Creative Financing Ten Ways

Creative Financing Ten Ways



Creative Financing - Ten Ways
Do all the creative financing techniques you hear about really work? Yes, actually .​
They probably have all worked somewhere for someone at​ least once .​
The point isn't if​ they will all work for you .​
The point is​ to​ know what is​ possible, so you can find your own creative ways to​ invest in​ real estate .​
Here are ten methods to​ get you thinking.
1 .​
Hard money lenders .​
You can ask around or​ find these online .​
They specialize in​ short-term loans at​ high interest .​
You typically use this type of​ financing for a​ fix and flip .​
You can often get the money fast, and if​ you make $30,000 on a​ project, who cares if​ you paid $10,000 interest in​ six months.
2 .​
No-doc and low-doc loans .​
No (or low) documentation of​ your income or​ credit required .​
Again, you can find banks that do these online now .​
The catch is​ that you will only be able to​ borrow up to​ 80% of​ the purchase price or​ property value .​
If you have 10% in​ cash, you might be able to​ borrow the other 10% from a​ friend or​ the seller.
3 .​
Seller-carried second mortgages .​
Sometimes a​ bank will loan you 90%, and allow the seller to​ take back a​ second mortgage from you for 5%, leaving you needing only 5% for a​ downpayment.
4 .​
Land contract .​
Called contract for sale or​ other names as​ well, this just means the seller lets you make payments, and delivers the title upon payment in​ full .​
I​ sold a​ rental this way for $1,000 down, because I​ wanted the 9% interest, and the higher price I​ got this way.
5 .​
Credit cards .​
If a​ seller will take $10,000 down on a​ fixer-upper that you expect to​ make $20,000 on, why not use credit cards? This is​ a​ true 0-down deal for you, and if​ you turn the project in​ six months, you will have paid $900 in​ interest on an​ 18% credit card .​
Don't let $900 get in​ the way of​ making $20,000.
6 .​
Retirement accounts .​
The laws get pretty complex in​ this area, but you can check with a​ tax attorney to​ see how you might borrow from your own retirement account to​ finance real estate investments.
7 .​
Friends and family .​
Keep it​ all business, if​ you use this source, but loaning you money at​ 7% isn't a​ gift if​ their money is​ getting 2% in​ the bank.
8 .​
Note buyers .​
The seller needs cash .​
He raises the price, and sells to​ you for $100,000 with no money down, taking back two mortgages from you for $90,000 and $10,000 .​
He arranged (or you did) for a​ note buyer to​ pay him $80,000 cash for the first mortgage at​ closing, getting him the cash he wanted .​
You pay two payments now, one to​ each note holder.
9 .​
Get a​ loan on other property .​
Interestingly, if​ you take out a​ home equity loan for a​ vacation, and then forget to​ use it​ for that, you can use it​ for the downpayment on an​ investment property, without violating the rules of​ the bank that gives you the primary mortgage .​
In other words, you got in​ with no cash of​ your own.
10 .​
Partnerships .​
For bigger projects, you could arrange for five investors to​ each put money into a​ partnership, with your share being the management responsibility instead of​ cash.




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