Down Payment and Rehab Funding Program for Owner-Financed (seller carry back) Deals.
In 2024, there were approximately 147 million residential housing units in the US. By all appearances, in 2025, the overall US real estate market is slowing down with longer listing times and lower prices in about half the country. This seems to be a growing trend. Higher interest rates as well as high selling prices have both been pointed out as key factors in the overall slowdown. This is at a time when millions of property owners would like to sell their properties, but not enough buyers have been forthcoming lately.
Currently, approximately 40% of residential properties in the US are owned free and clear, meaning they have no mortgage; it is estimated that another 10% or so are close to paying off their mortgages and owe a relatively small balance due before they own the property free and clear.
Put another way, close to 75 million residential properties are currently (or soon will be) owned free and clear. This represents a significant increase in mortgage-free properties over the past decade. The number of properties owned free and clear has been steadily increasing in recent years, driven in part by the aging population of baby boomers and the fact that more homeowners are reaching the end of their mortgage terms.
Another key fact: As of 2024, the total value of owner-occupied residential properties in the United States, representing the nation’s collective home equity (how much all the homes are worth minus mortgage debt), reached a record high of $32.8 trillion.
Taking all the above information into account, residential homeowners in the US are sitting on tens of trillions of dollars in equity. Meanwhile, tens of millions of owners of properties owned free and clear would like to downsize, move closer to their grand kids, cash out and finance their retirement, etc. Yet they are currently stymied due to the real estate market being in kind of a frozen state. New buyers can’t qualify due to higher conventional interest rates, so sellers are stuck where they are…same goes for prospective buyers.
Potential Solution: One option is for highly motivated sellers to offer owner financing to prospective buyers. The current owner acts as the bank and finances the purchase of the property. In this way, the current owner can use financing as a marketing tool to attract more buyers, sell their property sooner, and maybe even sell it for more money, to a qualified buyer. They can then use the funds they receive to move onto the next phase of their life.
However, one thing stopping owner financing deals from going through is that the buyer (say a Real Estate Investor or REIer) may lack down Payment and rehab funding (DPRF), i.e. their money is tied up in other investments? Now there is a potential solution: See below.
References: US Department of Labor, Statista, Axios, Fast Co., realtor.com, Eye on Housing, noteinvestor.com
Are you a REI Pro who needs Down Payment and Rehab Funding for an Owner-Financed (seller carry back) deal?
Welcome to Creative Transaction Funding (CTF) and our Down Payment/Rehab Funding Program for owner-financed (seller carryback) deals.
DPRF is like hard money, but with one important distinction: CTF does not offer loans. Instead, CTF offers Joint Ventures (JVs), a form of equity. The REI Pro brings a deal that meets CTF’s funding criteria, and CTF brings the funds to make it happen, for a share of the profits.
I. Overview
To qualify, the deal must meet the following criteria:
A. CTF only funds where the current owner:
1. Owns the property
a. Free and clear
or
b. Owes very little on their current mortgage.
2. Is highly motivated to move out of the property. They may wish to downsize, or they are in some form of financial distress, or the property is in probate, or they just don’t want to live there any longer for whatever reasons.
B. The REI Pro needs the funding for:
1. Fix-flip
or
2. Buy and hold
C. The current owner is open to seller carry back financing for the bulk of the purchase price via a temporary, subordinated, second position note.
D. CTF receives a first position note that includes our invested capital + share of the profits + 14% simple interest.
E. Time Frame for CTF funding: Typically, six months or less, though we are flexible for the right deal.
II. Details, Features & Benefits
A. CTF does not charge any upfront or origination fees.
B. The DPRF is available nationwide.
C. No payments are due on CTF’s note during its term; the note features a balloon payment due, in say six months, for both principal and interest, with no prepayment penalty.
D. We recommend that the REI Pro include the same term request in their offer to the seller. Best case scenario: The REI Pro winds up with no payments on either the first or second notes for the entire time frame that the rehab takes to successfully complete.
E. Even potentially better for the REI Pro: Request from the seller 36–180-month assumable financing.
1. If it is a buy and hold, then the REI Pro enjoys some long-term financing.
2. If a fix-flip, then:
a. After say six months, once the first position note to CTF is paid off, the second position note automatically moves into first position and the new buyer assumes the outstanding loan.
b. The new buyer makes payments to the original property owner on the outstanding balance.
F. CTF’s exit strategy is as follows: CTF leaves with a six-month, 14% simple (annual) interest, business-to-business, first position, non-recourse, commercial promissory note with no prepayment penalty. Simply put, CTF monetizes the (JV) equity into a commercial note (debt) as its share of the net profit as agreed to by both parties.
G. For providing DPRF, CTF receives a 50% markup (i.e. a share of the profits from the deal). For example, if CTF puts up $100,000 we receive a first position note for $150,000 + 14% simple annual interest (or 7% for six months since there is no prepayment penalty).
H. CTF is happy to pay a 2% referral fee with full account protection.
III. Case Study
What follows are details for a generic JV deal. It is based on a rehab project undertaken by an experienced REI Pro. Time frames from beginning to end of the average for this type of project usually takes a few months. The REI Pro has an investment opportunity that he has penciled out as viable; it is ready to go.
A. Purchase price from the current owner: $200,000
B. Current owner:
1. owns the property free and clear
2. is willing to offer owner financing for the bulk of the purchase price
C. At initial closing, the details of the deal are as follows:
1. ARV/Selling price to the new buyer $360,000
2. Provided funds
a. Owner Financing $140,000
b. CTF-DP & Rehab funding $ 60,000
———–
3. Purchase Price from the current owner $200,000
4. CTF markup 50% x $60,00 0 $ 30,000
———–
5. Total $230,000
6. Gross profit ($360,000-$230,000) $130,000
———–
7. Total $360,000
D. Results
1. CTF exits at closing with a first position note, face value = $90,000
($60,000 + $30,000)
2. REI Pro earned $130,000 gross profit and/or equity, less closing costs and interest paid on both the first and second position notes.
___________________________________________________________________________________
CTF also offers:
>>>101% Financing available for Investor Property Purchases
>>>Landlord Bailout Funding
>>>2% Referral Fee happily paid
>>>Free info pack. If you would like CTF to send you free, detailed information, instructions, etc. about our funding programs, Referral Program, etc. please send us an email and include your
1. Full name
2. Phone number
3. Email address
to support@asbclf alternatively send here with reference to this post.