How To Successfully Invest In California Real Estate with Andy Teasley

Hey everybody, welcome back to the podcast, The New and Experienced Investor Podcast. Today we're talking about successfully investing in California as well as a lot of creative finance stuff. It's definitely a show you don't want to miss. I'm Alex Barnett. I'm one of your hosts. I'm the new guy.

And I'm Joe Homs, and I guess that makes me the old guy. Oh no, no, the experienced guy.

That makes you real experienced.

Yeah.

Uh, we have an amazing guest with us today. He's one of the leaders of the SoCal Exchangers, a creative finance genius, as well as a mobile home note buying addict. So you guys are definitely going to want to stick around. Uh, before we bring him on, I just want to remind everyone about our upcoming meetup, March 24th, uh, this coming Monday.

Yeah. Wow.

6 o'clock, Hangar 24. Burton from PropStream will be there to teach us some new tricks on how to find properties.

You don't want to miss that one. It's a great place to meet a lot of amazing partners. I always like to remind you guys, this is an interactive show. We are live right now. Make sure to share this far and wide with any new or experienced investors in your life and come with questions. I know you're gonna have a lot of amazing questions. Drop them in the chat and we, we will have it, we'll basically choose a couple questions to You know, ask our guests here towards the end of the show. It's one of our most requested parts of the show. Um, before we launch into the topic of, you know, investing in California, creative finance, let's go over our 2 tips. I would say, um, okay, you could have let that play out.

It's a long one, so I was trying to cut it off, but I didn't realize it'd be so abrupt.

Like, I'm sorry.

Okay.

No, it works.

I was getting pumped. I was like, yeah, here we go. Okay. My first tip is, you know, when you're, when you're getting started in real estate, try to focus on one thing at a time. When I started, I had shiny object syndrome. I'm gonna be investing in mobile home parks, RV parks, multifamily, wholesaling, flipping. Maybe just try and pick one, stick with that and see how far you get.

Has that changed?

No, I mean, I still have shiny object syndrome, but I think I'm honing it in pretty well right now.

Okay. And, and the conversation you had with the agent on the mobile home that took you an hour and a half to basically say— She was a sweet lady.

Yeah.

I wasn't gonna cut her off. She was a very sweet lady. It was 28 minutes. It wasn't that long.

It seemed like an hour and a half. I was listening to it.

Yeah.

Uh, my tip is find a mentor. And there's a lot of them, although there's a few that are leaving this world, but there's still a lot of them out there. Find somebody locally and try to gain as much knowledge as you can from them, because there's lots of different things to do in real estate. There's not just one. There's a lot of shiny object things to do in real estate.

Mm-hmm.

Do focus on one and become that expert in that field and become successful.

Perfect. Let's go ahead and bring our guest in. Today we have Andy Teasley here with us. Andy, thanks for joining us. How you doing?

Hey, happy to be here. I, I love talking to people. I hope you guys out there in the Zoomosphere have lots of good questions because I live for questions. I'm always shocked when some millennial will text me permission to give me a call because they don't pay any attention to my newsletter, which says call Andy anytime. I figured out a long time ago to put my phone in the other room at night when I'm trying to sleep So, if you call and I'm asleep, you're not going to talk to me.

The man has boundaries.

What time of night is that?

Usually midnight, 12:30, and then I'm back up about 6:00.

Really?

The grayer I get, the less I seem to need sleep.

Yeah, my cutoff is 9:00.

Okay.

Yeah.

Well, I went to bed at 9:00, I'd be awake at 3:00.

Well, I didn't say I go to bed at 9:00, but—

We're taking questions.

I stopped taking questions at 9:00.

Okay, that seems reasonable.

I think so.

Yeah.

You know, I'm sure I started— I start up at 9 in the morning, so that's pretty good. 12 hours. Yeah, you're doing better though.

Well, you know, I just like— I love talking to people. I love good questions. I have a newsletter I put out. It comes out free every Sunday. It's called the Weekly What If, and I have to come up with 3 unique questions for a calculator question. That's 150 of those every year, so I gotta have questions so I can write them.

Amazing.

So it's a lot of work.

That's great. Uh, and maybe we could go over all that, um, you know, the newsletter and, and the meetups and stuff. Why don't you go ahead and introduce every— introduce yourself to the audience? How did you get into real estate? What were you doing before? What led you there?

I know this is going to be hard to understand because nobody else has done it this way, but I was up late at night watching infomercials on television And I saw an infomercial for a real estate guru, and her name was Ione Young Gray. I took her class in 1982. It was $3,000. That was a hell of a lot of money in 1982, as the gray-haired folks in the room can attest to. It was an adequate class. It was probably worth about $250 back then. We did a lot of crazy things like running around dumpster diving between real estate— behind real estate offices, trying to find MLS books that had been thrown out.

That's so great.

First time I ever heard that.

Awesome. You have to understand that the kids nowadays, you youngsters, man, you got so much technology at your fingertips. One of my biggest challenges back then is one of the things she taught us is if you want to get all the details on a piece of property, you call the title company and you ask for a property profile with deeds. The problem was when you're sitting on your parents' bedroom talking on the extension phone, 'cause there was one in the kitchen and one in my folks' bedroom, And you ask for a property profile, and they're used to couriering the property profile out to a real estate office within about 90 minutes. They had just gave great service back then. The problem is I could sound like a business on the phone, but if they showed up and I'm at my parents' house on the bedroom, it's kind of hard to look like a business there. So my trick was I would always say, oh no, my brother-in-law was just around the corner from your office. So if you send it to the office over there on Central Avenue, I'll send him over on his lunch break and he can pick up the property profile. So I'd go pick it up.

Hmm.

Because that was the challenge. Now it just comes in the email 2 hours later and you go, there it is. And it's got just a ton of information. And a lot of these youngsters nowadays don't even appreciate property profiles because they go to PropStream or PropertyRadar or a lot of these online sites because they can get a lot of that stuff. But we didn't have that back then.

Yeah. I feel like—

The good old days.

That's what I'm saying. I feel like it was less competition than there is now because people can be in their underwear, like looking up properties, putting in offers when you had to actually go to a place.

Yeah. But then how many of those people that are sitting in their underwear dreaming of making offers actually make the fricking offers? Whenever I run into somebody at one of our meetups that says, I'm not getting any success, you can't do this stuff, you can't buy houses in Southern California, I say, how many offers did you write last week? None. How many last month? None. How many this year?

2.

I'm going, you're succeeding. You're getting exactly what you're shooting at— nothing. So people have to take action.

Yeah.

There's opportunity in every market.

Okay.

Yeah. I mean, well, let's jump into that. I noticed in your bio, I think you have, I don't know how many rentals here in California.

Okay. I peaked at 51.

Hey-oh.

I'm down to 32.

Okay.

Which is 10 more than I ought to have.

All right.

And actually, when I hit 22, I said, I'm done. I'm not buying another house.

Sure.

I bought 2 last year and I'm buying a couple more right now. Yeah. It's so fun. It's just, it's, it's too easy.

Okay. And what, these are single-family homes? These are mobile homes? What?

Mostly single families and mobiles on land.

Okay.

And all within bicycle distance of my front door.

Oh, okay. Is there a reason for that?

Yes. The post-apocalypse bicycle rule.

Okay.

The post-apocalypse bicycle rule says never own a rental house you can't reach on a bicycle. Because after the apocalypse, you're going to have to tie the red flyer to the back of your bike to go out and collect the rent. There may be no gasoline, no government, but you're not staying in my house if you're not paying me rent. Even if I have to take tomatoes and squash, you're paying me rent.

There you go. I never thought about that, possibly bartering for rent. You're open to that?

Absolutely. I barter all the time. I love bartering.

Okay, that's great. And what, what area is this?

Near Palm Springs, the Thousand Palms community.

Gotcha. Yeah, so there's a good mix of single-family homes and mobile homes on land out there.

Yep, yep.

Awesome.

Does it matter if it's in a, uh, senior community park or other?

So Palm Springs is heaven's waiting room. Yeah, there's no shortage of 55-plus people. And the nice thing is that they are dying to get out of that neighborhood.

Yeah, they're dying to get in too.

So I, I— it's interesting, I've developed a neighbor— a reputation in my neighborhood as being the crazy guy that overpays for houses because I will pay any price for any house in my farm as long as I can pay $500 a month. I don't care, I'll pay a million dollars for a house that's worth $100,000 as long as my tenants can afford to make the payments.

Okay, your price, my terms. Yeah, sort of situation.

Yeah.

Gotcha. So all these have been acquired on seller finance?

The vast majority.

Okay.

Occasionally it's cheap enough, I just buy it for cash.

Okay. And when— from that course that you talked about in 1982, what did it cover? Any creative financing, or was it just sort of a basic outline?

It was a basic outline. Like I said, today that course should cost you about $495, Basic Real Estate Investing. Which nobody seems to teach. Mostly they teach basic real estate investing and another day or two of hard arm twisting and getting you to go spend $10,000 to sign up for their mentoring program. So it was interesting you brought up mentors. They're, they're a dangerous thing. If you have a mentor that depends on your check to pay his bills, he's not a very good mentor.

Right.

You're going to be much better off with a mentor who says, Well, I don't need you, but you can buy me lunch.

Mm-hmm. That's Joe's rule.

Thank you.

Meet Joe.

Thank you.

I would chime in and just say like, that's like, for me, that's like a guru versus a mentor. There's a lot of gurus posturing themselves as mentors when, you know, yeah, their whole MO is to get paid to teach you the bare minimum.

You know, the old Jack Miller rule of thumb was you should be able to fly to town pay for the seminar, pay for the hotel room, and not spend $1,000. Granted, that was a 1980-something rule, and today I can't seem to go to a Pete Fortunato seminar without dropping a couple grand.

Mm-hmm.

But I'm not paying $5,000 to be there and then the hotel and the airfare and all that on top of it, right? So I, I encourage you, when you're looking at the person that you're considering taking his class, Ask yourself, does this guy need my money? Yeah, and it's a good question. If he does, you're in the wrong place.

Good question. All I need is for you to buy me lunch.

Yeah, yeah, that's fair.

It's not hard.

Well, and for your time, you know, you should be yeah maybe compensated a little bit. But yeah, when when their business model starts becoming the courses, the seminars, the events, and they're not even doing real estate deals anymore, it's like. I don't know, they're being left in the dust. And then now you're learning from someone who's not even doing deals anymore.

Yeah, he hasn't done a deal in 15 years, but he's going to teach you how to do it in this market. Can you imagine there's been a change in the market in the last 15 years?

Yeah, for sure. I would think so.

Just a little bit.

Yeah, I think in the last 15 months. So how, how did you get down the path of creative finance and You know?

Oh, wow. Um, I'm a serial entrepreneur. I get bored easily. I've done a lot of different things. If you've gone through my bio, you've seen. Um, and I got— I bought a barter franchise in about 1997, '98, and it was a BarterCard franchise. And that's a business where you bring businesses together to exchange their goods and services for Basically, it's, it's a different kind of checking account. And the guy that runs the office has got to drive business because he gets paid on a fee on every transaction that happens. And I was introduced to a gentleman named Spud Barrett who ran a personal property exchange back in the day. And I went to his seminar. He just started coming back out to the West Coast after many years. And I watched what he was doing with the 16 feet of butcher paper stuck to plywood in the front of a ballroom in the hotel, writing deals, offers on the board. And I looked at that and went, ah, this is great, I understand how this works. And, and I started getting really active in that group because I could take product that my clients owned but couldn't sell and trade it for product that my clients might like to buy. So I could trade stale inventory for fresh inventory, and it was personal property exchanging. And I did a lot of business in that area, and I was so active that he hired me to be his board writer. So for many years, I was the guy writing with the magic marker on the piece of paper and did that. I've been doing that since then. Was quarterly for a long time. With the COVID it stopped for a little while. It's back about annually now.

Hmm.

Um, so then it evolved into learning about real estate exchanging. So I'm very active now in, in a real estate exchange world where we do what I call a whiteboard meeting.

There are—

hopefully, let's go take a big step back. 19— prior to 1976, the 1031 tax code said if you wanted to change your asset from one asset to another, you had to find the asset you wanted to acquire and go trade your asset for that asset.

Hmm.

So what that meant is that regularly in big hotel ballrooms down here in Orange County, there would be 200 people in the room every week trying to connect their client's asset that they didn't like anymore to someone else's asset that they liked. In 1976, a gentleman named Starker sued the IRS and said, this is too complicated. I should be able to sell my business, my building, have somebody who's licensed and bonded theoretically hold my sack of cash while I go shopping for my replacement property because it's too complicated to have to connect things. There's a champion of the exchange world who back pre-'76 did a 27 Transactions, simultaneous claiming— claim exchange in 9 states. That means they had escrows open in 9 states. They all closed within minutes of each other to solve his client's need to go from where he was through 27 transactions to get where he wanted to be.

Oh my God.

So that's what Starker changed. Now you, you sell your property, Somebody holds your cash, you presume he's honest. You have 45 days to identify and 180 days to close. So that's the way a lot of exchanging goes now. So that ballroom full of people that met weekly is just degraded down to an exchange that happens monthly with about 20 guys in the room. And that's a typical merchandise meeting where agents come and they say, my client has a mobile home park and he wants $2 million. And theoretically, somebody's supposed to make an offer on that and it'd close the deal. Well, there's a better system, which is called a whiteboard meeting, where we have a big whiteboard on the wall electronically. Excuse me, um, I'm still not up. I'm not well from the darn cruise.

Okay.

Anyway, so we have a whiteboard. It's, it's a whiteboard with sticky notes. And we put real estate and cash and notes and stuff on it, and people make offers and we structure deals. And the one that I run in Riverside, we do between 5 and 15 commitments in 2 hours every Wednesday at 2 PM.

That's awesome. And these are— I mean, I've heard about this Exchangers Club from so many people, so it's— word's out.

I think it's the best creative finance class in the country. And it's—

is there, is there a minimum deal that you're looking for or a maximum deal?

So our rule for stuff, yeah, is the stuff has to have a value of over $200.

That's it?

That's it.

Wow. And so there's no maximum either?

Oh no, no maximum. We've had, we've had multi-million dollar syndicators in there trying to fund deals. Wow.

That sounds very interesting.

I know, we gotta take a drive. We gotta get in on this. Well, and can you join via Zoom?

Yes, you can Zoom in or you can show up live. We have the best real estate education facility in Southern California. Uh, the gentleman that owns that organization, the club, figured out that for what he was paying to rent a hotel ballroom, have awful coffee and awful food, and do that meeting once a month, he could rent an industrial warehouse space with an office. So he did, and we've converted that into a very nice classroom with all this technology stuff you have here.

Awesome.

And we do a combo meeting, so it's a Zoom and, uh, and in person. And because it's a nice quiet facility, we're able to really understand— you can be on the Zoom and have a good meeting.

That's good.

Where the meeting that I first learned about whiteboard meetings was in St. Petersburg. And that meeting's held in a Denny's. And the Zoom portion of that meeting is not very good, right? Because you've got dishes rattling and the freaking shake machine is inside of the room. So it's, it's hard from the Zoom.

Wow. Is there a qualification to get into that room?

Yes, we hold a mirror under your nose. And if you can fog it, you're welcome.

Okay. Wow. That's fair. Wow.

So I mean, do you, do you Do you have any, you know, just—

I don't want to say weirdo people out there, but—

Of course we have weirdo people. They're the fun ones.

Do you have any weirdos that come in and say, yeah, I'll give you $1 million for that, you know? And it's like they never show up again.

Well, so here's the rule of the room. There's no due diligence happening in the meeting. We have 2 hours to structure deals. So after the meeting, it's time for due diligence. If you traded some gigantic amount of note or money or something for a mansion, You need to go put boots on the ground, look at the mansion, make sure it's not a wooden door with a half moon carved in the door.

Okay.

Okay. That, that makes sense.

Yeah, it's good.

It helps speed the meeting too, right? Because everybody understands you put an offer on the board, you're expected to go out, do your due diligence. And of course, the people that run the room, well, we can't be responsible for the decisions you make. So you have to wear your big boy pants. And, uh, but if you do get screwed, we want to know because we do our best to eliminate bad actors.

Mm-hmm.

And, and we've had some daisy chain wholesalers show up at the meeting. And those of you out there in the Zoomosphere who don't know what a daisy chain wholesaler is, that's when you get 5 different leads from 5 different wholesalers for this great house they've got under contract, and not one of them has it under contract.

Yeah. Yeah.

That's my email box every day.

Yeah.

I'll get the same property, all different prices. I'm like trying to go back. Who's got the lowest price?

I might have the first shot at it. Yeah.

Yeah.

The best is when you check and it's active on the MLS for like $40K cheaper than the wholesalers.

Right. You're like, what is going on here?

Those lovely wholesaling seminars.

Oh yeah, that really— I mean, And, and I have to give, you know, sort of credence to that because that's how I started in real estate was like learning to wholesale. But it's really sourcing leads, be, you know, becoming, being able to acquire properties.

But I have a question for you as the youngster in the room.

Okay.

What's the toughest skill set that you have to have to be a real estate investor?

The toughest skill set? To learn?

To, to, to succeed. What's the skill that you need more than— that's the most important skill?

Um, perseverance.

I think that's just— that's required of many things. But what's the skill?

Um, I would say communication.

Okay, closer. Am I getting closer?

Can I guess?

Yes.

Underwriting?

Underwriting, deal acquisition. Can you understand what's a good deal and can you get it under contract?

Okay, nice. That, that I—

that's, that's the toughest job in our industry. Can I get, can I get somebody to write a contract and take it to an escrow office and let the little girls there do their thing and close it?

Mm-hmm.

Anybody can do that.

Right.

But can I find a deal, negotiate a contract, and make the person I'm buying that house from happy to give me a price I can make a profit on?

Yeah.

Well, that's the toughest thing we do. And what do you have to be successful— if you want to be a successful wholesaler, what do you have to do?

Exactly that.

You've got to get those deals.

Right.

So wholesalers, it looks great on TV because you don't have to have any money, right? But the fact of the matter is you're getting poorly rewarded for the hardest skill we have when you should be massively rewarded because it's the most valuable skill we have. So I tell everybody that comes to around our group, I say, get a good deal under contract, negotiate it, sign it. And if you need some money to make the thing sing, bring it to our meeting. Stand up. Put— I got this house in Dana Point. And it'll make a great Airbnb and it's okay in the neighborhood and I've got it under contract and I'm $50,000 short for earnest money. Who's going to give me the 50 grand in the room? And somebody in the room's probably got the 50 grand. So instead of selling that for a $5,000 or $10,000 or $15,000 wholesale fee, you've got a piece of the deal. Even if you have to give up 80% of that deal for just 20%, Would you rather have $15,000 or 20% of a performing Airbnb in Dana Point?

Yeah.

Pretty easy choice, isn't it?

I would say so. Do you have a— do you have any Dana Point short-term rentals?

No, I can't get here on a bicycle. And short-term rentals are a job, Andy. There's a funny thing. I'll stand up in an exchange meeting. I do 6 hours minimum every week. And I say, I'll take any part of the deal but the sweat.

Mm-hmm.

And running Airbnb is a sweaty thing.

That is. Yeah, I mean, it seems like it's hit its peak. Um, it's interesting because I've only been investing for, I don't know, like 3 and a half, 4 years. But to see the, the trends of Airbnb is gonna last forever and it's the biggest thing and it's a moneymaker, and then now it's like Airbnbs are underperforming, everyone get out. You know, just to see those trends come up in such a short amount of time is—

you realize there's nothing new, right? Um, I'm sure you've watched It's a Wonderful Life, right?

Yep.

All right. And, uh, when it— when he went back in the world where he wasn't, what was his mom doing?

Oh gosh, I don't know.

You remember?

Yeah, I don't remember.

Short-term rental?

How about you?

I haven't seen it.

Oh, really?

Don't get her started on movies.

Oh, it's Christmas? Maybe I have seen it.

Yeah, It's a Wonderful Life with Jimmy Stewart and Donna Reed.

She's too young. She's too young.

Sorry.

So yeah, so his mom, since his— he, he was dead, his kid brother died because he wasn't there to save him, and his dad died from a stroke, ran a boarding house in the '30s, right? Is that Airbnb? Mm-hmm.

And, and co-living, which is all big now too.

Yeah, there's nothing new in real estate, right? It just goes in cycles.

Or, and then a guru will repackage it and come up with a really cool name and then sell a course.

Funny, funny story about names. I had one of my students— when I teach my class, so Saturday is financial calculator and Sunday is discounted note investing and mobile home flipping, and I try to get one of my students to do 45 minutes in part of that day. And, um, so I'm doing my class in Escondido, and I had 2 of my students come down to speak. And one sent me his pages, and, and he started— in his pages was talking about novation agreements. And I said, what do you think that means? And he described what it was, and it was being a broker without a license. And I'm going—

Hmm.

That's a criminal activity. That's not what novation means. Somebody has stolen a term that has a legitimate meaning.

Mm-hmm.

And taken that to be their fancy word of the day. So now that's what they're going to call brokering without a license. Novation agreements are what you do when you have a lower-level financing, you have a second or a third, and the borrower negotiates a structure with the first, which lowers your safety in the second. And they record a new note against the old mortgage.

Hmm.

Because they have damaged your position on that house, maybe they ended up rolling an extra $100,000. And so now you're $100,000 deeper out of position. You file a novation action and you get the court to move your second or third Up above the one that's been changed because the one that's been changed is new, a new note, and it's younger than your note. That's a novation.

Oh God. Okay, good to know because yeah.

Um, have you been brokering without a license?

No, no, no, I would never do that. But I've been seeing a lot of content, you know, that what you would say that to the novation king on Instagram.

Yes.

Okay, this is his old business model.

There's an afternoon guy who, who have— he and I have had some terse conversations over the year.

All right. Oh yeah, good. Well, yeah, and it's like the experience level, you know what I mean?

It's—

you just coin a term, you teach it to a 19-year-old, and then the cycle continues.

Yeah. So, and then at some point they're gonna make Subject-to transactions illegal nationwide. They're going to make wholesaling illegal without a license. That's in several states right now.

Yeah. So are they going to make sub-to illegal, you think? I mean, it's been around for that long.

There's a certain guru out there who preaches the hell out of it.

Right, right.

And his students are saying, well, my, my contract says even though I promised to take care of making the payments on your first, right, I sold that deal to someone who fogged the glass plate and handed me $6,000. So I'm out of the deal.

Right.

Well, that's criminal. At least morally criminal, in my opinion.

Yeah.

If I'm going to do something subject to and I don't want to keep that house forever, the only legitimate, reasonable, honorable way to do that is to sell it on a wrap. I'm going to take that $5,000 profit. I'm going to put it in a wrap note and they're going to pay me And I'm going to pay the first for that seller because I promised to make those payments, not the person that they never met. That's not what they're teaching, and people are getting hurt.

Yeah. So yeah, I've seen some stories, and I know he's even changed what he said because in the beginning, everyone— I mean, he— a perfect example. He's teaching something that's been around forever.

Well, subject to. Yeah.

And you're packaging it like, look what I just came up with, this is crazy. And then he's like, it's so simple. And then you don't even need to have cash to do it. All you gotta do is you negotiate and then you could sell it to someone for 15 grand.

Yeah.

And people figure out how to do that. But then you're totally right. Then there's all these buyers that default. Now you're screwing up somebody's life.

Mm-hmm.

Basically over You know, $5,000, $10,000.

Yeah, that's, that's not an honorable thing to do. And in my opinion, honorable business, not hurting people, is more important than anything else.

I would say so.

Um, I, I have a structure just so you understand what I do when I'm buying a house. I will typically spend 90 minutes kneecap to kneecap with the sellers, their kitchen table, their couch, and the coffee table, whatever it is. We're going to get face to face, kneecap to kneecap. And I'm going to spend 90 minutes talking about nothing, and then we're finally going to start talking about their house, and we're going to come to an agreement. And I'm going to reach across the table, and I'm going to shake their hand, and I'm going to say, I believe this is a contract. When I shake your hand, I have made a contract with you, and I will do everything I said I would do in this conversation. And I believe you're an honorable person. And you're going to do everything that you said in this conversation. And then I will hold out my spiral notebook and my ballpoint pen, and I will say, unfortunately, no two people remember a conversation exactly the same way. Would you mind jotting down a memo of what we've agreed to? And they write my purchase contract.

Hmm.

And I've had people that stood up to me and said, but that's not an enforceable contract. And I say, you're right. So if somebody gives them a better offer, am I going to haul them into court in front of the man that puts the black dress on to go to work every day and say, you have to do this or I'm going to sue you? No.

Hmm.

If I do that, what's that person going to say to everyone they ever meet that's in that area? They're going to say, that bastard Andy sued me. He forced me to do something. I could have made another 50 grand selling it to the other guy.

Hmm.

So instead of— he's gonna— they're gonna ruin my reputation so I could get one house, right? I'd much rather let him have the house, and they'll tell people, man, Andy's— I got a better deal and he let me walk away. They're going to tell all their friends that I'm a mensch. And what are the odds that the guy that wants to overpay for the house more than I'll pay for a house Is going to close, right? Pretty slim.

Yeah.

And I let people know, hey, if it doesn't work out, I'm still here. I'm a buyer today. I'll be a buyer in 60 days.

But you can still open up escrow with that.

Oh, I do them all the time.

With lined paper.

Yeah. Scan it, fax it, or email it in. Fax. God, I haven't had a fax machine in 10 years.

Yeah. Email it in.

Okay. Yeah.

That's all they need. They're going to take that one-page agreement and turn it into a small phone book.

Right.

Yeah, but they're, they're a neutral third party.

Mm-hmm.

Anytime I've read CAR forms, I've had people that want to do CAR forms on things. 28 pages now.

Yeah.

You realize when I took my guru, she was upset. And one of the things she was upset about was that they had made the purchase contract 2 pages. There was no excuse for a 2-page purchase contract. Use the old one, Xerox it, and fill it in with blue ink so we could tell what the original is. That tells you how old I am, right? And that was what we did. We used the older form, one-page purchase agreement. Now what's it, 28 pages?

I don't even know what's in it.

It's insane. And I've been known to go through— when I'm being forced to use one of those, I'm going through N/A, N/A. Right, right, right. I hate that.

Yeah.

But I guarantee you that in that 28 pages, is a number of things that are contrary to our contract. When I shook their hand, it didn't say there was going to be a, uh, uh, uh, uh, boy, the darn stroke. Just those once-a-year words go, uh, liquidated damages clause. All right, there's no liquidated damage in arbitration. Yeah, all that crap. I don't, you know, lawyer stuff, this, that. Yeah.

That's who got involved was the lawyers.

Yeah.

98% in there is protecting the darn broker you work for or the lawyer or the California Realtors Association. I don't care about any of them.

So I'm assuming all of your deals are usually off market.

Well, even when they're on market, I'm not licensed.

Right.

So if somebody's got a sign in their front yard and I want to buy their house, can I walk past the sign and go talk to the seller?

Yes.

If I talk to the agent, can they sell me the house?

Yes.

No. Oh, oh, agent can't sell the house. They gotta present an offer to the seller. Yeah, right, right. Sell their house.

Yeah, I see what you mean.

Yeah, I'm gonna talk to the seller, not the agent.

Yes, correct.

I do some pretty crazy deals. Do you think that the 90% of the agents out there can explain my offer to the seller?

They're gonna be like, this is illegal, I've never seen this before, and I've been an agent for 20 years. That's, that's going to be their answer.

Yeah. Here's an offer, say no.

Yeah, yeah, exactly.

My broker said I couldn't do it.

Yeah.

Okay, let's, let's get into some, uh, maybe some recent deals or maybe some of your favorite deals that were pretty unique and creative.

I don't have a favorite child.

Okay, maybe like the most recent so people can kind of see, you know, like a creative deal in action.

Oh well, like I said, My, my basic easiest cakewalk thing is I have about 20 widows that live in my farm. And when one of their friends passes away, inevitably their heir calls mom's friend. Oh, I've got the house. I'm in, I'm in Wisconsin. I don't, I can't live there. I'm not old enough. What do I do with the house? And the widows say, this is what you do. You call Andy. He pays more than anybody else. Come take what's important to you, you know, the pictures, the stuff that matters, the memorabilia. Take it out, leave everything else there. You can leave the food rotting in the refrigerator if you want to. He'll take it just like it is. If there's a car in the driveway with flat tires, don't worry about it, he'll handle that too. And I will go and talk to that heir, and I will pay more than anybody else will because I'll get terms. They don't need money. They didn't need a lump of cash because mom passed away.

Mm-hmm.

They just have a problem. They have an expense. They're clear across the country and they don't want the house. They can't live there. So if I'm going to give them $500 a month for the next 600 months, is that a good thing for them?

It's pretty good.

Yeah. So that's my typical buying.

Okay.

And are any of them savvy to the point where they're like, well, I want some interest?

I'm very interested.

And what— nice, you've done this a lot, I can tell. Down payment, I want this, I want half up front, you know, like people—

sorry.

Okay.

If you want half up front, for every dollar I pay, I want $2 in principal back, right? I'd rather pay you more. How do you ask for seller financing when you're trying— you negotiate some creative deals, don't you? How do you ask for seller carryback financing?

Um, I usually— well, if it's a price thing, I'll say, if I'm able to come up to your price, would you sell to me on terms? And then they say, what's terms? I say, well, it's kind of like, you know, and then go into some convoluted—

I'm going to give you a teachable moment.

Yes!

What's the default answer in negotiation?

Silence.

You're selling a car.

Okay.

Guy shows up to look at your car. He says, man, those tires are shot. I'm gonna have to put tires on this car. Would you knock off $400 so I can put tires on the car?

No, no, no. Yeah.

Gee, I just pulled the dipstick and that's pretty awfully gray. And look at all this leaking on this engine. I think that engine's gonna have to be rebuilt this year. I want you to knock off $500 because the engine needs to be rebuilt.

No, no.

The default answer in negotiation is always no. People are wired to say no. So next time you want seller carryback financing, I want you to ask this way: in the event that I can pay you more, is there any reason you wouldn't rather have more?

Okay.

What's the default answer? No, no, no. There's no reason I wouldn't rather have more.

Right, right, right, right.

There's $1 million just there for free.

Thank you.

That's—

yeah, that's really good.

Okay.

I wish I could say that was mine. I got it from Pete.

Okay, nice.

Wow.

Okay, there you go. That's a nugget right there, folks. Hope you're taking notes. Yeah, yep, yeah, yeah.

That's, uh, the big sound effects board, right?

It's fun.

It is fun. Okay. Hmm, that's great. So, and then just being in this farm, people know you. So that's constant lead flow.

That's why I have 10 more houses than I should.

Right. Okay.

Is there any reason that you did not get your real estate license? 'Cause it sounds like that was like a major decision.

It was. Are you familiar with the Ben Franklin chart?

No.

Okay.

Ben Franklin—

I'm not that old.

And you've never sold vacuums.

No.

So a Ben Franklin chart is a piece of paper with a line at the top and a line down the middle, and on one side you put benefits and on the other side you put detriments. And if you're trying to make a decision about something significant in your life, I encourage you to set some time aside, get away from all the people that annoy you and distract you, and do a Ben Franklin chart. on that decision. So when it came to, do I want a license, they listed the benefits. I could get the MLS. And then I looked at this, the other side, and I said, well, in the desert I get MLS anyhow. The only thing I don't get is broker's notes and aging. And when I was buying houses actively, lots of them, did I know how long those ads had been on? I was looking at the darn MLS every day. So, I didn't need aging and who cares what the broker has to say? I'm going to go look at the house. And I went down, I had benefits, detriments, and the one that says I can't walk past that sign and talk to the seller because I have to make an offer through the agent because I'm an agent. I don't like being controlled by paint. I refuse to be controlled by paint. It's all I can do to be controlled by colored light bulbs when I come to a crosswalk. So, I did a Ben Franklin chart and I looked at, that and decided that there were more detriments to having that license than benefits.

Good decision.

I think so. It's made me a hell of a lot of money over the years.

Yeah, good decision. Yes.

I have friends that are married, and one of the couple has a license, so they get all the MLS access, and the other one doesn't. So when they see a house that's listed, the, the one that doesn't can walk up and buy the house.

That's what we do. Does that sound familiar?

That's what we do. Yes, she got her license and I did. I can go rogue.

Yeah. Now, if they— if the seller screws their agent, that's really not on me.

Oh yeah.

If they're dishonorable, that we're probably not going to do a business anyhow. And they might say, you know, if I know there's an agent involved and I'm trying to get seller carryback financing, I'm going to be sure there's 10% for down payment because that agent wants to be able to close and get paid.

Yeah.

Yeah. And it's nice when you do come across an agent that may know about seller financing, but it's pretty rare.

It's pretty rare.

It's pretty freaking rare.

Yep.

But you do see it in the mobile home space a lot more.

Well, nobody— I mean, the, the, the mobile homes. So there's an interesting question I like to ask people. I have 2 mobile homes I can secure a note against. One is a 2022 Clayton You know, one of those ones that Warren Buffett made, and the other's a 1959 Angelus. Which would I rather have my notes secured against?

I'm thinking the newer one, but I know I've only known you for a half hour now, but I know that's not going to be the right answer.

No, it's not the right answer. How hard is it to go to your credit union and finance a 2022 Clayton mobile home?

Oh, not that hard.

Not that hard, right?

Yeah.

How hard is it to finance a 1959 Angelus?

All right, impossible, right?

So who's going to pay my note to the end?

Oh, the light bulb went on.

Wow, gotcha. Another teachable moment.

Okay, I love my old rusty boxes. They're great.

Yeah.

And who's gonna— how much do I have to pay for a 1959 Angelus?

Not that much.

$3,000?

Yeah.

And I'll put another $4,000 or $5,000 into it and upgrade it and give it some windows and some wood flooring and some paint. And I'll sell it for $30,000, $40,000, $50,000 note with $3,000 down.

But you can't cash flow in California.

You can't. Oh, no, it's impossible.

No, it's impossible. All you can do is just—

Go buy in Utah or Ohio.

Right. Cleveland. So what do you say to all those people?

I tell them they're right.

Okay.

Get them outta here.

If you can't do it in your— if you believe that it can't be done here, you can't be done here.

Yeah. Okay.

I do it here every day, but if you believe it can't be done here, it can't be done here.

Yeah.

Yeah.

There's no arguing with him.

I was in a friend's cabin. He does business in Crestline. And he runs a little meetup once a month up there and has lunch, and then they go out and look at somebody's project. And we're in this house, a cute little old house. It's got warts, but you know what doesn't? It's a 100-year-old house. This is Southern California. It's, you know, 30 miles from San Diego, 30 minutes from San Diego, or from San Bernardino. And he bought it for $125,000. When that's finished, it's worth $350,000, $400,000. Can he make a profit on that?

Mm-hmm.

Don't tell me there's no business here.

Oh, yeah.

I mean, the last mobile I bought in my farm was— I think I paid $135,000 for it. And it rents for $1,950. I'm okay with that.

Dang. Okay.

Yeah, heck with that 1% rule.

Yeah, really? Okay. Are you having the people pay the Space rent or—

Yeah.

Okay.

So they pay the space rent, they got their note to you. You're just acting as the bank.

Right. That really is helpful when something breaks and they call me and I say, and?

Yeah.

You want a referral to a plumber?

Right.

You're not a tenant.

Right. But you do have tenants as well.

In my single families.

Yeah.

Okay.

I like to say I have 32 families.

Okay.

Who work 10 hours a week. To pay my bills.

Yeah.

Wow.

The math. I watch the math grind now.

Yeah, exactly. We're all silent. Okay, so let's get into that. What, what's the biggest challenge in, you know, in managing that many properties? Are you self-managing or—

Absolutely.

Okay.

Can I tell you the big— I will share a story. This is a good story. There's a tax attorney and educator named John Hyer. He's the smartest tax attorney and former CPA in the country. And I went to Puerto Rico for one of his classes. And he does classes well 'cause he loves messing with the IRS and following the tax code. So if you go to a Puerto Rico class with him, you will go to class Thursday and Friday and Monday and Tuesday. So because it's not economically feasible, that's a good code word out of the tax code, to fly home for the weekend and come back on Monday. Because of that, you get to have a weekend in San Juan, Cap— in San Juan, Puerto Rico, and write all of it off on your tax return.

Nice.

So on Friday, little bastard, he says, if you get audited, if you're taking the real— the real estate professional deduction on your tax return, 90% of you in here that get audited are going to lose All that depreciation that you've taken off back 5 to 7 years, because none of you can prove that you've spent 750 hours in property management this year, documented, kept track of the hours you spent. So I'm sitting there going, because there was no way I had— could— I could never prove 750 hours because I don't spend 200 hours in property management. So instead of enjoying my weekend smoking cigars and drinking Puerto Rican rum, um, I fretted for the weekend. So Monday I cornered him. I said, John, you've ruined my weekend. There's no way I can prove that I spend 750 hours in property management because I just don't. And he said, well, is there anyone else in your company that works more hours than I do? And I said, you do. And I said, no, I'm Don't have anyone else, it's just me. And he says, can you prove 150 hours in property management? I said, well, if I figure 45 minutes for every deposit, every trip to the ATM, then I think I can prove about 200 hours that way. And he said, then you'll survive the audit. That's exactly what I do with my property management business. I open the mailbox, I take the envelopes out, Take the check out, write the amount of the check under the return address, take the check to the ATM, take the envelopes to the desk, put them in the shoebox until I catch up on posting every 60 days. That's it. I, I, when I'm choosing tenants, I, I might, I program my mind to say I'm hiring a property manager.

Mm-hmm.

If you want to rent a house from me, And you don't own a toolbox, you're out of luck.

Hmm.

If I have a house with a lawn, do you think I'm going to rent that to someone who doesn't own a lawnmower?

Hmm.

No. In the lease-up, which I spend 90 minutes on, my future tenant will agree to only leave that house in a gurney. And, and when he goes, I expect their kid to take over the lease. They are responsible to take care of the house. They're responsible not disturb the neighbors. They're responsible to pay their rent on time, and they are responsible to not disturb my peace. And I will give them the one thing I provide better than any other property manager and manager in my business: privacy. Because I will see the inside of that house. In December with no notice when I stop by with a Christmas present, and they will invite me in for a cup of coffee.

Do you tell your tenants that you are the owner or the property manager?

Well, I'm not the owner. I don't own anything. I'm a pauper. Can't you tell from my fancy dress?

Thank you.

Thank you. And so that brings up another question. I know mobile homes are different, but your single-family residences, are you titling them under an LLC, a land contract? What instrument are you using?

So I was in another class with that same attorney called Advanced Strategies last, not this January, but the one before when FinCEN had just been announced. And I sat in the back of that room listening to him talk about all the, Horrid things that the government was going to do to us with the Financial Crimes by the Government Act. And Peter Fortunato and I were both sitting in the back row and we both agreed we're more scared of the government than we are scared of a trip and fall attorney. So I came back from that class, killed my last 2 LLCs, and everything that I own is titled to a property holding trust.

Okay.

And that's what I use.

Okay.

That gives you privacy.

Yes.

Yeah.

And some asset protection. Not a lot, but enough.

Yeah.

I also carry plenty of insurance.

Okay. That's another way.

Yeah. Yeah. $2 million in umbrella on top of landlord insurance.

Good. Good.

So you'll, you'll only rent out single-family homes and then all the mobiles you put on notes? You create notes, right?

If it's a mobile home park, it's just a note.

Okay.

I've had up to a 6-plex. You could not gift me a common wall house today unless I could trade out of it in the next month.

Oh, why is that?

Okay, some kid flushes a stuffed animal because she saw mom give the goldfish a funeral. So she— they're going to give Fluffy the The bear funeral. So it stops up the sewer pipe on your 6-plex. Who pays for the Roto-Rooter in?

You do.

Yeah, because all of them are gonna say, oh, it's not my kid.

Yeah, right.

So same problem, single-family house, kid flushes the teddy bear. Who pays for that Roto-Rooter bill?

Tenant.

The tenant.

I know whose family stopped that pipe up. It wasn't anybody but them.

Mm-hmm.

Um, how long do people stay in apartments, excluding New York and LA?

Uh, 24 months.

Yeah, maybe 3 years.

Yeah.

You know, my average tenancy is 12 and a half years. Dang.

Yeah. Do you, do you keep up on increasing rents and stuff like that?

I raise rents every January.

Every January.

Every January 1st, everybody's rent goes up 4 or 5%.

Good for you. That's excellent. I have clients that come in and say, Joe, I want you to sell my house and there's tenants in there. And, or, you know, can you manage this for me? And it's like, when's the last time you raised rent? They're nice people.

They're really nice.

Joe, I know you're not going to like this, but it's been 10 years. But they're really, really nice and they never bother me. Yeah, no, I wouldn't ever bother you if my rent was never raised in 10 years either.

Do you know how to fix that problem?

Okay.

Um, give your— give that tenant a call, make an appointment, go see them and say, you know, expenses are going up. You know what gasoline costs now? It costs a hell of a lot less 10 years ago when you started setting this rent. But I, I'm happy with you. You're a great tenant. You haven't been a pain in the butt. I want you to do some research, look at your budget, and I want you to tell me how much you can afford to have your rent increase. And let me know. Call me next week. Every time I've done that, they have raised their rent more than I thought I could get away with. Oh, boy.

Yeah.

But it's much better to annually raise your rents.

Yes, I agree.

Not a lot, just a little.

Yeah.

My rents are all below the market.

Okay.

'Cause Lord knows what rent market's done in the last 12 years.

Yeah.

It's been going up a hell of a lot more than 4 or 5%. Right.

Yeah.

The only year in the last 15 that I haven't raised rents January 1st was 2021.

Right.

That's fair.

You know, with the, with the 'rona.

Mm-hmm. Mm-hmm. Mm-hmm. We come to the part of the show where I have 3 videos that we've curated, and I would love to get your reaction and your thoughts on these other—

Oh, the attack videos. Is this something I did?

Yeah. This is you at the grocery store. We've been following you for the past week.

All right.

The first video is The Astonishing Disparity in Buying Mortgage Notes: Perception Versus Reality.

But most importantly, if you're not gonna buy a note from, say, us, and you want to buy it from somebody else, you really need to know what you should be looking for to buy that, to make the correct evaluation on what you're going to offer in the form of the bid. Does that make sense? That makes total sense. Think of Wells Fargo. You go borrow a loan, get Wells Fargo to lend to you. Wells Fargo turns around and sells that mortgage immediately. They did not even— the ink's not even dry yet to somebody on Wall Street, hedge fund, PE group, whatever. And they're selling these notes that have a 4% coupon on them at 105% of the UPV. And I'm going, how's that possible? And you're telling me I got a note that's got a 10% coupon and you want me to sell it to you for $0.85, $0.90 on the dollar? So I learned that, that it's just how you— it's perception, right? But more important, Thoughts?

Oh, you're the note guy.

I think discounting on notes is offensive.

Okay.

So what I typically do is I'll buy the first half of the payments for half the balance. No discount.

Okay.

I'm just calculating.

Well, not without a calculator. You're not.

Yeah.

Elaborate.

Take out your HP, open, open the app on your phone.

I don't have one.

Really?

Yeah, what is it?

HP 10Bii.

I need to get that. I don't have that.

It's a whole $5.99, and you can move it from phone to phone because I break them regularly.

Okay, uh, well, I gotta get that.

But yeah, you want to get the brown one, not the green one.

The brown sauce.

Yep, it's by K2 Development.

HP what?

10, like fingers.

Okay.

B like in boy.

Oh, there it is.

Yep.

Gotcha.

The top 2 should be the green one and the brown one.

Yeah.

You want the brown one.

Ah.

So spend your $6.

Okay, doing it.

He's taking me out to dinner after this. I want to let you know, so we need to have some money left.

It's not breaking the bank. All right, open. I'm scared.

All right, I want you to put this note in there.

Okay.

100 payments, that's 100 N. So type 100.

100.

Hit the N button, the top left.

Thank you.

Right next to it is a button that says I/YR. I want you to put 10%. 10.

10.

I/YR.

Okay.

$100,000 PV.

Okay.

Put $100,000 on PV.

Oh, okay. $100,000 PV.

That's present value.

Present value.

0 on future value, so it's an amortized loan.

So 0, future value, FV.

Good. Hit PMT, solve for payment. What'd you get? 14, right?

Yeah. $14,778.81.

You think I do this once in a while, huh? I love that.

Jeez. So what did that mean?

Now I buy 50 of those payments. So make N 50.

Okay. So 50 N. Okay.

For $50,000. So $50,000 PV.

$50,000 PV.

And hit I/YR. 20%. Ah.

So what does that mean?

That means I, I bought for no discount and made 20%.

Oh, okay. So you said buy half, but what was your original offer?

Half the payments for half the balance.

Gotcha. And you're making 20% that way.

Want another nugget?

Yeah.

If you can buy a fraction of the payments for a matching fraction of the balance, and you can express that fraction in a 2nd grade type fraction, 1 over 2, 1 over 4, 1/6, 1/20. If you multiply the denominator times the face interest rate on that note, you will get a close approximation of your yield.

Okay.

So if somebody needs to raise $10,000 to buy a car, I will pay them $10,000 for 10 payments. What's my yield?

Oh, I was like, should I? So $10,000.

10,000 PV.

How do you clear it?

Just overwrite it.

Okay. 10,000 PV.

10 payments, 10 in.

10 in.

Hit I/YR. What's my yield? Something between 90. 93.

Yeah. 77.

Close to 10 times 10.

Okay. I need to go to school.

I teach that class.

Oh, okay.

$599 with free retakes.

Okay, nice. Amazing.

My next class is in Akron, the second weekend in April.

Beautiful, beautiful city of Akron.

Yeah.

Okay.

Yeah.

So you— wait, you travel and do this?

I teach nationwide.

Oh, okay. Amazing.

Nice.

May, I'm going to be in Gary, Indiana.

Okay. All to investors?

Yeah.

And this is for note buying?

So I teach how to use that tool. Takes me a day. And then on Sunday, we teach discounted note investing and mobile home flipping. Oh, want to see an interesting mobile home yield?

Yeah.

All right, I want you to do a— all right, here's a mobile home. I'm all in $10,000.

Okay.

I sell it for $3,000 down and a $22,000 note. So I want you to put $22,000 for PV.

Okay, $3,000 PV.

9i.

9i/yr.

Yep, $350 payment. Hit the plus-minus key above the blue, the blue key.

Mm-hmm.

And then make that payment.

Payment.

Solve for N.

So—

Hit N.

N.

Did you get 85.33?

Yeah.

All right.

Okay. So—

So I'm all in 10. I get a $3,000 down payment. And let's say I had $500 in closing costs because I hate those shows on HGTV. So I have $10,000 invested. I make $2,500 from the down payment. I have $7,500 invested in that note. Change PV to $7,500.

$7,500 PV.

Solve for I.

$54,000.

G? G, G E. Good enough.

Oh, dang!

Mobile homes the easiest way I know to make 50% cash on cash return.

There we go.

Amen.

Preaching the choir over here. We love mobile homes.

Cool.

I yeah, we sold. We've created notes just by accident because we had rentals let in a psycho that rented from us. And so we ended up getting her out eventually and then just selling it on a note, which was amazing because that was like the closest thing to passive income I've seen.

What did her landlord prior to the one she was leaving tell you?

Well, yeah. Okay.

Thank you. Thank you.

She was like, I'm going to pay this amount. I was like, that's good enough for me.

The cash for keys going to you.

Yeah, exactly. So it was good for a few months until it wasn't, and then just all hell broke loose.

Enjoy the education.

Yeah, exactly, exactly. So yeah, we're coming back around. Uh, what do we got next?

Uh, we've got mobile home investing, how, how lot rent will affect your mobile home cash flow.

Oh.

When you are buying a mobile home inside of a mobile home park, investing and selling on payments, there is going to be lot rent. Lot rent that the mobile home park collects every single month. When it comes to your role in the lot rent, what I recommend and what I've done for all the homes that I've purchased and invested in and sold on payments is the person who bought the home from me pays the park directly. Now, in the first couple months, you can check in with the park to make sure that they are paying it and make sure— because if they're not, then there's going to be more issues that occur. But check in the first couple months, make sure it's going through. But make them pay the park directly. You don't want to be that middleman who's collecting the rent and then paying the park because that's going to create chaos as well. So, the buyer pays the park directly, the lot rent, and the buyer pays you directly their monthly payment. So, don't worry about the lot rent. Just make sure that they're paying the park. When you are buying a mobile home inside of a mobile home park, investing and selling on payments, there is going to be—

sorry, my close button—

lot rent that the mobile home park collects.

All right.

You kind of touched on that already. Yeah.

Well, he looks like he's been Flipping mobile homes for at least 4 or 5 years.

Yeah, exactly.

You think that long?

Yeah.

Yeah.

So I guess they're just— you make them pay the lot rent. But yeah, do you check and make sure that they're making that payment?

So, so I have a good relationship with every park manager I do business with. If I have a bad relationship with a park manager, I don't want to be there because they'll make or break my business.

Right.

I want the one that calls me and says, hey, you know, George died and, and there's nobody paying his space rent. What do you want to do? I'll come— let me come take a look at the house and I'll get his rent caught up, and then I'll go— we'll find his heir, right, who's a brother who lives on the East Coast and has no interest in any of that stuff that crazy brother his has in California, right? So I'll take it back.

Oh.

And clean it and sell it again.

Nice.

My best one, I sold, uh, that note we just did, $3,000 down, $20,000 note.

Yeah.

Sold that. He died. Sold it again, same note. He died. Sold it again. The market had gotten a little hotter. Sold it to a nice Lebanese couple.

Ooh.

And, uh, they came in and spent $32,000 investing the house that I'd sold them for $28,000.

Wow.

The one that thought owning a mobile home in a park was the pinnacle of wealth.

Yeah.

Left the state. The one that was stuck here really hated it and wanted to go back to her condo. So she calls me, she says, I don't want you to ruin my credit, but I can't stay here anymore. So I went and we had a conversation and she said, I spent $10,000 doing the electrical and putting that jacuzzi in. Yes. And if you pay me $2,000, I'll leave the jacuzzi. So I paid her 2 grand, she went away. The last time, the 4th time I sold it, I sold it for $3,000 down and $45,000 note. That's the same home I had $10,000 in.

What park is this?

Keep going, keep going.

So, so the answer to space rent is the first— there's a— we call it formula number 1. What's the equivalent apartment rent in that neighborhood? Same square footage, same bed-bath count, same quality of community, right?

Mm-hmm.

If it's a junky community, you want a junky apartment building. If it's a Class A community with the golf course and the sparkling blue pools and a grill that runs all year long, You want that, so you can figure out what the equivalent apartment rent's for. Subtract the space rent, subtract $100. Whatever's left is your maximum mortgage payment. So we always work back, backwards to the monthly payment, and then that sets our price.

Gotcha. And then how do you make that fit in? Or do you amortize all these, or is it interest only, or how?

All our loans are amortized, yeah.

Okay.

They're, they're striving for that goal of the American dream of being a homeowner.

Right. That's awesome. Heck yeah. And you, I mean, can you get a mobile home for 3 grand here?

Sure.

Oh, okay. Like out in Palm Springs?

Oh, like anywhere. You find a park where the, the owner of the park does not want to commit money to fixing mobile homes.

Right.

And I walk in the front when I'm going to start a new park. I walk into the office, I say, hi, my name's Andy. I buy your ugliest mobile homes. I fix them up, make them pretty, and I sell them to people that you prequalify with seller carryback financing. What's for sale? Every time I've done that, I bought the 3 nastiest homes that they had, usually for $2,000 or $3,000 apiece, and got 90 days free space rent.

Okay.

Wow.

Good to know.

That's in California.

All right. They said it couldn't be done. All right. I think we have one more.

We have one more and then we have a couple questions.

Okay.

And I like questions.

Let's see. Next one is no— oh, yep. No money down creative financing deals explained.

There's a lot of misconceptions about creative financing. We think like little to no money down and we think zero down creative financing. And certainly you can get those deals and they're amazing when you do on the front. So like when you get into the deal, no money out of pocket, but those are kind of far and few in between. It's a little rare to get into a deal without any entry fee at all.

100%.

Usually, there's going to be some money to the seller, closing fees, something to do to the property, right?

So there's—

or some back payments owed, whatever. And so there's usually a little bit of money to a decent amount of money to actually put that creative deal together. And what you're doing that's so brilliant is you're now leveraging private money and outside money to then fill in the gap that you created, that additional cash at closing that's needed, and you're structuring Both with the seller and with your other funding sources to then package up this property to be a long-term rental. Not a short-term asset that you got to exit even in a year or 2, but a long-term asset that then cash flows. There's a lot of misconceptions.

When you are buying a mobile home— Is that a mobile home park investing and selling on paper?

All right.

Ain't technology grand?

Oh, yeah.

Yes.

Uh, zero down.

Uh-huh.

Creative finance.

Cool.

Is it possible?

Absolutely. How many people do you know who have hair this color?

Yeah.

And will take— and would love to get half a rental house as long as they didn't have to touch it?

Yeah, probably quite a few.

Yeah. So you get a deal that, that can potentially be a nothing-down deal. You're willing to do all the sweat because you're young and excited and Broke. Okay, so you, you talk to this person, you say, I got this great deal, here's the numbers, here's the price, here's the— this— I need $10,000 for the down payment and I need $25,000 for the rehab.

Yeah.

And I, and I won't take a penny out of this house until you've got your money back, and I will give you 40% of the house. Would you rather have 60% of a nothing-down house Or 100% of a nothing.

I know that math. Now that's one I do know. Yeah, I would like, I would like a little bit of something.

So, so when you're sitting down to talk to a seller and you have, in preparation for negotiating with that seller, you printed off Publication 537 from irs.gov. And we're talking about a seller who's selling an investment property. You hand them that pamphlet and you say, please take this to your tax professional and discuss the sale with them.

That installments or something?

It's the installment sale pamphlet. And then you'll have the IRS and their tax professional telling you that you should sell that house on installment sale treatment. And then you ask them, you know, what do you need the down payment for? If I just cover closing costs, can we get you making payments for forever? I'm not going to live that long. I'm 82 years old. You want to leave something for the kids, don't you?

Hmm. Right.

There you go. And now you're in it for nothing.

Right. Sweat.

Very creative.

Sweat. Well, yeah, not nothing. Time and life force.

Not his sweat, though. Yeah, that's right.

It's like, I'm not interested in sweat.

That's fair.

I did it when I was young.

There you go.

Yeah, paid off. Do we have a couple questions?

All right, we do. We have Liz asking, mobile home investing is often overlooked. What's the biggest misconception people have about it?

Oh, they believe Trailer Park Boys is a reality, right? I mean, yeah, I love to— I have so much fun when I'm dealing with somebody who's so excited about stick-built houses and mobile homes are supposedly not as high quality. And I said, I tell you what, we'll take my manufactured home, we'll put it behind a semi, we'll run it down the freeway to San Bernardino, 65 miles an hour. And when we get it in San Bernardino, we're still gonna have a house. Why don't you take that stick-built house that was built on this dirt lot by a bunch of beer-swilling yahoos, put it behind a semi-trailer and run it to San Bernardino, see what comes out the other end.

Nice, that's a good test.

Yeah, that is a good test.

I'd rather have a factory-built house than a stick-built house any day of the week.

Okay.

It's not your grandma's mobile home, right?

Yep.

Yeah.

All right, next one is, um, like a 2-parter. So we got like a compliment and then a question. So this is from Rami. He says—

Oh, I know him.

Andy Teasley is a wealth of knowledge and one of my mentors. He is a true master in mobile home Lonnie deals.

Well, thank you, Rami.

And then question is, ask Andy to share the meaning behind the classic line, why would you sell a nice house like this?

Oh, good question. Are you gonna— he's gonna make me share Pete tricks.

There you go.

We talked about negotiation earlier, right? You're selling your car. Are you prepared for the guy that says, oh, those tires are shot, I need to get $400 off because the tires are shot? Oh, look, the paint's faded. Oh, look, it's got too many miles on it. Oh, look, the radiator's low. All those insults to your car, you're prepared. You know what to say to every one of those because you rehearsed last night before you're going to meet this person, right? If he shows up and he says, man, that's a nice car. Why do you want to sell a nice car like that? Are you prepared? Did you prepare for that question? No. And you know what you have to do when you're not prepared? You have to tell the truth. That's why politicians are prepared for everything, because they never tell the truth.

Right.

So, when you ask that question, why would you sell a nice house like this? Nobody's prepared. They're actually going to have to tell you, well, you know, it's too big. I can't go up the stairs. I hate leaving the neighborhood, but I really can't maintain this big house anymore. And, and I will, I will tell you that the fact of the matter is sellers will tell you how to buy their house. And I have some friends that built a beautiful business, and their concept was building an ADU on an RV model and approaching a widow or widower who's still in the big house, loves her neighborhood, but they can't— they don't need all that house and they could use a little extra income, right? So the business model was we sell them this pre-built ADA-compliant ADU on, on an RV chassis, set it up in the backyard, give them a little privacy fence so they have their own space, and then they move in a family into the big house up front. So now you've got mom, dad, and some kids in the big house. You're still in your neighborhood. And if the, the couple in the big house Notice that you haven't come out and picked up the mail for the last three days. They're probably going to go look on you, look at you, and look in and see if you're still alive. And and if they if they're good people, if you have a good relationship like you should with tenants, they're going to invite you in for a cup of coffee every morning or something like that. And it gives you that support. But you're still in your neighborhood. You can go to your grocery store. You can go to your doctor. It was a great business model. Unfortunately. they got over their skis. They were dealing with a Ponzi guy, and, and he wiped out their company.

Oh, I think I met him. I think he came to the Ponzi guy. Not the Ponzi guy, the other people.

Hard to meet him when it was like—

I forget his name, but, um, yeah, they were making like manufactured— yeah, yeah.

Okay.

It was a beautiful concept.

Jeff. Okay.

Oh yeah, Jeff.

Jeff.

Okay.

Oh no, Todd.

Todd.

Yeah, yeah, Todd and Steven.

Okay, I think I met Todd.

Yeah.

Okay, that is a good— yeah, that is a good, uh, business model. Okay. Yeah, that—

dang.

Oh wow, we're overtime. Okay. Oh darn, that was amazing, Andy. Thank you so much for being here. This was really cool.

Yeah.

Um, how can people find you? How can people find the exchangers and your guys's—

Okay, well, so exchangers, I hope you'll put this in the link somehow to get it. is SoCalExchangers.com, spelled both ways, the right way and the right way.

Okay.

Um, I have a free weekly newsletter. It's called The Weekly What If. If you send an email to Andy the Christmas Guy, all spelled out, that says, I'd like your newsletter, I'll put you on the newsletter list. It's, it's priceless, which means it's free.

Perfect.

And you will get 3 calculator questions, the answer to last week's 3 calculator questions, Okay. Upcoming vetted education, that's no gurus, no upsells, and exchange meetings that I attend nationwide. And I will tell you that the rule to be someone that I promote is you have to not need the money. And I tell all my friends, I say, if there's some class that I promote and the only reason you're not going is because you can't afford it, Call the instructor, because if I'm promoting them, they are not teaching for money. Hell, I only charge for my class because when we don't charge, people don't appreciate it and they don't apply it, right? And I've made several multi-millionaires.

Nice.

Including one who's a 23-year-old phenom.

No.

Who I'm jealous of.

What? Nobody likes that. What'd you do that, Andy?

I tell you, that little turd took my class, went out on Tuesday while the rest of us were still sleeping, bought his first mobile home for $10,000, took his family down and cleaned it the next weekend, sold it the next week after that for $5,000 down and a $55,000 note. He, uh, came to me, borrowed $27,500, half the note for half the payments. And in the year he turned 20, he flipped 12 mobile homes and made north of $1 million. All of it postponed for 7 and a half years, which is a good thing. He has time to grow up. So in about 2 and a half years, he's going to have $1 million in mobile home paper coming his way. What?

Nice.

All in California?

Yeah.

Okay.

Yeah, I'll be there.

I will be there.

Awesome. Results may not—

May differ.

Yeah, results may vary. Um, okay, thank you guys so much for joining us. Everyone in the chat, make sure to share this far and wide, and we will be back here next Thursday as well as the Monday meetup. So we'll look forward to meeting you guys there. Thanks so much.

See you later.

See you.

Thanks for having me.

Mhm.

If you want some If you want some more advice on real estate investing, reach out to us one-on-one.

949-625-4533.