No Money Down Real Estate
Investing
By Lou
Castillo
If you really
want to make a wealth of money in real estate you must learn to leverage a
small amount of your resources to control a lot of property. One of the
techniques I like to use is Subject To financing.
Although some
states are attempting to pass legislation to regulate or ban this practice, it
is still one of the best ways to easily finance a purchase. My advice is to
check with a local attorney to verify if laws have been passed in your state
relative to purchasing Subject To the existing mortgage.
What makes
Subject To financing so powerful is the ability to take title (ownership) to a
piece of property while leaving the existing financing in place. In other
words, ownership passes to the Buyer, but the loan remains in the name of the
Seller, or more precisely, in the name of the original Borrower. You can easily
see why this is such a powerful tool: you can fund most or all of the purchase
price of a home with the loan that is already in place! The buyer simply makes
up the past due payments to bring the loan current, and commits to the Seller
to make on time payments in the future, but does not need to secure new
financing.
What about the
due-on-sale clause that most mortgages contain today? It's true. The lender
does have the right to call the loan due - but NOT the obligation to do so. In
fact, it doesn't make sense for a bank, an institution that is in the money
business, to call a performing loan due and risk forcing it into foreclosure.
After all, a bank would rather have the on-time payments than the real estate.
What about the
Seller? Why would they agree to placing their credit at risk? Since the loan
remains in their name, they remain financially responsible. A motivated Seller
however, is desperate to eliminate the responsibility for payments. They're
usually facing foreclosure. You're offering the opportunity to remove the
burden, AND at the same time improve their credit rating with on-time payments
made in their name.
Are you
currently using this powerful technique in your real estate business? Unless
your state prohibits it, Subject To financing should become one of your first
options for the purchase of investment properties. The bank benefits by having
the loan payments caught up and current. The Seller benefits from debt relief
and credit improvement. And best of all, you benefit by leveraging a small
amount of money to finance your real estate transactions.
Best of Success
& Abundance,
Lou Castillo
Lou Castillo
has been successfully investing in real estate since the early 1990s with a
focus on rehabbing and wholesaling single family residences. He is also a
national speaker and trains other investors on his model for investing and for
leveraging the power of the internet.
For more
information or to sign up for his Powerful Investing Tips visit http://www.Investorriches.com
Article Source:
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