A Ponzi Scheme, the SEC and a Real Estate Developer

Source: https://thinkrealty.com/ponzi-scheme-sec-real-estate-developer/

What housingwire.com calls a “Mini-Madoff,” Robert Shapiro, luxury real estate developer of the WoodBridge Group of Companies, created a $1.2 billion Ponzi scheme, pilfering more than 8,400 investors. A minimum… more

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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 with you.

To be fair, not every seller will be interested (or even understand) the concept outlined. Your better guess is to locate a land that the owner has great desire for offering it, whether because of moving, a divorce settlement, or frustration with the folks renting the property.

Actually, if you maybe currently renting and thinking of using this strategy perhaps the owner would be glad to help you out! There are a few variations that may be used depending on you and your vendor. Do they want the market price or are they just desperate to get out of the monthly payments – perhaps facing foreclosure?

The easiest method is to take over their mortgage repayments – called ‘assuming’ the mortgage. You will need to be approved by the first lender to assume 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 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 frame – two or 3 years. Rather than having the money stay in a bank they can be getting a high interest over 2 or 3 years with the rest due in full at the end of the investment term.

When the term ceases you should be able to refinance the cost, or perhaps you can sell. Unless you hit an actual bad market the value of the property 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 around 60-70% of the value of the land, 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. Conclude the deal with a 2nd mortgage created with the seller. If you default they could eventually foreclose on the property and sell it, paying off the existing mortgage in the proceeds.

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

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