Every day, I have would-be investors, real estate professionals, and others ask me about creative financing. It’s a topic which always generates a lot of curiosity, from investors and non-investors alike. Since it applies to nearly everyone, it’s a universal conversation starter. Folks from all walks of life are familiar with “the current financial crisis”. When you open the door to a converstaion by stating you’re involved in the real estate industry, one of the most frequent questions you’ll hear is “The real estate market…isn’t it doing terrible right now?”
What a fantastic opportunity for you to explain what you do! You can respond, “Actually, these are the perfect conditions for creative financing, which is what I specialize in. Most people wanting to buy a house have little cash, and can’t obtain a loan due to poor credit. And people trying to sell their homes are faced with rock-bottom prices, high commissions, and a really limited pool of potential buyers. With the creative techniques I use, I can leverage what cash or resources buyers and sellers have, and create options that help everyone out.”
You’ve turned the conversation around from one of gloom and doom to one of infinite possibilities. Today’s real estate investing market is budding with opportunities for creative financing.
The next question is often “Ok, how do I craft a creative financing deal?” That’s a great question! Below I have listed five prime situations that are ripe for a creative financing solution. Always be on the lookout for owners in these situations:
- A property owner who wants to avoid or postpone paying capital gains taxes on their profits after a sale
- Someone who would be forced to pay a penalty if they pay off their current loan early
- Anyone who is in a distressed personal situation which prevents the regular maintenance of the property, leaving it in poor condition
- Someone who needs to sell a property ASAP, but has little or no equity
- An owner who is tired of dealing with the headaches, hassles, and stress of their property
There are many more situations which you can look out for, but these have the potential to be the most lucrative. Some key hallmarks which identify these situations are: “bring all offers”, “investor wanted”, “handyman special”, “creative offers accepted”, “seller financing”, “owner motivated”, “owner will carry”, and “lease option available”. If you want to test the waters, try checking out Craigslist.com and entering some of these terms, and see what pops up. You’ll be amazed at the opportunities that are hiding in plain sight!
Once you have the lead, the next step is to create the offer. Not sure where to start? You’re not alone. There’s much to consider when working to create a win-win transaction for the buyer, seller, and most importantly, YOU! As the real estate investor engineering the deal, you have a lot of responsibility on your shoulders. The silver lining is that you stand to get paid handsomely for your knowledge.
Since I get asked frequently how to get started in creative financing, Central Florida Realty Investors (CFRI) has asked me to hold a full-day seminar showing how I personally create profitable deals. Registration is open through this week, but you’ll have to register before Wednesday if you want to get the early-bird rate!
We’ll talk how to find the owner’s motivation for selling their property. Then, we’ll review how to construct a creatively financed offer that meets both of your needs. Once you know how to invest in real estate using creative financing techniques, it’s like you hold the keys to the kingdom. You become a financial alchemist, able to take formulas for many different types of deals and mix them to get the perfect potion for each seller. So, get registered today! The next time someone asks you, “The real estate market…isn’t it doing terrible right now?”, you’ll smile and know exactly what to say next.
To your success…