How to Make $100K on One Creative Real Estate Deal

How can you actually eke out of a creative real estate deal 6 figures? I'm talking $100,000 or more on a house that might be worth $200,000, $250,000, $300,000. Think about that for a minute. 6 figures, say $100,000 on a home that might be only $200,000. That usually blows people's mind. Hey guys, it's Chris Prefontaine, founder and chairman of Smart Real Estate Coach. I want to talk to you today about the 6-figure formula. I've been talking about this for years, but I want to actually map it out for you because I want you to get excited this year to go out and create 6-figure deals. Now, I'm like fully aware that out there in the marketplace right now, there are people buying properties, what they call creatively, for example, in the sub-2 world. And we won't mention any trainers, but they're screwing it up. They're screwing it up by not doing the right thing morally and ethically. With their sellers. So while all that noise is going on, aside from making sure you're with the right community, the right attorneys and updated information and courses and all that good stuff, I wanted to give you in the owner financing specifically world a 6-figure formula. I will never say, especially on a video, that this is every time, but I'm going to tell you that most deals you do, I won't put a percentage on it. I'm going to tell you close to 100%. of the deals you do this way will crank out 6 figures if and when you do what I say here in the 6 Figure Formula. Okay, so let me walk you through it. In order to crank out with the 3 Paydays— we've trademarked this, 3 Paydays. Okay, that means no one else can do that the proper way. Okay, 3 Paydays is federally trademarked. When you exit your deals the way I'm going to show you with the 3 Paydays system, There's a whole course on this, of course, that you can do. Then you will eke out the 6 figures. Let me give you basic numbers. I'm going to round up on these to make it easy for you. Okay. A couple of things. First step, you find a home that you can buy for $200,000 or more that is free and clear. What does free and clear mean? No mortgage. Now, if you're not— if you're new to creative real estate or new to some of these videos, Can you buy a list or procure a list on your software that we have that will give you all free and clear properties in your area? Sure. Another list I love is free and clear properties in my area with people that live out of state. Great list. We talk about lists on another video. You get a house that's worth $200,000 or you decide on the price of $200,000 is free and clear. That's the first step. Okay. And you can do this. Second step. And again, if you're brand new, we'll help you. Second step, you structure a 48-month term, 48-month term with the seller or more. Obviously, any of this, like if it's higher price, works even better. If it's longer term, works even better. Third step in the process, you get— you're going to love this, guys. 6 figures. You're going to love this. Third step in the process, your monthly payments to the seller, make those $1,000 or more per month. So $1,100, $1,250, doesn't matter. $1,000 or more per month. You're going to— you're going to, with that criteria right there, exit with 6 figures. Now, how do I know that? Let's play this out. Well, you're going to go out. Let's change the color here so you can see what I'm doing. You're going to go out and you're going to sell this property. I'm going to be conservative now. I'm not going to go crazy. I'm going to say you're going to sell for $240,000. Well, let's say $239,000. Let's say $240,000. Because I just want to be doing easy math here for you guys. Again, I can make it look pretty. I'm just going to make it look realistic. How's that? $240,000 you sell it for on rent to own. Okay. This is what the— how the criteria works. It's free and clear. You go out and you exit this deal on a rent to own at $240,000. Now, are there people in the marketplace doing this incorrectly as well? Rent to own? Yeah, there's a whole bunch of them. And again, I won't mention any educators, but they will publicly say that they throw rent-to-own buyers in these properties and they don't care if they ever qualify because they get to keep their deposit. Might be morally— sorry, might be legally right the way they structure their agreements, but it's bogus morally and ethically. We have a ridiculously tight process that's been built and refined over the last decade plus by my son Nick, where we put buyers in homes only that deserve it and only that have a mortgage-ready plan to come out the other side as a win, meaning they get financing, they take this house down. Okay, so you sold it for $240,000. You picked up a rent-to-own payment from your buyer. Again, let's be conservative, of $1,300 per month. Okay. What happens here, guys, with the 3-payday system? I'm going to keep this very basic. Payday 1 is what? Payday 1 is your down payment for the property. And if it's $240,000, we're going to use 10%. So you picked up a $24,000 payment. Couple of things here. I'm not an accountant or a CPA or an attorney, guys, but a couple of things go on here. Number one, that does not have to be claimed as income with the IRS until and unless such time that the buyer cashes you out and/or defaults. Then that has to be claimed as income. You want to claim it sooner, the IRS will never get mad at you claiming income sooner, but that's when you have to. So in theory, you could have a tenant buyer that goes in the house, give you a $24,000 deposit in theory, And then 3 years, 4 years later, cashes you out. That's when you claim the income. You just got used to that money. Okay. Payday 1. So let's just do paydays and you guys are going to love my chicken scratch by the time we're done here. Get this. Payday 2. Every single month you're going to make a $1,000 principal payment to the seller. They're your bank. There is no bank involved here. Owner financing. You're paying the seller every month and the 48-month term means at the end of that, whatever's left, you got to, you got to do what's called a balloon payment and pay it off. I'm showing you how you're going to get there right here. Every month, though, you get the difference between the $1,000 and the $300— sorry, $1,000 and the $1,300. That's $300, right? What's $300 times 48 months? I can't do that in my head, so we're going to do it right here on the screen for you. $14,000. So let's call it $14,000. It's $14,400. Payday 2, if this goes full term, Could it go shorter? Yeah. Could it go longer if you renegotiate? Yeah. I'm just giving you general numbers here, guys, and we'll see where this comes out. I don't know where it's going to come out. Payday 3 is interesting because Payday 3 is going to take 48 months of principal paydown, right? It's $1,000 a month. So that's $48,000, right? Okay. Payday 3 is also going to account for the markup. You're buying it for $200,000. You're selling it for $240,000. Round numbers. So you picked up $40,000 in the markup, right? Okay. Payday 3 also says, well, wait a minute, the buyer put down $24,000. When you cash this out, our Payday 3, you got to give them credit for that, for that down payment. That's right here, right? So you're going to minus $24,000. So what do you got there? About $64,000. You got about $64,000 there. Let's add these up, guys. Let's see how we did. I just won these numbers. I could have made this come out to $180 grand all day long if you put a longer term in there. I think actually we did one. It was $183,000 purchase and we made like $126 grand or whatever it was. So what do we have here for, for paydays? Let's take a peek at this. We have— let's use a different color. We have $24,000. We have $14,000. That's $38,000. And then we have $64,000. How do we do? Do we get there? $64,000. Yeah. $102,000. I could do this a bunch of different ways, guys. It could have made it look even prettier. And when you get higher in the number and higher in the monthly, the principal paydown component here is magical. Magical. Now, am I saying you can go out and find 2 of these a month? Probably not. Okay. It's not realistic. I mean, you might if you really crush it, but I'm going to say, what if you went out this year, this calendar year? Okay. When you're watching this and you created 3 of these, just 3 with our help, and you created 6 figures every single time. What if it— what if the buyer cashed you out early and they cashed out in 2 years instead of 4? Oh, boo-hoo. You might make $80,000 instead of $102,000. Point is, this is predictable, guys. You can do this every single time. Not sure where to get started? Go to smartrealestatecoach.com/getgoing for free books, strategy calls, and a whole bunch more. We're going to help you get going the wicked smart way. We've been after this for over a decade doing exactly that. I wanted you to at least see that formula and understand that it's doable for you. It really is doable for you. This is not brain science. And what a lot of educators are teaching, unfortunately, is they— well, number one, they're going to show you all the fluff, right? All the good things. I could show you a $500,000 profit deal if I wanted to. I want to show you reality. That's just what we're all about. And I also want you to know that when things pivot in the market, like there's a community right now screwing up big time on how they buy sub-2s, they're screwing up, they're messing up with sellers' lives, they're screwing up. So when things like that happen, as I said earlier, you go with the right attorney and you make sure you're doing things properly. B, you always operate morally, ethically, and C, have other options to exit and to buy. So buy it with one of our strategies— owner financing, lease purchase, or AO, we call it, assign out. You don't have to buy sub-2. That's just an example. We buy 4 ways and we exit one main way with about 2 or 3 offsets. So just know that that's out there for you guys. Check out my masterclass to learn more at smartrealestatecoach.com/masterclass. Master's class. Make it a great week. Please make sure you subscribe, guys, and share this video because subscribing is going to get you the Deal Structure Sundays every Sunday, the Motivational Mondays every Monday like this, and the Q&A Thursday. Make it a great week. We'll see you soon.