Title Insurance Trends by Vincent Hoss

15 Top Creative Financing RE Investment Terms

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15 Important Creative Financing & Real Estate Investment Terms

1. Double Closing: A real estate transaction where a property is purchased and sold simultaneously or within a short time frame. The investor typically buys and immediately sells to another buyer, often without using their own money.

2. Assignment of Contract: A strategy where a real estate investor enters into a purchase agreement for a property and then sells or "assigns" their right to buy that property to another investor for a fee, without actually buying the property themselves.

3. Wholesaling: A real estate strategy where an investor finds a property under market value, puts it under contract, and then sells the contract to another buyer (usually another investor) for a profit.

4. Fix and Flip: An investment strategy where an investor buys a property, renovates it, and then sells it for a profit.

5. Subject-To: A method of acquiring a property where the buyer takes over the seller's existing mortgage payments, but the loan remains in the seller’s name.

6. Lease Option: A contract in which a tenant leases a property with the option to buy it after a specific period. Often used by investors to control properties without immediate purchase.

7. Owner Financing (Seller Financing): A deal where the seller acts as the lender, financing the purchase for the buyer, often with a promissory note and mortgage or deed of trust.

8. Rent-to-Own: An agreement where the tenant has the option to purchase the property after renting it for a specific period, usually with a portion of the rent applied toward the purchase.

9. BRRRR Method (Buy, Rehab, Rent, Refinance, Repeat): A real estate investment strategy where an investor buys a property, renovates it, rents it out, refinances to pull out equity, and then repeats the process to acquire more properties.

10. Equity: The difference between the value of a property and the amount owed on any liens or mortgages. Investors often look for properties with strong equity positions for leverage.

11. Hard Money Loan: A short-term loan used primarily by investors, backed by the property itself rather than the borrower’s credit. These loans often come with higher interest rates but are faster to obtain.

12. Private Money Loan: A loan from a private individual or company (rather than a traditional lender like a bank), often used by real estate investors for short-term funding.

13. Transactional Funding: A short-term loan used for double closings, where the loan covers the purchase of a property just long enough for the investor to resell it.

14. Option Agreement: A contract that gives the buyer or investor the right (but not the obligation) to purchase a property at a future date for a predetermined price.

15. Escrow Holdback: A portion of the buyer’s funds held by the title company to cover future repairs or other issues that need to be addressed after closing.

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NOTE: This website is for informational purposes only. Please verify any title questions with a licensed real estate professional or title clerk. Every state has different rules.

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