Tax Reform: A Closer Look at the Possibilities

Source: https://thinkrealty.com/tax-reform-closer-look-possibilities/

When President Trump was running for office, he made a lot of big commitments. Whether you love him, hate him, or are just trying to ignore the current political climate… more

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Are you thinking of investing in real estate? But you do not have enough money to accomplish this. Right here is a tip you can use as long as the person selling the property is willing to negotiate with you.

To be fair, not all sellers will be willing (or even understand) the concept outlined. Your best gamble is to locate a property that the owner has great interest in offering it, whether because of moving, a divorce settlement, or they are frustrated with the folks renting the property.

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

The simplest way is to take over their mortgage obligations – called ‘assuming’ the mortgage. You will have to be approved by the original lender to assume 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 payments while the property remains 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. Rather than having the money stay 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 need to be able to refinance the cost, or else you could sell. Unless you strike a real bad market the value of the home should have risen in that time.

Most mortgage lenders merely want to make a good investment. While your local bank could still be lacking confidence there are plenty of financial lenders that would like to make a deal. Financiers prefare real estate. The mortgage is usually based on 60-70% of the value of the land, so as long as they understand they get their money back in the value of the estate if you default, they don’t care what sort of money you make. Complete the deal with a second mortgage created with the seller. If you default they could still foreclose on the property and sell it, paying off the existing mortgage in the proceeds.

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

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