3 Creative Financing Solutions to Beat High Interest Rates

It’s no secret that current interest rates have presented a challenge to real estate investors. But rather than letting high rates price you out of potential investment properties, why not try one of these creative financing solutions instead?

1. Subject To Financing: Subject To (Sub2) financing lets investors buy a property while taking over the seller’s mortgage payments. This approach requires minimal upfront cash and sidesteps strict loan requirements. However, there are certain risks involved with this approach, and certain legal implications, so be sure to do your due dilligence. Investors should be aware of the “due on sale clause,” and ensure they have the liquidity to cover the loan if the bank calls it due, although this is rare.

1. Seller Financing: Seller financing turns sellers into lenders. Investors make payments directly to sellers, avoiding traditional mortgages. This offers flexibility, lower closing costs, negotiable interest rates, and faster deals. Seller financing can be appealing to sellers who don’t need access to the entire amount from their property sale right away, and would benefit from a steady stream of income over time.

1. Assumable Loans: Assumable loans are existing mortgages that investors can take over. This strategy is attractive when interest rates are low on the existing loan. It allows investors to inherit favorable loans without the hassle of securing new ones, however, unlike subject to loans, when taking over an assumable loan, the investor will have to qualify under the loan requirements.

Creative financing like Subject To, Seller Financing, and Assumable Loans offers investors alternatives to traditional bank loans. These methods enable investors to leverage existing financing, negotiate favorable terms, and unlock opportunities. But thorough understanding, professional guidance, and due diligence are critical to manage risks and maximize returns in real estate.

Interested in working with Nationwide Apartment Buyers to level-up your real estate investing in Chester County, PA, Montgomery County, PA, Delaware County, PA, Wilmington, DE, or Southern New Jersey? Whether you’re an experienced investor looking to buy or sell a multifamily property, or just getting started as a real estate investor, we look forward to partnering with you. Get in touch!