Creative financing ideas

8 Replies

Hello bigger pocket members,

I believe I may have found a great deal. Only problem is I do not have the money that is required for the hard money loan.

The hard money lender is staying at I need to cover the difference between the ARV and purchase/rehab cost. I need about $43,000. Would seller financing be a good idea to get this deal done? What are my options.

Regards,
Tori

A win-win seller financed transaction depends a lot on the seller's motivation and circumstances.  Do they need to buy again?  Do they have debt on the house right now?

Either way, mine have all required a down payment of at least 10%.  Even without a realtor, their closing costs will usually be 2-3%.  Can't really ask them to pay to sell, right?

Aurora is probably a hot market like the rest of Denver metro.  May be able to assign for a nice wholesale fee to build some capital?

In the meantime, while you are reading, listening and learning - get down to a scorched earth budget.  No restaurants.  No coffee shops or bars. No car payments.  Brown bag your lunch and drive a beater to your first closing with pride @Tori Hall!

@Steve Vaughan thank you for your comments. I am trying to see how motivated the seller is. Denver is a hot market, if there are multiple offer they may just go with a cash offer. Maybe seller financing is not the best route. 

@Tori Hall - you mentioned multiple offers - is the property off market? 

Very challenging to close a seller financed deal in our market if you are not speaking to the seller directly on an off market deal. I would be happy to talk through it with you if you want to give me a call or send an email.

@Tori Hall so why use any hard money? If the seller owns free and clear you can offer more since there would be no hard money needed. You can do a warp or a partnership to increase net yield to the seller. You have to get in front of them and talk about their needs. Until you talk to them, it's just pie in the sky and you are likely wasting energy. Most sellers won't go for seller financing but unless you ask you know the answer.

Some hard money lenders won't lend with seconds on the deal because there is a risk that the 2nd gets recorded before the first in which case they are no longer the first.

@Tori Hall What about bringing in a partner and/or private money.  Do you have experience/track record?

Originally posted by @Tori Hall:

@Steve Vaughan thank you for your comments. I am trying to see how motivated the seller is. Denver is a hot market, if there are multiple offer they may just go with a cash offer. Maybe seller financing is not the best route. 

 You're welcome, Tori.

All of my seller-financed houses and apt bldgs have been from tired landlords that want to retire and owned free and clear.  That's why I was asking about seller circumstances and debt.

Jack and Jill homeowner on the MLS that have a mortgage and need to buy again will be a waste of time most of the time.

Focus on building up a cash reserve to broaden your opportunities!

@Simcha Davidman - Hi Simcha, I do not have any experience- this would be my first deal. I also do not know anyone that has that type of cash on hand unfortunately. 

At this point, I am hitting a brick wall.

Thanks!

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.