601: Investing Strategies for the New Real Estate Market

SHOW NOTES FOR EPISODE 601: INVESTING STRATEGIES FOR THE NEW REAL ESTATE MARKET

Where can you invest $80 and make $800,000?  Only in real estate!  In today’s podcast, author, coach and real estate investor Chris Prefontaine shares the strategies he and his students regularly employ to make insane profits and achieve financial independence.

What You Will Learn

• What a lease purchase is and how you can make serious money with it
• How you can make $100,000 by just investing $10
• Why a Rent-to-Own home can give you Three Paydays
• How you can help people in need and get paid for it
• What kind of situation is good for a lease purchase
• How one of his clients spent $80 to make $800,000
• Who is the best prospect to buy a Rent-to-Own house

About Our Guest

Chris Prefontaine

Chris Prefontaine is a 3-time best-selling author of Real Estate on Your Terms, The New Rules of Real Estate Investing, and Moneeka Sawyer’s Real Estate Investing for Women. He is the Founder and CEO of Smart Real Estate Coach and host of the Smart Real Estate Coach Podcast.

Previous Old Dawg Podcast Interview: 209: Buying Real Estate Without Cash or Loans  May 28, 2018

Update

• Since we last talked, he bought his own building to house his company
  • It’s on an island, that’s part of Rhode Island
    • He lives and works on the island
    • It only has three towns
    • It’s a pretty tight market
    • Homes go at a premium
  • It’s a 6,000 sq ft commercial/multi-use building, which is tough to find bank financing for
    • So, he ended up buying it on terms from the owner with owner financing
• Regarding his coaching/training business
  • His “Wicked Smart” community has grown and spread across the country
  • He works directly with his “associates” (the name he calls his clients/students) to help them close deals
• There are a bunch of good marketers in the real estate investing coaching/training space but they aren’t doing a bunch of deals
  • His company is trying to close that gap
    • He has tweaked what he teaches a bit to make that happen
    • He is in the lease-purchase, owner financing and “subject to existing financing” deals  niche
      • He’s pushing longer terms (5-10 year terms) for his students’ deals so that don’t get caught up in any cycles
      • He’s also added a second component:
        • He helps his higher level students how to establish themselves as “the expert or authority” in their marketplace
          • He has a new book coming out called “Sell With Authority”

Trends

• What Chris has been seeing of late
• He was just in a mastermind group of 21 higher level people in his organization
• Because his Wicked Smart Community is all across the country, he sees a microcosm of trends that are occurring
• He’s seeing:
  • More and more people getting hurt by the banks
    • For example:
      • A woman owes $170,000 on her mortgage
      • She’s $40,000 in arrears
      • She has had legitimate medical expenses that have made her behind
      • She has no more forbearance
      • And she is at the end of the line
      • She asked Chris if he could help
      • The banks can’t help her
  • He is seeing more and more foreclosures in his area than he has ever seen before
  • There is also even a mailing list available that just came out called “Covid Distress” and they are experimenting with it
  • Probate is strong and has been for for a while
    • Someone is dying every 8 seconds and someone is born every 6 seconds
    • There will always be deals there
    • But the deals take more time and can be complicated
  • In his opinion, there seems to be a build up of foreclosures
• The emergence of many new small businesses
  • Because of Covid, there has a been a big rise in entrepreneurship
  • People saying, “The heck with corporate America, I’m going to start my own!”
  • Chris cite’s Michael Dell saying that the number of new businesses doubled from last year and it’s expected to go up again
  • Chris Googled it and saw a projection of 72% of people starting their own businesses
  • This has attracted more people to Chris’ program
  • The problem is that many of these people are no longer bankable because they don’t have steady income
    • They will need at least a couple of years of seasoning in the eyes of the banks with their new business
    • These are excellent potential buyers of the homes they handle and they usually have the down payments required
    • That’s a positive trend
    • He’s had doctors, lawyers and nurses come to his community, and they have money to invest in properties themselves
      • But when they see that they can get big returns without having to invest much, they are more excited about that
      • If they are looking at starting their own business and are waiting for the seasoning period, they can make a lot of money while they are waiting

Three Pay Days

• Chris teaches his students that are interested in his business model that they can look forward to 3 paydays
  • Cash now – down payment
  • Cash over time – monthly payments from the buyer
  • Cash long term – cash from the sale

Case Studies

• Brian
  • Lives in Chicago
  • A 17-year corporate person
  • On planes every other week
  • Son is getting older – bummed out that he was leaving him
  • Nov 2019 signed up with Chris’ online course (under $1,000)
  • He sent Chris and team a video saying he would be good for their community
  • He went after the lease purchase deals (their easiest) at $10 a pop (for option deposit)
    • He did 8 deals at $10 each
    • He worked his butt off
    • With all 3 paydays, he made a little over $800,000
  • Brian ended up leaving his job and going full-time with Chris’ program
• Justim
  • In medical sales
  • Does multiple six-figures in income
  • He joined Chris’ special “Wicked Smart” associate community
  • He worked very hard (Chris emphasized that this is not a “get rich quick deal”
  • He set up systems, learned skillsets and developed the right mindset
  • It took Justin 8 or 9 months to get his first deal done, working part-time
  • He left his job in medical sales
  • His 3 day days are in excess of $100,000
  • With his system now set up, he will see the deals flowing in
  • He now can mange his time, see his family more and enjoy the freedom – a whole different lifestyle

How Does it Work

• Students have access to any resource they have as a “family company”
  • One is a service that provides daily feeds of:
    • Expired listings
    • For-Sale-By-Owner listings
    • For-Rent-By-Owner listings
    • You might have to shift around, depending on the what’s happening in a market (i.e. Covid)
• Chris emphasizes to work markets within a 50 mile radius of your home
• A student will make a call to an expired listing
  • The listing was at $715,000 and just wouldn’t sell
  • The seller owes $475,000
  • You tell the seller how a lease purchase would work for his house
  • Then he is told:
    • The deed stays in your name
  • He is asked, how much did you hope to net?
    • He says $200,000 or a little less
  • He is told:
    • We are going to lock in the equity of $240,000
    • That’s the difference between what you were trying to sell it for and the amount you owe
    • On or before 36 months, we’re going to pay off your loan
    • And we’re going to give you your $240,000
    • If you need the money right now then you should sell and you’ll get $200K or less
    • If you have the time, you’ll get your $240,000
  • The seller would net more with a lease purchase than he would with conventional selling
  • The student only spends $10 for the agreement to sell the sellers house
  • The student takes over the mortgage payment and pays it with the monthly payments from the new buyer
  • The buyer takes on the maintenance and repairs
  • The student picks a good buyer that just needs seasoning
  • The student gets from Chris’ organization:
    • They get leads
    • They get scripts that teach them how to talk to the sellers
    • They don’t have to make the mortgage payment until they find a buyer to cover all the costs
  • The buyer gets the following from Chris’ organization:
    • They go through 3rd party screening
    • They come out of the screening with a “mortgage ready” plan
      • It says “Hey, I spoke with the buyer. They will be mortgage ready, if they follow A,B,C,D (follow the plan), in ___ months” (ranges from 18-30 months)
      • Chris’ team makes sure they stick to the plan
      • Then, the buyer can purchase the home directly from the seller and Chris is in the middle

What Differentiates Chris and His Organization

• They don’t  leave the buyer on their own
• They have systems in place that set up the buyer for success to REMAIN the owner of the home
• Industry stats for other organizations that teach lease options:
  • With 80-95% of the other organizations out there, the buyer never gets to complete the process and own the home
  • Only 2-10% of his buyers don’t actually buy the home
  • Chris’ son Nick handles the buyer side of the organization
    • Nick works with a person, Michelle, who handles  mortgages for his buyers
      • She understands the “Sandwich lease cash-out” that Chris does
      • She now has done over 100 transactions
      • Nick gets his buyers with Michelle 6-12 months before their mortgage timeline date and they usually close out early
      • He has a bunch of other “Michelles” in the markets they serve

• • The buyer’s responsibility
    • The buyer has to come up with a non-refundable down payment
      • That’s a buyer of any home would have to do
      • He asks for 10%
        • Sometimes is all upfront
        • Sometimes it’s in payments over time
        • 50% do either
      • This is usually one in the same of the down payment they would do when they get the conventional mortgage
        • Let’s say it’s a home for $500,000 and the buyer puts down $50,000
        • When he goes to get a conventional loan, he tells the bank, he already paid 10% down ($50K) thru Chris’ organization.  Then, Chris is responsible for paying the bank the $50K
    • The buyer may not go with a bank if the seller provides seller financing
    • The buyers are also told upfront:
      • We are not your landlord
      • You are the buyer
      • We’re going to treat you like a buyer
      • Your home will appreciate if the market is going up or go flat if there is no change or down if the market is going down
      • They won’t transfer title until you have your own mortgage
      • Everything else gets paid and taken care by you as you are the buyer
      • There are three options for buyers
        • Lease purchase
        • Seller financing
        • Sub 2

Free Stuff

• He has a free Masters Class
• A 55-minute video of Chris going into detail about how his systems work
• To get this, go to: SmartRealEstateCoach.com/MastersClass
• You will get loaded up with a lot of free stuff

How to Reach Chris

• Website: SmartRealEstateCoach.com

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Additional Episode Sponsor: Meno Studio – menostudio777@gmail.com