Subject-To Success: The 26-Year Pro's Unbreakable Cash Flow Plan | Real Estate Notes Show

Episode: Subject-To Success: The 26-Year Pro’s Unbreakable Cash Flow Plan | William Tingle Dave's Goals and Plans: - Flying to Chicago tomorrow to handle criminal eviction trial involving a squatter who has been in the property for 5-6 years - Planning to write up the Chicago squatter case as a case study after resolution - Attended IMN conference for mortgage and AI, planning to send email with takeaways to audience - On a mission for couple years to understand seller financing and bridge gap between note investors and seller finance professionals - Raising capital through Nathan's fund to buy more deals Nathan's Goals and Plans: - Has a fund to raise capital for purchasing more deals - Co-host learning about seller finance space through expert interviews - Partners with Dave to network with experts to accelerate education Key Recommendations: - Set aside one-third or more of down payment for reserves to cover missed payments instead of spending it immediately - Plan for bad times and downturns - don't assume current market conditions will continue forever - Use contract for deed instead of traditional wraps to maintain more options in case of buyer default - Attend industry conferences like DME to network with seller finance professionals and build community connections - Don't assume last 5 years of success in seller finance will continue - prepare for market cycles Topics Discussed: - Subject-to deals and cash flow strategies - Terminology differences between note investors and seller finance professionals (owner finance vs seller finance vs creative financing) - Contract for deed vs traditional security instruments - Lack of unified community among seller finance professionals compared to note investor networks - Down payment reserve strategies for managing buyer defaults - Real estate cycles and market downturns Guest Insights: - William Tingle has 26+ years in real estate starting June 1999, bought first house through FSBO calls - Quit restaurant management job (70k/year, 70 hours/week) after buying 24 houses in first year - Business model: buy subject-to, sell with seller financing using contract for deed - Recent deal example: $300k house, $214k existing mortgage, sold for $300k with $50k down payment - Most common investor mistake is spending down payments instead of reserving for defaults And one of the people took him to court and the judge said, "How many of these have you done?" And the guy said, "46." And he said, "I want to see the paperwork on every one of them." >> And he unwound every deal that guy had done.

Made him give money back and just do all kind of stuff. >> Welcome back to another Real Estate Note Show. I'm your host Dave Puts as always my co-partner Nathan Turner. How are you, my man? >> I'm doing well. Doing well. >> Ah, fun times. cuz I had some good calls recently um some sharing of stories um and some really interesting stuff coming out the seller finance world um I I talked to someone the other day who is creating five or six notes a month and he's trying to charge it up um and he's doing it by fix and flipping property and then selling that >> that once you're selling on terms um and we're just going over some numbers and >> what works what doesn't work how can we improve him um what can we do and we're sharing ing what it looks like, right? And that kind of stuff's interesting.

>> And we learn some new vocabulary as we talk. That was one thing you and I talked about on the show all the time is the vocabulary us note buyers use is often different >> what those seller finance world is. >> And and I we didn't realize that. We started talking to some of the seller finance folks and we just had who was that the other day and they're like, "Well, actually, it's owner finance." That was Bond. He was saying, "Actually, we call that owner finance." Oh, yeah. Okay. I guess that makes sense. But to us, it's, you know, one and the same. Owner finance, seller finance, whatever. >> Yeah.

>> But, uh, >> yeah, just learning terminology, learning how they're doing it so that we can work together. Yep. >> And get some deals done and really come together on what's going on. >> Paul also, we had a show two shows ago and he told me he didn't know what UPB was. And I said, don't pay balance. Well, it's loan balance. Oh, and so it's just vocabulary. And it's weird how some people it's all creative finance. Well, creative financing, seller financing, owner finance are the same thing. It just you want to call creative just little terms that we often use. >> So, it's interesting that >> we have vocabulary that we understand is meaning the same stuff, but in different sectors of the seller finance world, it's different.

>> Yeah. Really interesting. And and this is something that we talked about briefly a little while ago is it's I finding it interesting that the seller finance >> people don't have the same kind of community >> that note people do. And I thought that's fascinating. I never even considered that before. They don't have the same kind of like they don't get together. They don't you know >> do things. So >> unless there's one guru teaching it, right? There's a guru that teaches their tribe. There's like the tribes don't interact which is interesting here because we have different quotequote gurus in our space and they all interact with each other.

We have to. >> Yeah. We all get together. >> Yeah. >> But so I'm hoping that we can maybe help to change that a little bit. Get everybody come out to DME, >> meet each other, learn what other people are doing. Maybe you can learn something from somebody that's doing something similar to you. >> Uh but they've got some other, you know, whatever tips and tricks that you don't know about. That's how business is done. you know, like if we share and share a lake like, there's lots and lots of business out there. There's there's no reason not to share that kind of thing and then you can start transacting with each other.

What a >> what an awesome thing to be able to do and >> selling notes to us. >> Yeah. And before we introduce our little our guest, I wanted to bring back our little story. How was our situation in Chicago? That was our Chicago situation. >> All right. So, last week it wasn't actually Chicago. That's I'm heading out tomorrow for that. >> So, last week was it was actually it was really interesting. thing I was at um and it was an IMN conference for mortgage and AI. >> Okay. >> Which was really interesting and uh really great to learn some of those insights and things. And uh I'm actually going to be sending out an email later uh with kind of my takeaways and things that I've learned.

So stay tuned, watch for that because it really really interesting. I I really enjoyed that. It was good. Good conference. >> Yeah. So Chicago, you're flying out tomorrow for it. >> We'll start the criminal trial. Evicting a tenant in Chicago. Three years, four years, 5 years, six years later, it feels like it's forever later. So, >> not even a tenant. This is a squatter. From day one, she's been a squatter. Her and her husband literally never had the right to be in the home. 5 years on, still in the house, been evicted, and then broke back into the house, been removed by police twice, broke back into the house twice.

Like, it has just been an absolute gong show. Once it's all over, I'm going to write this one all up and we'll do a case study. But this has been just an absolutely amazing just a fascinating study in >> what's going wrong. Uh and and you know mistakes that I've made as well. Like I I don't pass the buck completely things I could have done better as well. But anyhow, >> stay out of Cook County next time, right? >> Yeah. Exactly. There's step one. Let's shift gears here because seller financing, we've been on a mission for a couple years now to really understand seller financing, >> how they do it, what they focusing on, what makes their situation work for them, >> how can we help them, but also how can they help us? Um, and the only way that me and Nathan learn is by talking to people who are experts in the space.

Yeah. And and to network with experts allows us to kind of just jump the line of education and truly dive into the understand the brain of what they're doing, how they're doing it, what they're focusing on so we can be better investors, better no buyers and raise capital to do this stuff. As I'm sure you know, Nathan has a fund and allow him to buy more stuff. Allow us to buy more stuff. So >> yeah, >> let's cut to the chase and bring our guest William Tingle. How are you, my man? Where are you calling out of? What's going on today? >> Well, I I'm fantastic. Uh Dave and Nathan, thanks for having me.

Uh calling from uh from Northwest Arkansas. We've been here for about three years. So, yeah. Fantastic. >> Awesome. So, I know you're not new in the space, right? I love the science, the background. Tell us a little bit how you got into real estate. We all started there, I'm sure. Tell us the story. Yeah. Well, it's it's a long story, but uh I'll make I'll give you the short version. I I quit school in ninth grade and ran away from home and uh uh was on my own until I was 18, of course, and and didn't have to hide out from, you know, the the cops anymore. But, uh so I I didn't have a lot of choices.

I didn't have a high school education, didn't have a college degree, but I was a hustler. So, I got into the restaurant business because that's anybody get in the restaurant business. And I worked hard. So, uh, 20 years later, I found myself being the director of operations for three states for, uh, a fast food chain, >> and I made okay money. Uh, this was 1999. I was making about 70 grand a year. Pretty dang good for somebody with a ninth grade education, >> but I worked 70 hours a week. I drove over three states all the time. I never saw my wife or kids. And I I was just miserable. And, you know, we lived like most people do.

We spent everything we made. We charged Christmas presents up at the end of the year, paid them off with the tax refund. Uh, and you know, just live that way. >> Uh, but I was just I was miserable. And, uh, one night uh, I I had a manager quit and I had to go run the store while I found a new manager. And I I was in the hotel room one night and I couldn't sleep and flipping channels and a Carlton Sheets infomercial was playing. No money down real estate. And I said, "Well, gosh, there's got to be something better than this." So, I ordered it and when it came, UPS brought it a couple of weeks later and I I actually took the cell phone off the the manuals and I read them and I did what he said to do, which at the time before social media was calling FSBO ads in the paper and that's tough.

>> Real quick, for sale by owners, for those who may not know, >> for sale by owner. That's right. And so, people paying for an ad, but too cheap to pay a realtor. And uh I just started dialing. Every spare minute I had, I was calling people and talking to them. And 30 days later, I bought my first house. And uh then 30 days, another 30 days, bought a second house and a third and a fourth. And and I said, well, gee, this might really work. So I said, I want to quit my job in a year. And I did the numbers and we downsized a little bit. And I said, I need to buy about 25 houses to quit my job. And a year later, I bought 24.

And I quit my job. And I've been a full-time investor ever since. I've >> What year you think this was? >> Uh, I bought my first house in June of 1999. So, I've been doing this for over 26 years. >> Well, >> wow, that's awesome. >> High five. So, guys, I'm sure you're listening in and watching on YouTube. So, >> this guy's been around for a little while, right? This is not a fly on the wall. This is not a fly by night kind of person. This is this he has some battle wounds, right? >> Been through a couple cycles. Yep. >> Fantastic. One of the things we find William is there a lot of people getting into space in the last five years especially seller finance people who are doing wraps and stuff like that that all they've seen is success in the last 5 years where payments are continuously going on and working out.

What do you say those kind of people where yeah last five years has been great for performing those but don't bank on that being performing forever. What do you say to those kind of people? >> Well you know my first 10 years I did a little bit of everything. I was a rehabber, a wholesaler. I sold houses on lease options. I sold them with seller financing. Uh, you know, you have to plan for the bad times in what we do and in pretty much everything. Uh, I think one of the biggest mistakes I see investors make now is uh, okay, like let's take this deal. We bought this deal about seven weeks ago. We just got a contract last week.

our our buyer side, uh they're giving us 50,000 down, uh which is a great down payment on a $300,000 house. Now, a lot of these new guys, they'll take that 50,000 and they'll go blow it on everything under the sun. So, the first payment that the homeowner, new homeowner misses, they got to come out of pocket. If they don't have the money, they can't. So, you need to take about a third of that down payment, if not more, and put that aside for the day when Sally doesn't make her house payment. That's how you stay in business. >> She can't blow all your money. Plan for the bad times. >> So, yeah, >> it sounds to me your focus in the note space is, are you doing fix and flip, selling terms? Are you doing sub two reps? What are you focusing on the note space? Uh, as far as as as creating notes, uh, that's a pretty cookie cutter process for us.

We buy subject to, we sell with seller financing. We don't wrap, uh, we don't do a true wrap. We do a contract for deed. >> Yeah. >> And for those who don't know the difference, why what is it between contract for deed and and doing a typical security instrument? >> Yeah. Well, doing if I give my buyer legal title, it really limits me on some options should they default and some other things. Uh, this deal I just talked about. For example, why would anybody do it? But this guy handed us the keys. He wasn't behind on payments. He owed 214. We sold the house for 300 and what it was worth. Uh, he just had a life situation.

He wanted out. He wanted certainty. So, even though we're getting 50,000 down, we still have another 35 $40,000 of equity in this property. Now, let's just say something happens and I need some cash. Uh, well, I if if I sell on a wrap, my buyer has legal title. My equity is tied up in this property. If I sell it on a land contract, I'm free to refinance or do other things, whatever I may want to do. Uh secondly, selling on a wrap, uh my property is subject to leans and judgments with my new buyer. If I sell on a land contract, we we hold title in a trust, by the way. Uh if I sell it on a land contract, my new buyer can't get leans or judgments attached to the property.

So, if they decide to default or move out or give the house back, which happens, uh I don't have to foreclose to clean up the title. So, it's just easier for everybody. That that's that's beyond a ninth graduate education. That's school of hard knocks. That's learning. >> Yeah. Well, I've been doing it for a little bit, but yeah. >> Yeah. >> When when did you start doing rap notes? Not rap, but doing the sub two world. Was that the beginning? When did that come out in your business? >> I'll tell you, I learned about sub two pretty early because, you know, I'm pretty analytical. So, I when I said I want real estate investing to replace job income.

I want to get out of my job. And I learned early on even though I have good credit, I didn't have a lot of money, but if I depend on the banks to finance all of my properties, they're going to cut me off somewhere down the road. And the numbers vary depending on who you ask to who you ask. But it seemed like the number I kept hearing was 10 to 20. The banks would go, well, you know, we got a lot of exposure with you, which just a fancy way of saying, you know, it's a lot of money. So I said, well, I can't lead the lifestyle I want to lead on 20 houses. So, I got to find another way. And I was in a This was before social media and Zoom.

I was in a chat room one night talking to some guys and they were talking about subject two. And I said, "What's that?" And he said, "Well, you'll own the property and the seller will stay responsible for the loan." And I said, "Man, that's some kind of crazy talk. Nobody's going to do that." But the next seller that called me that sounded motivated, I decided to try to pitch it to him. And he said, "Yeah, what do I need to do? It sounds great." So, I said, "Well, maybe this will work." So, I learned about sub two way back and that just seemed to be the right fit for seller financing. I didn't have to qualify for this loan.

I could buy as many as I wanted. If I wanted to buy 10 a month and I and I did enough marketing, I could do it. Uh, so that's what I chose to be my vehicle. Now, yeah, we still will do a rehab if the right situation presents itself. I'll still flip a house, but buying subject to selling with seller financing, that's our real cookie cutter thing. And we like to do 10 or 15 of those. >> What is the typical reason? Because, you know, it's a it's amazing to hear that so many sellers will sell, give you a house, let you take over the payments, there's equity, they could just sell the house. >> Yeah.

Especially in the market we're in up here, they absolutely could. But, you know, it's varied things. And I shared a list recently of my last few sellers and what their motivation was. It's not always financial. Sure, some are in foreclosure, but sometimes it's a divorce. Sometimes it's a relocation for a job. Heck, we had a lady sell us give us a house last year uh because she had to move from here to Little Rock for a liver transplant and she was on on the liver transplant list. But when you're on that list, you have to be able to report to the hospital within an hour of the call. And we're four hours away.

So, she had to relocate. So, she gave us a house subject to this lady had an 800 credit score. She had already qualified for a new home in Little Rock. But, she checked us out really good. She deeded us the house. We wrote her a check for 30,000. We spent another 35 or 40 on it fixing it up and we sold it and made $70,000 after realtor fees and cost and everything else. >> Fantastic. >> Different situations, man. >> Life happens, doesn't it? Like life is a funny thing. And it's it like you say, it's not always financial. People's motivations are not I mean, as as as kind of logical as it seems, it's not always tied to to money.

There's other life situations, things that happen, things that come up that you got to deal with. >> Absolutely. You know, the deal we referenced earlier, the one we just bought a few weeks ago, that guy's he he was from Hot Springs, which is a couple hours from here. His dad had recently died and he he realized he was up here single. He never saw his family very much, and it just reprioritized things for him. He said, "I want to move back home, and I want to move right now." He made the payment going out the door. He was not behind. He owed about 65% of the value of the house, but he handed us the keys and he moved and he was happy to do it.

>> You know, it's amazing. We all say that's not possible. That story sounds fake, right? And the answer is, >> well, then keep thinking that because William will keep making money doing it, right? It doesn't matter what we think is right or wrong. >> Stats show different. >> Here's here's the file the file on the buy side and the new file on the sales side with sales contract. I mean, it's, you know, it's real, man. I've been doing it for 26 years. I've been living it. I used to go to when I when I lived in Georgia, I would go to the the local uh realtor's meetings. And I remember sitting in there one time telling some of my stories, and this guy turned around, he'd been listening but wasn't in the conversation.

He turned around and he said, "You've got to be making this stuff up." And I said, "Man, I there's no way. I don't have the imagination to make this stuff up. It happens every day." What are some of the biggest mistakes that you've learned from and do differently today because of those mistakes? >> Uh well, the the primary one is the the uh the myth that if you sell a property on lease option, most of the people do all the maintenance, take care of the house, and eventually cash you out. Uh that's taught a lot. And I I I believed it in the beginning until I did a couple of hundred s lease options.

And now I know that actually about five to 10 percent of those people are are going to do any maintenance or uh or or cash you out on that deal. And in fact, when you get that house back, you're going to learn a new real estate term called deferred maintenance. Uh because uh yeah, I I'll tell you some of this stuff that's that's taught out there, especially today, man, it's it's just crazy. Um you know, my my grandfather was a carpenter and he always said measure twice and cut once. And uh if you think everything's going to work out like YouTube University says, you're you're going to be in for a sad awakening.

I'm afraid >> I had some of those as well. Absolutely. And and it sounds good. You know, again, >> if you're listening to the gurus and and you hear all the the best case scenarios, oh yeah, they're going to take care of the house, they're going to fix it up, and then you you know, even if they do default down the road, no problem. Now it's all improved. That doesn't happen. It just doesn't. And I'll tell you in some of this stuff, when you go before a judge and they're going to look at you and look at your contract and say, "I don't know about all this." In fact, I told you I was at that event this weekend.

Uh Randy shared a a lease option story. Of course, it's out of California. You know, everything goes cattywampus out in California. But, uh this guy did uh options where he would buy an option on a property and and do some shenanigans. Uh, and one of the people took him to court and the judge said, "How many of these have you done?" And the guy said, "46." And he said, "I want to see the paperwork on every one of them." >> And he unwound every deal that guy had done. Made him give money back and just do all kind of stuff. It It bankrupted the dude. So, I mean, you you better be very selective on who you listen to out there and the stuff you're doing because if it doesn't pass the sniff test, >> if if you guys are watching or listen this on YouTube or podcast, rewind the last 30 seconds and relist to what he just said.

listen to that again and again >> because in the last six years me and Nathan have seen way too much crap if not daily definitely weekly of these collateral files that and willing correct me if wrong if nothing goes wrong and they pay forever you're never going to have a problem when they default that's when crap happens >> uh well you know if so problems come from surprising areas sometimes uh you can do everything right and still have a problem. Uh it just depends. You know, that's one of the things we discussed at this event this weekend. We were talking about doing things the right way >> and how years ago judges ruled on the law, but today they rule on feelings.

A lot of times a lot of judges make law from the bench >> and then it's up to you to appeal it or fight it. And what do appeals mean? What does fighting mean? That means paying attorneys, other stuff. I I like this is I'm telling you, it's not enough just to do things right. You've got to go over and above that. And that's one reason why if I sell a house to Sally and she pays me flawlessly for five years and something happens and she quits paying, I'm not going to hire an attorney and go over there thumping my chest. I'm going to, you know, Danny Devito told Michael Douglas this in War of the Roses during his divorce.

He said, "Give to the point of night sweats. I'm going to go over there and I'm going to be nice with Sally and if I need to, I'm going to give her part of her down payment back. >> I'm going to work with her to make our parting as easy as possible because anytime you have to pay an attorney, you've already lost. So, you've got to go above and beyond, I believe, and you've got to really try to work with the people that that you're working with. >> So, you've got all these people with their life situations. Where do they come from? How are are you finding them or are they finding you? >> Uh, you mean my sellers? >> Yeah.

>> We We do a couple of different things. I I'm Man, I'm lazy. I'm old. I'm I'm in my 60s now, so I like to take it easy. I used to do a bunch of different types of marketing, but now I'm all about efficiency. And we do two forms of marketing right now. We run radio where we are. >> Uh we negotiate at a really good rate and we're on the stations. It establishes credibility. People call us offmarket deals we wouldn't know about any other way. And the second thing we do is door knock people in foreclosure. We actually knock on the door and and you know when they answer the door I say, "Hey, is Bob home?" "Hey, I'm Bob." And I go, "Bob, my name's William.

I understand the bank's trying to take your home and I wanted to see if there's anything I can do to help. And the first thing we try to do if they want to keep their house is we talk to the lender. We try to work out, you know, homeowners aren't familiar with loan mods and forbearances and all those terms. And we've helped many people keep their house. We do that no charge. We walk away. They're happy they're still in their house. If their circumstances won't allow that, if they don't want to keep their house, then we talk to them about buying it. So that's the two ways that we buy houses. >> Very good.

Very good. >> That's definitely old school. I don't know if I've run anyone recently that's doing door knocks, right? That's a even users. >> Even us not buyers. I don't think we do them anymore. I did them when we first began, but I don't do door knocks anymore. My door knocks a letter in the mail from the attorney. U that's about it, right? >> Yeah. Yeah. Well, it's it's effective because nobody does it. And you know, we live in the age now everybody wants to text. Maybe they'll drop a card in the mail, but we knock on the door and we actually have a conversation with people. >> What is your, you know, typical is a bad word for it, but what is your typical is, is your sellers, is it typically age? Is there any kind of common factor that you've seen that may not be the most common factor? Is there a factor? Is it age? Is it uh economics? What is the main reason for having to give up the property? Uh if you're talking about foreclosure, it's generally just poor money management and the e and or the economy.

Uh with just sellers in general, man, it is so many things. We had a lady uh two years ago, actually. I'll always remember this deal because it was biggest wholesale deal I've ever done. Uh she called us from our radio ad. She owned a house here, had owned it for years and years. It was her mom's house and it was her house and and and she had married and moved to Oklahoma. and the tenant that was in it had moved out. And when I asked her the question, I said, "Lisa, why are you selling this house?" And she said, "I don't want to drive over there every two weeks and cut the grass." That was her reason.

And I bought that house for $40,000 while I had it under contract. I listed it on the MLS and we sold it for $151,000. Made $100,000 on wholesale deal. I never touched that house. I was only over there twice. >> Amazing. Uh but she sold it because she didn't want to cut the grass. >> Yeah. >> Uh you know, and then uh there's a guy that gave us a house with $70,000 in equity. We flipped it and sold it. Uh he had had his hours cut back at the chicken processing plant. He had taken on a border, renting a room, and it was just uh it was just too much. He wasn't behind on payments yet, but he just didn't want the stress of it.

He was going to move in his camper and live out by the lake. And then, like I told you, Stacy, she needed a liver transplant. So man, they're all over the map. Um people in foreclosure is generally just poor money management in the economy. >> What makes you sell a property versus do it on term? >> Uh it it depends on a couple of things. One, if if I'm taking over subject two and I'm looking at a 2 and a half 2.8% interest rate and I see that I can make some long-term serious cash flow, the house is in good condition, doesn't need any work, that's going to be a keeper for me. uh if it needs work or if it has a tremendous amount of equity and I know I can sell it within 30 days, we might flip it.

So um those are the two factors. I don't like to fix up houses and leave money in them. So I like to seller finance houses where I've got very little money in it, no fix up, uh where I can be ahead from the get-go. You know, I was at that node thing is where I I met Nathan here. And I would listen to all these note guys just get really excited about a 25% return and things like that. And I said, "Man, I'm going to blow your mind because most of the houses we buy, if I put 10 to acquire it, I'll get 20 or 30 down from my buyer, then I'll get cash flow every month, then I get it back in." I mean, man, that's ease all day long on that financial calculator.

So, that's what >> Yeah. So for those who don't know what E means, it's error. It does not work. It does not compute anymore. So we talk a lot about on our show is creating a 702010 model where you get at least 10% down. You create a first lean at 70% of the balance of the note of the 70% of the value of the property and then create a second lean at about 20% of whatever is remaining and then hold that 20% whatever it is and sell a 70% note first lean and sell it out. Right? you're back into the E problem, right? There's an error because you now have cashed out completely. You have a 20% or 15% depending on the deal.

Second lean that you're going to hold on for the next 30 years and make cash flow. There's so many ways of doing this to make great money for everyone in there. You be completely cash out. We'll pay off the wrap the uh sub two note. Um I know mathematically it makes no sense for doing it, but in our world that's what we do. But when we do that, it allows the investor to now go and buy more property and then have a constant cash flow. When you hear most of people doing the sub two and then doing what you're doing, I find the biggest mistake they're doing is in the collateral in the documentation and then we've heard people not using services like that.

What are some of the things that you teach some of the people out there of the biggest pitfalls that are you're seeing in the market right now? >> Well, some of the things that I see these guys will buy houses that have absolutely zero equity or even underwater. I I routinely see in Facebook groups, hey, I've got this house. It's worth 300. Uh the borrower owes 290. There's a $30,000 entry fee. So, you're underwater right away. payment's 2,000 a month. It'll rent for 1,700 a month. >> Okay. Yeah. Well, and and and I I have a copy and paste. Where's the deal? Right. Oh, this this is an appreciation play.

And I'm like, dude, you have no idea what you're talking about. But they'll snap those things up. You know, people are all over. Oh, man. Send me more information and everything else because they're under the impression that if somebody will give you a deed, you can make a deal out of it. You know, my grandfather had a saying. He said, "You can't polish a turd, right?" And I mean, these deals >> Yeah. >> Yeah. Turds. And uh I've got to have equity. If if I have little equity, I've got to have some extreme cash flow. >> I think you're right though because a lot of people today are playing the yield, right? The interest rate's three.

I'm going to make I'm going to charge 10 and I have one or two grand of equity. It's like, well, I got plenty of cash flow. That's wonderful. But if the market changes or something happens to this borrower, you're in a bad spot. >> That's what I'm saying, David. You, these people that are saying all this didn't they act like they weren't alive in 2007 or 2008. Chances are they were in high school. >> This is true. >> And they don't know. >> That's true. >> Yeah. No kidding. >> They just don't know. But, you know, I was alive then. I know how, you know, something worth, you know, 400 today in the right market can be worth, you know, 275 or 300 next week.

>> Yeah. >> It just depends. And then I can't sell that house with seller financing in good conscience, >> right? >> My only option is to rent it out. So, if it won't cover rent and let me make some money, it's a no-go for me. That's the first question I ask my students when they bring a deal. What will it rent for? >> That's your backup plan. That's plan B. >> Yeah. What do you what's your tip? What's your max? Is there a max where the property worth 300 and you're into for 215? Is there a max purchase price or what you're into the deal for compared to the value of the property? Do you try sticking? >> I I am.

As far as a max purchase price, I am median sales price plus or minus 10%. Somebody calls me like right around here, median sales price is going to be 350ish. Somebody calls me with a $500,000 house, I'm out because I can't. Unless they're going to sell it to me for 300, it needs 50 in rehab. That might be a flip. But as far as a whole, something to keep. No, I'm not keeping it for six months before I get a buyer. I'm sorry. I know how that stuff. >> So, if that property worth 300, what's the most you'll pay with your rehab? What? 215 30? Are you looking for 70% >> with a Well, listen. I I I swing for the fences.

If that house needs a rehab, I'm going to be looking probably to buy it for 50 cents on the dollar or so. I I do I Certainty of Profit. That's what I tell my students. That's That is That is the most important thing in anything we do. Certainty of profit. >> That keeps you in business. If there's a question, >> if there's a question, there is no question. >> Very good. >> I'm out. >> Making money at the buy is the key thing here. >> That's exactly right. H so many people today we I taught someone just last week and he was his purchase price all in was 81% of value of the property and the >> well it's just >> that might work on a sub two wrap.

Okay, that might work that way but not with not with a uh you know a fix and flip. No, there's no way. I mean, not not in the market we're in, right? I mean, man, we are we we are teetering on the edge, right? We don't know which way this thing is going to go, but we've been balancing on the edge of that knife for a while. >> I'm waiting for the music to stop. I'm gonna have a chair. I don't know about everybody else. >> I'm gonna start hoarding chairs now, right? >> That's right. >> Yeah. >> So, >> save me. >> You know, one of the things we talk about too is is the power of networking. Your circle of people you surround yourself with.

you shared about the circle of people you spent time with, how you met them, and how do you can stay connected with these people? You don't got to name names, just that idea. >> You know, my circle's pretty small. Um, and that's for a reason. There's so much BS in what we do out here. You guys are out here. You know what I'm talking about. The people I hang out with have been investing for a long time or they're new people who want to learn from the right people. They're not into the, you know, the Flash and the Lambo stuff and, hey, I'm in front of a mansion, yo-yo. You know, they're they're not into all that stuff.

They they want to hear, you know, legitimate old school people that tell you how to do it and how to stay in business. So, my my circle's pretty small. That's why I was down in in Little Rock this past weekend. Uh, one of my best friends, uh, he he's been in the business longer than me. He's been doing it about 35 years. He runs the arena down there. So, yeah, I hang out with him. So, I was down there to support him. But people that have been around that know uh what's going on and and that teach. And it may be old school, but that's okay. Old school works and we're still around. So, I'm okay with that.

>> Yeah. Yeah. Yeah. No get no sense getting caught up in something that would work for the next year. >> Well, you know, I mean, some things work for a short period of time and that's okay. But what I find is that um old school, if if that's what you want to call it, uh you know, like I said, you know, people say to me, if if I tell a new investor, go knock on door. Oh man, that is so we use this this LOI blaster. We blast out a thousand offers an hour. All and I'm like, okay, well, if that works for you, but that's why agents hate investors, okay? Right. Uh I guess it may work. I mean, you know, but even a blind hog finds an acre every once in a while.

But I want to do stuff that's that's consistent that builds rapport with people. I want to be known where I work and and you know, when when I walk in Home Depot and somebody says, "Hey, that's the house guy that I know >> for sure." And that that's why investors hate investors. I get some of those offers and and I can tell immediately that they're bogus offers and that they don't there's no way that this is actually going to pan out. I've been around the block enough times. I know exactly how this is going to pan out and it's not going to. That's just the bottom line. >> Nathan, you know, when you get that text, that wording in there, right? No.

And every time we put a house on the market, I get a hundred of them, you know, and it's always the I say, "Okay, send me an offer." >> Uhhuh. >> Send me an offer. And it's some crazy, you know, stuff. And I said, "Why in the world would I do that?" >> Yeah. >> Okay. You know, it's just it's ridiculous. Yeah. >> So, >> those things just frustrating. >> Where do you find your borrowers for your properties? How are you doing it? >> We do a couple of different things. The main thing that we do is we utilize Facebook Marketplace and Zillow. Facebook Marketplace will sell most of our stuff pretty quickly.

There's a lot of people hanging out on there. Another thing you can do is work with real estate agents. Hey, Sally. Uh, I see you got a house over here on Oak Street. I've got one around the block. Have you shown it to anybody that just couldn't qualify, but they have money for a down payment? I'll be glad to pay you referral or some kind of marketing fee, you know, they're file 13 for you. Send them to me. Uh mortgage broker guys the same way. Somebody that came in wanted to pre-qualify, couldn't qualify for a house, but they got money to put down. Uh signage at the house. Really old school stuff.

Uh you know, hey, you know, seller financing, no banks needed. uh you know and then directionals that that usually gets our stuff sold within 30 days. >> Oh. >> Do you find there's there's a avatar for your buyers? Like are they going to be a certain demographic or I don't know something? >> We one of the one of the things we typically will only buy a threebedroom minimum because we're looking for families, you know, and if it's a twobedroom and they got a kid, they have another kid, it's a different sex, you know, they're out because the house isn't big enough. So, we want people that are going to stay and pay.

Uh, we're looking for families in general. Most of them are families with kids. To me, that's ideal. They're looking for a specific thing. A nice a good school district, a nice yard, a fenced yard where they can have a dog and their kids can play. We only do nice houses in nice areas. We don't do stuff in the bad part of town. If I've got to wear flat jacket to go look at it, nobody's going to want to raise their kids there. So, yeah, we like stability. That's our typical avatar for for a buyer. >> Amazing. >> Do you see like seller finance? Is that or sorry um self-employed people? Is are you seeing a lot of that kind of >> We see self-employed people, people that have been through a divorce.

Medical issues are common. Uh they owed a lot of medical debt, so now they can't qualify for a loan. Uh but uh but yeah, uh self-employed people are common. And I'll tell you more and more and you know whether you agree with this or not uh we discussed this this weekend too. I see more investors now who only market to sell in Spanish. >> Uh they sell primarily to Hispanic borrowers that have large sums to put down. They stay in the house. They take care of things. Uh they don't want any problems, you know, and hey, everybody deserves a good house to live in. So, I mean, like I said, you know, we do, you know, qualify people with a mortgage broker, you know, just to process that so we're DoddFrank compliant.

We, you know, even before I started doing that, I mean, I would make sure they made enough money. You know, we want to see somebody that makes at least four times what the payment is. >> That's wonderful. >> We want to make sure that they're not, you know, strapped. I want to make sure I I've known investors over my 26 years that would put somebody in a house. knowing they couldn't qualify to get the house back. In fact, I knew an investor once whose business model was to lease option knowing they would get 90 plus% of the houses back. To me, that's predatory. I don't want to do business that way.

I want to make somebody a homeowner and I want to collect payments for years and years and years. >> Yeah. A lot of them too are, you know, looking for that down payment. You know, they get the down payment and run and say, "Okay, if I take the property back, I'll just get another down payment, right?" And that could be a model. It could be someone's model. Sometimes it feels like if that's all you're chasing, that's not the end goal. We've also heard people say, "Listen, you know, they charge interest rates to refi out, which is wonderful, right?" Um, I'm more like Nathan, we're lazy investors.

We want that payment come for the next 30 years. Black clock, we're coming in the bank, >> right? >> What kind of interest rates are you typically charging your borrowers? Does it vary? Does it change? >> Uh, well, I'll tell you what. I move the numbers around to to get the kind of cash flow I want with an affordable payment. I try to make my payments no more than $100 a month or so above what the rent would be. Uh so my interest rate depending on how good a deal I got might be six and a half%. This deal here that I just told you guys about, we're financing them at 7% which is, you know, I mean it's not 12% or some of the things I hear some of these guys out there talking about.

I want to keep this house affordable and as long as I'm making $500 or $600 a month in cash flow. That's my target. I'm happy with that. >> Yeah, we would push back, right? We always say, why do what a bank does? You know, if the bank can give six and a half, seven, why are you off this specialty service and only charge seven? And I think your answer is correct. You're making money and that's all that really matters is that it works out, right? >> Well, not only not only that, David, I'm not limited to poor credit borrowers. Let me let me tell you this. This is how we finance people. Their only cost is $750 closing cost.

That's what our title company call charges us to close the deal. There are no points. There are no fees. I know there are a lot of profit centers I'm skipping. But if if if I'm looking at a $300,000 house in Bella Vista, Arkansas right now, and this was a nice home, and I can get this house uh you know, for 10% down with no PMI, with no points, no fees, no junk fees, with a one-year home warranty, and $750 in closing cost. Man, it behooves me with an 800 credit score to buy this house compared to any others. You know what? I've seen people pay the Bank of America and Arvest and other places in closing costs thousands of dollars.

>> Uh but it's a good deal for everybody. It was a good deal for my seller. He wanted out. He got out. I'm going to make $100,000 on this house. >> They stay and pay for just four years and my buyer can get in without a lot of junk fees or anything else. So, I think that's man that is a win-win win. >> Yeah, that's cool. Do you ever consider selling any of those loans or you hanging on to every one of them? We keep everything. If I sell or finance it, I'm keeping it. >> Sure, >> we can always try. >> But just in case, >> man. You know, I'm I'm I'm getting older, like I said, and I want options.

Cash flow gives you options. So, yeah, we flip one every once in a while. We'll rehab something a couple times a year. Uh, but I like to we want >> Have you ever Have you ever done hypothecations against your own notes? >> I'm sorry. >> Hypothecation. Have you ever borrow used it as collateral? I >> I have not. I I'll tell you what. I've got a ninth grade education. I understand what it is, but I like to keep my life very simple, >> but all that fancy stuff, I just I just don't do very much. >> The reason I asked that question is a lot of people are attracted to it, which I understand why they're attracted to it, right? Because the fact that they can get more money and get it out, but what I was trying to press on there is that you don't need to do it in that fast track.

William didn't get all these properties in 19, you know, in 2000. He don't have the same inventory he did back 2000. He started small. He started see easy over time things happen this isn't an overnight success slow and progressive >> tell me man I'm telling you you know the first couple of years of being an investor that is the most dangerous because you're making enough cash flow but if somebody doesn't pay then you got to cover that note then you've lost that cash flow I'm telling you it's getting it dialed in that's a that's a trick but if you'll just stay with it I'm telling you you know I could still be working for somebody right now I'd still be a couple of years away from retirement, subject to them firing me at any time.

Uh just I mean man, is real estate investing risky? Uh maybe. But gosh, everything is, isn't it? And my worst day working for myself was is so much better than the best day I ever had working for somebody. >> We told investing in the game. It's like playing Monopoly constantly. Do you ever want to stop playing game? No. You're still having fun. >> Yeah. And you get those surprises that come out of nowhere and you never could have anticipated it. That's part of the game and you just got to roll with it and figure it out and and think through the problem. Okay. So, if that didn't work, so how do we make this, you know, better whatever the case is.

>> How do we fix what you said about networking earlier so important, too. If I've got a problem, something new that I haven't seen before, and I surround myself with experienced people, players that have done this stuff and not the latest, I call them newurus. You know, the person that bought a house a year ago and now they're an expert. Uh, I can just pick up the phone and call any of these guys and chances are they've seen something like it. It can help me through whatever that problem is. Pretty cool. Now, before Nathan answers our our famous last question, I want to ask you one thing that we always are curious about and you've had the career doing it.

Have you ever got your kids into this and how did that work? >> You know, I've got two kids and one of them is is entrepreneurial. He's got cars on Turo and does some other stuff like that. Uh, and the other one told me flat out, I don't want to have anything to do with any of this. And you know, hey, I mean, you can have, you know, 20 kids and every one of them's got a different personality. I don't know. It's hard to explain, but no, neither one of them do real estate. And I don't know why because they've they've certainly enjoyed uh, you know, the fruits of it. Yeah. >> Life, you know, other kids could only dream of, but they're just not interested.

I guess it's not for everybody, but man, I took to it like a duck to water. I loved it right away. And uh, of course, I hated my job so much, man. I might have gotten into anything, but I love real estate. It's still exciting. I love making a deal. I kind of lose interest once I've made the deal now. Uh, but but yeah. No, they're not in real estate, but who knows? >> Isn't that interesting? Yeah, same kind of thing. >> I'm trying. We're trying. >> Can't get them can't get them interested. I don't know what it is. >> All right. So, we're we're always curious to ask our guests, people that have been doing this for a while and you've you've you know had some experience under your belt, where do you see this going? Where what's your crystal ball for for the next 12 24 months in the in the market cycle and what's happening and what you're doing? How does it all fit together? >> Man, I'll tell you, I we're we're getting close to an exit on our end.

I mean, I've been doing this for 26 years and we're getting to be that age. As far as what's going to happen in real estate, man, you know, there was a time I might could have told you, but with the government, you know, intervening and things like stopping foreclosures during COVID and doing some stuff that they do right now, I'd say it's hard to say. I believe there's going to be a correction. There's already starting to be in several markets around the country. You know, you got all these other people say, "Oh, no, man. This is just going to continue. There's a housing shortage. There's this and that." I know every builder around here is offering buyer incentives, $10,000 toward this, all these upgrades.

I was doing real estate during the last crash. I saw all of these things. Now the government's talking about giving a $25,000 first-time home buyer credit. Remember that stuff? All of it's like they pulled out the playbook, man, for 2007 and 8. If I had to make a guess, I would say it's going to get bad. That's my guess. Now, what will happen? Shoot, who knows? Uh, I know this, I'll still make money because I'm watching what's going on and I'm adapting to things. So, and that's what you got to do. >> That was a very good answer. >> That was wonderful. >> Oh, that's great. Yeah, that's great. >> Well, again, we're going to end it this show here.

Hang on for after hours, but um, thank you for joining us. It has been awesome pleasure to meet you and talk to you and stuff like that. and we will definitely see you again at the upcoming conferences and whatnot. Feel free to reach out to William. The the information will be in the chat below with links and everything else and ask any questions. He's open book as you can see. Wealth of knowledge bet. >> And uh thank you again, William. Appreciate you jumping on and spend some time with us. >> Well, thanks Nathan David. I I appreciate you all having me. It was a good time. >> Pleasure. You bet.

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