All Forum Posts by: John Clarkson

We syndicate senior housing properties specifically. Tremendous returns, the right team makes all the difference! Closing on an 11.5% cap portfolio now.

Thank you for a prompt response, here are additional details on the deal:

First, please share the state in which the property is located. Seller financing between business entities is governed mainly by state law, and some states are far better suited to these types of deals than others.

California

Next, does your purchase agreement offer you a financing contingency, or are you on the hook to close or else forfeit your earnest money? I'm trying to get a sense of whether your seller wants to get this done as badly as you probably do.

Our contingencies have all been removed, however the seller is highly motivated.

Once we confirm that the seller finance is feasible we will then negotiate financing terms.

It seems that the three outstanding questions to ask the sellers lender are below, in order of preference:

1. Will the seller's lender allow us to purchase the properties subject to the seller's debt
2. Will the seller's lender allow us to operate the property with the sellers still holding the note
3. Will the seller's lender allow us to purchase the properties assuming the sellers debt

We are purchasing a senior housing portfolio and we have gone through the underwriting process with our bridge to HUD 232 lender. We were at the final step of working with their legal team to prepare the closing documents two weeks from the close of escrow, and they have put an indefinite suspension on all deals in the pipeline.

In the pursuit of closing in the next two weeks, this appears to be our option:

Negotiate a seller finance.

The total purchase price is $15M

The sellers have $9M in debt 

The sellers have $6M in equity

We will pay them $3M down now, and the remaining $12M at the refinance event in two years. We will pay them interest on the $12M and a 5% share of net profit.

Will the sellers lender allow us to assume the debt, or for the sellers to keep the debt in their name while we operate the community?