The Terry Hale Show Episode 29

Deferment Payment

TRANSCRIPTION

Hey, this is Terry Hale, I want to take a quick minute here and
Chat with you about a strategy that’s used to make
A no payment, no interest structure. So now if you were
To just ask the seller straight out,
“Hey, Mr. seller, would you do no payment, no interest?”
Chances are he’s gonna laugh at you and
Maybe hang up on you.
But here’s how we orchestrate the right negotiation
To get no payment, no infrastructure.
What we do is we call it a deferment of payment.
So when we come in with a down payment,
What we’re doing is we’re creating a seller finance note and
Second position, that seller financing will have a timeline on it,
That’s the length of the time they’re willing to carry along
With an interest rate, that interest rate could be
A couple points about prime, maybe you’re sitting at
Four or 5% interest, or it could be high interest
More like hard money at 10% 12%.
Okay, it all comes down to your negotiation technique
On how you can persuade them to do it.
What are you working towards as far as a mutual benefit?
What’s the motivation of the seller, all these things
Truly come into play. But one of the techniques
That I like to use is a deferment of payment.
So I can explain to them clearly. And of course,
If the property that meets the exact criteria that I’m speaking of,
Which is being highly vacant, if the property is highly vacant,
Then you can say to them, “Look, it does not qualify
For bank financing. The only way we can do the deal
Is either an all cash offer”, which they’re not going to want to
Accept your cash offer 90% of the time. They’re going to
Want more money for it. If there’s a broker involved.
They’re incentivized with more money, a higher price point,
Meaning a sales point because they’re working on commission
And they get paid on what the property sells for.
So everybody wants a higher price. It makes sense.
You probably want a lower price but there’s an old saying,
And my mentor told it to me a long time ago.
He said, “Look, I’ll gladly go ahead and pay your price.
If you give me my terms.” If we buy on the ‘as is’ value,
Where is as is in its current state and its current condition.
And we’re buying for say 30 to 50 cents on the dollar,
We’re able to increase the value 50%. We’re going to
Double our money or even triple our money.
So what comes down to the deferment of payment and
How that actually orchestrates is this,
We let them know, ‘Look, we need some time to get in,
We’re willing to put our skin in the game.
We’re willing to put down 10 or 20% or whatever
You negotiate your down payment.
But we cannot also incur negative debt service.
If the property is not break even after we have our debt stack.
We have debt stack. We have senior debt that we’re wrapping.
We have a seller finance note. We, maybe, borrow capital.
We have to pay money. All this is debt stack.
If property is not going to be producing enough money
To take care of its debt. The only way to make the deal work
Is to have the seller continue to service the debt
On the property for a period of time while we turn it around.
We’re not talking about two years of deferment.
We’re talking 6-9-12 months that will give you
The opportunity to get in super …, not create debt service,
Be able to take the property, start to reposition it.
Make it cash flow. And that way you can create
Monthly passive income, financial security,
Create generational wealth and get the deal done.
So guys, obviously I have 20 years experience.
I know this business. I’ve been an active investor for 20 years,
And I’ve been teaching for 15 years. If you dig it.
You like what you’re watching. You like what you’re hearing.
Go ahead and click the link and learn more or better yet,
Just go to https://terryhale.com/ and check it out.
All right, I look forward to engaging with you guys real soon
And have a fabulous day. Take care.
Learn more strategies and techniques, visit https://terryhale.com/
Or go ahead and click the link in this video description.
And I look forward to engaging with you real soon.

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