seller financing probing in multi family
I think with all the uncertainty in market seller financing will be coming back to play in multifamily under 100 units. Besides asking what is the sellers plan with proceeds what is your favorite way to probe if seller financing is an option?
Hi @Jason Malabute, something that one of my clients does is agree on the price first. Then terms.
For example, iIf they agree to sell for, let's say, $10,000,000. Then, you can say "great, now that we decided on the price, let's discuss terms." If the property needs some renovations, you can always say "I want to make the best use of my capital so how about I put $500,000 down today. Then, I will spend the capital I would have used to get a loan to fix up the property. You give me the other $9,500,000 at x% interest only for 2 years, then I will refinance into long-term debt so you get the rest of your money then. I know you might be hesitant about holding the property in your name for another two years but worst-case scenario, you get $500,000 plus interest and a completely renovated property."
Obviously, it will not work for every investor and it depends on their reason to sell. If they want the cash flow but do not want to deal with renovations, this strategy works really well. If they just inherited the property and want out, this might not be the strategy.
Hope this helps! Let me know if I can be of any assistance.
Quote from @Andrew Garcia:
Hi @Jason Malabute, something that one of my clients does is agree on the price first. Then terms.
For example, iIf they agree to sell for, let's say, $10,000,000. Then, you can say "great, now that we decided on the price, let's discuss terms." If the property needs some renovations, you can always say "I want to make the best use of my capital so how about I put $500,000 down today. Then, I will spend the capital I would have used to get a loan to fix up the property. You give me the other $9,500,000 at x% interest only for 2 years, then I will refinance into long-term debt so you get the rest of your money then. I know you might be hesitant about holding the property in your name for another two years but worst-case scenario, you get $500,000 plus interest and a completely renovated property."
Obviously, it will not work for every investor and it depends on their reason to sell. If they want the cash flow but do not want to deal with renovations, this strategy works really well. If they just inherited the property and want out, this might not be the strategy.
Hope this helps! Let me know if I can be of any assistance.
great point thanks
