Epic Real Estate Investing - How to Buy Real Estate with $0 Down. A Masterclass for Beginners (No Banks Involved) | 1347

Episode Date: September 12, 2024

In this episode, we embark on an in-depth exploration of innovative financing strategies for real estate investment that bypass traditional banking methods. This detailed guide unveils ten dynamic financing options designed to help investors secure deals and expand their portfolios with minimal personal capital. Among these strategies are equity sharing, lease options, and seller carryback, each offering unique benefits and opportunities for closing more transactions. We also dive into five critical tips for mastering the art of negotiation, essential for any successful real estate investor. You'll learn how to effectively understand and leverage the seller’s motivations, approach negotiations as if you’re conducting interviews, and build rapport by personalizing interactions and using names. These techniques are pivotal for securing favorable terms and closing deals that might otherwise fall through. Additionally, the episode offers practical advice on forming strategic partnerships and tapping into other people’s resources, which can significantly amplify your investment potential. We also cover the importance of automating your marketing efforts to ensure a steady flow of leads and maintain a competitive edge in the market. By integrating these creative financing strategies and negotiation techniques, viewers will be equipped to overcome common barriers to entry, seize lucrative investment opportunities, and move closer to achieving financial freedom. This episode is a comprehensive resource for both new and seasoned investors looking to enhance their approach to real estate investment through innovation and strategic thinking. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Hey, strap in. It's time for the epic real estate investing show. We'll be your guides as we navigate the housing market, the landscape of creative financing strategies, and everything you need to swap that office chair for a beach chair. If you're looking for some one-on-one help, meet us at rei-aise.com. Let's go, let's go, let's go, let's go, let's go, let's go.

Let's go. Banks don't want you to know this. Why? Because it puts you in control, not them. As a real estate investor, you're constantly faced with a frustrating cycle. You need more deals, but those deals need cash. And traditional financing methods just aren't cutting it anymore if they're even available to you. But even if they do, you've got to jump through a lot of bank hoops, which is kind of what they want. It keeps them in control. There's a lot of things there that you're just kind of at their mercy, like high interest rates, endless paperwork, and banks that say no, they're all just keeping your portfolio from growing. The worst part, you know there's a better way. But Nolan seems to be talking about it or specifically sharing it with you. So in this masterclass that I put together over time, I'm breaking down 10 powerful creative financing options that will open doors, traditional banks slam shut, giving you the edge to close more deal and grow your business fast.

Let's die then. I'm going to turn you into a creative real estate investor so you can get your share of the wealth that real estate promises. And this is really important because if you don't understand what. creative real estate investing is and how it works, you're going to miss out on a lot of opportunity, not to mention use a lot more of your own money to build your financial future. However, when you can add creativity to your investing toolbox and do it right, your financial freedom, it's yours for the taking. And you get to call the shots on how it goes down. And the best part is you can do it all

with very little and frequently none of your own money. And that right there typically catches most people's attention, the no money part, because most people think you need money to invest in real estate. And if you don't have any or don't have as much as you think you need, it's natural and totally normal to think that money is your biggest barrier to getting started in real estate. Almost everyone thinks money is the problem. What most people find very refreshing about creative real estate investing is that moment when they learn that it's never a money problem, but merely an idea problem. Meaning in the absence of of actual money, you can insert an idea, thus creatively investing in real estate.

I like to refer to these creative ideas as intellectual currency. I mean, you've got actual currency money, and then you have intellectual currency, your creative ideas. And the more you use of one, the less you need of the other. If you're short on money, your only option is to brush up on the creative ideas. So let's talk about those ideas. We're starting with the very basics and the four key resources for success. in real estate are knowledge, time, money, and credit. The most important of your resources is

the knowledge. You can outsource or leverage all of the other resources with relative ease and minimal costs. As an example, the people you need to pull everything together are readily available, like accountants and realtors and attorneys and lenders, coaches or more experienced investors. And with almost certainty, you already have a person or know a person who knows a person that can fill one or some of these roles for you. There's an idea, maybe your first idea, to leverage someone else's key resources. You know, other people's knowledge, OPK, other people's time, OPT, other people's money, OPM, other people's credit, OPEC, other people's everything.

You see, you need all four of those key resources to succeed in real estate, but they don't all have to belong to you. You just need access to them. In that, very basic idea should start to open up additional creative ideas almost immediately. Now, if you plan to partner in any capacity with others to accelerate your success, as partnering with others done correctly can significantly accelerate your success, then it is almost always best to partner with someone to overcome your lack of resources. What most people don't or ever really realize is that what's difficult or challenging for

them is child's play to someone else and vice versa. As an example, you're watching me right now and you may have the knowledge to find good deals, but lack the money to take advantage of them in the way that you want. And you're paying attention to me right now hoping to solve that lack of money problem, while someone else is watching me right now with plenty of money, but no deal to put it into. And they're paying attention to me right now,

hoping to solve that lack of a deal problem. You see, what's a challenge for you, it's easy-peasy for someone else, and vice versa. And partnering with the right person to where you complement each other's, resources is just one single creative idea that could change the game for you and just break everything wide open. Your overall success in real estate investing depends on your ability to think creatively and to be resourceful, to solve problems. Ultimately, that's what you are as a creative real

estate investor. You're a problem solver looking to solve a seller's problem in exchange for equity. That's what we do as investment real estate buyers. We exchange equity for peace of mind. And as a creative real estate investor, we use ideas in place of actual money to solve those problems. And Epic investors commonly refer to these ideas as terms. And to create win-win scenarios that lead to win-win outcomes, we will buy real estate in one of two ways, by either our price in the seller's terms or the seller's price and our terms. As long as we can control one of those, the price or the terms, we can always make a deal for ourselves. Even if we pay full price to the seller for their property. I mean, if we can control how we pay that price via the terms of the payments,

we can create a deal for ourselves every time with terms like equity sharing and options and lease options and agreement for deed and seller carryback subject to wraps, all inclusive trust deeds and so on, of which I'm going to break each one of those down for you in detail and then we'll get more advanced and could essentially go on indefinitely. I'm not sure exactly where we're going to stop, is there are no limits to the creative. ways that you can invest in real estate. So if you'd like to start reading up on this and get a head start on these terms and and start to see how they work together to form your creative ideas that you'll be using

to invest in real estate with very little to no money and download the same cheat sheets that I give to my students at epic breakthrough.com. Creative real estate investing is the practice of inserting an idea in place of money. As a real estate investor, it's never a money problem that's going to hold you back. rather an idea problem. And we refer to these creative ideas as terms, terms like equity sharing, options, lease options, agreement for deed, seller carryback,

subject to, wraps, all-inclusive trust deeds, and there's so much more. I'm gonna show you how to use equity sharing, the sharing of ownership, value, and appreciation of a piece of property. It's not commonly known in what we do here with single family residences as much as, you know, terms like lease options and subject to

and seller carryback are known. As equity sharing, it's, most commonly used in commercial real estate ventures. But it can be a very valuable creative idea to invest in residential as well. First thing, what is equity? What is this thing that we're going to be sharing? Well, equity is the value of a property, less the debt and liabilities that are attached to the property. For example, if we purchase this $100,000 property with a conventional loan that required 20% down, this portion here is our equity, the amount that we put down. Or if we purchased the same property and used our negotiating skills, which makes up a significant portion of creative real

estate investing to purchase at $90,000, then this would now be our equity. And once we finalize the purchase, that equity can increase in multiple ways, like through appreciation, through principal paydown, and increase in income, or adding square footage, or a change in the property's use, and or negotiating the price or terms up front with the seller. That's what equity is, the value of a property less the debt and liabilities attached to the property. Now, a creative real estate investing strategy could involve sharing this equity, of which a partner would share in the upside and the downside, if there were any, and a common arrangement for equity sharing is where one person would play the role as a money partner, and the other person would play the role as the time and knowledge

partner. Remember the four key resources of a successful real estate investor. We had time, knowledge, money, and credit. But in other words, for this specific scenario, one person puts up the funds and the other person oversees the rehab, the management, and or the resale of the property. One or many equity partners could be the silent partners, while the other would be more active in dealing with the property. That's a common example, but there are no hard and fast participation rules except as defined in your equity sharing agreement. And let's look at what that agreement might look like.

The equity sharing process for you would typically work like this. One, identify an investment property. Two, identify a partner. And that could be another investor or a home buyer that will live a. the property or even the existing resident owner when you make the purchase, although another investor that does not live in the property is preferred. And I'll touch more on that in just a second. Number three, seek professional advice, like the advice of your attorney or an accountant, as there are many variables at play with each individual and each individual's situation. For example,

you may want to consider different levels of asset protection and different levels of tax strategy. Don't underestimate this part as it can be difficult to make changes after the fact. And very beneficial and lucrative before the fact. Number four, create the plan. Agree in advance with your equity sharing partner in writing on a plan of buying the property and how and when to liquidate and just in case include a buyout option along with what if clauses. Use a local real estate attorney to help you with this. I don't recommend you doing this part on your own. And a good rule of thumb is to plan your agreement for the worst case scenario. Enter that agreement as you're going to be married forever, but plan for a divorce on day one. And then once that's out of the way, you can now,

then comfortably focus on the investment and its performance and profit happily ever after. Number five, take title. In other words, buy the property. Close on it. Close on the property and take ownership. Now, you could take title as tenants in common. That's a simple way to do it, but your partnership planned and drafted in a detailed entity agreement as venture partners, that's best. See step four. Now, about sharing equity with someone that's going to be living in the property, it's my strong recommendation that you don't do that. If you choose to do an equity sharing deal with the resident of the property, you must first consult a good local real estate attorney to discuss the local laws that are at play because it's just too easy

in our litigious society for the investor to be seen by the courts to be taking advantage of the homeowner residing at the property. Remember the old adage, possession is nine-tenths of the law. This may not be literally true, but it can certainly make enforcing your claim on the equity much more difficult. Now, an alternative could be sharing with the resident owner as long as they move out to another residence. And it might look something like this. Mr. Seller, the current value of your property is $100,000, I can give you $50,000 for it today. And then when I resell or refinance the property at any price above $110,000, I'll split the equity or the profit 50-50. So if I sell this property a year from now for $120,000, I'll split the $10,000 with you and then I'll send

you a check for $5,000. That is a very valid and possible scenario to help you buy property at a bigger than normal discount by promising the seller a little bit more on the back end of the property. Note, it does not have to be a 50-50 split. This was just a simple example of how else an equity-sharing deal can be structured to help you buy property at a deeper discount. So, is equity sharing the best structure to create for your deals? Or is there another idea to where you can keep more, if not all of the equity, for yourself? Follow me to the next creative real estate investing term, options of which is another rarely discussed creative idea that can secure all of the equity for yourself and make you a boatload of money in the process.

Here's a creative financing strategy rarely talked about, but it was good enough for Steve Jobs, Sarah Blakely, and Richard Branson. If you have a 680 credit score or better, no collections or bankruptcies in the last seven years, Bank of America has a program for real estate investors and business owners where they'll give you up to $150,000 of capital at 0% interest. You can get instant approval at no-costcapital.com. And this just isn't any capital. It's up to 150 grand of 0% interest funding specifically designed for business operations, rehabs, marketing, earnest money, and down payments. I mean, you can even lend it out if you want to. And the best part, there's no fees. None. You can get instant approval in less than 30 seconds at no cost capital.com. Right now, I'm going to show you how to use option in your creative real estate investing. It's a unilateral agreement for you to buy or sell on or before a specific date at an established price. It's a unilateral. agreement, meaning it's a one-way street where the seller is obligated to sell,

but you are not obligated to buy. No risk. And I'll get to that. The seller who gives the option is referred to as the optionor. And the buyer, the receiver of the option, is referred to as the optionee. For this agreement to be legal, it must include consideration. That's the amount that you're paying for the option. And we'll get to that too. And it must also include an expiration date. This is a strategy for controlling a property without actually buying or owning it. In a nutshell, an option gives you time to pull your master plan for a property together with no stress or pressure. There are several scenarios where this may be your best option. Pun intended. First thing, you cannot transact real estate in the United States without a license unless you are a principal

in the transaction. When you enter an option agreement with the seller, that makes you a principal in the transaction. Boom. Now you're legal. So if your intent is to resell a property that you don't yet own, you first need to become a principal before you can do so. Wholesalers, you hear me? Don't go anywhere. It gets better. In addition to control, an option contract gives you equitable rights to the property with zero risk. And with those rights come the right to inspect the property and the right to market it.

So you can market for a buyer who would be willing to pay you more than you have an option for. Or you could market for an investor partner. Refer to the last lesson on equity sharing, and you might get an idea or two for that over there. An option on a property can allow you to tie it up to give you time to conduct longer than usual due diligence before taking ownership. As an example, for property development, or for zoning, or property use changes, or maybe you need time to get special permits from the city, or maybe you're waiting for some event to happen that could impact the value of the property. Like, you heard Home Depot might be buying the lot across the street. Or word has it, your local football team is contemplating building a new stadium nearby.

And if they did, it would boost property values in the area. That could change everything for you. These are examples of how an option can give you an extended period of time when you need specialized information for a specific exit strategy. Another use is to combine an option agreement with a lease agreement to create a lease option. to create cash today and cash flow tomorrow. Another reason to tie up a property with an option contract is to see if you qualify for the funding

that you're going to need to pull off your master plan for the property. Certain types of loans can take a while, a long while. Another great use for options is to resell luxury homes, where it's not unheard of to turn a $500 option fee into a $50,000 check or even a six-figure check. Yes, I said six figures. It's not a stretch to get a $1.6 million option on a $2 million house and find a buyer that will pay you $1.7 million for it.

Imagine if you were to do one or two deals like this a year inside of your self-directed Roth IRA retirement account, where the government, as of the recording of this, as an annual contribution limit of $6,000. But with a single option transaction like this, you stuff $100,000 into it, legally, morally, ethically, and tax-free with the government's blessing.

And of all these scenarios, if they don't pan out the way that you want, want them to, say you couldn't find a buyer, or the city wouldn't grant you the right permit for your development plans, or your football team decided to pick up and move to another city altogether, and the option period expires. The option contract becomes null and void. That's it. There's nothing for you to do or to be concerned with. So here's the process when you're buying an option. One, identify the property. Two, negotiate with the seller your purchase price as low as possible, and you want to negotiate today's value. Conversely, if you're selling, you want to negotiate

the future value as high as possible. Three, negotiate the expiration date as far out as possible. 30 days is pretty easy and actually 90 days shouldn't be a difficult request. Beyond that, you may get some resistance, but it really all depends on the actual deal. A cool tip is to include a clause that allows you to extend the option term for a small fee. Just in case you need some more time to pull off your master plan. Four, negotiate the option fee as low as possible. And how much this option fee should be is going to be a big,

fat, it depends. It depends on how confident you are about your exit strategy and how much you stand to benefit. I mean, if it's a tight deal or if your business consists of doing a high volume of options, you know, 50 bucks, 100 bucks, might be all that you are willing to and need to pay for the right to tie up the property. Or if you stand to make a boatload and you're confident that you can pull it off, you might be willing to pay a whole lot more for that option. It can be a gamble, and that decision, that's yours to make. You can head your bet, however, by breaking the option fee up into monthly installments or multiple payments. And if you get to a point where it's pretty clear your plan is not going to come together,

you can just stop the payments. Let the option expire, and you're done and free to go. No risk other than losing your option fee. So keep that in mind when you enter the agreement when you're negotiating your option fee. Bottom line, ask for the moon. Ask for more than you actually need and settle for what you get. But if you don't like what you get, don't hesitate to reject the seller's best deal. There'll be more.

Make the deal that you want to make. The cash today can be great by leveraging options in your real estate investing. And if you want the cash flow tomorrow and every month thereafter too, right now, I'm going to show you how to use lease options in your creative real estate investment. A lease option is an agreement in which an owner allows a person to use a property in exchange for rent. And also gives the person the right to buy the property for a specified price within a specified period. I see it like this. You buy the property today, but you don't have to pay for it.

until later. And you get to use and profit from the property in the meantime while you wait. And I would consider a lease option purchase the most flexible strategy as it's easy to get into and it's easy to get out of. You can make money today, make money every month, and make some big money down the road. And I'll get into all three of those profit centers of a lease option purchase in just a minute. But there's something even bigger at play that you're going to want to know, something that you won't hear from too many people, if anybody at all. It was Nelson Rockefeller, son of John D. Rockefeller, famously once said, the secret to success is to own nothing but control everything.

And his quote is really referring to asset protection. But I look at this quote a little bit differently than most. With my focus on the control everything part. And here's why, real estate has always appreciated. And I see no reason or evidence for it to stop. We've discussed that endlessly here at Epic. And so I'm not going to go into the details of that right now. But when you look at another famous quote by JFK, John F. Kennedy, a rising tide lifts all boats,

with that rising tide in our context being real estate appreciation and those boats being property. So the more property you control, the more property you have that's lifted, the greater your wealth rises. Thereby making the name of this real estate game, control. And what makes this lease option idea so compelling is it gives you the ability to control, a lot of property or a lot of boats, if you will, using very little to no money and when done right with very little risk. Wealth is a result of control and lots of control can be had with lease options. Now, let's break this lease option down. The option is what gives you the buying power. See the last lesson for how the option works. The lease portion works like this. In lease agreement, the owner is the

lessor and the investor is the lessee. The lessee pays the lessor a monthly fee. That's your lease payment that you pay for the right to use the property. With the option and the lease working together in one transaction, that gives you a lease option purchase. Like any other investing strategy, you want to buy low and sell high, and there are three opportunities to do this with lease options. And it works like this. We call this our A to B transaction,

with A being the seller and B being you, the investor. And as an example, we'll use this house right here valued at $100,000. You negotiate an option, price of $80,000. In exchange for that, you give the seller a non-refundable option fee of $2,500 that will be applied to your purchase if you purchase within three years. That three-year window is your option term. You will then pay the seller a monthly lease payment of $800 for three years. The most common exit strategy are B to C transaction. You are still B in this scenario,

and you would turn around and immediately find a new tenant buyer, C, who will then option the price property from you at, say, $110,000. Because tenant buyers will pay the future price of the property and will typically be happy to pay a premium if they don't have to deal with a bank. And they pay you a non-refundable option fee of $5,000 and then pay you a monthly lease payment of $1,100. Your three profit opportunities here are the option price where you will make a $30,000 profit should the tenant buyer purchase the property, the option fee of $2,500 right up front, and then a monthly positive cash flow of $300. This is called a sandwich lease, and it is what's most common.

An alternative exit strategy is to lease option the property while you fix it up in preparation to flip. So compared to the cost of borrowing money to purchase the property before you do the fixing, a lease option can be considerably cheaper when doing a short-term lease option. Another popular exit from a lease option, particularly if you don't want to deal with tenants in a sandwich lease or the rehab of the fix and flip, you could just wholesale the option. Using our previous example, you'd sell your option to another investor who will assume the responsibilities of the tenants and or a rehab, or whatever they're going to do with it.

Something also to consider if owning your home is a part of your American dream, maybe you come across just the right property that you want to keep for yourself to live in. A lease option is a great approach to getting an amazing deal on the purchase of your home. Not common, but not uncommon either. Back to the investment side. The terms of your lease option agreement will be important to both maximizing your upside and minimizing your risk. If those are important to you, you're going to want to consider these 10 pro tips. One, go low on price, long on term. Negotiate the lowest option price possible for the lowest option fee possible with the longest possible option term. As is the case in when buying property all cash at a deep discount, the same is true here. The foundation of every

real deal lies within the seller's motivation to sell. The more motivated the seller is, likely the better the terms you'll be able to negotiate. Most typically, your motivated seller is going to be a frustrated landlord. Two, cover the seller's mortgage. Your lease payment should be as low as possible, as low as you could possibly negotiate it, but it should at least equal the seller's mortgage payment. You don't want to make lease payments to the seller that don't give them enough to to make their mortgage payment on the property and keep it in good standing. Three, match the terms. When negotiating the option term and the lease term, you want to make sure that they equally other. As in our example, if you have a three-year lease, you want to get a three-year option. You don't

want the seller changing the terms of your lease midway through your option. And you don't want to be obligated to pay rent on a property you no longer have the right to buy. Four, get the right to sublet. Your right to earn monthly income from the property comes from your right to sublet. So make sure that you have that in your agreement. This gives you the right to execute the sandwich lease exit strategy. If you're lease optioning a multi-unit building, you'll hear the right to sublet referred to as a master lease. Five, break up the option fee. If you don't have the amount of money that the seller wants for the option fee, or even if you do, you can add more money to the monthly lease payment to pay for the option fee of which requires less money from you

up front and reduces your risk. You may also want to carve out a portion of the monthly payments you're making to the seller anyway to be credited to your purchase price. To reduce your balance, do at the time should you decide to purchase. Six, get a buyout. You want the buyout clause in your lease in case you decide you don't want to exercise your option. If you decide you don't want the property and you still have a year left on the lease, this could cause an expensive problem for you. Get the buyout.

Seven, clarify insurance. This must be addressed and clearly spelled out in the lease option agreement. I mean, if the house floats away in a flood or burns down or collapses in an earthquake, you want to be covered. Especially if you have invested money into the property. Eight, get the right to renew. You'll want to insert a lease renewal and extension clause in both your lease and option agreements for when things are working out really nicely and you may want to keep it going the way

it is before having to execute your option. Or maybe your tenant buyer needs some additional time to execute their purchase. Nine, ask for maintenance participation. Usually, the responsibility for maintenance goes with the lessee. Nonetheless, you should always try to negotiate share. costs and responsibility. Responsibility for maintenance should be clearly spelled out in the lease option agreement. If the water heater goes out in the first few months, you will want the seller to participate in the costs. Ideally, the seller and the investor would share equally in maintenance

costs. Most sellers, however, agree to a lease option because they believe they will have no more responsibility for the property. But ask for the clause anyway. It's not a deal breaker if you don't get it, though. 10. Play WIIFM for the seller. It's everyone's favorite radio station, W-I-I-F-M, what's in it for me. During your negotiations, always focus on what's in it for the seller, like no more tenant issues. The mortgage payment's going to be covered. And a key benefit to the seller is their ability to avoid capital gains taxes in the

short term. Giving the seller multiple options can be really helpful to you as well in reaching an agreement. If you're a my way or the highway type person, you limit your potential by giving the seller one of two choices to either take your offer or go look for another investor buyer. But if you give the seller choices, they are more likely to choose one with you. You may offer the lease option for a certain amount under certain terms, or you may pay less, much less in an all cash offer. Hey, if you find yourself at any time wanting to go deeper and or faster or get some one-on-one help,

go to R-EI-Ase.com, answer a few questions, and then pick a time for us to hop on the phone and we'll brainstorm some ideas for the next steps. Right now, I'm going to show you how to use an agreement for deed in your creative real estate. investing. An agreement for deed is a form of creative financing, specifically a form of seller financing. Instead of getting a loan from a bank and making payments to the bank, the seller steps in place of the bank gives you the loan to buy their property and then you make payments to the seller. Other than that, they're essentially the same with one major difference. When buying a property with a traditional mortgage. You get title to the property and then make payments. With an agreement for deed,

you make payments and then get title. It's like buying a car. The dealer gives you the car to drive, you make the payments, and when you've made your last payment, you get title to the car. This works just like that. You'll hear agreement for deed also referred to as a land contract, contract for deed, bond for deed, and installment land contract. It all depends on what state you're buying in, but basically, they all do the same thing. Now, although you're not initially on title when you make your purchase with an agreement for deed, there are valuable rights passed on to you as the buyer.

These rights are called equitable rights and equitable title, which give you the rights to use the property and prevents the seller from entering a similar or the same agreement with someone else. The agreement is a legal and forcible document, but for a couple extra levels of security for yourself, you're going to want to, one, record the contract, or a memorandum of contract with the city. This cloud's title and makes it almost impossible

for the seller to further encumber the property with any additional financing that may or may not interfere with your agreement. And two, escrow the warranty deed. Have the warranty deed held in escrow with instructions for when you make the final payment to give it to you? In the event, the seller disappears. It happens. Or they have a change of heart.

Or they experience some legal or financial trouble. that'll interfere with you getting title. You don't want to have to wait on or chase the seller down after you've done your part. Now, there are several benefits to you as the buyer in purchasing a property via an agreement for deed. First, you get control of a property. As we discussed in the last lesson, the name of the get wealthy and real estate game is control. Second, you assume less risk than paying all cash or taking out a recourse loan. Third, no bank qualifying.

Fourth, more flexibility dealing directly with a price. private seller. And then fifth, preserves your conventional buying power in the future since you're not on title. Now, benefits to the seller are, first, it's a lower risk structure considering they remain on title. This makes it much easier and less expensive for them to get their property back should you default on the payments. Second, they can get a higher price for their property and earn interest on that sale. Third, they reduce their closing costs. Fourth, they have no more maintenance responsibilities on the property. And fifth, if they have a mortgage on their property, their payments are now covered. They get mortgage relief. One of the key factors in an agreement for

deed is the interest rate. This factor determines the amount of the monthly payment and the amount of equity that builds up. If you have a low interest rate, the amount of your payment going toward the principal is increased, thereby building your equity. With that said, the key components you'll want to negotiate are the purchase price, as low as possible, the down payment, as low as possible, the monthly payments as low as possible, the interest rate as low as possible, and the maturity date. This is when the principal amount per the agreement becomes due, and you want to negotiate that as far out as possible. Here's what makes creative financing in this manner so much more fun. 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 have two options. Take it or leave it. That's what you call uncreative financing. Every loan has dozens of terms at play, and you can be sure that a conventional bank has stacked every single one of them in their favor. But when you're dealing with an individual negotiating creative financing, the terms are much more flexible and can be a lot more beneficial to you. You probably won't get everything you ask for in every transaction, but you can get a whole lot more than you'll ever get negotiating with a loan representative. In the more, mortgage department of a bank, within a division owned by a corporation, that's a member of a conglomerate that answers to Wall Street. Dealing directly with a private seller is just better for both you

and the seller, really. If you like the sound of that, let me know by pounding the light light. For a free list of 21 creative terms you can negotiate for in your deals, download the same creative financing cheat sheets I give to my private RIAEACE clients at Epic Breakthrough.com. Some of the other things you'll want to negotiate for are, one, the ability to alter the property. I mean, if you see an opportunity in improving or adding to or rehabbing the property, you want to be able to do that. Two, the ability to lease, protect your right to lease the property. Most standard agreement for deed contracts seem to maintain the underlying assumption that

the contract buyer will be residing at the property. Thus, they tend to prohibit leasing and subletting. Three, installment payments. It's not unreasonable to defer payments, especially if the property is vacant or a fixer-upper. You may ask the seller to defer the payments for a number of months, and that request can be justified by telling the seller your money will be spent fixing, maintaining, and or marketing the property so that you can afford to make the payments to them. Like any other investment purchase, what you get will be in direct proportion to what you ask for

and the seller's motivation. Having said, all that, when you reach in a business, agreement with the seller, it's best to have your own attorney draft your documents or at least review them. There are too many what-ifs in a transaction like this to trust forms that are general in nature. As they touched on in the last lesson, and earlier here even, the name of the real estate game is control. And there are many ways to get control of property. And we're going through a bunch of them one by one. But all levels of control are not created equal. There is a ranking of control, if you will. Each level of control that you step up essentially gives you more flexibility and

options and how you can profit from a property. The first level is an assignable cash deal, like a signed assignable purchase agreement with a seller or an assignable option to purchase. The second level would be your lease option and the third level would be the agreement for deed we just covered. Meet me in the next lesson and I'll reveal the fourth and final level of control, which gives you the most options for profit. Right now, I'm going to show you how to use the seller carryback mortgage in your creative real estate investing. A seller carryback mortgage is owner-provided financing. With the piece of real estate being a large purchase for most people, it's typical that

financing is used by homeowners and investors alike to facilitate the purchase. Customarily, real estate financing is obtained from a bank. A seller carryback mortgage is an alternative where the seller steps in and plays the bank's role and provides financing to the buyer in the form of credit. Like a bank, the seller will accept an upfront down payment and periodic payments thereafter until paid off. If you want to keep it super simple, a seller carryback mortgage is really nothing more than an IOU from the buyer to the seller. And you'll hear a seller carryback mortgage also referred to as seller financing. And you'll see it advertised as either and frequently as owner will carry or OWC.

When you see those terms advertised might be something you want to look deeper into. Might even be terms that you want to search for on real estate websites and online classified ad platforms. There are two components or financial security instruments to a seller carryback mortgage. The first instrument is the promissory note where the buyer formally promises to pay. This note defines the debt and payment terms like the amount of the debt, the interest rate, the amount of the payments, the number of payments, and the payment due date or the maturity date. The second financial instrument is the mortgage. In many states, a deed of trust, deed in trust, or trust deed will be the security instrument used in place of a mortgage.

All accomplish the same thing, though. They tie the promissory note or notes to a piece of property, as well as define what the owner can do with the property so long as the debt is in place. The mortgagee also defines what the mortgagee will do if the mortgaguer fails to pay as defined in the promissory note. The mortgagee being the seller, the mortgagee being the buyer. People get that one mixed up all the time. But now you won't. Using a seller carryback mortgage in your creative real estate investing is the same strategy that we used in the last lesson with an agreement for deed. The primary difference is that the buyer gets title and the deed at closing.

And as long as they continue to make payments per the mortgage, the property officially belongs to the buyer, as opposed to the agreement for deed, where the property at this point still officially belongs to the seller. And like the agreement for deed, the key components that you'll want to negotiate, are the purchase price as low as possible, the down payment as low as possible, the monthly payments as low as possible, the interest rate as low as possible, and the maturity date, as far out as possible. Every component of a seller carryback mortgage is 100% negotiable and is only limited by your own creativity. Stuff a bank wouldn't even fathom entertaining, like a deferred down payment or a tiered interest rate or a moratorium on payments. So,

before you begin you're negotiating with a seller, make a list of the ideal terms that you'd like to see in your mortgage. To get the same list or cheat sheets, if you will, of 21 creative financing terms that I give to my private RIA's clients, 21 creative financing terms that you can negotiate, go to epic breakthrough.com, where you can download all of them, plus 10 deal structure templates for free. So you want to enter your negotiations with the seller, with the ideal end in mind for yourself. You probably won't get everything that you ask for in every transaction, but you can get a whole lot more than you'll ever get negotiating with the bank. And when you consider the foundation of every real deal lies within the seller's motivation to sell, you'll likely surprise yourself more times than not with what you do actually

get. So ask. If you don't ask, you don't get. Once you've reached an agreement with the seller for their carryback mortgage, note it in the term section of your standard regular purchase agreement. There's no special purchase agreement for a seller carryback mortgage. Just use the one that you've always been using and proceed like you would with any other normal real estate transaction. The seller carryback details that you write in the purchase agreement will be enough for your closing agent to draft the promissory note and mortgage documents for you. When your name appears on title to real estate like it will after you've executed a seller carryback mortgage, you have achieved the fourth level of control that I was talking about in the last lesson. Agreement for Deed would make up the third level, lease option the second, and the assignable purchase agreement or option with the seller would make up the first, an assignable cash sale.

The name of the game is control, and creative financing is the tactic. As a rule of thumb, we want to work your way from level four to level one when you are buying and level one to level four when you are selling. By doing this, you are always maintaining the highest level of control, as Nelson Rockefeller famously wants to be able to. said, the secret to success is to own nothing, but control everything. The more control you have available to you, the more options of profit you have available. A lot more on that to come. Right now, I'm going to show you how to use the subject to idea in your creative real estate investing. And you'll probably have the opportunity to entertain this idea and up to two thirds of your creative deals. And it's so damn sexy. Because you get all of the upside and none of the downside.

A subject to purchase is when you buy a property and take official title, but you leave the loan in the seller's name. Sounds like a smoking deal, right? Well, it is. So how do you get more of these? That's what I was thinking the first time I heard about this. The subject two of this type of purchase is short for subject to the existing financing, which means when you make this purchase, the financing that was there

before you ever entered the picture is going to stay in place. I mean, the seller already jumped through all of the bank hoops and secured the financing for you. Boom. Who needs money to buy real estate when the real estate gets passed along to you with the money already in place? Too good to be true? Maybe. But not really. You just need to find the right situations.

And I'm going to show you how to find them in just a minute. A few things to know where people are mistaken. One, this is not a loan assumption. That's something else entirely. Two, just because a seller is ready, willing, and able to give you their property subject to their financing doesn't mean you should take it. It still has to be a deal for you. There must be equity and or monthly cash flow to be had. Otherwise, you are taking over a property from a distressed seller to soon only find that you are now being the seller in distress. And three, it is not

illegal to buy a property subject to. It is not illegal for someone to sell. what they own. The legal confusion occurs in that the majority of bank financing has something in the loan docs called the due on sale or due on transfer clause. This allows the lender to call the note due in the event that the borrower transfers title to the property. They almost never do, though. Just because the lender has the right to call the loan due, it does not mean that the lender wants to call the loan due or even or ever will. It's really pretty rare. You, the buyer, however, should, enter every subject to transaction with the full understanding that the lender may call the note due in the near or far future. You should always have a plan B to either refinance or sell the

property should the lender come a knocking. You could let the lender in on what you're doing, but if you do, you run a really good chance of just blowing your whole deal to smithereens. I prefer to keep the lender out of the loop. But should they contact me and ask me about it, I go into full transparency mode. It sounds something like this. banker, the previous owners couldn't afford the upkeep of the property or make the payments anymore. So I stepped in to help. I'm fixing the property up and making the payments for them. If you call the loan due, then I'm going to immediately stop all repairs and I'll stop all payments. And then you'll have to go through the foreclosure process. This approach has yet to fail me.

There are ways to hide the transfer from the evil corporate banks, but that's beyond the scope of this. In fact, I'll cover that all by itself in the next lesson. With all that said, I'm just a guy on YouTube. Seek the advice of a local and reputable real estate attorney with this or any other outside-the-box strategy as local laws may have an impact on how you do creative investing. There are a lot of reasons that you'd want to add subject to your investor toolbox. Reason number one, get control of another property. And that's the name of the game, remember? Reason number two, no bank qualifying.

Reason number three, small or zero down payments are required. Reason four, typically you get a better interest rate from the resident owner financing than you could get with an investor loan. Reason five, loan seasoning. The longer the loan has been in place, the better. And I'll explain why when I show you how the process works. And then reason number six, not on your credit report. There's no recourse nor impact on your own conventional buying in the future. So why would a seller want to do this?

Well, reason number one, they've got bigger fish to fry than going for a traditional full price sale of their home. home. Reason two, a cash sale just won't work in their situation. There's not enough equity in the property. Reason number three, they don't want to do the repairs to cause a cash sale to work. Reason number four, they can't catch up on their payments, but do want to avoid foreclosure. Reason number five, they need peace of mind. Most people that will consider something like this aren't typically on a winning streak. See reason number one. And as promised, I'll show you how to find property owners like this in just a minute. Now, even with all of those good reasons for the seller to do this type of deal with you, you will tend to still get some pushback. And the most common

objection that you're going to get is the seller asking, what if you don't make the payments? Why should I trust you? So you should be prepared with the response. Here's mine. Mr. Seller, this is my business and it's how I make money to feed my family. I'm going to put some money into this property and I'm going to take on all of the expenses of this property. I can't make any money by not making your payments. And in the event that I can't make the payments, you will have a fixed-up property to take back and be in a better situation than you are right now.

Works for me. Another note for when you're talking to sellers, avoid using real estate investor jargon light subject to. Keep it really simple for them and just tell them that you're going to take over the property maintenance and make their payments for them. Now, here's how the process works. Step one, put it under contract.

Use a normal purchase agreement, insert the price, and in the terms just write subject to the existing loan balance. It is imperative, though, that you inform the seller that there is no guarantee that the lender will not call the loan due. It's rare, but it's possible. It is important that you have the seller also signed documentation that they have been informed as such. And that brings us to step two.

Provide the seller with disclosures, like a distressed sale disclosure and a due-on-sale disclosure. Those two are essential. You will also want to get an authorization to release information. The smart investor, the Epic investor, will always conduct their due diligence on the property itself, on the market conditions, and in the instance of a subject to transaction, due diligence on the existing financing as well. The authorization to release information document will give you the ability to talk directly to the bank about the seller's loan,

and that leads us to step three. Validate the condition of the loan. Things to look for that could easily and quickly cause complications for you are adjustable interest rates, upcoming balloon payments, and the number of payments that the seller may be behind. None of these are deal breakers, but you certainly don't want to be blindsided by them as the new owner either. On the positive side, what I call a deal maker is the length that the loan has been in place. The longer, the better, because at the front end of a loan, most of the money paid to the bank goes to interest. And on the back end of the loan, the more of the payment that is applied to the principal. If you get to step in on the backside of that loan, more of your payments are going to

go to the principal, thereby growing your equity faster. Step four, calculate the amount of equity. That's the difference between what is owed on the loan and what the property is worth. Step five, calculate the expenses that you're going to be taking on, like the taxes, the insurance, the rehab costs, maintenance, and management. Step six, calculate the cash that you're going to need to close. Then step seven, determine your exit strategy. In most cases, it's going to become a rental for you or a lease option, but maybe it's a rehab job that you can fix and flip.

Step 8. Use an attorney to process the transaction and close it for you. Step 9. Pro tip. Set up a third-party servicing company to manage payments to the bank. Not required, but it's nice knowing the accounting. is being done properly without your direct involvement. At this point, the next big question is almost always, sounds great. But how do you find subject two deals?

Well, it's not that different in how you'd find any other deal. I mean, simply by showing sellers options, other than a low ball all-cash offer that everyone else is presenting to them, you'll get takers that way. But if you want to narrow your efforts towards subject two deals specifically, start marketing to one, people in pre-foreclosure. property owners behind on their payments that either can't catch up or just don't want to at a certain point, but still want to avoid a full-blown foreclosure on their credit report. And that's like a nuclear bomb blowing up their ability to ever buy a property again.

There's motivation there. Direct mail and bandit signs with messaging like behind on payments or free help with foreclosure or tired of making payments. All of those messages work well in attracting people headed towards a foreclosure. Two, property owners with low equity. There's less competition here. Most investors don't market to these people because they don't know how to make money on properties with low equity. But now that you're armed with subject to knowledge, you can. Three, the Multiple Listing Service.

Look for properties that are well beyond the normal average days on market for your area. And look for expired listings. Likely, these sellers will be tired of dealing with realtors and will be much more open to creative offers than they would have been when they first decided to sell. Then four, out-of-state absentee owners of business. vacant houses are likely going to be tired of making payments on these properties. There's plenty of motivation in that. Now you know what a subject to is, how the process works, and how to find subject to sellers. And right now, I'm going to veer from the curriculum a bit to show you how the land trust can be incorporated into your creative real estate investing to protect your deals

and provide some additional flexibility and options in how you profit from your deals, especially as how it pertains to subject to transaction. A land trust is a legal entity comprised of a trustee and a beneficiary that take ownership of or authority over a piece of property at the command of the property owner. For our purpose to creatively invest in real estate, a land trust allows the property owner to anonymously maintain all rights over a property and direct the actions of the land trust.

The land trust is on title. You, the beneficiary, receives the rights to the property, of which includes, but is not limited to, the right to occupy, the right to rent, to develop, or to sell the property. The trustee will follow the terms of the trust agreement and act in the best interest of the beneficiary. A major benefit of a land trust is the ease of transferring ownership of the property to your heirs when you pass. Without a trust, an individual's will has to be assessed through the costly and time-consuming legal process. of probate. Land trusts, unlike people, don't die. So the succession plan set up in the trust remains in place without needing probate. It's why land trusts are a common instrument used in estate planning. And because they are so commonly used for that, a transfer to a land trust

almost never throws up a red flag to the bank for your subject to transactions. The main benefit, however, of the land trust is privacy. The trustee's name is the only name. that appears in the public records. As long as your name doesn't appear as the trustee, your ownership of the property remains hidden. And as a real estate investor, that can be very important, especially when your wealth starts to grow.

After the title of a property is transferred into a trust, the names of the owners cannot be disclosed without a court order. This helps to avoid litigation from the bad guys who may find or look for a reason to try and get some of your hard-earned wealth. Lawsuits, they happen. A land trust doesn't directly provide asset protection. But if the bad guys can't find your assets, it indirectly does. They can't take what they can't find.

Now, the primary reason a creative real estate investor would use a land trust is to prevent a lender from invoking the due-on-sale clause on their subject-to transaction. As we discussed in the last lesson on subject two's, most, if not all mortgages these days, include a due-on-sale clause. The clause allows banks to call a loan due when the title gets transferred. Now, just because they can doesn't mean that they will. In fact, they rarely do. But just in case they do, there is a legal workaround regarding this clause that can

provide you an extra level of protection from the due-on-sale clause. It was in 1982, the United States Congress enacted the Garnes-Germain Act. And under this act, mortgage lenders cannot enforce the due-on-sale clause on a property that is a part of a land trust, as long as the borrower is also the beneficiary. When a property is transferred into a land trust, only the deed reflecting the name of the trust and the trustee is recorded. The land trust agreement, where the beneficiary is documented, is not recorded. So the beneficial interest can be bought, sold, or traded without anyone ever knowing,

including the lender. Of course, laws are not always black and white. The subtle and debatable nuances of real estate investors using land trust are much better understood by bar licensed attorneys who have years of experience using land trust. And I recommend you consult one to protect your interests and satisfy your questions and concerns. You don't need a lawyer to transfer title to a land trust, but I use an attorney for all of my land trust subject to transactions. And you'll understand why in just a minute. Here's how it works. As with your typical real estate transactions, purchasing a property with a land trust,

requires a closing to prepare, sign, and file all necessary legal documents. When you make the purchase agreement, rather than putting your name on the contract, use the street number and street name of your land trust. It would look something like this. Buyer, one, two, three, Main Street land trust, Jay Jones, trustee. You can create the land trust at any time prior to closing on the property. My closing attorney takes care of that for me, which is who I also name as the initial trustee. This way, he can sign to close the transaction and my name never appears on the dotted line.

He'll write in the seller as the beneficiary and the seller will then assign the beneficial interest to my LLC. And then after we close, my attorney will resign as the trustee where I step in. Now, I am the trustee and my LLC is the beneficiary. Note that the change in the trustee and the assignment of beneficial interest are not required to be recorded. If someone were to look the property up, they would not find my name. anywhere, but rather the name of the original trustee. Now, I fully own and control the property

without the bank or anyone, for that matter, knowing. This is all information that you should know, but don't be too concerned about how all of this works. Your closing attorney will handle all of this for you and see to it that you are compliant for your market. Right now, though, I'm going to show you a rap and how it works. Wrap is short for wraparound mortgage. Some states refer to it as the all-inclusive trust deed. Doesn't sound terribly exciting, I know. But with the amount of no money down income property you can buy using wraps, it's pretty slick. Your financial freedom, not to mention your overall wealth, can grow 10 times faster.

I did say 10 times faster. Then all of those people going to work every day, making sacrifices, saving their money in things like a 401k, and having to wait 30 to 40 years before they can even begin to enjoy it. Can you believe that's the plan we've all been told to follow? Life is short. You've got options, much faster options, and raps can be an instrumental part of picking up the pace and retiring early. The term rap or wraparound mortgage, those are used interchangeably and pretty loosely at that. Most of the time when someone mentions a rap, they're talking about an all-inclusive mortgage or all-inclusive trust deed, an AITD.

It depends on which state you live in as to which one you'd use, but they're both pretty much the same thing. A rap, it's a type of junior loan, which wraps or in. includes the current note due on the property. Typically, we begin with a subject to deal, what we discussed in the last lesson, and then add to it a seller carryback mortgage, what we discussed two lessons ago. It's called a wrap because we're taking the newly created seller carryback mortgage and wrapping it around the seller's existing mortgage to form one single mortgage, or an all-inclusive mortgage.

It looks like this. We'll take this house, valued at $3,000. $300,000 and the motivated seller has accepted your offer of $250,000. The seller has an underlying mortgage on the property of $175,000 at 6% interest. And you don't have the money to pay that off. So, you suggest to the seller that you'll take over the payments of that mortgage and then pay the difference in the form of a second seller financed mortgage. The seller agrees and carries back that second mortgage in the amount of $75,000 at 8% interest. The existing mortgage payment is $1,049, and the seller carryback mortgage payment is $550. You'll wrap that second mortgage around the first to form an all-inclusive

mortgage or an all-inclusive trust deed. Like I said, depending on what state you live in. You then make a combined payment of the two, a $1599, $1,049 goes to the existing mortgage, and $550 goes to the seller. Now, if a wrap-around mortgage is even just a little bit more clear to you, let me know by blowing up the like button. But wait, there's more to wraps. We've only cracked the surface. The wrap is key in getting control of more property. The name of the game, control.

Creative financing like this, this is the tactic. And by wrapping a new mortgage around an existing mortgage with a lower interest rate, you can often save money too. Due to the blended nature of the new interest rate created by the combination of the two mortgages. You have a 6% interest rate on the 5% rate. first loan and an 8% interest rate on the second. And at first glance, you might think you're getting a combined interest rate of 7%. But that's not the case. Due to the amount of each individual loan, the actual blended rate will be closer to the lower rate than the higher one because of the

larger amount in the original loan. Another benefit of using RAPS is that they offer more flexibility and allow you to negotiate many more terms than you could than by just taking over the property subject to and paying boring old cash for the difference. Why pay with your cash when you can pay with terms? These negotiable terms include but aren't limited to the payment amount, interest rate, maturity date, equity sharing, moratorium, deferments. I mean, every single ingredient in the whole enchilada is 100% negotiable. You're only limited by your own creativity. If you want to know how to negotiate a real estate price and terms, I think you're really going to enjoy this.

Now, I included terms to that because it's the two of those. price and terms that make up comprehensive real estate negotiation strategies. And it's the first of the many house buying negotiating tactics I can let you in on. The concept of price and terms. As an epic real estate investor, that's how you want to buy a house by either your price in the seller's terms or the seller's price in your terms. As long as you can control one, you can always make a deal for yourself. Boom.

And I'm going to show you how to do that right now. So get your pen and your paper ready because this one, this one's packed with stuff that you don't want to forget. Let's go. Hi, my name is Matt Terrio. I am CEO of Ethnic real estate where we show people how to invest in real estate with an emphasis on retiring early. And what could potentially accelerate one's retirement or overall financial freedom faster than anything is buying at the right price. You might have heard the expression before. You make your money when you buy real estate.

Well, it's true. It's where a big jump. start to your wealth can be created by negotiating the right price up front. So I've got five key points for you that make up a comprehensive real estate negotiation strategy that will turn you into an expert real estate negotiator. One, expectations. Two, intent. Three, strategy.

Four, process. And five, this is a bonus. My personal favorite ninja buying house tactics. Let's start with expectations. If this right here represents 100% of all real. real estate sales on a daily basis. Up here, we have 95% of all sales. These are people that want to sell. Then down here, you have 5% of people that need to sell. I don't care how good of a negotiator you are. It's virtually impossible to say the right thing to the wrong person, meaning there's not enough

motivation up here for these people to sell to you at a discount. Conversely, it's almost equally impossible to say the wrong thing to the right person. Meaning, if, if you're a lot of If someone's motivated enough, it won't matter how new of a negotiator or how bad of a negotiator you are. You can still buy these properties down here at a discount. This is what we call low-hanging fruit. So you want to practice your negotiating skills. The same way you'd practice any other skill with massive repetition. You want to practice your negotiating skills of price and terms so you can buy the deals in here.

And the better you get, the more you'll be able to reach in and grab the deals from up here. And the better you get, the deeper your discounts will get down here. The big takeaway I want you to get here is, as you start talking to property owners, most of them will not sell to you at a discount. The foundation of every deal lies within the seller's motivation to sell. Regardless of how good of a negotiator you are, motivation on the seller's part is still a very necessary component to buying property at a discount. If your expectations are set any other way, it's going to be a real struggle for you.

Bottom line, don't waste your time with unmotivated sellers. There are plenty of motivated ones waiting for you. Next, intent. Your mindset must be that of a problem-solving reluctant buyer, meaning, in most cases, property owners that will call you are those that have some sort of problem. In other words, motivation. The type of problem that a traditional sale through a realtor won't solve.

You are there to solve that problem for them because sellers will exchange equity for peace of mind. Additionally, you are reluctant because you can't solve all problems and buy every property, nor should you want to. You know, just because someone is willing to sell you their property at a discount doesn't mean you should buy it. From beginning to end, your conversation with sellers should be that of an interview. To see if they and their property qualifies for your time, your money, and your effort to complete

the purchase. Your job is not to prove to the seller that they should sell to you, but rather than, make them prove that you should buy from them. During the initial interview, your intent is to take charge, build rapport, uncover motivation, and set up a time to see the property. When you get to the property, your intent is then to continue the interview, walk the property, confirm what you know about the property, flush out more of what the seller knows about the property, negotiate a deal, and present your offer.

That right there is the ultimate intent. Get to the point where you make an offer. No offer, no deal. Next. Strategy. And overall, it comes in two parts. Part one, team up with the seller to solve the seller's problem. Your opponent is the market, not the seller. The market determines the value, not you or the seller.

So blame the market for everything bad. You are the good cop. The market is the bad cop. For example, if an unreasonable seller at first wants $125,000 for their $100,000 house, your attitude would be, well, let's go for it. If the market will allow it, we'll make it happen. If the market won't play ball, I've got some other options for you. Be the good cop with options.

That's the first part of the negotiation strategy. The second part is price and terms. In that same scenario, you could help the seller get their price, even if it is unreasonable of $125,000 for their $100,000 house, if you have a say in the terms. And the two work together like this. When the price goes up, the terms get extended, and vice versa. If the seller needs fast cash, then the price comes down.

As long as you can control the price or terms, you can always make a deal for yourself. So get control of one or the other. If you get control of both, hey, that's even better. But you only need control of one. That's the strategy. Now, here's the process. It breaks down into three phases. Phase one, the interview.

Phase two, the meeting. And phase three, the follow up. Phase one. I call the initial conversation with the seller, the interview to see if this is even a property you want to pursue. It begins by setting the stage and taking control. And it might sound something like this. Thanks for calling. You know, most people that call me want to know how much they can get for their property and how this all works. Do you have those same types of questions? Perfect. I can let you in on all of that.

Do you have a few minutes to answer some questions about the property so that I can give you the best answers to your questions? Great. And then after, you can tell me how you'd like to proceed. Is that fair? The second part of the interview is to ask these questions, qualifying questions. And you want to qualify not only the property, but the seller for their motivation. Because if there's no motivation, there's likely to be no deal. So this is key. Questions you want to ask are things like, what's the general condition of the house?

Is anyone living in it right now? Is there anything special you think I should know about the property? Sounds like a house that might work for me. Why would you want to sell it? How long have you been thinking about selling it? Why don't you just keep it as a rental? Have you considered calling a realtor? Do you have an idea as to what houses like yours are selling for?

What's the lowest you would take? Is that at all negotiable? And then repeat back all answers to the seller and ask, did I miss anything? Be quiet and then let them talk. So when they're done telling you everything about the house, you'll say something like, well, if the market will validate your price,

would this be a later or a sooner thing? Typically, not always, but typically, if they say sooner at this point, I'll move into the third part of the interview, the transition to the meeting. The transition would sound something like this. Sounds good, Mr. Seller, but I'm not sure if I'll be able to help you or not. The market conditions will have more to say on that. But here's what I can promise. When I see the inside of the property, if at any point I feel that it won't be a good fit, I'll let you know right away. And all I ask in return is that if at any point you don't feel this will be a good fit, you agree to let me know.

know right away as well. Is that fair? Perfect. I can come over later today or first thing in the morning, which will work best for you. And set the appointment for phase two, the meeting. Part one of the meeting, research. Do your research on the property prior. Know the neighborhood and specifically what has sold, what it has sold for, and when it sold, and what has not sold. This will give you a ballpark of the property's value. And you'll want to establish your own limits before beginning the negotiation. Begin with the end in mind. Part two, confirm. At the meeting, your mission is to confirm what the seller told you over the phone and what you found in your research to be true. And whatever you discover at the meeting, you can adjust your value accordingly. Part three,

make the offer. And there are countless ways to do this. And this is how I do it. I position the offer congruently with me being a problem-solving, good cop, reluctant buyer. And it might sound something like this. Mr. Seller, based on the current market conditions and everything that you shared with me about the property. And after carving out a small profit for myself, what you're saying is, we're right around $60,000. Is that correct? If they agree, get the contract signed. If they disagree, well, Mr. Seller, based on the market, the condition of the property and a small profit for me, what's the number you had in mind? And if their answer doesn't work for you, you'd move into, well, Mr. Seller, it looks like the market might not allow us to both get what we

want. And that's okay. It happens. I can't buy them all. You do have a few options, though. Would you like to hear about them? Okay, so first, I think the price you want for the property isn't out of the realm of possibility. I think you can definitely get that number if you're willing to do some repairs and get the house ready for a retail buyer. This is the retail option. You'll have to hire a real estate agent to market the property on the multiple listing service. And of course, there are commissions involved. You'll have to make the house available for showings and open houses. The agent will go ahead and they'll point out the repairs that need to be made, and I'm sure they'll point out where you can get the best bank for your buck. And that's going to take some time, but probably worth it. And then right now for the

area, the average days on market is about 30 days, and the average mortgage completion is about 45 days, as long as the bank approves the final loan and the buyer follows through. So if this is what you want to do, I know some good contractors I could refer to you. I know a great agent that will get you your price, and I could make those introductions if you'd like. Remember, you're the good cop. And this is what a good cop would do. They would help. The second option is the investor option. If you just want to move on without any effort, time, or uncertainty on your part, and get cash for the property as is, and then you could leave the hiring and the fixing and the managing all up to me, I'll close fast, I'll pay all the closing costs, and there'll be no showings, and there'll be no contingencies

because I'll be paying cash. The price, though, will look quite a bit different. It won't be a retail price, but much closer to the price originally suggested. So which one would you like to do? the retail option or the investor option. Or would you like to hear the third option? The third option, for lack of a better word, is called the hybrid option. I'll still use my time and energy for the hiring, the fixing, and the managing. You won't have to wait. I can still close fast.

I can still pay all the closing costs and can even pay a higher price if you're willing to take some money now and the rest later. So how much do you need right now? And then be quiet. Silence is golden here. This is the question that will open up the deal to your creative financing offer. By the way, if you'd like some additional help in putting your creative offers together, you can grab the same cheat sheets that I give to my private RIAease clients at epicbreakthrough.com.

For free, my gift to you. Now, if they push back and resist your creative offer, then okay. So, Mr. Seller, which one do you want to do? The retail option, the investor option, or the hybrid option. Again, be quiet. and let them answer. When you give three options like this, a really funny thing happens.

Sellers will tend to forget that they have a fourth option where they could just say no. And most of the time, you're going to get, I want to think about it. And that would take us to phase three, the follow-up,

where the vast majority of the deals are closed. There's a reason they say the fortune is in the follow-up, because that's where it is. Now, at this point, after confirming what it is that they do want to think about, I would typically dismiss myself

with something like, Mr. Seller, I understand why you'd want to think about it. It's a big decision. So give me a call as soon as you've made up your mind as I've got other appointments and I want to be able to honor what we discussed here today. But I can't make any promises if I buy one of these other properties. And then you're going to follow up like crazy with email, direct mail, text messages, phone calls until they tell you to stop. Now, as promised, the bonus, a few of my favorite ninja negotiating tactics. Number one, don't concede without a concession. If you're going to give something up in the negotiation, ask for something in return. Two, know their name and use it often. People like the sound of their name and they like the people that use it. Number three, don't make an

offer until you know the seller's motivation for selling because if there's no motivation, there's no deal. Number four, it's an interview. The entire negotiation is an interview. And I I want you to listen to the answers, as if there's going to be a test afterward. Amateurs don't listen. Sellers will open up to the professionals that do. And five, automate your marketing so that your leads are always flowing. It's easier to walk away from a bad negotiation when you know you have other opportunities waiting for you. Now, meet me in the next lesson, and I'll show you how to find these types of creative deals. So you can put your new negotiation skills to work.

And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would. And when their name comes to mind, please share it with them. And ask them to click the subscribe button when they get here and I'll take great care of them. God loves you and so do I. Health, peace, blessings and success to you. I'm Matt Terrio.

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