Chris Prefontaine shows how to structure lease-purchase deals when sellers have zero or negative equity. He uses 7-year leases with automatic extensions, then works to convert to a sub-2 deed transfer later. Two 2013 case studies show sellers who rejected sub-2 deals initially but eventually agreed after the lease structure proved the deal worked.
Questions this video answers
Yes. Use a long‑term lease purchase (e.g., a 7‑year lease with two 1‑year automatic extensions) and leverage QLS Home Study Course agreements while seeking quality lead sources.
Chapters
Welcome to this week's Q&A Thursday. A support question came in, simple, but, but I saw it and said, okay, that probably warrants a video. Here's the question: can you still do a lease purchase if the seller has zero equity? Now that brings me back to 2013 to some of my very first sandwich leases. Short answer is yes, of course you can. Here's why I say of course you can. I would prefer in a seller situation with no equity that we buy the property, right? Sub-2. It's a classic sub-2. However, I could think of 2 right now, and I'll give you the examples to give you the answer. I can think of 2 right now where in 2013-ish they had no equity. I think one was a little upside down. And I said, look, I tried to do the sub-2. They didn't want to do it. They didn't want to transfer the deed. They both had great credit. It wasn't a stress situation. It was, I just want this off my plate. I'm moving over here. One lady was moving to Washington. One couple was with their kids moving to a better school district that they had to get to for the fall. So here's what I did with both of them. I structured 7-year leases with 2 automatic 1-year extensions. So basically a 9-year lease purchase. Why? I said to them, you can't sell it in the open market without coming out of pocket. You don't want to transfer the deed. So what we can do is this. It's not like I'm asking them permission. I'm saying, if you want this done, here's how we would do it. I need time for the market to come back up and my principal payment to come down because I can't guarantee the market, but I can guarantee over time the principal payment will whittle down the mortgage balance, right? Okay, both of those deals we did extremely well. I think the one where the woman went to Washington, actually, we asked several times during the lease purchase process to try to convert it to a sub-2. The other one, um, we did the same exact thing. We keep trying to convert these To sub-2s when they're sandwiches, especially the longer-term ones. And both of these kept saying no, and they both started with no equity. Both of these were over 6 figures, just to give you some context. So the answer is yes, the short answer. And the longer answer is always do long-term, always utilize our agreements that are in the module for forms and agreements and documents. It's in the QLS Home Study Course. I'll give you that link in a minute if you're new to this and don't have it. And always, always, always be looking for the best lead source, which I'll give you the link for that because that changes, guys. Data companies are literally all over the place and we get prospected all the time for data companies. I will tell you that we vet the daylights out of these companies and we only bring them to the community if and when we think they're the best. Now recently we brought in a new lead company and I'm going to give you the link in a minute because they not only enable us to access expired listings as non-licensed We're investors, we're not licensed, most of us. But they also have a really cool exclusive list called Distressed that is tracking homeowners who are behind on credit cards, behind on, uh, auto payments, behind on other payments, not yet their mortgage. That's trending to what? Headache with house, right? Very cool list. That alone is a reason for you to check out this company. I'll give you a link here. It's smartrealestatecoach.com/list. Land Voice YouTube. And you can say you're with us. smartrealestatecoach.com/landvoiceyoutube. If you guys don't have the QLS Home Study Course, just go to smartrealestatecoach.com/qlsyoutube. Because if I just said to you, here's the QLS Home Study Course, just utilize our forms module with tens of thousands of dollars worth of legal agreements in there and our own family checklist, That would be worth it. Hope that helps make it an outstanding week. Keep the questions coming, guys. I want to make sure that we help you guys navigate this unpredictable world of real estate, and the best way for you to do that is to pepper us with questions nonstop. What's the other area you can do that in? We have a live Wicked Smart sit-down every Thursday. We've been doing it since like 2017 or '18, every week except for event weeks and holidays, and you can come for free every Thursday, 4 o'clock on Zoom. Uh, you can email support@smartrealestatecoach.com if you're not seeing that message. Make it a great week.
