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What Is Creative Financing?

By: Brian Gibbons
24 February 2010

What is Creative Financing?

I use 3 boxes:

-- No Financing
The first box is "No Financing". You can do deals that require no financing at all, such as when you buy a property and immediately sell it to another buyer. This is the "flipping" technique. You can
  • flip a lease,
  • flip a sale and purchase agreement,
  • flip a lease option,
  • flip a land contract,
  • flip a straight option to purchase,
  • All for an Assignment Fee

-- Existing Financing
The second box is "Existing Financing". This is where you structure the deal around the seller's existing financing. What usually comes to mind is an Sub2, Contract For Deed - Land Contract, Wrap AITD or a Buy on Lease Option.

-- New Financing
The third box is "New Financing". This is where the deal requires you to get some form of new financing, either from a bank, Private IRA Lender, or a hard money lender.

Usually, the only time you'll need to get new financing is when you're going to buy a property, fix it up and retail it, or when you're going keep a property as a long term rental.

Not all states are welcoming. For instance Texas has basically outlawed lease options and contracts for deed.  They use Wraps for Seller Financing.

Don't ask banks for help, ask your REIA Chapter President about creative financing in your state, what is ok and what is not.

And I have not touched on private money from Private IRAs for all cash loans at good repayment terms. I use http://TrustEtc.com for custodian services (Private Money from IRAs needs to be put through a IRS DOL approved custodian.

Best to you,

Brian, REISkills

Brian has made money for his company in lease purchase consulting since 1986.

He coaches select students for 1 year coaching agreements in every state except Texas.

Brian Gibbons, coach of Lease Purchase – Rent to Own Consulting – http://REISkills.com

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