Seller financing is a great way to make real estate deals happen. In some cases, waiting around for a buyer with a mortgage is never going to produce results. With the right approach, however, you could use seller financing to close 120 units. It’s been done before.
Closing 120 units is no small feat. It’s hardly something you can do over a single week. In reality, finding this kind of success, whether you’re focusing on commercial real estate or multifamily homes, requires years of hard work and dedication. It also requires some highly effective strategizing. If you’re hoping to find this type of success in your real estate endeavors, here are some ideas to consider.
Starting Your Own Company
While working with a big-name realtor can produce a perfectly stable career, you’re going to need more ambition to close 120 units. To become a broker capable of such prodigious success, you’ll need to start a title company alongside an insurance company. From there, you can buy into a real estate franchise and start looking for profitable deals. Creating your own mortgage company is another potential step that can help facilitate sales.
Using Incentives to Build a Team
A successful real estate broker generally works with a team of ambitious agents. The best way to build a talented team is by offering candidates significant incentives. One approach is allowing team members to buy into your insurance company. An ambitious, investment-minded agent will appreciate this opportunity to receive such a tangible asset.
Finding the Partners You Need
A large-scale real estate operation involves a lot of moving parts. Managing every aspect of the business is often too much for a single broker to handle. That’s why savvy brokers seek to forge relationships with third-party partners. You can bring in partners to run many different aspects of your business, especially ancillary companies. With the right deals in place, these partners will do a lot of the legwork while you manage to keep most of the profits.
Mastering the Concept of Seller Financing
Having the sellers finance sales is a great way to make seemingly impossible deals happen. There’s no reason every real estate transaction should involve a traditional mortgage. You can have sellers finance deals with multifamily homes, single-family units, and commercial real estate properties. All you have to do is identify potential targets and convince the sellers to go for the deals.
Searching for Properties
The first step for any broker seeking a deal is to identify properties that match the broker’s intentions. The internet is a valuable resource for any broker hoping to find potential options. Websites like LoopNet and Crexi give brokers a quick and easy way to search for properties. You can use these sites to identify properties that match your criteria. The best options for seller-financed deals usually have at least a 9% capitalization rate. It’s also a sound policy to find properties that don’t need substantial renovations.
Making the Deals Attractive to Sellers
To get a seller to finance a deal, you’ll have to convince them that it’s in their best interest. The best way to do this is by insisting you’ll buy the property at a discount price. If the property sells at only 75% of its market value, the seller will be paid off faster. At the same time, many buyers will insist on an even greater discount in exchange for buying the property with cash. Having the seller finance a deal made at only a slight discount allows the seller to maximize their earnings while getting out of the deal as quickly as possible.
You can also convince sellers to finance the deal by offering to take care of inspections and mortgage contingency. These perks will further incentivize the seller to take your offer and finance the sale.
Trust is an essential component of any successful negotiation. You’ll never convince a seller to finance a deal if they think you’re trying to pull one over on them. While a little secrecy is always necessary with these types of deals, you need to make sure you’re winning the seller over. A wary seller will never agree to finance the sale.
Giving the Seller an Exit Strategy
Many sellers are afraid of being left financing a deal for years after the sale has taken place. That’s why it’s so important to make sure you present them with an exit strategy. Making them see that they have a way out will make them more comfortable with the possibility of financing the sale. Giving the seller this assurance will be much easier if you have your own mortgage company that can perform the exit strategy.
Taking Decisive Action
Meeting your real estate objectives will only be possible if you actively pursue them. Sitting around and wishing you were a real estate mogul will never be enough. While listening and learning are certainly important, taking action is what will ultimately bring you to the top of the profession.
Don’t Remain Stagnant While Learning
Pursuing a career in real estate can seem like an overwhelming process. You’re far from alone if you’re worried your ignorance will hold you back. Unfortunately, many people delay their careers while they seek to learn everything they can about the job. Watching podcasts and reading books is great, but you’ll only really learn if you go out into the world and give things a try. The lessons you draw from your early mistakes will serve you far more than anything you ever read.
Get Out There and Go for It
Closing on 120 units might seem like an impossible task, but there’s no reason you can’t do it if you adopt the right strategy. With your own company and a persuasive pitch for sellers, you can secure more seller-financed deals than you’d ever thought possible. The key is to get out there and give it your best.