Creative Real Estate Down Payments Conventional wisdom is that you can buy a piece of real estate only with a cash down payment. However, that conventional wisdom is wrong! You can use almost anything as a down payment to buy real estate. I, and other people I know, have used countless items of personal and real property as a down payment on real estate. As a seller of property, I have also gladly accepted items of personal and real property as a down payment. These items as down payments were the lubricant that made a transaction possible which otherwise would not have closed. The definition of down payment is "the part of the purchase price paid in cash up front, reducing the amount of the loan or mortgage." This book explores the how to of a number of different strategies to use creative down payments. What could you give or accept as a down payment on real estate? Examples include: • Real Property: Houses, Condos, Apartments, Commercial Buildings, Commercial Land, Residential Land, Recreational Land, Dock Slips • Building Supplies: Lumber, Carpet, Plumbing, Lighting • Financial Instruments: Stocks, Bonds, Promissory Notes, Mortgages, • Professional Services: Legal Fees, Accounting Fees, Tax Advice, Plumbing Services, Home Improvements, Consulting Fees • Trade Credits: Advertising Credits, Building Supply Credits, Hotel Credits, Rent Credits, Travel Credits • Other Personal Property: Boats, Cars, Recreational Vehicles, Artwork, Jewelry, Gemstones • Anything else one person has that is seen as valuable and beneficial by the other party accepting the down payment The possible variations are endless. Often, more than one type of down payment can be combined in a transaction, such as a boat, a boat trailer, a truck to pull the boat, or even a building to store the boat in during the winter. In this book, we explore not only what can be used as a down payment, but also how various strategies might be employed. The strategies presented do not begin to encompass the available possibilities. That will be up to you to discover for yourself in your own transactions and in working with others who have experience. Here are the strategies we will be exploring: • House as Down Payment • Land as Down Payment • Professional Services as a Down Payment • Down Payment Equals Free and Clear Property • Apply the Down Payment to the Monthly Debt Service • Additional Collateral for Down Payment • Borrow a Property as Collateral for Loan • Deposit Money to Obtain a Loan Borrow a Certificate of Deposit to Obtain a Loan
