Note Investing Zoom @ OCREIN | 6.28.21

Okay, my name is Joe Holmes. That's not my picture that you see on there, but anyways, my name is Joe Holmes and I am sponsoring this online Zoom meetup. I want to kind of say right off the bat that Thank God COVID is over, and believe it or not, next month we'll be live and in person back at the pizza place that all this started several years ago. I may continue to have these Zoom meetings, but on another date, because I do have some speakers that don't live locally, so I'll just get them on a Zoom, but we'll be back. The last Monday of July. I'll post it later on this week in person, and our first meeting is going to be literally just networking. I just want everybody to show up, you know, want to know what you've been doing during COVID Did you find some sort of niche in real estate that you liked? And then literally just you know, conversing with other people there. Okay, so that, that's my goal for next month's meeting. This month I want to introduce Brian. He's a speaker and trainer for Note School, purchased his first piece of real estate in 2008. Making the leap out of financial software industry, he jumped full-time into real estate as a wholesaler and rehabber. Gaining traction as a wholesaler, Brian expanded into other strategies including land trades, private lending, rentals, buying and selling on terms through owner finance. He's seen firsthand how becoming a deal architect is required to get deals done at today's seller's kitchen table. Brian also realized the reality of wealth building using real estate secured assets, which inspired him to dream and connect people and educating others so they can too build wealth using real estate. Brian has been teaching and consulting investors since 2017 and is very excited to bring his passion and experience to the Note School team. Brian is a family man first. He's married to his high school sweetheart Chelsea, and that's sweet, and has 2 amazing kids that drive him to be change agent in the world. Okay, I'll let him go into what he's going to speak about tonight. So Brian, if you'd like to take over.

Yeah, I absolutely can. Let me see if I can share my screen. You just tell me if you see— do you see kind of the big slide, Become a Deal Architect?

Yep. Yeah.

All right, great. So let me do this and then let me also make sure my chat box is open so I can see questions and stuff. And we'll kind of make sure we're addressing those. Keep in mind, I'm happy to stick around at the end and do Q&A, that kind of stuff. Um, I'll kind of, um, I'll kind of kick this thing off by way of, um, really kind of the, the introduction of what we're going to talk about tonight. I'll kind of segue into, uh, that, that introduction from Joe, so I appreciate that. Um, but basically, uh, what I really want to cover tonight is Really, what is the biggest struggle in the real estate investor's business today? What's the biggest pain point in today's real estate investing space? And it's finding a solid deal. It's just not what it was several years ago. It seems that inventory is a massive problem literally everywhere. And so, how are we expected to go out and find these really solid deals? And so, tonight, I really want to show you what that looks like to maybe think a little bit differently depending on what strategies you do, right? And I want to show you what it looks like to become what, uh, what we call a deal architect. And a deal architect is really just like a specialist real estate investor who they want more out of every lead and deal that they have. They want to make some money today, but they also want cash flow to come with it, right? If you could wholesale a house and make a chunk of change, but you could also, you know, kind of participate in the cash flow even after the deal's done, that's a pretty big Uh, pretty big deal. And then, uh, we're going to talk about a few different ways to acquire properties, dispose of properties, all that kind of stuff. Um, and really this is a much, I would say much broader conversation. Um, but we're going to start with creative financing because some of you have probably heard of creative financing before. Some of you have maybe even done deals, uh, with creative financing. And I'm really hoping tonight you're going to be able to see how this is a unique, um, view on the creative financing space because Note School has really cracked the code when it comes to creative financing. Um, and I think you'll see that tonight. Even if you're already doing deals. And hey, if you're somebody who's never even done your first deal, you're trying to get your first deal done, I'm going to show you some pretty incredible ways to not just get into deals but also get to some money pretty quickly. We'll kind of go from there. If you're somebody who's been talking to sellers, there's a pretty good chance you've stepped over about $20 grand in the last 30 to 90 days. If you're, if you're consistently talking to sellers, there's a big opportunity in the market that We're just not used to looking at. I really want to make sure you're, you're kind of seeing that tonight so that you have a better understanding, um, of really what's out there, right? Um, to kind of segue into what Joe was saying, like he said, yeah, I actually did go full-time into real estate, uh, in 2014. I bought my first property in 2008, but I only went into full-time real estate because I went into work one day at my job and they were like, hey, you don't work here anymore. So it was like, perfect, right? It's just exactly what I needed at that time. And so I came home and kind of had that whole conversation with my wife. My whole situation was I was, you know, a stay-at-home— or my mom— my wife was a stay-at-home mom with my son, and she was also pregnant at the time. But I had a mortgage, I had bills to pay, I needed money. And so I kind of had to figure out what next. Real estate just seemed like the go-to thing. And my dad had actually made this comment about how there's this event we can go to, and they're going to teach us how to buy and sell— buy and sell houses without any of our own money. And that was obviously incredibly appealing since I had no real money after losing my job. And so really it was just kind of, that's the start as I started as this wholesaler and really grew. Right. And then as you heard, it really just developed into all these other strategies. And maybe you're kind of the same way. Maybe you're somebody like me who started as a wholesaler. Then you found out you can make a lot of money fixing and flipping houses, and then you end up buying rental properties. And then I got into land banking and I was a lender for a while. I even started a property management company for about 6 months, before I just, I had to give it away. Like I just don't possess that skillset and I'm not good at it. Um, and so it was kind of one of these things to where I was really growing really fast right at the beginning of my business. And it gave me a lot of confidence to really just scale up and let this thing take off. Well, a couple of years in, in 2016, I was actually at my local real estate investors group. And, uh, there was this guy speaking, uh, much like I am today. And he was talking about a little bit about creative financing, but really about how this note business can really, like, really change your wealth picture. Um, and just straight up, it was very interesting and it was very, you know, impressive. But everything that this guy was saying was like about wealth and your future and retirement. And I was in a spot to where like, I'm trying to grow my business right now. I'm trying to feed my family. I've got— I need money now. I don't need to focus on building my retirement. That's important. I don't want to diminish it, but I got to figure out how to make money now. So I honestly kind of tuned some of it out. Well, at the end of that, the man who was obviously speaking about this was none other than the guy you see on the screen, Eddie Speed, right? And the thing you got to know about Eddie Speed is 2 things, right? He's been doing it for 40 years. He's been in business for 40 years, and he's done over 50,000 deals. Like, that's a pretty intense amount of deals. And so he really has a completely different view on things, obviously going through a lot of different market cycles, much like Joe. You really do, you see things a little bit differently. And we're in a very interesting market cycle as we sit today, and I want to show you really why there is such a problem of finding a solid deal and why there's a very easy solution to entertain if you've never heard about it. And so we're going to kind of talk a little bit about that. And the reason we talk about kind of creative financing at the beginning is because it's the beginning of this picture I'm going to paint for you about what it looks like to be the bank, what it looks like to be in the note business, right? And I want to show you several different ways to participate, several different ways to get involved and invest in the note space if you want to invest in the note space. Ultimately, the idea of a Deal Architect is I want to help equip you with more skill sets tonight regardless of what your strategy is. So in 2016, when Eddie was giving this presentation, at the end of that night, you, you typically hang out and you're talking with other you know, colleagues and peers and stuff. And, um, he happened to walk up to a little circle we were in and he just was asking, you know, what do you do? What do you do? And I told him I'm a wholesaler. And he said the phrase, which is interesting to me. He said, if, you know, if you're wholesaling, you should really consider creative financing. It would radically change your business. And I kind of thought that was weird because I'm kind of sitting in a spot to where like I've kind of taken off, like our buyers list exploded as a wholesaler that year. And so we were doing really well on the buyer side. Our sellers, on the other hand, We were sending out marketing, and if we expected 10 phone calls from that batch of marketing, we were getting 11 or 12, maybe even 13. So we were outperforming. And so all this thing, all these things happening in my business was telling me as the business owner, hey, you're doing the right thing, don't change, stay focused, right? Well, then here's this guy speaking about all this really cool stuff. I can make all this money and do it in tax-advantaged ways and all this like really great stuff, but it's all for the future. I'm thinking like, that sounds cool. Why don't I call you in the future when I got, you know, a lot more cash to deploy, right? Well, I missed a pretty big step there because there were some pieces of the presentation he gave that I just completely either tuned out or missed or whatever. But the reality is, at that point in my life, 2 years into business, he'd been in business for 30, almost 40 years, right? And so I was kind of at a spot where I should have just paid attention. I really didn't. But the reality was this. I didn't need to change anything in my business, right? Like the results I was getting, they were good. So I didn't need to go change up my actions and what I was doing to get a different result. It was already working. Well, 2 years later in 2018, guess what happened? So I'm in the Dallas, Texas market. And at that point, we were wholesaling in 6 different markets. We had kind of grown and expanded. But the interesting thing was 2 years later, the market started to shift. And our marketing dollars we were spending, we would go get leads. But if I sent out a batch of marketing and we were expecting 10 phone calls, instead of getting 12, now we're getting 9 or 8 or 5, right? And so all of a sudden we're starting to panic. We're spending more and more money and we're making less and less money because we're getting less leads, which means you run less appointments, make less offers, do less deals, make less money. And so I had, uh, through a series of events, kind of got reconnected with Eddie. And this is kind of the beginning of the story for me with how I kind of got like attached to Note School and ultimately why not only was he right, but Note School ultimately ended up shifting my business quite a bit and really helping me meet some of the goals that I had. And we're going to talk a little bit about that. And I want to really show you too, I'd made a comment earlier about how like some of you are stepping over like $20 grand probably in the last month or 2, right? In the next last 30 to 90 days. And I want to show you really where that is because you should be able to relate to a seller who's put you in this spot before. And so this is kind of the beginning of the conversation. And really what we want to do is I want to kind of paint the big picture first, and then I'll kind of start at one end and we'll walk through it. walk through it all, right? So buying properties with creative financing, really what this means is I'm going to buy the house and the seller is going to play the role of the lender, right? So they're going to sell me the house and they're going to provide the financing. We're going to talk a little bit about this. This is not only the solution to your deal flow problems, finding a solid deal, but it's really also the biggest solution right now for your funding problems, right? And where you can borrow money from at certain rates and all this other stuff. We're going to talk about this, but if I can buy a property, And I could have the seller provide all the financing. So all I have to do is maybe, maybe I decide I'm going to come up with the rehab money because I'm going to rehab it, or I'm going to come up with the money to fix it up and get it rent ready because I'm going to rent it out, right? Because once I buy a property and there's financing attached, what can I do? I can do whatever strategy that is interesting to me, right? And you each have an individual strategy that you're focusing on or that you're interested in. But for me, as I started to do this, I was primarily a wholesaler. So I was buying a house with the terms, packaging it all up, and then taking it to my buyers and saying, hey, who wants a house? Or who wants a house with financing attached to it? Right? And I was just wholesaling this whole thing. But really from a buy-and-hold standpoint, it really became more appealing for me to just turn around instead of renting it out. I would turn right around and I would resell it immediately to another type of buyer, what we call a penalty box buyer. It's this trillion-dollar marketplace of buyers in our country that's just underserved. And these people have great credit, well, good to great credit. And they almost always have a very sizable down payment. Cash is normally not the problem. And so, the reason I would be interested in reselling it is because I don't want to deal with the tenants or the toilets, the turnover, that kind of stuff. I want to go out. I want to resell it. I also want to play the role of the bank, and I just want to get the payments. I want to get the cash flow, and I want to make my return on investment, right? Not to mention, there's a lot of tax benefits that come with this. For those of you who do know who Eddie Speed is, if you've been following him a long time, Um, if you know anybody who's a HomeVestors franchise, um, Eddie and Ken D'Angelo go way back. And in the '90s, actually, Eddie developed all of the seller financing curriculum that HomeVestors still uses today. And we still have probably about a dozen to 15 or so different franchisees come through Note School every year to really learn the rest of the business, uh, and kind of get exposed to other different strategies. And so this is really, when you talk about acquiring properties and then disposing of properties, this is a way to potentially look at a deal and say, hey, look, If I can make more money doing this, or maybe I can defer my taxes or whatever the benefit is. When you buy a property, you say, if I wholesale it, I get this. If I rent it, I get this. If I fix and flip it, I get this. Now you can add one more and say, if I did seller financing, and then just look at it and say, which one's best for me for this deal, right? And then this is really— and actually, I'll preface that with this, that once you buy a property on terms, when you go and you resell it to somebody on terms, What you're getting is you're getting a note that is owed to you. They owe you a payment. And that payment, that note stream, or that payment stream of a note is really an asset in itself. It's the paper side of real estate. It's mortgages. So instead of buying the house, I would really be interested in the paper side, the mortgage note. And so that's what this flipping notes for fee income is. If you can wholesale a house, buy a house low and resell it low, I'm going to buy a mortgage at a discount, and I'll talk about that in a minute. And then I want to wholesale it to a hold-on- buyer. Eddie started doing this at 20 years old. This is really how he got into the real estate space, as well as obviously the note space. And we're going to talk about how this is an interesting strategy for anybody who's wanting to make just kind of like, you know, a quick fee, right? Mm-hmm. Just anybody who's interested in wholesaling houses, this is another way. This is something else you can wholesale. So it kind of increases the opportunity for deals. And then obviously once you're in the note space, let's say you don't want to talk to the seller, you don't want to buy it and then have to resell it and create your own note. And that'll become more clear in a minute. But if you don't even want to, if you want to ignore the first 2 triangles and you just say, I'm brand new, I want to start wholesaling notes instead of wholesaling houses, you could also do that. And as you'll find out, wholesaling notes is, it's typically more simplistic than wholesaling a house because you don't have to gain equitable interest and also be marketing to find a buyer. And like wholesaling a house, you're always, always trying to find the buyers, always trying to find the sellers. You have to go in a certain order. Wholesaling notes, I can show you who's selling them and I can show you who's buying them. You just can't put them together, right? I'll show you who the buyers are. I'll show you what sources you can buy them. You just got to find the other piece of the puzzle. And so typically it kind of lowers the workload a little bit. And then there's all the people who are like, no, actually I am interested in like passive long-term wealth-building type tools. I really just want to play the role of the bank and I want to get a rate of return. I want to get cash flow. I want to get all these good things. but I don't want to have to deal with any of the headaches that come with maybe some of my rental properties, right? If you diversify. And so we're kind of going to talk about this, and I'm going to show you some things about notes that you probably have never heard of before that will, like, it will really change your thinking, and it'll start to make sense all of a sudden about why banks have the biggest buildings and all these other things. They might be on to something, right? And so one of the other niches I really like to talk about is burnout landlords. And you got to understand, Eddie's from Mississippi, so Eddie doesn't say burned out, he says burnt. Right? And a burnout landlord is really this category that when I joined the teaching team for Eddie, when he asked me to be on his teaching team, this is actually the topic that was going to be the really the main conversation because there was this study put out that said between 2010 and 2020, there was 18 million additional new investors into the real estate space. So have you seen, if you've been investing for a while, have you seen an increase in competition? Does it seem like there's more and more real estate investors all of a sudden in the space? Well, the reality is there is, and over the last 10 years, it's been an additional 18 million. And so the question is, where did these extra 18 million people come from? Well, it boils down, believe it or not, to 4 letters. It's HGTV, right? You've got your Desert Flippers, you've got your whatever, Flip or Flop, your Chip and Joanna Gaines where I'm at, whoever. I mean, Vanilla Ice was even flipping houses. So everybody at a certain point was getting into real estate. on the investment side in some form or fashion. And really what we saw across the country is HGTV really made this thing kind of sexy. And so you saw people basically like watching a show and then they get to the end of that show and, oh my gosh, they made $60 grand. And inevitably they just kind of turn and they're like, hey honey, I, I mean, $60 grand, like how hard could it be, right? That's like the famous kiss of death. How hard could it be to flip a house, you know, even though I know nothing? And so I'll kind of walk you through this, but basically To make it short, we're going to assume they got some level of education, right? They came, they got some, uh, some coaching, or they came and they got some education. They went to a seminar, they went to YouTube, they read a book, they did something to lower their risk by increasing their knowledge. And then we'll also assume they bought it from like a wholesaler. That way, at least there's some level of margin in the deal for them, right? The bottom line is these people who started flipping houses Right? That first one, that second one, whatever it was, their inexperience managing contractors and budgets and timelines is what costs them, right? So that $20,000 rehab became $25,000, $30,000, $35,000, $40,000. You've all heard horror stories, I'm sure. But it's one of those things of instead of just cashing out and being like, all right, we're going to take a small loss on this one. Let's get back out. Let's get another one. And now we'll be able to go and make that money back, right? A lot of these people just said, man, forget it. I'm just going to put a tenant in here. Like, it was this light bulb moment of all the good pieces. They thought that the tenant would always pay. They thought that the property will go up to a billion dollars, which, come on, we're on our way, right? And then like all of these different things they really thought were going to happen. They thought that if they started with an 8% yield or 8% cash-on-cash return, they would stay there, right? But what ended up happening in reality is The tenants don't always pay. That air conditioner that you repaired, well, now you own it 3 years later and, well, you got to replace it now. So you're putting more money back into a property that has the same cash flow. What does that do to your return on investment? It drives it down. See, the biggest problem when we've surveyed a lot of these people is the thought was, if I put a tenant in here, in 30 years, this will be the best decision of my life. And the reality is it will be, right? Like, trust me, I got nothing against rental properties. All I'm saying is that when you get into a rental property, you're only thinking in terms of 30 years. But as Joe will tell you, as anybody, if you've ever owned rental properties, it's not about 30 years. It's about that first 1 to 5 years, right? I need the, the rent to have increased enough to create enough cash flow to be able to sustain this thing long term. I need my mortgage to be able to pay down, the property to go up in value. So I can refinance and pull my cash out. Like there's a lot of different things. I need to find a longer-term tenant. I need to have repaired all the things that are going to break in that first year or 2, right? Then you start to stabilize really that asset, right? The problem is getting through that first 1 to 5 years normally defeats a lot of people. And so what we see is these burnout landlords, it's basically they love the good pieces. When the tenant pays, they do. They love the cash flow. They love all the good pieces of owning a rental property, including the fact that their money is attached to a hard asset, right? They could drive by it on their way home from work on a Wednesday afternoon if they wanted to. They love these pieces. The thing though is they deal with all of the bad pieces because everybody's got a thing they don't like about whatever their investment is, right? They deal with the bad in order to get the good. And the bad being the tenants and the toilets, the turnover, the putting more money into a property that has the same cash flow, which means you started at 8%, but because you spent money on rehab your first or second year, you're really sitting at pretty much breakeven still, right? And so it's not the perfect picture they're imagining, right? Well, we can go to these groups right now, these types of landlords, and say, look, what if I could show you a way to be able to keep all of the good and I can remove all of the bad? If I could show you how to keep all the good and I could take away the bad, would you be at least open to a conversation of what that could look like? And you'd be shocked how fast that converts into at least a conversation, right? And really the conversation can go a lot of different ways, but number one, We're really talking about showing them how to be the role of the bank, right? How to kind of have some power on their side. And if they're promised a certain amount of money every month in cash flow, they know they're going to get that because the bank gets paid. The landlords don't always get paid, but the banks get paid, right? And so it's really one of these things that's interesting because there's so many people right now, as you would imagine, with eviction moratoriums, foreclosure moratoriums, there's a lot of pain in the landlord space right now. That it's very appealing to go and say, hey, what if I could show you how to secure cash flow, never have to put any money back into this, not even deal with the tenant problems you're having now, all that kind of stuff? Would you be open to a conversation? And in this case, you could go and say, hey, I'll buy all your rental properties from you, or I'll buy a rental property from you, and you're going to become the bank. You're going to become my bank. So if you've got a mortgage, I'm not going to have a mortgage with you on top of that. And then I don't want the tenants. So I'm going to solve the tenant problem. And I'll end up reselling it to somebody else. And they'll have a mortgage with me. It just kind of keeps trickling down. And it seems rather complex, but I'm telling you, this is actually very simple. And it's exactly how our money system works today. So you borrow money from a bank and you think, well, the bank just had the money. No, the bank might've borrowed it from the Fed. And where did the Fed get the money? Well, they got bondholders who are pumping in money, right? Like whatever it is, there's always somebody else behind that. And really all we're doing is I'm showing them how they can be the bank now and how they can assume the role of the bank while reducing their risk and keeping their cash flow. And that's kind of cool because a lot of times I'm even able to say, look, I can give you more cash flow if you become the bank. Right? So it's pretty interesting. And really this same group of people is because they got into real estate, they bought 1 or 2 properties and they went bad. And so they started renting them out. That same group of people, they have more cash and they're not going to put it into rental properties anymore. And they're not going to try to flip houses anymore. And so what we see is once you help them understand how to be the bank, Maybe you don't buy their rental properties, but maybe they start funding every other aspect of your business, right? Like, I've seen some landlords become wholesale partners, right? They'll say, hey, I'll do all the marketing, you give me 30%, for example, of whatever the wholesale fee is, right? I've seen them partner with fix-and-flip people, etc., etc. You get the idea. And so it's really just— it's a great source of money right now. It's kind of like an avatar of people that we focus on. It's really where we're raising a lot of our capital. And this group too, Not only are they interested in long-term growth, they have very reasonable expectations. See, after 10 years of the market going like this, smart money right now is not interested in saying, I want to double my money over the next couple of years. I'm going to throw it in the market and let's try to double it. They see the risk of markets go up, but markets also, they have to come down. I just don't know when it starts to come down. It can't do this for the next 20 years.

Right.

And so, a lot of smart money is saying, look, I want to find a way to put my money somewhere where I get to secure my returns for the long haul, but I'm not exposed to a lot of the downside. And the banks, when you start to show them what I'm going to show you today, you're going to start to see how that's a very appealing thing. It's about— it's all about capital management and risk reduction, right? And capital preservation is probably the best word for it. So this is kind of that conversation. And then really the, the last niche that I'll talk about, and we'll kind of wrap up with that one at the end too, is this buying defaulted loans. These are mortgages that are not being paid. Why would I ever be interested in investing in a mortgage that's not being paid? That doesn't even make sense, right? This is like fixing and flipping the paper side of real estate. If you can fix and flip a house and make a lot of money, I'm going to show you how you can fix and flip a mortgage and make a lot of money. And what's cool about that is it's a market cycle-driven strategy. So in certain parts of the market cycle, there's a section where defaulted loans It's really attractive and you can buy a lot of them and you can make a lot of money doing it. But then that part of the cycle kind of phases out and it stabilizes and starts going the other way. And then the market goes up and it goes back over and then there's this section again. And so obviously from like 2000, after 2010, there was a huge opportunity for defaulted loans and buying bad debts. But really when you've had a year where nobody could even foreclose on properties, there's a huge opportunity. A huge opportunity. And we're going to talk about that. And I really want to show you that no matter what your strategy is, maybe you're a wholesaler, a rehabber, a landlord, you're into apartments, you're— whatever your thing is, there's not a cheaper way to get into an asset than to go through the bad debt, than to buy the bad note, right? The defaulted mortgage. If they get foreclosed on, what do you get? You get that asset, right? So, it's a very fascinating strategy. We're going to dig into a little bit more, but I want to kind of start at the beginning of the conversation. Right? So just kind of imagine, and this is like the life cycle of a deal, and we'll walk through it. But just if you can grasp this, it'll make the rest, I think, really, really clear as far as what the opportunity is in today's marketplace. So just imagine for a second you got a car dealership, brand new cars, brand new car lot, right? You're trying to sell cars as fast as you can, but you can only accept cash. So the question is, if you can only accept cash, you can't offer financing, do you sell more cars or less cars? Well, obviously, if you can only accept cash, you're going to sell less cars. We know this because the auto industry has figured out that it's about this powerful variable. There's this powerful variable known as financing. And if we plug it into our industry, the auto industry, they can sell cars on payments. And most new cars are going to be sold on a payment, right? And it radically changed their business, right? Same thing with home builders, right? Could you imagine a home builder throwing up houses and then being like, I can only take cash? It would make it a lot harder for them, right? Most of these home builders, especially the big ones, they even offer in-house financing that's very competitive. It's for a reason. I think the best example is a furniture company. Could you imagine a furniture company who says, look, we got all this furniture, we're only going to take cash, we're not going to do the no money down, you know, no payments until you graduate from, you know, your kids graduate from college, and no interest as well? Like, they're offering that kind of stuff because furniture companies have figured out this powerful variable, right? They could sell a $1,000 piece of furniture for $4,000 And by saying no money down, no payments for 17 years, and no interest, you go running in and you're like, heck yeah, let's do this thing. Right? You don't realize that you weren't— you're not paying interest. You're buying interest because interest is typically bought, not earned in our economy. And so, it's one of these things that's a fascinating variable, I think, that not only has changed these other industries, but what if we could just for a second take that same powerful variable and we can plug that into your real estate investing business? What could that look like? Because this is what it really means to be a Deal Architect, right? To get more out of what we're currently doing. If you're talking to sellers and you're trying to make offers and they're not helping or they're not, uh, you know, converting or saying or being willing to take some low price, can we show them a different way to be able to get involved and be able to solve their problems? And so I'm going to quickly go through— here's the 3 main things I want to cover. And I really want everybody to get this because the first thing is I'm going to go on a limb and say, you know, some people who are selling the house and they want, they want a retail price or a very high price for it. And so I want to show you how you can pay that retail price and still make a ton of money, right? The second thing is competition, right? I want to show you how to go after the leads that really no one else is looking at. A good example actually is the first one. If you got a lead that came in and you're trying to ask them all the same questions, right? Hey, you know, I'm glad you want to sell. Why do you want to sell? What do you want for the property? All right, when they tell you a number that you know is a retail rate, like you're like, these houses are about a million bucks, and they're like, we want $1.2 million, you're like, okay, this guy wants retail, right? Most of you investors, you don't run that appointment. You're going to outsource it. You're going to call a real estate agent and try to sell the lead or something like that to where you're going to try to monetize that lead. But you're probably not going to go spend 2 hours of your time talking to them and trying to find a way to solve their problem if you know they want retail, right? And so a lot of your competition is also not running those types of leads. And so I'll kind of tie that in. I'll show you why you could be talking to sellers that less investors are talking to. And probably the most important thing I want to focus on is making big money today, like upfront money, but also getting this bonus income in the future. This is the number one thing Eddie said I missed when he talked to me about this in 2016, is I really made this all about money tomorrow, right? Next 10, 20, 30 years. And he was telling me without me listening, look, you don't have to give up your money today in order to get that. You can have both. And we're going to talk about that. Even if you don't have a real estate investing business, up and running, right? If you're brand new, um, that's great, you know what I mean? I'm gonna— I'll kind of walk you through that. And so here's kind of what we're looking at. We got a traditional transaction of a buyer, a seller, a house, and a bank. Your seller is going to sell the property, the buyer's got to pay for it, right? Pay for it typically in the retail space, a bank steps in and they fund the whole transaction and they put a lien on the property, right? We got this part. I want to talk about more as the investor, right? As the investor, You step up, you're talking to the seller, you're trying to figure it out. The seller is going to deed ownership over to you, right, if you buy it. But how do we go about funding it and all that is the second part of the conversation. At the beginning of talking to the seller, what's the first thing we want to know? Essentially, we always want to know, what do you want? Like, what is the thing that you want? Because I need to know, is it worth my time to go out? Is this a serious motivated seller, or is this kind of just like a tire kicker, or is this somebody who just doesn't understand how this works and they just want retail, right? Well, for the last couple of years, what's it been like? You call, you're talking to the seller, and the seller is like, oh yeah, I want some absurd price. Um, you know, everybody's already offering it to me, I just haven't taken it. I'm still, you know, I've gotten that before too. Um, but it's like, where does this lead go? This lead is not a lead for me. This lead ends up in my follow-up file, in my trash can. It's not a lead that I typically I'm going to be like, yeah, I bought it at 30 cents, 50 cents on the dollar, 70 cents on the dollar, whatever the discount is. This is one that I'm going to say, look, I got this lead I spent money on. I got to find a way to turn it into money somehow. Maybe I'll call somebody and see if they want to, I don't know, list it. And maybe they'll give me a cut or a fee, or they buy the lead or whatever it is. And so when the investor is involved, if we are able to come to a deal, let's say you buy a rental property directly from a seller, and the seller says, hey, let's do this thing. You're like, great, deed me the property so I can have the property. It'll be my property now, and I'm going to fund it. Now, typically in the real estate space, a lot of investors are going to do one of two things. You're either going to say, look, I can get a mortgage note from a bank. And if you can, right now, obviously rates are historically low. You should get as many mortgages as you can. But that's typically the rub. As you scale your business, you're going to run into the same problems I did. Hey, your bank says, look, Look, with your Social Security number personally guaranteeing all this stuff, we're going to give you 7 mortgages or 4 or 10 before you mortgage out. We're not going to give you any more mortgages. And then we're going to have to say, well, are you married? Does your wife have any? Does your spouse have any income? Is there any way maybe we could give them 10 mortgages? And then once you mortgage out there, then you've got to finally make that leap over to like the commercial side of the product, commercial product side, where they can give you one loan for, you know, 8 houses or whatever. And that's one loan. And then it just grows from there, right? And so, if you can get a mortgage, great, get a mortgage. But eventually, you're going to run out of mortgages, right? And so, the question becomes, well, how do we solve that problem? And you might be thinking, I don't need to, man. If I can get 10 mortgages, I'm set. I hear what you're saying. But by the end of this, you're going to see there's an easier way to do this with a lot less money because there's still the whole other side of the coin. What if you can't qualify for a mortgage, right? What if you're whatever, you don't have good credit, you don't have 20% down, you don't have whatever They've got all these boxes you got to check. And if you don't have them all perfectly lined up, you're kind of in trouble, right? What if you're self-employed and you use the legal laws available to you to be able to write off all these things on your taxes? And so you've made this much revenue, but you're only paying taxes on this much. And a bank looks at that and says, I can't give you that big of a mortgage. You only make this much money. Well, I don't really fit in your box, right? Or me who was self-employed after losing my job, Self-employed, they wouldn't even really have a conversation with me until I had 2 years of filed tax returns. And then they were like, oh, okay, now you're a human being and we'll treat you like one. And so, if you can get a mortgage, great. If you can't, you can't. But even if you can, here's the question. What if we just got rid of the bank altogether and we just had a conversation with the seller becoming the bank? The reason this is an interesting conversation is how many times are you really trying to get a mortgage on a weekly basis? Basis anyway? It's not a weekly basis. That's kind of the point, right? You very rarely talk to a mortgage broker or, you know, a mortgage lender. And so it's kind of one of those things of, but how many times am I talking to sellers? I'm talking to sellers all the time. And so if there's an opportunity, even if it's a small percentage chance for the seller to play the role of the bank for me, wouldn't that increase my chances? Yeah, I think so, right? Just statistically, mathematically. And so why in the world would the seller ever even consider selling you a property and playing the role of the bank and providing the financing? Why would they even do that, right? They just want to get out of their house or whatever. Well, maybe, but here's the thing, that seller is no different than any other human on the planet. They still care about, believe it or not, the exact same 2 things that I do, that Joe does, that anybody does, any of you. We all care about the same 2 things. It's number one, what do I get? In this case, the seller is going to get something that no one else is offering. It's probably going to be price. Maybe it's a down payment, maybe it's interest. It's going to be something. You're going to get something that is worth saying, oh, I'll play the role of the bank. And I'll show you that in a second. But the second thing outside of they're going to get something that they want, the other variable is how are they protected? What happens if you loan me the money and I get hit by a bus? Well, it's pretty easy to be like, well, you get the collateral. You get the house that was protecting you, right? You're going to be able to resell this thing. You're going to be in the same spot you are today. It's just you'll have received all those payments from me, right? That would be the worst-case scenario. In other words, I'm not creating barriers for myself. I'm not like, look, man, loan me the money. I've got a mint pair of Air Force 1s. I've got a Nolan Ryan rookie card. I've got like whatever it is. I got something that is really valuable. You just got to trust me. Anytime that you are putting that in someone's brain, they have to ask themselves, Okay. Well, does that work for me? And on top of that, what is that really worth? And where would I sell it? How would I sell it? How long would it take to sell to get my money back? You're creating a problem for yourself. So obviously, the house being the collateral is what also makes it attractive. They have a general idea of what their house is worth already. And so if the worst thing that happens is you gave them some money and then you made some payments or whatever it is, yeah, they're back in the same spot. they've also been compensated for it, right? And so this is one of the psychological reasons that this starts to become a conversation. I always tell people all the time, the number one reason you're not getting sellers to provide financing for your deals, you're not asking. The second reason is you're asking in a really dumb way, and we're going to talk about that in a second too. But when I sat down with Eddie, this is really the big thing he walked me through. He said, look, look at your business model and say, how many offers do you have to make in order to get one deal? And I say, on average, I'm making 20 offers at that time and I was getting 1 deal. So if I want to double my business, I got to spend twice as much marketing to get twice as many leads so I can make another 20 offers and get a second deal. And really his whole point in 2018 was you're just not addressing these 19 leads. And I tried to fight back and kind of argue like, but I am, they're in my follow-up file. Like, I— and I, we really do, we have a very serious, um, a very solid follow-up file. on these leads. But Eddie's whole point with this that took me a long time to get was this is about a value-add thing, right? When I call back and say, hey, look, I'm a wholesaler and, you know, I just want you to know I could still pay you, you know, $86,000 for that $400,000 house. We absolutely can do that. We can close in 7 days. It's as-is. I could buy 1 or 2 more houses this month, right? I could still pitch that, but there's no more value I'm offering. I'm not calling back and saying, hey, here's more value to my deal. Right? And if it is, it's like I could pay you 86 and now I could pay you 88. There's not much value, right? The problem with that is this makes follow-up a hope game, right? You, you have to follow up, but the thing is follow-up is based on hope. I hope the seller likes me more than the competition. I hope the seller calls me back. I hope the seller lowers their price. I hope they come to their senses, right? There's no more value. And so because of that, Eddie says, look, your leads that are in the follow-up file are actually in your trash And instead of trying to go out and basically just hammer these people until they tell you to shove it, right? What you should be doing is acquiring a new skillset so that you have more value to add when you call back. And what you do is you're able to then say, look, out of these 19 who didn't take my cash offer, I can revive them from the dead. I can pull them from the trash can. I could turn them into a deal by saying, look, call the seller back, Mr. and Mrs. Seller. I think I found a way for you to be able to get that price. When's the time we can sit down and talk about it? If you did that with all 19 of them, statistically you're getting a second deal. Some people are even getting a third deal. We've run this case study so many times, it's always 2-point-something, right? 2.2, 2.4, depending on who's involved and how many leads they ran and all this other stuff. But now I'm spending X number of dollars and I'm getting my one deal still, right? I'm still getting a deal for cash and I can wholesale it or whatever. But now without spending any more money, I'm now getting a second deal and maybe if I'm lucky, even a third deal without having to go and spend twice as much money on the marketing side. Right. So this was a really big mental change for me is that it's not about I got to— I just got to be more serious about my follow-up or I got to change my marketing to be from a pink postcard to a yellow postcard. We've done that. We've done handwritten letters and cold calls and text campaigns. We've tried everything, of course. But it's really one of those things of instead of just tweaking little things to try to convert better, why not acquire a skill set to convert by offering more value, right? If you can call the seller and, hey, I'll give you the price you want, that conversation actually has some room to grow, right? Now, it may not— it's not always going to work out, obviously, but still, if you get one more deal from— again, you've already run the appointment, you've already talked to the seller, you've already gathered all the information, you know what they will take and what they won't take and all that kind of stuff, right? And so this kind of conversation is really the genesis of what started to reshape my business. I started rethinking about the sellers that I'm talking to. And so this is really what I want to walk you through to kind of give you the bigger picture, right? It's when you really look at a new— what seems like a new strategy or doing something a different way, so often the person who's presenting across the screen, which would be me in this case, is looking at you and saying, hey, stop doing that old-school way of doing things. Stop doing that other strategy, come do my new shiny thing. My new shiny thing is way better and it converts better. It makes you more money. It's less work. It's whatever it is, right? It's a shiny object. And the person on this side is typically saying, hey, stop all that work and that momentum you've been building and start all over again doing it this way. And so, the reason I tell you that is because when you look at what we consider to be the growth of a real estate investor or the evolution of a real estate investor, you see that no matter what your strategy is, We can show you how to be better, right? Like as a bird dog, for example, you tell a buddy about a deal. If he buys it, he cuts you a check for $500, for $1,000. And if you bird dog for a long time, you're going to start realizing that your buddy's a wholesaler and he's making 10 times as much money as you simply because he's going to find the buyer and he gained knowledge of how to gain equitable interest in a contract so he can go wholesale it. So he learned something new to approach the exact same deal and he monetized it in a much higher way. Right? Same thing if you wholesale for a while, right? I've definitely bird-dogged a lot, but I've definitely been wholesaling full-time for a long time. And as a wholesaler, I was wholesaling houses to people who would go and flip them. And I became friends with those people. And then I started finding out these people who were fixing and flipping, I'm making 10 grand and they're making 30, 40, 50, 60 plus on the same deal. So I'm like, maybe I should stop what I'm doing wholesaling and start flipping houses. And so then I started flipping houses and I grew that business. And I was trying to buy a bunch of houses all at once. sell some and then immediately rebuy some more. I mean, we were just trying to scale. But anybody who's fixed and flipped houses a lot, if you've done a lot of fix and flips, right, in your life, you eventually get to the point to where you say, man, this is a lot of work, right? And you say, I want to start keeping some of these rather than always just selling them, right? I bought it, I rehabbed it, I got it ready. I want to keep the margin and I want the cash flow or whatever it is, right? And so, you kind of evolve into a landlord. And most people, this is— and some people just start as a landlord. Some people just start as if it's not that this is everybody's journey, but from a barrier to entry standpoint, this is normally what we see. The problem is people kind of stop once they get tenants and they're like, it just, it is what it is. I'm going to, I want the good piece and I'll just deal with the bad piece. Right? I've never talked to anybody who had a perfect rental property, but I'm sure there's one out there. Right? And so the whole point of this conversation is really when Eddie talks about this concept of a deal architect, it's not stop doing this thing and start doing this new shiny No, the whole concept behind the Deal Architect is literally to make you better at what you currently do. So for example, when I talked about, as a wholesaler in 2018, when he was teaching me this stuff, I was already wholesaling. I just, hey, will you take $50,000 for cash, cash for the house? And they say, no, that's way too low. I need $90,000. Okay. I have a way to get you $90,000. I'm going to pay you over time. I'm going to buy it on terms. And they said, oh, that works. So great, now I have a house with the financing, package it up, and I was able to wholesale more deals because guess what? I was never going to get that deal at cash. So it allowed me to do that. And then obviously fixing and flipping, if you can have the seller always provide the financing, and if you can have them provide the financing at 4% interest, at 2% interest, at 0% interest, it's obviously a lot better than, you know, some of the private money or hard money lenders you work with. And then really from the landlord perspective, uh, during COVID this has been a massive conversation because I've been talking to people who have a lot of capital. They got a million I don't care if you got a million bucks in cash. If you're putting 20% down, you can only buy how many rental properties? Only X number, right? Depending on what price band you're buying in. So the argument is, don't stop buying rental properties. I don't want you to stop. What I want to do is I want to show you a better way to do it. And instead of putting 20% down, let me show you how to just work with the seller. The seller will only take 10% down or 5% down. They only want $5,000 down. A lot of times they want no money down. down. It just depends on what they want, right? And so again, the goal is to make you better at what you currently do, as well as just equip you with more resources to be able to get deals done, right? Monetize leads, go out and help these sellers. That's really our job as real estate investors, is we bring creative solutions to complicated problems, right? And so the more creative solutions I have, the easier it is to solve the problem and go out and monetize that lead, right? And so the reason we talk about this, and the reason I kind of say it that way is because in today's marketplace, a lot of investors are like, look, I'm not getting the same results I did before the pandemic. So I do need a different action because sellers are acting insane right now, wanting absurd prices for their houses. So if I want results that are better, I have to change my action, right? I want to show you how we can do this. But when you— when we talk about all those niches, right, whether it's creative financing or whether it's, you know, flipping notes, holding notes, whatever it is, right? It always boils down to these 2 things, though. And if you can figure this piece out, this is really quite simplistic, right? If you can figure out, hey, I'm money today, right? I'm not really focusing on building my wealth at the moment. It's important, but right now I really need to— like 2014 Brian, I need to pay my bills. I need to feed my kids, my family, right? I need money now to be able to survive, right? And for some of you, it's going to be the opposite. It's got, hey, I got plenty of taxable income. Don't give me any more money this year. I just got to give a chunk to Uncle Sam. So, if we can kind of defer all those taxes, if we can do it in a way to really benefit me long-term, well, that's going to be a lot better. Right? And so, really depending on what you're trying to accomplish, I can show you how to use that same strategy to make money today or money tomorrow. And some of you are going to be like me, like, I need money today. I have overhead. I have a staff. I mean, I've got marketing. I've got a family to feed as well. Right? Like, I need money today for sure. But I don't do the whole, I'm only money today thing anymore. Now it's how can I do a deal, make something, but also get a lot for the future, really start to build my wealth on the side? And I'll show you some cool strategies to do that. So if you can figure this out, everything I talk about moving forward from here, you can use that strategy to either make money today or make money tomorrow. And this is the biggest thing that I missed in 2016. So let me tell you a little bit about Seth. Seth's out in Cali. I don't know how, um, you know, Obviously, it's a little bit north, but the reality is I really like to talk about Seth because for whatever reason, I mean, I've talked to so many groups across the country and people always say California is the hardest place to do deals.

Okay.

I don't know if it is or it isn't. I mean, I don't know how somebody quantifies that, but what I will tell you is I chose some deals that are in California to kind of help prove the point.

Right?

And so, Seth is just kind of one of these guys who several years ago, he was just your your average investor. He's just trying to buy houses, right? Nothing really special about it. He's just trying to do what we're all trying to do. But he started running the same problems that I'm having in the Dallas, Texas area even, which is, guess what? The sellers want these higher prices, prices I can't even afford to pay. And on top of that, over the last several years, there's all this competition. It seems like all of a sudden I got a brand new wholesaler coming in here telling the seller they could pay some crazy high price. They're never going to be able to move it to a buyer. It's all going to come crashing down. And now the seller's going to be angry at every investor and all these other problems, right? And so how does he go about solving these problems? And 2 of the approaches he took was, number one, he started what I've always called the Walmart model, right? Just outbid the other wholesaler. Pay like $500 more. Mr. Seller, I'll give you $1,000 more than your highest written offer, that kind of thing. The problem is you're literally working more and you're making less per deal. And so it works if you can have 10,000 SKUs like Walmart does or 100,000 SKUs, individual products like Walmart does because they have massive amounts of transactions. But in houses, it's not like you're going to buy a couple thousand houses every single year. So margins become not really a usable solution. It becomes very high risk as well as stressful and all that other stuff. So then he goes to what the higher-level guys do. He doubles down. When we talk about doubling down, we really refer to the ninjas is what we call them. These are, if you go look at a group, the group of real estate investors who are buying 100 to 200+ houses every year, right? Consistently for the past 2 to 3 years, we call those guys the real estate ninjas, right? And the reason is because it's all about volume and scaling and they're not doing it anymore. Now they've got a team that does it, all that kind of stuff. So he happened to join a mastermind. And at that mastermind, he's hoping to get, you know, the marketing tricks and tell me something I just don't know. And he actually met a guy who was like, look, Look, the problems you're facing, I've been there, and you probably don't need to go figure out how to double your marketing and scale it up to $30,000 a month. You, you probably just need to go talk to this guy named Eddie Speed. He's in Texas. Uh, he has this sort of different approach on something, and that way you could take the capital you have and you can make it go way farther, right? And that's kind of obviously when he got introduced to Note School, and about 2 and a half years ago, really everything changed for him, right? He started kind of buying houses with creative financing. And the craziest part about Seth too is he was just your average home buyer, right? But now he buys over 100 houses a year. Now he is a real estate ninja, right? And not everybody wants to be a real estate ninja, right? Not everybody wants to go buy 100 houses. But if you want to buy 5 houses, doesn't it make sense to say, look, I can get an additional 5 houses on top of the 5 so I can actually do 10 houses knowing that it's not additional work? You've already spent the money on the marketing. You've already run the appointments. You've already talked to the sellers, right? That whole thing. You already know what they want. You just can't give it to them. But with a little bit of knowledge, now all of a sudden I could be like, oh yeah, okay. I could call them back and, you know, tell them at least I can give them their price, and then we could figure out if that's going to work for them, right? And so, you'll kind of see that as I kind of walk through this because this asset right here, right? It's a nice property. The seller was in their 70s. They'd moved from California to Arizona. They'd been renting it out, but they didn't want to do the absentee landlord thing. It was a paid-off house, so 100% equity, right? But it's got, you know, like an extra structure on the property, plus some barns, plus some land. And so there's a decent amount of buyers who would want to buy something like this, but the sellers weren't really interested in kind of going that route of renting it out again, or definitely not in the route of selling it to a wholesaler. In fact, when Seth talked to them, Imagine this, the seller was stuck on price, right? Seth, anytime you run an appointment, you have a general idea where you're going to be at, right? You've run your numbers. You're like, I'm probably going to be around $375,000. That's what Seth's thinking going into this thing. But the seller is just adamant. No, I have to get $450,000. I need $450,000. And it doesn't even matter why. Sellers just, it is what it is, right? And so Seth said, okay, great. I can give you $50,000. We just need to talk about what that looks like. And so he starts what we call the talk-off. It's this rational conversation, this logical, rational conversation of, how do I show them that mathematically creative financing is going to be in their best interest? Excuse me. How do I explain to them in a logical way using reason rather than trying to do salesy type stuff, using slick stuff? Let's just use logic and reason. And so he starts the conversation just saying, all right, Mr. Seller, let's talk about this. I have a way to give you the $450,000, but what I need to know is I need to make sure we're addressing all of your immediate cash needs. So what are your immediate cash needs? Money for the— over the next 30 days, maybe 90 days, right? Whenever we close, like, what do you need the money for first? Right? Because if we don't meet that, then we're never going to be able to, you know, do XYZ. And so in this case, the seller, they made a little list and the seller basically needs $50 grand. Now it doesn't even matter what it's for. What's important is to understand that this is what the seller needs. And if you're not willing to solve the seller's real problem, You're not going to get the deal done anyway. And so this is interesting because now Seth can easily point out as well, like, oh, you don't need $450,000. You want it and I can give it to you, but I really want to make sure we're addressing what you need. You need the $50,000. Now, again, this is a free and clear house and he has a need for cash, about $50,000. So Seth decided to go ahead and put up the 50 grand himself, mainly because Seth knows he's only going to be out of that money for about 30 to 45 days, right? Not a super long period of time. And so because of that, he's going to use his own money. But for those of you who are like, I don't have $50 grand, I could never do this deal. I could just head into this exact same deal, right? With none of your own money and the seller gets $50 grand. We just don't have time to go into what a subordination is and all this other stuff. But for the purposes of this example, all you need to know is whether you have the money or not, you can still do this exact same deal. The seller can still get their $50,000 down. Obviously, we're going to use a creative financing strategy to do this. But what's interesting is Seth continued to ask the questions, right? Hey, what else is important to you? I want to make sure we're meeting all your requirements, your needs. I want to make sure you're getting what you actually need. So this is a win-win for everybody. And the only other thing was just the seller was saying, hey, I'm in my 70s. I can't wait 30 years to get my money. And so they agreed on 10 years. The important piece of this, outside of the fact that there's not really a wholesale deal here, so you have to have a different level of thinking to be able to do it is the fact that it is not about the price that you pay. It is about when you pay the price. It's irrelevant what the seller wants. It's when can I give it to that seller? And there's a lot of silly examples, but I'm just kind of, in the essence of time, I really want to make sure I'm kind of digging into this because if they're getting $50,000 today, the $400,000 is in tomorrow money. We need to have that discussion of what does tomorrow look like?

Right?

That's kind of— we kind of got to agree on that as well. And so, Mr. Seller, we're going to make sure you get the $50 grand, the $400 grand. It's going to be tomorrow. Part of that is going to be, hey, you really don't want to make this thing go over 10 years? That's not a problem. We'll make this thing happen in 10 years. So Seth is agreeing over the next 10 years to either refinance this thing, pay it off, or sell it within a 10-year period. You're going to see why this isn't a problem for Seth in just a second. But they do sit down and they do have this conversation of what does tomorrow money look like? Now, this can be a much longer conversation. To make it short and easy, what happened is Seth asked the question, Mr. Seller, we got you the price that you wanted. We got you the $50,000 down. I want to make payments to you. If I pay you about $1,000 a month, does that kind of get you going on a monthly basis? And the interesting thing is his reply will always tell you what's important. So if he says, no, I really need $1,300 a month because it's going to supplement my income or do something else. Okay, well then what's more important than anything else is probably going to be that payment. In this instance, it wasn't about the payment. It was truly about $50,000 down. It's truly about $450,000 sales price. And so Seth started the conversation with, here's a 30-year amortization at 0%. We're going to have a balloon due in 10 years. So I have 10 years to pay it, but we amortize it. We spread it out over 30 years to get the payment down. And as long as you're good with about $1,000 a month, this is what it'll look like. Now, if the seller at that point's like, whoa, hold on a second, 0%? That's crazy. I need at least 5%, or whatever their number is, you're going to ask what that's for. And then they're going to tell you what's actually important. See, so much of this is like you've got to present it and then you're waiting for them to to fill you in. They're holding back something maybe. And so, if they said, hey, I need 5% because it needs to be able to beat out my Vanguard account or whatever. Oh, so this is an investment for you? Well, if it's an investment for you, then we need to relook at this whole thing. Because instead of buying the interest, we can actually help you earn the interest and you'll make more money. But if it's not about that, in this seller's case, it wasn't about beating out something, then hey, 0% might be an option. And if it's not, then okay, there's a couple of ways I can go about it. It's a math problem with 4 variables. You can pick some, but I got to have the rest to make it work. So if you want 5%, I just can't give you $450,000, or I can't give you a full $50,000 down. I don't care which pieces you want. I just need to have a couple pieces left to be able to make the math work. They all, all scenarios work for me. I just need to know what these numbers need to look like. So let's talk about what's most important to you, and I'll, I'll, you know, manipulate the numbers to some extent to be able to make the math problem work. For you, right? And so that's kind of an oversimplification, but you get the idea. The bottom line is the seller happened to be fine with 0% on this one. And you're not always going to get a seller to agree to 0% interest. But I will tell you that if it's said correctly using logic and reason, that conversation goes a whole lot farther. You've got to learn what that talk-off is, right? The talk-off that— I told you Eddie's from Mississippi, so he just says very different things sometimes. And the talk-off is what he calls it. So we're going with it, right? So now he's going to turn around, and now that he's acquired the property and he had to come up with $50,000 down of his own money, he could do whatever he wants. He could rent it, he could flip it, he could do whatever his favorite strategy is. But he looked at all the variables and he said, actually, instead, I'm going to resell it to another party, to a buyer. And this buyer is going to be called the penalty box buyer, right? It's this trillion-dollar marketplace of people. And I'm going to go be able to sell it at a premium price, get a premium down payment with a borrower that has good credentials, good pay history, all the this other stuff, good income, and I'm going to go resell it. Now, when he resells this thing, we're trying to find out affordability. So, let's just use easy math to make it simple. If we find a buyer who's got a big down payment and they got decent credit and they can afford $3,000 a month, well, great. Back out the taxes and the insurance. Let's just say, again, for argument's sake, it's $2,600 a month. Somewhere around there, they can afford. Well, we're going to solve for the interest rate, right? In this instance, $2,661 at 7% ultimately equals what they can afford. But 90% of the time, that interest rate's going to be between 6% and 10%. If you look at seller finance deals across the country, the majority of the time, over 90%, that's what you're looking at. And it's because you're not guessing the interest rate, you're solving for the interest rate. So it's kind of a different way of doing things. Most investors are like, oh, I need to make sure my interest is high enough or as high as I can get No, you really want to focus on what they can afford, and it will— you'll solve for a number that's, that's doable. And if you don't, if that's not high enough, before this is over, you'll see how we make it higher. So we're acquiring it on the left. Like I said, when we resell it, we, we sell at a premium price. And so because we're offering a service, right? Hey, I'm offering financing. I can charge a premium. You can't go and say, I'm going to resell this thing for $600 grand because whatever. First of all, no one's going to show up when everything's around $450,000 or $500,000 in the area and you're like, I want $600,000, $700,000. You can't say because it's going to appraise for that in 10 years, you're going to charge that. Well, you don't know that it's going to do that. You run into a lot of ability to repay and some Dodd-Frank predatory lending stuff. So you just say, look, if I got 5 appraisers out here, that number would be probably between $430,000 $470,000 and $480,000. Well, you can charge, you can ask for the premium of that, right? Somewhere in that $470,000, $480,000 range if you wanted to. In this case, this seller was happy to pay $475,000. They had $75,000 down, right? I'm telling you, people have so much cash right now. But this deal right here, why was Seth asking for $75,000 down? Why was he asking for that? It's because Seth has money today. He wanted to get his $50,000 back within a month or 2. And he wanted to make make some income that's transactional. He wanted to make some money today. But by reselling it at a lower, or by buying it at a lower interest rate, reselling it at the higher interest rate with the premium price and the premium down payment, his cash flow ends up being $1,500 a month on a deal where he's the bank. He's not the landlord, he's the bank. And the other thing is in 10 years, let's say this, the buyer has to agree to the same thing Seth agreed So it's a 30-year amortization, but guess what? In 10 years, you've got to refinance this thing, pay it off, sell it, whatever. And the cool part is we're going to help them do that. That's what's amazing. But what's interesting is we always forget about this bonus right here. See, in 10 years, if this dude waits the last possible second to do it, he's going to owe Seth— the buyer of the house is going to owe Seth $343,000. But Seth had a 0% interest mortgage that paid down a little bit faster. Seth owes the seller $266,000. But what's great is Seth gets to keep everything in between. So Seth has just this $75,000 or $76,000 check just sitting out there in the future sometime. Whenever he refinances, Seth's going to get the check for the difference. And that's pretty powerful. And so when you look at this, Seth is not only making more money than he would've on a wholesale deal, right? Let's say I'm nice and he was going to make 15 grand by buying Alice at $450,000 and wholesaling it for $465,000 somehow. I don't know how we do that, but you get the idea. Let's be nice. Okay. Let's say he could have made $15,000 somehow. He's making more money than that. Plus he gets a really nice cash flow for up to 10 years. And at the end of that 10 years, he's going to get that payoff of $76,000, which means he's going to make a total of $287,000 on this one deal that he paid retail for. So why is it so important to really look at how can you pay retail and make money? Because it's— see, don't get sucked up in the numbers here. It's not about the big flashy, like, that's a big number, oohs and aahs. No, it's about thinking, look, have I missed the deal where the seller was stuck on price? Because if I've missed the deal because the seller wanted retail, they wanted some price I could never give them, could there have been an opportunity for you to say, hey, I think I found a way for you to get that price. We just need to sit down and talk about it. And if that's happened, 10 times, 100 times, I mean, your chances are starting to look pretty good that you could have monetized it in a different way, rather than just walking away. And so that's really my point is, if you're talking to sellers right now, dude, you're missing a lot of deals if you're not finding the right way to have that logical, rational conversation to get the seller to say yes, and then also agree to terms that you're definitely not going to get out of the bank. And so this deal was a free and clear house that needed a huge down payment. Creative financing is very much a spectrum.

Right?

So these free and clear houses, and there's houses that are leveraged and overleveraged. There's houses that need really big down payments. There's houses that need no down payments. There's houses that need rehab in the middle and down payments, right? You see, it's a spectrum. So kind of goes across the board, and this just happens to be on this far end of the spectrum. I'm actually teaching a 1-day class in July that I'll invite you guys to if you want to come, that we really kind of take this and we break it down a lot farther and kind of show you throughout this spectrum, what this really looks like, and how no matter what the scenario is of the seller, creative financing not only ends up being one of the better solutions, but it allows you to do basically any strategy, right? And so I'll dig more into this during that one-day class, but I wanted to show you that this is another house that was in California, that this lady that lived in this house acquired this house 10 months ago on a zero-down VA loan, which means she put no money down and has only made 10 payments. How much could the mortgage have paid down in 10 months? Very little, right? Especially with this low, low interest, right? And so it's kind of one of those things of, look, we're kind of at this spot to, I don't know what to do with this lead. But if you have that interesting or that different way of thinking, right? You can think like a deal architect and provide a creative financing solution. You can make a lot of money. I'm going to show you how we bought this house with no money down. Even she would've had to write a check to have a real estate agent List this property. And we're going to show it. We showed her a way to not only not have to spend any money, but she's going to just get to completely move on to the next chapter of her life. And in the meantime, we're going to make $20,000 today, plus we're going to get $5,800 in cash flow every year for the next 30 years, up to $211,000, right? So there's plenty of money to be made, right? These deals are always going to be more profitable than a typical wholesale deal or something like that. Again, the goal is to help you analyze it in a different way so that you could say, oh, on this one, no, it makes more sense sense to rent this one, or this one, it makes more sense to flip it based upon the fact that I'm money today. Whatever it is, I'm just trying to show you there's a whole spectrum between free and clear houses and houses that owe basically what they're worth, and big down payments, no down payments, people who take 0%, people who want 7%, whatever. It doesn't matter. But the whole thing here that I want to make sure I'm hitting is this is— if you're already talking to sellers, this is a no-brainer because you're stepping over money left and What about those people who are not? Let's say you're brand new, you're trying to get your first deal done, you're trying to figure out what's that next thing? How do I do that? How do I get that first deal done? I'm struggling to wholesale. I'm struggling to find a seller who will sell it to me at 20%, 30%, 40% off. Let me tell you a little bit about Big Papi. He's arguably one of the best designated hitters in the country. And really the interesting thing about him is that the designated hitter role in baseball is very obvious. You step up, you bring in runs, you hit home runs. You don't play second base, right? That's not normally what you're going to see a designated hitter do. You're traditionally, you're a closer. You got one task. Eddie's trained 300 of the top 500 real estate investors in the country. And one of the things he's seeing from these higher volume real estate shops is the resistance to change, because once they have their team set up and their team is working, right, and their team is scaled, and all they have to do is Throttle the marketing dollars to hit their revenue numbers. The resistance to change is pretty high, right? They're like, dude, I love this. I would do this if I was buying the houses myself, but now you're going to go make me train everybody. And so really, Eddie, I would need you to train the whole team and all this other stuff. So it's just that let's not mess up what's already working. And if you've met Eddie, like, he'll straight up tell you, man, like, it's kind of cool. He's never going to push you into anything. He's just gonna say something like, all right. Like when I told him I was a wholesaler and he told me to add creative financing, I was like, I'm good. I mean, he's just okay. Like he's never gonna push after doing $50,000, you know, 50,000 deals. He's pretty, he's pretty good. You know what I mean? But what was interesting is he came home from that group and he was telling people on the flight, he had this idea. What if we could take a brand new person, somebody who has never done their first deal, we equip them with a little bit of knowledge in a short period of time, then we'll even give them the criteria that they need to be able to make this happen. What we're going to do is we're going to tell that person to go and call on the higher volume real estate investors in their market. Now, that's easier to do than the other way around because that's who, who does all the marketing. If you go and Google sell my house cash now Orange County, who do you think the top 15, 20, or 100 leads are, right? Or, you know, listings are— they're going to be the people who have spent the money on the marketing The pay-per-click, the SEO, all that other stuff, right? So you can call up these people, and essentially the argument is this: Hey, look, we close unclosable deals right now. Obviously, that's a little short. I'm just trying to get to the point here is we have a skill set that we can close deals that most investors aren't. So here's the way this works, and this is why it's different than because I used to buy leads from my competition. I'd be like, "I'll buy all your dead leads," but I wasn't working them. in this right way. But basically, Eddie says, look, you call them up, you tell them what you do, you tell them you're a specialist, and you say, look, I want to send you criteria of the houses I buy, and if you have any leads that match this criteria, here's what I want you to do. And this is what normally throws them off. I want you to take those leads that match my criteria, and I want you to work them as long as you possibly can until you get to the point where you say this lead is dead. And once you've decided it's dead, as long as it's still for sale, right? If they sold it, it really is dead. But as long as it's still for sale, And you've decided it's dead, give me 30 days to close it. And if I close it, then we share in the revenue in some form or fashion, right? Whether it's we split the down payment or the cash flow or whatever you work out. And if I don't close it, it was a dead lead. It costs you nothing either way. But I'm talking about bringing you free money. You've already worked it. You've already had your team go after it. You followed up, right? And all I'm telling you is we approach things differently and we can close a lot of those deals that even seasoned investors can't. Right? You're going to have to find a way to say it, not like that. Right? When you listen to Eddie say it, he has more time to talk about it. And so, it's not near as, you know, not near as overconfident, I would say. Right? But at least it gets the point across. You see where I'm going. And what I'm trying to prove here is that their trash really becomes your treasure.

Right?

Like, let me be super clear. This is somebody else who started a real estate investing company. This is somebody else who spent marketing dollars who generated leads, who ran appointments, right? They paid for somebody typically to go run appointments. They talked to the seller. They figured out what the seller will say yes to, what they'll say no to. They've made cash offers. They know how much rehab is needed. All these different variables. They followed up, followed up, followed up, didn't close them. And now you're calling, you have all of the information that is available. Now you have to just simply step in and obviously close the deal, right? And so the whole reason that this is of interest right now is because one of the biggest reasons that people are struggling to get deals is like I said at the beginning. You're struggling to get a deal because people are wanting these crazy high prices. What if we said we don't care what the seller wants? It's irrelevant. It's a matter about— it's a matter of the terms. Can I get the terms that are going to work?

Right?

And so it's pretty cool to really entertain this idea. And we're seeing a lot of not just brand new people basically become designated hitters in their own real estate market. That's what they do brand new. They remember wholesale, they had house, but they can certainly go out and monetize a lead that somebody else has already come up with. And so it's just kind of interesting because it's within reach for everybody. It's one of those things you don't need money or credit. You just got to be shown how to go out and structure the lead, structure the deal, and that kind of stuff. And so I just like to mention that because this is something I've seen obviously brand new people do, but I'm also seeing a trend of decent-sized wholesalers basically start approaching the same thing. We already have a buyer's list. We already know how to monetize leads. We just need to acquire that skillset, learn how to talk in a logical, rational way, all these other deal points. And so what I want to do is I want to jump to something else because what I've shown you so far is I've shown you here's a whole bunch of leads that you either haven't monetized or that are out there or whatever. Everybody knows there's a seller out there who wants retail price. The question is, will they they potentially take terms, right? If the average price of the house is $1 million and they're saying, man, prices are just going crazy, I want $1.1 million, can I mathematically show them a way to make more than that? And can I still make money on that? If I can, great, let's keep the conversation going. If I can't, well then we can't, right? But now we've acquired the deal, right? Once I acquired it, I could do whatever I want with it. I can rent it or flip it, but I'm going to show you how to seller finance it and sell it to another buyer. this whole buyer pool that no one's really paying attention to, mainly because they're the non-qualified borrowers in our space, right? Think self-employed people, think work visa people, think like in my area, um, it's the ITIN borrowers, right? There's not near as many banks that work with ITIN borrowers as they do somebody who's got a traditional Social Security number. But those ITIN borrowers in my market, not only are they really They have really great pay history on everything. They pay their bills, but they also just have a lot of cash because they're not traditionally getting loans from banks anyway. And so, they've just stashed up this cash over time. And so, there's all kinds of different people, but my point is that once you resell this thing to a buyer, they owe you a note, right? That note is just simply a promise to pay. Somebody owes somebody else money. And in this case, this penalty box buyer would owe you, the Deal Architect investor. money. You created your own note by reselling the property. Now, I want to pause there and say, what if we skipped all of the front section there? What if we don't even go talk to the sellers? What if we just start in the note business? Somebody else has talked to the buyer, they found a buyer, they got a down payment, they've been receiving payments for a year or 2 years or 10 years, and now they just want to sell their note. Well, that's what it looks like to really be in the note business. Right? And you could simply buy a note, which is an asset. You're going to buy it at a discount, and a wholesale price is another way to say it, right? And now you've got an asset that is performing. And when we're talking about a performing loan, we're talking about a mortgage that's been paying consistently over time. And so what we're looking at is we always take the note and we say, look, wherever it is, because it could be anywhere in the country since it's paper. I mean, we just need it on our computer screen. We want to know the value first, right? And so if you're sitting here saying, look, in California, you know, the assets out here are— somebody typed in the chat, I saw the average price in Orange County is $800,000. Perfect.

Perfect.

In the Bay Area, we've got so many students in the Bay Area, they're in the same spot, right? They're always dealing over the million-dollar mark, right? And so instead of trying to play in that same space, You say, I just don't have that capital to go put 20% down on a property. Okay, great. Why not take the capital you do have and go deploy it in other parts of the country? Because you're the bank, right? If you've ever bought a rental property out of state, it's a whole nother scenario. I'm looking for a note that's worth $48,000. And on top of that, that $48,000 is broken into 2 categories, right? The note, the debt itself that I'm buying, which is a first position lien, that tells me really what is my risk. risk when I compare it to the equity. So, if the note is $31,000, the loan amount is $31,000, and it's worth $48,000, okay, I got a 65% loan-to-value. They've paid about 3 years' worth of payments. It's gone up in value, whatever it is. So, when I look at the value, I'm splitting into those 2 buckets. And then when I look at the debt even farther, obviously, it tells me about the terms of the note. Now, what's interesting is, yes, you can do these in an IRA or an HSA, a Coverdell Education Account. You can do them in a whole bunch of different tax-advantaged type of Notes are very friendly to that kind of space. You could talk to a custodian. I'm sure Joe can introduce you to a self-directed retirement person who would be more than happy to talk to you about doing notes in your, you know, in your IRA or something. But the difference is when you're buying a note, you're buying the right to receive that future payment of whatever it is. So, 203 payments of $318,000, that's what you're buying, right? And when we're doing this, what we're seeing is that every single month, a third party known as a note servicer is going to collect all the money, make sure the taxes and the insurances are paid. They're going to send you a check for $318 every single month until you've received $318, 203 times, which would be $64,000. The cool part is about notes is if I bought it for $31,000, right? Let's say I bought it for $31,312. Well, my return on investment would be what is known as the coupon rate, which is what the note is written at. So I'd get a 10% return on investment, double digits. Cool. But what do I do when the note's at 7%? Notes are bought and sold at a discount. And so when we go to buy this note, we don't buy it at $31,000. We're owed $31,000, but I'm only going to pay $24,000 for it. The thing about being in notes that's great is the longer you're in a note, the lower your risk goes. So I, so my, I had a 60% loan-to-value, but by buying it at a discount, my investment-to-value value is now 50%. So now my risk went down. And then every payment they continue to make, my principal is being returned to me. And so my risk goes down farther and farther and farther. And that's really a beautiful piece, especially in a retirement account, is you want to know that I can make really good returns, like 14% or whatever's good to you. But the thing is, it's like, this is not— when I was a hard money lender, we absolutely would try to make 12% to 14%. But it was through these deals to where the longer that flip went, if I loan money out and you flip the house and you fix it up, you add the value and you can't sell it. Why can't you sell it? Well, because we over-rehabbed it. And so we had to raise our price a little bit. Oh, so now you're, now you're out of the market. Right. And so our problem was the longer we were in that note, the higher our risk got, because there was going to come a moment to where now we're going to get this property back. They've already added the value to it, there's not much more I can do to add value to it, right? And since I'm already sitting at 70% or 75% loan-to-value, I got to be able to sell this thing at a discount to move it quick so that I can get— like, let's say I set it 15% off or 10% off or whatever. I can sell it for 20% off if I wanted to. You get the idea, right? It's just, I need to recoup my capital. Whereas with notes, if things go bad, I've got so much more equity to not just get my money back, But it's a profitable deal. And so a lot of people look at this and they're like, man, notes can make you a solid rate of return. Right? And I think that 14% is an incredible return, but 14%, it's not like a hard money loan I used to write where I'm trying to get that in 1 year and I have to turn money over and over again. This is 14% from 1 deal that's going to pay you for the next 15 years, 14%. And if they've already been paying for 3 years or 2 years or 5 years or however long, every year that goes on, Again, you start to see how you reduce your risk. And so I kind of want to wrap up with these 2 things. You now know what a performing note is, right? You can either create your, your own note, right? And then now you're in the note business, or you can just start by saying, actually, I just need access to some notes. I would like to start investing in some notes. And you can go buy a performing note like you just saw a second ago. But if 14% return on investment isn't enough for you, I wanted to tell you about this little Eddie Right? Partials are like pizza pies. If it costs you $6 to make a pizza, you got to sell it for $12 to make money, but you've lost control. And what I mean by that is, what if you could sell it by the slice like you see at a pizza shop? You sell the front half of it, you've recouped all your money, but now you have the control of the back part of the pizza. So if things went horribly wrong, you could always eat that pizza. You could throw it away, and you could also resell it. You have more control, you have more options. And so, the reason I get to be the one to tell you about this is this is one of the best wealth-building tools that I've ever seen in my life. Because if you want to make a lot of money in the note business, you have to learn how to buy long, meaning buy the entire note, and then you're going to sell it short, meaning sell just the front section of the pizza, right? Sell the front half of the note, the front half of the pizza. And so, really the way this works is I'm going to go buy a note that makes me, like you saw a 14% return on investment. But what I can do is I could go to like my mom, for example. I'm going to go to my mom and say, hey, Mom, look, I really need you to be building your wealth a little bit more. You're at an age to where you should be focusing more on your retirement, whatever it is. And I want to hook you up. And so instead of me just wholesaling you a note so you can get 14% or 12% or 10% or whatever you're wanting, right? Let's say they wanted, she wanted 10% or 12%. I could say, look, instead of me doing that and you taking on all the responsibility and trying to figure it out. Instead of you take— buying a whole note, what if instead you bought just a part of a note that I'm already buying? So I'll buy the whole note and then you just buy the front section of it. Now, why would you do that? Well, one, now you don't have to commit to 203 payments. You don't got to commit to 18 years or whatever that is. I'll sell you 10 years. On top of that, I'll give you all of the payments for those 10 years before I ever take any of the payments. So I won't even take the cash flow. You get all the cash flow and you'll receive all your money and all your interest and everything before I ever take any of these monthly payments, right? And so instead of 12%, would you take less if I'm lowering the risk? Well, of course. And then I also add in, well, check this out, because if you're getting the front part of the loan and I'm at the back part of the loan, if they stop paying when you are getting the payments, that could screw up my profit on the backside. And since you're not really the expert in this, I am, I'm going to step in. I'm going to handle this. I'm truly going to make this the most passive investment for you. And so what would that rate of return And what you're going to see is, specifically right now, summer of 2021, you can raise a lot of money between 5% and 7% interest, long-term money at 5% and 7% interest. And that blows a lot of investors' minds because they're borrowing money from hard money lenders and they're paying 8%, 12%, 10%, whatever, sometimes some points. But I'm telling you, this burnout landlord conversation, it's just the market has created this condition to where they would rather lie lock up their capital in something that's set than risk losing, you know, X percentage of their net worth because they're trying to grow it, you know, in a different way. And so, what I'm seeing is I could go to my mom and say, look, Mom, I'm going to give you 10%. I'm going to give you 120 payments. That's 10 years. When I plug those 3 numbers into a calculator, a financial calculator, it literally spits the price out of $24,063. And so, my mom's going to sit here, pay the 24 grand. She's going to get $318 a month, every single month until she's received all of her payments, all of her interest, received $38,000 for her $24,000 investment, and made a 10% return on investment. Now, the note servicer who's managing all of this, all these payments and stuff, this is one of those scenarios to where they know, oh, 120 months, cool. Brian's mom gets the payment month 121. Okay, now Brian is going to get the payments.

Right.

This is one of these things that Eddie's been doing since, I think he said 1982. He learned it from his father-in-law who did it all throughout the '70s. This actually, this whole part of the industry actually came out of a computer glitch, believe it or not. There's a whole other story there. But they've just been doing it for so daggum long that this is one of those wealth-building tools that banks use, that just investors, we're not taught this stuff. Right? And so my mom, on the other hand, she gets $120 Which means I only get the back 83 months, right? But she gets completely taken care of because she's going to invest $24,063, but I bought the whole note for $24,425, right? And so she's going to get taken care of, but what do I get if I have to wait 12— if I have to wait 10 years to get my money? What does that mean? Well, I only have $362 in the deal and I have another $26,000 in payments that are coming to me. And so, the whole point as a, I would say, risk management strategy using this is this is also how we exponentially grow our returns, right? It's still one note. There's still X number of payments. But if I can acquire it at this return and I'm finding somebody who wants 7% or 10% or whatever else, I can simply sell you less payments, sell you more payments. I can give you whatever interest you want. And at this one-day class, I'll show you kind of how I do this in a spreadsheet to be able to say, all right, do you want 8%? Do you want 5%? whatever. And then based on that deal, I say, well, I want to leave $10,000 in this. And so I'm only going to sell you 75 payments or 100 payments. You choose what you're wanting to put together to build the deal that works for you. And if you're doing this in an IRA, you really aren't going to rely on this money anyway because it's in an IRA. This is the retirement side of the world anyway. And so you start to see, we always jokingly say, if you invest $362 and you turn it into $26,000, what's that return? Well, if you don't need a calculator, it's probably enough, right? So this is kind of the concept behind partials. This is just a brief introduction, but if you're wondering how banks are able to turn over such high rates of money and get such high rates of return, they just have skills that, you know, most— the average Joe investor doesn't, right? And this is something that I just— I don't know anybody outside of Martha Speed and Eddie Speed who do this at this level. In fact, probably the most seasoned partials investor is Martha Speed in the United States. That's what's pretty crazy. The longer you spend involved with Note School stuff, you kind of start to learn all kinds of crazy stuff from just how long they've been in business. And so what's interesting is this last niche here. Now that you've kind of seen, look, we've the creative financing side of the world. Obviously, a performing note is one that's just performing, but what do we do when they don't perform, right? What happens if they stop paying? Or what if I buy a note and they stop paying? Or what if I just Or I sell a partial to my mom and it stops paying, right? All of these can become non-performing. But what if I just wanted to target, for example, a non-performing note, right? On Friday, I funded a non-performing note. This is a note they haven't been paying in the last year and a half. And I know they haven't been paying in a year and a half. And so, I'm going to buy it. And the reason I'm willing to buy it is because I can buy it at such a discounted price. If I can buy an ugly, distressed, messed up junky house, house and then go and add a lot of value to it by rehabbing it and making it pretty and more valuable to create my margin. If I can fix and flip a house, I can fix and flip a note because a note is just the paper side of real estate. And if they're not paying their bills, it's troubled, it's distressed, it's all those different same things, right? I just have to rehab it in order to make it more valuable. And there's really only 3 ways you can modify it. You can do a deed in lieu, or you can do a foreclosure. We're not going to get into that in a second. But what I am going to tell you is that this opportunity right here is probably one of the most powerful things you have to understand in 2021 because of the market condition that's being presented. That's literally the reason why. And here's why I really wanted you to entertain this idea is that you're buying and selling houses right now, and that works. Let's say you buy it at $70,000, it's worth $100,000. There's enough money in there for you to make money. And if you're wholesaling it, for them to make money.

Right.

That deal works. So don't stop doing it. But what I'm saying is, if you'll take a look at what does it look like to enter the deals through the non-performing note side, I can buy them substantially cheaper. And then I'm either going to end up with a cash-flowing asset or— and a lot of equity, or I'm going to end up with an asset that I now own. And I'll have a $100,000 house that instead of buying it at $70,000, I'm buying it at $35,000 to $55,000.

Right.

And so again, it seems like an oversimplification, but I'm just, with the time that I have, I just want to at least mention, look, there's such an opportunity. Just FHA in March put out this, I saw this article that said that just FHA delinquencies hit 17.5%. That's not the VA or any of these other entities. And obviously we know why, right? Because of the moratoriums and stuff. But the reality is Because out of all these millions and millions of loans, how many— I mean, some of them, I'm a little optimistic. I think a lot of these are going to get worked out. I think a lot of these people, it's gone up in equity so much, they— I would like to think that they're just going to sell it rather than get foreclosed on. There's going to be a lot of that kind of stuff. But I'm telling you, there's still going to be a large amount of people who are getting foreclosed. And we're already seeing the foreclosures pick up, just not the ones that have been a part of the moratoriums, obviously.

Yeah.

Obviously, but it's one of those things of there's just so much money to be made and you don't have to change your strategy. If you want to buy rental properties, there's really not a better way to get into rental properties except through the bad debt side. Right. And so it's a way to acquire more properties. And for those of you who don't know, being a part of Note School, this is really one of the benefits, right? Access to different things, relationships with hedge funds and all this other stuff. And so since I'm out of time, I really just want to invite you guys to kind of take that next step, whatever that next step is you. I'm hoping this really kind of was informational and started to get across maybe some things that you should be learning and entertaining and kind of embracing. Some of you, you got to learn the getting terms piece to be able to get terms that banks aren't going to give you, right? 20% down or no money down, right? Or whatever it is for you. Some of you've got big trash cans full of leads that, I mean, you haven't monetized yet, right? And so you kind of got to figure that out as well. Some people are brand new and they just need to figure out maybe even just being a deal architect and just going out and you're your lead is actually just the other investors in your market. But this whole note business thing, right, after 40 years and 50,000 deals, I mean, they just have this thing cracked to a science. And it's just such a great way not just to build your wealth and make money long term, but again, it's money today or money tomorrow. You can use all of these strategies to do the exact same thing. And so it's one of those things of, I really just don't have the time to get into all the details today. And so we are actually hosting a full 1-day class. If you haven't seen a link for this already, if you haven't been told about this already, it is Saturday, July 10th, right? It's 9:00 AM to 3:30 PM Pacific time. So it's going to be West Coast time. And we're just going to be covering a whole bunch of stuff. We're going to actually use these case studies and go into more— since we have a full day, we can kind of go into and break down these case studies about acquisition and disposition. And why would you seller finance instead of rent this one, et cetera, et cetera. We're going to talk about using tax advantage accounts, or wholesaling notes or whatever it is that's going to be interesting to you. We obviously dig into performing notes. I show you a lot more about partials. And then we really spend a good amount of time talking about non-performing loans because I really need you to understand what that process looks like. And for a guy who he really kind of, I mean, I had a wholesale business in Dallas, Texas, but wholesaling in 6 different markets doing the virtual wholesale thing, I'm not saying that it doesn't work. Don't get me wrong. It totally works. My thing was it was just made out to be a lot less work than it actually was, right? Whereas the note business, when they say it's truly virtual, you're only relying on what's on your computer screen. So it's not the, uh, you're never gonna like go out to the property or anything like that, right? And so we, we kind of walk you through that a lot more to really help you like build that up a little bit, right? Not just your knowledge base, but, uh, the confidence as well. And so just for showing up on Saturday We're giving away 2 books. We've got the Moneyball 2 book, which is a creative financing book written for the pandemic times, as well as Making Money from the Post-Meltdown. This is what it looks like to buy and sell houses. I'm sorry, to buy and sell distressed notes, right? Non-performing loans. And so, this is kind of the picture of what's most important in the marketplace. If we can equip you with just even one, if not more, at least one way to do more deals, finding a solid deal truly is the hardest part of the marketplace today. And so, we want to try to find ways how. Let's equip you with some more resources. We're obviously going to talk a lot more about this. And I will say that for those people who are really, they're like all about money today, it's like, Brian, the money tomorrow thing, it's cool, but no, really, it's all about I need money now. I understand. I respect it. And I was told the model about, hey, just go wholesale 4 houses and then keep the 5th one. It just never really panned out. And so, I wanted to show you maybe an easier way. On Saturday, I'll break this down. I'm going to show you how to turn $100 into $100,000 absolutely tax-free using one note strategy on one deal. And then you can do one deal, like in an IRA or something like a Roth account, to where you can kind of set it and forget it. Let that grow for your future, for your money tomorrow. And then now you can get back to doing your money today if it's that important. But there's just such an opportunity to kind of get that set in place and start doing one deal. And I'll even show you where you could go buy the notes right now. You don't even have to go market or anything like that. And so, it's just, this has become a little bit of a passion project because I kind of feel like Harvard is— I'm sorry, Note School is the Harvard of the note business, right? Like, they just, the stuff they know, the stuff they've tested, the resources they have, Eddie is just so well connected that these strategies have been extremely beneficial to me. And if you're somebody who is really focusing on money today, I just, I'd like you to at least entertain this idea of, if I could show you how to do one deal that would build your wealth on the side, then you can get back. Is that something you'd entertain? I want to see you really succeed. And so if you want to come to this, here's what we're looking at. Oh, by the way, it's $29 for the whole day. The whole day class is now only $29. You can go to noteschool.com/ocrein to get registered right there. There's a little video that talks a little bit about it as well. But that's where you'll get registered. And when you register, it'll click, kick you back the links, uh, to the class. The class is really built to be, uh, interactive and bring your questions, right? And bring your concerns, bring your, bring your business problems. We're really going to try to unpack some of that stuff, uh, in the day. And I'm going to use case studies to show you how it's relevant and how in this scenario the seller could have adjusted, or you could have at least offered it to the seller, whether they would, whether they would have accepted not is irrelevant. Sometimes you just got to know, hey, here's one more tool I can bring to the table. So that's pretty much it for me. I, I love that, um, I love that there was— I see a lot of chat and stuff, so I can go and, uh, we can definitely, uh, do Q&A and stuff like that. But I love that I got to come out, Joe. I really appreciate the time, uh, kind of talking about this stuff. I, I obviously, I enjoy talking about it. But, um, man, however we can help, we will. I was going to try to read through some of these questions All right. Is this or no? We talked about that. I think you have to get depressed markets or lower-income markets. Oh, outside of Orange County. Actually, so this is a really great— I'm not sure who asked that, but this is a really good misunderstanding about creative financing. A lot of people think it's for these cheap, crappy houses, right? A lot of— mainly because this was really popular with mobile home manufactured homes. Because if you tried to seller finance a manufactured home for whatever, $20 grand, $50 grand, that borrower is probably never going to go and be able to qualify for a loan. Not to mention, there's not a lot of banks that want to loan on manufactured homes. And so, because of that, what we saw is seller finance people, they sell it, that person just walked away because they could never refinance. You get back the mobile home. Now you got to resell it. And so, you never got rid of it. You just always resold it over and over and over again. And so, it started to create this opinion that, oh, so that strategy is for cheap crap. houses. But on Saturday, I'm going to show you that's not the case. And in fact, the higher the asset price is, the more compelling creative financing becomes, right? Because now all of a sudden, there's a lot more money to be made. And so, it is a quite fascinating conversation for sure. And I think on Saturday, you'll kind of start to see that about people buying motels and businesses and apartment complex, commercial buildings. This is a pretty strong argument for why creative financing works in all price Yep. There you go. Somebody put a custodian in the chat there. I'm not sure which part you're concerned about, Jennifer. There was a note in here. I would not want to lose control for that small amount of money. Oh, I got you. So you just misunderstood. So on Saturday, we'll kind of go into it in more detail. I know I was going fast. I'm assuming you're talking about partials. The beautiful part is you're never giving up control, right? You don't have to worry about losing control when you sell a partial because you only have $300 in it, misunderstanding kind of how it's done. You absolutely, as the investor, you never want to give up the control, especially when your money's made on the backside. And so, it's a way to be able to keep your returns, keep the cash flow in the long run, build your wealth, but obviously reduce your risk and maintain control.

All right.

Hang on one second.

All right.

All right, so looks like cool. So yeah, man, if y'all got more questions, chime in. Um, I'm, I'm happy to help, help however I can. Um, and we'll, uh, we'll kind of go from there. Let me know what's going on. And, uh, if not, if no other questions, man, again, thank you so much for, uh, for having me out tonight. Really appreciate it. Um, hopefully we'll see you guys on the the 10th and be able to spend a day together. And, uh, again, if you're going to come to the 10th, man, go get registered tonight. But more importantly, start your list of questions, right? Start your list of concerns, bring them. I think that by walking away from a 1-day class with some answers, it'll probably help get you to that next step, right? What— depending on what you do, some of you are brand new, some of you, you're buying 50 to 100 houses a year. So I want to make sure that on Saturday I'm getting a feel that. And we're going to do some polls and stuff so that I make sure I'm talking to the— I don't want to talk about landlords the whole time if nobody's buying rental properties and vice versa.

Any more questions for Brian?

Sorry, what was that, Joe?

Any more questions for Brian?

Yeah, I had one.

Go ahead.

I came to this class. I'm a wholesaler right now.

Okay.

I was wondering if there's any ways that— I'm trying to breach the gap between wholesaler and just full-time investor, becoming the bank myself, things like that, rental properties, that type of method. Is there any way that you see the creative financing, helping wholesalers? Do you see any way that I can implement that into my wholesale strategy to help me be more effective?

Yeah. So this is exactly what Eddie was telling me in 2016 that I didn't pick up on. In 2018, when I started implementing this stuff, it helped me wholesale more houses. So let's just say hypothetically you're wholesaling houses, you go talk to 20 sellers, and you get one of them, right, to sell you the house. Well, those other 19 in that example that I kind of showed for my scenario, that's what it was. I was just calling those same people back and saying, hey, look, you know, you wouldn't take my $200,000 offer, you want $400,000. So, I can give you $400,000. I want to talk about what that looks like. And so now, not only do I have a house that I'm buying it at retail, but it comes with the financing. It's easier to sell a house with Right. If I came to you, Brandon, and I said, hey, man, you want to buy rental properties? Cool. Hey, here's a rental property right here. It's $8,000, and you can have, you know, 6% interest. Like, that's an appealing thing for a lot of investors to be able to buy. And especially, we've got a handful on our buyers list that we know they're mortgaged out. And so, they're the first people we call. They'll pay a premium just to kind of jump our list a little bit. So, it's easier to wholesale houses when the financing is attached it. And more importantly, hey, that's more deals, right? It's more deals that you weren't going to get by paying cash because they won't take that little price.

Right. So, okay, that makes sense. And does that only apply to houses that are turnkey or can you apply that to fix and flip methods as well?

No, it absolutely applies to any scenario. Like I talked about a little earlier, like it's a spectrum, right? Some houses need a little rehab, Some houses are gut jobs. It doesn't even matter. There's ways to be able to have the seller provide the financing. There's even creative ways, really fascinating ways. If you want to buy fix and flip houses, you can give it, you can show the seller that they want to be the bank for the funding of the rehab as well, because then they're in a spot to where the worst case scenario is they're getting their house back with value added to it. Right?

Right.

So yeah, it will help you not just wholesale more, more or rehab more or get more rental property, whatever your strategy is, right? Like my big kind of thing that I like to focus on is I've come to like 1,000 classes. I've gone to all these different workshops and all these seminars. And for so long it was, hey, stop doing your thing, my thing's better. And one of the things I really admired about Eddie early on was this idea of, he's like, do whatever you want. Let me just show you how to do it better. You know? And when he has 40 years of experience, I was kind of open-minded to it, right? And it really did, it changed my business a whole lot.

Okay.

Yeah, because, uh, what I'm finding right now, I'm working in the Sedona, Arizona market and it's an Airbnb beast. Um, but the problem is a lot of the homeowners understand this, so they want a house that, I mean, I mean, any comp that I can find is in the $400s. They want $700,000.

Wow.

They're just ridiculous prices. However, the Airbnb revenue, my significant other is a property manager for one of the bigger companies out here, has 35 properties under her belt and understands what the income looks like on these properties. So it's a matter of explaining to investors it almost makes sense for you to come in a little over budget because of your ROI. It's going to be way quicker. And then the rates aren't going down. However, I think creative financing will help because the strategy that I learned as a wholesaler is how do I buy it low?

Yeah. So the short answer is this, that really with Airbnb, it's kind of like It's more buying a business than it is buying an individual asset. And so the big pitch to Airbnb on creative financing is, hey, I know you want to sell your house and I know you want to sell it at a premium. If I can show you how I can buy it at a premium and instead of just selling it, you sell it and you get cash flow, is that of interest to you? And so the interesting play there is instead of getting all their money then, which then they got to go pay tax on unless they can find a way to do a 1031 exchange and immediately roll right into another asset, which finding a property right now is going to be very difficult. So 1031s get compressed, right?

Mm-hmm.

Instead say, hey, what if you can sell the house and keep the cash flow? Then all of a sudden it's, wait a minute, now this is interesting, right? And so now I don't have to compete on price. Again, it always boils down to, it's not about the price that I pay, it's about when I pay the price. You've got a gold chain in your picture there. And if that's worth $500, but I came in and said, hey, I'll give you $10 grand for it, it, you would probably agree to that without asking any other questions, unfortunately.

Yeah.

But as we got to the terms, you know, it's like, well, really, I'm going to give you $1 a year for the next, whatever, 10,000 years or something. You see what I'm saying? Like, that's a ridiculous example, but it's never— it's not about the price. It's about when I pay the price. And the majority of these people right now are so interested in the price that they won't care about the terms. And a good example of this is go to any website site and something pops up and it says, agree to these terms and conditions. I'm assuming that all of you go and you read all of those terms, right? Before you ever click that box. Or do you just click that box and you get what you want?

Yeah. Right.

You're after the thing that you want. Right. And on Saturday, I give even more examples of that. Where again, that's an oversimplification, but that's where we're at in today's marketplace. Sellers want something and they already know what they want before you ever show So just ask them what it is and let's find a way to make it happen.

Okay.

Yeah.

I mean, you're not gonna— like I said, you're not gonna get every single deal. It's just not a thing. But the main reason right now that people aren't getting deals is they're not offering, you know, a way to do it on terms. What if I can just give you the price that you want and we'll do it on my terms? You know? So it increases your chances.

Yeah. And when you were talking about like car dealerships and things like that, yeah, that makes sense. You know? just expanding your way of doing business. Okay, cool. Awesome. Yeah, that was super powerful. I appreciate it.

Sweet, man. Well, we'll see you on Saturday.

Absolutely. All right, everyone have a good night.

Anybody else? Brian, thank you very much. I appreciate it. And, and we'll definitely see you on July 10th.

All right, thanks, y'all. Y'all have a good one.

Take care.

All right, bye-bye.