2nd Offer Today

2nd Offer Today

I mentioned in another post I was drawing up the paperwork on an offer of a 4 unit with some seller financing (listed for $180k, comps are $220k). 2 blocks away I came across a REO 4 unit. Listed at $160k, did a walk through with realtor - needs everything but cladboards! Bank is in Texas (this is in Vermont) so I imagine they're looking to deal. Went through the repair numbers and came to $75k. So submitted the offer at $50k on the $160k listing. On my side if accepted $45k purchase loan (will put 10%) down) plus the $75k for repairs = 120K loan on a $220k comp property. So going to the bank with those numbers looks good. I put in the offer a detailed letter of how it needed everything and why I was submitting it for $50k. Deadline for them to respond is Friday, 6/12! - Tom



This REO sounds like it may be a good deal if the bank accepts your offer. Did you get any word on Friday? If they did not check in and see wha tthey have to say Monday. If there is no other intrest then ask you real estate to resubmit the offe later in the week. Sometimes a banker's motivation can change day to day or week to week. Good luck. Believe and Achieve! Smiling - Joe


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Great Offer

Hi Tom,
Congratulation's to you on your offer. Sounds like a great strategy! Much success to you...........Lubertha




We are waiting for the good news !! Can't wait to hear from you.

Way to go !!

Paul Smiling


Hi Everyone - sorry it took me a while to respond - lots going on! A quick background on me: I'm a buy and hold investor, renting out the properties. I generally do a good amount of research before submitting an offer so even an offer or two in a month is a fair amount for me. However, I take a lot of time to put together facts and numbers on the property, put in at a good discount, and get an accepted offer for about every 5 offers submitted. Then I have to rehab and rent the place, so about 1 purchase per year. I started out with a few books and RE courses 5 years ago, and tend to picks up a few tips from each one. Dean's books have been great as well and the best ones so far!

Onto this offer: I offered $50k on a place listed for $160k. Got the response today that another offer came in and they accepted that one BUT they took mine as a back up offer. So apparently I wasn't too far off on the price. As the place needs a good amount of work there's definitely a good chance the accepted offer by the other party may fall through. So just waiting. No money tied up with the backup offer so no harm.

And it gets better...while doing some more research Monday waiting on this, came across a HUD property (HUD.gov) that's a duplex, needs comestic repairs, already appraised and inspected by the gov't, and all that info was on-line. Appraised for $102k, they had it for $66k and it was just listed. Put in an offer for $50k and the gov't responded within 24 hours...and they accepted!! So I'm pysched! Best part - only $500 deposit required, and I have 60 days to obtain funding and close. So today I'm setting up appointments with contractors for estimates! - Tom


Way to go! I wish you continued success!!

I have a question though. When you go for financing on your properties, are you doing it as you, Tom, or are you set up into an LLC? Is your business completely separate from yourself financially? I'm just getting into this and am interested in how others are handling the money end of the deal.


Thanks for the feedback! I do my financing as myself (Tom). I haven't set up as an LLC yet, although I do carry a $2M umbrella policy - it's quite cheap - about $600 per year. In my few posts so far, I mentioned that building relationships through local banks is the way to go. They generally don't resell the loans, as the ones that do (Citibank, Bank of America, mortgage brokers, etc) then have to conform to stricter rules such as credit score and cash reserves.

Furthermore, I prefer commercial financing, which means it's much more dependent on the property itself. The rate may be slightly higher (6% or so), but in this deal, the place is appraised at $102k and I'm buying it at 50K (46,500 actually because they're giving a credit for some repairs). At a 50% Loan-to-Value, it's easier to get an approval. Same deal for seller financing. If you can get a deal where the seller will carry 20%, and it's far under value, the banks don't care as much about the seller financing. In my other post, I was looking for a $130k loan (1st mortgage) on a $220k property. The seller would sell at $160k, and carry a $30k 2nd mortgage ($130k 1st and 30K 2nd = $160k total sales price = 100% financing). The bank's position is that they have a 1st mortgage at 55% loan-to-value so they're fine.

One final note - make sure the property is cash flow positive. In this deal, I'm estimating $1400 gross rent ($700 each side), $275 mortgage + $300 for taxes, insurance, and maintanance. Good numbers! - Tom


Thanks for sharing and congrats on getting deals done with using little/none of your own money

I just wanted to clarify for some people because I was a little confused at first:

seller holding a 2nd mortgage = seller "carryback" mortgage = "wraparound" mortgage.

All those terms mean the same thing. It's a way for you to get 100% financing when a bank won't. You have the seller give you the money to put down (usually at 8-10% interest) - if they are motivated enough to sell the house they shouldn't have a problem doing this. Search the site for either of these terms and you will find plenty of information

Good Luck,


Hey Tom

Congratulations on making moves! It sounds like you really do your homework. I was wondering if you could explain more about "Commercial financing" and how you went about finding this. I am running into troubles getting financed, but have heard that they loan money based more on the value of the "potential deal" than the buyers financial situation. And thank you VERN for clarifying the 2nd mortgage issue. I too was confused and quite frankly still am a little as to how those types of deals work. Thanks! Can't wait to hear more success stories!


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Way to go

Congrats, my partner and I were talking about a HUD deal we came across and wasn't sure if they would be eager to accept a deal less than 1/2 of what was asked. Thanks for sharing.


Thanks Vern for clarifying the seller 2nd mortgage term but that definitely nails it and is a key for getting 100% financing!

Vaughn - I stumbled into the commercial financing a few years ago because I was trying to get a construction loan to rehab a place and no luck with the mortgage brokers. Everything was restrictive and tons of paperwork. But a broker told me to talk to "so and so" at a local bank. Turns out that person was a VP with sole authority to approve loans to $100k. So I explained that I wanted to do, mainly rehab but submit our invoices weekly and draw on a credit line. I put together a business plan detailing expected rents and expenses, and then with the appraisal showing the After Repair Value, it was approved! The rate was slightly higher - about 1/2 to 1 percent higher, and it gets reviewed every 5 years. That's the main difference with commercial financing. Then for the next deal I went to a different bank (different area the first bank didn't cover), told them want I wanted to do and the terms the first bank gave me, and they matched it! The process is relatively the same as a normal loan except for the business plan, and the loan officer assigned is a commercial loan officer.

- Tom

Update on the HUD Deal

So I got the accepted offer on the HUD deal on Monday (6/15), at roughly 50% of appraised value. Turns out "accepted" is not 100% accepted. I put down a $500 deposit (all that's required of HUD homes < $50k) but they wanted proof first that it cleared my bank. Sent that yesterday.

Today they came back to say they want a pre-approval letter. I explained it goes off the property and I need to submit the rehab plans first, which I won't do for another 2 weeks. I also pointed out the contract says I have 10 days before I even have to submit a loan application. They (HUD) said they don't care - they need a pre-approval letter, even if it doesn't state that in the contract! So I went with Coastal Funding, and submitted that. Waiting to hear back...

- Tom

Keep us posted

@TDSPropertiesVT: Do keep us posted how this deal works out! Could you please explain the business plan you use & why it's required with commercial financing?

@kim_denise: don't be afraid to submit an offer on HUD home; worse they can say is "No". Here's link http://www.hud.gov/homes/index.cfm click on perspective State where you live and then click the link Go to the requested page taking you to external site were you can view all HUD homes for sale in your area by City/County. I believe it'll show you what was the highest net offer (by date) submitted thus far. I know it does for properties in my area. You can also go here http://www.ocwen.com/reo/home.cfm to view all VA homes for sale in your State, by City.


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Hud deals

Did the Coastal Funding helped with the Hud deals for pre-approval? I know many of us use it all the time and it works very well. Can't wait to see how you make the deals so you can motivated others to do the same.

Warm regards,

Paul T. La Moy


Great job on moving forward. If you put in the work you will see the BIG $$$$$! I hope you get your offers accepted. Let us know what happens on friday. All the best! Faith will be rewarded!



This train, Dreams will not be thwarted
This train, Faith will be rewarded
Big wheel roll through fields where sunlight streams
Meet me in the Land Of Hope And Dreams

Bruce Springsteen

Pre-Approval Letter

Thanks everyone for the comments and just wanted to update everyone on how this HUD deal is going! HUD did accept the Coastal Funding Letter so that was sweet! So they initially accepted on 6/15 but turns out the final acceptance was Monday, 6/22 (after HUD officially signed and attorney said we were in contract). 60 days to obtain funding and close from here. HUD's insistance of the pre-approval letter actually bought me an extra week of time. My personal preference is buy and hold, and at the price (45% of FWV) it works. We had to use their selling realtor (they provide a list) and their contract, but my attorney reviewed and said it was good. The only warning was that it's an "as is" sale, which I know already. But gov't has appraised and inspected it, so feel a bit better for now.

From here, next dates are the week of June 29th to have contractors look at the place and put together better numbers. For now, doing my research, calling the town about zoning, and placing ads for rentals to judge rental market.

It's nice to share this and I'll keep you posted. Wishing everyone the best of luck - there are deals out there!

- Tom


Kim - regarding the HUD deal and the price they accepted - like others said - can't hurt to offer! This one said "all reasonable offers considered" and 10% realtor commission" - it was like they knew the words we were looking for. Amazing for HUD to say that, but obviously they wanted to deal. Good luck!

- Tom

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