Tips & Trends for the Flagstaff Real Estate Market:
Past Articles [June 2005]
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Cashing in on the Real Estate Market without Owning Property
While most of us know about the booming real estate market many investors are reluctant to put their money into real estate other than their primary home because of the hassles associated with property ownership. It is easier and safer to invest in a money market or certificate of deposit. The stock market is an option but for the uninformed can be quite risky.
Another investment you may consider is mortgage lending. There are many potential home buyers in our community who cannot borrow money through a mortgage company or bank for a variety of reasons, even though they have enough money for a down payment. Either they have a marginal credit score, lack credit history or the lenders fees make borrowing prohibitive.
If you have money to invest and are willing to assume the risk, perhaps you should think about lending your money to someone who is in the market to purchases a home. The interest rate at which you lend your money may bring a better return than some of your current investments. You will be the beneficiary of a Deed of Trust on the property of which you loaned the money, and you will have the satisfaction of helping someone acquire a home.
If lending money interests you, ask your real estate agent to keep you in mind when an opportunity develops. Most of us who have been in the business for a while know people who would like to buy a home but because of their circumstances are unable or unwilling to borrow money from a conventional lender.
There are numerous pitfalls that you will encounter as you begin the process of qualifing potential borrowers. Do you home-work up front and carefullyscreen your applicant. Doing so will minimize your risk when you lend them you're hard earned money. Generally when someone puts a 2%-30% down payment on a property they are not very likely to default on your loan.
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