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Based on the reports that BWBs give me today, credit card lines of credit are widely used for income real estate down payment money. This source of money is an excellent example of creative financing for BWBs everywhere. So give it some thought for your future wealth building in income real estate!
Flip Real Estate with Creative Financing
When you flip real estate, you buy it at as low a price as you can, fix it up a bit, and then sell it at a profit. Flipping gives you many opportunities to use creative financing to the maximum.
Why? Because when you get real estate to flip, you can use an option, a land contract, credit card lines of credit, or other ways to control the property for the time you need to flip it for a profit. For proof, see these reader letters:
Just Five Months to Positive Earnings
“In January I started full-time buying and selling residential real estate. It has been successful beyond my expectations. During my first 5 months, my financial statement shows I made $46,000. The average length of ownership of my flip properties has been 77 days. Most of the property I buy is distressed, and in need of repairs. It is often vacant and vandalized, with title problems, owners divorcing, and/or being
foreclosed. Mostly, I buy at 50 percent to 70 percent of market value. I won’t pay more than 80 percent of market, including any repair costs. I have averaged $5,000 profit on every piece of property sold. I have closed 18 so far this year. I have one crew to do all my work which is guaranteed to pass FHA or VA inspection. With nearly a year of experience, it is getting easier to buy good deals and I am able to earn more profit per house. Next year I expect to handle 25 to 30 houses.” —Texas
Youthful Start Gets Good Results
“I started buying rental houses 1.5 years ago. I am 25 years old. In the 1.5 years I’ve been in business I bought 29 houses. I live and breathe rental houses—I love the business. I just flipped my first house and made $8,000 in two months! I will quit my job at a lumber company as soon as I have a large enough positive cash flow to support myself. I taught my sister how to flip houses and she bought two houses in her first two weeks.” —Missouri
How to Start and Be Successful in Flipping Properties
To start buying houses to flip, take these eight easy steps in the area in which you believe there is a good potential for your business:
1. Look around the area. Check to see if you have a supply of houses to buy and sell.
2. See if there is a demand for housing in the area. Young families need low-priced homes.
3. Get estimates from HUD, FHA, the VA on typical housing prices in the area.
4. Check local papers on Sunday for bargain properties. Read every classified For Sale ad. You’ll almost certainly find bargains.
Creative Financing of Your Real Estate Fortune
5. Visit potential bargains; see how much work they need.
6. Find a competent contractor who can help you with needed repairs.
7. Bid on your first flip house, after you know how much profit you can make on it.
8. Do your first flip job. Go on to more, using creative financing.
You can make money using creative financing in flipping. For best results, you should have some experience with home repairs. And you should not be afraid to pick up a hammer and start working!
But if you’re “all thumbs”—as some people are—don’t give up. Get an experienced house mechanic and arrange to have that person do the work. Offer an incentive—such as a share in the profit on the sale of the property. Then your repair work will be done while you do the financial planning!
Take Lenders Out of Foreclosure Properties
Closely related to flipping is the Foreclosure Specialist who takes lenders out of properties they don’t want to own. These properties are often called REO—Real Estate Owned. No lender wants REO properties on its books!
Why? Because a lender’s business is to accumulate money and then lend it out on safe loans to earn interest. The interest earnings are shared with the suppliers of money. Such suppliers are people who put their excess funds into savings accounts, bonds, and similar holdings.
No lender wants to own property! Every lender wants nothing more than to receive a check on the first of every month for the repayment of a mortgage loan the lender made. That’s “lender heaven.”
How to Be a Hero with Lenders You can be a hero to any lender by:
• Agreeing to take repossessed homes off the lender’s hands.
• Relieving the lender of an intense problem, often at zero cash to you.
• Having all closing costs paid by the lender because they have an in-house legal staff and the work doesn’t cost them much.
• Flipping the property for a profit for yourself and making the lender happy because it no longer has REOs on its hands.
With zero cash down for REO properties you have the ultimate in creative financing. And—happily—many lenders will not even check your credit when you take over an REO property.