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6 Creative Ways to Afford a Home

1. Investigate local, state, and national down payment assistance programs. These programs give qualified applicants loans or grants to cover all or part of your required down payment. National programs include the Nehemiah program, www.getdownpayment.com, and the American Dream Down Payment Fund from the Department of Housing and Urban Development, www.hud.gov.

2. Explore seller financing. In some cases, sellers may be willing to finance all or part of the purchase price of the home and let you repay them gradually, just as you would do with a mortgage.

3. Consider a shared-appreciation or shared-equity arrangement. Under this arrangement, your family, friends, or even a third-party may buy a portion of the home and share in any appreciation when the home is sold. The owner/occupant usually pays the mortgage, property taxes, and maintenance costs, but all the investors’ names are usually on the mortgage. Companies are available that can help you find such an investor, if your family can t participate.

4. Ask your family for help. Perhaps a family member will loan you money for the down payment or act as a co-signer for the mortgage. Lenders often like to have a co-signer if you have little credit history.

5. Lease with the option to buy. Renting the home for a year or more will give you the chance to save more toward your down payment. And in many cases, owners will apply some of the rental amount toward the purchase price. You usually have to pay a small, nonrefundable option fee to the owner.

6. Consider a short-term second mortgage. If you can qualify for a short-term second mortgage, this would give you money to make a larger down payment. This may be possible if you re in good financial standing, with a strong income and little other debt.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

How to Structure the Deal to Share the Profit Fairly

This is one of the most difficult places where syndicators get burned. Many syndicators, that I see, structure their deal with a 50/50 back-end. That means that the syndicator does all the work, the investor puts up all the money, and when the property sells several years into the future, they split whatever the upside is 50/50.

Some syndicators take tiny fees along the way; but for the most part, a structure where you’re taking a large back-end but no money upfront, or little money upfront, is destined to disaster, because it’s very common that the syndicator will have a hard time getting into the long run. If the syndication that one does is just for a few friends to do a deal, then there is no harm and no foul in structuring this type of relationship. However, if the syndicator wants to get into the long run and wants to be in the business for an extended period of time, then the syndicator needs to realize cash flow throughout the life of the property. Imagine if you had one deal that was a 50/50 back-end split, but no money upfront and along the way.

That wouldn’t be so bad. However, would you be able to do the same deal for 20 properties? Certainly, you would not. Twenty Deals would require the implementation of a sophisticated property management operation, a maintenance operation, a mortgage operation, and a real estate brokerage operation.

The successful long-run syndicator will establish these programs and these business entities, and will charge the syndication for it. The syndication business is a great business, but it has to be run like a business. Therefore, all of the deals that I teach individuals how to structure have a front-end, an ongoing operations component, and a back-end participation. I always encourage the smaller back-end in exchange for more money in the front and in the middle.

Joel began his career as a CPA with the prestigious firm of Price Waterhouse. where he immersed himself in the real estate syndication business. After reviewing hundreds of partnership agreements and preparing as many tax returns, he left Price Waterhouse in 1986 to start his own syndication firm, raising several million dollars in three short years. By 1990, Joel had built a property management firm of more than 40 employees with a portfolio exceeding $100 million. Joel continues to syndicate real estate and other assets, as well as counseling other promoters on successful syndication strategies. He is also involved in film financing and invests in early stage companies and other deals. For more information about Joel Block and his upcoming seminar, visit his site at http://syndicatefast.com/

Author: Joel G. Block
Article Source: EzineArticles.com

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