Structuring Deals Based on What Sellers Truly NEED

All right, welcome to another Deal Structure Sunday. I invite you to think about taking the attitude of simply helping people when you're going after calls, you're going after conversations, you're going after talking with sellers, all of that, keeping in mind, hey, I just want to help sellers. That gets you a win. Um, today I'm with Kevin. Kevin, thanks for joining me, buddy.

How you doing, Chris?

I am doing awesome. You are doing better probably because you're in Florida and I'm not, but that's okay. Oh, well, Kevin, tell us, tell us what state this deal took place in and then give us like kind of the backdrop. And let me just tell the Wicked Smart viewers, you and I were chatting about this deal and I said, this is cool. I want to share this as a Deal Structure Sunday, even though it's not the conventional purchase on terms, sell on rent-to-own. I want to get them thinking always outside the box, right? So there's a little context for them. With that as a backdrop, why don't you lay out what we got?

Well, this is definitely outside the box, and I had never done anything like this before, but I got a call, uh, from one of our VAs who had talked with this woman up in Waltham, and that was back in February. And what happened was the woman was a nurse in Florida. She moved to Massachusetts, couldn't get her license to transfer. She wanted to be with her mother, 78 years old. And it's a duplex property where her mom lives on one side, she lives on the other side. And she was falling behind because she didn't have the income. She was due to go to auction, I believe it was within 10 days of our conversation. And I said to her, who have you been speaking with other than us before this call? And she said, no one. She was going to auction and it was actually 7 days and she was going to lose this duplex, which was worth $1.2 million.

And how much— I'm going to call some numbers up here. How much was owed?

She, with the arrears, she owed $110,000.

We got a value of roughly $1.2 million?

Yes.

Value and underlying debt?

Was $110,000. Call it $100,000. Keep the numbers even.

So I guess I got a question here, and you and I chatted, but I do— I chat about too many deals. I can't remember yesterday, never mind 2 weeks ago.

Sure.

She talked to no one. So what was the deal? Like, just head in sand? Like, you have all this equity, you got $1 million equity.

Yeah, she was going to lose it.

Unreal. Okay. Uh, okay. This is what I'm talking about helping guys. So, so let's continue and see where this, where this brings us, Kevin.

So I'm talking tongue in cheek when I say this, but using my magic connection, I called the government agency that I use and requested a foreclosure delay, and it was granted. That delay was for 60 days, and her auction was reset to April 22nd at noon. So throughout this, we were talking about options to save her house. And unfortunately, 60 days goes by in a heartbeat.

Yeah.

And most homeowners think that they have plenty of time to straighten things out and take care of it. And what we talked about was helping her get a modification on the mortgage with the mortgage company. And oftentimes the mortgage company plays games with the homeowner and the homeowner goes and fills out the application for modification. They send it to the company and they always seem to find a problem in the application and therefore they reject it. And oftentimes they don't tell the homeowner what was missing. They just reject it out of hand. Mortgage company said the investor on the loan said she did not qualify for modification.

And how much was she behind? I should have asked that. So the $110,000, but how much was she behind?

Right. So she owes $110,000 and she's $40,000 in arrears, and they're going to take her house worth $1.2 million for $40,000 in arrears and not give her the ability to try and work this out. That's what blew me away.

Crazy. And in the $110,000, is the $40,000 or is it in addition to, Kevin?

It is in the $110,000.

Ah, okay. Included.

Arrears.

Okay. All right, go ahead. Sorry.

So she had $1 million in equity.

Million bucks sitting on the table. Bank says, no, I can't approve it. Of course I do. All right, go ahead.

Right. So, you know, she— we talked about modification, which didn't happen. We talked about her going and getting a loan, borrowing money. Her credit wasn't perfect. She said she couldn't do that. So now we What are you gonna do? In my opinion, the options were to file bankruptcy and ruin her credit for a number of years, try and refinance, but it was a little too late, let it go to auction and get killed by losing her asset and equity, or find an investor that could bring $40,000 to the table and pay off the arrears.

Yeah.

So we offered to pay off the arrears for a stake in the property.

So this is unique. This is, this is fantastic. So I'll give you $40,000, and I'm not trying to sell your house, even though you would have lost it. I want just a stake in the property. Am I tracking with you?

Yes.

Okay, how much?

Absolutely. In this instance, uh, 10%.

Okay. I, I mean, I'll say morally and ethically super over-the-top generous on your part. There's plenty of investors that would come in and take that property, right?

Oh, they were lining up. We got a phone call from a woman that goes to auctions and knew That, you know, we go to auctions and we talk, everybody talks. She actually called Kathleen, my fiancée, who is the owner of the company, and said, I noticed that there's a lien on the property and we know Kevin goes to auctions. Would you tell me how he stopped the auction and what he did? And she said, no. Yeah, the heck.

Unbelievable. So, okay, so you give the $40,000, you stop it. Well, let's wrap, wrap it up, I think.

Yes. So what happened— one other point I think that's important to make. We have an angel investor who loves to invest with us, and she agreed to lend the $40,000. And technically, she gave us $35,000, we put up the balance. The problem we encountered was that it had to be paid by a Friday date. And we overnighted the check with UPS, and UPS couldn't deliver it because they said of weather in Florida, and the check was late. And we thought they were going to auction off the property, but we called, we had our attorney call and let them know that the check was there. We sent all the supporting documents and they did not— they honored the postponement. Until the check arrived on Monday.

It's unbelievable on all fronts. I do remember that piece of this. Okay, so the check gets there, uh, unless I'm missing something, the arrears get paid, you're on title for 10%, uh, you had your attorney do that. How did that take place?

Yes, what we did was we made it clear that the homeowner needed to come down, uh, to our attorney's office, which was about 45 minutes away and sit with the attorney so that he could review the situation so that there was no, you know, any inference that we're trying to take advantage of her.

Right.

We were trying to help her. And she did come down, signed all the documents, uh, you know, and she, on a notarized statement, explained that she fully understood the arrangement and was more than happy. to sign the paperwork.

Again, Kevin, I, I can't stress enough for the Wicked Smart viewers, especially if they're new, um, there's— there are not many people that would do what you did. Many people would give the 40 and take the property sub 2, period, end of story. And, and yeah, yeah, that wouldn't have been fair by any means. Yep. I— hey, one of my values is, uh, all transactions with the highest integrity. So this, this is why I wanted to do this particular deal structure Sunday. So it's all paperwork's done. You have a 10% stake. Where is this right now?

Right now, it was interesting as a side note that after we got out of it, she was actually crying in the attorney's office at his table. And, you know, we could see that she was very emotional. Kathy was a little concerned that, you know, she was upset when we went outside. I said, could I have a hug? She goes, absolutely. And she was still crying, and she gave us a hug, and she said, you are definitely my angels.

Gotta make you feel good on a lot of fronts.

Oh, absolutely.

Is her plan now, Kevin, to stay there? Like, what's the end of this look like?

That's a great question. Yes, because, uh, what we did was we put it in the agreement That the investment would be paid off within the next 3 years at maximum. Could be sooner, no penalties, you know, why? So, um, it would be paid off in the next 2, uh, 2 to 3 years, we'll say. And at that point, she should be able to qualify to refinance the property and be— everybody's made whole.

So on every 4, 3 years, she refis.

Yes.

Okay, she could sell, right? Oh yeah, but she—

the— that was part of the equation here because we wanted to buy the property, and she said that she did not want to sell it until her, uh, aging mother had passed. And, you know, we're always trying to help people figure solutions, and what I said to her was, look, is it possible That your mom moves into your side with you and you rent out the other half of the duplex, which would bring in $3,000 or more in rent every month. And she agreed that that was a wise decision.

So when she refis, I just wanna make sure I'm tracking, and then we can— I got a couple of comments, we'll wrap it. She refis in whatever, 25 months. You get $40,000 plus 10% of the value of the appraisal. Is that how it's gonna work?

Yes, but in all fairness, we've got a cap that we won't exceed.

Meaning you did that in writing or you just said, look, we're not gonna go beyond this?

Well, the contract is the contract, clearly. But between you and I, because I know nobody's listening, we're not gonna go over a certain amount. It just wouldn't be fair.

Yeah, nope. Look, I'm on all fronts, Kevin. You should feel super good for many reasons about that. Um, and not to mention you have a, a client or referral source for literally for life. She's—

she's absolutely—

yeah, that, that stuff will bring you 10 deals just by helping people. Uh, so kudos to you. Is there anything I didn't ask that we left out? Because I, I, I think I tracked like 100% towards the end there.

No, I think you— we've covered it all. It's just, you know, To be standing outside the attorney's office. And this has happened before with different deals that we've done. And I, I like to say to people, we've had people that have hugged us, we've had people that have kissed us, we've had people that have cried with us.

Yeah.

And thanks for the work that we've done to help them save their properties. I agree.

Many here, buyer front and seller front.

Yep.

In every conference room we've been in. I love it. So again, congrats big time. Kevin, I wanted to— as we were talking, I thought of this. You and I met— we can pivot for a second because it's new out there right now for us. You and I met at our In the Trenches private boot camp here at the office. I'm literally at the Newport office right now. You had met Zach at Aria some time ago, or maybe a friend did, but you came to the In the Trenches boot camp. I just wanted to do a shameless plug and have you talk about That, because for the Wicked Smart listener, we've only done a few, but they were so cool and so effective. And I want you to comment from the heart that we're going to keep doing them. And so if you're hearing this, there's going to be another one within the next 6 weeks, no matter when you hear this video. And it's called In the Trenches Boot Camp. And we only fit— presently we only can fit 15 or 20 because that's our conference room. That's it. That's what's in there. It's not a— it's not a perceived, you know, scarcity, as Kevin knows. So any comments on that, Kevin, or the family team, or anything you want, just from the heart? Yeah, it—

that meeting was an absolute game changer for us. And it's the value that you provide is amazing. And I would just recommend for anyone watching and thinking about joining the Wicked Smart team, don't wait, just do it. There's so many good benefits and values to working with Chris And Nick and Zach and the other folks in the office. It's just you got to do it.

I appreciate it, buddy. I appreciate. I know it's where we met, so I just was shamelessly going to throw that out there. I look forward to seeing that another one because you're in the high six and you can come whenever you want. Those of you guys that might be interested, yeah, those of you guys that might be interested, we'll have an application link on here probably, and if not, just send an email to support at smart. It is by application for obvious reasons, and, uh, we'll get you in here. It's free, by the way, if you're in the Jumpstart Program or Associate. If you're not, uh, we'll sell you a ticket if there's room after filling it with our, with our own community. So go ahead and delve into that deeper, send us an email or apply. Kevin, thanks, buddy. Again, congrats, and I really appreciate you spending some time here to throw a different twist at the deal structures.

Thank you, Chris. My pleasure.