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Updated over 11 years ago,
Buying a sinkhole house. Need to finance. Need advice.
Hello, I'm a new member of BP and in a unique situation. I need to find a way to buy the house i'm currently renting.
I'm new to real estate experience wise but I've read just about every article on this site, none of which quite cover what i'm looking for. *if it's even possible.
Home: 3/2/2 built in 86 with settling damage in the early 2000's. *Damage is estimated to cost $20-25k to fix with piers. It is not a sink hole, it's simply built on clay. It's a normal home in a descent to nice neighborhood and it's the only home with settling damage. And yes, the owner already collected insurance $$ from the damage but it wasn't enough to fix it (or so she said).
The current owner (83 yr old lady) loves me to pieces and wants me to buy it for $55k, but no one believes it's worth it, Zillow says it's value is $53k but i figure 35-40k considering the damage. I've been renting for over 18 months @ 800/mo so i need to either move out and buy a duplex or get this place and keep it as a rental for the future. *cut costs either way from 800/mo in rent to around 300/mo mortgage.
The question is financing. I have descent credit and a good paying job but i know banks or FHA won't finance a mortgage on house with "sink hole" damage. What makes it more interesting is my boss/best friend (like a brother) who happens to be my neighbor wants to help me get the house (long story, we grew up together so it'd be awesome if we were neighbors again) and he's got tons of cash & collateral. But we both agree that it's best i don't borrow from him, but get a loan of some kind and make payments, but he'll either co sign or put up collateral so i can get the house. (I don't have alot of cash laying around).
So, is this scenario even possible? The house is worth it if i can get the owner to accept 40-ish to buy it. The question is will any financing institute help me get a loan on it since i essentially have near unlimited collateral/co-signer quality.
Your advice is greatly appreciated.
-Jon