July 13, 2024


Mad about real estate

We Buy Houses in Knoxville, TN

Just by picking up the local news paper, it’s hard to look past the abundance of We Buy Houses classified ads. In addition to print advertising, chances are you have/will be driving by a multitude of We Buy Houses bandit signs (a.k.a. road signs) of the major highways in the greater Knoxville, TN area. Let us not forget about billboards, radio or television marketing either. Last but not least, real estate investors are popping up all over the internet trying to buy homes.

Investors today are buying properties in Knoxville to reap the financial rewards found in real estate. These same house buyers are looking for investment property that will return them money in one of two ways. They are looking for a return on their money either by a (1) capital gains method or a (2) cash flow method.

Many real estate investors purchase homes to fix up (a.k.a. rehab) and sell to an end buyer that is ready to move into it. This type of investor likes to flip houses. Their strategy involves buying properties at the lowest possible price. They can then rehab any the damages do to the home and resell it for the highest possible price to an end buyer. These are capital gains types of investments. Profits are made on the spread between the purchase price (along with the amount invested to rehab it) and the sell price of the house.

Still other buyers are investing for cash flow. These types of investment deals yield profits over a lifetime of home ownership. Cash flowing property buyers are obviously looking to purchase single family houses and apartment buildings at reasonable low prices. However, they are more concerned with the total amount of rent per month that can be collected from each tenant. Another advantage of owning cash flowing rentals is the tax benefits. Holding on to a profitable rental property for more than a year can help the investor with (1) a smaller tax on capital gains, (2) depreciation of the property and (3) possible eligibility of a 1031 exchange.

Most commonly property investors purchase homes with cash. Sellers usually prefer it that way if they can get an investor to write a check for  the entire amount to buy the house. This method is a great home buying strategy, but it’s NOT the only buying strategy used to buy properties. The following are a few additional buying strategies that investors use to purchase properties.

· Short Sale – This is a process whereby the delinquent mortgage holder is in agreement with the lender to sell the house for less than the mortgage balance. Typically in this situation the home owner has been behind on paying the mortgage payments and the mortgage balance is usually greater than the value of the home. The current owner of the home is expected to have the house    sold for less than market value to an end buyer without receiving any funds from the sell price. Often times a Short Sale can be the best outcome for both the lender as well as the current home owner.

· Owner Financing – This is a process whereby the current homeowner typically owns the property free and clear and decides to sell it to a buyer. A buyer that does not bring 100{ef6a2958fe8e96bc49a2b3c1c7204a1bbdb5dac70ce68e07dc54113a68252ca4} of the funds to the closing table (i.e. cash, private money source of funds or traditional bank financing)  can use Owner Financing to purchase the property. Then terms of Owner Financing are agreed upon by both parties prior to closing.

· Existing Bank Financing – This is a process whereby the current homeowner can keep the existing mortgage in place an have the new buyer purchase the house by using this same financing. Often times this is referred to as “Subject To” financing. It can also be thought of as a version of the older version of assumable mortgage.

· Private Lender Financing – This is a process whereby there is a third party that provides the funding source. These Private Lenders will typically charge the investor a higher rate for the cost of money, but the terms can be agreed upon prior to closing.

There are a multitude of ways that investors can purchase property here in Knoxville, TN without having the bring cash to the closing table. If you would like to learn more about selling your property to the We Buy Houses in Knoxville investors, then contact us to find out your options.