How to Analyze a Creative Finance Deal — The Numbers That Matter
By Deal Pros LLC · Deal Underwriting
The 5 numbers every investor needs before evaluating any deal
Evaluating a creative finance deal is different from analyzing a traditional purchase. You're not just looking at price versus value — you're looking at the structure, the payment, the equity gap, and multiple exit strategies simultaneously. Here's the framework we use to underwrite every deal at Terms For Sale.
The 5 Numbers You Need Before Anything Else
Entry Fee$XX,XXXCash out of pocket
Monthly Payment$X,XXXPITI or SF payment
Market Rent$X,XXXConservative LTR estimate
ARV$XXX,XXXAfter-repair value
Equity at Entry$XX,XXXARV minus all debt
Interest RateX.XX%Inherited or negotiated
Cash Flow Analysis — The Real Math
Many investors stop at "rent minus payment" — but that's not real cash flow. Here's the full expense picture you need to model:
That breakeven number looks unimpressive until you factor in the full picture: $55,000 in equity at entry, principal paydown every month, and a 2.75% rate locked for the life of the loan. The wealth-building happens even when cash flow is thin.
Equity at Entry — Why It Matters
In a sub-to deal, you inherit the existing loan balance. In a seller finance deal, you negotiate the loan amount. Either way, the difference between ARV and total debt is your equity at entry — money you made the moment you closed.
Example
ARV: $210,000 | Loan balance: $135,000 | Entry fee: $20,000 | Total cost: $155,000 | Equity at entry: $55,000
Evaluating the Rate Advantage
In any sub-to deal, quantify the rate savings versus what a new loan would cost. This is often the most compelling number in the whole analysis.
Inherited rate (2.75%) on $135K: $550/mo P&I
New loan rate (6.75%) on $135K: $876/mo P&I
Monthly savings: $326/mo
Annual savings: $3,912/yr
10-year savings: $39,120
Exit Strategy Analysis
Before buying any deal, model at least three exit strategies:
Buy and Hold (LTR) — what's the monthly cash flow after all expenses?
BRRRR — after 12 months, what does a 75% LTV refi return? Does it cover entry?
Midterm Rental — what does furnished MTR pencil at vs. LTR?
Wholesale/Assign — could you assign this contract for a spread if it doesn't work for you?
Fix and List — what's the net profit after entry, repairs, and selling costs?
Red Flags to Watch For
ARV not supported by recent comps within 0.5 miles
Rent estimate based on Zestimate instead of active rentals
HOA restrictions that prohibit short-term or even long-term rentals
Deferred maintenance that isn't reflected in the entry price
Balloon payment due before you can stabilize and refi
Entry fee that represents more than 15% of ARV
View Pre-Analyzed Deals
Every deal on Terms For Sale includes ARV comps, rent analysis, entry breakdown, and multiple exit strategies — pre-analyzed for you.