Deal Structure/Creative Finance...HELP

Im primarily a short sale and wholesale guy, but I’ve never done any creative financing, so I need some assistance here. I tried wholesaling, but response was lukewarm and I think it’s because of the opportunities in the city next door, Trenton. You can purchase properties out there for 25k+/- with 10-15k rehab and rent for 900+/-. The only problem is there’s a lot of war zone, so it can be tricky.

Here are the cold facts:

Subject is a bungalow/ranch 5/2/1 in Hamilton, NJ owned free and clear

Asking Price $32k
Taxes: $3,500/year
Repairs 35k
ARV $105k (conservative)
Potential Rent $1,000 – 1,200 ( I always lean towards the lower end personally)

I was thinking - Buy/hold, ask owner to hold financing, partner to complete the repairs, place a tenant in there, refi the owner out, and hold for cash flow. Given the above, how would you structure this deal?


Agree on a price that will work for you and the seller, tell the seller that because of the current condition of the property you can not get conventional financing so you will need them to work with you to create a deal!

Ask seller to carry owner financing for 18 months and to subordinate there TD Note to new financing. (A Hard Money or Private Money Loan) Make sure you completely estimate both hard and soft costs and borrow what you need, I am thinking you actually borrow about 75% LTV between your purchase agreement note and your rehab money. ($30k purchase plus $48k HML = $78k or 75% of FMV) This gives you funds for carrying cost’s, points, etc.

You have the potential to make about $20k in this if you have to sell it and if you have the ability to refinance you are less than 75% LTV and provided you can show reserves and qualify to refinance it you have a rental!

I think I would try to negotiate something around $26k to $28k range if possible! Offer 8% interest with payments wrapped into the loan and due on sale or refinance, this saves you from having to actually pay this cost monthly, if they really need payments then factor it into your expenses, at $28k the payment is only $186 per month!


Deal result: Negotiated the purchase price to $29,500, found an investor to purchase at $35,000, for a profit of $5,500. The construction cost was my biggest issue, so I took the quick cash. Thanks again for the advice.