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Updated over 4 years ago,
Interest vs Principal. How to negotiate seller carry?
I have a question regarding podcast 334. In there Brandon and Dave talk to Ben Lapidus about different negotiation tactics when talking to sellers about seller carry. In his metaphorical example he proposes to pay the seller a higher price, in exchange for a lower interest rate. Explaining to the seller that if they give him the lower interest rate, it would save him 1.5 million compared to what he would pay a bank, and he would pay them $600k more on the purchase price, also explaining that they would only pay 25% tax on principal as opposed to 30-40% tax on interest.
If I'm the seller, why would I want to take 75% of $600k, instead of 60% of $1.5 million?
Maybe his numbers were just off the cuff and I'm taking his example to literally, but I'm hoping someone can help me understand this strategy a little better. @Brandon Turner