Finance Strategies for Real Estate Investors-how to Finance Your Properties
In order to be successful as an investor you need to have a lot of ways to buy the deals you will come across or create. I
n this market you will run out of money way before you run out of good deals.
You need to have several different ways to finance these purchases and to create a win win situation for your self, the seller and the future buyer.
Here are several investment and financing strategies:
1. Lease Options-lease with the option to buy at a later specified date and price-We will explore this powerful technique on the next post.
2. Assignments-you put a property under contract and include “and or assigns” so you can either flip the contract to another investor without closing
3. Simultaneous closing-you put a property under contract, find a buyer and sign a contract to sell to them. at closing the seller deeds the property to you and then you deed it to the new buyer.
The new buyers funds is put in escrow, pays you which pays your seller and the transaction is completed without you having to get financing.
4. Agreement for deed– basically you pay the seller in installments and title is transferred after all the payments have been made or you refinance it. Also known as a wrap around mortgage-we will explore this technique further in the next post
5. Finders fee– you do not close on the property you simply find them for other investors and they pay you a fee.
6. Hard money loan-no credit or income required loan. Usually 70 % of the after fixed up value so if property is selling for 70,000 but is worth $100,000 fixed up the lender will lend you $70,000.
7. Single payment Note-a way to get 100% financing by have ing the seller hold a note for the balance of financing but there is no monthly payment just a future payment in full.
8. Subject to– buyer assumes the existing loans on the property and either pays the seller the difference owed or has the seller hold a note for the balance (can be combined with the single payment note (7) or a new second mortgage) for 100% financing.
You can also have the seller create a seller held mortgage to you and then he can sell it after closing to investors looking for income instruments. Usually have to discount the value of the note.
Sellers can sell properties much faster this way due to creating these “ No qualifying mortgages” at the full asking price and then selling them off. This can be repeated over again on other bargain properties you can find.
Creative financing provides flexibility and can make or break a deal so you need to have the knowledge of as many techniques as possible so that with the right knowledge you are prepared when the right deals come along.
Comments
Comment from Finance F
Time June 6, 2010 at 3:09 pm
The answer is 418.76 pounds.
Ok. This is a 'fairly' simple growth question. The formula I'm using is for compound growth which I'm sure you've heard of, as you put this question in the right section. (Compound growth is used most in finance). This is how the formula looks:
FV = PV ( 1+i )^n
Where FV is future value (his future weight which is what you want). 'i' is the growth rate. 3% growth means i will be 0.03. And n is the number of years he'll grow over, which is 60-35 = 25 years old. For this question the formula could be worded as:
Weight, multiplied by ((1+percentage growth) to the power of number of years he'll be growing).
= 200*(1.03^25)
The answer is 418.76 pounds.
To help you understand. If you're growing by 3 percent a year. then next year you will be 1.03 multiplied by the weight you are now. This would be 200 * 1.03
His weight in two years would be 200 * 1.03 (the weight after the first year) which will then grow by 1.03, so the above bit needs to be multiplied by another 1.03. So in two years he'll be 200*1.03*1.03 or 200*1.03^2. You'll notice the power is simply the number of years he's been growing. After three years would be 200*1.03^3.
So it ends up being 200* (1.03 to the power of 25)
Good luck with any other questions.
Comment from jay27
Time June 9, 2010 at 11:24 pm
It is a problem in a matter of law.
You should turn to your laywer for professional advice.
Comment from Finance F
Time June 6, 2010 at 2:09 pm
Have you always wanted to be able to do compound interest problems in your head? Probably not, but it's a very useful skill to have because it gives you a lightning fast benchmark to determine how good (or not so good) a potential investment is likely to be.
The rule says that to find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72. For example, if you want to know how long it will take to double your money at eight percent interest, divide 8 into 72 and get 9 years.
Yes, it is a useful tool and is reasonably accurate.