The Deal

The customer calls in and asks how the deal works. My response is,” we only put people in our houses that want to buy.” They usually say “great.” Then I explain if they want to rent first, I will try to find out how much they can pay down before they go in the house. All that money goes in their pot. The pot is the beginning of the down payment. Then each month they add an amount agreed, to the pot. When the pot reaches 10%, as an example, I will, or they can, try to get permanent financing. Provided they can’t get financed, I will finance them myself. The interest will be higher, usually 12%. Provided they can’t get a better deal, then 12% is fair. After they are in the house ninety days, they then deal with taxes and insurance. I add one hundred fifty dollars to the lease to go toward taxes and insurance. I sometime delay the taxes and insurance for a short period according to the customer’s facts.
The lease clearly describes in detail what the deal is. In fact the lease is the only one I have seen like it. As an example the customer is totally responsible for maintenance and repairs. The customer may have credit problems, if so; he will have time to improve his credit score. It will take a year or more to save enough in the pot for the down payment.
We have sixteen houses in the company, bringing about sixteen thousand a month income. The price of the company is Two million dollars.
I will try to help the buyer by training a new person, in fact, I’m training two now. I will also give the buyer a million dollar line of credit, if he will continue with my polices. The company is now at a good place to start growing. I’m going to describe how. You first raise your advertising budget accordingly using newspaper, TV, radio, and billboards.
The first year, as an example, buy ten houses. The houses will be worth at least thirty thousand each, on average, more than cost. You would make three hundred thousand that year, if the rest of the business broke even, and you would have no income tax liability that year. As an example, on this basis you can double your purchases and profit each year for five years, on the fifth year as you can see the profit would be four million six on the purchases that year. I repeat you would raise your advertising as needed to do the job.