All Forum Posts by: Jeff Grove

@Simon Obas -- I think there's an important distinction to make from the information you provided in your original post. You mention that the property doesn't cash flow, but you plan to house hack for the first year. If the property doesn't cash flow, but you are living in it and have your expenses paid by rent (or even pay a small expense), it sounds like you'd be golden. When you leave the property, that unit can be rented and will provide you cash flow that likely makes the situation appealing. If the property does not cash flow with all units rented (and you not living there), there's less meat on the bone, so to speak, and requires further analysis. 

Hi @German Vellon - I'm in a similar situation...from up north like you (Boston area), but relocated to Tampa and have called it home for quite some time. These types of lending/financing questions are what I work with and advise on every day. If you have questions or would want to discuss financing options with a local lender, I'd be happy to offer any insight I can. 

Good luck with the move!

-Jeff

@Eric Sax - So, I am from the Boston area...grew up in Peabody on the north shore. However,  I have lived in Tampa for over a decade and actually work for a bank located in Ybor. I'm right on 7th Ave across from Columbia Restaurant. I handle residential finance and do construction lending, but only on primary residence and vacation properties. However, I work very closely with one of my business/commercial bankers and sent him your message, asking if he'd be interested in speaking with you about financing the deal if I could make a connection. Let me know if you'd be interested in chatting with us and I can arrange a phone call or even a meeting if you happen to be in the area. Thanks!

Hi @Len Miller,

@Shaun Weekes is correct. Condos (particularly in FL) have a little more of a speculative nature to them. Conventional lending guidelines (Fannie/Freddie), will only lend on 'warrantable' complexes. All of the reasons your lending is advising they can't lend on your property are true. Had you try to finance the purchase with a mortgage, this would have come up as an issue then. 

If this is by any chance your primary residence or vacation home, you may want to look into a HELOC/HELOAN. Typically, a condo approval process isn't associated with this type of financing. If it's an investment property, you'll need to get a bit more creative. As @Derek Dombeck mentioned, a hard money or private mortgage would be the most likely path. 

Did this happen? The address was an office for a trailer park. The lights were off and the door was locked. Didn't seem like anyone was there...

@Daniel Sherman You may be referring to something called "delayed financing". This is usually done where buyers need to close quickly or want to make their offer stronger by being a cash buyer, but still have intent on financing the property. The idea is to get the property under contract and close, then worry about financing after you take title to it. Fannie Mae guidelines allow for delayed financing where you can then take cash out up to 75% of the purchase price of the property. The seasoning requirement is 6 months. After that time, you can use an appraisal to determine value as opposed to the purchase price. 

If the property is in good shape as-is and is otherwise a normal deal, there typically isn't a need to do this. Simply get pre-qualified, make an offer and close in a month or so. The downside to using delayed financing is it involves two closings as opposed to one, so there likely will be more costs involved. 

Hi Dan,

I'm not sure what the best option is, but this may help narrow down your options...financing a fixer-upper using a VA loan (or any conventional financing) will pretty much limit you to properties that only need cosmetic improvements. Essentially, you need a property in habitable condition where you would get an "as-is" appraisal and not subject to a bunch of work being done. If you're looking to create value through the work you put into a property, it may be wise to use your proceeds from the sale to pay cash. This obviously doesn't limit your options of properties to purchase, which will help your search. You could then refinance after the work is complete to get some cash back. It's essentially the BRRRR method, but you'd occupy the property instead of renting it out. Hope that helps...

Hi @Robere Istatia - There are a few other layers to this, such as debt/income and LTV, but assuming credit scores are the only issue, there is a potential option. There are some lenders that can originate and close FHA loans with credit scores in the 500's. Typically, with those scores, they'll want to see 10% down instead of the standard 3.5%. I found a quick article that speaks to this:

https://thelendersnetwork.com/fha-loan-credit-scor...

I thought this would appear in the post, but I bought in June of '04 and sold in July of '06. Certainly pertinent info...

Investment Info:

Single-family residence buy & hold investment in Lehigh Acres.

Purchase price: $75,900
Cash invested: $15,180
Sale price: $129,500

This was a condo I rented for two years. I got very lucky with timing. Shortly after a hurricane had some minor damage to some other units (the condos were built in the 80's), the condo HOA voted to become a 55+ community. Assuming this would significantly reduce a potential tenant pool, coupled with the scare of the storm, I decided to sell just before everything took a dump.

What made you interested in investing in this type of deal?

I financed a mortgage for my parents as they had previously bought in this community as a vacation home. After visiting, I realized I could buy a nice little condo where 20% down was only $15k. The rent carried the expenses and I used a local PM to manage. I did see the property, but only twice in 2 years.

How did you finance this deal?

Conventional. Took a 5/1 ARM at a great rate.

How did you add value to the deal?

I didn't.

What was the outcome?

My pockets got bigger. More luck than skill for sure, but I like to think I recognized the head wind causing my decision to sell and take the profit.