Real Estate Investing Financing Truths - Part 2

Tuesday, 7 January 2014

No Money Down and other 'Creative' Real Estate
Investment Methods

For many years, investors have seen the traditional
real estate investment methods described in Part 1
of this article as a lot less than desirable!

They began looking at the prices of houses and
finding methods of bringing the price more in line
with making more money in a faster way.

These savvy investors developed ways to get loans
on properties that allowed them to pull money out
whenever they buy a real estate investment (cash
back at closing) and lower their payments to build up
their cash flow ('creative' investing).

They even developed methods of determining a
Sellers motivation for selling - and bought the
property at a discount price.

These creative investors also saw that some Sellers
were not able (for whatever reason) to sell the
property at a discount price, however, they still
needed to get rid of the property, as they didnt
know how to manage it as a landlord, or make
money from it - not that it couldnt be done, they
simply lacked the knowledge of how to do it.

The Seller just never learned how to profit from a
real estate investment.

These investors understood how to make money
from such properties, and did.

They bought the property on discount terms, and
made money from the spread by selling it at retail
price and/or terms (certainly one of my favorite
methods of real estate investing).

Buy Every Real Estate Investment via Discount Price
or Discount Terms.

Several years ago (actually, it really took off in the
1980s), Real Estate Investment Experts began
seeing the potential for making money in bringing
this treasured knowledge to the public in the form of
home-study courses, seminars and Boot Camps.

They found that it wouldn't create competition for
themselves, as many people, even though they
purchase real estate courses and attend seminars
and Boot Camps, will not actually take the
information and utilize it to make the hundreds and
even thousands of dollars possible for anyone
serious about Real Estate Investing.

These Real Estate Investment Experts (being
dubbed 'guru') found that this side of the business
was lucrative often making more income from
teaching about real estate investing than the actual
real estate investments themselves.

It is important to understand that these real estate
investment gurus learned early that they can only
teach others what to do, not be responsible for the
other persons success.

Providing the information to those that choose not
to use it is very similar to the old adage "You can
lead a horse to water, but you cant make it drink".

Yes, these real estate investment gurus got wealthy
from selling this information, but their theories,
principles and techniques taught thousands of
others (those that take action on what they learn)
how to realize their dreams utilizing their tried and
true methods of real estate investing.

From home-study courses and seminars, to boot
camps and one-on-one training, these methods
have been proven to be not only interesting to
millions of people, but capable of bringing massive
wealth to those that take action on what is taught -
those that go on and actually make real estate
investments themselves.

Knowledge changes things...

This knowledge of no money down real estate
investing techniques being known by thousands of
Sellers has made changes in the industry.

By bringing the Seller into the knowledgeable realm
of Real Estate investing, Sellers now know many of
the methods that the gurus teach.

This is both a blessing and a curse.

To the talented investor, these knowledgeable
people are more likely to work to create a WIN-WIN
situation.

Investors that avoid the tricks and stick to the basic
real estate investment techniques and terms that
have been proven to work over and over again,
have proven these powerful real estate investment
strategies work even with these informed Sellers.

Oh, yes, many of these real estate investment
techniques work today, as they have for many
years. So much so that it is almost possible to say
they have become principles; things that work, over
and over, the same way no matter what happens -
like gravity.

However, sadly, they are not really principles, as
several of the real estate investment methods and
techniques that worked in the 1980s and even
through the 1990s are today not as powerful, nor do
they work as often as they did before (although
some 'gurus' are still teaching the same methods -
even after 20 years...).

Some of this decline is due to a more educated
society (due to the flood of real estate investment
information available via books, tapes, home-study
courses and the Internet), while some of it is due to
simple changes in policies and laws.

It seems like a wave started late in 2003, the FHA
announced that flips (transactions where investors
buy houses cheaply and sell them at or near market
rates) are "illegal". (Note that illegal in this context is
not a legal term, but one that has been adopted
from "you are not allowed to do that and do
business with us".)

The FHAs announcement started a wave of concern
(if not panic) throughout the Real Estate investing
community.

Title and Mortgage companies began to tighten up
their reigns. Many of these companies, in lieu of
direct information, began simply not completing any
transactions that did not follow the traditional real
estate investment system. This made it hard for
investors to complete transactions that involved
simple buy-then-resell agreements (as they are not
really real estate investments, but a rather nice way
to make some fast CA$H!).

In rapid appreciation areas (California and Nevada,
for example), the ability to flip a property all but
stopped (became 'illegal'). All the 'traditional'
creative real estate investing methods were virtually
put on hold.

Ingenuity to the rescue, other methods of real
estate investing always seem to pop up. After all,
"Necessity is the Mother of Invention", and "Where
there is a Will, there is a Way" are absolute
principles.

Investors have to make a way to get things done - a
way to keep their real estate investments profitable,
and even more creative real estate investing
methods were developed - to keep real estate
investors, and the love of real estate investment,
alive forever.