Woman: Vena Jones-Cox
Company: You Buy Houses
Place in the Industry
Vena Jones-Cox has been investing in residential real estate in the greater Cincinnati area full-time since 1989, and she’s… more
The post Woman To Watch: Vena Jones-Cox appeared first on Think Realty | A Real Estate of Mind.
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Are you thinking of investing in real estate? However, you do not have enough cash to do so. Here is a tip you are able to use as long as the person selling the property is willing to negotiate along.
To be fair, not all sellers will be willing (or even understand) the concept outlined. Your better gamble is to find a property that the owner has great desire for selling, whether because of moving, a divorce settlement, or frustration with tenants.
Actually, if you are currently renting and thinking of using this technique perhaps the owner would be glad to assist you! There are several variations that could be used depending on you and your seller. Do they need the market price or are they just eager to get out from the monthly payments – perhaps facing foreclosure?
The easiest way is to consider taking over their mortgage payments – called ‘assuming’ the mortgage. You will need to be approved by the first lender to assume the mortgage. If you cannot get approved for an assumable mortgage you could also 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 get a 2nd mortgage on the remaining cost of the house with the seller. Offer a high, interest-only payment for a short time period – two or 3 years. Rather than having the money sit down in a bank they can be getting 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 need to be able to refinance the cost, or else you can sell. Unless you struck a real bad market the value of the property should have risen in that time.
Most mortgage lenders merely want to make a great investment. While your local bank could still shy away there are lots of financial lenders that would want to make a deal. Financiers like real estate. The mortgage is mostly based on 60-70% of the value of the property, 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 kind of money you make. Complete the deal with a second mortgage created with the seller. In case you default they can still foreclose on the property and sell it, settling the existing mortgage with the proceeds.
Now you can see the entire picture. It is good that seller and buyer can work together. In the event that they can’t wait for a sale, you may still give them their initial price with a little overall flexibility on their part.