100 episodes

If you want to learn the best creative financing strategies in real estate investing out there today then this is the podcast for you. We cover Contract for Deeds, Lease Options, All Inclusive Trust Deeds or Wrap around Mortgages, Subject To's, and Seller Carry Back or Subordination. This is Jonathen's journey of learning creative financing for Real Estate Investing, Wholesaling, and Flipping from Jeff Rappaport who has been executing these strategies since 1999.

The Creative Financing Podcast Jonathen G. and Jeff Rappaport: Real Estate Investing and Creative Financing Expert

    • Business
    • 4.8 • 127 Ratings

If you want to learn the best creative financing strategies in real estate investing out there today then this is the podcast for you. We cover Contract for Deeds, Lease Options, All Inclusive Trust Deeds or Wrap around Mortgages, Subject To's, and Seller Carry Back or Subordination. This is Jonathen's journey of learning creative financing for Real Estate Investing, Wholesaling, and Flipping from Jeff Rappaport who has been executing these strategies since 1999.

    Ep 178 pt.3 Understanding Creative Financing; All The Strategies

    Ep 178 pt.3 Understanding Creative Financing; All The Strategies

    In this series we talk about understanding creative financing, the strategies used, and the pro’s and con’s of each. Here are the different strategies and how they pertain to the following …


    Title Transfer 


    Foreclosure


    Taxes


    Due on Sale Clause


    Maintenance and Repairs, 


    Closing and Transfer tax


     


    Lease Options- No title transfer, so no closing or transfer tax, no foreclosure, only eviction. No Due on sale. Maintenance can be passed on to the tenant. Taxes are typically paid by the Landlord.

    Contract For Deed/Land Contract- No title transfer, there is typically a closing but no transfer tax until the contract is fulfilled. No foreclosure just a Forfeiture process, which differs state to state. Taxes paid by Buyer, Buyer responsible for maintenance and repairs because this is a sale.

    1st position Trust Deed and Note- Only used when property is free and clear. Title does transfer, so there is a closing and transfer tax if applicable by state.  Foreclosure process. Taxes paid by Buyer, Buyer responsible for maintenance and repairs. No Due on Sale because the property was free and clear.

    Seller Subordination- Title does transfer,so there is a closing and transfer tax if applicable by state. Foreclosure process, Taxes paid by Buyer, Buyer responsible for maintenance and repairs. No Due on Sale because the first mortgage should be paid off at closing. . 

    All Inclusive Trust Deed/Wrap Around Mortgage- Title does transfer, so there is a closing and transfer tax if applicable by state. Foreclosure process, Taxes paid by Buyer, Buyer responsible for maintenance and repairs. There is a Due on Sale because there is an existing loan in place.

    Subject-To- there is no recourse for the Seller to take back the property. Title does transfer, so there is a closing and transfer tax if applicable by state. Foreclosure process, Taxes paid by Buyer, Buyer responsible for maintenance and repairs.. There is a Due on Sale because of the existing loan in place.

     


    We use an example of a property with 4 single family homes on one lot. It needs about 60K in repairs, the seller is asking 110K and owns it free and clear. It can rent for 2400/month with an estimated expense of 800/month, which leaves 1600 in monthly cash flow. We can offer the Seller 750/month principle only. Now with the amount needed in repairs we need to get in light, say 5K, then refinance the property as soon as possible after repairs are complete, in order to recapture our capital. So what strategy do we use? We would just use a 1st position trust deed and note because it's free and clear.  


     


    Now Let's say there is a debt of 40K with 550/month payment. Then what? Well we can still offer 750/month, with wrapping their exact loan terms and offer 200 in principal only payments on a second note for the balance of their equity. This is where we would use an All inclusive trust deed and note or wrap around mortgage as our strategy.

    • 23 min
    Ep 177 pt2 Understanding Creative Financing; All The Strategies

    Ep 177 pt2 Understanding Creative Financing; All The Strategies

    In this series we talk about understanding creative financing, the strategies used, and the pro’s and con’s of each. Here are the different strategies and how they pertain to the following …


     


    Title Transfer 


    Foreclosure


    Taxes


    Due on Sale Clause


    Maintenance and Repairs, 


    Closing and Transfer tax


     


    Lease Options- No title transfer, so no closing or transfer tax, no foreclosure, only eviction. No Due on sale. Maintenance can be passed on to the tenant. Taxes are typically paid by the Landlord.

    Contract For Deed/Land Contract- No title transfer, there is typically a closing but no transfer tax until the contract is fulfilled. No foreclosure just a Forfeiture process, which differs state to state. Taxes paid by Buyer, Buyer responsible for maintenance and repairs because this is a sale.

    1st position Trust Deed and Note- Only used when property is free and clear. Title does transfer, so there is a closing and transfer tax if applicable by state.  Foreclosure process. Taxes paid by Buyer, Buyer responsible for maintenance and repairs. No Due on Sale because the property was free and clear.

    Seller Subordination- Title does transfer,so there is a closing and transfer tax if applicable by state. Foreclosure process, Taxes paid by Buyer, Buyer responsible for maintenance and repairs. No Due on Sale because the first mortgage should be paid off at closing. . 

    All Inclusive Trust Deed/Wrap Around Mortgage- Title does transfer, so there is a closing and transfer tax if applicable by state. Foreclosure process, Taxes paid by Buyer, Buyer responsible for maintenance and repairs. There is a Due on Sale because there is an existing loan in place.

    Subject-To- there is no recourse for the Seller to take back the property. Title does transfer, so there is a closing and transfer tax if applicable by state. Foreclosure process, Taxes paid by Buyer, Buyer responsible for maintenance and repairs.. There is a Due on Sale because of the existing loan in place.

    We use an example of a property with 4 single family homes on one lot. It needs about 60K in repairs, the seller is asking 110K and owns it free and clear. It can rent for 2400/month with an estimated expense of 800/month, which leaves 1600 in monthly cash flow. We can offer the Seller 750/month principle only. Now with the amount needed in repairs we need to get in light, say 5K, then refinance the property as soon as possible after repairs are complete, in order to recapture our capital. So what strategy do we use? We would just use a 1st position trust deed and note because it's free and clear.  


     


    Now Let's say there is a debt of 40K with 550/month payment. Then what? Well we can still offer 750/month, with wrapping their exact loan terms and offer 200 in principal only payments on a second note for the balance of their equity. This is where we would use an All inclusive trust deed and note or wrap around mortgage as our strategy.

    • 28 min
    Ep 176 pt.1 Understanding Creative Financing; All The Strategies

    Ep 176 pt.1 Understanding Creative Financing; All The Strategies

    In this series we talk about understanding creative financing, the strategies used, and the pro’s and con’s of each. Here are the different strategies and how they pertain to the following …


    Title Transfer 


    Foreclosure


    Taxes


    Due on Sale Clause


    Maintenance and Repairs, 


    Closing and Transfer tax


     


    Lease Options- No title transfer, so no closing or transfer tax, no foreclosure, only eviction. No Due on sale. Maintenance can be passed on to the tenant. Taxes are typically paid by the Landlord.

    Contract For Deed/Land Contract- No title transfer, there is typically a closing but no transfer tax until the contract is fulfilled. No foreclosure just a Forfeiture process, which differs state to state. Taxes paid by Buyer, Buyer responsible for maintenance and repairs because this is a sale.

    1st position Trust Deed and Note- Only used when property is free and clear. Title does transfer, so there is a closing and transfer tax if applicable by state.  Foreclosure process. Taxes paid by Buyer, Buyer responsible for maintenance and repairs. No Due on Sale because the property was free and clear.

    Seller Subordination- Title does transfer,so there is a closing and transfer tax if applicable by state. Foreclosure process, Taxes paid by Buyer, Buyer responsible for maintenance and repairs. No Due on Sale because the first mortgage should be paid off at closing. . 

    All Inclusive Trust Deed/Wrap Around Mortgage- Title does transfer, so there is a closing and transfer tax if applicable by state. Foreclosure process, Taxes paid by Buyer, Buyer responsible for maintenance and repairs. There is a Due on Sale because there is an existing loan in place.

    Subject-To- there is no recourse for the Seller to take back the property. Title does transfer, so there is a closing and transfer tax if applicable by state. Foreclosure process, Taxes paid by Buyer, Buyer responsible for maintenance and repairs.. There is a Due on Sale because of the existing loan in place.

     


    We use an example of a property with 4 single family homes on one lot. It needs about 60K in repairs, the seller is asking 110K and owns it free and clear. It can rent for 2400/month with an estimated expense of 800/month, which leaves 1600 in monthly cash flow. We can offer the Seller 750/month principle only. Now with the amount needed in repairs we need to get in light, say 5K, then refinance the property as soon as possible after repairs are complete, in order to recapture our capital. So what strategy do we use? We would just use a 1st position trust deed and note because it's free and clear.  


     


    Now Let's say there is a debt of 40K with 550/month payment. Then what? Well we can still offer 750/month, with wrapping their exact loan terms and offer 200 in principal only payments on a second note for the balance of their equity. This is where we would use an All inclusive trust deed and note or wrap around mortgage as our strategy.

    • 30 min
    Ep 175 How To Deal With A Seller’s High Asking Price

    Ep 175 How To Deal With A Seller’s High Asking Price

    We use the example of a seller asking 700K for a property worth only 600K. Here are the important things that have to work for you, if you overpay for a property-


    These are probably deals you should hold yourself, so you don’t have to convince someone else to over pay for the property.

    You need a low down payment because you are already overpaying for.

    You need considerable principal paydown. Either by principal only payments or low hybrid interest rate for a longer term. 

    You need to be able to pick your monthly payment. This is probably the most important thing.

    You need a longer term 5-10yrs.

     


    Let's say we offer 700K with 25K down. That's a light down payment. Now we need to pick a payment that works for us. So let's say you can rent this property for 4K/month then you would want your payment to be 2,500/month so you have some cash flow. Now you need a term long enough to end up at an 80% loan-to-value by the end of your term. So that when you refinance or sell the property you won’t have to come up with money out of pocket to do so. 


     


    Now what kind of offer can we put together? Well, given that your financing 675K (PV on your financial calculator) and your payment is -$2,500 (PMT on your calculator), you need to play with the term (N on your financial calculator) and the interest rate (I/YR)...


     


    Here is what I came up with. 


     


    Purchase price 700K with 25K down. Present  Value 675,000. 1.8% interest for 10yrs (120 months) with a monthly payment of 2,500 would give us a balloon payment of $479,582.22 at the end of our term which is right where we need to be for 80% loan-to-value. This offer allows you to over pay,  to cash flow the property, and to be in a position to refinance at the end of your term without any significant money out of pocket. If the Seller wants a premium price then you need premium terms. By the way, if you can find a deal like this, you could earn about a 50% cash on cash return. That’s the power of Creative Financing.

    • 29 min
    Ep 174 How Our Last Deal Transpired And How To Renegotiate

    Ep 174 How Our Last Deal Transpired And How To Renegotiate

    On this episode we talk about the last deal we created offers on. What happened and the lessons learned. The Seller initially accepted the Seller Subordination offer but was confused on the down payment so Jeff had to re-negotiate. Jeff explains why sometimes, it’s not in your best interest to make  more offers because the Seller picks and chooses what purchase price they want, with what down payment. Listen closely to find out what happened and how Jeff was still able to get the deal done. And more importantly the lessons learned. Here is the summary of offers-


     


    4 offers.


    -Cash $162,220.


    -Short term $173,000pp w/20K down. Make the existing payment for 7months. 


    -All inclusive 200K w/ 8K hybrid interest 2.5% interest. 900/month payment 36 months. $173,327 balloon.


    -Seller subordination of $197,000pp, 90K down, owe 107K to Seller, payments 450/m principle only for 4 yrs. Balloon 85,4000. 7% interest only on first mortgage, payment to be 525/month.  Cash flow estimated to be 313/month.

    • 43 min
    Ep 172 pt3. Jonathen's Turn- Deal Structuring Straight From The CRM.

    Ep 172 pt3. Jonathen's Turn- Deal Structuring Straight From The CRM.

    Deal structuring straight from the CRM- Jonathon’s turn.


    Now it’s Jonathen’s turn to structure the offers… In this series we pull leads straight from Jeff’s CRM for some deal structuring. If you are generating leads and want to utilize creative financing then you’ll need to go through the same process as we are in this series. Here are the details of the property and notes on offer structures...


     


    Deal #1


    Property info- Wyoming SFH, 3 bed, 2 bath, 1 car garage, 2200 sqft, .23 acre, built in 1963. Occupied by the owner. 74K owed on mortgage. 736 piti/monthly payment. Owner wants to move right away to join husband in Texas who has taken a new job opportunity. Minor repairs needed. Taxes 1421/yr.


     


    Before we create offers we must- Pull comps, check taxes, and pull Rental comps. Sources: Zillow, County Assessor, Biggerpockets and Rentometer.


     


    Worth 260K-270K by realtor opinion. Asking 170-175K. To be structured as All inclusive trust deed/wrap around mortgage for existing loan terms plus new note.


     


    Offers


    Cash 160K 

     


    Short term finance offer 175K. 15K  1,000. At 4%  6months 157,176. Plus taxes and insurance. 

     


    Long term 4 yr. 190K 10K 2.5% ,1000/month  Balloon to Seller $148,483. Sell to an owner occ for 275K with 3K. 228,740 Difference $80,257 + 20K =110,257 13,344 cash flow over 4yrs= 13,344+110,257= $113,601. Seller grosses 206,483 over 4yrs.

     


    Subordination 210K 80K down. 3yrs Seller financed 130K. 533.33/ month int only to our lender.  500/month principle only to the seller. Seller balloon 112,000. Our Buyer’s  Ballon $233,098= 41,098 difference plus 8,820 cash flow= 49,918 plus 30K down from our buyer = 79,918 profit. 

     


    Hope you enjoy!

    • 48 min

Customer Reviews

4.8 out of 5
127 Ratings

127 Ratings

Coreyjay24 ,

Create Learning Podcast

This podcast is awesome, a lot of meat and potatoes and practical advice on how to use creative terms in RE. If you just follow along and write the numbers down you be able to go out and do a creative deal in no time.

TheJMan5000 ,

Awesome!!!

This is must-listen for any investor or real estate professional. So much great info on creative finance and deal structuring on the residential and commercial sides. Highly recommend!!

Bbell6 ,

love the step by step walkthroughs

not too much info. not too high level. Really love sitting down with my calculator (or not) when I listen. Thank you for creating this value.

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