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This episode is a business coaching course that explains what a balloon payment is.

Results-Focused Training, Tools, and Workshops from Expert Business Coaches.

Featured Coaching Excerpt - Notes & Transcript, Part 1
  • Definition Magician: Balloon Payment: The final payment of the balance due on a partially amortized loan.
  • Lesson Nugget: A balloon payment is an oversized payment that is more than your typical monthly payment, and is the final amount due on a loan including both principal and interest.

real estate for business, an alternative to Lynda.com


-All right, we are here on Thrive15.com, an alternative to Lynda.com, with Michael "there is no real estate topic too obscure" Burer in sunny San Diego, where the-- I haven't been outside in like a decade or so, and so I can't really open my eyes. So bear with me. I can see you-- it just looks like I can't see you. But Michael, we're talking about balloon payment. I'm going to go ahead and read the definition. And then I would like to go ahead and have you provide an ample example, so that the average thriver can know what you're talking about here.

So balloon payment-- this is the final payment of the balance due on a partially amortized loan. The word amortize snuck up on us there. What does this mean? What's an ample example?

-So if you get a loan, it may have a repayment term of over 30 years. So you're going to pay back the principal or amount you borrowed over that 30-year period. But the loan term may be shorter. Maybe it's only 10 years. So at the end of that 10 years, you started with a million dollar loan. Maybe you paid back principle-- a couple hundred thousand-- now you owe $800,000.

When that loan comes due at the end of the 10 years, you have a balloon payment or a payment of all the outstanding principal. $800,000 is referred to as the balloon payment.

-Do you see a lot of times where people don't expect there to be a balloon payment? They go, uh-oh. They didn't plan. They go, uh-oh. You ever see a deal where you're trying to-- you're working with somebody. They're trying to close a deal, and they say, uh-oh. And they didn't plan for it?

-Hopefully, real estate investors know when they're signing a loan the term of the loan and what's outstanding, so it shouldn't come up as a surprise.

-Thrivers, if you're watching this, you cannot be surprised with a balloon payment.

-No surprise.

-I only mention this because I do know people who've been freaked out by this before. So this is--


-This is a deal where you got to be aware of this.

-Yep. Now Michael, I don't want the thrivers or you to feel like I have to write down on a piece of paper witty ways to explain how much I appreciate you. So this one is totally just off the top of my head. I appreciate you in the same way that red hats appreciate the sun blocking ability of Banana Boat SPF 75. Boom.


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