Mastering Creative Financing in Real Estate with Chris Prefontaine

Imagine transforming your approach to real estate after a major financial crash - sounds daunting, right? Today, we're talking to Chris Prefontaine of  @wickedsmartinc a real estate veteran, who did just that after the 2008 economic downturn, shifting gears to focus on creative financing. His insights are bound to leave you inspired and equipped with new perspectives on navigating the industry.

Through our conversation, we reveal tried and true negotiation strategies, providing you with the tools to craft deals that are mutually beneficial. Get ready for an informative deep dive into owner financing, and discover how to utilize it for real estate purchases. We also discuss the potential benefits of rent-to-own property arrangements for landlords and tenants, and introduce you to automated platforms like PropSparsity, designed to streamline your real estate processes.

But our conversation doesn't just stop at strategies. Chris shares his long-term outlook on successful real estate investing, emphasizing the importance of providing value to clients. We also hear from Dan, another industry veteran, about how to face common objections and identify lucrative deals. Chris concludes by shedding light on working with various types of investors, and the importance of strong contracts for rental properties. This episode is packed with valuable nuggets of wisdom for both seasoned and aspiring real estate enthusiasts. So, are you ready to embark on this knowledge-rich journey with us?

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Real Estate, Real Estate Investing, Creative Financing, Negotiation Strategies, Investment Strategies, Process, Rent-to-Own Property, Challenges, Success, Current Investors, New Investors, Owner Financing, Hybrid Deals, Subject-to Deals, Expired Listings, For Rent by Owner, PropSparsity, Automation, Marketing, Rent Collection, Debt Payment, Permits, Long-Term Outlook, Master in the Field, Providing Value, Keystone Objections, Sub-Two Deals, Solid Contracts, Seller Financing, Land Contracts, Acquisition, Disposition, Lead Generation, Leads

Transcript

0:00:01 - Marcus
All right, welcome back to this week's episode of MVP Real Estate podcast. I apologize. Season three, episode 19. We have Yeah, Steve Prefontein, we are guessing out of Boston, yeah that's right. Correct, it's Chris. Steve is the runner. I apologize, Chris. Oh good, my fault, but thanks for coming on the show. Thanks for giving us time. We are very excited to have you on the show. 

0:00:30 - Chris Prefontaine
You bet, I'm happy to be here. Let's dive in. Hopefully we'll input some nuggets while we're chatting away. Awesome. 

0:00:36 - Marcus
I always start off the show with getting a little bit of background from our guests. So can you give us a little like 30 second, one minute kind of background of where you came from and how you got to the wonderful world of real estate? 

0:00:48 - Chris Prefontaine
Yeah, I'm from New England so I can talk fast. I'll go. This month is 32 years that I've been in the biz, so I'll do a thumbnail sketch. In the mid-90s, we built homes on infill lots onesie, twosies but without knowing it, I was in my 20s, we were naive, so I would go to the build, the homeowner, the landowner and all the vendors, all the lumber supplies, everyone and I'd ask them all the wait till the end when we pre-sold the home and closed on it. I've even thinking now I don't know if I'd do that, but it worked. The economy supported that. Everybody waited for the money like 120 days, which was crazy. 

Then I bought a real estate executive franchise in the mid-90s, sold at the Coal Banker in 2000, and then from 2000 to 2008, I had my own investments going, and I also coached people throughout US and Canada, but then the debacle hit in 2008. So that's what kind of turned my world upside down in a big way financially, mentally, like it was stressful. That, though, was the impetus to do what we're doing today, which was change everything to create a real estate. I just was brain dead from banks coming after me because I had signed personally. Right, that's what I thought you did. I had good credit so I did it. We do it again and that's what we do today. When I say we, we have a family company in New England. Son, son-in-law, my daughter, my wife's always involved and we buy homes creatively like we'll probably chat about, and then we teach that all around North America, mostly United States, where we don't just teach it or sell something, we actually do deals in the trenches with students. So we're revenue sharing, so we're in it together. 

You know we're in the same zone, and that's how it's the best way to learn, in my opinion. So that's what we're doing, and that was, I don't know, two or three minutes of 32 years. 

0:02:22 - Marcus
That was a fast. A fast through two years In my short stint in customer service. When I got put on the Northeast team I knew I had to pick up my day. I had some extra coffee so I could keep up with everybody. At first I thought everybody was super rude because I would have somebody call and they're like I need XYZ. And then they'd hang up the phone and I went to my manager. I was like I think everybody in the Northeast just hates me. They're like no, they just, they've got their business, they're going to get it done. They're going to get off the phone. And I was like all right, I just got to. I got to kick, kick up a gear here. 

0:02:54 - Chris Prefontaine
Yeah, that's always my disclosure at the events and, like tomorrow, I run a workshop. There'd be a few hundred people on it, but that's my, my, my pre-disclosure. 

0:03:02 - Marcus
No, it's good. I will try to stay with you as much as I can. I'm going to tune up back to a few years ago. So you started with with your own real estate. Do you still continue to buy and sell real estate or have you switched to now coaching full time? 

0:03:18 - Chris Prefontaine
No, we do still. Yeah, I think it's important for a lot of reasons. One creative is always like there's no one deal the same, so I don't give boys as soon as I get bored. I'd probably stop, but it's never, because all the deals are different than with the ways we buy. And then I love working with my son and son-in-law, so that makes it nice too. And then it's nice because then we keep our finger on the pulse and if a change comes up or a law, or we screw up which happens obviously then we bring it to the community, the Wicked, smart community, and we go hey guys, here's another lesson. And we tweak the contracts or whatever we got to do, and everybody wins. 

0:03:48 - Marcus
Yeah, no, that's. That is awesome. It's super cool that you can pull in the family with it too. Makes the team a lot stronger. 

0:03:54 - Chris Prefontaine
Yeah, yeah, for sure. 

0:03:56 - Marcus
So if you can think back to, let's go from your beginnings, where you used to personally sign for all your loans and then you switched into getting creative financing. That's a financing option that not many people know of or take advantage of. So if you can think back to your beginning of how you were going to get into that, what was your, what was your mindset shift? Or how did you, how did you gather resources enough to think like, okay, this is a reasonable avenue for us to take. It wasn't very popular back when you had started. So what was that gear shift in your head of like, all right, this is the direction we're going to go. I feel confident, I feel safe, secure. And then, obviously, you have to go and meet these people that can do the creative financing. 

0:04:41 - Chris Prefontaine
Yeah, a couple of things Now. First is I agree it's not as mainstream back then, but I mean, if you research it, I read the what's the book, the Vanderbilt story, by Anderson Cooper. It was about his family, but I read it only because I'm not necessarily a fan of his, but I read it because in New Port, rhode Island is where you know the Vanderbilt and all the, all those mansions are built. So I thought that was cool. It's right across the way here. And he talked about in that book how his family did owner financing in lease. They called it master lease purchase in the 1600s, before bank. So it's not like when a cellist says to me oh, I never heard that. Go, okay, well, listen, it's been around a long time before me and you. So that's number one. 

Number two the impetus for me was I said I was brain dead. That's an understatement. I got beat up pretty badly and so I almost didn't go back in a real estate. And I said, if I was to, what would be the criteria? And one of the criteria was I'm not signing personally ever again, because a bank actually did their job, no offense. But they got to come after you, right, the banks and the attorneys. So I wasn't going to put myself in that spot anymore. So you compare that going to sleep at night worrying about that to midst of COVID, like peak of COVID. We had 72, our family not the students had 72 properties we were carrying under terms created real estate. I didn't have a headache at all because they had buyers in the home that take care of the homes, with a couple of exceptions and I was not on one loan personally. That's dramatically different than pre-08. Dramatic. I just do not stay up worrying about that stuff anymore. 

0:06:09 - Marcus
Awesome, interesting. And you said you've got buyers in the home, so these homes are. Are they leased to purchase or how are you? 

0:06:16 - Chris Prefontaine
Yeah, they. So three ways. You buy only and creative us At least purchases one, my preferred is to own it. So owner financing and subject to existing financing, those are the only three ways you buy. Of course there's offshoots right of all that, but those three ways. 

And then we put in the home a rent to own buyer, who is a true buyer and where everybody screws this up and they talk about it, open them podcasts. They'll say, oh, I put a buyer in my home and I don't care if they cash out or not, I'll just put another one in, collect another check, more lenient. It's awful because we want to set the buyers up to win. My son, nick, has been handling that since, oh gosh, almost 10 years now and he's very strict on who he puts in. They're a true buyer, they may be from COVID, went and started their own business and now they need time. Right, the bank calls it seasoning. Two years More. They change jobs. They need two years or the rates just went up and kicked everybody to the sidewalk. The buyers, they need time again, time to save for down payment. So these are all good buyers If you look at you. 

Talk to any mortgage broker guys. We have one in our community does lots of loans and has for a lot of years he said 17% of his applications right now being qualified. That's it, 17. Wow. So what about the other 83%? They're not all great, but in that pool there are some great buyers. That's who we put in homes and that's why during COVID did we have some yes, four of them did took advantage of the whole thing going on and would federally went oh, I have to pay these guys. But they also lost their option to buy. So we eventually got their butt out of there, but everyone else. 

Can you imagine if your landlord had 72 homes? You'd be low stress during COVID. We weren't. 

0:07:45 - Dan
Yeah, that's really nice that is like six or 7%, only that you had to worry about out of the 72, something like that it's two to 10. 

0:07:52 - Chris Prefontaine
And actually two to 10 is that rate. So you spot on. It's about what happened two to 10 default rate. And why is that? Because of COVID. That was one thing, but life happens, right. I mean, we've had divorce, death, all kinds of stuff, and it just happens. It's sad on some occasions, but it just happens. And that's not a bad default rate. I don't know what the government loans are, but I don't even think. I think they're higher than that for default rate. 

0:08:13 - Marcus
I would imagine they'd be higher than that. Yeah, absolutely. And that like the default rate, yes, it's, it's a business and it's not a good stat you want. But the weird thing about real estate and I always mention this to people like, yes, it is a business, but you're dealing with people and people have issues and you never know what's going to happen and with our, with our purchasing and our, our kind of avenue, that we go down, we go through like auctions and decrepit properties. We like to pick up the worst property on a really nice block and fix it up. Sometimes they go to auctions for all different reasons and sometimes you have to talk and deal with old homeowners who are going through medical problems. It's no fault to their own, they just can't keep up with everything and that's where it all falls. You try to make it as personal as possible and as professional as possible, but you try to blend the person in the business and sometimes it gets a little hairy. 

0:09:09 - Chris Prefontaine
All we do to that point in the market is people say how do you convince them? Like this building that I'm sitting in, I bought owner financing. It closed last week. I sold it, but I bought it without going through commercial underwriting and all the crappy go through. So you don't convince them. What do you do? You either solve a problem to your point there or you help them accomplish a goal that otherwise they weren't getting from conventional market. 

In the case of owner financing, for example, this building was an example of it we talk with owners who are free and clear. There's no mortgage, so different from a sub two deal where you're buying and they usually stress A free and clear is like okay, well, I want my number because I don't need the money tomorrow, so I want my number. He wanted his number, this guy. So okay, I'll give you a number if I get my term. And we negotiated out a win-win and I did very well on it, but I also had a 20 year term. I didn't have to sell, I bought an 18. I just got a really good offer and moved on. But the point is, when you're dealing with sub two deals or at least purchase, sometimes it's you're solving a problem, stress financial another. And when you deal with free and clear, you help them accomplish a goal they're not stressed. 

They presumably would have taken their money out if they were stressed. So two different avatars there and it's nice to have them mix in your business. 

0:10:19 - Marcus
Yeah, and do you know, going into a deal with all of your due diligence on your property? Do you know, going in it's going to be subject to, or that there is financing on it, or is that kind of like, hey, are you interested in selling? And then you open up that door and you talk to them a little bit fact find from there. 

0:10:36 - Chris Prefontaine
Yeah, good question. Because when we pick up the phone, let's say Dan's a lead, I might know from my retro assistant calling him first that he has a mortgage or not, and usually they're accurate, and it might know his reason for selling. But I don't know yet if he'll be, if he has a mortgage, if he'll be able to purchase or a sub two, I don't know yet. Or there's a high. One of my students calls it a hybrid. He's in New Hampshire. He's done five deals. Where he did there was there was debt, but they wanted out. They didn't want to purchase, they wanted out. So he also tacked on some owner financing to that which was no payments, no interest for like five years. So that that's a hybrid. 

All these deals can be mixed and blended too. You don't usually know till you get in there if they're free and clear. Am I going for 100%? Yeah, I want to go do owner financing. Yeah, if they will, when there's a stress, a stress problem with finances, though they're behind the two payments, though I kind of know I'm going sub two. Yeah, they need relief tomorrow. Yeah, I'm not really I'm not relieving them if I can't own it. You know so. 

0:11:28 - Marcus
Yeah, and that obviously comes with with time. Going through these deals you can kind of recognize where it's going to lead and where it's going to go. 

0:11:35 - Chris Prefontaine
Yeah, I'll give you an example for new students. Brian O'Neill is a superstar in our communities in Chicago and he came in November 19, like right before COVID, his first eight or nine deals he did lease purchase. Well, it's because he was brand new, never did houses before. He's an elevator salesman for literally 17, 18 years. But he knew one thing I'm not taking title, the agreements are built in with $10 deposit, like this sounds easy, right, until such time. He understood after eight or nine of these and he built up a three-payday system like almost 900 grand, like nobody would feel bad for him. But he figured out, wow, I want to own these. And he said to me at that point I'm not doing anything else, I can do sub two owner financing now because so many advantages and so much control and so much more profitable. 

0:12:15 - Marcus
Yeah, and that is a. It's a little niche of real estate that a lot of people on the sell side and the buy side aren't really comfortable with. I know I've approached a couple people in. I brought up owner financing and I didn't really know about subject to at the time. But I brought up, like a land contractor, owner financing and that kind of killed the deal. They felt like it was kind of scammy and that just comes with educating them and at that point early on in my career I wasn't educated enough to give them that they came across like oh, I don't know about this. 

0:12:50 - Chris Prefontaine
So this is. It's usually their confidence or lack of in the call. That's all that is. And you just said you were new, that's all it is. I just don't get that right. Yeah, and the new students will call for that stuff. They'll. Oh, they hung up on me. They told me this because you used the wrong script and you screamed that you're not confident. 

0:13:05 - Marcus
Yeah, and I'll blatantly, I'll admit that one Early on in the career. It was an option that I don't know, I couldn't even remember exactly what was said, but that if they were interested in that we could explore the option, and at that point that it kind of derailed the conversation on that one I'll give you some nuggets, marcus and Dan, and then the listeners can literally try this. 

0:13:29 - Chris Prefontaine
Tomorrow. People try to give a seminar. Like, oh, I got to teach them, I got to tell them about it. No, you don't, you don't do anything. You got to know where, when, why, where? Like, if I call an expiry, jeez, where were you going? If it's sold, they had plans right, expire lists, frisbo. Where are you going? If it's like, if you went outside today and you talk to your neighbor, they had a sale site, you wouldn't go give them a seminar. You go hey, where are you going? Oh, cool, why, why, when do you need to be there? That's what you'd say. So you'd say to a seller. 

You find out those three things, you know if they're going to be a fit. And then what? What if it doesn't happen? Like, what's your plan? Be Normal conversation that you would have with a neighbor. When you do these four things you. You kind of know if they're motivated or not, because they just loaded everything out. 

0:14:10 - Marcus
Yeah, and I, like all those questions were open ended. I was watching through your Instagram. You had a couple of reels where it was like avoiding the yes or no questions because they'll shoot it down in. With me and Dan, we actually worked prior to MVP in sales and that was one thing that we never did was yes or no questions. 

0:14:28 - Chris Prefontaine
Because at least gets it choice either Cause. 

0:14:30 - Marcus
that's kind of a yes or no. Right, it is yeah, but always asking the why and having them explain in, avoiding the either the yes or the no right away, because then it stops the conversation. And when you were having that dialogue with the theoretical neighbor it was always open-ended questions so they could answer and keep talking. So first hit bit I got from you right, there was the open-ended questions. 

0:14:55 - Chris Prefontaine
So open-ended and after you answer is another one of Ron's scripts, right In case someone wants to run with some nuggets. See, they'll ask a question like, well, how does that benefit me? And the student will take it defensively I can't wait till they ask. That means they're interested trying to dig and figure you out, and so when they ask that, answer the question, move on. Don't answer the question and give a 40-minute seminar, like I literally say stop your buyer seminar or your seller seminar. Answer the question, act like it's not there anymore and go to the next one. They'll forget it. They don't dwell on it. You dwell on it because you're not confident. That's all it is. 

0:15:26 - Marcus
Yeah, and these scripts that you're referencing for your students are these scripts that you've tailored through your conversations, through your personal experience, and then expand them into the class. 

0:15:38 - Chris Prefontaine
Yeah, we just recently. So we have a course that we update nonstop, like it's a living, breathing thing online. And at our recent event last week, we had our twice a year event and on stage were the top three coaches and they did script work. We did call it script school and it was by far the most popular thing we did. And then we announced that all those newer simplified scripts are getting put into the course and people were ecstatic. So, yeah, it's what we constantly do. 

0:16:00 - Marcus
Yeah, and I like that. I think some of that stuff was on your website, if I'm not mistaken. Not the actual templates of them, but explanations they might. I thought they were and I glance briefly at those, but it was when I got into the. It's called Wicked Smart Academy, correct? Is the educational place? That's where all the stuff lives. Yeah, yeah, awesome. Where did you come up with the name on that one, Because it sticks out in my head. I like it. 

0:16:31 - Chris Prefontaine
My wife thought of Smart Real Estate Coach back in like 13 or 14 whenever I launched officially, when people kept just asking for help. And then over the years, because it's New England, we've been trying to get the Wicked. Smart thought we never could got a trademark, got the LLC. So we finally got it all done and got a trademarked and ran with it just because of New England. 

0:16:50 - Marcus
Oh, I like it, the ties to the East Coast, yeah, yeah, and when did that start? I'm trying to connect. Watch the Wicked. 

0:16:57 - Chris Prefontaine
Smart change. We rebranded to that, probably before COVID 18-ish maybe. 

0:17:04 - Marcus
Okay, awesome. And how have you built that from numbers, wise, or? Obviously you're putting on seminars now, so you've gotten growth, which is awesome, and just speaking to you for the last 20 minutes, I can see why. So where has that gone in terms of your membership and how has the growth been over the years with that? 

0:17:26 - Chris Prefontaine
Yeah, we've grown every year. I mean my first year I think we did. We just announced this at one of the private things. I think it'd be like 14 grand in sales and back in 13 or 14. We hit Inc 5,000 past grown companies in the US the last three years. We'll go surpass 5 million this year. It's because we're in the trenches and we care. When people come to events they go oh, wow, yeah, that's what you said you guys do. We just care. It's family oriented and I mean the coaches too, not just our family. Like everyone's got that family vibe there. Everybody cares. The amount of deals and help that went on at that event, for example, is through the roof. Like the coaches are there and they see you, they want to help you, they do them calls for you to your sellers. That stuff doesn't exist at events, it just doesn't. They're usually fluff. 

0:18:05 - Marcus
Yeah, I've been to a lot of those fluff seminars where they just get you emotionally riled up and then they're like, all right, see ya, and then it's just slowly tapers. 

0:18:15 - Chris Prefontaine
You and I and Dan, we've all been in seminars where you know what you're doing there. 

0:18:19 - Dan
They got a pitch right, so we don't. 

0:18:21 - Chris Prefontaine
It's probably our style, like just the blend style. We talk all the time I say hit some resources if you want, if you don't, we're going either way. Yeah, it's not about pitching. 

0:18:31 - Marcus
Yeah, now, with you and your career, now that you're doing real estate actively and you're coaching, which one do you prefer better? Because I feel like your time is kind of split. Yeah, they're different. 

0:18:43 - Chris Prefontaine
I like pieces of both. Okay, so in our company as it grew, my son a lot of loves scaling and meeting the people and doing the teams Nick loves. My son loves doing the buyers. I love just getting the trenches and doing deals. So I coached a higher level students and now they put me back in. They, the whole team thought it was best that I talk with the coaches because then they can help them do more deals, right? So I like stuff I don't prefer, frankly building and scaling. My son a lot loves it. So it's a nice organic mix, nice. 

0:19:11 - Marcus
That is awesome. And I have to backtrack a little bit with my next question, because when Dan jumped on, we both had we're listening to. The bigger pockets podcast is the one that I started listening to. That got me into real estate. Are you familiar with that podcast at all? Okay, so they had a guest on that talked all about subject to and he only does subject to deals and I had no idea what it was. So I started Googling. I find him on social media that subject to For me. When I first learned about it it seemed risky for me and I couldn't understand how I could get a buyer on board with that technique. What is? Do you have like some keystone or like some objections that stick out in your head when you talk to buyers about subject to or this can go into land contracts or owner financing that always come up that you kind of coach your real estate investors to answer? 

0:20:16 - Chris Prefontaine
you mean to sell aside, trying to talk to them about it. 

0:20:19 - Marcus
Yeah, as they would sell. Yes, correct, so us buying no one thing. 

0:20:25 - Chris Prefontaine
No, it goes back to why they selling and if I can fix it Right. Yeah, let me give you some examples. I think it's always best theory. Recently near here there was a couple that my son a lot found this one that had a nice house, like towards Cape Cod it's a resort area and they must have watched HGTV and they fixed house up and they leverage all the credit cards to do it and it was in good shape. But they then they got to us and one was on the title, one was on the loan, so that was split. It was not amical, so that was split. So they were like $4,100 in arrears. They couldn't sell it with a realtor. So what was the fix? If they went one more month, they're going to be in pre-foreclosure. So the conversation was super easy. It was. It was we can do a, b and c. If it's of interest, let us know Like there's no convincing right and we can act fast. The realtor already tried you for six months. You want to list that again? You know you go through the whole process again, so that was easy. When it's free and clear again, it's like the building here, what the building I bought here. 

Why did he do it? Tax planning he was free and clear tax planning and then estate planning. He since passed away. I think in hindsight he knew something was up. So instead of leaving his wife and his son a building and possibly a headache, he left them a cash flow stream. You think about it? Yeah, now again, we closed this last week, which was a surprise. I wasn't going to do it, and she got a nice chunk of chain right Cause we paid her up. 

But everyone's different. There's no one thing like oh yeah, here's the bullet. Just find out where, why and when and that'll give you your answer if you can fix it or not. Like if you say to me, marcus, we're on a call and you're the selling, you go. Yeah, I got like 20 grand equity. I, I'm the no hurry, uh and uh. But when I sell, move my money to Florida and I got to buy a house, I got to do that for my kids. Like, you're not a candidate for me? Yeah, and I say, just okay, marcus, if that doesn't work out, then I'm your plan B. So right away, I know if he, he or she needs his money. It's not for me. 

0:22:18 - Marcus
Yeah, and when you started with real estate, it's very, very hard to say it's not for me, because you want every deal and you'll take everything and you'll try to make it work. Where, with you being in it for for decades, understand that when a deal is in my bucket and in my scope, it's good, and if it's not, I just have to leave it. 

0:22:36 - Chris Prefontaine
Yeah, and on top of that, when you look at the three payday system that we, that we trade mark, they're not small deals Like. I'll give you an average across the country 45 grand is a low and that's like low end areas. I know of an outlier in Arizona and she does low end deals, but they goes up to a quarter of a million. One of our coaches is in Florida, two of our coaches are in California high end and there's other students out there. Well, their deals are like hundred grand deals all day long, every day, for all three paydays. So I mean seriously to every listen to how many of those you need to do. You're not going to find 10 a month, but how many do you need to do a year to go? Wow, I got money now because you do the money, cash flow and I got long term. I got all this in over five years. I can already see it. That's pretty cool. So you don't need to be like doing 40, 50, 60 deals a year. You need to do a good dozen. 

0:23:22 - Marcus
Yeah, and then, within your coaching, do you coach your investors into how to prospect for these people? Yeah, yeah. 

0:23:31 - Chris Prefontaine
We provide a lead source, we're going to get these leads, crms, everything we do personally. That's why it's important for the trenches. We just relay it to them. It's all show them our deals, help them with their deals. Just, we all do it together. 

0:23:44 - Dan
That was one of the questions I was going to ask is what's the acquisition process Like where do you find the deals? Or like is it expired listings, or you just have a lead generator that you use. 

0:23:55 - Chris Prefontaine
Yeah, we do so. There's a bunch of lead sources, but I mean one that we've literally had since 13. Dan is going to provide every day a live feed of expired listings for sale by owner, for rent by owner. Now, if you're in an area where, for whatever reason, your goals are super aggressive, you not getting enough leads to accomplish your goals because I know how many you'll need by you telling me your goals, or you just are in a sparse area where you go hey Chris, I'm not getting many fizz bowls or expiryants happening. Okay, Now we'll go inside that and go All right. What kind of niche list do we need? 

I love free and clear. I love out of state and free and clear in particular, and I would call those lists all day long because they're a pleasure to deal with, Especially after COVID. By the way, you get these people that own these products. They're like I'm done, and so those are great lists and there's plenty of people. Look, a third of the properties in US ballpark are free and clear. A third Not a bad pool to fish in. 

0:24:48 - Marcus
Yeah, this and they're they're probably very, very willing sellers to, like you were open, they get it yeah. 

0:24:55 - Chris Prefontaine
I go. This guy for this building goes. Chris, I'm into math. I find this fascinating. Now he's in this. He was like 71 at the time, so you know they did something right to be free and clear in their life, right. Right and the thing is pretty cool. Give me my price, I'll wait. There's a lot of ego with the price. I think, like they, they're fine. So like I saw my number, okay, then I need my turn. 

0:25:17 - Marcus
Yeah, and that is the same thing that Pace says. He's like I'll give you your number, but I need the terms. Yep, cool stuff that was Sorry. 

0:25:29 - Dan
I mean interject one more thing like so when you have you said you have your three financing types, please purchase owner financing or subject to. When you have the subject to property, do you then just like rent it out in place of tenant, like what it? What do you do with the property once you have it? That like just? 

0:25:45 - Chris Prefontaine
99% of them did not. Not to get too advanced is and I can make a couple comments on the advanced, but 90% of my rent on where we set that success rate up. We have them set to win. So I've that's that failure rate of two to ten. Where you bring anyone else on this show Some of the big names, everybody knows they will say to you that they convert only two to twenty percent success rate. That I feel bad for the buyers doing that yeah it's not up to feel. 

So we're the complete in brush relationship. It's not easy, it's more work, but they gotta thank you for it. 

0:26:17 - Dan
Okay, yeah, makes sense. 

0:26:20 - Marcus
So then you. 

0:26:20 - Dan
You said you set the terms and obviously the price with the subject to or the the Free and clears, and then they basically get to walk away. They just receive whatever the the terms are that you stipulate you own the property. You then place the rent to own Correct third party. Okay. 

0:26:40 - Chris Prefontaine
Yep, and then we, you know, third party on purpose for liability and success reasons. There's a third party that will go through the if it's currently purely need or seasoning, they need whatever it is. Yeah, that is it. There's a debt to income and ETI statement they sign. So there's a plan like okay, marcus, you're our new buyer. Listen, I'm not your landlord, you're gonna treat the house, you're gonna behave like you're an owner. You're gonna capture equity or lose equity as an owner. You, you're a buyer, you just have a mortgage. It that's the conversation we have. And then they know their plan is to get mortgage ready if they screw it up. They didn't go to the plan. 

0:27:09 - Dan
Yeah. 

0:27:10 - Chris Prefontaine
Yeah, that's why we're pretty strict with it. 

0:27:12 - Dan
So one night, I don't want to get too much into your process. Do you then ask those rent to owners? Do you ask them to put like a down payment down so that they have something into the okay? I? 

0:27:22 - Chris Prefontaine
Paid it. The street paydays we trade. My payday one is they're putting it down, payment down because remember their buyer? Yeah, they came through Kobe, they left corporate America a lot of these people are coming to us and they went and started their own business and they go oh, I can't get along like they don't realize that the bank needs usually two years of Seasoning. Yeah, so if they were ready, they probably have the down payment right. If they don't have a down payment, they weren't buyer. 

0:27:41 - Dan
They weren't ready. 

0:27:42 - Chris Prefontaine
So payday one down payment. Payday two the delta between what I'm paying on the underlying debt or to the seller like with this Billion was the seller and what I'm paying my tenant buyer in the house is a delta there. It's like 300 to a thousand a month per property. At that peak I told you about, we were up to like 28 grand a month just a net, net paydays. Nice, how to get that spitting out with an investment in the bank. It's a lot of money. 

It's a lot of probably I know 10 million, wherever it is. And then payday three is really cool. Payday three is, throughout the term of the pro of the project at that property, this principal paydown happening, whether it's an underlying loan or free and clear, it's all principal. Well, at the end, that all occurs to you. You're getting up, you're getting all that out of. Then you can pay it. It was paid by, technically, your buyer and then in any markup. So when I said some of these hiring deals, like a hundred grand, 200 grand, the payday three is pretty hefty, especially on a financing, because you're getting hammered principal. 

0:28:33 - Marcus
Yeah, okay, I had a question on because this rent to own stuff. I know my dad had dabbled in it a couple years ago. I still have all of his literature and his Training courses for rent to own. It's somewhere where I would like to go because, with all my tenants, like a good day for me Is if you are leaving and you bought a house, like that's a plus for you. I think owning a house is better than renting, right. I'm glad I could fill a need for you, but I truly want you to own your own house right. But I know that it's different from what we do and it's a different process that I don't feel like I am knowledgeable enough to offer that, which is a good thing that you're here, because I've got so many questions and we'll talk after the show on that one. Um you couldn't should. 

0:29:21 - Chris Prefontaine
I don't know how many rentals you have, but we have students that come in and per their contract. Even though we rev she, they're allowed to just bring one to the table. Help them do it, and yeah. Jose recently did it in Detroit. Jose Literally had a turnover that was not so pleasant and he's gonna rent it again. Be okay, but we created three paydays. I think it was like 83 grand. It's on YouTube. We put these all on YouTube. It's public knowledge. But it's a lot better than being a landlord. 

0:29:47 - Marcus
Yes, the turnovers are a little bit stressful. 

0:29:50 - Dan
Yeah. 

0:29:52 - Marcus
But my question with that is when do you find your? I'll call them buyers because they're not tenants. So where do you get those pool of people? Because it For the most amount, or for the 99% of people they look on apartmentscom or realtorcom for rental and then they just go, they sign their lease and then they're done. 

0:30:12 - Chris Prefontaine
A couple things. First of all, our ads awarded something like Nick does it, my son, you know rent on no banks or owner financing, sometimes with the buyers if they're stronger For a worthy buyer with a strong down payment. That's so it's worded. And then we used to post manually years ago to things like Craigslist rent links do it all ourselves. Now there's a company called prop sparrity Propsperity. 

When you get a property in a contract, not only you plug it into the system they market, they hit like 32 portals. We couldn't hit that many the leads like six times what we used to get. They do all that. Once you put the tenant buyer there, they act like an escrow company. They collect the rent on a portal like the rent, pay the underlying debt, drop the difference in your account. It's all done. You can do what you do best now. For years we had to do it manually my son and I and the team and when that came about, prop sparrity came about like gosh only two years ago during COVID and we latched on to them because I knew those escrow companies to do that and I knew there was marketing companies Never one that didn't both. It's plug-and-play. 

0:31:16 - Marcus
Yeah, because right now we have just the CRM. There's no like automation to it. So if, if I'm managing, or if we're managing a property that we don't own for another owner, if, if we've got a 6% management fee, we have to go in manually and separate the charges and link it to accounts. It doesn't just automatically do that, so that company. I wrote that down because I was about to press. 

0:31:41 - Dan
Are you doing it? 

0:31:43 - Chris Prefontaine
If you hit the team and I'll make a note here, guys, if you hit the team, tell me, get you in touch with Nathan. From prop sparrity Nathan, yeah, this came about because Nathan was in our community. He's like hey, guys, you're doing a lot of work, and then he started that. 

0:31:57 - Marcus
That's awesome and I'm gonna do some more research. But just one quick question on that that's not exclusive just to rent to own right. If I had my own tenants of houses, that I'm gonna keep. It doesn't need to be that. 

0:32:08 - Chris Prefontaine
Nope, you know, you don't have to be not community, you don't have to be retown, you can. Just it can be held as a management software. Yep management company interesting. 

0:32:15 - Marcus
Yeah, I like that and I, like you said it's new right, which is why I wouldn't have come up when I was researching, because I've had. I've had the service I've had now for I think four years. 

0:32:26 - Chris Prefontaine
Yeah five years now. Go to the. They did a name branding rebrand. Go to Nat and a T processing comm you'll find them. 

0:32:33 - Marcus
Okay. 

0:32:36 - Dan
Question regarding properties that you get that are in need of repair or updating. How do you handle that? 

0:32:43 - Chris Prefontaine
This is a good one, so we're working on right now. They got a home inspection back there was hideous and it's my student right in Boston actually. So it depends DN. First of all, is it habitable? If it's habitable, I Can still take it, not spend ten cents on it. Put it back out to the market as a rent on. And why am I so confident of that? 

Picture all those sort of mom-and-pop or one-man shows that do rehab and fixer ups. They're usually not financeable, right, they don't show other income, they just do cash. They love rent on and you love them because they're gonna fix up your property for free. So we had a student, steve. He's now a coach. The well, the better. Students want to become coaches. So he's out in Connecticut. This house had unfinished baths, kitchen on the like upside-down plan. The thing was like with he he closed on its up to to help the seller who couldn't sell it. He then put a family in it like the next week on a rent on contract, went by the house next day it was wife. That had to be 12 people there working, tiling, bath, of everything, because they were in that biz. But they weren't financeable. A lot of people remember that 83% number. I said mm-hmm, if you threw a blanket over that 83%. There's a lot of people in there that are like contractors and fix. They can do that. Stop and they need. They need you and you need them. 

0:33:58 - Marcus
Yeah, do you ever worry about the, the owner of the new buyer, doing shoddy work, or they gotta be parking yeah, how do you, how do you navigate that one? 

0:34:11 - Chris Prefontaine
in the contract. They have to be permitted. It's not allowed a, b when it's that extensive, like I don't. This kid's gonna go through the deal that. We just saw the home inspection. It was pretty deep. We basically told the owner all the equity, thought you're getting, you're getting zero, buying us up to and you're gone. If he goes with it, the buyer, there'll be a list in the rent on contract. Roughly speaking, you're gonna accomplish this by this date, this by this day, because they're not giving you this price which is price? Well, it's price. To give you equity. Yeah, that if you're just gonna live there, run to the ground. Yeah, there's a contract. It's like a sweat equity contract. 

0:34:44 - Marcus
Yeah, cuz my worry would be that they're not gonna put, they'll cut some corners, not put the money in, not put the time in, and they come up short when they can actually get financed. Have you ever ran into an issue where they came up short and couldn't get financing at the end? I'm sure in the entire community. 

0:34:59 - Chris Prefontaine
We have it in our team, but now you gotta be strict with it up front? 

0:35:03 - Marcus
Yeah, and are you eyes on, like, do you have people Managing or not managing the project? But like keeping tabs on how things are going and in finance, owns or just other fixer uppers? 

0:35:13 - Chris Prefontaine
Just on the fixer uppers. Really on the fixer uppers you'd go by on purpose. For that reason, sure to self-check, but on the other ones we don't, unless we like haven't heard from someone or payment was late. They might do a drive-by or even ask for a walkthrough because in the contract says we can. 

0:35:27 - Marcus
We just don't bug people if everything's going sweet, you know yeah, yeah, those are some of the nuances that I don't think the newbies would catch, so that's a really good. 

0:35:37 - Chris Prefontaine
I, you know, I appreciate asking some people hi that I won't mention their name because everybody knows their name. But what one of the guys in our industry said? You're scaring people off because you tell them all this. I said, okay, but you're telling me in a seminar that everything's peachy. Yeah, I'm telling them this what's gonna happen? You want to do it? I'll help you do it, but it's gonna happen. So when my book to the chapter says what can go wrong? Right, list things. That's what made him do, that's what made him call me. It's like what are you doing that? 

0:36:01 - Dan
Yeah. 

0:36:02 - Marcus
I like that, so that was rainbows man, it's. 

0:36:05 - Dan
I like the nitty-gritty, real, real aspect of it all yeah, or else they quit. 

0:36:09 - Chris Prefontaine
Dan right, they go to seminar. They go oh, it's easy, I can do that and they go out and one deal goes sideways and they quit because they think it's their fault. It's not, it's called normal. 

0:36:17 - Marcus
Yeah, yeah and I think that's why gravitated to the bigger pockets podcast when I first started was because they were open about. This is not easy Money. This is not like set it and forget it and then you're just gonna be a millionaire right? 

0:36:32 - Chris Prefontaine
No, no, you won't. My webinar starts with if you're looking for that is a this kind of the wrong. You know there's no niche in real estate. Frankly, if you come into real estate thinking that and the ones that go from niche to niche to niche, this, this cycle is never gonna end, you aren't gonna have success. You've got to commit to this thing for three years. I don't it's pot times, okay, but you got to commit the three to seven years. 

Do you guys remember the name Brian Tracy? Some of the younger ones wouldn't know in his 80s now, but he was. He's written on no at 30, 40 books and science of selling and all kinds of psychology stuff. You love them as old stuff, but I had him on my show. He's still alive, but I have my show, like just before COVID, and I gave him my 3a philosophy of you gotta put blinders up for three years. I don't care who you're following, go follow you when you want, but don't deviate. And everyone usually goes yeah, that's a good plan. 

He said no, it's not enough. He says, chris, I'm 80, something is, he's 82. He said I've gone broke, I made fortunes, gone broke twice, he said. He said you need seven years and here's why. And he's on my pocket. If you go back and look at, he said, for the first two or three years you're gonna suck, I don't care what you're doing, I don't care if you're in real estate enough for the next two or three You're gonna feel like, okay, I'm adequate, I can do this and I'm also adequately compensated. And not until the last few of the seven-year cycle Will you feel like you're creating well. And then I thought back to all the stuff I've done, like Jesus, he's spot-on. So now I say three to seven instead of three. That's awesome. 

0:37:53 - Marcus
Yeah, and it does take time because there's so many things that that I've come across that I didn't think I would even get to touch on on that little nuance of real estate or this situation came up and what's super cool is that it's never the first time. There's always somebody out there that, okay, I came upon that, this is how we fix her, this is how I mitigated it in real estate. 

0:38:14 - Chris Prefontaine
You're spot-on because I here's another example of this you all you have to do is find someone who's doing what you want to do. That's it. It's like to and make sure that they morally have to get aligned with you and all that stuff. But, like, I've been through enough cycles and even personal you know Dramaren trauma my son went through. It was in a coma from a snowboard accident we had. Now, you know, there's all kinds of stuff we go through. So therefore I can on most occasions help people who hit those, those speed bumps. 

And I had a guy be a great guy for your show, david nurse. He's written two books. Young guy David was and still is an MBA optimization coach. So he works one-on-one With those players that come out of college or learning. You have to go to cut and then make an 810, 20 million in the NBA. This is we coaches. And he said on my show he said, chris, all we do, and not always, but he's, he gave me exactly. So all we do is we go on the internet. Okay, that's, that's amazing. And they find people that like, if there's a skill set he wants to work out with someone, he finds some new master, that and then they either meet that person or they model that behavior and they that's all they do is they drill that for the next six months, or yeah, whatever, it is that okay? So in real estate, why not do what you just said? Find someone has been through that and just figure it out that you know you're not having a new problem in real estate. 

0:39:28 - Dan
Trust me, like there here you are, and here you are with us. 

0:39:33 - Marcus
That's fun and you are. You become very good at problem solving, I'm sure through the the years of I default Academy yeah, by default, but you put yourself in that, in that ring, which is not a lot of people would, because, from what I see and this has been different from even when I started, because maybe I just wasn't into social media as much as I am now but you see all these coaches on Instagram like putting out content and like join my class and join my class, but it's always a short-ended. They just get people in the door and then they forget about them. No, I saw them and then they're like they. They paint the picture of I always called the Vegas nightclub. We're like everything is these flashing lights and it's a big party. 

But they forget to actually tell people like, hey, if you're gonna get into this business, it is difficult, it is hard, but we'll help you through this. 

0:40:27 - Chris Prefontaine
Yeah, I got a straight face. So there's a guy again I want to run one of the boss. He was on my show, I was, I've been on his, I've done seminars for his group until this happened. He said I said I'll offer you like, after we've done this show, will jump for a few seconds. I said what do you do with you? We are coaching clients. Do you need help? Like we do some JVN. 

He said I don't coach. He said Chris, I'm, I'm really good marker. And he told me the number of sales he does he, it was a big number, it was like way bigger than us and he and that's just from he's a good marketer online. Everybody's getting marketed by him right now. And he said, after that out, I don't care what they do. So they buy the product and, unfortunately, they go and get frustrated and then they find us, hopefully, or someone else right in the industry. There's a lot of good people and then they get trained the right way. It's sad, but so we suck at marketing. I'll tell you we're getting better, but we but not a marketer we now do deals. So when the marketing catches up, maybe people, more people, know about us. I. 

0:41:19 - Marcus
Like your marketing. I'll give you that feedback. I liked it. I was on Instagram looking through all your stuff the other night. 

0:41:28 - Chris Prefontaine
I can take credit. I couldn't tell you to get on. 

0:41:31 - Marcus
Yeah, that's why Dan's here. I couldn't tell you how to get out of mind. I couldn't tell you how long I couldn't reset my password for to get onto my own account. Yeah, and Dan was like yeah, I was on that today. So Instagram marketing not my thing, all right. So, though, I wanted to touch more on. 

0:41:52 - Dan
I think we got about five minutes left, just heads up. Oh, we only have five minutes. Yeah, all right. 

0:41:57 - Marcus
I said I noticed that five after, or ten ten and ten two. My bad. Well then, I just want to go into your book. That was kind of where I wanted to end it. Okay, is this your one and only book, or is this? I feel like this is a. You've written more. Yeah, we did. 

0:42:15 - Chris Prefontaine
Realize on your terms in 17. And then we were just Revising it and Kobe hit, which was kind of good in hindsight, so we kept going and revised it pretty current. So that's the new edition. It's out Everybody. We sent the link for your tribe. 

I'll give you that in a second so every listener can get it. And again, from a marketing standpoint, it's not here's my free book. And then put in money for shipping. We're gonna ship it for free right from this building. They'll get that book and they'll get deal structure overtime, which was basically, if you go to YouTube, there's all there's like I don't know what it's up to. It's over 200, maybe 240 deals that we post every week. Every Sunday, deal structure Sunday it's called so on there there's like the deals, but there's not like behind the curtain, like the nuances like we were talking about. So deal structure over time Goes more than that, like what went on here and how'd that have? So we send those out for free. I just go to wicked smart books. Wicked smart books comm forward, slash MVP and the numeric number one MVP one. 

0:43:07 - Marcus
Awesome, yeah, and we're gonna put that in the show notes too, because that that behind the scenes thing would be be very cool, because you get the concepts and even me being in real estate and Dan being in real estate the concepts you can get, but when it gets down to the actual Application or the behind the scenes of how it's structured, that's where it gets very, very gray and there's a lot of liability out there may not personally be to you because it's not on your name, like that kind of liability, but Still, if you don't do it right. 

Yeah, yeah. You're dealing with other people's lives and it needs to be structured correctly, and you need to check your boxes and Crushed he's got your eyes, yep. So that is important, important, so for you to take the second step and actually help these people through it, rather than just market them, get them in the class and then set them free. Major kudos to you for that one. 

0:43:56 - Chris Prefontaine
I appreciate it. I appreciate the feedback. 

0:43:58 - Marcus
That's awesome, but yeah, we will link that book up to the, the show notes to this one, and then we're also gonna put the links to your website and your Instagram on there as well, so you don't need to say those Are. Is the Instagram the best way to get ahold of you, or? 

0:44:16 - Chris Prefontaine
is it. We'll get it if they can go there, if they want to call, like I would do free calls with people. It's all about. It's not a sales call. It's all about what the heck's blocking you know? Like, what do you ideally want to do? And now we a nice fit. And how's that work? Just go to smart real estate coach, calm forward, slash action and they can set up a call. It's no charge. 

0:44:34 - Marcus
Awesome. And with that call do you deal with Obviously current investors? Would you take calls from people that are like, hey, I want to get into real estate but haven't started, don't know? Yeah, we do both. Okay, mostly I don't. 

0:44:46 - Chris Prefontaine
I honestly should know the number, but it's mostly newer people that come from corporate America and other that come to us. Or they're looking for a franchise or they're looking for a big building. Instead, they come and learn how to do this for life, you know. 

0:44:56 - Marcus
That's good and because I, like With this whole podcast, started with getting people interested in real estate, taking the next step get out of your W2, even if you like your W2 to have some sort of Investment, even if it's on the side, yeah, so I'm glad to hear that you'll take on new investors as well, people that are interested in them in the market. Well, I will let you go. We'll end the show there. We'll put that on the the show notes, but it's been awesome talking to you, chris, you too, guys, and I'm hoping we can get you back on. I love an on car. I will do it. Awesome. Thanks a lot. I appreciate it. Guys appreciate it. 

Transcribed by https://podium.page