Creative Financing Thoughts Needed

Creative Financing Thoughts Needed

Hi to everyone,

I am new to the REI, just finished both of Dean's books-(Great by the way!) and believe I might have my first deal in the works. Here is the question, I found a FSBO that has been vacant for a couple of years. They own a small mortgage on it, are asking $125K, the house is need of some work, broken windows, kitchen updating, painting, carpet etc. It is in a nice neighborhood and a decent lot. They told me they open to all decent offers and they also told me that the bank won't let them contract for deed-which was offered to them before, because it breaks their contract. She mentioned the thought of paying off their small mortgage and being able to do whatever they wanted with it. I am looking at this house as a possible rental. I am wondering if a lease with option to purchase would be viable? I am looking to invest with no money. Looking for a win/win for both them and myself. Also my thoughts having them pay off their motgage and then contract for deed with them receiving the benefit of the interest, selling the home etc. I appreciate any thoughts on how to persue this.


Creative ideas

First you have to find out if it is a deal or not. If it is you have a couple of options.
1. Tie it up by offering to pay off the small mortgage and have them carry back the rest as an owner finance. Than lease option the home with the lease option money being equal to the small mortgage. Do a double close where you will be wiring the funds, close on a Friday so you get almost 7 days to get the money into the account (Since weekends don't count) and 3 to 4 days is acceptable in a wiring transaction. Close on the lease option deal utilizing the funds from that deal to pay the first deal.
2. Do an all cash offer for 50% off the FMV. Purchase using a transactional lenders funds. Offer owner financing to your buyer creating a mortgage note that can than be sold at a discount for immediate cash. Utilize that cash to pay off either the owner of the property or the transactional lender. With this method you pay more so the discount on the property has to be higher.
3. The seller of the property can finance you. Creating a note sell the note the same day that it is created utilizing that money to pay off their small mortgage and putting the remainder into their pocket. Only down side is your credit directly reflects what they are given for the note and a down payment is required to offer a higher purchase price for the note. You can get around that too by utilizing a downpayment lender. It gets more difficult at that point. You will have to write the contract for more than the agreed on price adding in the "down payment" plus the cost of the downpayment lender service so the seller gets all their money after the note is discounted.
PM me if you need help setting any of these up. It normally takes approximately 30 days to sell a note so allow for that upfront.
Sorry so long.
Hope this helps and is not too confusing.
If you have any questions let me know.



Congratulations on getting and reading Dean's books. They are packed with great information. It appears Ericka has already given you some good advice. I would add if you can try to determine the seller's magic buttons maybe you can put together a creative offer. What do they really want and how much is the small mortgage to pay off. Can you use a credit card or charge something they are going to do with the money like go on a trip or buy a large flat screen tv or furniture? When you have all the facts you can then work with the seller to create a win-win transaction. Good luck on all your deals! Believe and Achieve! Smiling Indiana-Joe


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In keeping with what Ind. Joe said, on one of my first deals, after I built a rapport with the seller, he eventually shared that he owed $16,000 on a(purchase price $83,000) camper and they wanted at least to pay that off and not leave town(retire and travel)with a mortgage note. We bought the house on contract for deed, borrowed $16,000 from cc and gave ourselves two years for 'balloon' payoff. They loved the idea; we rehabbed,sold, paid off the cc, etc. etc. Deals do work this way!
However, in my neck of the woods when I try the line," do you have to have all of our money now, or are you open to creative means. . . .?"
EVERYONE always says, " I want all my money now!"
I've learned to sort of ignore that and keep talking and in the process I've learned that many, many sellers are open,,,they just don't have any clue or idea such as the ones we're learning to do it differently, outside the box thinking.
Anywho, this is weeks past your writing... I hope you got the deal.
best regards.


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