Have you used any of these creative financing methods? Wanna be in a book?

[Brandon Turner]

Hey folks, I'm looking to tell their story for an upcoming brand new book for BiggerPockets. I would like to find people in the BP community who have used any of the following methods to buy RENTAL properties: 

• Home Equity Loans/Line of Credits?
• Private Money
• All cash
• Partnerships
• Seller Financing
• House Hacking

If you've done any of these methods to buy RENTAL properties, I'd love to know your brief story. Share it below here in the thread and if I can use it, I'll get in touch via the PM system! 

Thanks :)

[Nat C.]

I have only ever bought properties will full cash. I started working when I was 12 and had a large amount of savings 10 years later. This coincided with the great real estate crash, so I picked up a lot of properties. I really got hooked on real estate.

[Mehran K.]

I've used HELOCs and partnerships!

[Erik Stark]

I would love the opportunity to talk about two recent deals we did on owner financing. If you recall during our first call I was telling you how we owner financed a 4 unit, sold it one year later, capturing $80,000 in equity and instead of paying the lender off, we move his note/collateral to another performing duplex and paid off the higher interest loan on the duplex with the four units proceeds. 

Huge equity upswing

Better Interest rates

Locked in for 15 years

Its certainly advanced but going from a deal I would normally wholesale to capturing the greatness of leverage proved highly profitable. 

That model has worked for us three times over the past year and I would love to share it. 

thank you for the opportunity

[Cora Griffin]

Seller finance

[Freddie B.]

Sold my moms house on a Wrap mortgage with a "quiet closing" shhhh….

Great scenario for people that have a good amount of equity but would rather have income instead of all the cash.  

Mom had 100k+ in equity and her home was worth about 500K, she owed about 328k.  We were able to find a buyer to pay full asking price of 498K (because we were selling terms and not a house) who brought 50k down and the balance of 448K amortized over 30 years starting at 6% with bi weekly payments.  There is a 10 year balloon payment due. 

The quiet closing was necessary because we left Mom's original loan in place (similarly to a Sub2 deal) and wrapped this new loan around it. Quiet closing means that we found a Title company that would close the transaction without alerting the original lender since there is a due on sale clause (There is no due on sale jail people, this use to be a common transaction). There are a few disclosures that should be added to your contract to ensure that everyone is on the same page, but it worked out great.

Mom got a good chunk down (which she is now flipping with), and she's making a $1,200.00 per month profit off of the new mortgage after the original loan gets paid (Which is being handled by a loan servicer).  

Should the buyer ever default, Mom can foreclose if needed and do this all over again or sell outright.  

In the end she will make substantially more over the 10 years than she would've otherwise.   

Happy Investing

[Mark Shaffar]

@ Freddie that blows my mind:)

[Vinit N.]

@Brandon Turner No, I haven't used any of the methods you mentioned.

However, I was creative while purchasing my 1st home and all subsequent homes after that. I put 20% down-payment on my 1st home, half of which was financed via credit cards. 

In 2005-2006, many (online) banks were giving interest of 4-5% on savings deposits. And many credit cards were offering 0% balance transfers with no fees. So essentially one could borrow money at 0%, keep it in the bank and earn 4-5% on it. When the balance transfer offer ended (typically 12-mos), take the money from the bank and pay-off the credit card. During those 12-months you only had to pay the minimum amount due, to the credit card, and pay-off the balance amount at the end.

I took it to the extreme by doing an "app-o-rama", where I established credit lines of $150K+ between me and my spouse, then routinely did balance transfers on them and earned free interest. The interest wasn't a whole lot, but for the little time and effort, it was absolutely worth it.

In 2007, when I purchased my 1st home, I took some of the balance transfer money (which was already sitting in my bank account) towards my down-payment. 

The balance transfer game isn't as lucrative anymore since the credit card companies have added fees (typically 3% of the transfer) and banks aren't giving out a lot of interest. However I still have solid credit lines that I can use in case of an emergency or to finance any investment with stellar returns.

[Frankie Woods]

Home Equity Loans/Line of Credits?  Borrowed $50k from 401k to make a down payment/finance repairs on 4-plex.

House Hacking?  Lived with 3-4 roommates in a foreclosure I bought in East LA for 3 years. Lived essentially for free for one year.

Partnerships? Received a small loan/investment from my parents, but I still made the majority of investment. Creating a partnership with a group of ~10 college friends to buy multiple properties in ATL. First installments on $25k initial investment due next week from each partner.

[Aaron Mazzrillo]

Originally posted by @Freddie B.:

Sold my moms house on a Wrap mortgage with a "quiet closing" shhhh….

Great scenario for people that have a good amount of equity but would rather have income instead of all the cash.  

Mom had 100k+ in equity and her home was worth about 500K, she owed about 328k.  We were able to find a buyer to pay full asking price of 498K (because we were selling terms and not a house) who brought 50k down and the balance of 448K amortized over 30 years starting at 6% with bi weekly payments.  There is a 10 year balloon payment due. 

The quiet closing was necessary because we left Mom's original loan in place (similarly to a Sub2 deal) and wrapped this new loan around it. Quiet closing means that we found a Title company that would close the transaction without alerting the original lender since there is a due on sale clause (There is no due on sale jail people, this use to be a common transaction). There are a few disclosures that should be added to your contract to ensure that everyone is on the same page, but it worked out great.

Mom got a good chunk down (which she is now flipping with), and she's making a $1,200.00 per month profit off of the new mortgage after the original loan gets paid (Which is being handled by a loan servicer).  

Should the buyer ever default, Mom can foreclose if needed and do this all over again or sell outright.  

In the end she will make substantially more over the 10 years than she would've otherwise.   

Happy Investing

 Much easier to do a contract for deed and leave the property in a trust. Sounds like what your mom did was a land contract. Did title transfer or stay in your mom's name? As far as 'quiet closing' if title transferred and the new owner got their own insurance policy, I don't care how quiet you think it was. When the new insurance shows up in the new owner's name, it will be screaming loud and clear to the lender that there has been a transfer. They don't look at title until they see the insurance change names. That's what triggers to them a deed transfer because as a lender, they verify the property is properly insured to cover them in case of loss.

[Freddie B.]

Title did change, It is being double insured to protect all parties.  Original policy stayed in place and new Title holders obtained an additional insurance policy.  

[Bob E.]

We have been mostly cash buyers but with a twist, we also have a 10k Business Line of Credit and an 18k Visa card.  Our purchase strategy is unique.

As the market for flips here in Phoenix got more competitive I decided to look for alternatives.

I brought in my best friend from college and we decided to try investing in Notes.  We invested 50k each and bought Several notes, all out of town, here are the results:

Property 1, a 7,600 REO that we flipped in 30 days for a $4,000 profit.

Property 2, borrower told us she just didn't want to stay, that she just couldn't afford it.  We were all in for 20k we rented it for $775 a month and and sold to an investor for 45k with  10k down and carried the balance.

Property 3 A NP Note fund got this back as an REO and sold it to us for 12,300. Former owner was in the house and talked to us once and then went dark. Their balance had been 100k + and since they were still in the house we offered to sell it back to them for 35k. When we didn't get a response we filed for eviction. Rehab brought the all in cos up to 20k but we have it rented for $975.

Property 4, Borrower had gone through BK refused any attempt to communicate, FC was in October but we don't get the house till 4/15 while they exercise their right of redemption.   We are all in for 15k on this property and resale is between 30 and 40k.

Property 5 another REO that fell out of a finds pipeline, We bought for 7k and them paid 8k in back taxes and 15k for rehab, Rehab finished in early April and we have this listed for rent for $875, ARV is 60k.

Property 6, This is a note on a we bought for 20k on a condo in Chicago, the borrower is deceased but and the family currently has it rented out.  Neighborhood rents are @ $1,200 a month, FC has been filed but will take several more months.

Property 7   A modest 2 Bedroom in a rougher part of Indy, FC in at the end of May but we would take 5k for the note and let someone else do the rehab, This is one of our failures.

Property 8 A small 3 bedroom in Greenville IL that we bought as an REO, we paid a modest price and the BPO prices have come in between 65k and 70k, this is another property that we are looking to sell and we have a BP member looking at it this weekend.

So for 100k + 28k on our credit line we have acquired the following:

4k from a quick flip

10k sale proceeds with $490 a month from the financed portion of the sale for 8 years

One PropertyRented at $975 (ARV 60k)

One Property Listed for rent at $875 (Arv 60k)

One property in FC with a rent rate of $1200 (ARV 60k)

One Property worth 30k +/- 5k

Two properties we would like to wholesale and pay off the debt with the proceeds.

[Jeremy Chaudet]

**House hacking: purchased first home in April 2013 at 22 years old- 4 beds 2 baths, lived in 1 room, rented out other 3. Made $600 profit per month while having a place to live. 

Purchased a new home May 2014, 4 beds 2 baths- moved into that one and did the same thing. Fully rented out 1st house. 

**Creative financing: Purchased house #3 in November 2014 with 70% commercial financing and approx 25% owner financing via a forgivable loan.

Purchased house #4 on February 27th, 2015- full rehab triplex. I moved out of the house I bought in May- fully rented that out (my last room) and moved into the house which was gutted on March 7th...slept on friends couches/ floors for about a week, then just crashed on a futon mattress on the floor for another 2 weeks....work is still in progress but almost done. Now I finally have my own unit to live in after all this pain and suffering!  +will make a nice monthly profit w/ beautiful forced equity :)

[Rick H.]

When I did my sold-out probate seminar a few years back, we pitched it as "53 Ways and 53 Plays". However, by the time the material was printed, I had counted another 50+ tactics that I employ. This was some years ago and I've added many other methods. 

Now, why would I provide a single method to a stranger, for free, in order to provide content for their for-profit publishing venture? 

Ok, here's one. When I was concerned that too many people would encroach into my Cslifornia probate market, I saw that one primary book in the tooic was both the book that the California Association of Realtors sold to their agent and broker members. It occurred to me that the hold move was to buy out the book's publisher, which included the entire inventory of Probate books and reprint rights. 

I guess I should do something with these books someday. 

[Stephanie Cabral]

Originally posted by @Oliver Trojahn:

I have used the following all with success:

• Credit Card Balance Transfers to fund down-payments (If you have enough available  credit and can pay this back in a years time this is an incredible method.  You can actually write off the balance transfer fee against your income.).
• HELOC's. I have two on personal residences that I have moved out of. Both HELOC's are up to 100% value which can only be done on owner occ. Always get a HELOC before moving out of your personal and making it a rental.
• Portfolio Loans, 20 year amort, with a Business Line of Credit for acquisitions. Relatively new to this but will be able to acquire more this route and not effect my personal credit.  We are moving three conventional houses into this to see what it is like.
• Partnerships.

I'm curious about your 100% LTV HELOC...was that recently? I'd be really interested in finding one in CT. How did you find your lender? Thanks!

[Oliver Trojahn]

It is on owner occupant only.  I called all local smaller banks to see who offered it.  Usually, it is a credit union.