Buying Homes with $100 Down & Creative Finance Secrets Most Don't Know

this is the BiggerPockets podcast show 7.94. we were living in New York I was dating her for two weeks and I said hey I'm gonna go visit my grandparents of Florida do you want to come I'll pay for the whole trip and she's like you're crazy I've met you for two weeks but sure so I take her to Florida and our Dream wants to to eventually move there but we thought you know when you're 60 and 70 well we were tired we could finally move there and so we knew we wanted to build an income to support that so once we kind of stumbled Upon This Way of how to buy these gorgeous houses in beautiful neighborhoods with you know 100 bucks down it that's what it was like wow what's going on everyone this is David Green your host of the BiggerPockets real estate podcast here today on location in Maui Hawaii for once I'm the one traveling and Rob is not he's staying at home he's been traveling a whole lot before this so Rob how does it feel to be in the comfort of your cockpit in the studio ready to launch another Fire episode listen it feels great but I would rather be in Hawaii let's be very honest yeah and I'm getting to hang out with all your friends by the way Tony's hanging around nobody's there yep a lot of short-term rents you said he looks like he's been lifting which is scary for me because Tony and I are actually in a fitness competition for the next two months you got into a fitness competition with Tony Robinson well listen it's not like based on who like uh is the most muscular or anything like that I'm obviously going to lose that I actually think it's based on the winner is whoever loses the most body fat percentage by the end of the three months and we've been doing it for about a month okay you got an advantage there because Tony walked in with like 11 probably and you're more well first of all ouch but second of all totally agree and uh I've been I've been a very diligent boy okay I've been waking up early I talk about it a little bit later in this episode but I've been really slicing and dicing my morning routine trying to wake up early try to hit the gym and then try to walk 10 000 steps a day uh and then start start seven llc's before the work start before the work day actually starts I love it I love seeing this part of Rob I've often said you and Brandon Turner though you look very different have the same personality and Brandon's like this too like he just doesn't work out at all and then he gets a b in his Bonnet that he wants to go do something that he trains for six weeks and he does a triathlon you're like that you do you have like a ferocious work ethic that when it gets activated you just decide you're gonna go run five miles when you haven't been running at all it's very impressive it's just that consistency is hard my wife is uh training for a half marathon right now in October over and she's like I've ran two half marathons without training for them and she's like are you gonna are you gonna do this with me let's sign up and I was like I'll decide the week before okay there's another joke so I might run a half marathon in October we'll see it sounds like something that you would do well in today's show We're not gonna be talking just about Fitness but we do have a financially fit couple that is going to blow your mind today Rob and I interviewed Jen and Joe de la fave who have a fantastic story a fantastic relationship a fantastic business and a fantastic approach to real estate investing this couple has figured out how to get off Market deals and use creative financing or other methods that we talk about on this show to do things that will frankly blow your mind you're going to fall in love with them and this episode I don't want to take too long talking about it because the episode's a little bit longer there was just too much good stuff that we really wanted to get out of it what were some of your favorite Parts rob you know this is a power couple they're very nice good people and it's I think creative finance and subject too that's obviously like all the rage right now because it's a really great way to take on real estate in this current economy and market and it's just it's nice to hear their approach and hear more people doing it out there and they just really make it seem so achievable if you stick around until the very end you're going to hear how they Source leads from Facebook and the amount of leads that they get and the amount of leads that they're actually closing is pretty mind-blowing and it made me feel like hey you know I think I could do that too which is really what we want everyone I saw the wheels turning in your head when they said that I'm like oh Rob's texting his team hey guys this is what we're doing right now Facebook drop drop the it's cleaner before we get into the interview with them today's quick tip there was so much good information this episode that we are going to be releasing a bonus deal Deep dive along with the episode so that you can get even more information Jen and Joe break down an actual deal they're working through and explain how they got paid to purchase the property so today's quick tip is go listen to the bonus material as soon as the show is done Rob anything you want to say yeah quick tip number two go watch The Social Network so you understand my Facebook joke that I made because I feel like that one was just like fell very flat it fell flat but if you saw the movie you'll get it the good old Justin Timberlake will help bring that one home for you let's get to Jen and Joe Jen and Joe de la fave welcome to the podcast how are you today awesome awesome awesome thanks for having us yeah all right so first things first where are you living it looks like you're in a modern day designed Barn that Joanna Gaines had a hand in is this a magnolia special or is this just sighting and you're in a house we are actually in our office which is uh south of Tampa we are in Florida right now this is where we live so we have our office here um sometimes we work from the office sometimes we work from home okay weather is nice to semier you're in Florida I'm in Hawaii right now Rob's in Houston between the three of us there's enough humidity to give a baby bath who do you think is sweating the most right now it's pretty humid here I don't know I don't know Houston's pretty bad it's rare that Houston loses that but that battle I will say well come on down to South Florida yeah that's true when you go to Scottsdale when Rob and I are there it's so nice when it's hot but not humid like a dry heat is just so much more tolerable than when it's really humid outside yeah the country doesn't seem to matter people are moving to Tampa in record numbers Houston is growing as well you don't really have to convince anybody to go to Hawaii so maybe there's something to investigate in humid friendly States so we know you live in Tampa do you invest there as well we do yeah we um we love this area and this is kind of why we We Came As for a vacation we are already buying in this area so it just made sense to get out of the cold and uh be closer some of the places where we are buying okay so where did you come from We're originally from Rochester New York Upstate uh really cold very very gray and so when we started working together full-time and just being all stuck in a house it was uh short-lived I really knew that if we could get to a warmer climate we'd be able to enjoy so much more so what's it feel like to be a trendsetter to be a couple that moved from New York to Florida I've never thought of anyone doing this what did it feel like to just be on the front lines of innovative movement you know it took a lot of guts um to really put ourselves out there no really I mean if you go to any chat everyone says Florida's full but uh while there is a lot of traffic you know if you love this weather and the beaches and there's so many perks to it you know don't be shy don't be afraid to do it you know I always think you're not a tree you can pick up and move anywhere we brought our two kids they're as happy as could be so you know if it's in your heart do it you could always move back that's a great point I mean we're gonna get into your investing career here but I am interested because I know a lot of the listeners are here and they don't love where they live but they can tolerate it because if you hate something you'll figure out a way to get out of it if you're incredibly uncomfortable or in pain you'll make change and if you have a vision of what you really want you might actually go make that happen too but ninety percent of the world gets stuck in the middle where we are comfortable enough to live with it but not comfortable enough to be super thrilled with where we are Rob I know you and your wife have moved everywhere like you're like I want to invest in the Smoky Mountains I'm moving to the Smoky Mountains I'm eating dinner at the restaurants I'm smelling the air I'm gonna see the whole thing and that's gonna help your investing career maybe we'll ask you before we come back to Jen and Joe do you think that was wise to bounce around from City to city as you were learning how to invest is that something you'd recommend I would not bounce around from City to city for the purpose of learning how to invest in said City there's a lot that I learned moving to the city because I thought I had to live there because you know I was building that tiny house Village out there and I was like oh if I move out there I can be there in the action and get all my permits and this and that and what I learned after a year of living there was I really didn't need to be there at all I could have just flown in maybe two or three times and skipped the giant cross-country move but nonetheless I'm happy to have done it I I encourage anyone to move if you've ever thought about it it will change your life for the better I think because it always just gives you more perspective about how much to love where you're gonna finally end up I think so live where you want and invest where you want yeah totally you've been investing for years when did you go all in as full-time investors that kind of afforded you this ability to move around so that happened in March of March of the 20th uh when obviously the world shut down and we all were safe at home there for a little bit and we had honestly just signed up for some social media marketing in February so of course that we enrolled in and the whole goal was to bring Joe home at that point I was a stay-at-home mom and we're doing the part-time thing and I really wanted him home we just never saw each other and so when March hit and he had to stay home at the dealers from the dealership you know we looked at each other and I was like this is our chance like I know we're in a global pandemic and this is kind of scary and it's probably a terrible time to start this but we're going you know all in 100 and uh luckily through the internet we were able to grow our our real estate and it was crazy and intense and uh totally awesome at the time you did it did you feel like this is a an obvious move we need to make we need to go all in or were there some fears about if this was wise I don't ocean at the car dealership because it was going to be a little more money but way more time away from us and I was like this is the opposite direction of what I was looking to do here like I really wanted to work with you and I just I had visions of us being together doing this and that was not it so when covet hit I I saw nothing but good I was super excited I I was like all right the family's here like I was a teacher so I had a leg up with virtual school and helping the kids out with that and it was total chaos you know trying to you know take care of everything but we we did it now you two have really become creative Finance experts over the years what creative Finance strategies are you using to be able to have the success you are so every deal I guess is a little bit different um we love helping sellers out who are who want to sell their house who really don't want or even real consider a lowball cash offer and so the one benefit that we have is that folks love that we could buy their house and pay full price for it and we can make those terms work for them and they're excited that they're getting top dollar um and so we we use a lot of strategies uh we buy what's called and it's a technical term it's called a rap mortgage some people think there's you know sub 2 with another version there's a lease purchase where you could just lease the house with the ability to purchase it later on so there's a lot of different ways that you can control and buy real estate and that was the key to us breaking away is because we learned years and years and years prior that we can buy all of the real estate we are we want without having to go to the bank anymore without having to use very little to sometimes no cash and even if you've got bad credit it doesn't make a difference and we both had good credit but even if you've got bad credit like it makes no difference you could buy all of the real estate you want once you kind of understand just the way to communicate and ask sellers you know who are in a situation you could help yeah so we know subject two right that's basically assuming someone's loan obviously there's some uh some clarification that could be like pushed into there further but I think a lot of the people listening today if you if you don't know much about subject two we just did an interview with Pace morby I think it just came out this month go check that out it sort of breaks down that entire concept but something that he actually this is at a very timely because he's like maybe I'll come on and do an episode about wraps we did not talk about raps I just heard you mention that can you just quickly explain the concept of a wrap and how that's I guess in the same world as subject to yeah so there's really just a couple small differences and the reason why and I guess you know who likes vanilla ice cream who likes chocolate ice cream right so they're very similar but they're different so the difference is whether you buy a property subject to the loan stays in the seller's name so you're technically not assuming it it still stays in place but you're they're giving you the deed to the property so they sell you the house the deed goes to you um but the long stays in their name the and the reason why I like a wrap a little bit more is because the same thing happens where they due to the property but what a wrap does it puts a new mortgage which is not money it's just a promissory note it's a few pages and what that does now it makes a new loan between you and the seller so long story short it creates a note and with having that wrap Mortgage in place now if my seller if the buyer doesn't pay if I don't pay them they could foreclose on me and take the property back which makes it really handy for it protects the seller really that's why I like wraps so much and then it happens from time to time you know they'll call us and say Joe I have this Mortgage in my name and I want to buy a new house and the folks out the mortgage company say because I have this debt in my name you know it's making it hard for me to get my new loan so the neat thing about is when we do it on a wrap we just say show them your closing docs and the new note that we made you give that to them and that's going to help alleviate your dick your DTI situation so it makes it easier for the gun to get a loan because we've had some years later say I need to get a mortgage and this loans in my name I'm like no problem we'll get you through it and we do so there's really just the small differences it's just more technical stuff okay and uh tell me a little bit about because I've also heard of raps in the concept of you're also wrapping like a new mortgage or new interest rate in that as well is that is that a different kind of sector of raps because I know that sometimes whenever you're doing a subject two loan you get that interest rate that's on their loan on a wrap those terms can change a little bit as well right well you can buy it or sell in a wrap so what you're hearing in that situation somebody buys it subject to so say maybe the rate was three percent and then I'm gonna sell that house to somebody else and I could charge them another point or two right and then that payment goes up and I make the difference that's not a strategy that we Implement and we can get into that a little bit that's why we love our rent to own um it has I think far more benefits than just selling a property on a wrap so you can buy on a wrap you could also sell in wraps however when we do it our rent on strategy I think is the best in the game all right so let's get a little bit of clarity here when you're talking about a wrap you are taking over the existing mortgage first off correct like regular what we understand is subject to then you are getting a second loan from the owner of the property who's now become the seller and that loan is going to be in second position to the first one so you make a payment to them and then are they making the payment to the original loan or are you making both of those we make it's the same payment as what they currently have so say for an example I buy in a wrap and their payment a thousand dollars a month for rough numbers the new note will be for the same thing and we just pay that directly to their bank I don't pay it to the seller hoping that they're going to turn around and that just gets one more level of right something to happen so we just pay if it's through Wells Fargo we just send it directly to Wells Fargo okay so you make one payment to the bank for the first mortgage then you make a second payment to the seller for the second mortgage no because it's the same thing yeah exactly okay yeah okay you got it Rob yeah if there's any overage but generally when I'm buying it it's it's what we call a mirror wrap uh so it it does the exact same payment the exact same interest rate so if your payment is a thousand dollars per month that's exactly what I'm paying we don't pay anything over that to the seller typically so then I get I'm a little confused then where does this second position note to the seller come in if you're not making a payment to them the wrap part that's a new note that you're going to create so that's what they call the mirror wrap so for an example um we're doing one right now in Tennessee the folks owe 300 3000 on their house their interest rate is three percent the payment is I don't know like 1600 a month so what we're doing is they're selling to us for what they owe it's a house bill in 2017. so I could take it over subject too because I'm buying it for what they owe and they'll just do me the property but the difference is if they want to get a mortgage later on that could cause some issues so I buy it for 303. for their 1600 payment and then that creates just a new note around that existing one and so it pays the same exact payments there's no extra payments going to the seller at all so it's just a promissory note yeah that's what you say so basically just wraps it up a little bit different in a different I guess wrapper if you will so that whenever they go to the the mortgage company the mortgage company isn't necessarily getting stopped up on the DTI and everything like that because the way they've written it up just helps with the underwriting yes so now I can see that Joe and Jen our company is making that payment and we have that recorded right so they're going to show that our company's now making that payment so when you have to go to a new lender they're going to be able to show that to them that there's a new note in place shown that we're making that payment okay and then further further question your honor uh if you're if you're making that payment and then that helps with your underwriting with the DTI and everything are you able to completely knock out that DTI are you only able to use like 75 of that payment towards your DTI or is it Case by case yeah it most of the times it depends on the lender everyone's going to be a little different small Credit Unions might do it look at it different but generally it's 75 percent after after a year so here's the situation that would I love to look at when I talk into a seller if they say Joe I'm going to buy a house in a few more years then I could just buy it on a wrap because I know it's 12 months from now they're gonna be able to wash out at least 75 percent of that DTI but sometimes folks say I need to get a new house right now and I need to get this off my name so the benefit of why we love having a lease option is that lease that new lease will wipe out their DTI immediately okay so I think I understand a little bit better where you're getting at you're not getting the mortgage off of their credit report you're not getting it out of their name it's still going to show up if they want to go buy a house that they have a 1600 a month payment associated with the property but they no longer own that property you own it it's been deeded to you however you are creating another note that you owe them that mortgage balance for or for whatever the equivalent was sixteen hundred dollars that they could say listen we get 1600 in income but we have 1600 expensive theoretically it washes out and and I see that most banks will let them use 75 of that income to qualify for their next mortgage so this is a way to help a seller feel better about deeding their property to you but not having the loan paid off because the fear would be well it's gonna be harder for me to go get another house because I still have this this uh debt that I owe on the house that I don't know is that correct you said it spot on Boom perfect man I was like oh yeah that's that's what I thought too I just you said it so much better it's like an accounting move right you're like okay on one end of the of your Ledger you have this weight so we have to add a counterweight over here but you're not actually moving money around you're just creating these notes you are 100 it's just a handful of pieces of paper it's all it is there's no money there's none of that okay and this would differ from traditional subject to because in traditional subject two they don't have any source of income that they can come back and tell a lender well we don't actually make that 1600 a month payment the lender is gonna for the next house would say well you're obligated to make it I don't know where that money's coming from if somebody else is making the payment Uncle Sam's not seeing that so as far as I'm concerned I have to add this 1600 payment to your debt it makes it harder for them to go buy their next property or buy their next car whatever they want to use a line of credit for and there are some ways around it it's just it's a little bit more challenging and that's why the the note is just the easiest cleanest way to do it um and it's super easy to do it that way but that note's not recorded against the property that's what you were saying earlier it's just a promise story note that they can show yeah we do have it recorded as a mortgage um against the property and they do they show it to the the underwriters and that's that's what makes it um help with them purchasing a new house okay so you did what entrepreneurs do you solved a problem I want to buy your health subject too this is a thing that stops IT let's solve that problem now you're out there wrapping the real estate rappers have you guys thought about calling yourselves that there we go a trademark right now you know you know what's very funny actually when Pace said that he was he's like I'll come back and do an episode about wraps all of the comments they didn't understand I guess they did they thought he meant like r a p s reps and he was talking about obviously w-r-a-p-s and so they're all like yeah come back and do the wrap yeah write the wrap Pace we'd love to see you see you rap and I was like different different rap yeah he I mean he's talented enough he might do both good you know David has bars too though oh we gotta do that I actually started off my mic test with literal rapping and Rob was not very kind about it so yeah you say that in front of people but when we're alone he's very abusive actually which is really good yeah but on camera I build you up because you're my bud but off camera we're mortal enemies all right so you've got this business that you guys have been expanding can you can we explain the roles of the business we'll start with you Jen what is it that you're doing in this business that partnership yeah absolutely so as we've grown uh we have team members like Joe mentioned and so I've kind of evolved into like the integrator coo just making sure like operations are everything is Flowing from the leads coming in to you know that eventually the people that will buy the deals or our rent to own buyers so our dispositions and I just kind of oversee all of that um I'm definitely like I love marketing I love being the face of our company so really making sure that our branding is on point and uh just making sure all parties are on the same page and everybody's staying super organized especially as we're you know gonna go virtual the month of July we're gonna travel so I want to make sure that everybody is on the same page with everything but Joe is definitely the deal maker he loves talking to sellers the Joe you're the people person well we're both people but I just love I don't know I'm one of the guys who I love what I do I love real estate if I wasn't here doing this I'd be still talking about it and doing it um I just I'm like that I'm built different maybe but uh so I love looking at deals I like looking at houses pretty ones I like looking at ones that are all need you know to make pretty again helping people figure out what's going on in their life and if we could help them and point them in the right direction if we can't buy it is important so tell me the the I think that creative Finance sub 2 all this stuff is always so mind-meltingly confusing on the surface at the beginning right because you're like wait you just assume the property and sellers do this and it really doesn't make sense I have this conversation every single time with investors that want to get into creative Finance but then it's like so simple once you explain it right we just worked through that and it's like oh yes makes a lot of sense and y'all are very knowledgeable on this so when you got into creative Finance how much did you know about it like how did you even get into the world of of negotiating sub twos and wraps is this something that came naturally from you or did you kind of figure it out as you went so my poor wife um it was not easy for me at first you know and numbers weren't my thing is what I used to say and it gets to be a little overwhelming when you're getting overload with a lot of information because for forward with that we were we were buying houses with cash rehabbing them you know renting them we didn't even know what Burr was right then we'd refinance and repeat we knew what it was because you lived in freezing Rochester New York you were yeah right yeah not the real Clipper yeah we were doing it not knowing it had a name until a few years ago she's like did you know what we were doing was called Burr I'm like what but uh this was maybe more than a few years ago but yeah this is because we do that in 2009 but we had a handful of houses and when we wanted to retire I knew having a handful of properties probably wasn't going to give us the lifestyle that we wanted we came to Florida after dating for one month and we both have this Grandeur idea of we're going to move to Florida when we retire we love to do it now but there's no way you know we could do it now looking back on it how funny is that but we in 2016 I stumbled upon just different strategies that I started really diving into and this is kind of what fell in my lap was how to do how to buy real estate without using the banks and when I kind of wrapped my height around there the first thing John and I did is we went on and we hired some help we got a coach that walked us through how to do some of these things and then once a few of these light bulbs that were missing went off it was like just stand back right right because it's a it's so simple once it all kind of clicks I do want a little bit of clarity on what you just said though did you say you guys were living in New York and you dated for a month and then you all moved to Florida no okay all right we were living in New York I was dating her for two weeks and I said hey I'm gonna go visit my grandparents of Florida do you want to come I'll pay for the whole trip and she's like you're crazy I imagine for two weeks but sure so I take her to Florida and our Dream wants to to eventually move there uh but we thought you know when you're 1670 when we were tired we could finally move there um and so we knew we wanted to build an income to support that and I knew having a handful of properties probably wasn't going to get that done so that's why we need to look to how to grow our portfolio a little quicker without having to put 20 Downer and get Bank approvals every time and have it to go through that it was just it was a little bit trickier so once we kind of stumbled Upon This Way of how to buy these gorgeous houses in beautiful neighborhoods with you know 100 bucks down it that's what was like wow I gotta ask Jen like did you fall for that the the New Yorker I have grandparents in Florida right like there's not that all over the place who's then asked you like yeah I want to go have you meet Grandma and Grandpa they're gonna cook us pancakes we're gonna sit in the kitchen table with the roosters in the kitchen and look at the wallpaper like did you know how Charming he was being in that moment and that he was it was like that's almost a Wedding Crashers move yeah I was definitely like so much about his grandparents and they're from Italy and so yes there was tons of food and I do believe there were roosters in the kitchen it's amazing what I can figure out without hearing anything I was playing that game with Brandon yesterday in Hawaii people would come up to take pictures with us after his event and I was like let's try to see how much we can tell about a human being just in the first five seconds of meeting them and it was like ridiculous how accurate I was with a lot of the stuff we were saying that's my I love that in your guys's relationship you like working together that was another thing that you mentioned is that you actually you fight more when you're apart can you tell me about that Dynamic of the partnership and and maybe your marriage and how you two were able to get this thing to where you fight more when you're a part not less I wouldn't even say it's fight it's just more like I wasn't happy so we got this office we have in-person employees which was totally new for us we had everything virtual prior and so he started coming to the office every day and we homeschool our two kids so I once in a while would come in or bring the kids with me but you know an eight-year-old son sitting here spinning in a chair for eight hours is just not not happening um but we do involve them we can get into that a little bit but you know I'm at home and he was at the office and I was like what are we doing like this is kind of going backwards and I was in it because I understand like you know the office feeling maybe making him more productive I wasn't quite sure I don't know but we've been working from home now for the last few weeks we're doing even more deals and I feel like the energy and everybody is just like super pumped up and then I I am a control freak so I have my eyes and hands on everything again so that's super helpful um but yeah I just I love working with him he's my best friend and we do enjoy all the time together we could probably use more date nights um but but we laugh like all day long because it's either some of these things that we come across like they're hilarious and some of these are like what duh yeah yeah so you gotta have fun I think you can do it listen my wife and I have a a system a process that I've brought today when I said look it's really hard the thing I hear parents complain all the time about our date nights and not getting out and so we just told ourselves let's find a babysitter that we like and trust and every Friday or Saturday or sometimes both we're gonna hire said whenever she's available if she's available she texts us and we go out one to two times a week and that is just like a non-negotiable for us you know it's kind of jarring at first because you know it's hard to leave kids at home and everything like that but now that is that is sort of our way to really disconnect because you know I could totally understand where you're coming from you work 24 7. um you know my wife isn't nearly as involved but for both of you if you're working 24 7 it's like it's really hard to ever break away so we've had to put those boundaries in our life just so we can feel normal and human again and see each other and talk about things that aren't aren't business-wife so that's my task for you I'll go out there hire babysitter every single week I'm going to text you next week and I'm gonna say did you go out that's actually we hired a babysitter and I stole her yeah it worked for us we we we found our our manager on care.com and I I talked to Jen and she was like she just graduated college she wants a job in sales she sounds fantastic we meet her she babysits the kids the kids loved her I come back we offer her an interview she comes in we hire her day one I'm like all right pull up Zillow and she's like what's that and I'm like oh boy we got a little bit of training to do and she's come a long way five months later she is absolutely amazing now okay so you took the right steps you might have taken a few side steps hiring her for the business that's actually the opposite of what I've recommended of breaking business I know but now we're on a babysitter yeah we'll go find anyone find a new one um so um all right so he gave us an idea of sort of like your your life a little bit your jobs but can you paint a picture of really what your life was like before real estate before you had sort of mastered the art of creative finance and sub 2 and all that good stuff yeah so I'm working at the car dealership Jen's a teacher when we very first met she had her own home I did too and within a few months I'm taking her to look at some like junk house and she's like completely doesn't understand why we're looking at more houses when we already have two right um but we we got into that but our dream was to once we had kids Jen was going to walk away from her job and prior to that we'd hardly ever got to see each other I would wake up at like 4 30 hit the road by 6 30 maybe earlier if it was a blizzard right it was I had like a 45 minute to an hour commute there and uh he sometimes didn't get home until 10 o'clock at night and then he had Fridays off and obviously being a teacher I worked Monday through Friday so we saw each other maybe Sundays like and on Sundays you know it was trying to fit in family and everything else so you know it was hard because you meet the person you want to spend the rest of your life with and I'm like but there's no time just to see this person so we really started evaluating and everybody thought I was crazy you know I went to college got my Master's Degree I love teaching loved English like all of it and then to step that was a hard choice too to deal with you know what people were going to think of me even my family kind of question or you said I was money in college what are you doing you're throwing your life away but I just knew that that was not the case and that there was something greater and so my advice for people is just don't focus on what other people think is right for you and always truly you know do what your calling is and follow that yeah yeah so you're you're kind of you're starting to feel it right you're like wow I'm not even getting to see the person that I love most so what what was that Tipping Point for y'all I think it was my wife's birthday I remember I'm sitting there at my job I had to work all day and she came up tomorrow at work and she's like can we at least go get lunch and I was gonna take my one hour lunch break and one of the managers comes out and says hey I know it's your wife's birthday I know you're gonna go to lunch but can you just not and can you just come and work with this customer instead for like that hour um and I just remember being in my head thinking to myself yes I'm making the money but this is not fulfilling me this is not me I am like 30 something years old I'm I think financially I'm doing okay I've got a beautiful wife I'm happy but I wasn't getting my dreams fulfilled and I just felt like didn't matter how much money I made at my job I felt like it was just taking me not where I wanted to go and so it was that day I still remember it from my head I was like okay I gotta get out of this car business I gotta do something different uh they call it the golden coffin and they call it that for a reason and it's they make they just pay you enough just enough not to quit they pay you enough not to leave and then whatever that number is they'll pay just a crack over that right and so to me that was the thing and so I was like you know what we're gonna figure something out to where we could work together we could do this full time we didn't think it was going to be as quick as it did um but glad it happened that way couldn't change it for the world yeah we call that an advertising call it the golden handcuffs you know and it's like yeah it's pretty good and I'm not mad to be handcuffed right now but I I wouldn't mind being in a better place right and it's pretty tough it's pretty tough when you're doing all right and making that change but that's that's a big sacrifice right that kind of what you just talked about were there any other things that you sacrificed along the way or kids um for me I I missed everything days of school picking them up going to events different things I mean I had to work weekends even date nights are hard because you plan on leaving at five so I'd make reservations for 6 30 and then somebody walks in at five o'clock and they want to be there till 6 30 so I don't get out of work till late reservations are no longer and we'd Miss dinner nights you know even when we did have a date and then when we started having kids that was also the final like I'm missing way too much of the stuff of our kids growing up and I got to work with a lot of really amazing people at my car dealership the owners who are all really wealthy and successful and the one thing they all had in common was they always said that yeah money is great make a lot of money but I missed my kids growing up and that wasn't one thing I was willing to negotiate like that was not going to be something I was going to miss doing and so the fact that we could homeschool our kids and they help work in our real estate business and we travel all over and they come with us even to real estate events they come with us I mean they're at one just a couple weeks ago and they love meeting these people and so at eight and ten years old they're man they're doing awesome I'm ready for their HL yeah it's just that's what we want that's what you're trying to be a parent to be totally Jim what about you what did the sacrifice look like on your end because it sounds like you are helping run the business but then you're also you you're you know managing the kids not managing but you know I don't know maybe a little bit sounds like they're crushing it now too but you know what was that like yeah I think it's a CH it's a chosen sacrifice you know I knew when I looked into homeschooling that if I was going to run a business or multiple businesses and also homeschool my kids then I will have to have less time for myself and that's a that's something I'm willing to give up right now um there's tons of socialization and like things I can do with the kids so it's so fun and I enjoy that and it fills my soul but at the same time you know I don't have a ton of friends I don't watch Netflix on all the time you know I'm not out partying um you know I try to read books um for fun and cook and do my little Hobbies but there there's always a give and take for sure and and you know like Joe says something sounds so stupid maybe but I remember every Monday was garbage night and I remember every Monday I had to take out the garbage Recycling and it'd be like negative 20 right in the middle of winter and everybody else's husband it seemed would like bring out the garbage and here I am dragging out because he's still at work and it's dark out and I was like why like why can't we just like be together like he could help me with the garbage so I kind of giggle now because he does help me and you can't leave Florida garbage out let me tell you that you want to make sure that goes out but you know it's just you you really look at those small moments in your life and you know you have to be grateful for how far you're coming and know that there there is a price that you pay and you know just keep your eye on the prize and know why you're doing it yeah yeah do you have any tips for parents that are busy and working and trying to get into real estate are there any non-negotiables for you absolutely I think one that actually actually works or so we're told because we do it too is finding the cracks of your day I call them mom cracks but I know not everybody is a mom but every day everybody has little bits of time so I think we often overwhelm ourselves with I have to spend three hours on this task of calling sellers or analyzing properties you don't have three hours let's be honest right and or maybe you do but by then you're scrolling but what is the 10 minutes or the 20 minutes or your lunch break or listening to something on the way to your job you know just really utilizing your time better you know throwing that book out Atomic habits I think you talked about habit stacking like I love that concept just using your time wisely and really being aware of it so if you're struggling with I don't have time then for three days in a row write down the time you wake up till the time you go to bed every hour what you did and don't change anything and see where your time is going and then you'll really quickly realize you have a lot more time than you probably thought it's just going to places that doesn't need to be going it's a great tip that is a great A Time audit Rob Dyrdek talked about this and he tracks literally every single aspect of his routine how long he spends eating how long he's been showering how many breaths he takes a day no I'm just kidding actually I don't know maybe maybe he does yeah maybe he does track it to that degree but it really does kind of shed light and you know by the end he's like oh maybe you'll start tracking and I was like I think I'm too scared to find out the answer the answer on on uh on where I'm spending my time but I totally agree I think I think usually you probably have to start with what time you're waking up and um recently I I just feel like I'm always frustrated at five or six pm When I close my computer because I didn't feel like I accomplished anything and I'm not a morning person and so recently I've been waking up at 5 30 or 6 and it's difficult and I don't like it and I don't understand how people do it but I do feel like that was the big change for me and it's because I was looking I did exactly what you said I was looking at my my habits and my time and things weren't just working they weren't working just starting at nine o'clock every day so uh yeah so great tip for everyone at home I wanted to kind of ask because you say that you now coach new investors and you you've mentioned how important it is to these investors to figure out which creative Finance strategy that they should be using before we get into all that can you just walk us through what the different strategies are yeah so if they have a free and clear property and they don't owe anything on it we're buying one right now and right outside of Boston on a free and clear property that's just straight seller financing those are really easy to negotiate because you're really just gonna you know figure out the price the monthly payment the term length and any down payment but sometimes these folks have a mortgage in place and so there you could buy it a few different ways you could buy it with what we talked about earlier a rap mortgage or a subject to or sometimes folks really don't want that sale completed yet because you know they're a little bit worried so we also could buy on a lease purchase which is a really easy way to do it too there's been times where I've talked to a seller and I ask them you know well what happens if you don't sell the house they say well I'm probably just going to lease it that's when I go into well why don't you just lease it to me with the option to buy it and then you know what I'll do is I'll re-rent it to somebody else and I'll manage everything and you'd be surprised how many folks are really open to that option so that's just another way to you know get into it and then sometimes I'll say would you rather me just buy it now rather than leasing it and the way I could buy it is with the seller financing then I turn it down in there more so those are really the big four there's probably a lot more to do um you could get into technical stuff like hoteling which we do subtitles going down a rabbit hole but I love the strategy and it seems like so many of these strategies can and do work especially for for your current portfolio how did you two land on which creative strategies to focus on so I want to control the property I want to own it so when I'm looking at a lease purchase I don't own the property so that's kind of almost at the bottom of the total pool everyone I'm looking for I'm I'm talking to sellers if a seller has a property it's free and clear it's always just going to be straight seller financing if they owe a mortgage on the property that's going to be we're going to buy on a wrap so those are the real two strategies that we focus on but once again you might have a seller who's a little hesitant and you know giving you their deed why the loan stays in their name and so that's why we offer them a lease purchase so really what we do is we don't have like one way we talk to Sellers and we find out how can we help them so I'll give you an example the one we had in Boston she has a condo there she wants 300 000 for it it's probably worth more than that uh it was built in 07 so in Boston that's like new because it's such an old city and all the people who she reached out to before us were all offering her Cash numbers at 200 000. she says I really need 300 000 for the property I bought it for 250 and 07. it went down when the market crashed and it finally got back up and I want to sell it now for three hundred thousand I've got tenants in there they're moving out in June all right she does not want to put in the market so we bought it for three hundred thousand we're putting down five thousand dollars because it's free and clear and our mortgage to her is at one and a half percent interest uh so it is she happy yes we're paying her a hundred thousand dollars more than all the other cash investors and I'm paying her a small amount of interest on top of that too so when she looks over the term length we're paying her way way more than anybody else would afford that deal and on that deal we're gonna cash flow really nicely because once you have the tax the HOA and all that there's a really nice spread yeah no and it leaves us a really nice spread because our rate is only one and a half percent yeah I mean if you think about your interest that you're gonna pay I mean let's just say that you were able to get a five percent interest rate right now you can't but let's say that you could the interest that you would pay on that same loan would be like hundreds of thousands of dollars more than what you're gonna pay on 1.97 so in that case like look yeah maybe you are quote unquote overpaying maybe it sounds like it was still like a pretty decent deal but it's totally worth it if you plan on holding this thing for 30 years well and that's kind of the point I think that arv I'm just going to paint it it's all it needs but it's probably worth I would think 325 to 335 range um so I think I still got a really nice deal on it and at one and a half percent with only five grand down and now I own a cash flowing asset that's what I that's what we love and it's not a house built in the 1700s or 1800s it's a condo built in 07 so um it's a pretty nice shape style that's really cool and Jen how how big is your portfolio or how many deals have you done in the creative Finance space total we've done close to a hundred deals total but I think current portfolio we have I think it's 27 or 28 right now we have a handful we're selling we have a handful we're buying we have about a dozen deals in process right now wow that's okay so you've done 100 deals doing this those other I guess 70 or so that you don't currently own were those just flips or assignments what what happened to those other other deals kind of within your portfolio yep so uh sometimes we flip them sometimes we do what our favorite is our rent to own method so we help actually which is really cool is we help turn renters into owners and so over time some of these folks we have one right now it's a great case study one they're buying out their house currently and they're going to close I think it's June 4th I forgot to tell you or June 3rd and so yeah you forgot to tell you right right here on the podcast you'll let you know in front of hundreds of thousands of people well I just talked to the attorney this morning I knew it was in process I didn't know which is great news so um you know these folks moved into the house in 2017. they gave us 32 000 to move in they've been paying rent for the last six years and I think we've made we make it's close to 400 some change on that uh sometimes everyone's gone up a little bit because if tax has gone up but that's about what we average and then once they buy it out because they are now we're going to get a check for close to six figures and so we lose a door and everybody's like oh you lost the door keep that well guess what the way that we buy real estate I could fund five more of those Genie deals at those condo deals right or six more seven more of those deals and then how do I turn one property into six or seven more that's the way to do it so we could put that money into a 1031 exchange and buy four or five more doors that all averaged at three four five hundred dollars a month in cash flow and then because of our strategy we'll actually get you know mountains of money when they move in too so the way we figure it out is we're getting paid to buy these houses right in the beginning you've done a great job explaining what you do when the opportunity comes your way how are you finding these deals especially in a market like now where it's incredibly difficult to find motivated sellers it's really hard to find anything that's halfway decent that's not getting multiple offers so I'm glad you brought that up uh that's a really good question we have and I'm going to share this with everybody our secret sauce with you guys so this is what's currently working today in our business and a lot of folks that we work with across the country and we've been able to land deals even last summer in Marco Island where it's a small super ultra ritzy island off of Naples Florida it's like the sixth most affluent place in the country and we're finding deals even there so what we do is we go into social media we love Facebook we joined Facebook groups so if I'm in Houston I'm gonna go to Facebook I'm gonna go to my search bar I'm gonna type in Houston then it gives you these options to pick for people conversations or groups I'll take groups and then I'll join every one of them in Houston I'm doing every one of them the mom groups the garage sale groups every one of them and then what we do is I make a post in these groups and this is the post that works really really well we just write and it sounds simple does anyone have a house to sell that's not Market ready my wife and I are looking to buy one in the next two to three weeks pause say that again get your pants ready get your pants ready does anyone have a house for sale that's not Market ready my wife and I are looking to buy one in the next two to three weeks or I'm looking to buy one in the next two to three weeks right and then what I do here's the next trick to this when you type that in there you could go to a spot where you could click the cool backgrounds and there's a smiley face one there's the hearts uh I'm I just use a simple blue one it stands out when you're scrolling through Facebook people see it in these garage sale groups so here's what's going to happen now you hit send you only want to put in about five six groups a day if you put into like 50 Facebook will like lock your account out for a little while like oh you're spamming right so don't do that so put it in five a day six a day some of these groups you'll get nothing there's been a few groups where I've gotten two to three hundred comments now not all of them are nice comments some would be like oh you're just trying to buy houses I'm like yes I am right like but a lot of people yeah but a lot of people are going to say I have a property I'm looking to sell and I get the DM going absolutely maddening and if I put that post out today in Tampa Florida which is one of the hottest markets around the country I'll have 25 leads by the end of the day incoming warm leads of people who are reaching out to me saying I have a property that's not on the market although some slip through the crack and say it's listed with a realtor most are off market and say I have a property and think about listing in the next few weeks and then we start asking questions right okay so I got a question I have questions now it's my turn so let's go if you're talking about 25 leads a day are you calling those 25 leads a day or are you hiring virtual assistants are you training interns to kind of like get through the preliminary questions do you make them fill out forms what's the process here so great question so what we like to do is we ideally want to get into conversations but only get on conversations with people who are motivated and sell and want to sell right so I think what stops so many new investors is they hate talking to people they hate they're scared to pick up the phone and it's scary sometimes right and I understand so the way that I like to do it is when we those folks message us so the first thing a message is hi you know thanks so much for reaching out can you please tell me a little about the property and it'll tell you it's a three four I've owned it for this they give you the story I ask them even why are they going to sell it you know how soon do they want to sell it so I've got some information about the property we even get into you know do you own anything to contractors how much do you need for the property how much do you all want it and they tell us they tell us about 90 something percent of the time we find out even what they all want it what their payment is and then if they have motivation and they're nice we want to get on that phone call right two key words there yeah if they're not motivated and they're mean guess where they go all right I don't want to waste my time and I don't want to get aggravated talking to somebody who's gonna you know not be motivated who's not happy so really what's helped now is when you're talking to motivated sellers who's reached out to you and you finally do get on the phone with them those conversations are a lot better your closing ratios are a lot higher you're not going to make every deal I wish I was that good nobody is but you try to figure out a way to solve their problem and we can make an offer on every property because I could offer a cash offer on somebody who maybe has a older fixer-upper house maybe they you know have something like that but what about the turnkey houses in the beautiful neighborhoods and they want top dollar form those are all the ones I used to throw away now I just think back of how much money I threw directly into the garbage because the properties that I like to buy and John's the same way is the turnkey houses that really really nice house and if you look at a lot of the ones we've done we don't really buy I can't say we don't because we still do but we really focus on the pretty houses the really really nice ones that our TurnKey ready to go I do want to hear that deal but you mentioned that sometimes there you put in some work to make sure that it's move-in ready yeah so one of the questions that we love to ask every time is does the house need any work before a family with young children can move into it because here's what happens I'm talking to Bob Sam or whatever their name is and I say does the house need any work what do they do they look over their shoulder and they say no it looks good to me it does all the time right because they live there but when you say does the house need any work before a family with young children can move into it they're like well there's no handrail going down the stairs and the stairs you could fall in and there's a leak you know and they'll start divulging a lot more information because it's a different when you have little kids moving in there and then they they feel like they have to tell you like it's like a legally they're like okay maybe I should mention that the there's exposed wiring hanging from the ceiling above the sink yeah got it yeah so we we love to ask that question uh that's one of the most important ones to know and with our questioning if I were to ask you right in the very beginning how much do you on your mortgage you would never tell me that you never tell me you know my chance of me getting that answer go down significantly but if we've gotten the pattern called pattering where I ask you a question something easy can you tell me about the property another easy question why do you want to sell it another one how soon right but as we start asking about the contractors and do you owe any amounts to contractors does a house need to work before a family of the young kids can move in then we start getting into how much do you owe on the mortgage what do you need for the property what's your monthly payment and they just they'll tell you because now you've built that pattern and the rhythm of asking the questions now guys you gotta remember this is all done through messaging we're not even on a phone call at this point because here's the other thing too when you are chatting with somebody on Facebook sometimes and I'm going to be very blunt careful how I wear this to the audience but many times when they see that ad they might be at their job they might be most time on a break a lot of times in the bathroom right so what we've developed was a company policy and I'll be very I know Jen's already shaking her head but what happens is there's called speed delete okay if somebody sends you an a query about selling their house when do they want to sell it at this moment yeah right they just hit they just said yeah I want to sell my house right they are used to instant gratification so our company policy is that when somebody reaches out to us we have to get back to them before they wipe okay before they get off that toilet uh if that's the case so under 60 seconds is the key because once we could get that conversation engaged in 60 seconds unless we get the information we're able to now schedule that call if they're not available right then and there versus somebody who reaches out to us and they say I want to sell my house and I got back to him six hours later or the next day they've already forgotten and they don't even care at that point probably right different level of motivation okay so BTW that's what we call it in the industry before the white so important though this is what I I constantly bang my head against the brick wall with my realtors on my team they do not understand that we're not talking like they'll well I got back to him within 24 hours that you do not understand the psychology of a brain when they're they see a house they want to see or they want to talk to an agent and they send a message if it's not within 15 to 30 seconds their brain starts thinking what else could I do if it's not within a couple minutes they start thinking who else could I ask they've already asked another realtor and then we are like oh let me get back to them seven hours later because it works on my schedule and the person doesn't say you're too late I already moved on they just uh-huh okay yeah we'll talk later and but whoever the realtor is that connected first is already off and running with the ball I really think the key is understanding you're in a competition somebody else wants to buy that house somebody else wants to get that client somebody else wants to land that deal and when you're too busy whatever you're doing expecting that the other person sort of needs to work around your schedule you lose them and it like it's really just understanding that our default mode as human beings is to be narcissists we really want someone to work around what we're doing I'm busy with the kids I'm in this other meeting I I'm trying to eat lunch right now can I can I eat a sandwich without getting bothered no not if you want to make a hundred thousand dollars right that's a hundred thousand dollar bite you just took because you didn't want to call back that lead and that really is the attitude you have to have when you're in this competitive environment you guys agree yeah 100 I've spent so much time and effort into research and integrating and making sure and you are spot on I mean you give somebody 12 hours and if your closing ratios say 20 it cuts in half after 12 hours and it's another half after another 12 hours so if you got back to him in 24 hours and you normally could close 20 your chance of closing over 10 like it goes down significantly so on and so forth so speed delete is extremely important to make sure that you're able to is that instant gratification and they want answers now I want to be able to at least get the questions answered and schedule that appointment to get on the phone if they're not available right away but we want to get them those calls as fast as possible especially with incoming yes especially the incoming warm leads or hot leads I think you two are the perfect example of people that obviously enjoy Real Estate and enjoy people and so you get to play in this playground that you like every single day you get to talk to people find opportunities for deals use all of the different techniques that we teach about on podcasts like this to figure out the best disposition for the property maximize efficiency at every single level based on the unique traits of the person it kind of just reminds me of a coach who's coaching a sports team and loves that Sport and they're like okay they're throwing this defense at us we could try this we could try that we'll go to this person when you love the sport it doesn't feel like work and uh I'm frequently telling people this is an incredibly hard Market to try to buy enough real estate that you just live off the cash flow and never and never work again it just it's not working for almost anyone but what you're doing can work for people the more knowledge you gain the more money you're going to be making in your business this is it's an awesome way I think to live life especially that you two get to work together you're in love you get to work a business together you don't have to be a part like just it's a really good success story of an American work ethic in general and I love love love hearing this any last words before we let you guys get out of here I'm super grateful to be able to share our story and you know it just it is true and it does take hard work and you gotta put your time in but anything is possible yeah and I think it's you know we also love helping other folks who were you know maybe they don't understand where to get started and sometimes we find folks who they say you know I have a deal or I think I might have a seller who's in a situation but I don't know enough about it can you help us um and that's how we got engaged actually with the one in Connecticut they were doing with somebody who listened to our podcast and his wife does all the time and they said well you know we actually we're in a situation right now where we know somebody who wants to sell her house she's been on the house for over a year but I don't know anything about the deal so they got a hold of us and we were able to put it together for everybody so we also love helping people if you have that potential deal like reach out to us I'd love to help you and you know maybe we could help that seller out or at least Point her in the right direction in the right direction and a lot of times make a deal and that's what's awesome awesome so if people want to know more about you guys where can they find you yeah um definitely social media like we said we love Facebook um Jennifer de Lafave and Joseph de Lafave were on Instagram uh with our names we have a YouTube channel it's growing slowly but it's out there what is it um creative Finance Playbook we share a lot right on there too um is it all right if I share a cell phone number if you if you want you know this is a very be careful what you wish for scenario so tread lightly my friend give us the digits all right so if you have something that you want us to take a look at or you know we just need to talk uh my cell phone number this is not a recording this is actually my cell phone number it's 585 because it's an Upstate New York number it's where I'm from 207 -2240 that's my cell phone so you could call or text usually please text first um or call whatever's fine I answer my phone unless I'm in a meeting or talking with a seller but if you have a deal that we want to look at you need some help Reach Out we'd love to help well uh uh my thoughts are with your your cell phone and uh thank you for that David what about you man what's your phone number yeah that's really good buddy you can DM me how about that at uh on social media at David green24 please do reach out we love talking to all of you and uh on YouTube I'm at David green24 how about you rob you can find me over at uh raw Bilt on Instagram if you want to see the my goofier side and uh on Rob built on YouTube If you also I guess they're both equally goofy but I do real estate advice on there I do I talk about I talk about stuff there go go follow me go check it out uh and then also don't forget if this episode was the episode that you're like I'm gonna do it I'm gonna go to a Facebook group I'm gonna post that I'm looking for a house and it's actually gonna cause you to take action while you're taking action head on over to the Apple podcast platform and leave us a five star review so that we get served up to many other people who need that who need to take the same action so that they can Achieve Financial Freedom through real estate so thank you too very much for being here this was an awesome show we really appreciate both the knowledge you've shared and the insight into your life because I think that that is just as important as kind of showing a uh Playbook if you will for how to have a good marriage and a good partnership so it was great getting to meet you guys this is David Green for Rob live where you want and invest where you want Abba solo signing up [Music] thank you

Channel: BiggerPockets

Views: 81,865

Keywords: creative finance, creative financing, rental property, real estate, real estate investing, rental properties, income properties, investment properties, wholesale real estate, seller financing, mortgage wrap, wrap mortgage, creative financing strategies, invest in real estate, how to invest in real estate with no money, invest in real estate with no money, buy real estate with no money, no money down real estate, build wealth, invest, biggerpockets, biggerpockets podcast

Id: Hzf1aL3U_AE

Length: 61min 52sec (3712 seconds)

Published: Thu Jul 20 2023