Do you have a real estate deal that you want to do but are a little short on the down payment? Look here first!
Savvy real estate entrepreneurs know that there is a ready source of down payment money that is out there for the taking. No questions asked. No hassle. No problem. No kidding.
If you are looking for a little help with the down payment for a property you want to buy, look first at the property itself. This is a source of money that most people never consider when they are putting together the money to make a deal happen. In many cases there is a substantial amount of money already waiting in the property. It is there and available to you as: 1. Currently-held deposits, and 2. Rent.
Many times buyers of investment property forget that investment real estate often brings with it a block of funds that will reduce the amount of the down payment needed. When you buy a property, there will in all likelihood be deposits held by the owner. These deposits should be transferred to you (the buyer) at closing. Chances are that a check will not actually be written out and handed to you at closing. Instead, what will probably happen is that the total amount of deposits held, based on existing lease and rental agreements, will simply be deducted from the moneys due from you at closing. Guess what, this means that you’ll need that much less close the deal. Depending on the size of the property and your local laws regarding holding of deposits, this could result in a huge reduction of your out of pocket cost to acquire. And that’s not all.
Because rent is paid in advance and mortgage payments are paid in arrears, when you buy a property chances are that you will have a 30-day window before your first mortgage payment comes due. So how does that affect you? It can lighten your financial burden right off the crack of the bat! For example, if you close your property purchase on the last day of the month, you’ll have a big block of income the very next day when the rents come in. If your contract states that you will receive the month’s rent, you could even close on the second or third day of the month and use that month’s rents as a portion of your down payment. That’s a great benefit of having rents paid in advance and mortgage payments paid in arrears. These are just two of many tactics used by the pros to make buying real estate easier.
As in all things, the more you understand, the better off you are. With real estate as you grasp all of the subtle nuances, you will be able to use the tricks of the trade to structure transactions to maximize your benefits. If you will learn what you need to know, you can earn what you want. Don’t you love this business? I do. Good luck in your career. If we can help we’d be glad to.