Epic Real Estate Investing - Tips to Getting Low Income Housing to Perform | Episode 152

Episode Date: April 6, 2015

Today Matt is interviewing another special guest from his mastermind group, Mr. Joe Lieber.  Joe began investing in real estate in 1998 and, since that time, has bought and sold more than 700 houses.  Over the years Joe has been involved in many aspects of real estate from the brokerage side, to management, rehabs, landlording, wholesaling, and multi-family.      Of all of these, Joe is best known for his unique low income housing strategies, earning him the affectionate title of “ghetto-ologist.”  Today Joe shares the 2 strategies he uses to avoid management challenges in low income housing.  In fact, he is so good at what he does, he smokes the industry standards and is able to keep tenants for 46 months on average!  Enjoy! ------- The free course is new and improved!  To access to the two fastest and easiest strategies to a paycheck in real estate, go to FreeRealEstateInvestingCourse.com or text “FreeCourse” to 55678. What interests you most? E ducation P roperties I ncome C oaching Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey, Matt here, and I'd like to meet you. I'd like to meet you in person because I want to know your goals. I want to know where you are in your business right now. And I want to know what challenges you're experiencing and potentially offer a variety of solutions. So go to grub and grow rich.com to see when my team and I will be in a city near you. You see, we're traveling the country over the next 12 months just to meet you, just to break bread with you, toss a few cold ones back and talk shop. And at the very least, I'd just like to thank you. I'd just like to thank you. Thank you in person and thank you for supporting the epic real estate investing podcast because if it wasn't for you, this show would not exist. And for that, I am grateful. So go to grub and grow rich.com to see when we'll be in your city and reserve your seat, grub and grow rich.com. From Terrio Studios in Glendale, California, it's time for Epic Real Estate Investing with Matt Terrio. Welcome.

Welcome to Epic Real Estate Investing, the place where I show people how to escape the rat race using real estate. All you got to do. You got to do one thing. Just shift your focus from making piles of money to making streams of money. Change that one thing just one time. And you are on your way to financial freedom. It's not the most exciting path, but it is the fastest.

And once you get there, life then becomes exciting. Now, I got a great show for you today, an exciting show, in fact, as my guest waiting on the phone is an expert in low-income housing. Specifically, he's got two strategies that he uses to get low-income housing to perform with limited management challenges. And if you've ever had low-income housing, you understand that, you know, the higher ROI, it is typically accompanied by some additional management challenges. And he's figured out how to work through that and get all that, you know, sorted out. He's a really smart guy, Big Heart, with almost 20 years experience, doing what he does.

And, you know, before we get to our guest, I wanted to give a quick update regarding epicfastfunding.com. You know, in just over four weeks of sharing this funding source with you, it's been a huge success. We've funded more than $1 million to this epic audience. You heard me right. One million

for your real estate investing business to use how you see fit. How do you see best for your business? properties for bridge financing, for marketing, travel, office equipment. It's up to you how you use it. Just focus on when you do use it, make sure you're putting it to work for you. Make sure that it's actually bringing you money back. Invest it in places that are going to pay you back more than it costs you to access those

funds. And there's a lot more of you that have received a clean approval from Epic Fast funding, but have just chosen not to take the next step for one reason or another. I mean, I easily see that it could be up to $2 million that has been funded right now, but there's some people that are sitting on the fence. And I was kind of scratching my head as I was wondering why, like why they would go that far in the process and then stop. So I checked in with my partner to see what the bigger stumbling blocks are for people,

what's causing them to pause. And the first reason is that people have the wrong idea, he says, about what type of funding, Epic Fast funding provides. So I just want to create some clarity around that. They are revolving lines of credit. That's what they are. And the minimum funding amount is $50,000. And about the height is about $200,000.

Typically caps out right about $180. But he says he's got some instances where people have received $200,000. And this all comes with 0% interest in the first 12 months. Sometimes that stretches out to 18 months. months, just depending on your situation. So 12 to 18 months of zero percent interest. It's not long-term buy-and-hold type money. That's kind of where the confusion got. And, you know, if I had anything to do with causing that confusion, forgive me. It's not long-term buy-and-hold money. It's not to go buy a property

and sit on it for, you know, five, ten years and watch it cash flow. But it could be used for seizing a good deal to take advantage of a good cash flow operation. and then make arrangements for a longer-term financing structure later. That's what a lot of our clients over at Cashflow Savvy are doing. They're doing just that. They're getting control of the property now, and then they're worrying about the long-term financing structure later. I mean, in the meantime, while they're figuring that out, you know, they're cash flowing

with a zero percent interest payment. So we found that that has been a big misconception. So I wanted to clear that out. It's short-term money. It's not a permanent or long-term solution. So like I had mentioned, it could be used for property acquisitions or temporary deal structuring, fix and flipping. You could even do your own transactional funding with it.

You can get real creative. And that's how it could be a valuable tool for you in your real estate transactions, in your real estate business. Or you could use it to, say, set up your marketing campaigns. You know, you could buy your lists, you could schedule your postcard or your letter mailings, and you can do all of that in a way that you know you're going to be consistently generating six months to a year's worth of your real estate leads. And that is a system that we've talked about in the last few episodes that you don't have

a business unless that system is in place. And this would be a great use of those funds to have all your leads set up for the entire year totally automated. And, you know, so it's something like that. or just any business expense that you can think of, really, or you could just have it sitting there at the ready so when an opportunity does arise, you could strike. You could act quickly.

And that actually brings me to the second most common stumbling block. People are holding on to their approval until they do come across a deal, meaning they don't want to complete the process and get their funding until they find a deal. And that could be, okay, Okay, depending. I mean, it depends on the situation, but if you find yourself with an opportunity of which

you need to act fast, you know, at best, it's still going to be seven days before you get access to your funds, of which it may be too late, depending on the deal. So something to consider. And as well, I mean, you've all heard the time honored wisdom. The best and easiest time to get funding is when you don't need it. So if this type of funding makes sense for your situation, but you're just, waiting for that perfect deal to come along before you pull the trigger, it, I don't know, it might not be there by the time you get access to the funding,

or the funding might not be there, or there may be something that pops up in the process that causes a delay. And it's 0% interest for the first 12 months at least. You're accumulating no interest, no payments on the money while you're waiting for that deal. You know, the only thing at risk is Epic Fast Funding's fees, of which is probably the third most common stumbling block for those that do get approved. And I'll run down the fees for you as in the beginning, I thought they were clear, but they weren't totally clear to me at first.

So I actually did get some clarification. I wanted to pass this along to you. Maybe it was totally clear to you. It wasn't to me. I had a couple aha moments. So I get it now. The application is free. And it takes about 60 seconds to complete their online application.

your credit report is free and they tell you where to go to get one and free credit report.com is not the place. That one will not do for this purpose. They'll tell you where to go. But that's free. And after you submit your credit report with your application, you then receive a yay or an A in one to two days, oftentimes in the same day. It moves really quickly as long as you do your part.

Now is now at this point, this is the first time you are first time. faced with any fees. At this point, to enter into a contract with Epic Fast funding, it's $495.45. And what that does is that guarantees your funding and it gets the ball rolling. That $495 is 100% refundable. It's not at risk. It's 100% refundable if they do not get you at least $50,000 of revolving credit. You got that? The $495 is 100% refundable if they do not get you at least $50,000 of revolving credit. Now upon attaining $50,000 for you, then their flat fee is $3,000, of which can be deducted from your credit line. So you don't have to write a check for that $3,000. You don't have to pay that. It can come right out of your credit line. $3,000. That's it.

Now, the average amount that's being received right now is $94,811. So congratulations to all of you that have taken that ball all the end zone because on average you've all received $94,811. And the fees of $3,495, that's the $495 contract fee and then a $3,000 service fee. So there's $3495. that amounts to a 3.7% APR on that $94,811 average. 3.7%.

So, yes, they do have fees. But this is the cheapest money. This is absolutely the cheapest money that I know of. And most people can see that. You can probably see that as well. 3%. 3.7%. Yeah, who wouldn't take that?

And here's for some perspective. I mean, hard money today is going to run you approximately three points up front. plus 10 to 12% APR. I mean, just the three points up front for the hard money, there's a wash right there. Now you still have to pay the 10 to 12% APR payments on that hard money. And investors are jumping at that all day long. I mean, that's the rate most fix and flippers are accustomed to paying.

That's normal for their business. So the funding at epicfastfunding.com is really inexpensive money. All right. So now, okay, now here was the part that was in question. they do have an optional service. It is optional. You can decline this service. It's a corporate credit counseling service or consulting service.

And that is to help you establish your corporate credit. So you can get credit for your business. And they'll assist you with the entity establishment if you need it. And then they'll go ahead and they'll get your done and Bradstreet number all squared away. And everything else that goes along with that. and also near the one year mark of receiving your funds after a close to a year, nine, ten months or so, they'll start putting things in order for you. They'll start reapplying for new funding to pay off your original funding to restart your

0% interest. All right. So that's what comes with the consulting service, the corporate credit establishment, the Dun & Bradstreet number, the entity establishment, and then essentially refying out of that initial funding. And again, this is an optional service. It's another $3,000 and it's optional. All right? And even if you do take them up on that, let's put that into perspective, and you do take on this additional $3,000 fee, you're still looking at approximately, just right, just a little, I guess, around 7% for your overall funding, of which is still less than half of the current hard money

rates. And if you get approved for more than the average, more than the $94,000, that rate you're paying for these funds, it drops even more. All right, so there's that. You know, whether you decide to access these funds or not, it makes no difference to me. My interest here is in making sure you have the right information so you can make the decision whether or not these type of funds can help you grow your real estate business. If not, don't do it. Please do not apply if you don't think this can help your business. I don't want you digging a nasty hole of debt for yourself. All right? but if these funds can help you grow your business,

I don't know of a source of cheaper money out there, you know, unless you have a rich aunt or uncle that'll fund you, fund your business for 2% or less. So go to epicfastfunding.com and complete their 60 second application and you could receive your funds in the next seven to 10 days.

All righty. So that's that. I've kept my guest waiting long enough. So let me regroup real quick and we'll dive right into how to get low income housing to perform in 30 seconds right after this. Alert! Alert!

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On the phone, hailing all the way from Cleveland, Ohio, Mr. Joe Lieber. Joe, welcome to Epic Real Estate Investing. Oh, thanks for having me, Matt. You bet. Glad to have you here. We've been looking forward to this, and finally here we are. And, yeah, I want to learn all about what you do in Cleveland. I know you have a very particular strategy with Section 8 and working lower-income houses,

and you kind of got that down to a science. to the point where you are affectionately known within our mastermind group as the ghettoologist. Not that I am. Yes. But it's a very positive reference for you because you have figured out how to provide good quality housing to low-income people. So we want to talk all about that. But before we get started, let's talk about how you got started into real estate. Great question.

Well, I've been in the business 17 years now. Get ready, Joe. I've got a bunch of great questions. Okay. Wonderful. Okay, go. I got started in 1998. I just got out of high school in the summer of 97, and I knew I wanted to get in real estate.

I just didn't know what aspect. There's so many ways to get involved in real estate. You want to be a landlord? You'll be real estate Asian. You want to be a flipper. Do you want to be a wholesaler? And I just kind of jumped in with two feet, and a friend of mine who I had raised your high school, went and bought a house, and we were going to pick it up and sell it.

And we did that. So, unfortunately, it didn't go that well. I'm actually not losing $5,000 each. I can tell you when you're 19 years old, thousand might as well be $50,000, so I meant all the money in the world to us. Right. But as you continue to go, you learn and you go through the school of hard knocks, which like this day, I have a Ph.D.

And get a while to-y-now because all the hard knocks I've taken. And, you know, you keep evolving and you keep pushing. And here we are 17 years later. I have a flourishing real estate business for in Cleveland, Ohio, and it's just fabulous. What was your initial attraction to real estate, though? You know, even way back before Donald Trump was cool, I would always see Donald Trump things going on. And I was always, you know, interested in the lifestyle that it gave you. The passive investment side of it was the most interesting to me. Because I wanted to set

something up once and make money on it forever. And that's what attracts me to build a state the most. Well, cool. So you've been doing this, we're coming up on 20 years, just a few years away from that from when you got started. And, you know, you've kind of maintained a certain property type, a certain neighborhood type. I really like the lower income. That's where all the ROI is, as long as you can get the properties to perform. So that's just kind of, I don't know, can you run us through the basics, I guess, of, I guess, the secrets or the tips or the tricks? Absolutely.

Okay, cool. The biggest thing with the Midwest, especially Cleveland, Ohio is people are drawn to the cheap real estate prices. Right. And you can buy houses all the way from a few thousand dollars and all the way up. But everyone's attracted, they get in line, they'll see a house for 20 or 30,000, and say, whoa, that's awesome. I want to get involved in that.

And it is awesome. And there's ways to take the edge off and make these houses perform because a lot of times when you're the low-income houses are dilapidated and need work, I've come up with all these different techniques and strategies to get people vested to get paid. There's two ways, really. One is I do a work for equity program, and it's a rent-to-own, and it's a really awesome program that takes houses that are dilapidated, get people in there, get invested, then do work on property, give them that sense of ownership, that pride of ownership.

and when they're vested in the property, you're going to get your rent. And the other strategy that I really like is Section 8. And everyone, you know, oh, Section 8, oh, I don't want that, you know. And I'm here today to kind of debunk the midst of Section 8. You know, they're going to tear my house up, that's what I always hear. And that's the furthest thing from the truth. So, you know, just to talk about that a little bit and point some things out, yes, you can buy these cheap houses, you know, $23, $40, $50,000.

And number one, the rents are higher. Right. You're going to get Section 8, so it's funded by our dear government, you're going to get higher rent than a private pay. So if I can give an example, I can buy a house here for, say, $50,000. And I'm going to, you know, fixed up, rent-ready, beautiful. I'm going to get $9.9.50 a month in rent. It's really, really good.

The quality tenant, I'm going to. to get, let me just tell you about the people, because I have several of them. It's a mom with a few kids, and they're so blessed that I've given them this property and this opportunity to live there. Of all the houses in my portfolio have well over 100, Matt, they're the only ones that call me Mr. Lieber. They're so happy for the opportunity I've given them to be in these wonderful, beautiful single-family homes that they just stay forever. It's my lowest turnover and my highest call volume. If I went to Craigslist right now and put an ad on Craigslist,

I was offering a single-family home in Cleveland on Section 8, I can generate anywhere between 35 and 60 calls per day. Okay, so lowest turnover, and you're speaking specifically of the Section 8 tenant right now, right? of the Section 8 tenant. Okay. There's a big need for that here. Okay, got it. Got it.

And then it creates the highest call volume. So there's a lot of people out there with Section 8 vouchers that don't have places to live. Is that what that translates to? Correct. Correct. Very good. And, you know, I've heard that, and I've actually, you know, probably 20, 25 percent of our tenants, our Section 8 tenants. And I have heard, although I've never really been able to confirm, but I have heard from,

reputable people, and I think you're as reputable as any to speak on this subject, is that the Section 8 vouchers aren't as readily available as they used to be, and the waiting list is somewhat longer than it has ever been. So that's kind of translated to a better, I don't know, if this is the right word, better behaving tenant? Yes, that is 100% true. And here in Cleveland, Cuyahoga County is where Cleveland is located, and we have 14,000 voucher holders here, and it's very hard to get these vouchers.

They might only do 500 new vouchers a year, and if you need to get assistance, you go into a lottery, and getting that golden ticket, if I could be so frank, to get it's extremely challenging, and when tenants do get that voucher, that golden ticket, they're so happy and blessed. I mean, but Matt, let's think about it. if someone was paying your rent or mortgage, you'd probably be pretty nice to be right. Oh, yeah. Be ecstatic.

Exactly. Exactly. And that's exactly how they feel. And it's really a wonderful opportunity to give back and provide quality housing to these people who are in these situations. Right. So what did it used to be like? Where did the bad rap come from? You know, well, when I first started getting into Section 8,

a lifetime ago, they had a bad rap. And the reason why is there were bad inspectors. There were shady inspectors. There would be inspectors, you know, asking, calling me, say, I'm heading to your house and doing an inspection, Mr. Lieber. I need you to meet me there.

And I knew why he wanted to meet me there. He wanted to be taken care of, financially, if you know what I mean. And it was just a greasy, slimy business, and there was no real regulation or control on it. And landlord didn't want to be a part of that. Not even want to be a part of that either. And for many years, I was not in a Section 8 game.

It wasn't until they went and re-did it, basically, that I started getting back involved. Mm-hmm. Mm-hmm. Let me ask, I want to ask that kind of the tough, uncomfortable questions I think are on people's minds. And the Section 8, does Section 8 and say, you know, the popular word with real estate investors war zone? Does that necessarily go hand in hand, or how do you separate the two? Or do you need to? Separate the war zones?

I mean, if you have a good Section 8 tenant with a good property, but they typically aren't in the most desirable neighborhoods and that a lot of people that are looking at investment property would classify as war zones. And it's correct, and there are war zones as in any city. It works there very well. I personally don't invest in war zones. I have before.

It's not a good experience. I'll try to fix up a house and the war zone people can't really appreciate it. And I'll take a toilet in at 10 o'clock in the morning, and by 5 o'clock it goes out the back door. So there's still wonderful opportunities, not in complete war zones. I'm talking just blue-collar, good heartbeat of America neighborhoods. Got it. That's what Cleveland, Ohio represents. Okay, so Section 8 isn't necessarily synonymous with Warzone.

Correct. They can be mutually exclusive, right? Right, they can. Now, you're not going to want to find Section 8 in the suburbs. But on the west side of Cleveland, the east side of Cleveland, there are neighborhoods that are just perfect for that, and just good people who want a nice, safe place to call home. That's my model.

That's what I go for. There are people that do it in the war zones. I just, I haven't had much success in the absolute war zones. Right, right. Yeah, got it. I can relate there. Okay, so as an investor, you decide, okay, so I like this low-price house. I like this high-paying rent.

I like it being automatically paid by the government. Sounds great to me. So as an investor, what do you look for in, like, I guess, the ideal property that would fit a Section 8? It's all about bed-juring account. section eight. The more bedrooms you have, the higher the rent they pay. So as real estate investors, we want to try to come up with a higher and better use for a property. Kind of our job, really, as a real estate investor, how can we make it better? So what I typically do is I buy 1925-bill Colonials here in Cleveland that typically

consists of three bedrooms, a living room, a dining room, and a basement, and sometimes a one-car garage. Then what I do is I go to the attic, and I cut a center hallway in with a bedroom in the front, a bedroom in the back. And that now gives me five bedrooms. And when I'm at five bedrooms, I typically get paid over $900 a month in rent. Got it. It makes for a wonderful opportunity. And they're just beautiful, older Victorian-style homes.

Right. That have been there forever and they're probably going to be there a little while longer. Right. Okay, so I've seen those houses. In fact, we own a few that have the split upstairs in the attic. So what does those bedrooms have to be permitted to qualify for Section 8? I'm sorry, what did you say? Permit.

Do you need a permit for those rooms and then I guess to get the property officially classified as a five bedroom? No, you don't. You don't. As long as Section 8 comes in and it meets their requirements, such as have a heat source and a working light and outlets, they can serve that a bed. room. Really? Okay. Is that just in Cleveland, or do you think that's nationally?

I've never done anything. It's actually outside of Cleveland. I really don't know. That's a federal program, though, right? It's not, is it originally run by the state? It is a federally funded program. Okay. Okay.

So it's very similar. Very good. Now, so you've got, you bought a really low-priced property. You've split the attic. You've added some additional bedrooms. one way or the other. You've got, you're qualified now. You've got your Section 8.

Okay, so yeah, so what's the process of getting the inspector out there? You said that it used to be kind of a shady business in the past. How is it different now and how does that process go? So what happens now is once the home is fixed up, I'm going to fill it now. And I'll put in an ad, a very general egg, if I don't want to incur too much marketing costs. Real quick, just before we go there, because I'm going to ask that question. What about the inspector? Do you just call the Section 8 housing and say, I'd like an inspector to come out and give their stamp of approval?

No, what happens is I fill out the, they call it a RFTA package. Okay. And you'll fill that out, provided when that's given to you by a prospective tenant, and you saw all this documentation. Ah, okay. And they take it down to the Section 8 office, turn it in, and then the inspector comes out within about 48 hours. Oh, got it. So you get the tenant before the Section 8 approval?

Correct. Okay. Okay, okay. Super. So you were going that direction and I stopped you, so sorry about that. No, no problem. Okay. All right. So you put an ad in, say, Craigslist, you get your 60 calls. Correct. So if they've all got vouchers, they're all going to be good tenants, you know, kind of what do you look for as far as who wins? I look for a couple things. So one, I want the, however bedroom bedrooms my house is, I want their voucher to match. So sometimes I get folks to call me. They have a three-bedger voucher, looking at my five-bedroom home that I don't want. If I have a five-bedroom home, I want a five-bedroom voucher holder.

Got it. And the second thing I look for is, let me make sure they have a job. I like them to be employed. Remember, Section 8's a program that's almost like a rehabilitation program. Yes, we might pay all of your rent today, but we're trying to get you back into society to function as a normal person, and we're going to wean you off this program. that's the idea of Section 8. Now, typically it doesn't happen, even to the point of where they just work part-time

and they're just doing that, and they send on a program forever, but I want someone who is working. I don't want to sit at home all day. I don't like that. I want them giving back. So I look for that. And if they're employed, and then I call their landlord just to make sure everything's okay, I want to talk to their landlord, and I'll go with them.

Got it. Then what? They move in and... Then, then... And if they meet our requirement over the phone, we'll go out and we'll show them the property. And, of course, they're going to love it. I mean, our properties are great and there's not a lot available. So even if it's not what they're looking for, they're going to take it because there's not a lot of them out there.

And we'll fill out the package, we'll have the inspection. As soon as it passes, they're free to move in. And they'll give us a security deposit, of course. And we move them right in. And gosh, they stay so long, Matt. I want to say my average, my average turn time is 46 months right now. Wow. That is a long time.

And the only reason why they usually turn over is because the children get older and age and they come off of their voucher. So they have to pay more rent. And generally they, you know, they can't pay it. Right. So that's the only reason why they move. It's very, you know, extreme circumstances they move. It's not very often. Mm-hmm. Well, good. That sounds like a really good deal. And then you're still doing that today?

I am still. Very active with it, yes. Super. You know, I also do a work for equity program here. We talked about earlier. Oh, that's right. Let's talk about that a little bit. And, you know, that is basically what I'm doing there is an effort to, on my end, keep my rehab cost low. When I have turnover, I'll just turn the house over to someone who wants to own a piece of the American dream. And I might be $50, believe. low market rent for them, but I'll put them in there on a rent to own. They'll get the house $50 cheaper than market rent. I'm still getting a killer ROI. I don't really care. I don't want to pay for a $5,000 rehab. I'll let them go in there and do their own painting, their own carpeting, their own fix-ups. And I've noticed that when people do that, they become invested to the property now. I can promise you, if someone's over there painting their whole house, you're going to get paid next month. That's what I typically seen. So I also do a lot of that as well.

Got it. It's a wonderful program. Super. Sounds like it. So is that like a lease option type structure? It is. Exactly what it is. It's a lease option to buy.

Got it. Got it. I do them over five years, a five year lease with an option to buy, the end of five. And a lot of people will say a long time. And what I would tell people is even if we get to five years and you're not ready to buy it yet, I'm more than happy to expend it. I don't want to put anybody out. That's the truth.

I don't want to put anybody out. Right. And if you're getting paid, you really don't want to buy it anyway. Right. But I do want to give people the opportunity. I'll set it up. If you want to jump through the ring, jump through the ring. Got it.

I get that from you. That's the kind of guy you are, for sure. As far as rent, so if someone wanted to do something like that, what's a, is the amount that from their rent that goes to their purchase, is that come out of the lease payment? Absolutely. Okay. So what I do is I'll do a credit at the end of the lease. So let's do an example.

Let's say someone's going to buy a house for $75,000, okay? Well, I know from just being an ex-loan officer a lifetime ago that that bank is going to want 5% down. I just know that. So there's 5% down which is $3,750. It's supposed to me about $3,000 in closing costs, okay? So I know for that person to buy that house, they're going to need about $6,750. Now, what I didn't tell you is when I initially leased the house, I'm going to charge my down payment to enter into my lease-option contract. Now, it might be light, meaning 1,500 or 2,500.

Okay. But I'll give them full credit for that, and it helps with the vesting as well. So, all of that at $67. Let's take off that $2,500 they're going to give me initially back, we'll say today, but we're five years in the future. So we're going to take that off that $67. So now we've got a balance of $4,250 that I have to build in for them over the course of five years. So all I'm going to do is take $4,250.

divided over 60 payments, I only give them a rent credit of $70.83 per month. So at the end of five years, I now have $6,750 sitting in my phantom bank account for them. Right. And so now they can go to the bank for a conventional loan, and that's their down payment. Correct. I'm a send a credit to my closing. You'll get a credit out of $67.50, and they can complete. their acquisition and everybody's happy.

Perfect, perfect. And then I want to add one thing, if they do not complete their purchase, all monies are lost, down payment and credit, they do not get that back. Right. I was just going to ask that. And this is, I'm playing a little bit of devil's advocate here. And, you know, it's kind of like the proverbial toilet in the middle of the night. Everyone talks about it, but it never happens. But I have heard that you have to be careful. to be careful or I've been told to be careful in rent-to-own situations because if you're

applying a portion of the monthly rent, they could go to court and argue a percentage of ownership. Here's my only experience with that is they would choose like a land contract. They have to have 20% equity in the home or been there for at least five years to claim any type of ownership in that property. So until we cross that five-year bridge or 20% equity, there's no claim. Got it. Okay.

That's about the average purchase price. We're talking, that's about the average purchase price. We're talking, you know, $14,000. Mm-hmm. Mm-hmm. Got it. Okay, so you're using a land contract for this? No, I'm using a lease and then a separate option.

Okay. I thought you just said land contract. What was that about? I did say land contract because generally we don't. see that kind of problem unless it's structured as a land contract. Oh, I see what you're saying. I don't structure. I don't do land contracts.

Okay. Then kind of with these two structures, I'm assuming that you, that a lot of the headaches, the management headaches that go along with these, with the lower income properties, they kind of take care of themselves. They do, especially with the rent-to-own properties. You know, we've set it up. It's all about how you set the stage from the beginning. So when we're initially assigning that customer, we'll let them know, you know, this is a least option to buy.

You're taking the property as is. You're responsible for all repairs to the property. So we're acting more, we tell them we're acting more like your bank, not like your landlord. That helps defer a lot of calls. And I will say, calls still do come in here to the office. Joe, my furnace isn't working. And all the money. So we make, you know, we make circumstances.

We might change the game. So if someone's furnace is down, something. Sometimes I'll send a technician out to repair it, and I'll bill it to them. I'll pay it and I'll bill it to them or I'll split it with them or I'll make payments to me. So I'm really trying to defer my maintenance costs. I'm really trying to increase my N-O-I. Got it. And over all those years, Matt, that's what I have, the trials and tribulations and to the headaches all the way through,

that's what I found really works. Sounds like a great system. It sounds like you've got it all figured out, but no systems. without its challenges. What would you say are your biggest challenges in the way that you run this business? My biggest challenges are lately finding more property. You know, these things are getting sucked up left and right. You know, the Midwest is hot. People know it. Cleveland's awesome. As I like to say, I'm not playing one Dunkin Real Estate

deal with Sierra LeBron's Dunkin Balls every day on TV. Right, right. So, you know, that's a challenge. Finding good contractors is always a challenge for people to fix up your house. But those are my two biggest things. Finding houses and finding good contractors. Got it. That's the same it is with darn every strategy.

Yeah, pretty much. Right? Super. So is there anything I didn't ask that I should have asked? Anything important that you want to leave us with? You know, I think we covered it pretty much. I think we did. It sounded pretty thorough.

We went through it step by step. We did. Fantastic. So if someone wanted to reach out to you, if they had a question or, you know, wanted to just kind of chat, how should they get in touch with you? Absolutely.

Okay, go ahead. You know, I have my office line right here. It can reach me area code 440-387-4800. I'm an extension too. Can reach me direct. I'm also on the web at Cleveland Investor.com. And I have an email address, R-E-broker-216 at gmail.com.

R-E-broker? 216 at Gmail. Yes, sir. Got it. I'll make sure all of that are in the show notes. And then they can always hit rewind and listen again and write it down too. Wonderful. Super.

Joe, it was a pleasure. I know I'm coming out to see you next week. I'm looking forward to it. So, my, I can't wait. Little Italy, we have a great time. Yep. Let's have some great real estate. Absolutely.

And you're a blast. You're a good guy. You're fun to hang out with. And you're just one of my favorite people in this game. So it's always a pleasure to connect with you, and I'm looking forward to seeing you soon. Thank you. I'll see you then, Matt. Super. Take care, Joe. Take care. Bye-bye. You know how some people want to invest in real estate, but they don't know how?

Oh, yeah. And you know how some people want to invest in real estate but they don't have the time? Oh, yeah. And you know how some people want to invest in real estate and they simply don't want to do all that work? Oh, yeah. Do you know someone like this? Mm-hmm. Perhaps that someone is you?

Uh, yeah. If so, subscribe to the Turnkey Real Estate Investing podcast, the show for busy people who want to invest in real estate, but don't have the time or the desire to take on the heavy lifting. Turnkey Real Estate Investing. Subscribe today. It's free. Yeah. Turnkey, Real Estate Investing.

See you next week. I'm Matt Terrio, Living the Dream. You've been listening to Epic Real Estate. estate investing, the world's foremost authority on separating the facts from the BS in real estate investing education. If you enjoyed this show, please take a minute to visit iTunes and share your thoughts. Thanks for listening. We'll see you next time here at Epic Real Estate Investing with Matt Terrio. This podcast is a part of the C-Suite Radio Network. For more top business podcasts, visit c-sweetradio.com.