welcome to this video guys we're going to do something a little bit different we're going to be talking about how to put together a deal that is involving creative financing and i've got my good friend pace here with me we're going to have a lot of fun because you're going to actually watch us do a subject to deal coming up [Music] for a limited time you can get a free copy of jerry norton's virtual flipper kit with everything you need to flip houses without seeing them in person download it now at virtualflipperkit.com if you're new here to this channel i'm jerry norton with flippingmastery.com and this channel is all about ways to help you make money wholesaling and flipping real estate so you can live your dream life be sure to subscribe and turn on the bell notifications so you don't miss new videos alright so pace welcome man what's up brother this is a lot of fun you guys pace is somebody that i have tremendous respect for uh i consider him a close friend we're actually neighbors i think pace lives about 10 minutes from me he's joining me here in the home office here at the norton compound the norton library look at this library he lives in guys yeah unbelievable this is a lot of fun and what's really interesting is this deal came together i'm going to ask you pace to kind of share a little bit about it but this this deal kind of came together for both pace and i we're actually going to partner on this deal it's uh it's a creative financing deal specifically sub 2 but there's some kind of moving parts on this deal and we're going to attempt to really break this all down for you and show you exactly how we're gonna do this deal if you guys are interested make sure you leave a comment and tell us if you'd like to see a series on this deal then we'll kind of do next steps and we'll share how this deal progresses you know hopefully to the finish line you guys that are new to real estate actually you guys that are been in the game for a little while you know that not all deals make it to the finish line there's a lot of times along the way a lot of things along the way that can break down right but we're going to attempt to take this deal we've got right now all the way to the finish line and let you see it behind the scenes or looking over our shoulder so that you can understand this type of deal structure so again thanks pace for being here and maybe give us uh maybe share with everybody listening here kind of how this deal even came together why you and i are even talking together about this deal or partnering it's so fun because as you elevate and as you learn new things in real estate what happens is people come to know that you can actually close escrow on these types of deals jerry norton has been a guy in town for the last couple of years that when there's a luxury deal or there's a deal you know in a specific niche they go i'm going to call jerry norton right yeah high-end stuff so a lot of times people will dm me or they'll text me and go hey what do you think about this deal i think i'm going to send it to jerry norton it's literally every time they do that so um i'm the guy in town in a couple of different parts of the country where people have a sticky situation maybe no equity or maybe there's a big amount of arrears people will reach out to me because they weren't able to make it happen with traditional methods and so because i've stood out as that guy i get calls all the time probably four to five calls a day in multiple states of people saying i can't solve this problem and i need your help yeah which most people think of real estate as like cash transactions right cash cash which cash is awesome cash is like the ultimate way to get a deal done but because of the nature of cash you have to get a rock bottom number for that deal to work because of the deployment of money right whether it's your money or an investor's money there is a high demand for a return on that money and what pace is really known for is taking everybody else's throwaway leads and monetizing those and not just a little bit but like in a big way and that's using creative financing so we're gonna be really focusing this whole video and if we do a series here on how to do a creative financing deal specifically subject to so if hearing that it sounds like well what in the world is that your you talk about wholesaling you talk about making cash offers you know running the regular formula this is going to be a way to take leads that normally just don't make sense for most wholesalers most flippers most investors really where they just like there's no equity or that doesn't make sense done move on to another deal looking for that like high equity deal or all cash offer and this is really hopefully for you guys a real eye opener and how to put those together and by the way if you guys want to learn more about creative financing i put together an entire guide and this goes through several different it's a really good guide you i saw you put on your instagram i was like oh my gosh that guide is so good so how can they get it it's pretty cool so we'll put a link in the description you can get that for free it covers several different techniques subject to seller financing land contract lease option different ways to structure deals so if you want a really solid you know overview i will give this to you for free and stay to the end because patient i have a really cool gift huge value that we're going to also give you for free but you gotta stay to the end of the video so that you watch this whole video alright so okay so share with everybody how did you and i get in front of mr seller which we met at the at the kitchen table you and i sat at the kitchen table we had an hour-long conversation with him with his wife so kind of how did that come together so the way that this happens is that for the last four or five months this seller has been in foreclosure process and any seller that's in the foreclosure process step one of that foreclosure process is denial right i call it the ostrich effect head in head in the same way i love that so that's exactly what this seller had been doing for several months and primarily the only people that reach out to motivated sellers are wholesalers and cash buyers so the wholesalers were not able to solve his problem they were tying him up in contracts and cancelling on him and all this kind of stuff and he came down to the probably the last 15 days eleventh hour he's about hour lose his house and finally one of these wholesalers in town says okay i've talked to this guy long enough i'm gonna call in the heavy hitters and so what ultimately happened is i get a call last wednesday so today here we are five days later i get a call from a wholesaler he says man i've been working this guy it's an impossible deal it's an impossible deal and the first person i that came to mind was you because i know you take the impossible and make it possible and so i go a couple days i talk to the seller i tell the seller hey give me a day i'm flying from seattle to phoenix and i'll give you a call back in that time frame i get a call i get a text from my buddy jerry jerry says hey i got a lead from um from somebody local in town here are the details he didn't give me the seller's name or the the address yeah nothing and i replied to his text message with simply the seller's name i said and jerry goes oh my gosh how did you know and this is a really good testament to both you know last night on um wholesale hotline jamil was talking about building a reputation by making by keeping one promise at a time and by taking care of one person at a time jerry's a guy in town that has kept promises and done good business so ultimately leads and good deals come to his table when other people can't make sense of him and my bird dog essentially said the exact same thing said here's this lead i'm exhausted with it i'm not expecting anything i can't put it together here you go you know if you can make something work great here you go what's the kind of same conversation as you've got all these people for four months utilizing traditional methods and jerry and myself utilizing subject to we are both going to make in my opinion we're both going to make about a hundred thousand dollars each in a 12-month timeframe right in a partnership yeah in a partnership very cool so cool so what we're doing here in this subject-to transaction is we're tremendously helping the seller and we're going to go through how we're selling helping him and the structure of all that in a second we're helping the seller we're stopping the foreclosure last minute we're allowing the seller to live back in the property for 12 months and we are putting our position we're putting ourselves in a position where we control the real estate and ultimately make a hundred thousand dollars each and we're gonna whiteboard this we're gonna lay it out for you i do have to say though that you know i've been using creative financing techniques for a long time i've very rarely seen somebody be able to break down the creative financing process especially sub 2 in such a way that anybody can understand it and pace is the master at understanding creative financing and subject to so guys if you really want to learn this well not just kind of like high level more than just this deal we're going to share with you but really the nuts and bolts of how to do sub 2 then be sure to go to subtwo.com that's s-u-b-t-o-subtwo.com and you get more information i look at lead gen and deals at like like deep-sea fishing the more lines in the water the more fish you catch and you can catch so much more fish deals if you learn creative financing it is a must-know strategy and there's a it's a whole world right of opportunity because now it's what how can you see an opportunity that others can't you can put a deal together there's not another person in the world who gives as much value and shares so openly and freely as pace so that's my plug for for pace and thank you for all you do to in the community investing community so let's get into it let's let's break down now pace if you wouldn't mind let's talk about the kind of the high level numbers maybe like we'll jump on the whiteboard but we're going to mar we're going to whiteboard out kind of the seller situation so that you can see what's going on what the numbers are and then we'll go from there maybe and we'll kind of break down okay well now what's the right solution that works for them hopefully it works for us for sure so that we can kind of so you can kind of visualize this i think putting on the whiteboard would help everybody yeah i agree because what happens a lot of times when you're brand new to real estate is you put what i call you put your brain in the seller's head and you say why would the seller do something like that why would the seller allow jerry and pace to both make a hundred thousand dollars on this property how does that all work so we're going to kind of give you the situation of the solution we're presenting to the homeowner so you can see the value we're giving so that you can also understand why we're getting so much money back and quick teaser the the the sit down at the kitchen table with don and his wife pace recorded the entire conversation i looked it's an hour-long audio recording which we can do audio recording stay to the end we're going to show you how to get that it is invaluable because what i love about it is it was like a it was like a it was like a tag team you know wrestlemania where pace would come in and be like boom and then i would come in and be like boom and then we brought the and then we brought the wife over because the wife was kind of like whatever you say honey and she's sitting over here and we're like paula you sit down we're telling you the exact same thing so that this is crystal clear how this is going to go down why it's good for you why it's good for us it was so cool because as we left we had anna martinez one of my project managers she was there taking photos of the house anna after we left she sends me a text and she said i would be so fearful to go up against jerry and pace if i was any other investor so if you guys want to hear how we presented terms how we overcame objections how we in a very crystal like manner explained it to the seller and explained it again and again and again one more time exactly and there's a funny part where pace goes okay listen cause he's very the the the husband's very don is very interruptive and um he look he's he's played this thing all the way to the 11th hour he knows what's going on smart guy you know finance background he gets this and pace is like i need you to just listen give me three minutes don't interrupt me three minutes i'm gonna walk this all the way through a to z one more time but you have to listen and stop talking right and which was just which was just awesome so we'll show you how to get that recording stay to the end okay so we're gonna attempt now to break down the entire deal structure in a way to where it's easily digestible easily understandable hopefully if not go back and watch this a few times but let's take our deal here the our deal right now that we're that we're doing is has a million dollar value now apparently that's an appraised value that's a number the seller gave us it's not a number we pulled out a pie in the sky it's a million dollar home it's in a live guard community beautiful area all high-end homes in there million dollar home now the situation is this there is a first lien holder he's got a mortgage on the property that's in the first position bank of new york bank of new york now that loan is roughly about four hundred and fifty thousand dollars then he's got a second position lien he took out a home equity or a took a personal loan a personal loan against equity right so it's leaned against the property the most important thing you've got to understand here is this is first position this is second position this 191 in the second position lien is for closing so he stopped making that payment did the ostrich effect which has put his head in the sand didn't address the issue early on clearly there's equity right look at the equity in this property 650ish 650 in equity are 650 in debt a million dollar home now you and i watching right now are probably thinking well why didn't he sell the property why didn't he why didn't he protect his equity ostrich effect this is so common when people are in financial distress they think somehow this problem is going to solve itself down the road right right and i'll just worry about it tomorrow meanwhile that looming foreclosure date gets closer and closer then at the 11th hour pace and jerry are at the kitchen table he literally has what 10 days now night i think eight or nine days right to get this thing done so pace i'll have you explain kind of why this is so significant because this foreclosure is happening in nine days nine days which means certain things are gonna happen if he doesn't solve this if right so i'm gonna have pace kind of walk through that right now but hope you guys understand the numbers here million dollar value 450 000 first lean position with new york bank second position which is the big problem right now this is what has to get solved if this doesn't get solved there's a foreclosure he loses the property he's got to get out right so let's go through the process of where this money came from and why this lien is here in the first place at some point the seller says look i'm going to go out and build a business so i'm going to go out to one of my buddies and ask them for a personal loan well that friend of his said i'm happy to give you a personal loan but it needs to be tied and secured against your property in the form of a lien which means now he has protection against the seller failing to pay him on that personal loan so that personal loan was transitioned into a lien now the seller has not been paying that for years and this gentleman his name is terry terry has been fed up with it he finally got to a point where he said you've been messing around with me you haven't been paying the bill i'm taking the house i'm going to get my money back by taking you through foreclosure so terry hired a company named tiffany in bosco which is what we call a trustee and a trustee forces and takes the house through a foreclosure process you hire them and they do the whole foreclosure there's a legal there's legal steps you have to take in order foreclosure and subsequently in case you're wondering because this was a thought i had why isn't this also in foreclosure that's the bigger number he took advantage of forbearance right so he deferred his payments for a while and that's how he saved his butt on the first with bank of new york because of what's going on right now he got forbearance if you don't know what forbearance is we've done some videos on it but it's basically deferring your payments they'll either tack them on the end or a lump sum or whatever it is but it gives him relief right now to not have to make that first lien payment for a little while so what happened is dawn the seller put himself in a situation where he said i'm the ostrich i i'm number one i don't think any of this is gonna happen this guy i have been making payments to him for a couple of years why would he now change his mind and foreclose on me now right it just so happens that terry the person in this situation got sick and tired of not getting payments on this big lump sum so he hired the trustee and is moving forward so now he has 10 days until he's losing everything and that this is the two options that dawn has right now and i wanted to bring up why there's not an option three which is listing the property because somebody that might be watching this video would say why does he list the property why doesn't he sell it to a wholesaler why doesn't he just fire sell the house right now well don's main motivation is that he wants to stay in the property and fix his situation so he doesn't really want to sell the property and what he's really wanting and this is where we're at right now where this is the line we're at right now is dawn has option one which is in ten days or less the house gets foreclosed down which means the trustee that terry hired will come in take the property from from dawn and pull don and his belongings out of the property and say you're no longer the owner get out okay that's where he's at right which means he loses everything loses his equity yes he no longer has a house to stay in he's got a foreclosure on his record for however long they'll stay on your right you know like this is zero and right now he's got one plan b and that's pace and jerry that is correct now what's interesting about this is guys for you that are new investors or even maybe doing a couple of deals here and there there are so many foreclosures happening on a daily basis nationwide with sellers very similar to this not million dollar property sometimes fifty thousand two hundred thousand thousands of them are happening nationwide there are opportunities for you to take advantage of what's going on here where a seller tried to list it for too high they're in foreclosure they're about to lose their property they don't know what to do a wholesaler or a real estate agent no longer can help them and they just let the house go so this applies not just at the million dollar if you're if you're watching this saying well i couldn't take down a million dollar deal this is at the hundred thousand it's at every price point so don't worry about the numbers know that the steps and this is a very common this is a very common math right i'd say the average day we're in the middle of a deal right now somebody up in northern arizona waits till the last minute they have two days until they're gonna lose their house they couldn't sell it with a listing and so they gave us a call that price point is a hundred and eighty thousand dollars there's houses we bought last year that were sub one hundred thousand so like your pre-foreclosure right so like jerry said and jerry has amazing videos on pre-foreclosures and what that's all about so go um look on jerry's channel for more of that information but this price point should not scare you the whole thing that we're teaching you here are the mechanics behind how you can help a seller stop this option one from being a reality and give him option two which is this jerry and pace step in jerry and pace buy the house subject to which means we buy the property and we leave the existing mortgage in place this one correct so we take this over how much money are we going to pay towards this jerry zero zero dollars zero so guys we're not buying this 450 000 house with cash or with getting a loan there's already a loan in place we are just transferring who's who's um who owns that loan who can actually control that deed of the property and it's on a low interest rate on a 30-year fixed why would we take that out yeah why would you get a loan to pay off a loan what we're just going to do is we're going to take over this 450 000 very simple and then we are going to come in and pay this one off with cash now a lot of times in other subject-to transactions when we have entry fees that are large we go out and we raise private capital which is a whole other thing we can talk about in maybe part two three or four which we could do with this easy but you and i are looking more at on a return on investment on our money correct but if you're watching this saying well i don't have 191 fine borrow it at a you know from a private investor or wherever you can still get the deal done right i have private and lenders private lenders that would give me that 191 000 and i'd probably pay them 10 grand for the year yeah maybe maybe 20 me too i could make a phone call and have that money that's the power of relationships because it's a good deal 100 so what's going to happen is jerry and pace are going to buy this house subject 2 for 650 000 is our purchase price why is it 650 000 well because you add these two numbers together with some closing costs your closing costs are going to be about 9 000 with some fees we're going to get an attorney involved and stuff like that and then our trans my transaction coordinator where we pay her some money as well so this is going to total 650 000 on the purchase price we will not be paying that off we'll keep it in place what we're going to do for jerry is or jerry you and i are now going to be the owners of the property and what we're going to turn around and do is give the seller a 12 month option to buy the property back from us so he gets to live in the property for 12 months he gets to solve the problem that he's currently dealing with him and his wife don't have to be completely uplifted from their property and change everything in their lives and move furniture and all that kind of stuff we are bringing tremendous value to this guy's life so what we're doing is for that 12 month option at the end of the 12 months he has an option to buy it from us at 8.65 and explain what an option means an option means jerry and i are the bank and we own that property and we're letting him live in that property as long as he continues to pay the first mortgage which is 450 so that get continues to get paid which gives you and i the benefit of the pay down which is amazing because now he's been in this property for a long time most of that 2800 payment that 2800 payment is his payment on the 450 with principal interest taxes insurance right so it doesn't cost us anything to service that now because he's paying that in the form of his rent but the majority of that payment now is principal because if you guys understand how a 30-year loan works the more time that goes on the more principal gets paid off in the beginning it's mostly interest as you get further along is more principle so we get the benefit of the of the pay down we figured probably about 18 maybe 20 000 in this year if he makes that payment for 12 months straight our this is actually going to now be 430 right on the principal 100 the benefits to this deal are significant yeah there's 10 of them yeah there's there's 10 really big benefits or whatever i think maybe doing a video of here's all the benefits of us doing this deal i think would be huge plus having us go through his mortgage statement and showing people what a 30-year am looks like when you're halfway through in terms of principle and interest would be super impactful yeah but keep watching because we're real we're realist right and we're investors and so we're going to also we're not going to sugarcoat this we're going to also talk about the possible downside yes because there's always a downside things could go wrong here right but can you live with that we'll talk about that in a minute so let's go through this one last time and if you guys have any questions about that throw that in the comments anytime i do a video with jerry i personally go in the comments and help answer those questions i love the questions it gives us a good idea of what we need to hit on more what we need to focus on when we do make part two three and four depending on how this transaction goes so jerry and i are going to buy the property by buying the subject to this will stay in place we pay this off cash we pay closing costs we're all in at 650 on the purchase price we're going to give dawn the seller the ability to stay in the property for 12 more months and the the option to either sell the house on the market for the million dollars or to refinance us refinance us out and go get a loan in that process he would have to buy the house for 865. so let's say that he sells the property what what he believes to be a million 500 or you know and 50 000. he goes and lists the property he sells it off he pays off the 865 plus some closing costs plus some let's say um 75 000 in cost to real estate agents and fees and all that kind of stuff dawn's gonna walk away with with over a hundred thousand dollars in his pocket so we're taking him from an option one that is zero benefit to him he gets thrown out of the property and putting him in a position that in a year from now he can either sell the house on the open market get a hundred thousand dollars plus in his pocket and live in the house for another year to figure out what his next chapter of his life is the next adventure where his him and his wife are going to go with a hundred plus thousand dollars in his pocket depending on how that shakes out or he refinances right pays us off this because that's his payoff right remember that's the option and stays in the home doesn't have to move and he's got still equity because if it's worth that he's got his you know he still protected that equity right so here's the benefit best case scenario and we can jump into more best case scenario but in this world um what's going to happen is if he pays our 865 off we owe 650 right so let's let's look at that yep we're going to get a couple benefits here we're going to get the 650 that we owe so that's going to be taken out that leaves jerry and i with 215 000 dollars but the mortgage paid down 20 thousand dollars add that on so we add that 20 000 onto this deal we're gonna end up making about 235 000 in a 12-month time frame this would probably be the easiest amount of money for us to make we wouldn't have to lift a finger we wouldn't have to renovate the property or worry about it dawn sells the house or refinances us out we dollars make 235 months there's no extra time into it yeah done that's the easiest and i think kind of a worst case scenario for us in terms of return on our money yeah so definitely maybe what we should do is erase this and do a best-case scenario in a worst case scenario okay so let's now map out here for you the best cases because there's multiple ways that this could play out we'll whiteboard that and then and then pace is going to cover what could possibly be the downside what if if the worst thing happened what would that look like so that we can decide can we live with that and this is the conversation pace had patient i had what is what's the best case what's the worst case let's go from there so first let's take best case pace mentioned a minute ago that the easiest solution would be that he pays us off the 865. now there is some additional equity in there that we could capture but what's nice about a payoff at the end of 12 months whether he sells it or refinances it however it happens we don't care where the money comes from he could win the lottery for borrow money from another person we don't care as long as we get our 865 what's great is we're out of the deal in 12 months we recapture we get our principal of 200 back and we net 235. now remember 235 is the spread between 650 plus another 20 000 in paydown we would walk away from that deal with roughly 235. pace and i split that we're thrilled we doubled our money right that's pretty cool right doubled our money no renovation no listing it for sale no waiting past 12 months that's the benefit of the payoff right pretty good upside for the payoff in additional let's say that he that he doesn't do the payoff what could the upside be there's a downside peso cover but what could the upside be if he doesn't exercise his option at the end of 12 months and we have to take the property back what could that look like well we could sell the property and net over 235 right remember there's a million it's a million dollar value and in a year from now with the way this market's going it could be worth a lot more so we could either renovate it we could not renovate it put it up for sale sell it for 9.75 as is and walk out of there with anything over 235 would kind of beat this deal but we would be in the deal longer there might be a renovation so that's the downside we could be we're longer into the deal because if he doesn't pay it off in 12 months now we got to take it right maybe it takes us another three four six months to get out of it by doing something either listing it renovating it whatever or another possible upside if he doesn't pay it off is we keep it as a long-term rental now this one is very attractive to pace and i um i'm mostly a flipper but man there's nothing better than cash flow because think about it we would have we would be basically keeping this property with a 2 800 a month monthly payment on that first where this thing could rent for 4 000 i think it's 4 400 to 4 800 bucks okay so this thing's now cash flowing let's just call it 1500 bucks yeah more than that probably but it's things cash flowing pretty dang good uh we continue we continue benefiting from that paydown every year we're paying that thing down more our equity is improving this could be a nice long-term cash flow property uh there's a lot of depreciation benefits both you and i make with the income we earn yeah the challenges when you're doing a big flip like you're doing and you're making whatever you're making capital gains out the nose right so when you come down and you're getting a k1 from all your llc's and that's a whole nother conversation but essentially what holding this property does is it helps wipe out your income from other businesses so that you can hold and keep that capital in your pocket right and think about it if if this if certain assets allow you to not pay let's say a hundred thousand in taxes that's the same as making a hundred thousand dollars right my cpa told me months ago he said the fastest way to make more money is to not pay less in taxes exactly yeah okay so those are our possible upsides of best case scenario real quick before in a no payoff situation real quick what would be a reason why there would be a no payoff situation it's very likely actually that there could be a no payoff situation if he doesn't really get on top of selling that property way ahead of the 12-month deadline right he'll run out of time just like he did before uh or if he can't get new financing to take us out which could also be a likely scenario so we have to pace and i have our eyes wide open there is a likelihood there's probably more of a likelihood that this one happens then this one happens don't you agree i agree so we're looking at this not saying oh here's the mistake i see a lot of people make with creative financing they create this situation that on paper looks so phenomenal but it's so unrealistic and they and they have their head in the sand about the reality of what the seller is actually going to do remember he did not solve his problem before this is in a way could be kicking the can down the road where if he's not on top of it again we'll be right back in this situation where we're having the same conversation which is don you got to get out you didn't solve your problem right which is what i love about the recording that we did in the house yeah jerry and i were at the kitchen table with don his wife paola had a great contact teaming him yeah tag teaming him and making sure he understood hey you need to sell this property you can't just wait till the 11th hour again in fact dawn we are not extending that 12 month he asked us yeah yeah yes can i get 15 months can i get 18 months and our answer was absolutely not we don't want to be involved in this thing more than 12 months we have other things to put our money in so dom the answer is no no no no 12 months is the end yeah that's right what possibly could happen where this would not be as upside as we think it is love it so guys what's cool about the way that jerry and i structured this deal is we put ourselves in the driver's seat by buying the property subject to some people would have just funded the deal i've seen other people just fund the two hundred thousand dollars and they're just hoping to get paid back we control the entire asset it is our property we own and control that house and we're giving him an option to buy it back from us so we're in a no-lose situation because of the equity right right because of the action right here how bad so we're our analysis of like worst case is well what's the worst profit we'll make right there isn't a situation here where we're going well we could not get our 200 000 back right if that were a conversation you and i wouldn't be here right and if there is a meteor that hits planet earth we got a lot bigger things to worry about than don's house okay yeah so let's jump into um if if the seller and now in this situation the tenant if he misses his payment we have to evict him which cost us money it costs us time cost us money and maybe even a little bit of a legal illegal shuffle yeah um we end up fire selling that house and we pick up payments right payments evictions legal fees along the way and some headache and stress yeah right in that situation we probably it would cost us some money we'd have to make the payment on that house while it's that's going on we would be able to force a fire sell the house for no less and make at least our 235 yeah or the worst case would be when all that happens we don't make quite 235. right we might maybe that's the worst case scenario yeah 200 or whatever it might be so it could turn out to where we don't make the 235 if you paid it off but we're we're talking now about well okay like you said well we made 200 now instead of the 235 at the payoff or even 150 bucks worst case scenario you both you make 75 grand i make 75 grand we made a 75 return on our money in one year but even the upside to that would be we get our money back even sooner because now we're not waiting 12 months so there's an upside there as well love it right okay so then let's say the market declines in 12 months and we are forced to fire sell it right even if he doesn't miss the payment maybe at the end of the 12-month time frame don tries to sell it but the house is declined and don tries to refinance it but his lender won't give him a loan we would end up having to take that property back and again fire sell it and make less than the 235 we planned originally so we don't make as much profit as the total upside so that's a down but we get our investment back and we make a really really good return and then along the way we give the seller a whole year to live in that property and try and fix their situation um so let's say that there's no payoff he destroys the property because he's upset and that property right now is in really good condition like he's taking good care of it it's carpet not even paint yeah it's like you carpet it you rent it out worst case scenario he wouldn't even let us walk on his carpet right he was like he kept telling me take your shoes i'm like don i'm i'm just looking in the room i'm not actually going to walk in there because i don't want to take my shoes off but let's take care of it let's say he pours concrete down the plumbing he puts a dead turkey in the vents whatever the worst case scenario is takes the furnace with him when he goes right ac units what is the worst case scenario for us we might have some renovation here right we might have to go into the property and renovate it but the good thing is the upside is we can have the long well you have the long-term tax appreciation but the best thing is if he destroys the property we evict him and we go long-term play when we come we're back over here yeah well let me tell a quick story i had a um this was very early on pace when i first started in real estate and i was doing this fix and flip deal and i sat down with a money investor and i said hey here's my deal here's what i need for the purchase here's what i need for the repairs and i walked them through the deal i had my comps i had my total rehab numbers i thought i had like everything and he says to me and this is this is a really smart guy he and i knew him really well he put his arm around me way older than me i was like 27 28 at the time he put his arm around me he said uh what's the downside what's the possible downside and here's what i said i said you know what there is no downside oh this deal is amazing and he put his arm around me said jerry there is always a downside and when you can see and understand the downside and when you can tell your investors what the possible downside is your money investors and then they can live with that now you'll gain their respect they'll want to give you their money because now they've got the full picture always look at the full picture i can't tell you how many times people say to me well the value's here and here's my comps and they cherry pick the comps they don't have their eyes open oh yeah they're on paper they're making the deal work and all they're doing is setting themselves up to fail right take the emotion out be real about what could happen and what and the good that could happen but the bad that could happen and pace and are both looking at this going no matter what happens we're getting our money back and at the end of the day if we get in a deal and at least we get our money back that's i can live with that right i can live with that yeah so now we're moving forward okay so i hope this makes sense i hope you grasp all these numbers i think pace we did a pretty good job showing how this deal works again if some of this is like foreign to you or it's not all clicking go back through watch it make sure you go to subtwo.com you can learn a whole lot more about this strategy get my creative financing hacks oh and because you stayed this long we have a really special treat for you let's tell you about that right now and that is pace recorded the entire conversation it's an hour-long conversation with the seller and his wife at the kitchen table we're gonna give that to you for free i'll put the link it'll it'll be included with my creative financing hack so when you go to that link it'll be in there it's the audio i'm telling you guys it's so cool listen to it because you'll see again how we put all of this together and how to position that with a seller it's one thing for you and i to sit here and understand these numbers that's another thing to help the seller understand that worst case best case what he really is getting into how we're helping him we had to really help him understand why this is a win-win it's a win for you it's a win for us we are not predatory we are not taking advantage of you we are helping you pace told him you know right now we're the savior but in 12 months we're the devil right and that's because if he doesn't do things which we're giving him all the opportunity to do it then he will lose that property again right right and he will walk away with nothing now he'll have gotten 12 months of reprieve but he needs to understand that and you need to be able to convey that in an effective way with sellers what i like about your channel the most is that you spend a lot of time actually calling people recording it it is a lot of work to do that yeah it is a tremendous amount of work to do that and this time we got an entire conversation from us walking to the property you can hear us sitting down at the table you can hear us leaving the property and saying goodbye so start to finish we recorded the entire conversation it's game changing when you can actually hear what people are saying i wish it was video but he would not have that well he was not happy he was not happy about any video so so anyway get that it's in the links in the description uh get that creative financing that'll come with that huge value for you guys so so pace now here we are this we met with him yesterday clocks ticking you know there's only a small amount of time to even get this deal done it's go time now what are the next steps so we need to open escrow today so what we need to do is jerry and myself are going to get rachelle jarvis who's my transaction coordinator highly trained in handling these types of transactions and the paperwork associated with them we're going to get her on the phone describe the deal have her put all the paperwork together and then jerry and myself are going to call the seller once he receives that email and present the offer to him and see if he has any questions that's right now this video has gone long guys so we're going to stop this video now we're going to do that as part two i think would be a good idea so stay tuned for part two uh like like pace just said we're gonna get on the phone with this girl we're gonna get escrow open all of that explained to her you're gonna hear again what's gonna be great is you're gonna hear pace explain to his people here's all the things that have to happen the contract's going to go over to don we're going to pick up the phone call don make sure he's clear on it that's got to be the next step for this deal to move forward where else are you going to learn this stuff step by step guys this is nowhere yep all right if you haven't yet make sure you subscribe to the channel and we'll see you guys on the next video what do i normally say uh let me do it again you want your scripting how many times have i said this so you think i wouldn't need it when was the last time i told you i appreciated you you're so great at that you tell me that all the time i appreciate you you deserve it every time i'm on the phone with you i'm like did i tell her how amazing she is today