Creative Financing Techniques Pt 1


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Creative Financing Techniques pt. 1 Lease w/Option to Purchase

by Angela Benjamin

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  • Pic of 432 summit, 340 Elm street nw,
  • Pic of 432 summit, 340 Elm street nw,
  • Creative Financing Techniques Pt 1

    1. 1. ©2011<br />
    2. 2. Creative Financing Strategiesw/Angela Benjamin.<br />©2011<br />
    3. 3. Angela Benjamin has been investing in Real Estate in the Washington DC Metropolitan area since 1999. She is a wife (celebrating their 10 year anniversary this year) and mother of 5. Although the majority of her day is spent homeschooling her children, Angela has created streams of income through real estate by thinking outside of the box.<br />Angela Benjamin<br />Ph: 240-391-8297 <br />Email:<br /><br />©2011<br />
    4. 4. “If I can do it”…. You know the rest<br />I am happy to share a few of my creative real estate investing techniques with the hope that it motivates you to think outside the box. I must say upfront, that I am not a Guru, and I don’t have a Real Estate training, subscription or course to sell you right now. I do enjoy teaching, and I believe that applied knowledge is power.<br />I am still very young in the business, I cannot claim to be a millionaire or even close to it. I do not even have 20 hours a week to personally spend on my business anymore. I spend over 100 hours a week, being Mommy, Teacher, Doctor, Counselor, Chef, Janitor, Chauffer, Tooth Fairy, and Santa. All while preparing my oldest for college next fall, and caring for a daughter who has spent over 10 weeks this year on bed rest.<br />©2011<br />
    5. 5. It costs to learn the hard way<br />I wish it was easier for me to get free information when I got started. The price of education is definitely high in Real Estate Investing. Especially if you decide to learn the hard way, and not invest in some type of training. Kudos to you for taking advantage of technology and broadening your scope.<br />There are many courses today that will teach you 100+ ways to invest in Real Estate using creative techniques. Many are focused on wholesaling, rehabbing and landlording. Given the constant fluctuation in the availability to obtain bank financing, I encourage you to explore Creative Real Estate Investing more in depth. <br />©2011<br />
    6. 6. New Gurus vs. Old Masters<br />Although many of the “New Gurus” have ridiculed the teachings of some of the “Old Masters” I would highly advise you to seek the knowledge for yourself, and apply what works for your situation. <br />So yes, if you still have Robert Allen, and/or Carleton Sheets books/tapes/courses, dust them off and re-add them to your “drive-time university”. I’m sure you’ll still find at least a few relative techniques. Even more important, you will find the MINDSET it takes to think creatively.<br />©2011<br />
    7. 7. Think Outside The Box<br />Try not to follow the crowd who will tell you “that doesn’t work”. See and investigate for yourself. Talk to of other investors, as many as you can. Everyone’s situation and market conditions are different. <br />Just remember to THINK OUTSIDE OF THE BOX. Be Creative. Think Win-Win. And most importantly BeHonest.<br />To Your Boundless Success!<br />Angela“The REI Mom”<br />©2011<br />
    8. 8. Creative Financing Techniques<br />Lease Option <br />Master Lease<br />Wrap Around Mortgage<br />Contract for Deed<br />Land Installment Contract<br />Use Buyers Money<br />Trade<br />Owner Financing<br />Sandwich Lease<br />Government Grants<br />Subject to <br />Subordination<br />Work for Equity<br />Money Partner/Private Lender<br />©2011<br />
    9. 9. Creative Financing Strategies pt. 1<br />Problem #1: <br />The bank will not lend you any money right now. You have found a motivated seller, who has a nice home in a nice neighborhood. The home has some equity but not enough to wholesale the deal. The seller says present all offers, very motivated. You are ready to get into the cash flow side of the real estate investing business, but don’t know how.<br />Solution:<br />Lease w/ Option to Purchase <br />©2011<br />
    10. 10. Creative Financing Strategies pt. 1<br />Problem #2: <br />You are in the market for a nice home. You don’t have the credit to purchase today. You don’t have the cash to buy at a major discount.<br />Solution:<br />Lease w/ Option to Purchase <br />©2011<br />
    11. 11. Creative Financing Strategies pt. 1<br />Problem #3: <br />You have found a property that needs work. It is For Sale By Owner. The Owner is not willing to do any type of Deed transfer. However, the Owner is motivated enough to sell at a discount, and accept flexible terms.<br />Solution: A Work For Equity agreement using….<br />Lease w/ Option to Purchase <br />©2011<br />
    12. 12. Creative Financing Strategies pt. 1<br />Problem #4: <br />You have a beautiful home you need to sell. You are not willing to sell at a major discount. You are not under pressure to pay off the underlying debt in full. Your monthly payments are eating away your liquid cash reserves every month. You are willing to wait a few years to cash out, if you have a solid buyer today.<br />Solution: Sell Your House Using A …..<br />Lease w/ Option to Purchase <br />©2011<br />
    13. 13. Creative Financing Techniquespart 1: Lease w/Option to Purchase<br />Important Note:<br />As with any agreement, contract, and real estate technique you should make sure that your Real Estate Attorney approves. <br />©2011<br />
    14. 14. Lease w/ Option to Purchase<br />When I think of Lease Options I think “Control without Ownership”. <br />If I can control a property, sometimes I don’t care if my name is on the deed. Especially when I can give the seller what he/she wants, provide housing and create an income stream.<br />In today’s market, understanding this technique alone can set you miles apart from other investors.<br />©2011<br />
    15. 15. Lease w/ Option to Purchase<br />A Lease with the Option to Purchase does not bind you to purchasing the property. Yet, if done properly will allow you and the Seller(s) to negotiate the best terms upfront. <br />There are two agreements. The first is the lease. The terms will detail the monthly payment, and length of time. It will also specify who will make repairs. It protects both parties as all agreements should.<br />The second is the Option to Purchase. It describes the specific terms just as a purchase and sale agreement, the only difference is that it specifically gives you the option to buy before its expiration date. Using the right terms, coupled with the Lease you have achieved “Control without Ownership”.<br />©2011<br />
    16. 16. Lease w/ Option to Purchase<br />As an investor, two of the terms I like to use are:<br />1. Buyer will have the right to assign this contract.<br />2. Tenant will have the right to sublease.<br />Remember, there is a lot more to the agreement so keep an open mind to the Sellers needs and think win-win.<br />This is also a great technique to get into your own home.<br />©2011<br />
    17. 17. Lease w/ Option to Purchase<br />As with all other techniques, you should still be working with a “Motivated Seller”. <br />You can afford to offer the seller a higher price (much more than wholesale) when you are buying using this technique.<br />You can generate cash flow by leasing the property and/or by to a tenant buyer.<br />You are not obligated to buy the property if you have written the agreement properly using the Option.<br />©2011<br />
    18. 18. Lease w/ Option to Purchase<br />Real Case Example:<br />Bought the property using a Work for Equity Lease Option Agreement for $89,000<br />We lived in the property while completing the repairs. <br />When the repairs were complete we refinanced the property using an FHA mortgage at $112,000.<br />We moved out of the property after 2 years and rented it out to students. Cashflow $1,600/month.<br />We sold the property approximately 5 years later for over $300k.<br />©2011<br />
    19. 19. Resources:<br />Check out two of my mentors who specialize in cash flowing Lease Options<br />Wendy Patton<br />Joe McCall<br />©2011<br />
    20. 20. Lease w/ Option to Purchase<br />This segment will be continued. Feel free to email your questions to be included in part 2. <br />Email:<br />Thanks for watching!<br />©2011<br />