Episode 10: Instant Offers Pt.2

In this episode, Adam and Koby continue their discussion on real estate investing, focusing on financing options for instant offers and flipping houses. They delve into their experience of getting rejected by multiple banks before finding success with a local lender. They explain the benefits and drawbacks of using hard money lenders and how to approach them. The conversation also covers key considerations for beginners, such as starting small and understanding risk tolerance. Adam and Koby emphasize the importance of high-quality renovations and how to avoid common pitfalls that can impact profits.

Transcript

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when you go start talking to these banks, like expect to get rejected like you will. So don't just go to one, get rejected and feel like I'm done. I can't do it quality is massive. Like people can spot that today because so many more people are educated on styles and trends and HTV and and Selling Sunset and all those cool shows. Right. Like they don't really show, you know, most of the time. what actually how flipping works. They just show you the finished product, right? They show you when it's done. But people care about that and they can spot pretty easily, So I was 19 or 20 years old when I bought my first property. And I did some seminar. Yeah, I went to a, I bought I literally got a credit card. I was 19, signed up for a Chase credit card. Colby, sway here with an Bradley, like always. Today we're talking about Instant offer part two. Because we left some on the table last time. Some topics we want to talk about, mainly on the financing banking side. How do you afford to buy a house or how do you finance the costs? There's a huge part there. I think we left off. So Yeah, don't we dive into that right away? Yeah. So I'll I'll kind of break down like what Stacy and I do and like what we do when we do deals. And then we can kind of like go off of that. So you know what? Whether you're, like just starting to invest or, you know, I had a client texted me this morning who just they have a, you know, they're towards retirement and they have a budget cash in the bank. And they want like more passive investments. So we'll get in that too. But wherever you're at in life, you know, there's always a spot for you. Yeah, totally. So I operate from OPM, other people's money, and so I prefer to finance as much as I can. a little bit riskier side. So I don't go tell everyone to go do that. But it's just how how we like to operate. Because I feel like I can do more with that cash, and saving as much as my own cash and, and and then expanding it and and growing it exponentially. Well and if you only have, let's say $50,000 cash, but you can borrow$400,000, right? You can obviously do a lot more with $400,000 versus$50,000 cash. Yeah, 100%. So, again, it's you really got to figure out you like your risk tolerance too. So I definitely don't advise everyone to do it. So when you first start out, you know, you got to figure out, like, what do you, what do you want to do. Do you want to wholesale. Do you want to flip you on a whole tail? Do you want to have as a rental? And, if you ask Stacy, she's not a fan of rentals at all. Well, I like to take a couple of them and keep them in our rental portfolio. You know, now, what makes that difficult in today's world is where interest rates are at. So how we get our financing is now. When we first started, we went to probably seven, maybe nine different banks. Now this was our many years ago when we wanted right at this point for probably longer than that. and where we wanted to do this and we got declined quite a bit. and then finally we got three banks who said, okay, we, we believe you. Now, we weren't just doing real estate investments, and we were doing like, business investments as well. So they were a little bit riskier. but, you know, fast forward, they all panned out and everything worked good. But we really honed in on one bank. And I'm not going to go into who because again, you guys can I would just encourage you whoever. Yeah. It's all about creating relationships. And we want with the small town bank. And we went to them. And when you first start out, you know, you got to build your reputation with them. You got to build that. They know and they trust that you can perform. Basically now they are going to look at your income, your net worth, like they're going to look at all these financials to make sure, okay, if we're going to win these guys money, are they going to be credit. Were they you know they got to look. Yeah. Because a lot of times what it is is we do they're just in house loans. So they're not going to the secondary market. They hold these in house. Now when you do that you are generally paying a premium in your rate. So if your normal house rate today is, say 6% now they might be six and a half, they might be seven. I don't know exactly where they're at today, but we're generally going to pay seven and a half to 8% on that investment property. a one and a half to 2% more. Yes. And, it's an in-house loan. So they're making their money on that rate rate. And then they charge a pretty low loan origination fee. It's like 750 bucks. and but again, that can vary too. Every bank is going to be different. But we do this a lot with so I feel like that's I feel like they give us a good deal on that. And so how we do it is we will purchase the property and they will give us 85% of the loan value or sorry, I'll be appraisal value. So that means is if the house is appraised at $100,000, Get $85,000. Yes. And let's say we buy a house and for 85,000 and it appraises at 100,000, we're able to pretty much get 100% financing on that. And generally we are doing that on our flips. These are homes that we are going to go into the property, and on average, we're probably spending $50,000 on these properties. And and then that that does come from our cash. just going to say that it doesn't come from the loan. It comes from cash from you. Yes. Now there are plenty of loan programs out of there's local lenders in our town there. And then we'll get hard money lending to there's ways because, you know, for your first start out you're like, okay, that's great. You're essentially get 100% financing. But if I got to go put a bunch of cash into it, how do I do that? Right? So that's why I would say, hey, maybe try hotelier or wholesaling. or you know, you're, you're quickly selling that and making a quick ten, 15 whatever thousand dollars profit you're making. And then you're slowly building up cash to where you can then go start doing flips. And what just really quick. Sorry to stop you wholesaling is you find the property, then you take the note, if you will, essentially over to someone that will buy it You're you're basically a signing the contract. And I'm not actually even that great with the terminology. Yeah. Because my understanding with Whole Town has always been you buy it, you close on it, and now you do whatever you want with it. So we have bought properties. And if we let's say Casey has eight projects going at the same time and we bought it, we've closed on it and we're like, gosh, is this one really fit in our model right now? Do we have time? For how long is it going to sit just like that? We might just go quickly, try to sell that and make a quick 10 or $15,000 or you know your name. That's it. Yeah. yeah. Worth wholesaling. It has always been you. You get it under contract and you have the right to then go essentially a sign that contract to someone else before you even close on it. So it's almost like, and there's a lot of laws change around that too, because isn't my understanding is wholesalers are now going to have to have their real estate license. required. You have to have a real estate license. You can't do that unless your license anymore. Yeah. And is that fully into effect? You okay. So and I and that's what I and we don't do it. So I'm not as super well versed in it. But that is a great thing for you guys to look into to just see like okay, is this something where I don't have to put my funds into it? You're just identifying the property, get it under contract, and then you're going and finding another investor to purchase it. I mean, we've bought properties from wholesalers and, because the money was there is still enough in there for them to make their fee. And, and then for us to then go make our profit from flipping it. And from my understanding, most wholesalers around here will make like their wholesale fee is like 10 or $15,000 and you might see $20,000, but I really think it's like 10 to 15. So so my as a licensed real estate agent, I always care about my reputation in that world more than anything else. So that's where I we never went into it because, you know, if we could go really sell for that much more, we would just tell the client like, hey, let's just list it and we'll make you that extra money. And then we just charge. Our commission is essentially the route we take them versus us. Just quickly turnaround. So so we don't we don't do that. We don't even do a lot a whole telling. Oh it's it's pretty rare for us. normally we're keeping it as a rental or it's going into. Yeah, we're flipping it and we're putting that cash into it. so let's just keep it. yeah. So let's just keep it flip model where you're like, okay, well, how do I get this cash to. Okay, I able to get a bank that can work, get creative with me and work with that whole appraisal versus what I'm buying it for. And I don't have to put down a large sum of money. Now, when you when you get 20 or 25%. Yeah. When you first start out, you might just have to go put that money down. So let's just say you get a bank and you got to build this reputation with them and you need this money down. So now you need the money down and you need, cash into the project. There are plenty of hard money lenders in our marketplace. I feel, you could even talk to the bank about getting a secondary or, like, unsecured. Maybe you get a lock on your own home construction loans Yeah. Yeah, Yeah. You know, there are creative ways to do it. Yeah. And if you went like if you get so that secondary loan essentially. So let's just say you get a hard money lender to give you the money for the essentially the down payment and cash going into the project, you're going to pay probably I think Nebraska, the most you can charge as a hard money lender is like 16%. And our in our market it might be 15%. So you might pay 12 to 14% and maybe you're paying 15% on that. double what kind of the standard rate is going Yeah. And yeah. And but again, it's the whole idea is you're only keeping that loan for like three months, four months max. And so it's when you really look at it's really not that huge of a cost, but it's a way for you to get that. They also charge points up front. Most of them charge a point to three points up front. So if you get $100,000 hard money loan, you're going to pay what, a thousand bucks and up to $3,000 just. And that's just money. Think of it. That's just like a closing costs. Like that's just money that they get to give you the money and then they charge that higher rate Almost like an earnest deposit. If you will not know because earnest deposits technically good. Credit to you at closing. It's this, it's this a loan fee? It's just a fee to get the loan, basically. And that goes into their pocket and, it's just. But it shows you're committed to paying them. It shows that you have money Yeah. Know which is probably where they charge points upfront. Yeah. And you are in business too because some of these guys just this is their source of income. So they might have 3 or $4 million out on hard money lending. And it's their it's their income. It's how they're living. Well there's a lot of small businesses that don't qualify on a traditional and do this today in Omaha. So this isn't just for this, but our money is a real common trade today. Yeah. Yeah. So I would definitely and there's like there's there's so many thing like there's family offices that's generally to get in the family office money. You got to be connected and you got to be doing large numbers. So I would just go to like a local hard money lender and they're national too, where you just, you get that loan to again, you're putting that cash into the project to, to do it. Stacy and I, we've been fortunate enough where we didn't have to go down that path because we were able to just, you know, you know, you start doing a 1 or 2 of, and then you start funding that money, funneling it back into your account. And then that's the cash that we keep using that to. And then we just grow grow our money that way. now there's always risk. Right. And I think we talked about this on the last time. Like there are times where you may lose and that is, we're not financial advisors of any kind, but, you know, you have to know the risk and to to doing this. So making sure that you're doing your homework and like, what is your risk tolerance. And then also like, okay, is this home really worth this. You got to check the market to like what what do we feel like the market's going to do over the next four months. what are we going to, you know, shoot even like people will watch like who's going to get in for president to, to see like what's that going to look like too. And so you got to really know like or have a gut feeling. So talk to a real estate professional if you're not licensed, if you are licensed and you're you're doing this like hopefully you have a good idea of what you know, you can expect. And from what we've found when you're flipping, people will generally pay a premium for a nice redone property. And, you know, and and making sure that you're when you are doing the flip, like you have good work being done, like good quality work. So then you're not sitting on a product that's like hodgepodge together. It needs to be trendy. It needs to be today's style, to where you can secure that. You will get that money back at the end of the day. Well, and it's, you know, who's doing the work. Are you doing the work, or are you paying someone to do the work? Right. And then it's time that comes down to it. But you're right. I mean, it's houses typically will trade or sell if you will, faster at different times of the year. So you have to know, like if you have a hard money loan or you've got a lot of money that's out there and let's just say you have an estimated, cost of $50,000 for repairs and you've got a loan of $100,000. Right. And then you also have to figure out when is this going to be done? Well, let's say it's 90 days from now. Is that a good time to list the property and down Yeah. Right. Well yeah. Like we closed on one and got some stuff done to it and we're, we're still sitting on it right now. We're going to wait till after the holiday to list it, because of July is we're just going to assume that it's going to be a little slower. So we'll just wait and drop it beneath next week to, you know, after the holiday. So things do move fast but it depends on the price but it depends on the area. And like you said like what Adam is talking about is the quality is massive. Like people can spot that today because so many more people are educated on styles and trends and HTV and and Selling Sunset and all those cool shows. Right. Like they don't really show, you know, most of the time. what actually how flipping works. They just show you the finished product, right? They show you when it's done. But people care about that and they can spot pretty easily, especially if they hire a real estate agent to come in and they do an inspection. Right? I mean, an inspector's going to find some of these shoddy jobs. Yeah, Yeah. You know? So Yeah. And things that could really throw off too if you're looking at a property on that too is like make making sure you're looking at the Hvac, the roof, the foundation. We've come into some doozies with foundation issues. windows to windows can get very costly. And those are things that can really mess with your numbers. I mean, there because the problem is, like buyers expect that the roof has at least ten years left, windows have at least ten years left, Hvac has ten years of water heater, all those things. So if you're like looking at it like, oh gosh, these are out towards the end of that's useful life though. Yeah. And those are things that you don't necessarily get your money back in my opinion, because they buyers care more about the cosmetic pretty stuff. So if you go drop$30,000 on windows, you might not necessarily be getting that money back on those windows. So definitely keep that in mind when you're writing an offer. Securing that property. You got to factor that thing. Well I'm the vents. Sometimes the neighborhood tree roots talking to go into a septic system Yeah, to the street, stuff like that. Like those are little things you don't think about. It's like, oh, this is an older neighborhood. We've had lots of sewer mains where we've had to redo and that's that's an 8 to $16,000 job, depending on the extent of the work and how much dirt work they got to do. And then you got to put the sod back. And then when it settles, you got to. Yeah, there's a lot part of the city. The Yeah. Yeah. So you know those are all things to so you know you can even do your inspection nearby on it. But when you're again when you're first starting out like again start with one. And my advice would always be go smaller. Don't necessarily go try to buy a 400,000 house. We're going to go dump 100 into it. Maybe start with like you're purchasing a$200,000 property. We can go dump 50 into it and maybe go turn around and sell that for 300 or whatever that number is to start. Yeah. Those are I think you're always safe with that and then get your feet wet there. And worst case scenario, if you're getting to the point where you're breaking even or you're just not going to make any money, like turn into a nice rental too. so the flip you're going. Yeah. Then then you're. Yeah. And then you're going to have to start talking about so like, well, the idea for us was like, okay, we built a big enough portfolio of rentals and we might sell off a chunk of them together. or we just refinance all of them, and now you're cash is in it, so you can do a, cash out refi. Pull out that cash, to then take that and go put it into another project, too. so again, I would start with a smaller one if you're, if you're going that flip route so you can get connected with a hard money lender. And if you guys ever had questions like, you guys can reach out to us, like we can try to get you connected with different hard money lenders in town. or again, when you go start talking to these banks, like expect to get rejected like you will. So don't just go to one, get rejected and feel like I'm done. I can't do it right. Go like literally map out. I would start with a smaller banks credit union. Yeah, well, you can talk to a credit union. I think credit union would be good for if you're going down the rental path personally. But like yeah talk to a credit union. I again we focus on the smaller like small town banks, the smaller banks to where that's where we spent most of our attention. And we went them and all. It was really it was the small town banks that were initially the ones that said yes to us. And, you know, then if you do enough of these, you build this nice portfolio like, hey, here's our track record, here's everything you did. It's pretty easy to then go to another bank if you want to expand to say, hey, here's everything we did, what can you do for us and start negotiating? I mean, there's there's situations where you can like push all of your loan payments, interest payments off. So most of ours to our interest only payments, into the principal. Yeah. But that's just that's on our flips too. And so again, you can negotiate with them like, hey, we want we don't want to make payments for six months. So all that interest gets added on to the loan. So you know you got to process that too. So it's it's you literally negotiate. I'm not saying they're going to say yes, but these are all conversations you can have with them to see if they're willing to do that. instead of making like, let's just say a $580 payment, you might only be making$125 payment because as interest only, there's no principal in there. Well, yeah. And it's more than that. But because keep in mind when you first get a loan, generally if you are doing principal and interest to like, you're mostly paying interest for the first, what, seven years? It's pretty heavy on the interest side. Definitely higher than that. I just was trying to keep Yeah, yeah. thousand versus, you know, 1800 or something. But Yeah. So again, you can ask them to push it off. But again, don't be okay with the rejection. You very well may get rejected for the first 2 or 3 people you go talk to. So just keep at it. And you know, eventually you should find someone that can say, you know what, I believe in you and be confident yourself to, like, go in there, like, listen, I'm going to succeed at this. You know, you probably should have some sort of, knowledge research, market research done. You can't just go in there. Said, you know what? I think I'm going to start flipping. I haven't really done any research on what I'm going to do yet. Like, yeah, do some research, write You can use ChatGPT to help you a little yeah. I mean, I would totally you could probably get a chat you and have them work. Totally. You could definitely do that. Yeah. And again there's again if you are like, you know, I don't want to do the hard money lending. I want to keep it all at the same bank. There are banks that I mean, our bank would do this too. We just haven't gone down that path because we haven't needed it. But you could talk to him again about doing, like, okay, we need a get a loan for the house to purchase the house, and we need another $35,000 to start us with the remodel. And there are loan programs out there that do that. But again, keep in mind you are doing in-house, but you still got to get them all the same paperwork. But once you're flowing, they have all your stuff, they have all your stuff. It's in-house, so they're not having to sell to secondary market. They don't have to go through tax returns and all that every single time. And then it's just it's a very nice, streamlined process to where it's not like you want to pull your hair out sometimes, because. And what he's talking about getting on the secondary market or selling it to like Fannie or Freddie, is there certain guidelines the government requires to have a loan from them? By having it in house, they have the flexibility to not follow up. Sometimes credit standards, sometimes income standards, bank statements. They they can kind of follow guidelines that their bank has set up. And sometimes there's there's a, directors or board that has come up with what they prefer to work with. And, sometimes they prefer to work with something less. Can, you know, strict as a government loan. Yeah. So there's a lot of it. Yeah. 100%. the other that I was trying to think of like resource resources, there's a lot of, like, investor networking groups too, and I haven't got super involved with them. I know a lot of the guys that are in those and they, you know, the advantage of being a part of that, you generally pay a fee to be a part of it. Like they have one here, right. Investment group Yeah. And town. And you pay them a membership fee. And, don't hold this to me, but you're talking 50 to $150 a month, and then they have a meet up once a month, and then they have some kind of, speaker every time, and then they'll have some kind of like, so again, everybody in there has got some kind of trade. Right? So there's a roofer there that will help you or there's a contract or there again. So it's not just flippers in there. They have a lot of contractors in there that help flippers too. Yeah. And the reason why I would tell anyone to go to those, whether you're a veteran investor or, or new at it is it's all like you get to see like, what are these other guys doing? And that's like, oh, that's a new idea that I should try that. or they can get you connected with their guy that's doing financing, too, and start talking to them, or business. They're all doing business. So they want business. Yeah. And a lot of times too, they're like, hey, I just bought this property. It's not really in my wheelhouse right now. It's maybe it's a little above what I want to do, or it's not as big as I want to do or like. Someone in that group will just buy it from on, too. And so there's a lot of that from my understanding as well. So I think that's what's nice to I would definitely encourage someone to do it. I'm, I'm probably more introverted. So for me to go to those and like not work is not like my. Yeah. It's not my cup of tea. that's a really good local one you know. and there's national ones too. And generally you pay quite a bit more for those, but and then you got to travel there. But those generally you go to those and you come back like jacked up like, man, this is awesome. You got this awesome energy like. And the other thing too, like with all the social media out there too, like there's so many cool people you could follow that just give this content out there for free to get ideas of what they're doing. I would say the hardest game is it's not getting the money. That's generally I found that is the easiest part. Give it away. Yes, it's finding the deals that is, and that is a challenge for us to like we're still like we're going to start changing things up. On finding the deals too, because at the end of the day, there are people that would still much rather do. And we talked about this a little bit last time too. But there are still people that would much rather go this route then put it on the market. Yeah. They just they do not want to deal with it at all. Even if they know like we know listing it, we will get more money. But we would rather go this route. And the other thing too is the market has slowed. It's sounds like we had a really busy week from for from sales from the team. But overall, if you look at the data like slowed down quite a bit. Yeah, it's it's Council Bluffs. Yeah. I mean I was looking in Milford and there was 140% increase in listings. And the market across the board is down like 20 to 30% depending on, you know, maybe, you know, Gretna, all these areas like they do have different you know, the percentage of, you know, down doesn't mean the home price are necessarily going down. But that could be a trend where, okay, if home prices keep slowing or sorry if home sales keep slowing down. Ultimately, for the super motivated sellers, they might end up just having to drop the price to get it sold because get out and weeks. Yeah. So you know that again that's things that you got to analyze when you're buying it. But also that also goes to some folks are like you know what we we see it's out there like you see a lot of stuff in the media to home price or market slowing down. It's cooling off. so they might just say, you know what, if I can sell it to you and take a little bit of a haircut, you're taking this project on, then, Have fun. Good luck to you. Well, it's interesting you say that because it's, we our financial advisor just recently had her client event, and they had somebody there speaking about, presidential election years and how different this now through the end of the year. Kind of like, investments, purchases. Right? Like people start to really, like, do a shake or a stop or a freeze, and they really want to know what's going on with the world. And it doesn't matter what politician you like or dislike, right? Like, you watch the debate and really wonder, why are we doing this? But, it there's a that was an entertaining debate. Yep. you know. So. Yeah, it's going to be interesting for sure. Things didn't happen the way I think a lot of us thought is going to happen, especially with interest rates I think so with rates though to rates are high. So it's painfully high rate. So let's say, you know, this is how I first started. So I was 19 or 20 years old when I bought my first property. And I did some seminar. Yeah, I went to a, I bought I literally got a credit card. I was 19, signed up for a Chase credit card. I still have that Chase credit card. I have to, I'm a loyalist. and so I went and bought the seminar because I knew at 19 or 20 there's no one that is going to be giving me a loan. Now, back then they did a lot of stated income, like how people got loans back then was insane and like, yeah, way different exchange there. I got loans when I was 20 and I had no business getting loans like no business. And, you know, I was just starting out selling real estate. I was doing well, but still, I probably had no business getting a loan. And I think I bought seven properties that first year. So definitely no business getting that. again, guys, I'm always more I'm more of a risk taker. I've kind of like, put my head down and I'll just blow through a brick wall. I'll just figure it out. I will make mistakes along the way, but that's just generally how I. And and I never put money on this huge pedestal, like where I'm like, I'm not I don't I don't even know how much money we have. Like, I don't check my bank account to look, Stacy does that, but I don't. So in a higher interest rate environment like what I initially did, because rates back then were probably around seven. Now home prices were a lot different. But I went around and I started calling owners of properties, and primarily I called for some owners, okay. And I started ask them, like, would you consider taking payments like seller financing our land contractors, different terminology. I just always use seller financing. Basically you go to find people, it's you have a high failure rate. You might have to call 100 people to get one person to sell it to you this way, because most people it's they're not used to it in our market. Now, other markets, that's kind of it's a common thing. And and in commercial it happens in apartment buildings. It happens storage units. It happens a lot, a lot higher price point. Yeah. And you know, what do you want. Do you want to get a good price or do you want to get good terms. Is kind of like the whole thing behind that. So clients, the bank the clients the bank. So you approach them and let's say that you find someone that's like, you know what? Generally from what I found, it was the older empty nester. They have money. They don't necessarily need that cash to live their life. So you find someone that is they generally they don't have a loan on it because to do a true seller financing deal, they almost can't have any sort of mortgage or loan. No on the property, no lean on the property and you get them to play the bank. So you would then work out a so like my very first deal I did this way. What I did is I think rates around the time were around six 7%. I know exactly where they were for for me, if I were to go finance, it probably would have been eight at the time if, if not even more so, I was able. I gave him his price. It was $100,000, so that was the price he wanted. So I gave him his price, but I gave him $5,000 down payment and he carried the note for a with a five year balloon at 5%. Yeah. So I again I scrunched up the $5,000, and I know that I turned it into a rental. I gave him the $5,000 so that that is a credit to me when I go to buy. So now I have a no with him for 95,000, and I did a five year balloon amortized over 30 years at 5%. And I literally every month I would mail that check to him and he was my bank, so I didn't have to go through any credit checks or anything of the sort. That was my way. That is probably the best way to go purchase homes in a environment that we're in today. You know, there's sub tos and all this stuff I don't know much about that pays more, but he's, he pushes out a lot is a big on his on social media. it that's very fascinated me. So you guys might need it here on homework on that. That's basically where you're taking over someone's already 3% rate and then you're basically paying that rate on their behalf. I just don't know that there's some. Yeah. yeah. So yeah, it's sub two. Yeah. It's sub two. You're, you're basically you're taking over their payments. I don't, I don't, I don't do that. I would probably it's something we should explore. But we're, you know it's lower on the totem pole to, to work with. today. But anyway. So 95,000 you had the rate. And so that's just a great way. So if you're new into it and you and maybe you just started doing this or maybe you're now self-employed, it's a great way to get into flipping or having a rental property is if you're current environments, because then you ask them, well, what are you going to do with this cash? If they're going to just go put it at the bank, they're secured by the house, that if you ever, if you ever default, they could just they can take the house. They just just like a bank they would foreclose on it essentially. So that house is what's securing that. No. And so he got his 5%. Well, if he would have put it in the bank at the time, he might have gotten like 4%. So in his mind, he's like, you know, I'm getting an extra percent. And I was young and hungry. And, you know, I, you know, I, you know, I sold it, right? I said, listen, I'm going to perform and you will get your check from me every single month. And he did and I delivered. And so to fast forward, you know, as I was approaching that five year mark, all I did at that time, you can either elect, you know what? What's this house worth? Is it worth $150,000? Now, you know what? I'm going to put it on the market. Whatever it's worth, you put it on the market, sell it, and then you pay him off. He's done. You have your profit. He's paid off on the loan, and boom, you're done. Or you go to a bank and say, okay, now I have a loan. I have a loan balance. 87,000 or whatever that is. I don't I don't know what the math was at the time. and it this property's worth $120,000. Can. And I've owned it. Can you essentially. You're. Yeah. You're. Yeah. You're getting a new loan with this new bank to then they pay him off. And then now you have this new loan with bank. Maybe you keep your loan still at the $87,000 and you just have that much equity and that's counted as your down payment. Maybe they give you 75% of the financing. You pull out that difference between what it's worth to that 75,000 or 75% amount, maybe put an extra $5,000 cash in your pocket or whatever that amount is. so there's there's different things you can do there. The hard day when you're doing this is there's a there's tons of directions you can go got to figure out what's your comfort level and where are you going to go. Right. Do you want to play bank with somebody? Do you want to go to a bank? Do you want hard money? And then it's a matter of like, what are you securing with it? Because that's what it really comes down to, is you can always get a loan, but what are you securing it with. And normally they want first. What is it called first. Right. Right. So like if you don't make a payment and my bank for example, has first right on my car and I took another loan out of my car. And your second therefore if, if there's not enough money on the car, the second person squeezed out. Yeah. first position. position. That's what I mean. And so sometimes you run issues with that. Yeah. And that's why you ideally need to find someone that does not have a loan currently on their property. If you're going to do a seller financing deal, you can do, like a land contract or rent to own. And that's like another great thing to do where you basically are you have this option to purchase. So you almost have two separate contracts. Essentially, you have an option to purchase it. And there are times where there is option money. You got to give them money for that option to purchase. Maybe that's $500, maybe that's $10,000. It's whatever you negotiate. And then you have a, a rental contract essentially. And in that rental contract you have the ability to sublease it. So you have a agreement purchase contract. Now you can do that option purchase agreement. You can identify the price today. what you're going to be buying them out for, whether that's in a year from now, two years from now, five years from now, ten years from now, whatever. Or you can say, hey, I'm going to we're going to have two appraisals done and we're going to I'm going to buy it for 10% below the average of those two or the three. Now you got to pay for those appraisals or you will basically you're going to reevaluate what that purchase contract is going to be in the future. Yeah. So you can do it a couple different ways that way. and then again, you have a rental agreement in place where you have the right to sublease it, or maybe you put in there like, hey, I'm going to repair this property, and then I have the right to basically assign this house over to someone else, and then they're buying it. And whatever that difference is, is your profit essentially. Now that's where you got to dive into that whole wholesaling law tale is that that would almost You'd want to double check with that Yeah for sure. And that's why always having a good real estate attorney is a good thing to have too, because that is always up with the laws and they change all the time. Yeah, I Yeah. or they Yeah. like now it's everywhere. So I mean, if you just reach out to people, people will help you. Yeah. So again, if you're on the banks, out on that I would definitely stick to the, the local bank. So I say small town bank. But local banks, people that are in the community, they know that they're not this huge, massive bank. I'd probably stay away from the Wells Fargo chases and those if you're just starting out. Yeah, I would stick to the local banks and I think you would have a good shot. if you go to enough of them of getting a yes to or so not not be it not being shut down with the rejection. well. And the other good news is, like, you could start with a local bank, and then you could try, like you said, calling a for sale by owner. You could try a few different things and see what works. Because every time frame is different. Every client is different. And everybody has the changing times. Doesn't mean that it's not going to work tomorrow. It just wasn't working last year. Yeah, one. And for me, like Stacy and I, I know without a doubt we could have gone to another bank. Probably have gotten better rates, better fees with the amount of business we're doing. But again, we're like these loyalists and we love our banking relationship. And he's just a cool dude, like, and, yeah. So that's just what we've done. And, you know, it's like, hey, we're going to scratch your back, your scratch on our backs. We've you've helped us out in the beginning. So we're going to we're committed with our banker basically. But yeah, there's tons you know building up enough of these up. You can easily go and sell this to someone else. I mean, there's actually a lot of different loan programs out there for that. There's a ton. I was surprised myself when I was asking our mortgage company and they were they're running financing for some of those buying a fourplex. And they were counting apartment rent. And I was like, this is fascinating. They had little to no money in their accounting. This rent to buy that it like future rent. Yes. Future rent. yeah. It's not even like it's not even theirs yet. And they're counting it as their income exactly essentially. Yeah. And they were able to I would assume it's a higher rate. Still. They'll still It is a higher rate. But at the end of the day, I mean, you do the math and you start, you know, like, hey, I could buy a fourplex at 11%. I'm making this up at 11%. And now I have the ability to own a fourplex. And they were like, I'll have two jobs and but at least and three years and they did the math. In three years they had the ability to pop out of the loan and then go buy another fourplex. And now they'd have eight houses essentially. Right. Or a spots. Yeah. Yeah. yeah, because Stacy wasn't a big risk taker. No. Yeah. Now she's a bigger risk taker than me now, I would say. But yeah, I'm losing money like it is a real thing. I mean, I, I think this year alone we probably, I mean pushing$200,000 of hit on between a couple different properties. So yeah, it's a lot of money. So it's a it's a painful amount of money. Yeah. So it's not just like, hey you made a ton of money, but you do lose. And when you first start you probably have more losses because you don't have the right contractor. You're not as smart. Sometimes people take advantage of that. Right. So like you will have to kind of factor that in Yeah, right it's all on how you buy it. That's the that's the biggest thing is, is and that's what's challenging Yeah. is, is on how you buy it, you know. Yep. So again, if you guys have questions, reach out like there's some there's so many different directions we can go with this. And and that's what's hard when you're talking in a 40 minute section where you know it, I'd say reach out and we can I can sit down with you guys, go deep with it. Whether you're a real estate agent, you're at a different company, you're a new investor or you're someone that has just cash. We've never taken someone's cash and invested it for them. I'm not really a fan of that. There's a lot of guys out there that do that very successfully for their, you know, but, I probably even get you connect to those if you're like, you know what? I got $200,000 cash in the bank. It's not do anything I want to put in one of these group and go make a nice, what, 10% or whatever that return is like. There's tons. I have plenty of local guys and national guys that I do trust that I could help place that money for you guys too, and it'd make for a really good investment. Yeah, yeah. Thanks for listening, guys. And, seeing us next time.