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Investors, what does this mean? Please advice!?
Here's the situation:
Got a call from an investor who said the lender he's been working with has a few properties that I might be interested in. The lender wants someone to take over the rehab debt that's on the property, with zero down, and have my own financing within six months.
My question is, if I was to take over the payments on what ever is left of the loan(rehab loan), would that mean I have the rights to the property? And find my own financing after six months mean I would just have to find another lender to lend me the rest of the money(mortgage)?
Please feed me your inputs. I want a clear understanding of how this works so if I do go forward with the deal (after looking at the properties and numbers), this would be my first investment. Thank you.
4 Answers
- 1 decade ago
It sounds as though the bank/ lender has taken these properties as REO ( real estate owned) and is lookig for some one to Pick up the rehab cost of repair. The rights to the property would be your as a first right of refusal. You pay for the repiars and the bank will sell you the house as a reduced property. the rehab cost would then be applied to your downpaymnet requirements.
Here are the risk... the property cost a great deal to rehab and you dont get the value from it... you can not sell the house before the 6 months are up and the bank/ lender calls the note due... You can't get financing (currently for an investment property the requirements are about 740 credit score and a Debt to income on the property of 30/70) these requirements are changing quickly banks are less and less likely to lend on an investment property. These requirement has grown (credit score) by 30% in the last year. some anaylist suggest they will be at 790 by June 2008.
There are much safer way to invest in investment properties right now, and they would not require your own credit scores.
I would be happy to discuss further email shannon@newlookpremier.com
- 1 decade ago
Be extremely cautious of any direct investor offers. These are uncertain times in the real estate investment markets and many sellers are desperate to get out from under loans on properties where values can no longer support the loan amounts. Work through a qualified real estate professional acting on your behalf as a buyers representative. Generally there is no cost to you and you will be served by a licensed qualified individual or firm to help guide you through the acquisition, esp if this is your first entry into real estate investing. Do not go it alone.
Good Luck Investing
- Anonymous1 decade ago
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