Creative Financing Approaches..

[Mohamed Youssef]

When conventional financing isn't available, creative investors find alternative paths.

Master lease options have regained popularity. One investor secured control of a 12-unit building through a 3-year master lease with a purchase option, allowing time to improve operations before obtaining traditional financing. The structure gave the seller current income while granting the buyer control without conventional financing.

Another approach gaining traction: hybrid seller financing, where the seller carries a second position while the buyer secures a smaller conventional first mortgage. This reduces the lender's exposure while giving the seller priority over completely unsecured financing.

For construction projects, I've heard of successful implementations of "construction-to-perm" private financing where a single investor provides both construction capital and takeout financing, eliminating the uncertainty of securing permanent financing after completion.

The common thread: successful creative financing typically offers clear alignment of interests rather than just favorable terms.

What creative financing structures have you successfully implemented? Anyone willing to share details of terms that worked for both parties?