The American Education Institute

EIGHT (8) BASIC 100% FINANCING METHODS WHEN BUYING REAL ESTATE

You can study the following creative financing methods and put them to use immediately.  They are designed this way on purpose so that you can get started investing without undue delay.  But you should realize, of course, that these are not the only creative financing methods available to you, and that later as you learn about others you may be able to combine several methods into one possible real estate purchase using some hybrid type of financing.  This is all to the good and, and in fact, it is highly encouraged.

The eight basic methods described here are really just to get you started.  Also note that lending interest rates change frequently and rapidly.  Therefore, the percentages shown in the following examples are cited only for illustrative purposes.  The actual rates you will use or offer are always going to be subject to whatever lending rates are in vogue at the time.  Similarly, the property values shown are also arbitrary and will depend on the time, location, and many other factors as well — including the condition of the property itself.

For example, an excellent investment property in one area of the country could have a market value of $75,000.  In another part of the country, that same property might be worth two, three, or even four times that amount.  In yet some different location, its fair market value (FMV) could easily be reduced by half.

NOTE: The most basic rule of real estate investing that you need to remember is this:  Property values are based on rents.  It doesn’t make a bit of difference what anybody “says” a property is worth.  If you can’t realize a profit based on the rents the property brings in, then to you that property has no value at all.

METHOD NUMBER 1

Make a new mortgage and pay off all existing loans and supply the down payment.

If you have a seller who is flexible and willing enough to finance part of the purchase, this method can work quite well.  However, the seller (owner) must not still owe more than 40% of the property’s value, or else he or she must already own it outright, in order for this method to work.

Suppose now the property in question is a single-family home with a fair market value of $50,000.  However, the owner still owes $12,000 on his mortgage, and he is requiring a down payment of $15,000 so that he can walk away from the closing with $3,000 in his pocket.  But he is also flexible enough to be willing to finance the balance of the purchase, or $23,000 ($50,000 minus $12,000 which he owes minus $15,000 that you must pay him).

What you need to do in this case is simply obtain a new first mortgage in the amount of $27,000 (remember the home is worth $50,000 so traditional institutions should be willing to do this with the property as collateral).  With this new first mortgage, you can then pay off the existing loan of $12,000 and also pay $15,000 to the owner.  As part of the deal (since he doesn’t owe anything any more and now has $15,000 in cash instead of just $3,000) he should be willing to extend to you a second mortgage of $23,000, which you will then pay him monthly (from part of the rent you’ll receive from a tenant, another part going to pay the first mortgage) over the course of an agreed period of time.

The seller now has his entire asking price (consisting of a big payment up front and steady income for the next period of years) plus he’s now debt-free.  You (the buyer) now own the property, having just bought it with none of your own money while financing it 100% with OPM.  This is truly a win-win situation, it it not?

Note that a seller who is reluctant to accept this kind of offer might be more agreeable if you were to offer even more cash up front.  If you could obtain you first mortgage for $35,000, for example, perhaps he would accept you terms with an extra $8,000 down.  This would give him a total cash-out at closing of $23,000 ($35,000 minus the $12,000 he still owes).   Now your second mortgage with him would only be $15,000 (meaning you pay less per month to him and a little more per month to your first mortgage lender).  Depending on the rates of interest, you might be able to realize an even better ROI by doing it this way.

Remember the first rule of real estate investing:  The value of this property absolutely depends on the amount of rent you collect every month from a tenant who leases it from you.   If there’s a tenant already living there and you can show a profit without having to raise that rent, so much the better.  Otherwise, you might make the deal contingent upon your finding a suitable tenant — which is yet another way to buy property and will be discussed later in the text.

Another technique you might try with this 100% financing method (should it become necessary) is to have the seller co-sign a note and mortgage with you in order to satisfy your traditional lender’s requirements.  This can work if you (the buyer) haven’t established credit that’s good enough the mortgagor.  The seller, then, as part of this deal, effectively lends his or her credit to the buyer in exchange for allowing the sale to happen.  (Remember, the seller only gets paid if the sale happens.  This fact also helped to make sellers a little more flexible).  After the new mortgage is in place, the property can then be transferred solely to the buyer.

METHOD NUMBER 1 IN BRIEF

What it is designed to do:

Make a new mortgage pay off all existing loans and supply the down payment

What you need:

-  Good to excellent credit

-  Seller flexsible enough to help finance

What your terms are:

1.  Property asking price                                            $50,000

2. Total outstanding loans                                         $12,000

3.  Total money down                                                 $15,000

4.  Amount financed by seller                                 $23,000

How you proceed:

1.  Acquire new 1st mortgage                                 $27,000

2.  Pay off outstanding loans                                   $12,000

3.  Pay balance to seller                                            $15,000

4.  Acquire 2nd mortgge from seller                  $23,000

What you can expect:

-  Seller realizes full asking price and full down payment

-  You have obtained 100% financing

As a final note to this creative financing method, you should be aware that some banks or financial institutions will require that you (the buyer) must apply some of you own money to this real estate transaction.  So what can you do if you don’t have any money?  Perhaps yo have equity in another piece of property.  In this case, the simple act of securing a  second mortgage with your equity in that property (instead of just signing a note with the seller) might be all that is required.  What this says in effect to you first mortgagor is that you are using your equity in the other property to borrow money from the seller of this property, and that’s the money you’re using for this down payment.

Another possible way around this is to bring in a partner, who has equity in another property, and then you can show that your partnership equity will secure the second mortgage with the seller, which then produces the necessary cash for your down payment.  Yet another solution is to have the seller transfer this property “as is” to you, which means that the current $12,000 loan comes with it.  Without too many more legal gyrations, after this property has been deeded over to you “as it” you can then procure the needed $27,000 first mortgage, pay off the $12,000 loan, pay $15,000 to the seller, and then enter into yur second mortgage with the seller.

If you still can’t find a bank or other financial institution that will make the first mortgage under these conditions, look in you yellow pages under “mortgage brokers.”  You’ll find these financiers to be much more flexible than traditional lending institutions, but, of course, they’ll also charge higher interest or more points on closing.  This may cut into your profit margin, but it’s still a good way to make the sale happen.  Once it does, of course, you will immediately have more income as well as a new secured loan, which will also just as immediately improve your credit.  Your next purchase of real estate will go all the more smoothly.

NOTE:  Please watch for Method 2 in Dr. Martin’s next 100% Financing Blog.

Dr. Eric T. Martin /  100% Financing When Buying Real Estate / 11-28-09

MYTH:  THE SELLER RECEIVES NO CASH AT CLOSING.

If this myth exists in your mind and therefore contributes to your belief that a seller would have to be crazy to sell property this way, you need to dispel this notion immediately.  While it can certainly happen with some creative financing methods, there are just as many (or more) methods that allow the seller to leave the closing with money in the pocket (although usually in check form, not actual currency).  But certainly in each and all such cases, that money does not need to come from you.

MYTH:  THE ONLY WAY SELLERS WILL AGREE TO 100% FINANCING IS IF THEY’RE DESPERATE.

It just isn’t true that the only sellers who will agree to be flexible are the ones who are desperate or feeling unlucky.  Seller are, and can become, flexible for many different reasons.  On the contrary, you may find that a seller is flexible precisely because he or she is lucky.  Suppose one suddenly needs to relocate elsewhere, due to a job promotion or some other good fortune, and they need to divest themselves quickly of the property that holds them here.  Don’t you think that the seller would be flexible?  Wold you consider that seller to be down on their  luck?

This is not an unusual example at all.  In fact, emotional reasons for selling property might actually outweigh financial reasons.  As you go along, you are certain to find more sellers who are, or who become, flexible due to things like emotional dissatisfaction with a property than those who are broke or desperate.  Deaths in the family, divorce, relocation, changing personal or physical environments, or other such circumstances probably effect more property transfers in the long run than any need to “dump the place” for quick cash sale.

MYTH:  THESE 100% FINANCING METHODS WON’T WORK WITH AN INFLEXIBLE SELLER.

For those types of sales where sellers really do leave the closing with money in their pockets, it may not matter to them where the money ultimately comes from.  If they are interested only in making something at closing, you may find that they’re willing to negotiate if you can satisfy that objective.  If you know what matters most to any given seller, you may be able to produce some flexibility even with a seller who appears to be dead wet on a traditional sale only.

One other point to note is that any given seller who is inflexible today may well become flexible tomorrow.  Sellers are people too, and people’s life situations are always changing.  If a seller will not budge when you first make an offer, this does not necessarily mean you should give up.  Monitor the situation and, if the property still hasn’t sold after a few weeks or months, make another contact.  You may be surprised to learn what a previously inflexible seller might agree to after a property just has not moved as expected.

NOTE:  Dr. Martin’s next Blog will disclose several of the Eight (8) Methods of 100% Financing.

Dr. Eric T. Martin / 100% Financing When Buying Real Estate / 11-26-09

TO BEGIN

Creative financing is nothing new.  The truly successful real estate investors have financed their properties creatively for years.  Their reasoning should be obvious:  the whole idea is to acquire big assets by spending very little.  Or, to put it another way, the more you own, the richer you are.  But lately another element has entered the picture.  Now the average property buyer is relying on creative financing more importantly for three good reasons:  1)  to avoid the high cost of obtaining loans and mortgages from the more traditional financing institutions.  2)  to be better able to afford the monthly payments, and 3) to overcome their poor or unavailable credit.  Creative financing is no longer a secret tool of the very rich; it has now become a much more serviceable tool for those just starting out.  Even if you can afford the high cost of financing, why would you?  Won’t your investment be better in the long run if it cost you less to acquire it?  Absolutely!

The term that most applies here is leverage.  It means using a little to accomplish a lot.  Think of what a lever is.  In physical science, a lever is a tool that enables someone of lesser weight to lift or move something of much greater weight.  A teeter-totter is a lever.  If a big kid on one side sits near the middle, a little kid on the other side can raise him up just by sitting on the end.  This is a lesson of the way things work that you no doubt mastered in grade school.

In terms of investing in real estate, leverage means acquiring property with OPM (other people’s money).  In other words, this tool allows you to move something very big (property), from a seller’s hands to yours) by applying someting very little (money, specifically your own).  The investment approaches “ideal” whenever the property is very valuable and you acquire it by spending none of your money.  This is leverage of 100%, or 100% financing.  It means all of the money transacted has come from other people (not you).  In a real estate purchase like this, it also means that you have used OPM to do everything.  It finally means you have purchased a property by putting no money down — at lease none of your own.

Here’s an example.  Suppose you put up $10,000 of your own money to buy a property worth $500,000.  The property then produces a net profit of $20,000 per year.  This means you have “leveraged” a 200% per year ROI (return on investment).  But if that initial $10,000 was OPM (and not your own money). then your yearly ROI is infinite.  You never actually invested anything, and yet the property now pays you $20,000 a year.  That’s the kind of ROI you’re looking for!

Now you might be asking, “What kinds of properties can do this for me?”  And the answer is:  They can all do that for you.  Next you might ask, “What kinds of sellers would sell their property like this?”  And the answer is: many.  You would be surprised!

TEN CREATIVE SOURCES FOR FINANCING

As you absorb the 100% financing methods described here, you will come to learn the ten most creative sources for securing all the financing for all your real estate purchases.  Here is the list:

1.  The property seller

2.  The property by itself

3.  Investing partners

4.  Other investors

5.  Tenants and lessees

6.  Loans already on the property

7.  Your own skills and services

8.  Real estate brokers and agents

9.  Paper (both secured and unsecured) on equities

10. More traditional lenders (banks, credit unions and other financial institutions).

Each of these sources will be examined more fully in this text.  For right now, you only need to be aware that all these sources exist and that they can indeed be approached and handled creatively.

Dr. Eric T. Martin / 100% Financing When Buying Real Estate / 10-19-09

EXAMPLES OF CREATIVE PROBLEM SOLVING

A real estate investor with partners creatively bought a 60-unit apartment building with a very small amount of money as down payment.  He then converted the apartments to condominiums and sold them in blocks of five and six to still other investors at nearly twice the price he had originally paid on a per-unit basis for the whole building.  The residential use of the building did not change, but the legal structuring did and, b y doing that, this investor was able to make a huge profit for himself and his partners.

Another real estate investor in Detroit bought a condominium that was owned free and clear, and he went to a bank to obtain a 50% mortgage on the property in order to give the seller the cash she asked for and needed.  The bank asked the investor if he was putting any of his own money toward the purchase.  The investor responded by telling the bank that the seller was taking a mortgage on another property that he owned, and so the bank treated that as an equivalent cash down payment.

In another situation, a young couple that was living in a mobile home,, which they owned, decided they wanted to move into a more conventional home and lease out their trailer.  Then they discovered that the mobile home park’s regulations required that only owners could occupy their mobile homes.  After considerable thought, however, the couple fashioned a creative solution to their problem.  They found a renter and, as part of their leasing conditions, deeded a 1% ownership interest to the leasee.  The deed conveying this 1% ownership was then recorded in the county office of public records.  At the same time, the couple received a “Quit Claim Deed” back from the leasee, which they are continuing to hold throughout his tenancy.  After the tenant leaves the property, they will record the “Quit Claim Deed” with the county and extinguish the tenant’s interest.  They would then be able to repeat this procedure with the next renter.  By doing this, the home-owning couple was legally able to work around the mobile-home park’s regulation and receive rental income besides.

In still another “couple” example, a student investor was negotiating for a property owned by a couple that had recently gone through a bitter divorce.  Their anger and disagreement about the property’s price and terms had previously caused may potential buyers to become frustrated and back away from negotiating any further with this warring couple.  The husband wanted a quick cash sale, but the wife was holding out for her asking price.  She was, however, willing to accept terms.  The student creatively offered to buy the husband’s half of the property at a great discount for cash, and at the same time purchase the wife’s half for her full asking price but with no money down.  Because the property was owned free and clear by the couple, the student was able to borrow about 40% of the total property value and thus pay the husband his cash.  The wife then agreed to subordinate her second mortgage with the student to the new 40% bank loan that he had taken out on the property.  This, you might say, was a win-win situation, as everyone walked away happy.

In the Midwest a student of real estate investing bought a 60-acre, heavily wooded farm with the help of seller financing.  But because this student had no cash or credit, he was initially faced with the problem of how to produce the $20,000 cash down payment that the sellers required.  After giving it a lot of creative thought, he finally came up with the best solution.  He contracted a nearby lumber company and arranged to have them come out and tag a number of trees that they would cut as soon as he became the property owner.  Based on his written agreement, the lumber company advanced him $20,000 against the felled trees, which then enabled him to complete the real estate transaction.

In another creative example, a new dental school graduate was trying to purchase an existing dental practice.  Even though the retiring dentist agreed to seller financing, he did insist that some money be put down.  Because this young graduate hadn’t established any credit locally and because he had nothing saved (what he did have was a number of still outstanding student loans), he really had no access to cash.  He contacted a medical equipment leasing company, and it agreed to advance him the cash he needed in return for taking title to all dental equipment in the office.  At the same time, he was also able — in exchange for the cash down payment — to get the dentist to release that equipment from being part of the mortgage which the dentist was holding to finance the buyer’s purchase.  The young dentist then leased all that equipment back from the leasing company with an option to buy at the end of five years.

IN CONCLUSION:  TWO EXERCISES TO CREATIVITY

These are just a few examples of the creative problem-solving approaches that are conceivable with the purchase of real estate.  There are thousands of other examples as well.  By applying the two creative exercises discussed above to your own problem-solving challenges, you can and will be able to conjure up unique purchase agreements that satisfy your needs as well.

An important point to remember is that the combination of these two exercises, subconscious programming and conscious exploration of all possible solutions, can and do create powerful problem-solving abilities.  You should think of problems as opportunities in disguise.

Thomas Edison, a creative thinker who didn’t follow the norm, was completely nonplused by the fact that he had rolled thousands of possible filaments before he hit on the one combination that lit the bulb.  He was asked once what he thought of all those failures.  Without hesitating he replied,  ” They weren’t failures at all.  I simply discovered the thousands of ways that the light bulb doesn’t work.”

Hopefully you won’t have to study thousands of ways that your desirable property can’t be financed before you hit upon the one way that it can, but the example of Edison stands just the same.  Never give up your dream until you have made it a point to examine every possible way to attain it.  Then, somewhere in your relentless searches, you’ll find it.

Dr. Eric T. Martin / 100% Financing When Buying Real Estate / 10-11-09

HOW TO SOLVE PROBLEMS CREATIVELY

Here is one of the costliest misconceptions that you could suffer from as a beginning investor in real estate.  That there is some “standard” way of paying money owned or that there has to be a payment in the first place.  Consider, if a buyer and a seller agree to a certain repayment plan or to a particular interest rate then they have established a legal contract no matter how strangely that plan might differ from an otherwise conventional real estate purchase contract.

As an example, if you lend money to someone else, and the two of you agree that you should be repaid in one lump sum with no interest at the end of 30 years, you have a legal agreement.  If you both agree that you’re be paid 25% interest, provided you haven’t violated any usury laws, you also have a legal agreement.  (Note that state usury laws dictate the highest annual interest rate that may be charged for any given repayment plan.)

If you only follow the norm, it could cost you dearly.  In the following example, a conventional or traditional real estate transaction is being compared to a deal that have been creatively financed.  As you can see, the creatively financed transaction turns out to be a win-win situation for both buyer and seller.

With any conventional mortgage transaction, a buyer generally seeks financing of 70% to 80% of the purchase price.  Such a loan usually requires an application fee of up to $400, a service charge from one to three percentage points of the total loan, and other costs such as loan origination fees.  All of this is on top of a cost down payment of 20% to 30% of the purchase price.  Furthermore in this example, if the purchase had been transacted through a broker, the seller at closing must pay a commission of 5% to 7% of the purchase price.

On the other hand, in the simplest of creative “100% financing” purchases without the services of a real estate broker , the buyer just assumes the seller’s existing mortgage at little or no cost.  In addition, the seller is given a promissory note, secured by a second mortgage, to pay the seller’s equity in the property.  This is all legal and done according to a lawful contract.  Has any cash come out of the buyer’s own pocket?  Did he need to have  saved half his life to come up with a big down payment?  You can see that the answer is “no” to both questions.

CONVENTIONAL FINANCING OR CREATIVE FINANCING?          YOU DECIDE!

Conventional Financing                Creative Financing

Property Buyer:                                    Property Buyer:

Financing Arrangement Finances 70% to 80% of price               Can assume seller’s loan,

giving seller a promissory

note & 2nd mortgage

Amount of Down Payment Pays 20% to 30% of the                    Completely avoided

purchase price in cash

Application Loan Fee Can amount to $400                          Not applicable

Loan Service Charge 1% to 3% if entire loan amount        Not applicable

Loan Origination Fee 1% of the entire loan amount           Not applicable

Property Seller:                                     Property Seller:

Commission to Broker 5% to & 7% of purchase price                Not Applicable

Both parties to this transaction actually benefit through the use of creative financing.  The seller saves the broker’s sales commission and can, through quite a few different methods, convert the buyer’s note to cash.  The buyer of course saves the cash down payment and all the costs involved in securing a traditional mortgage loan.  The buyer may also get the property at a lesser price, since the seller won’t have to inflate the purchase price to cover the cost of  the broker’s sales commission.  At 5% to 7% of the total, a broker’s sales commission can be considerable — enough, perhaps, so that more money could go to the seller and still the buyer realize a savings.  Think of this as positive “bargaining chip”!  Truly it’s a win-win situation for both parties concerned.

Now, you see why learning to think creatively and to solve problems creatively is so important.  You can also see why it could be so costly if you don’t.  Consider how much more you as a buyer would be spending if, in the previous example, the conventional mortgage method was the only avenue open to you.  To so many unenlightened buyers of today, that is their only open avenue — or so they think.

Here’s a tip: Try asking questions instead of drawing conclusions.  For example, suppose a novice investor was asked which would be better, paying 10% interest or 12%.  Which would the novice choose?  No doubt, 10%.  But the experienced investor would always ask for more information.  Depending on the terms, it is quite conceivable that the buyer would spend less with 12% interest than with 10%.

Here’s a possible reason why:  Twelve percent could be a better rate than 10% if only 7% of the 12% was paid each year and the balance of 5% was deferred five years.  Now what if the seller made it even more attractive by stipulating that the deferred interest could be reduced by 1% for each year it was paid off in advance of five years?  In other words, if the buyer paid off the deferred note and mortgage within the first year, there would be no deferred interest due and only 7% woud have to be paid — even though it’s a 12% loan.  If it’s paid off in the second year, only 1% deferred interest would be owed (making it, in effect, an 8% loan); and if it isn’t paid until the last day of the fifth year, the entire 5% for each year plus any outstanding mortgage amount would be owed (making a 12% loan altogether).  You see that the choice of 12% interest, in this case, would be better for the buyer than a fixed 10% for at least three years.

Dr. Eric T. Martin / 100% Financing When Buying Real Estate / 10-9-09

YOU HAVE LOTS OF CHOICES

This text has not been designed just to prepare you intellectually on how to become a successful investor, but it also serves to give you practical and workable strategies to attain that goal.  You also have here a variety of creative techniques to employ along the way, and the subject matter in the text are designed to do that very thing.  Of course, whatever technique or techniques you select will still be up to you, always based on your analysis of the particular problem that faces you alone, but the information you acquire in this text will make that technique selection process quite a bit easier.

Every real estate transaction is different.  You need to approach each one with an open mind that is now reprogrammed in a positive way.  Do not be hampered by any restrictions or limitations that have been imposed on you by education, convention, or tradition.  Those are the kinds of restraints and limitations taught all the time by bankers, lawyers, and even real estate brokers themselves.  (Don’t forget, they only make money when you believe them and play along.)  Don’t think of your own solutions to investment problems as abnormal or unconventional, but rather as practical answers that ease the burden facing both you and the seller.

Also, do not worry about being rejected.  This is not to say you will never be rejected, because you will.  But just don’t worry about it because such worry is mentally draining and truly irrelevant to what you’re trying to accomplish here.   You should realize that successful people have always faced more rejection and failure than unsuccessful people have.  Part of success is taking risk, and risk involved rejection.  A big reason for non-success is staying put.  If you stay put, you won’t be rejected.  But if you do take a risk and are rejected or fall otherwise, count yourself lucky and take good notes.  It’s through failure that you learn the most valuable lessons of all.

When you are asked what has been your most creative real estate transaction, you should respond as Wood Allen once did when asked what his most successful movie was:  “I haven’t had it yet.”  You should always be constantly striving for more and more creativity.  You should not let being good at what you do stop you from doing better.  One good thing about this whole creative endeavor is that you won’t have much competition.  That’s right!  There just aren’t that many people trained to think creatively in buying real estate in the United States.

Dr. Eric T. Martin / 100% Financing When Buying Real Estate / 10-6-09

HOW TO DEVELOP SELF-ESTEEM

Self-esteem probably ought to be your first goal for development, especially as you try to rekindle the spark of your own creativity.  Confidence and capability are a big part of self-esteem.  You must first — and always — ask yourself what you (as opposed to anyone else) want, but then you much also know that you are capable of acquiring it.  To do this, you might have to learn how to be insensitive to what anyone else thinks.  For sure, this will be difficult in an employment situation where someone above you encourages only “yes man” behavior, but this certainly isn’t difficult in real estate investing.  In that you will find no restraints on developing your creativity.

By taking this course and studying this text, you’re already stepping up out of your comfort zone and into the “growth needs” of Maslow’s hierarchy.  You have chosen to become knowledgeable about real estate investing, and that is a creative choice all by itself.  All that you need now is more information and examples of creative thinking in solving problems related to this type of investing.  You also need to continue making good choices — like enrolling in this class — in order to make more of your own forward progress toward self-fulfillment.

HOW TO TEACH YOURSELF CREATIVITY

It has been said that creativity is nothing more than finding new ways to solve old problems.  If this is so, it certainly becomes important to know what those old problems are.  And that means you must really know!

Only when you know every aspect of a problem can you solve it.  In real estate, the one consistently big problem is how to buy a desirable property.  You can only solve this problem when you know all about the other problems facing both the seller and you.  If you know about all these other problems, you can go ahead and find a creative solution your one consistently big problem, you can go ahead and find a creative solution you one consistently big problem at hand.

Maybe now you’re thinking:  “This may all be well and good, but in the past I have come across too many problems like this that I was completely unable to solve.”  Well, if such is the case, then you need some more training.

You can teach yourself how to become more creative using just two simple, although related, exercises.  The first exercise is for you to create a positive mental attitude (PMA).  You can create this by telling yourself over and over “I can do this.  I am creative.  I am able to solve any problem.”  Just kind of simple positive feedback to your brain can produce powerful results.  Think of it this way:  There are over eighteen billion cells in you brain just begging for direction.

On the other hand, you cannot become creative by thinking of failure or by thinking with only a negative mental attitude.  If you tell yourself that something just can’t be done (like investing in property with no cash or credit) or that you personally can’t do it, then guess what?  It can’t and you won’t.  The thought itself becomes a self-fulfilling prophecy.

But if you can import to your mind that you are creative, you will surprise yourself.  You can then generate ideas that you would not otherwise have even thought possible.  You alone can control this.  You yourself have the ability to discipline your own thoughts and to make these kinds of positive declarations.  The choice is yours.  Believe that this is true, and repeat it over and over until you know that it is:  What you think is what you become.  As Henry David Thoreau once put it, “In the long run, men hit only what they aim at.  And though they should fail immediately, they had best to aim high.”

When Muhammad ALi was the world’s heavyweight boxing champion, he used to declare to news reporters (and everyone else):  “I am the greatest.”  While this may sound like arrogant boasting, it is still a good example of the kind of positive feedback being discussed here.  If you constantly instill positive affirmations within you subconscious mind, that act alone can lead to tremendous achievement.  It has been shown it’s your subconscious that determines what you’ll do, and your conscious mind that determines what you’ll do, and your conscious mind that determines how.

HOW TO DEVELOP INGENUITY

This second exercise, which you should be practicing along with the first, is designed to  help you develop a belief that every problem has more than one solution.  Once you realize that, it becomes a matter of thinking through the solutions after you’ve become totally familiar with the problem.  This then is the second part of teaching yourself how to become creative.  This part involves your conscious mind, while the first part involved giving direction to your subconscious mind.  You should convince yourself that every problem has at least ten solutions.  If you know that, then problem-solving is simply an exercise of thinking through all facets of the problem and applying each possibility or technique or strategy of any variation of them all, in order to find the best solution to the problem.

If you start to think through ten different solutions to every problem, you’ll find that the first one or two come fairly easy.  Buy by the time you get to the ninth or tenth solution, you’ll have already given an incredible amount of time and thought to the problem. It may even be that the ninth or tenth solution appears ridiculous to you, but later you might realize that it could contain the seed for a workable new idea.

Here’s an example, from the 1960s, of just how this has worked in the past.  At the time, when fewer than 10% of all real estate sales involved seller financing, the idea of proposing to a seller that he or she might finance the property would appear absurd.  It just wasn’t done!  But somewhere along the line, more and more buyers did in fact make such proposals; and, with the rising costs of transaction fees and the increasing scarcity of traditional lending money, suddenly more and more sellers started to accept those proposals.  Nowadays almost 40% of all real estate sales involves some sort of seller financing, and so today this method of financing has become customary.

Dr. Eric T. Martin / 100% Financing When Buying Real Estate / 10-3-09