We get it you Real Estate Investors! Most of you shifting through Craigslist or the MLS run across potential deals all the time and need quick ways to determine the value of a deal. It’s hard to make the best offer for wholesale or rehab flip investment purchase without knowing what a property’s worth currently […]…
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Are you thinking of investing in real estate? However, you do not have enough cash to do so. Here is a tip you can use as long as the person selling the property is willing to negotiate with you.
To be fair, not every seller will be interested (or even understand) the concept outlined. Your better wager is to find a land that the owner has great interest in selling, whether because they are moving, divorce, or frustration with the folks renting the property.
Actually, if you maybe currently renting and considering using this approach perhaps the owner would be happy to assist you! There are some variations that could be used depending on you and your owner. Do they need the market price or are they just desperate to get out of the monthly payments – maybe facing foreclosure?
The simplest method 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 get a 2nd mortgage on the remaining cost of the property with the seller. Offer a high, interest-only payment for a short time period – 2 or 3 years. Rather than having the money stay in a bank they could be collecting a high interest over 2 or 3 years with the rest due in full at the end of the term.
When the term draws to a close you need to be able to refinance the cost, or perhaps you could 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 could still be scared there are lots of financial lenders that would want to make a deal. Financiers like property investing. The mortgage is mostly 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 estate if you default, they don’t care what sort of revenue you make. Complete the deal with a second mortgage done 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 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 overall flexibility on their part.