Creative Financing Question

5 Replies

Hey All,

I have a question regarding a potential deal through creative financing.

Here is the situation:

I am interested in acquiring a commercial property that features around 30 mixed size storage units and 3 one BR efficiencies. I value the property around $250K. Here is the way I'm hoping to design the deal (ideally):

Use creative financing for 10 years to acquire the property. Pay $10K each year with rent around $1,500 a month ($280K over 10 years).  

So here are my questions:

1) Over those ten years, who is responsible for taxes and insurance? Is that negotiable?

2) At what point is the deed signed over to me? Is that negotiable?

I know I will probably have many other questions to come, but I wanted to get some feedback.

It's greatly appreciated!

hi bradford. here is what you will want to do. first, make sure in the deal that YOU will pay the property taxes. relying on someone else to do it will result in your finding out a few years down the road that you are loosing the property to back taxes because the responsible party did not pay them. 

second, you specify that YOU and the seller will both be on the deed. file the land contract with the county and make sure it includes the words that upon final payment to the seller, the seller will remove his or her name from the deed via quit claim deed to you. my dad always used to say " cover your ***". these are just two of the ways that you do this

Hey Mark,

Great input. I sincerely appreciate it. I will make sure I pay the taxes (even if they are so high in our native NY).

All the best,


Get an attorney @Bradford Myatt

Open up an escrow with title company.

Money goes from you to 3rd party payee to PITI payment - mortg, taxes, insurance

I recc

Anything outside that PITI goes to owner - seller.

Re: default, needs to spell out in an agreement.

What happens if seller dies?  gets incapacitated?  10 years is a long time.

@Bill Gulley may want to comment.

@Bradford Myatt

I see Brian is passing on what I've been saying for years, LOL.

Please don't take legal advice off internet forums.

Your idea as to your transaction is fine, but I would not suggest a land contract. I sure wouldn't suggest you go into a joint tenancy on title with a seller or put purchase terms or covenants on any deed. 

The first thing to address is if the seller has any existing loans secured by the property.

That will guide you as to the path you might take on an installment purchase. 

Being a commercial property, you may enter a long term lease, you can also utilize a NNN lease, you can also finance an option price. An attorney can place deed restrictions on title to protect your interests from the seller's creditors or keep the property from being encumbered.

If the property has no other liens, it will be much better to do a seller financed transaction and take title. 

So far, you're not really into "creative financing" you're looking at alternative financing.

It may get more creative by pledging other assets to  the seller in lieu of a larger down payment initially, as your payments increase in the transaction other asses are released. 

Yes, please see an attorney and begin your offer with the most beneficial type transaction for you that meets the sellers needs, tat will be obtaining the deed. Good luck :)   

@Bill Gulley

Much more eloquent than I could do at present, as I am just a humble REI Grasshopper. LOL

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