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March 9, 2021 @ 8:43 pm

Ep 148 Pt.5 Pop Quiz On Deal Structuring

In this series we continue the Pop Quiz from Jeff and turn the focus to deal structuring. We apply creative financing principles to deal structuring using real life examples. We cover the following:

Determine your buyer- Who are my Buyers: Flippers, Landlord, Owner Occ, Retail Buyer (on Market)

High purchase price,  Down payment, monthly payment, Low equity- Owner Occupant.

Owner occ- term to be 3yrs minimum. 

Get in light- 5-7%. Not  a hard number. We need 30days to find a buyer.

What would be a good monthly payment for a property, affordably. Would it make sense as a rental? Median price range of rents. 

What's enough equity to have to make it a deal work- price is the least important criteria when using creative financing, down payment and monthly payment are the most important.

How much can you raise the price when selling on terms? Within reason. Does the condition justify the price?  10-20K above market value

How to determine length of term- depends on your exit strategy and who your end-buyer is. Also how long of a term works for the Seller, and what is their goal with the proceeds. 

How much can you offer when selling to a Landlord

What's too much for repairs? Depends on down payment and who's your buyer. But cash on cash returns for a landlord needs to be 12% min. That's the all in cash required for down payment, repairs, closing etc. Equation equals cash flow x 12 divide all in cash = cash on cash return. Return needs to be a minimum of 12%. Unless, however, the landlord can do a cash out refinance after repairs and stabilizing, therefore lowering the out of pocket cash requirement. 

How much of a ARV discount should we try to get from a landlord? Look for value add, or equity. Cash on Cash return. Also, least important is cap rate. 

When do we shorten the amortization schedule? To make a payment work in our favor. More so for principal paydown. 

Hope you enjoy, And to get special access to a step by step video on how to structure creative financing offers, text CFP to our hotline at 877-409-8090 or click HERE.

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