Creative Financing Question
Okay so I have a question about creative financing. Loans from a bank are about 8.2% for single family homes. There is a property listed in a great up and coming area for $298,000--3 bed, 1 bath. I believe the seller is motivated to sell and it’s been on the market for 6+ months now. I wouldn't really have to put any money in for a reno/rehab. The average rent in the area is roughly $1700 per month. Closing costs would be around $16,000. As it is now, the cap rate and cash on cash return is not great once I calculate it out. And once you factor in interest, you are losing money since the interest alone is more than you’d get in rent once you deduct approx 50% expenses. Anyone have ideas on how to creatively finance this to make it a little bit better? The equity portion will end up being the positive with the buy and hold method, so I’m looking for a way to be creative to get to a better income flow/better return. What’s everyone think? Seller financing? Any ideas?
Quote from @Sara OBrien:What is the seller's existing interest rate and I'll tell you if it's a possible deal.
Okay so I have a question about creative financing. Loans from a bank are about 8.2% for single family homes. There is a property listed in a great up and coming area for $298,000--3 bed, 1 bath. I believe the seller is motivated to sell and it’s been on the market for 6+ months now. I wouldn't really have to put any money in for a reno/rehab. The average rent in the area is roughly $1700 per month. Closing costs would be around $16,000. As it is now, the cap rate and cash on cash return is not great once I calculate it out. And once you factor in interest, you are losing money since the interest alone is more than you’d get in rent once you deduct approx 50% expenses. Anyone have ideas on how to creatively finance this to make it a little bit better? The equity portion will end up being the positive with the buy and hold method, so I’m looking for a way to be creative to get to a better income flow/better return. What’s everyone think? Seller financing? Any ideas?
Use the spreadsheet as an example at
With $50,000 you can buy 3 Properties in 2024 – These are the Best Markets https://www.biggerpockets.com/forums/311/topics/1166342-with...
#2 Starting Out Contributor
- Specialist
- Mendham, NJ
A home in an up-and-coming market is sitting for 6 months? I bet the seller is motivated to sell. Just ask the agent if the seller would be open to seller finance, but you have to be able to explain that to the listing agent because they probably won't know. Ask if the seller wants to be the bank, explain the savings in cap gains, and then see if you can structure a lower down payment to go direct and then you can pay the price they want if you adjust the principal and interest in your favor.
