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flipping an investment property’s purchase money
By Buyincomeproperties.com
Oct 10, 2005, 01:51
What are some ways of flipping an investment property’s purchase money?
Buying an investment home wholesale at a discount price takes some searching and knowledge of the best markets to find investment properties that can be flipped.
Some investors choose to flip a mortgage loan itself This is called, “the flipping of the mortgage paper.” You just purchase the mortgage notes to sell them later at a higher price. Thus, you let the next buyer worry about the process of foreclosure. The advantage is that you are buying the mortgage loan at the best mortgage rate and therefore are able to buy low and sell high.
Other markets of mortgage leads besides foreclosed investment real estate are; IRS tax seizure auctions, wholesale distress auctions which sell probate properties, property tax auctions, open houses for run-down properties, as well as auctions for condemned properties, abandoned home mortgages ...etc..
An especially profitable way to flip your real estate investment money is by buying these investment properties before they go to auction. Why would a bank or mortgage brokerage give you a discount on the debt owed on a mortgage loan?
Say a bank or mortgage brokerage lends a borrower in Texas hundreds of thousands of dollars in an adjustable mortgage. They hope to get back triple their money after all the interest is paid even at good mortgage rates.
Later, when a borrower’s home loan has paid off much interest and some of the principle, for some unfortunate reason, like medical problems or a job loss, the borrower no longer can pay the home financing.
What does the mortgage broker do at this point? Well, after numerous letters and calls, the mortgage brokerage realizes that they will not get any more money from this borrower. They also realize that foreclosing on investment loans eats up both time and profits. Their best option is to sell the Texas mortgage to a third party, and then accept what profits they have all ready made, and move on.
Therefore, the mortgage broker offers a discount price on that current owner's Texas mortgage. This discount is typically the highest price that the mortgage brokerage can negotiate yet the lowest price that you, the buyer, will pay.
You, the mortgage investment buyer, can then sell high and flip that note for what should be a quick profit or you can carry the judgment and become a managing property owner. Either way, you can make good money on such a deal.
So now, you want to get out your mortgage calculators and decide if the risk is worth it. What risk and avenues should you be wary of?
Well once again, you first must find a mortgage franchise that wishes to avoid the lengthy process of foreclosing. If the bank has already established a foreclosure, judgment your work is half done. That foreclosure paper from the court demands that the debt be paid off. If the mortgage broker has not acquired a judgment prior to your purchasing the mortgage note, you must proceed with the foreclosure before you can move proceed.
Have your real estate lawyer ready if you intend on going to foreclosure. Getting a favorable judgment is always risky. There are so many factors involved that the outcome cannot all ways be planned.
Thus, once again, if you want to make a profit on your mortgage leads, you should remember that the best formula is when you have the foreclosure judgment before you purchase the mortgage note. Otherwise, you could easily be entangled with an onslaught of legal fees and encounter other problems, such as your borrower declaring bankruptcy.
Make sure you recognize all the costs surrounding your mortgage broker leads, before flipping your mortgage loan leads. the before foreclosure becomes necessary.
Some investors of even commercial mortgage leads make a prosperous full-time living by tracking these distressed properties and then flipping them. You can too with insight.
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