Today on The Wealth Secrets Podcast, Sean Adams talks to Adam Zach, the co-founder of Set Your Rent, a creative homeownership and real estate investment company specializing in rent-to-own programs. They talk about why most mortgage applications get denied, rent-to-own-lease agreements, and business loans versus conventional loans.
[03:01] Getting to know Adam Zach
[05:30] Adam's first encounter with real estate investing
[07:00] How to invest in real estate
[10:28] Why would a mortgage get denied?
[14:25] Risks of quitting your job and jumping into entrepreneurship
[16:49] All you need to know about private mortgages
[19:34] Owner financing and the prequalification process
[21:33] Rent-to-own-own lease agreements
[25:28] Risks and realities of the contract for deed
[31:40] Business loans versus conventional loans
[36:10] Real estate investment and creating value
[39:05] Passive real estate investing
[42:50] Investing in the rent-to-own space
Picture this scenario, you've found your dream home and applied for a mortgage, only for your application to be denied. A mortgage application denial is the one thing most would-be homeowners dread. Interestingly, most employed people assume that everyone can get their mortgage applications approved. Yet, one in every nine loan applications to buy or refinance a home is denied. Adam explains that denial can be due to various reasons, including insufficient down payment, no credit history, a poor credit score, or too much existing debt.
With this in mind, Adam came up with a brilliant idea to make money off mortgage denials. The fact that banks will willingly finance him puts him in a prime position to owner-finance a property. Owner financing is a transaction in which an investor finances the purchase of a house for a third-party entity/person. Adam explains that owner financing can be advantageous for sellers and buyers since it eliminates bank interruptions. Moreover, the financier gets to make a profit that would have otherwise gone to the bank.
However, this type of transaction packs much higher risks and responsibilities for the financer. First, there is the probability that the homeowner can default. The first red flag is that the buyer can't qualify for a traditional mortgage. This is why Adam and his team perform in-depth background checks on potential clients to assess their incomes, down payment situation, rental history, and credit score. He further adds that although credit scores are considered during background checks, they rarely decide based on a client's credit score.
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For more videos and resources, visit leveraged-life.com. Do you have questions and feedback? Get in touch with Sean Adams through his email: sean@leveraged-life.com.
All shared information from the Wealth Secrets Podcast should not be taken as legal or financial advice. Please consult with a professional before making any decisions.