Creative Real Estate Investing,
What is it?
Creative real estate investing, is being able to buy or acquire property with little or no money out of your pocket.
Here is a quote from one of my mentors:
Using cash to buy property is a sign of intellectual weakness.
Most people you ask about creative real estate investing will say something like, "that doesn't work here" or "nobody does that anymore." What they are really saying is that they don't know how to do it.
Anyone educated in traditional investing, including realtors and brokers, are not educated in the aspects of creative real estate investing. It is not part of the standard curriculum in getting a real estate license. So they are unfamiliar with how it is done and not motivated to learn about it. This is mostly because they don't see how to get a commission, which is understandable.
No one likes to work for Free!
Brokers and sales associates are trained to sell real estate not to invest in it, and they do a terrific job at what they are skilled at.
One of the first things you need to do when starting down the creative path will be to become educated on the subject. Look for someone who has done successful creative real estate investing transactions already. Ideally having a mentor or a coach will be a tremendous help and speed up the process.
You will have to make an investment in yourself, with both money and time, to acquire the necessary knowledge you'll need. You must take action! I constantly hear from new people looking at buying a course (manuals & CD's), "does this course work?" My answer is NO, no course works, you must do the work, the course is only information which will not help you unless you apply it.
I hate to break it to you but the BOS (Box Of Stuff) won't make you rich, without work!
One day I was attending a class that my friend was putting on and at the lunch break I was standing in line next to a woman with one of those badges that screams, I'm at a seminar. So we got to talking and she was from NJ, as was myself. As the conversation progressed I inquired about what she was learning about, which was real estate investing. In asking her questions about how they find property, she said we just use a realtor and they are paying retail for the properties and have to get new loans. My next question was how else do you find properties? The answer was "that was the only way they showed us." Wow!
She had told me that she and her husband had invested $25,000 for this training. I then gave her several other ideas of how to find unlisted property so they could buy below market and have no competition.
So lets look at some of the major differences.
The main differences between traditional investing and creative real estate investing.
Creative Real Estate Investing
- Is looking for motivated sellers, someone with a problem that needs solving
- Is directly talking to sellers, usually the scariest part for new investors
- No loan applications, your credit is not important
- Puts up little or no money, down payments are seldom needed
- Develops private sources of funds, gives you flexibility but not always needed
- Buys with owner financing or subject to
- Not driving around to see property, unless you have a contract with seller
- Can make several offers that solve the seller's needs
- You set the price and terms that work for you and them
- If you find a deal that doesn't work for you flip to another investor or realtor
- Has more fun and makes more money!
Traditional Real Estate Investing
- Needs a BIG bank account
- Uses a Realtor and MLS to find property, which means more competition
- May be bidding against other investors, driving the price up
- Buys foreclosures either from bank, or auctions
- Buys for cash from other investors
- Need thousands of dollars just for earnest money deposits
- Must jump through all the lender hoops to get a loan
- Lenders limit you on the number of loans you can have
- Must make lots of offers to get one accepted
- Most deals negotiate mainly on price
- Every other investor knows its for sale since it's listed
So there are some examples of creative real estate investing vs traditional real estate investing. If you have any questions please contact me.