I have approximately $25,000 to invest. My strategy is to invest in fix & flip properties, where I can use the same $25,000 over and over again. As I build equity, my plans are to invest the excess equity in buy and hold properties. I have a lead on a duplex in a market where I think there is potential for future appreciation. I don't want to pass this opportunity up, if I can negotiate a good price on the duplex.

I have a good credit rating and have no issues getting bank financing. I could use the $25,000 as a down payment. If I do that, I would not have the funds left to invest in the fix & flip part of my business. I would have to wait about 3-5 years, re-investing the cashflow from this duplex back into the business before I could look for the next deal. This does not achieve my goal of $20,000 income in the first year.

There is a potential for seller financing. One thought I had was to negotiate a carryback loan with the seller. My thinking is to negotiate a $20,000 carryback loan with funds dispersed at closing. The seller would have to agree to a second position on the deed. The loan would have a 30 yr amortization, with a 5 or 10 year balloon. I would use the funds to cover the downpayment. This will allow me to continue investing in the fix & flip part of my business and not pass on this opportunity.

Will financial institutions allow a carryback loan such as this to cover the downpayment? Since I have the funds in the bank, I am not sure if this will make a difference. If the financial institutions will not allow the carryback loan, are there other ways I can structure the deal and still make this happen? Can I use the funds in my bank account for the downpayment and do a second close a few days later?

Line of credit on my house is out of the question.

I'm looking for ideas from those of you who have successfully used creative financing to close on deal.

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Creative Financing on a Duplex

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