Financing the Acquisition of a Property Management Company

Financing the Acquisition of a Property Management CompanyShow more

Hey Beau, how would I go about financing the purchase of a property management company? I am a real estate broker and have experience managing properties. My colleague is selling her property management company that currently has about 1,000 doors. She’s willing to do a partial seller-carryback.

What would you do, Beau?

Thanks,
Tina

Timestamps
[00:34] How to finance the acquisition of a property management company
[00:43] What’s the best way to leverage?
[01:29] The most advantageous way to structure a deal assuming that the seller wants to carry back a bit
[02:00] On a business acquisition, you need 10% equity injection
[03:18] Book a call at http://bookwithbeau.com/

In this video, a real estate broker named Tina asks Beau how she can finance the purchase of a property management company that her colleague is selling.

The company currently manages around a thousand properties, and the colleague is willing to do a partial seller carry back. Beau suggests that Tina should consider an SBA 7a loan as there is no real estate involved in the deal.

He recommends structuring the deal with an 85% bank loan, a 10% seller carry back, and 5% standby equity. The 5% standby equity means that the seller will leave 5% equity in the deal, which will reduce Tina's equity injection to 5%.

The standby note can accrue interest, but it cannot be paid until ten years pass or until the loan is refinanced. Beau suggests that Tina can get the money for the purchase from gifted funds, an investor, or her own funds.

If you have a deal like this in the works, why don't you book a call with Beau -- https://investorfinancingpodcast.com/rumble

💥 Thanks for watching 💥
#propertymanagement #SBA7a #businessacquisition