Hi,I need some help please on a likely upcoming Distressed Property that will be for sale , and how the Deal would work The Current situation:The Property is Distressed and will need estimates of  $25,000 in repairsAll other LIKELY expenses  ( Lien paid off / Back axes paid / Money the Seller is wanting from the sale in the form of Cash / Closing Costs / Pre-Paids )  =  $70,000 I will either Purchase it as a Primary or as an Investment Property  ( My Money situation come the time of purchase will help decide which route I go  )Since I will be buying the Property from " Scratch " , and that $25,000 in repairs/renovations HAS TO be done How would this Purchase / Transaction work please ?

If the seller pre paid for the entire year, then based on the closing date, the buyer will have a debit (they will have to pay, beyond the closing date) and the seller will get a credit, for what they paid beyond the closing date. 

But I'm still curious about this requirement for the delayed financing program:The new loan amount can be no more than the actual documented amount of the borrower's initial investment in purchasing the property plus the financing of closing costs, prepaid fees, and points on the new mortgage loan (subject to the maximum LTV, CLTV, and HCLTV ratios for the cash-out transaction based on the current appraised value).From what this says, it's not really a cash-out refinance? 

In order words, a taxpayer who, in 2017, pays an income tax that is imposed for a tax year after 2017, can't claim an itemized deduction in 2017 for that prepaid income tax.

Brandon Hall It appears that they are not permitting a deduction for prepaid state income taxes.So I would say yes prepay for property tax and mortgage interest but not state income tax.

I have about 8-10k cash of the 15 the bank wants to cover prepaids, 20% down, and closing costs. 

Here are my assumptions:Monthly Rent: $1,700 (1% rule - check)Price: $180,000Mortgage: $153,000 (@ 5%)Down Payment: $27,000 (15%)Closing & Pre-Paids: $3,600 5% cap ex5% repairs5% vacancy8% realtor/property mgmt feeNet monthly cashflow: ~$126 after taxes/insurance/water/debtSo my question is, am I thinking about this the right way?

But I am not clear if they currently use a straight up LTV or the actual cost of buying and fixing.Fannie Site"The new loan amount can be no more than the actual documented amount of the borrower's initial investment in purchasing the property plus the financing of closing costs, prepaid fees, and points on the new mortgage loan (subject to the maximum LTV, CLTV, and HCLTV ratios for the cash-out transaction based on the current appraised value)."

@Ronald Rohde total closing costs $8,600. to include 12 months prepaid INS.

Ask the owners (or their agents) if anyone had prepaid their rent for __ months.