Real Estate Investors Turn Back on Thousands of Dollars!

 Those new to real estate investing often fail to take action because they don't have much cash. The truth is that the very best investors got their start when they had little or no money.

When you start at the bottom you have to work harder and smarter. You have to make every penny count... and in doing so you learn how to put together the most profitable deals.

Right now one of the very best ways for newbies to get started is to buy property by taking over the payments of an existing loan. It's called buying "subject to" existing financing.

The new investor can generate income to make the mortgage payments by quickly leasing the property. Lease payments often will cover the mortgage payments.

Here's something most investors overlook when buying "sub2" and why they lose around $1,000 each time they do a deal.

We often buy properties "subject to" the underlying mortgage. That simply means we give the motivated seller a little money (if he is really motivated no cash is needed) and take over the payments of the loan that's already in place.

We have title to the property, but the seller's name stays on the mortgage loan.

This a popular way of buying property from motivated sellers. It allows the investor to buy many properties with very little cash. It also places a severe responsibility on the investor to stay current with the mortgage payments. You must be a good landlord and keep the rent payments rolling in.

Here's where most investors fail to pick up that one thousand dollar that is just waiting to be claimed.

When the investor sells that property they often are not aware that they can get a check from the original lender for the cash that has accumulated in the loan's impound account.

That is the money collected monthly by the lender to pay the taxes and insurance. It often adds up to around a grand or more and it's easy to get if you know what you're doing.

When you buy a property "subject to" the underlying mortgage, always get all the owners of the property to sign a Limited Power of Attorney giving you control of anything having to do with the property in the future. That way you don't need their cooperation later, when they've left the area and can't found.

Finally, after you've held the property while it appreciated in value, you are ready to sell and cash out.

When you have found a buyer and you are arranging the close, send the lender a request that any balance in the impound account be sent to you or your company. Always send along copies of the Powers of Attorney so the lender knows you have the authority to make the request.

Sometimes they will honor your request and sometimes they won't.

More importantly, instruct the escrow officer or attorney handling the closing of your sale to ask for the impounds. They will give the pay off instructions to the lender and the lender usually will follow those instructions without question.

On a recent deal we received a check from a lender for the impounds in the amount of $1,357.00. Yeah!.. Happy dance!

Was there a catch? The check from the lender for the impound funds was made payable to the two original sellers whose names were on the loan. It looked like this...

Pay To The Order Of: John J. Seller, Paris W. Seller c/o The Author's Investment Corp.

Was that trouble? No! Remember we had a separate Power of Attorney for each of these individuals. We took the check and the POAs to our bank. We explained the situation and here's what the bank officer had us do...

On the back of the check, we signed the name of each seller. After those signatures we wrote:

By_________________ (and signed our own name).

Then we signed our company name and again (By______) and then we signed our own name and position in the company.

That was it! An easy way to pocket $1,357.00 that too many investors leave on the table.

Now YOU will never walk away from that extra thousand or so dollars!



About the author:

Mark Walters is an Investor and manager of the Real Estate Investor Base Camp at http://www.CashFlowInstitute.com

 Mark Walters

More Articles 

How To BE A Successful Real Estate Investor - Lou Vukas
What do we really want? To be successful, we need to know what we really want. This involves a vision of our life as we desire it to be. To cite the success coach, Tommy Newberry, “The most successful people in the world are those who have taken...

How to Profit from Real Estate in Dubai - Rhiannon Williamson
Since the Crown Prince of Dubai made changes to his country's constitution back in 2002 to allow for the foreign freehold ownership of real estate in Dubai, the real estate market in the emirate has gone crazy! Because there are no such...

7 Simple Tips For Flipping Real Estate - Heather Seitz
Unless you've been living under a rock for the past few years, you've probably either dabbled in real estate yourself, or at the very least, know someone who has. So, how does someone that's brand new to real estate start flipping homes? (And...

How To Find a Real Estate Agent - Alex Fir
You may be of the opinion that you don’t need a real estate agent and that using one will add to the cost of buying your new home. The fact is that a real estate agent’s fees are typically paid by the seller of the home. So, as a buyer, you can...

Real Estate Valuation - Steve Gillman
Real estate valuation for single family homes is typically done by using comparable sales. With income properties this just doesn't work well. Imagine if you are looking at a 24-unit building. It would be difficult to find similar ones nearby...

The Benefits of A Real Estate Agent 101 - Lori Osenbaugh
Buying and selling property is not as easy as you may think. There are many things that you have to consider when purchasing a home, or when putting a home up for sale. That is why there are real estate professionals out there armed with the skills...

Florida Real Estate Investing Tips - Lisa Carson
Purchasing Florida Real Estate Investment Considering researching the purchase of Florida real estate investment? Do you find yourself wishing you didn’t have that lawn to mow and the constant upkeep on a home? Purchasing florida real estate...

Cutting Edge Real Estate. Is There Anything New? Part 1 - Tim Phelan
Cutting Edge Real Estate Is There Anything New? Part 1 By Tim Phelan The world of real estate has pretty much stayed the same for decades. It’s no different today than it was 50 years ago. The basic principles will never change. Is this true?...

Should I Invest in Real Estate While Running an Internet Business? - Peter Dobler
Copyright 2005 Peter Dobler Of course you should. I practice this for quite a while and I never looked back. I think this is the perfect combination. You get the best of both worlds. Did you know that 90% of all millionaires made their...

The truth about owning real estate with no money or poor credit - Jeffrey Ringold
Discover The Truth About How To Own And Control Real Estate With No Money Down Or Poor Credit! If you've ever thought about breaking into the billion dollar real estate investing business OR if you're just trying to take your investing to a new...

Use your time wisely when looking up texas real estate information - Sue Ann Reyna
If you're looking for ideas on texas real estate, anything got a lot simpler since the takeoff of the internet. Do you recall the time as you had to consult a dictionary when you wanted to come across something appropriate to texas real estate?...

Cash is King as Real Estate Crashes! - Bill Young
True real estate investors have not had an easy time in the past few years as the field has been inundated with speculators chasing artificially bloated prices. Hoping to be able to sell at a higher price is not investing, it is speculating....