Epic Real Estate Investing - Three Option Letter of Intent (LOI) | 1053

Episode Date: June 18, 2020

It's not a money problem or a credit problem that gets in the way of people investing in real estate. It's an idea problem! One of the most effective ideas that will enable you to escape the rat race in less than 2 years is the Three Option Letter of Intent! Therefore, in today’s episode, Matt walks you through the process of creating the letter without ever getting a bank loan or ever accessing one point of your credit score! Tune in and find out more!a Learn more about your ad choices. Visit megaphone.fm/adchoices

Creatively financing real estate gives the average person with little to no money, and you can even pile a crappy credit score on top of that seemingly dire situation, the ability to invest in as much real estate as they'd want with zero restrictions. Because it's not a money problem or a credit problem that gets in the way of people investing in real estate. It's an idea problem. And one of the most effective ideas that enabled me to escape the rat race in less than four years without ever getting a bank loan or ever accessing one point of my credit score was the three-option letter of intent.

And if you think four years is fast, meet five of my private RIEI-A's clients, Josh, Parker, Tony, Corey, and Jeremiah. They manage their rat race escapes and better than half the time that I did. And they'll all give a great deal of credit to this, too. And I'm about to walk you through this so you can do it, just like them.

This is Terio Media. Success in real estate has nothing to do with shiny objects. It has everything to do with mastering the basics. The three pillars of real estate investing. Attract, convert, exit. Matt Terrio has been helping real estate investors do just that for more than a decade now. If you want to make money in real estate, keep listening. If you want it faster, visit r-e-I-Ase.com.

Here's Matt. Hi, I'm Matt Terrio, CEO of Epic Real Estate. where we show people how to invest in real estate with an emphasis on retiring early. And you can retire early simply by just shifting your focus from making mountains of cash to creating streams of cash. And this is the three-option letter of intent, one of the epic tricks of the trade that we use here to make streams of cash happen. The name of the document pretty much says it all, as when I present this to a seller, it's showing them that here are three different options from which they can choose and how I'm prepared to purchase their property. It's like three offers on one piece of paper,

and I've crafted the three offers in a way that I don't care which one they choose. Mr. Seller, choose the one you like best. Now, there's a number of ways that you can use this letter. One, you can send it as a direct mail piece. It works great for your marketing. Two, you can use it as a negotiating piece. For example, when a seller rejects your low-ball all-cash offer, you keep the conversation going by introducing a couple of different options and how you can purchase their property. That's That's how I use it most. In three, you can use it as a follow-up marketing piece. Josh Miller, who I introduced you to earlier,

he's the one who turned me on to this technique. When I showed him how to put a three-option letter of intent together, as I'm going to show you how to do in just a minute, he went through all of his old leads that had ever said no to him, and he mailed them one. In the year that he did that, it resulted in 55 extra deals closed. It works if you work it.

Let's break the letter down now and put one together. We'll start with this house right here, valued at $100,000. The seller has said they won't take a dime lower than $95,000, but you are not willing to pay a dime more than $65,000. For most real estate investors, this seller conversation has reached an impasse, and the negotiation ends right here. And here's why.

Both the buyer and the seller perceive this $30,000 gap as a money problem, when in reality, it's merely an idea problem. And in the epic world of creative financing, we refer to these ideas as terms. Instead of bridging the gap with money, we bridge the gap with terms. If you'd like a copy of the creative terms cheat sheets that I give to my private clients, you can grab them for free at epicbreakthrough.com. While both the buyer and seller are focused on the price,

they've both forgotten about the terms, how the price is paid. You need to only control one of these, by the way, the price or the terms, and you can make a deal for yourself every time. Since this seller is standing fast on the price, you take the terms, and you might introduce it to the seller. like this. Mr. Seller, it looks like you pretty much want a retail price for your property. And I don't blame you. I would too. But I'm not a retail buyer. The market, however, might allow me to pay you the retail price if you're open to a little creativity on how it's paid.

I put this letter together for you, of which shows two additional options and how I could purchase your property. Take a look and let me know which one you like best. Something like that. At the top, it states, letter of intent to purchase. Note that it doesn't read letter of obligation to purchase. This isn't a legal and binding contract. It's just a letter stating your intention of creating a legal and binding contract once you and the seller agree on the price and terms herein. It then states some pleasantries and finishes up with, I am prepared to purchase your property in one of the following ways. Note again, it reads that I am prepared to purchase as opposed to I am going to purchase. I just want to clarify that this is not a promise to purchase.

You're still negotiating. The document then shows three different ways in which you would agree to purchase their property. And there are no rules here. Your first option could be, I'll give you a bag of coffee beans for the house. Second option, I'll give you a couple rabbits. Or third option, how about a plate of hot wings? The point being, there are no rules, and you're only limited by your own creativity. With that said, I'll remove the silliness and get real with what you're more inclined to use as your options. Like equity sharing, an option to purchase, or a lease option, or a seller carryback, or an agreement for deed or a combination of any of these creative financing ideas.

Option one, I customarily include the all-cash offer that the seller last rejected. Using our previous example, it would be a discounted price of $65,000. For option three, I typically use the lowest price, the seller last found acceptable, of which was $95,000. And then I'd add seller carryback terms favorable to me like 10% down and the balance of $85,000 to be paid in 200 equal monthly payments. And option two would be something in the middle, like a lease option or an interest-only type loan with a balloon payment. I might even throw in some sort of equity sharing. Whatever it is, it would be something in between option one and two that would

also work for me. Now that you've got your three different options in place, my letter ends with to close in 14 days or less, all we need to confirm is the current status of any encumbrances and repairs. And what that states is, I have the right to due diligence, just like I would have in any real estate transaction. I get to check for clear title and validate the condition of the property. And at this point, the ball is in the seller's court. It's their time to choose. And when they choose one, you'd take the price in terms and write them into a formal purchase agreement and you'd proceed in the same manner you would in any other real estate transaction. If you'd like to learn more about creative financing for your own real estate investments, you can grab the creative financing

cheat sheets that I give to my private clients at epicbreakthrough.com. What'd you learn? What'd you notice, what did you find most impactful? Share with someone you know who would also find this creative financing stuff valuable. I'll see you next time. Yeah, yeah, we got the cash flow. Yeah, yeah, we got the cash flow. 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. For more top business podcasts, visit c-sweetradio.com.