So, we were thinking about how it sucks that a lot of what we want to do with our home is not possible since we are renting, so we have been exploring ways to buy our property.

Types of contracts that dont require up front cash

Traditional seller financing with interest

• Purchase Price: $550,000 – $600,000.
• Down Payment: Sellers usually require 10%–20% down ($50,000–$120,000) to ensure you have equity at risk.
• Interest Rate: Typically 5%–7% for seller financing.
• Balloon Payment Structure: Sellers rarely want to wait 20 or 30 years to get paid in full. Instead, seller financing is often structured on a 30-year amortization schedule with a 5-year or 10-year balloon payment. This gives you 5 to 10 years of fixed monthly payments to build equity, repair/build credit, and then refinance into a standard bank mortgage to pay off the remaining balance.

Lease option / lease purchase agreement

• Rent Agreement: You pay fair market rent (e.g., $2,250–$2,500/month).
• Option Fee: You pay an upfront non-refundable option fee (typically 2%–5% of the purchase price) for the exclusive right to buy the house at an agreed-upon price (e.g., $525,000–$550,000) within a set timeframe (e.g., 3 to 5 years).
• Rent Credits: A portion of your monthly rent payment (e.g., $250/month) can be credited toward your purchase price at closing.
• Maintenance: You can contractually take over routine minor repairs/maintenance in exchange for the fixed purchase price locks.

Compare

For us, we think seller financing is more ideal, mostly since we do want to buy a place. I am trying to stay in Lexington for a minimum 5 years, and having a guaranteed place to live is nice, but i will talk more about it later.

What this would look like

Seller financing

• purchase price: 550k
• down payment: 50k
• loan amount: 500k
• Interest: 6%

So we pay 50k up front, then our monthly P&I payments will be 3k a month for 5 years. Over time, priciple goes up and interest goes down to keep in 3k a month.

Year 1: You pay ~$29,600 in interest and ~$6,330 in principal. Year 2: You pay ~$29,200 in interest and ~$6,720 in principal. Year 3: You pay ~$28,800 in interest and ~$7,140 in principal. Year 4: You pay ~$28,400 in interest and ~$7,580 in principal. Year 5: You pay ~$27,900 in interest and ~$8,050 in principal.

The 5-Year Totals: Total paid to the seller over 5 years (P&I): ~$179,865 Total Interest kept by the seller: ~$144,045 Total Principal paid off: ~$35,820 Remaining Balloon Balance owed at Month 60: ~$464,180

then, after 5 years, we need to get $464,180 to give to the landlord

But casey, thats a lot of interest! what if we want to buy it sooner???

Prepayment Clause: the contract explicitly states that there is no prepayment penalty. This allows you to pay off any extra principal whenever you want, or refinance with a bank at month 12, 24, or 36 without incurring fees.

So, if we can get the money earlier, we benefit to buy it earlier

for example, lets say it only takes us a year to get financing: we pay 50k down 3k a month, ~$29,600 in interest and ~$6,330 in principal. total of 36k that first year. At the end of the year we owe $493,670, and at the end, we got the house for ~$580k

Only thing cheaper is to get the money up front and just pay 550k for the house, but we cant do that on short notice, as i cannot qualify for a mortgage right now.

So how expensive will this be with everything? Would we be able to afford monthly payments?

we normally spend, conservatively (rounding up on the most expensive month), 3500 a month. -2250 for rent, thats 1250 for 4 people for all household purchasing and utilities, so without rent, 312 a person, call it 400 a person, for 6 people, would be 2400, so call it 2500$ a month.

that means if we had 6 people living at our house, which we would be allowed to do if we owned the place, we would need to make 2500+3500 a month, so 6k a month as a household. in lexington, the cost of living in lexongton for a 6 person family is around there, so even with boosted numbers, this is doable for us. 15$ 20 hours a week after tax per person would be enough to afford to live.

alternatively, we need 72k a year after tax may makes 10k a year (~800 monthly), i'll make 20k as a TA (1600 monthly), so as long as the other 4 people in the house could scrape together 42k a year (3.5k a month), we will be ok

After we pay off the place, monthly payments for 6 people will drop to 3k plus any new expenses that show up with financing. If we do standard mortgaging, it will be roughly 3k to the bank, so nothing changes, just who we owe

Concerns

Investment Model

Radish LLC is a working community that uses this model. they are a bit bigger than our one house, so they have a lot of contractual agreements in place to keep everything perfectly legal and safe for everyone, and we might do that one day, but first is just the basics

There are residents and there are owners

Residents live with us, they are the people at the house. Owners are the people who put money up front to help us. If someone puts up money and lives with us, they are both.

Owners have no authority over residents. There is no power dynamic. you can live here and not own the place, and thats normal, nothing will change. If you are an owner, you just get to help make owner decisions, such as refinancing the place through a bank or something, but in our case, there are not a lot of owner decisions.

Why would someone want to be an owner?

Its an investment. We, as a household, can make money monthly, just not lump sums. So, in exchange for giving us roughly 500k, we will give them back monthly dividends with an annual return of 5% on their investment.

this means, if we raise 500k, we will give back to those investors 25k a year, or roughly 2k a month.

Lets do a breakdown that i think is likely if Jeff moves in with us: we need to raise 500k, so we go out and go to the people that trust us to pay them back (and if we get serious, this would be contractually)

By the time we get the investment and are dealing with paying ROI back to investors, we will own the property and have used the up front money to pay of the lien. with a monthly cost of living with utilities at 2500, insurance and property taxes and 500, and investor payback at 2000, our monthly cost to live for 6 people would go to $5000! lower than we were paying in principle and interest, guaranteeing that we would be able to afford paying back investors.

how does it work that im an owner and resident?

I, as a resident, will still pay my share of the 5000$, as how much people pay is calculated first. After that, we then pay back investors, and i would put $200 back into my bank account.

Being an owner will not put me in any sort of status over anybody. Im an owner, so i get returns on my investment, and thats it. Decisions that affect residents are for residents to decide, not owners. Owner decisions would be like refinancing the house or deciding to buy a second house and get more people. resident decisions are anything that affects how we live. So, in this model, life would not change once owners are established, the only change is things get cheaper

how does this work long term with jess wanting to own the property?

Say we are ready to leave lexington and jess wants the property

Anyone can buy out owners. if jess came to me with 50k, i could sell her my ownership, and she would be a 10% owner instead of me. she could go to owners over time and buy percents at a time, slowly lowering her monthly payments. Eventually, she will own 100%, and there will be no more monthly payments to make as the house will be fully paid off.

Casey, if you are going to buy a property, is this property really the best?

i dont think so. There are much better properties that allow for more people to live with us at a cheaper cost. But first, lets entertain the idea of having many people live with us. Right now we have 5, but going up to 6 or more gets hard. living as a single family will not be as feasible, and if everyone we wanted to live with us lived with us, we would be at 8 people.

8 people is affordable with the right property. 400 a person puts that at 3200, add a generous 800 dollars for insurance and property taxes, and thats 4000$ a month for 8 people. if we say that 8 people can afford 7k a month (875 per person final payment), that puts us at a budget of 700k dollars for invesment property. in lexington, that could get us a quad-plex 8 bedroom building with 4 full and 4 half bathrooms. we would stop living like a true family home, and would implement radish at its roots

The Roots of how Radish LLC works financially

We would have a traditional rental agreement for everyone, and part of rent would be money for community expenses. the rent and community expense money goes to the community manager, who pays officially to big cabbage, which pays their parts.

radish community: the community manager, probably casey, will handle the group payments. they collect rent and the money for community stuff, and handle giving it well as well. community expenses include utilities and food, so money is still spread for that to help alleviate expenses. for the residents, it will feel similar to how we live right now, but more structured, which payments given at the beginning of the month and adjusted according rather than tallied and payed back at the end of the month.

big cabbage: this is the official llc that prevents me from getting sued and keeps everything official. the community manager pays rent to the llc, which pays the property wide bills such as property tax and insureance. the leftover, always kept at 5% annually, goes to investors

Lets look at a real property and how we would do it

the quad-plex 8 bedroom building with 4 full and 4 half bathrooms is 550k dollars. the 8 people we want to live with us would take up 3 of the 4 units, meaning we could move even more people into our model or just rent normally for the last unit.

established earlier, we could say 400 a person, add a generous 800 dollars for insurance and property taxes, 4000$ a month for 8 people excluding investor payout. keeping a comfortable 900$ a month per person means we would want to pay back 3200 a month to investors.

This time, our budget is fixed. we need 550k for the property and lets say 50k for LLC fund money to fix broken things, so we need to raise 600k. 5% return on 600k is only 2500 a month, which is less than our projected 3200 a month, so we could raise the percent to make buyers more willing. To get to our number of a comfortable 900$ per person monthly, we could give back to investors 6.3%.

6.3 annual return on investments beats most high yield accounts, and best of all, we would be the ones benefiting. Rather than us paying interest to banks, we pay interest to our parents. Your investment money goes to giving your children a comfortable life. You font have to deal with the woes of leasing since its all us, and we will be doing our own repairs and handling things. There is higher risk, since its not like a zero risk saving account, but it is a wealth-preservation stategy that will provide modest stable returns while fundamentally securing our financial and housing future

And we arent locked into anything. The LLC could always choose to rent out a unit at fair market price if we needed more money. 2 bedroom 1.5 bath could be 1300 a month, and all of that would go towards the LLC since they wouldnt be a community member. That money would go straight to repairs and investors, massively alleviating the cost for everyone else. It would also be sustainable on its own like that, so as long as someone still living in one of those units is willing to be the property manager, we could lease out the other 3 for 3900 a month total, which would pay off investors alone and make 700$ a month for repairs.