I'm Trying To Structure Creative Deal For 8 Unit Building

[Zachary S.]

I have interest in acquiring an 8 unit building which is an approved condo structure and can be sold individually. I would like to use an old but effective
technique to purchase this property. I want to convenience the owner to sell with owner financing, as most people do nowadays I know he's going to want a substantial down payment.

I am going to put the property under contract but make the deal contingent on me selling one to two of the units for the down payment. I'd like to put a time limit of 30 to 45 days and if they can't be sold the deal becomes null and void.

Since the property isn't located in the state of which I live, I'm planning on using a realtor. I'm not sure if a realtor would sign only a 30 to 45 day contract.

I would like to know if anyone on here has made any similar deals and what their success was or if you can offer up suggestions to make this deal work.

Just as a side note, I'm using this method as I'm a younger investor so I don't have a fortune and I still need to build my credit. This peaks my interest as I think it can make this a win-win for everyone involved.

[Tom Goans]

Zachary S.,

If I read your post correctly, you are assuming the seller position on seller financing. If this is true, you may be incorrect. Ask the seller DIRECTLY to find out the seller's position and cash flow requirements.

I never go through a third-party. I want to have a feeling of what is being said as well as what is not being said.

It may be as simple as the seller has no understanding of seller financing. To make matters worse, most real estate agents have no to little understanding. Those who think they know, really do not. If you do not live and breath seller financing, it is about like a male saying they know what is like to have a baby.

With that in mind, for three generations my family has been involved in seller financing. Let me share a recent structure my father used to buy a large ranch for development purposes.

Note: the seller was using a real estate agent.

My father directly spoke with the seller. He learned why the seller was selling and the financial position of the seller - the seller was a successful professional poker player. The seller was making money playing cards and had plenty of money on hand. The seller also wanted to avoid a large tax liability.

Armed with this critical information, this is how my father structured the purchase that best suited both the seller’s needs and requirements as well as make the purchase ideal for my father.

Without a down payment, the seller financed the purchase with no payments due for 2 years unless part of the land was sold. Then, the payment was calculated on the percentage of the land in relation to the sum total.

My father brought me in and I developed the property, including putting in the roads. Every 40-acre tract of land was sold in about 18 months - all using seller financing provided by my father.

My father had all the property sold and producing a cash flow Before the first payment was due to the poker player.

This is an excellent example of how to invest in real estate without the burden of debt.

It is also an excellent example of knowing the details before negotiation begins.

My father’s situation is also an excellent example of being extremely good at what you do. This was no gamble for my father or me. We knew exactly how fast we could plan the development, survey the land, install the roads, and sell the property before the first time my father spoke to the seller. I had the maps already designed prior to closing.

Successful real estate investing is similar to being a successful chess player. You know the moves before they take place. Enduring success is not the result of luck, it is the result of knowledge.

Seller financing can be the ultimate finance option for both the buyer and seller. The best way to take advantage of seller financing is to know how to structure the financing and then understand the seller’s position prior to negotiations.

You can afford to pay more for an investment with properly structured seller financing.

I hope this might give you some ideas of how to approach your unique investment situation.