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Real Estate Investors Seek New Options

Posted by Brett Carman on 11/18/2008 at 9:47 AM
Posted in Real Estate

While lenders are fairly well settled into what they will require for a buyer to qualify for a loan in this new credit economy, many real estate investors find themselves disenfranchised from the process because they are no longer eligible.

It’s true. Whether it be for credit, income or a significant enough down payment, only a fraction of those who would have been eligible just 12 months ago, can still make it happen. So for every action, comes a reaction. The market has gotten creative and I am seeing a resurgence of unique ways people can still buy and sell real estate. The 2 most common are as follows.

Owner Financing- While we saw a large decrease in this type of financing over the past 15 years, it is most definitely becoming more popular. Sellers are hoping to move their properties in any way possible and get closer to their asking price. Owner financing enables the Seller in most cases to entice buyers who could not otherwise qualify due to credit or down payment requirements. A helpful suggestion is for a Seller to have a balloon note after a certain period so that the buyer WILL have to get traditional financing at some point in the future and buy out the Seller.
Lease-purchase- This type of transaction accomplishes much of the same thing as owner financing but with a little less “teeth”. Buy may have some significant earnest money at risk but has the option to buy or walk at the end of the lease term. The lease-purchase is a much easier transaction to “undo” if things aren’t working out. Buyer and seller agree on a lease term AND a final sales contract at the onset and Buyer has the option at the end of his lease to execute the sale.

It is clear that the face of the lending industry has changed for the foreseeable future. Until buyers can absorb the magnitude of the changes caused the recession/ correction, they will have to continue to be creative in their efforts to accomplish transactions at times. If you want to invest during this period of change, I recommend talking to a real estate investing coach first. They can help you find new options that work best for your strategy.

Related Training:

Creative Financing
Real Estate Investing
Real Estate Coaching
Profit From Foreclosure Investing

Brett Carman is a seasoned veteran in the real estate industry for over 17 years. He holds active licenses in real estate, mortgage finance, and property & casualty insurance. Offering a one-stop shop for his residential and commercial clients, he strives to not only educate, but streamline the real estate acquisition process. With a long and proven track record of success, he is uniquely qualified and has a passion for helping people achieve their goals in real estate.

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5 Comments

Posted by member1897129 on 12/02/2008 2:11 PM

I have been trying to sell a townhouse (bought for investment) for at least 2 years. The property is in excellent shape and has a great rental history. At this point I am willing to take a loss just to get rid of it. I still have equity in the property and due to loss of income I could use some cash. My credit history is good and I don't want to risk foreclosure. Do you have any new or inventive suggestions on selling in this market? HELP

Posted by Luis Pereira - DYN outsourcing Costa Rica on 12/02/2008 5:54 PM

Im an attorney here in Costa Rica, with a law firm focused on business and commercial law at http://www.dyncr.com. at this point, i think sell is the hardest thing you can do. well, why dont you try to rent the house? not for resident but for tourists!

With a simple structure like this http://www.dyncr.com/blog/your-own-business-in-costa-rica-the-simples... you can start your own business, find contacts to bring tourist to your area.

Posted by member1798111 on 12/07/2008 2:02 PM

In the Hernando County area the numbers of individuals who are looking for owner financing or lease to purchase has outpaced owners who are offering. A big obstacle on going this route is the homeowners that are upside down on their mortgage. The only chance some homeowners have is for the housing market to rebound. I personally do not see a housing market rebound in the Tampa area until the government steps back and let the market correct on its own.

Chris Frantz
Exit Success Realty
Spring Hill Florida
<a href="http://www.soldbychris.com" target="new">Hernando County Real Estate</a>

Posted by member11000083 on 08/04/2009 9:50 PM

I've seen a lot of movement in this area as well. I currently have three properties acquired this year with seller financing. I plan to see if I can't acquire more properties with lease financing.

Innovative solutions are critical during this difficult time.

Blake Ratcliff
The Apartment Guy
www.apartmentmarketingsolutions.com

Posted by member11004792 on 08/13/2009 1:32 AM

Lease purchase is more affordable for the people. Its like your renting to own for the future. In the current Real Estate market, whether to rent or buy is tricky, and a lot of people look into rent to buy options. Rent to buy, or lease to own, is where a renter wants the option to purchase a rental property, and for an upfront down payment, usually 3 to 5 % of the price – more than a payday cash advance, and a premium on top of rent, they can option to buy at the end of the lease, and all payments above rent are applied to the purchase price. A <a rev="vote for" title="Should I Rent or Buy . . . or Both?" href="http://personalmoneystore.com/moneyblog/2009/06/18/renting-buy/ ">rent to buy</a> can save a lot of cash off a mortgage loan, and maybe save a loan till payday or so a year.

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