Happy belated, New Year! I hope you enjoyed the time off with friends and family, and took a much-deserved break from the daily grind of work. I used the down time to reflect on the accomplishments from the past year …
To be up to date with the latest in the real estate industry to can check out our real estate latest news. On the other hand if you’re new to real estate investing and would like to begin profitable property investing today download a copy of our profitable real estate investing ebook.
Are you thinking of investing in real estate? But you don’t have enough money to accomplish 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 every seller will be interested (or even understand) the concept outlined. Your better wager is to find a land that the owner has great interest in selling, whether because of moving, divorce, or frustration with the people renting the place.
Actually, if you are currently renting and thinking of using this technique perhaps the owner would be happy to help you out! There are some variations that could be used depending upon you and your owner. Do they want the market price or are they just desperate to get out of the monthly payments – perhaps facing foreclosure?
The easiest way 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 cannot get approved for an assumable mortgage you could also try a ‘subject to’ assumption where you merely make payments while the property stays in the seller’s name.
You take over the original mortgage and get a 2nd mortgage on the remaining cost of the house with the seller. Offer a high, interest-only payment for a short time frame – two or 3 years. Instead of having the money stay in a bank they could be getting 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 need to be able to refinance the cost, or you can sell. Unless you hit an actual bad market the value of the home should have risen in that time.
Most mortgage lenders merely need to make a great investment. While your local bank could still shy away there are a lot of financial lenders that would like to make a deal. Financiers prefare real estate. The mortgage is usually 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 sort of money you make. Conclude the deal with a second mortgage created with the seller. If you default they can still foreclose on the property and sell it, paying down the existing mortgage in the proceeds.
Now you can observe 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.