Buying Investment Property
by Clifford A. Hockley
Few commercial transactions involve a simple purchase agreement without amendments or a quickie loan application. The process is more complex and each transaction is unique. The result is that sometimes the best way to close purchases is to come up with terms and conditions tailored to the individual property.
Assume The Loan
Imagine that you have money in your pocket, but the property is not cash flowing the way the owner claimed. You have lots of investment experience so you ask: Can I assume this loan?
What’s so good about an assumption? The less cash you use to get into a transaction, the more cash is available for property upkeep and turnaround. With an assumption you will likely pay 1 point (1 percent of the loan value) to assume the loan and your finances must be approved by the lender. But the good news is that you save time and money because the financial institution already knows the property. The other nice thing here, especially if this is a longer-term loan (10 years or more), is that you are not starting the amortization process from day one. Instead, because you pick up where the first owner left off, more of each monthly payment is devoted to amortization rather than interest, so you build equity more quickly than with a new loan.
Trust Deed Financing (more…)
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