Owner Financing Real Estate: Best Practices, Horror Stories & Lessons Learned

Hey everybody, this is Toby with Global Integrity Finance, and today we're here with Jim Benton and Kirti Joshi, and we're going to talk to them a little bit about who they are, what they do, their relationship with Global Integrity Finance, and then really dig deep into owner financing. We know that this is something that has become kind of a big topic with a lot of investors who don't want to be landlords but want to build assets, and we understand and believe that owner financing is the most lucrative way to do that. We brought them in to talk to them today. They are very educated and experienced in that. And I just got to turn my phone off before I get in serious trouble. But so we're going to talk to them about it. We're going to talk about best practices, horror stories, all that stuff. But first and foremost, I want to introduce you to Jim Benton and Keerity. And, you know, let's talk about your guys' history. You guys have been with Global as a financial partner for what, a little over 2 years now?

Right.

And in that role, What is your guys' position as a financial partner?

So we do the back-end lending for notes and for syndicated deals.

Syndicated? Okay.

Sorry.

She's nervous on camera. It's okay. I want this live. So great. What brought you to Global? I mean, you know, you guys have been with us for a couple of years, but why? Why Global? Why not somebody else?

You know, I'll answer and then I'll let you answer. Initially, we came here to borrow money and we were new in real estate, just looking around for some opportunities to see who we can build partnership with. And for us, getting to know you and the company and all your processes and how things work, we not only just wanted to potentially borrow from you, but we were also wanting to partner with you on the backend process too.

Okay.

Yeah, we initially came to borrow money and I think at the time about 2.5, 3 years ago, you actually had a group where you were helping newer people in the investing world find properties. That attracted us. We had, prior to that, we'd found a lot of our own properties, but we're always keeping our eyes open to new ways to go out and acquire properties, do deals with other investors. And at that time, that was part of your program. Your program's evolved since then, but before Before we left that first day, yeah, we were attracted to that. We were looking for a way to borrow money, but what you had to offer with your syndicated deals and with your equity pool fund at that time, you ended up convincing us to loan you money instead of—

Wasn't that the running joke? You came to borrow money, by the time you left, you cut a check to me.

And it's worked out great.

Yeah, so it just shows you how good of a salesman I am. Absolutely. So great. Well, let's talk about, you know, some of those deals that you guys did on the syndicated side. You know, people have asked me several times, you know, what do we need to do if we want to become a lender and how do we raise capital and all that. You guys had come in as a— you were working with somebody else on some owner finance where you guys were the private lender, I guess, on the deal. And you guys were holding some seconds and this individual had some firsts. And those deals really weren't as transparent as they needed to be. And I think that's how the introduction started, was, hey, we're looking at maybe liquidating some money on some owner finance notes that we had. How would we use those as assets and leverage and all that? One of the things that we want to talk about in great details is, why did that deal, do you feel, not work out? Because we see and hear a lot of people like yourselves that had several hundred thousand dollars that thought, you know what, I'm not making anything in the market, or I'm definitely not making anything in an IRA or a mutual fund, but if I can get into real estate as a lender, maybe there's more, there's an asset protection there, it's got good returns. But that deal kind of didn't work out. Without really going into the meat and potatoes, but what went wrong with that relationship or situation to help protect other people?

Well, what went wrong with that particular relationship that actually introduced the to you guys was they were dishonest. They didn't— even the things that they put on paper, they did not uphold their end of the deal. And our mistake, and I'll take full responsibility, my mistake was I allowed somebody else to control the transaction as opposed to maintaining control of the transaction. We had done quite a few owner finance deals before we met this particular individual. We relied on professionals, but we always controlled the situation in those things. We met this particular individual that indicated he was going to allow us to have a first lien position on properties, but what it turned out to be was he had promised several other people the same first lien position. And since he was controlling the paper, nobody knew. Nope, everybody thought they were in first position. And so I guess, uh, one of our, one of our lessons learned I learned from that is if you're going to do owner finance, always control the process. Doesn't mean you can't rely on other people to do the things that they do better than you, but control the paper, control the process. Don't put yourself into a risky second or third position unless you go into that fully aware and you're not paying par. To be in a second or third position. They're not paid part to be in a second or third position.

Yeah, I think the other component of that is ask questions.

Right.

Be—

just understand that you don't know everything, and when you have questions, ask the questions. They can be professionally asked. You don't have to be rude, but at the same time, if you do not understand the full process from start to finish, then there are going to be cracks there, and you're trusting somebody else to take care of that and make sure that they're actually going to deliver on what they said they're going to deliver on. And I think for me, it was— we were still feeling kind of new in the process, and so I wasn't comfortable asking all the questions that I had questions about. And I shouldn't, I shouldn't have done that because ultimately it's our money, right? We've got to be careful with our money.

And I think the best way that we tried to do with our relationship is make the situation completely transparent.

Exactly.

And if it's not, you have to make it become transparent, right?

Exactly.

So for anybody that's looking to get into that world and partner up with anybody, I think the biggest lesson that I've always learned or tried to adhere to, and that you guys are saying, is make the relationship transparent.

Yeah.

That everybody knows what everybody's role is and how it's gonna be played out. And if you don't see it being transparent, if there's something that's not crystal clear to you, then you've got to— you have that responsibility to make it crystal clear. You've got to initiate that. Right.

Let the other person know, hey, I don't understand this little component.

Right.

Tell me what's going on here. Right. In layman's terms, it doesn't have to be specific and with all the layers of detail, but enough to understand that you're going to get from point A to point B and ultimately your money is safe and/or it's not safe. I mean, you got to—

Right.

You know, weigh those balances.

Yeah.

Weigh those out.

Yeah. So, uh, to date, how many, how many properties do you guys have right now? Under owner finance structure.

So we've got a number of rentals. We've liquidated 2 of our owner finance properties within the last, what, 90 days?

Yep. They just refinanced.

They paid off. They paid off. I think we've got 5 currently.

5?

I think they have.

Under the owner finance, and then you have some other that are rentals.

Rentals, yeah.

So, and I want to talk about that because in the last 26 years being in real estate and financing, I've always been questioned and wrestled with being a landlord or being a bank. You know, why don't— why doesn't Global— why doesn't Toby and Angie Potter own rental properties? My argument's always been I never want to be a landlord because I hear all the horror stories of the landlord. The water heater always breaks at 2 in the morning. The ACH always goes out, you know, when it's 12 below or 110. So, and the renter, the tenant doesn't know how to fix it, doesn't want to fix it, so you have to go take that headache, hardship on. Whereas in an owner finance, you're a bank. They own that property, they're on title. It's their responsibility now to maintain and upkeep that. So share with me why you have both.

Well, I had to laugh because, you know what, air conditioners break in owner-financed properties. Air conditioner broke in her mom and dad's house 30 days ago.

Air conditioner breaks, but you're right, it always breaks. But the difference is who has to fix it. That's the— you're right, it always breaks. Don't get me wrong. It's not that they don't break in the owner— but you don't have to worry about it.

Exactly. And that's one of the advantages of owner-financed. Not to say that rental property is bad. There's advantages to rental property. That you can't get owner finance.

Evictions?

I'm sorry?

Evictions?

Yeah.

On a rental, you can evict immediately. On owner finance, you got to go through foreclosure.

On a rental property, you can take advantage of appreciation if you're in an appreciation— in a market that is appreciating.

Right.

But owner finance, yes. Being the bank, air conditioner breaks, they fix it. Insurance is not your responsibility. They've got to insure it, and they insure you as the lender, right? So you're insured. If— and we've had that happen. We've had a property that we had owner financed that was in a fire, and the insurance company wrote us the check, paid you off, paid us off, right? Uh, the, the advantage of owner finance, in our opinion, is it's a lazy— it's a lazy, lazy landlord.

Agree.

No maintenance, no insurance, no taxes, no capital gains taxes immediately.

You defer those taxes till they refinance and pay you off.

Till they're paid off.

Now you're in trouble.

So there's, uh, and the other great advantage in what we do with owner finance is compared to, to a rental where you might get first and last month's rent Owner finance, we charge 20% of the sales price down.

Period.

So we immediately have a 20% of that sales price right back in our pocket. So if something goes south, they decide to punch holes in the wall, they skip out, which they're unlikely to do. Most of these people already put $40,000 to $50,000, I'll say deposit down. It's a down payment.

Earnest money.

Earnest money. They're not going to walk out on that, but if they do, We can fix a whole lot of holes in the wall for $50,000 versus first and last month's rent at $1,800 to $2,500.

And you know, there's— so one of the reasons why I have a rental is because I actually had a note that I had purchased using my IRA funds. They defaulted and I took the house back and it happened to be a rental property that another investor had and I was a lien holder.

Gotcha.

So that's how I kind of fell into having a rental in my IRA. And there's ways to mitigate some of this, you know, the rentals are okay if that's what your goal is. It just depends on where you are with your investment strategy. So with the property I have, it's out of state. So I do have a company that manages for me. They verify the renters are legitimate, they've got good history, credit, etc. They're doing the collections for the first and last month's rent up front, and then they are doing all the collections and maintenance, uh, issues get covered by them.

Is that cost prohibitive?

It's not, because that, that is incorporated as, uh, in determining what that rent is going to be and what's fair for that area.

So it's already built in so that there's still a good profitability on the net, uh, there's still a gain, right? Net gain.

There's a net gain. I'm still getting the appreciation on it as well if I should decide to sell it at some point down the road. Later on, right. So there's benefits to both. Even with owner finance, if you happen to fall into a situation where they stop paying or they choose just not to pay the full amount and you have to go into a foreclosure process, that can drag out just depending on the individuals living there, what you can and can't work out. But again, you can mitigate some of that by having a third-party collection company there. So conceptually the same as a property management company, but they actually do the collections, they do amortization schedules, they verify escrow is correct every year. So if something should go awry, you've got a third-party company that has documentation of everything. When things got paid, any late fees. Fees that were applied.

So you have this case before the judge and say, here's our paper trail, you know, they did good up until this time, but here's where we've reached out to— not you personally, but a third disinterested party has reached out, tried to work this out, and they've failed. Therefore, we ask the court to find in favor.

And the same with the property management company. If they are doing the managing of it, now you've got a third party involved that can also help you and be your representation.

What about the different laws in each state? I mean, we know that in Texas, well, not a primary resident, it's pretty much across the board. It's, you know, as a primary resident on owner finance, I can file TROs, I can file bankruptcy. And I think, are you guys— you guys are still in litigation on a deal that's going on several years now?

Yeah, we're into about year number 3.

Year number 3 on an individual that you didn't owner finance on. They haven't made any payments and you've been fighting this because they filed bankruptcy, right? Which stopped all those proceedings. Now that's been exhausted, right? And now you're in the final stages of finally getting them out. And I guess that would be the biggest downfall of an owner finance, right? Is if it goes south, you've got the primary resident laws on their favor, whereas on a rental, it's just a rental. You give notice. You kick them out and evict.

And it— I hate to use the word downfall. I mean, it's a risk, but if you've got the ability to weather those small storms, it ends up being actually beneficial. For instance, this particular couple that bought this house, they did put 20% down. Which if you're smart with how you use that money, that's more than paid what it would have been in the rent that they haven't been paying.

Right.

So you're still ahead of the game.

Still ahead in the game.

Right.

The house that they purchased, that one of two things will happen. They'll eventually get caught up or they'll eventually leave. And if they eventually leave, the house has gone up in value in that neighborhood. Probably 80%.

So we're going to have that house back with, with now full valuation, not what you originally sold it at, not with the appreciation. Yeah, so that would be your—

turn around and do it again. And so they're going to walk away from $180,000 house over roughly $80,000 that they can't figure out how to pay the mortgage, right? So it's, for us, it's a win. I mean, yeah, we haven't— it's a headache, but it's a headache.

It's a headache, but it's life. But the business, it's a business.

And so like any other business, you have to take into account these types of risks or delays that might come into play. And as long as you have the financing, uh, behind it so you can float that time, right?

So you're not— now you're not financially struggling. To make your bills because somebody else is not paying.

If this would have been our first deal that we had done, we probably would have bailed. We would have bailed. We never would have done another deal.

We see that. Oh my gosh, dude.

But when you put one of those within, you know, 20 other properties.

Yeah, between flips and buying notes and, you know, you've got other income coming in.

A diversified portfolio.

You can handle one.

Right. And we see that. And that's one of the reasons why we want to have this conversation is that We see so many people make a bad decision on their first deal, whether it's a flip or whether it's an owner finance or rental, and they lose their shirt on it. Or they, yeah, they lose their shirt and they're out. And if there's any way that we can start educating and creating a platform for the new person, newbie, to make better decisions and not have to weather the storm right off the bat, but to get some positive Then when the storm hits, that's not all they know, right? And I agree, if that would have been your first deal, it would have been your only deal. Um, and so we're trying to let everybody know that yes, real estate is very lucrative, but it's like everything else. If it was easy, everybody would do it, right? Everybody would do it. And so because it's not simple, it's not black and white, it's not cut and dry, and you do— even as savvy and as educated as both you are, as as you are, Keri. I mean, Jim's arm candy. I get that. But as savvy as you guys are, there's still mistakes you've made.

Absolutely.

And we'll make more. And with Jim on your side, you're gonna make a lot more. Yeah.

But so, uh, one thing to keep in mind there, whether in this deal is a prime example, in other deals that people are thinking about doing, is you need to keep in mind that that more often than not, you make your money when you buy or acquire a property, right? Not necessarily when you sell it. And we bought this property right, and regardless if they paid us or not, we're gonna— we're gonna make—

the asset is still enough.

And, you know, we hope that they pay. We want people to— we want to provide houses safe and, and habitable houses for families to move into and stay in there 30 years. But if they— if for some reason life happens, they choose not to, and we'll take that house back, we still have an asset that is worth more.

It's not a devastational blow to the portfolio. That's right. So let's talk about that. So when you say, um, you know, you make money when you buy, and that is rule number one in real estate investing. You make money when you buy. But what does that mean? If I'm brand new, well, how do I make money when I buy? Can you break that down a little bit?

I guess the simplest way is there is a perceived value. You know, in our industry, most people call it an ARV or an after repair value. There's a value that is placed on a property, on a house. Based on what everybody thinks it's worth. Okay. We, and every successful investor, wants to buy that house for less than what everybody else thinks it's worth.

Right.

And it may sometimes need repair, sometimes may not need any repair. It may need a coat of paint. You may have to go in and move some walls around, you know, but the You make the money by buying it and spending less or tying up less money than people who are willing to buy it would be willing to pay for it.

At that time. So the sweet deals. And how many of those are out there on the street today?

Probably hundreds of thousands.

Yeah.

I would say they— Millions of houses. So it's not something you can find just driving up and down the streets.

I mean, you need to have a process.

The right project, the valued property, is not something that's just readily out there for everybody.

And you have to network. You have to get to know different areas. Doesn't have to be where you live, but wherever you're looking, you need to really assess the area and need to do some networking. We found that through networking, if you're able to find a situation where maybe an elderly family member is moving to an assisted living facility, for example. That was one, uh, that we found. And we were able to work with that family to help them get the funds they needed out of that house and still not have to step into that house and deal with everything that was in that house, um, and walk away, take care of their family member, get them settled into where they needed to be. And we were able to take over that property.

Property before that property ever even hit the market for every other investor to bid it out of profitability. And I think that's what's so important. When clients call and they're new investors and they're like, "Well, how do I find properties?" I'm like, "You know what? When you figure that out, let me know because we'll write a book and we'll make billions of dollars." Because every investor will spend 85 to 90% of their time finding the right property. Now you're right, there's hundreds of thousands of those deals out there. There are. But they're not public. They're through networking, through relationships. It's talking to a family that, you know, hey, yeah, mom or dad or grandma or grandpa is now moving out. Most of those family members don't want to deal with fixing it up, listing it, doing it. If they can unload it for a value that fits their need, Correct. And you still get it at a price that's profitable. That's a win-win.

And there are dozens of ways, you know, there are ways out there to find properties that we don't even know about. I mean, there's dozens of ways. There's wholesalers.

And I don't want to knock wholesalers because—

we use wholesalers.

Yeah, there are some that are very good. They're fair in their pricing and you can get in, get, you know, choose from a list and move forward. They're not all that way, so again, you have to know what your numbers are, what do you want out of it.

You still got to do your due diligence.

You got to do your due diligence.

You can't rely upon somebody else to— and we see a lot of that where wholesalers have thrown the ARV, thrown the rehab, thrown the as-is and all that, and it's wrong. But you have new investors who are tired of driving up and down the highways, sending out mailers, getting zero response. All of a sudden they got a deal that on paper looks great, so they take it down. And then it comes to us and we say, oh no, run, or I can't, I put $5,000, I put $6,000 up non-refundable, I'm stuck with it. You can't do that.

Yeah, yeah, that's right.

And you know, we have— we've gotten several deals just by treating people fairly. If you treat people fairly, yeah, not get greedy, not get greedy.

We're not trying squeeze every penny out of every deal.

Right.

If we can work with the family to get what they need, we try to really understand and focus on what is it that they're actually needing. Their need may be they're overwhelmed and they don't want to deal with the house. Their need may be, "I just have to have $50,000 out of this because that's my loan and that's what I got to pay." Once you can get to that level and understand what is it that they are actually needing, Exactly.

They may not solve a problem, right? Money may not be their issue. A, a way to control the property where they're not having to have a tax burden, right? Uh, inheritance, inheritance taxes and all that. Yeah, they, they may just need a place to move their, their parents' stuff until they can figure out what they want to do, and you step in and help them do that. You give them options that I guess until you've done a few of them, you may not even know what those options are, but acquiring property is, is probably 80+ percent listening to what it is the person needs, finding the problem, and coming up with Solve the problem.

I think it's life. When you're in sales or anything in that, if you find that customer or client's problem and you have a solution, you have a closed deal. But if you don't know what their problem is and you're trying to shove down their throat your position, then it's probably not going to work because you're not meeting their needs and there's not anything in it for them.

Right.

So that's great. So let's talk about best practice. So You found a property, you now own it. What's the steps and stages that somebody needs to go through as they work into making this an owner-financed project?

Okay, so I just jotted down a couple of steps.

Yeah, like 7 pages there?

It's actually no, it's 6 steps.

Oh, 6 pages.

6 steps. And it's basically, you know, finding a property, single-family home is what we focus on. Okay, for owner finance, because it seems to be within that price point, it's reasonable as far as the mortgage.

What is that price point that you feel most comfortable in?

So we try to stay— have an ARV of less than $250,000. Okay, um, that's a good starter home, single family, that, you know, they can move in. For those that maybe have a glitch on their credit or have no credit, doing an owner finance is a good option for them to start building that, and it helps them them in the process.

Okay.

So $250,000 or under is kind of what we target. We look at, of course, the, the neighborhood and the area to make sure that it's conducive to a single-family home. Do the fixing up that's needed, then determine is it something you can just do a for sale by owner and get that out there. If the demand is high enough, you may not need a realtor, right? Or go with a realtor that's investor-friendly. Somebody who's not going to charge you the full 3 to 6%, and then they can get it listed. And in that listing, you want to just make a couple of points. I always say to be upfront with the fact that, you know, we do require an RMLO, a third-party verified—

So it's listed as an owner finance?

Listed as owner finance.

In the special provisions?

Exactly. And that they are responsible The buyer, the borrower, responsible for the RMLO report.

That stands for Residential Mortgage Loan Officer.

So it's a licensed loan officer. Licensed loan officer. It's approved by Fannie Freddie programs.

Right.

Okay. FHAVA, all that.

Correct. And then I also like to put in there, um, the— our interest rates are not going to be as good as a bank, but again, we are taking on that risk. So usually when a borrower or buyer is getting a little more serious, we do make sure that we share that information with them along with the terms, whatever those terms you are that you guys decide upon, 30-year, 15-year, whatever.

Okay.

And then pick a good title company, somebody that you trust, and make sure that that's also in there so you know where that closing is going to happen.

Now, will all title companies handle an owner finance transaction? Or some say we don't want to do that.

They may not, and that's something you have to ask about. The title company that we use, they also help us draw up the paperwork for the owner finance portion of that title paperwork or closing paperwork. So, um, you know, find one that's good, build that relationship, and verify that they have that owner finance option.

Okay. All right.

And I would, I would say that, you know, work with a title company somebody that knows what they're doing with owner finance. Not somebody says, yeah, we can do it, and has to run back and look it up on a computer, right, to figure it out.

Because if you miss something and then you go into foreclose, you may end up handing that house over to that buyer for non-disclosure, misrepresentation, anything that a sharp attorney will pick up and say, guess what, borrower, you now own this house free and clear. We're going to sue the snot out of them because they didn't disclose all this to you. So because of this being an owner finance and this being a primary resident, you have to be extremely transparent that they understand what they're getting into. You're not complying with TRID laws, which Fannie and Freddie has come out with, but you're still having to completely disclose closing costs, interest rates, APR, all that. And that's why it's important to have the RMO involved in this because that's what they're doing.

Yes, because now you're relying on a sanctioned third-party provider to look at their ability to purchase that home from you and tell you yes, they have enough income, or no, this would not be looked at in the eyes of the law as a—

as affordability—

as something that they can afford. We're still ultimately can choose, do we want to sell those people or not. We've chosen to err on the side of making sure that if something were to ever happen down the road, that we can go and rely on that third-party provider that said, look, this is the income that you gave us, this is the assets that you said that you had available, you reported to these sellers that you had the affordability, the ability to afford this house, right? They relied on what you told them that you had before they sold you the property. Just to go out and willy-nilly owner finance a property to somebody and then get caught up in a legal disagreement is not something that you want to do.

So, so it gets back to, you know, When you were saying like the profit is in the buy.

Yeah.

This is also a protection measure, right? For us upfront. So everybody is clear on how things are laid out. Everybody's agreeing that yes, you can afford my interest rates and I can sell you the property safely knowing that you're going to be able to pay and that you're willing. Yeah.

Are you disclose their income?

Yes.

So they show you this is what their annual income. Their 30-day pay stubs. So you're treated like a true bank.

Yes.

So the RMN process, the third-party company that we use, they actually provide us with a full report and then a summary page that, that tells us the debt-to-income, overall debt-to-income ratio.

But it does have all that detail where it's supporting documents, all the supporting documents.

Okay.

Um, and so basically most borrowers can income qualify for an owner finance they just can't credit qualify. Oh, maybe through a divorce, some credit ding, something like that. And so this gives them the opportunity to clean that up over a 1, 2, 3, 4 year period and then refinance to FHA, Fannie Mae, Freddie Mac, and pay you off.

Absolutely. And we encourage that. You don't have any prepayment penalties. You can put that in if you choose, but we choose not to. Um, the one final step that we have as part of our overall process, and it is part of the title, the closing paperwork, is that we also have a third-party collection company who's bonded and insured, and they do the actual collecting of the mortgage. They verify the amortization. They make sure that the escrow account is up to date. If it gets modified for the following year, they are responsible for sending out those notifications.

For the increase of monthly payments or—

Correct. Increase or decrease, depending on the taxes.

Right.

Yep.

So shortage and overages and all that.

Yeah. Okay. And so all of that paperwork is available and all of it's in writing to review at closing.

And do you get a monthly statement? What do you guys get from that third-party company?

We do. So we get a couple of things. We get deposit information every month. So for every payment that's made, we get a notification. We also have a site that we can log into to see the overall status of any given loan, where they're at, what's the principal, what's the payoff, etc.

Um, and then, um, if there's any— anything that happens on the property, like from a city violation perspective. Oh, okay.

So the weeds gone too high, yards 2 foot high, trash out in the front yard, stuff like that.

If they haven't renew their insurance, we know right away.

Okay.

Because— or paid their insurance. Yeah. If their taxes are delinquent, we know right away.

Okay.

Uh, so we're kept abreast of everything that's happening on that property from a financial aspect. Uh, we're given at the end of the year 1099. Uh, that's when—

this is all from the third party management firm, right?

So we know what portion of the monies that collected throughout the year are applied to the principal of the loan and what is applied to the interest of the loan. The nice thing about owner finance is monies that you collect, you don't pay taxes on the principal that's collected. That's a non-taxable. You only pay taxes on the interest that's collected.

What if you apply 100%? So let's say you have a property that's $150,000, you owe $100,000 on it, but you're collecting on the $150,000. $1,250. So it's simple, simple numbers. You're making a $1,000 a month payment to the bank, and the borrower, the client, is making a $1,500 payment to you. And if you— so the difference would be $500 of interest earned. If you applied a full $115 towards your principal, you still charge a tax on that difference. So instead of just making the $1,000 monthly payment that you're owed, you applied the 100% of what you're earning on the property towards the mortgage.

I don't want to—

I don't want to— because you're not a CPA. Yeah, let's make a disclosure. They're not CPAs. They're not accountants.

Yeah, accounting device. But you've got two different transactions going on there that you should give to your— to your tax guy.

Come on, one is the—

out of the $1,500 that you've collected, right, how much of that is interest, right? You're going to be taxed on it.

Period. No matter how you apply it. Right.

Now, however you choose on this side of the ledger to legally lower your tax liability, and that is paying off the debt that you owe, then—

because it's still an expense over here.

It's an expense over here.

You're gaining an asset, an equity asset, but you still have—

so again, in that initial paperwork at closing, as part of that owner's finance documentation, it will, it will be in there on what the interest rate is, right, what the principal payment, the end, all of that, and the amortization schedule gets, gets put in that. So they know what they're going to expect and what they get. And we also know for that note, this is the principal, this is the interest, right? The any underlying note that we have is like an item number 2. It's It's a separate thing.

Gotcha, gotcha.

So the combination of that is what then your tax professional would determine.

I owe this, I'm receiving this, and there's a gap between them.

And you may choose to pay off your 30-year note in 10. In 10.

Right, by making those extra payments.

Exactly. Or you may choose not to.

And live off the difference. Right.

But if you're paying 7% and you're collecting roughly 10%, And like you said, your note is for $100,000 that you owe, but you're receiving 10% on $150,000. You've got a good spread there that you need to decide for your personal business how that money's going to be used.

Yeah, and you can kind of separate that, right? So you can, sure, you can take some of that profit, say $500 a month, put some of that towards your underlying note. You may want to keep some of that in your business account for something like, oh my God, this other property is now foreclosing, right? And we need a pad there to cover that. So you don't want to just take everything and just dump it and pay stuff off.

Zero it out, right? Right.

So you do want to— you want to really evaluate kind of where you're at, what are the other investments you have going on or that you're about to look to get into, and then make that determination. And you can talk to a tax professional or a finance professional at whatever is comfortable. Or just ask your wife.

They always know all of them.

The other thing that we didn't cover, which, which is worth mentioning, uh, even though the majority of the owner finance that we do is to somebody that's going to move into that home and it's going to be their homestead, we have owner finance properties to investors.

Really?

And That makes it a whole lot easier if we had to foreclose. Oh yeah, because they're not living in the same—

21 days, you're done.

But it makes it easier for the investor because the investor now can control a property. Yeah, with a lot less money without going through—

so they, they came and bought it from you for 20% down, period.

Exactly. And it's helped them, those, those particular investors that finance property to, or using it for rental income. So they turn around and rented the property out. They're making more off the rent than what they're paying us to pay us.

Uh, now do you normally know this up front?

Oh yeah.

So they, they disclose to you because they're going through the RLMLO whether this is a primary or this is an investment. Yeah, right.

The example was we did actually have a couple of properties here in the Dallas area that were rentals.

Yeah.

And we had investors come to us and say, hey, we just want an investment property. And we said, okay, we've got two, pick one. And they didn't want to come out of pocket for the full of the, the cost of that property. And so we were able to do an owner finance with them. So we already knew it was a rental.

Yeah.

We already knew they weren't moving in and they were not going to homestead that property. And so it was a very straightforward transaction. But we again Good title company, good paperwork up front, make sure everything's in writing and understood, and, you know, it can be a very smooth transition.

Now those guys can't in turn sell that as an owner finance. They can only rent that property out.

Well, they could probably sell it, but they are on title. But the title company that we use and the title paperwork that we have, there's a clause clause that if you attempt to sell this property—

due on sale clause.

Due on sale. Yeah. So you can do— I mean, it's your property as an investor. Do with it what you want.

But I would think that that would so muddy up the water.

Yeah. But we're not—

because if they default, you're now trying to evict a primary resident.

But keep in mind, if they're going to then owner finance it to somebody else, they should technically still be going through a title company. And if they're doing that, they will see that we have a lien on that property. Right. And so we have to be paid off as a lien holder anyway. So if they're doing everything legitimately, oh really, then it's going to catch up with them because they're going to see it. And nobody would ever be doing it illegally, then.

Not in the state of Texas, especially the state of Texas.

If they're not using a title company, if they're not really filing all the paperwork, right, then yeah, it can get a little hairy. But again, because We did our portion of it correctly and everything is filed correctly. We do have the lien on the property so we can go after, you know, that property and take it back should we need to.

I'll tell you how, why this comes up. We lent money to an individual to do a fix and flip as an investor. He turned around and sold it as an owner finance and put the other guy on title. How that all transpired without us ever being paid off? No clue. But when he defaulted and we went in to foreclose, this is where we discovered he had done another finance. The guy had paid $30,000-$40,000 upfront like you guys require. And, you know, we called and said, "Look, dude, we're getting ready to kick you out." And he's like, "You can't." And so we were able to get all parties involved and then they had to expedite getting a loan But this guy had done this on 3 loans. He did it on all 3 of them. So we're like, dude, number 1, you can't put a tenant in on a fix and flip. It's in our note and deeds and all that. But you more importantly can't do an owner finance where you put that guy on title. And why the title companies never found it. The guy could go and get this property free and clear. He could legally. Be careful. So you have to understand that if you as an owner-financer do that to an investor and they are somehow able to circumvent that, everybody could lose but the end borrower. It's a legal mess.

Again, there's risk involved.

There's huge risk.

With anything in real estate, just like any other investment options.

And there are title companies who will do things And I wouldn't say it's not above board, it just maybe have been missed. But when we found this out, I was blown away that this guy was able to be put on title. So I couldn't even foreclose on our guy because this guy was on title. I had to foreclose on both of them and then he could go file a TRO and/or bankruptcy, tie this whole thing up.

Right.

The legality was we were going to take our client and sue the dog out of it.

Right.

I gotta be nice because this is going on public air. And he knew it. And so he then stepped up and has been expediting to get this thing paid off and not be sued by me and the borrower. So it's a mess.

The nice thing is nobody's going to drive that house across state lines.

Right.

Right. You know, that house is still on concrete. That's right.

So it's different than Toten.

—Yeah, for a car. And then you gotta go find it in a field somewhere that's stripped down and all you got is a shell. But yeah, it happens a lot. One of the things that we want— that I did want to talk about, you guys bounce back and forth on, you know, the pluses and minuses of owner financing. The plus is, is that you're not a landlord, you're not having to fix things, they now take ownership and you're just a bank, so on and so forth. But the negative is, one, very hard to evict in the in, you know, in a foreclosure, it could take several years. But number 2 is appreciation. I've sold that property in 2017 at this price, but all of a sudden, you know, Sam's is moving in or Cinemax is moving in, and now this neighborhood is skyrocketed. And so like you said, you've got one that's appreciated 80% or $80,000, I can't remember, but you, you know, on an owner finance, that's a loss you take. Whereas on a rental, technically a loss—

but it's never a loss if you don't have it, right? It's not a financial gain for us, but it is a financial gain for the person.

But as a rental, as that valuation increases, your profitability on that asset increases. If you understand, only if you're selling, or if you just kept it as a rental.

If it's a rental, a rental's a rental. You're making whatever you decide. But you can also increase rent.

Every year as the value— as the values increase.

You're talking how much a year can you legally increase it. You're not going to increase it by $80,000 because the property went up, but you could increase it by $100, $150, $200.

And the city will increase their property taxes on that.

And so it's not always advantageous, and your insurance will go up. So really, it's only a value if the— if the appreciation increases and you're ready to Correct. Absolutely. And now I'm ready to retire.

Yeah, appreciation is, is only valuable if you're going to move that property in some way. If you're doing owner finance to an investor, maybe, because now it's a rental property already, you're selling it to an investor, right? You can get that equity out at that time and benefit from that appreciation.

You've just got to look at the situation. I—

when do you decide which one's going to be a rental, which one's going to be owner finance? Or do— is it just evolve? Do you take down a property saying we're going to keep them as a rental, or how does that play? How do you decide which one goes into which bucket?

We, we look at primarily when we go to take down a house is doing an owner finance.

Yeah, we always—

that's your primary focus? Our primary focus is— I got you. Yes, for us, because of—

that's what we like. That's kind of our wheelhouse.

Because I'm lazy. I don't— I want somebody to know.

Are you serious? I want somebody to do my collections.

I want somebody else to pay the insurance. All right, somebody else to do this.

I want to collect a check every month.

And, and I know what that check is going to be. In a rental situation, I may have the greatest rental in the— renter in the world, which is whatever landlord wants. They pay on time, they're there for 30 years, they take care of the place. It's clean. But if you get one of those other renters that gives you their deposit, they're there for 9 months, they mess up the carpets, they mess up the walls, they move out, all the appliances are broke, and now all that rent that you've collected, you got to go in and fix all that stuff.

That's because you look at it at an average price, you get $1,500, $1,800. So you're off $10,000 to $20,000 a year for 30 to 90 days while you're fixing it up. Plus you just spent all that money putting it back on the market, right? No profitability.

Owner finance, I'm making that $1,500 a month. Yeah, every single month. They're not going to move out. They just put a 20% down payment.

It's almost like an MLM where you just got that residual income because you built it down once.

And you're right, I don't get the appreciation down the road, but I don't have the headache to go with it.

But I don't have Well, and you know, we, we kind of look at projects, um, where we can put effort in once and continue to get paid. As opposed to— it's not that we're against flipping a house, we'll do it if we see money in it.

We're going to talk about that next.

But, um, if we can hold on to it, put the effort in once and continue to get paid, get a residual. Yeah, I mean So what we like—

you brought up the next topic, which is flipping, and you guys have flipped some projects. Yeah, let me just touch on one other benefit.

Sure. On the owner finance. Yeah, just, just from what we look at, um, is the opportunity to help someone get in a house and get out of the rental situation. So we do— we've got, you know, the mortgage calculators that you can find online, and we look at that compared to what they're paying in rent and just show them how they can benefit from actually owning a property versus continuing to rent. And you don't gain anything. There's no equity there. There's no money back you're going to get. There's nothing that you have at the end of that 12-month window. No tax deduction. Yeah. So that, that's for us, that's also one of the things that we try to educate whoever ultimately buys our house. If they want to sit down with us and actually work through those numbers and see what does it mean if you make make one extra payment a year, what does that do to your overall loan? And, you know, so we kind of talk through that as well.

So you're educating them on how to help them improve their life. Absolutely. And that's—

build credit as opposed to not having— a lot of people in this area in particular are very cash heavy, but they don't have a bank account. In some cases they don't have credit, or they might have credit but because of the divorce or Right. A car loan, something went— Life situation. Something happened. And so they can't get traditional financing from a bank. And so this kind of helps them get on that track if that's really what they're wanting to do.

Nice, nice. All right, let's move into the fix and flip because you guys have done a little bit of everything. I still chuckle about your last fix and flip and how much excitement that was. And I can only imagine the conversations you two had during that 6-month process of taking this property and hiring a contractor, dealing with the contractor politely, not so politely, getting a new contractor, so on and so forth. But again, I want to go back. So because you are heavy into owner finance, you have some rentals. Why would you ever do a fix and flip, and why did you do a fix and flip without causing a divorce?

You want to take that one?

Sure. No, he doesn't. I just saw him start sweating. Fix and flip.

Fix and flip are, for us, are good for immediate, uh, process. The immediate cash.

Okay, and they are for anybody. You have that choice. Do I need the equity today, or do I build a long-term portfolio? So your question was why did you choose to do that one as a fix and flip and not build it into your portfolio? You don't need the cash. We always need cash. Yeah, didn't need the cash for the pain that it caused you.

Because of the, the price range, there, there is— in the— I'm looking for the right word— the, uh, sellability owner, owner, because of where we, where we usually tend to sell and owner finances, you know, like my wife said, a starter home or maybe a second home, a gap filler. The next level home is, you know, 3-bedroom, close to a school, less than $250,000. If you can punch all of the, the items that the typical family in this market wants and still stay in the price range, it's a good owner-financed property. You're not going to own— we're not going to owner finance an $800,000 house, right? Because there's— it could probably be done, but there's not a whole lot of people out there.

You have a small demographic. You got a small demographic. Someone's gonna put $160,000, $200,000 down, make a $7,000 a month payment as a quote-unquote rental. Yeah, very, very, very, very few people.

Right. You're not gonna owner finance a one-bedroom one bath house usually, but as an efficiency apartment, an efficiency apartment, right? Because most families don't want an efficiency apartment. Then that's a college student, or that's a worker who's in transition that needs a place to stay for the next 6 months, 6 months to a couple of years. You're not going to owner finance that. So you do fix and flips on the On the houses that don't fit into that circle. Don't fit in that circle.

Okay. So this one obviously did not fit into that circle. So you saw profitability. You chose to take it down and do a rehab on it and sell it.

And sell it to somebody else that is either going to live there or an investor who's going to use it as a rental property.

But no matter what, you're in and out of it within 12 months was the game plan.

Yeah, well, the game plan is 3 months, but sometimes things go awry. So let's talk about the painting. It was my fault. Yeah, so slept on the couch a couple times.

Yeah, I'm glad you got to stay on the couch and not in the car. Uh, so, so looking back now, uh, and of course, you know, a big portion of our audience is flippers. Um, of that, I'd say 75% of our audience is flippers. And then you have buying old rentals, all that. But then of the 70% of flippers, I'd say a good 45% of those are newbies, you know, done less than 5 deals. So looking back on that project, knowing then what you know now, what would you do different? What did— what mistakes did you make in that project and how could you have prevented that other than not listening to your wife? And we can just remove that because that's going to be every man's What's the mistake?

I allowed a contractor to convince me he could do something that he didn't have the skill level to do.

Did you know this? Because— and you just believed in him, or you didn't do your due diligence and you took him at his word?

I thought I did sufficient due diligence. He was recommended to us from another investor who does primarily rental properties.

Oh, Lipstick. Yeah, so we thought we could trust their opinion.

So this contractor does a lot of their day-to-day or week-to-week maintenance. So he's a maintenance guy.

Yeah, he's not a rehab contractor. He paints walls, he stretches carpet. Puts trim on doors.

And so he was recommended. I said, well, they're successful, they've got a lot of rental properties, he's their maintenance guy. But don't hire— I guess bottom line, don't hire a maintenance guy, right, to do a rehab, especially obviously something that's not a traditional rehab. This one had some extensive work being done, and, and I, I allowed him to— I gave him enough rope to hang himself, and then I gave him some more rope that he hung you with him, that he hung me. And yeah, and I should have— I, I should have stepped in when I realized that he was in over his head and said, look, you know, you're a good guy, go do the maintenance work, let me get somebody in here that really knows what they're doing instead of you trying to figure it out on the fly and convince me.

So And that, it's like as being an employer, you hire slow but fire fast. And you should have, once you realized this wasn't working out, instead of continuing to try to fix it, you should have cut ties immediately and moved on to somebody else, right?

Yeah. When emotions, you know, sometimes you really want to help somebody, right? And you think, okay, you know, they're really putting forth their best effort, they'll make it happen. You cannot run a business like that.

But what do we always say? No good deed goes unpunished.

Absolutely. I know.

And my wife hates it when I say that, but it's reality.

It does. It's true, and I cannot deny that. But that doesn't mean that you still don't have that desire to help somebody. We always want to keep everybody busy. You don't want to be tainted by, you know, one bad apple, right? Um, because there's a ton of bad apples out there.

There's a, there's a, a ton is a nice word.

So yeah, so it, you know, you just have to remember from a business standpoint, yeah, that you are running a business, right? You do have a timeline that you've defined, you've put it in writing, you've got it on a schedule, and you need to stay to that schedule. If you don't, then you are affecting your own bottom line. The guy's still going to get paid. He's still going to come after you because he was there 3 days whether he did the work or not. Right. So at that point, you are hurting yourself. And if you choose to do that, and I say choose because you have to take that responsibility because it is your own business.

You take that ownership.

Yeah, right. So if you choose to do that because you want to help somebody, it's okay. Just understand that you're diminishing your profit. You're keeping keeping that property out there for a longer period of time with more things that potentially could happen to it.

And missing that window. Totally missing the window.

So there's a lot of things in play. There's a wheel that's turning. Right. And if you choose this guy to come put a wrench in it, and he's going to slow that process down. Slow that process down. Yep. And you're okay with it, go for it. But if you're not okay with it, then like you said, you got a higher slope. It, fire fast. You got to move on.

Thanks. I'm back on the couch. Open those wounds back up.

Everybody makes, you know, makes mistakes. So, um, I, I made the mistake with the one that's currently in foreclosure because I emotionally was involved with the person that ultimately bought that house, and I thought that she was wanting to get herself and her family in a better situation. And, you know, They really didn't. They just were saying what they needed to say to be able to get into that house.

No good deed goes unpunished. Correct. Correct. And it's terrible that that is a motto, slogan, a way of life. But I'm telling you, I've been down it. I know you guys have been down it. I guarantee you there's a ton of listeners who have stuck their neck out there to help somebody out and have regretted it. And unfortunately, you're right, you can't stop trying to help people because you've been burnt. Then we remove human nature, we remove our passion to improve people's lives. But it gets old. It gets old and you get calloused by it and you're like, really, why am I continuing to do this when every time I turn around I'm getting burnt by it? Right. Other than not pulling pulling the trigger quick enough with this contractor. Once you did make a change, did everything then move favorably and got the deal done? And have you sold that property?

No, we've got, uh, we've got a contract. A contract for one of the— was actually two I was doing at the same time.

Oh, I didn't realize that.

I knew there was one. We doubled the payment.

So much. I knew it was one. I didn't realize we were doubling down on the pain.

So we've got a contract for one, and the other is, uh, we're, we're waiting on a contract. It's available. Good. So anybody, anybody looking for a property, uh, it's near 35. What city is it in? It's in Louisville. 35 and 121. It's a, it's a great property. It's, it should be up on MLS here.

It should.

It's, I mean, Everything in there is new. It's been leveled. The plumbing is new. It's a whole new floor plan. It's—

So this was a complete gut out?

It wasn't a complete gut out, but it was a complete redo. I mean, it was—

I mean, all the way down to the 2x4s, down to the studs?

In some of the rooms, we went all the way to the studs and—

New wiring, new plumbing, sheetrock, new paint, new HVAC system. It's all there.

Replaced a portion of the fence. I mean, it's nice. New garage door openers. It's nice. It's nice.

It's not a total gut out. We've done, we've done that before. This one wasn't, but yeah, there's quite a bit of updates on this one.

We gutted a house up here in Anna. Speaking of gut outs, we took this house in Anna last year. It was built in 1910, and it was just originally a house about about the size of the studio here, with an outhouse. And the two sisters that I bought it from were in their late 70s, but they had grown up in the house. Wow. So I know it was at least 75, 78 years old. Mom and Dad had bought it, they passed, handed it to the kids. But anyway, they had added on to it with some makeshift, you know, rooms and added a bathroom there. But anyway, so I sent our crew up there and I said, I know this thing gutted, we're moving everything. They literally took all the flooring out, so there was nothing but bones. And I pulled up one day, it was a little bit windy outside, and that house starts leaning. They had not put any interior supports when they ripped all the interior walls out. And I mean, we scrambled for about 45 minutes putting up exterior, and that house leaned like this for days until we could finally get it interior boarded and slowly start at the back pushing pushing it back, bracing it up. It's like, guys, if I hadn't pulled up, this thing would have been on top of you. So when you say complete gut out, I will never do that again. Yeah, yeah, we didn't—

we haven't gone that far.

I mean, it was— there was nothing but exterior walls, so it was just a big old box that the wind was about to push over. That would have been a terrible deal. Um, so as you guys travel, you guys do a lot of guest speaking for other, uh, real estate investment associations. What do you see the trend of the industry, where do you see the fix-and-flip world going? You've got any, you know, magic 8-ball, crystal ball, anything like that to share with the people on what's happening?

I think the only thing our crystal ball has been consistently telling us is that things change.

Are you running for office?

No. That was a very political Answer. Things change and everything goes through a high and low, but there's always different strategies out there that you can still apply. So will there be properties out there that you can flip or that you can owner finance, rent, etc.? Yeah, they will be out there.

You have to be diversified.

You just have to be open to maybe a new strategy, a new way of flipping the property. You know, we We've looked at things like Airbnb. You know, we might take a property and decide to do something like that with one if it's in the right location. So there's always new ways. You just have to be open to the change coming at you and then be willing to change to adjust to fit.

So as long as you're not rigid and tunnel visioned, just adapt as the environment, as our industry is evolving, changing. We know that the fix and flip world, especially here in the in Texas has tightened down. Inventory's gone thin, and we've got more and more flippers, investors out there on the market today than we've ever had because it's been very successful. Um, and so everybody is, you know, wanting to, to get their hand in it. Um, but doesn't mean that, like you said, that there's not a way to continue to be successful. You just have to be able to be open-minded and get a different strategy, a different, you know, vision of where you want to be and where you want to go with all that.

Anything else? I take it to solving a problem. If you can solve either a perceived problem or a real problem, you have a valuable asset. You're going to make money if you can solve someone's problem or someone's perceived problem, and almost everybody needs a place to live, whether they are willing to purchase it and call it their own, or whether they want to pay you rent for it and live there, you know, for a shorter amount of time, or they want to lease it from you and live there for a longer longer period than a rental or lesser period. Every— almost everybody needs a place to live, right? If you can get— like, like my wife said, if, if you can adjust and adapt and go to the places where people want to be, whether that's Dallas-Fort Worth or McKinney or Plano, you want to avoid the places they don't want to be. Don't go buy houses in a place that nobody to live in. Southeast Dallas. Yeah, I mean, right. And then determine which space you want to be in. You want to be in the extremely short-term rental, the Airbnbs, the, the little bit longer, 6 to 12 months rental market, uh, you know. Do you want to rent to college kids, uh, and let their parents pay the bill for, for those 4 years? You want to go longer term and get a house that is going to appreciate in value, you just have to assume the maintenance costs on it and the risk of getting the right renter in there. Or you want this— I mean, we, we sell all our houses on 30-year notes. We're looking at a 30-year payoff on almost everything that we owner finance. Nice. So it's what's, what's the problem, how do you get in What can you do to capitalize and make money on the solution? On providing a solution to that problem or perceived problem. Okay.

You have any horror stories you want to share? Any one deal that you just, besides the fix and flip, we already talked about that one. Any other ones that was a joint mistake on and not a one-sided, I told you so?

You know, I mean, for me, it was the one that ultimately went into this— they filed bankruptcy and then we had to do the foreclosure. But getting emotionally attached either to a property or to an individual or family that you're trying to work with can be a detriment to your business. So I mean, that to me, that would kind of— if I were to give it a tip or something, that, that would be the thing to keep in mind is when you're looking at something, make sure you run your numbers, make sure the numbers are legitimate, they make sense, and they've been verified, and then make that decision on what strategy you're going to use or who's going to be the buyer, the— and who you're going to work with, what's of third-party individuals or companies you're going to work with, where you're going to borrow the money. So keep it on a piece of paper with numbers involved and the verification that follows that. And stick to it. And don't get the emotional aspect of what might be happening along with it. You need to keep the drama away from it.

It's like Gordon Gekko Michael says money has no emotion. That's right.

If you can keep it simple to that, you know, those, the, the steps that you decide that you want to go through, everything is verifiable and you can see the, the profit on the back end. Everybody's going to make money or benefit in that deal.

You're good. But doesn't every person, especially new, and this is so, so I want to, I want your opinion on to help people. Every person that's new is going to have a lot of emotion in this because they're doing this because of the emotion, the passion, the glory, the benefit that it's supposed to provide. So when they do get a deal, unfortunately, it's going to be emotional. The only people that I know that are no longer emotional about it are veterans. And I would believe that if we could go back to every person on the first those first 5 deals, there was a ton of emotions in that. So knowing now what that pitfall could become, how do we educate our viewers to maybe help them remove that emotion? I mean, what would be a self-help on that?

For me, it really is putting it on paper.

On paper and being disciplined to follow it.

Correct. You've got to be disciplined. Any business you have, you have to be disciplined. You've got to know where your profits are, where your gains are going to be. You, you have to know the basics of running a business. But you're right, either our first deal, our second deal, both were super emotionally charged. Excited. I got it.

Yeah, we're gonna make millions. We're gonna do this deal. Donald Trump, here I come.

If we can't do this, we're out. We're of this industry, you know, do or die, do or die. And, uh, but what really kind of helped us focus on what needed to be focused on is actually putting it on paper, running through the numbers, and moving forward. Don't move forward without— like, don't make assumptions on things and move forward based on your emotions.

And don't overlook your due diligence because you think it's all in place.

I would, I'd add at least one more thing to that. I, you know, not only put it down on paper to remind yourself why you're doing it, what your objective is, but use people that have done it before. Go to good mentors. Surround yourself with people who know what they're doing, that can walk in and say, you know what, that guy's probably a good maintenance guy, but he's not a good contractor. Let me get you a good contractor.

Well, and the other thing is they have no emotion. Somebody else who's a mentor is not emotionally attached to it, so they're going to give you a true perspective of what the deal looks like. You're too close to the forest to see the trees, or whatever that goes.

Yeah, get you—

you know, you know what I mean? It's too close to the trees to see the forest. I think it is. You had the content there.

Utilize, utilize a title company that is experienced in what you're wanting to do, right? You know, in our deal, we've— our owner finance, our title company, we go to them sometimes to say we're thinking about doing basically this.

Yeah, you know.

'Oh, can you look it over?' And they're like, 'Yeah, that looks like a good deal,' or, 'No, here are some pitfalls in this.

Don't get involved in this.' I think that's probably the biggest nugget, carrot, however you want, is get somebody, a mentor who's been down there, done that, because no matter what, they're not emotionally attached to the deal. And if they are a true mentor, friend, leader, they're going to give you an honest opinion. Correct. And they're not going to blow smoke up your skirt or steal the deal out from underneath you. And I think that's where most newbies are scared, is that if I take this to a veteran like you, you're going to tell me no, and then you can go right behind my back and do the deal. And I think that's where that relationship has to come in, to where as a new person who's done— and I say a new person, less than 5 deals in 12 months— you've got to find a group group of people to be able to bounce stuff off of and say, "Here's what I've got. Does this make sense?" This is one thing that Global does, is we try to be that because there's no way we can take down the deal. We want to look at it. We want to analyze it for you. We want to run the numbers and let you know if that's profitable or not. We've done that over the last 5 years with our clients and built our client base because we're not going to steal the deal. And the other thing, if we're not going to lend money, it ain't a good deal, right? I make no money with it sitting in the vault. It has to be lent out to make that interest in earnings. So we want to do every deal. But if we tell a client this deal is not going to work, it's not because we want it for ourselves. It's nobody's going to make you money at this structure. Now you can restructure it and it'd be profitable. But here's why it won't work. Yeah. And that's what our new clients need to find, whether it's a lender like us class, get into a reassociation, or find a mentoring class. They've got to get that to help somebody remove that emotion for them.

Well, that and, you know, on the flip side of a mentor, I will say make sure that you're not wasting that mentor's time. Right, with chicken. Don't— yeah, if you really need to know how to do some basic evaluation before you start just submitting 100 address addresses.

This will work, this will work, this will work.

Who knows? Yeah, that also is a waste of your time, it's a waste of the mentor's time, and it gets you nowhere. So when you have focused in on something and it really looks like a potential, then yes, it's very valuable to have a team around you, have good mentors, good companies, third-party companies, title companies that you've kind of built that relationship with. Yeah, so you can kind of look at the different aspects of the deal and make sure that, yes, if I borrow from Global and I'm selling it at this price and I owner finance it with this interest rate, that all these numbers look correct and I will end up making money and not paying money. Right.

Losing my shirt. Correct. And then bailing on it because it went south. Yeah.

But just think, I mean, if it's a legitimate option that you might move forward with, then, you know, that's the point at which you want to say, "Hey, mentor, can you please review this for me?" Review it.

Just verify that I'm on the right track. Yes. Perfect. So, I want to thank everybody for watching. I want to thank our guests, Kirti Joshi and Jim Benton, for being on the show. If you have any questions, comments, please reach out to us. Our website is globalintegrityfinance.com, or you can call us at 214-548-5190. And I look forward to hearing from you, and talk to you soon.