Jonathan Cronin shows how to submit multiple LOI variations for apartment deals: full price with seller financing, partial carryback, and a discounted all-cash offer. This approach increases your chances of acceptance in competitive markets.
Hey guys. So today we are going to be walking you through exactly how to set up a letter of intent an LOI with creative financing options. So adding a couple more options on your letter of intent that you're submitting to the seller I believe will give you a much bigger chance of getting an accepted loi, especially as a younger or newer real estate investor and in such a competitive market such as apartments, when you're looking on market you need to be submitting as many lois as possible and you need to try to optimize your letter of intent to increase your likelihood of getting it accepted. My name is Jonathan Cronin and I represent a group of investors, a mastermind and the team has currently done around 30 million in assets under management and we believe that we all need to be submitting more loi. So let's talk about it. Let's jump in. I'm going to share my screen. First off, an ELI is a non binding, non legally binding document. States it right from the start. If you need a template like this, just don't hesitate. Reach out to us. Maybe in the comments or something. Just figure out a way to reach out to us. Well, we'd love to give it to you. I believe we give it away in our free training. But either way the goal here is create figure out your maximum allowable offer. We I'll put a link in the description to a video I just did about how to find your maximum allowable offer on your on your property that you're wanting to get. It basically just involves a math equation of figuring out how much is it going to take to, to renovate the property and get it stabilized. And then from the stabilized value, you know you want to be all in, which is renovation, closing costs, everything. You want to be all in at 70 to 80% of the stabilized value, which is the future value once it's 90% occupied for 90 days. What is that value? You want to be all in at 70 to 80% max. And so once you have that, you'll know what you can offer the seller. But that's just one of the offers. Full asking price is, is something that you can also get to. And so right here, let's just jump into it. Offer number one, you see. So we can offer the full retail, full asking price, but here's our terms. Okay, the seller needs to carry back 25% of the purchase price. As an equity investor in the property now, you can do it any kind of way you want to do it. Seller doesn't have to be an equity investor. But that may be the most advantageous and, and greatest selling point for the seller because you know, there's many reasons for it. You know, one is just the bank may not want to liens on the property if, if the seller has financing already and they, they're not going to pay it off with the purchase. But either way you can structure it however you want. 25% the seller carries back of their, of their asking price and then they get a 5% interest per year on their money that they're carrying back and with the buyer of the buyout of the seller. So that would also include that and you could do that for a 15 year term. Now if you want to do less interest, you may want to consider shortening the years or however you want. But this is just rule of thumb for you if you're thinking about how you want to structure creative financing deals and offers for an apartment complex. Okay, offer number two would just be a little bit less. Seller would carry back 15 of the purchase price. As an equity investor in the property seller, so it's 5%. So same thing. But again if, if the seller's carrying back 15%, then what you want to do is say, okay, I need to be all in for, you know, just say 90%. You can be all in at 90%. So, so before you're allowing full retail asking price, you were going to give them all that they wanted because they're carrying back 25% this time you need to be all in at just a 90%. So the seller's carrying back 15% of the purchase price and now you can bring 90% of the asking price to the table. Okay. And then of course offer number three, the purchase price. This is your maximum allowable offer that, that I did the video on recently. This is just the traditional, hey, if, if, if we're going to bring all the money to the table, you know, we need to be all in at 70 to 80% of the purchase price. Okay. So you know, offer number one, full retail asking, you know, you, you can be 25%, you know, but offer number two, sellers carrying back only 15%, you need to still be a little bit of a discount in there so you can make sense of the deal. And offer number three, you're, it's a purchase price, you need to be 70, 80%. I've seen some people go as low as 60% when they, when they're figuring out how much they want to offer. So yeah, so that's the basic premise of, of, of adding different options to a letter of intent. If you would like this template, just reach out to us if you need further explanation. We'd love to jump on a call with you and chat more about it. Didn't want to go too long here. Just. We could get super lost in the weeds of it all, but I hope that helps. I hope that provided some value for you. Let us know if there's anything we can help with.
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