Epic Real Estate Investing - Creative Financing with Drew Hitt | EREI 171

Episode Date: September 7, 2015

Today’s podcast starts with Matt answering a common listener question: “How should I best use $100,000 to build my portfolio the fastest?”  And his answer may surprise you.    Then Matt is joined by creative investor, Mr. Drew Hitt.  Drew has some incredible strategies for using seller financing and substitution of collateral to grow his personal portfolio lightning fast.  So grab a pen and paper because this episode is sure to motivate you to step up your game and start building real wealth.  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

This is Terrio Media. From Terrio Studios in Glendale, California, it's time for Epic Real Estate Investing with Matt Terrio. Yeah. Hello. Hello. And welcome. Welcome to Epic Real Estate Investing, the place where I show people how to escape the rat race using real estate. You just got to shift your focus from making piles of money to making streams of money.

Change that one thing, just one time, and you are on your way to finance. freedom. It's not the most exciting path, but it is the fastest. And once you get there, life then becomes exciting. You know, the other day I received a question from one of my podcast listeners, someone that's looking for that exciting life, and I'll call him Larry. What's the best use of $100,000 for building my real estate portfolio the fastest? That was his question. What's the best use of $100,000 for building my real estate portfolio the fastest? And Larry's question, not an uncommon one. No, not at all, by the way. It comes to me frequently in different variations, but here's the gist. You see, Larry recently started building his wealth and

his passive income in real estate. And today, he holds a few cash flowing rental properties. He has $100,000 liquid to invest. And he just wants to know what he should do with it. How should I best use that money to build my portfolio the fastest? That was his specific question. And, you know, the most important detail of this scenario is that Larry is currently in the wealth building phase of his real estate career. In the building phase, you want to get control of as much real estate as possible and responsibly leverage as much as you can by using other people's money. Leverage as much as possible when you're in the building phase. The basic rule of thumb in getting wealthy quickly is to, one, maximize leverage while building. and two, eliminate leverage to sustain the wealth that you build.

So that's the basic rule. And, you know, other people's money is really the answer here. Your ability to use other people's money is what makes real estate the great and speedy wealth creator that it is. Other people's money. So the quick question to Larry's, or the quick answer to Larry's question is how does he best use his money? How does he best use that $100,000?

He doesn't. That's the best use of it, all right? So other people's money is what you want to focus on. And I'm not going to just leave it there and say, just don't use it. Let me give you some actionable information stuff that you can use and implement. If you happen to be in the same or a similar situation, maybe you have $50,000, maybe you have $500,000. I don't know. But the advice would pretty much go the same for all of you.

Here are a couple very important points about other people's money that you really want to understand and why it's so important. So the first point is you can get rich. using your money, but you get wealthy using other people's money. Okay, so that's the first part, because the leverage aspect. Second point is the harder you work for money, the more you're going to pay in taxes. And the harder your money works for you, the less you pay in taxes. But when other people's money works hard for you, then you really hit the jackpot and you're taxed even less. So it maximizes the income and it decreases your biggest.

expense in life when you're using other people's money. That biggest expense being taxes. Most people don't realize over their lifetime they're going to pay 40 to 50% maybe even more of their lifetime's income to taxes. So through using other people's money, you maximize your returns and you minimize your biggest expense in life. So when using other people's money, you increase your return via leverage and decrease your tax liability via the tax code. Other people's money. Now, what does that mean? Okay. Is it just mean? your friend Joe, or does it mean your aunt Mary? No.

What other people's money, that can mean anything that's not yours. It can mean hard money. It could be private money. It could be the existing financing on a property, whether that's the seller's financing or seller's property or whether that's one of your properties. Maybe one of your income property has some equity on it. Seller financing or through the seller specifically.

Or credit lines or maybe credit cards. Okay, that's all other people's money. Simply put, it's whatever is not coming out of your pocket. You see, just because you have money doesn't mean you have to use it to acquire property. You can, but it doesn't mean you have to. Personally, if I were Larry, I'd probably hold on to the majority of that $100,000 and use it to manage the properties that I do acquire. And two, I'd hold it for the perfect opportunity where I need more money than what other people's money can provide,

specifically maybe down payments. Okay? So if you're not going to dip into your own disposable cash, whose money are you going to use? Because there's a lot of different places you can go. So really the question is, whose money are you going to use first? So let's cover the six places to find money quickly

to build your real estate portfolio, and we're going to do that right after this. There are two steps to wealth. First, stop doing what poor people do. Second, start doing what wealthy people do. The wealthiest people work more on their business than they do in their business. If only you have the time and resources to do it, now you do.

We're VAs for Real Estate.com, and we have some free information for you. Get the five-step shortcut to hiring a rock star virtual assistant that will make you millions. Go to VAs for Real Estate.com. Stop doing what poor people do and do what wealthy people do. VAs for real estate.com. Number one, banks. This is obvious. I know.

Banks, right? But I've got to mention it because right now, As I'm recording this, the cheapest money available is through the banks. It's pretty tough to beat the low rates that they're currently offering right now. Now, that may change, but it may not. It's been this way for quite a while. So if I were you, or if I were Larry, I'd take as much of their money as they'd give me. And I'd take it right away, and I'd put it to use.

I'd go out and get pre-qualified for as much as I possibly can. And when the opportunity came up, I'd be in the position to pull the trigger. You know, the point that I really want to make here, especially if bank loans are not an option for you, is you really want to prioritize your financing options by the cost of which accompanies your financing. This is why I put the banks first. It is the cheapest money available. Like I said, maybe the next money, that won't be the case, but for now it is. Actually, you know, okay, one slight exception, I've stumbled upon an even cheaper source of financing. that actually my students turned me on to originally.

It's a little unorthodox, but it still works and it's cheap, and I'll share that with you in just a bit. But let's cover the more common orthodox sources first, if you will. Number two, seller financing. If banks are not an option for you, and even if they are, at some point based on the amount of business you conduct with the banks, they will not be. So I would start looking for seller finance deals. Look on Craigslist or ask realtors. search on Craigslist for terms like seller financing. You can actually search and just type in seller financing or seller carryback or seller will carry.

Those are some of the phrases that you'll see commonly in those types of advertisements by realtors or even private sellers themselves. And then ask every realtor that you come in contact with this question. Do you know of any listings where the seller is willing to carry back financing? It's a very powerful question for finding other people's money to use for building a portfolio, right? So you want to ask every single realtor, do you know of any listings where the seller is willing to carry back financing? And not only is it less difficult to qualify for than the bank's money, but the terms are really flexible. That's what it is also very appealing about it. In fact, really, the sky is the limit when it comes to your creativity and crafting your terms of financing with the seller.

You know, that's exactly inside the Epic Pro Academy. Once you get past that fast start, this is what I primarily teach, how to use creative tools like options and balloon. payments and interest only payments and principal only loans and subject to financing and lease options and private money and very institutional money to all these different tools that you can use that are directly or indirectly related to the seller's money to get them to finance for you. All right. Number three, friends and family. Yes, it's another place to look.

It's amongst your friends, your family, and your associates who, the ones that are specifically dissatisfied with the current returns on their investments. Now, I'm not saying to go to your friends and family and ask them to loan you money for your real estate deals. No, that's not what I'm saying. What I'm suggesting is that you offer your friends and family a better opportunity to put their money to work than what they're currently doing. Okay, you're going to offer them an opportunity. For example, don't you think, you know, Uncle Joe, who is earning 0.7% on his CD right now would be very interested in a 7% return? I mean, 0.7 versus 7, it's a big difference, right?

Or even 6% or 4% return up for that matter. Yeah, I think he might. You know, these types of loans are good enough for the banks. They do it all day long, so why wouldn't they be good enough for Uncle Joe? I mean, where do you think the bank gets their money in order to pay Uncle Joe that 0.7% on his CD? Yeah, they lend out Uncle Joe's money, the money he put into the CD, they lend his money out at 4 or 5. and then pay him back 0.7%. Perhaps they even lend Uncle Joe

his own money right back to him at a higher rate than what he's receiving for giving them his money. It doesn't even seem fair, does it? But it is fair. It's so fair that you and Uncle Joe can do this too. You two can do this together. But you'll never get to unless you present your opportunities to your friends, family, and associates.

Number four, assets and liabilities. Yes, let's not forget your own assets. and your own liabilities as a source of money. I mean, do you have any assets that are underperforming? Do you have an old 401K that you forgot about? Or an IRA, any sort of retirement plan that might have been from a previous job. How about some gold or some silver laying around the house? Maybe you have a couple jet skis or a dune buggy or a dirt bike in the garage

that doesn't get used as much as you thought it was going to get used? I mean, anything you have of value that's no longer serving you or not serving you as well as you is it should, consider it. Utilize that. For example, in a boat, sell your boat. Take a portion of that cash and buy into a fractional ownership of a new boat and then put what's left over to work in your portfolio.

I mean, it wouldn't be that difficult to generate a return with that leftover portion to actually pay for your new boat. Or just forego the boat for a while altogether and rent it when you need it. Or find a friend with the boat. That's my story. strategy. Number five, negotiating. Always be negotiating. Your negotiating skill can have actual monetary value. I want you to turn your intellectual currency into actual currency. I mean, if you ask a seller a very simple question like, what's your bottom line? And they respond back with $10,000 less

than what they originally asked for, that's $10,000 you don't have to leverage. And you could you could follow that question up with something to the effect of, is that the lowest you can realistically go? And boom, maybe another $5,000 price reduction, right? And the negotiating doesn't stop after you've shaken hands on a deal. No, you can keep negotiating. Sure, the seller can always say no, they're not going to be obligated to negotiate with you.

But there's no harm in asking for another concession or two during the due diligence process. In fact, you may find something during your due diligence of where you will have to ask for, for another concession to cause that deal to go through. And with that being the case, why not ask for the concession whether you need it or not? And there's a saying, perhaps you've heard it before. It never hurts to ask.

Number six, your creativity. You know, I've fallen in love with the saying that you don't have a money problem. You have an idea problem. I love the saying because it's so true. Money is merely the end result of a good idea put into action and followed through on. For example, couldn't you get creative?

and combine everything that I've already mentioned, you could take a little bit of each of those strategies and put an all-in-one deal, right? Sure you could. And the combinations of price and terms that you pay for real estate, those combinations are endless. So let's say, for example, Larry goes out and finds a single-family home

with an owner who's willing to sell or finance, say, 60% of the purchase price. And he's able to negotiate that up to 70%. Then he sells the jet skis for an additional 10% of the home's purchase price. And then Uncle Joe decides to step in and finance the remaining 20%. Joe's now got 100% financing and control of another cash flowing property in his portfolio, didn't he? Yeah. Plus, he still has his $100,000 in the bank, doesn't he?

Yeah, he's got that too. He's got the property and the money. Now, Larry might use a couple grand of his money to improve the place a bit, and then he might put another $3,000 into, say, a separate bank account for incidentals to help manage the property. That's really only $5 grand out of his pocket. And he's sleeping very well at night, knowing everything's taken care of, and he's got ownership of another property. Then tomorrow, he can get up and do it all over again. I might not be as easy.

It might not be as sweet. It might be easier. It might be sweeter. Right? We never know what they're going to look like. No two deals are ever going to look the same. And the second example of creativity that my students and my clients have, you know, recently tapped into for the purpose of conducting their real estate business and building their portfolos is using the unorthy. money source that I mentioned earlier.

And they turned me onto this and we've talked about a lot here on the show. That's business credit. You know, and the special source of business credit, business, the special source of business credit that they're using is pretty simple to get. And I mean, there's a quick 60 second application to fill out. Then you simply state your credit score and income and in as little as seven days, they're getting access to $100,000 to $150,000 at zero percent interest for the first 12 to 18 months.

0%. 6 figures, 0% for the first 12 to 18 months. You know, and like all sources of financing, there's a cost. But when considering the amount of money that's available to each individual through this particular source, the initial term of 0% interest in the absence of the piles of paperwork that banks require, it is the cheapest and easiest money that I currently know of. And all you've got to do is do the math and do the math carefully. you know, for some money that that seems cheap is actually expensive and vice versa, some money that

seems expensive is actually cheap. So don't get seduced by all the ads and everything. Just be ground yourself, do the math, and, you know, use the cheapest money first. And so that's my advice for this source of money, this business credit. It's the same as it is for accessing the bank's money or the seller's money or Uncle Joe's money. when it's this cheap, get as much of it as you can and put it to work. And it's uncertain how long it will be available, but it's available now. And epicfastfunding.com, if you haven't guessed, is the particular source to what I'm referring.

Epicfastfunding.com. Just go there and fill out their simple 60-second application, and you can have access to up to 150 grand, zero percent interest for the first 12 to 18 months in as little as seven days. You can do a lot. That can do a lot for your business. And if nothing else, I just, hope you get this. If you're building your wealth, you want to get your hands on as much property as possible. Okay, if you're building. And you want to do that using as little of your own money

as possible. And I want you to keep a good chunk of cash in the bank to support the properties that you do acquire. Because you're going to rest easy, knowing that your assets are covered and you'll continue to build your wealth until it's time for phase two, which is preservation of the wealth that you've created. Anyway, that's what I would do if I were in Larry's shoes. Actually, it's what I've done. The more important question here is, what will you do? So if you want to quickly build your wealth and you will want to utilize other people's

money as much as possible, and then get started by pursuing the cheapest money that you can find. Do that first. And then check back later of where I'll go ahead and I'll cover different strategies of preserving the wealth that you build. But first things first, build your wealth. And while we're on the subject of creative uses of money, our next guest has shared with me a couple of very creative ideas

that has empowered me to do some deals where I might not have been able to have completed them before. Well, at the very least, my deal structuring has gotten stronger since we met. And I asked him to come on the show today and share them with you as well. And we'll do that right after this. Contrary to popular belief, a lack of funding is not the biggest barrier to starting a business. It's excuses. But don't let a lack of funding be your excuse.

We are Epic Fast Funding, and we'd like to fund your business with up to $150,000 in revolving credit lines. If you've got 60 seconds on a solid credit score, you could have access to your funds in as little as seven days. Go to Epicfastfunding.com to fill out our 60-second application. It's fast. It's simple, up to $150,000 in as little as seven days. Go to epicfastfunding.com. On the phone, I'm joined today by a fellow mastermind member, Mr. Drew Hitt. Drew, welcome to Epic Real Estate Investing.

Thanks so much, Ray. Yeah, glad to have you here. I know we've been trying to connect for quite a while now, and we just made it. So that's good. Where are you calling from, Drew? I'm in the Norfolk market in the state of Virginia. Got it. And have you born and raised there?

No. Grew up in just a little bit north in Maryland and then moved down here about 15 years ago or so. Super. Super. Cool. So, you know, we're in the same mastermind group. We've had lots of, we've shared lots of time at the bar together. But I haven't really got to know you and what you're about and what your background is.

So why don't you share with us what your, how you got involved in real estate and what your business looks like today. Okay. I got involved in real estate in about 2006. My mother-in-law had a bunch of rentals. I thought it was kind of cool that she could hang around to do nothing. But she was, the time shares made a bunch of money that way. So I started getting into real estate saying,

how can I do the same thing without a ton of money, getting her job making six figures. So I started doing it in 2006, got it figured out eventually there, and then went basically full-time in 2008, 2009. And now we're doing wholesale, fixing flips, and then I'm buying rentals, sub-two, and owner-financing. Got it. So fix-and-flips, and you got sub-toos and owner-financing.

That's one of the things I certainly want to talk to you about. But there's a lot of people that are listening right now that want to get involved in real estate, but they kind of have to keep their foot in their existing job or whatever is supporting them, there's existing livelihood. And they're trying to make that transition. So if you got started in 2006 and you didn't really make that full step until 2009, tell me what those middle two years were like, going from 2006 to 2008 to go to full-time.

I think the biggest thing for me was just the proof of concept. I'm the type of person that needs to know all the aspects of it. And then it was just also proving to, you know, my wife, my family, that it actually worked. So it took a long time to just slowly get into that. And that was, of course, the time of the market where everything was exciting. So luckily I didn't get it figured out super fast because a lot of people were going out of business. So I just slowly wanted to make sure it really worked. You know, spent out very little marketing, finally got a deal.

And then I was like, oh, wait, I think this might work. And then that's when I also started picking up rental properties, but I didn't have money to go to a bank and get a bank loan. So I figured, how can I buy a house with very little money out of pocket and pick up a rental? So that's when I started looking into taking over mortgages and then buying with owner financing. Got it. Super. So at what point did you, like, you know, well, first of all, the proof of concept. Was that something that is part of your character?

Or was that kind of imposed on you by your environment? I mean, I think that's my character just to prove it worked. I mean, you know me, and I'm very interesting. But I keep my wife an ultimatum and just told her that it was either going to be this business, I was going to make it work, or, you know, you're either along for the rider. You need to go away. So for me, it was just I really wanted to pour everything into it

and make it work, and I just wanted to make sure that it really did work to give up everything that I was doing and go for it. So I just like to I don't like to jump right into stuff. I want to make sure that it works for me and it absolutely did. And now I have eight employees and we're doing

really well. Okay, cool. So you made the transition, your full time and so now it's like it's all about generating leads. You got to make sure that this does work. So what was your primary way of generating leads and finding deals at that time? So in the beginning, it was really just on a very low scale, just direct mail.

I always started with direct mail, just sending, you know, handwritten, you know, letters that I, you know, just write and fold up myself. And then slowly start building into postcards until I really felt that, you know, I could send more than just 100, 200, you know, cards and letters a week. So it was just that slow role of just all direct mail centered And I still do the exact same direct mail now Just on a much, much bigger scale Is that really the only thing that's changed

Is just the scale of what you do it? I think that's pretty much the only thing That's changed is just the scale I mean, that is 90% of where I get deals Actually, I probably say about 85% now But that is the majority of how I get deals Is just direct mail forever I just actually bought a house Tuesday

I contracted on it that I talked to the seller seven years ago. And they finally came around that I bought the deal on Tuesday. How funny. That's how it happens. Seven years, that's a long story. That's the longest one I've heard. I certainly hear six to eight months, 12 months and stuff like that. Yeah.

Seven years, that's a good one. That's persistence for sure. All right, so the mail goes out. How many pieces of mail a month are you sending out right now? we're at 30,000 a month now. 30,000 pieces. All right, so I got started doing direct mail very much like you did, handwritten letters.

We got up on Mercedes and I got up each morning, had a cup of coffee, and we just made a commitment. We're going to write 20 letters each, and then we could go on about our day. And we did that for a long time, and then we kind of tapped into a few good resources for deals, and we didn't have to do direct mail so much anymore. And then probably in the last six months,

we've started doing direct mail again and really ramped that up. So we're about, we sent out 7,000 pieces last month, and we just keep on escalating, the more we get our, or fine-tune our systems, the more we're escalating that mail. But that generated, you know, in a week, about 800 phone calls.

Oh, wow. I think my VA darn near imploded. You got to remember when it breaks the system around it, it's like, whoops. Right. So with 30,000 pieces of mail, what system do you have in place to field those incoming calls? So we have a live answer, a girl in the office at live answers.

We also have just like answer connect, just a secondary process of it. And then we've got another girl in the office that's really just following up on everything. So we've got two full-time employees basically just handling the incoming leads coming in, and then they just book appointments for outside sales. Got it, got it. So the person that answers the phone live, how many phone calls is she answering a day? Usually, most we usually have coming in a day is about 50.

And then it just starts to trail down as the week goes on. You know, they basically peak when the mail hits and then just slow trickle after that. Right. Do you send all 30,000 pieces out at once or do you break that up during the month? No, we try to break it up every week just so we consistently have, you know,

roughly 7,000 pieces going out a week. So we just try to break it up so that we can balance out the call volume and not just be overwhelmed with. I mean, I couldn't imagine 800. That would break our systems. Yeah, that's exactly kind of what happened. But then again, it broke it and it forced us to make it better,

so that's cool. Absolutely. All right, so you have someone answers the incoming calls. You have someone that follows up, and they set appointments for you. And then who goes actually out on the appointments and meets with a seller? So I have an outside sales rep that basically goes out.

We do all appointments, basically. He'll go out to the house. Those are poor, make an offer in writing there. And we do multiple offers because I don't mind if I buy it as a rental, if I have to flip it or wholesale it. But we go out and make multiple offers on every house. Got it. At that time? Yes, at that time.

Got it. So how do you determine with that type of volume and that many calls coming in, how do you determine, do you have something in place like a, like, a line in the sand that determines, no, let's just send them an offer in the mail, or let's go ahead and send Harry out my outside sales rep to go meet with face-to-face? So we do. We basically have two criteria. They need to have the ability to accept their offer. So whether the house is paid off or a very small mortgage,

you have to have the ability to accept a cash offer, and then they have to either have a situation or a timeline. So if they want to sell my next 30 days and their house is paid off, I don't care if they want full retail. That's why I have a sales guy. That's his job to go negotiate. So situation. But if they have no timeline and no situation

and the ability to accept the offer, we just send them a blind offer and then just follow up on that offer. Got it. Got it. Sweet. So you're sending out the properties that you fix and flip, the properties that you hold,

is that really based on what deals actually get accepted or do you have a criteria for one than the other. It really comes down to what deal that they accept. I'm happy either way they go. So I want to make sure that I don't care what they say. So if they accept owner financing, we keep it.

If they accept the subject two offer, we'll keep it. But if they take all cash, we'll fix it and flip it. Got it. That's pretty much how we work right here. So we do almost every, well, not almost, we do everything virtually. We don't do any investing in the state that we live. So we send out a three-option letter of intents.

We have an all-cash offer. We have an interest-only offer, and then we have a principal-only offer. And that's how we do our presentation. But your sales guy goes out there and meets face-to-face. Does he do something like that, or is it 100% just verbal wheeling and dealing? We have this option. So he'll give a written offer, and it will basically usually verbally give the owner-financed offer. Or in some cases, we actually have it printed out where there's multiple financed offers.

If we can get them on the phone and pitch the idea a little bit, then we'll come out there with something with multiple offers in writing right then there for them to decide. So, yeah, he'll go out there and just kind of feel them out just to see if that's something they might be leaning towards accepting so that we can cater that offer right then and there. Got it. Okay.

Super. Certainly an advantage to be in their face-to-face, I think. Yeah. Yeah, totally. Okay, so one of the things that when I first met you, and this was over a year and a half ago, and each time we go to our mastermind event, I come home with one or two things that I attack right away and change it right away. And that first event where we met, we sat across from the dinner table from each other. And actually, we're thinking side by side.

I remember exactly the restaurant. And you were talking about this substitution of collateral thing. And I've done even a podcast on that topic. and it got a lot of great feedback, and I don't want to take 100% credit for it. I didn't take credit for it then. And I'm sure you learned it from somewhere, but I did learn it from you.

And I came home, and I put that clause into every single one of my seller finance documents. And so now it's in place on all of my seller finance deals. So why don't you tell me what I thought was really interesting was not just the concept of it, but how you actually use it. So can you kind of explain that to us and how that works? and in what situations you use it in? So substitution of collateral just gives us the right that once we sell the house to move the loan to another house.

So we can go wipe out private debt. We have, you know, private lenders on another property. So basically the biggest way we use it is just for free money, essentially. Our owner finance deals are typically no interest. So I want to sell some of those properties. And I want to basically move that loan to another house to basically just pay off. other debt. So there's just such a beauty behind being able to sell it.

And I mean, every time I've done it, the sellers love it because it's just another opportunity to basically renegotiate the note too. And, you know, and even get a discount. And, you know, I find that people don't, you know, once they realize you're paying them, they don't care what happens.

Right. They actually don't care that it's not on that house anymore because they usually don't have any emotional attachment. But I just like the more creative side of real estate because, I mean, I don't want a big tax bill. And to buy with owner financing is very neat from a tax standpoint because you have a nice basis in every property. Right.

And I forget where I was, but I heard someone else talk about substitution of collateral. I heard of that face-to-face. And he had said he doesn't even put the clause in the contract. What he does is he goes and he talks to the seller says, hey, I'm upgrading my portfolio. and would you like to bring your loan onto a hire a better house with me? And I was just like, well, that was clever. And he says, he never says no.

It's like, would you like that your loan to be backed by a better house? And it's like, when you put it that way, it was very clever. Oh, yeah. I mean, when I just tell them, hey, great news, we're going to move your loan to a, we're going to split it up and secure via some other property to diversify it. They're like, oh, sounds good. I'm like, oh, that's weird. Oh, that works.

And it is good. It is better for them, actually. Oh, yeah. Yeah. Yeah. And the beauty, too, is by having the substitution of collateral and putting the seller in second position, I usually bring in a private money first. I can always, at worst-case scenario, give them a first mortgage on a different house,

and that gives them a way better equity position than where they were originally. Right. And we've had that sometimes where a seller says, I'll move it, but I want to be in first. And I'm like, okay, sure. I mean, I'll pay off a 9% private lender and substitute your 0% principal-only payments, sure. You know, the other thing that I know you do a lot of are subject, too, is you take over the loan, the existing loan. And I've covered that pretty extensively here on the show. I cover it inside the academy on how to do it.

At one time, the biggest concern was the due-on-sale clause, and I've pretty much squashed that by now. but the next one that always comes up is how do you like who in their right mind would allow you to take over the payments but leave their the original owner's name on it

how does that conversation go for you when you do it so I just had a conversation like that just the other day and I just told the seller I mean our job as a company is basically we're in business to make mortgage payment you know you have to make one payment we have to make you know several dozen

and we've never missed a payment. So all we do, I always like to relate it back to the 80s and 90s. I think it's before the St. Germain Act came out that changed, that the banks have the right to call the loans due. But half the time I just tell them, look, this happened in the 80s and 90s all the time. People took over loans. The banks just wanted to stop doing it because they wanted to charge higher interest rates. Right.

You know, have you, Mr. Sellar, ever done that? And half of the time, they're like, oh, yeah, I took over that VA loan back in the day. And I'm like, it's the exact same thing. I mean, everything's a cycle. It comes back. But, you know, we take on all the liability if something happens to the house. It's our problem. But that's also why, Mr. Seller, I'm not going to take over your loan if I can't make money on the spread, you know, from their payment to what I can rent it for.

And if there's not at least $40,000 in equity on the back end. So I just tell them, I'm not willing to get into a risky deal. And I want to make sure your loan sticks for 30 years. And if it is, I mean, you know, you. You know, you shouldn't let anyone take over your loan if it looks like a terrible deal. Right. But, you know, does it look like I'm making money? Yeah, okay, great.

Well, why would I want to stop paying it? I mean, the objection really just doesn't come up. I mean, once in a blue moon, they might say, oh, there's no way I'm doing that. And it's almost always because they heard a bad story. And it's just that they heard a bad story. Right. And that's all. And it's like, well, you know, how would I let you talk to a ton of people?

I've taken over their loan since 2007, and they've been able to move on with their life. So it's not really an objection. It doesn't come up that often. People are fine with it. Mm-hmm, mm-hmm. And that's certainly what I find over and over again with my clients is that they'll ask me something. What happens if this happens or what happens if that happens? I was like, I don't know.

That's never happened to me. You know what I mean? And as long as you know the right answer to it, too, like the gentleman was concerned about the insurance. He's like, I heard you keep the insurance on there. And I said, well, no. I mean, you're insured, not me. gotta replace your insurance policy so that I'm protected because I'm the one who went to the house, not you.

And he's like, oh, that makes sense. But they heard it from a friend of a friend of a friend and at a time they hear it wrong. Right. People project their fears onto their situation. And then those fears are just, they're present. And then that's when they get the objection. But, you know, if it's no big deal, then it's no big deal and it never comes up, just like you're saying.

Yeah. Let's see. Okay, so there's the substantive collateral. there's the, what you call it? You know, recently I just canceled all of my live events off the calendar. I just wiped them all clean because our real estate business is going really, really well, as you know, and I know yours is going well, and everyone around us is like, everyone's kind of, you know, we're doing really well.

And so I want to spend more time and spend more time with not just my time, but my team's time and my resources on still building my portfolio. And I know that the margins now are a little bit less than what they were. I see this window. You know, it's getting a little bit more narrow. I don't think it's near closed because, I mean, we certainly haven't bounced back from previous highs, not even close. But I'm feeling like I'm not, I haven't bought enough when the window was wide open. So I want to really get focused and build my portfolio.

Yeah, you agree. Okay, so that's what's going to be my question is like, how do you see like the state of the, of real estate right now and where it's going and how is that impacting your actions? I mean, it absolutely is an awesome market right now. You know, for us on the resale side, it's great for the acquisitions. I mean, I'm buying houses with owner financing

and people don't blink about it. I think, yeah, I mean, focusing on doing that because I don't want to, I'm sure you're the same about, you don't want to look back in, you know, in a year and say, oh, man, I wish I would have bought more. I mean, now is the time to get in and take down as much as you can especially in a creative way

and ride the wave of what it's going to be later. I mean, I just look at it as I don't want to go back and have an issue in with the market the way it is with multifamily. I think there's a huge opportunity for owner financing with multifamilies because financing doesn't exist for a lot of those buyers, those landboards.

So I would pick up as many, especially we're picking up duplexes. It's just as many as you can with really good terms because, I mean, we don't know where the market's going to go after this, but it's just, it's really easy to negotiate 0% owner financing when the going rate's like four and a half.

You know, people aren't really giving up much. And plus technically with owner financing, I just tell them it's not alone, so I shouldn't have interest anyway. Super. So we're in alignment there. And I would like to confirm that because, you know, I'm not, I don't invest, I don't live in the market that I invest in. So I don't have a lot of people to bounce that type, those types of ideas and thoughts that I

have off of. And so, yeah, if I was in your market, I'd invest outside. your market too. Yeah, exactly, especially for income. You've got to go where the deals make sense. I mean, we've gone to more

of a global market, like all of the United States and it's not just in your backyard anymore. But you've got to go where it also, the right investing model makes sense. And in my market, buy and hold only makes sense

if I buy them sub two or take over owner financing. Right. Otherwise, the cash flow is not there. Maybe you already answered it, but what's in your future right now that you're most excited about about your business?

I mean, the most for, for me is just really getting to treating the business like a real business, like a real corporation. I mean, everybody starts out at one point, but eventually as you start scaling and doing more,

it is to run it like a business and be able to step out of it and have this really good model that produces cash, but also produces rental properties for me personally. So my biggest is just focusing on that because, I mean, the opportunity is right now. We have a very stable market

for reselling. So it's do as much as I can when the market is, and then that way, whenever it does start to change, I'll be ahead of the game because I'm not so focused in the business versus on it. That's my biggest thing is just focusing on building the business while the market's good. And that's why I like to diversify with multiple different levels. So when the market does contract at some point, you know, I'll just buy more rentals. I've always got that stable income coming in that, you know, life isn't terrible. Right. You know, I have my own answer. and I get asked it all the time, and I have the same answer,

so it's very simple from me. But I'm just curious, if you are asked, yeah, but Drew, if you buy all these properties, what happens when the market tanks, then what are you going to do? I mean, rentals, rent will be rents. I mean, that's why I love renting a house. I mean, there's no such thing as a rent appraisal. I mean, I can ask whatever I want.

So if the market drops, I'll just buy more houses. I mean, I have an investment model that's on a short-term basis, and then my rentals are long-term. So if the market tanks, I just buy more houses and do better later. Exactly. But the biggest is just buying properties that actually cash flow, and it's not scary anymore. As long as you're making money every month,

and I like to make money on the back end two just in case, my market can drop 20 points, and I'm still positive on all of my rentals. In worst case, I mean, it's got to drop way more than that for me to have any issues. Right. It's really simple, isn't it? Yeah.

It's really simple. The hardest is just getting going, because if I had to do this whole business all over again, I would have just started dropping a ton of mailing because it works. Right. It just took forever for me to realize, oh, that works. And, oh, if I'm mailing 3,000 postcards, I'm going to get the same result if I mail 30,000. Well, why the hell am I not just mailing 30,000 already? Right.

Yeah, no, I had actually was kind of teeing that up for you or maybe even for myself, just to get confirmation on what I share here on the show all the time. It's like, if the market tanks, that's great news. You buy more property. Yeah. The question with owner financing. I don't do an owner financing deal unless it's a minimum 10-year term. You know, it gives me more than enough time.

Our pricing does, I mean, I wish I could pay them all off in 10 years, but our pricing is kind of high. But, you know, I tell a seller, you know, what if the market tanks? Why would you want me to be at a short term? Why don't we go 10 years? Actually, why don't we go 15? That we were both more protected. You know, and sellers are like, oh, that makes sense. Exactly.

So, yeah, I mean, you probably buy it any more better deals in a down market and just tell a seller will just extend it out a little bit further. I just, I mean, owner financing has just changed everything. I love it so much because there's so many advantages to it. I mean, I discount notes all the time from sellers who are like, I know you owe me $700 a month, but can you give me some money right now? Sure. I'll pay your house off faster. Right. It doesn't hurt my feelings.

That's an opportunity. Exactly. It's another built-in way to make money on my rentals, and why not? Right. Absolutely. Sweet. Thanks, Drew. It's been a pleasure.

This was everything that I was hoping it would be the best of luck to you. If anyone wanted to get in contact with you, I don't know why they would. But if they happened to want to get in contact with you, is there a website or a phone number or an email address, anything that you'd want them to contact you through? If they want to see, I mean, I was going to say you can Google me, but we know who's the only person. We know that just tells people that's how you get a hold of them. But you can send me an email at Drew, D-R-E-W at Hampton Roads, Cash Homebuyer.com. I hear we just go with the longest email address ever. Yeah, I thought I had some long domain names.

Hampton Roads, Cash Buyer. Yeah, cash homebuyer.com. Oh, we got a cash home buyer. We need another word in there. Yeah, I'd go with an abbreviation, but I'm not the, you know, the beauty of this business is good enough is an answer a lot of time. So my websites are good enough right now. Right.

I'll make it easier later. Right. I was wondering, like, gosh, were all the variations of that taken, and then that why you took the long one? I could have gone with something easier, but, I mean, that's kind of the name of our market, sort of the greater area over here. So, but I mean, it's just, it's not alone in the name as long as people can find you.

Exactly. Awesome. Well, thanks, Drew. Let's do it again. Okay, bud. We'll do it, man. I appreciate it, Matt. Thanks so much.

You know how some people want to invest in real estate, but they don't know how? Oh, yeah. And you know how some people want to invest in real estate, but they don't have the time? Oh, yeah. And you know how some people want to invest in real estate and they simply don't want to do all that work? Oh, yeah. Do you know someone like this? Mm-hmm.

Perhaps that someone is you? Uh, yeah. If so, subscribe to the Turnkey Real Estate Investing Podcast, the show for busy people who want to invest in real estate, but don't have the time or the desire to take on the heavy lifting. Turnkey, real estate investing. Subscribe today. It's free. Yeah.

Turnkey, Real Estate Investing. That's it for today. I'll see you next week, or catch me tomorrow for a brand new episode of Turnkey. key real estate investing. I'm Matt Terrio, living the dream. You've been listening to Epic Real Real Estate Investing, the world's foremost authority on separating the facts from the BS in real estate investing education. If you enjoyed this show, please take a minute to visit iTunes and share your thoughts. Thanks for listening. We'll see you next time here at Epic Real Estate

Investing with Matt Terrio. This podcast is a part of the C-suite radio network. For more top business podcasts, visit c-sweetradio.com.