Jeff Vasishta

I'm sure we can all relay many recent horror stories of trying to get loans closed. How about this recent jewel? Buyer has a 740+ credit score, putting 20% down going full doc. She was divorced 8 years ago. Bank asks for divorce decree. Then asks for ex-husband's financial info and property deeds, Ex husband and wife haven't spoken in years and in live in different parts of the country. In the end it all got too much for the buyer who didn't want to go through the hassle and walked away.

Underwriting has basically become the black hole of the real estate world. You can never be sure if you'll come out of the other side. Thus buyers, realtors, wholesalers have to become inventive if you want to get deals closed. Five of the winning strategies of late I've employed or have seen employed of have been:

1) Rent to own - it may mean there won't be a pay day for 12 months but if the tenant and future owner leaves a sizeable option payment and is safe bet for an FHA loan in 12 months, at least the seller won't be hit with the mortgage payments every month. Also it's a great way for investors to make cash in 12-24 month cycles. I've done a few of these and it's a win win. The tenant gets the house. The seller sells but what's really great is that when a third party investor purchases the house correctly at a bargain basement price, he can sell at retail in 12 months and make a killing.

2) Seller financing - Let the seller become the bank. Not a great strategy for the seller if they want all their cash at once but could be a steady source of income for the seller for a fixed period of time ie 1-10 years. This can be especially advantageous to the buyer if the seller is willing to engage in a direct principle reduction plan which would allow less interest and more principle payments.

3) Selling a note - There are a lot of investors out there who are buying discounted noted from banks. Many people have made a good living from this by acting as the middle man between the seller of the property, the potential buyer and the investor/note holder.

4) Subject To's - These have increased in popularity of late. The easy way to explain this is to compare it to "subletting" the loan from the bank with the existing owner still on the scene but happy to be out of the picture with you agreeing to take over the property for a fixed price and make the mortgage payments. It's then a simple case of renting out the property, generating the income and paying down the note. Works well for investors and sellers that don't want to be bothered anymore but can't sell.

5) Private lenders. No end of private sources of money that will allow you to buy properties all cash and make payments as you would do to a bank - usually with a better amortization schedule. By the way have you tried looking for investment groups on Facebook & MySpace? Overseas investors aren't afraisd to take advantage of the credit crisis in the US, either.

There are many other ways to make deals happen. The credit crunch has forced us all to be more creative which, though it's hurt us in the short term is good for our longevity in this business. If we find ways to buy and sell real estate without the unscrupulous practices of the banks, outrageous closing costs, points and amortization schedules and now ridiculous underwriting guidelines etc it can only be a good thing for our financial independence.