Archive for June 2019
The Terry Hale Show Episode 18
Why Sellers Carry Paper
It’s Terry Hale. I want to take a quick second to talk with you about
seller financing and why sellers would ever even think about
offering such amazing terms, just to give you a handful of
some terms that have been cut within the last 30 days,
on deals, projects that are under contract moving forward,
we have a 54-unit apartment complex that is under contract,
we have a 10-year seller finance note, that was a structure at 6% interest.
It’s not as low as I wanted, but it’s not a bad interest rate,
no personal credit check, we have 110 unit apartment,
that’s a really great deal out in Tennessee market,
that project actually has a 15-year seller finance note
with a lower interest at 5.5% interest.
And that’s actually an escalation of interest clause,
where it actually goes up over time, every five years,
it actually goes up a point.
So we want to get that one done sooner than later.
Got a couple of self-storage facilities also that are under contract.
And those also have seller financed structures.
And the key here, guys, is when you’re moving on the seller finance deals,
you’ve got to make sure that you’re talking to motivated sellers.
We’re not dealing with brokers, guys, when we’re negotiating deals,
you probably heard me say that in a previous segment,
we’re not dealing with brokers,
brokers are there to help service the project and sell it
and give us the knowledge that we need. So we can move it forward,
the negotiations are actually made with the seller.
So when we’re actually structuring these seller finance notes,
you got to look at the project
if the project is not going to warrant seller financing,
meaning it’s not justifiable, and there isn’t a mutual benefit there.
You gotta sit yourself within reason,
Hey, I’m trying to mold something trying to turn a turkey into an eagle.
It’s never going to fly. We’re making lemonade from lemons, as they say.
And for that reason, we have to have
the key identifiers in place like low rents,
we have to have a lot of vacancies, we have to have motivated sellers,
we’re dealing with a lot of inheritance property right now.
And these types of properties are out there,
there’s an abundance of these properties in your own backyard.
A lot of times they’re not even advertising,
that they’re willing to carry paper.
That’s your job guys. It’s something where you get the knowledge for me,
I’ll show you how to do it.
And then we position these deals through negotiations.
And we justify that and we point out that, hey, we can buy it all cash,
we just closed a deal in Kissimmee, Florida,
we bought it all cash for 500,000 and change.
And they were advertising it at 1.1 million.
And then we tried to get seller financing at around an $800,000 number
they wanted the all-cash so they took the all-cash not a problem. You know,
so that’s it, that’s the way it works, seller financing,
they’re going to make more money than an all-cash deal.
And they carry paper and they become the bank.
And, you know, the alternative to that guys is that they’re going to be
sitting on the property if no one’s willing to pay all cash.
And if they’re not willing to get creative, it’s not bankable,
it doesn’t qualify for institutional financing hard money
or even private capital.
These deals just sit and there’s a lot of them just sitting so I can show you
how to find them pre-screen them evaluate their structure and negotiate
and facilitate them with the team.
Grab the knowledge guys this is the time.
The time is now. Make it happen. If you like this tip,
seller financing is available on projects that make sense.
Go ahead and click the link below in the description of this video.
Or better yet, just go to terryhale.com and I look forward
to engaging with you again here real soon.