From the ashes of the economic collapse and housing bubble is a new real estate investment strategy that is changing the way leasing option investors do business.
The lease option replacement strategy is called Mortgage Assignment, which in its simplest form is simply giving title to the home, complete with the existing loan, to a buyer.
The father of this is real estate investment guru Phill Grove, inventor of the “Mortgage Allocation Profit System.”
This tool is a direct response to the unique economic conditions we find ourselves in, with record levels of motivated sellers needing to sell and the changing nature of buyers considering creative financing.
Here are some reasons to consider a mortgage assignment instead of the old lease option.
A higher down payment than the lease option
Over the past two years, the owner financing lease/purchase option has changed. The fact is that many people who were considered good credit risks before 2008 are now unable to get a loan no matter how much they earn. Included in this group are the self-employed, ITIN buyers, and even traditional buyers with good credit who don’t meet some finicky banking requirements like length of employment.
Despite the fact that they cannot recover the loans, these buyers do not want to rent or lease. They want to buy and guess what? Many of them are good savers.
They have a 10% to 20% down payment on a house, which you, the investor, can pocket with only one snag: they want the deed to the house.
Assignment is much more attractive to these buyers than a lease option because it protects their interest and since the house comes with the existing loan, they often get a much better rate, making it a much smarter decision to buy. this type of potential buyers.
There are some houses you don’t want to have
Let’s face it, there are some houses out there that, because of the area, condition, or type of loan in place, you just don’t want anywhere. With mortgage assignment, you simply bring the buyer and seller together. Unlike a leasing option, since the contract is an agreement between them, you are not responsible in any way and if anything goes wrong, your hands are completely clean.
less hassle
Leaseholds can be a real pain where you know what, endlessly rampaging with tenants and their excuses, evictions and home repairs. Not only can you earn more down payment with a mortgage assignment, but it’s a “one night stand” you’ll never hear from again.
They say you can’t teach a new dog new tricks, but you can teach a real estate investor how to make more money with no hassle. Mortgage allocation is a promising new tool for leasing option investors anywhere to add to their war chest.
