Epic Real Estate Investing - Real Estate Market is Cooling, but Fire Sale? (Ryan Pineda) | 1233

Episode Date: September 6, 2022

Real estate prices are cooling, but not the fire sale yet, according to some experts. What are predictions and what should we expect? In today’s show, Matt talks to Ryan Pineda, who has been in the real estate industry since 2010. Listen to this episode and learn what real estate pros have to say about this topic! BUT BEFORE THAT, Matt shows you how owner financing works in real estate and shares another live call with a motivated seller. Are you ready? Let’s go! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. How does owner financing work in real estate? This is a great question because the answer can set you free. It can even be necessary for your next deal, especially if you're having issues with qualifying for a loan or if you'd just rather not deal with banks. Because they're certainly not required, and I'm going to show you how. You ready? Let's go.

Welcome to the all-new, epic real estate investing show. The longest running real estate investment 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-EI.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 reiase.com. Here's Matt. So by the time we're done here, you'll know what owner financing is, how it works, and how to set it up for yourself. And at the end, I'll also give you a free copy of my owner finance contract so you can reduce your risks and make better buys. So if you're in the market for a new home or your next investment property and are perhaps having trouble winning loan pre-approval, or maybe the thought of jumping through the hoops that banks put you through to get an approval, has you a little bit discouraged. I totally get it.

Well, owner financing is an alternative that can keep this dream alive. Though not all sellers will be willing or able to provide direct financing to the buyer, it can be an excellent way to buy a property while also simplifying the closing process, even cheaper. You see, unlike dealing with a traditional bank when it's their way or the highway, that's how they run their show over there, owner financing lends itself to an almost unlimited amount of flexibility and creativity. And in some cases, it can become the,

very complex, but it also doesn't have to be. Either way, it's important to understand the process before signing on the dotted line. So let's start with defining what it is real quickly. Owner financing. Also known as seller financing, let's buyers pay for a new home without relying on a traditional bank or a traditional mortgage. Instead, the owner finances the purchase. Just like a conventional mortgage, owner financing will typically involve making a down payment on a property and then paying the balance off over time. It's like an IOU from the buyer's to the seller. So this alternative to traditional financing offers a lot in the way of flexibility. For example, owner financing is typically more expensive and requires repayment or refinancing

into a traditional loan in as little as five years. That's what most real estate agents will tell their buyers and sellers, but understand this, everything is negotiable. As long as the seller and the buyer agrees, anything goes. Some sellers may require some form of a background or credit check, and some don't. Most don't actually. Further, there are no banks or traditional lenders involved, and so an inspection or appraisal, those aren't required either unless the buyer wants them. Now, once a buyer and a seller agreed to the terms, monthly payments are made to the owner's seller according to an agreed upon amortization schedule.

Unlike traditional mortgages, tax and insurance payments generally are not rolled into the monthly payment, and the buyer must make those payments directly. Other than that, everything else about the real estate transaction is the same as any other, Instead of making payments to a bank, you're making them to a seller. And then, just like every transaction, after you've made your final payment to the seller, the mortgage lien is released and you own the property free and clear. Now, there are some advantages and disadvantages of owner financing, and I'm going to get to those next.

Now, owner financing, this is a popular option for borrowers because it can be much easier than dealing with the bank. Sellers might opt for owner financing to expedite the closing process and collect interest rather than taking a lump sum payment. Still, there are some disadvantages that may provide prevent a buyer or seller from signing on for owner financing. First, the advantages for buyers. Owner financing can provide access to financing that a borrower may not otherwise have

qualified for. Owner financing enables buyers to finance homes that don't qualify for conventional finance. It also reduces the cost of closing by eliminating appraisal costs, bank fees, and, if the buyer so chooses, inspection costs. Owner financing also offers greater flexibility to get in the deal done. Now, second, the advantages for the seller. Owner financing, what this does is it allows them to sell their property as is without having to meet a lender's appraisal requirements. It also presents an investment opportunity with better returns than most traditional investments.

And it can shorten and simplify the selling process by eliminating the traditional lending process. Owner financing can spread out their tax liability over time, and it offers the ability to sell the promissory note to an investor. Now, third, the disadvantages for buyers. owner financing may require the buyer to make a balloon payment at the end of the loan term. But that's about it for the buyer. I mean, you could look at it just more of a stepping stone to a more permanent situation. Now, the disadvantages for sellers, owner financing can expose the seller to the risk of non-payment, subsequent default, and in some cases, it need to initiate the foreclosure process.

But as a seller, I actually see this as a good thing because the seller gets their property back. They gets to keep all the past payments, the down payment, the monthly payments. They get to keep whatever improvements the buyer made to the property. And they get to keep all of that. And then they get to sell it all over again. Owner financing also could put the seller on the hook for repairs and other consequences of deferred maintenance if the buyer defaults. But that's just part of real estate.

And much of the real estate horror stories that you may hear from others, that can all be mitigated by just good upfront due diligence. Now, in just a second, I'm going to give you my custom seller finance promissory note. You're absolutely going to want this if you intend to buy properties with seller financing, and you can have it for free. But let's go over the basic terms that you're going to need to understand first, like, for example, the purchase price. So when drafting your seller financing documents include the total purchase price as a starting point to calculate the terms of the financing. Second thing is down payment. This is the initial payment brought to the closing table by the buyer.

If there was an earnest money deposit, this amount should also be included in the agreement. The third is the loan amount. So subtract the down payment, earnest money, and other upfront payments from the purchase price to determine the amount the owner is going to finance. Now, the fourth term is the interest rate. Your agreement should include the interest rate

that you're paying to the seller. And in a retail environment, it's likely to be higher than the going bank rates. But no, it is 100% negotiable by both parties, as all of these terms are. The loan term and amortization schedule, that will need to be in the document as well. The loan term, this is the amount of time

a buyer has to pay back the loan. The amortization schedule shows how much money you pay and principal and interest over time and will determine our next term, the monthly payment. Make sure your owner financing terms include the number of monthly payments, the due date, and what constitutes a late payment and whether there is a grace period or not. And then balloon payment details. If that's included, you know, many owner financing arrangements are amortized over 30 years, but we'll have a term that's much short.

So this results in a balloon payment or a lump sum. that must be paid at the end of the loan term. Now, there are federal laws that may restrict balloon payments. So you're going to want to look into that for your market. And then the tax and insurance payment. You know, although taxes and insurance payments are often rolled into traditional mortgages, not typically with owner financing. Nonetheless, your agreement should describe who will be responsible for these payments.

And then additional terms. You know, every real estate deal is different. So make sure your owner financing agreement spells out anything that's unique to your deal. Now, I'll quickly walk you through the steps of setting up an owner finance deal. But if you'd like a copy of my owner finance agreement, you can grab it for free at epic promissory note.com. Now, there are many ways to put a deal like this together, but I'll give you three primary ways to structure owner financing.

One, use a promissory note and mortgage or deed of trust. And this works like a very, like a traditional mortgage or how it would work if you would to a bank. The buyer and seller agreed to the terms of the sale and the loan of, of, which is detailed in the form of a promissory note. The mortgage is secured or collateralized by the house with the property, and the buyer's name goes on the title, and the mortgage is recorded with the local government.

Again, you can grab a free copy of the promissory note that I used to buy owner finance properties at epic promissory note.com. The second way is you could use a contract for deed, also known as an installment sale or land contract. And this is when a buyer does not receive the deed to the owner finance property until after they make the final loan payment, just like when you buy a car, works the same way. And then the third way is to create a lease purchase agreement.

So this option, also referred to as rent-to-own or lease option, involves a seller leasing a property to a buyer who has the option to buy it for a set price. So the buyer pays rent for the lease term, and at the end of the term, the buyer has the option to purchase the property for the predetermined price or just walk away. If the buyer opts to buy a portion or all of the rent that was paid during the lease period is applied toward the purchase price. Now, you know how to owner finance real estate.

Oh, and by the way, if you'd like to dive in and make some quick money in real estate and flip a house in just one day while using my funds to do it, I'm going to give you my funds to do it. I'm going to show you how, how you can pull this off in your market right now at mat's free training.com. We'll be back with more right after this. Boarding for flight 246 to Toronto is delayed 50 minutes. Ugh, what?

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Comex Ontario.ca. Hope is not a financial strategy. Let's get back to work. Hey, Rockster, I got another live call for you today, talking to a motivated seller and talking subject to today. There's a really valuable lesson, actually a couple of valuable lessons in this call. And when you own a business, you're always looking to optimize the business and increase the efficiency of the business.

And you kind of, you know, you kind of start here. Everybody starts here at 12 o'clock and then you kind of come around here and this would be like three o'clock. and then you make some more optimizations, you get to 6 o'clock, and then you come back around here, and then you're 9 o'clock, and then you make some more optimizations,

and boom, you're right back to where you started again with all the same problems. And that's what I've noticed here is what happened to my business over the last couple of years. And so go ahead and take the look, follow along, and see if you can kind of pick it out of what went wrong here. And then I'll go ahead and tell you what happened and how this all turned out at the end.

All right. Enjoy. Hey, Matt, this is, you gave me a call. about my property. Oh, right. Yeah, you came through a different avenue for me. So I was kind of curious that was what was going on. Did you find a website or something? Yeah, there was a website and then Craigslist.

Mm-hmm. Sometimes it's something like that. Oh, sweet. Okay, so. I just did out a bunch of different people. Got it. You have a property for sale then? Yeah, most people that reach out to me, you know,

they want to know how much they can get to their house, how this all works. You have those same type of questions? Yeah, definitely. Okay, perfect. I'll just ask you a few questions about it and then give you a couple options and then you can tell me how you'd like to proceed. Is that cool?

Sure. All right. So I got your name now. I got your info. Got your phone numbers. We've got that I'll confirm. I'll ask you about the property now. What's the general condition if you're going to rate it on a scale of 1 to 10, 10 being a

perfect condition, one being a tear down, where would it be? Oh, in terms of being a . . In terms of being a tear down, I would say it's an eight. Well, okay, so a 10 would be like you just remodeled it, that's all. Yeah, it's not, it's great. It's, yeah, all it needs is to remodel on it. Like, you know, everybody's, everybody's going to gut it. I know everybody's going to gut it.

The price that I'm getting told that how much is going to cost to restore or to get it up to the California style or the and land it's $50,000. Okay. Yeah. And they're actually between 35 and 70, but I actually know I'm doing the work myself, and I know it's no way it's going to set. Okay.

If it goes 70, then you guys are not, you guys are using contractors, and you don't have your own crew, which you're not the right one for us, because that means you're not competing, right? Yeah, so you've talked to 100 of us guys. Interesting. So, yeah, I talked to, I've been talking,

well, I've been doing this for almost a year. Okay. sell the house. Well, what's the problem? How can you haven't sold it if you talked to 100 people? Well, my mom lives there and she's been getting surgeries, right? And so I'm trying to get her to come to my house. And it's two week after the service. So then she, we started the ball rolling. She wasn't able to move. So now I waited until she got healed and now she can move. We already started moving her stuff. So now I can finally. Okay. Very good. So is she still in it then? Yeah, she's still there. All the way until the last day. She's going to be.

Got it. If it was going to be a rental, what do you think would rent for? I put it up for 2000 and I got a ton of replies for that. I put up on Zillow, but I put utilities included. So I got, I turned it off because I just wanted to see what the price would be for. Sweet. All right. Let's see.

So if you're, if your mom is going to stay there, say for another 10 years or so, What are like a few things you know for sure you would fix anything if you were gonna stay there for 10 years I would I would I guess I would just restore the the bathroom there's one bathroom there that We started we were gonna do like first we did all the drainage Plumbing because all the houses in that area did old drainage So we re did that and then we just left the bathroom With a tub back and all that but I would read the tiles there I would I might get a new air conditioner every year we service it to keep it running.

So I would do that for her and I already got a new water heater. Okay. That's about it. I wouldn't do, I wouldn't do anything else. I mean, there's nothing else. Okay. Well, you gave me that $50,000 number. What was that including?

I mean, my friend right. Well, the roof is like a tar type of route, right? The tar and the white paint thing. So, you know, everyone wants to get a new roof. It's not leaking or anything, but they're, they're calculating. a new route. Got it. I'm an employing, just painting, things like that.

Yeah, just bring it up to date then. Yeah, I remember you're saying that to bring it to the style. Okay, got it. I was writing, and so I was kind of multitasking. I shouldn't do that. So it sounds like something that really, it might work for us. Your mom's moving out as why you're selling it. She's moving in with you?

She's moving in with me. Awesome. Okay. So you've talked to a bunch of people. Have you considered just calling a real estate and make it a whole lot easier on yourself? I don't want to have to go through the absolute getting it through to let the fans can finance it all that stuff. Oh, okay, so I got to tell you,

so it's just 1,243 square feet, right? So it's actually around 1,600. But I didn't, you know, it's not permitted so I can't do that square footage on there. Ah, got it. The one car garage was converted into a master suite. In the back, an 800 square foot workshop,

off your own separate. Got it. Okay. Sweet. Good. I just moved to Vegas like three years ago. So I'm still kind of moved, look at my way or work my way around town. I still got to put GPS most time.

I go anywhere. All right. So this is, this is Henderson, yeah? No. This is in, uh, oh, downtown Southston area. Okay, got it. All right, I see it now. Okay, perfect.

All right. So if I, if we chose to buy the property, we're then I need to pay off any taxes, liens, or mortgage, anything like that? No. Well, the mortgage, yeah, the mortgage is, uh, uh, we all the hundred thousand on it. Okay. So that would be cool. All right.

All right. So I'll go ahead and do a little research check the current market conditions, but do you have an idea of what the properties, what properties like yours are selling for? Yeah, I got, uh, the opposite I started getting back just within this week. Not the, I mean, I got incredible offers before. I was able to grab. Yeah. It's not bad anymore.

Mm-hmm. But, um, I used redfin, the last one that I got so I can get some of a medium number and then they're offering us the first offers two forty three side on scene okay and at the end they don't know about and they ended up what i'm sorry just cut out on me and that is going the addition i was there i mean i can't guarantee it's going to get permitting but i do know that the guy that and the guy that was my stepfather he died the guy in the back i built the garage he built that as a contractor so it's not um got okay get those So Redfinson, 243.

Is that one of those automated things? I got a call from some lady in and she walked me through it. Okay, very good. So 243, what's the lowest price you might consider? The lowest price that we would consider would be, like, I'll be frank with you. I mean, I'm not going to go for it yet unless I have to, but 225 is a minimum. Okay. Under the right conditions, would that all be negotiable?

Down to 225? Yeah, if it was, if we had the right? conditions like helping us move and stuff like that that's like rock bottom that there's a safety for me not to use the other good we've certainly done that before cool all right um let's see i've got uh we need a new roof maybe aced bathroom rent for about two grand i'm just running through this thing make sure i got everything okay um flooring's uh we got about a fifty thousand dollar estimate we got 1,200 permitted square feet, 1,600 there.

Not permitted. About a $100,000 mortgage. We got to see. Redfin says 243, $2.25 or minimum might be negotiable. All right. So I did miss anything. Is there anything else I need to know about the property? No, unless you want to know about the neighbors that are buying up the land around it.

That's getting scooped up over there, too? Yeah, well, the neighbors and attorney that he's been, he bought the two properties around there like one next door and in the office on Easter. So he's been trying to buy that property, but my mom's afraid to tell him because she doesn't want to pay her to leave. And he calls her to buy that. So we're going to exercise a little discretion. Yeah, I appreciate that. Yeah. The other guy pulled up in a freaking van with like cash sale ban with signed all over. Yeah, okay. No, I get that. It's actually become a little bit more common these days. people are a little bit embarrassed about some of their situations.

So I get it. All right. So, gosh, John, in a perfect world, I mean, if you could wave a magic wand, what would you like to have happen? That we get a nice offer and we sell it today. That would be a perfect world. Perfect. All right. Nice offer today.

I could do that for you. I could do that for you. Tell me what's a nice offer and we could just put this thing to bed. What would we have to do? I would say if you offer $2.35, I would, would probably just cancel all the other stuff i got going on and go for it. That'd make it easy on you on okay yeah let me uh let me check here real quick our stop loss at 225 that that's why i've said 225 i got i put a stop

lot on this property i'm not going to chase it all the way down it's like that okay let's see and i'm not going to tread water by getting it permitted i mean if i get get it for made in district stuff i could tread water for a bit but it'd be better for somebody but it has experience all of it. Okay. I've got 50 and I'd be putting it too many fine. I think we're pretty close, John. If I gave you that, if I just like, let's cut to the chase

and I didn't even try to do the math. If I did that, maybe even potentially a little bit more. If I could give you some money now and the rest later, would you be open to something like that? Well, it won't be your offer there. Well, I mean, if I gave you some money now, how much would you need right now for it to be real? Honestly, we don't need money. Okay.

Right now. Like, we're okay. Okay. Financially. All right. Because, you know, I've got a bunch of deals on my desk right now, and I got to choose where I'm going to allocate my funds. Sure. So I'm looking at this, and what would make it easier, would you guys be open to say we just left the money or excuse me left the mortgage in place and I gave you money for your equity?

Hmm. Now, that, let me, how much time are you going to give me to think about that one? I like that. It's counting down, nine, eight. I like that. I got to definitely call my mom, right? Because it's under her name and the trust and all that. Got it. So what you're saying is that we keep in, wait, wait, explain how that would work for me.

Yeah, sure. So, and this is really common right now, particularly since the mortgage rates have gone up. Because I got to go get another loan and then, you know. It's not going to be contingent like a normal consumer loan would be. But I got to pay closing costs and the banks make all the money. So if we can keep it in house, that would be better. So what would happen is we leave the loan in place. I'll just take over the maintenance on the property.

I'll take over the payments. I'll take over all responsibility on the property. And I'll make those payments. And then you guys would give me the deed. And then we'd come up with some sort of additional loan that we'd put on it that would between you and I could give you some money down now. And then, you know, we can make some payments over time. give you a nice little cash flow, give your mom a nice residual income, and, you know, we could all win that way.

And then you would actually let her cash out on the equity. Yeah, yeah. We'll make arrangements on that for sure. Oh, man. Okay. So I like that. I think that's going to work. Let me give her a call real quick.

Okay. And then I'll give you call right back. I won't be long. Okay. I'm here local, John, so we could handle this today if you wanted to get it done today. Well, yeah. I do want to handle today. I need this out of my hair.

I got a business on a building and I got customers. I gotta see. Oh, yeah. You got better. I'll get a house over here getting up. For sure. Okay. Yeah, I'll get the call right back.

All right. I'll be in for another half hour. Okay. Okay. All right. Okay. Bye. All right.

So, so far, so good. And, you know, he said that the price that he could take right away. And if we got it done today and you'd sell it today was at $2.35. And that was actually a pretty darn good number. And I should have just taken that. But I wanted to entertain the idea of potentially doing a subject to here. I wouldn't have to come out with as much money, wouldn't have to borrow as much money.

And so I tested the waters there. With all intention, I was going to come back and take this 235 and just kind of reluctantly accept, because it was a good deal at 235. And I was surprised he said it, actually. But, you know, he was so receptive and so excited about the subject too. I was like, okay, let's just let it fly and see how it goes. And so he went to go check with his mom, and then he called me back.

Hey, all right, no, totally. I mean, just so we don't waste our time, I mean, why don't, can you guys tell me what the exact offer is that she wants to see? I'm sorry, your phone's cutting out. Oh, sorry. Can you hear me now? Is this better? Yeah. Check one too?

All right. Yeah, so, I mean, I can certainly put that together. Could she tell me, I mean, can you guys kind of tell me what you'd like to see just so I don't, you know, we don't go back and forth? I don't want to waste your time. Are you talking about price wise? Yeah. Put, two, put, um, 140,000 in the pocket. Okay.

So we got two third. We got one there and 140 in the pocket. And then now I'm sure she would like fight that and not. Got it. She can have me call other people too and all that. Perfect. Okay. So if I were to do that and we were talking a little bit about making the payments

potentially. So I took over the payments on the mortgage and then I'll give you the 140. But it's how I would give it to you. Like I said, I could give you some money now and I'll give you some money. over time and then, you know, go ahead and, you know, put some some cash right at close so everyone's happy. Then we can go ahead and just make monthly payments so she's got a nice little income coming to her, all secured by real estate. And then I'll take care of all the closing cost, everything. You guys won't have to pay for a thing. How long are you looking to be able to finance it?

As long as humanly possible. How much can you put down then? I know for her it's going to really be about how much she has in her hand. Okay. Well, now we're talking about something else because you said you guys didn't need the money. So that's why I was like, no, not up front. Because some people were like, I'll give you like $5,000 right now. And you do the deal that way. We never needed money up front for the deal.

Okay. But you need money at front now? No, we don't need money up front. We don't need money. Like what I understand when people ask me if I need money when it's cash buyers, it's, I'll give you money out of the money that we're going to give you in the end. So if you need 5,000 to move or you need whatever it is to get you going, here's $5,000. So you can move now and then we'll just take it out in the back end.

Right, right. And that's what I was assuming if you're asking, if we need cash. Yeah. I mean, I can do that for sure. And I could give you more than that or I could we could just go with zero. Oh, over than that. It wouldn't. There's like, man, that's not going to happen.

I'm going to be honest with you. Anything less than $100, in her pocket, there's just no way she's going to go for that. Okay. Yeah. Well, here's the thing. So when I purchase properties, I need either need to have equity in place or I need to be able to create a cash stream for myself. I really don't care so much about price. I'm more about creating the cash flow for myself. So that's where like I can give you guys more. I mean, we could do the 140. That it gives you that no problem. But I need to arrange terms on how I give that to you. So I'm able to, you know, turn this into a cash flow opportunity for myself. I got you. I got you. Yeah, you're doing it really creatively.

That's really interesting how you're doing that. So we, I go ahead and go ahead. You know what? Let me put, let me, I got this thing called a letter of intent. Okay.

And it's got two different options on it. So I can give you like, here's the fast cash. What is get done with this and be all over with it. And then the other one where, you know, I could give you a little bit more money and just, I'll be creative on how I give it to you.

Gotcha. Yeah, we're open for that, man. Okay. Let's do it. Sweet. Let me, I'll put that letter of intent together. And if you guys like one of them, then I'll go ahead and put in a formal agreement just the way it says on the letter of intent.

I'm going to be honest with you. I personally like if you were making payments. If she got payments, to me, that's better personally because I like that she will always have income. And that there's no way for her to go to the casino and spend all that money. Right. I like that. To be honest. Let me see how she feels about it.

Right. I'm just in the offer. But I'm definitely for the payments. I like that a lot better in our situation. How old is your mom, John? She's 82. Oh, that's awesome. She's very mobile, too.

She's still going. You're lucky to have her, man. Yeah, I'm grateful. I love that. It's great that you're taking care of her and looking out for her. Let's see. All right, so I'll put that together and I'll just, let's see, text it to you? Yeah, do that.

That's perfect. Oh, I got your email address too, I think, right? John Ramon at Gmail or Handy John LV? I got Handy John. Yeah, perfect. Yeah, perfect. That's my work one. That's perfect.

Okay, cool. I can put that together for you and have it over a few minutes. Sounds good, man. I'll wait for it. Cool. Take care of John. Talk to you soon. Okay.

All right, man. Okay. Okay. All right. So I went ahead. I sent over the two option letter of intent. I've reduced that from three to two recently. And it's working a lot better.

On this call, I made a couple mistakes. I don't know if you caught them. But the first one right away was I wasn't talking to the seller. I wasn't talking to the decision maker. That's kind of rule number one when it comes to any sort of sales, right? But I was talking to the son of the seller. I mean, I wasn't oblivious that I wasn't talking to the seller. I knew I wasn't.

But it seemed like the son had mom's best interest at heart. It seems like he had some influence over the decisions that she would make. And we were getting along and we connected. We were having fun. It was going really well. So it didn't seem like that much of a concern. So there's a saying that you should inspect what you expect.

And I expected that we were moving along fine and we were buds. But you need to inspect that. If you make these assumptions, you know, you know what they say when you assume, right? So I should have asked something along the lines like, well, John, it sounds like, you know, you're taking care of your mom and you're making the decisions for her. So, you know, if you and I come to an agreement,

she's just going to sign off on it. I should have confirmed. I should have done that. But I didn't. And then the second mistake, you know, when you have a business and you start optimizing and trying to look for how you can improve it and you know, you're changing your strategies and your processes, maybe you're outsourcing and delegating.

And, you know, it is possible if you're not paying attention to overdo it to where you can end up right back to where you started from with the same problems or you create a bunch of new problems. And that's kind of what happened here, what I noticed. And in hindsight, I mean, inside's a bitch, isn't it? I mean, it's 2020. and I get it what happened right now. But in every transaction, there's always a lesson. So, you know, I was born and raised in Los Angeles,

and that's where I started investing in real estate. But I was very much a cash flow focused investor. And in Los Angeles, it's very difficult to cash flow. The prices are just too high, and the rents haven't kept up with them. So creating a cash flow opportunity or cash flow deal difficult. So Mercedes and got really focused and entrenched in an embedded in the Midwest and the South where it was much, much easier to do. So we got really good at doing this whole business virtually over the phone.

And we got really good. We built a huge portfolio and we were able to create so many opportunities. We created a turnkey operation out of it and did it for other people too. That's what we have is cash flow savvy. And so I got so accustomed and so used to doing that for so long that I kind of forgot the power and the impact of the amount of rapport that you can build and the amount of action that can be taken when you're looking at somebody face to face, when you're in their presence and you're working person to person belly. And so when I moved here to Las Vegas, I got really excited

about that because, you know, there is the opportunity here to create cash flow. And certainly nothing like Los Angeles, but the opportunity are very viable in Vegas. And so we've done that a few times here. And I'm looking to do a bunch more. And what didn't register to me was I was talking to somebody right here in Vegas. And rather than closing for the next phone call, I should have closed for an appointment to visit the property. This conversation was going good enough to where that would have been worth my time and it would have been worth my energy.

Because when you're working this business virtually, although you can do it and you can do it and be very, very successful at it, you're going to lose probably 50% of all of the yes, that you get. And you're going to lose 50% of the good energy calls like the one I just had. Because something happens, life happens, really. Who knows? It's something always different.

But something happens when you hang up the phone, say you got the yes, you hang up the phone, and now you've got to get the signature. And something happens there where you don't get the signature half the time. You know, and as, you know, you'll get better and you'll get more experience and you might reduce that and improve your stats to, you know, you're only losing 40%, you're only losing 30%, but you'll never get to the point where you're going to close 100%

of the deals over the phone that you would have closed had you been there in person. So there is some slippage or some leakage there when you work this business virtually. And lesson learned, you know, I just wasn't, I'm so into the motion and got so good at doing this virtually. It's not a false sense of security.

but a strong sense of security, and you have a huge confidence that I do this every day. It's no big deal. But what I could have done and created, had I been there face-to-face, could have been an entirely different outcome because now I'm waiting for this guy's call, and now he's not calling me back.

And a couple hours later, I finally got touch with him, and he said, you know, Matt, I got a bunch of other offers, so my mom and I, we're going to go ahead and sit at the dinner table tonight, and we're going to look at them, and we're going to pick the best one and make our answer and give our answer in the morning. So,

right? So that's another disadvantage of doing this virtually when you could have done it in person is you have no defense against the people that are there in person. He said they had a deal

and they took someone else's deal and then like 10 minutes later, no, maybe an hour later, he sent a text out and it was written like it was a broadcast text, like he sent the same text to everybody. So now he was trying to bid everybody up against each other

and that property went, I think, for 252. And looking back, I should have just taken the $2.35 and closed it that day, just ran right over there and got the signature. Expensive lesson. And that's the thing. When you're doing this business, you're either making money or you're getting educated. And I got schooled on this one. But really, by my own fault, I knew better.

Sometimes we just need those reminders. All right. So moving on to the next one, lots of operations. It's a great market, and we're getting to talk to a lot more sellers than we have in the past, and we'll just keep on closing them, and I'll keep sharing with you. There is a lesson to be learned with every single transaction. You were going to experience something that you've never experienced before, and so you come out of each one a little bit wiser, a little bit smarter,

a little bit more equipped to handle the next opportunity that comes your way. Thanks for sitting tight while we pay our light bill. We'll be back right after this. This episode is brought to you by Peloton. Break through the busiest time of year With the brand new Peloton cross-training tread plus Powered by Peloton IQ With real-time guidance and endless ways to move

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Let's get you some more. Back to the show. Today, we're going to talk about the market again and what it means for real estate investors and what we should do. And I've got a great guest that's going to join me today to talk about what he's going and how he sees the whole picture. But first, I just want to bring your attention to the fact that your American dream is at risk. Specifically, there are seven imminent threats working day and night to take it from a rigged financial system. there are to inflation, to financial literacy. There's seven of these things that regardless of how earnest and hardworking you are,

applying that extra hustle alone is just not going to be enough to save your financial future. The system is absolutely failing each and in one of us. And it's why I'm hosting a two-day virtual event army with the strategies, the resources, and the support that you're going to need to pull through the mess that the American people are in. So if you like the idea of preparing and upgrading your approach to success, during an economic downturn or avoiding the big mistakes that led to others to lose everything in 2008 or how to McDonaldize a real estate transaction so that no money is left on table, then you want to be that.

Go to epic freedom event.com, epic freedom event.com. All righty. So, yeah, my guest yesterday, been in the real estate industry since 2010. He began his career as a realtor and soon realized that wasn't the path that he wanted to continue on. very similar paths there. And in 2015, with only $10,000 in the bank, he can be on flipping houses. Since then, he has flipped hundreds of homes, purchased hundreds of rentals, and opened other multi-million dollar businesses.

I'm going to talk all about it. He's amassed over a million followers on social media in a very short period of time where he teaches others how to build well and freedom. Pretty remarkable dude. And we're honored to have him today. So please help me welcome to the show, Mr. Ryan Paneda. Riot, welcome to at the real estate investing. What's up, Matt?

Awesome. So I wanted to start with, I'm committing you, Ryan, for, you know, what you built, how you managed it. I saw I got to meet you at your office about a month ago, and I was impressed. And I mean, 100 employees, that's remarkable. Anyway, Ryan, I brought you on because just to talk about the market. I want to talk about people who are actually out in the market and doing things. And, you know, you're kind of a household name here because you're on TV about every three minutes on cable. And so I ran into Josh Galinda this morning.

I don't know him, but, yeah, I said I was going to be talking to today, but you talk about the market a little bit. And I saw this, that the real estate prices are cooling, but not a fire sale yet, according to this expert. And I kind of agree, but it seems like a lot of people are kind of rooting for that the market to crash maybe, and they're looking for the opportunity. But it's just not happening, despite all of the bad news. Whole prices are cooling, but not a fire sale. This was Doddy Herman from Douglas Ellman. But the current issues and the real good noting that the current uncertainties in the world in the debate over whether the U.S. is in a recession are causing prospective homebuyers to wait.

There's all this uncertainty in the market. What are you seeing out there? What's your perspective? You know, I think it's definitely cooling a lot. We're not seeing like, at least in Vegas, right? I mean, every market's different. I've got students in California, and they're telling me that, yeah, prices are definitely going down in Cali. but, you know, it's also hard to say what they originally bought them as.

Were they kind of speculating a little bit? Or, you know, were they being conservative in their underwriting? For us, you know, most of our properties, we're selling them for close to what we kind of penciled them out at. And so we're not super concerned because we should do fine. But, you know, I'm sure there's some that we're going to lose money on. And it is what it is. That's kind of part of the game. You can't just the last two years get all this appreciation and,

up and you just kill it. And then all of a sudden, you're mad when kind of the dancing stops. And so I think for me, the key is just kind of resetting. So, you know, we got, I'm looking at my chart now. We got 40 active flips right now. And, you know, as long as we can sell those and make money, it allows us to go buy the next batch of deals kind of with this new market of like, okay, you know what? Let's be really conservative because we kind of don't know what the market's going to do four, six months from now. So the conservative part in your buying isn't in the rehab, where are you resetting? I mean, on the conservative side, we're pretty good at rehab.

So it is, rehab's going to be whatever it is. So mainly just on the buy side. And there's lots of ways to be conservative. You can just, you know, you could say, okay, I think the market's going to drop 5%, you know, a percent a month by the time I do this. If that's what you believe, then, okay. make your ARV 5% less. Or you could just say,

all right, I'm going to pencil it out at what prices are today, but I want a way bigger margin. Instead of 10% margin on ARV, I want 15%, 20%, you know, kind of whatever you think the market rate will be. Right.

Just buying better, basically, right? That's it. I tell all my students that, yeah, it's just like, you don't stop buying because all of a sudden the market is now slow.

You just buy better. How is it, are you noticing a change in the conversations with sellers? Because usually they're last ones to understand what's going on. It seems to me over here that's happening a little bit faster than I remember the last time. Yeah, I think this happened two years ago during COVID. So, you know, like you had mentioned, I run TV commercials freaking every day. So people see my face all the time in Vegas saying, hey, I'll buy your house. You know, I remember during COVID, all the investors were freaking out thinking the world's going to fall.

And sellers, you know, we're being stubborn. They're like, no, no, no, we don't think that. But, you know, there's a few who are like, oh, I got to get rid of my house now. But for the majority, that's not the case. And so there's this disconnect that's hard to overcome because you as an investor want to protect yourself. But a seller doesn't want to just give it up. It's for something that has not happened yet. It might happen, but it has not happened yet, right?

And I think we're in the same spot where sellers today know it's slower, but things haven't fallen off a cliff. They're not giving their houses away for free, right? But investors want way bigger discounts than before. So I think right now during the transition phase, it's harder to do deals. But I think that once you get out of the transition, just like when we were in COVID, whatever happens after the transition, good or bad. If it goes back up, stabilizes, or if it even keeps going down, you at least now can start to say, okay, like obviously. it's going down. Like, if you're talking to sellers, how much lower, how many days are you going to

wait next month? Your offer is going to continue to decline. Are you ready to take an offer now? Or it stabilizes and we can increase our offer now because we're confident on our exit. But right now it's still uncertain. We don't know where the market's going. Everybody's saying. Exactly. And that was kind of what I was leading into is I've done a real good job in weaning myself off the news here in the last six months because it was kind of tearing me up there. Got to stay away for the negativity. But the day I was happened to walk by the TV and they were saying that I didn't realize the stock market had been down four, five days in a row. And here we are on September 1st, and it started when another decline today. And they're expecting it to fall a little

bit more before it actually balances back up. That's the stock market. And there's some degree. There's some correlation between stocks in real estate. I mean, how much do you think we're going to go a little bit lowering, which is going to kind of level out and be steady? You know, for me, I don't want, like, I don't know what's going on in the stock market. Like, I'll see it occasionally of just like, yeah, it's going down, it's going down. But the main thing I watch is the real estate market. I mean, I'm watching inventory every single day. You know, obviously I'm watching interest rates and things that are happening there.

But I'm not super concerned. I mean, obviously, like you said, the stock market does impact real estate because people feel poorer, you know, when the stock market's doing bad. And obviously, people feel affordability crunch when interest rates are higher. So we've got not many good things going for us on the real estate side. But the big thing we do have going for us is supply. You know, at the end of the day, there's not a large supply of homes for sale. The actual amount of homes is way less than it was during the crash.

Like at the end of the day, many people are holding on to their homes because they got great interest rates. You know, builders can't build fast enough. They can't build cheap enough. So there's no supply coming there. So there's just not a lot of homes. Now, the moment interest rates drop and people start increasing demand, the inventory is going to drop again. Like, that's just what's going to happen.

So I just don't know where this massive supply is going to come from that would really tank things. Like, things are slow, and I envision them staying that way for a while. But I don't see a crash because I just don't see where the supply comes from. Correct. Yeah. I mean, a lack of supply is not a pre-term. conditioned for a crash. Like there's no bubble two pop, right?

There's not enough houses to pop. You know, I'm actually, while we're talking, we're both in Vegas. I have been waiting for the report for August to come out for median house price. I wanted to see if price went up or down. You know, it feels like it went down because August has been super slow, right? But here's Vegas' stats, according to the MLS, May of 2022, 395. June of 2022, 400, July of 2022, 4-05, August of 2022, 4-10. It's gone up 5K every month, regardless of how slow we think it is.

So what's truth versus reality? What's factual and then what's actual, right? Sales are slowing and the market is cooling off, but that's factual, but what's actual is that they're getting more and more and more expensive. They keep selling for more and more and more. The other part of that is when they say that prices are dropping. Those are the listing prices that are dropping, not the actual sales prices that are dropping, right? It's really just the seller is getting a little bit more realistic, I guess.

But even here with this one, this is August 27th right here from realtor.com, trends report found that the median home listing price was at 435, a decline from June's all-time high or 50. So the listing price grew up 13% year over a year. It was just down for the month, but the actual sales price was up as you just pointed out. Yep. So, I mean, people got more realistic. People aren't fire selling, that's for sure. Yeah, they're not. Uh-uh. And that's why I put that on the thing that's a big back question mark, because people are kind of rooting for it. And they're, you know, they said the foreclosures are up 700% this year, right? That's 700% of essentially zero. Yeah. Yeah.

Anyway, you know, you get to talk a lot, Ryan. I see all. all over media, you're all over social media. What do you like to talk more about that you don't get the chance to? That's a good question, man. I feel like you talk about everything. I don't know what your audience is super into. I mean, honestly, I don't talk about it. It doesn't matter as I'm going to right now.

What I'm into, I mean, like I said, NFTs are what I'm into at this very moment. You know, we just launched Tykes and super excited about it. The launch has been super success. And so here's the thing, too, about market, right? like the stock market, the crypto market has been crap for the entire year, right? It tanked just like stocks.

They were very correlated. You know, so people launching NFT projects and stuff are not doing very good, right? When the market sucks, it's like the worst time to launch a project. Well, I think we had one of the biggest launches like literally in any NFT project,

easily real estate this year. You know, we just did almost $2.5 million on our mint. and to do that in today's market is just insane. And yeah, and we're, you know, right now we were trending on OpenC at number one for utility-based NFT. So that was incredible. We were on the front page.

Just all kudos to just, you know, marketing and people being excited about it. So that's what I'm most excited about as of right now and probably the foreseeable future. Yeah. That's sweet. I think when most people right now, kind of the. layman's idea of what an NFT is is a JPEG. And you just kind of mentioned that you've got the utility

aspect to it. So how is your project different than, you know, the board eight thing? Yeah, you know, even the board apes have some utility, but you know, at the end of the day, yeah, I mean, for the board apes, the community is the

utility, right? Like, you get to be around these people. You get status. They got parties. Like, you know, it's definitely not like our real estate utility that we do. But on our side, very much taking the elements of what I've seen work in the real world, plus what are cool things of Web3. So in the real world, you and I both have masterminds and things, right? We are part of masterminds.

We understand the benefit. And I said, you know what? There's no mastermind for people that are interested in real estate and crypto. There's just none. And we know that real estate and the blockchain are going to be this thing later on. Like there's going to be a trillion dollar industry for blockchain real estate. estate. It's just going to happen, right? And the moment the Metaverse really takes off, which, you know, I think in probably five to ten years, it'll really take off like everyone will use it.

Then digital land and all those things become extremely valuable as well. So it opens up this whole new door of real estate. So for me, I'm just trying to be on the cutting edge of that. And I want to get the people who are also on the cutting edge of that because they have nowhere to go. And I want them to network. I want them to build businesses, do deals, learn. I want to get all the resources in one room. And so, like, that's the main priority of tikes on the normal side of things that we've always done in Web 2. But on the Web 3 side of things, the crypto side, there's so much we can do with NFTs, you know, and make it fun, like where you can stake your tyke, you know, meaning you can lock it up on contract and it's going to produce a cryptocurrency

that you get every single day called Tycoigne. And with that Tycoigne, you're going to be able to spend it on our marketplace where there's going to be all this cool stuff you can buy. You can buy nights at properties I own and other people own. You're going to be able to do a ton of cool stuff that I'm really excited about. And then just like the aspect of the events we're going to have, you know, at the end of the day, there's no real estate crypto event. It does not exist, right? So throwing the first massive one of those, I think, is going to be extremely fun. And there's a whole bunch of stuff that's coming.

But for me anyways, as an entrepreneur. I believe, like I said, Metaverse, NFTs, everything, blockchain. Every business is going to adopt it five to ten years from now. It's just like 10 years ago, somebody saying, you're going to have to be on social media as a business or you will not make it. And, you know, like people 10 years ago have been like, no, you don't. You don't need to do that. You can be in the phone book, right? And it's like, no, you have to be on social media.

And I think NFTs blockchain is the exact same thing as the years come along. Right. No, I think you're absolutely right. So are they still available or did you sell out? Oh, we sold out. We were already sold out before really we even minted. So, yeah, the only way to get it right now is on OpenC, which is great. A secondary market. Yep, the secondary market.

You still have time for anyone watching because we are getting ready to reveal the actual artwork here in a couple hours. And then you're going to be able to do some cool stuff right after that. And there's going to be like really big perks for those who own it from like day one, essentially versus somebody who buys six months from now. So this is a big day for you then. I'm a busy dude today. That's why I was like, hey, how long are we doing this for? I got a lot of things like I didn't plan for when I was like, yeah, I'll do it, whatever.

I had sent you to the tech, say, we should be down there three hours and then like no response came back. Yes, I'm already pissed. Now I was finishing up another meeting. No worries. All good, man. Well, thanks, part. I appreciate you being here. If someone wanted to get touch with you,

they all know already, but just in case they don't, what is the best place for them to go and connect with you? Yeah, I mean, I'm pretty much everywhere. I mean, you can go to Ryan Paneda.com, and it's got all my socials, my businesses, all that stuff. So go check it out, and we'll love to work with you guys. Super.

You got a fantastic website, by the way. I love it. Thank you. The design. The layout, the functionality, the navigation. It's very intuitive, and everything is right there. it's also. Yeah, my team, all to the team. It ain't me. Yeah, and your tick prox stuff and all that like, and it's just first class production. You got some real rock stars. How did you find them, by the way?

You know, one thing is, I've always had the belief you hire from the top down. You know, most people hire bottom up. And, you know, most entrepreneurs are, you know, I get it. Most entrepreneurs don't want to spend a lot of money. They want to get things done as cheap as possible. It's true. Like, so you have a need, you're like, oh, I'll hire a sales guy or an assistant or an admin, but I go into everything and I say, how do I hire like literally the best guy from the top? Because I know if I hire that top guy legit, he's going to hire everyone else. You know, we do need those lower level people, but I need somebody else who can go get them. Because if I get him or her, they're going to take care of the rest versus me hiring everybody by

myself and figuring this thing out. I couldn't even tell you all the hands that went into building I can't tell you what even gets posted every day. I can't tell you how these types. likes, you know, were came to be in the smart contract. I'm not that smart, but I know I'm really good at picking a team who is that smart. That's great. I must be really comfortable to have all that stuff broadcast out there and you only have to do the quality control. Yep.

It's just trust. You got to trust. That's sweet, dude. Well, thanks, but I'll let you get back to you today. And congrats on the launch. And if people want to follow, like, what you're doing right now, where should they go then? Like, what you're going to do here in a couple hours? Where's the big reveal that happened?

Oh, the big reveal. I guess follow me on Twitter. That's where I'm doing a lot of this NFT stuff. So Ryan Paneda on Twitter and you can see kind of like these reveals and all the news. Wait, I'm going to check out there. I'm going to follow up too. All right. You got to get some tikes.

We've got to get you on board. I'm going. I have in December, my crypto portfolio surpassed my real estate portfolio. And now raise so much. Yeah. Now that's the way. The thing is, if you hold the cryptocurrency. a portfolio, though, as long as you got, you know, the Bitcoin, you got Ether Bitcoin or,

like, you're going to be just fine. Yeah, I wasn't trying to flip. It's long term anyway, so I'll be okay. But it was a sad to a couple of those zeros disappear. Yeah, I trust me, mine was the same way. Right. All right, Ryan. All right, everyone.

Thank you. Yeah, appreciate you. See you guys. And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would. And when their name comes to mind, please share it with them. And ask them to click the subscribe button when they get here and I'll take great care of them.

God loves you and so do I. Health, peace, blessings, and success to you. I'm Matt Terrio. Living the dream. Yeah, yeah, we got the cash flow. You didn't know home world. We got the cash flow. This podcast is a part of the C-Suite Radio Network.

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