Creativity: Changing The Way You Think! Article

	1888 Articles Home \| Finance Articles \| Real Estate Articles	Real Estate RSS
Creativity: Changing the way you think!

There are many ways to make money in real estate investing. Hearing about creative methods are what will set you apart from other investors.

Author: Alan D. Kosinski

Article Tools:

There are many ways to make money in real estate investing. Hearing about creative methods are what will set you apart from other investors.

Consider the following scenarios:

Buy a property below market price, sell at market price.
This one is fairly obvious. Buy low sell high. NO creative thinking needed on this one.

Buy a property below market price - sell above market price.
This one is somewhat obvious - buy low sell high with a twist. Since you cannot normally sell a property to a buyer above market, you may see this as a problem. The banks and/or buyer will want an appraisal of the property performed, and the bank will not loan on a price above market price. But what if the buyer is in a situation that does not allow him to purchase a property in a conventional manner? Maybe he has bad credit, recently filed bankruptcy, or has no cash down. You could either sell it to him on a lease to own agreement, or sell it immediately to him holding the mortgage yourself, avoiding the bank appraiser, and justifying a higher than market price.

Buy a property below market price - sell below market price.
This is how I have made most of my fast cash during my twenty six years of real estate investing. I find a property below market and then immediately sell it below market - but higher than I have paid for it. This is the classic "Quick Flip" deal. Sometimes I buy and close on the property then resell it. Sometimes I buy and sell in the same closing (known as a simultaneous closing). Other times I simply sell the contract (Purchase & Sale Agreement) for cash.

Buy a property below market price - sell at same price.
This one probably has you confused. Let me give an example of how this can work: You purchase a property receiving financing at 7%. You offer to hold the financing by "wrapping" your financing and passing it on to your buyer. What this means is that you charge a higher rate of interest than your current rate and make the percentage difference in cash. In our example, if you are paying 7% on your financing, you could charge 8% to the buyer. If your loan totals $100,000, you would be making 1% or $1,000 per year on the difference. Do this on a more expensive property, a $300,000 loan and 3% difference in the interest rate and you would be making $9,000 per year, on OPM (the bank’s money).

Buy a property below market price - sell less than purchase price.
You may think this is a typo, but it’s not. Let’s look at an example. I buy a property at $200,000. I then immediately enter into Lease/Purchase agreement for $195,000. The terms are such that the buyer must purchase the property no sooner than five years from now, and the monthly payment is $200 higher per month than my monthly costs. At the end of the five years when they close on the purchase of this property, I would have taken in $12,000 in cash flow payments. I have also been able to use all the tax benefits of the property such as depreciation (approx. $29,000). So in effect I have made $41,000, sold the property five thousand dollars less than my purchase price (possibly giving me even more tax benefit)!

Yes, you can make profit on all the above. It’s time to start thinking out of the box - that is where wealth is formed. Above were only a few possibilities concerning buying the actual real estate below market. How about buying a property for current market value and doing one or several of the above. How about buying a property for more than current market value? How could you make that work?

It’s time to open all the possibilities of investing in real estate. It’s Time for Creativity: Changing the way you think!

About Author

Alan is a millionaire real estate investor with over 25 years of experience. He is an author, speaker and educator specializing in creative and traditional real estate investing.
To sign up to hear Alan’s next teleseminar packed with practical know-how, visit www.hearthecall.net for free access.

Article Source: http://www.1888articles.com/author-alan-d.-kosinski-7407.html