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Invest In Real Estate With No Money Down
Are you thinking of investing in real estate? But you do not
have enough cash to do so. Here is a tip you can use as long as
the property seller is willing to negotiate with you. To be
fair, not every seller will be interested (or even understand)
the concept outlined. Your best bet is to find a property that
the owner has great interest in selling, whether because of
moving, divorce or frustration with tenants.
Actually, if you are currently renting and thinking about 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 seller. Do they want the market price or are they
just eager to get out from the monthly payments - perhaps facing
foreclosure?
The simplest method is to take over their mortgage payments -
called 'assuming' the mortgage. You will need to be approved by
the original lender to assume the mortgage. If you cannot 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 create a second mortgage
on the remaining cost of the house with the seller. Offer a
high, interest-only payment for a short period of time - 2 or 3
years. Instead of having the money sit in a bank they can be
collecting a high
interest over 2 or 3 years with the remainder
due in full at the end of the term.
When the term ends you should be able to refinance the cost, or
you can sell. Unless you hit a real bad market the value of the
property should have risen in that time.
Most mortgage lenders merely want to make a good investment.
While your local bank may still shy away there are plenty of
financial lenders that would love to make a deal. Financiers
like real estate. The mortgage is usually based on 60-70% of the
value of the property, 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 money you make. Complete the deal with a
second mortgage created with the seller. If you default they can
still foreclose on the property and sell it, paying off the
existing mortgage with the proceeds.
Now you can see the whole picture. It is better that seller and
buyer can work together. If they can't wait for a sale, you can
still give them their asking price with a little flexibility on
their part.
About the author:
Dr. Drew Henry maintains a number of websites about Loans,
including New Home
Loan, No
Credit Check Loan, and No Equity Home Loan.
Written By: Dr. Drew Henry