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Buying houses Subject To the existing mortgage
Instead of repaying the mortgage at the sale status we leave the existing mortgage as it is in the seller's name but the ownership of the property passes to us.
Is it possible ? Yes ! is it legal ? Yes ! In the US.
We as purchasers undertake a contract with the seller to pay all future mortgage payments. We also sign a contract that says if we do not make the mortgage payments as we promised we will lose the house and it will return to the seller's ownership of what is called a quit claim deed.
What is the seller's profile who would be willing to sell the property to us without repaying his mortgage? A number of conditions must be met in order to have a reasonable chance of persuading a seller to do so:
The seller must also explain that this is a quick procedure with no costs to the seller. It will save brokerage and closing costs and will not have to make any repairs to the property (meaning you purchase the property AS IS)
Two main ways:
It has a lot of ads that homeowners want to rent out their property directly and not through real estate.
I purchased a property in Memphis Tennessee from an investor who lives offshore and found it difficult to manage the property remotely so he wanted to get rid of it quickly.
The value of the property was: 75 $ 1,000
The balance of his mortgage: 51 $ 1,000
Mortgage interest: 5 percent.
Balance of mortgage life: 24 years.
That means at closing I needed a little less than $ 4,000.
The property from 900 $ monthly rental income.
Spending on the property as $ 400 per month.
After paying a mortgage (principal + interest) I had $ 200 left.
Return on capital:
200 * 12 = 2,400 $ Annual Equity Invested: 4,000 $ gives 60 a return.
But think more about the return on equity that can also be endless (if we only buy the property at its mortgage value), we have purchased a virtually non-equity yielding property that generates a positive cash flow.
Now think about buying five, ten or twenty houses with this technique.
For the purchase option you will receive the same $ 4,000 you invested. The monthly rent will grow to $ 1,000 and then essentially no equity at all, you generate $ 300 a month.
The exercise price in two years will be $ 80,000.
If your tenant does not exercise the option you will find a tenant / purchaser in his place.
If the tenant exercises the purchase option you will exit with a profit of approximately $ 30,000 from the transaction excluding the monthly positive cash flow of $ 300 you received each month for two years.
Shay Halevy
Socialserve.com - Find Affordable Housing
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I believed until I got to the line that an asset worth 75 makes 900 a dollar in rent. I have not found such assets in all the years I have been dealing with and interested in the subject.
But I liked the mind games.
interesting.
Can this process take place in a situation where buying property is done under a company and not as a private individual?
Mortgage assumption
Udi Zecharia
Sing-er Yosef
Dudi Endy
Tal Sagi
In theory this sounds promising, but in general you have to be super careful because usually the sellers have no real reason to do this financing unless they have a reason (and then the buyer puts a healthy head in a sick bed)
Thanks for the info, can you send me more detailed material on the subject please in order to delve into this niche?
Noam Davida Vadim Lichtik