Massachusetts Investor Closes his First No Money Down Deal

Source: http://youtu.be/nI0eBA-9GCg

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Are you contemplating investing in real estate? However you do not have enough cash to accomplish this. Here is a tip you are able to use as long as the property seller is willing to negotiate with you.

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

Actually, if you are currently renting and thinking of using this approach perhaps your landlord would be happy to assist you! There are several variations that can be used depending upon you and your vendor. Do they need the market price or are they just desperate to get out of 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 repayments while the property remains 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 frame – two or three years. Instead of having the money sit down 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 term.

When the term ceases you need to be able to refinance the cost, or else you could sell. Unless you strike a real bad market the value of the house should have risen in that time.

Most mortgage lenders merely need to make a good investment. While your local bank could still be lacking confidence there are lots of financial lenders that would like to make a deal. Financiers prefare property investing. 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 don’t care what sort of revenue you make. Complete the deal with a second mortgage created with the seller. In case you default they can still foreclose on the property and sell it, paying down the existing mortgage with the proceeds.

Now you can see 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 overall flexibility on their part.

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