The topic of today’s episode has been inspired by another question from a listener of the podcast. We’re looking at getting creative and thinking about unique solutions to a finance problem.
In the case of the listener, he wants to know my opinion on a tricky deal and how I would go about facilitating it. Let’s call this listener Brian, and the first question I would ask is if would be possible to bring someone else into the deal that has some cash they can bring to the table.
Brian only has a few thousand dollars at the moment, and that’s a bit of a constraint on what he can do, so maybe he can partner with someone who has capital but may be short on time.
To a realtor that is successful and has existing streams of income, they may be more willing to be flexible with the commission on the deal. So for Brian, he may need to find the right realtor to facilitate the kind of deal he is thinking about.
Another tip for Brian is to take the money that he’s saved up and set it aside as an emergency fund instead of pouring it into this deal. Depending on the state he lives in, the money in his 401(k) could be leveraged in a way that it actually could be used as collateral for a loan.
Essentially the lesson is that creative deals are definitely possible but you have to find the sellers and the agents that have the need for what you’re offering. In the end everyone wants to get paid, so if cash is the biggest issue to getting your deal done bringing on a capital partner is probably your best bet.
Another big point is to only focus on free and clear properties, forget anything that has existing debt because your going to be wasting your time chasing someone who’s dealing with an institutional lender that is not going to be interested in your creative deal making.
The biggest hurdle will probably come from trying to find a realtor that will do the deal for you. Most realtors are working for less than minimum wage and pretty much flat broke, if they don’t have the funds to cover the costs of the deal they are definitely not going to be able to wait for the money. Brian needs to find an realtor that is already an investor and has streams of income in place.
Spend some time getting to know some real estate agents and think about how to present your opportunity in a way that benefits them. Discover the challenges and goals they have, and then lay out how you can help them. There a lots of options, but the only way to make this kind of stuff happen is to get out there and talk to people while adding value to the community.