Thanks to high-income tech jobs, limited housing inventory, and a determination to live in the hottest housing markets in the country, buyers in the Bay Area of California and other similarly hot metro markets are driving up condo prices and driving down the multifamily inventory in that sector. According to Paul Zeger, founder of real estate marketing firm Polaris Pacific, “a modern condominium in a good school district” is replacing the “once-held family dream of a four-bedroom two-ba…
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Are you thinking of investing in property? However, you don’t have enough cash to accomplish this. Here is a tip you are able to use as long as the property seller is willing to negotiate along.
To be fair, not every seller will be interested (or even understand) the concept outlined. Your better gamble is to locate a land that the owner has great desire for offering it, whether because they are moving, a divorce settlement, or they are frustrated with tenants.
Actually, if you maybe currently renting and considering using this approach perhaps the owner would be glad to help you out! There are several variations that may be used depending upon you and your vendor. Do they need the market price or are they just desperate to get out from the monthly payments – maybe 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 obligations while the property remains in the seller’s name.
You take over the first mortgage and get a second 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 down 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 ends you need to be able to refinance the cost, or else you could sell. Unless you strike a real bad market the value of the house should have risen by then.
Most mortgage lenders merely want to make a great investment. While your local bank could still shy away there are lots of financial lenders that would like to make a deal. Financiers prefare property investing. The mortgage is mostly 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 estate if you default, they don’t care what sort of income you make. Conclude the deal with a 2nd mortgage done with the seller. If you default they could still foreclose on the property and sell it, settling the existing mortgage with the proceeds.
Now you can observe the whole picture. It is good 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.