0008 Stay Away From Banks and Go To Credit Unions

Source: http://youtu.be/SSTBPFtxyGE

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Are you contemplating investing in real estate? However, you don’t have enough cash to do so. Here is a tip you may use as long as the property seller is willing to negotiate along.

To be fair, not every seller will be interested (or even understand) the concept outlined. Your very best guess is to find a land that the owner has great interest in selling, whether because they are moving, divorce, or frustration with the folks renting the property.

Actually, if you maybe currently renting and considering using this approach perhaps your landlord would be happy to assist you! There are a few variations that could be used depending upon you and your vendor. Do they desire the market price or are they just desperate to get out of the monthly payments – maybe facing foreclosure?

The easiest way is to take over their mortgage payments – called ‘assuming’ the mortgage. You will have to be approved by the initial lender to presume the mortgage. If you can’t get approved for an assumable mortgage you may as well try a ‘subject to’ assumption where you merely make obligations while the property stays in the seller’s name.

You take over the original mortgage and create a second mortgage on the remaining cost of the house with the seller. Offer a high, interest-only payment for a short time period – 2 or three years. Instead of having the money sit down in a bank they could be collecting a high interest over 2 or 3 years with the remainder due in full at the end of the term.

When the term ceases you should be able to refinance the cost, or perhaps you could sell. Unless you hit a genuine bad market the value of the house should have risen by then.

A lot of mortgage lenders merely want to make a good investment. While your local bank may still be scared there are a lot of financial lenders that would like to make a deal. Financiers like property investing. The mortgage is usually around 60-70% of the value of the land, so as long as they understand they get their money back in the value of the land if you default, they don’t care what sort of income you make. Complete the deal with a 2nd mortgage done with the seller. If you default they can still foreclose on the property and sell it, paying off the existing mortgage with the proceeds.

Now you can see the whole picture. It is good that seller and buyer may work together. In the event they can’t wait for a sale, you can still give them their asking price with a little overall flexibility on their part.

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