How to Buy Time With Commercial Real Estate

TRANSCRIPTION

Hey, this is Terry Hale,
commercial real estate trainer.
How great would it be to have
the ability to buy more time?
Wouldn’t you go and buy an
extra 10, 20, 30, 50 years?
It’d be great! Unfortunately,
we can’t buy more time,
but we can change some things, right?
We can create financial security today,
so that way it’ll free your time
so you can stop swapping
hours for dollars.
That’s a really important point.
I wanna talk about how to buy time
with commercial real estate,
because I buy time with
commercial real estate deals
on each and every transaction.
Let me give you an
example of how to buy time
with commercial real estate.
There’s something to be
said about making money,
and people love to make money,
and when people get a little greedy,
when it comes to, say, interest rates,
when we’re creating seller financed notes,
what I do is I do something called
an escalation of interest clause.
What that means is if
I know that the seller
will only carry, say,
three years (36 months),
and I lock them in at a 5% interest rate,
I know that I can buy more time
if I play on the greed of them
wanting to make more money
with a higher interest rate.
So what I’ll do is an
escalation of interest.
What I’ll do is I’ll start off with, say,
if I want more of a seven-year deal,
obviously if I only had a three-year deal,
that means I’m buying four years.
How can I buy four years of time?
What I’ll do is an escalation of interest,
so the first three years is 5%.
On year four, it jumps to 6%.
And on year five, it’ll jump to, say, 8%.
Year six, 9%, and year seven, 10%.
By doing that escalation of interest,
they look at it and they
calculate all their money,
and they crunch all their numbers,
and they count all their beans,
and at the end of the day
they look at how much
money they’re gonna make,
and then they agree to a seven-year deal.
What they forget about is
the appreciation factor.
When you have a property and
you own it for seven years,
I can guarantee you 100%
with commercial property,
without a shadow of a doubt,
you hold something for seven years,
it is gonna go up significantly
with just appreciation.
So, this escalation of
interest, you can buy time.
I hope you enjoyed this segment.
If you like it, go ahead and
look below at all the comments
and click the link and
engage with me again.
I appreciate you. Take care
and we’ll talk real soon.