What type financing do you use in your Investments, traditional or Creative?? If Creative what types?

Usually, financing for investment properties are commercial loans.

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Susan Vanderburgh
Licensed Real Estate Agent (California)
super_property_gal@hotmail.com
http://www.reliancerealtygroup.com

Disclosure: I am not an attorney. Any advice given shall not be construed as legal advice. Information given is applicable to real estate transactions in California unless indicated otherwise. Information given with good faith and best knowledge as of the date it is given with facts to change without any penalty to the undersigned.

Sorry, but in creative real estate investments, conventional financing is almost NEVER used...and when it is, only for very short time frames, that is why it is called creative real estate investments.

The question was about how do other agents handle investment real estate financing... Not how we process clients purchases. As agents, most of us have, or should have, a more detailed understanding of investment real estate and alternate methods to accomplish it. Being in the business, we can better assess the risk and opportunities of different forms of investment financing to fit our own needs. Not talking about clients/ customers here but about our own investments in real estate.

While I am aware of several differences due to how different states handle real estate in such processes as foreclosure, many forms of investment financing exist but are not "working tools" of the average agent. But are used by agents that actually invest in real estate for themselves.

The point of this post is to have a forum on better investment finance methods in use by agents themselves... what works in their areas and what doesn't, and at what point the opportunities present themselves, what type properties they best have worked on.....

Again, not talking about traditional financing used with the majority of clients but use by other investor agents.

There are many options available to you. Some of the most popular are 80/20 No Money Down Mortgage loans. In this situation, you actually take out two loans, the first for 80% of the loan value and the second for the remaining 20%.

But, as I said, there are many options - and it all depends on your particular situation.

You'll probably feel more comfortable discussing this 'off forum' - feel free to contact me at :

[url = "http://www.sapphiremortgagelv.com"]Sapphire Mortgage[/url]


cbirkland@sapphiremortgagelv.com

702-898-8250 - phone




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No Money Down Mortgages

Those are still the standards and not typical for investor properties... more like interest only loans, owner financed, subject 2 financing, Lease Option, Least Purchase, Hard Money Lenders, Investor Pool.

Looking for inputs from fellow investors / REALTORS® who use creative investment methods Not loans from banks.

That is one of the BIG questions that is placed to people all of the time.. As everyone else has mentioned, there are literally hundreds and I mean HUNDREDS of different ways, combinations, and types of financing... Some investors use cash, some use banks, some use creative methods, I have seen people use a combination of all of the above, etc. etc.

Please understand that there are an unlimited amount of ways to finance.. As long as you stay legal and don't run into any problems with the seller(s)... Then have fun and work some good deals..

Duane

Typically I will try to get my clients to go to the bank I use personally. It is a commercial loan from a local bank, they lend 80% of the appraised value (can be an as repaired appraisal too) this will usually cover the purchase price and give money for renovations.

That is still just every day retail investing... doesn't anyone do or even know about creative and wholesale investing???

Guess this is why so few agent actually invest in the area they are suspose to know best. Really strange......

I've done deals with LP, bond financing, interest only hard money, land trust, owner financing, another property as collateral, trades, and a lot of other ways, thousands of ways to buy a property.

But right now with rates so low, why bother? I can go get a 5% fixed rate mortgage, and cash out at closing for repairs or just to pocket the money. I close on one monday I will get a check back at closing for $21k, repairs will only cost about $9k, still will have a big monthly cash flow.

Right now I am getting some great deals in short sales (suprised what some banks will settle for) and some foreclosures, although those 2 really don't allow you to be creative.

Well I hate to say this but I think you are right Reality.... It seems that very few agents really know what creative means... I honestly can say that I have and will work with people who want to do creative financing... But I am a rarity in this field because I myself have used "unusual" financing methods in my own acquisition of properties... Trust me, like I mentioned above, there are hundreds if not thousands of different ways to finance a property creatively...

Duane
thepropertyguru@yahoo.com

yes... I know... of more than 800 real estate agents I know and work with frequently, only 4 know about creative real estate techniques and only 2 use them. All the rest just pay the bank to loan them funds. Problem is that most lenders start to balk when you have 5+ mortgage loans and no salary. To effectively use your capital you must work outside the box of traditional real estate and traditional financing. The whole intent of this string was to generate some discussions along those lines... hoping to expose more agents to new techniques and possible learn a few new jewels myself.. we all need to keep learning new things... even us old dogs.

Bottom line is, if you think going to the bank or sending your clients to a bank is investing with good COC returns... well you really need to review or take a finance course... why pay a bank to do what you can do with out them???? It really isn't hard or even difficult... 50% of my clients do not use banks for their RE investment, I do about 10% of the time but for specific reasons that are not always funds related.

Would like to hear from agents that are investors using non tridational financing.. Lets share and learn...

Hey Everybody...
It does seem that there is a lack of education about creative financing in these days of "low" interest... Wes, you mentioned the interest, well one thing that you have to keep in mind is that not everyone can use, qualify, or wants to use conventional financing... I know of some very successful business people that got crunched during 9-11 and lost everything.. They are now rebuilding themselves by using very creative methods... One example is owner financing where the owner finances the property with no money down, gets a monthly payment with a very good interest rate paid to him and for taking the risk of "being the bank" will receive one-half of the profits for a specific period of time...

Deals like that are the type that Reality had mentioned when the string was started...
Have a great day and good business..

Duane
thepropertyguru@yahoo.com

one of the more creative things i've had to do recently is when the seller doesn't want to hold a note, is create a seller held mortgage, and line up a purchaser for the note even before we close, basically what most mortgage companies do.

still takes the right property, and getting the note sold can be a pain.

I'm a new agent and am currently investigating creative financing options to start my own investment business. Is there any way this string can be ressurected?

I want to determine the best type of real estate to target (single family vs. multi family — pre-forclosure vs. distressed/rehab, etc.) and a way to purchase it with COC. I need the property to pay for itself from the get-go each month and would like some cash at the table (some to tuck away for repairs, etc., that might pop up and maybe enough additional to use toward my 2nd investment property).

Any words of wisdom?

KC