Financing and partnerships
4 Seller Financing Pitches That Actually Get Offers Accepted
Four real seller financing scenarios and the exact framing I used to win them, including a 38-unit, a $2M Stephenville deal, and an 81-unit bridge note.
Are you tired of getting your seller finance offers rejected? Or do you not even know how to phrase them in the first place?
I've done over 20 seller finance transactions in the last five years. A lot of these structures are easier than people think. The hard part isn't the paperwork: it's winning the conversation. This is one of the most common questions I get, including on BiggerPockets, and the answer is simpler than you'd expect.
Below are four real-world situations where seller financing gets said yes to, what you actually run into in each one, and exactly how I frame it. The thread running through all four is the same, and I'll say it up front because it's the whole lesson: don't make it a you thing. Make it a deal thing.
Related reading: Stop Asking for Seller Financing. Ask This Instead.
First, the One Rule That Saves You Months
You are never, ever going to convince someone who does not want to do seller financing at all.
If they want to be cashed out, they want to be cashed out. You are not going to sell them on the idea. You're not going to sell them on the tax benefits or the extra interest payments. It has to make logical sense inside the deal itself.
Accept that, and you stop wasting energy on the wrong sellers. What's left are the situations where seller financing is genuinely the only path to the outcome the seller already wants, and those are the ones you can win, even when you didn't think they'd say yes.
Related reading: How to Get Seller Financing Without Ever Asking For It
Pitch 1: The Bank Won't Lend on It
This is how I won on my 38-unit. This is how I got into real estate.
The sellers had a set price and they were married to that price. The problem was the bank would not lend on the building. So there was no way to cash them out unless somebody walked in with $2 million of cash. And everyone who has $2 million of cash doesn't want that deal, because it's a heavy value-add. If you're already rich, why take on the difficult project? You don't need to. Meanwhile if you're getting started, you'd love the deal, but where's the $2 million coming from?
So here's what we did. We walked the entire property, took a bunch of pictures, took it to the bank, and had the bank write us a letter laying out the condition, the rent roll, and the maintenance that had to be done before they'd be willing to finance it.
Then, before we ever got in front of the broker and the owners, we crafted how we were going to get the financing we wanted. We brought that letter to the listing agent and said: "We've taken this through a couple of banks. None of them are willing to lend in the current position. We have a proposal. We can give them their price, but we need them to carry a note for the next five years at 4% interest only. If they'll do that, this deal works for us and we can get it closed."
The broker came back: they're actually open to this. How much can you put down? They still owe $200,000 on the property and they want to walk away with $100,000.
And now we're just negotiating. The concept was already accepted, because it was the only thing that made sense.
Notice what we did not do. We didn't come in with "here are all the benefits to you as a seller," and we didn't come in with "this is why we need it." It's the bank's fault. We positioned it as: the property is unlendable, therefore if you want to sell it at this price, this is the way it must be.
We ended up doing $300,000 down: 15%. Easiest capital raise of all time. A fantastic deal with a fantastic custom debt product, and seller financing accepted.
Pitch 2: The Financials Aren't There at Their Price
The 38-unit came down mostly to physical disrepair. The second scenario is different: the building is fine, the price is just too high for the income to support debt.
I had a property in Stephenville, Texas: also a $2 million purchase price, nicer building, 25 units. We presented a lower price and he said no. So we came back to the $2 million and said, "For $2 million, it does not have enough income."
Then we played a very similar game. We had a bank look at it and tell us the DSCR (debt service coverage ratio) they'd need to lend on the property.
If you want a quick cheat code for this, go into ChatGPT and type in: at what price would I need to buy this property at a 1.25 debt service coverage ratio? It will literally tell you the price. You don't even have to know the math. Now you know where a bank is going to want to lend, and if that's not the price the seller wants, you instantly transition into the seller finance conversation.
Related reading: Creative Finance Explained: Deal, Debt, and Equity in Order
So I proposed full price with seller financing and an interest stair-step: 3% in year one, 4% in year two, 5% in year three, and 5% interest only for the remainder of the loan.
He said no: he wasn't willing to do less than 5%.
We still didn't have cash flow, and we needed cash flow. So we proposed a reverse amortization. We told him: how about we pay you 5%, but part of it accrues on the back end of the loan. We'll pay the equivalent of 3% interest, then 4%, then 5%, and that excess interest gets paid to you at the end of the loan. Our loan balance goes up just a little bit over time, but it lets us cash flow the entire time.
Perfect solution, and notice it's the same move as the first one. Find the simplest structure that solves the deal.
Pitch 3: They Want Cash, but Conventional Debt Won't Quite Get There
Sometimes the seller genuinely wants to be cashed out, you're close on terms, and the deal still isn't closable as proposed. That's when you bridge.
We just did this on an 81-unit. Stellar negotiation, absolutely loved it.
It had been on market for a while and we were this close to getting it done. The issue was occupancy: it sat around 85% and we needed it above 90%. I needed about six months to finish leasing the project. I own a property management company, so I know what I'm doing in that market: all I had to do was fill four or five units over six months.
So we did a one-year seller finance note. I'm not a fan of short-term debt, but the structure has to make sense with the project you actually have.
The pitch was clear, and clarity is the most important part: you seller finance for one year. We're going to get this refinanced into a new debt product in under six months, and I already have a bank committed that's fine refinancing early for this situation. The first six months are inexpensive for us, because we're just trying to get the thing finished and refinanced. If we don't refinance in the first six months, the rate goes to 7% and then 12% interest, and it moves to a 25-year amortization: so the payments go up substantially. And if we still can't refinance, there's an extension that raises the price again but gives us another full year.
So on a project we believe we can complete in under six months, we have up to two years inside the note structure. We closed that deal, and we're almost done with the refinance already.
Simple little tweaks. Find the solution, land the pitch.
And never open with "Hey, are you open to seller financing?" There has to be a reason for creative finance and it has to fit the scenario. Otherwise you'll get rejected, or they'll ask for a huge down payment or ludicrously high interest. I'll guarantee you that if you're running into that, creative finance isn't a valid fit for the deal you're trying to solve.
Pitch 4: Let the Seller Propose It
This is my favorite, and it's how the majority of my deals happened.
Instead of going after a specific deal, you go into the market and meet the owners. I get coffee with these people. Often they plop me in their truck, drive me around town, show me all their properties, and talk about how they built their portfolio: all instead of me trying to buy something.
Form relationships with the people who currently own. If everyone who owns in your market knows you, likes you, and has had real conversations with you, they know your goals. If you've never asked anything of them, they will reach out to you. And if you've already shared that you don't have a lot of money or capital but you do have a vision and an operating plan (and they've often helped you build that operating plan) they'll reach out and propose terms that work for you.
That's how I bought my third, fourth, fifth, sixth, eighth, tenth, and several deals after that. The seller called me and said, "I only need 10% down. I know you're a little strapped on cash, but if you can find 10%, we're going to write this deal so it cash flows for you day one." And we did that again and again and again.
That strategy is how I retired my wife from teaching, eventually retired myself from the 9-to-5, and how we moved from a tiny little house in Seattle, Washington to a gigantic house here in Texas and started a family. All of it came from these four techniques for getting a yes on creative finance: bridging the gap between money I did not yet have and money that was available for the right deal.
Key Takeaways
- You can't convert a seller who wants to be cashed out. Spend your energy where seller financing is the only logical path.
- When the building won't finance, get a letter from the bank and let the bank be the reason. You're giving the seller their price; the lender is the obstacle.
- When the income won't support the price, prove it with DSCR, and if the seller won't move on rate, restructure how the interest gets paid instead of arguing about the number.
- Reverse amortization and interest stair-steps solve for cash flow without insulting the seller's price.
- A short-term seller note is fine when you've already lined up the refinance and the note has escalating rates and an extension built in.
- Relationships produce the best terms. Meet owners with nothing to ask for, and eventually they call you with the structure.
- Never lead with "are you open to seller financing," and never make your credit, your cash, or your needs the reason.
If the seller has the equity, the seller can be your lender. You just have to know how to frame it. Nine times out of ten it's either bank financing or bank qualifications working as your reason ("for me to give you what you want, the bank won't do it, but you and I can work this out") or it comes directly from a long-term relationship with owners in the market. The only thing you can't do is come in with reasons that you need creative finance.
Watch the full video for the scripts in the exact order I use them. Details on our mentorship are in the description, the free multifamily course is at multifamilystrategy.com/get-free-training, and if you want thousands of investors talking about this every day of the week (plus free calculators) join the Multifamily Strategy community on Skool.
Read the episode transcript
0:00 Are you tired of getting your seller 0:01 finance offers rejected? [music] Or do 0:03 you not even know how to start phrasing 0:05 them so you can buy more real estate? 0:06 Now, I've done over 20 seller finance 0:08 transactions over the last 5 years. 0:10 [music] I've done a lot of this. And a 0:12 lot of these structures are easier than 0:14 you think. But how do you actually win 0:16 the discussion? [music] How do you 0:17 convince someone to give you seller 0:19 financing? Now, this is a common 0:20 question. I've been asked it on Bigger 0:22 Pockets many times. The answer is 0:24 simpler than you might think. On this 0:25 video, I'm going to go through four 0:27 different ways that you can win on 0:28 seller financing in actual real world 0:31 situations. So, I'm going to give you 0:32 what you come up against and exactly 0:34 what you say to make it through. By the 0:35 end of this video, you will be able to 0:37 close more seller finance transactions. 0:38 Here we go. 0:40 Hey, welcome back to the channel. My 0:42 name is Christian, your channel host. 0:43 I've done a lot of multif family 0:46 transactions. 20 of them have been 0:49 seller financed. The model is so simple. 0:52 There's a few different triggers that 0:53 [snorts] allow it. The first thing 0:55 before we even get to that though, I 0:56 need to tell you, you are never ever 0:58 ever going to convince someone who does 1:00 not want to do seller finance at all. 1:02 They want to be cash cashed out. You are 1:04 not going to sell them on the idea of 1:06 doing seller financing. It won't happen. 1:08 So, you're not going to sell them on the 1:10 tax benefits, the extra interest 1:12 payments. It has to make logical sense. 1:15 That being said, there are situations 1:16 where you can win on this even when you 1:18 didn't think they would say yes. First 1:20 of all, and this is how I won on my 38x. 1:22 This is how I got into real estate. They 1:24 had a set price. They were married to 1:26 that price. The bank would not lend. So, 1:29 there was no way to cash them out unless 1:31 you came into the deal with $2 million 1:33 of cash. Everyone who has $2 million of 1:36 cash doesn't want to do that deal 1:37 because it's heavy value ad. If you're 1:39 already rich, why do the difficult 1:41 project? You don't need to. If you're 1:43 getting started in real estate, it's 1:44 like, cool. I would love to do that, but 1:45 where's the $2 million coming from the 1:48 seller? Now, what we did on this 1:50 particular deal is we went ahead, we 1:52 walked the entire property. We took a 1:53 bunch of pictures. We took it to the 1:55 bank and we had the bank actually write 1:57 us a letter of this is the condition, 1:59 the rent roll, the maintenance that 2:01 needs to be done before we are willing 2:02 to finance this deal. And we were able 2:04 to bring that to the seller. Now, before 2:06 we even got in front of the broker and 2:07 the owners, we crafted how are we going 2:10 to get the financing that we want. We 2:12 brought this letter to the agent who had 2:14 listed the property and said, "Look, we 2:16 have brought this through a couple of 2:18 banks. None of them are willing to lend 2:19 in the current position. We have a 2:21 proposal. We can give them their price, 2:24 but we need them to carry a note for the 2:26 next 5 years at 4% interest only. If 2:30 they will do that, this deal will work 2:33 for us and we can get this closed." The 2:35 broker got back to us and said, "Okay, 2:36 they're actually open to this. How much 2:38 are you able to put down? They still owe 2:40 $200,000 on the property and they want 2:42 to walk away with $100,000. Perfect. Now 2:45 we're negotiating right there. We got 2:46 the concept accepted because it's the 2:48 only thing that made sense. So that's 2:50 the first way to frame it. The property 2:52 needs it to close at your price. It's 2:53 the only way that it could happen. 2:55 Therefore, our proposal is logical. 2:57 Notice we're not coming at this as, oh, 2:59 there's all these benefits to you as a 3:00 seller or this is why we have to do it 3:02 for us. It's the bank's fault. We're 3:04 positioning it as it is unendable. 3:06 Therefore, if you want to sell it and 3:08 you want this price, this is the way 3:10 that it must be. Now, we're just 3:11 negotiating down payment. We ended up 3:13 doing $300,000 down or 15%. 3:17 Easiest capital raise of all time. Found 3:19 a fantastic deal, a fantastic custom 3:22 debt product. Seller financing accepted. 3:24 Reason number two, the financials just 3:26 aren't there. That first deal, it was 3:28 mostly down to the physical disrepair of 3:30 the property. There was a lot of work 3:31 that had to be done. I had a property in 3:34 Stevenville, Texas. also happened to be 3:36 $2 million purchase price, nicer 3:38 building, but 25 units. Here's what we 3:41 did. We presented that price. We 3:44 presented a lower price and he said no. 3:46 We came back to the 2 million and said, 3:47 "Hey, for the 2 million, it does not 3:49 have enough income." And we played a 3:51 very similar game. We had a bank look at 3:53 it and say, "Hey, this is the DSCR, debt 3:56 service coverage ratio, that we need to 3:58 lend on the property." If you want a 3:59 quick cheat code to do this, literally 4:01 go into chat GPT and just type in at 4:04 what price would I need to buy this 4:05 property at a 1.25 debt service coverage 4:08 ratio. It will literally tell you the 4:10 price. You don't even have to know the 4:12 math. You go in, this is where a bank is 4:14 going to want to lend. If that doesn't 4:16 look like the price they want, now you 4:18 instantly transfer into the seller 4:20 finance conversation. So, I propose 4:22 seller financing 5% interest. So, we 4:24 propose the full price seller financing 4:26 and an interest stair step. So we go, 4:28 hey, in year 1, we're going to go ahead 4:30 and do 3% in year two, 4% in year three, 4:33 5% interest, and we'll do 5% interest 4:35 only for the remainder of the loan. He 4:37 said, no, I'm not willing to do less 4:38 than 5%. I'm like, huh, we still don't 4:41 have cash flow. We need cash flow. We 4:43 propose what's called a reverse 4:45 amortization. We simply said, hey, how 4:47 about this? We'll pay you 5%, but it's 4:48 going to acrue on the back end of the 4:50 loan. So, we're going to pay you the 4:52 equivalent of 3% interest, then 4% 4:54 interest, then 5% interest. that excess 4:56 interest will be paid for you at the end 4:59 of the loan. So, our loan balance will 5:01 go up just a little bit over time, but 5:03 it will allow us to cash flow the entire 5:04 time. Perfect solution, but notice it's 5:06 the same thing. It's the simplest 5:08 solution. Solves the deal. Scenario 5:12 number three, they want to be cashed 5:14 out, but you can't quite cash them out 5:17 with conventional debt. So, we're close 5:20 on terms, but we're not quite there. We 5:22 can't get the deal closed the way it's 5:24 proposed. We have to get creative. We 5:26 just did this on one units. This was a 5:28 stellar negotiation. Absolutely loved 5:30 it. So, 81 units. It's been on market 5:33 for a little while. We're trying to take 5:35 this deal out and we're this close to 5:37 negotiating it. I need about 6 months to 5:39 finish the leasing of this project. It's 5:42 at about 85% occupancy. We need to push 5:44 it to above 90. So, we're stuck. It's 5:47 not quite closable. It's really close. 5:50 We did a one-year seller finance note. I 5:53 am not a fan of short-term debt, but if 5:55 all I have to do is fill four or five 5:57 units over the course of 6 months, I own 5:59 a PM company, so I know what I'm doing 6:01 in this market. We go, "Hey, how about 6:03 this? You do seller financing. We're 6:06 going to try to get this done in a new 6:07 debt product in less than 6 months, and 6:09 I already have a bank committed who's 6:11 fine refinancing early for the 6:13 situation." So, we line up our debt 6:15 product. So, we have a very clear 6:16 proposal, which is the most important 6:18 thing, and we say, "Look, it you're 6:19 going to sell finance for one year. The 6:21 first six months are going to be very 6:22 inexpensive for us because we're just 6:23 trying to get this thing finished and 6:25 refinanced. If we don't refinance in the 6:27 first 6 months, it goes to 7 and 12% 6:30 interest and it goes to a 25-y year AM. 6:34 So, the payments go up quite 6:35 substantially. In the event that we 6:37 still can't refinance, it has an 6:39 extension. So, it goes up in price 6:40 again, but we can extend a whole another 6:42 year. So for a project that we want to 6:44 complete and believe that we complete in 6:45 less than 6 months, we have up to 2 6:48 years to complete in the note structure. 6:51 Now, we close that deal. We're almost 6:53 done with the refinance already. Awesome 6:55 process, super simple, but again, it's 6:58 simple little tweaks. I don't like 7:00 short-term debt, but it has to make 7:02 sense with what you're doing and the 7:03 project that you have. Find the 7:05 solution, land the pitch. Never come in 7:08 and just open with, "Hey, are you open 7:09 to seller financing?" There has to be a 7:11 reason for creative finance and it has 7:13 to fit the scenario. Otherwise, 7:16 absolutely, you're going to get rejected 7:18 or they're going to ask for a huge down 7:19 payment or ludicrously high interest. 7:21 Guarantee you if you're running into 7:23 that, it is not a valid fit for the real 7:26 estate deal that you're trying to solve. 7:27 And lastly, and this is my favorite way 7:29 to negotiate them for majority of my 7:30 deals, the seller's proposed seller 7:32 financing. So the method here is instead 7:35 of going after the specific deal, you 7:37 actually go into the market and meet the 7:39 owners. I get coffee with these people. 7:41 Oftent times they plop me in their truck 7:43 and they drive me around town and they 7:45 show me all of their properties and they 7:47 talk about how they built their 7:48 portfolio instead of trying to buy. Form 7:51 relationships with the people who 7:52 currently own. If everyone who owns in 7:54 your market knows you, likes you, has 7:56 had conversations with you, they know 7:58 your goals. If you've never asked 7:59 anything of them, they will reach out to 8:01 you. And if you've already shared, hey, 8:03 you don't have a lot of money, you don't 8:04 have the capital, but you have a vision 8:07 and an operating plan. And oftentimes 8:09 they've helped you with your operating 8:11 plan, they'll reach out and they'll 8:12 propose terms that work for you. And 8:14 that's how I bought my third, fourth, 8:16 fifth, 6th, 8th, 10th, and then several 8:19 after seller finance deals. They came up 8:21 where the seller called me and said, 8:22 "Hey, I only need 10% down. I know 8:24 you're a little strapped on cash, but if 8:25 you can find 10%, we're going to write 8:27 this deal where it cash flows for you 8:29 day one." And we did this again and 8:30 again and again. And ultimately that 8:33 strategy is how I retired my wife from 8:35 teaching, eventually retired myself from 8:37 the 9to-5 and allowed us to move from a 8:39 tiny little house in Seattle, Washington 8:41 to a gigantic house here in Texas and 8:44 start a family. All of that came from 8:46 these four little techniques of getting 8:49 a yes to creative finance to bridge that 8:51 gap between the money that I did not yet 8:53 have, but that was available for the 8:56 right deal. If the seller has the 8:58 equity, the seller can be your lender. 9:00 You just have to know how to frame it. 9:02 Nine out of 10en times it's going to 9:04 either be you're pitting the bank 9:06 financing or bank qualifications against 9:08 them for your reason of, hey, for me to 9:10 give you what you want, the bank won't 9:13 do it, but you and me can work this out. 9:15 Or it will come directly from a 9:17 long-term relationship with owners in 9:19 the market. The only thing that you 9:21 cannot do is come in with reasons that 9:23 you need creative finance. I never come 9:26 in with I need this for the deal to make 9:28 it work for me. It's either to make it 9:31 work worth a bank. We need to bridge 9:33 between A and B. Let's get you what you 9:35 want. Or they come to me with a proposal 9:37 and I say yes. But that subtle 9:40 difference between making it their idea 9:42 or making it a concession on your end to 9:45 get them what they want is so much 9:47 different than I see most people do this 9:49 where they call, hey, are you open to 9:50 seller finance? Hey, I can only do this 9:53 cuz I have a little bit of a credit 9:55 problem. Don't make it a you thing. Make 9:57 it a deal thing. Solve the deal. Get the 9:59 deal closed. You'll do this again and 10:00 again and again on repeat. Hope this 10:02 helped. Like, subscribe, follow the 10:04 channel for more real estate tips. And 10:06 if you want to join a free community 10:08 where we're talking about this every 10:10 single day of the week with thousands of 10:12 investors all over the country, free 10:13 calculators, the whole nine yards. Go to 10:15 the link below, join our free school 10:18 community, S K. Just type multif family 10:20 strategy community into school. Join us 10:23 there. Completely free. If you're 10:24 watching a free video, might as well 10:26 join us there. Thanks for watching.
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