Future discounting is a strategy that we use in real estate investing.
Let’s say that we have a sandwich lease option, where we’re leasing from a seller with an option to buy.
We have two more years on a lease and the option before it expires or needs to be extended.
And let’s say that our buyer is getting financing or wants to get financing soon, let’s say within 90 days.
We could ask the seller if he would consider a discount for a faster close, so perhaps if it was going to be a price of $200,000 in 2 years, we may ask for a discount of $11,000 to $189,000.
This is what we call Future discounting, some money today is worth more than money in the future.
