Lecture: Creative Financing in Real Estate

Introduction

• Presenters: Jerry Norton and Pace Morby
• Topic: Creative financing in real estate, focusing on a complex deal in Tucson.
• Offer: Free copy of Jerry Norton's Quick Start Kit for house flipping.

Jerry Norton's Background

• Transitioned from being broke to a millionaire by flipping houses.
• Created a channel to help others master real estate wholesaling and flipping.

Overview of Tucson Deal

• Location: Tucson
• Type: Creative financing deal
• Price: $300,000 house; purchased for $128,000
• Structure: Subject-to financing

Deal Details

• Original Structure:
  • Subject-to for $56,000
  • $15,000 to the seller
  • $7,000 commission to an agent
  • Total initial contract: $78,000
• Wholesaling Structure:
  • Multiple JV partners involved.
  • $50,000 assignment fee to Jerry Norton.
  • Two JV partners: 50-50 split.

Creative Financing Concepts

• Subject-To Financing:
  • Existing financing on property is maintained by new owner.
• Seller Financing:
  • Direct agreement with the seller to pay over time.
• Subtale:
  • Buying a property creatively and listing it retail.

Transaction Coordination

• Role of Rochelle: Transaction coordinator managing deal paperwork.
• Tasks:
  • Ensure proper documentation.
  • Verify all parties involved.
  • Open escrow and pull title.

Potential Complications

• Paperwork Issues:
  • Janky paperwork, possibly on a napkin.
  • Importance of verifying titles and liens.
• Closing Risks:
  • Potential hidden issues in title or seller's situation.

Financial Considerations

• Cost Analysis:
  • $128,000 total investment with potential $150,000 profit.
  • Opportunity cost of tying up $70,000 in one deal.
• Investment Philosophy:
  • Avoid counting potential profits too early.
  • Importance of terms such as novation agreements.

Novation Agreement

• Concept: Delays payouts to sellers and agents until retail sale.
• Advantage: Reduces immediate cash requirements at the closing.

Hold Open Policy

• Definition: Minimizes double escrow closing costs.
• Fee: $300 to hold open title for up to a year.

Final Thoughts

• Networking Importance:
  • Building relationships with private lenders.
• Resource Sharing:
  • Guides on creative financing and private lending available for download.

Conclusion

• Future Content: Anticipation of a Part 2 to follow up on the deal's progress.
• Call to Action: Encourage subscribing for more real estate insights.