In this conversational YouTube video, Christian Osgood and Cody discuss seller financing as a practical alternative to traditional bank loans for real‑estate acquisitions. Christian shares his personal journey from house‑hacking a condo to attempting a $2 million multifamily purchase, highlighting why he and Cody could not qualify for conventional financing (lack of income, net‑worth, and cash). Cody then explains the fundamentals of seller financing: a promissory note and deed of trust that give the seller a lien while the buyer makes negotiated payments. The duo breaks down the key negotiable components—price, interest rate (interest‑only vs amortized), loan term, and down‑payment—and stress the importance of structuring long‑term, fixed‑rate, cash‑flowing debt (ideally 10 + years). They advise against balloon payments, recommending review/extension clauses instead, and suggest staggering balloon maturities across the capital stack to avoid concentration risk. Finally, they touch on special clauses (modified or delayed payments) and emphasize keeping terms simple, legally reviewed, and repeatable. The video ends with a call to action to visit multifamilystrategy.com and subscribe for more content.
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And that was the time I met you where you were like, hey, let's go buy a $2 million 38-unit building. Well, on two fronts, I did not qualify for that one. I just left my job and Cody didn't have a job. So hello YouTube, welcome back. I'm Christian, this is Cody. Today we're gonna be talking about seller financing secrets.
Seller financing secrets? Well, reality is there are none.
That's the secret.
Ta-da! Video's over. No, but in reality, there are some basics you need to know about seller financing. Now Christian, how did you get started? Because you spent all your money relatively quickly without this model.
Yeah, absolutely. So I started, I actually did a house hack in a condo, rented it out myself, hated being a landlord of one unit, ended up buying a house, eventually sold the condo, bought a duplex, then saved up, bought a second duplex, renovated it, and from that point I was out of money. And that was the time I met you where you were like, hey, let's go buy a $2 million 38-unit building. Well, on two fronts, I did not qualify for that one. I just left my job and Cody didn't have a job, so no job, hard to qualify. The other piece was no money, didn't qualify.
I was already there.
I guess there's a third piece of there's usually a net worth requirement for a commercial loan.
Definitely didn't have that.
Did not qualify. So if you don't qualify for the bank loan, What are the options? Cody, on a 101 level, what is seller financing?
Seller financing, you sign a promissory note, which is a promise to pay. There's a deed of trust that protects the seller. They get to put a lien on title, and they will take payments in exchange for ownership of the asset. All the terms are negotiable, whether there's a down payment or not, and what the interest rate is, how much the monthly payment is, but you get to make the terms work for you, which is better because the deal that works for you probably will not work for us or the other people around you. So it's very specific to your personal situation.
Now we've done this on all sorts of different acquisitions and it's a different structure every single time. There's not that much going on though, so I want to simplify the creativity. Like you said, it's just a few pieces. You have the price, which everyone can negotiate, and that is on bank debt as well. The difference with bank is that bank will set the term of the loan, the interest rate, and any other clauses that fall within there will be what you get. You can shop those around to a few banks, but the products are going to be very, very, very similar. Creative financing, you have the price, then you have the interest rate. Is it interest only? Is it on an amortized schedule? Those are things you get to negotiate as you want. Then you get the actual loan term. Everything we do, everything is long-term cash-flowing fixed-rate debt. So we need to figure out a loan term that is long enough to actually complete our project. If there's a refinance planned, we just have to have enough time to work on the asset and have it in a position to swap the financing in the future.
Now, tips for making this thing work for the long term. It's one thing to build a portfolio. It's another thing to actually be able to hold it. Make sure that you're trying to push for your seller finance notes to be at least 10 years long. That doesn't mean it's amortized over 10 years. That means the term before it is due is 10 years or more. The reason we want 10 years or more is there's no 10-year cycle where real estate has not gone up. I've never seen it and I haven't been around that long, but all the other players in the space, and if you just look at statistics, you can look it up on any given market, typically they go up over decade-long periods. And so I like looking at that as just a standard 10 years or greater for your term. Another little tip and trick is don't have a balloon period. Balloons go pop. Do a review period, meaning that you will agree with the seller, if I do this, this, this, and this, then the period, the option will extend for another 3 years, 5 years, 10 years. You don't want your balloons popping on you. So make sure instead of a balloon, ask for a review.
And on the subject of balloons, make sure that you stagger those balloons. Even if all your debt makes sense, even if it's all long-term, say you have everything in a 10-year note and do all of your acquisitions the same year. Well, you should have enough time to meet that. That should be fine. It's long-term debt. However, if that one year you have millions and millions and millions of dollars due, and say that's the one year that the market just seems to be all the way at its bottom, interest rates are at their highest, that's really expensive. That can absolutely ruin your day and be really difficult. You want to make those staggered throughout so that you have time to move your pieces. We call that the capital stack or the debt stack. But you just want to make sure that everything is in order and in front of you long-term and that all your balloons don't pop at the same time.
Your ability to manage your options and your obligations determines how well you're going to do in the money game. So if you have a balloon, it is an obligation. You have to make sure you can hit it. You don't want to stack all your obligations on the same day.
Now, the last piece is the special clauses. We recently did a video on this, so we're not going to dive super deep there. But suffice to say, anything else creative that you can come up with that makes the deal make sense for the seller, makes sense for you. For the most part, in seller financing or creative finance in general, it can be done. The only rule is your lawyers and their lawyers have to review it, make sure it's legal, and that everyone agrees on it. But if it can be signed off on and it is legal, you can do it. This could be modified payments, it could be delayed payments. There's all sorts of special clauses, but keep them fairly simple. Don't get way in the weeds on creativity. We've done that and we regret it. It's just too much to track. Keep them simple, keep them repeatable, but you can modify your debt product to what you need. And that's it.
That's a wrap for today's video. If you're interested in a deep dive on this, check out multifamilystrategy.com and make sure to hit the subscribe button so you see all of our future videos because we post multiple times per week.
