Today’s show is all about investing in apartments. My guest is John Casmon the co-founder of Chicago based Casmon Capital Group. John controls and actively manages over $2.5M in real estate holdings, including a commercial apartment community with his partner that also happens to be his wife. He is also a blogger, a podcaster, a […]
The post How to Make Money Investing in Apartments with John Casmon appeared first on Louisville Gals Real Estate Blog.
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Are you thinking of investing in real estate? However you don’t have enough cash to do this. In this article is a tip you can use as long as the property seller is willing to negotiate with you.
To be fair, not every seller will be interested (or even understand) the concept outlined. Your best guess is to locate a land that the owner has great desire for selling, whether because of moving, a divorce settlement, or frustration with tenants.
Actually, if you are currently renting and thinking about using this technique perhaps the owner would be happy to assist you! There are some variations that may be used depending upon 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 way is to take over their mortgage payments – 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 obligations while the property stays in the seller’s name.
You take over the original mortgage and create a second mortgage on the remaining cost of the property with the seller. Offer a high, interest-only payment for a short time frame – two or 3 years. Instead of having the money sit 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 ought to be able to refinance the cost, or perhaps you could sell. Unless you hit a real bad market the value of the home should have risen in that time.
A lot of mortgage lenders merely want to make a great investment. While your local bank could still be lacking confidence there are plenty of financial lenders that would like to make a deal. Financiers prefare property investing. The mortgage is mostly based on 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 kind of income you make. Complete the deal with a second mortgage created with the seller. In case you default they could eventually foreclose on the property and sell it, settling the existing mortgage in the proceeds.
Now you can see the entire picture. It is better that seller and buyer may work hand in hand. If they can’t wait for a sale, you can still give them their initial price with a little versatility on their part.