Every real estate investor can be successful if he/she has some creative financing tools, which are the business methods to be very precise. With that said, you can work on creating your own toolbox of such methods but you need to make sure that you are actually going to get some benefit from it.
Here in this article, I am going to mention some of the great tools that have been helping a lot of people; it wouldn’t be wrong if I say that no one has failed with right application of these tools. But first, it would be worth mentioning some of the important aspects that elaborate why these creative financing tools are so special.
It’s a fact that best real estate deals are offered when market goes down. In that situation, you, as an investor, would want to purchase a property that may be available at the best price. But the problem is that banks rarely offer any loans during those days. In that scenario, if you are able to pull some money that would be enough to buy that property, you are definitely worthy to be termed as a successful investor. Now, the only way you can pull money in such situations is to use the creative financing tools that you have.
It is the first tool to talk about when we discuss creative financing. Using this method, you and the seller negotiate over the method of payment to be divided into monthly installments. The beauty of this method is that it doesn’t require involving bank or any third party in the deal. It is entirely based on the negotiation between buyer and seller. However, the seller, just like the bank, received promissory note and the mortgage payment.
Seller financing is not very common, may be because its implementation is a difficult process. Furthermore, this method doesn’t turn a bad deal into the good one. However, the difficulty involved in it is worth the result which may be in the form of your possession of a property that would otherwise be impossible to acquire using other methods.
Getting loan from a person having IRA
The main concept about getting loan using this way is pretty much similar to that of getting loan from banks. However, you are not getting loan from the bank but from a person having a self-directed IRA.
The benefit of a self-directed IRA is that you get the freedom to make decisions about investing your money anywhere you want. So, if you are successful in getting a person with such an account on board, you are definitely going to achieve bigger.
Here, it is to be remembered that this tool is not about pulling money from your own IRA. Furthermore, you should not engage in transactions that are prohibited according to the rules of IRA.
This process is same as that of getting a loan from a person having IRA. But the question is how to find a real link to the individuals with such a big amount of money that they wouldn’t hesitate in lending you the money according to your requirement. One thing that I can assure you of is that there are a lot of such people that you can find. As an idea, I would suggest you to join the real estate club in your area and join the network of pros. You can definitely get a break when you would have enough credibility.