if only there was a way to cut out the banks...

if only there was a way to cut out the banks...

Hey gang, I wanted to change the focus of this week's email to explain an option that many people aren't aware exists that I think would help in this market.

Did you know that there's a way to buy and sell homes that cut out the banks?


This technique was very popular in the 80s when interest rates were over 18%, and although homes were more "affordable" back then, the high interest rates were pricing so many out of home ownership.

Sound familiar?

This is a technique that I and many savvy real estate investors use regularly to allow us to pay more for properties, and yet still get a better deal than other investor buyers who aren't familiar with this technique.

Collectively it's called Creative Financing.

Inside of that umbrella are a myriad of different techniques but for the sake of brevity I'll focus on only one in this email: "Subject to". 

(if you'd like me to do a deeper dive in other approaches click here to let me know)

Before I explain how it works I have a question for you: when a traditional buyer gets a loan... to pay off the seller's loan... who makes all the money? 

(don't you dare say realtors... I know who you are!)


Yeah the banks do. So what is the point of getting a loan (and paying all the costs associated with that) just to pay off another loan? 

Why not just... take over the other loan?

That's essentially how 'Subject to' works: you're taking title 'subject to' the existing lien.


I'll give you an example:

Imagine you're a buyer and you want to buy a $500k house and you have 10% to put down. If you go the traditional financing route you could have approx 10-15k in lender fees so you'd end up bringing about 60 - 65k to closing.

Let's say you find the perfect house for $500k. you want to buy it so you'd be bringing 65k to closing: 50k for the 10% down and 15k for loan fees, and you would get a loan for the remaining $450k.

At today's interest rate of about 7% you'll be paying approx 3k/mo in principal and interest payments for a loan of $450k.

let's say in this case the seller happens to owe $450k as well but they have a 3.75% interest rate loan. Their payments for that same 450k loan is a little over 2k/mo.

If you could take over their loan you'd be saving almost 1k/mo!!!

So what if you wanted to "sweeten the deal" to the seller and you offered them $515k for their house? You'd give them the same 65k you were going to bring to closing but instead of the banks making that extra scrilla, you keep it in the transaction and both you and the seller benefit: you as the buyer save 1k / mo and the seller gets an extra 15k!

Sellers, I'm talking to you now:

What if in that same situation you wanted to make an extra 30k instead of just the extra 15k and were willing to be a little patient...?


Maybe you could say to the buyer: I tell you what, you give me that 65k you were going to bring at closing and instead of paying the 2k/mo you pay 3k/mo for the next 15 months, then you can have my 2k/mo payments for however long you stayed in the house...

do you think a buyer would go for that?

on one hand they pay 3k/mo starting day 1, or on the other hand (and with no extra money coming out of their pocket!) they only pay 3k/mo for a little over a year, then their payments drop to 2k/mo.

not a bad deal!

and just like that, you as the seller make an extra 30k on your house!

and just like that, you as the buyer paid the seller 30k more than they were asking AND you end up with a 3.75% interest rate loan starting the 2nd year.

ok now if this describes you right now...


...you have lots of questions.

if this is something you're interested in learning more about whether to help you as a buyer, a seller, or an investor, I'd be happy to spend a couple mins on the phone answering them: click here to grab a slot on my calendar.

That's all I wanted to share this week. I hope this inspires some of you who want to buy and or sell this year but feel discouraged about the market and interest rates.

just know, where there's a will there's a way! it's that much more important that you partner with a professional real estate agent. someone whose role is to actually advise, and give you options to help you achieve your goal.

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