What Creative Financing Solutions Benefit Real Estate Transactions?

What Creative Financing Solutions Benefit Real Estate Transactions?

Diving into the innovative world of real estate financing, we've gathered insights from ten industry experts from brokers to company presidents to share their unique strategies. From securing a portfolio loan that caters to the self-employed to employing a syndication model for investors, these professionals reveal how creative financing solutions can transform property deals.

• Secured Portfolio Loan for Self-Employed
• Buy Before You Sell Program
• Upsize Home with Equity Release
• Facilitated Community Land Trust Arrangement
• Structured Shared-Appreciation Mortgage
• Arranged Delayed-Financing Exception
• Employed Reverse Mortgage for Purchase
• Negotiated Dual-Mortgage Package
• Proposed Property-Exchange Deal
• Employed Syndication Model for Investors

Secured Portfolio Loan for Self-Employed

Through a lending relationship, I was able to secure a portfolio loan for my clients. My client was a strong, self-employed borrower but did not fit the typical lender's criteria. The lender was fantastic and provided a competitive rate for the loan.

Buy Before You Sell Program

One of the main stumbling blocks for clients today with significant equity in their present home is the fear of loss. They simply do not want to sell their present home until they are assured they have found a suitable replacement.

We have a program called 'Buy Before You Sell.' It involves advancing up to 75% of the current home's value minus current debt using a deferred sales agreement. This frees equity to allow the client to be a non-contingent buyer with a sizable down payment. Once they have acquired their new home, they then sell the trailing property.

The program is not a bridge loan, meets conventional loan guidelines for disposition of the current residence so that the client qualifies for the new property loan obligation, and costs a one-time fee. The added benefit is that the client can do repairs, paint, and stage the prior home for maximum resale without having the stress of living in the home while it is on the market.

Upsize Home with Equity Release

Helping families achieve their real estate dreams is incredibly rewarding. Recently, I assisted a family upsize to a new home much sooner than they expected, by leveraging the equity they had built up in their current property.

Initially, they believed that moving to a larger house was years away due to the financial constraints of funding a new deposit, but they had a newborn on the way and wanted to browse all available options.

By remortgaging their existing home, we were able to release a significant amount of equity. With the increased market value of their property and a substantial portion of their mortgage already paid off, they had ample funds available.

The remortgage process was straightforward. We obtained a new valuation of their home, secured a favorable remortgage deal, and freed up the necessary funds. This enabled the family to make a competitive offer on their desired new home without the pressure of selling their current property first. The result was a smooth and expedited transaction, allowing them to settle into their dream home much sooner than anticipated.

By unlocking their home’s equity, the family turned their dream of upsizing into a reality. If you’re in a similar situation, consider remortgaging to release equity—it could be the key to moving into your dream home faster than you think.

Facilitated Community Land Trust Arrangement

I facilitated a community land trust (CLT) arrangement, where a nonprofit organization retained ownership of the land and sold only the house to the buyer. This significantly reduced the purchase price and made homeownership affordable for low-income buyers. The transaction benefited by creating long-term affordability and community stability. It enabled the buyer to invest in homeownership without the burden of high land costs.

Structured Shared-Appreciation Mortgage

I structured a shared-appreciation mortgage (SAM) for a buyer, where the lender agreed to a lower interest rate in exchange for a share of the home’s future appreciation. This helped the buyer qualify for a larger loan and reduce monthly payments. The transaction benefited by aligning the lender’s and buyer’s interests in the property’s value growth. It provided the buyer with immediate affordability and potential long-term gains.

Arranged Delayed-Financing Exception

I arranged for a delayed-financing exception, allowing an investor to purchase a property with cash and then quickly refinance to recoup their funds. This strategy provided the investor with the leverage to act quickly in a competitive market. The transaction benefited by enabling the investor to secure the property without delay and then access financing shortly thereafter. It provided liquidity and purchasing power in subsequent deals.

Employed Reverse Mortgage for Purchase

I arranged a reverse mortgage for purchase (HECM for Purchase) for an older client looking to downsize. This allowed them to buy a new home without making monthly mortgage payments, using the equity from their current home. The transaction benefited by providing the buyer with a comfortable new home and preserving their cash flow for other expenses. It offered a practical solution for seniors seeking to maintain financial stability in retirement.

Negotiated Dual-Mortgage Package

I negotiated a first- and second-mortgage package, where the buyer took out two loans simultaneously to cover the purchase price. The first mortgage covered 80% of the property value, while the second covered 10%, allowing the buyer to avoid private mortgage insurance. The transaction benefited by reducing the buyer’s monthly payment and initial costs. This structure provided financial flexibility and made homeownership more accessible.

Proposed Property-Exchange Deal

In a unique situation, I proposed a property-exchange deal where two parties traded homes to better meet their lifestyle needs. This barter system eliminated the need for traditional financing and reduced transaction costs. The deal benefited both parties by simplifying the process and providing immediate solutions. Both clients were able to transition smoothly into homes that better suited their circumstances.

Employed Syndication Model for Investors

I employed a syndication model to pool funds from multiple investors to purchase a commercial property. Each investor received a share of the profits proportional to their investment. The transaction benefited by spreading risk among several investors and providing the necessary capital without relying on a single source. This facilitated the acquisition of a larger and more profitable property than any one investor could afford alone.