Tonight, I just have a dinner with a successful real estate investor. Remember I blog earlier, your net worth is determined by your network, it is always great to hang around with smart and successful people to learn their wisdom. Basically, he share with me his experience of one of his new real estate investment. The coolest part is he is able to buy this property with NOTHING DOWN payment. This is the step he took
1) Target Bank owned (REO) properties. Bank is more willing to negotiate than a seller in general.
2) Identity fixer upper property that need some paint or carpet to bring to livable condition. The asking price of this type of fixer upper is usually 5-15% below market value.
3) Negotiated with the Bank to accept a even lower price offer PLUS three months period for closing
4) Ask for permission from the bank to enter property during the three month to do rehab and repairs
5) As soon as the repair are done, he brings in an appraiser to reappraise the repaired house. The appraisal value come out to be about 20% over his purchase price.
6) He bring this appraisal report and get a 80% Loan to Value Loan base on the Appraised price.
7) He bring no money down at the close of escrow in three months to close this transaction.
This is a very creative method to buy property with nothing down. Traditionally, the bank can only loan you 80% of the purchase price. In his case, he is able to buy the property lower value, delay the close of escrow period, fix up the property in the meantime, and get a loan using the new and higher appraised value. This is an excellent example of create value in real estate.
Monday, October 1, 2007
A creative method to buy property with Nothing Down
Posted by 529pm @ 11:45 PM
Labels: real estate
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2 comments:
"He bring no money down at the close of escrow in three months to close this transaction."
This is really attractive.
Be sure your particular off plan property can be sold on prior to completion without penalty, as this is not always the case on every development and some will not publicize this fact to property investors. You’ll be better off with your options left open so it’s advisable to avoid developments where selling on is not possible. Be aware that some developers say you can sell before completion but include a clause in the contract stating you may sell on only when they have sold all the other apartments within the development.
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