| Real estate investing, whether doing house flips or | | | | the loan to acquire the property, and to pay for the |
| commercial, follows the traditional axiom of "In order to | | | | renovations to make the flip happen; provided this can |
| make money, you need to have money." Or so it | | | | be done quickly, it's a win-win-win situation. |
| seems. This article will showcase how this isn't | | | | The second way to streamline the process is to find |
| necessarily the case, and provide you options to | | | | something the seller wants that you can provide - |
| acquire real estate with no money down, or with bad | | | | trading skills for equity can work nicely. In similar vein, |
| credit. Note that these are not guarantees, they're | | | | leasing the property with option to buy can get your |
| techniques. Like all techniques, and most advice in real | | | | fingers into the property now, while you work to |
| estate investing, they won't do you any good unless | | | | secure financing, and find a buyer to sell the flipped |
| you follow them carefully, and know when not to | | | | home to. |
| follow them to suit the deal you're brokering. | | | | If you can gather up approximately 65% of the asking |
| First and foremost, you need to ask the classic | | | | price of the home you're selling, securing financing is |
| question, "What's my motivation?" Or, rather, you | | | | straightforward, and often doesn't involve a credit |
| should know your motivation already - you should be | | | | check at all. This is often called a "hard money" loan. |
| asking yourself what the seller's motivations are. | | | | The trick is gathering up the money to do so; the most |
| These provide the key to understanding what the | | | | straightforward method of doing this is getting an |
| seller really needs (rather than what they want) and | | | | investment partner; either 50/50 or some other split. A |
| will provide insight into how to make the deal happen, | | | | secondary way to do this is to put another property |
| even under less than ideal circumstances. Is the seller | | | | up as collateral for a secondary loan; by staking the |
| trying to get out from under the house to facilitate a | | | | loan with something of comparable value, you can |
| new job? Have they experienced a financial setback? | | | | attempt to get your existing housing inventory to help |
| Are they in danger of a home foreclosure? It's not | | | | you acquire new inventory. Variations on this technique |
| quite a case of "search out the desperate sellers", but | | | | can include getting a co-signatory on the loan, or |
| knowing why they want to sell now and what they | | | | investigating federal loan programs, this can get |
| need is a clue on how you structure the deal. | | | | complex if you're not careful. |
| Structuring the deal is a mind set, not a recipe. The | | | | Related to this, and again tying to the question of what |
| mindset should focus on mutually beneficial | | | | does the seller truly want, is the option of swapping |
| arrangements. You benefit from doing the deal, the | | | | properties. Again this is a way to get your existing |
| seller benefits from doing the deal, and both of you | | | | inventory cleared out to something you feel is better |
| succeed. Again, knowing your seller's motivations are | | | | suited to the marketplace you're in. Indeed, even if you |
| important here, because they'll tell you what the victory | | | | don't have the exact inventory desired for the product |
| conditions are. | | | | swap, making a two way or three way transaction to |
| Making the deal happens means finding a way to | | | | do this can help convert a property rich portfolio into a |
| meet the down payment. There are numerous options, | | | | capital rich one. |
| and what follows is at best a summary. | | | | The last variation on this theme is having a seller |
| First, and perhaps the simplest, is getting a loan. With | | | | carried loan. A seller carried loan allows the seller of |
| good credit, getting a loan is easy - with bad credit, in | | | | the property to "sell" the equity that's been |
| the current subprime loan meltdown, it's not. (To be fair, | | | | accumulated to you, and receive it back in payments |
| given the amount of truly horrific loans written in the | | | | at mortgage interest rates, which are typically higher |
| last three years, the subprime loan meltdown is having | | | | than the rate of return he'd get by putting the cash |
| a softer landing than any analyst expected). That's all | | | | directly into a bank account. There are risks involved, |
| well and good, but if you don't have good credit, this | | | | and you'll want to do a partial equity deal on this sort |
| may not be a straightforward process. | | | | of structure, because a lot of sellers don't feel that a |
| To unbind the kinks in the process, try finding your | | | | sale has been consummated without money changing |
| qualified buyer first. When you have a buyer lined up | | | | hands. This can be combined with hard money loans |
| for a home, finding a seller (and finding financing) is | | | | and cosigner loans, though; again, there is the potential |
| vastly simpler. Sometimes called the "forward flip", the | | | | for a lot of complexity if you aren't careful. |
| drawback of this option is time - you can lose the deal | | | | All in all, by focusing on structuring the deal, it's quite |
| if you can't find the inventory in time, so do your | | | | possible to get into a real estate investment with no |
| research on what's available and for sale first, then run | | | | money down and poor to mediocre credit. Focus on |
| some ads, and try to do some matchmaking - the | | | | making the deal a mutual win-win-win, and you'll be |
| buyer pays you cash down, you use that to secure | | | | significantly happier with the outcome. |