3 Proven Methods for Minimizing Risk in Real Estate

Source: https://thinkrealty.com/3-proven-methods-minimizing-risk-real-estate/

We’ve all heard the saying, “There’s no reward without a little risk,” but that doesn’t mean you have to bet the house every time you do a real estate deal.… more

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Are you thinking of investing in property? However you do not have enough money to accomplish this. In this article 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 very best guess is to find a property that the owner has great interest in selling, whether because of moving, a divorce settlement, or they are frustrated with the people renting the place.

Actually, if you are currently renting and thinking about using this approach perhaps the owner would be glad 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 from the monthly payments – maybe facing foreclosure?

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

You take over the original mortgage and get a 2nd mortgage on the remaining cost of the property with the seller. Offer a high, interest-only payment for a short time period – two or 3 years. Rather than having the money stay 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 term.

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

Most mortgage lenders merely need to make a great investment. While your local bank may still be lacking confidence there are a lot of financial lenders that would like to make a deal. Financiers prefare real estate. The mortgage is usually around 60-70% of the value of the property, 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 sort of revenue you make. Complete the deal with a 2nd mortgage done with the seller. If 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 they can’t wait for a sale, you can still give them their asking price with a little overall flexibility on their part.

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