How to Structure a Deal for University Housing

really plant the seed in regards to that price is going to change if you're buying it, uh, via rent-to-own versus, um, cash offer. So really good way for you guys to kind of back and forth on that as well. That's awesome. Hey there, I'm Zach Beach, CEO of smartrealestatecoach.com. I want to bring to you another Deal Structure Sunday. I'm here with Rick Uh, who has been a community member of ours for quite some time. And we were literally just talking offline how we just produced another $88,000 deal, had a buyer, uh, signing, which means that we're gonna have to do another deal structure with him on that deal to share those final results as well. Uh, Rick has consistently produced high 5 figures to high 6-figure deals, which my guess is this, uh, deal that we're gonna talk about here today is also gonna be one of those. Uh, but we're gonna soon find out here in just a second. If you're not currently subscribed to this YouTube channel, go ahead and click the subscribe button as we bring Deal Structure Sundays every single Sunday, not on Saturdays, only on Sundays, uh, so that way you can learn from all of the challenges we face and successes that our community and our team consistently brings when it comes to creative financing, buying real estate without cash, credit, or going to banks. Rick, welcome to another Deal Structure Sunday.

Thanks, Zach. Love it.

Awesome. For those that don't know you, because I can't assume that everybody's been following your story and seeing all the deals that you've done and your ability to retire, uh, just give everyone a quick synopsis of kind of where you were before you joined the community and then what you've been able to accomplish so far.

I've been in the defense industry for almost 40 years, just shy of 40 years, uh, and joined Smart Real Estate Coach, Wicked Smart, back in May of 2021, and within 2 days short of 2 years, I was able to leave my W-2. And I've since been a coach, coaching Starter and Immersion, so, and doing deals.

I love it, love it. Rick brought up Starter and Immersion, so those are 2 of our associate, uh, levels where we literally lock arms with you and do deals with you. Rick mentioned that he was a coach. I just did a Deal Structure Sunday with another one of our community members. And you got, if you haven't watched it yet, and I hope it's come out, Ken Shires out of North Carolina. He, as a part of our community, worked with one of our coaches, Russell Hamm, at the beginning of his journey, which helped him get the property, get the property moving or under agreement. And then Rick went ahead and I think he had to make a second call. Rick then jumped in and made another call. To this particular seller. And then, so then we got the property under agreement, and now Nick Prefontaine, my brother-in-law and buyer specialist inside our community, one of our coaches, then now consulted with Ken to launch the property and create an entire plan. So he's had access to 3 coaches right away throughout his journey so far, and Rick is somebody that plays a major factor in that. So we're hearing directly from some of the masters. Inside of our community right now. So that's awesome, Rick. So then walk us through, uh, maybe what your paydays look like, and then let's, then let's dive into this current deal that you just put under agreement.

The paydays on all the, all deals, or—

Yeah, let's, let's hear it. Let's not hold back.

So, uh, on 5 of my deals, they were just over $100,000 each.

So you have no deals that are under $100,000 right now?

One of them is just getting ready to cash out. It's going to fall just short of that because Um, it's cashing out early, so the principal paydown is not quite at it.

Justification of why your deal has not reached 6 figures. So, uh, you've done about 6 deals, right? All creative deals. And now this would be your 7th?

Uh, this one here is my 6th.

6th. Okay, so this will be your 6th deal. All those other deals are high 5 figures to 6-figure deals. Uh, would you say so far that you've got the investment that you made into our program, uh, as far as results of your deals?

5 times my investment.

5 times your investment when it comes to doing— that's not a bad ROI across the board. Now you get to, um, and now you get to share your experience, uh, with our community members. What do you like better now? I'm just curious, is it doing real estate deals like for yourself, or is it doing real estate deals with the community members?

I like both equally.

Okay, fair enough.

I get just as excited to watch our community members get deals and helping them do it. It's just a lot of satisfaction in doing that.

You like watching money no matter what enter into our community's bank account or your bank account? Fair enough.

Yep.

I love it. All right, let's walk through, uh, I'm gonna go ahead and pull up this deal, how you found it, uh, so like the, the lead source. Walk us through maybe the motivation. And how you were able to put this property under agreement?

Yep. This was a lead that came from one of my VAs.

Okay.

And it was a for sale by owner from iPlus Leads. And the story behind the seller, this is right across the street from University of Massachusetts in Amherst. And the seller's daughter lives there and they rent it out to other students as well. It's got 5 bedrooms and the father lives in Florida. So she is a graduate student at University of Massachusetts and is going to be going to, I believe it's Northeastern. So they're looking—

She's upgraded.

Yeah. Yep. She's going for her PhD program. So—

Oh God. As we like to say, she's wicked smart then. Yeah, I was— I, I went to a UMass but not the UMass. Uh, it was way too smart for me. And now this— now this lady's also going to University of Northeastern. That's the center into Boston, so she's easily graduating there and, and upping her game as she went from Western Mass to Eastern Mass.

Awesome.

Okay, so this was a— the college rental, uh, and you know, the parent— the family was, uh, intelligent enough to say, hey, instead of paying money to a university for housing. Let's just go ahead and just buy a piece of real estate and then let's rent it out to students so we can actually make money while our daughter is there at school.

So just to note, that last picture there is not a baby's, um, thing. Yeah, that's not for a baby, that's for a turtle.

Oh, okay, that makes perfect— that's why they call it Zoomass. That makes, that makes total sense. Okay, so, so great, great property, right? But I could see, um, and you could tell me, uh, yourself, but I could see why it might be challenging to sell it on the traditional market. Uh, how long was this seller trying to sell this property?

I don't know offhand. Quite some time, um, and they played around with the price, but I don't know exactly how long they had it on the market off the top of my head.

Yeah, I could just see that, right? I mean, this is— which is great for us— main road, Right next to a giant university, there's gonna be a very particular type of buyer, or somebody like ourselves, uh, who works with buyers that need time in order to qualify for loans, way more open to it, uh, when it comes to these types of structures. So love it. Okay, um, so then let's go ahead and, um, walk through this projection of these deals as well. And while we do that, let's begin walk through Uh, you told me originally that this deal came from— was it My Plus Leads?

Yes.

Okay, so if you don't have access to My Plus Leads right now, now this database, uh, provides the information including the seller's information, the location, and phone numbers to reach out to these sellers for expired listings, canceled, withdrawn, uh, for sale by owners, and I know, uh, for rent by owners. And they also are starting to come up with some other things. So If you want a free trial directly for that, go to smartrealestatecoach.com/myplusleads. Go grab your free trial. I'm telling you, it's the most inexpensive database out there that gives you access to MLS-type information so that way you can go out there and reach out to them. That's the most inexpensive one we've ever been able to come across. And that was actually the original one that we used in order to source data. So huge opportunity there. Go grab that. We'll add that to the show notes here as well. All right, so let's walk through the terms of this deal then, Rick. Uh, what was the, uh, debt on the property?

There was no debt on the property.

Okay, so we got a free and clear property. Okay, uh, so then what's the equity? What are we buying it for?

$690,000 even.

$690,000 even. Okay, and then what type of deal is this?

This is an AO on the sign-out.

Okay, so this is an assign-out deal. So the assign-out, uh, maybe you can explain it. What's an assign-out deal, Rick?

So an assign-out is where we're getting the buyer, we're screening the buyer and qualifying them, and then we're putting them under a lease purchase agreement and then assigning it back to the buyer or back to the seller.

Yep, sign that buyer's package back to the seller. So this is a really simple conversation to have, right? Uh, especially if somebody is a landlord or used to receiving cash flow from a property. Hey, Mr. Seller, do you want your price? Do you want cash flow? You want part of a non-refundable deposit? And you want to have a buyer in your house? Uh, most people would say yes, go ahead. And once we have qualified that buyer, just like we were going to accept them a part of our rent-to-own program, we simply assign that buyer's package Over the seller, and then we'll show you how Rick's gonna get paid here in just a second. Uh, so the term on this— now go ahead, Rick.

Yeah, this was originally, uh, approached as an owner finance deal. However, the seller wanted, uh, the monthly rent. He wanted the full monthly rent, so it worked out. I just, I just pivoted to an AO, and he wanted a shorter term.

Yeah, it's a great point. So Yeah, the intention always is to go out there and acquire real estate deals, but this is a great backup plan and how Rick used it, which was, all right, let's go for owner financing. Let's try to go buy it, then have the seller be our bank. But then instead, the seller's terms were unrealistic for Rick to make money. So Rick just said, all right, well, instead of like getting nothing from this deal, let me share with you how we operate on the backside or on the Exit, and then instead let's just have the seller step into our shoes and we get part of the deal. So the term on this deal—I'm assuming you're aiming for roughly a 24-month term for the the buyer. 24-month term, yep. All right, and what are we going out to market for for our tenant buyers? 719.9. 719.9. Okay. Any everybody usually asks right a common question. All right, how do you arrive at the Rent-to-own purchase price. So how'd you guys come up with that number?

So we want to increase it not dramatically, but enough that we can still move it on the market. And the buyers do realize it is a rent-to-own property. So it does go for a bit more. Putting it up to $739,000 or $749,000 might've been a little bit too high. So we went out at $719,900. Got it. Yeah.

So you would put a slight premium on the property, especially because you're doing a sign-out deal. It's, um, if Brick was probably buying it, uh, on owner financing, he probably would attempt to get a lot higher of a price or definitely increase the premium because now it's typically going to be a longer-term deal, um, from that standpoint. So we go up there for $719,900. Uh, what are we putting? I know this property is currently on the market. Um, what are we putting for a projection right now?

Uh, well, with a 10% down payment, payday, uh, the payday one, it was $71,900, and that split 50/50. However, um, my portion of that, which normally would have been $35,000, is, uh, capped at the markup, so that's, uh, $29,900.

Okay, so your, your potential earnings on this particular property in itself is gonna be $29,900. That's, that's your highest potential earnings on this property.

Yep.

I love it. Okay, uh, what is the rent that— because I'm just curious now, because you said that the seller wanted all of the rent— what are we going out to market for rent?

So we're going out— he wanted $4,500 a month. Um, what we did is we went out to market for $3,750, and the buyer on these deals pays taxes on top of that. So the taxes are $818.75, and so therefore the seller is still getting— he's getting $4,570 or $4,568. So he's still getting his $4,500.

Got it.

And that way, that's below market rent, uh, substantially below market rent. So we expected it to move pretty fast. We just went in that way since it's an AO.

Yeah, what is market rent?

It's about $4,500.

Got it. Okay, for that area and that, that size property, the, the market rent's $4,500?

Yep.

Because are we expecting that this— then this next buyer is going to be looking to do roughly the same thing as, as the current owner?

Yes, I've had some parents, uh, who have students going to UMass who have called on it. And normally we don't allow subleasing, but I did call the seller and the seller was perfectly good with it since that's how they— that's why they purchased it.

Yep.

So yeah, that, that's the plan.

Got it. So you could— I mean, me being a parent, um, being able to get into a rent-to-own on this deal because they're gonna still spend significantly less than if they pay for housing at the school, or if they had to actually go buy this property outright. Even if they didn't, even if they didn't actually follow through on the option, it's still going to be a lesser, a lesser payment. Because if I'm that end seller, I go ahead and put my daughter or son in the property and rent out the other rooms. Now I'm covering all my overhead, I'm probably gonna be making money. So it could even be a break-even. So that's a really— Really interesting opportunity. And this is why creative financing is always fun, right? Because all of a sudden you're open— you're now opening up many other pathways for other people, uh, to participate in this.

Yeah, I'll say one thing, and it expresses the value of having our community. Because it was across the street from University of Massachusetts, uh, on one of our mastermind calls, I was talking to Mallory. She's a professor at Penn State. And she knows how to deal with these properties. So she gave me some tips on how to market it more effectively because you're dealing with a lot of students and professors and parents.

Oh yeah. Interesting. I didn't even think about that. Yeah. So one of our other community members in our, in our highest level, High 6, they, um, they're a professor at Penn State. So that makes total sense on being able to, uh, really mastermind, right? The, the pure version of a mastermind to be able to actually access that information. to get this thing done. It'll be interesting to see if her tweaks are exactly what ends up getting this property sold.

Yep, absolutely.

What is your, uh, buyer activity like, um, going on right now? Like, how close are we to popping this deal?

Um, I've had a lot of students calling me asking if they can just rent it. Of course, that's normal, but I expected a high, uh, high activity from students. But I've had some professors call And I've had, uh, I have one parent called me the other day that would like to view the property, and they've got 2 students going there. That's what I was talking about. We've also had another buyer go through, uh, her and her mother own a business, so we've got some activity on it.

Love it, love it. No, awesome deal. Another potential $30K for you to make on top of this. It's definitely gonna lower your average, so stop doing AOs, uh, because it's definitely gonna lower your average, but Another amazing opportunity. Rick, any thoughts on either lessons learned directly from this deal or knowing what you know now, or any final thoughts in regards to, you know, your journey so far in investing in real estate?

Yeah, I think one of the things that I've— with this deal that was a little bit unusual, it was for sale by owner. The seller did not want to take it off the market as a FSBO, so we were co-marketing it.

Yep.

Um, so, you know, given there's a possibility of making nearly $30,000 on it, I'm okay with that. Yeah. However, what I did do is coordinate with the seller because we've been working very well together. So in his ad that he put up on Zillow and everywhere else, he added also available as rent-to-own for buyers with a good down payment. So I got his marketing and I got my marketing.

Awesome. A great way to coordinate And also really plant the seed in regards to that price is going to change if you're buying it via rent-to-own versus cash offer. So really good way for you guys to kind of back and forth on that as well. That's awesome. Very cool. Another, another technique that we just snuck in there as well. So Rick, thanks again for coming to another Deal Structure Sunday. Tons and tons of nuggets here. And tons of wisdom now that you've been, you know, in your journey here for the last couple of years. Massive opportunities are ahead of you as well, as always. Thank you guys for stopping by for another Deal Structure Sunday. Again, if you're not subscribed to this, this YouTube channel, please go ahead and subscribe as that way you're notified anytime that we put out another Deal Structure Sunday so that way you can see all of the challenges and more importantly, successes when it comes to these types of deals. If you want to come out and meet Rick, we have our upcoming live event, QLS Live. Um, that is going to be in September in Boston. I'll include the link below. You're definitely going to want to be surrounded by people doing these types of real estate transactions, as anytime we all get together, there is, uh, millions and millions of dollars worth of creative financing deals that are happening. Um, thanks again, Rick, and we'll see everyone again soon.

Thanks, Mike.