Financing and partnerships
Stop Asking for Seller Financing. Ask This Instead.
The biggest change I made to my creative finance negotiations in 2025, plus the 25-unit deal where saying yes to everything the seller wanted closed it.
This is year five and hundreds of rentals into buying with creative finance. Seller financing is still my number one tool. But I'm changing the way I ask for it this year, and it's the single biggest lesson I've picked up over the last few years.
Related reading: How to Get Seller Financing Without Ever Asking For It
I'm throwing out the words "seller financing." Also "owner financing." Also "carrying a contract." Anything that describes what they are giving me is coming out of my vocabulary.
Here's why, how I'm replacing it, and the 25-unit deal that shows what it looks like in practice.
The Words You Use Decide Whether You Get a No Before You Even Make an Offer
When you call an owner and ask, "Hey, are you open to carrying a contract? Are you open to seller financing?": what you are actually asking is: can you give me a property, and can you also give me the money?
Related reading: 4 Seller Financing Pitches That Actually Get Offers Accepted
That's technically what they're doing. But on a pure psychology basis, if the ask is can you give me, and then can you give me, it doesn't quite feel right. There's no sense of balance.
So now we talk about the deal. We negotiate the deal. I understand where the objectives are. And then I frame it as an exchange.
What are they giving me? The property. All right: in exchange for the property, can I give you this down payment? Say it's a million dollar property and 25% down, just as an example. I'll give you $250,000. On the remaining $750,000, I'll pay you this exact number of payments at 8% interest over the next eight years. Or 6%. Or 4%. Or whatever it is you negotiate. But the payments will look like this for the next eight years.
You're going to get a lump sum of cash, and then I'm going to give you payments.
That's a much better balance. Some people get a little freaked out and say, "Yeah, 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, and here's what I think it would look like and what would work for me: now there's an actual offer on the table to consider.
It does not mean you get a yes every time. But my success rate has just about doubled over the last two years. When you ask for seller financing by name, you can get a no before you ever get to propose the terms. Take it out of your vocabulary.
Map the Goalposts Before You Negotiate Anything
How do you actually negotiate these? You map out the goalposts.
Imagine a soccer field. Here's the pitch. You have your goal, they have their goal. The first thing you do is map out what everyone needs.
I always need the same thing: 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 pays me to wait for the property to eventually appreciate. I'll get rich eventually through appreciation, and I'll get paid the whole way there. That's my goal, every time, on every deal.
Their objectives are going to be unique to every single deal. Are they stuck on price? Interest rate? Terms? Down payment? The balloon date? Is there some special clause or special thing they need in order to find the right buyer?
If you can map out both sides, everyone can score. You need to find a deal where both sides hit all their objectives. And if you actually hit their objective and your objective, you will close every single time you make that proposal.
The 25-Unit: How Saying Yes to Everything Got the Deal Done
Here's a real one. I bought a 25-unit about a year and a half ago.
The seller wanted $2 million. He wanted about $250,000 down: so not a huge down payment in proportion to the building, call it 12.5% down. And he wanted 5% interest, no less than 5%.
Fixed price, fixed down payment, fixed interest rate. Great price. Interest way better than market. I was happy with all of it.
The problem: it did not cash flow day one under those terms. Rents were about half of market. Market was around $1,000 and the units were renting at $550. It doesn't cash flow, but only because the rents need to be bumped.
I'm not going to buy a deal that doesn't cash flow day one. That's my goal, and I wasn't hitting it. So we proposed a special clause: the simplest answer possible, a ladder. I pay 3.5% in year one, 4% in year two, 5% in year three. That gives me time to increase the rents, time to improve the operation, time to get it closer to market, and I get paid along the way.
He said no. He needed 5%.
Okay. That's the fixed goalpost on his side, and we were close on mine. So we kept the payments at 3.5% while the interest rate stayed at 5%. The delta (that one and a half percent in the early years) gets added onto the balance we owe. Effectively we bought the property for more by adding to the principal.
But we said yes to everything he wanted. Yes to 5%. Yes to the price. Yes to the terms. Yes to the down payment. He said yes right back, all across the board.
Here's what it does for me: my payments are lower in years one and two, which lets me keep running the property and investing into the property. By the time we hit year three, the property is cash flowing way above and beyond what it needs to service 5% debt. No problem at all.
How did I decide it works? Because at the effective price we ended up paying, I still liked the price. In this case, the reverse amortization was the correct tool. If that hadn't worked, I would have preferred the interest rate ladder. You just figure out what works and you score the goal. That's how you build wealth.
The Math That Tells You If the Terms Work
If you don't know how to negotiate your interest rate, here's all you have to remember.
Your actual cost of capital (principal plus interest, divided by the loan amount) just needs to be less than the yield of the deal. The cash on cash return. The cap rate.
If every dollar in the deal makes 6%, I need to borrow at a blend of principal and interest at a cost that is lower than what that cash makes. That's it.
Said another way: your loan factor rate must be less than your cap rate. Principal plus interest divided by your total loan amount needs to be less than net operating income divided by the purchase price of the property. Simple as that. If you've never run that math before, learn what a loan factor rate is: I talk about it on the channel all the time, and I'll do another video breaking it out.
Speed Is a Negotiating Advantage
You really want to be sharp when you negotiate these, because the creativity is easy if you can think on your feet.
I'm in front of investors and owners all the time, and the ability to quickly communicate okay, their goal, my goal, what would work, what is the simplest answer to the question: that's always the answer. The simplest answer.
The speed at which you can do this is critical. It builds confidence in the seller. If there's a broker involved, it builds a ton of confidence in the broker. You walk through the pieces effectively, say "this is what's going to work, I think this is a good proposal," and then you get the deal under contract. That's the part you have to do: propose it, and get the offer written as soon as possible.
There are a few ways to get sharper at this.
- Get used to talking to people about real estate. Get in community, get around people, go to meetups. You get sharp, and if you're in community you'll find more opportunity.
- Get good sleep at night. I'm not kidding. Great rest means you think better and you think faster. That's genuinely one of the secrets to doing better deals.
- Put good things in your body. Good nutrition, not out drinking late at night, healthy. When you're doing those things, this stuff just seems to come to you.
I think of that as mental wealth. Rest, nutrition, and the ability to pay attention affect how I show up to a meeting. The practical point is to build a routine that helps you arrive prepared and make thoughtful decisions.
Key Takeaways
- Drop "seller financing," "owner financing" and "carry a contract" from your vocabulary. Frame the offer as what you're giving them: a lump sum, then payments.
- Negotiate the deal first, then present terms. Naming the financing type too early gets you a no before you've made an offer.
- Map both goalposts. Mine never changes: long-term cash flowing fixed rate debt. Theirs is different on every deal.
- When you can't move their fixed point, move a different lever. On the 25-unit, payments at 3.5% with interest at 5% and the difference added to principal got us both to yes.
- Loan factor rate must be less than cap rate. Principal plus interest over loan amount, versus NOI over purchase price.
- Propose fast and get it in writing. Speed builds confidence with sellers and brokers.
One of my favorite books on negotiation is Chris Voss's Never Split the Difference, and the idea I keep coming back to is getting 100% of what you need on every single deal. On every deal I've done, I've given the seller 100% of everything they wanted. That's not a contradiction: it's the whole method. Find the roadmap from A to B where you say yes to everything you need and yes to everything they need.
Other people aren't doing this. They're not getting the rest you're getting, they're not getting the focus, they're not in the community, they're not writing deals the same way and they're not analyzing the same way. Get in front of opportunities, know how to propose quickly and effectively, and you'll get the deals you propose accepted.
Watch the full video above for the complete walkthrough of the 25-unit structure. My goal this year is for everyone who watches a video on this channel to purchase an apartment complex, and everything we release is aimed at getting you into better deals, more deals, and always leading with cash flow. You can learn about my mentorship at mentorship overview, download the free course on getting started in multifamily at multifamilystrategy.com/get-free-training, and join our Facebook group if you want people to talk deal structure with.
Read the episode transcript
0:00 get sharp on what it is that everyone's 0:02 looking at 2025 you want to buy a deal 0:04 in the next 3 to 6 months get sharp at 0:06 this skill seller financing apartment 0:09 complexes in 2025 how are we doing it 0:12 this is year five and hundreds of 0:14 rentals in to buying with creative 0:16 Finance seller financing is our number 0:17 one tools I'm going to talk about how 0:19 I'm changing the game on my entire 0:22 portfolio this year the number one thing 0:23 that I've learned over the last few 0:25 years I'm throwing out the word seller 0:26 financing owner financing carrying a 0:28 contract anything that has to do with 0:30 what they are giving me I'm no longer 0:32 asking a seller hey are you open to 0:34 carrying a contract are you open to 0:36 seller 0:37 financing that's asking can you give me 0:40 a property and can you give me the money 0:42 now while that's technically what 0:43 they're doing if the actual ask just on 0:46 a psychology basis if the ask is hey can 0:48 you give me and then can you give me it 0:51 doesn't quite feel right there's no 0:52 there's no sense of balance what I do 0:55 now is we talk about the deal we 0:57 negotiate the deal I understand where 0:58 the objectives are so what are they 1:00 giving you the property all right in 1:03 exchange for the property can I give you 1:06 this down payment say as a million 1:08 dollar property 25% out just as an 1:10 example I'll give you 1:12 $250,000 on the remaining 1:14 750 I'll will pay you the exact you know 1:18 x amount of payments pay you 8% interest 1:21 over the next eight years or 6% or 4% or 1:23 whatever it is that you 1:24 negotiate but the payments will look 1:26 like this for the next eight years 1:27 you're going to get a lump some of cash 1:28 and then I'm going to give you payments 1:29 well this is a much better balance right 1:31 if you're considering this some people 1:33 get a little freaked out by yeah you 1:34 know I I don't really think we're open 1:35 to carrying contract but if it's framed 1:38 as you have a property can I give you 1:40 money then can I give you more money 1:41 this is what I think it would look like 1:43 and what would work for me now there's 1:45 an actual consideration of okay what is 1:47 the actual offer and is this something I 1:48 consider it does not mean you'll get a 1:50 yes every time but I found my success 1:52 rate has just about doubled over the 1:54 last two years when I asked for seller 1:56 financing or when I just explained to 1:58 them exactly what I'm giving them what 2:00 it looks like you could get a no before 2:03 you even get to propose what the terms 2:05 would be so just take it out of your 2:07 vocabulary that's what I'm doing this 2:08 year I think it's going to get us to go 2:09 a lot farther now how do we actually 2:12 negotiate these well all you have to do 2:14 is you have to map out the goal post so 2:16 imagine if you will a soccer field 2:18 here's your pitch you have your goal 2:21 their goal you're just mapping out what 2:24 does everyone need that's the first 2:26 thing you do I always need the same 2:27 thing by the way I need long-term cash 2:29 flowing fix r debt I need a deal that 2:30 pays me day one continues to pay me 2:32 forever regardless of what the market 2:34 does and then I will get paid to wait 2:36 for the property to eventually 2:37 appreciate so I will get rich eventually 2:39 through appreciation I will get paid all 2:42 the way along the way that is my goal 2:44 longterm cash flowing fixed rate debt 2:47 their objectives are going to be unique 2:49 for every single deal are they stuck on 2:50 price interest rate terms down 2:53 payment the balloon date is there some 2:55 special clause or special thing that 2:57 they need to find the right buyer what 3:00 is the goal for them if you can map out 3:02 both sides everyone can score you need 3:06 to find a deal where you get both sides 3:08 to hit all their objectives and guess 3:10 what if you actually hit their objective 3:12 and your objective you will close every 3:14 single time you make this 3:16 proposal great example I bought a 25 3:18 unit about a year and a half ago seller 3:22 wanted $2 3:23 million they wanted I think it was 250 3:27 down so it wasn't actually a huge down 3:29 payment in proportion to the building 3:30 they want like 12 a half% 3:33 down problem is it did not cash flow day 3:36 one under those so I can't score their 3:38 goal I want 5% interest no less than 5% 3:41 interest I want $2 million I'm willing 3:44 to carry contract as low as 12 half% 3:46 down I'm like okay fixed down payment 3:48 fixed price fixed interest great price 3:51 way better than Market interest problem 3:54 with the deal their rents were about 3:55 half of market so rents about $1,000 3:58 they're renting at $550 4:00 it doesn't cash flow but it's just 4:02 because rents need to be bumped now I'm 4:03 not going to buy a deal that's not a 4:05 goal for me it doesn't cash flow day one 4:07 so I'm not quite hitting the goal so we 4:09 proposed special Clause what if we did a 4:12 ladder simplest answer possible I pay 4:15 three and a half% then next year I'll 4:16 pay 4% then next year I'll pay 5 percent 4:18 so year one three and a half year two 4:20 four year three 5% this way I have time 4:24 to increase the rents time to increase 4:25 the operation get it closer to Market 4:27 and get paid along the way problem is he 4:29 said no I need 5 per. so I'm like okay 4:33 we we found the fixed goal here we're 4:35 close over here we made the payments 4:37 three and a half% but the interest rate 4:40 Five which means the Delta the one and a 4:42 half per that first year is added onto 4:44 the balance that we owe effectively what 4:47 we did is we bought the property for 4:48 $250,000 by adding to the principal but 4:51 we said yes to everything he wants yes 4:53 to 5% yes to the price yes to the terms 4:57 yes to the down payment he said yes all 4:59 across the board and here's what it's 5:00 going to look like my payments are going 5:02 to be lower in years one and two and 5:04 this will allow me to continue to run 5:06 the property and invest into the 5:09 property by the time we hit year three 5:11 the property is going to be cash flowing 5:12 way above and beyond what it needs to be 5:13 to service 5% debt we have no problem 5:15 with that at all how do we decide it 5:17 works well it works if we paid a uh 5:20 $250,000 I still like that price so in 5:23 this case the reverse am was the correct 5:26 thing if that wasn't it I would have 5:27 preferred the interest rate lap 5:30 but you just figure out what works and 5:32 you score the goal that's how you build 5:34 wealth uh by the way you really want to 5:37 be like sharp when you negotiate these 5:40 because the creativity is really easy if 5:41 you can think on your feet so I get in 5:43 front of investors all the time and get 5:45 in front of owners and just the ability 5:47 to quickly communicate okay their goal 5:50 my goal what would work what is the 5:52 simplest answer to the question and 5:53 that's always the answer there's a few 5:55 ways to get really creative one is get 5:57 used to talking to people about real 5:59 estate getting Community get around 6:00 people talk about it go to meetups you 6:02 get really sharp you get able to do this 6:04 if if you're in community you're going 6:06 to find more opportunity number two get 6:09 good sleep at night I'm not kidding go 6:12 to sleep at night get great rest you're 6:14 going to think better you're going to 6:15 think faster that's actually one of the 6:18 secrets to doing better deals another 6:21 thing is your you know we talk about 6:22 your your actual wealth what about your 6:25 what does it look like to have mental 6:26 wealth I have found you need to actually 6:29 put good things in your body like if 6:31 you're getting good sleep you're getting 6:32 good nutrition you're not out drinking 6:34 late at night you're 6:36 healthy these things seem to just come 6:38 to you like that's my secret weapon I 6:40 have a few things that I do the number 6:41 one thing that I have found really 6:42 helpful is actually the sponsor of this 6:44 episode It's Magic mind they sent me 6:47 this I asked them for a discount code 6:49 I'll actually post it below for you guys 6:51 but this is one of those things like I 6:52 get up in the morning check one of these 6:54 I have an edge on other people great 6:56 ingredients super healthy less caffeine 6:59 than just dumping coffee into my system 7:01 tastes amazing they apparently have a 7:03 sleep thing coming out that I I'm super 7:05 excited to try I already ordered that 7:06 that's on the way but start your day end 7:09 your day with something really healthy 7:11 again magic mind link is below the 7:13 episode sponsor they were kind enough to 7:15 send this I love this stuff but if you 7:18 can get healthy if you can get the rest 7:20 the nutrition find that mental Edge be 7:23 awake Alert in meetings you're going to 7:27 find your deal quality goes up your 7:28 wealth goes up up you feel better doing 7:30 it highly highly recommend get the 7:34 community down get the health down get 7:36 sharp on what it is that everyone's 7:39 looking at again the goal post I think 7:42 for everyone if you want to buy and hold 7:43 real estate is long-term cash flowing 7:45 fix rate debt you know what your 7:46 objective is all this is is what is the 7:49 fastest road 7:51 map from A to B I want to say yes to 7:54 everything I want I want to say yes to 7:56 everything they want one of my favorite 7:58 books by Chris never split the 8:00 difference on 8:01 negotiation get 100% of what you need on 8:04 every single deal and I have found on 8:06 every deal I've done I've given the 8:08 seller 100% of everything that they want 8:11 you want to get tactical you want to 8:12 negotiate creative terms you want to get 8:14 seller financing 8:16 accepted in 2025 you want to buy a deal 8:19 in the next three to six months get 8:21 sharp at this skill other people aren't 8:24 doing this other people aren't aren't 8:26 getting the rest you're getting they're 8:27 not getting the focus you're getting 8:28 they're not getting the community 8:29 they're not writing deals the same way 8:31 they're not analyzing the same way you 8:33 get in front of opportunities like this 8:36 you know how to propose quickly and 8:38 effectively this is where the deal is 8:40 going to work for me and here is how I'm 8:42 going to give you everything that you 8:43 want you will get every deal that you 8:46 propos that way 8:48 accepted hope this helped this is what 8:50 I'm changing this year throwing out the 8:53 verbiage of seller financing owner 8:55 financing I'm taking all of that out I'm 8:56 going to tell them exactly what it is we 8:58 want I'm going to offer on deals that 9:00 work for me and work for them and if you 9:03 don't know how to negotiate your 9:04 interest rate all you have to remember 9:07 is your actual cost of capital principal 9:10 plus interest divided by the loan amount 9:14 just needs to be less than the cash on 9:15 cash return on the deal like the actual 9:17 yield of the deal the cap rate of the 9:18 deal every dollar in the deal makes 6% I 9:22 need to borrow at a blend of principal 9:24 and interest at a cost that is lower 9:27 than the amount that that cash makes 9:29 that is it going to end with this the 9:32 speed in which you can do this is so 9:35 critical it builds confidence in the 9:37 seller if there's a broker involved 9:39 builds a ton of confidence in the broker 9:41 but you go through these things and you 9:43 go really effectively this is what's 9:44 going to work I think this is a good 9:46 proposal you get in front of them and 9:48 you just get the deal under contract 9:49 that's something you have to do on these 9:51 is you propose it you get that offer 9:53 written as soon as possible if you don't 9:54 know how to calculate interest rate 9:57 learn what a loan Factor rate is I share 9:58 about this on this Channel all the time 10:00 but essentially your cost of debt needs 10:01 to be less than the yield on the cash in 10:05 the deal so your loan Factor rate must 10:07 be less than your cap rate if you've 10:09 never done this math before I'll do 10:10 another video breaking this out in the 10:12 near future but essentially principal 10:14 plus interest divided by your total loan 10:16 amount needs to be less than your net 10:20 operating income divided by the purchase 10:23 price of the property that's it simple 10:26 as that again it's super kind of magic 10:29 mind to share this with us so if you 10:32 guys want to try this I highly recommend 10:34 this will make you more creative this 10:35 going to get your your mental juices 10:37 flowing it's going to keep you awake 10:38 alert a link for this is below 45% off 10:42 uh link is below there if you guys 10:44 haven't yet like And subscribe to the 10:46 channel we talk about how to do this all 10:47 the time getting tactical with the 10:48 seller financing the goal for this year 10:51 is I want everyone who watches a video 10:53 on this channel to purchase an apartment 10:55 complex this year all the content that 10:58 we release for 2 is going to be about 11:00 getting you into better deals more deals 11:04 more opportunities and always leading 11:06 with cash flow thanks again for watching 11:08 see you on the next episode
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