Do all the creative financing techniques you hear about really work? Yes,
actually. They probably have all worked somewhere for someone at least once. The
point isn't if they will all work for you. The point is to know what is
possible, so you can find your own creative ways to invest in real estate. Here
are ten methods to get you thinking. 1. Hard money lenders. You can ask around
or find these online. They specialize in short-term loans at high interest. You
typically use this type of financing for a "fix and flip." You can often get the
money fast, and if you make $30,000 on a project, who cares if you paid $10,000
interest in six months. 2. No-doc and low-doc loans. No (or low) documentation
of your income or credit required. Again, you can find banks that do these
online now. The catch is that you will only be able to borrow up to 80% of the
purchase price or property value. If you have 10% in cash, you might be able to
borrow the other 10% from a friend or the seller. 3. Seller-carried second
mortgages. Sometimes a bank will loan you 90%, and allow the seller to take back
a second mortgage from you for 5%, leaving you needing only 5% for a
downpayment. 4. Land contract. Called "contract for sale" or other names as
well, this just means the seller lets you make payments, and delivers the title
upon payment in full. I sold a rental this way for $1,000 down, because I wanted
the 9% interest, and the higher price I got this way. 5. Credit cards. If a
seller will take $10,000 down on a fixer-upper that you expect to make $20,000
on, why not use credit cards? This is a true 0-down deal for you, and if you
turn the project in six months, you will have paid $900 in interest on an 18%
credit card. Don't let $900 get in the way of making $20,000. 6. Retirement
accounts. The laws get pretty complex in this area, but you can check with a tax
attorney to see how you might borrow from your own retirement account to finance
real estate investments. 7. Friends and family. Keep it all business, if you use
this source, but loaning you money at 7% isn't a gift if their money is getting
2% in the bank. 8. Note buyers. The seller needs cash. He raises the price, and
sells to you for $100,000 with no money down, taking back two mortgages from you
for $90,000 and $10,000. He arranged (or you did) for a note buyer to pay him
$80,000 cash for the first mortgage at closing, getting him the cash he wanted.
You pay two payments now, one to each note holder. 9. Get a loan on other
property. Interestingly, if you take out a home equity loan for a vacation, and
then forget to use it for that, you can use it for the downpayment on an
investment property, without violating the rules of the bank that gives you the
primary mortgage. In other words, you got in with no cash of your own. 10.
Partnerships. For bigger projects, you could arrange for five investors to each
put money into a partnership, with your share being the management
responsibility instead of cash. About the author: Steve Gillman has invested
in real estate for years. To learn more, and to see a photo of a beautiful house
he and his wife bought for $17,500, visit
http://www.HousesUnderFiftyThousand.com
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