NYC - Have $8-10,000 +Job +No Credit/Low Score - Advice?

Question

Hello All,

I have a few questions and would appreciate ANY advice anyone here is willing to offer. I am seeking advice on what would be the best way to secure financing for a home /slash/ investment property? (Specifically in NYC) I am looking to live in this property and hopefully have 1 or 2 units that I can rent out to help with the mortgage. (I already have a reliable tenant for 1 unit)

I should also say that I am most interested in having low monthly mortgage payments then the overall purchase price of the home. I would like to keep as much money in my pocket as possible. (To invest in another property.)

FYI: As stated in the title, (of this post) I am in NYC, have $8-10,000 on hand, my husband is working (Full-Doc), I have a steady freelance position, (No 1099 or tax returns yet, only letter from employer) There was a bankruptcy 2 years ago (Husband only) and "my" scores are low mostly due to no established credit. We have been with our current landlord for 16 years and have always been current with our rent. (Definitely verifiable by landlord.) Also, I am currently in the process of repairing my/my husband's credit, but would love to make this happen NOW.

With that said, is a hard money lender the way to go, or is that only best for a flip? Any advice on the best strategy to secure financing? I've seen a few great deals that would fit my needs if I can just figure out the best way to get financed and what my overall strategy should be.

I am also interested in finding either a bank-owned, pre-foreclose/foreclosed or (small) rehab type property. My question here is; If I were to find an excellent deal on let's say a rehab, the fix-up cost "could" be worked into the loan amount, right? I believe the property would need to be valued at, or above the full loan amount that I am seeking, correct or no? The "value" of the property would be based on the appraisal and what properties are selling for in that neighborhood, yes?

Well, I'll stop here and see what advice anyone has to offer.

Thanks in Advance!
~Eve

Eve H. · Answer

Hi Bruce, First, thanks for your response. -Much appreciated. Okay, I broke out my RE dictionary to try and fully understand all. (I'll get this all down eventually, I'm sure. I am only about a month into learning/researching.) Here are a few more questions, if you'd like to tackle them: 1. Is a LTV based on the purchase price, what the property is appraised at, or let's say it's a rehab, -what would the LTV be based on with that? 2. Let's see if I have this one right, not only so that I fully understand all the benefits & risks, but just in case I need to explain it to a seller. With a wrap, this pretty much means owner-financed, correct? Meaning find a seller who is willing to sign into a wraparound mortgage with me. Whereas, if we agree on all terms and a purchase price of 400k and I give the seller 3% cash (12K) -the remaining 98% (388k) would then be drawn up in "my" name and signed by the seller and myself in the form of a "deed of trust", yes? (If so, a "deed of trust" is the document that spells out our agreed upon terms and is held by a trustee company, correct?) So now, let's say that the seller owes 200k on his current mortgage, the seller then does what? Secures a second mortgage for the full 388k? Or, does the trustee holding the deed of trust just collect my payment and first pays on the sellers 200k mortgage, and then sends the rest to the seller? I'm a bit confused and am also concerned with the "due on sale" clause. What are the risks/benefits here for both myself and the seller? Am I even correct on any of this so far? -LOL Also, yes I am signed up with a credit monitoring site (includes all 3 bureaus w/ all 3 scores) and do have my eye on it. No, no turn-downs just had 2-3 brokers tell me I need 20% down, which would be 80k on a 400k loan. (I only have about 10k) Now being that I freelance and can only get a "letter" from my employer, they've said that my income would not be able to be included. (Which then brings us to the amount that they would be willing to lend.) They said that we would only be able to borrow what the lender feels we can afford. Which would be based on the 1 full-doc income. And... that they would not really consider the 2 rental units, "just in case" I cannot get/keep them rented. -I was pretty much getting the same response which is what made me consider looking into some type of creative financing for my first property, which would also be my home. Excuse the many questions, I just need to fully understand all before I set out full-force with whatever strategy and back-up plan/s I've mapped out here. Thanks Again! ~Eve ------------------------------------------------------------------ Verran, I'll give you a call as I'd like to hear your suggestions as well. -Thanks ~Eve ------------------------------------------------------------------ And... To ALL, Any suggestions on an what you may feel are excellent books or sites that really delve into creative financing? -TIA

N/A N/A · Answer

hard money will only get you to 70% ltv. you need to find a seller who can let you wrap (all inclusive deed of trust) for a couple of years. keep an eye on your credit and at a certain point banks will lend to you. have you been turned down for a home purchase? bruce

Verran Jones · Answer

[POST EDITED BY ADMIN] PLEASE NOTE: If you're going to offer advice, don't solicit business. Give advice here on the forums. Thank you.