July 10, 2025 • 36 mins
Summary
In this conversation, Zachary Beach shares his journey into real estate, particularly focusing on the impact of the 2008 market crash and the innovative financing strategies he adopted to navigate the challenges of entering the real estate market without traditional funding methods.
Takeaways
Zachary approached his father-in-law for guidance in real estate.
The 2008 market crash significantly affected many investors.
Creative financing became a key strategy for entering real estate.
Lease options and owner financing are viable alternatives to traditional methods.
Networking and mentorship played a crucial role in Zachary's journey.
Zachary's initial tasks involved reaching out to expired listings.
The importance of adaptability in real estate investing was highlighted.
Zachary's experience reflects the resilience needed in tough markets.
Creative financing allows for investment without cash or credit.
Zachary's story emphasizes the value of taking initiative in learning.
Chapters
00:00 Introduction to Creative Financing in Real Estate
03:36 Zach Beach's Early Life and Challenges
11:47 Transitioning from Bartending to Real Estate
19:38 Zach's First Creative Financing Deal
26:10 Understanding Creative Financing Strategies
34:25 The Importance of Problem Solving in Real Estate
36:13 Outro
Links
Book: Real Estate On Your Terms (Revised Edition)
Website: http://www.smartrealestatecoach.com
LinkedIn: https://www.linkedin.com/in/zacharyrbeach
Twitter: https://twitter.com/SmartRECoach
Facebook: https://www.facebook.com/smartrealestatecoach
Instagram: https://www.instagram.com/smartrealestatecoach
YouTube: https://www.youtube.com/user/smartrealestatecoach
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Approached my father-in-law at the time who lived in Newport,
RI as well that he just got crushed in 2008.
Previous he was doing fixing flips, raise the roof projects,
condo conversions when the market crashed and he was
looking for a new way into real estate.
So he started doing this thing called creative financing about
(00:20):
a year or a year and a half prior, lease options, sub twos,
owner finance. Because you he was looking for
ways to get involved in real estate without cash, without
credit, without banks, right? Because that was all taken away
in 2008. So I approached him and said,
hey, I know that you know, you, you're revamping this real
estate business. I'm like, I have no idea if I'm
(00:41):
going to like real estate, but I'd be interested if you if you
got some space on your team. He printed out a, you know,
about 100 names from expired listings.
He handed me a sheet to ask a bunch of questions and fill in
the information and said all right, start making phone calls
welcome. To the real Prop Pro.
(01:02):
Podcast where strategy. Innovation and wealth converge
to redefine real estate investing.
Hello and welcome to the Real Prop Pro podcast.
I'm your host Ian Deitler, Sacramento based real estate
investor. This show is where we bring on
(01:25):
real people doing real deals to share how they've built freedom
through real estate. At Realprop Pro, we help
investors master tax liens, fix and flips, multi family, and so
much more. If you're ready to take action
and build wealth with your team,check out some free tools at
(01:46):
realproppro.com. Today's guest is Zach Beach, a
real estate investor, author andcoach with Smart Real Estate
Coach. He's built a business around
creative finance strategies, acquiring properties, using
lease options, seller financing,and subject to.
(02:08):
He does all of that without using large amounts of capital
or traditional loans. We'll get into how we got
started, how creative financing works, and how he helps others
break free from the 9:00 to 5:00by learning to control real
estate with less risk and more flexibility.
Zach, welcome to the show. Yeah, it's a pleasure, my man.
(02:32):
I'm glad to be able to put this together.
Yeah, I'm so happy you're able to make it, man.
Like, you know, we met about a month, so when you came to Aria
and I just loved all the stuff that you're talking about.
You know, it really resonated with me and it's really
something that I'm, you know, really passionate about.
So I'm so glad that you came andyou spoke to our our group and
(02:53):
that you even spent some time the next day with us and kind of
talked a little bit more specifics.
Yeah, no, it was a blast. That was it was one of my
longest trips of the year. I flew down to Arizona and then
up to Norcal, then back to Arizona.
But you, you guys had an amazinggroup, amazing space, quite
passionate about California realestate just because we've been
(03:13):
doing it in the Fresno area in Southern California for a long
time as we have two long time community members and now
coaches. They've been doing deals out of
there for a long time. So I don't care what they say
about California. There are still lots, lots of
creative finance and deals available out there.
Awesome. Again, thank you so much for
(03:34):
taking the time to come on the show and and, you know, share
with the listeners all of your knowledge and all the stuff
you've learned over the years. So I really appreciate you
coming on. So I'd like to start all the way
back in the beginning. Can you talk a little bit about
where you grew up and what life was like growing up as a kid?
Yeah, I was actually trying to explain this to my son the other
(03:56):
day. So I grew up in Central
Massachusetts. I grew up with a single mother.
My dad was in of in and out of our house for quite some time.
So, you know, considered by almost being like an only child
because I do have a couple siblings.
I have two brothers, but they're1011 years older than me, so
basically a single child. And my mom, I would like to
(04:16):
describe her as like a hippie. So it was pretty much free reign
growing up. I was definitely a poor kid that
grew up in a rich town. So as you can imagine, that chip
is still on my shoulder. I still happens to be there till
this day. So when I was trying to have
this conversation with my son, because he quite frankly lives a
much better life than I did growing up, I tried to explain
(04:39):
to him like, just because you know, you want that brand new
$400.00 bat to go play Little League doesn't mean that, you
know, money just falls from the sky.
Instead, you got to, you got to work for it.
And quite frankly, that's what Ihad to learn how to do growing
up as a a young kid with a with a single mom.
That's wonderful. It sounds like it was, you know,
(05:01):
an interesting household. What was life like growing up,
going through high school and stuff?
You know, was that you said it was kind of free rein.
What was that? What was that like?
Oh yeah, it was for sure free rein.
No, high school years were were good.
I had quite a quite a time. I was always invested in sports,
but you know, I was always the kid in high school that my
(05:23):
teachers, you know, never thought much was going to come
about, or at least that was my perspective.
So the only reason why I actually ended up doing decently
well my senior year is because my teachers told me I couldn't
go to college. But quite frankly, I mean, my
whole life was kind of involved around sports and, and, and
(05:44):
really like living the, the freest life possible because it
was, you know, 00 control going on in my life at that point in
time. I had quite a few stints with,
you know, battling drug abuse through high school and then
through parts of college, but was able to manage that as well.
And actually in our Amazon best selling book, I realistically on
(06:06):
your terms, I actually brought up in, in how I went through
multiple panic attacks, you know, dealing with the death of
my father and some challenges that I was going through in my
early 20s. And quite frankly, I learned a
lot from from dealing with all those different challenges.
And it's probably made me, you know, a better father, husband,
(06:27):
real estate investor, business owner, because I went through
all those things. Wow, thank you for sharing that.
You said you said you'd went to college.
What did that look like? Did you did you finish and what
type of studies were you focusedon?
See you just like my teachers. Did you finish?
No, I'm just kidding. Well, I went to school, I mean,
(06:49):
not knowing what I wanted to do,right, because I just wanted to
quite frankly, get out of the area in which I was in and go
find something new. So I applied to like 14
colleges. I got accepted by a small school
that doesn't even exist anymore in downtown Boston.
It was known as Bay State. And we actually it was really
cool because we lived right on the the Commons, the our common
(07:12):
Ave. Com Ave. in Boston, which is
beautiful. It's Copley Plaza like we and we
were in a like a giant brownstone in my dorm room was
six guys and we all lived in a library.
Used to be no walls, 6 beds, allguys from different part.
(07:34):
I had a guy from Maine, Hawaii, Hartford, CT.
So it's people from all over theplace.
It was almost like real world ifthey had a camera in there.
And it was very interesting. But I learned a lot at that
school to actually allowed me toto think like as a as a college,
as a college student. That's where I actually learned
(07:55):
how to be a student was was at Bay State.
So I thank them, even though they're no longer resistance for
giving me that first chance. And then eventually I
transferred to a state school known as U Mass Dartmouth.
It's part of the UMass systems because I just did not want to
stack as much debt as that one year was providing me because of
(08:18):
that, because it was a private school.
So went to the, you know, the a state school that was closest to
my girlfriend at the time, whichis now my wife as she was living
in Rhode Island. So we made it so that we were
within a, a decent distance of each other.
And then once I kind of got to college, ended up studying
(08:38):
marketing and finance and did decent, you know, it didn't.
School still doesn't necessarilyget me going.
I'm definitely more of a hands on entrepreneur type.
But I made it and I graduated and, you know, I had some
degrees and I actually lived through an interesting time
because the Boston Bomber, I don't know if you remember that
(09:01):
he went to my school. So at UMass Dartmouth, well, the
younger brother did. And not to make this like, you
know, one of those podcasts here, but yeah, he, he went to
my school. So I actually remember the FBI
and helicopters flying into our school because they couldn't
(09:21):
find him. So they started to, to look at
the school to see if he was in the area.
Luckily, you know, I wasn't in Boston at the time and and quite
frankly, there's a lot of peoplethat get hurt in that scenario,
but my college, the original 1 Bay State was a block from where
that happened. So it was very eerie scenario
growing up and actually didn't even go to my graduation that
(09:44):
year because everybody was worried about repeats and
because he went to that school and he had friends at that
school, so they were worried. So I see didn't I didn't go to
my graduation. I sat at my girlfriend's a house
in Newport, RI during that day and just you know, called it a
day and got as far away from that area as possible during
that time frame. I also learned a lot during
(10:07):
College in regards to really working hard because my wife
lived in Newport, RI which is anawesome like what do you call it
town, like tourist town. So in my senior year, we decided
that we are eventually going to live in Newport after we
graduated. So I went and I started knocking
(10:28):
on bars, doors like like actual restaurants.
And I remember I went to a restaurant, it's right on the
water because I was trying to figure out what I wanted to do
because I was, you know, I, I didn't know what I wanted to do
because I just went to school because everybody told me not
what not to do. So this is a, a big, a learning
lesson for me. I was actually knocking on some
(10:48):
bars and I went and I spoke to this gentleman.
He said, hey, Zach, like good luck.
You're never going to get a bartender or a bar back job in
this in the town of Newport because you don't know anyone
and you've never done this before.
And I looked at him and I was like, well, how do people get
started then if you eat experience and you need to know
people like, and he was like, I don't know what to tell you, but
(11:10):
you're not going to be working here.
So I went to the next bar and I thought to myself, I got a
better, I better come up with a better, better pitch.
So I went to the next one and they were during their during
their Sunday cleanup. And I walked in and I was like,
I'm looking for the owner And I talked to his name was Chris and
went to him and I said, hey, look, I'm a marketing major.
(11:32):
I can help fill this bar if you'd be willing to hire me and
buy all I do that like during the week.
If you guys are looking for any bar back help or Bart, then I'd
be happy to do some work with that as well.
And basically that pitch worked,never did a single thing with
marketing, but ended up bar backing and then eventually
bartending at that at that spot for for the next 5 years.
(11:55):
So a lot of interesting things happened during this time for I
know, but I would have been a bit of a tangent but.
No, I, I love it that I think that's what the listeners want.
They want to hear, you know, your life growing up and your
stories and basically what, whattype of journey you went on, you
know, like all these different things that just really shape
(12:16):
who you are and, and what type of business that you've created.
So kind of getting a little bit more into that.
How? How did you start to get in real
estate? Yeah, well as you can imagine,
bartending it could be somewhat lucrative.
What I ended up working on is I worked at an all cash bar.
(12:36):
It was like almost like a club. So you walk in, there's 4 bars
and there's a stage and then there's a DJ in the back.
It's a lot of fun. Like Newport, RI, we never been
there, but it's really fun during the summer and then it
slows down. It goes from like 250,000 people
to 25,000 people. So you make all of your money
during that Sprint. So then I started thinking
(12:59):
myself like how else do I make money?
So then I started looking into other things.
So eventually I became a personal trainer to try to
supplement some additional income.
And then what happens is and then eventually got into selling
supplements through AdvoCare anda network marketing company.
So what ends up happening is youget really burnt out because you
start doing a lot of things and you're juggling a lot of things.
(13:21):
So by the time I was about 25 years old, I've, I kind of was,
was done with the night life. It was a blast.
It was my second college. I learned a lot, but I kind of
got to a point because it was a family run bar.
So I kind of got to the point where I was like at the highest
I was ever going to go, I got the, I got the best shifts that
I was able to get without the last name, right.
(13:42):
So I got all that to that point.So eventually I was like, I need
to figure out what I want to do next.
So I really had a fork in the road when it comes to that type
of industry. You really either move into
management or me being an entrepreneur, I would have
eventually been started looking into how do I own restaurants or
own bars or you decide to make apivot out of the industry
(14:04):
completely because, you know, that's not the lifestyle for
everybody. And after further conversations
with my wife, Kayla, we were like, we don't want to be up all
night long and live a completelydifferent, like opposite
schedule from our entire families if we want to have
kids. Like that's a tough way to live.
Even though some people were able to do it, it's just not
what we wanted. So I approached my father-in-law
(14:28):
at the time who lived in Newport, RI as well.
They moved down from Central Massachusetts when we graduate
from high school and he just gotcrushed in 2008.
Previous he was doing fix and flips, raise the roof projects,
condo conversions when the market crashed and he was
looking for a new way out of or or really a new way into real
(14:51):
estate. So he started doing this thing
called creative fighting about ayear or a year and a half prior,
lease options, sub twos, owner finance, because he was looking
for ways to get involved in realestate without cash, without
credit, without banks, right, because that was all taken away
in 2008. So I approached him and said,
Hey, I know that you know, you, you revamping this real estate
(15:13):
business. I'm like, I have no idea if I'm
going to like real estate. I have no idea if I'm going to
be good at real estate, but I'd be interested if you if you got
some space on your team. And really at this team was him
and my brother-in-law Nick, if you ask the space for your team,
like, like for me to pitch in, see if I like it.
So he printed out a, you know, about 100 names from expired
(15:34):
listings. He handed me a sheet to ask a
bunch of questions and fill in the information and said, all
right, start making phone calls doing this.
I'll listen to your calls. I'll see if I'll critique them.
If you want to keep moving and get better at this, then we'll
keep. We'll continue to have
conversations. So I added that to my calendar.
So in between my cat naps, between my long nights and my
(15:56):
early mornings with bartending and personal training, I started
making phone calls. And it took me almost six months
to get to my first deal. But once I did, then I was like,
all right, I'm in real estate. I, I really started to compound
all of the skill sets that I learned from being a young kid
collecting and selling golf balls to being a bartender and
having conversations with peopleto really piercing together, You
(16:20):
know, my, my college degree and kind of put it all together And
real estate kind of was that, that mishmash of everything and
things started to come together and went ahead and did my first
deal. And then I kind of burned the
ships like Cortez and went all in in real estate.
And you know, almost 11 years later, here we are.
(16:41):
Nice. Well, do you remember the the
moment that you went in the bar and and had to quit because
you're in a new full time real estate?
Yeah, interesting enough, like Ihad this vision when I first
started bartending and I was like, I'm going to give it like
4 years. I don't want to be.
I just thought to myself with mybackground or my history with,
(17:01):
you know, challenges with drugs,things like that.
I'm like, I don't want, I want to be out of here by like I'm 25
like I'll enjoy. It was almost like a second
college and and almost like a like an internship in a way, but
I got to make money. It was like I graduated from
college. It was like, here go work in
this business and this bartending business was perfect
family run business. A lot of room to be able to kind
(17:27):
of do your own thing and bring your own spin on things.
As long as you were working hardand, and put money in the cash
register, they didn't really care.
And, and honestly, I was probably one of the more strict
people there. I'd show up there way early.
I'd get my bar set up, I'd make sure everything was all set up
compared to some people that were, you know, enjoying
themselves. So I really got to learn the
(17:50):
ability to kind of own somethingin a way like I, I, when I felt
like when I got to that bar, I owned that bar.
I needed to make sure that that bar produced a ton of money and,
and really continue to expand onthat.
So once I did that, I just knew like I want to be up by 25.
So it was right around right around that year is about April
(18:12):
and I did one of my first deals and I just went to him.
I said, hey, Chris, I'll be happy to like sub in every once
in a while if you need me to. But you know, we're, we're
making a move. I'm going to go full time real
estate. And, you know, he was obviously
supported. The, the reality is in that
space, the, the bartenders are going to, they're going to be
turned over and there's going tobe lots of people that are going
(18:33):
to want to fill that position, especially in their early 20s.
So I was replaced relatively quickly, as you can imagine.
And I think I only went back oneor two times.
And the second time I went back was almost a year later.
They just needed me to be like a, a celebrity bartender at that
time. And by 3:00 in the morning after
the whole thing, I was, I was exhausted.
(18:53):
I was like, I'm never doing thisagain.
Yeah, you're like, I'm glad I got out of this one.
I did. Yeah, you, you never, like, you
don't realize how much energy and how exhausting it can be to
entertain a crowd of people in front of you the whole time,
pour drinks, right? Manage money like you're doing
it all at the same time, managing like different events
(19:16):
that happen. You know, you got people that
break out in fights over in the back and you get A and then you
got to manage the DJ. Like all these things are
happening in this giant chaos. You just don't, you know, you
don't realize it until you take a step back and you're like, Oh
my God, this was how did I do this?
But it's a perfect example of being an entrepreneur.
It's like managing the chaos in the chaos consistently.
(19:38):
And I think that's that's why I continued to fall in love with
being an entrepreneur. That's a great story.
Can you talk about that first creative deal that you did, like
how it all came together and what you know?
It sounds like you were doing some cold calling.
Oh yeah. So the first deal came from an
expired listing. So expired listings for your
(20:00):
audience. If they don't know, it's like
the property is on the market with an agent at some point in
time and they didn't sell. So they're they're listing
expired. Then we have a database that
then pulls that information, gives me the name, address and
phone numbers that I can contact.
I didn't go ahead and make a phone call with a specific
script to ask some questions. I remember this guy property was
(20:23):
in Jefferson, MA. It was a 1800s house, which is
very normal and in most parts ofMassachusetts.
And he was a teacher that went through a divorce and the
property had no equity. So we went ahead and
restructured a deal so that way he didn't have to pay out of
pocket to sell the house, right?Because if there's no equity,
(20:45):
he's got to go list with an agent, he's got closing costs,
he's going to have to pay that all out of pocket.
So it said, we just said, hey, we're going to buy it.
We use the strategy called buying it subject to the
existing loan, which mean title came to us or or our company and
the mortgage remained attached to the seller's credit.
And we just continue to pay thatmortgage on that seller's
(21:06):
behalf. We went ahead and bought it.
Guy went ahead and moved, everything looked great on the
deal. We went ahead and we sell on
rent to own as one of our main strategies, which means we sell
to roughly 80% of people out there that can't qualify for
bank loans, which is obviously ahuge market.
(21:28):
Then those buyers will come in, they'll give us a non refundable
deposit, they'll have the ability to buy the property in a
certain period of time, they'll pay us rent over that time
frame, and then eventually they go qualify for their own bank
loan. Well, about 3 to 4 weeks into
this, the buyer who was a little, who had some red flags
(21:51):
and we would have never placed this buyer in the property now,
but you know, hindsight's 2020 placed her on the property.
She had a couple young kids. She went ahead and started
testing the paint around the property or really the dust on
the window sill and she came back, there was lead paint.
Well, my initial conversations with the seller were, hey, is
there any knowledge of lead paint?
(22:12):
And he's like, no, there's no knowledge.
So I said OK, we went and checked county records or town
records, said there's no knowledge.
But this property happened to sit like in a miss a
municipality that has like 2 town halls.
It's Jefferson. That's Holden.
Well, the one that we checked said there's no knowledge.
The one that we didn't check said there was knowledge.
So now we're liable. So we had to, I have the tenant
(22:37):
buyer, we had to go place her into in a hotel, right and pay
for that. And then we had to D led the
property. Well, that D LED job was roughly
$30,000. Wow.
And the tenant didn't just go tothe Holiday Inn down the street,
she ended up going to the Great Wolf Lodge for the entire week.
(22:59):
So as you can imagine, that was the most expensive hotel bill we
could possibly have done for a tenant.
Fast forward this and there's some learning lessons from that,
obviously. So Fast forward that tenant
buyer, we place her back in the property, she then starts
defaulting on the agreement. We eventually have to go ahead
and remove her and then we go sell it on the traditional
(23:20):
market a couple years later. And I'm this was about 11 years
or so, I don't remember if we placed another tenant buyer on
that property or if we end up selling it traditionally.
But what end up happening is eventually end up making like 80
to 90 grand off of this deal. Well, it was a bit challenging
at first, right, because we thought no money down creative
deal, but then we get hit with this D LED job.
(23:41):
So some some key learning thingsthat we obviously learned
through the process was one all of our new agreements have this
lead clause that the seller has to sign off on, right?
So because they would have been they've been liable, but we
didn't have that in place so that we would have pushed all of
that back to the seller. 2 is that tenant buyer just wasn't,
(24:06):
that wasn't the quality of people that we wanted in the
property. We would have, we selected a a
much lower non refundable deposit that we would that we
would get nowadays. Nowadays it's like 3 to 10%
upfront and and at least 10% over time.
So there's a lot more skin in the game in that property as
well. So a lot of a lot of interesting
(24:26):
learning lessons and of course, if you don't have your business
lines of credit setup, that's what we use.
We have business lines of credit.
So we actually did the lead job with a business line of credit
and then went ahead and the property cashed out.
Later on we went ahead and paid off those lines of credit or we
used other non refundable deposits to do so.
So I can just tell you that if Idid it on my own, which is like
(24:48):
one of the things that I talk about when I speak across the
country, if you do it on your own, you know, you can find
yourself in these challenging positions.
And if I didn't have my businesspartners, then I that probably
would have been my first and last real estate transaction
just because of all the nuances that we kind of went through.
So I wish I could tell everybodylike my first deal set me off on
(25:12):
this massive trajectory of beingamazing real estate investor,
but that first deal was very challenging and, and really set
me up with the right mindset forreal estate, which is like,
there are always going to be challenges.
It's just how you approach them and then ensuring that you have
certain things in place to be able to handle them.
Because if you can withstand them and if you can make the
(25:34):
right decisions and most real estate deals will be profitable
with time. And that's exactly what end up
happening is that deal ended up making a good amount of money.
It just took time to do it. Yeah.
Thank you for sharing that. That's a really good story.
And really, like you said, really good learning lessons on
that one, you know, definitely highlighting the value of having
(25:57):
another person there or team behind you, not only
financially, but also to, you know, maybe catch some of these
things up front before you actually come across these
challenges. So really appreciate you sharing
that with the listeners. Can you explain the differences
between the three main creative financing types?
(26:20):
You know, you got the lease options, you got the subject to
and you got the seller financing.
Can you explain those in simple terms?
Yeah, for sure. So a lease purchase tends to be
the easiest creative financing transaction because you're not
necessarily owning a piece of real estate, you're just
controlling it. So just think about a lease
(26:40):
purchase in almost like 2-2 pieces, 1 you have the the lease
agreement that's really tied where it's like you control the
property, you have certain expenses that you have on the
property and you're agreeing upon for a certain time frame.
And then you have the second piece, which is like the ability
to purchase it. So now you have a locked in
price or locked in amount of equity.
(27:01):
So you agreed upon all that withthe seller and then that
agreement allows you to go aheadand sell it to somebody else.
We tend to then sell it on rent to own.
That's why this structure is known as a sandwich lease
because you have a lease purchase agreement with the
seller, you're in the middle andthen you have a lease purchase
agreement with the buyer. So all of that still allows you
(27:22):
to tap into what we call a threepayday system, meaning you still
get non refundable deposit, still get cash flow and you
still build equity into these deals.
So when a cash is out, but just know you're just controlling it
and then you also file what theycall a notice of option or
memorandum of real estate. All that really means is you're
putting a lien on the property so the seller can't sell to
their uncle or their best friendwhile you're under agreement.
(27:45):
So that's one strategy. I would say that's like the
easiest deal to get in because that's like your pure no money
down deals because you don't have closing costs.
You can do it via DocuSign or over the table signature with
the seller. Then you have your other two
strategies, which are actual Closings.
These are where you actually take title and you own it.
(28:05):
The best way to kind of describethese is to make them like as
extreme opposites as possible. So owner financing, let's think
of an owner financing deal is a seller that has no debt on the
property, right? Free and clear.
And what you're then going to dois you're going to go ahead and
agree upon some specific terms of the seller purchase price,
(28:26):
monthly payment time frame and and close date, right?
So you're going to go ahead and close on and then the seller
instead of going to get a bank loan, the seller will then
provide you the financing. So you go ahead and close on and
then you just start making payments to the seller as if to
the bank. The opposite strategy, right?
So is known as a subject to deal.
(28:48):
If we again stick to these two extremes and that is listening
of that particular type of deal is no equity.
So the seller has a mortgage andand no equity.
So what we then do is we go buy this property, the title
transfers to us and then we keepthat initial mortgage in place
(29:08):
and can instead of paying off that loan, we just keep that
debt in place and then we make payments to the bank on the
seller's behalf. So that way we still acquire
title. And the reason why that second
strategy or the third strategy is so popular nowadays is
because there's a lot of good debt out there, like the two
(29:29):
percent, 3%, four percent, 5% mortgages that sellers got, but
there's not a lot of equity in alot of these homes as well.
So the only reason why it makes sense for somebody to buy it is
to keep the existing debt in place, because if you go get new
debt, it's at 7/7 and 1/4, whichmakes this no longer a
(29:50):
profitable deal. So those are the three
strategies that we use to acquire properties.
Great. Thanks for explaining that to
the listeners. I know there's little nuances
between each different strategy and different times to use it.
So, you know, I appreciate you kind of explaining that to the
listeners so they have a a better idea what options are out
(30:12):
there. Because a lot of times people
just think, create or just thinkkind of traditional, right?
Like I have to go get a mortgage, I have to go buy a
house, you know, maybe get it 75% of value and then I get a
hard money loan and I can flip it.
But it sounds to me like there'sa lot, a lot of different ways
that are more outside the box toeither do flipping or buy and
(30:34):
hold or whatever strategy that they want to do well.
There's a, there's quite franklya lot of deals out there or a
lot of really motivations from sellers out there that can't be
solved by a traditional means. So like if somebody doesn't have
any equity in their home and they don't have, let's just
(30:55):
assume they don't have much money available because if they
did, they probably would have been out of the property or they
might be in a better position financially.
Then they might not be able to get out of that home unless
they're able or unless they decide to go down a, a
challenging route like a foreclosure or short sale.
(31:15):
And that isn't always necessarily the answer or
there's lots of sellers out there that have a great property
that's in really good condition and they have a certain number
in mind that they want and they're not willing to or have
unrealistic expectations about what their house is worth.
So somebody like myself or our community members, they can step
(31:37):
in and say, look, I can get you your price as long as we're able
to buy it over time. So there's lots of different
scenarios out there and the bestway just to put it is just
anything that the traditional market either can't solve or
chooses not to solve, then that's where creative financing
can step in. And that's why you're seeing
this drastic amount of people now utilizing these strategies,
(32:00):
even though we've been doing it way before it was cool.
But then you see more people utilizing these strategies
because of how unstable the market is and how things have
transpired. Like, for example, you had a lot
of good debt put into the world,right?
So a lot of very low interest rates and people bought them for
(32:21):
the interest rate. They didn't buy that.
They didn't buy houses for the purchase price.
So it in that scenario, if the property drops in value at all,
it's not that they have all thisequity to go play with in order
to do it. They they bought for the
interest rate. So how are they going to get out
of this property? So the only, some of the only
(32:43):
answers are us to go ahead and purchase that property.
And honestly, there's a whole bunch of other scenarios where
the, the assessed values are nowstarting to catch up from these
homes because they drastically appreciated in in value during
COVID. And somebody had a, you know, a
(33:04):
monthly payment of taxes and insurance that were reasonable.
And now all of a sudden the assessed value came back and now
their taxes and their insurance drastically increased.
So now if somebody bought the property for the mortgage
payment, right, or the interest rate and they were what most
banks are giving them anywhere from 33 to 50% of debt to income
(33:26):
ratio on that mortgage payment. Now, if that monthly payment
increases, they no longer can afford the property, even though
they bought it at a really good price, right?
So or really good monthly payment.
So what are they going to do? They have to figure out a way
out of this so people like myself can step in and say,
look, I know how to actually make money off this asset and I
(33:48):
know how to actually get you money at some point during this
or at least allow you get out ofit.
So why don't we go ahead and step in and create a strategy
that can create a win win? Because really creative
financing is just as much of a skill set as as a real estate
investment strategy. Because you first have to
identify motivation that you canidentify motivation, then
(34:12):
identify the finances and then be able to provide a solution to
people that are either in a challenging situation
financially or or in a challenging real estate
situation where they don't know what to do with their property.
So, and if you can get really good at that, that's how you buy
property with little to no moneywithout going to banks, right?
(34:34):
And without personally signing and guaranteeing debt because
you're able to step in and solveproblems that traditional market
can't solve. Wow, thank you so much for all
the great information Zach. This has been very wonderful.
We give away one free book each week to help our audience level
up. Some of the books we have
available are The E Myth, Rich Dad, Poor Dad, 10X, Rule
(34:59):
Outliers, the go Giver. To enter all you have to do is
like this episode and comment which book you'd like to receive
and each week we'll pick one lucky winner and if you win
we'll send the book directly to your house.
You have 5 days from the air date to enter and hopefully
(35:21):
we'll get you guys one of these amazing books.
Zach's story is a reminder that you don't need to own real
estate to control it, and you don't need to be wealthy to
start building wealth. Creative financing opens the
door to freedom, flexibility, and opportunity without banks,
without huge down payments, and without waiting years to save
(35:43):
up. If you've been sitting on the
sidelines, scared of rejection or confused by contracts, just
Start learning and start by asking the right questions
because control beats cash when it's done right.
Thank you all for tuning in and we'll catch you on the next
episode. Thank you so much.
(36:04):
Really appreciate it, man. We'll stay in touch.
Yeah, let me know. I can help in the meantime and
tell everybody we said hi out there.
All right, sounds good. See ya.
Approached my father-in-law at the time who lived in Newport,
RI as well that he just got crushed in 2008.
Previous he was doing fixing flips, raise the roof projects,
condo conversions when the market crashed and he was
looking for a new way into real estate.
So he started doing this thing called creative financing about
(00:20):
a year or a year and a half prior, lease options, sub twos,
owner finance. Because you he was looking for
ways to get involved in real estate without cash, without
credit, without banks, right? Because that was all taken away
in 2008. So I approached him and said,
hey, I know that you know, you, you're revamping this real
estate business. I'm like, I have no idea if I'm
(00:41):
going to like real estate, but I'd be interested if you if you
got some space on your team. He printed out a, you know,
about 100 names from expired listings.
He handed me a sheet to ask a bunch of questions and fill in
the information and said all right, start making phone calls
welcome. To the real Prop Pro.
(01:02):
Podcast where strategy. Innovation and wealth converge
to redefine real estate investing.
Hello and welcome to the Real Prop Pro podcast.
I'm your host Ian Deitler, Sacramento based real estate
investor. This show is where we bring on
(01:25):
real people doing real deals to share how they've built freedom
through real estate. At Realprop Pro, we help
investors master tax liens, fix and flips, multi family, and so
much more. If you're ready to take action
and build wealth with your team,check out some free tools at
(01:46):
realproppro.com. Today's guest is Zach Beach, a
real estate investor, author andcoach with Smart Real Estate
Coach. He's built a business around
creative finance strategies, acquiring properties, using
lease options, seller financing,and subject to.
(02:08):
He does all of that without using large amounts of capital
or traditional loans. We'll get into how we got
started, how creative financing works, and how he helps others
break free from the 9:00 to 5:00by learning to control real
estate with less risk and more flexibility.
Zach, welcome to the show. Yeah, it's a pleasure, my man.
(02:32):
I'm glad to be able to put this together.
Yeah, I'm so happy you're able to make it, man.
Like, you know, we met about a month, so when you came to Aria
and I just loved all the stuff that you're talking about.
You know, it really resonated with me and it's really
something that I'm, you know, really passionate about.
So I'm so glad that you came andyou spoke to our our group and
(02:53):
that you even spent some time the next day with us and kind of
talked a little bit more specifics.
Yeah, no, it was a blast. That was it was one of my
longest trips of the year. I flew down to Arizona and then
up to Norcal, then back to Arizona.
But you, you guys had an amazinggroup, amazing space, quite
passionate about California realestate just because we've been
(03:13):
doing it in the Fresno area in Southern California for a long
time as we have two long time community members and now
coaches. They've been doing deals out of
there for a long time. So I don't care what they say
about California. There are still lots, lots of
creative finance and deals available out there.
Awesome. Again, thank you so much for
(03:34):
taking the time to come on the show and and, you know, share
with the listeners all of your knowledge and all the stuff
you've learned over the years. So I really appreciate you
coming on. So I'd like to start all the way
back in the beginning. Can you talk a little bit about
where you grew up and what life was like growing up as a kid?
Yeah, I was actually trying to explain this to my son the other
(03:56):
day. So I grew up in Central
Massachusetts. I grew up with a single mother.
My dad was in of in and out of our house for quite some time.
So, you know, considered by almost being like an only child
because I do have a couple siblings.
I have two brothers, but they're1011 years older than me, so
basically a single child. And my mom, I would like to
(04:16):
describe her as like a hippie. So it was pretty much free reign
growing up. I was definitely a poor kid that
grew up in a rich town. So as you can imagine, that chip
is still on my shoulder. I still happens to be there till
this day. So when I was trying to have
this conversation with my son, because he quite frankly lives a
much better life than I did growing up, I tried to explain
(04:39):
to him like, just because you know, you want that brand new
$400.00 bat to go play Little League doesn't mean that, you
know, money just falls from the sky.
Instead, you got to, you got to work for it.
And quite frankly, that's what Ihad to learn how to do growing
up as a a young kid with a with a single mom.
That's wonderful. It sounds like it was, you know,
(05:01):
an interesting household. What was life like growing up,
going through high school and stuff?
You know, was that you said it was kind of free rein.
What was that? What was that like?
Oh yeah, it was for sure free rein.
No, high school years were were good.
I had quite a quite a time. I was always invested in sports,
but you know, I was always the kid in high school that my
(05:23):
teachers, you know, never thought much was going to come
about, or at least that was my perspective.
So the only reason why I actually ended up doing decently
well my senior year is because my teachers told me I couldn't
go to college. But quite frankly, I mean, my
whole life was kind of involved around sports and, and, and
(05:44):
really like living the, the freest life possible because it
was, you know, 00 control going on in my life at that point in
time. I had quite a few stints with,
you know, battling drug abuse through high school and then
through parts of college, but was able to manage that as well.
And actually in our Amazon best selling book, I realistically on
(06:06):
your terms, I actually brought up in, in how I went through
multiple panic attacks, you know, dealing with the death of
my father and some challenges that I was going through in my
early 20s. And quite frankly, I learned a
lot from from dealing with all those different challenges.
And it's probably made me, you know, a better father, husband,
(06:27):
real estate investor, business owner, because I went through
all those things. Wow, thank you for sharing that.
You said you said you'd went to college.
What did that look like? Did you did you finish and what
type of studies were you focusedon?
See you just like my teachers. Did you finish?
No, I'm just kidding. Well, I went to school, I mean,
(06:49):
not knowing what I wanted to do,right, because I just wanted to
quite frankly, get out of the area in which I was in and go
find something new. So I applied to like 14
colleges. I got accepted by a small school
that doesn't even exist anymore in downtown Boston.
It was known as Bay State. And we actually it was really
cool because we lived right on the the Commons, the our common
(07:12):
Ave. Com Ave. in Boston, which is
beautiful. It's Copley Plaza like we and we
were in a like a giant brownstone in my dorm room was
six guys and we all lived in a library.
Used to be no walls, 6 beds, allguys from different part.
(07:34):
I had a guy from Maine, Hawaii, Hartford, CT.
So it's people from all over theplace.
It was almost like real world ifthey had a camera in there.
And it was very interesting. But I learned a lot at that
school to actually allowed me toto think like as a as a college,
as a college student. That's where I actually learned
(07:55):
how to be a student was was at Bay State.
So I thank them, even though they're no longer resistance for
giving me that first chance. And then eventually I
transferred to a state school known as U Mass Dartmouth.
It's part of the UMass systems because I just did not want to
stack as much debt as that one year was providing me because of
(08:18):
that, because it was a private school.
So went to the, you know, the a state school that was closest to
my girlfriend at the time, whichis now my wife as she was living
in Rhode Island. So we made it so that we were
within a, a decent distance of each other.
And then once I kind of got to college, ended up studying
(08:38):
marketing and finance and did decent, you know, it didn't.
School still doesn't necessarilyget me going.
I'm definitely more of a hands on entrepreneur type.
But I made it and I graduated and, you know, I had some
degrees and I actually lived through an interesting time
because the Boston Bomber, I don't know if you remember that
(09:01):
he went to my school. So at UMass Dartmouth, well, the
younger brother did. And not to make this like, you
know, one of those podcasts here, but yeah, he, he went to
my school. So I actually remember the FBI
and helicopters flying into our school because they couldn't
(09:21):
find him. So they started to, to look at
the school to see if he was in the area.
Luckily, you know, I wasn't in Boston at the time and and quite
frankly, there's a lot of peoplethat get hurt in that scenario,
but my college, the original 1 Bay State was a block from where
that happened. So it was very eerie scenario
growing up and actually didn't even go to my graduation that
(09:44):
year because everybody was worried about repeats and
because he went to that school and he had friends at that
school, so they were worried. So I see didn't I didn't go to
my graduation. I sat at my girlfriend's a house
in Newport, RI during that day and just you know, called it a
day and got as far away from that area as possible during
that time frame. I also learned a lot during
(10:07):
College in regards to really working hard because my wife
lived in Newport, RI which is anawesome like what do you call it
town, like tourist town. So in my senior year, we decided
that we are eventually going to live in Newport after we
graduated. So I went and I started knocking
(10:28):
on bars, doors like like actual restaurants.
And I remember I went to a restaurant, it's right on the
water because I was trying to figure out what I wanted to do
because I was, you know, I, I didn't know what I wanted to do
because I just went to school because everybody told me not
what not to do. So this is a, a big, a learning
lesson for me. I was actually knocking on some
(10:48):
bars and I went and I spoke to this gentleman.
He said, hey, Zach, like good luck.
You're never going to get a bartender or a bar back job in
this in the town of Newport because you don't know anyone
and you've never done this before.
And I looked at him and I was like, well, how do people get
started then if you eat experience and you need to know
people like, and he was like, I don't know what to tell you, but
(11:10):
you're not going to be working here.
So I went to the next bar and I thought to myself, I got a
better, I better come up with a better, better pitch.
So I went to the next one and they were during their during
their Sunday cleanup. And I walked in and I was like,
I'm looking for the owner And I talked to his name was Chris and
went to him and I said, hey, look, I'm a marketing major.
(11:32):
I can help fill this bar if you'd be willing to hire me and
buy all I do that like during the week.
If you guys are looking for any bar back help or Bart, then I'd
be happy to do some work with that as well.
And basically that pitch worked,never did a single thing with
marketing, but ended up bar backing and then eventually
bartending at that at that spot for for the next 5 years.
(11:55):
So a lot of interesting things happened during this time for I
know, but I would have been a bit of a tangent but.
No, I, I love it that I think that's what the listeners want.
They want to hear, you know, your life growing up and your
stories and basically what, whattype of journey you went on, you
know, like all these different things that just really shape
(12:16):
who you are and, and what type of business that you've created.
So kind of getting a little bit more into that.
How? How did you start to get in real
estate? Yeah, well as you can imagine,
bartending it could be somewhat lucrative.
What I ended up working on is I worked at an all cash bar.
(12:36):
It was like almost like a club. So you walk in, there's 4 bars
and there's a stage and then there's a DJ in the back.
It's a lot of fun. Like Newport, RI, we never been
there, but it's really fun during the summer and then it
slows down. It goes from like 250,000 people
to 25,000 people. So you make all of your money
during that Sprint. So then I started thinking
(12:59):
myself like how else do I make money?
So then I started looking into other things.
So eventually I became a personal trainer to try to
supplement some additional income.
And then what happens is and then eventually got into selling
supplements through AdvoCare anda network marketing company.
So what ends up happening is youget really burnt out because you
start doing a lot of things and you're juggling a lot of things.
(13:21):
So by the time I was about 25 years old, I've, I kind of was,
was done with the night life. It was a blast.
It was my second college. I learned a lot, but I kind of
got to a point because it was a family run bar.
So I kind of got to the point where I was like at the highest
I was ever going to go, I got the, I got the best shifts that
I was able to get without the last name, right.
(13:42):
So I got all that to that point.So eventually I was like, I need
to figure out what I want to do next.
So I really had a fork in the road when it comes to that type
of industry. You really either move into
management or me being an entrepreneur, I would have
eventually been started looking into how do I own restaurants or
own bars or you decide to make apivot out of the industry
(14:04):
completely because, you know, that's not the lifestyle for
everybody. And after further conversations
with my wife, Kayla, we were like, we don't want to be up all
night long and live a completelydifferent, like opposite
schedule from our entire families if we want to have
kids. Like that's a tough way to live.
Even though some people were able to do it, it's just not
what we wanted. So I approached my father-in-law
(14:28):
at the time who lived in Newport, RI as well.
They moved down from Central Massachusetts when we graduate
from high school and he just gotcrushed in 2008.
Previous he was doing fix and flips, raise the roof projects,
condo conversions when the market crashed and he was
looking for a new way out of or or really a new way into real
(14:51):
estate. So he started doing this thing
called creative fighting about ayear or a year and a half prior,
lease options, sub twos, owner finance, because he was looking
for ways to get involved in realestate without cash, without
credit, without banks, right, because that was all taken away
in 2008. So I approached him and said,
Hey, I know that you know, you, you revamping this real estate
(15:13):
business. I'm like, I have no idea if I'm
going to like real estate. I have no idea if I'm going to
be good at real estate, but I'd be interested if you if you got
some space on your team. And really at this team was him
and my brother-in-law Nick, if you ask the space for your team,
like, like for me to pitch in, see if I like it.
So he printed out a, you know, about 100 names from expired
(15:34):
listings. He handed me a sheet to ask a
bunch of questions and fill in the information and said, all
right, start making phone calls doing this.
I'll listen to your calls. I'll see if I'll critique them.
If you want to keep moving and get better at this, then we'll
keep. We'll continue to have
conversations. So I added that to my calendar.
So in between my cat naps, between my long nights and my
(15:56):
early mornings with bartending and personal training, I started
making phone calls. And it took me almost six months
to get to my first deal. But once I did, then I was like,
all right, I'm in real estate. I, I really started to compound
all of the skill sets that I learned from being a young kid
collecting and selling golf balls to being a bartender and
having conversations with peopleto really piercing together, You
(16:20):
know, my, my college degree and kind of put it all together And
real estate kind of was that, that mishmash of everything and
things started to come together and went ahead and did my first
deal. And then I kind of burned the
ships like Cortez and went all in in real estate.
And you know, almost 11 years later, here we are.
(16:41):
Nice. Well, do you remember the the
moment that you went in the bar and and had to quit because
you're in a new full time real estate?
Yeah, interesting enough, like Ihad this vision when I first
started bartending and I was like, I'm going to give it like
4 years. I don't want to be.
I just thought to myself with mybackground or my history with,
(17:01):
you know, challenges with drugs,things like that.
I'm like, I don't want, I want to be out of here by like I'm 25
like I'll enjoy. It was almost like a second
college and and almost like a like an internship in a way, but
I got to make money. It was like I graduated from
college. It was like, here go work in
this business and this bartending business was perfect
family run business. A lot of room to be able to kind
(17:27):
of do your own thing and bring your own spin on things.
As long as you were working hardand, and put money in the cash
register, they didn't really care.
And, and honestly, I was probably one of the more strict
people there. I'd show up there way early.
I'd get my bar set up, I'd make sure everything was all set up
compared to some people that were, you know, enjoying
themselves. So I really got to learn the
(17:50):
ability to kind of own somethingin a way like I, I, when I felt
like when I got to that bar, I owned that bar.
I needed to make sure that that bar produced a ton of money and,
and really continue to expand onthat.
So once I did that, I just knew like I want to be up by 25.
So it was right around right around that year is about April
(18:12):
and I did one of my first deals and I just went to him.
I said, hey, Chris, I'll be happy to like sub in every once
in a while if you need me to. But you know, we're, we're
making a move. I'm going to go full time real
estate. And, you know, he was obviously
supported. The, the reality is in that
space, the, the bartenders are going to, they're going to be
turned over and there's going tobe lots of people that are going
(18:33):
to want to fill that position, especially in their early 20s.
So I was replaced relatively quickly, as you can imagine.
And I think I only went back oneor two times.
And the second time I went back was almost a year later.
They just needed me to be like a, a celebrity bartender at that
time. And by 3:00 in the morning after
the whole thing, I was, I was exhausted.
(18:53):
I was like, I'm never doing thisagain.
Yeah, you're like, I'm glad I got out of this one.
I did. Yeah, you, you never, like, you
don't realize how much energy and how exhausting it can be to
entertain a crowd of people in front of you the whole time,
pour drinks, right? Manage money like you're doing
it all at the same time, managing like different events
(19:16):
that happen. You know, you got people that
break out in fights over in the back and you get A and then you
got to manage the DJ. Like all these things are
happening in this giant chaos. You just don't, you know, you
don't realize it until you take a step back and you're like, Oh
my God, this was how did I do this?
But it's a perfect example of being an entrepreneur.
It's like managing the chaos in the chaos consistently.
(19:38):
And I think that's that's why I continued to fall in love with
being an entrepreneur. That's a great story.
Can you talk about that first creative deal that you did, like
how it all came together and what you know?
It sounds like you were doing some cold calling.
Oh yeah. So the first deal came from an
expired listing. So expired listings for your
(20:00):
audience. If they don't know, it's like
the property is on the market with an agent at some point in
time and they didn't sell. So they're they're listing
expired. Then we have a database that
then pulls that information, gives me the name, address and
phone numbers that I can contact.
I didn't go ahead and make a phone call with a specific
script to ask some questions. I remember this guy property was
(20:23):
in Jefferson, MA. It was a 1800s house, which is
very normal and in most parts ofMassachusetts.
And he was a teacher that went through a divorce and the
property had no equity. So we went ahead and
restructured a deal so that way he didn't have to pay out of
pocket to sell the house, right?Because if there's no equity,
(20:45):
he's got to go list with an agent, he's got closing costs,
he's going to have to pay that all out of pocket.
So it said, we just said, hey, we're going to buy it.
We use the strategy called buying it subject to the
existing loan, which mean title came to us or or our company and
the mortgage remained attached to the seller's credit.
And we just continue to pay thatmortgage on that seller's
(21:06):
behalf. We went ahead and bought it.
Guy went ahead and moved, everything looked great on the
deal. We went ahead and we sell on
rent to own as one of our main strategies, which means we sell
to roughly 80% of people out there that can't qualify for
bank loans, which is obviously ahuge market.
(21:28):
Then those buyers will come in, they'll give us a non refundable
deposit, they'll have the ability to buy the property in a
certain period of time, they'll pay us rent over that time
frame, and then eventually they go qualify for their own bank
loan. Well, about 3 to 4 weeks into
this, the buyer who was a little, who had some red flags
(21:51):
and we would have never placed this buyer in the property now,
but you know, hindsight's 2020 placed her on the property.
She had a couple young kids. She went ahead and started
testing the paint around the property or really the dust on
the window sill and she came back, there was lead paint.
Well, my initial conversations with the seller were, hey, is
there any knowledge of lead paint?
(22:12):
And he's like, no, there's no knowledge.
So I said OK, we went and checked county records or town
records, said there's no knowledge.
But this property happened to sit like in a miss a
municipality that has like 2 town halls.
It's Jefferson. That's Holden.
Well, the one that we checked said there's no knowledge.
The one that we didn't check said there was knowledge.
So now we're liable. So we had to, I have the tenant
(22:37):
buyer, we had to go place her into in a hotel, right and pay
for that. And then we had to D led the
property. Well, that D LED job was roughly
$30,000. Wow.
And the tenant didn't just go tothe Holiday Inn down the street,
she ended up going to the Great Wolf Lodge for the entire week.
(22:59):
So as you can imagine, that was the most expensive hotel bill we
could possibly have done for a tenant.
Fast forward this and there's some learning lessons from that,
obviously. So Fast forward that tenant
buyer, we place her back in the property, she then starts
defaulting on the agreement. We eventually have to go ahead
and remove her and then we go sell it on the traditional
(23:20):
market a couple years later. And I'm this was about 11 years
or so, I don't remember if we placed another tenant buyer on
that property or if we end up selling it traditionally.
But what end up happening is eventually end up making like 80
to 90 grand off of this deal. Well, it was a bit challenging
at first, right, because we thought no money down creative
deal, but then we get hit with this D LED job.
(23:41):
So some some key learning thingsthat we obviously learned
through the process was one all of our new agreements have this
lead clause that the seller has to sign off on, right?
So because they would have been they've been liable, but we
didn't have that in place so that we would have pushed all of
that back to the seller. 2 is that tenant buyer just wasn't,
(24:06):
that wasn't the quality of people that we wanted in the
property. We would have, we selected a a
much lower non refundable deposit that we would that we
would get nowadays. Nowadays it's like 3 to 10%
upfront and and at least 10% over time.
So there's a lot more skin in the game in that property as
well. So a lot of a lot of interesting
(24:26):
learning lessons and of course, if you don't have your business
lines of credit setup, that's what we use.
We have business lines of credit.
So we actually did the lead job with a business line of credit
and then went ahead and the property cashed out.
Later on we went ahead and paid off those lines of credit or we
used other non refundable deposits to do so.
So I can just tell you that if Idid it on my own, which is like
(24:48):
one of the things that I talk about when I speak across the
country, if you do it on your own, you know, you can find
yourself in these challenging positions.
And if I didn't have my businesspartners, then I that probably
would have been my first and last real estate transaction
just because of all the nuances that we kind of went through.
So I wish I could tell everybodylike my first deal set me off on
(25:12):
this massive trajectory of beingamazing real estate investor,
but that first deal was very challenging and, and really set
me up with the right mindset forreal estate, which is like,
there are always going to be challenges.
It's just how you approach them and then ensuring that you have
certain things in place to be able to handle them.
Because if you can withstand them and if you can make the
(25:34):
right decisions and most real estate deals will be profitable
with time. And that's exactly what end up
happening is that deal ended up making a good amount of money.
It just took time to do it. Yeah.
Thank you for sharing that. That's a really good story.
And really, like you said, really good learning lessons on
that one, you know, definitely highlighting the value of having
(25:57):
another person there or team behind you, not only
financially, but also to, you know, maybe catch some of these
things up front before you actually come across these
challenges. So really appreciate you sharing
that with the listeners. Can you explain the differences
between the three main creative financing types?
(26:20):
You know, you got the lease options, you got the subject to
and you got the seller financing.
Can you explain those in simple terms?
Yeah, for sure. So a lease purchase tends to be
the easiest creative financing transaction because you're not
necessarily owning a piece of real estate, you're just
controlling it. So just think about a lease
(26:40):
purchase in almost like 2-2 pieces, 1 you have the the lease
agreement that's really tied where it's like you control the
property, you have certain expenses that you have on the
property and you're agreeing upon for a certain time frame.
And then you have the second piece, which is like the ability
to purchase it. So now you have a locked in
price or locked in amount of equity.
(27:01):
So you agreed upon all that withthe seller and then that
agreement allows you to go aheadand sell it to somebody else.
We tend to then sell it on rent to own.
That's why this structure is known as a sandwich lease
because you have a lease purchase agreement with the
seller, you're in the middle andthen you have a lease purchase
agreement with the buyer. So all of that still allows you
(27:22):
to tap into what we call a threepayday system, meaning you still
get non refundable deposit, still get cash flow and you
still build equity into these deals.
So when a cash is out, but just know you're just controlling it
and then you also file what theycall a notice of option or
memorandum of real estate. All that really means is you're
putting a lien on the property so the seller can't sell to
their uncle or their best friendwhile you're under agreement.
(27:45):
So that's one strategy. I would say that's like the
easiest deal to get in because that's like your pure no money
down deals because you don't have closing costs.
You can do it via DocuSign or over the table signature with
the seller. Then you have your other two
strategies, which are actual Closings.
These are where you actually take title and you own it.
(28:05):
The best way to kind of describethese is to make them like as
extreme opposites as possible. So owner financing, let's think
of an owner financing deal is a seller that has no debt on the
property, right? Free and clear.
And what you're then going to dois you're going to go ahead and
agree upon some specific terms of the seller purchase price,
(28:26):
monthly payment time frame and and close date, right?
So you're going to go ahead and close on and then the seller
instead of going to get a bank loan, the seller will then
provide you the financing. So you go ahead and close on and
then you just start making payments to the seller as if to
the bank. The opposite strategy, right?
So is known as a subject to deal.
(28:48):
If we again stick to these two extremes and that is listening
of that particular type of deal is no equity.
So the seller has a mortgage andand no equity.
So what we then do is we go buy this property, the title
transfers to us and then we keepthat initial mortgage in place
(29:08):
and can instead of paying off that loan, we just keep that
debt in place and then we make payments to the bank on the
seller's behalf. So that way we still acquire
title. And the reason why that second
strategy or the third strategy is so popular nowadays is
because there's a lot of good debt out there, like the two
(29:29):
percent, 3%, four percent, 5% mortgages that sellers got, but
there's not a lot of equity in alot of these homes as well.
So the only reason why it makes sense for somebody to buy it is
to keep the existing debt in place, because if you go get new
debt, it's at 7/7 and 1/4, whichmakes this no longer a
(29:50):
profitable deal. So those are the three
strategies that we use to acquire properties.
Great. Thanks for explaining that to
the listeners. I know there's little nuances
between each different strategy and different times to use it.
So, you know, I appreciate you kind of explaining that to the
listeners so they have a a better idea what options are out
(30:12):
there. Because a lot of times people
just think, create or just thinkkind of traditional, right?
Like I have to go get a mortgage, I have to go buy a
house, you know, maybe get it 75% of value and then I get a
hard money loan and I can flip it.
But it sounds to me like there'sa lot, a lot of different ways
that are more outside the box toeither do flipping or buy and
(30:34):
hold or whatever strategy that they want to do well.
There's a, there's quite franklya lot of deals out there or a
lot of really motivations from sellers out there that can't be
solved by a traditional means. So like if somebody doesn't have
any equity in their home and they don't have, let's just
(30:55):
assume they don't have much money available because if they
did, they probably would have been out of the property or they
might be in a better position financially.
Then they might not be able to get out of that home unless
they're able or unless they decide to go down a, a
challenging route like a foreclosure or short sale.
(31:15):
And that isn't always necessarily the answer or
there's lots of sellers out there that have a great property
that's in really good condition and they have a certain number
in mind that they want and they're not willing to or have
unrealistic expectations about what their house is worth.
So somebody like myself or our community members, they can step
(31:37):
in and say, look, I can get you your price as long as we're able
to buy it over time. So there's lots of different
scenarios out there and the bestway just to put it is just
anything that the traditional market either can't solve or
chooses not to solve, then that's where creative financing
can step in. And that's why you're seeing
this drastic amount of people now utilizing these strategies,
(32:00):
even though we've been doing it way before it was cool.
But then you see more people utilizing these strategies
because of how unstable the market is and how things have
transpired. Like, for example, you had a lot
of good debt put into the world,right?
So a lot of very low interest rates and people bought them for
(32:21):
the interest rate. They didn't buy that.
They didn't buy houses for the purchase price.
So it in that scenario, if the property drops in value at all,
it's not that they have all thisequity to go play with in order
to do it. They they bought for the
interest rate. So how are they going to get out
of this property? So the only, some of the only
(32:43):
answers are us to go ahead and purchase that property.
And honestly, there's a whole bunch of other scenarios where
the, the assessed values are nowstarting to catch up from these
homes because they drastically appreciated in in value during
COVID. And somebody had a, you know, a
(33:04):
monthly payment of taxes and insurance that were reasonable.
And now all of a sudden the assessed value came back and now
their taxes and their insurance drastically increased.
So now if somebody bought the property for the mortgage
payment, right, or the interest rate and they were what most
banks are giving them anywhere from 33 to 50% of debt to income
(33:26):
ratio on that mortgage payment. Now, if that monthly payment
increases, they no longer can afford the property, even though
they bought it at a really good price, right?
So or really good monthly payment.
So what are they going to do? They have to figure out a way
out of this so people like myself can step in and say,
look, I know how to actually make money off this asset and I
(33:48):
know how to actually get you money at some point during this
or at least allow you get out ofit.
So why don't we go ahead and step in and create a strategy
that can create a win win? Because really creative
financing is just as much of a skill set as as a real estate
investment strategy. Because you first have to
identify motivation that you canidentify motivation, then
(34:12):
identify the finances and then be able to provide a solution to
people that are either in a challenging situation
financially or or in a challenging real estate
situation where they don't know what to do with their property.
So, and if you can get really good at that, that's how you buy
property with little to no moneywithout going to banks, right?
(34:34):
And without personally signing and guaranteeing debt because
you're able to step in and solveproblems that traditional market
can't solve. Wow, thank you so much for all
the great information Zach. This has been very wonderful.
We give away one free book each week to help our audience level
up. Some of the books we have
available are The E Myth, Rich Dad, Poor Dad, 10X, Rule
(34:59):
Outliers, the go Giver. To enter all you have to do is
like this episode and comment which book you'd like to receive
and each week we'll pick one lucky winner and if you win
we'll send the book directly to your house.
You have 5 days from the air date to enter and hopefully
(35:21):
we'll get you guys one of these amazing books.
Zach's story is a reminder that you don't need to own real
estate to control it, and you don't need to be wealthy to
start building wealth. Creative financing opens the
door to freedom, flexibility, and opportunity without banks,
without huge down payments, and without waiting years to save
(35:43):
up. If you've been sitting on the
sidelines, scared of rejection or confused by contracts, just
Start learning and start by asking the right questions
because control beats cash when it's done right.
Thank you all for tuning in and we'll catch you on the next
episode. Thank you so much.
(36:04):
Really appreciate it, man. We'll stay in touch.
Yeah, let me know. I can help in the meantime and
tell everybody we said hi out there.
All right, sounds good. See ya.
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