O.T. Mortgage question- Need help

Iceman · Jun 23, 2006

Here is what I am trying to do.

I have a 150k loan out on a house that is worth about that. This is my current home and I lived there about a year. I have looked in my current neighborhood for 2 years, as my mom and dad are looking for a place over here also. So I really have a good idea about what homes are worth in my neck of the woods.

A neighbor passed away this past spring and his home is worth 180k (after you do some yard waork and put 10k into some touchups ) but his family has the home up for sale for 145k(they don't want to mess with it). I am pretty sure it is a helluva deal (mom and dad don't want it).

The question is can I get a loan on another property that I want to flip? Can you have 2 loans? How does this work? What do they call it?

I have a excellent income (low 6 figures) and a credit score at 690, with zero marks on it.

I see crap like this on TV all the time and would love to get involed in something like this.

Anyone else do this? My biggest question is the whole loan process. Does anyone have any tricks or suggestions on how to tackle this loan process?

blueedwards · Jun 23, 2006

you can probably get a swing loan but, it'll cost ya. be prepared to pay 1 point and an above market rate. if you can sell it for $180k...it'll be worth it.

TheRightSide · Jun 23, 2006

Ice might be tough in Michigan to make a fast turn on it. But it could be worth it in the end.

My wife is a manager at a title compny she culd save you soem money on closing cost. Let me know if I could help ya out in that way. Good luck Ice either way.

5teamparlay · Jun 23, 2006

With an income in the low 6 figs, you should be able to get qualified for a loan in the 300K range in the first place, so it is doable.

May be even worth holding on to the new place and renting it a year or two, and see appreciation on 2 places and see where your at that point. Seeing as you are equity poor and need to build some up in general. Lucky here have I close to 200K in unused equity and a blank checkbook. Luckily I'm married and I can't gamble it away (checks and balances).

D2bets · Jun 23, 2006

After you put in 10K of repairs, closing costs when you buy, mortgage interest costs, costs to maintain while you own (utilities, insurance, property tax, etc), and closing costs when you sell...it will probably hardly net you anything, not to mention the time, effort and uncertainty risks. And then capital gains tax on what small profit you might make. Is all of this really worth netting 10K, if you're lucky? More profitable and less headaches to just spend that time scalping and middling.

Might make sense with larger numbers, I doubt it makes sense with what you're talking about.

Good luck.

Iceman · Jun 23, 2006

D2bets said:
After you put in 10K of repairs, closing costs when you buy, mortgage interest costs, costs to maintain while you own (utilities, insurance, property tax, etc), and closing costs when you sell...it will probably hardly net you anything, not to mention the time, effort and uncertainty risks. And then capital gains tax on what small profit you might make. Is all of this really worth netting 10K, if you're lucky? More profitable and less headaches to just spend that time scalping and middling.

Might make sense with larger numbers, I doubt it makes sense with what you're talking about.

Good luck.

yeah kind of figure the same thing. I jotted down some numbers and think I can net 10k in less than 6 months. Have always wanted to try something like this and never have.

Since it's in my own backyard I may go for it. Just seems like such a low sell price that I can't stop thinking about it but much like everything so many hidden costs.

TheRightWing · Jun 23, 2006

Iceman said:
Here is what I am trying to do.

I have a 150k loan out on a house that is worth about that. This is my current home and I lived there about a year. I have looked in my current neighborhood for 2 years, as my mom and dad are looking for a place over here also. So I really have a good idea about what homes are worth in my neck of the woods.

A neighbor passed away this past spring and his home is worth 180k (after you do some yard waork and put 10k into some touchups ) but his family has the home up for sale for 145k(they don't want to mess with it). I am pretty sure it is a helluva deal (mom and dad don't want it).

The question is can I get a loan on another property that I want to flip? Can you have 2 loans? How does this work? What do they call it?

I have a excellent income (low 6 figures) and a credit score at 690, with zero marks on it.

I see crap like this on TV all the time and would love to get involed in something like this.

Anyone else do this? My biggest question is the whole loan process. Does anyone have any tricks or suggestions on how to tackle this loan process?

Well it's NOO (Non Owner Occupied) but with the secondary markets loaning money these days shouldn't be impossible.

First of all check your flipping laws cause every state is different, but call a few brokers and ask how aggressive the LTV programs can be on (NOO) properties and list it six months later or use it as rental property.

WVU · Jun 23, 2006

If you are making 100k+ what the heck are you doing in a 150k house? You would qualify for 500k if you can prove that income and your beacon is 690. Hell buy 3 of em.

kksuited · Jun 23, 2006

yeah, agreed, with a 6 figure income, no problem on the loan.

When you bought your first house, did they mention you probably qualify for a $400k house, yet you decided to buy a $150k house?

WVU · Jun 23, 2006

I bought my house which cost much less than I qualified for and have regretted it ever since. Not only do you live in a nicer house, but you gain more in appreciation assuming all things equal. Instead of the 300k I have in equity now I would have more than 500k if I spent more. Such is life, but my mistake cost me 200k over 5 years.

SSI · Jun 23, 2006

atta boy Ice, live like no one else........... so when your older, you can live like no one else..

on a house your flipping, never offer over 70% of asking price.. 126k is the most you can put in this house..

pay cash for everything else... if you cant do that, you dont need it.. (not talking about the real estate),,,,,,,,,, non-appreciating items..

ClipJoint · Jun 23, 2006

I am a little puzzled by the fact that you have a loan on your house for $150k if that is what the house is worth. I think it is great that you do not overspend for the house, but why in the world would you still have that much left on the loan if you make 6 figures?

Tough to answer based on another states resale value, but I know here in California if you ever have the opportunity to buy more property, it is always a wise investment.

kksuited · Jun 23, 2006

SSI said:
atta boy Ice, live like no one else........... so when your older, you can live like no one else..

on a house your flipping, never offer over 70% of asking price.. 126k is the most you can put in this house..

pay cash for everything else... if you cant do that, you dont need it.. (not talking about the real estate),,,,,,,,,, non-appreciating items..

How much of the actual asking price you pay depends on the market. In a market with good appreciation, no way you can get something for 30% off. My fiance is a real estate agent in Atlanta. The market is really hot. If you offered 70% of the asking price, you would not even receive a response.

Just last night, someone offer $400k for a house listed at $450k. The seller laughed and didn't even want to counter offer. They did, at $445k, final offer. The house will sell for that too.

That kind of thing depends on the market.

vinividivinci · Jun 23, 2006

The money made on these type of deals is always on the buy side of the transaction. You cannot make money on distress sales unless you acquire the property cheap. In your example I would be looking to buy at $120K or so.

Remember, guys who consistently make money at this game look at maybe 100-200 deals to find one that makes financial sense. The odds of looking at one deal and it being a homerun are, well, 100-1.

If you really like this property offer them $110k and see what they say. They might say no, we have to have $120. Who knows? The critical thing is you must have a firm top price in mind before you enter negotiations.

How long has this property been on the market? Many times the best deals are found on properties that have been on the market and have not sold, especially if they need a little cosmetic improvement.

In any event, good luck with whatever you do and let us know how it comes out!!

VVV

SSI · Jun 23, 2006

you make the money on a flip, when you BUY the house and not when you sell it.......... period, end of discussion.. insert appropriate figures..

stef · Jun 23, 2006

Amazing to me the different housing prices in this country.

TheRightSide · Jun 23, 2006

You guys don't understand how shitty the economy is up here in Michigan. Ice would be taking a big gamble on this house. I would have to tell him to pass on this deal.

Ford GM and Delphi are bleeding up here. People are leaving the state very quick. In Cali or Flroida hell yes buy everything you can get. But up here people are having a tough time selling houses.

lander · Jun 23, 2006

Sounds alot like Buffalo. On the flip side, you can get a house around here that would bury you for 30+ years in most other cities.

kksuited · Jun 23, 2006

TheRightSide said:
You guys don't understand how shitty the economy is up here in Michigan. Ice would be taking a big gamble on this house. I would have to tell him to pass on this deal.

Ford GM and Delphi are bleeding up here. People are leaving the state very quick. In Cali or Flroida hell yes buy everything you can get. But up here people are having a tough time selling houses.

ding, ding, ding. Very important to understand.

WVU · Jun 23, 2006

even the Michigan market is appreciating. Anyone who thinks a seller would even consider an offer that is 20% or more below asking price is out of touch. Go to zillow.com and punch in the address of the property and see a quick appraisal. Not at all accurate, but it will be fairly close.