Creative financing describes any way outside of the traditional home-buying experience that you can buy or sell real estate. However, over the years the term has come to be used largely to indicate atypical types of sales agreements, such as when the seller agrees to set up a payment system with the buyer and finance it themselves (owner-financing), when the buyer takes over the mortgage payments but does not actually assume the mortgage (subject-to financing) or when the buyer pays rent for a period of time and then exercises the option to buy the house (lease-option financing).

All of these types of creative financing can make the difference for you as a real estate investor when you are dealing with tough housing markets and even tougher credit market regulations. Knowing how to use creative financing effectively can make the difference between your ability to thrive as a real estate investor in any market and your having to "take a break" until the market improves.

While a lot of creative financing savvy comes with experience, there are some key facets of this incredibly flexible strategy that you should be aware of no matter how many or how few deals you have done.

1. Creative financing can be tailored to fit the situation

Many people learn one way to do creative financing, then believe that their specific education reflects the only methodology possible. In reality, part of the beauty of creative financing is that you can adjust to fit the buyer's and seller's needs. For example, you might use part of the rent in a lease-option agreement to help the buyers build up a down payment.

2. Creative financing requires legal supervision

By nature, creative financing may not adhere strictly to standard procedure. This makes it crucially important that you have all documents and agreements reviewed to protect yourself as well as the seller.

3. Creative financing is a great promotional tool

The ability to find ways for people who want to own homes to get into them is a highly desirable trait in a home-finder. If you can help people get into or out of their homes more effectively than other agents (if you are an agent) or than agents in general (if you are not) then you have a built-in advantage over everyone else competing for the chance to buy or sell properties in your area.

Peter Vekselman has been successfully investing in real estate since 1996.  He has completed over 1200 real estate deals, owned a construction company, been a private lender, and owned a property management company.  Peter currently works with clients all over the US helping them achieve riches in real estate.

Peter Vekselman has been successfully investing in real estate since 1996. He has completed over 1200 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the US helping them achieve riches in real estate investing. For more information please visit www.CoachingByPeter.com.