#156 - From Active Deals to Passive Income with Chris Prefontaine

[00:00:00] Welcome back to Passive Income Pilots everyone, Tait Duryea and Ryan Gibson here for another week of financial education. What's up, Ryan? Oh man, I'm doing good. How are you? I think this is going to air the week leading up to Memorial Day weekend. So super excited to take the family on a trip, some backcountry flying. Amazing. And we're going to go down to a ranch actually in southern Idaho to do some bass fishing and hang out and spend some quality time with the kids and we're going to fly a sky wagon down there.

[00:00:29] And land on a little turf strip. That's so cool. Yeah, it's off airport technically. The kids must love that. Yeah, super fun. Incredible. Yeah, but today we're talking about maybe making that more possible for people, right? Which is how to be a little active real estate investor so that you can build up a passive portfolio. You know, one thing, Tait, we didn't get into the show and maybe we address this now is like going from active to passive, right?

[00:00:56] We talk a lot about on the show how you maybe you got to go build your nest egg, right? You got to go make some additional income so that you can go do passive things like debt funds and syndications and things that you can actually enjoy like monthly passive income and not actually have to work for it. Right. But we all know the truth to that, right? Which is you've got to put in the time and work, right? Unless you inherit all the money or something. That's different. But you actually got to go out and you actually got to do something right. So that's maybe having an illustrious airline career.

[00:01:22] Right. And save, you know, and that's fine. Right. That's one way to do it. We have great careers now. But another way to do it is like become your own active real estate investor. And so a lot of investors are just starving for information about how do you do that? Where do you even start? You know, what are the options out there? And so what we're doing today is we're just bringing you one of those options. Right. How to get plugged in and educated on something that gives you these options. Right. So absolutely. What do you take away from the show?

[00:01:47] Yeah. Today we have Chris Prefontaine. He was on the show back in on episode 97 talking about seller financing. And we did quite a bit of talking about creative financing on this one. What I love about this is, you know, this is how I started. I sort of went active in the beginning and then I became passive and then it became active again. I guess that's a precondition. But. There's a special place in this world for us crazy active real estate people. Crazy entrepreneurs. Yeah. I guess you just can't. You can't get away from it. It's in your blood.

[00:02:17] It's like airplanes. So. Like once you're in, you're in. You're not getting out of it. You're hooked. Exactly. But, you know, I did, I did a lot of active real estate investing early on my career and it, it built my net worth. It got my net worth and liquidity up and my cash flow up to a point where I could.

[00:02:33] But on top of my W2 at the airline, I was able to invest pretty aggressively in passive deals because I had, you know, taken the gloves off and got my hands dirty and bought properties and renovated and I created a lot of equity that way. So, you know, we joke that, that, you know, we talk a lot on the passive income pilots podcast about active investing, but it really is. You got to have active income to turn it into passive income. And so this is just another way to do that.

[00:03:02] But without further ado, let's get into it. Welcome to passive income pilots where pilots upgrade their money. This is the definitive source for personal finance and investment tactics for aviators. We interview world renowned experts and share these lessons with the flying community. So if you're ready for practical knowledge and insights, let's roll. Chris, welcome back to the show. Hey, thanks guys. Good to see you.

[00:03:31] Yeah, it's been a little over a year. And, you know, last time you were on, you were on episode 97. We were talking about seller financing, sub two, a little bit more niched strategies. So today we wanted to have you back on, you know, I know a lot of our listeners, we were talking about this before the show, are kind of getting hungry to get more involved. You know, a lot of them have, have made passive investments. They're the light bulbs starting to turn on. They're starting to understand this real estate alternative investing world.

[00:04:00] But a lot of them want to go out and maybe buy a short term rental or invest in a duplex or quad or something like that. So we wanted to have you back on talk about active versus passive. Ryan and I have talked about how a lot of times you kind of have to roll up your sleeves and get a little active before you can be completely passive. So we wanted to kind of talk about the journey from passive to active and then maybe out the other side. How do you unwind being super involved in real estate and rentals and all that sort of stuff?

[00:04:29] So with that, welcome back to the show, Chris. For anybody that did listen to episode 97, you want to give us a little bit more about your background? Yeah, I'll give 10,000 foot view. So as usual, so I don't put them asleep. But this is this fall is 35, 35 freaking years. I can't believe I'm saying that in the biz at some shape, form or fashion. So, yeah, we did. I did a lot of different niches that you guys even touch now on a broader scale.

[00:04:51] And then if I just bring it up to the crash of 08, right, the four years there that I was in my head in the sand, that headache was the impetus to do everything we're doing today, which is buying and selling without banks, without needing credit and creating three paydays on every deal, we call it. So we're in about 82 markets right now with students just like the three of us doing deals out there in the trenches. And that's pretty cool transition from it was just me and then organically it grew to that over the years. Amazing.

[00:05:18] I want to kind of put a nod back to Tate and what you've been doing, Chris, with seller financing. I want to get to that in a second. But, you know, me and Tate talk about passive income a little tongue in cheek because, you know, Tate and I are hardworking dudes and we're very active, right? So we've definitely taken the blue pill, you know, on going active and diving in. But, you know, here we are, we have a podcast, we preach passive income, right?

[00:05:41] And so, you know, we kind of fall on the sword for people who want to be passive and we go and find the operator and vet the deal and sign on a loan and do all the work, right? And so, but I know we've talked to our listeners who are like, look, you know, I've got this sweet schedule. I'm bored to tears. I want to learn how to be active. I want to go out and I want to spread my wings a little bit. And, you know, I always tell people when they're thinking about going active versus passive, you're undoubtedly going to potentially make a higher return actively.

[00:06:11] And when I say that, I mean, you're going to like if you just look at your spreadsheet and you look at what you made on your own and what I made for you in one of our deals, there's a good chance that your percentage number is going to be higher. But what's not in that is your ROI on your time. Depends on what you buy. Yeah. ROI on your time. No, I mean, because if you think about it. And then ROI on your time. Yeah. Because I mean, I just think we need to lay the foundation here like a little bit. Like you go pick up a green slip and you make five to ten thousand dollars.

[00:06:40] That might be what you make in one deal spending way more time than that green slip. Right. But maybe that deal brings you some kind of satisfaction that you now have been educated on how to do something and maybe even sharpens the knife for another deal. Now, so I just, you know, I think I think it's important. And I also think that if you're listening to the show and maybe you're a flight instructor and you have not made any money yet.

[00:07:03] And you're just like, you know, I want to I want to learn how to build up my income or my my savings so I can, you know, be a passive investor later on and enjoy the more ROI on life. And you have to be very active to do that. So you have to think about, you know, what can you do? How can you be educated to do these things? And that's why we brought Chris on. But I want to kind of underscore what Chris just said, which is I went through the great financial recession of 2008.

[00:07:33] And I get the sense that Chris had a few loans. And when the banks call the loans, it's not a very fun experience. And so what he's done and focused on for the last, I don't know, 15 years now since that time is how do you actually get financing without having to go to a traditional bank that would create a liability to expose you?

[00:07:55] Because I think, you know, when you think about doing deals on your own and you're active, not only are you doing all the work and putting in your time and dedicating that, but it typically means you're going and signing on some debt. And then you're obligating yourself to that debt. So if it goes wrong, guess what? Guess who's knocking on your door? The bank. And so you've got to think about this stuff. Like when you go into this, not only are, yeah, you're getting the better ROI and all that, but you're obligating yourself to debt. Right.

[00:08:24] And so anyway, Chris, I didn't want to steal your thunder on that, but I just wanted to, I didn't want to just glaze over like, you know, I've been doing this, you know, you just said you've been doing this for 35 years. And, you know, the GFC turned the rudder on your ship a lot into this whole seller financing world so that you could have less exposure to banks and creditors and things like that. So anyway, just wanted to make sure people listening kind of understand where we're coming from. Yeah.

[00:08:49] And to you guys point, I, what I'm thinking about when you were talking is picture using off three paydays to do a deal and then just plowing. You could pick payday three. Hypothetically, it's just one of the profit centers. In other words, for the listener that might not have heard that episode, but you could plow that into passive. Can and should. So then you're not only creating some more profit to the front end if you need it, like Ryan, you just said, but then you have the outlet after you don't have it and have that outlet for going right back into passive. Because one deal, one deal could just be a home run for you.

[00:09:18] And then you just plow that into any, anything you guys are doing. Absolutely. Talk about those three paydays real quick, because I got to be honest with you. I don't remember that concept from episode 97. Can you recap that? Yeah. Maybe we didn't do it. I mean, so it just hones in on one of the ways we exit. One of many, right? Because you can do, as we were talking about earlier, you guys, you can do short-term rental exit. You can do long-term. You know, we do a lot of things with how we buy. It doesn't matter how you exit. One of the exits is a rent-to-own client.

[00:09:47] And a rent-to-own client is someone, they can be high income. They can be high credit score. They just maybe left their J-O-B, like we're talking to people about all the time. So they're not bankable. They can't go get a loan. So we'll do a rent-to-own with them. Paydays work like this. They come in with a down payment just as if they were buying. They're just not bankable yet for a conventional mortgage. So we put them in the home with a nice, strong down payment. That's our payday one, $40,000, $50,000. Then the payday two is the monthly cash flow of the property spits out every month.

[00:10:16] And the payday three is any mock-up we did, but also any principal paid down that was realized throughout the term of that deal. So that's what I meant when I said, okay, someone like maybe Ryan mentioned the person that's trying to build up some cash to then go passive. They come in, they do a single deal. A single deal to us is worth anywhere between $450,000 and $350,000. They can take just one of those paydays, allocate it mentally and reality-wise into a passive income and live off the rest short term.

[00:10:46] So it's a pretty cool combo. Got it. Okay. So you're talking about using a seller financing strategy when you're exiting properties, when you're selling a property. Could be rent-to-own, could be a seller financing with that same buyer. It doesn't matter. The same payday is spit out. Right, right. Chris, help us roadmap. So someone's listening to this and they're thinking, yeah, I want to be active. I want to get into this, you know, what, you know, I know what journey I went on, but, you know, kind of help us roadmap what they think, like what you think they should do as a first step.

[00:11:13] I mean, they're listening to our podcast, but, you know, in the 155 episodes we've had now, we're not really blueprinting here a step-by-step, you know, here, you know, step one, you go and you look for property. Step two, you go and right. We don't work. That's not what we're doing here. Right. We're, we're actually probably better served for the person who just is like, oh, I didn't even realize you could invest in real estate passively without having to do all the work through a syndication. Or I didn't know that you could do a working interest in a, in an oil and gas deal.

[00:11:42] You know, walk us through like what the journey would be to learn from the beginning. Cause I mean, I think you're kind of, you're jumping to these payday things and you know, it's like, where, where do I even start? Yeah. Okay. So I'll answer it broadly first and then I'll hone in just because I know my path, right? So broadly is find one of the many niches in real estate. I'm, I'm biased to ours, of course, cause I think it can survive and thrive in any market, but there's some phenomenal niches. So find the niche you can get behind to find someone in that niche that is bopped and weaved

[00:12:12] through different market cycles. I think that's super important. And then third, put the blinders on for three to seven years and take that journey. Now let's back up to what you said a little more niched. In our world, it's a simple online learning Academy. And then because I think there's so much junk out there for education, meaning they want to sell, sell, sell. We bring them through what we call deal lab and deal lab has them literally bring in leads. We tell them how to do it. Then we're calling the sellers for them.

[00:12:41] And then we're sending them home with deals. That's like literally a brand new person. We had, we had a pilot in here last week. I think I was telling Tate. And I think it was from your, your listeners. And that's what we did with her. She literally brought leads. We called them. We sent her a home to do the appointments and hopefully get the contract. That learning is interactive, not go do it on your own. Good luck, which is, I think there's just too much of that out there. Cause then when real life happens, what do you do? It's the speed bumps. And to me, people think, oh, I can't do this or it must not work for me. No, it's called normal.

[00:13:11] We just need to be with you and interactively introducing you to the next step. So I don't know if that's where you were going. That's kind of how we do it. I think it's super important to make sure you're in the trenches with them to learn it. No, that's great. And you have a podcast too, right? Where you kind of talk about this stuff on the weekly or daily show. Yeah. A hundred percent. You guys are going to be featured soon, but it's smartrealestatecoachpodcast.com. Nice. You know, something Ryan said once was knowledge, people, action.

[00:13:36] And if you're looking for what steps to take, one, two, three, I really think, Ryan, you just said it so well a few months ago when you said knowledge, people, action. First, you got to get the knowledge. You have to, you know, you're listening to this show. You're getting educated. If you're serious about buying some personal property, sign up for Smart Real Estate Coach. Go through the course. Yeah. What's the, what's your, there's no downside. I've never regretted spending money on education. Yeah. And maybe you get to the end of it and you go, you know what?

[00:14:06] I'd rather just invest passively. Yeah. Or. Totally. You know, or, or it lights you and, and now you're, you're better for it. Right. And then people, so you surround yourself with people who are doing it, get into a coaching program, a mentorship program where people can guide you and then action. You got to pull the trigger at some point. You got, you can't just sit there and consume content forever and ever. Or at some point you got to get in the ring. Real quick comment. So let's say you made me think of this picture. So to get painted.

[00:14:33] So let's say that someone learns the skillset, right? Right. It's not something you got to go out and do it for 40 hours. If you don't want to, once you learn the skillset, you can literally navigate any market up, down, sideways. Doesn't matter. And then while you're passively investing, let's say that's what you love. You go, I'm going to do that. Yeah. But you're driving around. You're just experiencing life. You're going to see deals that when you have the skillset, you can just reel in whenever you want. Right. Like that's pretty cool. Like handpick the nice low hanging fruit.

[00:15:01] You don't want to do that until you go through that training. So it's just a thought. One of the most psychologically challenging times in my career as a real estate investor was when I declared that I was a self-storage investor. This is like 10, over 10 years ago. We educated ourselves for two years and didn't own a thing. So imagine, imagine like, yeah, I'm a self-storage investor. Well, how many self-storage facilities do you own? Oh, I don't own any yet. You know, I mean, so if you think that you spent, you know, wow, I've spent so much time

[00:15:29] educating myself, I mean, I went two years before buying my first property. But then we bought a lot of properties and could scale it faster because we had the knowledge and then we knew the people and then we took incredible action against it. Right. So I also think like, you know, what's the hurt? I mean, and I've taken so many real estate classes online and things like that, but it never went really anywhere. But it gave me kind of the well-roundedness knowledge to know kind of how all the little

[00:15:57] assets work and maybe I picked up a few things that I don't even, maybe I underappreciate a little bit. Right. Maybe I learned about seller financing when I was learning about flipping or rental properties, but I can apply that to commercial real estate. So I think it's all relative. It's all kind of like, definitely. It's like picking up a book, learning how to fly a plane. Like it might be about a Cessna, but some of it might apply to your day-to-day job. Right. I mean, there's, there's always something that applies somewhere else. So, and I think it's all relative. Yeah. Never a waste.

[00:16:26] I have people coming in and saying, well, I took this course, this course didn't work for me. It's great. It's just like going to school. Nobody blinks an eye, by the way, about going to college and spend a hundred grand. Yes. But they worry about a course for two hours. It didn't work overnight. It's crazy. Yeah. A hundred grand. That's cheap college. So let's, let's shift gears a little bit. So we do want to kind of drill into Chris. I know that you, you're, you're kind of up on the trends, right? Like what is trending in 2026?

[00:16:51] What are people most searching, looking for hungry for, you know, what, what's, what's going on out there in your world? Yeah. I know the heavy, one of the heaviest searches right now is, you know, does X niche work in today's market? Everybody wants to know that because a lot of the niches are about timing and indoor geographic and with creative, like I said, a couple of times where I alluded to, it doesn't matter what the market is. So a couple of things going on right now. Now, yes, uh, relatively speaking, money's harder to get now, say for the buyer, let's

[00:17:19] just the regular Joe homeowner. It doesn't mean there's less buyers. It means that it's a lot more restrictive. So that's where creative comes in because we open the door from the same. Then on the other side of the scale, if you're trying to sell a property as a seller, you are a little bit strapped down right now because of the demands way down only conventionally. So then we show them the avenue. So right now in my 34 and a half years, I'm telling you that I have not seen such a awareness

[00:17:46] for creative and B demand for creative because of what's going on to banks. And the more they change things and the more there's uncertainty, the more the media is screaming, the better because we become the guide, the trusted authority. So I think that's big right now. The other thing that's big is, um, you guys probably aware of this stat. I mean, the average homeowner right now buying is like 40 ish, 40 years old. So that means all the people in their thirties, uh, late twenties, the trend now is, well, I

[00:18:13] don't want that normal apartment traipse up and down the stairs. I want more of a home. And that's where the, our exit comes into play, right? The rent home. So it's just a lot of things pulling on creative that say the scream loudly. Now's the time while we're in my opinion, sort of in a flat, a curving up. So in 28 or 29, you look back and go super cool. I know my, I know I got a few of my properties. Now I can plow a bunch more into again, the passive end of it simultaneously. Okay. I know we talked about the three paydays and that was sort of like, if you own a property

[00:18:42] and you're going to, you're going to use a rent to own strategy to sell it. Let's back up here for, for somebody who's listening to the show right now and going, what is creative? Like, what's the difference? Can you, can you, let's start from the beginning and just sort of run through creative financing, seller financing, and why that strategy is applicable in today's market. Yeah, sure. Um, huge point. What I do after doing so many years, Tate is I just, I'll just go thinking, yeah, everybody knows what I'm talking about. Right?

[00:19:11] So creative, creative to me is, is buying real estate as my book is termed on your terms, meaning what? Meaning without banks. So you're never applying for bank loan and signing personally. I learned that the hard way. Um, number two, it means one of three ways because creative has been around before banking, but let's just set the scenes. Everybody knows, but it's just become more and more prevalent and more and more understood and more and more accepted. So it means for us owner financing, which you talked about pretty heavy on that first time I was on your show.

[00:19:41] That means what? It means I buy a property, whether it doesn't matter the asset class and there is no bank money coming to the table. So if people used to buy in their own house, for example, bank money came to the table and you purchased your home. Well, no money comes to the table. No new money comes. You actually are just paying monthly payments to the seller. They become the bank. I bought me own building that way by many homes that way, hundreds and hundreds. Second way is buying a property. Again, any asset class subject to the existing loan staying in place.

[00:20:11] So I look at Tate's building. He says, look, I just got to get out of this or I'm financially strapped. So he's on the loan. He guaranteed it once upon a time. I'm buying the asset. He's staying on the loan. That loan stays in his name until sometime I cash it out. That's huge right now. Talk about timing because all those loans that were two, three, 4%, they're out there. We did a couple of deal structures yesterday with loans in the 2% range. So picture buying that now and you never sign personally on it. It stays in the seller's name.

[00:20:40] And the last way that we buy out of the 3%. The third is lease purchase where we're not buying. We're just literally controlling the property until such time we exit. So none of those needed banks. None of those needed your credit. And none of those needed personal signatures. So there's no recourse on that. That puts you in the driver's seat. What are the characteristics of seller? And when I say characteristics, how much they owe on the property.

[00:21:07] So if you're buying a million dollar house, let's say, somebody throws it on the market and they're done, right? They're selling the house. What characteristic in terms of who they are, what their motivations are, and how much they owe in terms of bank debt on that house, which buckets of strategy do those fall into? Good question. So it's not so much, okay, this person fits here. Let me talk about a few things, Tate, and see if we nail it.

[00:21:36] So a couple of things come to mind. There's so many scenarios. But one is, generally speaking, overlay 10,000 foot view, the seller of any asset class that does not need the cash today, but wants the best pricing to take it over time. That's our best seller. Doesn't matter where, what asset class. I think Ryan and I were talking on my show recently about a seller on one of his first deals that didn't want to be cashed out for tax reasons and estate planning reasons. That's exactly who we bought our building from.

[00:22:06] So there's that component. And then the third component is, those people aren't hurting financially, right? They're planning. But the third component is, okay, I'm financially strapped. I need this taken care of. Like, I need this band-aid tomorrow. That screams subject to if there's a loan in there because they just want to be done. I don't care if it stays in my name. Just take care of it. That's the only one that does fit cleanly in that box, Tate. Whereas the free and clear person, I tend to go into financing right away because they

[00:22:36] love being in the bank. So the person who's 70, 80 years old, they're done, but they don't want a massive capital gains tax hit. And they're like, sure, I'll take a 20% down payment and monthly payments. I'll be the bank because then it just gives me cashflow to live on. I don't have to have this massive tax bill. And they probably get best price, right? Because a lot of our deals are structured with no or little interest. So we can bump their price exactly where they want it if that's the case, if the deal works.

[00:23:05] So by the way, exactly what you just said, what happened to my building? The gentleman structured an owner financing deal with us. He said, Chris, the realtors don't get it. I don't want to sell it. They don't understand. My sign says owner financing. So we structured that. He passed away during the process. Well, he did it on purpose because he wanted the cashflow, not a building to go to his son and his wife. And we mail checks to this day, right to the wife. Yeah. And I think, Chris, you mentioned it earlier, but it's kind of the more boring topic that,

[00:23:34] oh, that will never happen to me. But can you talk about what a personal guarantee is and what it did to you when it went wrong? Yeah. Let me just say to your point, yes, it can and will happen to you if you're signing on too much bank debt because the market changes and God love the bankers. They do their job and they come hunting. So, yes, we had 22, 23 properties running into the crash in like a light switch was thrown in February of 08. Remember like it was yesterday? Those were all under way over leverage.

[00:24:03] So every single one of them, the banks were calling me. And every single one of them was a part-time job. My son's the only one that witnesses for three or four years where I had to work those all out, whether they were short sales or foreclosures or found a way to keep it. But the fact is they're not letting you get away with that if the market just dropped by, you know, a third or two thirds in some cases. And when you sign that personal guarantee, that means that any of the debt that you can't repay, you personally have to guarantee, right? Yeah.

[00:24:32] And so what do they do if you don't have the cash sitting in the bank, which most people don't, or under the mattress? They try to start, not try, they will start attaching all your assets that you personally own. So it's a whole other subject of asset protection, but that's reality what happens. Yeah. And so that's the dismal path I went through. Yeah. And so in this case, you know, if you're seller financing, you're not necessarily personally guaranteeing the debt. Never. And you're not under the covenants. Because I think a lot of people don't realize this, like your loan comes with a bunch of

[00:25:01] things called covenants. And if those, you might be making the monthly payment every month, and you might be doing exactly what you think is the right thing, right? Like, oh yeah, I'm making my payments every month. Why is the bank bothering me? Well, the bank has this thing called a covenant. And if you have over leveraged beyond the covenant, or you're not making your DSCR per the covenant, the bank will come to you and say, you're not meeting your covenants. What are you doing about this? And even if you're making your payments, they might take that property back from you

[00:25:29] and then say, you owe the difference in what we can sell it for. That's what a personal guarantee does. And I know this is like, you know, the excess fuel you have on a flight, you know, no big deal until it's kind of a big deal. Until an airplane is disabled on the runway and you've got to circle for an hour and there's no alternates around, right? I mean, we all plan better than that. But this is what planning correctly in real estate looks like in having an alternate and having the extra gas is trying to mitigate your exposure on personal guarantees.

[00:25:57] You know, one way to do that is not, you know, not have that much leverage as a percentage, which is what, you know, Tate and I, the deals you and I have done are have very low leverage, which helped us go through the big interest rate raised period, right? And hang on to properties really well, right? But also like the personal guarantees, they come to roost and they hurt. And so, you know, I think seller financing is a great way to mitigate that. So I just, I didn't want to glaze over that. Yeah. Well said. Put you in the seat too, right? Right.

[00:26:26] Meaning leverage wise and negotiation wise. So during COVID, I don't know how many properties we had close to 80. If I was a landlord and I had 80 properties, I had 80 headaches. In our world, because we deal with buyers just need time. We only had three or four headaches, but one of them was, Hey, I need an extension and just make it long story short. So in the cell, I was like, I don't know if I want to give me an extension. I said, okay. Cause you're not on it personally. So I can give you the property back or you can give me an extension. Well, I don't want the property back. Exactly. So I need the extension. And it was a win-win because he raves about us now.

[00:26:56] The fact is I had that leverage that I wasn't on personally and I could do it. I control the cards. Right. Totally. We get a lot of questions about buying short-term rentals. You know, it's a, it's a popular tax strategy. If you were going to go out and buy a short-term rental today. Yep. Where would you look? How would you handle it? Who'd you call? How would you, how, how would you tackle that? Yeah.

[00:27:20] I would use the same lead list and lead sources I use now, Tate, because again, what I said earlier is I can buy any, I wouldn't, no matter what I buy, I can exit how I want. So if you say, well, I want to exit three or four of these short-term rentals. I want to cashflow that. And then the tax strategies that can follow. I love free and clear. That would be a list that I'd want to look at. And by the way, just so everybody understand, I wouldn't- And what is free and clear for anybody that doesn't know? Yeah. No mortgage on the property. Let me give you a stat on that real quick.

[00:27:48] 33% about a decade ago or 12, 13 years ago when I started this were free and clear in the United States. It's 40% now. Like there's a lot of equity out there. So that's a list I love because they just want their price and they'll do it over time. And now you have a very cool situation. You know, I saw something interesting on the internet the other day. I don't know if this is true or not, but supposedly there's a tradition where people will hang

[00:28:14] a freedom eagle on their, like on the front of their house. And that's a sign that they've paid off their mortgage and it's own free and clear. Have you ever heard of that? I, that's cool, but I haven't heard of it. That's cool. And so those are the doors to knock on, you know? Yeah. I mean, did Chris's point too, there's also like really great lead lists that basically pull. Yeah. That's probably more. Yeah. Like if you're, if you're getting phone calls because you've paid off your mortgage, it's because they know you've paid off your mortgage.

[00:28:43] If you're getting a call from a realtor or something and they're like, Hey, are you interested in selling? It's probably because they see that you have no mortgage. Like that's kind of, I have a mortgage, but very, very low leverage. So I get these calls like all the time, like, you know, are you thinking about moving? You know, so. Or refinancing because they see you have the equity. Exactly. Yeah. No matter what list you pick, you can pick hundreds of lists out of state owners free and clear. I love that because they eventually going to get tired, but no matter what list you pick,

[00:29:10] just understand as we talk about active and passive, you can have a can and should have a virtual assistant calling those for you. You don't have to call them. And then the low hanging fruit that says, yeah, sort of interest. Have Ryan, give me a call. Okay. Then you call them and we give you the scripts to do it. So that's what I would do if I wanted some short term rentals and you can pick them up. It's like picking fish out of a barrel. My daughter said to me one time, Hey, let's add a couple of small multis to our portfolio. So I said, okay, great.

[00:29:35] So he mailed a mailing to four to 10 unit buildings free and clear, bought one only I'm talking like 300 pieces, not a big mailing. And then we said, well, that was cool. Let's do that again. We bought another one. So we bought a four and a six and fully owner finance it. No money down, zero money down. In fact, you walked away with a check because you timed the closing to happen after the rents. Right. The rent probations. Yeah. It's Friday to answer everybody. I don't know how to tell the listeners how valuable this is because I've bought small

[00:30:01] multi and I bought it off the MLS 15 ish years ago and it didn't perform very well because there was a seller who put it on the market, wanted a good price for it. I had to go through bank financing. You know, I mean, it's being able to find, you know, sift through the sand and find a deal, find a motivated seller. It makes all the difference. Ryan said beforehand, you know, Hey, you can make a better ROI if you do it yourself.

[00:30:30] I'll push back on that and say that, that some of the best deals I've ever invested in have been passive. You're, you're participating in value creation that is way beyond the scope of what most individuals are capable of, of handling in terms of building, renovating. So, you know, yes, you can make better ROI if you buy it yourself, but it's only if you buy a good deal. So I would highly recommend tuning into this. I would caveat too. Yeah.

[00:30:59] I mean, just, I was just thinking more structurally, like if you're investing in somebody's deal, you're splitting it and you know, if you're doing it by yourself, but yeah, you've got to be highly skilled to do that. Right. You've got to, you've got to, you've got to be sharp as a tack. Yeah. And you have to find a good deal. That's the thing. You have to buy right in real estate. You make money when you buy. I also wanted to bring up a point too, about the financing take that you made me think of, which is, I think people spend a lot of time looking for a deal. That's half of it.

[00:31:26] The other time you're going to spend just as much time looking for the right financing and working with the bank and closing that loan. That is a massive undertaking, like finding the bank, huge, going through all the loan documents, submitting credit, giving them your LLC, setting up an account like that. That whole process takes just as long sometimes as the, the, the process of actually finding a deal. So just don't underestimate like the easy button. Oh, I found one in the MLS and I went and got a loan and I wouldn't did that. Like that takes a lot of time.

[00:31:56] Yeah. Yeah. And they got a microscope. Usually we don't want it with underwriting. So, yeah. Yeah. I mean, I bought out of state, you know, with leverage and it's just like, wait, you live in Seattle and you got your entity in Wyoming and we're good. You know, we're, we're not gonna, we're not gonna lend it to you on this one, buddy. You know, go find somebody else, you know, to go do it or whatever. So seller financing could be super powerful. Absolutely. Well, Chris, I, I think we're pretty much out of time.

[00:32:23] I know that, uh, I appreciate you coming on and being so gracious with your time. One more time. How did the listeners get in touch, uh, with you and learn more about what you guys do? Yeah. To our earlier, I think it was one of your first questions about this market, right? This market. Even though every market around the country has different pockets, but how to operate now. I want to give them a free blueprint to do that. And so, and I'm talking, you won't put 10 cents. It's free. We're just going to ship it to you. Just go to three paydays books.

[00:32:49] And that's the number three, three paydays books.com forward slash PIP. So I know it came from your tribe and we'll ship out a free package to them. Oh, nice. Yeah. Put that slash PIP in there. Perfect. I love it. We'll link to that in the show notes. Chris, thank you so much for coming on. I might actually, uh, someday when I have a little bit of free time, I'm going to come and take your course as well. Uh, because I would love to learn more. Come hang out with the other pilots. Yeah. I like about seller financing. So thank you so much for your wisdom. Look forward to seeing again sometime soon. Thanks guys.