Creative Financing - Fix & Hold

[Nicholas A.]

Hello,

I bought a home in the Bishop Arts area in December 2021, one street south of Jefferson Blvd. A really beautiful home that was completely renovated which included an additional 15-20 feet of home addition to the back of the house. A complete gut and rebuild. This home is currently a long-term rental. 1,900 sqft, 3 bed, 2.5 bath, currently renting for $3,400.00 per month.

Recently, after some conversation with my neighbor, they let me know that they desire to sell their home and move away. I told him that I wanted to purchase the home. 

Home in Question: 1,996 sqft, 4 bed, 2 bath (duplex) / (Likely to adjust the bedroom / bathroom matrix to meet local demand). Will likely need to be completely gutted and rebuilt.

 He text me the other day letting me know that he's ready to sell. 

I want to creatively finance this deal. I have no experience with creative finance, but have an understanding of how this strategy is executed.

I have a few concerns / questions / thoughts:

1. How do I creatively finance a deal that will need major rehab?

2. I do not have capital for this deal, but can run / manage all construction etc, as I live locally.

3. I need a partner to compete this deal.

4. I have not presented creative financing as a solution, but I am confident that he would accept such a proposal if I could help him get what he wants.

I look forward to your input!

- Nick Aja 

[Denver McClure]

Hey @Nicholas A., fellow Bishop Arts resident and investor here! Here's my quick stab at your questions, but I'd be happy to chat anytime if you'd like more info. Feel free to PM me.

1. Approach the seller and ask if they would do seller financing on the property. It's fine if you want to be transparent and tell him that after you renovate it that you'll put a traditional mortgage on it and pay him in full. If he's not interested in that, there are a  few other routes you can take to get the short term capital needed to acquire the asset.

2. We can help source hard money loans, construction loans, secured and unsecured loans, portfolio margin loans, small business loans, etc to help you get the capital for this deal.

3. Several of my clients are interested in bishop arts properties. I'm sure we can find someone with similar goals who would be a great fit for you. We just need to understand the partnership you are looking for.

4. Locking in your strategy with your partner and financing options will make this easy for you. It's all about the seller's current needs, outside of that you can build the terms to help him without over-leveraging yourself or your partner.