Market Overview

Some of following methods will actually allow you purchase a property with little or no money down.

Bring in a Money Partner as a Joint Venture “Equity Sharing” arrangement Another approach to locate capital is to add a money partner and do a Joint Venture with them. This technique works very well on properties that can be acquired far below market value or due to the current poor condition of the property. By purchasing the property and refinance with a cash out, you can recoup the capital you gave the seller and repeat the process on the next property. Keep in mind that banks have LTV (Loan to Value) limits on how much they will loan based on the appraised value of the property.

On one of our rental properties we purchased we had some very motivated sellers that had a property that would not qualify for traditional financing due to its condition. We were able to negotiate a deal where they would hold a mortgage while we rehabilitated the property. At the end of the mortgage period, we were able to refinance and pay off the owner financing creating a win/win situation.

* The seller may benefit from a lump sum of cash from the down payment.

This technique is different than assuming the loan because with an assumption, the loan is “transferred” to the new buyer. With a Subject To, you will pay the mortgage on behalf of the current owner. A Subject To deal is usually applicable when the property is not a candidate for a Short Sale. On a Subject To property there usually is significant equity in the property as apposed to a Short Sale that may not have any or negative equity.

If you currently own property that has equitity (the difference between the market value and the total amount of all mortgages), you can use that equity to secure a line of credit. Lenders will have underwriting guidelines that will limit the amount of equity they will allow you to pull from the secured property.

Assuming the Existing Mortgage Assuming a mortgage is a great way to avoid dealing with all of the cost, time and underwriting criteria you may encounter when originating a new loan with your bank.

* Interest rate and any adjustments that may occur * Any balloon payments * Prepayment penalties * Assumption fee * Term left on mortgage * Assumption qualifications

Owner Holding a Mortgage One of the most effective ways of doing creative financing is when the current owner is willing to hold a mortgage for you.

* The seller could benefit from reducing their Capital Gains tax resulting from a traditional transaction.

* Property condition is not a problem because you will not have a bank underwriting the loan with specific guidelines regarding the condition of the property.

* If the subject property is commercial and not performing well due to poor management or vacancy issues, a lender may not write the loan. * Giving the seller a higher sales price in return for no or low interest rate.

Substitution of Collateral A substitution of collateral basically means that you will use another property to secure a mortgage other than the property you are purchasing. This technique will allow you to sell the investment property without having to satisfy the mortgage and leveraging the additional capital you will receive from the sale.

Options Perhaps the most powerful technique in creating deals is using the concepts of Options. For the privilege of having the option to purchase, the buyer will usually be required to pay an option fee upfront and if they do not “exercise the option”, the fee will be surrendered to the seller.

What the options technique allows you to accomplish is to have control over properties with very little money in the deal. During the option period, you will not be required to manage or provide capital for the underlying property including insurance or taxes.

Option Terms Option terms are completely negotiable and usually no two deals look the same. Longer option periods are typically used when the buyer is anticipating future equity and/or cash flow. Having the ability to extend the option period will usually cost additional option fees, but may be worth it if the property has the value you are anticipating.

Lease Options A variation to the option technique is a Lease-Option. This technique combines a typical lease with a purchase option. Unlike a straight option, the lease-option will shift the responsibility of property management to the leaseholder. With this technique, you will benefit from any cash flow and also tax advantages if this is a rental property.

Second Mortgages Another technique to finance your acquisitions is to take a second mortgage out on a property you currently own.

Using Signature Loans If you have a good credit score, you may want to consider taking out a signature loan to help fund your acquisition Capital.

Self -Directed IRA’S You may want to consider using a Self-directed IRA to fund your investment capital needs. * Interest rates are lower than hard money (be cautious with this method regarding your monthly payment because with the shorter loan terms typical of this product, you will be paying a higher monthly premium).

* If you have poor credit, conventional financing may not be possible. This option offers many interesting possibilities.

Using Hard Money to fund your deal Using Hard Money to fund your capital needs is a very common financing approach that should be considered. This method of financing is a great win/win strategy.