CREATIVE REAL ESTATE FINANCING

CREATIVE REAL ESTATE FINANCING:
Generally the goal of creative financing is to use as little of your own money as possible, otherwise known as leveraging, OPM (Other People’s Money).
1. Traditional:
Still best option since interest rates are still low
FHA, VA, Rural Development, Conventional
Credit scores as low as 580
2. Owner finanOcing or seller carry back:
Seller agrees to carry the note
Seller must own property free and clear
Usually need down payment but you can mortgage another property (ie: car, boat, etc)
Bond for Deed, seller hold title but transfers physical ownership
3. Subject to existing financing:
Title is transferred but loan stays in seller’s name
Buyer makes payments
Buyers use this to avoid down payment
“Formal Assumption” must be approved by original lender
“Subject To” the loan can be called by the original lender due to acceleration clauses
4. Lease Option:
Sometimes seller requires down payment or higher rent for security
Sign a lease and a purchase agreement at same time
Option will require money to seller
5. Private Money:
From a private individual or organization
Interest rates are usually higher than the standard lender rates
Record the mortgage/deed
6. Hard Money:
Typically lend 50-70% of the value of the property, regardless of sales price
Credit scores and income over looked
May need down payment and show cash reserves
10-20% interest is common and/or part of the profits
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