Why Creative Finance Deals Are Thriving in Today's Market

Welcome to the Smart Real Estate Coach Podcast, your source for actionable, real-life, practical investing advice. Each week we help you make a quantum leap somewhere in your business, your finances, and/or your life. Subscribe, leave a rating and review, and learn more at smartrealestatecoachpodcast.com. Okay, it's Chris Prefontaine, your host again, with actually another solo cast. Smart Masters Class today. Just me. I thought it was super timely to chat with you today about 2 things. One, why creative financing is thriving big time for those that want to grab onto it right now in this market and why that's going on and some stats around that. And it was provoked by a few things that I'll share with you as I'm going here. And secondly, I want to wrap it up with because of all these things we're about to share and I'm about to share because there's no conversation. Then what kind of quality and quantity of income are we talking about? Okay, so let's talk real estate in general here because of this lovely market we're in. Because if you're trying to make sense of this lovely market right now, you've probably heard people say things like, and I, by the way, I hear this all the time because I lived 2008, but I hear people saying all the time, like, feels like '08 all over again. Well, first of all, there's dramatically different stats that I'll share with you. But here's the truth. It's not like '08. This is not. And you're going to understand why, or when you understand why, you'll see where the real opportunity is, which is why I wanted to share this today. I did a sort of a mini version of this on our weekly, what we call a Monday rant on our community channel in Slack, because I think it's important for everybody to know how empowering and how cool this is right now. So before I do that, Let me just call your attention to someone I recently had on the show. He was on in September of, oh gosh, '25, and then he's going to air on April 15th to 26th. You go back and see that one. Go review the interview. It's with Lon Welsh, and he's the founder of Ironton Capital. And there's some cool things we talked about in the interview, but let me just give you a teaser. There are things like You know, hordes of people, fear of losing their jobs due to AI and ChatGPT, all that. And it means that there's panic out there, right? By the way, doing creative real estate, terms real estate, and just stop worrying about your job, which is the next— is your biggest risk by far. Just stop worrying about your job and move over to terms real estate, creative real estate. If you're already here in our community and you listen to this, Congrats. And if you haven't, please understand, I've been saying for years, your job is your biggest risk. So this fear of losing their job in the next 1 to 5 years is real. And so when there's fear or uncertainty, people need a guide. They need you as the creative financing expert. Fact. Okay. Next thing. The average age, I was kind of surprised when you shared this with me, of first-time homebuyers has increased to like 40 years old. Wow. And so you've got this gap, let's just say 25 to 40, say 30-year-olders not wanting to rent in your normal apartment or not wanting to go in a complex and go up and down the stairs or not wanting to let the dog out, going down the stairs and up the stairs. So the rent-to-own is a great answer. Huge demand because lots of people don't want to deal with that. They want a nice house and rent-to-own does that. Next stat, I've been screaming for years that it was 33% of the United States population or homes have, 33% are debt-free, free and clear. Then it went to like 37%. Well, it's 40% now. 40%. I'm going to come back up to this point later because that's one of the major things that differentiates this market from '08 big time. And then the last thing I want to talk about, then I'm going to jump back into the comparison and kind of where it puts you when you take advantage of it, is you're kind of catching the market in general. And this was Lon's opinion. And I got to say, I kind of agree with him. Where it's flat and swinging up, flat and swinging up. So his point was just emphatically, his point was, well, you are definitely going to look at '28 and '29, look back if you didn't capitalize and thrive during this and wish you had, right? And I agree with that a million percent. So, okay, back to the 2008 comparison that people get stuck on. Back in 2008, the issue wasn't high interest rates like it is right now. They're not crazy high, but they're higher. Rates were actually pretty normal in 2008, around 5 or 6%. What was the real problem then? Banks were giving money to anyone, as you all know. And so no income verification, adjustable rate loans, zero accountability. So when prices dropped like they did, I lived it. Everything collapsed, right? Just the way it is. Foreclosures skyrocketed, credit froze, literally froze like you flipped a switch. That's what happened. And banks disappeared overnight. And that's when creative financing once again became a lifeline. It wasn't about it being a strategy. We talk about it often as being a strategy. What I tell people was, A, it was a necessity, and B, it's been around before banking existed, right? Read some old books like with some of the wealthy families in America, and you'll see they were doing owner financing and what they called master lease purchases before banking. Crazy. And as Smart Real Estate Coach, We leaned into this real hard coming out of that crash. We leaned into it real hard during COVID too. Things like what? Seller financing, lease purchases, sub-to deals. Those are the 3 ways you buy primarily. There's a 4th that's more of an assignment. But the fact is, that's what we focus on because if you couldn't get a loan, you had to create one, right? Our deals skyrocketed. When I talk about COVID March of '20 and April of '20 skyrocketed. I think to this day, maybe record months. Because why? Because people were in the uncertainty panic mode, just like that group of people right now, like raising weekly, rising weekly of how many people are worried about losing their jobs, right? And so now we can help them. And homes back in 2008 had little to no equity. Wait till you hear that stat when he goes over that. That was a shocker to me. Lots of them are upside down, right? Well, fast forward to today, it's a completely different picture for, and for some it's a different problem, Rates are high, higher, 6%, 7%, even pushing higher as of the time of this recording, this filming, if you're not watching this on YouTube. But what about lending? It's actually pretty solid right now. We don't have bad loans, generally speaking. We have expensive money right now compared to then, and that sort of changes everything. And then I'm going to reenter the conversation of the debt-free homes. They, we have a crapload of equity across the country with 40% of the homes being debt-free and the other ones having a lot of equity in them. That's different than '08, dramatically different. So here's what's happening right now. Sellers are stuck. Think about this. They've got 2, 3, maybe 4% mortgages and they don't want to give it up. I hear it like weekly. So some of them don't sell even though they want to sell or have to, or have a job relo or something like that, right? So it keeps inventory really low. And at the same time, buyers are stuck too. Why? Because payments at today's rates just don't make any sense. They do on our rent-to-own program, which makes it shine, by the way. So we can help. Most of the rent-to-own programs are going to qualify them for that future mortgage that we have. Other people don't qualify buyers. We do. We care about them getting cashed out. So right now they have this ramp where they can ramp up more down payment or ramp up their credit or ramp up whatever they're working on in life or seasoning because of a new job. While they have a manageable payment and build up to that higher payment, or maybe rates will be lower then by the time they cash out, who knows? So we've got sort of this weird standoff. Specifically, not everyone wants to move. Perfect, because this is exactly where creative financing comes back into play once again. Again, remember, whenever there's chaos, uncertainty, need of a guide, fear, anything like that, but this time it's not about survival, it's about complete leverage. In 2008, you sort of used creative financing, and '09 and '10, you sort of used it because you had no other choice. Today, we're going to use it. We're going to show you how to use it because it gives you an edge. Think about, think, just think about that. Gives you an edge. Instead of negotiating on price, you're negotiating on terms. Instead of fighting over interest rates, you're working around them. Instead of relying on banks, you literally become the solution. And I love when we don't have to rely on banks, right? Since my whole dilemma or debacle back in '08. And so here's the shift I invite you to think about and to understand, and then I'll move you into the quality of income so you can really get your hands wrapped around this. And then I hope this empowers you in some shape, form, or fashion to just go out and crush it no matter how you're going to do that in the next 18 months or so. 2008 was distress-driven for sure. Today is structure-driven. Back then you're solving a lot of foreclosure problems and related. Today you're solving sort of payment problems, if you will. And the seller doesn't need to be in trouble today. They just need to feel like they're stuck or unsure. And if you can step in and offer flexibility, that's where the deals ramp up specifically. And this is why the strategies we teach at Smart Real Estate Coach are more relevant now than ever. I've been at this, this is my 35th year. It's about my 13th year with Smart Real Estate Coach and doing deals just solely laser-focused on creative. And I'll tell you, it's more relevant than ever because the focus isn't just buying houses, it's controlling a whole bunch and controlling that by way of the terms. That's it. And when you control terms, you control the deal. No matter what the market's doing, it can be going up, down, sideways. When you control the terms, you control the deal. When you're not signing personally and dealing with a conventional bank, And you control the terms, no matter what the market is doing, you sleep better. Trust me. So if you're sitting on the sidelines right now, either, I don't know, waiting for rates to drop, which would be more conventional, or waiting for things to change, or waiting for you fill in the blank with your personal life, or a crash or whatever else you're waiting on, you're missing it. And you will most definitely, I agree with Lon on this one, you would definitely look back in '28, '29-ish and say, you know what, I should have I should have done that. I definitely agree with a lot on this. Now, hey, we might be off for half a year or a year, but I'm telling you, this window of opportunity is here because the opportunity isn't in the cheaper money and the low interest rates and all that. It's in a better, smarter, long-term structure. It's the creative structure. It's real estate on your terms. That's the game, guys. And the investors who understand this sort of shift and continue to watch what the shifts are, are frankly the ones who are going to win in this market anyway. And smart investors in our amazing Smart Real Estate Coach family, that's who's going to win. That's it. Now, if this helped you see your situation differently or the market differently, if it helped you to start looking at deals through the lens of terms and not price, that's a really good thing. Like, if it did any Piece of that. Go through this again and let's do it. I'm a little rubbed up and so I'm going quickly with you because as soon as you start looking at the market through a different lens and looking at, hey, I'm just looking to help people, et cetera, that's when everything changes. And in addition, you get to start speaking with sellers and finding out 2 things mainly, which I've said for years. One, what problem can you solve? Like, just listen for that. I'm just looking to help people. If you just go out and think that, I'm just looking to help them. I'm just looking to help those you can help. Great. Those you can't, it's okay. So one, what problem can you help solve? And/or two, what goal can you help them achieve that the conventional market won't or can't? For example, I want to keep my low rate, but I do want to move. For example, I have a debt-free home. I don't have a problem, but I want the best price. I want it over time to spread out the taxes or for estate planning, whatever it might be. I could go on with 100 examples. Okay. I'm going to wrap with that and invite you to just keep an ear to the ground with this stuff. And I invite you to give me a call and let's talk about how you can and should take advantage of creative real estate, especially in the smart real estate community family. Now, let's talk about, as I wrap up here, what kind of income that you can create, because this is about, and I'll just kind of bring you back to my story a little bit before I wrap here, but this is about quality of income versus quantity. Quantity's great, but I want you to focus on replacing whatever income you have or doubling whatever income you have and doing it so with a quality of income. From 1991 when I started in real estate till 2008 crash, February of '08, remember it clearly, I was running on a proverbial treadmill. In other words, there were some really good income years. I don't, I, our lifestyle's been phenomenal. My wife and I have been married 40 years this summer. It's all great. However, every January I remember going, oh man, I gotta, like, I literally gotta start over. I gotta reset the clock and do this again. And every single January. And one of the things, or one of the rules I set up coming out of the crash, there were many, was no longer, I'm not going to do this on a transactional basis anymore. And that's where the 3 paydays were created and I trademarked it federally. And we've been doing that. I've been doing that since 2013. Now, talking about quality of income, let me just give you a summary. Some of you may have seen this on my master's class. You can just go to smartrealestatecoach.com/masterspodcast and you'll see a It's a free class for about 30 minutes. But one of the things in there is we took a 12-month look back, myself, my son Nick, my son-in-law Zach, and when we were doing deals as a team and we said, all right, 12-month look back, I think it was like 22 deals we did. This is the quality versus quantity difference. Now, 22-ish deals, whatever the number was, it was around there in that 12 months. Forget the one, the months before that, forget the months since then, just in that 12 months. Those deals, those 22 or so deals created $593,000-some-odd in payday 1s, $6,500 a month, monthly clear income between what we were paying on the house and what we were collecting from our tenant buyers while they were in the home, $6,500 a month clear. And about, I think it was $800-something thousand in payday 3s. Now just picture that. The 1s are coming in mostly upfront, sometimes over time. The 2s are coming in every month. In the payday 3, if you, if you're not familiar with the paydays and this podcast is new to you, definitely go to that master's class because I explain what the paydays mean. Not the time for it here to start with that basic, but then the payday 3s cash out when the buyer is mortgage ready. So if you put that on a spreadsheet, that's 1 point, whatever it is, $6 million or so in paydays accumulated over that 1, 2, 3, 4, 5 years, depending on how long the deals go. But that $1.6 million, and let's say 10% default, right? $160 grand less, not too bad. Then what happens is you have this staggering of income that now allows you to get off the treadmill. And that's a different quality and it's a different plan and allows you to scale or jump off the treadmill in a planned fashion, enjoy life so much more, or both scale and enjoy life a whole bunch more. Because couldn't you, after that 12-month sprint, so to speak, couldn't you take I don't know, 3 months off, the payday's not going to stop. And now you come back and you can scale it and just again, enjoy yourself. Oh, and I want to address this last thing. I keep saying one more thing. This can be done in any asset class, guys. I mean, most recently a 4-unit, a 6-unit, our own office building. Shoot, people are doing boats and planes. They still do owner financing. So I don't know about lease purchase on those, but owner financing. So I wanted to open your eyes a teeny bit. I hope I did. And I'd like to hear from you regarding the market, the state the market's in, what you can do to capitalize on it, and not only capitalize, but thrive big time and set yourself up for a quality of income that's in the vicinity of 2, 3, 5, a decade, maybe years that allows you to have a lifestyle that frankly you deserve. So if you have a J-O-B and you're listening to this, Please let us help you do something about it. The Smart Real Estate Coach family is different. We care about you and we care about doing deals, period. You'll learn that when you learn more about what we're doing. We'll bring you into the office. We'll let you see what the deals look like for sure. We'll let you see what the Deal Lab looks like. It's a 2 and 3/4 day event we do, and you'll really, really have an eye-opener. I just wanted to touch on the surface here. And invite you to learn more about the Smart Real Estate Coach family. Guys, please rate and review the show. That wraps up my time together. I could keep going, but I hope again, in some shape, form, or way, I empowered you even a little bit to capitalize on what the heck is going on right now. Because you will say down the road, Chris, I'm so glad I did that. I'm so glad I heard that episode. And I'm not tied to that ego-wise, guys. I'm just saying, I'm just exposing you to what's happening out there. And I invite you to be proud of it. Rate, review the show, share it with as many people as you can because they too deserve to not be strapped to a W-2. And if they're in another niche in real estate that perhaps, or you are, that perhaps is a little more predatory, you know, you're trying to buy properties at 60, 70 cents on the dollar and the sellers are hanging up on you, you will love, love the phone calls you make here because you're just helping people and you're helping it in a win-win-win fashion. You, the investor, The seller as well as the buyer. Make it a great week. Hope you enjoyed the SoloCast, guys. Let us know. You know, guys, for years I've been at the business now, 34, but for years we had some rent collection things in place, we had bookkeepers in place, we had marketing to go to all these different websites. Now we simply go to prosperity.io. It was built with us and you in mind. You can market your first property if you're brand new, you can scale if you're already in the business, but you can market your properties across 50+ platforms in one click for way less than hiring a pro. You can easily collect rent online, so it's like an escrow service for you. You can track payments, you can get monthly reports so you know how your investments are doing, or if it's your first investment. And no tech headaches, no guesswork, just smart tools to help you grow with confidence. Get started now at prosperity.io because every portfolio starts with a powerful first step. All right. Thanks for tuning in to the Smart Real Estate Coach Podcast. 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