In this Q&A session, Chris Prefontaine answers a question from his high‑level coaching client Jason about structuring owner‑financed deals when the seller is free‑and‑clear and wants to avoid an early cash‑out. Chris explains that the buyer’s option to purchase can be contractually limited (e.g., not exercisable before year 5) and illustrates this with a student case where understanding the statute of limitations on existing liens allowed the seller to wait out $180,000 of debt. He then proposes a rent‑to‑own pathway: the buyer first rents for up to two years, builds a 20‑25 % deposit and demonstrates perfect payment history, after which the investor (Jason) can owner‑finance the property at a below‑market rate (e.g., 4.5 %) while making principal‑only payments on a 0 % seller loan. This creates strong incentives for the buyer to stay in the deal for the full ten‑year term. Chris also mentions advanced clauses such as pre‑payment provisions to protect against interest‑rate changes, and highlights the growing niche of free‑and‑clear homes (now ~40 % of U.S. homes) as a source of six‑figure deals. The video concludes with calls to action for further resources and live events.
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Welcome to this week's Q&A Thursday. This one came directly from a gentleman by the name of Jason who was in my President's Club. President's Club, side note, is a very high-level personal one-on-one coaching that I do with just 6 people and they're hand-selected. And so when I bring questions from them, you can usually bet that it's higher level. Jason happens to be a private lender too. So this one's going to be related to that in a way. So here was the question. I have a I have a seller that, by the way, came as a referral from my mother. So very strong seller. I'm going to get this deal. They're free and clear. They want to do owner financing. They don't want to be cashed out. Side note, guys, I hope this is a huge lesson for you because so many people say to me, how do you convince people to do owner financing and take monthly principal-only payments? We don't convince them of anything. Remember what we do? We solve problems, right? We provide solutions or we help people accomplish a goal the market's not accomplishing. If we do all that, and when the woman says, "I want all the money, but I'm free and clear, and I can do it over time," Jason's reply should have been and was, "Yeah, let's do it. I can pay you top dollar for that because she wants to do a ten-year deal." Guys, if you just one second think about, and I'll get to Jason's answer. Think about the value of ten years of principal only pay down. So then his question was, "Okay, so I have this setup. Can I restrict my buyer?" my tenant buyer that we're going to fill the property with, which is how we— a majority of our exits are, at least at the beginning. Can I restrict the buyer from when they can cash out because my seller doesn't want to cash out early? Capital gains and estate planning reasons, which is very typical of free and clear owners. And another side note, about a decade ago, the free and clear properties in the United States were 33%. They're 40% now. 40% of the homes in the United States are free and clear. Might that be a cool niche for you to create some 6-figure deals? Just a thought. Now, back to the question. I said to him, yes. First and foremost, could you, in your agreement with the buyer, just restrict when their option can be exercised? Yes, you can say cannot be exercised before year 5 or whatever. And I'll give you a quick story on this where it was worth $180,000, $180 grand. One of our students, David, brought me a deal and he said, hey, Chris, Get this cool deal. The seller, as far as they're concerned, is maxed out. They owe about what it's worth, if not a little more. However, what I found was there's 4 or 5 liens totaling $180 grand, and that's why the seller is like, I'm done. I can't even sell this thing. I got these liens. So I said, Dave, go check with your local attorney, research what the statute of limitations is on each one of those liens, meaning when does the— what year does it have to hit for those to drop off? That's what the statute of limitations in my, my simple language is. Well, what we found out was in his state, 5-year statute of limitations. We were already at year 2.5. All he had to do is make it for the other 2.5 years and 180,000 dropped off. So did we have incentive to limit that buyer that they couldn't cash that house out before the 30th month? Yeah. So we did that. Now, what are some other ways you can do this? Well, I said to Jason, let's do this. So it's a win-win for you and the buyer. And he said, okay, interesting. How? Well, let's bring the buyer in as a rent-to-own buyer and tell them right up front after they qualify and they've passed the smell test and we know that they can be a strong, deserving buyer, let's tell them that they're going to be a rent-to-own buyer for up to 2 years and that we need to see perfect payment history for 2 years. And we need to see their deposit that they pay over time, their down payment get up to like I said, Jason, whatever you're comfortable with. But I personally would not transfer a deed if my buyer didn't get up to 20 or 25%. So I said, okay, let's replay that. 24 months of perfect payments and take your time, Mr. and Mrs. Buyer, and get your deposit up to 25%. When you do that, I will owner finance you, Mr. and Mrs. Buyer. This is Jason talking to them now as the investor. And you can do this. I will owner finance you and I'll give you a super aggressive rate that you can't get on the open market. Why could he offer that? He has a 0% interest loan with the seller. He's making principal-only payments. Now he can go to the buyer and go, I can give you a 4.5% rate. Can they get a 4.5% rate now in the market? Nope. I don't even think they could buy it down and get to that. So do they have incentive to stay in that deal at 4.5% and never go refinance, Jason? Yes, they have every incentive in the world to stay in that deal. Jason just created a win-win scenario for the buyer, the seller, and himself to stay in that deal for 10 years. At the end of 10 years, he could do all kinds of things. He could extend this. He could cash out the seller. The seller could say, no, I don't want to cash out. Let's go further. All kinds of things. What else could you do just for some more advanced stuff? Well, you could structure a prepay in there, right? And so that No matter what happens interest rate-wise, they can before the next year pay off that loan without getting a heavy prepay. So just food for thought. There are so many pivots in these deals and— Not sure where to get started? Go to smartrealestatecoach.com/getgoing for free books, strategy calls, and a whole bunch more. We're going to help you get going the wicked smart way. We've been after this for over a decade doing exactly that. Now, one question Jason asked is worth hundreds of thousands of dollars. Be sure to see our 6-figure formula for all free and clear deals so you can go out and get 5 or 6 of those next year. That is a complete game changer. Now, if you want to see this live, like you want to see our blueprint, you see how we structure these real deals in this market, go on over to 3paydayslive.com/youtube and attend our fall event. We've been doing this for 11 years, just the events, the annual event. 3, the number 3, paydayslive.com/youtube and get registered for that event and come hang out with us and learn how to do exactly what Jason did.
