# Entrepreneur of the Week - Meirav Regav-Visblut. Post # 4 - Creative Finance / Owner Finance Well, who…
# Initiated week - Most Regev-Visblut.
Post # 4 - Creative Finance / Owner Finance
Well, those who know me know that I may not get time to talk about real estate or mention the most exciting ways to buy real estate - owner finance
When I got to the real estate in the US, I knew of buying and buying cash assets only .. But once the plan is buying a wealth of assets, at some point private money runs out and other ways have to be made.
Then of course there are the options of private investors / lenders or taking out a loan from HML (Hard Money Lender).
But the beauty of the real estate world in the US is that the possibilities are much greater and creative.
I was first exposed to the world of creative finance through Shay Halevy The one and only, who has actually built a business (even more than one) in creative finance. Highly recommends to anyone who is seriously interested in taking the comprehensive course - lots of knowledge and tools.
These methods are good for buying and selling, I will focus on this post at the purchase angle.
So what is it?
Simply put - a loan on the property, but one provided by the property owner.
That is - instead of paying a full amount of cash and taking a loan from outside entities, you can take a loan from the property owner and in the first place not to pay him all the cash amount but an initial down payment and the balance under loan terms whose terms reach a settlement with the property owner.
If you are a buyer it is simply ingenious when you consider that basically every property comes with build-in financing.
If you sell this method - you can recoup most, if not all, of your initial investment and get a regular monthly payment without dealing with leased property management.
The terms of the loan - depend on the mum with the property owner. Most of the down payment will move between 5-20% and the interest rate will usually be lower than the loan of an accompanying body. Decide on the loan period for the purpose of calculating the monthly payment, and in many cases there will also be a prepaid repayment period (balloon - for example: repayment of principal balance after 5 years).
As more property owners get more motivated to sell (for example, those who are tired of managing the assets - many Americans give up on a property management company because they live near the properties but after a few years of dealing with tenants - are sick and ready to sell) - good terms can be reached More.
It is sometimes possible to reach assets that do not cost a dollar, and / or interest-free assets. It sounds unfair, I would also think so if I didn't buy assets myself for which I received 0% interest from the property owner (!!!)
Why would a property owner want to sell such a method?
What do you care ???
There can be many reasons - tired of managing tenants over time but still looking for a monthly income without tired landlord, want tax benefits, get a higher interest rate from you than the bank, and many other reasons.
There can be many reasons - tired of managing tenants over time but still looking for a monthly income without tired landlord, want tax benefits, get a higher interest rate from you than the bank, and many other reasons.
In a contract with the property owner, he has protection if the buyer does not pay on time (default) - the property returns to him. So he doesn't have much to lose, on the contrary.
You must involve an attorney with experience in such transactions to protect you. The emphasis is on an attorney with experience because attorneys who have not engaged in such deals may not always know what to do even if they have a lot of experience in other real estate deals.
How to find such assets?
In the same methods I outlined in the #2 post, simply direct your contacts to check out OneR Financial's option first.
If you work with Holsler - he has a high interest because he will receive his commission and you will have more money for some deals.
If you come directly to property owners - just check if this is a relevant option for him. Worth asking.
You can also find owner finance ads, do a search.
Another way to buy that could be relevant is if the property owner has a mortgage on the property, We can suggest that we take on the monthly repayment. This method is called Subject to existing mortgage or in short.
Since in the United States, unlike Israel, it is possible to sell a property without repaying the mortgage, it allows a mortgagee to sell a property, leave the mortgage on its name and enter into a protection contract that the property is returned to its owner if the buyer does not pay while the monthly payment is set.
Which allows us as buyers to purchase a property with an existing mortgage, with conditions of an American citizen (most often we will not be able to accept terms like the American citizens).
Of course, every case, and you have to check that the numbers are worthwhile, check that the deal is worthwhile, make sure we have a safe ash and certainly not jump on any deal just because of owner financing (so recommends anyone who wants to get into this area to learn a little more about it).
I borrowed a deal that was bought using this method not only for rent but also for flipping.
But there is no doubt that the needs of building a portfolio of assets yield these amazing methods that the return they give on the actual money spent is higher than rent, and sometimes even higher than flip.
Of course there are still properties to manage, and tenants who can be good or not and all the rental management just like in a normal transaction. The only risk we have is the additional expense per month - which remains constant even in months when the property is not yielding (no tenant, under renovation, etc.). Therefore, pay close attention to the numbers and make sure that there is no chance that you will not pay the monthly payment.
But it's good to know these options - one of the exciting things about the US real estate (-:
Excellent post
Cons of selling at OWNER FINANCING:
The buyer does not pay the loan - in this case the ownership of the buyer's property can be wiped out in legal proceedings.
Cons to Buyer at OWNER FINANCING:
1- The buyer pays a much higher interest rate on the loan.
2 - The delicate buyer needs to prove loan repayability.
3 - The buyer must be responsible for checking whether the bank that has given a mortgage on the property to the seller - is ready for such a procedure, the property owner is considered a lender as well.
4 - The original seller can sell the loan to a third party.
Most champion?
Cannon.
Excellent post!
?
I thought I was the only gate during those hours….
Really you're my role model ??
????? Excellent post
Sing-er Yosef
Thanks
Achla Post
Know the thing, but I really enjoyed reading the post?