$760,000 in 17 Months. Is it Possible?

Here's how one of our Associates reached this impressive milestone in his first 17 months in the terms niche.

We talk a lot about how consistent time and effort (along with the right coaching) will translate to consistent deals over time. Those deals, thanks to our 3 Payday™ system, will then translate to sustained wealth.

Don't believe us? Here's a great example of one of our Associates who has now cleared $760,000 in 17 months since starting with our program. In those 17 months, he has closed 10 deals with an average of $76,000 per deal.

And don't forget, each of those deals contain 3 Paydays ™—a lump sum at the beginning, monthly payments throughout the term, and another lump sum at the end. In this post, we're going to look at his ninth deal, which helped him hit the $760k mark.

Finding a buyer too quickly?

Our Associate found this deal through an expired listing, and after speaking with the seller found out that they had purchased a home in another country with the intention of moving there full time and selling their current home.

They hadn't been able to sell their home through traditional means, and they liked the option that our Associate was presenting them—a quick way out that would guarantee they're paid the full equity they deserve.

But something happened that threw them for a bit of a loop. Our Associate found a buyer so quickly, that the deal almost fell apart. They weren't ready to move into their new home yet, so they would have to find alternate accommodations in the meantime.

Ultimately, finding a buyer too quickly is a good problem to have! Our Associate helped them work through this situation, reminding them that they had signed a contract which stipulated the tenant buyer was legally obligated to the home within 30 days. Finding intermediate accommodations during a move isn't uncommon, and they were able to make this work so the tenant buyer could move in at the predetermined time.

Keep in mind that we are right alongside our Associates in the trenches for exactly these types of curveballs. A $73,000+ deal all 3 Paydays™ could have gone away without that type of team work.

All 3 Paydays™

This deal ended up being a sandwich lease purchase with a 48 month term for the seller, and a 30 month term for the tenant buyer. If you're wondering why there are two terms, that is a tactic that we often use to give tenant buyers a little more wiggle room and give us wiggle room with our seller.

The 48 month term means we are legally obligated to pay off the seller's mortgage and give them their remaining equity within 48 months. But the 30 month term for the tenant buyer means they should be ready to purchase the home within 30 months. If they're able to do it in 30 months, great! The seller simply gets cashed out early and the deal is over.

But, if something comes up, this extra 18 month window gives our Associate time to pivot. If the tenant buyer isn't quite ready to purchase at 30 months, he can extend the term for them. Or if the tenant buyer leaves for some reason, he has some extra time to find another one and get them in the home. (The chances of this are slim due to the extensive vetting process and the fact that the tenant buyer puts down a deposit upon entering into the deal, but it can still happen.) We could also just sell it off conventionally if the buyer didn’t close, and that happens approximately 2-5% of the time.

As this was a sandwich lease purchase, our Associate clarified the underlying debt on the property and negotiated with the seller to determine how much equity they would be receiving at the end of the term. There was $269,457 left on the mortgage and the seller wanted $30,543 in equity—meaning an effective "purchase price" of $301,000. Our Associate then agreed to a sale price of $339,900 with the tenant buyer.

Payday #1, the down payment, consisted of three payments plus the first month's rent. The first payment was $15,000, with two more payments of $5,000 each during tax time in 2021 and 2022. The first month's rent of $2,355 was also added on here. This is something we write into virtually all of our contracts, which state that we will not start making payments until 30 days into the term—meaning we capture the first month's rent.

Payday #2 is the monthly spread, which came out to $585 per month. That's calculated by taking the rent from the tenant buyer ($2,355) and subtracting the PITI payment our investor is making ($1,770). Over 30 months, that's $20,080. If the deal extends to the full 48 months, that number jumps to $28,080.

Payday #3 is the markup on the home plus the principal paydown that has accrued over the length of the term. Since our Associate was able to sell the home to the tenant buyer for $339,900, the markup was $38,900. And out of those monthly payments, $420 was going toward paying down the principal—which comes out to $12,600.

When you remove Payday #1, the total for Payday #3 comes out to $26,500—or $34,060 if the tenant buyer requires the full 48 months.

Add up All 3 Paydays™ and our Associate is looking at $73,935 if the deal goes for 30 months or $89,495 if the deal extends to the full 48. Across his 9 deals so far, his average for All 3 Paydays™ comes out to right around $76,000—shockingly close to our average of $75,000!

And what did he do to achieve this? It was nothing more than time, effort, commitment, and having the right mentor to guide him through his first couple of deals. Now, just a year and a half into his life as a real estate investor, he's a professional.

What's your average deal price, and how does it compare to our Associate's average of $76,000? Leave a comment below.