Anyone doing creative financing in Philadelphia Region?

Question

Hi All-

My husband and I just bought our first STR in the Poconos and are getting that up and running. I would like to know more about the processes for creative financing (seller finance, sub to deals) and especially from someone in my local market. Anyone willing to mentor?

Happy to share deals as we find them in exchange for mentorship.

Best,

Hannah

Alesandro Breguez · Answer

@Hannah Rodriguez, some local community banks offer 100% financing with a cross-collateralized loan.

If you have a portfolio with some equity, you can take loans and collateralize the portfolio. Instead of securing the loan with just one property, the lender combines the value of multiple properties to mitigate their risk. If the borrower defaults on the loan, the lender has the right to foreclose on any or all of the properties used as collateral.

Cross-collateralization can provide borrowers with access to larger loan amounts or more favorable terms but also carries the risk of losing multiple properties in the event of default.

Saaj Patel · Answer

Hannah, Love the drive to get a deal done even in this environment via seller-financing/sub to. A lot of people turn away from this because of the complexity (which in reality - it is not as complex as people make it out to be)

I have some experience, I have done 1 seller-financed deal for my personal portfolio. You'd be surprised with how many sellers are attracted to this type of sale because they receive an annuity.

Let me know if you want to bounce any ideas off of me. I'm always available!

Chris Davidson · Answer

@Hannah Rodriguez congrats on taking the step and getting your first STR going. I would recommend really understanding how a transaction works first. Learn the basics of Lien's, Title, Escrow, and Contracts. Creative finance by nature has creativity. If you don't know what you are trying to create or do it will make it really difficult to understand and apply.

In short seller finance and sub to deals are addressing the financing part of the deal. Title will still go the same as on your prior transactions. Escrow could be moved to long term after closing or not all will depend how the deal was structured.

Best of luck!