Wholesaler Turns a "Dead Lead" Into a Subject-To Deal

Today we're going to show you how a wholesaler slash real estate agent was able to take a PPC lead that did not fit in any other bucket and be able to turn into a $50,000+ creative financing deal. I'm Zach Beach. I'm the CEO of Smart Real Estate Coach. Welcome to another Deal Structure Sunday where we outline exactly how our family has been doing creative financing real estate deals for well over a decade now and how we've been able to build an amazing community of real estate investors that do the exact same strategies, buying creative deals without cash, without credit, without going to banks, and exiting on our federally trademarked 3 Payday System. You're going to absolutely love this deal structure, Sonny, because this gentleman that we're bringing in is able to squeeze out 50 Just over a quick 24 months from a deal that most wholesalers, most agents would've thrown away. Hayes, welcome to a Deal Structure Sunday, my man.

This is Zach. I appreciate it. Thanks for having me.

Love it. As you can hear, he has a Massachusetts accent, so we got some more people from New England here. I'm just playing. Hayes, I'm so excited to have you on here. The moment that you joined our community, I knew you're going to absolutely crush it, coming from your background. And I knew just having this, a little bit of tweaks when it comes to how to structure these deals, that it would completely open up your real estate business. So if you could, why don't you just let everybody know kind of who you are, where you're located, and walk us through, you know, what, how you've been doing here at Smart Real Estate Coach.

Yeah, you got it. So I got into real estate in 2021 when I moved down to the Florida Panhandle and started out as a realtor and got on a team there. Learned how to be an agent fast, got burned out just as fast. Uh, did about 100 deals in my first 24 months, but learned that driving around town showing buyers 10 and 15 properties only to tell me that they were just going to rent got frustrating.

Mm-hmm.

So, um, pivoted into wanting to do some wholesaling in 2023 and started out driving for dollars and then worked into some inbound marketing type deals. It was doing well with that, but I was quickly finding out through, through the wholesaling and through being a realtor that there was a, there was a gap that I wanted to bridge between doing a cash deal fast for cash with a seller or being able to list it for retail. And that gap in the middle was, for me, was creative and learning how to do, um, do deals on creative terms. And I knew there was a bridge there to be built. I just didn't know where to find it yet. And then, uh, honestly, completely random of opening an email one day for carrot.com. That's where I have my wholesale website through. Uh, Chris was there. There was a little interview that he had done on one of their podcasts, and I was walking my dog and listened to it. And, um, whatever he said in there worked because I, I jumped in with you guys, I think the next week.

I love that. And then you ended up, uh, coming out to our Deal Lab. So we host an event like roughly every 6 weeks where we literally do deals with the people that are in, uh, in the event. Maybe tell me how that— because I saw a light bulb go off. I remember when you were at that event. Maybe talk about how, you know, seeing it in person Maybe it helped bridge that gap as well.

It did, it did, because there was— and luckily it was good timing when I signed on with y'all. I think the Deal Lab was 2 weeks away, so it was good to keep that momentum of just get there however I can. And yes, I think there was skepticism on my part. Not— yeah, I would call it skepticism, and just, I think, a lack of clarity of, um, creative finance felt like this, this thing that other people did, or people that were way smarter than me, or even way Way more seasoned than me, right? You got to have 20 years in real estate investing in order to be able to properly underwrite a creative deal. So that cleared the fog or lifted the veil, so to speak, of going to Deal Lab, seeing it written out on the board and going, oh, this—it's not rocket science. It's just a matter of listening to that seller, seeing what they need, and then trying to structure the deal around it to fit their needs and also be a win for us, and then ultimately a win for the buyer.

Yeah, for sure. No, it makes total sense. Well, because I got to know you a little bit better when we were there as well. I— you played like D1 football, didn't you? I did.

Yeah, yeah, that was the background, was sports. And then, um, and then found my way into real estate once I moved down here. But yeah, big, big sports background.

Yeah, uh, and not like just like any like D1 schools. I believe it was like a really good D1 football school, was it not?

Yeah, yeah, uh, Auburn University. Yeah, yeah. And to be fair, to be fair, I did my time at a D2 school as well, so I got a little bit Both worlds.

Yeah, for sure. Well, we always know that like anybody that comes from like a sports background, military background, they they tend to be able to really embrace the structure of our our credit financing deals in our our three payday system, and we tend to see people become successful relatively quickly when they have those backgrounds. And I think it's just because when you have a coach that's able to kind of share with you exactly what to do. And when to do it. And then you are used to that in your background. Like, you can just imagine. I think you played, uh, defense, right?

I did. I played linebacker. Yeah. And, and to your point, I tell people that I'm a really good soldier. Yeah. Um, and I think that speaks to like what you said, being in a structured, disciplined setting. And like you said, having a coach saying, this is the path to take. I'm really good at taking the path once the path has been shown to me.

For sure. Yeah. And just so you guys know, like, I know I look like the same height as, as Hayes here on this video, but he is significantly bigger than me. I promise you that. All right. Very cool. Love that. And I'm glad. I'm so glad that we're able to continue to help you through this process. So, all right, you get this lead that comes in. We're going to walk through the whole deal structure in a second. But just so we can kind of paint the picture of like how you were working directly with our coach in order to get the deal done, maybe walk us through like, all right, so you got the lead and I believe you said it was like a PPC lead. Maybe just walk us through, like, your connection points. Like, you get a hold of them and then you brought in, I believe, was it Rick that you were working directly? Just walk us through that, that kind of handholding process.

For sure. So he did come in as a PPC lead, which is generally it's people who are wanting to sell fast for cash, or at least that's how it's advertised to them on the form that they fill out. And any seller-facing language is gonna speak to sell fast for cash now. He came in and again, prior to June, this would have been a dead lead for me because he had it listed and he had it listed himself with a flat fee brokerage. And he was in a panic when he came in that they're going to be moving at the time in about less than 2 months. So he needed to do something fast with it. He was having no luck with it on the market just because of where the market is and where he needed to have it priced because he had only owned the property a year. So there was no equity in it for him at all. And he was stuck, and I would have been stuck prior to going through this. So I immediately talked about an option that could work for him, which was me taking over his payments, taking over the debt to service that for him. So that way he doesn't have to worry about the property anymore. He doesn't have to worry about the payment, and they can just focus on getting to Virginia. He loved the idea right out of the gate, and this one moved fast. I think he came in on a Wednesday. I went to see the property on Friday. I rolled Rick into that call with a sit-down with him and his wife at their kitchen table. Okay. Yeah. Able to answer any questions that they had at that point, any concerns that they had, maybe even some skepticism that they had. But leaving that meeting, they were ready for me to put something in writing and send it over to them. And I did. And they signed and we're off to the races.

Quick, quick motivated sellers, right?

It was. It was, I think, 4 days from lead to contract.

That's not normal, but that's absolutely amazing. Yeah. Interesting enough, like, you're the coach that you're working with, Rick, some of his first couple deals, because he had a wholesaling background as well, actually came from— I don't know if it wasn't PPC, but it was like a Google search. He was able to create 2 deals that were like $100 grand apiece.

Wow.

So perfect for having that background set up for that deal. So you're at your appointment, right? You're walking through your appointment. You're a realtor, wholesale. You've seen probably hundreds of properties.

Yep.

Really, the— I would say the main benefit, you could tell me what you think here, is like when you went in and sat down at the kitchen table, was Rick really able to just kind of take over and have a conversation around like buying it, which we're going to talk about subject to right now, buying it subject to, to kind of put them at ease?

Absolutely. Yeah. Yeah. It was, it was that conversation. You know, I think they were— while they were super motivated and they had a ton of urgency to get this done, there were still a ton of outlying questions or remaining questions, me going to that appointment. But it was the sit-down, putting Rick on speakerphone so that we all, you know, we had a roundtable, so to speak, with him on speakerphone, and he addressed every single question or concern that they had.

I love that. I love that. That's exactly how I learned in this real estate business when I first started 12 years ago. I would have, uh, Chris, the founder of the company and my business partner, uh, I'd have him call in at those appointments so I could kind of just sit down. I got to just be the face and, and build the rapport and build trust, and then I let them kind of take over and And really answer the actual detailed questions so we get this thing signed up. So awesome that you get to kind of learn why you earn, per se. Well, that's awesome. Okay. Any other nuances? Maybe just talk about the seller's motivation a bit. I know that they were extremely motivated, but maybe walk us through like why they were so motivated and maybe even walk us through like you said, the current market in Florida, right? I believe this deal is in Florida. Maybe how that kind of came into play as well as I pull up this deal structure sheet.

Well, yeah, it was just the market has softened here, especially on the retail side. And so for them, there was no path to sell as far as their personal money that they have set aside, their personal savings or income. There wasn't a path for them to sell on the market because they would've been bringing a big check to closing. Once you, even with them listing it themselves with a flat fee brokerage, you're still going to probably likely have a buyer's agent come in. They don't work for free, so they're going to ask for a percentage of commission. Buyers in this market, at least heavy in our Panhandle area, are asking for buyer closing credits to help them with whatever— cover the closing cost or buy down their interest rate. So it wasn't, it wasn't going to go easy for them to sell it on the market. And once where they were listed for, it just, it was very clear there was— they were not going to sell for the list price anyway. So they were really upside down in that regard. Their urgency was that the wife was taking a job in Virginia, uh, back where she's from, but they're going to have a gap of income. And so they were going to have a loss of income, and, and their biggest fear was after, you know, the end of September, we won't be able to make any more payments on this property. Um, so that was the big SOS, you know, light shining for me that it was time to get busy and, um, yeah, put a contract on it.

I love it. And obviously you could have went both with a lease purchase or subject to. Any reason why you guys went down the pipeline of Of buying it subject to?

Uh, I mean, for me, it was just a matter of, of if I'm going to take on the risk of it, to have ownership of it as well, to get the benefits of depreciation with the property down the road. And I think for them, just hearing that they were no longer going to have a payment, that they could step away from the property, that they weren't going to have any responsibility to it anymore at that point, that was the biggest, um, sigh of relief for them, figuratively and, and literally. I mean, you could see the stress Drop when I just said, hey, you can just focus on moving and I'll take care of the property from here.

I love it. I love it. This is what creative financing is all about, is just solving problems. When we walk through this deal, I just— the main question that comes to my head is like, hey, how many of these deals have you kind of passed up because you didn't know the strategy from even these PPC leads? I just— I don't— you don't have to give me a number, but I just— I don't know.

I thought about that on the flight home from the Deal Lab of thinking how many leads I've just said, hey, sorry, I'm not the best fit for you. Good luck with selling. Yeah, it's, it's, I've burned a lot of bridges in that regard.

Well, let's dive into the deal so we can kind of break down this a little bit further. So this deal, Hayes is currently put under contract. Do you guys have a set close date or are you, or is this deal contingent upon you finding a third-party buyer?

It is contingent on finding a third-party buyer and we shrunk that a little bit to 60 days because of their situation with needing, knowing that they're not going to be able to support a payment. Much longer. Obviously, we talked about the idea of possibly extending that if we get down to crunch time on that 60 days. But we do have a contingency in there to get a buyer, and luckily we've got some buyer activity on it already. No, I love that.

I love that. Awesome. Okay, so everything we're gonna talk about here, we're gonna walk through the deal structure of how we bought it, right? The actual numbers. And then we're gonna have some projections here because, as you heard, Hayes is currently on the market. And if you didn't catch that little nuance. We train all of our investors to have contingencies in place so that way they don't have to commit to a monthly payment right away. Eventually, as you build up a real estate portfolio, you actually can get better deals if you commit and you kind of take out some contingencies. But if you're just using our, our contracts, they already are built down, built in. So if you guys want to learn more about exactly how to work with us and be able to structure these creative deals, we'll include in the show notes But it's just smartrealestatecoach.com/advisorysession as well. You can speak to one of our, our teammates. All right. So let's walk through this. So this deal type, I believe we bought it subject to the existing loan, correct?

Correct.

And if this is the first video you've ever seen, right, of being part of our community, this is when we buy a property, title transfers to us, but the loan stays in the seller's name and we just continue to make payments on the seller's behalf. This is how, and the main reason why Hayes is able to take this deal that would actually have cost the seller money and be able to create— it's gonna be over $50,000 all 3 paydays because of this strategy. Awesome. Okay, so where did— and we found this from a PPC lead. So that's just, if you guys don't know what that means, it just means pay-per-click. It was, was it Facebook or Google?

Google. Yeah.

Love that. All right. And then the term of this deal, I believe you told me it was— it's infinite. So there's no end date on the contract. It's just when we have the ability for 2 things to happen on this type of sale, when you buy something for— that's roughly what the seller owes and that's what the retail is in today's current market. You need 2 things to happen. You need the price to appreciate or we're going to sell it on rent-to-own and manufacture equity. And then you also need the principal to pay down over time, which creates equity. So we always let the seller know, look, we'll do it. We'll get you cashed out when we can. But for now, we're just going to take it over and we'll let you know when it's to be cashed out. So no term here. What was the purchase price of the debt that we bought it for? Yeah.

So taking it at what is owed on the property, which is $328,113.

$113,000 to be precise. Okay. And the seller's got no equity in the deal. And then we are currently listed with or marketing the property to rent-to-own buyers at what price? $369,900. Awesome. Okay, so we got this deal lined up, right? And I believe you told me the interest rate on this property is like 4.75% or something. It is. Yeah, 4.75%. Yeah. The reason why I'm bringing this up, guys, is because amazing rate, right? Below current, current interest rates, which makes— this is why this can be a good deal. This is the asset, right, that he's buying is this interest rate. But in the future, we could do a rent-to-own deal. But in the future, Hayes has the opportunity to go sell this thing later using a different strategy known as a wrap mortgage or seller finance, and he could create an arbitrage or a difference in the interest rates in the future as well, because the current market's 6.5%, 6.75%. So there's always an opportunity when you have a great interest rate to make even more money off of this transaction as well. All right, so we got some projections here from our buyers, and I know you said— how long have we been on the market at the—

at this recording? Uh, we've been on about 10 days.

About 10 days. Okay, and you got— you got good interest?

Oh yeah, yeah, got, um, one buyer who's submitted what we call our next step forms where they've already seen the property, they want to move forward to get qualified, and then we— I have a second set of next step forms coming in today.

Oh, I love it. And And being a part of our community, I'm assuming you're working those next step forms with either your coach Rick or Nick at this point.

With Nick. Yep, for sure.

So you got the head cheese there too. So Nick, my brother-in-law, who actually like built out this entire rent-to-own backend, drastically improved it. He's working directly with Hayes right now. So this is what I mean when it comes to literally we lock arms with you guys in the trenches, helping you get some real estate transactions. So All right, we got the projection at 10% down, which can come upfront or over time. So just you guys know what that means. It's every single buyer that we sell to has, you know, they have their different— they have their own individualized plan, custom plan based upon how much they have in their bank account, how much, you know, they're going to have over time. Do they get bonuses? So in a true sense, this could be like $20,000, $25,000 down. And then additional, say, $10,000 plus over the course of their rent-to-owner lease. Give me the monthly payment that you currently have. Yeah, it's going to be $2,228. Awesome. And then the payment that we're— for the rental is how much for our buyer?

It's going to be $2,212.

I know most people are sitting there and they're looking at this and they're going, whoa, you're going to lose money on this on a monthly payment. Here's some key components, right? This is another reason why it doesn't check off the box for another investor to come in to rent this property because, you know, there's not there's not room. But here's here's the reality, right? Because we sell it on rent to own, there's three income streams, right? Payday one, which is your non-refundable deposit. Payday two, which is your cash flow. And payday three, which is the equity that's built in. So because we have those three income streams, it allows us to create profits. Even if one of them is not profitable. So, you know, the, the negative was a negative $16 a month that Hayes is gonna have to deal with. He can pull that directly from his Payday 1, right? And we added up, let's assume this buyer needs 24 months. That's what we made projections on. We, if we do that over 24 months, was like $300 and—

$384. Yeah.

$384. I mean, Hayes is going to spend more on Starbucks coffee over the next 24 months than he is on this property. So I just want you guys to hear that because most investors would look at this and be like, well, this deal, this isn't a good deal. And it's just because they're looking at pure cash flow. And because we have these strategies and because we sell via rent-to-own, it allows us to still make a significant amount of profits on this individual deal. All right. Bought it for $328,000, sold it for $369,900.

What's our price premium? It's going to be $41,787.

$41,787. All right. And then the average principal paydown or the amount that when you pay the mortgage payment that's coming off the principal balance is how much per month?

Yep. $451.76.

$451,000. And then we'll just multiply that by 24 months based on our projections.

Yeah, it's going to be— yeah, that'll be roughly $10,842.

All right. So you got $10,000. So we got— we increased the purchase price by $41,000 because we're selling to our rent-to-own buyers, buyers that need time to qualify for bank loans because our buyer is paying us. Right, monthly rent. We're going to take that payment. We're going to go pay down the principal balance on the loan. So we have $451 a month. So that's going to be another $10,000 in equity that's generated just over 24 months.

Right.

And this deal could extend significantly more. We've already collected $36,990 from our payday one because that is credited towards the purchase price. So what's our backend cash out or our payday 3?

Yeah, it's gonna be roughly $15,639.

$15,639. Love it. So $36,000 upfront, he's gonna have to pay Starbucks money all, all during that timeframe. And then we get another $15,000 at cash out, which gives us how much profits over 24 months?

Yeah, $52,245.

$52,245 from a deal that he was literally going to throw away. And it's probably, as we were talking about earlier, Hayes has probably thrown away more $52,000 deals than he would like for you guys to know it. But he proudly came on here, uh, and, and talked about this because this could absolutely— if you're a wholesaler right now and you're getting these types of leads wholesaler, fix and flipper, right, agent, and you have these types of leads coming in and you don't know what to do with them yet, creative financing really does bridge that gap. Because now, how many times can you pull out a $52,000+ deal from leads that you are literally going to throw away? This is your opportunity. If you're watching this right now and you're a wholesaler and you're throwing these deals away, If you are not learning these strategies in today's market, you're throwing away millions upon millions of dollars over the next coming years. I promise you that. Now that, hey, now that you've kind of executed on the front end and now you work in the back end of this deal process, maybe walk us through like some aha moments throughout this process or anything that like you learned as you were going through this particular deal.

Yeah, good question. Um, honest, it's still the biggest aha moment for me, whether it be this deal or the next one. It's, um, and it's— this is pretty nuanced, but I think it's important for me. It's the, it's the principal paydown aspect that I've never really considered when it comes to a creative finance deal. Um, this idea that you're creating a spread here, that, that again, unless you know the structure and you've been coached on it, it's something that, at least for me, um, It's out of mind. So this idea of looking at a payday 3, that was such a foreign idea to me before getting into this group and before becoming an associate with the program to see where you could really create a spread. And like you said, just over 24 months, we're looking at a little over $10,000 in additional equity being built. And that's over the minimum amount of time. And like you said, this could be extended even further to create even additional equity. Um, all from, again, the biggest aha for me is all again because of, let's just call it 50 days now that I've been an associate with this program. The aha is that 50 days ago I would have told them good luck, um, hope you get your home sold. So that's the biggest one is it's, I guess the aha would be that I, I was, uh, talking to Chris recently and saying that a seller might not, or I'm sorry, not Chris, I was talking to a realtor friend of mine, uh, who was a mentor to me. He was the team that I joined when I first got into real estate. And I said, I've gotten even in 40— at this time it was like 45 days into the program— I said, even in 45 days, a seller might not want to take what I have to offer, but there really isn't a seller unless they're just too far upside down. There's not a seller that I shouldn't be able to offer an option to, to get their home sold. Again, whether they take that or not is their decision, but I can at least offer an option to sell it. I mean, it could be a number of different ways, but with this creative bridge, again, closing that gap for me, I can, I can have a conversation with anyone whether they want to, you know, move forward, their decision. But I can have the conversation and I can offer a solution. That's the— so to answer your question, it took me a roundabout way to find it, but that's the biggest aha from this so far.

Oh, I love— we always, we always tell agents, uh, wholesalers, I mean You're already in the business. You already are doing the hard work that most people that are brand new, that's what they're going to work through is like building up their lead flow and having conversations and being able to educate sellers. Like you guys are already doing it. It's like now that you can make an offer of like, I can buy your property like with cash, I can offer you a creative solution if that's the best fit. I can also list your property if that's the best fit. So there's not a deal, as you mentioned, that That comes across your desk that you can't technically do at the end of the day, which is, I mean, talk about the compound effect over the next 3 to 5 years. It's going to be amazing to see where your business is at.

Absolutely.

Being, having kind of that 3-pronged approach as well. So I would say this, let me, let me ask you this and we'll kind of wrap towards the end. We have an agent watching this, a wholesaler watching this video, and now you get to kind of see behind the green curtain per se and actually execute a deal. Any words of wisdom or thoughts for them so that way they can kind of lift the veil without potentially having to come to one of our events or, or go through some of the studying that you did, uh, when it comes to these creative strategies in Smart Real Estate Coach?

Yeah, I think I would simply tell them, uh, or to expand their mind that they don't have to be a one-trick pony. Um, and for me, I was a two-trick pony, but that was— they were very far apart, again, between a cash deal and listing a property. There's a huge gap in the middle. Um, in this community, again, I, I know I keep repeating myself, but that's the best, um, analogy or metaphor. I'm not sure which one it is, but it's build that bridge across to be able again to offer a solution to anyone. So my words of wisdom would be just get curious that there are other ways to serve these sellers. There are other ways to build a business, um, not just from the one angle you have or maybe the two angles you have, but for the most of the realtors, I mean, it's Yeah, it's, it's one path and it's a really narrow path. And I feel like it's getting more and more narrow with this current market, that it's tougher and tougher to sell a property on the market and to make a seller, uh, to meet their needs or to meet their goal of what they were looking for with the property. Because most of the time they're so equity and price oriented that you coming in and showing a net sheet as a realtor It's usually going to leave them with a bad taste in their mouth because they're not getting what they want. So now to be able to offer an option to say, hey, if you're okay with a little bit of time, you will get more money out of this. And that's where they're so focused most of the time. So that would be the word of wisdom is get curious and then get involved and watch your— at least for me, my knowledge base, again, in less than 2 months has expanded beyond— I don't even know the word, but it has. It's expanded. I'll just keep it at that because it's— and I'm— this is just the beginning. I can't wait to stay in this and see where this goes and where I grow.

I love it. I love it. You guys heard it directly from Hayes. Guys, again, I'm Zach Beach, CEO of Smart Real Estate Coach, and this is the Smart Real Estate Coach YouTube channel. If you have not subscribed yet, go ahead and click that subscribe button. If you want to see exactly how you can enter into the journey just like Hayes has, Especially if you're an agent, wholesaler, right? And you're trying to bridge that gap. Go to smartrealestatecoach.com/advisorysession. We'll put it below as well in the notes. Everybody have an awesome rest of your Sunday and we'll catch you next week.