Do all creative financing techniques you hear about really work? Yes, actually. They probably have all worked somewhere for someone at least once. The point isn't if they will all work for you. The point is to know what is possible, so you can find your own creative ways to invest in real estate. Here are ten methods to get you thinking.
1. Hard money lenders. You can ask around or find these online. They specialize in short-term loans at high interest. You typically use this type of financing for a "fix and flip." You can often get money fast, and if you make $30,000 on a project, who cares if you paid $10,000 interest in six months.
2. No-doc and low-doc loans. No (or low) documentation of your income or credit required. Again, you can find banks that do these online now. The catch is that you will only be able to borrow up to 80% of purchase price or property value. If you have 10% in cash, you might be able to borrow other 10% from a friend or seller.
3. Seller-carried second mortgages. Sometimes a bank will loan you 90%, and allow seller to take back a second mortgage from you for 5%, leaving you needing only 5% for a downpayment.
4. Land contract. Called "contract for sale" or other names as well, this just means seller lets you make payments, and delivers title upon payment in full. I sold a rental this way for $1,000 down, because I wanted 9% interest, and higher price I got this way.
5. Credit cards. If a seller will take $10,000 down on a fixer-upper that you expect to make $20,000 on, why not use credit cards? This is a true 0-down deal for you, and if you turn project in six months, you will have paid $900 in interest on an 18% credit card. Don't let $900 get in way of making $20,000.