Loaning on Off-Grid?

Question

I have an Off-Grid property that is currently for sale. It is also unpermitted, so I figured on selling it for cash only....but of course the first showing is asking if I will carry paper. Due to various reasons I would prefer not to, so I'm wondering if there is any financing available for these types of properties?

TIA....

Bill B. · Answer

Depending on the various reasons for not wanting to finance it you could figure out your net ahead of time. My only seller finance sale was 25% down, no inspection, no appraisal. 7% interest (18 months ago, about 1% over traditional, so maybe 7.5-8% today.) and a 5 year balloon.

If you need the money or want to be done with the deal you could sk note buyers ahead of time. What percent of the notes value they would pay, that’s your net. If you can live with that you’re only the note owner for a month or two, the time it might take to find another buyer and close. If they don’t meet those terms tell them you’re not intereted, if you have other options. Good luck. Let us know what happens.

Don Konipol · Answer

Yes, there’s financing available for almost any property or situation - but it’s the cost that’s the killer. You may be looking at 15 -18% interest. Any buyer paying super high interest like this will want a HUGE discount from fair market value. You can of course owner finance with a note at say 10% interest, and then sell the note at a discount to yield 15 -18% to the investor, but you end up in about the same place.

A sophisticated strategy I’ve used in the past, taught to me by the late, great note expert Jimmy Napier (Invest in Debt) was a “workaround” that Is rife with risk and should only be utilized by very experienced real estate specialists, if at all. Essentially you purchase a property for fair market value with owner financing at say 6-7%, with the note having a “substitution” of collateral clause for a property of equal or greater value. as well as being “assumable”, i.e. no “due on sale” clause. You then “substitute” the property your selling for the property you bought, and sell the property you bought for the same amount you paid. The subject property you’re trying to sell now has an assumable 6- 7% interest rate note attached.

Bruce Woodruff · Answer

Thanks all! @Shaharyaar Erea there are hundreds (probably thousands) of properties in this back-country (or any rural area I've seen) that were.... errrr....we like to call it 'constructed outside the conventional building-permit process'. They buy and sell all the time with no issues.

But I realize it probably comes down to either a cash sale or carrying paper.......

Shaharyaar Erea · Answer

"Bruce, off-grid and unpermitted properties are a highly specialized niche, and finding traditional financing is nearly impossible.

Don, your breakdown of the Jimmy Napier strategy is brilliant. Structuring the seller financing to be assumable at a 6-7% rate is a masterclass in creating liquidity and mitigating the high-interest problem. Bill, your point about the 5-year balloon is crucial; in this rate environment, that's a ticking time bomb for a buyer.

As a Dubai-based investor with a background in Real Estate, E-commerce, and Crypto, I look at these scenarios from a cross-border perspective. In the UAE, unpermitted properties don't exist in the same way due to strict DLD regulations. However, for international investors stuck with non-conforming assets, the best exit strategy often involves seller financing with a structured 'lease-to-own' approach, or moving the equity into a more liquid, tax-friendly market like Dubai (0% personal income tax, 6-8%+ yields).

Furthermore, in the Web3 space, some private lenders are now accepting digital assets as collateral for these types of off-market deals, though the risk premium remains high.

Bruce, how are you handling the regulatory risk of the unpermitted structure in the purchase agreement? That seems to be the biggest hurdle for any lender here. I'd love to connect and hear how you structure these unique deals."

Ashish Acharya · Answer

Bruce, yes, financing can exist for off-grid properties, but the challenge is usually that they fall outside a lot of standard conventional underwriting boxes.

The lender is going to care about things like legal access, water source, septic, power setup, whether the improvements are permitted, insurability, and whether there are comparable sales that support the appraisal. If the property is very unique, the appraisal and marketability can become the bigger issue than the borrower’s qualifications.

I’d probably have the buyer talk with a lender that handles rural, portfolio, or non-QM loans rather than assuming a standard conventional mortgage will work. Local banks and credit unions can sometimes be more flexible because they’re underwriting the actual property instead of trying to fit it into a national guideline.

Since you’d prefer not to carry paper, I’d also make sure the buyer explores those routes first before you agree to seller financing.

Happy to connect!

Loaning on Off-Grid?

Loaning on Off-Grid?

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