Creative Financing Strategies: Have You Tried This Approach?

Question

Have you ever combined seller financing with another strategy to close a deal? How did it work out?

Tom S. · Answer

@Melanie Graham  I would assume it's a seller financed 2nd mortgage.  I've done a number of similar deals as a buyer, 80% of purchase funds from the 1st mortgage lender, and 15% of the funds from the seller as a 2nd position mortgage.  So effectively 5% down on an investment property.

For simplicity, the 2nd mortgage is interest only and then the balance due in 5 years.  In the meantime you make improvements to the property and force appreciation, so you can re-finance within those 5 years to pay off the 2nd mortgage.

Typically this has to be done with a commercial loan for the 1st, conventional financing usually don't allow this scenario.

Chris Seveney · Answer

Yes doing it now where we could not agree on Purchase price where they are getting traditional financing so we included a small 2nd on the back end that is interest only with a 5 year balloon. Got the deal closed.

Melanie Graham · Answer

Hello Chris, Can you elaborate on this? You included a "small second" mortgage w a 5 year balloon? Can you elaborate on this creative deal?

Shawn Ackerman · Answer

@Dexter Florendo Kalai Aspacio "to close a deal" no but I have purchased subject too and sold to a lease option tenant after closing.  I've never got through the sale process with the end buyer but those are two strategies I've combined.

It sounds like you may be referring to getting the seller to agree to sell on terms then finding the capital to repair or get the down payment?  Not really sure what other strategy you need to add to seller financing to acquire a property if a seller agrees to selling on terms.

All the best!

Mike Grudzien · Answer

No.

Creative Financing Strategies: Have You Tried This Approach?

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