Creative Finance for Realtors

THE MARKET HAS SHIFTED

DO YOU HAVE WHAT IT TAKES?

Creative finance is a critical tool for navigating market instability. Would you rather learn it all for yourself, or get paid for knowing an expert?

We help realtors turn trash into cash. Do you have a "deal" with one of the following issues?

Creative Strategies

The following is not an exhaustive list, but are the most common strategies Creative TC facilitates.

Subto

In a typical subject-to transaction, the buyer allows one or more mortgages to stay in place and agrees to make those payments on behalf of the seller. The parties acknowledge the due-on-sale clause and sign the additional paperwork Creative TC brings to the closing to ensure that the deal not only closes, but that it's smooth and successful for years to come.

The property transfers to the buyer, but the mortgage stays in the name of the seller and on the seller's credit report.

Did you know every transaction is some form of subto? Consider all the rights-of-way, water rights, utility easements, etc... every property is ultimately bought subject to those encumbrances.

But isn't subto illegal? Is it illegal to sell a property subject to the mortgage?

Nope. Technically it's a default of the mortgage contract. That means the lender has the option to call the loan due-on-sale (extremely rare), and if the borrower cures the default, the lender must continue/reinstate the mortgage.

We have multiple strategies for handling a due-on-sale, and it doesn't scare us a bit.

Seller Finance / Seller Carry

Sellers either want or have to finance their equity to their buyer, and a promissory note and mortgage are created for the debt.

This can be combined with subto, making it a hybrid wherein the seller's equity is secured as a 2nd position lien for the Buyer.

Wraparound Mortgage

Wraps are a form of seller finance one or more underlying liens are rolled into a single, all-inclusive note and mortgage which has it's own interest rate. The underlying liens are listed in the documents and are paid on schedule, and what's left after the other payments goes to the seller/investor as profit.

Novation (“agreement to rehab and sell” - similar to Net Listing)

It's all in the name: Agreement to Rehab and Sell.

The buyer brings funds and labor, fixes up the property without buying it, and then sells the property. Typically, the buyer makes all mortgage payments from the contract until the closing (30-180 days). The seller usually gets paid a flat dollar amount and/or a percentage of the sales price.

This strategy significantly reduces expenses to flippers who would otherwise have to borrow funds for the purchase as well as the rehab.