Creating Residual Income Opportunities in Real Estate

You can invest in mortgages, just like Wall Street’s Mortgage Securities but on a smaller scale. Make money in the same method by buying discounted mortgages. What is it? Here is a scenario that explains how it works: Mr. & Mrs. Smith find a house that they want to purchase. They both have excellent credit and earn decent incomes, but the Smiths are $5,000 short of their required deposit. Interest rates are at 7.5%, and they ask the sellers of the property to if they would be willing to take out an interest-only, 8 year mortgage. What is an interest-only mortgage? It’s when only the interest is paid during the life of the loan and the full amount of the actual loan is paid when the loan matures.

In our scenario, if the home’s purchase price is $100,000, and they need an interest-only mortgage for the $5,000 down payment, then the Smiths would pay $500 each year for 8 years, and in the 8th year, also pay off the full $5,000. In the meantime, they would have two mortgages on their new home. Whenever property is sold, information regarding the sale of the home is recorded at the country courthouse of the Town or City Hall. The information becomes public record. The information in these records includes: • Purchase price • Liens on the property • Taxes