Seller Financing Starting With the Borrower | Real Estate Notes Show

Episode: Dan "Dancito" Diaz - Seller Financing Starting With the Borrower Dave's Goals and Plans: - Closing on multiple mortgages in first position - Made several offers on CFDs but got rejected, moving on to next opportunities - Not affected by current moratoriums due to the type of deals they do - Actively seeking new approaches in seller financing and exploring different strategies Nathan's Goals and Plans: - Just picked up three more mortgages - Had offers out on some CFDs but they're not looking promising - Looking at lease options as potential investment vehicles - Focuses on security and first position regardless of deal type Key Recommendations: - Start with the buyer first to determine real-world ability to repay based on down payment, income, and liabilities - Use self-directed IRAs as capital source for financing qualified buyers seeking stabilized returns - Don't mark up home prices to buyers to avoid them being underwater and unable to refinance - Price homes based on actual cost plus interest rates rather than capping payments to market rents - Focus on beautiful homes in great neighborhoods to create optionality if you need to take them back Topics Discussed: - Seller financing and owner financing strategies - Self-directed IRA capital sourcing for real estate transactions - Pivoting from inventory constraints to buyer-first financing models - CFD offers and rejection management - Lease options as alternative investment strategy - First position mortgage security focus Guest Insights: - Shifted business model from inventory-focused to buyer-first approach after identifying capital availability as the real constraint - 70% of business now starts with qualified buyer, then raises capital from self-directed IRA investors seeking predictable returns - Average deal size is $320K, ranging from $150K to $1.2M in Texas - Targeting affluent ITIN buyers from Latin America who are accustomed to 35-50% interest rates and are willing to pay 9% with proper loan terms - 65-70% of clients have 40-50K liquid cash despite bringing 20% down, indicating strong financial position - Offers 30-year mortgages with no balloons, no prepayment penalties, and no mortgage insurance to buyers hey fellow no investor are you looking to learn the basics of note investing so you can get started however you don't want to spend a few hundreds or thousands of dollars and hours online on some training program have you thought about attending a notes conference however you don't want to spend the money or the time away from your family well we have a tremendous beginners video series of 20 different topics with each video being less than 15 minutes this means each video is less fluff and direct to the content visit www.jkpholdings.com beginner dash series to learn more again www slash beginner dash series yeah i'm not sure there you go let's try it hey everybody here dave putz here from jkp holdings alongside me as always mr nathan turner how are you doing man very good very good how are you oh good man the week goes back past all of a sudden friday comes up like holy god wait what day is it oh man friday already so it's funny we get into space we're doing this stuff weeks go by fast and fries are not the worst of the year or the best day of the week it doesn't matter like you're just doing it um which is awesome so that one day yeah it really doesn't make a difference the only way it makes a difference for me is i think we talked about this once before is that's how i organize what i'm doing each day so yeah my friday is kind of a filler day and so that's how i kind of that's crazy applied my time so i know last we were talking about you buy some cfds and whatnot um it made some more offers uh we made a few offers we got rejected so we're going to move past them and move on what's what's up with you man what's going on last week so last week i don't remember if last week i'd already closed or not i don't remember but anyway i just i just picked up three more uh all three mortgages um i had some offers out on some cfds but not looking good so i don't know we'll see we'll see but it's fine that's that's the nature of the business and yeah if it works it works if not you move on to the next one and keep moving yeah and then all these moratoriums coming through doesn't really affect us right now right these uh these struggles and stuff like that doesn't really affect us because of what type it is so um i know you're looking at some lease options as well uh which is pretty cool so yeah i'll buy anything in first position oh it's funny because we do all that stuff and we say all that stuff but it's true right it's if that security's there is what we care about yeah um and we had a great session last week um last couple weeks been awesome stuff we talked about seller financing and i i'd reach out to dan i i've been watching him on facebook a little bit and i said listen he's doing everything everyone else is doing what new could there be yeah and it seems like every time i say stuff like that there's something new out there and i'm like and i shot a message to him and he was grateful enough to to entertain me for a few minutes and i was like whoa so i'm excited right to bring dan on business there are so many different ways to do this which is just great the challenge with that is you pick one and then do it um unless you're rey and then you do three different things [Laughter] yeah oh it's just frustrating right because it's just there is no ultimate person in this base doing everything that he should do ray's clothes but yeah you know i think for me it's interesting so yeah well i think i'd like to introduce dan uh to to our weekly uh facebook live dan can you share a little about back your background how did you get a real estate you know what kind of stumbled blocks you came across and what are you doing now sure sure well first of all it's an absolute pleasure and honor to be here i'm excited um i know you're um definitely very active in the note world and no creation no no buying and things of that nature and when you reached out i i i was excited so so thank you for for having me here for sure a little bit about my my background my name is dan diaz i was introduced into the wonderful world of real estate through what i like to call real estate real estate so for about four years i was manager for palm harbor homes here in san antonio texas actually a little town outside san antonio called elmendorf texas and as general manager for palm harbor homes i i got a glimpse a behind the scenes behind the scene glimpse to real estate i was able to see a lot of aspects that i had never been exposed to before and i fell in love with it uh what i did not like was that i did not have an eight to five i had a five to eight and that was seven days a week and i hated it made really good money but i hated it so right around 2004 i really started educating myself i started learning uh about owner financing i started learning about landlording versus lien lording and i could tell that my personality kind of veered towards owner finance towards notes towards lean lording and i finally took the lead november of 2015.

uh first deal generated me over 80 000 in upfront profit in a 400 monthly spread for the next 30 years and i was absolutely hooked uh it took me a long time it took me nine months to to realize that deal and it to me it was the litmus test if i could do this once then in my mind i could do it again and again and again again so if i was able to to produce it once then that was enough for me to quit my job so that that very day when we closed on that property went ahead and submitted my two weeks notice my my boss obviously wasn't very happy because we were producing really really well but i knew 80 hours a week was not for me so i started off like a lot of owner finance investors buying the home fixing it up or cleaning it up and then selling it carrying the note as we started growing in 2016 i started i started noticing two problems one the problem was there was only so much inventory that i could handle uh maybe you could handle more but there was only so much inventory i could handle for us it was about three to five homes at a time so so we needed to kind of sell one before we could get another one yeah and through our marketing we started acquiring coming in contact with these really really really really great buyers i just didn't have the home they were looking for so they had a great down payment they had great ability to make payments maybe they didn't have a social maybe they were self-employed you know maybe they had bad credit whatever but they had a great down payment they had a great um ability to make payments we just didn't have their home they wanted something newer bigger um two stories they wanted a certain zip code they wanted a certain you know school district and i started scratching my head and i'm like how can we capture these buyers and it was right around 2017 late 2017 early 2018 that a light bulb literally hit me and and i realized the problem is not inventory dave there's 10 000 homes for sale on the mls so why am i focusing on trying to build up our inventory to bring to the market inventory did not seem to be the problem for us the problem was finance you know how to acquire the money and of course i started kind of researching and there's not a whole lot of banks who will lend you to wrap their money um so so that really wasn't an avenue but then i was introduced to the wonderful world of self-directed iras and i was introduced to you know the nearly 13 trillion dollars of money that's sloshing around in self-directed iras people wanting stabilized predictable returns um at least the people that we came in contact with they they didn't necessarily want a higher return they just they were approaching the retirement years you know they were between 45 50 55 maybe 60 years old they wanted something stable they had already built you know half a million dollar nest egg million dollar nest egg 2 million nest egg but they just didn't want to go through a huge loss in the market so they were looking for something a little bit more stabilized so now what we do about 70 of our business is we start with the buyer first we make a determination of the real world ability to repay based upon their initial investment and their income and their liabilities once we make a determination of the real-world ability to repay we go ahead and raise the necessary capital for them to purchase their homes with owner finance terms i'm very proud of the notes that we built for them 30-year mortgages no balloons no prepayment penalties no mortgage insurance obviously uh we don't mark up the home either which is important there's a few other investors that have popped up in in the industry and what they'll do is they'll buy the home and then they'll mark it up 10 15 20 30.

i've seen even up to 50 percent i guess there's nothing really wrong with that model except that the buyers upside down from day one so refinancing is is nearly impossible for at least you know seven eight nine 10 12 years we don't mark up the home uh we simply focus on the on the funding of the uh of the transaction for them so that's the bulk of what we're doing we're still a small family-owned and operated business we do about four or five deals uh a month in texas our average deal was about 320 000 we'll do anything between 150 up to 1.2 million and what's really nice is that we're now in the owner finance world but we're in the pretty homes you know these are beautiful homes great neighborhoods if we ever get them back i mean i'm i'm going to be happy you know to you know own them these these are beautiful homes and great great neighborhoods so that's kind of what we're doing now and and uh i guess it is a little bit different than most of our finance transactions yeah that's really interesting so you covered your price point um how did you get up to that like i'm assuming you started out lower and went up higher and and if that's the case why not necessarily yeah okay yeah not necessarily so when so there there's a lot of inventory i'll use that term there's there's quite a few owner financed by you know sellers and investors in the 100 to 200 000 range and most of them are happy with 10 down so if somebody is wanting that range they're not going to like our 20 requirements and there's quite a few out there that they can they can kind of go to um the reason a lot of owner finance investors stay in the 100 to 200 000 range is because they are trying to make the mortgage payment be equal to or similar to market rents at a 9 10 11 interest rate and the math tells you that once you go over the 175 185 195 200 000 range if you're going to keep you know your 9 10 11 interest rate and it's going to be comparable to market rents you're kind of going to be capped off now our perspective is is we're going to let you buy whatever home you can afford we approach it more like a bank or a mortgage company this is our interest rate it's currently nine percent so um you want the three hundred thousand dollar home knock yourself out we don't care you got 20 cash to close we don't care so our mortgage payments are nowhere near market rents i mean it's just the mortgage payment it's just the cost of owning your home so we approach it you know from from that kind of um that kind of perspective and and we're we're very we're very successful i would say about 65 of our clients even though they bring 20 they really have 40 to 50 liquid cash um about 65 70 percent are itin buyers they don't have a social security number in this country but they're affluent they're already paying three four five thousand dollars in rent in the neighborhood that they want to buy so it isn't necessarily a a sticker shock the other advantage for for us from a from a psychological perspective and your audience may know this or they might not but most of our buyers being from mexico central america and latin america in latin american countries interest rates right now is anywhere between 35 to 50 percent a year holy smoke so when you're giving them nine percent interest rate they're happy they're not gonna say they're not gonna they're gonna thank you they're gonna thank you and they're gonna be happy that now you've given them you know the opportunity to buy the home that they want not this limited inventory of uh of properties you're solving a problem at the ultimate sense you're giving them a home that they want where they want to live they just can't qualify for either a the social security situation or b they don't have the paperwork needed to close on it or whatnot that a bank wouldn't do it you're supplementing that situation yeah and we let them know we disclose upfront we're not going to force you to refinance there's no balloons but most of our clients are refinancing in about 18 months if if if uh if they choose to to attempt to do so and we're okay with that i tell them all the time it's like listen we know we're not wife material we're not long-term marriage material we're like your short-term girlfriend uh i mean we we we might end up being your one-night stand i don't care we know where we're at i'm not offended uh we're giving you what you want which is we're letting you buy your home we're getting you in the door and we fully know that once you're in the door you're gonna try it very hard to improve your situation and we're totally okay with that are you reporting your credit viewers can i help them out getting their thing okay yeah yeah um we're doing third party note servicing uh we're giving them 1098s at the end of the year so they can write out all of the interest that they've paid on their taxes we're escorting taxes and insurance our papers is beautiful we're creating qm um transactions qm loans um for those who don't know that's qualified mortgages yeah qualified mortgages we try to stay uh under 47 dti uh we're pretty open-minded when it comes to underwriting how server knows that that means debting that's an income for those who don't know sorry yeah for sure so so i i love i mean i'm very proud of our paper if i was in the note buying business i would buy our paper it's it's very very uh very nice so how difficult is it to find these borrowers how much work is it on upfront to get the holy people to you know to get your clients great questions so we made a mistake and it took us about a year to realize it was a mistake and the mistake that we did is we were trying to get to them directly we were trying to find them directly and what we found is that the vast majority are terribly unqualified i mean for every thousand leads that we would get about 950 were complete junk and and i don't mean that derogatively from the person's perspective but they had no money no credit total lack of preparation they they thought that you know we are better than fha lower interest rate i mean just just no common sense as to uh you know who we were and we corrected that mistake when we came to the realization that the quality owner finance buyers and for us quality is those who have at least 20 initial investment and ability to make payments they might not be educated from from a scholarly perspective because many are not but they're smart enough to go to real estate agents so you know nugget for all the guys that want to find the quality owner finance buyers if that's that's your audience go to real estate agents talk to them they are the ones that have the contact information the the people who have down payments uh go to real estate agents and sadly real estate agents usually don't know what to do with them they'll do an mls search they'll give them a list of 10 12 homes in their city that offers seller carry or seller financing or owner financing or whatever it is in your state and um and usually these will be you know just regular owner finance investors or sellers with the price point of 100 to 175 200 000 um but when they can come when that when that's not the kind of home they're looking for then you know where we make sure that we're there through social media presence and uh cold calling we recently purchased the list of every licensed real estate agent in texas they are currently being called and um connected with if anyone wants to know it's about 160 000 of them in texas um it wasn't cheap to get you know but um that's where our quality buyers are at it's an interesting play nathan what's your thoughts on that i mean mostly because nathan's about more than least cfds than i have what's your thought of that strategy what's your thoughts here i think that's really good um we were talking just before we got on the call that down payment is key um so when i started doing seller finance way back when uh i was doing at initially no down payment oh that didn't work out well at all um and and part of it was because of of the kind of houses that we had like these were these are houses that i had kind of inherited uh that were very run down we had no operating budget to fix anything up so we were just selling them as is so because of that we didn't feel like we could really do a large down payment um but we quickly learned that uh that we needed something so in those beginning days um i would get it was just three times whatever the monthly payment was so if it was a 500 monthly payment then it down payments 1500.

and that was kind of our our initial model and that helped out um quite a bit in just like you say getting quality people are you still in houses um are you still in in that in that business model of of uh owner financing um kind of dump ruse occasionally i don't do a lot of seller finance anymore but sometimes may i share something that has worked with us because we're still buying you know inventory uh when it comes to to the dumper roods uh what we do is the home is not livable yeah we understand that so um we originate basically a non non owner occupied hard money loan for them so this totally avoids all dodd-frank safe act you know rules and regulations and if anyone has any questions there's like well you can't live in that obviously you know it's a dump so what we'll do is we'll do a um a three-month loan okay with with almost no money down but they have to have cash in the bank to fix it up okay and basically it's a very short term three term if the progress has been made we'll extend it to six months we'll extend it to nine months and we'll extend it to 12 months and the goal is very simple within 12 months the home has to be fixed up in a livable condition if they have met those conditions then we'll do a long-term owner-occupied fully you know dodd-frank safe act regulatory compliant long-term mortgage for them but that prevents us from being locked in long term yeah in a with an unqualified person in a unqualified home i guess i'll say that in that video yeah so we'll do that with with ours um now i heard you do lease options is that right uh yeah so my lease options what i do with those is i will pick up a lease option and because they're not as marketable i i buy to resell so because they're not as marketable to resell i will actually convert them over to uh depending on the state land contract contract for data agreement for deed bond for deed whatever you're going to call it depending on where you're bonfer deed i've never heard that i only operate in texas so is that okay uh louisiana and one other state that i don't remember anyway um learned something new today yeah but um but yeah then i'll convert them over uh and then when we're writing that paper whatever typically they've been in at least that lease option contract for a year or more so we'll use whatever they've paid um and i'll be specific we'll use whatever equity that they've accumulated as their down payment not going forward so that's how we so we do lease options as well i i don't like to promote them but i'll share the way we do we do lease options if you have a minimum 10 down and your dti is 42 or less so again that to me is a somewhat safer position right uh will extend at least option uh if they believe that they can either a qualify for a conventional mortgage within three years or save up the necessary money for the other 10 percent to close them on a 20 down payment owner finance transaction now this is where for us the cash flow is phenomenal the monthly payment is based upon what the mortgage payment would be if the interest rate was 12 okay yeah so you know we're we're making massive cash flow during that time frame and i tell them you know the reason i'm setting it up like this is i i i want your situation to improve later on i want this to be the highest payment you're ever going to have to make and i want there to be an incentive for you to improve your situation either by raising the necessary capital to close as an owner finance transaction in which case the payment will drop because we're gonna close you right now at nine percent instead of twelve percent yeah or conventional in which case it'll really drop you know if you get another three percent four percent five percent interest rate yeah and same thing so i'm buying the lease option it's already an existing lease option um but because they're not very marketable i can get them at a pretty good discount then like you're saying it's at like an 11 or 12 percent so i'll approach them and say listen here's here's what you're set up at right now i'll give it to you for nine percent if you can qualify at a bank you can get four or five percent and save a ton of money yeah but but at the very least let me save you some money we'll convert you over to a land contract at these terms and uh contract for deed whatever and uh and it's usually a you know no brainer they'll go for that in a hot second yeah yeah man i love this yeah so when when you're working with these borrowers what is the biggest hurdle that you come across from a very early initial qualification or or from either early or during that process of you know what are some of the things that either maybe they still want the house after a while what are some of the things that you struggle with that are that hurdles yeah yeah so the first hurdle like kind of way before we still have to go through quite a bit of people to find 20 people i am totally okay with that hurdle because i i i if i'd rather do you know three four five deals a month that i feel very confident will perform than doing 15 20 30 that i'm very confident will probably not perform yeah um so that's a personal preference there are some people who love volume and and and love to you know just just hit that ball you know and and pray you know something will stick i'm very risk averse very risk-averse so so from that perspective that's one of our biggest hurdles we do have to go through a lot of people even though you know we're getting our leads from real estate agents um the second hurdle before the closing um is um if they're self-employed folks and they know what interest rates with banks are today the nine percent interest rate is is a definite you know mental hurdle and again you got to remember we're dealing homes in the in the 300 350 400 450 500 000 range so not an unfortunate interest rate is a hefty monthly payment when converted to dollars and um they'll either say whoa my payment is going to be five grand when i can just rent for three in the same neighborhood which may be true yeah or and why are you offering nine percent when you know the banks are right now offering three percent that usually is is um overcome simply by talking to them and saying listen it doesn't matter if interest rates are zero percent right now if they're not accessible to you that's just not something you have an option that's just not within your options you know it's it's like if if you're married to a beautiful woman and there are these other beautiful single women you can't go date them you should not encode them i mean they're not available to you you know you're you're married that's that's what's available to you right now yeah so you know sometimes i get it sometimes they don't um the the other the other approach that i would say is listen how much are you paying right now in rent well you know three thousand dollars a month great what's the interest rate on that rent and that just like throws them off and like uh what do you mean interest rate yeah yeah yeah what's the interest rate on your rent payment and they of course they can't say i'm like look i want to tell you a secret it's so high they can't even legally call it interest rate anymore they have to give it a totally new name and call it rent is the payment ever gonna end no is it ever gonna go down no congratulations you're paying a hundred percent interest rate that's what you're paying now it's so immoral what you're paying right now that legally they can't even call it interest rate they have to give it a totally new name so that you think of it in a different way now i'm sorry i can't get you down to three percent i'm sorry but i can't take it down to nine percent from a hundred percent can you just be grateful yeah yeah you know yeah i'm sorry i i can't do i can't do you know three percent yeah but i can do nine you know can you just shut up and be grateful you know and you guys totally hold your loans long term yes i'm not selling any to you there are none and you're you're typically holding these loans long term but what is a typical time frame for these buyers or borrowers to get out is it 18 months two years five years so it depends uh we have two kind of pots um about 60 to 65 67 percent are itin buyers i-10 buyers don't have a social security number in this country it'll probably be very hard for them to to to refinance until they reach a 30 equity position uh which yeah i mean i don't know houses are pre appreciating pretty quickly in texas now but it might be five years six years seven years i mean mathematically um the 18-month refinance rate are on our self-employed pool basically whenever they get the two years the tax returns if their credit is where it needs to be you know they'll have the equity position they'll have the two years to tax returns they'll probably have the income and uh you know refinancing is is about 18 and all the credit because if you're reporting to the credit bureaus it makes it easier yeah yeah we are reporting to credit bureaus if they want us um we do have a few about maybe maybe two three four percent where they have great credit great income w-2 they could get a bank loan but for privacy reasons they come to us privacy reasons they come to us um the largest deal that we've got in our portfolio is 1.2 million dollars and i am almost 100 certain that the lady that was there with the gentleman was not his wife gotcha and um there is no evidence that that home belongs to the gentleman interesting and i'll keep my mouth shut on that it's just business yeah yeah we had another another lady um her story was that she really wanted to make sure there was there was privacy you know that that home didn't appear on her on her on her credit on legal documents on nothing uh she her story was that she was running away from an abusive you know boyfriend from south carolina north carolina somewhere in the carolinas and um about a year after we closed with her just just one of those things that you're like let me do a little research on this lady there was something in the back of my head that just didn't really sit well with me and i i i stopped when i got the gut feeling that she may be a fugitive of the law yeah and i don't and i don't think she was running away from an abusive boyfriend i think she was the abusive girlfriend and the boyfriend may be sleeping somewhere six feet underground so don't ask questions yeah and you shared something with offline it was really intriguing because we had just had on call the underwriter on and whatnot you guys go through that process of vetting these people out oh yeah in in they talked about our weekly they vetted out and you can vetted all the people for 200 bucks and if they approve then you're going to go find the home for them versus i have a home let me bring in these borrowers and let me pre-approve them then but i'm holding the home and waiting for someone to come to it you're doing the opposite complete opposite you're finding the borrowers pre-proving who could be approved who wouldn't be approved by an mls and then saying okay let's go find the home that you want i would think that's probably easier than the other way around in some circumstances certainly in our circumstances in our in our you know business model it's 100 better because i'm dealing with pretty homes there is zero holding cost because i've already got a person who liked and approved and is going to close on the home and is going to perform from day one i'm actually not finding their home we're not real estate agents they came from real estate agents and that's the reason real estate agents love working with us because once we approve them very much like a mortgage company we send them right back to them and then their work begins and they get these are fully commissionable transactions for them so they do the work of finding the home that suits you know the uh the client all we really care is that it's an appraisable home so whenever they find it they submit a contract to purchase we close 18 days after the option period ends which you know depending on the option period it's a total of 25 28 days and it's it's very hands off you know from from our perspective i've got lead generation i've got pre-called people where they disclose terms costs and conditions in a confidential conversation once they like everything that they hear then we send them to an independent underwriter and third-party residential mortgage loan originator to actually document their real-world ability to repay once they give us that information we give them a pre-approval letter we send them right back to the agent they go find a home and they usually call us you know two three four weeks later when they found the home they have a contract and we're ready to close on it so it's very very hands-off so then earlier you talked about ira money um how are you how are you approaching your investors like how do you how do you find them first of all and then how do you pitch them and i'm not going to ask what you're offering them yeah no i mean i i don't have a problem sharing um we we um we're we require a minimum two percent spread so we're offering seven percent right now and we are uh owner financing at nine percent okay um i i have no problem so so if anybody out there you know has that ira money let me know i'll tell you what you're going to be getting if you're getting less then come talk to me if you're not then don't talk to me you know it is um so before kovitz something that we did i was i was really really smart i didn't realize was smart at the time and but now i realize how smart it is is we were doing conventions medical conventions where we were setting up boots and that wasn't the smart part well i think that was a little bit smart but the really smart part is we never offered high returns that was never our pitch our pitch was move your money to a stabilized predictable reliable budgetable return and of course a mortgage payment is 100 predictable you know exactly how much you're going to be getting on a monthly basis right the underlying asset is insured and um you know you're working with your many of these doctors already had rental properties so we were moving them from being landlords to to lean lords right so our pitch from the beginning was not not more because i think that would have gotten us in trouble because because most people you know if they're quasi-smart they're probably getting six percent five percent you know seven percent i mean five to seven percent is not unheard of you know if you're just like a doctor and a pharmacist a a normal you know nine to five individual that has money in their 401k sure so if i'm going to be offering more then what am i gonna offer you know eight percent nine percent well what does that leave me you know the only way i could make money was if i pair up the person with the individual buyer but i don't want to do that because that cuts me from the spread and i also don't really want to put pair up non-educated people with with fairly complex you know situations so the the really smart pitch that we did is listen you probably not going to make more you know you might make more but you're probably not going to make more however it's going to be a stabilized predictable monthly budgetable return so we started getting people from the late 40s to the early 60s that already had half a million million two million dollars in the 401ks and they wanted to remove themselves from the volatility of the stock market into something that was a little bit more predictable um so are you guys running a fund or are you guys no no no no no one person one loan we we'll borrow yeah i know i throw the word investor out there but no we borrow money sure yeah we borrow money we personally guarantee it we personally guarantee it yeah you know so what they're saying here guys they're not joint venturing one of these people they're actually doing a return guarantee return on a contract with them so they're actually doing the borrowing versus the equity yes no doing venturing going on at all we don't put the money together um we we yeah that would be that would fall under sec you know bad people you know umbrella and we're not we're not doing that and my picture's real simple listen at the at the end of the day mr you know lender mr private lender um you're going to be getting either your money with interest or you're going to be getting a house valuable texas real estate that's that's it we do personally guarantee our loans um and and that is part of our pitch um and and we're totally okay with that with a 20 equity position i mean that's that's very reasonable for us to do that have you talked to other people doing this now states texas is such a hotbed for this and in certain states these kind of going when the cfds are kind of being pushed out um where this is a little different this is not a contradict it's not these options this is a true seller finance duration and you're becoming the bank ultimately um you know for me in germany new jersey this is not something that's very often done and i think it's you know the amount of capital needed um but also there isn't many seller finance deals that is in texas it's like we don't do raps up here just not loud news kind of thing is just weird are they are they actually illegal are they actually not allowed when i've been told they are okay um maybe i would be corrected by one of smart people that i am out there right well yeah if i was told i tried doing one you're like oh you can't do it this is about 15 years ago okay okay so you know there's so much leeway in texas that these kind of things work out really well i'm sure nathan there's most states out there that identify um colorado um more a little bit more um not gonna try to go political but a little bit more relaxed but stuff so i think states where it's not judicial are probably a good area if you're listening to this guys and you're thinking about this you know there's another method of investing you don't want to if you don't looking to do it you can start doing your local inventory and in reaching out to your agents and solving the problem that they have that that they want to get commission off of it off this buyer but they can't get it alone with them they can't get a pre-approval so the agent won't work with them you're going to go work through it grab the situation pre-approve them get administration where you can be the lender for them they go back to the agent and the agent is going to be thanking you and sending you more leads that process can be repeated over and over again and i'm thinking it could be done it could be done with contract for deed as well if i'm just thinking for example uh maybe in ohio where well if you're going 20 down then that doesn't work so scratch ohio but let's say um there but say maybe missouri um you could set up a contract for deed in missouri um and then in case of a default it's just that much easier to get the property back now here in texas getting the property back is not a major i i can foreclose in 41 days yeah yeah legal injections that's okay it's faster than lethal objection right it's just it's quick yeah we can foreclose in 41 days uh not that we would you know but if we're talking about you know bear bare minimums looking for clothes just says 900 bucks you never know yeah yeah and i have that conversation you know with them that's that's really part of you know the pre-closing uh conversation so let them know that part of the reasons we're comfortable putting the deed in their name is because um you know if they decide not to hold in their end of the bargain it will uh be very easy for us to foreclose i let them know that you know in 41 days and it'll cost you about 900 i can go ahead and foreclose and i will exercise my right to foreclose if they are knuckleheads about you know holding in their end of the bargain i used to i used to uh i used to do something real mean or in the beginning um i there was a taco place right across the street from where they did the foreclosures and uh downtown and i would just invite him over hey you know i want to get to know you guys before you know i lend out all this money um just have a taco with me you know my treat and they would see all these people and i would just let them know if you guys don't ever pay this is where your house is going to get foreclosed you see all these people that happens every time every month in texas it's called texas tuesday first tuesday of the month tuesday the month and they're like oh wow yeah 100 rosa so for those who are curious i did put dan's information on a google doc just fill out the form and we'll share the information again i can't stress enough if you're struggling to find deals um our assets are are being a little bit limited compared to years before silver finance is a great way to get started and get involved you don't need to do a 200 000 deal right you can qualify someone for a 50 000 mortgage if your market is top 70 you don't need to go and do that kind of stuff so you can go look at the fact that talk to those local agents and find the bar borrowers it's that easy and then you're re just rewatching it over and over again and you're solving the problem for both the borrower then the agent in yourself and nine percent is not unheard of that's a normal rate for these kind of high-risk loans yeah well that's not all can i share something with the uh with the audience if they have maybe a lower capital um or maybe they want to start off with something small um again check your state but this is something that that we do invest in purchasing uh small pieces of land quarter acre half acre uh one acre that allows mobile homes that allows mobile homes and instead of uh owner financing or contracting for deed to the mobile home buyers just lease them the land um again every state is different every market is different but in san antonio and surrounding i can buy you know a half acre outside the city for you know ten twelve fifteen thousand dollars and i will lease it to them for five hundred dollars so if you convert that to what the interest rate would be if it was a a mortgage payment on a 30-year amortization it's about an 18 to 20 interest rate it's phenomenal returns now check with your mobile home dealerships but most you don't have to put the utilities most mobile home dealerships when they approve somebody for a mobile home loan and they don't qualify for the land purchase or they don't or they don't have um enough enough money for a land purchase they will approve them for the home and they will approve them for the utilities so the dealerships will put utilities and upgrade your land now there is a catch and this is a catch you're going to love they're going to require a 21 year lease so can you imagine buying you know a 5 ten fifteen thousand dollar little piece of land and having a guaranteed tenant for 21 years and mind you you don't have to lock in the rent payment for the 21 years it can be fully escalating as a matter of fact ours have been escalating to clause of minimum five percent per year so we know it's going to be increasing in the the rent payment a minimum of five percent per year the dealerships are putting in the utilities into the land and we know we have a 21-year tenant the only reason it would be less than 21 years is if they pay it off sooner so they pay it off sooner and they want to move the mobile home they can't but basically that's an absolute set of then forget it and you can start off with the small amount of money yep wow that's very cool so if you're in the midwest or you know midwest areas um it's that's an awesome idea to do guys um where i said before colorado in that midwestern texas course alabama tennessee is such an awesome market for this kind of thing there's so many rural areas um that you know homes are common and that's a normal thing for a lot of people where you know where we come from my area true trail parks are very rare they just they are um but in those areas where we're all higher yeah yeah that's true rural ohio's in colorado and montana that is common right yeah texas and you can kentucky always come and you can literally buy that land do a lease option make a payment arrangement form and they will be paying you they take care of everything else there is no reliability on you at all i mean it's just that kind of weirdness there's very little that can go wrong with renting dirt a few things can go wrong but very little that can go wrong with renting dirt yeah so what happens if the borrower doesn't like mow the lawn and the city leans on it is that following you or fall on that borrower so good question um first of all the zonifications that allow mobile homes are usually not in any city incorporated area so that's probably not not going to happen um secondly in the lease agreement it does say that they have to you know uphold and and and you know and and make sure the lawn is mowed and all that good stuff um what is really nice is what happens if they stop making the mortgage payment on the on the mobile home so presumably if they stop making the mortgage payment on the mo home presumably they're also going to stop making the rent payment i mean i can't imagine they're going to be making the rent payment and not the rent payment well this is where it gets really fun because you're going to get a call from the lender and they're going to let you know that they've stopped receiving uh payments from the um from from from the borrower and many times many times because banks and lending institutions do not want to deal with a mobile home they will offer you to pick up the loan subject to the existing financing so they'll just pass on the loan to you if you wanted it so there's a lot of people that want to pick up property subject to the existing financing but they're scared to do on sale clause well with with wheel estate you got the lenders coming to you and say hey do you just want to finish this loan like i'm okay i will let you do it i will i will transfer i'll do whatever because otherwise otherwise mobile homes are personal property and ultimately ultimately they belong to the bank because it's personal property they don't belong to the borrower until the loan is paid off so if the lease isn't and again this is just in texas i don't know other states consult your attorney blah blah blah that's my disclosure um but in texas what we can do is if you don't get the lease payment then the um tenant has 30 days to move their crap which includes their mobile home all right now if they don't move their crap which includes their mobile home then you can go to the lender and say hey by the way you're the actual owner of the mobile home you either have to start paying storage fees or you've got to pay rent or you've got 30 days to move your crap in which case the conversation usually turns around and says hey would you like to just you know get this mobile home and continue making payments i mean it's a beautiful game it's a beautiful game with with small dollars that you that a lot of people can start playing with yeah cool awesome strategy so i guys i did like i said posted uh performance error so feel free to fill it out if you see us later we'll make sure we'll make it available for those who missed it nathan what do you think about this strategy it's so cool to think about this alternative method that i didn't even think about for years yeah that's interesting it's i've got actually one lady um it's a lady who i had a she was a land contract in columbus ohio and she got bought out uh which turned out to be a great thing for her it gave her a nice little nest egg and house prices are going up in the neighborhood all that and so she she paid me off and had this money and she calls me every few months and asks if i have a house for her and she wants to rent from me or to you know buy a house from me and i'm just not set up that way uh you know that that doesn't quite work for me but uh she'll contact me every few months what steve is she in she's in ohio uh but she'd be happy to go to north carolina or ohio or kentucky she's totally open how does she feel about texas it wouldn't be a 300 000 home it would be you know 50.

what is your what's your average home sale 320 okay yeah i will do anything from 150 um i i say 1.2 just because we've done a 1.2 but i think we only have one over a million um but we have quite a bit in the three hundred thousand dollar range quite a bit and i think yeah go ahead share the question um what kind of land qualifies to have a mobile home on them and typically what returns can we expect so those are two questions uh it has to be zoned for mobile homes so again you got to go to your county or to your state in texas it's got to have a zonification of mh mobile home or it's got to have a zoning of ocl outside city limits so if it's got those two you know it'll uh it'll it'll work i guess every county or state is probably different on uh on what they do have to allow mobiles so it's it's not like um you can put a mobile home in the middle of the city if it's owned residential any random residential launch yeah yeah i asked ask me how i know yeah um welcome to the wonderful world of making mistakes yeah uh expensive ones too so leon just real quick um you want to know more more about how to do these deals in texas um that mobile house if you fill out the uh form you're gonna get dan's information feel free to reach out to him he has a very very active social media as well um so feel free to reach out to them great guys you can tell definitely a different avenue to explore on but yeah you could definitely do this in texas as he's doing it i wouldn't say that he's monopolized the entire state oh no no no no reach out to your local agents and start working on leon uh but definitely cool idea for you to get started on this avenue you know just connect with it you can call the underwriter i'm not sure who dan uses uh but you can use called underwriter and pre-approve these people just someone that's pre you know nmls approved they can create these loans and what not so you will stay above the board when it comes to the originations you want to stay above board because the penalties are very stiff yeah so stiff you got to go to canada if you break them it's awesome so what year did you start doing these kind of things did you start unwrapping this idea so i i think for me i've always had a creative uh mind and i've i've always had a philosophy of there's probably nothing new under the sun i mean as as as smart as we want to tell ourselves that we are we're probably not going to be the inventor of anything new that that's just the statistical truth um so for me it's it's more like what has already been done but hasn't been exploited so what has already been done but but hasn't been exploited now specifically with mobile homes i i did have the advantage of i used to be manager for palm harbor homes you know so one of the things that really had a big impact on me and i don't know if you guys know this but about 40 percent of warren buffett's wealth has been made on the backs of the mobile home industry wow so he owns and i love sharing this story he owns clayton homes which is the number two dealership in the country so he owns the factory he then owns 21st mortgage which is the number one lender of mobile homes in the country about 80 of all mobile home loans are under 21st mortgage so he owns the financing and then he owns some communities and guest communities which combined um are the number one largest uh manufactured home park portfolio in the country they own together about 70 of all of the communities that mobile homes at least the nicer communities not the mom and pop but like the nicer that have like swimming pools and tennis courts and jogging trails and beautiful communities so i'm thinking okay this homeboy owns the factory he owns the financing product and he owns the land that his that his homes are going to be put in are you kidding me yeah so i did the math one time so a typical mobile home that sells at a mobile home dealership for eighty thousand dollars the dealership will buy it from the factory for about thirty five thousand a little less than half now in the factory it cost them about half that to make sure so when you're thinking about a cost basis of like 20 000 that you are then financing at a hundred thousand and you are putting them into your land that you're charging 450 500 550 a month yeah in rent i mean those numbers no wonder he's like the richest guy in the world yeah and nobody knows that he's involved in mobile home dealer and mobile home industry i don't i don't think i knew at all yeah so when i was at palm harbor homes and i i learned that i was like you know just you don't need to reinvent the wool you just got to figure out where the wheel's at and how the wheel works you know go get yourself a wheel so before i go to nades real quick someone they were asking what is the okay sonya wanted to just clarify was a typical investment and what kind of returns to buy and lease land from mobile home um so the return is tied to whether or not you're gonna lease option it or under finance it or or uh or uh lease it um if you're gonna be owner financing it your typical yields are anywhere between 20 to 22 percent because you're going to be buying let's say at 10 15 000 and the sale price is going to be you know 25 30 000 18 interest rates because it's land it's vacant land you can do that so your yield is going to be in the 22 23 24 25 range however if you're going to be leasing it your returns are easily in the 30 range because it's never going to end i mean that's that's really what it comes down to it yeah and then of course what's the impact on your assets when all of a sudden twenty thousand dollars worth of improvements water electric and septic have been done to your land i mean that's it's just a no-brainer the numbers are phenomenal the percentage numbers are phenomenal i guess the problem is there's a rarity of finding it right the deals are great no no no no i mean nobody how many people do you know are looking what's your competition yeah you're right i don't i don't think we've ever had a mobile home in our portfolio nathan how about yourself i have uh twice and i'm not interested in mobile homes and again that's just my business model because i'm looking to resell it so because i'm looking to resell uh because it's not attached yeah mobile homes is not it's not an asset that works well for any kind of reselling note selling uh contract selling situations nobody they don't work for me but yeah like they're a great holding model yes they're a great holding model yeah so if you're which is the same as the second yep and if you're into the hold great yeah that's a fantastic model yeah yeah that's interesting i mean the whole methodology of that kind of stuff is you know and there may be a way of playing it you know i'm sure there's funds out out there doing this kind of method um sure i don't know them but yeah i'm i mean at the end of the day you know i imagine you know once you have a 21-year lease that's pretty solid paper you can probably take it to the bank and recycle your capital get a loan against it i mean yeah we we don't because we we bought them for 10 12 15.

i mean it's it's it's probably more more trouble to you know get loans against him yeah amazing but from a return perspective it's like yeah yeah i know some guys that trade in mobile home parks but not individually yeah well that would be the next step up yeah yeah yeah parks would be the next step up although by what i have seen at least in texas there's some pretty there's a lot of capital being infused into it so you're i'm starting to see eight percent cap rates nine percent cap rates in mobile home parks and that's too rich for my blood yeah um that does not get me excited uh yeah at all at all yeah it's amazing well dan i think the information you shared for those of people who look for an alternative way of investing maybe even a passively investing um but especially those who are getting started this avenue to even explore and let's let's also throw the catch out there if you find an asset and you get nervous about this you know dan has a course as well but you can pitch this deal to dan and say listen i'm not i don't want to buy it i get all homework here you go i don't know what to do this is yours you can broker this stuff you know do you buy these kind of things where someone has a great deal based you're scared nervous only three times a month right so guys if it's in texas for sure yeah right so explore that option for people who are out there that yes we don't do a lot of brokering we talk poorly about it if you do all the homework and you get all everything set up reach out to dan or anyone else that does this kind of stuff and you can get that sweet situation and get a nice little paycheck out of it too so yeah i'm a big fan of uh you know dave i'm a big fan of learning how to negotiate seller financing i i think that learning how to negotiate seller financing is probably the best way to get your feet into actually owning owning real estate and uh i know you did mention i have a course for those who are asking it's like less than 300 bucks and it's 10 hours so i don't think that this is like a pitch for a 30 000 mentorship or anything like that it's 300 bucks it's completely you know recorded um i've got a facebook group that that people can kind of join and get their questions answered um but what it focuses on is how to negotiate seller finance transactions and i've got students there that come back to me they're like dan i pitched it exactly the way you told me i got it zero down zero percent interest 15 year that is awesome that can't be possible and i tell them that can't be possible how did i miss it that's awesome so that's that's super super exciting so i'm going to presume a lot of people here are brand new is this something for inexperienced investor to get into yeah absolutely as a matter of fact a lot of a lot of and i don't know your audience but a lot of people start wholesaling and to me wholesaling is is um obviously a high reward no risk situation but it it doesn't and i'm sorry if i've offended anybody in this audience but it does not make you an investor an investor is when your name is on real estate for real assets whether it's real or paper when your name is on something then you've become an investor and seller financing negotiating seller financing is an excellent avenue for you to morally ethically and legally tell people i buy real estate never mind the fact that it was zero percent down zero percent interest never mind that i bought real estate i own real estate i'm involved in real estate i'm a real estate buyer and investor and i may end up wholesaling your property but because i now own real estate i can now confidently say that i am a buyer i am a buyer and i think everyone should do that that's really you're never going to get out of the transactional uh one-time money rat race unless you start owning something that pays you on a regular basis and then once you buy it you can do whatever you want you can airbnb it you can rent it you can own or finance it you can if you still want to sell the contract i will buy it um you know there's a lot of things that you can do with it wow yeah very cool sumi nuggets my man dan i appreciate your wealth of knowledge as well as you share everything i'm grateful to call your friend it's awesome to hear from you um the nuggets you dropped today i'm sure people will be writing down re-listening to it um but guys jump in and get started right so it's amazing but just to let everyone know um the next two weeks will be off uh nathan and i i will be uh vacationing with my family um in puerto rico so if you're down there reach outside and i don't know how to work facebook so there it is yeah and it's been crazy sorry the fee's been a little crazy my internet's been wacky today but guys i think i brought dan on for a reason um and i wanted to get this started before i went on vacation um we have a few more things that we're teaming up for when i get back um so feel free to rewatch us on our youtube channel or our website our facebook group and all the other places we have everything else but feel free to reach out and talk to dan directly he is well open to talk to anyone out there um has a great group as well so then again i appreciate your time your energy honors online you're willing and if anybody's got anything that they want to talk about anything they want us to talk together any topic she wants to bring up or bring on um bring out additional guests and whatnot feel free to let us know and we'll work our magic and uh get someone on here and topics we want to learn i want to know when real estate will become affordable in canada when it warms up you know the worst part about kid iras they don't have self-directed iras up there we've got a version of it but you can only use it to buy publicly traded uh something it has to be publicly traded wow so if you don't mind asking me real quick and i know i know yeah you got to take off but but nathan what do you think how do people afford um you know the prices in in canada i have no idea we bought our house 15 years ago for 175 000.

today we we just last year did a major renovation so that's something but today probably 750. so so is it is it because interest rates are super low because i mean that's kind of what what's driving prices up up up here down here but what it's part of it here yeah that's part of it i don't know canada's kind of a funky little corner and then and you know it's regional as well and so like we're right where i'm at we're just outside of montreal and and uh we're just looking this morning my wife and i just looking at a neighborhood just comparing but uh you know a three-in-one bungalow uh just one street over for from us they did a renovation last year where they had added on the sun room which is really nice it's pretty but the house is really nothing special and it's listed for six hundred thousand dollars it's ridiculous it's ridiculous yeah hopefully i'll burst soon and that leads to the question so nathan asked the question at the end of every week yeah you've got your crystal ball on what do you see in six months or a year ah bro i don't know i i i i'm not smart enough big enough knowledgeable enough deep pocketed enough um to to you know know what the markets i i do see um that the us in general is uh in some sort of hyperinflation situation um i was reading that um and it's little things that you don't really catch like for example there's a guy that uh he sells three tacos and we go at least once a week real nice guy san antonio is a little different you know um and he was telling me that like for example a box of barbacoa meat he would buy it for 65 three months ago it's 450 right now a box of bacon was you know 85 everything was 100 under 100 85 and now it's 380 dollars cheap you know was 110 four months ago and it's now six hundred dollars and um you know lumber prices are to just numbers ridiculous um but but even more subtle things like steel salt sugar uh corn just very very subtle but very basic flower staple items are skyrocketing and the consumer is not feeling it because it's it's the prices consumers are buying from the from the big box grocery stores and the big buck grocery stores they still have a certain presence where they're able to force you know the the main you know wholesaler distributors to to maintain a certain level of pricing but it's like the small restaurants the the mid you know that are really feeling the hit and eventually it's going to it's going to you know boil over to to the grocery stores but you know we saw this in venezuela we saw this in mozambique we saw this and and and how long is it going to take i i don't i don't know but um things are not well do you see a bubble do you see it no it's not a bubble it's not a bubble i don't think it's a bubble in the traditional sense i think i think the us and and the fiat currency that the us is under is is imploding you know and i see the collapse of a civilization not in six months yeah hopefully but i'm gonna get the football season come on yeah um but no i mean we're talking about a you know global uh collapse of a civilization yeah which brings the topic of bitcoin and all that kind of good stuff yeah yeah but you're right though you know we've had the conversation a lot of people and everyone's like well you know even a year ago we're heading to a bubble right and the bubblegum i don't think it's a bubble i don't think it's a bubble yeah it may be the new way of life it's just what it is yeah yeah yeah and i i did you know see like for example um hyperinflation in venezuela uh during during the final collapse you could buy bread in the morning and it would be more expensive in the afternoon yeah i mean that kind of you know like the price would increase from the moment you picked it up on the shelf to the moment you went to the cash register to pay i mean it was just ridiculous i saw it in mexico um you know during you know the late 1980s and uh of course what happened after that after that that minor mid collapse the cartel took over you know so we'll see what happens but in the next six months i'm buying deals so you got something i got it i will buy it with that we're gonna disconnect from facebook guys feel free to watch on youtube and all that good stuff but uh again enjoy your weekend and have a great time man have a great one finna play it um which is awesome so that one day yeah it really doesn't make a difference the only way it makes a difference for me is i think we talked about this once before is that's how i organize what i'm doing each day so yeah my friday is kind of a filler day and so that's how i kind of that's crazy applied my time so i know last we were talking about you buy some cfds and whatnot um it made some more offers uh we made a few offers we got rejected so we're going to move past them and move on what's what's up with you man what's going on last week so last week i don't remember if last week i'd already closed or not i don't remember but anyway i just i just picked up three more uh all three mortgages um i had some offers out on some cfds but not looking good so i don't know we'll see we'll see but it's fine that's that's the nature of the business and yeah if it works it works if not you move on to the next one and keep moving yeah and then all these moratoriums coming through doesn't really affect us right now right these uh these struggles and stuff like that doesn't really affect us because of what type it is so um i know you're looking at some lease options as well uh which is pretty cool so yeah i'll buy anything in first position oh it's funny because we do all that stuff and we say all that stuff but it's true right it's if that security's there is what we care about yeah um and we had a great session last week um last couple weeks been awesome stuff we talked about seller financing and i i'd reach out to dan i i've been watching him on facebook a little bit and i said listen he's doing everything everyone else is doing what new could there be yeah and it seems like every time i say stuff like that there's something new out there and i'm like and i shot a message to him and he was grateful enough to to entertain me for a few minutes and i was like whoa so i'm excited right to bring dan on business there are so many different ways to do this which is just great the challenge with that is you pick one and then do it um unless you're rey and then you do three different things [Laughter] yeah oh it's just frustrating right because it's just there is no ultimate person in this base doing everything that he should do ray's clothes but yeah you know i think for me it's interesting so yeah well i think i'd like to introduce dan uh to to our weekly uh facebook live dan can you share a little about back your background how did you get a real estate you know what kind of stumbled blocks you came across and what are you doing now sure sure well first of all it's an absolute pleasure and honor to be here i'm excited um i know you're um definitely very active in the note world and no creation no no buying and things of that nature and when you reached out i i i was excited so so thank you for for having me here for sure a little bit about my my background my name is dan diaz i was introduced into the wonderful world of real estate through what i like to call real estate real estate so for about four years i was manager for palm harbor homes here in san antonio texas actually a little town outside san antonio called elmendorf texas and as general manager for palm harbor homes i i got a glimpse a behind the scenes behind the scene glimpse to real estate i was able to see a lot of aspects that i had never been exposed to before and i fell in love with it uh what i did not like was that i did not have an eight to five i had a five to eight and that was seven days a week and i hated it made really good money but i hated it so right around 2004 i really started educating myself i started learning uh about owner scratching my head and i'm like how can we capture these buyers and it was right around 2017 late 2017 early 2018 that a light bulb literally hit me and and i realized the problem is not inventory dave there's 10 000 homes for sale on the mls so why am i focusing on trying to build up our inventory to bring to the market inventory did not seem to be the problem for us the problem was finance you know how to acquire the money and of course i started kind of researching and there's not a whole lot of banks who will lend you to wrap their money um so so that really wasn't an avenue but then i was introduced to the wonderful world of self-directed iras and i was introduced to you know the nearly 13 trillion dollars of money that's sloshing around in self-directed iras people wanting stabilized predictable returns um at least the people that we came in contact with they they didn't necessarily want a higher return they just they were approaching the retirement years you know they were between 45 50 55 maybe 60 years old they wanted something stable they had already built you know half a million dollar nest egg million dollar nest egg 2 million nest egg but they just didn't want to go through a huge loss in the market so they were looking for something a little bit more stabilized so now what we do about 70 of our business is we start with the buyer first we make a determination of the real world ability to repay based upon their initial investment and their income and their liabilities once we make a determination of the real-world ability to repay we go ahead and raise the necessary capital for them to purchase their homes with owner finance terms i'm very proud of the notes that we built for them 30-year mortgages no balloons no prepayment penalties no mortgage insurance obviously uh we don't mark up the home either which is important there's a few other investors that have popped up in in the industry and what they'll do is they'll buy the home and then they'll mark it up 10 15 20 30.

i've seen even up to 50 percent i guess there's nothing really wrong with that model except that the buyers upside down from day one so refinancing is is nearly impossible for at least you know seven eight nine 10 12 years we don't mark up the home uh we simply focus on the on the funding of the uh of the transaction for them so that's the bulk of what we're doing we're still a small family-owned and operated business we do about four or five deals uh a month in texas our average deal was about 320 000 we'll do anything between 150 up to 1.2 million and what's really nice is that we're now in the owner finance world but we're in the pretty homes you know these are beautiful homes great neighborhoods if we ever get them back i mean i'm i'm going to be happy you know to you know own them these these are beautiful homes and great great neighborhoods so that's kind of what we're doing now and and uh i guess it is a little bit different than most of our finance transactions yeah that's really interesting so you covered your price point um how did you get up to that like i'm assuming you started out lower and went up higher and and if that's the case why not necessarily yeah okay yeah not necessarily so when so there there's a lot of inventory i'll use that term there's there's quite a few owner financed by you know sellers and investors in the 100 to 200 000 range and most of them are happy with 10 down so if somebody is wanting that range they're not going to like our 20 requirements and there's quite a few out there that they can they can kind of go to um the reason a lot of owner finance investors stay in the 100 to 200 000 range is because they are trying to make the mortgage payment be equal to or similar to market rents at a 9 10 11 interest rate and the math tells you that once you go over the 175 185 195 200 000 range if you're going to keep you know your 9 10 11 interest rate and it's going to be comparable to market rents you're kind of going to be capped off now our perspective is is we're going to let you buy whatever home you can afford we approach it more like a bank or a mortgage company this is our interest rate it's currently nine percent so um you want the three hundred thousand dollar home knock yourself out we don't care you got 20 cash to close we don't care so our mortgage payments are nowhere near market rents i mean it's just the mortgage payment it's just the cost of owning your home so we approach it you know from from that kind of um that kind of perspective and and we're we're very we're very successful i would say about 65 of our clients even though they bring 20 they really have 40 to 50 liquid cash um about 65 70 percent are itin buyers they don't have a social security number in this country but they're affluent they're already paying three four five thousand dollars in rent in the neighborhood that they want to buy so it isn't necessarily a a sticker shock the other advantage for for us from a from a psychological perspective and your audience may know this or they might not but most of our buyers being from mexico central america and latin america in latin american countries interest rates right now is anywhere between 35 to 50 percent a year holy smoke so when you're giving them nine percent interest rate they're happy they're not gonna say they're not gonna they're gonna thank you they're gonna thank you and they're gonna be happy that now you've given them you know the opportunity to buy the home that they want not this limited inventory of uh of properties you're solving a problem at the ultimate sense you're giving them a home that they want where they want to live they just can't qualify for either a the social security situation or b they don't have the paperwork needed to close on it or whatnot that a bank wouldn't do it you're supplementing that situation yeah and we let them know we disclose upfront we're not going to force you to refinance there's no balloons but most of our clients are refinancing in about 18 months if if if uh if they choose to to attempt to do so and we're okay with that i tell them all the time it's like listen we know we're not wife material we're not long-term marriage material we're like your short-term girlfriend uh i mean we we we might end up being your one-night stand i don't care we know where we're at i'm not offended uh we're giving you what you want which is we're letting you buy your home we're getting you in the door and we fully know that once you're in the door you're gonna try it very hard to improve your situation and we're totally okay with that are you reporting your credit viewers can i help them out getting their thing okay yeah yeah um we're doing third party note servicing uh we're giving them 1098s at the end of the year so they can write out all of the interest that they've paid on their taxes we're escorting taxes and insurance our papers is beautiful we're creating qm um transactions qm loans um for those who don't know that's qualified mortgages yeah qualified mortgages we try to stay uh under 47 dti uh we're pretty open-minded when it comes to underwriting how server knows that that means debting that's an income for those who don't know sorry yeah for sure so so i i love i mean i'm very proud of our paper if i was in the note buying business i would buy our paper it's it's very very uh very nice so how difficult is it to find these borrowers how much work is it on upfront to get the holy people to you know to get your clients great questions so we made a mistake and it took us about a year to realize it was a mistake and the mistake that we did is we were trying to get to them directly we were trying to find them directly and what we found is that the vast majority are terribly unqualified i mean for every thousand leads that we would get about 950 were complete junk and and i don't mean that derogatively from the person's perspective but they had no money no credit total lack of preparation they they thought that you know we are better than fha lower interest rate i mean just just no common sense as to uh you know who we were and we corrected that mistake when we came to the realization that the quality owner finance buyers and for us quality is those who have at least 20 initial investment and ability to make payments they might not be educated from from a scholarly perspective because many are not but they're smart enough to go to real estate agents so you know nugget for all the guys that want to find the quality owner finance buyers if that's that's your audience go to real estate agents talk to them they are the ones that have the contact information the the people who have down payments uh go to real estate agents and sadly real estate agents usually don't know what to do with them they'll do an mls search they'll give them a list of 10 12 homes in their city that offers seller carry or seller financing or owner financing or whatever it is in your state and um and usually these will be you know just regular owner finance investors or sellers with the price point of 100 to 175 200 000 um but when they can come when that when that's not the kind of home they're looking for then you know where we make sure that we're there through social media presence and uh cold calling we recently purchased the list of every licensed real estate agent in texas they are currently being called and um connected with if anyone wants to know it's about 160 000 of them in texas um it wasn't cheap to get you know but um that's where our quality buyers are at it's an interesting play nathan what's your thoughts on that i mean mostly because nathan's about more than least cfds than i have what's your thought of that strategy what's your thoughts here i think that's really good um we were talking just before we got on the call that down payment is key um so when i started doing seller finance way back when uh i was doing at initially no down payment oh that didn't work out well at all um and and part of it was because of of the kind of houses that we had like these were these are houses that i had kind of inherited uh that were very run down we had no operating budget to fix anything up so we were just selling them as is so because of that we didn't feel like we could really do a large down payment um but we quickly learned that uh that we needed something so in those beginning days um i would get it was just three times whatever the monthly payment was so if it was a 500 monthly payment then it down payments 1500.

and that was kind of our our initial model and that helped out um quite a bit in just like you say getting quality people are you still in houses um are you still in in that in that business model of of uh owner financing um kind of dump ruse occasionally i don't do a lot of seller finance anymore but sometimes may i share something that has worked with us because we're still buying you know inventory uh when it comes to to the dumper roods uh what we do is the home is not livable yeah we understand that so um we originate basically a non non owner occupied hard money loan for them so this totally avoids all dodd-frank safe act you know rules and regulations and if anyone has any questions there's like well you can't live in that obviously you know it's a dump so what we'll do is we'll do a um a three-month loan okay with with almost no money down but they have to have cash in the bank to fix it up okay and basically it's a very short term three term if the progress has been made we'll extend it to six months we'll extend it to nine months and we'll extend it to 12 months and the goal is very simple within 12 months the home has to be fixed up in a livable condition if they have met those conditions then we'll do a long-term owner-occupied fully you know dodd-frank safe act regulatory compliant long-term mortgage for them but that prevents us from being locked in long term yeah in a with an unqualified person in a unqualified home i guess i'll say that in that video yeah so we'll do that with with ours um now i heard you do lease options is that right uh yeah so my lease options what i do with those is i will pick up a lease option and because they're not as marketable i i buy to resell so because they're not as marketable to resell i will actually convert them over to uh depending on the state land contract contract for data agreement for deed bond for deed whatever you're going to call it depending on where you're bonfer deed i've never heard that i only operate in texas so is that okay uh louisiana and one other state that i don't remember anyway um learned something new today yeah but um but yeah then i'll convert them over uh and then when we're writing that paper whatever typically they've been in at least that lease option contract for a year or more so we'll use whatever they've paid um and i'll be specific we'll use whatever equity that they've accumulated as their down payment not going forward so that's how we so we do lease options as well i i don't like to promote them but i'll share the way we do we do lease options if you have a minimum 10 down and your dti is 42 or less so again that to me is a somewhat safer position right uh will extend at least option uh if they believe that they can either a qualify for a conventional mortgage within three years or save up the necessary money for the other 10 percent to close them on a 20 down payment owner finance transaction now this is where for us the cash flow is phenomenal the monthly payment is based upon what the mortgage payment would be if the interest rate was 12 okay yeah so you know we're we're making massive cash flow during that time frame and i tell them you know the reason i'm setting it up like this is i i i want your situation to improve later on i want this to be the highest payment you're ever going to have to make and i want there to be an incentive for you to improve your situation either by raising the necessary capital to close as an owner finance transaction in which case the payment will drop because we're gonna close you right now at nine percent instead of twelve percent yeah or conventional in which case it'll really drop you know if you get another three percent four percent five percent interest rate yeah and same thing so i'm buying the lease option it's already an existing lease option um but because they're not very marketable i can get them at a pretty good discount then like you're saying it's at like an 11 or 12 percent so i'll approach them and say listen here's here's what you're set up at right now i'll give it to you for nine percent if you can qualify at a bank you can get four or five percent and save a ton of money yeah but but at the very least let me save you some money we'll convert you over to a land contract at these terms and uh contract for deed whatever and uh and it's usually a you know no brainer they'll go for that in a hot second yeah yeah man i love this yeah so when when you're working with these borrowers what is the biggest hurdle that you come across from a very early initial qualification or or from either early or during that process of you know what are some of the things that either maybe they still want the house after a while what are some of the things that you struggle with that are that hurdles yeah yeah so the first hurdle like kind of way before we still have to go through quite a bit of people to find 20 people i am totally okay with that hurdle because i i i if i'd rather do you know three four five deals a month that i feel very confident will perform than doing 15 20 30 that i'm very confident will probably not perform yeah um so that's a personal preference there are some people who love volume and and and love to you know just just hit that ball you know and and pray you know something will stick i'm very risk averse very risk-averse so so from that perspective that's one of our biggest hurdles we do have to go through a lot of people even though you know we're getting our leads from real estate agents um the second hurdle before the closing um is um if they're self-employed folks and they know what interest rates with banks are today the nine percent interest rate is is a definite you know mental hurdle and again you got to remember we're dealing homes in the in the 300 350 400 450 500 000 range so not an unfortunate interest rate is a hefty monthly payment when converted to dollars and um they'll either say whoa my payment is going to be five grand when i can just rent for three in the same neighborhood which may be true yeah or and why are you offering nine percent when you know the banks are right now offering three percent that usually is is um overcome simply by talking to them and saying listen it doesn't matter if interest rates are zero percent right now if they're not accessible to you that's just not something you have an option that's just not within your options you know it's it's like if if you're married to a beautiful woman and there are these other beautiful single women you can't go date them you should not encode them i mean they're not available to you you know you're you're married that's that's what's available to you right now yeah so you know sometimes i get it sometimes they don't um the the other the other approach that i would say is listen how much are you paying right now in rent well you know three thousand dollars a month great what's the interest rate on that rent and that just like throws them off and like uh what do you mean interest rate yeah yeah yeah what's the interest rate on your rent payment and they of course they can't say i'm like look i want to tell you a secret it's so high they can't even legally call it interest rate anymore they have to give it a totally new name and call it rent is the payment ever gonna end no is it ever gonna go down no congratulations you're paying a hundred percent interest rate that's what you're paying now it's so immoral what you're paying right now that legally they can't even call it interest rate they have to give it a totally new name so that you think of it in a different way now i'm sorry i can't get you down to three percent i'm sorry but i can't take it down to nine percent from a hundred percent can you just be grateful yeah yeah you know yeah i'm sorry i i can't do i can't do you know three percent yeah but i can do nine you know can you just shut up and be grateful you know and you guys totally hold your loans long term yes i'm not selling any to you there are none and you're you're typically holding these loans long term but what is a typical time frame for these buyers or borrowers to get out is it 18 months two years five years so it depends uh we have two kind of pots um about 60 to 65 67 percent are itin buyers i-10 buyers don't have a social security number in this country it'll probably be very hard for them to to to refinance until they reach a 30 equity position uh which yeah i mean i don't know houses are pre appreciating pretty quickly in texas now but it might be five years six years seven years i mean mathematically um the 18-month refinance rate are on our self-employed pool basically whenever they get the two years the tax returns if their credit is where it needs to be you know they'll have the equity position they'll have the two years to tax returns they'll probably have the income and uh you know refinancing is is about 18 and all the credit because if you're reporting to the credit bureaus it makes it easier yeah yeah we are reporting to credit bureaus if they want us um we do have a few about maybe maybe two three four percent where they have great credit great income w-2 they could get a bank loan but for privacy reasons they come to us privacy reasons they come to us um the largest deal that we've got in our portfolio is 1.2 million dollars and i am almost 100 certain that the lady that was there with the gentleman was not his wife gotcha and um there is no evidence that that home belongs to the gentleman interesting and i'll keep my mouth shut on that it's just business yeah yeah we had another another lady um her story was that she really wanted to make sure there was there was privacy you know that that home didn't appear on her on her on her credit on legal documents on nothing uh she her story was that she was running away from an abusive you know boyfriend from south carolina north carolina somewhere in the carolinas and um about a year after we closed with her just just one of those things that you're like let me do a little research on this lady there was something in the back of my head that just didn't really sit well with me and i i i stopped when i got the gut feeling that she may be a fugitive of the law yeah and i don't and i don't think she was running away from an abusive boyfriend i think she was the abusive girlfriend and the boyfriend may be sleeping somewhere six feet underground so don't ask questions yeah and you shared something with offline it was really intriguing because we had just had on call the underwriter on and whatnot you guys go through that process of vetting these people out oh yeah in in they talked about our weekly they vetted out and you can vetted all the people for 200 bucks and if they approve then you're going to go find the home for them versus i have a home let me bring in these borrowers and let me pre-approve them then but i'm holding the home and waiting for someone to come to it you're doing the opposite complete opposite you're finding the borrowers pre-proving who could be approved who wouldn't be approved by an mls and then saying okay let's go find the home that you want i would think that's probably easier than the other way around in some circumstances certainly in our circumstances in our in our you know business model it's 100 better because i'm dealing with pretty homes there is zero holding cost because i've already got a person who liked and approved and is going to close on the home and is going to perform from day one i'm actually not finding their home we're not real estate agents they came from real estate agents and that's the reason real estate agents love working with us because once we approve them very much like a mortgage company we send them right back to them and then their work begins and they get these are fully commissionable transactions for them so they do the work of finding the home that suits you know the uh the client all we really care is that it's an appraisable home so whenever they find it they submit a contract to purchase we close 18 days after the option period ends which you know depending on the option period it's a total of 25 28 days and it's it's very hands off you know from from our perspective i've got lead generation i've got pre-called people where they disclose terms costs and conditions in a confidential conversation once they like everything that they hear then we send them to an independent underwriter and third-party residential mortgage loan originator to actually document their real-world ability to repay once they give us that information we give them a pre-approval letter we send them right back to the agent they go find a home and they usually call us you know two three four weeks later when they found the home they have a contract and we're ready to close on it so it's very very hands-off so then earlier you talked about ira money um how are you how are you approaching your investors like how do you how do you find them first of all and then how do you pitch them and i'm not going to ask what you're offering them yeah no i mean i i don't have a problem sharing um we we um we're we require a minimum two percent spread so we're offering seven percent right now and we are uh owner financing at nine percent okay um i i have no problem so so if anybody out there you know has that ira money let me know i'll tell you what you're going to be getting if you're getting less then come talk to me if you're not then don't talk to me you know it is um so before kovitz something that we did i was i was really really smart i didn't realize was smart at the time and but now i realize how smart it is is we were doing conventions medical conventions where we were setting up boots and that wasn't the smart part well i think that was a little bit smart but the really smart part is we never offered high returns that was never our pitch our pitch was move your money to a stabilized predictable reliable budgetable return and of course a mortgage payment is 100 predictable you know exactly how much you're going to be getting on a monthly basis right the underlying asset is insured and um you know you're working with your many of these doctors already had rental properties so we were moving them from being landlords to to lean lords right so our pitch from the beginning was not not more because i think that would have gotten us in trouble because because most people you know if they're quasi-smart they're probably getting six percent five percent you know seven percent i mean five to seven percent is not unheard of you know if you're just like a doctor and a pharmacist a a normal you know nine to five individual that has money in their 401k sure so if i'm going to be offering more then what am i gonna offer you know eight percent nine percent well what does that leave me you know the only way i could make money was if i pair up the person with the individual buyer but i don't want to do that because that cuts me from the spread and i also don't really want to put pair up non-educated people with with fairly complex you know situations so the the really smart pitch that we did is listen you probably not going to make more you know you might make more but you're probably not going to make more however it's going to be a stabilized predictable monthly budgetable return so we started getting people from the late 40s to the early 60s that already had half a million million two million dollars in the 401ks and they wanted to remove themselves from the volatility of the stock market into something that was a little bit more predictable um so are you guys running a fund or are you guys no no no no no one person one loan we we'll borrow yeah i know i throw the word investor out there but no we borrow money sure yeah we borrow money we personally guarantee it we personally guarantee it yeah you know so what they're saying here guys they're not joint venturing one of these people they're actually doing a return guarantee return on a contract with them so they're actually doing the borrowing versus the equity yes no doing venturing going on at all we don't put the money together um we we yeah that would be that would fall under sec you know bad people you know umbrella and we're not we're not doing that and my picture's real simple listen at the at the end of the day mr you know lender mr private lender um you're going to be getting either your money with interest or you're going to be getting a house valuable texas real estate that's that's it we do personally guarantee our loans um and and that is part of our pitch um and and we're totally okay with that with a 20 equity position i mean that's that's very reasonable for us to do that have you talked to other people doing this now states texas is such a hotbed for this and in certain states these kind of going when the cfds are kind of being pushed out um where this is a little different this is not a contradict it's not these options this is a true seller finance duration and you're becoming the bank ultimately um you know for me in germany new jersey this is not something that's very often done and i think it's you know the amount of capital needed um but also there isn't many seller finance deals that is in texas it's like we don't do raps up here just not loud news kind of thing is just weird are they are they actually illegal are they actually not allowed when i've been told they are okay um maybe i would be corrected by one of smart people that i am out there right well yeah if i was told i tried doing one you're like oh you can't do it this is about 15 years ago okay okay so you know there's so much leeway in texas that these kind of things work out really well i'm sure nathan there's most states out there that identify um colorado um more a little bit more um not gonna try to go political but a little bit more relaxed but stuff so i think states where it's not judicial are probably a good area if you're listening to this guys and you're thinking about this you know there's another method of investing you don't want to if you don't looking to do it you can start doing your local inventory and in reaching out to your agents and solving the problem that they have that that they want to get commission off of it off this buyer but they can't get it alone with them they can't get a pre-approval so the agent won't work with them you're going to go work through it grab the situation pre-approve them get administration where you can be the lender for them they go back to the agent and the agent is going to be thanking you and sending you more leads that process can be repeated over and over again and i'm thinking it could be done it could be done with contract for deed as well if i'm just thinking for example uh maybe in ohio where well if you're going 20 down then that doesn't work so scratch ohio but let's say um there but say maybe missouri um you could set up a contract for deed in missouri um and then in case of a default it's just that much easier to get the property back now here in texas getting the property back is not a major i i can foreclose in 41 days yeah yeah legal injections that's okay it's faster than lethal objection right it's just it's quick yeah we can foreclose in 41 days uh not that we would you know but if we're talking about you know bear bare minimums looking for clothes just says 900 bucks you never know yeah yeah and i have that conversation you know with them that's that's really part of you know the pre-closing uh conversation so let them know that part of the reasons we're comfortable putting the deed in their name is because um you know if they decide not to hold in their end of the bargain it will uh be very easy for us to foreclose i let them know that you know in 41 days and it'll cost you about 900 i can go ahead and foreclose and i will exercise my right to foreclose if they are knuckleheads about you know holding in their end of the bargain i used to i used to uh i used to do something real mean or in the beginning um i there was a taco place right across the street from where they did the foreclosures and uh downtown and i would just invite him over hey you know i want to get to know you guys before you know i lend out all this money um just have a taco with me you know my treat and they would see all these people and i would just let them know if you guys don't ever pay this is where your house is going to get foreclosed you see all these people that happens every time every month in texas it's called texas tuesday first tuesday of the month tuesday the month and they're like oh wow yeah 100 rosa so for those who are curious i did put dan's information on a google doc just fill out the form and we'll share the information again i can't stress enough if you're struggling to find deals um our assets are are being a little bit limited compared to years before silver finance is a great way to get started and get involved you don't need to do a 200 000 deal right you can qualify someone for a 50 000 mortgage if your market is top 70 you don't need to go and do that kind of stuff so you can go look at the fact that talk to those local agents and find the bar borrowers it's that easy and then you're re just rewatching it over and over again and you're solving the problem for both the borrower then the agent in yourself and nine percent is not unheard of that's a normal rate for these kind of high-risk loans yeah well that's not all can i share something with the uh with the audience if they have maybe a lower capital um or maybe they want to start off with something small um again check your state but this is something that that we do invest in purchasing uh small pieces of land quarter acre half acre uh one acre that allows mobile homes that allows mobile homes and instead of uh owner financing or contracting for deed to the mobile home buyers just lease them the land um again every state is different every market is different but in san antonio and surrounding i can buy you know a half acre outside the city for you know ten twelve fifteen thousand dollars and i will lease it to them for five hundred dollars so if you convert that to what the interest rate would be if it was a a mortgage payment on a 30-year amortization it's about an 18 to 20 interest rate it's phenomenal returns now check with your mobile home dealerships but most you don't have to put the utilities most mobile home dealerships when they approve somebody for a mobile home loan and they don't qualify for the land purchase or they don't or they don't have um enough enough money for a land purchase they will approve them for the home and they will approve them for the utilities so the dealerships will put utilities and upgrade your land now there is a catch and this is a catch you're going to love they're going to require a 21 year lease so can you imagine buying you know a 5 ten fifteen thousand dollar little piece of land and having a guaranteed tenant for 21 years and mind you you don't have to lock in the rent payment for the 21 years it can be fully escalating as a matter of fact ours have been escalating to clause of minimum five percent per year so we know it's going to be increasing in the the rent payment a minimum of five percent per year the dealerships are putting in the utilities into the land and we know we have a 21-year tenant the only reason it would be less than 21 years is if they pay it off sooner so they pay it off sooner and they want to move the mobile home they can't but basically that's an absolute set of then forget it and you can start off with the small amount of money yep wow that's very cool so if you're in the midwest or you know midwest areas um it's that's an awesome idea to do guys um where i said before colorado in that midwestern texas course alabama tennessee is such an awesome market for this kind of thing there's so many rural areas um that you know homes are common and that's a normal thing for a lot of people where you know where we come from my area true trail parks are very rare they just they are um but in those areas where we're all higher yeah yeah that's true rural ohio's in colorado and montana that is common right yeah texas and you can kentucky always come and you can literally buy that land do a lease option make a payment arrangement form and they will be paying you they take care of everything else there is no reliability on you at all i mean it's just that kind of weirdness there's very little that can go wrong with renting dirt a few things can go wrong but very little that can go wrong with renting dirt yeah so what happens if the borrower doesn't like mow the lawn and the city leans on it is that following you or fall on that borrower so good question um first of all the zonifications that allow mobile homes are usually not in any city incorporated area so that's probably not not going to happen um secondly in the lease agreement it does say that they have to you know uphold and and and you know and and make sure the lawn is mowed and all that good stuff um what is really nice is what happens if they stop making the mortgage payment on the on the mobile home so presumably if they stop making the mortgage payment on the mo home presumably they're also going to stop making the rent payment i mean i can't imagine they're going to be making the rent payment and not the rent payment well this is where it gets really fun because you're going to get a call from the lender and they're going to let you know that they've stopped receiving uh payments from the um from from from the borrower and many times many times because banks and lending institutions do not want to deal with a mobile home they will offer you to pick up the loan subject to the existing financing so they'll just pass on the loan to you if you wanted it so there's a lot of people that want to pick up property subject to the existing financing but they're scared to do on sale clause well with with wheel estate you got the lenders coming to you and say hey do you just want to finish this loan like i'm okay i will let you do it i will i will transfer i'll do whatever because otherwise otherwise mobile homes are personal property and ultimately ultimately they belong to the bank because it's personal property they don't belong to the borrower until the loan is paid off so if the lease isn't and again this is just in texas i don't know other states consult your attorney blah blah blah that's my disclosure um but in texas what we can do is if you don't get the lease payment then the um tenant has 30 days to move their crap which includes their mobile home all right now if they don't move their crap which includes their mobile home then you can go to the lender and say hey by the way you're the actual owner of the mobile home you either have to start paying storage fees or you've got to pay rent or you've got 30 days to move your crap in which case the conversation usually turns around and says hey would you like to just you know get this mobile home and continue making payments i mean it's a beautiful game it's a beautiful game with with small dollars that you that a lot of people can start playing with yeah cool awesome strategy so i guys i did like i said posted uh performance error so feel free to fill it out if you see us later we'll make sure we'll make it available for those who missed it nathan what do you think about this strategy it's so cool to think about this alternative method that i didn't even think about for years yeah that's interesting it's i've got actually one lady um it's a lady who i had a she was a land contract in columbus ohio and she got bought out uh which turned out to be a great thing for her it gave her a nice little nest egg and house prices are going up in the neighborhood all that and so she she paid me off and had this money and she calls me every few months and asks if i have a house for her and she wants to rent from me or to you know buy a house from me and i'm just not set up that way uh you know that that doesn't quite work for me but uh she'll contact me every few months what steve is she in she's in ohio uh but she'd be happy to go to north carolina or ohio or kentucky she's totally open how does she feel about texas it wouldn't be a 300 000 home it would be you know 50.

what is your what's your average home sale 320 okay yeah i will do anything from 150 um i i say 1.2 just because we've done a 1.2 but i think we only have one over a million um but we have quite a bit in the three hundred thousand dollar range quite a bit and i think yeah go ahead share the question um what kind of land qualifies to have a mobile home on them and typically what returns can we expect so those are two questions uh it has to be zoned for mobile homes so again you got to go to your county or to your state in texas it's got to have a zonification of mh mobile home or it's got to have a zoning of ocl outside city limits so if it's got those two you know it'll uh it'll it'll work i guess every county or state is probably different on uh on what they do have to allow mobiles so it's it's not like um you can put a mobile home in the middle of the city if it's owned residential any random residential launch yeah yeah i asked ask me how i know yeah um welcome to the wonderful world of making mistakes yeah uh expensive ones too so leon just real quick um you want to know more more about how to do these deals in texas um that mobile house if you fill out the uh form you're gonna get dan's information feel free to reach out to him he has a very very active social media as well um so feel free to reach out to them great guys you can tell definitely a different avenue to explore on but yeah you could definitely do this in texas as he's doing it i wouldn't say that he's monopolized the entire state oh no no no no reach out to your local agents and start working on leon uh but definitely cool idea for you to get started on this avenue you know just connect with it you can call the underwriter i'm not sure who dan uses uh but you can use called underwriter and pre-approve these people just someone that's pre you know nmls approved they can create these loans and what not so you will stay above the board when it comes to the originations you want to stay above board because the penalties are very stiff yeah so stiff you got to go to canada if you break them it's awesome so what year did you start doing these kind of things did you start unwrapping this idea so i i think for me i've always had a creative uh mind and i've i've always had a philosophy of there's probably nothing new under the sun i mean as as as smart as we want to tell ourselves that we are we're probably not going to be the inventor of anything new that that's just the statistical truth um so for me it's it's more like what has already been done but hasn't been exploited so what has already been done but but hasn't been exploited now specifically with mobile homes i i did have the advantage of i used to be manager for palm harbor homes you know so one of the things that really had a big impact on me and i don't know if you guys know this but about 40 percent of warren buffett's wealth has been made on the backs of the mobile home industry wow so he owns and i love sharing this story he owns clayton homes which is the number two dealership in the country so he owns the factory he then owns 21st mortgage which is the number one lender of mobile homes in the country about 80 of all mobile home loans are under 21st mortgage so he owns the financing and then he owns some communities and guest communities which combined um are the number one largest uh manufactured home park portfolio in the country they own together about 70 of all of the communities that mobile homes at least the nicer communities not the mom and pop but like the nicer that have like swimming pools and tennis courts and jogging trails and beautiful communities so i'm thinking okay this homeboy owns the factory he owns the financing product and he owns the land that his that his homes are going to be put in are you kidding me yeah so i did the math one time so a typical mobile home that sells at a mobile home dealership for eighty thousand dollars the dealership will buy it from the factory for about thirty five thousand a little less than half now in the factory it cost them about half that to make sure so when you're thinking about a cost basis of like 20 000 that you are then financing at a hundred thousand and you are putting them into your land that you're charging 450 500 550 a month yeah in rent i mean those numbers no wonder he's like the richest guy in the world yeah and nobody knows that he's involved in mobile home dealer and mobile home industry i don't i don't think i knew at all yeah so when i was at palm harbor homes and i i learned that i was like you know just you don't need to reinvent the wool you just got to figure out where the wheel's at and how the wheel works you know go get yourself a wheel so before i go to nades real quick someone they were asking what is the okay sonya wanted to just clarify was a typical investment and what kind of returns to buy and lease land from mobile home um so the return is tied to whether or not you're gonna lease option it or under finance it or or uh or uh lease it um if you're gonna be owner financing it your typical yields are anywhere between 20 to 22 percent because you're going to be buying let's say at 10 15 000 and the sale price is going to be you know 25 30 000 18 interest rates because it's land it's vacant land you can do that so your yield is going to be in the 22 23 24 25 range however if you're going to be leasing it your returns are easily in the 30 range because it's never going to end i mean that's that's really what it comes down to it yeah and then of course what's the impact on your assets when all of a sudden twenty thousand dollars worth of improvements water electric and septic have been done to your land i mean that's it's just a no-brainer the numbers are phenomenal the percentage numbers are phenomenal i guess the problem is there's a rarity of finding it right the deals are great no no no no i mean nobody how many people do you know are looking what's your competition yeah you're right i don't i don't think we've ever had a mobile home in our portfolio nathan how about yourself i have uh twice and i'm not interested in mobile homes and again that's just my business model because i'm looking to resell it so because i'm looking to resell uh because it's not attached yeah mobile homes is not it's not an asset that works well for any kind of reselling note selling uh contract selling situations nobody they don't work for me but yeah like they're a great holding model yes they're a great holding model yeah so if you're which is the same as the second yep and if you're into the hold great yeah that's a fantastic model yeah yeah that's interesting i mean the whole methodology of that kind of stuff is you know and there may be a way of playing it you know i'm sure there's funds out out there doing this kind of method um sure i don't know them but yeah i'm i mean at the end of the day you know i imagine you know once you have a 21-year lease that's pretty solid paper you can probably take it to the bank and recycle your capital get a loan against it i mean yeah we we don't because we we bought them for 10 12 15.

i mean it's it's it's probably more more trouble to you know get loans against him yeah amazing but from a return perspective it's like yeah yeah i know some guys that trade in mobile home parks but not individually yeah well that would be the next step up yeah yeah yeah parks would be the next step up although by what i have seen at least in texas there's some pretty there's a lot of capital being infused into it so you're i'm starting to see eight percent cap rates nine percent cap rates in mobile home parks and that's too rich for my blood yeah um that does not get me excited uh yeah at all at all yeah it's amazing well dan i think the information you shared for those of people who look for an alternative way of investing maybe even a passively investing um but especially those who are getting started this avenue to even explore and let's let's also throw the catch out there if you find an asset and you get nervous about this you know dan has a course as well but you can pitch this deal to dan and say listen i'm not i don't want to buy it i get all homework here you go i don't know what to do this is yours you can broker this stuff you know do you buy these kind of things where someone has a great deal based you're scared nervous only three times a month right so guys if it's in texas for sure yeah right so explore that option for people who are out there that yes we don't do a lot of brokering we talk poorly about it if you do all the homework and you get all everything set up reach out to dan or anyone else that does this kind of stuff and you can get that sweet situation and get a nice little paycheck out of it too so yeah i'm a big fan of uh you know dave i'm a big fan of learning how to negotiate seller financing i i think that learning how to negotiate seller financing is probably the best way to get your feet into actually owning owning real estate and uh i know you did mention i have a course for those who are asking it's like less than 300 bucks and it's 10 hours so i don't think that this is like a pitch for a 30 000 mentorship or anything like that it's 300 bucks it's completely you know recorded um i've got a facebook group that that people can kind of join and get their questions answered um but what it focuses on is how to negotiate seller finance transactions and i've got students there that come back to me they're like dan i pitched it exactly the way you told me i got it zero down zero percent interest 15 year that is awesome that can't be possible and i tell them that can't be possible how did i miss it that's awesome so that's that's super super exciting so i'm going to presume a lot of people here are brand new is this something for inexperienced investor to get into yeah absolutely as a matter of fact a lot of a lot of and i don't know your audience but a lot of people start wholesaling and to me wholesaling is is um obviously a high reward no risk situation but it it doesn't and i'm sorry if i've offended anybody in this audience but it does not make you an investor an investor is when your name is on real estate for real assets whether it's real or paper when your name is on something then you've become an investor and seller financing negotiating seller financing is an excellent avenue for you to morally ethically and legally tell people i buy real estate never mind the fact that it was zero percent down zero percent interest never mind that i bought real estate i own real estate i'm involved in real estate i'm a real estate buyer and investor and i may end up wholesaling your property but because i now own real estate i can now confidently say that i am a buyer i am a buyer and i think everyone should do that that's really you're never going to get out of the transactional uh one-time money rat race unless you start owning something that pays you on a regular basis and then once you buy it you can do whatever you want you can airbnb it you can rent it you can own or finance it you can if you still want to sell the contract i will buy it um you know there's a lot of things that you can do with it wow yeah very cool sumi nuggets my man dan i appreciate your wealth of knowledge as well as you share everything i'm grateful to call your friend it's awesome to hear from you um the nuggets you dropped today i'm sure people will be writing down re-listening to it um but guys jump in and get started right so it's amazing but just to let everyone know um the next two weeks will be off uh nathan and i i will be uh vacationing with my family um in puerto rico so if you're down there reach outside and i don't know how to work facebook so there it is yeah and it's been crazy sorry the fee's been a little crazy my internet's been wacky today but guys i think i brought dan on for a reason um and i wanted to get this started before i went on vacation um we have a few more things that we're teaming up for when i get back um so feel free to rewatch us on our youtube channel or our website our facebook group and all the other places we have everything else but feel free to reach out and talk to dan directly he is well open to talk to anyone out there um has a great group as well so then again i appreciate your time your energy honors online you're willing and if anybody's got anything that they want to talk about anything they want us to talk together any topic she wants to bring up or bring on um bring out additional guests and whatnot feel free to let us know and we'll work our magic and uh get someone on here and topics we want to learn i want to know when real estate will become affordable in canada when it warms up you know the worst part about kid iras they don't have self-directed iras up there we've got a version of it but you can only use it to buy publicly traded uh something it has to be publicly traded wow so if you don't mind asking me real quick and i know i know yeah you got to take off but but nathan what do you think how do people afford um you know the prices in in canada i have no idea we bought our house 15 years ago for 175 000.

today we we just last year did a major renovation so that's something but today probably 750. so so is it is it because interest rates are super low because i mean that's kind of what what's driving prices up up up here down here but what it's part of it here yeah that's part of it i don't know canada's kind of a funky little corner and then and you know it's regional as well and so like we're right where i'm at we're just outside of montreal and and uh we're just looking this morning my wife and i just looking at a neighborhood just comparing but uh you know a three-in-one bungalow uh just one street over for from us they did a renovation last year where they had added on the sun room which is really nice it's pretty but the house is really nothing special and it's listed for six hundred thousand dollars it's ridiculous it's ridiculous yeah hopefully i'll burst soon and that leads to the question so nathan asked the question at the end of every week yeah you've got your crystal ball on what do you see in six months or a year ah bro i don't know i i i i'm not smart enough big enough knowledgeable enough deep pocketed enough um to to you know know what the markets i i do see um that the us in general is uh in some sort of hyperinflation situation um i was reading that um and it's little things that you don't really catch like for example there's a guy that uh he sells three tacos and we go at least once a week real nice guy san antonio is a little different you know um and he was telling me that like for example a box of barbacoa meat he would buy it for 65 three months ago it's 450 right now a box of bacon was you know 85 everything was 100 under 100 85 and now it's 380 dollars cheap you know was 110 four months ago and it's now six hundred dollars and um you know lumber prices are to just numbers ridiculous um but but even more subtle things like steel salt sugar uh corn just very very subtle but very basic flower staple items are skyrocketing and the consumer is not feeling it because it's it's the prices consumers are buying from the from the big box grocery stores and the big buck grocery stores they still have a certain presence where they're able to force you know the the main you know wholesaler distributors to to maintain a certain level of pricing but it's like the small restaurants the the mid you know that are really feeling the hit and eventually it's going to it's going to you know boil over to to the grocery stores but you know we saw this in venezuela we saw this in mozambique we saw this and and and how long is it going to take i i don't i don't know but um things are not well do you see a bubble do you see it no it's not a bubble it's not a bubble i don't think it's a bubble in the traditional sense i think i think the us and and the fiat currency that the us is under is is imploding you know and i see the collapse of a civilization not in six months yeah hopefully but i'm gonna get the football season come on yeah um but no i mean we're talking about a you know global uh collapse of a civilization yeah which brings the topic of bitcoin and all that kind of good stuff yeah yeah but you're right though you know we've had the conversation a lot of people and everyone's like well you know even a year ago we're heading to a bubble right and the bubblegum i don't think it's a bubble i don't think it's a bubble yeah it may be the new way of life it's just what it is yeah yeah yeah and i i did you know see like for example um hyperinflation in venezuela uh during during the final collapse you could buy bread in the morning and it would be more expensive in the afternoon yeah i mean that kind of you know like the price would increase from the moment you picked it up on the shelf to the moment you went to the cash register to pay i mean it was just ridiculous i saw it in mexico um you know during you know the late 1980s and uh of course what happened after that after that that minor mid collapse the cartel took over you know so we'll see what happens but in the next six months i'm buying deals so you got something i got it i will buy it with that we're gonna disconnect from facebook guys feel free to watch on youtube and all that good stuff but uh again enjoy your weekend and have a great time man have a great one finna play hey fellow no investor are you looking to learn the basics of note investing so you can get started however you don't want to spend a few hundreds or thousands of dollars and hours online on some training program have you thought about attending a notes conference however you don't want to spend the money or the time away from your family well we have a tremendous beginners video series of 20 different topics with each video being less than 15 minutes this means each video is less fluff and direct to the content visit www.jkpholdings.com beginner dash series to learn more again www slash beginner dash series yeah i'm not sure there you go let's try it hey everybody here dave putz here from jkp holdings alongside me as always mr nathan turner how are you doing man very good very good how are you oh good man the week goes back past all of a sudden friday comes up like holy god wait what day is it oh man friday already so it's funny we get into space we're doing this stuff weeks go by fast and fries are not the worst of the year or the best day of the week it doesn't matter like you're just doing it um which is awesome so that one day yeah it really doesn't make a difference the only way it makes a difference for me is i think we talked about this once before is that's how i organize what i'm doing each day so yeah my friday is kind of a filler day and so that's how i kind of that's crazy applied my time so i know last we were talking about you buy some cfds and whatnot um it made some more offers uh we made a few offers we got rejected so we're going to move past them and move on what's what's up with you man what's going on last week so last week i don't remember if last week i'd already closed or not i don't remember but anyway i just i just picked up three more uh all three mortgages um i had some offers out on some cfds but not looking good so i don't know we'll see we'll see but it's fine that's that's the nature of the business and yeah if it works it works if not you move on to the next one and keep moving yeah and then all these moratoriums coming through doesn't really affect us right now right these uh these struggles and stuff like that doesn't really affect us because of what type it is so um i know you're looking at some lease options as well uh which is pretty cool so yeah i'll buy anything in first position oh it's funny because we do all that stuff and we say all that stuff but it's true right it's if that security's there is what we care about yeah um and we had a great session last week um last couple weeks been awesome stuff we talked about seller financing and i i'd reach out to dan i i've been watching him on facebook a little bit and i said listen he's doing everything everyone else is doing what new could there be yeah and it seems like every time i say stuff like that there's something new out there and i'm like and i shot a message to him and he was grateful enough to to entertain me for a few minutes and i was like whoa so i'm excited right to bring dan on business there are so many different ways to do this which is just great the challenge with that is you pick one and then do it um unless you're rey and then you do three different things [Laughter] yeah oh it's just frustrating right because it's just there is no ultimate person in this base doing everything that he should do ray's clothes but yeah you know i think for me it's interesting so yeah well i think i'd like to introduce dan uh to to our weekly uh facebook live dan can you share a little about back your background how did you get a real estate you know what kind of stumbled blocks you came across and what are you doing now sure sure well first of all it's an absolute pleasure and honor to be here i'm excited um i know you're um definitely very active in the note world and no creation no no buying and things of that nature and when you reached out i i i was excited so so thank you for for having me here for sure a little bit about my my background my name is dan diaz i was introduced into the wonderful world of real estate through what i like to call real estate real estate so for about four years i was manager for palm harbor homes here in san antonio texas actually a little town outside san antonio called elmendorf texas and as general manager for palm harbor homes i i got a glimpse a behind the scenes behind the scene glimpse to real estate i was able to see a lot of aspects that i had never been exposed to before and i fell in love with it uh what i did not like was that i did not have an eight to five i had a five to eight and that was seven days a week and i hated it made really good money but i hated it so right around 2004 i really started educating myself i started learning uh about owner financing i started learning about landlording versus lien lording and i could tell that my personality kind of veered towards owner finance towards notes towards lean lording and i finally took the lead november of 2015.

uh first deal generated me over 80 000 in upfront profit in a 400 monthly spread for the next 30 years and i was absolutely hooked uh it took me a long time it took me nine months to to realize that deal and it to me it was the litmus test if i could do this once then in my mind i could do it again and again and again again so if i was able to to produce it once then that was enough for me to quit my job so that that very day when we closed on that property went ahead and submitted my two weeks notice my my boss obviously wasn't very happy because we were producing really really well but i knew 80 hours a week was not for me so i started off like a lot of owner finance investors buying the home fixing it up or cleaning it up and then selling it carrying the note as we started growing in 2016 i started i started noticing two problems one the problem was there was only so much inventory that i could handle uh maybe you could handle more but there was only so much inventory i could handle for us it was about three to five homes at a time so so we needed to kind of sell one before we could get another one yeah and through our marketing we started acquiring coming in contact with these really really really really great buyers i just didn't have the home they were looking for so they had a great down payment they had great ability to make payments maybe they didn't have a social maybe they were self-employed you know maybe they had bad credit whatever but they had a great down payment they had a great um ability to make payments we just didn't have their home they wanted something newer bigger um two stories they wanted a certain zip code they wanted a certain you know school district and i started scratching my head and i'm like how can we capture these buyers and it was right around 2017 late 2017 early 2018 that a light bulb literally hit me and and i realized the problem is not inventory dave there's 10 000 homes for sale on the mls so why am i focusing on trying to build up our inventory to bring to the market inventory did not seem to be the problem for us the problem was finance you know how to acquire the money and of course i started kind of researching and there's not a whole lot of banks who will lend you to wrap their money um so so that really wasn't an avenue but then i was introduced to the wonderful world of self-directed iras and i was introduced to you know the nearly 13 trillion dollars of money that's sloshing around in self-directed iras people wanting stabilized predictable returns um at least the people that we came in contact with they they didn't necessarily want a higher return they just they were approaching the retirement years you know they were between 45 50 55 maybe 60 years old they wanted something stable they had already built you know half a million dollar nest egg million dollar nest egg 2 million nest egg but they just didn't want to go through a huge loss in the market so they were looking for something a little bit more stabilized so now what we do about 70 of our business is we start with the buyer first we make a determination of the real world ability to repay based upon their initial investment and their income and their liabilities once we make a determination of the real-world ability to repay we go ahead and raise the necessary capital for them to purchase their homes with owner finance terms i'm very proud of the notes that we built for them 30-year mortgages no balloons no prepayment penalties no mortgage insurance obviously uh we don't mark up the home either which is important there's a few other investors that have popped up in in the industry and what they'll do is they'll buy the home and then they'll mark it up 10 15 20 30.

i've seen even up to 50 percent i guess there's nothing really wrong with that model except that the buyers upside down from day one so refinancing is is nearly impossible for at least you know seven eight nine 10 12 years we don't mark up the home uh we simply focus on the on the funding of the uh of the transaction for them so that's the bulk of what we're doing we're still a small family-owned and operated business we do about four or five deals uh a month in texas our average deal was about 320 000 we'll do anything between 150 up to 1.2 million and what's really nice is that we're now in the owner finance world but we're in the pretty homes you know these are beautiful homes great neighborhoods if we ever get them back i mean i'm i'm going to be happy you know to you know own them these these are beautiful homes and great great neighborhoods so that's kind of what we're doing now and and uh i guess it is a little bit different than most of our finance transactions yeah that's really interesting so you covered your price point um how did you get up to that like i'm assuming you started out lower and went up higher and and if that's the case why not necessarily yeah okay yeah not necessarily so when so there there's a lot of inventory i'll use that term there's there's quite a few owner financed by you know sellers and investors in the 100 to 200 000 range and most of them are happy with 10 down so if somebody is wanting that range they're not going to like our 20 requirements and there's quite a few out there that they can they can kind of go to um the reason a lot of owner finance investors stay in the 100 to 200 000 range is because they are trying to make the mortgage payment be equal to or similar to market rents at a 9 10 11 interest rate and the math tells you that once you go over the 175 185 195 200 000 range if you're going to keep you know your 9 10 11 interest rate and it's going to be comparable to market rents you're kind of going to be capped off now our perspective is is we're going to let you buy whatever home you can afford we approach it more like a bank or a mortgage company this is our interest rate it's currently nine percent so um you want the three hundred thousand dollar home knock yourself out we don't care you got 20 cash to close we don't care so our mortgage payments are nowhere near market rents i mean it's just the mortgage payment it's just the cost of owning your home so we approach it you know from from that kind of um that kind of perspective and and we're we're very we're very successful i would say about 65 of our clients even though they bring 20 they really have 40 to 50 liquid cash um about 65 70 percent are itin buyers they don't have a social security number in this country but they're affluent they're already paying three four five thousand dollars in rent in the neighborhood that they want to buy so it isn't necessarily a a sticker shock the other advantage for for us from a from a psychological perspective and your audience may know this or they might not but most of our buyers being from mexico central america and latin america in latin american countries interest rates right now is anywhere between 35 to 50 percent a year holy smoke so when you're giving them nine percent interest rate they're happy they're not gonna say they're not gonna they're gonna thank you they're gonna thank you and they're gonna be happy that now you've given them you know the opportunity to buy the home that they want not this limited inventory of uh of properties you're solving a problem at the ultimate sense you're giving them a home that they want where they want to live they just can't qualify for either a the social security situation or b they don't have the paperwork needed to close on it or whatnot that a bank wouldn't do it you're supplementing that situation yeah and we let them know we disclose upfront we're not going to force you to refinance there's no balloons but most of our clients are refinancing in about 18 months if if if uh if they choose to to attempt to do so and we're okay with that i tell them all the time it's like listen we know we're not wife material we're not long-term marriage material we're like your short-term girlfriend uh i mean we we we might end up being your one-night stand i don't care we know where we're at i'm not offended uh we're giving you what you want which is we're letting you buy your home we're getting you in the door and we fully know that once you're in the door you're gonna try it very hard to improve your situation and we're totally okay with that are you reporting your credit viewers can i help them out getting their thing okay yeah yeah um we're doing third party note servicing uh we're giving them 1098s at the end of the year so they can write out all of the interest that they've paid on their taxes we're escorting taxes and insurance our papers is beautiful we're creating qm um transactions qm loans um for those who don't know that's qualified mortgages yeah qualified mortgages we try to stay uh under 47 dti uh we're pretty open-minded when it comes to underwriting how server knows that that means debting that's an income for those who don't know sorry yeah for sure so so i i love i mean i'm very proud of our paper if i was in the note buying business i would buy our paper it's it's very very uh very nice so how difficult is it to find these borrowers how much work is it on upfront to get the holy people to you know to get your clients great questions so we made a mistake and it took us about a year to realize it was a mistake and the mistake that we did is we were trying to get to them directly we were trying to find them directly and what we found is that the vast majority are terribly unqualified i mean for every thousand leads that we would get about 950 were complete junk and and i don't mean that derogatively from the person's perspective but they had no money no credit total lack of preparation they they thought that you know we are better than fha lower interest rate i mean just just no common sense as to uh you know who we were and we corrected that mistake when we came to the realization that the quality owner finance buyers and for us quality is those who have at least 20 initial investment and ability to make payments they might not be educated from from a scholarly perspective because many are not but they're smart enough to go to real estate agents so you know nugget for all the guys that want to find the quality owner finance buyers if that's that's your audience go to real estate agents talk to them they are the ones that have the contact information the the people who have down payments uh go to real estate agents and sadly real estate agents usually don't know what to do with them they'll do an mls search they'll give them a list of 10 12 homes in their city that offers seller carry or seller financing or owner financing or whatever it is in your state and um and usually these will be you know just regular owner finance investors or sellers with the price point of 100 to 175 200 000 um but when they can come when that when that's not the kind of home they're looking for then you know where we make sure that we're there through social media presence and uh cold calling we recently purchased the list of every licensed real estate agent in texas they are currently being called and um connected with if anyone wants to know it's about 160 000 of them in texas um it wasn't cheap to get you know but um that's where our quality buyers are at it's an interesting play nathan what's your thoughts on that i mean mostly because nathan's about more than least cfds than i have what's your thought of that strategy what's your thoughts here i think that's really good um we were talking just before we got on the call that down payment is key um so when i started doing seller finance way back when uh i was doing at initially no down payment oh that didn't work out well at all um and and part of it was because of of the kind of houses that we had like these were these are houses that i had kind of inherited uh that were very run down we had no operating budget to fix anything up so we were just selling them as is so because of that we didn't feel like we could really do a large down payment um but we quickly learned that uh that we needed something so in those beginning days um i would get it was just three times whatever the monthly payment was so if it was a 500 monthly payment then it down payments 1500.

and that was kind of our our initial model and that helped out um quite a bit in just like you say getting quality people are you still in houses um are you still in in that in that business model of of uh owner financing um kind of dump ruse occasionally i don't do a lot of seller finance anymore but sometimes may i share something that has worked with us because we're still buying you know inventory uh when it comes to to the dumper roods uh what we do is the home is not livable yeah we understand that so um we originate basically a non non owner occupied hard money loan for them so this totally avoids all dodd-frank safe act you know rules and regulations and if anyone has any questions there's like well you can't live in that obviously you know it's a dump so what we'll do is we'll do a um a three-month loan okay with with almost no money down but they have to have cash in the bank to fix it up okay and basically it's a very short term three term if the progress has been made we'll extend it to six months we'll extend it to nine months and we'll extend it to 12 months and the goal is very simple within 12 months the home has to be fixed up in a livable condition if they have met those conditions then we'll do a long-term owner-occupied fully you know dodd-frank safe act regulatory compliant long-term mortgage for them but that prevents us from being locked in long term yeah in a with an unqualified person in a unqualified home i guess i'll say that in that video yeah so we'll do that with with ours um now i heard you do lease options is that right uh yeah so my lease options what i do with those is i will pick up a lease option and because they're not as marketable i i buy to resell so because they're not as marketable to resell i will actually convert them over to uh depending on the state land contract contract for data agreement for deed bond for deed whatever you're going to call it depending on where you're bonfer deed i've never heard that i only operate in texas so is that okay uh louisiana and one other state that i don't remember anyway um learned something new today yeah but um but yeah then i'll convert them over uh and then when we're writing that paper whatever typically they've been in at least that lease option contract for a year or more so we'll use whatever they've paid um and i'll be specific we'll use whatever equity that they've accumulated as their down payment not going forward so that's how we so we do lease options as well i i don't like to promote them but i'll share the way we do we do lease options if you have a minimum 10 down and your dti is 42 or less so again that to me is a somewhat safer position right uh will extend at least option uh if they believe that they can either a qualify for a conventional mortgage within three years or save up the necessary money for the other 10 percent to close them on a 20 down payment owner finance transaction now this is where for us the cash flow is phenomenal the monthly payment is based upon what the mortgage payment would be if the interest rate was 12 okay yeah so you know we're we're making massive cash flow during that time frame and i tell them you know the reason i'm setting it up like this is i i i want your situation to improve later on i want this to be the highest payment you're ever going to have to make and i want there to be an incentive for you to improve your situation either by raising the necessary capital to close as an owner finance transaction in which case the payment will drop because we're gonna close you right now at nine percent instead of twelve percent yeah or conventional in which case it'll really drop you know if you get another three percent four percent five percent interest rate yeah and same thing so i'm buying the lease option it's already an existing lease option um but because they're not very marketable i can get them at a pretty good discount then like you're saying it's at like an 11 or 12 percent so i'll approach them and say listen here's here's what you're set up at right now i'll give it to you for nine percent if you can qualify at a bank you can get four or five percent and save a ton of money yeah but but at the very least let me save you some money we'll convert you over to a land contract at these terms and uh contract for deed whatever and uh and it's usually a you know no brainer they'll go for that in a hot second yeah yeah man i love this yeah so when when you're working with these borrowers what is the biggest hurdle that you come across from a very early initial qualification or or from either early or during that process of you know what are some of the things that either maybe they still want the house after a while what are some of the things that you struggle with that are that hurdles yeah yeah so the first hurdle like kind of way before we still have to go through quite a bit of people to find 20 people i am totally okay with that hurdle because i i i if i'd rather do you know three four five deals a month that i feel very confident will perform than doing 15 20 30 that i'm very confident will probably not perform yeah um so that's a personal preference there are some people who love volume and and and love to you know just just hit that ball you know and and pray you know something will stick i'm very risk averse very risk-averse so so from that perspective that's one of our biggest hurdles we do have to go through a lot of people even though you know we're getting our leads from real estate agents um the second hurdle before the closing um is um if they're self-employed folks and they know what interest rates with banks are today the nine percent interest rate is is a definite you know mental hurdle and again you got to remember we're dealing homes in the in the 300 350 400 450 500 000 range so not an unfortunate interest rate is a hefty monthly payment when converted to dollars and um they'll either say whoa my payment is going to be five grand when i can just rent for three in the same neighborhood which may be true yeah or and why are you offering nine percent when you know the banks are right now offering three percent that usually is is um overcome simply by talking to them and saying listen it doesn't matter if interest rates are zero percent right now if they're not accessible to you that's just not something you have an option that's just not within your options you know it's it's like if if you're married to a beautiful woman and there are these other beautiful single women you can't go date them you should not encode them i mean they're not available to you you know you're you're married that's that's what's available to you right now yeah so you know sometimes i get it sometimes they don't um the the other the other approach that i would say is listen how much are you paying right now in rent well you know three thousand dollars a month great what's the interest rate on that rent and that just like throws them off and like uh what do you mean interest rate yeah yeah yeah what's the interest rate on your rent payment and they of course they can't say i'm like look i want to tell you a secret it's so high they can't even legally call it interest rate anymore they have to give it a totally new name and call it rent is the payment ever gonna end no is it ever gonna go down no congratulations you're paying a hundred percent interest rate that's what you're paying now it's so immoral what you're paying right now that legally they can't even call it interest rate they have to give it a totally new name so that you think of it in a different way now i'm sorry i can't get you down to three percent i'm sorry but i can't take it down to nine percent from a hundred percent can you just be grateful yeah yeah you know yeah i'm sorry i i can't do i can't do you know three percent yeah but i can do nine you know can you just shut up and be grateful you know and you guys totally hold your loans long term yes i'm not sellin....