How To Buy Mobile Home Parks with NO MONEY w/ Jon Bartlett & Logan Pritchett

That is all they are. It is a gamble on you. And if I believe that it is going to pay off, you will get the financing that you want. That is all it is.

Yep.

You've explained exactly why someone would do it, but the way you communicated it, I'm like, that is why people give it to you.

Bet on my greed. That's literally what I tell them. Bet on my greed.

Hello and welcome back to Multifamily Strategy. Today we are going to be joined by John and Logan, some mobile home park investors, well-versed in creative finance. This is going to be an awesome episode talking about how they run it, how they bought their properties, how fast they bought it. These are some young investors, really excited for the episode. Logan, John, welcome to the show. Definitely.

Thanks for having us here, Christian.

Yes, thank you very much, Christian.

Yeah, absolutely, man. We don't do a whole lot of doubles on the podcast, so we're going to learn what we learn as we go through this. But I'll ask you guys one at a time. You show up on my screen as John, then Logan, so we'll go in that order. How many mobile homes do you currently own, John?

See, mobile home units I'm defining as lots, and then sometimes those lots have homes on them as well. So yeah, total units, I'm at 140 soon when we're closing on our current transaction, which we just got funded. We talk about that later, I'm sure. And then of that, then it's probably like 130-ish or mobile home, mobile home units. So 5 to 10 that are just kind of straggling non-park stuff. So Logan, what about you?

Yeah, hey, so, uh, first I want to say thank you for having me on the show. I very much appreciate it. And, uh, yeah, I, I got my first park last year. I got about 29 units for one park, and— or that's two parks combined, uh, 29 units total. And then a third park we've got in December, and that one's 13 units. And then And of course, the one we have under contract right now is 35.

So there we go. So you're going to be— how many total units will that be when you close that out? 70?

That'll be 77.

77. There we go. I never do math live, so I'm glad you—

Yes.

Yeah, me neither.

So just, just to be, just to be safe.

Yes.

77 units. Okay, John, how long have you been playing the mobile home park game?

I got into the park game in August of 2022. I closed with some other investors in my hometown and that was the first park. And it was very educational for sure. It's a different type of industry. It's not going to be like your single families, but so knocked out the first part, no money down or no money from my end at least. And then second, third, fourth, and now fifth are going to be all again zero money in. So it's been, been, been quite a ride on that. And obviously the margins look great on the back end, but that can take a little while to get there.

There we go. Logan, same question to you. How many years have you been playing the game? And how old are you?

Yeah, well, I guess I'll start with how old I am. I am 22 and I started in real estate when I was 21, which was fall of 2022. I was a senior in college going for my finance degree. I had only 2, 2 classes left and I was like, I got to do something with my life. So I became a real estate agent actually. And then through being an agent and just trying to bring people value, I was able to find a mobile home park. I can go a little deeper into that later, but I ended up meeting John and trying to buy his park that he originally had got. And I could not because I didn't know what I was doing. But that's how I got into the game is we ended up connecting and then we're like, mobile home parks are like cash cows. Why are we not doing this together? So we both have, we both have drive for it. So that's what we decided to do and how I got started.

There we go. A year in the game. So we got, we got two veterans here. So you guys are partnered now. So you actually met as a buyer and a seller on a potential transaction. How did that turn into a partnership? I'm actually really interested in this.

Yeah, so Logan hit me up through Facebook. So, and he was very persistent for sure. So I had our park listed off market through mobile— not mobile home park store— through Facebook Marketplace. And he was just DMing me saying like, hey, I want to, you You know, see how I can add value, add value, right? Everyone talks about add value. It's like, okay, yeah, sure, you're just like everybody else. And then he just like keeps calling over and over. It's like, dude, leave me alone. So, so eventually, uh, he brings over some buyers. It didn't work out. Um, that's fine, but he did, he did a good job. Everything he was supposed to do on his end for sure. Uh, and definitely try to, you know, understand our side of the coin, understand what is that we're looking for. Um, and unfortunately that transaction didn't work out, but I ended up explaining like, hey, here's how you go syndicate, here's how you go get these things funded. I want you to go do a deal like this for yourself. Like, I promise it will work. So then we ended up partnering up later on when I was like, hey, actually, I need some extra hands. And I was like, I remember this guy that was super persistent and was like, dude, I got you. I can go learn everything. I can, you know, get on top of it. And it didn't take too much convincing with our third partner on that deal. After the third partner met Logan, then we brought on Logan and been going ever since.

So there we go. Now, you said a key word in there, buying things zero down. I heard something about syndication. I know you guys have played with seller finance. Talk to me a little bit about the first few deals, buying zero down, what methods have been working for you guys?

Sure. So I won't eat up all of it from my end, but I not to go off track, but I, I did single families first, and I did it with my own cash. And I was like, man, that's okay, 100% return is cool. What's cooler is infinite return, right? It's like literally like no money into the deal. And I cracked that with the first part when I, um, found somebody first and said, I like, how do I, how do I buy a thing with you? Like, like, what's it going to take? Uh, we came to some rough equity terms on that one, and then we got to close. It was with their, uh, their funding. And then I brought another person who was in a similar situation with of, hey, I want to go buy stuff with you, what is it you're looking for? I just brought them together. So instead of having two separate deals, I just had them join forces, um, and then that was that first deal. So I was into the deal for zero money because I did all the acquisition work on it, and, and then I stayed on. I did some of like the back-end administrative work on it as well. So, um, could have wholesaled it for sure, but instead I was like, I'm gonna, you know, stay in and, um, uh, you know, stay in and continue to add value essentially after day one. So, and then Logan, Logan probably talked about the contract for deed stuff and seller finance ones that we do as well.

Yeah, well, Logan, take it away. Creative finance, you added some other pieces for zero down. By the way, zero down is in budget. So anyone looking to buy a property, if that is in budget, you can play the same game. Logan, I already love what you said here. College student figuring out what you want to do, got your broker's license. You're not— I mean, you basically just immediately went into owning real estate. I'm assuming you didn't start with a huge budget of family money. Am I correct there?

Yeah, man, surprisingly, I don't actually have any parents to take money from. So I mean, it's just crazy that a lot of people think you have to get a lot of money to get into real estate, but really you just got to learn how to structure deals. If you just spend a lot of your time and energy on YouTube University, which is completely free, you know, Christian even posts videos for you to watch. There's so much opportunity for you to just grow and learn the things you need to learn to get where you want to get. You just— my biggest advice really would just be ask questions. Like, you want to get somewhere, how do you get there? I remember I called Christian, uh, when I first was— I found his YouTube channel and I just was scrolling through and I was like, man, I gotta know, I gotta talk to this guy, how is he doing it? So I found his number online, uh, through the same way he said that he found people's numbers, and I gave him a call and he was like, hey man, what's up? And we ended up, you know, he gave me a little bit of advice at first. So I say, you You know, it's definitely getting into the game is not easy, but it's doable and it's doable if you really put your mind to it.

Well, and that's really important too. It's definitely not easy, especially with rentals. We can talk about managing 'em a little bit through this too. Like mobile home parks, you guys are doing a lot of entry-level housing, which is, that's, I specialize in entry-level housing in the multifamily space. I also have a 25-unit mobile home park. Like it's entry-level housing. You have some rougher management stuff in there. But yeah, anyone can get into this game and there's some fantastic opportunities, especially in the mobile home park space. I don't know how much you guys have done with seller financing individual lots or how you guys like to do park-owned versus tenant-owned. We'll talk about that too. I guess the two different strategies with mobile home parks, but you have a lot of unique creative opportunity within the space because ultimately with mobile home parks, unlike multifamily for the most part, like you're providing a lot and power and utilities., and that's your main thing. As long as those things work, the park cash flows, they're relatively simple. Simple means repeatable. Repeatable means scalable. It's why I love mobile home parks so much.

Mm-hmm.

So question, while you're learning this game, and we're gonna get deep into mobile home parks and your guys' strategy here really quick, but while you guys are learning the game and you're fairly early in the career, What has been the highest stupid tax you've paid so far? If it's one that you can share, if it's the second highest, that's allowed too. I've, I've had that happen on a few of these, but shareable thing. When you're learning something new, you don't know what you don't know. It costs more to learn the game. As you've been doing this to date, is there one thing that stands out as like, wow, I wish we knew this and this would've put us in a totally different place?

I, I'd say for me it would be Um, after learning creative finance is just sticking with creative finance. Like, it's not rocket science to make it work every time. There's a lot of different ways to do it. Um, the anxiety of is this going to get passed with a bank and is a bank going to screw me over on the transaction, um, is going to be a deal killer a lot of the time. So I probably looked at thousands and thousands of park home or of mobile home parks where, uh, it could have been a good fit with the bank and we probably would have been able to close, but, um, just kind of getting through the— it's not even like an anxiety of like, is this going to work? It's, is it literally going to have that as a risk of it is not going to work, period? Am I going to waste my time on this? And when you multiply that across thousands of deals and it's like, just stick with creative ones. So I would say not niching down to creative finance only at the beginning, that would have been the better way for— I would be at least 1 to 2 years ahead of where I'm at right now. So I'd say not doing creative. So Logan, what about you?

Yeah. Yeah. So I would say there's two main things that come to mind. And the first one is over-raising money. When you're looking to raise money for a property, let's say you do get a seller finance deal, which we did, and we need to do a 10% down payment. Over-raising money will help you with CapEx projects in the future so you can actually expedite certain things and not have to spend as much money over short periods of time. So that's helped out a lot. We'll raise 110%. You can even do 115% just depending on how much you need, as long as you measure it out correctly. The second thing I would say is just— and this is one little strategy that we just did, but we had the— since we have to use banks for some— if we need to use a bank for some properties, what we'll typically do is we'll tell the seller, especially if he doesn't have any leases, we'll say, hey, Listen, we need leases signed. Can you please go get the leases signed so we can actually finance this thing? Because banks won't even look at it if there's no leases. And then we might do like a $10 increase in rents just to take care of things for everybody. And then what does that do? We walk in and we've already kind of hit pro forma before we even bought the property, which is a huge value add. And we could technically just go wholesale the deal, which we don't want to, but it's just a really cool strategy we've kind of stepped into the game.

It's kind of like a master lease purchase option without actually having to sign a master lease purchase option, and you have the purchase option. It's like, well, we were like, wait a minute, what are we doing? We could just increase it before we even buy the thing. That was, uh, that was, that was definitely a really, really good play. And that's what we're doing on our current one right now that we're, uh, that we just got funded.

So, oh, that's fantastic. How long are you usually under contract on these, by the way? Is this, is this, uh, like, because if you're doing some management piece through these, like, 60-day contract, 90-day contract, what does it usually look like?

Yeah, so this particular one, uh, I was, uh, as I mentioned previously, the, um, issues with getting things done through a bank, it's, you know, we don't have all the due diligence we need, etc. So on this particular one, I actually structured it so that due diligence period would start after we get all the required information that we want, which would be stuff like leases, right? So it's like, hey, we're not even gonna play games until, until we get the information we need, like T-12s, etc. That was the fastest we've ever gotten due diligence in my life. Like, that was insane. It was perfect. And, um, that entire period is about 120 because we were able to cook in some more because we said, hey, you don't have leases, it's going to take you a little while to go get this stuff. So, um, so it's about 120 on that. But longer is usually better, just because especially if there's a bank involved, um, which this one's a bank in first position, a seller carry in second position. So it's still a creative deal.

Well, there we go. How much is the bank carrying versus the seller, by the way, Logan?

Well, I was going to say, just to back off what he said, is 90 days is typically the best because you want to get 90-day close, 60-day due diligence, just to really get yourself in a safe spot. Do really careful due diligence because septic go bad. I mean, I know you were talking about septics with your mobile home park and it can get a little crazy and you want to make sure everything's in place, especially if they've been inspected. But yeah, I think that's very important when going through due diligence. So yeah. And what was your question?

So it was bank and seller financed. That's really interesting. That was a play that I have a lot of friends who have done, but I actually haven't done that before. We were going to do it on a deal and ended up being a deal that we decided not to do. When the bank does this, I think these are the questions most people have. How does the bank look at the seller financing? Like when they're in first, they're in second, what do you have to communicate to the bank? And do they put any limits on what you can do on the seller financing end versus what you have to put in yourself?

Yeah, so banks, the thing about banks is they like, if they get in first position and you can structure it where they are in first position, then a lower loan-to-value is less risky for them. Because if they're only going 50% LTV, and then they are first lien on the property, then what they're going to see is, well, if we do not pay and they take the property, they now get that not just that 50%, but the rest of the property as well. And so there's just elements there where they're really safe. So they're going to see a lot of value in this deal, which is really good. So if we can structure it to where the seller might be doing, I don't know, like 35% seller financing, we can get a bank 50%, 55%, and then get the rest raised up from private equity.

So yeah, and Christian, what we found for the conversations on that is I have something along the lines of this. Hey, do you care at all if they're in second position? And it's like, well, no, why would we care? It's like, exactly. And that's what I said. So really, you want this business, don't you, for 55% LTV? Well, of course we do. So that's, that's one way of it. And then the other is parks are a— they're effectively storage units with storage container housing on them, more or less. So if you— which we didn't do it on this one, but we could have done it on this one— is we could have just done, uh, first lien through the bank on the land, and then we do first lien on the homes through the seller. So that is another permit, right? Yeah, so that's another permutation we could do on a different deal, and that keeps us from having to cloud up our titles on the trailers in case we want to sell them off, rent to own, whatever. But simply separating those out— like, banks don't really want— and they're probably not even going to value off the homes anyway, but, but by at least contractually having it so that seller's in second, if we need to collateralize all the trailers, then it's still $7,500 times, you know, 30 or whatever. So, um, you can just tack on a little bit extra value there in case inexplicably, you know, 55% LTV is not going to work, which is like, give me a break, it's always going to work.

So, and of course, having the first on the land and the first on the mobiles, that only works on a park-owned home, right?

Yeah, I mean, it would be for a park-owned home for that.

Yep. Creative Finance, you can finance anything that you own, which is interesting. On your guys' homes, do you guys only do park-owned, or do you guys also do tenant-owned? Is that a deal breaker, part of your criteria?

Yeah, we typically like to go— oh good.

No, no, I was gonna say I could talk, I could talk like Percival and this other one, and you can talk Kentucky, but just because we got a little different holdings on there, there's different strategies. Normally tenant-owned home is definitely the way to go. But if they're like very, very good condition and they're already rented out, then it would make sense to hold on to it as a park-owned home until you have the property stabilized enough that you're not going to rent-to-own to an unsavory tenant that can afford to be there forever. Right. Because, you know, we all know that drug lords make more than $500 a month. So it's like you're not getting that guy out for a while. So, so that's if they're really good condition and we have a good tenant, then we'll rent-to-own it later after we've confirmed that. So and then look at if you want to talk about Kentucky.

Yeah, yeah. And just to kind of clarify in case viewers don't know, park-owned homes are homes owned by the tenant and— or owned by the tenants. Sorry, park-owned homes are owned by the park and we would own the homes and the land, whereas tenant-owned homes are just— the homes are owned just by the tenant and then we own the land and they rent off the land. And it's actually better to have a tenant-owned home because Any issues with the home itself, the tenant has to take care of. It's like it's a house for them. They are just renting the land. It's like they put, you know, it's like you have a car lot except it's houses. And you're making a— it's very nice because you're not having to take care of all the maintenance on the car nor on the house. And so we find a lot of value there. It's nice because banks are going to value— typically banks when they value properties as well, they're going to value based off the lot rent. So John and I were like, "Okay, well, how do we get the banks to value the property when we have park-owned homes?" Because they're not going to look at— they will look a little bit in a way, but it's like, what do we do to kind of manipulate the system maybe a little bit? And it's not really manipulating, it's just playing numbers. And we just write in our leases—

Specifying.

And specifying. Yeah, exactly right. And we specify in our leases like a $400 lot rent and $200 home rent, even though it's really kind of you know, $600, $500 home rent, $100 lot rent. But we specify it that way. So when the bank sees, they're going to be like, okay, we can value it based off the lot rent, which is $400. And we're playing it truthfully.

And just to clarify, so it doesn't sound like we're doing anything super goofy, it's annoying for a bank when they look at it and they— there is no lot rent, right? So after we've talked to a lot of lenders, then we figured out, hey, we actually really need to be incorporating this. And I see a lot of the senior level, like, mobile home park owners do it this way as well. Now here's the key. Is that lot rent has to be reasonable. For the same reason it would be mortgage fraud, for instance, for me to say I rent out my house for $1 million a month. It's like, really? I don't, I don't know about that. To myself, like, okay, that's weird. So, um, so it has to be reasonable. But it does help, obviously, if it's a T-12, T-24, T-36. That's going to make it a lot more sense as far as justifying, hey, here's what lot rent is, especially if that's, you know, close to, if not slightly below, fair market rent for what lot rent is. So that is key. After doing, because a bank will definitely double-check to make sure that you're not pulling a fast one. But if it's left blank and there's nothing to be determined, then you're at their discretion, which could again result in it not refinancing, not closing correctly, etc.

Yeah, control what you can control, right? Exactly, exactly. That's actually a good point. I should probably review my leases on my newly purchased 25-unit.

Yep, more than happy to share some tips and tricks that we have in our leases that protect all parties, including the tenants.

We got a ridiculous price because there were no books and we own all the things and they are not at all in great condition. And our septic tanks are— only 6 of the 6 are damaged and need to be replaced. Only 6, which to your point earlier, you finance over 100%. That was in the budget. We were rolling the, the septic dice. It's like, wow, we raised enough to replace all of them, but hopefully you don't have to spend it all. Turns out we do. And we bought 25 units on the water for $375,000. They rent for like $850 each.

Yeah. Wow. It's— wow. Really? That's, that's very good DSCR.

I'm sure it is not a terrible deal. It is worth redoing the septic. And there's— we were worried about the well. Turns out the well is actually fine. So that's good. All we have to do is replace the septic and we are going down from a 25-unit park to— we will now be a 23-unit park with the new septic design. That's what we can fit on it. So I'm like, okay, lose 2 units. And we have 2 really gross ones that I already want to get rid of. I'm like, okay, lose 2 junk units and brand new septic. I'll be comfortable. There's no problems with the septic because it will be 0 days old. Fun how these deals work. One of the things that I love about this too, I don't know if you guys have done this yet, but you have the option if you don't have debt on the homes and the debt's all on the land, you can seller finance the mobiles back to the tenants. I don't know if you guys have played that game yet. Uh, have you guys done that on any of your parks?

Yeah, so there's actually a couple interesting things you can do with that. So you can technically seller finance it, so title goes to them, or you can rent to own, which is more like a contract for deeds. So there is a legal distinction depending on state by state. The good news is if it's rent to own is, you know, you're not having to like foreclose on them, it's just an eviction. So that makes it a lot easier. Um, I have seen it done with seller financing though, just depending on exactly how, you know, nice the trailer is, then maybe they want to capture the depreciation. So So that's one aspect of it. The other one is there's actually a way around doing having free title on here. So even if a bank is on there, you can still rent to own it off, right? Because what if I were to go buy a mobile home off of somebody and said, hey, can I do a master lease purchase option on your thing? You're gonna say sure, right? So that's essentially what we do if there is a debt in place, or even two lines of debt in place, is we can say, hey, this is a master lease purchase option. Your purchase option is able to be exercised in the future at XYZ month. And then it's the landlord's responsibility to ensure that that title is free and clear, otherwise they are liable for damages. So then we have a very clear due date on here's when we have to go clear off that first line and second line potentially, and, and then we can transfer title over. So we— I've done it that way, and our lender is aware of it, and he's like, that's totally fine by me, man, just make sure before title transfers that, you know, we got to get paid. It's just a principal reduction. So, so other creative ways to get around that normal issue of having to pay it off first. But, but yeah, and Logan, if you want to talk about our rent-to-own issues that we have, which we were not anticipating out in Kentucky—

I want to hear about this. Okay. Rent-to-own issues. Logan, what are we working on? Yeah, man.

I mean, just the biggest thing with like with our parks is like as soon as We, if we have any units that are just in bad condition, but people are really, really wanting to live, sometimes what we'll do is, is we'll, we'll let them come and take over the park. We might, you know, not make them pay rent for a couple of months, let them fix up the trailer themselves. So they kind of do a lot of the renovating for us. And then, and of course, you know, we're not going to give them a crapshoot, but we're going to give them a trailer that works. There might need some work, cut their rent for a little bit so they can take care of everything. And then Boom, they pay for it and then they— we just RTO it off and it's very helpful. So that has been very helpful in our park. It's helped us increase cash flow and then allow us to reinvest back into the park, which has been very helpful with fixing, especially, septics.

Yeah, I can imagine. And some of this stuff is ridiculously expensive. Like, septic can be ludicrously pricey. So anything you can do to keep a healthy septic or to keep tenants, you know, taking care of your stuff is a big deal. And that is one argument for the, some of the tenant-owned stuff is people tend to take better care of the things that are theirs. And so if you can move the ownership onto them, suddenly less things break. They take care of things when they do. They're not wrecking your septic system, they're not wrecking your mobiles. And it, it does typically have a superior— it's a superior strategy, is less work for you. It's more ownership by the tenants. You end up with a nicer park that's run better is typically what I see.

And that's, yeah. And that's one thing that, that's really exciting because it's like when you can create different structure with the mobile home park, like when we bought this thing, it was in really, really bad condition. And I just got off the phone with our property manager today and he said that people around town have been saying like they're, they're really happy to see that it's in much better condition than it was. And people have been thanking us for it. And it's just like, we're able to create a better community because we're able to reinvest the money in the park. And that's another point that I wanted to bring up is we don't take, we don't go into our deals expecting to take all this money just from going in. Like we don't raise rents or, and stuff, right? When we go in and try to take all the money for ourselves, we, what we like to do is take the money. I mean, we're going with zero down, A, and B, we're going in and we're saying all the money we make, we want to reinvest until these parks are top tier. They're looking as good as they possibly can. So the tenants are taken care of first, and then once we have maybe $10K, maybe up to $30K in the bank, then we're going to start putting distributions. So in case anything goes wrong, we can take care of these tenants before we try to take care of ourselves.

One of the comments I got on YouTube from one of the just amazing haters that help support our channel and boost our videos, of course, uh, is they're like, well, I hope you're not planning on profiting off these, these poor people who live in your Your mobiles. It's like, first of all, it's like waterfront. We have orcas and seals that run through the Hood Canal. It's a saltwater fjord. You can literally see orcas from your front door. Like it is, they're not poor people. They are sure. Very, uh, it's a very nice area. One. Yeah. Two, the profit is what allows you to make a better place. I, I, I've just, I, it's one of the things that I hate more about anything online. People get so upset. They're like, you're running a profitable business. I'm like, Where do you think the new subject's coming from? That like it's coming from running a profitable business that can reinvest in itself. You're doing the right thing is you buy, you stabilize, you optimize, which is what you're opting to do. And in the future, then you can either pay off the debt, you can sell it, you can hold it forever. I prefer to pay off debt in its entirety and just own properties debt-free. But the last one is kind of up to your preference. The first 3 shouldn't be optional. If you just buy and stabilize and hold, eventually you'll end up owning a slum. You will not invest enough cash. You'll buy the sports car, you'll do something with the money, and you'll end up with an asset of less value or less quality than what you bought. If you are buying, stabilizing, and optimizing, one, your net worth is going to go through the roof because you're going to get a park that is worth more and more and more and more, and it's going to be appreciating. And you're going to maximize rents. So it's good for your business and you're going to have tenants who love living there because every single year it gets nicer. I think you're doing the exact right thing with that strategy. This is why we run profitable businesses.

We improve communities. And Christian, you said something when we met at the meetup that I thought was really, really good, is you were using the Catan card analogy. And I've actually used that for— I've like further developed it in my brain. Um, not that there's anything wrong with the original one, I just— I see there's— it applies in a lot more situations. So I was explaining to one of our other partners why we're not going to take cash out of our checking account for the business pretty much ever because we want to accomplish all those things like you were talking about. This is an only-make-equity type of play, not a let's-go-cash-flow-and-bleed-every-tenant-dry type of play. So when saying we have cash, we have debt, we have equity, and we have time, I look at it on a— and I've gone through and I've done this on a couple of our taskers. On a literal ratio, like a literal trading ratio. If we spend a dollar, how much are we going to increase our equity by? Is it a 1 to 2 ratio, or is it a 1 to 800 ratio? Because we get those sometimes. It's like, why would we not want to clean up this trailer and, you know, rent it out? So we just hit all the really, really high-level ones. But what's good is the entire community benefits as a result, and we also are able to benefit greatly because we're converting either our time of like 1 hour spent converts to $80,000. It's like, well, that's a great dollar an hour. Of course we're going to do that. Or it's we're paying down, you know, the septic, for instance. We're preemptively pumping septic so that we don't have an issue in the future when we don't have sewage in the streets for our tenants, stuff like that. So, uh, really looking at those ratios of how does this convert between these different, you know, asset classes, so to speak, of resource classes, I guess would be the better way to um, say it when we've hit all those high-level ones, then it's appropriate to take a disbursement when we're no longer dealing with the 1 to 800s, right? And I see a lot of slumlords, they're like, I just want cash. It's like, dude, you're not getting it. You got to convert all of your resources, you can optimize for every party, and that's how you get a win-win-win scenario. But anyway, I just love the katana analogy here. So it's like, I'm gonna get like a deck of cards now, and every time I explain to people, I'm gonna like hold up the different cards and, you know, just do it like that. So because it literally is a measured ratio of it is a 1 to, you know, 4 type ratio is pretty average and making a 400% return on anything's pretty good.

Exactly.

And that's the reason I love that analogy so much is because it makes the entire real estate game just a simple board game. You have 3 resource pools. I share this all the time on our channel, but you have cash flow, you have liquidity, you have equity, you can trade them. And what you get in your trade depends on everyone else's pieces. Like it's exactly like the game. Like sometimes it's going to cost me 3 brick to get 1 wheat and sometimes someone else also needs it and we can just one for one it. Like there may be a cost to trade resources, but you just need to hold them in balance. And when you're starting, you need to have enough money to survive, which is going to be my next question. Logan, especially for you, because you just got out of college. You said that you're not being propped up by family money. No. So presumably you have to live on something. If you're not taking money out of the properties and you bought all these properties, How are you playing the real estate game? Where does the money that Logan lives on come from?

Yeah, so I mean, there's a lot of different avenues that I've worked with. Sometimes what we'll do is we'll wholesale properties. So we specialize— we've also got a lot of skills in wholesaling and spent a lot of time, which is what we'll actually want to go into in a little bit with the, with the whole wholesaling thing. But we found some properties and we've been able to wholesale as a team, and that's been very helpful. I mean, Right now my situation is, is a little different than most people because I, unfortunately, I had lost both my parents about a year after I got out of college. So this past fall my mom had passed away from cancer, and 3 years ago in March 2020, I had also lost my dad. And we weren't really sure because the world was a mess and we couldn't figure it out. And so unfortunately it was really hard for me for a while because I didn't know what I was going to do and how I was going to make a living, but We've been fortunate to be able to take care of things. Sometimes that means you have to go do a little bit of extra work on the side to make things happen. But Pace Morby even said one thing, you know, it's not— you don't want to quit your job right away when you're investing in real estate. Sometimes you've got to build up your assets and, and, you know, make good assets before you go full in. And that's okay. And everyone's situation is very different. And it's important that you don't think, I'm just going to quit my full-time job, go into this and make a ton of money because it's not as simple as that. It's important that you are very careful, you treat your assets very well. And with everybody, with every asset that you buy, you're very frugal and you don't go and just take all the money for yourself.

So outside of the obvious, very impressive discipline that you have, of being like, you went through something, I mean, just ridiculously hard. Like, I'm sorry you had to go through that, man, but you took that and you went— there's two things that you can do. You can move forward or backwards when you have major adversity. And you went, okay, I'm going to make things work. I'm going to make rational decisions. And I think you manage your resources amazingly. You're prioritizing building equity, but you're making sure you're taking the steps to not run out of money because you can't run out of resources. That's like when you leave your job, do I wholesale a deal? I think if you're someone who's starting and your goal is to get into real estate, your first priority is buy a property. Like, you're not a real estate investor until you invest in real estate. Buy a property. And then after that, it's like, okay, well, I still need liquidity. Your next thing is like, okay, let's go focus on liquidity. Keeping all that cash flow rolling back into your properties to build your equity and just keeping that as a closed loop especially in your first few years, I think it's going to pay off massively, like millions and millions of dollars of net worth massively at the rate that you're buying. That's just realistically something that's going to happen to you. If you figure out the cash thing, it could be brokering a deal, it could be wholesaling a deal, it could be just if you get fantastic terms and price and you're raising private capital to close the deal, it could be an assignment fee to yourself from like Logan and John's LLC to the LLC that you guys end up closing it in. There's a million ways to get liquidity, but focusing on your pieces correctly, where when we buy them, we're reinvesting this into equity. And outside of that, I'm going to come up with other ways that feed what I'm doing and build your business for liquidity. You've answered all three sections, which again, at your age is really impressive to me. I mean, that's just, that's a really insane feat to me that you were able to come in.

I appreciate it. Yeah. Yeah, I appreciate it. It takes drive. I mean, you have to ask questions. A lot of people go through life, and I always say this to people, a lot of people go through life and they just, they're going through college and they're going to get their next job and just sticking with it. And they don't really think like, what can I be doing to build wealth? Or what can I be doing to excel in this world?. And a lot of the things, you know, my ultimate goal is to go into full-time ministry one day. And I thought to myself, well, if I want to reach that goal, how am I going to do that? And part of it was I got to find a way to build wealth to take care of my family because I'm not in a position where I can just stay at my mom's house while I go to like seminary or something. I've got to actually step in and learn how to take care of my house, my family right now financially and long-term as well, because anything could happen. So I went and I was like, I'm going to figure this out. I went and found a— one way I got started was I found a guy who was doing— who's very successful. And this was before I knew real estate. I went and I said, I need to find somebody who's just doing something really well. So I saw a guy who has a big family. He raises great kids. He's adopted like 5 kids and he's very successful. So I went to him and I said, hey, what— how can I be like you? How can I do what you are doing? And so we ended up getting coffee and he became my mentor. Turned out he was a hard money lender who owned a bunch of properties. And he started teaching me about real estate. And I was like, well, I want to do what you want to do. But I didn't know how to do it if I didn't have money or experience. I'm a young 21-year-old dude who doesn't know anything. But what I did was I just started investing in my education. I had money saved from when I worked at Chick-fil-A and I started buying tons of books. I joined y'all's mentorship. I stuck with it. I went to every single meetup I possibly could. And then I got my license, which is not necessary, by the way, to actually be successful in real estate or to ever invest in real estate. But it just was an avenue of how I ended up meeting John, and it helped me excel my career. So I think it's important whenever you're trying to find where you're trying to go, ask questions and keep asking questions until you get to where you are and then start building the path to get there.

This is interesting. This is actually a little turn from my, my planned my planned episode today, but almost every successful entrepreneur that I've met has had something ridiculous happen somewhere in their life where, if you've done something incredible, which I would say both of you have, uh, I mean, high unit count, amazing, there's something that happened that made you different at a younger age than other people. That's been very consistent even within Multifamily Strategy Mentorship. The people— there's a lot of successful people who buy property, properties. The people who absolutely take off, there's something about them that motivates them, that drives them, that had— I mean, for the most part, it's people who are like, hey, I instantly grew up really fast because something happened. John, we didn't discuss this at all before, so this is just off the cuff. John, what is it that drives you? I'm just curious. Did you have any one thing or you've always been wired this way to attack stuff? What is the drive for John to get to your 40 units in a relatively quick period of time as well.

Sure. Um, I guess the financial origin story, I suppose, would be, uh, I was— I guess I was like 13 or something like that, and, um, my, um, cousin was making like a couple thousand bucks off eBay. She's 7, and I'm like, what? Like, are you kidding me? Like, like, I could do that. Like, so then I did that, and I made like $20K in a summer, and I was like, Well, dang, I don't ever need to work a W-2. And then I went the college route, went for Air Force Academy, and then got out of the Air Force Academy and then went and did 5 years acquisitions officer for Air Force, which we could talk about more of that later. But the entire period in between, I was like, I know I don't need to work a W-2. I know I can hire myself essentially. I did it when I was 13. I don't want to do eBay for my whole life, but it's like, if I could, then I, you know, if I really need to, then I can. Um, so I guess like getting that like base confidence at 13 because a 7-year-old did it, it's like, dude, I can do that. So, um, and, uh, and then I knew it was like, I can't be doing, you know, 6, 7, 8, 9, 10, 20 years in the military. I, I can be making a higher dollar an hour for myself. Um, you know, I feel very good about what I've already done for the military, uh, so far. And, um, you know, already saved a ton of taxpayer money, like more than with the cost of basically training me. So I was like, okay, I could sleep great at night. So, um, everything past that is then, uh, just kind of getting into enjoying the game a little bit more, which I'm glad I'm at that point where I can just enjoy it and not have to like stress like crazy over it. I think a lot of that too is just having had a lot of stressful experiences. I mean, not like, like crazy, crazy life level stuff, but, uh, just having the ability to handle stress at a higher level, I think makes any person that works anything. If they are focusing on their systems on how to reduce their stress and handle it better allows them to tackle the stuff of like, whatever, I can, you know, convert this $500 into more, or I can deal with these unknown problems, or I can take that next step and know that I will be able to handle it even if there's not a predefined precedent for it. So, but yeah, no, again, it's funny because I don't think I've actually ever told my cousin that, but I really need to be like, hey, thank you. Like, you don't realize what you did, but you set me on a really good track where, um, you know, now it's like, it's, uh, it's like, man, I could— 7-year-old could do it, then I could do it. So, you know, anybody, anybody that's older than Logan, you better be having the exact same thought process. Yeah, you can do it too. Join Christian's multifamily strategy. Like, he'll literally tell you that. Like, it's, it's, it's all— everybody says all the type same stuff. It's really about like who presents information well. I think Christian does a very good job of presenting stuff, like the, um, especially like the Catan cards, all stuff. But it's like, it's, it's all elemental theory and business, and it's just learning that, whether it's 13 years old, 21 years old, you know, 26 going on 7 years old, or whatever, it's, it's all the same. So it's just, it's fun and exciting at a level, later level, uh, you just got to get through the hard work at the beginning and get over that hump.

Awesome. Well, I— we're coming up on time, but I do have 2 questions that I really, like, came up through this that I really want to know. We talked about the bank thing and the financing and how they're okay with a seller coming in second. How do you get the seller to be comfortable with being in second? I get that question a lot where people are like, I can't structure them where the seller is going to be in first.

Yep.

How do you get a seller to seller finance to you and to be comfortable sitting in second position?

So I, uh, look, I'm gonna grab this one because I love this topic.

Um, go for it. Yeah, I know you talk about all the time, so go for it.

Yeah, yeah, yeah. So I, I struggled with this for a while. I was like, how do I get people to say yes to seller financing? And I just wasn't paying attention to um, how I was presenting value. And because I'm giving them value, they just don't realize it. And it's conveyance of that value, like explanation of it, which was so critical. So Alex Hormozi has a literal value formula, which I don't know if you know Alex Hormozi is, but like, you know, $0 to $100 million a year cash flow in 5 years. The fact I know that off top of my head tells you that like he does a very good job what he's at. So, uh, his, his value formula is— and I literally have it like written on my board over here, which you can't see on screen— but it's dream times likelihood divided by effort times sacrifice. Right. Or effort times delay. I'm sorry. I'm just, you know, totally knew the formula there. But what's critical on that is the likelihood aspect, which when it comes to seller finance pitching is the likelihood is like, what's the percent likelihood that I'm going to fail as an operator?

Right.

So what I've shifted the pitch for on the seller finance or any type of creative deal is I say, do you think I want to work for free?

Right.

It's like, I'm not trying to work for free. I am competent. I do know what I'm doing. I manage tons of money for the government and I manage tons of money for myself. Myself. Here's my track record, right? Do you really think I'm going to work for free? Because if I am working for free, you're the benefit of it, right? Because I'm going to improve this property, and if I miss a singular payment, you're walking out of there with an extra million dollars of equity. So after cracking that, I was like, that's how I got the value to— I was like, dude, I want to buy your property for more than it's actually worth. I just need you to understand that. Once we did that, 0% down seller finance deals started coming out of the woodwork. It was nuts. So like that, and it's just everyone's been saying yes. Same thing with seller secondary. We're like, dude, we're not going to screw this up. There's 4 of us. We have tens of millions of dollars assets under management. We're not here to work for the next 3 years for free just to default and miss a payment. And then here's proof, we're going to pay a month early every time. So just really crushing it by like targeting every one of those pieces on the value formula there. Um, and then also obviously you can do a quicker close, which is the time, then, then that's, uh,, and a higher likelihood of actually closing the thing because you can skip the bank. So, um, yeah, it's just, it's just really breaking down the formula on that one was, was the, was the move.

And the difference beyond just the logic behind it is you understand it and you believe it 100% is the confidence that you project when you're telling them, this is why I believe that this is going to work because I've done this before. Because like people think it's about the words that you're saying. And at the end of the day, it's not like you're right and you do have good rationale, which is why you're confident, but you are able to present confidently. This is why I'm not going to screw this up. And they believe you. And it's that relationship where they have trust that is going to get you seller financing. Seller financing is based on trust. I have to be willing as the seller to make a bet on the other operator that they are going to be able to pay me. That is all they are. It is a gamble on you. And if I believe that it is going to pay off, you will get the financing that you want. That is all it is. Yep. You've explained exactly why someone would do it, but the way you communicated it, I'm like, that is why people give it to you.

Bet on my greed. That's literally what I tell them.

Bet on my greed. Yep. There we go. Yes. I also wanted to say, you know, one, one thing I like to pitch to some sellers, just depending if they're really stuck on their price and they're not moving, is I like to say, hey, listen, instead of me trying to make a price that's affordable for me, how about I try to make the price that you want work for you? And we just structure terms around that price. So it's like sometimes sellers are coming in and throwing, you know, a $1.1 million property and saying, well, I want it for $1.2 or $1.3. It's like, well, I understand you want that and you need that money. What if I just came in here and said we do some seller financing for a period of time? And we structure a deal to where we can get into this deal, increase the value in enough time to refinance, and then we can get them exited in a couple of years. So a lot of times it's like you can get your first deal just by showing the seller that you're trying to make things work for them and give it a win-win situation.

At the end of the day, anatomy of a deal, it's price and terms. You can't win on price and terms if you're the seller. No one will buy it. So it's like if price is the thing, we're going to win on terms. And we're going to be okay with it. If— exactly, if you're flexible on the price, I can be more aggressive with the terms. I can also use a bank, all the other things. Price unlocks all the conventional stuff. If price is where they're stuck, then you're going to have to get creative terms, which means you're pretty much looking at contract for deed seller financing, lease option. You're looking at all the unconventional ways to take it out, because if they're getting priced and it's beyond what a bank's going to lend on, that's what you have to do. Or you buy it in cash. I mean, those are the only options. So yeah, you're taking the anatomy of the deal and you're explaining to them in the simplest way possible, which again, with confidence is how you get it done. You guys are doing the deal thing. This is why these guys are getting yeses. If anyone's wondering like, why are they doing things that I'm not able to do? Like we just unpacked the whole secret there. I like, sorry if you had to watch through the first 30 minutes and it wasn't speaking to you, because like this is the, this is the secret sauce right here at the end of the pod. Um, it is confidently present something in a rational way, as simply as possible. And if you can do that again and again and again, you always will get yes if you are hitting their objective with your proposal. And that's it. That's the whole game. You guys are nailing it. Last question. Final question. What thing individually, what is the thing that you're the best in the world at and how has that affected your business?

Um, it's gonna be structuring the deals up front. And again, anatomy of the deals, I feel like I've, I've spent a lot of time on it, but where um, where we've achieved the highest dollar an hour is going to be through assignments of stuff, right? There's no logistical drag on it. If we know that we can get a thing for 0% down seller finance and we know it's going to make a million bucks, how much could we assign that opportunity for, right? So being incredibly transparent on deals to a point where no one's going to ever doubt that any of the numbers are wrong, and if there is something off, then we immediately rectify it. And we adjust accordingly. And also putting in due diligence just like beyond what anybody would normally ask for. That's how we've been shifting towards. So I'd say that's probably best is packaging up those really way beyond top 0.01% opportunities that can simply just be a signed off is going to be the future on the direction that we're going to be moving on for sure. We've had buyers that are saying like, this is the best deal I've seen in my life. Like, like they're trying to sell their house to buy your deal. And I'm like, dude, you've got to stop. Like, like, you can't sell your house in the next, like, 10 days and get this thing. Like, seriously, like, you gotta pause it. But I can't put the words in their mouth. It's just presentation of presenting to the seller and getting the contracts, one half of it. The other half that now we've cracked the code on to a significant level, but not all of it for sure, because we still got a lot to learn. Uh, but, but is, is getting that same, you know, copy-paste of the parameters from the seller and copying and pasting that over to a buyer. So what does a buyer need? Luckily, we are buyers, so we do know what they need, and we do know what we're talking about when it comes to parks because we have done parks. So it's really going to be signing off those parks. That's what we've been best at on the, uh, dollar an hour approach, and that's, that's going to be the future on that. Which actually, that's how we're trying to— which I'll do a plug if that's okay, but you know, preselling.com, that's, that's like our email distro. That's where we're going to be pumping out all incredible, like 0% down, nutty, crazy deals and just taking a cash assignment fee on those when we could close on them.

Logistically, we just can't buy everything in the world. So there we go. Logan, what are you best in the world at?

Yeah, I would say, I mean, there's so many things I could talk about, but the first, the main thing I would say is I love building relationships. And I think that's been a huge value that I've been able to bring not only to myself, but to the team. I love going and meeting new people, but also people who I can put as a tool in my tool belt to then partner with them on something in the future, whether that means I need to raise money or I need to ask for advice or help people get to where they need to be. I think that's how I met John is building relationships and showing him that I'm serious about the game that I'm in. And so I think with anything, I mean, and also I met my mentor that way too. So if you're willing to get out of your comfort zone, and build relationships with people. Like you said, with the coffee thing, like what I did with you is I texted you. You mentioned getting coffee and, and that's the best way to really build connections. So I sent Christian a $5 coffee card over the phone since he lives all the way in Washington and I live in Georgia. And now we're here on this podcast and we're getting things going. So I think it's important that you just have to strategically build relationships, but also bring value to people in ways, buy them something, you know, take care of them in some way, show them that you care about them. And that the things that you're meeting them about, you value. And it'll speak levels and it can take you really far.

So, oh, this makes sense then. This partnership makes a lot of sense. So we have someone who is a relationship guy and an opener and someone who is a genius at structuring deals and closing.

As far as a deal cycle goes, that strategy makes a lot of sense to me. It works out quite well. I never have to look over my shoulder to see if Logan's doing something weird. So that's, that's a huge benefit. We don't bring on partners unless they do fit those criteria. And we have a third partner we do a ton of work with, and he's very good to work with in that regard too.

Fantastic.

So yeah, I mean, it's a good fit all around, and it only, you know, helps it go even further. So I'm glad you also identified that.

Okay.

And you mentioned it just a minute ago, but what is the, what is the website that people would find your deals at? Sure.

Yeah. So it's, we're just now transitioning into this new model, but we've already had tremendous success through it. So it's presaling.com. The name is from, you know, pre-sales is the activities required prior to closing, such as collecting due diligence, and then wholesaling. So it's a merge them together, you get presaling. So as of now, it's pretty much just an email distro. Tell us your buy box, we will find whatever fits it, and we're not going to send you annoying spam like everybody else because that's not value, that's distraction. We like people being excited and saying, this is the best people I've ever worked with, you know, when it comes to wholesaling. Because that's like, literally we have recordings of people saying that. It's kind of crazy. So, and we didn't even tell them to, we're just like, they just naturally are giving us testimonials. So it's perfect.

So, um, but yeah, preselling.com. So perfect. And John, where would someone find you if they have questions for you online?

Where do you exist? Uh, I don't exist too much else other than preselling.com. I'm a little bit odd for my generation in that regard, so I I don't really have the whole Insta setup or anything else, but this is the centralized branding approach, I suppose, from our end.

It's really just kind of working through this.

Awesome.

Logan, is there anywhere else to follow you?

Is it all just presailing.com? presailing.com is a great way to catch us. You can also follow me on Instagram, Logan Pritchett with 3 Ts on the end. So, but other than that, I think presailing is a great way just to really stay connected with us. Want to provide really high-quality deals, and we want to help people get their first property under contract. So if they put their buy box in, we can hopefully get them a deal that works for them.

Fantastic, guys.

Thanks for joining us on the channel. It's been another episode of Multifamily Strategy. If you guys want to follow more, and if you haven't liked and subscribed yet, by the way, this is the longest podcast we've done. We're at like 53 minutes. If you've watched all this, you're going to appreciate the rest of these. So go ahead and like, subscribe, subscribe, set that notification button. We do these every single week, new interviews. So looking forward to having you here, and we'll see you all on the next episode.