If you’re looking to invest in condos but worried about financing, you’ll be glad to know there are creative ways to make it happen. After listening to Linda Baumgarten’s latest podcast, I learned a lot about how to find the money to buy condominiums—even if you don’t have much of your own cash. Linda, a seasoned real estate investor and expert in condo investing, shared her top strategies for creative financing and alternative funding sources. Here’s what I took away from the conversation.
by Kim Tucker
Creative Financing: The Basics
Linda started by talking about creative financing, which allows you to buy properties without using your own money. The idea is to work out deals that benefit everyone: you, the seller, and sometimes the tenant. Creative financing doesn’t mean using traditional loans. Instead, you tap into the value of the property and explore other options.
According to Linda, most of the best deals come from sellers who are facing some kind of problem. As a real estate investor, your job is to solve that problem while structuring a win-win transaction.
Owner Financing
One of Linda’s favorite methods is owner financing, which allows you to buy directly from the seller without going through a bank. In many cases, you don’t need any of your own money, and your credit score doesn’t matter. You can often negotiate terms like lower interest rates or monthly payments. This method works well in a fast-moving market where sellers want to close deals quickly without the hassle of appraisals or repairs.
Linda shared a recent deal where she put a condo under contract and closed in just 10 days. The seller didn’t have to make any repairs, and Linda didn’t need approval from a bank. Owner financing lets you be flexible and get creative with the terms.
Lease Options
Another strategy Linda loves is the lease option. This is a two-part deal where you sign a rental lease and also get an option to buy the property later. You don’t have to buy if you don’t want to, but it gives you time to “test drive” the property, neighborhood, or market conditions before committing.
Lease options can also be helpful in markets where prices are rising. Buyers can lock in today’s price and buy later, while sellers can secure a buyer without waiting for the perfect offer. It’s a flexible way to start earning rental income while keeping your future options open.
Private Money and IRA Loans
Linda also talked about private money loans from individuals, rather than banks or lenders. People with cash in a self-directed IRA or 401(k) can loan that money to you. This allows you to borrow without paying the high fees and points you’d typically see with hard money lenders.
Linda prefers private money because it’s easier to negotiate terms like interest rates or when payments start. For example, you could set up the loan so you don’t have to make payments for the first six months, giving you time to rehab the property and get it rented.
Traditional Mortgages You Should Know
While creative financing is great, Linda reminded us that traditional mortgages shouldn’t be overlooked. Mortgages backed by the FHA, VA, or even the USDA offer options for condos. She shared that even if a condo complex isn’t FHA-approved, you might still be able to get a loan for an individual unit.
VA loans are particularly helpful if the condo complex allows rentals. Since military members may be called to duty and need to rent out their homes, this is an important feature to check.
Case Study: First Deal Success
Linda shared a personal story about her first condo deal. She bought a unit for $29,000 with a line of credit from her home. The condo required minimal work, and she rented it out, earning $5,400 in cash flow over 18 months. When she sold it for $55,000, she walked away with a $36,000 profit—all without using any of her own money.
Case Study: Condo Wholesaling
Another example Linda shared was about wholesaling condos. In one deal, she put a condo under contract for $45,000 and then found a cash buyer willing to pay $55,000. She made $10,000 in profit by assigning the contract, and didn’t need to use any of her own cash. Wholesaling is a quick and easy way to finance deals when you don’t want to hold on to the property long-term.
Using Credit Cards for Rehab
Linda also discussed using credit cards to fund rehab projects. While this might sound risky, it can be an effective strategy if managed well. She recommended using commercial credit cards so they don’t impact your personal credit score. In one of her deals, she used a credit card to pay for condo repairs and then sold the property quickly, paying off the balance right away.
Keep Learning and Find Your Niche
You don’t need a huge pile of cash or perfect credit to invest in condos. By using creative financing like owner financing, lease options, private money loans, or even traditional mortgages, you can get into the condo market without a lot of upfront capital. The key is being flexible and finding the right financing strategy for each deal.
If you’re interested in learning more about creative ways to fund your real estate investments, Linda Baumgarten will be teaching a master class at MAREI on October 26th. This is a great chance to dive deeper into her methods and find the right financing strategy for you.
