Epic Real Estate Investing - 5 Creative Ways to Finance Your Deals | Episode 202

Episode Date: April 25, 2016

As more and more investors begin entering the game, the low hanging fruit is quickly getting snatched up.  If you want to separate yourself from the noise, prepare by educating yourself on alternative and innovative financing techniques.  Today Matt gives a summary of the top 5 creative ways to buy real estate.  Enjoy! ------- The free course is new and improved!  To access to the two fastest and easiest strategies to a paycheck in real estate, go to FreeRealEstateInvestingCourse.com or text “FreeCourse” to 55678. What interests you most? E.ducation P.roperties I.ncome C.oaching Learn more about your ad choices. Visit megaphone.fm/adchoices

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Real estate investments involve a high degree of risk. Residential income and returns may vary and are not guaranteed. Past performance has no indication of future performance. Nothing herein shall be construed as investment, tax, legal, or accounting advice. This is Terio Media. from Terrio Studios in Glendale, California, it's time for Epic Real Estate Investing with Matt Terrio. Uh, yeah, what's that? And welcome.

Welcome to Epic Real Estate Investing, the place where I show people how to escape this darn rat race. Using real estate. You just got to shift your focus. It's really simple. Shift your focus from making piles of money. Leave that whole savers mentality behind. So stop making piles of money and focus on making streams of money. money. Adopt that residual mindset. Change that one thing about yourself. Change that thing just one time

and you are on your way to financial freedom at 10 times the speed. It's not the most exciting path, but it is 10 times the speed. It is the fastest. And that there, I promise to you. And once you get there, life then becomes exciting. And speaking of excitement, right now, there's an extraordinary time to be searching for real estate deals. And I'm finding the greatest opportunities right now with my creative deal structuring. And, you know, in many markets, you may have noticed if you've been running any sort of a real estate business over the last few years, many markets are experiencing solid, steady appreciation again, right? Builders are starting to build again. That's a sign of appreciation because they're not going to build if they can't sell their house

for more than what, than what it costs to build them. You know, those values are coming up to to like a replacement value, which means the market has bounced back significantly since the lows of, you know, 2007, 2008, which means purchasing properties at deep discounts isn't nearly as easy as it was a year ago, is it? Or even just six months ago. But no worries.

There is still plenty of profit to be had, but likely less and less of that profit will come to you by way of just making straight all. cash offers by just getting deep discounts on your on your offers less likely to happen in the in foreseeable future and you're gonna you're gonna have to get creative and squeezing out profit from your deals and I'll be spending the next several episodes on just this getting creative using your intellectual currency more than your actual currency and before I get into today's episode I want to warn you about what you're likely to start here

hearing, you're going to start hearing some chatter. It could be a year or two away. Could be six months away. It might be next month. There's no crystal balls here. But I've been doing this long enough to have recognized market patterns. And when you start hearing your barber or your dentist or your unemployed brother-in-law, meaning just about anyone that typically wouldn't have any interest in or business conducting

real estate investing, when you start hearing those people start. talking about it, that's a warning that changed, it's probably on the horizon here. And I'm hearing the very beginnings of those types of conversations at cocktail parties and social events. And being a member to many online real estate communities, and you might be noticing this too, you know, over the last year or so, there's been a surge of people posting pictures of very large checks in these communities on social media, you know, in a sense, it appears, wow, everybody is doing this and everybody is crushing it. Giving the impression that it's easy.

And recently, I guess it has been. There's been a lot of low-hanging fruit out there the last few years. And when you hear a story from the grocery clerk or your coffee barista doing deals on the side, there's only so much low-hanging fruit that's going to be available to go around. I mean, there are plenty of deals. There's always deals. But that low-hanging fruit is what's really getting snatched up first. And the more apple pickers you got out there, those good apples at the bottom of the tree are going to become fewer and further between.

And it's this dynamic that's going to force change. And I don't think there's any cause for alarm right now. I'm not here to scare you. Not by any means. But you want to be prepared. You want to prepare yourself for this change. And this change doesn't mean the market is going to go from good to bad. No, it's just going to be different.

And how you prepare yourself for this is how you prepare yourself for anything. You educate yourself. You train yourself. You develop new skills or you strengthen your existing skills. You know, until shelter goes out of fashion, until a roof over your head, you know, falls out of trend, real estate will always be where it is and there will always be deals. Because the deals happen because of some sort of life event for people, right? some sort of life event that causes some sort of distress, whether it's financial distress or personal

distress or, you know, just wear and tear on a property causes the physical property distress. That happens every single day. There will never be a shortage of deals because life happens to people every single day. Right. So until, you know, that roof over your head falls out of fashion or falls out of trend, real estate's always going to be where it's at. Just know that the rules change every once in a while. Strategies must be modified.

different skill sets must be called upon to seize the opportunities that exist each time a market shifts. So I've been preparing for this over the last year. My business is getting lean and efficient. And we're pushing the envelope with creative deal structuring. And we're doubling right now, we're doubling the amount of offers that we were getting accepted like six months ago by simply offering multiple solutions to motivated sellers. And some not so motivated sellers. We're getting deals from them as well.

Options that they didn't even know existed. Those are the types of options we're offering to people. And all this so far to say, keep your eyes and ears open for change for the chatter at your next birthday party. I mean, watch social media. Pay attention to traditional media. And when the news starts to get a little too positive, when it starts to get good, the news starts to get optimistic, recognize that we're on the brink for change. and regardless of what you do here,

stay focused on your mission. Don't get distracted. Don't get sidetracked. Stay focused on your mission, on your business. Keep the sauce sharpened and ready for change because, you know, that Walmart greeter that's flipping properties on the side, they won't be.

They're not a professional like you are. So you want to keep honing your skills, keep opening up your minds of education, keep your eyes and ears open. you know, don't walk around with, you know, like with your head in the sand thinking like the deals are never going to stop. Because they're not going to stop. They're just going to move. They're going to move to somewhere, place different.

All right? And so what we're going to do is we're going to talk about or start the conversation of how to position yourself and how to find those deals once they do move. And maybe you can, you know, catch deals that are still there. Just no one else knows how to capture them. That's the goal today. That's the goal over the next several weeks. So let's go over five creative ways. to buy real estate. Five creative ways to buy real estate. And we're going to do that right after this.

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one of them and then some. Okay. And I'm really excited to share creative financing with you. Creative financing, creative investing, creative deal structuring, all of that stuff, because that's exactly how I got started. And, you know, I've never, I don't know if I've admitted this or thought about it, but when I got started, I didn't really actually know what wholesaling was. I knew about subject to and creative deal structuring and seller financing and seller carryback and, of course, all the traditional forms of acquiring real estate. I'd heard about all that. I mean, a lot of that stuff was, you know, circulating in my environment as a real estate agent. So I'd heard about it. But I didn't really know what wholesaling was.

So I'm really excited to share of it, and I've become a very good wholesaler. And I've created an amazing wholesaling operation since I learned. I know, it's what, five, six years ago now. I guess it's more than that. I've been saying five or six years ago for a couple years ago. So we're probably like eight, seven, eight years ago. So I've become very efficient at wholesaling. But it's nice to get back down to the parts of my real estate business.

We've done this over the last year that really built my portfolio. That really created the epic empire over here. So I mean, it's how I built my entire portfolio. So through the types of deals that I'm going to be sharing with you today and in the foreseeable future. All right. So number one, conventional financing. Conventional financing. Now, I understand that that wouldn't normally fall into the category of creative.

But I invite you to look at this in a slightly different way. You see, we're still at historic lows when it comes to the interest rates. and the banking guidelines, they're starting to loosen up a bit in case you didn't know they are. So it might be time to go check in with your local banker. And if you're going to use other people's money, you always want to take advantage of the cheapest money that you've got available to you. And right now, that would be the bank's money. But it might not be for too long. So the creativity comes in here with regard to how can you get some of this cheap money?

I mean, do you have the credit means yourself? If so, I would go and start looking into that. At least getting qualified. So if you come across a deal, you can pull the trigger and you're ready. Yeah, you might want to tap into that right now if you haven't already. Now, if you have, if you're way ahead of me, if I'm preaching to the choir and you've maxed out your credit, the available credit you have for purchasing properties, I want you to look at it this way. Who else's credit can you tap into? are there people in your world with solid credit and solid financials that that would be open to partnering with you by simply offering their credit score, so to speak, to do a deal?

You know, my good friend Christian Martinez, he's purchased almost his entire portfolio this way. See, he's got time to go find the deals. He has one partner that brings in the down payment, so they'll bring in $5,000, $10,000 every single time. He's got another partner that qualifies for the loan with their credit and their employment situation. And then he goes out and he finds the deals and then manages them from that point forward after they acquire them. And they are three-way partners and they're building wealth in a way that they couldn't if they were doing it all by themselves. So there's a thought on creativity and seizing the opportunities of the current lending environment. All righty.

So that's number one. Number two. And probably my favorite. I'm not going to say my favorite for last. I want to talk about it right now. And that's seller carryback. You know, at whatever point you hear somebody looking, looking at purchasing on terms, they're referring most of the time to creative financing.

And most commonly, the means that the seller of the property, that means the seller of the property is involved in some way, carrying back a mortgage. And knowing how to structure these types of deals, these can double, triple, quadruple the amount of deals you do. And what a seller carryback is, if you don't know, instead of you borrowing the money from a bank to purchase a property, you borrow the money from the same. seller of the property. The seller becomes the bank. And they loan you the money to purchase the property. And the creativity right here is really unlimited by only your thinking. And much of that

creativity is inspired by why the seller is selling in the first place. You want to get down to the core of their motivation. You know, that's the foundation of every deal. It lies within the seller's motivation to sell. So where's the motivation? That's going to inspire the creativity for you. And I mean, sometimes they're going to, they'll carry back and they'll finance the property for you because there's no other way for them to sell the property. Or maybe they just flat out don't need a giant chunk of cash right now. And there's everything, every possibility in between. So understanding the seller's motivation is very important to when you're putting creative deals together, especially if you're going to involve the seller. Now, more often than not, this type of structure will not be a long-term solution for you.

There's typically a shorter time period on the financing here with a seller than there is through a traditional 30 year or even a 15 year mortgage. But that's okay. The creativity and flexibility that can be had right here is like no other. An opportunity for yourself can be created at every single corner. Just the ease of acquisition alone is enough to add this to your toolbox, meaning typically no credit score is required, no appraisal process is required, no underwriting process. and it's not uncommon for there to be actually no down payment required either.

So, seller, carryback. That's number two. Number three, subject to. This subject to strategy, it's an incredible approach to funding a real estate deal quickly. However, it's almost always a short-term solution. I would say, yeah, most of the time it's a short-term solution. And the phrase subject to, what that originates from the expression, subject to existing financing. So if there's financing on the property already, that's what you're tax.

into, you're going to leave that in place. And what it does is, it implies you purchase the property on the condition that the current financing stays in place under the seller's name. See, the title is exchanged, however. The existing financing stays in the seller's name, but title is transferred to your name. This is an ideal solution for the seller when they need to sell fast. And it's an ideal solution for you, as frequently it can be a no money down deal. So that's ideal for you.

And it can give you time to find alternative financing that will be in your name. So you can do it quickly. That's convenient to you. Or it can serve as a bridge loan, so to speak, while you go out and you look for either a wholesale buyer, or it can serve as a bridge loan while you take the time to fix it up, to fix up the property and sell it for top dollar at the retail level. You know, in the event that you deploy this strategy to fund a deal, understand it's your responsibility to follow through on your word and make

the payments of the seller's financing on time, okay? You've got to follow through. And there are other nuances here. Actually, there's several nuances here that will require your attention. But that's the gist. And we're going to go over that in detail of it in the coming weeks. Number four, the seller second, the second carryback, closely related to seller carryback. The strategy can be extremely helpful in putting deals together.

The seller second, what that implies is that the seller gives a second home loan. And normally the second would be large enough to cover most of. or all of your down payment to complete your conventional financing loan. Got it? So if you're approved for a loan, and this could be a traditional loan through a bank, or it could be a private loan from Aunt Millie. You know, but the loan, if it's not enough to pay for the entire property, you can ask the seller to carry back a second to complete the transaction,

to seal the gap there. And in this way, the seller gets most of their equity out of the property. they get most of what they want, and they get some interest payments to boot. And it's typically a good win-win scenario. And you get into the deal, you know, typically using very little to any of your own money. Another option for a second to complete a no money down acquisition for yourself could be a credit card or a credit line, just like the ones Epic Community members are using from Epicfastfunding.com. So that's number three, the seller second or get creative with a credit card and use that as a second.

Number five, lease option. You know, at long last. In the event that you can't figure out how to fund your real estate deal, you can propose a lease option. You can do a lease option. The lease option, what that is, it permits you to get into the house for practically zero cash down. And it gives you the exclusive privilege to purchase the property in the future. You have first right of refusal for the future purchase. Typically, I don't know, and it could be one to three.

years, a few years. And what this does is the time period will give you the opportunity to obtain long-term financing or find a buyer for the property or you can find a buyer for the option. Additionally, you can structure your deal so that a portion of the monthly lease payments are applied toward the eventual purchase of the property. So the lease option is a great strategy to acquire and control property. So there are many more approaches to funding your deals and we're going to go over a ton of them in the coming episodes. And what it's going to get really exciting is when we start discussing how you can use a lot of these different strategies I just shared with you in conjunction with each other

and to really just, you know, create absolute magic where it seemed like there was no deal there at all, creating unlimited opportunities for you and the sellers of your deals. So if you're determined to, if you're determined to create financial freedom for yourself, investing in real estate, you're going to find a way. And I'm going to show you many different ways. because it's never a money problem. Most people think it's a money problem. It's never a money problem that's going to stand in your way.

Just an idea problem. And one of the ways that we're creating new ideas, how we're inspiring new ideas within ourselves, getting more or more creative with ourselves, and then we're inspiring that same type of creativity with the motivated sellers and some of the unmotivated sellers is through using a three-option letter of intent. Now, you've heard me mention it here before,

more than once, multiple times, because it's a staple in my business. And right now, I've got to tell you, it seems to be working better than it ever has. And I'm thinking, it's no secret that, you know, a lot of people are marketing right now. A lot of people are marketing to the same sellers.

They're making all cash wholesale offers to the point where they just kind of might, and it might be sounding just like a bunch of noise to sellers right now. And every offer they get kind of looks on peers or sounds the same. But because we're following up, with some additional options. We're getting, I think, greater consideration than we were before

when we were just sending out a single all-cash offer. So I'm going to go deeper and deeper into this over the next several episodes. But if you'd like a copy of that calculator, the same one that we use and a Microsoft Word template of the letter that we send, you can go to epicl-o-I.com. Epicl-O-I.com.

You can get familiar with that right now. And that should create and elevated listening for yourself in the next several episodes. There's even a video there that I show you how to use it. So go to epiclloi.com, all righty? Many new and creative ideas to come. So I will see you next week. I'm Matt Terrio, living the dream.

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