Sharing my Latest Creative Financing

[Jesse Edwards]

Hey everyone,

I wanted to share an exciting creative financing deal I just closed that resulted in over $50k in equity, with only $6k cash to close, plus many other benefits! My agent brought me a great off-market deal that for 140k, that I knew was worth much more given we've been working on other properties in the area. 

In fact, we have a flip coming to market soon and we really needed stronger comps to support the price point we're going to be pushing. So I started trying to get creative on how to create a win-win-win for all.

Here’s how it went down:

1. I got the sellers to agree to an asking price of $180k, a full $40k over what they originally wanted.
2. In the offer, we included a seller credit of $34k.
3. This strategy allowed me to cover the extra commission for both the buying and selling agents and ensure the seller got exactly the cash they wanted should they have sold it at 140k.
4. With the seller credit, this reduced my total out-of-pocket expense to just $6k.

I used a commercial DSCR loan product with a local bank. The flexibility with commercial loans is amazing. Normally, the cap on seller concessions is 6% of the sale price, but that's not the case for commercial loans.

Here are the trade-offs:

• 5-year stepped prepayment: A typical residential loan at this price point isn’t allowed in the state, but with commercial, those rules are different.
• 20-year amortization: This means higher payments, but it forced me to ensure my deal works under strict terms.
• Interest rate: It came in at 7.9%, not stellar but still good.

Overall, I’m pretty proud of this deal. Here’s what it netted me:

• $52k in equity at closing: The home appraised at $185k, a full $45k over the original asking price.
• A solid comp for my flip about to hit the market.
• A happy seller who got what they were asking for and more.
• Satisfied buyers and sellers agents with even more commissions.
• Only $6k down: This is about 3% of the purchase price.

I wanted to share this to help get your creative juices flowing when it comes to making deals. Sometimes thinking outside the box and leveraging different financing products can lead to amazing opportunities!

Feel free to reach out if you have any questions or want to chat more about this.