Creative Acquisitions – what are they
- Equity Sharing
- Master Lease
- Lease Option
- Agreement for Deed
- Seller Carry-back Mortgage
- Combining Strategies
- Retirement Account Strategies
- Seeking Private Lenders
Why did I start with listing some of the Creative Acquisitions to purchasing property? Just as with any goal, you want to see where you are going. As these posts are done, you will see each of these covered in more detail.
Every market is local governed by different laws
Creative Investing can provide solutions to buyers who the lending institutions see less than qualified.
These lending tactics of over-qualifying people to purchase using ‘sub-prime’ loans put many lenders out of business, however the “re-packaging” and “re-wording” has these types of loans back out on the market, giving those who are less qualified the opportunity to get in this trap once again.
Who gets paid and how?
Realtors get paid based on what a buyer spends
Lenders get paid based off the amount borrowed.
The more money a person spends the more the government can do property taxes
What does this mean?
It means more State Legislators are imposing more regulations on how properties are bought and sold. The funny thing is the problem came from not investors, but from the banks, lenders and realtors looking to make more money in a gravy train market at the time.
Circa 2004-2006 around the country, because the values of properties were going up so quickly, laws were passed to protect the buyers from so called “unscrupulous sellers”. Ironically when the market came down after 2007, many states started imposing laws to protect the sellers from buyers when houses became worth less than the amount owed on them.
So the new regulations are centered around Honesty, Integrity and Keeping good records, things investors have always done. You would think lenders and banks would have kept good records, right. But how often did you come across a story where a family was stuck in limbo trying to re-finance their home or even short sale their home because the bank can not find the original loan documents, which are required by law for these types of transactions in many areas of the country, especially if a government loan was involved.
Now before your mind wonders like mine did about creative property investing, because let’s face it, it does sound shady. BUT don’t you do creative shopping? You look for 2-1 coupons or sales, using other store coupons at your favourite store, heck they even made a TV show about Extreme Couponing on TLC [http://www.tlc.com/tv-shows/extreme-couponing/] where people get hundreds of dollars, shopping carts of food and products for pennies out the door. Several episodes show cash registers breaking down because they can’t accept that many coupons without a manager override or a program update.
What about shopping for a car? Haven’t you gone to many dealers or private sellers looking and negotiating over what is a fair price? Offering a certain amount of cash to lower the interest rate or bring down the amount borrowed? What about my favourite? The 3 day option where I get qualified for what I can borrow from my own bank or credit union at a very low interest rate and then shop for a car using a 3 day option to pay off the car in that amount of time from my preapproved loan.
These are real world relate-able creative acquisition techniques used in Real Estate Investing (REI) as well. Let’s step back to extreme couponing for a second. Here in REI terms, an investor or group of investors approach a bank and purchase several bank owned properties, many at $0.20 on the dollar… how is that for couponing?
What about the pre-approved loan? This is where you have private money or hard money available to purchase property very quickly with the option to payback in various ways to those that lent you the money for the investment.
I will be doing a post/article on each one of the above mentioned creative solutions for buying and selling property over the next few weeks. Here is a Question for pondering. Batman is human, can we be like Batman? Think about it, his family built Gotham and were involved with politics and his self education, tenacity for doing what’s right continued honing his skills to have the right tool at the right time, just like a real estate investor using these tools I will be sharing that I learn about. So could you be Batman? of Real Estate Investing?
I hope you join me in my adventure of learning, what it takes to be a real estate investor and how to start.
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