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If You Want To Be a Multiple Property Investor You Must Read This

Jul 11, 2008
The real estate market has finally returned to some semblance of normality - and those in the market for a home in the Melbourne area have a lot more properties to choose from than before. To a real estate investor, this sounds like a gold mine - however, if you already own multiple properties, you may need to employ some creative financing methods to be able to snatch up these newly available properties.

Of course, if you are a fixer-upper "flipper" with two or more properties already owned, you may already understand how to finance all of your future acquisitions with part of the proceeds from the sale of your currently owned properties, so that after your first property or two you never need to lay out any new cash or get financing again. But what if you are a real estate investor who buys properties to rent them out, or you have not reached the point in your flipping business where you can finance everything with sales proceeds?

All real estate investors know that getting the best deal possible is important. The financing which banks offer is often hardly the best deal out there. Banks also tend to have slow moving gears, which is basically money lost in the mind of a real estate investor.

Assuming a loan is one creative financing option employed by many in the real estate investment field. Assuming a loan involves buying property by just taking over the loan payments associated with the property already. For this to work for you though, you have to find properties which have a high market value presently but were financed using a low interest loan. This strategy is currently a good one to employ, since the U.S. mortgage crisis has had the effect of keeping interest rates high.

You should of course only use this financing strategy if the current owner's mortgage features an interest rate which is lower than the prime interest rate at present. You must also be certain that the loan agreement in question has no "due on sale" clause.

Lease options are another good creative financing technique used by real estate investors. Lease options can save a lot of money for investors and works much like a futures option does on the stock market. It's like a rent to own arrangement, but has a deadline. A very small payment is made to the current owner upfront, much like the options premium in stock trading. Basically, what you have bought is the right to rent out this property and the right to sell it at any time up to the expiration date of the contract.

If you sign on to an agreement such as this, you should be certain that you have a "Full Right of Assignment" clause included in the contract. This will allow you to sell this property without any further consent form the current owner of the property. Such agreements also carry the stipulation that the owner must, upon request, sell you the property at a previously agreed upon price at any time before the expiration of the contract. You can cancel this contract at any time, but you will of course lose the premium by doing so as well as any rent you have received to date.

By using these unconventional financing strategies, you can make a lot of money in the real estate market. Always be sure to plan your strategy based on your current situation. You can receive invaluable assistance in this regard from an experienced, independent finance advisor.
About the Author
About the author: James L. Hardcastle can show how to create customised Finance Solutions for multiple property investors. Visit "Loans Australia" website for more great information on property investment solutions by independent financial advisors.
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