Epic Real Estate Investing - Creative Real Estate Tools You Won't Find Anywhere Else | 1145

Episode Date: May 6, 2021

This Thursday is all about the final frontier for financial freedom and how to get yours! Stay tuned and find out Matt’s creative real estate tools that tremendously helped him on his path to success in real estate! Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey there, Rockstar. Today, it's all about the final frontier for financial freedom and how to get yours. 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 helped. 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-a-a-a-accom.

Here's Matt. Hey, Epic Investor, it's Matt Terrio from Epic Real Estate, where we show people how to invest in real estate with an emphasis on retiring early. You don't have to retire, but you just can create the option for yourself that you can retire anytime that you want. That's freedom. That's real freedom to me. And this is the epic real estate investing show.

And if this is your first time here, really glad that you found us. And if you like what you hear after where everything's all said and done, make sure that you hit the subscribe button before you go. Because you don't want to miss an episode. We post cool stuff like this each and every day. And if this is not your first time here, welcome back. And thank you. Thank you for coming back. Thank you for sharing this with your friends and family.

You are the absolute best for doing that. I love this about you. So thanks again. All righty. So let's talk about the final frontier of the final frontier of the family. financial freedom. You know, I was at our new epic think tank workshop this past week, and I'm getting to meet a whole bunch of new people here, and the question came up.

It had been a podcast listener, the first time I ever met him, and he had asked me, where did you read that real estate is the final frontier where the average person has a legitimate shot at real wealth? And I didn't have to think about it too much, because I remember exactly where I didn't actually read it. I heard it. You know, I went on to tell my story about how Napster crushed the music stores, how the digital download went and put all the music stores out of business. If you're, I guess, under the age of 30, believe it or not, they used to have music stores. You'd walk into a store and actually buy music on compact discs and cassettes and albums.

And that's how I made my money in the first portion of my life, the first half of my life, is I sold compact discs. I sold music. And I had to, to store. start life over at the age of 34 because Napster just kind of changed the way, not kind of, totally changed the way that the world consumes music. Now we just go to our computer and download it. Now we don't even download it. Now we just stream it. Now you don't have to, you don't even need any computer space to store the stuff. And so I had to start over at the age of 34. And I went from my very first seven figure year, the previous year, to $7 an hour. bagging groceries.

And it was the grocery store manager of all people that shared that expression with me, that real estate being the final frontier for the average person to have a legitimate shot at creating real wealth. And at the time, it sounded really good when I heard it because after about six months of that place, in hindsight, I think it was a total blessing and it's made for a great story ever since. But at the time, it felt like hell. I wasn't sure if what he had said was true or not about it being the final frontier to wealth,

but I really missed my money and I wanted it back. So I went with it. And that was probably, I don't know, 15, 16 years ago now, at least. And I've yet to see anything since that rivals real estate's wealth creation powers, especially when it comes to creating wealth for the average person. Certainly there are things out there that there's wealthy people out there that don't have any real estate and made their money in a different way. But for the average person, that's the road.

That's the way to do it. And what I mean by average person is you don't need any special skills or special talents, not a certain intelligence level, no privileges or background or connections or resources are necessary to harness real estate's wealth creation powers. And I've actually done quite a bit of research on the subject over the years in search of something easier and better because, you know, face it, I have. I'm human too. And if there's an easier way, I want to know about it.

If there's a better way, I want to know about it. And I just did not find anything else that would be easier or present more certainty in creating wealth and overall financial freedom than real estate. Haven't found it. There was nothing. And now I've been looking for a while. I kind of stopped looking because I just became convinced because I have found so much info that supports the idea.

And I'll share with you what I found. And before I do, if, you'd like to go deeper in your real estate investing, and you might like the new stuff that we're doing with our private clients at REI-A's to get them accelerated results in real estate. If you like the sound of that, you can head over to REIAIS.com and check out what we're doing over there. All righty-I-Ais.com. Now, some of my research, because in the beginning, I wanted to make sure I was indeed pursuing

the right thing. Like I said, I missed my money. and all I knew how to do was program a drum machine, press it to a compact disc, and go out and sell it. And I was really good at that. But that was like really my only skill. So there wasn't a whole lot of demand for that type of person in the industry at that time because even all the major labels, like Sony and Universal,

like they were laying off tens of thousands of people at a time. Big numbers of people were losing their jobs. That's how big of an impact the digital download had on the, the music industry. So I knew I had to learn something new. And I wanted to make sure whatever it was that I chose that I was going to learn was attached to a really good, promising, strong income potential. I wanted my money back. So what is it, what's my best chance of making it happen? And so one of the books that I was reading while I was at the grocery store was a book by Ken Fisher. You might know him of Fisher investments. He's actually running a lot.

of commercials right now. But I read this book 15, 16 years ago, and I didn't know who he was at the time, but the title really grabbed my attention. It's called The Ten Roads to Riches, the Ten Most Commonly Traveled Roads to Riches. And I was like, okay, the ten most commonly traveled roads. I want to read that book, so I did. And it was ten chapters, and it had ten different ways of how to get rich. And it was Ken Fisher, who a very successful financial planner with a very elite, prestigious, wealthy clientele, just did an assessment of his clientele and looked at the 10 most common roads to riches

that his own clients had traveled. Like number one was founding a company. Yeah, you started a business and it blew up. You know, if you are a company founder, that typically means something really big happened after you found it. Otherwise, you know, you're just an entrepreneur. The second one was CEO of a company.

So you've climbed the corporate ladder and it rose all the way to the top. And you became in charge. You became the man. You became the woman. You became the person in control of that. The third one was what he called ride-alongs. So like the number two people to really wealthy people. One of the examples he gave you or gave was Warren Buffett's right hand man, Charlie Munger.

Maybe you've heard his name, maybe you haven't, but a very, very wealthy man in his own right. And he got there on basically the coat tails of Warren Buffett, not to be demeaning by any means. I'm sure he's a very smart, intelligent person to be Warren Buffett's right-hand person. But a ride-along, that's what he called it. Another example was Bill Gates' ride-along, was Paul Allen. And, you know, Bill Gates pretty much a household name. Paul Allen, becoming more and more known, I guess, especially. if you're a sports fan, he owns a couple of franchises.

But Paul Allen was another example. So being the number two person and right along with someone else that's on their way up. Number four was celebrity. So an actor, a singer, an athlete, those were examples. Inventors. You invented something that changed the world and you got paid a boatload of money for it. Another one that I thought was really funny, but he pointed out so many examples. It was like, wow, I guess that actually is one.

and it was marrying well, like you marry into wealth. And I suppose that's certainly an option. And I immediately was thinking about, I mean, just the vision that comes to mind is, you know, the young, attractive girl marrying the old man on their deathbed. But the examples he gave were actually of men doing it. Oh, my gosh, this guy, the name escapes me. He was a political candidate. He ran for president. Really good-looking guy, a dark brown hair, younger-looking,

and he married into the Heinz fortune, the heiress of Heinz. And he made a bunch of money doing that. And then he got divorced, walked away with a bunch of money, and then did it all over again and married into some other family. I don't know if the sequence was right. I don't know who he's married to now. Not Clark. Oh, my gosh.

Anyway, it doesn't matter. Marrying well, that was another example. Another road to riches was stealing it. And he put in parentheses legally, of course. And what he's talking about is mergers and acquisitions, doing hostile takeovers. If you saw the movie Pretty Woman, that's what Richard Gere did. Right? Mergers and acquisitions.

Then using OPM, other people's money. And the example he gave there were hedge fund managers, people that take other people's money and invest it for them. get a big fat fee for doing that. So hedge fund managers, that was another one. And then another one was just having good fortune in the stock market, picking winners and letting compound interest do its work. So that was another one. And then lastly, real estate, what he calls land barons.

And he went on specifically to define that, people that, buy real estate and hold on to it. And even had a distinction in there and talked for a few minutes that he is not talking about fix and flippers, which I thought was very interesting at the time. And it's probably why I'm such a buy and hold fanatic. I certainly flip properties because I like the cash. But most of the time, I take that cash and I direct it towards creating cash flow, buy and hold. So the land baron.

So when you look at all of those, you know, of someone that interacts with a high volume of wealthy people and he looks at all those common roads, you know, you could found a company, you could climb the corporate ladder, you could find a really wealthy person and tag along, right along with them. You could go out and become a celebrity. I mean, maybe you're going to be an actor or an actress or you have got a really good voice and you want to go on American Idol and take your chances there. Maybe you're physically gifted and you're going to be a great. athlete. That's certainly all possible. You could invent something, or you can go and hit the circuit and try to find someone a wealthy family to marry into. You could take on mergers and acquisitions. You could become a hedge fund manager. You could take your, do a lot of studying and take on the stock market and hopefully good fortune and a little bit of luck is on

your side and wait a long time to let compound interest do its work. or you can do real estate. So just with that study of somebody in that position, I just went down all of those. I was like, nope, founding a company maybe, but it ain't going to be Microsoft, right? Not going to be Facebook. A CEO of a company,

I really don't have the credentials to go climb the corporate ladder. Right along, I don't know anyone that's on their way up that I could go and support that way. Celebrity at this point, I kind of had enough of the entertainment. industry. Plus, I'm not really gifted with a good voice or acting chops. Inventor, I didn't really have any ideas, marrying well. After just getting divorced through all that whole process, that wasn't really high on my list. And the mergers and acquisitions,

I had no idea how that even worked. And then using other people's money, becoming a hedge fund manager, totally no comprehension of that either. The stock market just, it seemed like a long time even if I got it right. So real estate, that's kind of what I was only left with. And that's how I chose this. And that's how the wealthy do it. And I was like, okay, I'm all in. And that's when I made the big giant investment in my real estate investing education. And I just went and applied myself and did what they told me to do. And I just kept on doing it with massive consistency and persistence until I got what I got. And looking back, I think I chose the right path because all those others, they still don't seem like really great options for me today. So the final frontier, my grocery

store manager, quite a smart person, wise beyond their years. And then I went and did this just recently before I started recording this. I was like, what does the research look like right now? Right. So I found, I think this was Forbes, how the world's billionaires got so rich. This was the 2019 list. The world's billionaires with a B. Top 10 industries for 2019. Number one was finance and investments. So there you got those hedge fund managers, right?

There's 306 billionaires. It comprised 14% of the list. Number two was fashion and retail. So that was 230 billionaires, 11% of the list. So if you've got the fashion chops or to run a retail store, I don't know exactly what the details of our are that, but there is an option, right? Number three, real estate. 223 billionaires in the real estate industry, 10% of the list. So it might not been the biggest wealth producer or producing the most billionaires, but when you look at finance and investments, hedge fund managing or fashion and retail,

real estate seems a whole lot easier to me and more comprehensible and simpler than those first two. Right. And then number four, just for entertainment purposes only, was technology. Then number five was manufacturing. Six was diversified. I actually don't know what that means. Does that mean diversified industries? I'm not sure.

Number seven was food and beverage. Number eight was health care. Nine was energy. And ten was media and entertainment. Real estate. Why is it real estate? Why did it show up in Ken Fisher's book as one of those top 10 rows to riches and certainly the most accessible for the average person? It ended up as number three on the top 10 industries for 2019.

And when you go through all of those, still, probably the only one there accessible to the average person, all confirming what my grocery store manager said to me 16 years ago. So real estate, here's why. Because it's the only asset class available to the everyday person that produces. It reduces cash flow that appreciates, that reduces your tax bill. It's one of the last tax shelters available to the average person. You have the ability to leverage in real estate like in no other. So there's your five times on average, all of the other profit centers by the use of leverage. And then you've got the amortization thing.

Someone else pays that off for you. Someone else is actually paying down the loan. And then you can also force equity. and it's a hedge against inflation. You can't say that about any other asset class. You can't. And it's this that led to Andrew Carnegie's famous quote at the turn of the century. He said, 90% of all millionaires become so through owning real estate.

He said that at the top of the century. And if we look at the 2019 list, it's pretty darn accurate, 90%. more money has been made in real estate than in all industry industrial investments combined. The wise young man or wage earner of today's invests his money in real estate. Let me read that again. The wise young man or wage earner of today invests his money in real estate. Got it. He's saying it's a wise investment.

That's Andrew Carnegie, billionaire industrialist. And he was a billionaire a hundred years ago. So that meant a lot more back then. Marshall Field, an American entrepreneur, said, buying real estate is not only the best way, the quickest way, the safest way, but the only way to become wealthy. It's not only the best way, the quickest way, the safest way, but the only way to become wealthy. Marshall Field entrepreneur.

Lewis Glickman said, the best investment on Earth is Earth. And Armstrong Williams said, now one thing I tell everyone is learn about real estate. Repeat after me, real estate provides the highest returns, the greatest values, and the least risk. It's the final frontier where the average person has a legitimate shot at creating real wealth. And ultimately, financial freedom, your financial freedom. You really don't stand a chance at any sort of financial freedom unless you incorporate real estate into your financial plan. So who said that?

Who's that quote from? That would be mine. You just don't stand a chance unless you figure this real estate thing out. When you go to work for your money, does it really? turn the favor. If not, no worries. You do not have a money problem. You merely have an idea problem. We're cashflow savvy.com and we'd like to share a new idea with you around income real estate that can transform your financial future and accelerate its arrival. Go to cashflow savvy.com and download a free investors package. Cashflow savvy.com. You do not have a money problem,

merely an idea problem. Cashflow savvy.com. More ideas, less worries. Cashflow savvy.com. Moving on. Yeah. Boy, quarantine. Not all what it's cracked up to be. It's funny. Mercedes and I have this conversation, I don't know, maybe once a month. Just kind of wishing and hoping. Gosh, I wish the world could just stop for a couple days so I could go and catch up with everything. I could just clear out my inbox. I mean, that could take two days. But I need the world to stop for me to put that on any sort of priority list. But when I log into my inbox, I'm like looking at, oh my God, I got 3,500. unread emails. So if yours is in there, I'm getting to it eventually. But the world has stopped. It seems like we're busier than ever. But, you know, I told you about the seller finance deal that I got this week. And it's a really good deal. Even though I am paying essentially market value right now at a time where, you know, once this crisis shakes out, once it plays out, it's probably going to be worth a lot less. I'm probably going to take it hit for that. And I'm okay. with that. I'm okay with that for two reasons because I am an educated, trained investor.

The creative acquisition strategies and these tactics, they protect you if you know what you're doing, if you know how to use them, right? Because first, I have an escalating interest rate. So if I happen to overpay, I can make up some ground in the principal paydown in the first couple years. But even that might not be that important or might not want to do that. that after you hear what you hear today. And even if I do, though, it's not going to be a lot. And it does depend on how far values might drop. But it'll be some, and that helps.

All right. Second thing, and this is the big reason why I'm okay with overpaying. And you've heard me talk about this here and there. And that's the deal after the deal, because that's where the real money is made. And I haven't really gone into detail as to how that works. and that's what I'm going to do today. Because the initial deal is essentially a starting point, and it's really the part that solves the seller's problem.

You know, the actual deal is what solves the seller's problem. And you do your best to create a win-win scenario so you can get control. Remember, that's the name of the game. You've got to get control. But it's okay if you don't get everything that you want out of that because of the deal after the deal. And, you know, I've always talked about the deal after the deal, and I've always known about the deal after the deal

because, you know, I've always said that I'll put, every time I get a seller of finance offer accepted, I'll just put on my little calendar, a little reminder, every six months where I will follow up with the seller and offer them a discounted payoff of whatever the balance is. And we get a lot of those accepted within a five-year period. I'd say 65 to 75% or so. I'd say about, I haven't kept real track,

but I'd say 60 to 70% is really, really accurate. At least it's on the conservative side. It might be a little more than that, but I'll just say that. So we get those early payoffs at huge discounts. I mean, the seller is totally detached from the property emotionally. They're tired of receiving their little payments. And quite honestly, life just happens to people. It happens to everybody, every day, and people need money.

And so that's what we kind of play that in our favor. Life happens, and that works out for us. And that's, so that's the deal after the deal. But my good friend, Eddie Speed, has become a little bit of a mentor to me. He's a good friend, for sure. Really like the dude. Fun to hang out with.

Good beer-drinking buddy. If you know who he is, then you know what I'm talking about. Good old boy from Texas. And that guy, he knows his stuff when it comes to numbers. And he, we sat down, we were in a few years ago. we were in, I think Tampa. We were at a mastermind event. And he kind of just explained to me, he says,

Matt, I like what you're doing. But you know you're, I'm not going to try and copy his text as an accent, but he says that you're leaving a lot of money on the table. Let me show you what I mean. And what I'm about to share with you right now, just I had no idea. And so the deal after the deal just took on a whole new meaning after that conversation with Eddie on that little bar napkin

that we wrote this plan out on, or at least he explained it to me on. But let me explain to you why I'm so confident in this strategy. Even if the market gets hit really hard, that's okay. You see, when you borrow money from a conventional bank to buy a property, they present the terms of the loan to you, and you got two options. Either take it or you leave it. That's what you call uncreative financing or conventional finance. But when you negotiate with an individual, like the owner, the private owner of a property,

the terms of the loan are much more flexible. And we've been talking a lot about that. And you're probably starting to get a really good idea as to how they are flexible because you can negotiate everything. That's what makes it creative financing. We take our ideas and place them in place of money. That's the creative part. And it's a lot more fun and a lot more beneficial to you as well than a lot.

having to have the bank dictate the terms, to take it or leave it terms. So, you know, just every loan as you're starting to gather has so many different things, umpteen things, if that's a word, to negotiate. And you can be sure that a conventional bank, they stack every single one of them in their favor when you go to the bank. You're on the wrong side of that agreement there. But it's how everyone does it. They just accept it. But when you're buying a, property with creative financing, you'll be dealing with an individual instead of a department with a division within a corporation, within a conglomerate. You know, a traditional mortgage company will never agree to the same things a private party will agree to. And by dealing with an individual,

you can negotiate dozens of things in your favor, or at least as many as possible, but you have to know what you're negotiating for in which terms are most important to you. Because the terms that are important to me might not be the same ones that are important to you. And Eddie, with his deep mind in 40 plus years of experience, what's important to him is different than what's even most important to me. So you have to know what you're negotiating for and what's most important to you. It's why I really want you to be clear, particularly in the beginning, on, is be clear what your minimum deal standards are. You've heard me say that before. You know,

what's the minimum cash you're willing to take if you flip a property? And what's the minimum cash flow you're willing to take if you hold a property, right? So those are really important. And so based on your own personal numbers, you'll know which levers to pull. So you get what you want. So you get your minimum cash or you get your minimum cash flow. And when you're negotiating, it's not critical, you get every single thing the way you want it if you're thinking about the deal after the deal because that's the deal on paper at closing. And it's really though the deal after the deal is where the real good thing is. You know, you've heard me say that a bunch right now. So let me just give you an example. Let's say if you're a golfer, you know how you might aim your drive

toward the trees, right? Instead of toward the fairway because you check the wind and you know the wind is going to correct the shot as it flies and the ball will ultimately land where you want it to, even though it didn't start out going in that direction. Okay. Now, I'm not saying that you're not going to stick with the terms of the original agreement. What I'm saying is that by sticking strictly to those terms, you're going to benefit later through a number of additional terms that will be in your documents. Because there's three real sales going on here.

We've just talked about price and terms, price and terms, price and terms, right? But there's actually a third element to this that really increases the profit for yourself. See, there's the terms of the sale, there's the terms of the loan, and then there's the terms of the documents. And it's within the documents, the details within those documents where the money is really made. For example, if you got something in your note called substitution of color, collateral. That's why I want you to control a lot of property because the substitution of collateral clause that's in your note documents.

It's where you may substitute any property where you have a total amount of equity equal to or greater than the amount of equity that exists in the subject property. So basically, I can take the note on one property and move it to another as long as there's enough equity over there to hold it. And if I take that note and move it from one property to another property to where that equity is, what that does is it leaves me with a free and clear property. Ding, ding, ding, ding, you get it? So without paying anything off, I can have a free and clear property.

And the more you control, the more options you have in doing that, the more likelihood you can make that happen. And now with that one that's free and clear, I can go sell it and cash in. If that was $100,000, $200,000 property, boom, I just put $200,000 on my pocket. Or I had a free and clear property and I just went and refinanced it all, which I like even better, refinanced it all, and you put $100,000, $200 grand in your pocket that you just refinanced out tax-free, because now you didn't sell it, right? So it's not income, it's a loan. So that's just one example, and that's something that

could be in your, or should be. It's in every one of mine, substitution of collateral, and it allows you to move that around. So you've got that. And then, And another one, like I said, control is the name of the game. And it's why I'm not afraid of balloon payments. Everyone says, well, what are you going to do about the balloon payments? Well, it's because of something like substitution of collateral. I'm not concerned. If there was a balloon payment on that, I'd just move us somewhere else.

And then I could take that money, refinance it out, and then pay off the balloon payment. So now, substitution or excuse me, a subordination clause is another clause, right, inside your documents. where you do a refinance and insert a loan ahead of the sellers. So you can take private money against a property and put them in the first place. It's really tough to do a refinance if you have another loan already in existence. I mean, banks certainly won't do a refinance on a property if they're going to be in second position, right? Or you can't have a private lender, any smart private lender wouldn't come on and give you a bunch of money if they're going to be in second position. So as long as it doesn't impact their equity position,

you can go ahead and take the seller and put them in second position and put your new money in first position. It's kind of one reason why the amortization can play into your favor. So if you start buying that down, buying it down, buying it down, and you got a bunch of equity there, and now you can go ahead and put a private lender in front of that seller finance and put some money in your pocket that way. Right? Options.

You're not going to do this with every single deal, bit, you just have options. That's why I said it's much easier. If you got control of a bunch of stuff, it's much easier to manage all the financing if you got a bunch of them to do it with. And you got these clauses in your documents. And then you got an assumption clause

where you can just flat out sell the property to someone else, let them assume it and give you some money for it. It's kind of like an assignment, right? While keeping the seller's financing in place. Like you're kind of doing subject two. But per the contract, there's no breach and there's no due on sale clause.

And then there are other clauses like, making it wrappable or adding provisions for extending the note. And my favorite one, though, and this is the one that was really where the light bulbs and fireworks went off with Eddie when we were sitting at that table, was where you have the first right of refusal clause, should the seller receive an offer to buy the note? First right of refusal. This one must be in your docs if you're doing seller financing with your deals. It must be.

and I ask for all of that other stuff, all that other cool stuff I just shared with you, I ask for all of that. And it's great when I get them all. It's not uncommon to get them all. But you'll get pushback, I mean, you'll get push back here and there, and you'll have to admit one or two.

That's why I like to ask for more than I need so I can make concessions and give the seller stuff. And so you will have to admit one or two every once in a while. But this one, the right of first refusal or first writer refusal, should the seller receive an offer to buy the note? That one right there,

that one's non-negotiable. No. Unless maybe the front-in terms are just super strong in your favor, it doesn't matter. You got such a huge discount up front. But that one, that one is a non-negotiable. Because, I mean, you've heard me say, and I put, I mean, like I said up front, you've heard me say, I put an alarm in my calendar to call a cell every six months to make a discount offer on the balance.

And we get those accepted about 70% of the timeish, within a five-year period. But here's the deal. Understand that as an epic real estate investor, time is on your side. Because a smart investor, and this is where Eddie kind of let me in on the little secret that I'm not smart. Well, at least it was a secret to me. A smart investor, like Eddie, plays the long game. So for a loan with payoff terms that are 12 years or longer, here's what he let me in on. And I had no idea about this.

them bet that the chances of that loan becoming available for purchase at a discount before it's paid off are close to 100%. Here's what I mean by that. You know, just as you are out there marketing for property to buy, there's a whole other industry out there marketing for notes to buy. I mean, you go over to an epic property finder and pull out your data and pull out your lists and and you got your vacant houses owned by your absentee owners that live out of state and their own free and clear and they've got liens on them and there's there's a bankruptcy and a divorce in their history and those are who you target right that's what we do as investors that's what we do is property buyers well there's a whole other sector of people like us there's probably

a podcast on it of people talking this talk right now talking about us what we're talking about them because they're out there pulling those same types of lists trying to buy those seller finance notes that you have with the seller. So it's a guarantee with a note longer than 12 years that they will get an offer, if not multiple. And most untrained investors, as Eddie gave it was explained to me, focus on negotiating the price and the interest rate, which are the price and the terms. and so that let me in on that Eddie thinks I'm an untrained investor. But I was like, I did pretty darn well by negotiating the price and the terms, right? Because we think that those are what determine how much money that they're going to have to pay to settle the debt. And I've been really changing my tune about this over the years, and I'm totally bought in now.

But if we start here, then it becomes a little confusing up front. Because I don't want you to get so confused or so focused on what I'm talking about. talking about right now that you don't get the part up front. All right. I'm trying to like break you into this nice and slowly in one little bite at a time. So you can, we'll paint the big picture, right? Because this is really an elephant. It's a giant elephant.

And how do you eat an elephant? Yeah, one small bite at a time. But they think the huge mistake of not asking for the right of first refusal for when the note comes up for sale down the road. That's the big mistake that. I made for probably the first six or seven years of myself doing this. And what happens when you make that big mistake of not asking for that right of first refusal is you miss the opportunity to buy back your own debt at a big discount.

You miss out on the deal after the deal, the real deal after the deal. Because, you know, as I was mentioning, life happens. So there's an almost guaranteed certainty that the seller will want to get their cash early. almost guaranteed certainty. They're going to want to get their cash early before the long payoff date so that they can start a business. They can pay for college for their children. They can settle a financial problem.

They can buy a new property. I don't know. They can take a vacation. They can cover health expenses. They can retire early. Or they can get divorced or whatever. You see, life is full of twists and turns. So let those twists and turns work in your favor.

Getting the right of first refusal. it should never be an afterthought. It's your first thought because I'm always thinking about the deal after the deal. I was always thinking about that, but now I'm really thinking about it, now that I have that conversation with Eddie. Now that's my first thought.

Okay, let's just get control. That's the name of the game is control. Let me just get control because I know about the deal after the deal. That's my first thought. It's the top box on your checklist during negotiations for if, or more likely when the note becomes available for sale

to get an early payoff. That clause, non-negotiable for me now. And when you do this, when you ask for this first rider refusal, there's no need to specify the price that's going to be paid in the future because nobody knows when that date will be or how much will still be owed on the loan when it happens or what property values and interest rates might be at the time. I mean, you'll cross that bridge when you come to it.

So the price you pay will be negotiated at that time in the future. And so I've been buying back my own debt. for 10 years by making those semi-annual calls. But now I've got a safety net in place because of this first rider refusal, thanks to my good buddy Eddie Speed. That's his real name. That's a good name, right? But I've got this safety net in place.

If I miss a call or two, now it's not so important that I put on my calendar. No worries. I mean, someone else is going to call. That's what I can count on. Someone else is going to call and negotiate that deal for me. And then per this clause, that seller has to call me before they can sell it. And I've got the option to then buy my own debt at a discount that somebody else negotiated for me. So I think I'm pretty good at it, right?

Within five years, like we're hitting about 70%. So I typically get somewhere between 20 and 30% discount when I call on my own. And I think that's pretty good to buy my own debt back at a discount of 20 to 30%. But the first ride of refusal calls, those guys, have, those guys are a little bit better because we can buy back at 30 to 40% at a discount. They're just better negotiators. I mean, there's just people out there that are much better at it than I am, I guess, right? This is what they do for a living.

I buy houses for a living. And unless specified in the contract, note owners, they almost never contact the property owner when their note goes up for sale at a discount when they get these calls. They almost always go to a third party. But if you put that first write of refusal, they'll always go. go to you. It's the deal after the deal where the real money is made. And with this additional dynamic in place, when you have that clause in place,

typically it'd be someone a whole lot better of a negotiator than you negotiating your deal for you. And it goes, there's another level to this. Like, it just gets better and better and better. And perhaps it's too much to explain now. I'll take a quick stab at it just really quickly, just so I don't leave you totally hanging. and Eddie and I don't know, we disagree on this part maybe a little bit still.

I mean, he thinks, you know, I'm a little dumb for doing this, but, but I, and I see his point. He makes a really strong argument, but I feel like either my way or his way, it's just one's great and one's greater, right? Eddie prefers it his way, but I see it as actually two options, regardless of what the seller agrees to up front. I mean, some investors think a loan with short length of time that has like a zero percent interest to pay it off amortization. It's better because you pay less interest, which I kind of, I don't mind that, right? You know, you look at someone like Corey, you know, he paid off all kinds of stuff, right? All kinds of principal with all of his principal-only loans and refinanced a million and a half bucks in one year. And he put a million and a half dollars in his pocket.

tax-free. That sounds like a pretty good deal, right? Well, Eddie thinks Corey really sold himself short. And it's a surprise to a lot of investors because paying zero percent interest for five or six years can just, he thinks it's a terrible deal for you from his perspective. He doesn't think it's even average or good. I mean, I just explained to you, well, it's wrong with a million and a half bucks. Particularly when you get to go and retire your family like Corey did and you get to. And you get to, to build your dream home at the age of 26, and you get to put a fireman's pole that comes from your master bedroom on the second floor and goes all the way down to your garage in the basement. Passes right past the first floor. I mean, I guess that's what you do when you're 26 years old and you've gotten a million

and a half bucks. That don't sound like such a bad deal. But Eddie's like, no, he could have two of those houses with two bat poles. So, because Eddie doesn't like it because you're going to pay off the full loan amount in that short of a term, and he doesn't like to do that because he likes the greater opportunity of buying his debt back at a discount. Instead of agreeing to a five or six year loan with no interest, he'd much rather agree to the 15 or 20 year loan with some interest. I mean, he wants to lower the market rate for sure, but somewhere around 2 or 3 percent, but he'd rather have that 15 or 20

year loan with some interest than the 5 or 6 year loan with zero interest. I think they're both good, right? I like them both. And that's what this first rider refusal does. That's what the deal after the deal does. That's what your loan documents do for you is it gives you options. So it can correct whatever mistakes you make on the front end or it can enhance what you did good, what that you did on the front end. Anyway, in my loan docs with my deal that I shared with you on Wednesday, I've got all of that in that loan. I've got the first rider refusal. I got the assumable clause. I got the rapable clause. I got the substitution of collateral. I got the subordination clause and I got the extension of note. The extension of note is kind of cool too, especially if you got a balloon payment in there.

Where if I reach the term of my note and a balloon payment is due and I don't have the money to pay it, I can pay a very small tiny balloon payment to extend my note and give me more time. I like that one too. Basically, I've got options, right? I've got a lot of options. And then when you control a bunch of property with all of these options, you've got huge options. And you get stinking wealthy in a down market. Because in a down market, you're going to have the ability and the opportunity to control a lot more. All right.

Control equals options. Options equals freedom. Now, do the best you can up front to get control. Okay? I like the price of terms and now you know how they work hand in hand. the term of the sale, that kind of helps the seller, and then the term of the loan, that helps you hold on to the property and make some money while you're holding it. But the terms of the document is where you get paid. All right.

So the first step, go to epicbracthru.com and download those list of 21 creative financing terms and 10 creative deal structures, those little templates. They work. And they'll get you in the game so you can start playing this game on the back end too. but they'll only work if you know what they are and use them. And if this is all, you know, hieroglyphics and Swahili to you at the moment, go to Epic Breakthrough.com and just start at the beginning and work your way through. How do you eat an elephant? One bite at a time.

And that first bite is available at Epicbreakthrough.com. If you found this episode valuable, there's a good chance you know someone else who would too. And if you think about it, if it crosses your mind just in the middle of the day and you go, yeah, I think they would like that too. Go ahead and share it with them and ask them to click the subscribe button when they get here. I'd really appreciate it. And I will take great care of them. And I'm going to make you look like a star for referring them here. Ready? So that's it for today. God loves you. And so do I. Peace, health, blessings, and success to you. I'm Matt Terrio. Living the dream.

Gas flow. Yeah, yeah, we got the cash flow. Yeah, yeah, we got the cash flow. You didn't know home for us. This podcast is a part of the CEDAW. This podcast is a part of the CEDAW. suite radio network. For more top business podcasts, visit c-sweetradio.com.