Closed Captioning:
good morning good afternoon good evening
folks michael zuber one rental at a time
it is thursday and that means the three
amigos how you guys doing how you doing
matt pumped super excited to be here
ready for topic number three sorry i saw
your line to you
and dionne how are you howdy i’m doing
great i’m ready to get off the topic of
matt showers
oh yes you guys are missing it when that
camera’s when that camera’s off or we’re
not recording it’s still a lot of fun
over here yeah let’s just say it’s a
once once a month thing whether he likes
it or not whether i need to or not
exactly exactly
true story so guys what i want to talk
about here is again i want to keep doing
real deals uh i want to talk to you dion
specifically about your four plex that
you brought to my channel the
opportunity i don’t know six weeks ago i
want to talk about a phone call you and
i had after matt and i talked about the
50 40 10. talk about what you did after
that kind of catch everybody up and then
i wanted to talk about the broader
question of how do we go and have
conversations with the sellers so dion
do us a favor remind us of the fourplex
and step one that you you did it was
list
remind us of the numbers okay
so i’m looking for a fourplex that costs
at least a million dollars i have an
auto search set up for for three
different auto searches set up but
that’s one of them my goal is to put my
money where my mouth is i’ve constantly
said i wish my properties cost more
as long as the yield scaled with that
purchase so i’m looking for one that
costs at least that much
before that i think my most expensive
property was
590 000. oh so this is a big jump for me
that was four plex that now is like
worth 1.6 so
anyways uh so i’m looking for that four
plex one came listed at 1.3 i run the
numbers doesn’t make sense
now when you say run the numbers that’s
essentially what i talk about in my
course get the basically the yield is
what you’re looking at right yep right
the average yield in my area is was
seven to eight percent so i was looking
for tens
it seems like it’s constricted a little
so i’m still watching i haven’t lowered
it yet but i might lower it to nine okay
um but this one was
a one
or a or a break even at 1.3 but at 1.1
i got my 10. there you go that was my
yield so i make the why i waited a
weekend
because in november and december
that property at the price at priced
right with low interest rates would have
been gone in hours
but rates had gone up
so i waited the weekend monday i make
the offer
they come back and say say we have a
bunch of offers now we need your best
and final
i submit
1.1 yep
it doesn’t sell still hasn’t sold
so i’m waiting and i check in every week
it’s not selling so they’re not a
motivated seller that’s what we’re
looking for we’re looking for the person
who does exactly this doesn’t sell and
is motivated to eventually take our
offer
you had the call with um matt
the
that’s right
somebody reminded me that the other day
too
so you called me
and said have an idea let me pitch this
to you
50
loan from the lender which is 50 ltv or
less which gets you the best interest
rate
40
uh seller finance carry and then 10 from
me so 50 40 10.
and i’m glad you asked to bring this up
as a video today because i want to point
out a huge mistake that so many people
do and i hear this constantly to where i
just want to reach in and pull a little
part of their brain out that does this
and fix them
you
know how seller financing works the
investor
we are often pitching it to a seller
who’s never
heard of it has had agents say it’s
illegal because they think they’re not
going to get their commission so when
people say things like i don’t know
about seller financing because you got
that balloon payment in five or 10 years
well why did you speak that into
existence
that you could do 30-year
zero interest with a seller if it’s what
makes sense to them yeah it doesn’t
matter i have one of those i do right so
they exist right
so when you pitch the idea of seller
financing to the seller
to steal from the lumberjack landlord
what matters to the seller find that out
if you can whenever possible to see that
your down payment will cover it to where
they’re not writing a check to lose an
asset so they’re not going to have to
cover the agent fees and they’re not
going to cover closing costs or whatever
that is or whatever remaining amount
they have on their mortgage if they have
any left so you need to ask those
questions so i’ve resubmitted the offer
waiting for information
um
they haven’t accepted it yet
i did the 50 40 10
but i have also asked the questions you
know do you have a remaining mortgage
how much down payment would make sense
to you so the 10 might make sense to me
now but maybe they do want 15. maybe
and maybe the interest rate doesn’t
matter but the one thing that you didn’t
say that i want to make really really
clear
the numbers in your original model which
was 75 ltv 25 down you had to write it
at 1-1
what i told you to do was give the
seller their list price or even go
slightly over
because again you can overpay
when you have better terms your blended
rate because i think i told you to do it
at one percent or at least put in your
model
your payment you could you could bring
less to the table
pay more
and have higher cash flow how do you
like me now
right and that’s so i’ve got the offer
in that you’re right the the offer of 50
40 10 was at 1.3 they’re asking price
yeah so no now hey seller do you want to
be cashed out i can make it work at 1-1
or if you’re because i’ve had still i
have overpaid for houses before
i have
the for whatever reason this guy wanted
150 for a 100 house or one i think he
wanted 125 for a 100
like months dealing with this i finally
told him i’ll give him 125 but this is
it he said great let’s do it i got 125.
he wanted to tell all his buddies he
sold his house for 125.
he wasn’t going to tell his buddies that
he got zero down in zero percent
interest
he just wanted to say he sold for 125.
okay
i’ll buy that you know for 30 years
fully amortized
every dollar is principal
okay fine
so uh again
so i want to take the average investor
through this first so first and foremost
right plucking on that little brain or
the little portion of the brain
a lot of you will be doing this through
agents
because a lot of you are doing on the
mls
i would coach your agents to ask early
especially if the listing goes long
is the seller open to this how much do
they have a mortgage if so how much
because you can collect data up front
this will not work
50 40 10 does not work if the seller has
10 equity doesn’t work don’t even bother
but if you don’t know try and this in
the sophisticated investors we will do
what dion did in two steps i would
actually like let’s say the owner comes
back to me and says sellers own this
four plex free and clear
let’s just pretend
that’s what they told us to be awesome i
would go back to them and tell my agent
i want you to write two offers
i want you to tell the seller that i
don’t care which one they take
i am here for cash flow
and given the yields that i expect i can
make both of these work
but he don’t don’t merge these
it has to be this way all cash which
would be
not all cash but no seller carry
or some seller carry
i would have both offers written day one
if i knew that ahead of time that it was
free and clear what do you think of that
what do you think matt what do you think
of all this yeah 100 i mean it’s it’s
one of those things i think is going to
become a very big market you know i
think that the people and not only that
but i think the people that want to get
out of the market they’re likely the
ones that have equity
exactly because this is where we are
going yes
any of the stuff that i look at i don’t
look to buy anything that’s been owned
for five years exactly i want to i want
to talk to the guy who has owned it for
at least 10
because that goes back to 2012. he’s
likely doubled his money
right exactly that’s exactly right he’s
likely doubled his money maybe tripled
and so there’s plenty of equity sitting
there he looks at it and goes i don’t
have to be a landlord anymore but i
still got a monthly check
that sounds really really nice and i get
to lower my taxes because i hate the irs
absolutely i don’t have to pay taxes on
this this seems like a wonderful idea it
is wonderful let’s be clear you still
pay taxes but it is a um
uh what do they call it
it’ll come to me in a minute installment
loan so you only pay on the payment not
the purchase price anyways i just didn’t
want to say like you’re avoiding taxes
you are paying taxes just spread out the
duration of the loan
um but yeah this this is um
this is something all my students should
be doing again uh i think the key is how
to find these
so you guys know i had prop stream on
like a year ago
uh haven’t been back i’m inviting them
back i’m actually bringing my guy who
does it for me on tomorrow at 10 15.
because you’ve got to you’ve got to be
able to fish
where the sellers can say yes
going to sellers that have 10 equity is
stupid don’t waste your time so prop
stream given their data lake pulling all
the data together gives you the ability
to go hey i want sellers with 50 or more
in my buy box
send them a postcard right from the app
uh so i’m bringing my guy on tomorrow
then i’ll get prop stream back next week
of the week after so
um
that’s that seller finance deal that i
did that blew up
they wholesaled the house
of course they did they wholesaled it
and you know what ended up happening
that wholesaler
ended up making like 60 000 bucks on
that house in 30 days
wow
and i’m like
she’s like i really wish we’d done your
deal with me too yeah me too yeah but we
don’t ever need to talk again because
you don’t want any more houses but yeah
bye we’re done yeah exactly so dion when
you think of all this you’ve now tried
it right um
i guess what i want to talk did it make
sense when i called you or did you have
to put money did you have to put pen to
paper or kind of play with the numbers
no it made sense with a really simple
explanation and really what was was an
eye opener where
when i submit offers now for the last
six months
i submit an offer that says here’s what
it would look like with a conventional
loan
and here’s what seller financing would
be and my and i actually have a seller
financing email that i submit with it
where it says and i don’t say to avoid
capital gains completely i say to avoid
a large capital gains hit a point of
sale correct and then i would prefer to
pay interest to you instead of the bank
and if you’d like to consistently get
payments but i never thought of
that doesn’t solve the problem if they
have like one hundred thousand dollars
of a mortgage on a million dollar place
left it doesn’t even fix that no but
offering
50 40 10
covers a pretty decent sized mortgage to
where they can still walk away without a
big capital gains hit still get
consistent income get the price that
they’re looking for because the blended
rate is better so yeah it totally made
sense it was very simple to understand
that’s awesome and again folks what i
what i want my investors students
followers to think about is
again as we talked about
episode two the housing market is broken
the housing market ran into a brick wall
but what does that mean to us it doesn’t
mean transactions will go to zero we’re
still going to do over four million
transactions this year
lots of those will be from sellers that
have to sell checked out cash out fomo
selling whatever
as investors
only write great offers the other thing
i will say recessions bear markets a lot
of you are just thinking price price
price crash crash crash
drives me nuts
think terms
terms i don’t care about i really don’t
care about price if i get my terms
so matt where can people find you
lumberjack landlord on youtube at 11 30
a.m eastern time on sundays my live
stream three hours of glorious real
estate fun there you go and dion
dion talk financial freedom right here
on youtube my live streams are tuesday
afternoons at 4pm and let me know in the
comments below is three hours good or do
people like to go to bed earlier and
should i cut it down to an hour
they’re gonna want three hours who
doesn’t want dion after dark
i just shut it off when i’m done
just let it run in the background so he
thinks you’re there
all right guys thank you very much