KGCI: Real Estate on Air - Profitable Real Estate Investing Using the Slow Flip Model

Episode Date: November 22, 2024

Scott, thank you so much for joining us tonight. Thank you for having me. I was looking at what your podcast was all about, and it is completely in alignment with what I'm always preaching. And it's all about setting yourself free. And I saw that was what your whole baseline of your podcast was about to begin with. So I thought that was an awesome fit. Absolutely.

And I love the fact that you not only achieve that, but you are helping others kind of get to that level and be able to achieve that for themselves. And so I really want to take it back to begin. beginning, Scott, because I'm super interested in your story. I hear that you actually started your first business venture well before Natal, right, back in, what, the high school days? Yeah. So I started, I mean, if you, if you were to go through my whole history, I was an entrepreneur from the time I was a little kid. I was selling candy in school, you know, and most people I know that our entrepreneurs have a

very similar story. I'm not unique, you know, selling candy in school and doing our jobs. And then I got into, I dropped out of school in 11th grade. I don't know if you read my book and you know about that. I dropped out of school in 11th grade, and I started working at the mall, and a Army recruiting event came in the mall, and they ended up recruiting me. And I was only 17, but they were like, hey, how about you? Why don't you join? And I'm like, sorry, I'm only 17. They said, you only got to be 17 with your parents' permission. And so I was in the Army.

I got out, got back home. And then I moved to Virginia, and I was selling sodas on the beach in New York. Then I moved to Virginia, and I started mowing lawns. And my very first house I bought, how old are you, by the way? I didn't ask you. I am 31. 31. So you don't know anything about non-qualifying assumptions because they did away with them. They did away with them a long time ago. So they ended them in 89, 87 for FHA and 89 for VA.

But back then, you were able to kind of like sub two right now, but with the bank's blessing. You were able to assume anybody's mortgage. And so I had bought my first house in 1994 to live in. I had no interest in real estate, but it was $5,000 down and I had $5,000. And so I bought it. And then shortly after I bought it, another house on the block came up for sale for $2,000 down. And I know it sounds stupid now, you know, but I didn't know anything about real estate or equity or anything about anything. I just knew I paid $5,000 down and this one was $2,000 down.

So I felt like I got ripped off. And my genius brain then said, well, let's go buy that one also and kind of cost average. And that was my first, you know, insight and thoughts into real estate is that's what got me into it. I started all the sudden every month, I'm having someone paying me. And I'm like, well, I borrowed the money and they're paying it off. I borrowed it. they're paying it off. And then I slowly became obsessed with it. And I've been doing real estate ever since. It's been a constant obsession. That is incredible to even have the courage to go out there

and buy that first one at such a young age. I can tell you that a lot of individuals would have paused and said, hey, I know nothing about this. Why am I going to jump into this scary game of real estate? What helped you get over that hump? And even before that, taking a step back, first and foremost, thank you for your service to join at 17. And serve. the number of years you did is incredible. Do you mind even telling us about the transition from service back to civilian life? So I was only in a short time because I joined during time of war. So everybody's like, you have to do four minimum. I said, well, you don't. When you're in time of war, it was once the war ended, I was able to get back out. So I was only in for a

short time. And then I was in the reserves after that. And so I did communications in the army. And so I had no skills that could translate back to civilian world. So I started selling and so does on the beach when I got out, and that was the end of it. I was no longer, other than the weekends in the reserves, I didn't, I didn't have any more affiliation with my skill that I can use in the outside world. As far as to get over the fear, and my answer is a horrible answer. I almost hate to say it, but the thing that always has been with me getting over fear is at the time, I had nothing to lose. And when you have nothing to lose, it's almost like, you're like, what's the worst they can happen? What's the worst they can happen? They take it back, you know?

And so I kind of moved along with that theory in my head always. I'm like, well, what's the worst that can happen? If I fail, I lose it. And if I don't do it, I lost it anyway. I don't have it to begin with. So I didn't really ever feel like there was any downside. There was no worse that can happen. Absolutely.

No. And to that point, that was a lot of what helped me get started in the real estate game, was just thinking through like, hey, when I got started, I got started at the age of 24. And at that time period, it was more like, hey, even if I completely messed this up, I can come back and kind of go the traditional route and build the whole corporate culture and make it through there. And so that's what really helped kind of make it happen in the beginning. And so, no, super exciting for that piece. Now, let's fast forward to today. You've been through over 800 deals.

Like, how did you really start to ramp up? So I'm going to give you a slightly depressing story. So I started buying in 94 and by the year 2000, I was buying all non-qualifying assumptions and all with the premise of let's just wait out time. Buy them. I wasn't making any money, but let's wait out time and they'll become paid off. And it was working. And in about the year 2001, I had about 20 properties by this point. And I don't know, you weren't investing then.

So in 2001 was the first time since I had started, since. it's actually the mid-80s that we started having appreciation. Up until then, I was buying houses for the same price they paid for them in 85, 86, 87, and I was taking them over for the same price. 2001, all of a sudden, my little $65,000 townhouses were $905, and 105. And I'm like, what is going on? These were always 65. And then I did, this is something I regret, and this is why I teach against it, but I did something that everybody taught to do, and everybody still teaches to do, was I refied everything. I pulled the money out and I bought more.

And I refied and pulled the money out and bought more. And everybody preaches it and loves it. And you may, I don't know, but I'm against it. And so what I did is I bought more and more and more. And I got up to 84 properties. And I'm loving it. I'm a king, right? I'm the best.

I got all these properties until about late 2007, if you can remember what happened then, overnight. Overnight, I had 30% of them stopped paying. I had 84 houses. I had 84 mortgages. And I had about a million dollars in cash saved. And I had all these houses. And suddenly I started losing $25, $30,000 a month. And I ran through every single dollar I had, fighting the good fight. And then what do you think happened when I ran out of money? The bank kept knocking. I lost about 55 of my houses to foreclosure. And it was devastating because I'm the guy that stops foreclosures. I had a big escalation. another side of it, stop foreclosure, we buy houses. You know, I'm the guy that stops foreclosures. And so it was absolutely devastating. And at the time, 2008, 2007, 8, 9, most investors that that got crushed like I did went

back to their real life, went back to the job they had before they got invested, went back to doing other things. And I had contemplated it, but I didn't have any other thing. I was like, what can I'm, you know, again, I'm a high school dropout. I'm living a really good life. And I'm like, I'd have to get a job as a doctor, a surgeon to be able to support the life I'm already living. So, you know, I had to figure it out. And one of the things that I started figuring out, which is why I love sharing it, is I started paying attention to not everybody got crushed.

Most everybody got crushed, but there was a certain subset of people that were not only surviving, they were flourishing during this time. And so I started paying attention to what did they do different? How come everybody got crushed and these guys are, they're flourishing? And one of the things, you know, I started having lunch with a lot of people. And one of the things I noticed, but of them, most of these older guys, is they owned their houses free and clear. And I was the biggest advocate against free and clear because I'm like, you know, I say the same thing people say to me now. It's stupid. It's dead money. You're not making any, all this great stuff. I was so against it until I got crushed. And then I'm seeing these guys. They owned everything free and clear.

And now they're buying more and more houses and they're paying cash for them when everyone else was getting smoked. I used to drive. I had two Cadillac escalades and I had a Cadillac XLR, a Cadillac XLR, cost me $105,000 and I love that car, right? Yet these guys who are lending me money, they're worth tens of millions of dollars and they're showing up to give me a check, hard money when I'm doing hard money deals. They're pulling up in a Honda Accord. And it didn't dawn on me at the time until after the bust. I'm like, I'm the guy borrowing the money and I'm driving in all these fancy cars. They're the guys lending the money and they're showing up in a Honda accord. And it was things like that that started clicking in my head to notice what I did right

and what I did wrong or what they're doing right and what I did wrong. And I revamped absolutely everything to model that theory. Now, so to this to this day, can you get can you guess what I drive? Let me guess. A Toyota or a corolla or something. A Honda Accord and I'm committed to it. I drive a Honda Accord and I'm committed to it. And I have more money than I've ever had in my life and I can buy any car in the world I want. And I'm committed to my Honda Accord. And so I started making changes. So at the time, you know, everybody says, oh, well, that's great to have free. clear, but you got to have money to buy houses free and clear, right? You do. And so you can't just go and buy houses free and clear. So what I did is I kind of made a hybrid of, yes, we have to

use money to buy the houses because if you don't have it, you still got to borrow the money. But I don't want to get into that 30-year trap of we're just going to be stuck making payments for 30 years. So we have a plan where we buy houses and we pay them off over a five-year period. And so for five years, you're really not making any money, but at the 61st payment, that money is all yours. And so I have 170 right now, 170 properties. I have 76 of them are free and clear right now. And the rest will be free and clear at some point within the next five years because each one, the longest program it has is five years. And I love that. There's no more of this. You know, I always joke about Mr. Burns from the Simpsons. And I say, you know, picture him at the top of

these bank buildings, you know, and we all do all this work, collecting rents and, you know, and go in a cord and filling vacancies. Then we collect the money and we send it all on up to Mr. Mr. Burns, right? And he's sitting there waiting. And with the new program we designed, we flipped it, and we're Mr. Burns. And everyone else is running around and just sending us the checks. And I completely love a thousand X more than I used to love the conventional model. But there are people, and there's probably people listening, and you could be one of them. There are people who hate it because they love their properties. And I used to where they're like, yeah, but if you do this, if you do this, you don't have the same benefits. And I'm like,

the benefit I want is the cash flow every month. And that, That's the benefit. I don't look at them as houses I'm in love with anymore. Now I just look at them as pieces of paper that send me money every single month. And so it's been a mindset shift over the last several years that I completely changed. I started this program in 2011. And so in 2011 is when I started the five year model, the slow flip model. And it was rough. 2013, 14, I remember started thinking, am I doing the right thing? You know, this is because you're not making any money until 2016 hit. And they started becoming paid off. And all of a sudden, I'm like, I'm the smartest guy in the world. And seriously, slow flips are the one thing that have changed everything for me where I don't have any burden or stress anymore because I still wholesale. I still do everything else. But my life is completely covered from my slow flips. And so there is no more, I have to make money. I have to do this.

My home's free and clear. My cars are all free and clear. My entire life is free and clear. And I have money coming in from my property. So whether I do a deal, don't do a deal, there is no more stress. And that's kind of my whole focus, which I know is yours. too because I was listening to your podcast is all about setting yourself free and not trying to be a bazillionaire, just having an absolute freedom lifestyle. And I know you agree because, again,

I was listening to your stuff and you have the same mindset on that. Absolutely. And I love the story about the Honda Accord and just noticing and seeing, hey, these are other guys that are making a lot of money that are not spending it on, you know, luxuries and things that nature, right? Maybe you do that down the road. But when you look at some of the richest people in the world, like Warren Buffett, right? I mean, he lives in Omaha and drives a pickup truck, right? Yeah. Yeah. I've been buying his house. Yeah. And so if he can do it, we can definitely do it on our rise. And that's just a microcosm or a small snapshot of what's helped you be successful. But I really want to dig into this slow flip because this is a concept that we haven't talked about

on this podcast before. And I know that you're an expert on it. Can you just talk to those who may not have heard this term before, what would you consider a regular flip and how does a slow flip differ? Two completely separate things. I'll give me a regular flip you guys already know, so we don't even have to talk about that. What a slow flip is, and the way I make a definition for it is I say it's the, it's flipping a house as slowly as possible for the fastest possible path to wealth. And when I say that, people like, well, that doesn't make any sense.

And then I correct it in saying, not the fastest path to a check. You know, wholesaling, in my opinion, is the fastest path to a check, right? And I love wholesaling. I did my biggest deal in my life closed yesterday, $250,000 on a wholesale. But that's not what we're here for. Congrats. Yeah, thank you. But wholesaling is your fastest path to a check, but that's not wealth.

Slow flips are the fastest path to wealth. And so what we do with slow flips, and let me explain to you what they are. We buy the lower end properties, which I know some people hate. Typical landlords hate them. Rehabers hate them. You know, everybody hates them because they're the, they're the least value biggest headache. For landlords, the least value biggest headaches,

flippers don't want them because there's not a lot of retail sales in that market. So I call it real estate purgatory. These houses are sitting around and nobody wants them. Well, we buy them, and what we do is we buy them on short-term money, five-year loans from private lenders because banks won't do five-year mortgages and they won't do these small price points. And then we immediately, as is, we don't do any work, we don't clean up, we don't load the loan, we don't do anything.

Then we immediately sell them with long, term owner financing. So we buy them on five-year mortgages and I sell them on 30-year mortgages. So that's why I said we don't make any money for the first five years, but then we get paid. And in the interim, there is no my sinks leaking. There is no the grass has to be cut because we're just the bank. We operate. That's why I said we're Mr. Burns again. We operate like the bank. All we do is collect payments. So in the first five years, we collect a payment and make a payment. after the 61st payment, we just collect the payments. And it is life-changing.

I have people, I have somebody in my program that has, he's only been with me a little over four years, four years. In December, it'll be five years. So what does that make? Four and a half years? He has 70 properties already. And we were just talking last night, and the reason I know his exact date is because I asked him, when does his first one come free and clear? And he said this December. So think about that. In four years, he's got 70 now. So starting on his fifth year, he'll average around $60,000 to $80,000 a month, income, personal income, as they become paid off. It's insane. And he's my number one. So I can't use him as a benchmark because he is my number one. But I had lunch today with a guy who's in my group and he's been in for a year.

And he was talking almost disappointed like it was a failure. He's like, well, I don't think this is working out. I've been doing this for a year now and I only have 10 properties. And I'm like, do you hear yourself? You got 10. You're 10 and they're all on the five-year plan. I'm like, do you hear what you're saying? Because I usually tell people, you know, forgetting wealth and being, you know, on a yacht and Greek islands and Lamborghinis, I said 10 properties is usually enough to set someone free. If you can pay off 10 properties, again, you're not rich, but you don't have to go to work.

You know, it's, there's a lot of levels of financial freedom. But the first one is you don't have to work anymore. It doesn't mean you're rich. Doesn't mean you can do anything in the world you want. But the important thing is you're free. You don't have to do anything you don't want to. And so I absolutely love the quickness. And I know people love flipping and they like five years.

That's not quick. I'm like, listen, compared to the other plane, which is 30 years, 30 years on a mortgage or working a job for 40 years, I'm like, believe me, five years is quick. And most people who really appreciate it are people who've already tried the conventional plan doing the Burr method or doing conventional rentals. And they've been doing it 15 years and still aren't making money. Then all of a sudden, for them, it makes perfect. sense. When people are brand new, they're like, well, I want to make money right now. I don't want to wait five years. And I'm like, well, you know, you do what's hard now and life will be easy, you know. Absolutely. Absolutely. It's definitely, it's playing on kind of the whole fact. And, you know,

I've learned this since my investing career. I've been investing for a little over seven years. And it's always those deals that you bought early on that are the best ones now. It's like, man, that was a headache early on. But now it's increased in rent rapidly. The mortgage is going down and the tenants are getting better, the units are getting better, and it's not like your mortgage rate has increased. So it's like those ones that you buy a little while ago are the ones that are going to fill and be so much better for you down the road, you just have to have a little bit of delayed gratification. There's a saying that somebody told me and I repeat it all the time to people, and it doesn't just apply to real estate. It's everything in your life,

but they say if you do what's hard, life will be easy, do what's easy, life will be hard. And it's so true with everything. If you take the easy path, you can do it and you'll have a good day today, but now your future is going to be harder. Or if you do what's hard right now, your future is going to be easier. And I see it all the time in every aspect of people's life. And I'm like, just a simple saying, just remember it. If you're taking the easy path, you're setting yourself up for a hard future. Agreed. Agreed. And I just have a couple more questions before we turn it over to the group. And they're probably going to have a million questions and be joining in here live, as you can see a couple right now. But the first and foremost is around this group.

You mentioned that you mentor, you have a couple individuals that you're helping actually follow this path of the slow flip. How do people join that group? And how many members do you have right now? So we actually don't take people just joining because what I did is I do a free, I have a free training. And I like people to watch the whole thing because it's long. It's about two hours, just explaining it. And because I only want people who understand and resonate with the same, same as you do, with the same purpose. You know, I don't want, I'm not the guy in the Lamborghinis.

You see if you're on social media, there's a lot of these real estate guys running around in Lamborghinis, hey, you can be rich like me in two weeks. And I hate all of that. And so I really am careful to make sure that the people that we work with resonate with the same mindset that I have. Because otherwise, we're not going to get along. If you're hoping to be in a Lamborghini in three weeks, then it's just not going to be the right group for you, right? And so we have people go through our free training first, which is at slowflips.com, SLOWFLIPS.com.

And it's a two-hour training. And then at the end, for those who it resonates with, then we have a group program there. It's called the Freedom Accelerator program. And the people in the group love it. And it's a community also. So it's not just me coaching. It's coaching community and the courses altogether. But they love it because even people that only have two and three properties, and there's a lot of them that just have two, three properties.

You'll be amazed how even just a couple of properties changes someone's life. there's, you know, there's people who make marginal amounts of money and just a couple properties can double their, double their pay. And this is money they're not working for every month and they still go to work at their job. And so it's a life, it's a life changing thing for a lot of people. 100% agree. It changed my life. I know it's changed your life and many others that are joining us here tonight. And so, yeah, this is an amazing, amazing way to kind of transform generationally your whole family.

My son is 14 right now and he has 30 already. Your son has 30 at 14? Yep. And because the way we teach, the way we teach, and this is why I tell people, like when people, my oldest guy in my group is 77 now. He joined me when he was 74. This is the way I tell me, but if you don't need money, so what stops a kid from doing it?

If you don't have to have money to do it because you don't, and you don't, everything's done on the computer as far as filling them in the paperwork, what would make somebody either old or young think that they couldn't do it, just because of their age, anybody could do it. And that's why I love slow flip so much, because it's such an overlooked area that it's neglected. And I call it real estate purgatory. Nobody wants them.

I see sometimes the house will be there for weeks, and everybody's passing on it because it doesn't fit the typical landlord model or the rehabber model, and we get to slip right in. And we just get between them. The people who want to buy them need the financing, and the people who want to sell them need the cash. So we just get in the middle.

And then that's it. Put the two together and just collect our money. That's the key. Finding a niche and really narrowing down and zeroing in on it. I love it. There's a saying, right? The niches are the riches are in the niches. Yeah. Riches in the niches. I think you found one that is definitely kind of right for the picking. And the last question for me before opening up to the group and there's going to be others asking questions. What are some major projects or goals that you have for this year, right? As far as growing your presence, things that nature. Well, I have one major project I'm working on right now, but it has nothing to do.

with anything we're talking about. I'm buying a home in the Bahamas. I'm actually leaving tomorrow. Yeah, and I'm real excited about it because that's something I've been wanting to do. And I'm not going to live there because my son's only 14, so I still have another good four or five years until he leaves for college. But once he leaves for college, we're going to start doing our winters there. It's in Bimini in the Bahamas. And so I'm really excited about that. So I know that wasn't the type of project you were talking about, but that's what's on my head right now. One thing that I am working on right now that I'm real excited about. My other project, I just completed, which I talked to you about earlier. I don't know where the cameras, if you could see,

but my book is finally out, the art of the slow flip. And I worked on that for a long time. And so I was very happy for it to finally be out. And, you know, you said you ordered it. So I look forward to hearing your feedback after you read it. And I know you said you ordered it, so I didn't want to have to tell you, but I was giving them to you guys, everybody who wanted it for free. We're making a page right now. If you go to scotsfreebook.com, it's, I don't know if it's live yet, but they're working on it as we speak. And I told him I was doing this tonight and he said he's going to set it up to give everybody a free copy of the book. No, Scott, we appreciate that.

I'm going to definitely flaunt my copy, but I think the rest of the group will put the link into the show notes so that they can click it and be able to go and get that book as well. And we appreciate you jumping on and sharing your knowledge. And I want to now open it up to the rest of the group. Please feel free to do your live call in and or drop questions into the chat. We've got Scott here who is going to answer some questions on the art of the slow flip and kind of help us start to understand even a bit more how we can accelerate our portfolio. So we'll give it a pause.

And Scott, while we're waiting, one other question for you, this Bahamas piece, right? I'm always interested in seeing like, hey, you know, what's driving people? Is this a dream that you've had for a while to be able to make it and buy that house over there? So I wasn't always planning on, we go to the, Bahamas a lot and I wasn't planning on buying one there in just recently a friend you know some of my friends have houses down in the Bahamas and I we go to the Bahamas a lot I love Atlantis we go to Atlantis a lot in Nassau and we really fell in love with Bimini we've been to a lot of the islands in the Bahamas and we really fell in love with Bimini and then we were we were talking about

getting a house in Florida for when Vince leaves to you know to have warmer winters and then I was like well for doing that why don't we just go to the spot where we love which is Bimini we started looking and fell in love with it. That's awesome. That is awesome. So we got a couple questions. I went in the chat, but before we get there, Dwayne, do you got any questions for Scott? Hey, Scott, how are you doing?

First of all, I want to say thank you very much. I definitely can't wait to get my hands on that book. Awesome. And that piece about you getting the house in the Bahamas, that's great because my wife's from the Bahamas. With your process, I would love to get a house in Exuma maybe, you know, because we love that. Oh, very nice. Yeah, I love it there. Yeah, so my question is for, I've been listening to you with your process.

Do you, you say, you know, you don't need money to start, whatever it is? Is it like creative financing that you're using to be able to start this process? We raise private money. So, and I have a whole section that we teach on raising private money. We also have a national lender now that just lends to the people in my program, but we raise private money. And I teach people how to raise without ever being rejected. And it's really unique system. And I can give you a short version of it if you want.

But we teach people, you know, it happened to me on accident. When I started raising money, I have this woman that runs a local club and she has a lot of connections. So I went to her and was asking her, hey, could you set me up with some of your people? I'm trying to raise money to buy houses. I'm going to pay 12% return. 12 is a crazy good return, right? I still pay 12.

So I'm going to pay 12% return. We're only borrowing X amount. And before I was done with the conversation, she was like, well, what about me? I want to do that. And so I was like, well, okay. And so she became my lender. And it taught me something. And I call this the way to never get rejected.

I said, we never ask anybody to be our lender. We always ask if they know somebody who might be interested, even though we want them. I want you to be my lender, but I'm never asking you. I'm always asking, do you know somebody who might be interested? And then we never ask to borrow. It's offer an opportunity. We offer them an opportunity to make a 12% return on their money. But not you, Dwayne.

You're into a bunch of other stuff. But you know people. So you might know something. somebody who wants to be, it's the safest investment out there, 12% secured by real estate, but not you, you're doing that crypto stuff or whatever else you're doing, until you're saying, whoa, tell me about it. I might be interested. And then you maintain your position of power, so you're not sitting there groveling,

oh, would you please loan me money? Right. And once you do it properly and you can practice on people, you'll be surprised how much money is in your circles right now that you don't even know, because it wouldn't be them. It'll be their grandmother who wants to loan out of her IRA or somebody's working and has, because a 12% return is good money. They're making 1% in the bank. And so it's really easy to raise money.

And then we have one national lender that we just recently got to do deals now for our slow flip deals, but mostly everybody's been raising private money. Nice. Thank you, Scott. You ask a short question. I give a long answer. Sorry. It's fine. Shifting over to Rodin, did you have a question for Scott?

No, we don't broker it. We actually buy the house. Yeah, we actually buy the house. But what we do is you'll have a seller. or a distressed seller and they need cash so they can't sell it with owner financing and they can't fix it up to put it on the market. So we will get in the middle and use a private lender and pay cash to the seller. So now we own the property and they're out of it. Then we'll turn around and sell it with long-term owner financing to an end user, either a buyer or more often than not, we sell them to

landlords who are doing the conventional model, but they don't have the credit or the money to go and buy it cash. So we'll sell it to them with the financing. Then they'll fix it up and put tenants in it. do the conventional model like I used to do, but then all we do is collect a check every month. They're the ones who have to fix the leaky toilet. They're the ones that have to go to court. They're the ones, some of them rented out Section 8. They're the ones who deal with the landlording part of the business. And all we do is we operate just like a bank. We just collect and process payments. And that's it. We don't have any of the headaches that come along with it. I'm sorry, you broke up on me. So, yes, except it's not a

recorded mortgage. We do it through where we call kind financing. It's an agreement for deed. And so it's not recorded. So we still have the deed in our hand, in our name. And then we finance it for them on a full 30 year note. That's pretty incredible. It's not, it's not recorded. It's a table contract. So we do it in our office and it sits in our file cabinet. Nothing gets recorded. We still own the house. And when they finally pay it off, that's when they get the deed. The way I explain it to my buyers when they say, well, what's the difference? And I say, when you buy a house from a bank, the deed goes in your name, and then you pay for 30 years. When you buy a house for me, you pay for 30 years, and then the deed goes in your name. It's the exact same end result. Love it. Love it. I think

Radim, we're going to come back to you. I think your line's breaking up a little bit, but we have a couple of questions in the chat. And one of those is from Mark, and really, I think there's one right below that, which is along the same line of this. He said, who finances this type of deal? You just mentioned kind of who that was, the five-year portion of it. And you mentioned kind of holding that. I think a lot of people have questions on that piece. And then also somebody asked if you could explain the concept in more details. Do you have just one example? You've given a couple, but could you give us one more example of a deal you've done recently? So I can give you a thousand, but I'll just, I'll just break down numbers for you. So, and I know when I tell you these numbers and I

don't know where everybody lives. The people's first inclination is, you can't do that in my area. That doesn't work in my area. And I get it. And in a lot of areas, it doesn't work. However, I buy in four states. I live in Virginia, but I have a ton of houses in Illinois and a ton of houses in Missouri in St. Louis area that I've never even seen. I have 37 out there that I've never even seen. It works without even going out there. So as a, for instance, real numbers, we'll buy houses for, and I know you might be in an area where they're all 500 grand for houses. We'll buy. buy houses for $25, $30,000. And then we'll buy them, we'll get a five-year mortgage on them.

Five-year mortgage on $30,000, the payment comes to $667.33 a month. That's at 12%. That's for 60 months. That's a five-year amortized mortgage, no balloon. Then we'll turn around and sell it immediately, typically for $79 to $89,000 with owner financing, $3,000 down and $8.75 a month. But we're selling it for $8.75 a month for 30 years. So for those first five years, we really don't make any money.

That 875 covers our 667, plus we pay the taxes and insurance, so we really don't make any money. But in five years, we own the house now free and clear. And now that 875 is all ours. The other irony is when I started, they were all 875, and I still use those numbers because we don't know how the market's going to move. But right now, those same houses, I'm getting 1375 and some 1475. And houses I paid 20 and 30 and 40 grand for, which the returns are staggering. But I don't like to ever teach on those numbers.

And the reason is we don't know how long that's going to last. That's new because the market's been so crazy these last few years. So I try and teach on the numbers that I know work even when the market is low and stable, not the way it's been recently. And so 875 is a number that's always worked, even though we are getting a lot more in the current market. Nice. Nice. And that's a good nugget to kind of keep in mind as the market is starting to settle down, things of that nature that, yeah, we're elevated. but I don't know that we go back to the 875.

I think we're still going to stay a little bit of fire. I know. It's crazy. I was talking with a girl the other day who rents in an apartment and she said her rent is $1,600 a month or something, 16 something. And she has a three-bedroom apartment. Her renewal is in August. And they already gave her her renewal if she wants it.

Which she said, no, it's $2,800. It's going from $1,600 to $2,800. I was like, holy, that's a big increase for one year. That's nuts. That is nuts. And Mark, Mark, I see you joined. Did you have a question for Scott? Hello, Scott. Again, I appreciate you sharing your wealth and knowledge about this slow flip.

I'm very curious about the details of it. I know you explained it several times. And it sounds like you have to gain the financing first. So you find a deal, I'm going to say for $100,000, you purchase it. You finance it for five years? So the $100,000 price. price point would be tough to make it work in five years. We try and stay at 50 grand or under. And the reason is, at a $50,000 loan, it comes out to $1112.22. And that still works because even the

lowest price point on a $50,000 house is about $11.75. So when you get to $100,000 house, typically the numbers don't work to get paid off in five years. And I'm not that I'm that old, but I guess I'm old. I'm 49 now, but I've gotten to the point where I'm like, I'm not willing to go 10 years and 15 years. I'm like, five years is where I believe my max is. And I'm just not, so I make it where the numbers will work in five years or I won't bother doing it. Okay. Now I understand. So there is a constraint. Yes. To pay it off in five years. So it doesn't work with all numbers, I guess. Correct. Now you can. So I don't mean to cut you off, Mark, but let me tell you, you can and I do. I have one. I just bought that's 875,000. So that one I did where there's, there's two sides to a slow flip. There's

the buy and the sell side, right? And so this particular one, I got a really good deal on, but I bought it sub two. And I'm still selling it as a slow flip, but I'm not paying it off in the five-year term. It's just not possible. It's a high dollar house. And I have a lot like that. So the model, really, my plan is always paying them off in five years, but there's certain houses that there's just no way. You know, but I make good money on it.

I'm going to make over $2, $2, $3,300 a month cash flow on it. And it only has seven years left on the mortgage. so I'm like, you know, I'll make it work. Okay. Thank you so much, Scott. I look forward to reading your book, too. I'm sure it goes over and gives more examples to that. I left nothing out.

When you read it, you're going to be like, he gave away everything. Seriously, I left nothing out. It is detailed from start to finish on exactly how to do this. Thank you. You're very welcome. And we're going to kick it over to Desmond. Do you got a question for Scott? I do not.

I'm sorry if I needed to have one. You are good. Yeah, I just joined in. So I'm just trying to really soak up the knowledge, but it sounded like something cool that you guys were talking about. So I really just kind of want to listen in. No, that is fair. That is fair.

Because we've got one in the chat. And we're going to have this question and then maybe one more. And then we'll kick it to Scott for a wrap up and a summary because I want to make sure that we respect this time as well. But we got a question in the chat from Kareem. Within the 30 years, if the value of the house appreciates, can you take advantage of that in any way? And do you also market as a rent to own at all with this, with this strategy? So we don't market as rent to own.

We are selling it. It's not, there's not rent. And that's important because if you ever end up in court and you guys have known if you've done lease options with a lease option, everybody says, no, my contract says I'm not responsible for repairs, which is true. I used to do lease options. It doesn't matter. The law says you are responsible.

You can write whatever you want in the contract. The law says the Landlord Tenant Act applies and you are responsible. that's number one so so we sell them we do not do rent to own and the first question what was the first question within those 30 years 30 years if it appreciates yeah so if it appreciates you wanted to appreciate it's theirs they get the benefits and burdens of ownership so they have so recently we've had a lot pay us off because they appreciate it i bought them at 20 30 grand i sold them at 89 and all of a sudden it's worth 159 so they sold it and they got to keep that money. And I love that.

I want everyone to make money. That's what makes this a viable business is it's not just you getting rich and other people have to go and suffer through it. They get to make money as well. So people say, yeah, but now you're not getting appreciation. You're not getting this. You're not getting that.

You're right. Except we forced the appreciation from day one. We bought it at 30 and sold it for 89. If you were waiting on your 5% appreciation, how long would that take you to do? I mean, a long, long time. And so, yes, if it goes up more, it's theirs. I want my buyers to be happy.

I want them to make money as well. I have a saying I tell people all the time, which is don't count the money in another man's pocket, right? I always tell people, let everybody make money. If everybody around you is making money, you're going to be surprised at how many people are trying to help you make money because they know when you make money, they're making money. And so I'm very big on everybody making money.

I'm not trying to be the only one making money. That's not going to be any fun anyway, right? We want everybody. So yes, if it goes up and it appreciates, we're locked in just like a bank is locked in. We operate just like a bank. If they owe us $89,000, that's all they owe. And if for some reason it goes up to $300,000, good on them, right? They did good.

They did a good purchase. No different than if you bought one that appreciated. Your bank's not asking for a part of that, and we're just the bank. All we are is processing payments. But I will tell you this while we're talking about the appreciation part. And this is something I always tell people, but I said, go into any city in the U.S., any city with tall buildings and look up at the tall buildings, and they're all banks. They're all banks for a reason.

They're the ones that are getting paid. We're doing all the work, and then we send them the money, right? So what this program is, is flipping that on its head where we're the bank. We're letting everyone else go and do all that stuff, and all we're doing is exactly what the banks do. We're just collecting interest and collecting checks. And yes, they'll get the appreciation. Yes, they'll be able to renovate it and sell it and make a profit. And that's great for everybody.

We're just operating, just like the tall buildings in every city. We're just operating as the bank. No, that is awesome. And I love the analogies here. And we have one more question in the chat. Plus, I got a little variation to it. The question is, what are some of the main risks? And I also wanted to kind of add on to that and ask, what type of software do you use to manage some of the payments and then eviction piece to go along with a risk? Let's do these questions one at a time because my memory is short. So the risks, the risks, the risk, I'll tell you worst case scenario. risk. You rent, you sold the house to somebody. He attempted to renovate it and gave it back to you and it's completely gutted or something, right? Which has happened. These are real things that have happened. And I remember one of them, I came in and I'm like, oh, God, this guy tore my house apart. What am I going to do? No, now it's gutted. It's just studs. And so I market it. I put up,

you know, I put up signs. We do our advertising. And next thing I know, I got somebody buying it as is, same scenario and the same thing. They're still making me a monthly payment. Now I may have adjusted my purchase price or my monthly payment, but they're completely renovating it. I have one, and I don't have, I show in my live events. I had a house once. I bought a package of 24 houses and my own fault because I was traveling. I didn't do proper due diligence on inspecting all of them. And so after I bought them, I had my guy going around and, you know, seeing which ones are occupied and vacant. And there was one that was boarded up. Well, he goes in it and it had a fire. He's like, Scott, did you know this house had a fire? And I said, no. And I was pissed. I'm like, the guy could have

me, you know, I only paid $21,000 each form. I got to steal. Well, anyway, it was really, it was pretty bad fire. It was all burned up downstairs. And we still marketed it. I have a contractor who bought it because we sell to a lot of contractors and they renovate them and rent them. And so I have a contractor who bought that one. And I sold it cheaper. We normally sell at 89. I think I sold him that one at 59. But again, it was, I would have thrown the house away. And it was, it was a burned up house. And not only did he renovated, bought it at 59, he renovated. He's since already sold it. And I got paid off on that one.

And I'm like, that was one that I thought was my worst house ever and turned that $21,000 into $59,000. So I'm like, I don't, is there risk? Somebody can do something to the house. But ultimately, you have the house, the land. You know, it's still something there, which holds its value. We sell, and this is something important. And if you're writing something down, I always say to remember this. We sell the financing.

The house comes with it. We're not selling the house. We are selling the house. But that's not what our pitches. Our pitch is the financing. So people ask, why would someone buy your house? Why would someone buy that for 89 when there's one right on the block for 50? One right on the block for 40, right?

The reason they would buy ours is because they can. It's as simple as that. When somebody looks at me and comes in and they say, how come you're asking 89? The other one like it's only 35. I said, well, I would buy that one. That's a way better deal. But I can't buy that one. That one's cash.

Well, then I would buy mine. You know, that's it. I don't ever try and push anybody into believing a different reason. what we have that they don't is the financing. That's it. The only reason you would buy mine is because you can. The other one might be a better deal, but you have to have the cash to go buy it. Mine, you just have to come in with your $3,000 down and sign some papers.

And so that's the ultimate reason. We sell the financing. The house comes with it. I know you had other questions. Mine went blank on them. No, you're good because what you just said is super incredible, right? Because this is strategies that's used in the commercial world all the time, right? Commercial real estate, it's hard to get loans that are,

you know, better than, hey, 40% down, 30% down, things that nature. And so people sell their finance. And this is basically becoming a thing. And so financing with, you know, single family homes and smaller homes. But the other two parts of that question were what type of software do you use for, like, collecting rents, things that nature? And then have you gone through evictions? So with the software we use, which I'm in the process of testing a new one.

So right now I use property wear and I've been using property wear for years. and I pay $250 a month for property wear, which is why I'm telling you, I'm testing a new one now, and I'll tell you what that is, but I'm testing it so I don't know it to be good. I always used for collections. We used to use a software called Paynear Me, and I was with Payne Me when they first started,

and then that company blew up so big that they eventually quit us and said that we're too small of a customer, because now they even do the IRS. They do everybody now. And so we switched to another company called AppTX, A-P-T-E-X-X, and what makes AppTech's unique is You can, they can pay with a debit card, a credit card, or a bank check, which most, every company that does collections can do that. What makes them unique is just like Payne Near Me, they can also pay by cash, where they can go to any 7-Eleven, they can go to an Ace Cash Express, and they get a barcode on their phone, and they can pay cash, and then the money automatically goes into your bank account.

You get an email that this much paid, and they get a receipt, and you don't ever have to see anybody or collect any money. It's all done automated. As far as evictions, yes, obviously in any aspect of real estate, you're going to end up having evictions. And we don't do that many because of the nature of they have a down payment and they typically renovated the house. They generally will fight to keep the house that they don't want to ever lose it because it's their home, unlike a rental where they know they're leaving anyway. But yes, it does happen. And so with that said, we don't invest in what's considered non-landlord friendly states because

you want to like even Alabama as an example. I have friends that do a lot in Alabama. In Alabama, you have to do a lease option because if you do a land contract or an agreement for deed in Alabama, they require you to do a foreclosure. And that just gets expensive and takes longer. So there's certain states that like right now I'm in Indiana, I'm in Illinois, I'm in Missouri and Virginia. And they're all very landlord-friendly states where if somebody doesn't pay, it's just a regular eviction. You file six weeks later, they'd be out. And so even during COVID where all of a sudden, nobody paid, our people still paid because they knew they can get away with it. We can't kick them out, but then they're going to lose their home.

And so our people still paid. And I have friends that they were like, I'm $500,000 behind in collections. And because nobody was paying the landlord, they're like, well, I'll stay as long as I can and then move somewhere else. But our people, if they had to move, they're losing their home. So our people still paid. The slow flip still paid when everyone else was saying, I don't have to pay. You can't kick me out.

No, Scott, this is incredible. And the fact that you've been able to do this through, you know, really a couple cycles. Yeah. It's just a testament to the strategy. And we truly, truly appreciate you coming on tonight and kind of sharing some of this wisdom. The last piece from us, how can we help you with some of your goals? You mentioned the book. There's going to be a lot of downloads coming as soon as that site is live and also probably some purchases.

But how can we help you with some of your goals for this year? So I'll tell you really simple. If you haven't read on when you both, book my mission, my purpose, my mission is to help as many people as possible to set themselves free through real estate investing. And so that makes you a question very simple to answer. How can you help me is by doing exactly this and setting yourself free. That's what does it for me. When people call, I get them all the time. They'll send me either a screenshot. I just paid off my fourth one or whatever it is. That is, and I generally repost them. And I'm like, this is why I

still do this? Because everybody's like, why do you still do this? That is the whole reason why I do it, because I love when people are like, I went to your class six years ago, and I just want you to know that this is my life now. And it's amazing on what a short period of time. And I know five years doesn't sound short to people with short attention spans. But five years is very short compared to all the alternatives, right? When people want to do conventional rentals and the Burr method and all this other stuff, I'm like, five years is nothing. Five years is 60 little payments. And the idea that you can completely turn your life around and set yourself free in five years is incredible. And the last thing I want to say is, you know, one of the things I'm always telling people, I always say, do something today, your future self will thank you for, right? And with that said, slow flips is a short time to set yourself free.

If you wait, if you wait, no, a month is a month. But if you wait a year, six months, a year, two years, you're going to look back and five years will pass and you'll be like, I wish I started that day. We talked about this because today, I would already be free. And now I'm starting and it's going to be five years from now, right? So every day I always tell me, I said, just do something. Do something today. When you look back, you'll be like, thank God.

Scott did it back then. So now I'm reaping the rewards now. And so I always, you know, people think I'm crazy when I talk about future Scott. But I do that on purpose because the work I do today is for him. You know, it's it. It's for future Scott. And if you can see yourself and start thinking in that way, you don't mind doing stuff now that you don't get a benefit for today because you're not doing it for you.

You're doing it for your future self, right? And when you have that mindset, you don't mind because you know he's going to thank you. Your future self is going to look back and thank you for doing the work now so that he can live that life then. 100% agree. We're not buying houses in the Bahamas unless the Scott from previous was put in the way and kind of building for that. And so, Scott, we appreciate you for the motivation and for putting the knowledge that you've gained over the years out there for us to kind of digest it and be able to follow in those footsteps. and thank you so much for coming on the Akaba Home Financial Freedom Mastermind podcast.