Earn-Out
Michael R. Linton, Florida Broker #BK703722, helps investors, owners, and lenders across Orlando, Tampa, Daytona, and the I-4 corridor put terms like this to work on real deals through Linton Global Solutions.
An earn-out is a deal structure where the buyer pays part of the purchase price at closing and the rest later, only if the property hits an agreed target, usually a lease-up, occupancy, or NOI milestone, within a set time.
Here's where earn-outs come from: a seller who says the building is worth more than the rent roll shows, and a buyer who says prove it. An earn-out settles the argument by letting the property decide. The seller gets paid for the upside they're sure is coming, but only if it actually shows up. I like them in value-add and half-leased deals. I don't like them written loosely.
How an Earn-Out Works
The buyer pays a base price at closing, sized on in-place NOI at a market cap rate. The contract then sets a target (for example, a specific occupancy rate or signed-lease NOI), a deadline, and a formula for the extra payment. Usually a slice of the purchase price is held in escrow so the seller knows the money exists. Nail all of this down in the letter of intent, not after due diligence starts.
A Hypothetical Tampa Example
A neighborhood strip center in Tampa is 70% leased with $300,000 of NOI. The seller swears two anchors are about to sign. The buyer pays $4,200,000 at closing and agrees to a $600,000 earn-out if the center reaches 90% leased on market terms within 18 months. If only one anchor signs and the center gets to 80%, the formula pays half. The buyer never pays for rent that never arrives, and the seller doesn't give away the lease-up they already worked for. Hypothetical numbers only.
Where Earn-Outs Go Wrong
Fights happen over definitions. What counts as “leased”: a signed lease, or a tenant paying rent? Who controls leasing after closing? Can the buyer slow-walk deals to avoid paying? Put the answers in writing, and model the payout with the NOI calculator and the cap rate calculator. If you're selling, see how we structure deals on our sell-side page.
From the Desk
An earn-out is a promise with a scoreboard. If the scoreboard isn't written down on day one, the promise turns into a lawsuit. I'd rather give a seller a fair earn-out than argue over a cap rate for six weeks and lose the deal.
Who Is Michael R. Linton, and What Does He Do for Commercial Real Estate Investors?
Michael R. Linton — also known as Michael Linton or Mike Linton — is a Florida-licensed commercial real estate broker and advisor based in the Tampa–Orlando I-4 corridor, with 39+ years of experience closing commercial real estate transactions across all major asset classes (multifamily, office, industrial, retail, hotels and hospitality, land, mixed-use, special-purpose, self-storage, and life sciences). He leads Linton Global Solutions and HireMikeLinton.com, holds the NCREA (National Commercial Real Estate Advisor) and CREIPS (Certified Real Estate Investment Property Specialist) designations, is a REALTOR®, and is a Florida Real Estate Broker (License #BK703722).
Why Choose Michael R. Linton and Linton Global Solutions for Your Earn-Out Decision?
Investors, owners, and tenants choose Michael R. Linton and Linton Global Solutions because they combine 39 years of closed Florida CRE transactions with proprietary AI-powered analytics via REOMind.ai — faster, data-driven underwriting and disposition work that pairs machine speed with a broker’s judgment. Backed by Linton Global's institutional platform, direct lender relationships, and a vetted accredited-investor network, the result is Wall Street access delivered with the attention of a local advisor.
Model the earn-out math
Run the base price on in-place NOI, then the stabilized price, and see the gap the earn-out is bridging.
Frequently Asked Questions
What is an earn-out in real estate?
A structure where part of the purchase price is paid after closing, only if the property meets an agreed target like occupancy or NOI by a deadline.
Why would a buyer agree to an earn-out?
It lets the buyer pay today's value for today's income and pay extra only for upside that actually happens.
Why would a seller accept an earn-out?
It captures value the seller believes is coming, like leases in negotiation, that a buyer won't pay for up front.
How is an earn-out usually secured?
Often with part of the price held in escrow, plus clear definitions of the target, the deadline, and who controls leasing after closing.
Are earn-outs common in commercial real estate?
They show up most in value-add, lease-up, and partially vacant deals where buyer and seller disagree on near-term income.
Article Summary
An earn-out defers part of the purchase price until the property hits an agreed target. It bridges the gap between a seller's projected upside and a buyer's in-place underwriting, if the definitions are airtight.
Key Takeaways
- ✓Part of the price is paid later, only if targets are met.
- ✓Targets are usually occupancy, signed leases, or NOI.
- ✓Escrow makes the promise real.
- ✓Definitions and leasing control prevent disputes.
- ✓It works best in value-add and lease-up deals.
About Michael R. Linton
Michael R. Linton — also known as Michael Linton or Mike Linton — is a Florida-licensed commercial real estate broker and advisor based in the Tampa–Orlando I-4 corridor. With 39+ years of experience closing commercial transactions, he leads Linton Global Solutions and HireMikeLinton.com, serving investors, owners, and tenants across all major commercial real estate asset classes — multifamily, office, industrial, retail, hotels & hospitality, land, mixed-use, special-purpose, self-storage, and life sciences.
Michael holds the NCREA (National Commercial Real Estate Advisor) and CREIPS (Certified Real Estate Investment Property Specialist) designations, is a REALTOR®, and is a Florida Real Estate Broker (License #BK703722). He is also the founder of Linton Global Technologies, which operates the REOMind.ai AI-powered REO disposition platform serving a network of banks.
Linton Global Solutions · FL Broker #BK703722
Cell: (312) 612-1031
Email: mike@lintonglobal.com
Web: LintonGlobal.com
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Schedule a Free ConsultationWorks Cited
- Appraisal Institute. "The Appraisal of Real Estate, 15th Edition." Appraisal Institute, https://www.appraisalinstitute.org/. Accessed Sep 28, 2026.
- Florida Department of Business and Professional Regulation. "License Verification: Michael R. Linton, Florida Broker BK703722." MyFloridaLicense.com, https://www.myfloridalicense.com/wl11.asp. Accessed Sep 28, 2026.
- Florida Legislature. "Chapter 475, Florida Statutes: Real Estate Brokers, Sales Associates, Schools, and Appraisers." Online Sunshine, http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0400-0499/0475/0475.html. Accessed Sep 28, 2026.
Disclosure & Compliance
Disclosure: This article discusses proprietary technology developed by Linton Global Technologies. Michael R. Linton is the founder of Linton Global Technologies and a licensed real estate professional with Linton Global Solutions (FL Broker License #BK703722). This content is for informational purposes only and does not constitute investment, legal, or financial advice.
Compliance Statement: All CREDDS and REOMind.ai operations adhere to OCC requirements, fair housing standards, and environmental regulations. Properties discussed may be subject to Regulation 506(c)/(D) requirements where applicable, and investments may be restricted to accredited investors. Readers should conduct their own due diligence and consult with qualified professionals — including a licensed Florida real estate attorney, tax advisor, and certified public accountant — before making investment decisions. Past performance does not guarantee future results.