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RG 039 – Lets Get Creative! Seller Carry Back Financing 101 with Rod Khleif

Lets Get Creative! Seller Carry Back Financing 101 with Rod Khleif

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About Rod:

  • Rod has 38 years of investing knowledge and experience
  • He has built a net worth of over $50 million
  • Rod is the host of the Lifetime Cashflow podcast
  • He is the founder of the Tiny Hands Foundation.

 

Nuts and Bolts:

Rod Khleif has worked in real estate since he was a young man and got his brokers license when we was just 18 years old. He initially started small and made very little money for the first two years, however in his third year he made over $100,000. Rod puts this sudden success down to finding his confidence in the sector. Pre 2008 Rod used to buy and hold single family properties and at one point he held 13,000 houses in Florida. This caused him serious problems after the crash when he ended up owing more than what the properties were worth. Rod is a proponent of buying multifamily properties because if one apartment becomes empty you don’t have a 100% vacancy rate. He says that if he’d been buying and holding multifamily property pre-2008 the crash would not have hit him so hard.

When you’re starting your first deal you have two options to raise the initial money; you can ask a more experienced investor to sponsor you so that the bank will lend the money, or you can do seller carry back financing. This second option is where the property owner acts like the bank and offers financing for a period of time with or without a down payment. You can offer an interest rate and the property acts as collateral. If the seller still has some debt then this can be “wrapped” which is where the seller accepts a note from the buyer for the amount due on the underlying mortgage plus an amount up to the remaining purchase money balance. Alternatively the seller can become a member of the buyers LLC and so become an investor in the deal.

There are also benefits in this method for the seller as they will earn more off their money than if they were to keep it in a low interest rate savings bond. This way they get to keep the full amount (pre-tax) and collateralize it against the property at a higher interest rate. Rod also offers sellers a life insurance policy against himself just in case anything happened before their money was completed paid out. He also offers a management provision where they are able to call off the note within 90 days if the occupancy falls below a certain level.

Top 5 investing tips

  • Most successful habit – Writing goals down every morning and visualizing them with pictures.
  • Most influential tool in you RE business? – A 20 year old employee who does the research.
  • Most exciting project at the moment? – A 41 unit apartment complex sold at $8000 a door.
  • Most influential person in your career? Tony Robbins
  • Best deal to date? An 88 unit complex in Florida with 5 acres of land alongside that was zoned for another 300 units.

 

Contact – Rod is offering his free book about multifamily investing, to claim this offer text ROD to 41411 or for international listeners email rod@rodkhlief.com

Until Next Week, Happy Investing!