In our current economy and real estate market, sellers are more anxious than ever. They aren't always desperate, but they are nervous.
This means very good things for investors. As we've talked about before, creative financing is abundant. When sellers are in a bind, you're likely to find more options than ever. But, finding desperate sellers is never a free pass.
I spoke with a very experienced investor and friend over the weekend who particularly enjoys working with desperate sellers. He has become quite the stud at structuring deals creatively, but as with all of us, he's susceptible to making mistakes and encountering problems.
He recently structured a deal where he took over a seller's mortgage on a nicely new-built home. The deal was kind of amazing, to be totally honest. But there was a problem with it. The seller had been sending her mortgage payments to her mother, while she was out of town, and the mortgage hadn't been paid for 60 days. The investor took over the payments and thought he was in good shape with a current mortgage. Well, when the payments weren't made, the lender asked to see proof of insurance and when provided, it showed a new owner. This was a major red flag for the lender and could hurt everyone involved.
It's easy to take people's word and to not do the necessary research. You make excuses at the time because you have other things to do. You take the easier way out. That's fine, until you're thousands of dollars out of pocket and have nothing to show for it.
Be smart. Do your research. Don't just ask questions. Get real evidence. That's how great investors avoid disaster and continue to make huge profits.
Tuesday's Tip: Don't get so excited about the possibilities or too busy with other things and avoid the most important details. Do your research and do it right.
Comments(1)