What is Creative Financing? And Who does it?

Question

What are the advantages for doing Creative Real Estate financing? If I can get a  personal loan from a credit union to put a down deposit on a property, Is that consider Creative Financing? Can I have list of all the options for future reference. Thanks

Account Closed · Answer

Creative financing is when you DON"T go to the bank.  There is nothing creative about borrowing money from a bank.  Creative is when you get the money some other way.

I hope this helps.  Stay away from banks, credit unions, saving associations.  Get your financing from the owner If the owner does n't want to finance it,  keep looking.

Jordan L. · Answer

Thanks Mike and Ron, need to start networking and find someone to partner up with.

Account Closed · Answer

Jordan   I did not realize you were from Florida .  Congrads on working on the Florida real estate license.  Here is another creative financing trick.

http://www.biggerpockets.com/blogs/3840/blog_posts/34123-tenancy-in-common-a-way-to-get-started-as-a-real-estate-investor

If you don't have a copy of the candidates handbook, call my office in Orlando and Kathy will send you a free copy.  It has a breakdown of what is on the Florida real estate exam.  Tell all you classmates to watch the math videos.  That is the math that is on the exam.

Mike H. · Answer

Actually, I would include Banks in Creative Financing.

To me, a better definition of creative financing is how do you finance the purchase and rehab of an investment property with as little money out of your pocket as possible OR with little to no cash or credit to your name.

But banks can very well be a big part of a Creative Financing solution.

I use the hard money / portfolio lender combination to add as many houses as I can with as little money out of my pocket as possible.

To me the only thing that is NOT creative is if you're buying a home with 25% down and paying for the rehab out of pocket. Everything outside of that for the most part is Creative. :-)

Jordan L. · Answer

Wow Ron, Im watching your youtube math videos to pass my Real Estate Exam  you have been such help, you and Kathy. I now understand the Math section clearly Debit to the Seller : ( Credit to Buyer : ) Didnt think I will find you on here! I really do want to stay away from the banks. I have a realtionship with a Credit Union in my area. Im trying to purchase my first rental property.

Brian Gibbons · Answer

I put together a video on Creative Financing for a REIA in GA.

NO LINKS!  NO ADS!

If you live in FLA, it is a great state for CRE.  Id be licensed tho.

http://reiskills.evsuite.com/creative-financing-explained/

@Curt

@Curt Smith undefined I believe showed this vid to Newbies.

Nicole A. · Answer

Typically, I'd say network. Are there REIAs in your area? Tell people what you do. Have a strong plan in place and explain how their "investment" in you will be safe and make them better money than it is sitting in a savings account or money market.

For me, I just shared my landlord stories with lots of acquaintances and friends. I said I want to buy more properties. They saw that I was successful and/or that I had a strong plan. I showed them numbers on paper...for me, I showed them projected cash flow from a rental I was interested in.

I offered $100/month for 3 years because that didn't kill my cash flow and it made him a lot more than his savings account

I've shared this story of how I got a loan from an individual and now I have at least two others who are also interested in doing a similar deal with me in the future. Word travels.

Mostly, have your case....have your numbers (true conservative numbers) and just explain your goals and what's in it for them. Have a loan document in place too. If they want more protection, file that loan (lien) against the property.

Jordan L. · Answer

Do you just ask anyone? Or someone you trust?

Nicole A. · Answer

-Ask the seller to finance you (you pay him monthly for agreed amount of time instead of a bank)

-Borrow money from a person with cash (I borrowed $20K from a guy and pay him $100/month for 3 years. At the end of 3 years, I owe the $20K back.)

-Take equity from a current property to buy another.

What is Creative Financing? And Who does it?

Most Popular Reply