Comments on: Buying Bank-Owned Properties: When Homes Need Repairs http://www.lendingclarity.com/2008/04/18/buying-bank-owned-properties-when-homes-need-repairs/ Home loans made easy Thu, 20 Nov 2008 15:57:13 +0000 http://wordpress.org/?v=2.3 By: Catherine Coy http://www.lendingclarity.com/2008/04/18/buying-bank-owned-properties-when-homes-need-repairs/#comment-13509 Catherine Coy Sun, 20 Apr 2008 03:30:12 +0000 http://www.lendingclarity.com/2008/04/18/buying-bank-owned-properties-when-homes-need-repairs/#comment-13509 If the house is purchased at a significant discount to "after rehab value," the would-be homeowner can get a "hard money loan" to (a) purchase the property and (b) also borrow fix up money. Upon ownership, the homeowner would fix the property to bring it to (a) minimum standards for health and safety and possibly (b) neighborhood norm. Then the homeowner would refinance the property to (a) pay off the hard money loan and (b) put a market interest rate in place. A potential problem with this strategy is that (a) interest rates may be higher after the homeowner has fixed up the property; or (b) there may be seasoning issues and (c) the homeowner's circumstances may change, thereby rendering him/her un-financeable. Using hard money is a viable strategy but, in the current chaotic marketplace, not a guaranteed successful one. If the house is purchased at a significant discount to “after rehab value,” the would-be homeowner can get a “hard money loan” to (a) purchase the property and (b) also borrow fix up money.

Upon ownership, the homeowner would fix the property to bring it to (a) minimum standards for health and safety and possibly (b) neighborhood norm.

Then the homeowner would refinance the property to (a) pay off the hard money loan and (b) put a market interest rate in place.

A potential problem with this strategy is that (a) interest rates may be higher after the homeowner has fixed up the property; or (b) there may be seasoning issues and (c) the homeowner’s circumstances may change, thereby rendering him/her un-financeable.

Using hard money is a viable strategy but, in the current chaotic marketplace, not a guaranteed successful one.

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