Tree Town Investors,

 

                So we all know that the economy is in a slump, but this may be a great time to purchase income property or property in general.  More properties with distressed owners have to give up on quality properties, and many of their prices show their great desire to unload them.  Not just the small houses are or second properties which they tried to rent out, but many desirable multi-unit dwellings in great areas.  I just saw a large multi-unit property in the Kerrytown area (a very desirable rental property area of Ann Arbor) which hit the market, and yet the owner last year in talking with me was crying over the prospect of having to let the property go.  It had been in her family for decades, but the financial agreement with a partner was something she had to get out of.  So this cash-flowing property is now up for sale.  Many other landlords or income property owners are no longer able to get bridge loans to help finance their properties, upgrade them, or do business as usual.  So many are cutting some properties loose.  Others are simply getting out of the business.  This is now the time where smart investors are picking up these properties at great prices. 

 

                But where does the financing come from?  Well there are a few different options out there.  You can contact your personal mortgage professional (you honestly should have one you work with who can “manage” your loans).  See if they (or if you don’t have one, feel free to contact me and I can give you the names and information of a few good ones) are doing any income property financing.  Depending on who they are tied in with depends on what rates, minimum down payments, points, etc would be involved in a transaction.  I am finding that many local banks have been more willing to lend for their local clients then some others.  In this lending climate, many local banks are more willing to lend locally.  We can use this as investors to our advantage.  Want to invest in a specific town?  Call up a few local banks and see how far you can get.  They may be more willing to lend then some larger banks. 

              

         How about some other financing options?  Remember land contracts?  Well I have been welcoming them back into the real estate world this year in quite a few deals.  Unfortunately for my lender friends, this cuts them out of the loop, but it can really help move the process along.  If you are not familiar with land contracts, let me explain them briefly.  Instead of a typical mortgage transaction with a lender, the seller becomes the lender.  A down payment, monthly mortgage payment, interest rate, and everything in a usual loan is worked out with the seller.  The seller effetely becomes the bank.  You pay the payments to the seller, and for a limited time, they are your lender.  At some point, there may be a balloon payment provision in the contract in which at a certain point (typically 4-7 years) the remaining balance of the loan needs to be paid up.  Realistically, once a buyer is able to get a loan, they can pay off the balance of the loan.  If you would like to know more about these, feel free to drop me an email.  It takes much of the hassle out of the loan issues of right now.  Keep pondering the idea of income property ownership, as a slight risk now can produce a huge reward in the future.  Being smart and savvy in climate can jumpstart those who are looking for ways to become income property owners, or build on their real estate portfolio. 

 

 

David A. McNamara

 

Tree Town Realty

Email: David@TreeTownRealty.com

Cell: (734) 476-9768

Fax: (734) 668-8339