creative finance

11 Replies

I have a property owner that has put 180k into remodeling her home and the house is still only worth 100k. She is willing to do a owner finance but her terms are not what I have read about.  She wants 50% up front, 25% in 30 days and 25% in 30 days after that. I'm not sure how to make this work for me. How should I go about making this work? 

Oh BTW I locked her other house up for 29,000 and it already has  a tenant in it paying 500 a month.  I'm asking 38,500 for it. 

just because the seller says they put $180,000 in to the house does not mean it is true.

There is absolutely NO DEAL here.  

The seller is obviously looking for someone with more money than BRAINS.


Just walk away from this property. There's no profit here.

@Jackie Lange @Karl Smith

Not quite sure why its "not a good deal"

Yea the terms aren't great, but what is she asking for the house? I don't see an asking price. If she only wanted say 20k for it then I would easily do this deal.

@Everett Marshall

What is she asking and what is the ARV? If there is no meat on the bone then this is a horrible deal based on the terms alone.

50% up front is kind of a strange term

she asking 85,000. I seen anything like this. That's why I ask. She knows the house house isn't worth more than 100k. She knows she is in it for more than its worth. I've seen the repairs and where it's prob not 180k she has fully updated the house. 

If she is asking 85k and it's ARV is 100k then I would definitely pass. You might as well figure 10% in closing and realtor fees when you sell, leaving you a profit of 5k. Not worth it to me.

see I was told to get her to owner finance it and whatever she ask for down I add to that and find someone else to take over payments. But you guys didn't say that so I guess that's not the thing to do. 

Originally posted by @Brian Gibbons :

How is this a good deal?

Seller financing does not add value to the appraisal.

Be careful of predator lending with Seller Financing.  Its federal law.

@Bill G.ll

A bit off Brian, an appraisal is a valuation at a point in time.

Financing does not add value to a property, at any time, a year later the property still has not greater value due to a seller financed note that might be assumable for example, it never adds value to the property.

The value of financing can be shown in the alternative costs for similar financing, but that is an intrinsic value to the transaction, not to the price or value of the property.

Charging more for a property due to financing arrangements is predatory dealing/lending. :)