Big Fat Real Estate Checks Ep 176: Seller Call Case Study: How to Generate 30 Years of Cash Flow with Real Estate

Please enjoy this transcript, but please note that it may contain a few typos. With many episodes lasting over 2 hours, it can be challenging to catch minor errors. Enjoy!

Marco Kozlowski
All right, you’re brand new. This fantastic. These are live. Well, this is a live thing. I’m here live. So whatever happens, happens. It’s 805, on a Tuesday, the 10th of September. Lot of cool things happen today. Number 131, years ago, my oldest son was born, if you can’t see more, and a few hours ago, my granddaughter was born as well. So she got another addition to the family on the same day as my son’s birthday. Kind of cool. So I’m a second grandpa two. Got two grandchildren, which is bananas, because I still feel like I’m 25 years old. And, yeah, where does time go? Kind of bananas. Grandpa Carrie, good to see you as well. Uh, yeah. So if you’re brand new to this, basically, these are calls that are done from this week, very recently, but generally the week or the week before, and show you how you can acquire assets using skills, not money. You invest in yourself to learn the skills of and have access to tools of the wealthy, so you never have to use your own money to buy assets again. And the key of the game. The name of the game here, is cash flow. We want as much cash flow as possible. And based on market cycles, there are different things that you can do, different strategies that you can implement in order to get the fastest pass path, fastest path to cash flow, which is really what this is all about. And the more you understand the skills, and more you apply these skills, the more deals you get, the more cash flow you you retain. So today we’re going to do our best to do, excuse me, me, me, me, a double header. These are two calls that we did an event just a few days ago that ended, calling for cash flow, dialing for dollars. We have all sorts of names, but I have a group of people that are sequestered in a mansion. You stay there. You eat there. We slap you around there, and you do what we tell you to do. And by the end, you leave with some great opportunities and pull out process as well to make sure that you’re crushing it and killing it, no matter what your level understanding is. So it’s pretty cool. We’re going to play first Chris’s deal. Going to pop her in. I think I gave you a heads up that I might play this on the center. Call. So, Chris, how’s it going? Chris, hey, good. How are you I’m good. You had a good time. I had a great time. Good. So, by the way, these are all regular people that have learned just skills to do something specific, right? So, and I think you’re a real estate agent, not that that matters, but you have certain problems that come with being a real estate agent, and certain benefits that come with being a real estate agent. There’s pros and there’s cons. I’m not a real estate agent. I I’d say 99% of the tribe is not real estate agents. We use real estate agents in order to bring us deals, but having a license actually is, I think, more of a disadvantage than an advantage, but we work around it, right? So the key here is to have agents bring us opportunities of people that have a specific profile, which you’re going to see today. They do the work. We have a conversation with them, we structure the deal, and then we sell the deal and make cash flow for 30 years. And this strategy is called infinite whole tailing. We basically tie up a property, take over a cheap debt, and then offer a new buyer that has a Bruce credit that would be literally bent over by a bank on extremely high interest rates, very high interest rates that can’t get a loan. We own our finance. We basically wrap in a new mortgage that flows through and make cash flow for 30 years. All right. And you do it over and over and over again until you don’t want to make any more cash flow, whatever that is. All right, so it’s cool, exactly like the Fed, the bank borrows the money from the Fed at x every month. They got to pay that loan back. They borrow the money for X percent, they lend out the money for more. And you make the spread. It’s identical, except instead of borrowing the money from the government, we’re borrowing money from the borrowing money from the existing bank that’s there at a really cheap rate, because there’s a lot of cheap mortgages out there, and there’s a lot of people that need out of their home. All right, if you know nothing about real estate, that’s even better, because we’re actually not in the real estate business. We’re in the helping people business people need. We basically are in the business of serving, helping people that are in a situation that need to escape. This is no exception. So not a bad looking property. I think the value is around 710, and we’ll hear the story here. Yeah. So, yeah. How

can it help? Okay, so I understand you have a, I guess, a situation on a property where it needs a little bit of work. There’s a VA loan involved. They drop the price again. They want to get out. They’re motivated. I just, if you could just brush paid, okay, brushing red and crayon, just whatever you can share to make me understand the situation. And what the sellers, I guess, are intending to do, are they just trying to, yeah, yeah, just that’d be, that’d be great, yeah, yeah. So they

all about three, okay, so

Marco Kozlowski
first of all is, is it occupied or vacant? Right? Again, this is a interactive experience, right? So was it occupied or vacant? Now vacant generally means they’re probably making two mortgage payments. I understand that there was a VA loan is which and for those that don’t know what VA means, it’s a loan that’s for vets, veterans, and it’s basically a loan that’s guaranteed by the government at a lower. Right? And it’s 100% financing. They’ll even pay the closing costs and attorney fees and everything. So they wrap their and they don’t have to pay anything down in order to get into a VA loan. Some VA loans are assumable. Some VA loans are not assumable. It doesn’t matter, because when you know what you’re doing, all loans can be taken over and then, say, assumed when you take a loan, assumption that means you’re qualifying at the bank. If you’re Canadian, if you’re Mexican, if you live in Australia, you can take over a loan. Doesn’t matter. You don’t need to be a US citizen in order to make the payments. So ultimately, we’re we’re again taking the existing loan, and we’re going to have someone else make the payments, but the payments are going to be higher than what the existing loan is, and make the spread for 30 years, because we’re creating a new 30 year mortgage, but overlapping wrapping around an old mortgage. All right? And just to be clear, this is completely legal, all right. This has been around for a very long time, and I know you don’t probably understand the mechanics. It doesn’t matter, all right, because when you go through this process, we’re gonna hold your hand tell you exactly what to do next. All you have to do is, Marco, what do I do next? This is what you do. Marco. Do next. This is what you do. All right. All you have to do is go, here’s the first step. Your second step. Don’t have to know everything. Just know the next thing that’s it. All right, done years

ago and intended that kind of make their their own, their special own. Started a bunch of projects, didn’t finish a lot of them, and then just decided to pull up and pull up stakes and move back to North Carolina and just, I want to be done. But they obviously want to maximize their profit as well.

Marco Kozlowski
So they’re, they’re listing it for 645, all right, if there’s a 5% commission buyer and seller, all right, 5% of that is going to be around 30 grand, and you have closing costs, there’s nothing left. All right, there’s zero, all right, there’s really zero equity in this thing. So for him to say they want to maximize their profit is just the agent doing agent talk on autopilot at this point, all right? And as you get better at this, you’re going to see what you want to listen to and not

listen to they I found they found me through a friend. When I did my initial assessments on the home and I ran comps, I got to about a 710, author price, which is what I suggested to them is they do that. Let’s align with where Zillow is, or real, or.com is, more or less. Although I really liked it that number independently, although we initially listed at 675 and flipped them down from there and had some interest. But no go offers of note, yeah. So we’re listed in the MLS right now at 650 I haven’t met them down in my inbox, 45

okay, and they have a VA loan right now. That’s, you said, three years older, so they were three years ago. That’s, that’s about, right? Yep,

okay,

Marco Kozlowski
do you know if it’s an assimilable VA loan or not assumable? Because I’ve seen both. All right. Now, this is not a question that you typically going to hear me do on a summer call, this is assumable, not assumable, all right? Because most agents, if you ask them about taking over a loan, they’re going to be like, nothing’s assumable. You can’t do this. No owner financing, and they shut you down. By the way, anyone that asks for owner financing upfront is always going to be someone that has no money, right? And no one wants to deal with someone that has no money. So at the very beginning, I was like, hey, part of a small private equity fund. If you’re in the tribe, you are, and we, know, write checks for things that we want that makes sense. And, you know, heard this problem, what’s going on? Right? Very, very casually. We’re not trying to impress anyone. We’re not selling anything. No jazz fingers. Ah, look at me. It’s very calm, very important, right? So he’s selling me right now. Well,

that one says ish, because usually the A it’s like, nobody down and they the vets get taken care of that

way. But yeah, yeah, we’re running pretty close to loan value outdoors, attracting the agent, commission, taxes and things like that. So there’s not a whole lot, there’s not a whole lot more room,

Marco Kozlowski
I know. So now I’m going to see what the seller really needs. Now an agent’s not necessarily going to know that, all right, but they’re going to have some insight as to what’s going on, right? So this is where the magic really starts happening. If

they, if, if they got their loan taken care of, you pay for closing costs, everything else. Is that like, is that, would that make them happy? Is that what those where there’s an outcome is like, just getting out of this thing? Is that what they’re working there?

I’ll put it this way. Obviously, my case for them is that, hey, don’t walk away from the loan. Let’s at least get some equity out of it. And we don’t want to, want you to have any credit issue, right?

Marco Kozlowski
Let’s get some equity out of it. But don’t walk away from the loan. And by the way, if they walk away from the loan, how much does this guy make? Chris, you can answer that if you want to. You’re right. So the agents listing it putting in time, money and effort, because it costs money to put something on the MLA, something on the MLS. There’s a fee to that, right? There’s gas in the car. They used to go take these pictures. There’s time involved. He could be doing something else and enjoying time with his family. He doesn’t want to waste his damn time. He wants to get paid, and I want to get him made, right? Again, how much money does an agent make if these people walk away from the loan? Now, what’s very interesting, all right, is that, hey, what do they want on this thing? They just want to walk away and be done. All right. Now, I didn’t say walk away from the property and let this thing go into foreclosure. He picked up. What he wanted to pick up was, don’t walk away from the loan. All right, I’m a decent listener, so walk away from the loan. That means, okay, well, they’re ready to walk away from the loan, because that’s what they suggested to him. He’s. Don’t walk away from it. I want to make a commission here, and then we should have credit issues, which is true, if they walk away from the loan, there’s a credit issue, right? You basically get into foreclosure. Shows up on your credit. Bad news, bears

the loan cleanly. Give it back to the to the bank, and actually, we’re now a mortgage payment behind. Oh, mortgage

Marco Kozlowski
payment behind. Now we have not there’s the big D debt, right? It’s all debt, and they’re behind. So that’s not good. Think she wants to recover that payment.

So they’re she’s mentally prepared to do that. Now, his

Marco Kozlowski
role as a real estate agent, his fiduciary responsibility, is to do what’s best for his client, which he’s doing. I want my client to make some money, but his client is telling him, transparently, I want to walk away from this thing. You sell it before goes to foreclosure. God bless you. What happened? Your payment behind? All right? So this is perfect. All right. Do you remember the interest rate on this? Chris, 3.5 you think you think, go, go to the bank right now, get a 3.5% loan for 600 grand. The other way? Anybody? All right? Anybody? You think you can do that? No, not going to happen. Do you think there’s someone with Bruce credit that’s looking down the barrel of saving and saving and saving, that’s really trying to feed their family and have the American dream and has bumps and bruises. Can’t go to a bank because they might need 30% down and they’ll be literally robbed at 9% interest, which will there’s a big difference between three and a half percent interest and 9% interest. That’s my client. And how much money does a mortgage broker make by not qualifying somebody zero. So these mortgage brokers have these people that have down payments and Bruce credit that are good people that have gone to hard times or have chosen not to pay their I’m a business person, and when I was struggling, I had shitty credit for very long time because I did what I had to do in order to make that happen, right? So if I can get this person the same credit at in this high debt economy that a person with great credit has, not with 20% down, but with 10% down. Is that a good deal for them? Hello, yes. All right, and I sell this thing for seven and a quarter. All right, a little bit, a little bit of a just a little juice, not a lot of juice, just a little juice. Seven and a quarter, if I fix it, all right, or I’ll give you 710 as is, whatever. All right, because, again, we’re all in for less than 600,000 we’re good at 599 All right, at 3.5% what I want to do real quick is, I want to show you what those numbers look like now. All right, do you think any real estate agent knows that how to step take a really cheap mortgage and find a buyer for a cheap mortgage like this is even advertised that there’s a cheap loan that can be that can be assumed by us putting things together again this we’re just the conductor here. We’re just the orchestrator, right? We’re the engineer. We take this piece, we take this piece, take this piece. We have a seller that needs to sell, that literally is willing to walk away from the house. We have an agent that needs to be taken care of. And the reason we want and need to take care of these people is, number one, it’s the right thing to do, because they’re working and they should be paid. When you’re working, you want to be paid. But forever, most real estate agents are not taking listings because there’s no equity in the property. So, and there’s a shit ton of them. So we did a call today, and Owen has two that he just found like this, right? So there’s they’re everywhere with really cheap mortgages to make insane amounts of cash flow. All right, take a look at it. First of all, let’s take a look at what the underlying loan is. All right, 599,005 99,000 which I believe was the original loan, right at 3.5% All right, so payment is 2690 if you guys can remember that. So the payments 2690 a month? Yeah, there’s taxes, insurance, maintenance and all that shit. All right, but we’re the bank. The bank doesn’t pay that the owner does. So right now, the owner is going to have to pay whatever’s left on those old things. Let me explain. Right now, someone has fantastic credit. They’re paying around 6% for 30 year mortgage. That’s the best you got. 5.99 All right, no less. All right. Now, if we do 725, all right? And we asked for 75k down. That’s 75,000 does that cover the two and a half percent at the at whatever the debt is, because we’re basically buying it for the debt, and that’s it. That’s the number that we’re going to be buying it for. So it’ll be two and a half percent of 600,000 we’re going to give them 15,000 we got 75 from our buyer. That has not they need 20% down, right? That’ll be 150 so we don’t, we don’t, even if they have 150 I don’t want it. Keep it. I only want 10, because the more debt that they have, that you are owed, the more money you make. This is a cash flow game, not a cash game. If you get cash, you spend it 100% I know you. I’m looking at you. You’re going to go shopping. Go to this. Go to that. You’re the money’s gone. If you take a look at how much money you’ve made in your lifetime and how much money you have in your bank account, there’s a vast discrepancy for most people, all right, you’re not replacing that constantly, or you’re having to work to replace that. The key is to have more in, more money coming in than going out, so your money is always going up, not going down. So you want to do as many of these kinds of transactions as possible. And this is a 30 year paycheck you. Now we want to find someone that’s grateful for giving them a low ass interest rate. All right, if they, if they again, have perfect credit and 20% down, they’re getting six. We’re offering six and a half. That’s really good. All right. Now, if they, if it’s seven and a quarter and they put 75k down, and by the way, where do we find these people? Well, they’re everywhere. Once you know where to look. But a hint is, mortgage brokers don’t get paid on people. They deny. And once you understand how to have the right conversation with the right mortgage brokers, and they send them to the property in a two hour time span, because I do basically an auction on steroids, where for two hours we got 100 people in the house that all have 10% down, have the same profile, and we pick the one that we pick the one that we want the most, that wants the property the most with the family, the one that’s most likely going to want to stay there for life, because I want to be paid for the rest of my life. I know about you, Chris, all right, but I want to be paid for the next 100 years, not just 30. I hope this is making any making some sense, guys. So we’re left with $650,000 all right, at six and a half. All right, it’s 4108 what was the number before 4108 minus that other? 2690 if I’m not mistaken, that was correct. 2690 what’s the balance? 4108 minus? 2690 What’s that 14? 1814? 118 14 118 1418, a month? For how long? 30 years for? Actually, for 27 years, because the last three years this thing is paid for. That’s right, but you can’t live on that. But is it a good start? You’re paying an agent, so you paid the 15,000 you’re paying a broker. All right, you probably paying all all in 25 grand. How about half? Let’s call it half, just to be safe. All right, out of the 75 you get half of that. What’s that? 37 5040, grand, yeah, better than a poke in the eye with a sharp money stick. I guarantee it. Where’s that 40 grand? Go hit. National Bank closing costs are almost zero, literally, 500 bucks. It’s not a title company, all right? And you’re looking at, yeah, $17,000 a year, every year, while you’re picking your nose. You’ve served a buyer, you’ve served a seller, you’ve served a mortgage broker, you’ve served a real estate agent, and you served your family all in one transaction, and you got paid to do it the day you close. So you don’t need money to make money. You need access to money to make money. You need to have the skill sets to make money. You need to know what, what conversations to have to make money. You need to stop getting in your way and believing that you can never get there because you’re absolutely right. If that’s your belief, you can get anywhere you want to be as long as you follow the process that wealthy people do. Wealthy people don’t use banks. They are a bank, so become a bank. Wealthy people don’t use their money and credit to buy shit, so don’t do it either. All you have to do is, again, mirror the process. I put it all together for you. All you have to do is follow the damn steps. If you can get out of your own way. You.