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Ten Creative Financing Techniques
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. Steve Gillman has invested real estate for years. To learn more, and to see a photo of a beautiful house he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com
MORE RESOURCES: Chicago Voters Face Choice on Tax to Fund Homeless Programs The New York Times Bring Chicago Home: What voters need to know referendum Chicago Tribune Commercial Real Estate's Systemic Threat: Separating Fact From Fiction Commercial Observer Kairoi Residential envisions major mixed-use hub on 115 acres in East Austin - Austin Business Journal Austin Business Journal Once America's Hottest Housing Market, Austin Is Running in Reverse The Wall Street Journal Five Ways Buying and Selling a House Could Change The New York Times Va. real estate industry weighs in on $418M Realtors settlement Virginia Business Magazine Real estate commission change shakes industry's foundation University of Miami: News@theU Local real estate agents face uncertain future with new negotiation rules WJHL-TV News Channel 11 Investigation underway after 44-year-old real estate investor seen on video firing shots off boat docked at Lakeview ... WSVN 7News | Miami News, Weather, Sports | Fort Lauderdale Once+a+male-dominated+industry%2C+more+women+are+entering+the+commercial+real+estate+field Idaho Business Review The Realtors' Big Defeat The New York Times CrewBaltimore’s mission to accelerate women’s success in real estate Afro American Newspaper The Best Places to Retire in Florida Real Estate New rules on real estate commissions could change the housing market game LehighValleyNews.com Commercial Real Estate Roundup for March 15, 2024 Idaho Business Review Illinois real estate: Home sales in Peoria, Tazewell, Woodford counties Peoria Journal Star A luxury agent on how the NAR settlement will change his business The Washington Post Real Estate Roundup: 240-acre farm near Orlean sells for $1.9M and more Fauquier transactions Fauquier Now Settlement will affect Iowa homebuyers KCCI Des Moines Cities Face Cutbacks as Commercial Real Estate Prices Tumble The New York Times H2 2023 Global Real Estate Report PitchBook News & Analysis Austin real estate: Holt Lunsford plans first area project The Business Journals National Association of Realtors Agrees to Slash Commissions to Settle Lawsuits - The New York Times Is real estate the best investment in 2024? Racine County Eye Changes could be coming to fees related to home buying process Fox 46 Charlotte Realtor group will pay $418M to settle commission lawsuits The Associated Press Bay Area Real Estate Executive Charged with Wire Fraud, Identity Theft in Investment Scam - Hoodline Checking In on Dallas Real Estate The Dallas Express Realtors settlement to lower home sale costs, alter commission structure - The Washington Post The Washington Post REAL ESTATE | Kewaskum Police station moves to temporary location | By Chief Tom Bishop washingtoncountyinsider.com Real Estate Settlement Could Affect Housing Market erienewsnow.com Real estate lawsuit settlement will affect Orlando agents - Orlando Business Journal The Business Journals Major Changes to Real Estate Business erienewsnow.com Real estate lawsuit settlement upends decades-long policies that helped set agent commissions WQAD Moline What the death of the 6% real estate commission means in D-FW The Dallas Morning News Real estate commissions, unassailable for decades, could crumble after landmark settlement The Denver Post China's Real-Estate Market Just Set a Record—but Not a Good One The Wall Street Journal Is the Era of the Celebrity Real Estate Agent Over? Industry Reacts to Settlement That Could Slash Commissions Hollywood Reporter Antitrust ruling rocks real estate: Buyers brace for shift in commission structures Straight Arrow News Realtors Reach Settlement That Will Change How Americans Buy and Sell Homes The Wall Street Journal The week's top commercial real estate transactions in Charlotte, Collier, Hillsborough, Lee, Manatee, Pasco, Pinellas ... Business Observer Jill Schlesinger: Real Estate Settlement - My Bellingham Now My Bellingham Now - End of 6% real estate commissions could mean lower home prices The Atlanta Journal Constitution Realtor Lawsuit Settlement Will Change the Housing Market Forever Business Insider |
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