What If You Could Make an Extra $1k to $3k on Every Deal You Make?

Sometimes the devil is in the details. In this case, there are a few thousand dollars in the details.

We have associates all across the country who are working at varying levels. We also continue to add our own deals every month as a family company. As a result, we’ve seen our fair share of exciting situations and unique deals. But more than just stories, some nuances pop up here and there which we’ve learned to take advantage of.

It just so happens that one of these nuances can save you between one and three thousand dollars on every deal you make. Curious? Let me explain.

Where is this money coming from?

Let’s set the scene.

You’re coming to the end of a sandwich lease purchase i(t could also be a cash out of a subject to deal as well) where your seller is now transferring directly to your buyer. In most cases, there will be some underlying debt—which means there’s going to be a mortgage payoff. You’ve probably had dozens (or hundreds) of deals like this. If you haven’t, you will if you are buying on terms and participating in sandwich leases.

But over the years, and after working with associates across the country, we’ve noticed something odd that happens on every single payoff. When that mortgage payment goes in, the attorneys always round up the per diem payoff. Always.

Why? Well, the closing has already taken place and the people are moving in. They’re assuming this is going to get recorded. But the problem is, it can’t get recorded if the payoff is off for some reason. Even if it’s two dollars short, it won’t get recorded—and that’s a problem. As a result, that wire or check is always going to be more than the actual payoff.

Now, believe it or not, a lot of these attorneys are still mailing checks! Or they’re doing a wire transfer. But either way, they need to make sure that payoff gets recorded. And to ensure it does, they round up the payoff so they can ensure there aren’t any issues at the bank. It goes to the bank, it gets recorded, and then the overage—the amount they rounded up by—gets sent back to the seller as owner of record.

Now, you might be thinking, “So they round it up by a few bucks, what’s the big deal?” But the crazy thing is they always round up by a massive amount, when you consider that’s your money. We’ve found that on every single deal that closes, without exception, there is somewhere between one and three thousand dollars refunded back from the payoff.

Just yesterday, we were funded on a payday #3 (sandwich lease cash out) and the settlement statement was off from my math by approximately $1,800 and, sure enough, it was the payoff of the first mortgage rounded up.

This is not a joke. This is simply one of those small nuances we’ve seen from being in the trenches with our own deals and from working with our associates—and it happens on every single deal.

Getting that money into your pocket

In 2014, we were first exposed to this phenomenon when one of our sellers was honest enough to call us and say, “Hey, I just got a check in the mail. What should I do with it?” We told them to send it to us, and what do you know, it was for $1,800!

Now, are most sellers going to do this? Of course not. Here’s how you can make sure that overage money gets into your pocket.

During a sandwich lease purchase deal or subject to deal, you have an escrow overage letter that allows them to send any escrow overages to you or to apply it to your principal on the underlying loan of your seller (which is in their name). But there’s no letter stating, “Hey, if you happen to have an overage at the end of the deal, send it to us!” There should be, though. And there’s no reason why you can’t send them that letter.

So, we send it!

When the attorney sends the payoff in, simply instruct them to also send a letter that directs any overage to be sent to you and your company. ...And that’s it. It’s that simple.

We taught this at our Business Scaling Secrets Event and showed actual HUD-1 statements from our associates with as much as $2,400 coming from this simple tactic. If you’re doing one deal a month, that letter can add between $12,000 and $36,000 to your bottom line.

I shouldn’t have to tell you how valuable that can be. You just got a raise.

Is something you can add to your process? How much money could you be adding to your bottom line?