Breakthrough First Real Estate Deal of $170,000 Payday

The rough estimates, um, I had, uh, payday 1 was $33,029. Okay, right.

Yep.

Yeah, if I go 5-year term, uh, payday 2 was $33,000. Okay, then payday three was five nine seven one. So total you're looking about one seventy two.

One hundred and seventy two thousand dollars on your first deal. So tell me, amazing, right? That's always absolutely amazing. Everybody should be clapping. They should be excited because why? We celebrate people with their successes because if we don't, then it's usually an ego check, right? It's like because. You hang out and you celebrate for where you want to be, right? That's how I've always approached it. I should say that's how I've always approached it. That's the way I've learned to approach it as I've continued to break through my own paradigms, right? This is part of the process. So you celebrate because then eventually you want to be with that person. But if you, like Dr. Amanda, we're always talking about our other mindset coaches, if you start pushing that away and your ego is not happy about it, then it's very unlikely you're going to be able to attract that, right? If you want to attract their winnings, then you're going to be able to— you're going to be present on the same energy wavelength as them. As well, so but with that, but no, it's as and I just got asked this on our workshop. Like what? Like what about the challenges in the business? Because you guys always you know when you're in a workshop, you're trying to explain things and talk about the benefits. So how long did it take you to get to that deal? And then we're going to dive into this deal in a second. But how long did it take you to get to that deal? Because we're like 172 amazing over the next three years. But let's also talk about you know some of the challenges that you just went through as well.

Yeah, it took me about a year, and, and, and obviously everybody has their own journey and their own pace. Um, like I said, for me, I came from the, the firefighting world, right? So getting on the phones and calling and understanding how a business works and all the ins and outs, and just— and then understanding real estate, and then be creative real estate on top of that, to have that confidence to talk to people and, and to keep propelling myself forward. So actually, the deal that we're going to talk about today, I actually came across first. That was a lease purchase for 5 years, but the seller wasn't interested. So I kind of parked them off to the side for the time being. And then this other one came about, an opportunity through a referral through family. And that one was— it took me about a year. And then shortly after getting that one going, I reached back out to the deal that we were going to talk about today and kind of pivoted To the AO, you know, see if he'd be more interested then. And then they were, they were interested. We went that route. That helps.

No, I love it. So this is important. So let's walk through that, right? Took you a year to get a deal. But really what you're telling me is it took you a year to stack enough skill sets and enough knowledge in order to really benefit from that, right? It was like, hey, I'm a firefighter. I got a couple rentals, so I'm a little bit maybe ahead of some people. But, but in order to know how to build the business, how to do all the ins and outs of the business, acquire the right knowledge and skill set, took me about a year. And then once you did, now you're starting to see the labors of your work. And now you're in that position where you get not only one deal sold, but now you get the second deal sold as well. I know Kyle froze, so I don't know if he's coming back yet. But that's his excited face. But the funny thing about it is, have you ever seen our associates get a good deal? It's quite amazing because none of their faces change. They're like still looking for the next deal. Like, I'm like, can you guys all be excited for like 5 minutes? I couldn't tell you the first time I got a deal. I think I like was celebrating and like yelling from the top of my lungs. Because that was a, that was a long six months. So when we bring Kyle back here in just a second, so that's I like to always share both sides of the story because it's really easy for all of us to sit up here and just talk about all the major wins. But I'm not lying when I talk about in these workshops to say you have to be committed for the next one to three years, if not three to seven years, according to Brian Tracy on our podcast that said. It takes seven years to master, seven years to master a craft. So just imagine it's like it took him a year to get everything rolling. Now he's got his first deal done. Then he just got a second deal done, and now his business is starting to flow. Now he's got some confidence. Now for the next two years, it's all gonna be about maximizing his front end and then getting his systems and his processes dialed in with the back end with the buyers. So now that's at three years, and now he can start to. Grow and scale his business because he's got his systems and processes dialed in. He's confident. He's managing his portfolio. And now, by the time he gets to seven years, I know this might sound scary for some people, but you've also probably been working in your job for five, ten, twenty years, and you're not where you want to be. Man, all you gotta do is dedicate the next seven years to potentially be where you want to be, where you don't have to do anything else ever again, which is a huge opportunity. So. Kyle comes back here. We'll talk about just a second, but I will go ahead because I know we did an oops in our marketing email. So I want to go ahead and he's back. I want to go ahead and pull up the property because this property also, Kyle, is not like a cookie cutter property either, correct? No, it's just like house over in Lower Lake, correct?

Yeah, so this is in Lower California. So I'm in Northern California. So this property is probably about an hour and a half from Sacramento, 2.5 hours from the Bay Area.

Love it. So I actually remember when we were doing the Deal Structure Sunday, this is why this is really good. When we actually recorded this, you didn't sell the property yet. And you and I were going through like marketing and we were looking at pictures and we made some adjustments and Then I think you went and did some other things. So I'm just curious now. So it's been maybe 4 weeks. Who the buyer was, how you were able to capture this buyer. I'm really curious about how this all thing played out.

Yeah. And we're still working on getting buyers. But the way this thing played out was obviously I originally saw this, oh, February, March last year. Talked to the owners. That's when I originally gave him a proposal. The lease purchase wasn't for him. When reached out to him back in October, he was ready to go on an AO. I hadn't been back out there, but I would notify him like, "Hey, we got to get the place kind of cleaned up." So he sent me some pictures, so at least we can get something going. He was working on getting it cleaned up. In the meantime, he had a guy up there staying, right? Because this property is on 29 acres. It's About two miles down a dirt road, so it's pretty secluded. You know, and then so one of the things I took from your our conversation, Zach, is like you're like hey we gotta get people to want to actually go out there and see it and make it inviting. So I I went back to the seller, you know, and we were getting traction on it, but not not like I wanted. So um I went back to the seller and says kind of explained the situation. It's like hey we gotta get this thing. Better, right? We gotta, we gotta move this thing. There's a lot of benefits to this home, and we gotta magnify them and let people know. So at that point, I did go back up there, and I was gonna work on. I says, "Hey, you got that guy up there? Make sure he cleans it up. Let's get this thing dialed, and I'm gonna go up there and get some pictures." And then we also talked about some different marketing strategies of signs and and whatnot. So he's like, "Okay, no problem. I got the guy." He says it's cleaned up, and and that's his whole water source. It's a beautiful property. Yeah, I went back up there, and it was a completely different situation than we had gone on six to nine months ago. Right? And the seller, the seller had no idea what was going on with his property. Granted, he's three and a half hours away in the Bay Area, so he hasn't been up there. So I went up there and unfortunately the guy who was supposed to be taking care of the place for him was actually the place, right? He wasn't. And then at this point, right, when I went up there, they had a couple dogs. The second time I went up there, there was 12 dogs on this property. Now they're, they're hungry dogs and they're, they're German Shepherd-sized dogs, right? So those are going to become big dogs. I actually ran into the neighbor, talked to her. She kind of gave me a heads up what's going on. She's a super nice lady. And she's been feeding the dogs. The guy hadn't been feeding the dogs. They've been defecating all over the yard. They've been living in the house. The guy hasn't been cleaning the house. And so I still just went through, walked through, just kind of get eyes on, just, just to, you know, do help my, help my seller out. Let him know what's going on with his property, right? Because he's obviously, he's not aware. And then just going through the house, firefighter, right? You know, I know commonalities cause fires, right? Just like you and Chris, just, you know, you know your commonalities within real estate. You just, you just know them. You've done it for so long. And I just walking through and I saw the shape like the stove was in with grease and just everything on there. Also now, also he had these extension cords running through the house going to places you don't know. Like, you can't use extension cord as permanent wiring, right? That's what creates overheating of currents and fires. So But I was cool with the the guy there. I didn't say anything. And the other thing was the guy was burning trash, right? You know, and all due respect, he's from Mexico and he's living, you know, and I've spent time in go out in the in the cuts there and they burn their trash and he was doing the same thing. But the smoke was like going into the house and like it was just it was a bad situation. So um so I was cool with the the the the guy there and. Was cordial, and then I went back, and it's like I have an obligation to talk to my seller. And then I also have a obligation to my buyers, right? I can't send a buyer up there with their kids, and you got 12 hungry dogs, and they're jumping all. So that's that's not going to work. And then number two, you know, for my seller, he doesn't know what's going on, and you know, he's he's getting himself set up for to have a fire in that place, and you know, and lose the whole thing. So um. I just had a nice heart-to-heart conversation with him, and not so much of me as a of a guy trying to buy or sell his home, but as a friend, and like just let him know what's going on. And and so he was greatly appreciative of that. So since that time frame, like he's gotten the guy out. They're working on getting animal control up there to get the dogs off of there. We've had like hey you need a professional come in to get like this thing like a deep. Clean, right? Let's get all that stuff out and let's like stage it as if we're going to sell. Now that we're bringing furniture, get it in its best shape. And that includes the outside because it's like we talked about, Zach. It's fully self-sufficient, its own pond, solar generator. I mean, it's great, but it's all covered in bushes. People can't see that. So like just the whole nine yards. So that's where we're at right now is I'm focusing with him and working with him through the process to get things cleaned up. And then, then I was even— then I'm going to go back and get, get the pictures going again and get this thing looking sharp. And, and then to focus in on, like you said, like, get people to want to come out there, you know, maybe do some walkthrough videos or something like that so people can see the property without having to drive 2 miles down that road. Got it.

Okay. Lots of, lots to unpack there.

Yeah.

What's the reason why the seller is selling again? I'll back up for a minute.

Yeah. So, the seller, he and I think it's his cousin, but their family runs 7-Elevens in the Bay Area, right? In Northern California here, San Francisco Bay Area. So, they originally bought that as a second business investment and they were going to get into the cannabis industry and grow cannabis because up there you can grow cannabis, you can get permits, the whole 9 yards, right? It's legal. But they found out that industry was tough to do. It's always changing and it's tough to keep, and especially with their other business too. So now, not working out, the home's up there, and then they have 2 loans on it. They have a private loan and then they took a cash-out refi on another home. So they have 2 loans— not cash-out refi, but, um, but anyways, they took out another loan. So they had 2 loans that were— they were paying on. Um, they couldn't sell it. Um, and, and that, that was, that was kind of their, their reason. They're coming out of pocket every month.

Yeah, well, let's talk about that then. So, um, what's the purchase price? Now I'll share this too because I believe this is a sign-out deal, correct, based upon what you structured?

Yeah, so this is a, a sign-out deal, and the purchase price that we were— we had it at was $499,900.

For— okay. And is that— do you know? All right, so the debt on the property, do you know that? Like you said, there's 2 loans on it, and are they both attached to that property, or are they— they take out another loan that's attached to another property, but they're counting that as the way to fund it?

I think they're both attached to that property, right? And at least, at least the, the hard money loan was.

Okay. Okay. So what's the 2 loans? You know, if you don't, that's okay. I just figured we'd go in depth.

Yeah, I don't have the— I know the monthly payment on each one, but I don't have the balance on each one right in front of me.

Okay. What's the monthly payment on each one then?

So the private hard money loan was $1,709.48 a month.

And how long is that? When's that hard money loan due?

Um, he had only had a few years left. That pinch is— is meaning it sounds like he knows the person that has a private money loan, but it sounded like it was supposed to get paid off within a 2-3 year period.

Yeah, it sounds right. Hard money loans usually short term. Yeah, that's even long for a hard money loan. Okay. And then what's the other payment?

The other payment was— it was a variable rate loan, and that payment was $949 at 7.75%, but it all the way up to $1,338.33 once it hit its max at 10%.

And then plus taxes and insurance.

Uh, yeah, I believe we— I think the taxes insurance on that, that's included in there if I'm looking at it right. I don't have that separated out.

See if I can get this. Oh, it's just not sharing right now.

Okay, our goal was to take it to the market And get a buyer for $3,100 a month, right? And that would cover both the payment of both those loans monthly. Yeah.

Okay. So you're going to the market for $3,100. How realistic is that? Because I know— because I'm sorry, I set the wrong stage. It's probably still being currently marketed. I was referring to your other property that you sold. So Tell me, how has that process been with marketing the house right now? Because it's very unique.

Um, it is unique. I think it's been going good for the most part. Where it's been different is obviously I'm using more yard signs like that, that I have people there, and of course using Prosperity, that's helped. Um, and filtering the buyers, uh, so far that's been good because with the, the other home I had, fortunately it was in a, um, very high demand area, so that gave me a lot of buyers to filter through and gain that experience and working with Nick. So on this one, um, it, it's, it's, it's, it's going smooth, you know, and I'm still get— we're still getting interest on it. It's just more of me following up with the people, kind of starting to filter them a little bit and say, hey, This thing will be be ready to go for a walkthrough soon and get you know get them out there right because I don't want to lose those leads.

Yeah, okay. So $3,100 you bought it for what'd you say the price was?

Uh, four uh four nine nine nine we had it marketed at. So they had, and they had equity of $235,073. So, you know, they're looking at their price was $450,000, right? If you added the $264,927 plus the $235,073 of equity that they had, that puts them at $450,000. So you're roughly marking about, above what the Okay.

Yeah, my apologies, my iPad's not connecting. So let's just write these down. So you bought it for $450,000, or are you marketing it for $450,000?

We're marketing it for $499,900. So $1,000.

$499,900. Okay, so you got it for $450,000. So it's $50K in, uh, in, uh, and what's the split?

So we were going to do a 50/50 split. And so if we did a 50/50 split on payday 1 at that sale price of the $499,000, payday 1 would be $49,990. And then you divide that by 2 for the 50/50 split and you're looking at $24,995.

Okay. So it sounds like you're doing a ton. Which is you're getting a ton of experience by walking through this entire challenge property, right? Which is awesome. And you have a secondary and you have a property that's not, you know, typical. So amazing experience you're gaining right now. And by gaining that experience, you have potential earning potential of, say, $25,000.

Mm-hmm.

Okay, got it.