Chris Prefontaine evaluates a subject-to real estate deal using payday projections. He buys a $228,000 property appraised at $273,000, collects $2,020 monthly rent against a $1,932 seller payment, and projects $86,910 total return over 42 months by holding 18 months then selling for $300,000.
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Basically, we'll have like the how much money you made, actual money you made on this one, and then add it to what you're going to make on the other. It's a sub-2 deal, right?
Yes, correct.
Is there any— and you're buying it for $228,000.
Is there any equity in the deal? There is about— yeah, it was appraised for $273,000. So that's what, $45,000?
I just meant like, is the seller—
No.
Seller finance, straight sub-to deal?
Straight sub-to. Awesome. Okay.
You're selling it after 18 months for $300,000 unless you convert the current tenant to a buyer.
Correct.
Okay. You have a 60-month term here. There's a— did you tell the seller you'd pay off their loan in 60 months?
No, that was just choosing I did not. There's no end date on the loan. So I was just choosing a number to be able to put something on paper. That's okay.
So all I did was, and we can talk through this, all I did was put the $1,932, which is the monthly payment to the seller, the $2,020, which is your current rent payment. So it's $1,832 Times, I just did $88,000, 18 months, because that was—
Yep.
What do you call it? That's what you're currently doing for the 18 months. And then I just put an equity position at $72,000 because we're going to either sell it to the tenant buyer for $300,000, or once the tenant buyer leaves, we're going to sell it for $300,000, assuming the market's the same and doesn't go up. And then what I was thinking was we can just do some basic projections of like, so this would be Senate, this would be fire, and then we could do like a $30K. We could keep the $0.88 just or $88. And then we'll just do a 30 or 24-month term on this end. And that way people can see it, right, on how you're translating this.
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So we'll assume 1932, still 2020, still So $88,400.
Do you know what the— what's the principal paydown per month?
$267.
$267 times 18 equals—
this would be a good one because it's different.
Yeah.
Right, and we already collected 30,000. We got How was Israel?
It was fabulous. Thank you. Yeah, it's awesome. Athletic moments. We did outtake Go to the building shelter a couple of times.
Oh man, must be strange because yeah, what a way to meet your neighbors. Yeah, yeah, exactly. Oh man, yeah. All right, so then we'll take 1584 plus 4806 plus 30,000 plus 2 plus 64 plus 48. That will give us our total and we'll walk through that.
So 15 points.
Basically, we'll have like the how much money you made, like actual money you made on this one and then add it to what you're going to make on the other. And was this one of those skills from what's-his-name?
No, no, this was fire.
So I came up with roughly 86,910 after a 24+ 18, 42-month term.
