In this YouTube conversation, Chris Prefontaine, Avi, and a third participant (Speaker C) dissect the financial details and negotiation strategy for an assign‑out real‑estate transaction. They first compile the core deal metrics: a rent comparable of $3,500 per month, the seller’s mortgage payment of roughly $2,100, about $40,000 of seller equity, and annual property taxes of $7,800 (≈ $600/month). The seller is reluctant to enter an Assignment of Ownership (AO) and prefers to avoid being a landlord. Avi reports the seller’s interest in a hybrid arrangement—potentially a lease‑purchase, owner‑financing, or sub‑to—while expressing uncertainty about the feasibility of a 5% interest component. Chris proposes structuring a modest extra lease payment of about $400 (instead of interest income) to stay within the monthly cash‑flow ceiling, suggesting a spread that leaves $2,500 for the lease and $400 as a supplemental payment. The team discusses the importance of keeping the payment classification as lease income to avoid interest reporting, and they consider using the seller’s equity as a cushion for the spread. Taxes in New Jersey are highlighted as a factor that could affect buyer down‑payment expectations. The participants also touch on contingency planning—what if the seller won’t sell conventionally—and the need for a fluid conversation that can adjust rent assumptions. Finally, they coordinate next steps: Chris will call the seller (potentially with Avi present) to present the $400‑ish lease payment proposal and gauge openness to a hybrid owner‑financing/sub‑to structure.
Chapters
Hey, there's only so much we can get monthly, so there's not going to be that interest or extra lease payment. So this is the appointment Avi went on, then didn't get some stuff. So we told him, we sent him back yesterday. So what did you get so far? Because I circled up top, I still don't have comps. What did you get? You got the mortgage payment.
Okay. I didn't write in comps. I apologize. I have rent comp is $3,500.
Okay.
Um, and his asking price seems to be on target.
Okay.
Uh, I had to get the mortgage, the monthly payment, which he gave me an approximate $2,100.
Okay, I got— I see. Yep.
Okay. Uh, that's what I need to fill in. Is that— is that PITI? Yes.
Okay. And this is the guy that wants money on the $400 and some odd grand he's got in equity for whatever it is?
Correct, correct. About worth $40,000.
Does he want to do an AO?
Um, I didn't speak to him about AO, but I do— in my conversations with him, he was really— he talked a lot about renting and how terrible it is, about how terrible it is to be a landlord.
Okay, so he's screaming that he doesn't want you to have him be in an AO.
Yeah.
Okay. So what did you talk to him about? Refresh us.
This was— we spoke about a hybrid of, well, I mean, a lease purchase with— and he asked about interest on his equity.
Okay. And did you have the conversation that Rustin and I told you about, hey, there's only so much we can get monthly, so there's not going to be that Interest, you know, or actual lease payment, right?
So I didn't say how much. I did, I did say, yeah, the numbers, I'm not sure they're going to work out because I said you have so much equity there that with the rent comps, I don't know that we could, um, I don't know what we can do. But I said that my partner would call, that you've got a, a good, you know, maybe you can figure together, can figure out some other options or something else. I left it open because I didn't know which direction you'd want to go in, but I did, I did paint that picture that doing straight up more, um, interest is not gonna— at 5%, it's definitely not gonna work.
No, it's $1,800. I think we figured.
Yeah, yeah. And he did ask me what about what rent comps we were looking at. When I told him $3,500, he was right on the same page. He said, that's exactly what I was thinking as well in terms of rent comps.
Okay, so then my conversation next would be— and I can call this guy Thursday because you set it up to somebody who's going to call him— but my conversation would be, if we're on the same page for rent comps, I want to hear Rusty and Rick on this. Um, then my conversation would be, I need to, I need to work in a spread. If I take the grand I need for a spread and you're $21,000, there's only a little bit left, that would be an actual lease payment. You wouldn't have to claim it as interest income.
Well, I'm sorry, repeat that. You said—
Well, the difference, if you're gonna— it's not even half. It's if you're gonna— if you agree on $3,500, and this is contingent upon you getting $3,500, it has to be. And he has to be open to you coming back and going, hey, I didn't get it, and we gotta lower it. If he's open to that, like, fluid conversation, then you need a grand, let's just say, and to start the conversation off. So now you're down to $2,500. There's $400 left for him as an extra lease payment. Okay.
Hypothetically.
Taxes are high in New Jersey, so, uh, yeah, you, you'll give yourself a good chance of getting a buyer with a good down payment. Yeah, especially in this market. The $35,000 is probably totally realistic. Um, what is the taxes, you know?
Uh, about $7,800, something like that.
So $600 a month, let's just call it, in that payment. Super good rate. All right. So, Avi, I'm going to call him with the— unless Rick and Rusty want to tweak this, I'm going to call him with the thought of there might be perhaps maybe $400-ish in this for a lease payment. You won't be claiming interest income. It's a lease payment. And is he open to doing that?
Okay.
That's all. That's what's left. If he doesn't sell this conventionally, what is he going to do? Did you ask him that?
Um, trying to remember if I asked him.
That's probably the most important thing on all these guys. Okay, I get like that's your plan, but what if it doesn't work?
Yeah, I think he was one of the confident that's gonna sell guys.
Yeah, they all are. No, it'll work. It'll work. Yeah. Okay, Rick or Rusty, any other thoughts? I was gonna say he's anti-renter, but did you talk to him about, well, Our, our buyers aren't renters, they're buyers. They're not gonna—
Yes. Yeah, you know, I totally calmed him down about that. This was on my first phone call, right? And explained the whole— explained how the people we work with are different. So that opened them up to allowing the appointment.
Okay.
Yeah, one thing I did, Chris, with Kevin Mahoney at the Sub2Owner Finance was they were giving the seller an additional lease payment on top of the mortgage payment Like this? Yeah, similar to this. And so what I told him to do is just tell the seller that amortizing that, make it like an interest payment.
But so how are you going to do that with a lease, though?
Well, yeah, not on a lease, but on a sub-to owner finance.
If you did.
Yeah.
Yeah, you could do it against his equity. Yeah. Avi, is this guy open to a hybrid owner financing sub-to, you think, or is he thinking lease purchase? You said the right thing.
Okay. I didn't ask.
So, so one issue is the $400-ish, and the second issue is, is it interest, to Rick's point, or is it a lease?
Right.
Yeah. Um, okay. Anything else that we're missing to help Bobby? Nope. You guys good? Okay.
Tell him you're gonna call him tomorrow. Is that—
Yeah, sometime tomorrow. I have openings, so I will call him tomorrow.
Okay, so do you, do you want— are you setting this up to call with me, or are you just gonna call him direct?
If you're around. I just don't want to hard schedule it.
