In today’s mortgage and real estate environment, people are looking for a scapegoat to blame for the Subprime Mortgage Crisis. Some believe it’s the lenders fault for offering aggressive mortgage products to homeowners.
The truth of the matter is: Its not the lenders fault.
Homeowners and Home buyers need to take responsibility for their actions.
It’s not the lenders fault that the homebuyers didn’t make their mortgage payments.
It’s not the government role or responsibility to bail out these homeowners.
In this time of the market you need to be focusing on no Risk Strategies for your real estate investing business.
Several of these strategies are:
Options
An option controls a home and gives you an equitable interest in the home giving you the right to sell the home for any price you want creating as much profit as you want.
However it does not obligate you to buy the home so there is no risk. An option agreement can be secured with a $10 or $100 deposit. This is No Risk Deal because you have no money invested and it doesn’t require the use of your credit. These work on all types of properties, single family, commercial, land , large, small, Ugly, Pretty, low end and high end luxury.
Short Sales
Short Sales are a strategy that only applies to homes that are in foreclosure, behind on payments or about to behind on payments. Short Sales Work Awesome in this market because there are so many of them out there right now. They’re very easy to find right now and you have nothing at risk. All Short Sales are no money down and do not require the use of your credit.
Performance Subject-To/Lease Options
This is a deal where you offer to help a homeowner sell their home for them by taking over their mortgage payments only if you can find a lease option buyer for the home. One thing you do not want to promise to a “Subject-to” seller is that you will guarantee to make their payments on a home when you don’t know you can sell it on a lease option.
Guaranteeing to make someone’s payments and then not doing what you promised will make an unethical investor that doesn’t operate with integrity. Sometimes this is beyond your control because you don’t have the cash flow to make the payments. If you don’t promise to make their payments in the first place, you can’t get in trouble. Make sure you get this in writing because sellers always only hear what they want to hear.
What Not to do:
You should not be using your credit to buy houses on marginal deals. You should only use your credit if you have to or if the deal is grand slam deal or a commercial deal. Never put any money down on a “subject-to deal” unless you know you’ve got it sold.
Remember You have nothing at Risk if you:
Don’t use your own credit to buy houses,
Don’t write any checks to acquire homes,
Don’t make guarantees to sellers you can’t support
I’m sure these tips will help you sleep better at night
I will be teaching a section on no risk strategies to use for today’s market at my seminar on May 8th in Tampa. Seats are filling up Fast.
