Whats Your Favorite Financing And Why???
I know a little about different types of financing, but I want to know what investors actually use.
I like the sound of an Interest only with a lilttle down payment just so you have a little equity to be safe.
I have heard that with an Interest only you also get a lower rate .... do you find this to be tru?
If not it seems like an 3 or 5 year arm might be the way to go.
But what I really want to know is what Financing do most Investors usually get? Why? and how is that working for you?[ Edited by 1furcron on Date 01/20/2004 ]
My current preference is to buy a house with cash or HELOC. Then when the house is finished, I will refinance it with a 30 yr conventional with extra money added to principal each month. I like to add enough to principal each month to allow the house to be paid off in 15 to 20 years, and still cashflow. If times got rough, I could always stop the additional payments to principal.
I know some people like to use owner financing because of the lower costs and possibly lower interest rate. This route sounds good to me but I have never used it. It may not be true, but I perceive the drawbacks would be too great. My first problem with it is the fact that I might miss out on too many deals. I imagine many people would simply want cash and not want to bother with financing it themselves. Also, I wonder if there really are in savings in closing costs. Sure, your costs are lower, but if the owner would sell the property for $1k or $2k less if you paid cash, where have you saved? Just my opinion on owner financing. Hopefully someone will prove these perceptions wrong.
I like traditional finance with money back for repairs equaling the 20% down. That way no cash at close and tenants pay for repairs as we go.
I also like putting the 20% on a low interest CC. Same thing, the tenant pays.
Thirdly, I like owner finance. very simple, no closing costs. Don't care for the HELOC or WLOC but ONLY because I do not flip properties. If I flipped, I would most definitely set up a WLOC.... But, I am a hold til you die and let the kids worry about it kind of guy.
Good Luck,
Shawn(OH)
I like HELOCs as well. I also like the option payment financing which offers the option of paying on diferent schedules each month, those being 15yr, 30yr, interest only and a minimum payment. You have to be careful of negative ammortization but it does allow cash flow if times are tight. You can always rachet up your payments later to catch up.
anyone have experience with Interest only financing or doing an arm .....
I am looking for the monthly cash flow and do not own a house yet so this a HELOC isn't an option
The Power of Private Money. Once you get a couple of these guys on your team, you will never need funding again!
Read this article here on TCI.
http://www.thecreativeinvestor.com/modules.php?name=News&file=article&sid=437
BAMZ[ Edited by BAMZ on Date 01/20/2004 ]
That was a really good article thanks for the post.... any other ideas, has anyone done Interest only ??
This is my preference for financing:
-Cash
-Credit line
-Owner carry
-Private money
-Hard-money
You have to be flexible. I think BAMZ
is absolutely right! Once you find your
private money source and build a track
record, you are set. I have a guy who I call
up and he doesnt even look at the properties any more. He just wires his
money to escrow. I pay him 2 pts and 12% interest. Sometimes I can even
get him to do the loan fee simple.
Put an ad in your local paper:
"Real-estate investor with proven track
record looking for investor who wants to make 12% on their money secured by a
first trust deed." This is how I found my
guy 9 years ago. He calls me begging to lend me money!
Good Luck
Jeffrey Adam
[addsig]
My favorite type of financing is NONE.
Easily done through Sub2 so you never have to get a HELOC, never have to fill out a mortg appl and best of all you can keep getting more and More and MORE properties and are never limited by qualifying for loans.
I agree with Mr. Mike also.
The problem though is many people will not let you simply take over their loan
subject to, they want it out of their name,
therefore you have to have a back-up
plan....
Jeffrey Adam
[addsig]