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There’s an entire generation of investors right now learning real estate from YouTube clips, Pace Morby soundbites, and “creative finance” bros selling leverage like they invented it.
They didn’t.
And somewhere along the way, a dangerous idea took hold:
“If the seller gets the property back, there’s no risk.”
Absolute nonsense.
I had one recently talk to me like I was some wet behind the ears retail seller because I wouldn’t celebrate a seller finance structure with roughly 10% down.
The pitch was the usual:
“We’ve done 50+ of these.”
Cool. Has one defaulted yet?
No answer except, “Seller keeps the down payment.”
Good. That still isn’t enough.
“If we default, seller gets the property back.”
Maybe.
But what property are they getting back?
That’s the part the Instagram clips skip.
The seller already has the asset.
They don’t fucking want it back.
That’s the whole point.
They’re selling because they want to de risk, simplify, create liquidity, eliminate operational exposure, and move on with their life.
Instead, what’s being proposed?
Hand control of a $400,000 asset to somebody with roughly $38,000 in the deal while the seller continues carrying the tail risk.
Subject to; wraps, seller financing with little to no money down and or an IO period.
Tenant issues. Deferred maintenance. Market exposure. Legal process.
Nothing but risk for the seller in exchange for a box of chocolates and a LinkedIn post about “creative finance.”
And when I asked the simple question:
“What happens if payments stop in month eight?”
Suddenly the confidence got real theoretical.
Because here’s the part the Instagram clips skip:
If the deal blows up, the seller doesn’t magically “get a house back.”
They get a legal process.
They get lost time.
They get carrying costs.
They get tenant issues.
They get deferred maintenance.
They get rehab uncertainty.
They get market exposure.
And potentially a damaged asset in a softer market.
That is not “risk free.”
That is delayed realization of risk.
This is where the creative finance crowd loses me entirely.
They talk about seller protection like their default clause is some magical force field.
Every contract works perfectly until somebody stops performing.
Then you find out who actually owned the risk the entire time.
And for the record:
“Sell outright = making less money” (your argument) vs “sell outright = risk off” (my argument) is too simplistic, well I can live with that.
And that tells me you don’t understand pricing risk.
Risk. Time. Liquidity. Reserves. Net proceeds.
These are the variables. Not TikTok guru math.
Now look, some seller finance deals absolutely make sense.
Some sub to structures are intelligent.
Some investors are genuinely creative operators and can make sense.
And some sellers are sophisticated enough to use these tools wisely.
But, Lax Bro, if your entire pitch boils down to:
“Trust me dood, I’ve done 50 of these with no defaults”
That’s not underwriting. That’s salesmanship.
And if you talk to experienced operators like they’re stupid because they won’t hand over a six figure asset for 10% down?
You’re telling on yourself.
Go buy another list of guru leads and keep mucking around in someone else’s deal.
Not this cowboy.
Peace.
