With creative real estate investing, you can make money from property in ways very different from the conventional routine of taking out a mortgage to buy a house and then selling it when you get a fair price for it.
The most important thing to note about creative real estate investing is that it generally doesn’t have negative connotations. One of the main examples of this type of investment is an option. This works identically to options used for less tangible financial assets like stocks.
When it comes to an option, there is the involvement of an agent and the property owner. As the owner, you sell the right to buy a home on or before the closing date at a fixed price. The buyer of such an option would wait for there to be an increase in market prices before the cut-off date arrives, giving him the opportunity to exercise the option and then sell the house instantly for a profit. If you are the seller of the option, you risk missing out on a higher price.
On the other side of the coin, wholesale is all about buying three or four properties at a time and then selling them once market conditions are in your favor. For this purpose, you may need to get involved in the massive purchase of houses that the financial institution has achieved through foreclosure. After you buy it in bulk, you have to sell these houses individually at a low price. In such a scenario, you will find that the individual sales price will be much less than the current market value. As a wholesaler, your benefit will come from the fact that the financial institution will have approved an even lower price to give discounts for bulk purchases.
Another common source of creative real estate investment is tax bonds. The whole concept is based on the fact that a county government has the power to automatically obtain an interest in a property, widely considered a lien, if the property owner is unable to pay property taxes on time. Number of counties will sell such links to investors. From that point on, the investor is entitled to the money from the outstanding taxes in addition to the interest, along with the possibility that the owner may not be able to pay.