This November, California voters will determine whether city governments need more power to enact rent control policies. Many landlords in the state are already selling off properties or holding off on buying more, according to the Wall Street Journal. The initiative, if passed, would repeal a 1995 state law called the Costa-Hawkins Rental Housing Act. At present, cities and counties are limited in the types of rent control legislation they can pass. They cannot cover “large amounts of hous…
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Are you contemplating investing in real estate? But you don’t have enough cash to do this. Here is a tip you may use as long as the person selling the property is willing to negotiate along.
To be fair, not all sellers will be interested (or even understand) the concept outlined. Your best wager is to locate a land that the owner has great desire for selling, whether because they are moving, divorce, or frustration with the folks renting the property.
Actually, if you are currently renting and thinking of using this strategy perhaps your landlord would be glad to help you out! There are some variations that could 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 – maybe facing foreclosure?
The simplest method is to consider taking over their mortgage payments – 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 may also try a ‘subject to’ assumption where you merely make payments while the property stays in the seller’s name.
You take over the first mortgage and make a second mortgage on the remaining cost of the property 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 remainder due in full at the end of the investment term.
When the term ends you need to be able to refinance the cost, or else you can sell. Unless you strike a genuine bad market the value of the property should have risen in that time.
A lot of mortgage lenders merely need to make a great investment. While your local bank may still be scared there are plenty of financial lenders that would want to make a deal. Financiers like real estate. The mortgage is usually based on 60-70% of the value of the property, 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 money you make. Conclude the deal with a 2nd mortgage done with the seller. In case you default they can eventually foreclose on the property and sell it, paying off the existing mortgage with the proceeds.
Now you can see the whole picture. It is better that seller and buyer may work hand in hand. In the event they can’t wait for a sale, you can still give them their asking price with a little versatility on their part.