All Forum Posts by: Jeff Lundeen

I recall someone talking about sending multiple with different terms.  Here's what I created in an attempt to get either a lower price or better payment terms with seller financing.

Background:  This is an international property in a Country that it's fairly common to ask for payments.  The payments typically are 1-3 years (but there's no real standard) and don't have additional interest added.

Asking price: $280 Million (different currency than USD)
Last year's asking price $250 Million (we assume the price increase is because of inflation)

The owner doesn't seem in a hurry to sell and when we asked if he'd negotiate last year at $250 million he said no.

I'd like to offer the following 3 options to see if any of these work for him:

Option 1: 
250 Million upfront 

Option 2:
140 Million upfront
130 Million in 6 months. (Total of 270 million)

Option 3:
140 Million upfront
70 Million in 6 months
70 million in 12 months (total 280 Million)

My wife and I like all 3 options.  Just looking for feedback on if this is something you'd do.  (I figure worse he can do is say no and then we're in the same place as we are now).  The goal here is to make Option 3 (his asking price) look more appetizing.  But we'd also be happy with option 1 or 2.

Thanks for reading!

@Michael Cavitolo how are your selling skills?

I've got a phone sales gig I'm looking to hire someone who's hungry!  

California has long been seeing people exiting, and I'd speculate that COVID will increase that trend.  Especially as we see tech companies like Twitter, Square, and Facebook allowing Work From Home.  I personally see people from the Blue "high tax" states leaving.

Where will they go?  I'd speculate: Texas, Colorado, Arizona, and Utah.  (probably Idaho too)

Any states in the Midwest or places with cheaper property that you would expect people to move to?

I'm hoping to revive this thread and see what you guys who are using this system think of it 3 years later.  @Drew Cameron are you through the loading phase?  

@Brian Fouts do you have any concerns with "Black Swan" risk of the insurance company losing your money through malinvestment?  

@Thomas Rutkowski The book I'm reading was published when interest rates are higher.  Does this system still work when interest rates are where they currently are?  I'm asking the agent who has shown me this system where and what the life insurance company does with this money in order to generate both dividends and interest.  The answer was somewhat vague but has a good track record.    On another note, do you sell life insurance?  I'm just curious if you have any incentive to recommend this strategy.

Thanks so much!

@Katherine Bickel 
What are the things you value most in software?  My team can build something for you to help you save time and make your job easier.  The more specific that you can be about what exactly you want or wish you had in software, the easier it will be for us to build it for you.

Jeff

@Michael Ealy

"One Challenge with Foreign Investors

One challenge with foreign investors specially with the "trade war" between US and China, is that transferring money (from China to US) is more limited than before."

Care to speak more on these challenges?  If it's censorship from one of the governments or problems with the banking system, Bitcoin could be a very useful tool.  You don't need to speculate on it's price.  You can use it as a medium of exchange.  I'm happy to explain more, but If you haven't already done your own research, be prepared to take some time to understand how the protocol works.

@Adam Lang  That seems to be the problem that most who are new to the game have.  What value do you provide?  In my opinion, Bigger Pockets does a great job with solving this problem as it expands your network and gives you opportunities to meet people worldwide with similar goals.  Your focus would probably be on providing massive value to any potential partners who have capital but don't have something that you can provide.

What do you need in your business to save time?  Do you have any problems that are consistent?  Problems that are stealing your energy and focus?  What kind of problems are these?

What would it be like if you gained an extra hour per day?  How much more could you accomplish if you were free'd from tedious work?

Let me know what I can do for you.  What are the areas of your business that you continuously wonder why there isn't some software or service to reduce your workload and free up mental energy?

I love analyzing risk and figuring out the best way to protect downside.

I've got a current deal that has significant upside, I am just trying to fully understand and mitigate risks. The current building has low rents and is managed poorly. My partners an I have a big opportunity to renovate, raise rents, and reduce expenses to increase the NOI. I specifically want to know how we can protect our 25% equity investment.

The things I have questions about:

Cap rate seems to be a subjective number.  If we have a premium product in a premium location, we assume we will be getting the lowest cap rate in the range of our market.  How can we narrow in this range?

There is also a range of what the units will rent for.  A $0.10 difference per square foot is significant, based on how it is amplified over multiple units.  Do we just calculate minimum and maximum and be sure we are happy with both results?

As far as reducing expenses, it appears that 50% net income is a conservative estimate, and 25% is an aggressive estimate. This is a huge range. How can I narrow this down? As part of renovations, the HVAC will be new and the roof will not need to be replaced. We don't foresee any CapEx.

I want to ensure we are putting ourselves in the safest possible position with our capital.  What else can you think of that would be a factor in analyzing the risk?  We have two exit strategies, refinancing and holding forever, or selling after the rents have been stabilized.  We can afford to hold the building, so long as we can draw out our equity investment after 18 months.

@Mike Lane I recently sat through a presentation from Lynn Merritt with Incite Tax.  I can strongly recommend him.  He's not cheap, but you'll save that money and more from taking his advice.  A friend of mine with a small business did a phone consultation with him, so you can start there and see if it's a good fit.  I'd recommend googling him for contact info, as I don't have it with me right now.  Drop me a message if you can't get in touch with him and I'll do some digging to find his info.