How Creative Financing Can Get You Deals in Any Market

In this episode of the Tax Smart REI Podcast, hosts Thomas Castelli and Ryan Carriere welcome Chris Prefontaine, founder of Smart Real Estate Coach, four-time bestselling author, and leader of the Wicked Smart Community. Chris brings over 34 years of hands-on real estate investing experience, and his unique approach to creative financing has helped investors close hundreds of deals across North America.

What sets Chris apart? He doesn’t just teach, he partners with students and shares in the profits of real deals.

How the 2008 Crash Changed Everything

Chris began his real estate journey in the early 1990s, working in everything from ground-up construction and condo conversions to owning a brokerage, which he later sold to Coldwell Banker. But after the 2008 crash devastated his portfolio, he completely restructured his business model.

Instead of relying on banks or personally guaranteeing loans, Chris leaned into creative financing. Today, his business runs on terms-based deals, avoiding conventional lending altogether.

Thriving in Any Market Cycle

When asked where we are in the current market cycle, Chris was clear: he doesn’t try to predict it. Instead, his focus is on building a business that adapts no matter what’s happening. Creative financing thrives in uncertainty. High interest rates, market volatility, and economic shifts don’t derail his strategy, they often make it more effective. By focusing on flexibility and pivoting quickly, Chris is able to continue doing deals regardless of market conditions.

Two Strategies That Are Working Right Now

Chris highlighted two creative strategies that are especially effective in today’s market:

1. Free & Clear Properties:
Roughly one-third of properties in the U.S. are owned free and clear. These are ideal for seller financing deals that include principal-only monthly payments with 0% interest. Since many sellers just want their price and aren’t pressed for immediate cash, they’re open to receiving their equity over time. This method builds equity fast and avoids interest costs entirely.

2. Subject-To (Sub2) Deals:
Many properties still have mortgages locked in at incredibly low interest rates, often under 5%, and sometimes under 3%. Rather than going through the loan approval process, Chris’s team simply takes over the existing payments. This allows them to bypass traditional lending altogether and acquire properties with favorable terms. It’s a win-win for both buyer and seller.

Structuring Creative Deals with Confidence

A major theme of the conversation was overcoming seller objections. How do you convince someone to accept 0% interest? According to Chris, many sellers just want to feel like they “won.” If you give them their asking price, they’re often happy to exchange interest for favorable terms. When sellers do want some interest, Chris builds hybrid deals that start with principal-only payments and transition to amortized interest down the line. This keeps the early payoff strong while addressing seller needs.

Chris also emphasized that most of these deals aren’t held for 30 years. The typical exit is between 2–8 years. In some cases, the investor may hold longer-term if the numbers make sense. The key is to negotiate flexibility up front so you can respond to whatever the market brings.

What About 1031s and Legal Risk?

When it comes to taxes, Chris said he occasionally uses 1031 exchanges for long-term portfolio assets, but most of his rent-to-own deals don’t allow for 1031s because the exit is structured at the start. Still, tax deferral is possible depending on your strategy and how you classify income, something Chris strongly recommends discussing with a qualified real estate CPA.

He also addressed common concerns about Subject-To risks, particularly the due-on-sale clause. Chris pays lenders directly and uses trusts or other legal vehicles to protect the deal structure. He’s never had an issue in over 14 years of doing Sub2, but he emphasized that working with the right attorneys is critical.

Why the Right Team Matters

Throughout the episode, Chris drove home the importance of working with the right team. From real estate attorneys who understand creative deals to CPAs who know how to handle multi-payday income models, surrounding yourself with experts is essential. He shared that poorly structured deals can result in unnecessary tax consequences, and how he’s helped students clean up messy books by referring them to the right professionals.

Finding the Right Properties

If you’re wondering how to find deals like these, Chris shared that it’s all about targeted list building. His team uses tools to pull public records and filter by free & clear ownership, tax delinquency, zip code, and more. You can niche down to something as specific as “2-bedroom, free & clear properties with a garage” in your market. It’s all about working smarter, not harder.

And yes, this works in expensive markets too. Chris has students and coaches in places like California doing million-dollar deals creatively. It’s not about the market, it’s about understanding what tools to use and when.

Final Thoughts

As Chris put it, “Deals are happening every day, even in tough markets.” The difference between investors who close deals and those who sit on the sidelines comes down to knowledge and strategy. Creative financing gives you a powerful set of tools to buy properties without banks, build equity fast, and thrive in any cycle.

If you’re ready to stop waiting for the market to get better and start taking control of your investing future, creative financing could be the key, and Chris Prefontaine is one of the best guides to show you how it’s done.

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Transcript

Introduction

[00:10] Thomas Castelli, CPA:
Today we’re joined by Chris Prefontaine, who is the chairman and founder of Smart Real Estate Coach, a four-time bestselling author, and the leader of the Wicked Smart Community. They’ve helped investors complete hundreds of transactions, assisting students in doing the same.

Chris also hosts the Smart Real Estate Coach Podcast, which ranks in the top half percent globally. That’s pretty awesome. Today, we’re diving into creative financing, the current market landscape, and more.

Chris’s Real Estate Background

[01:10] Chris Prefontaine:
Yeah, I’ve been at it 34 years. I’ll give a 10,000-foot view. I started in 1991—built hundreds of homes, did raise-the-roof projects, condo conversions… not every niche, but a lot.
I owned a brokerage and sold it in 2000 to Coldwell Banker. From 2000–2008, I focused on my own properties and coached realtors across the U.S. and Canada.

Then came the 2008 crash, which crushed me financially. That’s when I changed how we do business: no more bank loans, no signing personally—just creative financing. We now teach this model across about 80 markets in North America. We even partner with students and revenue share on deals, so we’re in it together.

Thoughts on the Current Market

[02:46] Thomas Castelli, CPA:
Where do you think we are in the market cycle, especially with current interest rates?

[03:05] Chris Prefontaine:
Good question. Nobody truly knows, not even the billionaires. What I’ve focused on since 2008 is not being dependent on the market. Creative strategies allow us to pivot—up, down, sideways. Uncertainty is actually great for our model. So, I don’t try to predict—I focus on the ability to adapt.

Strategies That Are Working Now

[04:00] Thomas Castelli, CPA:
What strategies are working best in today’s market?

[04:08] Chris Prefontaine:
Two main ones:

• Free & Clear Properties: About one-third of properties in the U.S. are owned free and clear. We structure principal-only monthly payments—no interest. That hedges against rates and recessions.
• Subject-To (Sub2) Deals: So many loans are still under 5%—even 3%. We buy properties subject to existing financing. You don’t have to go through underwriting or sign personally.

Principal-Only Seller Financing

[05:14] Thomas Castelli, CPA:
Can you break down what “principal-only payments” actually look like?

[05:31] Chris Prefontaine:
It’s basically seller financing with 0% interest. Many sellers want their price, but they’re willing to take it over time, especially to reduce their tax burden. One seller even had a sign that said “Owner Financing” and turned down all-cash offers because they didn’t meet his specific goals.

Subject-To Deals Explained

[06:23] Thomas Castelli, CPA:
A lot of people hear about “Subject-To” financing—can you explain how it actually works?

[06:31] Chris Prefontaine:
Sure. “Subject to” means I buy the property, but the existing loan stays in place. I just take over the payments. It’s different from assuming the loan—there’s no underwriting or personal guarantees. We always make the payments directly to the lender. It’s a powerful strategy, but it has to be papered properly. Work with attorneys who specialize in it.

Seller Objections & Hybrid Deal Structures

[07:47] Ryan Carriere, CPA:
How do sellers respond to the idea of 0% interest? Don’t they want some return?

[08:27] Chris Prefontaine:
Some do, and we’ll create hybrid structures. Example: 18 months of principal-only, then amortized over 30 years with interest. Or we stair-step—0% year one, 1% year two, etc. Still pays down principal aggressively. Sellers often just want their price, and many aren’t hurting financially.

Hold Times & Deal Exits

[11:05] Chris Prefontaine:
We usually don’t hold for 30 years. Most deals exit between 2–8 years. But some Sub2s, we keep long-term. It all depends on the strategy.

1031 Exchanges & Tax Considerations

[13:44] Thomas Castelli, CPA:
Do you use 1031 exchanges when exiting deals?

[14:08] Chris Prefontaine:
I have personally, but in our rent-to-own model, we usually lock in the exit up front. So it doesn’t allow for a 1031. But in our portfolio, yes—we use them as a tax deferral strategy.

Sub2 Risks & Due-on-Sale Clause

[15:54] Thomas Castelli, CPA:
What if the seller doesn’t pay the loan? Isn’t that a risk?

[16:00] Chris Prefontaine:
We always make payments directly to the lender—seller doesn’t touch the funds. Regarding the Due on Sale clause, we use trusts and proper legal structures. We’ve never had a problem in 14 years of doing Sub2s. One attorney we work with even won a case when a bank tried to call a note. The key is having experienced legal pros.

Importance of a Professional Team

[18:21] Thomas Castelli, CPA:
Sometimes you just need the right team—like the right accountant or attorney—especially with multi-payday deals.

[18:46] Chris Prefontaine:
Absolutely. We’ve seen students mess this up. Payday #1 might be $50K—but you don’t recognize it until the option is exercised or defaults. Accountants need to understand that model.

Applying Creative Financing to Rentals

[19:45] Thomas Castelli, CPA:
Do these strategies work for short- or long-term rentals?

[19:57] Chris Prefontaine:
Totally. Use Sub2 or seller financing to acquire properties, then keep them for as long as you want. It’s very flexible.

How to Find Free & Clear Properties

[21:23] Ryan Carriere, CPA:
How do you find free and clear properties?

[21:58] Chris Prefontaine:
We use public records and database tools—search by zip code, property type, even tax delinquency. You can niche down to things like “2-bedrooms, free & clear, with a garage” if you want.

Markets That Work Best

[23:19] Ryan Carriere, CPA:
Are there better markets for creative deals?

[23:40] Chris Prefontaine:
Not necessarily. High-cost areas like California still work—it’s just relative. You might not get as many deals in cities, but within 50 miles of most people, there’s plenty of opportunity.

Why Focus on Free & Clear Properties

[24:21] Ryan Carriere, CPA:
Why focus so much on free and clear properties?

[24:38] Chris Prefontaine:
It removes the need to deal with banks or due-on-sale risk. It’s just you and the seller. Cleaner, faster, simpler

Coaching & Working with Chris

[27:36] Thomas Castelli, CPA:
Tell us about your coaching programs—how do you help investors implement this?

[27:50] Chris Prefontaine:
We offer group coaching, live bootcamps (in our office), and partnerships with students across 80+ markets. Our coaches have gone through our program and done deals themselves. We also revenue share with students—real hands-on mentorship.

Where to Learn More

[29:22] Chris Prefontaine:
We offer free resources so people can explore before committing:

• WickedSmartBooks.com/TSI — Get free books sent to you
• SmartRealEstateCoach.com/mastersclass — 50-minute free workshop

Wrap-Up

[30:02] Thomas Castelli, CPA:

There are deals being done today, no matter the market. With the right strategy and support, you can make it work. Chris, thanks again for joining us—and thanks to everyone for tuning in to this episode of the TaxSmart REI Podcast.

Disclaimer: This podcast summary and transcript were partly generated and may contain some errors or miss key points from the audio recording.