In any transaction there is price and there are terms. For example, the price of a home might be $300,000. If the sellers want cash at closing and will not consider negotiating on other terms, you must either come up with $300,000 cash or secure a mortgage to purchase the property.
If you were to get a mortgage, the terms of the mortgage would include the payment, payoff period, interest rate, down payment, possible prepayment penalty, any variable rate stipulations, etc.
With mortgages, lenders generally have greater power to control terms than borrowers. The borrower does have power to not accept the proposed terms, but institutional lenders will rarely negotiate the terms.
Negotiate for a win-win
However, if the sellers of this particular property are willing to enter into a different contract than cash at closing, you could negotiate a lease option or a seller financing arrangement. At that point you have many more moving parts to work with in structuring the deal and greater ability to create a win for both parties.
If you don’t like the price, maybe you can get the seller to come down on the payment. Suppose the property would rent for $1300 a month. If you can accept their $300,000 price to get a $1,000 monthly payment, you can possibly sublease the property and receive a $300 positive cash flow.
Having the ability to structure and control terms gives us greater certainty in every investment we enter into. If various terms are available, then the price in many cases becomes far less important than if terms are not available.
Through terms we can gain control of investments without necessarily having ownership of them. And through that control we can derive profits.
When if comes to staying in abundance with property value investments, the name of the game is certainty. The more certainty we can create, the greater chance we have of staying in abundance no matter what happens with the investment.
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Garrett Gunderson is an entrepreneur, financial coach, the founder of Freedom FastTrack, and the primary author of the New York Times bestseller Killing Sacred Cows: Overcoming the Financial Myths that are Destroying Your Prosperity.
Garrett loves inspiring others to turn their potential into production. He has dedicated his life to living and teaching a unique concept known as Soul Purpose that reveals how anyone can live a more prosperous and rewarding life.
As a finance and business productivity coach, Garrett instructs both large and small groups of business owners and financial service professionals nationwide.
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