Creative deal structuring help needed

[Michael McDermott]

I have a meeting tomorrow with a lead from one of my yellow letters, sent to an LLC actually. Turns out the guy owns 4 multifamily units, I would be interested in purchasing 3 out of the 4 but I simply do not have the funds to do so.

What type of deal could I present that would seem appealing enough to have him sell me the properties without listing them on the MLS? He has stated that he wants out of the business but doesn't seem desperate to sell.

I came across a similar thread from about a month ago and a few people suggested "terms" and "quit claim", neither which I am familiar with. Would offering subject to on something liken this be crazy?

Sorry if this sounds jumbled, I'm not even sure what questions to ask to get this going.

[Bill Gulley]

He wants cash flow and away from the headaches. I don't need numbers to go to the concept to structure the deal.

It's seller financing, he'll have cash flow he can use that to accelerate his other loans if he wants to. If he has owned those properties for awhile, he is better off tax wise to carry the sale, not cash out. Check posts about seller financing and tired landlords.

Throwing in a lump sum on existing loans doesn't effect cash flow immediately it shortens the time to the payoff and reduces interest expenses, that are deducted from income. Additional monthly payments do the same thing from interest income. 

If he seller finances, his net worth remains the same, trades property for a note. He dumps the property expenses, vacancy and holding costs, he can be better off with the note cash flow. His cost of capital on the other loans needs to be less after taxes than his note income after taxes. He has operating income from his rentals that may carry higher tax burden than interest income from a note. 

His thinking as to his goal of paying of other loans may not be the best approach as his payment now in an old loan are contributing more to principal reduction, his real interest expense is declining, even at a higher note rate his cost may be less. He needs to look at the opportunity costs and most likely note income will be better than an alternative investment or buying down the existing debt.

Follow this path and then fill in the numbers, you do need to get the numbers, but look at it from his point of view to make it work for you. Good luck :)