In this video, we dive deep into the world of real estate negotiations and show you the secrets to securing fantastic deals through creative financing strategies.
Whether you’re a seasoned investor or just starting in the real estate market, our expert tips and insights will empower you to leverage unique financing techniques to your advantage.
Join us as we discuss seller financing, lease options, and other innovative approaches that can help you achieve your real estate goals.
Don’t miss out on this valuable knowledge – watch now and take your real estate negotiation skills to the next level!
Transcript:
Chris Bounds 00:00
What are your thoughts on creative financing strategies? And are you seeing a any changes and maybe an uptick or maybe a decline in those kind of strategies to make deals work in this market?
Burton Alicando 00:11
No, I’m actually seeing more creative seller financing, I don’t know if it’s because it’s the era of credit federal financing, or because the information is more readily available now than it ever was before. You know, I mean, if you go back into the 90s, people didn’t know about lease options, as much as there were sub twos or any of that stuff, you know, Hotelling Novations, like all these strategies were around for a long time, but it’s kind of hidden behind a vote of some sort. Or you had to be part of an echelon of fancy investors to understand the strategies, or maybe go to a very fancy seminar, it costs quite a bit to understand that stuff. So either it’s because of, you know, the possibility of low equity right around the corner, the possibility of homeowners not wanting to let go of their property right now. And they want, you know, a higher price than a 70% to the dollar offer.
Maybe you know, all these factors, but I like to believe it’s not just one thing that’s causing an increase in creative seller financing. I think it’s, you know, homeowners that want full price, not trying to get that cash offer, they know what their houses are worth. And so they’re trying to get that Max offer. Some of them are willing to wait, you know, to get that amount. Again, it could be the social media could be internet, teaching people these new strategies. That way, they go from just, you know, that one trick pony to becoming a real estate professional, just like your team. I mean, when you said that your team are 5050, you know, realtors and investors.
I’m sitting over here thinking that’s what the future is going to be. I don’t think there’s going to be realtors and investors anymore in the future, I believe, we’re gonna see a real estate professional, someone who actually can solve all the problems, whether Hey, we can list your house or hey, maybe, you know, due to the limited time that we have maybe you know, a cash offers the Debt Debt right now, or, you know what, since you want top dollar, but you can’t get it right now, maybe some, some creative strategy to get you what you want over a period of time, I’d be the best.
And so to me, that’s what I’m seeing. I think it’s just many things coming together kind of like a perfect storm. But yes, creative dollar financing is increasing. Some markets are more stepped into it. And some markets don’t kind of voodoo or taboo, essentially, like you want to tread lightly, or just make sure you’re speaking to attorneys, making sure you’re dotting your I’s and crossing your T’s properly when you’re when you’re approaching these types of a little bit more challenging of a strategy.
Chris Bounds 02:40
Yeah, I mean, there’s definitely, there’s both federal and state laws, you got to make sure you following like, like lease options in Texas, like that’s how I got started in real estate. And then Texas, changed some laws like very early in my, it was like I within a year of me starting to invest. I’ve already done a lease option and like, boom, they didn’t outlaw it, but they do a lot of red tape edit, where it’s, it’s challenging. To do that properly without exposing yourself to quite a bit of risk. But in other states, it’s seemed to be pretty, pretty open season.
Same thing with owners financing disclosures, making sure you’re following all the like Dodd Frank laws and RESPA. And or, I don’t know if RESPA. It really applies there. But but in any case, yeah, that’s where you’re working with the real estate attorney helps ultimately it comes down to like liquidity. When liquidity is readily available or more available, especially easier to access and cheaper to access, like 3% mortgages, then creative financing becomes less desirable. I mean, why wait 1020 30 years wanting to get it all now. Now, when credit starts to dry up or becomes harder to get or more affordable, creative financing can be attractive alternative options.
And this also doesn’t necessarily have to mean the actual interest rate. It could also like you mentioned market, neon, primary markets are going to have more liquidity like Houston, LA, Miami, they’re going to have a lot more capital banks, lenders willing to loan in those but you go out to secondary, or even tertiary markets where it typically it’s small banks, very local community banks, or its owners financing, very common in the country. Like if you’re buying like rural property owners financing or you’re getting some type of very specialized loan product.
Burton Alicando 04:54
Yeah, but
Chris Bounds 04:55
these are all gonna be ways that you can actually make deals work even paying full retail? Yeah, like, Would you pay full retail for a house where you’re getting no equity? I mean, for a lot of investors really? No. Why would I do that? Well, what what if they gave it to you, for a 30 year interest only mortgage with 36 months of deferred payments? I mean, does that make sense? I don’t know, it might, depending on what you want to do with it, and the rent rates and all that stuff. But I’m just thinking about these things. Because there’s probably some people that you’ve you bought your house in the last 18 months, depending on your market, you might be underwater, not everywhere, like some markets like Miami. They’re still chugging along
Burton Alicando 05:50
very valid point. I mean, we go back to 2021. I mean, every MLS showing had, you know, 1513 cars out front, most properties that were listed, were being bought five to 15%, over asking price. Now we’re in a market where potentially values are starting to kind of correct maybe in some markets go down, what we are seeing our days on market are increasing. So that’s probably what’s keeping the price worried that something’s going to budge. Or these days on markets gonna keep climbing, eventually fire, or these prices are going to start need to get adjusted, to where the demand is going to be. And so that I think is a very, very, very bring a good valid point, like just the fact that you’re mentioning that I think these are just going to be some things to start considering.
Chris Bounds 06:39
Yeah, if you’re in something other than single family owners financing, creative financing is very common. Self Storage, mobile, home parks, small multifamily. That’s very common, but just ultimately, don’t be afraid to ask, because this is the market to where getting in may seem hard, but it’s actually easier because there’s a lot of more institutional or bigger players, or folks that have been in the game for a while. Where things aren’t working the way that it used to for them. And it’s a little harder for you to adjust a big ship, but a smaller player can come in. And if they can learn these creative strategies, they can get in and take DNA and get some deals done. When there’s less competition.
Burton Alicando 07:25
Yeah, you know, actually, here’s a great example, I’ll keep the name secret. But 2021, again, when everybody was paying a little over asking pricing, a really good friend of mine investor was looking for military homes, military personnel areas. And the reason for that is, you know, a lot of these guys traveled from state to state they because of training or you know, where they’re being relocated to. And so what you discovered is that most of them needed to help right away. And so they were willing to pay that five to 15%, over asking price. Well, a few years have gone out, now they’re being relocated, or they’re being deployed somewhere, and they need to sell.
But to your point, Chris, the equity is not there, because of the fact that they paid over asking price, right. And so we’re starting to see a lot of people do creative stuff with the military folks. Because again, they’re they’re not trying to break even, right, while they’re out and about, they rely on professionals like you guys to fill in that void, make enough brandy had that tenant, cash flowing, and then over a period of a year or two, when the equity is now there, you’re able to list that property on their behalf, and you’ve made and sacrificing a profit, you know, it’s my understanding that VA loans are assumable have salutely. So one of the filters you can drop for him. So if you guys want to put your VA loans, we got it covered?
Chris Bounds 08:52
Yeah, there’s really a massive opportunity right now with the government created this window of basically two years or 18 months. But if you want to go back, and even up to 4% interest rates, the last three or four years. So you’ve got between three and four, three and four and a half percent interest rates, that debt is gold. Because if you can control that debt, and in by control, I mean, we, whether you’re doing some type of creative lease option, or owners finance, subject to subject to being the big one. Yeah, a loan assumption, that gives you a ton of value, because you can do things with that property that you just cannot do with a 7% mortgage unless you want to put 50% down payment just doesn’t work.
Burton Alicando 09:43
Yeah, you know that on the head. And those are some filters of ours. You can search by interest rate, you can search by the loan type. Chris gave you guys some really good hints. You didn’t catch on to that. But yeah, I mean, identifying those owners of low interest rates with assumable loans. Control that And cash flows. Cash is going to flow in everybody’s pocket. At the end of the day the owner is going to cash flow, you’re going to be able to make your profit and you’re going to make someone happy because they’re going to be able to afford a property that they may not have afford traditionally with the bank. So it all to me it’s a win win win situation at the end of the day. 100%