A New Twist On Property Investment
If you ever wanted to expand your investment portfolio to include investment properties but think you just can’t come up with the money, Think again. There are many ways to purchase homes that don’t involve banks.
Salesmanship
If you have any selling ability whatsoever or even if you just like talking to people, you can leverage your ability. You would be amazed to know how many deals are made or broken based solely on ones people skills. This can be one of the most important skills to develop if you want to get into property investing. Most of the time, you will be dealing directly with the owner’s in the case of buying property with no money down. It is negotiating with owner’s that will determine your level of success.
No money down
This is the way you will be buying homes if you intend to avoid banks. This is how you can control property without ever having to get a loan or if you have less than stellar credit. Many times you can reduce your risk with these techniques if not eliminate risk entirely.
Techniques
There are almost endless techniques for structuring property investment deals but let’s go over a few examples.
1. Seller finance- This is where you negotiate with the seller to “carry the note” on the house. Essentially the owner is the bank, why would they want to do this? Banks make a ton of money off of interest payments; this gives the owner of the investment property the chance to make money off of the interest payments that have been agreed upon.
2. Lease option- This is where you negotiate a lease with the option to purchase the property at an agreed upon date. This can be a sweet deal for both parties. The owner can get an option fee which is money paid up front to kick off the deal. This covers the owner in several ways. It provides incentive to the lessee to stay in the property because the money is usually non-refundable. It also covers the more minor damage that may occur which isn’t covered by insurance. The owner can usually get a better lease rate due to the fact that this type of deal doesn’t require bank interaction and the owner is locked into terms. The best part about the deal is most people that get a lease option intend to purchase the home at the end of the option (usually 3-5 years) which makes them much more likely to take care of the home.
The benefit to you
You may be wondering where the money for the option fee is coming from since you are strictly a now money down deal maker. This is the fun part, the money for the option fee and the lease will come from the person you end up sub leasing the property too. The benefit is obvious, you get the best of both worlds and everyone comes out ahead. Worst case scenario, you can always kick the deal to another investor, or if you can’t find anyone for the sub-lease, you just walk away before you make any commitments. The best part of the deal is that you can do it over and over again because no banks are involved on your part.
3. Dealing in equity- When negotiating for property investments, you may not have cash but many people have equity. The list of items can range anywhere from a gold watch or other jewelry to other commercial investment property or land. Anything you own equity in could be of value in negotiations. Often times you may simply put your equity up for a short time until the deal closes or until you get a tenant. You may actually even be able to use the same equity over and over again.
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