Short on Funds? Get a Co-Borrower to Help you Purchase that Home
Real estate investing can be seen as a very long-term process in which your earnings get a little bigger each year, or it can also be a bunch of decision making that involves big sums of money. There will be times in which you will find yourself with no money at all. What can you do in those cases? A co-borrower is the best choice you could seek for. Here we will give you some advises regarding finding a right borrower.
Team up in order to win up
If you try to do everything by yourself, you will end up getting trouble. This happens in life and real estate investing is not the exception, especially if we´re talking about funds. Most investors find it very difficult to qualify for a loan; therefore they seek for a co-borrower to be in the deal with them.
Look for a family member or a friend, someone you can trust, to be in the deal with you. If you play your cards right, we´re looking at a win-win situation in which the purchase process fastens up and you and your partner end up owning the property.
What´s in there for me?
Remember that loan that seemed far-fetched for you, as an individual? Well, if you partner up with someone, that person´s real estate background can help you out to qualify for that loan. Furthermore, the monthly mortgage payments can ease up with another partner willing to pay half of what´s owned. This is really recommended for rookie buyers in high-priced markets.
However, if the co-borrower does not want to take part in the monthly mortgage payment and just wants a percentage, a share of the income in exchange for having paid half of the down payment. In other words, if they are not for the long run and just want a cut of the action, they need to clarify that before paying any initial sum because that can affect you figures regarding mortgage payment.
If your co-borrower decides not to pay the mortgage without stating that before, his or her credit history will be affected and he/she will also suffer the investment losses they purchase can give.
Moreover, your co-borrower may also want to occupy the place or simply live in another place as an investor non-occupant. Parents can use this to set their children with a property to live in in order to keep them close by.
Impact on the market
There are some effects of this investment technique in the market. The negative thing is that many first time investors see themselves forced to work with co-borrowers to actually buy the property. On the other side, this makes a financial growth on the co-borrowers.
The good thing is that risks decrease, a lot. When you have a partner to count on, this means you´re not on your own whenever you have to face any hardships or challenges in the market.