Power Tool #: Private Loans
I didnt include a diagram here because it is the same process as the previous tool. The only difference is that the private lender uses funds outside of an IRA.
Who would have that kind of money? More people than you think.
The most likely candidate is an individual with a large net worth. And if you understand the principle of books like The Millionaire Next Door: The Surprising Secrets of Americas Wealthy, this person WONT be the one driving the expensive car or wearing fancy clothes. So, dont underestimate anyone you meet!
My favorite way to find these individuals is at real estate networking events like BiggerPockets meetups or a local real estate club. Attend these events and get to know people. Find the experienced old guys and gals in the back of the room. Ask questions. Make friends. Once you get to know people, they may be willing to loan money.
Borrowing from high-net-worth individuals also brings more benefits than just getting the money. In addition to the loan, borrowers can learn from their expertise and experience.
A couple of my own private lenders became mentors and close advisors. While they may have been interested anyway, the fact that I had their money made them VERY interested in my success. Their tips, feedback, encouragement, and friendship over the years have been an essential part of my own success on their deals and others.
Strategy One: Syndication Sponsors
While pondering the question as to why more people do not invest in real estate, David also reflected on the issue of trust. Investing in real estate syndications requires the passive investor to turn their hard-earned money over to a syndicator. Once the funds are turned over to the syndicator, the passive investor has little to no control. The same is true for a stock investment too, but stocks are liquid.
You can buy a stock, and two minutes later, turn around and sell. Real estate is non-liquid. Once the funds are invested in a real estate syndication, those funds will be tied up for at least three to possibly ten years.
Investing in a real estate syndication requires a high level of trust.
The first strategy the investor needs to employ is finding a syndicator they can trust. This is not only the most crucial step it is probably the most challenging.
Various kinds of real estate meet-ups can be found in most communities. There are real estate investment clubs or associations that conduct regular meetings and hold educational events.
Some meet-ups are just that. They are not an organized club but just a group of people who meet regularly to network and discuss real estate investment opportunities. The organization can be found via an internet search, and many of them are now meeting online.
Podcasts are an excellent source for getting to know syndicators.
What Are The Fees & Limits
Parcl doesn’t require a minimum investment to start. However, there are a few barriers to entry.First, Parcl is in the initial stages of development. Currently, only token holders of Parcls Homeowners Association NFT project can mint parcls and thus access the platform.
Additionally, you cant invest on Parcl without first depositing crypto. Investors stake their cryptocurrency as collateral in a vault maintained by the Parcl protocol. From there, an investor can borrow parcls and manage their portfolio.
There isnt a fee to get started, but Parcl takes fees out of the vaults collateral balance when debt is repaid. Transactions on Solanas blockchain also incur gas fees. Market demand for Solana determines these fees, which are independent of Parcl.
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Who This Course Is For:
- Open-minded Intermediates and Advanced Investors
- 4.5 Instructor Rating
- 12,401 Students
Freedom Mentor Phil Pustejovsky is a best selling author, national speaker, accomplished investor and has been recognized as the leading real estate investing coach and mentor. His works have been featured in Inc, Huffington Post, Entrepreneur and Yahoo! Finance. He frequently shares the stage with other legendary wealth expert like Robert Kiyosaki and he has the most popular real estate investing YouTube channel in history. Having been a part of more than 1,000 real estate investments himself, Phil is considered one of the most experienced investors alive. And for nearly a decade, Phil has been guiding everyday people to financial freedom through his innovative and creative real estate investing techniques and strategies.
Creative Real Estate Vs Traditional Investing
Is creative real estate right for you or should you go the traditional route? You’ll discover the differences, the pros and the cons of both approaches and which one is right for you.
First let’s take a look at what each one looks like:
With traditional real estate, an investor…
- Buys investment properties on the MLS.
- Finds deals by calling up a real estate agent.
- Buys foreclosures that are listed on the MLS.
- Buys foreclosures at the foreclosure auction sale.
- Buys properties from wholesalers.
- Gets into bidding wars with other buyers.
- Uses big earnest money checks to get properties under contract.
- Puts down big down payments.
- Applies for investor bank loans.
- Gives loan underwriters their proverbial first born child.
- Makes tons of offers to get a few accepted.
- Constantly looks at deals, on the web and in person.
- Negotiates deals based on price.
With creative real estate, an investor…
Both have barriers to entry creative real estate requires significant education whereas traditional real estate requires money and/or the ability to borrow money.
Which one is better?
Also, with absolute auctions, there are cases where a traditional investor can get a tremendous deal by being the high bidder when there are little or no other bidders.
Which one are you ? And which one do think is better?
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Here’s Howfrom Buying Rental Property To Reits And More
Buying and owning real estate is an investment strategy that can be both satisfying and lucrative. Unlike stock and bond investors, prospective real estate owners can use leverage to buy a property by paying a portion of the total cost upfront, then paying off the balance, plus interest, over time.
Though a traditional mortgage generally requires a 20% to 25% down payment, in some cases, a 5% down payment is all it takes to purchase an entire property. This ability to control the asset the moment papers are signed emboldens both real estate flippers and landlords, who can, in turn, take out second mortgages on their homes in order to make down payments on additional properties. Here are five key ways investors can make money on real estate.
Investors Front Crypto Assets As Collateral
Parcl investments use crypto as collateral, which investors provide upfront. They deposit the collateral into a digital vault. Investors essentially borrow parcls from the vault, which are then minted as digital tokens representing a share of the Parcl Price Index. As the index value increases, Parcl investors repay their debt and build equity in their parcl.
The way Parcl calculates value adds risk to the investment. The Parcl Price Index is based on the aggregate price per square foot of all properties within a neighborhood. So a change in the value of just a few key properties could have a significant impact on the valuation of the entire parcl.
Read more > > > What’s the Best Way to Determine the Value of My Property?
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What Is Subto The Creative Real Estate Investors Guide To More Lucrative Deals
Lets be honest getting into real estate investing is a challenge more than a challenge, its almost designed in a way to get beginners from crossing the barrier into it.
And its complicated.
Believe me, I know. I started real estate investing after a long career in construction, where I worked long hours and was taken away from my wife and family for long hours.
Like a lot of people, I wanted to find a way to make money while still being able to spend time with my family, while also doing something I would enjoy.
At my core, Im an entrepreneur Ive gone through the trials and tribulations of growing a business, of going to every course, seminar, training, and what have you to learn the business and the industry.
And you know what?
In all of that, the one thing that I learned was all of these teachers and mentors werent actively in the area they were teaching.
They werent doing the kind of deals or had never done the kind of deals that they were teaching and they werent around after the course was done.
I wanted to change that.
Obtaining A Visa In India Hasnt Been A Practical Option
Rent out the single-family home for consistent income, and when you have the resources, scrape the house and build a multi-unit property on the lot. You can choose to sell the entire property for a profit or keep it and continue to rent out multiple units to different tenants.
Hold and rent the single-family home, then sell it to another developer who wants to build a multi-unit property on the lot. Even if you do nothing to the house, you will find buyers willing to pay a higher price than for a standard single-family home on a residential lot.
Look for this type of zoning opportunity in up-and-coming urban neighborhoods or areas on the outskirts of town that are being redeveloped. Walk around city neighborhoods that used to have a lot of commercial or industrial activity, and are now being transformed into hip places to live and work. If you see a handful of single-family homes that look out of place among multi-unit properties, these stragglers are a prime target for future appreciation.
2. Buy a multi-unit property near an area marked for development.
Strategies For Experienced Investors
If you have already purchased several properties, these more advanced long-term strategies can help you expand your portfolio:
3. Buy parking lots during the economic downturn.
4. Buy a single-family home near a university with zoning to build an ADU.
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Four Different Types Of Creative Real Estate Funding Methods:
1) Owner carry first mortgageWhere the seller acts as the mortgage companyThe owner carries the mortgage for the buyer instead of using a loan company2) Owner carry second mortgageWhen the buyer is not approved for a loan equaling the whole amount for the property or does not have the funds upfront for the down payment, the seller can act as a second mortgager for the amount the buyer does not have.
3) Master LeaseNo banks requiredA lease with the option to buy that does not require banks. When purchasing the property, you put a small or even no down payment, and receive all rights and privileges that come with owning the property without actually obtaining the title. You receive an equity title instead. Any profits made are yours to keep minus a monthly payment you make to the seller that is typically used towards the mortgage.
4) Crowd FundingCrowd Funding is a collection of money from sponsors typically on the internet. You find a good deal, submit it, and a website shares the deal with a large lot of investors who can then get on board to help finance the deal. The money goes into an account to be used as a down payment with the sponsors typically receiving a 7-10% return on their money plus a split of the cash flow. Over 90% of these deals are rejected so you must be very experienced to use this sort of creative financing.
Three Creative Real Estate Investing Strategies
While there are many different creative real estate investing strategies, some that real estate investors create on their own from special circumstances in the real estate market, here are three tried and true creative real estate investing strategies.
Owner Financing
Owner financing is an option real estate investors have when buying an investment property. The motivated seller of the income property agrees to provide the financing to the buyer. The buyer receives a kind of credit and pays monthly mortgage payments on the income property.
A promissory note lays out all the conditions of the agreement. The amortization schedule is usually shorter than a conventional bank loan and often there is a balloon payment at the end.
Besides not worrying about or being approved for financing for an income property, there are a few other benefits to this creative real estate investing strategy: close on a house much faster, avoid closing costs, and oftentimes real estate investors can even negotiate a lower down payment.
Related: Everything You Need to Know About Selling and Buying a Home with Owner Financing
Rent to Own Homes
Rent to own homes are a kind of income property that real estate investors can purchase with what is called a lease option, or a lease-to-own agreement. A real estate investor interested in buying an investment property rents the property for a certain time . When the lease is up, the income property investor has the option to buy the house.
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No Money Down Real Estate Deals
Every green behind the ears real estate investor in America dreams of fat investing portfolios, bank accounts swelling with cash, and having the time to devote to family, civic activities, or to simply sit and watch the clouds pass by.
For most real estate investors, they give up on the dream and go back to their day jobs and put their dreams on a shelf not because of a lack of knowledge or self-limiting negative thoughts. For most, its a lack of money. Let me rephrase that: Its a perceived lack of money.
Because so many wannabe real estate investors have been conditioned to believe that the only way of acquiring real estate is to pay cash for their real estate or to utilize traditional bank financing, they run into a brick wall of doubt and negativity that stops their real estate investing career from even getting off the ground.
The reason? Investors overlook creative investing strategies and no money down real estate investing.
Its too bad, too, because for example theres a little-known real estate niche market Abandoned Property Owners- that not only has an abundance of motivated sellers who are anxious to unload their properties, but are willing to do so on a no money down basis. And many of these sellers are willing to participate in financing their properties just to sell/get rid of them.
No Money Down Real Estate Investing Strategies
Owner Financing Strategies
Other Peoples Money Financing
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A Proper Guidance For Beginners
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Do you want to learn how to create passive income, wealth and financial freedom with real estate investing? If so, then this is the audiobook for you! Real estate investing is one of the best types of investing a person can do. More specifically, investing in rental properties provides for a very profitable return for very little effort. So, if you are looking for a reliable investment that can also transition into a true passive income stream for you, then this informative audiobook will teach you how to get started and succeed with investing in real estate rental properties.
S To Create An Invisible Investor Strategy
The greatest mistake that people make when it comes to asset protection for real estate is not understanding the risks that are waiting out there for them. This eBook reveals the structure you should follow to ensure your hard earned money is protected from frivolous lawsuits and costly tax mistakes.
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Is Real Estate Crowdfunding Risky
Compared to other forms of real estate investing, crowdfunding can be somewhat riskier. This is often because crowdfunding for real estate is relatively new. Moreover, some of the projects available may appear on crowdfunding sites because they were unable to source financing from more traditional means. Finally, many real estate crowdfunding platforms require investors’ money to be locked up for a period of several years, making it somewhat illiquid. Still, the top platforms boast annualized returns of between 2% and 20%, according to Investopedia research.
What Is Subto And What Does It Mean In Real Estate
I have two definitions that I need to give you. First is the term subto.
Subto is an abbreviation of subject to, which is a creative financing method of taking over ownership of a property from a seller.
This is different from seller finance, where a property is bought from the seller using terms.
The second definition is the name of the course I teach Subto.
Subto is a real estate education program that is focused on creative financing strategies, while providing training and mentorship to new and seasoned real estate investors.
While my program is called Subto, I do teach students about creative financing as a whole, as well as different fundamentals of real estate.
I told a great story when I was on Real Estate Disruptors with Steve Trang about how I was able to get my house through subto and how the seller gave me the idea for the icon I use for the program.
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