How To Buy Real Estate Without Equity
Entrepreneur of the Week Daniel Nissim # Post 4
As you have already understood in previous posts, the ability to persuade the other side is a very useful ability as a real estate entrepreneur, one that can even help you buy properties without high equity
One of the sellers I worked with, a guy from Seattle who owned a property in the Pittsburgh Pennsylvania market where I work, told me he has a $ 100,000 property that he owns without loans, with a tenant who pays $ 950 every month, he just no longer wants to own property and has intentions Others at his stage in life..the property had a buyer who canceled just before closing and now the property is back on the market - the seller stated that he is interested in receiving $ 100 for the property and if not - he will not sell (by the way the value of the property was about $ 120)
Zig Ziegler once said an amazing sentence - "You can get anything you want if you help enough people get everything they want" - I turned to the seller and asked him the following question:
What If I could come all the way up to your asking price - would you be willing to give me terms in return?
The seller did not understand at first what I meant, and I explained to him that I was willing to pay him his amount if he was willing to give me the conditions I needed - the conditions were a sale price - $ 100,000 and the terms of sale were $ 10,000 DOWN PAYMENT and a monthly payment of $ 250 for 240 months and the balance At the end of the 240 months (20 years)
The seller who was tired of property management, and stubborn about his price agreed and to this day he receives from me monthly payments for the property while I own the property and he functions as a bank in a WIN-WIN transaction
In another recent transaction there was a seller of 3 units (triplex) and even a mortgage against the value of the property, the seller failed to sell the property with a realtor due to the fact that the property needed work and cosmetic renovation and also did not have enough EQUITY (equity) for the seller to sell and pay Brokerage commission - an absurd situation where the seller had to come with money out of pocket to sell the property
I offered the seller to give him $ 5,000 at closing and just keep paying for the existing mortgage payments and take ownership of the property - Buying a property subject to the existing finance - the seller who at first did not understand how to do it was interested and after explanations and persuasion
This method is very common in commercial real estate in high volume but less well known in small family or multi-family small - but existing and legal (feel free to look at line number 503 in your HUD1 closing document and read the section asking if there are loans taken SUBJECT TO EXISTING FINANCE in this sale)
Real estate without equity or with little existing equity. In the two cases I described here, one Seller finance and the other BUYING A PROPERTY SUBJECT TO EXSITING FINANCE I did not spend much money out of pocket at closing - and actually got a 20 year loan at 0% interest… -WIN for both parties
Next time you are considering a deal, check 2 other important factors - reason for sale and condition of the property in terms of mortgage - if the seller does not have a mortgage give 3 offers for the property - one straw, the other partial and partial financing, and the third full or almost full owner financing (as in the example I showed Here)
If the seller has a mortgage, offer a straw offer, and another offer that includes paying the seller and buying the property SUBJECT TO EXISTING FINANCE
I would be happy to help and expand further on the subject if needed but it seems to me that I have dug enough
Succeed and pass it on
Daniel?
Responses