Welcome to The Deal Pen, a podcast that digs into the details of untold stories from crafty real estate investors. And now, here's your host, Avi Rasowski.

All right, we are live with Chad Bonowitz. Chad, how are you doing today? Doing great. It's a beautiful day. Amen. Thank you so much for doing this. Chad is with Dignity Properties. And Chad, I have you saved in my phone, I think you know, is Chattanooga Chad. So are you in Chattanooga, Tennessee today?

Avi Rasowsky

Yeah, man. I'm sitting up in my attic looking out over Lookout Mountain. And you know I'll be Having a cup of coffee, buddy.

Chad Bonawitz 

We have a shared love for coffee. We might talk more about coffee today than real estate. So for anyone listening to this episode, if you don't like coffee, tune out now. But if you do, yeah. Thank you so much for everything that you've done in terms of just kind of swapping notes in real estate over the last several years now.

Avi Rasowsky

Uh, we'll we'll dive into a lot of that and then more recently just your your recipe for great cappuccinos and espressos and americanos Yeah, I am on or my wife and I are on the quest to find the perfect cappuccino in chattanooga So we went to europe last summer and it was ridiculous because like here You go to a Buc-ee's, you know, and it's all the pump things and it's just garbage coffee. There are gas stations there, Avi. I kid you not. You go, there were 30 espresso machines. There was no drip coffee. Everything's espresso and they are just banging these things out. And that cup of cappuccino was perfect from the gas station. This is in a gas station in Europe. Yeah, it was like the Buc-ee's equivalent in Europe and it was like perfect coffee. You could not find, I was trying to find bad coffee there. I'm trying to find good coffee here.

Well, it's funny. So, so two or three years ago, I would drink gas station coffee all the time, you know, if I just out on the road and now it's, it's so gross to me because I've, I've, I've seen the light. I've seen the other side of, uh, of coffee. What, what was, what was your experience like sort of understanding the beauties of, of freshly roasted beans and things like that?

Yeah, I've had a lot of different ways of brewing over the years, you know, had the fancy, what's the glass thing called with the wood around and the leather strap?

The French press? No. The Chemex.

OK, no, I don't know that. OK, you got to get the Chemex just because it's like a piece of art. OK. I've done all these different kinds of ways of brewing, but now I'm super spoiled. My wife and I have an espresso machine, so we pull a shot every morning and, you know, steam the milk and I have a cappuccino or a latte or something. And The beans we get is from this place called 41 and change. Okay.

You told me about that. Yeah.

So 41 and change. 41 and change. Yeah. And they're out of Nicaragua and they've won all these like awards across the world. And they're, they're, yeah, like you said, they're, uh, been picked and roasted every pretty quick when you arrive, when they arrive to you, they're not old. And they're just super fresh. And then every bag goes to like, send a kid to camp over there. And so you're doing good. Oh, wow. That's really, really more expensive than like, some shade grown organic stuff you'd buy off the shelf here. And they're amazing, amazing beans. But, you know, I went to a place recently, the Livingstone here in Chattanooga, and it was the best cappuccino I've had by far. My wife and I walked there yesterday. I was like, you got to check this out. But other than that, I make the best cup of coffee in Chattanooga. So if you visit and stop by, I'll pull a shot. I love it.

I love it. Well, before. So before we ever talk, actually, and we'll talk about Jeff Hatcher, I'm sure, because he helps us with all of our Creative trust questions and things like that but jeff told me that you're in the coffee more than i was and at the time i was grinding my beans with that like blade grinder. And you're like no no no no no no what are you doing you're ridiculous for doing that you introduce me to the. What do you what do you call the Baratza? What kind of grinder is that where you have a conical burr grinder? There you go. Conical burr grinder. Thank you. So my life has been so much better ever since using the burr grinder. I appreciate you for that.

That specific one looks like you could like shoot it with a gun. And it's just like it just deflected or something. That thing's bomber. Yeah.

It's great. Anyway, so many things. I learned something new on every cup of coffee, just like I learned something new on every deal, as I'm sure you probably do, right? Let's get into, before you and I ever met, you had been in the investing game for a bit, obviously, but you were a contractor before getting into real estate, right?

Yeah, I've been married 20 years at this time, and most of our marriage, we were in the nonprofit world and we're making pennies. I mean, we were literally on food stamps, not making a lot of money. And I was also doing some contracting. I worked with a couple of guys, did small green builds. And then there was a segue from there into getting into investing that I was, I just had a terrible back and I was tired of breaking my back and I was, you know, I knew, I knew there was a better thing. So there was this one guy, Walt, all I was doing is his cabinets and his doors and all his flips. And I turned to him one day and I go, well, what are you going to make on this? Like net, what are you putting in your pocket? He's like, ah, he kind of felt bad, but we were, we were friends at that point. I'd done a bunch of work for him and he was paying me a very good hourly wage. And he goes, Bro, I'm going to net $90,000. And I was like, Well, I work for two and a half years of my life to make that much money. No exaggeration. I'm not posturing here. And I go, how do I do this? And he goes, I just like get them like wholesale from this guy. And he like makes 10 grand off of me. And I was like, what's a wholesaler? And he just laughed. He goes, I'll take you to lunch. So he took me to lunch with this guy. The guy was bought into the We Buy Ugly Houses franchise. Okay. Um, kind of the story went from there. So, I was really grateful for him helping me figure it out.

So you're OK. So your eyes were open to, OK, I'm on the wrong side of the deal here. Yeah. And did you immediately get into it yourself?

Yeah, what that did is it led to a series of me having conversations of, okay, I have to have somebody teach me how to do this. And that is one thing that I've kind of held as a core thing throughout life is I never, I always want to pretend, even if I don't think I am, I try to pretend that I'm the dumbest guy in the room, because then I'm going to, that helps me push ego down and stop posturing so that I can ask questions. And so I, was introduced to Mike Hambright, who runs InvestorFuel and Flipner. He's a wonderful, wonderful guy. And he had, I won't say what the fee is now in case it's gone up, but he had a fee that I couldn't afford to pay. And I had to go and borrow money from somebody. It was over five digits. I had to borrow money from somebody to pay for this program. And I was like, this is crazy. I worked for like four or five months to make this much money. Um, but I was hungry, and I knew I had to do something else because I was tired of getting paid for my time or a task, and then having to spend more time or do another task to get paid again right and. Um, and Mike's program was wonderful and I was kind of traveling with him. And at one point he invited me, so they can come into the next conference. And I had his personal cell at that point, which was kind of generous of him. Uh, and I go, bro, I would love to come. I just, I don't have the money for the event. And so I got to thinking and I called him back and I said, I'll tell you what, I said, is there any way you can work with me? I said, I will show up early. I will stay late. I will vacuum. I'll take out trash. I'll serve. I'll do anything I can just to be in the room. And he was like, better yet, if you do that and you come a day early and stay a day late, I'll cover all your meals. And I was like, I'm in. Right. So it's just that scrappy, like, I'm hungry. I have to figure this out. And it was very generous of him. If you're listening, he probably won't do that for you.

But. So what year is that? That's awesome that he did that for you. And it's awesome that you came to that approach. When was that?

That was about five years ago. No, it was five and a half years ago.

OK, like twenty nineteen. Something like that. OK. Yeah. Super generous of him. So these were mastermind events with other investors that were mostly doing what, flipping or what?

They were wholesalers and flippers and they were buying and hold, that's it. It was nothing creative in the room. And then I had another buddy who we keep track quite frequently. He called me actually this morning, Jason Ratcliffe, and he was at the event. And he pulled me aside. He goes, Hey, there's this thing. He goes, I can't tell you about it, because I don't understand it myself. But there's this guy, David Alexander, and he does this thing. And I, and I was like, What is it? He's like, I think it's gonna change your life. But I was like, he couldn't tell me what it was. And it's because he wasn't trying to hide that he didn't understand it. But something powerful here. And he goes, you know, I mentioned to Dave, could he take you on as a apprentice? And I was like, why are you coming to me? There was like hundreds of people at this event. And he goes, you know, I think there needs to be guys that have integrity and honesty, or they could abuse this information and take advantage of people. And so that's this, all this Testament kind of passed down word of mouth. And so he said, I mentioned to David, if he'd take you on, but he was like, he kind of at this point is only taking guys in Texas area or something. He goes, but he has an apprentice, Brad Smotherman, who's starting a program and he's close to you. And he was like, maybe. Maybe he'll, he'll do something. So I got Brad's number. I kept calling him, kept texting him. He never would reply to anything. I was like, what's this guy's deal? And, um, finally one of my friends or Jason goes, he goes, text him the numbers. Cause I was getting good deals. And I texted Brad, like the numbers on a deal. He called me right away. I was like, Oh, Hey, Hey, you know, I'll help you figure this out.

I'll take you seriously now. Right.

Yeah, exactly. I'll take somebody with this. So, uh, and Brad was absolutely wonderful. I learned a ton from him as well. And, um, so it's just been kind of going from like, you know, Mike to Jason, to David, to Brad, to then our friend Jeff now. And, um, and even with Jeff, I was stuck on something early on, like, man, I don't know what to do with this house. And I just had this moment of like, Hey, I'll give you the house. You can have it. Because I'd taken it creatively, but I didn't, I was falling apart. I didn't know how to do it. And Jeff was like, Oh, there's this trust thing and a way to do it better. And blah, blah, blah. So, um, you know, we haven't mentioned it, but, um, you know, we, we, we, I would say we don't take things sub two, we have a better model, Avi and I, you know, but, uh, and Jeff has taught us that model, but, um, But anyway, so I gave him the house and I was like, I'll give you the house if you teach me how to fix the problem. And he did. And so kind of leveraging like time for Mike or leveraging this house for Jeff to get their attention or whatever it is like, please teach me, please teach me.

That's awesome. Okay. So you've done that. Yeah. That's sort of a pattern where you're like, Hey, I have something that would help you, but you have something that I want to know and you'll exchange that value. That's a, That's a great way to do it. So kind of bouncing from, not bouncing from, but like moving from and evolving from one mentor to another, what is your, let's kind of talk about like, what does your business look like currently and how you got to this point?

Yeah, sure. I have zero employees and I hope to keep it that way. Okay. Some guys love it and they want to build a big team. They want to 10x and go big and go strong and scale. And there's tons of that language all over the internet. You know that's that's kind of the culture with this hustle culture we live in it live in and that's great for some guys for me. I don't really want all that I don't want employees so instead what i've done is i've kind of placed a team of people around me that I feel like our professionals in their own right that can fill the gaps that I need, so I have. My insurance guy, you know, send me three or four insurance companies to finally find a guy who's my guy and he's freaking on it and he's amazing and he knows how to write these creative policies for me, you know, I have my realtor we're good friends, we, you know, always go to look at a house and we try to find the best Mexican restaurant around. and we go to lunch every three weeks or something. I have three contractors who are good friends at this point. I have my marketing guy. I have my accountant, bookkeeper. She does an amazing job. If it wasn't for her, I'd be a mess. I have a coach or a mentor. I have a therapist for my own mental health. And then, of course, I have friends that I can call and lenders. And these are all people that I've placed around me that I don't want to have employees. I want to be able to do the thing that I like to do. And as time goes on, there's more that I don't want to do. So I keep finding, well, who can I do for that? So right now I'm hiring a transaction coordinator to be able to do some stuff. Not hiring to work for my business, but that's what she does professionally. And she's going to handle things. So I'm going to get under contract. I'm not going to do anything. She's going to know all these other people who to contact and how to set it up. So that's kind of how I have my business set up. It's not necessarily what I do, but that's the way I've set it up. And I like it. And it's freed up a lot of time.

That's great. So basically, yeah, without employees, what you've done instead is you have a network of people that you can rely on, on, I guess, on a deal by deal basis is how you look at it. Like you're, you're obviously staying in touch with them, but you use people, um, in a good way on transactions where you need their expertise, as opposed to having a full-time staff.

Yeah. Yeah. And, um, it might be, I don't know if it's more expensive or not to do it this way. And I've had some people say, Whoa, you pay that person. What? Okay. Yeah, it's fine. It works. It still works for me. And I don't have any kind of responsibility that if I want to go on vacation, and I want to take time off that I have to feel like I have to whatever for them, I have no ties. And I like that. There's been a couple of times I've got, personally, I've got overwhelmed and I've really slowed the marketing down because maybe I took on too much or whatever. And I don't know that I would have felt the freedom to do that if I had employees.

Yeah. So right now you have, I mean, you have a portfolio of properties, right? And they're a mix of, just because I know we've talked in the past, they're a mix of notes and rentals. How would you describe your portfolio?

Yeah, I have, I think, 15 properties that I'm working on currently. that are in the pipeline, either under contract to purchase, we've already purchased, they're getting rehabbed, or maybe we took them creatively, and I'm going to try to sell them under finance, or we are, you know, we're closing on that side. Yeah, and then I have a handful of properties that I hold as rentals, and I try to get something that, you know, is solid bones that we've fully remodeled, and I know it's in a good area. I'm kind of close. I have an amazing, I didn't mention my property management company. That's another big thing. I was like, I'll never have rentals. Never. And then, uh, this company kind of started a few years ago in Chattanooga and they've exploded because they do a great job. Okay. You know, so I was like, okay, well I'll try. So I sent like one or two and then more and more and more. Right. And then, um, I hold a bunch of notes. Yeah, so I have all these owner financed notes that are kind of scattered across Tennessee and North Georgia. And now I'm helping my brother-in-law get in the business in Illinois. So we're starting to do some of these in central Illinois. Nice. Yeah, I love them, you know. So now it's just kind of a process of we always have new things going, like I mentioned, but just making sure these people pay. And I'm trying to get some stuff set up around that where I have people that check in and reply and figure all that out. So I don't have to be a part of that anymore.

Okay. So if we rewind just for a second, just cause I want, if somebody listens to this and wants to kind of build what you built, When you first started, before you ever owned a property, you learned from that guy who was making $90,000 on one deal, and then you learn from multiple other people. Did you start wholesaling or did you start, what was your first set of transactions where you started making money?

Yeah, I wholesaled two properties, I think. And then I decided pretty quick I did not like that at all. The stuff I was being taught to do felt like it was going against who I was as my core values.

You mean in terms of honesty with the seller?

Yeah, so I was honest with the sellers and I told them, I said, hey, I don't have money. But I'm networked in with people that do, other investors. And so I'm gonna make profit by just selling this contract over. And if you can give me 30 days, I knew it'd take me probably two weeks to find somebody, another two weeks to close. Then I said, I think I can put it together. And I said, if I can't, then here's a cancellation of contract up front that in 30 days, here's your cancellation if I haven't performed. But yeah, a lot of the advice is like you don't tell that to people, right? You don't want them to know. And then you say, oh, I'm sending my realtor through the house. Now I'm sending my contractor. And it's really just all these investors are pushing through. And yeah, always felt a little slimy to me. So I know there's ethical wholesalers. I know I'm really crashing them right now. And there's guys that do a great job. But the, the advice that I was being given and stuff was just like, this isn't for me. So, um, so I started, uh, just flipping and, um, And I didn't hold anything for the longest time until I started getting networked in with David and Brad and Jeff. And then we started doing these creative things, which we can get into the details of those if you want. But that's what I really was like, OK, OK, now this is starting to make sense. This is really helping people. And this is this is my jam. But it took me probably two years of real struggles to try to get to that point of doing some of this stuff. Yeah. Okay.

And it's, I don't know if it's a good thing or a bad thing, but when you, you were accustomed to living off a very low overhead, right? I mean, cause you, you said, I mean, what was two and a half years worth of income was 90,000. So you weren't living on a lavish monthly budget. So maybe, I don't want to say it was easier for you to withstand that, but you got through the two years where a lot of people probably would have quit.

Yeah, I think that one thing that's worked for me is sticking through something. And when things get hard, I kind of like start getting this tunnel vision of focusing in on what do I do to save this deal before it falls apart? You know, man, sometimes they start spiraling, right? And Jeff and I'll get on the phone and talk about, uh-oh, it's spiraling. Somebody's going dark. And you just got to get on the phone with them. You can't avoid it. You have to hit it head on and just be honest and say, look, this is a problem or I dropped the ball or whatever, just own it and say, but I'm also here to solve it. And so, yeah.

What do you think you get that sticking through? Cause that's a very rare trait. And I see that across a lot of people that actually make it in the business is being able to stick through it and, and, and push through the challenging times. Is that something from, you know, your early, early years, or what would you say that comes from?

I was hungry, Avi. It's pretty simple. Yeah. Yeah. I was hungry. And I think that's one thing that kind of helped me get to where I'm at now. And I'm really grateful is I had to make this work. Okay. You know, my wife was like, why don't you go be a school teacher and good for school teachers, but I would go crazy. And I was like, I don't want to do that. I love, I love houses. I love architecture. I really, really, really love architecture. And so there's a couple of things that have come together for me where I love what I do now. And I knew, I think I will really love doing that even if I just make a nominal wage.

Yeah.

It'll be pleasurable for me. I'll enjoy going to work. And I love what I do right now. But I think being hungry makes a big difference between somebody that has bought into a lot of this social media stuff of it's going to be easy, right?

Yeah, well, because there's being hungry and then there's also figuring out how to go get the food to satisfy your hunger, right? So some people can be hungry and say they want it and just watch YouTube all day, but you actually consistently do the work that's required of you.

Yeah, this is kind of a sidebar. I get calls from wholesalers quite often, you know, 18 year old, 19 year old kid that's watched TikTok and some guru or something. They always call me and my response is always, Hey, if you have a wholesale deal, just email me. And I'm happy to look at the numbers, but they want to like say, well, can we go through your buying criteria? And they have some, I'm like, no, no, I don't have time for that. So I told this guy to email me. So here's what he does. He he's sitting there on the bed and he takes a picture of his laptop on his legs. He's in his underwear and he has slippers on in his bed and he takes a picture of the laptop. And that's all I got. That's the whole deal. That's awkward. Yeah. You can make a living like really hustling hard here. You know, it's like, yeah. Have you been hearing about this? Like, where did you think this was going to be easy?

Yeah. Oh my God. Yeah. Try, try, try going and actually going to look at houses that, that might help. That's really funny. Yeah. No, it's, but it's true though. A lot of people just try to do it from, from their laptop and it's, uh, you can, you can definitely make deals happen from your laptop and a phone, but going to the properties I think is, um, I don't know. I mean, well, you, you actually don't go to every property that you buy, right?

The longer I do it, the less I visit these properties.

You're relying on someone to go for you.

No, I'm getting good at buying on the phone.

Okay. So, so to walk me through that, then you're, let's say you are, well, actually let's go back up to your mainly, what's your main marketing right now?

Um, just online marketing.

Okay. So, so lead comes in online, right? Yeah. And they're going to your website or.

Yeah. Yeah. I don't do any kind of like text blast or mailers or anything. Yeah. It's all incoming.

Okay. And then you're getting on the phone yourself. Yep. I love taking the call. Okay. Awesome.

I want to, I want to take the call. So if I didn't like that at one point, then I'll find somebody else that can do that for me on my list. I love it. I love taking the call and I love sitting on dirty couches. That's, that's my jam.

You mean the seller's dirty couch, not your own?

Correct.

No, I'm kidding. All right, so just the sequence of your typical deal flow is you've got the lead coming in, you talk to them. Let's just say they're like, yeah, I'm going to lose this house in two weeks. I need to do something. Whatever it might be, you know it's a deal. What happens when you know you're going to do something?

Yeah, well, once we kind of go through work out the numbers, then I say, Okay, um, you know, this works for me, I just have one contingency. And I just have to I can't pay you, you know, $100,000 for property that I haven't seen. And everybody says, Oh, of course. And so I say, Hey, I have to get eyes on the property. So I'll send an inspector over there within a few days. Okay, everything is as you said it was, then we're gonna move forward. If it's not, then I'll call you and we'll have a talk and we'll see what we can work out. And it's not as some ploy to try to like, you know, beat them up on price or something quite more often than not. I shoot him a text and said, all's great. Closing still on. Okay. But that's the way I, I kind of protect myself there. But, um, yeah, so I, I'll, I'll send, I have a, uh, inspector, Emily is wonderful. And she goes to all this stuff within like a couple of hour radius of me outside of that. Then I just get on the phone and try to find somebody.

Okay, so I want to make sure people understand, you're paying for an inspection, right?

Yeah, like 500 bucks for an inspection or something, yeah.

Okay, so you got a contract signed over the phone, then you're getting an inspector out there. How quickly are they going, typically? Five business days. Okay. And then you're closing. Do you have a normal window of time?

I can close in two weeks. I know some guys can do faster. My title guy is not the fastest, but he is very thorough. He will let anything slide through. And usually people need two weeks anyways.

Okay. And this is a, just for Tennessee is, is it closing attorney or title company that close? Yeah. Closing attorney. Attorney. Okay. All right. So it's the attorney that does the title work and then you, you're doing everything through that attorney. Yep. Okay. So, okay. Um, so, so you may not ever see the house. You said the more and more you're doing it, you have the inspector go out, you know what's going on and then you, you own it and you just like, uh,

And then I'll send my, I'll send my contractor over there to change the locks and blah, blah, blah. So, you know, depending on what our exits going to be on it, you know, sometimes we're just junking it out and listing it on our finance. And then we're going in and doing a big rehab. Um, and then I'm getting a loan on that and we're financing it inside of the trust owner financing my interest out, you know, and, um, or, uh, we're flipping it. So, and I usually, I mean, I don't know my exit. I usually like having like two options. I don't know my, I just, it's just me, man. I love. I love like walking through the house and feeling it and smelling it and kind of walk in the neighborhood. All right, here's what we're going to do that. That's another fun aspect to me. So I'll drive two hours at the end of a job to go take the contractor out to lunch, walk it, you know. fist bump them and then figure out my exit on what option seems like it's going to be best. And sometimes it just really just depends on what my business needs, right?

Interesting. Okay. No, that's fascinating. So you're buying it because you know, it's a good deal regardless of which one or two or three exits you have. And then once it's, so the end of your process of buying is the house is now clean and ready to go to the next step. Yep. Okay. So once you're there and you kind of get a sense of the neighborhood, you pick rental, owner finance, listed, whatever is the best for that property? That's right. Yeah. Okay. Interesting. And you've talked a lot about your realtor. You have a strong relationship with the realtor that you use. What is that dynamically? Like, what are you guys talking about and when do you bring a realtor in?

He and I, we have a great relationship where he will pull an ARV from me for stuff that he knows he's not going to get paid on. So, but he also knows he's going to get to list every flip that I have. At this point, I'm his biggest kind of client or whatever. And so he gives me priority, I've earned it. And he's very happy to do it. So yesterday, he spent probably an hour pulling comps for this property. And I was on the phone for maybe an hour and a half with a lady. He knew he wasn't going to get paid. I knew I was very high chance I'm not going to get paid on this either. There's a 10% chance this is going to work. However, part of my dignity property values and the dignity way I call it is I'm going to take care of people. And what I tell people on the phone all the time, and I mean it is whether it benefits me directly or not, I'm happy to help. Please call or text. I want you to, you know, be educated and make the smartest decision. Especially when it comes to a widow, Avi, right? She's in tears on the phone with you because her husband has died. She's overwhelmed. She's depressed. She should be depressed. And her house is full of clutter. There's half-finished jobs. She doesn't know what to do. And I feel a responsibility as a human being to take care of this lady, you know? And so, and my realtor shares those same ethics. So he knows he's not just doing this for Chad. He's doing this for this lady. And I ended up connecting her with a realtor in that town yesterday that I felt like was really going to help her. And I said, look, you do not, I told him the phone last night, you do not need to hand a penny of your equity to me. Please just call this realtor. A good realtor can help you out and you don't have to have, you don't have to clean it out. She'll help you figure this out.

That's awesome. I'm sure people appreciate that because honestly, that's so rare in the business. Everyone wants to make a buck for themselves. Thank you for doing that on behalf of the investor community. How did you come up with Dignity Properties? I know that's just how you operate, but when you were thinking of the name, What was that thought process, if you don't mind sharing?

Yeah, sure. I wanted to make sure that doing this business, especially after being in the nonprofit so long, I mean, guys might not quite connect with me on this, but I felt a lot of guilt about getting in this business and making a bunch of money. Okay. I just did right or wrong. I just did. Okay. And so I was like, all right. Um, I don't want to become the money, hungry, greedy bastard, you know, that's raping and pillaging towns. And, you know, uh, I knew that that is, it's in, in me as a human being to do. So I was like, what do I, how can I set this up to make sure that I'm kind of in check with my own ethos? And, um, I have a picture printed up here. that is Charging Bull and Fearless Girl. The Charging Bull that's right in front of Wall Street.

Yeah, Wall Street. Yeah, I've seen that.

Stock market, right? Well, then this guy went up and put up Fearless Girl, and it changed the image from a bull that's aggressive and going after the stock market and making a lot of money in a positive way. It made it look like he's about to charge this girl that is vulnerable. And she's standing like defiant with her hands on her hips. And I just have that image up on my desk as a reminder to like, be the girl stand in the way, you know, and, um, and I think you and I've talked about this before, but I think there's more than the capital of money. or there's other capitals that we are investing in in our life. And so if I can take a second, I'd say there's five capitals. And you and the listeners can order them in the way that you think is best for your life. I'm not projecting what I think you should do, or maybe there is a little projection, but I have my order. And I think they're this, I think it's spiritual capital at the top, Then it's relational capital, intellectual capital, physical capital, and financial. So, you know, spiritual is at the top, and there's a currency that we exchange for all these. So I think spiritual capital is like wisdom and power, like the good kind of power that serves the vulnerable, right? And then there's relational capital, which is like family and friends. You got intellectual capital, which is concepts and ideas. physical capital, which is just the hours and minutes and the physical strength we have, and financial capital, which is dollars and cents. So that's the way I've ordered those. And I was also trying to stay in alignment with that. I had this kind of idea about the world prior to starting the business. What I have seen guys do now that I'm in the real estate investing world is kind of do this, where they flip it.

Yeah, absolutely.

Since money is the top capital, and now what's right here is relational capital. So now we will lie and cheat to our sellers and our buyers and our realtors and our lenders to try to make money. And then we, our intellectual capital, our physical capital and our spiritual capital, some of these things just get totally compromised for money and greed. And, and, you know, so, um, I try to keep those in check. And when I'm on the phone, I try to listen to the voice of somebody. It's like, um, I try to view them as a family member. So like, listen to the voice. It's like, okay, what would I want somebody to say if this was my grandma?

Yep.

She was and I knew she was calling another investor or listening to the voice like this guy could be my brother or my sister or my mom or my dad or something. What kind of advice would I give? And I don't need to buy. I don't need to buy their house. I got plenty going on. There's plenty of stuff out there for all of us. And I just want to get off the phone and feel good. And when I say, hey, so what do you think your house is worth? And they say, I think it's only worth $150,000. And I think the ARV, because I'll say, what do you think it's worth after it's fixed up? It's sexy and shiny realtor, like 150. I'm like, if I think it's worth 230, I don't want to leave it at 150. I would want somebody to say, actually, I think it's worth 230. What do you think? And I want people to know what their house is worth. And then at the end of the deal, it's like if they know and they're happy at the price and all. And the other thing is I don't ever make offers. You know, I picked that up from Brad. I never, ever, ever make an offer on a property. So it's either like I can give you your number or it's no deal and I'm moving on. but I'm not going to throw some low ball awkward offensive offer out there and you hang up or chase me out of the house with a broom. So that was kind of long winded, but that is the core of how I do my business and how I try to view every call that I take.

That's awesome. Okay. So basically I love it because you're not ever, blindsiding someone and they're not going to look back and say, wait a second, he took advantage of me. It's all fully on the table. You're, you're telling them, even like you said, if it's worth more than they think it is. you'll let them know that. How do you then, and it probably goes into what you just said, it's not making offers. How do you then get such great deals? And I mean, is it just sometimes sellers want to get rid of it or what's your, what's your feel on deals that you will pull the trigger on? How, how are those coming to fruition, especially in a market where, yeah, they can just go sell on the market. When do you, when do you take those on and how do you feel like those great deals come about?

Good question. I think it's a little counterintuitive, because think about what that person thinks about you as a human being after you just told them their house is worth $80,000 more than what they thought. It probably have a lot more. And you tell them, I'm not going to make you a lowball offer that's offensive. And so you tell me what the best is you see yourself doing and i'll either call you back and say I can't do that um and here's what I think you should do um or i'll say yeah I can make that work um or a third option would be. I can't do all that cash up front, but we could maybe get creative and I could give you that amount if we could get creative on something. And I've done that quite a few times where it's like, okay, they really need that amount. Or for some reason, psychologically, they feel they do. And so then I just go through the numbers and I say, all right, well, we both agree your house is worth 230. Okay, so when you sell it, or when I buy it, either one of us are going to have 6% in realtor fees, 2% in negotiation, or 4% negotiating, 2% in closing costs. We'll go through all the things. If you list it, or if I buy it, I have to take that off the top. Both of us are going to lose this 9% or 10% off the top. And then I go through all my other fees. I go through everything and then say, I just try to make what a contractor makes. And And here's what I'm probably going to make on this. And here's where I'd have to be. And if you can find a better offer and you know, they're actually going to close, then go for it. Cool.

Yeah. Yeah.

And I've earned, I've earned so much credibility with the person by the time we get to that, that, um, people all the time say, you're my guy. I'm not, I'm not even going to call anybody else. You're you're, you know, we can work this out. So, uh, yeah, I love it.

That's awesome. Yeah. I think a lot of people get sort of nervous that, oh, the seller knows I'm going to make X amount of dollars. A lot of times sellers don't really care. They understand that, right? And they're okay with you doing it, especially if they pick you as their guy they're going with. They want you to win, right?

I was on the phone with a lady last week and she goes, well, I think you should make $40,000 on this. And I said, I agree.

Yeah. Yeah. That's awesome. All right. So let's, um, let's get into, thank you for kind of going through the context there. Let's get into maybe a couple of exam or do you have any example deals you want to share that might help people understand like how you do structure that? Let's say someone's like, okay, yeah, you're my guy. Let's do it. What you're sort of buying it for and what you could sell it for just to kind of dig in to give people, um, a concrete example of what a deal looks like in Chad's world.

Yeah, happy to do that. And for everybody listening, I hope you hear me talk about the lives that were changed and the people that are impacted through the whole thing all the way from buyers to sellers more than the numbers. Numbers matter, we want to make money, we have to make money, but Think about the five capitals. So I had a lady, so my son just got, he's going off to college next week. He got accepted to his university of choice. He's really excited. Yeah, it's so wonderful. And he has, my basement has a bunch of 3D printers in it. He has a little business he started, I shouldn't say a little business, he's killing it actually. So he had some money in the bank. And I was like, I've told all my kids, you don't have to do what I do, but you have to save up enough that we can get each of you one house. because I want you to understand what passive income is like. And then if you want to pursue it, we can figure out how to do that later on. So I have three kids in high school, by the way, and a middle schooler. So so a lady calls me and she is like, Chad, my husband died. It's a double wide on a permanent foundation on a nice lot with like a big shed, a carport and a giant workshop. And she had $103,000 on her mortgage at 4%. She had a down payment assistance loan that she had not fully paid off from when she bought it of $3,200.

This is like a state of Tennessee thing or a... Yeah. Okay.

Yeah, and it was a nonprofit. They're giving us down payment assistance. Okay. Yep. And they'd loaned it to her at like a low interest rate. Okay. Then she had a $12,000 HVAC lien that the power company has some program to help people out like that. So 103 on a mortgage, uh, $3,200 on the down payment assistance and 12,000 HVAC lien. And so her house, For me to sell it, retail sell it, I probably would have had to put $15,000 into it. Then by the time I listed it retail, especially a double wide and all, I might have made $15,000, but it was kind of a scary purchase for me, all cash. And so I asked her, you know, as I do, how much do you need cash at closing in your pocket after I take care of everything and give you a flexible close date of your choice? And she said, 10,000, that's my number. I need 10,000 bucks. I think if she sold at retail, I went through the numbers with her. And I think if she sold at retail, I think I told her, I said, you might be able to make 15 if you sold at retail. And she goes, Chad, I was actually sitting at her table and she goes, Chad, I do not want to do that. You hear me? I do not want to do that. She was like, I would much rather make 10. And so I said, all right, here's how I can give you your 10. And so, um, what we did was we, uh, we moved her, we, we did the paperwork for her to move her property into her trust, right? She transferred all her interest into her trust and she gave us the beneficial interest in the trust. She still retains some of that interest. Okay. We, um, in exchange for that, we gave her $10,000 at closing. Nothing came out of that. And then we took over all of those payments. Right. So now we just got online access to those and we're making those payments. Okay. So this was my son's deal. Oh, nice.

Okay. Yeah.

He paid the walkaway money. And he kind of put all this together and he went over, pressure washed the vinyl siding and we banged in the signs to market it, put it out there. So then we put it out there at, so that's 128, $128,000 total, but we're only out of cat, out of pocket, 10,000 plus closing costs. So we marketed it at $189,900, which was kind of top market value. And that's what I probably would have listed it as. And I had, I sold it to, or I should say, he sold it to a couple. This guy was ex-military, wonderful couple. They didn't have enough credit. They had a credit problem. They don't have enough for a full down payment to buy. And they were paying in rent, I think. $1,800 a month. And so they gave me, or him, a $10,000 down payment. So my son got his money back. And then now he cash flows well over $800 a month. And by the time the HVAC is paid off, the down payment assistance is paid off and all that in a few years, the equity spread is going to be like $75,000. So now my son has within six months, I'll have zero money in the deal, have all his money back. He's going to cashflow 800 plus a month while he's in school. And then at some point in the future, somebody is going to call him and give him a check for $75,000. That's amazing. So the question is who lost in that? Right. My seller, she got what she wanted, and I think was pretty generous. These people that bought were like, oh, they're paying $1,500 a month, by the way, and that's including escrow. They're saving $300 a month. They're owning. He was thrilled to death. They'll have equity in there in six months where they could sell it and not be upside down. They're thrilled to death and my son wins. And I was able to help him out and my son in such a wonderful way. That's where I like it. It's like if you can clearly see, oh, yeah, the greedy bastard in the middle won, but I don't think that's the case. Everybody won here.

I agree with you. There's a ton of winners in not just owner finance transactions, but I mean, we know there's so many and we're serving buyers that don't have the ability to go to the bank sometimes or don't want to for whatever reason. That's very cool. Now your son, what kind of, so what is he selling? 3D printer products that he's making?

Yeah, he, he, during COVID sat down and taught himself this software to be able to design things on the computer. And then he started, he bought a 3D printer for a couple hundred bucks, his own money. I've never given him a penny. Then he, he was like trying to figure it out. He was selling stuff at a few craft stores around the area and making dollars here or there. Then he got on Etsy and he designed this product and started selling it. And he's kind of really found this niche to where if I, he has, He has a 3D printer farm at this point. And he's going off to college. He's making amazing money. And he is now gonna, in college, he's gonna design the products, send the file to his brother who's in high school. And now his brother's taking over the side here and he's printing and shipping every day. I mean, they put out like 60 orders yesterday. And- Is it all through Etsy?

Or mostly through Etsy?

Yeah. And they're doing like a profit share on it. And this is their job in high school and college. And it's incredible. That's awesome. All I've done is help them build shelves for their printers.

Very cool. Pretty cool. Yeah. That's awesome. And to think that he was able to accumulate the money to be able to give a $10,000 walk away. That's pretty cool. And get it all back within, what, a few weeks or so? Yeah, it was like three weeks. Jeez. Okay. So, in case somebody didn't get the gist of that, so you have, is your son managing the underlying payments to the loan or are you managing some of that?

No, that's my accountant bookkeeping. I handle all that stuff. I don't even touch it. They send me an email and they say somebody hadn't paid. That's Misty with Alakai?

Yeah. Okay. All right. Wonderful. Yeah. Awesome. She's a, I've only started just to dip my toe in the Alakai waters, but she's a, she and her team are amazing.

It's been incredible. Yeah.

Yep. Awesome. Okay. So, uh, so right now that monthly payment is getting paid and then what, do you know roughly what that is? Like it's less than a thousand obviously, but it's 700 or something like that. I don't remember. You said you're making 800, right? So if they're paying 15,

So, all right, so you've got a good- Yeah, because her interest rate was low. Okay. It was like 4%, I think. Okay. And we owner financed it at, I want to say seven and a quarter. Okay. Which is like, that's what people are paying at the banks right now.

That's right. That's a really fair rate right now. It's not bad at all.

Yeah, and some guys that own their finance are like, oh, push it up 9.9, 10.9 or something. It's like, I don't want to do that. If I can, I'd rather set it low so they don't ever go anywhere. I don't want to refinance out.

I have a bunch in the 8, 9, 10 range, and I've gotten more payoffs than I expected just in the last half a year. Interesting. So you're right. It's like, okay, there is a benefit to just having someone not even want to pay you off. Just, yeah.

I did one lately that were late this last year at 6.9 and the interest rates were like seven and a half.

So yeah, you're competing with the banks and you have, I'm sure it's way cheaper to close with you than it is with a bank loan.

Yeah. 1,300 bucks.

Yeah. Very cool. All right. So, one thing I'm curious about on the HVAC lien, that's a monthly payment that's due on the HVAC or is that just got to be paid?

Yeah, that was a little complicated because once the utility bill transfers to somebody else's name, then they want to call that HVAC lien due. Really? But with how we have that structured, Um, we just told the power company that the seller, uh, moved her property into trust and we're managing it for her, which is the truth. And they didn't ask me about it. They just said, okay. And we were able to get access to making the payments. Okay. Perfect.

I think I would imagine there's gonna be some curiosity on the trust. I've not talked about trust at all on this podcast.

So like- Are you trying to hide something?

No, no, no, no. We've maybe referenced it, but I've never gone into detail. And I think you would probably, if you're open to it, be really good because you're articulate about how, so you said it, the seller deeded the property to a trust, right? And then can you walk through the mechanics of, What happened then?

So a lot of guys out there are thinking, oh, all you're doing is sub two. Um, that's not the case. These are not sub two transactions. Um, some two transactions are where the, uh, the deed is actually, um, changing over the real estate is actually, uh, getting sold. So no real estate, I'm not buying or selling real estate. We're having the beneficial interest of personal property move into trust. So, you know, if somebody out there has ever set up a living trust for their own family, you know, then they know that their personal house maybe used to be in their personal name and they had a state attorney move it into a living trust for them where all that did was just transfer their beneficial interest into their trust. Now, once they do that, then inside of that trust, you know, it's just a it's just a trust is really just a set of papers, right, that go into a file that's private, nobody can see. So then once they move that into their own trust, then they can do what they need to do. So if they want to give off a portion of their beneficial interest to family or friends or an LLC or they can do what they need to so that when they die, the money disperses accordingly. It's not much different than that, where we are helping somebody move their property. And these words are specific, right? You picked up on that. We're helping people move their property into their trust. And then afterwards, we're working out something with them to help them manage their estate. And in exchange for that, for us managing everything for them, then they exchange off a portion of their beneficial interest inside of that trust to us. And then we hold that. We own or finance off our portion of that interest in the trust. No real estate has still been sold. And it won't be until one day when our buyer comes to us and says, hey, we want to sell. And then the new buyer will buy the real estate.

And the trustee then signs it out of trust, right? Correct.

Yeah. So I'm not signing any documents to buy or sell. The trustee holds the deed, but they have no beneficial interest of that. They're simply holding the title and they get paid a monthly fee for doing that. And then we figure out the beneficial interest between myself, my sellers, my buyers, and whatever we need to do to put that together.

It took me a while to wrap my head around a lot of that stuff. Once it sank into my brain, I was like, oh, it's actually simpler. It's just a layer on top. The trust is just a layer on top and then everything else is private. It's funny, I had a private lender I talked to a couple months ago. He was willing to do a loan with the trust as the trust was holding the property. And because he understood it, he trusted me and I signed a personal guarantee. And so I told him, I said, yeah, I had a really hard time because I brought this to a hard money lender and their legal team rejected it. He's like, Avi. the lender hates the trust for all the reasons that you love the trust. And I said, yeah, that's, that's actually a good point because it is so private. There's, there's really, nothing's really publicly recorded except for the deed. Right. So it's a, it's a beautiful thing. I know you and I both use trust a lot in our portfolio. What's the, did you start using trust because of the protections that like, what was the reason that you started and continued using trusts?

Oh, I mean, we could probably talk about it for a while. There's a lot of a lot of reasons why it's it's better. You know, all these guys are doing sub two stuff. They are actually selling real estate. So they are actually violating the due on sale clause on all these mortgages. Now, does that mean they're going to get called due? I don't know, not necessarily, but they are. And with this, people will argue with me in comments when you post this out.

I know. Oh, I've seen it.

Yeah, that's fine. They can. But and and so whatever. But. where there's no real estate that's been sold, right? And so some guys will say, well, yeah, but the beneficial interest is transferred. And so it has, but there's been a few times recently that I know other guys that are doing this that had a bank that wanted to call it due because they saw something happened. And then before they did, they ended up backing off. I heard of that twice recently because they just were like, it's not worth it. And actually, I think once they looked into it, they realized they didn't really have much to stand on. So Jeff would be the one to get into kind of layout. He reads this legal stuff for toilet material is fun. But that's one of the reasons. I did another house recently that I sold to a lady. It was really similar. The people had $140,000 in their mortgage. It was 3.625. We weigh no interest rate, 140,000 on it. They had a $40,000 HELOC. It was a fluctuating interest rate. They wanted 30K and walk away. I was like, man, I mean- Were they behind on anything? They were behind two months, I think. um but they just said we need 30 and I was like but you realize that if you put 30 into this house and then you sell it you probably you might make 30 but. you're not really guaranteed that, you know, that's if you do really good and you get top of market and they're like, yeah, I know, but we want 30. And so I gave them full retail. Essentially I gave them the 30 because I gave them 30. And, um, and then I sold that. So I was a two Oh nine all in, I sold it for two 59, seven owner finance. And I got a $60,000 down payment. I got really, really lucky Yavi.

Well, it's funny. Yeah. We, we did something, uh, I was out of pocket, like 53,000 on a deal. Very similar. I think the seller wanted 20 and there was another 30 something in, uh, in like reinstatement and, and other, other stuff that had to be handled before we took it over. Yeah. Yeah. I was very nervous. Cause I knew I might've been negative, but we ended up getting a 70 that's something like 60, 70. And I was like, It took several months, but I do not like doing that. I just had somebody bring me something. It's a little risky. This week, I was talking about somebody this week and I was like, I'm not doing that again. I think I'm very, and especially now with like, you know, the market's so, I don't want to say it's crazy. It's just uncertain. I don't know what's going to go on. So yeah, that's, would you have done that deal over again or no? Probably not.

I got really lucky, but what we're doing on that is, what was my point? Oh, my point was my buyer came in and she, I was like, that's a lot of money. I was like, I actually told her, I don't need that much.

And- When she said 60, you're saying?

Yeah. And she goes, no, I want to give you this much. And I go, okay. And you can tell I'm kind of like, why? Like, who would say, I want to give you this much? Even after I said, I don't necessarily need that much. And she goes, look, I am leaving a divorce. I do not want money in the bank. I want nobody knowing where this money went. I'm going to hide it in this house. And I was like, well, actually, the deed is held in trust. And so you pull up the address on this right now. You pull up the deed. You're going to see 123 Main Street Trust as the name. She was like, well, my ex know what I bought? And I was like, not if you don't tell him. She was like, perfect. She wanted the anonymity. She didn't want him to know where she lives. She didn't want him to know where she put her money. And it was a big win for her because she kind of like put it in the house as her savings account. And so that was kind of my point of that. But yeah, it's also the numbers on it. So my again, right, my my my sellers got, I was pretty generous with them. My buyer, she was thrilled. And she instantly, I sold that for like $30,000 below retail, quite a bit of work. So she's super happy. And I cash flow $399 a month on that. So what I told Misty, as I said, take that 399 every month. I don't want to get a penny of it and pay down that HELOC of 40 grand. Cause you know, those monthly HELOC payments are just paying the interest. They're not paying the principal. So that 400 a month, pay down the HELOC. And then in a couple of years, that 40 is going to be wiped off. My equity spread grows and then I can start collecting cashflow. And so that was a, that was an incredible deal. Yeah.

I actually think I might remember that we, so we talked about, We talked about a HELOC on a deal. I don't remember exactly if it was this one, but a lot of people that are familiar with taking over payments on loans get nervous about HELOCs because you don't want that seller to tap into it. You got to freeze it. Okay. So can you explain what you did?

Yeah, I took some risk. I called the bank and I, so guys that do stuff too, they're like scared to death. You know, I was at a conference one time and somebody said, what do you do when you have to, you know, call into Bank of America and, and, you know, tell them you're trying to get information about some loan, you know, and guys are like, just tell them you're Joe Smith. And it's like, that's fraud. It's a recorded line. That's bad advice, right? And so I called this lady and I told her exactly what we did. I said, hey, you know, so-and-so, they moved this name and address into trust. We are managing everything for them inside. And I said, I need to know that this HELOC is frozen and they cannot get access to it. Since we're managing the estate for them, I was like, if they get access to it, we're gonna have problems. And so I said, what do we need to do to freeze it? And she obviously needed a borrower's authorization or power of attorney or something to be able to talk to me about it. And I gave her that. We talked the next day and she assured me that she had frozen it and there was no issues there. And she actually said, it's already frozen because it's behind. And as soon as it gets behind, we freeze it. Because the fear is, if anybody's kind of confused, is that your seller, a year from now, after you've paid down $10,000 of that HELOC, they're going to go, oh, yeah, that's right. And they're going to go over to the bank and suck $10,000 back out. And then I'm going to say, wait a second. So you got to make sure that doesn't happen.

So what if they, is there still a risk if the seller goes back and says- The bank will say, no, they've frozen it.

You can't tap into it any longer.

You cannot unfreeze it. Okay. Yeah. We dealt with one that we had, I think it was like a, I want to say 20 year The whole loan length was 20 years, and then it was like 10 years of draw period where they could take money, and then there was a 10-year repayment period. And so it was like, okay. And in the documents, it said, no more draws after you're in the repayment. So I think we're safe on that one. Yeah, it's definitely a little tricky and you have to trust your seller too, right? Like to make sure it's set up right. So that banker or whoever that was, they assured you like you're safe as long as you're paying it down, it's never going to get tapped into.

Yep. Yeah.

That's awesome.

And the big win when that was just being totally upfront with her about what we're doing and my name, not lying about anything. I was just laid it all out there and she was like, okay, cool.

Yeah. Yeah.

There's not like, yeah, there's no like, oh, we're gonna call the note due and blah, blah, blah. It's just, it's great.

Yeah. Oh, that's awesome. I love it. So I'm trying to think about other things we haven't really touched on, which is maybe private money. I know you use private money fairly often, right?

Yeah. Yeah, I use private money for all my purchases. And so I don't know that I have some deep wisdom to share on private money. I think maybe because I try to hold to the dignity way and these standards of being honest with people. I've been able to raise up, you know, a good bit of money. And it's all friends and family and business acquaintances, you know. people that I know, like, and trust that are close to me. And some people that have come to me, whether it's somebody at a title company or whatever, right? They go, hey, we kind of like how you do business. We, you know, we want to be a part of this thing that you're doing. And I got, you know, I don't have a lot. I got $10,000 or I got $70,000 or whatever it is. Is that something you could make work? And, um, and what are your terms and rates? And I usually I'm like, well, what do you need? And we kind of go from there and figure it out. So, and that's grown to a number that, um, you know, is more than I ever thought I would, that I knew I had in my network. And I could go out and like hustle and grow it bigger. But I'm good. I got enough right now to be able to do what I need to do. And I can only do so many deals at a time. I'm kind of maxed out on my capacity. And I'm sure I could, like we said at the beginning, I could go and like 10x it and grow it, but I don't want to. I'm satisfied. I am. I'm good.

Yes. You're pretty self-aware. Like, you know, what makes you tick and you know, what makes you happy and that's awesome. Yeah. Yeah. You don't need to go compete with the, the, the room full of people doing a hundred deals a month. Right. Yeah. That's right. Yeah. Yeah. Whatever it is. So one of my, one of my, um, one of my sort of, challenges I guess I would say is, or it has been, is, okay, well, I know I can buy this deal because I know I have this lender that might do it. And then there's sort of ceilings, right? You're like, oh, wait a second. If I don't have somebody that's going to do a 10-year loan or a 20-year loan, this deal might not work. How do you look at that? Do you buy things only if you know you've got a lender lined up, which it sounds like you do now, or Or do you say, well, I'm only going to, or I'm just going to do this deal because I know it's a deal. And then I'm sure I can get the money because I've got a network. Like, do you, do you understand the question on like, how do you order your decision?

Yeah. It would be smart to only do a deal if you do have the money. Well, I know my pool. I know how much money I have available in my pool, and I have it on a spreadsheet, but I got in my brain, you know, so I got about this much and I got about this much left. And so I'm sure that person will say yes to me. They want me to borrow again.

Gotcha.

Okay. But sometimes I do, I'm like, man, this deal is too good to be true. I don't know where I'm going to get the money, but I've got three weeks. I got to figure this thing out, you know, and that that's been, that causes you to like grind hard. Cause you're like, Oh, I cannot pass this deal up. It was hard to put it together. And they, they said, yes. So I'm going to send a, I'm going to send a contract over. Yeah. Yeah. And then that kind of pushes up your threshold and you hit these ceilings and these thresholds that Or for me at times have been super stressful, you know, and that's where you have to have this network of people that you call and say, you know, talk me off the ledge. I need some help. And so, yeah, that's why I listed a therapist in my list of people to help.

to deal with the crazy stress fest of closing and getting the money on time. What is your typical, and I don't know if there is a typical structure for your loan, like private loan, let's say, like loan amount, what types of loans are you taking and how long and what's the repayment? You don't have to get into interest rates if you don't want to, but like, what is your structure that you typically have on two types? Like a sub two deal where you're like, okay, that's more walk away than I, want to use myself, and then on a free and clear deal where it's a bigger chunk of cash up front?

Yeah, I pay anywhere from 8% to 12% interest, and I pay anywhere from zero to two points. It all depends on what the person needs. So I won't let my lenders listen to this because some people are going to say, wait a second. But That's kind of where that is. And usually people, I have some people that want it. People are pretty laid back with me, really. They're like, you know, hey, when the house sells, just pay me then. Some people want monthly draws and we can set them up on the monthly interest payment, which is fine. But a lot of these folks, I'll borrow the money, attach it to a house, house sells, I'll shoot them a text. Hey, you got $73,564 coming back, including interest. Do you want the money or do you want me to reborrow the new amount with the interest? And most of the time it's, yeah, just reborrow it. And they just like not collecting that interest payment and just letting that grow. These days, I'm gonna ask when they're gonna go, yeah. It's time. I want my check, you know? But it feels good because one of them is like my friend's mom who had $30,000 to her name. That's it. That's all she had for retirement to live on. And she has a long life left. And I have kept that money just solid, just churning deal to deal to deal for like three years now. And so she keeps going to her son, Josh, is this legal? No, because she's like, I'm getting paid and I'm not doing anything. And it's growing. So it feels really good, you know, and she's getting really good rate for doing nothing. And it's a good rate for me. We're both happy. And so I don't have if a deal comes where that was a lot of walk away for me. Yeah, you'll comes where it's like more walk away than what I'm gonna get in a down payment. I can let a little money sit in the deal sometimes, but if it's a big chunk. then that's when I shoot for some now, some later, right? Where it's like- With the seller. With the seller. So where it's like, okay, you know, I can't quite do that much all cash, but if we could do some of it at closing and some of it monthly installments, then maybe I could give you that amount. Would that work? And if people were like, I just can't do that, then I'm like, I just can't do this for you then. And they're like, well, what's your number? What's your bottom dollar? I ask you what the best is you see yourself doing? You said 50 grand. I can't do that. And, um, and so then you pack up your notebook or you get off the phone and then I go, okay, my number is really 30. You know, well, I can do that. I thought it was 50. Yeah. So, um, So, but yeah, that's where I try to shoot to some now, some later on, on some of those deals like that. Uh, I had a lady last week and she called me in tears, double wide, husband died, house is a mess, partially finished, you know? And she's like, I need a hundred thousand dollars for this. It isn't like nowhere. I mean, I'm looking, I've never even heard of this place. What the heck? Yeah. And she needs $100,000 for this double what? I don't even know if it's worth that, right? Right. So that's where I reached out to my realtor and said, hey, can you pull cops for me in this random place? And he was like, you know, maybe 150, bro. Okay. The RV. And I was like, and it needs work. I, I don't know if I can do this. So I just told her, I said, I'm out. I can't do that. She's like, what am I going to do? I was like, well, if we could do some now, some later, maybe we could. I was like, do you need all the money up front? No. How much do you need? She's like, I need $20,000. It's like, okay. If I could do $20,000. I mean, would that work? And she's like, yeah, if we could do 20 grand at closing in three weeks, that would work. I was like, okay, how much would you need in monthly installments? She was like, well, Chad, it'd be kind of nice to be like, you know, a little side hustle or part-time job. I wouldn't mind the monthly payments. I was like, well, I can explain to you how we can secure those, but how much would you need a month? And what's 750 work? I was like, I think so. I think that'll work. Yeah, so she gets she got her number, you know, and then that so who's my lender to kind of circle back to your question? She's my lender, right? And I have a 0% loan for $100,000. And she's thrilled. She was happy. She ran it by her son, which usually at that age, I'm like, can you have a family member that can kind of like help you make sure this is good for you and your family? Yeah. I'm going to be living with your son. I know next month. So I don't want him calling me mad at me. Does he know what we're doing here? And she was like, actually, he's preaching tonight, Chad. And he knows about this. I was like, OK, cool. Yeah. So anyways, but yeah, so if you don't have the money, that's where you go to your seller. So I have two deals right now, Avi, that are gonna be flips. The people gave me the number they needed. I knew I was tapped out. My private money was maxed. And both of these were gonna be profitable flips. So I told them both, I said, look, I will give you your number and I will pay off your mortgage within nine months. but I need to let that mortgage remain in place until I get paid. And then I can't give you that 50,000 to walk away or whatever. Right. So how much do you need at closing? And, um, one person said like 10, somebody else said like 20. And I was like, I can do that. So I took control of the property for 10 or $20,000. And then I don't pay them until I get paid when it flips. And they lended to me on the deal. So it's really, all we're doing and the more, if anybody's experienced out there, they know this, we're not buying and selling houses. We're not doing that. We're just using them to solve people's problems. That's all we're doing.

We're just using- Using the house, using the real estate to solve the problem.

Yeah, using the real estate and the bricks and sticks on dirt to solve a problem for somebody. And so that's where you get creative and you're like, I don't, what do you need? You tell me what you need and I'll help you figure this out. So that's where we do post possessions often, you know, where we let people stay in the home after closing a little bit, because they need money for their first month's rent or moving expenses, or I'll line up the moving vehicle for them. And I'll pay for the movers to come out and whatever, whatever it is, just tell me what you need. We'll solve that problem.

You ever run into sellers where you're, let's say they just treat you like garbage and they're not respectful. You're like, I'm not, I'm not dealing with this person. You like write them off if it's not someone that you feel like deserves the attention that you can give them.

Yeah, um, I don't know, one of those coaches I mentioned said, pain in the ass in the front end and in the ass in the back. And it's really true, right? Yeah, if you have somebody that you're on the phone with, and they're kind of giving you a hard time, or you feel like you're getting sold on the property or something, it's like things seem difficult, whether it's a seller or an owner finance buyer, the first time you meet them, if they don't know, how to follow my, especially owner finance buyer, man, if they don't know how to follow my instructions and how I've told them to kind of like call this number or do this or whatever, or send me a text or an email and they do the opposite or they call me instead. If they're having a hard time with instructions, they're kind of a problem. It's like, I don't think they're the right fit for me. And the same with a seller I've had plenty of times, like there's lots of money here, but this person is a problem. I just kind of back off.

It can be exhausting. You put a lot of energy into these deals, and if it's not someone that you want to be associated with, you move on to the next person. One thing I want to ask you, and we can wrap up in a sec here, but just for my own curiosity, because over the last probably six to nine months, it seems like it's been slower with owner finance buyers, at least in my area where we're in North and South Carolina, where it's not like it used to be, let's say go back two, three years, you'd have a deal out there and it would one, two weekends and it's gone. Is it taking longer for you these days to sell with owner finance? Or have you noticed any change in how long a property is sitting out there?

Um, well, that one I just mentioned with my son was last month and it sold in, um, like a week. Okay. That was real quick. That was really quick, but I was also only needing like a $10,000 down payment. I have two more I'm about to put out, uh, today and tomorrow. And so we'll see on those. I have another one that's been sitting for two or three weeks now. Um, I have had them sit two or three months. So yeah, I think that's slowed down a little bit. The bigger thing I've seen slow down is me selling retail. Okay. I just don't like selling retail, man. It's not fun.

You're saying the houses are sitting longer on the market.

Yeah, people are, I'm not getting full asking price. I'm paying for their closing costs and they are beating me up on repairs, man. They're making me replace a $4 sill that's like, that has like a dog bite out of it on the back door. You know, it's like, okay, I'll do it. I'll do it all. Just don't want to lose the contract. So I've had two properties retail fall out of contract, have to go back to a new buyer. Obviously you've lowered the price. And so I've had a couple of flips this year that I'm not going to make anything on. So that's a shift. And we're coming out of the hot spring real estate market. So it's like, okay, that's different. And that has nothing to do with my realtor being like incompetent or me not vetting the deal properly beforehand, or it's just the market. and stuff happens, right? So I had one house that had termites that ate up all my money and a few things I didn't know about, right? And then you drop the price twice and you have that it's like things start compiling. So on that one, instead of retailing out, I just got a 30-year loan on it and I'm going to hold it as a rental. So it's going to cash flow, but there's quite a bit less cash upfront versus what they're giving me in the loan versus what I was going to get retailed in that I'm going to get. So then I had to shift around some of my my lenders money to other properties. I have plenty of equity. So just kind of move it around. Okay, well, we'll do this to make sure they get paid. And I was like, yeah, okay, this works. We'll do that. But you got to get creative and kind of keep pivoting and stuff. So yeah.

Do you mind sharing what you do to sell with Owner Finance? I mean, we may do some of the same things, because I know David Alexander taught me a lot about how to put signs out and the process.

What's your... Yeah, we probably do the same thing. We put a sign at the yard that, you know, I got Vumber numbers. And so somebody calls me at the house sign in the yard. I answer that call and I get them inside to see the house. And then you do other signs that are perimeter signs that are a voicemail. And then you also put that voicemail number on like Facebook marketplace post. And then when people call that, your phone's not blowing up like crazy, right? So they call, they hear the recording, recording gives them all the details, tells them the address, told them to drive to the property and call the number at the house. So that voicemail one, you call it, hear the voicemail, call drops. And then if they're serious, they'll drive to the house. If they're a tire kicker, then you're not going to waste your time on them. Um, and I was, I was about to try this website and then I sold a house. Um, and so I didn't try it, but I'm about to try it on this one that's been sitting for two or three weeks and it's called listwithfreedom.com.

Oh, I've heard of them. Yeah.

Okay. Dollar flat, flat fee listing. And it just kind of pushes it out on Zillow and a few things. Okay. Yes. Talking with my realtor about it, he was like, yeah, He was like, you're gonna have realtors contact you now, want to get paid. And I was like, that's fine as long as they realize that their buyers are paying them. I'm not gonna pay the realtor. And so as long as the buyer's paying the realtor, then I'm cool. Which means that's probably gonna have to come out of my down payment.

Yeah, that's the only cash available, right?

Only cash available. But if that means I sell it and I can't move it, it's $150. Yeah, it's worth a try, right? Yeah. So I'm probably going to try it again. I don't know if it works or not. But that's part of the business, right? It's like, I don't know if this works. Give it a try. Yep. That doesn't work. I wasted money or, oh yeah, this works. I mean, how many marketing things did you or myself try or how many things have we done? Or, you know, you just always like pivoting and shifting and, oh yeah, this insurance company is garbage. And so you just keep trying and finding, it's like, finally you find your, your things and then everything starts settling down, but it takes years to get all that stuff to kind of settle in and you start feeling comfortable and confident.

Yeah, well, no, there was a time when Facebook Marketplace wasn't an option, right? And it's like, all right, you had to do Signs or Craigslist or whatever. And Craigslist still gets a little bit of traffic, even though some people can't believe that website still exists. But no, Marketplace, yeah, Marketplace was sort of just testing it out. And it seems to get... There's a lot of tire kickers there, but Marketplace is a good source of traffic. So yeah, I'm always willing to test something out. And listing on the MLS, I've not tried really. I did try a couple of times listing with a realtor owner finance, but that was sort of a mistake because the expectations were so off. I had some houses that were pretty rough and then the buyers coming in were thinking, oh, this is a retail house. And then they're like, no, it's not. And so that didn't go well. That was several years ago that I tried it. But

Yeah, I totally see that. Yeah, realtors and investors, unless a realtor is like a hybrid realtor, or they work with investors, it's a hard sell on quite a few things. They just don't understand us. And I don't understand them, honestly, in a lot of regards. So yeah, that can be hard to try to interpret. Yeah.

But I have heard though, that There's a lot of opportunity and realtors know sometimes owner finance buyers are looking. People are looking and they can't get a bank loan. So if you can tap into those networks and obviously pay a fair commission to the realtors to do that, there's definitely opportunity there. I just haven't figured it out. Um, cool, man. Well, I love your, uh, just your approach and your style and how, how much integrity you have and how honest you are. And I appreciate it. It's refreshing to hear because it's, uh, unfortunately it's not the norm in the industry. So thank you for, for just operating the way that you do. Yeah. Well, thanks for that. I appreciate that. Yeah. Yeah. Um, is there anything else that I know we touched on a lot, but is there anything else that you kind of want to, um, share with those that, uh, want to get some Chattanooga Chad wisdom?

Um, yeah, thanks for that. I think, um, a couple of things to just kind of for people to check in with themselves is, um, I'd say first, like network with, you know, honest, grounded people, maybe try to stay away from people that are that seem to be over promising. It seemed to be flashy. Yeah. Like kind of get with somebody that's pretty grounded. Um, just be honest, right. Honest with yourself about your own capabilities, kind of check in with your body. And, and I'm doing a lot of kind of body work, checking in and trying to make sure like, this doesn't feel right. Or why am I, why is my heart rate? What it is good grief. And I'm looking at my garment and it's like, so something's not right. Just trying to check in, be honest with myself, honest with other people. Um, we mentioned working hard. you know, and pushing through problems, not giving up when something gets difficult, but trying to really be a problem solver, calling somebody that can help, you know, give you something you don't know, not being the smartest guy in the room and go to a therapist. Find a good therapist that can help you work your shit out and, you know, and be a better human being to your partner and to your co-workers and all the other people around you. And, yeah, the world will be will definitely be better for it. And then, you know, last thing, Avi, I have a mirror. It's a brand M.I.R. I have a mirror little pour over is wonderful. It's these it's like three little metal pieces that fold up. They're the size of a credit card. OK, together like origami. And I just have that in this little fanny pack with, you know, a filter. And then I'll have a little little glass mason jar with a little bit of coffee beans. And I have a little I'll either take a thermos or I'll take my little gas camp stove. And that just stays in my car. And so when I'm out in the boondocks and it's like, oh, look at that. Look at that mountain. It's beautiful. And the cows are on the pasture. It's like this is the spot. I'll just pull over on a gravel road. You know, make me a pour over, enjoy the day, breathe, push the stress out, relax, say I'm a good human being doing good in the world and I need this cup of coffee.

That is awesome. That's a, oh my God. I'm definitely going to add that to my routine because yeah, there's so many times where you're going to look at a property out in the, you know, whatever rural countryside. And I have a seller I dealt with a few years ago. He calls Carolina the Southern part of heaven, which I, I love because there's, there's a lot, I mean, sure. Tennessee is very much like that where you look, you're like, oh my God, you stop, stop for a second. And if I can add a cup of coffee to that, oh my God, that's a great. So you just using a little camping propane thing. And what is the mirror? What is the brand of the mirror thing? M-I-I-R. M-I-I-R.

Yeah. It's like, it's like three credit card size and it comes this cute little cloth pouch with this little elastic bandage thing. And it's really small and you can just slide it in your pocket almost. So it doesn't take up much room. Just kind of keep it around. The other day I was with my contractor and his wife and we were coming back from looking at this property way in the sticks. And I was like, you guys want a cup of coffee? And they were like, I'll show you, I'll show you. We pulled off and I brought two like mugs from home for him.

And you take one of your white banded signs. You're like, all right. Okay. Espresso on the side of the road, $4.

And I just started doing pour overs. They were still sitting in the car. They started smelling coffee. They got out. They were all like hanging outside.

That's amazing. So you, it is a pour over. You just need hot boiling water basically. And then you're pouring it in slowly.

Yeah, yeah, yeah.

All right. I know what I'm getting today. Your coffee. So there you go. How it starts is how it ends. Just like you said, we start with coffee and we wrap it up with a bow with coffee. That's awesome, man. Thank you so much. I think anybody that listens to this and takes the time to understand what your approach is will definitely benefit greatly, just like I have. Every time we chat, I learn something new.

Yeah, well you're a wonderful person. I've stayed at your home before with your beautiful wife and kids and you're doing good out in the world. You're one of the good guys helping people and I'm grateful for you for the times I've called you and said I'll be I'm losing my shit over here. Help you know you give me some advice on stuff and we're able to brainstorm and work things out so I really appreciate you and if anybody doesn't know you you know I'm sure one day they can connect with you at a conference or mastermind or something and. Yeah, so thanks for what you're doing out there and putting yourself out there on social media and your numbers and postings and stuff just kind of helps us all out. Figure this out so we can, you know, do good in our neighborhoods and grow together, right?

Yeah. So helping each other out is a nice thing. So thank you so much. And and we will, I'm sure, be chatting very soon. That sounds great, man. See you.

Thank you. Thanks so much for tuning into this episode of The Deal Pen. We sure do appreciate it. If you haven't done so already, make sure you're subscribed to the show wherever you consume podcasts. This way we'll get updates as new episodes become available. If you feel so inclined, please leave us a review. And remember, there's always more deals to be had in The Deal Pen. Until next time, friends.