The Fear of More Money

Source: http://youtu.be/1djsE5I10Ro

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Are you thinking of investing in real estate? But you do not have enough cash to accomplish this. Right here is a tip you are able to use as long as the property seller is willing to negotiate along.

To be fair, not every seller will be willing (or even understand) the concept outlined. Your best wager is to find a property that the owner has great interest in offering it, whether because they are moving, divorce, or they are frustrated with the people renting the place.

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

The simplest 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 could also try a ‘subject to’ assumption where you merely make payments while the property stays in the seller’s name.

You take over the first 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 frame – 2 or 3 years. Rather than having the money sit down in a bank they could be collecting a high interest over two or three years with the remainder due in full at the end of the term.

When the term draws to a close you ought to be able to refinance the cost, or else you could sell. Unless you struck a real bad market the value of the house should have risen in that time.

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

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

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