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Creative_Financing_-_Ten_Ways

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									Title:
Creative Financing - Ten Ways


Word Count:
528


Summary:
How many ways are there to finance real estate? Who knows, but here are ten creative financing techniques
to get you started.



Keywords:
creative financing,real estate,real estate financing,seller financing



Article Body:
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.




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