How to Owner Finance a Property | Make Huge Profits with This Strategy
Summary
TLDRIn this video, Grant Kemp from Creative Cash Flow Comm discusses the concept of owner financing a free and clear property, where there is no mortgage involved. He explains the benefits of such properties for learning about owner financing strategies and demonstrates how to calculate payments using the 10B2 financial calculator. Kemp also highlights the importance of understanding a seller's motivation and the potential for significant profit through owner financing, emphasizing the power of leveraging real estate to generate consistent income.
Takeaways
- 🏠 Free and clear properties are houses with no debt, where the owner has full equity and can use the property for owner financing strategies.
- 📚 Studying free and clear properties simplifies understanding of owner financing by eliminating variables like underlying liens and bank involvement.
- 💡 The speaker emphasizes the importance of the 10B2 financial calculator for real estate investors, highlighting its role in simplifying calculations and aiding in strategic decisions.
- 💰 The script introduces the concept of owner financing as a means for investors to become the 'bank', providing loans to buyers and earning consistent profits through payments.
- 📈 The presenter discusses the benefits of using a 30-year note for owner financing, allowing for the accrual of maximum interest over time.
- 🤔 The importance of understanding the seller's motivation and 'bottom dollar' is stressed for successful negotiations and deals in owner financing.
- 📝 The 'wants and needs pamphlet' is introduced as a tool to help investors align seller expectations with realistic outcomes in real estate transactions.
- 🔢 The script provides a detailed example of how to calculate payments and potential earnings on an owner-financed property, using an $100,000 property as a case study.
- 📈 The potential for significant earnings through interest payments on owner-financed properties is highlighted, with an example of turning $100,000 into over $300,000 in earnings.
- 🔑 The concept of 'today money' versus 'tomorrow money' is introduced, with owner financing being an example of the latter, providing long-term income.
- 🛠️ The versatility of owner financing is underscored, with the acquired property potentially being used for renting, flipping, or other dispositions depending on the investor's strategy.
Q & A
What is a 'free and clear' property?
-A 'free and clear' property is a house that is owned outright by an individual without any debt or mortgage on it.
Why are free and clear properties beneficial for learning about owner financing?
-Free and clear properties are beneficial for learning about owner financing because they simplify the process by eliminating the involvement of a bank and the complexities of underlying liens or mortgage payments.
What does the term '10 B to financial calculator' refer to in the context of the video?
-The '10 B to financial calculator' is a specific financial tool or app used in the real estate industry for calculating various aspects of owner financing, such as payments and interest rates.
How much does the 10 B to financial calculator app cost?
-The 10 B to financial calculator app costs $5.99 and is available on both the Google Play Store and the Apple iTunes Store.
What is the significance of the top row buttons on the 10 B to financial calculator?
-The top row buttons on the 10 B to financial calculator are crucial as they represent the main functions used in owner financing calculations, including the number of payments, interest per year, principal value, payment, and final value.
What does the acronym 'PV' stand for in the context of the financial calculator?
-In the context of the financial calculator, 'PV' stands for 'Present Value' or 'Principal Value', referring to the initial amount of the loan or investment.
What is the typical interest rate used in owner financing as mentioned in the video?
-The video mentions a typical interest rate of 9.5% for owner financing.
Why might an owner choose to owner finance their property?
-An owner might choose to owner finance their property to avoid the involvement of a bank, to potentially earn more interest over time, and to have more control over the sale and payment process.
What is the advantage of a 30-year note in owner financing?
-A 30-year note in owner financing is advantageous because it allows for the accrual of the most interest over time, setting up a long-term income stream.
What is the process of 'backing into the deal' and why is it important?
-The process of 'backing into the deal' involves starting from the end of a potential investment scenario and working backwards to determine how much one can afford to pay for a property. It is important because it helps investors analyze deals and make informed offers based on potential profits.
Outlines
🏠 Understanding Free and Clear Properties
Grant Kemp introduces the concept of 'free and clear' properties, which are homes without any debt. He explains that these properties are valuable for learning the basics of owner financing strategies due to their simplicity, as there's no bank or mortgage involved. The example of a $100,000 house is used to simplify calculations. Kemp emphasizes the importance of the 10B2 financial calculator for real estate investors, highlighting its functions and urging viewers to invest in it for strategic financial planning.
💼 Owner Financing: Becoming the Bank
The script delves into the process of owner financing a free and clear property. It explains that the owner of such a property can sell it while retaining the title and collecting payments from the buyer, effectively becoming the bank. The example of a $100,000 house sold with a 9.5% interest rate over 30 years is given to illustrate the financial benefits. The script also touches on the importance of understanding the legal aspects of charging interest rates in owner financing, referencing the Dodd-Frank Act.
📈 Calculating Owner Financing Payments
This paragraph focuses on using the 10B2 financial calculator to determine the payment for an owner-financed property. It provides a step-by-step guide on inputting variables such as the number of payments, interest rate, principal value, and final value into the calculator. The example continues with a $100,000 property at a 9.5% interest rate over 360 months, resulting in a monthly payment of approximately $840. The paragraph also explains the concept of amortization and how it affects the distribution of payments between principal and interest over time.
🤔 Maximizing Earnings with Owner Financing
The script discusses the potential earnings from owner financing a property, using the example of a $100,000 house that could generate nearly $303,000 in total earnings over 30 years, including a significant amount of interest income. It also mentions the upfront income from a down payment and the advantages of owner financing, such as not dealing with tenants' issues. The paragraph highlights the power of owner financing to turn equity into a substantial income stream.
🔍 Identifying Sellers of Free and Clear Properties
The focus shifts to identifying potential sellers of free and clear properties, often older individuals or those dealing with probate situations. The script stresses the importance of understanding sellers' motivations and needs to negotiate effectively. It also mentions the value of leads from services like Propel Yo and the significance of uncovering sellers' 'bottom dollar' to structure beneficial deals.
📝 Negotiating and Structuring Owner Financing Deals
This paragraph discusses strategies for negotiating with sellers, emphasizing the need to understand their motivations and differentiate between what they want and what they need. It introduces the 'wants and needs pamphlet' as a tool for aligning seller expectations with realistic outcomes. The script also introduces the concept of 'backing into the deal' to determine the maximum price one can pay for a property while still achieving desired profits.
💡 Exploring Disposition Strategies in Real Estate
The final paragraph explores various disposition strategies for properties acquired through owner financing, such as renting, flipping, or wholesaling. It emphasizes the flexibility in how one can make money from these properties and the importance of analyzing deals to determine the best approach. The script encourages viewers to watch further educational content to gain an edge in the real estate industry.
Mindmap
Keywords
💡Free and Clear Property
💡Owner Financing
💡Warranty Deed
💡10B2 Financial Calculator
💡Interest Rate
💡Amortized Loan
💡Down Payment
💡Balloon Payment
💡Dodd-Frank
💡Subject To
💡Probate Properties
Highlights
Grant Kemp discusses owner financing a free and clear property, emphasizing the lack of bank involvement and the ease of calculations without underlying lien payments.
A free and clear property is defined as a house owned outright without any debt, allowing for simpler owner financing strategies.
The importance of using the 10B2 financial calculator for real estate investors to simplify calculations and improve decision-making is highlighted.
The 10B2 financial calculator is recommended as an essential tool for understanding and implementing owner financing strategies effectively.
Explanation of the basic functions of the 10B2 calculator, including number of payments, interest per year, present value, payment, and final value.
The concept of owner financing is explored, where the property owner acts as the bank, providing financing to the buyer and receiving payments over time.
A detailed walkthrough of a hypothetical owner-financed property sale, including determining the sale price, interest rate, and payment schedule.
The benefits of a 30-year note in owner financing are explained, focusing on the accrual of interest over a longer period.
The process of calculating the monthly payment for an owner-financed property using the 10B2 calculator is demonstrated.
An amortization schedule is introduced as a tool to understand how interest and principal payments change over the life of a loan.
The potential earnings from an owner-financed property are calculated, illustrating the power of leveraging a small equity into significant income.
The acquisition of free and clear properties is discussed, with a focus on identifying sellers and negotiating effectively to secure properties for owner financing.
The use of probate properties as a source for free and clear properties and the importance of understanding seller motivations in the acquisition process.
The concept of 'wants and needs' in negotiation is introduced, emphasizing the importance of understanding a seller's underlying motivations to negotiate effectively.
The strategy of 'backing into the deal' is introduced as a method for determining how much to offer for a property based on desired future profits.
The importance of education and continuous learning in the real estate industry is stressed, encouraging viewers to subscribe for ongoing insights.
Transcripts
[Music]
hey there grant Kemp here with creative
cash flow comm right now we want to talk
a little bit about free and clear
properties and more specifically how are
we going to owner finance a free and
clear property all right so let's take a
look in what is free and clear why are
we why are we going towards the free and
clear side well free and clear just says
you own a house and you don't have any
debt on it the reason why we're talking
about free and clear properties right
now is because you can learn all the
principles that you need for some of the
more complicated owner financing
strategies if you remember from our
basics video there's multiple strategies
that go into the umbrella term of owner
financing by studying with free and
clear properties we're able to find out
a little bit more easily how this works
right we're taking away one of the full
aspects of the complicated side on owner
financing there's no bank involved in a
free and clear property okay there's no
mortgage so again you own the house you
have the deed you've owned it forever
paid it for 35 years
the 30 to 30 year mortgage is done it's
a little bit easier math this one's big
for me right makes a lot easier for us
to do the math whenever we don't have to
account for underlying lien payments
underlying principle all that kind of
stuff and also the home value I'm just
going to go ahead and establish for the
purpose of this video and for the
purpose of this exercise we're going to
establish that our house is worth a
hundred thousand dollars you'll find
that I like using a hundred thousand
dollars a lot because it makes our
percentage is really easy right point
number two easy math we need to keep
things easy for ourselves so if I tell
you we've got a hundred thousand dollar
house we bought at 80 percent how much
did we buy it for eighty thousand
dollars right you'd be surprised how
many people don't make that connection
but at a hundred whatever percentage I
say just change the word percent to
thousand and that's where we're at the
ten be to financial calculator guys I
want you to take a good long look at
this the 10 B to financial calculator
this is the lifeblood of this industry
this app is available on the Google Play
Store as well as the Apple iTunes Store
this app is going to be $5.99 now I know
I preach a lot and tell you hey oh this
is a great way to get into industry
without have any money ba ba ba ba ba
I'm going to make you spent the money
right go to the App Store right
now start the download occurring $5.99
you know what you got to spend money to
make money in this business right if you
can't take the $6 that it takes to get
this app maybe now's not the best time
to be watching this video but get it
practice with this calculator even
without these videos practice with it
we've got a separate video specifically
on how to use the 10 b2 calculator so
I'm not going to go into too much detail
right now in this video but just make
sure to watch the other video on how to
use the financial calculator because
you're going to be amazed at all the
wonderful things you're able to do and
how much money this thing is going to
make you this is the lifeblood of our
business
no single item is going to make you more
money than knowing how to use this
financial calculator right here so let's
do a quick overview of what that
calculator says - it's okay all that we
care about on this calculator is this
top row right here this top row is our
our home base obviously we've got the
numbers in the middle but at the end of
the day these are the only buttons we're
going to be pushing so I'm going to
start from left to right on that top row
and explain which each one of these is
very briefly the n stands for number of
payments number of payments so if you've
got a 30-year mortgage you actually have
360 payments if you've got a 15-year
mortgage you actually have 180 payments
so that's the number that you're going
to put into the in field
whenever you're calculating something
out the next one is I slash yr I slash
yr this stands for interest per year now
in this calculator you're just going to
write down the interest number whatever
that is you're charging nine percent
interest you're going to put nine in
this field some financial calculators do
require you to to calculate that out
from an annualized term but one of the
reasons I like the 10 B - specifically
is that you don't have to do that here
just whatever number you're going to use
that's the number you put in right there
okay the next field is called the PV now
PV really stands for present value when
you're actually talking about the
financial calculator and financial
calculator terms PV means present value
but I'm going to refer to this as
principal value because as real estate
investors it's a lot easier for us to
understand off the cuff what's the
principal value of this loan and the
next one is PMT can anybody guess what
PMT is for payment payment is going to
be in the next field here the last field
is really easy for us it is FV FV
stands for final value now the beautiful
thing about final value for us in our
world and what we're going to be doing
sv is always going to be equal to zero
okay I won't get into too much of why
but FB is going to be always equal to
the or the way that this thing works is
we're going to give it four I'm sorry
we're going to give it yes well four of
the values it is going to solve us v 1
sv always being zero makes that one step
easier for us so we really only need to
know three things to find out any of the
other ones you can know the interest
rate the principle value in the payment
and it's going to tell you how many
payments there are you can know how many
payments there are the interest rate and
the principal and it's going to tell you
what the payment is okay so that's a
quick overview of B 10 B 2 I really want
you guys to go out watch that video
learn how to use that calculator let's
look at a free and clear property okay
we're going to say that us as the
investor owns this house right here our
ownership is shown by a warranty deed
that warranty deed is what actually
gives us the full ownership of this
property that's how we collect title on
the property you'll hear people say deed
and title almost interchangeably a lot
of times and in this context that means
that when you have the deed to a
property you are the owner of the
property if you have title to the
property you are the owner of the
property now you will also hear title
referred to as like title searches right
or a title policy you're going to hear
that word get thrown around a lot for
different reasons right a title policy
is a different title policy is something
you're gonna get through a title company
it's insurance that make sure that they
covered or uncovered everything that
needed to be found as far as debts on
the property when ever you bought the
house that's a totally different issue
okay but in our case when we talk about
title today we're talking about you own
the house we're talking about bead so
I'm out you own now in this example you
own the house and you own the house free
and clear you have no debt whatsoever no
lending on this house now two owner
financed that house it's as simple as
this you are going to sell the property
on payments you're going to feed that
property over to the buyers so the
buyers are going to take title to it
they will be the full-blown owners of
that property but the buyer is going to
have debt
and that debt is going to be owed to you
okay so in other words the buyer takes
title they are the full-blown owner of
the property but every month they're
going to be making a payment to you for
seven hundred eight hundred dollars a
thousand dollars whatever that might
calculate to be right you are the bank
this is one of the beauties of the owner
financing world is that you were
becoming the bank and as we talked about
in the basics video it's one of the
great ways to ensure that you've got
consistent profits to ensure that you're
not going to have to deal with tenants
toilets and trash all that kind of stuff
that goes along with some of these other
investing strategies and owner financing
you sell in the house they make their
payments every month they don't make the
payments you take the house back you
sell it again you make more money right
it's pretty good little strategy going
on here so let's look at a kind of a
basic deal right what's the what's the
deal that we're looking at here now on
this one I'm just throwing some numbers
out these are very typical of what we're
going to be looking at in an owner
financed world gonna be very typical of
what you're going to see all throughout
this series one hundred thousand dollar
sale one hundred thousand dollar houses
here in the DFW area are kind of our
bread and butter at owner financing
right for other markets is going to be a
little bit challenging making that
equation because I'm saying just a
straight dollar amount and heck hundred
thousand dollars over in your area may
just mean that you've got a Shack on the
middle of a porta potti and that's what
you get to live in here in Dallas that
gives you a pretty decent house one
hundred thousand dollar house is a
pretty decent house it's probably a
little bit older not in the greatest
part of town but you're still okay and
those houses move quickly and fluidly
and there's a lot of buyers for them a
lot of times we kind of refer to this as
our Walmart principle right you've got
the kind of a pyramid if you look at it
at the pyramid of people people's needs
in real estate and only so many people
are going to be able to buy those
million-plus dollar houses a little bit
more people are going to be able to buy
the two hundred three hundred thousand
dollar houses well down here at the
bottom that eighty to two hundred
thousand dollar house that 82 to twenty
five house there's a ton of people in
that demographic so you're able to move
those houses a little bit faster and
that's kind of one of the reasons way
like why we like to stay in there nine
and a half percent interest rate for now
nine and a half percent interest rate is
where I want you to stay okay dodd-frank
if you watch our dodd-frank video I'll
explain a little bit more in detail of
why you get to charge certain interest
rates over other interest rates there's
a lot of misinformation guys that
circulates around about
can and can't be done and owner
financing and I want to be very clear to
you that if somebody tells you something
and they can't point to the verse in the
law that tells you why they're saying
you can't do that
second-guess it write anything that I
talk about I've actually read dodd-frank
all the way through I've actually done
my research on this stuff I will point
to you in a nanosecond anything that I'm
telling you in these videos so if you
have any questions or any doubt
especially when having to deal with the
Texas side of things just give me a
shout granite creative cash flow column
be glad to show you why I'm telling you
the things that I'm telling you because
I'm backing it up with the law now
dodd-frank a lot of people will say oh
you can't charge over six percent or you
can't charge over eight percent they're
confusing some of the Burbidge that's in
there and I won't go into too much
detail but essentially what it says if
you can't charge six percent more than
the going rate of interest like for a
Bank of America loan or something like
that without turning in some extra
compliance issues right so the short
story is you can do anything you want
really you can pretty much do anything
you want up to the state Ussery level
which is different for different states
you just have to hit different
compliance milestones for whichever area
you land in okay so again nine and a
half percent interest rate that's kind
of a going rate that we have and owner
financing today and it has been that way
for quite a while so buyers kind of have
this mental block of passing over ten
percent you're totally allowed to pass
over ten percent if you can get that in
your area but we're going to stick with
nine and a half here thirty year terms
are what we typically sticking on a
30-year note I like thirty your notes
thirty-year notes mean that I'm setting
up the largest amount of interest
possible this is a big tomorrow money
play I'm putting a note in place that
says that I'm going to continue making
money for a long time now advantages to
a shorter term so you did a ten-year
note or a fifteen year note if you do a
shorter term note your payment's larger
just like if you went to the bank and
you're getting a mortgage on your house
you get a 30-year note it might be a
thousand dollars a month you get a
15-year note it might be $1400 a month
so one of the advantages if you want to
do shorter notes that's fine you'll make
more money on a monthly basis however if
you look at the total income that you're
going to make from that asset and we
assume that it's going to maturity which
not everybody does and you know you're
going to have probably 20 25 percent
fall
off of people selling their house or
refinancing or you know whatever but for
those who go to maturity the 30-year
note is really where you make the most
money because you're accruing the most
interest over time with that one and
then what we do need to figure out is
what's our payment right what is our
payment in this scenario so that's where
we bust out our handy-dandy 10 B to 10 B
to 2 calculator again this is our
lifeblood so what we're going to do is
we're going to populate each of these
fields accordingly all right so the SP
that's our easy one we know that one's
going to be zero so we're just going to
automatically have zero in there what
else do we know from my last slide what
else do we know what are our knowns well
one thing that we know that we were
going to do a 30-year note 30-year note
is 360 payments so with 360 payments
that's what we're populating in I /yr I
also told us that the interest rate the
going interest rate about nine and half
percent so that's what we're going to
populate than I /y our PV our principal
value one hundred thousand dollars now
to have a hundred thousand dollar note
means that we sold the property for more
and collected a down payment okay
so in other words here's what we want to
think about if you sell a house for a
hundred and ten thousand dollars that's
your sales price 110 if you take a
$10,000 down payment on that property
you know have a loan of $100,000 all
right if your loan is just whatever the
sales price minus the down payment is
that's your loan amount now for the sake
of this argument even though I said our
house is worth a hundred thousand
dollars I'm putting a hundred thousand
dollars into our PV just because it's
nice easy round numbers but in this
house if you're following closely you
would say well grant where's the down
payment I basically didn't work in a
down payment for this one because we're
just trying to get the principles put
together okay so we've got a hundred
thousand dollar note nine and a half
percent interest for 360 months and a
final value of zero by the way that
final value what that really means is
that this is a fully amortise alone the
opposite of a fully amortise alone would
be like a balloon note I'm sure you guys
have heard about balloons right you get
a you get a loan you're going to pay as
though that loan is going to be paid for
30 years but after
five years whatever amount of still do
that entire amount gets paid at once
that's the balloon payment okay that
would be when you use the FB of
something other than zero but we want to
do fully amortise anon all of those so
we're keeping it at zero as I said
before we have now populated four of the
five items that we need so all we have
to do is push that fifth button and it's
going to solve for us in this case we
have a payment of $840 840 dollars and
some change well the beautiful thing
about this like I mentioned before is
you've got so much interest that accrues
so much interest that eight hundred and
forty dollars I don't know if you've
ever seen an amortization schedule and
if you haven't just make sure to pay
attention to that section in our ten b2
tutorial eight hundred and forty dollars
at the beginning very little of that is
actually going to pay down the principal
very little of it how amortized loans
work and amortized alone is any loan
that you're going to run into where you
have the same monthly payment it's a
fixed monthly payment over a set period
of time with a maybe kind of set
interest rate that's an amortized loan
so you're going to see amortized loans
with car loans right you're paying for
72 months 60 months 48 months at 1.5
percent Interest whatever that is that's
an amortized loan your payment never
changes every month you've also got
other types of loans like your credit
card that's a revolving credit line that
payment may change every month you may
owe this you know $100 one month and 115
the next month that kind of thing
amortized loans same payment entire way
through well the beauty of how that
works is that when you look at an
amortization schedule and in other words
if you look at the graph that shows you
how much is being paid to for its
principal and how much is being paid
towards interest all of the interest is
basically front-loaded you're making all
your interest right at the beginning of
that loan so this loan for eight hundred
and forty dollars maybe fifty of that is
actually buying down the principal the
rest of it is that that entire chunk is
all interest so you're making your money
upfront on that as time goes on that
kind of changes where you're paying more
and more principal
less and less interest to where at the
end most of your payments are going
entirely towards principal there's going
to be an important thing to understand
as we start talking about the subject to
world right I want you guys to watch
this
to video because that's one of my
favorite ways to acquire properties is
that you can essentially take over on
payments we're not going to say taking
over on payments to our seller because
we don't want to imply some of what that
implies but that's essentially what's
happening we're going to continue to
make those payments on their behalf
knowing that we're getting all of our
interest paid upfront and our principal
paid on the back end is actually going
to turn into a lot of money for you so
without going into the hugest details in
here what I want to do is I want to give
you a sneak peek
what would our total earnings be no
total earnings be on a loan like this
where we have eight hundred forty
dollars a month coming in for three
hundred and sixty month well assuming
that we've gone to maturity in other
words assuming that we get a full 30
years of payments from them you're
making almost three hundred and three
thousand dollars on this asset that was
only worth one hundred so yes you're
right whenever you are selling with
owner financing one of the cons I
mentioned in our in our basics video is
that you're not getting appreciation I
get that however we're turning assets
that are worth a hundred thousand
dollars and a three hundred plus
thousand dollars of income and pure
interest alone that's two hundred and
two thousand seven hundred and fifteen
dollars purely an interest that's being
earned on this property so now you're
starting to kind of understand why owner
financing is so powerful what we're able
to do with this is just you know again
we've got asset income it's going to
come in over time like clockwork fingers
crossed and if not then again we've got
recourse that's going to end up making
us a ton more money our backup plan our
worst case scenario is actually even
better for us in our pocketbook but
we're making a three hundred three
thousand dollars on a hundred thousand
dollar house a lot of times we're
turning that maybe you've only got
fifteen twenty thousand dollars worth
equity in the house say it's not free
and clear a lot of times we're turning
that fifteen twenty thousand dollars
into one hundred and fifty two hundred
thousand dollars right this is the
beauty of owner financing one of the
cool things about this is that when you
are selling a house owner finance
regardless of business if it's got
underlying debt or not right now we're
talking about an owner financed home
that's free and clear but when you sell
the property to your buyer you're going
to collect a ten percent down payment
right so like I mentioned a little bit
earlier if we if we sold this house and
we ran these numbers as we did this
would imply that we sold it for
111 thousand dollars we're going to get
to get a 10% down payment so we're going
to get $11,000 as a down payment on this
home and we're giving them a 30-year
note at $100,000 now the cool thing here
is that and I calculated that into these
numbers or actually no I take them back
I did not calculate that into these
numbers but your down payment so you pay
3% to get a buyer into your house you're
gonna pay 3% to an agent to bring you
somebody for that house well in this
case you sell for 111 what's that $3,300
that you've sold the house and you're
paying the agent for bringing the buyer
in so if you have to pay the agent
$3,300 and you've got a $11,000 down
payment what's your net from that bit
down payment about seventy seven hundred
dollars that you're making that's a
that's a pretty sweet deal right you're
making seventy seven hundred dollars up
front you're making eight hundred and
forty dollars a month for the next 30
years and when all it's said and done
and interest alone you're collecting two
hundred and two thousand dollars add
that seventy seven hundred bucks on top
of it that you just made from your down
payment and really you know I'm saying
you're making 303 total on here you're
making 310 add a little bit more extra
on there those are good numbers I like
numbers like that because again the
barrier to entry to doing these kinds of
deals is very low so you really have the
possibility to make a lot of money
without having to put so much of your
own money and you need to be prepared to
cover payments if you're not getting
your your buyers payments in but that's
that's pretty basic to any kind of
investing strategy who is our seller how
does their seller fit in here right
we're talking about buying houses I'm
sorry we're talking about you're selling
a house owner finance that we already
own free and clear which is all fine and
dandy but grant what if I don't have a
house free and clear what do I do then
well you have to buy that house right
that's part of the deal that's part of
why you're watching this is to figure
out who these sellers are and how you
can buy those houses so how does our
seller fit in most often the sellers of
free and clear properties tend to be
older because if you think about who's
actually going to have that free and
clear property it's typically the person
who's been in there for a while somebody
who's already been making their payments
for the 20 years or the 30 years that
they took that loan out on right so
that's just a little bit of a
demographic clue of who you're looking
at for your buyers I'm sorry for your
sellers and then excluding the
hi equity list right obviously the hi
equity list is going to be the people
with high equity but outside of that
probates tend to be the area that I run
into the most free and clear properties
probate properties obviously being the
properties where somebody's passed away
the family the estate now has to do
something about that property one of the
things that I really recommend for you
guys and I'm not just saying this
because I'm standing in front of a giant
banner that says propel you on it but
propel yo leads that come out as a paid
member are so worth it I mean I myself
these were the leads that I was always
targeting all the leads that you're
getting now as a member of propel yo
release that I was always targeting
already and I've beat up Daniel so many
times for actually giving those leads
away I'm truly unhappy about it but that
being said you guys need to take
advantage of that because now I've
gotten to the point where I literally I
don't pay my staff anymore to do that
every morning my staff used to come in
gather all the leads that I was looking
for provide the marketing to them send
it all out that kind of stuff well that
takes time now they don't do that now
they just wait on the email to come in
for propely oh and then send the
marketing out accordingly to that so
don't pass up on the opportunity that's
being put right in front of you I think
a lot of people don't fully appreciate
what's being given to you in that area
when again those of us who actually are
the real deals and are actually going
out there and hitting a hard core those
are the people that were shooting for
and probates are one of those what's the
bottom dollar this is motivation always
has to be your number one priority when
you're talking to your seller okay I
train a lot of people how to do real
estate and I and I'm always having to
walk them through how that negotiation
process goes and we have a negotiation
series in this video series it's going
to help you to know more of the nitty
gritties and more of the the for lack of
a better word scientific background of
why certain things work over other
things right why certain phrases are
going to work over other phrases but one
of the things that you've really got to
figure out is you don't care what your
seller wants I'm going to say that again
you don't care what your seller wants
what you care about is why does your
seller want that that's what you need to
locate so when you are doing these deals
you need to find the motivation for your
seller find their bottom dollar a lot of
times these free and clear properties
they still want money for it right
obviously they're not just going to give
it to you so if they own it free and
clear you need to find out what they're
using their money for when they need
that money and how you might be able to
get that to them over time and or
upfront are they willing to finance it
this is one of my my favorite questions
I'm going to go ahead and give you a pro
tip on negotiations here even though the
majority of that's going to be in the
negotiation series but when you're
looking to buy a property the best
question that you can ask is are you
willing to sell sell your house and take
your equity and payments or take your
equity and installments right it's a
really good way to broach the owner
finance topic because they don't really
understand hey do you want to be the
bank or hey what if I buy your house and
I only give you six hundred dollars a
month for a long time how about that hey
but if you're able to ask the question
and say hey are you willing to sell your
house and take your equity and
installments a lot of time the answer to
that question is yes right little subtle
phraseology little subtle differences
and how you say things are going to be
the difference between getting a yes and
a no asking somebody if they're willing
to finance it as an excellent way to
figure out if you can do an owner
financed acquisition because with owner
financed acquisitions
just like we said in our basics video
it's an unlimited non-institutionalized
non-recourse money that you can buy as
many houses as you want if you get
somebody that's willing to finance it to
you there's no limit to how many houses
that month that you're able to buy how
much today money do they mean
today money versus tomorrow money we're
going to talk a little bit on today
monies versus tomorrow money in other
videos of the series but that's a big
principle that I want you guys to really
see deeply into your chest of today
money versus tomorrow money today money
wholesaling fix and flip stuff like that
things that are going to get you cash
now and then you're done tomorrow money
stuff like when you're on or financing
and you're you're getting payments in
over a long period of time that's
setting up your retirement that's
setting up your future I call that
tomorrow money one of the things that
you can look for is the once and the
needs of your seller what do they want
what do they need right that's one of
the real keys of what your your
negotiations have to be based on is they
may want a hundred thousand dollars for
this house they only need
Ede 30 so that they can pay off some
medical bills right so then you can kind
of split the difference and get them a
little bit of what they want and a lot
of bit of what they need but if you can
really core down into that that's going
to really help you get there okay now
we've got a download for you called the
once and needs pamphlet it's something
that I can take to sellers a lot of
times that are trying to you know
they're having trouble of understanding
what they might be able to expect and
the one that needs a pamphlet is a
really good way I'm sure you've all got
to kind of seen the the drawings before
where it says like hey you can have it
fast you can have a cheap or you can
have it quality to choose to right once
the needs is very similar to that right
you can have fast money you can have a
lot of money right those kinds of things
and you can mix and match that and if
you can properly place that in front of
a seller and really work with them on
this situation and help them to
understand what they're trying to get
out of this because guys let's be frank
this is maybe the first or second time
these guys have sold a house that we're
talking to
we buy houses all day every day I'm sure
you've gone in and bought a car before
and you're thinking oh my gosh this guy
is just running circles around me I
don't know how much equity or how much
room they have I mean I'm going to ask
for a thousand dollars of I don't know
if I can get it that's kind of a
situation we're and we're the guys that
do this every day we understand how the
real estate works they don't so they may
have unrealistic expectations and when
they have those it's our job to let them
know it's unrealistic right we're not
going to be a jerk about it but we're
going to let them know that's not going
to happen
so download our wants and needs pamphlet
that's going to help you broach that
topic with your sellers where do we make
our money that's the big key right Oh
grant this is all fine and dandy a
buying houses how do I make money off of
that well again this is an acquisition
model I'm talking about right here we're
talking about buying an owner financed
house that's free and clear we're
talking about buying with subject to
writing we're going to get into that as
well in a subject to video but once
you've acquired this property once you
own the property you can do anything you
want with it nothing says that you've
got an owner financed sale it nothing
says that you can't rent it that you
can't fix and flip it I mean I'm doing
one right now that I bought subject two
I closed on it actually probably got
closed about an hour and a half ago
while I was up here doing this video and
and I'm just going to take over go in
there fix it up put it up on the open
market I'm going to make about thirty
thousand dollars on it's going to be
today money but for
reasons that we'll get into in other
videos it just didn't make sense to hold
for tomorrow money the payments weren't
matching up to what I needed the
payments to be however if I had tunnel
vision and I was only looking at one
strategy I would have been able to see
hey I can acquire this with subject 2
but I can also sell it as a flip or hole
tale later or whatever so you're
acquiring with owner financing but your
disposition is totally up to you your
disposition is a totally different topic
to find out how you're going to make
money to find out how you can actually
turn this deal into money you have to do
something called backing into the deal
okay backing into the deal is a little
bit harder sometimes for people to
understand because you literally are
starting from the end and working
yourself backwards you've got to start
at the very end of the scenario and see
how much money you think you can make
there and then back everything out from
that point and that leaves you with what
you can buy the house for alright so
watch our backing into the deal video
which is going to be the next video up
for you and it will really go deep into
detail of how you're going to analyze
these deals to properly tell how you can
make your offer whether it's free and
clear or not right so guys keep in touch
with us granite creative cash flow comm
you can always go to our website figure
things out there don't forget to like us
subscribe to the YouTube channel all
that kind of good stuff that you can
keep your education rolling because this
is an industry where education is
everything knowledge is everything this
is how you get your edge on everybody
else so thanks for joining us today
don't forget to subscribe
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