As more and more people start to hear and learn about creative finance real estate, there are still a lot of misconceptions that are thrown out.
“Creative financing is illegal!”
“You’re hurting the seller!”
“It takes a lot of money to get started.”
Guys, I hear these all the time and the reason they’re misconceptions is because people aren’t aware of what creative financing is, and how it can make a difference for buyers and sellers.
So what are the top misconceptions that people have about creative finance?
Top 3 Creative Finance Misconceptions
1. Creative Financing is Illegal
I hear this one all the time and this is probably the most common.
You’d be surprised at how many people, especially those in real estate, who have never heard of creative financing, subject to, seller finance, etc.
First – creative financing is absolutely legal.
And I’ve talked about the paperwork involved, the people you need to talk to – which includes lawyers – and how to ensure that you have the right paperwork to make sure that everyone involved is protected.
2. You’re Hurting the Seller
“Creative financing takes advantage of the seller!”
After the first misconception, this is the one where we’re hurting or taking advantage of the seller. If you’ve been on my YouTube channel or have heard the live calls I have with my students, you’ll hear firsthand how we’re trying to help the seller.
Sometimes a seller does not have the luxury of waiting for their home to be listed on MLS or have the time or resources to wait while their home sits on the market for months or years on end.
I’ve worked with a lot of sellers in unique situations beyond their control:
One seller bought a house and ended up finding a job outside of the state
Another seller bought a property only for their spouse to die a month later
Lastly, one seller was planning an out of state move and, unfortunately, ran into a wholesaler that was unable to sell her home, literally days before her move.
It’s these types of situations where creative financing is a help, not a hindrance. In these situations, a seller simply can’t wait around for an agent to sell their house.
They need it sold now.
And in these cases, we were not only able to buy these properties from the sellers, but do it in a timely manner, while also ensuring they were able to get the amount they asked for.
3. It Takes A Lot of Money to Get Started
While these first two misconceptions are usually on the part of the seller, this third one is actually more about people, who are considering investing in real estate.
The great thing about debunking this myth is that it does not take a lot of money to get started.
Now, if you know me, you know I am a big proponent of using other people’s money. And what I mean by that is using money from those who are comfortable and ready to loan out money.
Great examples of this are:
These are the two best ways of getting the amount of money you need to get your first property without having to use your own cash, without having to provide credentials, or providing your own credit.
Misconceptions come about because people just aren’t aware of the thing they’re against. It’s a normal thing to question and it’s also normal to provide the information to answer those questions.