Creative financing tips?

[Willie J Baxter]

I used dealcheck on a multiunit in the area and played around with it till i could cash flow positive $250/mo. With a 3.5% fha loan i would still need about $14,500 for a down payment. Any advice on creative options to finance this. I have never had an actual deal done. Currently work a day job and have no capital to start off with. Should i just call the agent and see if the seller is willing to finance somehow? There's a lot of things im unsure of and any small mistake will hurt since things are tight

[Stuart Udis]

Based on what you shared you are not financially qualified to own real estate. Even if someone in these forums were to teach you a creative financing strategy that required zero out of pocket cash and the seller was willing to accept those deal terms, you still aren’t qualified to own real estate with your current balance sheet. What happens if the roof has to be replaced? What happens if the water service line has to be replaced? What happens when you have vacancies and have to turn over units? 

Purchasing real estate is capital intensive. While there could be avenues to acquire real estate creatively with less cash operating  real estate properly is capital intensive. Most fail to consider what goes into owning and operating real estate once it’s purchased and solely concern themselves with how to buy the property. Those with little to no experience should have even larger amounts of reserves in place before they purchase real estate. 


Also, if the property doesn’t cash flow or cash flows poorly as your summary indicates, coming up with a creative financing strategy that allows for greater cash flow doesn’t necessarily make it a good purchase or investment. It merely means you will likely have a difficult time refinancing the property to a traditional lending source. This is another issue I see with those who seek out alternative financing because it’s the only way they qualify to make the purchase. Along with not having sufficient funds to operate their real estate they fail to consider what happens when the property must be refinanced. If the best you qualify for is alternative financing when the purchasing loan matures you will  likely be treading water barely able to stay a float.