#19 The Keys to Owner Financing Thousands of Houses Over 24 Years

0:00so then you're not a landlord you have a different set of management or servicing actions right so so like you wouldn't evict someone but you would have to foreclose because you're the bank if they didn't pay so what what is that is is that a lot less intensive and do you have to foreclose a lot or in Texas well right now I mean I only have like a one 1% or less foreclosure rate really even through this Co thing wow okay actually it was 0.2 for the longest time but I had I had a a few people bomb out at one time for whatever reason but because think about it on a $100,000 house I got at least 10,000 down I'm averaging 12,000

0:49Down and then I sell a lot of houses and this is the most this is the most beautiful plan in the Hawaii World buy it don't fix it watch the person that's paying you monthly payments go over budget rehabbing your collateral what a plan so here's how it looks I could buy a house for 40 I can put 20 in it now I got 60 in it right then I got to sell it for 120 is my goal I don't always sell it for double but you know that's my goal I sell it for 120 owner finance with with 10% down which is 12,000 down you know or I could just buy it for 40 don't put 20 in it and sell it for 80 and and then watch them put 20 in it to make it worth whatever it's going to be to make be worth 120 it's the same I doubled my money either way I doubled 60 or

1:38I doubled 40 but the magical part about doubling 40 was and selling it as is and letting the guy who buys the house fix it is he's putting his 20,000 into my collateral and he's making it worth $120,000 yeah and I have a $40,000 I mean I mean I I got have 40 in it I I owner financed it for 80 you know I doubled my money either way but one is where's all the time in a flip it's in the rehab I didn't have a rehab I bought it for 40 at 10: in the morning I closed and by two in the afternoon it's for sale wow where's the risk yeah how many times have you gone over a budget when you bought something and put it up and didn't touch it how many times did you go over budget of course you didn't go over budget because you

2:26Didn't do anything there was no budget yeah know how many times did get your Lumber ripped off on a job that you didn't fix never because you never brought any Lumber to the job yeah yeah wow and and so you're not you're not holding them seually aroused doesn't it I don't know if I'd quite go that far but close do why I'm a lunatic I I love these houses I love doing this longer than me so yeah yeah well it'll get you so so you're not holding them for a year now you you mentioned that previously you can if you want to but I never got these people to commit they were pain in the ass they they never came up with the rest of the money they were supposed to come up with 80% of the time that's the problem with an option they

3:14You know they're real excited about owning your house when it smells like Mr Clean and the carpet shampooed and about eight months in when they have four more months left before they have to consummate and bring you that other $6,000 or that other $4,000 or that other $2,000 they're not so enthusiastic about the house anymore because the house smells like it has dog crap all over the place and there's broken windows and they're the ones that did it all to the house yeah yeah so so you you're just paying a little bit higher taxes than because it's not long-term capital gains but it's worth it because you're able to flip them over tax course and learn how to mitigate your taxes yeah yeah you know there's things I here's one thing I use to quote Jack Bosch I use you

4:03Know 70% of the 100 houses I buy a year and I've been buying 100 houses a year for 24 years almost unbelievable I didn't even believe that but we went we were in my Mini Storage where I had kept every file I had ever done because I own the Mini Storage complex so I never need any more space I just go get more space actually we were just stacking these things up to the roof and then starting a new row stacking up to the roof I had someone count them all and we divided them by how many years I've been in business I was started full-time in March of 1996 it's 100 houses a year for I took two years off so I've taken that out of two about two and a half years off so I took three years off for some sabatical I took so I did the math and I bought about a hundred houses a year for over for 20 years so when

4:52I look at where was I going with this the so the the taxes you're you're talking about so I I I make money on the quick flips in the Wholesales there's houses I don't want to be part of you know and there's people in my organization that need a hit every now and then you know they they work upon success only and sometimes they need a hit like you're running a little thin you're running dry great what what houses do I have with you put one on the market let's retail it let's get 15 $20,000 in each of our bank accounts you know let's I got to take care of my people the other 70% of them sell are financing and and I so I take the money from the quick flips the one-time caches and the temporary cash which is what a note is a note is temporary cash temporary cash up front and temporary cash

5:40Flow because it's going to run out so onetime cash and temporary cash I take all the money I make from that and I buy into a forever cash scenario which is apartments or anything you can rent I chose boat and Mini Storages boat and self dry storage household storage I have 1,600 doors in 14 locations around the lake where I live at Canyon like Texas I'm Canyon lifestorage.com you look me up I have 1600 doors, 1600 of people a month owe me a 100 bucks on the first every month 1,600 do the math that's $160,000 a month people owe me and I've been doing this since 1991 I started with 13 units so I don't owe a lot on this stuff I don't get to keep the whole 160 nor do I collect the whole 160 because I got vacancy rates and I got delinquent people but I get to keep a crapload of it right I

6:29Never had work again in my life but I got depreciation on millions of dollars worth of property when I buy a house to depreciate or something to depreciate it's $2.4 million you know I got appreciation there I can play the tax game there you can play the tax game within your own business even if you're flipping houses you shouldn't pay for a car it should all be figured you know you shouldn't pay for a phone you shouldn't pay for your hats and your clothes and you know I don't know I don't there's there's the danger zone you know there's the black and then there's the black and white then there's the gray Zone I stay deeply in the gray Zone you know like I think I can defend this yeah but if I don't defend it I'm not going to prison and they're not gonna it's not gonna hurt

7:18Me any worse than I can't pay you know what I mean or whatever I need to yeah so take a learn how to use your IRAs and your 401ks I mean I've I need about 20 $200,000 a year to eat and drink and do everything I want to do me and my wife that's all I need I don't need a l i don't have a l jet don't want a l jet I don't need a bigger house I need a smaller house I got a ranch you know it's paid for I don't need a bigger range and so I flip houses and pay taxes until I have about $200,000 net and then I'm flipping an IRA 401ks anything but me and so when you flip house in Ira or 401K you

8:06Don't have to hold it a year because it doesn't make any difference you know so I know you're in a higher tax bracket and you're you know if you if I flipped all those 70 houses in my personal name it'd be killing me but figure out what you need to live flip that many in your name till you get that much money and then the rest of the year you're not doing anything in your name anymore that's great advice that's that's awesome you know making the money is only half the equation keeping the freaking money the other half of the equation so as soon say you start beating your chest say I've made the money you're fixing to get a big tax bill and then you're gonna get real humbled again and then you're gonna say okay I got another step on the ladder to go again and now I got to figure out how do all these how did how do these rich people live taxfree and

8:55It really pisses me off when people complain about about how the rich don't pay any anything because they we all live by the same laws it's the same law for the senator it's the same law for me except for health insurance and pension plans but as far as tax code goes it's all the same and all the tax moves they they make you're are available to everyone in this country so the rich get richer because they're just smarter than you there financially they're smarter than you you could be a professor you could score off the charts on a on a on a on a IQ test but you're not smarter than these guys when it comes to how to work money and the reason why they're smarter than you is they studied it they studied the hell out of it they they got advisers and people that tell them when things change in the law and cracks open up and there's things to do or or there's new case law that says guess

9:43What we didn't think we could do this but this guy just went in court over there in Indiana and hell man we can start doing it like this now that's why that's why they don't pay taxes and the other reason they don't pay taxes is generally those people they spawn they're an economy of their own they spawn a huge amount of Taxation they have hundreds of people working for them if not thousands or hundreds of thousands and they create more tax than they could ever pay and our tax system rewards entrepreneurs like us that go out with our coonies in both hands with no net no guarantee and no subsidization and create jobs for people hey hope you enjoyed this portion of the interview with Mitch Stevens this guy is a wealth of knowledge if you want to check out the

10:31Full podcast interview you can listen to it on any podcast player it's the living off rentals podcast also you can go over to Facebook and check out the living off rentals Facebook Community I know you'll get a ton of value out of that it's a super engaged community and I hang out there a lot of other really smart rental property investors hang out there I hope to see you there if not I will see you in the next video