Catherine BellEmpowering Women to Create Financial Freedom Through Passive Income, Real Estate, and Social Impact

Real Estate Deal Secrets: Seller's Cash-Out & Your Profit! #shorts

23 Jul 2026 · 2 min

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2:09

In this short, the speaker walks through the financial mechanics of a seller‑financed real‑estate transaction. The property is listed for $600,000; the seller carries a $300,000 hard‑money loan that is due soon and plans to pay it off from the sale proceeds. The buyer contributes a $60,000 down payment, and the seller finances the remaining $540,000 on a 5‑year term with a balloon payment. The speaker calculates the monthly payment (~$3,200), the total cash the seller will receive over five years ($194,000 in payments plus a $500,000 balloon, totaling $456,000), and derives a cash‑on‑cash return of roughly 16% on the seller’s net cash at closing ($240,000). The note’s internal yield is about 6%. The analysis emphasizes why the deal is attractive to the seller—solving the hard‑money loan, providing monthly income, and securing the property—while warning that if the economics turn unfavorable, the seller could become angry within the first few years. The speaker uses this calculation to ensure the deal is fair and to anticipate potential seller dissatisfaction.

Chapters

I need to do the economics of the seller. The seller is selling it for $600,000. They currently have a $300,000 hard money loan that is due in August. They are willing to pay that loan off out of their own proceeds or out of their own bank account, and then allow us to come in with $60,000 down payment and do a 5-year term with them on it for their balloon. So can you do the economics on this and tell me what the cash on cash is? For this seller. And the only reason why I'm bringing this up again is because if they're going to lose money on doing it this way, they're going to become angry with us within the first year or two. And that's the last thing I want to do is like take advantage of— we only do when— because again, it's like, it doesn't make sense. And I, I don't necessarily feel like I need to point it out to them, but I need to make sure that I know in my heart when they get upset, it's going to be, here's what, right? So pan this out here a little bit, because again, they've been paying interest only on that loan for 5 years or whatever they bought it in 2021. So that's why it's coming due in August right now. So here's the economics of it. Sale price $600,000, buyer down payment $60,000, seller financed $540,000. They're paying off the $30,000 loan, which is then giving them a net cash at closing of $240,000. So interest rate at 60% and the 3x. 30, that'd be going down. So here's where we're at. So the monthly payment to the seller is going to be about $3,200. And then after the 5 years, they'll have a total of $194,000 with a 5-year balloon of $500,000. Like that's their balloon back, right? So, cause we're going to get some amortization on it. So net seller receipts after 5 years is only $456,000. So what that does is it gives them Cash on cash on net cash tied up of 16%. Okay. So the 6% is their true note yield, then they'll have a 16%. So says here, this is a strong argument for themselves. They get their hard money problem solved. They get monthly income and they stay secured to the property, by the property, and they have a large balloon coming in 5 years. So, okay. I feel better.