All right, we are live right now on the Payneless Wholesaling podcasts. I got my man right here, Zachary Beach, who is the man of the wicked smart coaching program. He’s the man Zack. What’s up, brother?
Hey, Dan. It’s a pleasure. Pleasure, my man. I’m excited to spend some time with with the Payneless crew.
Yeah, I think I’ve told you this before. And for people that are maybe tuning in, that are new to Payneless, I call it Payneless, because my last name is Payne and I try to make your investing journey is painless as possible because it can be difficult as a new investor. If you don’t know what you’re doing, you could make mistakes, you could get yourself in some sticky situation. So that’s why we’re here. We’re here to talk about how you can learn from our experiences, especially from Zach. That’s why I brought him on here. He loves creative financing. He’s been you’ve been in real estate for how long? Me now eight years. Hey, man, eight years? Well, what were you doing before for real estate row?
Bartender a personal trainer? Was I Yeah, yeah. So I mean, when I was growing up, I grew up with like a single mom father wasn’t around you know, the the money never made to the end of the week, constantly being told, you know, that, that might go on trees, you name it. So in the in a financial environment that was advantageous for an entrepreneur, right? lover to death, great mom, absolute grandma, great grandmother, too. But just I was not put in an environment that was set up to be real estate investors or business owners, multiple businesses like that wasn’t set up in my life. So I just I just consistently worked hard at certain things. And actually, I found my first entrepreneurial journey when I lived right next to a golf course. And I used to find myself walking through the tall grass and picking up golf balls. And then I go to I think it was like the seventh green, or the I’m sorry, the seventh tee box. Yeah. So golf balls for $4 for $4. Like, I know, it’s well now that look at and I go golfing, I was in a same course. And I’m like, it’s three golf balls is $10. I’m like I was given away golf balls. So it’s all the hard work. But that’s kind of where things started transpiring for me. And then I went through high school ballymount at high school, you know, it was decent in college. And then you know, you do what every great person with a college degree does, they become a bartender. So I did that for four years. And then I ended up pairing up with my father in law, Chris, who’s one of my partners on this company that we run now or multiple companies that we run. And I went to him because he was going through a transition in real estate, you know, he got crushed in 2008. He was trying to find his way start doing creative financing. And I approached him and said, Hey, I don’t know if I’m gonna like real estate, but it’s gonna be better than what the heck I’m doing. Yeah, for sure. That’s when I made that transition from working late nights as a bartender and then personal training. Very early in the morning, I got burnt out there. So made that shift took me about six months to do my first deal and it being a sub two deal. And then kind of you know, history was kind of just started there and real estate investing.
So let’s talk about that first deal because a lot of the viewers a lot of people listening to this are brand new to investing. You said six months a lot a lot of people that get into this they they want a deal within the first week, man How do you get out for six months,
it’s it’s funny that you bring that up just because we we partner, a coach with students, we really lock arms with them across the country. And unrealistic expectations is one of the greatest downfalls to any brand new unreal, any brand new investor, any brand new business owner, period. I just recently read a book. The your next fives next five moves from Patrick bet, David awesome book. So let’s listen to the book. And I was walking out of at the time I was going the YMCA was walking out the YMCA. And I heard him talk in this in the first part of the book. And I literally stopped in the middle of the parking lot people must have thought I was crazy. And I started taking out my my phone just like this, I started taking down notes. Wow is one of the notes and I’m actually this is gonna be part of one of the openings at our upcoming event in March. Part of the notes was his line was alignment is the key to fulfillment. And once you’re aligned, I mean in alignment when you’re talking about your vision, like who you are, where you want to go, who you want to be, to your expectations into the amount of work that you’re putting in. So when I say that unrealistic expectations is one of the number one downfalls for real estate brand new real estate investment business owners is there is a there’s an unrealistic expectation of what you’re going to accomplish for most in a short period of time when you becoming a business owner. And it’s because there’s a misalignment, a misalignment with the amount of effort and action that you need to take on a daily basis to actually receiving the end result. So he says it very eloquently saying like, what you really need to do is if you want to be in alignment with your own vision and It has to be a big vision. And for somebody brand new doing their first deals a big vision or leaving your job as a big vision, and trying to try to get enough money in order to Eclipse or salary, you either number one need to raise your the amount of action that you’re taking consistently in order to meet your expectations. Or you need to lower your expectations to meet the amount of work that you’re currently doing. So when I put myself back in the position when I first started making phone calls, because really, this is the most unsexy thing I’m going to tell you when it comes to real estate investing. And that was I spent the first two years in my real estate investment career on the phone for 5060 hours a day, I was either on the phone, creating what we would call leads, so I was talking to prospects, qualifying them with scripts and then moving them through our funnel, right, or I was going on appointments, where I was trying to convert those properties to deals and I used to literally go I used to leave every single Wednesday or Thursday for an entire day, I booked my own appointments for the entire day, I used to travel through three states mass Rhode Island and Connecticut. And I would hit anywhere between four and six appointments in that day. So I’d leave at like six in the morning, and I get back at six at night on the road. I was like a road warrior at that time, right, you’re dead. That’s Wow. But that was the beginning of my real estate investment journey. And that was because my willingness or my vision was pulling me in such a direction that I needed to raise the level of my game. And at one point time, Nathan, I was bartending personal training and making dials during the day as being too late. And then eventually, I got to a point. So I did that I did those three things for about three to four months. And then I got to a point where I felt as though I had the skill level where I was like a deals around the corner so that I you know, Cortes that and burned all the ships. Gotcha. Which, which I don’t always recommend the beginning. But I was I was young, I was able to do that I didn’t have a lot of overhead. I didn’t have kids or anything like that. Not a lot of responsibility. And then it took me you know, additional probably two months, and I landed my first deal. Which was this up to you bro.
Wow, I can’t believe you were doing all that. That’s amazing. So what enabled you to stop doing that grind? It sounds like you said for two years you’re doing it right?
Well, so. So that’s kind of fast forwarding a bit, but I went so I ended up getting my first deal. And at that point time was April of I think it was 2015. And I made my full leap into becoming a full time real estate investor. And so I did that for two years, because so I did that for like the making phone calls to the appointments until I was able to scale myself up. So then we brought in some additional help that could then go on appointments. So I pulled myself out of the appointments, I still on the phone do this exactly, we teach our students, which was you start at the ground level with your scripts, and then you improve so then you you move yourself up, and then you train somebody underneath you in order to make those lower level calls. And then as you continue to elevate, you train that same person or multiple people to raise up and their level of communication is that’s all creative financing is and then you get to a certain point as being one of the business owners that you’re just closing deals, which is what most people believe, is real estate when they make the leap or they say I’m gonna go become a real estate investor, I’m just gonna like, I’m just gonna be out there closed deals. Now majority of it is prospecting and follow up and talk on the phone until you build up a either a small team, and you duplicate yourself. So now you can just sit at the top and construct deals. But no, you can’t construct deals until you go through that process because you would never be good at negotiation or understand how to construct these deals unless you went through the basics. Or they get you to a point where you can now actually level up because you’ve level up your skills.
So you got to go through the pain sounds like you can’t avoid a brother.
No, you absolutely cannot. There’s I was listening to a if you watch the new Netflix special and Phil Stutz,
I think I saw but I haven’t seen it but I saw the pop up so good.
I got like three pages of notes by watching a Netflix special which doesn’t normally happen. And he said there’s two things in this life that you that you can’t get away from. Basically, you have to go through pain and uncertainty through things no matter what pain uncertainty, and it’s when people try to avoid pain uncertainty is when people get depressed or they get on drugs or things like that. And trust me I have that experience. Maybe we’ll save that for another podcast.
There you go. There you go. Somebody so this is live so someone says so it’s not completely painless, is it? Fortunately, maybe my markings misled some of you out there. You can’t get completely Payneless. We can try and get it painless, but not completely not in hope not in real estate, right?
God no, no, you are there’s gonna be lots of lots of pain. The reality is though, and this isn’t trying to be patronizing, especially if you’re like on the outside looking in because if we had a conversation with our inner circle of people that are all entrepreneurs or business owners are real to investors, you name it, they’re all going to tell you like the world of entrepreneurship is how much pain can you endure for a period of time before you start to see success. It’s like consistent uncertainty and pain is the game that you get involved in.
How much can you take? I love it. I love it. That’s actually good man. And I love how real you’re being because I think a lot of people portray what we do is like, you know, luxury right? It’s like, Well, hey, you eventually right? But you got to go through the gauntlet, you know, you got to go through the fire to learn learn how to do it, right.
Oh, yeah. Reality a&e. It’s not Bravo TV. I mean, I like shows like Million Dollar Listing and stuff. But they don’t show the incremental things that somebody does on a day to day basis. They’re showing you the 10 years from now of where somebody got to. And let’s just talk about that real estate like that show that real, the realtor show. I mean, they’re like the 1%. Number one, and all those guys who have you read or listened to the book, sell it like serhant, which is pretty good book, actually. And he talks about it like he would spend, like all he spends is like hours and hours and hours and hours on the phone prospecting, then they show you like the five minutes snapshot of the really luxury property. That’s what everybody thinks is the real estate investing or real estate world. And really, that’s like a small five minute increment into the world of of who he is,
right? Most people want to see the results, right? They don’t want to see what it took to get to get them right.
Yeah. I couldn’t agree more. If you are somebody that either gets excited or gets emotional watching, like the entrepreneurial like movies, like Ford versus Ferrari, or like, like some of those and you feel it, then you know exactly where you need to be. Because those movies tend to show you more about what the reality is of what we’re talking about, like entrepreneurship or business ownership, right? Yeah. But those, that’s what that’s what they show you is like the pain that somebody goes through until the end of the movie, when they’re like any finally accomplished it. Yeah, they find 30 years of pain. And then all of a sudden, he became, you know, the billionaire or the billionaire. And that’s really what it is.
So what do you say for people that join your coaching program? Or that you’ve worked with that want the result but aren’t willing to make the calls? Do you tell them before they join like, Hey, you better be strapped up and ready? Or do you? Do they usually join in? And then they find out? Oh, shoot, I just signed up to make like to work really hard?
Yeah, it’s an interesting question. Because most people will tell you that they can do it, right. It’s not until they’re actually doing it is where they start to see it in, in with some too, you know, they don’t know what to expect. And then you’ll see once they get in their character now is being is being shown, like, what somebody’s actual character is because you’re like, for most people that come into our community, and that we work with, they’re looking to leave their job, like we have this tagline, like, helping people escape their jobs is 2014. Like that, that’s where a lot of people come into our community is because they see creative fights in order to do so. And once they enter in, it’s not like their W two stops, it’s not that their family stops needing them that they stop, like, you know, needing to see their their family or doing all the extra activities that they’re originally doing. So you start to see character being built, especially because the pressure of now you’re starting a business on top of handling, everything else is going to be a defining moment for some and some they crumble, they fall apart. They either lower their expectation right of their goals, because they’re like, Oh, now I realized the work, which is okay, as long as that aligns with your long term vision. And then some are like, Yep, totally get it. I’m starting to get comfortable now of being uncomfortable. And now it’s like, how do I now elevate and now I know the gotcha people come to see us, Nathan, say our company in your company because they want to, they want to pull it forward to right, which is, which is what a coach does to a coach or community. It’s supposed to pull it forward. So yes, somebody could go through pain and deal with all the trials and tribulation for the next three to five years. Or if they find the right coach the right community, they could only have to go through that for a year or a year and a half, because they can pull that knowledge and experience forward. And like us, we lock our arms in the trenches. So I was literally just speaking with my father, my partner, and he was like I’ve just got on the phone with her name is Renee, she’s out of Minneapolis. She’s a they got on the phone with a seller, they’re about to close at four month lease option. So we’re and she’s been with us for I think, less than 60 days. So we were able to help her by utilizing our experience to pull that deal forward. And that’s why that’s what the path when you have the right coach when you have the right community can significantly change the timeline of your business. But it’s not to take away anything from a stew because that student needs to still put in a lot of time and effort and build that skill set right And most importantly, build that mindset as they continue to go through this process.
Yeah, so it’s definitely like, even even with your help and your program or being willing to help, they still got to take the action. It’s not like you’re replacing the effort they have to put in because they have to do it to learn, right? You have to go through the furnace, you got to learn learn through experience, we can’t plant that experience in you.
Yeah. One of our core values is match effort for effort. So that’s, that’s the main thing. So we can’t push your wet noodle, right? You can’t you can’t move that. But when somebody’s running, oh, boy, can we accelerate that process? Yes. So it’s not that anybody that joins coaching is not going to go from like zero to hero, but those that are committed are going to be able to move through that significantly faster, versus those that you know, are not committed.
If you had to have some of those hard talks with some of the people that you work with and be like, well, you ain’t doing nothing.
Force, one of our other core values is clear, blunt, to the point, no gray area, that doesn’t mean for us to be rude, it means to edge wasting time, if you don’t go ahead and share with them what their current skill sets are, what their current actions are telling you about where they’re going. And so people just need to see a mirror. If you ever read the book, trillion dollar coach was another really good book. It’s based upon the his name escapes me right now. But he was the basically the mentor to Google and to a lot of those massive tech companies. Yeah. And he said that a coach is somebody there’s to show you, your blind spots. So it’s really easy for us to go in the mirror and be having a tough day and blame everyone else, right? Or blame everyone else for the results that we’re getting. But if you have a really good coach, or good, you know, community where somebody can literally look at you and say, You know what the big challenges actually is you you’re not falling, you’re not being coachable, you’re not following the directions, you’re not putting in the additional effort, you’re putting in minimal effort in order to get the results and and the results are coming from that effort. So having those tough conversations is absolutely a daily, daily message.
So, yeah, and some people don’t want to hear it, man, some people don’t want to hear it. I know, I know, I have to certain things too. And it’s the small simple things that take that you have to do every day that make the big impact. So
Oh, Nathan, I’m guilty, too. I at any point in time, have at least one if not up to three coaches in multiple facets of my life. Either that or I’m a part of a mastermind. That’s that’s the reason why you and I are here connecting right? We’re part of we committed to being a part of a mastermind or to grow our skill sets our systems or mindset, whatever it was that we came into that that mastermind for, and it’s available there for a mirror or to bounce ideas or to ask people tough questions. Hey, these are the results I’m getting, what am I doing wrong? You’re maybe five years ahead of me and your business? Tell me tell me what should I expect? Am I being unrealistic? Those are the questions that we get to ask to our mentors and people that we surround ourselves with.
So let me ask you something about your program. So you partner with students Correct? Like to help them out?
We do a profit share with our students. Yep.
So how does that look? Do they provide you with leads that they can’t close? But they’re like, Hey, I know this person is legit. I just don’t know how to negotiate it. And then you go in, you send in your closer and get it done? Is that kind of what it is?
No, not exactly. So the way in which our associate experiences work, is you not only get a coach, like a personal coach, you’re also gonna get small group coaching a 90 day on ramp and then consistently being able to communicate with our codes almost like we can put them in your business. Yeah, so we bring them from anything from the very beginning. Let’s say you’re brand new, move them in to show them how to set up their systems, put everything in place, and then be able to go from there to help them build on that we call it our genius miles, their mindset, their skill set in their systems throughout the process, but we actually help people put deals into their portfolio. So as they bring a leads in, we can then communicate with them at the beginning of their journey where it’s like, hey, you know, I called on a prospect and you jump on a through a phone call. Alright, great. We’ll do a three way phone call, or we move that prospect forward. Hey, can you be available on the phone for me when I go visit the property so that way the sellers got additional questions, you could jump in on it. Hey, can you be available in order to help me negotiate this deal? Or help me craft up some offers? Oh, you got about to send out an agreement. Can we make sure we were review this, revise it, make sure it’s all set to go out? All right now we’ve taken under agreement. Can you now help me launch and market my property in order to drive buyers to me and then we help them go through the entire vetting of the buyer process? Yeah, yeah. So we helped them put deals into their portfolio and then what we have in the rev share from it, so they’re actually getting all the benefits of ownership, taxes, all that benefits. We’re just getting a rev share as being their advisor or their coach in a like to call a quasi partnership is because our coaches are on the phone with these, with our students probably more than their round with their family.
Wow, that’s Wow. So I have a I have a creative deal I want to ask you about so is yesterday, one of my students brought me a lead that he said she wanted to sell. I called her and she wanted too much for a wholesale deal like most people, right? They don’t want it. They don’t want like, 50% of what their house is worth. And so I said, Hey, I can give you what you’re asking, but I’m gonna have to I’m gonna need to do terms, right? And she’s like, Okay, what does that look like? I was like, no money down, I could do 4% interest. I didn’t talk about interest. I just had the payment, right? I said the payment, your mortgage payment is 1300. I can do like 1400 a month and no money down. And she’s like, okay, I can do that for two years. So we did a two year balloon. And right now at Airbnb is for 3k 3000 a month, and regular rents are 2000. So for me, I think that’s a good deal. Because I get to get into this property with no money. And she signed and everything. We’re good to go. But so no money. It’s already fixed up. It’s already in great shape. It’s remodeled. Yeah. So tell me Just hearing that. Is that? Does that sound like something that’s like a good deal? Or would you be like Nah, man, it sucks. Because I’m not like the Master of Creative. But I know that as long as you’re I’ve been told if you can make at least 300 cashflow a month and not put anything into it. It’s a good deal. So Nathan,
I would always start with because that could be a good deal. Or that could be a bad deal. Let me let me walk through this. And that’s because I don’t understand what the end goal is. Right? If I understand the end goal. So what’s your exit strategy? So when the two years comes up? What are you going to do
either refinance and keep it or sell it? Okay?
And if you’re going to sell it, you would did you buy it at a discount?
So I bought it. So right now it’s worth 300,000, right in this current state, and I bought it for 300,000. That’s the purchase price.
Okay, so you bought at retail, so if you’re going to sell it, we got to hope that the market either stays flat, or that it increase, right? That’s kind of your right. So you got to think about you got this thing for 18 months, if you’re going to sell it, then you got to put on the market with six months left.
And that is the kind of the why I got it, right. Because I gave her her price. She just was like, Dude, I just want 300 That she bought it two years ago for 285. Right. So she tried to list it for 320 commissions and fees. She was like getting thing, I think around like 310. So she was getting less after everything than 300. So
okay, and then. So let’s just assume you’re, let’s say you’re gonna refinance, because that I would never personally guarantee debt, not any of our investment properties. That’s just we don’t view as cash. We don’t I mean, we put down some small down payments, but we’re not using bank loans. And we’re certainly not personally guaranteeing debt or giving our credit polled. Okay, so let’s talk about let’s look at the rest of the deal. So you bought it for 300k? What’s the mortgage balance at the time in which you bought it for her mortgage balance?
Oh, I didn’t ask her what what she owes on it. I just asked her what her mark mortgage payment was in. It was 1300. And she bought it two years ago. So let’s just say she bought 285. It’s been two years. Let’s say it’s down to like 280. Maybe.
Okay. All right, that could have been a sub two.
Well, it is a sub two. I don’t know if I explained it, right. I’m just, I’m bringing nothing down. I’m just taking over making payments, title transfer. We haven’t done it yet. I just signed it yesterday, but I’m assuming we would we would do just the normal sub sub to route.
Okay, so purchase and sale agreement subject to existing loan yum. So you’re gonna have to find our mortgage balance, because you’re buying it subject to your existing Yeah,
of course. Yeah. So her mortgage balance. Okay. Yeah. So I would have to find that out. Okay, it makes sense. And then I just use less than what I was buying it for. So I didn’t really ask your viewers.
Important question. So the question I’m asking is, like, if I asked the student course, of course, yeah. Basically, she’s financing. Let’s say, if she’s gonna balance the 280 She’s fine. It’s 30 or $20,000? Is that $20,000 going to be due as 0% interest and just a balloon and 24 months?
Yes. So what I was I was gonna do the way I set it up is add in 24 months, I was having the payment 4% interest basically go towards the purchase price, right, like and go down and it was good. At the end of 24 payment periods, it was going to be 286 That would I would owe her after 24 payment periods. Okay, does that make sense? It’s just 4% interest and it’s taken away from the principal for 24 months like that. Some of its going to interest some of its going to the principal
Yeah, so you creating a new loan and I don’t want to overcomplicate this here but it’s it’s a you creating a new loan at 4% interest rate that’s going to pay in service the original loan that’s what I that’s how I set it up. Yeah. So we’d be creating basically a rap Morgan so you got to close on it and put a rap mortgage on it for 300,000 at 4% interest rate that loan is gonna then service the original loan that’s on the property. Yeah. So
so if I maybe I misunderstood so subject To is just assuming their payment. It’s not doing a rap, which I wouldn’t be.
Yeah, just I think we’re saying the same thing. But assuming would mean that you’re assigning personally on that debt, all you would be doing is closing on it. And now we’re making payments for the seller, because the way a sub two works is, and this would be funny if
this is great, man, I mean, this everyone, sorry, let me say something the audience, look, I’ve done a couple sub two deals. And I’ve, I don’t really know what’s going on other than I just got the numbers, right.
Nathan, is you’re taking your next step, you’re not afraid to take your next step. And most of the time, fear holds people back from doing a deal. That’s also why people get coaches, right is to eliminate some uncertainty. So the way a sub two would typically work is you approach a seller. So in this circumstance, you would approach a seller, you say, Hey, I’m gonna go out and we’re going to purchase your property, I’m going to buy your property subject to the existing loan, it’s not, I wouldn’t use that language when talking to a seller, but you’re going to close on it. In this case, you’d be buying it subject to the existing loan, so assume that loan, maybe that maybe that loan is at 280, you’re buying it subject to 280, right, that loan is going to stay attached to the seller and remain on the property, you’re not paying it off the seller. In most circumstances, the seller would then be financing the difference. So it’d be so I’d say it’s 280, she’s got 20 grand in equity, okay. And the way in which we would typically structure that is then at 0%, interest, zero payments doing a balloon. So it’s just basically a placeholder. That’s one way you could do it. The other route that you’re talking about is you’re recreating a new mortgage, you’re in you and your attorney, and now are creating a mortgage that wraps the current mortgage that’s in place in order to and that that new loan will service the original loan. Yeah. And your company, right,
I have to get a servicing company to pay them and they take care of everything.
Yes. So here’s what here’s some tweaks and things that I would have done slightly different. So do in conversations that I need to have with the seller, as I want to know roughly about what they want for their purchase price, I need to know what the balance of the loan is. And that is so important to us, because we need to understand how much equity is in this deal. Because if I knew the seller only had 20 grand in equity, the offers that I’m giving them are going to be different. Because I could say to her, hey, you know, I could give you 300,004, and I need 60 months, 10 years, whatever that’s going to look like. And what I’m going to do is I’m going to buy it for exactly what your loan balances, and we’re going to put a second position on the property that’s 20 grand, that’s gonna be your placeholder, it’s going to be secured by the property, and I’m just going to make your current monthly payment, whatever the interest rate on that property is, that’s where you’re gonna make the monthly payment. So that means that you’re gonna get the benefit of principle pay down on that loan to the current loan, which is further along in the amortization schedule, which means you’re gonna get more principal pay down, got it, then what also you could have done is say I’m so I could do that, or we could buy it, I could give you maybe 10 grand right now, or seven grand right now. And you can go ahead and walk away. Okay. So now it’s like now you just bought the property sub two, you put down seven grand, and you have nothing owed to the seller. Now what that has done is there’s no end date on sub twos, you just make that payment on that mortgage. So that property just went from a two year deal to a 30 year deal or whatever, you can do whatever you want with it.
Okay, so you’re looking at it this way, you’re saying, hey, look, really the equity you have is this, will you take this equity, just the balance, right, and I’m just gonna take take over the payments, right? Doesn’t matter to you because I got it covered. So versus what I did is I just said, Hey, in two years, I’ll pay it off the whole thing off.
Yes, it’s common mistakes, especially if you haven’t done a lot of sub twos is, we’re assuming, and this is some that it took me a long time to get this to, we’re assuming things that the seller wants because we are because we’re so engrained are so we’re so used to and have a specific paradigm on how things operate real estate, like this seller doesn’t want to be a part of this property and only will go to yours. You know, why would somebody sell me the property a transfer title without me you know, either giving them a high interest rate or giving them a bunch of money or paying full retail price? We almost and this was me too. i Oh, you almost put yourself in like a beggars mentality because it’s like well, if you’re gonna if they’re so graciously going to give me a credit financing deal, then I need to make this deal like the best thing in the world for that right in all reality, we just need to solve their problem. And once you solve their problem, their pain of you solving that problem or your elimination of that pain, no pun intended, is going to then create a good deal for you. So like let’s say this the seller, if we didn’t bring to the table and say I like these are the terms I want I’ll pay you two years will be a 4% You could have potentially right in hindsight structured a better deal because you just asking more questions to say if I did this. Well, what would you be open to? Or hey, I may be able to give you your purchase price. I understand that, you know, obviously, it’s been tough to sell this thing on the market. If I was able to get your price, you know, how long of a timeframe do you think you’d be able to wait for the your equity? And then she could have said something and you could have hemmed and hawed and gutter, potentially, if she said, I would do two years, I would love to do that. But at two years, I’d want to be able to do this, or, you know, I would really need 60 months. If if we were going to do that for you. Is that some Europen? So it’s just on the same side as the seller trying to solve their problem.
Yeah. And I think from you’ve been doing this while for me, it’s like, I don’t really have those, that muscle developed on how to ask the right questions, right. But, uh, no, those are great questions to ask, as you’re saying it like, like, again, I didn’t really care what her mortgage was, right? Like that she currently had, because I was like, well, it doesn’t really matter if I wrap it right. That was my thought. But you’re right. Like if, if it was like 10k. And it’s like, well, let me just get her 10k. And we don’t ever have to worry about each other ever again, with a balloon payment.
100%. And you, you actually like created more work by going to the rap right away, instead of just taking over that understanding what her equity was, because if she like, let’s say, if she has 20 grand in there, let’s let’s be honest, if she has $20,000 in equity, if she’s if she even got her purchase price, let’s say she got her purchase price at 300,000. How much money do you think she actually put it in her pocket? Like how much money you think she would put in her pocket?
What do you mean by that? Like if if she owes 280? And we got gave her 300,000? That’s okay. Right?
Well, let’s see. Let me back up. I know that my head so let’s say she sold the property for 300,000. Traditionally, yes, with a realtor with an agent. With an agent closing costs, she would probably put her pocket. So in between three and $5,000. At the most, of course. So a change in in script. And this is a this is a script that we use quite often and absolutely changes the dynamic of the conversation, which is alright, Mrs. Sally, I understood that you were on the market at one point in time. If you sold how much net do you think you’d put in your pocket? That’s money that you get? And then she would give you a number? And you could have said, well, hypothetically, if I could get you around that number or at that number, would you be open to me just go ahead and pay me overtime. And you may have just dramatically dropped the amount like could you offer it right? The 300,000 You may have dramatically dropped that to five grand Yeah, 295 or 290 Versus, or 285,
right? By saying, Hey, this is what you would have probably taken away if you listed it right after commissions and fees.
Yeah. And it’s actually getting them to say it could be more important, which is the key, right?
It’s got to be their idea, or they got to feel confident about it makes sense.
So then imagine this too. So you get to now say I was only going to get 5000 oz. And now imagine if you said well, I know you’re only gonna get five. So magic, if if if I was able to get you to five, here’s what it may look like. Alright, she says, and maybe that’s a 48 month term or something. And so you pay her five grand in 48 months, or now you can even store say, Oh, give you $7,500 If we can change this to a eight year deal, or you maybe say hey, you know, how would I give you a portion of it now, and we do an installment sale. So now she’s got maybe because we bought a property very similar, they had 15 grand in credit card debt, we bought sub two. And then what we said was, Hey, I can’t give you the whole 15 grand now. But what we’ll structure is over the next three years, I’ll pay you 5000 hours every year until it’s paid off. And of course, that gives you plenty of time to make a bunch of money on this property. It also does solve the sellers challenge, and it actually gives her a little bit of money in her pocket.
It’s a lot you can do here man’s blow my mind. I was just I’m just a rap guy, dude. That’s all I can think about. Oh, let me just put a new more like just putting my calculator and make a new loan.
Yeah. And actually, that’s probably the more complicated way of going about it. In all honesty, because you’re adding another layer, you now have to create a new instrument. Yeah, for sure. So the rat mortgage definitely comes into play in a lot of circumstances. And it does, especially when the seller wants to if the seller wants to be in a better protected position. And if the seller wants to eventually go get another loan for property because that rap is now going to show on their debt to income ratio that that loans being serviced the original loan, if you’re buying it’s up to it actually won’t show that it’s being serviced. So it’s gonna depend on the person that’s there. There’s also contract for deed or deed in lieu, you can utilize those as well land contracts, which I don’t think we have enough time here to talk about that here today. But yeah, that’s another way in which you can structure these types of deals to get them to the end result that the seller wants. So just so many ways. So let me say this to everyone listening because I know this may have jumped over your head, which is completely understandable. And that is creative financing. Most people believe that creative financing gets more complicated than wholesaling, fixing, flipping, fix and flip, but in all reality is actually less moving parts because there’s less people what tends to make people look like a deer in headlights is that there’s more options available and knowing when to use those options is what you know, kind of stops people. So know that that overtime just comes with experience. But I love what you’re doing Nathan, which is like, I’m gonna go out there, I’m going to figure out how to do this, my first deal isn’t gonna be perfect. Definitely not my first deal definitely wasn’t perfect. We’re gonna get better over time, right? We’re gonna get better over time. Let me let me they make me humble myself here for a second. So I talked about that deal, that original deal, that sub two deal, we ended up acquiring it that property was listening to like it was in a town but also listed in a like segment of a town as well as called Holden and Jefferson, one of them had it listed that it had a lead certificate, one of them did not, we placed a tenant buyer in the property, which is how we operate on our back end, and the tenant buyer ends up doing a lead test that costs us $30,000. And on that deal upfront, no, overtime, that deal became good. I think it’d be like a net 70. But imagine this bartender, personal trainer, it takes me six months to do my first deal. You know, I’m working with my in laws who have 25, and you know, five years of experience, so they’re so much more spiritually, I do my first deal, I bring this deal to table sub to cost everyone $30,000 up front,
they’re like this, get this guy out of here.
I’m like, like, this guy is probably not meant for real estate. That’s, that’s funny. But that’s it. It kind of loops around back to the beginning of our conversation, which was I didn’t let that stop me from saying, Hey, I got a lesson learned. We actually included in all of our agreements, all of our students now, if they look at the agreements actually have a lead section in it. So when you look at that, you can think of me now yeah, the lead guy, and we endured the pain. And then we kept moving forward. And then we kept working that deal because the creative financing, were able to exit at dealing I think, like six within 60 months, and it ended up being like a positive, you know, 75k or something. Yeah. Now
I’ve seen those lead things in this contract light lead, like whatever you want to say, wording, and I’ve always been like, why is that even in there? Yeah, no, I know how I get it. So let me ask you this, because this happens all the time with new wholesalers, they’ll say, Hey, I gotta create a deal, or, Hey, I got a sub two deal. And then they’re like, you just need to bring 100k down, or 50k down or a ton down. Is there? Does that kill a deal most of the time, because in my mind, it’s like, hey, if it’s more than, like 15% of the purchase price, or 20 are certain amount. Nobody’s want wants that. Tell me if that’s true.
I don’t wanna give like a blanket statement. Because yes, high down payments tend to kill deals in our world. We like to see if we’re going to put a downpayment, we’d like to see that return from what we would call our first pay day. So when our tenant buyer moves into the house, they’re gonna give us a large non refundable deposit. And then we’re gonna cashflow it, which is our payday two. And then we’re gonna build an equity, which is our payday three or the third, when that property cashes out. So typically, if we’re given down payments, and know that over the past 10 years is about 90 95% of our deals didn’t require any down payment. Wow. And a lot of that is because number one, when we first started, we didn’t have all these down payments, we’d have money to do down payment. So you got to get really good at your scripts. But then two is it’s it’s just part of a it’s one of the terms. It’s one of the terms, it’s figuring out what’s most important to the seller, we ask all the time, is it price? Is it down payment? Is it timeframe, you tell me what’s most important to you. And I could more than likely craft something up to help you get there. But I won’t be able to give all of it to you. Because it doesn’t make financial sense for me to buy. Gotcha. So I know I went off a little bit.
The reason I asked you is sorry, the reason I asked you just because I talked to a lot of sellers who like for example, I have a call with someone at 330 She wants a higher price house isn’t that bad, she’s not going to accept the cash like a wholesale cash offer, but needs the money. Because she says she’s trying to retire and take all her equity shows 80,000 or houses worth about 300,000. So she’s gonna take the equity moves somewhere and she wants to buy something cash. So for me, I’m like, even if I were to work something out with her, she’s gonna want a certain amount down so she can put down on a new home. So part of me is like, forget this subject creative financing. Let’s not even think about it.
You know, I mean, it’s some of that means that the seller needs to go through more pain is the truth, their motivation is not there yet, in order to do a creative deal or wholesale deal, right? Right. Because my open dialogue with a seller is the only person that’s going to give you all that money down and give you your price as a retail buyer, someone’s gonna move in the house. And that’s I mean, so either one is you need to be able to take your equity over time or two is that you got to take your equity at a discount because that’s the only way that it would make sense for me as the buyer. Okay, thanks. So that’s the perspective change. I’m challenging each of you that are watching this to think of it’s you’re the buyer. Yes, you may be looking for creative deals, but that doesn’t mean that you buy a bad deal because they’re willing to do creative It’s true, very true. So when we put out a downpayment, if we’re gonna put a down payment, we’re typically in like the three to 5% range, because we know we’re going to be able to get five to 10% from our buyer, which means that we’re already positive on that.
Do you sell it to your buyer on a rap? Is that how you do it?
Typically, we’re selling it on rent to own or lease option, okay? Because we got more control of it. Plus, if we have title, so there’s three ways we buy, we buy on lease options, we buy on sub twos, and we buy on owner financing, like if we generalized it. So in order for us to sell on a route, we have to have title, so but majority of the time, we want to take advantage of the tax benefits of having ownership, so we’ll sell them rent to own first plus, in most states eviction laws are more advantageous than foreclosure laws. Yeah, it’s very difficult. Yeah. So it depends on the state, like in the state of Texas, you’re probably going to do all wraps and you’re gonna pry it, you’re gonna do also dues, you gonna do otter files, you’re gonna do all wraps, most likely, that’s what that state is, the laws are built for that state that way, because the eviction, I mean, the foreclosure process is like 60 days. So it’s built that way. So that’s the way you would strategically look at it. But in most states, the eviction is easier to get somebody out of the property. So you have control on a lease option. But there’s many deals in which we marry the two together. And this is kind of our strategy. So we put them on a rent to own first, okay, allow them to make all their payments, make all their down payments. And then if we have enough time, meaning like, we don’t have a balloon or anything, do, well then go to that buyer and say, hey, you know what, we can actually finance you on this deal. And then at that point in time, we would primarily construct like a contract for deed or a land contract or something like that with that buyer at a higher interest rate.
Okay, cool. Cool. So I totally get the lease option, because you don’t you have way more control as the the the owner of the problem seller. Cool. Wow, man, that’s awesome. Do you feel like you’ve mastered the seller finance game? Or do you feel like you’re still much more to learn?
There’s always so much to learn. There’s deals in which we come across, like even now, and it’s even now but then we come across and we scratch our heads and like, how do we figure this out? And that’s, that’s my career fighting is fun. It’s like, no matter what you always got, like, there’s always something that’s gonna come across you be like, I’ve never seen that before. It’s like, how do we handle that? Dude,
so this lady that I, I got this deal with, she gave me another property she’s willing to do terms on I might as well just, I should give it to you and see what you can whip out and then we should partner on or something because I’m gonna call her and make her an offer on it. But uh, I don’t know. Like, maybe we should work together on it.
Now you’re gonna give her away more advantageous deal for her than I am.
This one’s in Jacksonville, Florida. So I don’t know if that’s around there. But uh, yeah, so
we’ll mess around anywhere. Like the 80 Plus markets right now.
Dang, bro. Okay, and the way you get it done is what do you find? It’s difficult to have all those lease options going on? Would you? Would you rather just get out of there. So you didn’t have to worry about it? Like, you know, I’m like worried about the the people that are renting, renting to own?
Well, to answer that question. I mean, we’re not worried about I mean, this is our business, right? This is what we’ve always done. And I would at this stage, right, I would rather have somebody in the property that has 10 15% down. It’s very, they’re the buyers mentality. It’s like when we own businesses, and we have employees that have profit share, or teammates that have profit share, or have equity stake in the company, they always treat there, they always treat the company or somebody like that always shoots the house and way better condition, and somebody that’s renting, or that’s just getting a paycheck. So I our business was built on that. And the reason why we’re able to infiltrate so many markets is because when a student comes in and lock arms with us, we enter into that market. And then we started doing deals with them in that market. Because what we the way in which we tell our students to kind of evolve first is do deals in the 50 mile radius around you, because you already know like and trust that area. Yeah. So let’s not overcomplicate it, let’s get you moving forward. So now that’s how that continues to expand so that we always have, we always have somebody that’s local that we’re doing deals with. I like it
So last question I have for you because we’ve gotten a good amount, but I’ve enjoyed every minute of it is I know you got some interesting property an interesting story for me about a deal you did, like maybe a tenant just taken off in the middle of the night or that. Yeah, what do you got for me?
I’ve kind of seen it all anything. Yeah, jumps out at me.
Yeah. Do you have anything? If not, it’s okay. I was just curious, because I know you probably ran into some interesting price situations with sellers or
yeah, I’ve had more horror stories than that. That like to say, because it the other day. I mean, the stuff happens all the time. Interesting deal, though.
Well, horror stories. Interesting deal. Don’t matter to me. Unless you can admit it on air.
Yeah, too many of them. I’m trying to give you like a good story, and some of them may just seem sad.
Yeah, no, no.
I’ve had plenty of people that have, we’ve had people that have passed away in houses, we’ve had people that, you know, absolutely destroyed houses. In the past.
We’ve had lease options like where they’ve like been leasing it. And they’ve they passed away. Oh, yeah.
And we’ve had stories where the seller passed away, where we’re buying a property and then the seller passes away, which is always an interesting, interesting dynamic
then you got to deal with their family, right?
Yes. Luckily, if things were in trust, let me say this, though. We’ve been through so many horror stories and come to our events will tell you them all. Yeah, the reality is, there are less horror stories, typically the most rentals, because you have buyers in the properties that that actually care about the house and in ours is roughly an 80 to 90% success rate. But you always have those crazy stories that pop up for sure that you just you shake your head sometimes. But this is a fun one. Give me a fun, we had a student come up. So with some of the associates that we work with those students we work with, they get an office visit and the office visit means they’ll come up and we’ll actually take them on appointment up deals that we were booking, you’re working. So the student comes up, he’s actually came out of Jacksonville came up, visit us, they spent the day with us in the office, then we go on the road. So we went to a property it’s on a lake, it’s about probably an hour and 15 minutes away from where we’re located is like 9am really nice day, summer night. And so we walk up to the house, the TV is blaring like blaring. So we’re knocking on the door, knocking on the door, and we’re like, I’m like, I’m sorry, Dave, I don’t I don’t know if this guy’s here. All of a sudden, this guy walks up the stairs. And like ragged t shirt, pants basically fallen down, comes to the come to the door. I’m like, hey, yeah, we’re here to see your property. And we booked the and you confirm yesterday. And he actually had no idea what the heck I was talking about. So when I walked in the property search show me the house. And what I noticed while he showed me the house is he’s slurring like, Oh, God, I look at like Dave and just go this dude’s hammer. Yeah, he’s a hangover. All the way down. Oh, no, he just started drinking like six. Okay, now. He was hammered. Walk away down to the dock, right? Because like this house walks, it’s like it’s on a lake. So it goes down, and then you get to the lake and what’s in a dock. And I just start to explain stuff. And he just looks like, you know, he’s hammered. So I just go, I just go, Alright, you’re clearly drunk right now. Like, there’s no point of us having any more conversations. We should probably just go and then we’ll call you tomorrow. So that’s one I got another good one for you now because then you go ahead.
Yeah, then we’re gonna start coming now.
So we’re in Central Connecticut, Central Connecticut Waterbury area, which isn’t a great area, we’re going we were having a conversation to the seller. When we get there. The sellers actually, which I didn’t know, was having like a mini open house. So like I was there, he had like a couple realtors, things like that. So we walk into the house, and it was a tenant there. And we walk in and look to the left. There’s like a giant mound of wheat that’s like sitting there. So we’re walking to the house and like this, like literally, there’s probably five or six of us walking through this property. And I’m having a conversation with the seller and I’m like, pretty much ignoring it. Because, you know, it’s I guess normal in like the Western Central Mass area. So I was pretty much used to it. But we started walking through and this was another office visit. Just let you know, this is James link. He’s one of our coaches. He came up from North Carolina. What’s going on over here? No, this seller, I mean, this realtor that says like hustling the seller, like she, she’s all over, she wants to get this deal done. So eventually, she ends up doing the deal, because the lady’s talking to me, I’m like, Hey, if you just want to go the realtor, I mean, I’m not. I mean, obviously, this isn’t gonna be a good deal for me. So now the realtor is signing paper on the table. So my student is now taking a picture of the realtor and it’s the realtor basically signing a contract next to a giant pile of wheat. This Right. So there’s a couple of funny stories of like,
like when Yeah, the student was ready for that. I bet he probably liked that.
Oh, it was it was comical. I mean, he’s from the south too. So you’re just like joking around the entire time afterwards. So those are the interesting things that happened needless to say I didn’t do we didn’t we didn’t buy them on those properties. But you could go on enough appointments and you’ll see some stuff
Yeah, and that’s that’s what I love about I can tell just from what you’re saying man you love what you do and you love helping others man so it’s a great to have you on here and I would advise anybody that’s watching this wants to crush creative financing and wants to learn to hit up Zach at the wicked smart. How can they hit you up? How can they reach out to you?
Yeah, let me make sure I get you guys a free book link here to me make sure because I know it’s alive. So I want to make sure I got the right one. So it is wicked smart. books.com forward slash Nathan wicked smart books.com forward slash Nathan. Love your head and we’ll give you our first Amazon best selling book real estate on your terms. It really is the overview of creative financing, how we do what we do and also kind of share our stories there as well. So great, great place to start. So wicked smart. books.com forward slash
How’s that wicked smart books.com forward slash Nathan’s at it?
You got it my man, you got it. Okay, go get a book man.
Go read a book everybody. Yeah, exactly. So I this is live. So I do have someone to ask this question. They said, Have you done any deals on right of redemption states? So let’s say the state I’m in has 90 days of redemption after the auction has occurred? Can you assign it during the redemption period? So I don’t I don’t know, you know that? I don’t I don’t know anything about that.
Yeah, some states, it’s a redemption period. But these are auctions. Okay? We’re not, we’re not buying properties at auctions. We’re buying properties. So think of this. This is like nice move in ready homes or you know, our needs to be updated, something like that. This is an auction houses, even in the pre foreclosure foreclosure process. We tend we want to catch these deals even before they go to pre foreclosure. But that would be like if they hit pre foreclosure. That would be like our window before they went to auction before they went to banks, because we want to avoid banks.
Gotcha. Oh, yeah. This now that you talked about, you don’t really mess around too much with flips. So let’s say a seller wants to sell your property. And it’s a good deal. Good terms, but it’s completely trashed. You guys mess with those? Or do you only really touch the ones that are like moving ready, and you can just get, you know, turn around real quick?
Yeah, we would call those work for equity homes. And if you’re first getting started, that might be a give yourself a chance you buy it contingent upon finding a third party buyer using any of our agreements that always be in there. So we’re doing a deal, actually, with this gentleman that you know, was there taking the picture? We didn’t deal with him down. He’s at a Charlotte and we actually acquired a property on owner financing. I think it was a 72 month balloon didn’t even have copper enough. We bought for like 80, some $1,000. What on terms and then what we did is we looked for a work for equity buyer who had to be in a contractor they came in, did a bunch of work to the property and cast us out. I think that deal ended up acquiring high 80s total profit,
but you’re not messing with yourself. You’re like, I’m not gonna go fix something up on terms.
No, we’re in it’s not you can’t it’s definitely not that you can. So if I could kind of tie things in a bow here. creative financing for those that are listening like right now let’s say you’re actively following Nathan, you’re doing wholesale deals, you’re doing fixin flip. creative financing, now is the ability to go ahead and acquire another deal from the current leads that you’re bringing in at least one more deal. And then this deal will happen to be able to bring you cash now cash monthly and back end profits, but it’s stopped throwing away your leads. So if somebody says you I’m not willing to take the deal, which you’re proposing for wholesale, that you can make another offer and exactly what Nathan just did doesn’t have to be perfect. He made another offer because the first option that they went to didn’t work. Well, how do I do another offer? Create another offer? Get another property under agreement? Because if you’ve read any of the books of Stephen Schwarzman, the guy who started Blackstone, he always says don’t over negotiate deals, because if there’s a high potential of long term gains on it, then you do you create the best deal you could possibly get. So it’s like, that’s what you did. Nathan, right, you go with my knowledge. And what I have available is the best thing I could possibly get. Because I’m not going to like completely fret over that. Because I know that I can make $1,000 a month off this property for the next 24 months. And as I go through it, I’ll figure out my exit strategy. And that’s exactly what you can do with with some of the stuff you’re doing right man.
I love it. I love it. And I think you’re a great guy to learn from and what we’re going to do. We talked about this earlier, but in people in my community, I want them to, you know, if there’s anything that they have, and it’s creative, that, you know, the directly just send them to you. Right? We got we got to figure out how we’re going to do it though, right? Like, you know, if they have something they can send it over. Maybe they can fill out a form or something. Yeah, we’ll have to figure that out.
Um, we Yeah, yeah, there’s a handful of people right now, that seems to be a massive need for that when it comes to losing deals, and you probably
get a bunch of trash dude and be real, you probably get a bunch of guys who aren’t even that motivated. Right?
Well, the challenge with some of that is that we get to build the student or the real estate investor from the ground up, to know for that communication and to recognize a creative deal versus a wholesale deal. So it’s never a bad idea to invest in your education for both wholesale and for creative. They’re not going to they’re not going to cannibalize themselves. And if anything, you may want them to sometimes cannibalize themselves. Yeah, because I know so many people that started wholesale, and they started to do some creative deals, and like, why am I wholesaling these things out anymore? I’ll just be the buyer.
Exactly. Well, we’ll figure it out. But hey, it’s great having you on the Payneless podcast. Thanks for letting everyone know what they can do. We’ve we’ve covered some great stuff. So is there anything else you’d like to leave the audience with before we tune out?
Life rewards action? That’s it. You gotta go take some action. We spoke a lot about stuff today. Now it’s time for you to start taking your next step whether it be small or big. In order to move towards either doing creative financing or doing wholesale, you got to do something. Don’t go listen to another podcast. Go make a phone call.
Yeah, exactly. Thanks, Dan. Peace out everybody.
