How to Buy a Million Dollar Business $0 down

Today we're talking about seller financing again, but today it's from a different angle. Now for context, I've done over $30 million of seller finance transactions on over $20 million of seller finance debt. I've done the buy side a lot of times and I talk about it a lot. What I have seen a lack of content on, on Instagram, on YouTube, on courses is people have been on the other side. People who have seller financed to people and from people. Now I've done both sides. This year I seller financed the first company I ever started. It was a, I think a huge win for me. It It was a massive win for the buyer. I'm gonna talk about how you actually negotiate win-wins. What you're gonna get out of this video versus anything else you've seen online is one, yeah, we're gonna define what seller financing really should look like, but you're gonna get to hear from the seller perspective versus the buyer perspective. What was going through my head, why someone would do this. And I'm gonna give you actionable steps that you can take and use in your portfolio when you are negotiating. This is what the other side is thinking, and this is going to change the way I I think you're gonna pitch seller financing. So everyone, welcome to the channel. If you are unfamiliar, my name is Christian Osgood. Now I purchased a couple hundred rental properties. Am I the largest landlord of all time? Absolutely not. However, I did this in less than 4 years. I bought every deal where it cash flows, and I did get to financial freedom in about 4 years of dedicated work in this field. Creative financing is not the only way to buy real estate. Seller financing is not the only type of creative financing. However, it was the key for me to get momentum to get rolling and really has been the most powerful tool. Now, I think before we dive in, it's really important to very quickly, very quickly define what seller financing is. So you can finance anything that you own, much like going to the bank. They will write you a loan backed by the asset. Now, if you own the asset, you can say, here you go, a $2 million property. I'll lend you, let's say, 85% of it. I'll lend you $1.7 million. As the seller, I have no debt. I don't have anything to pay off. I get $300,000 now, and now I get payments on the $1.7 million. For an extended period of time until we have decided there's a balloon and the note is now due. Now there's not one right reason of why you would do seller financing, but I will tell you what was right for me. So in the process of buying hundreds of rentals, I started a property management company. Now there were two major reasons to do this. Number one, I was finding that I could not find the right property manager. I actually got robbed by a property manager. They took our security deposits, fled the state, lawsuit, whole thing. Awful. So I had a trust issue with property managers. So that was the first actual company that I started. I was like, look at this. We have, we have a 38-plex, we have a 6-plex, we have a 7-plex. We're expanding around the state. We're doing all these transactions. I want to have one team who does everything my way on my portfolio. So we started a company where I can house my employees that can work on each property instead of each property hiring one manager. I was able to consolidate systems. Okay. This makes some sense. Oh, by the way, don't just start businesses to start businesses. I think they should all plug into each other directly. I was buying a lot of real estate. The first company was started specifically to facilitate the things that we were already successful in. So we get some employees and I go, oh, you know what would be really cool? If we can do enough management of the people around us and a good enough job where they retain our business, we keep growing and we can subsidize the cost of my management team. Essentially, if I can manage enough business so that management's effectively free for me, my properties get my own custom team with my own custom hiring practices, accounting. It's customized to exactly how I want it to be. I have full control and I really don't have any cost because we're now running a profitable business. Eventually I even got myself on payroll. My wife joined payroll for that company. It was an amazing tool, but at the end of the day, that company was a tool. That was a job that I gave myself within my portfolio that I did while I scaled. Side note, you do not have to start a PM company if you're buying real estate. There is actually a simpler way to play it. However, It is what I did. Now fast forward a little bit into the future. I did hit financial freedom through cash flowing rentals. You're going to hear online that cash flow is a myth. It's not. It worked for me very well. You keep buying deals that cash flow day one, you buy enough of them, turns out you get a lot of income. That worked for me. I hit a point where I didn't have to do that job. I also had this goal right in the beginning. I wanted to move to Texas, build my house, start a family. By the way, my son's 3 weeks old as of the filming of this. So I have done all the things. We are in my house. My wife retired from teaching, my son is born. All objectives were met through real estate. When I moved from Washington State, do you know what I didn't want to do? The job that I created for myself up there. I actually was able to take my job, which was originally an asset for me and has now become a drag on my time. I'm not in that state. I have lost some of my efficiencies. I wanted to go focus on being a dad and building my other companies down in Texas. Now my asset has become a liability. I got someone else to buy my job from me and continue to pay me monthly for it. Seller financing. I owned, well, I owned 80% of the company. I actually had a managing broker who was more or less a silent partner, but I needed his license. I owned a vast majority of my company. It was valued at $300,000. It's a little VM company. We're not talking huge dollars here, but I had someone I wanted to sell it to. I liked the guy. I knew his operations. I knew his team. I knew he did not have the cash that he wanted to put down, so he would've had to go through a long SBA loan process, which I did not want to do. I wanted to get the company sold, but more importantly, I trusted that he would operate the company and continue to grow it, protect my employees, do a good job managing my portfolio and my client's portfolios. And for that, I was willing to lower the price by $50,000 and seller finance to him at 6%. Now I put a cool clause in here where at the end of every year for 3 years, I financed $150,000 of the sale. So they put in a down payment, they bought out my partners completely. I hold a $150,000 note. At the end of each year, I get $50,000 paid down. So year 1, $50,000 comes off the principal. Year 2, $50,000 off principal. Year 3, it's fully paid off. We basically amortized it over 3 years, but we have chunks of principal pay down. Now on my end, is that a ton of money? No, it's not a ton of money, but I get about $1,000-ish a month, every single month on the interest in year 1. And obviously it goes down as they keep paying down the loan. It's an interest-only loan. But for me, I get paid a little bit every month and every year I get $50,000. I basically put myself on a $50,000 salary for the next 3 years for doing absolutely nothing in that company, plus interest. As a seller, that is a phenomenal option. And for a lot of sellers in real estate or business, This is what is really happening. They would rather sell to someone else that they know, like, and trust, who will grow the business, who will take it to the next level, who will protect their employees or protect their tenants. They also want someone who has a really high likelihood of paying them back. I don't want to take back that company. I live in Texas now. There's a lot of people who sell their properties. They don't want to take the property back. They sold it because their asset, for whatever reason, has become a liability for them. It is taking more time. It is not performing like it used to. They're having management problems. There is something that has taken their asset and made it no longer worth it for them to own it. Now, how they get rid of it, you can take a big cash buyout and that can be awesome. It is more taxable typically. In my circumstance, I did not need the lump sum of cash. I have a ton of real estate. For me, I don't need the cash right now. I don't even need the cash flow. I don't want the liability on my time. I was able to move that to someone I know, knew, liked, and trusted to grow the business. That is where you get seller financing. That's where you get low down payments. That's where you get low interest. That is where you can customize your term. Did I want to sell it for $50,000 less than it was worth? No. Would I make the same decision again to sell it to that individual instead of someone else? Absolutely. Every single time. I think I sold the company to the most qualified individual for the objectives that we have. So how are you gonna put this into practice? I talk a lot about mapping out other people's pieces on this channel. You can go to multifamilystrategy.com, by the way, and check out our course mentorship group. We talk about this all the time. I also have a free course linked below. You guys can check out if you want to get your head around some of the methodology here. I digress. When you are building relationships, you are increasing their ability to work with you, to trust you. You're also learning their systems and their processes. Most real estate transactions, sell off market. Because if I know someone who's gonna buy my property and it's the person I wanna sell to, we're gonna make a transaction happen without having to list it without the same broker fees. Most real estate goes this way. So if you're feeling stuck and you're like, man, the seller finance deals I'm finding are like 2-year balloons and 50% down, because you're competing with the listed properties or you're going after distressed sellers who aren't in a position to finance more than that. Go with people who are winning the game. I had a strong PM company that was performing well. It was small but mighty. I liked that company. It was doing well. It had great employees and it had profit. It was worth someone else buying. I created something of value. It just wasn't of value to me at the time I wanted to sell it. If you were in the position to be that person to people who currently have assets, this is why we get around people who are winning instead of buying distressed properties. I thought, and I still do, I think this video— stop right here. Think about how I'm gonna say this. It's my belief there's a lot out there, Instagram, YouTube, Facebook, online courses, gurus, TikTok, you name it, where they're talking about, this is how you play the real estate game. This is how I've bought everything. And to a certain extent, I do that a lot too. It is so much different hearing it from the seller's side. I got everything that I wanted from the transaction. We did just enough down to completely pay off my partners. It worked with the cash he had on hand. It hit all of my needs. I think it's pretty clear for me as the seller, I'm getting a win here. I have a $50,000 salary per year plus interest. For doing absolutely nothing for the systems that I built to run my other business. I sold my job to someone else. What a fantastic opportunity. That is how it feels on the seller side when you put together terms that hit their objectives. It is not about the price. It is not about the down payment. Those things help. It's not always about the tax benefits, even though I do have a little bit better tax structure because I seller finance. I didn't do this for tax. So if you're trying to sell someone on seller financing, you're doing this wrong because you don't know what their objective is until you get to know them. If you are playing the relationship game and you understand how it feels on the seller's end to get a win seller financing, you can win on price, you can win on terms, you can win on timelines, you can win on interest rate. You can get what you need to do your deal only if you are going after relationships with people who are winning in the field that you want to compete in. I hope this shed light on seller financing a little bit different for you. If you have questions, ask them in the comments below. I do go through and answer every single one. If you want to ask a question live every Wednesday, 5 o'clock Central, we go live and answer your questions on this channel. If you haven't yet and you found this video helpful, like, subscribe to the channel, and we'll see you on the next episode.