Southern California, often referred to as SoCal, is defined in many ways. You can use the term to refer to California’s 10 southernmost counties. You could use it to refer to the geographic area surrounding three of the country’s largest metropolitan areas and those areas themselves. You could use it to refer to one of just 11 “megaregions” defined by New York-based planning group the Regional Plan Association and used to designate not just the southern part of California, but also Ti…
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Are you contemplating investing in property? However you do not have enough cash to do so. In this article 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 best wager is to locate a property that the owner has great interest in selling, whether because they are moving, a divorce settlement, or frustration with the folks renting the property.
Actually, if you are currently renting and thinking of using this technique perhaps your landlord would be happy to help you out! There are a few variations that can be used depending on you and your vendor. Do they desire the market price or are they just desperate to get out from the monthly payments – maybe facing foreclosure?
The simplest method is to take over their mortgage repayments – called ‘assuming’ the mortgage. You will need to be approved by the initial lender to assume 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 obligations while the property remains in the seller’s name.
You take over the first mortgage and create a 2nd mortgage on the remaining cost of the house with the seller. Offer a high, interest-only payment for a short time period – 2 or 3 years. Rather than having the money sit down in a bank they could 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 ceases you should be able to refinance the cost, or else you could sell. Unless you struck a genuine bad market the value of the property should have risen in that time.
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 wish to make a deal. Financiers like property investing. The mortgage is usually 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 income you make. Complete the deal with a 2nd mortgage created with the seller. In case you default they can eventually foreclose on the property and sell it, settling the existing mortgage in the proceeds.
Now you can observe the whole picture. It is better that seller and buyer can 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.