Sometimes, real estate investors must get creative to find the financing they need to secure deals. There are seven common types of creative funding in the real estate industry:
Rent to Own
Owner Held Mortgages
Lease Options
Land Contracts
“Subject To” Transactions
Reverse Wholesaling
Private Money Lenders
Advantages of Creative Financing
There are several benefits to implementing creative financing in your real estate business. Following are a few of them:
Little to no down payment
Can buy without bank qualification
Can buy with credit issues
No income qualifications required
Disadvantages of Creative Financing
On the other hand, there are a few disadvantages to creative financing as well. We have provided a few of those below:
Limited property selection
Labor-intensive process
Lower return on investment for time
Why Would a Seller be Open to Creative Financing?
The seller has a problem and creative financing options can solve it. Some of those reasons include:
Unable to afford the house
Don’t want to pay 2 mortgages
There are negative emotions attached to house
They need money fast
Don’t want to manage/maintain the house anymore
To get the amount they want out of the house
Why Would a Seller Not Be Open to Creative Financing?
On the other hand, a seller may not be open to creative financing because it is not a good solution for them.
They are afraid
They have a tenant that is trashing the house
Worry about what others would think
Their expectations are not realistic
They believe they will get their asking price
Creative financing is often used in the real estate industry as a solution for a seller who wants to get rid of their house as soon as possible. Not everyone finds this to be a great option for them. However, as a realtor, you know you have options to share with them.
Contact the experts at Fortis Funding to explore our wide range of creative financing solutions.