Joe: What's up, guys? I'm Joe and I'm with the one and only material wherever he is over here, and hope you guys are doing well. This is our Creative Financing Lab. weekly podcast. Glad you're here. And I'm excited about this show. We're going to talk all things creative financing. Pace could not make it today because can we tell people what he's doing? Does everybody know? I don't have no idea. I wouldn't I wouldn't know either. But he's doing something really cool. Let's just keep it a secret to kind of build the suspense and let it hang out there. But he's doing something really, really cool with Jamil, the one and only Jamil Damji. So, guys, on this podcast, I thought we would just keep it real simple. We want to answer your questions about creative financing. Jay is in the house. Let's go. Come on. Oscar is here. Edwyn, let's go. Big investor, the number one show on the planet. Wow. I don't know.

Matt: Thank you for that. That's nice. Yeah, it's pretty good after just two episodes.

Joe: Or three, this is our fourth. All right. I think. But anyway, we're glad you guys are here. And even without Pace who couldn't make it, he just apologized. He's got something really, really cool that he's working on. And I don't know if we have permission to tell you what it is yet, but you're going to know soon enough. Oh, yeah. So, yeah, he's filming for his TV show.

Matt: And he's gone Hollywood on us.

Joe: But he didn't go to Hollywood. I think they're filming it in Phoenix, aren't they? Yeah. So what is creative financing? That's a great question to start off with. What do you say, Matt? What is creative financing?

Matt: Creative financing? Well, financing is where you're using your money to transact. Creative financing is where you're inserting your ideas in place of the money. And that's right. And so we call those ideas terms and you'll hear them reference that way. And there's stuff I like subject to and there's a lease option and they're seller can go back and there's wraparounds and there's moratorium's and there's deferments and all kinds of stuff. So these are all just the different terms and ideas that you can use. Most people think that they have a money problem when they get into real estate or it's money that gets in the way of them even getting started. So I don't think they can make it happen. And it's not a money problem. You just have an idea problem. And so that's what we do, is we show you how to put your ideas in place at the money so you need less of your money to operate. Exactly right. Semper Fi, big investor. Yeah. The Marine Corps thing there, Joe.

Joe: I wish I, I mean, I know what that is, but I wish I could relate. So, yeah, right now we're getting messages here that they're having a hard time streaming to Facebook.

Matt: So, yeah, there's a little message on their Facebook was having issues before we even started.

Joe: So Thomas is here. Yeah, everybody knows. OK, so Pace and Jamal are filming a new TV real estate series. It's going to be awesome for A&E. I think we're HGTV. It's all the same. I don't know. They probably owned by some big corporation somewhere, but yeah, they're filming this really cool show. And this guys I talked to pace about this and like, he was telling me not to brag or anything, but they were begging him and Jamal to do this show. They said, no, they don't want to do it. They're just too busy. It's crazy what you know, you're on to something when the producers of these real it's real estate reality TV shows are begging you to do it. So they just started filming this week and they had to reduce some things this morning. That's why Pace couldn't be here. So we're getting some good questions already. Yeah, I like it. Can you explain innovation agreement?

Matt:  You know, I never even heard of that expression until I heard of Pace Morbey. I looked it up and I forgot what it said.

Joe: I'll tell you right now. A novation agreement transfers the contractual obligations of one party to a third party or replaces a contractual obligation with another one. All parties involved in thistype of contract must consent to the changes. Here's another.

Matt: How is it different from an assignment or an amendment?

Joe: That's what I'm wondering myself too. I always called it just an assignment or an amendment agreement. Innovation is the process by which the original contract is extinguished and replaced with another under which a third party takes up rights and obligations, duplicating those of one of the parties to the original contract. This means the original party transfers both the benefits and the burdens under the contract. So the original party, it's where they transfer both the benefits and the burdens under the contract. So it's an assignment agreement. But here's the thing. When you're doing creative real estate, you can get pretty creative, which is a good thing. But you're going to find in some states some title companies, they call them different things like they're escrow companies in California, I think. Right. And then their title companies in Missouri. There's some people like up in Ohio, Michigan, they call them land contracts. Right. But they're called contracts for deeds everywhere else.

Matt: So agreement for a deed. Agreement for bond in Louisiana.

Joe: Agreement for bond. Yeah. Yeah. So it just kind of you got to find out what here's what I suggest to students all the time. And I say, listen, find somebody who's already doing deals in whatever market you're doing them in a title company. It deals and ask them, hey, I'm thinking about doing this. I got a great deal here. What how do you recommend we do? And let them tell you what they're called and the paperwork that they use and all that good stuff. Right. All right, good. Got some excellent questions here about another one from Louise. What are the best leads to attack when looking for your first deal, wholesaling or creative financing? How about first the best leads to attack?

Matt: Yeah, we answered that last week. And if you want to hear, no problem, we can do it again. And I was really curious as to how Pace was going to answer this, because it is such a common question. I mean, it comes up all the time. What's the best list? What's the best type of leads? And our answers were exactly the same. I was really relieved to hear because I've always been looking for that great answer that satisfies everybody. But they're the same leads that you would go after regardless of what you were going to do. A deal is a deal. You're looking for an equity position or you're looking for a cash flow position or you're looking for both. And the only way you're going to get that is through a motivated seller. So now you have to retrace that or backtrack that or reverse engineer that. What causes a seller to be motivated in our world? The motivation is kind of a good thing, right? We want to be motivated each and every day. But in the seller's world, when they're motivated, typically something not very good is going on in their life. And there's something more important or a bigger problem that they're dealing with than them trying to get full price for their house. They need money. They need it fast, and they need it simple and easy without a lot of effort.

Matt: And so the types of things that cause a seller to agree to a creative offer or a discounted offer are, you know, you got the death and you got the disease and you got the drugs and you got the divorce and then you got the delinquencies and, you know, you got job loss and probate and all types of financial distress, personal distress. And then the property itself can be in distress. So you're just looking for signs of distress with property owners and you want to go out and reach out to them. One more thing, though. Yeah, just to kind of finish up this question, because keep in mind, when you're looking at those lists, there's deals in every single one of those lists and. Exactly. But they don't guarantee that there's going to be motivation there. And here's a perfect example. I know I have a property in Memphis, Tennessee, that's been there for about two years. It's vacant. I think I might have an issue with the city, the weeds overgrown. I keep it in the weed abatement stuff and I just haven't gotten to it yet. And it's not high on my priority list. So I would show up and I know I show up on the list because I get a lot of mail for that one property and but I'm not motivated. I'm not in any hurry. I just haven't dealt with it yet.

Joe: But you might be motivated next month.

Matt: Next month. Yes.

Joe: Just like screw it. Forget I don't care if I lose money on this deal. I just want it out of my life.

Matt: The point being is on any of those lists, just because they're on the list doesn't mean they are going to be a motivated seller. That's all I'm saying.

Joe: So what list do you target? All of them.

Matt: All of them. Yep.

Joe: That's like now I've always liked absentee owners. Those are the best lists. That's always been the best list. Always will be because they don't have as much emotional attachment with you. Right. But yeah, all of them. And I think, Pace, I've heard talk about this and you and I have talked about this a lot, that old leads, I think, are the second best. Right. Like these are people that have already expressed some motivation. They called in response to a postcard or a Facebook ad or they they've already expressed some here. I would like to sell this thing, but maybe they don't have enough equity. Maybe they're not super motivated yet. Most of you guys here, if you've done any marketing in the past, you already have a bunch of old leads you're sitting on. So I would go after that list first and then find other investors who have old leads and contact those old leads. I just was talking to somebody today. He was saying, like, what kind of marketing should I do for lease option deals and what kind of marketing should I do for wholesaling deals? And I was like, it's not the same. You're not you're not doing marketing for creative financing. You're doing marketing for deals. Right.

Joe: I was talking I was hanging out with Tom Croll, mutual friend of ours. You've met Tom before, haven't you? Met, of course. Yeah. So we were talking just yesterday about this, and he likes to use the pawn shop analogy and he says, you know, when you're at a pawn shop, the conversations you watch, porn stars, the conversations, always the same. Right. You bring in a watch that looks like a nice watch. Why do you want to sell it? You know, is there anything wrong with it? Why don't you just listed on eBay? Why don't why don't you just keep it? It's worth a lot of money. Why don't you just keep it or why don't you sell it yourself. What are you going to do if you can't sell it? What are you going to do with the money. Right. So how much do you want for it on that pawn shop store? Do they ever give you a price first? Do they ever say, well, would you be willing to sell it? I don't know. I don't know how they sell watches or buy watches, but like, they never say like, would you want to do a lease option or a cash deal or whatever is what do you want for it? You make the person bringing in the watch.

Matt: I'm a big fan of this show. So first. So what do you want to do. What you want to do, what you want to do that's in my script is it's always like, what do you want to have happen? You know, if we could wave a magic wand, what would you like to see happen?

Joe: It may not be money that they want. Exactly, exactly. They just may want to hold it for a little while they borrow some money and then bring it bring it back or just they just want cash. They want to be done with it. So anyway, the conversation is always the same. And the seller of the why. Brings up the price first and what do they always say? I don't know if I can do that. Is that the best you can do? Right every single time, even if it is a good deal? And then they say, well, let me take it back and think about it and look into it right now. And they let the person sit and stew a little bit and stressed out. But so it's the same with houses. So we're not doing marketing for creative financing deals or cash deals or regular realtor listing deals. We're just doing marketing for deals. And we're targeting all the lists.

Matt: You could be doing yourself. And that could be I'm going to say you are doing yourself a big disservice if you're looking for deals for just one exit strategy. Oh, yeah. If I'm looking at just the wholesale properties, you're kind of blow so much money on marketing and miss so many other opportunities. If you're looking to do just creative financing, you're going to miss so many opportunities. You don't want to identify yourself as your exit strategy. You want to identify yourself as your acquisition strategy being I'm a deal finder. I have to find deals and that. And you don't want to identify yourself based on your asset class either, because you're going to miss a lot of stuff, because when you do the type of marketing, you're going to have all types of opportunities come your way. A lot of the stuff you're not going to have control over what you get. You know, the all of the multifamily is that I've owned have all come to me from marketing to single family owners. And if I was just looking for that, I could have I would have missed out on a bunch of units. So be careful how you identify yourself and how you think about your marketing. You're just looking for motivation.

Joe: Good question. Here from Kristen, what is Dodd-Frank? Keep hearing about it when it comes to notes. You want to tackle that?

Matt: Sure. Well, the Dodd-Frank Act, it's kind of long. It's kind of big and it's in depth. It's designed to protect the consumer, the consumer buyer primarily, not primarily, almost exclusively the residential buyer. Someone that's going to buy their own property to live in. So all of these guidelines that came into play after the 2008 collapse. But to answer your question, Kristen, what I think you're going with this when it comes to notes is when you're doing a seller financed property, when you're selling via seller finance, so you're holding on to the note and you're dealing with someone that's going to live in the house, I believe you can only do two of those a year without having a mortgage loan originator involved. Tips to make sure that you are in compliance. But if you're selling seller financing to another investor, Dodd-Frank doesn't apply. So you don't have to worry about anything. It's just when you're selling to a resident owner.

Joe: And when it comes to lease options, we're not attorneys either. Right? Lease options from attorneys that I've talked to have said to me, again, you've got to talk to your own attorney, get legal advice from them. Right. But like what I've what I've heard from other attorneys is Dodd-Frank doesn't necessarily apply to lease options because it's not seller financing anything. Right. You're doing a lease with the option to buy, but you should still be smart about it, right? Don't put somebody in a house that they have no realistic chance of ever getting a mortgage on. Right. Never put somebody in a house that you need to still be working with the mortgage brokers. What I'm trying to say and that mortgage broker will tell you, yeah, that tenant buyer should have a realistic chance of getting a mortgage if they do this in this in the next two to three years, whatever. And they do want to make sure that tenant buyer can afford the house. They're still putting good money down. And generally speaking, you don't want to do a ton of rent credits. You're doing lease options. I don't even like calling them rent credits anymore. They're just that gets their seller concessions that go towards either the closing costs or to reduce the price of the home. But Dodd-Frank is important when you're doing a lot of seller financing deals. But the good news is there's a lot of licensed RMLOs residential mortgage loan originators, I think is what it is that can help you with that. Right. So whatever market you're in, find somebody else who's already doing owner financing deals, seller financing deals, and just ask them who is the RMLO that you use and connect with them, network with them. And I bet you Pace might even have somebody that he uses a lot.

Matt: What's the transaction coordination service?

Joe: Constant close dotcom that's about to figure it out for you. That's the Pacers company, constant close dotcom. Talk to them and they'll be able to point you in the right direction for my seller financing deals. My local mortgage broker that I've used for years and years can help me with it, but he doesn't do nationwide. Anyway, here's a good question. Can you do a wraparound mortgage transaction on an MLS property listed with an agent?

Matt: Yeah. If they agree to it, yeah.

Joe: It's always a little harder whenever realtors involved doing the creative financing deals, but it can certainly happen and it kind of depends on the price range, too. It's sometimes it's easier to do on cheaper properties than on more expensive properties. The agent, they care about the client being taken care of, but they also care about their commissions. Soyou just going to have to find a way to make sure the agent gets paid. And normally on creative financing deals, if it's listed with an agent, I'm going to give the seller enough money down payment or option deposit so they can pay the agent something, at least one month's rent. And then the agent can get the rest of their commissions if and when on a lease option, specifically if and when I buy the house in three to four or five years. Now, if it's kind of a subject too, you are buying it. So you just got to be aware of that or land contract you kind of are buying. It so you need to give the seller enough money to make that agent happy. It doesn't have to be all of it up front either. It could be, you know, I'll pay you some now and the rest in a year. That's all negotiable. But it's the listing agent is not representing you. The listing agent representing the seller and the seller is the one who pays the agent their commission. So you need to let them figure it out and worry about the paperwork. You don't have to be involved with that preparedness.

Matt: Seriously frustrated if you try too

Joe: That's true. OK, here's a good question. I think when looking at wholesaling your creative deals, do you have to convince your buyers or are they already open to it? Good question. Matt, let me ask you something. Have you ever wholesaled your creative deals to another investor just to get out of them?

Matt: No, I want them all. Yeah. I don't want to wholesale them. And I know where people are going with this because they could lock up a creative deal, but they still need cash. Right? They don't want the two hundred dollars a month or whatever they're going to get from the cash flow. The way that I get cash and cash flow from a creative deal without wholesaling it is I borrow more for the down payment or bring in a partner and I borrow more than I actually need. So if I get a creative finance deal and I got to pay the seller, 10 grand is my down payment. I'll bring in a money partner and I'll borrow 15 grand. So the salary at 10, I get five and then I still hold the property for cash flow. So that's the way I prefer to do it. But to answer your question, if you if I were looking to do that, do I have to convince buyers? Are they already open to it at all? It's all dictated in your marketing. Your marketing is going to attract the people that are open to it. So, yeah, it would just be in your marketing message.

Joe: And you know what? There's a lot of active creative financing buyers in these creative financing Facebook groups. There's a lot of good ones out there. Has one. There's a guy.

Matt: Here we go. Yes, I'm already open to it. So bring it to me.

Joe: And that will take one right now. Last week I did a video, I called it. I was teaching the double dip lease option strategy and the double dip lease option strategies where you get a property under lease option. You put a tenant buyer in it and you collect five, ten grand from the tenant buyer. But it's a good cash flowing deal. There's a little bit of equity in it. You can sell that contract to another investor and be done and out of the deal and get another ten-thousand-dollar assignment fee from the investor. So if you're cash flowing, let's say conservatively two hundred dollars a month and that's twenty four hundred dollars a year. Two hundred dollars is twenty-four hundred dollars a year in cash flow. You should be able to wholesale that contract for five to ten grand pretty easily. You know, you're giving that end buyer, that end investor who's taking over that property a twenty four percent cash on cash return in their first year with a twenty-four hundred dollars cash flow, ten thousand dollar assignment fee. So you could make potentially five grand from the ten buyer, ten grand from your end buyer and be done and out of the deal. And you just you're getting paid to structure these creative deals. And how do you find those buyers? Well, they're already buying properties in those areas, but also network in these Facebook groups. Jonathan Rexford is a guy I was thinking of. He's got a good subject to Facebook group and Pace has a big one as well.

Matt: Sam, if you have a creative deal that you're looking to wholesale, call me. I will take the cash flows.

Joe: Can you explain subject to purchase? I'll just take that real quick. A subject to purchases when you buy a property subject to the existing mortgage. So you're basically taking over the seller's mortgage, you're getting a contract for the property, you're taking over the deed, the seller, the mortgage stays in the seller's name and usually, I don't know, depending on how you do it. When I used to do a ton of them, I would have a balloon typically in five years. Now, Matt likes to take them longer and Pace takes them longer too. So just kind of depends on the deal. You want to add anything to that?

Matt: I mean, I like them subject to is always has been kind of a bridge transaction for me until I could get more permanent financing in place. And if the terms and of the deal are really favorable, I mean, I'm going to wait for more favorable terms to refine out of there. But my concern is it's always about putting if I were to put a bunch of money and say to rehab or maintenance of the property, I just want to get stung or burned somewhere down the road with that, it never happens. And I know it never happens. I only know one person and I happen to be a student of mine that got called on the due on sale clause. But I don't know, I just it's just a comfort level. I still do them all the time. So it's not like I'm afraid of them, but I'm always thinking, how do I transition to a more permanent situation?

Joe: And that's important, too, because you need to be prepared when, if and when it did get called, do would you be able to do you have the private money in place or do you have a relationship with a local bank that you can get a new mortgage for the house? Cool. Good question here from Big Investor. I love vacant land. You know what, Matt? Just yesterday and you got a contract signed for a twelve-acre lot in Texas near Jasper County for about twelve thousand three hundred dollars. So it's about a thousand dollars an acre. Nice. And they're worth about four or five thousand dollars an acre. So we bought it for twenty cents on the dollar. Not seen it yet. We never even talked to the seller. We just sent some direct mail, they called us that I'm interested. Left a voicemail, we sent them an offer at 20 cents on the dollar based on what other similar properties are selling for, and three months later, that they signed the contract and send it back. And we have never even talked to them. So we're doing our due diligence now. But I love vacant land. It's a great way to make a quick dollar. Now, big investor has a question here about buying vacant land on creative terms, and I've never done that before. The reason why I haven't is because it's just so easy to buy them with cash. You certainly could, right. I guess if it's a if it's one hundred plus acres and you need one hundred grand to buy it. Yeah. Maybe then you could do creative terms. I've never done it before. Have you Matt ever bought land with creative financing?

Matt: Now I have one lot I took. What's the guy's name that we know that teaches the land?

Joe: Jack Bosch.

Matt:  Jeb Bosch. Yes, I got his course. I sent out one piece of marketing. I got one contract back. Everything works just fine. And so I stopped doing it. That's what entrepreneurs do, right? We find something that works and we go try to do something else.

Joe: The definition of an entrepreneur.

Matt: Yes, exactly. So I have this one piece of land. But my position is, is that I would like to have financing on everything. Yeah. I would like to buy everything on financing. If I have the cash to buy one, I could buy maybe three or four with the financing. So I'm very much a control buy and hold person. I'm very, very in tune right now. We don't have to get too deep in this unless you want to, but I am really, really in tune with the amount of stimulus that's being printed. I'm really in tune with the inflation and what that how that's going to impact us. I'm very in tune with really stripping all the equity out of my properties right now. I want long term fixed debt on asset producing excuse me, income producing assets. And so I'm really focused on that. I'm actually very concerned about the country in the way that we're going. And I'm not even talking a political aspect. I'm talking about monetary policy. And I think, you know, we have to start thinking about that. But one of the cool things about inflation is inflation eats up your debt in the same way it eats up that your bank account. So if you're holding a lot of debt and you're on the right side of the economy and thatinflation is eating that up and reducing the power of your debt as well. So, yeah.

Joe: And do you feel like we're more likely to have inflation or deflation?

Matt: I mean, based on what has been printed already this year and what is being proposed? We're going to learn a whole lot more tonight. I know the president is speaking, but there's a ten-billion-dollar stimulus year excuse me, 10 trillion. Ten trillion. I mean, we financed the whole Gulf War over several years with one trillion. Right, just to get a grasp. And if they tax and I know the new tax implications are a new tax plan is going to be introduced. We could tax every corporation one hundred percent and it won't be enough to get out of the hole that we're digging. So something's got to happen. I can't imagine it being deflation.

Joe: Yeah. You know, I read The Wall Street Journal almost every day, every couple of days, and I'd encourage you guys just to go do your own research on it and do the search for the word inflation in The Wall Street Journal or something like that and get some get some opinions on it. I won't say this, too. And I've thought about this like maybe I should when I'm I don't know, we've done thirty something land deals and how many more deals have I missed? Because maybe I could have offered the seller ten grand for cash or fifteen grand with payments over five years. Right. And I'm thinking about seriously, why don't I do that? Right. And here's a great thing about land for everyone one call it, when I'm buying after I've already bought it. And by the way, we advertise and start marketing our lots before we actually close on them. But like for every one call I get from a buyer interested in buying my lot for land, I get five calls from people looking to buy them on terms of the owner financing and you can make great cash flow selling your vacant lots on terms. So that's something you guys are thinking about. I just did a podcast with a guy, Brent Bowers. You all should check that out. Go to real estate investing mastery, real estate investing mastery. It's my podcast. And on YouTube, just do a search for Joe McCall’s YouTube channel. And I have an interview with a guy named Brent Bowers.

Joe: And Brent. Oh, I don't know. He just told me he's got one hundred notes paying him an average of three or four hundred dollars a month. Maybe I'm way low. I don't even remember. Sorry, but it's on there. And he's got students left and right that are that are quitting their jobs within six to twelve months just from the cash flow of these vacant lots that they're selling on. Terms of the problem, though, with vacant land, you got to be aware of this. You don't get write offs like depreciation. You can't depreciate land and you're going to have a higher default rate with land. OK, and those are only two disadvantages that I can think of. There's a lot of advantages you don't to worry about. Tenants, toilets, trash, good stuff. All right. Anyway, there's a huge demand for land right now. Alex is saying peso's videos on innovation agreements. Of course he does. He sells videos on everything. By the way, Matt, I mentioned my podcast, What's Yours?

Matt: The Epic Real Estate Investing show, The Longest Running. Podcast on iTunes.

Joe: Pretty soon you're going to retire, though, aren't you?

Matt: That could be and then you could take that over. Sure.

Joe: All right. I thought the USA was in a seller's market. Yes, it is. But you know what? Every market man, would you agree there's going to be five to 10 percent of all sellers that are motivated to sell.

Matt: So that's a good question, Malcolm. And we absolutely are. You're absolutely correct. If you're referring to the retail market, if we're talking to the wholesale market, then it's pretty much always even Steve, and it's always a really a buyer's market, to tell you the truth, because you're dealing with people that aren't concerned with what's going on, the retail market. They need to sell, they need to sell fast, and they don't even care if it's a discount. They've got bigger fish to fry. We got to be really careful. And when you're looking at the type of what the market conditions are doing, because there's a retail market, that's ninety five percent of what's going on, that's what you're going to read in the paper. It's what you're going to hear on the news. And it's what you're going to hear when you're talking to cocktail parties or with your barber or whatever it may be. That's all that the general public knows is what's going on in the retail market. We don't play in that area. We play on off-market. And, you know, unfortunately, that giant list of motivating events, it kicks people in the teeth every single day. And just like Joe had said, you know, I might not be a motivated seller today, but I might be next month because life is going to continue to happen and who knows what's going to what the future holds. So I think the seller's market is a great thing to take advantage of. I think it's the best time ever to do wholesale deals because the demand is so high. So you can really focus on that for your exit strategy.

Joe: Bottom line, if you're worried that it's a seller's market and you can't make any money and you're sitting on the sidelines, you're making a huge mistake, huge mistake. There's never a bad time to be in the market, never a bad time to buy and sell houses. Right. If you just look at the big, big term picture you have, the population of the United States is going to double in the next 50 years. That's what I've heard. I don't know if it's true or not. The population of the United States is going to double in the next 50 years. Let's say it's in the next hundred years. What where are those people going to live? There will always be demand for housing. People will always need a house over their heads. And did you know what else? One third of all homeowners in the United States own their house free and clear. They do not have a mortgage on their house. So there's a lot of properties out there with a lot of people still die in a seller's market. People still have tenants that they have to evict. They still lose their jobs. They get job transfers, divorce, divorce. So they're still out there. All right. Got a good thing here from Dominic. Look at this. I'm a couple of deals in. Fired myself from a 9:00 to 5:00 this morning. Ready to get going full speed ahead. Awesome.

Matt: Congratulations.

Joe: That's awesome, Dominic. But let me ask you something, Matt. Related to that, when's a good time to quit your job? What do you tell people like you? I've done a couple of deals now. Should I quit my job or not or when? What do you think?

Matt: When you look at the line where I'm actually losing money by being here, I think that's a good spot. And I think the other trend, and I did like the five things, this video like three years ago, five things you need to do before you quit your job. But one of them is to make sure to understand that when you do quit your job and you go out to be your own boss, which has a really nice ring to it, a nice feel to it. Understand in the beginning you are also your own employee. Right. And what people will kind of they want to get work so quickly in transition, transition so quickly to be working on their business and forget that somebody still needs to be working in their business, particularly in the beginning. And so that would be the big thing is ready that be ready to make that commitment that you just the way that your 9:00 to 5:00 like yesterday, Dominic, yesterday you reported to work and you had your list of responsibilities and you had to be there for a certain amount of time and you had to perform those responsibilities yesterday or your boss would have fired you or you would have had that job. Understand that you have a new list of responsibilities you have to report in every day and you have to do them consistently for yourself. Also today, that's it. Now that you're your own boss.

Joe: Yeah, for me, I my when I was working my nine to five, my goal was originally to have at least six months of savings and reserves before I quit my job. And I found that I just couldn't do that because I was doing so many deals I couldn't do any more because my ninety five was holding me back. So I changed it. My wife was cool with it. I just said, listen, all right, how about this. I can do deals three months consistently. I can do enough deals in three, four, three months in a row that I know I have. I can make enough money to replace my income. And then we both felt comfortable with that and I did. So I was just flipping lease options at the time was what I was doing and I was making seventy five hundred a month on my engineering job about eight grand a month. And I was consistently three months in a row making about twelve grand a month and I knew I could be doubling, tripling that if I just had more time. And that's when I said I quit my job. But it's best if you can have money in the bank to give you some cushion, but sometimes for some people that may not be possible, number one. But number two, that may be holding you back from going all in and saying, all right, well, I'm going to do this come hell or high water, I'm going to do it or die. So sometimes you need that kind of. Screw it, I'm doing it to finally get going when your back's against the wall.

Matt: I would also say one more thing on that really quickly is that while you have your job and if you have a decent credit score, don't leave until you can maximize all of the bank financing that you're able to get. All great point, because once you leave that job, you can say goodbye to that opportunity for a little while.

Joe: Yeah, yeah, yeah. Great point. If you're just joining us, this is the Creative Financing Lab. I'm Joe McCall, Matt Theriault from the real estate podcast Epic TV. Go check out his YouTube channel and you can find me on YouTube as well. Just search for Joe McCall. I have the real estate investing mastery podcast. Pace Morbey is normally here with us. He is filming right now a show with Jamil for I think it's an A&E. Any show that they're doing and which is going to be cool, it's going to be awesome. It's going to be really funny, I imagine, seeing those two guys together. So I'm looking forward to that. But they're filming this morning. So Pace texted us that he apologized. He couldn't make it. Big investor found a land deal from a Zillow for sale by owner. I love Zillow for sale by owner. Why aren't more people targeting them for these deals? I don't know but this vacant lot is getting a twenty-one thousand five hundred dollars assignment fee for a vacant lot. I love it. Way to go, big investor. All right. Question here from oh, I lost my spot. If you see a question there, Matt?

Matt: I don't know how to highlight these things on the show.

Joe: Yeah, sure. Actually do. OK, did you do it? I can't. I got another one here. How about this one? This is from Sam. I have a subject to lead that owes fifty K on a property worth forty-four hundred and six dollars PITI. So his total principal interest taxes insurance payment is four hundred and six dollars. It's a section eight. It's giving eight hundred and fifty dollars a month in rent. It's a rough area. The seller wants sixty-two thousand dollars. How do I calculate if this is a good deal and how can I do it with no money interest? This is a class D property, I would guess. Not sure where it is, Samuel, but I'll tell you what I would do. I probably pass on it. I don't like houses in those areas personally for me. What would you say Matt?

Matt: Yeah, that's my first thought is that I purchased probably over one hundred properties that would fit this criteria. And they just became such a tough management issue for me. And even if this cash I was trying to do this, this cash flow thing. So if it's if we got eight fifty, I'd like ten times by 60 percent, minus five to ten, minus four or six. So you're going a cash flow if the management goes well, one hundred bucks a month, if the management goes well and they want sixty two on a property is worth forty. So you're paying twenty two thousand dollars over. And if you take that twenty say give them the twenty two thousand bucks and so it's one hundred twelve hundred dollars divided by twenty two and you're looking at five percent ROI, there's no equity, it's going to be a management headache and the ROI is really, really low. I would pass.

Joe: Well you know what though I would, I would let me correct this. I wouldn't pass it. I would still make an offer. I would just make a cash offer. I would find out who are some investors that are buying properties. And there's a lot of investors that are comfortable with that property that are looking for section eight. And I would make an offer for thirty. Now, he won sixty-two and he owes fifty. Yeah, yeah. It doesn't matter. I don't care what they owe. I'd still make a cash out. I know I could sell that deal for 40 grand so I would make him an offer for thirty. And guess what, he's probably going to say no. Fine, but I'm going to follow up every thirty days. How's it going to be sold that house yet? You know, follow up every thirty days. And I'd tell you if he just got to give him some time to cook, that seller will get more and more motivated. The longer they're sitting on this property, there's a reason why they want to sell it. There's a reason why they want to sell it and they're probably sick of managing properties in that area. So make him a cash offer and just make it again. Thirty days later, make another offer in thirty days later, because you can sell that pretty quickly, probably for five to ten grand assignment fee.

Matt: And I would say any property that's upside down at this point in time, there's a story behind it and it's probably not a good story that you want to take over.

Joe: Yeah, so here's the thing, though, Matt. I mean, if you ever made an offer on a deal less than what the seller owed, the seller accepted it and then brought money to closing?

Matt: Of course. Of course.

Joe: So it definitely can be done. We've had a seller one time. We told them, Mr. Seller, this isn't going to work. How much would you pay us to buy your house? It's like, what? How would you how much would you pay us to buy your house and remember how that deal ended up? But there's been deals where the sellers are brought five, ten grand to closing for us to buy it. So I always make an offer, but make an offer for the numbers that work for you. Don't make an offer based on what they owe. It doesn't matter what they owe or what they want. Make an offer and follow up. So we need to hustle because we've got to be off in fifteen minutes. We've got a lot of questions here. Hey, Tim, glad you're here. You're new to the business. OK, good question. We'll just cover this real quick because we've kind of already talked about it. What are some of. The best ways to handle the due on sale clause with subject is, well, number one, you have to fully disclose to the seller that there may there is a due on sale clause, the bank may call it due. And you just have to know that.

Joe: The second thing is you need to make sure you don't do anything that makes the bank that raises red flags for the bank. So make sure you get the right insurance. Make sure you're using a title company to close these deals. Pace has a company called Constant Close Dotcom that can handle all of that for you and make sure you never miss a payment. OK, if the insurance is cool and you never miss a payment, chances of them calling it calling it do is very slim to none. So just don't be stupid. And I've talked I talked about this in our first podcast. I think I've talked to people at the banks like Citi Mortgage Bank. And I asked them, do you know what the subject to is? And then go, yeah, we know what they are. We know you guys are doing them. It's really not that big of a deal. But if you force our hand and if you force us to call that, do we have to you just have to make sure your insurance is not don't. This is just one guy that I talked to. And so don't quote me on this or because that may be not their real policy. And if they were to find out that that guy said that he might have gotten fired, I don't know. But like so just be aware of that. Just make sure you're doing it the right way. Tom Croll in the House. Bam. I just was thinking we were just talking about him.

Matt: You hang out with Tom. Yeah. You tell people about that. Yeah.

Joe: Tom is a good guy and he's got his enemies. No, he doesn't really. He's got one or two enemies.

Matt: He's a great guy. And I know if he's listening, I was that was for his benefit, not mine.

Joe: He's probably not even still watching this anyway. What do you guys think of Chris Krohn? Never met him. Heard good things about him. Have you met Chris?

Matt: Yeah, I used to work with him. And that's really. Yeah, I did not know that I did. We were in a network marketing company together and it was a long time ago. Really smart guy, great speaker, great or great salesman. Yeah. Stand up, dude.

Joe: All right. What are some creative ways to dispo properties? It's called the flap your lips method. It's getting on the phone and calling people. That's it.

Matt: Is that really what he's asking?

Joe: Well, some creative ways to just sell your properties. Well, let me when it comes to selling, wholesaling your property, selling to an investor, I like to get on the phone and call every single landlord, every single realtor that does any deals in that area and just call them and ask them. I call other wholesalers. I call property managers, landlords, realtors, investors. I just call if you're selling your house, like on a wraparound or on owner financing. Facebook marketplace signs, signs work the best for me. You can add anything to that Matt?

Matt: I mean, if you if you maintained a daily presence on Craigslist and, you know, you on Facebook marketplace, you're reaching a whole lot of people just by doing that. And then go ahead and describe the terms of how you want to sell the house in that in that deal. I don't think you need much more than that. And obviously, if you've got a buyers list, but there's so much demand out for houses right now, you don't need a whole lot of exposure to sellanything.

Joe: Now, just make a few phone calls to realtors and they'll help you out. All right. Pace is buying several areas of vacant land right now creatively that a student brought to him to develop an RV park in Texas. That's great. Yeah, there's a lot of opportunity. What service and company do you use for subject and raps? Pace has a great company. I've never used them before, but I've heard good things about it called Constant Close.

Joe: That's his transaction coordination company. Right. Right.

Matt: But for servicing the mortgages or the loans, they'll probably point you in the right direction. A company I've used before is a company called Escrow ServeDotcom, but it's spelled funny. It's SERV dotcom. EscrowServ.com

Joe: I'll put it in who he is will be using them for ten, eleven, twelve years almost. Yeah. Note servicingcenter dot com.

Joe: Note servicing center dot com, note servicing center dotcom. All right. We're going through these questions here.

Matt:  Mitch has a company as well. His daughter does it. Who does? Mitch Stevens.

Joe: Oh really? Yeah. Is Daughter Stevens has got a good podcast as well, and he's out of Texas.

Matt: Other great creative brain. He's great to be great to have on the guest. Oh, he would be.

Joe: Yeah, we should do that. Matt, I actually looked up your YouTube channel for updated real estate news. Great stuff.

Matt: Oh, thanks, Chris. Kristen, appreciate you.

Joe: Matt does have a really, really good YouTube channel. Guys, check it out. It's better than mine because he just really puts a lot of thought. I put thought into my videos, too. Matt does a lot of research and it's just he's really, really good. I'd recommend it.

Matt: Best way to learn something is to teach it. So I do a lot. I do a lot of videos and stuff that I want to learn myself. I've gotten so deep into this whole inflation conversation.

Joe: I heard the market is starting to shift. What do you guys. I've not heard that. Have you? Now then. Good morning. What's going on? St. Louis in the building. In the house, the. All right, go Cardinals, they beat the Phillies last night. How are the Dodgers doing?

Matt: When was the last time they beat the Dodgers, I wonder? I don't think doctors are so far in first place that it's not all about the cardinals.

Joe: Who cares about the Dodgers? You know, I would love to go to a Dodgers game stadium. I've never been there before. That would be that would be pretty cool. I'd love to do that someday. All right.

Matt: It'll be on me. I'll make it happen.

Joe: Nice. What about OK, what about the big corporate buyers? Are you seeing any slowdown in corporate buying that? I don't know the answer to this.

Matt: I don't have a I don't have a corporate buying contact. I just haven't needed one. And I haven't come across one.

Joe: You know, I did sell one of my rental properties the other day. We fixed it up and sold it. We've got we had five offers in three days, like 30 or 40 showings. And we sold it for about 20 grand or about almost 10 percent over asking price. And we got we got an offer from one of the big hedge funds. And I couldn't tell which one it was because it's under some weird L.L.C.. But you know what? I don't know if you've ever gotten an offer from one of these big hedge funds, Matt, but they were. So I don't know what the right word is demanding on their offer. Like, I have to use their title company. They use the regular realtor contracts, but they have like a six-page addendum that goes with it, all kinds of weasel clauses. They were asking about five percent more than asking price, but I just didn't like all their huge list of demands. And it just made me I just didn't like it at all.

Matt: You got emotional.

Joe: Yeah, well, I don't want to help these guys out, buy more properties. Or have you heard anything about the 1031 exchange?

Matt: Yeah. So Mr. President Biden is making his I don't know if it's a State of the Union, but it's a, he's announcing his whole tax plan this evening. So I'm sure that ten thirty one exchange will be included in that, whether he's going to or not.

Joe: Yeah. And, you know, here's the thing to you got to understand with politics, let's say he completely abolishes the ten thirty-one exchange. I don't think he will. I don't know enough yet, though. But if he does, it's not going to happen overnight. Usually when these kinds of initiatives happen, they it actually goes into effect one or two or three years later or it's a phased approach into it. So you'll have time to figure out and plan on what to do. But I think we can all agree taxes are going to go up. Yep. And so what are you going to do about it? I don't know. I would think the more write offs you can get, the better. But yeah, I don't know. I used to have it as a government to pay a million dollars a year in taxes. That used to be my goal. I thought, oh, I'd be so cool if I could pay a million dollars. But it's not guys. It's not about what you make. It's about what you keep.

Matt: Amazon doesn't even pay that. That's a big goal, Joe. But I that's what I always like thatabout you. You're a big thinker.

Joe: Well, all this is a really long comment, and I can't type it in or show it because it's way too long. But Jesse is new to the wholesaling game. What do you think is going to work for yourself? Sorry, Jesse, I don't understand the question. Here's a question from Samuel. How do you lease option with other people's money? Without a lender, you don't need any money or borrow any money when you do a lease option and you can't borrow money. That's one of the disadvantages to buying a house on the lease option. You can't borrow any private money on that deal because you can't you can't secure a note against the property you don't own.

Matt: Just have to be a promissory note. Personal.

Joe: OK, just a couple more questions here. This is a good one. Let's end with this one from David. What would you say is the best way to approach your day week task wise for a new investor looking to start from the ground up on a wholesaler buying hold through business? OK, how do you what's the best way to manage your day now that you got to talk about your scorecard? I love I love, love, love what you do with the scorecard. Will you talk about that?

Matt: I happen to have one right here, keep them handy all day long. So I created a scorecard for, I create a game out of real estate when I got started. And because there's things that you have to do on a daily basis, some of the things you're going to like doing, some of the things you're not going to like doing, but it doesn't matter. They still have to be done. And just knowing how human nature works, that if things are fun, we're more inclined to do it. So we created a game out of it and just get creative, put all the the money making activities on a scorecard and then assign a point value based on how important they are to do during the day. And then these little check boxes, every time you perform one, you go ahead and you check a box, you to start every day, you pull out a new sheet, you start from the top and just workyour way down. And that's how it works.

Joe: You know, examples of what those daily chores?

Matt: So, you know, we make it really simple to get started. Start by just reviewing your goals. Remind yourself of why you're getting up and going to work on the first place. So it could be one thing we could do. Personal development. Right. So you could listen to a book or an audio book list or podcast, watch a webinar or whatever it may be, go to a seminar or something like that. I always like to put practicing my scripts in that area and trying to just warming up your mouth, warming up your mindset before you even start talking to people saying do that for fifteen, thirty minutes. Then we start with our attracting activities. We divide our whole business up into the track, convert and exit. So attract is what our marketing is, we started broadcasts so you could broadcast email, you can broadcast direct mail, you could broadcast rainless voicemail, you could broadcast text messages, but just send a broadcast out there into the world each and every day of some sort to start bringing in incoming inquiries and then placing ads. So that could be classified ads, could be bandit signs of be social media as it would be paid for click ads. So you want to get your advertising and put up a new ad, at least one every single day, probably a lot more.

Matt: And then you just start talking to people and you're going to initiate that contact by dialing the phone and knocking on doors. You're going to return phone calls and you're going to set appointments and you want to set those appointments so you can put yourself in a position to create an urge to present an offer. And that is the goal every single day. So, David, to make a really, really simple wake up every single morning and decide who is going to get an offer from me today and don't quit working until you've presented at least one offer. And after a year, that's three hundred and sixty-five offers you have written. That's typically three hundred and sixty more offers than most people do a year. I love it, but make it that simple. One offer a day. And how many deals are going to close off a three and sixty-five offers. I bet you close at least a dozen one a month by just that simple practice.

Joe: Yeah, yeah. I love that because you get points based on how important the activity is, you get more points, the more important the activity is. So you get more points by talking to a seller, making an offer than you would with posting a Craigslist ad or something like that. So people are asking, Matt, how can they get that scorecard?

Matt: I'm looking to see if the look at that, it's a really old domain name and it looks like somebody else has it now.

Joe: So you lost the domain?

Matt: I did. Oh, my goodness.

Joe: Well, how can people just find out about you? Matt.

Matt: We have to do this. You got to see. I'm just checking the domain. Another domain name really quickly,

Joe: Matt, by the way, everybody has one hundred million domains.

Matt: And I got so many. Each one is represents a great idea I had in the shower one day.

Joe: But the cool thing about he can it's easy to find because every domain has word epic in it, which is nice because like if he wants to have a if he wants to sell something about crochet, he could do epic crochet dotcom and he will get the domain. And if you see that e on his hat epic breakthrough. Yeah.

Matt: Go there. And I think that's going to lead you to the scorecard. Sorry about that. I wasn't even prepared to talk about that or else I would have been more prepared.

Joe: Well we could. Oh it's a creative financing. Twenty one creative financing terms.

Matt: OK, well wait a minute. I know where I can go, where we have it, Joe. OK, minemeisterDotcom, we've got the Google link there. Right. You won't have to opt in for anything

Joe: Our old mind map?

Matt: Our old creative financing lab thing. I can just give them the Google link to that. Right.

Joe: OK, ok. OK, hold on guys. You're going to it's worth the wait. OK, we will put the link in the YouTube and Facebook comments here. Overview. It'll be worth the wait.

Matt: We got two. We got Matt's and Joe's.

Joe: All right. Can you put them in the link. I will. In the comments here.

Matt: And we don't even need your email address or anything.

Joe: Matt and I did a class called Creative Financing Lab a year ago. It was really successful. A lot of students are doing deals from it. So we may we may sell that again sometime soon here.

Matt: OK, so there's mine. And then that was real quick. Oh, Joe's got something similar.

Joe: Now, if you guys are watching this later and or you're watching this on Facebook, because we've had some problems streaming this to Facebook today and you don't see the link, go to our YouTube channels. You will find this podcast right now on YouTube. Look in the comments down below the comments either on my channel or Pace's channel or match channel. And you'll see the link to these scorecards. It's just a Google doc sheet so you can make a copy of it and download it.

Matt: So there's just OK, so now you got both,

Joe: I guess, really important guys. I mean, I'm telling you, when I'm talking to a student who's struggling, I say, show me your scorecard. And within like five seconds I can figure out what the problem. We appreciate you very much. Thanks for being here. Thank you, Matt. Yep. It's been fun. Likewise. Looking forward to the next one. Pace will be with us on the next one. But we're glad you guys are here. We appreciate you all. Go check out Matt's channel on YouTube, Epic Real Estate. Go check out mine on YouTube. The just Joe McCall. I need to come up with something better, but we both have podcast. You can look us up anywhere. You listen to podcasts and we appreciate you all. If you like this video, please give us a thumbs up. Subscribe to our channels, share it with somebody. We appreciate you guys very, very much. And I'm going to I'm going to post one link in here, too, if you're interested in working with me. I have a new program I just started called PartnerWithJoe.net, PartnerWithJoe.net. I have a software that helps you calculate offers that I give away for free their partner with Joe that helps you create owner financing, lease options and cash offers. So we'll see you guys later. Bye bye, everybody.