Dan Haberkost
Throughout high school and college, work dominated my life. I’d go to school and then go to work and that was about it. As time went on, I quickly became tired of this sort of routine and decided there was no way I was going to allow my entire life to revolve around work. Consequently, my junior year of college I began reading about different types of investments and businesses that were scalable and could be set up passively. It was at this point that I discovered real estate investing. Real estate appealed to me as it’s a malleable asset, is extremely tax advantaged, and can be almost entirely passive with the right systems in place. Fast forward to the present and I’ve been buying rentals consistently since college and have built out a land & development business which continually feeds the acquisition of rentals. I quit my job in 2019 and relocated to Colorado where I’ve always wanted to live. Because of the financial impact of real estate investing, I left traditional employment at 23 and now have the freedom to work on what I want without being tied to any sort of employer.
Within the real estate world, I’m currently working on a mixture of new development, land investing, consulting and am always on the lookout for property that makes sense as a long term buy & hold. Aside from real estate, I like to spend my free time in nature either in the mountains or on the beach. Surfing, snowboarding, hiking, and mountain biking are some of my favorite hobbies. Thanks to my business, I’m able to pursue my passions at my leisure.
It’s often said that money isn’t the most important thing in life, which is true, but money DOES enable us to spend time doing the things that ARE most important like visiting with family or pursuing our passions. This is why I started this blog & website in 2019 as I wanted to share what I’ve done so that others could replicate it. My situation isn’t special, it all starts with being prudent with your finances, spending time with the right people, controlling the things in life you can control, acquiring useful skills and taking action once you have the necessary knowledge. It’s easy to fall into the traditional trap of spending all that you earn, inflating your expenses as your income increases and not taking the time to learn about how simple investing can be. Even if that’s been your M.O. for years, there is no reason why you can’t change it now. Regardless of your age or your financial starting point, small incremental changes in your habits can quickly snowball into massive life changes.
Episode Highlights Here:
Dan
The other thought is people often are fixated just on the price and or monthly payment. And so, you know, selling land on terms, you can get really substantial interest rates most of the time if you’re if you’re giving them what they want price or terms why so, you know, eight to 12% interest rate is very typical.
Brett
So, Dan, what is the number one secret to structuring seller financing deals? Hmm,
Dan
the number one secret. If we’re talking about you selling on seller financing, we can hit that first, just to be clear, I would say one of the biggest things is to make sure that you’re doing your due diligence on the person to make sure that they are going to be able to pay and or getting a large enough downpayment, that it doesn’t really matter. And so let me let me give you an example. You know, I bought one a couple years ago, just a piece of land, it was a multifamily lot at 13,500 sold it at 38. And she put 15,000 down, so my money was completely out. And just after the initial downpayment, and then getting 500 a month on that sense. And so in that case, I didn’t screen her really hard because the downpayment was more than what I even had into it. In other cases, when I’ve sold land with lower down payments, which is often a great strategy, if you’re struggling just to get it moved. I’ll go on a land contract or contract for deed, where it stays in my name in the, you know, the company’s name until they pay it off. So it’s much easier to take back if there’s if there’s any sort of problem. So those are probably are the the main thing that comes to mind. Excellent.
Brett
So it sounds like if you are the seller, and you are selling, you’re going to be financing the buyer. The number one secret to structuring these types of seller financing deals is to a make sure that you’re doing due diligence on the person and make sure they can pay as much as you can, like, you’re being thoughtful about that. But even more so or a coupled with that, just make sure it’s a large enough down payment, where essentially, you’re getting all or most of your money that you put into the deal Anyways, if they don’t pay because you’re just gonna foreclose on Is that a fair summary? Damn. Yeah, exactly. will be the second secret to structuring seller financing deals, it could be from the buyers perspective, or it could be just in general for approaching people to make deals. Yeah,
Dan
the other thought is people often are fixated just on the price and or monthly payment. And so you know, selling land on terms, you can get really substantial interest rates most of the time if you’re if you’re giving them what they want price or terms why so you know, eight to 12% interest rate is very typical.
Brett
Interesting. So dependent, you saw from here, and you’re saying that either someone’s typically focused on the price, which perhaps means you can negotiate a little bit lower interest rate because they get that higher price, or they’re really focused on the cash flow in that scenario, maybe it’s a lower price and a much higher interest rate. Is that what you’re saying? Referring to Dan?
Dan
Well, I was saying, again, more from the perspective of you’re selling the land, a good negotiating tool, as they get fixated on, they only want to pay X price more, they only want to pay X amount every month. And so you can charge a really substantial interest rate. But your point is also true. On the flip side, where if you’re trying to buy on terms that people still get fixated on on a number, whether it’s the lot of times it’s the price, and so they’ll give you low low interest rates, if you give them their price. And so I can give you an example of that, if you’d like. Yeah, please have a great got a rental on seller financing a couple years ago where he had 250 just stuck in his head as the price he wanted, couldn’t get him down on that, but got 3% interest only for two years, at which point it transitions to a permanent mortgage at 3%. So especially now, that’s quite an asset having 3% debt on just a solid rental here in town. When interest rates are seven 8%. Wow,
Brett
Okay, make sure I got that. So he said, Fine. I’ll give you the 250 although perhaps you don’t think it’s worth so you guys aren’t coming to a great, great compromise, but the compromise was, he would? Or you would I’m quite sure 3% IO for two years. And then it was fixed for what for how many years?
Dan
And then it’s a 15 year, straight line, amortization loan. Just normal mortgage 3% 3% Yeah.
Brett
Okay, then it’s just fully am. But if if for 15 year am at 3% So when from IO just to fully me 15.
Yeah, that’s a great point, especially if interest rates are where they’re at now. Yeah. So how do you sir, were you the buyer on that credit?
Dan
Yes, that’s when I bought that’s a rental property.
Watch the episode here:
Important Links:
- Dan Haberkost
- Website
About Dan Haberkost
Dan Haberkost – Throughout high school and college, work dominated my life. I’d go to school and then go to work and that was about it. As time went on, I quickly became tired of this sort of routine and decided there was no way I was going to allow my entire life to revolve around work. Consequently, my junior year of college I began reading about different types of investments and businesses that were scalable and could be set up passively. It was at this point that I discovered real estate investing. Real estate appealed to me as it’s a malleable asset, is extremely tax advantaged, and can be almost entirely passive with the right systems in place. Fast forward to the present and I’ve been buying rentals consistently since college and have built out a land & development business which continually feeds the acquisition of rentals. I quit my job in 2019 and relocated to Colorado where I’ve always wanted to live. Because of the financial impact of real estate investing, I left traditional employment at 23 and now have the freedom to work on what I want without being tied to any sort of employer.
Within the real estate world, I’m currently working on a mixture of new development, land investing, consulting and am always on the lookout for property that makes sense as a long term buy & hold. Aside from real estate, I like to spend my free time in nature either in the mountains or on the beach. Surfing, snowboarding, hiking, and mountain biking are some of my favorite hobbies. Thanks to my business, I’m able to pursue my passions at my leisure.
It’s often said that money isn’t the most important thing in life, which is true, but money DOES enable us to spend time doing the things that ARE most important like visiting with family or pursuing our passions. This is why I started this blog & website in 2019 as I wanted to share what I’ve done so that others could replicate it. My situation isn’t special, it all starts with being prudent with your finances, spending time with the right people, controlling the things in life you can control, acquiring useful skills and taking action once you have the necessary knowledge. It’s easy to fall into the traditional trap of spending all that you earn, inflating your expenses as your income increases and not taking the time to learn about how simple investing can be. Even if that’s been your M.O. for years, there is no reason why you can’t change it now. Regardless of your age or your financial starting point, small incremental changes in your habits can quickly snowball into massive life changes.
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