Epic Real Estate Investing - Negotiating Price or Terms (Live Seller Call) | 1224

Episode Date: August 4, 2022

Negotiating price or terms is key to making a deal out of every motivated seller you talk to. Your mindset should be that you only need to control one, the price or the term, to create a win/win outcome for both parties. Whether you're wholesaling or creatively financing your deals, the win/win result leads to a good sustainable real estate business. But, sometimes there is a missing ingredient... can you guess what was missing in this call? Stay tuned and learn more about this! BUT BEFORE THAT, Matt looks into how much real estate in the metaverse is. Are you ready? Let’s go! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. How much is real estate in the Metaverse? I mean, are people really paying millions of dollars? Is there anything cheaper? Well, let's take a look. You ready? Let's go. Welcome to the all-new, epic real estate investing show.

The longest running real estate investing podcast on the interwebs. Your source for housing market updates, creative investing strategies, and everything else you need to retire early. Some audio may be pulled from our weekly videos and may require visual support. To get the full premium experience, check out Epic Real Estate's YouTube channel, EpicR-E-I.TV. If you want to make money in real estate, sit tight and stay tuned. If you want to go far, share this with a friend. If you want to go fast, go to rei-Aase.com.

Here's Matt. Buying virtual real estate in the Metaverse platform like DeCentraland, or the sandbox. It's becoming an increasingly popular investment for the tech-savvy real estate investor who doesn't mind the risks of being in, you know, being an early adopter. However, determining just how much to pay for said virtual real estate,

that's been tricky, especially since there are no professional appraisers in the Metaverse yet. For many, knowing what to pay for a parcel in the Metaverse platform or platforms, the ones of their choice, it's kind of like a crapshoot. The market has shown to be extremely volatile. Meaning, depending when you're watching this, prices could be way, way down, and if you came back to watch this next week, prices could be way, way up.

And just like real-world real estate, there are several things to consider when determining how much to offer for a piece of Metaverse real estate, all of which can help you better determine a fair market value for the land that you want to buy. Most of the same factors, though, come into play when pricing virtual real estate as you'd use to price real-world real estate. For example, it's important to know how much the lots around yours have sold for, as well as the commercial potential of the lot that you've purchased, if any exist at all.

So you can look at marketplaces like OpenC to check prices, and you're going to want to look at location, just like real world real estate. You'll want to look at what you think the foot traffic can be and what you think you can get as a yield. However, one thing that's harder to predict with virtual real estate is who is about to move into the neighborhood. You know, big companies are buying and renting plots in a very hush, hush manner, which is impossible to do in the real world.

I mean, if LeBron James moved into your neighborhood, for example, you'd definitely hear the rumblings. If a popular fast food chain were being built next door, there would be permits and zoning hearings, but not necessarily for the Metaverse. Now, there are many different characteristics of land that can determine its value in the real world, anything from retained mineral rights, access to water, the terrain, to existing sewer connections. All of these aspects can make a property more valuable to the right buyer. And the same can be said for MetaStrecht's. LOTS, though buyers in the Metaverse

value different things. And so here are a few important characteristics of Metaverse parcels. Number one, the location. That one's obvious probably, right? We've touched on it. But the influence on the price of Metaverse Lots location can, it can't be overstated

because that means not only the location of the lot within its platform, but also the platform wherein it's located. Since Metaverse land can't be moved, just like real world land, it is where it is. And if the neighborhood is a hot one, you may find you have to pay a lot more to be there. Number two, size.

Although lot sizes in some platforms are the same, others are not, and this is important to note. You can also buy something called an estate, a real estate package that may contain multiple lots or a lot with a structure already on it. These additional parcels or structures can significantly influence the value of a piece of Metaverse property

since they directly influence the size of what you can build on your land. And then number three, utility. You know, in theory, you can build anything you want on any Metaverse lot, but some lots simply make more sense to use in particular ways. For example, if a lot faces a road, it might make a more valuable parcel for people who want to build billboards. If you hope to build a mini-mall,

you don't necessarily need the road frontage since avatars can move through lots without roads too. If you're a lot or two off the main drag, a dominating structure would be just as visible from the road, and you'll pay less for the location. So prices for land, in the meadow. Metaverse have surged this year, with some plots selling for millions of dollars. Many brands they want to secure space that they think will be popular in the Metaverse, in the same way that they buy advertising space on popular websites.

Price Waterhouse, Adidas, and Warner Music Group, just to name a few, have all invested planting their flags in the digital ground. Land prices have risen by as much as 500% since Facebook changed the name of its holding company to Meta in October 2021? 500%. So why are they throwing it? so much money at it. Well, imagine in the late 90s thinking the internet was a fad and would never amount to anything worth investing in. Sounds crazy, but many did. People don't want to make that

mistake again. Many investors are viewing this as a once-in-a-lifetime opportunity. So if you missed out then, this might be your second chance. And considering that the Metaverse is fundamentally a 3D version of the internet and the expectation is that once the technology has caught up with the concept, more and more people will spend more and more time in this virtual world. You know, people spend a lot of time on the Internet already. So why wouldn't they spend a lot of time in the Metaverse? Especially if, as Facebook CEO Mark Zuckerberg says, they can have experiences there that they can't have on a 2D website.

All of this means there could be some very serious money to be made. The Medverse has the potential to become a multi-trillion dollar part of the world economy in the coming decades, according to Tim Sweeney, CEO, of Epic Games, that's the company behind Fortnite. I mean, he's gone on to say that the next three years are going to be critical for all of the Metaverse aspiring companies like Epic, Roblox, Microsoft, and Facebook. I mean, it's a race to get to a billion users, with the winner essentially being able to set the standard.

So the race is on, and the amount of money it takes to compete, it's rising rapidly. I mean, someone recently paid $450,000, almost a half a million bucks, to be rapper Snoop Dog's neighbor in the Metaverse. The Metaverse's biggest deals have been by Republic Realm, which splashed out $4.3 million on land in the sandbox, and Tokens.com spent $2.4 million. They spent that inside of Decentraland. And some are saying that Microsoft's $68.7 billion deal to buy Game Publisher Activision Blizzard is a sign that gaming will be a key part of the Metaverse, with people popping on

headsets and gaming in virtual reality setting. Many questions, though, remain about the future of the Metaverse. The one thing that seems certain for now is we're going to be hearing a lot more about it in the years ahead. And in the meantime, people are currently paying millions for Metaverse land. But we're still early. We're really early. I mean, the number of crypto wallets that own Metaverse land accounts for less than 30,000 investors. Parcels in Decentral Land can still be purchased for $15,000 or so, up from $6,000 just 12 months ago.

So we're early, but it's going up fast. You know, $15,000 for a parcel, it's not chumpt. change, but we're not talking about anything out of reach for most people either. The adoption of the Metaverse is moving in the right direction. Most stats are showing steady, significant growth, which has translated to massive gains for early sellers on these platforms and the trends point to these gains continuing. However, understand, and I don't know, maybe I don't even have to point this out, but these worlds are new and not yet fully established.

So the potential might be tempting, but you may have to delve further and look beyond the statistics. You know, before you make any investment decision at this point, it probably makes sense to follow the wisdom of crypto, NFT, and blockchain vets. Do not invest more than you're willing to lose. So I'm getting closer by the day to making my first Metaverse investment. The asymmetric risk to reward ratio is just too big to not take that chance. And that's my opinion. But I'll go ahead.

I'll keep you posted as to what I do and when I do it. So if you'd like to explore the possibility of working together one-on-one in In the real world of real estate, with a creative, open-minded mentor, go to ryeiase.com, answer a few questions, and pick a time for us to hop on the phone, and we'll brainstorm some ideas about getting you to the next level of your real estate investing. Thanks for sitting tight while we pay our light bill. We'll be back right after this. Boating for flight 246 to Toronto is delayed 50 minutes. Ugh, what? Sounds like Ojo time.

Play Ojo, great idea. Feel the fun with all the latest slots in live casino games. with no wagering requirements. What you win is yours to keep groovy. Hey, I won! Boarding will begin when passenger Fisher is done celebrating. 19 plus Ontario only. Please play responsibly. Concerned by your gambling or that if someone close to you, call 186653310 or visitcomexonterio.ca. Ever hear someone say, I have too much money? Me neither. Let's get you some more. Back to the show.

Hey, Rockstar. I got another live call for you today. And this one was very interesting. The seller was firm on his price, not willing to budge, I believe were his exact words. But he was very open to seller financing. And he didn't bat an eye when I mentioned subject to either. So watch how it played out. And then I'll run the numbers for you at the end. And then I'll even play you the follow up call on the next day so you know exactly what happened. Those is... Yes. It's Matt. And, uh, I was calling about your property on that you might want to sell. Yeah. Very good. We texted back and forth a couple times, so sorry for the delay.

Yeah. Super. So I know Jen talked to you a little bit about it, and I just want to review a few things to see if this is going to be a good fit for us. Okay. All right. She says the condition is like an imperfect condition? Yeah.

Okay. Super. If you're going to stay there, say, a few more years, or is there anything that you know you would fix for sure? Dude, I'll tell you what I've, I would probably redo the second bathroom just to remodel it. The second bath? Got it. Yeah, that's about it, though.

Okay. I may update the floors, like, they go from the laminate floor and jackshaw real bamboo. Mm-hmm, mm-hmm. That's kind of that, though, man. Like, I just put in a completely brand new 16th Sears train HVAC system on the roof, and in the thing that was about a month ago. Not one appliance in there is older than three years old. Okay.

The kitchen's been redone, new countertops. The whole master bath has been completely remodeled as well. We find your carpet, flooring, and all that time. Not really, man. Nothing at all, actually. Sweet, sweet. Are you living in the property right now, or is it vacant? No, I have a month-a-month tenant in there right now.

Okay. Very good. And what is the rent bringing in? May I ask? Yeah, it's $1,200 a month. He's a really good friend of mine. As soon as this thing is up with him, his rent will be raised in 16. Got it.

And so it's month to month. Do you have like a verbal agreement with him? I have a verbal agreement with him. Okay. I'd want to honor that. What is the extent of that if we needed to? 30 days notice. Okay.

Perfect. Well, gosh. sounds like a perfect property. It sounds like something we'd be looking for. Why are you thinking about selling it? Dude, like, I have a locked in rate at 2.75, right? And, you know, I was one of two things. I was thinking about wanting to wipe out some debt

because I'd started a business venture down in Mexico City, and it didn't really work out that well, just given the climate that we're all in. For one, two, and I wanted to use the rest of that money to buy something else. got it but I mean but when you're

valued at 310 315 right in there and you only owe 160 on it it's kind of like all right

you bought it for 185 I'm way on the other side got it so you're going to make some money on that's what you want yeah

I mean like just to have a pressure start however though if I do get one of these jobs that I've applied for I probably won't sell it

got it got it because the two jobs that I'm being considered for right now are well-ended six figures. And it is like, all right, you know what, I'll bite the bullet, live cheap for a year and a half, I'll pay off my debt myself, and then I won't sell the property. Got it.

Do you have a deadline on that? Probably in a couple weeks. Okay, so it's coming up. Okay, perfect. Have you considered just calling a real estate agent? Sounds like a perfect retail property. I have. They're taking pictures of it tomorrow.

Okay, so this is something you're probably going to list. I'm probably going to list for a little bit And if I do get one of these jobs I'm going to have a pull it Got it got it Okay Well gosh I don't know if I'm going to be the right buyer for you I mean it sounds like you kind of got to figure out

You know what you want to do What do we have here? I mean but if somebody offers me What the current value is For those apartments that are in there And I'm currently listed I definitely consider it But I'm not going to sell it for anything glass

I understand got it All right. So what are the, I'm looking at some of the most recent comparables. I mean, gosh, the market is shifting so quickly and I've got so many opportunities

on my desk right now. No, I'm sure. I'm sure. Yeah. I mean, the comparables I've sent over to me, the average is about 310,

given the condition that my apartment is. Right, right. And you, it's a two-bed, two-bath, right? And a two-car garage. And a two-car garage, got it.

We've been back. Because even just, like, if we just took out, May and just focused on June when that was kind of seems like the transition right there mid May. Let's see. I would love to make this work for both of us, but I got an obligation to keep the lights on

over here. Oh, absolutely. Yeah. I totally get it, my man. Totally. So let me see. Just removing all of the three bedrooms here out of this report. And then.

I got the same report from her as well from the real estate. Yeah. Do you got a time frame of how far that goes back? Yeah. Okay. June. June? Yeah. Oh, really? Okay. So I'm looking at the public records here. And if we took out, if we just looked at the two bedrooms within a quarter mile of your area,

let me take out the one bedroom, take out the three bedroom, and then lots of three bedrooms in there. Like we got the, we got the market, there are the average, just the average sales price at 262. That's a little far off that way. That's the thing, though. The thing is, if you go one block up, you're in the hood. Is that what's going on here? Okay. Yeah, you go one block up, you hit .

You're screwed. Right. I fit right in that pocket where Spanish trails is. And this is why a lot of people like that neighborhood is because I got the best schools zoned. Uh-huh. And I'm right there before I get . . . So this is the thing, though. A lot of people, like, I see.

that you're calling me from LA and I'm from LA as well and it's kind of like it's kind of like if you're on one side of the street or on side of the street in Santa Monica you get into section 8 you get into section 8 housing and if you go up one block literally a quarter of a mile you're right there in that hood and that's where like it has a lot of trailer parks and all that jazz and this is where a lot of people who are not 100% really familiar with that because you look at a quarter mile but you feel like to look at a quarter mile ways in Santa Monica, you jump into, you know, rent control housing, you drop into a lot of, you know, not as desirable stuff because the first thing you think about Santa Monica is like, you know, 3rd Street Promenade. I went, I went to Samo as well. And I get it. You know, but that's a thing, though. Like, it's not something that I'm willing to budge on our neighborhood. Sure, but then that quarter mile right is, but if you look around that quarter mile radius, There's nothing desirable in there. What's this number eight property?

Okay, hold on, because I'm looking, and I am between... If you get up to... You're screwed. Okay, let me take that out. This one right here. That's weighing you down. Yeah, it takes us to $2.99. That's what I'm saying.

Yeah, yeah. And that's the thing, though. And I got this little pocket. And for what my interest rate is, dude, if I'm about to pay off the loan in 10 years. Right, right. So if I get a fixed figure income, you know, for the jobs that I'm looking at, dude, I can pay this thing off and get myself out of debt. And now I'm sitting on a property in about five or seven more years or now that could be worth $2.50.

Right. No, you're in a good spot. And, boy, your loan is as much of an asset as your property is really. No, absolutely. I mean, like when you have $2.75 at your fixed rate for 10 more years, well, I had it for 15, I got 10 more years left on it. after I refinance it because I refinanced it from 30

now was at 3.9 and I got it down to a 15, 2.75 dude, my payment only moved about $75. I mean, like, but I cut my loan into half. And when you have an inflation rate at 8,

it almost got paid to take out that loan. Yeah, you're a little bit more that's what I'm telling people all the time too. It's like, what are like a negative interest rate? Even if it's 6%, we're still at negative 3% of what the loans are. Yeah, I, dude, I got a degree in economics for a reason, man. Yeah, you get it.

Like, you just noticed it. As soon as you took up that one house on that corner, dude, it goes up to 300. Just pay $2.99. Just go up to $300 for round number purpose. Right, right. I got you. No, I need that extra buck, dude. No, here we go. I'll buy you a beer at the end of the day.

Sounds good. Sounds good. Yeah. The only way that the mark would allow me to come up and get you your price is if you're willing to take some money now and the rest later. Would you be open to something like that? Okay. Yeah, like I'm never going to say no to something until something's formally presented. Sure, sure. Okay.

Here's the other thing that makes you a little bit more desirable than most people that I talk to is your loan right now. Would you be willing to leave that in place and just sell me your equity? Maybe. Like I said, my last statement said I owed 161 income change. I make my next payment here, look, six, seven more days. What I dropped to my bottom line, I only pay $370 a month in the interest, I'm like shit. Right, right.

That's all I pay an interest. Okay. Like I said, man, if you put something forward, I can definitely look into it. Okay. It's really hard to come up with something off the cuff. Like, I'm more into entertaining the idea. All right. But I need something to take a look, entertain, though.

For sure. No, I'll put something together for you, for sure. Just so I'm not wasting your time, though, if I were to give you some money now and the rest later, how much do you actually need right now? $50,000. Oh, $50,000. Oh, $50,000. Okay.

Yeah, $50,000. All right. I think that could be very doable. All right. Let me put something together, and then when can I call you back when you'll be in front of your computer? Is this your cell number, man? Yeah, this is my cell. I'm from LA, too.

Shoot me a WhatsApp message. Mm-hmm. And maybe we can schedule a Zoom call. Okay. Sounds good. Sounds good. Yep. Thanks, partner.

All right, buddy. Talk to soon. Bye. Bye. All right. So, we might have something here. I don't know. We're going to run the numbers really quickly.

But, you know, when I'm looking for a deal, I'm always looking for two things. It's really not a deal unless I've got equity. and or if I've got cash flow. So those are the two things I'm always looking for, and then that'll put me in a position as to whether it's worth my time even making an offer or not. Typically, I will always make an offer,

but how far, how much time do I want to invest in this is really what I'm trying to discern right away. This is my quick and dirty math formula, so I'll show you real quickly. All right, so we know the seller's property is, I have it valued right at, at, right at, I had 299. So I'll say 300.

The seller wants 310. He said he's not willing to bud, right? So an equity play, this is probably not going to happen here. Doesn't need to sell. There's no real distress. The property is in a great condition. I saw the picture online. It's decorated beautifully.

He's already got an agent out there taking pictures. Probably got a list it next week. So he's not going to sell it at a discount. If he has to keep it, he's more than willing to keep it. So what we have to do is run the cash flow play. Can we turn this into a cash producing asset based on his willingness to direct the financing and even go subject to. So that's what we're going to look at.

Right. So I saw the rents. He said he's going to re-rent this thing for $600 bucks at the beginning of the next month. I looked online. That is probably market rent. And I'm already thinking right now that might not be enough for this to cash flow. So I did buy a couple property in the area that cash flow, or excuse me, that rented for $1,800.

So that would be my best case scenario. And I think I would need the best case scenario to even make this work just based off of what I was thinking. One thing I didn't, information I didn't get from him was what the property would or what the actual mortgage payment was. So I texted him back and he said 1279. Wow, 1279 with this 2.75% interest, because this is what I'm really going after it, because that's really juicy right now based on what the rate.

have done. So at 1279, that kind of scary is if I take the 1800, and I know based on taxes, insurance, maintenance, vacancy, property management, I'm going to lose about 40% of this every month, averaged out over the year. Right. So I just always hit that time at point 60. So my real rent, what I actually need to take is going to leave my operating in. Now I have a money the mortgage payment. I can already see that there's a problem there, right? Like my cash flow. And I added back in what my down payment's going to be,

how much money I'm going to have to pay, or how much I'm going to have to pay for my private money on the down payment. And then we still got the gap between the, his equity, or excuse me, the value of the house, and then he owes 180. So that puts us at what? So I still got a negotiate seller financing terms on the equity here. So if we're already $199, it's probably not a deal,

but I was curious because this looks really, really high. So it's got to be a 15-year loan. So I'm going to call him back to confirm. And what I also didn't ask was about HOA. So I'm going to have to call him back on that also because it looks like from an aerial view that he does live in some sort of condo type building. And I don't know, 99% positive there is an HOA there. So I'm going to give him a call back real quick.

Yeah. All right. So, yeah, me, on your, you. You said your mortgage, you text me back, it was 1279. Yes. Is that like a 15-year mortgage? 15-year mortgage fix at 2.75. Ah, okay.

That 15-year, man. That might be the deal killer. Yeah, it was just for what my payment was to that. And now I'm going to renew that lease for $1,600 a month. Mm-hmm. That's what I'm at. Are you managing the property yourself? Yeah.

Okay. All right. Yeah, so you've been negative cash flowing almost, right? Up to this point? For the last few months, yeah. And then I'm renewing the least September 1st, and it'll be $1, and it'll be $1,000 a month. Got it, yeah. All right, so I saw $1,600 was kind of the average $1,800 in your best case scenario. Do you have an HOA over there, too? Okay. Do you have an HOA over there? Yeah, two... Got it. All right. Well, man, I'm... I don't know if I can make this work. Do you got any ideas?

Do you want to take it out, right? Yeah, you know, I was even looking at a 30-year amortized with today's mortgage rates, and it puts me basically right at your 1279. Yeah, that's the thing, though. That's why I refinanced it when I could. Because I was at 3.98 for the price, and from my payment went up. I was at 3.9 something, I think 3.8 something. And when I refinanced it at 15 at $2.5.

point seven five my payment increased what 50 bucks right right so yeah that's just the thing no man like if you guys want to take it outright and I'll change some ideas for you but right this is where I currently yeah got you yeah the rents just ain't keeping up with the prices over there so and then with that yeah 260 bucks in HOA it's like a deal killer yeah I totally get it man I totally get it all right man well I just want to get back to you and let you know what I was saying I appreciate it not You bet. Good luck, partner. Okay. Bye.

All right. So, for sure, we've got a little deal here, unless I miss something. But this right here being this 15-year loan, that is, that's the deal killer right there. And when he said, told me about the, uh, when I asked about the HOA. So there's the nail in the cropping right there because that puts us at, what, four, 459. And I didn't even have calculated the down payment. But let's go ahead and do that because if I would go, you want to give them 50 pay down. It's the down payment.

I've got a couple sources of private money that I can get this down payment. It right at 8%. It would be right around $333.33. There's another negative. So $4.59 minus. That would be plus, wouldn't it? Plus 333. So now I'm in negative $7.992.

my great cash blowing property, especially when you're valued at the $300,000 a box. And then I still haven't even calculated what I would have to pay him for his equity to sell it finance. So we got the difference between here. This was actually not $180, $160. So that would put the $300. There's $140,000, then minus the $50,000 that I gave him.

It gave me $90,000. What I owned, right? You missed that. It was a 300 minus 160,000. That gives us 140 minus the $50,000 down payment. Now I've got to negotiate where I'm going to pay for this. I doubt that he would be down for principle only, not that would make a difference at all.

But even if I was, that's on the sweet deal. I got at a 4%, you know, we're still, there's another 300 bucks in the payment to him there. And so now we're at that with that $1,000. see in cash flow. But that's not a positive cash flow. That is a negative cash flow. So I don't see a deal here. I'm probably better off just going to a little bait and getting one of these high six or seven percent long that they're giving out today. That would do much better than what we got going on right here. So I don't see a deal here. I've got no equity. I've got no cash flow.

If I miss something, if you got an idea that you saw that I missed were somewhere that I messed up, I am a student of the game. I am always open to learning. I learn something new at every single transaction, what you saw, what we could have done differently. And if you're thinking about changing the use case, because that would really be the only other option I could think of is changing the use of the property so it would generate more income to cover all the debt service that we got going on here. Then, I mean, we could do student housing. We could do short-term rental. We could do assisted living. We could do all of that type of stuff under normal circumstances. But this isn't a condo complex and condos townhome connected homes, something like that. But they've got an HOA there.

And for most parts of the country, that HOA is going to kill a lot of those possibilities. But here in Las Vegas, it absolutely kills every single one of those possibilities. So my only option here are the traditional ways of buying, selling, and leasing homes for this particular property. And that wraps up the epic show. If you found this episode valuable, who else do you know that might 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 world. We got the cash low. This podcast is a part of the C-suite Radio Network.

For more top business podcasts, visit c-sweetradio.com. Thank you.