Private Party Financing "PPF" - When to use it vs. a FNMA/FHA Loan

Brokers, Agents, Investors, and Network Affiliates:
With over 5 million people having lost their homes in the past 3 years, and many millions more who have lost jobs and income and seen their credit ratings shot to heck, the question rises over and over, Is Private Party Financing “PPF” i.e. “Hard Money” an appropriate loan for real estate buyers?

The short answer is yes. More now than ever. While there are scenarios that lend themselves to PPF better than others. A growing portion of real estate sales will be financed with some version of PPF. There are of course various categories of PPF, that come up.

1. Seller Carry “WRAP” financing. - This is typically a case where the seller does not need the equity upon sale, or has no equity and is able to sell the home at a price that will eventually get the out of ownership without the buyer needing conventional financing at time of initial sale. The carry period for these can be anywhere from 2 years to 5 or more.

2. Lease w/ an Option to Buy. - This is in fact a type of private party financing of a sale yet to be determined. The structure can even be recognized in some cases as a “financing” for IRS tax purposes. Thus giving the Lease Option Buyer the rights to take a tax write off as an interest deduction. (Check with you CPA or Tax Advisor before trying this one.).