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What is Creative Finance

You probably hear me talk about creative finance all the time on my Instagram or in my YouTube videos. And the phrase ‘creative finance’ is thrown out all the time.

You might even go to seminars about real estate and you hear creative finance, creative finance, creative finance thrown around like it’s the easiest thing in the entire world to understand.

But for a lot of people, it’s really not.

So I want to answer the question of what is creative finance.

This is what it is - if I’m going to buy a deal and I want to hold that deal, which means I want to be a landlord. That could mean owning it as an Airbnb, an assisted living facility, whatever. I’m going to own the property.

Most people think they’ve got to go to a bank, they’ve got to apply, go to a loan officer, show their tax returns, bank returns, pull your credit, all that kind of stuff, right?


How To Get Creative Financing for Real Estate

Creative finance is a way to buy houses without literally doing any of those things or without cash, credit, or licenses.

The sellers financed these houses to us, whether it’s subject to or seller finance, sellers will give you the financing without having to go through a bank and showing your credentials. My partner Cody Barton and I purchased four houses on a Friday in September 2021 which we bought without having to use cash, credit, or a license.

Guys - I don’t have a W-2 job, I don’t have a W-2 income, neither Cody or I showed any credentials, like bank records, and no one even asked if I had $4 in the bank.

Every single house we buy is either utilizing seller finance or subject to investing. We’re doing this month in and month out all over the place.

And usually the way we’re getting these deals is not using any of our own cash.

The sellers will seller finance to use, meaning that they have their houses paid off and because we gave them the number they were looking for, they are willing to finance us.

The best way to explain this even better is with my infamous F150 story.

A couple of years back, I owned a construction company and in that company, I had a F150 truck. It got up to 320,000 miles racked up on the engine and it was starting to have little hiccups here and there, and we decided it was time to sell the truck.

So I go to Kelley Blue Book,, and I find out that my truck, with that many miles on it, was only worth $5,000.

The challenge with selling anything for $5,000 is that I’m not going to get $5,000; I’m going to get somebody to offer me $4,000, 1,000, or $3,500 and they’re going to make it seem as if cash justifies me selling it for that low.

And I said, “you know what? This truck is worth more to me than $5,000. I’d rather either try and sell it for some crazy amount of money, like $10,000, or I’ll just keep driving it because $5K or $3,500 really doesn’t move the needle or change anything for me.

So I put it on Craigslist for $10,000.

I don’t get a call or a text or anything for three months. Nobody’s reached out whatsoever.

Then my wife comes into my office and she says, she does it very sweetly, says, “hey sweetheart, it’s time to get that truck out of the driveway.”

And I tell her that I’m not going to sell the truck for $5,000. And she goes, “Pace, you’re the creative finance guy. Why don’t you sell it on payments?”

And I’m like, “Oh my gosh, my wife is a genius! Why didn’t I think of that?”

So I went back to my Craigslist ad and said that I will take payments. Man, I had to turn that Craigslist ad off in like 30 minutes.

I ultimately sold that truck for $12,500 because I was willing to seller finance that truck to a guy named Jose and his family. He paid me $300 a month for like 3 or 4 years, totaling $12,500.

I sold my truck for two and a half times what it was actually worth because I was willing to seller finance and Jose terms or payments.

That’s what seller finance is.

It’s the ability to buy houses where the seller turns around and gives you terms. Sometimes we do this by utilizing subject to a lot, I’d say 40-50% of the time, to get houses under contract without using cash, credit, or credentials and paying the number that the seller really wants.

What’s cool about this is I can get all of these houses and I didn’t have to buy them; so many people think that you have to buy the house.

I actually teach my students to wholesale creative finance their deals, so they can get some cash in their pockets at the beginning.

We don’t wholesale all of our creative finance deals because we’re looking to acquire and build our portfolio.

We’re building wealth, with a goal of $1 billion assets; the fastest way to wealth is acquiring actual real estate and creative finance is the answer. It’s actually easier to get than on wholesale.

And that’s it! That’s what creative finance is all about!

If you're interested in learning more or you're ready to get started as a creative investor and using creative financing solutions, come and join us at Subto!


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