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

[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.

[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).