Posted 4 months ago 7 Days to a Buyers Meeting If you ever get worried about whether your house will sell or not, just remember: it only takes one person! Today, we’re looking at a deal that was done—oddly enough—between two accountants! Our Associate who did this deal runs his own accounting business while doing terms deals on the side, and the seller was an accountant as well. This makes for an interesting situation because normally we’re used to dumbing down the numbers and making everything as simple as possible for the seller. But in this case, it was the exact opposite. When we heard our Associate was dealing with a fellow accountant we told him to let loose with all the numbers and details! Naturally, the seller appreciated that and the duo worked well together. Now let’s get into this deal and see how the 3 Paydays™ turned out. From text to call to contract The source of this deal was a text broadcast. Our Associate uses an automated system to text a large list of potential sellers to see if they’re interested in doing a rent town deal. If anyone responds, he gives them a call and takes it to the next steps. This is yet another example of how you can use automated systems to contact lots of leads and set it up so that you’re only talking to people who are already interested in what you’re doing. You should never be reaching out to cold leads manually—it’s a waste of your time! The house had been listed with a realtor for six months. Naturally, the seller wasn’t too happy about this and he was getting anxious to sell the house. He understood how rent to own deals work and was ready to get started—he just needed to cancel the realtor, which took about seven days. Once that was done, they drew up an agreement. A sandwich lease with a HELOC This deal was structured as a sandwich lease with a few small nuances. The seller had taken out a HELOC (home equity line of credit) on the property, meaning he had a revolving line of credit based on his equity in the home. The only real difference this makes for our Associate is that he’s not going to get the principal paydown he would get in a normal sandwich lease deal. But as you’ll see, that doesn’t impact his bottom line as much as you might think! There was also some negotiating on the purchase price and term length. Our Associate asked for a four year term, but the seller wanted something shorter. In the end, they settled on one of two situations. He could do a three year term at a purchase price of $300,000 or a four year term at a purchase price of $303,000. Basically, if it goes to four years, our Associate picks up another $3,000. For our calculations below, we’ll assume that it does go to four years. Either way, it’s a great price considering the house was originally put on the market for $330,000 and later dropped down to $317,00. The HELOC was locked in at $240,000, meaning he had $63,000 in equity on the home. As with all sandwich deals, instead of talking in terms of “purchase price” we simply told him that we’d pay off that $240,00 and give him the remaining $63,000 in cash. The 3 Paydays™ Payday #1 is always the down payment. This one ended up being a little over 10%, coming in at $35,000 for the full down payment. Payday #2 is the monthly spread. In this case, our Associate owed $1,018 to the seller each month for taxes, insurance, and interest. But he also has $2,495 coming in from the tenant buyer! That is a whopping $1,477 in profit per month, or $70,896 over the four year term. Payday #3 is the surplus on the home. Our Associate was able to sell the house for $349,900, which is a difference of $46,900 going right into his pocket. Again, there’s no principal paydown on this deal because of the HELOC—but if you’ve been doing the mental math in your head up to this point, you know the total is still massive! The total for the 3 Paydays™ comes out to $117,796! And there’s one more thing to point out on this deal… Not only did our Associate go from his first contact with the seller to a signed agreement within seven days… He also secured a buyer’s meeting within seven days of listing the property! It just goes to show that there is no better time to be doing deals in the terms business. Have you ever done a deal with a HELOC involved? How’d it go? I’d love to hear about it.