Dallas, Texas – When former head football coach of the Texas Longhorns football team Mack Brown entered the main presentation hall at the Think Realty National Conference & Expo in Dallas, Texas, the room erupted in cheers. Brown, who is credited with revitalizing not one but two major college football programs, took the applause in stride. “I just want you to know that today [Saturday] is a pretty important day for me,” he joked. “I’m here with you, so that shows you how import…
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Are you contemplating investing in real estate? However you do not have enough cash to do this. Right here is a tip you can use as long as the property seller is willing to negotiate along.
To be fair, not all sellers will be interested (or even understand) the concept outlined. Your best gamble is to locate a land that the owner has great interest in offering it, whether because they are moving, a divorce settlement, or frustration with tenants.
Actually, if you are currently renting and thinking about using this approach perhaps the owner would be glad to help you out! There are some variations that could be used depending upon you and your seller. Do they want the market price or are they just desperate to get out of the monthly payments – perhaps facing foreclosure?
The easiest way is to consider taking over their mortgage repayments – called ‘assuming’ the mortgage. You will need to be approved by the first lender to presume the mortgage. If you cannot get approved for an assumable mortgage you may as well try a ‘subject to’ assumption where you merely make obligations while the property stays in the seller’s name.
You take over the original mortgage and get a 2nd mortgage on the remaining cost of the house with the seller. Offer a high, interest-only payment for a short time frame – 2 or three years. Rather than having the money sit in a bank they could be collecting a high interest over two or three years with the rest due in full at the end of the investment term.
When the term ceases you ought to be able to refinance the cost, or else you could sell. Unless you hit an actual bad market the value of the home should have risen by then.
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 real estate. The mortgage is mostly around 60-70% of the value of the property, so as long as they know they get their money back in the value of the property if you default, they do not care what sort of revenue you make. Complete the deal with a second mortgage done with the seller. If you default they can still foreclose on the property and sell it, paying down the existing mortgage with the proceeds.
Now you can observe the complete picture. It is better that seller and buyer can work together. If they can’t wait for a sale, you could still give them their asking price with a little overall flexibility on their part.