Once upon a time I knew an investor who was trying to structure a deal with a seller who wanted the money from the sale of his property to buy a motor-home so he and his wife could travel the country. The investor asked the seller, if he was able to find a motor-home of the sellers liking, would the seller use the book value of the motor-home in exchange for the down payment on the property the investor was trying to buy from the seller? This was regardless of what the investor had to pay for the motor home he would be trading to the seller for his property. The seller told the investor exactly what he wanted a motor-home to have, that he would accept. Once the investor knew what the sellers wanted, he then immediately set out to find a motor home he could use as catalyst to complete the transaction to buy the sellers house.
After a few days of searching the investor found a motor-home exactly like what the seller of the house wanted. The investor approached the owner of the motor-home and asked if he would be interested in selling the motor-home. The owner of the motor-home was eager to sell because he and his wife could no longer travel as they had once done because of their age and some health issues. Because of this the motor-home had been setting in the owner’s barn for over five years, not being used. The investor offered the owner of the motor-home four promissory notes the investor had taken back from sales of properties and had been collecting from his buyers he had sold that were a few years old and each promissory note had a payer with a good payment history in exchange for the motor-home he needed to complete the other deal he was trying to do. All four of the promissory notes had a remaining balance owed almost exactly totaling the exact amount of what the owner of the motor home was asking. The owner of the motor-home gladly accepted the investors offer and exchanged the motor-home for the performing promissory notes the investor had.
The investor then had the motor-home he needed as partial payment for the property the investor was trying to buy. The seller of the property the investor was buying also agreed to accept monthly payments from the investor for the balance of the purchase price of the house instead of the investor having to go and get an institutional loan for the balance of the purchase price of the property.
Now, let me ask you, who was the winner in that deal? Everyone was a winner and here is why. The investor got the property he wanted without giving up cash out of his savings account or having to get institutional financing to buy the property. The investor gave up four small income streams (the promissory notes) he had. The seller of the property got what he wanted. He and his wife got a nice motor-home exactly like they wanted and a retirement income every month from the investor for the next 30 years. The seller of the motor-home got what he wanted, a monthly income from a motor-home he and his wife could no longer use. That motor-home was costing the owner money every year for insurance, licenses and maintenance costs even though they weren’t using it and hadn’t used it for over 5 years. The seller of the motor-home was very happy receiving the payments from the promissory notes the investor traded him for the motor-home. At least he was getting some of his money back from the no longer used motor-home every month he and his wife could surely use. Everyone was a winner and in that deal two different catalyst were used, the motor home and the investor’s promissory notes to make that deal happen. Remember, every deal you will ever do will always have a catalysis involved that makes the deal happen and that catalysis doesn’t have to be cash! Always find out what the sellers REALLY need and use that item as the catalysis to make the deal happen!
It’s amazing how you can create deals without money simply by giving a seller what they want instead of giving them ALL CASH!