The Terry Hale Show Episode 8

The Reason Why Sellers Do Seller Financing

TRANSCRIPTION

Hey, this is Terry Hale here in my office in Malibu, California.
Bright and early in the morning, just finished with my podcast,
and wanted to just take a few minutes and talk to you about
the topic; of discussion and how this all transpired.
So I have a client,
and the client really had to wrap their head around the reasons
why sellers would even consider seller financing,
you know, what’s the give? Like, why would they want to,
you know, carry paper for us, what’s the reason behind that
I’ll walk you around the office as we,
as I do this little segment for you.
So part of the reasons that sellers will carry paper for you
is because of the type of deals that we’re going after,
we’re not going after your average run of the mill type of deal that has,
you know, occupancy at, say 80% or 90%,
the type of deals that we’re moving on our
deals that have very low price occupancy,
but they’re built, they’re in great areas, meaning great locations,
they make sense as far as what their highest
and best use can be, and their cash flow,
add value there by filling the vacancies by raising rents,
adding profit centers,
the deals just make sense. You know, they make sense.
And we’re able to get in on these projects with seller financing,
because we just let the seller know, hey,
there’s no possible chance that this deal is bankable,
you can’t walk into any institution, take out a loan,
be able to qualify for bank financing and be able to get these deals done.
It’s just not what banks do.
They want to cross-collateralized lower their debt,
they don’t want to take on liability, they only want to take on assets,
properties that are already operating at their highest and best use.
So the fact is, we’re able to get in on these types
of projects with seller carry back
and we justify this we say look,
there are only two ways to buy this property.
One is to purchase the property, all cash, we can make it lowball offer.
And we do that all the time it happens we just closed another project,
we tied it up for 395,000. That’s a smaller deal, a little mini storage,
the thing has potential to cash flow
has the potential to be worth closer to 850,000.
And we got that deal for a 10-year seller finance note 4% interest.
And it was a non-recourse structure, no personal guarantee
and that is seller financing ramped up.
And we can do these types of deals over and over again,
rinse and repeat. We don’t have the competition that most people have
when you’re out there buying with the capitalization rate,
looking at these properties, crunching the numbers,
and really just trying to compete against the masses.
We’re in a position where we’re focused on the right deals,
we’re focused on projects with value add again due to vacancy,
and the sellers will carry as long as you can
point out that meant mutual benefit.
That reason why they should carry paper.
The reason why is because two ways to buy it either all cash lowball offer,
or they carry paper to become the bank and they create an income stream.
And we’re able to service that debt by the income from the Property
Plus everything that that property makes
on top of that goes into his National Bank,
meaning cash flow baby.
It’s all about cash flow and you want cash flow.
Now, this is the business to do it. Stop flipping houses,
stop looking at other ideas of pursuing ways to make money.
This is the vehicle that can produce
massive amounts of wealth for you.
Just look at projects that make sense
and do the right deals that yield
amazing returns on your investment.
And the beautiful thing is,
you can borrow other people’s money to do it.
And you don’t need your own personal credit
if you structure the deal the right way.
If you liked this segment, go ahead
and click the link below in the description
and visit terryhale.com
and remember it’s all about cash flow.
CRE commercial real estate is the
vehicle that produces massive wealth.
I look forward to speaking with you real soon. Take care

KNOWLEDGE IS POWER

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