Epic Real Estate Investing - Creative Financing with Lisa Shearer | Episode 193

Episode Date: February 8, 2016

Today Matt is joined by Lisa Shearer, an investor who went from zero consistency in this business to becoming co-coach in the Epic Pro Academy. The two work through a real life deal using the creative strategies and principles that we discuss on the show. 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. Podcasting from Terrio Studios in Glendale, California, it's time for Epic Real Estate Investing with Matt Terrio. Welcome. Welcome to Epic Real Estate investing, the place where I show people how to escape the rat race using real estate. 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 financial freedom. It's not the most exciting path, but it is the... fastest and once you get there, life then becomes exciting. All righty. So today I got a special show for you today doing something that I've never, ever done before.

I don't know how it's going to turn out. But I've got on the line, I've got Lisa. Lisa is Lisa Shearer. She is my new, I guess, assistant coach, co-coach, other coach inside of the Epic Pro Academy. If you're a member of the Epic Pro Academy, you probably know her pretty well through Facebook, our private Facebook group. She interacts there and comments a lot. She has a great help to people.

And so I asked her to come and join me and work with me. And so she's working with me in a coaching capacity, but she's also working with me in a wholesaling capacity. She's my boots on the ground, so to speak, in Nashville. And we're out there and we're putting deals together. So yesterday she hit me up with a, a deal. deal that is getting kind of creative. And so we talked through it a little bit. And I was like, you know what?

I'm just going to let's reserve this conversation for tomorrow where we can record it. And we'll just make a podcast episode out of it and see what happens. And I really don't know what's going to happen. This is unedited. This is our phone conversation. We're just going to go ahead and hit record and start talking. We're going to talk about a lot of numbers, a lot of creative structuring. We'll talk about price and terms.

I'm going to do my very best to keep this really clear and straight, especially if you're brand new. You might get a little loss, but I'm going to do my best to really make it simple and be clear and direct the best that I can. For those of you that have been here for a while and you've been listening to the show for a while, I think you're really going to love it, at least is how I imagine it's going to play out in my head. All righty. So on the phone, waiting for me is Lisa Shear. Lisa, welcome to Epic Real Estate Investing. Thanks for having me, Matt. You bet. Good to finally get you on here. We've been working together for a little while. And I want to introduce you to everybody as you're going to be working with me as a coach inside of the Epic Pro Academy and with the brand new follow-through crew. And I'm excited about that. And what you're also, the capacity of what you're working with me is you are essentially my boots on the ground or my wholesaling partner in Nashville, Tennessee. And we've been doing a lot of business. And I wanted to bring you on and just kind of talk about,

All of that, but first, can you just kind of share with me what you were doing before you found real estate? Well, I'm 27, Matt, but I feel like it's been a long 27 years. I was born and raised in Northern California, and after I graduated high school, I went to the Air Force. I knew from an early age, from being very young, that I wanted to be financially wealthy. I just knew that that was my calling. I didn't know how. I didn't know when, but I knew that that was something that I really wanted. And I went into the Air Force.

I got stationed in Denver, Colorado at Buckley Air Force Base and was honorably discharged in 2010. And then proceeded to bounce around. I used the GI Bill to go from city to city in California, if I need some more I like. And bouncing from job to job. just taking whatever was available or whatever seemed interesting at the time. And then I actually found my way to real estate. My cousin, Dylan, were about the same age. And we used to, when we were little, she also knew that she had a calling to be financially wealthy one day, too.

So we would talk about it all the time. And when I was living in Southern California, she gave me a call and said, I just read this book. It's incredible. have to read it. Let me guess. It's called. No, go ahead.

Rich Dad, Poor Dad? No. Oh, okay. I'm going to be the first person to say that was not the book for me. You are the first person that I've talked to for sure. So what was it? It was a million bucks by 30 by Alan Corey. Hmm.

Okay. And so his goal, when he graduated college, when he was 21, was to be a millionaire by the time he was 30. And he tried everything. He ate Dale bagels and pot ramen for years. He didn't have a social life. He worked every minute of every day, and he was nowhere close. And that was around 2007 when real estate was really taking off, and anyone could do a flip, make mistakes, and still make a killing.

Right. So he ended up achieving his millionaire status by the time he was 29 by doing flips and holding rentals. And I thought, oh, that's cool, but, you know, too bad. Like, I didn't know this in 2007. Like, it was already 2011 by the time. It was actually 2012 by the time I read that book. And I was like, oh, bummer.

I'll have to find another way to get rich. Right. The window closed. Yeah. Uh-huh. And then I stumbled upon rich dad, poor dad. Then it was rich dad for dad. I got it.

All right. Yeah. But it wasn't the first. one. And I was in a Barnes & Noble, and I thought, and I didn't know it was about real estate. I just thought, said, rich in the title, and it was seven bucks. And I thought, if this is a terrible book, I'll just return it. But I bought it and read the book. And Robert Kiyosaki explains in the book how you can make money in real estate in any market. And I was like, oh, okay, cool. Then I jumped on a podcast. It was a podcast app in iTunes, and I typed in Robert Kiwasaki, and your podcast was the first one to pop up. That's how you found me. Yeah, that was in 2012. Okay.

And your podcast was pretty new then. You had the intro was the like, dun, dun, done, don't, don't. Yeah. Right. Pretty intense intro. And I ran out of your episodes pretty quick. And this is something I actually have never told you, Matt. but I went to Sean Terry's Clip to Freedom podcast,

listened to all of his, and almost joined his academy instead of yours. This almost never was. Ah, really? Got it. I did not know that. Sean is a great friend of the show and a really good friend of mine.

We're pretty close. What was the deciding factor? I'm curious. Well, now, mind you, I was a college student. So his academy was $1,99 at that point in. time. I have no idea what it is now. And yours was like 800, but I googled for a coupon code, and you had posted a coupon code on a blog of yours. I think you're due over blog. And you forgot, you forgot to expire it when it was supposed to expire, so it was still valid. So I got in to the Epic

Pro Academy, the first version for $199. Oh my God. That serves me right because I do that all the time to other people, especially GoDaddy. I get all my domain names like 40, 50% off because I search for those coupon codes. So, interesting. Okay, so yes, I didn't know that about you. Awesome. Okay. So then you joined the Academy for $199.

I don't even remember. That was a long time ago. I don't remember. Yes. Got it. Okay. Cool. And then you dove into the education, I'm assuming?

Yeah, my personality type is kind of to go full blast and then get distracted. So I had at that point a full-time day job working in the call tracking industry. It's tracking, marketing, using phone numbers. And I was in the auto department, and I was listening to your podcast. I joined Epic Pro Academy. and I was like, cool, I'm going to do this all the way. But I was also listening to Sean Carey's at the same time, and he suggests that you put a year's salary aside before you quit your job.

So I took that advice and was rolling with your program in the Epic Pro Academy, which was the first version at the time. And I was at work one day. and I just thought, I'll just put something on my Facebook. If anybody has a house they want to sell, because I had done some marketing, but in Southern California, as you know, it's a little bit difficult to find motivated sellers, and if they are motivated to find nice ones. And I had a full-time day job, so it wasn't that easy to go meet sellers. So I just put it on my Facebook, and that was actually how I got my first property in my portfolio. Someone who I had worked with in the airport saw that post and said, I need to get out of my house.

So I got my first property in my portfolio through that Facebook post. Awesome. Awesome. So then what happened next? So that first property, is that something that you held on to? Did you flip it? Did you wholesale it? I held onto it for a while.

I made a million mistakes on it. I lost a good amount of money. I was very eager and just wanted to get it signed, and I signed a contract that was not in my favor. Luckily, I had a contingency, so I was able to get out of the contract, but that was after a year and a half of being stubborn and trying to hang on to it.

So it was like what, a seller finance type contract? Yes, and I made the monthly payments way too close to what the rent was, and the next year the taxes went up, and I immediately started losing money. Got it. and then a tree fell on the house. Okay. And you had insurance, of course.

Yes. Okay. But it was still, it was a very interesting learning experience, I would say. Typically the first one always is. And sometimes you get the lessons and the money, and sometimes you just get the lesson. Yes. Yep.

Absolutely. Okay, cool. So bringing up to speed up to current date. From that point to now, real quick. The wife just kind of got in the way, and I was not consistent. I would pick a market, send out a mailer, and then after a while, just stop following up. And then I would say, okay, no problem. I'll just take a new market, or I'll do this market again, and this time I'll follow up, and then wouldn't do it.

And that kept going on. And I did eventually get to a point in that day job where I had saved enough money for a year's salary, and I did put that job. But the other circumstances in my life, I let get in the way of my own success. So it was between 2013 and maybe six or eight months ago, just zero consistency. And I did acquire three more rental properties, but they were all through referrals of that first one. Okay. And those were all seller finance deals.

I actually just closed on the last one, I think last month or the month before very recently. Awesome. And where are these properties? They're in Louisiana. Louisiana. Good. And they all performing? Yes.

Fantastic. Super. Cool. So you caught my attention really inside of our private Facebook group for the Epic Pro Academy. And when people would chime in with a question, it always seemed Lisa was the first one there to give the answer. And based off those answers, I could really tell that you had gone through the academy. I could tell that you'd never missed an episode of the podcast because you were answering the questions darn near, you know, almost exactly to the word of what I would have said and how I would have answered it.

So I watched you do that for, I don't know, at least six to eight months, maybe even a year. I don't know. It seemed like a long time. I think it was about a year. It was about a year, right? So I knew I was having a new program coming up and I was like I was looking for someone to help me out with that. And I was like, you'd be ideal. I wouldn't have to teach you anything because you already got it down and you're already helping everybody inside the epic community anyway.

So that's how I reached out to you. Now I know how you found me. So there, I guess we just let everybody in on our private conversation there. But I wanted to bring you on today specifically for. or wanted to introduce you as my partner in the coaching program. But also, you know, we're taking on this world in Nashville, this virtual wholesaling world. And we're looking for properties for buy and hold and wholesaling and fix and flip.

And you're in Nashville. So you're my person on the ground. And I've been driving a large number of leads towards you. I've put in a big mailing. Actually, a couple now. We've got the third one going out next week. So we got a nice steady clip. And you're, uh, that are, my VAs are filtering those leads.

So we're sorting the suspects from the prospects and we're sending the prospects straight to you. And you are following up, setting up appointments with those sellers, right? Yes. Okay. Perfect. Just bringing everybody up to speed. So yesterday you had contacted me in on a specific offer that, uh, that, uh, that you had presented.

And we had a conversation back and forth and I was like, wow, this would be perfect for the podcast. So that's why we're here. So 12 minutes into the show, now you all get to see why we're really here. Cool. So we, I guess go ahead and just start kind of from the beginning with this particular prospect. Yeah, this is a prospect in one of the neighboring cities, a suburb of Nashville. And he inherited the property from his uncle, I believe about two years ago.

and it has been vacant since. Okay. And I met with him yesterday at the property to assess potential repairs, and they were a lot more than he had let on over the phone, which happened. Mm-hmm. And so in recalculating with the repairs, we couldn't get the cash price anywhere near what he wanted. But the options two and three for seller finance were potential.

potentially close. So at this point, we are trying to move the terms around to meet a price that will be acceptable to him in amount of time that will be acceptable to him so that we all win. Perfect. Okay, so we couldn't get, you couldn't reach an agreement on the cash price just because the repairs were too much and he wanted too much. And so you submitted or you gave him a three option letter of intent. And so that's option number one is the all cash price, which he is rejected. option two is a seller financed option with interest only payments and option three is a seller financed option with principal only payments we've talked about that a lot on the on this show and so but I just want to bring everybody up to speed in case this is their first time listening so the the

strategy behind issuing a three option letter of intent is really Lisa did it in the exactly perfect way that that she was supposed to that she was unable to reach that cash price agreement So rather than just walking away and say no, you know, brushing your hands and saying no deal here, I ask Lisa and all the people that I work with and I recommend to everybody inside of the academy to leave an offer anyway and leave the three option letter of intent. Because what that does is one is when they see this option two and three, it makes option one not look as bad like that all cash offer. it doesn't look as low when you have two other options to consider because you're like, I could have all this cash right now, I could have a little bit now and more later. And so that introduces a new line of logic and a new line of thinking to the seller.

And so that's the first thing. And the second thing, everything changes once something's in writing. So you always want to leave that in writing. Third thing is that a lot of times when you give them three options, they forget that they have a fourth option that they could actually say, No. So that's the third reason you do it. And number five is that nobody else is doing it.

So should they change their mind somewhere down the road, they're most likely going to call the person that actually left their phone number behind with an offer. So that's another reason. And the biggie, which actually came right now, was it introduces a conversation where there might not have been one before. Because Lisa could have very easily just walked away and say, hey, this all-cash offer isn't going to work. But the seller came back. looked at option two and three. And so tell me, it was option three that they were initially commented on.

Is that correct, Lisa? Option three was the closest to the price, but still not where they wanted it. But this seller was more keen on option two because we were able to offer a two-year with the full balance. And option three was 70 months. Got it, got it. Okay, so the big thing for the seller was they were open. They wanted their price.

but now so now they were going to negotiate the terms and you know what the position that you want to take is you want the price or the terms you want one or the other you can create a win-win situation if you get control of one of those so it sounds like the seller is really focused on getting his price so that means we need to work the term so they so it ends up in our favor so we win also and we can still give that seller their price so option uh oh and then the big thing with the terms was He didn't mind giving us terms and paying overtime, giving us seller financing. He just didn't want to wait that long. So that's the essence of that was the sticking point, right? Yes. And he originally wanted a price that I did talk him down from that a little bit. So the price that we're going off of now is after some negotiating in person using the phrase that you often suggest, what are you realistically looking for?

I got a $5,000 discount from that when we were at the property. So now we're working with a reduced price, but it's still a little bit more than what I had originally come up with for option two and three. Okay, got it. So just that one question got you a $5,000 price reduction. Right away. What do you realistically expect to get for the property? I love it.

Okay. So there's your $5,000 tip, everybody right there. Just ask that question once and see what it results into. Okay, so let's work with some real numbers. what have you determined to be fair market value? Fair market value is probably a little bit higher than 70,000, probably 76,000. So I'm going off of 70,000 right now. Okay, so 76,000 is what you determined fair market value, but to be a little bit more conservative,

you put that number down at 70, so that's the number we're starting with, right? Right, and 76 is still conservative, but I'm just trying to be ultra-conservative. Sure, sure. and then so I like it. So 70,000, and then we're going to subtract the repairs from that, right? Yes. Okay, and you said the repairs came out a lot more than what the person had suggested they were, the seller said they were.

So what do you have the repairs estimated as? 24,000. 24,000. Okay. And then our profit that we were trying to make on this was 10,000. 10,000. Okay. So that puts us at 50, about 40,000 for the all cash, right?

Is that right? So 70 minus. So yeah, it'd be about 35,000, I guess. Yeah. And that was no point O for him. No. Got it. Okay, so we are presenting, so offer two is going to be, what percentage of a discount

did you offer on option two? I believe 85%. 85%. So what does that put us at? A purchase price, what, like 60? ish 65 one second i don't have it pulled up yeah i'm pulling out the calculator right now okay cool so 70 times 0.85 that gives us 59 000 so 60 000 box

yes and we're offering them term so we're offering a down payment with that one no no so that was zero down zero down and he didn't object to that okay and what interest rate were we offering on that Six percent. Six percent. Okay. So we take times .06 equals that, divide by 12. So we're looking at payments around $300, $297?

Yes, I believe so. Okay. So we got two, I'll just round it up to say $300 in our payments. Now, when did he want that? Oh, so we were offering that in our typical first pass is a 10-year balloon, right? Yes, and he said absolutely not. Okay. And so he wanted what?

Two years. Two years. Okay. So he wants a two-year balloon. Okay. So I'm looking at a couple things here. When you come down to negotiating, so everyone can, hopefully you can see that, you know, he didn't take any option one, two, or three, but it got us back into the conversation of negotiating an offer. So now it's just a conversation back and forth of price or terms.

And what I was sharing with Lisa yesterday said, would you take a two-year balloon? and I would, but when you're negotiating, you don't want to narrow it down to just one point. So we don't want to go back and forth and just negotiate the two years. You want to take more of a position of, okay, so I'd be willing to do the two-year balloon. I'd be willing to do that for you, but what would you be willing to do for me? That would be there's got to mean exchange there. So the other places where we can play with, since there's zero down, we can't do much with that. So we're cool with the zero down. So we have the price to still negotiate we can work with.

We have the percentage rate to work with. Or we have, say, the payment that we can play with as far as when do we actually start paying because we have all these repairs, right? Yes. Okay. So we're going back and forth and we're like, okay, so if we gave him the two-year balloon, what would we have to adjust to make the deal acceptable? What would have to adjust in the other areas and the other terms. So what Lisa and I came up with was putting a six-month moratorium on the actual payments. So that would allow us to go ahead and do the repairs, get the property performing, and ideally get that performing, collect a couple months, make sure everything is stable before we actually have to make payments on the note. So I like that. I like the moratorium, especially when big repairs are, are, in play or anything that gets in the way of the delaying the property's performance.

Okay. So that's good. So we can go back with that. The other thing we have here is maybe the price. So maybe if we said, okay, well, maybe if you need two-year balloon, then it's 55,000, whatever it means, whatever it would be. You can negotiate that too. I'd be cool with a six-month moratorium. The only thing I'd really want to confirm is that if I purchase this property for 60 and I put

24 on top of it, that puts me at $84,000 in. And fair market value, you were negotiating with 70, but you had it figured as pretty conservatively at 76. So if I understand this correctly, we're paying about $8,000 more than what the property is worth, which I don't have a problem with, but we have a balloon payment in two years. So we don't even have the luxury of letting like the market play with that or principal pay down with that or yeah like in two years we're going to have to do something with this so here's the other number that we need what is it rent for Lisa 700 conservatively 700 conservatively we've got

let's take the 700 I like to use 60% of that that and the 60% is our vacancy our taxes our maintenance our insurance and property management because I don't like to manage property. So typically about you get about 60% left over of whatever the gross rent is. So that gives us $4.20. Okay? And so we minus the monthly payment of $300.

So it's zero down, but it's not really zero down because we've got to do the rehab, but that gives us $120 a month. So if we were to times that by 12, so that gives us $1440 over the year. So we have to divide that by the rehab because that's the money we're putting down. We don't have a down payment, but we still got to put the money in for the rehab.

So we're going to take 1440 and divide that by the $24,000 in repairs. And that's a 6% cash on cash return. Not great, right? Not great at all. Plus we have a two-year balloon of which we're paying about $6,000 or $8,000 more than, is that $6,000? $6,000, yeah, $8,000 more than fair market value. All right. So now we have figured.

this out. Hopefully you're all following along with me. So it's 8,000 more. We're at a 6% cash on cash return based on the repairs. But if we have the six-month moratorium, you know, we could push that up a little bit, but that it will eventually catch up to us, and we only have two years for that to do it. So that's probably not going to work either. So what we can do to make sure that we're cash on cash, because of the repairs, Lisa, we're going to have to negotiate the purchase price down. We just are. So we can say we'll give you fair market value, but we're going to subtract 100% of the repairs. So the purchase prices, it can't be any higher than 52,000. Matt? Yeah. Can we take a second? Sure. I think our math went haywire somewhere. Did it?

Yeah. I just put it into my phone. The cash offer should have been 15,000. Oh, 15,000. Because we have to take out our fee, too, the $10,000. Oh, you know what I didn't? I just started taking it from $70,000. I didn't do the discount first. Yeah, it's so 70% of that minus $24,000 for repairs, minus $10,000 wholesale fee is $15,000 cash offer.

Right. There you go. Okay. So, perfect. Thanks for bringing us back there. I don't know how the other math went. Got it. No, well, I still started with the 70,000.

We did 80%. Okay. Okay, or 85%. That got us to the 60,000. Okay. The seller is willing to take 35,000 for option two or three. Okay. Well, there you go.

That's much better. Yeah, that's what he didn't like the cash offer of 15,000. Okay. Well, this is getting way better now. Okay, so... The math wrong in the first place threw me off guard. Got it. No worries.

That's why we go through the numbers. That's why we figure this out. And I just thought it would be better to go ahead and record this conversation and get on the same page and let everybody listen in. So this is perfect. Okay. So they're willing to take $35,000 on option two. Let's start that now.

So $35,000 times 0.06 is $2,100 divided by 12, 12 months of the year. And so that makes monthly payments of 175 instead of, 300. That was what you had? I believe so. Okay. And then, so we got

rent of $700 a month, and I like to take 60% of that as far as our, that would be our net rent, because 40% for all the expenses

that we went over. So we got 420 minus 175, which is the payment, gives us $2.45 a month. So we're going to to see what is $2.45 a month for the whole year. So I do that times 12. It's $29.40. Now we're going to divide that by the rehab amount of $24,000. So now we've got a 12% return.

Okay? So much, much better. So that's good. So we're going to have $35,000 for the purchase price that will be due in two years plus the $24,000 that we put in. So we're at $59,000. So we're still pretty good under fair market value. So we still got about, I would say, conservatively, we've got $15,000 of equity. And during the two years, we've got a 12% cash on cash return, which would probably be a little bit higher than that since we don't have to make payments for six months. So I like the deal. This is something I like.

And so the next big question, people might be. you're wondering, well, what are you going to do in two years? That's another good question. Like, you got this balloon payment. You got to pay all this money in the next two years. Now, if you're looking at each deal as just one deal, yes, that could be a little bit concerning. You're going to have to get some other financing or something like that in place. You're going to have to go out and find a private investor.

Or you're going to have to find, say, a local bank that's willing to loan that small of an amount. Those are other things that you may have to look at or you may have to like say six months out, start trying to sell the thing. That could be a potential out. And so your options are really limited if you're looking at just one deal. But if you look at this as your business as how many more deals are you going to do between now and then? So you could flip a bunch of properties and you made all the cash to pay it off. Or you've acquired a bunch of other buy-in holds to now where you can use the resources, from those to pay down this debt

or you can start moving debt around to pay people off. You have a lot more options if you're looking at balloon payments within your business as you look at those as part of a whole portfolio and not a single property.

Because what happens is the more you control and this is what we're, this is kind of the strategy with this property is we're getting control of it. Because the more you control, the bigger your portfolio, the more options you have because it's much easier to manage the debt in that portfolio than it is to go out and find new deals.

So that is my philosophy is to acquire as much as you possibly can, get control of as much as you possibly can. Responsibly, of course, and I would consider this a responsible acquisition because we've got a 12% cash on cash return at least, and we've got about $15,000 of equity. That's a responsible position in the cash flow front or the rent from the property. I mean, it easily covers the expenses. So those are all the different things I'm looking at. So as we go back, Lisa, to the seller, let's propose. Let's do this.

Let's say, let's go back. Yeah. Are we missing the wholesale fee, though? Oh, I see what you're saying. No, with the seller finance deal, we're going to have to put that on top for the other person. What I'm looking at right now is if we can't wholesale it, is it something I would still be willing to hold. Right. But I'm going to get paid.

Absolutely. Absolutely. So we didn't factor that into it. Right. No. So this is what we have here is we have a nice package little deal that's really easily acquireable for anybody. Like seller financing or any type of financing, and especially with zero down, that's very, appealing. People are willing to pay a premium for that. We do that all the time. So someone is going

to give us, it would be equivalent to an assignment fee. Correct. So they're buying the property, but they're also buying the terms. And the terms make the property even more appealing and people are willing to pay a premium for that. So we can still get an assignment fee on top of that. I'm not concerned about that. Okay, because I've only been seller finance where I personally keep it and then I don't need to worry about a wholesale fee because it's not. Right, exactly. So we don't need to factor that into the cash on cash return? Well, the word need is a strong word. We can, but that's going to be for the buyer to figure out.

Okay. So we present it as an assignment fee that's separate from the cash on cash return. Exactly. We're analyzing the property as a single property, single asset. So, and even if you bring up that point, and if that's a concern for you that this is a little tight because maybe $10,000 more bucks on top of this. That brings it down to what, to an 8% cash on cash return. And that might make it a little bit more difficult to sell.

So we can factor that in as well. So if they're willing to take $35,000 with the seller finance of 6% and zeroed down, I say we counter. Let's counter back at $30,000. So, Matt, the only thing that he seems firm on is around two years and $35,000. Can we mess with the percentage? Sure. So I was going to do that as well.

So let's do 35,000 then. I love it. And we'll do, instead of 6%, we'll go to 5%. We'll give him the two-year balloon, but we get six-month moratorium on payments. Okay. And now when you counterback, you can just write that into the contract.

You can write that as part of the terms. So purchase price 35,000, zero seller to carry back, at 5%. zero down payment, two-year balloon. So it's 5% interest-only payments, two-year balloon. And first payment not due till six months from acceptance date.

Or six months from close of escrow. Perfect. Got it? Cool. So we went a roundabout way, but I just wanted everyone to kind of hear and hear the thought process that goes on on a real live deal on exercising and implementing.

the actual stuff that we talk about here on the show and see how it works in a real world application. I would love to say it's a nice, straight, easy line every single time in a perfect world it would be, but it's not a perfect world. So the whole option, let me kind of just sum this up. The three option letter of intent, I want you to use that when you have been unable to negotiate an all cash discount price, whether that be over the phone or face to face. So they said no to that.

So now give them the three-option letter of intent. And if you have to go home and figure it out, go home, figure it out, and mail it. And maybe drop one off. And if you got their email address, email it, one, two. And then you can follow up and say, hey, I sent you some additional options. Did you like option one, two, or three? And they're even going to say I didn't like any of them or they're going to say something like Lisa got. I liked option number two, but I don't want to wait that long to get my money.

Boom. Now your window is open. Now you've got this opportunity to now talk. about putting a deal together and when you're putting the deal together you've got two things to negotiate you've got the price and you've got the terms you have to keep control of one of them okay that's how you're gonna win so if they want all cash then that you're gonna come down with a really low price right and so you win if they want their price like this person does then you got to play with the terms

like we did so that you can win as well and so in this scenario we've come up with a win-win scenario heard how we talked through it. We had some misunderstanding. We had our numbers wrong, but we're doing it all over the phone, so we really couldn't see it. But now you saw how we came to the resolution, right? So, Lisa, you think this is a, this is, you're feeling good about this. This might fly.

Oh, absolutely. Okay. Perfect. Perfect. Then we'll do an update, say, next week on whether this, how it panned out. Okay. Perfect. Cool.

Well, thanks, Lisa. Any parting words? How is it going out there? You know, we've got a couple months of driving leads to you through our marketing efforts. And what are you noticing out there? Anything in the market or what have you found to work or not work? Yeah, I think that just knowing like the area in general and how people like to be talked to, and if they prefer to do more talking or get more information up front,

I think that just knowing your market really well, here in the South, people expect you to not be in a rush. So it's important to add additional time because you can easily offend a seller by trying to get out of an appointment really quick. So I schedule extra time, and it really makes the seller feel comfortable. So I would say that that's a key thing in any market is just to make sure that you understand the people that live there. But it's a great market here, especially the suburbs around Nashville. Nashville is exploding and everyone is having to move out. So this is the perfect time for us to be wholesaling here. Perfect.

So really the thing in there is just assimilating and building rapport with the person is just as important as, you know, closing the deal, basically, or to close the deal. It's really the only way to get there unless they absolutely have an emergency. but with especially like a market that's so close to Nashville, we have competition. So if we're willing to put in the time to find out what they need to make them feel comfortable, we're the ones that they want to go through at the end of the day. Absolutely.

And that's what that first question is when you talk to the motivated seller is, tell me about your situation. That's your opportunity to hear about what's going on with them and build that rapport. And perfect. Cool. Well, thanks, Lisa. We will chime in real quickly. We won't take a half hour to do it next week.

And I'm sure we'll be much more on the same page next week, but we'll bring everybody up to date next week. Sound good? Perfect. Cool. Good luck, and call me if you need me, okay? All right, thanks, Matt. Okay, take care.

Bye-bye. Alert! Real estate investors, listen carefully. A closely guarded secret reveals that closely guarded secrets aren't really that closely guarded. go to find motivated sellers ASAP.com to get the inside scoop on how the nation's most successful real estate investors really find their deeply discounted properties. Go to find motivated sellers ASAP.com. Deeper discounts, less secrets.

Find motivated sellers ASAP.com. All righty, that's it for today. I'm Matt Terrio, living the dream. You've been listening to Epic Real Estate Investing, the world's foremost authority on separating the facts from the B.S. in real estate investing education. If you enjoyed this show, please take a minute to visit iTunes

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