We have been researching hard money lenders for a possible deal we stumbled upon while talking to a prospective RE agent.
She had a property that fell out of escrow (nervous buyer) that was supposed to close on 7/3/2010. It is an REO on the market for more than 4 months. All inspections were done, including termite. The subject property is in a nice neighborhood near a hospital, with many rentals in the area. The appraisal for this property came in at $134,900. The listing price is down to $99,900. It does need a new roof. Our agent shared that the bank took it back with a first mortgage of only $65,000 but didn't know if there was a second on it. It is a 3/2 with garage, remodeled in and out in 1985. Comps in the area are for $120K to $140K, all with less sq ft. Rental rates are $1,100 in this area. We are putting in our offer at $70,900 with a quick closing, and our goal is to pull out some cash at closing for the repairs, etc. Then do a refi to payoff the HML and put some additional cash in our pocket while renting the property out.
As we looked over HML, we saw many are asking for large down payments. If we had a large downpayment, we would go the traditional route of a bank and mortgage! Has anyone else encountered this with HML? Or is it just out here in California?
We also wanted to know if anyone has had a deal where they used a HML and took some cash at closing when there was a ton of equity in the property.
Thanks everyone for your input!!