Think Realty is heading back to California July 14th-15th for the Irvine Conference & Expo! This power-packed, two-day REI event features a panel of local experts who will take an in-depth look at the current state of the SoCal REI market. Think Realty spoke with one of the local market panelists, investor and realtor Joe Homs, on the best practices for people looking to invest in Southern California, and what attendees and first-time investors can expect to learn from this event!
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Are you thinking of investing in real estate? But you do not have enough cash to do this. Right here is a tip you are able to use as long as the person selling the property 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 find a property that the owner has great desire for offering it, whether because they are moving, a divorce settlement, or frustration with tenants.
Actually, if you are currently renting and thinking of using this technique perhaps the owner would be happy to help you out! There are some variations that can be used depending on you and your owner. Do they want the market price or are they just eager to get out of the monthly payments – perhaps facing foreclosure?
The simplest way is to consider taking over their mortgage payments – called ‘assuming’ the mortgage. You will need to be approved by the original 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 remains in the seller’s name.
You take over the original mortgage and get a second mortgage on the remaining cost of the property with the seller. Offer a high, interest-only payment for a short time period – two or three years. Rather than having the money stay 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 term.
When the term ceases you should be able to refinance the cost, or perhaps you can sell. Unless you struck a real bad market the value of the house should have risen in that time.
Most mortgage lenders merely need to make a great investment. While your local bank could still be scared there are plenty of financial lenders that would want to make a deal. Financiers prefare real estate. 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 property if you default, they don’t care what sort of income you make. Conclude the deal with a second mortgage created with the seller. In case you default they can still foreclose on the property and sell it, paying off the existing mortgage in the proceeds.
Now you can see the entire picture. It is better that seller and buyer can work hand in hand. In the event that they can’t wait for a sale, you may still give them their initial price with a little overall flexibility on their part.