BLAIR HALVER

BLAIR HALVER

Shift #3: You don't NEED a big discount on a house in order to make a profit.
(If you're just tuning in and you haven't read the previous parts of this series, you can head back to the start here.)

Blair Halver

Jan 25, 2020
I mentioned in Shift #1 that “all cash” is probably the least advantageous form of financing.

Well, to do an all-cash deal, you know you need to get a big discount, right?

You’ll hear it all the time from the conventional real estate world:

“Every good deal starts with a deep discount.”

Bullsh*t.

Let me illustrate…

Would you ever buy a $250k house for $300k?

No?

Well what if I told you the seller was willing to let you pay him off over time at a rate of $1/mo until paid?

How about now?

If you don’t say yes… well, I don’t know. Maybe there’s hope for you, but probably not.

So not only is the idea that “every good deal starts with a deeply discounted price” patently false, it’s probably severely hindering your success.

You see, most motivated sellers out there today simply don’t have enough equity to give you a big enough discount to make the deal work as an all-cash deal — wholesale or fix and flip.

So what do you do, just throw the lead away?

Heeeeeeeeck no.

You gotta be able to handle any kind of seller lead that comes in.

My business partner, Jeff, and I call this skill “Transactional Engineering”. 

(We’ve got a whole podcast and youtube channel on this stuff, you can look it up later.)

Ok so if you can’t get a big discount on a property, either because there’s not enough equity, or the seller's asking price is near market value and knows he can get it because the house is in perfect shape, what do you do?

You use what I call “Equity Injection” strategies.

These are all the creative financing tactics like seller financing, lease-options, subject-to, etc etc.

The tactics themselves don’t really matter much.

The strategy is what's important - provide easy, built-in financing along with the house to your buyer and all of a sudden the value of the house increases.

In other words, you can “inject artificial equity” into the deal when you can’t get equity any other way.

Because when you sell a product (including houses) with financing built into it, you automatically increase its inherent value simply because it now comes with financing.

So then even if you have to pay full market value for the house, if you can provide great financing terms to your buyer, you can mark up the selling price of the house higher than what the market would pay without the financing.

In other words, buy it for market price, sell it for OVER market price.

Now obviously, if you want to sell something with built-in financing, you need to be able to get built-in financing from the original seller.

This is how you can "become the bank" WITHOUT first having a massive bank account of your own. 

The seller is the bank.

There are a lot of moving parts to this if you don’t know what you’re doing — interest rates, amortization schedules, down payments, balloon payments, discounted notes, etc.

It’s a deep subject, one we can’t really get into in this article alone.

But you should know…

There are ways to DRASTICALLY SIMPLIFY this whole seller-financing thing.

All forms of seller financing boil down to four key deal points. 

Whereas in an all-cash transaction you really only have one deal point - the price - in a "terms" deal as we call them, you have these four:

1. Price
2. Down Payment (if any, we usually buy with nothing down)
3. Monthly Payment
4. Length of Term (i.e. how much time will the seller give you to pay them off in full)

And that's it. 

All these fancy words boiled down to just four key deal points. 

And that’s what you have to do if you ever want to get seller financing from a seller — you have to make it extremely SIMPLE to understand.

Because a confused mind says “no”.

As an example, when you’re negotiating the interest rate and the monthly payment and the amortization schedule, you can do all of that without ever saying the words “interest” or “amortization” or anything.

“Mr. Seller, what’s the least you could take on the monthly payment? Is that the best you can do? (If they give you a number you like…) Ok Mr. Seller, we’ll pay you $X amount every month until paid.”

Now if the seller says yes to that last statement there, what have you just done?

You’ve just negotiated a principle-only, 0% interest loan with no balloon payment, i.e. no shortened deadline by which you have to pay them off in full.

Now, I do want to make something abundantly clear here -

This is not just about doing seller-financing or “terms” deals all the time.

This is about being able to take the deal whichever way it needs to go.

This is what allows you to monetize approximately TWICE as many leads as the wholesaler down the street, which lowers your marketing cost per deal, increases your profit, and puts you on the fast-track.

That being said, I’ll admit that these kinds of “terms” deals are my favorite. 

Because seller financing on anything makes it more attractive.

Because then you can REALLY move into the financing game and set yourself up some pretty sweet deals where you get a big chunk of cash now, monthly cash flow without being a landlord, and then some back-end equity to boot.

Are you starting to see this, yet?

This business really doesn’t have to be so difficult.

If you can embrace these three key shifts in your thinking and the way you look at real estate investing in general, then you really can turn this business into the dream business you’ve wanted it to be all along.

Ok at this point, I hope I’ve at least opened your eyes to the possibilities a little bit here.

I’ve been in the real estate investing world for a good 10+ years...

I think this is one of the best times and biggest breakthroughs we’ve had in this business in a looong time - being able to do "nationwide house flipping".

Because only now is the technology and the infrastructure and the culture itself getting to a place where all this is even possible.

Most investors complain about these big venture-capital-backed home-buying companies coming in like OpenDoor or Zillow Offers, etc.

But man, I am so glad these companies are out there now.

Because all the millions of dollars they’re spending on marketing and advertising has gone a long way in legitimizing our industry of professional home-buyers in the minds of the public.

Back in the day, everybody just thought we were scamming people.

Nowadays it’s all over television and it’s a full-blown career for some people. 

Crazy how times have changed, right?

So anyway, if you want to see more of how we do this business using this new “Pipeline Method”…

And you want us to help you implement this new model into your own business…

Just click here to find out more...

Written By
Blair Halver

The lifestyle real estate investor, famous for creating highly profitable house-flipping businesses without having to hustle 24/7. 
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