Selling a Home and Educating the Amish (At the Same Time!)

Our industry provides a unique opportunity to educate home buyers and sellers… Sometimes people who are completely new to the world of real estate!

In the terms business, we often deal with people who are first-time homeowners, buyers, or just new to the real estate world in general. It’s an easy way for people to purchase a home who otherwise wouldn’t be able to, and it offers homeowners a quick way to sell their house and maximize the return on their investment.

In this case, together with one of our Associates, we actually worked with an Amish family to sell their home. This family had recently left their sect and they were trying to sell their house on their own. As you can imagine, they found the learning curve to be pretty steep—they had no prior knowledge in terms of real estate or finance.

Ultimately, they were in a bind and needed someone to help them out.

An Associate of ours was able to come into their home, explain how our process works, and guarantee their house would get sold for more than they would get with a realtor. Let’s check out how it happened.

The 30-Day Deal

As you can probably guess, the source for this property was a FSBO (for sale by owner). This Amish family was trying to sell their home and they weren’t having much luck. We were able to close this deal out just 30 days after our initial call to the owners.

This was a sandwich lease purchase deal with a 48 month term. As you may have noticed, we are pushing for longer and longer terms to make these deals recession-resistant.

The purchase price was $192,500 and the monthly cost for the owners’ mortgage was $1,335. Because this house was in a rural area, the one thing we did struggle with was the monthly rent price. In order to make a sizable spread, we’d have to charge a fairly high monthly rate.

We actually received a lot of kick-back on the rent price when we initially listed the house, so we did end up lowering it in the end. Keep in mind, we had over 100 inquiries on this property during the 60 days that it was on the market!

We settled on a monthly price of $1,561—which provides a spread of $226. Not the best we’ve seen, but the other Paydays more than make up for it.

Speaking of Paydays, let’s get into the three Paydays on this deal. But first, there’s one important note before we get into the numbers. These numbers below are actually based on 25 months instead of the entire 48. The buyer wants to purchase the house in 25 months and they’re welcome to do it, but they will always have the option to take the entire 48 months if they need it.

So, with that said...

Payday #1 is the down payment. In this case, we got a down payment of $17,587. $6,597 of that was up front and the rest was paid in two installments in March and October. We often do this with buyers if they’re unable to pay the entire down payment up front.

After all, they’re usually coming to us because they’re unable to get a mortgage or purchase a house through normal means—so why should we expect them to make a massive down payment in one go?

Payday #2 is the monthly spread. At $226, this is on the lower end, but it does come out to $5,650 over the 25 months. If they use the full 48-month term, that number would go to $10,848.

Payday #3 is the final back-end profit. We were able to sell this property for $219,900… When you subtract the purchase price and down payment, then add in the principal pay down on the house over 25 months, Payday #3 comes out to $32,026.

All in all, that’s around $57,000 in profit on this property over 25 months. And if this goes for the full 48-month term, you can add on another $10,000+ to that number.

Educating and Helping an Entire Family

The money on this deal was great, but what’s even better is that we were able to help a family sell their home. One of the main reasons they wanted to work with us is simply because they trusted us. We were open and honest with them, explaining every step of the process and what they could expect. No one else was doing that!

The other part is that the owners of this house actually owed a significant amount on it. They owed $173,351, and with the price they had it on the market for ($192,500) there wasn’t much room left for profit on their end.

If they had decided to go with a realtor, this deal may have actually cost them money!

We were able to help them sell their house, make more money than they would have with a realtor, and educate them about the world of real estate… All while making a nice Payday on our end.

This deal changed this family’s lives for years to come…

And THAT is why the terms business is unlike anything else in real estate!

Have you helped a family in need with a terms deal? What was the outcome? I’d love to hear about it!