I may have originally posted this in the wrong place. I didn't get a reply. Then I was prompted to start a new Forum Topic.
Here's what I posted a couple of days ago (3/4/09)under "Ask a Question." Wrong place huh....? I'm still learning the website.......
This is my first post. I have just signed up and received the "Profit from Real Estate Right Now" and "Be a Real Estate Millionaire" books which I am currently reading. My reason for getting in you ask? Well, here's my situation. I live in Michigan and have a small business which is strongly connected to the automotive industry. I'm still struggling along with the business, but with the declining economy and struggling auto industry you might be surprised to know I'm looking for other means of income. My credit's in the crapper and my bank isn't going to loan me any money anytime soon. I have two (yes two) mortgages in addition to the original promissory note owned by a relative which of course puts my original house "upside down" according to lender terms.
So here's more good news, I've been separated for a good period of time and live in a friend’s house and pay rent. He has filed Chapter 13 and the house I'm currently living in is in foreclosure. I see an opportunity here but with no credit it seems all but impossible for me to purchase this property. Additionally, I didn't know about the situation until I recently got the foreclosure notice taped to my door. It was to be sold by auction today (3/4/09) but I'm told that because of the President's real estate moratorium the sale has been delayed until the moratorium has expired or lifted. I thing that's within the next couple of weeks. So here I am with an opportunity in my lap and no credit and I don't know what to do. It seems time is of the essence. Any suggestions?
Your help is greatly appreciated.
Okay now the update. Yesterday, I spoke with my bank to see if there was any possibility of getting a loan for this house. They ran a credit score and it was fair at best. They also said my credit to income ratio must be at least 45% before even thinking about getting an approval. I'm not even close. And they want 20% down, which I have but using it would put me at risk since my income is intermitant (project-to-project).
I'm thinking that I may just move back into my original house (regardless of the personal situation) and buy this property as an income property. If I go that way, area rentals are going for $750-1000/mo for plain Jane houses. This one is in a great location (2 blocks from everything you'd need), plus it has a pool and a full finished basement w/wet bar and 1/2 bath. There's around $140K owed but comps are going in the $50-75K range. If I can pick it up for $50K, the payment would be around $660/mo including taxes and insurance. If I could get $1000/mo that's $440/mo positive cash flow. The bank wasn't buying that strategy either.
So now, what's a fledgling rookie REI to do? With no bank support, is this one too far gone? Or, is there still a way for me to get this property? Or should I step back and rethink my approach? Any suggestions?
Thanks in advance to all.