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Slow Flip


A slow flip is when you buy a property, typically with specialized high leverage funding, and then immediately sell it for a considerably higher price to a tenant buyer using a contract for deed (land contract) with seller financing.


What is a contract for deed?


To understand the slowflip strategy, it's important to understand the concept of a contract for deed. This is a legal contract for the sale of land where the buyer acquires possession of the land and pays the purchase price in regular installments over a designated period of time. The seller retains legal title until all payments are made.


When the full purchase price, including any interest, has been paid, the seller is obligated to sign a deed to convey legal title to the property to the buyer. The buyer is typically required to make an initial down payment to the seller. This concept is otherwise known as "land contract", "installment land contract", or "land sales contract". Contract for Deed definition source: Cornell Law School Legal Information Institute


This lesser-known real estate investing strategy is attractive for a number of reasons, especially:


๐Ÿ’ฐ limited capital requirement -- we fund over 100% of your purchase price, up to 100% of As Is value
๐Ÿ› ๏ธ no repairs -- the buyer on your contract for deed is responsible for property maintenance
๐ŸŒŽ passive, low-touch, low turnover -- ideal for out of state investors


Slow Flip Example


Step 1: Purchase


  • Purchase price: $26,500
  • As Is value: $30,000
  • As Is market rent: $875
  • Loan Amount: $30,000 (12%, 5 year fully amortizing)
  • Monthly loan payment: $667.33
  • Cash to close: -$250 (yes, the borrower actually received $250 at closing)

Step 2: Sale using Contract for Deed with Seller Financing


  • Contract price: $75,000
  • Down payment: $5,000
  • Contract loan amount: $70,000 (12%, 30 year fixed rate)
  • Monthly payment: $720.03

Step 3: Service Debt, Monitor Performance


  • Spread on monthly income during years 1 - 5: $52.70
  • Spread on monthly income during years 6 - 30: $720.03
  • Responsibility: make monthly slow flip loan payments, maintain insurance policy on subject property, monitor subject property to ensure there are no tax and utility liens, collect monthly payments from tenant buyer, if tenant buyer defaults, evict and re-sell using contract for deed, pivot to rental property or sell outright

Slow Flip Funding


Designed in collaboration with a network of real estate investors who specialize in the slow flip strategy, our Slow Flip funding program is the perfect solution for your next slow flip. We use a common sense approach to underwriting each deal and each borrower ("client"). This loan program is a balance sheet program -- we hold your loans until maturity and we service in-house. For that reason, we have a clear sense of long-term partnership and the ability to learn and collect feedback and continuously improve your borrowing experience and investing resources. Let our actions and performance show you how obsessed we are with client experience and success.


Slow Flip Loan Terms


Terms Guidelines
Max loan amount up to 100% of As Is value ($50,000 limit)
Interest rate Get Instant Quote
Amortization 5 years
Origination fee Get Instant Quote
Legal/Doc Prep fee $500
Appraisal Market price ($300 - $450)
Time to close 14 - 21 days

Borrower Underwriting Guidelines


Borrower Underwriting Guidelines
Slow Flip experience 0+
Real estate investing experience Preferred
Credit score 720+
Background Clean
Personal Guarantee Yes
Business Entity LLC or Corporation

Deal Underwriting Guidelines


Deal Underwriting Guidelines
Minimum Loan Amount $20,000
Maximum Loan Amount $50,000
Property Type single family residential
Property Condition C3, C4, C5, C6
Rural No
Appraisal As Is 1004 with 1007 Market Rent Schedule

Slow Flip FAQs


Why is it called a slow flip?


The reason the strategy is referred to as a slow flip, is because you are essentially selling the house over a long period of time and collecting monthly seller finance payments until your loan is paid off or the property is sold and your seller financing is paid off.


What markets are good for slow flips?


It's important to consult a real estate attorney to determine if your local or preferred market is a good fit for the slow flip strategy.


๐Ÿš๏ธ distressed houses
๐Ÿ’ฐ low home prices (up to $50,000)
โš–๏ธ favorable and stable legal precedent for contract for deed transactions and evictions
๐Ÿ™๏ธ close to large cities with favorable long term prospects


Who buys properties on a contract for deed?


Generally there are two personas of tenant buyers:


  • people who are unable to qualify for conventional mortgage funding
  • handyman-types that are able to fix up properties including while living in them, and then sell them for a profit above their contract price

Is slow flipping ethical?


We have put a lot of thought into this question, and like most things in life, the appropriate answer is that it depends. We have come to the conclusion that the merits of the model outweigh the risks inherent in the model and we feel a strong sense of responsibility to know our clients and verify that they are conducting themselves in an ethical manner. These are the questions we ask ourselves:


  • is the property going to be improved and if so, will that improve the value of the neighborhood?
  • is the end contract buyer (tenant buyer) saving money compared to paying rent?
  • is the end contract buyer otherwise unable to qualify for a conventional mortgage? (i.e. issues with credit or background)
  • is the end contract buyer living in similar or greater comfort than a rental in the same market and monthly price?
  • will the end contract buyer be able to sell the property for as much or more than their purchase price if reasonable repairs are made?
  • is the contract for deed understandable and not misleading?
  • is the real estate investor disclosing and explaining the contract for deed and risks for non-performance?
  • is the real estate investor charging a fair down payment?
  • is the real estate investor charging a fair, legal interest rate?

We encourage you to share questions that you think should be added to help all parties understand and debate the ethics of this model.