Primary Home - Creative Financing

[Shravan Hemchand]

Hello Bigger Pockets Community,

I'm currently in the process of considering purchasing my first primary home and I'm exploring the option of creative financing. The seller seems motivated to sell, which has piqued my interest in exploring alternative financing options.

I'm seeking advice and insights from the experienced members of this community who have successfully utilized creative financing strategies in the past. I would greatly appreciate any tips, recommendations, or cautionary tales you can share based on your own experiences.

Specifically, I'm interested in learning about different creative financing methods, potential pitfalls to watch out for, and any legal or financial considerations that I should be aware of before proceeding. 

Details on the deal: 

- The seller has $288,000 left on the mortgage and has a 3.6 percent interest rate. 

Thank you in advance for your valuable insights and guidance. 

[Stuart Udis]

With respect to the property you are trying to buy, it doesn't seem like a fact pattern that screams creative financing. More generally, are there opportunities to utilize creative financing? Sure. Is it common? No. Anyone who tells you otherwise or claims to have done these deals in volume is likely willing to sell you a course. Also, full disclosure - I have utilized creative financing & transaction structures (installment sale transactions, had the seller take back 2nd position notes, baked brokerage fees into the agrement of sale  in off market transactions to name a few), so I am not opposed to it, but they were utilized in very unique and circumstantial land entitlement transactions.

 Put yourself in the shoes of the seller who is willing to offer seller financing or perhaps enter into a sub-to transaction which are  two commonly contemplated creative ways to structure transactions on BP. Why would you want to enter into such an agreement? You likely wouldn't, so why would the seller? I say this to illustrate a point which is you are looking for unicorns or the property is not marketable in a traditional transaction (could be location, condition, price etc.) and therefore the seller has to offer creative financing as a concession to off load a bad asset. I personally wouldn't want to purchase bad assets, even if favorable creative financing was offered and I am confident I can accomplish more buying assets in a more traditional transaction than hunting down the unicorns.  

I don't want to discourage you from seeking out the creatively structured transactions but don't expect to assemble a portfolio other investors will envy.