Epic Real Estate Investing - Creative Financing - When to Use, and When to NOT! | 1109

Episode Date: December 24, 2020

There are times to use certain real estate investing strategies, and times to NOT! Otherwise, you could flat out LOSE money! Therefore, in today’s episode, Matt shares 9 DIFFERENT creative real estate investing strategies, revealing when to apply them, and when to avoid them in order to MAX OUT your RESULTS! Tune in and find out more! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. Success in real estate has nothing to do with shiny objects. It has everything to do with mastering the basics. The three pillars of real estate investing. Attract, convert, exit. Matt Terrio has been helping real estate investors do just that for more than a decade now. If you want to make money in real estate, keep listening. If you want it faster,

Visit R-E-I-A-Ase.com. Here's Matt. Hey there, Epic Investor. It's Matt Terrio from Epic Real Estate. This is where we show people how to invest in real estate with an emphasis on retiring early. This is the Epic Real Estate Investing Show. And I do this show because I know that most people are living a life of financial sacrifice and betrayal. So what we did is we built a system that creates an opportunity for one's money to work harder for them.

than they did for it, for your money to work harder for you than you did for it, saving everybody and their families from a lifetime of financial worry. I know that real estate works. I'm living walking proof. I didn't get started until midlife. And I've been able to replicate those results in so many of my private clients. And I just believe everyone deserves a chance. I know it works and you deserve a chance.

So if this is your first time here, really glad that you found us. If you like what you hear, make sure you hit the subscribe button before you go. And if this is not your first time here, welcome back. And thank you for sharing this with your friends and family. I just would not be here for you doing that. You're the absolute best for doing that. I love you for that. All righty, it's Christmas Eve. Merry Christmas. Probably my favorite day of the year. In the 26th of December, the day after Christmas, probably my least favorite. I just remember as far back as I could remember when I knew what Christmas was to just to drive down your neighborhood street with all the Christmas lights up and Christmas had passed.

I was like, oh, wow, we got to wait a whole other year for this to happen all over again. It was always sad for me. And I still have carried that well into my adulthood and kind of feel the same way. So, least favorite day of the year, the 26th of December. Well, maybe the second least favorite. Not too fond of April 15th either. And that's sad because that's my grandma's birthday. And I always had mixed emotions on that day, at least during my adult tax-paying years.

Anyway, I wish you and your family a very merry Christmas. and if you don't celebrate Christmas, then take the time off anyway. Enjoy it with your friends, your family, your loved ones, and just cheers, peace and blessings to you all. All righty, so on today's show, some creative financing for you. As it's my favorite part about investing in real estate,

using more mind than money, more head than bread, more of my intellect than my, I don't know, currency, my wallet. I'm looking for other things that rhyme. Anyway, I'm going to run down nine different creative strategies and answer the questions that come to me frequently, such as, should I do this strategy or should I do this strategy?

Hey, Matt, do you think I could do this strategy with this deal? And I'll also tell you under what circumstances to avoid certain strategies. And to make it easier on you, I've got a free cheat sheet download for you. And I don't even need your email address or anything. You just go to the website and you click it and boom, you got it. All righty. But first, in the news, and I'm recording this a few days in advance. So hopefully nothing extraordinary happens between now and now.

So Bitcoin passed $24,000. It just won't stop. It's an animal. It keeps going up. It looks like a new coronavirus bill was passed. As I'm recording this, the headline reads, Congress passes stopgap bill to avoid government shutdown. Coronavirus relief deal reached.

So Senate Majority Leader Mitch McConnell on Sunday evening said lawmakers have reached a long-awaited coronavirus relief bill, though it will be hours before the full details are made public. So I'm pretty sure it will be made public by the time you are listening to this. And I can't wait to hear what they are. Well overdue. And I just hope it's enough in time to save as many people as possible, particularly small business owners and their employees. The 30-year fixed-rate mortgage, the most popular long-term commitment after marriage,

fell to a record low of 2.67%. This is the 15th record low this year. And it's the lowest since Freddie Mac started tracking 50 years ago. So if you got, one of the thing that makes real estate so amazing is the ability to leverage. And 2.67%, I mean, the money is almost free. So take advantage as much advantage of that as you can. Even if it's just in one simple refinance, it'd probably be worth it. But if you got the ability to borrow.

borrow and buy, but buy for cash flow. Don't buy out of speculation, okay? Buy for income producing returns. Let's see, what else? The FDA granted emergency use authorization to Moderna's vaccine, so that makes two vaccines on the market. First shots for the Moderna vaccine could come as soon as Monday. That would have been two days ago or three days ago by the time you're listening to this.

So hopefully that's going to, that means or that will translate to double the speed of our road back to recovery. Tesla stock hit an all-time high last week. And let's see what else I got. Oh, save the date. The Epic Intensive is on the calendar for January 28, 29, and 30th. And it will be virtual. However, we'll have a small number of VIP tickets to attend in person in Las Vegas,

just like this last time. If you'd like to join us. And that's at Epicintensive.com. So I think the last thing we had, I don't know, 15 people in the room that came to enjoy the experience in person. And we had a lot of fun, ate and drank and had fun in the breaks. And it was a blast. I created some really good relationships. It was really great to interact and meet you all and I can't wait to see you again. And then we had, I don't know, 250 people or so on the on the virtual side of thing. So whatever makes the most sense to you,

if you'd like to attend, we'd love to have you. And if you want to come in person, make sure you register early. That's at epicintensive.com. Once you buy the virtual ticket, then there'll be a small little upgrade if you'd like to have that in-person ticket. That's how you find it. Okay, so if you go to the website, I can't see how to get there in person because we actually had that last time. But just buy the virtual ticket and then there's a small little upgrade if you want to join in person. All right. And the longer you wait, the more expensive that's going to get, by the way. That's just kind of how live events work. Even this half virtual thing, we still need a venue for it. And the sooner that we can cover that deposit the better. So we like to provide that early bird price

reduction as an incentive. Helps us out, helps you out. Everybody wins. All right? Let's see. So epicintensive.com, write that domain name down. And I've got a couple more of these for you. Joe McCall and I were doing something together that I've never done before. Neither has he for that matter, as far as I know. At least that's what he told me. But this was his idea, and I thought it was a pretty good one. So I was like, okay, I'm in. So what we're doing is we're giving away for free the creative financing lab that we recorded together about three or four months ago. And we'll be airing it the 26th of December through New Year's or so. And it starts on the 26th. I'm not sure exact date it ends, but every day there'll be a new lesson. And it's absolutely free.

So if you'd like to participate and get ready for the new year with some new skills, go to creative financing lab.com. All right. So we got those two domain names. I think I got another one later. We got epicintensive.com and we've got creative financing lab. com.

All right. That's what I got so far. As I'm recording early, as I shared with you, there might be some other news events that I overlooked because I don't know about them yet. But I'm doing this early because my producer, Luca,

is taking a well-deserved break for the holiday. So we wanted to put these in advance so he could get the work out of the way so he could enjoy his holiday. So everybody give Luca some love through the speaker, blow him a kiss, give him a hug or a round of applause. Just let him know how much you appreciate him because I certainly do. He does a great job here and we've been working together for quite a while now. And so I appreciate you, Luca. Merry Christmas.

Happy New Year. Thanks you for all that you do for this epic real estate investing show. All right. Now for today's show, Rick from the Epic. YouTube channel. If you're not in the know, now you know, you can go to epic r.ei.tv. Oh, there's another domain name. And that will take you directly to the channel.

And I'll put a link or I put a link for a free download in the description of this video. It's probably something you're going to want to get. But since you can't see it, then you'll have to write this one down to. And it's free epic download.com. free epic download.com. And I don't need your email address or anything like that. You don't have to opt in or nothing. Not going to get any extra emails from me or anything like that.

But you'll understand after today's episode, as you'll probably want to write a bunch of this down. But don't fret. Don't need to write it down. Just sit back and listen. Then you can grab the cheat sheet. I wrote it down for you at free epic download.com. All righty.

Enjoy the show. Creative financing for real estate investors is an advantage most people that sell or purchase real estate don't understand and as a result constantly leave money on the table but there are times to use certain strategies and times to not or you could flat out lose money and we don't want to do that now so that you end up on the right side of the equation more times than not I'm gonna share with you nine different strategies to creatively finance your real estate investments plus when each one is appropriate and when to avoid

each one all together and just before we get into it if you want to escape the 9 to 5 grind using the one investment vehicle that gives the average person the greatest chance of success. I'm talking about income producing investment grade real estate. Click the subscribe button and ring the notification bell because I post cool stuff like this each and every week and you don't want to miss it. Let's go. Hi, I'm Matt Terrio, CEO of Epic Real Estate and this is where we show people how to invest in real estate with an emphasis on retiring early. And a real estate investor armed with creative financing strategies will be able to create financial freedom much faster and

reach their retirement earlier than those that aren't in the know now I'm gonna lay out nine general creative financing strategies for real estate investors when they are most appropriate and when you want to avoid them and if you'd like to go deeper into the details of each one of these creative financing strategies I've put a link to a creative financing and real estate investing playlist below in the comments based on the views and the comments and the likes it's one of the more popular subjects that I cover here at Epic rei. TV. Now, if you're ready to begin, let me know by smashing the like button. Creative financing strategy number one, equity sharing,

also known as joint venture, partnership, membership, syndication, shareholding, among other terms. Now, it's often appropriate when you have friends or you got family or organizations with capital available for investing in real estate and they don't particularly want to get their hands dirty with rehabbing or being a landlord. Now, it's a good idea to avoid equity sharing when dealing with the seller's personal residence. If you must share equity with the seller in this situation, word it in your agreement as deferred interest as opposed to equity. Creative financing strategy number two, option. This is when you place a contract on a property that gives you the right to purchase the property for a predetermined price within a predetermined time, but not the obligation to purchase. An option

is often appropriate when you may not want to take title to the property to avoid liability. For example, the market has declined a little bit and you anticipate it to come back in the near future and you want to wait it out. Or maybe you anticipate a zoning change or a change in its use. Perhaps there's good value in the property but negative legal issues attached to it and you want to get those sorted out first. Or maybe you might want to purchase the property in the future for any number of reasons, don't want to make the financial commitment right away. An option can be a really good strategy for

flipping luxury properties for six-figure profits while using a very limited amount of your own money. It's one of the most underrated creative financing strategies of all. Check the playlist in the comments where I'll show you in detail how to get jiggie with options to fatten your wallet. Now when to avoid an option, probably don't want to put down a large amount of money for the option fee if you have less than, say, a 90% percent certainty of following through since the option fee is almost always non-refundable creative financing strategy number three option with the lease also known as a lease option or rent to own this is often appropriate when

the seller is motivated to act quickly or the seller wants to maintain the tax advantages that accompany the property or if the seller wants to keep the property in his or her asset column now when to avoid a lease option two things you want to avoid combining the option and lease into one agreement and you want to avoid leasing back to the original owner-occupant seller. I can tell you a long story at another time why this is a big mistake. Big mistake, big, huge. Creative financing strategy number four, subject two, also known as buying subject to the existing

financing. It's often appropriate when the seller must sell fast and the seller trust you and you are worthy of that trust. Or maybe when you have too many mortgage loans under your name and you can't get another. Also, when the seller has difficulty selling traditionally, that's a good time to use it. And this is typically due to something about the property itself. Or when the seller is in arrears on their mortgage payments,

when the property is in heavy disrepair, maybe. It's also good for when a property is an investment property for the seller. So when to avoid this? It's very much like the lease option. You want to avoid selling or leasing back to the occupant owner. Also avoid subject to if there is a balloon payment or an interest rate adjustment coming soon that could cause

financial distress for you. Also, in most cases, avoid if the existing mortgage puts you, the buyer, in an upside down cash flow or equity situation. I mean, there may be a few exceptions to this, but for the most part, those are good rules to follow. Creative financing strategy number five, agreement for deed, also known as land contract, contract for deed, agreement for bond, buying on contract, installment sale, seller finance, there are a lot of ACA's for this one. Now, it's often appropriate when the seller is concerned about the due on sale clause in a subject to transaction and or the seller wants to maintain some property ownership rights until it's paid in full. Now, when to avoid this, you want to do that when the seller is in extreme financial trouble,

like maybe they're facing bankruptcy or divorce. I like the cloud title by recording the contract even if I have the slightest doubt about the seller's financial situation. That would make it almost impossible for the seller to try and refinance the contract. the property if they wanted to get you know sneaky I'd also avoid an agreement for deed if the seller objected to signing the deed in advance and leaving it with escrow during the agreement's term creative financing strategy number six seller carryback mortgage also known as a private mortgage seller financed seller carryback owner carry often appropriate when the seller wants a specific

market value price but they're flexible and how they receive it or when the seller has no better investment options and likes the idea of a fixed rate of return over a long period of time. Now when to avoid this? You want to avoid it when the seller won't provide a title insurance policy clearing all items to which you, the buyer, object. Creative financing strategy number seven, wraparound mortgage. Also known as a rap, an all-inclusive wraparound mortgage, an all-inclusive wraparound

trust deed, an AITD, and a seller carryback rap. Now it's often appropriate when the seller has a low balance on their existing loan compared to the property value, or when the interest rate on the seller's loan is low. Or when the existing loan has been seasoned and or the seller has no better investment options and likes the idea of a fixed rate of return over time. Now when to avoid this? You want to avoid this if there is a balloon payment or an interest rate adjustment coming soon, especially if it will cause any sort of financial struggle or hardship for you.

Creative financing strategy number eight, IRA investing, also known as self-directed individual retirement account investing, HSA investing. self-directed 401k investing and there's some other terms used there's some other vehicles that you can do this with now it's often appropriate when the seller will discount the price deeply for cash or when the property needs a lot of repairs or the property has potentially great cash flow or maybe the seller is willing to do any of the above strategies non-recourse now when to avoid this you want to avoid anything high risk or that will cash flow negatively or if you need the cash or the cash flow that the property will produce if you need that before your retirement age

Creative financing strategy number nine, private loan money, also known as private money, hard money loans, private mortgage, private trust, deed, among other terms. And they're often appropriate when the seller will discount the price deeply for cash. Property needs maybe a lot of repairs. Maybe you've got friends, family, or organizations with capital available for investing in real estate and they don't particularly want to get their hands dirty this time around with the rehabbing or being a landlord. Now, when to avoid this? I want you to avoid this if you feel there's a greater than normal risk of the deal panning out or if you have any doubts whatsoever about the deal. Because if it doesn't work out, you can be almost certain that that money source

won't be available to you again or at least until you settle up with them. If you found this episode valuable, who else do you know? There's a good chance you know someone else who would too. And when you think about it, when their name comes to mind, share it with them and ask them to click the subscribe button when they get here and I'll take great care of them. That's it for today. Again, a Merry Christmas to you. 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. You didn't know home world. We got the cash flow. This podcast is a part of the C-Suite Radio Network. For more top business podcasts, visit c-sweetradio.com.