When Creative Financing Makes Sense
These strategies help sellers in situations where traditional real estate sales fall short.
Need to Sell Fast
Relocating for work? Going through divorce? Creative deals close in days, not months.
Facing Foreclosure
Subject-To can stop foreclosure and save your credit when traditional sales take too long.
Little or No Equity
Even without equity, Subject-To lets you transfer payments and walk away clean.
Want Maximum Returns
Seller financing and wraps can net you 20-40% more than a traditional sale.
Property Won't Sell
Expand your buyer pool to investors who don't need bank financing.
Want Passive Income
Turn your property into a monthly income stream with seller financing.
Creative Financing Strategies Explained
Understand each strategy so you can make the best decision for your situation.
In a Subject-To transaction, you transfer the property deed to a buyer while your existing mortgage stays in place. The buyer takes over your mortgage payments but the loan remains in your name until they refinance or sell.
Benefits
- •Get out from under payments quickly
- •Avoid foreclosure or short sale
- •Preserve your credit (if payments are made)
- •Little to no closing costs
- •Close in as little as 7-14 days
Considerations
- •Due-on-sale clause risk (rarely enforced)
- •Your name stays on the mortgage
- •Trust required in the buyer
Best For
- •Sellers behind on payments
- •Properties with little equity
- •Sellers who need to relocate fast
- •Sellers facing foreclosure
With seller financing (also called owner financing), you act as the lender. The buyer makes monthly payments directly to you, including principal and interest. You hold a note secured by the property.
Benefits
- •Earn interest income (often 6-10%)
- •Spread out capital gains tax
- •Higher sale price possible
- •Monthly passive income stream
- •Secured by real estate
Considerations
- •Works best with properties owned free and clear
- •Risk if buyer defaults (but you keep the property)
- •Need to manage payments or hire servicer
Best For
- •Properties owned free and clear
- •Sellers wanting passive income
- •Investors looking to defer taxes
- •Sellers in no rush to cash out
A lease option combines a rental agreement with an option to buy. The tenant pays rent plus a premium, with a portion credited toward the purchase. They have the right (but not obligation) to buy within a set timeframe.
Benefits
- •Higher rent than market rate
- •Non-refundable option fee upfront
- •Tenant has incentive to care for property
- •Potentially sell at higher price
- •Income while waiting for sale
Considerations
- •Tenant may not exercise option
- •Property still in your name during lease
- •Need to maintain mortgage payments
Best For
- •Properties not selling traditionally
- •Sellers wanting premium rent
- •Markets with high renter demand
- •Sellers flexible on timing
A wrap mortgage (or all-inclusive trust deed) creates a new, larger mortgage that encompasses your existing loan. The buyer pays you on the wrap, and you continue paying your underlying mortgage, keeping the spread.
Benefits
- •Earn the interest rate spread
- •Higher effective sales price
- •Monthly income above your payment
- •Can work with existing mortgage
- •Buyer may pay higher rate
Considerations
- •Due-on-sale clause applies
- •You remain on original mortgage
- •More complex documentation
Best For
- •Sellers with low-rate mortgages
- •Those wanting ongoing income
- •Properties with built-up equity
- •Sophisticated sellers
A hybrid deal combines Subject-To with seller financing. The buyer takes over your existing mortgage payments, plus you carry a second note for your equity. This maximizes your proceeds while offering buyer flexibility.
Benefits
- •Get some cash at closing
- •Convert equity to monthly income
- •Higher total return than Subject-To alone
- •Flexible terms for both parties
- •Works with existing mortgage
Considerations
- •More complex structure
- •Both Subject-To and financing risks
- •Requires clear documentation
Best For
- •Properties with both mortgage and equity
- •Sellers wanting cash now AND monthly income
- •Complex situations requiring flexibility
- •Experienced creative finance buyers
How Our Deal Generator Works
Get personalized creative financing options for your property in minutes.
Enter Property Details
Tell us about your property, including address, type, and condition.
Add Mortgage Info
Share your current mortgage balance, payment, and interest rate.
Describe Your Situation
Help us understand your timeline, motivation, and any special circumstances.
Get Your Options
Receive 3-5 personalized deal structures with projected proceeds for each.
Creative vs. Traditional Sale
See how creative financing compares to listing with an agent.
| Factor | Traditional Sale | Creative Financing |
|---|---|---|
| Time to Close | 30-90 days | 7-30 days |
| Agent Commissions | 5-6% of sale price | Often $0 |
| Closing Costs | $5,000-$15,000+ | Minimal ($500-$2,000) |
| Buyer Financing Required | Yes (bank approval) | No (you are the bank) |
| Inspection Contingencies | Common (can kill deals) | Often waived |
| Monthly Income Potential | None | Yes (seller financing/wrap) |
| Works with Low Equity | Difficult | Yes (Subject-To) |
| Tax Advantages | Limited | Installment sale benefits |
Frequently Asked Questions
Selling Safely with Creative Financing
While creative financing offers powerful solutions, it's important to protect yourself. Here's what we recommend:
Work with Professionals
Use a real estate attorney and title company experienced in creative financing. They ensure proper documentation and legal compliance.
Verify Buyer Qualifications
Screen buyers for experience, track record, and financial capability. Experienced investors understand these deals and perform reliably.
Use Payment Servicing
Third-party servicers collect and distribute payments, providing accountability and paper trails for both parties.
Structure Proper Protections
Include deed escrows, insurance requirements, and notification clauses to protect your interests throughout the deal.