Panel in Print: Hard Numbers and Real Deals

Source: https://thinkrealty.com/panel-in-print-hard-numbers-and-real-deals/

At the end of the day, it’s all about the numbers for real estate investors. However, those numbers can look very different from deal to deal even if each of… more

The post Panel in Print: Hard Numbers and Real Deals appeared first on Think Realty | A Real Estate of Mind.

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Are you contemplating investing in property? However you don’t have enough money to do this. Here is a tip you may 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 very best wager is to find a property that the owner has great interest in offering it, whether because of moving, divorce, or frustration with tenants.

Actually, if you are currently renting and thinking of using this technique perhaps your landlord would be glad to help you out! There are a few variations that could be used depending upon you and your owner. Do they want the market price or are they just eager to get out of the monthly payments – maybe facing foreclosure?

The easiest method 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 cannot get approved for an assumable mortgage you may 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 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 can be getting a high interest over 2 or 3 years with the rest due in full at the end of the investment term.

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

Most mortgage lenders merely want to make a good investment. While your local bank could still be scared there are plenty of financial lenders that would like to make a deal. Financiers prefare real estate. The mortgage is mostly around 60-70% of the value of the property, so as long as they understand they get their money back in the value of the property if you default, they don’t care what kind of money you make. Complete the deal with a 2nd mortgage created with the seller. In case you default they could still foreclose on the property and sell it, settling the existing mortgage in the proceeds.

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

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