Your Input on Creative Financing References

[Todd G.]

I've enjoyed my views from the back row, but have decided to lose my 'Forum Post Virginity' this afternoon.

I'd like to start by giving myself away with CREATIVE FINANCING

While that may sound suggestive - insert Creative Financing Twerk, here - I am actually looking to get my mind out of the traditional financing gutter, and develop my acumen with creative financing, or, in other terms, 'thinking outside the traditional monetary box'.

I would like to hear your suggestions on reading material about Creative Financing.

I like seeing the numbers work just like everyone else - but I am not the guy who picks up on the math-part instantaneously.

If you have suggestions on reading materials using creative finance / how it works / when to use it / and / or explanations that demonstrate creative financing in-action, I would be very appreciative.

* Thanks here to Jeff Brown who has the patience to break-it-down to basic math

* Thanks here to Ben Leybovich for his super huge brain on the subject

* Thanks here to those of you who have suggestions on the topic.

~ Todd

[Bill Gulley]

My input to creative financing:

If you have enough hogs or cattle you can trade them for real estate!

I've done deals with livestock, machinery, cars, boats, an airplane, timeshares, vacation packages, labor traded, professional services, swapped RE, took jewelry as collateral, about everything but the first born, all of it was simply using other assets to leverage a deal or trade in lieu of money.

You can use other peoples money if you follow the rules of obtaining their money.

I've done large deals with seller financing, placing notes in trusts along with estate planning to reduce taxes and funded projects over 100% as contributions, setting up businesses floor planning inventories and pledging assets, lease financing of equipment and then assigning the leases for value. I could go on, but it's all pretty boring stuff.

You need to know conventional financing requirements inside out before getting creative as you can easily run afoul. Not disclosing some alternative financing to an institutional lender can be seen as fraud. You need to know all the conventional rules in order to use them to your advantage instead of trying to circumvent the rules you want to avoid.

You can buy a $100,000 property with zero coupon bonds that will mature to$100,000 in 15 years if the seller is an idiot. Gurus dream up "creative financing" techniques as a product, not really so much as an every day method of buying.

Investors seem to come up with new innovations that were done 40 years ago, I guess it's a generational thing, anything that can't be remembered is new again.

Education is the key to doing creative deals, understanding business and RE laws, tax issues, use of trusts and special non-profit entities, municipal financing and economic development and when and how different financing vehicles and sources of funds can be used. Bridge financing, seller financing, HMLs, lots of options, borrow against other assets or pledge other assets...... you get the idea. You need an in depth knowledge of financing contracts and sources of funds before you can dance with them.

Creative financing is the lawful application of various methods that may be agreed to in order to perfect a transaction. It is not how do you get to buy with no assets, knowledge or effort as some scheme. The more you have in the way of assets, knowledge and willingness to work the more creative you can be.

Finance is regulated heavily by an alphabet soup of agencies many of which have police powers at the state and federal level. You won't be a good race car driver if you don't understand all the parts of your car and all the rules that apply, if you don't know the rules you may win the race but if you cheated you don't win. Reading about Dale Earnhart or Graham Hill won't make you a championship driver. Graham started out in midgets, Dale with a go kart, seems RE investors want to start at Indy. :)

Every deal is different, so there really isn't a creative financing program to follow for each deal. That means you need to know how things work and which tools to pull out to accomplish the desired result for both parties, buyers and sellers. Just because you have a roofing hammer doesn't mean you can't drive a nail in a wall.

We use to have a creative financing group, I think after people found out there was no magic bullet that didn't require much knowledge or experience, they became disinterested as there wasn't much activity in that group.

Kinda my take on "creative financing". :)

PS. When I mention "education" I don't mean RE books from gurus or mentors or anyone having a financial interest in you, I mean conventional education in RE, law, finance, accounting, law, marketing, economics as the core understandings required in business. :)