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Buy With No Credit - How to amke Money This Month in Real Estate
How you can buy homes with no credit checks and only $1 to $10 down.
Million Dollar mistakes that most real estate investors almost always make and how to avoid them.
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Financing Options - Be Creative!
Probably the best way to finance real estate purchases is with OPM - other people's money! That way you let the property pay for itself and while your own cash supplies are unaffected. Creativity is often the key for real estate investors. Experienced real estate investors know how to use a variety of financing options, often combining methods to achieve the most bang for the buck.
The Traditional and best know route is with the use of banks, credit unions, and other home mortgage companies. This can be a great was, as it is stable, predictable and works especially well for the buy and hold investor. Mortgage rates vary, but once the mortgage is finalized, the rates are known and the real estate investor knows his/her numbers.
However, because of the current mortgage turmoil, traditional lenders have tightened their lending criteria. Most require a 680 credit score or better for approval as well as full documentation of income and debts to be qualified. For those who do qualify, a down payment of at least a 10% will probably be required. If you are able to get approval, now is the time to invest in real estate.
Private Lenders may be a cost effective way to finance your real estate investing. These lenders are the personal lenders, people with money in low return investments such as bank CDs and savings accounts. Terms and conditions will vary from lender to lender, depending on that person's comfort level with you and your real estate investment. Often these lenders fall into the friend and family category. They may have IRA money they do not need for a while, but need a reasonable return on their investment.
Hard Money Lenders are businesses in the business of lending money. Terms are often short term with higher points rates higher than traditional loan rates. The typical real estate borrower presents a higher risk than a bank wants to take. Many real estate investors also need money for the short term. The higher points of a hard money loan may actually be cheaper than all the costs banks put into the equation.
As a real estate investor, creativity becomes a critical factor in financing. Creative financing can be almost anything a buyer and seller agree to in the transfer of real estate.
One of the simplest creative-financing methods is a Seller Carry Back. This method is a form of owner financing in which the seller agrees to carry the note for your purchase. If the seller owns his/her real estate free and clear you might be able to finance the whole purchase with seller financing. Other times, the seller may still owe part of a mortgage on the property, but may be willing to finance the equity portion.
Essentially, the seller doesn’t want the property anymore, but also doesn't mind receiving a monthly payment on it. Don't be surprised if the seller wants/needs the balance in 1-5 years. However, this is a great way to finance a real estate investment as it gives you time to improve the value of the property, to improve the terms of a refinance later. Remember: It's easier to qualify for a refinance loan than a purchase loan.
The subject-to method poses a significant risk to the seller, though it can be a great way to finance a real estate investment quickly. It will be a short-term solution, due to the fact the seller keeps the loan, but the buyer has title to the property and makes the payments. Most lenders will not be amenable to this arrangement, so title may need to be held in a trust. Experienced buyers will use this method when they don't want to come up with a down payment and know they can refinance or resell in six months relieve the seller of the liability.
This method is commonly used when buying real estate that in heading into the foreclosure process. at this point in the seller knows he/she will not be making any money on the sale of the property if the lender forecloses, so keeping a foreclosure off the credit report can be beneficial to them. Using this method requires the buyer to be ethical by making the mortgage payments as promised and paying off the loan as soon as possible.
Finally, if you can't find any other way to finance a real estate investment, you may want to try a lease option. Essentially, you lease the real estate from the seller and have an option to purchase within a specified length of time. You need to be sure the lease allows you to renovate or rehab the property, giving you the opportunity to increase the value of the real estate, facilitating either a future sale or permanent financing.
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