You may remember we went over five common ways to buy real estate. Notwithstanding these, there are around 50 ways that my team and I have identified to acquire real estate. We teach these at Investors United, our real estate investing school here in Baltimore. When you know then, you’ll be better able to conserve your cash, and you’ll be able to do more deals and make more money. Here are a few ideas for free.
– Consider doing a dry settlement (transfer the deed with no money exchanged), then refi. The property and pay off the seller. (That’s no money down, my friend.)
– If there’s existing financing, consider taking that over either with an assumption or a subject to contract; it may reduce your cash out of pocket.
– Consider asking the seller to refi the property at an agreed rate with a one-time qualified assumption and release of liability. You qualify with the bank and take over the mortgage at closing, the seller is released from the debt immediately and walks with cash. (This too is a no money down an idea.)
– Use soft money. There are plenty of people out there with financial resources. To find them, attend an REIA, talk with co-workers, ask your boss, ask your dentist, speak with people 60 years and older who have had a lifetime to save. You know them already most likely, you just don’t know they have money. Now understand that their money is far less valuable than what we have as investors (knowledge). They don’t know how to multiply their money, and they’re terrified of losing it. Between stocks or bonds, investing in a franchise, buying gold, they’re confused. You can give them confidence and a return. What’s more, you’re a person they can see and touch. So, identify your next real estate opportunity, package it by writing a short investment summary, then sit down with those folks for their opinion. Don’t ask them for terms; you tell them how much you’ll borrow, what interest you’ll pay, and how you’ll pay them back. I suggest 8-10% annual interest with no payments until you refi. Within 12 months (to be extended at your option).
There’s a lot more to creative financing for real estate investment, but this is a good start. Happy to consult with you if you or anyone else reading this needs more.
All the best,
Ian Parrish, President