In the latest episode of the Raising Private Money podcast, Jay Conner interviews real estate veteran Chris Prefontaine. With over 30 years of experience and having raised over $5 million in private money, Chris shares invaluable insights into successfully navigating the challenging landscape of real estate. The conversation revolves around creative financing techniques, the 3 payday system, and the intricacies of structuring and selling properties. This blog post delves deeper into these topics to provide actionable tips for both novice and seasoned investors.
The Birth of Creative Financing After 2008
Chris Prefontaine initially started his career in single-family real estate. However, the 2008 financial crash prompted a shift in his approach. Moving away from traditional financing involving banks and heavy cash investments, Chris adopted a strategy that combined private money with creative financing techniques. These include owner financing, lease purchase, and “subject to” deals. This pivot allowed him to maximize his real estate deals while minimizing personal financial risk.
Attracting Private Money
Chris first tapped into the private money market by approaching professionals he trusted—his attorney and accountant. By demonstrating the advantages of earning a 7 to 8% return on investment through his 3 payday model, he gained their confidence and subsequent referrals. Trust plays a crucial role in this process; as Jay Conner points out, investors are ultimately investing in the individual, not just the opportunity.
Understanding the 3 Payday System
One of Chris’s hallmark strategies is the 3 payday system, designed to create continuous income streams. This method ensures profits at different stages of the deal: principal payments, cash flow, and markup when selling on terms.
Breakdown of the 3 Paydays
- Day 1: Upfront Payment
– Earned at the outset of the deal, often during acquisition. - Continuing Cash Flow
– Monthly income generated from lease payments or seller financing arrangements. - Final Lump Sum
– Realized at the end of the term, either through selling the property or final payment from the buyer.
This approach contrasts sharply with traditional real estate models such as wholesaling and flipping, which are mostly transactional and offer income only upon the sale of each property.
Buying Real Estate on Terms
Chris emphasizes three primary rules when buying and selling real estate on terms: avoiding banks, requiring little to no money down, and creating 3 paydays.
Types of Creative Financing
- Owner Financing
– The seller acts as the bank, accepting monthly payments directly toward the principal. - Subject To Existing Loan
– Acquiring a property subject to its existing mortgage while maintaining the original loan terms. - Lease Purchase
– Lease agreements that provide the option to purchase at a future date, are often facilitated with little initial investment.
Benefits for Sellers
Sellers may agree to these creative terms for various reasons. Some are looking to solve financial problems or achieve goals that the conventional market cannot fulfill. For example, sellers with free and clear properties may be willing to accept monthly payments in return for a higher total payout over time.
Marketing and Selling Properties
Rather than relying on traditional multiple listing services (MLS), Chris uses a specialized company called Prosperity for marketing real estate deals. By focusing on direct referrals and automated processes, he can negotiate favorable terms with sellers and ensure a higher rate of return.
Identifying Ideal Prospects
One effective strategy for finding properties ideal for terms is targeting expired MLS listings. Approximately one-third of these listings are open to the concept of selling on terms, with about 10-15% willing to engage in serious negotiations.
Continuous Education and Support
Chris emphasizes the importance of continuous education and support through his community called Wicked Smart. This network provides interactive help and resources, particularly valuable for part-time investors or those with other lucrative careers.
Conclusion
The conversation between Jay Conner and Chris Prefontaine offers a masterclass in navigating the complex world of real estate. By embracing creative financing, establishing trust in private money relationships, and utilizing the 3 payday system, investors can create robust and continuous income streams. Chris also provides further learning opportunities such as his free book, “Real Estate On Your Terms,” available at https://www.wickedsmartbooks.com/jay1 and through the Wicked Smart community.
10 Lessons Discussed from this Episode:
- Chris Prefontaine’s Real Estate Origins
- Chris started his journey in single-family homes, initially building on vacant lots within established neighborhoods. This foundational period set the stage for his evolving strategies.
- Adaptation After the Financial Crash
- Post-2008, Chris shifted from conventional financing to creative strategies. This transition allowed him to avoid the pitfalls of relying on institutional lenders, focusing instead on safer, bank-independent methods.
- Integrating Funding Methods
- Chris began combining private money with creative real estate techniques. This dual approach facilitated down payments and covered sellers’ arrears, optimizing his deal-making capabilities.
- Effective Private Money Raising
- By initially approaching trusted professionals such as his attorney and accountant, Chris was able to attract private money. He demonstrated how unused 401(k) funds could generate higher returns, leading to further referrals.
- Foundational Role of Trust
- Jay Conner emphasizes that the key to successfully raising private money lies in building trust with investors. This relationship-focused approach ensures long-term collaboration and success.
- Innovative Property Acquisition
- Chris details three main buying techniques: owner financing, subject-to-existing loans, and lease purchases. These methods often require minimal or no cash upfront, making them accessible and efficient.
- Understanding the 3 Payday System
- This lucrative model involves earning from principal payments, enjoying consistent monthly cash flow, and profiting from the eventual markup upon selling properties on terms, creating multiple income streams.
- Advanced Marketing and Sales Techniques
- To streamline sales without relying on the MLS, Chris uses Prosperity for marketing. This approach automates the process, from promoting properties to managing sales, ensuring efficiency and reach.
- Benefits of Selling on Terms
- Selling on terms is particularly suitable for properties that failed to sell via traditional listings. This strategy not only provides sellers with more cash over time but also aligns with their financial goals without requiring immediate liquidity.
- Wicked Smart Community Support
- Chris highlights the value of the Wicked Smart Community, which offers extensive interactive support through platforms like Slack. This resource-rich environment is crucial for both novice and experienced investors navigating real estate challenges.
Fun facts that were revealed in the episode:
- Unique Seller Motivation: Chris Prefontaine shared that some sellers prefer owner financing for estate planning or tax reasons. For instance, a mixed-use building owner turned down cash offers because he wanted to avoid immediate taxation and preferred to receive monthly payments.
- Creative Start in Real Estate: Chris began his real estate journey by finding vacant lots in established neighborhoods, building single-family homes on them, and selling those homes—all while the landowners and subcontractors waited for the sale before getting paid.
- 3-Payday System: Chris trademarked the “3-payday system,” which creates three streams of income per deal: upfront money from the down payment, monthly cash flow, and a lump sum at the end, providing continuous income compared to traditional wholesaling and flipping.
Timestamps:
00:00 Real estate expert raises $5M in private money.
04:57 Buying deals without cash, creating 3 payday deals.
08:10 Utilize money to work for your advantage.
12:17 Monthly payments to sellers who become a bank.
15:16 Calculating seller’s benefit from selling through MLS.
16:09 Real estate investors seek big cash margins.
20:08 Analyze the market and costs for selling houses.
25:49 Real estate success without full-time commitment.
28:30 Repeating ideas, expanding options, promoting Wicked Smart.
29:12 Free Book: Free Book: https://www.WickedSmartBooks.com/Jay1
30:10 Connect with Chris: https://www.SmartRealEstateCoach.com/MastersClass
Connect With Jay Conner:
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Jay Conner is a proven real estate investment leader. Without using his own money or credit, Jay maximizes creative methods to buy and sell properties with profits averaging $67,000 per deal.
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The Power of 3 Paydays: Chris Prefontaine’s Real Estate Strategies for Success
Jay Conner [00:00:00]:
Welcome to another amazing episode of Raising Private Money. I’m Jay Conner, your host, also known as the Private Money Authority, and this is the show where we talk about how to raise private money without ever asking for money. Well, my guest today is a very, very good friend of mine. He’s been in real estate now for over 30 years, probably knocking on 40. Anyway, he’s only raised, over $5,000,000 in private money and he does something very, very interesting, and I do it as well, but he uses private money simultaneously along with his creative strategies of buying and selling houses on terms. So, what my guest is known for, in fact, he’s not only known for it, he’s trademarked it. And what he’s trademarked is, quote, the secrets to creating 3 paydays per deal without using any of your cash, credit, or banks. Well, simultaneously, he runs his own buying and selling business with his family team and they purchase about 2 to 5 properties month in and month out.
Jay Conner [00:01:09]:
So, you’re going to be listening to an individual on this show who’s in the trenches every week. He’s doing the business. He’s very active. And what I’m talking about here is decades of experience as well. In addition to all that, he’s a 4-time best-selling author. So having been through several real estate cycles just like myself, my guest understands the challenges of this business, and he’s helping students across the nation navigate the constantly changing real estate waters. In just a moment, you’re gonna meet my good friend, seasoned real estate investor, and the creator of 3 Pay Days Per Deal, Mr. Chris Prefontaine.
Jay Conner [00:01:52]:
Right after this.
Narrator [00:01:55]:
If you’re a real estate investor and are wondering how to raise and leverage private money to make more profit on every deal, then you’re in the right place. On raising private money, we’ll speak with new and seasoned investors to dissect their deals and extract the best tips and strategies to help you get the money because the money comes first. Now here’s your host, Jay Conner.
Jay Conner [00:02:23]:
Well, Chris, welcome back to the show, my friend. How are you?
Chris Prefontaine [00:02:27]:
I am terrific. Thanks for having me back.
Jay Conner [00:02:30]:
Absolutely. I’m excited to have you back. It’s been a little while since, my podcast and YouTube audience, have had the pleasure of learning from and listening to, as most people know you, Chris Pree. Prefontaine takes about 10 seconds to say, right? So we call you Chris Pree. But anyway, welcome back, Chris. We’re gonna talk about this show Raising Private Money because, after all, this is the Raising Private Money podcast. But then we’re gonna segue over to, what you’re known for, and that is, buying and selling on terms, the secrets to creating 3 paydays per deal without using your cash, credit, or banks. But before we jump in on that, let’s start with, first of all, I mean, you’ve done new construction.
Jay Conner [00:03:17]:
You flipped houses. You’ve done a commercial. What asset class of real estate did you start in way back?
Chris Prefontaine [00:03:25]:
Oh, man. Single family. Way back would be finding spot lots, I call them. Vacant lots in established neighborhoods and then building a single family on that. And we did so naively back then in my twenties. We did so while the landowner waited for the house to be built and sold, and all the subcontractors did the same. So I didn’t know it, but it was creative real estate back then too. And, it was single families primarily.
Jay Conner [00:03:55]:
Okay. So you started in a single family. That’s where I got my start as well. It’s been my experience in interviewing, real estate investors here on the show, that have gotten into private money. And, of course, you’ve raised 1,000,000 in private money as well, that something happened in their real estate investing career to where they realized I gotta find another way to fund my deals. I need to find all the cash on some of my deals. What was it that happened in your real estate investing journey that caused you or triggered you to start raising private money?
Chris Prefontaine [00:04:30]:
Okay. So there’s 2 tiers to that, Jay. Good question. When I say 2 tiers, 1 was precrash to pre-2008, and one was posted. And here’s why I say that. Pre-2008, I was under the conventional mindset of I’ll either putting conventional financing in place and then I’ll tack on some private financing, or I’ll do all private financing. And then after I went through the crash, getting beat up financially, mentally, and otherwise, I said okay, enough. I’m not dealing with banks anymore at all.
Chris Prefontaine [00:04:57]:
I’m only gonna buy things that don’t require cash. And so tier 2 came about because I said, well, wait a minute. About 3 years into that, which would have been somewhere around 2015ish, 14, I said okay, we’re leaving deals on the table. So yes, we buy no money down, we buy owner financing and and lease purchase and sub 2. But what about these deals where they go, well, I just need this much, and if you did this much cash down, you get x amount of equity out of it. So we were leaving those just on the table and started again starting to raise a little bit. And if they’re a little bit proportionate to the deals go ahead and not leave more money on the table and create more 3 payday deals.
Jay Conner [00:05:34]:
Right. So, what you just went over there to unpack a little bit is one way that you can combine private money and creative strategies, such as buying subject to, etcetera, seller financing, etcetera, is you can combine private money, say in a second position, a small amount of money. Let’s say, like, if the seller needs a down payment, won’t sell on no money down, or perhaps they’re behind on payments for whatever reason, you can use private money to bring those payments current etcetera. So, what are some of what are some of your favorite ways to raise private money? To where do you feel like you’re not out there chasing money, but how do you attract or how have you attracted private money into your world?
Chris Prefontaine [00:06:24]:
You know, Jay, it’s been fairly simple for me because I started with people who knew, worked with, and or trusted me, and that would be my attorney and accountant. Those are the first two. And I simply said, do you have money sitting in a 401 k, or IRA, not earning at least 7 or 8%? And every single one of them said, of course, I don’t. Okay. So why don’t we put that to work for you? And I showed them the 3 paydays, which they all love because it’s different. And I showed them how they can earn with us. And and, those 2, one who always saw my books and one who always saw my deals, were the first two that started, and then referrals came.
Chris Prefontaine [00:06:59]:
And I know you have experienced this tenfold, and I have experienced where once you do the first deal, even if it’s a small deal, 25, 30 grand, all of a sudden, either they or people they know have a lot more. Right? It comes out of the woodwork. So
Jay Conner [00:07:12]:
They always talk about it, though. Yeah. So you started with the professionals who were already trusting you. So there’s a very, very important word you said right there was trust. They had trust in you. And they probably, as I’ve experienced, were not investing in your deals. What they were doing is they were investing in you.
Chris Prefontaine [00:07:38]:
I agree.
Jay Conner [00:07:38]:
Even though, of course, you know, those deals were collateralized in the note. I assume you weren’t borrowing unsecured funds. But they were investing in you and the relationship that they already had with you. Right?
Chris Prefontaine [00:07:50]:
Right. Yeah. A 100%. Because look at here’s a here’s a gentleman that sees my books. Right? And says, okay. I got some money sitting on the sidelines. I wanna put it to work. He said I know I’ll spend it.
Chris Prefontaine [00:07:59]:
So what what can we put it in? And with the same with my attorney. He had an old, an old four zero one k sitting there that was left to him, and he’s like, Chris is making nothing. So that’s how that started.
Jay Conner [00:08:10]:
Yeah. I love the phrase that you just said, in the role play there where you were talking about, what you said to that individual. And the phrase you used was, why don’t you let us put your money to work for you? And I say that all the time. I say it all the time. I wanna put your money to work for you, or when I’ve got a deal ready to fund, I’ll call you up and I’ll put your money to work for you just as soon as possible. So, the reason, in my opinion, that’s such a powerful phrase, is that that’s an example of how we’re serving, keyword, how we’re serving these private lenders. Remember, we don’t have to go around chasing and begging and selling and persuading, but we’re, instead of asking for money, we’re offering them an opportunity to how they can make money. And, you know, in my case, Chris, I’ve got 47 private lenders.
Jay Conner [00:09:05]:
These are all average everyday people. None of them had even ever heard of private money or private lending. They had never heard of self-directed IRAs and how they can use, as you just said, an existing retirement fund that’s not like getting them any returns. Well, they never heard of this opportunity. And so here I come along with my teacher hat on in a serving kind of way, showing them this opportunity. And, you know, just what’s so amazing is that they have, like, light bulb moments. Their eyes light up, and they’ve just never heard of this. I don’t even think any of my 47 private lenders even know what an accredited investor is, to tell you the truth.
Jay Conner [00:09:49]:
But have you had some private lenders along that way to where you showed them this opportunity and they’d never heard of this world before you told them?
Chris Prefontaine [00:09:58]:
Yeah. Most of it did come in some shape, form, or fashion from referrals. Right? So and so would like to talk to you about the deals that I’ve done with you. I think every single one of them did. But every single time I get on the phone, they’ve never heard of the concept of how we do it, how you teach it. And they’ve also never heard of the 3 paydays. So, you put those 2 together, it’s kinda neat. It’s an eye-opener for them.
Jay Conner [00:10:17]:
I love it. I love it. Well, let’s move over to what you are known for, Chris. And that is the secret to creating 3 paydays, and that’s buying and selling real estate on terms. So, let’s start right there. In your world, in your words, what does it mean? Really, in simple terms, what does it mean to be able to buy and sell real estate on terms?
Chris Prefontaine [00:10:42]:
In my role, it’s really simple. It’s no banks. So you’re never signing personally on a loan. I get calls from investors saying, yeah, but this bank will give me 3 more loans and this one I said, don’t sign personally. Please don’t do that. So no banks. Secondly, little to no money. I’ll never say every single time you can get no money because it’s sometimes just a teeny bit needed for transfer tax or something else.
Chris Prefontaine [00:11:04]:
But no banks, little to no money, and terms to me mean I wanna create those 3 paydays. I didn’t wanna be stuck on that proverbial treadmill again after the crash. That was one of the things I re-engineered and said I’m not doing that again. So those are the main three rules, if you will.
Jay Conner [00:11:21]:
So what are some specific ways that people can sell to you sellers can sell to you on terms where you don’t have to use a local bank or Yeah. Or a hard money lender or any kind of institutional money.
Chris Prefontaine [00:11:39]:
Yep. So that’s, the 3 ways we buy would be owner financing. You alluded to a few of these earlier. Subject to the existing loan staying in place, so sub 2 is what they’ll your listeners will hear out there. And then lease purchase. Lease purchase, you’re gonna control. The other 2, you’re gonna own. Those are the 3 ways we buy.
Chris Prefontaine [00:11:57]:
And they will be little to 0 money down on those.
Jay Conner [00:12:01]:
So let’s start with the first one you said, seller financing. So, I mean, what does that mean? You’re not using a bank. The seller is gonna sell you their property with seller financing. How do you break that down? What does that look like?
Chris Prefontaine [00:12:17]:
Yeah. So they become the bank. And that’s why I say to them, you’re the bank now. So I’m gonna be making payments to you every single month. And a side note, Jay, as you know, we mainly deal with, in our world, free and clear sellers. So we’re gonna make that monthly payment to them directly against the principal. So let them know that. We’re gonna give you your price in the for example, and when you become the bank, we’re gonna make monthly payments to you against that price is what I say.
Chris Prefontaine [00:12:44]:
Until such time, we’re gonna have a balloon payment due for the balance. And that could be 4 years, 5 years, 6 years, in that range, 10 years it could be. That in its simplest form, that’s it.
Jay Conner [00:12:56]:
So why would a seller be interested or willing to take monthly payments on a free and clear house? I heard you say recently, that one of your most popular lists that you and your students use are expired listings. They had the property in the multiple listing service that didn’t sell. Right. And in a lot of cases, you could, in your words, get them their dollar, get them their price. Why would they be willing to do that?
Chris Prefontaine [00:13:28]:
Couple thing. I mean, we could do this for now. I’ll give you, like, the top ones that I’ve seen and bought from, including my office building. We’re always looking at either one of 2 things, solving a problem that they’re having or helping them accomplish a goal the conventional market’s not doing. So example 2 examples. Mixed-use building. This can be any asset class even though I teach primarily residential just to keep from getting into the shiny object syndrome with students. The mixed-use building, was his building was sought after.
Chris Prefontaine [00:13:57]:
He was in high demand. He was free and clear. What he said to me was, Chris, the realtors don’t understand that bringing me offers, I don’t want cash offers. I want for estate planning reasons and tax reasons, I want owner financing. He was adamant about it and didn’t wanna get cashed out. And so, what do we do? We help he didn’t have a problem, we helped him accomplish a goal the conventional market wasn’t helping him do. Now switch gears a little bit, Free and Claire, a couple’s gonna leave the state. They wanna leave by literally next week.
Chris Prefontaine [00:14:30]:
They’re out of time. The runway’s over. They had already done it in the market, but it hasn’t expired. They called me and said, can you come do that owner financing thing? They’re retiring. They just wanted a cash flow stream and the conventional market didn’t get it sold. So what I said to him was, how much would you have gotten if it sold with the realtor? It did not, but if it did, he said, I think around 183. Said done. I’ll pay 183, no money down, $923 a month principal payment.
Chris Prefontaine [00:14:56]:
And that’s what we structured with him. It took minutes on his porch. Because why? Because he had a problem now. He had an end of his ramp, and he wanna leave the state, and winter was coming here. And he said, I just want closure on this. Boy, I got the price that I couldn’t get. I get cash flow while I’m retired, and I can let go of this now and have closure. But there are many more.
Chris Prefontaine [00:15:14]:
Those are just two examples.
Jay Conner [00:15:16]:
So let me unpack that story. So you got a seller. You ask them how much would have gotten if it had sold through the the realtor community, through the MLS. He told you 183 is what he would have gotten if he’d sold it through the MLS and had paid a realtor. So let’s let’s turn the coin upside down. When you’re buying on terms and you’re not having to come up with all the cash or any of the cash, how does that math now I know you’re gonna need to keep this simple. But how does that math work for you as the real estate investor to be able to pay them their price? And let me do a little caveat to the question, and then I’ll come back and put a bow on it. So I say most.
Jay Conner [00:16:09]:
A lot of real estate investors that don’t work and move in your sphere of terms, think I gotta have a spread. Yep. I got I got to have a big spread between what they’ll sell it to me for, all cash. Maybe they’re a wholesaler. They’re gonna sign it out to another real estate investor that’s gonna take the deal down, or maybe they’re gonna stay in the deal. And so they’re gonna have this big spread. And, of course, you know, in the world of cash, you got the formula called the maximum allowable offer, and you’ve got, you know, a good 30, 35, 40%. You know, like, when I’m paying all cash, I’ll buy I’ll buy a house all the time for 50% of the after-repaired value.
Jay Conner [00:16:54]:
But back to my question. A lot of real estate investors and what and your answer is gonna be very valuable, particularly if you are a seasoned real estate investor and you always have this, I gotta have a spread in my mind. So back to my question. How does the math work for you, the real estate investor, to give the seller their price? Why does that work on terms when it wouldn’t work with all cash?
Chris Prefontaine [00:17:21]:
Yeah. And and didn’t sell, right, in the conventional market. So I’m gonna give you the answer, and then I’m gonna give a formula that’s super simple that you can bet on and work on for the next year or 2. K? So the answer is it’s the 3 payday system. So let me explain. Number 1, it is super powerful to have principal-only payments. Think of this for a second. $923 a month in principal payments to this gentleman.
Chris Prefontaine [00:17:46]:
Now this house has been cashed out. This is a very successful deal already. But I had a 4-year term on that. So that’s almost 48,000, call it 42 or $43,000 over 4 years that paid down that principal. I didn’t pay it down. I had a buyer in there who needed time to get financing and they paid me monthly. So while they were paying me monthly, my principal is going down. The other cash flow stream is while they’re paying me monthly, they’re paying me something higher than my 9.23.
Chris Prefontaine [00:18:14]:
In this case, it was 1500. Well, there’s cash flow there built-in. And last but not least, there’s the markup. When we do the house, we mark that back up to where it was on the conventional market. How can we do that if it didn’t sell in the conventional market in the, say, 2 teens or 2 25, I think it was? Simple. We’re selling to who? We’re selling to people who they’re valid, deserved buyers, but they need time. Credit repair, job seasoning, new business seasoning. So they’re ready, willing, able, and anxious to jump on the path to homeownership because the banks won’t do that for them yet.
Chris Prefontaine [00:18:48]:
That process creates those 3 paydays and is super lucrative. Let me give you the metric I promised. When you go out and find free and clear property in I’m gonna use round numbers, and you buy it for $200,000 or more, most of the listeners can do that in their marketplace, 200 grand or higher, all the way up to 2,000,000. Then you structure at least 4-year terms, 48 months or more, and you structure a monthly principal payment of I’ll use the 9.23 or 9.50 a month or higher, you have a 6-figure deal all 3 paydays every time. So that’s what I hope the short answer and the long answer.
Jay Conner [00:19:28]:
Well, let let me let me let me recap that and review that again. If you’ve got a property that’s a value of 200,000 or more, that’s for 2,000,000, and, and you’re gonna be able to buy it over a so you’re so are you amortizing it over, is that a 4-year balloon that you’re putting in there?
Chris Prefontaine [00:19:50]:
Exactly. For all principal, then a balloon, whatever the balance is, on or before 48 months.
Jay Conner [00:19:55]:
Alright. So it’s all going towards principal, and so there’s no interest.
Chris Prefontaine [00:20:01]:
Right.
Jay Conner [00:20:02]:
How do you come up with the payment that you’re gonna offer the monthly payment you’re gonna offer the seller?
Chris Prefontaine [00:20:08]:
Yeah. So we simply look at 2 things, Jay, that this market’s helping us a lot because interest rates are a touch higher. But we look at what are the rent comps in the area, just so we’re aware. And then we say if a buyer was gonna buy this house today and they were able to get a mortgage today at today’s rates, what are they gonna pay? Those are usually pretty close because rents are going so high now due to the high interest rates. We’re gonna wanna create a spread there, a delta because we need to be a little bit lower than that to the seller so that we can go to the market and get collect that delta which we call our payday too. But those are the 2 things we look at. What’s a conventional loan gonna cost them? Because remember what we’re doing with these buyers. We’re trying to train them, get them ready to be homeowners, and as such, we wanna make sure that their payment’s gonna be fairly close to that and that they understand how that calculation works.
Chris Prefontaine [00:20:56]:
And then we can go to the market and know we can sell that pretty quickly.
Jay Conner [00:21:00]:
Gotcha. So you knew you were gonna be able to sell this house for around $1500 a month. Do you remember what you put on the market to sell it for?
Chris Prefontaine [00:21:12]:
I believe it was 2 a quarter. I’m I’m a 100% service, 2 a quarter.
Jay Conner [00:21:15]:
So you buy for 183, you turn around and sell it for 2 a quarter. Did you find your buyer in the multiple listing service by offering owner financing or or Facebook marketplace?
Chris Prefontaine [00:21:26]:
Yeah. We don’t use, MLS. I don’t think we’ve done it ever. We have a company called Prosperity. We used to do this manually, but now about 2 years ago a company called Prosperity, took the property, and markets to all the portals for us. So they’ll hit Craigslist, the rent links, the, you know, all the portals that we used to do manually, all automatic. Then after we filled the property, we selected our buyer who needed time to get the mortgage ready. They will act as this, escrow company, collect the rent, pay us the difference and pay the mortgage, or the seller in this case.
Chris Prefontaine [00:22:03]:
So it’s pretty automated now.
Jay Conner [00:22:05]:
Right. So when you were negotiating with that seller, sitting there on the front porch, did you get the seller to tell you what’s the least they could take per month, or did you start with offering them so much per month?
Chris Prefontaine [00:22:22]:
You’re gonna rack my memory, Knox. This is a while ago. Okay. So I got the price from him, and then I believe I created the monthly, but the question is always, if I get you to that price and we manage within the term, what’s the least you can take? That is a 100% my script. You’re testing my memory about 9 years ago, but I believe that I created the third he created the first two, The term and the part. Yeah.
Jay Conner [00:22:48]:
Gotcha. So I was wondering if you’re wanting to if you’re typically you’re wanting to get the seller to name their lease the the lease that they could take per month. Excellent. So when you’re talking to a seller about buying on terms, how do you approach the conversation as far as, offering? If they never thought of it, what type of benefits could you tell the seller that they would have if they did sell on terms?
Chris Prefontaine [00:23:18]:
Typically, more cash out if you don’t need your cash today. That’s my short answer to them. I said, look, if you’re someone that needs the money no matter what and you’re willing to price reduce if you have to because you need to move this cash for a family home or whatever and you’re time sensitive to that, I’m not your buyer. If on the other hand, you’re open to receiving the price that you wanted, but getting that over time, you’re gonna net more money. There’s no question about it. So that’s that’s the avatar of who we deal with. People want their price and can wait for their equity, and that’s more important to them than reducing and getting out of it for less cash-out.
Jay Conner [00:23:55]:
Right. As we talked about a few minutes ago, one of your best lists of prospects for buying on or for selling on terms are those that tried to sell it in the multiple listing service, and they couldn’t.
Chris Prefontaine [00:24:09]:
Yeah. Because there is, there, you’re dealing with that criteria that I said we where you’re probably fixing something. Right? It could be it could be their price, but it could have been a bunch of other things that the reason they didn’t sell. Right? There’s a there’s a large percentage right now, Jay. We’re using this list, which we never used in the past, where they’re listed for 60 days, and you can look and say, oh, 60 days have been on, and there’s very little equity, which means they’re not gonna be able to reduce with their realtor and then afford to not come out of pocket. So that’s a great list too.
Jay Conner [00:24:35]:
Okay. So make sure everybody understood that. A house is in the multiple listing service. It’s been in there it’s been in there for 60 days, at least. And there’s very little equity, which means they don’t have the flexibility to come down on price. So here you come along with, offering terms, and it’s back to this whole framework of what we’ve been talking about, and that is offering solutions offering solutions. So to those expired listings that you would reach out to, give or take, what would you say is a ballpark is what percentage of people might be open to that conversation?
Chris Prefontaine [00:25:14]:
On the initial calls from the virtual assistant, about a third are at least open to hearing, and then about 10 to 15. It can be high depending on the marketplace. But 10 to 15% of those will get to the table where we can probably make an appointment.
Jay Conner [00:25:27]:
Gotcha. So, we got we got some, in the audience here, people who are brand new to real estate investing. We have very seasoned real estate investors as well. But for those that, have not started yet, does someone have to be full-time to do this business the way you do it?
Chris Prefontaine [00:25:49]:
No. This is the biggest question I get because the perception of any niche in real estate, at least that I hear, is that, oh, I gotta throw all this energy at it. You can, but 99% of the people who come into our community have a JOB, and some of them are very lucrative jobs. So, they don’t have to be and I would even go so far as to say don’t try to do that right away. Let’s make sure you have a nice, comfortable ramp as you build your 3 pay days. And let’s face it, if you get 3 or 4 of these deals, recently a guy in our community, Rick, did 4 of them all over 6 figures and then he started planning to leave his JOB after 30 years. He worked for the government. So I would say plan on being part-time.
Chris Prefontaine [00:26:29]:
Now if you have a nest egg and you’re making a move for full-time, I can set that strategy up with you too. But most aren’t able to do that.
Jay Conner [00:26:36]:
Yeah. So, you know, there are all kinds of different ways to invest in real estate even in, you know, single-family or residential. I mean, there’s wholesaling, flipping, rehabbing, renting apartments. How would you compare this strategy that you’ve been talking about to these other ways of investing?
Chris Prefontaine [00:26:57]:
Painfully, I’ve done a lot of those. I would I would hit a few of them off the top of my head that you said. Wholesaling and flipping, look, I have good friends that do it. They’ve been on my show. But the fact is that’s very transactional. That’s very, what I call, the old way, getting paid once. And I remember, like it was yesterday, getting to January every year and going, oh, man, I did a lot of deals last year, but I gotta do it again. And so our 3 payday system takes that off the table and allows you to get continuous money.
Chris Prefontaine [00:27:23]:
Every time you launch a property, you get a launch cash flow stream and you launch a future date cash out and they all differ. So that provides a nice quality of income. And then the competition, Jay, let’s face it, wholesaling and flipping right now, super, super competitive. And the seller gets the call from everyone constantly, and they know they know they’re gonna get lowballed. So the wall comes right down when you start talking terms and the fact that you’re not it’s not about that. It’s about the term. It’s a whole different conversation. So it’s it’s very interesting when you start taking it from that from that standpoint.
Chris Prefontaine [00:27:56]:
So I guess the money for you, the quality of income, not just the quantity, and then the conversations, they’re pleasant. You know, they’re not, we’re trying to steal that house or we’re trying to lowball that house. It’s not that at all. And so if you’re out there now wholesaling or rehabbing, man, look at all these deals that you might have thrown away. Keep doing what you’re doing, but don’t throw the other deals away. You now can do them.
Jay Conner [00:28:18]:
I love it. I can’t imagine over the years until I learned your way of doing it, how many 1,000,000 dollars I threw away in the trash can.
Chris Prefontaine [00:28:28]:
You and me both. Yeah. Yeah.
Jay Conner [00:28:30]:
You know? And it’s like, I mean, I wanna repeat, essentially, what you just said. Like, if someone that’s listening to this show is a wholesaler or, you know, I’ve rehabbed over 500 properties myself on major fixes and flips. And if that’s been if that’s the way you’re in a box and you’ve been just thinking that way, all this other way that Chris is buying houses can be a huge bonus and complement what, you know, what you’ve already been doing. Well, you’ve got a community, and I’m so thankful you have introduced me to your community. But you’ve got a community called the Wicked Smart, and I see you got your t-shirt on. You got the Wicked Smart Community. And tell us, what is the Wicked Smart Community, and how can people learn more about what you do?
Chris Prefontaine [00:29:22]:
Yeah. We hang out. I think the community is big. Any community. Your community is amazing too, and and likewise, Common, I’m happy to be part of it. But when you’re in a community, there’s that interactive approach that happens. Right? You have instant access to Slack, for example, in our case, and you have 140 or 50 other people who can help you. Well, that’s huge when you when you start hitting the speed bumps that are normal in real estate.
Chris Prefontaine [00:29:45]:
They’re normal. They’re normal every week, sometimes every day. I would love to, for your tribe, Jay, give the free book. For those who may not have gotten it in the past, just go to https://www.wickedsmartbooks.com/jay1. That would be the best place to start if you’re brand new. If you’ve been at this a little bit, and do everything we’re saying is resonating and it’s kinda of processing quickly, then go to https://www.SmartRealEstateCoach.com/MastersClass, and you’ll get my free workshop. So there’s no one there talking to your professional, you go at your own pace, it’s free, and you decide if that’s something you wanna pursue further. That’s all.
Jay Conner [00:30:24]:
Excellent. So, I want to repeat those, because we have a lot of people listening to the audio podcast. So, Chris’s book, which is fantastic, is called Real Estate, On Your Terms. Right, Chris? Real Estate on Your Terms. Mhmm. You can pick that book up for free at https://www.WickedSmartBooks.com/Jay1. And then you’ve got the free master class that Chris just offered up. That’s at https://www.SmartRealEstateCoach.com/MastersClass
Jay Conner [00:31:03]:
And of course, we’re gonna have these, URLs and websites in the show notes as well. But, Chris, I tell you what, you covered a lot of ground in the time we had together. Thank you so much for joining me, and parting words.
Chris Prefontaine [00:31:16]:
Yeah. I would say in my 33 years it’s 33 years this month, Jay, so I’m thinking about this lately. And in my 33 years, never has there been sort of a convergence of things going on in the marketplace between uncertainty and interest rates and the timing with banks, never, to create such high demand in creative real estate. So now is the time when you kinda look back for 2 or 3 years, some of you 2 or 3 decades and go, I am super glad I got my hand on that during that time. It’s good always, but it’s never been better than right now. So take advantage of it for sure.
Jay Conner [00:31:52]:
Awesome. Thank you, Chris. God bless you, and I’m sure I’ll be talking to you soon.
Chris Prefontaine [00:31:57]:
Thank you.
Jay Conner [00:31:58]:
And thank you, my listener and viewer. Thank you for joining us for another amazing episode of Raising Private Money. I appreciate, you taking a listen today, and I always appreciate you giving us feedback. Like, share. If you’re listening on one of the podcast platforms, be sure and follow me. And if you and be sure to subscribe. And if you happen to be watching on YouTube, be sure and subscribe and click that bell so you don’t miss out on any of the upcoming amazing episodes. I’m Jay Conner, The Private Money Authority, wishing you all the best, and I look forward to seeing you right here on the next episode of Raising Private Money.
Narrator [00:32:38]:
Are you feeling inspired by the knowledge you gained in this episode? Then head over to www.JayConner.com/MoneyGuide. That’s www.JayConner.com/MoneyGuide, and download your free guide that shares seven reasons why private money will skyrocket your real estate investing business right now. Again, that’s www.JayConner.com/MoneyGuide to get your free guide. We’ll see you next time on raising private money with Jay Conner.