In a seller’s market, finding a great rental property can be a challenge. You’re competing against tons of well qualified investors for a limited amount of inventory. To find a good deal you need to have a clear definition of your criteria, be able to move fast, and have several reliable sources for finding deals. […]…
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Are you contemplating investing in real estate? However, you don’t have enough money to accomplish this. In this article is a tip you can use as long as the person selling the property is willing to negotiate with you.
To be fair, not every seller will be willing (or even understand) the concept outlined. Your better guess is to locate a land that the owner has great interest in offering it, whether because of moving, divorce, or frustration with the folks renting the property.
Actually, if you maybe currently renting and thinking of using this strategy perhaps the owner would be glad to assist you! There are several variations that could be used depending on you and your seller. Do they need the market price or are they just eager to get out from the monthly payments – maybe facing foreclosure?
The simplest way is to consider taking over their mortgage repayments – called ‘assuming’ the mortgage. You will have to be approved by the first lender to assume the mortgage. If you can’t get approved for an assumable mortgage you may as well try a ‘subject to’ assumption where you merely make payments while the property stays in the seller’s name.
You take over the original 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 frame – two or 3 years. Instead of 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 investment term.
When the term draws to a close 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 home should have risen by then.
Most mortgage lenders merely want to make a great investment. While your local bank may still be lacking confidence there are plenty of financial lenders that would want 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 don’t care what kind of money 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, paying down the existing mortgage in the proceeds.
Now you can see the whole picture. It is better that seller and buyer may work together. In the event they can’t wait for a sale, you may still give them their initial price with a little versatility on their part.