3 Methods of Creative Real Estate Financing

Traditional real estate investing involves the purchasing, managing, owning and renting of property.  This is a for profit model. This model defines real estate investments as an asset with limited liquidity. This is true of comparable investments that you may choose to invest in. For instance, potential investments in the stock market are good for comparison. Real estate investments are limited by being dependent on a cash flow. If you look closer at real estate investments there are excellent investment opportunities.

Obtaining Financing

Partnerships are a common way of obtaining financing for real estate. It is the way a lot of young real estate entrepreneurs go about financing his or her project. By finding someone who can put the money up and split the profit fifty-fifty is ideal. This also limits your risk and makes the money go further.

Hard Money Lenders are companies that have the money upfront and ready for you to borrow. This is usually a good alternative to traditional banks. The reason this is true is regardless of credit score you can usually get money upfront and quick. Be aware, these lenders do not like to lend more than 65% of the fair market value of a property. This is a good incentive to find better deals on property, because; it will give you more options.

Private Lenders are an even better alternative to getting a cash flow. This is because; you can often arrange the terms of repayment with a private party. They can also be anyone and everyone. Such as a friend or extended family. In this case, everyone wins. By offering a better rate of return than your lender can get on his or her savings or mutual funds. Not to mention there is security in the real estate property.

“Subject to” Financing originates from a clause that states, “subject to existing financing.” Here you leave financing in place and take over the existing mortgage payments. Your name will not be on the loan. It will stay in the sellers’ name, so this is not an ideal way to conduct business. This is a good strategy for people who want to invest right away and have poor credit.

Wholesaling or Flipping

Using the method of wholesaling or flipping you cut out the need for financing. You will begin by obtaining a property that needs fixing at a discount. Then fix it up and sell it to another buyer or investor for a quick profit margin. There is no need for an excessive amount of cash. You do not need to hassle with financing or credit either. This makes this an ideal way to make the most out of your investment. It gets rid of several headaches that surround your typical financing options. Plus it gives you the ability to make a cool quick profit.

These are just a few quick ways to create creative investments in real estate. This is a lucrative business. Some of the world’s richest people made his or her fortune in real estate. It does not matter if you flipping a property or making a long term investment. There are plenty of opportunities waiting.

Elizabeth Goldman is the editor of AlternativeInvestmentCoach.com. She has written for Investing.com, Bullbearings.com and many others.