In this coaching session Chris Prefontaine, Rusty, and John dissect a potential owner‑financed acquisition of a property that was originally a single‑family home but was legally converted into a two‑family house. They walk through the seller’s proposed terms (5% interest, $3,000 monthly payment on a $420k price), calculate the actual amortized payment ($2,254), and flag inconsistencies. They verify the seller’s claim of no existing mortgage using PropStream, discuss the reliability of online data, and decide to directly confirm with the seller. The team reviews the tenant situation: a long‑term month‑to‑month tenant upstairs and a first‑floor tenant currently in eviction, noting the impact on cash flow and exit strategy. They examine the property’s layout (5‑bed/1.5‑bath first floor, 2‑bed/1‑bath second floor), legal egress, and potential marketing angles (selling the bottom unit alone or the whole property). They compare comps (around $400k–$420k) and discuss how to present them to the seller, suggesting a non‑confrontational, data‑driven conversation. The discussion also covers term structuring (principal‑only first year, longer amortization), tax considerations, and the need to factor maintenance and eviction costs into net cash flow. Throughout, Chris plugs the Smart Real Estate Coach platform for further resources.
Chapters
When you're talking to this guy, he says, "I'm getting this much right," but you're dealing with maintenance. You deal with now an eviction that's going to cost a few grand, and you're dealing with, and you got to pay taxes. He's not netting that much. All right.
So we got asking four twenty, rent cost fifteen. Has a home in Vermont already. Wants to sell this one. Does he need to sell this? Vermont, or he's already there?
He's already there.
Buyers couldn't find financing. Perfect. Owner financing. Oh, this is a 1. Okay. Yeah, you discussed it before. Tenant on the second floor.
First floor.
But this is single, right, Rusty and John?
No. Well, I mean, So it, it basically was a single-family home. And he basically, he converted it to a 2.
Legally or just, he just did it?
Yeah, legally. He bought the house all run down. He did, you know, I think it was, what, 7 years ago.
And as long as the town shows it, that's what I meant as a 2. Yeah, yeah, yeah, yeah.
All right. So he already told you his terms. Which is weird because he's asking 5% interest and a $3,000 monthly. So does that even calculate?
Well, that's kind of what I wanted to, to go over. And there's a couple other things too. PropStream is showing that he's got a mortgage on this and he claims that he doesn't.
Just ask him.
Well, I did and he said no. But like I say, PropStream goes against that. Should I trust PropStream at all?
I mean, I always say Judy does this all the time and she checks all the online stuff. It's just freaking ask them. And because you already did, I'd say, hey, some of the online shit's outdated. It just says you still have it. So you got a release. I just want to make sure I heard you right. You have a mortgage. Like, just do it lightly.
Okay. Okay.
So I mean, it's not a red flag, but I just— I put in 5% at $420,000 and it's a $2,254 payment, not a $3,000. So those are conflicting. I'm not sure what you think, Chris.
I agree.
I want— we want to be able to— we want to be able to do $3,000 anyway. We're not going to be able to sell it on the back end at $3,000. So, right, we need to find out exactly what's like What does he want? He wants 5% or— I mean, we'll give him 5% for sure.
And amortized over 30, Rusty, you're saying it's 22 and change?
Yeah. Yeah.
22. Okay. So what's the exit here, though? We getting rid of tenants? Just bring me up to date.
Well, the upstairs tenant is month to month, and he says they're good paying. He's had them for 5+ years. And so I could inherit them or not. And then he's got a person on the first floor renting a room that he's in the eviction process right now.
Yeah, I was going to say before you said eviction, make sure they're out. And then is this house like— can this be a single family or no? Like, what's the neighborhood like?
Yeah, I mean, it could.
What's bigger, the first floor or the second floor? Because you inherit tenants. If you inherit the tenants, then you're going to sell the first floor. Right.
So what's your concept of the first floor?
First floor is definitely bigger.
Okay.
Can we see this house? Can you just call up Zillow? Yeah.
429.
I just want to see what— So, John, you haven't talked about anything else than what we just said, right?
Really? I mean, he asked, you know, what would I do with the house and He was— I just skimmed very lightly over the buyer, buyer side, and he would— that's one of the things that really intrigued him. He's like, I really like that model. You're helping somebody else out. Yeah, that's kind of what I feel sold him on the owner finance.
A lot of sellers.
Yep.
Okay, so the second floor does have a second entrance and all that good stuff, it looks like.
Yeah, there's an egress around out back. Yeah, very good.
So it's a great in-law setup, right? This looks like our Auburn, Massachusetts house that we did. It had the exact same thing on the left back.
Okay.
I'm just making sure I got my head wrapped around it, Rusty. That's why. Mm-hmm. So you're Your comps are coming in up to $420,000. Does he know that? I'm just thinking of all avenues here for you.
Well, you know, the comps were a little bit nicer houses that were coming in up around $400,000.
Okay. So does he know that? Did you share that?
I didn't yet. No, I hadn't done the comps before I went out. I wanted to see the house, see the condition and all that kind of stuff. And like I started saying, he bought the house 7 years ago, all run down, and he did Okay on the upgrades, but it's not like super nice, you know, if you see it up close.
Okay. I think then you need next conversation, right, Rusty?
Yeah, good. Yeah, of course. And we would tier it. We would try to get principal only first year like Chris always does so he can buy down that purchase price. We need to— you definitely need to show them like, here are my comps. Where did you— did you ask him where did he arrive at the $420,000 number?
Well, yeah, he— first of all, he did his own comps. And then there's some personal inflection in that price, you know, like, I put a lot of time and work into this house. So, you know.
So in the conversation, John, Like things like that. Again, not confrontational, but very conversational. Say, no, I get it. But you realize when an appraiser goes and looks at this for the conventional buyer, they don't like— they don't care about any of that. All they care about is what they found. And if you found higher, I just haven't found it. I'm on your team here.
Right.
That's where I would go next with that. And then like Rusty said, hone in on the terms, whether you're doing that with one of us or just kind of do one more prelim call, it's up to you. But that— I think we got to hone in on the terms a little bit. Okay.
Yeah.
You're going to inherit. I would try to get a longer term, obviously. Obviously, the longer the term, price really doesn't matter. Right. So, you know, we can do— you know, we can go that way as well.
Why did he talk term?
And he said, yeah, we had 4 years.
Yeah.
4 years.
Okay. Yeah, I agree, Rusty. If I'm taking— you're going to get the bottom tenant out. If I'm taking the top tenant out over, I need an extra year or whatever, whatever you want to try. Okay. Empty, I can stick to the 4. This is just— it's just, again, playing with language slightly. I mean, price-wise, John, for you, this is because some of yours is so high-end. This is— this could be a good little deal.
Right.
We got to get that monthly down.
Right.
Because if you— if your comps are $1,500 a month and we give them 5%, eventually it's— you're negative. Right. So we need to make sure that we—
That whole house would only be $1,500.
Yeah. They're coming in pretty, pretty low.
Well, what's the top tenant paying? The bottom?
The top tenant was paying somewhere in the range of like, I think he said $1,400. Or so. That's for the top of the wall. So that's— yeah, that's what I wanted to talk to you guys about was, you know, being that it's a 2-family and it does have the potential to, you know, bring in $3,000 worth of rent. Yeah.
Your cuffs are off then. Yeah.
What, what's the bed and bath on the first floor?
It's 5-bed, 1.5-bath on the first floor.
Okay.
Yeah, you can definitely get it.
Yeah. The second floor is what?
Yeah, that's, that's a 2-bed, 1-bath.
So it's a 7/2?
Well, yeah, I don't know what I had written down. I think that's a little off, but the one of the baths on the, on the first floor was not through the— he didn't get any permits or anything like that. The— it's, it's not vented correctly and that kind of stuff. So I almost wouldn't mention that or, you know, for marketing purposes.
I mean, Rusty, I'm thinking for marketing again, just like we've done several of these, I would like— in theory, it's a regular 2-family, right? So I would market it for as just the bottom floor when the tenant's out and then market as a whole package. And when the— if they can afford the whole thing, they take the whole thing. If they can't, you keep that rent coming in.
Yeah.
Up top until such time the bottom floor gets their financing. But this house is not a $1,500 comp. If you do, if they're paying for a 2/1, you should be finding comps in your area around $1,200 to $1,400 for a for a 2-bedroom, then you get a 5-bedroom below it. Like, I think you easily get $2,000 below. Okay. And $35,000 for the whole thing, or $3,000 for the whole thing. And now the deal's worth it. Yeah.
All right.
Once you're tracking—
Yeah. What's the taxes on it? Do you know?
No, I didn't. I didn't get the taxes. I was just on PropStream. I forgot to run—
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We've been around long. We need to get taxes all the time, no matter what, because then that kind of in our head kind of determines, you know, okay, we take that out and we can rent it at this and then add the taxes back on. Then, you know, you're starting to create some cash flow for yourself.
So, yeah, nothing else. So he— so he knows, right? I think like You, when you're talking to this guy, he says, I'm getting this much, right? But you're dealing with maintenance. You're dealing with now an eviction that's going to cost a few grand and you're dealing with— and you got to pay taxes. He's not netting that much. Right, right.
