The Brant Phillips Show

Brant Phillips Show 17: Brant Interviews Mitch Stephen

Brant: Welcome everybody today to The Brant Phillips Show. The show all about life and business results. Today, I got a really, really special guest for you guys. Mitch Stephen is on the show today. I’m going to give you a quick bio about who this guy is in case you haven’t heard. First and foremost, he is a real estate entrepreneur. I would call him more of a godfather of the, or guru of owner financing since that’s where he is today but before he got started, a little background on where he started from. He’s been self-employed in the real estate field since 1996. He has purchased over, well over 1,000 houses. I think it may be in the 1,500 range these days. He operates out of San Antonio, Texas.

When you read about this guy, you’ll see that he’s a grinder. He does what we talk about. He’s created success by just being persistent and never ceasing to stop learning, reading, going to seminars, podcasts, just whatever he needs to do to get ahead. Like I said, today, he specializes in owner financing properties basically to individuals left behind by traditional lending institutions. He’s created a tremendous amount of success and wealth and has a lot of great testimonials from his coaching students as well who are going out and doing what Mitch has taught them to do. Without further ado, Mitch welcome to the show my friend.

Mitch: Hey, thank you. It’s a pleasure to be here Brant.

Brant: Yeah man. We were just talking before we started this thing man. I’ve been following you for quite a while. I’ve doubled with some owner financing over the years. Just in the last year, I’ve looked at where my business is at and just looked for ways to expand and opportunities that are there. Owner financing has been just hot and heavy for me on my radar. I know that you’ve got your book, My Life & 1,000 Houses, which is subtitled Failing Forward to Financial Freedom and some other books as well. Why don’t you just start by telling everyone a little bit about yourself better than I did and how you stumbled upon owner financing and what’s transpired since.

Mitch: In the very beginning I just wanted to buy a condo to live in and bartend in my early 20s. Then it was small, one bedroom so I needed a bigger one. I thought, “If I could get two bedroom and I could rent out one of the bedrooms to a roommate then I could probably live pretty cheap.” I rented out my one bedroom and I got a two bedroom and I got a roommate. I collected the rent on the one bedroom and I collected the rent from my roommate. I was living for free or maybe even making 100 bucks. I thought that was pretty cool. Then one day I decided I’m going to get a house. I sold the two condos and I made more money when I did that by far. I made way more money than I made the whole year working and that got me thinking.

Then, I don’t know. It took me a long time to grab some of the concepts to free up my mind and get out of my own way. It took me way too long to figure out that I didn’t need money to get into the business, as much as I needed expertise to know how to find a good deal. I stumbled around for a while, I read some books and I read Robert Allen but it took me five years to get that concept of not needing money. To own that concept in your heart is a whole different thing. I finally on accident did a nothing down deal. Then all of a sudden the light bulb went off. I thought, “Well, if you can buy one house with nothing, you can buy the whole town with a whole bunch of nothing. I got a whole bunch of nothing so I could buy the whole town.”

Brant: Yeah. It was a light bulb moment for me as well when I realized like man, when I started working with private lenders, it was like, “Not only can I buy a whole crap load of houses, it’s that these people had more money and I was cultivating this great win-win scenario here where I didn’t have to deal with the banks anymore which the paperwork alone was a headache. These people were like just incredibly happy to work with me and loan me even more money. I was like, “Holy cow, I think we’re on to something here.”

Mitch: Yeah. I did my first 100 deals with credit cards because they didn’t ask me any questions and they didn’t care what I bought. I did my first 100 deals with credit cards which is a form of zero down. You know?

Brant: Yeah.

Mitch: Then I did so many deals that my banker said, “How are you doing all this?” I told him and he says, “Why don’t you come down and get a credit line or something?” I started doing that. Banks turned out to be too slow, too cumbersome, too much reporting all the time. You know?

Brant: Yeah.

Mitch: They just want another piece of paper. I just decided to go with private people. I became a master at private money. I have $12 million of private money give or take a million right now. I can’t spend it all. I can’t buy enough houses with it. I invented the hard money loan company. I loan it up to my competitors who find some deals before I do. I loan it out to them at 50 cents on the dollar. I have about five or six companies. They’re all kind of one big incestuous real estate mess. You know?

Brant: Yeah. It sounds really familiar. I didn’t do my first 100 deals on a credit card but I did my very first deal on a credit card because I had no money. I was like, “I got good credit and a credit card.” Leveraged that experience to do my next deal. I went through the hard money route for a while and a good long while actually before I stumbled upon private we’ll say and Good Lord, the rest is history since then.

Your market’s a little bit different. Why don’t you tell people a little bit about the types of houses that you buy and that you pick out for owner financing? I know a lot of my students and myself, we do a lot of the, we buy the ugly houses and we fix them all up and do the rehab thing and turn them into pretty houses. You’re doing something a little bit different. Why don’t you just educate people on what the owner financing model is for you?

Mitch: It’s a decent size subject. To start out, it’s just I buy houses with OPM or other people’s money. I have private lenders like you. When I decide I want to buy a house, I go borrow the money at 8% interest only for five years, non-recourse, collateral only loan and I go buy the house. Then I sell the house by taking a down payment from someone and then signing documents to where they’re going to owe me the balance over 20, 25, 30 years. I basically finance the house to them. They give me a down payment and then they owe me 30 years’ worth of payments.

The core belief of my business is that a person paying $1,000 rent would rather pay $1,000 to own. I have to deal on the X amount of houses where I can take what people are paying for rent in that neighborhood and I can make them the owner and their payment, I can replace their rent with their mortgage payment that’s about the same give or take 100 bucks one way or the other. That’s the core belief of the business. If you believe that most renters would rather own then you get to join the owner finance strategy arena. If you don’t believe that, then you can stay out of it.

I’ve been doing it for 22 years. There’s a massive amount of renters that wish they were owners, they just don’t know how. The institutions are keeping them from owning a home because they don’t fit into the box that traditional mortgages offer. I just do that about 1,500 times in a row now. I just do it over and over and over. It’s a really great business because you’re helping people that are sick and tired of getting burned in the stock market or too old to gamble on the stock market, you’re helping them make a decent rate of return.

You’re helping the people that were renters become owners. You’re helping neighborhoods that used to have crack houses in them turn that page and that house lose from being a crack house or a house of ill repute to a decent house with an owner occupant living in it. We move the tax assessments upward which benefits the municipalities and all the services that the cities offer. It’s just a great, win, win, win, win, all the way around. At the end of the day, I get to make a great living and know that I caused all this stuff to happen. A typical deal would be, can I think of a deal, a typical deal we’ll run some numbers from a case study?

Brant: No, absolutely.

Mitch: Say like I find a house I can buy for 50 all in and I go in and I borrow 52 because I always borrow an extra $2,000 because finding houses isn’t free. Somewhere in there, I’m burning up tires, gas, advertising, paper, ink cartridges, you name it. I just estimate it runs around $2,000 per house to find it. Sometimes it’s low and sometimes it’s high. I borrow 52. Let’s say my payment is like 350 for a round number, 8% interest only five years non-recourse. Then I don’t do anything to the house. I owner finance it for double. I owner finance it for like 100,000 with 10,000 down and I carry the 90,000 at 10% interest for 30 years.

It’s an incredible business because what really made the value is not that I painted it or put any new carpet. I just made it affordable for someone to own. I made it affordable to someone who couldn’t get a loan otherwise. I made the payment about what they’re paying for rent in that neighborhood anyways. The separator is the $10,000 down payment. In this scenario, at 90,000, I’m collecting about 850 a month principal interest and I’m paying out 350 so I’m collecting $500 spread of which I am not a landlord. I’m not the landlord. I don’t have any of those landlord responsibilities. If the air-conditioner breaks, it’s not my air-conditioner. If the hot water heater goes out, it’s not my hot water heater. I sold the house. I’m the bank. I’m just collecting the payments.

See, when you’re the landlord, you collect the money. You don’t know if it’s your money or not? Even if you collect two or three months on time from your tenant. On the fourth month, the air-conditioner could break and you could have to give all that money to the air-conditioner man. I was doing a hell of a job collecting money for the air-conditioner man and the plumber and the electrician and the carpet guy and the shampoo guy. I just got tired of it. I had about 25 houses I was supposed to make about, and I had rent houses. I was supposed to make 7,500 a month, I was making zero at the end of the year. I wasn’t making anything, not for 25 houses. Then I started owner financing these houses and the money started hitting my bottom line and staying there.

My tenants would move into my house, tear up my house and leave. My buyers, they give me a down payment and move into the house. Fix the house up and stay. It’s just a completely different dynamic. I’ve been in love with the business for 22 years. I’ve never stopped owner financing houses.

Brant: Thanks for sharing all that. for those of you who are listening to this and maybe you don’t know anything about owner financing, one, I want you to know that what Mitch is talking about, when you dive into this and start doing a little of your own research and digging and playing with some spreadsheets with this stuff, you realize why banks are banks. You realize why banks love to loan money. For those of you who’ve done some real estate investing and you’ve done the rental property investing for a while, you’re probably catching on to the genius with this business model.

When I came up, I was a buy and hold guy. I bought rental property, rehabbed it, rented it out. I got to where I had about 50 houses. Good Lord, you talk about just the stress of the proverbial tenants, toilets and taxes. I wasn’t really like, we weren’t really set up to manage them really well, meaning me and my, I had hired an assistant. It was just constantly, there was some kind of headache that we’re putting out. I actually just started selling my houses because I didn’t want to deal with all the crap of being a landlord. I wanted to be a real estate investor so for the most part, I just turned to flipping houses.

Since then, yes, we’ve gotten much better at managing houses. About five or six years ago, one of my contractors was like, “Hey, I’m looking for a house. Do you have a house you want to sell me?” I’m like, “As a matter of fact I do because a tenant just moved out and I’m owner financing.” I didn’t really know anything about it but that’s when I first decided, “Let me look at this.” I don’t know five-six years ago, I’ve owner financed my first one. I’ll tell you that five or six years later after doing a sum rate of these things, I’ve had a couple of late payments so I can’t say that. I’ve never got a call for repairs. I’ve never paid the taxes or the insurance or any of that kind of stuff. Knock on wood, all my buyers have been great. I’ve never had to take a house back or anything like that.

I don’t know. For those of you listening out there, there’s some real genius behind this business model. It’s more of the, if you want to get into lifestyle with your business, I’ll tell you there’s a reason why I’m moving more towards the owner financing model because of a lot of the things that Mitch talked about. I encourage you guys, check out his book, My Life & 1,000 Houses: the Art of Owner Financing and dig into this much, much deeper.

Mitch: There’s a lot of case studies in that book. It’s in four colors. It’s a lot of numbers. One of the reasons why the book is rather expensive if you think $55 is expensive for a 100-page book. There’s a reason why it’s $55. The people that call me and say, “Why in the hell is that book so expensive?” I tell them to put the book down, step away from it. Come back to it on another day when you’re ready because you ain’t ready right now.

Brant: Yeah.

Mitch: That book is worth a million dollars to the-

Brant: Exactly yeah.

Mitch: To the people that understand what I’m talking about.

Brant: Mm-hmm (affirmative).

Mitch: It’s in a four color which is an expensive book to print, very expensive to print because there are so many numbers in the book that I thought it would be advantageous if I had the expenses in red, the incoming green and the important numbers in blue so that you could, every time we went to a case study, you could grab all the numbers and they’d be in the right place in your head real quick. Just to try to simplify it for you because if it’s just a bunch of numbers on a spreadsheet, it could get a little bit mindboggling. It helps to break up the numbers.

There are so many positives to owner financing. Sometimes you get 20, $30,000 down. Sometimes you get 50,000 down. Every now and then you get lucky. When was the last time you tried to rent your 2,000, your $1,500 a month house or apartment and someone gave you a $15,000 non-refundable deposit? It never happens. It never happens. In this business, it can. It’s a way of making money today while building a residual income for tomorrow that you could work yourself out of a job.

Imagine if I did that scenario that I just talked about, if I did that example twice in a month, I’d make 20,000 today and I’d have $1,000 coming in that I don’t have any liabilities on. If I do it three times in a month, that’s $30,000 today with 1,500 coming in. If I do it a hundred times in a year which I’ve done before, that’s a million dollars in down payments and $50,000 year income. Positive income, cash flow with nothing to do but collect the payment. That’s all there is to do is be the bank. Make sure you get the payment. If you don’t get the payment, you got to send out a letter to make sure you get your late fee and the payment. That’s it. You can even sign that over to a collection agency. Believe it or not, you’re allowed to collect principal, interest, taxes, insurance and servicing fee. I charge my house buyer the $35 a month servicing fee and they pay for it so it’s not even out of my pocket to hire someone else to do the collection. It’s a really great business.

The only two things that you don’t get, that you’ll miss as a buy and hold guy is you’ll miss appreciation and depreciation. You have a business, let’s say there are other ways to get your write offs. As far as appreciation goes, did you hear that example that I just gave Brant?

Brant: Yeah.

Mitch: I bought it for 50 and I sold it for 100 in less than 30 days. How much appreciation do you buy and hold guys want?

Brant: Yeah I know. I know.

Mitch: Maybe the landlords just think they have to wait eight to 10 years for their appreciation. I can get my appreciation right now and I’m moving down the road.

Brant: Yeah. No man. For those of you listening to this, it’s music to my ears. I’ll tell you, before we connected for the podcast, I was reaching out to your office. I’m like, “When can I get on Mitch’s calendar? I want to hear straight from your mouth like what to do and what not to do.” I really am man, it’s a beautiful business model. There’s nothing wrong, if you want to be a landlord investor and you want to go out and buy 100 houses, and that’s great. You’re going to do really, really well on a lot of those houses if not all of them.

Mitch: Let me comment on that. Let me comment on that though. There’s a lot of millionaires that buy and hold. I don’t think it’s what you think it is, because if you’re trying to become a millionaire, you’re trying to make it on the amount of money that you clear between what you’re collecting and what you owe, then that’s a long hard brutal, brutal way to go. It’s not going to be fun. It will be a long time before you make any money. I think the people that are getting rich in the buy and hold, they’re paying cash for their houses. They don’t have any underlying debt. They can take some expenses throughout the year and still show a profit because they don’t have any debt on the house.

People that are buying those houses with their 401ks or their IRAs or they just inherited some money and they paid cash for a bunch of houses. I can understand how it would work if you didn’t have debt on your houses. It does not work. It’s the biggest myth ever perpetrated on the investment community that collecting 900 and paying out 500 that you’re going to clear 400. That’s bullshit. You’re not going to clear 400. They just gave zero weight to all the liabilities. You want to start naming them, it will be a half hour before we’re done. Starting with the hot water heater and the air-conditioner. You just start going through a house, every component, you’re responsible for every single one of them. Then even outside the house, all the way out to the curb and the mailbox, you’re responsible for all of it, all of it, all the way out to the fence.

Brant: It’s one of those things where for most people they just have to experience that for themselves because when I started in real estate, no experience, no money and da, da, da, da, whatever. I got involved with a local investment club and they’re preaching and teaching the business model that you just shot down. That’s what everyone was doing. I’m like, “All right. They got a lot more money than me. Consider I had zero and they’ve done this like a million times. I’m going to do what they do.”

I started out doing that about 10 houses my first year, 10 houses my second year when I was working a full-time job. Then I quit my job year two. I got to this almost to 50 houses mark. There was a friend of mine. We were racing to buy 100 houses first. We were like, “I bought two more this month.” I’m like, “I bought two more.” “I got 20.” “I got 30, da, da, da.” We were just racing. When I started hitting the mid 30 mark I’m like, “I’m not sure this is what it’s supposed to be.” That’s when I mention, when I got in that mid 40s mark, my buddy is like, “I got 60.” I’m like, “You know what, I think you’re going to beat me to 100 because something is wrong here. I got to figure it out.” I flipped my second house. My first flip went horribly wrong. I flipped my second house and I made 65 grand in 60 days. I’m like, “I think I like that better.” That’s why I transitioned to more of a flipper. I hold rentals and I believe in creating wealth.

You’re absolutely right. A lot of the guys who are where I was when I started out, where I didn’t have any money, I had zero dollars, to leverage your way into wealth with rental property, with financing 80% or whatever you’re getting deals at these days depend on where you’re buying at, with bank financing, it’s a break even at best proposition. You’ve got to really manage that thing right and have some good breaks. You can come out really, really well over time. I agree wholeheartedly, it’s not a great way to build wealth and to create a lifestyle at the same time.

You can build wealth but it’s not so much of a lifestyle there’s so much stress that’s involved with the financing and the renters and the toilets and the taxes. That’s why I love flipping houses. I love the business I’ve created but I’m always looking for ways to make it better. That’s why we’re on this call today because I believe owner financing is one of the tools that people who are serious about this, about creating wealth and the lifestyle at the same time because owner financing definitely falls into the lifestyle category in my opinion, they need to check this out. I know you do some coaching, that you and I are both real estate coaches. I’m assuming this is what the focus of your coaching is with your students. Tell us a little bit about that and what’s going on there.

Mitch: Yeah, people try to pigeon hole me. I’m just the owner financing guy. That’s not true because along the way to trying to find the perfect owner finance house, you find all kinds of things. Sometimes the houses are better to wholesale. I do wholesales. I do subject to’s. I’ll do all kinds, I’ll flip a context every now and then. There’s houses that are too expensive to fit into the owner financing model. There are houses in neighborhoods that I don’t think are good for owner financing. They’re too rust. They’re too lower level. I’ll wholesale or flips those. There’s other houses you buy and it just screams retail me. There’s nothing to do. There’s other houses I buy and it’s just like, “I really just want to put some money in my pocket today.”

Along the way and I do in about, and people always want to know this, are you really doing this or are you just talking about it? In 2015, I did just under 100 houses, 2016 just about the same. It’s really competitive right now so maybe I’ll do 75 houses this year because I still only want to buy great deals. About 35% of them, I’ll slip out of real quick for a lot of different reasons like I said. Another reason could be that some of the people on my team are getting a little strapped for cash. It’d be a perfect owner finance house but I can make 20,000 if I wholesale it or I retail it. Everybody needs to make some money so we can live to fight another day and another week and another month. You sell sometimes just to keep your team going. About 35% wholesale, 10% retail and then the other 55% of whatever I owner finance.

I average over $500 a month but I’m sure there’s a lot to do after 22 years. If you average $500 and you owner finance 100 houses, that’s $50,000 a month coming in. It don’t matter whose air-conditioner breaks. It’s not your problem. It doesn’t matter whose hot water heater goes out, it’s not your problem. It’s not your house. You’re just collecting the payments.

The problem with notes in the owner finance strategy if there is a problem is that they’re going to run out. They’re going to expire. Sooner or later, the notes pay off. You have to take the wealth that you created from that and you have to buy something that’s forever. I took the wealth that I made from flipping and signing contracts and retailing and owner financing, and I took that wealth and I bought mini storages. I have 1,100 doors at the lake where I live in 14 locations. One in Corpus and one in Rockport and 1,100 people owe me $92 every month. Do the math real quick.

Brant: Yeah, awesome man.

Mitch: I created the wealth. You created real estate investing and then I preserve the wealth to some kind of forever cash which could be something that you rent or you lease which could be apartments or office and warehouses or industrial space or strip centers or whatever. I just don’t like renting houses to people and families. I like renting 10 by 10, and 10 by 15 and 10 by 20 cubicles to people. You know?

Brant: Sure.

Mitch: There’s no carpeting, there’s no hot water heater, there’s no shit rock, there’s one light switch and one light bulb and a door. That’s about it in each unit. There’s not a lot to take care of.

Brant: That’s awesome man, really, really, really great story. What advice do you have for people? Maybe people just starting out, people who’ve dabbled with rental property and found out like we did it’s not really all that or maybe like a lot of my students flip houses and I flip houses or just someone who is a newbie. What advice do you have for investors?

Mitch: Let’s take the wholesaler. He wholesales a deal and he makes 10 grand. I just made the same 10 grand he made on a house because I owner finance it. We both made 10 grand but here’s the deal, I got 360 months of $500 a month positive cash flow coming in. That’s 180 grand. The wholesaler just left 180 grand on the table in future money. If you got to learn a concept, why don’t you learn the one where you get the 10,000 and you get the 180,000 over time? Why would you learn a concept where you just get paid the 10 grand? Although there’s a place and a time for every concept like I said.

Brant: Absolutely.

Mitch: You use them all. When you get up a little bit you say, “You know what, I don’t need to glean the seals on this one. I need to go the long way where I make all the money.” Flip two and owner finance one or flip three and owner finance one, or flip one and owner finance three. Get some kind of plan where you’re building because otherwise you just got a job and you got to keep doing it every month. You can’t even sit down. If I want to leave the country for six months right now, I’m going to make $100,000 a month whether I, it doesn’t make any difference. It’s still going to come in whether I’m in China or Russia or wherever I’m at, Mexico, it doesn’t matter, wherever I’m at, the paycheck is still going to come in. If I’m a wholesaler or a house flipper or a rehabber, it doesn’t work like that.

Brant: Yeah. No, I know. I’ve seen that with some wholesalers in the local market where that’s what they do and that’s what they know. They don’t want to get out of that comfort zone, I’m like, “Dude man, you’re spinning your wheels. I don’t know if your net worth is going up or not man. Most likely it’s not.” I’m not knocked at wholesalers. Ideally, for new investors coming in, start out in wholesale, learn how to market. Learn how to find the great deals. That’s the best place to start.

Mitch: People coming in I tell them, “Hey,” we look at their finances and says, “Man, you’re too tight for my comfort level. Let’s flip a couple of houses real quick, put 20 grand in the bank. Then we’ll have a budget for all this stuff we need to because you’ll have some place to take it from and still have your paycheck from your full-time job. Let’s flip a couple and get some money in the bank. Then we’re going to take that money and we’re going to put it back into the business, we’re going to set up some systems so that when you get off of work you’re not doing a bunch of menial stupid stuff. You’re out trying to sign contracts.”

Brant: No, I agree. I just closed a deal Monday from one of my students who’s at East Texas Area. I was like I think given where you’re at, I was like, “I think you need to start out just wholesaling.” He’s like, “Well, think about that. You think it’s best?” I’m like, “I do. You can do anything you want but I think you should start at wholesaler.” He’s like, “Yeah, I don’t have any buyers.” I’m like, “Who are you talking to my friend?” I ended up buying his first deal. He’s working on some more that we’re probably going to buy.

Mitch: If you want buyers, go to livecomm.com and just watch the four minute video on that. Selling has never been so easy.

Brant: Oh yeah. Right now it’s so easy, so easy.

Mitch: Just go to livecomm.com, livecomm.com, if you don’t have any buyers or don’t have a cash buyer’s list or don’t have a way to, you get a deal and you don’t know what to do with it, just go watch that and then you can quit worrying about that.

Brant: Yeah, especially in the Texas market, selling deals is not really an issue right now at least where we’re at and from some other markets from friends of mine who I’ve talked to. Man, I know we’re out of a little crunch for time. I would love to get into the financing aspect a little bit. I guess the last real technical, real estate questions. You borrowed typically you said 8% five years, non-recourse. Is that five years interest only? Are you going to sell most of your notes before that period of time or tell me how that works? You’re going to wrap the mortgage and create like a 30-year note but tell me how if you can, give everyone like the …

Mitch: There’s so many exit strategies that if you want to go to 1000houses.com and check out my blog, look up the article, Why I Borrow at the Terms I Do. Real quick, you could sell the notes but selling notes is counterintuitive. I’m trying to build long-term cash flow. Selling notes is counterintuitive. If I had to I could though. If I got to the end, I never make it to five years. The average note in America lasts seven and a half years. They get refinanced or they sell it, and someone else brings the loan and pays off. It burns down, the interest pays off, they win the lottery, they get an inheritance, I don’t know.

The average mortgage in the United States market lasts seven and a half years. The train wreck is happening, it’s like I’m owner financing these houses for 30 years and I’m borrowing money at five years. It would take a long, long time for my buyer to owe me what I owe my private lender, probably over probably 15 years or so. You can replace that person with another private lender, you could write a check for it because if you did this model for five years, you definitely have the money to just write a check for it. You could write a check for half of it and just borrow the other half.

You could take all your notes which I’m doing this right now. I’m taking 35 of my notes down to a community bank. I’m pledging my notes to refinance the $1.7 million that I borrowed to buy those 35 houses. Then I sold them and created a note to myself. I’m pledging those notes and I’m borrowing the 1.75. I borrowed that money at 8 and 10% from private people. I’m borrowing it from the community bank for 4.75. I’m cashing out my $1.7 million worth of private money on those houses, replacing it with cheaper money by a long shot, by a long shot, 4.75% versus say 9. The new loan with the community bank amortizes 15-year ARM with a 12-year balloon, no covenants, no adjustments, no anything, it’s just every five years, they have a chance to adjust the rate to prime plus 1. There’ll be two adjustments in the whole loan and there’s a sealing of 9%.

I go to a community bank and I cash them out. This is what it does. I start amortizing now. I’m amortizing very quickly. I have a short note on a small amount of money. My people that buy my houses have a long note on a large amount of money. I’m good for a long time. I just freed up $1.7 million of my private money. Guess what? I get to go get it out again. Actually they’re mad at me. They want it out now. They’re all a little frustrated that I paid them off. They want their damn money out.

Brant: Yeah, some of them are brutal.

Mitch: The difference between a bank and a private lender. The bank wants to know when you’re going to pay them off, private lenders get pissed off when you pay them off.

Brant: Absolutely they do, yeah.

Mitch: As a matter of fact …

Brant: It’s a good problem to have.

Mitch: They get so upset about it that I have to make sure that in the 1.7 million I’m not paying one person completely off. If a guy has 10 houses with me, I’ll take four of his houses and put them in that group. If a guy has 20 houses with me, I’ll take seven of his houses and put them in that group. I never take all of someone’s houses and pay them off because then they’re left with no income. These elderly people are living off that income. When you pay all the loans off at one time, they have to bite into the principal that next month, those months until you get their money back out because there’s no cash flow for them.

Brant: Yeah. You got to manage those relationships. That’s why we help our students, we help fund their deals with our private lenders. It’s a good thing. We’ve got more money typically than we can invest. We like to keep our lenders happy and they’re happy whenever we’re placing their money on good deals or trustworthy people. You’re right man, as soon as they get it back, it’s like I’m getting calls and text. Even with some of them, we’re a little bit more honoraria than others where it’s like we haven’t even sold it yet and you’re already like, “Where am I going to reinvest it?” I’m like, “We’re working on it. Trust me, we’re working on it.” Mitch man, I’m sorry go ahead.

Mitch: I think it’s a great business man. If you go to 1000houses.com there’s enough free stuff over there to launch your career. I give really freely there. I figure if people want me as a coach or think I’m the right coach, they know how to find me. I can’t take a ton of people because I’m not a meal house. I don’t serve my spaces out to someone who did 20 deals last year. I’m the guy who answers the phone. If you want to go there and download the first 100 pages of my book or listen to one of the webinars or watch one of the videos or listen in to a Q&A session, there’s a lot of free stuff there. It really is a lot of stuff.

Brant: Yeah. I checked some of it out myself man. I think we’re on the same page in a lot of ways. I’m not a big time coach kind of guy. I coach but on a real small level man the same way. When my students call, it’s me they’re getting. I like to support them. The greatest way I coach I’m sure is the same man. It’s like, “We just go out and do it. We just do a crap ton of real estate. We are always looking for new ways to learn and grow our business.” I’m coming down to your investor summit this weekend man to pick your brain and learn from other investors throughout there doing it, just to continually get better. Everybody, go to 1000houses.com. Check out Mitch Stephen. It’s Mitch Stephen, S-T-E-P-H-E-N. Google him. He’s all over the place. Good stuff man. I really appreciate you coming on and sharing with all the listeners. It really means a lot to me.

Mitch: Hey, I appreciate it Brant. It’s 1000houses.com just in case anybody is wondering. I really appreciate you having me on. Thank you so much. I even have a podcast reinvestorsummit.com if you’re interested. I think Brant you’re going to be on the show here pretty soon, aren’t you?

Brant: Yup. I think in a couple of weeks I’m coming on.

Mitch: Yeah, yeah. I think I just busted 100 interviews. That’s quite a job doing this stuff all the time.

Brant: It is.

Mitch: You’ll be surprised how much time it takes.

Brant: It is.

Mitch: What an effort it really takes to get it all going. It’s worth it. I’m reaching a lot of people. I never get tired of hearing people tell stories about how they let their boss go. I love those stories.

Brant: Yeah, absolutely man. It’s like my mission statement, my business mission is helping people do that. To educate, motivate, inspire and equip so they can go out and create whatever it is that they want to create man. I appreciate you coming on the show and helping me to fulfill my mission for my listeners and followers and students and everybody else.

Mitch: All right. I’ll stay in touch. Again Brant, I really appreciate you having me. It’s been my pleasure.

Brant: Likewise my friend. I’ll see you in Mexico in a few days.

Mitch: All right.

Brant: All right buddy.

Mitch: All right. I look forward to it, bye.

Brant: Take care.

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