I saw a very creative way to finance a cash flow property today. The strange thing is that the one who came up with the idea in the deal was the seller. The property was in pretty good condition, but several things came back on the inspection needing to be fixed up. The buyer wasn’t in a position where he was willing to put 20% down (to avoid PMI) and fix everything that needed to be done. It was a simple amount of money, but enough to make the numbers too tight and therefore out of reach for him.
The buyer was asking for the place to be rehabbed and the price to be dropped. In great fashion, the seller, who is desperate, offered to carry back a 10% second mortgage at 6% interest, only there would be no payments. He only wanted it to be paid off when the place was sold or refinanced.
What a great idea. He knew the buyer was concerned about the cash flow and that he just needed it sold. So, he found a way to make it work for both of them.
Who benefits from your investing? If you’re the only one, it’s not likely that will last very long. If everyone else around you wins with you, they’ll be likely to promote you and make you more successful.
Tuesday’s Tip: Become the Leonardo da Vinci of investment real estate. Make every deal a masterpiece by being creative.
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