Can You Actually Make 6 Figures on a Deal When You’re Starting Out

Owner-financing deals are often six figures and up—but can you actually do them when you’re new to real estate?

We get a lot of questions about how long it takes to start making money in real estate and if new people can actually close the deals we talk about on here, our Youtube channel, and all of our other content.

The answer is unequivocally YES! (If you get the right mentor and educate yourself first…)

We structure our courses so that they give you all the knowledge, documents, and tools you need to start closing deals right away. In fact, the Associate that closed the deal we’re talking about today called it a “Master’s degree in real estate.” This was his third deal since he started in the terms business—with no prior real estate experience—and all three have been over $100,000.

Let’s take a look at what he did to make this deal so lucrative.

Helping a seller out after a divorce

Our Associate found the property in this deal through a Sly Broadcast that he had sent out earlier in the year. This is an automated system we use to contact lots of potential sellers at once, with hardly any effort on our part.

The seller had listed it with a realtor but it didn’t end up selling. The listing expired, and she decided to give our Associate a call to see what he could do. She wasn’t happy with the realtor she worked with and she needed to liquidate the property as soon as possible as she had just gotten out of a divorce and wanted to get rid of the house quickly.

When our Associate explained to her that he could not only take the house off her hands quickly, but it could be liquidated as soon as they got a buyer…she was over the moon! The property was entirely debt free, so our Associate structured an owner-financing deal.

Helping a family buy their first home

On the flip side, our Associate was able to find a great buyer who was thrilled to have the opportunity to buy a home. It was a mother with her two sons—both of whom were business owners—and an uncle. The mother was retired and receiving benefits from a work injury.

They had never been able to buy a home, primarily because the two sons had difficulty qualifying for a home as they were self-employed. Our Associate screened them right from the beginning and found they’d be able to qualify for a mortgage within about 24 to 30 months of starting a rent-to-own deal.

He used this knowledge to create a 36-month term for this deal, which gives him an extra 6 months to pivot at the end in case something happens and the tenant buyers don’t actually purchase the home.

One note on this deal is that we included everyone who earns income on the lease. That means the mother, the two sons, and the uncle. Only one of them has to get the mortgage and go through the credit check process—but including all of them on the lease makes it a lot safer in our end in case anything happens.

This is yet another example of how terms deals are a win-win-win. They benefit the buyer, seller, and the person doing the deal!

Oh, and one more thing—this was a dual signing. That means our Associate signed the contract with the seller and the buyer on the same day!

3 Paydays ™

We often talk about how owner-financing deals are frequently in the six-figure range, and this one was no exception.

Our Associate was able to purchase the home for a price of $420,000 on a 36-month term with the seller. He marked it up by $40,000, selling it for $460,000 to the tenant buyer.

For Payday #1 (the down payment), he secured $42,000 in total. This was split up into an $18,000 payment at the signing, $10,000 within the next 6 months, and then $2,000 after their tax refund the next year. This tax refund tactic is incredibly helpful for buyers as it basically allows them to convert their tax refund—which most people would spend frivolously—directly into a down payment. Our Associate set up the same thing for the following year, with another $10,000 payment and $2,000 at tax time, coming to $42,000 in total for Payday #1.

Payday #2 is the monthly spread. There was $1,800 going to the seller each month and $2,295 coming in from the tenant buyer. That’s a monthly profit of $1,195—and over 36 months, that’s $17,820 in total.

And finally, there’s Payday #3. We already mentioned that he had $40,000 surplus on the house from marking up the sale price. But the best part of this deal is that the $1,800 monthly payment to the seller was going entirely to paying down the principal. Over 36 months, that’s $64,800. Minus that initial $42,000 down payment and he’s left with $62,800 for Payday #3!

That comes out to $122,620 for this entire deal!

But there’s still one thing we’re forgetting… We always structure our deals so that we don’t start making payments until 30 days into the term, which means we capture the first month's rent. So you can add another $2,295 to that total price, making it $124,915.

As a reminder, this was our Associates third deal in real estate! And the first two? They were also over $100,000 each.

So to answer the question in the title… “Can you actually make six figures on a deal when you’re just starting out?”

YES! There’s the proof.

What did you make on your first few deals in real estate? Were they close to this? Comment below!