OfflineOk my father wants to buy a foreclosure in Florida for cash. Their asking price is 90,000 for it, my dad is making an offer of 85,000 for it, and will pay CASH.
What i want to ask is, lets say he does get the house and after repairs the appraised value of the home is let's say 125,000 dollars.
My father's plan is too hold this home as a "long term" investment and collect rent for monthly cash flow and not for a quick profit.
My question is though (sorry for the lengthy post) is lets say it does get appraised around $120,000, how would a HELOC work in this situation? Does my father get $120,000 in EQUITY?
If he does get that much EQUITY, how long does he have to pay it back? Cause i want my father to pull out the EQUITY to buy more foreclosures down in Florida.
Greatly appreciated if anyone can answer this important question for me! Thanks!
"Whenever you find yourself on the side of the majority it is time to pause and reflect."
-Mark Twain
A HELOC (Home Equity Line of Credit) is usually only available on owner occupied homes. If your father wants to rent this home he might want to look into doing the fix-up and then applying for a non-owner occupied mortgage refinance. Some banks may require that you own the home for 6 months or a year prior to refinancing. This is called seasoning. In the event you find a small local bank they may not care about seasoning and may be willing to borrow you in a mortgage refinance up to 70% of the appraised value. I hope this helps. Believe and Achieve!
- Joe
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Thanks for the info Joe.
I remember reading in BARM that a good mortgage broker can find you a loan without the "seasoning."
Perhaps my dad can start there.
"Whenever you find yourself on the side of the majority it is time to pause and reflect."
-Mark Twain