Advice on funding this property-soft money?

Question

So I have found a property I would like to purchase for myself to live in. I have no issues going conventional, besides the fact the bank is not accepting financing (I'm assuming due to the repairs, waiting for more information).

So I'm looking for another way to put this deal together. House is in PA.

ARV: 215k

Repairs: $15k (far less as I will be doing labor myself, but that's a contractor price)

Asking price: $150k

Offer price: $120k

Details about me: 31, no debt besides two rentals.

Rental 1: 125k house, owe 90k, $1095 a month.

Rental 2: 135k house, owe 48k on LOC ($100k line), rented at $1150 a month (just finished this one, took a lot of my cash to do it)

750 fico (and on the rise quickly now that I have no cc debt). Never missed a payment in my life, and have extensive history to back it up.

Have a stable job, make nearly $85k a year.

So what are my options here? Anyone know any "soft" money lenders? Hard money the only way to go? I'm hoping the fact that I have cash I can put into the deal, a good credit score, and a great job that's provable, someone will work something with me. Then I could do the repairs, and refinance into a conventional mortgage and that's that!

Any suggestions? Thanks in advance......

Jon Holdman · Answer

Trouble is that almost no hard money lenders will lend on a property you want to occupy. That gets into residential loan teritory and that's so regulated that HMLs don't want to be there. There's one HML around here who calls her loans "squishy". But they're really just hard money loans that have a lower rate and points but higher down payment. Private money is an option, but that requires knowing someone who has that kind of cash. What about an FHA 203k rehab loan?

Joshua Dorkin · Answer

@Josh Gibbons - Account Closed will help you with your username issue and will help you get the other account back up and running.

Jon Holdman · Answer

REO sellers often say "cash only" on junker properties because they know getting a loan is going to be a problem. Look into the 203k and have your agent ask if they would consider that loan.

Wayne Brooks · Answer

Right, makes no sense. Either a 203k or Fannies homepath renovation loan. Get preapproved, make the offer preferably during the owner occupant only period. Maybe your realtor isn't aware of these?

Josh Gibbons · Answer

If it was a private seller, I could put the deal together...... I looked into an FHA 203k, and again, the realtor is telling me Fannie will only do a cash deal (which makes absolutely no sense to me) The property is a Fannie Mae REO property.

Jon Holdman · Answer

OK, but tell us about the seller. Lots more options, like options (ha!), with an individual seller than if this is a REO.

Rick H. · Answer

Josh - One of two obvious things makes sense here: an all cash offer or seller financing. Try seller financing, as you'd ultimately have more control and unlikely the restrictive requirements that a commercial lender would require. Don't worry about the price as much as the terms, which should be a minimum of 7 years, IMHO. Once property completed, it can be brought into compliance and refinanced if desired. Or, have a trusted associate buy the house with a hard money loan for part of purchase price, complete repairs and buy from them. Or, option to buy the property, make the repairs and complete the purchase with a conventional loan. Or, I could go on and on. There are just too many ways to work this deal. I challenge the BP community to come up with as many ways to control/buy this property as possible. Come on guys and gals!

Wayne Brooks · Answer

Agree with Jon. Repairs seem too extensive to get a repair escrow with conventional. Maybe a 203k to purchase/Reno, then refi out to conventional after 12 mo.s or so.

Raymond B. · Answer

@Josh Gibbons, Said: this also isn't my first post on BP......I couldn't get my other user name to work, which is over 7 years old I'll call in @Joshua Dorkin, maybe he can help you with your problem concerning your other user name. Raymond

Josh Gibbons · Answer

Hey Jon, Thanks for the response. The realtor is telling me the bank isn't accepting financing because a bunch of the walls are opened up, and ripped out two of the three bathrooms (house had lots of mold, bank had a contractor come in and remove it all, but never did the rest of the repairs). Def. can't go FHA on the house. The realtor I'm working with doesn't really do this kind of transaction (first mistake), and the listing agent isn't the most communicative (maybe because of the holiday?). Didn't really make sense to me, so I'm looking to see what my other options are. Maybe they just have no idea what is going on.....hoping to get more info soon.