Posted by Bill Gatten on May 30, 1999 at 14:24:51:
Todd,
I don’t normally share the following information for free, but since you are new to RE investing, it’s yours at no charge.
In order to find out how felxible a seller is, you say the following words, and don’t change a syllable, or you’ll lose the effect:
“How flexible are you?”
That’s it. Good luck.
Bill
P.S., Oh yeah… his answer will likely be “I don’t know. What do you have in mind?”
Note that when the ad says “Investors Welcome,” that means he’s flexible…'else why would he have spent the extra money for the extra words in the ad: who else buys commercial property? Non-investors? What he means is “Creative Financiers and Mooches Welcome.” The fine line between the two is only knowledge and selling skills."
This is the point where you suggest that you’d like to discuss ways of taking over his existing financing, while living in the master apartment and managing the place until you can refinance. Let him know that at this juncture, you are more interested in terms than price; and that if he’d consider staying on the loan long enough for you to get a sizeable down payment together you will pay off all the current debt in XX years, with a reasonable return on the amount he’s carrying for you.
Don’t offer anything else unless asked, but here are some other bargaining chips:
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You can suggest that he hold the property in a PACTrust™ in his name, so that he doesn’t have to transfer any title to you, until you’ve proven yourself (you still end up with 100% of the ownership benefits…but he and the title and the property are shielded from anything that could go wrong).
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You can offer him the depreciation write-off to offset his gain from principal reduction in his mortgage.
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You could agree to give him a portion of the positive cash flow until the property is sold or refinanced.
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You cold agree that all postive cash flow (less a contingncy Fund) would be impounded in order to build up your down payment for the refinance in xx years.
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You could agree to give him a portion of the net profit from appreciation when you refinance or sell in xx years.
Bill