What are some creative strategies to structure win-win deals with motivated sellers?

To structure VTB/Seller financing effectively, grasp the seller's situation. If they're eager to sell for immediate cash needs or to address debt, convincing them for VTB might be challenging. However, if their priority is securing their asking price and they lack immediate investment plans, present seller financing. Emphasize the advantages: they become the lender, using an asset they know well as collateral; non-payment allows foreclosure/power of sale, and they gain tax benefits. Outline how VTB benefits you, and stress your exit plan. Ensure they consult an accountant for an unbiased perspective on VTB's advantages.

Financing options: Seller financing: Offer to buy the property with the seller carrying back a portion of the mortgage. This can be attractive to sellers who need time to sell their current home or want a steady stream of income. Lease-purchase option: Lease the property with the right to purchase it at a set price within a specific timeframe. This allows the seller to receive immediate income while you secure a future purchase commitment. Subject-to deals: Take over the seller's existing mortgage payments instead of obtaining a new loan. This can benefit sellers facing foreclosure or high mortgage rates.

Consider offering flexible financing options, such as lease-to-own or seller financing, to accommodate the seller's needs. Explore creative terms like delayed closings or seller concessions. Collaborate on finding mutually beneficial solutions that address the seller's motivations while meeting your investment goals. Building rapport and understanding with the seller, along with thinking outside the box, can lead to innovative and successful real estate transactions.

In my experience, Vendor Finance/Seller Financing is one of the best ways to structure a real estate deal. However, the seller must consider the following 3 points: (1) Lodge a Caveat or Second Mortgage on the property if the buyer has not fully paid off their finance from you. (2) Consider your stamp duty situation - which party bears the initial stamp duty cost? (3) Taxation - always seek advice from your accountant.

A business-minded (and/or business owning) seller will get this. The key question is 'what are you planing to do with the money?' You are effectively taking a loan from the seller, against which they can make a return. Pitch it as 'better than keeping it in the bank' (inflation, risk etc).

In negotiating a lease option, consider key points: Option Fee: Agree on a non-refundable fee for the purchase option. Monthly Rent: Set a slightly higher rent, with a portion potentially credited toward the purchase. Lease Duration: Determine a reasonable lease term with a clear expiration date. Purchase Price: Specify a fixed or formula-based price, accounting for market conditions. Maintenance: Clarify tenant responsibilities for property upkeep. Market Conditions: Address potential price adjustments based on market changes. Seller Financing Insurance and Taxes: Clearly outline obligations for each party Default Terms: Define default conditions and consequences. Flexibility: Remain open to negotiations based on both parties' needs.

If you were my brother, here’s the truth about lease options. Can you handle it? If home values rise after setting a lease option price, you could miss out on profits. Selling now at market value ensures you get the most for your property. Lease options have legal fine print. It includes rent credits, option fees, and disputes. A straightforward sale avoids these headaches. It’s often unclear who handles repairs. Selling outright means no maintenance worries and more focus on your next move. Even with an option fee, there’s no guarantee your tenant will buy. If they back out, you lose time finding another buyer. Lease options seem flexible, but they add complexity.

Nothing against Lease Option, however personally I consider Call Option (deposit) has a better structure than Lease Option. It potentially gives more time and lower upfront fee. Typically developers will use Put and Call Option to secure Development Site rather than Lease Option.

Sellers will often consider a lease option for one of two reasons: 1). If they've been renting for a long term and want to have less of an active role in the management of said asset. 2). If they can get more cash later than they can right now, they will often consider terms like lease options.

Options are fantastic at helping remove barriers to entry. A key question in using Options to acquire residential stock is, 'do you need all the money now'? If the answer is yes, you will struggle to get this to work. If no, and they can do a delayed sale, there's a potential win:win on the cards.

Great job overall by the AI on this arrival. However, on this financing option, I believe the explanation is over simplified. For example, to take over mortgage payments, the new ‘borrower’ would need to be qualified and approved by the lender. So avoiding a ‘credit check’ may not be feasible.

Buckle up, butter cup. This one might sting. "Subject to" deals can seem like a lifeline for sellers in tough spots. But they carry significant risks that aren't always clear upfront. These deals might benefit buyers. But, they can leave sellers with all the risk and little control over their finances. If you're considering a "subject to" offer, know the risks. It may affect your credit, ability to buy another home, and financial stability. Tread lightly. Consult a knowledgeable real estate attorney before signing anything. It might save your shirt.

I love a subject to agreement! The other comment on this thread isn't accurate - you don't need to be approved and qualified to take over someone else's debt, because it stays in their name. You are simply making the payments on their behalf. The title and ownership can transfer without the debt being transferred, and that's the essence of a subto deal.

In my experience, "Subject To" is usually used by developers who want to subject a property to a Development Application (DA), allowing for a longer settlement time. Another trick developers use is "Subject to Valuation," giving them room to adjust the offering price. For example, they may use "Subject To Valuation For Mortgage Purposes" as the purchase price. Many industry professionals know that valuation for mortgage purposes is typically more conservative than market value.

Imagine you want to buy a property, but a big down payment feels like a mountain to climb. Subject to lets you take over the seller's existing mortgage payments – the loan stays in their name, but you handle the payments. Benefits for you? Low (or even no!) down payment, skipping credit checks, and potentially snagging a sweet interest rate the seller already has. Bonus: It can help you build your own credit history for future purchases! For the seller? They're off the hook for those monthly payments, potentially avoiding foreclosure and even improving their credit score. It's a win-win for everyone!

I've a lot of successful investors make a business out of selling wraparound mortgages. They'll get a property on seller financing or subject to, renovate the property and then resell it on a wrap. By doing this, they'll cashflow for the life of the loan without owning the property. It's a great way to create cashflow and not have to deal with any of the issues that come with ownership (tenants, repairs, market crash, etc).

In my experience, you would not be able to use a wraparound mortgage while the landowner still keeps their original loan, unless it is a second mortgage or a refinanced first mortgage. Banks or non-bank lenders usually prioritise the first mortgage ranking of the property. Typically, developers will use a new business entity to sign a Development Management Agreement (DMA) with the landowner to control the property. The developer then applies for a loan as the borrower with the landowner as the guarantor.

An optimal candidate for equity sharing is a seller with constrained liquidity, particularly if their property requires renovations and is distressed. This scenario presents an opportunity for a partnership: you can undertake the renovations, share the resulting profits with the seller, and benefit from reduced closing costs as long as the seller retains title. By avoiding land transfer taxes and lawyer closing fees, substantial savings, potentially tens of thousands, can be realized. It's crucial to establish a robust contract and engage in a thorough discussion with the seller to address the pros and cons of this arrangement.

Thinking outside the box: Trade properties: If you own another property, consider proposing a trade, especially if both properties suit each other's needs. Rent-back agreement: Allow the seller to rent the property back for a short period after closing, providing them with temporary housing and you with guaranteed rent. Joint venture: Partner with the seller on a future development project or renovation, leveraging their property and your resources.

Equity sharing can also involve "Trading with Stock"; when the property development finishes, the client can retain units of the apartment/house as profit. This could be another way to receive rewards without taking cash. It may potentially offer better tax benefits, but you must consider stamp duty and other taxes. It's always a good idea to consult your accountant.

This could be on a joint venture perspective, on a deal-by-deal basis. Or could involve raising capital and selling equity in your business, much as we are currently doing.