Traditional Real Estate Investing Vs Creative Real Estate Investing – The Big Debate
The term creative real estate Investing is a bit misleading. Some people look at creative real estate investing strategies with suspicion as though it were a trick or scam of some kind but the truth is creative real estate investing is about finding out what the seller actually needs and providing solutions to true need – period. Where is the scam in doing this?The investor using creative strategies, looks at the sellers situation and try to make an offer based on seller’s needs. This is really the way it should be, because – both the seller and investor have needs and the goal of the investor during the negotiations process is to discover those needs.As a full time professional investor, I always go into negations with sellers asking myself this simple question: “WHAT DOES THE SELLER NEED”, honestly, I ask myself this question about 20, 000 times to set the stage in my head.Normally, I really don’t care about what the seller wants – I only focus my attention 100% on what the seller need right now! If you do this you will close your deals seamlessly with no money down with fewer headaches. Just LISTEN, LISTEN AND LISTEN MORE, the seller will tell you what he/she needs. That’s it. In negotiations, I talk less and listen 98% to the seller.These are the differences:Advantages of Traditional Real Estate Investing
———————————————————————–1. Investors, who follow the path of traditional investing, buy investment property on the MLS using real estate agents.2. Investor has the ability to purchase a lot of properties quickly since they are paying CASH.3. Investor, may be able to leverage owner financing options with seller is the property is fully paid ( landlord)4. With traditional investing, investor can purchase at great discount at Auctions ( Cash is needed)5. Minimum real estate education is required by investor, since the investor is depending on agent to do the numbers. All the investor need to purchase a new property is to get a real estate agent and get CASH ready…Disadvantages of Traditional Real Estate Investing
—————————————————————————1. Money is always required to by investor to purchase property2. There is always a possibility of a bidding war3. Investor always have to apply for bank loan to close on deal4. Significant competitions (100s of other investors are looking at the same deals on the MLS)5. Investor need to look at 100s of houses to get a good deal to work on6. Negotiation process of property is NOT based on seller’s need but mostly PRICE of property.7. Investor has too much dependence on Agent to keep your business moving8. Investor takes on all the risk by purchasing the investment property up to 95% retail price.9. The ability to get good deals is dictated by market cycle ( Sellers, buyer and balance market) – business is not steadyAdvantages of Creative Real Estate Investing
————————————————————————-1. You are finding deals by marketing for motivated sellers; no real estate agent is involved.
2. No CASH / Credit to purchase investment property is required, investor have the options to use these strategies to take over property using:a. Seller finance or “subject to”
b. Lease option
c. Sandwich lease option
d. Short sale or pre-foreclosure
e. Wholesaling3. No competition with other investors, ONLY you and the seller know that the property is for sale.4. Low Risk, High Returns – in most cases investor is buying property 20-40% below market value5. This business approach is very steady, there are always people going through life changes irrespective of real estate market cycle – such as: divorce, death, upgrading, downsizing, job relocation) will continue to happen year after year.6. No need to qualify for a bank loan, earnest money is usually between $10 to $1000 down to the sellers7. Investor has the ability to generate cash flow on every deals – through assignment / wholesaleDisadvantages of Traditional Real Estate Investing
———————————————————————————–1. Your real estate education is the biggest cost, you need to get trained fast and right way.2. Possibility for ongoing cost – need a mentor to help you follow through and coaching3. You don’t know when the next deal is going to show up – sometimes it takes months, hence the need for consistent marketing to bring in leads month after month.My route is always creative real estate investing…