Chris Prefontaine shows how to structure a creative assignment deal using owner financing instead of traditional rent-to-own. You draft a purchase agreement matching the seller's terms, assign it to a buyer for a fee, and pocket the difference. A Florida deal netted $52,000 on a $1,500 down payment.
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You look in the MLS, you'll find 1 out of X amount of listings that are saying possible owner financing. People don't go look there necessarily.
I got something now that we're on mortgage brokers. Your message to me in the call critique, I don't know if you remember that call. She was a broker. She was wanting a down payment. We moved the conversation. It was seller finance. We moved to AO. And you said just maybe go out as like a purchase and sale with her.
Oh, the one I just did recently?
Yes.
Yeah. Okay.
Yes. Now, my question is more around the purchase and sale and how is that structured intertwined with—
Yeah. I meant to bring that up. So this is good, Kyle. You brought it up and I'm going to make a note. DNS versus AO. Okay. The only reason I was going there is, excuse me, that it was the older lady sitting in the room, right?
Yes, Daisy.
Yeah, yeah, super. Like, this was just— I'm gonna paint a scene for these guys in the Call Critique channel if you want to listen to it. She's an older woman sitting there with a broker or a friend.
That's her property manager. She's the broker, property manager.
Okay, the, the older woman was definitely open to and savvy and understood owner financing and had a bunch of notes out there she held, and she sounded older. Um, so I said, don't go— my critique was saying, don't go the AO route. Call back and say you met with your team And draw up, because she was talking about what terms she wanted, like she was, she knew what to do. Draw up a purchase and sales agreement. And Kyle, let me make believe it's you're her. Let's drop a purchase and sales agreement with you, Kyle, for exactly the terms you want. So this behaves and smells like an AO, but you're going to see the difference. It's exactly the terms you want. I'll bring it to market. I'm going to mark it up or do what I could do to make my money. You're going to get your terms that we outlined in the agreement. And I'm going to bring any and all buyers back to you and we're going to decide if they're viable options for you. And if they are, I'm going to take that agreement that you said, this is what you want. I'm going to assign it to the buyer and they're going to step in my shoes. I'm out. You just get an assignment fee.
Okay.
Sergio and I did this in Florida and I think we got like $52,000. Let me give it context and then we'll go back to agreement-wise. The context of it was this guy said to Sergio, Here's what I want. And Sergio's like, all right. So we mocked it up like we normally would for a tenant buyer. An intelligent buyer came in with a lot of cash and said, I think he had like $100,000. And he said, the monthly's too high because we had to mark it up to make this deal work. And he said, well, I got a question for you. What if you pay me an assignment fee and I assign my agreement to you? My payment with the buyer, with the seller is only like, I think it was $1,500. The guy's like, yeah, I'd love that. So we just assigned our purchase and sales agreement and now he's in our shoes with the purchase and sales agreement. So instead of taking the buyer in for rent-to-own, getting them all signed up, and then assigning that buyer package over to the seller, you're actually taking the seller's agreement that you have, you're assigning it to the buyer. They just step into your shoes. Now they have to do what you were going to do in the P&L. Not a rent-to-own, it's owner finance.
Okay, so it's just a straight owner finance deal.
Yep. And you're only going to look— the lady kept saying to you, if I recall, I want Was it 20% or 10, 15?
Yeah, she was wanting 20. She was up there, but we kind of— we'll talk about the 10 and 15.
And yeah, so here's reality. You write it up at 15 or 20, whatever you can get her down to, right? You go get a buyer, you come back and go, hey, good news, Daisy, I got a buyer. They're super strong. Bad news, I can't get it to 20 because— or 15 or whatever— because I got to make some money too. So let's talk about how we can get this done. We don't want to lose this buyer. The whole conversation changed.
Okay.
And all you're doing is giving her the terms she wanted.
Yeah.
So I don't want to skip over— you guys get what we're doing with the AO versus this, or is that confusing? Please tell me if it is. I can— You kind of lost me on, on your description there, what, what you were doing, uh, okay, the other deal that you were explaining.
You kind of lost me there.
I don't know, I'm a little bit slow here. No, no, you're good. I, I do it fast, so it's in my brain, John. Doesn't mean I say it right. Um, so Let's stay with Kyle's guy instead of jumping. So just giving you an example of how it works, but Kyle's going to please Daisy, who's experienced, and write up that purchase and sales at— what's the sales price, Kyle, that she wants? Well, let's just say half a million, guys. Just, you know, yeah. And then he's going to write, he's going to try to say to her, hey, let me try it at 15%. I think it's still a little high, but let me try to 15% down. So the purchase and sales is going to say $100 deposit. Balance of that 15% is going to be at closing. And then the difference is going to be owner finance. He's going to write all that up in a P&S as if he's buying it, but the title's going to say Kyle's company or assignee, because he's going to assign this. He's telling the owner, that's what I'm going to do. Then he's going to go to market just like he would rent-to-own. It's a little different. It's going to say owner financing with the right deposit. The terms are going to be a little more specific. A buyer steps forward. He's completely transparent with them. Hey, I got this under agreement with the understanding that I need to help them find a buyer. You can step into my shoes. Here's my agreement. This is what I got, but it's gonna require you to come up with X, and X has to be more than she needs. So instead of 15%, it might be 22%, and that would give him the excess he needs above the sales price too.
I got you.
Because he has to make some money. It's a, it's basically an assignment fee he's always getting. And what is the difference between an AO then and this? What, what you're suggesting to Kyle?
Yeah.
So the difference is because this lady wants owner financing and is savvy to do it and has done it, he's going to write that up. And that buyer is literally going to— best way I can say it is that buyer is going to step into his shoes and step into his P&L that he wrote up with the lady. Now that buyer is going to close the deal and do the owner financing deal with that owner. It's not a rent-to-own, just like Kyle would have. Okay. I understand that. Okay. Versus an AO is like I get a rent-to-own client or buyer and I sign them and I take them and I assign them over to the buyer, seller. That's the difference. Go ahead, Kyle.
And then as far as marketing it, it's still on our same rent-to-own market, right?
A little different only because you're trying to get her, you are truly trying to get her an owner financing person with a, 'Cause you wouldn't own a France. I agreed with her in the call. Like, you wouldn't own a France and give up your title unless you're gonna get 15, 20. You know, that's my head. I, I don't like to do it unless I get 20. So you could say to her, for expectations, Kyle, look, what this will also do for us is we might find someone just outside of affordability and we could start them as a rent-to-own, Daisy, and then we can convert them to your terms. So you let her know that, hey, this might happen if you're open to it. Let's see what's out there. You know what else that invites? That invites maybe you staying in later. You just don't know. Keep it totally flexible. I'll look for your ideal. Let's see what I find. I may find someone that needs a little more time. I may find whatever.
Because I guess my question would be her comeback. Okay, well, where are you going to market to? If she's already a broker, she's going to take it to her regular market versus—
Her regular market is not the same as yours because the terms market's still the terms market even though you're not You're not going to yell out rent-to-own in the ad. If she's okay when you say, I might find someone that wants to do an interim rent-to-own before they do this, and she suggests that, now you've got a huge marketing campaign that she can't touch. Rent-to-own and owner financing.
Okay.
Because she's a broker, but she's not like— they don't— the conventional world, Kyle, doesn't— very rare for you look in the MLS, you'll find 1 out of X amount of listings that are saying possible owner financing. People don't go look there necessarily. Just different.
Okay.
And what does she got to lose? Think of that. It's your dime, your time.
Mm-hmm.
I know I liked her. I said it when I was critiquing. I'm like, this lady knows what she's doing. This could be fun.
