Creative solution to buying my first personal residence...(HELP!)

Buying & Selling Real Estate
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Creative solution to buying my first personal residence...(HELP!)

Andre Green
Investor / Agent · NY, NY · Member since 2009 · 97 posts · 20 votes

Ok so I have some real estate experience in the business not the most and I'm not a newbie but none of it is on the creative side to get things done really outside of the box.

Like the majority of the population in my age range I have committed my share of bone head financial moves dut to ignorance and stupidity of me knowing it all at the tender age of 18 because I thought I was invincible (like who listens to their parents in their teenage years...lol... like don't waste your money and save some for a rainy day...blah blah blah). So fast forward 10 years and I have paid of my $30k!!!! of credit card debt (how dumb was I) and created some savings through alot of sacrafice, budgeting, and change in my spending habits and I feel like I have just completed a marathon! (BTW my parents were so right about everything! Even though I won't admit it to my Dad yet. I'm waiting to do it as a Christmas gift. LOL)

Anyway I have been looking to purchase my own home and I came across a decent area in Long Island that has what I am looking for but I am not in the best of positions to go to a Lender for finacning yet. Good news is that I recently learned that a neighbor of my cousin in this area is selling his property to move up NY to some lake area (Lake George I think) but can not move until they sell their current home. They are retired and don't seem to be in a rush but I would love to hear what you guys think can help me with some ideas as to what options I can offer to the seller to maybe get this deal done and purchase my first home for me!

I look forward to the feedback and the more ideas the better! Thanks!

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  • Loc R.
    Note Investor · Pasadena, CA · Member since 2009 · 849 posts · 544 votes
    14y

    First, find out what is preventing them from moving now? It may or may not strictly be financial. If it is financial, figure out how much they need and compare that with what you have to offer and go from there.

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  • Andre Green
    OP
    Investor / Agent · NY, NY · Member since 2009 · 97 posts · 20 votes
    14y

    I will speak to them this weekend @Loc R. but what kind of financing options would there be if its only financial to not go the convential route through a lender?

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  • Loc R.
    Note Investor · Pasadena, CA · Member since 2009 · 849 posts · 544 votes
    14y

    If they're older, there's a good chance they have equity. If they have equity, they can seller-finance the whole thing, or wrap their current mortgage. In either case, you can show them how to create a win-win situation.

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  • Jake Kucheck
    Residential Real Estate Agent · Costa Mesa, CA · Member since 2008 · 1k+ posts · 380 votes
    14y

    Sounds like they might need the cash from this purchase to move to their next home. If that's the case, seller financing or an AITD wouldn't work. This is an important distinction.

    Andre Green- do you happen to know if the seller needs the cash from the sale to move, or just need to have the payments on their place taken out of their DTI calculation for their new loan?

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  • Andre Green
    OP
    Investor / Agent · NY, NY · Member since 2009 · 97 posts · 20 votes
    14y

    @Loc R - good points that I will explore when I talk to them over the weekend. I want to make sure I don't forget any of the creative financing options before I speak to them again.

    @Jake Kucheck - I am going to find out as much as I can from the seller about the reason they are waiting to sell their current home before making the move. What's an AITD by the way?

    ***Also how do I make the @ a hyperlink?***

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  • Raymond B.
    FL · Member since 2009 · 2k+ posts · 357 votes
    14y

    Andre Green,
    To make the hyperlink, type @ and continue to hold down the shift key, and type the first two letters of the persons name.
    Look at the bottom of the post that you're creating, and you should see the persons name highlighted, and then click on the name.

    Raymond

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  • Andre Green
    OP
    Investor / Agent · NY, NY · Member since 2009 · 97 posts · 20 votes
    14y

    Raymond B. thanks for the info on the hyperlink.

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  • Andre Green
    OP
    Investor / Agent · NY, NY · Member since 2009 · 97 posts · 20 votes
    14y

    Does anyone know how to move this post into the Creative financing forum to possible get some more feedback and advice?

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  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    14y

    Andre, ifsomeone needs some cash they can seller finance their property and then sell part of the note for cash. Say the finance it for five years, they could sell 2 or 3 years of payments and retain the balance of the note.

    Alot of new people seem to think that "creative financing" is pulling money out of thin air or buying with no money down....while it is possible to buy with no money down in rare cases, it's not really creative IMO.

    Creative financing really knowing conventional and seller financing, the use of notes and other assets to leverage a deal. For example using bonds assigned as additional collateral or structuring a deal to save the seller taxes thereby giving a better price or terms.

    While writing this I got a call about someone wanting to sell payments that are received from a court order and my suggestion was not to deal with the scum bag but to loan the money to the payee and assign those payments as collateral with the right of offset, that puts the payee and payor on the hook instead of buying the annuity payments. Such could have been used for down payment money on a purchase. That's an example of creative financing, using existing assets to transform a deal.

    So, to get into any creative issues with you, you'd need to provide alot of information about the parties involved, and I suggest you not do that in any forum, BTW!

    See what you have to work with, assets,equities, cash, investments and then look for ways to use those assets to your advantage....

    Good luck!

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  • Andre Green
    OP
    Investor / Agent · NY, NY · Member since 2009 · 97 posts · 20 votes
    14y

    Bill Gulley I did not mention that I had no money for a down payment I only stated that I was not in the best situation to pursue conventional lending lets say through a lender which is why I used the term "creative" but it sounds as if that term means different things to different people maybe I should have said "unconventional".

    I am not rubbing on some magic bottle looking to buy a property with no money with the hopes that I have a great outcome. I was asking the vastly experienced BP community for ideas that I might not have thought of so that as I identified the sellers needs I could have some options to present to the seller to hopefully get the deal done.

    Thanks!

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  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    14y

    Ooooo, looks like someone took what I said personally.....not meant that way at all, when I'm writing I do try to address the topic, but I'm also speaking to the public in general, especially about the misconception of creative financing which seems to be the general ideas many do have, not saying you do.

    Your use of the term was fine......I might suggest you consider an installment purchase of some kind, what might be appropriate and common in your area. A contract for deed, lease purchase, subject-to assumption from a owner occupied seller staying clear of the SAFE Act.

    You can also devise any of those transactions with staggered payments, paying more in the early periods to add to your down payment, just make sure that what ever the reason you can not use conventional financing that issue will be cured in time for you to use conventional financing to payoff that obligation.

    You might also consider private money, not from a HML as rates are high and terms rather short, but someone in your area, ask Realtors, they know who does that.

    You might also consider a partnership and do a few flips, more money never hurts and you may buy out your partner/rehabber.

    Just some suggestions off the top of the old head, sorry if you thought I was jabbing at you, I wasn't, I usually take the path of least resistance to say something and sometimes it doesn't work well in a forum......Good luck!

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  • Andre Green
    OP
    Investor / Agent · NY, NY · Member since 2009 · 97 posts · 20 votes
    14y

    Bill Gulley I may have taken some of that to heart but no blood no foul. As usual you have some great advice and insight. I had thought about bringing in a partner but I wasn't sure if that idea was advisable for what would be my own primary residence. I will be working to make my situation (credit) as attractive to lenders in the future to pay off the seller.

    I do appreciate your insight and its a bit laughable at some of the posts I have been reading in the forums about others ideas of creative financing which may have but me on edge earlier.

    I think I will have to start referring to you as the "Amazing Bill Gulley!"

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  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    14y

    LOL, Please, just Bill, you could take an equity partner on your home, some may call themselves credit partners.

    You go on title jointly with a buy out agreement subject to your making payments as agreed to buy out the other half interest. This can work but has some downsides, so make sure who ever you get in with won't get sued or take bankruptcy, whcih you can still come out of, but messy. You can cover death and incapacitation of the partner as well .......see an attorney if you find a partner. Your partner usually get a return on any investment and a % of equity if you sell or in your case, an agreed higher buy out price.....just be reasonable. Good luck

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