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 .