Facebook is getting plenty of negative attention from the media and investors, but they continue to expand their real estate in the Bay Area. This comes in the wake of ongoing issues with speculation that the company’s user growth may have hit a wall. However, that does not appear to be a concern for the real estate acquisitions side of the company.
“We continue to grow,” John Tenanes, the company’s head of facilities, said euphemistically of a recent Facebook real estate binge…
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Are you contemplating investing in property? However you do not have enough cash to do this. 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 all sellers will be willing (or even understand) the concept outlined. Your better wager is to locate a land that the owner has great interest in selling, whether because they are moving, divorce, or frustration with the folks renting the property.
Actually, if you maybe currently renting and thinking about using this strategy perhaps your landlord would be glad to help you out! There are a few variations that may be used depending upon you and your vendor. Do they need the market price or are they just eager to get out of the monthly payments – maybe facing foreclosure?
The easiest method 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 could also 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 create a 2nd mortgage on the remaining cost of the property with the seller. Offer a high, interest-only payment for a short time period – two or 3 years. Rather than having the money stay in a bank they could be getting a high interest over 2 or 3 years with the remainder due in full at the end of the investment term.
When the term ceases you need to be able to refinance the cost, or else you can sell. Unless you strike a real bad market the value of the property should have risen by then.
A lot of mortgage lenders merely want to make a great investment. While your local bank could still be scared there are lots of financial lenders that would want to make a deal. Financiers like property investing. 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 property if you default, they don’t care what kind of income you make. Conclude the deal with a 2nd mortgage created with the seller. If you default they can still foreclose on the property and sell it, settling the existing mortgage with the proceeds.
Now you can see the entire picture. It is good that seller and buyer may work hand in hand. In the event they can’t wait for a sale, you can still give them their initial price with a little versatility on their part.