Investing: Creative Financing

We are all familiar with the phrase, “it takes money to make money,” and it certainly holds true for nearly 50 percent of residential real estate investors who paid cash for their investment properties in this last year.

But, did you know that slightly more than 51 percent of investor in 2011 actually financed their purchases? And guess what else? They are making out like bandits!

I know the phrase “creative financing” might have left a bitter taste for a few of us during the crash of the market, however, there are a few creative options for financing, which have been mainstays in the real estate investing world. Knowing your options as a new or experienced investor can open new doors to opportunities and extra income that you may not have thought possible. Here are a few creative financing options you need to know about if you are considering an investment in real estate:

Installment Sales: the current owner plays “lender” and allows the investor to make payments directly to them, with a sizable down payment.

Carryback Loans: the current owner agrees to “carry” a portion of the purchase amount as a junior lien holder.

Lease Options: both a lease and purchase agreement are negotiated upfront. The investor makes monthly “rent” payments for the term of the lease (usually one year) with a non-refundable deposit, which applies to the down payment. At the end of the lease agreement, the investor must secure financing or forfeit their deposit.

Hard-Money: a short-term loan, typically at a higher interest rate. The lender maybe considered a “silent partner.”

These are just a few of the creative financing options available to people who are interested in building wealth by investing in real estate. If you are interested in learning more, please contact the Russo Team today. Take advantage of this market – it is providing an excellent opportunity to make real money, now. I look forward to hearing from you soon. Frank


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