Smart Way to Use Seller Carryback

Seller carryback, also known as owner financing or seller financing, is a creative way for buyers to invest in CRE. Especially if you want to preserve your cash for another deal. Seller carrybacks are when the seller carries all or part of a mortgage and collects monthly payments from the buyer. The sellers become the bank.

For example, a building owner, let’s call him George, is selling a property for $1,000,000. Over time, he accrued $250,000 in equity. He’s the perfect type of owner to ask in negotiations if he is willing to be flexible.

If you need $250,000 up front to purchase the building, there’s no hurt in asking George if he would be willing to offer a carryback credit of $100,000. That means the amount of cash you need to put on the table is lowered to $150,000. You would pay him 6% for five years on his $100,000, which is a higher return than most money markets today.

By making the deal more flexible, George makes the property more marketable and defers his capital gains taxes. For you, it’s a way to use our $100,000 for the next property and continue build your CRE investment portfolio and your wealth. This smart way to use seller carryback opens investment doors.

Jeff Salzbrun is the owner/broker of Commercial Equities Group (CEG). As a veteran-owned real estate brokerage, CEG has been involved in thousands of sale and lease transactions, ranging from single offices to 250,000+ square foot buildings. At CEG, we get your deal done. We know space, and we know the CRE business.

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