|Posted by: Ray Nov 5 2004, 11:57 AM
I am looking to start in the realestate racket . My idea is to buy homes in need of repair at a cost well below market . do what needs to bring the property to a selling price I am happy with and sell or hold as a rental if the market isn't at its best . I have talked to some friends who are doing the same . Thay have only been at it for a year and haven't bought more then 3 properties yet .
They have used what they call a hard lender I am not familer with that financing option . I guess it a broker of sorts but not a normal financing instution so . They buy the property with there monies and refi right after closing to pay the hard lender off and pocket the equity that the property has .
My ? is does this sound like a good idea , Is there a differnt name for the lender type I'm talking about .
Any ideas ,comments or warnings would be great . I am kind of worried that normal financing might be a issue
right after closing on the inital buy
Thanks to all
|Posted by: loanuniverse Nov 6 2004, 10:37 AM
My comments on this are limited because I have only work for bank lenders, which do not usually lend money to someone to do this as a business. I think that when banks are involved providing financing, they are looking at this mostly as residential financing.
Having said that, I also know of people that are doing this successfully.
If I have a comment is that you are not really buying the property at well below market in the first place. The market values a damage property at a certain amount. It is the sum of the refurbishment as well as the normal increase in price over the six months that it takes you to clean / fix / paint / build that increases the value.
Financing happens before closing, you are probably thinking about having trouble finding financing after the purchase contract is signed.