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Can U get a Loan on an REO/Fixer?

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LA Woman

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Jul 18, 2007
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Certified Residential Appraiser
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California
I have a friend that wants to buy an REO that is boarded up. I've done an inspection....it only needs carpet, patching and paint and replace a few windows, agent states all appliances, etc. are in working order. Cost to cure is around $8,000 max. Bank would probably accept $175,000 for the property and she can put down $15,000.

Can she get a loan on this? Does anyone make loans on fixers? I haven't done FHA work in years, so I'm not familiar with any of those loan programs.

Thanks to all for any input on this.

LA Woman
 

TJSum

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Nov 12, 2007
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State
Maryland
How about FHA 203-K program? When you say she has $15,000 to put down, does this include closing costs and the cost to repair? If not, the $15,000 would be eaten up making the place livable and with the closing cost. From what I hear, it is hard getting conventional loans any longer with little money down.
 

Lloyd Bonafide

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Jan 15, 2006
Professional Status
Certified Residential Appraiser
State
California
Possibly the bank that owns the REO will loan on it as-is?
 

murray stroupe

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Apr 27, 2005
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General Public
State
Tennessee
Re; Probably

Probably would need to go hard money.
=====================
Probably.

Mr Bonafide had another possibility;
& with reasonable credit, Sherwin Williams/others [paint, carpet]has30 day commercial credit,& that sounds like a fixer upper to get @ bargain.

If she doesn't mind sweating;
sweat equity may sit well with the bank,,with paint carpets.......
 

Mountain Man

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Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Yes, a bank can do that loan on a one year note. It'll be an in house loan, but in cases like hers is exactly why I only bank with LOCAL banks. For an investor, the banking relationship is the most valuable tool... more valuable than even a set of bump lock keys. :)
 

Brad Ellis

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Feb 7, 2006
Professional Status
Certified Residential Appraiser
State
California
LA,

Not only is this money relatively freely available to buyers with good credit (you neglected to tell us how good this buyer's credit is- and perhaps you do not know), but you can also get the loan from FHA- and that is probably a better way to go overall.

FHA has a program called 203K and it is specifically geared to buyers of owner-occupied types of properties to acquire, renovate and then inhabit the property. Note this applies only to homes and 2-4 unit properties that will be owner occupied; it is no longer available to investors.

If this is an investment property, the money is still fairly easily accessible, but it will cost more in rate.

I would certaionly caution this potential buyer to try to avoid a prepayment penalty if they go the investment route since rate may well come down.

BTW, plenty of banks have what they call CTP- construction to perm loans. Starts as a construction loan and then gets closed as a permanent rate fixed term loan.

Brad
 

Mountain Man

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Jan 15, 2002
Professional Status
Certified General Appraiser
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Georgia
If this is an investment property, the money is still fairly easily accessible, but it will cost more in rate.

Not much though. I get $$$ for 1% closing cost, and 0.25% over prime. It is an interest only one year note, but I don't need it that long as I'm just fixing and flipping. Sometimes I use my credit line to buy a property, and my cash to fix it up. Zero closing cost, and interest at prime for six months.
 

NC Old Guy

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Jan 16, 2002
Professional Status
Certified General Appraiser
State
North Carolina
What Leggett said. Talk to your small local bank. Forget the mega nationals as they don't give a @#$%. Banked with one of the megas for 30 years. Everytime tried to do something, nothing but excuses. Moved everything to the local banks and now have several that understand and are willing to be helpful. Small banks like the small businessman. The mega banks don't, just like they don't care for the small depositor.
 
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