A real-estate investor walks through a three-way call with a Virginia seller to show why the initial subject-to strategy didn't work, then pivots to an Assign-Out structure where the seller retains involvement, gets a non-refundable deposit, and receives monthly cash flow and principal paydown.
Chapters
Our options are not a one-size-fits-all. There are times during your conversations with your sellers that you're going to have to go ahead and pivot your options to one of our other options. Let me give you an example. I was on a 3-way phone call with one of our associates down in the Virginia area, and we're having a very in-depth conversation with a seller who we believed would be a great opportunity to purchase the property subject to the existing financing. Now, all that means is that you're going to buy the property, you're going to close on it, the mortgage is going to remain attached to the seller for a period of time, and then on or before a certain time frame, you're going to go ahead and pay off that mortgage and if there's any equity involved. Now, the reason why we thought this to be the case is because this was a property that the seller originally had as a rental. And they were interested in creating long-term cash flow. So we thought this would be a really great opportunity to, to have this. So we started off the conversation with this option, but we quickly decided and quickly realized was that this was not the best option. Now, the way we look at all of our deals and the way we communicate with sellers is we need to determine what's the best option for them How do we solve their problem? How do we get them from point A to point B and then create an option that makes financial sense for us as the investor as well? We're in this business to solve challenges. So by having that mindset, we then quickly shifted and we pivoted to an assign-out deal. Now, an assign-out deal simply means that you and the seller are going to agree upon a price. You're going to agree upon a monthly payment. You're going to then take it to market because you have equitable interest in the home. You're going to then bring the buyer, the tenant buyer, the rent-to-own buyer through a process where now you have a buyer's package. Then you're going to simply assign that buyer's package to the seller and exit the deal. We realized that this seller wanted to be more hands-on. He wanted to still be involved in working with the buyer. And also, he was becoming less flexible on the terms of this agreement. So the only way that it really made sense for us was to create this AO option for him, or a sign-out option. So at that time, we then quickly pivoted and we said, hey, you know, based upon everything you're telling us, this is what's going to make the most sense for you. Now tell me if this works for you. What we're going to simply do is we're going to be able to get you A down payment. You're gonna get a portion of a non-refundable deposit that's above and beyond your price. You're gonna be able to get your price, you're gonna be able to get cash flow, and you're gonna be able to build in wealth in this property because you're the one that's gonna benefit from the principal paydown because you're the one responsible for working with the buyer. And we're gonna go ahead and set up a package for you, and we're gonna hand it over. You accept it or reject it. If you accept it, we both are gonna do great financially here. And now we helped out a buyer move into a property. Once that was presented, did he say, yep, that's exactly the option I'd like to go with? So the original question that we get asked is, so when do you pivot to an AO? When do you pivot to that assign-out option? And the reason that that was asked inside our community is because an assign-out is the option that we typically would use last. It's the catch-all because— From our perspective as being investors, we want to buy and/or own the properties so that way we can create long-term cash flow and long-term wealth for our companies. So we pivot to an AO simply when the other options do not fit and we know that that option can solve the seller's challenge. Now, all of these options that we're describing here, you can find in our ebook. You just go to smartrealestatecoach.com/ebook. And that will allow you to get a great surface level on the different options that we have available. Now, our job as real estate investors is to solve challenges, and you solve the challenge with your options.
