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I can virtually guarantee NO on the equity swap. Banks want to shed properties not take on additional ones. And as far as financing, homes needing extensive repairs a lot of times will not be eligible for traditional financing.

Therein lies the rub when it comes to a lot of REO's - since most buyers require financing to acquire a home; if the home is not eligible for financing then the bank needs to discount the home low enough to attract a cash offer. On the positive side those with access to the cash can get a phenomenal deal.

I'd recomment looking into an equity loan or cash out refinance on the other home. However if that home is listed for sale or had been listed for sale the last 6 months you're probably going to be ineligible for that so you may have to just wait until you sell the current home.

Best of luck

J
I am confused.

REOs are simply homes owned by lenders. You do not need to have cash to purchase a home. Most homes are purchased using financing, so you simply need to qualify for a loan.

Sounds to me as if this purchase would be a great candidate for an FHA 203K loan that wraps your purchase money and rehab loan in one package. Ask a lender who knows FHA. If it's within the loan limits this could be a very good deal.