All Forum Posts by: Jeremy Dugan

On the exit strategy for seller financing, say the deal was Property Value: $450K, DP: $80K, Loan $370K. Over 3 years, I make interest only payments to seller, but raise market rents and it assesses at $650K. Could I get an 80% LTV Cash-Out Refi ($520K), pay off the $37OK, and pocket the difference ($150K)? Is that how it would work?
[In my scenario below, I was thinking about a share of the equity upon refi (what @Jack Pasmore called "the kicker" or share of the upside) since I don't think the seller would agree the property values at only $450K, even though that's what the rent and NOI say]

So, would the seller financing deal be based on the current value & rent roll or the future?
Say we structure the financing at $448K with 25% Down. Loan Amount is $336 and after 3 years the principal is $324K. In those 3 years, I've brought the Rent Roll up to $7,000/mth and it gets appraised for $700K. Those are favorable numbers for me...

Or do we do the financing based on the $700K future valuation, but with a smaller down payment of $100K (15%)?

Or...could we do a deal where we finance it now on the current valuation...they get a DP (say $100K) and a regular mortgage payment (say $2,500/mth = $90K over 3 years) and they get a portion of the cash on the equity when I refi in 3 years (say 30% or an additional $90K) plus the remaining principal ($324K). They'd get $100K (DP) + $324K (Remaining Principal) + $90K (Payments) + $90K (Equity Cash) = $604K. Do deals work this way?

Or am I missing something and completely off base?

Good morning BP,

I am working with a potential off-market seller who wants to off-load their converted motel (8-units, 1 is the motel office that can be commercial space) as they retire. I've received their rent roles (4,760/mth) but believe that the market value is about $6,600 to $8,100/month. The Commercial Loan Officer I am working with comes up with a Loan Amount of $336,000 (Total value is $448,000) because of the low rents. I also have their expenses which are in line with my estimates/analysis.

I do not believe the Seller's will like that valuation and I know they are hiring an appraiser. Also, I believe they own this property out-right, no loans, etc.

I'd like to structure a deal where they provide seller's financing with a 2-3 year off-load timeline that gives them a) some cash now via a down payment and b) some regular monthly income all while I work to bring rents to market value and we both benefit on the sale and refi.

How would something like that work and what would it look like? Very much appreciate any advice or recommendations on how to approach this conversation/negotiation.

I am a US Air Force and Massachusetts Air National Guard veteran with 20-years of experience as a military Civil Engineer. In previous roles, I was responsible for the asset management, capital improvement, repair, and maintenance of an ANG Fighter Base worth over $400M. I'm an experienced project manager with hundreds of cradle-to-grave efforts under my belt, including building project scopes and budgets, evaluating contract proposals, and managing construction to maintain the delivery of high quality products on-time and in budget.

Penny is a licensed clinical social worker (LCSW), serving the community mental health needs of parents, children and families.

We both recognize we have an immense opportunity to serve our community and want to capitalize on the blessings we have been provided so that we can continue serving our neighbors.

My wife, Penny, and I are looking to transition into commercial multi-family real estate in 2025. By 2030, we want to have grown a portfolio of over 100 units, created a property management company that manages an additional 100-200 units, and, finally (and most importantly), we will have established a non-profit that is focused on quality, affordable housing that specializes in providing housing and resources at/on the "services cliff" alongside financial counseling and first-time home buyer education in our target area.

Our target area is the Springfield, MA and Hartford, CT areas with dreams to expand to Central Massachusetts (Worcester, MA), Southern New Hampshire (Nashua, NH), and Southern Connecticut (New Haven, CT).

Would love to meet up with likeminded individuals in our area!

Merry Christmas & Happy Holidays all!

Jeremy