How to Structure an ASSIGN OUT for a CANCELLED Property

Hey everybody, Zach Beach, CEO, smartrealestatecoach.com, where we buy and sell real estate without cash, credit, or going to banks. And go ahead and sell real estate so that way you can create 3 distinctive income streams. Payday 1 is your nonrefundable deposit. Payday 2 is your cash flow. And payday 3 is the equity in which you build into your property. We're going to share with you an awesome deal today on how we were able to acquire it creatively, and now we're exiting it, uh, creatively as well via rent to own. We got a familiar face as of recent, uh, Rick, who's out of Tampa Bay area in Florida. Rick, welcome back.

Hey, how are you?

Awesome. Well, uh, as much as I would love to think, uh, not everybody watches every single one of these Deal Structure Sundays. So if you haven't been watching these Deal Structure Sundays, Rick has been on, and of course, if you haven't been watching this, that means you're probably not subscribed to our YouTube channel. So go ahead and click the subscribe button as well. So Rick, if you could just give everyone a brief background of who you are, and then and then we'll go from there.

Oh, thanks, Ian. My name's Rick. I'm from Tampa Bay. Day job, I'm a database administrator for a bunch of hospitals, and Started doing rehab. Um, got to get my wife retired. So, uh, the whole loan process and rehab just isn't working out as well as we thought. So I found this and we're pivoting over to, uh, creative finance.

Love it. Love it. All right. So you got, uh, you're working in hospitals, you had some real estate experience, right? I believe you were doing like, you're doing virtual flips, right? In a completely different area than Florida. Um, how many did you have? How many flips were you doing before you ended up coming into the Wicked Smart community?

We've got 5 houses that were rentals. My wife just sold one. This one's going up for— I got one that's going up for a lease purchase. And then the other one still has a renter. So as soon as this one goes and they get out, I'm going to do the same thing with that one. And then the 2 here, we may keep because they're pretty good income generators. I love it.

Very good.

We've several flips before that.

Very cool. So this is a great way to add to your current portfolio. So if you're watching this, you're like, hey, I already do, uh, fix and flips, I already do the BRRRR method, uh, you already have long-term rentals. Now this is another way in order to structure more real estate deals and to be able to acquire new ways, uh, new additional revenue streams, uh, which is exactly what Rick's doing with us here. Uh, today as well. So I definitely want to dive into this deal, but he did bring up the word lease purchase. So just in case it's the first time watching our videos, a lease purchase or rent-to-own is when we go out there, we acquire a property, and then we sell a property to buyers that need time in order to qualify for loans. Especially in today's current market, the amount of buyers that can qualify for loans is getting smaller and smaller. So as soon as we get a property under agreement and we release it to the rent-to-own, Uh, world, that is a, a not only a huge market but a huge opportunity for additional profit centers as well. Um, Rick, and, and you're a part of our community, if you wouldn't mind just explaining to them like what your journey has been so far. I know you originally started in one level, then you moved to another. If you wouldn't mind explaining that as I go ahead and pull up the current deal that we're going to talk about here in just a second.

Oh yeah, I started in the Jumpstart. I found it at the beginning of the year, uh, started in the Jumpstart Jumpstart program, and the coaches were fantastic, and they helped me get a couple things going. And then I went to the In the Trenches, and that was such a phenomenal experience. And the confidence that I got from you guys alone was— it just made me realize I gotta jump up a couple levels. So I just went into High Tech.

Love it. And what have your results been so far since you started at the beginning of the year? Maybe tell us what your results have been so far.

It's been a learning curve. It's been a huge jump in everything that I've been doing. And right now I've got 3 properties that are under contract.

Love it. 3 properties in just about 6 months. So amazing job so far, which has been absolutely amazing. So why don't we go ahead and let's dive into this deal here in just a second. But Rick did bring up a couple different things. So if you are interested in learning more about our associate programs, we buy and sell real estate with you in the trenches. Go ahead and you can go. We'll have a link below. You can schedule a free advisory call. We'll go over the different ways in which we work with people. Then also, if you have interest in our In the Trenches boot camp, which is literally a three-day intensive boot camp where we literally make calls to your sellers and then structure those deals. And then go ahead and create a strategic game plan with you so you have the tools to leave and really create a business that thrives on creative financing. We'll also include a link here as well. I'll go ahead and pull this up. So if we could, let's dive into where did you find this deal?

This was a canceled from My Plus Leads.

Got it.

It was a— and when I talked to the seller, he Really just got really upset with his realtor. So there was— there's some bad blood there. So, all right, perfect for me.

So canceled, and, uh, it would mean that this property was on the market at one point in time with a real estate agent, but then the seller went ahead and actually canceled the contract. So now it came off the market. Now we have some databases in which we use. Uh, if you go to smartrealestatecoach.com/my-plus-leads, we'll include the link there as well. You can actually get, I think it's either a 7 to 14 day free trial, but it provides you all the names, emails, and phone numbers so you can go ahead and reach out. And that's exactly what Rick went ahead and did. Um, what's the motivation on this seller? So why was he, uh, selling?

Well, that's kind of an interesting thing. So he wants to get more money to buy more crypto. That was his biggest motivation, uh, in trying to sell that house. He has a renter in there right now, but it's This is helping to pay for his mortgage, but he wants the equity out to buy more coins.

To buy more crypto.

Yep.

Love it. So take a hard asset and go buy more crypto. Well, he could be right, right? We'll find out in the next upcoming years. But for sure, I'll stick with real estate because that's what I know. Okay, so the seller's interested in that. So he's got a tenant in the property. I'm assuming he's going to deliver it vacant though.

No, he's going to deliver it with the tenant. I mean, it depends on the buyer that he gets, but they're paying $1,600 a month towards that mortgage, so it almost cuts it in half.

All right, so tell me, what's the debt on the property then?

He owes $422,400.

$422,400. I'll go ahead and pull up the Uh, the deal structure sheet here so we can walk through it. Okay, so this is a sign-out deal, correct?

Correct.

Yeah, so the sign-out simply means that you're going to go ahead and lock in, uh, so you'll, you'll create a structure with a seller where we're going to agree upon a price, we're going to agree upon a monthly payment, and then we're going to agree upon a time frame. And then we're going to go out there and find a tenant buyer. And then once we have that tenant buyer, we vet them To the fullest degree, and we understand what their buyer's package look like, which is going to consist of background check, credit repair. It's going to consist of the non-refundable deposit that they have available today and over time, what they make as far as income for a living. And then we're going to present that package. And if the seller accepts the package, then we're going to simply assign that buyer over to, over to the seller. And then Rick is going to take part of that non-refundable deposit. So with that, so I'm curious on how you guys are going to work this as we take a pause on the numbers for a second. If the property has a tenant in place, is the intention to go out there and try to find another investor that wants to have a tenant, or how are you guys planning on navigating this?

Right now it's advertised as a 3/2. It is a 2/1 split with a 1/1, which is where he's got the rent. coming in. It's really going to be— since it's an AO, I'm going to try to find a tenant buyer, and it's really up to them to decide if they want to keep a tenant in there to pay for some of the mortgage, or if they want to just go outright and just knock down a wall and make it a complete 3-2 and pay the mortgage themselves.

Got it. So right now it's essentially a duplex?

It's essentially a duplex.

Okay, you get a duplex with a 2-1 and a 1-1.

Correct.

All right, and then which one is tenant occupied?

1-1.

The 1-1 is tenant occupied, and that's bringing in how much per— in rent?

$1,600.

That's $1,600 in rent. All right, so the intention is to go find a tenant buyer that is interested in occupying this property, this side, the 2-1, uh, and then eventually go ahead and purchase the property. So Uh, is the plan to then have the tenant buyer— so they're gonna pay $1,800 a month, and then, um, or whatever we can figure out, or whatever the max amount we can get for the seller— and then keep the tenant in place? So that's one route. Or you can have the tenant buyer take over all of it. Um, and then actually, if you go the first route where you place a tenant buyer on the house, you then could— they could have the option to buy it. But then at the same time, you— the seller could continue to rent out that other side and then they'd really be cash flowing this really nicely.

Yep, that's, that's the plan. Yeah.

So multiple options here with a duplex, which is always great. Okay, cool. So walk us through. So the $1,800 that we were advertising for, for rent or the monthly payment, is that for the entire property or is that for Is that just for one side?

The entire property is, um, the $1,600 plus the $1,800. That's the mortgage, uh, that's PITI. So if they keep the tenant in place, then they get the $1,600, and that brings the rent down for— or the lease down for the, um, tenant buyer down to $1,800.

Got it. Okay. All right, so let's, let's jump back up to the numbers. So $422,000 is the debt on the property. What's the monthly payment?

Uh, $3,400.

Okay, so the monthly payment's $3,400 on this.

$3,100 and change.

And then the, um, what was the equity of the purchase price on this property?

Uh, $105,600.

Oh, $105,600. So that brings us to what, $430,000?

$528,000. $528,000 is the purchase price.

$528,000 is the purchase price to, um, to the seller. And then what are we marketing it for to our tenant buyers?

$554,400.

$554,400. Okay. Uh, and then the $1,600 plus $1,800, that's what we need to get covered on this property. So Is the seller trying to make money off of this? Is he just trying to get the $3,400 covered?

He's just trying to get it covered.

Okay.

He just wants his equity.

Yeah, got it.

All right.

So then the equity play is going to be, of course, we're going to be looking for the tenant buyer that has the most amount of nonrefundable deposit available.

Okay.

So we went on the market and interesting enough, right? Didn't you tell me that you've been trying to get tenant buyers in the house? But then the seller went ghost on you?

Yeah, it turned into a little bit of a left turn. He wasn't responding to phone calls or texts. And then I started making phone calls and it just went straight to voicemail. And after some research, I found out that he got arrested for a DUI.

Oh, man.

So he actually gets out today. So I'm going to give him a call tomorrow to see about it. Because I've been keeping up on the buyers. Yeah. And telling them it's not ready yet, but I'll put you on the list and make sure you guys know first so that we can set up a showing so you can see the house. So it's on pause right now, but I'm still marketing it. I'm still collecting names.

Love it. So once this thing goes live, you got a list of people that you're ready to go ahead and push into the property?

Correct. Love it.

Very good. All right. So we're expecting to get— how much is the down payment? Or the AIM non-refundable deposit?

10%, the $5,544. So $55,044 or $44,000. Yeah, close enough.

Yeah, close enough. So what's the split amount for you?

Well, 50/50.

Okay, great. All right. So the intention is, so you get a 50/50 split, it's like $22,000 to you, $22,000 to him.

Uh, $29,200.

$29,200. That's why I have you here. $29,200. $29,200. Okay, so then Rick's, Rick's gonna make roughly $29,000. And now that can come up, uh, all up front or over time as well. This is the, the power of structuring these types of transactions versus, you know, like a traditional wholesale. Because if he was, say, traditionally wholesaling this property, he'd be selling it to a cash buyer and it would have to be below market. And at the same time, he's only going to be able to collect what he can make up for the difference. The cool thing about this type of strategy is that this tenant buyer may come in with 3%, 4%, 5%, up to 10%. And Rick, no matter what, can make up to $29,200, whether it comes up upfront or over time, because Our tenant buyers tend to have a package where they put down, say, 5% today, but then they'll put the other 5% over the course of 24 months. And now Rick has the ability to create a continuity-based real estate investment model for himself without any liability on this type of transaction, which is really powerful to be able to continue to go ahead and structure that as well. So this particular seller I know he was on the market when he— and he canceled. What was the purchase price that he was on the market when he canceled?

Well, that's, that's an interesting story. Um, the realtor had marked it up over $600,000 and he got an appraisal for $528,000. So he got into an argument with the realtor and that's why he canceled, because he wasn't getting any movement on it at all.

Because he was extremely overpriced.

Extremely overpriced.

Okay, so you got— you guys have an appraisal in hand of $528,000 and you're selling it for $550,000 to a tenant buyer. That feels right, uh, in general, because that thing will appraise in the next 2 to 3 years probably above and beyond that, uh, which is awesome. Okay, so this particular seller is gonna make, uh, an additional, let's say, $20,000, $29,000 if you sell them for $550,000 versus the appraised, uh, $528,000. So he's making an additional $25,000 plus no fees. Um, do you know the principal paydown roughly on this loan?

Uh, $105,600. Oh, I'm sorry, that's the equity. It's the $422,000 minus, uh, well, $422,400, what he still owes on it.

Yeah, I was asking like on the monthly payment of the $3,400, do you know how much that is principal?

Uh, I have it written down, but I didn't put it on this sheet. Um, I think it was like $300 or $400. He just He just refinanced like a year ago.

All right, so let's just do $400 times 24 months. So then he'll also make another $9,600 in principal paydown on top of that. So now he's closer to, you know, $25,000. Now he's at like $35,000 in addition. Plus he has the ability to depreciate this property, so he's got tax benefits. So lots of win-wins. Uh, from this, uh, from this property. Any, um, any ahas or anything like that that you had while going through this type of transaction? And any, uh, additional stories, anything like that? Uh, you know, in case— the reason why I ask is like every single deal usually teaches us a lesson. Uh, I'm just curious if you've had a lesson learned yet from this particular deal.

Oh yeah. Um, my first call to him, he actually had been getting calls about Lease purchasing, owner financing, different people had reached out to him for other things. And I mentioned that we are accredited, so be careful who you deal with. And as soon as I did that, I didn't even have to make a follow-up call. I barely got through the first call and he wanted me to come over to see the house and explain this and start going through it. So it was just, he literally just pulled me right out and just had me go for it.

Love it. And so the accreditation is, is certainly a huge win and a major factor with a lot of deals that were happening right now. So if you go through our Quantum Leap System 4.0 and you go through the process, you'll actually— we'll get you certified in the Creative Financing Real Estate Association. And that has really pushed people over the edge to work with our community members and our business owners. Because of the amount of knowledge in which they have for for this really this specific type of model. So if that's something that you're interested in, we'll make sure there's a link below as well because I mean between you and I can just think of like a handful of other people, it is hundreds of thousands of dollars in profits that are coming to our community members simply because they're using that script and even more importantly because they're actually. Structuring these deals appropriately to solve sellers' challenges. So I love that you brought that up. Awesome. Well, Rick, it has been another absolutely amazing Deal Structure Sunday, and you continue to be on the rise here as like a rising star of us. So I'm assuming you're coming to our QLS live event in Boston. So I'm going to go out and throw it out there. If you guys want to meet Rick and pick his brain on how he's been doing these real estate deals now, he's really been on the come up over the last. 6 months. Uh, he'll be there to speak with you guys. We'll include all the information. This is going to be on September 24th and 25th in Boston, Massachusetts. We're going to have well over 100 creative financing specialists in one room, uh, talking creative financing and doing real estate deals along with so many guests. So make sure you go ahead and grab your ticket, qlslive.com. If you have not subscribed to this YouTube channel, go ahead, make sure you click that subscribe button. so that way you are notified on, uh, all of the creative financing deals that we put out there every single Deal Structure Sunday. I'm Zach Beach, CEO, Smart Real Estate Coach. Everybody have an amazing Sunday, and we'll speak again with you soon.