Is It a Good Idea to Ask For Next to Nothing Down?

Hey, it's Mark Podolski, land geek with your favorite niche real estate website, thelandgeek.com and on this week's Round Table podcast, we have almost all the usual suspects. We've got Terea putting in the reps. Harris. Teria, how are you?

I'm well. How are you, Mark?

I'm good, I'm good. Good to see you. We've got the technician, Eric Peterson. Eric, how are things in the city of barbecue?

I'm not it. That's all I got to say. Not it.

Why? We're playing a little inside baseball right now. I love it when you call me Big Papa. Tate Litchfield. Tate, we're gonna all be in your backyard in a few days for boot camp. Are you excited to host?

Yeah. Really looking forward to picking all you up at the airport.

Are you feeling the pressure by the way of the food?

No, no, not in this city.

Just so confident.

So many options. Yeah, the greatest city on earth. When it comes to food, I would put that up against anyone.

Okay, if you're Parisian right now and you just spit out your coffee, I apologize.

Hey, I'm going to bring my tent. I heard there's room in Tate's backyard. Is that cool?

Yeah, totally.

I think that's appropriate.

Not an issue at all.

I signed up for Tate's Airbnb months ago.

The reality is my tortoises have woken up. So if you're back there, you're free game. They might bite you. It's just saying.

All right, enough of the tortoises shenanigans. We gotta introduce. You know you love them. Your flights go Sherpa. Scott Todd. Scott Todd.netlandmodo.com Learn anything about anything. Investor ninjas.com Scott Todd, how are you?

I'm good, Mark. How are you?

I'm good. We've got a great topic. Dear listener, so glad you've made it this far. Eric, what's our topic?

I think our topic today revolves around the idea of is it a good idea to ask for zero down or a dollar down on your. Your properties for sale?

0 down or $down? I could just see from Sharia's face, she has a strong opinion about zero down, a dollar down. So, Trio, we could all. I think we could all agree that the lower the down payment, the easier the sale, correct?

I agree. Yeah.

So why don't we all just do a zero down, a dollar down, or what do you think? I mean, do you think it's a viable option?

I think, as you just said, it does help People get into the property quicker. So initially it looks like you're really closing a lot of property. I, I think when people don't have any skin in the game, when they have not put anything down, that they're more likely to default or have issues making the payments. So I think it does look good in the beginning because everyone's signing up, oh, $300 down or $100 down or just your doc fee. But over time I think those have a higher tendency to default.

Yeah, I think that you might be right. But I love it when you call me Big Papa. Tate Litchfield. He might be, he might play devil's advocate here. He might love no money down. He might just want the customer. He might just want to build his customer list. I don't know.

You know, there's nothing wrong with taking that approach. It's not an approach I generally like to take simply because I am not seeing the market in a state where I'm sitting on properties for such a long period of time that I feel the need to give them away. But I know plenty of investors who are out there doing the super, super low, next to nothing down payment approach to the land business. And their objective is not to make a bunch of money on the down payment or even with the DOC fee. They're looking at the customer value. They understand that, hey, by doing so, I'm probably going to have an increase in defaults. But that's not a bad thing, right? Especially if I can get somebody who normally wouldn't have been a customer to make payments for a certain amount of time. Then we go through the process of the foreclosure. If they decide the property is not right for you, you reduce your cost basis and you turn around and you do this over and over and over again. I don't think there's anything wrong with that approach. Just make sure you have good systems in place. Right? You're going to want to make sure you have some sort of note servicing software, otherwise you're going to go nuts trying to remember who paid what and how much they're behind and that kind of thing, I. E. Geek pay. But look, not necessarily my cup of tea, but it could be yours and I've got no issues with it.

So you're told you, you're, you have no, you're completely agnostic to the, the business strategy of zero down, a dollar down.

Yeah, it's not for me. I've tried it. I didn't like it. But hey, if that's what you want to do and you're having success with it, go for it. Multiple ways to skin this cat.

Yeah. Why didn't you like it? Was it about capital recovery for you?

For me, it comes down to capital recovery. It also comes with some of the other things that come with that. Right. Like the questions, the back and forth communications. When I get a down payment in a doc fee, we're able to set the tone of the relationship going forward. On day one, hey, this is the way things work. When you don't have a big down payment, you tend to get somebody who might not have read the fine print. They might not understand what happens if they don't pay. Right. And I don't like to find myself in a situation where we're playing customer service with all these people calling them, reminding them, chasing them down for payments. That takes a lot of work. And honestly, it goes a little bit away from the way that we've set up our business because we're trying to reduce our workload, not increase it just for quick, easy, you know, unpredictable sales.

Yeah, that's, that's a good point. The technician, Eric Peterson. What are your thoughts on a zero down or a dollar down down payment?

I think that there's a time and place for everything. In other words, it might make sense on occasion. I don't think that it always makes sense. You're not going to find me going out and taking my entire inventory and marking it as zero down or a dollar down because in some cases it just doesn't make sense.

Right.

We might have more valuable properties. And to take zero down on that property is going to lock it up for a period of time at a risk, as everyone's kind of talking about. You know, when we, when we don't collect any money down, maybe we just collect a doc fee. Yeah, they've got the dock fee, but they really don't have any other skin in the game. So I like to look at the dollar down, zero down strategy. You know, maybe for the less expensive properties, I think it's, it's a good tactic to use because you're already in the bucket of. But maybe people that don't have a lot of money to put towards land. So if we can make it more affordable for them to get into by wiping out the down payment entirely and just asking for a dock fee, that might help us get the sale sooner and we have less at risk.

Right.

You know, maybe a cheaper property. We're paying a few hundred dollars, certainly less than $1,000 for that property. So, you know, it's not going to hurt our returns so much. And then the other place that I think it makes sense, at least in my business to do it on occasion is when we're going to have some kind of big sale or big offer to our buyers list and we want to really incentivize our existing customers, the people on our buyers list, to say, hey, you know what, we've got something special for you guys. We don't do this all the time, but look, for this period of time for these properties, whatever it is, we're willing to accept nothing down and maybe a dock fee. I think that if you blanketly apply that to all of your properties, you do run the risk of potentially looking a little desperate to your potential customers.

Right.

If everybody else out there on the market is asking for $100 down, $500 down, whatever that number might be in your given market and all your properties, you're out there trying to blow them out for zero down. Like, I don't know that that's the look you want to go out to the market with. If you do it with one or two here and there, I think that's okay. But that's my thought on it.

Yeah, I like it. I agree with you. The flexibility where we would ever want to make a blanket statement, you should never do this, where you should always do this. So I, I agree with, with almost everything you said, but I'm just an agreeable person, unlike Scott Todd, the irascible Scott Todd, that's most likely just going to take a very strong aggressive stance either way. Scott Todd.

No, I'm not gonna take an aggressive stance either way. Like for me, I mean, I agree with really everything that was said here. You know, like you, you do the low down payment, zero down payment, dollar down payment. And like there, there's. This is not my word for it, Mark. Right, like, and like this is not my word. But at a boot camp, somebody, some group, during the group exercise said that they were going to, on a particular scenario property that they were going to deploy the redneck default. Meaning, Meaning that it would go out there, they'd get a low down payment or zero down payment. I'm talking like a dollar or zero down. And the intent was that that buyer was not going to be a long term buyer. And I'll tell you, you know, like, I don't think that it, like I don't have any numbers per se and everybody can should do. Like if you want to try it, I'd say try it. But what you would probably find out Just if I had to guess, I'd say that most of the people that, that pay zero or $1 down, one, they may. You might be lucky to get four payments. You'd be extremely lucky, in my opinion, to get one payment, honestly. So you're, you're not doing anything but creating more work for yourself, Right? Because you're going to do all the paperwork. You're going to get a doc fee today and. Okay. Then you're going to pat yourself on the back like. Yes. And then a month from now, they're not going to pay. And then you got to go through the whole process of waiting two months to even try to get a payment. I would want a more solid buyer on there. Now, if that's part of your strategy, like, you're okay with that and you're just okay with collecting doc fees or, you know, four payment, up to four payments and done. Okay, then that's fine. That's a strategy to deploy. But I think that everybody's kind of said the same thing. If you want a more solid buyer with less work, then you kind of just wait. But if you want the fast sale and the hit, like, yay, look at what I did, you could get that hit, but you're just basically spending your tires, in my opinion. Just depends. Depends on what you're trying to achieve.

Yeah, I agree with everything that everybody said. I do think because you brought up the redneck default, we should define it via Jeff Foxworthy. So you might be a redneck if nothing under your Christmas tree is paid for. If you think recipe for disaster has something to do with your wife's chili. And, and if your wife's boss. Wait, no. Yeah, so he cranks out like 365 redneck jokes a year, by the way. Anyways, I don't want to get canceled because of Jeff Fox, really. So I'm not going to keep going on and on. But I do have an idea. Here's an idea that I want to run by you guys. So we're all familiar with dollar stores, correct? So if you're, if you've never been to a dollar store, you might not be a redneck, but if you have been to a dollar store, you'll see that there's amazing deals there. And it's also just kind of fun to go in and ask for a price check just to see the look on their face. But, you know, now dollar stores, actually not everything is just a dollar. They do have things for like more than a dollar. Like a dollar five, dollar, three A dollar. But basically the dollar store model is they buy items in bulk and then sell them. And I don't, I assume their margins are pretty good at these dollar stores. So it's not the worst brand strategy. If you're coming out of the gate and that is going to be your brand. I'm a dollar down on these properties or just in General, I'm the $5, $15. Like you're just making it so easy and irresistible. And you come in out of the gate knowing this is my brand, these are my people, I'm catering to this type of person. And you then really make sure that your systems and your service is geared towards doing the extra labor involved in getting those down payments and then working a little harder to make that experience good enough so that they're more likely to keep making monthly payments, lowering your cost basis, knowing that I'm going to get the property back, most likely, and then maybe I switch that to a larger down payment. And so it could be an interesting brand strategy. Number one, it could be an interesting way of just getting your cost basis lower and then figuring out how to, how to really make, you know, the profit on it. I don't know. But it's again, to Eric's point, to everyone's point, you want to be flexible in thinking about down payments. You want to be flexible in business and strategy in general, but certainly know if you do these things, the unintended consequences of doing it. Number one, you're going to have a, a less ideal buyer. Number two, because that person's going to be less ideal to Tate's point, they're going to be asking lots of questions, they're going to be less sophisticated and they are going to tax your team for service. Number three, you better have a good collection system in place. You know, shameless plug for geek pay IO first month free. By the way, set up your automations set. Forget it. System can always make more money, can't get more time. Anyways, I digress. But you want to have that in place. And number four, have a system then that you realize, okay, I'm going to have a cash flow issue here because of I'm not going to get my return to capital as fast as I would like if I'm catering to this buyer Persona. Unless you structure it in a way where it might be easy, an easy down payment, but then it's going to be a normal monthly payment or you're going to be collecting in the doc fee what would be a normal down payment. And so there's Lots of ways you can structure it. I think it's a marketing strategy that you could. That might be worth exploring more, depending on. On you. So those, those are my final thoughts. Eric, I'll give you the last word on this. I can't. I can't hear you.

You're on mute.

You're on mute.

Sorry I said I don't know that I have a last word. I feel like we've covered it pretty well.

Oh, okay. Yeah, I mean, I just thought you might have a good redneck joke too.

So no can do.

That was just like a lob.

He's not taking the bait.

He's not taking the bait at all. You're not taking the bait?

No, absolutely not.

Remember how I started this podcast? I said not in.

Not it. Well, we are at that point in the podcast now where we're going to tap Scott Todd for his tip of the week. A website, a resource, a book, something else actual for the art of passive income listeners go improve their businesses and prison lives. But before Scott does give his tip of the week, we have to give a shout out to our sponsor, which is flight school. Learn how the next 16 weeks can literally start transforming your life. Go up that mountain of land, investing safely, quickly, efficiently with Scott Todd, Azure Sherpa, who's done it thousands of times. You are going to solve not just your money problems, but your time problems in this business. And I know what you're thinking. Oh, the investment for flight school. Yeah. It's not going to cost you anything. Guaranteed. You're going to make back that money 180 days or less in terms or cash sales. Just show us your work. Learn more. Go to the landgeek.com training. Thelangeek.com training. Scott Todd, what is your tip of the week?

Hey, Terea, would you agree that, like, one of the big problems about Facebook is like people getting banned and kicked off and kicked off marketplace and all that other stuff? Yes, we could solve that problem. We could solve that problem. That'd be huge, right?

Not getting kicked off Facebook.

Yeah, like the marketplace. Like that kicked off your. Your marketing channel. Like, that's huge. Right? There's this marketing website you guys all need to learn about. It's called landmoto.com get a subscription. That's my tip of the week. Because you don't need more tips of the week. You don't need these little geeky websites. You have enough shiny object syndrome going on mail and market and I don't know, just. Just do the business, guys. You don't need all these tips of the week. I don't know why Mark wants to drown you at those tips of the week.

It's.

It's.

How do you do that, Mark?

It's one tip of the week. You know what? If you're not going to give Mark a good tip, I'm going to give a cool tip.

Mail Market and moto now marketing moto.com.

All right, my tip of the week is called.

Wow.

This is interesting.

Riveting.

This is interesting. There's so much AI Stuff that's going on right now. It's crazy.

So much shiny.

There's so many shiny objects. All right, so I. The ones that I just looked at, I don't love, but they're really cool. Eric, what's your favorite AI no, no, no, no, no, no, no, no, no, no.

Seriously, you said you. I give the tip.

Wait, wait, wait. Hold on.

Hold on, Eric.

Hold on.

That was nice.

I just didn't want to go very smooth, you know? Like, I didn't want. Like, the silence keeps going. All right, here it is.

So, Mark, you're telling me that you're just googling AI tips right now? Is that what you're doing right now, going through. It's not a tip if it hasn't been vetted, Right? Like, I was always under the impression that this was something that we were. That was making our lives better, not just the first thing that Google popped up with.

Right? Oh, my gosh. It's a good point.

What's your tip, man?

What's your tip?

You're not going to give a real tip, Scott? I will.

I just put it in the chat.

You really should have just let us go with Land Moto today.

Land Moto has made my life better. Like I said, when Scott Todd sells me a piece of property, it counts as a little extra because he could have sold it himself. Right? Like, he's. He did it for me. It's the greatest.

You gave us a blank screen, man. Auto GPT. There's nothing there except we're having to log in. It's up. Dude, this looks like I wouldn't put my information there and give it to, like, a hacker. Come on, man. For all we know, this is a backdoor TikTok.

All right, my tip of the week is going to be use ChatGPT. No, no, wait, wait, wait, wait, wait. Just let me finish. Use Chappie Chat GPT to improve your headlines when posting on landmoto.com. that is going to be my tip of the week. My also My tip of the week is don't cheap out on land Moto. When any. Honestly, like, don't get the free plan. Like, marketing is an investment.

Did you just Samsung Scott Todd's tip of the week? Did you just circle back to what we just discussed?

Look, all I. I say this stuff at boot camp, too. Marketing is an investment, not an expense.

Oh, buddy.

All right, we'll let that be your.

Look at how Red is, guys. He's feeling the heat right now.

Well, I'm looking at all these. These. I mean, you're right, though. Like, I should be recommending, like, sites I'm using, so.

Because that's a problem. Like, I got on, I went down the rabbit hole, and I finally just had to put it on pause because I'm like, I'm looking at introducing tools that they make my life. They don't make it better. Right? They don't make me more productive. Right now I'm using a tool for a task that I normally don't do, but because it's there now I'm doing what. Why do I care about writing books?

Right?

Like, that's one of the most common AI ones I see. It's like, write a children's book.

It's like, I don't.

I'm just make up a story with my kids. I don't need an AI to write a story for my kids. That's weird. I'll just do it myself. Plus, the one they generate is going to take, like, 30 minutes to read. I make one myself up, it takes like, two, and then it's bedtime.

Yeah, it's a good point. It's a good point. I don't know. There's something. There's something very scary and something very alluring about the future of AI, but I honestly think it's just like any other tool. And really, we people can just speculate. We have no idea what's going to happen. I'd like to think that we're just going to be more superhuman if we use it effectively, but it's also possible we just end up destroying ourselves in this process. I really don't know. It's too early to say, but it is exciting times. But anyways, it's the best time ever to be an entrepreneur. It really is. I'll definitely say that. All right, well, are we good? Teria's like, I can't believe this. This podcast is not done yet.

I think we're good.

All right. I want to thank the listeners to remind you the only way that we're going to continue to argue over silly AI tools if you do three little favors. Rate Follow Rate Review the podcast and a screenshot of that review. Supporthelankic.com I'm gonna send you for free a signed copy of Dirt Rich. Also, be on the lookout for signed copies of Dirt Rich 2 coming out very, very soon. Very exciting. All right, let's do this. One, two, three, let's Freedom Ring ring. All right, thanks everybody.

Thanks for listening to the Art of Passive Income podcast. Are you ready to learn how you can start building a passive income without renters, rehabs, renovations, or rodents? Schedule a free consultation@thelandgeek.com training let freedom ring.