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Creative Investment Strategies For Multiple Property Investors

Author: JamesL.Hardcastle Total views: 2 Word Count: 592

Now that the real estate market is back in balance, home buyers in the Melbourne area have a significantly bigger pool of properties that they can choose from. This sounds like gold to the ears of a real estate investor, but for those investors who own multiple properties already they may need to check out some creative financing methods to snap up the hot properties.

If you are of the fix it and flip it school of real estate investors, you probably already know how you will finance your next purchases by using the proceeds from the sale of property which you presently hold. In fact, you may never need to put any cash out again after your first few property sales. But what do you do if you are buying property to rent it out, or if you are not yet investing in real estate on a scale which permits you to finance one purchase with the sale of another property?

All real estate investors know that getting the best deal possible is important. The financing which banks offer is often hardly the best deal out there. Banks also tend to have slow moving gears, which is basically money lost in the mind of a real estate investor.

Well, one creative financing option that is prized by real estate investors is assuming a loan. When you assume a loan, you buy a property simply by taking over the loan payments from the current owner. For this strategy to work for you, you need to find a property that was originally financed with a low interest rate loan and currently has a high market value and a high payoff balance. Now is a great time for considering this strategy with the ripple effect from the U.S. mortgage meltdown keeping interest rates on the high end.

You should of course only use this financing strategy if the current owner's mortgage features an interest rate which is lower than the prime interest rate at present. You must also be certain that the loan agreement in question has no "due on sale" clause.

Lease options are another good creative financing technique used by real estate investors. Lease options can save a lot of money for investors and works much like a futures option does on the stock market. It's like a rent to own arrangement, but has a deadline. A very small payment is made to the current owner upfront, much like the options premium in stock trading. Basically, what you have bought is the right to rent out this property and the right to sell it at any time up to the expiration date of the contract.

Before signing any such agreement, be sure that you are covered by a "Full Right of Assignment" clause. This clause permits you to sell the property without any consent needed on the part of the current owner. These agreements also stipulate that the current owner must sell the property to you at any time before the expiry if the contract if you decide to purchase it. This purchase will be at a price previously agreed upon. This contact can be canceled at any time you choose, though you will lose any rent you have collected so far, as well as the premium paid at the beginning of the contract period.

By using these unconventional financing strategies, you can make a lot of money in the real estate market. Always be sure to plan your strategy based on your current situation. You can receive invaluable assistance in this regard from an experienced, independent finance advisor.

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About the Author

About the author: James L. Hardcastle can show how to create customised Finance techniques for multiple property investors. Visit "Loans Australia" website for more great advice on property investment techniques by experienced financial advisors.

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