Real Estate Code

Real Estate Code

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House owner/real estate agent giving away the keys - house out of focus

House owner/real estate agent giving away the keys – house out of focus

Cracking the Real Estate Investment Code: Know the rules of the Game

Strategy without tactics is the slowest route to victory; tactics without strategy is the noise before defeat

-Sun Tzu

Real estate investors are action takers that are always on the lookout for actions that deliver tangible, concrete results. It goes without saying that ‘taking action’ brings forth an immense sense of satisfaction. Sadly, there are a number of non-strategic investors who make use of this urge for action as an excuse to focus primarily on tactics which are actions that lead to the execution of strategy.

Owing to the rapidly evolving landscape of consumer lending, conventional financing at times becomes a very difficult and costly option, and in some cases, it is not even an option. In order to help you with real estate financing, we are going to introduce you to some creative financing strategies in this blog that may be available to you irrespective of how good or bad the economic situation.


Creative Financing for Acquiring Properties: Profitable Real Estate Investments

Strategic investors like to make money on the buy. Most of the times, they like to invest in undervalued properties as they offer them many tactical options. Balancing their portfolios with properties that produce both cash flow and equity is their primary motive. There are a number of ways with which real estate investors can make profitable investments. Some of these strategies are outlined below;

  • Owner Financing – Owner financing involves a situation in which the property seller actually holds a mortgage for the investor while the investor makes payments.
  • Assumable Finance –Assumable Finance involves a situation in which a real estate investor makes an assumption of the property seller’s mortgage. In this situation, the mortgage lender of the property seller permits the real estate investor (or the buyer) to bear the responsibility of the property seller’s mortgage.
  • Wrap Financing – Wrap finance involves a situation in which the property owner offers the buyer or the real estate investor a new loan whilst keeping and making payments of the original loan. This way the new loan wraps the original loan of the seller.
  • Lease Financing – Lease financing involves a situation in which the buyer or the real estate investor leases the property from the property seller until the buyer has the cash or the equity to buy it. If the buyer finds it challenging to finance the property through conventional financing, they might take into consideration other ways to help them achieve their property purchase.

Whilst owner financing is a widely available option, it is of utmost significance to note that all mortgages cannot be assumed and there are a number of mortgages having a clause called ‘due on sale’ that involves the approval and notification of the lender for one to be wrapped or assumed.

Bottom Line

It is of utmost importance for homebuyers to know that if they cannot utilize one of the creative real estate financing strategies discussed in the blog, they may be available to lease option the property until they can take the ownership.

Needless to say, first time liens are most protected against the property and are first in line if the property deal goes bad. The property needs to be liquidated to pay the loan back. Secondary lenders however are responsible for the terms they offer.

The most important thing to keep in mind is that you have a multitude of financing options at your disposal when acquiring a property. All you need to do sometimes is to search for them in places that are less obvious. Remember, due diligence is required before making an investment decision.

Happy Investing!

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