Everyone is Pitching Seller Finance WRONG!!! The Secret to Creative Finance Apartments in 2025

Seller financing apartment complexes in 2025. How are we doing it? This is year 5 and hundreds of rentals in to buying with creative finance. Seller financing is our number one tool. So I'm gonna talk about how I'm changing the game on my entire portfolio this year. The number one thing that I've learned over the last few years, I'm throwing out the word seller financing, owner financing, carrying a contract, anything that has to do with what they are giving me. I'm no longer asking a seller, hey, are you open to carrying a contract? Are you open to seller financing? That's asking, can you give me a property and can you give me the money? Now, while that's technically what they're doing, if the actual ask, just on a psychology basis, if the ask is, hey, can you give me, and then can you give me, it doesn't quite feel right. There's no sense of balance. What I do now is we talk about the deal. We negotiate the deal. I understand where the objectives are. So what are they giving you? The property. All right. In exchange for the property, can I give you this down payment? Say it's a million-dollar property, 25% down, just as an example. I'll give you $250,000. On the remaining $750,000, I'll pay you the exact, you know, X amount of payments. Pay you 8% interest over the next 8 years or 6% or 4% or whatever it is that you negotiate. But the payments will look like this for the next 8 years. You're going to get a lump sum of cash and then I'm going to give you payments. Well, this is a much better balance, right? If you're considering this, some people get a little freaked out by like, yeah, you know, I don't really think we're open to carrying a contract. But if it's framed as, you have a property, can I give you money? Then can I give you more money? This is what I think it would look like and what would work for me. Now there's an actual consideration of, okay, what is the actual offer? And is this something I'd consider? It does not mean you'll get a yes every time, but I've found my success rate has just about doubled over the last 2 years when I ask for seller financing or when I just explain to them exactly what I'm giving them and what it looks like. You could get a no before you even get to propose what the terms would be. So just take it outta your vocabulary. That's what I'm doing this year. I think it's gonna get us to go a lot farther. Now, how do we actually negotiate these? Well, all you have to do is you have to map out the goalposts. So imagine, if you will, a soccer field. Here's your pitch. You have your goal, their goal. You're just mapping out what does everyone need. That's the first thing you do. I always need the same thing, by the way. I need long-term cash-flowing fixed-rate debt. I need a deal that pays me day one, continues to pay me forever regardless of what the market does, and then I'll get paid to wait for the property to eventually appreciate. So I will get rich eventually through appreciation. I will get paid all the way along the way. That is my goal. Long-term cash flowing, fixed rate debt. Their objectives are going to be unique for every single deal. Are they stuck on price, interest rate, terms, down payment, the balloon date? Is there some special clause or special thing that they need to find the right buyer? What is the goal for them? If you can map out both sides, everyone can score. You need to find a deal where you get both sides to hit all their objectives. And guess what? If you actually hit their objective and your objective, you will close every single time you make this proposal. Great example. I bought a 25-unit about a year and a half ago. Seller wanted $2 million. They wanted, I think it was $250,000 down. So it wasn't actually a huge down payment in proportion to the building. They wanted like 12.5% down. Problem is it did not cash flow. Day one under those. So I can't score. Their goal, I want 5% interest, no less than 5% interest. I want $2 million. I'm willing to carry contract as low as 12.5% down. I'm like, okay, fixed down payment, fixed price, fixed interest, great price, way better than market interest. Problem with the deal, their rents were about half of market. So rent's about $1,000. They're renting at $550. It doesn't cash flow, but it's just because rents need to be bumped. Now I'm not going to buy a deal. That's not a goal for me. It doesn't cashflow day one. So I'm not quite hitting the goal. So we proposed special clause. What if we did a ladder? Simplest answer possible. I pay 3.5%, the next year I pay 4%, then next year I'll pay 5%. So year 1, 3.5%, year 2, 4%, year 3, 5%. This way I have time to increase the rents, time to increase the operation, get it closer to market and get paid along the way. Problem is. He said, no, I need 5%. So I'm like, okay, we've, we've found the fixed goal here. We're close over here. We made the payments 3.5%, but the interest rate 5%, which means the delta, the 1.5% in that first year, is added onto the balance that we owe. Effectively what we did is we bought the property for $2,050,000 by adding to the principal, but we said yes to everything he wants. Yes to 5%. Yes to the price. Yes to the terms. Yes to the down payment. He said yes all across the board. And here's what it's going to look like. My payments are going to be lower in years 1 and 2, and this will allow me to continue to run the property and invest into the property. By the time we hit year 3, the property's going to be cash flowing way above and beyond what it needs to be to service 5% debt. We have no problem with that at all. How do we decide it works? Well, it works if we paid $2,050,000. I like that price. So in this case, the reverse AMM was the correct thing. If that wasn't it, I would have preferred the interest rate ladder, but you just figure out what works and you score the goal. That's how you build wealth. By the way, you really want to be like sharp when you negotiate these because the creativity is really easy if you can think on your feet. So I get in front of investors all the time and get in front of owners and just the ability to quickly communicate, okay, their goal, my goal, what would work? What is the simplest answer to the question? And that's always the answer. There's a few ways to get really creative. One is get used to talking to people about real estate, get in community, get around people, talk about it, go to meetups. You get really sharp, you get able to do this. If you're in community, you're going to find more opportunity. Number 2, get good sleep at night. Go to sleep at night, get great rest. You're going to think better. You're going to think faster. That's actually one of the secrets to doing better deals. I have found you need to actually put good things in your body. Like if you're getting good sleep, you're getting good nutrition, you're not out drinking late at night, you're healthy. These things seem to just come to you. Like that's my secret weapon. I have a few things that I do. The number one thing that I have found really helpful, it's Magic Mind. They sent me this. I asked them for a discount code. I'll actually post it below for you guys. But this is one of those things, like I get up in the morning, chug one of these, I have an edge on other people. Great ingredients, super healthy, less caffeine than just dumping coffee into my system. Tastes amazing. They apparently have a sleep thing coming out that I, I'm like super excited to try. I already ordered that. It's on the way. Start your day, end your day. With something really healthy. Again, Magic Mind, link is below. I love this stuff. If you can get healthy, if you can get the rest, the nutrition, find that mental edge, be awake, alert in meetings, you're going to find your deal quality goes up, your wealth goes up, you feel better doing it. Highly, highly recommend. Get the community down, get health down, get sharp. Again, the goalpost, I think for everyone, if you want to buy and hold real estate, it's long-term cash flowing, fixed rate debt. You know what your objective is. All this is, is what is the fastest roadmap from A to B? I want to say yes to everything I want. I want to say yes to everything they want. One of my favorite books by Chris Voss, Never Split the Difference, is on negotiation. Get 100% of what you need on every single deal. And I have found on every deal I've done, I've given the seller 100% of everything that they want. You want to get tactical. You want to negotiate creative terms. You want to get seller financing accepted. In 2025, you want to buy a deal in the next 3 to 6 months, get sharp at this skill. Other people aren't doing this. Other people aren't getting the rest you're getting. They're not getting the focus you're getting. They're not getting the community. They're not writing the deals these ways. I'll try this again. They're not writing deals the same way. They're not analyzing the same way. You get in front of opportunities like this. You know how to propose quickly and effectively. This is where the deal's going to work for me. And here is how I'm going to give you everything that you want. You will get every deal that you propose that way accepted. The speed in which you can do this is so critical. It builds confidence in the seller. If there's a broker involved, it builds a ton of confidence in the broker. But you go through these things and you go really effectively, this is what's going to work. I think this is a good proposal. You get in front of them and you just get the deal under contract. That's something you have to do on these is you propose it, you get that offer written as soon as possible. If you don't know how to calculate interest rate, Learn what a loan factor rate is. I share about this on this channel all the time, but essentially your cost of debt needs to be less than the yield on the cash in the deal. So your loan factor rate must be less than your cap rate. If you've never done this math before, I'll do another video breaking this out in the near future, but essentially principal plus interest divided by your total loan amount needs to be less than your net operating income divided by the purchase price of the property. That's it. Simple as that. Again, it's super kind of Magic Mind to share this with us. So if you guys want to try this, I highly recommend this will make you more creative. This is going to get your mental juices flowing. It's going to keep you awake, alert. A link for this is below, 45% off. Link is below there. If you guys haven't yet, like and subscribe to the channel. We talk about how to do this all the time, getting tactical with the seller financing. The goal for this year is I want everyone who watches a video on this channel to purchase an apartment complex this year. All the content that we release for 2025 is going to be about getting you into better deals, more deals, more opportunities, and always leading with cash flow. Thanks again for watching. See you on the next episode.