How to Buy Real Estate Without Cash or Bank Loans!

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Oh, is this John? John, hey, my name is Lane. I'm calling you about your property on Brighton Cove that you're looking to sell.

Yes, sir.

Um, sent over your contact information and said that, uh, yeah, you're looking to sell that property. Tell me a little bit about what you got on there.

Well, we, um, we currently have it listed on the market.

Um, I see that.

But, uh, yeah, we're trying to just sell this and get into a 4-bedroom right down the road.

So, gotcha.

I just figured I would explore different options.

Yeah, so you're currently living in the property? This is your personal residence?

Yeah.

Gotcha. Yeah, it looks like a nice home. I'm looking at the pictures right now.

Oh yeah, it's got a brand new roof, brand new, um, AC unit, outside unit. It's got a brand new condenser coil on the inside, and it's, you know, good to go for a while.

Okay, great. That is good information that I was going to ask, so I'm glad you beat me to it. Let's see, what year built is this property?

2010, we bought it.

Yeah, have you done any— done any updating since then?

Oh yeah, we've, um, updated the floors, um, and, you know, the roof and the AC units.

Nice.

Okay, the roof is, um, like, I think about 2 years old. It was replaced about a year after the last— that Hurricane Ida that came through a couple years ago. Yeah, yeah, yeah. So AC unit was replaced after Ida and the roof through an insurance claim, so Gotcha.

Are you looking into the home down the street? Is it just bigger and more comfortable for your family?

Yeah, that's all it is. It's just a bigger, bigger home. We have— I have 3 small children and they just— we just need a little more room.

Gotcha. Hey, I know all about that. I got 4 of my own.

Yeah.

What, what's the situation on that house you need to buy? Like, is it on market? Do you need to move quickly on it, or what kind of timing are you looking?

Yeah, we, um, it's through a builder called DSLB Homes. They build like I guess what you call spec homes or whatever.

Oh, gotcha, gotcha.

Yeah, we've already got a contract on that and, uh, we're set to close on it July 23rd. And, oh, it's something— it's just this, this home was built the same way through the same builder, DSLB.

Gotcha.

You know, we were able to pick this, the plan out, the colors, the brick, everything, you know what I mean? All the details of the house. And we did this— we're doing the same thing with that one, but we were just kind of, you know, just— we just listed this one about a month ago.

Yeah. How much activity have you had on it since you've had it listed?

Probably about 4 different walks, you know, visits, but not a whole lot of activity other than that.

Yeah. What kind of feedback are you getting? No offers? Any feedback?

Yeah, we haven't had an offer yet, but the feedback we're getting is that like, basically they're always like, we liked your house. It was a great walk. It's in our top 3. That's all they ever say.

Gotcha. And your realtor, your realtor's your realtor still feels like you're priced competitively?

I mean, now that, you know, we had it on the market for this long at that price, uh, he feels it's probably time to move it down like $5,000 or so to $10,000, you know, kind of thing.

Yeah.

So we haven't done that yet, but that would be the next step.

Gotcha. Okay. Well, John, let me just tell you a little bit about us. We're obviously, we're a cash buyer, you know that. You reached out to us and really what we're looking for, we're looking for situations where we can, we can bring value. You know, your situation isn't the type of value we bring by rehabbing it and, you know, finishing the house, you know, redoing the whole house top to bottom to really get top value out of it because it's a beautiful home.

Okay, you guys are looking to restore a house and sell it kind of thing?

Well, not necessarily. That, that's one option that we have, and that's one way that we bring value to the situation. Let me ask you this: is your new house contingent on this one selling? Like, your loan that you are getting on the new house, does this house have to sell in order to get that loan closed?

No, because, you know, our mortgage is only like $1,000 a month on this house. Okay, we qualify for both houses actually.

Gotcha. So you don't necessarily need your cash out of this one, or are you needing your cash for the down payment on the other one, or do you already have that taken care of?

I mean, we do, but we need to move it as soon as possible to replace that, those funds in our account kind of thing, you know what I mean? It's kind of Yeah, only savings we have really.

So gotcha. So yeah, what's the loan balance on your current home?

Um, well, yeah, we owe, uh, like $122,000 on this house. So we, you know, we're— we have a considerable amount of equity in this house, right?

Right. So how much— I'm— the reason I'm asking these questions is because there is, there is different options that people don't realize that you can sell your home. And if I was to come in and just pay you cash and buy it quick and easy, close it as is, not have any realtor, I'll pay all your closing costs, I'll do all of that, I mean, I'm probably going to be around, I'd say, $175,000, maybe $180,000. And I don't know if that gets it done. I don't know if that's enough or if that's the right option for you.

Well, see, that's why I called you guys, because, you know, by the time we sell our house and we have to lower it by, you know, $10,000 or $15,000 and then pay the realtors $15,000, you know what I mean? We're looking at only pocketing probably, you know, you're selling our house for $240,000, we're probably coming out $220,000, you know what I'm saying?

Right.

Because we'd have to pay the realtor and everything else probably come down with $5,000 for closing, all, you know what I mean, all that type deal. So, you know, we were kind of looking for something around, you know, $225,000, you know, if we were going to try to sell it to someone that's doing a real— going through the real estate deal, you know, the realtor deal.

Yeah, yeah. And I can't get there on a cash deal, um, but I'll tell you what I can do. There's other ways to sell your home. Like I said, my cash would probably be $175,000. Are you, are you at that point where that—

yeah, we're not. We couldn't do that.

Okay. Yeah, and I don't blame you. I don't blame you at all. I totally understand that. Instead of doing that, or instead of getting close to the closing time of your new house and whatnot, there's a couple other options that you might want to consider. You know, a thing that's a really popular way of selling houses right now and buying houses is buying them with seller finance. So basically, you have a loan on this property, leave that loan in place, let me take that loan over and pay you out your equity over time. I'll come in at closing with a down payment, a down payment that, you know, works for you, works for us, and then I pay you out the remaining equity over time. And that's what they call, you know, seller finance. I don't know if you've explored that option or not.

I'm not very familiar with that, no.

Okay, well, instead of lowering your price to get the house sold, why don't I pay you what you're asking, $250,000, and then you leave that loan in place and I pay you out your equity over time? That way you don't, you don't leave any of your equity, you know, you don't lose any of that equity. You're going to make it. It just takes a little bit more time to get it.

How long does that take to get it?

You know, we usually, like, like I said, we can come in with a down payment. We can totally do that. And if I can get this approved, you know, by my office, that, that will determine, you know, how much you guys actually need, how much we're willing to do to make the deal work. But we come in with a down payment, and, you know, the remaining equity that's left, we like to We like to have a 10-year term, and so at year 10, it's completely due and payable, but you will be receiving monthly payments along the way.

I just would have to do a little research into that because I don't know, like, uh, what kind of guarantees I have that will, you know, receive those payments and all those kind of things, you know?

Right. Yeah, no, I totally understand. And people know it as, uh, subject to. So I am buying your home subject to that loan staying in place. Your equity, I'm paying you that out over time, just like I'm paying your mortgage. So what we do is we—

how do you make money off of that deal? Like, I don't understand how you make money off of that.

So the term— the terms is what is, um, attractive to us, you know, because then I can keep that property, I can keep your loan in place, which is a great loan. I can't go replace that loan today because interest rates have gone up so much. And then it makes financial sense for me because I can keep it, you know, as a long-term rental, as a short-term rental, but just as a long-term investment.

Oh, I see, like just kind of renting out. Yeah, because that's, um, a lot of people are doing that in this, in this neighborhood, you know. They've kind of, uh, moved on but they've kept the house as rental kind of thing, you know what I mean?

Yeah, yeah. The better part of selling it on seller finance is you're not a landlord. You're selling your home to me. You're not responsible for any maintenance, any taxes, anything. I'm making the payments on your, on your loan. You're actually selling the home. That's, that's the difference. You're, you're not, you're not a landlord. And you get, at closing, you get, you more money than if you were just being a landlord because we're going to come in with a down payment. And then you, you wipe your hands clean, just, you know, same way as you when you sell your house traditionally.

As long as I'm paying the monthly payment, the deal stays in place. Is that how it works?

Right, but I'm actually going to be making that payment, not you. I use a professional servicing company, and that servicing company services your loan. They take money right out of my account and make your payment um, directly.

I see. Um, but the loan stays in place under my name, right?

Yep, 100%, it does.

Okay. And what— I mean, what would that— what would have happened if you guys start just, you know, went insolvent or something, you know what I mean, stop paying on the loan? Or— totally.

Yeah, we have, we have paperwork that's, that's been through lawyers, and it protects both sides. And I can send you the paperwork and you can take a look at it. But there's also different ways of doing that. We don't need to get into all those details right now, but 100%, the— all the paperwork protects sides of that transaction. So if, if, if, if for some reason I die or my company, you know, stops operations— which, that's— don't see that happening, I've been in business for 25 years— if something happens, if that loan does go late, then that— the way the paperwork is all written out, that you can take the property back immediately.

Okay, so that's how it works. Okay, that might be something I would consider. Can you at least send me something I could read up on that?

Um, 100%. Um, let me make sure. Did you give us your email?

I put it on there.

JPocasio@gmail.com.

That's right.

Yeah, perfect. Yeah, I'll send you what our paperwork looks like, and there's all sorts of videos out there and instructional videos on— I mean, because this isn't anything new. It's been around for— I mean, it's been around for decades. People have been buying houses with creative finance and subject to for decades. And so it's not a, it's not a new thing. And in some situations, and it seems like in yours, it works a lot better because you don't have to give up a bunch of your equity because you need to sell it quick and get into your other house. Keep that equity. It just, you get paid out over time instead of taking a haircut, right?

So you're saying, um, you, you do a down payment and then you work out the rest of the payments in a matter of a certain amount of whatever agreed time is?

Yep, exactly.

Uh, and at the end of that time, what happens? Just the transfer of the house? Like, what— I'm just trying to understand what happens at the end of that.

So at the end of that, then your equity portion is 100% due in full. So for example, what's your monthly payment on your $122,000 loan?

Yeah, we only pay $1,000 a month, like $1,020, you know, with everything.

So yeah, that's right, that's what you told me. So on top of that $1,000 a month, I'm going to pay you a certain amount for the equity, for the equity that you have that you're carrying. And then at the end of, let's say, 10 years, whatever the balance is left, I owe that in full.

Okay, so it's kind of like that, and then you, you pay— do a lump sum right at the end. Okay.

Yep. Yeah, you'll get a monthly payment every single month, and then at year 10, whatever the balance is left, that is paid in— that's— yeah, that's due in full.

Okay. Yeah, if you don't mind, send me something. I want— because I gotta talk to my wife about, you know, everything.

Yeah. And, and another way, you know, we have to get—

talk about to make sure it's something we both want to do, you know, 100%.

And another way that we do it, just if, if just if somebody else— if somebody isn't comfortable like deeding the property to us, is we can just do a contract for deed. Basically, it's a, it's a seller carry, but the title, the deed of the property stays in your name, and you and I have a contract for that deed. That makes people feel a little bit more comfortable, and then— and we've done that many, many times as well. So there's just a couple ways to structure it. The concept's the same, but there's a couple different ways to structure it to where everybody's comfortable.

Right. I see. Yeah, if you don't mind sending me the information on that, I'll read it over, you know, just give me a couple days and look at it.

And, um, 100%. Yeah. And if you want me to jump on a call with you and your wife, I'd be happy to do so.

Yeah. Um, you know, once I read that and think about it, because, uh, you know, we, we need to do something and we would like to get into the other house without prolonging that date much longer. I think we already pushed it back to, you know, middle of August. That's about as far back as we could push it, you know. Yeah, just— yeah, send that and I'll take a look at it and, um, talk again.

Awesome. You'll have it in your email here this afternoon, John.

All right, thanks a lot.

Hey, thank you. We'll talk to you soon.

Bye-bye. Nice. I don't know, I don't know how smooth that went, but I thought, I thought it was really good. It went well. And that, for me, like, that has been 80% of my experience with with seller financing, except I would get like really into the weeds when I was inexperienced. And I would like this— that one call would have been like 2 to 3 times as long for me, you know, just explaining all the different things. The one thing that I like to do a little bit different, I usually, you know, the one thing with the seller finance subject to, they're always like, hey, what happens if, you know, you stop making payments or whatnot? And I always love when they bring that question up because, yeah, I don't know what do you say. So yeah, the way I frame it is they're like, hey, so what happens if you miss a payment or whatnot. And I go, I'm like, honestly, best thing that could happen to you. And I say the reason why is because what we do is we do a 3-month performance deed. And what that means is it's a pre-signed deed by us to where if we miss 1 month's payment, a 2nd month's payment, on the date the 3rd payment is due, if we haven't made it, you don't have to go through a foreclosure process. You don't have to— you just have to take the performance deed that's pre-signed by us, bring it to the to the county and boom, you can have it switched back to you immediately. And the best part is I just— you get to keep the down payment. You've been making all the payments I've been making on your mortgage. And to you, that's all, all extra money in your pocket. So you're now getting this house even at a better price than when I bought it from you. And then depending on the situation, for most people I'm chatting with, I was like, and you're getting a house to where I just spent $20,000, $30,000, $40,000 fixing it up and it's going to be in beautiful condition. And that's why I always tell you, I said, I said, best thing that could happen is for me to default.

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