How to Find an Investor to Help Me Buy My House
Maybe your credit score is too low to qualify for a reasonable interest rate on a mortgage or maybe you don't have enough money for a down payment and closing costs. If so, it may occur to you to look for an investor to buy a house then do a lease-purchase deal with you, which will allow you to apply part of the rent to the purchase price each month, as described by Jack Guttentag, Professor of Finance Emeritus at the Wharton School of Business. Or if the investor pays cash for the house, he may be willing to hold the mortgage for you.
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Instructions
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Compile a list of what you can offer a prospective investor--remember that investors do what they do to make money, not to be nice. For example, you may offer to pay 7% on a mortgage. If CDs are paying only 2%, that may look like good money to someone who can buy the house then sell it to you and hold the mortgage. You may also offer a down payment or offer to sign a lease-purchase agreement that gives the owner a $200 profit over his monthly carrying costs or both.
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Obtain a credit report and references. Investors want to know what they are getting into and with whom, so if you are prepared with this information, you will send a message that you are not trying to do anything shady.
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Advertise in classifieds and in other venues, such as area real estate publications. Be specific and realistic about the price-range and size house that you hope to get, and mention that you plan to give the investor a fair return on his money.
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Talk to your accountant. Some accountants have clients that are looking for sound investments. If yours knows of any investors, he will put them in touch with you. Do not ask for their names.
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Attend a real estate investment club meeting. Real estate investment clubs are filled with people looking to do exactly what you need someone to do. Some of them will already have houses to sell on a lease-purchase deal, and some others may be willing to hold the mortgage if you agree to let them keep their name on the deed along with yours.
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Tips & Warnings
Do not advertise that you have $3000 or some other amount to put down. Someone may devise a way to collect it from you without ever getting you a house.
Do not give anyone any money until your attorney approves of the deal. Legitimate investors will understand this.
Get everything in writing and have an attorney look at it for you. Entering into any unconventional real estate deal is highly risky, especially if you are too eager.
References
Resources
- Photo Credit house image by Byron Moore from Fotolia.com
