Creative Financing 101

[Steve Kontos]

Hi BP Community,

Over the last month being fairly activate on this site, I have noticed a very common theme amongst investors.  People often ask "how to grow" and how can they purchase properties outside of using the old fashioned "save and buy" approach.  I am setting up this specific forum so that along with myself, many real estate professionals who have been in the business for a while now can chime in and give their 2 cents on the topic.  I am going to keep my opinion brief and keep in mind this is based on my personal experience of being in the business.

Using the "save and buy" method to grow your portfolio is stale.  While I am not knocking it, it is something that I always felt was impractical to me.  In today's markets with all of the availability of funding, you can grow your business at a better pace through leverage.  Now for the sake of keeping this piece short, there are multiple different ways to leverage.  To name several, you can leverage through personal lines of credit, business lines of credit, retirement accounts (401k, IRAs, etc), and from other people's resources (people who may have money sitting around doing nothing or even their credit or retirement accounts).  It's about better understanding leverage and properly DOING YOUR HOMEWORK that you can entertain such options.  There is definitely a discipline involved here and will not work for people who just jump in and borrow away.

On that note, please feel free to contribute....