Disruptive technologies are changing the face of the globe, and one that could revolutionize transportation would also be a monumental game changer for real estate. The high-speed Hyperloop system would… more
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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 can use as long as the person selling the property is willing to negotiate with you.
To be fair, not every seller will be willing (or even understand) the concept outlined. Your best gamble is to find a property that the owner has great interest in offering it, whether because of moving, divorce, or they are frustrated with tenants.
Actually, if you are currently renting and thinking of using this technique perhaps the owner would be glad to assist you! There are several variations that could be used depending upon you and your vendor. Do they want the market price or are they just desperate to get out from the monthly payments – perhaps facing foreclosure?
The simplest method is to consider taking over their mortgage obligations – 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 original mortgage and create a 2nd 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. Instead of having the money sit in a bank they can 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 ends you should be able to refinance the cost, or else you could sell. Unless you struck a genuine bad market the value of the home should have risen by then.
A lot of mortgage lenders merely want to make a good investment. While your local bank may still be scared there are a lot of financial lenders that would want 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 know they get their money back in the value of the property if you default, they do not care what kind of income you make. Conclude the deal with a second mortgage done with the seller. If you default they could eventually foreclose on the property and sell it, paying off the existing mortgage with the proceeds.
Now you can see the whole picture. It is good that seller and buyer may work hand in hand. In the event they can’t wait for a sale, you can still give them their asking price with a little versatility on their part.