Nashville, Tennessee, is, quite simply, sitting in the catbird seat when it comes to real estate. The “Music City,” so named in 1950 by radio broadcaster David Cobb thanks to its longstanding position as the home of country music, is hitting all the right notes these days. Positioned in the highly affordable southeastern United States, the U.S. Census Bureau recently reported that Nashville adds about 100 residents to its population each day. This influx of population is supported by a ra…
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Are you thinking of investing in real estate? But you don’t have enough money to do this. Here is a tip you can use as long as the person selling the property is willing to negotiate along.
To be fair, not all sellers will be willing (or even understand) the concept outlined. Your better guess is to locate a property that the owner has great interest in selling, whether because they are moving, divorce, or frustration with tenants.
Actually, if you maybe currently renting and thinking about using this strategy perhaps the owner would be glad to assist you! There are some variations that may be used depending on you and your owner. Do they desire the market price or are they just desperate to get out of the monthly payments – perhaps facing foreclosure?
The simplest 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 repayments while the property remains in the seller’s name.
You take over the first mortgage and create a 2nd mortgage on the remaining cost of the house with the seller. Offer a high, interest-only payment for a short time period – two or three years. Rather than 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 investment term.
When the term ceases you need 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.
Most mortgage lenders merely want to make a good investment. While your local bank may still shy away there are lots of financial lenders that would want to make a deal. Financiers like real estate. The mortgage is usually 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 land if you default, they don’t care what sort of income 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, settling the existing mortgage with the proceeds.
Now you can observe the complete picture. It is good that seller and buyer can work together. If they can’t wait for a sale, you can still give them their asking price with a little overall flexibility on their part.