2nd Contract for Deed – Bluffdale, Utah (2.375% Fixed Rate, A-Class Townhome)

[Nicholas Stevenson]

I’ve been building a portfolio through creative financing and just closed on my second Contract for Deed deal. This one is a newer build townhome in an A-class Bluffdale neighborhood — great location, newer construction, and easy to manage long term.

Property Overview
Property Type: Townhome – newer build, A-class neighborhood
Purchase Price: $480,000 (market value)
Down Payment: $70,000
Underlying Loan Balance: about $410,000
Interest Rate: 2.375% fixed through December 2051
Loan Start: December 2021
Monthly P&I: $1,755
Taxes/Insurance (Escrow): $470
Total PITI: $2,225 per month
Rented: $2,495 per month
Serviced through Escrow Specialists
Protection: Recorded Notice of Interest on title

Why I Bought It

This isn’t a big cash-flow play — it likely breaks even after reserves — but the rate was too good to pass up. I bought it at roughly market value for the long-term debt and strong area fundamentals.

At this stage of the amortization schedule, the loan is paying down around $11.5K in principal each year. Assuming just 3% annual appreciation adds another $14–15K, that’s roughly $26K in annual equity growth. On only $70K invested, that’s about a 37% return on equity before even considering depreciation.

In other words, even without big monthly spread, the leverage efficiency and debt structure make this a solid long-term wealth builder I believe, please feel free to correct me if I'm wrong. I want to know if my thought process is right or wrong.

Deal Summary

• Purchase price: $480K
• Down payment: $70K
• Underlying loan: ~$410K at 2.375%
• PITI: $2,225/mo
• Market rent: ~$2,495/mo
• No balloon or prepayment penalty

Big Picture and Questions

This is my second creative-finance property using a Contract for Deed. My focus right now is trying to figure out how to scale, I want to hit a 10 million dollar portfolio of cheap debt. 

For those who have scaled using CFDs or subject-to deals:

• Are you partnering with others to grow faster?

• How are you structuring profit or equity splits when bringing in capital partners?

• Do people even want to be apart of these deals?

• Any Utah investors here successfully refinanced or assigned CFDs later down the line?

Would love to connect with others building creative-financed portfolios in Utah County and along the Wasatch Front.

— Nicholas Stevenson

[Chris Seveney]

Quote from @Ethan Whaley:

Wish I had examples to share. I like the terms. And rent should continue to increase. How confident are you that it will appreciate 3%? I've heard townhomes don't appreciate nearly as much as SFH.

Have you added vacancy and repair to your monthly expense?

I agree. Townhomes will hit a "max" value just like condos do. What I wonder is if they took capex into account and increasing HOA fees as well. I would not calculate that as a ROE as you are not seeing that money until the deal closes. The interest you can book and that is 15% based on the investment of paydown which is good, but if you also have vacancy etc and turnover costs, my guess is that would eat into 30%+ of the Principal paydown. Still not "bad" but I think 37% is the rosiest of rosey pictures which most people never achieve.