All Forum Posts by: Eric Andrekopoulos

He will lose a lot of money if he doesn't take advantage of seller financing.  Why doesn't he want to do it, and what are his plans to do with the reduced cash he gets after selling the properties traditionally?  Does he realize just how much of that equity he will not get in cash through taxes and other fees found with traditional financing?

@Eric Andrekopoulos

He could also sell them and not have to worry about if the borrower is paying or not - put the funds in a deferred sales trust and invest it in something less risky (not levered at 90% which is probably what it would be seller financed) and not pay ordinary income but have it taxed at qualified dividend.

There is a reason why 99% of loans are originated by banks and not by sellers. If banks didn’t have fractional lending they would not give mortgages either as with inflation you lose money over time

For example:

Take $1M as an example of a portfolio and put it at 7% seller financed vs putting it into an investment that gets 6% but doesn’t pay your principal back and is taxed at a much lower rate and see how big a difference that is

Roughly $1.4M interest vs $1.8M and taxed at 15% less rate it makes a huge difference.

Your approach is correct, but if the delivery is wrong, they may not be hearing you. 

If you can get them to sit down and figure out the actual losses they will take on paper, maybe it will sink in. If you leave it up to them to figure out, they are probably never going too.

Another strategy could be to Lease the entire portfolio with an Option to purchase for cash (or terms ) after they pass away. The kids will get a step up in tax basis at that time and will be likely able to get the full benefit of the portfolio tax free.

Hi Eric - I recommend checking out Furnished Finder, VRBO and Airbnb (30 + day stays) and local Facebook groups to see how much competition there is for what you're offering. Like Bonnie said there are a lot of different clientele you can target for MTRs. ALE solutions can be great for insurance placements as well

Hi Zachary, Thank you for the tip! What are some of the other guests you have targeted and did you do anything different to advertise your property to them such as communicating directly with the coorporation? 

I have a MTR in the Raleigh area and also work a W2 in healthcare. Traveling healthcare professionals will likely never go away but its not booming like it was 1-3 years ago. The home prices in the Triangle make it more challenging to target this audience as they're typically looking for something  smaller (1-2 BR) and affordable. Depending on your market it could still make a lot of sense! 

If you like the MTR model, there is a lot of opportunity in the 3-4 BR space with relocation and families displaced due to insurance. Check out https://experimentrealestate.com/ for more details, Ruben has a lot of great free info!