In such cases, the equity of the subject property itself is sufficient to close the deal.

In some instances, however, a little extra is needed to remove lingering suspicions on the part of the seller. That is where the blanket mortgage comes into play. In any mortgage or trust deed arrangement, there are two basic documents that are prepared. One is a note given by the buyer to the seller setting forth the terms for converting the equity to cash, the other is a security agreement in which the buyer says to the seller, in effect, “If I don’t perform according to the terms of the note, then you can take back the property.” In a cashless or near cashless transaction, the security of the subject property may not be enough to satisfy the seller. Therefore, the buyer may choose to secure the note with additional collateral – not only the subject property but also additional property (equity) he may have in his portfolio.

The note itself stays the same, but the security agreement is changed to increase the collateral and build trust with the seller. Naturally, the buyer will want to arrange to have the seller release the additional collateral as soon as the subject property appreciates to a predetermined value or as soon as the buyer has proven himself to be dependable and prompt in making his payments. The blanket mortgage technique is not among the most frequently used in creative finance. The buyer hopes to build trust without having to tie up his other equities. Still when a seller needs that extra bit of persuasion, the blanket mortgage technique can come in handy.

For example, one creative investor we know of recently acquired a nice four-bedroom, three-bath home for $75,000. The investor put a new first on the property) which was nearly free and clear) and had the sellers move their remaining equity ($35,000) to another property owned by the investor. To build trust with the sellers, the buyer granted them a blanket mortgage that also included his equity in another rental property he owned. Although the buyer did not put any of his own money into the deal (the bank provided all that was needed), he was able to persuade the sellers to agree on the basis of his neck being on the line with the blanket mortgage.

Technique No. 3 Life Insurance Policy

There is another strategy the buyer can use to persuade the seller to play lender in a transaction. As in the case of the blanket mortgage, the key is building trust. What if you say to the still somewhat incredulous seller, “Since you are permitting me to pay off your equity