Quote from @Mitchel Johnson:
@Jonathan Greene I myself am a new investor and have been learning as much as I can before purchasing a property. Have read and done some preliminary research on assumable loans, and was wondering if you could help me understand the hurdles that go along with it. Obviously some potential issues with the lender, but how often do these deals really happen? And is there risk of the bank changing the rates on an assumption?
There is "assumption" which involves the bank. The buyer is qualifying for the loan just as if he were the originator of the loan. Same interest rate, same terms. Same income, same credit, DTI ratio, underwriting requirements. That process has direct lender involvement.
Where the challenge lies, is when unsophisticated "investors" with no experience, no money and no reserves use creative financing (often called wrap, subto, lease option, seller financing, land contract) to purchase properties and along the way there is a "hiccup". There are always "hiccups" in life and in real estate investing. For a relatively "safe" creative financing, one needs serious reserves (lots of moolah) and the ability to sell or refinance quickly when one of those "hiccups" occur.
The gurus usually collect a large fee, from people who have neither money, reserves, nor experience. That is the gurus actual income. The guru uses the allure of easy success. However, there is no easy success in creative financing. It's hard work.
The guru though, uses that income to finance the "creative financing" they "teach". So, id it really doing what they teach if they have lots of money to begin with? Say they have a "community" of 100 and someone does a deal, (it doesn't have to be a deal that actually makes sense), everybody believes that's "their" success and they all do the "happy dance". It's their "tribe".
Just keep in mind, the guru will not bail you out in a tough situation, unless there is significant profit in it for them. Basically, you do the work, they make the money. Now, ca n you learn to properly do creative financing from a mentor/coach/investor - of course. But, that's a different discussion.
