How To Build A Real Estate Portfolio Without Cash

This is the Anderson Business Advisors podcast, the show for real estate investors, stock traders and business owners. We help you keep more of what you earn and protect what you've built. Let's get started. Have you heard real estate investors talking about buying real estate with no money down, using what is referred to as creative financing? Well, if you want to learn more about that, then watch this video because I'm going to be interviewing Gabriel Hamill. He is an expert in the field. He's going to tell you how he built a portfolio of nearly 400 properties by using this one technique. All right, let's get started. All right, Gabriel. Thanks for joining. So, to start off, for people who haven't heard of you yet, who are you? And basically, what are you doing in real estate? Yeah, I'm just a guy who thought that real estate investing made more sense than the typical W2. I got my background. I started a lot of motivation. I read the book Ritz Dad Portad back to 2002, but a few years prior to that, I joined the military while in high school. So, kind of going back to me, father, I joined the military at 17. I joined the Army National Guard at 17. I was not what you call a studious kid. I stayed in school really for high school wrestling and the social aspect. But I had a buddy that said, "Hey, Army National Guard, Infantry Unit, one week in a month." You know, you go play in the woods and I thought, "All right, this makes sense." A couple years later, I read the book Ritz Dad Portad. I'm living in my friends' attic at the time for $100 a month. And I read Ritz Dad Portad and I'm like, "This makes sense. This is not the stuff they teach in school. I'm going to build this financial freedom, this financial future of mine through buying cash flow real estate." And then shortly after that, I got a phone call and I was deployed in Iraq in 2003 and 2004. So, you know, on that deployment, I had all this motivation and very little information that I knew that real estate investing would be my path. So, I had all this excitement and really on that deployment, my goals were to come back alive, not to mess up and come back and start buying real estate. That was really kind of the beginning of kind of where the where the motivation came from. So, you didn't come back with a whole bunch of JnR and think you're going to turn that into USD and that would be the way. You know, I did buy some JnR. I think it's worth, I looked the other day because I was telling my kids a story and I looked at the value for the first time in years. It's worth about the same as I got it for, you know, 20-something years ago. So, yeah, I do have some dinner but that is not where I've built my wealth. So, I came back from the deployment in 2004 and got completely out of the military in 2005. And in 2005, when I bought my first property and so, you know, back in 2005, anyone could qualify for a home and I had no money, I had no job, I had no income, but I wanted to buy a property and I had a lender that approved me with 100% financing. Back then it was an 80-20 loan, so 80% lending from one bank, 20 from the other. And I bought my first single family house to no five and rented out two of the bedrooms and lived for less than I could anywhere else. Now, now they call it house hacking back then and just made good, they made good financial sense. So, I did that in 2005, 2006 and 2007. And honestly, I remember thinking back then, I'm like, this is easier than what the books say. I'm like, I'm just doing know the bank every year and buy another property. Also, in 2006, I opened up a small nutrition store, never really made a lot of money. Sometimes we're talking hundreds of dollars a month, and so that really wasn't enough to, you know, support myself, my wife, and eventually my children. So, in 2008, I shut my store down, I had no degree or no, you know, high paying job that I could fall back on. And so, 2008 was really kind of my, oh shit, moment of like, hey, what do I do? I have this dream of owning real estate and being financially free. I have these three houses, two of them cashed $200 a month, but that's not really enough to live on. And I started taking all these odd and in jobs. I mean, I was literally, I was qualified for nothing. Even the military, I was infantry. So, there wasn't a lot of job options. And so, I was literally like Craigslist help wanted ads. I was Mo with lawns. I was literally like riding my bike to do landscaping. I was doing everything I could to get by and I eventually landed a 30-hour week minimum wage job in a high school special education class. And it was about three months into that job that I'm like, this, this is not what I want to do forever. And my heart goes out to these kids, but this was not my dream, you know, 30 hours a week barely getting by, barely a minimum wage. And so, in 2008, I went back to the bank and said, hey, I want to buy another house. And they said, you don't qualify. And I remember, I said, well, what do you mean? I asked them directly, what do you mean? I don't qualify. I've purchased the home every year, the last three years. I've never missed a mortgage payment. And they said, yeah, guidelines have changed a lot. You actually have to have income, a down payment, a real job, you know. And I'm doing the math thing and like, to save for a down payment, like I'm going to need three or four jobs. And, you know, there must be another way. And I remember reading about, you know, seller financing, private money, hard money. And at the time, I knew nobody with money. I knew no one in business. I knew no one in real estate. And I just kind of fell on, hey, seller financing will be my path, the financial freedom. And I made a goal that year in 2008 that, hey, if I could replace this 30 hour week minimum wage job by buying cash flow real estate, seller financing, then I would at least be financially free. I could quit that job and really focus on just taking down more deals. And so I spent a year looking every night, you know, after work, the kids were in bed, I would just get online and start looking at off market deals, mostly on Craigslist. And I talked to hundreds of people and analyzed hundreds of deals. And I eventually, about a year later in 2009, bought four units, no money down seller finance, it cash flowed almost to the dollar that I was making at that low paying job. And I stopped working. And now I spent, you know, I was, I was financially free, but I was poor. You know, I, my expenses were low, but my income exceeded my expenses. And I spent the rest of 2009 through 13 buying all no money down seller finance deals. And my only criteria back then was these properties had to be cash flow positive. Yeah. You see, that's the thing is, you know, people that are watching this right now, if they didn't go through 2008 and with the mortgage crash, they don't have any idea what you're talking about. Where you used to be able to walk into a bank and you would try to get a loan. And they would say, well, in order to meet this loan, you have to have X amount of income and maybe a hundred thousand dollars a year. And they would ask you, how much do you make? You'd say, I make a hundred thousand dollars a year. And then you'd walk out with a loan. And it didn't even matter what you were making. And so it was kind of, I don't know, called the Wild West. It was so easy back then. And that's what you were saying you were doing. And I'm not saying you were misrepresenting your income, but you could walk into banks and they were just throwing money at you. But then we had the mortgage crisis of 2008 and everything came to a screeching halt. And the banks tightened up their lending standards. And one of the major issues or impediments that I find for people who are just getting started in real estate investing is they think that the only way to buy real estate is to go out and get a traditional loan because their parents did that. They've talked to other real estate investors who are using traditional financing to purchase real estate. But there's this other side that's out there. And it's called creative financing. And the thing about it, and I'd like you to speak to this, is that investors will tell me sometimes that they think it's kind of sketchy or illegal to engage in creative financing. And somehow that word has taken on for some people a negative connotation. Have you run into that? And then if you could address that. Yeah, I mean, I have heard of the people that, you know, seller financing or creative financing is negative connotation. But when I've seen more, more often, as people say, oh, it's just not a thing people do anymore. Even when I was buying in 2009 through 13, which is when I built up my initial portfolio, I had agents, brokers, other investors, people in my circle that at the time looking back and realizing they were not, they had maybe never bought a real investment property in their life, right? So be careful who you take your advice from. But I had all these people that, as I started building relationships and kind of growing my network that said, oh, sellers don't do that anymore. I had sellers laugh at me. I had agents and brokers laugh. But I was committed to, you know, finding seller finance deals. And I really, it was really out of necessity. I mean, at the time, I had no money. And I just had a big dream. And I thought like, this is how I'm going to get into real estate. And what I found is I wasn't talking sellers into caring financing that year of talking to potential sellers, mostly off market, you know, these were mom and pop owners, mom and pop investors, great people that were just tired landlords. Oftentimes they had owned the real estate 25, 30 years. They were, you know, self-managing. They were tired landlords. They were doing maintenance, repairs, property management. They're dealing with the tenants. Oftentimes they had the property paid off. So they didn't have the advantage of, you know, they weren't, they weren't, they weren't able to write off the interest anymore. They, they've already depreciated the property. And they were good people and but tired landlords. And it created a scenario where these sellers wanted to carry financing. So instead of me going and trying to convince or talk sellers into caring financing, I found sellers that already understood the advantage of caring financing. And it was almost like an annuity for them. They wanted true mailbox money. And so I was able to walk into these properties that were poorly managed under rented, had some deferred maintenance. And the seller became the bank. They got true, passive mailbox, mailbox money. So it was a win for them. And it was a win for me. A lot of times these properties, the upside value was that they had just been poorly managed and under rented for so many years. And these sellers wanted to carry financing. I mean, I would say I've never done a deal with a seller who didn't already want to carry financing and understand some of the advantage of it. I just wanted more passivity to their, to their investment because they they were at a time they're like It was mostly men and women in the 60s, 70s that did self-manage and were just ready to not actively invest like they had 25, 30 years prior. Well, are you just in focus on seller financing or have you been doing any subject to, you know, novations, subject to lease options, those types of things? Or is it just that is the niche that you found is the best? Yeah, I mean initially it was, you know, almost all properties that were free and clear. And so, you know, we would do a note and trustee and we would negotiate, you know, terms that made sense for me as the buyer and for the seller. And I think, you know, we're a lot of people get hung up and I've done some subject to stuff and but the majority of the stuff I purchased with seller financing has been true free and clear properties. It's a note and trustee. And I think we're a lot of people get hung up. They think they have to convince or talk a seller into carrying financing or they have to come up with like what the perfect terms would be. I mean, the question that I get asked probably more than anything, the two questions is how do I talk a seller into carrying financing which I already addressed. I never have. I've just found sellers that wanted to carry financing. And then the other big question is what kind of terms are typical? And there are no typical terms. I mean, I find that sellers are usually stuck on price, down payment, interest rate or some other emotional aspect of the deal. And I kind of found this by accident. I mean, I just didn't know I didn't know. And so as I was talking different sellers and I would just ask the basic question of hey, what kind of terms would you be interested in? Just by asking that basic question of hey, what kind of terms would you be interested in? The seller usually told me it was down payment important, was it interest rate, was it the price, was it some other emotional aspect of the deal. And then I would always go home and go, okay, can I give them the thing that's most important to them and still make the deal work for me? So if they're stuck on price, for whatever reason, they're stuck on this price, can I give them that price, but maybe no down payment or a lower interest rate, give them the thing that's most important to them that they're happy about and still make the deal work for me. And a lot of cases, that was possible. And with other sellers, we were so far off on terms that it was just, it was fine walking away from. But I think people get really stuck on like that maybe there's some magical terms. I've done deals where it's interest only or direct principle. I've done deals where it's a 30 year fully amortized with no balloon. And so it really is as creative as you as the buyer and the seller are willing to get at what works for both parties. Okay. So, you know, a lot of times when I teach an events and this topic comes up with the students that are attending these events and we start discussing this, they seem to think that these are unicorn deals, that there's not a lot of individuals out there. And I've heard people say, I can't find any seller financing deals. How would you address that person that's the skeptic that will tell you these don't exist in my market? Yeah, I think that's common. People do think it's like this unicorn, you know, but the reality is like people finance properties like this for years. Like, I think before there was ever a 30 year fixed mortgage and before banged lending, like this is how people transact it. I have people telling me the same thing in 2009. And I think oftentimes it's a numbers game. I mean, I've had people tell me that even in this last year going, hey, there are no seller finance deals. No one wants to carry financing. I say, how many sellers have you talked to? They're like three, four, five. I probably had 200 conversations from 2008 to '9. I had about 200 conversations before I was able to put together a seller finance deal that penciled. Now, of those 200 conversations, there were a handful that were willing and wanting to carry financing and a lot of them wanted to carry financing in terms that didn't financially make sense. The property wouldn't have cash flowed. It wouldn't have made sense for me as a buyer. With those 200 conversations where I was looking at deals, I was building relationships, I was analyzing deals. And most people that I come across that say, hey, these are not available. They're just asking an agent like, hey, we'll sell a carry financing. And then the agent says, no. And they're like, okay, and I'm done. And oftentimes they've only asked like three, four, maybe five sellers. And they just think, hey, seller financing just isn't an option. I think it's a little bit of a numbers game. And then also getting to know what the sellers needs are. And a great example I have is I bought years ago, probably 10 years ago now. I bought this commercial property and there were seven multifamily properties attached with the sale. And it was being marketed as a development project. And the land itself, long term, does have some great potential for development. But when the, never sold and the listen expired and I walked around with the previous owner with the seller for like 15 minutes. And I said, hey, I know some people that offered on this. I see it didn't sell. I'm just curious, why not? And he said, well, he goes, I'm 75 years old. I'm a retired judge. He said, I don't want to be cashed out. I just want income. I want income. He goes, I want income for the next 15 years. And if I were to pass a waiter in that time, there's this non-profit that's really important to me. And I don't really have any family to pass it down to. But if I pass away during that 15 year period, I want to make sure this non-profit's taken care of and they would get the payments. So here's a guy who wants to carry finance. He has own broker marketed this as a development project and solicited cash offers. So his own broker didn't even ask of what he wanted. He kept rejecting these strong cash offers because he didn't want cash. He was 75. He didn't want to actively invest. He didn't want to big lump some of cash. He didn't go stick in the stock market. He didn't want to actively go invest in deals. So here's a guy, prior to that deal, I would have said, you know, sellers are stuck on price down payment and interest rate. He was actually flexible on price down payment and interest rate, but had this emotional attachment that, hey, if he passed away during this 15 year term, that this non-profit that was important to him would be taken care of. So walking with this guy 15 minutes and finding out what his needs are and what's most important to him, we're able to get a, put a great deal together. He carried financing for me for 15 years. I still own the properties today. They're worth more than double what I paid for them because what was important to him was that he had didn't come for the next 15 years. If he were to pass away this non-profit would be taken care of. And nobody, there wasn't a buyer out there, including his own broker that listened or asked him what he needed and what was most important to him. And spending 15 minutes with him, I found that was most important to him and was able to give him that. And then he gave me incredible terms on price down payment and interest rate. Now see, what you're saying is I hope people are picking up on this. So I'm going to break this down and interject if you think I'm off base here. Number one, you're doing seller financing. The person you're approaching is not the homeowner themselves or it's a personal residence because they're not going to be interested in that. The person that I have approached and we've done several deals like this is we, like what you stated, we approach investors that have a portfolio that are looking to get out of the market and sell. And those are the people that are going to be open to this because the homeowner, they're trying to sell their house, maybe go buy another house so they need those that principle cash. Whereas they used to have the 75 year old individual, they don't need $500,000 right now. In fact, if you gave them $500,000, it becomes more stressful for them in their lives because they don't know what to do with it. Where am I going to put it? I mean, I loan money on work with developers and every time a property sells. And I get say $800,000 or a million dollars off that property deal. It becomes stressful for me because I want that money out there. I don't want to be on those funds. I need them invested to bring it in cash flow. And this is the mindset. I think a lot of people don't understand and they don't know who to approach. So if you're looking at the avatar, what is your key avatar for a seller finding? So if you just break that down for the viewers to let them know, hey, these are the people you should be approaching. Yeah, you're absolutely correct. It's never their personal property. I mean, rarely I can have sure people have purchased, you know, personal property seller financing. It's usually men and women that are 60s, 70s, even 80s, even 80s sometimes that they don't want a lump sum of cash. They don't want to pay a huge capital gain at once. They don't want to put a bunch of money in the stock market. They don't want to actively invest. So it's usually men and women 60, 70s, sometimes 80s. Oftentimes they own the property screen clear. They're investing people, they're investors themselves, so these are investment properties and they want passivity. They want income without the headache of having to manage the property. And so they become the bank. They just get to be on the other side of the transaction on an asset that they've typically held for a long period of time. And you know, like some of these sellers, they don't, you know, you pay them off. A lot of people think like non-investors, they go, okay, this, you sell a property for a million dollars. Well, great. And investors are thinking, well, if I have a million dollars, just like you said, well, it's a problem. I either have to 1031 into another deal. And a lot of these, you know, older investors don't want to keep actively investing. Or they have to pay a huge capital gain at once and they don't want to do that either. And so that really is the avatar, the mom and pop investor. And I would even say mom and pop, sometimes like as I shifted towards more commercial properties, there's a lot of reasons why a seller would want to carry financing. And sometimes at the same reason, they just don't want that big capital gains. All at once. And, you know, for them, it's easier to earn interest on their money than go have to place it, place it somewhere else. Yeah. And so what I would tell the viewers as well, one place to go because it's always, well, where do you find these people? What we've done in our business, because we flip property in Winston-Salem, North Carolina, and we have a lot of investment property there as well. And the way we were able to tap into that market and scale quickly is we aligned with the property managers in that market. And so we started them talking to the property managers who've been in that market for over 20, 30 years and saying, all right, who are the retiring landlords? Okay, because they know their clients. And then we would tell them, hey, if you know that they're looking to get out, then this is how we buy property. Okay, we buy it on terms, go to them, run it by them or give us the information if they want to talk to us. We'll talk to them. And we've picked up several portfolios that way. And I found that was an easy way to break into a market that, you know, we really didn't have any association with, because I'm in Washington state. I mean, the first thing we went to actually was the used appliance store there. So we started going down and said, who are the landlords in the market? We got some names from them, so we would call them. Do you have any, when you started your investing journey going down this road? Are there any things like that that you would look at and say, hey, this is a great place to go to find these landlords? Yeah, you know, it was interesting. I mean, this is, you know, again, we're going back to, you know, 2000, 2008. But I was, I was on Craigslist. I was, I was, and I say people laugh at Craigslist, but it's like, that was where you had owners that self-managed. They didn't want to put a sign in the yard. They didn't want to hire an agent. And then I just kept it really human. I think, I think a lot of, like newer investors, they think way too much about the transaction. Like the, like the transactional piece to real estate is the easiest part. I kept it really human. I was like building relationships and I had a genuine interest in these sellers. Like I genuinely was curious, you know, I would meet a man or woman or a couple who, you know, had multiple rental properties. And I was just curious about their story. Like how did you acquire these? How did you buy these? Oftentimes they bought, they had bought with seller financing. So I wasn't there, you know, like I wasn't showing up in a suit and tie with a contract saying, "Hey, something or house, take it or leave it, sign this or sign that." I came with a genuine curiosity and started building relationships and just having conversations and asking really basic questions. And I think, you know, sometimes with newer investors, they think that they have to know everything or they have to, again, talk to sellers into it or come with this, you know, these are the terms that I'm presenting. I just asked really, really basic questions. And then I shut up and listened, you know, I mentioned before, I would say, "Hey, what kind of terms have you be interested in?" And by saying that, I had a seller talking 30 minutes or an hour just telling me about, you know, this property, that property, this tenant, and I just listened. And even to this day, I, I've built, I mean, I would say, every deal I've ever done has come from a conversation or relationship, the transactional piece of real estate. That's the easy part. I think people forget, especially with technology and how easy it is to connect with people online and, you know, auto-dilers and all these things, people forget the human element of business and real estate. And I've done my best deals, again, from relationships and conversations and I just make sure that there's a human element to it. And I genuinely like people, you know, and so I enjoy having those conversations and building those relationships and some of those, who knows? You know, some of those lead to great friendships or acquaintances. Some people I never, you know, we never talk again. Other, you know, other relationships lead to great real estate deals. And I'm okay with any and all of them. You said two things there that really resonated with me and I, and again, this is some people who are watching this. You got to be picking up on this stuff because these are gems that he just dropped. Number one, Craigslist. My father's an avid real estate investor. He heard my story, grew up, you know, helping him build these rentals up. And where does he list his properties? Craigslist, right? For every reason you mentioned, that's why he continues to use that. And the thing about it is my dad's now 81 years old. If an investor like yourself were to call him up and start a conversation with him, they could probably buy his properties on seller financing because my mom's been talking, she wants them out of it. She doesn't want to continue to deal with the tenants. I mean, I hear this all the time when I'm with them about their lamenting about owning the property that they just want to be done with it. And then the other thing is what do they do with the cash? And so that's the problem. If they just had income coming in, they're really happy. And one other point about this that I hope people understand is that if you know, if you meet that person, say you met my father and he wasn't ready to sell, he knows other real estate investors, they run together. And so he's going to introduce you possibly to his buddy, who's the same age that would be willing to sell their portfolio. So that was key. And you know, I hadn't thought about the Craigslist angle before. And so I'm going to keep that one for sure in the back of my mind because you're spot on. That is where I think the older people tend to gravitate because that's what they're most comfortable with. You talk about the internet and AI. No way. That's not where you're going to find them. Yeah, I have another interesting story I'll share. I feel like sometimes, you know, storytelling gives some good examples. I had a guy in town who started developing these big properties on campus. So I'm in you, Dean Oregon. He started the bed. And I grew up here. So, you know, I see these big apartments going up and all over campus. And I am like, who is this guy? Who's building these? I'm just starting to get, you know, involved in real estate, but I'm fascinated by these developments. And as I look into it, it's like the same guys attached to all these. And so I reached out to him. Not for any other reason that I wanted to learn his story. I was genuinely interested in who is this local guy that's just developing these, you know, beautiful apartments. So I reach out to him. And I'm just curious about a story. And he goes, hey, you know, I was going to law school at the University of Oregon in the 70s. And I started buying these small multi-family properties. And by 2010, you know, his prime, it was prime area to develop. There was all these incentives to develop. So he was buying properties, well, going to law school in the 70s. And by 2010, he was ready to develop. So I was sharing with him my story. I was just by 2010. I, you know, it just picked up a handful of my first, you know, few seller finance multi-family deals. We stayed in touch. It's not like we became best friends, but we kept in touch. We'd go to lunch every once in a while. And he's probably 20, I don't know, 20 something years older than me. Well, a couple years later. So this is like 10 years after we met. Right? So I met with him with no intention other than to like hear a story, fascinating story. This guy now owns thousands of units all over the, you know, all over the country, mostly in the Northwest. 10 years later, he calls me up and says, Hey, a buddy selling a single family home, the town over, are you interested? And I said, I'm not buying single family anymore. I just bought my first mobile home park. I'm really focused on mobile home parks. And he goes, that's interesting. I own five. And there's one I'm thinking about selling. And I said, Hey, are you open to seller financing it? And he said, yes, I am. So he sell our finance that property to me, 2% down, 60% cash on cash. And I bought that property for, oh, everything, but I bought this property for 600. No, 780,000. It had praised two years later for 2.3 million. And so 10 years before I reached out to this guy, just because it's from the story. And 10 years, I had no, no other interest. And then 10 years later, he led to this phenomenal deal, because we already built this level of no and like and trust, right? He already had enough income, taxable income. So he didn't want to large down payment. He didn't want to be cashed out. We already had this relationship and this level of trust. And so he was willing to carry finance, financing for me at great terms. And even though he was an experienced investor, his expertise was development and not in the mobile home park space. And so I still able to get a phenomenal deal on this mobile home park with great terms from a conversation relationship that I had built 10 years before when mobile home parks weren't even, weren't even on my on my radar. And I think that's the part that people forget is like that genuine connection and reach out because I wanted to hear his story led to a phenomenal real estate deal that, you know, netted me over a million dollars 10 years later, just because of genuine interest in relationship, not focusing on the deal itself. Okay, so you keep saying these things and to you, it's just second nature. You just gloss right over it when you said it. Probably you don't know what I'm going to refer to here. You said that you found this developer and you looked them up to see what deals he has. So basically you research to see that he has several pieces of property. Now, this is something I think is important again, correct me from wrong here. If you're looking to put one of these deals together, you don't want that owner that has one rental property. That's going to be a harder sell for them because they're used to get that cash. Maybe they're living on that rental income. But you find those people that have what three, five, 10, 15 rentals and you search the property records to see whether or not they have more property in that area, then you can approach him fully informed and you know they got a portfolio if you're 81 years old and you have 13 properties. That's a headache that becoming an anchor around your now, you're probably going to be open to listening to what I have to say. So is that what I gathered from what you just said is that kind of the process you've gone through before? Yeah, I think every seller who's ever carried financing for me has owned multiple investment properties. In fact, the woman that carried financing for me on those first four units that replaced that minimum wage job. She sold multiple other properties to me with favorable terms because we did that first deal and we built that again that no like and trust. I was making my mortgage payments to her on time. In fact, that first deal for the first many years, I used to handle it or check she had a brick and mortar business as well. I would handle it or check every month, not because I needed to because I wanted to have that face time and generally build that relationship. Fast forward to 2014, I refinanced a lot of those early properties and some of those early properties were properties she had sold me. And so at the time 2014, I refinanced a lot of these properties. She has a big payday and she called me up and says, what am I going to do with all this cap? And I said, you could lend it back to me and I had never borrowed private money at the time and she had never lent private money. And I casually said, "I'm not going to be able to do it." said, "You can lend it back to me. I'm still investing." A couple months later, I was in contract on a property. I had some other financing lined up. She called and said, "Hey, were you serious about me lending you money?" And I said, "I'm actually in contract on a deal if you want to finance it." Now, we had six years of trust, six years of me hand delivering a mortgage payment to her, at least most of those six years I was hand delivering that. I bought multiple properties from her seller finance. I refinanced in 2014 so she had a big payday. But most importantly, it didn't end just because of transaction ended. The relationship still remained and we had all those years of trust. And she became my first private money lender. So I'm in contract on this property. She has all this cash because I refinanced her out of multiple properties and she had a big payday. And so I think a lot of people think, again, they focus on the transaction. They do a deal and think, "Hey, that ends." Well, she had sold me multiple properties. In fact, there were times she was like, "Yeah, I think this is the last property I want to sell." And then a couple months later, and be a difficult tenant, or then we've out, she goes, "You know what? I have another property I'd like to sell you." And these were always no money down. So I financed deals because I did what I said I was going to do by improving the property and making payments to her on time every month. And then she became my first private money lender. It was a win for her. She got to continue to have income. And I got to go take that money and reinvest it into new deals. Everybody, everybody wanted that scenario. You know, we're about, you know, people to get into these deals. You're in the community. You got this great community you've built up, zero to 100. And we'll talk about that as well. And I'll have a link in the show notes to that. But having met with so many people who have gotten started in creative financing and seller financing, what would you tell people that they need to look out for? Where people get into trouble when they try to put these deals together? I think the biggest thing is buying properties, not every seller finance deal. Just because a seller will carry financing doesn't mean it's a great deal. I believe that, you know, deals are, you know, they're made not found. It's rare that someone's offering terms, whether it be price down payment interest rate, that always financially makes sense. I mentioned, you know, earlier in the show that I had 200 conversations, there were other sellers that one of the carry financing, but I did the math and the math would be backwards. They wouldn't cash flow. You know, at the time, like I look back and I feel very fortunate that I didn't have any money. I don't think I felt that way at the time. But early on, I was still fortunate. I didn't have money because it forced me to be creative. And so I had mentioned that, you know, my only criteria in those early years were that the property had to be cash flow positive. It was because I needed cash flow. I needed the money to live, to survive. And I think that's what that's what really, you know, saved me a lot of me to hold these hold on to these properties. Just because a seller was carrying financing, the term still had to make financial sense. I would buy on terms that supported what the property was doing the day that I bought it and the previous couple of years. I would look at it wasn't, I wasn't buying properties going, you know, this has to go up in value for it to make sense. Rents have to go up in order for it to make sense. Now I was buying almost every property I purchased had upside potential. The rents were where I was poorly managed. But I always put together terms that actually supported the financials of the property the day that I bought it because my worst case scenario, I was like worst case scenario. I mean, the property is cash flow. And if I get to the end of that term and I can't refinance it, I'll give the property back. Now that never happened, that never happened. And I was able to maximize Rents and get improved the property and create a ton of value and refile out. But I put myself in a scenario where worst case, the property cash flow from day one. And you know, that allowed me to hold the property. Some of these properties I've sold off, you know, because they've gone up in value and I've put that money in other places. Some of these properties still hold the day. But I had a lot of people early on saying, well, what if the what if the values go down, especially 2009, 10, 11, 12, you know, people going, yeah, but what if the real estate's worth less? I remember thinking I have nothing to lose and they're going to cash flow the same or better. So as, you know, 2009, 10, 11, 12, 13, as I'm buying these properties, I never cared what the value was on paper as long as they were cash flow positive. And the cash flow from these properties is going to allow me to hold them long enough to then refinance them. And so I think, that was a long, long answer, long one to answer your question, but I want to make sure the financials support the property of the day that I the day that I purchase the property. Well, the great thing about is most time you're going to find these deals, they already have a tenant in the property as well. Yes. So it is currently cash flow and it's just a matter of the rents getting assigned over to you. And so then you start collecting that money. But what about the rehab side of it? How often you find properties and you look at them and you realize it's going to need some catbacks to go into it to make it what it needs to be. How does that factor into your investment decision? Yeah. And those early years, I mean, I was just scrappy and cowboy and I don't know that this is, you know, I would say this is the best advice I had, you know, very little reserves. I had really no reserves, no money in the bank. But it was like, I had also no plan B. I mean, I was working at 30-hour a week minimum wage job. So it was like, I operated well not having a plan B because it was worst case scenario. What would happen? I have to give the property back and go back to a low pay and low pay and job. So they were a lot of crazy time in those early years where it's like, you know, I self-manage, I today have about 450 rental units and, you know, up until about 17 units, I managed myself. And those early years, look, I didn't have a bunch of reserves, I didn't have a bunch of money to pour into it. But the risk of not doing the deal outweighed all the what ifs that could happen in real estate? You know, what if a tenant moves out? What if I have to renovate this? So yeah, there were some crazy times, like, you know, a tenant moved out and I'm like, oh gosh, like this place needs, you know, something and I'd pull up the carpet and I'm like, thank God there's some hard wood under that carpet that hadn't been replaced in 25 years. Like, you know, and some paint, you know, so I didn't have the money at, you know, in those early years to do all these heavy, you know, heavy rehab projects and heavy turns, you know, over time I've been able to put a lot of money into, you know, some of these properties that previously had deferred maintenance. But for me, it was, you know, risk and reward. It was like, the risk of not doing the deal way outweighed the risk of all the moments that can happen in real estate. I'd rather own the real estate and have to find a solution of the problem that have the problem of not owning a real estate. So in the last two years, have you run into this issue? Because I've run into it with our investing. Is that you approach the investor? And again, I was, I started to approach some younger investors, you know, 60, 50 to 60. And what I found is that many times they wanted the price that they saw in Zillow. Okay. And the, you just couldn't make him cash well because the interest rates that they would want demand as well, it just didn't work. And a lot of that came down to the fact that interest rates have been going up and, you know, people realize they could just stick their money in the bank and get a good return. So what I was willing to pay to make that deal work at their price point, it just, there's no way I could do it. And so we walked away from so many deals because of that. Have you seen that? And have you seen a softening now in the market because the interest rates are starting to go back down again. So the deals are getting better. Just curious. Yeah. Yeah. You know, I have seen a little bit of a softening, but I'm not focused on, you know, multi-family anymore. I've really shifted 2022. I really, basically 2019 to 21. I was really focused on buying mobile home parks, picked up eight mobile home parks in our repark. But 2022 to present, I really started focusing on triple net commercial deals. And, you know, I found banks that were actually willing to get creative up until that point. I always was like anti-bank. You know, I used the bank for a refive, I get creative on the front end. And as I shifted into commercial properties, I found banks that were actually willing to get creative on good deals. But to answer your previous question, yeah, I think we're coming from, you know, through a time where interest rates were really all time lows. We're coming out of 2020, 2021, early 22, interest rates were low and money was cheap and it was easy to get financing. And everybody was able to, you know, buy real estate. And, you know, I think that, you know, there's a lot of syndicators right now that are getting their advocate because they were buying on slim margins with easy money. It was easy to raise capital. It was easy to give somebody money to, you know, to do a deal. And then all of a sudden, you know, interest rates double. And I think, you know, 22, 23, even 24, we kind of had this period of time where sellers just like you're saying they looked at Zillow or they looked at what a neighbor just, and this is like all asset classes like you, they go family, multi family, mixed use, commercial, everything. They're going, well, this is what it did sell for. Well, when interest rates were almost nothing and money was, you know, easy to get. And now interest rates have doubled and they still want what their neighbor sold their property for. And then you have these buyers that want these crazy discounts. So I do feel like there's this period of time where, you know, buyers wanted, you know, like 2008 pricing. They're going, well, hey, everything's changed. Everything's changed. We want a huge discount. And you have sellers going, yeah, but my neighbor's global property for this, it's worth this much. And so it kind of felt like in a lot of markets, there was just this, this back and forth. I do think, you know, now we're in early 26. And it seems like a long stretch. But I feel like buyers and sellers are getting a little more reasonable. And I also think it's a time to get creative. Like this is a great opportunity to get creative when when banks start tightening and sellers can get what they want for a property. It creates an opportunity for a buyer and seller that I'm willing to get creative to put a deal together that wouldn't typically work with, you know, for the traditional type of financing. - Yeah, so then what would you recommend people look at it? Single-family, multi-family, mobile home parks commercial in this current environment right now? If you had to start over knowing what you know now, what is the first product asset class you would look for? - Gosh, that's tough, that's tough. I mean, I've been asked that so much. I would focus on building relationships, building your network, getting around people that are, you know, that are doing what you wanna do. I'm invested among multiple asset classes, and that's worked really well for me. I don't syndicate, I don't raise capital, I don't have a lot of partners on deals. You know, so some people really focus on being an asset expert. You know, the guys that run zero to 100 with, they exclusively, almost exclusively, by mobile home parks. You know, so they're experts in the mobile home park space, they raise capital, that serves them well. They should be experts if they're raising capital in that space. You know, it's always tough. Like I get asked all the time, would you, if you were to go back, would you do it how you did it and start small, and then scale it, would you just start with bigger properties? I kind of hold two conflicting beliefs, because, you know, those first couple deals gave me the confidence and experience to do the next one and the next one. The first seller finance deal, the confidence and experience to the next. My first big commercial deal gave me the confidence and experience to do the next and the next. So, you know, I think you find what works for you. I mean, I've met people that start with single family and they slowly scale up. I met a guy once that syndicated the 300 unit apartment complex for his very first investment deal. You know, I don't think there's a right or wrong. I think it's important, you know, whatever you're investing in, like getting knowledgeable. I think young and new investors, it's almost like, do it all until you find your niche, like kind of find what you want to niche down on. I wish I had a better answer for, you know, your listeners, but I think everyone's investment philosophy is different and there's a lot of ways to, you know, build wealth and financial freedom through real estate. - Well, I think, you know, what I would add to that is, you know, associate with the community. Get to know other people who are doing what you're doing and A, there'll be a mentor to you and they'll help you walk you through where you're trying to get to so you don't make a serious mistake. What I've seen with investors, you know, I've been doing this now for, gosh, what has it been? 27 years. And you see those investors that are excited, they want to get out there and start investing and then they hit a wall and they lose money and then they never go back to it because they never took the time to invest in themselves, invest in the education to find the people that have already done it, learn from them or have a support group of individuals that can help walk them through it. And I think you've created something there. I'd like you to talk about a little bit about, for those people about zero to 100, what that can do for them if they're just thinking about getting started in this. - Yeah, I think getting involved in the community and building relationships, I mean, I say relationship, relationship, relationship, I think it's one of the biggest hacks because you can compress timeframes. Like if you have people in your network that are one, two, 10 steps ahead of where you want to go, you don't have to bang your head against the wall for 10 years figuring out a problem that somebody else has already solved. You know, zero to 100, it started with, it's myself, Mitch and Travis. Mitch and Travis, you know, we went through another mastermind, but they started zero to 100 before I got involved and it was really asking themselves the question of why isn't that some people spend 20 years, you know, trying to invest in their own adplex? While other people are building that thousands of units in a short period of time. And it started very organically that way. You know, I got involved because we really aligned on not just financial freedom through real estate but time freedom through real estate. We all value our time. You know, my own journey was, I had this innate desire and, you know, to become financially free and really questioning why is it that I want to be financially free? It really came down on my time. I wanted to time with my wife and my kids and I wanted to travel. I didn't want to show up and have a boss. I didn't want people telling me what to do. You know, and Travis and Mitch, who I run the zero to 100 podcasts with and we have our zero to 100 community, aligned very much through a lot of conversations with other investors. We realized that a lot of people talk financial freedom, but one layer deep, it's not always that they're excited about real estate, but it's what real estate can do for them. Oftentimes one layer, one layer deeper, you know, why is it that you want financial freedom? Usually the answer was like, well, I want to be able to quit my job. I want to spend more time with my family. I want to travel. I want to give back to this cause. And so zero to 100 started very organically, you know, with people, the people within our tribe are men and women that not only want financial freedom, but they want to buy a cash-lion real estate to give them true time freedoms so they can live life on their terms. Yeah, I mean, that's exactly right. And that's why, you know, when you get started in real estate, even if it is you stated your journey, you started small and you didn't make a lot of money at first, but over time you stuck with it and look where you're at today. As you stated, spending that time with your family, being able to travel to Hawaii or Europe and you're still earning money, there's no price you can put on that. It's just to get to that point through real estate is where I think a lot of people that are watching this want to be and they should take advantage and go to your site, check it out. As I stated in the show notes, I have a link there. Go there, get involved. All right, don't just stand there and watch another one of my videos and think, all right, this is magically gonna happen. It's 2026, I've got my one property. I don't even have anything yet, but if I just watch more, it's gonna be there. That's, you need someone kicking in the button and deforestation you out there. So anything else in passing you want to leave or save to the audience? - Yeah, I think the last thing I would say, like if you want it bad enough, you find a way. I mean, I've been fortunate to be around a lot of successful folks and you know, it's, you know, if you want it bad enough, like, I think it starts with that desire and then you go and take action. You go and you make it happen. You get around the right people, you make offers, you build relationships, you take down deals. Well, I'll talk about, talk about one in it, but I think it does start with that desire, that's strong, why? But where I see people become real successful is they have that strong, why, that strong desire and they actually go take action on their goals and they make their dreams a reality. - Yeah, well said. Hey man, thanks for coming on and taking the time. I know we went way over on this, but the topic just flowed so well. I know it's gonna get a lot of eyeballs. I appreciate it and I wish you the best. - Thanks, Clint. Appreciate it, you have me else. (upbeat music) - Thank you for listening to today's podcast. Show notes for links to everything mentioned in this episode can be found on our website at AndersonAdvisors.com/podcast. Be sure you subscribe to our podcast and if you are already a subscriber, please provide us a review of what you thought of this episode. (upbeat music)