How are people doing subject to’s and creative financing in this market?

Creative Real Estate Financing
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How are people doing subject to’s and creative financing in this market?

Mike Schorah
Rental Property Investor · Member since 2021 · 423 posts · 190 votes

I just talked to a big property manager in my area and she said that since interest rates are so high, landlords are buying in cash only. No financing.

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Scott E.
Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes
3y

The gurus make it sound like this is a magical market for subject-to and creative financing. I went down the rabbit hole a few months ago. I came out a skeptic. 

I truly don't believe that anybody out there is successfully buying good deals with creative financing at scale. And I've yet to find a local investor, developer, agent, or title company who believes that creative financing can be used to buy good properties, in good locations, without paying over retail for the property.

Regarding what your property manager told you, I'm seeing the same around my market. The seasoned investors around town still have capital to deploy (whether their own cash or private equity). So everybody is more particular about what deals they are buying, but they're buying deals. And doing it with cash.

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  • Scott E.
    Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes
    3y

    The gurus make it sound like this is a magical market for subject-to and creative financing. I went down the rabbit hole a few months ago. I came out a skeptic. 

    I truly don't believe that anybody out there is successfully buying good deals with creative financing at scale. And I've yet to find a local investor, developer, agent, or title company who believes that creative financing can be used to buy good properties, in good locations, without paying over retail for the property.

    Regarding what your property manager told you, I'm seeing the same around my market. The seasoned investors around town still have capital to deploy (whether their own cash or private equity). So everybody is more particular about what deals they are buying, but they're buying deals. And doing it with cash.

    6Reply
  • Kelsey Jurewicz
    Lender · Fort Lauderdale, FL · Member since 2023 · 33 posts · 19 votes
    3y

    Creative financing loan program include DSCR, asset qualifying, FHA (multi-unit), & bank statement (no income/tax returns needed). Also check with your local lender if they offer any type of down payment assistance programs/grants.

    1Reply
  • Caleb Hommel
    Investor · San Diego, CA · Member since 2022 · 9 posts · 4 votes
    3y

    Hey Mike! I've been getting that a lot as well! However there are tons of opportunities out there still! I've found 28 units seller financing in Texas over the last 12 months! Shoot me a message!

    1Reply
  • Chris Davidson
    Real Estate Agent · Boise, ID · Member since 2016 · 1k+ posts · 888 votes
    3y

    @Mike Schorah same way they were in other markets. They are the majority of deals so don't expect to find them everywhere but they are happening. However you have to set your expectations correctly. If you think you can do a deal where the seller gets zero down payment and you get a deal that cashflows you are looking for a unicorn. Not saying its impossible cause i don't look for unicorns so i don't know. The seller is going to have to pay to close the property you will have to cover those cost, other than that you can make it work but it does take capital to make happen.

    To @Scott E. point you may be paying over retail but getting better than retail payments. You can literally go on Zillow put in key words for seller finance and properties pop up.

    https://www.zillow.com/homedet...

    4Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    3y
    Quote from @Chris Davidson:

    @Mike Schorah same way they were in other markets. They are the majority of deals so don't expect to find them everywhere but they are happening. However you have to set your expectations correctly. If you think you can do a deal where the seller gets zero down payment and you get a deal that cashflows you are looking for a unicorn. Not saying its impossible cause i don't look for unicorns so i don't know. The seller is going to have to pay to close the property you will have to cover those cost, other than that you can make it work but it does take capital to make happen.

    To @Scott E. point you may be paying over retail but getting better than retail payments. You can literally go on Zillow put in key words for seller finance and properties pop up.

    https://www.zillow.com/homedet...


    what I find in our market ( west coast) when you put in owner financing in MLS  there are quite a few that pop up.. but most folks that will sell for OF want LARGE down payments like half down and for you to fully qualify.  

    I think what most of these folks dont quite realize finding motivated sellers ( other than landlords) those are going to be people in trouble / Default at least in my experience and the closer to auction date is when the best deals are had.
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    4Reply
  • Chris Davidson
    Real Estate Agent · Boise, ID · Member since 2016 · 1k+ posts · 888 votes
    3y

    @Jay Hinrichs We see that with some here. However the last two I wrapped up were lower down. One was about 23% on a duplex, and the other 5% on a SF. Both where investors just looking to get truly passive income. The 5% was an agent, and I feel like a lot of investor forget a seller is going to have 5-10% in fees and cost just to sell.

    It is all about getting the right expectations and knowing the seller you are looking for on your deals.

    3Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    3y
    Quote from @Chris Davidson:

    @Jay Hinrichs We see that with some here. However the last two I wrapped up were lower down. One was about 23% on a duplex, and the other 5% on a SF. Both where investors just looking to get truly passive income. The 5% was an agent, and I feel like a lot of investor forget a seller is going to have 5-10% in fees and cost just to sell.

    It is all about getting the right expectations and knowing the seller you are looking for on your deals.


    What about ARV did you buy these at today's value  above value or did you get them below value ??  Just curious all the sub too OF I did in the past we had to have instant equity incase we needed to sell as you noted its 7 to 10% to sell and I did not want to have to come up with money to sell I wanted the transaction cost at least offset by what we paid for them.  AGAIN  mine were all foreclosure bail outs so a little different than vanilla owner carry burnt out landlord. And NON of mine were from landlords all owner occupants.
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    3Reply
  • Chris Davidson
    Real Estate Agent · Boise, ID · Member since 2016 · 1k+ posts · 888 votes
    3y
    Quote from @Jay Hinrichs:
    Quote from @Chris Davidson:

    @Jay Hinrichs We see that with some here. However the last two I wrapped up were lower down. One was about 23% on a duplex, and the other 5% on a SF. Both where investors just looking to get truly passive income. The 5% was an agent, and I feel like a lot of investor forget a seller is going to have 5-10% in fees and cost just to sell.

    It is all about getting the right expectations and knowing the seller you are looking for on your deals.


    What about ARV did you buy these at today's value  above value or did you get them below value ??  Just curious all the sub too OF I did in the past we had to have instant equity incase we needed to sell as you noted its 7 to 10% to sell and I did not want to have to come up with money to sell I wanted the transaction cost at least offset by what we paid for them.  AGAIN  mine were all foreclosure bail outs so a little different than vanilla owner carry burnt out landlord. And NON of mine were from landlords all owner occupants.

    After counting rehab the larger down was about .9 ARV with a 3% rate, and the smaller down was a .95arv with around 6% with some more creative terms as well.

    one a prime location the other ok location better cash cow.

    1Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    Property managers are old school, they see one side of the story and form opinions. That what people say with a grain of salt. I saw 30 subto deals this month. 

    1Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    3y

    @Mike Schorah

    not accurate

    landlords are buying in EVERY market with EVERY strategy

    shrug

    1Reply
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