Had an interesting one recently.

Buyer was purchasing an investment property directly from his neighbor.

No Realtors involved.

Buyer and seller knew each other and decided to use a title/closing attorney to handle the transaction, which kept the transaction costs pretty low.

Here's where it got interesting.

The seller had enough equity that instead of the buyer coming in with the normal down payment, they structured a 20% gift of equity.

Then the seller also gave a 6% seller concession toward the buyer's eligible closing costs.

20% down payment covered by equity.

Most of the closing costs covered by the seller concession.

Buyer ended up bringing essentially no money to the table.

And this was an investment property.

I think a lot of investors hear "gift of equity" and automatically think:

Parent selling a house to their kid.

That isn't always the only scenario.

Certain Non-QM/investor programs can allow structures outside the normal conventional gift-of-equity box. The exact relationship, seller mortgage history, non-arm's-length rules and program all matter, so this definitely isn't something I'd assume works on every loan.

But if someone is buying a property directly from a landlord, neighbor, friend or somebody they already know, it's at least worth understanding whether there is equity in the deal that can be used instead of automatically writing a huge down-payment check.

The craziest part to me was the seller got the price they wanted and the buyer preserved basically all of their cash.

Anyone here ever structured a purchase using gift of equity on an investment property?