I own over a dozen self-storage facilities across 4 several states. More than half were acquired with some form of seller financing. I've done deals with 100% seller financing, deals with 50% seller + 50% private money, and deals where the seller held a second position note behind a private lender in first.

Seller financing is the single most important tool in my acquisition strategy. Here's why, and exactly how I approach it.

Most of the facilities I buy are from mom-and-pop operators. They bought the place for $50K-$100K decades ago. Now I'm offering $700K-$900K. If they sell outright, they face a massive capital gains tax bill. Seller financing spreads that recognition over years through installment sale treatment.

Beyond taxes, many of these sellers are retiring. They want predictable monthly income. A seller-financed note secured by the real estate they already know gives them exactly that - often at a better return than anything they'd get parking the cash in a savings account or CD.

I never lead with "will you do seller financing?" That sounds like I can't afford to buy their facility. Instead, I ask what they need. Do they need a lump sum to buy something else? Do they want monthly income in retirement? Are they worried about taxes? Their answer shapes my offer.

If they want monthly income: I structure a longer note with manageable payments. For example, one deal was $725K total, $350K down, $375K seller financed at 6% over 15 years. The seller gets a check every month that covers her retirement expenses, and I get terms that make the deal cash flow from day one.

If they want to minimize taxes: Installment sale with lower down payment, longer term. I've done 10% down with 90% seller financed on a 10-year balloon. The seller defers the bulk of their capital gains.

If they need cash now: I still try for a smaller seller-financed second position. Maybe 70% from a private lender or bank, 20% seller carry, 10% my cash. The seller still benefits from the interest income and tax deferral on their portion.

1. Seller financing (everything is negotiable - rate, term, balloon, prepayment, down payment)

2. Private money (10-12% interest to the lender, secured by first deed of trust, 12-24 month term while I stabilize)

3. Equity partners (60/40 LP/GP split, used sparingly)

4. Bank or SBA (last resort - too many hoops, too slow, too many covenants)

When a seller offers monthly payments, always know: is that principal only, or principal plus interest? One of my coaching clients almost signed a $1.55M deal with $7K/month payments without clarifying this. The answer completely changes the amortization schedule and your actual cost of capital.

If you're waiting for interest rates to drop before buying your first storage facility, you might be solving the wrong problem. When the seller IS the bank, the Fed rate is irrelevant. You negotiate your own terms.

I'd rather have a 6% seller-financed note with no prepayment penalty after year 3 than a 7.5% bank loan with 6 months of due diligence, personal guarantees, and quarterly financial reporting covenants.

Happy to break down any of these structures further. Drop your scenario in the comments and I'll walk through how I'd approach it.