Creative Financing - Wraps - Seller Financing - Now More Than Ever, Here's Why

Investor · Member since 2024 · 181 posts · 63 votes

11mo

Quote from @Ken M.:

Did you know that if you buy a $400,000 property . . .

In a typically bank financing scenario you put down 20% or $80,000 and finance $320,000 for 30 years the Principal and Interest at 7% is $2,129 and over 30 years you pay $766,428 (the bank loves you)

BUT

if you take over a loan using a Wrap (Wrap To, it takes about $15,000 in costs) and take over the existing mortgage at 2.5% that was taken out 2 years ago your payment Principal and Interest is $1,264 ($865 a month less) and over the remaining 28 years pay $447,894 (you get to keep the difference)

That's a savings of $318,534 Three times a Year! For 5 years and you are RICH!

Who doesn’t want to do that!

Retire Early and move from CA to FL Uhaul will love you ;-)

When you are new, looking for lenders & considering Fix & Flip, BRRRR, or rental, as a buyer, I’d ask the owner/seller to be one of my private lenders with creative financing. This works in Southern California (CA), AZ, WA, and TX.

If done correctly it makes a ton of sense. As a note buyer we have seen 100s of these wrap notes where they did a lot of things wrong. Disclosures, underwriting, interest only, non-dodd-frank etc.. Then they also are not in a position to pay if the borrower defaults to ensure the underlying debt stays current. And if you incorrectly write the note, you could be hold to pay back the borrower all that they paid(including interest).

2 Reply

Ken M.
OP
Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
11mo
Quote from @Lauren Sanford:

Quote from @Ken M.:

Did you know that if you buy a $400,000 property . . .

In a typically bank financing scenario you put down 20% or $80,000 and finance $320,000 for 30 years the Principal and Interest at 7% is $2,129 and over 30 years you pay $766,428 (the bank loves you)

BUT

if you take over a loan using a Wrap (Wrap To, it takes about $15,000 in costs) and take over the existing mortgage at 2.5% that was taken out 2 years ago your payment Principal and Interest is $1,264 ($865 a month less) and over the remaining 28 years pay $447,894 (you get to keep the difference)

That's a savings of $318,534 Three times a Year! For 5 years and you are RICH!

Who doesn’t want to do that!

Retire Early and move from CA to FL Uhaul will love you ;-)
When you are new, looking for lenders & considering Fix & Flip, BRRRR, or rental, as a buyer, I’d ask the owner/seller to be one of my private lenders with creative financing. This works in Southern California (CA), AZ, WA, and TX.
If done correctly it makes a ton of sense. As a note buyer we have seen 100s of these wrap notes where they did a lot of things wrong. Disclosures, underwriting, interest only, non-dodd-frank etc.. Then they also are not in a position to pay if the borrower defaults to ensure the underlying debt stays current. And if you incorrectly write the note, you could be hold to pay back the borrower all that they paid(including interest).
And be sued. :-(
That's why we encourage being trained, which co-incidentally, we train on Creative Finance.
Now, when you buy notes, what are you looking for?

0 Reply
Lauren Sanford
Investor · Member since 2024 · 181 posts · 63 votes
11mo
Quote from @Ken M.:

Quote from @Lauren Sanford:

Quote from @Ken M.:

Did you know that if you buy a $400,000 property . . .

In a typically bank financing scenario you put down 20% or $80,000 and finance $320,000 for 30 years the Principal and Interest at 7% is $2,129 and over 30 years you pay $766,428 (the bank loves you)

BUT

if you take over a loan using a Wrap (Wrap To, it takes about $15,000 in costs) and take over the existing mortgage at 2.5% that was taken out 2 years ago your payment Principal and Interest is $1,264 ($865 a month less) and over the remaining 28 years pay $447,894 (you get to keep the difference)

That's a savings of $318,534 Three times a Year! For 5 years and you are RICH!

Who doesn’t want to do that!

Retire Early and move from CA to FL Uhaul will love you ;-)
When you are new, looking for lenders & considering Fix & Flip, BRRRR, or rental, as a buyer, I’d ask the owner/seller to be one of my private lenders with creative financing. This works in Southern California (CA), AZ, WA, and TX.
If done correctly it makes a ton of sense. As a note buyer we have seen 100s of these wrap notes where they did a lot of things wrong. Disclosures, underwriting, interest only, non-dodd-frank etc.. Then they also are not in a position to pay if the borrower defaults to ensure the underlying debt stays current. And if you incorrectly write the note, you could be hold to pay back the borrower all that they paid(including interest).
And be sued. :-(
That's why we encourage being trained, which co-incidentally, we train on Creative Finance.
Now, when you buy notes, what are you looking for?

We are looking for a bunch of items, (we have 14 on our helper guide). So it maybe best to get in contact with us privately and we can go over it. With our 15 years we see a lot of items that hurts the deal. Including Low Rates and Long terms.
0 Reply

John Clark

Member since 2018 · 1k+ posts · 1k+ votes

11mo

Quote from @Ken M.:

Did you know that if you buy a $400,000 property . . .

In a typically bank financing scenario you put down 20% or $80,000 and finance $320,000 for 30 years the Principal and Interest at 7% is $2,129 and over 30 years you pay $766,428 (the bank loves you)

BUT

if you take over a loan using a Wrap (Wrap To, it takes about $15,000 in costs) and take over the existing mortgage at 2.5% that was taken out 2 years ago your payment Principal and Interest is $1,264 ($865 a month less) and over the remaining 28 years pay $447,894 (you get to keep the difference)

That's a savings of $318,534 Three times a Year! For 5 years and you are RICH!

Who doesn’t want to do that!

Retire Early and move from CA to FL Uhaul will love you ;-)

When you are new, looking for lenders & considering Fix & Flip, BRRRR, or rental, as a buyer, I’d ask the owner/seller to be one of my private lenders with creative financing. This works in Southern California (CA), AZ, WA, and TX.

Tell us, Ken, is the buyer supposed to record his deed?

1 Reply

James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
11mo
Quote from @John Clark:

Quote from @Ken M.:

Did you know that if you buy a $400,000 property . . .

In a typically bank financing scenario you put down 20% or $80,000 and finance $320,000 for 30 years the Principal and Interest at 7% is $2,129 and over 30 years you pay $766,428 (the bank loves you)

BUT

if you take over a loan using a Wrap (Wrap To, it takes about $15,000 in costs) and take over the existing mortgage at 2.5% that was taken out 2 years ago your payment Principal and Interest is $1,264 ($865 a month less) and over the remaining 28 years pay $447,894 (you get to keep the difference)

That's a savings of $318,534 Three times a Year! For 5 years and you are RICH!

Who doesn’t want to do that!

Retire Early and move from CA to FL Uhaul will love you ;-)
When you are new, looking for lenders & considering Fix & Flip, BRRRR, or rental, as a buyer, I’d ask the owner/seller to be one of my private lenders with creative financing. This works in Southern California (CA), AZ, WA, and TX.
Tell us, Ken, is the buyer supposed to record his deed?

"Tell us, Ken, is the buyer supposed to record his deed?"

0 Reply
Ken M.
OP
Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
11mo
Quote from @James Hamling:

Quote from @John Clark:

Quote from @Ken M.:

Did you know that if you buy a $400,000 property . . .

In a typically bank financing scenario you put down 20% or $80,000 and finance $320,000 for 30 years the Principal and Interest at 7% is $2,129 and over 30 years you pay $766,428 (the bank loves you)

BUT

if you take over a loan using a Wrap (Wrap To, it takes about $15,000 in costs) and take over the existing mortgage at 2.5% that was taken out 2 years ago your payment Principal and Interest is $1,264 ($865 a month less) and over the remaining 28 years pay $447,894 (you get to keep the difference)

That's a savings of $318,534 Three times a Year! For 5 years and you are RICH!

Who doesn’t want to do that!

Retire Early and move from CA to FL Uhaul will love you ;-)
When you are new, looking for lenders & considering Fix & Flip, BRRRR, or rental, as a buyer, I’d ask the owner/seller to be one of my private lenders with creative financing. This works in Southern California (CA), AZ, WA, and TX.
Tell us, Ken, is the buyer supposed to record his deed?

"Tell us, Ken, is the buyer supposed to record his deed?"

Now, as I have always said, "when properly trained, an investor using Creative Finance, always records the Deed, Uses a Title Report, clears the items on Title, Uses Escrow, pays all back payments, pays any transfer taxes, brings the property taxes current, brings the HOA current, brings the electricity, water and lawn care current, writes a check to the seller for their equity (for whatever the agreement was), gives the seller a comfortable amount of time to locate a place to move to, takes the property "as is" and makes every payment in the correct amount, on time. And again, a PROFESSIONAL who has been PROPERLY TRAINED always records the Deed.

I think @Jay Hinrichs: said he did things that way when he did Creative Finance, and
@Don Konipol: said he did Creative Finance but it was typically commercial. Same set of rules though, you treat people with respect, get the deal in writing and make sure everybody is as happy as the situation will allow.

0 Reply
Ken M.
OP
Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
11mo
Quote from @John Clark:

Quote from @James Hamling:

Quote from @John Clark:

Quote from @Ken M.:

Did you know that if you buy a $400,000 property . . .

In a typically bank financing scenario you put down 20% or $80,000 and finance $320,000 for 30 years the Principal and Interest at 7% is $2,129 and over 30 years you pay $766,428 (the bank loves you)

BUT

if you take over a loan using a Wrap (Wrap To, it takes about $15,000 in costs) and take over the existing mortgage at 2.5% that was taken out 2 years ago your payment Principal and Interest is $1,264 ($865 a month less) and over the remaining 28 years pay $447,894 (you get to keep the difference)

That's a savings of $318,534 Three times a Year! For 5 years and you are RICH!

Who doesn’t want to do that!

Retire Early and move from CA to FL Uhaul will love you ;-)
When you are new, looking for lenders & considering Fix & Flip, BRRRR, or rental, as a buyer, I’d ask the owner/seller to be one of my private lenders with creative financing. This works in Southern California (CA), AZ, WA, and TX.
Tell us, Ken, is the buyer supposed to record his deed?
Your Question @John Clark: "Tell us, Ken, is the buyer supposed to record his deed?"

Your question @John Clark "Tell us, Ken, is the buyer supposed to record his deed?""
Why yes, @John Clark: "Professionals Always record the deed. It would be foolish not to. Any good trainer teaches that.

0 Reply
John Clark
Member since 2018 · 1k+ posts · 1k+ votes
11mo
Quote from @Ken M.:

Quote from @John Clark:

Quote from @James Hamling:

Quote from @John Clark:

Quote from @Ken M.:

Did you know that if you buy a $400,000 property . . .

In a typically bank financing scenario you put down 20% or $80,000 and finance $320,000 for 30 years the Principal and Interest at 7% is $2,129 and over 30 years you pay $766,428 (the bank loves you)

BUT

if you take over a loan using a Wrap (Wrap To, it takes about $15,000 in costs) and take over the existing mortgage at 2.5% that was taken out 2 years ago your payment Principal and Interest is $1,264 ($865 a month less) and over the remaining 28 years pay $447,894 (you get to keep the difference)

That's a savings of $318,534 Three times a Year! For 5 years and you are RICH!

Who doesn’t want to do that!

Retire Early and move from CA to FL Uhaul will love you ;-)
When you are new, looking for lenders & considering Fix & Flip, BRRRR, or rental, as a buyer, I’d ask the owner/seller to be one of my private lenders with creative financing. This works in Southern California (CA), AZ, WA, and TX.
Tell us, Ken, is the buyer supposed to record his deed?
Your Question @John Clark: "Tell us, Ken, is the buyer supposed to record his deed?"

Your question @John Clark "Tell us, Ken, is the buyer supposed to record his deed?""
Why yes, @John Clark: "Professionals Always record the deed. It would be foolish not to. Any good trainer teaches that.

You are on record as saying otherwise when the buyer deems it inconvenient, Ken. Something about rattlesnakes.
1 Reply

Phil SalazarPro Member

Rental Property Investor · Conroe, TX · Member since 2015 · 49 posts · 7 votes

10mo

And alway close with a Real Estate Attorney who closes at his office.

[email protected]281-925-7706

0 Reply

Ken M.
OP
Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
10mo
Quote from @Phil Salazar:

And alway close with a Real Estate Attorney who closes at his office.
Correct.
Some states are escrow states, so it's common practice to close at their place of business. However, since Covid, most escrow companies now send a notary to meet you at the house.
0 Reply

Creative Financing - Wraps - Seller Financing - Now More Than Ever, Here's Why

Creative Financing - Wraps - Seller Financing - Now More Than Ever, Here's Why

Most Popular Reply

11 Replies