The Best Ways to Invest in Real Estate with Little to No Money

Foreign this is the no Closer show where you get the latest developments in distressed note investing and learn the secrets of how you can control millions of dollars worth of property. For panties on the dollar. Get educated and entertained by someone who has closed thousands of deals and lives to support you in achieving the same. Now, here's your host CEO of We Close Nodes, Scott Carson. What is going on, everybody? Hey. Welcome to Note Night in America. As always, honored to have each and everyone taking time out of your busy schedule. Join us on a Monday, Tom. Even first hot day here in Austin, Texas. Got the 90 day, 90 degrees a day. Some places are expected snow. It's just a chaotic world, chaotic weather, just a chaotic market in a lot of cases. But glad to have you, each of you for this special topic tonight. The best ways to invest in real estate with under 25k. And we did it. I guess I had a hot button there. People looking to invest in small balances, which is great. There's nothing wrong with having a small bounce of a retirement account or small savings or just getting started or maybe just recovering. There's a multitude of ways to invest. We'll get, we'll dive into that. And just a few of the what I think are the easiest ways and the best ways. If you've got a small amount, especially under 25k, get the ball rolling. Now, why did I pick 25k? I'll talk about that in a second. But first of all, once again, everybody, this is your first time. I know. Not in America. Welcome. We're honored to have you. We've been doing these for over a decade. This is the 12th year actually going on. 13th year, I believe. We've been hosting these things. You can catch all the replays over the last couple years on our Note Night in America podcast. Yes. Anywhere that you listen to podcasts, you can download the Note Night in America. We actually have the number one month for downloads for Night America in March that we've had in, I don't know, five years. So thank you for listening. Thank you for watching. If you're watching it there, of course, we also are on our YouTube channel. You can watch the videos live on WeCloseNotes TV. And we had our second best month in the last year, year and a half on our YouTube channel as far as views in March. So thank you guys for listening. Thank you for watching. Make sure you hit subscribe while you're there at weclosenotes tv. So that are you not only getting notices of when we release a Note Night in America, but Also any of our podcast episodes, any of our shorts, any of the amazing content that we're coming up on 1750 videos on there and 7000 subscribers to our YouTube channel. We have the number one YouTube channel, number one podcast out there. As always, make sure you check out also the Note Closed show podcast. Over 750 episodes. Just a lot of great stuff for you. Number one note investing podcast out there. So best ways to invest in real estate. Now why did I pick 25k? I was mentioned about that. Well the reason I mentioned 25k because I don't usually like to use somebody's money if they've got less than 25k. Now yes, if I'll do a smaller deal if they in on another deal or two. But 25k, especially if you're starting off and you're raising capital, you probably want to be dealing with people that have more than 25k for the most part more that they have 50 or 100. When you're dealing with IRA investors that have a bunch, I know that we have friends and family that will have a savings account, a retirement account or educational savings account or an old 401k they need to roll in and do something and you want to do something to help your family out. I get it. And so here's some options that I come up with. These are things that I've done, others have done. Some people make these as full time strategies we'll talk about tonight. No, it's not just notes but I'm going to give you guys some different options that you have available too. And how do you tap into these options? Well, we'll touch base with each one as we go through roughly about five or six different strategies for you guys to get the ball rolling as a new investor. Now by show of hands, who in here is looking to do their first deal or they're they've got money sitting in ira, they're burning a hole in their pocket. A small balance. If you just want to raise your hand, say yay, yes, that'd be great. Thanks John. Thanks others. Few others comment on there pre awesome. Thank you, thank you, thank you. K. Thank you everybody. That's awesome. Great stuff. Then you're in the right spot. Hopefully I'm able to answer some questions tonight. If you have questions after tonight's call, you can always book a call on me on my calendar@talkwithscottcarson.com that's talkwithscottcarson.comthat'll take you directly to my calendar and I'll be glad to kind of go through a couple of these with you and we'll have some opportunities for you guys to put some money to work if you want to. Anyway, what stops? Let's talk about this. What stops most people from investing? Think about this. What stops? And I, I think back to when I got started, when people would first talk to me. Of course, my mind is completely changing warp now than it was back in 2001 when I first graduated from college and got engaged and married and was in the workforce and thought about investing. My thought about investing was investing in my retirement account, right? My 401k, right. Taking 3% of my paycheck. My boss was going to match that 3% if I stayed there for three years. The full 6% would go with me. Otherwise it'd just be the 3%. Right? But when it came to investing, and really, even though I grew up in a small town, my parents weren't most, the most financially savvy people there was investors in town, I just thought that they used all their money for it. But the first thing that stops a lot of us from investing is a lack of experience. We just don't know. We just don't know. Right? That's probably why you're here, Mike. America. To lose that lack of experience or gaining some experience or gaining some knowledge in the options that are available for you and what to do, what not to do. Another one is a lack of deals. Maybe you live in an area that you've got some money, but everything is so overpriced. I was just talking to a couple investors today, some of my colleagues and stuff like that that are out in San Francisco and they're like, yeah, it's just so stupidly overpriced. It's so stupidly overpriced here in Austin, Texas. Talking with my realtor buddy today, looking at some stuff on the MLS and things like that. It's just you got to know how to find it. If you can't find experience, they're definitely not going to find deals maybe that fall into that smaller price margin. I mean, you might live in there like Ohio, Michigan, you may have plenty of deals at 25. But if you're in like California or Arizona or Texas here, you may not see a lot. A lack of network. That's the biggest thing. You don't know what you don't know. You don't know who, you don't know who. Right? A lot of the best deals come from having a network, a network of deal sources like with Me, it's building a network of banks and lending institutions that send me deals that I can cherry pick hedge funds, other investors. Today on our WC and Crew coaching call, I went through a tape came from a source, and I showed my WC and Crew students how to leverage this type of contacts to two or threefold the number of vestments or deal sources that they could be looking at.

Okay?

And building a network that feeds them deals that others don't necessarily see because they're taking that extra one or two steps along the way to build a network. And that's part of what's so important. Over the years, I've been teaching this note investing. And I see people that come in, they're all gung ho, they're excited market, but they get, they let their network shrink down where they become reliant on just like one, two or maybe three sources for deals. When one of those sources goes away or runs out of product or goes out of business or wraps up their fund, then they're now left with two deals or one source and they don't market to go find more deals. And that's a big thing that I'm a big advocate of. And part of what our podcast, I know Night in America and all these things do is to build that network for deal flow. And you guys can do the same thing too. But most importantly, it's what we're here for, right? A lack of funds. I don't have a lot of money. I got less than 25k because I'm new to the workforce or I'm recovering or I got an old 401k and do something with whatever it might be. There is no right or wrong. I'm starting over, starting again. I'm going through the big D and don't mean Dallas. And he or she took, took most of my money and left me with nothing.

Right?

But these are all very relevant things. But the number one thing we're talking about tonight is the lack of funds. Like I said when I was a young guy, when you start thinking about investing, I think many people think that, they think, guess what, you've got to have a ton of money. You got to have a lot of your own funds to do what you do, right? I educated two people this weekend when they asked me about what I did and I told them like, oh my God, you must have a lime. I was like, no, I don't use my own money. We use other people's money. And he's like, oh, my gosh, I didn't think about that, I know that was an option. People just don't know. I should put a lack of education, but really it comes from lack of experience, lack of network.

Right. Okay.

You don't have to have a ton of money to do deals. It's great if you do have money. But guess what, There's a lot of different opportunities, but that's that hard earned 5k, 10k, 20k, 25k or more to work in a couple of scenarios for you tonight. And what I've done is kind of broke them down from 0 up to 25 case. So it gives you a little bit of things. The first one, I'm sorry, the first strategy I'm going to go through these years. Here's basically what we're going to cover here the next 30 to 45 minutes.

Okay?

You can wholesale, you can do options. Now options are not like stock options. We'll talk about options. And when it comes to real estate, you can do earnest money, EMD deposits, you could do mezzanine financing, small balance financing in seconds. You could also do subject to deals and handle the reinstatements. You can do notes. And the notes can split down into small balance, performing, small balance, non performing, or even doing some partials. And that's what we see is the 1, 2, 3, 4, 5, 6, 7, 8, 8 different strategies for small balance stuff. And you could do a variety of these things.

Okay.

And whatever you choose to do is up to you. It just depends on what you take action and might like. Anything, stuff's just not going to fall in your lap. Can we agree to that, ladies and gentlemen? You've got to be marketing, you've got to be networking, you got to be, you know, sharing what you're doing. Some of the best ways to do that social media, others is at your local real estate clubs or networking events or conferences. When people have a haves and wants or a needs and wants, you can say, hey, I've got some small balance stuff. I'm willing to do some stuff. Just literally sharing what you have available, communicating. Nobody knows if you're going to be a secret agent man or woman. And by not saying what you do, people don't know if you've got 10 grand or 20 grand. But many times our limiting beliefs will stop us from saying, well, I could do that or I've got this option. Are there any options available to me or anybody out there looking to do other deals that we can partner with that can do one of these different things? So let's first talk about the first Strategy wholesale in. Okay. Now wholesaling, when it comes down to it, you can wholesale a property, you can wholesale a note. The amount of money required really is zero to a thousand. And I put thousand on there because sometimes you might need to put up a little bit of money. But for the most part, not a lot of me required. Basically, you go out and you find you're finding a deal, a property or not below value, or you negotiate it at a great price, you're placing the deal under contract, all right, and then selling your contract or position for a fee or higher price. It could be a flat fee, it could be a percentage, it could be, we've done wholesale fees from 500 bucks to 100 grand.

Okay?

But you got to know what you have and have an account for it. And one of the most important things is got to make sure that your buyer who's buying that deal from you. If you say you buying a $100,000 balance note on a property that's worth 90,000, a little underwater. Let's say you're getting under contract for 45,000, what's at 50% of the value? That's not bad. You could sell it at 60 cents of the value. If it's in a faster foreclosure state, it's a good looking property. Maybe it's an occupied asset to 60 of 90 is 54. Well, if you get a contract for 45, maybe you can flip that contract to an investor like me, a note buyer like me at 54 and make nine grand on the deal. You just understand what the deal is and what it makes sense. All right, now everybody talks about wholesale. I want to wholesale, I want to wholesale. But they don't take the action to go out and look at deals and put things together. They just. This is the biggest. Everybody wants to do wholesaling because they don't have to invest any money and they're nervous. Why? Because they don't have a lot of funds. And that's okay. But it's going to be harder for you these days, especially as things are going up. People bank sellers often know what they have and you're not. You can still see great deals at $0.50 of the dollar or less. If you will market. And if you're going to market to good wholesalers, you might as well market to raise some capital for your own self to take down the deals yourself. That's my personal opinion. I think wholesalers often get the short end of the stick because of their own accord or their lack of action. Lack of marketing. No offense to anybody, not trying to piss anybody off, just telling you as it is.

All right.

Go find your deal. I know this sounds stupid. Go find a deal. Get under contract. You're gonna have a hard time getting under contract from a bank, but you can do it from a private seller. I mean, you've got stuff. We've got something account before wholesaler from bank. You just gotta have your marketing down and know that you've got a good buyer's list of people that can perform. If you don't have a buyer's list and you're starting off, it's gonna be a harder thing to start wholesaling real estate or notes. If you don't have a list or aren't part of a networking group or aren't leveraging social media. So. So that's one of the biggest things. Or have an email list number one way that we wholesale notes is by sending an email blast out to our database of buyers and sellers when we have stuff questions about that before moving on to the next strategy, which most people will often forget about. And actually this was the first strategy that I made money with. Now I was. When I bought my first house out of college, I got 80, 20 financing. 80% first, 20% second. And I just paid like down closing costs, like four grand.

Okay.

I bought two investment properties the same way and lost my ass in there. So when I licked my chops and started learning real estate investing versus just real estate buying a true investment. I use this strategy to make money on one of the first deals. Deal am I talking about. I'm talking about options. Now what is an option? An option is pretty simple. Basically, many of you are familiar with, hey, you, if you're buying a piece of property of an option, period, you put earnest money deposit down of a thousand bucks or $2,000 and you put option fee of 100 to 500 bucks. That option fee gives you a period of time to back out of the contract to do your due diligence, a little bit inspection, stuff like that. And if you have to cancel the contract, you get your earnest money deposit, but your 100 to 5, 500 bucks is gone.

Right.

And notes, we don't see a lot of options as far as when it earns money deposits. We do see some options. And we. I've used options, not only traditional property, but I've also used it on notes. And I'm gonna give you two scenarios that we've done it with later on. But literally it doesn't have to be a Lot. Literally we've done options that we put say $10 on the contract, and with zero, we've done up to a thousand. Actually done up to $40,000 option before on a deal. But basically what you're doing is once again finding a property owner to agree to sell the property or the note at a agreed upon price for a period of time. Maybe you have an option to buy a property at this specific price for 6 months or 12 months or 90 days or pretty common 30 days. You got a 30 day option period to close on a traditional piece of property, which is pretty normal for people.

Okay.

And that's great. Like I said, we've done anywhere from ten hundred to five hundred on a normal basis. Pretty lease is pretty common. Ninety percent of time, it's going to be somewhere between ten to five hundred bucks. Sometimes it's more. We did the forty thousand was on a large $1.1 million pool that we're buying of 285 assets. We had to put up the $40,000 option to extend it to ninety days.

Okay.

Anyway, but here's the thing. Like I said, options are often used for inspection periods. And traditional real estate, it gives you a week or two to get out of jail. What I like using options for though, is to secure property for that extended period of time. Maybe it's 90 days. I've got friends who will go out to like an aggressively growing metroplex and they'll go basically two miles outside the city limits. And then what they'll do is they'll go around to the property owners, the homeowners, the property owners, and they'll inquire about buying their property at a price that you know, and a lot of times it says I don't want to sell, or they come up with a price that might make sense. Well, that's fine. Can I secure an option on your property for that amount for 12 months or 24 months now, depending on how much property is appreciating an area, they may be able to get that price now maybe at full value, but in six or 12 months they're buying it at a discount. I actually know one guy who made $150 million on the Daytona beach area of Florida. And down the, the tip down by Miami. This goes back to when Florida had a lot of these little shanties. They didn't have these big high rise. He went around and put options on all these crappy little hotels at a price that they were happy to sell them at.4, which would have been overpriced but then what he did is he knew the value of the property that was redeveloped, it would be 10 times that. So then he went and sold his options to developers, were glad to pay him his huge price to go and buy these, knock down these small crappy hotels to build up these high metroplexes. And he literally put them under, you know, a hundred dollar option period. And he had a, basically a, a two to five year option, depending on what he did. Okay, you can do options in Texas. You can totally. You can't do lease options in Texas, Cynthia. Okay, so a lease option is different. That's where a person has a lease and they have an option to buy that property. Usually what happens with a lease option in Texas, you can do it in an llc, but if it's an owner occupant, they're usually, we're putting a deposit down 10, 20, 30,000 as an option fee to convert that to. They had the option to buy it in two years or three years. Well, what happens if people got evicted or they couldn't hit that option period in two years is that deposit, $20,000 was gone. So what happened in Texas is the government, state, let's say here, made lease options beyond 180 days illegal. Okay, so you can do options here. You're not talking about a lease option. It's a separate thing. Like I'm say, so you got a property next door to me. And say, hey, Cynthia, I love your property. What would you sell me your property for right now? Well, I know you don't want to sell, but if you could sell it, what would be your price when you probably, well, it's worth 500. I'll sell it for 600 if you give me 600. Great. If I know that the property values are going up or something's going to happen, say, well, I'll give you 600. Give me two years to do that. And I'm hoping that in two years that property value would go above 600,000. Well, I now got a contract. I go right to put that contract on file with a title company saying it's 600. Well, if the property value goes to 700 and you try to sell it, guess what, you can't sell it because I have an option to buy it at 600. Okay, so options are done quite a bit. We've used options on multiple deals, but they're kind of a great way if you don't have a lot of money. But you know, stuff is happening that you can do this. Like, I'll give you A great example. When Tesla, when Elon Elon decided that he was going to move his offices here in Austin for Tesla, I got a phone call from buddy Wayne Brinstein Recipes, who reached out. Hey, did you hear this? You may want to run down and start putting options on all this land. I was like, well, the place they're putting at isn't the cheapest stuff already. It's already kind of overpriced land in a lot of cases. But it can be, but it can happen. So how do they get honored? You would go file the option with a title company or go file the option at the county clerk or the county recorder's office to record it. So it's basically a cloud on title. Okay, let me give you an example. I talked about my friend who made millions and millions of dollars putting options on crappy ass hotels. Here's one of the things that I did. A $10 option turns in 110,000. Okay, true story. This is one of my best deals I did with years ago, we got a tape in of assets from a hedge fund. Digging from a bank. It was a hedge fund. Sasha, the guy actually passed away, but had bought a lot of assets. He had this, he's 52 notes left that were left over. It's like the tail end of his trade. Okay, last 52 assets and he wanted to sell them, but he didn't want to do all the work. He didn't have the network to market all these assets. Okay, yes, yeah, exactly. You would have to pay the $10 $100 option fee to the actual stock because they've got to sign off on the option. It's like a sales contract with a future date.

Okay, yes.

It's like if you give me an option for 100 bucks, I'm gonna give you 100 bucks. You're gonna sign off on this Anyway. So anyway, Sasha had these 52 non performing notes. They were low balance stuff. It was the tailwind. And he's like, I want to sell them. I said, well, I don't want to buy them all.

Okay.

I said, but I'll tell you what. If you give me loan level pricing on these and you tell me exactly what you want for each your bottom of the barrel thing, Let me put an option on each asset for what you want and I'll go out and market them for 90 days. Give me a 90 day option period and I'll go out and sell what I can sell. And he's like, okay, that's fair. So I, for basically $1.6 million in value of these notes. I was able to secure that for 10 bucks.

All right.

And I was able to do that for 90 days. I had basically from October to the end of the year, one year, October 1st to move them and I busted ass. I went out and they were all over the place. I remember one in Esther, North Carolina and then they wanted Las Vegas and Jacksonville, Florida. These are all these small balance ones. But over that 90 day period I was able to sell, I don't know, it was like 10 to 15 of them above what he wanted on his loan level pricing. So we purchased basically 15 of these and I made 110 grand in profits above. So my $10 option turned into $110,000 in profits in 90 days. Average profit is somewhere around 4,500 bucks. I think my numbers may be a little bit off on that, but when I took the bigger ones out, I knew that I averaged roughly about 4, 500 after. I did have some marketing costs along the way, but anyway, still a freaking great deal for me to go out there and move and hustle my butt off in 90 days by. I had a seller who was flexible, he wasn't going to do anything. He also put in there, there was an option agreement and I made it non exclusive. So if he founds me to buy the whole tape, he could go ahead and sell them all and be fine. And that's what we put the non exclusive. So if it was an exclusive option, he couldn't touched it. I said, well listen, give me a non exclusive. He finds me by the whole take from your price, go ahead by all means excluding what I put. And if you find somebody's buying individually, I have the first right of refusal to match any of those individual offers. And he was like okay with it. So that's how we turned a 10 option into over $110,000 in profits in 90 days. It was a very, very busy day. It was a very busy 90 days, but well worth it.

Okay.

Now another thing is we did another option here in Austin, a single piece of property. We took a hundred dollar option fee and I turned it into $40,000 in net profits.

Okay.

I found, we were doing some marketing here and we found a property that was listed on the mls, but it was also on the foreclosure list. It was pending foreclosure. It was in a nice desirable area of Austin, down by Zilker park, down by where they have the ACL music festival. It's literally down by Barton's Springs and great Part of Austin, Texas. Right. And we found that was going to foreclosure. And when we found it was foreclosure, we approached the seller and said, listen, I know you want to sell this asset, but it's about to go to foreclosure. How about you give me 30 days? It needs a lot of work. It's not going to get what you need because it needs a whole rehab. But he'd lived in it forever.

Okay.

His name was Sash. He had these dreads that went all the way down to the floor. Huge dreads. He's a drummer. I end up pretty. He was pretty high most of the time.

Okay.

I said, okay. I said, I'll tell you what, I will buy this property from you for what you owe with your payoff with a lender. It was 250 and it gave me 30 days to make this happen.

All right.

And he's like, okay, he agreed to it. That's fine. He also basically agrees to okay if we sold it. Anything he had, he had $10,000 above what we sold it for as a profit team. I was like, that's fine. We could. I think we can make that happen. Because I knew the value of the property was much higher if it got some work. But it needs some work. So it was turning buyers off because they come and saw this ugly property. He wasn't the cleanest guy and it was just turning people off. A lot of cases for that. Let me see. Text message.

Yeah, there we go.

So what do we do? We went out and I found a developer. I found a guy that liked doing rehabs. He was looking for stuff. And in this neck of the woods, it's hard to find property in this zip code.

Okay.

So I got him degree because he could. He knew that if he put some money into, he could, you know, have this house at 5:50, $600,000 house. So we agreed to sell him the property for 325. We sold our option. We ended up netting after commissions and closing costs and paying Sasha's 10k. We still netted 40k. Thousand is our net on a hundred dollar option fee. And even paid the realtor. There was. Our listing agent was all worried that they were gonna get paid. We took care of them, got them their 3% on 250.

All right.

Even paid our realtor a little bit who brought us the deal as well. And the developer, he ended up buying the property. And he actually, he goofed the buyer. He had his rehab go through and they demoed way too much of the Property and it sat vacant for almost a year, ended up selling the property. Another developer and this is what the property looks like right now.

Okay.

It was a two story house of this back here part was there, this is attached to it, this house. It has beautiful old, old original floors in the property. Now this house is worth 1.6 million. To give you a bit of an idea what real estate and Austin's done for the last, you know, 15 years. Just gone up ridiculous. But this is actually 1500 Blue Bonnet Lane in Austin, Texas and just it's one of the first wholesale properties I flipped here and I took what I learned from an educator, somebody that you guys a name you may know of and I put it to work and made it happen. I secured it with a hundred dollar option fee and a six pack of Heineken. And I, I. One of the books that I really loved about options and wholesaling actually came from Ron LaGrange. I went to, you know I traveled on the Ronald grand circuit with Bobby and Annie, Jimmy, Kayla for a couple years. And when Ron has this quick, quick turn real estate class he loves to give this book away. I remember reading this on the plane. I was like oh, this is options. I like this idea wholesale. I like this idea. But anyway, I think you can buy this book for like 5 bucks on Amazon or someplace like that. But it talks about options. And I just took what he did and applied it create my own option agreement. But I'm just telling you like I learned it. And all of you can do options if you just know where there's a deal and you get something that's obviously flexible or as motivated or another, another guy, one of the. You've probably seen a series the Scorpion that was on NBC a few years back to talk about one of the most intelligent guys. Well what he would do. The Scorpion made millions of dollars in real estate too because he went out the side of town, path of progress in the main highway, three miles outside with the most thing and he would go around and knock on doors they had like to buy your property if you'd be willing to sell it for me. How about you at least write an option so if you decide you sell you you got a ready made buyer and people would. 100 bucks. 100 bucks. You put all this property on a contract and every once in a while one would hit and that's all you need to do. Okay, so something to think about for you. Those are every make send any questions about options or wholesaling so far before we move on to the next strategy. Hopefully that it was valuable, maybe a little bit entertaining. You never know what you're going to run to. Yeah, I did $1.6 million for 10 bucks. That and then I said I turned into $110,000. I still, I came across. What's funny is I came across the wholesaling agreement. If you're part of our one on one coach students, I'll share that. I share that with you every once in a while. I also talked to my buddy Boyd, Pops, who helped me out with that deal as well, honestly. But anyway, next thing you could do is if you have a little bit of money, but you're a little nervous to do the deals yourself is to actually kind of partner up with people that are doing deals. And there's often investors out there that have a deal, but they may not have the earnest money deposit to put up. Maybe they're strapped, maybe they've got all their money tied up in other deals, but they've got a great deal. They need to try to put up a little bit of earnest money to secure the asset for a period of 30 days or 60 days or something like that. Now, earnest money deposits, you can actually bring in your funds and provide the earnest money deposit to other investors. Usually it's going to be at least a thousand bucks, sometimes more. Like I said, at the 40 is what we've done at the most before. But a thousand bucks is pretty normal on a single family. Maybe it's $2,000 depending on where you're at. Maybe it's 1% to the sales price, whatever. But like I said, the investor, the buyer, doesn't have the money for the earnest money and they borrow the money from you for a period of time. I guess it's 30 days a week, two weeks. A lot of times I get big, I've gotten big developers. I need a million dollars earnest money to go on file for 30 days to show that we've got the money. Okay, now here's the thing that's important. If you're going to do this, you got to actually read the contract and make sure that there is a period that if the buyer or the investor doesn't come through with the earnest money, replace yours. You have the ability to cancel the contract and walk out. There's a soft period. Soft and hard. Okay? So once the period softens, that money goes hard and that earnest money deposit is not refundable. Okay, but we've done this before. We've actually had a students do this before. Hey, I Need some earnest money to put down really fast on an asset while working onto it. And you know, I work with, sometimes I'll work with realtors on this. Hey, I got a deal. If you want to throw some money in here, I'll give you a 12 return on your money. Or I'll give you, if you give me a thousand bucks, put it in there, I'll give you 2,000 back when we're done.

Okay?

Or we'll do even some, depending on the amount. I said, well, hey, I'll give you earnest money deposit, but I want a split of the deal. Give me 5% or 10% or even 20% of the deal, which is a little steep, but it depends on how, what the deal looks like and go from there. Okay, but you're writing a check, you're depositing it, usually a title company, in a lot of cases, banks with notes. You're not going to do an earnings money deposit. This can be on your traditional piece of property. Okay, but that's pretty. If you're looking to do that, go to your local real estate club. Go to your local real estate club. Say, hey, I've got some small balance money in my ira. Small balance savings. If people are looking for earnest money deposits, I'm willing to do it for 30 days and charge you, you know, one and a half. I put up a thousand, you're gonna pay me back 1500 bucks, which when you annualize that, you're making 50% in 30 days. That's pretty good. All right. If you can make 500 bucks on a thousand bucks in 30 days and you do that once a month, that's a 600 return on your investment annualized, that's not too bad. So great way for you to put a little bit money work even with your ira, stuff like that.

Okay.

You probably want to make sure the Earnest Money Agreement, stuff like that, you're going to have a one page agreement, having a real estate attorney draw that up for it. But that's something you could do.

All right.

You could also do mezzanine financing. And this is if you get a little bit more money. All right. And basically if you're doing mezzanine financing and you've got a small amount, you probably want to stick below 25,000. This is really 5,000 to 25,000 is the amount that we kind of see on a small level. Usually mezzanine can even be a lot more, depend what part of the country. But if you're buying, say an investor's coming in and they don't have the money. They have the money. They got a rehab loan from a hard money lender or to purchase a property. They had a lender to purchase it, but they don't have a little bit of money for the clean out crew or the quick little, you know, paint and carpet. Okay, you could do that and basically you would be a second lien on the property. So if you're putting a 5,000 or 25,000, it goes as a second lien against the property because the hard money lending is usually going to be in the first lien position. The short period of time, 6 months is pretty normal. 12 months depending on the time, days on market. I prefer if I'm going to do this, that I'm going to be in at six months and get in and get out if I can. But with the days being dragged out on the market, you got to look at this. So expect for 12 months. I guess it's used to cover rehab or carrying costs. A lot of cases we've used one of these for both of these light rehabs are best.

Okay.

And you can get a percentage of or get a flat interest rate. That's pretty normal. Is getting a flat interest rate easily 8 to 10 to 12% for a period of time. We see mezzanine financing, especially on the west Coast a lot of times where they're buying these big million dollar properties and doing these big rehabs and be worth 2 million, they might get 10% of the deal or 10% of the profits. Or they may ask, hey, I need to get 8%. But if you do it in six months, I want a full year of interest. So there's a one year prepayment penalty. There's some of these things that we've done on different things actually if somebody is interested, I do have an opportunity for a mezzanine finance deal right now of 25,000. If you're interested, let me know, reach out to me, I'll be glad to talk with you about it tomorrow. But this is one example. If you got a $25,000 balance, we could put it to work and get it back to you roughly in probably six months or less. Our mezzanine financing falls under consumer lending. So you're not going to be lending to owner occupant K. Okay. This is going to be an investor loan.

Okay.

So you're going to be doing this to an llc. You're not going to be doing this to an owner occupant. You're going to be doing this to somebody who's fixing flipping the property in most cases.

Okay. All right.

You'Re not on all these. You're not going to be doing these for owner occupants. These are all going to be investor scenarios.

Okay.

But good question. Thank you for asking. Let's see here. Let's get, let's go through an example. Here's an investor. He's buying a $200,000 property as is and he's getting a hard money lender to. To fund the 65% purchase price of the current fair market value, which is 130k. But he needs some money, 25k to do paint, carpet and a little bit of cleanup. But he didn't have the 25k himself. And if he does this repair, he knows that he can get the value of the 250 based on cost. He just needs to be in clean condition.

Right.

So where, if you take the 130,000 plus the 25,000, that's at 72.5% of the AS IS fair market value. But if you base it off the after repair value, it's only at 62% of ARV. So it's important to know the 2 difference in how your money acts up. So 62 of ARV, it's a pretty good deal. Even if it as is deal. It's. You really don't want to be about 70, but it's still acceptable for do that in a lot of cases, especially if the market's hot and property's flying off the markets. It's. I'll go to, you know, I would go to 75 in a mezzanine if it's in a fast fast in 90 days market or less, provided that the property's gonna be in clean condition once again, you're gonna be in a second lien position behind the hard money first. All right, Like I said, paid it. You're gonna. A lot of people will say, hey, can I just pay you your 25k back plus your interest at the closing. If it goes longer in six months, we'll start making monthly payments.

Okay.

They just don't usually want to start making payments while they're working with the existing hard money lender who's wanting payments on there. Trying to be a little bit more flexible. Important thing is make sure that they know what they're doing. Make sure you see the property or have put eyes on the property, know what they're doing. And sometimes I said something like the higher end stuff, hiring rehabs will take a percentage of profits.

Okay.

No, I'm not willing to do A percentage of profits on the deal that we're working on. We, we just need a quick little bit of stuff and we'll be done. It's basically a very cosmetic rehab and what we're working on. Okay, next strategy that you can do with a limited by the funds to see if there's any other questions on here really fast. And I'm also monitoring questions on the YouTube channel as well here for you.

Okay.

Is you can do subject to deals. Now, Scott, a subject to deal is taking over financing. Why would I have to bring money in on a subject to deal? Well, great question. Well, maybe you aren't the guy or gal finding the subject to deal with.

Okay.

And we've done this with anywhere from 1,000 bucks to 25,000 on a 72 deal we marketed. We had a seller or a property owner reach out to us. They want to walk away from the property. So we take over paying for paying the first lien. But they are behind. The borrower's behind by some payments, some months of payments maybe need a little cleanup, stuff like that. But we need to make up the back payments or the taxes avoided taxes. So that's where we would bring in a private money lender with a little bit of money to come in and either a go in a second lien position for a period of time or you know, give them a percentage split of profits invest. We're going to borrow the money from that small IRA or small investor. I use a flat percentage rate. Or we might give depending on what the structure is and the cash flows, it might give us split of the deal on subject to deals. But we need to expect them. You need to with this. This is probably not going to be a quick in and out 90 day thing.

Okay.

If you're going to come in on a subject to deal and you're providing that financing to pay the back payments off taxes or maybe a little cleanup. You have to be comfortable with your money being tied up probably at least two to three years depending on what the situation is with the underlying investor. Okay, so let me give you a scenario on what makes sense here. So the investor takes over property with subject to financing. Their strategy is, let's say turn around and rent it out. And they know they can make $400 net on a rental.

Okay.

They know they can make at least $400 a month above and beyond the mortgage payment PITI payments by taking over the existing loan, cleaning up, paying off some payments and then keeping it to cash flow for 24 to 36 months. Okay, so the investor say needs 10k to bring in a loan current to avoid the foreclosure process. Maybe they got to pay six months or four months, whatever it might be. Okay, so you've got 10 cases and so hey, I got 10K, I'll bring that to you. So if, but I want 12%. Okay, well 12% on a $10,000 loan is $100 per month. That's 1200 dollars a year. That's not a bad return for your $10,000 deal. Right. You're in a second lien position. You want to make sure the first is getting paid so you don't get wiped out. You don't, you don't almost want to set the payments up on a, with a servicing company or third party stuff, you know, in that cases. But if 400 is coming on in cash flow above and beyond, then the investor, the buyer can pay you the $100 out of that 400. So he's still seeing, or he or she is still seeing $300 per month in positive cash flow. Or Maybe they're doing $200 a month and paying you down faster. Okay, you getting paid off in a timely fashion. Either way it's fine. Or maybe they just want to, hey, come on in and we'll give you 10% of the profits or 25% position. Come in, hey, I'm in a buy. They really want this great deal. So come on in, bring your 10k. We'll give you 25% position of the profits and equity and, but we got to let it ride for a period of time. Well, if there's $50,000 in equity and your $10,000 is going to secure 12,5 plus, you're going to get a quarter of the cash flow. That's a pretty good ROI in the long run, especially as you're paying down that loan, the equity, if the values are going up, your equity position is increasing every year usually. And then of course you may get some write offs and some stuff like that, but that's a possibility for you to make it more comfortable to let that money ride. So that's something to think about. Subject to deals, you're seeing more of these, especially with all the low interest rates. It's if you can find subject to deals, that makes sense. It's a phenomenal thing. And either doing like a rental wraparound or I mean a rental agreement where you've got the underlying low interest rate and you're paying the underlying low interest rate and you're collecting above rent or you do an owner financing wrap or you owner finance the property to somebody at a higher interest rate and you're making the net spread and going from there. Question from somebody here. Does cost segregation work with this? Well, I'm not an accountant or bookkeeper, but yes, if you're going to take over a property and the deed is transferred to you, but the mortgage days and the borrower's name, I believe you can use cost segregation to write off the profits or write off expenses and cost segregate that towards your taxes. So yes, I believe it can be done.

All right.

I'm not an accountant or bookkeeper or an attorney, but yes, I believe that would be a good thing to do because you're the one paying the mortgage.

Okay.

And then you can take the interest deduction and all that good stuff.

Okay.

Next strategy besides 72 deals is small balance notes. All right, now this is kind of a three part thing with it.

Okay?

Small balance notes are great because there's a lot of opportunities out there, but you got to be careful of depending on what the term is, the value of the properties, and making sure that if you do end up having to take the property back, you're okay taking the property back.

Okay.

And we've, we've bought small balance notes anywhere from 1000 to 25,000. Actually I've got a couple of students, Crystal and Selena and Carmela who paid fifteen hundred dollars for a small balance note and it turned into a performing note, I think bringing in 300 or $400 a month. So it's a pretty good return on investment form. And it's secure. They buy like a $40,000 property. So they got a sweet deal with that deal. Now you could buy a performing, a small balance performing note or a reperforming note. Somebody who's bought it, got it back working, they want to sell it off. You can do small balance first or seconds, but I'm honestly, I'm not a fan of seconds right now. Seconds are way overpriced. And you, if you're gonna buy, if you got the opportunity to buy a first, buy first, you're in a much more secure position.

Okay?

And you can buy the performing or reperforming at a decent roi because if you're using your own money to buy this and you're not using somebody else's money, you can get a 6, 8, 10, 12, 13 cash and cash return by a small balance. And just. But you gotta make sure, look at the low balance and then making sure that hey, if they do pay you off, you're still getting a great deal. Or if what they're paying in monthly payment, interest payments is still a good return for you. If it's less than 10 year term frame, still could be a phenomenal deal, even if it's shorter than that. But just got to run everything through your financial calculator, make sure it makes sense. You've also got to take in consideration your monthly servicing costs. So if it's A$50 a month or $25 a month servicing cost, you got to take that out of the P and I payment and also make sure taxes and insurance are being paid that you're not going to cover that as well. So sometimes these low balance loans, low balance payments, if they're only paying $150 or $200 a month, it may not be worth your time depending what you're putting into it. I think it's always best if you're new small balance, but owner occupied because you're going to have more exit strategies or at least occupied of some sort because you're going to have more strategies if they don't pay to foreclose, get modified, get back on track. Always check your property taxes, making sure that they're paid. Like I said, you want to have a third party servicers handling this because you don't want to create another job for you. A lot of times you'll see land loans. We saw a bunch of contract for deeds on land loans today when we're working through our coaching call this morning. Or valued property loans at 8% ROI or greater in a lot of cases we actually took look at the tape, 190 and out of 190 there were 78 notes that were below $25,000 purchase price. If you're looking for deals, we know how to show you deals, guys. Okay, now on small balance notes, let's talk about small balance, non performing, same thing first seconds. I prefer firsts. We bought non performing first anywhere from seven bucks up to way beyond that. But 25,000 begin with like I said, best to buy occupied assets. You get the condition exit more extra strategies. I don't like to buy vacant because you're getting buying the vacant, you're gonna have some rehab costs that will go very easily quickly above 25,000. If you're not doing it once again, look at the low balances or low remaining terms. Make sure it makes sense in a good roi, especially after servicing costs or out of your cash flow. And then also you figure in foreclosure costs, taxes Repair costs also. Got to figure that. So this is why if you're buying a low balance, second, I mean a low balance, non performer, making sure that you're getting a deal on it. And if you start getting, you know, you want to be at 50% of value or lower in a lot of cases. Okay, Depending on the area it's at. Okay, now I'll give you an example. This is actually a deal I'm working on right now. This is in Shreveport, Louisiana. It's an occupied asset. This is a picture taken by a realtor about a week or two ago. It's occupied. We expect the bar back contract. They haven't made a payment in about a year because they were out of work. But they're back working again and in the process of negotiating a loan mod. And it's worth 50,000. They owe, they owe 29,000 on the deal. We're going to pick this up for 14,000, some change. So somebody had 20,000, they want to come in and get a pretty decent little return. Hey, we've got an opportunity for you. But I like this little deal. A little red brick home. It's not the biggest home, but they've got some equity. The bars got some pride of ownership. And we really feel if we have to foreclose, we're going to still come out, make some money on the deal anyway. But don't think we'll have to foreclose based on everything we see. Okay, it's in a decent area of Shreveport, Louisiana. Here's another one. This is in Greenwood, Florida. This house, this is a nice little house. The actual picture, this is taken from the street view, but the actual realtor that drove by took a decent photo. But I like the way this one looked a little bit better. You can see they've got some wind chimes, got some pride of ownership, get some bikes on the back from their kids. Not a big, big property. Three bedroom, two bathroom, about 1200 square foot. Same thing valued at 55,000. I've got it under contract for 18 five or 18 some change. Looking for, like I said, 22, 23,000 on a deal like this that we could get reperforming. If not, we'll foreclose and be sitting pretty on an asset. But somebody who doesn't really want to lose property. This one I believe is only about six months behind on payments and just needs somebody kind of help them out. Why the seller on both these assets, has it worked more to modify these loans, I don't know, but that's okay. We'll take the opportunities, but we see deals like this all the time, ladies and gentlemen. You got low balances. You want to put a deal to work, hey, let's get, let's talk. We'll get your rocket rolling and get the ball rolling for you.

Okay?

Now one last strategy that I joke about a little bit. It might be the most overused strategy in the note business people talk about all the time, but it doesn't happen very often. But it does happen with owner finance notes. And you've. We've seen balances like this money required to be anywhere from a thousand to 25,000 or greater than what we're doing. But it's partials. Buying a partial, a chunk of partial, buying a series of payments for a lump sum.

All right?

And Tom Henderson's a note investor out of Dallas. He kind of made famous. I'm going to pay you, pay you 10 payments for 12 months of payments. I'll give you 10 payments if you give me 12.

Okay?

It's a really easy kind of strategy to take a look at. You know, I want a year of payments. I'll give you 10 payments for where I'm getting two payments. So you figure this and Fanac will also do. They bought, you know, First National Acceptance Corporation, First national bank of America. Oftentimes if I'm sending in an owner finance notes, they may offer a partial purchase of 24 months, 36 months or 16 months for a lump sum to the seller. Whereas after that 60 month period, the note then reverts back to the original note holder. Okay, not the borrower, but the note holder. But I'll give you an example. This happens most of the time with owner finances. You're not going to buy a partial from a bank. I have never seen it done from a bank on a partial. Okay, not seen it done. Now, I've seen the collateralized payments, but that's not the same thing as buying a chunk of payments. So this is going to be primarily owner finance notes that you'll see happen. And this, this can happen if you understand it and put it to work. So let's give you a scenario here. And this will work with any scenario. So let's just say your monthly payment is $500 a month coming on the note. Okay, well, investor me who've got the short balance, okay, I need 5,000 bucks to make a deal happen, okay? So I'm gonna go to say, Tom or another investor who's got short balance and say, hey, I need five grand. So Tom turns around gives me 5,000, 10 months of payments to collect on 12 months of payments. So what is he making? Well, he's making 20%. He's making $1,000 profit on his $5,000 investment, which turns into 20% ROI. It's pretty good. Now what happens if the borrower stops paying? Well, the bar defaults, you foreclose. I would only do this probably in faster foreclosure states. I want to do this in longer foreclosure states. Unless you're getting a big, big chunk now also too, if you foreclose, guess what happens if you're due? Let's say Tom is due. How much he's due? 6,000.

Right.

Well, let's say after halfway through the deal, you start the foreclosure process. So it sells, it sells for 65,000. Well, Tom would get his remaining 3,000 he's owed. The remaining profits would go back to the original note seller who sold the partial off.

Okay.

And they can collect on the remaining profit. So that's what happens. The partials get paid first or partial buyer gets paid first and then the note seller would get their remaining balance back above and what they sold it for. But this is a great little strategy. 10 and 10 for 12. 10 for 12, you know, no matter. You can run different monthly payments, but it's roughly, if you do 10 for 12, you're going to see about a 20% cash, cash return. It's a great little way to put your IRA stuff to work. And that's the thing I really want to harp on, ladies and gentlemen. So we're coming up here. It's the first Monday in April. As you're listening to this, use your self directed IRA. Start a self directed IRA. Now, you don't have to put 6,000 or 20,000 into it, just start putting $500 in. If you go find a deal, an option, put a hundred dollar, you can pull a hundred dollar option fee and that's the minimum withdrawal amount from most IRA companies, 100 bucks. So they might get you two deals because there's gonna be some fees and stuff like that involved wired processing. But you put 500 bucks in to start an IRA, guess what, go do a hundred dollar option fee and they make a thousand bucks or go, you know, put some money to work. And all of these scenarios that we've gone through tonight, the wholesaling, the options, the mezzanine financing, the earnest money deposits, the note scenarios, that stuff, all that can be done with your self directed IRA as long as it's with a Self directed IRA custodian or trustee that can do notes or real estate. Because if you put 500amonth away, that's $6,000 a year. That's not even quite maxing out your full year contribution limits, but it's still 6,000, that's not going away. You can use that money to go in and buy real estate, to invest in other real estate. So putting it in and then using that money to go do options. So if you did put 5,000 away and then you made a thousand bucks, you can make your IRA make you 20% return on this stuff. Roll over your 441k and a self directed IRA, Roth or Traditional, or do a solo 401k. There's a whole variety of different things. I am not an IRA expert. Still, talk to somebody, you want to talk to somebody, let me know, I'll be glad to put you. But start using your own funds to explode your retirement accounts. If you've got five grand or ten grand, or if you've got kids educational savings account and you want to partner up and the four of you with two grand each, that's eight grand. Go buy a note together each got 25 ownership, 25% of the profits goes back in each one. Be a great deal, buy a note, lend on a property, do an option, wholesale a property. You can do it all in your self directed ira. And here's the kicker, ladies and gentlemen. You have until April 15th of this year to contribute to last year's amounts. That amount doesn't need to go to this year. So you could literally put, was it 6,500 per individual IRA right now? You could actually put $13,000 away in the matter of the next nine months or actually the next 13 months. But 6,500, if you got it towards last year's numbers, as long as the money's in by April 15th, an additional 6,500 in. Put something in, put 500, put a thousand, whatever you can put in something towards your IRA that goes towards this year's contribution, 2022's contributions and start that monthly deposits or something away each month into your ira. It'll work out. And if it's a Roth ira, it's going to grow tax free growth. If it's traditionally doing a rollover, it'll grow tax deferred and go from there. So any questions, ladies and gentlemen, about some of the different things we covered? Hopefully this was educational. Like I said, one of the best ways is just to start talking with people, your local real estate clubs Your real estate groups, hey, I got 10,000. I've seen a lot of people on bigger pockets and connect investor. Hey, I got small balances. What can I do? And they start. You start getting all these complicated answers. Look, put in an IRA if you got money sitting in a savings account. Put in an IRA if you ain't got to touch into it, great. If you need to tap into it, then take a chunk of it and keep it for savings or keep it from emergency. You gotta have some emergency funds. But put a little money away. But do some options, do some earning money. These deposits get out network. You'll be surprised what you come across. And you know you can do a lot with a little, all right? And that little can grow very rapidly if you know what you're doing.

Okay.

All right. Any other questions? Let's see if there's any questions online here before I let you go for the evening. Hopefully this was valuable to everybody out there. I had fun. I was looking back at some of the crazy deals that we've done. And they're not really crazy, just that, you know, you got to know your options, know your availability and things that you have. Or if you're interested, like I said, everybody feel free to reach out to me@talkwithscottcarson.com that's Talk with Scott Carson dot com. Book a call. Love to let you pick my brain, ask me some questions. And let's. Let's make this year the most profitable year yet for you or make the year that you take the most amount of action. If you've been sitting on the sidelines, haven't done anything, it's time to put the ball, get the ball rolling, get in court and make it a slam dunk here for you. So go out, take some action, buddy, and we'll see you all at the top.

Bye.