What is Creative Finance in Real Estate?

Added: 2026-05-12

[00:00:00]Oh my gosh, B, you're throwing so much too fast at us. I know. That's the purpose of this first video is to tell you you have a lot to learn and to keep you excited and go, "Wow, this is amazing."

[00:00:09]First video, we're going to talk about what is creative finance and why should you learn it before you learn anything else. Creative finance is like walking into a kitchen and learning about all the ingredients for the first time.

[00:00:21]Right? Let's say that I'm going to go walk into somebody else's kitchen and I'm supposed to make Rice Krispie treats. I'm going to go start looking around for what ingredients they have and start putting it all together on the table. So, for the next couple of hours or a couple of videos, this whole entire series is going to be learning what each one of these ingredients is. When we make, let's say, Rice Krispie treats, what are some things that we need with Rice Krispie treats? Throw the throw it out.

[00:00:45]>> Marshmallows.

[00:00:45]>> Marshmallows. Marshmallows are actually the most important part. And I'll tell you why marshmallows are the most important part. People watching this, oh, this is so stupid. I hate PE's analogies. Guys, this is why you never take action. Okay, marshmallows equals the glue. Is that correct? Let's say that I do everything else. I put the Rice Krispie treats in. I put the sugar.

[00:01:06]I put the butter. I put everything else in there. M&M's, whatever else I want to put in those Rice Krispie treats, but I don't have marshmallows. Does this become something that sticks together?

[00:01:15]Okay, so I need the marshmallows. The glue equals the action. Okay, so everything that I'm going to teach you is I'm going to teach you what all these ingredients are. But if you don't take action on this, it just becomes a big sloppy mess. And everybody needs to understand that in the very beginning.

[00:01:30]Oh my gosh, I know creative finance. No, you don't. You know what the ingredients are called, but if you're not taking action, then this is a waste of your time. Do we all agree with this?

[00:01:40]>> Okay. All right. So, the other stuff, let's say the Rice Krispies, that could be seller finance. Or let's say that the butter is sub two. Are there going to be times where sub two, which we'll talk about in a separate video, what sub two is, we'll go really deep today. Are there going to be times where I'm using all these ingredients in one batch?

[00:02:01]Yes. Are there going to be times where I only use the butter? Are there going to be times where I only use whatever? Yes.

[00:02:07]Your job over the next couple of videos or next series is to understand the name of these ingredients and when to use them. And then ultimately what you're going to do is when you run into a seller, a broker or a JB partner, you are then going to go back to your ingredients list and go, "What does this recipe call for?" Okay, check this out.

[00:02:26]I'm going to start with a complex deal.

[00:02:28]We're going to talk about what creative finance is. Creative finance is the activity of buying anything that I want and controlling anything I want. So, it's either buying or controlling anything that I want without what?

[00:02:40]Without the three C's. Okay. What are the three C's? Credit, cash, and credentials. That's creative finance means that I can go and buy a house. I can buy this office building. I can buy self- storage, RV parks, mobile home parks. And so, a lot of times you guys will see Pace bounce around a lot. Why is Pace talking about co-l livingiving?

[00:03:01]Why is he now talking about RV parks?

[00:03:03]Can't this guy pick one lane? I did.

[00:03:05]It's called creative finance. That is my lane. My lane is controlling or buying anything that I want without the use of these three C's. So if I'm buying a landscape company right now, which I am, I'm using creative finance. That's my lane. My lane is not RV parks. My lane is not mobile home parks. My lane is acquiring cash flowing businesses without the use of the three C's. That is my lane. And I chose to go down this lane because I didn't want to be pigeonholed by, oh, I'm an Airbnb person. Oh, I'm a section 8 person. Oh, I'm a such a No, I'm an investor. And if I could teach you guys one thing, don't ever identify as I'm a midterm rental person. Why? Because the market changes and you have to pivot all the time. The most important strategy you can ever learn is creative finance. What are the ingredients I can cook up a deal with based on what I learned? So, I'm going to start with a couple of deals and we're going to talk about something that gets a little bit hairy and how multiple ingredients have to come in to get a deal done. Okay. So, we'll start with Zion Tiny Home, which is a brand new deal that I just got back from yesterday. Zion Tiny Homes. We're going to talk really creative and I'm going to go high level and it's going to confuse a bunch of people here and I'm going to talk really fast and it's going to tell you why you should stick around for the rest of the series. Pace, you're going too fast, too soon. I know. I'm intentionally doing that for you to go, "Holy crap, there's a lot to unpack here." And then in the preceding or in the following videos, I will then go deeper on each one of these tactics.

[00:04:34]There's a woman, her name is Autumn.

[00:04:36]Autumn lives in a little town called Colorado City. She sees a piece of dirt and she says, "I think I can fill that piece of dirt up with tiny homes because the nearby city that's about 30 minutes away called Springdale." And what is in Springdale is Zion National Park. So, Nion National Park has 4.9 million visitors every single year. Springdale cannot handle all of the people that go to Springdale. And so, what ends up happening is people stay in towns nearby and they go to the rinky dinky hotel that doesn't have a cool experience. And so, Autumn being a visionary says, "I'm going to get a piece of dirt and I'm going to fill up that piece of dirt with tiny homes." Okay, you guys can Google Zion Tiny Home uh or Zion Tiny Getaway and you can go and see what this looks like. Now, Autumn no longer owns this piece of property because two sub two members partnered together and bought it with her or bought it from her on Creative Finance. However, I'm going to jump into something hyper creative that is not anywhere on your radar. And you're going to say, "Holy moly, Autumn goes and buys the dirt using someone else's money, a private money lender. Is using someone else's money also creative?" Of course, she did not use credit, cash, or credentials to do this.

[00:05:58]She goes and buys this land, and then she goes, "I don't have the tiny homes.

[00:06:04]You know what I'm going to do is I'm going to go to a local tiny home developer, a manufacturer, and I'm going to tell them, "If I could sell 40 of these units, would you cut me in on the sales price of these units?" The tiny home manufacturer says, "Of course, we have a salesperson. We pay the salesperson to sell these things. Why wouldn't we pay you?" So, she works out a creative way of getting paid to sell these tiny homes. Now you're thinking, well, is she going to sell them to herself? No. This is also creative. Do we also agree that she's being creative and going to the tiny home manufacturer?

[00:06:39]And this is nowhere on your radar of what creative finances.

[00:06:43]>> Yes, >> creative finance is so amazing because it's not just seller finance, sub 2, hybrids, morb methods, lease options, which you'll learn all of those things.

[00:06:51]It's thinking creative. It is a way of being. And so what you'll learn in this amazing community is a way to think around like how do I do this? So she buys the dirt for $900,000 with somebody else's money. She then goes and finds a CPA that has W2 employees that hate paying taxes. And she goes to these W2 employees and says, "If you buy, pay attention, this is going to blow your mind. If you buy one of these tiny homes from this tiny home manufacturer that I know, he will finance you for the tiny home and you as a W2 employee can wipe out your W2 taxes by buying a tiny home.

[00:07:38]If you buy these tiny homes, I will let you place them on my dirt and I will do profit share with you. I get 30% of the revenue, you get 70% of the revenue, and I will manage the property. Creative finance is way more than just the name of a strategy. It is a way of thinking.

[00:07:58]And so, what does she do? Autumn gets paid $1 million by selling these 40 tiny homes from the tiny home manufacturer.

[00:08:10]She gets paid a million bucks. The people who bought them are 40 W2 employees. who are saying, "F my taxes.

[00:08:18]This sucks." Do you guys know that the IRS codes are not written for W2 employees? They're written for us entrepreneurs. So, if I'm a W2 employee, do you know I'm very limited on what tax benefits I can go get? There's something called the short-term rental loophole.

[00:08:33]And so if I go buy these tiny homes and I pay, let's say I'm one of these people, I pay $150,000 for one of these tiny homes. How much will I save in taxes? Now, this is going to be I know it's too much too fast.

[00:08:49]Pace, I have questions about taxes.

[00:08:51]We're not going to jump into that. I'm going to go really fast. Give you some things that you're already are you not already interested? You're already leaning in going, "Tell me more. How did this work? I haven't even told you how the sub two members bought this deal.

[00:09:04]So you see all these little ingredients that you want to cook up a deal, you need to learn what all these ingredients are called. So that when you run into a situation, you can also have permission to do the same thing. Let's say that you go and make $150,000 this year. How much will go to taxes? A lot more than you want, right? So let's say that um you go earn $150,000 as a W2 employee and you also go buy $150,000 tiny home. Did you know that the IRS will let me take this tiny home in year one and wipe out my full taxable income in year one for two reasons. One, it's actually a vehicle.

[00:09:43]Tiny homes are actually a vehicle.

[00:09:44]They're not a home. They're not a doicile. So, I'm getting full bonus depreciation on the on the purchase.

[00:09:49]Okay. This is IRC code 168, 172, 169.

[00:09:53]Not important for today's video, is it?

[00:09:55]It's not. That's deeper into sub 2. You can learn all that kind of stuff later.

[00:09:59]I can wipe out all my W2 income, which means what if I buy this $150,000 um tiny home with $10,000 down payment.

[00:10:07]So, think about this. I go to the tiny home manufacturer, right? Here's their big shop. I go to the manufacturer and I go, "Hey, I'm a W2 employee. I want to place one of these tiny homes on Autumn's property. I'd like to buy one of these tiny homes. The tiny home manufacturer, don't you think they have financing options?" So, they have financing options and one of these W2 employees goes and puts $10,000 down and gets the rest financed, the $140,000.

[00:10:36]What pays for the $140,000 loan payment every single month? The profit share on the property. The W2 employee that placed their tiny home there gets 70% of it. So, out of that, Autumn doesn't have a mortgage payment, does she? Creative, creative, creative, creative. Stop thinking like a gosh dang traditional person. You're going to get your ass beat. If you're going out and trying to do the burr strategy where I save up 30%, go and apply for a loan, put all my money in there, refinance. That's the traditional way of thinking. This is a creative process. So, what happens is these employees put $10,000 down out of pocket, but how much did they actually save in real taxes that would have been pulled out of their their paycheck?

[00:11:18]probably like $30,000 $35,000.

[00:11:22]So, who actually paid for the down payment for this? The IRS did because I was going to give if you make $150,000 in your W2 employee in your income, am I not writing a check to the IRS at the end of the year for $30,000? So, I can tell the IRS, hey, instead of giving you that 30 grand, I'm going to take that 30 grand, pocket 20, and I'm going to go put 20 $10,000 down on on a uh tiny home and I can wipe out all my taxable income for the year. Creative. Is that also not creative? Is this not also called creative finance? So, forget about just sub two and seller finance and hybrids and lease options and all of those things, which we'll go really, really deep on. Think way beyond that. Now, are you going to be able to do that on this first video? No, you're not. But you're going to find yourself running into situations where you go, "Let me throw a dash of this in there. Let me throw a dash of that. That doesn't taste well."

[00:12:17]And I'll explain this to you in a couple of minutes. So, do we see how creative autumn is? Did she have to go buy all these 40 tiny homes? No. She actually got paid to buy the tiny homes. So, the manufacturer goes, "Man, you just sold 40 units for us at 150. We're going to pay you 20 uh $25,000 per tiny home as a referral fee. That's how she made the million bucks. Are we following? It's just creative.

[00:12:43]Everybody else thinks traditionally. Our community thinks creatively. It's not just sub 2. So people, oh, the name of your community, sub two. You only teach sub 2. No, I am the creative finance guy. I teach all things creative finance. Sub two is one of the cool strategies, but it's like one of 26 strategies that you'll learn. One of 26 strategies. Okay, that's like me saying, "Yeah, I only cook with salt." No, sub two might be the salt. Seller finance might be pepper. We got butter. We got this. We got that. It's one of the elements. Okay, cool. So, we see how Autumn put this deal together. And now she's bringing in a million a year in revenue. She's doing profit share and she's netting $350,000 a year on this property. Okay. Well, the Autumn doesn't own this property anymore, does she? She sold this property to two sub two members that partnered up and knew how to acquire this also creatively.

[00:13:37]Why would Autumn get rid of this property? I want you guys, this is also one of the most important parts about learning what creative finance is.

[00:13:44]Autumn got cancer.

[00:13:48]So remember, bunnies, bunnies, bunnies, bunnies. You've heard the bunny story a thousand times. It's one of the most important things you'll ever learn. I wish I was recording myself and I wish I had a YouTube channel at the time so you guys could see these silly calls I would make. This first call I answered, I didn't say, "Hi, this is Pace. I buy houses. How can I help you professional?" It was, "Hello." Like, it wasn't a business phone. Like, I didn't spend money to put my number on somebody's on a postcard. Like, that's how I answer the phone. Hello.

[00:14:17]Like a freaking turkey on the fence, not committed to what I'm doing. The lady, her name is Janie. Janie says, "Uh, is this Pace the guy that buys houses?" I was like, "Yeah, um, how can I help you?" I go in the appointment and I'm talking to Janie the seller. I go to the counter and I see stacks of cards. Real estate agent, real estate investor, real estate agent, real estate investor. And I'm like, "Okay, so you're talking to a lot of other people like me. Like, I'm not the only person that sent you mailers. I'm the only one that sent you their business card." And she says, "No, I've met with 15 people already." And I go, "Okay, well, what do you need me for? like what's kept you from selling your house? And she says, "Pace, I have a price at 165." And so, as Janie, the seller, is saying she has an offer at 165. I immediately go, "Oh, I don't think I can help you." Then Janie's like, "Is this a sales trick?" I'm like, "I'm not smart enough to pull any sales tricks." It's literally what I told her.

[00:15:14]I have no experience in sales to like pull any sales tricks. It's not a sales trick. She's like, "Okay, so like what do we do?" I go, "I think maybe I just leave."

[00:15:24]And as I was walking out of the house, um, I stopped in her doorway, like I remember having my back up against the door jam. And I turned to her and I said, "Hey, before I leave, I know you're retiring and I know you're, you know, basically here by yourself. Is there anything I can do to help you? I'm a contractor. I have crews. We can help you load up boxes or do you need need anything fixed?" And she's like, "Are you what are you like, a boy scout?" I'm like, "Yes, I am a boy scout. my my mom made me get an eagle my Eagle Scout before I could even drive. And she's like, "Whoa, you're serious. You like really want to help me?" I go, "Yeah, I want to help you. Anything I can do to help you before I leave?" And she's like, "You're not going to give me a price?" I go, "No, I I can't help you, Jenny. You have a price higher than what I could offer you, but is there something I can do to help you?" And she says, "Yes." Now, I want you guys to remember a lot of people think that the logo of our community is the sub 2 logo.

[00:16:17]It actually has two meanings. The other meaning is a are bunny ears. Okay, this is this like the the symbol of the first deal I ever did and the first lesson I ever learned in real estate. Well, probably the second the first lesson in real estate is stop being a turkey. Get off the fence. That's the first lesson in real estate. Get off the fence. Like, make a decision or don't make a decision. Stop teasing yourself you're going to get into real estate and just do the gosh dang thing. You already know you need to get into real estate. So, that was the first thing. Stop being a turkey. Get off the fence. The second lesson was finding the bunnies. And this is what happened. So Janie says, "All right, well, I've got something in the backyard. Can I show it to you?" She takes me to the backyard. We go in the backyard. She opens the sliding glass door. And she shows me these bunnies that are literally the size of like a 5-year-old child. They're called Flemish bunnies. And she has three of them. And she says, "They're costing me $600 a month. I can't retire with these bunnies. My granddaughter brought them home. We thought they were regular bunnies. They turned into the like these massive massive bunnies. and I don't know what to do with them. Like, do you know anybody that will actually give them a good home? I don't want to sell them. I don't want to give them to a family I don't trust. Like, I really need somebody that can take these. I go, "Dude, this I got the I can solve this problem."

[00:17:28]And she's like, "Really?" I go, "Yeah." I call my mom. I literally just call my mom. A 30-year-old man calling my mom going, "Hey, mom. Here's the situation.

[00:17:37]I got this lady needs help. My mom is such a gangster. Raised 12 children. My mom is so awesome. And she didn't even ask me why. That's the family I came from. My mom didn't even ask me why.

[00:17:50]Like, hey, what? Why? She just went and borrowed a truck from a friend of hers, brought this truck to this house, and helped me load these bunnies into my mom's truck. And my mom took them took these bunnies down to her her little farm. My mom had like four acres at the time. And she gave Janie a hug. She says, "Oh, my son Pace, he loved his school teacher. This is awesome. I'm so glad we could help you out." And then my mom leaves. like she's there less than 20 minutes and Janie's standing standing there with her mouth open going who are you people and I was like I'm just a person to just want to help out and she's like you're not going to give me an offer on my house I go no you should sell your house to the person that gave you a higher number I just can't get to that number now I didn't know creative finance at the time otherwise I would have been able to get this house a different way probably faster but I left two weeks later I get a call from Janie school teacher Hey, Pace. Sorry it's Saturday. I'm bo I don't want to bother you, but I just want to let you know I made the decision on who I'm going to sell my house to.

[00:18:49]I'm like, "Oh, that's awesome. Anything I can do to help you. What What did you end up selling the house for?" And she goes, "Well, I don't know yet." I'm like, "You made the decision? What do you mean you don't know yet?" She goes, "Well, I made the decision to sell my house to you. I met with 15 people before you and I met with 15 people after you and you were the only person that actually gave me compliments in my about my house. You asked me questions about where I was moving. You were genuinely concerned with what was going to happen in my life and I sell the house and where what does my new house look like and what's my living situation and you were the only person that asked me if you could help and she says pace I have not met somebody in all of my years of living on this earth that genuinely just helped me and did not use any I she goes I was waiting for you to call me for 2 weeks to say I rehomed your bunnies you need to sell your house to me. She's like I've waited two weeks and here we are. You still haven't done that. you're serious and whatever the number is that you guys are at, you're my buyer. My life changed. And I got obsessed with it. I got so obsessed with not only getting sellers out of bad situations, but actually giving them what they wanted. And here's what's really, really fun. I've got a I've got a multif family deal now where everything comes down to finding these bunnies. Every single relationship I have now is where are the bunnies? Where are the bunnies? What bunnies do you have? Oh, you're going through a divorce. Okay, those are your bunnies.

[00:20:11]Oh, you're going through bankruptcy.

[00:20:12]That's your bunnies. Okay, you want a really high price because you're trying to retire. Oh, I get it. Those are your bunnies. Why would a seller ever sell this property? Well, because she got cancer at the age of 31. She's going to die and so she moved out to Tennessee to be near near her family. You're going to think the way you think, which is I would never sell this property that's producing a million dollars a year in revenue and I'm making three. You have to stop. Rule number one of creative finance. Rule number one of creative finance. Rule number one of creative finance. I'm saying it for the third time is don't put your brain in the seller's head. You will use your thought of like why would the seller do this?

[00:20:43]Why wouldn't a seller do this? Cuz they're not you and you don't have cancer. You're not getting fired from your job. You're not in foreclosure.

[00:20:51]You're you are in a class of learning how to be a real estate investor. Other people are not. I buy deals from people like I don't know how to delegate. I my this deal is falling apart and it's melting away and I just need to get this property off my hands. And in my mind when I was brand new, I'd go, "Why would they ever sell this treasure of a deal?"

[00:21:11]Bunnies, bunnies, bunnies, bunnies every single time. Okay. All right. So, this is a creative way she put this deal together, correct? Will you learn more about this inside of our sub 2 community? Yes. This isn't the be this is not even the deal. I just needed you to know how the deal was even pieced together was also with creative finance.

[00:21:31]Okay. So, here's what Autumn does. Once the deal gets up and operational, Autumn goes and refinances. Now, she can go to a bank, okay? Because banks don't like lending on dirt. They like lending on things that are producing cash. So, she gets this deal up and operational.

[00:21:50]She has money coming in. She then goes to a bank and she wipes out all her private money lenders, the original million dollars she used to buy the land. Following? So, now what does Autumn have? Autumn has a property that has a $1 million loan with a local bank.

[00:22:07]She also now has a cash flowing business. Right? Tiny homes are actually businesses attached to real estate.

[00:22:14]They're not real estate attached to a business. They're businesses attached to real estate. So, she has a million-doll local bank loan, but she's also selling and she's trying to sell the property for $3.2 million. Why? Well, because she feels like that's what it's worth. I want to get my money out of it. I need money to take care of myself and my family. I need to move closer to my my parents. So, in my dying days or in my potential healing days, I'm close to family. That's what I need. So, what does she do? What does every seller do?

[00:22:45]I go put it with a real estate agent.

[00:22:48]Does this real estate agent even understand how Autumn even pieced this deal together when she acquired it? You also need to know that this is how most agents are. They have no clue what's the underlying debt. They have no clue what the seller has in equity. They have no clue what the property's cash flowing.

[00:23:03]And there's like, "Sure, I'll put it on the market." Okay, this is 99.9% of brokers. And by the way, that there's nothing wrong with that. Okay? Don't expect them to do your job for you. So, what happens is we have a brand new sub 2 member. Okay? I'm gonna call her Barbara. Her name is not Barbara. I'm gonna call her Barbara because I don't want pe everybody following up with her and hammering her. Barbara sees this on what website? I bring it up all the time.

[00:23:28]>> Craigslist.com. Barbara calls the agent, says, "Hey, I'm not a buyer, but I look for deals for buyers." What does Barbara do? Barbara sets up an appointment for the agent to talk to Nicole and Kelly.

[00:23:42]Okay. Nicole and Kelly are in owners club, which is our leadership group of our community, and they have the ability to publish their buy box, and everybody comes and brings them deals. Okay. Their job is now to help lead newer people in the community. You see how that works?

[00:23:58]So, Cole, Nicole, and Kelly are being rewarded for being great leaders in the community and giving Barbara a place to set appointments. You see how we build the community? Okay, cool. This is also creative. You ever seen a community that built like this?

[00:24:10]>> Because I'm not traditional. I'm a creative person. I build things the way they should be built. I don't follow other people's stupid rules. Okay?

[00:24:17]>> So, Nicole and Kelly get on a phone call with the broker or the agent. They don't want to be called agents when they're commercial. They want to be called brokers. They somehow they think that that's better. I don't know why. Um, but they think it's better. Don't ever call me a broker. Don't ever call me an agent if I'm a broker. Call me a broker. Tell me I'm wrong in the side chat. Okay. So, what do they do? They call the broker.

[00:24:36]Give us the financials. Does the broker have the financials? No. So, they build rapport. They build rapport. They build rapport. The broker just keeps running into questions she doesn't have the answer to. Finally, the broker's like, "Do you want to just call the seller?"

[00:24:49]This will happen. This is standard.

[00:24:52]Expect that. Do not go, "Why is this broker so every broker you're going to talk to? That's going to be a problem."

[00:24:57]Expect that. It's like having a child that doesn't cry. Really? Is that possible? No. So, um, the broker has none of the information. Does the broker is it their job to know everything about everything about everything about this business?

[00:25:11]I wish, but that's never going to be ex that's never going to be the case. So, if you expect the broker to know everything about the business, that's like expecting a fish to know how to climb a tree. Who's the idiot? You, not the fish. You are the dummy that thinks that this is appropriate. So, Kelly and Nicole start asking questions of like, well, we buy with creative finance. What is the underlying debt? Does she have underlying debt? Why? Because if you don't know what the underlying structure is, you don't know if there is a loan you can take over sub two.

[00:25:45]And so they find out that the broker doesn't know. The broker finally says, "Let's just get on a three-way call.

[00:25:52]Let's talk to the seller." They start building rapport. And over the course of about 40 days, by the way, this is a large asset, so expect large assets to take a little bit more time. We also have a lady that has cancer. Also, expect that people are going to be a little bit trepidacious. They're going to go, "This is my one chance to sell this properly to move on to the next chapter and take care of myself." Do not go, "Wow, this seller's hard to deal with. This broker's hard to deal with.

[00:26:16]These are real people with real lives.

[00:26:18]We care about them. We want to solve their problems. And the best way to solve their problem is understand their problem." So, they start understanding, oh, the seller has cancer. Oh, the seller's hyper motivated. Oh, the seller really needs this money to move it to the next chapter of their life. So, they started looking at the deal and going, "Ah, man, this just doesn't make sense based on what the seller wants." So, what the seller's asking for is $3.2 million cash. Why is this not effective?

[00:26:45]A lot of times, why will that ingredient not give the outcome that we're looking for? Well, because number one, the property is not cash flowing well enough to justify a full cash purchase. The second biggest reason you're going to run into is that they don't have financials that are documented in a way that I could even go to a bank and go, "Hey, bank, here's the financials. I'd like to buy this deal. So, are these is am I going to even be able to get a cash loan?" 90% of commercial properties that you look at, you will not be able to get a commercial loan. 90%. Why? Because the seller was so busy building the property, they did not track the expenses of the property. Make sense?

[00:27:21]Cool. So, cash is not going to work.

[00:27:24]Unless a cash offer is like $2.4 million. If you have cancer and you're trying to get as much money as you possibly can out of something you just put like six years of your life into, are you going to want to take a haircut of $800,000?

[00:27:37]So we already know cash is not going to work. And so learning and understanding cash is also a very important strategy.

[00:27:45]Will you learn that in sub 2? Yes, of course. We offer cash on every deal we buy. Every single deal, but we offer at a price that makes sense for us, which 90% of the time cash offers do not make sense for sellers. So they came in and they go, "Well, if you do want the $3.2 million, we're going to need to structure it." Now, here's how they structured it. Obviously being in the sub2 community, they learned how to do this. They took this loan over subject two. Okay, so they just took over the loan. Okay, this loan is already existing. Did they have to go to the bank and get approval? Did they have to go and apply for anything? So they could just take over the payments. Okay, I know we're going to have a whole dedicated section of what sub 2 is and you guys will be able to ask questions.

[00:28:29]So they take over this existing debt. No credit check, none of that. Okay, actually the way they bought it, do you guys know what they did? They just bought the LLC that had the debt inside of it, which is also another creative structure you'll learn. Oh my gosh, B, you're throwing so much too fast at us.

[00:28:44]I know. That's the purpose of this first video is to tell you you have a lot to learn and to keep you excited and go, "Wow, this is amazing." Guess do you think this broker knows anything about subject two? Do you think this broker knows anything about buying LLC's?

[00:28:57]>> No. 99% of people on the planet will not have access to the tools that you will learn in this community. You will be an overpowered superhero when you understand creative finance. I walk into an appointment, I already know I'm going to buy the deal. I could have 50 other people meet the seller before me and I walk in going, I just have the best option. Okay, I have that confidence.

[00:29:18]And by the way, how long had this deal been on the on the market?

[00:29:23]400 days. This was last year in 2025.

[00:29:29]Zero creative finance offers. So, they buy the property. They took over the $1 million debt. This is in first lean position. Will you learn more about first lean positions through this series? Yes. Do we need to worry about that right now? No.

[00:29:44]All right. Then the seller Autumn is seller financing $1.4 million at Pay attention. This is where creative finance becomes super powerful. And you're going to say, "How the heck did they pull this off?" $1.4 $4 million.

[00:30:01]The seller is seller financing, which means the seller is creating a note.

[00:30:05]Okay? Do you guys know what creating a note means? Somebody doesn't know what creating a note means. Raise your hand.

[00:30:09]You want to do it with me right now?

[00:30:10]Yes. Let's do Let's create Yeah. I want to create a note with you right now.

[00:30:12]Come up here real fast and then bring your uh bring your phone. Bring your phone and your notepad. We're going to create a note real fast so you guys understand what creating a note means.

[00:30:19]Okay.

[00:30:20]>> Okay. What's your name? Tell everybody your name.

[00:30:21]>> I'm Ashley.

[00:30:22]>> Okay. This is Ashley. She's from Arizona. What part of Arizona do you live in?

[00:30:26]>> Phoenix.

[00:30:26]>> Okay. Phoenix. Phoenix. Like the fancy part where all the hipsters get all the good food.

[00:30:31]>> Yep.

[00:30:31]>> Okay, cool.

[00:30:32]>> Mesa sucks cuz we don't have any good food. Okay, cool. So, here's what we're going to do. You have a phone. You left it back or you still have it?

[00:30:38]>> Okay. What kind of phone do you have?

[00:30:40]>> An iPhone.

[00:30:41]>> What kind though? Like what year?

[00:30:42]>> Like I think the 17.

[00:30:45]>> Okay. So, an iPhone 17. Okay. So, you have an iPhone 17, which means you probably paid somewhere around $1,500 for this phone. Something like that, right? Okay. If you were going to sell this right now on Craigslist, what could you sell that for?

[00:30:59]Let's say 1,200. You feel comfortable with that? Okay. So, 1,200.

[00:31:04]And if you put this iPhone on Craigslist right now, are you going to get that 1,200 or are people going to lowball you at 1,000 or 900 bucks?

[00:31:12]>> They're going to lowball me.

[00:31:13]>> Okay. So now you know what it feels like to be a cash seller that's selling their property on Kraxy or any other property, Zillow, even single family, is that you go, "Well, I bought it for 1,500. It's time for me to upgrade to my phone. I don't want to just throw this thing away, so I'm going to go and and by the way, if you trade your phone in, you're not going to get full value of that either." Right? We already know that.

[00:31:32]And you're you seem like somebody that trades their phone in.

[00:31:34]>> I have I run a buy, sell trade business.

[00:31:36]>> Okay, cool. So you're smart about this.

[00:31:38]Cool. So you got a $1,200 phone, something like that, right?

[00:31:41]>> Mhm.

[00:31:41]>> Cool. Most people are going to come in on Craigslist and offer you about a thousand bucks. And so this is what your sellers are going through on cash transactions is they're getting people to lowball on something that you've already felt like you discounted if that makes sense. So that's what Autumn and every seller's going through is they're gosh dang it. Sure, I'll take a,000 bucks. But most people don't want to take that because they bought it for 1,500. Think about Autumn. Six years of her life, she's also moving on to the next thing. She's upgrading to something else. She wants to extract as much money as possible. So instead, what I do in creative finance is I'll go to the seller. I'll go to you and I'll go, "Hey, can I just I'll buy it for 1,500 bucks, but I just need you to give me terms." Okay? So, what we're going to do is we're going to create terms on a piece of paper. Okay? And the terms that we're going to create, um, okay, so your phone, let's say you list it for 1,200.

[00:32:28]I'm going to pay you the,200. Could we technically, not saying you would because you just bought the phone. I understand this, but let's say next year you're going to go to like the 18 or whatever it is, right? Could we technically work out a deal where I say, "Hey, I'm going to buy this from you for $1,200 and I'm going to pay you $100 a month for the next 12 months. Could we technically do that?"

[00:32:51]>> We could.

[00:32:51]>> We could. And you would get what? How would that benefit you?

[00:32:54]>> I'd get a $100 a month and not have my phone that I wanted to sell anyways.

[00:32:59]You'd get the higher purchase price.

[00:33:01]>> Oh yes.

[00:33:02]>> Right. This is why sellers sell this way is they want higher purchase price. They want tax benefits. They want all sorts of things. Okay.

[00:33:08]>> So you get a higher purchase price.

[00:33:10]Right >> now you could come back to me and go if I'm going to give you terms. I want 1300 bucks. Could we also technically do that? So why don't we over give you a little bit more value on your side but give me some good value as well. You cool with 1300 bucks?

[00:33:22]>> Sure.

[00:33:23]>> Cool. So let's work through terms. Terms are four things. And are you cool with $100 payments for 13 months?

[00:33:30]>> Let's do 200 for six months.

[00:33:33]>> Okay, cool. Love it. So, what are terms?

[00:33:35]Terms are four things. So, let's write this down on your piece of paper. I'll give you a marker so we can Do you have a free fresh piece of paper?

[00:33:42]>> Yes.

[00:33:43]>> Okay. I want you to write this down with a marker. Okay.

[00:33:47]Get a fresh piece and I'm going to have you write down the terms of our agreement. Yeah, you can set it down.

[00:33:52]The first part of terms. So, when we talk about terms, we're going to get terms from the seller. What's the first thing that we always figure out is the purchase price, right? Purchase price is how much?

[00:34:01]>> Uh, 1300.

[00:34:03]>> 1300. Cool. Second thing, we've already worked this out, by the way. So, don't now I'm going to highlight this to you.

[00:34:08]I don't want you renegotiating with me.

[00:34:09]>> We've already worked this out.

[00:34:11]>> Okay. $1,300 purchase price, $200 monthly payments for the first six months, and then $100 for the final month. So, it's going to take me seven months to pay you off. Correct.

[00:34:20]>> Cool. So, we just worked at a full creative finance deal and I we worked out all four po uh points of the terms.

[00:34:29]She just doesn't realize we did purchase price 1300.

[00:34:34]Okay.

[00:34:35]Down payment is the second one. What's our down payment?

[00:34:39]>> $200.

[00:34:40]>> No, >> we didn't have the problem.

[00:34:42]>> We didn't. We did work it out. She just didn't realize we worked it out. So, what I'll typically do is I'll take possession of a property, a car, a business, whatever it is, and then my payments start the following month.

[00:34:52]Okay? So, I put $0 down payment on this deal. Now, the next thing you're going to do is you're going to work out the interest on this deal. How much is my interest with her?

[00:35:03]>> Zero. Zero.

[00:35:04]>> Zero. I have 0% interest with her.

[00:35:07]This is how I also work out 0% interest.

[00:35:09]I go, "Cool. I'll give you I'll give you the 1.4 4 million, but I want to pay it over a certain amount of time, and here's what my monthly payment is. The seller doesn't even stop and go, "Oh, well, I want interest." So, I just do principal only. In my agreement, it will say principal only. So, I want you to write down um $200 monthly payments, principal only. And then the final thing is length of time.

[00:35:29]What was our length of time? It was seven months. Six months of payments at 200, one month of payment at 100 bucks.

[00:35:35]Right? Cool.

[00:35:38]>> Doesn't have to be perfect.

[00:35:39]>> This is just an example. You said what did you want me to write?

[00:35:42]>> Um after interest I want you to say 6 months 200 bucks one month 100 bucks total seven months. Okay. So now write a little signature line for you and sign and a signature line for me and then tear it out.

[00:36:00]Okay.

[00:36:04]Cool. So what did we just create?

[00:36:07]>> We created what is called a promisory note. It is always called a promisory note unless somebody's calling it a note. Fancy people call it a note. When you're learning, just call it a promisory note. So, here's what that means. It means I promise to pay you.

[00:36:22]It's also what we would call an adult IOU. It's a big boy IU, right? You guys remember on Dumb and Dumber, that movie where he was like passing out the sticky notes?

[00:36:32]>> Those are IUs. Go ahead and add it up.

[00:36:35]Every cent's accounted for. Look.

[00:36:39]See this? That's a car. 275 thou. Might want to hang on to that one.

[00:36:45]>> Those were promise. Those were promisory notes. This is a promisory note. This has value. So, you now hold this. You're the note holder. And that's creating a note. You just seller finance your phone to me. And that's exactly how easy it is. It is not more complicated than what we just did.

[00:37:02]>> No, not technically. So, you have a note. Now, here's what's interesting.

[00:37:04]Let's go. I'm going to get I'm going to break your brain. Did you guys know that there's a whole entire industry of just note buyers and sellers?

[00:37:11]>> Yes.

[00:37:12]>> Okay. So, you have a note that's valued at how much money?

[00:37:15]>> $1,300.

[00:37:16]>> $1,300.

[00:37:18]So, let's say she needs cash right now.

[00:37:21]Could she not sell that note to somebody in the audience right now for 800 bucks?

[00:37:25]>> Yes.

[00:37:26]>> Isn't that interesting? There. Do you know there's a there's an industry where over 7 million people a year exchange notes with each other like Pokemon cards?

[00:37:34]>> Have no idea.

[00:37:35]>> It's huge. It's a Matt. So, did you learn something new today? Are you happy you came here?

[00:37:40]>> Mhm.

[00:37:43]>> She now she just doesn't want to be in front of everybody, which I get. I understand that. Okay. So, we understand what a note is.

[00:37:49]>> So, now when we're going to work and I'll let you get down in 20 seconds. So, I took over the seller's loan subject to we'll talk about that in a second, another video what that is technically and how that works and how the paperworks, but I'm now going to create another note. So, I'm taking over the bank note. So, that who hold who holds this note, the million dollars?

[00:38:09]>> The bank does.

[00:38:11]>> So, I take over that note. Okay. I take over the responsibility of the payments.

[00:38:15]That's really how that works. Here, we create a new note. Could I not with the seller work out any terms I want just like I did with Autumn right here?

[00:38:24]>> Okay. So, this is another level of creativity. So, what did Kelly and Nicole do? They go, "The only way that we can get to your purchase price, Autumn, which you're really, this is really important to you to get to this purchase price. The only way for us to get to this purchase price is to do five years of no payments and zero interest for 15 years. Can I do whatever I want on this promisary note as long as the seller agrees to that?"

[00:38:53]>> What is the number one thing the seller cares about when they're selling a property?

[00:38:56]>> Getting the full asking. full asking price. Second thing they care about is taxes, which we'll talk about in another video a lot deeper and you'll your mind will be blown. You're going to feel like I gave you a million-dollar education in the next couple of days. Okay? So, you can sit down. Think give it up for her, please.

[00:39:14]This is what happens when you're quiet in my room. I'm going to pull I'm going to pull you out, but that'll be the last time.

[00:39:18]>> I'm not going to raise my hand again.

[00:39:21]>> By the way, I I know by looking at your body language who knows what I'm talking about and who doesn't. but also she's newer and I this is good for me. It helps me build a relationship with her.

[00:39:30]So, um All right. So, did we all learn uh so Chad says, "Can you sell a portion of that note?" Yes, I could sell half the note to one person and half the note to somebody else. Is this so confusing?

[00:39:42]>> Yeah.

[00:39:42]>> Is this so overwhelming?

[00:39:44]>> Yeah. But so is walking into a kitchen with a thousand ingredients. Ladies that cook, are any any chefs or bakers in here? Do you want to walk into a kitchen that only has like a little like you have to like strike like flint and matches and like have to grind your own salt off a salt cube or do you want to walk into a chef a kitchen where you have way more opportunities than you need? That's creative finance. When you walk into a kitchen with traditional finance, it literally is like walking into a FisherPrice kitchen.

[00:40:16]It's like this is all I have to work with is a plastic bowl and a plastic.

[00:40:20]This is not even a real tomato. That's traditional real estate. Creative finance. You walk into like a a three-star Michelin restaurant where you have more ingredients. You you didn't even know some of these spices existed.

[00:40:31]And so what I wanted to show you is that these elements and I've got a little bit more on this deal, but there's a lot of creativity here, right? Creative finance is way more than just seller finance sub two. It's also creating a note, selling a note, selling off half the note, which you don't need to worry about for probably like six to nine months. Okay?

[00:40:49]So, their structure of the deal is what we would call a hybrid deal.

[00:40:56]Hybrid means it's part sub 2, it's part seller finance, and sometimes part something else. So, it's sub two loan is 1 mil. So, they took that responsibility. Now, did they go to the bank and go, "Hey, we're now the new note holders, or we're going to start paying the note." No, you just start paying the note. You take the responsibility of paying the note. Okay?

[00:41:17]And then seller finance, what did they work out? They worked out another 1.4 million, 0% seller finance, zero payments for five years.

[00:41:31]Why did they do that?

[00:41:33]>> Build up their cash.

[00:41:35]>> They needed to build up their cash. this property had been running when Autumn found out she had cancer, she stopped running the property as efficient as she should have. And so she wasn't able to get the next buyer financing. And so Kelly and Nicole need to stabilize the property for a couple of years, clean up the books, put some people in place, obviously while paying themselves in the process, and then at some point going, "All right, this now makes sense for us to start making a payment to Autumn."

[00:42:04]Everybody understand? Cool. Now, what did Autumn also want? Autumn wanted a down payment. So, does 1 million plus 1.4 million add up to 3.2 million?

[00:42:14]>> How much are we missing? 800. Okay. So, I could either bring on PML or PMP.

[00:42:23]Okay. PMP means private money partner.

[00:42:26]This is a phrase I created about 14 years ago. PMP, I call them pimps.

[00:42:31]They get equity in the deal. Okay. I don't really give a lot of equity on my deals anymore because I have way more people that want to put money in my deals than I used to. Now people are like, I just want to do a deal with you because I give personal guarantees. I'm a safe bet. And so, am I going to give up equity on a safe bet? Usually not. When you're starting out, you're going to have to go a lot more PMP than you are PML.

[00:42:58]Does this make sense? Why?

[00:43:00]>> Because nobody trusts you yet. So, they want equity and control and they want to be on the operating agreement. They want to be in the LLC. Does this make sense?

[00:43:07]So, these gals brought in $800,000 roughly. They're going to watch us and go, "That wasn't the exact number. It was $812,000 400." It doesn't matter. We get the point, right? This $800,000 not only covered their down payment, also covered their closing costs. And a lot of people in our community get paid to acquire these properties. So, couldn't I just raise 900 grand and pay myself $100,000 for buying this property? Yes or no?

[00:43:38]>> Yes.

[00:43:40]>> Yes. Most of the time when I put a deal together, I get paid 30, 40, $50,000 from my capital structure to acquire a deal with no bank, no money out of my pocket. And now I have a property that's cash flowing $350,000 a year. Any questions about this?

[00:43:57]>> Yes.

[00:43:58]>> Okay. So hybrid is when you have two >> or more >> or more creative fun. Okay. Yeah.

[00:44:04]>> I just wondered.

[00:44:04]>> Yeah. Two or more. So um even sometimes you'll have sub two you'll have three sub two loans on one deal. Meaning I took over the bank loan but they also had an HOA lean. They also had a um solar lean and they also had a personal loan with their uncle Gary. I've I in a property in Atlanta, Georgia, I have five sub two loans on one property. I took over all property, all of those five loans sub two. Okay. I even have on one of my properties in Gilbert, I have a $7 million IRS lean that I took over sub two.

[00:44:40]That's another conversation for another day.

[00:44:43]So, I can walk into these deals. This is highly complicated. For me, it's simple.

[00:44:49]For you, it's like, wait, hold on.

[00:44:51]There's a lot of moving parts here. No, there's a lot of ingredients that you interchange. Now, did they just come up with this structure right out of the gate? No. So, this is the part, and we're going to cap this conversation.

[00:45:00]We're going to then jump into seller finance and sub two and lease options.

[00:45:04]Okay.

[00:45:05]Imagine a seller comes to you and they go, "This is what is my appetite."

[00:45:11]Right? Imagine everybody you talk to, a broker, a seller coming into your restaurant and they're saying, "I have cancer. I have this situation. I have a $3.2 million such and such." When you go to a fancy restaurant, what do they ask you?

[00:45:26]Do you have any allergies? Do you have any preferences? Do you have any such and such? Do you have blah blah blah blah blah? Here's the problem with most people is they think traditionally, so they go, "The price is the price is the price." and they offer before ever asking the customer if they have any allergies. Why would I do that? That makes zero sense. You're coming into my kitchen. I want to use the appropriate ingredients. I have 26 plus ingredients that I can utilize to cook something up for you and solve your problem. I need to understand what your preferences are.

[00:45:57]This is where rapport, finding the bunnies are critical. So, when people come to me, they go, "I can't get this deal done with the seller." And then I get on the phone, you guys ever seen me on a phone call with the seller? I'm diabolically good because I care so much about their preferences, right? Well, why? Okay, so you have cancer. Makes sense. You got a timeline. You're highly motivated on making sure you have money.

[00:46:18]You have kids. So, if you do pass away from cancer, you want to make sure that your kids get as much money as possible.

[00:46:23]You want Okay, cool. I'm pay make sense.

[00:46:25]Okay, this makes a lot of sense. Got it.

[00:46:26]Got it. Got it. Got it. Boom, boom, boom, boom, boom. So, the price is not really something I'm going to push on.

[00:46:31]I'm going to try and make sure you get your price. However, now I'm going to take that price and I'm going to compare it to the income of the property and go, I can get to that price if I sprinkle in a little bit of this and a little bit of that. Zero payments for 5 years, 0% interest for this. You know what? I can make what you want work. Thank you for telling me what your preferences are.

[00:46:51]Now, I know how to cook this up. Does this make sense? And so, this is the part that realtors don't learn. This is the part where traditional real estate investors get burned out is because 90% of people on the traditional market should not sell on cash.

[00:47:07]The other problem with this is if this lady bought this property, pay attention, if this lady bought this property for a million dollar, remember she bought the dirt for a million dollar, she's now selling it for 3.2, what's her capital gain?

[00:47:20]>> 2.2.

[00:47:21]>> 2.2 is her taxable gain. But what's her capital gains tax going to be?

[00:47:26]H >> half a million to $600,000. You have cancer. You got to pass your money off to your children. Do you want to pay the IRS $600,000 in capital gains tax?

[00:47:36]Did you know that she can wipe out all her capital gains tax by selling on creative finance?

[00:47:42]I have a whole five hours I'll teach you on another day of exactly how that is.

[00:47:46]Okay, so this is what creative finance is. I wanted to give you guys a highlevel overview of holy moly, there's a lot of moving pieces. There's deals where all I do is a sub two deal. People hand their keys keys to me. Super simple. There's deals where people sell me something on seller finance, no money down. I've had sellers pay me at closing. All of these little ingredients you're going to learn are going to allow you to add a little flavor, taste it, and go, "That's not working out. Let me pull that ingredient back out." That's what creative finances is. You're testing what are the the ingredients.

[00:48:16]Imagine the only ingredient you have is to go to the seller and lowball them. Is that going to solve this seller's problem? So when we talk about traditional real estate, I want you to write something else about traditional real estate. Traditional real estate is a win lose game.

[00:48:34]There is literally no way for you to win in a traditional transaction without taking money from the seller.

[00:48:42]It's not possible.

[00:48:46]You have to get a great deal on your price, otherwise you can't make money. The only terms you have are you're taking cash from your pocket, from your savings or whatever, and you go, I got to get a great deal, so I'm going to lowball the seller. Is that unethical? No. There are sellers that will sell to you on cash because they need speed and convenience.

[00:49:08]They don't care about the repercussions.

[00:49:09]They need speed and convenience. That's why cash works. I've done thousands of cash transactions and I love cash. But most of these sellers, especially in RV parks, mobile home parks, larger assets, businesses that you want to buy, their biggest concern is, I need the highest price and I want to avoid paying taxes.

[00:49:26]Am I going to be able to do that with cash?

[00:49:29]>> No. Now, what's fun about creative finance also is that am I limited to any type of asset class?

[00:49:36]>> No. And so I want you guys to think in a way of you're I don't want to be an Airbnb investor. I don't want to be a section 8 investor. I don't want to be an RV park investor. I just want to be an investor.

[00:49:49]Right? If you are a chef, do you say, "Oh, I'm just I only make turkey sandwiches."

[00:49:56]No. You want to be able to say, "I'm a chef. I can make anything you'd like."

[00:50:00]Like the other night, my wife does this really cool birthday party for herself.

[00:50:03]She invites 10 of her friends. She hires a chef. The chef comes into our house and our the chef, she sees our guest house kitchen and she's like, "So, like, where's the kitchen?"

[00:50:14]It's a goodiz kitchen, like a normal house kitchen. It's a 3,000t guest house. And the chef walks in, he's like, "So, where's the kitchen for the big house? Can I see that?" The chef walks in, she goes, "This is my workspace. I can't work in that guest house. I need to work here." And I appreciated that about her craft. She says, "I need more space. I want to create." And my wife's like, "Well, what do you want to what are you creating tonight?" Right?

[00:50:38]Because my wife ordered omicaz, which is chef's choice. And so she goes, "I don't know yet.

[00:50:45]I want to meet your guests." So she meets the guests. She pulls in information. She goes, "Okay, I know exactly what I I want to create. I'm going to try this. I'm going to try that. I'm going to make this for that person. They have a lactose intolerance." D. That is how investors need to be. Oh, there's somebody sitting on the market for 400 days. Their problem is their price is too high. But if I apply 0% on a portion of it and zero payments, I could probably get to that number. When you think creatively, you're the only person that can compete on deals. Now, am I overpaying? Now, here's another question about creative finance. Do I overpay on properties? The answer is never have I ever overpaid for a property. Well, Pace, this this will be the last part and then we'll go into seller finance in sub two. Okay. Now, inside of sub two, do we have dedicated 20 hour courses on each one of these strategies? Yes or no?

[00:51:38]>> Yeah. So, if you're like, I really want more information about sub two or lease options or whatever strategy, could you just go into the sub2 vault and go and earn the badge on each one of these strategies? Yes or no?

[00:51:50]>> Yes. Okay. So, let's let's cap this.

[00:51:54]Let's say that I'm My name is Brad. I buy only things with the burr strategy, okay? And then I'm Pace.

[00:52:03]There's a property online. It's on Zillow because that's where people that freaking buy with bur strategy go is Zillow and re retail agents that don't imagine buying a deal from an agent and an agent says, "This is a great deal."

[00:52:16]76% of real estate agents don't even own their personal home. 84% of them don't own an investment property. Should you be taking investment strategy from real estate agents? Hell no. Sorry if you're an agent. I'm very sorry. So, we both see this property on Zillow. It's listed for $500,000. In order for Brad to make money or break even on the bur strategy, guess what Brad has to do? Brad has to offer probably somewhere around $320,000 to get that deal done. Why? because he have to put his own money in it. He has to improve it and then he has to refinance and pull the money out. If he's doing a refinance, let's say the property becomes worth $700,000 after a renovation. A bank's not going to give him a loan for $700,000, are they?

[00:53:01]They're going to give him a loan for how much? They're going to give me him a loan on this for probably it's going to be probably 8020. So, it'll be 560,000 bucks. So, he sees a property that's being sold for 500. He knows that he could improve it and make it worth 700, but once it's worth 700, he can only get a loan for 560 and pull his money out.

[00:53:23]So, in the bur strategy, I got to keep my money involved in the deal. Make sense? Are there times where the burst strategy is applicable? Yes. Okay. He offers $320,000.

[00:53:35]This is why you'll see a lot of people go, I just can't find deals. There's no good deals on market. Because what they're doing is they're lowballing the seller by nearly 40% off the price.

[00:53:45]Okay? And so you'll see them all the time. They have like, "Oh, well, I go on Zillow. I listen to a real estate agent and I submit offers on Zillow or on on MLS all day long and my offers are going to be this low." Cool. That's the traditional way of thinking. So, I'm lowballing every seller that's trying to retire. I'm trying to lowball every single family that's lived in this house for 20 years. I prefer to just go to the seller and go, "What kind of debt do you have on that? Do you have good debt? Oh, you have four a $410,000 loan. So, you have a $410,000 loan. By the way, this is a real story. You have a $410,000 loan. Nobody offering 320 can buy that property. No wonder they say no to you.

[00:54:24]Meanwhile, I find out they have a $410,000 loan, but it's at 2.9%.

[00:54:30]I go, I'll just take over that and I'll put a little bit of money in your pocket. And so, somebody online will go pace over pace for properties. Really?

[00:54:37]Because this dummy is not. If you go and get a loan right now, if you're a burst strategy investor, what's your interest rate? If you're an investor, you're getting about a seven and a quarter rate. If you're a homeowner, you're getting like 6.25. Okay? But this is an investor. So your investor rates at 7.25. Who paid more for the property? Me or the other guy?

[00:54:53]>> By a long shot. So it's the same thing on um other big deals is that I will run into cash buyers that will buy stuff for cash. But what does cash really mean?

[00:55:04]And this is important for you guys to understand on creative finance. What does cash actually mean? When somebody says, "I'm a cash buyer. Are they actually a cash buyer?" They're financing it with a bank and then they're bringing in maybe some retirement savings or somebody else's money, right? So that money comes from somewhere. Is that money free? No, of course it's not. So let's say that Brad and Pace are competing on the same $5 million RV park. Okay. How much does Brad have to offer on this to make it make sense for him and his cash investors is probably around like 4.1 million. Meanwhile, I just go to the seller and go, I'll pay you the five million. I'll give you your high purchase price. I'll pay for your agents. Where how do I come up with that money? Private money, private money partners, whatever. So, I'm still no money out of pocket. No bank. And I'll do seller finance with you. One of my best RV parks. This is exactly what was happening. He was getting every offer he was getting was 4.1 million. I bought it for a million. I get a DM from the guy that was competing with me. He's like, "How did you how why did you overpay for the property?" I'm like, "Okay, so I got 4% interest with the seller direct.

[00:56:05]Seller gave me 4% interest. What was your rate with the Bank of Montana?

[00:56:10]It's like 8 and a quarter. Who overpaid for the property? I'm not flipping this property. Am I buying businesses so I can flip them in six months? No. I'm buying them for cash flow." So, more importantly, am I getting more cash flow on day one? So f first and foremost, it's not even about my interest. It's about I actually have more money in my pocket on day number one from the cash flow because I'm not paying this rate.

[00:56:32]I'm paying that rate. And I also can structure with the seller. I can say, "Hey seller, I need six months of no payments so I can get my team up and operational. Can I do that with a bank?"

[00:56:42]>> No.

[00:56:44]Why would I ever on God's green earth use traditional real estate?

[00:56:48]There are times when it's applicable, but it's applicable usually when you can get about 50 cents on the dollar. Tap.