Many think that creative financing involves complex, convoluted and “only for the big boys” strategies. NOT SO! Creative financing simply means finding an alternative way to solve financial problems or barriers to your real estate investment goals.
I was driving my kids to school last week and counted 7 bandit signs that offered “Seller Financing”. Now rewind a few years back and those very same signs read something like: We Buy Houses or For Lease. Got me to thinking, now that traditional lending has tightened up and 401k's are worth peanuts people are challenged to find new ways to finance and sell properties.
Ok– So you ask how are investors getting deals done?
I've spoken to 6 investors this week from New York, Atlanta, Tampa, Texas & New Orleans to gather intel on the numerous methods and techniques they are using to get their investments financed and sell their properties quick.
Sources of Creative Financing & Funding
- Other Investors
- Hard Money Lenders
- Relatives & Friends
- Collateral From Other Properties
- The Property Equity
- Seller Financing
- Options & Leases
- Existing Mortgages or Wrap Mortgages
- First Time Home Buyer Programs
- Rehab Contractors
- Government Grants
- Private or Special Project Grants
- Local Government Down-Payment Assistance & Loan programs
- 401K Borrowing
- Credit Card Checks
- Transactional Funding
There are a few others but 20 different Creative Financing ideas is plenty to work with. Some are self explanatory and some will have you scratching your head.
For example, how would you use a Realtor in a creative financing situation? Well, if this person is part of your team and you've done business with them before you make ask them to lower their commission fee so you can offer a better sale or snag a lower purchase price. They can also get you in touch with another investor that you can partner with.
Can't wrap your hands around “Renters”? Well if your buying property with existing renters or an apartment complex, you can use their “deposits” and “rent payments” as credits in your HUD settlement statement. Doing so results in you having to come up with less out of pocket at closing.
How about this, you also approach current or potential renters with the offer to purchase or lease to own and use their “down payment or lease option fee” towards your purchase price or closing costs.
Creative financing is out there. Where there is a will ….a way is shortly to follow.