Real Estate Investing Outside of the Box
Real Estate Investing Outside of the Box
When the typical non-real estate investor thinks about real estate investing, this person most likely has a defined set of techniques that is considered investing. This involves finding a property to purchase then securing financing from a lender. Of course to secure this financing a portion of the investor’s own money must be used for the down payment. This method is the more traditional way of real estate investing. There are some techniques that are known as creative real estate investing that move outside these confines to garner a larger amount of profit or to allow the investor to move forward without spending any of his own money.
One creative real estate investing techniques that many investors start off with is what is known as birddogging. This is not investing, per se, because the “investor” does not put in any of his time or money towards the deal. Simply, in this creative real estate investing technique the birddog gets paid for referring deals to other investors. The only risk involved is the birddog getting the information to the investor before another investor finds out about the deal. The birddog gets paid a fee once the deal closes.
The best creative real estate investing techniques are those in which the buyer manages to avoid putting any money towards the deal. One such technique involves using seller financing to purchase the home. In this case, the seller is the lender for the purchase. When the deal closes, the seller lends the equity of the home to the buyer and the two negotiate a payment plan. The terms of the payment can range anywhere from interest only, principal only, or some combination of the two. In this creative real estate investing technique, the investor usually situates himself so that he can use the equity he receives from the sale of the property to pay off the loan.
There is another creative real estate investing technique that takes advantage of seller financing. In this technique, the buyer is allowed to take over the loan that the seller currently has in place. This method of creative real estate investing can be done in two ways. In the first way, the lender formally allows the buyer to take over the loan. This is known as assumption. In some cases, the terms of the existing loan might be modified. In addition, the buyer’s credit must be approved before the lender will allow the loan to be transferred.
The second method of a buyer taking over the seller’s loan is known as “subject to”. In this method, the buyer purchases the property without contacting the lender. There is a risk involved with this method as some lenders include an acceleration clause that allows them to demand the loan in the case that ownership of the property is transferred.
One of the most popular creative real estate investing techniques is known as flipping. This creative real estate investing technique involves purchasing a property that is underpriced. Once the property is purchased, it is quickly resold at market value.
A creative real estate investing technique is any technique that allows the investor to make a profit quickly and without an outlay of his own cash. These strategies are perhaps the best ways to make money in real estate investing.
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