Creative Financing Secrets for Massive Profits

Go to Investorthrive.com right now to check out some of our free training on how you can make money as a real estate investor, or schedule a time with me so we can chat about our mastermind mentorship and how we can help you learn how to wholesale nationwide and grow your business. You know, we just started chatting right now, and I bring people on that are experts in their fields, and you've told me that you are— you've been doing subject-to deals and creative financing for the last 23 years?

That's right. I got started in 1999.

That is absolutely amazing. So not only am I going to ask you questions about subject-to, that a deal that I'm doing right now that I might need some help, maybe some advice. I also want to know like what got you started in subject-to? There were so many different exit strategies. Why subject-to? So before we get into all that, would you like to introduce yourself and kind of let people know who you are so they know who they're listening to?

Sure. My name is William Tingle. I started investing, I bought my first investment property in 1999. I bought a Carton Sheets infomercial real estate course off late night TV. I've been in the restaurant industry for over 20 years. I worked 70 hours a week, never saw my family, and I was just really sick and tired of it. I quit school in the 9th grade, so I didn't have this big degree. I could go out and get another job. And so I thought, man, that's my only chance, you know, other than that, I'm going to be stuck doing this the rest of my life. And I just started buying houses. And 3 or 4 years in, I quit my job after the first year, went full time. And I had so many people approaching me, how are you doing this? How does this work? Somebody said, man, you just need to write a course. So I did, and started selling courses and doing training as a secondary job. And that's, that's what I've done since then. So I train other investors and and buy houses and do all of it.

That's awesome. So I'm just curious, like, so you, you dropped out of school in 9th grade?

I did. I did.

Did you just not like school, or how did that happen?

You know, that's, that's a long story, but the, the short version of it is, uh, I, I just, I had to, to leave home. I ran away from home at 15, and I couldn't go to school and work and support myself, so I've just been on my own since I was 15.

And wow, and that's an amazing story so far. And, and infomercial, when did you see that? Was that around 15 as well, or—

No, you know, I don't remember when Carlton Sheets got started. Now I'm, I'm 60. I just had my 60th birthday.

You look good.

So, hey, thanks, you know, good living. Uh, but, uh, you know, I was probably— I've been watching Carlton Sheets for probably 10 or 15 years. Uh, in 1999, I was 37 years old. And I just, you know, I've been in the restaurant business since I was a teenager. You know, they suck you into that thing. And if you work hard, you get paid well. I was director of operations for 3 states. Wow. I made, you know, $60,000, $70,000 a year, which is pretty dang good in 1999 for somebody with a 9th grade education. So I was kind of stuck. And I said, what am I going to do? So I just decided I can try to buy this real estate stuff. We'll see how it works. And it worked out for me. And I said, gee, I bought one house and then I bought another house and another house. And I said, whoa, wait a minute, maybe this stuff works. I better put a plan together. And I said, I want to quit my job in 12 months. And I bought my first house in August 1999. And I quit my job in August 2000. And I hadn't had a job since. Wow, that worked for me.

It's fun to look back, doesn't it? Like, I'm sure, I'm sure it wasn't all smooth, right? Like, did Having some ups and downs?

Yeah. Oh, well, I mean, yeah, I mean, I, you know, I worked really hard and I was really careful. I'm pretty analytical, but I was lucky. I made some mistakes. I mean, I was talking to somebody the other day about, you talk about stupid mistakes. I bought a course where this guy said, hey, you target these landlords that are filing evictions and you mail them a check and say, hey, you probably haven't cashed an income check on this property for a while. Cash this one, we'll do a deal. And, and, you know, cashing it's supposed to bind the contract, but they don't tell you about the people that'll cash your checks and not send the contract. Yeah, stupid stuff, you know, listening to people. But I bought thousands and thousands of dollars worth of courses trying to define what I wanted to do.

So what would you say for the people that are watching— this is usually Investor Tribe Nation, is usually a lot of newer people, but there are experienced— how much would you say in the last 20 years you have spent in courses? I'm just— and self-education?

Uh, easily $50,000. Now, I never paid a really high dollar mentorship or, or anything like that, but I bought a ton of courses. And, and so, I mean, that's what just worked for me. You take stuff and you go, I like this, I don't like that, uh, and you just, you, you formulate your own business, you know how you do things.

And some people, you know, they, they pay that high, that high-ticket item to have that mentor that's just like going to walk them through it. So it sounds like what you did is you, you, you took, bought those courses and educated yourself and you learned that way.

Is that, is that That's right. Yeah, and I went, you know, before I quit my job, you know, like I said, I worked 70 hours a week, and the internet— we didn't have Facebook and all that automated stuff. But man, I would get home in the evenings at 8 or 9 o'clock, and I'd stay on the internet and all those chat rooms and newsgroups. Remember AOL? You probably don't remember that. But all that stuff, you know, where you're just typing all night long. You'll type, ask a question, somebody will type and answer it. And that's the kind of stuff we did. These guys today, they don't know how good they got it.

That's right. That's right. Well, that's really cool. So you actually— don't— what— don't you have your website or your email domain? What is it? Sub2Deals?

Sub2Deals, S-U-B, the number 2 deals dot com. We've been operating that for about 20 years teaching people.

Yeah. And I was about to say, I was telling you before we got on this, I'm like, wow, you know, I'm sure a lot of people want that domain. That's a, that's, that's a juicy domain right there. Yeah.

Well, you know, 20, like I said, 20 years ago, you know, they didn't even know subject to. Sub2 is something that you know, my little group of people, we started calling subject to Sub 2, just to shorten it. So, uh, sub the number 2, that's what we always call it. So that's why I got that domain.

So tell me, you know, I've been doing real estate for a while, and I feel like, um, you know, we've done subject to deals, we've done creative financing deals, but I feel like you have to find the right situation. Um, are you— are you— have you found a way throughout 20 years to, like, you know, maybe not find the right situation, but just, like, not, not so much convince, but like, I, I guess convince people to do it. I, I, no other way.

Yeah, there's no real way to say it. You know, people use that, how you convince somebody, and I say we don't. We offer that as a solution. It's got to work though. Yeah. But here's the thing, if you don't offer that option, nobody's going to take it. You know, I— and we'll hear this all the time out of people with— obviously our main And two-thirds of the people that we buy from are in distress. They've been transferred, they're in foreclosure, they're getting divorced, there's some financial element there that's a problem. They can't pay two mortgage payments, whatever it may be. But for the other third, it's just presenting it in a way that makes sense. And a lot of people— yeah, I don't think I've ever heard anybody else present it this way. But when they go— when I say to you, Nate, because you called me, you want to sell your house, but you know, you call me about it, and I go, I find out maybe that you don't have a ton of equity. And I just say, Nate, what if I could make the payments for you until I can find a buyer? Would that help? And you're like, well, how does that work? And I said, well, listen, have you ever heard of a relocation company?

Yeah.

Okay. All right. You know how they work? They step in, they start making your payments until they can sell the house, which lets you get on down the road. So that's how we present it. We say, listen, we work a lot like a relocation company does. Okay. You need to do something. You want to sell this house, you've already bought another house, or you're building another house, or whatever it may be. This lets you get down the road. We'll start making your payments for you. And if most people go, oh no, that won't work, but occasionally somebody goes, well, tell me more about that. Yeah, I've heard of relocation companies. I said, well, we operate just like that. We've been doing this for 23 years.

So you get someone interested in that, do they usually try and say, well, how much can you put down, or for how long? Do they ask about down payments, or is it more like Oh, just cover the payment, great.

Yeah, well, some people, some people will ask about a down payment, and my response to that's pretty simple. Well, we usually don't put anything down. We're taking over the responsibility, the maintenance, the taxes, insurance, and we're gonna start making those payments for you on your schedule. Want to stay 3 months? No problem, we'll start the 1st of November. Want to leave tomorrow? No problem, we'll start next month. So we're gonna make this easy for you. And if they balk at that, oh no, you got to put something down, say, well, you know what, maybe we can do something. Now, if we bought this house through the bank, if we went and we got, say, FHA financing, we pay 3.5%. What if we pay you that? Will that work? Uh, so I'll pay 3.5% down all day long because I'm gonna get 10% down for my buyer.

Yes, of course.

So that's easy.

So most wholesalers, what they do is they, um, they pitch cash first. If it gets denied, right, they go subject to or creative financing. Do you just Do you ever pitch cash, or is it just always the subject-to?

The only time we pitch cash is if it doesn't look like they're going to go for a sub-to deal. And then they say, no, no, no, that won't work. And I say, well, listen, what if I send you over an offer, okay, and show you how it works? And almost everybody's always going to say, sure, send it. Because my philosophy is, if I talk to you on the phone, if I talk to a seller, I want to get an offer in their hands. Of course, how many, how many people go, the seller says no, so they go, oh, okay, well, thanks, click, and they go away. But I'm going to send them a 3-offer choice. One's going to be cash, whack them over the head with that low cash offer, and then show them a couple of other options— seller financing, subject to— where I even pay more than they're asking if the numbers work.

And you do lease options as well, or is it mostly You just take over?

No, listen, my first 12 years as an investor, I was a transaction engineer. We marketed for leads, leads came to— came in, it was a wholesale deal. It was a buy it, rehab it, retail it. It was a buy it or a BRRRR before there was the term BRRRR. We did whatever. I don't like lease options. All we do now, all we've done for the last 10 years is buy subject to, sell with seller financing. That's it. That's all I want.

So you don't really keep them, you sell them, you resell them.

We create notes. We're in the business of notes. Right.

Creating notes.

Okay.

And any reason you don't take it and then just put a tenant inside?

12 years ago, I moved to Belize, and I lived in Belize for several years. I was remote. And I didn't want all those moving parts. I wanted someone with skin in the game, Longer, you know, more likely they'll stay, uh, and, and I just didn't want to have to manage all that stuff. So that's why we went with seller financing.

And, um, haven't turned back. Do you love that?

I, I won't, I won't change. We might start taking on a rental or two every year, maybe, as we're getting a little bit older, you know, and, and want to slow down and not do so much stuff. But not for right now.

So when you're finding that buyer who, you know, you get at 3.5% or whatever, you're just taking over their payment and you charge maybe if 5, 6, 7— what's the highest percentage you've been able to resell to, uh, an end buyer for?

You mean mark the property up or their down payment?

Uh, they're— mark the property up, right? Because you usually, you cover their payment of $900, and let's say that interest payment was 3.5%. Um, what's the highest you've been able to mark up, uh, interest-wise, like, um, a payment interest-wise?

Most of our seller finance buyers are in 6 to 9% interest.

Wow.

We'll mark the house up as far as if the fair market value right this minute is $200,000, we'll sell that house for somewhere between $215,000 and $220,000. We're going to go somewhere between 7% and 10% on a markup because the seller finance that we're offering has value. Yeah, sure. Of course.

Because they can't get a house the traditional way. So where are you finding these people that are able to pay the 6% to 9%? Are you cultivating those, your own leads or your agents?

They're everywhere, Nathan. And here's the thing, and I was talking to somebody about that today. If you don't have a buyer's list, which you should always be working on a buyer's list, the only thing about a buyer's list is for a home. Now we're not talking about a buyer's list for flips. When you're, when you're collecting names for people who want a home, their lease is about to run out on their apartment, they're looking for a home right now, that list is probably only going to be good for 30 to 60 days. They're either gonna sign a new lease, they're gonna find a house to buy, something. That's very short-term. But if I buy a house in a certain neighborhood, I'm going to do 3 things right away. Number 1, I'm gonna ride around and find agents who have houses listed in that neighborhood. I'm gonna call them up and say, hey Sally, I see you got a house listed on Oak Street. I've got one around the corner on Pine. It's gonna be ready next month. We're gonna offer it with seller financing. Have you dealt with any people who want to buy over here who couldn't get qualified but have something to put down. I love number one. Number two, I'm going to list it on Zillow, of course, and then I'm going to call every mortgage broker in town and say, listen, how many people— because we know statistically 70% of people who apply for a loan can't qualify. So I'm going to say, hey, how many people have you had come through that really want to buy a house? They've got a little money to put down, but you can't quite get them through yet. You want to make some money on that file that you're going to throw away? I need to talk to you because not only will I pay you, because I need a mortgage broker to do the qualifying stuff anyway to be Dodd-Frank compliant, I'll pay you to do that, I'll pay you for the lead, and guess who's going to refinance them in 3 or 4 years when they're ready to refi? So this guy's going to get paid 2 or 3 times. So those are the 3 main things.

Do you just— so you said Zillow, you said calling agents. And brokers, do you list it on the MLS if you haven't found anyone at the time and list it and then say seller finance available?

We, we will list it in the MLS, but that's just for exposure. Uh, you're not going to get most of your buyers through the MLS.

Oh really? Okay, so if you say it's available, that's not how it's going to get done, right?

That'll get other agents to see it and, and, and maybe give you a call, but most of the time it's, it's not going to work that way.

So you got Zillow. Does Craigslist do well too for—

I haven't been on Craigslist in 5 years. That place is so overrun with scammers and predators and everything else. It's just— and then plus you got other investors that flag you, and it's just not worth messing around with, in my opinion, you know.

So let's talk about someone calls you, has a very distressed— well, not very distressed, but it's pretty bad. Do, and you know you're gonna have to put some work into it before you could, uh, re— you know, sell with seller finance. Do you take those on? Uh, you don't?

If I have to do anything more than maybe some paint, change some carpet out, if I have to spend more than $5,000 or so getting it cleaned up, I'm not interested. We don't do long-distance rehabs. We're just— we're just not interested.

And is this a nationwide thing where you're getting leads from all over and you're doing Pretty much.

There are a few states we won't operate in, and they're typical. We don't do anything in Oregon, Washington, California, New York, Maryland. We just— the laws are not landlord-friendly. They're just— yeah, we just— we like the Midwest and the South.

You like the red states?

Yes, that's correct. That's correct.

That's, that's where— yeah, that's where everybody's moving. Yeah, for sure. So this is awesome. Tell me about how you can help Investor Thrive Nation or how you help other people learn this stuff or what you do.

Well, we have a podcast, The Sub2Deal Show. You can listen to that on any podcast medium out there from Apple to Stitcher to Google, anywhere else. We also have a YouTube channel that we put out 5, 6 videos every week. Facebook Lives, our podcast in the video format, and then what we call Goat Nuggets, which are just little tidbits of information on how to do things.

What'd you say, goat?

Like goat nuggets? My, my students started calling me the goat.

The goat.

So we put out— we call them Goat Nuggets, uh, and they're just, you know, little, you know, the shorts.

You're the real sub2goat.

I don't know about that. I would never call myself that. You know, everybody in the space now wants to act like they created it, man. This has been going on since way way before we were living. Okay.

Do you ever see this being taken away, subject-to, or no?

It's very possible. You know, there have been, in the 23 years I've been doing this, there have been a couple of stabs at trying to do something that have happened in North Carolina. And I don't know, 2004 or '05, an attorney general got on a big campaign about how it hurts sellers because they don't have recourse. They deed you a property, and if you don't pay, then they're just out of luck, you know, especially if there's not another deed of trust recorded. So that became a thing, but it went away. So what I'm afraid of is the big influx we've had in this market surge, okay? Everybody's in real estate, and that's how it works every time. In 2005, '06, '07, it was the same way. All these people come in, they don't really know what they're doing, they get sellers to give them deeds, and the first time the market tanks, they're all out, you know, oh, well, I can't make the payment, I'm out. And if we have a lot of that this time, I'm afraid this time something may happen. What it'll be, I don't know. You already see states like Texas making contract for deed tough, making lease options tough, right? Will sub-to-go-away? It's hard to say. If we don't self-police, somebody else is going to police us. And so that's a worry.

And you probably love when they own it outright and it's not subject to, but it's just, uh, what is that, seller carryback, right?

Yeah, seller carry is great. We don't do many of those. Is that because it's hard to find, or, you know, we just never have targeted them? We target— and I— this is what we push all the time. Listen, when I— if I'm texting or calling sellers, I'm saying, listen, we'll, we'll pay full price. I mean, I've even overpaid for properties before. If you call me, Nathan, you've got a a $200,000 house and maybe it was a VA loan and you financed 210 because they roll everything in and you get an order 6 months later and you still owe 205. Well, I buy it. Sure I will. If the terms are right and I can still cash flow, yeah, I'll buy it.

And usually by terms you mean like, okay, if the payment's low enough and you, you have a long enough term to either cash flow and—

Absolutely.

Do you bank on, you know, hopefully the, the property appreciating? Quite a bit, like, for— so when you do sell it?

Well, we, we hope it appreciates, but remember, we sell it at a preset price that's going to make us money. I can show anybody how to make $50,000-$60,000 on a zero equity $250,000 house in 3 years, all day long. That's simple.

Can you give us an example?

Okay, well, let's say— it's hard to do with numbers without showing, but let's just say You call me up with a $250,000 house that you owe $250,000 on. Okay, it's a wash there, but the payment's only $1,100 a month. Okay, I can sell that same house for $270,000, mark it up $20,000. That's about 8%. Get $20,000 down from my buyer that goes straight into my pocket. Remember, the payments are current, the house is in good shape. So I got $20,000 on the front end. I owe $250,000, my buyer owes me $250,000. We're dead even right now.

Got it.

But remember, my payment's only $1,100. Maybe that house will rent for $1,600. So I'll set their payment at about $1,650 or $1,700, where I cash flow $450, $500 a month. Okay. So every month for, let's just say, 3 years, I'm cash flowing $500 a month. Okay, 3 years, that's $18,000. I'm up to $38,000 in profit now. Okay, their interest rate's several points higher than mine. So every month their principal paydown is lower than mine. So if they refinance me in 3, 4 years, my back-end payoff may be $5,000 or $6,000 there. Okay, so I've got $20,000 on the front end, I've got $18,000, and then I've got another $4,000 or $5,000. So my profit on that's what, $23,000, $43,000 in 36 months on a zero equity deal.

And that's because you were able to sell it on, uh, seller finance to another— I was able to pay a little bit more, but if you were to sell it to them at $250,000, it would be a little bit—

if I sold it, if I sold it to them for exactly— if I bought it for $250,000, sold it for $250,000, I'd still make $500 a month for 36 months, which is $18,000, and still make another 4 or 5 on the back end. So I'd still make $23,000, and that's okay too.

Yeah, yeah, for sure. I guess sometimes I get iffy about these because usually when you buy properties, I'm usually using a hard money loan. So there's origination fees, there's closing costs. So that already sets you back, like, you know, so much. But with this, there's just closing costs, correct?

And I'll tell you, 95% of these we close with a mobile notary. It cost us about $150. That's it.

That's awesome. Okay. So, let's say today, your company, you get a random lead of someone wants to do this in, let's say, Macon, Georgia. You know, you would— your process would be talk to them, cover their payments, and negotiate something. And then, fine, once you have it under contract, would you ask for 30 days, 60 days before closing? How much so you could find the buyer? Or do you— go ahead.

It depends on their situation. If they're in foreclosure in Georgia, they got to get out of there and we got to get things straightened up right now. They don't got about 28 days. If they're getting a transfer and they need to move in 60 days, we're gonna do it when they want to vacate. Uh, typically we like to get about 30 days though. I can usually have a buyer in 30 days.

Okay, so it's sort of like wholesaling, but instead of, you know, where we try to find the buyer by before we close so we don't ever close. It's the same thing with you. You're, you're not trying to get— keep these, right?

Right. I'm not trying to keep them. I know I'm going to get rid of them. And I've had houses I've held 2 or 3 months before and made a couple of payments on, and that's okay.

So when you do this, um, do you— is it an assignment? Are you assigning your rights to, uh, the terms to the other buyer, or do you have to close on it?

Um, we, we have a closing at a title company or attorney's office. We sell on a contract for deed.

Oh, well, yeah, I'm sorry. You own it. That's, that's right. So you actually own it, but you're selling it.

We, we technically— legal— we have legal title, but they actually own the property. They have all the rights of ownership. They can deduct the interest, they can homestead, file a homestead on it. They can do all of those things. Okay.

Well, hey, it's time for me to be pretty vulnerable with you because I got a deal that I did, and maybe I— if I would have called you before, I wouldn't be in this situation. So can you help me out with this?

How can I help? Yeah.

So in Utah, 2 or 4, like 3 or 4 months ago, we bought a deal subject to in a neighborhood that the ARV was about $600,000 to $620,000. Okay. So the seller tells me, I say, hey, we can buy this house for about $480,000 to $500,000 cash, or if you finance me and I don't have to get a hard money loan, I can do $520,000. But the house needed work. So he was a contractor. And I said, I can give you $20,000 down and you— but that money needs to go into repairing the home. So he's like, okay, I'll take it because I don't have money and I want to repair. And I said, anything we make over $610, we'll split in half. So the agreement that we had was $20,000 down. He fixes the house and he vacates by the end of May. Okay. So he agreed to fix it up and vacate and That's what the value of the house was. And we— and I also said, because I was pretty sure this is a good deal, I said, I'll give you $50,000 once you vacate, right? So not so much like a long-term deal, but it was more of like, hey, you finance me so I don't have to get a hard money loan. And, and then the balloon payment was at the end of August 31st. So turns out that because of the interest rates, unfortunately, the values in that neighborhood it's not as an appealing neighborhood now that there's more listings. That house ARV is now $550,000. So it's gone down a lot.

Right.

So if I were to sell this house right now at $550,000 and I got it at $520,000 after closing costs and giving him $20,000, like, I lose money, unfortunately.

Right.

So this is what he did. He didn't vacate the house at the end of May. He didn't fix up the house.

Right.

And he's still in it.

Yeah.

He's telling me, hey, Nate, I need my money because that's what we agreed. Once I vacate and I say, look, you didn't fix the house and you're still in it. So we're in a situation where even if he leaves and he picks up the house, it's not worth what we're underwater. So what I had told him we could do, and I wanted to know your opinion, I said, look, we're underwater now because it took too long. You didn't do what you said you'd do. And, um, we can just quick claim deed the property back to you. And so we don't have to go through a foreclosure. We can just give it back to you and we'll put a lien on the property for the amount that you didn't fix the house for. So when you do sell it, we get paid back. And, um, we're having that talk right now because I said the— that the balloon payment at the end of August 31st, I said we can make this work at the normal price we agreed if you— we extend the balloon payment to 5 10 years, uh, because his mortgage payment is $1,100 and the— you can rent it for like $2,500. So that you cash flow a lot, right? Their situation is like, we, we need that, the house to close at the end of August 31st to get into another property because that's why we, we originally did this. We were going to rent somewhere. So anyway, weird situation, never wanted to be in it, but, um, I probably would have been in a situation anyway if I got a hard money loan, because same thing, I would have just had to owe the lender. So now I owe this person, and we're negotiating right now. But from your experience, like, has this happened, or do you— what would you do?

Well, there's a couple of problems right out of the gate. First, tell me, why was he selling?

So he was selling because they're moving to North Carolina, and, um, that he did not have the money to fix up the property to, uh, Yeah, so that's why.

Right. Okay. Well, first problem is you gave a seller money before he was out of the house and deeded it to you. I would never ever do that in a million years. Second problem, you let him stay in the house. Big problem. Because as you see now, once he's got money in his pocket and the pressure's off, whatever, he can spend the money on whatever he wants to do, not fix it up. He doesn't have to move. You're only— all you've given him right now is $20,000. Is that right?

That's all we've given him, and he's wanting that extra $50,000.

Well, listen, if I were you right now, I would just, you know, I would try to record something against the property that, you know, I mean, and all you can do is a memorandum if he hasn't signed anything, and hope if he sells it, the title company calls you and listens to your story and goes, okay, we're gonna make him pay. Because, you know, they can insure around a memorandum if they decide to. But otherwise, I'd walk away from that deal because you can't force that guy out of the house. There's nothing you can do at this point. That was just a bad deal all the way around. The third— the problem, the problem with— I would have said to him, listen, I'll pay you X, but I would never do it before he was out. And I would never promise him that short a balloon. You know, you know what, balloon— balloons are for clowns, right? You know that.

They are for clowns.

They are for clowns. Uh, that's what, you know, I think Ron LeGrand, I heard him say that 20 years ago. Uh, the, the very shortest fuse we'll put on a deal with a seller is 60 months. That's the very shortest. And that's only been in this, in this hot market when it's tough. Before, if a seller said to me, well, you got to have this paid off in a couple of years, I'd go, I'm sorry, Mr. Seller, but listen, All I can promise you is an on-time payment every month until our buyer refinances. That may happen in 6 months. This loan may go the full amortization. All I can promise you is an on-time payment. And if they wouldn't go for it, I said, sorry, we can't do business. Yeah, that was just a mistake, Nate. That was just— that deal, that was just a mistake.

Well, this is kind of how I got into doing deals like that, is because we've had— we've asked sellers to finance us instead the getting a hard money loan and they'll usually do it for 5%. So they'll say, sure, I'll finance you for a year. And then, you know, it's just crept down lower and lower. Like with how hot the market is, we don't need that much. So and if the numbers stayed true, it was looking like an $80,000, $60,000 to $80,000 flip. So who would have saw that happening?

And that's— but see, and you know, the market's been cool, just slightly cooling for a few months. And those high-priced houses are the first ones to feel it. You know, a $200,000 house isn't going to fluctuate much one way or the other. But those $600,000, you know, half a million and up, they're the first ones, you know, Nevada, California, they're the first places to take off. And they're the first places, you know, just to auger in. So yeah, letting somebody stay in the house, giving them money, that's your big— I don't beat you up or anything, but— beat me up. Because I never, ever ever do that. I'll give you money, but you got to be out. You got to have your own. And that's why we don't do repairs. Yeah, it's just too hard to find people to do it. And the homeowner, my goodness. Yeah.

Yeah, it was a mistake. And I think everyone— I mean, even though I teach people how to wholesale, like creative financing, I have taught people how to use that so you don't have to get a hard money loan. But you're saying, hey, we don't, we don't mess with those unless they give us 60 months, right?

That's right. That's the minimum. That's the minimum. That's a lot of pressure to put on yourself. And if you're buying, if you're like us, and you're only looking for 10 or 15 deals a year, okay, it's one thing. But if you're buying 10 or 15 houses a month, and like you've said, it's crept down over time. And that's what happens. You know, if you're making a 1-year promise now, 6 months from now, you're making a 6-month promise, you're going to look up in a year or so and you got all these balloons due and the market has tanked a little bit. Where are you going to go? You know, it's a problem. So, yeah, I don't like those problems. Yeah.

And I appreciate you shooting me straight because, you know, I've, I've been trying to figure out and this a way out would be, hey, let's extend the balloon 5, 10, whatever, because then, you know, you have time to cash flow and that. And it's only— I mean, 20 is a lot, right? But it is a lot. 20% or less.

But, but the headache and the frustration of what the term is, throwing good money after bad. Record a memorandum. If the guy won't listen to you, he won't go ahead and get out, he won't list it, let's get it sold, he hasn't fixed it up, record a memorandum, move on to the next thing, hope that the title company calls you and believes you and you get paid when he sells.

So what if I— so I own it technically. So if I record a memorandum, am I recording it on, I guess, just the property in general?

Just the property. That's correct. So he's not going to be able to sell anyway. The deed's in your name. He's going to need you when he tries to sell. Or else he's going to have to let it go into full-blown foreclosure or just live there and make the payments on a property that you own. You could go out and refinance that house right now.

Yeah, but I wouldn't be able to get—

you wouldn't be able to right now, but I'm just saying, if you got the deed, I mean, you have a lot, you have a good position in this too down the road when he's trying to do something.

Yeah, so this is, this is just to kind of wrap it up. This is what I, we have hashed out so far. I was going to say, look, no one saw this was coming. I'm sorry. And you're obviously sorry too. You didn't do what you said. Let's take the $20,000. Let's split the difference. I'll get $10,000 because he's not giving me back the whole $20,000. So let's split the difference. I'll get $10,000 and we both sign off on that. So I don't know if technically, like, there's a way that we both can agree to that. So it's not like, hey, at the title company, when he closes and sells, it's like, they have to believe me. I wonder if there's something we can sign where we both agree on it. And then I was like, hey, let— and let me list the property so I can recoup, you know, some that way. And he's in there like, we're not listening with you guys. We can— we have friends and family and forget you guys, right? Yeah.

Yeah. Well, he's got your money, so— but you have ownership of the house whether he likes it or not. Now, like I said, worst case scenario, he quits paying, his mortgage goes into foreclosure. And he doesn't move out. Okay, ideally I would keep an eye on it though, because if he quits paying, it's his credit that, that suffers, not yours. If he quits paying, he vacates that property, you got ownership, then you can go in, take possession, and do something at that point.

Yeah, I mean, I, uh, I know they want to get out, and one of— this isn't something I would do, but someone that's savage told me like, hey, you can evict them because we have them on a lease So you can get them out and then we can just make the— put a tenant in there for $2,200, $2,500 and not make the mortgage payments and then you're cash flowing all that, right?

Well, that sounds great, but I can guarantee you that that eviction would not go as smoothly as a lot of them do. When you file for an eviction, you have to pay an attorney to do that. Yeah. What's going to happen is he's going to get an attorney. It's the magistrate judge it goes before is going to go, hey, this is way out of our jurisdiction. We're going to kick this up to superior court. Then you've got another process, another— yeah, I guarantee you this wouldn't go very smoothly, you know.

And I wanted to go as smooth as possible, even though it didn't go. So what is one thing we can ever— Investors Live Nation can learn from having the GOAT right here? And me, my mistake is when you do a subject-to deal, do at least 60 months, right?

I mean, that's— you know, I wouldn't even recommend that. That's a minimum, an absolute minimum. And that's been in a current hot market. Okay, so ideally, ideally, you make no promises on terms, but you absolutely do not give the seller a nickel until they have vacated the property and given you possession.

For sure, don't give them a nickel. And I know people that are like, give me some money just up front to help me out.

Listen, I've, I've rented moving trucks for people and brought it to the house on the day and let them help them load it, but I will not give them the money to do do it. Okay, okay, I'll go rent the truck. Okay, but I'm not giving—

ever give a seller money until they vacated the property.

That's right, right.

At least way over 60 months if you do a subject-to deal, right?

That's for sure.

And, um, I think there was another nugget in there. Um, was there anything else?

Uh, well, not, not giving them the money, making sure that they're out of the property for sure. Uh, get that term for as absolute long as you can. Uh, I don't— I don't— I think we— I think that covered it.

And that's good stuff. That's good stuff. You know what I really enjoyed about being on this podcast with you is because we come into— we talk to sellers all day long and we're always pitching the cash offer first, right? And, um, you know, if we were to pitch the seller finance deal first, then be— then send them the options offer, like you say, you know, you got the lowball cash, you got the— then the different options of like, uh, subject to You know, that, that could work.

Yeah, well, and that's what we do. And when we send them that offer, and then we put them into a follow-up campaign on a CRM that just reaches out to them once a week or whatever. Hey, have you got a chance to look over our offer? And then if they don't respond within about a week, then we kick them into the 6-month follow-up. That's just an occasional text and a voicemail that says, hey, you know, we're still interested in your property, reach out to us.

I wanted to ask this. Have you— do you do a lot of subject-to deals where they have a ton of equity, or is it usually low equity?

It's usually lower equity. Now, we've done some where they had a ton and they just walked away, but there were other motivating factors. Okay, for sure. Yeah, cool.

Well, I appreciate your advice, and your advice for me is just get out of there.

Listen, I— like I said, if you've already reached out to him and said, listen, you know, let's just— let's just part ways on this thing, we want our $20,000 back, give me X now, or sign a note and I'll just collect it when you sell? And they've said no to all those things.

So they— yeah, they've agreed to the— give— instead of, uh, me recording $20 against it, they're like, we'll give you $10 once we sell it.

Okay, where's your other $10 come from?

They say, hey, you lose out, we lose out. That's what their opinion is.

Why should you lose? He didn't do what he said he would do. If I were you, if they're not going to give me any money right now I would go record a memorandum for $20,000 and I would move on to the next thing. I wouldn't devote any more attention or time to this negative energy. How many more houses can you buy? Record your memorandum. Don't worry about it. Consider it a $20,000 mistake. You know, a learning experience, seminar that you went to that was 20 grand and don't devote any more time to it. And then probably you'll get paid in the future. You may not. But if you don't, you learn some important stuff.

Do you know, we're going through this, do we deed the property back to them?

I would not. I would not. That is your possible saving grace in all this to get your money back when you go listen, because he can't sell that house if it's in your name or your company's name. He can't sign a deed for anybody. Guess who has to do that? You do.

I would.

Okay. So he's stuck.

I guess I was just kind of worried about a foreclosure.

That's not going to impact you. That's his credit.

He forecloses on— no, if he forecloses on me.

Well, I mean, why does he want to spend that money to foreclose on you? You can fight that and make a case. Listen, this guy owes me $20,000 because he didn't put it into the house. That's right. Yeah, but I would make him make that move. If he doesn't have the money to fix up the house or do anything else, is he going to file a foreclosure suit against you? Probably not. No, you know, he probably doesn't have a clue what he's got to do.

Yeah. And honestly, when it comes to, you know, him foreclosing and him saying like, oh, I didn't fulfill on my end, I didn't give him the $50,000 that he said I agreed that I'd give him.

Right.

You didn't vacate. You're still in the house, right? Yeah. You didn't fix up what you said you would, right? I mean, it's just hearsay, but I just thought I would have to deed it back to avoid any legal problems.

I don't think so. No. I mean, and even if he does foreclose on you, what difference does it make? It's not like it's going to show up on your credit. You know, is this in a financial institution? I mean, it may be a foreclosure, but it's probably in an LLC or a trust, right? It is.

Yeah, it's in that.

So what? I mean, that doesn't impact Nate at all. Okay, I would make him— you know, if he wants— if he wants to foreclose on— you got it. You guys have all of this in documentation, I'm sure. A contract and an agreement. Listen, let me show up in court, okay? You know, but he's gonna have to sue me. He's—

he—

because he's got to write a check to do that.

Wow, that's, that's some great advice too, because I was, I was kind of concerned. I was like, look, I'm— he didn't do what he said, and now I'm the one that's got to eat, eat the, the money even that I've already shelled out.

Yeah, well, that's possible down the road, but he can't sell the house. He needs your cooperation too. I would, I would not deed that property back to him. I would, like I said, I would record my memorandum and I would just move on to the next deal, and one day He'll call you. I mean, I've had this happen, not the similar situation, but where people owed me money or backed out of a contract that I had spent time and money on and backed out for no reason. And I would say, well, listen, I spent X on an ad, I did this, I did that. Write me a check for $1,000 and I'll let you go. Oh no, I'm not giving you anything. Okay, well, I just go record my memorandum. And 2 or 3 years down the road, a title company calls me and goes, hey, What's this $1,000 for? Well, you know, I signed a contract with her. I spent money on advertising. I did this, I did that, and she backed out and she wouldn't pay me. And guess what? I got a check.

And you know what, you're absolutely right. Like, because I was— I'm not even— he's not even offering to give me $10,000 now. He's just saying, hey, we'll get you $10,000 once we sell it.

What, right?

I did it back and he's like, I ain't selling, sucker.

Right? He's already— he's already backed out on his promise to you once or twice. On repairing the house and moving. What makes you think he'll keep his promise this time?

It ain't gonna happen.

Fool me once, shame on you. Fool me twice, shame on me, right?

Tell you right now, right here, right now, Nathan Payne, he ain't never giving any seller money ever again until they're vacated.

I would never.

How many times— I've actually done it a couple because it almost like we feel like it, it's what will save the deal.

But right, I'm sorry, that deal ain't worth saving.

Not when you got to deal with this.

That's right. And now you know, now you know why we don't give sellers money, especially people in distress. Like I said, two-thirds of our business are sellers in distress. Once the distress is gone, why they got to work with you? Yeah, you know, yeah. Remember this, Nate, the we buy houses guys, man, we're the last people on the list they want to sell to anyway. Okay, you know, I mean, really, who doesn't want to sell for cash? Who doesn't want a fast close with a cash buyer? If they're selling to us, if they're leaving, you know, mortgages in their name, and they're selling at big discounts, it's because they don't have other options. They're in a hurry, there's some kind of, some kind of problem going on. So, you know, and we're seen ultimately by a lot of people as taking advantage anyway, once the pressure's off, well, you made a lot of money off this deal. So You know, it's not fair.

So, so let's play this scenario because I— this is interesting. And then we'll— I've been having a good time talking to you, so I don't know.

Yeah.

So let's say I call back, say, listen, man, you know what? I've listened to you and I heard your sob story, but you really— you really didn't do what you said you would. So go ahead, do what you feel like you need to do. I'm putting a $20,000 lien on the property and, you know, deal with it.

Right.

And then like, what's the— what's the recourse? Could he just be like, hey, uh, you know, I really want the house back? Or like, how does that— like, I feel like if I acted like that, he'd be like, I got nothing. Yeah, he—

what can he say? I'm gonna sue you. I'm gonna foreclose on you when this balloon pops. What can he say? The truth of the matter is you could market that house right this minute and sell it out from under him and he's got no rights. Okay. If you found a buyer and I don't know the situation on this, if you found someone and you probably won't, but if you found someone that would get— what's the mortgage balance on this? What are the liens against this property right now? Did you sign a note for him?

Yeah. So it's— he owes about $200,000 and we bought it for $520,000 with $20,000 down.

Okay, so he actually has a mortgage for $500,000 recorded with you owing him that money?

Yes.

Correct. Okay. So, well, he would have to be contacted for a payoff, I guess. And then he would not be cooperative at that particular point. So that would— man, there's a lot of messy parts to this thing. But I mean, what's he going to say, really? You know, technically, could he foreclose on you after the balloon pops? Yes, he can. But that's your opportunity to appear in court and go, 'But look, Your Honor, okay, this is what's going on.' Okay, so it's not going to be— and in the meantime, he's making payments on a property and stuff's going on.

So I'm just wondering if, like, what's the resolution at that point? Or if I just say, 'Hey, fine, stay in it, and, um, you know, foreclose on me, go ahead.' Yeah, like, I guess what's the agreement that could happen where I feel good? Like, not I feel good, but where it works out? And, um, I would just say, well, would I do a cash offer at that time and just be like, 'I'll just cash you out'? At $450,000.

And, or the, you know, the best case, if you have a buyer and you just— I mean, where would you be? You owe him $500,000 and he's got $20,000, so you have to sell this house for more than $520,000 to be made whole, correct?

Yes. Yes.

Can you get a buyer for $520,000 as it sits?

I wish I did. This, this house is probably worth $490,000 cash now.

Of course, if, if the title company called him for a payoff he may just think you were calling to pay him off. He might openly give that, and then you sell the house to somebody else. I mean, that's, that's always an opportunity there too. I don't know, I would love for the—

it to rebound, but I don't know. I don't know your opinion on things, but I, I think— I don't think that's happening maybe for a while.

Yeah, that's right. I, you know, like I said, the, the most likely scenario here is, uh, he just sits there. He needs your cooperation when he's trying to sell the house. That's your opportunity to get your $20,000 back. That's the best-case scenario. I don't think he'll sue you, you know, for foreclosure. That would be an expensive process for him, plus he would have to ante up at that time. So, for sure, like I said, right now this is a negative drain on everything else you're trying to do. I'd go record my memorandum and I would just forget about him. And the worst-case scenario is you lose $20,000. Best-case scenario is you break even because he has to pay you later. But just don't, don't think about it anymore. That's how I do those things, man.

That's a good, that's a good solution. And that's honestly how it is in life. Like, I've talked to so many people that are higher level like you, and they're just like, that's not worth your time. Don't even let that— don't even let— and I think that's an important lesson is like, as we get deeper into like real estate and doing what we do, don't let those things suck your energy because it's not worth it.

Right. I agree.

Well, William, this has been awesome. So for anybody, I've had some questions come through. Okay, um, and, and they just want to know how they can, you know, work with you.

So, okay, well, we've got a couple of different things you can go to. Actually, we, we just started a new, uh, portal. It's Sub2 University, S-U-B, the number 2, University. Uh, we've got courses that we offer. We've got, uh, anything from how to do a kitchen table closing to an explanation about how to fill out all the documents with video explanations. And we also have a couple of coaching programs. We've got the most affordable, best coaching in the world, $7 coaching, $7 a month. I'll answer all your questions personally, we'll teach you how to do sub-to deals for $7 a month. You can go to 7dollarcoaching.com, number 7, dollarcoaching.com. And then we've got a higher level coaching that is the $7 coaching.

I mean, I might You got my money, take my money already.

You know, it's really, it's just for people that are testing the water. Maybe you're a wholesaler and you're kind of interested in this creative finance stuff. How does this work? And you don't want to drop $10,000 on some, you know, some coaching program or spend $500 on a course. You just want to look at some things. You can come inside our group. Like I said, I'll answer your questions personally. I do that for each and every student every week. And we've got a lot of videos. We do a live weekly training in there, a Facebook Live. And it's just, it's a good place to find out if it's for you. Yeah.

So I, I have a program similar, it's very inexpensive for people to get in, I guess. Are you— is the hope just to grow the community with something that about like where you provide over— provide value? Or is it to maybe get some subject-to deals? Maybe somebody brings one and they don't know how to structure it.

Well, we haven't actively marketed for— I mean, will I JV with a student? We only JV with our Sub2Max students. We've got the Sub2Max program. It's a premium group coaching program. It's $297 a month, and we do JV with those students. Now we have weekly one-on-one Zoom calls in there and a whole bunch of other stuff. We're at this point, we've got 3 years of training calls. In there and courses on how to do sub-to. So we do JV with those guys.

Well, I mean, it sounds like with the outlines you've given me, that's, that's— I mean, if you get that, I mean, I've— that's awesome. If you can get a deal 90, 90 months, whatever, like that, and you're cash flowing, I mean, who wouldn't want to do that and get those every day, every month?

Sure, for sure. Yeah, we've had, we've had a bunch of students come into Sub2Max and get their first deal in 60 days., you know, and make $50 grand, you know. So I mean, it's, it's pretty cool because it's not even that, it's, it's $300 a month. If you stay 6 months, you spend $1,800 and you've learned how to do it all. You don't have to drop $10,000 or $20,000 on the high-dollar stuff.

Well, William, I'd love to have you back on Investment Drive, and I think it's been awesome to get to know you. Thanks for answering my questions too, because, uh, I mean, I'm always trying to get better and you've helped me do that today, so I appreciate you.

Glad to, glad to help. And if you want me to come back, just let me know. I'll be glad to do that. We'll have you back. Yeah, okay, sounds great. Thanks, Nate.

All right, well, we'll see you later. I appreciate your time again. Okay. All right.