Epic Real Estate Investing - Mitch Stephen and the Art of Seller Financing | 239

Episode Date: December 5, 2016

Join Epic Real Estate Investing as Matt Theriault and Mitch Stephen discuss the art of seller financing. Learn how to invest in real estate with other people’s money. Discover how you can build long-term cash flow investing in real estate without risking a dime of your own. Find out how to access private lending and ways to create more marketable deals to partner with big dollar investors. ______   The free course is new and improved!  To access to the two fastest and easiest strategies to a paycheck in real estate, go to FreeRealEstateInvestingCourse.com or text “FreeCourse” to 55678. What interests you most? • E.ducation • P.roperties • I.ncome • C.oaching   Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. Broadcasting from Terrio Studios in Glendale, California, it's time for Epic Real Estate Investing with Matt Terrio. Hello, and welcome to Epic Real Estate Investing, the place where I show people how to escape the rat race using real estate. So if you're just getting started and or if you're looking for new and creative ways of making money in real estate, I've put together a free course just for you, including a checklist on how to find motivated sellers. Those are property owners that are willing and able to sell you their property at a discount. And to access that free course, you may do so at free real estate investing course.com. Free real estate investing course.com, okay?

Super. I've got another great show for you today. Today's show and last week's show are right there at the top of the list of, I think, my favorite episodes of the year. I met today's guest also in my mastermind group, just like last week's and not until recently did I realize what kindred spirits we are. And because of this, he makes a perfect guest, as I know you're going to want to know all about his creative strategy for creating big chunks of cash and long streams of cash flow.

You can have your cake and you eat it too. That's cash and cash flow. So I asked him to come on the show today and talk to us about how he does what he does. And I pre-recorded this interview, and I've already listened to it three times. And that's a rarity. I rarely listen to my episodes ever. Once I record them, they are done, and they are in the archives, and I never go back. But this one I've listened to three times, and I'm probably going to listen to it again.

And you're going to want to have a pen and paper ready for this episode. Huge nuggets of gold in our conversation that can transform your entire business. But before we get to our guest, I mentioned it last week, and it's officially early bird registration time for the next epic intensive. So if this is the first you've heard, we are not. waiting a year in between intensives anymore. The response and demand for them has become too great for us to ignore. So there is a new epic intensive on the calendar. It's January 26th and 27th in Manhattan Beach, California.

The theme for the last intensive was strategies for a shifting market, which was a huge hit. But, you know, what caught me a little bit off guard was the tremendous amount of conversation that was created around creative ways of creating passive income and escaping the rate. So I thought it was going to be a lot about, you know, finding deals and wholesaling and making these chunks of cash because that's just kind of what people still want to do. As much as you talk about cash flow, that's really what people are motivated by.

And I thought that's what it was going to be. And although we'll be discussing more shifts in the market and how to find deals and, you know, what there is to do about the shifting market, but the primary topic of discussion and overall theme of this intensive is going to be around creating a monthly stream of income that pays your expenses and builds your wealth in as little as 12 months, even if you're prone to procrastination, overwhelm and susceptible to distractive. Actions. Early bird registration is officially open at epicintensive.com. The Epic Accounting Department was a little annoyed at the last intensive in September. And the reason why is I left

the early bird door open a little too long. And that event ran in the red a bit actually. So we've got a very short time for this early bird pricing that the early bird pricing this time is going to be available. And the price will keep inching up the closer we get to capacity. So the earlier you grab your seat, the cheaper it is going to. be. So go to epicintensive.com and grab your seat. Now let's get to our special guest to discuss his creative way of generating large chunks of cash and large streams, long streams of cash flow. Please help me welcome Mr. Mitch Steven to the show. Mitch, welcome to Epic Real Estate Investing. What's going on? So it's Mitch Stephen, not Stevens. Yep, no V in the middle, no S on the end,

causes me a lot of grief. I have two first names, Mitch Steven. There you go. Got it. I was just introducing you. I said, oops, there's no S there. Hey, it's a lifelong hazard. I don't even,

I don't even flinch anymore. Got it, got it, yeah. No one pronounces my name correctly either. I just say, hey,

that you just get the T and everything else is silent and you get closer than if you try to sound it up. But. I was wondering that, Tural. Yeah,

yeah, it's Tereo. Tereo. Yeah. Duh. Those French people putting all those unnecessary letters in there. Super.

So, Mitch, it's great to have you. I haven't talked to you in a really long time. We've certainly made some rounds together and had some good times, but we've really never talked real estate, and I've noticed that you've been doing some big things, and we have a lot of mutual friends, so I wanted to connect with you. And I can recognize your passion for real estate investing. Where does that passion come from? I guess you can go back as far as you want to go and bring us the current. Well, I mean, it started out a long time. I just wanted to call myself the owner of something.

And I bought a couple of condos. And, you know, it was nice to say that was mine. And, you know, these are my house rules. And, you know, stake out your territory and mark your corners and all that. But then one day I sold those. I bought one to live in and I bought another one to rent a little bit later. And then I sold them both one time. And I made more money than I did at my job by a long shot.

I made more money than I made for the whole year at my job. And then that's when the light bulb kind of went off. I thought maybe I better look into this a little bit because I didn't spend near as much effort on these two little places as I do at my job every week, you know, 40, 50 hours a week. Got it. Well, that's a couple houses versus a year's worth of working for someone else, I think, is a good place to start, right? Good place to start, yeah. Yeah, absolutely. After that, after that, the passion came because not only was I helping myself, but I was helping so many different people and so many.

There was so many good things going on when I bought a crack house in downtown San Antonio and converted it and made it into a real house and got real people living there that were really happy. And, you know, there was so much good stuff going on. You know, the back taxes were getting paid. The municipalities were getting their money. The neighbors were getting owners instead of renters. The renter got to become an owner. The list just goes on and on. I wrote about seven pages on it one day at my blog.

all the different things. And your blog real quick, since we were talking about that, where is your blog? It's at 1,000 Houses.com. You just find the blog there, or you can go straight to it at 1,000houses.com forward slash Mitch Steven, S-T-E-P-H-E-N. And that's 1-0-0-0-Houses.com. Perfect, so it's not spelled out 1,000. It's the number, numerically, 1-0-0-0-Houses.

Awesome. So speaking of it, 1-0-0-1-Houses. 1,000 houses. You've got a series of books called My Life in 1,000 houses. I knew about the first version. I didn't know you'd had three now. But the first one was failing forward to financial freedom. The other one is 200 plus ways to find bargain properties.

And this new one, which is what I think really inspired me to have you on the show because I really resonate with this one is the art of owner financing. And, you know, I was sharing with you just before we started recording. This time last year, I had about 200 units. and I started liquidating, or not liquidating, but transitioning those properties, especially the problems properties, into seller-financed notes. And I've purchased notes, or excuse me, I've purchased properties using seller financing for since the conception of my real estate, now almost a decade.

But I didn't start selling them a lot until just about a year ago. And then, so that was working really well. And I stumbled upon your podcast. So congratulations for that. It's a big hit. It's a great show. And I started just getting some different nuances, and I applied a couple of the things that you were talking about on your show. And I really like the structure that I've got going on now.

And in the last few deals, I can see that are even better, more profitable. And you take those really great returns, and you turn them into infinite ones. So about this owner, kind of explained to me and everyone that's listening, what is owner financing and how are you using it to gain financial freedom? Okay. Well, like you said, when you first start out, most people don't. have money so they're trying to get the person they're trying to buy the house from. They're trying to get that person to sell or finance the house to them so they don't have to go to the bank or find the money.

They can just buy the house with the seller financing. But I took it a step further and then I would sell my house and offer seller financing to the guy who wanted to buy the house from me and move into it and live in it, you know, 90% of the time. That's what they did. And so, you know, it's a real simple concept. I have a house and I have a payment to my private lender. and then I sell the house on a wraparound mortgage,

which is all legal and done correctly. And the person who moves into my house gives me a down payment, plus it gives me a monthly payment for X amount of years. And I collect the money from them, and then I pay out what I owe to my private lender, and I keep the spread. Right. And it differs very much from being a landlord in that.

I am not responsible for all those liability, of the house because it is not my air conditioner hot water heater roof glass windows sprinkler system garage door yada yada yada yada yada it's not mine i sold the house to the person who's living in it and sending me a payment and so when i get the payment it is my money it's not the air conditioner man's money it's not the plumber's money right that's what i i like to do is create cash flow without the liabilities of being a landlord got it no i i love it a lot i'm gonna play devil's advocate in a minute on a few things. Sure.

I'm going to get your opinion on it. But let's kind of maybe walk through like, I know on, I think it's on the very first episode of your podcast. You walked through your typical deal. Okay. Can we do that? Yeah, I got a case study here in my head. Sure.

Let's say I, the first of all, the core belief of the owner of finance strategy, the core belief, and you have to believe this from the, from the tip of your head to the bottom of your toes is that the person paying $1,000 a month rent would rather pay $1,000 to own. Right. Do you believe that? Yeah, I think in most cases that would be the case. Well, you know, it's not across the board. No, it's not.

There's about 15% of the people that don't deserve a house, don't want a house, and the other ones don't need it right now for certain reasons. You know, they're going to be transferred or whatever. I come across a lot of people that just flat out don't care. Yeah, they don't care. Yeah, exactly. Which in my book translates to you don't deserve a house if you don't really want one. Perfect.

And so I say it's about 83, 85% of the people wish they could own a house. They just don't know how, especially for the same amount of rent as rent. So that's the core belief. So let's say, so when you start out, you have to know what you can sell something for before you can make an offer to buy it. But we don't base our value on the house based on the comps. We base our, we establish an owner finance value, an O-F-V, an owner-finance value, by backing into the rents because I'm going to try to accomplish this goal of changing this guy's $1,000 rental payment into a $1,000 mortgage payment. So let's say that the rent is $1,000 in this particular neighborhood for this particular kind of house.

And so we go to the tax records and we subtract $100 because the monthly property taxes is $100. Then we figure the insurance is $50 for easy number. So you take the $1,000 and you minus $100 and you minus $50. So that's you come up with $8.50. And so if you use the terms 10.5% in 20 years, then that 850 that this guy has left over for principal and interest payment translates into 85,000. That's how much he can finance, okay? If you use the terms 10.5% in 20 years. So if he can finance, if he can afford to finance 85,000, then let's just add 12% on top as a down payment.

and see what the sales price would be. So in this case, it would be about another $10,000 on top. So the owner-finance value of this particular property, given the taxes and the insurance, is $95,000. Now that I know that I can sell this house for, that the rents tell me that I can sell this house for $95,000, what do I want to offer to buy this house? I would love to be $95,000.

I'm going to try to get at least $10,000 down, So they're going to owe me $85,000. I would love to be in this house for half of that $85. So I'd love to be in this house around $42, you know, $42,000, somewhere around $42. Right. Because that would be a home run, okay? Now, I'm not saying I couldn't pay $45, $46, $47, for it. It's still a good deal.

You can pay $48, $49. Still a good deal. Okay? But I can divide by two really good, man. Right. Sure. So I know that my bar is 425 right now. And so I go out.

And if I get for less than that, then it's a grand slam. And if I get it for less than that, then it's a grand slam with bases loaded, you know. But there's my bar. Okay. So let's just say I get this place under contract for $40,000. Mm-hmm. Okay? And I can buy it for $40,000.

I'm going to go borrow $42,000 from my private lender. And so I buy everything with OPM, private money, and I borrow an 8% interest only for five years. Mm-hmm. And so in this particular case, my payment's $280. Okay. Uh-huh. So is that interest only or is that amortized over the five years? Interest only.

Interest only. Okay. Forty-two. Okay. Now, did you notice I borrowed 42? I got it under contract for 40, but I borrowed 42. I'm going to always make sure that including closing costs or whatever I think, if I'm going to mow the lawn and that's going to cost $100, I'm all in. I want to borrow 100 percent, okay?

Right. Plus $2,000. Because I need to put that $2,000 on my left-hand pocket. Because if anyone, if any private lender ever says, well, why do you get to put an extra $2,000 in your pocket, you just say? because I'm finding houses isn't free. I don't know exactly how much it costs me to find this house, but on average it's about $2,000 a house. And if you're out there buying houses

and not writing this expense into your equation, you start to understand why you're broke all the time. You know, you buy two or three houses this month. You're $6,000. You're out $6,000, and you don't know why. Right. You know? Okay, so let's just say it's $2.80 is what I owe.

And I'm collecting, I'm going to click, and then I sell this house to someone. and they give me 10,000 down and they owe me 85,000 at 10 and a half percent for 20 years. And that's they owe me 850 a month. So 850 a month, you know, I'm clearing 570. Is that right? 850. I'm doing it real quick here, 850 minus 670.

Yeah, 670. No, no, you're right, 570. You're right. 570? Yeah. 570. I'm clearing 570 a month, which is my money. If the air conditioner breaks, I don't have to give it.

back. So do you see where in this equation, I picked up 2K when I bought. I picked up 10k in the down payment. So I made $12,000. I paid myself $12,000 to create a $570 a month positive cash flow with no liabilities to speak of that I can think of. And that's going to go on for 240 months. If you want to take 240 months and multiply it by 570, that equals 100. and right at $137,000 plus another $12,000, that's $149,000. So with no money out of my pocket, I got to make $12,000 up front so I could eat and feed my family and pay my car payment. And I created, I added $570 to my positive cash flow, which over its lifetime will be $137,000. And I did this with no money.

I actually not only did it do with no money, I got paid to make this happen. I got paid $12,000. Okay? Now, it's not to say that sometimes you get lucky, someone will give you $30,000 down payment today. When was the last time as a landlord? You got $12,000 or $30,000 non-refundable rent deposit. Oh, with every single property. No, it doesn't happen.

It'll never happen. And you got to give it back. And then you got to give it or argue about giving it back. Right, exactly. Right? Yep. So that's the magic of the business. Now, there's two downsides to it.

As the owner of financier, we don't get appreciation. Right. And we don't get depreciation, a tax treatment. Right. So. You also lose the advantage of leverage as well. Why is that? Where did I lose the leverage?

Well, I guess you are in for zero. So you are about as leverage as you can get. So it's an infinite return. Yeah. Yeah. Yeah. Okay. All right.

Yeah. Yeah. So I have leverage because I'm borrowing money. Yeah. Am I right with you? Yeah. That would tie into it. the appreciation, so yes, never mind.

I just said the same thing you said twice, so we're good. Okay, that's right. So, but look, but now let's address this thing about appreciation. The first thing people say to is, well, you know, you're giving away all the upside of this house because you're not going to get the value of its appreciation over the years. I say, look, I bought this house for 40, okay? And I sold it for 95 in less than 30 days. I mean, exactly how much appreciation do you guys want fast?

Right. You want to annualize that? Because this is just, that's just 30 days I'm talking about. So if you were to, if you annualize that, you're in the thousands of percent appreciation. You know what I mean? So, and this is what I choose to do for right or for wrong. And I'm not bashing people that do rent houses because there's been a lot of fortunes made in renthouses.

But I'll talk to you about maybe how that happens and how it doesn't happen. But I just choose to take all that time that landlords spend being a property manager and I just go find another house. I narrow all those tasks that you have to be as a property manager and all those things. things you have to handle. I just throw all that trash and say, I'm just going to focus on buying houses. I'm just going to buy another house with all that time. Okay. Now, I think that the people that are being successful at landlords, the best I can figure, because see, this is a big myth. You walk in and they say, you know, we're doing the buying whole theory. You're going to buy and you're going to have all these rent houses. And, you know, you're going to borrow this money and

your payment's going to be $500. And then you're going to rent it out. And the rental is going to be $8.50. and so you've got this $350 positive cash flow that's close to $4,000 a year positive cash flow, right? Wrong. They haven't given one ounce of weight to all the multitude of liabilities on the other side of the page. We could sit here and start writing

for another half hour and never finish all the things you're responsible for as a landlord. If they break, someone says, well, the grass can't break and I said, no, but it can die. You know, the trees, well, the trees don't break. Oh, yes, they do, and they fall on top of the roof of the house. And they get into your pipe. Yeah, and then roots crawl into your pipes, exactly.

So now the only thing that I'm for sure that we lose is depreciation, but we still have a business. And if you're any kind of businessman at all, or you want to listen to some podcasts by me or Matt or somebody who knows what they're doing, there's plenty of write-offs to be had, right? There's other ways besides depreciation. And there's things to do. So that's my, that's my schick right there. That's the whole thing. Okay. So next one, taxes.

This income is taxed at a different rate as your income, your cash flowing income from a property. Well, there's another one. You could, you could buy these houses, rent them for a year and then get a long-term capital gains treatment. I'm getting, you know, probably with a little harder tax because I'm doing mine's short term. Right. But I make enough money that I just don't care. And I don't want to, I don't like being a landlord so much. that I'd really rather pay the tax and worry about that later.

Right, right. Okay, so you another aspect of taxes is if you buy it at 42 and you sell it at 80, even though you're selling on an installment plan, you have to, how do you get around paying the full? Well, you're talking about, all right, first of all, you never ever claim yourself as a dealer. There's ways around that. There's a lot, there's like 12 different points, just like, you know, the same kind of criteria, like, you know, how do you decide if this person's a subcontractor and our employee? They have these points that you have to measure against. Right. You've got things to measure against this.

I've been doing it for 20 years. I'm not a dealer. I'm not going to claim myself as a dealer. No one's made me be a dealer, and I'm just not going to go there until someone proves me different. And if your CPA can't defend you, then you need to get a different CPA. All right. Very good. But I pay on the installment plan and I pay tax as it comes in.

Right. No, and so do I. So I just wanted to know if you had a different way of looking at that. But I get it. Okay, but if they did demute as a dealer, then all you do is you would sell your notes, Matt, to someone for like $1,000 over what's owed. And then you get the notes back on some kind of default or something.

I mean, you know what I mean? I got you. You got to be careful. careful, but you know, but there's things to do about things they do. Right. Well, we got, yeah, exactly. We got people for that that do take care of that for us. So that's not our profession.

Next is, the next side of that thing is what to be inflation. You know, this is why I'm holding a balance. My biggest reason holding a balance of notes and properties is the hedge against inflation. And it's a very good point. And there is, there is a reason to do that. But so, you know, in Jack Bosch's book, Forever Cash, you had, you know, one-time cash, temporary cash, and Amber Alert, excuse me. Yeah. One-time cash, temporary cash, and Forever Cash.

And so this is, the owner finance strategy is temporary cash, because we're creating notes, but the notes have an expiration date, right? Right. And but I took the wealth that I made from manipulating the houses and the owner of finance strategy and I bought storages with it. And that's where I'm going to hedge my inflationary bet. I bought boat storages and many storages. I have like 1,100 doors. I average $92 a door per month. You can do the math.

And I really don't like being landlords in a place where I have to deal with families in the displacement of a family if I have to foreclose. So I pick storages or, you know, industrial buildings or strip centers or anything but houses or apartments. Got it. No, that's a perfect answer. It's a very good strategy. The next thing would be, I don't know if you're a conspiracy theorist at all, but should the dollar collapse? Do you have any fear of that? I do.

I'm a big doomsdayer. I don't like to admit it, but, you know, I own things today that I never thought I would own. and this is my theory the day that little bitty Walmart houses made for Walmart people are worth nothing then your money was going to be worth nothing a long time ago and the last thing to go will be housing the day that housing is worth nothing then you better just hope you had it in bullets that's all I have to say right but if the dollar's worth nothing and all your money and income is based on notes. Your notes become nothing. Well, I'll trade for cabbage. I'll trade for bullets. I'll trade for guns. I'll trade for whiskey. You know, you live there.

I'll trade for something. But I don't have to trade for that stupid dollar. If it's not worth anything, I'm not going to trade for that anymore. Sure. But that's that you lose that income. And so what would you be trading? Just the stuff that you're investing in afterwards? You know, it's a great question. I've run it out. I mean, what's your take on it? I don't know what else to do except for that's why I'm going to trade it for something right if the money if the if the dollar collapses and the money is not worth anything then you know here's one thing you get to pay your debts with that with that useless dollar the only problem is is if you're owed a lot of money that's where you really need to be you really need to owe a lot of money when inflation

happens because you're paying with that that's reduced dollar but if your owner financing houses then you're getting the bad side of that stick too I don't really know what else to say about it, but I just figured, I'll deal with that one happens. You've got the storages. You've got the boat storages and other storages. I have the houses, so like the houses aren't going to be worth zero. The land you of your storages aren't going to be worth zero. So there's something there. And that's why I maintain a balance. My wife said, well, my wife took it even further. That's just what happens when nobody, you know, wants to pay for their storage stuff? I says, when it gets that bad, honey, people will be living in those

storage units. Exactly. I will charge them to live. Right. Right. And she said, again, well, the money's not going to be worth anything. What are they going to pay you with? I said, you know, pay me in goats, cabbage, carrots, beans, whatever, something. Actually, and a lot of people say, you know, to buy gold, but I think that's maybe an issue because when it really gets rough and you start going out there to pay people in gold, I mean, they're just going to follow you home and hold a gun to your kids' head and say, where's the rest of the gold, right?

Right, right. I personally like to buy shipping containers of vodka, bourbon, rum, and gin. It never goes bad, doesn't freeze. It'll always be in demand. And it'll always be in demand. So I want to buy big containers of booze. I'm making a note of that right now. It is a good idea, though, isn't it?

No, I think so. I mean, shoot. I mean, it doesn't rot. It doesn't spoil. Yeah. And when it was against the law, people did whatever they possibly could do to get it. Yeah. Yep.

All right. And that's another reason I hold, the other reason that I continue to hold some houses is I have so much depreciation, I basically have a big giant gap of where I can make free money. So the notes make a whole lot more sense to me there too. Yeah, I have depreciation in my storages. You know, there are $500 million facilities. You know, every time we put something up, it's $450,000. Right.

And I get to depreciate that. So, yeah. Okay, cool. You got to have, you got to have, it takes a lot to make a business run. You got to have your depreciation. You have to have your tax strategy. You have to have your incomes. You have to have to, you know, people think there's.

businesses, you know, they try to make it look all easy on the guru shows, the late night TV. There's a lot to learn about it. But the one thing about it is, you certainly grow as a person because you're learning so much about everything. You know, by the time you are really good at any little strategy in the creative real estate business, you're a pretty consummate businessman at that point because you had to deal with a lot of things. Mm-hmm.

Mm-hmm. No, I agree. So you own real estate, just not houses. So that's the part I was looking for. So that's, as the doomsday are model, I mean, I went and bought a ranch. Mm-hmm. I bought my ranch out in the country with the horses. I mean, I'm sorry, with the deer and the fish, in the quail, in the dove, and the hogs, and the whole thing.

So, right? So there's water. I'm ready, man. There's water. And I drilled extra wells. I mean, you know, I spent some money on it. Perfect. My rationale was, my rationale was that if the doomsday never comes, it's still going to be worth money.

Yeah. And I get to walk on it, enjoy it. Because, see, I did have that money in the bank, and that was no fun at all. I could look at it every month on a statement. It was no fun. Now I got it, and I can walk on it, drive on it, write ATVs, hunt on it, camp on it, bring people out to it, fish in it. You know, it's a lot better place to hold your money.

Absolutely. I couldn't agree more. Sweet. Okay, so you do 100 of these a year. I know you had a really good year this year. So where, if you're borrowing the money each time for these, that you got to borrow 100 times that $42,000 we just talked about. What is your source of money?

Where are you getting that? How do you make that happen? My average private lender is probably between 60 and 80 years old. He's done. He's not working anymore. He used to be worth twice as much as he is now, but he lost half of it in the stock market. He's never going back. His take on it is that the stock market's rigged,

and he's not a member of the club big enough for anyone to tell him when the crap's coming down the pipe. And in fact, they're using him to get rich. That's his take on it. So he has his money sitting over there in CDs that are not even making 1%. And then he stumbles on to me or I stumble onto him. And here I am offering him 8%. And I'm offering a first lien, a pristine first lien from a title company on a real piece of properties, some Texas real estate, a house that's worth the owner of finance value,

usually about twice as much. I average 52% LTV, 52% LTV between the owner finance value and what I borrow. But I do want to clarify something. My owner finance value is based on a price that I arrived at by backing into the rent. It is not the MAA appraiser. It is not the BPO's broker professional opinion. It's not a CMA. It's not based on comps.

It's based on rents. So I may be 10 or 15% over the market or I may be at the market. it doesn't matter because that renter doesn't have the choice to borrow the money where everyone else did. Right. So here we go. We got someone loaning me $52,000 on $100,000 house. What's the worst thing can happen? Worst thing could happen is I pay him on time because that's the least amount of money he's going to make.

Because if I don't pay him, he gets my $100,000 house. Yeah. Yeah. So look at it like this, too. If everyone in Bernie Madoff's pyramid schemes, scandals, scam, would have had a half, pledge for every $50,000 they had invested, none of them would be broke right now. But they all zeroed out because they were buying, you know, like in REITs, you buy a certificate or a piece of a company. You don't own any of that asset, you know.

So it's a lot. And so it's one deal, one house, one lender, one borrower. And if they don't get paid, they get the house. I like to say in my program, you either get or you get, you either get paid like I told you or you get a house. Right. Right. No. Yeah, the worst thing that can happen for someone like that is that you actually do what you said you're going to do. Yeah, because then they're just going to make 8%. Right. If I don't pay them, they're going to get $100,000 house for $52,000. That's a lot of money. Exactly. Exactly. That's the middle strategy in our fund. Just like the worst thing that happened is everyone makes their payments on time. Yeah. And it's a big clue as to why banks lend money and don't buy real estate. right well you know i got so good at raising private money that i um that i had to start a hard money

loan business to loan it out to my competitors in my market because i couldn't buy an i couldn't buy enough houses and what i found out was is if i didn't take those people's money and get it out for them they would go lose it you know either stock market or they'll loan it to uncle bob for a snow cone factory in alaska and can't figure out why their money's not coming back And so I have on any given day now about $8 million to $10 million out on the streets in my town where I have loaned. And that too, I average 52% LTV. I average loaning those investors $52,000 on $100,000 house. And unlike a bank, I know what to do with this house if I get it back.

Right, right. Am I stalking the house? No, I'm not stalking the house. I don't want people to fail and I don't want to take their houses. But if I have to, I'm going to be fine. Yep. Yep. So you mentioned when a private lender stumbles upon you or you stumble upon them. Give me your three favorite ways for stumbling.

Okay. Well, when I was first trying to raise private money, I made it a goal, and it's probably not the most aggressive goal, but to me it was, I thought it was at the time. It's not aggressive now looking back. But I was going to tell someone my elevator pitch, one person a day, seven days a week. You usually end up that I tell two people on Friday and on Thursday and skip the weekend. So my elevator pitch is, hi, my name is Mitch Steven. I help average people achieve above average rates return on their idle money, and I give them very, very valuable Texas real estate as collateral.

You either get or you get. You either get paid or you get a house. Are you interested? I like it. So that becomes a muscle that you need to exercise. there's two things that I became good at. I became good at getting people to ask me what I do so I could go ahead and tell them my elevator pitch.

How do you get people to ask you what you do? The simplest way is to just ask them what they do. Any common guy, any normal guy in the world or girl after they finish saying, you know, well, I sell fertilizer for a living, they turn around and go, what do you do? You know? And so that's when you can throw your elevator pitch. Now there was days that I was on my way home

moment it dawns on me that I hadn't got my elevator pitch in for the day and I hadn't met my goal. At which time I would just pull over to the first bus stop I saw, I'll jump out of my car, walk over to the slumped over drunk bearded guy and say, hi, my name is Mitch Stephen, I help average people achieve above average rates of return on their idle money and I give them very valuable Texas real estate is collateral and then I'd leave and that people say, well, what's the point of that? I mean, the drunk guy at the bus stop was never going to invest with you. It says it's the point was is that I met my goal, I exercised that muscle and I became more bold and more bold and more bold and less afraid to talk to people in silk ties and in alligator shoes, you know?

Right. The more I said it, the easier it flowed. I'm out of a practice right now because I haven't said it in a long time. And then, you know, the more higher pollutant people I was less intimidated to talk to. Mm-hmm. Mm-hmm. Another thing is, is once you ask that person what they do, before you get to your elevator pitch, you would say, you know, I don't know if I need that right now, but I think I know someone I think needs your service. I need your card. That way the ball was in my court. I had the option to contact them. If I gave them my card at the end of my elevator pitch, they're never going to call me because they're not as interested in talking about it as I am. Right.

So I would always try to get their card. So it was ask them what they do. Tell them you know someone that might be interested in what they're doing. Can I have a card? Get the card. Then give them. And by that time, then they ask you what you do. Then you tell them.

And then try to set an appointment. Right. Either that there or a few hours later or the next day you call them because you have their card. Right. It's a snowball effect because an amazing thing happens when you borrow money, give people the right paperwork. and then pay them back, they start to refer you or they start to bring you more. And it's gotten to the point right now is I can't hardly stop the river of money coming my way.

I'm so glad you're saying that, Mitch, because I've been saying that from the beginning of this podcast, that you just need one and do what you said you were going to do when you said you're going to do it, and you'll eventually have two right away. And it just, it snowballs. You're absolutely correct. Well, and everybody starts off with just their little finger. I mean, no one's started off with me with a million dollars. I mean, every one of them said, well, what's the least amount I can try one?

I can invest. You know, I'd say 30, 40, 50,000. They'd say, okay, and that's what I'd get. But it was almost uncanny. It was almost three months to the day that you, on the, by the time they received their third payment, you'd get a phone call. Right after the third payment arrived. Hey, what can you do with a little more? Right.

And then it'd be another three months. It was what can you do with a little more? And then it was usually bigger, like, okay, what can you do with $250? What can you do with $300, you know? And then when you say, finally, you're sending on deals and they say, well, I'm tapped, I'm out. Then you say, do you know anybody else we can help and quit begging for money? Because we're doing a great service for people.

We're helping them get an 8% return, which by golly, is a good rate of return given the security that they have. You know, it's a tremendous rate of return given the security they have. Yep. Again, glad you said that because until it happens to you, nobody believes it. You know, and that's exactly how it happens almost every single time. And we just had our, completed our first quarter of our fund, and we did very well in the first quarter. And we sent out the summary, and immediately everyone was, well, I got a little more. Can you use that?

It's just like, we didn't even ask for it. We stopped prospecting for shareholders, and it just started coming after that first summary. And now we got a couple buddies, and we got a sister. And here we go. So yes. I had a meetup. I had a meet up, which was scheduled the same day of every month. Like the, you know, the first Tuesday of every month or whatever.

And I had a meetup and I was in and and so what I would do is I would I would go to the subway and get the subway sandwiches and I chop them up. I'm have them chop them up into, you know, finger foods. And I'd get the chips and the Cokes and in the ice chest. And I'd set up a room. And I figured if I'm going to set up a room for a lunch, I might as well keep the room for the evening in case they can't make it because I've already got the room set up. So I'd have two meetings that day.

I'd have a lunch meeting and I'd have an evening meeting. And so my whole month was spent like, how many people can I get to come to that room? And I tell everyone, can you come to my investment meeting, you know on the first Tuesday of the month over and over again well the most people I ever had in the room was 10 usually I only had two or three people in the room sometimes I have two people at lunch and I have three people in the evening like five people for the whole day but it didn't matter because I had made a commitment that I was going to have that

meeting once a month for 12 months in a row come hell or high water no matter if no one showed up I was still going to go the next month and do it again and I had to stop in six months. It was like I had I had more than enough money. So what was your meeting? What did it consist of? I would take case studies. This is a picture of the house. Very simple. Don't make not a PowerPoint. Nothing complicated because you don't want to make it complicated. Right. This is really easy. This is the house. Just like that case study. I was able to get it for 40. I borrowed 42. This was my payment. You know, then I sold it for this. Do you see where I made a lot of money? People go, well, why are you telling them how much money you made? That's just because that's how they know you're going to pay them back.

They can see that you've got a money-making machine here, you know, that it's great. And then he says, well, won't people just want to go do it themselves? I said, sure. They all joke about it. I mean, the last guy was a doctor. He says, well, why don't I just do what you do and make the whole $136,000? I said, great, doctor. Just take that shingle, throw it in the trash can.

Let's go to town. He didn't take that shingle off the wall. That's not who he is. He's a doctor. Exactly. I love those people. They're great. Well, if you're making so much money even doing it, why are you showing everybody else how to do it?

So I like the answer. So they'll know I'll pay them back. Yeah, so they'll know that I have the money to pay them back. That this is a good sound business practice. Right? That's a good one. Okay, cool. So let's see.

Another thing to point out here, and I kind of, I mean, I know what I would do, and so I'm not concerned about this, but I think some people might be listening, might be thinking about this. You borrow your private money for five years, but you sell on 20 years. What do you do at the end of the five years on the money that you borrowed? What is your primary access strategy? Okay, well, let's, I wrote, I wrote three pages on this on my blog. It's at 1,000 Houses.com, and it says why I borrow it the terms I do.

But let's start from the very beginning. Okay. First of all, the reason why I'm borrowing interest only is most of these people are old. I pay seven widows now. You know, the man died. The woman never knew what the business was about and still doesn't. And now she's 83 years old and it's even worse. So they elderly people are really fearful that they're going to spend their principal.

And if I send them an amortization check, you know, a check over an amortation schedule, then they're going to have to figure out how much of this check is principal and how much is interest and how much can I spend. So just to make it easy for them, I do interest only. And I say if you get a small check, you can spend all of it. You get that really big check. That's me giving you back your principal. You know, so you can spend all these little checks I'm sending you every month. And you won't be touching your principal.

So that's one reason. Two, in the early days when I needed cash flow, you make more cash flow if you don't have an amortized loan. If you're just interest only, you have a smaller payment. And when you're trying to create enough cash flow to quit your job every dollar counts, you know, you're trying to get up to $3,000 or $4,000 or $6,000 a month, and you want to get there as fast as you can't. And so I set up all these people that way. And I never went back to change them because you don't want to go change. changed the story on people after they got set up. So when I was young, I set it up for one reason.

Even though I didn't need the lower payment anymore, I wasn't going to go back and try to change it. Number two, let's just look at the worst case scenario. If you bought a house for 40 and ended up with a note for 80 and you made $12,000 to do that, you know, to, you know, up front. And then you collected $570 a month for 60 months. And then you had to give the house back. Is that a bad deal?

it ain't a bad deal. Right. You had no money out of your pocket. You made $12,000 up front. You collected $570 for 60 months, and then it was over. So that's as well. So, but do you think 80-year-old people want the house back? Right.

You think the doctor wants the house back? I mean, if you ever made it to five years, you don't think they would renew another year or another two years. No. The reason why I would love to get all 15-year amortizations or 20-year amortizations, but old people don't see themselves living that long in their first argument and their argument always is I'm not going to live to see it so I don't want that it doesn't matter that it's all the same it doesn't matter that it's all this in their mind they're getting a note that's going to outlive them and why would they do that so I had to make something that was short enough that they thought well I'm going to

live that long you know okay so then if you had a note for three years that was paying you on time you think you could sell that note I mean what would the house be worth in three years? years from that day. And in season note, you think you could sell that note to someone if it had a 10 or 10.5% face value? You know, so you could sell the note. But what about this? Matt, you'll appreciate this. So I have 20 of these notes. I spent, I borrowed a million dollars. Actually, I'm going to tell you it was a million, 25,000, but let's call it a million for easy math, okay? And I had 20 houses that I had sold on notes. So I had these 20 notes out there. 20 people owe me a payment every month. They're living in the house. I sold them.

I went to the bank and said, look, I want to refinance this million dollars worth of underlying debt that I have. My million dollar debt is at 8% and it's interest only. And I needed to start amortizing at some point. I'd like to have a 15-year fully amortized loan. Would you give me a million dollars to replace the million dollars I have at 8%? They said, yes, but of course they want to put me through the ringer. So they said, well, how much do these millions, how much do these houses owe you? I said, well, I'm owed 1.8 million.

You know? They said, well, how much is a house is worth? I said, I don't know. You have to go get them appraised. I mean, they told me they had to go get them appraised. Right. I mean, I told them what they were worth. They didn't believe me.

They went out and they appraised for more than I told them. They were praised for $2.2 million. So here I am wanting a million dollars. I'm owed $1.8, and the collateral is worth $2.2. They gave me a 15-year non, you know, a fully amortizing loan. You can't call the note, okay? At four and a half percent, and it had adjustment every five years. So there was two adjustments.

There was adjustment at year five, and there was an adjustment at year 10. And it was prime plus one. And I was just old enough to remember the Carter years when interest rates went to 18 percent, and everybody went broke, right? So I said, and there has to be a ceiling because I'm not going to go open-ended. And certainly not the way the world felt before the last election, okay?

Before the last election, I was horrified. So they gave me a 9% cap. And then another smart guy came by and said, yeah, and you've got to tell them no covenants. No covenants, meaning there's no ratios as to what the rents are compared to the whatever. You either make your payments or you don't make your payments, and if you make your payments, they can't foreclose.

And if you don't make your payments, they can foreclose. That's the only way they can foreclose on you is if you don't make the damn payment. Okay? No covenants, no little fine print that says if your collateral is not worth so much, then we can call the note. There's none of that. So that's the kind of loan I got. And then I went and paid off my million dollars worth of people. And so this million dollars is usable over and over and over again now.

And by the way, when I refinanced my 8% private money debt down to 4.5% 15-year fully advertising, increase my cash flow 60,000 a year. And it's amortized. And it's amortized. And I don't have to worry anymore. Right. And so I quit making, and I also quit making 20-year notes for this reason.

I make 30-year notes now. My payment that's coming in is a little bit lower, but in 10 years they haven't reduced their debt at all. Hardly. And I'm sitting there not reducing my debt because I'm interest only for the first five years. So it makes perfect sense to set up my payer to where in the first five years he's paying, he hadn't reduced his debt either. Hardly. Fractional. Yep. Okay. And then there's also another way to sell notes without giving a discount. And this is how I sell notes.

I sell notes. I mean, you could sell this $80,000 note for $65,000 and pay off the 40 and have the 25 left over, right? But you're still taking a discount. You took a $20,000, $15 or $20,000 discount in this case. But how you sell notes without doing a discount is you could sell the note on the first day without seasoning. It's just a matter of how much of the back end of the note do you want to hold? Three years, five years, six years, seven years. And so for every year that you hold that you've got 30 years on this $80,000 note. Well, you say, look, I want $80,000. The guy says, well, the house is only worth 95. I don't feel comfortable. There's not enough spread. You know, what if it goes default on the first day? I said, okay, I understand that. So I'm going to hold five years

of the back end. So I'm only going to sell you 25 years, the first 25 years of that 30 years. And I'm going to keep the last five years for myself. And that reduces what you're going to pay me now by $7,000. So now you're instead of giving me $80,000 for the $80,000 note, you're just going to give me $73,000 for the $80,000 note and the house is worth $95. Now there's a bigger spread. You're comfortable now, sir? Yeah. Plus, there's two reasons why I do it. Number one, I always make it mandatory. I always sell them at least one year of the note. I mean, I'm sorry, I always keep at least one year of the note.

You know why I'm at? Because now I can handle this problem for us instead of handle it for him as a third party without a real estate license. I'm a principal of this note now. If it goes on, if I need to resell it to someone, I'm protecting my interest, not his interest. Got it. You know, I, because if he buys the whole note and then I go try to help him reload the house, I'm practicing real estate without a license because I have a real estate license, and here I am trying to put someone in his house, an owner finance deal.

Plus, we're going to flip a coin and we're going to lose, and we're going to have to collect the payments. And whoever has to click the payments gets $35 a month for that service, whether he does or I do. We're going to flip the coin, and I'm going to lose every time. I get the $35 and I'm going to take care of it. You know, why? Because as soon as that doctor starts having to chase these guys around for money,

he's not going to loan me any more money. He's not going to buy any more of my notes. he's not going to so you got plus they're not any good at it you know I had a one doctor finally called me says hey we got a problem with this house is what's right they're not making their payment I said okay well how far are they behind

he said two years I said are you you know I like threw my hands up in the air I said you're kidding me two years I can't fix that you know what I mean and you're calling me just now yeah that's food barred man you know I can't I can't I can't fix that so I want to take care of it because I want to know

right when things are broken because when I find out when things are broken within 30 days and 60 days, I can fix it. You know, there's a really good chance I can fix it. And maybe even come out ahead for all of us. And all you have to do is fix one note for these guys. And come out ahead, even by a little bit. They're never loaning their money to anybody.

Because the worst nightmare to them is they buy this note and it goes bad. And that's their nightmare. When that happens and they come out ahead on the next sale, it's over. All their money is yours. Yep. I actually wait for that to happen. I get it. It's really amazing what we can do with money and houses.

I did a couple episodes a while back on how to get wealthy on balloon payments, where so many people are so afraid of the balloon payment. And, you know, you just shared two or three different strategies of how to get out of these five-year interest-only loans. The other thing that people forget is they look at this, one little deal in a box. It was like, and they're worried about how they're going to pay $5,000 down the road or they're going to play that balloon payment. It's like, is this the last deal you're ever going to do?

You know what I mean? Like, this is something you're going to keep on going and that money's going to keep on going and you have all of these options. And, but worst case is like you just pay it, you know? Yeah, yeah. I never, I never even wrote that in my story, in my book because I didn't think of it either in my little thing. But that's the truth of it is, is, you know, when you've been doing this, like,

as long as Matt and I've been doing it. I mean, our cash flow can be 30, 40, 50, 60, 70, 80, 90, 100,000 a month, right? I mean, so if you got a payment and someone really wants to, you know, the other thing you do is you can just substitute one of your other lenders for this guy. Right. You know, just every time I pay someone off, when I paid that million dollars off, those people got mad at me, Matt, because they were living off that interest payment. And when I cashed them out with the bank and gave them all their money back, they had to live,

They had to bite into their principle for that month. Right. And they were mad at me, literally mad at me. Yep. I learned a lesson there. I learned to make a million dollar bundles and make sure that it don't wipe any one person out. That I'd just take a house from this guy and a house from that guy and a couple of houses from this guy that has 20 and this guy over here that has 10. Take a couple of him.

This person only has three, so I'm only going to take one from them. You know what I mean? Yep. Because I spread it out so that I didn't wipe because the first time I did it, I wiped a couple of people out. and I didn't think about, I thought they'd be happy to see their money come back. They weren't, which is a different dynamic from the bank. The bank wants to know, when are you going to pay me, when you're going to pay me, when you're going to pay me, when you're going to pay me, when you're going to pay me. The private people say, don't pay me off, don't pay me off, don't pay me off.

Right. Well, that's the big reason that the private money snowballs, snowballs, is because you do what you said you're going to do when you said you're going to do it. You gave them back their money when you said you're going to get them back. And they're like, well, what am I supposed to do with it now? Right. Yeah. And now they're ruined because no one else wants to give them 8%. Right.

Right. So yeah, it's projecting what would be your issue and what your problem, projecting that and assuming that's what the other person has as well. And it's just not the case. So let me tell you this, man. Go ahead. An interesting transition going on here at my office. We have now so much 8% money that it dawns on me, when do you start asking for 6% money? You know? So I've come up with a way to ask for six percent money now. And so what I'm saying is, you know, when people come with me, I pay between 6% and 8%. And they go, well, what's the difference between the six and the eight? I said, well, if I'm borrowing 60% to 65% I'm paying eight. Or, you know, or 55 to 65, I'm paying eight. But if I'm only borrowing below 55% of what the owner finance value is, then I'm only paying six because it's a risk reward formula. And with a little more risk, I'll give you a little more interest.

With a whole bunch less risk, I need to pay a little less. Right. So I'm starting to move into that now. I just wrote back down, by the way. Of course, the people that I have at 8%, I'm never going to change. I'm not going to go back to them. I did it one time from 10 to 8, but the money got so cheap for so long that I had to go to them and tell them. I can't keep your money out because people that are borrowing from the banks are kicking my ass so bad.

I can't compete with them. You've got to come down a couple of points if you want your money out. And they did, and they understood. it. But I'm not going to go back to them and ask them for six. I'll just start with my new people and telling my pay between six and eight. And of course, if they sign up with me, I'll have a whole bunch of six percent deals for them. Sure. Super. So we've been going on a long time. I can keep on talking. Do you have to go anywhere? No, I'm good. I love this conversation. I've been, I started talking about it 20 years ago and I've never stopped. Yeah, no, I get it. And I don't know why.

I get it. And I think that your podcast is a good outlet for that as well. Just like mine. I love talking about it. Okay, so you said if you get someone to sign up for 6%, you get a whole bunch of deals for them at 6%. So what are your favorite ways of finding deals in today's market right now? A lot of things that used to work don't work anymore. Bandit signs don't work anymore. Mailings are suspect. But I'm still doing mailings, but it's the same stuff, Matt. It's just you've got to be more Johnny on the spot. You've got to get you got to find out who they are faster like tax delinquents who's who who who's new on the tax delinquent property tax delinquent list in the last seven days every seven days who's new i got to get to them right now

they're just they just hit the chart i got to get to them and i got to get to their door or get to their phone right now right okay because there's competition out there right it's about getting to them quicker and it's about getting being consistent that's why i have vAs that over in the philippines right now that do it for me every day they're doing one of these lists and I'm getting to those people, like they just hit the list two days ago. I'm already calling them. Mm-hmm. Mm-hmm.

You know? Yeah, today's market speed and consistency and follow-up is just, oh, my goodness, that cannot be overstated. One of the things I learned from the mastermind that we were in that has worked very well for me ever since, I always send a hard copy of a contract in the physical mail. Mm-hmm. That has made a lot of difference. You know, people that have cussed me out told me.

to get off their property, I still send them with the same offer that they were mad about in a hard copy envelope mailed to their mailbox. And inevitably, when some of them do call me and end up taking my offer, I'll ask them, why did you pick me? They say, you're the only guy that was serious enough to send a real offer. Yeah. So, yeah, exactly. That was a big takeaway, and you might have been at the same one.

I think it was. I'm sure it was the same day. I'm sure it was. And they're like $100, $200,000 a month in direct mail. And their direct mail piece is a purchase agreement in a FedEx envelope. Oh, wow. Yeah. Mm-hmm.

And so we started doing something similar to that. We scrape the property management websites. We go and we look at all the properties that are vacant. And we go ahead and do title search. And then we send them three options, letters of intent, direct mail. And we'll send it in a fancy little. To the owner. To the owner.

To the owner. Yeah. Very clever. Very clever. Because they've got a vacant house. They've got a problem. They're in it for the cash flow, so I'll offer them cash flow. Absolutely.

They'll be the note holder now, not the property owner. I consider that a jewel right there because I didn't know that. So can I give you a jewel? I'll give you a jewel. I think that maybe you don't know. You might know. You're a smart guy. You probably know it.

Now I'm probably going to embarrass myself. No, that's okay. Nobody's listening. So the other day, you know, one of these famous TV, house manipulator guys is getting foreclosed on in houses at my auction at my in my town you know here these guys are on TV trying to tell you how to do it and buy their course and they're getting foreclosed on and I looked at my partner and I said you know I'll have to call up those poor people that are having to foreclose on those houses and ask them if they want to deal with a real investor and at the minute I said it we both looked at each other and we got the address of those people that are foreclosing. They're not companies. They're not Frost Bank.

They're not Wells Fargo. They're not Chase Bank. They're just individuals that are foreclosing on some investor they loaned the money to. And I'm going to go approach them and say, hey, how would you like to deal with an investor and this crap will never happen to you again? You know, I've 1,500 houses, 20 years. I've never given a house back in my career. Mm-hmm.

You know, so now one of the things of V8. does is she checks for who's foreclosing on who and when we find a little guy foreclosing on someone we go talk to the little guy. Ah, got it. So you are looking for anything that's not a bank doing the foreclosing. Yeah. And then he's having a hard, and then you know what I'm going to do? I'm going to go and say, you've got a problem with this house, don't you? You're getting back a house. Do you know what to do with it? They're going to go, hell no, I don't know what to do with it. I says, let me help you out with this. I'm going to fix this house for you. I'm going to fix this for you. But you try me on a couple of houses and quit

Quote loaning money to these Yehus. Research me. Look me up. Here's 200 bucks. Go hire a private dick. This is my social. Don't look me up. Right.

You know? I like it. Go do what you got to do. And quit dealing with these wiener heads and start dealing with a real investor. And then I'll go fix the house for them. I know I'll pick up money that way. I know I will. Right.

That's a good one. We just started it. We just started it. That was a good one. Sweet. Might have to do a market. module on that. It'll be pretty short.

It's really not that complicated. Yeah, I know. Most of them are pretty darn simple. We just have to have the idea. So thank you for sharing. Okay, so let's keep talking about the private money for a second. The biggest problem, all my students is, they can't see themselves getting private money. They don't believe that people are going to want to loan them money, right?

That's one of like the biggest obstacle for them to break through that barrier that someone will loan you the money. But so the way that I get helped them to overcome that obstacle is like, and I think you'll agree, it's not about them. It's about the deal. I should be able to be like sitting right next to Charles Manson in a jail cell, and I should be able to get the money. If I have a house that's worth 100 grand and all I needs 50 grand on it, and I'm going to give the guy a first lien, I should be able to be convicted of multiple murders and be behind jail and I should still be able to get the money. Yep. because it's the deal that brings the money, not the person. Yep.

And so, so let's just keep going. So here comes the warden. He's walking down the aisle and, you know, I can hear his footsteps getting closer. And right when he gets right to my jail cell, I jump and say, hey, warden, I need you. Stop for a minute. I know how you can make some big money and legal. And he'll look at me and you're like, yeah, sure. I go, well, look, I got this house that I own.

It's a $100,000 house. And I need to borrow $50,000. I just need you to loan me the $50,000. I'll pay $8% interest. And he'll go, right. I said, look, I'm going to give you a first lien in my 100,000 house. If I don't pay you, you get to take my house. And he'll like, you know, guards, get the keys.

Get this guy's out of here. Let me, we've got some papers to sign. Right. Totally. No, the mantra on this show from day one is find the deal and the money will find you. That is, it's find the deal first. Don't, don't look for the money first. It's so much harder that way.

No, totally. There's still people out there that this is their big obstacle. You're absolutely correct. I can't get into real estate because I don't have any money. Well, if everyone couldn't, if that was the case, neither you nor I or anybody else would have been in real estate. That's, it's so true. No, and I just love it when it comes from different perspectives. I love that you're sharing this.

It's not me because that is the most common question. I imagine now that you're an educator as well, and that's the biggest one. What do I find the money? How do I do this without any money? It's like, you don't. You go out and find deals and the money's no problem. Yeah, when you don't have money, you're a professional. professional deal maker because the better you are at making a deal the better chance you have it getting the money

Yeah, all you are all you are at that point is two legs two arms in a megaphone you have a deal You become two legs two arms and a megaphone and that means you you pick up your contract with your with your with your two arms with two hands And you hold it over your head and you take your two legs and you start walking around town and you take your megaphone your mouth and you start saying hey I got a 50 thousand dollar profit this deal here who wants half of it Who wants half of fifty thousand dollars? Let me tell you what you got to do you got to bring the damn money right I got the deal you need to bring the money and we'll split we both did our fair share and so you start out for a while splitting with partners but of course 50% of something's way better than 100% of nothing and then after a while you don't need those partners anymore you grow up mm-hmm totally yeah and so say to tell people you know

that you don't need money to get involved in real estate is real easy for my lips to say and it's real easy for everyone's ears to hear but it's a bit of a difficult concept to own in your heart and that's what I'm trying to get my students you know that's I know when I've broken through and usually how it happens is the first time they go out and they get their first person to give them some money on a deal and that's when that's when the light bulb goes off and the barrier has been broken but it has to happen once and I got a lot of people say well I'm just not having any luck finding private money I say okay so let's put on our honest hat here real quick. You've got to be completely honest with me. So how many people have you called on in the last

30 days? Well, I, I, you haven't called on anybody, have you? Okay, well, that's why you don't have any money. Because you have to call on the people. It's a numbers game. I challenge people to call on, to get 50 no's. Will you go out, please, and get 50 people to turn you down? And I bet you can't do it. I bet you can't go out there with a good deal and get 50 people to say no to you. Amen. Amen. And, you know, people say, everybody in my market is a short sale. And I was like, so how many phone calls is your marketing generate? How many people you've talked to? Well, I got six this week.

And I'm just like, six people and everybody in your market is a short sale. Really? Exactly. Wait to, wait until you answer the phone a hundred times and then tell me that everybody is a short sale. Right? Right. Awesome, dude. We should hang out more.

This was fun. We are kindred spirits for sure. Yeah. Do you ever make it down this way? Occasionally. I've been to Dallas once in San Antonio a few times, and there is definitely a reason to go back to San Antonio, beautiful city.

Love it. Well, I've got a new ranch. I'm dying to show anybody who wants to look at it. All right. I'm in. Put it on the calendar. Super. Well, Mitch, it's been fun.

Fantastic. I definitely want to do this again. Where can people go to learn about Mitch Steven and all of that his organization has to offer? Okay. I have that right here. that to me I got to make sure I get this right where is it at there it is um you can go to 1,000 Houses.com that's one zero zero zero houses dot com forward slash matt matt

books and that's where you can see the three books that i have for sale the failing forward of financial freedom 200 plus ways to find bargain properties and the art of owner financing if you want to watch a PowerPoint presentation that has the pictures and all the numbers and easy to follow my owner finance strategy, plenty of case studies, go to 1,000 Houses.com forward slash Matt M-M-A-T-P-R-O, Matt Pro. And I'm giving away, I say giving away, I'm practically given away my book for $7. It's about a $20 value there at Amazon. And you can go to 1,000Houses.com, Matt 7, the number 7,

Matt, the number seven, and you can get my first book, My Life in a Thousand Houses, failing forward to financial freedom for only seven bucks there. And, you know, if you just peruse around on those sites there, I have tons of free stuff. You know, Matt, people say you give away too much. I say, you know, there's two theories. Give away this much for this price, and then tell them they want a bigger piece of the pie, you need more money. And then if you want the real secrets, give me some more money.

I don't like that way myself. So this is what I do. I give you everything I know. And if you think I can help you get someplace making less mistakes than call me. It's a perfect philosophy. You know, if you can do it yourself, go do it yourself and more power to you. But I'm going to guess that it's still going to, that education is going to cost you money one way or the other. You pay Matt or you pay me or you pay someone or you're going to pay it to the street.

The street's going to get your money. Oh, my God. Such a more expensive school to go to. It is. Plus, it might, if you go out on the street. the street and you lose on your first couple of deals, it may cost you a career that was going to be worth a fortune to you if someone would have just kept you from failing yourself right out before you got started. Right. And I'm being serious about this. I don't care who you hire,

hire me, hire him, hire, but hire someone and make sure you vet them, make sure they're doing what they're teaching. They have to be doing it. I mean, I'm still doing 100 houses a year. So I'm doing what I'm teaching. And then make sure that they're the kind of person in the kind of place you want to be 10 years down the road in your career. Make sure that you want to be who he is. So, you know, for sure. That's an integrity level, the whole thing. Yep.

The finance level, everything. And if you can get those to line up, then you got your mentor. Super. So Mitch's podcast is R.E. InvestorSummit.com. REinvestorSummit.com. Find it here on iTunes right where you listen to this show. And I'm sure you're on Stitcher and you're on the new Google Google Play, I think it's called.

Yeah. So you're everywhere. Everywhere podcast can be found. Mitch is there. If you are in the car or on the treadmill and you missed all of those domain names, go to Epic Real Estate.com. Look at episode number 239. All you got to do is remember, 239 over at Epic Real Estate. We'll have all of those links right there in the notes for you.

All righty. We'll make it simple. Mitch, it's been a pleasure. Happy Thanksgiving to you. I guess by the time people are listening to this, Thanksgiving will have passed, but still, I wish you the best. and let's do this again. This is really fun, man.

I'll talk to you soon. Take care of it. All righty, until next week. God bless and to your success. I'm Matt Terrio, living the dream. You've been listening to Epic Real Estate Investing, the world's foremost authority on separating the facts from the BS in real estate investing education. If you enjoyed this show, please take a minute to visit iTunes and share your thoughts.

Thanks for listening. We'll see you next time here at... Epic Real Estate Investing with Matt Terry O. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.