There are indeed creative ways to finance your real estate investments. To do that you need to understand the principles involved in creative real estate financing.
Do they work? Well, that remains to be seen but it sure worked for some people. If you believe in it, sometimes it will work afterall.
Here are 7 ways for you think about creative real estate financing.
1. Use hard money lenders. No! No! Not illegal moneylenders. These lenders charge high interests for short-term loans. You can find them online or by asking around.
Usually, you will use this financing technique for to buy, fix and sell real estate. You earn your money fast and if you get $ 35,000 on a real estate project, the $ 15,000 interest that you incur may be small change for you after maybe 6 months or so.
2. No-down or low-down loans. Typically, with these type of loans, your income proof or credit status is not required. There are banks you can access with this method online.
They'll allow you to borrow 70% to 80% of the property purchase price but if you can spare 10% in cash payment, a friend or even the seller can help finance the other 10%.
3. Getting help with financing through the seller. You can sometimes pay a downpayment of only 5% if the bank allows a loan of 90% and the seller is allowed to take back a second mortgage from you for 5%.
4. Land contract. This means that the you are allowed by the seller to continue making payment and will hand over the title deed to you when all payment has been completed.
5. Credit card advances. Some say this is a risky technique but why not?
If you have a credit limit that is high enough for let's say a $ 9,000 downpayment on a fixer-upper which potentially makes you $ 18,000, this could turn out to be a zero downpayment deal afterall.
Imagine selling the project in 6 months, granted the interest on the credit card could be as high as $ 1,000 to $ 2,000 but why let the small amount stop you making making $ 18,000?
6. Borrow from friends and family. If you decide to do this, keep it official.
Imagine you paying them 7% interest instead of the 2% they will earn from the bank. Surely this could entice them
7. Use your retirement accounts. Depending on state and country laws, check to see if you can borrow from your own retirement account to finance real estate deals.
There. You have 7 creative real estate financing techniques to get you started. Take action now!