21 Creative Financing Terms for

Your Real Estate Investing Toolbox

1. Payments – A payment is the trade of value from one party to another to fulfill a legal obligation.
2. Amortization – The reduction of loan value over a set period of time.
3. Interest – Interest is payment from a borrower to a lender of an amount above repayment of the
principal amount borrowed, at a particular rate.
4. Principal – A capital sum earning interest, due as a debt.
5. Credit – The provision of money, goods, or services with the expectation of future payment.
6. Down Payment – A part of the full price paid at the time of purchase with the balance to be paid later.
7. Balloon Payment – a final payment that is much larger than any earlier payment made on a debt.
8. Moratorium – an authorized period of delay in the performance of a legal obligation or the payment of
a debt.
9. Profit Share – Payments to principals in a transaction that depend on the profitability of the
transaction.
10. Option – A contract that offers the buyer the right, but not the obligation, to buy a property at an
agreed-upon price during a certain period of time or on a specific date.
11. Lease – A contract by which one party conveys property to another for a specified time, usually in
return for a periodic payment.
12. Lease to Own – A contract that combines elements of a traditional lease agreement with an exclusive
option to purchase.
13. Carry Back – When a seller acts as the bank or lender and carries a mortgage on the subject property.
14. Subject-to – Buying a home subject to the existing mortgage. While title is transferred to a buyer, the
existing mortgage stays in place where the buyer takes over the payments.
15. Deferral – A postponement of an action or event (deferred interest, deferred profit, deferred down).
16. Wrap – A term for wraparound mortgage or one where an existing mortgage is wrapped around by a
new mortgage.
17. Equity Sharing – Sharing ownership, value and appreciation in a property.
18. Agreement for Deed – Also referred to as Contract for Deed/Land Contract/Installment Contract. An
agreement of periodic payments to buy property. Title remains with Seller until agreement is fulfilled.
19. All Inclusive Trust Deed (AITD) – A document secured by a promissory note which combines multiple
loans into a single security instrument.
20. Master Lease – A controlling lease under which a lessee can sub-lease the property for a period of not
extending the term of the master lease.
21. Promissory Note – Written, signed, unconditional, and unsecured promise by one party (the make or
the promisor) to another (the payee or promisee) that commits the maker to pay a specified sum on
demand, or on a fixed or a determinable date.

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 TERMS OF THE DOCUMENTS
(THE DEAL AFTER THE DEAL)
Watch https://youtu.be/5ymUQXLK6HE for an explanation of why the “deal after the deal” is so important.
Recommended clauses to include in your seller-financed documents for maximizing your returns.

BORROWER’S RIGHT TO PREPAY

The Borrower reserves the right to prepay this Note (in whole or in part) prior to the due date
with no charge or penalty. If Borrower makes a partial prepayment of five-percent or greater of loan
amount and/or a change in interest rate per the terms of this Security Instrument or mutually agreed
between Lender and Borrower occurs during the term, Borrower reserves the right, but not the
obligation, to cause the loan to be recalculated with a new amortization schedule based on the note’s
remaining principal and term.

RIGHT OF FIRST REFUSAL TO PURCHASE NOTE

Lender hereby grants Borrower a right of first refusal to purchase this promissory note or any
portion of this note if during the term of the note Lender receives either a bona fide written offer by a
willing third party to purchase all or any part of this note which Lender intends to accept, or a
purchase agreement which Seller intends to enter into (collectively,“Offer”), Seller shall give written
notice to Purchaser at the address provided below accompanied by a copy of such Offer at least
fifteen (15) days before the date of contemplated sale.

SUBSTITUTION OF COLLATERAL
Lender agrees to allow Borrower to substitute any property or properties in which the Borrower
has a total amount of equity equal to or greater than the amount of equity as existed to secure this
note at the time this note was created, as collateral for this promissory note and accompanying Deed
of Trust. Furthermore, Lender agrees to execute in a timely manner any documents necessary for the
implementation of this substitution of collateral.

TRANSFER OF THE PROPERTY

If all or any part of the Property or any interest in it is sold or transferred (or if a beneficial
interest in Borrower is sold or transferred and Borrower is not a natural person) without Lender's prior
written consent, Lender may not require immediate payment in full of all sums secured by this
Security Instrument.

SUBORDINATION
Lender agrees to subordinate this promissory note (and accompanying Deed of
Trust/Mortgage) to any future financing Borrower secures against this property providing Borrower
maintains the same amount of equity protecting this promissory note by Borrower to Lender as
existed at the creation of this note. Furthermore, Lender agrees to execute any necessary paperwork
in a timely fashion to comply with this provision.

EXTENSION OF NOTE
Borrower may renew this note for _____ additional _____ month terms by paying to
Note Holder $____________ of principal on or before 30 days prior to the expiration of this
promissory note or any extension thereof.

Copyright 2020 © Epic InvestED a division of Epic Real Estate

 10 Creative Deal Structure Examples (educational purposes only)

ASSUMPTIONS-
• FMV: $100,000
• Seller’s Asking Price: $95,000
• Monthly Rent: $1,100
• No Mortgage
• No Repairs
PRICE TERMS

$50,000 Cash, 21 day close

$55,000 $5,000 non-refundable EMD (applied to purchase), $40,000 down

payment due at closing (30 day escrow), $15,000 when sold or refinanced

$60,000 $30,000 down payment due at closing (30 day escrow, 21 day inspection
contingency), seller carry back financing of $30,000 at 6%, amortized over
30 years, balloon payment due in 2 years. Profit share 80% buyer/20%
seller when re-sold or refinanced at $80,000 or greater

$65,000 $30,000 down payment, $20,000 due at closing (30 day escrow, 30 day
inspection contingency), $10,000 deferred 6 months, seller carry back
$35,000 at 5%, amortized over 30 years, balloon payment due in 5 years

$70,000 $20,000 down payment due at closing (45 day escrow, 30 day
inspection contingency), seller carry back $50,000 amortized over 30 years
at 2% interest first 3 years and at 5% interest years 4 through 7. 6 month
moratorium on first payment. Balloon payment due in 7 years.

$80,000 $20,000 down payment due at closing (45 day escrow, 35 day inspection
contingency), $30,000 divided in 48 equal monthly payments, $30,000 at
6% interest with payments commencing on year 5 amortized over 15
years.

$90,000 $15,000 down payment due at closing (60 day escrow, 45 day inspection
contingency), 100 monthly payments of $500, balance due on 101st
payment.

$100,000 $15,000 down payment due at closing (30 day escrow, 21 day inspection
contingency), 200 equal monthly payments of $475

$125,000 $20,000 down payment due at closing (21 day escrow, 7 day inspection
contingency), 300 equal monthly payments of $350
Copyright 2020 © Epic InvestED a division of Epic Real Estate