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Investment options

I am currently thinking of purchasing my first house as an investment property (to resell preferably, or to rent out if needed). I have a great credit score (720+) and have enough to put down approximately 20-25 percent down payment. I was curious if there are loans out there to purchase the house with the costs of repairs included in the loan. For example, if a house was selling for 25k and required about 20k in repairs, could I get a loan for the 45k or what options have you professionals seen? 
  • November 22 2010 - Fairborn
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Answers (4)

Another Option:   Inquire about a 203K loan.  Offered by FHA to finance repairs on owner occupied single family homes.  Try and Google:  203K

Here is a YOU TUBE video about 203K financing...
  • November 22 2010
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I would try the following in this order:

1. Propose owner financing.  Start at 0% interest and negotiate up from there.  (An owner has none of the costs of a bank: a marble clad building, full time employees, plush furniture, etc.  They shouldn't charge interest like a bank.).

2. Borrow from a relative or friend and offer 3-5 times what they are getting from their CDs - backed by real estate.

3. Form an LLC or corporation and build business credit. (A longer term activity.)

4. Try hard money.  Look at dohardmoney.com as an example of what these cost.  The interest rates sound prohibitive, but remember that you'll keep the loan a short time.

Also, if the house is selling for $25,000, offer less than $5K.  It's not all that much difference and the owner might be glad to get rid of it.

Rules for investing:

1. If you aren't embarrassed to make your offer, you are offering too much.
2. If they take your first offer, you offered too much.
3. If you need a calculator to figure out a deal, it is not a deal.

Good luck with your offer!

Bob
  • November 22 2010
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Just to be clear, the house appraises to about 70k in "selling condition". Are you saying if, I try to do a higher cost house for more than $75k, there are programs or loans out there but since it was a low amount, there is none?
  • November 22 2010
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NOT at all. You are asking for a loan for about 200% of the purchase price of 25k. not even a chance at those specs. There is no gov sponsored market for that type of a loan amount. All I do are loans above 75k for conventional products. Hard money loans could fund such a small loan amount but only at very low LTVs 
  • November 22 2010
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