When it comes to investing in real estate, its not always easy to get a traditional mortgage to finance your purchase. That’s why it makes sense to consider these other, non-traditional ways to purchase real estate.
Seller Financing. If you can’t get a mortgage company to back your purchase, try getting the seller of the real estate to back you. Often times sellers can be persuaded to give you financing on the property they are selling. Believe it or not, you can find an agreement online that could probably suit your needs, or hire an attorney to draft such an agreement. If you are interested in this type of financing you will have to be a good salesperson – almost every seller is looking for cash. However, some tricks are to offer them more money than everyone else, or set up the agreement with the idea of refinancing in a few years and paying the seller off quickly.
Home Equity. You can always tap any home equity you have, or any equity in other investments to help you purchase real estate.
Credit Cards. Although this isn’t recommended, if the property you want to buy is really cheap, sometimes it actually makes sense to put it on your credit card. Especially if you are buying in foreclosure and think the property will appreciate faster than the interest rate on your credit card.
Hard Money and Bridge Loans. If there are short term problems getting financing that you can fix in a few months or years, then you may want to consider applying for a bridging loan or a hard money loan. Bridge loans are provided mostly by banks whereas hard money loans are from lenders that consist of a consortium of investors.
Friends and Family. If you truly have your heart set on an investment and can’t come up with the money or a loan, you can always turn to friends and family. You can easily download lending agreements online to help you make this transaction legally binding. I shouldn’t have to tell you that this type of purchase is extremely risky because of the tolls it can take on your relationships if something goes wrong – and it probably will go wrong.
Internet Funding. If all else fails turn to the Internet for help. There are lots of crowd funding sites that you can plead your case to in hopes of getting some help. Make sure you put together a realistic model of your potential investment returns so that you can gain the attention of these lenders.