Investing in properties is one of the best ways to make money. Buying underdeveloped and foreclosed real estate then developing and selling it is an example of real estate investment.
When investing in real estate you should first determine what kind of real estate investment is suitable for you. Do not just jump in with the crowd and start buying properties. You have to think this through.
Remember that real estate investment is one of the biggest financial decisions you have to make and can be very risky and might end you up broke.
There are many ways to invest in real estates. One of them is the assumption of loan. The good thing about assuming the loan is that you will need less money to invest in a property. Therefore, you can spend more cash for the property development and upkeep.
Since the lender already knows about the property, you save precious time and money. Another great thing about assuming loans is that with long-term loans you will not start the amortization process when you start the loan. This is because the monthly payments of the first owner was used to the amortization instead of the interest.
There are many ways to assume the loan.
Here are some ways:
Trust Deed Financing
This usually happens if the banks will not finance for the loan of the property. When this happens, the seller can use a trust deed where the buyer can pay lower down payments and the seller will be more flexible with the terms of payment.
The advantages for this are lower costs and a chance for the seller to reduce interest costs. The trust deed also enables the seller to specify how many years the term of the loan will be.
This works when the seller gets a second mortgage and wraps it around the existing mortgage. In this type of assuming the property loan, you have to ask permission from the loan holder to assume the loan. With this kind of financing, the new financing is added to the original loan.
You might want to know why you would want to invest in Real Estate
Real estate investments can increase the property’s value. To make this work, you have to invest in the development of the property to appraise the value of the property.
You will be buying an underdeveloped property cheaply and sell it with the property value increased.
Before investing in a real estate, ask yourself these following questions before buying:
• What are the local investment conditions?
• What retirement savings do I have?
• Do I want a house to provide income when I retire?
• Do I want to pay down the loans on my properties before I retire and live on the income they generate?
• Do I want to sell the properties and use the profits to finance my retirement?
• What other investments do I have?
• Can my unpredictable cash flow allow me to own my properties?
• Will my property generate immediate income or will it be a long-term investment?
Answering questions like these can help you decide if you would want to invest in real estate. It will help you determine about the type of income you would get in your property and allows you to see yourself in the future when you retire.
S. Stammberger is the editor of Real Estate Investment Advisory. Real Estate Investing Information – Training, Advice, Tips.