New bee needing help with creative financing

My husband and I have read almost everthing we can get our hands on. But nothing that we have read actually spells out exactly how the financing will work and how to get the money to come from where they say it needs to come from. We are so confused!! :-[ please anyone, Everyone help. We do not have good credit and the lenders that we have experienced will only finance 90% with a 10% seller carry back (with a very large interest rate). and no money down. Please be very creative. Thanks from Oregon.

Have you considered lease optioning? This is what I am looking into, so you might find this helpful…

Thank you for responding so quickly.
We have considered the lease option. but we do not have a large payment to put down. usually they require a large down payment and also this would not build equity for future ventures. We are looking more in the direction of getting an LLC and buying our properties in one of those. Have you heard how this is done? I was thinking if we were able to get the credit that most banks make available to small businesses, we could use the LLC as the Hard money lender and adding that with the 90% from the other lender to get the first property With being able to put down the 5-10% ie the line of credit from the bank. Is this even possible? or even legal? :-\ Thanks from Oregon.

I wish I could help you with that one, but I am also a newbie. KEC seems to be one of the most knowledgeable posters on this board, maybe you could direct that question to him, he will no doubt have an answer for you. (IWINUWIN is his screen name)

Have had any luck so far? any deals that you are working on? I am really confused as to where to begin. Where did you start? Thanks from Oregon :-\

I am currently working on 2 lease options. In lieu of “option consideration” have you thought about offering a bit more on the purchase price? I couldn’t tell you if this the best thing to do, but this is what I will probably do to avoid coming out of my pocket with money I really don’t have right now. What about a promissory note? you could offer that too. Or take a lower percentage of rent credit in exchange for a lower down payment/option consideration. These are just some of the things I have been researching

So, at this point have you working with an agent? The folks that I have been trying seem to have no idea what I am trying to accomplish and I dont know enough to explain it all to them. So tell me more about how to do a lease option. Do I have to live in the house myself or can I get someone else in there. Do these houses have to be listed as a L/O? Thanks from Oregon.

There are numerous ways to use a lease option. The way I intend to do it is by getting a tenant in for the period of the lease option (36 months). After I buy the house at the end of the 36 month lease option, I will sell one and put the equity in my pocket and keep the other as a rental property. This is just one way. You can also do a “sandwich” lease, where you find a tenant who wants to lease option the house from you. That way you can charge higher than market rents, put the option money in your pocket, and have someone else pay down the mortgage, which will leave less for you to have to finance at the end of the option period. This may seem a but confusing right now, but just hang in there, once you start hearing the terms over and over, you will catch on. Another great way to start is by getting Carleton Sheets “No Money Down” course, which is only $9.95 for the first 30 days. I found it to be an excellent course to get the basics about investing.

Lease/Option is simply a lease(rental agreement) with an option to buy the home by a certain date for a preset amount. You can buy on a lease/option to live in the home yourself or you can do a sandwich lease/option where you buy the home on a lease/option and you sell that same home on a lease/option to your tenant buyer.

When buying on a lease/option try and give the seller your lease as the option consideration along with paying the first month’s rent. This way the seller feels he is actually getting something…and he is - the first month’s rent. - Your lease is the option consideration.

When you do a lease/option with the seller, you want to give the seller your lease as the option consideration or a small amount of cash if you have to. You then offer the house to your tenant/buyer for a greater amount of cash than you put out. This option fee is non-refundable. The second way you make money on a lease option is that you try and get less than market rents for your lease and you rent to your tenant buyer for a greater amount than your renatal payment with the seller. The third way is to charge a premium on the purchase price to your tenant/buyer greater than what you have agreed to purchase the home for.

if your doing a sandwich lease/option you want to get your tenant/buyer qualified to take the option and buy the house. If your Tenant/buyer does not take the option you can than purchase the house or walkaway (not take your option) to purchase it. If your tenant/buyer still wants to buy and can’t at this point in time-you could always ask the seller to extend the time.

sandwich lease option example:

Seller lease options to you and will accept a nonrefundable $1000 option fee and you agree on a purchase price of $100,000 in 24 month’s and your rent will be $650/month. You then Find a Tenant/buyer who will give you an option fee of $3,000, Their rent will be $750/month and their Purchase price will be $110,000.

So in effect if your Tenant/Buyer takes the option You will have made $2,000 on the Option consideration, $100/month Cash flow for 2 years, and $10,000 on the purchase price difference for a total of $14,400 over a 2 year period.

If your Tenant/Buyer fails to pay his rent - You are still obligated to do so as per your agreement with the seller.

You only want to do Lease/Options with Sellers who are not in financial trouble, otherwise they can mess up the title with IRS liens, judgements, etc. angainst the property. Theres risk in everything!

This description is in its simplest form and does not describe all the things that should be considered between you and the seller and you and your tenant/buyer regarding such things as maintenance, insurance, and a host of other things.

Hope this helps.


Is this legal? How can I sell or rent a property that is not mine to another person? Do the original owners need to know that this is happening? 2 years seem like a long time to keep the owners in the dark on what is going on with their property. Could this totally break the deal between myself and the sellers and the Buyers?

Please dont get me wrong.This sounds great and doable. :slight_smile: I just want to know how often this is actually done. Thanks in Oregon

It’s legal and is done every single day. In my opinion, the seller should know its being done and that you are responsible for whatever happens - not your tenant buyer. Sure this could break the deal between you and the seller. If it does - you are dealing with the wrong type of seller. You want to deal with sellers for example that have an immediate need to sell or stop the bleeding such as someone who has bought another house but has not sold his first house yet. Ouch - two mortgage payments. Maybe this person moved in his new home, a realtor tried to sell the first home and didn’t after a 6 month listing and the seller just decided to rent it out then. The Lease/Option or Lease/Purchase may be a good situation for them.


Thank you both for all of your help. I will think about this method and see if this way would be right for us as well.This way seems much easier then the first way. Where can I find the contracts for this type of deal?We have a “For Sale by Owner” store here is Oregon, Would I find them there or should I just buy some software to print out my own? or is there a web sight that has this contract? Thanks again from Oregon. :smiley:

The forms I use comes with the Carlton Sheets “No Money Down” program, he gives you a whole portfolio of forms. You might be able to go to the Professional Education Institute which sponsors the “No Money Down” course to see if you can download the forms.
Or, as an option, go to Carleton Sheets website, order the course, make copies, and then send it back within 30 days. The forms are excellent. Also, you can go to the link to your left and click on “Real Estate Forms” to see if they have a free one you can download.
Good luck :slight_smile:

You should check with a lawyer in your area and get state specific contracts.

Thanks for the idea! I think we will try this. I have ordered carlton sheets program and am expecting it in a few days. But… In the mean time, What scripting do you give to the real estate agent and seller to convience them to take your offer? and to keep referring their sellers to you? :slight_smile:

When you get the carlton sheets info, there are several examples that you can follow. you can learn these from either the tapes or the booklets…I found them to be very detailed, I think you will too.


I will study them well. Have you started doing lease options yet? :smiley:

I actually haven’t…I hope to have a tenant/buyer lined up for a property 1 June, I am very anxious to dive in head first. I have 2 sellers that I am working with right now, One is not familiar with the process of lease optioning, so she is a bit hesitant. I hope to have an answer from her in 2 weeks. The other is very motivated, but I am having difficulty getting the rent credit I am asking for. I hope to have a “go” or “no go” by the end of June.

In the meantime, I have stumbled onto another property that I have my eye on just in case either of these sellers fall through. All in All, I will be invested in SOMETHING no later than 30 June. I have committed to do just that, no matter what it takes.

Good for you! :smiley:
I hope that once we get the all the hens lined up we can just dive in as well. I have a few friends that are real estate agents, so hopfully they will be willing to flip me their reqs of sellers who have not sold. :smiley:
Thanks again for the great idea!
From Oregon! ;D

Okay! We have recieved the program and I have been listening and watching the tapes contantly. I want to know is there anyway to buy a preforclosed house without any of our own money and with bad credit .
Thanks From Oregon