Millionaire in the Making – Todd Foster & Alecia Phillips

Hi Ron,

Here are the details on a Work For Equity Sandwich Lease deal we just did!!!

We put the property under contract with the Seller on a 4 year Lease/Option with an optional extension of 2 years. $0 down, $923/month payment beginning in 2.5 months. Our option price is mortgage balance at time of exercise + 20k. The current mortgage balance is $118k.

We found a boyfriend/girlfriend couple that wanted to do their own work on the property. The Tenant/Buyers closed April 1st with the Attorney, and we got a check for $3,000 (non-refundable deposit) and another for $1,195 (1st month’s rent). The total non-refundable deposit will be $6,000 (they are paying an additional $200 per month on top of the rent for the next 15 months towards the deposit).

Thanks again for showing us how to make this happen! Without my mentor’s and Ron LeGrand’s Work For Equity program this is likely a deal we would’ve passed up in the past just due to the condition of the property. We previously would’ve wanted to fix the property up and make it ‘pretty’ because we weren’t sure anyone would want it ‘as-is’. But Ron and you two taught us that there was a whole segment of the population that would want a property like that ‘as-is, where-is’, as Ron would say. We’re so very grateful your help and for Ron LeGrand and his 6 month mentoring program. Having the two of you as mentors made this process so much simpler, we couldn’t have done it without you!

In case you were wondering, here were the details of the deal:

Purchase Side:

• 4-year Lease/Option with an optional extension of 2 years
• Our payment to Seller = $923
• Option to Purchase = Loan balance at time of option exercise + $20,000 (Current loan balance ~$118,000)
• Option Deposit = $0

Sale Side

• 18-Month Lease/Option period
• Monthly Rent = $1,175
• Purchase Price = $174,900
• Option Deposit = $6,000 Total ($3,000 of which has been received, and an additional $3K to be collected at $200/month for next 15 months above the $1,195 rent payment)

Profit:

• Total Option Deposit = $6,000 ($3,000 at closing and an additional $200/month for next 15 months)
• Monthly Cash Flow = $252 / month for 18 months
• Purchase price difference (estimated) = $30,900 ($174,900 – $6k deposit – current value of option $138k)
• Plus our 1^st payment to the seller doesn’t start till May 10^th, so we pocketed the entire 1^st month rent of $1,195 from our Tenant Buyer.
• We figure the total profit would be over $36,628 if they when we are cashed out, but that number will get larger since it doesn’t take the mortgage buy down we are receiving into account.

We absolutely couldn’t have done this without you two!

Best Regards,

Todd Foster & Alecia Phillips