You could replace the word 'business' with the words 'commercial property,' and the same points would apply. Great video. The deal has to be a win-win for both buyer and seller. If a seller is too greedy or lets emotions get in the way, it could put the buyer in a position to default."
Hi David, is there anyway you could do a owners finance from a buyer POV. I am struggling to understand how to present this to a seller I am currently working with. I'll give you a little background. I'm 23 years old and I'm looking at buy a business that going at 235k. I have looked into getting an SBA but the 10% down is too expensive for me. So I want to present to the seller a "owners finance" deal that works for the both of us. Anything helps, thanks David!
You have to demonstrate that lending you the money will be a good investment. At 23 this will be a challenge as the seller might think you lack the experience. Also, what if things get into trouble? To pull this off, you'll have to demonstrate that you're capable and show the seller that you have a viable plan and are coachable. It might be easier if you work in the business for some time so the seller can get to know you.
The seller has a lien on the business typically after the bank. So, they need to choose the right buyer and be helpful to them. If the buyer defaults, the seller has the option to take the business back and take over the bank note, usually. But not the obligation.
Very informative and to the point. Thanks for the content David. I'm from Australia and am looking for more information on where to source and how to best structure seller carryback small businesses to acquire and operate. Have you written a book for buyers by any chance? Would love to support. Cheers
Your content is awesome, David! All down to earth info, street smart know how, with no fluff. You clearly know this stuff, and your integrity and honesty is most admirable.
wow. thanks for the information. your videos have saved me years . I planned to buy a business this summer but after listening to you, its more prudent to wait a little longer and start with a solid footing. thanks again . God bless you with health and wealth.
Hello David I have a gym in Dallas that I am selling I have a lot of people asking me if I offer seller financing. I am very uncomfortable about doing that and have no idea how to do that and secure that I get all my money.
Yes, it makes you want to ensure that you pick the right buyer and you might even want to coach and mentor them to be sure they succeed and you get all the money. These are just some of the reasons why buyers need to ask for it. The difference in price you'll get by financing some of the deal vs not can be significant. Financing is the biggest hurdle for buyers. If you offer a fix, your buyer pool grows and the length of time it takes to find the right buyer shrinks. This is why car dealers always have financing options an hand when people go car shopping. Check out my book 'How To Sell My Own Business' on Amazon to guide you on this journey.
You have to humanize yourself to them. Show that you're a person that is a great choice to be their successor. Not a walking wallet there to make them rich.
@@DavidCBarnett best strategy to do bond financing in stead of bank financing? I dont like the fractional reserve stuff. thank you. What do you think of jeremy harbour's strategy of issuing a bond and giving the bonds to the sellers when they his clients buy businesses? I guess for regular bonds it didnt make sense before you pass 100 million loans, but maybe that has changed? So my plan for now is to use sellers finance, maybe a little bit of equity from a partner and an expandable bond if that is a thing. that the bond buyers and consultants/brokers/investment banks understand that the loaned amount will increase as I go. which brings my mind to cross collateralisation. best to avoid somehow. thought and word salad. I know. Could you adress each point briefly?
Hi David. Does a buyer have credit standing if necessary, even if he has already a structured deal on hand? Or can ordinary individuals with no track records and results qualify to do this even if he is new but knowledgeable and equipt on deal making?
Whatever the seller will agree to. Do you have a compelling story? See my video about a real 'no-money' deal here: ruclips.net/video/HLNmOvfok6A/видео.html
Nobody wants to do seller financing. Would you agree to lend a stranger money? You need to build a relationship so the seller can make a decision about your chances of success. Asking for seller financing before you've even met the seller is a big red flag for the selling team.
Hi David, thank you for the videos and content I love your channel. My question is what percentage of seller finance should a buyer be looking for on average? An example would be a Coffee kiosk that is for sell for $100K, gross revenue of $310K and cash flow of 55K?
It's whatever you negotiate, but I like to make the seller note relate in some way to the amount of goodwill in the deal. I have videos on this topic... ruclips.net/video/YhEs5CG3uGs/видео.html
Hey David. Subscribed to your channel. Thanks for this informative video. This is COMPLETELY new to me.v I wanted to purchase just a profitable already existing e-commerce business . How do I begin to engage in a conversation with the seller to find out if they will embrace seller financing? I have never owned a business before so I am completely new to this idea period your help would be greatly appreciated .
You first have to demonstrate that you're loan-worthy. So, you need to show that you have something significant to invest and that you're capable or at the very least, coachable. So, you need to get to know them.
@@DavidCBarnett Thank you David. When you mention that, does that mean that I need to show credit worthiness? I've never had a business so I have no business credit. Does that also mean that I need to have available cash Or some kind of money?
We sold our business a year ago. A portion of the purchase price is a note. He has ran our successful business, we had for almost 10 years, ran into the ground. Made lots of changes in the beginning and lost lots of customers. Now he wants out, says he wants us to negotiate a lower the note by half of what is still owed. Of we don't want to, do you think this is a mistake?
It's up to you to decide if you want to take a reduced payout or if you want to foreclose on him and take the business back. Whether or not there is a bank involved ahead of you in security would be the first thing I'd consider.
Or if they really believe in the success of their business, and the ability of you to grow the business then an equity position as part of the seller financing would be the best deal for the seller
Sir I recently contacted my accountant about seller financing on my personal home and he said it is a requirement by the IRS for me to charge the buyer the current rate the feds have set at the time of the real estate sale / settlement (which is currently 6% 😲) have you ever heard of such 🤨 Has there been a new law implemented lately 🤔
Not sure I get the context of the question. A business can always change its name and would update this with the bank, in that case, tax numbers would remain. If you bought it and did this, you'd be doing a share purchase. Mostly though, you want to keep the name as this is what is recognized by the public. Names can transfer in an asset purchase and sometimes change slightly. You may have noticed that a business can go from 'Dave's Plumbing LLC' to 'Dave's Plumbing (2023) LLC' This could happen because the business was sold.
You could replace the word 'business' with the words 'commercial property,' and the same points would apply. Great video. The deal has to be a win-win for both buyer and seller. If a seller is too greedy or lets emotions get in the way, it could put the buyer in a position to default."
Great point!
Brilliant as always David! Stay healthy and wealthy
Thanks Richard.
Hi David, is there anyway you could do a owners finance from a buyer POV. I am struggling to understand how to present this to a seller I am currently working with. I'll give you a little background. I'm 23 years old and I'm looking at buy a business that going at 235k. I have looked into getting an SBA but the 10% down is too expensive for me. So I want to present to the seller a "owners finance" deal that works for the both of us. Anything helps, thanks David!
You have to demonstrate that lending you the money will be a good investment. At 23 this will be a challenge as the seller might think you lack the experience.
Also, what if things get into trouble? To pull this off, you'll have to demonstrate that you're capable and show the seller that you have a viable plan and are coachable.
It might be easier if you work in the business for some time so the seller can get to know you.
What kind of guarantee does seller get on repayment, because the bank has first lien right?
The seller has a lien on the business typically after the bank. So, they need to choose the right buyer and be helpful to them. If the buyer defaults, the seller has the option to take the business back and take over the bank note, usually. But not the obligation.
Very informative and to the point. Thanks for the content David. I'm from Australia and am looking for more information on where to source and how to best structure seller carryback small businesses to acquire and operate. Have you written a book for buyers by any chance? Would love to support. Cheers
You should sign up for Business Buyer Advantage online training. www.BusinessBuyerAdvantage.com
Thank you for this content. I appreciate your perspective. You made a lot of good points.
Glad it was helpful!
Super informative, I've seen so many fluffed youtube videos, and you actually give great insight.
I'm glad you found it useful.
This is absolute gold. Thank you so much.
You're very welcome!
Your content is awesome, David! All down to earth info, street smart know how, with no fluff. You clearly know this stuff, and your integrity and honesty is most admirable.
I appreciate that! thanks Richard.
Very informative in a short amount of time.
Glad you think so!
I guess great negotiators know how to wear various hats. Thanks for teaching us!
Thanks Sean.
This was a very good video with excellent content. Very nicely done, David. Thank you.
Glad you enjoyed it!
wow. thanks for the information. your videos have saved me years . I planned to buy a business this summer but after listening to you, its more prudent to wait a little longer and start with a solid footing. thanks again . God bless you with health and wealth.
This is my mission. To help people avoid bad deals and go into good deals with less risk. Thanks for being in the audience.
what were you about to do and what will you do now?
@@snorttroll4379 I’m paying up my personal debt, so I don’t have to work for personal and business debts.
Brilliant! Thank you for sharing!
You're welcome
Great information David! This is the stuff that you need to know to get deals done.
Glad it was helpful Jamie!
Hello David I have a gym in Dallas that I am selling I have a lot of people asking me if I offer seller financing. I am very uncomfortable about doing that and have no idea how to do that and secure that I get all my money.
Yes, it makes you want to ensure that you pick the right buyer and you might even want to coach and mentor them to be sure they succeed and you get all the money. These are just some of the reasons why buyers need to ask for it.
The difference in price you'll get by financing some of the deal vs not can be significant. Financing is the biggest hurdle for buyers. If you offer a fix, your buyer pool grows and the length of time it takes to find the right buyer shrinks.
This is why car dealers always have financing options an hand when people go car shopping. Check out my book 'How To Sell My Own Business' on Amazon to guide you on this journey.
Great video! Great explanation! Sir, you are a very good teacher!
Thank you kindly!
how does one get into a collaborative spirit with the sellers and not an adversarial? same with banks etc?
You have to humanize yourself to them. Show that you're a person that is a great choice to be their successor. Not a walking wallet there to make them rich.
@@DavidCBarnett best strategy to do bond financing in stead of bank financing? I dont like the fractional reserve stuff. thank you. What do you think of jeremy harbour's strategy of issuing a bond and giving the bonds to the sellers when they his clients buy businesses?
I guess for regular bonds it didnt make sense before you pass 100 million loans, but maybe that has changed? So my plan for now is to use sellers finance, maybe a little bit of equity from a partner and an expandable bond if that is a thing. that the bond buyers and consultants/brokers/investment banks understand that the loaned amount will increase as I go. which brings my mind to cross collateralisation. best to avoid somehow.
thought and word salad. I know. Could you adress each point briefly?
Hi David. Does a buyer have credit standing if necessary, even if he has already a structured deal on hand? Or can ordinary individuals with no track records and results qualify to do this even if he is new but knowledgeable and equipt on deal making?
Whatever the seller will agree to. Do you have a compelling story? See my video about a real 'no-money' deal here: ruclips.net/video/HLNmOvfok6A/видео.html
So, I always hit up businesses that offer seller financing but the broker automatically says no.
Nobody wants to do seller financing. Would you agree to lend a stranger money?
You need to build a relationship so the seller can make a decision about your chances of success.
Asking for seller financing before you've even met the seller is a big red flag for the selling team.
Hi David, thank you for the videos and content I love your channel. My question is what percentage of seller finance should a buyer be looking for on average? An example would be a Coffee kiosk that is for sell for $100K, gross revenue of $310K and cash flow of 55K?
It's whatever you negotiate, but I like to make the seller note relate in some way to the amount of goodwill in the deal. I have videos on this topic... ruclips.net/video/YhEs5CG3uGs/видео.html
Hi David, Thanks for publishing the seller note content. What would be the ideal split (%) between the bank and seller's note financing ?
Hi Ken, I answered this a few weeks ago, check here: ruclips.net/video/YhEs5CG3uGs/видео.html
@@DavidCBarnett Thanks!
Hey David. Subscribed to your channel. Thanks for this informative video. This is COMPLETELY new to me.v I wanted to purchase just a profitable already existing e-commerce business . How do I begin to engage in a conversation with the seller to find out if they will embrace seller financing? I have never owned a business before so I am completely new to this idea period your help would be greatly appreciated .
You first have to demonstrate that you're loan-worthy. So, you need to show that you have something significant to invest and that you're capable or at the very least, coachable. So, you need to get to know them.
@@DavidCBarnett Thank you David. When you mention that, does that mean that I need to show credit worthiness? I've never had a business so I have no business credit. Does that also mean that I need to have available cash Or some kind of money?
We sold our business a year ago. A portion of the purchase price is a note. He has ran our successful business, we had for almost 10 years, ran into the ground. Made lots of changes in the beginning and lost lots of customers. Now he wants out, says he wants us to negotiate a lower the note by half of what is still owed. Of we don't want to, do you think this is a mistake?
It's up to you to decide if you want to take a reduced payout or if you want to foreclose on him and take the business back. Whether or not there is a bank involved ahead of you in security would be the first thing I'd consider.
If the business is long gone can she take him to court to pay that money sooner or later?
Or if they really believe in the success of their business, and the ability of you to grow the business then an equity position as part of the seller financing would be the best deal for the seller
so does 100% seller finance mean the seller finances 100% of the deal? and what is owner finance?
Yes. Owner finance, seller finance, seller note, vendor take back, seller carry note, all mean the same things.
@@DavidCBarnett Thank you david, Ive been searching for an explanation for so long now!
@@DavidCBarnett what is the percentage of the do you have to give for a seller financing deal
Sir I recently contacted my accountant about seller financing on my personal home and he said it is a requirement by the IRS for me to charge the buyer the current rate the feds have set at the time of the real estate sale / settlement (which is currently 6% 😲) have you ever heard of such 🤨 Has there been a new law implemented lately 🤔
My understanding is that the minimum interest rules apply to 'non-arms-length' deals. Meaning if you buy/sell to a family member.
Can they change the business name. Does your name come off the business bank account? Ein still in my name?
Not sure I get the context of the question. A business can always change its name and would update this with the bank, in that case, tax numbers would remain. If you bought it and did this, you'd be doing a share purchase. Mostly though, you want to keep the name as this is what is recognized by the public.
Names can transfer in an asset purchase and sometimes change slightly. You may have noticed that a business can go from 'Dave's Plumbing LLC' to 'Dave's Plumbing (2023) LLC' This could happen because the business was sold.