Equity growth
with bad credit investments...
Property takes numerous
types and forms, each market has its own unique structure of
real estate property types which can provide income or equity growth or both
for those with bad
credit.
Planned
Unit
Development
(PUD)
A
property
that is
comprised of
Single
Family
Homes, Town
Homes or
Condominiums. The
individual
homes and
land are
privately
owned, but
common
elements
such as
roads,
recreational
facilities
and open
areas are
owned and
maintained
by a
mandatory
Homeowner's
Association.
Owners in
PUDs are
required to
be members
in and pay
for the
Homeowners
Association.
Condominium
A condominium is
created out of
vertical space.
Instead of owning a
parcel of land, you
purchase a
subdivided piece of
space contained
within a condominium
regime, which may
also be referred to
as an apartment or a
townhouse. The
walls, common
elements and all
improvements are
owned and maintained
by the condominium.
Cooperative
A corporation
that owns real
estate is referred
to as a cooperative.
To purchase a
cooperative unit the
owner actually
purchases a pro rata
share of the
corporation stock.
The corporation is
responsible for
paying real estate
taxes, underlying
mortgages, and all
common elements
maintenance.
Leasehold
A long-term
ground lease is a
leasehold estate.
Renting land out for
unencumbered use
instead of selling
creates a ground
lease. The land is
returned at the end
of the lease term,
in it's improved
state, to the
landlord.
Fee Simple
Single Family
Detached (SFD)
properties are
referred to as Fee
Simple. The land is
unencumbered by any
covenant requiring
ownership in an
association.
Attached homes can
also be Fee Simple as
well.
With the above
listed real estate property
types there is
always an associated
risk for the buyer
and the lender.
Primarily, there are
two sources of risk
associated with
property
underwriting (loan
approval):
- Is the lender
taking a risk if
they have to
re-sell
the property
after a
foreclosure?
- Is the
borrower
accepting a risk
by living in a
certain property
type?
To make this
short and sweet,
risk is evaluated by
outside factors that
impact the borrower.
An example would be
with a Homeowners
Association property
type. They are responsible
for common areas of
the dwelling.
Someone slips on ice
on the sidewalks and
sues the
association. If
their insurance
policy fell short,
and they lost the
law suit, they might
go bankrupt which
would adversely
impact the property
values. Determining
the property type to
pursue has it
advantages when an
underwriter in
dotting the
"i's" and
crossing the
"t's", try
to weigh the pro's
and con's of high
risk real estate property types. Property
Type To Mortgage
Theory |
