Epic Real Estate Investing - EREI 060: Q & A - It's All About You Today

Episode Date: August 12, 2013

On today's episode, Matt starts the show off with a few announcements of new Epic Wholesalers closing deals and cashing checks by borrowing Matt's private and exclusive "all cash" buyers' list. For more information, you too can register to use Matt's private "all cash" buyers' list at EpicWholesalers.com The second announcement is of the new service available to podcast listeners, EpicRealEstateWebsites.com, where you can establish your Internet presence and be up and running with two landing pages to generate leads online while you sleep. Why two landing pages? The first one is to attract and caputure the information of motivated sellers that want to do business with you, and the second page is to attract and capture the information of cash buyers so that you can build your own "all cash" buyers' list like Matt's! Get the details at EpicRealEstateWebsites.com The majority of this episode consists of Matt answering your questions about: What to do with a property that has no equity and does not cash flow. What to do when a Realtor stands in between you and your deal. What to do when your friends and family don't support your entrepreneurial spirit. If you have not yet done so, download Matt's free real estate investing course at FreeRealEstateInvestingCourse.com Learn more about your ad choices. Visit megaphone.fm/adchoices

Broadcasting from Terrio Studios in Glendale, California, it's time for Epic Real Estate Investing with Matt Terrio. Yeah. All right. Welcome. Hello and welcome to another episode of Epic Real Estate Investing. This is the podcast where I show people how to get out of the rat race using real estate. And it all begins with just a simple shift in mindset, a shift in focus. Simply stop focusing on creating piles of cash and start focusing on creating streams of income.

What we like to call right here in the real estate world, cash flow. Cash flow. It's everything. I created my financial freedom in less than four years. And I created a free course for you, just for you, to show you exactly how I got started, specifically step by step and exactly how if I were to get started again today, how I would do it. And you can access that free course at free, really, estate investing course.com. Free real estate investing course.com. It's whole and complete,

no strings attached. Everything you need to know to get started right there and start making some money right away is there. Okay. So I've got a few announcements to share with you before we get started today. First, congrats to Brad Donnelly, Nick McKinnis, Brad Weber, and Kurt Waters for all closing deals by borrowing my all-cash buyers list. See, it works. I told you it work. And I didn't take a dime of their wholesale fee either. If you'd like to learn more about how you can borrow my all-cash buyers list, you can visit Epicwholesalers.com, epic wholesalers.com, and there you can register to become an official epic wholesaler.

But in a sense, you just get to borrow my all-cash buyers list. Sometimes it works. Sometimes it doesn't. But for these four last week, they all definitely got two cash, nice little wholesale checks. Well, some of them weren't so little. So congratulations to you for. And I was still about, you know, two weeks away from making this announcement. But since Kurt found his motivated seller this way, I thought I'd just give it a brief mention right now.

Kurt is one of my coaching clients and he found his deal that he wholesale to my buyer's list using one of the new epic landing pages. And if you don't have a web presence, you're going to need to get one. And you want a really easy and if you want a really easy and inexpensive way to capture internet leads, you can take a quick visit over to Epic Real Estate Websites.com. Epic Real Estate Websites.com. I'll be sharing more information with you about this very soon, as well as different strategies to drive traffic to your real estate lead capture page. But it is up and running.

And, you know, what a way to announce it then with a success story right off the bat. And if you can't wait for the details and you need an effective lead capture page right now, go to Epic Real Estate Websites.com. It's up and running and fully functional. Okay. So today's show is all about you, totally dedicated to you and your questions. And if you have a question, comment or concern that you'd like me to answer or address here live on the show, please share them with me on the Epic Real Estate Investing Hotline at 1-888-891-7203.

And that's, I'll give you that again, 888-891-7203. And that's what I'll be doing today, is answering your phone calls. So here's our first call. Matt, this is Josh. I want to say thank you for the podcast. There's a lot of great content on there. And I know that you're helping a lot of people, including me. So I took some of your action steps, and I'm getting a lot of calls.

And I'm getting some leads. And I got one lead where there was an older man. He's an absentee owner, and he's got bad tenants, and he actually owes more than the... property is worth, the property is worth about 500, I'm sorry, he owes around 500 and the property is worth around 430,000. So he stated that he had an assumable loan at 3%. So I'm just wondering if there's a creative way where I can structure this to make a win-win

situation. Anyways, well, his payments are around $2,434, and the market rent in that area is around 2,000. So I'm trying to figure out a creative way to structure this. Anyways, I hope to hear my question on the podcast. Once again, thanks for the great content. Go-bye. Okay, thanks, Josh. So we've got an absentee owner.

We've got some bad tenants. The seller owes $500,000. The property is valued at $430,000. So right there we have a property underwater. The seller owes more on the property than what it is worth. And the seller claims to have an assumable loan at 3% of which results in monthly payments of right around $2,300. And the property rents, however, for $2,000.

So you see that rent will not cover the mortgage payment, will it? No. So Josh is asking if there's... is a creative way to make a deal out of this, a property with no equity and no potential cash flow. Well, it's not how we see it right now. The quick answer, Josh, is yes, there's always a way. But the more appropriate question is really, do you want to make a deal out of this? Do you want to do what's going to be necessary to potentially make a deal out of this?

personally, I would walk away and go look for another deal. I just would. I think there's too much opportunity out there to try and get so creative with something like this and expend the type of energy and effort. And, you know, that is going to take to turn this into a deal. I mean, from the numbers I've been given, there's no equity here, and there's no cash flow either. Now, I definitely, I know you have to. I don't know you specifically, Josh, but I know many of you have heard.

You know, you've heard gurus and you've heard educators out there explain how they can make deals out of situations like this where it looks like there's no deal. And to be honest with you, on paper or in a PowerPoint presentation or on an overhead projector or on a chalkboard or on an internet sales video or even here on a podcast, you can craft and illustrate a theory that would create equity and or cash flow out of situations like this. But you know, when it comes to real world application, it's fantasy. I've just done too many of these deals. And I'm not claiming, not these deals, I've done too many deals, period. I have too much experience to know, you know, what the probable outcome is of something like this. And I certainly don't claim to know everything because I don't.

And I know there are people out there much, much smarter than I am. But, I mean, you'd essentially have to find an end buyer with more motivation than the seller. So you have someone that wants to get rid of their money. more than somebody that wants to get rid of their house. And just, you know, logically, that would be no easy feat if at all, if it would even be possible. I mean, it certainly is not going to be anyone on your existing buyers list. It's certainly not anybody on my buyers list. It would have to be, I guess, a retail buyer with a very unique situation, a situation

like they have too much money and they are desperate to get rid of it. That's the only situation I can think of. you know, let me just swing back around. I'm getting a little off track. The real point is, and I totally get where you're coming from, Josh, you have someone that's willing to give you their property and you want to make some money. I totally get it. And I especially get it if you've been working at this for a while with little to no success yet, like if this is your first, second or one of your early deals. I mean, you feel you've got an opportunity in front of you.

And unfortunately, you just don't. So the main thing here is just because someone is willing to sell you their property doesn't mean you should buy it. I mean, if there's no equity and there's no cash flow, then pass. Just walk away. There's just way too much opportunity out there to invest a bunch of time in an unlikely deal like this. I mean, Josh, that's what I would do. I'd pass. But I'm going to give you an option.

If I had to do this deal, and this would be a long shot, but if I had to do this deal, Here's what I would do. Actually, no. I wouldn't do that either. I was going to say that I would assume the loan and then immediately apply for a loan modification to get the loan principle reduced. But that would really be a 50-50 shot at best,

at the very best. And it would likely take months at best. And I'd have to make the payments during that time since I assumed the loan. And then there's really no guarantee that it would get modified. In fact, in today's short sense, sale loan modification environment. I think the chances of getting a modification right after assuming a loan would be almost

impossible. And I guess the other option would might be to have the current seller to do the modification first prior to you assuming the loan. That could be another possibility, but there's almost no doubt in my mind that one of the following would happen. The loan would be modified to a non-assumable status or the seller would decide not to sell after the modification was approved. That's very likely if they got that.

that modification approved. They've probably already tried it. And for one reason or another, they didn't get approved. Or if they did get approved, there'd be some sort of deed restriction on it. I mean, the banks have gotten very savvy to investor ways and just, I don't know if that's really a road that you want to go down anymore as an investor is dealing with the banks and the short sales. Let's see.

I suppose you could put some sort of agreement in place with the seller or use an option to protect your situation should they. try to modify before you took over. But you see what I mean here? I mean, it's way too complicated. It's way too much work. There's too much uncertainty in place. And you have very little control over the whole.

I mean, you have no control. It's going to take just way too much time and it's still a big maybe. And in fact, it's very unlikely. So you know what? I'm just going to stand on my first inclination to walk away and go find another deal. That's what I would recommend, Josh. I was trying to give you at least one option. But, you know, as you can probably tell by now,

the options they suck. There aren't really any options. When a property is underwater, you have very little leeway. There's very little creative strategies that can get you out of an upside-down property. And the only saving grace for that other than dealing with the bank is if the property did actually cash flow, then it might make sense to take a property underwater. If it actually cash flow, then you could wait it out and hopefully the market would bounce back and then at some point it wouldn't be underwater anymore.

But you don't even have the cash flow here for that situation to make that house. happen. So, Josh, just keep doing what you're doing. Awesome that you found deals, or not deals, but obviously it's awesome that you have found a seller to talk to. And you got to a point where there was an actual dialogue and you're trying to find a solution. You're doing it right, dude. You're absolutely doing it right. So just keep on doing what you're doing. And those opportunities will reveal themselves. Okay. So thanks for the call, Josh. Here's the next question. Hey, Matt, this is Kirk Lewis. My wife, Rochelle and I are out here in Phoenix trying to get some deal done. Got a question for you about how you deal with what looks like it could be a deal,

but it's already listed with a realtor. Do we just have to wait for the listing to expire or is there any way to get creative and structure a deal where that might be able to work? Thanks, Matt. Thank you, Kirk. So you found a deal listed with a realtor and you want to know if you have to wait for the listing to expire before you make a move. Is there a creative way to make the deal work you ask. And I think you mean, is there a creative way to buy the property without the realtor or without the realtor's fee interfering? So good question. This comes up frequently. It's a common question. So first things first, the seller of the property and the realtor, they have a formal agreement in place. And that agreement is binding. But keep in mind that you are not a part of that agreement.

Okay. So that just lay the ground. Now, in Well, I guess what that means is what I was trying to get to is that anything that you do to get around that agreement that you might classify as creative. It's not illegal. Okay, there's nothing against the law by trying to get around that agreement because you're not a part of that agreement. I mean, you might be playing a little bit with some moral gray area, but it's not illegal. And it's entirely up to you how you want to approach this. You have a few options. First, you can wait until the listing agreement expires.

and then you can approach the seller after. But, you know, maybe the property or likely the property is going to sell before that listing agreement expires, which means no deal for you. So not a great approach. Highly, a good outcome is highly unlikely there. Second, you can go in the back door by contacting the seller going around the realtor, going in the back door to contact the seller directly. And you can do that via a letter or a phone call or a combination of the two. or you can just go knock on the door and let them know that you'd like to purchase their property without the realtor's involvement of which then gives the seller the dilemma, right?

So there's nothing wrong with you doing that, but the seller definitely has a dilemma. Do they want to breach their contract with the realtor or not to deal directly with you? So, you know, to approach the seller that way, I mean, what this does is it puts the ball in the seller's court for sure. And how they respond is going to depend on. a bunch of things. It's going to depend on why they are selling. It's going to depend on how motivated they are to sell. They're going to depend on their financial situation. You know, maybe they can just pay the realtor fees aside and make the realtor go away. I don't know. It's going to depend on

their moral character. It's going to depend on how sneaky they want to get. It's going to depend on their sophistication level. You know, maybe knocking on the door and speaking to someone who has really no experience inside of real estate or their sophistication level might be a little bit lower. you know, that might be totally confusing and they're going to say no just because they don't understand. That can happen. Or it can just be a combination of all of the above. There's so many, you know, variables here.

I mean, you're a guess to how the seller is going to respond to this approach is as good as mine. But it is an option, okay? It is an option. The third option is you can go through the front door and just contact the realtor directly and present your intentions to them. Present to them what you're trying to do and see if you can work something out with them. I mean, if you take this approach, here's my advice. Keep in mind that the realter's only real

concern, and it's kind of sad that this is the way it is, but it's just the way it is. We're all adults here. We can just talk how it is. Keep in mind that the realtors only concern is that they, the realtor, get compensated. They want their commission. If this house sells, they want to make sure that they get compensated. That's all the realtor is concerned with. So the angle of your negotiation and your presentation of your intention to the realtor is to keep the realtor's compensation in the foreground. That's what they're concerned with, so you've got to keep that in the foreground.

And there are multiple ways that the realtor can get compensated from you without coming out of your pocket. But you want to keep on reminding them that this is how they're going to get compensated. So first, let them represent you. Okay, you contact the realtor. Let them represent you as the buyer. You want them to represent you in this particular transaction.

and that will be very influential to them that are already going to be open to helping you is they're going to be compensated to see double typically double they'll be compensated for the selling side of the commission and it'll also be compensated for the buying side of the transaction so that that uh that's very appealing to them that they get to represent you okay so allow them to do that it's going to work in your favor and let's see the other way that you can compensate them is the promise of future business. For example, if you planned on flipping this property, you know, let them know that,

hey, I'm going to give you the listing of the property when I flip it if I can't sell it myself in a certain period of time. And let them know, say, maybe you're doing a bunch of business in the area and you're always looking for new team members. Dangle those carrots. Just keep in mind that they are almost solely focused

on what's in it for them. And it's no guarantee that you're going to get the deal you want. want with the realtor involved. But it's your best chance by keeping the focus on their compensation and assuring them that they are going to get paid. And if you can just kind of demonstrate that to them on how they're going to get paid and how easily it's going to happen and they understand it, then they're going to be on your side and they're going to try and get the deal to go through.

If you lose sight of that aspect of the deal, even if you come up with a killer, I mean, if you come up with a killer, win-win result for you and the seller, if the seller is all about your offer and you've lost sight of the aspect that they're getting compensated or somehow they get a little nervous and are a little uncertain that they're going to get paid, you are unlikely to get that realtor's cooperation. They can easily kill the deal because they already have a relationship with the seller. Okay. Now, one thing you might be thinking is, because I certainly thought of this before,

is, hey, maybe I'll try the front door by contacting the realtor first, and then if we're unable to come up with a deal, you can just wait until the listing agreement expires, right? Sure, sounds logical. good on the surface. But most listing agreements have a clause in that agreement that if anyone that the realtor has discussed the sale of the property with during the term of the listing agreement, they're still entitled to compensation for a period after the listing agreement expires. So if you go in and you talk to the realtor and you are unable to come to a meeting of the minds to reach a deal and then say that listing agreement expires the following week and then

then you go in to try and buy the property, that realtor can still kill your deal. They might be entitled for 30 days, 60 days, 90 days after the listing agreement expires to still get compensated for that. It all really just kind of depends on the realtors savvy. And if you know a lot of realtors, that's almost a oxymoron, isn't it? Just kidding, realtors. I'm just kidding. I'm just kidding. So the reality is the realtor found the seller before you did, and they put an exclusive contract in place.

That's what so. It is what it is. You just have it, and it can be a big barrier, small barrier, just depends on who's involved. And, you know, it's just an extra piece of the puzzle to work with, the realtor. But all of the other factors are the same of any deal. So it's really just one extra little piece. Kirk, hopefully that gave you some insight as to how to proceed. Thanks for the question.

It's a common situation that real estate investors deal with all the time on a daily basis. So, our next call. Hi, Matt. This is Prasita from Chattanooga, Tennessee. You used my question on your podcast number 58. I just heard it, and it is such a pleasure and an honor for you to have my question answered on air. And thank you so much for the words of encouragement. That meant so much to me, Matt.

So thank you so much, just the fact that an experienced investor and successful once I teach yourself, say that I'm doing a good job, this is the way it's supposed to be done, means a lot to me because I've had a lot of friends and family members who've never done it, by the way, just give me words of discouragement and saying that I can't do it or you've never done it before, so you should wait until you learn everything about investing before you make a move and just not really encouraging. So it just means a lot to hear those words for encouragement from someone who's actually doing it.

So thanks again, Matt, really appreciate it. One other thing, one other question I have for you. A couple of podcasts ago, you said that you were setting up a website or a phone number for people to go to, they wanted to donate to your show so that you can keep the podcast going. on the upcoming podcast, could you repeat that information again? Because I would definitely love to donate so that you can keep the lights on in your new studio

because I love the content and the information that you share through the podcast. So I definitely want to donate and keep things going. So if you could repeat that information in the upcoming podcast, I greatly appreciate it. All right. Thanks again, Matt. Bye-bye. That is awesome. You are so welcome, Rashida.

and thank you for being an amazing example of going out and taking action before you know everything. You're going to hear me say that over and over and over again. You don't need to know everything before you get started, and you've just been an awesome example of that. And hopefully everyone listening, you can take note of that if you've been waiting to get ready. If you're getting ready to get ready, if you're waiting to know everything to get ready, just know that you don't need to know it. Travel as far as you can see. And when you get there, you'll see further. And that's exactly how Rashida, how it turned out for Rashida.

So it's awesome. So thank you for that, Rashida. And thank you for calling again. I want you to know that, you mentioned having an environment of friends and family not being the most supportive can be challenging. I want you to know that it's extremely common for entrepreneurs. So don't sweat it. That means you're doing it right. If you're doing what they wanted you to do, then you would have what they have.

And obviously, you don't want what they have because you've chosen a different path. So if you're getting advice or discouragement or advice that's contrary to what you want, hey, you're doing it right. That's the life of an entrepreneur. Welcome to the family. And, you know, to help you in that department, though, because you are going to need help, because your environment is going to be a big factor to your results. Make sure you're attending your RIA meetings, your real estate investor association meetings

and interacting with like-minded people at the very least. I mean, at the very least, you need to do that to balance out your network. network of people. You might not be able to find enough people to compensate for the people that are closest to you. Or, yeah, to compensate for the people that are closest to you. But at the very least, balance it out. Okay, keep your head on straight because, you know, being an entrepreneur can be a very lonely business and you, you need some support. You need some help from your environment. So if your environment that you have right now isn't supporting you, then you need to create an environment that does. Okay. So I appreciate you also volunteering to don't.

I really appreciate that. I could use a little help over here, keeping the lights on. And, you know, by the time this episode airs, you should be able to visit epic realestate.com. Epic real estate. That's the brand new website for Epic Real Estate, where I'm building our online presence from scratch. And you can there contribute in one of three ways. First, you can simply just click the donate button that you see in the right hand column of the website. There's a donate button there.

Just click and that comes to me and it helps pay the bills. Second, if you know you're going to do some shopping over at Amazon.com, you can first visit Epic Realestate.com and click the Amazon banner and then proceed to do your Amazon shopping just as you normally would. It doesn't pay a whole lot. It's just a few cents. I think every time a book is sold, I get like 13 cents or something. It's no big deal.

But it's no money out of your pocket. It's the exact same amount of money that you were going to pay if you went over there to Amazon. So that's one way, or that's the second way. And the third way that you can contribute to this show is to become a member of the Epic Pro Academy. Become a member of the Epic Pro Academy. So again, you can visit Epic Real Estate.com and you can click the join button there.

And all of those buttons are grouped right there in the right-hand column is that you'll see the Donate button, you'll see the Shop at Amazon button, and just below those two, you will see the Join the Academy button. So there, that's three ways you can support the show. And, you know, it's certainly not required. That's not an obligation by any means. But if what you're learning here is making a difference for you and you feel so inclined that you would like to give back, those are three ways that you can do so. And, you know, hey, if a monetary contribution doesn't work for you, no worries, you can always visit iTunes and leave a favorable, favorable comment and rating of the show there.

That helps a great deal too, and that's absolutely free for you to do. Okay? So thank you, Rashida. Thank you for bringing that up. I was going to bring it up next episode, but since you called in and I thought I'd bring it up now. Okay, so I know I'm going to be working with you, Rashida, together very soon as you did just become an official epic wholesaler. So welcome to the family. And Rashida did that by registering over at Epicwholesalers.com.

So I am looking forward to working with you and putting some nice wholesale fees in your pocket. Okay, I think I got everything out. I know that was a lot of dot com talk today, a ton of website addresses. I'll be sure to include all of those in the show notes. Or you could always just hit the rewind button if you missed anything. Okay, so if you happen to have a question, comment or concern that you like me to answer or address live here on the show, please share them with me on the epic real estate investing hotline at 1-88-891-7203. Okay, so next show, I'll have a very special guest join me here in studio. He's a wizard, an absolute wizard, a genius almost, a very creative guy at generating leads online.

And as I'm going to be dedicating the next few episodes of this podcast on how to, generate leads online. And I'm going to show you how to find motivated sellers online, how to find all cash buyers online. And in case you haven't noticed, the reason we're doing this, the world is online. And you can really no longer, I mean, if you, I don't know, you just can no longer afford to be invisible there. You know, that's the realtor association. They came out with a statistic like six years ago that 86% of all home searches, property searches, begin online. So, you know, If you're not online, at least six years ago, you were invisible to 86% of the entire real estate buying public. So I'm sure the number is much higher now.

But anyway, you know, that that's kind of the reason that I've launched the epic real estate websites.com to help you out there. I don't want you to be invisible to that big portion of the market. But anyway, more on that to come, as well as some invaluable training over the next few episodes on how to maximize your online real estate investing presence. Okay? So until next time, as a very wise person once said, diversification is only required when investors do not understand what they are doing. So, focus and invest in yourself to guarantee your future. To your success, 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 BS in real estate investing education.

If you enjoyed this show, please take a minute to visit you. at 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.