100% Investor Financing

[Jessica Johnson]

HI ALL I am currently reading a book on real estate investing and just have a quick question on understanding some concepts. The Author stated that you could obtain 100% financing if it appraised well above what you have bought and rehabbed for the house. So basically I am suppose to purchase the house with cash, pay for the rehab work, get it appraised and then try to obtain financing from the bank? So they are initially paying back my money invested if it appraised above everything I put into it? How does this work???

[Jon Holdman]

What's the copyright date on that book?

If you get a SCREAMING deal and have cash (or hard money) to fund the initial purchase and rehab, this might work. You're wanting to do a refinance using a new appraisal as the value for the new loan. And either get back the cash you invested (a "cash out refi") or pay off the hard money loan (a "rate and term refi".) Expect to own the property for at least a year before you can do this. Expect the LTV on the new loan to be 70%. Expect to have to document the work you did to justify the new appraisal. Be sure your credit score, cash reserves, and other income allow you to qualify for the new loan.