Deferred considerations - help needed

Sasha Williams · 03-01-2008, 10:26 PM

Hi All,

I am trying to get into a deal on a commercial property that my partner and I want to run a business from. It looks like it might be a bit beyond our reach at the moment as we probably don't have sufficient deposit.

I am wondering about the following approach and so would like to know if anyone knows if it would work.

If we are unable to negotiate the price down to what we can pay outright I am thinking of offering a deferred consideration (i.e. pay x% up front and the remaining % in say 12-18months). Does anyone have experience of doing this? How do you structure it legally/contractually?

If I was to get the vendor to agree to a deferred consideration do you think we would be able to use this in lieu of a deposit? What I mean by this is:

We agree to pay 80% now and 20% in 12 months time. I am assuming that on completion the sale would be agreed at the 100% (with the deferred consideration in place). If so could we then go for a mortgage for 80% of the total purchase cost and therefore not need to put in a deposit now as our deposit would effectively be the 20% we had agreed to pay in 12 months time?

Hope that makes sense, all thoughts/knowledge/experience gratefully received!

Sasha

Gerry Pridham · 03-01-2008, 11:03 PM

Sasha,

You can ask the vendor to be the second lender, put a charge on your deeds, and agree to pay him in any way acceptable to both parties. That could be rent at an attractive rate for him, interest and capital, or bullet capital after an agreed period. You won't find out what's best for both parties without talking directly with the vendor. It's no different than negotiating a residential purchase agreement (except in commercial, it may be easier since it's not the vendors home)

Sasha Williams · 04-01-2008, 12:23 PM

Thanks for that, really interesting idea, will give it some more thought!

Robert Clark · 04-01-2008, 06:53 PM

Hi Sasha

Congratulations on joining the forum, it’s a really great place to be.

There’s loads of good advice to be found here, as well as thousands of like minded property professionals who’s expertise covers every aspect of the property business.

My own area of interest is Lead Generation, Ready Made Deals, Marketing and Advertising.

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So if you would like any help or advice in this area, then don’t hesitate to get in touch. I would be delighted to try and help you if I can.

Best of luck!

Regards

Robert

Rapid Property Buyers
01825 700165

www.RapidPropertyBuyers.biz/associates.html

Brian Adgey · 04-01-2008, 08:35 PM

Hi Sasha

Welcome to the forum.

It's a very knowledgeable forum all willing to help when they can.
Go through all the forum, reading all the posts, topics.
Any Q's hit the search section at the top and type it in or just ask.

Ronald Horsfall · 04-01-2008, 09:04 PM

Hello Sasha

And a big welcome to the Property Tycoons Forum. On here you will find like minded people who will be happy to reply to your posts and give you all the help and advice that you are looking for. We are a very friendly and helpful bunch and are very good at sharing information, advice and experiences.

As well as owning and managing a property portfolio, in both the UK and Spain, I generate quality Property Leads, Done Deals, and Ready Made Packaged Deals throughout the UK and including sunny Spain.

You never know I may have exactly what you are looking for.

Wishing you every success in your property business.

Ron Horsfall
0113 3226262

Parmdeep Vadesha · 05-01-2008, 03:00 AM

Hi Sasha,

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I wish you the very best with your property business and continued success.

Parmdeep Vadesha · 05-01-2008, 03:17 PM

Sasha,

I know a lawyer who acted for someone who did just that on a big hotel deal (£20m+). You are basically getting the deposit loaned to you from the seller and have an agreement in place to repay the loan in a year. The bank was happy to do it in his case and loaned the money based on the 100% of purchase price. Drop me a PM and I'll pass on details.

Juswant Rai · 09-01-2008, 08:12 AM

Hi Sasha

to the forums

...

.

Sasha Williams · 09-01-2008, 09:08 AM

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