Just go to a bank to get the loan, right?
Most people will in fact just go to the bank or financing company to arrange a loan for their personal home.
What if you want to purchase a gas station? Or a restaurant, maybe even a church?
These types of investments are not usually something that you would be able to finance through a bank.
This is why Creative Real Estate Investing was created.
If you are looking into purchasing a somewhat different type of property other than a primary residence or vacation home, you would usually use some other type of financing.
This type of financing is usually called Private Mortgage Financing or something similar in name, doing the same types of financing.
With traditional bank financing, you will need to have income scores within a certain set of parameters, cash on hand, tax returns to prove it, and sometimes you just don’t meet the guidelines for an institutional loan.
Even the government guidelines that have been set up for investors to own properties, with loans from the government, also have strict guidelines and limits.
These government companies are usually controlled by names like Fanni Mae or Freddie Mac, and there was another one called Ginnie Mae, but that was used mostly for student loans.
So now you know why real estate investors don’t always just go to their local bank for a loan.
If a property similar to what is known as a developer’s property that will need a few years of being brought to life, such as permitting, zoning, site clearing, utility planning, and basic infrastructure set up, is something you will be looking at, you will need an investment partner or group.
Banks will usually only get involved in any kind of financing after all of this has been done and paid for. Then, and maybe not, banks will start offering to finance, although their basic involvement will be traditionally toward homes financing when the properties are being developed.
This is why you will need to know more about alternative forms of financing for certain types of properties.
Some are owners that need a tax shelter from other financial investments, as well as seeking a profit.
Wherever you fit into this, it is mostly to earn a profit.
It doesn’t matter much as to what kind of investment people make, whether it be financial investments or real estate investments, we are all looking for an eventual profit from it.
Real Estate Investors have been involved with many properties changing hands since about the 1960s, but it had also been done many years before, but gained popularity when President Eisenhower signed into law an act that combined the best attributes of real estate and stock-based investment as a way of producing income.
Real Estate Investing also goes back much further than that, as it was generally a way for showing the status of wealth even in the Middle Ages when rooms were rented out to peasants, thus creating income for the owners.
And today, we have exploded the entire industry with its so many forms of investing.
There are also many other ways of investing in real estate, without owning the property. The list is long, but to give you an idea, there are real estate investment trusts, which own different properties, and their investors don’t own the property, but they do profit from its being managed well to turn a profit.
There is also the mortgage note business, where you wouldn’t own the property, you just own the right to get paid from it. You receive payments from a buyer, who owns the property but is indebted to you in the form of payments, with a note and mortgage.
This is also a little-known business to the general public, but it is a multi-million-dollar business.
And you can also be one of these investors. You would be known as a note holder. You get paid by the terms of the security agreement pledging the security of this property. You would be essentially in control of the deed. The property wouldn’t be able to be legally sold until you are notified and paid in full.
Almost every type of real estate investment that I have mentioned also can be “flipped” for profit.
Some investments are not flipped though. Think of Elvis Presley’s Mansion. It is still making money for whoever owns it or has the right to receive the money from tours.
The Empire State Building has been flipped, and offices are being rented out to different companies, to the owners of the building, who collect the payments.
Many more articles to follow this one. This is the place to find new ideas and twists on old thoughts of finding and financing real estate.