Lets face it…most of us are not yet rich. At least not yet! I always look for win win situations with my investors…my JV partners plus the vendors. I look to fulfill everyone’s needs.
We all know that being a real estate investor takes money, sometimes lots of it. No matter how much you have, at some point you run out. Thus, in order for us to build our real estate portfolios and become successful investors, we need access to money. We need access to financing. We need to build relationships.
In this post I want to share some of the concepts I have used. Firstly I started years ago a bridging company in the US. However I still needed greater access to money. I blew threw our money in less than 6 months. I looked for high net worth people who wanted a greater return on their money yet giving them security at the same time. I ended up with several high net investors which enabled me access to larger funds. I was virtually able to do any deal that made sense ( low risk). I would source the deal, take the introduction fees ( entry and exit) and all payments went to the investor and was registered as a first charge in their name personally or company. They were protected by this plus by the low LTV.
Besides running my bridging company….I built houses…refurbished blocks of flats and did a rather large warehouse deal ( 100,000 Sq feet).
How was all of this done?
Creative Financing
Creative financing is just about everything else. It could be owner financing or JV finance or partnership of some sort. I have done all of these all the time ensuring the investor was protected. I wanted them to feel good in order we could do the next deal. My warehouse deal was over $6,000,000 ( US Dollars- Yes I did real estate for years in the US). Myself and my JV partner and older gent each put down $300,000. A measly 10%. Within 1 year we sold the entire project and walked away with a very healthy profit each.
Bridging
Creative finance could be the use of Bridging. It could be the use of some type of line of credit. It could be private investors or crowd sourcing. It is almost anything your creative mind can come up with. I never used bridging rather owned a bridging company…but a great source -yet expensive.
The Advantages of Creative Financing
Faster and no hoops to jump threw
Creative financing can be fast. The use of hard money lenders or private investors who have cash readily available, who trust your analysis, and who do not need an appraisal…however maybe a survey…Buying for cash incentives sellers.
No Interference from the Banks
Many times with creative financing, it is just you and the seller making a deal that works for each of you. There is no bank looking over your shoulder. No one to kill the deal. This is one of the best aspects of creative financing in that you get to work directly with a seller.
Flexibility
The profit split or interest rate are all things you and your JV colleague can negotiate and decide what works best for the two of you. You can have your cake and eat it too…You can you negotiate the price with the vendor plus you can also negotiate the terms with your JV partner or Bridger.
No Money Down?
Most traditional lenders want the borrower to have some skin in the game and thus require some form of down payment. Potentially with creative finance you can put no money down or marginal money down. Private lenders may provide all the capital you need. Their alternative is leaving money in the bank to make no interest. Imagine negotiating a no interest loan or no money down. It can all be done with creative financing. Vendors can also hold finance with delayed completions…
Recent Comments