3 Tough Truths About Real Estate Asset Protection

Source: https://thinkrealty.com/3-tough-truths-asset-protection-real-estate/

Ask any real estate investor what asset class is the safest for their capital investments, and the odds are pretty good that you’re going to hear the same answer time… more

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Are you contemplating investing in property? But you do not have enough cash to do so. In this article is a tip you may use as long as the property seller is willing to negotiate with you.

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

Actually, if you are currently renting and thinking of using this strategy perhaps the owner would be glad to help you out! There are some variations that could be used depending upon you and your seller. 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 consider taking over their mortgage obligations – called ‘assuming’ the mortgage. You will have to be approved by the initial lender to presume 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 repayments while the property stays in the seller’s name.

You take over the first mortgage and make 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 three years. Instead of having the money stay in a bank they could be collecting a high interest over two or three years with the rest due in full at the end of the term.

When the term ceases you need to be able to refinance the cost, or else you can sell. Unless you strike an actual bad market the value of the property should have risen by then.

Most mortgage lenders merely need to make a great investment. While your local bank could still be lacking confidence there are plenty of financial lenders that would wish to make a deal. Financiers prefare property investing. The mortgage is mostly around 60-70% of the value of the land, 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. Complete the deal with a second mortgage created with the seller. If you default they can still foreclose on the property and sell it, settling the existing mortgage in the proceeds.

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

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