Non Traditional Ways to Purchase Real Estate

by on April 16, 2015

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.

{ 7 comments… read them below or add one }

Dominique June 12, 2015 at 5:32 am

Great article. I like the part about using friends and family to help. We recently did a renovation and had our friend buy the house as we were short on funds. We made a considerable profit so it was win win!

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Carol Martin June 25, 2015 at 6:13 am

Hello Chris,

Good article on non traditional ways of getting a mortgage. There are some of those which I have not came across earlier. The friends and relatives is a new one for me.

I learnt quite a good amount of things from this article. Thank you for a good post.
Carol Martin recently posted..How to Improve your Home for Sale in Gabriola?My Profile

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Rick Toney March 18, 2016 at 11:51 am

I enjoyed your article as it gives the reader a good overview of real estate financing. I think your last category of internet funding is going to be huge over the next few years. Crowdfunding seems to be growing exponentially.

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John Briggs March 20, 2016 at 1:24 pm

Honestly, I’m a fan off any method that doesn’t involve the use of banks. If you have enough cash, buy the home outright (I know some financial planners that would beg to differ). If you don’t seek non-bank funding. Finally, if that isn’t an option, the lowest interest rate option – then pay off the loan!! And don’t borrow against the equity!! Live within your means for a happier life 🙂

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Gloria Roberts March 21, 2016 at 4:27 am

Hey! 🙂

Awesome share this is, I am actually planning to buy a property since last month but was so much confused about which would be worth of investing upon. Reading your article I suppose I can take help from my relatives on this.

Thanks alot & keep sharing 🙂

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Micky Larsen March 21, 2016 at 5:26 am

Even though I find that the banks and mortgage institutions are too conservative when it comes to finance a purchase of real estate, I do believe that mostly there is a reason they dont want to lent people money. So unless they are clearly wrong, I would be very careful when it comes to buying real estate if the bank/mortgage brokers are refusing you finance request.

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Hazel Owens March 23, 2016 at 11:25 am

It’s interesting that sellers can give you financing on the property they’re selling. I didn’t know it was possible. I’d definitely want a lawyer in that situation who can draft a good agreement and advise me if anything went wrong. While it seems like a great way to get around mortgage companies, it also seems risky, so having a property lawyer’s help along the way can make it less risky. Thanks for the article.

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