Learning deal structuring for you investors out there is very important. The first thing you need to do is, "investigate the deal and do your homework" to know the ins and outs and facts about the property (what I call the DNA of it all) and it is important to know what is the seller's main objectives or motivation. Why do they want to sell? It should make sense. How is it that you can get a property that you've done comps on that is worth let's say, $150,000 for only $110,000? That allows you to have an idea of what approaches are going to be compatible with the sellers needs and your financial interests, allowing you to do the deal.
Also, Create a Real Estate Forms Portfolio. This should include:
-a weekly planner & priority schedule along with an Analysis of Property (sellers info, buyer's property inspection report, property analysis report, cash flow anaylsis, property rehabiliitation analysis & Market Sales Analysis).
-Acquiring Property, Agreement for deed, real estate sales contract, addendum, deposit note, attorney approval, quit claim deed, closing statement, bill of sale, affidavit and memorandum of agreement.
You will also want to explore with your Real Estate Forms Portfolio all Financial Documentation you may need, lease/rental agreements & property management.
Here are a few ways to structure deals. Of note as well, research professionals in areas you are investing in that may be of help to your needs, in otherwards Title Companies, Appraisers, Mortgage Brokers, Realtors, Etc.
Create a Real Estate Team or Partnership: You can partner up on a 50/50 basis with somebody. It doesn't have to be 50/50, it can be what ever you can negotiate. Perhaps one of the partners has the perfect credit, the other has a good cash flow, and even another (A Birddog) who finds the properties.
That good old often mentioned term........THE FLIP: the best way to flip is to find a potential buyer first and then find a property. You can do this by running an ad on a property to see what kind of action you get. One of our best clients does this all the time. Last week he was settling on a house Friday, ran an add two days prior to settling for $35,000 more than he was buying it for and had 5 open house appointments on Saturday.
LEASE OPTION: Many times you can buy and sell with a lease option. Of note, if you will need traditional financing to buy the home when the lease option contract is up.....it is a must that you have 12 months of cancelled checks.
SELLER CARRY BACK: This tends to be a great and often overlooked way to buy real estate. Now the best way to utilize this system is to do a second seller carry back in order to give the seller some cash in the deal. If money doesn't exchange hands, many times the seller doesn't feel that they consummated a sale.
HARD MONEY: Hard money is purely an equity loan made generally at 65% LTV, based on the equity of the property only. There is hard money availability all over the place, both residentially and commercially. Credit is not a consideration nor typically is income. There are three C's of lending.....Credit, Collateral, Capacity.....Collateral is the only one considered here.
Non-Conforming or Sub Prime Financing: Many Wholesale lenders I deal with will provide financing at 70% with poor credit and won't verify money down. We have access to many of these.
SUB PRIME/ SELLER CARRY BACK: This combo can provide a bulk sum of money to the seller, rather than ask them to carry the whole thing. Also there are local independent portfolio lenders that will lend as well as mortgage co's that may be worthwhile in seeking them out. National one's would be Associates Finance, American General, Beneficial etc. With these companies you will be paying high fees & rates that are associated with the high level of risk they are entailing giving out the credit.
