No to Yes with Seller Financing
Hey, this is Terry Hale. Hope you’re doing well.
Just wanted to take a quick few minutes here
And tell you about this project where I absolutely just crushed it.
I was on the phone with this broker that put the seller on.
And at first he was a little hesitant to put me on the line
With the seller because he was thinking maybe
There could be some circumvention, where I’m going to go
Around them and get the deal closed
Without paying his commission or something ridiculous like that.
And it took a little bit of convincing on the front end
To get the broker to put the seller on the phone.
But once I actually had control of the conversation,
I was able to explain all about seller financing.
And originally the seller did not want to finance the deal.
He absolutely 100% said, “No, I don’t want to finance.”
I turned that conversation around within five minutes
And here’s how I did it. All right.
So to make sure, you should take some notes on this
Turning around, when they say ‘No’ about seller financing,
How to turn that around to a ‘Yes.’ First thing I did was
That I explained that the property was an actual liability
Not an asset, meaning it’s not income producing
Enough money to qualify for bank financing, no bank financing.
So at that point, there was only actually two ways to buy it.
One was a lowball, all cash offer, quick, close, no contingency,
Everything that the brokers want is all cash sale,
Except they didn’t like my price point.
Because my price point, it was quite considerably less
Than what they were asking. They were starting out asking 1.695
And I told them, “Hey, if I’m going to be a cash player,
I’m going to be on a 10 cap formula.”
That property was producing exactly $93,000.
I was a $930,000 player. Obviously, we were pretty far off
On the price point. So how did I make it all come together
And really make sense so we can make dollars, pun intended.
This is the way I did it. I explained that
Because it does not qualify for bank financing.
The only other way for me to go move forward
And purchase the deal is if the seller carry paper,
And the seller said, “Look, I don’t want to carry paper.
That’s not something I’m interested in.”
And I said, “Look, if I were to come in and even cash you out
At your asking price, you’re going to have to pay
Massive amounts in capital gains tax.”
The guy started nudging on his ear a little bit
And he was interested to hear more.
I explained that the deposit I put down, he will have to pay
Taxes on that but he’s going to also be receiving
Monthly passive income for seven years
Because that was the timeline that I negotiated.
Of course, I came up on my purchase price, I paid that premium.
I locked it down at a 1.395 offer, so he took a $300,000 haircut.
But in order to get that deal done, that’s exactly what it took.
It took for me to come up off of my actual 10 cap,
Normal acquisition methodology to pay a little bit more
For the premium to have him carry the paper for seven years.
But here’s the fact I get appreciation, I get depreciation
Plus, I get cash flow on that deal after I get it operating
At its highest and best use, close to market occupancy.
So if you dig everything that I’m saying
And you understand the true value of these properties,
By the way, that thing is sitting currently today
At 30% economic occupancy, it’s a self storage deal, 360 units.
When that thing comes from 30% of the market occupancy
At 95 to 98%, that property will be worth
A heck of a lot more than 1.695.
And that’s how we make money in this business.
Plus, I have a few other tricks that I do like canceling management,
Automating gate systems and things of that nature,
Which adds an additional $35,000 in income yearly
Without adding additional expense. So if you dig it,
Go ahead and click the link below. Come and check it out.
Check out more. Take advantage of my training
That I have available and my upcoming event
That will be happening shortly too.
All right, or you can go to my website https://terryhale.com/
And I look forward to engaging with you again here real soon.
To learn more strategies and techniques,
Visit Terry 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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