Mortgage Sale, Land Contract Sale, vs Rentals in Michigan
Obviously, this is the most favorable way to sell your property because you get your cash out to re-invest immediately. This is also the most difficult sale to get on your property unless the property is in an area of high demand. A mortgage sale should be the goal of every property investor when selling property. Unfortunately, many investors end up purchasing property in the more distressed areas, which of course is where most of the deals and most of the profits are. It is also the location with the fewest qualified purchasers.
Fortunately, since there appear to be more and more people who have less than perfect credit and employment, many mortgage companies have begin to adjust to accept a wider range of borrowers.
The major reason most people don't qualify for a mortgage is insufficient funds to cover a down payment and closing costs, rather than credit or employment. There are ways to work with this situation, but I'm going to leave that for another time.
One thing you can do to greatly increase your chances of selling on a mortgage is to offer to pay all allowable closing costs normally charged to the purchaser. Doing this can create much more interest from potential purchasers in your property. Your willingness to do this should be placed in any advertisement or listing of the property.
How much you can pay on behalf of the purchaser depends on the type of mortgage they are trying to get. If you are working with a Realtor to sell your property, ask for an explanation of the different financing options available to you. If you are attempting to sell your property by owner, you may want to contact a mortgage broker so he can give you some ideas of different mortgage programs currently available for your property and likely purchaser.
While selling property on a land contract will generally result in the fastest sale, it can have the drawback of making you wait for your money. The question of whether or not you should sell on a land contract is mostly answered by how you initially financed your property, and the controlling language in your land contract, or mortgage.
There are some common misconceptions about selling on a land contract. A common one being that you won't be allowed to pull your cash back out of the property. There are many investors who are willing to purchase a land contract from you for cash. They will not pay the full balance owed on the contract but rather will pay a discounted figure. Some investors also offer the option of purchasing only a certain number of payments from you and giving the contract back to you after they have received those payments. They refer to this as a partial purchase. If your financing was structured correctly, you may be able to withdraw your profit and keep the financing in place with a partial sale.
If you are investing in property as a long-term investment, you might find that land contracts have some advantages, especially over renting property. Let's look at a comparison:
Land Contract
|
Rental
|
You receive a down payment which is yours to keep
|
You get one month’s rent and a security deposit that you may have to give back when the renters move out
|
You eliminate maintenance expenses and headaches
|
Tenants eventually break every breakable part in a house
|
Once it’s sold, it usually stays sold. Even if you do get it back, at least you got a down payment, even if it was small.
|
You get it back on a regular basis and have to fix it up and do it all over again
|
It can be converted to cash in a matter of weeks by selling the seller’s interest in the land contract
|
Must be put up for rent. Can be sold for cash but might take much longer
|
Is considered much better collateral for loans because it is a receivable loan
|
Considered poor collateral as it requires management of the property to make a profit
|
Take approximately 3 months to take back by forfeiture if the purchaser defaults
|
Takes 30 to 45 days to regain possession
|
Often brings payment equal to or greater than rent income, plus you are earning a reasonable rate of interest on the balance owed to you
|
Only receive the monthly rental income
|
Land contracts can also be used as an interim method of sale to allow purchasers the chance to qualify for a mortgage. They can be written with balloon payments of a year, for example, allowing the purchasers to apply for a refinance mortgage which is often easier to get than a mortgage on a new purchase.
If you decide to sell on a land contract, you will find that you can cut a lot of time off how long it will take to sell. There are always a significant number of people looking for homes on terms. You may also be able to sell your property for a little more than market price.
A great place learn more about where to find out more Michigan Land
Some might say it is real estate "haven" of like minded people out to help each other on the common goal of real estate investing. A REIA is a real estate investment association. A group formed for the continuing education and networking benefit of its Club members.
Real Estate Investment Associations meet regularly all over the country. They hold there meetings usually on monthly basis in the evening. Guests can usually come free to a first meeting or pay thereafter a meeting by meeting charge. Membership is encouraged as these organizations are primarily funded through membership. Whether you are a new or seasoned investor, membership in your local association is a priority. There is old saying it's never too late to learn something new. These meetings are full of valuable real estate investing information. Learn from those who have been in the "investor land mine fields". Having a place and a setting for putting your dream team together through the networking, which is priceless? How many times have you heard, "It's not who you are, but who you know that makes you successful?" The people you meet at these meeting will move you to a whole new level of results by cutting through the red tape of investing. You can not believe what you get in value from the membership investment. It's like having Mark Twain as your personal coach for one year of training on writing a success book and all you pay him is $150 to $200 dollars.
Individual members benefit from meeting both new and seasoned investors. What great places where newer investors go to learn and work for seasoned investors, finding them deals and getting paid while learning. That's right, they make money, learn the business without risking their own dollars or credit. Being Wholesaler of real estate is sometimes call being bird dog for the seasoned investors. Growing up I always heard the term "that dog don't hunt". This holds does not hold true in the real estate investing club business. Here the meaning is "this does dog hunt". The new investor will learn as they earn free from risk and pressure. They have the experienced investor along as your coach and mentor.
There are resources tables at the investor meetings where every one brings their fliers and business cards. What great way for group to get to know each other and promote different recourses like Investor Real Estate Agents, Investor's Mortgage Loan Officers, Real Estate Attorneys, And Real Estate Minded CPAs, Accountants, Property Managers, Contractors, Title Companies, and Wholesalers? Real Estate Business Suppliers with products or services for the real estate investor seeking repeat business can network at their local REIA to meet potential customers. Like minded people working together can move mountains.
These REIAs and Real Estate Clubs invite national and local speakers and experts to teach their members new and innovative techniques that when applied, will bring success. A lot of National Speakers have investing courses, boot camps and home study courses for sale to the attendees. The club leaders work on reviewing these course and reputations before inviting speakers to the events. Some of the REIAs provide forms disk for their members. It is always advised that members check with their own attorneys before using.
What to Look for in a Successful Real Estate Investor Association (REIA)
What to Look for in a Successful Real Estate Investor Association (REIA)
• Owners or board members invest in real estate in the market that club is located. Many of the most successful REIAs have expert real estate board members or owners.
• They provide a good mix of local and national expert speakers
• They have an online presence – they provide resources and information their members can access – like forms, seminars, and up coming event calendar, list of real estate terms and what they mean
• Meetings are held regularly (at least monthly). Many of most successful groups have more than one meeting a month
• Speakers give great value – they give more than promised
• Membership includes benefits – forms disk, access to recordings of local speakers
• Opportunities to network with like minded people
• Local REIA to be member National Associations for investor club to gain advise and coaching.
How to find a Real estate investors association in your area may be done by going to National Real Estate Network LLC web site http://www.MegaEveningEvent.com on the home page look in the lower left hand side for a list of real estate clubs through the country.
National Real Estate LLC is sometimes call and know for information the following: Real Estate Association of Michigan, Michigan Real Estate Group, Real Estate Investment Association of Michigan, REIA of Michigan, Real Estate Class Michigan, Real Estate Investing Club Michigan, Landlord Club Michigan, Michigan Real Estate Mentoring Program, Michigan Real Estate Training Classes, Michigan Real Estate Seminars, Michigan Real Estate Schools, Michigan Real Estate Courses, Michigan Real Estate Network, Michigan Real Estate Conventions, Michigan Real Estate Boot Camps, Michigan Real Estate Forums, Michigan Real Estate Licensing, Michigan Real Estate Learning Center, and Michigan Learning Annex. http://MegaEveningEvent.com
No comments:
Post a Comment