HOME BUYING ADVICE NEEDED

[usmcdannyboy 0]

ok heres the deal about this post. I trust you all not to steer me too far off course. i was offered to buy the property i currently rent a room from. the reason is, this nice old lady (72 yrs old) is in financial trouble because of a visit to the hospital that lasted 2 months. her family cant help her and i just so happen to be "the good tenant" and in the military (she just plain likes me ) she offers to sell to me to help her out of trouble. this means i have a chance to pick up a property that has a 3 bedroom apt., a 2 bedroom apt., and a 6 bedroom house for a easy $540,000. the house has been appraised for $700,000 and she has been offered 1.5M by a bussinessman 6 months ago. the income on the apartment covers the mortgage and utilities for the entire property with change to spare. so far the only catch is i dont have the down payment, nor will i ever on a sergeants pay. oh did i mention the 6 bedroom house has 7 tenants counting the owner and myself. oh and the other catch is i'll let the lady i am helping live the rest of her life here...(she's 72, a diabetic and 250 lbs) sad to say may not be long. this is a shot gun blast of what i am dealing with
knowing that the skydiving community is full of brite people and go get'rs im hoping that someone can help....lets see where this thread goes

I am the light my son...What you seek is fire

[quatorze 1]

Owning this you would build extreme amounts of equity but as you said

>so far the only catch is i dont have the down >payment, nor will i ever on a sergeants pay

Guess that you get to be creative

just a thought... I hope some one can give better advice than me.

I'm not afriad of dying, I'm afraid of never really living- Erin Engle

[indyz 1]

Take it with a grain of salt...

I heard somebody somewhere tell a potential landlord to ask him/her self, "Would I be willing to evict a single mother and her children if she couldn't make payments?"

[Brisco 0]

Rent the movie "Pacific Heights" first....

Brisco

Experience is what you get when you don't get what you want.

[rmsmith 1]

OK, if you have good credit then you won't need much for money down if there is income being generated there.

Go to: http://www.myfico.com/

If you have a score over 700, you shouldn't have a problem getting a mortgage lender to listen to your business plan. BTW, I had a recent score of 796, which is slightly lower this year because I applied for, and received, more than two low-interest credit cards. I haven't ever had a late payment in over 389-months of credit history, and I don't have any derogatory public records either.

--rms

[Luna 0]

I'm not going to offer advice on whether or not to buy it, but I'll try to help you about the down payment if you decide to. With the VA loan that you qualify for, you don't have to make any down payment, and you can request all closing costs to be paid. However, there is an upper limit on what you qualify for with a VA loan, and I don't think $540,000 falls within it. Wouldn't hurt to check though. The only problem with the VA loan is they tack on a funding fee of somewhere in the range of 3-4%.

There are other ways around a huge down payment, but almost all of them require at least 5% down, which is still $27,000 on this size loan, which I wouldn't imagine you'd have lying around.

In general, they don't like for you to get a loan for your down payment, and that is a question they usually ask.

Good luck!

Luna

I'm walking a marathon to raise money for the Leukemia & Lymphoma Society. Click Here for more information!

[PLFXpert 0]

What he said......I was going to say the same thing. Plus, does the lady flat-out own the property or does she still make payments on it? You could possbily, w/out any down payments, simply assume her loan and continue on with the payments. This is rare but it can't hurt to check.

[Zinger 0]

Who's holding the mortgage?? The owner?(sounds like it). If so get a signed by the owner "Agreement of Sale" contract.Take that to the bank along with the written proof that proves your $#'s are correct, and you have reasonable credit, I'm pretty sure they would give you a starting loan with that kind of written collateral.
I bet this ol'lady had the landscaping and general repair done by others and paid for it. If you do all that there is more money to be saved.
I'D GO FOR IT. (works for me..).

------Have a good one!--------

[jimmytavino 16]

# 1 Idea...Borrow the down payment from the "businessman who offered 1.5 mil.",,,(just kiddin')
Remember, though Income property which generates
positive cash flow may cost you at tax time..
# 2 Idea.
Here's the Real Deal.
Buy the place for 540 G,,, find the businessman,,, sell it to him for 1.4 mil...(think how much He'll save....) use the profit to buy
a Twin Otter...# 3 Idea,
"Pay no attention to the man behind the curtain.." (i.e. this idiot, (me) who is responding to your question....) hahaha.
Blue Skies Black Lava....

[hagar 0]

Why doesn't she sell to that bussinessman?

---
PCSS #10

[rushmc 18]

If the values are as you say, and with the lenders holding fists full of cash they want/need to lend, I am sure you would have no problem finding a firm that would carry 100% of the loan. You may have to talk to a few of them but I know, from experience, they are out there.

Good luck

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[tigra 0]

The first thing you need to do is talk to a mortgage lender and crunch some numbers and see what is possible. Remember, just because the rental income covers HER mortgage payment, it won't necessarily cover yours. If she's owned the property for a while, she might not have a very big mortgage on it- you would need to borrow more in order to purchase the property. Make sure you know what you are getting into.


Some ideas:

You could execute a sales contract which calls for the seller providing a "gift of equity" up to the downpayment amount. Since she is not a relative, the lender may not approve it. (I've seen this when someone is buying a home from his or her parents.)

Another option is a "seller carry back" second mortgage for the downpayment amount. Again, your lender would need to approve this. Your payments to her could be offset by "rent" that she would owe you.

Keep in mind, laws vary from state to state, and also when you are going with less than conventional financing, you tend to pay more- (higher interest rate and closing costs.)

Good luck!

[freefalle 0]

I just finished real esate school and I work part time for a mortage company so I can make a couple of suggestions regarding this that may help.

You can ask the present owner of the property to hold a purchase money mortage basicall what that is is the down payment portion of the total sale price is held by the owner/seller, each month in addition to the mortage paid to the finance company a second or "purchase money mortage" is paid directly to the seller. If/when the purchase money mortage holder dies, the balance of that mortage can be paid to the person she designates in her will OR if she elect the mortage can be forgiven subsequently satisifing the lein on the deed.

A second option is an 80/20 financing mortage, Im not sure how feisable that is on the property you are looking at because of the price, however the way it works is you get a first mortage for the 80% of the asking price, then you get a second mortage (usually for the same lender) for the reamining 20% to use for the down payment. Given the amount of equity in the property you are considering, you may be able to convince a lender that this is in their best intrest because (and not that you would) if you default on the loans they have a property that they can resell at a huge profit with very little loss.

Buying the type of property you are looking at is a great investment, The securing financing and the inspection and other incurred cost can add up quick be prepared to pay some cash up front for the inspections and appraisal. Dont get discouraged, there is ALOT of moeny to be lent right now hang in there and keep looking. If you have anymore questions that I may be able to help you with please PM me or drop me an email Ill do what I can to answer them

[Michele 1]

If it's been appraised within the last 3 months at $700K, you won't have any kind of problem in obtaining a loan. As it has income, it follows other general lending laws which don't necessarily apply to home mortgages.

As a realtor, this looks, on paper, like something you shouldn't pass up. But here are some of the questions I'd ask:
1. Are all the units occupied? By lease or month to month? What is the actual rent per unit? What are the utilities the tenents pay for?
2. What are the costs of running this building? Not just gardener, but property taxes, insurance, any special assessments for the area which are out of pocket expenses, whatever utilities the landlord pays for...some suggestions.
3. What are the code modifications needed to bring the property fully up to code? In Burbank, for example, there's low flow toilets, fire alarms, seismic shutoff valves, termites, and whatnot that must be at code before the transaction closes. If you use government funding for ANY part of the loan, there are additional requirements needed, such as handicap access (not just to the unit, but within the unit itself), and so forth. What are your regional, local, and municipal codes require in this way to clear escrow?
4. What updates does the building need? A new roof? New wiring? New plumbing? As the landlord, these things can (not always) be important in retaining your tenents, and having their rents collected on time.

Other questions which are important is the ratio of vacancies v. your ability to pay. If you have a unit which vacates at the end of, say, November, you can reasonably expect it to remain vacant for 90 days. Will the rents from the other units be able to cover it? Or is it out of pocket for you? And can you handle that?

What are the tax ramifications? Will the write-offs balance out the income you must claim for the rent? How high will this place you in your tax bracket? The tax ratio is larger on what's considered multi family dwellings, which are generally more than 3 families (4+) living on the same piece of property in seperate dwellings...

What are you planning on doing if you get a transfer, and can't be hands -on the property?

As for the downpayment issue, many many many lenders are lending at 105% LTV on properties, for the simple fact that money is inexpensive right now. They write the loan to cover closing costs, as well. The problem with that is you are mortgaged to the hilt, and should some problem arise, you are now stuck with a high $ mortgage, and have no way out.

My advice?
I would look closely at the existing numbers, and then talk to a CPA. Once I understood the whole parameter, I'd then talk to a mortgage broker. Once I had an understanding about that, then I'd talk to a local realtor or real estate attorney, and get moving on the deal (all else being good for you, of course). (And I can get you a qualified realtor in your area, as well, so let me know).

It's a great opportunity, but as with all great opportunities, there are great risks...check out what those risks are, assess them accurately (with the help from professionals), and then make your decision. If this fell into my lap, and if the answers to the above questions were the ones I was looking for, I would not hesitate to make a move.

Let me know if you need more help, or help getting to professionals in your area...I work for the largest brokerage in the nation, and we have systems in place for just this kind of thing. PM me if you need to, or e-mail me if you'd rather.

Ciels and Pinks-
Michele

~Do Angels keep the dreams we seek
While our hearts lie bleeding?~

[usmcdannyboy 0]

Dam I love you guys!!!! i knew i could count on you all to give me some good advice and everyone of you have given me not only good answers but a ton of good questions. it seems a little daunting but it cant hurt to look into this deal. well gotta do my homework now. Thanks a bunch. I'll keep you posted on my progress to answer why she doesnt sell to the bussinessman, he wants the house to use for single family..she wont be able to live the rest of her life in the home she raised her family in.
Take risks not to escape life, but to keep life from escaping..if i get myself in a jam and loose my ass in it then ill just sell everything i have and become a dropzone rat and beg for jumps

I am the light my son...What you seek is fire

[jtval 0]

Danny,
this is just my understanding of it. I am an e-5 in the A.F. and i have never owned a house. so take this with a grain of salt.

540,000 I know you can not afford that type of rent. however if you DO have the 5 other roomates paying, that excludes you and her,correct?
if they are paying then great. if the property is Worth700K i would beg borrow and steal to get the 540K. all you need to do is have the house for a little while and put it on the market for 690k and take as little as 640k thats 100k youve made.
if the new owner wont let the old lady live out her days there you can always help her down the stairs...(J/K)
there are always ppl who say I MISSED OUT ON A DEAL OF A LIFETIME.do you want to be that person? or do you wanna be the one that say...I made my 1st fortune from buying this house?
whatever you do MAKE SURE YOU HAVE A BACK UP PLAN? turn BOTH options into a POSITIVE deal!
again I have not bought a HOUSE yet, but if you look at all your options (and some of the buyers/sellers options) you may find a cash cow looking back at you!

My photos

My Videos