This is a trap that many can fall into when searching for a property to purchase. Believe it or not, there are owners that do very well by selling their properties over and over again. What can happen is the dream comes crashing down! Cash flow is interrupted for some unplanned reason. Debt service becomes harder and harder to make.
The owner then ends up taking the property back, either through foreclosure action; or often having it handed back in lieu of foreclosure. He or she then becomes the beneficiary of the down payment that was made, the interest payments before the default, with a property and market that he or she is fully familiar with.
This is a great formula for selling it again to a new buyr, with often the same results.
Your transaction may not fit into this category, but be very careful. Don't risk money you can afford to lose when providing the down payment. Also, a simple answer is “don’t overpay” for a property!
Good luck and onward and upward!
Oct 30, 2012