Why Is Creative Finance No Longer Just A Method In Today’s Market

#EntrepreneurOfTheWeek – Omer Menashe & Dor Pollak
#Post3 – Why Creative Finance Is Not “Just Another Method” in Today’s Market

In the previous post, we talked about the moment that changed our direction — when we realized that real estate tools should serve the strategy, not manage us.

Today, I want to take this one step further and talk about the moment we understood that creative finance deals are not “just another strategy”, but rather a powerful tool that allows us to reach our goals much faster than we initially thought, given today’s market reality.

What are Creative Finance deals?

Creative finance generally refers to three main deal types (there are more, but we’ll focus on the core ones):

Seller Finance

Subject-To (Sub2)

Hybrid Deals

Seller Finance

In a seller finance deal, the seller becomes the bank.
The seller finances the purchase for a predefined period, at an interest rate and terms agreed upon by both parties.

Example:
Purchase price: $300,000
We put $30,000 down at closing + closing costs
The remaining $270,000 is financed by the seller at 3% interest, with a 7-year balloon payment

Subject-To (Sub2)

This applies when a seller wants $300,000 for a property, but still has an existing mortgage of $275,000 at 2.85% interest (taken in 2021).

If the seller sells traditionally:

Sale price: $300,000

Selling costs (~8%): ~$24,000

Net: ~$276,000

After paying off the mortgage, the seller is left with ~$1,000 (or break-even).

Our Sub2 offer:

We take over the seller’s existing mortgage ($275,000) at a low, attractive interest rate that generates cash flow for us

We pay closing costs

We pay the seller $25,000 in cash

Result for the seller:

Receives $25,000 net, instead of ~$1,000

Typically closes faster than a traditional sale

Result for us as investors:

We acquire a newer home (built in 2021) worth $300,000

Entry cost of ~10% (cash to seller + closing costs)

Locked-in low interest rate that no longer exists in today’s market

Strong cash flow, high cash-on-cash return

Significant annual principal paydown, creating equity regardless of market conditions

Hybrid Deal

A hybrid deal combines both strategies:

We take over the seller’s existing mortgage (Sub2)

Part of the seller’s remaining equity is paid through seller financing

Why Creative Finance? What does it allow us to do?

As investors, creative finance allows us to:

Buy new, rent-ready homes in strong areas

Leave only 8–12% of the property value in the deal (including closing and ancillary costs)

Lock in low interest rates that don’t exist today, generating cash flow and strong principal reduction

Rent the property within days, not months

Most importantly: scale quickly, repeatedly, without renovations, new loans, holding costs, refinance processes, and more

Final thoughts

Creative finance is not a “clever trick” or a “get-rich-quick secret.”
It’s simply the path we chose — one that allows us to achieve our goals faster, while maintaining all the criteria that matter to us.

In the next post, we’ll break down how we actually find and create creative finance deals as entrepreneurs.

We can’t wait to share the next post!
Let us know in the comments what you think 👇

You’re also welcome to join our Creative Finance Community on WhatsApp, where we share insights, updates, deals, and deal analyses with the community 👇👇
https://chat.whatsapp.com/JgnJFwcrbuRAgwg9Eq6Vup?mode=hqrc

See you tomorrow!