Creative financing is any method of unconventional financing that allows real estate investors to purchase properties without traditional loans or using large amounts of your own money. Creative financing might include options such as seller financing, wraparound mortgages, or crowdfunding. And you can use these to purchase various types of property, including residential and commercial investments.
Why would real estate investors want to use creative finance options rather than traditional mortgage loans to purchase property? There are plenty of benefits, including flexibility in structuring deals, the potential for higher returns on investment, and accessing more opportunities in a competitive market. It opens up a whole new world of possibilities that might allow you to take advantage of more lucrative financing options.
Types of Creative Financing for Real Estate Investing
There are many different types of creative financing for real estate investors, including:
Seller financing: The seller of the property agrees to act as the lender, where they allow you to make direct payments to purchase the property.Lease options: The seller agrees to a lease with the option to purchase, where you rent the property for a certain term and then have the opportunity to buy. An extra percentage of rent may be charged and set aside to use as a down payment.Subject-to financing: The seller will have a loan in their name, which you agree to pay. They accept the deed to the property in your name, which you receive once you finish paying off the loan.Wraparound mortgages: The seller keeps their existing mortgage for the property, and you make monthly payments directly to the seller. The seller will use a portion of your payments to continue paying their mortgage.
While these can all be valuable options, let’s take an in-depth look at two of our favorite creative financing options.
Private Money Lenders
Private money lenders are individuals or companies that can provide you with the funds needed to make real estate investments. These private money loans are typically more flexible than traditional loans. You might have the option to finance repair costs in addition to the purchase cost, get shorter loan terms, or be subject to less strict eligibility requirements.
Private lenders are also more accessible for communication and assistance, which leads to more personalized service. Lastly, there is less red tape in the process of private money lending, so you get your money faster.
Dominion Financial offers Fix & Flip loans for investors looking to purchase properties that need repairs. We can provide financing for 100% of the purchase cost plus rehab costs. In addition, we offer a DSCR Price-Beat Guarantee for DSCR rental loans.
Hard Money Loans
Hard money loans are short-term bridge loans that are secured by real property. One of the major benefits of a hard money loan is that you can get financed faster than traditional loans. Loan terms are also flexible, and you may qualify for a hard money loan even if you are denied by traditional lenders.
Dominion Financial Services is a balance-sheet lender for hard money loans. We do not require appraisals. Instead, we use an in-house valuation team, which allows us to get you approved faster by cutting out third parties. Hard money loans may close in as little as 48 hours.
Access Creative Financing From Dominion Financial Services
Creative financing can have many benefits for real estate investors. Get your money faster with easier lending processes and more flexible loan terms. Check out Dominion’s Fix & Flip loans as well as our Rental Loans to get started with your next real estate investment project.
