Be Creative
in Real Estate Investing
"Buy With No Money Down"
Many people have the misconception that real estate investing need a
huge amount of initial payment. This is true to some extend. However,
there are many ways for you to be creative in real estate investing
which can start you off with no money down when you purchase a property.
You just have to know how it works and think creatively.
Buying properties with no money down indeed may sound too good to be
true. But it has been proven that it can be done, and with profitable
success. This is not easy, but with careful thinking and financing
plans, you too will be able to reap success. With testimonies of many
others who have utilized only their good credit and provable income,
they have secured real estate investments that are stable and high
yielding too, with no money down. This is what I call ¡°Creative Real
Estate Investing¡±!
Start it Small, and Grow it Big
One of the easiest types of creative real estate investing is to buy
with nothing down on land or small lots. In many areas of the country,
it is common for sellers to sell these properties with a small down
payment or none at all. Of course, one of the reasons they do this is
because it is an easy way to get more for the land. I once bought a
piece of land for cash and resold it in weeks for 30% more, because a
lot of buyers could afford my terms: $250 down and $100 per month. So be
sure that you are not paying too much.
"Too much" doesn't necessarily mean paying a lot over "market value". It
is determined by what you will do with the property. For example, if you
have no other way to buy a small lot, and as a result of the easy terms
offered by the seller you pay $12,000 for a lot worth just $9,000, is
that too much? Not if you will later put a modular on it and make a
$21,000 profit selling the package.
Now you might notice that many of the lots and parcels of land for sale
are not offered with no down payment. Most sellers will at least want
something at closing, even if it is only $1,000 down on an $8,000 lot.
So how do these become "nothing down" deals? You can borrow from the
down payment. In the above example, you eventually make $21,000 when you
borrow the down payment on a credit card at 18% interest, this perhaps
will take a year to do the deal. You would make $210 less ($30 cash
advance fee and $180 interest), or just $20,790 profit, which is good.
Buying land is also a way to get a property with no money down. When you
invest in real estate this way, you can pay for the lot over a few
years, and then use it as the equity necessary to get a home loan. Many
banks will loan you the money for a modular or stick-built home if you
already own the land free and clear.
100% Financing
If you have a good credit score, you might still be able to get a 100%
mortgage loan. They are getting less common now (late 2007), but I still
see an occasional advertisement for them. Alternately, you might find a
lender who will loan 90% and still let the seller finance the other 10%
on a second mortgage, meaning none of your cash is necessary.
If you are looking for a creative real estate investing method, you
might get 100% financing from a "hard money" lender. These lenders
charge very high fees and high interest, but the idea is that you use
them for high -profit deals that make it worth it. Other investors may
put up the money for the down payment and repair costs on a fixer upper
project, if you find the right deals. This can be at a higher interest
rate, or for a share of the profits.
Buy Real Estate From Motivated Sellers
If you stick to properties that have highly motivated sellers, there is
usually a way to buy with no money down. For example, a seller might
sell his $90,000 house to you with only $3,000 down if you offer him
$95,000 and a good interest rate. You can borrow the $3,000 of course
(or even a little more to cover the closing costs, if you want nothing
at all into the deal).
Sellers have been known to take cars or other pieces of property as a
down payment. They may let you buy with two mortgage notes, one for 20%
and the other for 80%, one of which they'll immediately sell to get the
cash they want. To buy real estate with no money down, just look for a
way to get the seller (and the lender, if necessary) what he needs -
without using your cash ¨C and that¡¯s all in all in creative real estate
investing.
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