30 Dec How to Use Creative Real Estate Financing Strategies
If you’ve followed me online or listened to any of my podcasts, you probably heard about the story of how I got started in creative financing. We wanted to sell our family home, but after lowering the price over and over to get interested sellers, we made out with only $4,000 from the sale of our home. We didn’t know back then that there were other ways to sell our home. Since then, I’ve become an expert in creative real estate financing strategies, and I now help people in the same position who don’t want to sell their homes and watch all of their profits disappear. Essentially, I find sellers who wish to get the most value out of their home and come up with solutions to get them their home’s value, even if it takes a little bit longer than traditional financing options.
Who Is Our Ideal Seller?
When it comes to finding a seller, I want to be their problem-solver. I’m looking for specific problems that a seller has that I can solve – and if you don’t have any of those problems, I’m not your guy. Those people will sell their home conventionally, get the money, and be on their way, simple as that. I’m looking to provide solutions for people who have problems the traditional methods can’t solve. What if you owe what your home is worth? What if you’re behind on your payments or just inherited a house and owe back taxes? What if you are straddling two mortgage payments? That’s who I want to work with! We can create a creative financing structure and help them sell their home.
These are the main questions I ask sellers to see if they would be a good fit:
1) Why are you selling your house?
2) Where are you going if you sell it?
3) Do you need the proceeds from this house to do your next thing?
4) How fast are you looking to get to your next place?
Who Is Our Ideal Buyer?
You need to have a buyer if you have a seller, right? I work with people in good financial standing who simply can’t get a traditional loan from a bank right now. In the future, they will be able to, but as it stands, they are unable to get one at the moment. A whopping 65-75% of the total buyer market can’t get a loan today, a significant number of people. I help those who truly want to be homeowners get matched with a home and rent until they are in a place where a bank will accept them for a loan. Until then, we follow the rent-to-own structure where they build their credit, save money, and work long enough to get approved. Many of my buyers are small business owners, single mothers, and those who have gone through a major life change like divorce.
How Do We Get Our Real Estate Buyers Ready?
The objective of rent-to-own is to get my buyers ready to be approved by a bank within 12-24 months. You have to understand; I’m working with the top percentage of people who need a chance at homeownership. In most cases, I’m actually more thorough than banks when assessing who would be a good fit for these homes. We look at their ability to qualify and support the house within a period of time. We also set a mortgage-readiness date, which is the date we anticipate that they will be ready to be approved for a mortgage. Their income needs to be at least 3x their monthly lease payment, and they need to have a down payment plan in place. We want to put them in a position where they will get to the finish line, so we view them and treat them like they are homeowners. We absolutely never put someone in a home that we don’t think they would be able to buy.
Who Is This For?
The last question is – who is this for? I can tell you; it’s not for everyone. On the buyer side, I’m looking for people who have the desire to own a property. I want them to take this second chance that they are getting and do what we are asking of them. I’ve made mistakes before too, and just like I’ve learned from them and grown, I want that for my buyers. The home buying process is work, and I need my buyers to do what they agreed to do. They need to make their payments on time every month and show that they are ready to be homeowners. These people who are determined and prepared to work are those we aim to attract and work with. We need buyers who are willing to trust us to get them to where they need to be. I ask that you all take the time to learn more about real estate financing strategies because it isn’t a difficult topic. Let me help educate you on this! Make sure to check out my guest appearance on “Let’s Talk Real Estate Investing” with Sharon Vornholt. We talk in-depth about rent-to-own and everything that goes into finding ideal sellers and buyers.
Listen to my guest appearance on any of these platforms: