Disruptions are a Good Thing

Source: https://thinkrealty.com/disruptions-good-thing/

Over time, we are taught and trained in school, at work, or at home, that we need to eliminate distractions so we can focus. That this is the only way… more

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Are you contemplating investing in real estate? However you do not have enough money to do so. Here is a tip you may use as long as the person selling the property is willing to negotiate along.

To be fair, not all sellers 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 of moving, a divorce settlement, or frustration with the people renting the place.

Actually, if you are currently renting and considering using this technique perhaps your landlord would be happy to assist you! There are some variations that can be used depending on you and your owner. Do they want the market price or are they just desperate to get out of the monthly payments – perhaps facing foreclosure?

The simplest way is to consider taking over their mortgage payments – called ‘assuming’ the mortgage. You will need to be approved by the first lender to presume the mortgage. If you can’t get approved for an assumable mortgage you could as well try a ‘subject to’ assumption where you merely make repayments while the property stays in the seller’s name.

You take over the original mortgage and create a 2nd mortgage on the remaining cost of the property with the seller. Offer a high, interest-only payment for a short time frame – two or 3 years. Rather than having the money sit in a bank they could be getting a high interest over 2 or 3 years with the remainder due in full at the end of the investment term.

When the term draws to a close you ought to be able to refinance the cost, or else you could sell. Unless you hit a genuine bad market the value of the property should have risen by then.

A lot of mortgage lenders merely want to make a good investment. While your local bank could still be lacking confidence there are a lot of financial lenders that would wish to make a deal. Financiers prefare property investing. The mortgage is mostly around 60-70% of the value of the land, so as long as they know they get their money back in the value of the land if you default, they don’t care what kind of revenue you make. Complete the deal with a second mortgage created with the seller. If you default they could eventually foreclose on the property and sell it, paying off the existing mortgage in the proceeds.

Now you can observe the whole picture. It is better that seller and buyer can work hand in hand. If they can’t wait for a sale, you could still give them their initial price with a little overall flexibility on their part.

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