Episode Transcript
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Speaker 1 (00:02):
All right, everybody. Hey, we are glad to have our
first speak here here. Join us on note Camp twenty
twenty two. This guy is a very knowledgeable real estate investor,
got a big heart, somebody that's involved with four real
estate club throughout the state. It's definitely got a servant
mindset and servant leadership mindset out there. So we're really
excited to have Derek domback from best Arii funding Group,
(00:22):
join us here on note Camp twenty twenty.
Speaker 2 (00:24):
So, good morning, Derek, Good morning Scott. Glad's the weather
up there, you guys as heat hot like everywhere else?
Well you know it.
Speaker 3 (00:33):
I've living in Wisconsin, so usually summer hits us on
a Tuesday and that's about it. So it's been pretty
nice lately, you know, seventies and comfortable.
Speaker 1 (00:44):
Don't get me getting me jealous on here with our
hundred degree whether you're done in Austin, text everything else.
Speaker 3 (00:48):
Fried, Yeah, I know, and I got. I actually owned
some bucking bulls, Scott, and they live in Texas, so
I'm very very informed on what's going on down.
Speaker 1 (00:58):
In your area exactly exactly, but well, you know what,
we'll take our we'll take our winners.
Speaker 2 (01:04):
Compared to you up there as it's.
Speaker 3 (01:07):
Yeah, there's there's reasons we travel a lot, especially in
the winter.
Speaker 1 (01:11):
Amen to that, brother, Well, hey man, I think you've
got a presentation lined up to kind of go through
some of the great things that you're doing up there,
and they share with their audience.
Speaker 2 (01:18):
Correct, Yeah, I do. I do.
Speaker 1 (01:22):
Three if you want to share your screen or go
from there, and then if you want to take questions
throughout or do you want to wait till the very end.
Speaker 3 (01:29):
So I really do prefer interaction along the way, like
I've got, I've got about five case studies. If we
get through one or two, I'm fine with that as
long as everybody's getting their questions answered. If we get
through all of them, we get through all of them.
Speaker 1 (01:42):
So well, then what I'll do is I'll jump off
here if you want to share your screen, and I'll
monitor the chat roll and jump in and be here all.
Speaker 2 (01:48):
Along with you and keep the interaction going forbody. Yeah,
thank you, great, be great.
Speaker 3 (01:55):
All right, let's see here, I gotta get this thing
to go to a slide show.
Speaker 2 (02:01):
Come here we go, all right, so you can see that,
all right, Scott.
Speaker 3 (02:07):
Okay, So basically Scott and I were chatting a while
back when he asked me to to, you know, speak
with with the audience today and and you know, one
of the thing that kind of hit was, well, what's
going on in the market and what do you do?
Because nobody can get their offers accepted and there's there's
so much competition out there. So I started telling them
(02:29):
about some of the deals that I've done, and and
and guys, these deals are all deals that you know
I've done in the last market that's been really busy, right,
and like these are ten year old deals. Scott, can
can you do me a favor?
Speaker 2 (02:45):
Yes, sir? What? Yeah? Are we able to uh see
our audience at all?
Speaker 1 (02:52):
Yeah, it should be able to. If they able to
turn their cameras on, we can flip it to the
view for sure. Let me let me do that here
real fast.
Speaker 3 (02:59):
And here's why I hate talking to myself and staring
at myself in a computer like it's really really boring
for me. And I just I love interacting with people.
But if I can see the audience, anybody that's willing
to share their Sunday Morning view, it definitely makes it
easier for me too.
Speaker 2 (03:17):
Ha. Here the show video.
Speaker 1 (03:21):
Let's see here, guys, if you want to turn your
cameras on so Derek can see you, I just put
it over to the different view on that.
Speaker 2 (03:35):
Let's see here. Well, I'll be here. You can speak
to me.
Speaker 3 (03:44):
I'm gonna talk to you, Scott. I talk to you
for an hour and a half. No, I seriously, if
anybody's ever had to present on zoom and uh and
you don't have something else to look at but yourself,
it's it's interesting.
Speaker 2 (03:58):
It's definitely more interesting. So he says, he's in his
pj's picking breakfast. He's not gone.
Speaker 3 (04:06):
Well, you guys don't know what's on underneath this nice shirt,
you know, so below it, I should say. But so, anyways,
Scott and I were talking about, you know, some of
the stuff that we've been doing, and I said, well,
the big thing for us is we like to give
you know, our sellers multiple options and multiple offers. And
in my background, I've been around since two thousand and
(04:29):
three and I used to just use bank financing, and
all I ever could do was make you know, cash offers,
not cash offers, financed offers. And ultimately, when I got
through the downturn of two thousand and seven, which really sucked.
And you know, my wife and I got our butts kicked.
We had to get creative. And what I realized was
(04:52):
creative should have been the first thing we did, not
the backup plan. To me, a bank should be the
backup plan, or even a cash offer should be the
backup plan, because there's so many other great ways to
buy or control property, and that's important. It's not just
about actually owning it, and you're going to see that
(05:14):
in the first couple of case studies that I do.
It's all about control and helping people one hundred and
twenty five percent. I don't talk about my needs when
I'm negotiating with a seller. All I'm focused on is
how I can solve their real estate problem, and how
do I do that that makes sense for all of us.
(05:37):
So this first one, Scott, that I'm going to jump into.
These are all in proximity to where I live in Wisconsin.
I do have a case study in Texas. I don't
know if we'll get to it or not, but I
did a deal in Texas a while back, which was interesting.
But Scott, would you agree that that's not a bad
(05:58):
looking house exactly?
Speaker 1 (06:00):
That's a pretty cookie cutter. Get to look at a
little ranch house.
Speaker 3 (06:05):
Yeah, three bedroom, two bath, cookie cutter house. This actually
sits on about five acres of land. This is about
twenty minutes from where I live now, to give you
all an idea where I live. The median price points
are about one hundred and fifty thousand to two hundred
thousand dollars for a cookie cutter house when you add
(06:26):
some acreage, any kind of extracurricular you know, things like
this one had a dog kennel actually like a professional
dog kennel for multiple dogs. So this one, in after
repair of value, would have been worth about two hundred
and twenty five thousand dollars. Except the challenge with this
(06:49):
one was the guy had one hundred and thirty two
thousand dollars worth of debt on two different notes, two
different mortgages.
Speaker 2 (07:00):
And his name was Randy, so I'll just use his
first name. It's easier.
Speaker 3 (07:04):
Randy wanted to retire from his job, and literally within
days after retiring, he wanted to move from Wisconsin to
South Dakota because he had met some gal there and
you know, he was going to retire and go work
on her ranch.
Speaker 2 (07:20):
And just hang out.
Speaker 3 (07:21):
And his biggest challenge with this house number one, he
didn't want to deal with thrillters. He didn't want to
stick any money into the house that would come up
on any kind of inspection reports from a home inspector.
And he didn't want a bunch of people walking through
his house. You know that he had to and he
(07:41):
was a bachelor at this point, or at least his
girlfriend lived in a different state, so he was the
only person living in his house to wear and tear
was minimal and it wasn't cluttered by any.
Speaker 2 (07:52):
Means, but it was dated. Parts of it were updated.
Speaker 3 (07:56):
The kitchen had been updated within about ten years, but
the bathrooms still looked like the seventies.
Speaker 2 (08:02):
So he had a pinker and avocado green.
Speaker 3 (08:05):
It had Yeah, it had some wallpaper, had some issues.
So when I looked at this and I said, well,
if I did a full renovation on it, I'm going
to spend about forty thousand dollars to update this property
to make it worth two hundred and twenty five thousand dollars.
That was made my cash offer in the one twenty range.
And I'm going to use round numbers through this whole
(08:26):
presentation because it's just you know, simple for me. So
for Randy one hundred and twenty thousand dollars, he would
have to you know, bring about ten or twelve thousand
dollars to the table to close deal. And he wasn't
really excited about that, as most sellers aren't, right, but
it still didn't solve his problem. He wanted to retire,
(08:49):
he wanted to leave, and he didn't want to have
to deal with realtors. And the other problem. If you
look at the leaves on the trees. This was entering
the fall of the year, so fairly large yard. It
needs to be maintained. You can see the grass now,
but there was about four inches of leaves all over
that yard that had.
Speaker 2 (09:09):
To be taken care of.
Speaker 3 (09:10):
And then shortly thereafter we get this thing called snow
and that has to be taken care of.
Speaker 2 (09:14):
So picture this.
Speaker 3 (09:15):
If he would have just listed with a real estate
agent and he moved to South Dakota, the real estate
agent is not going to maintain the property. They may
hire somebody to do snow removal, they may hire somebody
to do law care, but this is about ten miles
from the city, so those services get harder and harder
to find, and more and more expensive. So I said
(09:38):
to Randy, I said, okay, let's look at other possibilities.
I could buy your property for cash. You said, that
doesn't work. We could do a joint venture where I
bring the money to rehab the property, we agree upon
a sale price for you right now, and then we
split the proceeds when I sell it. By the way, Scott,
(10:00):
I don't recommend that with civilians, civilians being non investors.
But it was actually a conversation that he or a
question he brought up. Otherwise I would not have brought
that one up, sure, And I said, or I could
put an option in place to purchase the property, and
(10:21):
you can see on the screen for one hundred and
fifty thousand dollars, which is what he told me is
his walkaway number. He would walk away for one hundred
and fifty thousand. And I said, the problem is I
don't now want to stick forty thousand dollars of rehab
into a property that's going to be worth two twenty
five and it's just too much risk. So I structure
(10:46):
it in a way that was me trying to get
as close to retail. I guess we'll call it wholetale
pricing as I could, and I explained it to Randy
in the way that I'm going to make my profit
off of what I sell your property for over and
above the one point fifty. Are you okay with that?
(11:08):
Because guys, he has to be okay with it.
Speaker 2 (11:11):
Because he's gonna know.
Speaker 3 (11:12):
I mean, I'm gonna list this property on the MLS,
and I'll tell you, guys how in a little bit
I'm gonna list it on the MLS and he's gonna
see what I'm selling it for. I'm not trying to
hide anything from him at all. It's full disclosure. So
he agreed. He said, okay, I'll give you you know,
I'll accept one hundred and fifty.
Speaker 2 (11:31):
But how long is this going to take? Now?
Speaker 3 (11:34):
When we're doing options, we as the investor, we want
to try and get as long of a period of
time as we can, and the seller usually wants a
short of a period of time as we can. I
typically want a year to ten years on my deals
at least.
Speaker 2 (11:51):
But he was not having it.
Speaker 3 (11:53):
He said, I don't really want this to go anymore
than it has to. And I said, Randy, if you
are going to list it with a real estate agent
along would that listing be? And the typical answer is
six months. So I said, okay, if I can get
this deal done within six months and different than a
real estate agent, I'm going to stick my own money
(12:14):
into it and do what I feel is necessary to
make it sellable, and I'm going to take care of
all the maintenance, the long care, snow removal. If it
gets to that point, is that a better deal for
him than listing it with a real estate agent? And
he's got he already knows what his price is going
to be, his sales price. And if I fail, six
(12:36):
months goes by, he has an improved property and I'm
out whatever I spent out of pocket. But he's in
a better position than he was the day I met him,
and and he's he liked that, you know, he liked
the fact that I was going to actually have some
of my own money in it and skin in the
game versus a real turn.
Speaker 2 (12:58):
Then we had this other portion of this though, was
how do I legally have the right to use.
Speaker 3 (13:04):
The property and not to live in but use being
improve it, be inside of it, spend time there. Well,
it's utilizing a lease, right, So we had to put
a lease in place. So this just turns this into
a lease option, right. I mean it's early on Sunday morning,
so I missed a step I should have said earlier
(13:25):
on Scott. Creative deal structuring, in my definition, is stacking
different strategies. Okay, So a lease is a strategy and
option is a strategy. Purchasing subject to is a strategy.
(13:45):
You know, originating a note is a strategy. All these
in strategies. But that's not creative. Creative is using the
different strategies, stacking them and solving a problem. So I
said to him, I said, okay, great, I need a
lease so that I have the right to use the property,
(14:06):
and we need to agree upon you know, what do
you want for a monthly rent for lease? And he
was a shrewd negotiator, Scott. He came up with a
dollar amount of zero. I mean, he really beat me
up on it.
Speaker 2 (14:22):
He did.
Speaker 3 (14:24):
I did have to take over the utilities, which there
was a pro paining tank because this was a real
property and U so that was already seventy five percent full,
so there's no expense there for me and the electric
the electric bill which averaged about seventy five dollars a month.
Speaker 2 (14:43):
I will tell you that. A couple of days later, he.
Speaker 3 (14:45):
Did come back and strong armed me and said, I'd
really like to be able to collect, you know, at
least enough to cover the real estate taxes, which was
two hundred and twenty five.
Speaker 2 (14:55):
Dollars a month. So I did.
Speaker 3 (14:57):
I did settle on two twenty five rent for a
three to two on five acres for six months, plus.
Speaker 2 (15:05):
Utilities plus utility. Scott, h that's a that's a tough vibe, man.
I don't know if you'd be able to take care
of that.
Speaker 3 (15:10):
Man, I know, right right. So so that was the deal,
and we we put it together. Now I'll go through
this the rest of the numbers, and then I'm going
to circle back to a couple of things that I
think are really key to protect yourself. So, you know,
I had a two hundred and twenty five dollars a
(15:31):
month lease Randy. We signed the documents. Now, the documents
were at lease, an option, two separate documents, a power
of attorney, and a mortgage, and the mortgage was given
from Randy to me securing my option. Okay, Scott, not
(15:57):
a lot of people ever talk about this. And I
don't know if anybody that you've ever had in your
circle have talked about securing an option using a mortgage
or a deed of trust, depending on your state. But
I've had multiple conversations with attorneys, including Randy's attorney, who
are clueless as to why we would want to do this.
(16:20):
And part of this deal was Randy did want to
have a conference call with his attorney, and his attorney
adamantly said, Randy, I cannot advise you to pledge a
mortgage to Derek to secure this option. And I said,
not a problem. It's been great meeting you all.
Speaker 2 (16:43):
I'm not moving.
Speaker 3 (16:44):
Forward without it, so it's take it or leave it.
And Randy hung up with the attorney and myself and
called me within three minutes and said, let's do this deal.
And the reason is I love this line, Scott. When
somebody wants to talk to their accountants or their attorney,
you have no choice. You have to let them do
(17:05):
it because if you don't, they're.
Speaker 2 (17:07):
Gonna call you, you know, crooked yep.
Speaker 3 (17:11):
So when they come back, not yet, but when they
come back and say, my accountant said I shouldn't do this.
My attorney said I shouldn't do this. I just say
to them, great, did your attorney give you any other
solutions to your problem? Or just tell you to say
no to mine? Right, And that flips the script and
(17:31):
most of the time they'll still move forward. The reason
that I really strongly advise putting a mortgage in place.
And I don't know if there's any questions in the
chat on this or not, because usually I get questions
at this point.
Speaker 1 (17:47):
But it's to like that, Oh, that sounds risky. You
got some different comments in the chat roll here. I
like that, that's creative, all that kind of stuff.
Speaker 3 (17:58):
Okay, I'll tell I'll tell why this is not risky
for us at all. This is this is super important
for us. A mortgage is nothing more than a security instrument.
And when I say mortgage, guys, it's the same as
you know, dita trust. Depending on your state, I'm just
gonna use the term mortgage. So, a mortgage secures a promise,
it secures a pledge. Typically it's used to secure a note,
(18:22):
but it can also secure an option. It can secure
a lease, It could secure a purchase contract that almost
would never happen.
Speaker 2 (18:30):
But it could.
Speaker 3 (18:31):
It's just saying if the agreement is breached, the property
is collateral to take back to you know, compensate for
the breach of the agreement. Why would a seller not
want to follow through on our agreement to sell me
the property for one hundred and fifty thousand dollars. Well,
(18:55):
because I'm going to sell it for two hundred thousand
dollars and they're gonna see this, and I'm open about it.
I'm not hiding anything. But people sometimes get butt hurt
after the fact, yep. And you have to protect yourself
because you're going to be sticky money into this property.
You may have given them a large amount of money
as an option consideration payment. So if Randy decided, hey,
(19:21):
I don't want to sell you the house anymore like
we agreed in the option, and I did what every
attorney tells you to do, which is record your option,
which you can do, should do.
Speaker 2 (19:35):
I don't. Instead, I record the mortgage. And here's why.
Speaker 3 (19:40):
If you go and record the option of public record,
what does everybody in an entire world get to see
what you.
Speaker 2 (19:46):
Haven't under a contract for? What do you have that for?
Speaker 3 (19:49):
And how long you have to buy it? So if
I record this option and people saw that I only
had six months to buy it for one point fifty,
that could be a problem. The next thing is if
Randy sells this property to somebody else, and it typically
goes through a title company or a closing attorney, and
(20:10):
they do a title search. Options have been missed in
title searches because people at work in these offices aren't
necessarily trained to look for options. They're trained to look
for mortgages and deeds of trust for sure. So if
and it's rare, I mean it's a rare occasion. But
if that option got missed and Randy was actually able
(20:32):
to sell that property to somebody else, what are my
odds of ever reversing that sale?
Speaker 2 (20:40):
Very slim.
Speaker 3 (20:41):
Now, I may be able to get a judgment. I
may be able to get you know, go back on
the insurance, the title insurance, all these things. I may
get a monetary judgment. That does not mean I'm gonna
get paid. That just means I'm going to get a judgment. Okay,
But I don't want the judgment. I don't want that money.
I want the property. That was the whole agreement. I
(21:05):
had a right to buy that property and do with
it as I wish. Now we go to court and
I'm filing a lawsuit against Randy, and we now end
up in front of a judge, and the judge is
looking at contract law, and the judge is reading and
(21:26):
using his opinion on what we meant. What was the
intention at the time that we signed the option, and
it could be one hundred and eighty degrees from what
we really wanted as intentions doesn't matter.
Speaker 2 (21:40):
He's the judge.
Speaker 3 (21:40):
He's the judge, right, So we just end up in
this coin toss situation by only recording an option. If
something goes bad, let's flip the to the other side
of this coin. If I have a mortgage that Randy
signed pledging his property as collateral number one, I'm gonna
(22:02):
be in a junior position behind any leanholder ahead of me.
So you always, before doing options, want to get a
title search done for sure, so you know where your
option is sitting in line. And I have no problem,
you know, having this property subject to two mortgages ahead
(22:22):
of me. That would be no different than if I
bought it subject to their mortgages. But you always want
to know that if we got into the situation of
this lawsuit.
Speaker 2 (22:33):
And I lose, I'm out, but I win.
Speaker 3 (22:38):
They may just give me back what I had taken
out of my pocket, which is another good point. But
if I had the mortgage, I could start a foreclosure action, okay,
and I could take this property away from Randy and
potentially Randy gets zero proceeds if I do this. I've
(23:00):
never had to even threaten this, by the way, so
don't think that this is something that happens, but it's
a great tool to say to Randy if he's starting
to get a little bit skittish, or you feel like
something's going up on. And here's how you may find
out if something's going on. You get a random phone call.
(23:21):
This did happen to me once, random phone call from
a title company or a bank asking you.
Speaker 2 (23:26):
What's your mortgage payoff?
Speaker 3 (23:30):
Well, that's interesting, Gee, what do I want my mortgage
payoff to be? Because it can be anything I want. Now,
Randy's either trying to sell it or refinance it. And
do we want Randy to refinance it in excess of
our purchase price? No, because then we go to exercise
(23:53):
our option if he doesn't. If he goes and puts
two hundred thousand dollars worth of debt against one hundred
and fifty thousand dollars sale and he doesn't have the
fifty g and when we want exercise. Now we have
another issue. Right, So we get that phone call from
the title company or that new lender that's trying to
put dead in place because we hold a mortgage. Again,
(24:14):
if we had an option recorded, would we still get
that same phone call?
Speaker 2 (24:19):
Maybe?
Speaker 3 (24:20):
But I guarantee you're getting that phone call if you've
got a mortgage in place. Okay, any questions on any
of that at all, Scott.
Speaker 2 (24:30):
You're you're muted. You my apology? Yeah, what's the terms
of the mortgage that you put on there?
Speaker 3 (24:36):
So that the terms of the mortgage are, if if
Randy does not sell me the property per our agreement,
I have a right to foreclose. That puts Randy in default. Okay.
The other the other mortgage clauses that you would see
in a mortgage securing a note are not in this mortgage.
(25:00):
This is a one page mortgage. It's very very simple, okay.
Speaker 1 (25:03):
Bit that's what of the questions where we're like, is
it the same terms as the underlying debt and you're
just putting a basically putting the mortgage on here, basically
the one fifty there.
Speaker 3 (25:12):
Right, because the underlying debt. They have other factors involved,
like if Randy doesn't pay the real estate taxes, they
can foreclose. If he doesn't have insurance, they can foreclose.
You know, we don't have all those clauses. Although we
would want Randy to add us as an additional insured
in his insurance policy as a mortgage a lender essentially,
(25:38):
not as not as your should. I should take that back, Scott.
It would not be an additional insured. It would be
another mortgage holder. We should go on his insurance policy
because we stand to lose if the property burns to
the ground. Okay, So any other questions on the mortgage
aspect of this, Randy.
Speaker 1 (25:59):
So see it's okay, So you're putting a third lean
on the house basically, but this one allows him to
foreclose if Brandy won't close.
Speaker 3 (26:06):
David asked, yes, correct for any reason if he breaches
the agreement to sell you the property within the agreed
upon amount of time at the one fifty. What's the
timeframe on the mortgage. It's six months. It goes right
along with the option and I will tell you that
one of his attorney's biggest problems was he says, how
(26:29):
do we guarantee that you're going to satisfy this mortgage?
And I said, draft a satisfaction and keep it in
your office in your ESTRO account, and I'll sign it
right now pre closing and so as soon as done.
And that still didn't satisfy the attorney, but it shut
him up.
Speaker 1 (26:48):
You know, hey, we're very good side. Like you know,
that's like a dalaalon s grow basically, you know, like
what's wrong with that? We'll date it, you know, sign it,
and you just got to exercise it when we're ready.
Speaker 3 (27:01):
Scott at the risk of, you know, upsetting somebody in
your audience, I'm going to say this anyways. Attorneys, accountants,
professionals that have a lot of education do not like
getting put in their place. They think their shit doesn't think.
Ye I have a PhD, a public high school diploma,
(27:22):
and I set a lot of attorneys back on their heels,
not because I'm better or smarter, but because I'm open
to learning, and they're not open to learning from somebody
that has, in their eyes, less education. So we just
have to know our I mean I've studied a lot
of this stuff. I don't need a lat agree to
(27:44):
study one piece of what works in our business.
Speaker 2 (27:48):
Right.
Speaker 1 (27:49):
And I'm so glad you said that, because most, like
you said, those individuals there book learned, they're not always
real life learned. They don't have a diploma from school.
Hard knocks are common sense, you know what I mean.
And most in which he has hit so many realtors,
their first thing they don't understand this is to say, well,
that's got to be illegal. That's their thing, and no,
(28:09):
there's nothing illegal about.
Speaker 2 (28:10):
What we're doing.
Speaker 1 (28:11):
This is completely legit legal. It's in our favor. If
you don't fall through with this, it's in our favor.
We're doing this to protect ourselves well. And the other
rebuttal to an attorney in this particular scenario would be,
why would Randy not pledge a mortgage? Is he not
planning and following through.
Speaker 3 (28:28):
With our adrea exactly, And again they don't know how
to respond to that. Their job is to protect a client.
I respect that one hundred percent. But again, I'm solving
Randy's problems. I'm meeting every one of his needs. He
told me he wanted the attorney is not. The attorney's
not giving Randy any solutions on how he can pick
(28:48):
up and move within days to South Dakota to be
with the woman he loves and not.
Speaker 2 (28:53):
Have to deal with the house. That's right.
Speaker 3 (28:55):
So again we're just problem solving. We're not taking advantage
of anybody's ad situations. I'm not taking advantage of Randy
in any way, shape or form. He's getting what he
asked for.
Speaker 2 (29:06):
So so.
Speaker 3 (29:09):
The last piece of our documentation was the power of attorney. Now,
this is a durable power of attorney for the property only,
and you have to explain that to the seller, you know,
maybe more than once, and just say, this gives me
the right to make decisions on your behalf for the
property that are in your best interest, including selling the property.
(29:34):
I can sign the deed, I can, you know, talk
to the banks if there's debt. I can talk to
the tax authority for real estate taxes. All the things
that he would normally be able to do. Why because
he's moving out of state, right, I gotta be able
to have the control of this. And you're gonna see
in a second how this came into play. Now, one
(29:55):
caveat I found out could bite you. You have got
to be able to prove that that person is still alive,
because your power of attorney dies with.
Speaker 2 (30:05):
The death of the individual.
Speaker 3 (30:07):
So on the Texas deal, which we likely won't get to,
that one could have bit me pretty hard because that
particular seller was supposedly leaving Texas and going back to
help some family in Mexico, and I would likely not
have been able to prove that he was still alive
(30:28):
if I was asked. But so Randy, everything went good.
He retired, we signed the documents. Six days later, he
moves out of the house, leaves for South Dakota, and
we went in and spent two thousand dollars to fix
(30:49):
what needed to be fixed, and that included we had
some seepage coming into the basement, which we took care of.
If you look at the picture close enough, you can
see rain utters on the house. He had actually put
those on thirty days prior to us buying this property.
He had already solved ninety nine percent of his moisture
issue in his basement. We just had to do a
(31:11):
little bit of earthwork and do some pitching of the grade,
and then we painted the entire basement, including the walls
and the floor because they were stained water stained. Did
a deep clean on the house, brought in professional carpet cleaners,
things of that nature. Did the yard work in landscaping.
Five days of labor two thousand dollars total including labor
(31:34):
and material, and we listed this property on MLS for
two hundred thousand dollars. We had fourteen showings scheduled within
the first two hours. We accepted the very first offer
that we got because it was my real estate broker's
friends that were looking for a house and they gave me.
Speaker 2 (31:55):
We could have gotten a bidding war. I could have
got another ten.
Speaker 3 (31:57):
Thousand dollars for this house, but they were you know,
we did it legit. It hit the MLS at four o'clock.
They're showing was scheduled at five. There literally was people
parked at the end of the driveway for the next
showing as we were signing a contract. And but they
were a great young couple, good financing, no no inspections,
(32:18):
everything you'd want. They actually were family friends of Randy
and never knew that Randy would ever sell his house,
right because they don't talk. We we do off you know,
off market deals. Nobody ever knew the house was for sale.
Randy was actually very happy that this young couple ended
(32:38):
up with the house, even though he got a lot
less for that property. He was tickled to death. But
here's where the power of attorney comes into place. Got
I signed the listing contract as POA for Randy, and
Randy directly sold the property to this young couple. I
(33:02):
did not exercise my option, nor did I double close,
which is.
Speaker 2 (33:08):
What you would one way.
Speaker 3 (33:09):
That you could do this, Okay, Instead, and I sold
it as POA from Randy to this young couple. I
got paid on the closing statement as a mortgage payoff. Okay,
where does this really come into play? If that couple
(33:29):
is using FHA financing and there is title seasoning required,
I could not double clothes. It would screw up their financing,
Their underwriting would kick out their loan. The beauty with
using the POA is when the underwriting's reading the title report,
it shows Randy as the owner of record, not Derek. Right,
(33:50):
So we don't have to explain anything. If I was
double closing, They're going to have a contract, you know,
Derek selling it to them, and then the title work
comes back showing some guy named Randy on title, Well,
what's what's going on? All these things have to be
explained to underwriting and the loans get kicked out.
Speaker 2 (34:10):
So there's a ninety day seasoning on the flip rule
with traditional financing a lot of cases. So yeah, it's yeah.
Speaker 3 (34:17):
Especially with the government backed type of loans. If it's
a local credit union or bank, you can go in
explain the situation. They probably won't care. But so this
really works well. I never owned the property and never
took deed to this property. We had two thousand dollars
into it in five days. I met thirty six thousand
(34:37):
dollars on this property and I never owned it. Now
it took him twenty eight more days to close. So
start to finish five days on the market for one
plus another twenty eight whatever. That adds up to thirty
six odd days whatever. That is thirty six thousand dollars
(34:57):
profit on a two thousand dollars out of pocket. What's
that ROI? The answer is enough, it's enough. Yeah, who cares?
Speaker 2 (35:09):
Right?
Speaker 3 (35:09):
And we we solved everybody's problems. Randy one, we won.
His attorney lost, but we won the end buyers won.
My real estate broker friend won. Everybody got their profits
and we never owned the property.
Speaker 2 (35:26):
So and that's a great question.
Speaker 1 (35:30):
Yeah, because you know Randy, don't You said, Randy don't
real Church, he didn't really want to deal whether he
was more more interested in in in love and love
one in this situation.
Speaker 3 (35:42):
I love that he loves it too or wanted love right.
Speaker 1 (35:47):
In fact, you made him, motivated him to want to
work with you versus having to go through all the
other things.
Speaker 2 (35:52):
And he solved an issue. That's one of the greatest
things you got paid to solve an issue. Yeah. Absolutely,
did anybody got any questions to chat on that one? Scott?
Speaker 1 (36:01):
Let's see here nice David asked the question why don't
why don't all mortgages have a power of attorney too?
Speaker 3 (36:10):
Well, the mortgage isn't the reason for the power of attorney.
The reason for the power attorney is because through the
option phase, I need to be able to know that
I can make decisions on his behalf even if I
had never listed it and sold it, you know, as
his POA. Let's say I wanted to keep this property
(36:31):
and turn into a rental. That would change the option period.
But let's say that I lease optioned this property and
I was going to sublease it to a tenant. I
may have to deal with code enforcement. I may have
to deal with one hundred different scenarios.
Speaker 2 (36:47):
Yep. Right.
Speaker 3 (36:49):
How do I know that Randy puts me on his
insurance policy to protect me? As I mentioned earlier in
this case study, well as POA, I can call his
insurance company mcdan. I'm sure that I'm on that insurance policy.
All these things are there to protect you. And oh,
by the way, we're taking it off Randy's plates. Don't
worry about Randy. I'll call your insurance guy. What's his
(37:11):
name and number? Right, it's all about helping him, but
protecting us along the way.
Speaker 2 (37:17):
Yep, you, Well, that's the think. It's when people move on,
it's really hard to get him to take action in
anatomic fashion. It's on their comfort level.
Speaker 1 (37:26):
And then it's a little bit well, I thought I
turned this over to you to get everything.
Speaker 2 (37:29):
Now now I got to call this person and call
this person and do this stuff. I don't want to
do that.
Speaker 1 (37:33):
I want I want to go out and get the
get some lovin call me mcleven.
Speaker 3 (37:37):
Absolutely absolutely, in South Dakota of all places, so.
Speaker 2 (37:45):
So that that's that one.
Speaker 3 (37:46):
I can jump to the next one if if everybody's
got their questions answered.
Speaker 2 (37:49):
Scott, yeah, I think so let's go ahead. Let's good
on the deal. North two. All right, So this is
a cute little house. So this city.
Speaker 3 (37:59):
To give you some person, there's about one hundred thousand
population in this city. A lot of these forties and
fifties and sixties homes that were built, you know, around
the wartime, and a lot of them that are you know,
I've been halfway updated, but they still need some love.
And these turn into rental properties, very common. So this gentleman,
(38:20):
he was seventy years old, he had bought this property
and he bought it for fifty five thousand dollars six
years prior to us doing this deal. I started this
deal about let's see, two and a half years ago
is when I did this deal. So I made a
(38:44):
three tiered offer, and the first offer was thirty four
thousand dollars cash, The second offer was fifty five thousand
dollars at five percent interest amortized over twenty years, and
the third offer was seventy thousand dollars zero interest payments
(39:07):
of three fifty Okay, why does that? Why is that important?
He was charging not enough rent to start with, but
his cash flow every month, Now this was free and clear,
but his cash flow was about two hundred and seventy
five dollars a month after his taxes insurance. By the way,
(39:27):
that's not including maintenance or anything else, you know, actual expenses.
In his mind, he was cash flowing two seventy five
To the rest of us.
Speaker 2 (39:35):
We all know better.
Speaker 3 (39:36):
He wasn't hardly cash flowing anything because he was self
managing and had to deal with, you know, the maintenance items.
He had the same tenant for the entire six years,
which is why he didn't want to raise rents. He's
charging six fifty for rent for a three bedroom, two
bath house that needed a ten thousand dollars renovation. So
(40:01):
when we stepped into this, I was looking at this saying,
if I stick ten grand.
Speaker 2 (40:06):
In this house, it'll be worth about.
Speaker 3 (40:10):
One hundred one hundred and five. Okay, not a bad deal.
I mean again, in this neighborhood, one car garage that
that should rent for about one thousand dollars a month.
So if I was into it for seventy to eighty,
I'd be okay with that. But the cash offer is
(40:33):
if I'm gonna flip it, right, so thirty four thousand
dollars cash and I'm gonna stick ten grand into it.
Typically I would probably do that deal and stick twenty
grand into it, because if I was going to do
a full flip, I'm going to do a lot more
to it. But I'm looking at this as I want
to hold this property and rent it out. So I'm
(40:55):
talking with him and he says, well, I really need
to run this past my son in law, who is
a financial advisor. I thought, oh, here we go. This
is going to be great. And as you can imagine,
financial advisor who only deals with stocks and mutual funds
has no clue about real estate, is telling him, absolutely,
(41:17):
you should not do this deal with zero interest. Why
would you ever do that? That's crazy. And I said
to him, I said, okay, Well, for me, I am
happy with any one of these three offers because the
net result is about the same. But for you, seventy
(41:39):
thousand dollars at zero percent interest keeps more money in
your pocket. Because of Uncle Sam and how things are
taxed now, I never give anybody tax advice, and I'm
not going to give your listeners. Tax advice, you know,
and again I have a PhD. What do I know
about taxes? But I know that even if he got
(42:03):
hit with imputed interest, he's still going to be at
a much better scenario with the seventy thousand dollars. And
it raises my basis and the property as well. When
I'm get ready to sell the property, which I like,
I lose a mortgage interest deduction because there's no interest,
but I gain a higher tax basis when I sell
(42:26):
the property. If I sell it short term or long term,
that's still important to me. Okay, So ultimately my payments
in those couple offers were going to be in the
three twenty five to three fifty range. He puts more
money in his pocket each month now with zero hassles
(42:48):
of management, and that's really all his goal was. He
did not want a lump sum of money some of money.
He wanted the monthly revenue, and he was concerned about
what happens if he dies. And he said, Okay, I
don't love putting balloons in any of my structures if
(43:09):
I don't have to, But he did want a three
year balloon payment. And Scott, what do you think about balloons.
I mean, you're the note guy, what do you what
do you feel about balloons? You're you're still muted.
Speaker 2 (43:25):
They don't. They don't bother me. As long as they're
far enough out.
Speaker 1 (43:27):
They're usually pretty enough to renegotiate if I need to
extend a year or two. But usually I do a
balloon five to ten years, and I'm usually going to
be out of the deal by that point, or have
it restructured or to some other things.
Speaker 2 (43:38):
But that's what I like to do in there.
Speaker 1 (43:40):
I mean, you know, this is we're buying a lot,
you know under financial stuff. That's what I that's what
I want. But you know that they don't. They don't
bother me at all. But you know, everybody's a little
bit different than what they want to do and what
their goals are long term for an asset, you know
what I mean. So you said that you could renegotiate
him and get them extended possible.
Speaker 2 (44:00):
Right, yeah, exactly? Oh yeah all the time.
Speaker 1 (44:03):
Okay, Yeah, so we'll come and say, you know, like
we had to come and say, yeah, hey, I need
can I REDEU send us out, I pay you a
point or we adjust the terms a little bit. You
know it's pretty easy to do.
Speaker 3 (44:13):
So it's almost like we rehearse this, but we didn't, okay,
because I want to structure that extension from the get go,
right from the jump. And here's how you do it.
I just said to him, I said, okay, I understand that,
and agree to a three year balloon. I got no
problem with that. My goal is to put a person
(44:34):
in here on a rent to own or a lease option.
Actually more than a rent to own, a lease option.
And my lease options are structured to be one to
two year deals, but sometimes those fall apart, and I
got to start over with a new lease option. And
I'm saying this to the seller, right, And I said,
if I got to that three year window and it's
(44:57):
it's the windows closed, it's time to pay the balloon.
And there's something beyond my control. We could be in
the middle of a war. We could be you know,
have an election cycle that doesn't go well. Always blame
it on things beyond your control. Right, we could have COVID.
This was before COVID actually, so this would have been
(45:18):
several months before COVID is when I did this purchase.
And I said, in that event, something happens I can't
pay you off.
Speaker 2 (45:28):
Do you want the house back?
Speaker 3 (45:30):
And ninety nine point nine percent of the time their
answer will be no. There is the rare occasion they
will say yes, But as long as they say no,
it's super easy to get an extension because you just
say to them, listen, mister seller, we're in really good
communication right now. We know each other, we like each other,
(45:52):
we trust each other. We have to grow that trust
over time as I make payments to you. But if
I live up to my of the agreement, would you
have any reason to believe that I'm not going to
pay you longer term? Can we not figure out an
extension right now where I give you X you know,
(46:12):
and it might be I'll give you five thousand dollars
towards the It all comes off the principle, and then
I get another three years, or I get another five
years or whatever. So you can take almost without fail,
you can take these balloon deals from the get go
and get twice the amount of time that they wanted
for a balloon, almost without fail. You just got to ask, yeah,
(46:34):
so that's exactly what we did. He was, Oh, he's
seventy seventy seventy one at the time, worried about not
being around when the balloon hit, or we just want
to make sure his wife was taken care of if
he did pass away. So yeah, let's solve their problem,
but let's look out for what we need to. So
(46:57):
we ended up doing that. The seventy thousand dollars was
zero down. Monthly payments of three fifty actually ended up
with a five year balloon and a three year extension
on this one and zero interest.
Speaker 2 (47:09):
Okay, So.
Speaker 3 (47:12):
At three fifty a month, we're getting three to fifty
a month principal reduction. So once we have this thing
turned over and a tenant in there, and we're going
to increase our rents even if we were at a
break even cash flow on the front end, which by
the way, I would never do. But if we were,
(47:32):
we're legit cash flowing three to fifty a month from
the get go on the principal reduction alone.
Speaker 2 (47:37):
Okay.
Speaker 3 (47:40):
So I brought in a financial friend who because I
don't like tying up a lot of my own money
in any deal, I kind of have a religion against it. Actually,
I have a religion against paying a retail and I
have religion against using my own cash for very long
periods of time.
Speaker 2 (48:00):
And I suffer from the same thing.
Speaker 3 (48:02):
Yeah, yeah, it's it's definitely something that we could start
a club. So I have a financial friend, and I'm
very nosy with all my financial friends. I like to
know what they have and what they're seeking. So I
knew she had a small IRA and I had actually
used it before and gotten her an extremely nice rate
(48:24):
of return, so she wanted to place it into another deal. Now, guys,
I run a lending company, So I run a hard
money lending company, so it's not out of the question
for us to be, you know, working with millions of
dollars a month in hard money loans. But those are
all short term, and I don't want to go to
those investors and say, hey, you know, I want to
(48:44):
take your money and put it into this long term
deal because I want to use their money.
Speaker 2 (48:51):
For all our short term loans.
Speaker 3 (48:53):
But my financial friends that have twenty thousand dollars in IRA,
I don't want to put them into our hard money
lending pool of funds because it's too small of a
dollar amount, right, But I still want to make them
great returns.
Speaker 2 (49:07):
So I said to her, I said, okay, here's the deal.
I will.
Speaker 3 (49:11):
I want to use ten thousand dollars of your IRA
in exchange for twenty five percent of the future equity
of this property at the time I sell, And that
time is up to me. It could be a year,
it could be ten years, it could be twenty years.
And she's said, absolutely, let's do that. That is a
(49:33):
really generous gift to her. Why would I do such
a thing because we're financial friends and we're trying to
help each other grow our retirement accounts. You know, we
pass deals back and forth with our financial friends. We
do things for each other. And I'm being able to
get into that deal with zero cash out of my pocket.
(49:56):
You look on a screen, you'll see the renovations went over,
and it went over because we ultimately had once we'd
started a little bit of demo in there, we had
to do some other things and you know, hey, it happens, right.
So I actually did have six one hundred and fifteen
dollars out of our pocket to put in this deal.
We put a lease option tenant into the property and
(50:20):
they gave us five thousand dollars upfront for their option,
which means I now had one hundred and fifteen dollars
into this deal because that money doesn't go to my
financial friend. That financial friend gets twenty five percent of
the equity. They do not share in the cash flow.
Very important point. Okay, the five thousand dollars on the
(50:44):
front end is considered cash flow. It does go towards
the purchase price as long as the option is exercised,
but it does not go towards the purchase price if
they fail, so then it becomes rent. Okay, So this
family moves in. The guy was a veteran. I have
(51:07):
him working with my mortgage broker ahead of time before
we signed the least option, because I like to know
what their challenges are. What do we got to do
to get them to qualify for a loan. I set
up one year options with the right to extend for
a second year at my sole discretion, not theirs. They
have to pay the rent. They have to take care
of the property as if they own it, which means
(51:29):
they maintain everything. I don't care if it's a furnace
in ac of whatever it is.
Speaker 2 (51:36):
It is.
Speaker 3 (51:36):
Their responsibility is if they own it within our agreement.
So fast forward. I mean they signed this contract in
November start paying nine to ninety five a month for
their rent and COVID hits four months later, job losses,
(51:57):
they start falling behind. It got ugly, and I absolutely
could have booted them out right.
Speaker 2 (52:04):
We had that time.
Speaker 3 (52:06):
A lot of us had that that period of time
to try and make decisions.
Speaker 2 (52:09):
What's what do we do? What's best for us?
Speaker 3 (52:12):
The key there was they were taking care of the property.
You know, if I walked through and they weren't taking
care of the property and they weren't paying their rent
on time, game over. But they were taking care of
the property. They were struggling, They were doing what they could.
They were robbing from Peter to pay Paul, getting friends,
getting getting money from family, and doing whatever they could.
(52:35):
So I kept working with them. They got through year one,
you know, twenty twenty, twenty twenty one. Now we're into
year number two.
Speaker 2 (52:44):
Now.
Speaker 3 (52:44):
In my options, I structure a tiered purchase price. The
purchase price is set in stone, but it goes up
in year two because I don't want people to gain
the equity while they're not performing and exercising their option.
(53:04):
I want them to be motivated to do whatever they
got to do to fix their credit. Or whatever their
challenges are in year one and get closed, exercise their
option and closed within three hundred and sixty five days.
If it goes three hundred and sixty six days and
they close, their price just went up to in this case,
(53:25):
went from four one hundred and fourteen thy nine hundred
in year one was their purchase price, to one hundred
and eighteen thousand and three forty seven in year two, okay,
which happened to be twenty twenty one.
Speaker 1 (53:40):
Are you basing it off of pulling cocks or it's
a percentage increase in the contract as that worked for you.
Speaker 3 (53:47):
There percentage increase in the contract usually which in this
particular case, I was way off on appreciation, right like,
which was a benefit to them, right you know, I'll
usually be a three to four percent bump in year two,
which is just cost of living increases. But I want
to make sure that when I'm doing these deals, I'm
(54:10):
not setting them up for failure. That one hundred and
fifteen thousand dollars initial price that was off comps that
I know the property will a praise out. I know
they'll be able to get the loan at that number
without any issues. So they go into year two, it's
twenty twenty one. They're still having some financial struggles, not some,
(54:32):
they're having a lot of financial struggles. But they've gotten
current with me. Now it's just a matter of getting
their credit fixed so that they can actually qualify for
a loan. And November of twenty twenty one came and
it got to a point where, you know, they're working
with my mortgage broker. So I'm in communication. I'm not
(54:53):
getting this third party from them saying yup, everything's roses.
I'm getting it from my broker saying okay, we really
need for them to close. And he said I need
at least two more months. Said okay, so if that's
the case, I'll still honor that purchase price if you
(55:13):
can get him closed in two more months. He couldn't
get him closed, And they said, well, we have a
friend he was in a military with that is willing
to co sign. Can will that work? And his friend
lives in Hawaii's stationed in Hawaii, currently houses in Wisconsin,
and this guy is willing to co sign. I'm looking
(55:34):
at him like you're an idiot, but who am I
to judge? So they it still wouldn't work. The wife's
credit had gotten too bad. It wouldn't work. And I said, okay,
well your option is expired, and I'm sorry, but you
have to leave. This property is now worth one point
(55:56):
thirty five because of the market we've had right and
now we're in spring of twenty twenty two, this past spring,
and it's worth it's appraised a praised value at one
thirty five. So that financial friend in Hawaii was willing
to buy the house outright and then do a side
(56:19):
deal with them to lease it to them. I don't
know what terms of their agreement are, but I got
on the phone with this gentleman in Hawaii and I said, listen,
the property's worth one thirty five. Here's the steps I
would suggest you take to protect yourself. Friend or no, friend,
you still have to protect yourself. But I'm not selling
it to you for one hundred and eighteen thousand dollars,
(56:41):
because why I could just kick them out, go in,
freshen up the property and sell for one thirty five.
So I said, what's fair and what makes sense, and
we agreed upon one twenty three six. He still had
some equity, and remember the five thousand dollars that I
had gotten as option consideration, which would have gone towards
(57:03):
the purchase price. Is now that's that's the different buyer.
So I pocketed that five thousand dollars, did not go
towards the purchase price, and then I sold it for
one twenty three six. So if I really added those
numbers up, I got one twenty eight six. But now
I didn't have to go back in and stick any
kind of money into the property again, so everybody won. Okay,
(57:31):
how did the numbers come out on this? Well, one
hundred and twenty three six. If you look at my
profit over two and a half year period of time,
this is going to be rents and the sale price
after I paid my financial friend. Okay, so how is
(58:00):
that as far as a rate of return? Scott on
six fifteen dollars over a two and a half period
of time. Yep, you're muted. You're muted, Scott, But I'm
reading your lips. That's enough, it's enough, right, Yep. I
mean that's the that's the whole point of these deals.
(58:21):
But we structured and stacked a lot of different strategies.
If we go back, we had a free and clear
property with a seller finance note and mortgage. Then we
put together a contract with our financial friend which that
was a participating note. Then we did a lease and
(58:44):
an option with our end buyer who didn't end up
being our end buyer, and then finally the purchase and
sale contract with the actual buyer. All through this and
everybody came.
Speaker 2 (58:59):
Out a winner. Yep, right, amend to that.
Speaker 3 (59:05):
Consequently, my financial friend on this deal her ten thousand
dollars IRA, she got a check back for just over
twenty one thousand dollars right in two and a half
year period of time, So pretty good rate of return
in her IRA.
Speaker 2 (59:20):
Yeah, David asked that question.
Speaker 1 (59:22):
So when Derek says that he paid his finance, here's
the twenty five percent equity at closing, he really means
that she got twenty five percent of the free and
clear profit.
Speaker 2 (59:29):
Right, Yes, she.
Speaker 3 (59:31):
Got twenty five percent of the net, not including the
cash flow from the rents over that two and a
half years.
Speaker 1 (59:41):
And the seller, original seller is happy now he got
his He got his? Uh what was he got a
little bit of cash flow along the lay? I think
it was reducing the debt roughly about twelve grand a year.
So if you were into it, for two and a
half years. You owed what froun thirty forty thousand dollars
forty five thousand dollars on this at the end of closing, right.
Speaker 3 (01:00:00):
And that's see, that's the part that my financial friend
does get. She gets twenty five percent of that principal
reduction every month in equity.
Speaker 2 (01:00:09):
Yep. So it's very appealing to her. Yep. Awesome good stuff.
That's a great deal. Who wouldn't do those?
Speaker 1 (01:00:18):
You? I mean, that's the beautiful thing. You do those
all day long. There's you know, all day long, baby,
and twice on Sunday.
Speaker 3 (01:00:24):
And especially now as the markets are starting to get
a little bit more volatile, like the you could do
this in any market. That's why I'm talking about case
studies I've done in the last couple of years when
it's been really hot. But guys, when the market shifts,
you can do this even more and more and more.
That's the point of this.
Speaker 1 (01:00:45):
And the thing too is you look at what's going on,
not just with prices going on, but you've got a
lot of baby boomers who have bought real estate. They
don't want to be in the real estate business man.
They don't want to be in the rental business. They
want to get out. They've got equity or they've got
free their property. They want to get out. And you
structured this in the way where they wouldn't taken immediate
tax it. They delayed it over time for them. It's
(01:01:05):
a benefit for them because now they don't have to
deal with it. It's an opportunity for you to come
into and make things work. And you help folks get
into a house that they couldn't qualify for. It almost
didn't qualify for without their financial friend. But it's also
you know, it's still a win for them. Is if
you sold it at the one twenty three. Get the
guy in the Hawaii if he's a VA loan, he's
(01:01:28):
got some.
Speaker 2 (01:01:29):
Little bit of quid there. You he really helped multiple
people along it along the process. Right.
Speaker 3 (01:01:35):
And when I'm doing this in front of a live
audience and people are raising their hands and asking questions,
most of the times people will ask this question, Scott,
how do you get the seller to tell you what
they need?
Speaker 2 (01:01:49):
Right?
Speaker 3 (01:01:49):
Because this is the biggest problem with real estate investors
in general. And again, maybe I'll offend some of your audience,
but I don't care too many people are lazy, yeah,
and they just want they want to push the easy
button and they want cash to flow like like you know,
falling rain. The reality is you've you've got to learn
how to talk to people and you've got to learn
(01:02:11):
how to solve their problems. And you can't solve their
problems if you don't know what their problem is. When
I got my ass kicked in two thousand and seven
when the market shifted, I was that problem, that distress
seller that had all these problems. So I can relate
a lot to people that are having struggles. This gentleman
didn't have a financial struggle. He had a struggle with management.
(01:02:34):
He didn't want the joys of management anymore. So how
do we how do we really find that out? We
have to ask questions. We have got to get on
a personal level with the sellers. You can't do that
with an MLS listed property that you're just making a
written offer through a realter. It's it's virtually impossible. It is,
(01:02:56):
it can happen, but it's it's very rare. Okay, So
you just have to get good at solving people's problems,
but you got to know what they are. Typically I
do a little elevator pitch. Usually this is over the phone,
and I do it within the first two minutes of
every interaction I have with a seller, and it goes
(01:03:17):
something like this, Scott, Scott, we buy houses in several
different ways. All cash is not a problem, but that's
typically going to be our lowest offer. If that doesn't
meet your needs, then we can look at other possibilities,
like we can take over your debt payments if you
still have debt. If you don't, we could make payments
to you over time, or we could even lease your
(01:03:38):
property and buy it at a future date. That usually
works with like landlords that are trying to offset some
taxes or something like that. I tell you all this, Scott,
just so you know there's multiple ways we can help you.
But I may have to ask you some questions that
most people wouldn't.
Speaker 2 (01:03:52):
Is that okay?
Speaker 3 (01:03:54):
And elevator pitch okay? Now, by doing it and setting
it up that way, any question I ask you moving forward,
you're not going to be offended with, and you're gonna
likely answer now. Of course, there's all gonna be some
people out there that you've got to caress a little
bit more, right, But but I've gotten their permission to
(01:04:14):
ask him anything I want. And that's why it's so
important to try and do whatever's natural for you, so
it doesn't sound like a script. Whatever's natural for you.
To get that point across, that's how you get people
to open up about their needs and you solve their needs.
Speaker 2 (01:04:31):
So I have questions, I mean, that's the that's the power.
Speaker 1 (01:04:33):
The people that make the most amount of money, that's
the ones ask the most my questions.
Speaker 2 (01:04:37):
Yeah, for sure, for sure. So that was a pretty
good deal. Yep.
Speaker 3 (01:04:43):
I Uh was there any questions in the chat on
that one at all?
Speaker 1 (01:04:47):
No, they just like the great elder pitch and David asked,
is there any downsides to this type of deal for you?
Speaker 2 (01:04:52):
Derek? Absolutely? If the markets crash.
Speaker 3 (01:04:58):
And you're tenants can't get financing, you know, you've got
to be prepared if if you're the one holding the option.
If you know, if I was in the tenants shoes
and the markets went down and now I can't get
financing and I put up five, ten, fifteen, twenty thousand dollars,
do I stand to lose that money?
Speaker 2 (01:05:20):
Yes?
Speaker 3 (01:05:20):
Us as landlords COVID moratorium on rents, could that have
destroyed it? Did it destroy a lot of landlords? Absolutely?
There's always risk.
Speaker 2 (01:05:31):
You got to weigh out what's what you're willing.
Speaker 3 (01:05:33):
To take on. In this case, he went month after
month with giving me partial rents, not the thousand dollars
that he owed me.
Speaker 2 (01:05:43):
We had to make a decision do we keep them
do we not? So there's risk, But.
Speaker 3 (01:05:50):
I like my odds when I when I'm buying a
property for fifty to two hundred thousand dollars versus if
I was buying a property for five hundred to two million.
Speaker 2 (01:06:00):
Exactly. Yeah.
Speaker 3 (01:06:01):
You know I live in the Midwest. We can still
cash flow our properties and be okay. I bought one
on Friday for thirty seven thousand dollars and you know
it needs a sixty thousand dollars renovation, but it's to
be worth one sixty when it's done. If it doesn't sell,
I like my odds, right, I'm into it for under
(01:06:23):
one hundred grand, will I be okay?
Speaker 2 (01:06:24):
Yeah?
Speaker 3 (01:06:25):
So it's just those types of deals that you got
to get used to and know your threshold.
Speaker 2 (01:06:32):
Cool. So this one, Scott, what what what do we
got for time? You're good?
Speaker 1 (01:06:37):
Do you get We've got roughly twenty five minutes for
the next peer you're supposed to start, so you're golden.
Speaker 2 (01:06:41):
Okay, sweet, So I'm gonna run through this one.
Speaker 3 (01:06:43):
Now. This is not some really dramatically awesome deal from
a financial standpoint of profit, but I love this deal
from the perspective of helping people. Okay, this little house
is about three hundred yards from a really nice lake,
(01:07:04):
doesn't have a basement, has a crawl space, and Wisconsin
basements are pretty important. Most people expect one, so it
does devalue a property if you don't have it. But
this little two bedroom house was super important to a
couple people that were brought to me by a real
estate agent that didn't know how to solve their problem.
Speaker 2 (01:07:21):
Okay.
Speaker 3 (01:07:23):
Pam and Justin are their other names. Pam's dad eighty
ish eighty two. He's beyond the point where he can
do anything for himself. Really needed twenty four hour care, Pam.
This is the house Pam grew up in. She moved
back in with her father and to take care of them,
(01:07:46):
and now they're trying to get their father into a
nursing home and on Medicaid. The problem with that is
Medicaid looks at you know, looks at your assets, and
they want you to liquidate your assets so that they
can use them.
Speaker 2 (01:08:02):
And I guess that's fair.
Speaker 3 (01:08:03):
We won't get into a political debate, but you know,
that's what was happening. And this house has been in
her family. I mean she grew up in this house,
so it's been in this family since the seventies.
Speaker 2 (01:08:16):
And the way.
Speaker 3 (01:08:17):
Medicaid works and all of these government programs essentially is
he can't sell the property to a family member for
less than retail value. She can't qualify for a loan
because of their income and other challenges at retail value.
So this property is worth one hundred and twenty five
(01:08:37):
thousand dollars as it sits. He owed forty five thousand
dollars on a mortgage, her dad owed forty five thousand
dollars on a mortgage, and there's two other junior leans.
They made some bad decisions and overpaid to have this
handicap accessible bat shower put in and got price gouged
beyond belief windows gouch. So there's twenty two thousand dollars
(01:09:02):
worth of payments there or debt that they're making payments on.
So all said and done about sixty seven thousand dollars
worth of debt and property valued one twenty five one
point thirty ish.
Speaker 2 (01:09:16):
Right, So I said to.
Speaker 3 (01:09:20):
Pam, I said, okay, if I buy your dad's property
subject to the debt and I let you guys lease
the property from me with an option to purchase, does
that solve your problem? And she said, well, yeah, but
how does that work with Dad, because you know, if
(01:09:43):
he goes into the nursing home and the loan is
still out there, aren't aren't Isn't that going to be
a problem? I said no, because he doesn't have the
deed anymore. If I leased the property from your dad
and he still had a deed, that would be a problem.
Speaker 2 (01:09:58):
If I buy the.
Speaker 3 (01:09:58):
Property subject the mortgage, he doesn't own it anymore. We
have a closing statement, you can prove to the nursing home.
You can prove the Medicaid it's sold. And she said, yeah,
but how can you buy it for forty five thousand
dollars first mortgage and the other because in reality, I
actually bought it for the forty five thousand and they're
(01:10:21):
still paying on those other two lians. I'm taking that
risk because it doesn't matter for the story. But the
closing statement showed a forty five thousand dollars sale price,
and she said, well, how can it be bought for
such a dollar amount below fair market value? And I said, well,
(01:10:42):
there's a very good chance that it's going to get questioned,
and so I need to be able to show why
I did this. I need to be able to show
you know my track record in my company that we
always buy property below value, we renovate them and increase
their value. And I said, our worst case scenario is
(01:11:05):
that they get pissed, but there's no money for them
to get there. Really, isn't I mean, because this did
end up ultimately happening. And I'll tell you the end
of the story before i tell you the middle. They
put Dad into a nursing home. Two months went by
and the nursing home started to question nursing home being
(01:11:29):
the front person for Medicaid, right, so Medicaid was questioning
the nursing home. The nursing home was questioning them how
how did this property self so far below value? And
we had taken pictures of the inside because the inside
is dated and it needs needs a lot of work
to update. It doesn't need a lot of work to
(01:11:50):
live in. It's perfectly fine. But it's wallpapering, and you
know it's it's you know, it looks old. It was
an eighty two year old man's house. To him, it
looks like fine. But to us, anyone that would want
to buy it now, it's not updated. So we just
documented it. We documented the fact that there was what
(01:12:11):
a nine thousand dollars shower put in, and we documented
that there was thirteen thousand dollars where the windows put in.
And then I had a real estate friend of mine
broker run comps. Now I carry a broker's license, I
could run comps, but I need a third party. So
(01:12:32):
we ran comps and I said, okay, what are the
lowest comps in that area? Not the highest, what are
the lowest backed out our renovation costs. Showed him my
formula for what I do every day and how I
purchased properties and why it would sell for that, and
the whole thing went away. And the reason the whole
thing went away is because the nursing home doesn't care.
(01:12:54):
They just needed something to put in the file.
Speaker 2 (01:12:57):
YEP.
Speaker 3 (01:12:58):
The person on the Medicaid side of the phone call,
doesn't care. They just need to show they did their job.
They're just pushing paper. So when they had something from
a licensed real estate broker in a state of Wisconsin saying,
this is the valuation of these comps in this neighborhood.
Here is what it would cost or the renovation costs
to take it up to this current value whatever. Right,
(01:13:20):
So I have done this so many times that I
don't it doesn't even make me nervous anymore because ultimately
I know they're just trying to show that they did
their job and there's gonna be no follow through after that.
So it all worked out on that regard. But if Scott,
if you bought this property forty five thousand dollars first mortgage,
(01:13:42):
subject to a couple twenty two thousand in debt, and
it's worth one twenty five, what do you think the
resale on the option back to Pam and Justin should be.
Speaker 1 (01:13:55):
If you're solved on an issue that can't be solved,
I would say at least one hundred, if not.
Speaker 3 (01:13:59):
More, one hundred grand purchase price at least yeah. Okay, okay, So,
and there is no wrong answer. This is the cool
part of helping people and solving people's problems because.
Speaker 2 (01:14:11):
You get to lead with your heart, right.
Speaker 3 (01:14:15):
I told Pam and Justin, I don't do a deal
that I can't make twenty grand on minimum. So I said,
I want to make twenty thousand dollars over my actual expense,
including all closing costs, anything I ever take out of
my pocket in regards to this house in Delavan. That
plus twenty grand, and I want to make two hundred
(01:14:37):
dollars a month on your rent. So I'm taking over
the mortgage. You know what the mortgage payment is because
you've been making it for years. Add two hundred dollars
to that. If the escro goes up because of taxes
or insurance, your rent goes up proportionally, you know. And
that's the deal we were doing. And they're still there.
(01:14:59):
We did this deal last year. Their one year came
up in April April thirty first, and they're working with
my mortgage lender. They're still having some challenges getting a mortgage,
so we I said, no problem, We've already got it
documented what your purchase price is. For year two, it
goes up by two grand. Pretty fair deal this house.
(01:15:21):
By the time they close on it in you know
by let's call it next spring. This house is worth
one forty all day long, maybe one fifty, right. So
I love this story mostly because I get to give
back and they are doing Like the furnace went out.
They called me in June. The furnace went out. They
(01:15:42):
had spend fifty seven hundred dollars. They don't have an
extra fifty seven hundred dollars, but they found it. I
owned the house. They put a fifty seven hundred dollars
expense into my house. I could have kicked them out
right in April their one year came up. I could
have said, nah, I don't feel like extending because the
market is so hot. Right, I could have kicked them
(01:16:04):
out of their family home. That's not fun. Nor do
I want to be that guy, and I don't have
to be. I'm still going to make a profit, right.
So that's why I love this deal. It's not creative.
We didn't stack fifteen structures right, or fifteen strategies for
the deal structure. It was pretty basic, a sub too
(01:16:25):
and then a lease option. But I love the fact
that we get to help people by being creative. Nobody
else knew how to help this family, this real estate
agent had no clue how to help this family, and
I feel like that's super important.
Speaker 2 (01:16:39):
It is. Yeah, no, so the go any questions on
that one at all? Yeah, we asked to see here.
David asked. The question is was Derek able to get
them to sign over the title at the beginning of
the deal? Yes, yeah, that's you mentioned.
Speaker 1 (01:16:54):
He had to do that because otherwise Medicare would have
seen that the father's name was still one tip, still
sitting out there and still owned it technically, and that's
why he was able to sign it.
Speaker 2 (01:17:04):
Over and do the d transfer.
Speaker 3 (01:17:05):
So yeah, Scott, is this does this group understand subto
very much?
Speaker 2 (01:17:09):
Have you had much of that discussion? Yeah, we we did, exactly.
We talked.
Speaker 1 (01:17:13):
We had Chris Prefontaine on you State talking about subject to. Okay, well, Matrees,
how did you How do you find your houses? This
one it came from a reformer realter, but how are
you finding your houses?
Speaker 3 (01:17:24):
Every off market marketing, chanlenge channel you can think of,
So we do direct mail, Google AdWords, campaigns, social media marketing,
the gamut, and and we do some more than others,
and it'll change, will fluctuate, But yeah, I don't buy anything.
I shouldn't say I never buy off the MLS, but
(01:17:44):
it's very rare at least right now.
Speaker 2 (01:17:47):
Sure? Cool?
Speaker 1 (01:17:50):
You want to share the numbers on this one and
what exactly it came out to on this one?
Speaker 2 (01:17:54):
Like I said, it hasn't sold.
Speaker 3 (01:17:55):
Oh okay, okay, okay, So I'm gonna I'm gonna be
at question mark on profit. I keep forgetting to flip
through the slide.
Speaker 2 (01:18:05):
So I'm just talking. It's Sunday morning, guys, Sunday morning.
Speaker 1 (01:18:09):
Exactly what can I ask? What the option is? What's
their option on it right now? Do you know that
or do you want to know?
Speaker 3 (01:18:15):
It was at about eighty thousand dollars when we started,
But again it's it's going to be when. So when
they exercise their option, we have to fill out a
purchase contract.
Speaker 2 (01:18:24):
Yeah.
Speaker 3 (01:18:25):
At that time is when we'll figure out what I'm
out of pocket exactly and add twenty twenty two thousand
dollars at this point A yeah, so it was a
fun deal.
Speaker 1 (01:18:36):
Yeah, keeping people, I mean, that's the thing.
Speaker 2 (01:18:39):
You helped solve an issue.
Speaker 1 (01:18:40):
The reason the realtor could do it because they are
not create enough a lot of times and they're all
they can sell the property, Well where does the family go?
They don't want to go. They want to stay in
their house. They put this work into that works well
for dad. And that's a you know, doing a lease back. Yeah,
that's a that's an option. I mean, it's great. We
don't Yeah, you can't do lease options here in Texas
one hundred and eighty days.
Speaker 2 (01:18:58):
But you know, doesn't mean you can't. All right, when
you want.
Speaker 1 (01:19:02):
To sell it, let's you know, just not taking it
to positives. Let's offer to sell it, or we'll sell
it to market value, ready for five percent of market
value whenever you get around to it.
Speaker 2 (01:19:10):
In a lot of cases.
Speaker 3 (01:19:10):
So let me ask you this question, because I did
do a deal in Texas and I least optioned it.
I was the one that got the least in the option.
But when I did my research, can you or can
you not lease option to a business all day long?
Speaker 2 (01:19:28):
Yes? Right, yes, all day long? Yes to LLC's the business. Yes,
of course you can do that. See owner occupant's what
I thought. Yeah, they can't do but yeah, so do
they have loopholes?
Speaker 3 (01:19:39):
You know, if your owner occupants happened to start an
LLC like a single member LLC. Can you do or
is anybody trying that at all? Again, I'm just I'm
just thinking outside.
Speaker 2 (01:19:50):
That's that's where I go.
Speaker 1 (01:19:51):
If the if the owner started LC, well then it's
a hard time if they want to get traditional financing.
A lot of times, if the LC is not seasoned
and they don't have the acces, the credit stuff like that.
Speaker 3 (01:20:01):
It would have to be a longer term lease option.
With all that in mind, that yeah, yep, okay, yeah.
Speaker 1 (01:20:07):
And it's I mean, you can buy on a lease
option all day long here as an investor, I think
it's a great, great way to do it in a
lot of cases, especially with the appreciating values of things
going on. But yeah, it's you know, on our occupants
or homestead basically, it's a really difficult thing here right.
Speaker 2 (01:20:24):
Well.
Speaker 3 (01:20:24):
The other the last thing I'll point out on this one,
Scott is usually when I buy sub two, I'm buying
in a trust. I usually name my trust after the
last name of the individual I buy it from, so
it'd be their last name family trust. But because this
was a medicaid scenario, I didn't want to do that.
Speaker 2 (01:20:41):
Yep.
Speaker 3 (01:20:41):
In this case, I just named it three one three
First Street, Trust and no problems whatsoever with it.
Speaker 1 (01:20:49):
So yeah, it's pretty common either off the name or
the street address in a lot of cases.
Speaker 2 (01:20:54):
For sure, Right man, how much I don't we got
thirteen minutes, next speaker, if you want to squeeze one in.
Speaker 3 (01:21:03):
I don't know that I'm gonna be able to, but
I'm gonna I'm gonna show you this real quick. I'm
just gonna click through these slides for your guy. For
you guys, it's a lake house. I optioned last year
for one hundred and sixty thousand dollars one year option
monthly rent of six hundred dollars for a lake house
divorce situation. They both moved out, both went into their
own apartments, and ultimately they now had two rents plus
(01:21:26):
eleven hundred dollars mortgage. And this house, the the lake
front edge and the yard and everything was awesome. The
house itself was weird as hell. If you look at
the picture, on the left hand side was a cabin
and then on the right hand side where you see
that goofy roofline, they brought in a modular prefab and
attached it to the cabin weirdest thing that you've ever seen.
(01:21:50):
But we we went into this on the option six
hundred dollars a month's rent. We came in and put
in seven thousand dollars rent over thirty days, very similar
to what we did with Randy's deal. Just made it
where it could pass for financing, cleaned up the landscaping,
accepted an offer at two hundred gram and we profited
(01:22:13):
twenty two thousand dollars, plus a hot tub and a
six month old side by side stainless refrigerator that are
both in my house as we speak. So that was
a fun one. Dickinson, Texas not a bad house, right.
I wish I had time to tell this whole story
(01:22:34):
because this guy absolutely lied to me and found out
he was in jail, flew down to Texas, had to
go to jail and get his signatures on stuff. He
was allegedly going to go to Mexico to help a
family friend. In fact, he was running from a sexual
assault of a minor charge. And this all happened right
(01:22:57):
as COVID was hitting. So I can't go through all
the numbers, but long story short, I profited eleven grand
and I was happy. I didn't lose my ass on
this deal because it could have went really sideways. But absolutely,
you can do a deal from anywhere. You know, there's
these things all airplanes, so you can fly around.
Speaker 2 (01:23:16):
Well, we've also I've had the deal.
Speaker 1 (01:23:18):
I've sent people, sent signers, you know, notaries and reps
into jail, into prison to have people sign off, especially
when we buy the debt of hav them deed the
property over and putting you five hundred dollars in their
commissaries is cash, your keys, deed and loom. Yeah, you've
got your information. Leave your information up there for a second.
But we had a few folks that wanted to ask
questions a little. Can you talk about more about the
(01:23:40):
trust on the on the on the deal there that
you mentioned before? Hered you put things in the trust.
Speaker 3 (01:23:46):
And I guess in what regard I mean. We we
use trust for the anonymity, but we use trust primarily
when we buy subject too, so that we don't trip
to do on sale clause in their loan. And that's
why we would name the property after their last name
family trust. Where I live in Wisconsin, trusts are not
(01:24:08):
hardly used at all other parts of the country. They're
they're very very commonplace. So our attorneys, again I'm not
bashing on attorneys, but it's easy to do. Our attorneys
don't spend much time on you know, learning trusts, and
if you ask an attorney here to do one for you,
they're extremely expensive and you know, once you know how
(01:24:30):
to use them. I mean, we draft our own trusts
at this point. We don't need an attorney every time
because it's we're just changing the address and the dates
and trustees and you know.
Speaker 2 (01:24:39):
Stays the same. So so that's Is there any other
questions on that.
Speaker 1 (01:24:45):
No, but that I mean, that's that's the thing that
makes sense, is you're doing that to avoid the do
U cell clause and make it very simple. In the
trainsfers it looks very similar to the bar or for
image wise stuff like that. Have you have you had
any banks called notes as long as you're getting paid, yeah,
I mean, as long as they're getting paid most of
the time.
Speaker 2 (01:25:01):
I mean, I'm being in the lending side.
Speaker 1 (01:25:04):
If somebody wants to assign a proper to somebody, as
long as you're paying the mortgage, I don't give a
ras ass.
Speaker 2 (01:25:09):
I'm happy being the bank.
Speaker 3 (01:25:11):
You know, we had one one time, the very first
sub to we ever did, which we were green.
Speaker 2 (01:25:16):
We didn't know what we were doing.
Speaker 3 (01:25:17):
We tried closing it in an LLC and the insurance
is what tripped it up, so we had to go
back and redo that. But no, never had it happen
after that, and we were able to shift that one
around and solve it. So, Scott, do you mind if
I mentioned my conference?
Speaker 2 (01:25:35):
No? I do? Please? Do? I want you to Derek definitely,
so so.
Speaker 3 (01:25:38):
Real quick for your audience. I'm drafting a book. My
primary business right now is running a hard money lending company,
and I'm writing a book about how to be a
private lender. And I'm talking from a to Z from
when the application comes in from your client that wants
to borrow it, all the way through underwriting and you know,
servicing the note and everything else. I want to give
(01:26:00):
that away to your group. The book is not published yet.
I'm literally writing it right now, so it'll be out
tail end of the year. But you guys, you can
see my email address there. Just shoot me an email
say hey, I saw you on note camp. I'd love
to get the book. When it's available, I'll send you
the free version when it's out and my phone number
is on there, raising money, lending money, whatever, feel free
(01:26:28):
to reach out, you know. And the last thing that
we do is an annual conference, and this is Advanced Strategies.
This is the stuff we were talking about today, and
then a lot of other stuff as well. But the
next one I'm having it's in February twenty twenty three
(01:26:49):
in Cancun at the Hyatt Ziva. We do things a
little different everybody, So I Am going to have non
selling speakers presenting from until one each day, five day
conference Monday through Friday. The afternoon is open networking, get
your beach time, get your pool time, get your drink on,
(01:27:10):
whatever you want. But you're spending time networking and growing
your relationships with others. And then we have these town
hall sessions in the evening which are more interactive you know,
Q and a case studies whatever. But the part that
I the reason it's called Generations of Wealth, the part
I'm super proud of is we encourage you to bring
(01:27:31):
your kids. We encourage kids, especially ten and older, to
sit in on the sessions. There's no charge for you
to bring your kids, I mean, other than what you've
got to pay to have them at the resort, but
as far as the conference, there's no charge. And it's
really something that I'm passionate about my family, my kids
(01:27:53):
building a network in their teenage years that we didn't
even think about building until we were in our thirties and
forties and some of us in our fifties and sixties.
So not a hard sales pitch. You can see the
website gw voyage dot com right now. It's like a
thousand bucks a ticket plus your you know whatever, your
(01:28:14):
resort choices. We've got you know, different style rooms at
the resort. But so not a hard sales pitch. I
will tell you Scott, and you and I had this
conversation offline. When you run a conference, you guys can
see the logo has a cruise ship. This this used
to be and was designed to be on a cruise way.
Less stress running a conference on a cruise and so
(01:28:38):
financial obligations, contracts, all this stuff. I did not book
a huge room block at this conference because I'm on
the hook if I don't fill it.
Speaker 2 (01:28:47):
Yeah, well, this is not a sales pitch.
Speaker 3 (01:28:49):
To be hurry up and do it now, because blah blah, blah. Seriously,
I can't guarantee any additional rooms after my block is full.
They may give me. I don't know what the pricing
will be at that point. I know if I hit
my room block, not if I know when I hit
my room block. We've got a great number of people
(01:29:10):
for the conference, and if it goes more than that, cool.
If not, we're gonna have a great conference. So anybody
who's listening to this, if you'd like to be a
part of it, there's the website. If not, Scott, it's
been awesome. I really appreciate you having me as a
as a speaker.
Speaker 2 (01:29:25):
No problem, Derek.
Speaker 1 (01:29:25):
We're gonna have to have you on the podcast later
on when you when the book comes out. We'll help
you get get promoted out there as well. For for
everybody out there, so uh get contact information. I put
that the chat roll for you, everybody. Go w voyage
dot com is the website. Check it out, guys. February
twenty six to March fourth. That's that's awesome. It's still
cold in most places, I mean the ground still frozen
(01:29:48):
in Wisconsin.
Speaker 3 (01:29:48):
For the most reason, there's a reason we go that
time of year, no doubt.
Speaker 2 (01:29:54):
Exactly well. Good stuff, Derek.
Speaker 1 (01:29:56):
Thank you so much for speaking on note camp. We
really appreciate love the case studies. We're gonna definitely have
to have you back on and and have some more stuff.
And uh, I mean, I got my guy Wisconsin because
I got I get stuff in Wisconsin. I'm not really
excited about buying the dead a lot of stuff, but
there's some deals on there and we could we can
partner up with some stuff for sure, and I'll be
reached out to you and that stuff.
Speaker 2 (01:30:15):
So sounds good man. I appreciate it. Thank you everybody.
Speaker 1 (01:30:19):
Thank you, Derek. Have a great rest of your weekend.
But enjoy have fun teaching your kids pee week.
Speaker 3 (01:30:24):
Yeah, that'll make you start drinking. I promise you that,
but it's still fun.
Speaker 2 (01:30:29):
It's still fun. Good stuff, man. We thanks man enjoying
us your Sunday. Thank you,
All right, everybody. Hey, we are glad to have our
first speak here here. Join us on note Camp twenty
twenty two. This guy is a very knowledgeable real estate investor,
got a big heart, somebody that's involved with four real
estate club throughout the state. It's definitely got a servant
mindset and servant leadership mindset out there. So we're really
excited to have Derek domback from best Arii funding Group,
(00:22):
join us here on note Camp twenty twenty.
Speaker 2 (00:24):
So, good morning, Derek, Good morning Scott. Glad's the weather
up there, you guys as heat hot like everywhere else?
Well you know it.
Speaker 3 (00:33):
I've living in Wisconsin, so usually summer hits us on
a Tuesday and that's about it. So it's been pretty
nice lately, you know, seventies and comfortable.
Speaker 1 (00:44):
Don't get me getting me jealous on here with our
hundred degree whether you're done in Austin, text everything else.
Speaker 3 (00:48):
Fried, Yeah, I know, and I got. I actually owned
some bucking bulls, Scott, and they live in Texas, so
I'm very very informed on what's going on down.
Speaker 1 (00:58):
In your area exactly exactly, but well, you know what,
we'll take our we'll take our winners.
Speaker 2 (01:04):
Compared to you up there as it's.
Speaker 3 (01:07):
Yeah, there's there's reasons we travel a lot, especially in
the winter.
Speaker 1 (01:11):
Amen to that, brother, Well, hey man, I think you've
got a presentation lined up to kind of go through
some of the great things that you're doing up there,
and they share with their audience.
Speaker 2 (01:18):
Correct, Yeah, I do. I do.
Speaker 1 (01:22):
Three if you want to share your screen or go
from there, and then if you want to take questions
throughout or do you want to wait till the very end.
Speaker 3 (01:29):
So I really do prefer interaction along the way, like
I've got, I've got about five case studies. If we
get through one or two, I'm fine with that as
long as everybody's getting their questions answered. If we get
through all of them, we get through all of them.
Speaker 1 (01:42):
So well, then what I'll do is I'll jump off
here if you want to share your screen, and I'll
monitor the chat roll and jump in and be here all.
Speaker 2 (01:48):
Along with you and keep the interaction going forbody. Yeah,
thank you, great, be great.
Speaker 3 (01:55):
All right, let's see here, I gotta get this thing
to go to a slide show.
Speaker 2 (02:01):
Come here we go, all right, so you can see that,
all right, Scott.
Speaker 3 (02:07):
Okay, So basically Scott and I were chatting a while
back when he asked me to to, you know, speak
with with the audience today and and you know, one
of the thing that kind of hit was, well, what's
going on in the market and what do you do?
Because nobody can get their offers accepted and there's there's
so much competition out there. So I started telling them
(02:29):
about some of the deals that I've done, and and
and guys, these deals are all deals that you know
I've done in the last market that's been really busy, right,
and like these are ten year old deals. Scott, can
can you do me a favor?
Speaker 2 (02:45):
Yes, sir? What? Yeah? Are we able to uh see
our audience at all?
Speaker 1 (02:52):
Yeah, it should be able to. If they able to
turn their cameras on, we can flip it to the
view for sure. Let me let me do that here
real fast.
Speaker 3 (02:59):
And here's why I hate talking to myself and staring
at myself in a computer like it's really really boring
for me. And I just I love interacting with people.
But if I can see the audience, anybody that's willing
to share their Sunday Morning view, it definitely makes it
easier for me too.
Speaker 2 (03:17):
Ha. Here the show video.
Speaker 1 (03:21):
Let's see here, guys, if you want to turn your
cameras on so Derek can see you, I just put
it over to the different view on that.
Speaker 2 (03:35):
Let's see here. Well, I'll be here. You can speak
to me.
Speaker 3 (03:44):
I'm gonna talk to you, Scott. I talk to you
for an hour and a half. No, I seriously, if
anybody's ever had to present on zoom and uh and
you don't have something else to look at but yourself,
it's it's interesting.
Speaker 2 (03:58):
It's definitely more interesting. So he says, he's in his
pj's picking breakfast. He's not gone.
Speaker 3 (04:06):
Well, you guys don't know what's on underneath this nice shirt,
you know, so below it, I should say. But so, anyways,
Scott and I were talking about, you know, some of
the stuff that we've been doing, and I said, well,
the big thing for us is we like to give
you know, our sellers multiple options and multiple offers. And
in my background, I've been around since two thousand and
(04:29):
three and I used to just use bank financing, and
all I ever could do was make you know, cash offers,
not cash offers, financed offers. And ultimately, when I got
through the downturn of two thousand and seven, which really sucked.
And you know, my wife and I got our butts kicked.
We had to get creative. And what I realized was
(04:52):
creative should have been the first thing we did, not
the backup plan. To me, a bank should be the
backup plan, or even a cash offer should be the
backup plan, because there's so many other great ways to
buy or control property, and that's important. It's not just
about actually owning it, and you're going to see that
(05:14):
in the first couple of case studies that I do.
It's all about control and helping people one hundred and
twenty five percent. I don't talk about my needs when
I'm negotiating with a seller. All I'm focused on is
how I can solve their real estate problem, and how
do I do that that makes sense for all of us.
(05:37):
So this first one, Scott, that I'm going to jump into.
These are all in proximity to where I live in Wisconsin.
I do have a case study in Texas. I don't
know if we'll get to it or not, but I
did a deal in Texas a while back, which was interesting.
But Scott, would you agree that that's not a bad
(05:58):
looking house exactly?
Speaker 1 (06:00):
That's a pretty cookie cutter. Get to look at a
little ranch house.
Speaker 3 (06:05):
Yeah, three bedroom, two bath, cookie cutter house. This actually
sits on about five acres of land. This is about
twenty minutes from where I live now, to give you
all an idea where I live. The median price points
are about one hundred and fifty thousand to two hundred
thousand dollars for a cookie cutter house when you add
(06:26):
some acreage, any kind of extracurricular you know, things like
this one had a dog kennel actually like a professional
dog kennel for multiple dogs. So this one, in after
repair of value, would have been worth about two hundred
and twenty five thousand dollars. Except the challenge with this
(06:49):
one was the guy had one hundred and thirty two
thousand dollars worth of debt on two different notes, two
different mortgages.
Speaker 2 (07:00):
And his name was Randy, so I'll just use his
first name. It's easier.
Speaker 3 (07:04):
Randy wanted to retire from his job, and literally within
days after retiring, he wanted to move from Wisconsin to
South Dakota because he had met some gal there and
you know, he was going to retire and go work
on her ranch.
Speaker 2 (07:20):
And just hang out.
Speaker 3 (07:21):
And his biggest challenge with this house number one, he
didn't want to deal with thrillters. He didn't want to
stick any money into the house that would come up
on any kind of inspection reports from a home inspector.
And he didn't want a bunch of people walking through
his house. You know that he had to and he
(07:41):
was a bachelor at this point, or at least his
girlfriend lived in a different state, so he was the
only person living in his house to wear and tear
was minimal and it wasn't cluttered by any.
Speaker 2 (07:52):
Means, but it was dated. Parts of it were updated.
Speaker 3 (07:56):
The kitchen had been updated within about ten years, but
the bathrooms still looked like the seventies.
Speaker 2 (08:02):
So he had a pinker and avocado green.
Speaker 3 (08:05):
It had Yeah, it had some wallpaper, had some issues.
So when I looked at this and I said, well,
if I did a full renovation on it, I'm going
to spend about forty thousand dollars to update this property
to make it worth two hundred and twenty five thousand dollars.
That was made my cash offer in the one twenty range.
And I'm going to use round numbers through this whole
(08:26):
presentation because it's just you know, simple for me. So
for Randy one hundred and twenty thousand dollars, he would
have to you know, bring about ten or twelve thousand
dollars to the table to close deal. And he wasn't
really excited about that, as most sellers aren't, right, but
it still didn't solve his problem. He wanted to retire,
(08:49):
he wanted to leave, and he didn't want to have
to deal with realtors. And the other problem. If you
look at the leaves on the trees. This was entering
the fall of the year, so fairly large yard. It
needs to be maintained. You can see the grass now,
but there was about four inches of leaves all over
that yard that had.
Speaker 2 (09:09):
To be taken care of.
Speaker 3 (09:10):
And then shortly thereafter we get this thing called snow
and that has to be taken care of.
Speaker 2 (09:14):
So picture this.
Speaker 3 (09:15):
If he would have just listed with a real estate
agent and he moved to South Dakota, the real estate
agent is not going to maintain the property. They may
hire somebody to do snow removal, they may hire somebody
to do law care, but this is about ten miles
from the city, so those services get harder and harder
to find, and more and more expensive. So I said
(09:38):
to Randy, I said, okay, let's look at other possibilities.
I could buy your property for cash. You said, that
doesn't work. We could do a joint venture where I
bring the money to rehab the property, we agree upon
a sale price for you right now, and then we
split the proceeds when I sell it. By the way, Scott,
(10:00):
I don't recommend that with civilians, civilians being non investors.
But it was actually a conversation that he or a
question he brought up. Otherwise I would not have brought
that one up, sure, And I said, or I could
put an option in place to purchase the property, and
(10:21):
you can see on the screen for one hundred and
fifty thousand dollars, which is what he told me is
his walkaway number. He would walk away for one hundred
and fifty thousand. And I said, the problem is I
don't now want to stick forty thousand dollars of rehab
into a property that's going to be worth two twenty
five and it's just too much risk. So I structure
(10:46):
it in a way that was me trying to get
as close to retail. I guess we'll call it wholetale
pricing as I could, and I explained it to Randy
in the way that I'm going to make my profit
off of what I sell your property for over and
above the one point fifty. Are you okay with that?
(11:08):
Because guys, he has to be okay with it.
Speaker 2 (11:11):
Because he's gonna know.
Speaker 3 (11:12):
I mean, I'm gonna list this property on the MLS,
and I'll tell you, guys how in a little bit
I'm gonna list it on the MLS and he's gonna
see what I'm selling it for. I'm not trying to
hide anything from him at all. It's full disclosure. So
he agreed. He said, okay, I'll give you you know,
I'll accept one hundred and fifty.
Speaker 2 (11:31):
But how long is this going to take? Now?
Speaker 3 (11:34):
When we're doing options, we as the investor, we want
to try and get as long of a period of
time as we can, and the seller usually wants a
short of a period of time as we can. I
typically want a year to ten years on my deals
at least.
Speaker 2 (11:51):
But he was not having it.
Speaker 3 (11:53):
He said, I don't really want this to go anymore
than it has to. And I said, Randy, if you
are going to list it with a real estate agent
along would that listing be? And the typical answer is
six months. So I said, okay, if I can get
this deal done within six months and different than a
real estate agent, I'm going to stick my own money
(12:14):
into it and do what I feel is necessary to
make it sellable, and I'm going to take care of
all the maintenance, the long care, snow removal. If it
gets to that point, is that a better deal for
him than listing it with a real estate agent? And
he's got he already knows what his price is going
to be, his sales price. And if I fail, six
(12:36):
months goes by, he has an improved property and I'm
out whatever I spent out of pocket. But he's in
a better position than he was the day I met him,
and and he's he liked that, you know, he liked
the fact that I was going to actually have some
of my own money in it and skin in the
game versus a real turn.
Speaker 2 (12:58):
Then we had this other portion of this though, was
how do I legally have the right to use.
Speaker 3 (13:04):
The property and not to live in but use being
improve it, be inside of it, spend time there. Well,
it's utilizing a lease, right, So we had to put
a lease in place. So this just turns this into
a lease option, right. I mean it's early on Sunday morning,
so I missed a step I should have said earlier
(13:25):
on Scott. Creative deal structuring, in my definition, is stacking
different strategies. Okay, So a lease is a strategy and
option is a strategy. Purchasing subject to is a strategy.
(13:45):
You know, originating a note is a strategy. All these
in strategies. But that's not creative. Creative is using the
different strategies, stacking them and solving a problem. So I
said to him, I said, okay, great, I need a
lease so that I have the right to use the property,
(14:06):
and we need to agree upon you know, what do
you want for a monthly rent for lease? And he
was a shrewd negotiator, Scott. He came up with a
dollar amount of zero. I mean, he really beat me
up on it.
Speaker 2 (14:22):
He did.
Speaker 3 (14:24):
I did have to take over the utilities, which there
was a pro paining tank because this was a real
property and U so that was already seventy five percent full,
so there's no expense there for me and the electric
the electric bill which averaged about seventy five dollars a month.
Speaker 2 (14:43):
I will tell you that. A couple of days later, he.
Speaker 3 (14:45):
Did come back and strong armed me and said, I'd
really like to be able to collect, you know, at
least enough to cover the real estate taxes, which was
two hundred and twenty five.
Speaker 2 (14:55):
Dollars a month. So I did.
Speaker 3 (14:57):
I did settle on two twenty five rent for a
three to two on five acres for six months, plus.
Speaker 2 (15:05):
Utilities plus utility. Scott, h that's a that's a tough vibe, man.
I don't know if you'd be able to take care
of that.
Speaker 3 (15:10):
Man, I know, right right. So so that was the deal,
and we we put it together. Now I'll go through
this the rest of the numbers, and then I'm going
to circle back to a couple of things that I
think are really key to protect yourself. So, you know,
I had a two hundred and twenty five dollars a
(15:31):
month lease Randy. We signed the documents. Now, the documents
were at lease, an option, two separate documents, a power
of attorney, and a mortgage, and the mortgage was given
from Randy to me securing my option. Okay, Scott, not
(15:57):
a lot of people ever talk about this. And I
don't know if anybody that you've ever had in your
circle have talked about securing an option using a mortgage
or a deed of trust, depending on your state. But
I've had multiple conversations with attorneys, including Randy's attorney, who
are clueless as to why we would want to do this.
(16:20):
And part of this deal was Randy did want to
have a conference call with his attorney, and his attorney
adamantly said, Randy, I cannot advise you to pledge a
mortgage to Derek to secure this option. And I said,
not a problem. It's been great meeting you all.
Speaker 2 (16:43):
I'm not moving.
Speaker 3 (16:44):
Forward without it, so it's take it or leave it.
And Randy hung up with the attorney and myself and
called me within three minutes and said, let's do this deal.
And the reason is I love this line, Scott. When
somebody wants to talk to their accountants or their attorney,
you have no choice. You have to let them do
(17:05):
it because if you don't, they're.
Speaker 2 (17:07):
Gonna call you, you know, crooked yep.
Speaker 3 (17:11):
So when they come back, not yet, but when they
come back and say, my accountant said I shouldn't do this.
My attorney said I shouldn't do this. I just say
to them, great, did your attorney give you any other
solutions to your problem? Or just tell you to say
no to mine? Right, And that flips the script and
(17:31):
most of the time they'll still move forward. The reason
that I really strongly advise putting a mortgage in place.
And I don't know if there's any questions in the
chat on this or not, because usually I get questions
at this point.
Speaker 1 (17:47):
But it's to like that, Oh, that sounds risky. You
got some different comments in the chat roll here. I
like that, that's creative, all that kind of stuff.
Speaker 3 (17:58):
Okay, I'll tell I'll tell why this is not risky
for us at all. This is this is super important
for us. A mortgage is nothing more than a security instrument.
And when I say mortgage, guys, it's the same as
you know, dita trust. Depending on your state, I'm just
gonna use the term mortgage. So, a mortgage secures a promise,
it secures a pledge. Typically it's used to secure a note,
(18:22):
but it can also secure an option. It can secure
a lease, It could secure a purchase contract that almost
would never happen.
Speaker 2 (18:30):
But it could.
Speaker 3 (18:31):
It's just saying if the agreement is breached, the property
is collateral to take back to you know, compensate for
the breach of the agreement. Why would a seller not
want to follow through on our agreement to sell me
the property for one hundred and fifty thousand dollars. Well,
(18:55):
because I'm going to sell it for two hundred thousand
dollars and they're gonna see this, and I'm open about it.
I'm not hiding anything. But people sometimes get butt hurt
after the fact, yep. And you have to protect yourself
because you're going to be sticky money into this property.
You may have given them a large amount of money
as an option consideration payment. So if Randy decided, hey,
(19:21):
I don't want to sell you the house anymore like
we agreed in the option, and I did what every
attorney tells you to do, which is record your option,
which you can do, should do.
Speaker 2 (19:35):
I don't. Instead, I record the mortgage. And here's why.
Speaker 3 (19:40):
If you go and record the option of public record,
what does everybody in an entire world get to see
what you.
Speaker 2 (19:46):
Haven't under a contract for? What do you have that for?
Speaker 3 (19:49):
And how long you have to buy it? So if
I record this option and people saw that I only
had six months to buy it for one point fifty,
that could be a problem. The next thing is if
Randy sells this property to somebody else, and it typically
goes through a title company or a closing attorney, and
(20:10):
they do a title search. Options have been missed in
title searches because people at work in these offices aren't
necessarily trained to look for options. They're trained to look
for mortgages and deeds of trust for sure. So if
and it's rare, I mean it's a rare occasion. But
if that option got missed and Randy was actually able
(20:32):
to sell that property to somebody else, what are my
odds of ever reversing that sale?
Speaker 2 (20:40):
Very slim.
Speaker 3 (20:41):
Now, I may be able to get a judgment. I
may be able to get you know, go back on
the insurance, the title insurance, all these things. I may
get a monetary judgment. That does not mean I'm gonna
get paid. That just means I'm going to get a judgment. Okay,
But I don't want the judgment. I don't want that money.
I want the property. That was the whole agreement. I
(21:05):
had a right to buy that property and do with
it as I wish. Now we go to court and
I'm filing a lawsuit against Randy, and we now end
up in front of a judge, and the judge is
looking at contract law, and the judge is reading and
(21:26):
using his opinion on what we meant. What was the
intention at the time that we signed the option, and
it could be one hundred and eighty degrees from what
we really wanted as intentions doesn't matter.
Speaker 2 (21:40):
He's the judge.
Speaker 3 (21:40):
He's the judge, right, So we just end up in
this coin toss situation by only recording an option. If
something goes bad, let's flip the to the other side
of this coin. If I have a mortgage that Randy
signed pledging his property as collateral number one, I'm gonna
(22:02):
be in a junior position behind any leanholder ahead of me.
So you always, before doing options, want to get a
title search done for sure, so you know where your
option is sitting in line. And I have no problem,
you know, having this property subject to two mortgages ahead
(22:22):
of me. That would be no different than if I
bought it subject to their mortgages. But you always want
to know that if we got into the situation of
this lawsuit.
Speaker 2 (22:33):
And I lose, I'm out, but I win.
Speaker 3 (22:38):
They may just give me back what I had taken
out of my pocket, which is another good point. But
if I had the mortgage, I could start a foreclosure action, okay,
and I could take this property away from Randy and
potentially Randy gets zero proceeds if I do this. I've
(23:00):
never had to even threaten this, by the way, so
don't think that this is something that happens, but it's
a great tool to say to Randy if he's starting
to get a little bit skittish, or you feel like
something's going up on. And here's how you may find
out if something's going on. You get a random phone call.
(23:21):
This did happen to me once, random phone call from
a title company or a bank asking you.
Speaker 2 (23:26):
What's your mortgage payoff?
Speaker 3 (23:30):
Well, that's interesting, Gee, what do I want my mortgage
payoff to be? Because it can be anything I want. Now,
Randy's either trying to sell it or refinance it. And
do we want Randy to refinance it in excess of
our purchase price? No, because then we go to exercise
(23:53):
our option if he doesn't. If he goes and puts
two hundred thousand dollars worth of debt against one hundred
and fifty thousand dollars sale and he doesn't have the
fifty g and when we want exercise. Now we have
another issue. Right, So we get that phone call from
the title company or that new lender that's trying to
put dead in place because we hold a mortgage. Again,
(24:14):
if we had an option recorded, would we still get
that same phone call?
Speaker 2 (24:19):
Maybe?
Speaker 3 (24:20):
But I guarantee you're getting that phone call if you've
got a mortgage in place. Okay, any questions on any
of that at all, Scott.
Speaker 2 (24:30):
You're you're muted. You my apology? Yeah, what's the terms
of the mortgage that you put on there?
Speaker 3 (24:36):
So that the terms of the mortgage are, if if
Randy does not sell me the property per our agreement,
I have a right to foreclose. That puts Randy in default. Okay.
The other the other mortgage clauses that you would see
in a mortgage securing a note are not in this mortgage.
(25:00):
This is a one page mortgage. It's very very simple, okay.
Speaker 1 (25:03):
Bit that's what of the questions where we're like, is
it the same terms as the underlying debt and you're
just putting a basically putting the mortgage on here, basically
the one fifty there.
Speaker 3 (25:12):
Right, because the underlying debt. They have other factors involved,
like if Randy doesn't pay the real estate taxes, they
can foreclose. If he doesn't have insurance, they can foreclose.
You know, we don't have all those clauses. Although we
would want Randy to add us as an additional insured
in his insurance policy as a mortgage a lender essentially,
(25:38):
not as not as your should. I should take that back, Scott.
It would not be an additional insured. It would be
another mortgage holder. We should go on his insurance policy
because we stand to lose if the property burns to
the ground. Okay, So any other questions on the mortgage
aspect of this, Randy.
Speaker 1 (25:59):
So see it's okay, So you're putting a third lean
on the house basically, but this one allows him to
foreclose if Brandy won't close.
Speaker 3 (26:06):
David asked, yes, correct for any reason if he breaches
the agreement to sell you the property within the agreed
upon amount of time at the one fifty. What's the
timeframe on the mortgage. It's six months. It goes right
along with the option and I will tell you that
one of his attorney's biggest problems was he says, how
(26:29):
do we guarantee that you're going to satisfy this mortgage?
And I said, draft a satisfaction and keep it in
your office in your ESTRO account, and I'll sign it
right now pre closing and so as soon as done.
And that still didn't satisfy the attorney, but it shut
him up.
Speaker 1 (26:48):
You know, hey, we're very good side. Like you know,
that's like a dalaalon s grow basically, you know, like
what's wrong with that? We'll date it, you know, sign it,
and you just got to exercise it when we're ready.
Speaker 3 (27:01):
Scott at the risk of, you know, upsetting somebody in
your audience, I'm going to say this anyways. Attorneys, accountants,
professionals that have a lot of education do not like
getting put in their place. They think their shit doesn't think.
Ye I have a PhD, a public high school diploma,
(27:22):
and I set a lot of attorneys back on their heels,
not because I'm better or smarter, but because I'm open
to learning, and they're not open to learning from somebody
that has, in their eyes, less education. So we just
have to know our I mean I've studied a lot
of this stuff. I don't need a lat agree to
(27:44):
study one piece of what works in our business.
Speaker 2 (27:48):
Right.
Speaker 1 (27:49):
And I'm so glad you said that, because most, like
you said, those individuals there book learned, they're not always
real life learned. They don't have a diploma from school.
Hard knocks are common sense, you know what I mean.
And most in which he has hit so many realtors,
their first thing they don't understand this is to say, well,
that's got to be illegal. That's their thing, and no,
(28:09):
there's nothing illegal about.
Speaker 2 (28:10):
What we're doing.
Speaker 1 (28:11):
This is completely legit legal. It's in our favor. If
you don't fall through with this, it's in our favor.
We're doing this to protect ourselves well. And the other
rebuttal to an attorney in this particular scenario would be,
why would Randy not pledge a mortgage? Is he not
planning and following through.
Speaker 3 (28:28):
With our adrea exactly, And again they don't know how
to respond to that. Their job is to protect a client.
I respect that one hundred percent. But again, I'm solving
Randy's problems. I'm meeting every one of his needs. He
told me he wanted the attorney is not. The attorney's
not giving Randy any solutions on how he can pick
(28:48):
up and move within days to South Dakota to be
with the woman he loves and not.
Speaker 2 (28:53):
Have to deal with the house. That's right.
Speaker 3 (28:55):
So again we're just problem solving. We're not taking advantage
of anybody's ad situations. I'm not taking advantage of Randy
in any way, shape or form. He's getting what he
asked for.
Speaker 2 (29:06):
So so.
Speaker 3 (29:09):
The last piece of our documentation was the power of attorney. Now,
this is a durable power of attorney for the property only,
and you have to explain that to the seller, you know,
maybe more than once, and just say, this gives me
the right to make decisions on your behalf for the
property that are in your best interest, including selling the property.
(29:34):
I can sign the deed, I can, you know, talk
to the banks if there's debt. I can talk to
the tax authority for real estate taxes. All the things
that he would normally be able to do. Why because
he's moving out of state, right, I gotta be able
to have the control of this. And you're gonna see
in a second how this came into play. Now, one
(29:55):
caveat I found out could bite you. You have got
to be able to prove that that person is still alive,
because your power of attorney dies with.
Speaker 2 (30:05):
The death of the individual.
Speaker 3 (30:07):
So on the Texas deal, which we likely won't get to,
that one could have bit me pretty hard because that
particular seller was supposedly leaving Texas and going back to
help some family in Mexico, and I would likely not
have been able to prove that he was still alive
(30:28):
if I was asked. But so Randy, everything went good.
He retired, we signed the documents. Six days later, he
moves out of the house, leaves for South Dakota, and
we went in and spent two thousand dollars to fix
(30:49):
what needed to be fixed, and that included we had
some seepage coming into the basement, which we took care of.
If you look at the picture close enough, you can
see rain utters on the house. He had actually put
those on thirty days prior to us buying this property.
He had already solved ninety nine percent of his moisture
issue in his basement. We just had to do a
(31:11):
little bit of earthwork and do some pitching of the grade,
and then we painted the entire basement, including the walls
and the floor because they were stained water stained. Did
a deep clean on the house, brought in professional carpet cleaners,
things of that nature. Did the yard work in landscaping.
Five days of labor two thousand dollars total including labor
(31:34):
and material, and we listed this property on MLS for
two hundred thousand dollars. We had fourteen showings scheduled within
the first two hours. We accepted the very first offer
that we got because it was my real estate broker's
friends that were looking for a house and they gave me.
Speaker 2 (31:55):
We could have gotten a bidding war. I could have
got another ten.
Speaker 3 (31:57):
Thousand dollars for this house, but they were you know,
we did it legit. It hit the MLS at four o'clock.
They're showing was scheduled at five. There literally was people
parked at the end of the driveway for the next
showing as we were signing a contract. And but they
were a great young couple, good financing, no no inspections,
(32:18):
everything you'd want. They actually were family friends of Randy
and never knew that Randy would ever sell his house,
right because they don't talk. We we do off you know,
off market deals. Nobody ever knew the house was for sale.
Randy was actually very happy that this young couple ended
(32:38):
up with the house, even though he got a lot
less for that property. He was tickled to death. But
here's where the power of attorney comes into place. Got
I signed the listing contract as POA for Randy, and
Randy directly sold the property to this young couple. I
(33:02):
did not exercise my option, nor did I double close,
which is.
Speaker 2 (33:08):
What you would one way.
Speaker 3 (33:09):
That you could do this, Okay, Instead, and I sold
it as POA from Randy to this young couple. I
got paid on the closing statement as a mortgage payoff. Okay,
where does this really come into play? If that couple
(33:29):
is using FHA financing and there is title seasoning required,
I could not double clothes. It would screw up their financing,
Their underwriting would kick out their loan. The beauty with
using the POA is when the underwriting's reading the title report,
it shows Randy as the owner of record, not Derek. Right,
(33:50):
So we don't have to explain anything. If I was
double closing, They're going to have a contract, you know,
Derek selling it to them, and then the title work
comes back showing some guy named Randy on title, Well,
what's what's going on? All these things have to be
explained to underwriting and the loans get kicked out.
Speaker 2 (34:10):
So there's a ninety day seasoning on the flip rule
with traditional financing a lot of cases. So yeah, it's yeah.
Speaker 3 (34:17):
Especially with the government backed type of loans. If it's
a local credit union or bank, you can go in
explain the situation. They probably won't care. But so this
really works well. I never owned the property and never
took deed to this property. We had two thousand dollars
into it in five days. I met thirty six thousand
(34:37):
dollars on this property and I never owned it. Now
it took him twenty eight more days to close. So
start to finish five days on the market for one
plus another twenty eight whatever. That adds up to thirty
six odd days whatever. That is thirty six thousand dollars
(34:57):
profit on a two thousand dollars out of pocket. What's
that ROI? The answer is enough, it's enough. Yeah, who cares?
Speaker 2 (35:09):
Right?
Speaker 3 (35:09):
And we we solved everybody's problems. Randy one, we won.
His attorney lost, but we won the end buyers won.
My real estate broker friend won. Everybody got their profits
and we never owned the property.
Speaker 2 (35:26):
So and that's a great question.
Speaker 1 (35:30):
Yeah, because you know Randy, don't You said, Randy don't
real Church, he didn't really want to deal whether he
was more more interested in in in love and love
one in this situation.
Speaker 3 (35:42):
I love that he loves it too or wanted love right.
Speaker 1 (35:47):
In fact, you made him, motivated him to want to
work with you versus having to go through all the
other things.
Speaker 2 (35:52):
And he solved an issue. That's one of the greatest
things you got paid to solve an issue. Yeah. Absolutely,
did anybody got any questions to chat on that one? Scott?
Speaker 1 (36:01):
Let's see here nice David asked the question why don't
why don't all mortgages have a power of attorney too?
Speaker 3 (36:10):
Well, the mortgage isn't the reason for the power of attorney.
The reason for the power attorney is because through the
option phase, I need to be able to know that
I can make decisions on his behalf even if I
had never listed it and sold it, you know, as
his POA. Let's say I wanted to keep this property
(36:31):
and turn into a rental. That would change the option period.
But let's say that I lease optioned this property and
I was going to sublease it to a tenant. I
may have to deal with code enforcement. I may have
to deal with one hundred different scenarios.
Speaker 2 (36:47):
Yep. Right.
Speaker 3 (36:49):
How do I know that Randy puts me on his
insurance policy to protect me? As I mentioned earlier in
this case study, well as POA, I can call his
insurance company mcdan. I'm sure that I'm on that insurance policy.
All these things are there to protect you. And oh,
by the way, we're taking it off Randy's plates. Don't
worry about Randy. I'll call your insurance guy. What's his
(37:11):
name and number? Right, it's all about helping him, but
protecting us along the way.
Speaker 2 (37:17):
Yep, you, Well, that's the think. It's when people move on,
it's really hard to get him to take action in
anatomic fashion. It's on their comfort level.
Speaker 1 (37:26):
And then it's a little bit well, I thought I
turned this over to you to get everything.
Speaker 2 (37:29):
Now now I got to call this person and call
this person and do this stuff. I don't want to
do that.
Speaker 1 (37:33):
I want I want to go out and get the
get some lovin call me mcleven.
Speaker 3 (37:37):
Absolutely absolutely, in South Dakota of all places, so.
Speaker 2 (37:45):
So that that's that one.
Speaker 3 (37:46):
I can jump to the next one if if everybody's
got their questions answered.
Speaker 2 (37:49):
Scott, yeah, I think so let's go ahead. Let's good
on the deal. North two. All right, So this is
a cute little house. So this city.
Speaker 3 (37:59):
To give you some person, there's about one hundred thousand
population in this city. A lot of these forties and
fifties and sixties homes that were built, you know, around
the wartime, and a lot of them that are you know,
I've been halfway updated, but they still need some love.
And these turn into rental properties, very common. So this gentleman,
(38:20):
he was seventy years old, he had bought this property
and he bought it for fifty five thousand dollars six
years prior to us doing this deal. I started this
deal about let's see, two and a half years ago
is when I did this deal. So I made a
(38:44):
three tiered offer, and the first offer was thirty four
thousand dollars cash, The second offer was fifty five thousand
dollars at five percent interest amortized over twenty years, and
the third offer was seventy thousand dollars zero interest payments
(39:07):
of three fifty Okay, why does that? Why is that important?
He was charging not enough rent to start with, but
his cash flow every month, Now this was free and clear,
but his cash flow was about two hundred and seventy
five dollars a month after his taxes insurance. By the way,
(39:27):
that's not including maintenance or anything else, you know, actual expenses.
In his mind, he was cash flowing two seventy five
To the rest of us.
Speaker 2 (39:35):
We all know better.
Speaker 3 (39:36):
He wasn't hardly cash flowing anything because he was self
managing and had to deal with, you know, the maintenance items.
He had the same tenant for the entire six years,
which is why he didn't want to raise rents. He's
charging six fifty for rent for a three bedroom, two
bath house that needed a ten thousand dollars renovation. So
(40:01):
when we stepped into this, I was looking at this saying,
if I stick ten grand.
Speaker 2 (40:06):
In this house, it'll be worth about.
Speaker 3 (40:10):
One hundred one hundred and five. Okay, not a bad deal.
I mean again, in this neighborhood, one car garage that
that should rent for about one thousand dollars a month.
So if I was into it for seventy to eighty,
I'd be okay with that. But the cash offer is
(40:33):
if I'm gonna flip it, right, so thirty four thousand
dollars cash and I'm gonna stick ten grand into it.
Typically I would probably do that deal and stick twenty
grand into it, because if I was going to do
a full flip, I'm going to do a lot more
to it. But I'm looking at this as I want
to hold this property and rent it out. So I'm
(40:55):
talking with him and he says, well, I really need
to run this past my son in law, who is
a financial advisor. I thought, oh, here we go. This
is going to be great. And as you can imagine,
financial advisor who only deals with stocks and mutual funds
has no clue about real estate, is telling him, absolutely,
(41:17):
you should not do this deal with zero interest. Why
would you ever do that? That's crazy. And I said
to him, I said, okay, Well, for me, I am
happy with any one of these three offers because the
net result is about the same. But for you, seventy
(41:39):
thousand dollars at zero percent interest keeps more money in
your pocket. Because of Uncle Sam and how things are
taxed now, I never give anybody tax advice, and I'm
not going to give your listeners. Tax advice, you know,
and again I have a PhD. What do I know
about taxes? But I know that even if he got
(42:03):
hit with imputed interest, he's still going to be at
a much better scenario with the seventy thousand dollars. And
it raises my basis and the property as well. When
I'm get ready to sell the property, which I like,
I lose a mortgage interest deduction because there's no interest,
but I gain a higher tax basis when I sell
(42:26):
the property. If I sell it short term or long term,
that's still important to me. Okay, So ultimately my payments
in those couple offers were going to be in the
three twenty five to three fifty range. He puts more
money in his pocket each month now with zero hassles
(42:48):
of management, and that's really all his goal was. He
did not want a lump sum of money some of money.
He wanted the monthly revenue, and he was concerned about
what happens if he dies. And he said, Okay, I
don't love putting balloons in any of my structures if
(43:09):
I don't have to, But he did want a three
year balloon payment. And Scott, what do you think about balloons.
I mean, you're the note guy, what do you what
do you feel about balloons? You're you're still muted.
Speaker 2 (43:25):
They don't. They don't bother me. As long as they're
far enough out.
Speaker 1 (43:27):
They're usually pretty enough to renegotiate if I need to
extend a year or two. But usually I do a
balloon five to ten years, and I'm usually going to
be out of the deal by that point, or have
it restructured or to some other things.
Speaker 2 (43:38):
But that's what I like to do in there.
Speaker 1 (43:40):
I mean, you know, this is we're buying a lot,
you know under financial stuff. That's what I that's what
I want. But you know that they don't. They don't
bother me at all. But you know, everybody's a little
bit different than what they want to do and what
their goals are long term for an asset, you know
what I mean. So you said that you could renegotiate
him and get them extended possible.
Speaker 2 (44:00):
Right, yeah, exactly? Oh yeah all the time.
Speaker 1 (44:03):
Okay, Yeah, so we'll come and say, you know, like
we had to come and say, yeah, hey, I need
can I REDEU send us out, I pay you a
point or we adjust the terms a little bit. You
know it's pretty easy to do.
Speaker 3 (44:13):
So it's almost like we rehearse this, but we didn't, okay,
because I want to structure that extension from the get go,
right from the jump. And here's how you do it.
I just said to him, I said, okay, I understand that,
and agree to a three year balloon. I got no
problem with that. My goal is to put a person
(44:34):
in here on a rent to own or a lease option.
Actually more than a rent to own, a lease option.
And my lease options are structured to be one to
two year deals, but sometimes those fall apart, and I
got to start over with a new lease option. And
I'm saying this to the seller, right, And I said,
if I got to that three year window and it's
(44:57):
it's the windows closed, it's time to pay the balloon.
And there's something beyond my control. We could be in
the middle of a war. We could be you know,
have an election cycle that doesn't go well. Always blame
it on things beyond your control. Right, we could have COVID.
This was before COVID actually, so this would have been
(45:18):
several months before COVID is when I did this purchase.
And I said, in that event, something happens I can't
pay you off.
Speaker 2 (45:28):
Do you want the house back?
Speaker 3 (45:30):
And ninety nine point nine percent of the time their
answer will be no. There is the rare occasion they
will say yes, But as long as they say no,
it's super easy to get an extension because you just
say to them, listen, mister seller, we're in really good
communication right now. We know each other, we like each other,
(45:52):
we trust each other. We have to grow that trust
over time as I make payments to you. But if
I live up to my of the agreement, would you
have any reason to believe that I'm not going to
pay you longer term? Can we not figure out an
extension right now where I give you X you know,
(46:12):
and it might be I'll give you five thousand dollars
towards the It all comes off the principle, and then
I get another three years, or I get another five
years or whatever. So you can take almost without fail,
you can take these balloon deals from the get go
and get twice the amount of time that they wanted
for a balloon, almost without fail. You just got to ask, yeah,
(46:34):
so that's exactly what we did. He was, Oh, he's
seventy seventy seventy one at the time, worried about not
being around when the balloon hit, or we just want
to make sure his wife was taken care of if
he did pass away. So yeah, let's solve their problem,
but let's look out for what we need to. So
(46:57):
we ended up doing that. The seventy thousand dollars was
zero down. Monthly payments of three fifty actually ended up
with a five year balloon and a three year extension
on this one and zero interest.
Speaker 2 (47:09):
Okay, So.
Speaker 3 (47:12):
At three fifty a month, we're getting three to fifty
a month principal reduction. So once we have this thing
turned over and a tenant in there, and we're going
to increase our rents even if we were at a
break even cash flow on the front end, which by
the way, I would never do. But if we were,
(47:32):
we're legit cash flowing three to fifty a month from
the get go on the principal reduction alone.
Speaker 2 (47:37):
Okay.
Speaker 3 (47:40):
So I brought in a financial friend who because I
don't like tying up a lot of my own money
in any deal, I kind of have a religion against it. Actually,
I have a religion against paying a retail and I
have religion against using my own cash for very long
periods of time.
Speaker 2 (48:00):
And I suffer from the same thing.
Speaker 3 (48:02):
Yeah, yeah, it's it's definitely something that we could start
a club. So I have a financial friend, and I'm
very nosy with all my financial friends. I like to
know what they have and what they're seeking. So I
knew she had a small IRA and I had actually
used it before and gotten her an extremely nice rate
(48:24):
of return, so she wanted to place it into another deal. Now, guys,
I run a lending company, So I run a hard
money lending company, so it's not out of the question
for us to be, you know, working with millions of
dollars a month in hard money loans. But those are
all short term, and I don't want to go to
those investors and say, hey, you know, I want to
(48:44):
take your money and put it into this long term
deal because I want to use their money.
Speaker 2 (48:51):
For all our short term loans.
Speaker 3 (48:53):
But my financial friends that have twenty thousand dollars in IRA,
I don't want to put them into our hard money
lending pool of funds because it's too small of a
dollar amount, right, But I still want to make them
great returns.
Speaker 2 (49:07):
So I said to her, I said, okay, here's the deal.
I will.
Speaker 3 (49:11):
I want to use ten thousand dollars of your IRA
in exchange for twenty five percent of the future equity
of this property at the time I sell, And that
time is up to me. It could be a year,
it could be ten years, it could be twenty years.
And she's said, absolutely, let's do that. That is a
(49:33):
really generous gift to her. Why would I do such
a thing because we're financial friends and we're trying to
help each other grow our retirement accounts. You know, we
pass deals back and forth with our financial friends. We
do things for each other. And I'm being able to
get into that deal with zero cash out of my pocket.
(49:56):
You look on a screen, you'll see the renovations went over,
and it went over because we ultimately had once we'd
started a little bit of demo in there, we had
to do some other things and you know, hey, it happens, right.
So I actually did have six one hundred and fifteen
dollars out of our pocket to put in this deal.
We put a lease option tenant into the property and
(50:20):
they gave us five thousand dollars upfront for their option,
which means I now had one hundred and fifteen dollars
into this deal because that money doesn't go to my
financial friend. That financial friend gets twenty five percent of
the equity. They do not share in the cash flow.
Very important point. Okay, the five thousand dollars on the
(50:44):
front end is considered cash flow. It does go towards
the purchase price as long as the option is exercised,
but it does not go towards the purchase price if
they fail, so then it becomes rent. Okay, So this
family moves in. The guy was a veteran. I have
(51:07):
him working with my mortgage broker ahead of time before
we signed the least option, because I like to know
what their challenges are. What do we got to do
to get them to qualify for a loan. I set
up one year options with the right to extend for
a second year at my sole discretion, not theirs. They
have to pay the rent. They have to take care
of the property as if they own it, which means
(51:29):
they maintain everything. I don't care if it's a furnace
in ac of whatever it is.
Speaker 2 (51:36):
It is.
Speaker 3 (51:36):
Their responsibility is if they own it within our agreement.
So fast forward. I mean they signed this contract in
November start paying nine to ninety five a month for
their rent and COVID hits four months later, job losses,
(51:57):
they start falling behind. It got ugly, and I absolutely
could have booted them out right.
Speaker 2 (52:04):
We had that time.
Speaker 3 (52:06):
A lot of us had that that period of time
to try and make decisions.
Speaker 2 (52:09):
What's what do we do? What's best for us?
Speaker 3 (52:12):
The key there was they were taking care of the property.
You know, if I walked through and they weren't taking
care of the property and they weren't paying their rent
on time, game over. But they were taking care of
the property. They were struggling, They were doing what they could.
They were robbing from Peter to pay Paul, getting friends,
getting getting money from family, and doing whatever they could.
(52:35):
So I kept working with them. They got through year one,
you know, twenty twenty, twenty twenty one. Now we're into
year number two.
Speaker 2 (52:44):
Now.
Speaker 3 (52:44):
In my options, I structure a tiered purchase price. The
purchase price is set in stone, but it goes up
in year two because I don't want people to gain
the equity while they're not performing and exercising their option.
(53:04):
I want them to be motivated to do whatever they
got to do to fix their credit. Or whatever their
challenges are in year one and get closed, exercise their
option and closed within three hundred and sixty five days.
If it goes three hundred and sixty six days and
they close, their price just went up to in this case,
(53:25):
went from four one hundred and fourteen thy nine hundred
in year one was their purchase price, to one hundred
and eighteen thousand and three forty seven in year two, okay,
which happened to be twenty twenty one.
Speaker 1 (53:40):
Are you basing it off of pulling cocks or it's
a percentage increase in the contract as that worked for you.
Speaker 3 (53:47):
There percentage increase in the contract usually which in this
particular case, I was way off on appreciation, right like,
which was a benefit to them, right you know, I'll
usually be a three to four percent bump in year two,
which is just cost of living increases. But I want
to make sure that when I'm doing these deals, I'm
(54:10):
not setting them up for failure. That one hundred and
fifteen thousand dollars initial price that was off comps that
I know the property will a praise out. I know
they'll be able to get the loan at that number
without any issues. So they go into year two, it's
twenty twenty one. They're still having some financial struggles, not some,
(54:32):
they're having a lot of financial struggles. But they've gotten
current with me. Now it's just a matter of getting
their credit fixed so that they can actually qualify for
a loan. And November of twenty twenty one came and
it got to a point where, you know, they're working
with my mortgage broker. So I'm in communication. I'm not
(54:53):
getting this third party from them saying yup, everything's roses.
I'm getting it from my broker saying okay, we really
need for them to close. And he said I need
at least two more months. Said okay, so if that's
the case, I'll still honor that purchase price if you
(55:13):
can get him closed in two more months. He couldn't
get him closed, And they said, well, we have a
friend he was in a military with that is willing
to co sign. Can will that work? And his friend
lives in Hawaii's stationed in Hawaii, currently houses in Wisconsin,
and this guy is willing to co sign. I'm looking
(55:34):
at him like you're an idiot, but who am I
to judge? So they it still wouldn't work. The wife's
credit had gotten too bad. It wouldn't work. And I said, okay,
well your option is expired, and I'm sorry, but you
have to leave. This property is now worth one point
(55:56):
thirty five because of the market we've had right and
now we're in spring of twenty twenty two, this past spring,
and it's worth it's appraised a praised value at one
thirty five. So that financial friend in Hawaii was willing
to buy the house outright and then do a side
(56:19):
deal with them to lease it to them. I don't
know what terms of their agreement are, but I got
on the phone with this gentleman in Hawaii and I said, listen,
the property's worth one thirty five. Here's the steps I
would suggest you take to protect yourself. Friend or no, friend,
you still have to protect yourself. But I'm not selling
it to you for one hundred and eighteen thousand dollars,
(56:41):
because why I could just kick them out, go in,
freshen up the property and sell for one thirty five.
So I said, what's fair and what makes sense, and
we agreed upon one twenty three six. He still had
some equity, and remember the five thousand dollars that I
had gotten as option consideration, which would have gone towards
(57:03):
the purchase price. Is now that's that's the different buyer.
So I pocketed that five thousand dollars, did not go
towards the purchase price, and then I sold it for
one twenty three six. So if I really added those
numbers up, I got one twenty eight six. But now
I didn't have to go back in and stick any
kind of money into the property again, so everybody won. Okay,
(57:31):
how did the numbers come out on this? Well, one
hundred and twenty three six. If you look at my
profit over two and a half year period of time,
this is going to be rents and the sale price
after I paid my financial friend. Okay, so how is
(58:00):
that as far as a rate of return? Scott on
six fifteen dollars over a two and a half period
of time. Yep, you're muted. You're muted, Scott, But I'm
reading your lips. That's enough, it's enough, right, Yep. I
mean that's the that's the whole point of these deals.
(58:21):
But we structured and stacked a lot of different strategies.
If we go back, we had a free and clear
property with a seller finance note and mortgage. Then we
put together a contract with our financial friend which that
was a participating note. Then we did a lease and
(58:44):
an option with our end buyer who didn't end up
being our end buyer, and then finally the purchase and
sale contract with the actual buyer. All through this and
everybody came.
Speaker 2 (58:59):
Out a winner. Yep, right, amend to that.
Speaker 3 (59:05):
Consequently, my financial friend on this deal her ten thousand
dollars IRA, she got a check back for just over
twenty one thousand dollars right in two and a half
year period of time, So pretty good rate of return
in her IRA.
Speaker 2 (59:20):
Yeah, David asked that question.
Speaker 1 (59:22):
So when Derek says that he paid his finance, here's
the twenty five percent equity at closing, he really means
that she got twenty five percent of the free and
clear profit.
Speaker 2 (59:29):
Right, Yes, she.
Speaker 3 (59:31):
Got twenty five percent of the net, not including the
cash flow from the rents over that two and a
half years.
Speaker 1 (59:41):
And the seller, original seller is happy now he got
his He got his? Uh what was he got a
little bit of cash flow along the lay? I think
it was reducing the debt roughly about twelve grand a year.
So if you were into it, for two and a
half years. You owed what froun thirty forty thousand dollars
forty five thousand dollars on this at the end of closing, right.
Speaker 3 (01:00:00):
And that's see, that's the part that my financial friend
does get. She gets twenty five percent of that principal
reduction every month in equity.
Speaker 2 (01:00:09):
Yep. So it's very appealing to her. Yep. Awesome good stuff.
That's a great deal. Who wouldn't do those?
Speaker 1 (01:00:18):
You? I mean, that's the beautiful thing. You do those
all day long. There's you know, all day long, baby,
and twice on Sunday.
Speaker 3 (01:00:24):
And especially now as the markets are starting to get
a little bit more volatile, like the you could do
this in any market. That's why I'm talking about case
studies I've done in the last couple of years when
it's been really hot. But guys, when the market shifts,
you can do this even more and more and more.
That's the point of this.
Speaker 1 (01:00:45):
And the thing too is you look at what's going on,
not just with prices going on, but you've got a
lot of baby boomers who have bought real estate. They
don't want to be in the real estate business man.
They don't want to be in the rental business. They
want to get out. They've got equity or they've got
free their property. They want to get out. And you
structured this in the way where they wouldn't taken immediate
tax it. They delayed it over time for them. It's
(01:01:05):
a benefit for them because now they don't have to
deal with it. It's an opportunity for you to come
into and make things work. And you help folks get
into a house that they couldn't qualify for. It almost
didn't qualify for without their financial friend. But it's also
you know, it's still a win for them. Is if
you sold it at the one twenty three. Get the
guy in the Hawaii if he's a VA loan, he's
(01:01:28):
got some.
Speaker 2 (01:01:29):
Little bit of quid there. You he really helped multiple
people along it along the process. Right.
Speaker 3 (01:01:35):
And when I'm doing this in front of a live
audience and people are raising their hands and asking questions,
most of the times people will ask this question, Scott,
how do you get the seller to tell you what
they need?
Speaker 2 (01:01:49):
Right?
Speaker 3 (01:01:49):
Because this is the biggest problem with real estate investors
in general. And again, maybe I'll offend some of your audience,
but I don't care too many people are lazy, yeah,
and they just want they want to push the easy
button and they want cash to flow like like you know,
falling rain. The reality is you've you've got to learn
how to talk to people and you've got to learn
(01:02:11):
how to solve their problems. And you can't solve their
problems if you don't know what their problem is. When
I got my ass kicked in two thousand and seven
when the market shifted, I was that problem, that distress
seller that had all these problems. So I can relate
a lot to people that are having struggles. This gentleman
didn't have a financial struggle. He had a struggle with management.
(01:02:34):
He didn't want the joys of management anymore. So how
do we how do we really find that out? We
have to ask questions. We have got to get on
a personal level with the sellers. You can't do that
with an MLS listed property that you're just making a
written offer through a realter. It's it's virtually impossible. It is,
(01:02:56):
it can happen, but it's it's very rare. Okay, So
you just have to get good at solving people's problems,
but you got to know what they are. Typically I
do a little elevator pitch. Usually this is over the phone,
and I do it within the first two minutes of
every interaction I have with a seller, and it goes
(01:03:17):
something like this, Scott, Scott, we buy houses in several
different ways. All cash is not a problem, but that's
typically going to be our lowest offer. If that doesn't
meet your needs, then we can look at other possibilities,
like we can take over your debt payments if you
still have debt. If you don't, we could make payments
to you over time, or we could even lease your
(01:03:38):
property and buy it at a future date. That usually
works with like landlords that are trying to offset some
taxes or something like that. I tell you all this, Scott,
just so you know there's multiple ways we can help you.
But I may have to ask you some questions that
most people wouldn't.
Speaker 2 (01:03:52):
Is that okay?
Speaker 3 (01:03:54):
And elevator pitch okay? Now, by doing it and setting
it up that way, any question I ask you moving forward,
you're not going to be offended with, and you're gonna
likely answer now. Of course, there's all gonna be some
people out there that you've got to caress a little
bit more, right, But but I've gotten their permission to
(01:04:14):
ask him anything I want. And that's why it's so
important to try and do whatever's natural for you, so
it doesn't sound like a script. Whatever's natural for you.
To get that point across, that's how you get people
to open up about their needs and you solve their needs.
Speaker 2 (01:04:31):
So I have questions, I mean, that's the that's the power.
Speaker 1 (01:04:33):
The people that make the most amount of money, that's
the ones ask the most my questions.
Speaker 2 (01:04:37):
Yeah, for sure, for sure. So that was a pretty
good deal. Yep.
Speaker 3 (01:04:43):
I Uh was there any questions in the chat on
that one at all?
Speaker 1 (01:04:47):
No, they just like the great elder pitch and David asked,
is there any downsides to this type of deal for you?
Speaker 2 (01:04:52):
Derek? Absolutely? If the markets crash.
Speaker 3 (01:04:58):
And you're tenants can't get financing, you know, you've got
to be prepared if if you're the one holding the option.
If you know, if I was in the tenants shoes
and the markets went down and now I can't get
financing and I put up five, ten, fifteen, twenty thousand dollars,
do I stand to lose that money?
Speaker 2 (01:05:20):
Yes?
Speaker 3 (01:05:20):
Us as landlords COVID moratorium on rents, could that have
destroyed it? Did it destroy a lot of landlords? Absolutely?
There's always risk.
Speaker 2 (01:05:31):
You got to weigh out what's what you're willing.
Speaker 3 (01:05:33):
To take on. In this case, he went month after
month with giving me partial rents, not the thousand dollars
that he owed me.
Speaker 2 (01:05:43):
We had to make a decision do we keep them
do we not? So there's risk, But.
Speaker 3 (01:05:50):
I like my odds when I when I'm buying a
property for fifty to two hundred thousand dollars versus if
I was buying a property for five hundred to two million.
Speaker 2 (01:06:00):
Exactly. Yeah.
Speaker 3 (01:06:01):
You know I live in the Midwest. We can still
cash flow our properties and be okay. I bought one
on Friday for thirty seven thousand dollars and you know
it needs a sixty thousand dollars renovation, but it's to
be worth one sixty when it's done. If it doesn't sell,
I like my odds, right, I'm into it for under
(01:06:23):
one hundred grand, will I be okay?
Speaker 2 (01:06:24):
Yeah?
Speaker 3 (01:06:25):
So it's just those types of deals that you got
to get used to and know your threshold.
Speaker 2 (01:06:32):
Cool. So this one, Scott, what what what do we
got for time? You're good?
Speaker 1 (01:06:37):
Do you get We've got roughly twenty five minutes for
the next peer you're supposed to start, so you're golden.
Speaker 2 (01:06:41):
Okay, sweet, So I'm gonna run through this one.
Speaker 3 (01:06:43):
Now. This is not some really dramatically awesome deal from
a financial standpoint of profit, but I love this deal
from the perspective of helping people. Okay, this little house
is about three hundred yards from a really nice lake,
(01:07:04):
doesn't have a basement, has a crawl space, and Wisconsin
basements are pretty important. Most people expect one, so it
does devalue a property if you don't have it. But
this little two bedroom house was super important to a
couple people that were brought to me by a real
estate agent that didn't know how to solve their problem.
Speaker 2 (01:07:21):
Okay.
Speaker 3 (01:07:23):
Pam and Justin are their other names. Pam's dad eighty
ish eighty two. He's beyond the point where he can
do anything for himself. Really needed twenty four hour care, Pam.
This is the house Pam grew up in. She moved
back in with her father and to take care of them,
(01:07:46):
and now they're trying to get their father into a
nursing home and on Medicaid. The problem with that is
Medicaid looks at you know, looks at your assets, and
they want you to liquidate your assets so that they
can use them.
Speaker 2 (01:08:02):
And I guess that's fair.
Speaker 3 (01:08:03):
We won't get into a political debate, but you know,
that's what was happening. And this house has been in
her family. I mean she grew up in this house,
so it's been in this family since the seventies.
Speaker 2 (01:08:16):
And the way.
Speaker 3 (01:08:17):
Medicaid works and all of these government programs essentially is
he can't sell the property to a family member for
less than retail value. She can't qualify for a loan
because of their income and other challenges at retail value.
So this property is worth one hundred and twenty five
(01:08:37):
thousand dollars as it sits. He owed forty five thousand
dollars on a mortgage, her dad owed forty five thousand
dollars on a mortgage, and there's two other junior leans.
They made some bad decisions and overpaid to have this
handicap accessible bat shower put in and got price gouged
beyond belief windows gouch. So there's twenty two thousand dollars
(01:09:02):
worth of payments there or debt that they're making payments on.
So all said and done about sixty seven thousand dollars
worth of debt and property valued one twenty five one
point thirty ish.
Speaker 2 (01:09:16):
Right, So I said to.
Speaker 3 (01:09:20):
Pam, I said, okay, if I buy your dad's property
subject to the debt and I let you guys lease
the property from me with an option to purchase, does
that solve your problem? And she said, well, yeah, but
how does that work with Dad, because you know, if
(01:09:43):
he goes into the nursing home and the loan is
still out there, aren't aren't Isn't that going to be
a problem? I said no, because he doesn't have the
deed anymore. If I leased the property from your dad
and he still had a deed, that would be a problem.
Speaker 2 (01:09:58):
If I buy the.
Speaker 3 (01:09:58):
Property subject the mortgage, he doesn't own it anymore. We
have a closing statement, you can prove to the nursing home.
You can prove the Medicaid it's sold. And she said, yeah,
but how can you buy it for forty five thousand
dollars first mortgage and the other because in reality, I
actually bought it for the forty five thousand and they're
(01:10:21):
still paying on those other two lians. I'm taking that
risk because it doesn't matter for the story. But the
closing statement showed a forty five thousand dollars sale price,
and she said, well, how can it be bought for
such a dollar amount below fair market value? And I said, well,
(01:10:42):
there's a very good chance that it's going to get questioned,
and so I need to be able to show why
I did this. I need to be able to show
you know my track record in my company that we
always buy property below value, we renovate them and increase
their value. And I said, our worst case scenario is
(01:11:05):
that they get pissed, but there's no money for them
to get there. Really, isn't I mean, because this did
end up ultimately happening. And I'll tell you the end
of the story before i tell you the middle. They
put Dad into a nursing home. Two months went by
and the nursing home started to question nursing home being
(01:11:29):
the front person for Medicaid, right, so Medicaid was questioning
the nursing home. The nursing home was questioning them how
how did this property self so far below value? And
we had taken pictures of the inside because the inside
is dated and it needs needs a lot of work
to update. It doesn't need a lot of work to
(01:11:50):
live in. It's perfectly fine. But it's wallpapering, and you
know it's it's you know, it looks old. It was
an eighty two year old man's house. To him, it
looks like fine. But to us, anyone that would want
to buy it now, it's not updated. So we just
documented it. We documented the fact that there was what
(01:12:11):
a nine thousand dollars shower put in, and we documented
that there was thirteen thousand dollars where the windows put in.
And then I had a real estate friend of mine
broker run comps. Now I carry a broker's license, I
could run comps, but I need a third party. So
(01:12:32):
we ran comps and I said, okay, what are the
lowest comps in that area? Not the highest, what are
the lowest backed out our renovation costs. Showed him my
formula for what I do every day and how I
purchased properties and why it would sell for that, and
the whole thing went away. And the reason the whole
thing went away is because the nursing home doesn't care.
(01:12:54):
They just needed something to put in the file.
Speaker 2 (01:12:57):
YEP.
Speaker 3 (01:12:58):
The person on the Medicaid side of the phone call,
doesn't care. They just need to show they did their job.
They're just pushing paper. So when they had something from
a licensed real estate broker in a state of Wisconsin saying,
this is the valuation of these comps in this neighborhood.
Here is what it would cost or the renovation costs
to take it up to this current value whatever. Right,
(01:13:20):
So I have done this so many times that I
don't it doesn't even make me nervous anymore because ultimately
I know they're just trying to show that they did
their job and there's gonna be no follow through after that.
So it all worked out on that regard. But if Scott,
if you bought this property forty five thousand dollars first mortgage,
(01:13:42):
subject to a couple twenty two thousand in debt, and
it's worth one twenty five, what do you think the
resale on the option back to Pam and Justin should be.
Speaker 1 (01:13:55):
If you're solved on an issue that can't be solved,
I would say at least one hundred, if not.
Speaker 3 (01:13:59):
More, one hundred grand purchase price at least yeah. Okay, okay, So,
and there is no wrong answer. This is the cool
part of helping people and solving people's problems because.
Speaker 2 (01:14:11):
You get to lead with your heart, right.
Speaker 3 (01:14:15):
I told Pam and Justin, I don't do a deal
that I can't make twenty grand on minimum. So I said,
I want to make twenty thousand dollars over my actual expense,
including all closing costs, anything I ever take out of
my pocket in regards to this house in Delavan. That
plus twenty grand, and I want to make two hundred
(01:14:37):
dollars a month on your rent. So I'm taking over
the mortgage. You know what the mortgage payment is because
you've been making it for years. Add two hundred dollars
to that. If the escro goes up because of taxes
or insurance, your rent goes up proportionally, you know. And
that's the deal we were doing. And they're still there.
(01:14:59):
We did this deal last year. Their one year came
up in April April thirty first, and they're working with
my mortgage lender. They're still having some challenges getting a mortgage,
so we I said, no problem, We've already got it
documented what your purchase price is. For year two, it
goes up by two grand. Pretty fair deal this house.
(01:15:21):
By the time they close on it in you know
by let's call it next spring. This house is worth
one forty all day long, maybe one fifty, right. So
I love this story mostly because I get to give
back and they are doing Like the furnace went out.
They called me in June. The furnace went out. They
(01:15:42):
had spend fifty seven hundred dollars. They don't have an
extra fifty seven hundred dollars, but they found it. I
owned the house. They put a fifty seven hundred dollars
expense into my house. I could have kicked them out
right in April their one year came up. I could
have said, nah, I don't feel like extending because the
market is so hot. Right, I could have kicked them
(01:16:04):
out of their family home. That's not fun. Nor do
I want to be that guy, and I don't have
to be. I'm still going to make a profit, right.
So that's why I love this deal. It's not creative.
We didn't stack fifteen structures right, or fifteen strategies for
the deal structure. It was pretty basic, a sub too
(01:16:25):
and then a lease option. But I love the fact
that we get to help people by being creative. Nobody
else knew how to help this family, this real estate
agent had no clue how to help this family, and
I feel like that's super important.
Speaker 2 (01:16:39):
It is. Yeah, no, so the go any questions on
that one at all? Yeah, we asked to see here.
David asked. The question is was Derek able to get
them to sign over the title at the beginning of
the deal? Yes, yeah, that's you mentioned.
Speaker 1 (01:16:54):
He had to do that because otherwise Medicare would have
seen that the father's name was still one tip, still
sitting out there and still owned it technically, and that's
why he was able to sign it.
Speaker 2 (01:17:04):
Over and do the d transfer.
Speaker 3 (01:17:05):
So yeah, Scott, is this does this group understand subto
very much?
Speaker 2 (01:17:09):
Have you had much of that discussion? Yeah, we we did, exactly.
We talked.
Speaker 1 (01:17:13):
We had Chris Prefontaine on you State talking about subject to. Okay, well, Matrees,
how did you How do you find your houses? This
one it came from a reformer realter, but how are
you finding your houses?
Speaker 3 (01:17:24):
Every off market marketing, chanlenge channel you can think of,
So we do direct mail, Google AdWords, campaigns, social media marketing,
the gamut, and and we do some more than others,
and it'll change, will fluctuate, But yeah, I don't buy anything.
I shouldn't say I never buy off the MLS, but
(01:17:44):
it's very rare at least right now.
Speaker 2 (01:17:47):
Sure? Cool?
Speaker 1 (01:17:50):
You want to share the numbers on this one and
what exactly it came out to on this one?
Speaker 2 (01:17:54):
Like I said, it hasn't sold.
Speaker 3 (01:17:55):
Oh okay, okay, okay, So I'm gonna I'm gonna be
at question mark on profit. I keep forgetting to flip
through the slide.
Speaker 2 (01:18:05):
So I'm just talking. It's Sunday morning, guys, Sunday morning.
Speaker 1 (01:18:09):
Exactly what can I ask? What the option is? What's
their option on it right now? Do you know that
or do you want to know?
Speaker 3 (01:18:15):
It was at about eighty thousand dollars when we started,
But again it's it's going to be when. So when
they exercise their option, we have to fill out a
purchase contract.
Speaker 2 (01:18:24):
Yeah.
Speaker 3 (01:18:25):
At that time is when we'll figure out what I'm
out of pocket exactly and add twenty twenty two thousand
dollars at this point A yeah, so it was a
fun deal.
Speaker 1 (01:18:36):
Yeah, keeping people, I mean, that's the thing.
Speaker 2 (01:18:39):
You helped solve an issue.
Speaker 1 (01:18:40):
The reason the realtor could do it because they are
not create enough a lot of times and they're all
they can sell the property, Well where does the family go?
They don't want to go. They want to stay in
their house. They put this work into that works well
for dad. And that's a you know, doing a lease back. Yeah,
that's a that's an option. I mean, it's great. We
don't Yeah, you can't do lease options here in Texas
one hundred and eighty days.
Speaker 2 (01:18:58):
But you know, doesn't mean you can't. All right, when
you want.
Speaker 1 (01:19:02):
To sell it, let's you know, just not taking it
to positives. Let's offer to sell it, or we'll sell
it to market value, ready for five percent of market
value whenever you get around to it.
Speaker 2 (01:19:10):
In a lot of cases.
Speaker 3 (01:19:10):
So let me ask you this question, because I did
do a deal in Texas and I least optioned it.
I was the one that got the least in the option.
But when I did my research, can you or can
you not lease option to a business all day long?
Speaker 2 (01:19:28):
Yes? Right, yes, all day long? Yes to LLC's the business. Yes,
of course you can do that. See owner occupant's what
I thought. Yeah, they can't do but yeah, so do
they have loopholes?
Speaker 3 (01:19:39):
You know, if your owner occupants happened to start an
LLC like a single member LLC. Can you do or
is anybody trying that at all? Again, I'm just I'm
just thinking outside.
Speaker 2 (01:19:50):
That's that's where I go.
Speaker 1 (01:19:51):
If the if the owner started LC, well then it's
a hard time if they want to get traditional financing.
A lot of times, if the LC is not seasoned
and they don't have the acces, the credit stuff like that.
Speaker 3 (01:20:01):
It would have to be a longer term lease option.
With all that in mind, that yeah, yep, okay, yeah.
Speaker 1 (01:20:07):
And it's I mean, you can buy on a lease
option all day long here as an investor, I think
it's a great, great way to do it in a
lot of cases, especially with the appreciating values of things
going on. But yeah, it's you know, on our occupants
or homestead basically, it's a really difficult thing here right.
Speaker 2 (01:20:24):
Well.
Speaker 3 (01:20:24):
The other the last thing I'll point out on this one,
Scott is usually when I buy sub two, I'm buying
in a trust. I usually name my trust after the
last name of the individual I buy it from, so
it'd be their last name family trust. But because this
was a medicaid scenario, I didn't want to do that.
Speaker 2 (01:20:41):
Yep.
Speaker 3 (01:20:41):
In this case, I just named it three one three
First Street, Trust and no problems whatsoever with it.
Speaker 1 (01:20:49):
So yeah, it's pretty common either off the name or
the street address in a lot of cases.
Speaker 2 (01:20:54):
For sure, Right man, how much I don't we got
thirteen minutes, next speaker, if you want to squeeze one in.
Speaker 3 (01:21:03):
I don't know that I'm gonna be able to, but
I'm gonna I'm gonna show you this real quick. I'm
just gonna click through these slides for your guy. For
you guys, it's a lake house. I optioned last year
for one hundred and sixty thousand dollars one year option
monthly rent of six hundred dollars for a lake house
divorce situation. They both moved out, both went into their
own apartments, and ultimately they now had two rents plus
(01:21:26):
eleven hundred dollars mortgage. And this house, the the lake
front edge and the yard and everything was awesome. The
house itself was weird as hell. If you look at
the picture, on the left hand side was a cabin
and then on the right hand side where you see
that goofy roofline, they brought in a modular prefab and
attached it to the cabin weirdest thing that you've ever seen.
(01:21:50):
But we we went into this on the option six
hundred dollars a month's rent. We came in and put
in seven thousand dollars rent over thirty days, very similar
to what we did with Randy's deal. Just made it
where it could pass for financing, cleaned up the landscaping,
accepted an offer at two hundred gram and we profited
(01:22:13):
twenty two thousand dollars, plus a hot tub and a
six month old side by side stainless refrigerator that are
both in my house as we speak. So that was
a fun one. Dickinson, Texas not a bad house, right.
I wish I had time to tell this whole story
(01:22:34):
because this guy absolutely lied to me and found out
he was in jail, flew down to Texas, had to
go to jail and get his signatures on stuff. He
was allegedly going to go to Mexico to help a
family friend. In fact, he was running from a sexual
assault of a minor charge. And this all happened right
(01:22:57):
as COVID was hitting. So I can't go through all
the numbers, but long story short, I profited eleven grand
and I was happy. I didn't lose my ass on
this deal because it could have went really sideways. But absolutely,
you can do a deal from anywhere. You know, there's
these things all airplanes, so you can fly around.
Speaker 2 (01:23:16):
Well, we've also I've had the deal.
Speaker 1 (01:23:18):
I've sent people, sent signers, you know, notaries and reps
into jail, into prison to have people sign off, especially
when we buy the debt of hav them deed the
property over and putting you five hundred dollars in their
commissaries is cash, your keys, deed and loom. Yeah, you've
got your information. Leave your information up there for a second.
But we had a few folks that wanted to ask
questions a little. Can you talk about more about the
(01:23:40):
trust on the on the on the deal there that
you mentioned before? Hered you put things in the trust.
Speaker 3 (01:23:46):
And I guess in what regard I mean. We we
use trust for the anonymity, but we use trust primarily
when we buy subject too, so that we don't trip
to do on sale clause in their loan. And that's
why we would name the property after their last name
family trust. Where I live in Wisconsin, trusts are not
(01:24:08):
hardly used at all other parts of the country. They're
they're very very commonplace. So our attorneys, again I'm not
bashing on attorneys, but it's easy to do. Our attorneys
don't spend much time on you know, learning trusts, and
if you ask an attorney here to do one for you,
they're extremely expensive and you know, once you know how
(01:24:30):
to use them. I mean, we draft our own trusts
at this point. We don't need an attorney every time
because it's we're just changing the address and the dates
and trustees and you know.
Speaker 2 (01:24:39):
Stays the same. So so that's Is there any other
questions on that.
Speaker 1 (01:24:45):
No, but that I mean, that's that's the thing that
makes sense, is you're doing that to avoid the do
U cell clause and make it very simple. In the
trainsfers it looks very similar to the bar or for
image wise stuff like that. Have you have you had
any banks called notes as long as you're getting paid, yeah,
I mean, as long as they're getting paid most of
the time.
Speaker 2 (01:25:01):
I mean, I'm being in the lending side.
Speaker 1 (01:25:04):
If somebody wants to assign a proper to somebody, as
long as you're paying the mortgage, I don't give a
ras ass.
Speaker 2 (01:25:09):
I'm happy being the bank.
Speaker 3 (01:25:11):
You know, we had one one time, the very first
sub to we ever did, which we were green.
Speaker 2 (01:25:16):
We didn't know what we were doing.
Speaker 3 (01:25:17):
We tried closing it in an LLC and the insurance
is what tripped it up, so we had to go
back and redo that. But no, never had it happen
after that, and we were able to shift that one
around and solve it. So, Scott, do you mind if
I mentioned my conference?
Speaker 2 (01:25:35):
No? I do? Please? Do? I want you to Derek definitely,
so so.
Speaker 3 (01:25:38):
Real quick for your audience. I'm drafting a book. My
primary business right now is running a hard money lending company,
and I'm writing a book about how to be a
private lender. And I'm talking from a to Z from
when the application comes in from your client that wants
to borrow it, all the way through underwriting and you know,
servicing the note and everything else. I want to give
(01:26:00):
that away to your group. The book is not published yet.
I'm literally writing it right now, so it'll be out
tail end of the year. But you guys, you can
see my email address there. Just shoot me an email
say hey, I saw you on note camp. I'd love
to get the book. When it's available, I'll send you
the free version when it's out and my phone number
is on there, raising money, lending money, whatever, feel free
(01:26:28):
to reach out, you know. And the last thing that
we do is an annual conference, and this is Advanced Strategies.
This is the stuff we were talking about today, and
then a lot of other stuff as well. But the
next one I'm having it's in February twenty twenty three
(01:26:49):
in Cancun at the Hyatt Ziva. We do things a
little different everybody, So I Am going to have non
selling speakers presenting from until one each day, five day
conference Monday through Friday. The afternoon is open networking, get
your beach time, get your pool time, get your drink on,
(01:27:10):
whatever you want. But you're spending time networking and growing
your relationships with others. And then we have these town
hall sessions in the evening which are more interactive you know,
Q and a case studies whatever. But the part that
I the reason it's called Generations of Wealth, the part
I'm super proud of is we encourage you to bring
(01:27:31):
your kids. We encourage kids, especially ten and older, to
sit in on the sessions. There's no charge for you
to bring your kids, I mean, other than what you've
got to pay to have them at the resort, but
as far as the conference, there's no charge. And it's
really something that I'm passionate about my family, my kids
(01:27:53):
building a network in their teenage years that we didn't
even think about building until we were in our thirties and
forties and some of us in our fifties and sixties.
So not a hard sales pitch. You can see the
website gw voyage dot com right now. It's like a
thousand bucks a ticket plus your you know whatever, your
(01:28:14):
resort choices. We've got you know, different style rooms at
the resort. But so not a hard sales pitch. I
will tell you Scott, and you and I had this
conversation offline. When you run a conference, you guys can
see the logo has a cruise ship. This this used
to be and was designed to be on a cruise way.
Less stress running a conference on a cruise and so
(01:28:38):
financial obligations, contracts, all this stuff. I did not book
a huge room block at this conference because I'm on
the hook if I don't fill it.
Speaker 2 (01:28:47):
Yeah, well, this is not a sales pitch.
Speaker 3 (01:28:49):
To be hurry up and do it now, because blah blah, blah. Seriously,
I can't guarantee any additional rooms after my block is full.
They may give me. I don't know what the pricing
will be at that point. I know if I hit
my room block, not if I know when I hit
my room block. We've got a great number of people
(01:29:10):
for the conference, and if it goes more than that, cool.
If not, we're gonna have a great conference. So anybody
who's listening to this, if you'd like to be a
part of it, there's the website. If not, Scott, it's
been awesome. I really appreciate you having me as a
as a speaker.
Speaker 2 (01:29:25):
No problem, Derek.
Speaker 1 (01:29:25):
We're gonna have to have you on the podcast later
on when you when the book comes out. We'll help
you get get promoted out there as well. For for
everybody out there, so uh get contact information. I put
that the chat roll for you, everybody. Go w voyage
dot com is the website. Check it out, guys. February
twenty six to March fourth. That's that's awesome. It's still
cold in most places, I mean the ground still frozen
(01:29:48):
in Wisconsin.
Speaker 3 (01:29:48):
For the most reason, there's a reason we go that
time of year, no doubt.
Speaker 2 (01:29:54):
Exactly well. Good stuff, Derek.
Speaker 1 (01:29:56):
Thank you so much for speaking on note camp. We
really appreciate love the case studies. We're gonna definitely have
to have you back on and and have some more stuff.
And uh, I mean, I got my guy Wisconsin because
I got I get stuff in Wisconsin. I'm not really
excited about buying the dead a lot of stuff, but
there's some deals on there and we could we can
partner up with some stuff for sure, and I'll be
reached out to you and that stuff.
Speaker 2 (01:30:15):
So sounds good man. I appreciate it. Thank you everybody.
Speaker 1 (01:30:19):
Thank you, Derek. Have a great rest of your weekend.
But enjoy have fun teaching your kids pee week.
Speaker 3 (01:30:24):
Yeah, that'll make you start drinking. I promise you that,
but it's still fun.
Speaker 2 (01:30:29):
It's still fun. Good stuff, man. We thanks man enjoying
us your Sunday. Thank you,
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