investors. Investors should explore opportunities for working creative deals with lenders in their own areas. The next period of time will be marked with increased hard-money flexibilities that could lead to win/win deals for everyone involved.

Of special interest also are the R.E.O.’s – “Real Estate Owned” properties that the lending institutions have had to take back through foreclosure and now want to get rid of. Foreclosure activity increases during tight-money times, and investors should cultivate relationships with lenders who might be very anxious to sell R.E.O.’s to them on soft terms.

Recently in Freemont, California, one buyer used the program to generate $15,000 toward the down payment on a condo. The existing FNMA first at $41,000 was refinanced at $56,000, with the excess proceeds going to the seller. The new interest rate was 12.25%, far below market levels at the time.

Technique No. 38 Pulling Cash Out of Buildings You Own But Don’t Want To Sell

Many variations in the basic approach of dealing creatively with holders of underlying mortgages are possible. Here is one other example of how a creative investor might pull investment funds out of a property without actually selling it. Let’s suppose that a private party holds a mortgage against a property our investor wants to keep. He needs to raise investment capital but a refinance of the property would not net a large amount of cash because most of the proceeds, let’s suppose, would go to pay off the existing private mortgage. What can he do? Perhaps the private mortgage would agree to share the proceeds of the new loan with the investor and take back the balance in the form of a new second mortgage against the property. The investor may have to sweeten the deal (perhaps in the form of a higher interest rate, higher monthly payments, or a shorter pay out period), but at least he gets to keep his property and achieve his goal of raising capital.

Technique No. 39 Making A Partner of the Holder of an Underlying Mortgage

What other ways are there to induce a private mortgage-holder to cooperate in creative arrangements such as moving the mortgage? One could offer to give the party one half interest in the property if he would release his mortgage so that a refinance could take place. Out