Investing Where it Makes Sense Rather than Where You Live with Kira Golden – Podcast Episode #106

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This show today will change the way you think about where to invest. My guest is Kira Golden the CEO of Direct Source Wealth, and we’re going to dive into investing where it makes sense (which may not be where you live). Kira took a bold step of investing outside of where she lived in […]

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Are you thinking of investing in real estate? But you do not have enough cash to do this. Right here is a tip you are able to use as long as the property seller is willing to negotiate along.

To be fair, not all sellers will be interested (or even understand) the concept outlined. Your better guess is to locate a property that the owner has great interest in offering it, whether because of moving, a divorce settlement, or frustration with the people renting the place.

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

The easiest way is to take over their mortgage payments – called ‘assuming’ the mortgage. You will have to be approved by the initial lender to assume 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 first 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 – 2 or 3 years. Rather than having the money stay in a bank they can 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 draws to a close you need to be able to refinance the cost, or perhaps you could sell. Unless you hit a real bad market the value of the property should have risen in that time.

A lot of mortgage lenders merely need to make a good investment. While your local bank could still be lacking confidence there are a lot 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 land, so as long as they understand they get their money back in the value of the estate if you default, they do not care what kind of revenue you make. Conclude the deal with a 2nd mortgage created with the seller. If you default they could still foreclose on the property and sell it, paying off the existing mortgage with the proceeds.

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

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