It’s honestly super hard (mostly due to lack of speed) unless you have a really strong lender relationship
Like I’m at the point where my lender knows what my investment style is and what kind of deals I even look at. He knows that my investment criteria and his lending criteria are aligned, so in many ways I’m “pre-approved” for just about any amount, and actually getting things in motion is just a matter of bureaucracy. Even with such a well-oiled relationship, stuff still takes forever
One time, I was trying to buy a Shopify app. I reached out to a lender for $300k. They asked me for a quality of earnings (typically 30+ page report) to ensure the Shopify PayPal payouts were legit 🤦♂️
Finding a lender I think is the wrong way about it. It's like trying to find an investor cold. You're best getting a referral, in my opinion, because what you're after is a relationship. The warmer the relationship is when you start it, the faster you can reach the level of trust you want to get some accelerated treatment.
I don't know enough about home services to guesstimate how a seller might react to those kind of terms. That said, I'm a huge fan of seller financing. But it doesn't work for everyone.
Seller financing works well if the seller doesn't hold much debt. If they do have debt, that will eat into their calculations. If you propose a leveraged seller to do some seller financing, they would likely decline the terms because they simply could not afford them after servicing their debt.
If Maslow were to make a pyramid of what sellers want most, it'd be something like:
1) All cash
2) Cash + seller financing (10% and under usually easy, anything over becomes a factor)
3) Cash + earn out (financing doesn't have conditions, earn-outs do)
3) Cash + loan (depends how quickly you close, but it's a yellow flag at minimum for some)
4) Cash + loan + earnout/seller financing
5) Cash + loan + earnout + seller financing
6) Anything more complicated than that is not even worth trying IMO
RE: Finding a good lender
Finding a lender I think is the wrong way about it. It's like trying to find an investor cold. You're best getting a referral, in my opinion, because what you're after is a relationship. The warmer the relationship is when you start it, the faster you can reach the level of trust you want to get some accelerated treatment.
I don't know enough about home services to guesstimate how a seller might react to those kind of terms. That said, I'm a huge fan of seller financing. But it doesn't work for everyone.
Seller financing works well if the seller doesn't hold much debt. If they do have debt, that will eat into their calculations. If you propose a leveraged seller to do some seller financing, they would likely decline the terms because they simply could not afford them after servicing their debt.
If Maslow were to make a pyramid of what sellers want most, it'd be something like:
1) All cash
2) Cash + seller financing (10% and under usually easy, anything over becomes a factor)
3) Cash + earn out (financing doesn't have conditions, earn-outs do)
3) Cash + loan (depends how quickly you close, but it's a yellow flag at minimum for some)
4) Cash + loan + earnout/seller financing
5) Cash + loan + earnout + seller financing
6) Anything more complicated than that is not even worth trying IMO