Does Creative Finance Has a Perception Problem?

[Chris Seveney]

1487 COUNTY RD 324, CHESTER, CA 96020 | Crexi.com

I came across a Crexi listing for a hospitality/RV park asset in Chester, CA this week. Solid deal on the surface: renovated motel, 15 new full hook-up RV sites, seller financing available at 20-30% down at 5% interest-only, seller even owns a local bank. Real upside play.

But buried in the marketing description is this note, verbatim:

"Important Note to Prospective Buyers from Pace Morby: Congrats to all new members of the Pace Morby 'Creative Finance' and 'Subto' communities. We appreciate your interest and enthusiasm. Please note that we work exclusively with qualified, verified buyers. Our clients are not seeking first-time purchasers attempting to acquire mobile home parks with no capital investment. We will also not share proprietary Seller information with any intermediaries, including, but not limited to, scouts, bird dogs, or third parties."

I'm not here to take shots at Pace (never met him, never watched a video of his). I know he has introduced a lot of people to real estate investing, and creative finance is a legitimate tool that serious operators use every day. Subject-to, seller financing, wrap mortgages, these aren't gimmicks.

But that disclaimer exists because of something real, or a perception that a flood of unqualified, undercapitalized buyers has hit the market carrying creative finance terminology as a credential rather than a strategy. Brokers and sellers have noticed. When a listing broker feels the need to put a named disclaimer in a public OM, that's rare.

What this actually means for you as an operator or investor:

1. Perception is part of your deal stack. If you show up using the same language, the same scripts, and the same community badges as someone who has never closed a deal, you're starting behind zero with a sophisticated seller or broker. We see this in the Note Investing space from one guru who all he teaches is marketing, and you get the same emails "direct to buyer/seller" and the same lingo that screams "joker broker"

2. Seller financing is most available to buyers who need it least. The sellers offering the best terms, like this one, are doing so because they want qualified buyers, not because they want to educate a first-timer on how hospitality assets operate.

3. The tool is not the identity. Creative finance works. But "I'm a creative finance buyer" is not a pitch. Your track record, capital position, and operating plan are the pitch. The structure is just the mechanism.

The deal itself is interesting, by the way: and potential real upside here for someone who knows what they're doing with hospitality assets (not my cup of tea or investment strength so not an asset for me).

The irony is the seller is actively offering creative financing. 

[Don Konipol]

Quote from @Chris Seveney:

1487 COUNTY RD 324, CHESTER, CA 96020 | Crexi.com

I came across a Crexi listing for a hospitality/RV park asset in Chester, CA this week. Solid deal on the surface: renovated motel, 15 new full hook-up RV sites, seller financing available at 20-30% down at 5% interest-only, seller even owns a local bank. Real upside play.

But buried in the marketing description is this note, verbatim:

"Important Note to Prospective Buyers from Pace Morby: Congrats to all new members of the Pace Morby 'Creative Finance' and 'Subto' communities. We appreciate your interest and enthusiasm. Please note that we work exclusively with qualified, verified buyers. Our clients are not seeking first-time purchasers attempting to acquire mobile home parks with no capital investment. We will also not share proprietary Seller information with any intermediaries, including, but not limited to, scouts, bird dogs, or third parties."

I'm not here to take shots at Pace (never met him, never watched a video of his). I know he has introduced a lot of people to real estate investing, and creative finance is a legitimate tool that serious operators use every day. Subject-to, seller financing, wrap mortgages, these aren't gimmicks.

But that disclaimer exists because of something real, or a perception that a flood of unqualified, undercapitalized buyers has hit the market carrying creative finance terminology as a credential rather than a strategy. Brokers and sellers have noticed. When a listing broker feels the need to put a named disclaimer in a public OM, that's rare.

What this actually means for you as an operator or investor:

1. Perception is part of your deal stack. If you show up using the same language, the same scripts, and the same community badges as someone who has never closed a deal, you're starting behind zero with a sophisticated seller or broker. We see this in the Note Investing space from one guru who all he teaches is marketing, and you get the same emails "direct to buyer/seller" and the same lingo that screams "joker broker"

2. Seller financing is most available to buyers who need it least. The sellers offering the best terms, like this one, are doing so because they want qualified buyers, not because they want to educate a first-timer on how hospitality assets operate.

3. The tool is not the identity. Creative finance works. But "I'm a creative finance buyer" is not a pitch. Your track record, capital position, and operating plan are the pitch. The structure is just the mechanism.

The deal itself is interesting, by the way: and potential real upside here for someone who knows what they're doing with hospitality assets (not my cup of tea or investment strength so not an asset for me).

The irony is the seller is actively offering creative financing. 

Good points

40 + years ago in private lending we used to get ready for a deluge of clueless, newbie calls right after Robert Allen or Al Lowery held a “weekend workshop” in a local hotel.  The callers were provided a list of hard money lenders by the gurus and told (incorrectly) that the lenders would finance 100% of the purchase price or that the lenders (incorrectly) would lend the down payment.  

Many of these guru “students” became belligerent and hostile when told that we did neither.  Some were just in a state of shock, only a very few realized that they had been played.  

Interestingly, the ones that became belligerent and hostile weren’t angry at the guru who had misled them, they were angry at us for not willing to fulfill their fantasy.