HOUSING MARKET IS CHANGING FAST Buyers are Dropping out. Investors are Stepping in with Great Deals

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

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