In real estate investment, starting well in the market is a bonus, especially when short on resources. You want to keep your business growing despite the economic changes in the market. For this reason, having creative financing in your investor’s toolbox becomes significant. You should, however, understand what creative financing structures entail, the types, and available alternatives. Below are the types of creative financing to note.
If you want to get immediate control of a property, you can consider a lease deal. With lease options, you have control over the property for years, depending on the agreement you have. With lease options, there is also the possibility of buying the property at a predetermined price. When you control property under the lease, you can sublease it for cash value, especially when the price goes up.
Rent to Own
As an investor, you have the best way to get started in a competitive market with rent-to-own deals. With time, you can acquire deals and later resell properties to potential end buyers and tenants. You will also spend less on rent to own, especially if you have the intention of acquiring your own. In rent-to-own deals, you take control of the property fast.
Subject to Deals
With subject to deals creative financing option, a buyer takes over existing financing without seeking new loans. There are no lender fees, and locking in good financing becomes easier. There is an exit for the seller with subject to deals making it possible to avoid mortgage delays.
Like rent to own, land contracts allow a buyer to steadily pay down the amount owed and later own the property. The more payment buyers make on the land contracts, the close they become to owning the property. After full payment, the title can now change hands.
Owner Held Mortgages
With owner-held mortgages, the buyer avoids the stress and struggle of getting a bank mortgage loan as the owner provides it. With this type of creative financing, there are no strict application requirements, qualifying criteria, and credit card checking. There are also no delays, lenders’ fees, and you close the deal fast. The exit price is higher when you choose to sell the property.
Having the right knowledge about creating financing for real estate investors is paramount. Reach out to Eagle Bend Capital Financing for expert guidance.