The Easiest Way to Make Money in Real Estate (That No One Talks About)

What's up, brother?

Quick question. What is the gator method?

Gator method? Oh, my gosh. That's the way to make money on other people's real estate transactions. You want me to explain it all for you?

Yes, please.

I love it. Let's go, guys. I get this question all the time. In fact, I get hundreds of questions every single month all about gator lending. Like, where do I find these deals? Where do I find the money? How do I get paid? How can I get involved? What is my next step? Today we're going to be covering all of that and more Gator A2Z. So if you're somebody that likes to take notes, this is going to be a great video for you. Let's get to the whiteboard. All right. A gator transaction is pretty simple, but there's so many different types of ways to make money as a gator. So we're going to cover all of those today with a whiteboard and a marker. So let's start with every real estate transaction is always starting out the same exact way. There's always a seller. Okay? This is a seller of an RV park, a mobile home park, an apartment building, a piece of land does not matter. Let's just say it's a seller that owns some sort of property. Now, this also applies to buying businesses. This applies to all sorts of other things that we lend money on. But let's just talk about a regular home right now. So seller is in some sort of pain, obviously, right? This is where deals are done. So wholesaler comes along. So wholesalers are reaching out to sellers who are in pain. Let's say that the seller is in foreclosure. Seller is in foreclosure and they're about to lose their home. The wholesaler goes to a website like dilsauce IO and they find all the foreclosures online. So wholesaler goes over to dealsougce IO, they pull a foreclosure list. Now, of course, this will work with any type of seller that's in pain. I'm just giving you an example about foreclosures right now. Wholesaler will call the seller and negotiate with that seller saying, hey, I want to buy your house. I'll give you an all cash offer or a sub 2 offer or a seller finance offer. Does not matter. The contract that they end up getting into is going to have a handful of things inside that contract. Number one, it's going to have purchase price. Number two, it's going to have earnest money. This is a big deal. You're going to want to know what earnest money is. Number two, it's going to have the or. Number three, it's the close of escrow. That's the finalization of the transaction. Meaning today I buy the house with the contract, but I still have to go through all the paperwork and finalize that transaction. The finalization of that transaction is called close of escrow, Coe in the business. Okay? And then the fourth thing that you're going to have is you're going to have an inspection period. IP inspection period. Which means, hey, I, the wholesaler, want to buy your house, Mr. Seller, for $200,000. Let's just use that as an example. And I'm going to give you $2,000 of earnest money to start the transaction. To show you I'm serious, I call earnest money the real estate engagement ring. Hey, I want to buy your house for $200,000. But while we're going through the paperwork and while we're going through the inspections, I'm going to put up $2,000 to show you that I'm serious about this transaction. That money is called earnest money and it is legally required in every real estate transaction. You cannot do a real estate transaction without earnest money. It's called consideration, legal consideration, meaning I have to put something up even if it's a dollar, 10 cents, whatever. But if you tell a seller, hey, I'm going to give you a dollar up front, do you think the seller is going to think you're serious? Absolutely not. So, hey, seller, $200,000 purchase price. $2,000 earnest money. Let's close escrow and let's just make up a number. 30 days. And I need 10 days to inspect the property, check title, make sure that the house is clean and there's no issues. So I can finalize the transaction and go and gather the money to buy the property. Now, what is this wholesaler and their biggest problem? Well, I own a title company. The title company I own is called Creative Title and Escrow. You guys can go and use our company, Creative Title and escrow.com 87% of wholesalers do not have money to put down earnest money. So Gator 1.0, the first type of gator transaction we're going to talk about today in this very long video. Hopefully you guys have your pen, your paper. We've been doing these transactions for over 15 years and we're going to be breaking down all sorts of things. So this is Gator 1.0. How can a wholesaler open up this transaction? Go get Another deal. Go get another deal. And let's say they have five transactions going on at one time, meaning they have five sellers under contract, five earnest monies, $10,000. Okay? In Phoenix, Arizona, the average earnest money is $5,000. In Nevada, it's about $4,000. In Los Angeles, it's about $15,000 is the average earnest money. Where are these wholesalers? If they're just starting out, where are they getting their earnest money? Well, that would come from a gator. So a gator comes into this transaction, and a gator comes along and says, hey, I can bring you your money. Okay, here's the gator. We'll make them green. Gator comes along and says, hey, I can bring you and cover that $2,000 earnest money so you can go and do your job. What is the wholesaler's job going to be? The wholesaler is going to go and try and sell that deal to a buyer. Hard money to buy this property. The gator gets a referral fee of 2,250 bucks just for literally referring them to that hard money lender. That's crazy. That's Gator 2.0, which means somebody else already brought the EMD. Somebody else is going to make the MD. I'll tell you where that money comes from. Another gator could come along and go, hey, buyer, I have hard money. Do you want my hard money? You refer them to myinvestorloan.com or another hard money lender, and that hard money lender is going to pay you a point. They're going to pay you 1% on that loan amount for bringing them a client. You don't have to buy the deal. You don't have to find the deal. You don't have to wholesale. You don't have to negotiate. You don't have to be the guy that's going out and getting permits and dealing with contractors, doing all that kind of stuff. You literally just find buyers that need access to money, send them to places that there is money, and you get paid a point. That is Gator 2.0, referring people to hard money. Abundant, abundant, abundant, abundant. It is so crazy how many opportunities there are in Gator 2.0. All right, great. So let's talk about where this money comes from. Gator 2.0 comes from a hard money lender. My investor loan. What my investor loan does is they wire the money to title. Okay, so my Investor loan gives $225,000, $225,000 to title when the transaction is finalized. Here's where the money goes, the first person that gets paid comes from title, and that goes to the seller. They get their $200,000 that the original contract stated. Out of that $200,000, $2,000 gets reimbursed to the Gator. Gator got his $2,000 back. Pace, where'd the money come from? I just showed you. And in that process, the seller's already received $2,000 because you put that $2,000 to start the transaction. And so really, the seller only receives technically $198,000 because that rounds off the $200,000 purchase. You've already given them $2,000 to start the transaction. There you go. Then, out of what's left, the gator gets their $2,000 back, their reimbursement, and then the wholesaler gets paid $25,000. Where does that money come from? Well, I made it red for a reason. It also comes from the title company. Hard money lender wires money to title. Title then distributes money to the appropriate places. 25 grand goes to the wholesaler. Or does it? Well, remember, we had this matter of $5,000 of profit that the Gator had. Now, this will open up another question that we'll answer in another video, which is, where does the gator get the paperwork and how do they protect themselves? I'm so curious. How do they protect themselves? In fact, somebody already has asked that question in the comments, and they didn't even watch till minute number eight, which is probably about where we're at. The Gator has gotten paperwork put together that protects themselves on their $2,000, and it also allows them to get their $5,000 profit. So out of this 25 grand that is remaining, the wholesaler won't get the full 25 grand. They'll get their $20,000, and the remaining $5,000 of that 25 will go to the Gator. Therefore, the Gator got their full $7,000, $2,000 reimbursed, $5,000 profit. So what's cool about Gator is that you go and solve people's biggest problem that are wholesalers. You bring earnest money or you bring transactional lending, which is another story I'll save for a little bit later. That gator, where does their money come from? Pace, I'm broke. I have no money. I have no money. Pace, where does that money come from? Well, I'll answer that in another video deeper dive. However, the very simple answer is, when people join the gator community, I fund their first 10 transactions, meaning they find a deal earnest Money deal. And they say, pace, I have this deal. I don't have any money. I go, no problem, let me fund it for you. So when you're in the Gator community, I just fund your first 10 transactions for you. That's where your money comes from. Pace, what about the hard money? Where does that money come from? I bring that money for you if you are inside of Gator tribe. Okay. All right, so We've got Gator 1, which is earnest money. We've got Gator 2.0. Let's talk about Gator 3.0. Let's talk about the third way I can make money on the same exact real estate transaction. All right, so what does the fix and Flipper do? The buyer, right, is going to fix and flip the property. He's already bought the property with my investor loans, hard money. That's where the purchase came from. But doesn't he have to fix the property once he buys it? That is where we enter into the fix stage, which I will make very simple. He now owns the property, and let's just say he needs $100,000 to renovate the property. Where's that money come from? How does a fix and flipper renovate a property after they buy it with a hard money loan? Well, that, in your world, the regular world, we would call that a private money lender, somebody that's willing to go in second lien position. So that is called Gator 3.0. So actually the most dangerous of the gators, there's no risk on Gator 2.0. There's no risk on Gator 1.0 if you have the right paperwork. But there's a tremendous amount of risk on Gator 3.0. I tell people that are in Gator, I say, be very careful doing Gator 3.0, because what you're doing is if you are the gator and you bring that money to the table, the renovation money, that money is now going to contractors, it's going to permits, it's going to payments, it's going to utilities and all sorts of things. And so that money could be mismanaged, that money could be misused. And so when you get into Gator 3.0, it's a more advanced strategy. And I've done multiple videos on exactly what to watch out for. And I've done 20 point checklists. So if you guys want the checklist on how to protect yourself on Gator 3.0, which is by far the most dangerous gator strategy, click the video up here. It'll Take you to that checklist. So there's Gator 3.0. So in the same real estate transaction, if I'm a gator, which I am, I can make money on the earnest money. I can make money when my buyer buys the property, and I can make money when my buyer needs to borrow money for the renovation. Three different points that they will need money. And by the way, every real estate transaction needs earnest money, Every real estate transaction needs purchase money, and every real estate transaction needs renovation money. This is what Gator is. And the beautiful thing is I bring the money for the gators for their first 10 transactions on Earnest money. So that should answer the question, where does the money come from? I bring the money for Gator 2.0, which should bring the answer to where do they get their transactions? Here I have a lender for 300 million and I have another lender that we've just onboarded for $2 billion that I give my gators access to so they don't have to go and establish those relationships. I establish these relationships for them. A lot of people are literally just referring their fix and flip clients to these hard money lenders and they' getting paid a point. Think about that. Last year I referred over $75 million of people to go to MyInvestorLoan.com I got paid $750,000 for referring people to MyInvestorLoan.Com $750,000. It's not my money. I'm not managing the transaction. I'm not dealing with the collections or anything else. I am literally just referring them to a hard money lender. And I'm getting paid a point. That is Gator 2.0, Gator 3.0. Now I'm wiring money to the client, right to the buyer. The buyer receives that money. Now I have to rely on that buyer to manage that money, manage the contractor, manage the permit. That is a risky situation that deserves a video all by itself. Now, I have a new videographer. He's sitting here right now watching, and he's the one zooming in and out and doing all of the things. And he might have some questions. Do you have any questions?

How would I get into Gator 2.0? Do I give that money to you or do I just say I have an open checkbook, I can give you earnest money, et cetera.

How do you get into Gator 1.0?

You mean, yes, 2.0 or. Because the 2.0 is.

You'll never, you'll never need any money for 2.0.

Because it's all just referral based.

It's all referral based. You're basically white labeling a hard money lender. Okay? So you never need to have any money in Gator 2.0 ever. My money, Your money. You'll never raise money. You'll never borrow money. You literally refer them to a hard money lender.

So Gator 1.0 is using your own funds.

Gator 1.0 is using my funds. For your first 10 transactions until you get up and going and you get your own money.

Let's say I have 20 grand in the bank.

Yeah, you could use your own money. I suggest people don't use your own money. And the reason I say don't use your own money because you're not learning a valuable skill of using somebody else's money. If I have the skill of understanding how to leverage other people's money versus you using your own money in the long run, who wins? You do. Because. Right.

You, the world has way more money than you do.

Right? That is correct. So if you. I tell the Gators, I say if you're using your own money, just admit you're being lazy, that you don't want to go and use either my money or learn how to use other people's money. Now, the other thing I give to Gator people in the Gator community is we have a lady that gives people business credit. So people jump in the Gator. I fund their first 10 transactions with my money so they don't need money when they join Gator. Okay, understood. First 10 transactions, I fund it. Okay? They make enough money, they could now choose, hey, I want to use that money to live off of. I can go buy a new car or pickles or sushi, whatever. Okay? I don't care what they do with that money. But during that time frame, you, if.