Today I want to talk about getting inside the mind of the executor. Probate investing is my favorite real estate niche of all. This group of sellers is very motivated to sell any property in the estate. Once you can understand the seller’s viewpoint, it’s easy to see that investors provide a much needed service […]
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Are you thinking of investing in real estate? But you don’t have enough money to do this. Right here is a tip you may use as long as the person selling the property is willing to negotiate along.
To be fair, not every seller will be interested (or even understand) the concept outlined. Your very best gamble is to find a property that the owner has great desire for offering it, whether because they are moving, divorce, or frustration with the people renting the place.
Actually, if you are currently renting and considering using this strategy perhaps the owner would be glad to assist you! There are a few variations that could be used depending upon you and your seller. Do they want the market price or are they just desperate to get out from the monthly payments – maybe facing foreclosure?
The easiest method is to consider taking over their mortgage repayments – called ‘assuming’ the mortgage. You will have to be approved by the original 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 repayments while the property remains in the seller’s name.
You take over the first mortgage and get 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 3 years. Rather than having the money sit in a bank they could be collecting a high interest over 2 or 3 years with the rest due in full at the end of the term.
When the term ends you need to be able to refinance the cost, or perhaps you could sell. Unless you hit a genuine bad market the value of the property should have risen by then.
Most mortgage lenders merely want to make a great investment. While your local bank could still be scared there are plenty of financial lenders that would wish to make a deal. Financiers prefare property investing. The mortgage is usually 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 property if you default, they don’t care what kind of income you make. Conclude the deal with a 2nd mortgage created with the seller. If you default they could eventually foreclose on the property and sell it, paying down the existing mortgage in the proceeds.
Now you can see the complete picture. It is good that seller and buyer may work hand in hand. In the event that they can’t wait for a sale, you may still give them their initial price with a little versatility on their part.