Creative $260K deal with cash flow

A real estate investor Pace Morby used as an example says a buyer took control of a $260,000 property with no bank loan and no down payment, then cleared about $700 a month. (x.com) Morby posted the deal on X and framed it as a seller-problem transaction, where the structure mattered more than a cash-heavy closing. His education business centers on “creative finance,” including seller financing and “subject-to” deals that keep an existing mortgage in place. (x.com) (subto.com) Seller financing means the owner acts like the bank and accepts payments over time instead of collecting the full price at closing. The Internal Revenue Service says an installment sale is one where the seller receives at least one payment after the tax year of sale. (nolo.com) (irs.gov) A “subject-to” deal works differently: title can transfer to the buyer while the seller’s mortgage stays in the seller’s name. Rocket Mortgage says the buyer gets ownership, but the original financing remains in place. (rocketmortgage.com) That structure has become more visible in a high-rate housing market because an older loan can carry a lower payment than a new mortgage. U.S. News said subject-to deals let buyers take over payments on an existing mortgage, often at a lower rate than current market financing. (realestate.usnews.com) The seller’s incentive is different from the buyer’s. A seller-financed deal can spread proceeds over time, and the Internal Revenue Service says installment-sale rules may let some gain be reported over future years instead of all at once. (irs.gov 1) (irs.gov 2) The risk is that “no bank” does not mean “no obligations.” In a subject-to transaction, the seller usually remains liable on the original mortgage even after the deed transfers, according to Rocket Mortgage and U.S. News. (rocketmortgage.com) (realestate.usnews.com) Many mortgages also contain a due-on-sale clause, which can let the lender demand full repayment after a transfer. Federal law allows lenders to enforce due-on-sale clauses in most cases, with limited exceptions. (law.cornell.edu) (ecfr.gov) Morby’s example did not include a public closing statement, note, or settlement sheet in the material reviewed, so the $700 monthly figure could not be independently verified from public records here. What the post does show is the pitch behind creative-finance investing: solve the seller’s terms problem first, and the cash flow can show up at closing. (x.com)