Conventional Financing requires 20% down for a single family non-owner occupied, 25% for a 2,3or 4 unit and 30% if you own 4 and are buying your fifth! Couple that with very stringent credit requirements, unbelievablely strict income qualifications and experience requirements and you have a cocktail for an impossible seller’s market for investment property.
I prefer to think in terms of Solutions rather than the dismal problems that face investors. Since the problem with selling investment property lies in financing it, doesn’t the solution seem obvious? Why, then, is nobody doing it?
The answer is education. The solution is Seller Financing! I like to use land contracts to protect both buyers and sellers.
A land contract transaction allows the buyer to hold title to the property. The deed transfers to the new buyer but is held in escrow by a third party until the final payment is made. Most of the time that comes in the form of a balloon payment accomplished by a refinance a few (two or three) years down the road.
The seller gets to sell and get out from under the burden of property management and buyer gets a property at today’s bargain prices without the ridiculous scrutiny of today’s banking guidelines.
A caution to both parties; Sellers should pre-qualify buyers and only accept those with solid incomes and good credit. This is not intended to be a free real estate give-away, but a means to transfer one investor’s burden to another’s opportunity. Buyers should be aware of the numbers. Remember, you are buying a piece of real estate for the purpose of making money. Our system got into trouble because easy money allowed unsophisticated buyers to amass huge quantities of real estate with little or no experience and many (most in that category) failed. The numbers still have to work!
If you are a Professional Realtor reading this then seize the opportunity to be the educator of all parties. Seller financing is back and it is likely here to stay for a quite a while!
Real Estate Investing is the single most lucrative endeavor that the average American Citizen can engage in, and Today is the day to do it!!
