Creative Financing
Our current property after three months of rehab is now on the market and we would like to purchase another property to flip while this one sells. We would like some tips on finding money for the next property. Any information would be very helpful.
Very Respectfully,
gman1
Why be concerned about money? There are thousands of motivated sellers out there who will give you their properties and pay you to take them. You don’t need money or a bank loan or even credit.
It's a matter of calling everyone who might be interested in having you take over their loan payments while you sell the property to someone else for more money (or... you may decide to do what I do....pick them up, hold them for 4-5 years while someone else lives there and makes all the payments and covers all costs. We then sell at termination (or they buy me out) and split the profit.
Kind’a cool...free houses with no payments or costs....and they are out there by the thousands.
Bill Gatten
Bill, does that really work. Can you explain that in more detail.
Eddie, the concept is employed in various ways...Wraps, CFD's Lease Options, Equity Shares, Etc.; however,, what we do, in particular, is take control of the properties by having the owners place them into land trusts, then assigning to us a beneficiary interest in the trust (90%...the seller keeps 10% to forfeit to us later...thus avoiding the DOSC and allowing for easy insurance coverage in the borrower's name).
Our next step is then to name a 3rd beneficiary who will to live there and cover all costs (in exchange for ownership and tax benefits)...and to ultimately share with us in the sale of the property at some future date.
In the meantime, we charge the tenant/buyer to get in, and charge them more per-month than our payments (and frequently collect from the seller as well). All of this, coupled with sharing the principal reduction and appreciation at termination makes us a pretty good living).
Bill Gatten
Thank you everyone for your helpful replies. We have bought another property for rehab, and are doing very well. However it looks like we will be going a little over budget. Any recomendations for us?
Hi Gman1
Let first of all welcome you to TCI!
You will find a great deal of information on the rehab forum at http://www.thecreativeinvestor.com/ViewForum20-10596.html
The best way to control cost is the upfront inspection of the subject property.
When I take on a project for rehabbing purposes, I do a lot of research on all major repairs and interview several contractors prior to the purchase. I also seek out city; county and private rehab funds.
When I deal with any rehab project, I add an extra 90 days for the project because of the manner on how I market a project.
Let me give you an example:
The 1st 30 days I try to sell a property as is (after clean up) no sale I go to:
The next 30-day process All exterior work is completed and I place it up for sale for another 30 days. No sale!
I have the entire exterior work completed and sale in completed condition.
I watch the rehab cost vary closely and visit the project several times a week. I offer cash bonuses for completing projects timely.
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