Seller Financing In Commercial Real Estate & NY Tourism

The other day, I was reviewing my piece on luxury home building in Boston and how it benefits the local tourism industry, as recommended by a friend. I wanted to be sure that I have not left any loose ends in whatever I have written.

Now, she works in New York, and she has asked me to write about how commercial real estate supports the tourism industry in the city.

While doing my research, I got into a rather fascinating topic. I got to know David, the Vice President of Business Development of a “a sign now pay later service for commercial real estate investors and developers.”

Now, he introduced me to seller financing in commercial real estate, which many buyers are choosing to avoid the complexities of traditional money lending. Further, the demand for commercial real estate properties is going up with the growing tourism industry in New York.

In this context, you must know that New York City welcomed around 64 million visitors in 2024. The numbers are even expected to go higher in 2025.

“The two rate cuts that happened in H2 2024 were not enough to lift the real estate market. Unfortunately, that time of monetary policy easing didn’t last, as economic uncertainty led the Fed to pause rate cuts. 

This pause is likely to continue for the foreseeable future, which means traditional funding methods may remain inaccessible for longer, and options like seller financing, where the seller offers a loan to cover the purchase price, will become more popular.”

- David, Vice President, Business Development, Duck Fund

So, what are the advantages of seller financing to you as an investor in commercial real estate? How is the commercial real estate industry supporting tourism growth?

Let’s find out in this Dream and Travel Guide.

How Does Seller Financing In Commercial Real Estate Help Investors?

Jack wants to buy a commercial property from Samuel. Now, Jack does not want to go to the bank.

Samuel assures Jack that he (the seller) is willing to give the amount as a loan to Jack. Jack has to repay the loan with interest through monthly payments.

Here, the seller or the owner of the property works like a mortgage broker. He does the financing for the buyer and, in return, earns interest every month.

This is the scenario of seller financing.

Most beneficial for buyers of lower-income groups to build affordable housing, seller financing has become popular in commercial real estate investment now.

Here’s how!

1. Easier Accessibility

Sellers do not generally impose the same stringent conditions that banks do (usually regulatory constraints), which makes seller financing more accessible.

Even buyers with not-so-good credit scores can get a seller financing deal, though this can come at a higher interest rate.

With traditional financing becoming harder to access, seller financing can be a lifesaver for many investors who would otherwise sit out the market.

2. Flexible Terms

The absence of regulatory constraints also makes seller financing more flexible. Sellers and buyers can negotiate interest rates, repayment periods, repayment schedules, and down payments.

This flexibility is important for buyers since a deal will not meet you in the same financial situation.

There are times when you have sufficient cash to pay a 20% down payment, for example, but some deals will show up when you can hardly pay 10%.

With seller financing, you can settle for a lower down payment but higher interest payment (or shorter repayment period) instead of being denied access to funding, as some traditional lenders would.

3. Lower Closing Costs

Origination fees, bank fees, and appraisal costs are some closing costs that are non-negotiable with traditional lending. These fees do not apply to seller financing, reducing the total closing costs.

Though seller financing may be costlier in terms of interest rate, it can be far cheaper in terms of upfront costs.

4. Faster Closing

Even when CRE investors can access traditional lending, the process often becomes lengthy due to the onerous requirements imposed.

In contrast, seller financing can be more quickly accessed as its requirements are far less burdensome.

This can be a huge advantage in competitive markets where quick access to funds is a competitive advantage.

In these markets, investors who depend on seller financing can complete deals while their counterparts are still sorting out documents at the bank.

However, equity and debt financing with services like Duckfund is even faster than seller financing.

With Duckfund, you can get up to $100 million in equity financing and $500 million in debt financing for all types of CRE properties.

You can also secure earnest money deposit (EMD) financing with Duckfund. EMD is mandatory before you can even negotiate for the property or secure seller financing down the line. Thus, securing it should be a priority.

With Duckfund, you can complete an application for EMD in two minutes. Further, you will get the cash transferred to an escrow within 48 hours.

“Is earnest money refundable?” many have asked. Yes, it is. One of the advantages of the system used by Duckfund is that you can get back the EMD from the escrow when the deal falls through due to the seller’s fault or for any reason already included as a contingency in the deal.

How Is The Growing Commercial Real Estate Sector Helping Tourism Growth In New York?

Now, building a connection between seller financing in commercial real estate and tourism in New York was not easy.

Thanks to David, I got a clear idea of how many buyers with the intention of transforming the commercial property into a hotel or restaurant are choosing seller financing these days.

Commercial real estate and the tourism industry in New York depend on each other. For example, with commercial real estate properties being used as personalized and luxury accommodations, tourists’ experience improves.

Also, commercial real estate properties, being used as hotels and resorts, constitute the fundamentals of tourism in a place.

Further, commercial properties are often used as cafes and restaurants. These places are important for culinary tourism and overall leisure activities locally.

Moreover, when a tourism boom occurs in a place, the standard of living improves. Tourism boost also brings positive economic impacts and infrastructure development. This positively impacts the commercial real estate industry as the property price goes up in such scenarios.