Creative Financing: Tips and Tricks of the Trade
If you live in Australia, particularly Victoria, perhaps you have noticed the investment boom around you. Perhaps you live on another continent but have overheard discussions of the housing boom and property investment opportunities. Either way you likely want to cash in on the deal while it’s still growing, otherwise you wouldn’t be here reading this article.
To make the most of these investment opportunities, you’ll need to be able to invest in many different properties. You might already know some ways to secure financing for this, at least on a smaller scale. However, if you can use several different creative financing techniques, you could increase the size of your portfolio; going from just a few properties to dozens – and creative financing is the way to do this.
Creative Financing
There are three things you need to know in order to get started. If you really want to be a successful property investor and increase your portfolio you need to be educated on the many different financing techniques available to you. You need to know what these techniques are and have a few examples explained to you. Then you need to know how to find the right independent financial investor who can provide tailored service and advice.
In order to be successful in property investment and increase your portfolio significantly, creative financing techniques need to be used. Creative financing is a term used by real-estate investors and it refers to non-traditional real-estate financing techniques. These techniques are not commonly used.
The aim of using these creative financing techniques is to aid you in purchasing properties when either the investor doesn’t have enough capital of their own to invest, or they don’t want to use their own funds. This type of financing is sometimes known as leveraging other peoples money.
Creative Financing Techniques:
Simultaneous Closing: In this technique, the seller receives financing without taking out a mortgage. At closing, the title is transferred to the buyer and the mortgage is simultaneously sold to a note investor for cash.
Subject-To: This is a creative finance technique where the buyer can obtain the title to the property without having to procure a note. The seller of the property in question keeps the existing financing in place – this way, the buyer does not need to pay any of the loan fees or transaction costs. This is akin to assuming a loan; but beware – this is done without the consent of the financial institution which issued the loan (which violates the terms of the original loan).
Many other creative financing techniques exist – land trusts, 1031 exchanges, retirement accounts, seller seconds, credit partners, private mortgages, hard money loans and more!
An independent financial advisor can assist you with their expert investment advice. These professionals can assist in many ways:
They can asses your borrowing capacity.
An advisor has intimate knowledge of lender guidelines.
They will know which lenders to approach; ones who will view your request favourably.
They can save you much time by doing the necessary research for you.
Explores all the options that are available to you and can help present the right ones for you to choose from.
They can show you opportunities and financing techniques which you may not have known about.
They can streamline the loan process for you.
They look after your interests and help you avoid lending traps.
Helps you even after the loan process is complete
Personalised service.
They can show you techniques which will save you a lot of money in the long run.
An independent financial advisor can grant you access to many options which lenders would happily keep you in the dark about. The creative financing techniques they can assist you with can quickly expand your property investment portfolio.
If you want to get in on the boom in property investment here in Australia, you’ll need to get up to speed on creative financing techniques, get the advice of a financial advisor and then begin working to really beef up your investments. You could go from just a few properties to more than twenty in the space of a couple of years.
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