Loan for auction property ?

[workingprogress]

Can you get a loan for auction property ?  There is a small 1 house and 38 acres of land coming up for auction next month and I would love to have it but my obly way of getting it is getting a loan for it. Is this possible and is it complicated task ?

[Revelate]

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@workingprogress wrote:

Can you get a loan for auction property ?  There is a small 1 house and 38 acres of land coming up for auction next month and I would love to have it but my obly way of getting it is getting a loan for it. Is this possible and is it complicated task ?

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I once looked into it but you basically need to bring cash to the table for auctions period, and there may need to be proof of source.  I'd check really hard into it personally.

Anyway you can get an unsecured loan up to 100K, whether this is acceptable for throwing at the auction in terms of source not sure, again check hard before doing it.  IF you can do it, get the house, then do a cash out refinance effectively immediately to get out from under the unsecured loan which is going to be at a punitive rate compared to even the cash out refinance.

[StartingOver10]

Auctions are cash only.  

Some people get hard money and then finance when they own the property - perferably after the fix up is done.

[workingprogress]

 edit.......................................meant to be a quote.

[workingprogress]

Revelate......Thanks for the reply. I'm little confused at trying to understand what your saying. I understand you say try to unsecured loan up to 100k to throw at throw at the auction. Then if I can get it refiance it into mortagage terms ? And didnt understand what you meant cash out and the secured loan you mentiomn at the end. Care to explain ? I'm complete newbie at how these loans for homes work.

[workingprogress]

Startingover10.....When you say hard money.. Do you mean just going to a bank and asking for 100k loan and tell them its for a auction property  ? Another thing could I get the hard loan from one bank and refiance it into a mortgage from anotrher bank ? The bank i bank with doesnt isnt very good qith mortagages. Lot better companys out there then the one I use to bank with.

[StartingOver10]

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@workingprogress wrote:

Startingover10.....When you say hard money.. Do you mean just going to a bank and asking for 100k loan and tell them its for a auction property  ? Another thing could I get the hard loan from one bank and refiance it into a mortgage from anotrher bank ? The bank i bank with doesnt isnt very good qith mortagages. Lot better companys out there then the one I use to bank with.

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No.  

Hard money is money from private individuals - it is called hard money because the rate is high, the LTV is low  and the terms are short.  It is not a good loan for the long term. It is used by investors to purchase and fix and flip a property if they don't have 100% of their own cash.  The LTV is usually less than 65% of the purchase price. Or if you do fix up the property you can then pay off the loan with financing it with a regular mortgage after it is repaired.

You don't get these from a bank.  You can go to a mortgage broker and they may or may not have a source for hard money. Don't do an internet search - all the crazy scammers come out of the woodwork if you do. 

Join an investor group in your area to see who is the hard money source in your area.

Auction properties are cash - usually the condition of the property is not financable either - so you will have to have funds for fix up. There also may be title problems due to liens and encumberances. You would need to have a title search done before you bid so you don't find yourself in a big money pit. 

[Revelate]

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@workingprogress wrote:

Revelate......Thanks for the reply. I'm little confused at trying to understand what your saying. I understand you say try to unsecured loan up to 100k to throw at throw at the auction. Then if I can get it refiance it into mortagage terms ? And didnt understand what you meant cash out and the secured loan you mentiomn at the end. Care to explain ? I'm complete newbie at how these loans for homes work.

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That's because I screwed up, I meant unsecured in that message... meaning, a loan not secured by an asset, in this case the property.

It's what S10 stated much better than I could, get the house, fix up, then refinance getting a new loan secured by the house at a tremendously lower rate than the hard money loan.  Cash-out refinance just means you're taking cash out of the asset, so going from 100% ownership/equity to 20% and you get 80% in cash (roughly, origination fees notwithstanding) and you use that to pay off the loan you took for the auction.

[workingprogress]

Thanks guys for the replys. Here is where I'm at now into this. I live in a small area and I can't seem to find a hard money lender. Any tips for finding that ?

I called a couple local banks and the highest personal loan they offer was $30.000. Called another that was offering 100% finace loan but they said they couldn't do it because the place up for auction is 31 acres. They said the 100% fiance loan couldnt be over 10 acres.

Now this property I'm looking at shouldnt go for more then $60.000.. I'm thinking it will go between $40.000 to $50.000. Property in my area doesnt go for a lot.

Now the day of the auction they request 20% of the whatever it goes for and they will give you 30 days to pay the rest. The auctioner I spoke with said he would allow more time if I was going through a bank.

I was wondering could I get a personal loan so I could have the money to pay the 20% down at day of auction and then go straight and redo thta into a mortgage or would that be possible ? Please advise and if you have anu tips please share them. I really want this property!

[StartingOver10]

You might check out real estate investment clubs in your area to see where they get the funds to purchase. Like I said your best bet is private funding or maybe even a small local bank in your area. However the bank will want to see the source of your 20% down payment and if you borrow that 20% then I don't think you will be able to finance the rest because that would be 100% financing. Private money doesn't care where you get the down payment from, but they limit their exposure to about 65% of the value of the property.