Saturday, September 19, 2009


Another approach to buy land is with a loan assumption. Most mortgage companies strictly forbid this activity, unless they approve the buyer. But to do this you need good credit and verifiable income. If you could pass all that……….you don’t need to assume. You could go the conventional rout, and buy any property you want (in your price range).

Here’s a way around that.

First let me caution you, don’t get delusions of becoming the next Donald Trump! You wont make money doing this even on a large scale. The equity is not there! Real Estate Holdings are NOT, a measure of wealth! (Gold and Silver are).

A good place to start is the legal section of the local papers. Foreclosure notices are listed here, the Mtg. Co. is required to post notice of foreclosure the ad has to run for, some thing like 2 weeks (it’s a small window of opportunity so check them regularly). The notice will list the names of owners (some times there mailing address) and amounts owed. Including payment amount and interest rate. There are other ways of finding foreclosures but this is an old method that still works well.

Then attempt to contact the owner. Then make your offer, You need to let them know it can be a win win situation. Lets say (rounding numbers) the delinquent mgt. is for 50k 30yr fixed at 10% monthly payments are 500.00. He is five years in-to the note.

There is NO equity here, owner has only a few options:
1, sell property outright.(not likely he currently owes more than the market will bear).

2, A short sale with a Real Estate Agent. ( also not likely, first they need a buyer with money or ability to get a loan. Also the Mtg. Co will pressure the seller to add cash, to cover the short sale.)

3, Your deal a WIN WIN! You give him 2500.00 he pays the lender the delinquent amount of 1500.00 he puts the 1000.00 in his pocket Conveys property to you by deed (You can use a Quit Claim Deed but you should preferred a Warranty Deed. More on deeds in another post) You agree to pay all future monthly payments on time. You saved the owner from a foreclosure, also saving his credit. As long as you make the payments in a timely fashion the Mgt. Co. Is not likely to look close and wont notice ownership has changed.
It will remain on the sellers credit report until the loan is paid off.
There is a million different spins you can apply for protection of you and the seller, With contracts, escrow agents, and re-convey clauses.
The basic idea is if you have more time than money this can be a great option.

Mostly a loan switch will be found with houses but if you look hard and long you can find land. If you currently live in a city a small house in a small town may be a better option. There are small towns in Montana and others that allow livestock in your back yard. Also building codes are nil if any. Some still have a well in the yard, or an irrigation ditch running by.

To be continued in part III

No comments:

Post a Comment