REI WEALTH MONTHLY Issue 36 (The Best of REI Wealth Monthly) | Page 11

Creative Real Estate Financing and Acquisition Strategy # 1

CREATIVE REAL ESTATE FINANCING AND ACQUISITION 101 MATT THERIAULT

you should not restrict yourself to any one strategy in any one situation

Equity Sharing

• A / K / A: Joint Venture, Partnership, Membership, Syndication, Shareholding, among other terms.

• Often Appropriate When: You have friends, family or organizations with capital available for investing in real estate and they don’ t particularly want to dirty their hands with rehabbing or leasing.

• When to Avoid: Avoid Equity Sharing with the Seller when dealing with the Seller’ s personal residence. If you must share equity with the Seller in this situation, word it in your agreement as deferred interest as opposed to equity.

Creative Real Estate Financing and Acquisition Strategy # 2

Option

• Often Appropriate When: You may not want to take title to the property to avoid liability. For example, the market has fallen and you anticipate it to come back in the near future. Maybe you anticipate a zoning change or change in use. Perhaps there’ s good value in the property but negative legal issues attached to it. Or, maybe you anticipate some environmental issues with the property.

• When to Avoid: Avoid spending a large amount of money for the option premium since it’ s almost always nonrefundable.

Creative Real Estate Financing and Acquisition Strategy # 3

Option with a Lease

• A / K / A: Lease Option, Rent­to­Own

• Often Appropriate When: Seller is motivated to act quickly. Seller wants to maintain the tax advantages that accompany the property. Seller wants to keep the property in his / her asset column.

• When to Avoid: Avoid combining the Option and Lease into one Agreement. Avoid leasing back to the original“ owner occupant” Seller.