Christian OsgoodCEO, Multifamily Strategy · CEO at Multifamily Strategy

Debt is ALWAYS Cheaper Than Equity

30 Mar 2023 · 0 min

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A financing strategy that maximizes seller financing through promissory notes, treating the seller's equity as debt. The approach keeps capital structure heavily weighted toward debt because debt costs less than equity.

So the biggest portion of our acquisition is the debt. We try and get as much money as possible in the form of seller financing. That is where we write a promissory note to promise to pay made-up money, but we promise to pay them over time because they have equity in their assets. So we're leveraging their equity in the form of our debt, and we want to get as much of that as possible because debt is cheaper than equity.

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