June 19th, 2022 6:11 PM
Start by finding a property that would make a good addition to your portfolio or allow for a quick flip. Look for the right creative financing strategy once you have selected a property.
Answer these questions to determine which financing strategy makes sense for you:
- Do you have any capital available that could go towards a down payment and other expenses such as closing costs or repairs? _____________________________________________________________
- What kind of outcome do you expect from your investment? What kind of profit margin are you comfortable with? _____________________________________________________________
- Would you rather hold on to a property on the long-term to generate a regular income or purchase a property and sell it right away for a profit?_____________________________________________________________
- What kind of profit are you expecting from the property you are interested in? How much can you afford to spend on monthly loan payments?_____________________________________________________________
- Do you have an exit strategy in case the property does not sell right away or you cannot collect rent for a while?_____________________________________________________________
- Would a traditional mortgage make sense for you? Would you consider financing part of the value of the property with a traditional mortgage?_____________________________________________________________
- Do you have any equity you could borrow against? If not, what does the seller think of seller financing?_____________________________________________________________
- Are there any other creative financing options you could use, such as partnering with another investor, becoming an owner occupant or using a credit line?_____________________________________________________________
- Is there enough room for an interesting profit margin with the creative financing solution(s) you selected once you take as repairs, maintenance, and other unforeseen expenses into consideration?
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Your answers to these questions will help you determine if the property you are interested in would make a good addition to your portfolio or allow you to make money with a quick flip.
It’s important for your creative financing strategy to be well planned, account for unforeseen expense, and include a solid exit strategy.