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Started By
Message
Looking for some ideas/ thoughts on buying a 2nd home
Posted on 8/31/16 at 10:33 am
Posted on 8/31/16 at 10:33 am
My house did not flood, but my FIL's neighborhood did. The man that lives next to my FIL is old and retired. He has a 2nd home on a lake somewhere(don't remember where he said). His house that flooded was paid off and he doesn't feel like the hassle at his age to fight fema to rebuild(his words not mine). The houses in the neighborhood sell for between 180-220(denham springs). He told me he would sell me the house for 60k. He has some significant damage, but I would imagine for 50k(max) I could get the house better than before. That would allow me to turn a huge profit. Now my question.
What steps(if even possible) can I take to get a loan on a damaged home? I am mid 20's so I do not have the savings to pay cash. I do make a decent living and could afford the note on a 2nd mortgage(assuming I could get approved for the extra money to fix the place). My wife just got a significant raise so we are doing better than we ever have. We can afford it, IF we can figure out how to do it. Worst case scenario my FIL said if we can't get approved he would be willing to put 40k in and I could put 20k(would cut my savings in half and make me feel a little nervous). Then once the house sold we would split the profit(because he said he wouldn't lift a finger to rebuild it)
Any advice or direction would be appreciated.
What steps(if even possible) can I take to get a loan on a damaged home? I am mid 20's so I do not have the savings to pay cash. I do make a decent living and could afford the note on a 2nd mortgage(assuming I could get approved for the extra money to fix the place). My wife just got a significant raise so we are doing better than we ever have. We can afford it, IF we can figure out how to do it. Worst case scenario my FIL said if we can't get approved he would be willing to put 40k in and I could put 20k(would cut my savings in half and make me feel a little nervous). Then once the house sold we would split the profit(because he said he wouldn't lift a finger to rebuild it)
Any advice or direction would be appreciated.
10
Posted on 8/31/16 at 10:49 am to iamAG
I don't know all the legal things you'd need to do, but one option would be an "owner financed" deal. Basically you could fund the rehab while he still owned it, then once it was fixed up you'd have an easier time getting a mortgage. I would think you could do a term like 1 or 2 years or whatever.
But obviously you'd have to make sure that at that point he is 100% selling the house to you.
But obviously you'd have to make sure that at that point he is 100% selling the house to you.
Posted on 8/31/16 at 10:52 am to iamAG
I'd get a loan for $40 from the FIL rather than having him as a partner.
Posted on 8/31/16 at 10:52 am to baldona
Yea he seems like a honest man, but I would have to get great lawyers to do that deal. I am definitely going to look more into it. Thank you for the advice
Posted on 8/31/16 at 10:53 am to iamAG
What kind of equity do you have in your current home?
Depending on how much you have you could do a cash-out and use those funds for your renovation project. It would be easier to loan on your current non damaged property
Depending on how much you have you could do a cash-out and use those funds for your renovation project. It would be easier to loan on your current non damaged property
This post was edited on 8/31/16 at 10:55 am
Posted on 8/31/16 at 10:58 am to HYDRebs
I have only been in my house for two years so it wouldn't be enough, but it could help.
Posted on 8/31/16 at 11:13 am to iamAG
Honestly, the best option if you are just going to sell it is to talk to the guy about splitting the income once its sold. I don't know how you'd do it but a real estate lawyer would have plenty of options.
But basically just let him maintain ownership and you finance the renovation, and then you keep a % of the sales price or the sales price minus $60k or whatever.
If all you are doing is flipping it, theres really no reason for you to ever own it. It will just cost you more money that you don't really have.
But basically just let him maintain ownership and you finance the renovation, and then you keep a % of the sales price or the sales price minus $60k or whatever.
If all you are doing is flipping it, theres really no reason for you to ever own it. It will just cost you more money that you don't really have.
Posted on 8/31/16 at 2:24 pm to iamAG
He could gift you the house or sell it at a stupid low price while entering into a separate contract with you for the 60K upon completion of the renovation and sale. When you sell out, give him the 60 K and keep the rest. If your FIL isn't lifting a finger, try to keep him out of it.
IDK if what I suggested is legal, but it is something to think about/look into.
IDK if what I suggested is legal, but it is something to think about/look into.
Posted on 8/31/16 at 3:18 pm to iamAG
You have enough equity in primary house to take out a HELOC?
Posted on 8/31/16 at 3:26 pm to iamAG
You are looking for a hard money loan. Companies, not banks, lend money for this purpose, probably at a 8-12 percent interest rate for 6-12 months. Or, you can do a private loan with an individual (such as FIL) lending the money.
I think given those numbers, I'd rather borrow the money and pay interest, as opposed to splitting the profit with someone else.
I think given those numbers, I'd rather borrow the money and pay interest, as opposed to splitting the profit with someone else.
Posted on 8/31/16 at 3:34 pm to iamAG
I'm glad to see you haven't been labeled a POS vulture.
I guess heads have cooled in the past week or so.
Good luck with the deal.
I guess heads have cooled in the past week or so.
Good luck with the deal.
Posted on 8/31/16 at 6:53 pm to iamAG
quote:
The houses in the neighborhood sell for between 180-220(denham springs). He told me he would sell me the house for 60k.
How much is the land valued at?
Posted on 8/31/16 at 11:07 pm to TigerintheNO
Thank you everyone for all the ideas. I have much to look into.
I really don't know the value of the land. This is all so new to me that I am learning as I go. I need to get that info asap.
I really don't know the value of the land. This is all so new to me that I am learning as I go. I need to get that info asap.
This post was edited on 8/31/16 at 11:08 pm
Posted on 8/31/16 at 11:13 pm to Teddy Ruxpin
Well the guy spoke with me and told me what he wanted to do. I didn't go looking for an opportunity to make $ off his bad day. It almost seems to good to be true at this point though. For a middle class family like mine, 50k in profit would honestly change our future. We could pay off everything(cars, wife's student loans) and then be almost debt free besides our mortgage at 26 years old.
10k in wife's sl (paid mine off this year so we have been focusing on hers recently anyways)
25k left on my truck and 8k on wife's.
For many people on the ot who talk crap that money wouldn't do anything, but for my household that would be an extra 1200 a month to save or put towards our house. Big deal for my household.
10k in wife's sl (paid mine off this year so we have been focusing on hers recently anyways)
25k left on my truck and 8k on wife's.
For many people on the ot who talk crap that money wouldn't do anything, but for my household that would be an extra 1200 a month to save or put towards our house. Big deal for my household.
This post was edited on 8/31/16 at 11:19 pm
Posted on 8/31/16 at 11:19 pm to iamAG
Ask your father in law, assuming the lots are of equal size, what his land value assessment is for his property tax. That should give you a ballpark idea.
Posted on 9/1/16 at 12:22 am to iamAG
quote:
25k left on my truck and 8k on wife's.
For many people on the ot who talk crap that money wouldn't do anything, but for my household that would be an extra 1200 a month to save or put towards our house.
Don't payoff the cars with it unless you have shitty interest rates on those.
Put that 33k on the side or just use it to refinance your house.
Don't spend it on payoffs if your intent is to put the savings on the side or put the savings toward the house. YOU ALREADY HAVE IT. Use it for that.
Posted on 9/1/16 at 5:59 am to iamAG
Lots of bad info in here in my opinion. More than 1 local bank will do a construction renovation loan on that property, and loan you up to 90% LTV of value with a contractor and 80% without. The biggest issue I see are your numbers. Granted, I have not seen the house, but where did 50K come from? I think the bigger investment will come in 90 days when there are dozens of houses who budgeted 50K to finish and fell 20K short, and now have to move it because they ran out of money.
Posted on 9/1/16 at 8:38 am to Helmethead
Op a couple things you need to figure out:
1.) get 3 quotes to repair
2.) value of the land
3.) will someone loan you the money
Personally, I would possibly look into the original owner still owning it, using your FIL's capital and pay him back 25% return or so, and then you doing all the work. This removes virtually all risk from you outside of what capital and time you have put in. If you can scrounge up $10-20k of your own money to get to $50-60k with little to no loans that would be sweet. It's a good deal for all involved most likely.
Getting a mortgage is going to take time and cost money, probably $4-5000 and take 2 months to get it in your name. You could have a lawyer draw up a contract and get to work on Monday with this thing if the original owner keeps it in his name.
I'm 100% for not getting others involved in long term deals and a business, but this is a short term flip. I'd prefer to make $40k with lower risk in 4 months than take 6-12 months to make $40-60k.
But frankly I have not clue how a construction loan would work with a house like this, I just feel like it's going to take a lot of time to get.
ETA: if you are going to buy it, I don't know how that would work as far as putting money down. If it's a $200k house and he wants $60k I'm assuming the land will only be worth $25-50k? So you'd have to come up with a down payment of some sort?
1.) get 3 quotes to repair
2.) value of the land
3.) will someone loan you the money
Personally, I would possibly look into the original owner still owning it, using your FIL's capital and pay him back 25% return or so, and then you doing all the work. This removes virtually all risk from you outside of what capital and time you have put in. If you can scrounge up $10-20k of your own money to get to $50-60k with little to no loans that would be sweet. It's a good deal for all involved most likely.
Getting a mortgage is going to take time and cost money, probably $4-5000 and take 2 months to get it in your name. You could have a lawyer draw up a contract and get to work on Monday with this thing if the original owner keeps it in his name.
I'm 100% for not getting others involved in long term deals and a business, but this is a short term flip. I'd prefer to make $40k with lower risk in 4 months than take 6-12 months to make $40-60k.
But frankly I have not clue how a construction loan would work with a house like this, I just feel like it's going to take a lot of time to get.
ETA: if you are going to buy it, I don't know how that would work as far as putting money down. If it's a $200k house and he wants $60k I'm assuming the land will only be worth $25-50k? So you'd have to come up with a down payment of some sort?
This post was edited on 9/1/16 at 8:46 am
Posted on 9/1/16 at 10:55 am to iamAG
I feel like no one is questioning whether or not the houses in that area will still sell for what they did before. What if the houses that were selling for 180k are now 150k or less, is it still worth the risk?
Posted on 9/1/16 at 11:32 am to Hermit Crab
quote:
I feel like no one is questioning whether or not the houses in that area will still sell for what they did before. What if the houses that were selling for 180k are now 150k or less, is it still worth the risk?
Oh I agree. But at the same time, they could be worth $250k also. Hard for us to say from a keyboard, but if done properly I would think the next year or 6 months will be a sellers market as most contractors will be busier with rehab than new builds?
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