Deedless Real Estate Investing-An Overview

Are you looking to increase the number of real estate deals you can do without significantly increasing your risk and without increasing the amount of cash or credit you need? If so, then deedless real estate investing may be just the strategy you?re looking for.

Deedless real estate investing is a collective term used to describe a group of tactics that do not involve an immediate transfer of ownership of a piece of property. Among these tactics are straight lease option, sandwich lease option, and subject to.

The first of these, the straight lease option, describes an agreement between you the investor and the seller in which you lease (or rent) their property for a monthly payment, and you have a guaranteed option to buy the property at a predetermined price within a fixed period of time. Ownership does not change hands unless and until you exercise your purchase option, making this the first type of deedless real estate investing.

The second type of deedless real estate investing, the sandwich lease option, starts out as a straight lease option. You then, as the tenant buyer, would find a second tenant/buyer to assign your interest in the property to. They would lease the property from you, with the option to buy it from you. When and if they exercise their option, you would in turn exercise your option to buy from the original seller. This puts you in the middle of the sandwich, where you stand to profit with little or none of your own money at risk!

Finally, the third tactic for deedless real estate investing is the subject to, which means you buy the property subject to the existing mortgage or deed of trust remaining in place in the seller?s name- you simply start making the payments. Some investors actually do insist that they get the deed when doing a subject to deal, but they don?t record the deed until they resell the property and cash out the seller?s loan.

Other subject to investors don?t get the deed, waiting instead until they find a buyer who exercises their option and cashes them out of the seller?s loan. Doing it this way makes this a true deedless real estate investing tactic, but significantly increases the risk. I don?t recommend it!

We have barely scratched the surface of what could be said about these three tactics for deedless real estate investing, but now you have an overview. Add these tactics to your real estate investing toolkit, and more deals will be available to you.

Now, go make more offers!

Creative Real Estate Investing

When non-traditional methods are used to buy or sell a property, it is termed as creative real estate investing. It refers to unusual methods used for selling or acquiring real estate. Many kinds of creative real estate investing are practiced frequently.

Popular Types of Creative Real Estate Investing Techniques:

Seller Financing: This is an unusual real estate investing technique where the property owner offers to finance the buyer! The owner typically lends a portion of the equity to the buyer and receives regular monthly payments. The mode of repayment may differ, it may be a principle only payment and interest may be fixed or variable, all depending on the contract agreed upon by both of them. Sometimes the buyer gets to assume the sellers loan, which is written as an all inclusive trust deed. Loans for commercial property are termed as assumable loans where as residential loans are termed non-assumable. These two techniques are used widely among the creative real estate investing techniques.

Lease Options: This refer to a person signing a lease as well as an option to purchase the leased property within a fixed amount of time. The options usually are for short durations of time like 12 months etc. and the lessee agrees to pay an additional amount as an option fee which will be forfeited should the option not be carried through. There are lease purchase options that make it mandatory for a lessee to buy the property with the term of the option. The price of the property is fixed at the time of the agreement and no matter what the land value; the lessee has to pay the amount stated in the agreement. Sandwich lease options are methods of buying a lease option and immediately selling it to another buyer for a profit, which will be shared by the owners.

When mortgages are defaulted the owner may try selling the property to the lender asking him to accept a lesser amount than what is owed in the mortgage.

Another technique is to buy bulk property from banks etc and sell them individually for a small profit. Using tax liens to acquire property is also a creative real estate investing technique. Investors buy tax liens from the government and should the homeowner default, the investor may foreclose the house. Some people buy a property that is ugly or old and unfit, make a few changes and give it a facelift, and are able to sell it for a huge profit.

The scope for being successful by investing in real estate is astounding. With careful planning and using creative real estate investing techniques, a person can make a huge profit as well as build a successful career dealing in real estate.

Creative Real Estate Investing

When non-traditional methods are used to buy or sell a property, it is termed as creative real estate investing. It refers to unusual methods used for selling or acquiring real estate. Many kinds of creative real estate investing are practiced frequently.

Popular Types of Creative Real Estate Investing Techniques:

Seller Financing: This is an unusual real estate investing technique where the property owner offers to finance the buyer! The owner typically lends a portion of the equity to the buyer and receives regular monthly payments. The mode of repayment may differ, it may be a principle only payment and interest may be fixed or variable, all depending on the contract agreed upon by both of them. Sometimes the buyer gets to assume the sellers loan, which is written as an all inclusive trust deed. Loans for commercial property are termed as assumable loans where as residential loans are termed non-assumable. These two techniques are used widely among the creative real estate investing techniques.

Lease Options: This refer to a person signing a lease as well as an option to purchase the leased property within a fixed amount of time. The options usually are for short durations of time like 12 months etc. and the lessee agrees to pay an additional amount as an option fee which will be forfeited should the option not be carried through. There are lease purchase options that make it mandatory for a lessee to buy the property with the term of the option. The price of the property is fixed at the time of the agreement and no matter what the land value; the lessee has to pay the amount stated in the agreement. Sandwich lease options are methods of buying a lease option and immediately selling it to another buyer for a profit, which will be shared by the owners.

When mortgages are defaulted the owner may try selling the property to the lender asking him to accept a lesser amount than what is owed in the mortgage.

Another technique is to buy bulk property from banks etc and sell them individually for a small profit. Using tax liens to acquire property is also a creative real estate investing technique. Investors buy tax liens from the government and should the homeowner default, the investor may foreclose the house. Some people buy a property that is ugly or old and unfit, make a few changes and give it a facelift, and are able to sell it for a huge profit.

The scope for being successful by investing in real estate is astounding. With careful planning and using creative real estate investing techniques, a person can make a huge profit as well as build a successful career dealing in real estate.

Low-Money-Down Real Estate Investing

Is it really possible to make money from real estate without much starting money?

The answer is both yes and no.

Here’s the No part:
Investing with no money down is a popular topic at high-hype, low-information seminars. The truth is, when people say you can make money from real estate with little or no money down, they are being slightly misleading.

Indeed, they are right: you personally do not need any money to get started. BUT, you have to get the money from somewhere. Speakers at these high-hype seminars mention OPM (Other People’s Money). The way to invest in real estate with no money down is to borrow from other people (family, friends, and investors) to get started.

This is perfectly true, it’s not YOUR money, therefore you’re starting with none of your own money down, but wouldn’t you agree “invest in real estate with no money down” is a misleading statement?

Even if it’s not your money, it is your responsibility. And it’s your debt if something goes wrong.

Here’s the Yes part:
There are ways that you can MINIMISE the amount of money down. I’ve found that there is an inverse relationship between start-up money and creativity. Generally, the less money you have, the more creative you have to be.

Here are a few creative strategies:
Note: These are by no means easy. They require a lot of work and a lot of explaining to people what you’re doing. There is also potential for investors to exploit their clients when doing strategy 2 or 3, so these strategies are for ethical investors only.

• 1. Negotiate terms.
  You can negotiate the settlement terms in a way that best suits you. For example, you could buy a cosmetically challenged house with a five month settlement period, and negotiate access to the house within those five months.

  In that time you could renovate the place and then sell it on the settlement day for more than you pay. Of course, you’d need the money for the renovations, but it’s not as much as you’d need to buy the house.

• 2. Sandwich Wrap.
  Find someone who will sell their house to you on terms instead of for a lump sum (i.e. wrap it for you). Instead of getting a loan and paying the seller the sale price in one go, you simply make weekly/fortnightly/monthly repayments to the seller until you’ve paid the sale price.

  Then you repeat this process for someone else - i.e. you sell the house to someone else on terms instead of for a lump sum.

  Because you want your client to be paying you more than you are paying the original seller, you need to increase the value of the house somehow (e.g. by renovating). You make a profit by receiving higher repayments from your client than you have to pay to the original seller.

• 3. Some now, some later.
  Find a house that has been on the market a while and is having difficulty selling. Go to the owner and tell them that you can sell the house for their asking price if they are willing to accept most of the money in a lump sum, but some of it in instalments. Then advertise the house as FOR SALE, NO DEPOSIT REQUIRED.

  The house will now quickly attract buyers. The buyer will get 80% finance from a bank and pay it to the seller. You then finance the other 20%. Pay it back to the seller in instalments, with a little bit of interest. And get the buyer to pay you back with a little more interest than what you are paying the seller.

  You can charge this extra margin because you are taking on the risk that the buyer might default on their payments and leave you stuck with the debt. The extra interest is essentially your charge for taking on this risk. You make a profit by receiving repayments that are higher than you make.

  I must stress once again that strategies 2 and 3 are hard work, especially because they involve specific legal paperwork. It is actually easier to just save up and use more traditional real estate investing strategies than to spend the money learning how to do these more obscure strategies.

The more traditional strategies I would recommend include positively geared rentals, wraps (simpler than sandwich wraps), and lease options. For more information about these highly profitable strategies, go to http://www.sustainable-wealth-creation.com/property-investing.html

About the Author

Nat has a passion for property and education. She is co-director of a property investing company and is the author of several high quality articles. To read more of what Nat has to say go to http://www.sustainable-wealth-creation.com/property-investing.html or if you would like to contact her directly go to http://www.sustainable-wealth-creation.com/contact-us.html.

Low-Money-Down Real Estate Investing

Is it really possible to make money from real estate without much starting money?

The answer is both yes and no.

Here’s the No part:
Investing with no money down is a popular topic at high-hype, low-information seminars. The truth is, when people say you can make money from real estate with little or no money down, they are being slightly misleading.

Indeed, they are right: you personally do not need any money to get started. BUT, you have to get the money from somewhere. Speakers at these high-hype seminars mention OPM (Other People’s Money). The way to invest in real estate with no money down is to borrow from other people (family, friends, and investors) to get started.

This is perfectly true, it’s not YOUR money, therefore you’re starting with none of your own money down, but wouldn’t you agree “invest in real estate with no money down” is a misleading statement?

Even if it’s not your money, it is your responsibility. And it’s your debt if something goes wrong.

Here’s the Yes part:
There are ways that you can MINIMISE the amount of money down. I’ve found that there is an inverse relationship between start-up money and creativity. Generally, the less money you have, the more creative you have to be.

Here are a few creative strategies:
Note: These are by no means easy. They require a lot of work and a lot of explaining to people what you’re doing. There is also potential for investors to exploit their clients when doing strategy 2 or 3, so these strategies are for ethical investors only.

• 1. Negotiate terms.
  You can negotiate the settlement terms in a way that best suits you. For example, you could buy a cosmetically challenged house with a five month settlement period, and negotiate access to the house within those five months.

  In that time you could renovate the place and then sell it on the settlement day for more than you pay. Of course, you’d need the money for the renovations, but it’s not as much as you’d need to buy the house.

• 2. Sandwich Wrap.
  Find someone who will sell their house to you on terms instead of for a lump sum (i.e. wrap it for you). Instead of getting a loan and paying the seller the sale price in one go, you simply make weekly/fortnightly/monthly repayments to the seller until you’ve paid the sale price.

  Then you repeat this process for someone else - i.e. you sell the house to someone else on terms instead of for a lump sum.

  Because you want your client to be paying you more than you are paying the original seller, you need to increase the value of the house somehow (e.g. by renovating). You make a profit by receiving higher repayments from your client than you have to pay to the original seller.

• 3. Some now, some later.
  Find a house that has been on the market a while and is having difficulty selling. Go to the owner and tell them that you can sell the house for their asking price if they are willing to accept most of the money in a lump sum, but some of it in instalments. Then advertise the house as FOR SALE, NO DEPOSIT REQUIRED.

  The house will now quickly attract buyers. The buyer will get 80% finance from a bank and pay it to the seller. You then finance the other 20%. Pay it back to the seller in instalments, with a little bit of interest. And get the buyer to pay you back with a little more interest than what you are paying the seller.

  You can charge this extra margin because you are taking on the risk that the buyer might default on their payments and leave you stuck with the debt. The extra interest is essentially your charge for taking on this risk. You make a profit by receiving repayments that are higher than you make.

  I must stress once again that strategies 2 and 3 are hard work, especially because they involve specific legal paperwork. It is actually easier to just save up and use more traditional real estate investing strategies than to spend the money learning how to do these more obscure strategies.

The more traditional strategies I would recommend include positively geared rentals, wraps (simpler than sandwich wraps), and lease options. For more information about these highly profitable strategies, go to http://www.sustainable-wealth-creation.com/property-investing.html

About the Author

Nat has a passion for property and education. She is co-director of a property investing company and is the author of several high quality articles. To read more of what Nat has to say go to http://www.sustainable-wealth-creation.com/property-investing.html or if you would like to contact her directly go to http://www.sustainable-wealth-creation.com/contact-us.html.

Deedless Real Estate Investing-An Overview

Are you looking to increase the number of real estate deals you can do without significantly increasing your risk and without increasing the amount of cash or credit you need? If so, then deedless real estate investing may be just the strategy you?re looking for.

Deedless real estate investing is a collective term used to describe a group of tactics that do not involve an immediate transfer of ownership of a piece of property. Among these tactics are straight lease option, sandwich lease option, and subject to.

The first of these, the straight lease option, describes an agreement between you the investor and the seller in which you lease (or rent) their property for a monthly payment, and you have a guaranteed option to buy the property at a predetermined price within a fixed period of time. Ownership does not change hands unless and until you exercise your purchase option, making this the first type of deedless real estate investing.

The second type of deedless real estate investing, the sandwich lease option, starts out as a straight lease option. You then, as the tenant buyer, would find a second tenant/buyer to assign your interest in the property to. They would lease the property from you, with the option to buy it from you. When and if they exercise their option, you would in turn exercise your option to buy from the original seller. This puts you in the middle of the sandwich, where you stand to profit with little or none of your own money at risk!

Finally, the third tactic for deedless real estate investing is the subject to, which means you buy the property subject to the existing mortgage or deed of trust remaining in place in the seller?s name- you simply start making the payments. Some investors actually do insist that they get the deed when doing a subject to deal, but they don?t record the deed until they resell the property and cash out the seller?s loan.

Other subject to investors don?t get the deed, waiting instead until they find a buyer who exercises their option and cashes them out of the seller?s loan. Doing it this way makes this a true deedless real estate investing tactic, but significantly increases the risk. I don?t recommend it!

We have barely scratched the surface of what could be said about these three tactics for deedless real estate investing, but now you have an overview. Add these tactics to your real estate investing toolkit, and more deals will be available to you.

Now, go make more offers!