Creating Financial Freedom while serving in the Army

0:00I I don't know what our total income at that point was when I look at looked at the cash flow off the off the top of my head but I do know that we we felt more and more confident we learned a lot from each individual purchase and we gotten a little bit of landling experience under our belts with the duplex and the fourplex and we turned one of the homes into an Airbnb so then we got some some short-term rental experience and that was Cash flowing super well at the time compared to what it would have for but what we realized was hey we we want to continue doing this and and it's even if even with these low down payment options that we've been able to do it still takes a decent amount of money if if one of the tennants moves out or if if there was some delayed maintenance that we need to take care of now

0:48That we're the owners or whatever and so we needed to account for that and it it became important to us to to continue looking for ways to purchase properties that we didn't have to put a large amount of money into at that time a 20% or 25% down payment did not seem like you know maybe we could have done that with with one property but we we didn't we thought it'd be way too long to wait for for the next one so other financing which you mentioned earlier is a strategy that I don't know who initially maybe opened my eyes to it but but I I learned about it read about it listened to to podcasts and and read books and talk to other investors that were using it it's a strategy for purchasing a property that I hadn't heard about didn't know was possible

1:38That became the way that that we started looking for deals hoping that we would not have to put as much down as a down payment if all the the other terms were were good so I I can talk about that more what it is if that's what you'd like yeah yeah absolutely that so that's what you started doing from there then at that point exactly targeting seller yeah just looking for that really we were just looking for for deals we're kind of focused on small multif family deals and mobile home parks got it the mentor of mine that I mentioned earlier he's a mobile home park investor also which seemed pretty interesting to me and wasn't so attractive of a of a niche at the time but I was kind of looking for that so we started just cold calling when we saw a property that had four mailboxes hey it's a fourplex

2:26Or or a little mobile home park in fville or whatever we started calling the management number and asking for the owner's number or you know looking online text records and trying to get the owner phone number and calling them and seeing if they would be willing to sell we talk about the deal and then we would always try to to assess whether or not owner financing was an option wow so it was pretty manual in the beginning just just calling just looking up opportunities and making phone calls y exactly that's exactly what it was I love that I love that that's so many people want to get so sophisticated right off the bat and say how can I send out thousands of letters and you know scale to the Moon right from the start man you can make like you're a perfect example of like making significant financial strides

3:16With you know just doing the basics and and I was the same way you know my wife would drive around and I'd staple you know we buy houses signs up on Telephone polls you know and you know we'd be doing it on a Friday night and then that week you get a couple calls and all a sudden one of them turns into an estate sale deal that you know makes you tens of thousands of dollars of of profit you know and so it's you can do these things that don't require a budget don't it just require you to do something that most people aren't willing to do so be honest that's to be honest that's still I I haven't really grown out of that that's kind of what I've always done and I I never got more sophisticated when it when it comes to to marketing or or Outreach than than that it was it was letters it

4:04Was knocking on doors it was getting phone numbers and calling 10 phone numbers to try to get the actual owner and and try to talk to him and it's still that and and and people will be like H how do you have this much success and then you ask you know everyone who's asking you that question are you doing this are you willing to do this and it's like nobody is like that that's just the difference it's like you know the there's this book called the compound of effect that Darren Hardy wrote It's yeah great book and he he says in the book you know if it's simple to do it's also simple not to do and it's those simple things that actually create the biggest impact I think so very cool so so what kind of deals did you do from there then did you get a mobile home park and you started to get some seller finance deals so

4:54Yes to both to both of those yeah so the next deal which was big and and this I still consider to be kind of my my unicorn deal was through cold calling I got got a hold of of a a lady she was actually retired army that owned a 4unit really it was a five unit property in a nice area in fville in North Carolina she was an out ofate owner and yeah got got her on the phone and initi very very quickly she she was not interested in talking to an investor I'm not interested in talking to we bu ugly houses type type proposition so just just kept talking kind of like hey yeah I'm a I'm young military guy we we own some properties my wife and I are looking to buy some more

5:43And we're just looking for other investors that may be interested in selling and I think I seemed like a real enough person as opposed to what she considered to be just like a a company that would waste her time and and she she decided to hear me out and kind of built a relationship over over a few weeks of her just kind of sharing some information about this five unit that she had bought years before and hadn't really done much with it because it had always just kind of paid its own bills and it was paid off at that point she shared more information on that and and she asked questions about us and as luck would have it or blessing or whatever she she lived in Texas in San Antonio and I'm from Texas I was traveling home for for Christmas a month or so after that and I said hey when I'm there how about I come I'll

6:31Try it's a couple hours out of the way but I'll come introduce myself face to face and we can see if if we could talk about me purchasing this property using seller financing which is something we had kind of talked about I said you own the property free and clear she had explained to me that she wasn't looking to get rich she was just looking to kind of get a fair price for for what she paid she didn't really even need the money she just wanted to know she was doing well on on her on her sale on her exit so I said hey it might work out if you're okay accepting as opposed to all the money from the sale I'll give you a you know we can negotiate a down payment and we can we can talk about how long you want the loan to be and and what interest rate you want to to collect the payments on and that might help us out a lot and it might work for your

7:20Situation and and that ended up being what what we did when I went to meter you know we we enjoyed talking to each other and built some trust and and we worked out a deal where I I purchased that five unit property for z now she said I don't even need a a down payment I I trust you you know I'm gonna have my attorney look over everything but I I feel that I don't need a down payment and I said that's that's very generous what what kind of interest do you need and she said 1% interest and I said I don't think that's a realistic interest r R at the time interest rates were in the threes I said three is kind of what I would get with a bank right now and I kind of

8:08Talked her up and we we ended up on on two and a half percent which was still incredible for me but I just didn't really I didn't think that 1% sounded sounded right but ended up being an incredible deal where I didn't have to bring any money down I got five units and eventually turned those all into airbnbs it was in a super nice area they're all Studio kind of apartments and there was a great demand for that and there still is there still they still operate as five airbnbs and it's become a huge Cash Cow and as you can imagine my my payment on it has not been huge because the interest rate was was super low and and and we worked out a good purchase price so that was that was for me proof hey that seller financing can work and you never know exactly what a seller is trying to get

8:57It doesn't mean look and and try to find a seller to to take advantage of or something like that but you just don't know what people are motivated by and by building trust maybe you can figure out what exactly they they actually do want and it might work out well for for what you can provide yeah that's so great there's so many great lessons in there and I think the reason why a lot of people don't take advantage of seller finan is because it's just so nebulous in terms of you know the way you can structure it like it's just the the world is your oyster you know there's not like you know with a VA loan or a conventional loan it's like here's the terms that everybody gets and you know you have something to go off of but with with seller finance how for this one since you'd never done it before how did you determine how to structure it was it just kind of letting her lead

9:45The way and then does she have a mortgage on the property did she how long is that mortgage like what is what does that look like yeah so she did not have a mortgage on the property so when I when I say seller financing what I'm usually talking about is not subject to which is where you're kind of paying the payments on on someone's existing mortgage and you're not assuming any debt or anything like that I'm just talking traditionally when someone does not have any debt on the property and you just say hey rather than me getting a loan from A bank you know I'll pay a down payment and then get a loan for the bank and then you'll get the full sale amount you're going to become my bank maybe I give you a down payment maybe I don't and then you are the bank and you and I can can negotiate whatever terms we want for for that loan to look like so really there's there's four or five

10:34Different levers when I explain it that you can pull with seller financing and they all like if it goes in one direction for for a seller is probably going further away from what the what the buyer would want but you can kind of adjust those levers as you want and an obvious one is is purchase price right seller's going to want a higher purchase price buyer's going to want a lower purchase price and then you have down payment you have interest rate you have the amortization you know how long is the is the loan amortized over and then you have the actual like term or the balloon like when when is it due and what I've said is hey tell me I explain kind of all of those terms and there's there's more than that probably but those are the big ones I said what of these are are important to you what's the most important to you help me understand Mr seller Mrs seller like what you

11:22Want from these and then maybe I can pull the levers on on the other the other terms to work in my f and and we can find a good win-win so yeah it was just kind of that conversation with her and as far as structuring it it was a simple I talked to some some closing some closing companies like closing attorneys that would do the title work and things like that and they said yeah we can we can draw up the contract you pretty much just I think it was actually just over email we sent them the email that we both agreed to over email like me and the seller to the title company and they put it up in a contract and said if this is if this captures what y'all are trying to capture then both of you sign here and that's what we did wow and then it was it's a simple at least it's a little bit different state

12:10By state but for seller financing for a transaction it's is it's two papers there's two documents it's a promisory note which is lays out the terms that I'll pay the loan back at and then there's a deed of trust and what the deed of trust does is it ties that property to the promisory note essentially so if if I violated as the buyer if I violated the terms of that loan the seller has recourse to take the property back in a pretty straightforward way through the through the the closing attorney that we used yeah nice that's yeah that's great and you don't have to over complicate it and did were did you give her a little bit above like market value or what you would have paid had it been non

13:00Seller finance I in other cases I have on this one it was very simple and straightforward and she named her purchase price she told me her purchase price which it sounds like a like a pretty low number and it it was but it was it was 15,000 it needed some work but it was 105,000 and she was happy with that because she had paid much much less than that years prior many years prior wow and and she said hey if I can get this and and if my month she cared about purchase price and she cared about monthly payment like the the total amount and it came out to to two things that she was happy with and I said hey I I would like to put as little down as possible and I would also like to to extend the

13:48Loan over over 30 years at a fixed interest rate where I don't have to pay you off a balloon at five or 10 years or something like that she she agreed to those terms wow so yeah that's great that's how the Unicorn deal worked out at least yeah yeah but it's it's still a win-win for someone in that situation who you know it sounds like she's a little bit older and she's looking for an annuity you know she's looking for income she doesn't want to worry about you know repairing this property anymore just wants the income and it it made sense to her and it makes sense for you gives you the ability to do more deals you know that I appreciate that breakdown because a lot of people wonder about seller finance and sure that's a can say Kirby one of the things I I didn't mean to interrupt you but one of the things is I feel like I know this that she just she

14:36Felt like she could trust the person that she was working with and she didn't feel unsure about what am I getting into is he gonna pay me and and it's been four or five years at this point she's collected a payment every month on the first of the month so I believe that she probably looks at it as hey I got what I wanted out of this and I and I feel very certain about you know he did what he said he was going to do and she's she's been very kind to to write me multiple referrals to other sellers for for deals that I've done saying hey this is what he said he was gonna do this is what he did I would do it again if I had the chance and that that's that's helped me out aesome that's great that's great win-win all the way around and I know you so you did some other seller finance deals from there and you

15:25Mentioned that you've even refinanced a seller finance deal where it's can you kind of explain how that I've never heard of somebody refinancing a seller finance deal yeah but what what did that look like I have not heard of that either and it it I was reading a book that was all it was focused on seller financing it was like a Kindle book for you know I'm sorry I wish I could even tell you what it was I'm sorry it was 100 deals is a land flipper just a book that nobody's probably ever heard of but he just kind of listed a strategy with how he did a certain transaction and it made me realize like wow anything a bank can do technically an individual if they had the the funds could do as well I don't know so it was another deal where

16:13I purchased 10 properties from from an individual using seller financing and it was very small down payments I think was about 1% down payments which was incredible for me and it was it was a favorable interest rate and it was spread or it was a 3% interest rate 30-year fixed bought these 10 properties which was a huge move for us when when we did it and each of them they they they took some work so we invested a lot of money into them but they they became great cash flowing properties and and we built a great relationship with that seller very similar story to the first where before the transaction happened we had we had connected and and spent a lot of time together actually his two sons were were West Point grads as well which not hurt as far as

17:02Kind of having things in common go yeah and and I met them as well because I was like why don't your sons pick these properties it was a gentleman that that had been had gotten into the rental business had all his properties paid off and was just kind of ready to to be out of it he just said they're in the stock market in crypto and they just don't really want to deal with tennis and toilets and I don't blame him so but yeah so sorry if I'm I'm getting too in the weeds there but I purchased all these properties from him we maintained a good relationship we ate at Waffle House once a month after we had bought the properties and I showed him pictures of hey here's a renovation we did on property one and here's the how the tenants doing in property six and things like that it just had a great relationship as the years went on fville which

17:50I believed just to be a a cash flowing Market but not necessarily an appreciating Market actually experienced some good amount of appreciation as did a lot of places and and the the craziness of of the last five years or so and and I found myself with with a lot of equity in these properties these these 10 properties and the gentleman that had sold the properties obviously if you're able to sell 10 properties and don't need the the cash from those sales up front that's why he was able to do seller or financing then you may be of means you may you know have the ability to to entertain some some creative ideas so I went to him and I said hey I'm I'm paying you 3% interest on these properties here's how much

18:38These properties have appreciated and we we've put a lot of money into them ourselves to to help get them there and interest rates have have since gone up a lot higher so so you could probably be making more money in a CDE right now than than what I'm paying you do you have the ability to to lend me more more money on against these properties it' still be secured by these properties to lend me more money essentially it would be like a Cash out refinance that you'd be funding and in exchange I'm going to increase the interest rate not just on that new money but on the entire loan balance for all the properties from 3% up to 5% is what I said he came back at 6% and and that's what we agreed on so it increased my monthly payment to him significantly

19:28But he he actually allowed me to pull out $250,000 amongst those those 10 properties which which really helped me as far as future projects and other down payments and things like that went so yeah that that's how it worked and he was very happy about it because it it improved his situation and apparently he had the money to to put into it for for that and and I was obviously very happy about it because I believe that I can do things with that money that are going to earn more more than 6% so that's how it worked out