Combining Seller Carry Financing & Hard Money Loans in California

Mortgage and Lending with All California Lending BRE# 01458390

We work with many unique situations when dealing with hard money loans in California.  One unique situation involves seller carry financing in conjunction with a hard money loan.  While many conventional lenders will not work with this situation, we have funding available to help take advantage of the higher leverage point this combination can bring.

For investors looking to purchase distressed properties, leverage is often the key.  Utilizing hard money funding can help with this leverage.  This is especially true in fix and flip funding scenarios.  In these situations, we can put loans together based on the ARV, or after repair value of the property.  This allows for higher leverage than basing the loan on the purchase price.

For savvy investors who are able to find seller carry situations, combining a seller carry back with this ARV funding can potentially enable 100% funding on both the acquisition as well as the rehab.  We have programs that will treat a seller carry as cash in from the buyer.  In these situations, the seller carry must be in second position to the first position hard money loan.  Under those circumstances, however, we have successfully enabled many investors to acquire property with little to no money out of pocket.

Seller carry back financing can be combined with our hard money loans in other situations as well.  Land purchases is another category where we see this.  Land typically does not sell as quickly as improved property.  For distressed sellers, sellers who have inherited a property or sellers who have had the property on the market for long periods of time, a seller carry can make a lot of sense.  

In these situations it can be more difficult to get in with zero cash out of pocket.  Typically on land we will need some 'skin in the game'.  With that being said, however, it is not impossible depending on the deal.  A more common situation would be a seller carry of say 30%, 20% cash down and a hard money loan in first position of 50%.

There are many other situations where a seller carry back makes sense.  Family sales of property is another example.  With hard money loans we do not have an issue if a family member is selling to another family member and carrying back a portion of the purchase price to help them out.  We can structure financing to take advantage of this situation for our clients.

Unique properties are another time when seller financing may come into play.  Properties that may be problematic to finance through traditional means for a variety of reasons.  Utilizing a seller carry back can help push the transaction through, allowing the seller to realize cash on the sale and the buyer to acquire the desired property.

There are many creative solutions when it comes to financing.  If a seller carry back is being offered, give us a call to discuss how we can leverage this scenario to your advantage.  We can help with loans on most property types throughout the state of California, and specialize in out of the box, unique scenarios!

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