Video Link: https://vimeo.com/323889888
Brant Phillips: I started owner financing properties about 8 years ago so I’m really excited to share tonight about owner financing which is my favorite investment of all.
So, how many of you guys came in here to specifically learn more about owner financing? Okay, how many of you already know owner financing, currently? Cool. So, we’re gonna share a lot about it and I’m not gonna lie, I put this together very quickly, over the course at the last week, but I’ve worked hard and long on it and I think it’s really good so I think you guys are gonna get some big take-aways.
Give me a few minutes to go through some slides for the people who are first attending here tonight. You guys— guys, you have a lot of options when it comes to networking events in the city of Houston, right? There’s a networking event almost every single night of the week, it seems like. So, I wanna thank you all for coming out tonight. I’m gonna assume you just didn’t come here for the free food and the free drinks, if you did that’s okay. But, we really, we created this about two years ago because we first got out of the networking scene for a long time, and I built my business through networking, but I got out of the scene for a while when I went to some events— and I was just like, there was a big sales pitch for like a 20 or 30 thousand dollar coaching program and, there’s nothing wrong with that I suppose. But I was just like, I couldn’t get a good feel from the events I was going to and I had so much gratitude from the events where I first started out. I learned so much, not only did I learn a lot, I also got motivation from other people who are also taking action in building their businesses. And some of the masterminds that sprung from that, some of the ideas that I got, some of the motivation I got— Man, I just want to do my own event so that I could do it my way. And that’s where Reiaction is born. And I think 2 years ago, we should probably have like a 2-year anniversary ‘cause I think it was 2 years ago. If not this month, next month. We started this thing and we do this every single month, first Wednesday of every month, it’s going to be a lot like this tonight. There is going to be networking to give you guys an opportunity to build your business. Build your networks and add in educational components. Write what tonight we’re going to talk about.
So, a brief introduction about me. I started this business about 12 years ago. Started with nothing my wife and I were living in an apartment. We had no money and we just finished paying off student loans— credit cards and all that stuff. And then, I tell my wife that I had an idea— that probably I want to become a real estate investor. And she’s like, “How are you going to do that? You don’t know what you are doing, we have no money and we are living off in an apartment. If you want to own a house, you got to buy off houses. So, I told her I was going to buy it, and houses that year. And she asked me, “How are you going to do that?” I said I really don’t have a clue I’m not even going to do one, I’m going to do 10. And I did.
I figured it out and I’m going to share some of that stories tonight. That’s why we’re going to go into Owner Financing Model by sharing some of the experiences that I’ve had with the rental model. These are some of the things that you may or may not know. For some of you that have been wanting to become landlord Investors, how many of you are investing in real estate property? Alright, so we still got rentals, I think 3 or 4 rentals this year. So, I still like rentals, but I’ve been much informed about some of the headaches and the risks of owning a rental property, and that management issues, and I have a whole entirely different Investment strategy when it comes to rentals. But, how are you utilizing those rentals? Converting those in owner financing? And what we are all doing with financial models? And we are going to talk about that later.
So, I started this business 12 years ago and I’m still working a full-time corporate job and raising a family. In my first year, I was able to get 10 deals. I was able to do 10 deals from my second year. Figured a few things out, went full time a little over 10 years ago. And just you know, running my businesses, becoming a real street entrepreneur, which is really what I wanted to do along that way, I just have grown up to what we do— an investment construction and education. And I got that to speak one time. Spent a week at boot camp about nine years ago and I really enjoyed it. I don’t know what I’m going to say. I was never a speaker and I was really shy growing up, and I was never a wordsmith by any means, and I really enjoyed it! I mean, teaching people, educating people, and motivating people, and just really equipping people to go out and take action— do what it is that I do which I love. And I enjoyed it. It has been able to create a really, really nice life for my family. So, I have written a few books, a few books. We have a podcast out and I do teaching and sharing. And ultimately, do you know why I enjoy teaching, sharing, educating and equipping people the most? Those who go out and take action, right? And so, I hope that I’m going to speak to some of that people tonight.
The name of my company is Invest Home Pro. We made it to the 85,000 fastest growing companies a couple of years ago with a relative growth mode. So, I’m really proud of that, but that’s just some credibility stuff. If you guys want to research it up, if you don’t know you can. But more importantly, is this kind of stuff, this is kind of, “Why you should listen to me”, it’s not about the stuff that I’ve done good or some of the things that I got right. In here, I have done a lot of wrong, I failed at a lot of things. When it comes to real estate, I made a lot of mistakes. So, hopefully, it is one of the main reasons why you listen to me tonight because I’m going to share some of those mistakes. And sometimes, guys, when you’re building your own business, we’re gonna go on a different path to build our business, and I’m going to tell you, it is never fun when you’re going through it. But when things are going bad, and when things are going wrong, just consider that those are, typically, that is just a fact about real estate and businesses. These are signs that are given to you. It’s an incredible opportunity for you to learn and extract some very powerful lessons.
When I got started on my business, I had some friends who started business at the same time—
plugging along working shifts, markets terms and things go sideways at times and people tap out. People quit and they give up when things get a little bit hard. And that’s where I’ve learned the most, that’s where I profited the most. Swiper talking about what we’re talking about tonight. So, I was really going to a hard time and my own business and I discovered Owner Financing and it was just like a breath of fresh air. It was like a fountain of youth because, like, I struck gold and I didn’t even know it was there. I wouldn’t have found it if I didn’t keep on pushing you guys with me. Oh, that’s the thing when you come to this networking event, whether it’s our event or whoever’s event is it. There’s a lot of events out there. Part of your importance in coming into the event is that, when you are struggling, when you’re thinking about quitting, or when you’re thinking about giving up, if you don’t get plugged in and you get that kind of energy, just like your cell phone, right? ‘Cause when the battery is low, you just have to charge it up.
All right, so what are you going to learn here on a monthly basis are all things that are essentially residential pure in real estate investing. That’s where I built my business. That’s what we focus on. You see a graphic behind me of the 7 Fundamentals of Real Estate. When I first wrote my first book, I was really looking at what is really, what is it that we do here, and how do we do it? So, I am looking at the major areas and this is what it all came down to. This is now all the coaching that I do, all the mentoring that I do, and now we’re on our business.
All starts with the mindset of strengthening and sharpening what’s up here. That’s the most important thing, guys. This is the foundation. So, it starts there, talking about marketing generating deal flow. We’re talking about how to analyze deals, and how to estimate repairs, talking about how to get your deals financed, be it to hard money lenders private lenders, about managing rehab, talking about generating income. And so, I found that it’s not very fun to be a real estate investor if you are a one-trick pony, and that pony dies, and the market shifts. That is not a lot of fun, I bet. It’s a lot funny when you’re building your business, built on multiple exit strategies and multiple income strings. So, going through some of the stuff markets, I was the proverbial one-trick pony. And I’ve started and I failed, and they learned that businesses are so much funny and profitable. It’s sustainable when you build a model where you can track titles and flip them and told them, or you can do Owner Financing. Can you sell them? You can build a business when you’re only attracting deals, when you have multiple exit strategies. Does that make any sense? Because one of the greatest things that you can do is whenever you get a deal further.
Having all of that settlements, I got to flip this house because I’m a flipper. Guess what? Some of these deals are not a good deal for clipper. Some deals are like better rentals. Some deals are better for Owner Financing Models. I’m a big football guy, it means I’m a sports guy. All the sports fans, now that we’re talking about the draft. So, one of the things they talk about when it comes to draft time is near is the greatest teams typically are drafting for need, they are drafting for the best available play. Does that make sense? They are drafting the best available player and they want to maximize the value of that pick that they get. So, that’s what I want to encourage you guys to do each and every month when you strengthen your skill set and you have multiple exit strategies. And in your tool set, you’re almost gonna say no. I’m not gonna flip that deal. I’ve got the skill set to be a landlord or to owner finance that deal or to wholesale that deal. Use your multiple exit strategies ultimately to create the most profitable business deal for you.
Like what I’ve mentioned, this month were going to talk about the Owner Finance Model like in Facebook Live. I think we got some comments, let me check those comments. Maybe some of you have comments, so, give me some comments. Let’s do some of like, Facebook trickery. So, they responded right and show up at some of the people’s feed. Click it, like it, love it, whatever. Give it some social media love. Go on Facebook reactions, go on facebook.com/react, or just go on Facebook. Some of you guys who act like they don’t have a Facebook account, and I know what you do late at night, don’t act like you don’t. I saw some of y’all. So, give us some love on social media! Share, like it post it, whatever. You know, I’m not going to ask you guys to do selfies or something like that, but just give us some love on there. You know we really appreciate that.
So, if you want to get all of our updates make sure to go on reiaction.com. Get in on our email list and we’re going to learn about upcoming events and upcoming topics. We got a lot of stuff, really exciting stuff, honestly. This year with speakers, with events. Where’s my man, Will, in the back? Will, raise your hand. He’s in there. At the top, with the jacket, with the Invest Home Pro and all of these acquisitions with Invest Home Pro. One thing that we ask from everyone that comes through here, we don’t want you guys to sound like contractors, but if you guys have a deal, how many of you here are sellers? So right, there’s some wholesalers, so, get with Will, get Will’s card, give us a shot with your deal, you don’t have to sell it with us, but give us an opportunity with your deals to take a look and buy them ‘cause that’s what we do. Make sure that you get with Will for any potential deals that you guys have.
Okay, so how many of you guys are agents or are looking to be real estate agents? How many realtors in the room? Did you get your license, Becky? Not yet. Almost. Alright. So, I won’t go long on this, but, similar to the early last year, on officially July 1st, I decided to activate my license ‘cause I deactivated my license and become an active real estate agent again. And the reason I did it is for EXP realty. So, I think the quickest way I could summarize the slide and not take too much time, but I’ll put it like this, I’ve never seen an opportunity with no risks, no liabilities, essentially no expenses to build passive and recurring income while also going your investment business working as an agent and many, many, many other advantages that you get from a broker’s that I’ve never seen before it’s the first crowd-based brokerage in the US history it is the fastest growing brokerage in US history. I joined July 1st of last year and I built a team of over 50 agents while receiving commissions on every single one transaction that they do. Just think about that. Out of the revenue, the gross revenue that there might be. So, if you’re a new agent, or you’re a real estate investor considering in getting your license, come and join in one of our discovery meetings, we have meetings every Friday at 2 o’clock. We do it at our office at Invest Home Pro, or you can just join from your computer from the zoom call. I’ll show you and explain in depth the EXP brokerage model, but I’ll show how we’re using my license. I’m using our team of agents to grow and invest into business and generating income in the stock and ownership in the company EXP based on performance. It’s true that I’ve never seen anything like it. So, if you’re an agent, you owe it to yourself to take a look at the model and just consider it. I tell you that’s what I did, and for me, it’s no brainer. But maybe it is, or maybe it’s not for you. Just take a look.
So, last month we did a virtual assistant workshop, that was a 4-hour workshop and I know some of you guys attended that and we recorded it. The replay is available and some of you guys may notice it and some of you guys don’t, but we actually opened an office in the Philippines, about 2 years ago, we won a large portion of our business from outsourcing, overseas work, admin, staffing, anywhere from construction management to property management to content creation to web design, back-end support marketing, you kind of name it. We have built a team of virtual assistants, so, we run our business that way and it is a more efficient model where you can really get top-class talent for maybe $2 an hour, or $3 an hour. So, I just discovered around 7, 8, 9, 10 years ago, and we’ve been using that in our business ever since. Not so efficiently in the beginning, but a lot of bumps and bruises and learning and we got some really good team, and from there, we kind of pulled back the curtains from everything that we do with our virtual assistants. So, if you want to get a copy of that replay, my assistant has a little sign-up sheet and you can get that. So, we’re gonna get started, I promise.
So, upcoming events, first Wednesday of every month 6 pm were here. Every Friday at 2 o’clock in the office. If you’re an agent, if you want to get signed up for that, that’s realwealthrealtor.com/grow. I’m also speaking at the Wealth Club, March 28, speaking at the Wealth Club, you guys can register for that go to thewealthclub.org. It’s gonna be a quest, March 28, Thursday. I’m gonna be talking about rehabbing, hiring contractors. And so, I was asked to speak about this about weeks ago, but I haven’t focused on talking about rehabbing for the long time. You’re right, man. I used to speak about rehabbing all the time. So, I’m excited. I haven’t presented on that a little while and I’m going to show you guys some of the ways there are in managing rehabs these days. How many of you would like to manage rehabs without ever going to see the properties, right? But, still assuring that things were getting done on time and in budget etc., etc. We just invented a couple of new things this year. I haven’t really shared with anybody.
Right, Mike? Where’s Mike at? So, we’re going to resort with some technology, reading tours, walk-throughs and etc, etc., that’s allowing us to invest further away with, actually, using less time. Because if you got a rehab that is close by and you want to check that rehab, if you got a rehab that’s far away, you still need to go check on it, right? Unless you don’t!
So, I’m going to show you how we’re doing that, or will you go invest further and save time and other things, March 28, Thursday, March 28? Y’all come out go to thewealthclub.org, check that out and next month, April 3rd. So, I did a training, some time ago, called the “Simple Private Money Training System”, a training course that teaches you how to raise money for your deals. So, we are going to give that course away for 10 people, were going to have a drawing, give that training away so, you could go and buy it if you want and I’d appreciate that but if you want a chance to get it for free, you can get that just by showing up next month.
We’re going to talk real quick. I’m going to have some people come up here real quick.
Tom, are you coming up? Okay so, I’m going to bring some of my vendors out. Everyone got a piece of paper there, right? So, on that piece of paper, you turn it over, if you turn it over, there’s a list of vendors. So, I wanna do two things. I’m going to bring a couple of vendors up tonight to talk about their product and their service. But what I’m going to encourage you guys is— don’t, that’s just not a piece of paper that you ought to throw away, put it in the trash or recycle, I hope you guys recycle. Whenever you get home tonight, when you get home tonight, and whenever you get to your office or wherever it is, please put this piece of paper on your fridge, in the drawer, whatever it is. Hang it up, because it is really important ‘cause down the line, maybe you’re starting your business, or you’re investing business, or maybe you need some appliances for the house. Whatever it may be, guys, the people on this list are people that we do business with. Okay? So, you go to some of these events and they have two or three or four vendors for every category, but we don’t do that. We only allow vendors that we do business with. Some of these vendors we have been working with for over 10 years. Okay? So, they are people that you can you trust, these are people that we know.
So, how many of you guys need Financing? Alright, so let’s talk about investor lending services and come on up and—
Natalie: Hey guys, how are you doing tonight? For those who don’t know me, I am Natalie from the Investor Loan Source. So, like what he said, we have your funding needs— anything you could think of when investing, your fix and flips, your rentals. So, for all of you guys looking to get some fix and flip, we have some great products for you. We also have long term rentals as well. So, we actually have 20 to 30 year rentals also. So, for any of you guys that are looking, we also have, if you’re looking to place money, we have some great opportunities for you guys as well. So, if you guys want to come back and chit-chat with us, we’ll be happy to help you.
Give Natalie a round of applause, all of our vendors a round of applause. Y’all, they can’t come up because of the time, because they are the ones who paid for our food, our drinks, the facility. So, give all our vendors a round of applause, please, thank you very much.
I don’t think Jerry is here from Property Care. Jerry, if you’re here, I didn’t see you. Okay, so Jerry’s not here tonight. If you are looking for a property manager, Jerry’s another person that I go back, way back. Done deals with Jerry for many, many years ago. He’s built a very successful property management company and he is a real estate investor, which is really important. So, he looks at these things in an investor’s perspective. Alright, so that’s Jerry with Property Care. And this next one is up, Kevin? Alright, so, you want me to just hand it over to you? Let me just hand it over to you.
Woman: Hey guys, so we are Renova Appliance Center, and we have been pretty much Brant’s exclusive appliance people for the last— over, how long have you been doing it? For a while, right? For a while. And, we’ve actually been serving the Houston areas since 1988. So, if you got rental properties, and you need one piece here and one piece there, we can help you with that. Or, if you are doing flips, we can come in and give you an estimate for what you need— certain pricing on billeting, or if you just have basic rate, we have pricing packages that can suit your needs. And if you have a certain budget that you are looking to meet, we also can work with you on your budget needs so you can just contact us. And with the wine cooler, we have cards back there, which you are obviously not gonna get up now, ‘cause you know, we don’t want to interrupt Brant. But, we have cards back there, you put your name, your e-mail and your phone number and just tell us, you know about what you’re looking to flip. Or, if you got some investment properties that you are using with rentals, or things like that, if you just let us know, we will enter you to a drawing and you have to be present in order to win. So, that’s it. Tonight, yes, that’s tonight.
Thank you. Alright, yes. so we were friends way back when your dad was running things and where Kevin was in diapers. So, a long time. And, so, we value you guys. That’s what, that’s one of the keys in building a business— building good relationships with good business partners, right? They’re not just vendors, they’re business partners so that’s what we’ve done.
So last month, Kevin and I said, were gonna give away a wine chiller and let’s make it happen so we’re giving this away tonight, you have to be present to attend, okay? So, we usually wrap up about midnight for first timers, just kidding. So, that’s gonna be given away tonight. You’re on your own with getting it out of here. I have like a procedure today, so I’m not gonna be lifting a whole lot. So, we’re giving this bad boy away tonight. I’ve been heard it and I’ve been told that it works well with beer, the same as wine.
Alright, so y’all ready to learn some Owner Financing? Yes, yes? Alright, give me some energy! Let’s go, let’s go!
Alright, so, I’m going to be looking back at my slides quite frequently ‘cause this is not a presentation I’ve done before so, y’all forgive me for that. So, let’s start with this. So, when at first, we’re gonna work, we’re gonna wait on Owner Financing and we’re actually gonna start with talking about the Rental Property Model— that’s how I stumbled in Owner Financing and when I first got started in Real Estate Financing, which I mentioned earlier.
I was gonna do 10 deals in my first year. I did 10 rental properties in my first year and I want to say that again. About 10 rental properties in my first year, and how much money did I have? Zero.
I used up all my credit cards to leverage for my first property, then I did no money deal after that. One of the things I already talked about on multiple people tonight is— no matter what you get started, I don’t have any money, one of the things that you’re gonna have to do to become a successful real estate investor is get over this mindset of, wherever you are right now, about the money thing, like, if you are in a bad spot financially, you have no money, you’ve got bad credit, all that kind of stuff, you need to fix that, I’m not saying that you don’t, but, you need to come over the mindset thing like how? How can I do these deals? How can I put this together? How can I structure it because in my second year I got financing? So, I’ve been putting together partnerships, year 3. I began raising private money, right? So, there is always a way if you could just challenge yourself to ask that very simple and powerful question: “How can I, how can I do this?”
Somebody make sure and check if this goes on in Facebook Live, if y’all don’t mind. I’d appreciate that. So, when I got started, I was going to networking groups, reading a lot of books. I wanted for me to quit the job I was working that I hated. Okay, so I had some good motivation. So, I was pretty motivated to quit my job. The idea of getting rich, creating wealth and stuff like that, for me, like I grew up middle class, I’ve had some bumps and tough and hard times with my dad and his job, stuff like that. I got to see a little sight of ugly. Growing up feels like a good life, a good upbringing. Perhaps, I was just one of the guys like, I wanted to get rich and make a bunch of money. I wanted my time. I wanted to control my time. So, for me, I was going to this job, every day, that I really hated. Like I really, really did.
So, my first objective when I first started looking at real estate was— I wanted to make money, of course, but I only wanted to make money to get to the stage 1 of my plan, and or the phase 1 of my plan.
Phase 1 was essentially just to get my time back. I wanted to create freedom. Right, I wanted to create my financial freedom, where I wasn’t tied to a job, right? So, how do we define, Financial Freedom? Some of you guys were thinking, you know, I need a million dollars, I need five million dollars, or whatever it is that you can get to this finish line where you can retire or quit or not to work again. Like, I challenge you to consider, if that’s a useful thought for your life and in your business, because I have the mindset that I don’t ever wanna retire. I just want to do something that I am passionate about, that I enjoy, that I am giving back, and that I am helping others’ cause the thought of that, like, I have to get to this finish line and being gone— oh I don’t have to work anymore— that’s a scary thought to me because I enjoy what I do. That’s more fulfilling to me. So, build a business where you can enjoy what you do. So, this was the, Financial Freedom definition that I have. I was told that when my cash flow exceeded my monthly expenses, then that was it, I would be financially free. And that was a much easier thought and a goal to swallow. So, it’s an easier pill to swallow. Hey, I got to go out and make a million dollars, or two, or three million dollars, but no! At that point in time, I was like, if I had 7 or 8 grand a month, that would be, okay, like that would be good. And like, some of you guys are hearing or saying, I just only made a hundred of dollars on the beginning. I was, like, making 50 grand or so. It was on my corporate job, but I didn’t need to make that much. Now, if I made a hundred thousand dollars, you know where I’d be, I’d be bankrupt with a hundred thousand dollars now. But then again, it was a much smaller goal. Like, man, if I could make 5 or 6 thousand, so, really it just became a numbers game. I said, “Hey I was taught that in this rental property model, that if I could go out, buy these properties, that would have some equity twenty or twenty five percent equity like what the model has told, and a good cash flow after all my expenses to the 300 hundred dollars a month”. Anybody heard that model?
And that was cash flow. So, I wait now and say, I learn on how to do it on one, I’m gonna buy two, I’m gonna buy 3, and I’m gonna put this ugly poster board on our apartment. I was filling in each square every time I bought a property, and I was just like, it’s just a numbers game. It’s just a numbers game, I just had to buy this amount of properties until I see it exceeds my income and we are gonna be financially free! Does that make sense? Anybody heard that model before? Anybody executed that model? So, that was the rental property lifestyle that I went out and executed.
When I bought those 10 properties my first year and things worked really well, still working my job, managing those rehabs, looking for deals, managing construction, and most importantly, like I was really enjoying what I was doing, like man, this is a lot of fun. Like going in and checking on the rehabs and all the stuff that I’m going to do anymore, watching stuff get done like, whatever, knocking down holes in the walls, it was so much fun. So, that was really important, that’s a big tip, if you’re just in it for the money, it’s not sustainable. You need to do something that you enjoy, that you are passionate about, and the money’s gonna come. So, that’s what’s really important to me when I got to the end of year 1, I hit my goal and at the end of December, I bought my tenth house. It was like, holy crap I did it. And I was kind of amazed of what I did, my wife was shocked, she was like, “Holy crap you did it!”
So, I got there, and we finished it out, and I was just like, yeah, that was pretty good. So, I was doing this, and I was executing this rental property model and so, I’m gonna read some of the bullet points, if you guys can’t see it. It was based on that premise, right?
Whenever my monthly, passive, passive income never exceeded my bills, we’re going back to that word, passive. It was also really cool because I could use a one hundred percent financing. Remember I told you guys that I did no money down deals? Some of you guys are here watching online and you say, man, you are waiting to get started this day as soon as I get some money and I went to Barnes and Noble, some of you guys are pretty young, so Barnes and Noble is this place, it’s this building and it sold books, that’s where you have to go and buy books, actually, you can read from your phones actually, or read books from your phone, you didn’t have cellphones, not that old. So, anyways, I went to Barnes and Noble and I started seeing all of these books that I didn’t need money to invest in real estate, I’m like sold, I’m in! And some of you guys say, I need money to start in real estate and I’m like, if I have been told that I needed money to be in real estate, I would never gotten into real estate. You know? So, that’s my motivation. Like man, if there’s all these people writing about books on how to do real estate without money, there must be some truth to it right? So, I just took the rental world, and rent some books and just dove into it. So, that’s really important to me that I could use 100% financing on some sort of leverage to get these deals done. I could increase my net worth. I was in my late 20s going into my 30s at that time, and I think my net worth was zero. So, that was pretty cool. I mean, anything was better than zero, and I mean it didn’t have a negative sign in front of that right? So, I was like, that’s cool that’s a check, that makes sense, I like that. My properties are theoretically going to appreciate each and every year at least more like macro view of every 5 or 10 years that will greatly appreciate, and I even read that real estate doubles about every 20 years.
Right. Order some AC’s even though they look great, not perform as you think they’re going to perform. Home warranties, I’ve tried that relic. “Oh just get a whole warranty they’ll fix everything”, they fix nothing! They got we don’t have a home warranty vendor here because I don’t like them. Alright, so all that kind of stuff. I did some pretty good screening. I used to be a law enforcement, I know how to screen people pretty darn good. I got made a fool a couple of times like straight up played a fool. So there was all of these headaches so. I had a couple of buddies we got started in the business at the same time. And like literally the ground floor we were going in these networking events each and every month.
You know I remember from the very beginning we met and I had like two or three. My buddy had like five or six. He’s like no going to buy one hundred I’m like, “I’m going to buy one hundred too.” And then our other buddy here gotten to think is I’m going to buy 100. So we’re like on this race to buy 100 hundred rental properties. Every month we would meet event or multiple events sometimes. Like I got six and I got five and mixed months I got eight and I’m like I got seven so we were racing to like, buy all these different properties and then our other buddy joined in as well. Man I’ll tell you what, when I got to the mid 30s I was like I don’t know if I want to, I don’t think I want to have 100 these things. That’s a hundred like, I think my life I had about three kids at the time. Now we have five. And I’m like, I’ve got kids and these are these things can be worse than kids.
All right. One of my kids are here and I love him. So I hope he’s not paying attention. He’s got headphones on. Good. I’m in love. So, I love you bud. So he’s just smiling there with his headphones on.
So anyways I got to this point and. I had a breaking point. I was in mid 40s about to hit the 50 rental properties, I’m like “I don’t think I wanted to do this any longer.” Not. Not just rental properties. I mean real estate I was like “I don’t really want to do this.” Luckily I started flipping houses and that was much more enjoyable to me.
Now that’s a really start flip houses and like, I can I can buy a house, fix it up. The first flip I did I lost money on the second flip, I owned that property 60 days and I made sixty three thousand dollars. And I was like. That was more than I made the previous year working a job. So I was like “I think a lot to try this flipping thing for a while and there’s no tenants and I get cash like that.” So this rental property thing I had a couple incidents. You guys want to hear a couple good stories. All right. So I won’t talk about all the make-ready kind of madness I went through, that was just depressing. And I never really had tenants destroy my properties. There were a couple that were close but it was just kind of depressing like this thing was painted and carpet and flooring and you did this to me you live like this? It was just, it sucked the wind out of me.
So one day, where should we start. Oh. The FedEx man just drove his damn truck into the house. Alright. So let’s talk about the passive lifestyle that this is. So I literally get a phone call one day from my tenants who says the FedEx man just drove his truck into the house. I’m like. Are you smoking something like are you on medication? Illegal or illicit you know I don’t know. So, middle of the day I get my car drive across town I’m like, “Yeah, FedEx guy just drove his damn truck into the house. What just happened here? Was the FedEx guy smoking something?” So you know that’s my point. Like, I’m like: this kind of sucks.
So you know ‘cause now we’re dealing with the insurance company, the tenants not happy. It was her kid’s room. Hit the kids bed, had the kid been there. I don’t even know what that would have looked like. Right. So I Google search a couple of days ago. FedEx van into house and. It’s like a page of pictures. But scientists like took a screenshot of the first row. So I guess this is a thing you know this is a thing. So I had that happen and then one. So another story was one of my partners from a year or two when I began to put the partnerships to buy rental properties. And so I got a letter I got a letter from one of my partners and, this may have even been before the FedEx thing a while before. But so I got a letter from the insurance company saying that our insurance was at pay for that quarter or whatever, it was like a quarterly thing that time, and we were going to not have insurance unless was paid us certain time. Well that was my partner’s job I managed all the stuff that she paid insurance. So guess what she did do she pay insurance. And I found out about it that day. And we were talking where she is just “Ugh just been busy, I’ll get to get to it. Yada yada yada.” So remember laying in bed one night and I was tired, I was stressed out from stuff. And it was like 2:00-3:00 o’clock that night I had to get up early next morning. I remember I was like dead tired exhausted. I lay down in bed. I mean I’m asleep for maybe 20 or 30 minutes and my phone rings, my phone rings. Call me these days, my phone goes off. You cannot wake me up the more night my phone when I’ll ring because of this incident. So that house was being released. Tenant moved out. My son was in the yard with my cell phone number on arise leasing the property. I get a call in the middle of the night. Someone said “Your house is on fire. House on fire. Your bleepity bleep house is on fire.” And I’m like “What house? What house?” So he said the street name and pretty much like hung up or whatever, I was half asleep. So this house was like a good 45 minutes away. So I’m like do I get my car, do I drive, what I do? When to say get my car, I meant do I find the fire department or start driving like. Go to my phone and call so I started looking for a fire department there that it was outside the city limits. So we’re on a volunteer fire department status. OK. Volunteer Fire Department. Guess what I can find the number to the Volunteer Fire Service volunteer fire department. So come to find out. Thank God it was a prank call. It was a prank call. The house was fine but I was just like I’m done like this. This sucks.
Fortunately, it wasn’t the life solidly. And they are making this up for me. So this does how I stumbled upon an owner fined.
Thank you for going with me cause I kind of needed to set the stage for this right. And so during that time I did start flipping houses and doing some other things. I’m. Like I’m. I’m like I know. Rentals are going to build.
Well, I know but the tax advantage. I’m still going to do it. I’m going to keep them.
One hundred and twenty like 20 or 30 or two. Where was a manageable level. Right. That was my own thing and then let me just see and I’ll go from there. Well around.
This time all the stuff like really burned out with the business on and I wasn’t managing the properties I hired a full time assistant that Tom to manage my properties I had was somewhat in isolated I’m still doing some stuff like leasing them and so we had to make ready to do. And we walked into this property and I’m there with my project manager and some painters and people like that. And I’m like Man these people.
Trash out. This house was a painted nice and we just imperfect we give it to in perfect shape and it was kind of somewhat trash making calls and she rock it was just nasty. And my painter. You know he was like looking at. Looking at the house and he just looked in at a little bit differently. We usually do you know and it seems like I’m looking for a house he’s like Give many houses for sale. I’m like Yeah but don’t you just buy this house. Like right now. As it is he’s like. Okay. I don’t like. For real. So I didn’t know anything else about it was like none. I’m being serious and he’s like Yeah I am too. This is the area my wife and I were living we want to live over here. So I was like Alright I’ve heard about this thing owner financing but I have no clue how it works. Like Ella had no clue they hadn’t read any books on it and not much research hadn’t been networking events but I knew it existed. Probably saw some books about it. So I started doing some research. Called a real estate attorney long story short we got. I sold the house with owner financing and in hindsight we did it pretty good. I hired an attorney who was specialized in owner financing so he walked us through the steps. He’s the third party servicing companies service the note all those types of things right. So we did it pretty good in hindsight. So I’m gonna share with you some of the things that. That I’ve learned. I’m going to give you guys some of the owner financing one on one kind of stuff that I’ve learned along the ways and I’ll give you a few different case studies some good she guys with me so as what I learned in hindsight. How many guys don’t have no food no clue what our financing is just learn about it. Well some mostly you guys do so, except, you know. So there’s no excuse for that boy sleeping outside tonight.
So long and so similarly were the beats when we all underfinanced something we become the bank and we become the underwriting department. We screen on potential buyer we did that. That buyer the opportunity for homeownership because most likely most likely they don’t have an opportunity to gain homeownership going through the banks or through their own cash or conventional ways. So we essentially solve a problem. And that’s what entrepreneurship is of all about really is solving a problem. Little did I know how incredible this opportunity was right. I don’t have a financial background. And some people have a financial background they come this business and they’re able to see things and understand things like much much sooner than I’ve been able to learn over the course of years. But we essentially begin to become the bank and I didn’t even realize it in so the very first bill I did I was able to learn about. Wrap mortgages and really really how to take 100 percent leverage meaning buying rental properties with 100 percent leverage to the entirely next level. Right. So I put a word up there arbitrage. I’m not even sure I can give you the definition of arbitrage but I think I’m gonna show you a slide of what my definition is of arbitrage. My clicker would work.
They’re not working. All right. So they tell you. Think your computer froze. OK. Well I’m just saying I think your computer froze.
Froze for sure. OK. So so let’s talk about arbitrage. I’m going to get to the next slide. So this is this is what I learned about the beauty of owner finance and I hope. I hope everybody is paying attention because when I got this totally changed my business I didn’t even understand how good it was I didn’t I didn’t really see how powerful this was until I had done multiple deals. So let’s say for example this house the house in the very first underfinanced property that I don’t give you a little back story to it. It was a rental property that I bought in 2007.
Yeah. OK. There we go. So it was a rental property that I bought in 2007. OK. About in 2007. Bottom was a hard money loan. Refinanced it to a long term 30 year loan. Like six and a half percent interest 30 year fixed mortgage I buy with me. OK so I take that back. Totally. Screwed up. It was like eighty thousand dollars for a bottom for I end up selling it for one hundred thousand dollars and I think eight and a half percent interest or something like that. And I wrapped my mortgage. OK. I had the six and a half percent. 30 years that I got in 2007 guess what I still have today. I still have that loan. I’m paying it down right. But we wrapped it with an owner finance loan right at one hundred thousand dollars at eight and have eight point seven nine percent whatever it was with him and I didn’t know what I was doing at that time but come to find out it was pretty smart pretty lucky on my part. Somebody give you guys a case study of your typical deal that you could do at our market some you guys driven in from other markets. So let’s say for example that you can get a rental property or an investment property that’s one hundred thousand dollars total investment meaning you buy it for seventy thousand you put 30000 dollars into it and you’re into it for one hundred thousand dollars. Anybody get a deal like that. You bet. And if I do a deal like that right. I can do that.
All right. So let’s say you’re able to get financing can you get them to get financing at 7 percent 20 years. Probably some you can even get a cheap right. You can do that. By year and do that. Well let’s just say let’s just say that you get that loan. Hundred thousand dollars Simpson interest for 20 years and then you let it fully amortize you pay it off in 20 years I’ve been in this business how long time for 13 years 14 years and so I’ve had properties that I’ve had that long. Right. Loans I’ve had that loan so you can do that. So if I were to fully amortize and pay that loan I would pay a hundred and eighty six thousand dollars essentially for that property. Everybody with me. That’s all this is though this is arbitrage the arbitrage does it did the bank really loan me a hundred thousand dollars. What do they have five grand in that deal? Yeah it’s fake money. It’s numbers on a screen adding and understand this. So we’re playing their game and we’re beating them out and also I think they like it. And that’s why for those so shout out to Mitch so amount and shout out to Mitch how many you guys have heard of the Texas 100 Club. I mean you guys are members of Texas 100 Club. So look Mitch Steven up on Facebook consider investing and consider making a donation to the Texas 100 club that’s fighting for our ability to keep doing these deals because some people that are just uninformed about it and so they hear bad things about people doing it wrong.
So, they want to shut it, shut us down from being able to do it and point blank there’s just some people that don’t want us to be able to do it anymore because we’re playing the game and taking money from them. That’s when you know you’re making an impact right. So this type of deal this type of deal I could leverage right I can borrow my one hundred thousand dollars at seven percent save for example that same property I can sell for one hundred thirty thousand dollars. You mean you guys can buy and rehab for one hundred thousand hours and sell four hundred thirty thousand. How many you guys have that skill set you all of you all do with a little bit of training a lot of education. You all do. So let’s say I go in this property now I’m one hundred thousand dollars and I turn to sell it. For one hundred and thirty thousand dollars of total investment for my buyer right. That’s their No. Whatever it is. So if I have a note at one hundred thirty thousand which by means I sold it for 140. And I find instead at nine. Point five percent interest which is what we typically do. Now that I’ve learned a saga 10 years ago typically nine and a half percent interest I could do more. That’s just what we do for 20 years. If that loan fully amortized is over and 40 payments I didn’t just make 30 or 40 thousand dollars. How much money it made over one hundred thousand dollars and what have I eliminated at the same time.
All of those headaches I mentioned gone. Like my friend gear mow that I financed his property to seven or eight years ago. Guess what he has not done. Called me for repairs. Call me to pay taxes to fix a toilet. Guess what also he hasn’t done he hasn’t refinanced. He’s still on that loan. OK so that’s a set. I think I’m on to something. I think I’m on to some. So. That same year start with gear Mo. We did. We did another make ready later in the year so I started shopping my contractors were going to do make racism like you want to house you want a house you want a house you want a house you only about looking for a house I got a house for sale right now I don’t go on any other auction style and it started working like I’ve sold four or five houses to my contractors right. And it’s good because I know where they’re working and I know where their paychecks come from and these are guys I’ve been doing business with these guys 10 years now so that. That was pretty help. It was pretty helpful I knew the quality work that they were going to do to make sure that we had to watch and make sure clothes at home depot make sure they weren’t sliding makes repairs that the materials in there for their house. But it started working pretty good so. Unlike my clicker.
So Thalia, it stopped working again. OK so that’s frustrating. OK so, where’s Thalia?
Terry. Oh I don’t have these slides memorized I but the next line is any questions so far. If I have any questions why do you keep fighting? So why do we why do we choose 20 years over 30. I like 30. OK so I know a lot of people do the honor finance model do 15 to 20. In general I like 30. Some people don’t so I just I just chose 20. Depends on the price. One of the hopes that a lot people do that we’ve got. We’ve had. 15 20 and 30. OK. She mentioned that there. All right so here it was a couple of other things I’ve learned.
When you’re buying with owner finance you still run your business with fundamentals. So whenever we’re looking at the deal I mentioned that earlier just like the draft we want to use a property with where it’s going to have the greatest return for. Schreiber makes no sense. We still buy on fundamentals some of the fundamentals that we use whenever we’re buying deals or we flip deals rental properties or some of these fundamentals typically we like to be 70 percent all in sequence about the 75 percent we want to be 70 percent all in purchase price repairs 70 percent of the after repaired value. We’re buying the cheapest houses in the area. That’s one of our key indicators whenever we’re looking at a deal. The help when you pull up the MLS if we’re buying a house in that subdivision ninety nine point nine percent of the time the house that we’re buying is cheaper than anything else on it’s sold. So that makes sense.
That’s just what we do. Buy low sell high. We can utilize 100 percent financing and we can always execute multiple exit strategies. That’s really key. OK. So under financing what interest rates do we charge? So I know guys who we’ve ten and a half percent. What’s the law now? What’s the high? She can go. It’s like love letters. We have ten point nine nine. Nine point five. It’s just. It’s easier for our buyers to swallow. We still get some pushback on that. But that’s why we pick that number many years ago and that’s kind of our going rate especially on our ideal properties that are under 200000. But yeah you’re not responsible for the toll it’s the taxes. Repairs. No more tenants. Guys who takes better ownership of a property a tenant or an owner. Right. And so you know knock on wood I’ve not had to take any houses back. All.
All of our owners that we’ve put in properties have performed.
You still pose the same way you still want to go to a title company. We use this real estate attorney to all the loan documents surveys your property if you don’t have it. We’re going to get a survey but we usually have those you’re going to get the title commitment they’re going to get their title insurance they’re going to get property insurance. We use a third party servicing company. So I mentioned earlier to start a time out. You want to build a business that really allows you to have the lifestyle that you want to have. And I know some investors who do this owner financing thing but they’re still servicing their notes meaning collecting those payments and doing that kind of stuff. Guys it’s so cheap to outsource that stuff. No I mean not just for you it’s cheap to your Dubai right. So the owner financed car pays. How’s that. So I think it’s 15 dollars a month to use. So we don’t even collect payments. Third party company collects that. Fortune, fortunate someone told me about that when I first got started. So our vote. So from day one when I did my first owner finance deal. He’s a professional real estate attorney but the owner finance background used a third party servicing company. So by. My buyer. He sent his payments to the servicing company. Right. And so they would escrow taxes in a assurance which we always do. Right. We require are buyer to ask for taxes and insurance pay those every month. So In the end I, like, bite my nails wondering if they’re gonna pay their taxes insurance. No I know that they are because I get a monthly statement each and every month that shows me taxes were escrow insurance as an escrow. How what how much principle this has left. What interests me does that make sense. It’s a win-win for you. You end then they get the same thing for peace of mind for them. Now guys now we’re getting into building what. A truly passive and truly passive business model. Has a business model and you can now begin to what. Project your financial freedom because you’ve got. It. Sustainable cash flow but it’s consistent. Unlike the rental properties it’s all over the place. Still love my rentals for all that they do for me and my family. Okay I’ve got I’ve got rentals were literal I’ve had the same. Rental properties going on 14 years thirteen years. I’ve had the same tenets that are paying these properties off. I’ve got a property that’s going to be paid off in about a year and a half.
I’ve had the same time he’s lived there. I’m on my phone now. Those of you’ve never been to a built. You cannot go to Bradfield without technical difficulties. You know I thought we’re going to we’re going to. Be dealt with tonight but maybe not.
Look a breaker or something. Oh you know hear me. Yeah. I saw a move faster. Go. On move faster and so. All right so. You guys with me was so good right. You with me right. So what are some of the disadvantages what are some of the negatives about it? There a couple. There’s a couple. One. If the house appreciates. My friend, my partner here Mo. Is a hundred thousand dollar house where he goes.
He’s on a 30 year ammo. He’s owned it for. Eight years. A get like three or four thousand dollars right. So guess what his house is worth now. Worth one hundred sixty thousand. So that. Kind of sucks a little bit. You were talking about the other days like a brand. It’s like I know man I’m like. You know you wouldn’t. Buy a vacuum you went to him.
Which one. So that didn’t work out. So you’re going to lose that appreciation. Right. So you have to just ask yourself are these headaches the management yada yada yada. Hurricane parties. Why was that? Was that a peaceful time for landlords especially if you didn’t have flood insurance. Is Tom still here? Well it was over. It was ugly. It was not fun. I have multiple properties that flooded without flood insurance rentals. It’s not fun. OK so you just have to make up your mind say is the risk worth the reward right. For me the appreciation some of the tax advantages and things like that you can appreciate. Guys Aldouri quit the business I was sober now I’m like No I’m good with that if I know I’m going to get my two three four five hundred dollars seven hundred dollars a month from his cash flow. I’m like if I know I’m getting that ninety nine point nine percent of the time. I’m doing. And then and for. I’ve never had a buyer default but I’ve had people pay late. I forgot to show. I forgot you’re the best story about the owner financing me so. I’m going to try to wrap up soon. I have to share the story about why even. Wow I really started doing this so. I’m not the sharpest tool in the shed. I’m just telling you guys.
So one year this was forget the year I’m doing a year end of the year review thing with my wife my wife. She’s still here. She may have left. She’s not too involved with my business right. We have a sign in the and says We’re doing a work. Husband and wife workshop are where she shops. You know it’s like. Her.
Sit down end of the year. She like I said she doesn’t have five kids right. And one or two but this doesn’t pay real estate. So this is probably about. It’s. About four years ago. We’re sitting down at the end of the year. I’m going over like numbers what they’re showing like hey this is how many properties that we flip this year. These are the rental properties that we own. You know this is what our construction business did. This is what our coaching business did. These are what our owner financing deals did you know. And so.
I just kind of skimmed over that. I had like eight or nine at the time. And so I kept going. I just kept on talking and my wife say well she’s like. Tell me about the owner financing again. And I’m like. What do you tell you about? She’s like What. I don’t understand it. How does it work? I was like Oh well let me just think about it. I said. It’s kind of like a flip. Ok. Like we’ll fix the properties up. To sell them you know. But if we get owner finance buyer then we’ll sell it to them like that. So it’s kind of like a flip. We’ll get some cash right. And we’ll get some cash. But I was like it’s kind of like a rental property too because we’re going to get cash flow at the same time. I was like but you know I like I don’t have to pay the taxes the insurance I don’t have to do repairs. I was like OK these people pay me for anything I only have to collect the payments. And then I was even like no toner I was like as a matter of fact we we’ve collected every penny we’ve ever been owed because of the servicing companies so if they’re ever late they charge all the late fees. Does everyone charge all the late fees with tenants? We did it again. Right. Sounds like it’s pretty cool. I’m like it’s pretty cool deal.
So I just kept on to the next thing. She’s like Whoa whoa whoa. She was like. Why don’t you just do that the other stuff it’s like you never thought about that before? So that’s why I’m a big believer in coaching, mentoring to speed up results avoid pitfalls. That’s. I didn’t know Steven at the time so I was the first time I reached out the mystique. I’m like All right man I’m going to start folks says. Owner financing thing.
Tell me what I don’t know. And I knew quite a bit but now when. I reached out to Mitch, got some training for him to learn more about the owner finance model. I forgot all about that story. Feel like right now. So that’s really where the light bulb went off. And another feel I can order a case study the deal that we did that I’ll share in just a second so you can hear me OK. We’re going to go through three quick cases we’re at plus. So this is this was just a typical deal. We’re in this state for sixty thousand dollars nothing special it’s you know three of neural cell phones though. Right. So in it for 60 sold it for 79. Right. Not a great spread. This is one of my still my first bills I was doing. I gave him eight point seven point eight point nine percent interest. My cash was only one hundred ten dollars. Is that good? Not really. But what I decided said hey I’m going to aggressively pay this thing off. I did this one about seven or eight years ago.
My loan is going to be paid for in about two years two and a half years. I only have twenty four thousand dollars because I’m aggressively paying this thing down just because I thought. I would own some briefly real estate right. Well not via sale of sixty two dollars. Right. So when I pay this thing off in two and a half years or so guess what I’m going to be cash flow on this property. You know seven, eight hundred bucks on a property you are not going to see more fair to. I don’t collect payments. I don’t get all the tenants for this taxes. All that kind of stuff. Pretty good deal right. Pretty good deal. And another thing another thing. This was a make-rent so I shared earlier what is my rental property strategy. So typically with rental properties we fix them up less nice than we used to fix them up really nice probably over the day. Start doing that we do less because I know. When I buy a rental property now typically you know OK so typically when I buy a rental property, I’m gonna rent that property until when we sell it.
To the tenant who’s out there. So how about How about a rental property about four years ago with a tenant in it and their lease was up. Like within six to nine months I said Cool. You guys can stay. As soon as they leave I’m going to mix it up sell it owner finance it or whatever flip it. Guess what they are done. They and they moved. So my strategy with rental properties now is I’ll buy do a little bit of rehab. I’m going to rent them until they move out. And we’re sticking a For Sale sign the yard owner finance are just going to cash out. That makes sense. That’s kind of become the model. Just because that’s what I. Did and I kind of you know bumped my way and stumble onto this stuff. This was a big eye opener for me. All right. This was this happened the year that I had the conversation my life before that conversation. We’re flipping this property out in Richmond Texas during fifty thousand dollars. There’s a beautiful house. Beautiful houses big nice like. Hundred thousand dollar rehab kind of thing really nice quiet cul de sac kind of street. We’ll have one problem. House one sale. Maybe it was as nice as I thought it was but I thought it was pretty darn nice. So we put this house on the market and it’s not selling. It’s not even getting showings. You know it was it was baffling to me because when we bought this property we thought maybe it’s worth four hundred thousand dollars. There just wasn’t there weren’t any comps because it was such a small area and the people who live there didn’t sell a move. So we put this house on the market. It’s not moving it’s not selling. And my agents like what are you going to do and why don’t you sell the things she’s like besides that. What are you going to do? I said I don’t know. Put it out for owner financing. She’s like it’s three hundred fifty thousand dollars. I can do that. I’m like I don’t know. We’ll figure it out. Put it out there. Two days later and this does not always happen but. It happened this time. Two days later we had a full price. Owner finance all four and the lady put down seventy five thousand dollars and they go to seventy thousand dollars. Thing was seventy thousand. They shut down seventy thousand dollars as a down payment. OK. Plus she paid all the closing costs.
So, we go to closing it just so happened at that point in time we finance this deal with to her. We hit two hundred eight thousand hours invested that we invested with two lenders. We had a firstly lender that invested like to 15 or 20. And we had a second England lender that vessel like 60 or 70 thousand whatever was on the roll the numbers. So first and secondly. So we get to closing. She brings her seventy thousand dollars down what do we do with that. Pay off the second lien. Talk to my firstly lender. I said hey we’ve got an owner of finance offer gave them basically owner finance of 1 to 1. Are you okay with us wrapping this? Will you agree to that? Your writing journey is going to draw up the documents he’s like yeah sure you’re still going. So make the mantras go for it. He’s pretty sharp guy too. So he got it. Which it’s actually even more security for a private lender than just lending to you. But when I got to go into that right now. Talk to ISIS about they have a program where you can do this right now. So, so we are closing and this this is the only owner bar that ever had they offered no. And she came to us and she said hey we’ve got money we’re gonna pay this thing off cash in less than a year all I need but not only need you to honor finance it for a year. I was like. Are you sure about that. She’s like Yeah we just need for a year. And I was like things happen. I’m like I don’t want to drill this thing up for a year we get in a year and you can’t pay it off. You get in some situation. I take this house back. I don’t want the girls back because I couldn’t sell it before so. Otherwise you know they don’t consider that. So I like. Look let’s just how about we just go to you versus like let’s go five years she’s like not paying off in a year. I’m like. Two years let’s go two years she’s like 18 months I’m not I’m trying to help you out here. So we go for 18 months we cash full light set. Yes about seven hundred dollars a month. We get to 18 months and what happens. I could pay the loan off any more time. So anyways we had to extend it out for another year or so. That’s what I wanted right just to keep that thing milk in that said pump in seven order dollars a month. And it did for close to three years close to three years. Now. Interest rates. This is not our ideal. Owner finance model and price point. You go to this higher price points you can’t go typically you want me to go nine ten eleven percent interest rate because just price is about of it but we’re able to go eight is eight. OK. If you’re six and a half seven percent this is where the beauty of it is guys. So we were it two hundred and ten two hundred fifteen thousand dollars at seven percent interest with our kind of lender. So we were essentially we’re making 1 percent on two hundred ten thousand dollars. OK but we’re making eight percent on the seventy thousand dollars. Once again not paying taxes insurance. None of that stuff. Not enough to collect payments. So when this happened unlike. Some. I didn’t expect that to happen. Sure. That’s. This is one of the stories I share with my wife. She’s like why don’t you just does that. I’m like so I’m not that smart. So I started looking more until my I think I’m gonna really start focusing on this the last one I might share with you. Mitch tells us something like there’s no fix strategy whatever. I’ve never been good at that. With not doing any repairs on a property like just buying it. Put the sign in the yard. I mean you guys do that. If I don’t do that I’m not like I’m a. Like. Rehabbing is in my DNA now like it’s in my blood we rehab we rehab. Well I’ll tell you what it. After Hurricane Harvey we were up to our eyeballs in rehabs and we’re buying properties like never before. We were all stressed out. Like I’m talking stressed out. So this is a property that we bought after Harvey didn’t own the flood or not maybe an inch whatever. I don’t I don’t think this property flooded. I don’t really know. Never sold this house. So we bought this house. Seventy five thousand dollars revised seventy five thousand dollars. We borrowed intending to rehab it. So we actually borrowed I think a hundred one hundred ten thousand dollars. I can’t remember what it was it was. Bought it intending to rehab it but weren’t busy I mean it was 30 45 days at. Best. Before starting a rehab. So I told my construction manager unlike dude do a trash out and throw a sign in the yards in a rural area. Throw a sign in the yard. Owner financing do a trash out and let’s see what happens. So you guys we’ll see before and after pictures. OK. That is before and after pictures. We mowed the yard trash did a trash out that was it put it on we sold it for one hundred and twenty five thousand dollars.
Call my lender, but with that I said hey we sold the property for this you loan this. How about we give you back that money we just modify the note for eighty thousand dollars. You okay with that. You’re going to let us wrap it. Yeah. He said I’m okay with that. So that’s what we get. So we own financed that.
Forward put down. He owes one hundred seventy thousand dollars one hundred seventeen hundred eighteen thousand dollars I think he put fifteen thousand dollars down. Not even a half percent interest for foreigners. Sixty five dollars a month cash flow. We’re doing no repairs at all. In a rural area. I don’t know what this house looks like. That’s the owner finding. Guys. So when I when I talk about it. When I talk about it when I say I like this is my favorite investment strategy. Like I’m not lying. Beats the hell out of rentals. Right. The advantages over. I still love to flip make big paydays and all that kind of stuff. That’s great. That’s wonderful. But this is kind of the best of both worlds. You get that cash injection now. But you get the cash flow. For the long term. Does that make sense? You guys Latham learned some things tonight. Alright, so, here, yeah. I’m sorry I forgot like this. This is the breakdown of that. Just e-mail us if you want slides I’ll give you these slides. But this shows the numbers on that deal. Violent Central at 75. I think we did a thousand dollars. Probably not even for a trash out a couple of trash. Mow the yard. Modified our loan to bowl 80 thousand dollars at eight percent interest but seven. Sold it for 125. We put down fifty thousand dollars. Oh a couple other things. So we went to closing have a note of essentially a hundred eighteen thousand dollars. At nine and a half percent interest for 15 years. So that’s twelve point thirty dollars a month. Cash was for sixty five. This is something. These are the things that you learn from coming to events like this. I just learned this about a year and a half ago. You guys who’s ever borrowed money from private some hard money lenders charge you points.
Guess what you can do it. Borrowers. Charge points. It’s origination fee there’s work you know. So we start charging points charge one to three points. Typically when we do an on a finder’s fee. So it’s a little less going to. You know going to. The principal the house makes your know a little bit bigger. Where are we still giving them? A good deal of. Opportunity for home ownership guys. Right. It’s incredible, incredible. Opportunity. I wrote down five ways to get paid. There’s actually more. Now you get paid. You get paid whenever. On the bus so. You get into this. Come out what are we talking about private money next month. So make money on the buy. All. Right. What does that mean? I thought that makes its own grading program. So whenever you buy a property mostly you guys are in the mindset of when I buy a property they need to have you know I need to come up with money for a down payment reserve with all this kind of stuff. Typically when we buy we’re getting 100 percent if not. More than that if not more than that. Meaning if we had need a hundred thousand dollars typically we may go a hundred and five thousand. How is that even possible? Well one. Of our lenders are still in a really good position right. 70 percent. There’s still 30 percent equity. Well if you’re buying five or 10 properties a month yes I mean that’s a lot of cash if you’re going to marketing your staff. Other closing costs. We’d like to recoup those costs on the buy. So there’s ways to make money when you buy a car. Number two when you sell it. I’ve talked about you’re going to get that down payment. From the owner finance buyer right. So you’re going to make money there their monthly cash flow.
So you’re going to cash flow little or a lot but you’re going to get that monthly cash flow. You can always sell the No. I’ve never sold a note. I know some people who buy and create these notes and sell them. You can do that. Those notes are gold to me like I don’t I don’t want to sell my notes but you can you can borrow against the No. And lower your interest rate right. So we’ve got to make contact. And that’s what we do now and we recycle our private money. We’re recycling private money. Take it to the bank borrow against that no. Increase our cash flow free up our private money so we can go do the same thing. I’m going to point out ISIS again because they’ve got. A product where you guys can do this. So now we raise your hand. Nobody knows them. So you can do these properties you can go buy on. The rumor if you want or just go straight to owner finance and finance. I did deals with them in the beginning. Tom I didn’t know what I was doing the whole time. I got a contract and we did. Came the sign you learned there’s other you can make. You can charge money on servicing. No there’s other ways make money we don’t do that. But you can. All right. Someone write this thing up. So just give you a couple other tidbits. Ideally your PTA principal interest taxes and insurance you want to keep that for your owner finance buyer in range of market rents. Right. Because if market rents are fifteen hundred and you’re putting in someone a house that’s going to be twenty five hundred a month when you’re gonna have a hard time doing that finding a family that can afford that. But if you’re if people are paying fifteen hundred a month for rent and they can own it for the two hundred or sixteen hundred what most people want. Home ownership rather than being a tenant. They do. And that’s where you get into the 1 1 type of scenarios. Don’t overpay on a property because it’s a good owner finance area. I have wholesaler Simeon deals and I want to charge more like but it’s a good owner financier area might help. No. OK. Walking to buy based on our fundamentals and our numbers. Period. Always use a servicing company. Always get a down payment. All right. So typically you want to look at least 10 percent down on your down payment. So what is our model? Ideally we love houses that are below two hundred thousand really up the lower you go the better they are. OK. But under two hundred thousand we love one hundred fifty thousand unless we love them even more. One hundred thousand dollars even more. Under ten thousand dollars.
So some people say that you can sell owner financing houses for more of your heart that you can charge. What we don’t do that we probably can. We typically we execute the same strategy over and over and over again where we select the apartment, we pick our price. This is a price for a house we put on MLS. We offer owner financing and that’s our price. We don’t say no you’re doing or finance we’re going to charge more. Now we’re going to charge them points and where are we really going to make our money on the interest rate over time.
Right. So that’s what we do. Can you do this with private money? You can do a private money you can use private lenders self-directed our raise you can do it with conventional lenders you can do with wrap mortgages. So, for those of you who have that excuse that mindset that limiting belief like I need money it’s just not true. You do it. All right. So last name. So we two things I’ll announce here. So, I’ve got a I’ve got an online training program called Flip fundamentals close to 100 videos it goes through all of the seven fundamentals. I’ve talked about mindset deal flow. Analyzing deals estimating repairs financing rehabbing in one generation full training goes deep into all these fundamentals. We’re cool. I’m pretty excited about this. We’ve got a physical product coming out next month. Talking to her now which makes me feel kind of slimy but inside at the same time some came with it but it’s can be like a box thing and you get like it’s like the shiny toy thing. But so, we have that from an out next month. And but we have it online digitally. And so, for anyone who wants to get that and get access to it tonight. It’s ninety-seven dollars. We’re going to give you the physical shining box thing that’s coming out next month. I’m proud of them. Arguments that. You’re going to get that but we’re going to do an owner guidance vote. We’re going to do a training. And owner finance trainings. More in-depth training about owner financing and you can either come to that or get the replay. Because I’ve never really done an in-depth owner finance training and I did this I did that was putting this presentation together and why I need to do some training on it and I’ll record these in either tournaments or product or go into my coach and students put them into that membership. So that’s the intent behind it. It’s an incredible business model. I love it. I kind of want oversight. I really want to open it up for questions right now. I want to get to our winner. I’ve already mentioned events coming up so. Friday to her office. The. Welfare. March twenty eight Thursday March 28 to register for that and next April 3rd next month first Wednesday we’re going to wait 10. Simple private money.