Leverage means investing the least possible amount of your cash. In this way you earn the maximum percentage return on your money. That is the magic of leverage, and that is why low or no down real estate purchases are important to the investor. Similarly, if you can take over the seller s low interest loan with no qualifying and with no escalation of payments or interest, this would qualify as a good deal. Clearly, if a seller is distressed and must sell, or if the seller is unaware of the fair market value of his or her property, or if the seller is unable to manage his property she may sell to the buyer who can solve her problem.
Many people make a lot of money seeking out the distressed seller, often called a don t wanter.
There are as many reasons for distressed sales or forced sales as there are don t wanters. When the seller will accept subordination clauses or substitution of collateral clauses then you have the makings of a good deal. Properties that can be lease-optioned and then sold on a contract for deed have a potential for making a lot of profit. This clever technique will be explored in future issues of this supplement. Or, the property can be bought subject to existing loans, you then resell on a wrap around mortgage with the same down payment and the same price, but with a higher interest rate.