Case Study: Articles of Agreement for Deed (owner financing)

Case Study: How I Turned Articles of Agreement for Deed (owner financing) converted into a BRRR Property Rental for a 15% cash on cash return. Lake House in Antioch, IL

What is an Article of Agreement for Deed? Also known as a “Land Contract” or “Contract for Deed” in some states. An AAD is an agreement between a home buyer, under which the buyer agrees to pay to the home seller the purchase price (plus and agreed-upon interest rate) in installments over a set period of time.

Upon execution of the AAD, the home buyer immediately takes possession, but the seller retains legal title to the property until the buyer pays the full purchase price.

The seller delivers the deed to the buyer once the final payment is made. Installment contracts or articles for warranty deeds are an alternative to traditional home financing and can benefit both the seller and buyer in a real estate transaction.

Finding the Property

Now for this property, it was simply driving around in a boat. I saw for sale sign and I gave it a call.


After discussing with the realtor what the seller’s situation was it piqued my interest. The home was an estate sale. The daughter inherited the house from her parents that recently passed away. The house was in bad disarray from years of neglect. A horrible smell and insect issue combined with an unwelcome raccoon guest in the attic made this a fun deal!

Structuring the Deal

Since the house was in bad working order with roof leaks, floor coming up, and plumbing drain that just drained into the crawl space the daughter didn’t have the money to invest in the house to make it sell-able let alone pass any type of home owners inspection.

Here is how the buy numbers folded out:



  • Purchase Price: $188,000
  • Down Payment $37,500 (20% down).
  • Tax Credit of $5,262.40 from seller. $32,438, actual down payment.
  • Balance Financed $150,000
  • 3 Year Term
  • 5% interest rate
  • 30-year amortization
  • $807.92 P & I payment
  • $438.53 property taxes
  • HOI is paid over the term by the seller


This house had a million-dollar view with a shack sitting on top of a hill begging for a face lift. Kitchen, Bathrooms, Roof, you name it needed to be done. Below are

a lot of things completed making this one hell of a lake shack.

  • Demo $500
  • New Kitchen Cabinets $2,500
  • New Maple Countertops $1,000
  • New Appliances $3,500
  • Flooring $3,000
  • Electric $2,500
  • Plumbing $2,000
  • Drywall $3,000
  • Painting $1,500
  • Structural $1,000
  • Decking $4,000
  • Landscaping $1,500
  • Windows & Doors $5,000
  • Roof $10,000
  • Lighting $800
  • Total Budget on Remodel $41,800




  • Full kitchen gut and remodel
  • 2-Bathrooms gut and remodel
  • Originally it only had 1 working bathroom and 2 bedrooms.
  • Converted a send unused bathroom into a second bathroom and laundry room.
  • Converted a 3 season room on the side of the house into 2 new bedrooms making this a 4 bed 2 bath!
  • New Roof
  • New front and backyard large decks
  • All new windows and doors in & out
  • Gutted every room down to the studs, re-insulated & new drywall
  • Updated electric panel & plumbing
  • Paint inside and out


4 bedroom 2 bathroom Lakehouse with an incredible view I market it on 2 websites. and Cozy. co. Both are distribution sites that send your listing to websites like, Zillow, Facebook, etc. These websites also have a built-in background check system and a credit check system where the prospective tenant can pay directly with them and you receive them back in real-time. The cost is $35-$45.



  • Rental Income: $2,500
  • Loan Payment: $807.92  (5% interest)
  • Taxes: $438.53/month
  • Insurance: $50/month
  • Total Fixed Expenses: $1,296 per month.
  • Base Cash Flow: $1,204.00 per month.
  • Note: I did not include capital expenditures, monthly repairs, or management fees. I will self manage this place for the first 5 years to keep costs down. Everything is basically brand new so no other repairs will be needed. After the 5 year mark, I will refinance again to lower the payment and then I will add those fees into my costs.


Now comes the fun part. Refinancing.

With all the improvements made to this lake house. Along with adding 2 more bedrooms and adding an additional bathroom the property appraised for $250,000. Here is how the refinancing numbers broke down:


  • ARV (After Remodeled Value) Appraisal came back at $250,000
  • Original sale price $188,000
  • Remodeling costs $41,800
  • Total into the property $229,800
  • Bank refinanced 75% of the ARV- $187,500
  • New payment on a 30-year conventional loan with Taxes & insurance included $1,600
  • $32,438 original down payment + $41,800 remodeling costs= $74,238
  • New total cash flow $ 900.00



I decided to keep all my equity in this property, not cash out & go with the lower payment to have a higher cash return on my investment. It will now cash flow $900 per month. A little under 15% cash on cash return on $74,238.


My long term hold plan on this property is to:



  • Have the tenant pay down the mortgage
  • The property will appreciate in time
  • Cash-out refinances or refinance and lower the payment for additional cash on cash returns every 5-7 years.

Leave a Comment

Your email address will not be published. Required fields are marked *