Buy my Grandmother's house and get a loan on the house

[Marco Herrera]

Hello. I am from South Texas. This is my first post. I am very interested in wanting to in the immediate future start wholesaling then later on I will get involved in buying, rehabbing and selling and buying, rehabbing and renting. I am still learning more about Real Estate, so I have quite a bit more to learn about. 

However, I had a question about a possible situation that I will explain here. 

My Grandmother owns her house. She does not need to sell her house but she would be willing to just to help me out if I can pull of the following. 

Can I get a hard money/private money deal to buy her house? When I get that done can I get a loan on the house?  

[Bill Goodland]

Hi Marco, I would suggest reading the ultimate beginners guide at biggerpockets.com/ubg first before seriously considering any creative or high leverage deals, especially with family.

I know you're just starting out, but I'm curious what your education in REI is thus far? The reason I ask is because I know myself included along with many others get the "shiny object syndrome" and want to jump into the first thing they hear about that can make them a lot of money with seemingly no risk. I would recommend listening to every episode of the BP podcast that you can to get an idea of every option available to you along with the risks associated with it.

I just listened to episode 37 of the podcast with @Aaron Mazzrillo and he made a very good case on why wholesaling should not be the thing you start with. Yes, some people get lucky and become successful wholesalers with little money and experience however, to be truly successful, you need to be an expert or at least relatively experienced with

1. Marketing

2. Negotiating

3. Estimating Rehab Costs

4. ARV

5. Networking to find cash buyers

My next question is why is your grandmas house what you're considering? Is it a great flip or rental potential? Is she considering moving elsewhere and wants a quick and easy sale? Or is she just willing to help you out to loan some money?

If the latter is the case, why not bring up the idea of a HELOC with her if she has significant equity in the home to help you get started with say a househack using a 203k loan?

I'll tell you right now, it's going to be nearly impossible to find a private money lender(outside of family and friends) or a HML that will loan to someone with no experience unless they are partnering with someone with experience or have a smoking hot deal that is nearly can't miss. So besides your personal education, I'd still try to get out there and network if you're serious to maybe find partners, or help someone find good deals through bird dogging or something. I would strongly suggest against buying your grandmas house just because she's willing to let you unless you can justify it to 3 experienced investors that you take out to lunch without them cringing and talking you out of it. Best of luck and feel free to reach out.

Bill