The American Education Institute

MAKE CAPITAL FOR DOWN PAYMENTS THROUGH LOANS AND OTHER RESOURCES.

This last creative financing method harkens back to the earlier text on how to build good credit.  You might want to reread it now in light of a these creative solutions as o how you can acquire investment property by putting down none, or very little, of your own money.

In essence, this eighth basic method involves being able to take out unsecured (or minimally secured) loans, just by signing your name.  But this is almost like a “last resort” because these kinds of loans always carry high rates of interest.  Still, as in method number 7, the ability to come up with cash in a hurry is a tremendous asset to have.  Many times, if you can put a lot of money down on a choice property immediately, you can acquire ownership and then refinance later with more leisure.  At that time you will be able to pay back whatever high-interest loans you took out by using this method number 8.

What you’re doing with this method is building better credit, or, to put it more accurately, developing your ability to borrow a lot of money in a hurry.  You can do this, as described in the previous text, by taking out small-then-larger bank loans in succession, and paying them off before they are due.  Nothing pleases bankers more than getting their money back, with interest, ahead of time.

This is one way to start building a line of credit.   Another way is to buy something (a car, boat, etc.) and finance the purchase through a traditional lending institution.  Again, if you pay it off ahead of schedule, that lender may very well turn around and offer you your own line of credit (similar to a credit card’s credit line) which you can access any time you need to borrow money simply by writing yourself a check.  You could also, of course, write such a check to a property seller as part, or all, of his required down payment.

Consider the seller as a possible lender or extender to you of a credit line.  Sometimes, the seller will appreciate the efforts you’re making to satisfy his down payment requirement.  He may take your bank line-of-credit check, whatever cash advance you can pull from a credit card, and even the contents of your “piggy bank” — and then do you the courtesy of delaying the down payment balance for maybe six months to a year.

Try offering a seller a higher interest rate than the bank or credit card charges to see if he will do this.  A rate of 15 to 19 percent might be all it takes to have the down payment balance come due a year or two after the closing.  Remember that a high rate of interest on just a few thousand dollars really doesn’t amount to all that much money.  Besides, the interest you have to pay on any loan to buy property is fully tax deductible.  And lastly, don’t forget that if you can defer payment on the down payment until well after closing, you’ll be earning rents on the property in the meantime and should have no trouble paying off the seller when his little loan to you comes due.

IN CONCLUSION:  BUYING SOMETHING WITH  NOTHING

These have been eight practical methods for creatively buying property with 100% financing.  They include getting the seller, a lender, a partner, or something you already own to come up with enough to cover the deal.  There really is nothing secret or fancy about these methods.  They are in fact pretty basic.  But they all point to one simple truth:  you can buy property using nothing more monetary than you own mind.

Thus, you don’t already have to have something in order to acquire something else.  That means you don’t need to be rich to get rich.  All you have to be is willing:   willing to learn and willing to work.  It is, in fact, no more and no less than anybody ever has to be in order to do — even if all you have to do is survive.

While these are the basic methods for purchasing real estate with 100% financing, they aren’t the only ones.  The next blog carries creative financing a bit further, and teaches you more complicated ways to do this, whenever those situations arise.

Dr. Eric T. Martin / 100% Financing When Buying Real Estate / 1-1-10