Wednesday, November 15. 2006Secret Funds for Investors and Rehabbers
Using Government and Private Programs to Achieve Your Goals
 One of the biggest stumbling blocks in renovating an older home is finding the funds to make the improvements. It comes with the territory. Older homes tend to have a mixed bag of renovation problems from lead paint and asbestos to plumbing, electrical, and foundation issues. Many people don’t have the time or the pocketbook to be able to invest in properties with these "special needs." It’s easy enough for you to find a loan to purchase the property, but what about the additional money needed to make repairs to the foundation or the roof … not to mention updating the existing wood paneling or the 1960s kitchen?FHA 203(k) Loans A lender typically won't give you a conventional loan until specific repairs are made. But if neither party has money to make the repairs, the FHA 203(k) loan may be a godsend. You can even use this loan if you decide to refinance a property you already own, if you intend to make repairs or renovations. Additionally, if your intentions are to be an owner-occupant, this loan can allow for a measly 3 percent down payment. The interest rates and discount points have to be worked out between you and your lender, but this loan can be the vehicle for financing those projects that once seemed out of reach. The basic outline for this process is:
• Find a property. • Execute a contract. • Choose an approved FHA 203(k) lender. • Draw up a proposal of repairs and improvements. • Have an appraisal to determine the value of the property post improvement. • Go to closing. In your contract, just as most contracts include a financing contingency, make sure that you include your intention to use the FHA 203(k) and that the contract is contingent upon receiving approval for that loan. This is a standard part of the forms available through the Texas Real Estate Commission that most Texas real-estate agents use. Partner Up  If the 203(k) loan doesn't work for your business, another alternative is to purchase properties with one or more partners. The financing arrangements can be divided any number of ways; however, you should enter into such an agreement only with partners you know to be trustworthy and financially reliable. Private lenders often will provide funds if they are reimbursed for their investment upon the sale of the property and you split the profits incurred from the sale.Once such company that provides this type of opportunity, endorsed by the Real Estate Investment Club of Austin (REICA) is Networth USA. This company has its headquarters in San Antonio, Texas, and has been in business since 1999. Networth's founder, Richard Pamplin, allows investors who join his company access to his private lenders and literally millions of dollars for real-estate projects. Unlike many real-estate programs, Networth has private lenders already secured and available instead of requiring members to find lenders on their own. If you live in the Austin area and attend a REICA meeting, be sure to ask about Networth. For complete details, call Sylvia at 512-415-8591. Trackbacks
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