Recession Real Estate Deal Structuring and Why 2023 is a Season of Extreme Opportunity Greg Pinneo

Well, there's a lot of anxiety right now on the part of anybody thinking they wanted to make a transition, they wanted to sell this, but the market now has left them. All that means to me is that I have a greater listening audience than I may have had a year ago. And of course, they're hearing this messaging through not only the media, but if they do meet with a broker, the broker sort of says, well, now at this time, as you know, the market shifted and da da da da da, and all this doom and gloom. And so now they're confirmed, like even the experts say, be real, be realistic, you know, this may take a while to sell, blah, blah, blah. Well, The bottom line is, is that when that momentum exists and you accompany that momentum with A, knowing what you want, and B, a toolbox of proposals, a toolbox of how you can go about buying this in a way that might be different than how most people go about it. Well, this, this is a nice little combination in favor of the buyer that is equipped in that way. All that's to say is that for people who know what I know, these are the best of times. This is, this is the time that you should be so on point and focused and digging in to be a buyer of real property It's not even funny because your audience is listening.

Welcome to the Cedar and Porch Real Estate Investment Podcast. I'm the host, Shona Lepus. Follow along as we unpack and demystify real estate investment strategies through expert interviews and personal experience, from how to find off-market deals to creative financing to long-term and midterm rentals. Our goal is to educate and inspire others to gain financial freedom and generational wealth through real estate investing. Welcome. Today I have the honor to chat with Greg Pinho. He's a legend. He's an epic entrepreneur and mentor to many successful investors. I've done a lot of training and courses, and his Power Player Seminar is pretty much the PhD of investing. If you have the chance to check out one of his events, don't miss the chance. It's really a game changer. So a little about Greg. He's a family man, married to Shauna, has 7 great kids. And is blessed with many great friends and students. He loves all things family, the outdoors, and aviation. Greg has been an entrepreneur for over 46 years. Really impressive. He's only ever done his own thing every day since he was 18. Greg started teaching acquisition, finance, negotiation, and the philosophy of success at Seattle Pacific University at a very young age. This was his entree that opened the door to many opportunities to teach and speak all over the world. His goal has always been disruption that leads to positive change and impact. He believes in A Deliberate Life of Purpose and Passion. So Greg, I'm really honored to have you. I just love to learn a little bit more about your background and, you know, kind of how you got started in this crazy industry.

First of all, Shona, it's, this is a comfortable forum because I'm gonna forget that anybody else is, is might be watching this. So it's just you and I, and for an extreme introvert, that's a about as big as I like it getting. So thank you for letting me talk with you today. The, the complete serendipitous, game-changing moment in my life came when I was really— when I was 17, I was taking very seriously the directive that was very clear in our family that the night you graduate from high school, you're an adult. And when you look up adult in our family dictionary, first line was, you don't live here. And, and so wherever you live is up to you, but it's not here because you're an adult. And the subsets of that were that you take care of yourself, you pay your own way in life, you figure out your own plan next, and, and we will be here and come and Christmas and Thanksgiving and bring something, not your dirty laundry. And, and so that wasn't a bad thing. It was actually a really good thing. And I watched my brother heed to that. Formula. And the night he graduated, I didn't see him again for years. So we were raised to know that that was coming and be prepared. The bottom line is, out looking at options for me to live— the introvert, I'm not a fraternity guy, I'm not a dorm guy, I'm not a be-around-anybody guy— so I'm looking for houses that that I could rent, I flat stumbled into what I now know as an opportunity. This house was an absolute dive. It needed everything. I couldn't believe that there was even an ad run to rent it. But the reality was, is that I made a silly comment when he said, well, what do you think? And I said, well, honestly, I, I've been taught to respect my adults. I don't think you really want to know what I think. No, give it to me straight. I said, well, it, it's an absolute mess. I mean, the bathroom looks like it's falling apart, the kitchen's falling apart, it needs a new roof, the deck— I, I'm surprised I didn't fall through the deck when I walked up to the front door. And I said something along the lines of, it's not that I'm afraid of hard work. I know how to do all these things. My dad has taught me. I could, I could put on a new roof and build a new deck, and I could do that. But if I were going to do all that work, I would want to own this rather than rent it. And the comment came back, well, maybe you should buy it from me. Well, that was the furthest thing from my mind, and I knew nothing about real estate. I knew nothing about the process. The shortened story was that it worked out that I purchased that home for $25,000, $1,000 down. I had a $24,000 note. The payment on my note was $206.10 a month. I was able to start working on that house in March of 1976. I graduated from high school in June of 1976. I moved in the night I graduated, and my first payment came due a month after I moved in. There was a deferral of accrued interest, which I didn't know what that meant, but he did that for me so that my first payment wasn't due until the summer of '76, and there I am writing out my first installment check. I knew how much and I knew when it was due, and I'm sitting in my office/bedroom/laundry room. There was all of 10 by 10. My bunk bed was above the washer and dryer. I'm sitting there at my little desk writing out my installment check and Jeff and Kelly, my two buddies, who I think it just was assumed, oh, you've got a house, we'll live with you. I don't even remember talking to them about renting anything, but maybe I did. But anyway, I'm writing out $206.10, and they pop their head in the door and said, hey, we're going to run around Green Lake, you want to go? And I go, no, I got things to do. And they go, okay, well, here's the rent. And they each threw a $100 bill on my desk. And I went, thanks, and they left. And I continued to write, and I looked down, and I had already written 200, and there was $200. And I went, $206.10, back in the day when you write checks. And right at that point, I just remember just dropping my pen, and I'm looking at these $200 And I'm looking at what my house payment was, and my heart started to race. I stood up and, and I went, I am living in a house I'm buying, and my contribution is $6.10 a month. And I— my brain exploded. I know, I— hey, simple minds, right? But I my brain exploded. And, and the best way I can put it, looking back, it was like, you know, when you're 18, you want to do all these amazing things. You're, you're an adult, you're free, you make your own decisions, all these things, right? But like every 18-year-old, I didn't know how to do all those things. I didn't know how I was going to pay for all this and that. I just, I didn't know. And there was this sense that in that moment I knew all I had to do was buy more houses and find more Jeff and Kellys to pay for them. And somehow there was this instinct that it would all work out, and I became obsessed. I mean, it's all I— that moment, I have never looked up from that moment being in love with and obsessed with the sport of real estate acquisition since that moment. I've— and you know, for someone who has a relatively short attention span to have full focus on something that, like, literally right now is just short of 47 years I've been doing this. I, I kind of can't believe it. Like, how does anything kept my attention that, that nothing has? This has. And so For that, I feel incredibly blessed. Okay, so there's the start. And I started buying houses and I started finding Jeff and Kellys to pay for them. And I just became immersed in all of what this sport has to offer. And as you know, Shauna, the umbrella of real estate entrepreneurship is just an enormous umbrella. It's everything from a mobile home park to a high-rise in Dubai. Everything is real estate when you really look at it. And of course, real estate is construction. And so you learn one to help with the other. And then of course, the details and the negotiation and the financing and the— oh my God, you know, I mean, there's so much to know. It's kept my full attention for all these years, and I hope it will, and I'm certain it will, until I drop dead. So there you go. That's how it started.

I love that. I mean, that is, that's such a pivotal moment and it's like the original house hacking right now is house hacking. Back then it was a roommate, right? But that's really, uh, that was it.

Yeah.

Um, yeah, the more I learned, I think I know everything and then I, you know, I come across new things and I realize I have so much more to learn. And I think that's why this is such a great sport, as you say, right?

It's a great sport. Yeah. Yeah.

So that's really, that's super cool to hear. I mean, I have to kind of ask a little bit as a, you clearly you're, you're a family man. Are you that kind of, and I'm, you know, raising kids too. I, that's a really unusual kind of philosophy. I mean, I think we're, we coddle our kids a little bit, maybe too much these days. Are you parlaying that same philosophy onto your kids or I know you've got grown kids. I just have to ask. Yeah.

Yeah. Um, and you know, it's a, that's a very, very big discussion. Um, because I'm not, I'm not certain, you know, for every kid in every situation, that's, that's the, that's the right way to handle things. Um, thank God for Ms. Shawna because she's the CEO of KIDS. You know, I have, I have two older kids before I met Shawna. And, and, um, but I can tell you that the, that the, uh, philosophy runs deep that, that there is no free lunch. Entitlement is the largest hot button in my world. If I even sense or detect a shred of I'm owed this for anything, that will get my full attention and it will be a sit-down to have a discussion immediately. I believe, and this is off real estate topic, but I believe it's the parent's job to, to ready children to be able to go out there and fox for themselves. To have the skills and abilities to first and foremost handle themselves and then step into the responsibility of helping and leading others to handle themselves. I hear statistics these days of how long kids live with their parents, and I can't even get my head around it. I don't get it. I was so wanting and looking forward to trying out this do-it-by-myself thing that I, I was chomping at the bit for that night to be on my own in my own place doing my own thing. Shawna and I have 5 kids. Our oldest, Everest, you know, well, it started with— she got many scholarship offers for her academic abilities. She chose a private university in Washington, Whitworth University. That academic scholarship paid for half of of her college. And then she has had 3 jobs through college to graduate in 3 years, and she has zero debt at a, at a school that's $60,000 a year. So when I hear, well, kids just can't do it without help these days, I go, well, that's wrong. She worked her ass off in high school to get an academic scholarship and actually have a year of college credits before she even graduated high school. And she graduated with, you know, I didn't know you could do better than a 4.0, but she did. She graduated with an amazing grade point average because she worked her butt off till 2 o'clock in the morning on her homework and, and just did an amazing job. And then she's had 3 jobs through college, so she's now graduated In 3 years, she still has her jobs that she has worked, and she has zero debt at 22 years old. So is it possible? It absolutely is possible. But I think it goes way back to the expectations you have of kids to contribute and do their part, and this philosophy, there is no free lunch. You want to bed around here? You want to eat around here? Well, here's the expectation of what you've got to do to carry your weight in this family. And you know, Shauna was born and raised at the military academy at West Point. There's— it's a tight ship around this place. There's no gray area and there is no slacking off. Nobody's gonna just roll out of bed at noon and burp and go eat and go back to bed. That's not going to happen around here. And so this is where I think philosophy, it has to be your own. How do you approach the world? And taking 100% responsibility for the outcome of your life, that has to be job one. If you're not 100% responsible for your life, then by definition, you're a victim of what's about ready to happen. I believe in that. I believe that even things that you don't see coming, even things that come out of nowhere, you've got to get your head around it and say, listen, I didn't ask for this. Sure, this isn't what I planned, but it's now a part of my world, and it's up to me as to what to do with it now. And I'm going to change. You know, when we take responsibility, we now have the power to change what happens next. When we don't take responsibility, we have no power. I want the power. I want to live a deliberate life to say, I get to say how this goes. I get to say when I quit. I get to say where I'm going and when I'm going to get there. That deliberate control is a big deal versus the, I just don't know what's going to happen next and I feel overwhelmed. Well, we all feel overwhelmed. What are you going to do about it? And so these are basic philosophies. I think I took a left turn, but that's kind of the way I do it sometimes.

No, I mean, maybe to tie it back to the topic, right? I think real estate, being an entrepreneur, gives you the agency to live that life and have that freedom and live on your own terms. That's how I see it.

Yes.

Yes, I really firmly believe that. Um, that's why, part of why I'm doing this. I think it's a very, it can be an intimidating thing to get into, but I feel like there is so much opportunity. And if you put in the work and you take the time and you learn it, like you're saying, and you, there's opportunity. I believe that. I'm very small now, but I'm very grateful for what I've, you know, built up so far and given me that freedom a little bit, right?

Yeah.

Well, so I think along those lines, right, I think these are, these are weird times. They're shifty times, you know, market conditions are questionable, and that could be an excuse of like, oh, it's too risky, or it could be like, hey, there's a lot of opportunity for creative stuff for like, as you're known for deal structuring. So what's your take on the opportunity during these times that we're in?

Yeah. Everything in real estate, in my version of real estate, starts with an assessment of your audience. The audience that I deal with are people who own real estate that I want. Okay? And if we were to look at people who own real estate right now, there is a survey says perception. And again, this is the pre-existing momentum, and assessing the pre-existing momentum is always job one in any negotiation. And when we assess the pre-existing survey-says momentum among people who own real estate right now, If they have an interest of selling that real estate, they would say, survey says the market has shifted. Days on market are increasing, values are falling, interest rates are going up, fewer buyers are in the marketplace. And therefore my expectation as a seller is that things are going to be tougher to sell now than they were a year ago. Now, I don't pretend that every property owner thinks that, but as a whole, that's the messaging going on in the country right now. And as people kind of take it all in and listen to the media and this and that and the other thing, they form sort of some expectation, and that expectation either excites them or it creates some anxiety. Well, there's a lot of anxiety right now on the part of anybody thinking they wanted to make a transition, they wanted to sell this, but the market now has left them. All that means to me is that I have a greater listening audience than I may have had a year ago. And of course they're hearing this messaging through not only the media, but if they do meet with a broker, the broker sort of says, well, now at this time, as you know, the market shifted and da da da da da, and all this doom and gloom. And so now they're confirmed, like even the experts say, be real, be realistic, you know, this may take a while to sell, blah, blah, blah. Well, the bottom line is that when that momentum exists, and you accompany that momentum with A, knowing what you want, and B, a toolbox of proposals, a toolbox of how you can go about buying this in a way that might be different than how most people go about it. Well, this, this is a nice little combination in favor of the buyer that is equipped in that way. All that's to say is that for people who know what I know, these are the best of times. This is, this is the time that you should be so on point and focused and digging in to be a buyer of real property. It's not even funny because your audience is listening. I can show up to somebody and say, and say, you know, you know, Ruth and Herb, about a year ago, this may have been your option. And as you probably know, that's not the way it is today. And so the bad news, I suppose, is that to think that there's going to be 10 offers in a row that have no contingencies and all cash and quick closings. Um, well, that's not real now. That's the bad news. The good news is that I have a route to get you from where you are to where you want to go. Now, it's a route that I'm certain you haven't thought too much of in the past, but let's face it, the bridge is out. And so to get from here to here is going to take a new route, a different route, a route that I'm going to explain to you. I actually think that as you look at it, you're going to realize that there are some benefits to this route that you never even knew before, and I'm going to explain those to you. But the good news is I have a way to get you from here to here. Would you like to hear it? And they say, yeah, we're listening. And now my toolbox and the ability to communicate a proposal is being listened to. And that's, that's all I hope for, is an audience where I can sit down and say, here's what I have in mind, and I've done my research, and I know this property, and I understand what we're looking at. I understand your goals and objectives. I understand what you're trying to do, and here's a proposal. That's going to get you from here to here. Now, that proposal, that toolbox— Sean and I used to teach, you know, 120 hours of hardcore acquisition finance at the university, and I always felt like I had to cut down the outline, and I always felt rushed.

Wow.

Because there just wasn't enough time to go through the tools. I've put hundreds and hundreds of hours on digital education around tools and how to understand them and where they're used in specific situations. This is the ground school of the sport. And I say ground school because without ground school, nobody will allow you to fly an airplane. They won't allow you. Sure, I guess you could go steal it and you might get it off the ground, but eventually you'll crash and die, right? The ground school is how Step 1 of getting a license to fly. Well, the ground school of entrepreneurial acquisition and finance is a study that, that is never-ending. It's dynamic, it's growing and changing. I mean, hell, 10 years ago nobody knew what Airbnb was. It didn't exist, right? And so, and so the dynamic nature of our sport and the tools and the ways you might go about something is ever-changing. And this, this is where great real estate entrepreneurs are, are a student first and foremost. I am learning every single day in this sport. So, but as far as this market, I've got a listening audience now. Now Now that I've got a listening audience, I'm going to tell you that it's— there are certain things that I'm avoiding in this market time. And anything— buy, buy is much easier proposition right now because we have a listening audience. Sell, especially an all-cash sale where I'm wanting to sell something for all cash, where somebody gets new money and cashes me out, That is a very difficult proposition right now. The things that are selling for all cash are, are chasing a market down to a number where somebody's willing to write a check or willing to pay high interest rates to get a loan. I don't want to be in that position. It's a non-leveraged position. And therefore this time Rule 1 of deal structuring in this time is that hold has to be the plan. Your proposition, your deal structure has to have a hold plan, and if it does have a sell plan to it, that sell plan has to be really well thought out. If it's an all-cash sell plan, you better have a price on that thing that will make people just pee themselves, right? Because otherwise it's just going to sit there, right? Or a sell plan that offers really great financing along with the sell plan. In other words, where you may be the beneficiary of a note and you may offer the kind of finance package that, that draws somebody in to be a buyer of that. But overall I take sell out of the equation during these times, and I look to control property and buy property that serves me long term. And that's deal structuring. It's reverse engineering with what you're buying, a way that you can figure out how to do this, employing the principles of leverage, using very little of your own capital. And create a long-term hold acquisition. Now let's insert this. When I say that, there's a whole group of people who, who aspire to know this stuff that would say, well, wouldn't that be great? Yeah, very little of your own capital. You're going to hold it long term, so it's going to have a positive cash flow. Yeah, wouldn't that be nice? That doesn't exist. There's, there's, there's a whole world, especially that's never experienced that, that would say that that's a unicorn. It doesn't exist.

That's the take. Owner financing, owner carry is a unicorn. It's— that's, that's the concept.

And, and all I can say is that those people have not spent enough time with focused intention in enough living rooms negotiating this, because I get to work with great, great entrepreneurs like you who have closed deals that are not only unicorns, they are pink unicorns. They are, they are, they sparkle. And I know that because I've watched you close a Pink Unicorn That Sparkles, where people would say that cannot be done.

I have blown some minds, Greg, with that story. Just, yeah.

Well, it, it— but, but do you see, but do you see, the palette was open. The palette was open, and it's your story to tell. But A, somebody that really was motivated to exit this. B, They owned it free and clear. Uh, you know, see, um, they're listening ears. Okay. Here's a proposal that could close literally instantly and your problems get relieved. They go away. You don't even have to make a call to anybody. We got it. Well, when you start looking at the palette of possibilities, We all know that, that, that, that palette, if you're hunting for deer, you don't go to the Nordstrom's parking lot. I haven't seen one there in a while. If I'm hunting for deer, I go to where deer live. Right. And, and so it's the same thing in real estate. I'm hunting the likelihood that, that I have a tool that will fit this palette. So I'm hunting. The palate. And more importantly, I'm hunting a receiving side of this that has listening ears.

Okay.

So I go to the right location and I'm hunting for receptivity and the ability to apply a tool entrepreneurially that gets them where they're going and meets an entrepreneurial deal structure that makes sense. And it does exist because I bought real estate for 46 years thinking this way, or at least 44 of it. You know, I learned very quickly what worked and why.

And, um, okay, to bring this like kind of like on practical a little bit, there's, you know, finding properties, there's MLS and there's off-market. You know, I know what you teach, so like how do you find these? Who are we looking for? How are we marketing to them? Just to kind of like, so I think this is It's out there. You need to be strategic and hunting your romantic neighborhood.

Well, I'm going, I'm going to go to what I would consider to be my own definition of an opportunity zone, which is a proven amazing location. Okay, now within that location, I'm going to get sophisticated because I'm in the general location. I'm not going to go outside of great locations, but within that location, there's a lot to know. There's current zoning, which is going to tell you what's allowable currently in this general location and specifically to this property, what's allowable. There's also the comprehensive plan for that area that says, here's where zoning is today, but here's the 5-year plan, the 10-year plan, 15-year plan of where the city or county wants the zoning to evolve to. They've already decided it. They already decided that this residential area here, they want to change to a high-density multifamily zone 5 years from now. Well, I'm, I'm understanding their future desires. And let's be specific with that one example. I might I can put a property under contract here that's currently zoned residential, give myself a long close, and in that closing time, now that I have equitable interest because it's under contract, I may apply for zoning use change. And before I even buy the property, change the zoning from a residential zone to a high-density multifamily zone, which changes the property value by 2.5 times before I even buy it. Under the contract that I've written back here. So it's, it's not just going to the right location, it's going to the right location with sophisticated eyes around zoning, around underutilized zoning, around, around lots I might split, lots I might put together, underutilized real estate. And so once I decide this is the area and I'm knowledgeable in the area, Now I'm going to employ two forms of fishing very simply. One, net fishing. I'm going to fish with a net, meaning I'm going to catch everything and anything that I can get a response to and then throw back what I don't want. Okay? And I'm going to do that in the form of a lot of direct mail, a lot of letters, a lot of advertising, a lot of all kinds of ways that people see, hey, I want to buy your real estate in this area. Give me a call if you want to sell, right? That's net fishing. The other is the spearfishing. Now I want you to picture yourself with a California sling, which is a one-shot spear with a rubber band around your thumb, pointing at a specific fish and going, that's the one I want. And boom, you let go and you spear it. This is, this is where I'm seeing a specific property It has all of the potentials that I look for, and now I'm going to not just contact the owner, I'm going to stay in contact with that owner until I get an opportunity to purchase that property from them. And I've literally written people handwritten letters every quarter. Well, in one case for 15 years without so much as a phone call or a return letter. But in 15 years, the guy died. And before he died, he gave the whole box of letters to his estate attorney and said, when I die, you might want to give this guy a call. He really wants the property. Give him the first crack at it, would you? And the attorney called me and gave me the first crack at it, and I bought it. How badly do you want what you want? These are the disciplines of success, is that when you determine this is now on my list, well, stay consistent with it until you get what you're looking for. It's a skill set that doesn't take talent, it doesn't take aftiveness of intelligence, it doesn't take anything other than resolve. I'm going to go after this and I'm not going to let go until I get what I'm looking for. To me, that's what's so awesome about this sport, Sean, is that it's an inside job. We get to say how it goes. And people are so— if they don't get what they want in about 3 seconds, they're off to the next thing. I'm not that way. I, I put something in my crosshairs and, and I stay with it. I lock on. There is a type of lizard that lives here in the desert. Um, it's, it's, it's an elamonster GH. I think some people call it a gila monster, but I think it's pronounced heela monster. And it's a lizard about that long, and it's pink and black, and it's very slow. And da da da. But if it bites you, if it bites you, you and the lizard go to emergency, because the only way to remove the lizard from you is with a doctor unlocking the jaw of the, of the lizard, because once it's got you, it will not let go. You can't pull it off. It's got you, and its jaw power, it clamps and locks, and that's it. You have to cut it off of you. And, and so I guess that kind of resolve is spearfishing. When you decide what you want, you know everything about the property owner, everything about the property. You are completely in the know and you stay with it until you get it. So there you go. Those are two ways I go about buying real estate.

So the other thing that I've learned so much about from you, and it's blown my mind, and we can't really unpack it here, but is involving the seller in the terms. And how to, how to— I think that that's a big myth, that seller financing installment plans are not out there. People don't understand it. So involving the seller in financing, how do you do that? What do you look for?

Well, let's, let's presume that in most situations, in most situations, the normal person buying real estate doesn't go to their checking account and say, oh, I've got $400,000 here. Let's just write a check for the property like I'm buying groceries and, and, and buy it. Most of the time that does not happen. Now it, it does, but not most of the time. Most of the time there's some kind of financing involved, and it only seems logical that if this particular property owner has equity in their property they can do with that equity what they want. And maybe the better choice for them is, rather than take that money and go march down to Bank of America and buy a CD, maybe it would be better for them to lend it to you at a higher interest rate with great collateral. And great customer service. Maybe that would be an upgrade to what they plan to do. Then of course, when you look at certain situations where people own real estate, if they receive all of their equity in the form of cash at closing and they aren't intending to buy another property, and therefore maybe they would be involved in a tax-deferred change. But if they're not wanting to buy more property and they receive all their, all their equity out of the property, there may be a large capital gain bill due. And, and so another advantage that I might point out to them is that they only pay that capital gain tax when they receive the principal gain. And in an installment sale, they may not be receiving any principal gain. If I'm paying them interest only on the note, there is no capital gain, and therefore it's an excellent strategy of deferring the capital gain obligation. And so you learn ways of communicating with them the benefit of them keeping their money invested, not now in the property, but in you that owns the property, and that you can give them a better return. Better customer service, help them defer capital gain, give them excellent collateral, all in the same transaction. Now, in any market, there are those that, that really understand this, that steer the sale that way. I've met with many an attorney and many a financial planner who represent the sellers, saying, this is how we want to do it for all these reasons. Okay, not many people even know that that's available to them. So you become an educator of their ways they can go about selling this property, right? But once you've educated them in this market, you can say, listen, you know, here is a proposal that I can buy your real estate. And by the way, I don't see 20 people in line with the checkbook that are willing to write you a check. So the bird in the hand that can perform and close this property within a week, maybe that's going to be a good option for you. I don't know, think it over, let me know. And you leave them with it, and a week goes by, and a month goes by, and 2 months goes by, and they don't have any better offer. And then they call you and they say, hey, is that deal you put in front of me still— is— are you still willing to do that? And go Absolutely. And you see, you are the one creating a proposal that, that says, I will get you from here to here, I will help you with this transition, but it's going to have to be packaged in this way. This sort of involving them in the financing also oftentimes is teed up by the property itself. It's a vacant building, it's an underutilized building, it's a building that needs all kinds of repairs. In other words, it's conventionally non-financeable, or they would have to spend a whole bunch of money making it financeable to be able to sell it. They don't want to do that, they don't want to put money in. And so that's a gimme. It's like, listen, as you know, this particular property there isn't a conventional lender on the planet that's going to touch this. Therefore, you're probably knowing that the way that you're going to have to go about selling this is you're going to have to participate in being the beneficiary of a note to a certain amount on this property. And then of course, not only are you creating the terms of the note, you're writing the terms of the note. You're, you're having a say-so in all of the various terms of the note, from the interest rate to when interest clock begins ticking, to where the payment is. Is it monthly? Is it quarterly? Is it annually? Does it continue to accrue? To all of the internal workings of, of how length of term is it? Is there a first right of refusal clause in it? Let's talk collateral. Is it the initial property as collateral? Is it a different property as collateral? Does it have a substitution of security clause? Are you able to slice up the note into different components? Is there a first right of refusal clause on the note, etc., etc., etc., etc., etc.? The lettuce and tomatoes, as it were. I have to take a diversion and tell you a funny little story. There's several of my students are very, very into commercial, and they're a part of a commercial group And this commercial group, hundreds of people in the country, they picked the top 5 in this whole group of the year and had them speak at the annual conference. And as it turns out, here the 5 speakers all go one after the other, and then they're up there on the panel and somebody asks a question and says, you know, there seems to be a common thread here among all of you. That you, you have a language that we've never heard in this group before. You keep referring to like things like the lettuce and tomatoes. I mean, have you all read a similar book or this is happening? And of course, in this particular group, even saying the name of another teacher is sort of forbidden. But one young gal who didn't really know the rules said, well, that's That's an obvious question. We've all learned deal structuring from Greg Pinneo and the lettuce and tomatoes. You don't know what the lettuce and tomatoes are? Well, you need to go learn everything you can from him. But anyway, the top 5 in this group of about 400 people are all power players of mine, and they all understand deal structure, and they all understand the, the lettuce and tomatoes, which is a vault of negotiable terms that they've gotten very good at weaving into their deals and explaining that create a value package within the terms that oftentimes the terms of debt are more valuable than the real estate. And I know when I say things like that, I don't want the real estate, I want the debt. People go, what? What do you mean you don't want the real estate? You want the debt? That makes no sense. I go, no, no, no, no, it makes perfect sense if you understand it, because that debt becomes your cost of funds on the backside. How do banks make money? Margin penalties, et cetera, et cetera. 4 ways. Well, what you're setting yourself up for is the second tier of how you make money. I don't make money on real estate. I make money on money. I make money on the negotiated terms of my debt that allow me to do things that nobody else can do that has normal debt, conventional debt. Bank-structured debt allows for none of the things that I do once I negotiate my debt package with all the lettuce and tomatoes. Now, that may have not connected with everybody, which is why 120 hours, I always felt rushed talking about finance because there's a lot to know in that package. But I get to negotiate every bit of the terms, every bit of the collateral agreement, every bit of what I've created. I get to say so in what it says. Versus signing your Wells documents is 120 pages of their way or the highway. My documents still look like that.

It's, it's so creative and flexible. And it also, I think the flip for me too was it's, it's a win-win for the seller too. You're crafting a proposal that works for everyone. It's not just, I used to think, oh, I got lucky, I got seller financing. No, actually you're adding a ton of value. You're really working with them to craft something that is ultimately benefiting everyone. And I think that's took me a minute, but when that sunk in, I was like, wow, it absolutely is.

It absolutely is. I am educating people every day that own real estate on ways of going about it that, that are beneficial to them given this situation. It absolutely is a win-win situation. And you look at people that have money in a self-directed IRA that it's not being directed, it's sitting there costing them custodian fees and it's sitting there, just sitting there. Well, listen, they can invest as a lender in real estate. Here is a return every month paid to your custodian. Here's your retirement plan that's now building. You're not sitting around watching CNN and the red arrows every night because it's tied to some mutual fund that you have no control over. You know, you're giving people control, predictability, deferral of capital gain. You're giving them all kinds of things in a package that they're not getting in a lot of places. At the same time, from an entrepreneurial acquisition standpoint, it allows you to build and build and build and build and build and build and build your portfolio. If you're putting 30% down, or in this market, 35, 40% down, a 1:3 debt coverage ratio to buy some income-producing property, your savings account is going to go really fast, and you're going to buy your 1 or 2 properties, and then you're going to go, I'm stuck. Now what? I'm playing 3-dimensional chess. I don't ever want to get stuck. So you have to have terms that allow you to move the game board.

That toolbox. It is. Yes.

So that's the toolbox. Yeah.

So I think this all makes sense. I think the idea of it, that sometimes getting that slow dance with the seller, and I'm trying to tie it back to kind of the negotiation, you know, Assume nothing, ask questions. Questions of proposition can be very uncomfortable. Why do you— what are you going to do with the money? Just stick it in the bank. I know you're, you're very famous for that.

I was so blessed, Shona, that in my freshman year at the University of Washington, I almost by mistake got thrown into a class taught by Dr. Michael Shadow. And Dr. Michael Shadow is the most renowned name in the world in the art form of negotiation. It's his PhDs, it's his life work and training, and he has taught and negotiated on behalf of the most famous people in the world— presidents, chancellors of countries. He's an amazing instructor, and I knew it the minute I met him. I took every class he taught 3 or 4 times. I did 2 years of extra work at the university working solely with him, creating an expertise in the art form of negotiation. There's a lot to know about that art form. And this is the great challenge of the real estate entrepreneur, is that, is that your left brain has to be developed to a high degree in the world of numbers and finance, engineering, and, and, and all of the technical aspects of this business, but without a right brain that understands communication and the art form of communication and the art form of negotiation, we, we are left incomplete. We have to create proposals that connect with people. We have to create connectivity. And oftentimes negotiation is about creating small agreements that form a platform, subconscious platform, to asking bigger questions of proposition. We don't try to get the girl upstairs with the first question. You know, a little handholding, a little bit of creating other agreements, allowing for bigger agreements to be made on top of smaller agreements, understanding all the available means of agreement, as Aristotle would put it. Understanding the canons of rhetoric, the primacy effect, the recency effect, syllogisms, enthymemes, these sorts of structures of thought that allow us to connect with people, row the boat the direction it's going. We always inherit preexisting attitudes, beliefs, conditions. We have to accept that, and then we get in the boat with them. With their language, with their inflection, with their tempo, with their belief system, with their attitude. And we take it from there and we start rowing the boat. But we may just pull on one oar very subtly, slightly, and all of a sudden, you see, over time, the boat turns. Negotiation is where You land in a place that you want, but oftentimes the audience doesn't even know what you want. They took you there. It was their conclusions that, that you, that you picked up on, their words, their attitudes that were directed. You know, if you were to fight somebody that just stood there and didn't give you any indication of their ability or their strength or anything, that's a scary place. But when you go in and somebody is absolutely flailing, you see they're providing all the energy, they're providing all the inertia. All you have to do at that point is direct it. The negotiation is first being aware of everything you're working with, and then knowing how to direct it for their best and for your best. That right brain has to be equally developed with the left brain. And I'll tell you, for an introvert like me to get out of my 'I just want to be alone' skin and throw myself into any arena where people are involved, it's, it's a stretch. And then to actually go out there in the world of, you know, teaching this, or it's, it's, it's a huge stretch. Every time I, I do anything that involves multiple people, which is like every week of my life these days, I have to set myself aside in favor of a bigger purpose. And, and so sometimes you'll have to do that. You'll have to realize that the way I really am in this situation isn't going to serve me or them. So getting out of your own way, which of course all of what we're talking about is an inside the head thing, and of course then we enter the, the, you know, analysis and the reality of the you and the anti-you. There's two voices. They both sound like you, but one's your advocate, one's your adversary. Knowing the difference and understanding the difference and feeding your advocate and sitting down and scolding your adversary in your own mind— controlling your mind is a prerequisite to having the ability and the focus to be able to understand anyone else. If you can't understand yourself, how would you possibly understand anyone else? And so this is the hard work of real estate entrepreneurship, is it requires a full package to be really good at it. It really does, which is the ultimate challenge, right? It's, um, You know that I'm, uh, you know, addicted and very attracted to aviation as well. And I liken this sport to aviation because aviation starts with the 172 Cessna, and then of course there's the space shuttle. And they're both airplanes, but one requires a much better game, and there's a lot of growth between this one and this one. And isn't that the point of life? Growth is the grail. Sameness is the enemy. I don't want to stay the same as I was yesterday, ever. Matter of fact, to me, it's the measure of all things. If next month looks like last month, I'm doing something wrong. I want to grow. I want to press. I want to challenge myself to, to bigger and better equipment, as it were. That's the beauty of this sport, is it, is it always is requiring more of you to become better.

It truly is a sport, and it's always changing. And it's the right-left brain thing. It, it's, it's so true, right? You really have to connect with people and be very analytical, and it's a whole package.

It's a package, yeah. And it's, it's the ultimate challenge Most people go through life and defer to their, their given brain, and they don't ever venture the other side. They go, I'm an engineer, it's just who I am, this way I am. They never have to connect with people. And, and, and when you really analyze that reality, it explains, it explains a lot things. It explains sometimes the people who are in charge of community development at a county or city, because they were an engineer who couldn't get a job anywhere else, so they went to work with the county in a city. They had no management people leadership skills. They just were an engineer that, that was a job they could get. And then of course the county and city promotes by one and only one thing. Longevity. So 30 years later, if you're still alive and have a heartbeat, now you're running the community development, but still you're just a left-brain engineer. You haven't developed the social people skills to create agreement. And so we've got all this dysfunction in departments like that, and it's very explainable when you understand how most people just stay with the one brain they were sort of born with as being their strong suit. You can't do that and be a great real estate entrepreneur. You have to work on both sides of the brain to bring a full package together. And, and of course, if you want to get a lot done in your day— and you see this played out certainly at Power Players— is that we very deliberately alternate left brain give it a rest. Right brain, work on that. Left brain, right brain, left brain, right brain. Your whole day is structured around using different sides of the brain so that one side can rest while you're working on the other side. Someone who uses just one side of the brain all day, they're spent after 6 or 7, 8 hours. But, but I can go 14 hours a day because my day is structured alternating sides of the brain. And so no side ever gets completely exhausted. Anyway, little, little tips. You know, that's a good cocktail napkin thing. You'll use it sometime.

Yeah, I think it's a muscle too. I'm very much an introvert and I can, you know, I can tell myself I don't want to, but then I can, you know, it's, it's right, left, right. It's all practice, I feel like.

It is.

Well, Greg, I feel like we can go on forever. I mean, we didn't even unpack. I just, I think the takeaway here is education, the toolbox, you know, there's just so many tools and I think it's so important and so valuable and you might think, you know, everything, but most of the things in my experience that are taught is like wholesale flipping, you know, quick cash. It's not a long-term game. And I think what you teach is very long-term, very strategic and leveraging this game board is it's just, you can't unpack it here, but it's, it's really a way to build a legacy and long-term wealth. And, you know, I really appreciate that because I, my mind was blown when I heard about it. It took me a minute to sink in.

I'm not sure when this, when this will air or if you even call it airing. I'm not sure how they do this, but, but on March 4th at my hangar, I do 2 days a year. That we get very focused on a topic and we'll work for 9 hours. It's on me. There's no charge. I buy the food, the drink, and provide the outline. This particular March 4th, the topic is recession deal structuring, which we will very specifically go through many tools that all put things in a control/hold category, but many tools that will do that, that should be used during these times as a real estate entrepreneur. That's the topic for the day. I do a day in the spring and a day in the fall at the Hangar. They're free days. The Hangar can only hold about 220 people. And, you know, the going and interested is already way over that. But the, the going— those people are registered as being there. I think it's at about 160 or so right now, so there's still room if someone is willing to commit for the day. Don't say you're going and not show up though. That, that will get a call from me saying you just displaced somebody. But anyway, that day on March 4th at the hangar, which is just north of Seattle, is a very important day for a lot of people. That, that in a day, in a day, Shona, I feel like I can, I can at least set the framework for how we should approach a time and space with the toolbox of real estate entrepreneurship. In a day, I think I can do that. It's very hard to do it in a shorter period of time than that, but, but, um, hey, we gave it our best shot, didn't we?

I think we piqued people's interest. Yeah. Like for everyone, I can attest it's well worth it. If you think you know everything, you don't, your mind will be blown. Again, I think education is so important and there are so many tools that you just, especially in these times, um, it's so relevant. So Greg, just to wrap up, I think we kind of covered this, but I guess business or life advice, I think we've kind of covered this, but I like to kind of ask everyone this, just kind of your two cents to live life on your own terms. How does it go?

The business, uh, slash life, you know, the curly question, the one thing, right? You know, I saw that, that you sent that out as sort of like a question you like to ask, and, and I have, I have given it some thought. When you sort of combine business and life into one answer, I think it has no direction. Question, but to be answered philosophically, because the overlay that applies to everything— business, life, and everything else— is your philosophy, is your belief system. And I suppose the one thing I would encourage people to do is really think about what you believe. We inherit a belief system when we're 3, 4, 5 years old. We were programmed, we— by well-meaning people doing their best, but usually unqualified people are programming a belief system. Most adults never question it, and they want for things. They want to win the Indy 500, but they're driving a Volkswagen Bug as far as their belief system. And, and there's conflict. They're frustrated. They don't know why. Well, the one thing I, I ask everybody that I ever work with to do is question everything. Unpack your belief system and look at it and ask yourself, does this belief serve me, my family, and the people I love most? Do I really believe this? I think what you'll find is that Many times you'll run into things that need remodeling, beliefs that need remodeling. Sometimes you run into beliefs that need replacing. You gotta rip it out and replace it with an adult belief that's your belief. It's very, very difficult to build to the stars on somebody else's belief. And so the one thing that will serve your business, it will serve your life, is to unpack your beliefs and look at them and remodel where necessary, replace where necessary, and ratify where necessary. If you go, yeah, I absolutely believe that. I was installed that way as a 3-year-old and I still believe it with my whole heart. Good. Ratify it. But taking ownership of your belief It— nothing goes from there if you don't own your beliefs. So that's the one thing.

Yes, I think we don't really ever stand back and look at that, so that's really valuable. I know it's a little silly, but a superpower— and what's your superpower and how do you— how have you used it in your entrepreneurial, you know, business life?

Again, you threw this out in advance and I've never been asked this question. So I, I, first of all, I think my deferral is, I, is that I, I think of superheroes, superpower, and, and all of that sounds like some giftedness that you were handed. And I don't believe I was handed any giftedness at all. I'm, I'm painfully normal in most every measurable category. The one piece of the equation that, that is in my control, that doesn't take giftedness, is resolve. You could call it persistence, you could call it resolve, you could call it tenaciousness. I decide what I want to do and I don't give up until I've done it. And, and that could be deciding to say I'm sorry, or it could be deciding to fly a jet. It doesn't really matter. When I, when I say this is now what I've got to do, I don't let go of it until I do it. And I think living a deliberate life is identifying with very crisp clarity what it is that you want your life to do and B, and then reverse engineering a game plan to make sure it happens. And, and that's how my mind thinks. My skill set is tenacity. And so, you know, I know that once I set it in my sights, well, it's going to happen. I don't let go of it until it does. And so I finish things. I, I get locked on. It may take me a long time. The last house I built for my family took me 8 years and 3 months between buying the land and moving in, and there were 20 guys on a job site for 8 years and 3 months. So it, it You know, it— I decided what we wanted to do, and then you just stay with it until it's done. You figure it out, you keep working it, you keep believing, you, you keep pressing. And that's the— that's an inside job. I played in a golf tournament a week ago. It was a match play tournament. Nobody's going to even understand this, but after 5 holes, I was down 5. I'm losing 5 holes in 5 holes. That's not a good way to start. But I had a little talk with myself and said, you know, this is where you draw on the fact that you came here to win, so you better get your head in gear. And, and I not only caught back up, I went ahead 2 up with 3 to play. And that's, to me, that's philosophy guides results. That when you accept a result less than what you set your sights for, well then, how do you deal with that inside of you? I, I know why I came here, and I'm going to I'm going to give it everything I've got. I think people die with way too much left in the tank. I don't intend to die with anything left in the tank. I know that I've given it everything I have until my last breath. The unforgiving minute— give it everything you have and stay with it. And I'm blessed to be married to a woman that, for whatever reason— we're coming up on 25 years next month— and she had every opportunity in the world to throw in the towel, but she didn't. And I don't think she will. And I didn't. And to me, I think that that's a big component in the success equation. It's just staying with it, and that's a choice. That's my superpower right there.

And yeah, that's powerful, right? It's, it's not— everyone's born with that, right? Everyone can tap into that.

That's it. You get to choose that. Yeah, yeah.

Okay, I ask people a resource. I think you are the resource. I don't want to ask you this question because I think everyone should check out your event. So, I mean, I don't know if there is another resource. I mean, clearly you, you are an amazing teacher.

Well, I would love to meet anybody that is sincerely interested in this entrepreneurial life. You know, Shona, you are, you are one. You're, you're the quintessential one that I'm drawn to because you take it all seriously. You are a doer. You, you don't just talk about it, you throw yourself into it, and you push yourself and challenge yourself. Boy, any that fall in that category, it's such a privilege to meet and to get to know. And we exchange, we learn from each other, and we draw on the resources that each other has to both become better. I am so blessed to know, you know, great people like you that I learn from. So yeah, March 4th is a day where I'm going to meet a lot of people. People, and they're all brought by somebody, you know. They're all brought by somebody who I've gotten to know, and what a blessing that is to, to unload the way I think about, about real estate in life, you know. Yeah, who would have ever thought, to an introvert, that this kind of thing even exists in my life? But, you know, sometimes God has plans that are bigger than our So anyway, yeah.

And all the success of that, it's also you attract amazing people that are really interesting, really just good people, easy to connect with. And it's, I think it's important to be around your tribe. And I think you have a tribe of like-minded people. And there's this industry is takes all types. And I think it's important to align with really good people. Yeah.

You're right, right. Yeah, yeah.

Well, Greg, this has been an honor. Like, you're definitely someone I just have learned so much from, and I, I hope people take it to heart and check out the event. I'll certainly include all the stuff in the show notes and get it out there. So thank you again for your time.

Absolutely, absolutely, Shona, absolutely. Anytime. And, and, uh, I'll look forward to seeing you on March 4th too, for sure.

All right, Greg, take care. All right.

Bye now.

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