All Forum Posts by: Care Peel

Ok. I think I've figured out how to pay with cash up front. I can use a HELOC for some cheaper homes starting out.

But I don't know how closing will work now. I'm guessing I'll need a lawyer who will do a title search etc.. to make sure there are no issues with buying the house etc...

What else will I need?

I guess I need to know what closing costs I'll have to pay and essentially how to protect myself just as I would be if a bank were handling this for me. Can anyone point me in the right direction?

I was about to ask a similar question on the newby forum. :)

I backed out of a short-sale deal a couple of weeks ago because I paid to get the home inspected and they found about 15K of repairs that needed to be done that the seller 'failed to mention'. Something was up. On the disclosure the sellers said that the heat and a/c were working.

It wasn't true. Neither could even be turned on and had to be fully replaced. Several other problems too. In the end, the repairs added up and made the offer one where I couldn't get my money back out of it.

This week I looked at a home from a local wholesaler.

They have an inventory of homes they sale and many are not occupied. There was no power etc.. on the home when I walked through it.

They're asking if I want to make an offer. And at face value, it looks like a pretty good deal. I haven't completely finished crunching the numbers. But at first glance, I think it is going to be profitable.

But the problem is I really don't know because I can't inspect the home. They don't really have any disclosure info on the house either. And certainly no 'repair estimate' was mentioned (And I didn't know to ask. Do now though. ) I'm not sure if they own it or how the deal works on their side, but they seem unable to get the power etc... turned on so I can inspect it and just want me to make an offer.

From what I've read on this thread, it looks like this is normal? Not sure. But after what I went through on my last home, it seems pretty risky to buy a home without it being inspected.

These guys have a lot of homes and if all goes well they could end up being a good source for the future but I don't want to ask for an unusual concession if there are a ton of other experienced buyers who will walk through the home and just make an offer.

Is it totally unacceptable be ask to be allowed to inspect it? What's the standard operation procedure here? :)

Chris Mason said:
If you can be a cash buyer, be a cash buyer. They get their pick of the litter of homes AND generally can expect a discount relative to what a financed buyer would pay.

Then, the day after closing, go apply for a cash out mortgage to recoup your capital.

I'm a little confused. You're suggesting you do a cash-out refi before you do any repairs?
So, if you're using the brrrr method, you would do two cash out refis? The last one being after you've repaired/rented the home?

Is this common? I'm going to go crunch some numbers on some deals I've lost and see how this would have worked if I had paid cash with my heloc. 

I spent months trying to get this deal and ended up walking away mainly because I couldn't see how to get my money back when I tried to do a cash-out refi. I would think buying a home with an ARV of 78K for 45K would be a good deal. But apparently, either you have to buy with cash, it is a bad deal, or I don't know what I'm doing. :-)

Notice the max offer should have been 41K.
I could only drop to 45K or the bank wouldn't finance it. Too small. Not worth their time. (conventional loan)

Here are the numbers:

I could have got it for 45K.

I would have done it except I was using my HELOC to make the down payment.

It would have been at 7% interest. 

I could have bought the house for cash (HELOC) but didn't have money for repairs if I did.

My main questions:

1. What did I do wrong? Right after I walked away another investor bought in a matter of days.

2. When you do the cash-out refi, should I expect to get all my money back? Or is having $6k left to pay back on the heloc normal/acceptable?

Yes... I'm a newby looking for some direction.

Thanks for any insight you can provide.