3. Seller Financing
Ø Also called VTB or seller carryback loan
Ø Asset based loan
Ø Creativity and Negotiation a MUST!
Pros
• You don’t need to borrow the full amount from the bank
• Deal is quicker and cleaner
• Your credit and employment not a big issue
Cons
• High than bank interest rate (5-7%)
• Rare for residential
4. Variations of
Seller Financing
Allinclusive
mortgage
• Seller carries the promissory note and mortgage
for the entire balance of the home price, less
any down payment
Land
contract
• Land contracts don't pass title to the buyer, but
give the buyer "equitable title," a temporarily
shared ownership
• After the final payment the buyer gets the deed
5. Variations of
Seller Financing
Lease
Option
Sandwich
Lease
Option
• tenant pays a lump sum to owner for the
option to purchase the property in the future
• some or all of the rental payments can be
credited against the purchase price.
7. Hard Money Lending
Ø Asset-based lending
Ø Short-term loans
Ø Can be a second mortgage
Pros
• Backed by the value of the property, not the
value of the borrower
• Can be available quickly
Cons
• Highest interest rate of all loans
• Have lower loan-to-value (LTV) (50
-65% max) ratios than traditional loans
• High admin Fees
8. Hard Money Loans
My Deals
Ø $35,000 HELOC @ 3.5%
Ø Lent it out to two borrowers, $25,000 and $10,000 @ 12%
Ø $3,000 admin fee per deal ($1,000 to writing agent)
Ø Received back $27,000 and $13,000
Ø $4,000 in Fees in 5 weeks
10. Private Investor
Ø Requires a return on their money, not equity
Ø Requires YOU to be experienced, prepared and organized
Pros
• Asset based lending
Cons
• High interest rates @ 10 – 12%
• High competition
14. Joint Venture Partnership
A business undertaken by two or more
individuals or companies in an effort to share
risk, use resources, time, knowledge, and
differences in expertise for a common goal
15. Joint Venture Partnership
Ø Equity share
Ø Max 50 investors in Ontario
Pros
• Unlimited deal combinations
• Leverages everyone's strengths
• Unlimited deals
Cons
• You give up equity
• More than one decision maker
