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Hidden Cash Flow Fortunes Ian Flannigan
I am real excited about this podcast episode with Ian Flannigan from “Hidden Cash Flow Fortunes“.   He just came out with an incredible course that is taking t he industry by storm…  (We get him here for the inside scoop of what's really going on behind the scenes!)

You can get more information about his course, watch the webinar here.

Immediately after this podcast, I called one of my former students who is crushing it in one of my markets, and I told him that we need to meet and implement this stuff.

I have been throwing away too much money.  Enough of that…

Why buy ugly houses when you can make more money with pretty houses?  These “Hidden Cash Flow Fortune” deals are 5-10 times more profitable than wholesale deals, and they are 10 times easier than rehabbing.   You don't need any cash buyers, private money, high equity, investor buyers, contractors, unexpected surprises, experience, etc, etc…  Get the picture?!

This is the PERFECT strategy for new investors.  There is very little to no competition for these deals because most investors are hunting for “high equity” wholesale deals, and they pass these deals over because they aren't trained to see the opportunity.

To get more information on Ian's new course, go here:


Listen and enjoy:

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Mentioned in this episode:


Download episode transcript in PDF format here…

Joe: Hey, everybody! Welcome! This is the Real Estate Investing Mastery Podcast. I have a special guest today. I’m so excited about this. This is last-minute. Literally, just the other day, I asked him, “Hey, can you be on the show?” I’m gonna try to publish this today because this is a really important week. His name is Ian Flannigan.

But first, I want to go to realestateinvestingmastery.com. We have the Fast Cash Survival Kit that you can get in there. It’s a really valuable free bonus. You’re gonna get a lot of good stuff. You’ve heard us talk about it before.

The show notes for this call… I promise you there’s going to be a lot of stuff that you’re going to want to get after listening to this call that we’re doing with him. So right now, go over to the show notes and see what we have in there. We’ve got some good goodies for you.

I was looking online on our stats. Get this, Ian. You’ll be my co-host today, okay? Ian: Alrighty.
Joe: We have listeners from 165 different countries—

Ian: Wow! That’s incredible! Joe: …listening to this podcast. Ian: 165 countries?
Joe: 165 countries. And if I were to give you the list, I’d probably put you to sleep, but it’s so
crazy to see some of these countries where there are people listening to us. With technology today anywhere in the world, you can listen to podcasts. The technology is amazing. We’ve got these people in these little islands that I’ve never even heard of near Puerto Rico. They are listening to us. Turkmenistan in Western Asia or I maybe that’s what it is.

Ian: Absolutely.

Joe: It’s crazy. This is an exciting time. I’m glad to be doing what we’re doing. We have a special guest today. We’re doing this on video. If you’re listening to the audio, you can go to the website, realestateinvestingmastery.com, and see the video. But you’ll notice, in Ian’s back office, it’s a real office. I can tell he’s go deals going on ‘cause he’s got folders there, right? He’s got a map on the wall.

Ian: That’s my partner over there.

Joe: And his business partner…what’s his name? Hello!

BEN: Ben.

Ian: His name is Bendell Kye. That’s my partner in crime over there.

Joe: Nice. So this is what a real deal-making business looks like. My background is an office in my basement. I do have an office that I rent that I have my assistants working at them. But I mostly work from home.

Ian: Cool.

Joe: I’m just a little different, I guess. But I wish sometimes I worked more in my regular office. I’d sometimes joke to Ian that my third office is at Starbucks. Do you ever go there [overlapping] much yourself?

Ian: I don’t just because whenever I’m out I always get back here or I’m either home. I have a home office at my house. That’s where I started. That’s where I did all my deals, so my closet just next to it is just filled with books and content. Anybody that’s in this business has that library of content to learn all the different strategies and the techniques. What you’re doing is just amazing because it’s really hard to get into conversations with guys that are actually doing the business. This is a great platform. Thanks again for having me on.

Joe: You’re right in the middle of a huge launch. You’ve come out with this product. I believe you call it “Hidden Cash Flow Fortunes.”

Ian: Yup.

Joe: I’m really excited about this. I don’t promote that much stuff. A lot of things go around, and I just ignore it. But this is really cool. Zack, one of your mentors, called me and said, “Hey, you gotta check this guy out, Ian. This is the real deal. He’s actually doing the stuff.” You’re not a trained guru or professional speaker.

Ian: No.

Joe: You might have taken some sales training. I don’t know, but I doubt it. This is something you have been doing for the last couple of years. It really caught Zack’s attention. He said, “We’ve got to release this out to the public.” This is something that you have been doing in the past and you’re doing now. You’re also teaching people how to do this stuff. I’m excited about this because this is similar to the niche that I have been in for a long time—finding properties that everybody else just throws away and taking those leads that other investors will throw away and turning them into gold. Turning your trash into gold, you might wanna call it.

Ian: Yes. That’s exactly what the strategy is.

Joe: You’re finding deals that other people pass up. You’re being creative. You’re not a one- size-fits-all trick pony. You’re finding these deals that don’t have much equity in them, if with any at all. You’re being creative with them. Then you’re selling them. I’ve never heard of this before, and this really what I’m excited to learn about: You’re selling them to hedge funds, the notes in hedge funds.

Ian: Yeah. We saw the property to tenant buyers (just folks that buy the property and move in and live). You’re very familiar with tenant buyers. But once we have that note, we have the ability to either sell a partial of that note, which we can monetize our profits and keep cash low. Or if there’s enough spread in the deal, then we can sell the note to the hedge fund at a discount because these are basically newly originated. There’s not a whole lot of seasoning on them, but we’re able to offload our notes that way as well.

Joe: This is something that you just stumbled on. We’ll get into your story in a minute here.
But I’m excited about this, guys. You really should listen up. This isn’t gonna be like your typical webinar. We’re really gonna dive in deep in asking him difficult questions. He’s agreed to come on this podcast and share his knowledge with you guys.

He’s got a really, really powerful product right now that I strongly suggest you take advantage of and invest in. It will pay back many times over if you take this stuff that he’s gonna be teaching and actually start implementing it. This week, there are a lot of people e-mailing about this stuff. I said to Zack, “I’ve got to get this guy on the podcast
‘cause I’m excited about this.”

But you took me a little bit back into your history. I heard from Zack before you were a guy who bought a lot of courses. You went to a lot of training in real estate. You wanted to do real estate, but you struggled a little bit getting started. Can you tell a little bit about your history and story?

Ian: Absolutely. I was chasing the dream of being a professional musician in my early 20s. I don’t look like I’m 40, but I’m 40 now. I’ve been around long enough to fail miserably and keep picking myself up and keep going. But I came out of the music dream, realizing I wasn’t gonna be able to make a living or the life that I want to live.

So I went into hairdressing, which provided a great income for me. I loved it [unintelligible], and I built a massive clientele, but I hate… I would say this, sounds cliché but I read that book “Rich Dad Poor Dad” and the reality of life of trading dollars for hours was more apparent after reading that book. I just knew at some point that I did not want to continue that.

I knew that most of millionaires either had real estate in their portfolios or real estate is what got them there. I knew absolutely nothing about real estate. You remember back in the heydays that are late 2000s all the way up to 2005. If you can walk into a bank, found a mirror, and say you made $80,000 a year, you got a bank loan. I was one of those folks.

I bought my first house in 2006. That’s when I really got the bug for real estate. That’s when I started updating my property, making it nicer. I just really caught the bug for living, breathing, and owning real estate. I started reading books on how to buy and sell. Everything was just so over my head in the beginning. Just like a foreign language, you have to learn the vocabulary in the language of real estate before you can feel comfortable talking to people about real estate.

There were a few years that I didn’t necessarily try to get into the business. I was just trying to learn more about it. Around 2008, that’s when I said, “Okay. I wanna try to do this to make money.” I’m sure, like a lot of folks out there, I bought some Rich Dad education. When I swiped that credit card of $30,000, I thought my wife was gonna divorce me. She about flipped out.

That was the beginning of my education. I was learning about pre and foreclosures and wholesaling and lease options and all these different buying old strategies. But just like a lot of people, in the beginning, it’s like Shiny New Object Syndrome. A lot of people say this…if only knew then what I know now, I could have built a massive portfolio of cash flow of all the money that I spent on trying to find deals, trying to get educated, and all the other things. Learning tax links, short sales, and all the other stuff that comes along while trying to learn the business.

At the end of the day, if you’re not building cash flow, then you’re never gonna get to that point where you can let go of your job and have your residual income make those payments for you. You’re just making your monthly expenses. I don’t need millions of dollars. I just need residual income that covers my monthly expenses. Once I realized that was the path that I wanted to take… [overlapping]

Joe: What year was that?

Ian: That was…coming out of ’08, ’09, and ’10. That’s when I really started getting into wholesaling and I started seeing some profits coming in from wholesaling. But I wasn’t able to really scale that business ‘cause I didn’t have the marketing and I didn’t have the knowledge on how to really outsource it to really low wages, virtual assistants, paying people on commissions regardless.

I wasn’t able to scale a wholesaling business. After I met my partner, somewhere around
2011, we really got together. We went into business together. We were wholesaling and

rehabbing. Then we got a taste of what the real of rehabbing is—getting eaten alive by contractors, the City Permitting Department and all that, getting beat down all, and then getting beat down all the way down to the closing table by the people buying your house making those repairs, and all the other things that come along with it.

But we knew that wouldn’t scale a rehabbing business into the level that we were looking to and really start turning volume. At the same time, we weren’t carrying any cash low back on the properties. Some properties we’re making money on, some properties we didn’t make money on, and then a few we lost money on. So that was really the shift for us ‘cause we had some rental properties.

I just remember thinking their problems are my problems ‘cause I was dealing with these folks. I just knew that I didn’t want to have the landlord mentality in the expense of being emotionally wrapped up in ‘cause when you’re holding real properties. This is an emotional deal. You’re getting calls all the time to make those repairs. When you’re in between tenants, you’re trying to get them cleaned up. You’re out the expense of carpet paint, whatever appliances are busted.

I heard about carrying bank notes, but I didn’t really know where to go to learn about it. I had a little bit of mentoring on it, but it wasn’t like a business model. I just remember doing some research on it and I told my partner, “Let’s try to do this strategy.” We started making seller carry back offers to sale-buy owners on our list. We found this lady who had a house listed for $50,000.

Joe: Instead of making an offer to buy their house, you’re making cash where you have to
get the house at 50 ¢ on a dollar. Ian: Yes.
Joe: …which is sometimes like pulling out teeth. You’re offering her the price that she wants.

Ian: Probably close to it, yes. Joe: With owner finance?
Ian: Yes, exactly what it is. For example, there was this house. It was sitting on the market.
She was initially asking $50,000 for it. It needed a lot of repairs. She was asking somewhere around $35,000 or $32,000. This was years ago. I don’t remember the exact amount. I just remember we bought the house for $25,000. We offered her an $8,000 down payment and the balance in monthly payments, which my first offer always has no interest on it. So that was a no interest, seller carry back loan. She said yes. I couldn’t believe it.

In that contract period, we split bandit signs out all around the neighborhood: “House for Sale, Owner Financing.” We had a guy call us up, “You own several rental properties in that neighborhood.” He came over to the house. He said, “How much are you asking?” I said, “$35,000.” He was like, “Yeah, that’s a good price. How much do you want down?” I was like, “How much can you put down?” “So if I can put $10,000 down…” It was like, “Oh my gosh, I just got my down payment covered!”

I was able to leverage his down payment to make my down payment. We did that deal. The light bulb went off in my head. We just went head-first into that strategy. After we finished that last big rehab, paid off for lenders, we were like, “This is what we’re doing.”

Joe: This was in the Dallas/Fort Worth (DFW) areas. Is that right? Ian: Yup. It absolutely is.
Joe: What kind of neighborhood was this home in? is it a rental neighborhood? Is it a nice
median income neighborhood?

Ian: This one was a little lower. This was definitely on the lower end. I wouldn’t say like a war zone, but it was in the price point where the houses are renting for about $750 a month. There are areas that are a little bit more depressed, but most of the folks in this area are actually rental tenants. It’s a rental neighborhood, lower income ‘cause the median home price in my area across the metro on average is somewhere around
$160,000 right now. This house was worth about $45,000 to $55,000 all fixed up. Joe: Typically, a landlord would buy that property.
Ian: Yes. That’s exactly what it was. We were just looking for someone to come and do the
repairs themselves ‘cause we didn’t want to make any more repairs. We’re like, “This is just madness, trying to just dump money into a house.” Pouring money into a house doesn’t force the appreciation. That just means you got more money into the deal.

Joe: Yeah.

Ian: We did another one, and literally it just snowballed from there. Joe: What year was it when you started doing this?
Ian: This was right around 2012…somewhere around that timeline. We had had a few real
properties, and we ended up converting those into notes over the last few years. We’re pushing at the end of ’14 now. In the last few years, we’ve probably done about 75 of these old buggers.

Joe: Wow.

Ian: We’re really scale and snowball it because we started building our buyer system. Now, we’re in the seller market. The inventory levels all across the city are really low. The wholesaler’s margins are being pushed up. Then the rehabbers are bidding those properties up, so their margins are even tighter. Then inventory levels have come down, so sellers aren’t willing to take our offers like they were a couple of years ago. But we’re still able to move their inventory. Now, we have a huge buyers list, and we need an inventory to free them.

Joe: Who are your buyers for this?

Ian: Our target demographic is the lower income worker that earns anywhere from about
$35,000 to $40,000. The demographic would be more the Hispanic family. These folks have cash to put down. They work very hard. They can make their monthly payment, and they’re just looking for a place that they can call home and own the property as well. That’s our target demographic here in the Dallas area.

Joe: The reason I’m excited about this is because I would typically do lease options on homes at the median home price and above. But in the last couple of years, I’ve been doing a lot of wholesaling in the rental neighborhoods, just like what you’re talking about. The home prices are around $40,000 to $50,000 at the upper end. Landlords are typically going in and buying this renting amount for $700 to $800 a month. They have good ROI.

In a lot of homes in this neighborhood, you have to get them really low. You have to get it really low if you wanna buy them with cash. For the last two years, I’ve thrown away literally every lead that didn’t have enough equity or they wouldn’t agree to my price. I follow up with them, but, always in the back of my mind I’ve been thinking, “How can I create some kind of creative owner financing deal and make money with these properties that I’ve thrown away?” Probably, 50 to 70% of my leads would fall into this category.

Ian: Yeah. Absolutely.

Joe: Somebody who’s doing a lot of marketing and getting frustrated with these leads that they’re throwing away because they don’t have enough equity or they can’t agree on a price with the seller. This is a strategy and another tool that you wouldn’t do without. You can make quite a bit of money with these things. Let me ask you, Ian. Let’s start from the marketing. You’re marketing for these deals. You’re looking for these sellers. What’s your favorite kind of marketing strategy to get in front of these home owners who own these properties?

Ian: Right now, just properties that are online either through the MLS for sale by owner. Any of those buy owner sites, anywhere that has houses for rent is perfect because those houses are vacant. I love vacant houses regardless if they are distressed or not because if somebody is trying to rent a property that’s vacant, they need to get that payment covered, or they need to get that property turned into an asset for them. I like to say this…targeting free leads online are my favorite ways to start, then moving into direct mail campaigns. Our targets are absentees, out-of-state owners. I target expired listings. I target code violations, bankruptcies, divorces, evictions, probates, and notice of defaults. That’s more of a highly motivated type of list.

Joe: But you’re still targeting the homes only in this specific neighborhood, right?

Ian: Yes. I have my zip code matrix laid out, and I know exactly which zip codes that I wanna be doing business in. I don’t do direct mail campaigns and zip codes with median prices like $600,000 and up because we’re looking to do volume. That’s where I found the most success. It’s in those lower class and working class neighborhoods. It came just a lot easier to do the deals there. Not to say that I wouldn’t do a higher $400,000 to
$600,000 house if there was an equity and I had a motivated seller that will be willing to
sell on my terms. But that’s just where we found the least resistance in.

Joe: When you’re sending marketing out to these guys, what’s your pitch? Are you just telling them, “Hey, I saw your rental property on Craigslist. Are you interested in selling it?

Ian: Yeah. Let’s see. I’ll actually read you the copy of one of my campaigns that I just sent. I like to try to keep the copy really simple and not try to tell them a thousand different ways of how I can buy their house. It’s just real simple. One of the post cards I’ve used is like “We buy houses fast,” and I’ll just use a phone number and not put a website on there. I’ve had a better response from just a phone number rather than a website URL. But I was actually spending about an hour this morning working on my Google AdWords campaigns.

We’re targeting the two counties that I live in through Google AdWords. We have about a thousand different copies of ads that go up. But here’s one of my yellow letters. It’s very simple, and this is what I send out to my absentees and the targeted lists. It’s like, “Hello, Gary! My name is Ian. I wanna buy your house located at 123 Main St. if you have considered selling your home for any reason, we should right away to determine if my cash offer is right for you. Thank you. Ian Flannigan.” I use a P.S. here. “I’ll make it simple, fast, and easy for you. I can pay cash and buy assets.” Then I just leave my local phone number.

Here’s the cool part about that. If I automated that work, that local phone number is actually a call forwarding/routing phone number that I shoot that out to a call center in Florida that has 24-hour call service. When they pick the phone up, they say, “Thank you for calling Golden Falls Properties. Do you have a property you’d like to sell?” If they say yes, great!

My script pops up, takes all their information, takes all the property information, then I get into a little bit more detail about the property—your asking price, if their behind on payments and how many payments, what is the payment, who much do they owe. Whenever that list gets submitted, I get it over an e-mail, then I can take a look at it. Do my due diligence if I feel like there’s a big play on it.

I can literally call them back with an offer right there. I can write the offer up, send the offer through a DocuSign, where they can just electronically sign it, whatever the case may be. But it took a very long time just to learn how to settle that up. That’s a lot of golden nuggets for you guys right there. That’s how I run my marketing systems. [overlapping]

Joe: It’s really simple.

Ian: Yeah, it is.

Joe: Are you going to actually see the house? Meet with the sellers?

Ian: Yes. I don’t just go run out and look at every single house. There has to be some motivation there. When I do my pre-screening, I’ll ask them certain types of questions like, “If I can buy your hose between $45,000 and $55,000, would that be something you’d be willing to entertain?” If they say yes, then I make an appointment. I go see the house and I’ll leave a written offer with them. If I don’t feel they’re motivated, I can still send them over an offer like on an LOI or even in an e-mail, just getting them some numbers. I just let them respond from there. It just depends. I also have to ask people, if I make an appointment with them, would you be willing to sign the paperwork if we can agree on price and terms?

Joe: Yeah, that’s a hugely important question.

Ian: It really is. You really need to pre-screen folks to where they understand that you’re serious. You’d understand that they’re motivated because if they’re not motivated, then they’re not gonna agree to any of your price and terms.

Joe: Right.

Ian: It’s just what it is.

Joe: Talk about how you make your offers. Are you first making your cash offer to buy the house, see what they say, then come back with some kind of seller financing?

Ian: I always do three offers. Joe: At the same time?
Ian: Yes. It will be like A, B, and C. Like, “Mr. Seller, here are three different ways I can buy
your property. Offer #1…”

It’s always very close to their asking price. So if they’re asking $75,000 and I’ve verified that the property is worth $75,000 to $80,000, my price would be like, “Mr. Seller, my first offer is $67,000 with a $10,000 down payment and the balance in monthly.”

Joe: So your…I’m sorry.

Ian: No, that’s fine.

Joe: Your first offer is not a cash offer at $20,000. Ian: No, it’s a terms offer.
Joe: All three of your offers are terms offers?

Ian: I’m getting there. [laughs] My cash offer is the third one.

Joe: Ah, I’m sorry.

Ian: All cash is the third. The first one is very, very close to asking price. If the property needs no repairs whatsoever, I can even get right at their asking price. So if they’re asking
$75,000, my offer is, “Mr. Seller, I can buy your house for $75,000, $10,000 down payment, balance in monthly payments.” That has no interest on it. I don’t put interest into the deal until they counter and negotiate interest in the deal.

Joe: Right.

Ian: For example, they’re asking $75,000, the second offer would be $65,000, $15,000 down,
balance in monthly payments.

Joe: That’s a lot of [overlapping] any down payment.

Ian: Here’s the kicker. I’m leveraging my borrowers to make my down payment. I’m not coming to the closing table with $15,000. I’m just making them to offer. Then we put the property in the contract. I’m closing in 45 days. I’m not closing in two weeks. I’m gonna set it up, close it in 45 days, and then as soon as I get the contract, I start marketing to my buyers.

In those first three weekends, most of the time, I have the property under contract with someone that’s agreeing to pay me either $15,000 or more. So I leverage the down payments from other folks to make my down payments. The only way that you can do that is when you have a buyers list in place. We have a really big buyers list. We’ve pre- screened all these folks, and you figure out who has cash and who doesn’t.

You basically take those folks, bring them out to the property all at the same time. You’re gonna hold an open house Saturday between between 1 PM and 3 PM. I send that out and usually call fire. There’s an account that we do. Then I’ll talk a little bit about my marketing, only get to that point.

Offer #1: $70,000, $10,000 in down payment, balance in monthly. Offer #2: $65,000, $15000 in down payment, balance in monthly.
The third offer is always the whole sale cash offer. They can see that I’m not low-balling
them on my first offer because it’s very close to their asking price.

Every seller is different. If they have debt on the property, meaning they’re paying the mortgage, it’s a decision that they would have to make if they wanna go through the transaction with me because there is a mortgage on the property. I can cover their payments, I can make sure their taxes are current. That lender, the [unintelligible] sale close that everyone is scared of…

I was on the phone yesterday with a lender. He told me, straight from the horse’s mouth, “I don’t care if the property sells. All I care about is the taxes are current, and I get my note payment every month.” That’s what he told me.

Joe: Especially in these neighborhoods, the banks [overlapping] still want these properties back.

Ian: No, they don’t. The expense to take them back, hold them, carry them… If do they have to take them through the legal process to get them back, it’s a lot of cash for these lenders to take these properties back. If their behind down payments, we can negotiate to make those payments up. But it all comes down to the motivation of the seller. I can’t drive that home.

Joe: You’re right. Because if they’re not motivated, there’s really nothing to do.

Ian: They’re not going to sell on my terms.

Joe: But a lot of times, you can still work with less motivated sellers because you’re giving
them the price that they want.

Ian: Yes.

Joe: On a scale of one to ten, if you’re just doing wholesaling, they need to be on a nine or ten scale. If you’re just doing wholesaling to get 50¢ on $1 and quickly flip it, you have to be on a scale of nine to ten, ten being the most motivated. But I would imagine, in these kind of deals, they may need to be on a six to ten scale.

Ian: Yes.

Joe: …so it opens up more sellers that you can actually work with. [inaudible]

Ian: Absolutely! It just gives you an additional arsenal in your tool belt to be able to take properties down that don’t need repairs that sellers are not gonna accept 50¢ on $1 offer. The property has to qualify for that 60¢ to 50¢ on $1 offer. The property has to be beat up, distressed, vacant for a long time. That’s the only way that people are willing to let those properties go—the huge discounts. If the property is really beat up, they just want it out of their hair.

Joe: There’s another huge advantage to this. It’s because these properties don’t need a ton of work. In fact, a lot of times they’re already being advertised for rent, so they’re already cleaned up and ready for a tenant. But the landlord is just sick and just wants to get rid of it. He doesn’t wanna deal with any more tenants. You’re not coming in and saying, “Hey, I’ll buy this property. You don’t need to worry about maintenance and repairs anymore. I’ll get over the mortgage and take care of it. You don’t have to worry.”

It’s not—

Ian: Absolutely.

Joe: You’re not trying to convince them to hold it a little bit longer while they’re being a
landlord. Does that make sense?

Ian: Absolutely does. Yeah. I know exactly what you’re talking about. That just comes down to pre-screening that lead to determine their level of motivation. A lot of people that are holding real estate have been burned and been beat up. They’re tired making the payments. They’re tired of making the repairs on it. Yes, those guys can finance you and then you can sell it on a wrap as well. They call that a double wrap.

It all just comes down to the motivated party. That is the key. I tell this to a lot of folks. There are three things you need to focus on in your business: (1) marketing for motivated sellers; (2) marketing for motivated buyers; and (3) making offers. If you can get those three things down where you’re consistently doing it week after week, that’s when you get traction. If you’re not speaking with folks weekly, regardless if they are a

buyer or seller, other investor, another professional, title company, real estate agent, no
matter who, you’ll never get the business off the grounds.

Back to what is said earlier about the language of real estate. A lot of folks, when they’re new, they’re not talking to people and professionals because they don’t have the vocabulary to have an intelligent conversation about it. Just like I’ve learned over the years, it takes the fear out of speaking to people about real estate.

I don’t make emotional decisions on property. Everything that we do is based off numbers, which are basically unemotional decisions. So we don’t let any emotion make any decision. We run our numbers through our spreadsheets, our software, and it’s a deal or no deal. Right before you and I got on the call, I was actually negotiating with my agent on an offer that I made on MLS. I was going back and forth with her to negotiate my terms.

Joe: Back to the terms…how are you setting up the monthly payment amount? Are you
spreading out over 10 or 15 years?

Ian: I was back in my way into the numbers if I know that I’m gonna sell the property for
$60,000. Here, I’m gonna pull up my little financial calculator real quick so I can give you some accurate numbers. I know that my target sale price is $60,000, right? I know that I’m gonna put a 10% interest rate on it. I’m gonna try to get a shorter term out of my buyer, so I’m gonna try to get a term of 25 years, so if sell that for $60,000, for 25 years at 10% interest, that’s a principal interest payment of $545.22. All I’m gonna do is focus on the spread, so $545.22…$60,000, 25 year ARM, 10% interest.

Joe: That’s principal and interest?

Ian: That’s just PAN, yeah. Because the taxes and insurance go on top of that from my buyer.
I back in my way into the numbers. I know that I can pay $45,000. I’m gonna try to get it on a 30-year ARM [?]. My first offer is always no interest, so that would be somewhere around $125/month. They may or may not take that. I can also say, “Alright. I’ll give you a balloon payment in 10 years.”

If they accept my $125/month, then all the balance due in 10 years makes my offer a little bit more attractive to them. I just look at the spread because I got $125 going out and I have $545…so that’s a $395/month net cash low. I always back my way into the numbers. I look at what I can sell for and what are the terms I can get on the sale. That basically gets me to put a spread on it. I go backwards. I have a small spread, and then I get to my first offer priced that way.

Joe: Are you looking at this house? Many times, these buyers are more concerned about the monthly net they have to crack.

Ian: Yes.

Joe: The price, right? You’re looking at this house—

Ian: Absolutely.

Joe: Homes in this neighborhood might rent for $700/month, but now you’re making this deal attractive to somebody where [unintelligible] bought it with owner financing. They payments would be actually lower than what the rent would be. Is that about right?

Ian: Yeah. Or equal to. Absolutely because let’s say the principal interest is $545. I’m gonna have them add their insurance. Let’s say that’s $45/month. Let’s say the taxes are about
$65/month. Then I’m gonna throw in the servicing cost because we set them up with a licensed loan servicer, and they escrow for taxes and insurance. Basically, if I have an underlying debt, I set them up to where my servicer pays my underlying debt. Then they kick me the difference every month. So they’re paying somewhere around $690 in total.

Joe: Okay.

Ian: If they need to get that lowered, I can say, “Okay. I’ll extend out your term to 30 years.
So if you do $60,000 for 30 years, that’s gonna drop that principal interest payment.

Joe: And you’re charging your buyers living in the house 10%.

Ian: A lot of times, it’s higher because usury laws right now are 11.99%. Dodd-Frank says I can charge up to 11.99% if considered a high-cost mortgage. Because its 1.5% over the current prime rate. I can legally charge 6.5% over prime. For example, if the prime rate is 4%, I can add 6.5% to it on our first [unintelligible], then I can add 8.5% on a second but nothing over 12%.

Joe: Okay. Max 12. I just wanna clear. You’re offering to give the seller $15,000 down. Then you’re also collecting $15,000 from the buyer. Are you only counting your profit on the monthly spread? Or are you making profit on the down payment upfront as well?

Ian: Yeah. On the first example, if my seller says yes to my $15,000 down payment, I’m gonna try to get a larger payment from my buyers. But my payment that I make offers on is contingent on what my buyers have in cash. So if I know that I have several different people on my list that has $20,000 to $30,000 cash, then I would split that in half.

If I know that somebody has $30,000 and wants a certain area, I’ll target properties in the area that they want, and I’ll make those offers to anyone that has a house either for sell/buy owner, MLS, for rent—no matter what it is. I’ll go directly to them and say, “Look, I’ll offer you $15,000 down” because I know that I can bring in $30,000 from my

buyer. Yes, there are closing costs depending on how well you can negotiate that. If there are agents involved, then those agents have to be paid out of those down payments as well. Everything just depends on negotiation. You’re just trying to maximize the amount of money that you get from closing.

If I know that my buyers bring in $30,000 to the table, and I’ve agreed to pay $15,000, then I know that I have a $15,000 gross number. If I can help that buyer out, if they can afford all the closing costs, then I’ll absorb some of those closing costs. Then maybe I’ll walk away from the title company with $12,000.

But here’s the most beautiful part about everything. It’s the interest. It’s the amortization on the second transaction that makes it so sexy because—I love saying this—a $60,000 house will never appreciate 12% a year for 30 years. But a $60,000 note will pay me 12% for a very long time.

Joe: That’s a good tweetable.

Ian: Yeah, tweetable. I like that! [laughs]

Joe: A $60,000 house will never appreciate 12%? Ian: Year after year for 30 years.
Joe: But—

Ian: So if I amortize $60,000 over 30 years at 10% interest, that’s a principal interest
payment of $526.54. There are 360 months that these folks are gonna be paying me
$526.54…that is $189,554. That is true wealth building right there. Joe: You’re becoming the bank.
Ian: That’s exactly what it is! Think about that. What do banks do? They loan money on
interest. They loan money on real estate. They loan money on all different types of multi-family…anything that…if it’s commercial, whatever the case may be. They loan it on real estate. They loan it on cars, and unsecured lines are credit. But they’re not gonna give you a $100,000 unsecured line of credit because there’s no collateral on that credit card.

That’s what so beautiful about banks. They loan it based off the collateral value they call the “loan-to-value.” That’s why they order appraisals. That’s why they get inspections. They wanna make sure the property is functioning properly and there’s nothing that’s gonna come back to bite the homeowner. That would cause them to slip into default. There’s a reason why banks loan against real estate because there’s real asset and

collateral. You can’t go down to a bank and borrow $100,000 to go gamble on stock market, right?

Joe: Yeah, right.

Ian: [laughs] But you can leverage them on real estate.

Joe: Another question I have then is about your example where you’re selling it for $60,000 to an end buyer who’s gonna live in it. Can you also have the purchase price of $60,000 to the seller? Are you marking up the price a little bit?

Ian: Yeah. I like to put it where I like to try the largest spread that we can. But when a seller finances you on the front end, or you bring in private capital or whatever the case may be…but if you can get a long, or even like a 20-year ARM, from the first transaction, I don’t need to have a massive spread like I’ve marked one property up $8,000 because the interest alone will diminish your debt at a rate faster than what you owe your seller.

Basically, just the interest alone will eliminate my debt. Once my debt’s paid off, then I absorb 100% of that cash flow, that principal interest payment. So you have to look at the amortization over time to see where your debt is going down because 10% interest and a 30-year ARM, in the first 8 to 10 years, they’re paying all the interest. If I balled it at 20 years on, my first transaction in the first 8 years, half of that or almost three quarters of my debt is gone. It really accelerates that debt down low if you can get someone to accept a small down payment and balance to monthly payments.

With the lease option strategy you’re very familiar with, you’re looking to get as big a down payment as possible and also maximize that spread on the backend. When go into refinance, you get that big check on the backend. We don’t do contract for deed anymore, so I can’t charge interest on property that I’m not conveying the deed to. If you have a seller that’s willing to finance you but not necessarily give you ownership, then you have to take a lease option strategy because they’re not conveying the deed to you and then you’re not conveying the deed to your buyer.

Whenever you’re conveying the deed to your buyer, that’s when you can charge the big interest rate. This is the private sector. That’s what’s great about this country. This is true capitalism. It’s a deal between two people. He agrees to pay my price and my interest rate. I’m gonna do everything I can for him to make sure that he’s successful with that if he needs to get refinanced down the road.

I call it “breach financing” like hard money…like, “Look, we’re gonna amortize you over
30 years, but I’m also gonna put you on the credit repair company and get you in touch
with a mortgage broker. At some point down the road, once your credit gets to a certain

level, with FHA right now we’ll do 580 credit score if you can show good credit history. At some point down the road, you can refinance down to a lower rate.”

They take it because no one else is gonna give them that. That’s basically a subprime
type of product, which is non-existent in the market right now.

Joe: Just to be clear, if that house is worth $60,000 in that neighborhood, you’re not marking
it up to $100,000.

Ian: No. I’ll mark it up just a little bit above. If it doesn’t need repairs whatsoever, then I’ll mark it up a little bit above market for 5% or 10%. If it needs a ton of repairs, I’m just gonna try to lock it up and flip it to my investor guy. He’s gonna come in with his cash, do the renovation, put the renter in it. Then he pays me my monthly payment. If I have debt on it, then I pay my payment out to the seller or lender, whomever I got the money from.

Joe: Okay. Good. You mentioned you don’t take contract for deed. I’m a little confused then.
How are you tying these properties up? Are you tying them up on a lease option or a contract for deed? Will the seller still keep the deed?

Ian: No. It’s actually a purchase, so my primary strategy is write them just a purchase and sale agreement. There is a seller financing addendum behind it that states the terms of what I’m willing to pay them. If they say yes, then I’m in business. If they say no, I just go to the next person.

Joe: Right.

Ian: If they have the property free and clear, then they carry a backend note in first position.
If they have debt on the property, my lane goes into second. When I sell, the lane that I have with my borrower goes into third. That’s a double wrap. But if I take it to Subject 2, then I’m actually not doing a wrap on that transaction ‘cause I’m taking the ownership, and then I just sell in on a wrap. If I’m buying at Subject 2, I’m just selling on a wrap, which my lane is in second position, which I still have the underlying debt that’s in first.

If the property is free and clear, then the seller takes it in first. Then my loan to my buyer is in second. It takes a long time for people to get their head around that alone. But everything we do is honest and ethical. There’s nothing fishy. There’s nothing funny. All of our buyers and sellers know exactly. We tell them everything is very transparent.

Joe: So you are crystal clear on this. If the property has a mortgage, you’re taking over that mortgage. You’re buying now subject to the existing mortgage.

Ian: Yes.

Joe: This existing mortgage is staying in place. You’re making the payments. Is the deed
transferred to you now at this point? Ian: Yes. I take the deed.
Joe: Okay. You take the deed. Ian: I take the deed.
Joe: Now, when you turn around advertise it for owner-occupant, how are you advertising it
then? Are you advertising it with owner financing? Or lease option?

Ian: House for sale, owner financing. When they agree to my terms, I transfer the deed to them. I carry back a note and deed of trust, which collateralizes the house to my paper documents. I set it up with my servicing company. I give my servicing company all the information of the first mortgage and all of my information so when the borrower pays the servicing company, the servicing company will then pay the underlying lane and then they pay me the difference of my net cash flow.

If you’re taking a subject, too, that lender’s already escrowing for taxes and insurance. But I’m still making my borrower pay for it because it has to be in the payments somewhere. Somewhere in the transactions, it has to be collected, so we require all of our borrowers to escrow their payments. We don’t let people make an annual payment on their taxes; they are required to make an escrow payment every single month.

Joe: With those kinds of details, you just let the servicing company worry about and figure it out.

Ian: Absolutely, once we get to the very end of the deal and we’re closing. We have a house closing today. Yesterday, my partner and I spent a few hours with the title agent there, making sure all the HUD was correct because they had some expenses that weren’t proper. We go through and make sure all the numbers make sense we’re happy with what our net number is. The borrower has their number that they have to get their cashier’s check to come to closing. We’re pushing off all those expenses off on the borrower, so they’re paying.

We don’t require them to buy them to buy a title policy because if there’s a first lane on the house or we buy it cash, there’s already a title policy on the property. But they do have to come to the table with their first year insurance premium—three months of taxes, three months of insurance. They pay the loan origination fee. My loan originator processes the borrowers through Dodd-Frank same process that they would do if they went to the bank to get qualified. But they have to sign 36 pages of documents that walks them through all the details of the loan.

Once the deal is closed, we contact our servicing company. We send all the information to them—the HUD, the note, the deed of trust. They set up the payment coupon booklet to the borrower. They send out the welcome letters to let them know, “Hey, you mail your payment to us. This is what the amount is gonna be.” They have the escrow set up, and they handle all communication with the borrower from there.

Joe: Right. You mentioned Dodd-Frank. You’re complying with Dodd-Frank. You’re not trying
to get around it.

Ian: Nope. Yeah. [overlapping]

Joe: So many people talk about it and it frustrates them to no end. Ian: Yeah, it is.
Joe: We’re gonna comply with it. [laughs] Alright. We’re gonna do what they say to do.
That’s not rocket science. Explain how that works. Is it the loan officer? Is it the escrow
company that does it?

Ian: It’s the loan originator…what I just explained to you. We call them, on our marketing, “RMLO,” which stands for residential mortgage loan originator. What this professional is they have a specific license registered with the state that they’re gonna qualify and underwrite seller finance transactions. It’s a separate license from a mortgage broker license. [inaudible – video freezes]

They just wanna make sure that we qualify them. We wanna make sure that we’re not predatory lenders and we just are selling people on the mortgages called the ability to repay.

Joe: Right.

Ian: We follow an FHA standard of underwriting. They pull their credit. They pull all their assets. They do the ten [unintelligible] credit app. They have to provide their bank statements, their tax returns, their employment verification. If they are in a rental property, they have to provide that information as well from their landlord or whatever the case may be.

They’re underwriting them, just like any person that will go into a bank and get underwritten. But the one thing that we’re—I’m not saying that we’re overlooking— helping them out with is if they have beat-up credit, but they can provide all this information for us and the ability to repay the loan, as a seller financer, we are a small lender. We are making the decisions, whether or not we’re going to actually sell the property and carry back a note like the one that we’re selling today.

The husband has a 720 credit score. We were ecstatic because we know down the road, he’s gonna be able to refy at some point. We don’t mind carrying the paper for 15 to 20 years. But if they refy, then we could cash out. We get to take those funds and go buy another house.

Joe: Okay.

Ian: That’s what a lot of people don’t really understand. You can go to consumerfinance.gov and read about all this stuff. That’s what my professional has explained to me. He puts on seminars all over the country because there’s so much questions about Dodd-Frank. People just don’t understand what it is. They fear it. It’s just like anything in life. If you don’t understand something, you fear it. You say no.

Even attorneys… People hire attorneys to go read the language. If the attorneys don’t understand creative financing or just real estate themselves, then they’ll just come back to their clients and say, “Yeah. I don’t think you should do this because…” They’re not gonna tell their clients, “I don’t know about this. Therefore…” An attorney is never gonna say to somebody, “I don’t know.” But if they have that question in their mind, they’re just gonna tell their client no.

Joe: Right. They fear the unknown. Ian: Exactly.
Joe: There’s nothing much that you can do. Dodd-Frank isn’t something to be afraid of.

Ian: It’s not.

Joe: It’s really not.

Ian: It’s just a qualification process. Just qualify your borrowers! Just make sure they can pay! Somebody has a $15,000/month income, and their payment’s $800, you probably don’t wanna sell it to them. They make $5,000 to $10,000/month and their payment is
$800 and they can prove that they’ve made $5,000 for the last five years, I’m not worried about them defaulting. Plus, if they put a substantial down payment, that’s just called skin in the game, right?

Joe: Yeah.

Ian: You don’t wanna finance people with nothing down. That doesn’t make sense. Then you’re putting yourself at risk.

Joe: Right. Somebody in Missouri, Ohio, California…how do these people in other states find their loaner engineers? Or do you have access to loaner engineers that can do these deals all over the country?

Ian: My loan originator is licensed in 39 states, so anybody that comes on board with me or is part of our program or I know personally will get referred to our loan originator. I’m not gonna list the states, but in a state that he’s not in… I had a two-hour conversation with him two days ago. He said, “Ian, if you can bring me business in a state that I’m not licensed in, I’ll pay the fees. I’ll study for the test. I’ll take the test and get a license there.”

The way that you find these professionals is (1) you go to real estate investment clubs and (2) you ask those folks who are doing Subject 2 and wrap mortgages. You find them that way. You also get the referral of the title company because, as you know, a lot of title companies won’t close these creative transactions just because they don’t understand the process of these transactions. Just like anything, if they don’t know, they just say no.

That’s how you find the folks in your backyard, in your market. You do it through the real estate investment clubs. Find out who’s doing Subject 2’s and wrap mortgages. Get a referral for a loan originator from them. Also, get a referral for a title company that will close those transactions. You can also do it through Google and stuff like that. Google your state, loan originators, seller financing.

There will be professionals in every market, especially if it’s a major metropolitan that you can find. They don’t have to live in your city. We do all our documents digital. My license loan originator can originate documents all the way up into Montana, North Dakota because he’s licensed there.

Joe: Can your title company do deals all over the country, too?

Ian: No, not necessarily. They are state-specific like attorneys. They’re licenses are state- specific. But there are national title companies that have branches all across the country. If you have a relationship with them like here, we have one called Trinity Title, in all the other states that they are affiliated in, most likely you’ll be able to get a title agent in another state to do that creative transaction for you.

It’s a big hurdle for people in the beginning. It took me a while to find the investor-
friendly title companies. But that’s a thing of the past for us now.

Joe: You just got to be persistent with it. If you can show them you have a licensed mortgage originator who is doing the pre-qualifications for you, that’s gonna ease a lot of their concerns and fears. A lot of times, it’s just the relationships. I totally agree, you got to

network with the local real estate clubs and find out who else is using them. Just start asking around. You gotta keep in mind you got to keep a lot of notes sometimes if that’s okay. You gotta be persistent with it, and you’ll find them. In some states, it may be ana attorney that they need. In some other states, it’s got to be—

Ian: Like New York and others closing attorneys, you just have to diligently ask and find out.
If I would have given up the first time that I failed, or had a seller say no, or my marketing didn’t work, or whatever the case may be, I wouldn’t be sitting here. But I had this feeling inside of me that I didn’t care what it was gonna take because we all have to live somewhere. Either I’m making a payment to a bank or someone’s gonna make a payment to me regardless. I just knew that I had to figure out how to get in front of that.

I’ll tell you something that a client of mine told me years ago. He was an investment banker. I was cutting his hair. He looked to me and said, “Ian, you will never become wealthy with your two hands. You have to get in the path of money and leverage other people’s time and money. If you can’t do that, you’ll never become wealthy.” That just stuck with me for a very long time.

Joe: Hash tag tweetable. Ian: [laughs] Yeah!
Joe: Whatever.

Ian: I’d like to see that trend: “You will never become wealthy.” And see the fuss of that
starts kicking out.

Joe: Alright. A few more things I wanna ask you about. Ian: Sure.
Joe: What do you find the best ways to market for buyers for these properties?

Ian: I always say that I can pull buyers out of any market because we do pre-printed science.
I’ll actually show you one. I’ve tested this. Whenever we switched to this sign, the phone
lines blew up.

Joe: Wow. That’s it? “House for Sale…Owner Financing” with a phone number.

Ian: Pretty simple, right? Joe: Yeah.

Ian: When you go drop this out at any market, your phone’s light up. What I do with those is…once again, that’s a call forwarding line. Let’s just say a local number—so I don’t have an 800 number. A lot of people are hesitant about dialing an 800 number. They see the area code, and it’s a very easy number to remember so if someone’s driving by. Try to keep the number simple like 443-4466. That’s really easy to remember.

I take that to call forwarding line. I shoot that in to a call capture software that’s designed for brokers. It’s called 877infoline. I can set up mailboxes for each one of those numbers. If I’m marketing in Oklahoma, I’ll have a local Oklahoma number and I have it tagged to a certain mailbox. What we do with that is we send them to the 877. I actually come on the line, “Thanks for calling. We have properties for sale right now with owner financing.”

It’s doing one of two things. One, I’m capturing their phone number. It’s somebody that called my marketing. I wanna capture their number. Number two is I’m directing them to my sales team from there. “If you would like to know what properties we have for sale, please press ‘1’ now.” They hit number “1,” then I have it set up to forward to my sales team. It goes to their office. If there’s no one there to take the call, it forwards out to another live person.

That’s how we’re funneling our buyers, so whenever we get a property, regardless of where it is, we literally pinwheel the signs. I’ll put one in the front yard, at the end of the streets. I try to put about 25 signs out in about a quarter-mile radius from that house. You put those signs out on Friday nights so when the sun comes up, on Saturday morning my sign is right there at the major intersections in the highways. That’s when people go look for houses.

Joe: Yup.

Ian: Folks that aren’t familiar with the area are represented by an agent for sure. They’ll be driving out. Also, people living in that neighborhood will get those numbers and call because they want their friends and family to know, “Oh my gosh, there’s a house here for sale with owner financing. We need to call this. We need to find out about it.”

That’s a little marketing funnel that we do. We also post ads on Craigslist. We don’t get a lot of hits on Craigslist, but the signs perform the best. We’ll also put flyers in the neighborhood. If we get a property under contract for sale, then we’ll basically print the address, house for sale, owner financing, showing this weekend. Then we’ll put that phone number on there. We’ll put my sales team’s phone number on there. We’ll blanket the neighborhood with flyers. That’s pretty inexpensive to do as well.

Joe: Are you pre-screening them out through your voicemail that says something like, “You need to have at least $10,000 to put down on the house”?

Ian: No, my sales team does. I keep it really simple because I’m just trying to get their phone number. I’m just looking for motivated people that want to buy a house with owner financing. When they call that line, it’s very simple. “Thank you for calling Rehab Properties for Sale with Owner Financing. If you’d like to know what properties we have now, press ‘1.’” Then it shoots into my sales team.

My sales team goes through and pre-screens them, starts getting more information from them, how much can you put down. We have to know three things. When are you looking to move? How much can you afford to put down? How much can you afford per month?

If we know somebody is looking very quickly and we have something available, then we know that might be a hot lead. They can either make an appointment with them or drive them to an open house where we make all the buyers go at one time, which makes the down payment amount go up. We basically tell everybody, “The house is available. Whoever has the largest down payment will get the house.”

Once we find a buyer that wants the house that will agree to our terms, we put him under contract and send them over to our loan originator to start the pre-qualification process. Then they do that whole process—owner occupants, the property code that says we have to give them seven days—from the day they sign the disclosures, not the contract. We typically sign the disclosures on the same day they sign the contract just because we’re looking to close them fast.

So from the day sign the disclosures, we give them a seven-day window. That’s what Dogg-Frank tells us. In that seven days, our loan originator is doing the underwriting, gathering all the documentation that they need to close. They send that packet to us. They give us a profile, the credit score, their debt-to-income, everything. Then my partner and I will look at it. We’ll make a decision. “This borrower looks good. They don’t have all this funky charge offs on their credit.” Then we close them.

Joe: Yeah. Good. This team you have that takes all these calls from buyers…I would suspect they’re getting tons of calls.

Ian: Yes.

Joe: But probably more from buyers than sellers. Ian: Yes.
Joe: Who’s the team that manages all those calls?

Ian: It’s actually a broker.

Joe: [overlapping] I recommend that people also. [inaudible]

Ian: Yeah. I do that, too, because the broker and their license is in a deal. My real estate agent and her license is in a deal. My title attorney, his license is in a deal. My loan originator, his license is in a deal. My company, our tax idea is in a deal. So we use all promulgated contracts from the state of Texas. I don’t use anything funky. We use everything. We are completely transparent in these transactions. I negotiate with my broker to pay them a 2% fee to sell the houses. They pre-screen all the leads. I have their phone number because they called my marketing, and I shoot it over to them.

Another strategy that we’ll do is I’ll go into that 877 info line and I’ll pull all the people that call my marketing in the last three months. I drop that down into an Excel file, then I go to another service called callfire.com, upload that spreadsheet to the callfire, set up a test text message, which says, “House for Sale, Move-in Ready, Owner Financing.” And I leave my sales team’s phone number there because I’ve already got their number. I will blast out my buyers list. We typically get about a 30% response on that.

Joe: That’s fantastic. Yeah. I do the same thing. It’s really important to have a buyers list, for sure. I love that you’re using a realtor to do this for you. They’re getting paid well for it.

Ian: Yeah, they are.

Joe: You’re not taking those calls yourself.

Ian: No. On Saturdays and Sundays, I’m laying on my pool. I’m going out, hanging out with my dogs and my wife, and we’re barbecuing and doing all those things. I just negotiate terms on my iPhone.

Joe: Nice.

Ian: But when we first started trying to scale the business, my partner and I were putting all the signs out, placing all the ads, showing up, taking all the phone calls, handwriting all the contracts. We had to pay our dues. Once we got to the point where we started doing volume, I just handed over to my sales team, which is my real state agent and her broker.

Joe: Nice. A couple more questions [inaudible]. Ian: Yeah, no problem.
Joe: Talk about some of your exit strategies. Some of these deals you keep for yourself.
Some of them you sell to other investors, right? Ian: Absolutely.

Joe: You’re creating new notes, and you’re sometimes keeping them because the cash low is so good. But sometimes you’re also selling them when you want some cash. Can you explain that a little bit?

Ian: Once you create that note and deed of trust, I always tell people that everything is contingent on how you set up the first transaction. Our exit strategy off the back of these deals is contingent on how we set up the first transaction. Example one, if I borrow private capital, I’m gonna borrow it cash, buy the house, sell them a note. If I have to pay that investor off because I have a 12-month term on that cash, I can take my note and I can sell it on the secondary market at a discount, monetize my equity, cash out my investor. That’s exit strategy number one.

If I get a seller to carry back the note, unlike a 20-year ARM, I don’t need to cash the note out. That’s a keeper. If I have a $20,000 spread in it, and I have a long-term financing on the front end, I can sell a partial of that note. That’s how I can monetize some of my equity, the backend profits, and keep a slice of the cash low. That’s another exit strategy.

Or I can put the property up for sale. I can get a cash offer. I’ve had that happen. If I have a $10,000 spread on a deal and someone offers me all cash, I can take that. If the property is clean and I market it—I don’t need a lot of repairs, I can market it at full price—a conventional FHA buyer can come in and cash me out.

Those are three different exit strategies. It just depends on what your needs are and how you structure the first part of the deal. If you can lock up a long-term financing on the front end, then you can absorb all that cash and interest over time on the backend. If you have short-term financing or short-term capital on the front, then I’m gonna have to cash the deal out at some point in the back.

Joe: What’s your favorite strategy? What do you prefer to do?

Ian: My favorite strategy is long-term. For example, I have a lender that will loan me [unintelligible] cash at 11.5%. I don’t need to cash the deal out. That’s my favorite one because that’s the long-term cash flow. From borrowing $40,000 at 7% for 20 years, I’m gonna turn around and sell that property for $55,000 at 10% for 30 years. That’s my ultimate scenario. That’s my favorite. I can either borrow bank money at 20 years, I can get the sellers to carry it back at 20 years, I can take it Subject 2, which already has a 30- year note on it. Those are my favorite. Long-term capital on the front gives the long- term capital on the back. If I have short-term capital on the front end, then I know that I need to monetize that on the backend and cash out the deal.

Joe: Good.

Ian: Every deal is a little different.

Joe: I hope that makes sense to people. I know we’re getting advanced and technical running this, but it’s been really good. You also talk about in your webinar, Ian…you have investors that will sometimes buy these notes from your student. Is that right?

Ian: Yeah, that’s right. The folks that come on board with us. I’m gonna train them, give them the support they need to go out there and put these deals together. If they can bring me a house that has a buyer ready to go and we have a nice spread on it, I can fund that deal, pay that partner handsomely, and then I can take back the note.

I’m in the business of creating notes, not buying houses so you can’t just sit on me and lead that I buy a house sitting there with nobody in it because I don’t wanna buy the insurance policy. I don’t wanna fire up the utilities. I don’t wanna put the marketing dollars out. I don’t wanna go through all that.

I can train you how to build your own buyers list, bring those folks in. if I can get them to get a 20-year capital or a seller carry back, I would rather see that person absorb that big down payment and the cash low over time. Then if they have a note that they created or they came across, they can send it to us so we can give them a bid and buy the note as well.

Joe: Nice. So there are several different strategies students can do if they invest on your
system that you’re providing a service that not anybody else is offering right now.

Ian: Yeah. We’re providing them the training and the support to first do it themselves. So if they can get their head around the whole process from beginning to end, I can come in and help them, support them to help them iron out all the little things that it took me years to figure out. I can give them the support to do that. What I can’t do is I can’t motivate you to go do it.

But if you’re motivated and you can get out there and you wanna put these deals together, I can put you in the right directions and basically hold your hand from beginning to end. If it’s a deal that’s too big for you or whatever the case may be, or if there’s a big spread that I know we can both make some cash on, then you can bring it to me. I can fund it. We can monetize some of those profits that way.

Joe: Good. I can’t think of any other questions, Ian. But let me ask you this one more thing. Ian: Sure.
Joe: If you were to do it all over again, and you were dropped into a city that you’ve never
been to before and you have hardly any cash, and you need to start making money, what are some of the things you would do to start making money in that city?

Ian: If I had no money and somebody dropped me off in a hotel room and they gave me—if they paid for my hotel room, if I had a place to sleep, take a shower and eat, and I had a laptop and a cell phone, and no money to put down on real estate—the first thing that I would do is I’d start putting ghost ads on Craigslist, your city, house for sale, owner financing, your phone number. I would open up as many Craigslist accounts or as many different e-mail accounts as I could.

You can go to Gmail and set up 6 different Gmail accounts. Then you can go set those up on Craigslist. Every two hours, you can use a different e-mail account to post that ad. All day long, all I would do is post ads, looking for motivated buyers. I’d start taking those calls. I’d start building a small list of people that are looking for houses for sale with owner financing. I’d ask them where do they wanna live, how many bedrooms and bathrooms, what’s the most they can afford to put down, and how much can they pay a month. That would be the first thing that I’d do.

The second thing that I’d do is I would call every single “For Rent” ad, “For Sale by Owner” ad on the Internet every single day. I would go through all the different sites that have those properties, and I would call them up. I would just sit there and talk to them. “Tell me about your property.” Just build a little bit of rapport with them before you try to lead them into what you’re trying to ask them.

People that have property for sale or house for rent are gonna love to talk about it because you’re a potential tenant. I’d get to the end of the conversation. I’d be like, “Hey, you know what, that sounds great. I just got a couple more questions. Would you be interested in selling your property with a down payment and the balance in monthly payments?”

You don’t know their situation. If they say, “yes,” I would say, “Great. How much can you accept for your property? What’s the least you can accept for down payment and what’s the least you can accept for a monthly payment?” If they say, “yes,” I got a motivated seller. I already have some buyers. I would make them an offer. It could just be in an e-mail or white sheet of paper. I would structure it in those three ways that we talked about from the beginning—close to their asking price down payment, a little bit further away from their down [inaudible] their asking price would be a little bit larger down payment, and then a cash offer.

I would send it over to them. If they said, “yes,” I knew that I was on a timeline to get paid because I already had a buyers list that was already starting to build. I would fill out the agreements to give myself a 45-day time period to close. Hopefully, I can lock it up on that first weekend. I’d bring all my buyers in. I’d continually post on every single site that can post free ads, and I would just get people who have cash.

If I build a big buyers list fast and I don’t have a property, then the next thing I’m gonna do is I’m gonna go to the investors that are offering properties for sale with owner financing. In a major metropolitan area, there’s gonna be a lot of investors that have properties with owner financing, ready to go.

I’d call those guys and say, “Would you be interested in splitting the down payment if I could bring you a buyer that closes?” It’s a yes or a no. If it’s a yes, now I have inventory and I have a buyers list that didn’t cost me a dime to get. I do a one-page agreement: “Mr. Seller/Investor will pay in 50% of the net proceeds at closing as a free for bringing the buyer.”

Very simple language! I’d have him sign it. I hook him up with a buyer that I got. The buyer closes, and at closing, he’s got to pay me the funds that we agreed to.

I’ve never given that much detail on something like this but for you. I think this is a great call. That is literally how you can do this with no money. I like to say this, too. It comes down to the skill of how to put the deals together, and it’s not the house with the price range. It just comes down to the skill, the vocabulary to speak to somebody, give them the confidence that you’re gonna do what you say you do, perform on that, line the buyers up. It’s a lot easier to get buyers and it is to get houses right now.

Joe: That’s true. I think it’s true in almost any market…seems like…

Ian: Yeah. Joe: But…
Ian: Did that really give you a good indication of how you could do this with no money? Joe: Yeah. You went into more detail than I was expecting .
Ian: Cool.

Joe: I appreciate that, Ian. Ian: Yeah, you got it.
Joe: So, guys, this week, Ian is doing a huge launch. He’s got some amazing bonuses available
if you’re interested in his system. I wanna give you a link here to go check it out:
joelikeshiddencashflow.com. How do you like that? Ian: That’s awesome!
Joe: Joe likes… I could have had “Joe loves.”

Ian: [laughs]

Joe: Joelikeshiddencashflow.com. If you go there, you’re gonna get a link to a little webinar that you’re doing. You’re doing a bunch of those this weekend. Just get some more information. I think you’re going to be really impressed. Ian’s a real deal. He’s not some kind of professionally trained speaker. You can tell just by looking at his office. He’s out there actually doing deals, which I love. I think that’s awesome.

Ian: Yeah.

Joe: Good. Thank you very much, Ian. Again, go to joelikeshiddencashflow.com. Get some more information, watch a webinar that Ian’s gonna host. I think you’re gonna be blown away. This is a no-brainer. This is really something that I’m excited about and I’m gonna start implementing.

I’m in several different markets right now. This is something that we can really start
implementing with the leads that we already have. Ian: Absolutely.
Joe: It’s a no-brainer. So, cool! Thank you again, Ian! I sure appreciate it. Ian: Yeah, you got it. Anytime.
Joe: Alright. See you, everybody! Bye! Ian: Take care.

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  1. Joe–Great interview with Ian! I am definitely going to implement these strategies in to my business.
    Two questions: 1. Where is the transcripts portion? I LOVE this..
    2. Where is the outline of the program? This helps me sooo much to listen to the call again and again.

    Tom Vise

  2. Ian is giving us out a free blue print of his business.
    I am wondering how can this happend seller with no equity sell to us with seller financing and we finance again our lease buyer? Seller->my team-> lease option buyer.
    Joe, where is the point this is different from sandwich lease options and lease options of yours? Thanks, Joe.

  3. Joe, great podcast! Are you going to post the show transcript? It would really be helpful and appreciated. Thanks for all you do. William

  4. Hi Joe,

    I just finished listening to the "Hidden Cash Flow Fortunes" episode. That was a fantastic one! I really wanted to see what you had for show notes and what the JoeLikesHiddenCashFlow.com site had to say. Unfortunately, I'm having trouble viewing both. I went to the JoeLikes links and was redirected to an ad for site access. Is that normal? Any help would be greatly appreciated. I thank you for the knowledge you share and the time you give.

    Take care!

    Connor Wentling

  5. Hi Joe, say when you are matching sellers with buyers that is real estate brokering, right? So do you recommend having a Realtor's license to do this strategy? Thanks!

    1. Bob – yes, I have always recommended that you get a license. You don't have to have one to do wholesaling. But I recommend it.

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