Epic Real Estate Investing - Building Legacies in Real Estate: A Deep Dive with Chris Prefontaine | 1410

Episode Date: January 16, 2025

In this episode of The Epic Real Estate Investing Show, host Matt Theriault welcomes Chris Prefontaine, a seasoned real estate investor with over 34 years of experience. They discuss Chris’s journey into real estate, starting from his early inspiration within his family business to becoming a prominent figure in the industry. They explore the importance of experience in real estate, how to handle different market cycles, and the significance of public sentiment. Chris shares insights into his company, Wicked Smart, and their unique approach to coaching and deal-making, including the three payday system. They also touch upon the role of technology, the impact of interest rates, and how to effectively communicate with sellers. The episode concludes with strategies for finding off-market deals, the importance of family legacy in business, and the future of real estate investing. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Hey, strap in. It's time for the Epic Real Estate Investing Show. We'll be your guides as we navigate the housing market, the landscape of creative financing strategies, and everything you need to swap that office chair for a beach chair. If you're looking for some one-on-one help, meet us at rei-aise.com. Let's go, let's go, let's go, let's go, let's go, let's go.

Let's go. All right, please help me welcome to the Epic Real Estate Investing Show, Mr. Chris Prefontein. Chris, welcome to Epic. Hey, good to be here, buddy. Yeah. So you're in the northeast? I am in the northeast.

I am in the massive state of Rhode Island. Massive state. That's a big state. How long does it take to drive across? End to end, maybe two hours. Really? That's like L.A. to San Diego. All right.

I got a reference point there. Very good. Well, welcome. What's the weather like? It's actually unseasonably nice here, 50 sunny. Okay. Yeah. I went on the coast.

We get nice weather, actually. I saw on the news that you guys were getting gearing up for a storm. But rain for me, though, even an hour north with my son or Isaac and my daughter, they'll get snow. Very good. Awesome. Well, welcome. And the Wicked Smart Smart Podcast is yours, right? Yeah, Smart Real Estate Coach.

Yeah, Wicked Smart is the name of the company. Wicked Smart is a DBA, Smart Realistic. Got it. I love it. I love it. So, I guess, explain to me. How did you get started in this whole thing and what inspired you to take off into this crazy world of real estate? Yeah, real estate in general. I started in 1991, some date myself a little bit.

34 years, it just clicked over to, which is crazy. All right. I think you're the biggest vet that we've ever had on the thing. Usually I win that, but I think you got me. Yeah, so I've done a little bit of everything, but it was inspired to answer your question. I hung out in a family company that was not real estate. It was actually welding supply and gas, but my dad would build brick and mortar buildings and lease them back to himself, and I couldn't get that when I was like eight or ten, but then when I figured out, like, that's pretty cool.

So I started hovering around his center of influence and got hooked on it. And ever since, I've loved it. That's awesome. You know, you've been in it for that long, you've probably interacted with a lot of different people. And it's a huge advantage from someone that didn't have it. And I recognize it right away. Have you recognized it? Where people don't have the experience, you mean?

Yeah. Not only of you, I recognize it, but I tell people, and I know you got so many shows out there, Matt, you see it. You see people that are out there mocking themselves as, let's say, coaches or whatever. You and I hang out with a lot of good people. but they haven't been through like a cycle yet or even one. Right. And it's just scary. And it's just too much of that out there.

I have a couple students that became coaches. And I was like, I know you only did like two deals and now you're teaching people how to do the else. I'm telling you. And when it comes out is when? When there's a bit of turmoil, right? And then of a sudden, you know, you're going, oh, I didn't know that.

It was all rosy. Yeah. And as part of our training here when the conversion process with the seller, like that's really the money maker, how that conversation with the seller goes. And it's like the least sexiest part because it's the part that's actual work. And it takes some skill. It takes some experience.

And I talk about like these four different quadrants of where the conversions happen. And one of them is like where you kind of positioned yourself as the bad guy, right? It's you negotiating against the seller. Not necessarily a bad guy, but it's you versus them. But then like the seller will kind of take the lead and might give you a little bit of a discount, but it's not a big enough discount for it to really be a deal. And like up there since 2010, maybe 11 or 12 in there.

You could work in that area and still do okay for yourself because the market would appreciate and it would save you from yourself, from your incompetency, right? And now that the market shifts, it's tough to make money there. And I think that's where the people that have left the business is because that's where they were operating. I agree that in that little window because like in our world and creative,

as you know, I love it when it shifts. I love it right now because when you understand, I always say this to people, real estate one constant. It's constantly changing. Great. So learn how to pivot and act in any market. And you'll be super confident whenever else is like the media is already screaming, as you know, right?

So this is perfect timing when everybody's running. But yeah, you're right. The new people like, oh, I guess it's bad timing. Media said so. And no, that brings me another point. What you just said, people run screaming, right? You being doing this for so long, you've got a podcast. Do you have a YouTube channel?

Oh, yeah. Okay, you got the YouTube channel. I mean, I've noticed already just the public sentiment about real estate is way down. Have you noticed the same thing? Okay, it's interesting because I got, I getting it from both sides. So I'm getting that from like conventional or maybe even the wholesale world, right, some different niches.

And then in the creative sense, I'm seeing like this surge, at least maybe because I'm so privy, I know I'm watching it all the time. I've seen like a surge because they tend to know that when things get, sellers need guidance, okay, they need us now. We don't need the discount.

So I'm seeing both depending on pocket. Like, you know, in Florida right now, it's weird. It's getting hit and not in Nariari and not so. So dip your pockets. Got it. I'm very much in tune with the public sentiment because, you know, with all the content that I do, I'm always doing research. Like what can I talk about now?

And it's always an opportunity for me to learn. And there was certain things like a couple years ago when it felt like we were going to be going into a recession and like how does real estate get affected that are impacted by a recession. And so I did a lot of research on recessions and obviously led me eventually down to the Great Depression. And what I got to really see was how much public sentiment actually. runs the economy and not necessarily the economy. Yeah. Right. Yeah.

And so I noticed right now with, I have my YouTube channel for like 12 or 13 years now. And I used to be able to release something like one of the little hacks is like a list, like seven states that are poised to grow in cash flow. Like that would always kind of work. And now I notice like anything that has like real estate in the title or whatever, it doesn't get nearly the impact. But if I go and say seven states poised to benefit from Trump's, new policies.

Now, I mean, it could be the exact same video, right? And it's a 10 to 1 difference. And so that's where I'm kind of noticing the difference in public sentiment, like there's not the attraction to the subject of real estate. I got to think, I'd love to know you thought of this, but I got to think it's because of the money that's probably behind where I said earlier, I was saying kiddingly, but the media, 100 people camp out the TV or the social media

and listen to that crap, like all day, every day. And so you can't help but be influenced by, shoot, I'd be it by sat on it all day long, you know? Mm-hmm. So I'm not too much of that. Totally. But, I mean, it's the public sentiment. So we have to, like, kind of be aware of it, right?

Yep. And it kind of runs the market. And based on that, where do you see the market going? Is it changing your way you're doing business at all? It's not changing, but I laugh only because, like, the billionaires don't know, right? So people, I love people that go, come on. Like, what's going to, I don't know. But I do know why I said earlier, I'm going to lean on that again.

I do know that when there is answer any, cool, people need us, UI, and other people that are skilled, they need us more than ever. So I get excited. My wife will say, we've been married 30 years. I've been in business 30, gone on 34. And she'll say every time, well, the rates did this. What does I do to your business? Or the media said this, where's it doing? I always say, the more chaos and turmoil, good.

Good for our students, good for us. That's how I react to that. Yeah. Where there's crisis, there's cash flow. Yeah, in some form, right? Or uncertainty with beginning of COVID is a good example. Uncertainty. All of a sudden, month late, everybody was selling house like hockey.

But for that month window, when there was uncertainty, we were just contracting out the contract because they needed a guy. They didn't know what to do. Yeah. And in that month, they had four or five hundred percent seller finance properties. Oh, crazy. It was like nothing to get that. I think we had in the community a normal month in the weekend smart community, not just our

stuff. It would be 10 or 12-ish deals. I think we had like 28 deals in Russia of 20. It was like, I look back on the chat, I'm like, crazy. Right. That's awesome. Cool. So not really changing the way you're doing business. Any anticipation with the new administration coming in? This isn't a political comment.

Obviously, you and I have been on upshows to know that. It's not that at all. I just, I'm feeling like people a little bit more, at least in our community away, a little bit more open and aggressive to doing real estate in general. And I don't know if it's a conference thing because of what's going on. I don't know. But I like that feel right now. It just seemed like there was all this uncertainty and all this, like,

I don't know, I don't know before that happened. Whether you like it or not. I'm just, that's just my opinion. No, I get it. I always kind of preface my conversations that way as well. I mean, just every time a new administration comes in, you just kind of look at it, hey, you're just giving a new hand of cards. Yeah.

How are you going to play them? Yeah. Right. Totally. I am thinking about, I've done a lot of research and studying on tariffs, right? And what those mean and how those are actually inflationary. And it could actually counteract what the Fed might do with regard to, interest rates. And we have a big turnkey operation. And, you know, it's hard to be cash flow savvy

when they keep on raising the payments on you. Right. Yeah. So I'm just kind of looking at from there. It seems like they've settled a little bit. And I'm just kind of wondering which way they're going to go. And again, that's public sentiment because when the rates went up two years ago, everyone freaked out and everyone stopped. And then everyone kind of eased in. And all of a sudden, then they started buying again. and now this new level of uncertainty came in. And so, like, everyone's kind of waiting to see what goes on. I guess the theme of the show is public sentiment. Don't you think, though, like, you've been around long enough to the rates.

I just said this yesterday. My wife and I was hike, and I said, I caught myself saying the rates as high as they are. And I said, wait a minute. When we first bought our first few houses, her and I, they were 10%, you knew how to figure out your payment and your head like that, right? It was normal. When they went to seven, right, we're like, oh, this is, like, gold. And so that's also how this perception comes across, too, and how you act on it.

Yeah, it's all relative. I mean, when I was a real estate agent just before the crash and rates were at 6%, and we couldn't keep houses on the shelf, you know? Yeah. Cool. All right. So doing this for as long as you've been doing it, I know marketing is a big, big subject for people.

How are you finding your off market deals these days? What's the, what's working for you? Yeah, good question. Because we do everything off market. So we still start, like if someone comes in and says, hey, I just want to do a few deals a year. We still start with the base, which is the basic expired for sale by owner and for rent by owner. Always some cool things in there because they get tired. But when they say, hey, my goals are bigger than this or I need to expand more, then we go to what I call niche lists,

which I love and always have out of state. I love out of state free and clear because we tend to do a lot of owner financing and free and clear properties, you know, they're about a third of the properties in U.S. right now generally. You know, those tend to go, hey, I don't need the money, but I'd like a nice setup here. And I even bought my house building that way. So I like those kind of niche. And we get those through mostly virtual assistants, Matt, to answer your question how those are generated.

So that we're not calling on them, Cole, but the virtual assistants are finding those and then giving them to us. That's typically what we do. We don't spend a lot on marketing. I'll always in my own business, my family business with my son. I'll always do some postcard mailings just to keep the variety going. But again, I'll pick those lists like I just said. And I'll mail to those.

They just did a recent one, which I'm pretty optimistic about. I'm looking for a property from my brother in the area anyway. So I figured, okay, I'll blast this out to out of state owners who attacks the link one right now, you know, just to see if I can grab some sub two property. So I play with different lists, but they're all either a short, a very small mailing or VA calls. Got it. So the VA's are making the calls for you. Yeah. Yeah.

Got it. That's working for you then? That generates enough opportunity? Yeah, plenty. Like, yeah, because our three payday deals, they range like 45 grand to 350 grand per deal. that's a game changing for most people, right? So they don't need to go out and do like 50, though, is they need to do a handful next year

and leave their job or whatever it is to them, you know? Okay, cool. So that's your kind of your secret sauce or your unique proposition, I guess. Explain to me what those three payday deals are. Yeah, so we exit for the length of the show, just for the sake of basic, we exit most of our deals on rent-one.

We unlike a lot of educators out there, you know you're in the space. We want to get the buyer to the end zone. So we only get two to 10% default rate, which is pretty low. And so the three paydays are, one, they commit with the down payment because they're a true buyer. They just need time.

They need a ramp. Two, the delta between when I'm paying the owner or they're underlying debt and the vent-owned buyer. And three, the cool one is the payday three because all of the accumulated principal paydown throughout the term and any mock-up that I did. So we just cashed out of an 11-year deal. So he's not all short-term, 11-year deal that the payday three, that was a record, actually. But the payday three was like $319,000.

Why? Because it was massive, massive principal pay. out when you do these free and clear deals. We do them no interest, Matt. Most of our free and clear. I actually, almost all, they're no interest. The principal only payments. So we get them to the number, sure, but we do principal payments, which eats up principal. So cool. Yeah, it builds really, really fast. So on those seller conversations that you have, and there's a good number of mine are principal only also. Nice. But you get every once in a while, probably about 50% of the time, 60% of the time you get a seller who's a little bit more

sophisticated as, hey, you're not going to pull the old fasty on me, no principle or no interest, right? Yeah. So, if most of you use are that way, what's your approach to that to getting them to accept that? Here's how I do it, just script-wise, so the listeners could run with this like tomorrow. So I say then, look, picture A, if they

only brought up term, price, and monthly, I give them a C-Sar analogy, because I'm going to tell you what I'm saying the minute, and then I go to a quadrant if they give me something like down payment or interest. So the C-saw one, if they don't bring up down payment or interest, is just those three variables. price term and monthly.

And I say, look, Matt, what's most important to you? Well, I want all three. Well, Matt, that's not fair. I can't give you all three. So what would be the number one thing you want on that price term or monthly? Now, trying to get them to that. If they say the down and the interest comes in, I go, all right, can you get a pencil? Yeah.

Can you draw a quadrifium? You drop four boxes. And I have them right to four pieces in there. I say, what are the top two? I can give you one or two. I just, this wouldn't be fair to try to give you all of them. Wouldn't be a win-win. And they get that word fair, right?

That's why I use it. Oh, okay. that's not fair if I take all. So that's how I try to approach it. As long as I can get them to their goal, the other tack we use is my building I bought, and I recently sold it, but the gentleman was very conventional.

It owns most of the land on Ireland here. And I said to him Prince Maloney, and he chuckled, and I said, well, why? What's your goal? His goal was five and a quarter. It was back in 18. So what we did was we did 18 months of Prince of Only,

which was cool. And then we took the balance and amortize it. He's like done. It took like 15 minutes to negotiate for a building. And this guy wanted her, for a state planning reasons. So that was getting him to his goal. You don't want to cash sell.

Good. So it's a little bit of a take, like on the service price quality. Yeah. You can't have all three. Which two can you have what you want? Yep. Awesome. So you're acquiring for as little down as possible,

and then your exit is for rent or like a lease option. Typically, yeah. And I said we can go more advanced because if someone, if I own that property long term, whether it be sub two or owner financing and a buyer gets in there, I want to convert them from rent home buyer instead of them going conventional. I want to finance them long term, right? That's all right.

Yeah. No, that's on the exit. There's so many ways you can play with those to the remaker. Totally. So what's most fun about what you do then, speaking of fun? They're never the same. As you know, like the deals are not the same thing where I get bored way too quick. So you can never throw a deal.

It's the same exact cookie-cut a deal. It'll be very hard. Yeah. I always said there's a lesson in every transaction. Yep. Still. I've got now, but 30-something creative financing terms in my toolbox. Yep.

But boy, I mean, each one of those came from a deal. A deal. Or a headache sometimes, right? I think, totally. Totally. So you got a family, you got kids? Yeah, I've got, well, adult kids. My son, Nick, works with me here.

He's 36 years old. Kail is 34 and a half or 35. And my son-in-law, Zach, my partner also is 34 with two great kids. Awesome. So we're passing it on down to them. Just one of them works with you? They both work with just in different capacities. When we started together like 14 or 15 in the coaching side, it didn't.

Like people go, oh, it'll be really cool. How did you design? I said, I didn't. It just kind of organically like, oh, I like this. I don't like that. And everybody went into their own lane and it worked great. So yeah, eventually they'll take pieces. That's awesome.

Yeah. Yeah. I've got a 13-year-old and he just really has no interest in business at all yet. Yeah. Yeah. While I started him early, Nick was doing pre-finding. foreclosure doors in 2008 when he was at junior in high school. So that's when driving and not going to do it. So get him started early. Okay. Yeah. That's just a few years away. I think about that because, I mean, you were sharing with me like what your dad was doing and then how you got your kids because I came from a family of just a bunch of civil servants, a bunch of police officers, firefighters, a couple aerospace engineer people that worked for the government type thing, but not an entrepreneur on the whole lot of them.

Wow. So now I'm thinking about the message. and what I pass on to my son. That's really cool, though. You start in like a whole new legacy or generation. So what word comes to mind for that is exposure. When Nick said after I had a head injury, he was in a caller for a little while back in 03, and he said, he didn't want to go to college. He said, okay.

So I just exposed him to a bunch of my mentors, I think it's so important, like, to your 13-year-old, just exposure. Yeah. I still have no idea what motivates him, though, because we punish him. And he's like, okay. Restriction he doesn't care. You take away the iPad he doesn't care. You take away the phone he doesn't care.

I was listening to an old, just during New Year's. I like to do it. Listen to the old Bob Proctor's stuff on audio. And Sandy Gallagher was reading it. And she said, someone asked about that, very topic about kids. And they said, not quote, but essentially they said, ask them what gets motivated. And do not, do not, do not prejudge whatever comes out of their mouth, just feed it. So someday that'll come up with him, probably.

Awesome. Sweet, man. So what's in the future that you're most excited about? We are at, with Smart Real Estate Coach, we are big on deals. Like, you know a lot of companies want to sell stuff. We're big on deals. Like, if you don't do transactions, it's not really our community. So we are really clamping down, like we had a meeting today with our coaches and really

tightened up the accountability and the performance in the metrics so that we can get more people doing more deals because if that happens, why would they ever, ever leave? And it felt really good today. Like, we just went to the next level with that. So I was super excited about that for 25 and see what that brings for growth. That's great. Yeah, we've had a very similar shift. Like I don't really, just for ease of communication, I guess we still have a quote-unquote coaching program.

But it's much more of a partnership now with our students. I do a lot of closing calls for them now too. So I think that's a great way to teach. So they're sitting here on Zoom while I'm on the phone with them. No better way. Yeah. Yeah. And it makes for good YouTube videos too.

and it's all 100% real and organic. You never know what's going to happen. And I think the student kind of realizes that there's really nothing to be afraid of. You know what I mean? I can't remember the last angry seller I talked to. I know. I agree with that. No, I agree.

And they see us through calls. They go, oh, that was easier. You were just natural. Yeah, we just having a conversation. It's like talking to your knees. Exactly. And as a coach, I'm always thinking, I hear someone like amazing on the phone, like, like Pace Morby.

Absolutely amazing on the phone. And he's really good. But he's Pace Morby, right? Is that really a duplicatable skill that someone could just pick up and hit the ground running today? So I'm always thinking about how do we make it more duplicatable? Simple. Yeah.

You got to make it really simple. And you give them a framework to work within. And, you know, as you grow, then, you know, you can become the talented skilled R.J. Bates or Pace Morby type people that just are really phenomenal what they do and doesn't seem like they have any sort of framework at all. Like, they just kind of get on the phone and talk. But you've got to start some people out. out in the right way.

With that being, like, in my opinion, the most important skill, how do you start them off? What came to mind when you were talking about that and answers your question, I think, is call critiques, right? Like, live with us, they go, oh, okay, I can do that. But then letting them do a call critique and us critiquing it and sending them back feedback, when I think back, like my wife would say, hey, who's doing the best and why? It's always, well, they did the most call critiques with me or our coaches now. So they got the real solid, candid feedback.

And then they went and put that into place. So critique, put it in place. Critique adjust, put it in place. And that seems to be the best way to get people going and build their conference. We bring them in now to the office, someone to what you said, and we never used to do this. And we do their calls with them right here, like live. You can't get that much more hands on. And then that gives them the hope and then go to your own calls and let us critique.

So it's kind of like a stair step. Are you working with just local people? Are you flying people in? Are they fly themselves in? They fly themselves in. We started as a beta last March of 24, and it's by far the best thing we did because they're in a little conference room with four of us. It's like four on 10 students, right? They come in and solve the country, some from Canada, but mostly the U.S.

Awesome. This is cool today I talk to you for, I think it's the first time we've talked. Yeah, yeah, I think so. We'll get together again. We'll get you on my show. For sure. But very parallel lives here on the opposite sides of the country. So that's, you know, we started doing live calls and our trainings here in the office and we fly them in.

Energy attracts the same, right? We connect the for a reason. Totally, totally. Well, super. If someone wanted to get in touch with you, Chris, what would be the best way for them to do that? We created a link just for your tribe, Igners will grab free books. And, man, it's not the, I just the other day opt into a free book. And, of course, it gets me to the end.

It has me pay for shipping. Mine, you will get the book. There's no shipping. We'll ship it. It's wickedsmartbooks.com. WickedsmartBooks.com forward slash your name. Matt Thoreau. Just plug that in.

So I know we'll ship it out totally free. Might have a couple goodies in there for you. Cool. Hopefully everyone can. Is there a Matt Space stereo? Nope. Just all one. So there's three T's together.

Well, that's awesome. Thanks for sharing that. Appreciate that. Yeah, me know, let's stay in touch. I 100% agree. Look forward to having you on my show, my friend. And thanks for having me on. You bet, Chris.

Take care, bud. And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would. And when their name comes to mind, please share it with them. And ask them to click the subscribe button when they get here and I'll take great care of them. God loves you and so do I.

Health, peace, blessings and success to you. I'm Matt Terrio. Living the dream. Yeah, yeah, we got the cash flow. We didn't know home for it. We got the cash flow. Okay, only 10 more presents to wrap. You're almost at the finish line.

But first, there. The last one. Enjoy a Coca-Cola for a pause that refreshes. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.