The Creative Financing Podcast
Episodes
Monday Jul 26, 2021
Ep 168 pt.2 Deal Structuring Straight From The CRM
Monday Jul 26, 2021
Monday Jul 26, 2021
In this series we go straight to Jeff’s CRM for some deal structuring. Here are some details of the property... 3bd 2bath 2 car garage 2100 sq ft. .16 lot built 2016. Owner lives there. Open to terms. Free and clear. Excellent condition. 108/m HOA. The Seller thinks it is worth 400K. Taxes $2051. Zestimate 339K. We think ARV is 375K to 380K. $1900-$2000 is market rents. What would you structure? We came up with the following….
Offers
Interest hybrid offer-
395K PP 21K down 374K at 2.5% interest for 3rys. Balloon = 343,346.78. So what do they net- 1600x36 + 21K + 343,346 = Seller nets 421,946 at end of term. Sell to Owner Occupant for 425 with 10% down at 4% interest for 36months.
Second offer-
309K PP 27K down 3.5% over 30yrs pmt 1630/m Balloon 325,600.37. Seller nets 450,400. Sell to Owner Occupant at 425K with 10%down at 4.5% interest for 5yrs.
Third offer- Subordination-
405K PP 70K down borrowed at 6% interest= 350/month interest only on first note. 335K owed to Seller. 1,100/m principal only payments for 42months = 46,200. Minus the 335K= Balloon 288,800 at end of term plus 70K. Sell to Owner Occupant for 425K with 40K down at 4.5% for 42months. Seller owes you 361,984 at the end of term.
Hope you enjoy, And to get special access to a step by step video on how to structure creative financing offers, click HERE.
Monday Jul 19, 2021
Ep 167 Deal Structuring Straight From The CRM
Monday Jul 19, 2021
Monday Jul 19, 2021
Details. 3bd 2bath 2 car garage 2100 sq ft. .16 lot built 2016. Owner lives there. Open to terms. Free and clear. Excellent condition. 108/m HOA. The Seller thinks it is worth 400K. Taxes $2051. Zestimate 339K. We think ARV is 375K to 380K. $1900-$2000 is market rents. What would you structure? Here are the notes of what we came up with….
Offers
Interest hybrid offer-
395K PP 21K down 374K at 2.5% interest for 3rys. Balloon = 343,346.78. So what do they net- 1600x36 + 21K + 343,346 = Seller nets 421,946 at end of term. Sell to Owner Occupant for 425 with 10% down at 4% interest for 36months.
Second offer-
309K PP 27K down 3.5% over 30yrs pmt 1630/m Balloon 325,600.37. Seller nets 450,400. Sell to Owner Occupant at 425K with 10%down at 4.5% interest for 5yrs.
Third offer- Subordination-
405K PP 70K down borrowed at 6% interest= 350/month interest only on first note. 335K owed to Seller. 1,100/m principal only payments for 42months = 46,200. Minus the 335K= Balloon 288,800 at end of term plus 70K. Sell to Owner Occupant for 425K with 40K down at 4.5% for 42months. Seller owes you 361,984 at the end of term.
Hope you enjoy, And to get special access to a step by step video on how to structure creative financing offers, click HERE.
Monday Jul 12, 2021
Ep 166 Let's Talk About The Term
Monday Jul 12, 2021
Monday Jul 12, 2021
What’s too short. What's too long. Do you wait till a market correction. Longer terms means you have way more flexibility and more options for exit strategies. So it depends upon your Seller and your exit strategy. For owner occupants you want 3 yrs to give them ample time to repair their credit. If you are holding it as a rental, always determine the principal pay down you want to achieve at the end of term. And rather or not you can refi the property at 80% loan to value. Ultimately the term has to work for the seller and that is what you have to work around.
Hope you enjoy, And to get special access to a step by step video on how to structure creative financing offers, click HERE.
Monday Jul 05, 2021
Ep 165 The Big 5- How To Make Multiple Offers
Monday Jul 05, 2021
Monday Jul 05, 2021
How to make multiple offers- This is really more of a mindset than anything else once you understand the basics and foundation of creative financing. Try structuring offers based on 3 or 4 different exit strategies. That will help you create different types of offers. Offers you can make every time are Cash, short term finance, long term financing, minimum 3yrs or 5yrs. Try to gauge down payment and terms they are open to 358K offer 5% down 10% down.
Longer Term Offer- 5 to 7 yrs. This is more for an Owner Occupant or a Landlord if you are not holding the property yourself. Always ask; How long would you like to continue to make money on your property. The Seller must make significantly more if they are holding a note long term because you really need to incentivize them. Offer a higher purchase price, downpayment, and/or interest rate, and show the Seller what they will net or gross at the end of the term. You want the longer term balloon payment to always be less than the shorter term balloon payment because you need more principal paydown over that time.
Subordination- This is where the Seller takes their equity in second position. We borrow the down payment in first position. Always consider what your payment will be on your first position note. You still need the payment to work for you. Plus you still need to offer the seller a note and monthly payment. These are longer term deals because. Offer 1. 358 Offer 2 350. Offer 3. 350 w/100K down. 250K in second position. 2.5% int. 900/month for 48months. 19k paydown.
Wrap Around Mortgage or All Inclusive Trust Deed- If there is debt on the property, what do you do? It really depends on what that debt is and what the monthly payment is. If you can make a cash offer then you can make a short term financing strategy 6-12months, offer a down payment and offer to make the monthly payment. Ask if they are willing to wait on their equity, this strategy works if you can wholesale to a landlord or hold it longer term. Or if you can use it as an AirBnB or rent rooms out individually to create more cash flow. Break it into its component parts, 1 is debt, 2 is the Seller’s equity. Another option, You can offer to pay interest only payments on the Seller’s equity to keep you payment lower especially if the loan is further along in amortization to get more principal paydown.
Hope you enjoy, And to get special access to a step by step video on how to structure creative financing offers, text CFP to our hotline at 877-409-8090 or click HERE.