This past March, an 84-year-old actress was struck and killed by a car just a few feet from her home in Greenwich Village, a neighborhood on the west side of Lower Manhattan in New York City and one of the most expensive real estate markets in the country. When she died, Patricia O’Grady was a beloved dance and theater professional and, unbeknownst to many, the extremely determined tenant of one of New York City’s few remaining “cold-water units,” a one-room unit with no heat or hot w…
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Are you thinking of investing in real estate? But you do not have enough cash to accomplish this. 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 all sellers will be interested (or even understand) the concept outlined. Your very best guess is to find a property that the owner has great desire for selling, whether because they are moving, a divorce settlement, or they are frustrated with tenants.
Actually, if you maybe currently renting and thinking of using this strategy perhaps the owner would be glad to assist you! There are a few variations that may be used depending upon you and your owner. Do they need the market price or are they just eager to get out of the monthly payments – perhaps facing foreclosure?
The simplest method is to take over their mortgage repayments – called ‘assuming’ the mortgage. You will need to be approved by the original 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 stays in the seller’s name.
You take over the original mortgage and make a 2nd mortgage on the remaining cost of the house with the seller. Offer a high, interest-only payment for a short time frame – two or 3 years. Instead of having the money stay in a bank they can be getting a high interest over two or three years with the rest due in full at the end of the term.
When the term ends you ought to be able to refinance the cost, or perhaps you can sell. Unless you strike a genuine bad market the value of the property should have risen by then.
Most mortgage lenders merely need to make a great investment. While your local bank may still be scared there are a lot of financial lenders that would like to make a deal. Financiers prefare property investing. The mortgage is usually 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 estate if you default, they do not care what kind of income you make. Complete the deal with a second mortgage done with the seller. If you default they could eventually foreclose on the property and sell it, paying down the existing mortgage in the proceeds.
Now you can observe the complete picture. It is good that seller and buyer may work together. In the event they can’t wait for a sale, you can still give them their asking price with a little overall flexibility on their part.