Example

For this example our seller will be selling their house to us for
$250,000

Closing Cost: Lets take a look at the closing cost first. When selling for all cash, there are fees associated with the transaction as I’m sure you’re familiar with. Here are some nation averages.

• On average it takes 45-90 days to close and get paid
• The cost to sell runs between 12% to 15% on any transaction. Check Zillow and they will show you the same thing
• 5 to 6% is the normal realtor fee. Even if you’re selling FSBO you will be expected to pay 2 to 3% to the buyers realtor which most home buyers have. If you don’t the buyers realtor won’t even consider bringing your property to their buyers attention.
• 3% additional cost in negotiation. No one ever pays full price and after the typical inspection period the inspector will always find something wrong (that’s their job). Buyers will see that and want a discount or the issues repaired. We often call this “bribe money”
• Lastly there is the additional 3% for actual closing cost. This includes closing agents, attorney’s fee, property tax proration, utility bill proration, conveyance and transfer tax. It adds up insanely quick!

Total Closing Cost

By selling to us, our seller pays no closing cost. We’ve already saved our seller $25,000 to $37,500 of their hard earned equity

Cash Flow: Next let’s talk about the monthly cash flow our seller will receive. This is money in their pocket at the end of each month to use as they wish. Monthly cashflow is typically reserved for landlords, but with how we buy and sell our seller with have NO landlord duties or responsibilities. How is that possible? Well lets look at some facts …

• What I do is specializing in selling to folks who normally don’t qualify for a bank mortgage, which is about 80% of all buyers, and sell to them on our lease to purchase program. I call them Tenant-Buyers
• During the term of their tenancy they are responsible for all repairs and maintenance. Remember, they are buying the home so they will take extra good care of it. Look at it this way. If someone rents a car, they aren’t going to change the oil, wash it, do a tune up etc. BUT if they are buying it they will take care of it because it’s their own.
• We only sell to people who will qualify for a mortgage to purchase the property in one to two years. We work with credit repair specialist and mortgage brokers to ensure our Tenant-Buyers are in a position to purchase in one to two years.
• The Tenant-Buyers are required to put a substantial non-refundable down payment on the property, so they have skin in the game from the start and are highly motivated to purchase the property
• Lastly remember that because we are selling on a rent-to-own, the tenant-buyer is BUYING the house, NOT Renting. They are only paying rent for the use of the house while getting qualified for a favorable mortgage.

They handle all the maintenance and repairs as if they own it, which means we can get some cashflow without any of the landlord obligations to you. You are now the bank. Think of it this way, when was the last time you called your bank and asked them to come fix a toilet? The bank would just laugh at you right?

Total Monthly Cash Flow to Our Seller

Our seller gets their cashflow from the difference between their monthly expenses (often just the mortgage payment) and what they get for monthly rent. For this particular property our seller will earn a whooping $850 a month!

Principle Reduction: Okay here comes the exciting part.  The Tenant-Buyer is now paying you rent. Which means the monthly rent is just for the use of the house. So when they pay you for the use of the house, you pay your monthly mortgage payment to your bank from this income right? Well as you can guess, each time you do this you reduce your mortgage amount, and owe the bank less on the home. So the Tenant-Buyer is actually paying your mortgage off, and you are NOT!

Total Principle Reduction

Now check this out. With our seller in our example they are locked in at a 5% interest. Which means the following.

IRS Depreciation: So if you’ll like that, you are going to love this. Because you don’t live in the house, the government allows you to deduct depreciation for this property off your taxes each year. Which is another huge advantage of not selling for all cash now. The average percentage is around 3%, which comes right off your income, and will be less tax you have to pay to Uncle Sam each year

Total IRS Deductions

Lets take a look at what this looks like for our example property.

Appreciation: Now the last part I want to tell you about is appreciation. For the last 100 years, the average price increase per year on real estate is about 3% a year. Often it is much higher, as you have seen since covid and the last few years. So over the course of this term your property is earning appreciation at a rate of 3% or higher!

Total Appreciation

So for our example property out seller gets to benefit from …

So What Does This Mean for our Seller?

It means from simply selling to us on creative financing our seller could see exponential profits over the course of one to three years! Lets break them down