Seller carry gets treated as a financing detail, something bolted on after the real deal is struck. That ordering is backwards. Carry is deal structure, it moves price, speed, risk, and returns all at once, and the buyers who use it well negotiate it as part of the offer rather than requesting it as a favor afterward.
Start with why a seller would do it, because carry only exists where it serves both sides. A seller carrying paper spreads their gain across years instead of recognizing it at once, which their tax advisor may have opinions about. They earn a yield on the carried amount that frequently beats where the proceeds would otherwise sit. They can defend their asking price by financing the gap between what they want and what the market's debt supports. And they can close faster, because the slowest party in most closings is the institutional lender, and the seller just replaced a piece of that lender. Every one of these is a talking point in the negotiation, and a buyer who understands the seller's motives can shape terms around them.
The structural questions decide everything, and they deserve more attention than the headline rate gets. Position: carry almost always sits behind the senior loan, and the senior lender's appetite for junior debt behind them is a gating question to ask early, not at commitment. Payment shape: interest-only carry preserves cash flow during the exact years a value-add plan is spending money, while amortizing carry quietly competes with the renovation budget. Term and the balloon: a carry note maturing in year three plants a refinance event in the middle of your plan, and it needs to be underwritten as one. Then the quieter clauses that matter when things wobble: prepayment rights, what happens to the carry on a sale, and how the senior lender and the seller relate if the deal has a bad year.
Underwriting carry means putting it in the stack and letting the model tell the truth. It changes the equity check, the blended cost of the debt, the coverage picture, and the waterfall, and it adds a junior obligation with its own maturity to the deal's calendar. Modeled honestly, carry frequently turns a deal that did not pencil into one that does. Modeled as a footnote, it becomes the year-three surprise.
PropCalc™ treats seller carry as a first-class piece of the capital stack, alongside the senior and anything else in the deal, with the downstream math carried through coverage, cash flow, and the waterfall automatically. Which is the real point of this page: carry is not exotic and not a trick. It is a structure with a logic, and the operators who can model it in real time during a negotiation are the ones who get to use it.