Buy a 10-acre parcel for $55,000 with $10,000 down and $800 monthly payments, then resell it for $25,000 down and $1,000 monthly. You pocket $15,000 upfront plus $200 monthly cash flow, totaling $27,000 profit without owning the land. The catch: you're liable if the buyer defaults, so vet them hard.
Chapters
This is an advanced strategy, not for beginners, but this is how creative financing works in land flipping. So let's say you find a 10-acre property worth $55,000. So let's go ahead and write this down. So we have 10 acres and we have the purchase price equals $55,000, but let's say we only have $10,000 to work with. So we're going to structure it on terms. So what we want to have is $10,000 readily available. So what can we do to structure this on terms to make this profitable for us? So what we're going to do, since we have $10,000 that's readily available, this is going to be the down payment. So we're going to do $10,000 as the down payment of the $55,000 purchase price that we have here. And we're going to have it to where we have monthly payments as well too. I know there's plenty of people that talk about to where you have 0% interest and you don't have monthly payments. You could structure it as balloon payments. Every 6 months, every year, every few years until, until the end of the loan. Now you can get as creative as you want, but for this example, we want to make it as advantageous when it comes to the seller. So if we're able to do monthly payments as well too, like let's say again, down payment $10,000 and we have MP, which is monthly payments. Let's have that as $800 a month. So for terms, now let's say we have it for 5 years. Let's say it's a 5-year term. So it's a 5-year loan. So the seller agrees to that because they get the full price plus the interest without managing the property. Now we've done our research and we know that we could turn this around and sell this, sell for $70,000. So we already know that we're going to make a profit on this, right? But the nice thing is we can sell it also on terms. So what we could do for this is their down payment, down payment from buyer, from the new buyer. And let's say that's $25,000 of a down payment. So we already recouped what we had just paid for with the down payment of $10,000. So we have $25,000 down and let's say $1,000 per month. Let's actually do this as MP. Well, we'll just have it $1,000 as a monthly payment for 5 years. So here's what just happened. Your buyer's $25,000 down payment that we have right here, that covers the $10,000 that you paid to the seller. That's already— it's already what, $15,000 profit immediately from that flip. And now we also need to take into consideration you have $1,000 of a monthly payment. And what we did here is we had $800. So right there, we also have $200 of steady passive income from this creative financing deal. So again, we already made— we have a down payment of $10,000. They put down $25,000. So we made $15,000 from this, and now we're also getting $200 of steady income. So Here's again what just happened. That's $15,000 profit in your pocket immediately. Now, every month your buyer pays you $1,000 and you pay the original seller $800. That $200 difference is yours for 60 months. That's another $12,000 in cash flow over the life of the deal. So the total profit is $27,000 from one property you never fully purchased. Now, this is called a wrap. You're wrapping two seller financing deals into one. But here's the critical part that no one likes to talk about. If your buyer stops paying, you're still responsible to the original seller. That's why buyer vetting isn't optional. Income verification, down payment size, credit and payment history are extremely important to verify. Follow for more land flipping strategies like this.
