Today I want to tell you about one of my favorite apps I use in my business. It’s an organization tool called Trello, and it’s free. I have a confession to make. I am a recovering notebook addict. I have lots of notebooks. I love pretty notebooks. I simply cannot resist buying a one that […]
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Are you thinking of investing in property? However, you don’t have enough money to do so. Right here is a tip you can use as long as the person selling the property is willing to negotiate along.
To be fair, not every seller will be interested (or even understand) the concept outlined. Your very best wager is to find a land that the owner has great interest in selling, whether because of moving, a divorce settlement, or frustration with tenants.
Actually, if you maybe currently renting and thinking of using this strategy perhaps the owner would be glad to assist you! There are a few variations that can 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 easiest way is to consider taking over their mortgage obligations – called ‘assuming’ the mortgage. You will need 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 2nd 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 sit in a bank they can be getting a high interest over two or three years with the rest due in full at the end of the investment term.
When the term ceases you need to be able to refinance the cost, or perhaps you could sell. Unless you strike a real bad market the value of the house should have risen by then.
A lot of mortgage lenders merely need to make a good investment. While your local bank could still shy away there are a lot of financial lenders that would like to make a deal. Financiers like real estate. The mortgage is mostly around 60-70% of the value of the land, 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 sort of income you make. Complete the deal with a 2nd mortgage done with the seller. If you default they can eventually foreclose on the property and sell it, paying off the existing mortgage with 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.