Seller Carry and Creative Deal Structuring

[Jorge Abreu]

One strategy that has consistently brought me success is seller carry financing and creative deal structuring. In this section, I want to emphasize the benefits of seller carry financing, share success stories where it enhanced the deal, and highlight the tax advantages of utilizing a 1031 exchange.

Seller carry financing is a powerful tool that allows investors to purchase properties with flexible terms and minimal upfront capital. By negotiating with the seller to carry a portion of the financing, investors can leverage their resources and maximize returns.

When you can structure a deal creatively, it opens a world of opportunities.

Let me share one remarkable success story that exemplifies the power of seller carry financing. We recently had a deal where we initially didn't bring up seller carry, but through building rapport and consistent communication with the seller, an opportunity presented itself. The seller, who happened to be a developer, agreed to leave some funds as equity in the deal, providing us with favorable terms. Additionally, when we faced challenges with private equity financing, we asked the seller to replace them. Surprisingly, they agreed, allowing us to close the deal quickly and on much better terms.

One crucial aspect of seller carry financing is recognizing the tax advantages it offers, especially through a 1031 exchange. Byutilizing a 1031 exchange, investors can defer capital gains tax by reinvesting the proceeds from the sale of one property into another. This strategy not only protects your profits but also provides a significant advantage in building wealth through real estate.

To recap, seller carry financing and creative deal structuring have been instrumental in my real estate investment journey. It offers flexible terms, opens doors to new opportunities, and allows investors to maximize their returns. Furthermore, recognizing the tax advantages of utilizing a 1031 exchange can significantly impact your long-term wealth-building strategy. Remember, negotiating creatively and building rapport with sellers can lead to remarkable deals that others might overlook.

[Colby Fryar]

@Jorge Abreu

We love seller carry as well.  On my first syndication deal, we were able to get a seller carry note for 5 years at 4% and another 5 years at 6% cap back in 2020.  Our only other option would have likely been a bridge loan for this size of property.  We are so thankful we got it.  They are much easier to deal with and there are no hurdles or lender requirements to meet other than paying the note on time every month.  They work well for mom and pop sellers that are free of a mortgage and are looking to retire on the cash flow.  They don't work so well for most syndicators and sophisticated operators in the space.