Creative Financing In a Nutshell
Creative Financing
In a Nutshell
Part One of ?
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There are No Rules as to how you can or cannot structure your creative financing deals, other than what is legal, moral, ethical and using the guidelines found here
Creative real estate financing is not business as usual. You will be met with skepticism from critics who practice traditional financing usually real estate agents, attorneys, your friends family and the like. Mostly those that have never even purchased real estate. I can hear them now. You can't do that! It’s illegal it's risky.
Risk Taking. A while back I overheard an interview with Pulitzer prize author Jane Smiley talking about her book Horse Heaven. Jane related that our whole economy is based on a willingness to take risks. She's absolutely correct. There's risk in any business transaction. Creative financing has risk, most notably the due on sale clause, which is the core of these lessons. We will spend considerable time showing you how to beat, minimize and shift the risk of the due on clause.
Legal? There's nothing illegal in any of the methods employed here. These blogs is written for the state of California if you don’t at least have a basic understanding of the real estate principals and real estate financing applicable to your state, I suggest you go to your public library, book store, amazon.com, whatever and get a copy of the real estate principals, financing and laws that apply to your state. Although real estate laws go back to the feudal times in England and are fairly consistent there can be and are subtle and major differences from state to state.
Do I need a college education to buy real estate without cash or credit? If your able to read and understand these postings your in.
Can you still buy with No Money down? The definitive answer. Yes and No. It depends. The no money or nothing down deals are out there, they're just harder to find and have to be approached differently. (When this latest bubble bursts and it will...Creative financing will come into its own again.)
No Money Down?
Think of buying with no money down as 100% financing. In other words you're going to borrow all or most of the money needed to purchase the property.
Here's what I mean. You find a suitable property for let's say $100,000 the seller owes the bank $75,000 how to we purchase the property? You offer to take the property "subject to" the existing bank loan, and ask the seller to loan you some of his $25,000 equity by holding a note for $12,500 called a wrap or an AITD all inclusive trust deed.
Then you borrow another $12,500 from a third party who you would give a note secured by a second mortgage on the property as security for the down payment money.
Congratulations you just purchased a property for 100% financing or no money down.
I should mention here that most of you will have different reasons for needing the information found in these postings. Maybe you have good credit but no money. Or you have the money for a down payment but no credit.
Buyers verses sellers will want to use different approaches Whatever your particular need these blogs will address all of the techniques available to you to purchase and sell real estate creatively without cash credit or banks.
Use the information found here to assist you in filling the missing need in making your real estate purchase
The example used above is just one of the many ways the purchase could have been accomplished. However, by using other no money down or creative financing techniques such as a land contract, a lease option or equity sharing may be advantageous for you as a buyer or seller. We will explore all of these techniques in detail and more in subsequent postings.
But no mater what technique you're going to use you want to make sure it's a win win for the both of you, however the one with the better knowledge of creative financing will ultimately come out on top. So it's very important that you have an understanding of your creative financing options so that you as the buyer or seller and not the other party can use the correct or best way to structure the deal.
My lessons favors the buyer and will first point out their best approach and secondly the sellers approach. You as buyer or seller will have to determine the technique that works best for your situation. With that said let's get to it....Next time
If you need any help structuring any type of deal give me a shout
Bill