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14 Creative Real Estate Financing Techniques to Fund Your Next Deal


With inflation soaring at levels not seen in decades, people are looking for ways to invest in assets that protect against inflation.

Assets such as real estate.

But real estate investing can be expensive. Rental properties can cost hundreds of thousands. Of course, you can take out an investment property loan, but you still need the 15-30% down payment.

If you cannot fund the project, you’re probably searching for some creative real estate financing ideas.

This guide will explain creative real estate financing and how you can do more deals by using many different methods to invest in real estate. 

What is creative real estate financing?

Creative real estate financing is any type that falls outside traditional methods like banks, credit unions, and online lenders. 

Typically, when people think of creative financing, they think of seller financing, private money lending, or lease options. But there are many other types of creative financing as well.  

The key is to think outside the box and be willing to try new things. By doing so, you’ll have access to more opportunities and will be able to do more deals.

14 Creative Real Estate Financing Techniques

The following creative financing options are a great place to start:

  1. Subject to
  2. Seller finance
  3. Morby method
  4. Cash-out refinance
  5. Hard money
  6. Private money
  7. STABBL Loans
  8. Installment Contracts
  9. Business Credit Lines
  10. Home Equity Loan
  11. Cross Collateralization
  12. Self-directed IRA
  13. BRRRR Method
  14. Crowdfunding

To give you real-life creative financing strategies that real estate investors use to do more deals, we spoke with Pace Morby, the king of “sub to” deals and creative financing. 

As he said, “You can double or triple your deal flow without increasing your lead flow by just being more creative.” And also: “I never once ran into a deal I couldn’t structure to be a win-win for myself and the seller by utilizing creative finance.”

Below we’ve compiled many of the strategies he shared with us and some tactics other investors use. 

Here they are!

1. Subject To

A subject-to-deal is when you buy a property “subject to” the current mortgage. In other words, you take over the payments on the seller’s mortgage without getting a new mortgage. 

And the seller doesn’t need to have a lot of equity.

That’s why this is such a valuable strategy — it can save sellers from foreclosure and immediately gives you a cash-flowing asset. 

You might not make a ton of money today like you would if you wholesaled a high-equity property… but you’ll be building wealth over the long term. 

2. Seller Finance 

Seller financing is when the seller of a property provides financing to the buyer. 

Seller financing can be a great way to buy a property without going through a bank. And it’s perfect for deals where the seller wants above-market value for their property. 

Agree to pay their price, but with no interest, and all your payments go directly to the principal. This is a huge win for you and a great way to nab deals other investors shy away from. 

Pace Morby points out, “Wealth is created from cash-flow and longevity… so we make a ton of money from taking properties and putting them into a cash-flow situation.”

That’s what this is all about. 

You might be paying a seller over time a higher price than the property is worth… but you’re still building equity and wealth over the long term. 

3. Morby Method

This creative real estate financing method was created and coined by Pace Morby. It’s so good we couldn’t include it. 

It builds upon the previous method: seller financing.

A common hurdle you’ll run into if you start buying properties via seller financing is that the seller will want a large down payment. Unless you’ve got deep pockets, you don’t have the ability to pay every seller a big down payment. 

This method suggests that you agree to give the seller a large down payment, then you go to an easy loan site (such as myinvestorloans.com) to finance 70% of the purchase price. You bring that 70% to the seller, and then the seller finances the remaining balance.

Now that you’ve purchased a property without your own money on the line, the seller gets their down payment. 

4. Cash-Out Refinance

A cash-out refinance is a traditional mortgage loan where you take out a new loan for more than what you owe on your existing loan. 

The difference between the two loans is given to you in cash. This cash can be used for anything, including investing in real estate. 

A cash-out refinance can be a good option if you have home equity and need cash for a down payment on another investment property. 

This is commonly used in the BRRRR method. 

5. Hard Money

A hard money loan is a type of financing backed by the property’s value, not the borrower’s creditworthiness. Hard money loans are typically short-term (12 months or less) and have higher interest rates than traditional loans. 

Hard money loans are a good option for investors looking to buy properties quickly and don’t have time to go through the traditional lending process. 

6. Private Money

Private money lending is when you borrow money from a private individual or group of individuals. 

This differs from traditional bank financing because the loan is not from a financial institution. 

Instead, it’s coming from people with money to invest. 

Private money lenders can be family and friends, but they can also be people you meet through your network of other investors. 

Private companies also specialize in lending money to real estate investors.  

If you’re looking for private money, a good start is by going to local real estate investing meetups and asking if anyone knows of any private lenders in your area. 

7. STABBL Loans 

STABBL Loans (short-term asset-backed bridge loans) are a new type of loan that is becoming popular among real estate investors. STABBL loans are short-term, interest-only loans typically used for fix-and-flip projects. 

The biggest benefit of STABBL loans is that they’re easy to qualify for. There is no minimum credit score requirement, and you don’t need to have a lot of experience. 

Another benefit is that STABBL loans are interest-only, which means you only need to make payments on the interest for the first 6-12 months. This frees up cash so you can put more money into your rehab project. 

If you’re looking for a short-term loan for your next fix-and-flip project, STABBL loans are a great option. 

8. Installment Contracts

An installment contract, also known as a land contract, is a type of financing in which the buyer makes payments directly to the seller instead of to a bank or other lender. 

With an installment contract, the seller usually agrees to finance the property for the buyer. The buyer then makes monthly payments to the seller until the purchase price is paid in full. 

Once the purchase price is paid, the buyer owns the property outright. 

Installment contracts are popular among land real estate investors. They’ll often create a promissory note and sell lots of land by payments, and if the buyer defaults, they get the property back. 

9. Business Credit Lines

You may not think of business credit lines as a form of real estate financing, but it can be a useful tool for investors. 

A business credit line is a loan that gives you access to a certain amount of money you can use as needed. You only pay interest on the portion of the loan that you use, and you can typically borrow the money again once you’ve paid it back (much like a credit card). 

Business credit lines can be a good option for real estate investors because they give you access to cash when you need it without having to go through the lengthy and complicated process of applying for a traditional loan. 

10. Home Equity Loan

A home equity loan is a second mortgage on your primary residence.

You can usually borrow up to 80% of the value of your home minus any outstanding debts. So if your home is worth $100,000 and you have $50,000 in outstanding debt, you could potentially borrow up to $30,000.  

This is useful for investors because it’s a way to access cash without selling your investment property. 

You can use the money from a home equity loan for anything you want, including investing in more real estate. 

Just be aware that if you default on your loan, your lender could foreclose on your primary residence. So only use this method if you’re confident you can make your payments. 

11. Cross Collateralization

Cross collateralization is a type of creative financing where you use more than one property as collateral for a loan. 

For example, let’s say you have a portfolio of five properties that are each worth $100,000. You could use all five properties as collateral for a $500,000 loan. 

The advantage of cross-collateralization is that you can get a larger loan than you could with just one property — or you can use your assets (rather than cash) to secure a hefty loan. 

The downside is that if you default on the loan, the lender could foreclose on all of your properties. So it’s important only to use this strategy if you’re confident in your ability to make the payments. 

12. Self-directed IRA

A self-directed IRA is a retirement account that allows you to invest in alternative investments, including real estate. 

With a self-directed IRA, you can use pre-tax dollars to buy investment properties and grow your wealth tax-deferred or tax-free. 

This is useful for investors who want to buy properties (and have a retirement account) but don’t have the cash on hand to do so. 

13. BRRRR Method

The BRRRR method is a popular real estate investing strategy for “buy, rehab, rent, refinance, and repeat.” 

Here’s how it works:

  1. You find a property that you want to buy.
  2. You put down a small deposit (usually 10-20%) and get a loan for the remainder.
  3. You renovate the property to increase its value.
  4. You rent out the property and use the income to pay off the loan.
  5. Once the loan is paid off, you refinance the property and pull out cash to buy your next investment.
  6. Rinse and repeat!

The BRRRR method is a great way to quickly build up your rental portfolio with minimal cash investment from your pocket. And, once you’ve refinanced, you can use the cash from the refinance to buy more properties and continue growing your business. 

14. Crowdfunding

Crowdfunding is financing that allows you to raise money from a large group of people. 

Many crowdfunding platforms, like Kickstarter, allow you to raise money for virtually any business, even rehabbing or buying rental properties. 

The great thing about crowdfunding is that it allows you to tap into a large pool of potential investors, many of whom you wouldn’t have otherwise had access to.  

Can you buy a house without a loan? 

Yes, you can buy a house without a loan if you have the cash to pay for it outright or use one of the other creative financing methods. 

You don’t need a loan if you have the cash to pay for a property outright. You can simply buy the property and own it free and clear. 

If you don’t have the cash to pay for a property outright, then you can use one of the other methods of creative financing, such as seller financing, private money lending, or lease options. 

Can you buy a house with bad credit and/or no money down?

The short answer is yes; you can buy a house with bad credit and no money down. But you’ll have to be creative and likely avoid going the traditional route. 

One option is to find a seller willing to finance the purchase of the property. Another option is to use a private money lender. These individuals are willing to loan you money for your real estate investment. 

You can also look into lease options and rent-to-own agreements. These are creative ways to buy a property with bad credit and no money down. 

Ultimately, it will be up to you to find a creative way to finance your real estate investment. But know that it is possible to do so even if you have bad credit and no money down.

Final Summary

Creative financing is a great way to buy property when you don’t have the traditional means. 

There are many different types of creative financing, such as seller financing, lease options, private money lending, and more. 

Each type of financing has its own set of pros and cons. The key is finding the type of financing that works for every deal your way. 

And remember, even if you have bad credit and no money down, there are still ways to finance your real estate investment. You just have to be creative!

Mike Blankenship

Michael is a freelance copywriter who helps startups build bigger, more sustainable businesses. He’s been mentioned on Forbes and Entrepreneur for his expertise as a writer, and he's written articles for SUCCESS, SmartBlogger, GetResponse, AdWeek, Jeff Bullas, and a whole slew of other publications. You can learn more about him at mikeblankenship.org or connect with him on Facebook.

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