Since Congress passed the $8,000 (maximum) tax credit to first-time home buyers, I have received several calls from Moms and Dads with some variation of this question: “My daughter (son) just graduated from college and started a new job. He (she) can’t qualify for a mortgage yet. How can I help them qualify for this $8,000 tax credit for buying their first home?”
Simple. You be the bank. You put up the money and they can buy a home as if it is a cash transaction, granting a purchase money mortgage to Mom & Dad at closing. They get the tax credit, you get a great investment paying above-market returns and secured by real estate. Maybe it’s Grandpa and Grandma or an Aunt, Uncle, Brother or Sister who puts up the money. You don’t even need to be related; anyone can "be the bank" for a purchaser and they are a great way to benefit from investing in real estate without actually owning, renting and maintaining the property.
Of course, not everyone has an extra 50, 80 or a hundred grand lying around the house, but some do. When the stock market tumbled, many people moved their money out of the market into safe, secure investments which pay next to nothing in interest, essentially parking their nest egg until the stock market recovers.
So why buy a house for you kid RIGHT NOW? Here are FIVE good reasons you should:
1. Single-family homes are selling at discount prices. Your son or daughter may never get a deal this good ever again.
2. Prices do not appear to be dropping further; prices have stabilized. According to many experts, we are at the bottom.
3. Homes in the $50,000 to $100,000 are SELLING FAST! If you wait two months, the selection of homes will be picked over and prices may start to rise.
4. Wait four months and your son or daughter will miss the $8,000 tax credit entirely!! The deadline for closing a sale is December 1, 2009.
5. Where can you get a return of 6 or 7% on your money today, secured by real estate, and invested in someone whose values are yours? Is there anyone you would trust more than your child to protect your investment?
If you more questions about how you can invest in purchase money mortgages contact me through factoidz or e-mail donaldrphelanjr@ameritech.net
