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 Rosowski.

Okay. We are live with Philip Klink from Upstate Land Trust. Philip, how are you doing today? Doing great. Thank you for making the time to do this. I know we've only talked a couple of times, but I've been connected with you on Facebook probably for five or six years. So I think one of the things, I have a bunch of questions for you, but one of the things that comes to mind right away when every time I see your name is you do a pretty unique style of investing, which I think you refer to as exchanging. Is that right? Yeah. Okay. We'll get into exactly what that means and everything, but this is just my guess is that if you line up a hundred investors, you've got a bunch of landlords and a bunch of flippers, and you might have a very small percentage that do some owner financing and creative deals, but you'd be hard pressed to find one out of a hundred that know anything about exchanging. Am I right?

Avi Rasowsky

Yeah, at least simultaneous exchanging. Everybody's used to the what was called Starker and turned into the just the deferred 1031 exchange. But in any time I tell people I'm an exchanger, they go, oh, yeah, so you do 1031 exchanges. I'm like, well, yes, but they're all simultaneous and we don't take any cash.

Philip Klinck

OK, so can we there's probably a ton of context that we'll probably dig into. And if you're OK, kind of going out of order, can we dig into what you just said? Sure.

Yes. The 1031 exchange that everybody is familiar with is you sell your property for cash. The money goes to a qualified intermediary to hold. You've got 45 days to pick your property. And there's a lot of little details, but you got 45 days to pick your property, a total of 180 days from the beginning of the exchange to close on the property. And that defers your capital gain into the future. And that came from the Starker exchange. I think it was in the 70s. I don't know the exact dates, but then it just became the standard 1031 exchange that everybody knows about. What we do is what people did in the 1800s is a simultaneous exchange. So you just go to the closing. I shove a deed across the table at you, you shove one at me, and we might have to balance with a note mortgage or some other deal.

So you're doing something without cash though, right? You're exchanging assets?

Typically. Yeah. There might be, it might be deed and some cash. It may be. Okay. So there's sometimes some cash, but a lot of times not.

So if I'm just thinking out loud, like let's say somebody sells a house for 300,000 and they, and they think about doing a 1031 exchange, um, and they're going to profit out of, I don't know, 150,000 on the one deal. If you did what you're talking about, which is a simultaneous exchange, are you suggesting that they could do without all the other sort of hoops to jump through, they could do a simultaneous exchange and get the 150,000 in another asset immediately at closing?

Yeah. And they don't have to worry about not being able to follow through with the exchange within the 45 days. So let's say you pick three properties that you want to go into. So you've got your first choice, second choice, third choice, and your money is that 45 day window being held with a qualified intermediary. And all of those contracts fall out for some reason. You just have to pay the tax.

Okay.

If you're doing a 1031. If you're doing a deferred 1031 exchange. Okay. Do a simultaneous exchange. You just go to the person and say, Hey, I want to buy yours with my property. I even have a contract on mine to go to cash. So that's a, that's a really easy exchange because the other person is just going to receive the cash. Okay. I want to deed mine to you and you deed yours to me prior to that closing. Okay. So we're going to go to a closing where all we do is pull title work and make sure everything's good. deed it over, deed it over, and that's it. There is no chance of it failing other than us not closing that particular deal.

Okay, yeah, you need everyone to sign what they're supposed to sign, but interesting. Yeah, you're not. So, okay, I've got all kinds of questions, but do you know, whatever context you have on why did we shift away from what happened in the 1800s if this is what people used to do?

There's a lot more banking now. It's a lot easier to get a bank loan. And so if I end up with a bunch of cash, I want to be able to spend that any way I want. And the government we will give you a way to continue to do what you did without having to come up with that one-on-one transaction, because it is a little bit difficult if you don't know what you're doing. Whereas cash is easier to spend. If I get cash and it just goes with the qualified intermediary, and I go look around and figure out what I want to buy, well, I can just pick anything I want. That's on the market.

Do you know how people like, it'd be interesting now to read back through like what people used to do. Were people back in the day trading livestock for land and like all kinds of different types of assets?

It was, I think so. So there was a time when you, there were more things that you could trade. Now it's all like kind, so it has to be real estate and like kind for some reason everybody gets confused about this. Like kind is not mobile home park for mobile home park. It's just any real estate for any other real estate. And even things that are in the bundle of rights that aren't really real estate, like oil rights, you can exchange out of your multifamily into oil rights.

What about like an owner finance note? Is that still considered real estate or that's personal property? Yeah. Okay. So, okay. Anything that has a deed with real property, you can do like kind to like kind.

Yeah, and that's for the deferred exchange. It doesn't mean you can't exchange a note for real estate. You still can. It's just not deferred tax.

Okay, got it. So I guess the obvious question, which I don't fully get yet is why is the method that you're using, why is that more advantageous than the deferred 1031?

Because, okay, when you buy and you use your cash, do you get a better deal or the same exact deal?

if I'm using cash to buy something?

Yeah, when you go around and you're beating everybody up with cash, don't you get a discount? Usually get a discount, yes. Yeah, we don't have to take a discount on anything and then go into the next thing. Okay. One of the benefits is you're compounding all of the equity the whole time.

Okay, so keep going on that if you don't mind.

So let's say somebody wants to sell something and I've got that house that's $300,000, right? What happens at the sale of a house? I got to pay commissions. I got to pay closing costs. They're going to beat me up a little bit. Maybe I end up with 260 instead of 300. Well, now I've got that held with a qualified intermediary. I can only buy something for 360. Whereas if I exchange, I get the whole 300 into the next deal. They take the 360. They're the ones that are gonna take the little bit of a discount in order to make the exchange. And let's say it's a $600,000 property that I'm giving this house as a $300,000 down payment on. Well, them taking a $40,000 discount on a $600,000 property is nothing like me taking a $40,000 discount on my 300.

Gotcha, okay. So you're selling costs are significantly reduced because there's no commissions. There's probably some closing costs, but not as much maybe?

Yeah.

Okay. All right. So you effectively get your discount. You're using your full equity instead of it getting shaved off at closing. Yeah. I imagine there's more to it than that though, right? Oh yeah.

I mean, there's a lot of benefits too. I don't have to worry about the 45 day window. Never gonna get stuck in a situation like that. Another thing is just, I'm not looking for cash buyers. I'm always looking to trade up or trade sideways or do something where I can create a benefit to me without losing what I have right now. So I can sit on the thing that's making me income and just keep my head on a swivel and look out for opportunities. So I'm not selling and then waiting six months or whatever to close on whatever it is because they got to build it first or finish it or whatever it is. I see a lot of people do that because it is kind of difficult to sell and then go into a development with a 1031. Because you can't really do it that easily. There's some provisions for it. And that's the way you get upside, right? You want a 1031 to something that has a lot of lift. It's kind of difficult to do that with a 1031.

Yeah. Okay. Okay. So can we dive into that whole concept of trading up a little bit? Sure. So as an example, every now and then I see an interesting post of yours where I'm like, You're offering something and you're looking for something in exchange and I assume you're pretty wide open to just see what comes your way, right? Sure. Can you talk about maybe, I don't know if you have a specific example, but something where you say, hey, here's something I'm trading and how you would trade up from what you currently have.

Okay. So, and I don't know if this is exactly trading up, but this is a way that we facilitated a bigger transaction. We had somebody come in the room and they had 17 kind of not that good mobile homes on land, pretty funky stuff that they bought, that they stole. They found a really good deal. They bought it for, I think it was like $600,000, something like that. They got them on seller financed and it was like one, three in paper, something like that. And we had just purchased one of our RV and boat storage development land.

Wait, can I, can I go back one second? Sure. They bought these for about 1.3 million, but they bought it for less, but it was worth 1.3.

Yeah, they bought it for six, but they still financed them and they had about 1.3 in paper.

Oh, okay. So they got down payments and they have notes for 1.3. Yeah. Okay.

Got it. So we, and so they had about 14,000, no. Yeah, about 14 $15,000 a month coming in. Okay. Net on some paper. Okay. We had our land, which was the RV about storage land, and we had just got approved. And we were about to start pushing dirt, but we needed to get money to develop it. Okay. So we exchanged our $300,000 land for their deal for their stuff. And then we have an option to buy ours back for 1.3. And we paid $2,500 a month for the first year, $5,000 for the second year, and $75,000 for the third year. And we only have three years to buy it back.

So the $300,000 was an option fee, right?

That was what we had in the land.

No, that's what the land was. Okay, you're all in cars. Is that what it was worth? Or you was worth more?

It was probably worth a little more. We got a little bit of a deal on it, but not much. Okay. Now getting it entitled and getting it ready to do RV and boat storage gave some more value, but it's kind of hard to tell what it is.

Okay. So you, so what did you do again? You took that land and.

And we exchanged it for those 17 double wides or single wides on land, half single wides, half double wides. And now we own them. We receive the income. We own them free and clear. We have a lease and an option on our land to buy it back.

Uh, from who though? We're, we're the tenant. You're the tenant.

Okay.

So they own our land. We're the tenant and we're paying them rent and we have an option to buy it back.

Okay. So that, that happened after the, or at the same time as the exchange, I guess. Same time as the exchange.

Yep.

So now we own all these kind of crappy mobile homes on land, but they have a ton of income. Yeah. So we start borrowing against them just from people, you know, 75, a hundred, just onesie twosie at a time as we develop the land.

Wow. Okay. So, all right. So going back to the, the land, you're now the tenant, but not the owner, right? And so you have use, but not ownership rights. You're paying rent, but truthfully to get access to own all the 17 mobile homes with land, you didn't pay any money. You just exchanged the land. So what were the details of that agreement? You exchanged the land as a down payment?

We just did a simultaneous exchange. So we both valued ours at the same only because we were lease optioning it back and we knew them. So maybe we'd have to do it a little more secure if it was somebody who didn't know. But we know them and they said, yeah, just borrow against them as you need to. But you have to put it back in the property. You have to get this land fully developed. That was the whole point. It took about, a year, something like that. And we borrowed about a million, not quite a million on each one of those. Land, you know, cleared, graded, gravel, fence, you know, all that stuff.

Yeah. You're saying a total of about a million, right? Yeah. So one at a time, times 17 different houses. Yeah. Um, that's fascinating. Okay. So yeah, my mind kind of exploded there a little bit, but that's, I think I get the gist of it where you, what was the reasoning, like, this is somebody in a, in a network that, you know, and, and so whatever you're, I mean, obviously I'm sure there's some private stuff there, but what was the reason that you wanted, like, why did, why did each of you want to swap places there?

Because we can borrow more against mobile homes on land that have 14 $15,000 a month in net income. Okay, then we can own some land that's just we just bought.

Got it. Okay. Okay. There's more, there's more income producing ability in the, in the 17 trailers.

And not only that they're paying our debt service for us. So normally when you borrow money, like if I went to a bank and I borrowed a bunch of money from a bank, I got to start paying debt service on that money. Right. And then I probably got to over borrow on it just so I have extra, so I don't run out of money on the development. Right. Okay. Whereas if I do it with these trailers, they're paying my debt service for me.

And the debt service you're talking about is the debt service on the development?

Yes, but it's on the trailers. So those 50 and hundreds and whatever we borrowed on each individual mobile home. Yeah. Those are less than or equal to what the income is off the mobile home.

Yeah. Okay. So I understand you're, you got, yeah, you got chunks at a time from each house. And so the, the mobile homes were kind of like your bank, uh, although you had to go through private. Who did you actually use as the lender, the same person or different lenders?

Yeah, just a bunch of different lenders. Okay.

All right. So you went to third party lenders to say, Hey, we've got whatever this income stream looks like. Can you, can you lend us this amount? And you use the money to then continue to development on the land. Yeah. Unbelievable. Okay. So, all right. That's some advanced stuff that you probably didn't start out that way. How many years have you been doing this, this type of exchanging?

maybe the last five or six. Okay. Um, I started out like 10 years ago, something like that. And mostly just doing sub twos and some under finance stuff and pretty, I call, I would think it's basic, but you know, fairly normal for even the creative world.

Right. Right. Okay. So yeah. And then that is definitely more, even just that basic stuff is more elevated than the typical, you know, flipper, wholesaler, landlord. And I told you right before we started recording, I heard a really interesting interview that you did with Courtney Fricke. She's in Louisiana, right? I believe so, yeah. Although you guys met at Pete's meeting in Florida? Yeah. Okay. So I need to get down there one of these days. He said you guys meet at the McDonald's on St. Pete.

Yeah, that's what he, well, he's there like every morning, like an actual seminar that he has.

Oh, okay. This was a meetup, like a, like a full blown conference. Yup. Okay. Pretty, pretty large crowd or no? Yeah.

He always has about 50 or 60 there. The hotel can only hold,

about that many. Okay, nice. So what was that like? Because I mean, I want to get into a little bit of how you learned all this stuff. And I know Peter Fortunato is a very famous name in the exchange world, and just creative structuring in general. But what was your process in learning how you do what you do?

So going to a local meeting first, so I was going to local meetings, Jason, my broker is, was hosting it. And we were at a Denny's. I mean, we're just sitting in the back of a Denny's with 15 investors. And they were doing pretty normal stuff like wholesaling and someone had rentals and maybe somebody here and there would be an owner financing something and mostly flippers. And then my Then Jason's mentor came in the room, which is Mike Elkins. And Mike deals with Peter Fortunato and Jack Miller and other people. And he studied under them. And so when he came in, he started coming up with all these different things that we didn't understand, or I didn't understand. Jason was keeping up, at least. I didn't really get it.

This is about, what do you think, 10 years ago or less?

Maybe like eight, something like that. And, um, and so I just started going to those meetings consistently and I probably didn't really do anything that was very creative, even after going to those meetings for a couple of years. I mean, it just takes so long to understand all the pieces. I mean, there's, there's two 12 hour courses that Jack Miller does that's on cashflow Depot that are just on options. I mean, it's 24 hours of how to use options and that's. It's pretty intense. You gotta listen to it over and over again, just to understand where he's going with all this stuff.

These are still available. Like you can go to Cashflow Depot. It's a website or it's a. Yeah.

Cashflowdepot.com. Okay. They've got just the depository of all his stuff that he basically, they convinced him to do it, to record it before he died. Okay. Nice. Cause he would only do seminars and you couldn't bring anything into him. You couldn't record anything.

Oh, wow. Okay. So, so whoever, who, who convinced him to do it?

Uh, Jackie Lang, she was, uh, one of the people that went to it. She's the one that owned the website until recently.

Okay. All right. Interesting. So that's great that that's out there. All right. So, so you, you learned a lot of that stuff from those and then these local people, uh, Jason, as you said, you're, you still run a local meeting with Jason now.

Yeah. Yeah. Greenville equity marketing sessions is, uh, is our local meeting. Actually we have, uh, on 10 31, October 31st, we're doing a regional meeting.

Okay. Nice. Okay. So, uh, and you were telling me right before we started, you do that meeting twice a month, right?

Yeah. First and third Thursday of the month.

Okay. In Greenville, South Carolina.

Yep.

What is the, uh, so if you just come to a, not a regional, but just one of the meetings, is there a specific topic each time or you just talk about what people have?

Yeah. What people have, I mean, typically we go through cash, paper and property. and then just get out inventory that they have, and then try to make exchanges happen.

So, okay, let's maybe, we'll zoom out a little bit because the, what is the nationwide, is it the SEC?

Society of Exchange Counselors is a big national meeting, and then the National Council of Exchangers is another one. Okay. I think they only meet four times a year and it's always in Vegas. It's always at the Tuscany.

Okay. Uh, so sorry. National council, national, national what?

Council of exchangers. Okay. The NCE.

So as you got kind of going in your journey, you, you started to get involved with some of these organizations where you, what's the intent? Like, is it a bunch of people that may have assets?

It's a bunch of brokers. So you have to be brokers to go to those national meetings. You don't have to be a broker to come to our local meeting. Same with most, not most, but a bunch of local meetings. You don't have to be up to that point. They kind of want you to be a fiduciary. You might be coming there only for yourself, but they, they want some kind of responsibility on you. If you're, if they're going to invite you to those meetings.

Okay. They want you to be a real estate broker. That's what you're saying? Okay. Okay. All right. So your GEMS sessions, they're sort of like a smaller version of the nationwide?

Yeah. And it's just wide open. You don't have to have a license or anything.

Okay. All right. So you're trying to make exchanges happen. How do you do that? I mean, what's the format?

So you want to find out why they're selling. So why is the most important thing? And that's what you'll find out when you go to a Peter Fortunato event is when somebody says, Hey, I've got this house to sell. So why would you want to sell a nice house like that?

Yeah. I've heard that. Okay. And it opens up a floodgate of answers.

And I mean, if it's, oh, well, I live in it and I need to sell it so I can buy the next house, probably you're not going to do anything with it. I mean, you just have to sell it and they're going to be real picky on the one that they want to buy and stuff like that. But if you're selling an investment property, we just came from the meeting in Rhode Island. There was a lady there from Denver and she had a rental house and she said, I've got the $600,000 rental house and it's in a great area and I don't want to sell it, but I used it as collateral on this other deal. And we were trying to give her some options and she was like, I'm just going to do whatever I can to keep it. And we were like, well, why do you, why do you want to keep it? Well, it's in a great area and the rents are good. I said, okay, well, what's your rent at this? Okay. And these are probably your expenses, right? Just guessing. Yeah. About that. Okay. So what you're telling me is you like to make 3% on your $600,000 money. Well, no, I don't like to make 3%. I'm like, well, that's what you're doing every day when you wake up and don't sell it.

Okay. And so how did that unfold?

So she said, well, yeah, when you put it like that, you know, of course, maybe I need to do something with it while we, and we can give some offers and I'm sending those to her, but you know, we can take that house in exchange for some brand new low homes on land that we're putting out right now and give her a few of them. And she'll make 8% on her money. And we'll just lease option them back from them. Now we own her house. She owns our houses, but we still have control. We're still lease optioning back for less than what they make.

Interesting. Okay. So, all right, let's say you've got, like, what is, I would imagine one of the limiting factors for you is not a lot of people know that this even is possible, right? How do you combat that? I mean, is it just by getting the word out and doing these meetings?

Yeah, go into the meetings and, you know, a lot of people that come to those meetings, they're just there to sell something. They go to the retail meeting and they go to the multifamily meeting. This is just one of the meetings that they go to.

You're talking about to try to sell an asset or sell like a service as a vendor?

So, they're there to sell something, some kind of real estate. So, when they come, they go, I don't know what all this is about, but some of these people have money and maybe they'll buy my stuff. So, when you find out those answers to those questions, how much debt do you have? When did you buy it? What's your basis in the property? If you could sell it, what would you buy?

Yeah, okay, interesting. And you can sort of skip the, I guess you can skip the cash component if they tell you, well, yeah, I would buy this. You're like, oh, okay, well, here, let's marry you up with somebody that's got whatever.

When it's just investment, it's just numbers. When it's, like I said, when it's their house, they get real picky about it.

Sure, sure. So how do you, How would you suggest, because I remember first talking to you right when we moved to Charlotte, probably about five years ago. And one of the things that I think you suggested, I may have this wording wrong is, all right, let's say I've got a bunch of notes and bought property for a discount, sold them at full value with a down payment and then took a note back. And so now I'm sitting there with a bunch of notes, right? And they pay, but what would be your suggestion on if I wanted to trade up, how do you even get started doing something like that? Well, do you have any debt on them? Some of them have debt, some of them don't. Most of them have some debt and then several are totally free and clear.

So let's say the ones that don't have debt, that's the easiest way to explain something. You can package those up and look for something that you wanna buy. Typically, if you're trying to buy like A-class something, they're not really gonna take it. Sure. And they might, but it's gonna be a little harder. If it works for something that's got some value add to it, let's say an old dark building, and it's a reasonable price. And we're not talking about way overpriced dark building. I mean, the price is okay. And you know, you can put some money into it and get it where it needs to go. You can either give them the notes as a down payment. You can create notes against your notes at 0% instead of 9 or 10 or 11, whatever you have them at. So you create cheap debt against them just so you can get them some income and give it to them as a down payment and go to the bank for the difference. We don't go to the bank, but you could. Or you can give them the notes as an option. We like to own stuff a lot of the time as a lease option holder.

So go back to the, we don't go to the bank. I mean, I hesitate to go to banks also, but sometimes I will, right? What's the reason? I mean, I'm sure there's some philosophy behind it. Do banks just slow you down?

Yeah, they slow you down and they make the things that you own untradeable. Why? Very difficult to trade because the bank won't move with you. Okay. I would imagine the notes, let's say a note that you have with a private lender on it. Yeah. If you traded that for something they liked, would they just sign a release over here and you sign a new mortgage over there?

Yep. Yep. Yep.

Yeah. You can just, it's slick. It's easy. You just trade right over and you don't have to really, there's no more application process. You don't have to do any kind of weird bank stuff. Okay. And they don't call the loans due like banks do. Okay. You send the wrong paperwork. You send your tax return into the bank on a Freddie loan and they don't like your tax return anymore. They'll just call the loan dude.

Okay.

All right. So a lot more just kind of caution tape around bank stuff. I don't want to sound selfish in asking this, but let's keep going with that note example. Let's say you have a portfolio of notes and you got some, like we talked about, that may be free and clear and you can trade them. What do you do from there? You look at this old dark building, right? And you look and say, the income potential, if I could get it producing, what's the process? You then negotiate with the seller?

Yeah. So you go to the seller and say, Hey, you've got this million dollar building. It probably really is worth a million dollars. I'm going to give you a million dollars for it. But what I will give you is, and you've got, you know, what is it doing? It's sitting there and making no money. Oh no, it's not making no money. I'm paying $40,000 a year in taxes.

Right. It's losing money.

Yep. Do you like making, you know, paying $40,000 a year in taxes or, you know, if I paid those for you, would that be better? Yeah. Well, why don't I do this? I'll give you $200,000 in notes. that pay $40,000 a year for an option. So I'm going to have an option to buy it at $1 million, but I got a credit of 200 on my notes. So my strike price is really 800. The property needs, let's say $100,000 in tenant improvements, and they just didn't have it. That's why they didn't do it. So you list it up with a broker, a leasing broker, and say, Hey, I've got the a hundred grand. As soon as you get a tenant, let them know that I'll put the a hundred grand in it exactly how they want it or whatever. Okay. And we'll get it leased up. Get it leased up. Now it's worth one five or one seven or whatever the deal is.

Because it's cash flowing.

Yeah. Because it's cash flowing and you've got a good tenant and they got pretty good credit. Who gets all that equity?

The equity upside is all yours now.

Yeah, I've got the strike price at 800. I get everything over 800 that it sells for. But now, the person that still owns it at 800, they won't get any income other than those notes that are paying their taxes for them, right? I just made their property liquid. So what I'm going to go do before I do anything else is I'm going to go find a property that I can buy for one five or one six or one seven, and option that one somehow. Then I'm going to put mine up for sale, the one that I've got an option on, and I'm going to go to the person that I owe essentially $800,000. I'm going to say, Hey, how would you like to start making 5% on your 800? Like almost right away.

Okay.

Yeah. I'd like to do that.

How would I do that? Well, it's going to be on a different property. You're going to have the 1031 with me.

Okay.

So now I sell it for one seven. And I take his 800 and my balance and go forward with it. But he just, he just looks like debt to me. Because I'm only going to pay him a master lease of 5% on the new property.

Okay. Okay. So, so can I back up for one second? Got, you got the note for, let's just say $200,000 in notes or, or call it one note just to make it simple. Then you've got the dark building that you owe 800,000 to the, to the, the seller or the option.

Only because I gave them that they now own my notes. I don't own those notes anymore.

Okay. You actually assign the notes, total transfer. Okay. Then the 800, you owe them if you have their strike price. And then you've got this third building is call it 1.5 that's already producing or no?

Yeah. Let's just say it's a seven cap producing building. No upside. I just know, I know about it.

Okay. Call it a dollar general so we can name it. So it's a dollar general. and it's bringing in, yeah, 7% on the money. And so now I didn't quite catch that. So you're going to tell this person that can get 800,000, hey, I'm going to get you 5% on your 800, but it's going to be a different property. It's this dollar general, right? Then how do you structure that?

So I'm going to line up the sale. I don't want to take those cash proceeds until I have all this lined up. So I know it's gonna sell for over the 1.5, so I'm gonna have enough cash proceeds to just buy this dollar general. But before any of that stuff happens, I gotta make my deal with the person that's got 800. So I make my deal with the person that's got 800, I take the cash. Now I'm not really taking the cash, the 800 person's taking the cash. But we have a deal that I'm gonna lease option this property that we're going into, at 5% triple net on his 800.

Okay. So I'm just going to do the math real quick, unless you know it, but so 800,000, sorry, 800,000 times 5, 40,000 a year, 33.33 a month. Does that sound about right? So you're going to tell this person that's got 800,000 owed to them, the original owner of the dark building, instead of 800,000, I'll turn it into 33 a month for you. Yeah. Okay. So now what are you doing with the Dollar General?

Well, one sec, let me do this real quick. I was just kind of making this up off the top of my head.

No, it's good. I don't mean to put you on the spot. I'm just curious how it plays out.

Okay. So now I'm still a lease option holder on the dollar general.

Got it. They own it, but they get a 5% triple net payment.

Okay. It makes 8% on the full one five.

Okay.

So that means I make $80,000 a year on my position on my $700,000 in equity in my option.

So hold on, say that one more time. They're getting 8%, they're currently bringing in 8% on their 1.5.

The whole Dollar General brings in 8%. Okay. The person that owns it, they only get five on their 800.

Yep. And you're keeping the three.

So I keep three on the 800 and I get eight on the 700.

Oh, wow. Because, okay.

Damn. I just made them into a 5% interest only lender to me.

Okay. Yeah. Okay. I see what you're saying. And, and so, oh my God. Okay. So, so how do you buy the one five though?

Cause I got it in that scenario. I just said, Hey, I've got a 1.5 million coming from a sale. Okay. And what I would tip, what I would say to do is instead of taking the cash and putting it with a 10 31 intermediary in that person's name, cause they're the owner and they're the one that's going to go forward and buy the next one. I would say, hey, person with the Dollar General, I've already got a contract on this. The money's gone hard. They are going to pay one five for mine. Why don't we just deed for deed first, and then you can take the cash. I don't want it.

Well, no. I apologize because I'm still lost. You started with just, let's call it one $200,000 note. Then you got into this dark building situation. who's ultimately getting paid the, who's getting paid from, go ahead.

Yep, so I've got the 200 in it, the 200 note, and I've got the 100,000 cash that I had to do for the TIs.

You had to put that in to make the dark building performing? Yeah. Okay, then someone is gonna come and buy the dark building?

Right.

So I put it up for sale. Got it. It's now a nice, clean AutoZone or something.

Let's call it the AutoZone now. AutoZone. Got it.

So we've got the AutoZone that's worth 1.5. Okay. I get a contract on it for 1.5. Okay. But I don't want to take the 1.5. I want my person that owns it to go with me into the next deal.

Okay. I'm with you now. And so it really is something coming in to buy the AutoZone, but you're not taking that money.

Don't want it.

That's right. So then what happens to the buyer of the AutoZone comes in with 1.5?

They're not actually going to buy it from us, from me and my owner. They're going to buy it from the Dollar General owner. Wow. We're going to swap ours first. Then the cash comes in and buys it from the Dollar General owner that wanted the cash in the first place. And this could be all of the same

Yeah. So the dollar general seller is actually the one getting money in their pocket. Yes. Unless you can convince them to go roll into a casino, right?

Well, when they get, when they get the money, I want, I want to talk to them also.

Okay. Yup. So you're networking the whole way through. Yup.

What are they going to do with their one five in cash that they just got that I didn't want, that I helped them get.

Okay. That's incredible. So, okay. I can kind of see the light now. It was very hard to understand, and I'm sorry for not getting it at first, but how do you, so you're navigating through this stuff all the time, it sounds like. Like you're just looking for plays to parlay.

And sometimes it's, and that got kind of complicated there, but sometimes it's just, I buy a lot, I put a mobile home on it, I get it seller financed, and then I trade that for another lot.

Yeah. Okay, yeah, it can be much simpler, yeah. But in the scenario, the long-winded example there was you had 200,000 note, which honestly, you probably got at a discount anyway, you created equity, and then you turn that into whatever the, I'm not gonna do the numbers now, but whatever the cashflow is on that spread that you made for a lifetime potentially, right?

Yeah, I turned it into a $700,000 position in an option that if I convince my owner to take 5% and they move with me, it turns into an $80,000 a year deal.

Yeah. And you didn't really even need the cash, the $100,000 to fix up the AutoZone building. You could bring in a private lender that knows what you're doing, right? Yep. Can I ask you a little bit about the, without going too much down the crazy path of, I'm sure there's stuff that's hard to explain on audio here, but the paperwork to do exchanges, what's the high level view of it all?

we just write up two contracts. I'm gonna buy yours for a million, you're gonna buy mine for a million. And on the HUD, HUDs work just like a double entry bookkeeping. And it just balances on the HUD. You don't actually need the cash to make it cross.

You're just saying, here's a credit for a million, here's another credit. All right, so if you go, you can go to any closing attorney that doesn't even understand this stuff and they just tell them, yeah, we're doing this, but actually just trade this out for this asset is worth this amount. Very cool. Do you have preferred attorneys that you work with or you just can go with any attorney? Okay.

You can do it with, if you want to sit there and explain it for an hour ahead of time every single time, you can use a different attorney, but it's better if you just use the same one all the time.

Okay. All right. That's amazing. Are you doing these types of transactions across multiple states or mostly close to home?

Mostly close to home. I mean, I will, but I haven't, I just haven't done it that much.

Yeah. What would you say? And look, everyone, everyone's got their own personal feeling about how much they want to share on their own private stuff. But do you have any examples of, of like your favorite deal or anything that you're like, okay, that was, that was an amazing deal. You know, I wish I could do that one again.

Well, there's one, there's one that we kind of like in general that I'm always looking out for. Okay. This is one version of it. So we bought this is it so many steps to it. But we bought 27 double wides and that part was creative in general. We had eight of them released. And so they were they were free and clear.

And we so you got a release from the private lenders.

Okay, I'll just tell you the whole deal. Yeah, we got an owner finance from the seller. He wouldn't discount at all. And they were all like contract for deed, except for like six of them. And so he wanted full price. I'm like, well, I don't want to pay full price. And he said, well, come up with something. So I said, well, I'll give you a down payment, $300,000 down payment, but you have to release a certain amount of them, equal proportion every time we make a payment. And then we had five other equal payments to pay them off. We got a 1031 person to 1031 into the first four or five, I can't remember how many we did, to pay the down payment. So now they own those and we have to make them a payment. We use those and another one, free and clear, to create a note to buy a piece of land in Kentucky. Okay. It was like two 40 or something like that. And I didn't know what it was going to sell for. It was zero interest note. Okay. Created a zero interest note, bought the land, sold, luckily sold the land for exactly what we paid for it. Okay. After closing costs and all that kind of stuff, our, our effective rate was like 0.56% or something like that on the two 40. Okay. The two 40 plus the cashflow. And we see, we got to keep all the cashflow when we bought it. Okay. So it was bringing in, Let's see, it was bringing in 180 a year in cashflow.

Which one was bringing in 180? The 27 double-wide package.

Okay, got it. Okay. So we used some of the cashflow in the 240 to make the next payment. Okay. Wow. So that released another four. Okay. So we used those and another one to create a note, and we went to a meeting, create a note to buy a house in Austin, Texas for $800,000. We gave a $600,000 note at 0%, 3,333 a month payment for 180 months. And we had to give the guy 200,000 cash because he owed it a little bit on this house. So we reported the patent first position against the house. Because most of his equity was in the form of that note that we created on the double whites. The only reason we did that deal, cause that's really far and we don't know Austin. It was like South Austin. It was a really crappy little house in a really, really nice neighborhood. Okay. Only reason we did that deal is because the broker said, yeah, yeah. Key keeps turning down $580,000 offer from this slipper guy. Okay. So I put it in my calculator and that was five point or 6.5%.

Okay.

So we knew we had to take her right away.

Yup.

So we, Buy it from him, sell it. So I bought it for 800, sold it for 580. Every time I tell people that story, they're like, yeah, but you lost money.

Okay. Yeah. How do you explain it?

Well, you did. If you put in your calculator, what I really did was I borrowed $380,000 at 6.5%.

Got it. Which is, yeah, which these days is pretty good.

Right. And it wasn't just that, we've got these yearly payments to make. Bob was his name, Bob. he, we had just made that other payment.

So Bob was the guy that owned the 27 double heads.

Yeah. That we owed the big payments to. Okay. So, uh, we had just made that other payments. We really didn't have to make a payment for about a year or something like that. Okay. Well, we had this 380 in cash and we had all this money piling up in the account. Yup. And we said, well, why don't we just call it Bob and see if he'll take, We owed him 286 times two for two payments. Why don't we just get him to see if he'll take 400,000? And he said, no. We were like, well, what would you take?

He said, 410. Okay, fine.

So once we made that payment with that cash that we borrowed at 6.5%, really we're at like a 0% or maybe negative.

I think I get most of that, but yeah. So if people are looking at the service level, Austin deal alone, isolated, yes, the price is less than what you bought it for, but you borrowed it in order to pay, yeah, you finished the rest of the deal and you were able to, so what was the end game? You ended up with what?

We just increased our cashflow because what we were doing was saving up all that $180,000 a year to try to pay Bob with, but we owed him 280. The deal was we need to come up with financing and we did a pro forma on it at if we just borrowed the money at 10%, we'd still make some cashflow. We just borrowed it on each mobile home at 10%, we'd have some cashflow. Okay. But that wasn't what we wanted to do. We wanted to do these kinds of deals and make it a lot better. All right. We've got, now we've got $10,000 a month of cashflow coming in and we still have a couple more payments to make, but they're two years from now. Amazing.

At some point. Okay. So, and how many, you still have control of all 27? Yes.

Well, one of them paid off.

Okay. All right. One of them paid off. So, so those are performing notes and, and in order to get those, you, yeah, you basically just look at your total return on it. And I assume, I don't know if you know exactly, but it's a pretty good return, I would imagine.

Well, I don't have anything in it because we had somebody 1031 in for the down payment. And then we did these weird deals for the other three payments.

All right. So infinite return isn't bad, I guess. Yeah. Jeez. The 1031 person put how much in? 300. And that was for just a chunk of the... Okay.

They get a payment and then they get a quarter of the deal. Okay. It's like they get a preferred return versus the part owner's getting. We split it up even with him. Yeah. There's four of us, so everybody gets a quarter. So we all get 500 bucks a month, but he gets a little extra because he's got 300 grand in.

Jeez, okay. So that's amazing. So you're juggling these balls. Is it always, I mean, it sounds like those last couple of examples are, okay, you're looking for a long-term cashflow in play. Is that always what the end game is? Whatever can cashflow with stability?

I mean, you know, cashflow is definitely good. Cashflow, especially when it's a bunch of little stuff, comes with a lot of administration. So once you kind of have all the cashflow you want, you might want to go after the big upside deals that don't have any cashflow. Like the big deal we just talked about, you know, a million and a half, two million, stuff like that.

Even that though was a cashflow play. I mean, you're still aiming towards the cashflow. Can you give your view on, thank you for explaining, by the way, that was helpful. I'm going to definitely be listening back to pieces of it myself. I'm sure others might as well. One of the things you explained to me probably four or five years ago was the liquidity. You might've messaged this on Facebook. Okay, you've got certain things that are very liquid and certain things that are not liquid at all. Can you kind of run through how you view those when you talk about notes and houses and stuff?

Yeah. So there's a, we've got this little, and I probably should have brought it or whatever, but then there's this PDF that's just like the pyramid of value. Okay. Like down at the bottom would be like encumbered bullet hole land would be like regular land. That's not encumbered. And then. dark buildings. And then once you start getting to the top, everybody's opinion is different. It's like maybe triple nets here and papers here, or maybe triple nets above paper. Different people like different stuff. And then cash is at the top because it's the easiest to trade, but there's the least amount of it out there. There's tons of land that's free and clear. I mean, tons of it. And it's just sitting there and the equity is not doing anything except for holding that person's wealth together.

So all right, I've got an idea. So a friend of mine and I, we own some land together and it's not performing, right? Just sitting there, vacant land, 90% trees, but let's just say it's worth $100,000. What in my current reality with that land, what can you do with that in your group of exchangers?

Well, the first thing I would ask is, do you want to keep it or you don't mind trading it? Don't mind trading it at all. Okay. If it was worth a hundred and then the next question is, what are you trying to do? Are you trying to go up or are you just trying to get some cashflow? Great. Trying to trade up. Trying to trade up. Um, I'd make, if it were mine, I would be making offers with it on anything that I was trying to buy. Okay. I'll give you $300,000 and this land for your $400,000 house or whatever it is you're trying to buy.

Interesting. All right. So just use that as a bargaining chip, like a big down payment or something.

Yeah.

Yeah. And so the person or, or people that might be interested in that are people that really want the land for hunting or whatever, right?

Or they just want the $300,000 that they can't get yet because nobody's made them an offer.

Gotcha. Yeah. Okay. Okay. They just need to sell it. Yeah.

Even better with people that don't know how to trade. They don't know anything about anything. If you had an offer at 70 that you wouldn't take. Yep. You can go to them and say, Hey, I'll give you my land and 300,000. And they say, no, well, I've got a buyer for the land at 70 that we can do all the same closing. Interesting. I don't want to take it, but you can take it at the same closing.

Jeez. Okay. Yeah. It's definitely, uh, my eyes are opening to it. Do you, do you, um, do you look for land specifically to use as bargaining chips?

Um, even to try to get people to go into a deal.

No, like, do you, let's say, do you look for discounted land that then you can use to do what you just explained to me?

I mean, I'm always looking for, you know, lots to put mobile homes on and improve the value and stuff like that. Okay. You know, I want to create as much value as I can with it before I then try to trade it.

Sure. Okay. Okay. So, um, all right. So, so for example, if you could put, double wides on it, a couple of double wides on it, that would be more interesting, obviously, than it's not just vacant land.

Yeah. Yeah. People like that a lot more. So if you can improve it all the way to as good as it's going to get for now, I mean, maybe it's going to appreciate, but as good as you can get it for now and then trade it, that's what people are more likely to take.

Yeah. Because right now, if we took, it's 12 acres, you can right now subdivide it only once really into two, six acre lots. And then it's worth 350 to 400. And I assume you can get pretty reasonably priced used double wides. When you're doing stuff like that, where you're marrying up a double wide with land, I assume you're looking for used stuff. You're not buying new? Yeah, we're doing new now. You are? Really?

Why is that? Just because I can get an unlimited amount of it. Okay. I don't have... It's not limited by what I can find in the market. Gotcha. Okay. And the used ones seem to be fairly expensive, or they were all the way through COVID. I don't know. You might be able to find some now. The what? The new ones? The used ones were like almost as high priced as used ones. Cause nobody could get them. They were like 12, 14 months out.

Okay.

Okay. Now they're like four to five months out, which is still a long time. But if you are in the business of like finding lots, you just go ahead and order them and then you'll find some lots and close on them before the trailers get there.

Okay. Interesting. Yeah. Okay. This is incredible. Um, what, um, so obviously there's a lot of like the history of how you got into it, that, that we didn't cover, but I think anyone, anyone listening, anyone that hasn't watched your interview with Courtney Fricke, I think is, is totally, um, you know, it's worth checking out for sure. I've only gotten through half of it, but it was intriguing to hear how you built up. Um, it sounds like you, some retirement accounts for your dad, and then you kind of got into your own investing after that. Is that kind of what happened?

Yeah. Yeah. A lot of what I was getting was like the fees and stuff on wholesale. So, okay. Which is really not the good part. I mean, that's what everybody likes and stuff, but that's just, you know, it's fully taxable at whatever your tax rate is. Yeah. And it's nothing like equity. Like when you, when you do a bunch of deals and then you look up and you go, man, that thing went up $150,000. I didn't do anything.

Yeah.

Just went up that much. And you can trade it for, so we did that with a sub two deals. We bought this house, nice neighborhood, Simpsonville, South Carolina. It was like the model house, but it was maybe like nine years old. We bought it, seller financed it. Cause we did that with everything. And making like three or 350 a month, something like that on the spread, got a decent down payment. And then they just said, Hey, we can't do it anymore. Well, this was like after COVID. Before COVID, this was after COVID. And he said, just give me five grand and I'll sign a quick claim deed. I look it up and it's got $170,000 of equity, more than what we started with. Now, if I underfinanced it again, I might get 40, 50 down and I might increase my spread to say 500 bucks a month. Well, I went to an exchange meeting. And there was a guy that's been pitching these double wides on land for a while. He's got two of them. One was really nice and a nice double wide neighborhood. The other one was kind of junkie out in Lawrence. So I said, but that kind of matched the equity. I said, why don't you take the house and we'll take the double wides and you can just sell the house or whatever and take your cash. You've been trying to sell these things forever. He's like, yeah, I'm in. So I get the double wides. sell the first one for, I think it was like 159 or 169 with $20,000 down and $1,400 a month. Then I sell the second one with like 8,000 down and 1,000 a month or something like that. So we went from $300 cashflow to $2,400 a month cashflow. Jeez. By converting that 170 or whatever equity into Wow. And he did a little rehab on it, like painted it and stuff like that and got his one 70 or one 50 or what, you know, whatever the, yeah, he's still got his cash that he wanted.

Jeez. Are you, um, if you have a big payday coming, let's say you've got an owner finance power, you know, you're going to get, you know, 80 grand in a payoff. Are you, are you then immediately thinking, how do I turn this 80 into whatever monthly you can get?

Yeah, I mean, yeah, if I if we're just getting a bunch of cash, then I'm looking for more stuff. Okay. Yeah. You know, it happens here and there. But, you know, and there's another part to that deal, the Austin deal. Yeah, I guess I could have just kept going. The guy that we owe the 3333 a month to on the eight trailers. Okay. We had one of them. It was like two months later, they called up and said, hey, we need a payoff. We're like, man, it's just going to go straight to him. Let's call him up and see if he'll take. the $64,000 in exchange for the next 19 payments. And he was like, yeah, that's fine. So we were going to get the money anyway, but he agreed to take it for the next 19 payments. So we did it, send the money to him, didn't have to make a payment for 19 months. Four months later, he calls us up and says, Hey, I need another $35,000. And we're like, well, I mean, we don't just have the money, right? No, we can go try to find it. And he said, yeah, I mean, if you can do something for me, that'd be great. And I said, well, maybe if we modified it, where we only owe you a thousand a month for the next 500 months, and we don't have to make a payment for the first 12, would you do that? And he said, yeah, I would do that.

Wait for the next how many months?

So we don't have to make a payment for 12 months. Okay. And then we start making a thousand dollars a month payment instead of 3333 for how long though? The thousand? Yeah. We owed him $500,000, so it extended for about 500 months.

And he was okay with it?

Yeah. And then we had to go figure out how to get the 35 grand.

Jeez. Oh my God.

When you're working with a bank, you just owe that money. They're not ever going to call you unless you don't. You got to pay it and pay it and pay it until you don't pay it anymore. But when it's a person, stuff comes up in their life.

Yeah. I've seen the stories that can unfold when someone's like, yeah, I've had most of the time when I have had seller finance, a seller agrees to terms, oftentimes they're coming and saying, can I get some now or all of it now? Yeah, I try now, now that I've seen it a few times, I try to set the expectation up front. Like, Hey, if you, this is the schedule, right. And if it changes, it's, I'm not just going to give you the balance. Um, so do you have, do you have any like tips or words of wisdom on how to, how to set expectations for that?

Come to me when you need some money. I mean, I'd let them know. Yeah. We're going to change the deal.

Yeah. Yeah. Just let them know it could change or will change if you, if you need it all.

Yep. Or giving them all of it, it better be a pretty good discount.

Yeah. Oh, that's cool. Now, you definitely got my eyes open to opportunities in all kinds of things, right? Taking these notes and turn them into different things or taking vacant land. Is there anything that we haven't talked about? Like, okay, so you've got houses, you've got notes, you've got land, you've got all these different types of real estate. Anything that sort of overlooked that is really like a goldmine?

Well, I mean, going back to what we were just talking about, owing sellers. Yeah. So you owe a seller, you know, $500,000, pay it off with created debt that didn't cost you as much. Okay. We're going out there buying land and putting mobile homes on it and then seller financing it. I can just go to them and say, Hey, why don't you just take this and let me not owe you anymore? Well, it might cost me half as much. Yeah. But they still, I mean, they got what they're getting. It's the same exact thing, but it didn't cost me anywhere near as much to pay them off.

Yeah, that's cool. And I assume a lot of the process is actually educating your sellers and your buyers throughout the whole process. You got to explain it so that they feel comfortable with the transaction.

Yeah. Well, and usually what we're securing them on. So when we buy from somebody and they're going to sell their finance to us, we secure them on something we're never going to sell or we're not going to sell anytime soon.

Okay.

So their property comes to us free and clear. Well, why would they ever do that? Only if what we're securing them against is better collateral than what theirs is.

Yeah. Okay. So you say, yeah, you say, Hey, if it's a, whatever, $60,000, well, you may secure it against something that's worth 300 and it's a no brainer.

Yeah. I wouldn't, I wouldn't use up that much of my equity with something that small, but yeah.

Yeah. Just like that. You, you would do it on a, on a smaller value.

Yeah. If it's 60, maybe put them on something's worth a hundred.

Okay. Yeah. Just be at 60 cents or lower on the dollar. Yeah.

Something like that. Okay. Something nice and safe. If I, if something happens to me and they have to foreclose something that they can get hold on, I don't, I'm not trying to put people in a bad position.

Okay. Okay. And you explain that to them as you're, as you're working through it. Yeah. How do you bring more people into the fold, into the exchange environment?

They have to be interested in it. We have a lot of people that'll come and then they just don't ever show up again, especially brokers. Because they don't see that quick nickel. They don't like the, oh, I got to wait and I got to do all this very complicated stuff and I have to learn something. I don't want to learn anything else. That's what's the toughest thing with it. And now some of them will not be interested, not be interested, not be interested. And then they see you do this very profitable deal and they're like, oh, maybe I need to actually pay attention then.

Yeah. Once they can see what actually comes out the other side.

We had a big, he was an agent and he owned a bunch of retail stuff in our downtown area. And he was telling me all the stuff that he had. And at the end of the meeting today, his first time he's ever been there, he was like, All right. Come over here. So who actually has any money in here? I know there's somebody with money. All the time I'm trading this and that, I don't know what all that stuff is, but who's got the real money. And I'm like, well, that person has $20 million in equity. And that person has this. And he's just like, yeah, but where, who has the cash? I'm like, I don't know if you know this or not, but equity is cash. If they got an offer on their $20 million equity property, that's 1031 cash that they now have to go figure out what to do with. Okay. They're storing their equity. They're storing their cash in equity in real estate because there's more benefits than in the bank.

Yeah. Yeah. Yeah. Well, are you okay on time by the way? Yeah. Yeah. I'm good. So we can, we can wrap up in just a moment. Uh, I did want to, I want to touch on this and it's probably like a can of worms. I want to be careful. You sometimes will post about the Fed, right? Obviously there's big news that the, I don't know if it's big news, but just news in general that the Fed dropped rates yesterday. And then you talk about the 10 year treasury, right? You post a lot about that on Facebook. And I guess, what are you tracking? to make sure you know what's going on? Because you're obviously way more versed in this stuff than the average bear. But what are you looking at and how do you keep an eye on the market and how it affects you?

So for me, all of that stuff only has to do with growth and inflation. So what I'm trying to figure out is, is the market, is the real market going up or down? I'm not talking about the stock market. That does all kinds of stuff that doesn't have anything to do with the real economy. But I want to know if the real economy is slowing down, or speeding up or whatever. And those treasury bonds tell you what's going on. And everybody thinks it backwards. They think, oh, the rates are going down. That means it's going to be stimulative. Well, it helps people that borrow money. It hurts people that save money. So it's on net. It doesn't really do anything to the economy. And everybody's got that kind of wrong. What it really shows you is the price of money is going down. That means they can't get their money out there. The banks can't get their money out there. And the people that, you know, the, the lenders are not finding good, safe collateral to lend against. And that means there's less dollars in the system.

Okay. And they're trying to, they're trying to nudge us to get, to borrow more money.

That's what they, that's what the fed says they do. But really all they're doing is, is pushing people to borrow money at the expense of savers. On net, it really doesn't. It's not very helpful.

Yeah. Yeah, I got you. So when you look at the real economy, like you're talking about, you're saying like, what are consumers actually doing? What are the other indicators besides the 10-year treasury?

Well, the 10-year, two-year spread tells you if it's inverted or not, usually towards the end of an inversion. That's when the economy actually goes into real recession. But they don't call recessions until you've already been in it for a while. It's like they can't see it until you've already been in it.

So the inversion, for anyone who hasn't seen that chart, what is the inversion? Like what is that in layman's terms?

It just means that the short end of the curve, which is the two year or one, you know, one month, whatever, it doesn't matter which one you pick, but the short end of the curve is higher than the long end of the curve. So the 10 year is going to have a lower rate than the two year month or whatever. Okay. Got it. Typically that doesn't happen in a lot of other countries because they don't They don't forcibly push up the short end of the curve. They just let it do whatever it's doing and they use other processes to try to manage their currency.

Okay. So if you see, okay, the economy, the real economy is actually getting weaker. What is that? How does that change your behavior when you're investing?

I need to start buying cheaper. Okay. Okay. Just about like that. And I'm noticing it on the sale side. So I'm selling finance and stuff all the time and it's taking longer.

Oh yeah.

I noticed that as well. And I'm not getting as big of down payments. I'm not getting just absolutely blown up when I post something for sale. I can't even imagine what it's like for selling stuff cash.

Yeah. Retail.

Yeah. Yeah. Okay.

All right. Well, definitely be more careful when I'm buying as well. So yeah. What used to be a good deal may not actually be a good deal anymore.

Yeah. And go up. If you were doing C, go to B. Okay.

You know what I mean? You can get into better, higher value neighborhoods, right?

Yeah.

Okay. All right. I really appreciate it. I know we're at probably an hour, but thank you for doing this. Is there anything else you'd share with anybody that this may be the first time for a lot of people hearing anything about this exchange stuff?

Yeah, just look up, you know, Jimmy Napier, invest in debt. That's a good book. Yeah. And anything that Peter Fortunato does, if you can make, he's getting old. So if you can make it to one of his meetings, I would go just listen to everything he says. He has a paper course in December. That'd be a good one to go to. I mean, it's a full book and it's like deals, like actual deals and the paperwork that he did in those deals. And he explains why they did it. And he really does the why more than anything. There's a reason why this transaction was so weird. It's because they needed this, that, and the other thing. We just don't do weird deals just because we feel like doing weird deals.

Right. Yeah. No, that's great. I don't know if it was his quote or not, but I think I heard him say that cash is the lazy way to buy, right? Yeah. I'm sure a lot of people would agree with that, but he's always looking for, okay, well, they don't really need the cash. They need something else that the cash is going to get them.

Yeah. And honestly, when I do get lazy, that's when I'm buying with cash and it's typically on little stuff. It's hard for me to want to put a note secured by something else that I own with a $10,000 a lot.

I'm not going to give them anything.

Just take the 10 grand and we'll move on. The bigger the deal, the more the stuff works.

Yeah. Well, that's cool. And if anybody wants to look up those two, it was the Society of Exchange Counselors, right?

Yeah. That one's really tough to get in. You got to be invited and then it takes forever to become a member. NCE, if you've got your brokerage license or agent, then you can get in pretty easy.

Okay. That's the National Council of Exchangers? Yeah. Okay. Well, I really appreciate it. If anybody wants to reach out to you, what's the best way to, if you want them to, what's the best way to check in with you?

Yeah, you can email me, philip at upstatelandtrust.com, and Philip is with 1L.

Okay, all right, philip with 1L at upstatelandtrust.com. Okay, perfect. Amazing. Well, thank you again for doing this. I know it's going to be very eye-opening for people to listen to the whole thing, and even just little bits of those stories, like, holy cow, what's even possible is kind of mind-blowing.

Yeah, and one thing, I guess at the end, look up what a note is, what a promissory note is, look up what a mortgage does. Everybody kind of gets those mixed up. What a deed does kind of get your fundamental stuff down because even people that I've seen in the business for, they've been doing flips for 20 years. They don't really know what any of that stuff is.

Oh yeah. Well, one of my first deals, I didn't even know what a deed was. I was working with somebody who's like, all right, make sure you get that deed recorded. I'm like, wait, which one is that? And I felt like such an idiot, but it's like, Yeah, there's a lot of stuff, a lot of terminology. And a lot of people think with mortgages, it's just, oh, well, that's not actually the loan. That's the security instrument. So I agree with you. Don't ever feel shy about asking because there's a lot of terms that if you get it wrong, you're not actually in a safe position, right?

Yeah.

Yeah. All right. Well, good deal, man. Thank you again. And I hope people enjoy this as much as I did.

Yeah. Good to talk to you. Thank you.

Yeah, you too. 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.