In this video, we’ll reveal the secret to getting your first creative finance deal.
This is a great way to get started in real estate investing without a lot of money.
Transcripts:
Chris Bounds 00:00
One thing that I’ve been saying, Actually, I’ve said this for years way before inflation ever kicked in, is the folks that really make the most in this low like free money environment by free money. The 4%, 3, 2% you know, era that we were living in. The ones that really make the most money are those that built a portfolio with long term fix at those rates, and then end up owners financing them when interest rates get up into the 7, 8, 9 10, era.
Ultimately, when the interest rates get there, then they’re owners financing for 10, 11, 12 13, 14. I mean, those folks will probably end up making 10 times the original purchase price of their house. But there’s also this other other little spot, then I just bring this up since you’re keen on creative financing. Being able to buy a house now with using short term financing or to interface get six short term financing may go 12 to 14, being able to negotiate either owners financing, or subject to existing financing on a house that has two and a half. That’s gotten a lot of value. What are your thoughts there?
Steve Dancer 01:15
There’s some tremendous deals out there and you’re right on the money. I call it creative deal making one on one and mastering OPM other people’s money. There’s two and a half 3% rates out there all day long subject to deals out the wazoo man is at an area we’ve been working last two years, we kind of pulled back about a year and a half, two years ago on our agency business, we’re still doing it, we’re still just sold a listing the other day, okay, we’re still doing it.
But we’re focused more on the investing side. Because there’s some cheap money out there on the creative deal making so we can get a loan over there’s two and a half 3%. Right. And then we can do either a version of a rap or version of subject to or a deed assumption may have different creative ways we do it ethically and legally. And holy cow, we can get an interest rate of for a short term seller finance deal, maybe 7.5%. Think about that spread on that right there.
Chris Bounds 02:08
Yeah, plus points. It won’t surprise you. But my very first deal was owners are subject to if the actually it was the third deal, the first deal I held subject to nine and a half percent. And I was happy to get that deal. We ended up renting it out. But nine and a half percent, and that was 2015 or 2005. I’m not sure where the mortgage was, originated somewhere in the 90s. But-
Steve Dancer 02:40
Today’s market the number one way we’re creating notes, and I love creating notes. The number one way we’re doing it because you can push the price. For example, if it’s a home that’s going to sell for 350, we push the price up to 375-385-390. It may not appraise for that, but the buyer if they want to buy it, and they’re doing conventional financing, let’s say it appraises for 355. And we’re selling it at 385. And you know there’s gotta be a negotiation there.
And we’ve got that home auctioned exclusive right to purchase it with all the documents filed with the courthouse right, there’s a $30,000 spread there. They’re not going to do that and the seller is not going to take anything less. Right. And so we simply do a $30,000 second link carried back note ourselves, a note created out of whole cloth. I’m telling you remember the old the old movie that said you got mail right, you gotta manage it on my phone or you can set up a phone from your bank when I get this thing on my phone. It’s no longer you got mail and she got money.
This way it’s got to be so can we create a note out of that difference right there while we have equitable interest in the property, we have the legal right to do that. We got a $30,000 note. Do it out there for about 10 years they may pay it off in five but man you got two 300 bucks 400 bucks a month coming in, out of something you didn’t take out of your pocket to create a note that’s creative do make you want to become a millionaire. Go do bunch of those. That’s the way to go. Plus, how about making another 20 or $30,000 on the option spread when you sell?
Chris Bounds 04:14
Yeah, anyone who’s interested in notes or cash flow? I think you got their mouth watering, right?