Real Estate Investing 101
The recession is here and is progressively falling. This doesn’t
mean you can’t make money anymore. This is a buyer’s market and the
recession has not hit the floor YET. In fact, now is the absolute
PRIME time to purchase.
Real estate is one investment that is disired by anyone and
everyone. Everyone needs a place to live. If you cannot afford to
purchase a home of your own, you have to rent. One way to make money
in a down real estate economy is to buy a home on the verge of
foreclosure where the residents are still living in the home.
By purchasing a home that is on the threshold of foreclosure, you
can allow the previous owners to stay in the house and continue to
make payments to you as their landlord. You will be getting all of
the tax benefits as well as be the ultimate owner of the home. You
can refinance the mortgage so that the interest rates are lower and
the mortgage rate is much less than what the people were originally
paying. You can help them out of their bind by lowering their
monthly rent payments and allowing them to stay in their home for a
period of time until they can afford to either buy the home back
from you or move on.
If they cannot afford to carry on living in the home any longer, you
can rent the home out to other people. The home will be a long term
investment for you as well as a tax write off. If you are planning
on investing in real estate in this manner, make sure that the home
is located in a solid area where the property values are increasing.
In a few years, the market should rebound making your home worth a
lot more than when you purchased it.
In most cases, a person who is on the verge of foreclosure has no
idea what they can do to help themselves. If they have children who
are attending a nearby school district, they do not want to displace
them. You can help them and make a wise investment if you purchase
the home before it goes into foreclosure. This is known as the short
sale and you will be merely assuming the payments as well as the
incurring the debt from the bank. Since banks rarely lend out more
than 80 percent of the value of a property, you are already getting,
at the very least, a 20 percent discount off of the home. The longer
the people have lived in the home, the less they likely owe for the
mortgage. You will assume the mortgage payments, refinance the
property at a lower interest rate and then rent the home to them.
This will make the people who are on the verge of foreclosure happy
to be able to stay in their homes as well as have the possibility to
make you some money. If they have gone into foreclosure because of
some unanticipated circumstance that will be alleviated, such as
someone losing their job, you can make them an offer to rent to buy,
which means that a portion of their rent can be used as a down
payment if they want to buy their home back when things get better.
It is very important to have a real estate attorney draw up any rent
to own agreement. If done correctly, either way, you can make a
solid investment and have renters who will most likely take care of
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