Clever Investor Testimonial: Abdul

Source: http://youtu.be/PAWCxBBcE-E

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Are you thinking of investing in real estate? However, you do not have enough cash to accomplish this. Right here is a tip you can use as long as the property seller is willing to negotiate along.

To be fair, not every seller will be willing (or even understand) the concept outlined. Your better guess is to find a property that the owner has great desire for selling, whether because they are moving, divorce, or frustration with the folks renting the property.

Actually, if you are currently renting and thinking about using this strategy perhaps the owner would be glad to help you out! There are several variations that can be used depending upon you and your vendor. Do they desire the market price or are they just eager to get out of the monthly payments – perhaps facing foreclosure?

The easiest way is to take over their mortgage repayments – called ‘assuming’ the mortgage. You will have to be approved by the first lender to presume the mortgage. If you can’t 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 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 2 or 3 years with the remainder due in full at the end of the investment term.

When the term ends you ought to be able to refinance the cost, or you could sell. Unless you struck a genuine bad market the value of the house 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 plenty of financial lenders that would want to make a deal. Financiers like property investing. The mortgage is usually based on 60-70% of the value of the property, so as long as they understand they get their money back in the value of the estate if you default, they don’t care what sort of money you make. Complete the deal with a second mortgage done with the seller. If you default they could eventually foreclose on the property and sell it, paying down the existing mortgage with the proceeds.

Now you can see the whole picture. It is better that seller and buyer can work hand in hand. In the event that they can’t wait for a sale, you can still give them their asking price with a little versatility on their part.

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