Getting some easy deals with the power of the Assign Out option!

Some things that we're going to talk about in the Associate Private Mastermind in like in about 45 minutes, but I think it'd be important to hit here as well, and that is utilizing the assign-out, uh, or some people know as like the executive lease purchase, but the assign-out agreement. Really powerful way to get your first deal, your first couple deals, um, when it comes to, um, yeah, when it comes to getting involved in creative financing, especially your first couple deals, and get some checks in hand. And those of you that are brand new, and I'm just going to make an assumption here when I utilize these terms, that every single person on here, every single person on here has gone through our QLSM study course. If you have not, there's this thing called the Wicked Smart Academy, and it houses $12,000 worth of product that all you have to do is pay $547 a month to have access to. And your QLS Home Study Course is our entire system, and there's a module specifically on assign-out deals. Now, assign-out deals are only one payday. It's only one, but it's a really easy conversation to have with a seller, especially unrealistic sellers or sellers that have unrealistic expectations in today's market and haven't noticed that the market is shifting. And that is you can go to a seller and say, hey, Mr. Seller, I have an option for you. Would you like to participate in a deal where you can get Part of a non-refundable deposit, get your price, get cash flow, and get principal paydown on this house so that way you can net significantly more than if you sold it traditionally. And when they tell you yes, you just go ahead and write up the agreement and get it signed.

Yep.

And then what you then do next is you then go acquire or find a tenant buyer, a buyer that needs time in order to qualify for a loan, like all of our buyers. And once you have that buyer, you then present the buyer package to the seller. If the seller accepts it, you simply assign that buyer package to the seller, collect your portion of the non-refundable deposit, and then get a release from both of them. And now they are married, and then you move on to the next deal. Couple, couple things, Zach, through the process.

A couple quickie things. Um, can't do that in Illinois right now unless you're licensed. Um, it's just because, as always, you get unscrupulous or idiot investors that screw us up, and that's one thing they screwed us up on. Uh, just like in Texas, you can't do sandwiches. Somebody took advantage of people and screwed it up. It's always gonna happen. Uh, secondly, just for context, if you're brand, brand new, um, when I started the terms biz I did AOs because the only thing I know how to do that then, but also because I had no cash whatsoever to do a sub-to or do an owner financing. And the AOs, you can get cash going quickly, um, because of the one payday. You want to quickly learn how to do the more advanced deals, which we'll go into at Summer of Deals, but it's a nice way to get you rolling, uh, and it's how I started. Uh, Zach, if you remember our payday on the AOs, I remember like it was yesterday. It was like $10,000 in 2013, and we quickly, quickly rose that to $28,000. So there's ways of maxing out the AO too. Um, and that's, that's what we'll, we'll go over at the Summer of Deals for sure, how to maximize these paydays, whether it's 1 or 3.

Well, I'll give them a quick— let's do a quick one because we're still waiting on Matt. So When you're doing these AOs, there's what you want to structure when you're closing these things out is that all of the non-refundable deposits come to your company and all of the monthly payments go to the seller. That's how you can max out the AOs because there you typically still have money available from the premium. In the agreement that you structure with the seller to consistently get a portion of the non-refundable deposits that you help structure over the course of their lease, or say max it out.

Zach, can you repeat that again?

I can't, it's being recorded. No, I got it.

All right.

Let me break it down a little bit further just because we got time. Again, because I want to show you behind the scenes of how we're going to just— as we're just free-flowing here, this is what the entire day is going to be like on June 3rd. And we won't be able to stop and tell Laura again what we just said because we'll be going too fast. I'm just kidding. All right, so when you're structuring an AO, And sign-out deal, mod 5, mod 5. Please go back and review it. When you are structuring the deal with the buyer, just like you would in a sandwich, just like you would in an owner financing or sub-to, when you're selling it to your buyer, you're going to be structuring a non-refundable deposit upfront at the signing. And then you're also going to be structuring over time, typically, More deposits over time, depending upon the structure with your seller. In most AOs, you're going to get a portion of the non-refundable deposit above and beyond what you locked in with the seller. So, for example, you bought a house for $250,000; you sold it for $300,000. You and the seller agreed to split. the overages by, you know, 50/50, let's say 50/50. You collect $20,000 upfront. So you get $10,000, the seller gets $10,000. There's still $30,000 that if you're getting more non-refundable deposits that you can collect on as a 50/50 split. And that'll be structured over time. And that's how you increase your non-refundable deposit. Clear as mud?

There's my— you can get much less than that too, guys, for splits. The ones that I were doing before, uh, I was getting 33%, and then I found out like, you know, 6 months later I could get 20%. And there was 20— I can give away 20% of it instead of giving away, you know, 33%. And then you got people like Bill Rice that were doing deals where he wasn't sharing any. It's really all depending on the relationship you have with the seller and what you can negotiate or how you can script it, bring it up.

And when you're brand new too, Steve, like, your first deal, even though you heard Steve say that and that's better, but your first deal to say to a seller, again, this is how it was so easy to say to a seller, we're just going to split it. They go, okay, that sounds fair. Like, they can't even argue with you. And we'll bring it to market at your price and just be open to me coming back to you if the market doesn't respond. Are you open to that? Yeah. Okay. So you got nothing to lose. That's why some months we did as many as 10 of those. We wouldn't do 10 sandwich or 10 owner financing or 10 sub-2s. They're a little more intricate. They're a little more involved. They're a little tougher. But AOs, you could stack those up no end.

And 2 of them that I did after I gave them 33% of the non-refundable, they paid— one was $16,000 and the other one was $25,000. So that kind of shows you how just fast cash— and these aren't— we're not talking about wholesaling like $5,000, $3,000. You can make a lot of money with these too. They're especially the higher, you know, higher end the house is, obviously the bigger the non-refundable.

And if you need cash now, let me say this, Zach, on our— on my first AO ever. If you need cash now and you don't— you don't need to raise your hand, you know, just think about this. If you go, yeah, I, I like— I need cash in June, the very first AO I ever did was a free and clear mailing. I was operating out of an attic office. I had free and clear mailing that went to a gentleman who said, my daughter just moved out of the house and I'm interested in what you sent me. It was just a handwritten note. And the house was on the market with a realtor for 12 months with a sign in the front yard. The mason who came after I put my sign up said, oh yeah, I saw the realtor sign every day, but I can't get a loan. So my sign went up, he called me. That time period from when he called this, when I put it on agreement and he called and he walked in the office with $23,750 down payment, that's, that was my payday, all up front, was 11 days. Soup to nuts, 11 days, not counting the mailing.

Yep.

So if you need cash now, these can be done quickly. Um, that guy was I'll say a little full of himself, but he also didn't want nothing to do with splitting anything with me other than that one payday. He didn't want me to have any spread. He didn't want me to have principal pay. So the AO was perfect, perfect. And we each got $11,000 and change, $11,000 and change, 11 days.

What's good to know for you guys, just to make it easier speaking confidently about this kind of stuff. So in Zach's example, say a $300,000 house they want for the house, you do an AO with them, right? The cash flow their portion of the non-refundable down payment and the principal paydown, that's all on top of $300,000. That's not coming off, that's all in addition. So, it's when you look at these deals and you look at how much money that these people can make, generally it's between 15% to 20% more than what their asking price is, right? So, that's why you should be able to speak confidently about it because it's like, why wouldn't you do this? Is like my actual like mindset going into explaining these to people. You'd be crazy unless you just want to cash out now, you'd be crazy not to have a— a safe investment that makes you 20% more in, in 1 to 2 years, that's— where else are you gonna find that?

And, and some of the guests, uh, Zach and Steve, let me say this to them, because we're always direct and to the point. We would not be ourselves if we weren't. Some of you guys that are guests, we love you coming to these, but I'll tell you, the example I just gave you, you could have had a deal by now with an AO. But, you know, you, you could maybe just— that analysis paralysis, just, just dip your left toe in. Let's get going. And let's get you some cashola before the summer's out.

Cashola.

Stacy, I see you raised your hand.

How's it going?

Good.

Question, um, you know, because I've got it— I've received a little bit of pushback from some sellers when you talk about a non-refundable deposit because they think a deposit on their home, they think that they're like entitled to all of it. Um, but I remember, I don't know, it was a couple weeks ago Brian actually called it a buyer's fee.

Yep.

And I thought that was clever. And I was, you know, one— I mean, because that it puts it, frames it completely differently.

Okay, let me say something about that. You, you can say that verbally for sure, Stacy, for that reason. But be very careful, just so there's no misunderstanding here with everybody hearing this. On the agreement and for underwriting, It's got to be a down payment or they ain't get— they're not going to get credit for it. And then you're doing them a disservice. So you gotta be careful. So it's not, you know, some people call it an option fee. Some investors do this. They call it an option fee, non-refundable. They will not get credit for that when they go get financing. That's the only caveat here. Be careful with that piece.

Right. Well, I mean, if we keep the paperwork the way it is, right? And we're just talking about, you know, talking to the seller about it. I mean, is— are you okay, pro or con?

No, you're okay. If you said— let me— tell me if this is what you're saying, and I'd be okay with it. Mr., Mrs. Seller, they're going to pay the buyer fee. And if they ask— if the seller asks, do they get credit? Yeah, they get credit for that, that buyer fee on the, on the purchase sale eventually. If you say it that nonchalant like that, I'm cool with that. You're not saying anything out of school. As long as the P&S— sorry, the, um, the rent-to-own agreement says that it's a down payment.

So, gotcha.

Thank you. The other thing that I always position it is I'm helping you get anything above and beyond what you and I agree upon. Yeah. Oh, it's gravy. Like, this isn't— so we're gonna say you want $250,000, I'm gonna buy for $250,000, I'm gonna sell it, uh, and I'm gonna give you a portion of what I collect that's above and beyond what, what, um, what you and I agreed upon. Steve used to say that really great. I don't know if you remember. How to say it, Steve. Yeah.

I mean, the buyer, I say buyer's fee, Brian might too. I don't know if that was you, Brian, or not. So you guys can spank me for that. But yeah, that's what I typically say is I say, well, they want to know, well, how do you get paid? I just say, simple. I sell it for a slight premium of your asking price and that difference, that's the buyer's fee there. And then we share 20% of our buyer's fee with you as well, which is just on top of your asking price. So you can just net generally a lot more and have cash in hand, if that makes sense.

And on the— your script, this is literally— if Steve and I were talking and he was a seller and he was that $250,000 house, literally just to give him an example, and I would say to him, it's just an example because I don't know what the buyer is going to bring yet, but Steve, if you're at $250,000 and I determined I can go on for $300,000 and the buyer brings a $20,000 deposit— I'm using this just for math, guys. Uh, and they bring $50 grand in, you're getting your $250 plus half of that $50. Like, you're way ahead of it. You can use any formula you want, any down payment, you will come higher. If you just give examples like that, use 10% down, doesn't matter, you will be higher, they will be higher. Easy conversation.

You guys should know too, if you're not familiar with these, the buyer is responsible for the property, the upkeep, everything. So they're not in the landlord business, they're not If things go wrong, this is a very— this sales protects them. This isn't like a renter in your house and then they destroy it. And these people, for them to do that, they'd have to walk away from a lot of their savings and walk away from the sale. So these are buyers that are responsible for everything. So they get the benefit of collecting money, but not the headaches of keeping up the property upkeep and repairs.

They also get to have a say in the buyer because it's an AO. I— the script again is, hey Steve, uh, good news too, you get to, you get to look at the buyers with me. I'm going to tell you, I've been at this for a while, I'm going to tell you who I think, but the ultimate decision is yours. I'm going to present the information to you. And what are we going to present? The buyer package, the screening package that goes through the, um, credit enhancement company. It's gonna— we're gonna show it to them. I'm gonna say, this is the one we think you should pick. Boom. Or And they usually go with you, but it's ultimately their decision.

I still use the line that either you or Zach said a while ago where we, you know, we just simply, uh, we pre-vet, we wrap them up in a bow. That's— I think that's one of you two said that. And, uh, we just put them in front of you and, and, you know, you can go ahead and decide if they're a fit or not. We can discuss it, but ultimately it's going to be your decision who moves into your house.

Uh, Ross, I was just gonna kind of piggyback on what you guys are saying. You know, my first deal, and if you guys are in a high-end area, it's perfect because, you know, if you do a sandwich, you know, you're responsible for the monthly payment. If something happens with the buyer, you're stuck with that payment, right?

Yes.

So, you know, my first deal, $1.1 million house, got a 10% down payment, split it halfway with the seller. You know, the seller is, you know, with high-end homes, they're typically pretty savvy with their finances. They probably have done rentals before. So it was easy because the guy has rented it before. So I get $55 grand out of it just on one deal. And I don't have to worry about the headaches of, you know, if the buyer doesn't perform.

Ross, I love $55 grand. How long did that deal take you? Ayo, you're gone, you wash your hands. How long did that take you? I forget.

Oh, it was pretty quick. I met with the guy in June and we were done in October, I think.

I'm sorry, but it's funny that it's that quick. And I know you just showed some ultimate excitement there, but—

That's him on a 10 for excitement, right?

By the way.

Yeah.

Nice job. I forgot all about that deal.

Yeah.

So if you're in a high-end area, don't— it's, oh, it doesn't work in California, or it doesn't work in certain areas. It works. Trust me.

I don't think we mentioned this. Maybe we didn't, I missed it. But in your— I mean, all your agreements, but specifically in your AO agreement, like we're talking about, you also in addition get first month's rent, which is an additional revenue for you because the buyer is going to come in with first month's rent, but that's going to go in your pocket. And then the seller's going to get the month, 30 days after they move in. So there's an additional on top of whatever your option Your option fee is there.

See, that's an example, Steve. That was a good one because that's an example of something that originally Nick and I and Zach didn't do, but we're constantly tweaking the paydays. How can we eke out more? How can we get the buyer to get in a better position? And that was just one tweak, but that one tweak, you add up whatever the monthly rent is for a house you're looking at, and you do that 10 times this year or 50 times, whatever it is, it's a lot of money. Just think about one tweak.

Think about Russ's house. If he had a million-dollar house, I assume the monthly payment on that was between $4,000 and $5,000, maybe higher. So if you got first month's rent on that, that's, that's a big chunk of cash to have in addition.

Sorry, $55,000 plus $4,000 for the first month's rent.

So $59,000. There you go.