Chris Prefontaine and Zach explain how 7 to 9-year lease purchases can turn upside-down properties into profit. A nine-year deal generated six figures. Rent-to-own contracts let you lock in a higher future sale price and manufacture equity immediately.
So you can sell the property at a higher price today, and that's how you can create equity day one on a property that doesn't have it.
Yeah, someone asked about upside down, but what I wanted, as I always try to do, not just give you theory, I want to give you sort of some deals we've done. So in 2013, as I alluded to earlier, for those of you that weren't on, when I was really hot and heavy starting this launch, The a lot of homes were either at value or upside down, but not grossly upside down. If something's you know someone calls us and it happens, hey, I haven't paid my house in two years and there's no equity, and we're and I'm like two hundred grand upside down or hundred no. But these houses were close to about value whereby if they did sell with a relative, they didn't have to come out of pocket, right? So I did, and I just pulled these HUDs like coincidentally two weeks ago for another workshop we were doing. I did. 7 and 9-year leases were pretty standard for me before I was comfortable, as it were, to buy them, which we would now. So a long-term lease purchase, fine. And then later on, if you're more comfortable, we can show you how to convert that to a sub-2. These days we would go right to a sub-2. The short answer on anyone upside down is long terms if it's not grossly upside down. That's, that's one issue. Um, I don't know if that sparks other questions, Zach, but that's just— Longer terms. Those deals, by the way, let me give background. One was a woman from D.C. was not hurting financially, had good credit, just didn't want the house anymore in Massachusetts because she was leaving to D.C. I tried every few years to get her to transfer the deed and she wouldn't. Most sellers will when they get to know you. She just wouldn't. So we kept it as a lease purchase. I think it went the full 9 years. We cashed out over 6 figures on a house that she couldn't get out of. More punchline that came from a rehabber. Who got the lead and said, I can't do anything with this. So you will get relationships like that with rehabbers and wholesalers. Zach's actually speaking to the REIA in a couple weeks. That, that gentleman's been hanging out with us for a lot of years because he knows how to do that. Um, so it just gives you ideas, I hope.
No, great point. I'm just, just to be like more technical, right? Um, if it's upside down, 2 things need to happen, right? We need the market to appreciate. So to Chris's point, Longer terms, and we need the principal to pay down. So it's that simple. Like, if those two— as those two things happen, you create equity, and that's when we can go eventually get rid of the property. The other interesting thing is we're about to dive into rent-to-own, is you can actually manufacture equity day one on a property that is either upside down or that has no equity. And how do we do that? We're going to do that through a rent-to-own program because we can sell the property at a higher price. than current market because our buyers are locking in their price for the next 2 to 3 to 4 to 5 years, whatever they end up— the deal ends up being. So you can sell the property at a higher price today, and that's how you can create equity day one on a property that doesn't have it. There's one additional question in regards to compensation to a realtor.
Episode 575: Redefining Retirement as the Day All Your Choices Open Up with Doug Bennett
