Epic Real Estate Investing - How to Find MORE Real Estate Deals in 2023 (3 Option LOI) | 1254

Episode Date: February 9, 2023

Having a tough time finding seller-financed, subject-to, or wholesale deals? Perhaps it's because you're taking the wrong approach by LOOKING for deals when you should rather be focused on something else. The truth is, the best deals are not found, but they are created! A 3 Option LOI, short for three option Letter of Intent, can be the investing tool that opens up a blue ocean of creative real estate deals for you. It’s like making 3 different offers simultaneously to a seller… and the seller gets to choose which one they like best. You've 3 chances to put a deal together with every seller you meet. Matt wants you to have a copy, so he uploaded it at http://3OptionLOI.com. Go there and grab a copy for yourself because it BELONGS in your creative financing toolbox. Listen to this episode, and find out WHAT it is, WHEN to use it, and WHY it works. Are you ready? Let’s go! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. I want a deal. I want the real deal. Are you ready? Let's go. Welcome to the epic real estate investing show, where we talk about the housing market, creative financing strategies,

and everything else you need to retire early. And if you're ready to get to the next level in your real estate game and get there fast, go to R-E-I-Aase.com, where most training programs end, ours begins, at R-E-I-Aase.com. Enjoy the show. Hey, you having a tough time finding seller finance deals? Yep.

Or any deals at all? Yep. Feeling like you kind of suck at this? Yes, definitely. Yeah, because you probably do. Oh, no, he didn't. I mean, we all suck at worthwhile things when we first get started. And you're not finding deals right now because you're looking for them.

Wait, wait. What? Most of the time, they're not found. They're created. And you're not creating them because either, One, you don't know how, or two, you introduce your creative ideas too soon and the seller doesn't trust you. Or three, you don't explain it clearly and the seller doesn't understand you. Or four, you give up too quickly and you don't follow up.

Sounds about right. When I got started, I made all of these mistakes. And it's this right here that corrected the course for me and put me in control of my financial future and ultimately got my life back on track. All right, we're back on track. In fact, I just used it to purchase these three properties without paying anything. anything other than closing costs. Jeremiah, a private client of mine who just five years ago was working 50 to 60 hours a week at a job he couldn't stand, and he used it to build an $8 million cash flowing portfolio. This is a three-option LOI. It's a creative financing tool that can do

all the explaining and negotiating for you. And it can open up a multitude of creative solutions for you and a seller that originally weren't even on your radar, and especially theirs. And weirdly, it can do the follow-up for you too. Wait, what? And I'll explain in just a second, but first, I want to give you a copy. I uploaded it at three option, LOI.com. Go there, grab a copy for yourself because it belongs in your creative financing toolbox.

Now, this was the only way I bought real estate for a very long time, and I built my entire portfolio using it in 2008, 9 and 10. Creative financing, it's all the rage right now. You know, fixing and flipping and wholesaling, they all had a really good run at center stage, didn't they? But now it's all about creative financing. And I suppose we should be grateful

for the shifting market that's forcing real estate investors to learn and implement these creative ideas. Because some of the most creative minds in real estate, they're getting up there in age. And some of their juicy, creative investing secrets are dying with them. Creative genius Jack Miller comes to mind. I mean, there's just not a ton of options out there to learn this creative stuff from. And it takes time to learn enough of it to be consistently successful with creative financing strategies. But with this, you can flatten out the learning curve quite a bit and be successful with creative stuff right away.

So let me tell you what it is, when to use it. and why it works. Now, a three-option LOI, this is short for three option letter of intent. It's a legal document that outlines three different options of price in terms of a potential deal. It's like making three different offers all at the same time to a seller, and then the seller gets to choose which one they like best. You can do that? Absolutely. Now, I'm going to show you how I write mine in just a second, but you don't have to do it my way, because this is creative financing. You can write in whatever you want. Then we'll get creative. Everything is allowed. Everything? Every seat.

long as you and the seller agree, you're good. Here's what I mean. If you want to buy a seller's property in exchange for you sending them a pepperoni pizza to their house every Friday night for the next four years, if the seller agrees, you can do that. And that might be option one for you. And in case they don't like pizza, option two might be trading your car with a 10-year supply of gas for their house. And option three might be, I don't know, their house in exchange for a lifetime membership at 24-hour fitness. Anything goes, as long as it's legal and the buyer and seller agree. I keep trying the pizza thing, but no takers yet, but I'll let you know when it happens.

getting creative. Now, my typical real world starting point has always been like this. Option one is a low ball all cash offer for the equity. Option two, I offer a higher price, a small down payment with interest only payments and a balloon payment in 10 years. And this option is more for the cash flow. And then option three, often an even higher price, sometimes even full retail, often with a larger down payment, and then the remainder is divided up into 300 equal monthly payments. Yeah, principal only payments for the cash flow and the debt. paydown. And I don't care which one the seller takes because they're all good deals for me. And when you write yours, make sure all three of those options are good deals for you.

Yes, I will do that. So that's what it is and an idea of how to use it. Now, when to use it. One way, it works great as a direct mail piece to the probate list, the inheritance list, the board investor list, the downsizer list. It really gets the phone to ring. Number two, it works great to leave it with a seller after you've reached an impasse on price. Because it gets the seller's wheels turning overnight after you're gone, and it keeps the negotiating door open for you to follow up. And then three, it works as what we call here as a rejection letter. My student taught this to me after I taught him how to use it.

This guy right here, Josh Miller, he had a practice of sending one of these to every lead that ever said no to him. And over the course of 18 months, he sent 1,100 of them. And it resulted in 55 extra deals, all from the people that said no. Can you guess which option the sellers most commonly chose? I'll let you know in just a sec. But marketing, negotiating, and follow-up. Those are some ideas of when to use it.

Now, the why does it work? Well, a few reasons that I've determined over the last 15 years are, one, it puts your offer in writing. And when it is, it's clear to the seller what's being proposed. There's limited opportunities for you to mess it up verbally this way. Further, when in writing, the entire dynamic of a negotiation can change. I mean, it's no longer just talk. You know, it's perceived as an official offer.

And the seller now has the opportunity to really consider it and to actually take an action. Like, sign it. You see, most investors, they don't put their offers in writing unless the seller and they agree verbally first. But when the seller eventually comes to grips with the uncomfortable fact that they want more for their property

than what the market will bear, they start considering all the offers that they passed on. And the first ones that they're going to consider are the ones that left them a reason to call back. Now, I know, there are two schools of thought. There's a lot of people that would push back on me for this. You know, some investors, they never leave anything in writing behind.

Others, like myself, I always leave something in writing because they both work. Just pick one and stick to it. Here's a tip, though, if you know you're weak on your follow-up, then you might want to err on the side of caution and leave the seller with something in writing. You're clearly talking about me. No, I think you're talking about me. Now, I'm sure that I've lost deals in the past because I did do this, but I've closed enough deals because of it too.

I mean, it's really nice getting a random call every now and then for a deal you totally forgot about. Kind of like when you find that $20 bill in your pocket after doing the load of laundry. Now, the second reason it works. When giving three options to a seller, it's not uncommon for the motivated ones to forget that they actually have a fourth option. I mean, they could say no, but often they don't. The motivated ones feel compelled to actually choose one of the three. And so they do.

You're going to do more deals because of this. And number three, the sellers themselves will create their own options. They'll actually help you move the ball down the field. No, they won't. Yes, they will. Watch this. For example, I typically won't put a subject to offer in my LOIs because I want to be available in person to squash the objections that are commonly raised when offering subject to.

Instead, I will offer seller financing, assuming the house is own free and clear. And when the seller says that they like that option, but then they ask me about, well, what about the mortgage? How is that going to get paid off? I'm like, oh, I wasn't aware there was a mortgage. But no worries, we can still do this. We'll just have to structure it a little bit differently. Let me explain. Essentially, the seller has just invited me to have the subject to conversation with them.

That would be one way to do it. It's kind of like kung fu negotiating, where instead of your energy, your opponent's energy is used to reach the desired outcome. Oh, I get it. And this happens all the time. Like a common response I get sounds something like this. You know, I like option two, but do you think I could get more money at close? Or can I get a higher interest rate? Or can I get a shorter time period for the balloon payment?

Sellers will request and indirectly create their own structures. And after a little bit of back and forth, you reach a win-win deal. So, Josh, and those 55 extra deals he did, which option do you think was the most popular? Was it the low ball all cash option, the interest-only seller-financed option, or was it the principal-only seller-financed option? Which one do you think the sellers chose most of the time? Well, the most common option sellers took was option number one, the low-ball all-cash offer that they originally rejected.

Apparently, when motivated sellers have three options to compare against each other, more commonly they choose the fast nickel over the slow dine. So you will get more creative deals using the three-option LOI for sure. But as Josh proved in how he used it, you will also get more deeply discounted cash offers accepted too. But here's the real reason it really works. You see, the more offers that you send to sellers, the more you'll get accepted. And this is inarguable. And that's why you deserve to add it to your creative toolbox, to make more offers, to give sellers more options, to do more deals. Grab it at three-option LOI.com. 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 boy, we got the cash flow. This podcast is a part of the C-suite network. For more top business podcasts, visit c-sweetradio.com.