Episode 4: Mike Zlotnik TempoFunding Big Russian Hardmoney Lender in New York

Source: http://youtu.be/kWl9-yFcm7Y

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Are you contemplating investing in property? But you don’t have enough money to do this. Right here is a tip you can use as long as the property seller is willing to negotiate with you.

To be fair, not all sellers will be willing (or even understand) the concept outlined. Your very best wager is to find a property that the owner has great interest in selling, whether because of 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 happy to assist you! There are some variations that may be used depending upon you and your seller. Do they want the market price or are they just desperate to get out from the monthly payments – perhaps facing foreclosure?

The easiest way is to consider taking over their mortgage payments – called ‘assuming’ the mortgage. You will need to be approved by the original lender to presume the mortgage. If you cannot get approved for an assumable mortgage you may as well try a ‘subject to’ assumption where you merely make obligations while the property stays in the seller’s name.

You take over the first 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 period – 2 or three years. Rather than having the money sit in a bank they can be getting a high interest over two or three years with the remainder due in full at the end of the investment term.

When the term ends you should be able to refinance the cost, or you can sell. Unless you hit an actual bad market the value of the property should have risen by then.

Most mortgage lenders merely want to make a good investment. While your local bank may still be lacking confidence there are plenty of financial lenders that would wish to make a deal. Financiers prefare real estate. The mortgage is usually based on 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 revenue you make. Conclude the deal with a second mortgage created with the seller. If you default they can eventually foreclose on the property and sell it, paying off the existing mortgage in the proceeds.

Now you can see the complete picture. It is good that seller and buyer may work hand in hand. In the event they can’t wait for a sale, you may still give them their asking price with a little overall flexibility on their part.

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