I wanted to write to you today, just to give you a little encouragement despite the recent flop in the mortgage market. Acquiring loans is getting much tougher, and we are going to have to change some of our approaches in order to capitalize on the ever increasing real estate investing opportunities.
Don’t Be Discouraged, There’s a Definite Upside!
You heard me right, although it is tough to get mortgages now, it also means that sellers are going to be ready and willing to deal with you. Now that all the shouldn’t-have-been-but-got-a-mortgage-anyway buyers are gone, that opens up the playing field for investors like you and I to cash in on monster deals!
It’s just simple economics: less buyers means less competition, which leads to lower prices. But the question you are asking yourself right now is, How do I cash in on the falling prices?
Get Creative in Your Real Estate Investing
I am sure you have heard the term “creative financing”. But you may have never done a creative financing deal. So what is creative financing? It simply means that you make arrangements with an owner to help you finance a deal, or you have partners that help share the load of financing the investment. Some common methods of creative financing are:
- Seller carry back (seller second mortgage)
- Full owner financing
- Lease option
- Lease purchase
- FHA / VA assumption
- Establishing partnerships and strategic alliances
Now, I realize that banks and mortgage institutions are going to be much more limited on the number of seller seconds they will be issuing. But doing lease options and lease purchases are still a great way to gain a position in a property. And the FHA / VA assumptions are really going to become a gold mine, as you will be able to assume the note for little or nothing down.
Old Fashioned Partnerships
Now, more than ever, cash is going to be needed to get deals done. So you may have to scout out your local real estate club, find the movers and shakers, and establish partnerships in order to get deals done. You may have to bird dog for them for awhile just to get off the ground, and establish your position with them. Remember, anything you do in business has its roots in relationships. So if you establish great business relationships, you will prosper in the long run.
Hunker Down, and Get to Work
The type of deals I mentioned above are still out there to be had, however you are going to have to make a commitment to work harder. You have to make that commitment to yourself, that you are not going to sink just because the financial markets are in turmoil. There is going to be a sea of available deals out there coming up very soon, and you have to be willing to commit yourself to finding and financing them. It can be done, and I just want to encourage you to do so.
So step out there and make some great deals. Don’t be afraid to ask for seller concessions, even if they are costly concessions. It will sweeten the deal for you, and with the down turn in the market, I think you will find that sellers will be much more receptive to your offers.