How to Triple the Down Payment on a Deal

With terms deals, you have the unique luxury of being able to change the deal in a multitude of ways…

Is it really possible to triple the down payment on a deal? Well, yes! But the caveat is that this isn’t something you can do on every deal.

Today, we’re looking at a deal that had a few unique nuances that allowed our Associate to triple the down payment. This isn’t something anyone can do on any deal, but the important lesson is to understand that there are so many different ways you can alter a deal to make it work in your favor (or the seller or buyer’s favor!).

This is just one of them.

Anyone can do deals like these!

Before we get into the specifics of this deal, it’s important to take a step back and understand that this deal was done by one of our Associates… And it was his first deal ever!

People seem to think that real estate is only for extroverted, entrepreneurial types who are great at selling. And that’s just not the case—anyone can do these deals!

In this case, our Associate wanted to explore real estate so he started reading, listening to podcasts, got his real estate license, and then ran into our podcast. This is a guy with a family and a normal job—but he decided to try and commit 10-15 hours a week to real estate, and he ended up completing his first deal within six months.

You do not have to be an expert seller or an expert in real estate to do deals just like these. All it takes is a bit of effort, some patience, and some guidance from a mentor.

Making $75k off a postcard

The deal in question was a sandwich lease that our Associate acquired from a mailer. Now, we like to point out that in most other real estate niches, people are sending out thousands and thousands of mailers. It’s not unheard of to spend $10,000 per month on mailing campaigns in other niches—not us.

We don’t recommend spending even close to that amount because it’s just not worth it. We prefer quality over quantity—so we send out a small amount of postcards, but they’re going to a very targeted list of leads who we know are already qualified.

In this case, our Associate spent about $200 on mailers. And it worked out, seeing as this deal came from one of them!

This was an expired listing that had been on the market for a while. It was originally put on the market for $329,000 but the agent kept bringing the price down, eventually stopping at $265,000. The seller didn’t want to go that low, so they pulled it off the market.

When they got our postcard, they reached out and it was clear that we’d be able to make a deal. Here are the specifics…

The house was purchased for $275,000 and the seller owed $172,000 on it. So what we’re doing is simply paying off the $172,000 loan and giving the seller the remainder of the equity, about $102,000.

Payday #1 is the down payment. This originally started as $10,000, but there was a unique circumstance that allowed us to increase it significantly.

The seller in this deal actually owned multiple houses and was trying to sell another one. Our Associate had his real estate license and actually took the listing on the other house! He structured the down payment so that he would get $10,000 up front and then an additional $21,000 once the other house sold!

He was able to effectively triple the down payment with that one simple trick. Now, this isn’t something that will necessarily work for anyone—but the important part is understanding that you can always change a deal depending on the situation you find yourself in. And hey, if you have your real estate license and your seller has other homes, you may actually be able to put this one to use!

Payday #2 was the monthly spread. In this case, there was $2,195 coming in from the tenant buyer each month and $1,650 going to the seller. That’s a monthly spread of $545, which comes out to $19,620 over the 36-month term.

Payday #3 is the back-end profit, which came out to $35,000 as our Associate was able to sell the house for just under $310,000. There was also $600 per month being paid down on the principal, so when you add that in over the course of the term and remove the down payment, the total for Payday #3 comes out to $25,600.

Add all those up, and this deal comes in at $75,520. Not bad for a first deal!

Have you ever altered a deal to handle a unique situation? What was the situation and what did you do? I’d love to hear about it.