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Apr 02, 2010 Free PAYPAL Account with Money on it!, Its got money on it, I dont use it so im giving it away. Post who got it, dont change the password please;)! Email: SKMichael@live.com.au Password: Sa, Spam Forum, Spam Forum, Viral Threads, Upper Spam.
I think that we all find ourselves getting stuck finding money, I mean we all think we have a good deal, we all think that we have the knowledge, but when it comes to the money we find ourselves short. Our friends and family are telling us no, the banks tell you no, and most of all you say no to yourself. Without a target, you won’t get anyplace. You look at your first deal based on the money you have, and many of you give up on the real estate game because you don't have any money. When you get started you don’t have any money, right?
Let me tell you there is no such thing as no money down. No bank will lend you money with no money down, and no seller will carry a note without you putting some money down even if it's a promise to do money in the future. There is no such thing as no money down because the money is going to come from somewhere. It’s money down if you're going to have to do something if you have to exchange something with the person giving you something. If they're going to give it to you for nothing, then trust me, you don't want it. So the question becomes, how would you raise money if you don’t have any money?
Related: 5 Keys for Building a Business Without Money
The first thing I say, and I say this over and over, is that the deal is what matters, not how much money you have. I say it doesn't take money to make money, it takes guts and courage. The thing you should be chasing is the deal, not your budget. Most people make decisions on how much money they need based on their job and on how much money they spend, but this is backward. You should make the decision on how much money you want regardless of how much money you spend. This is why people never get ahead. The deal is senior to the amount of money you have.
The secret is called OPM -- other people's money. It's going be somebody's money. Somebody's money is going down because there is no such thing as no money down. How do you get the money from other people? Finances are about playing offense, not defense. Don't chase your budget. Instead of chasing a $200,000 deal, chase a $2.5 million dollar deal. Do not buy less than 16 units, because without 16 units you cannot have a manager. If you can't have a manager you're either not going to have your attention on the property or your property will become your full-time job.
Related: How to Build a Side Hustle Into a Massive Success
Go to investors, people that have $100,000 each, $20,000 each and give them a good deal. You're going to have to offer a good deal because people are taking a chance on you. Who would you go to first -- mom, dad, uncle, brother, sister? You can go look for investors in your local area, maybe a real estate investment club because those are the people who maybe don’t have enough time but want to put $50,000, $100,000, $200,000 into it. There's a lot of people out there right now that have money sitting in the bank.
You've got friends and relatives giving their money to Wall street right now, and they don't know anybody in that place. They are putting it in mutual funds, IRAs, and 401ks. You need to convince them to go in with you. Their money has been reduced to little digits and it's backed by nothing. Money basically represents an idea backed by confidence. You need to raise money.
I want to look at bigger deals, and if I want to look at bigger deals, sooner or later everybody runs out of money. I don't care how rich somebody is, sooner or later you run out of money. You're buying a business so get creative. There's nothing set in stone. If you want to get into the game, you either go out and tell your mom, your dad, your uncle, and find others to go in on a deal, or you find a guy like me and ride his deal. Either way, you will have to raise money.
Related: Why You Should Believe Anything Is Possible
I suggest you don’t invest until you can learn how to make enough money on your own to save at least $100,000. If you can earn enough to save that, it shows that you are ready to begin multiplying your money. Until then, rather than worrying about real estate, concentrate on increasing your own income. Get skills so that you can make enough to save rather than living paycheck to paycheck.
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I’m giving lifetime access to Cardone University right now, and it's a lot cheaper than any real estate. It will teach you how to start increasing your income so that one day you will have money to put down on a piece of property. If you want to do real estate with no money down, you will have to sell others on you. Cardone University is the #1 sales training platform in the world and will help you in any industry, in any town, and in any country.
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Key Takeaways:
Cash out refinance | Home equity line of credit | Personal loan | Seller financing | Lease option | Self-Directed IRA
Do you need capital for your next investment deal? Maybe you are just starting in real estate, or perhaps you have been investing for a while, but your portfolio is at a standstill. Either way, there are several creative real estate financing techniques that can jump-start your real estate career—if you know where to look.
A typical real estate transaction looks like this: an aspiring homebuyer finds a property they love, they apply for a mortgage, and once approved, they close on the house. While common, this process is not a one-size-fits-all model. More often than not, investors will need to get creative to find the best way to fund a real estate deal.
This can open many questions, such as, what real estate financing options are out there for newbies? Which financing methods are the best fit for which exit strategies? And, how do you avoid all of the common creative financing real estate mistakes that plague investors?
Below are creative real estate financing methods to help you get closer to your next investment deal.
[ Wondering how to fund your first investment deal?Click here to register for our FREE online real estate class where you can learn how to get started in real estate investing, even with limited funds. ]
What Is Creative Financing For Real Estate?
Creative financing for real estate refers to uncommon or unique ways an individual can purchase land or properties that are for sale. An investor or homebuyer would typically use one or more creative financing methods when he or she wants to use as little of his or her own money as possible.
Creative financing for investors peaked in the late 1970s when interest rates were as high as 18 percent. Because it was more difficult to qualify for a loan, the need for creative financing was born.
If you’ve decided you’re ready to buy a home, but traditional banks are accusing you of being a less than perfect candidate (whether it be because your credit score is low or you don’t have enough in savings to afford a 20 percent down payment), the following methods are your answer.
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10 Creative Financing Techniques For Savvy Real Estate Investors
Today’s investors should be equipped with not one, but several financing options before approaching a deal. It may seem simple to go straight to a traditional lender for a mortgage, but this approach will not always guarantee the best loan terms. In many cases, finding the best financing will require investors to get a little creative. That being said, there are so many unique ways to finance real estate it can be hard to fully understand what’s out there. The following creative financing options are a great place to start:
Cash-Out Refinance
Home Equity Line Of Credit
Personal Loan
Seller Financing
Lease Option
Self-Directed IRA
Hard Money
Private Money
FHA Loans
Crowdfunding
1. Cash Out Refinance
A cash-out refinance for real estate is a transaction in which you tap into the equity of your home — you borrow enough to pay off the mortgage of your home and then pocket the difference — which can free up funds to invest elsewhere. What’s more, a cash-out refinance happens to be one of the best real estate financing options out there if you know what you are getting into.
A real estate cash-out refinance is different from a simple line of credit, in which you add a second mortgage to your home to take out cash. The interest terms on a cash-out refinance are much more favorable than a traditional home equity loan. And, unlike borrowing money from a hard money lender or traditional financial institution, the interest on a cash-out refinance is tax-deductible.
The risks with a cash-out refinance are that your mortgage term gets reset — the 30-year clock starts over again — and if something unforeseen happens, such as an illness or job loss, the new monthly payments can be difficult to contend with.
But if you have a great opportunity and need some ready capital to make that opportunity happen, it can be a good source of investment dollars.
2. Home Equity Line of Credit
Unlike a cash-out refinance, with a home equity line of credit, you don’t pay off the original mortgage. Instead, you borrow against the value of your home — up to 80% of the home value, minus the amount of the mortgage.
HELOCs generally have a draw period, typically lasting 10 years, and a repayment period, often lasting no more than 15 years. Like a cash-out refinance, a HELOC’s interest is tax-deductible, but only up to $100,000.
So, when would you use HELOC and not use a cash-out refinance? A HELOC is perfect for doing repairs, either to your primary home or a rental property. Situations where you don’t need huge sums of cash for an entire property purchase — maybe you need $10,000 to improve a bathroom in your rental property.
3. Personal Loan
Though a personal loan doesn’t offer the same great tax benefits as a refinance or HELOC, there are some compelling reasons to consider it, among other creative real estate financing techniques.
For one, you aren’t required to put up your house as collateral. In some cases, you aren’t even required to put up any collateral at all. And with a repayment term much shorter than a mortgage loan —five to seven years is a good benchmark — you’ll end up paying a lot less interest over the long-term.
However, with that shorter repayment term comes a much-larger monthly payment. You most likely have to have excellent (or at the very least) good credit to qualify for a personal loan. Still, if you have good credit, but very little equity in your home, this can be an effective real estate financing method.
4. Seller Financing
If you ever hear an investor talk about buying something “on terms,” they refer to seller financing. As any seasoned investor will tell you, the ultimate goal is to use as little of your own money as possible and instead rely on other people’s money. Seller financing, or seller carryback, is a great example of this philosophy.
In this method of real estate creative financing, the seller of a property agrees to hold on to the note of purchase. You then pay them a monthly payment until the note is paid off. Now, of course, this will only work with sellers who own their homes free and clear and don’t mind forgoing a bit of short-term cash for some long-term streams of passive income. (Motivated sellers who are underwater with their payments won’t work here.)
If you see a great investment opportunity and realize that you will probably end up refinancing any way at some point, seller financing as a real estate investment option can be a great arsenal to add to your toolbox.
5. Lease Option
A common school of thought among real estate investors is that it is always better to buy than to rent. The problem with this sentiment is the word “always.” It ignores the fact that lease option contracts are a very viable route to homeownership. Real estate investors of all experience levels may occasionally encounter a property they are not ready (or sometimes able) to purchase, which is where lease option contracts come in.
A lease option property allows investors to work with landlords so that they can purchase the property at the end of the lease agreement. This allows investors to build equity through monthly rent payments and provides landlords with the opportunity to generate interest income. Depending on the specificities of the contract, a portion of the rent payments will then count towards the down payment on the home.
The biggest challenge investors face when searching for a lease option contract is finding the right landlord to work with. This setup is most commonly introduced when an owner has difficulty selling a rental property, but that’s not to say it can’t happen under other circumstances. Investors hoping for a lease option scenario should be prepared to shop around and know how to approach the conversation when they find a potential property.
6. Self-Directed IRA
Investors with existing retirement savings can consider yet another creative way to buy real estate: through a self-directed IRA. This technique allows investors more control compared to other retirement options and several tax benefits. It is worth noting that all returns must flow directly to the IRA instead of straight to the investor. Depending on your preference, this can either be a pro or a con.
What is important to remember is that a self-directed IRA can allow investors to amp up their retirement savings, one property at a time. Just make sure you have a good system in place for analyzing deals. While a self-directed IRA is largely beneficial, there are always risks involved when it comes to investing.
If you don’t already have an IRA, the setup process is relatively straightforward. Research different options and closely examine the fee structures involved. You want to make sure your cash flow covers your account’s required costs and with enough returns leftover to be lucrative.
7. Hard Money
An investor can obtain hard money from a private business or individual to invest in real estate. While the terms of hard money will vary from loan to loan, there are several traits that almost all hard money loans possess. Firstly, the approval requirements for a hard money loan are much less stringent than that of a traditional lender. The lendee’s income does not have to be verified, nor does their credit score.
Secondly, hard money loan stipulations can vary. Term lengths are typically shorter, interest rates are typically higher, and hard money can often fund a deal in just a few days. Lastly, hard money lenders understand the process of investing in real estate better than traditional lenders (real estate is their specialty, after all). Instead of analyzing your credit score and asking for references, hard money lenders will review your rehab blueprint, scope of work, and ARV to determine loan terms. Be sure to have your exit strategy in mind before employing this creative financing option because the last thing any investor wants is for his or her loan to run out (remember, hard money loans are short-term).
8. Private Money
Private money is very similar to hard money in several aspects but is identifiable due to the relationship between the lender and the lendee. Hard money lenders are professional real estate investment lenders, while private money lenders typically know their borrower for more personal reasons. A private money loan can come from your friend, family member, neighbor, coworker, or essentially anyone else you feel comfortable asking for money from. Investors can negotiate more flexible loan terms with their private money lender because the entire transaction is less “business” oriented. Lastly, private money lenders rarely receive any additional cash flow based on equity other than their pre-determined interest rate.
9. FHA Loans
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Backed by the Federal Housing Administration, FHA loans are perfect for first-time homebuyers who don’t qualify for a traditional loan. While you are still technically borrowing from a conventional lender, this loan allows those with credit scores of 580 or above to pay as little as 3.5 percent for a down payment. Keep in mind that this real estate financing loan requires an upfront insurance premium of 1.75 percent as well as an annual insurance premium of 0.85 percent of your loan balance for as long as you have the loan (note, this is different from PMI).
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10. Crowdfunding
This financing strategy is relatively new and allows investors to use money from the public. Several well-known crowdfunding platforms like GoFundMe and Kickstarter authorize users to raise money for anything they want. However, sites like Hatch My House and Feather The Nest are crowdfunding platforms designed specifically for real estate investors and homebuyers. Choose a site, create an account, make your case to the public, and wait for funds to roll in.
How Can I Buy A House Without A Loan?
Living off one income, downsizing, and taking advantage of an investor are just three ways to buy a house without a loan. If you live with a spouse, significant other, or roommate, find ways to cut back so that you can live off of just one income while putting the other person’s income into savings. Eventually, this will allow you to purchase a home with all cash, which requires no mortgage payments.
If you already own a home that has plenty of equity, there is always the option to sell that home, take that profit, and move to a location with a lower cost of living. There are several markets where homebuyers can get more house for less money.
If you’re looking to buy an investment property but don’t have the credit score or savings to qualify for a traditional loan, seek out an investor to cover the expense of buying the home. Many investors will pay all cash for a property, which looks very attractive to lenders. Once you fix up the property and flip it for a profit, you can split the proceeds with the investor.
Is It Possible To Buy A House With Bad Credit & No Money Down?
Despite what you may think, there are ways to buy real estate even if your credit is less than stellar and/or you have very little in savings. Taking advantage of the previously mentioned FHA loan is perfect for those who have credit scores as low as 580 (500 if you are willing to put down 10 percent instead of 3.5).
Programs like veterans affairs loans, the US department of agriculture loans, and special grants (like these mentioned in this HomesGuide.com article) allow homebuyers with no money and bad credit to still achieve the dream of homeownership. Terms aren’t always ideal for these individuals— interest rates may be higher, and they may have to pay premium mortgage insurance — but it does allow the possibility of homeownership.
Summary
A traditional mortgage can be a great way to purchase real estate, but it is not always the best option. For example, seller financing could provide a lower interest rate, while a personal loan may have a faster approval process. The right way to finance will vary from project to project and property to property. What’s important to note is how many options you have available and how to use them. After all, real estate investors are required to get creative from time to time.
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Anyone can buy a home or invest in real estate if it’s a priority to them. Implement any (or a mix) of these creative real estate financing strategies, and you’ll be well on your way to building wealth in real estate. Have you had any luck with some of your own creative financing options? Fill us in in the comments below.
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