Joe:  Welcome, this is the Real Estate Investing Mastery Podcast. Hey, what's up guys? Welcome to a brand new YouTube video series I'm doing called the New Market Video Series, where we're going to go in and pick a brand new market, one that we've never done a single deal in, and we're starting from zero. On camera, live, we're going to be picking the market, building the list, sending real actual offers, calling sellers and realtors. No theory, just watch what we actually do. And it's going to be so exciting. Thanks for tuning in.

Let's go into today's video. So I'm going to walk through sending a new seller a two-option letter of intent, where we buy it with cash, and we also make an offer to buy it with owner financing. Let's go to, let's just pick a new one. All right. It's a vacant lot. It's got road access. Let's just double check for floodplains, wetlands, none of the above.

And the lady doesn't own any other property around it. Zoom out. You can see if it was in wetlands, it would be covered like that. This is such a good area right here for owner financing. There's no restrictions. It's not an HOA. Somebody could go in there, cut a little road, put a camper in the middle of that and be totally 100% private. That's a big lot. So let's send this lady an offer, but we need to know how much to offer, right? How much is this property worth? The land portal says it's worth maybe 49 grand, but let's just see for ourselves in Zillow.

So I need an address. Let's click on this person's right across the street. There's an address right there. I'm going to copy that. This is our property we're interested in right here. And let's go to Zillow. I'm just going to paste that neighbor's address right there. Hit enter. Takes us to that property. I'm going to click back to search, remove boundary, and we're going to zoom on in. All right, so our property is right there. And what do you see immediately? There's some other properties nearby that are currently for sale.

Okay, so let's first look at solds. I want solds. And again, our property is 2.5 acres. So let's look at solds, land. I want to do one acre to five acres. Solds in the last 12 months. And let's zoom out. Five comps, 12 comps, 29 comps. All right, I'm going to scroll down to load them all up. And let's scrape them. Analyze current page. So just scraped all 28 comps. And there were 29. So one of them didn't scrape. That's fine. There must have been an error in it. And I have the median price of $30,450.

But there's some weird outliers here. So sometimes what I do is I just remove the outliers. They're super cheap. And let's do lowest 50%. So now we have 13 comps. Median price is $26,000. 1.92 acres. Ours is bigger. Ours is 2.5. So let's put the numbers in here. We're not going to use this spreadsheet. We're going to use something else. You're going to love this.

All right. So then let's look at active for sales. Days on Zillow, any. I've got 41 comps. Let's scroll down. I'm going to scrape them all. So none of these properties are bigger than two acres. That's interesting, isn't it? So we have a unique property. It's bigger than all the others. Gives us a little more wiggle room. All right. So we're doing show all. I'm going to download everything into a spreadsheet. Click this button right here, export CSV. It just downloaded everything into a spreadsheet.

And then I'm going to go into this new calculator right here. You have to create an account to get in. Once you create an account, you can see all the deals that you're working with. And I'm going to click right here, a new deal. And I'm going to upload those comps I just downloaded. Our property is 2.5 acres. I'm going to discount the active comps 15%. So I have an active price per acre of all that stuff I uploaded into that spreadsheet. $31,000. That's the median. And if I discount that 15%, you come up with this. And if I have sold, it's at that. So you can choose. I want $26,000 an acre or $22,000 an acre. We'll do $22,000 an acre. And then I click, I'm going to use this value.

So we need to ask ourselves, could we sell this two and a half acre lot for 55 grand? Let's think about this. If we look here, could I sell it for 55 grand? This is 25 grand for 1.25 acres, so double that would be 50 grand. If we look at solds here, it is the biggest one, but here is one. Here's a sold that was two acres in the same size that sold for 52 grand. Let's look at this one here. This is real similar to ours. Let's see how long it took to sell. It sold in less than a month. So let's sell ours for 52 grand.

So I'm just going to override. We're going to sell it for 52,000. That's our list price. 52 grand. Now here in the cash offer section, there are two methods. Method number one is just 50% of the value. So it's worth 52 grand. I'm going to offer 26 grand. Method number two, it's called the back solve method. Back solve from minimum profit. So this is where I say, all right, I'm going to subtract my profit, closing costs, photos, miscellaneous, and 10% realtor commissions. So now I have two method offers, cash $26,000 or method number two, $32 grand. So I can choose which one I want to use. I'm going to use 26 grand.

Okay. That's 50% of value, 26 grand. Now here is the seller financing offer. This says I'm going to make an offer at 75%. This defaults to halfway between this and one. So if I say 60% here, it's going to change this to 80%. If I make this 40% here, I'm going to make this 70%. You see what I'm doing? So we keep that at 50%. We choose which method. So we're going to make a cash offer for 26, but I'm going to make an owner financing offer for 39.

Now, how can you do that, Joe? But first let me ask you, what offer would be more attractive to the seller? $26,000 or $39,000? Probably $39,000, right? How are you going to make any money on this? I'm going to buy it with owner financing. I'm going to sell it with owner financing. So check this out. What am I going to offer to the seller? I'm going to give them 10% down, but I'm going to pay them 5% interest over 10 years. Really? Can you get away with that? Yep. If you wanted to, you could say, I want 15 years.

And you can choose whether you want to use an investor or no investor. Now, what are we talking about here? You're going to offer the seller 10% down, which is $3,900 down payment. You want to do more? You could do 20% down payment. Do you think this is going to be a good offer to the seller? What if you said, all right, I'll give 25% down, but I'm going to make the offer $35,000 instead. And so where is this 25% going to come from? It's going to come from either myself or somebody inside of Dirt Flippers.

And you're going to pay this private investor 15% over five years. Now you might be thinking, what the what, Joe? 15%? Listen, your payment on this to the seller, to the investor, you're still going to cashflow $354 a month. So let me walk through this here. Let's just say you're going to offer the seller 25% down, 5% interest over 15 years. You're going to borrow from the private investor the down payment and the closing costs, but you're going to pay that private investor 15% over five years. How many of you would lend me $11,000 if I would pay you 15% over five years secured by this property? So you would have a mortgage and a deed of trust secured against this property.

In the Dirt Flippers group, there are probably over a hundred people in there right now that would love to earn 15% on their money. And we close with a title company. We get title insurance. Your mortgage is going to be secured by deed of trust. Now look at this, even if I offered 20%, what would my payments jump from $267 to $298? It only jumped up 30 bucks a month by doing 20%. Now just do 15% because that sounds like too good to be true.

All right, but now look at this. The property's current value is 52 grand, but I'm going to mark it up 25 grand. I'm going to sell it for 65 grand. Can you do that when you sell with owner finance? Yes. Because just like with a house, you can charge higher prices when you have premium features in a house, right? Well, just with land, you can sell land at a premium when you offer owner financing.

Why? Because the banks aren't lending money on these deals. There are no banks that will lend money on this kind of property. They're hard to find. So we can charge a premium. Now, maybe we do 25% up. We get 3% down from the buyer. We charge 9.9%. Maybe we sell it for 15 years. So we're paying that seller over 15 years. We're paying the private investor over five years, and we are collecting payments for 15 years.

Okay. Check this out. So the buyer is going to pay us $674 a month. We're going to pay the seller $208. We're going to pay that private investor for five years, just $267. So our initial cashflow for the first few years is $200 bucks. But check this out. Our cashflow for the next 10 years is $466. Is this crazy? Yep. We can make $200 a month in cashflow for the first five years, and then make $466 in cashflow for the next 10 years. This is all adjustable. Let's say you only want to do 10 years, and you want to pay the private investor over 10 years, and you want to sell it over 10 years. Your profit goes down, but then your cashflow is $369 the whole time. Do you see why we can make bigger, higher priced offers to the seller? Because we can sell it on owner finance.

Now, how do we get the down payment money? Don't worry about that. You know, if you wanted to, you could say zero down payment, and maybe give the seller 7% interest over 10 years. And you don't use a private investor, right? So you're going to collect $830 a month, and pay the seller $406 a month, and you're going to get $423 a month in cashflow on this. Your profit's going to be $43,000. Could you do that? Isn't this amazing? What if you offered the seller, I can't do 10 years. I only want to do five. All right. So maybe the price goes down to 30 grand and five years, but you're going to sell it on 10 years, 9.9% interest.

Look at this. Your cashflow for the first five years will be $236 a month. For the next five years, it'll be $829 a month. You're still going to make $57,000. Do you understand what I'm laying down here? Are you picking it up? The numbers are crazy. You can give sellers whatever they want, price or terms. We are not using any of our own money.

We can give the seller 10% down, 25% down. We can give them zero down, give them a higher price. Let's say our cash offer is 26 grand and our owner financing offer is 40 grand with zero down, higher interest rate, shorter term. That would still work, wouldn't it? Let's check the numbers. So the first five years, our cashflow will be $38 a month, but the next five years, our cashflow will be $830 a month. This is called arbitrage. You're borrowing money at one rate and collecting at another rate. This is what banks do all the time. They borrow at one rate and collect at another rate.

Now this is a summary of everything. You can click, you can view cashflow by month, which is cool to see. But then here's your owner financing deal summary. So your deal with the seller, if you're doing owner financing, you're buying it for 40 grand, zero down, 40 grand principal, five years, 5%, 10 years. And your deal with the buyer is this. You're going to get $1,950 down payment. You're going to charge 9.9% over 15 years. And your payment from the buyer is going to be $674 a month.

Now let's create a letter of intent right from here. I'm going to download the letter doc and the two option letter of intent doc. All right, listen, I know what you're thinking, that took a while. It doesn't actually. In the next video, I'm going to do the whole thing in about five minutes. And then I'm going to show you a robot doing the handwriting for my offer letter. So I'm not kidding. Check this out.