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How To Make Zero Down Offers – Roleplay Part 2 of 2
How to make zero down offers. This is a role playing session, part two of two parts. And I think you’re going to enjoy it because we get into great detail about how to talk to these sellers, what to say to them and how to get them to say yes. All right. I hope you enjoy it. If you like it hit the subscribe button, hit the like button. I appreciate it. Thanks.
Joe: I think the question, you know, I think I would get specific with him on the questions. Like, so, are you good with this price? You know, are you good with – what was it – $125K is what wanted right?
Daniel: He sounded like he was good. I don’t know. I think Bill’s just tough is what I think.
Bill: Let’s ask some of the other people. What do you guys think? Was I too tough or do you think that was real?
Esther: I think you were tough but I think it was real.
Valerie: It was realistic.
Esther: You were like, no nonsense.
Daniel: What was the thing that really turned you off? Like, you said it was too good to be true. Which is – I never hear that. I never every hear anybody say, oh, this is too good. Like, meh, but, so – I mean, really what was the, what was the thing that I didn’t get for you?
Bill: That’s a good question.
Joe: I think the way you find out, the way you find out is by asking very specific questions, like, are you good with the $125K? Would you be happy if you made, if you got a property sold like that? Are you good with that? Let’s go ahead and have this dialog, Bill.
Joe: Are you good with that $125K?
Bill: Yeah, well, that’s what my asking price is. That’s what’s on Zillow, so, yeah, why not?
Joe: Okay. So if I got you a $125K least option buyer you’d be good with that?
Bill: I just want to clarify. So, you already explained to me what a lease option is, right?
Bill: Yeah, that would be fine. Yeah.
Joe: And we’re looking at $1,500 a month, right?
Bill: Well, that’s what you said, yeah. I mean, I was getting less than that but if you can get $1,500 that would be good.
Joe: And by the way, I think that’s too much, but, my guess is it’d be closer to, you know, $1,200 or $1,1100.
Bill: $1,200, yeah.
Joe: But let’s say it’s $1,500. So, $1,500, but you’d be good with $1,500 a month if I got you that amount?
Joe: I mean, that brings you $600 extra a month income that you didn’t have before. So that’s something that’s attractive to you?
Joe: Okay, and three-year term on this so you don’t have to worry about reupping somebody every year? Are you good with that?
Bill: Yeah, I’m good with that. Yeah, she was in there for six years, so I’d be good with that.
Joe: Okay. I mean, these people may want to stay longer than that. They may exercise their option and cash you out within that three-year period, and they may not. Only about 30% of them do. So, and then as far as them taking care of the property themselves and not having, you know, you don’t have to do the lawn and you don’t have to get a new furnace and those types of things.
Bill: I don’t understand. How do you get them to do that?
Joe: That’s something that they’re agreeing to do. That’s part of the agreement that I’ve created. So I’ve created a lease option agreement that protects the seller. And I did it because I believe the seller’s the one that has the most risk in these transactions. So that’s why we created a document that basically protects you. And the way that I’m making money – are you okay with me making money?
Bill: Yeah. Yeah, everybody’s got to make money.
Joe: Yeah, because I’m going to raise the price of the property and I’m going to make a profit on this deal. And they’re going to make – the buyer is the one that’s going to be paying it – you don’t have to pay it, so you don’t have any realtor fees that if you tried to sell this with a realtor. Have you thought about selling with a realtor, by the way?
Bill: You know, to be honest with you, my wife wants me to sell it, you know, but I don’t know, I mean, it was kind of like, out of sight out of mind for all these years and I was helping my brother’s kid out, you know, so, I don’t mind not selling – I just don’t want – I was hassle free for six years. So I wanted to just sell it and just get rid of it. We don’t need the house anymore. We couldn’t sell it before. I think it’s to a point now where we can sell it. I just don’t want the hassle.
Joe: Do you know what it was worth six years ago?
Bill: I think we paid $94K or $96K for it.
Joe: So it’s worth about $30K more now because you kept it those six years.
Bill: I think so, yeah.
Joe: So you made that much money on it even though you didn’t make any cash flow at all.
Joe: Right. Now, if you’d made this cash flow you’d have made an extra $500 a month on it over a six-year period, that’s $6,000 a year over six years, that’s $36K on top of that that you would have made if you had done that.
Bill: Don’t tell me that.
Joe: Then there’s also some other money that you made on this property that you may not have even been aware of. I’m assuming you put it on your tax returns; right?
Bill: I did.
Joe: So you got a tax depreciation on that property which is probably bringing you in about $1,000 in real tax savings every year. So you’re making that, just by owning this property you’re making $1,000 a year just on your taxes. And then, of course, every month you pay down that mortgage a little bit and on that $90K mortgage, that $850 payment, probably close to $200 of it is principal. So you’re making another $200 a month on that, so that’s about $2,400 a year that you’re making on that over a six-year period. There’s another, you know, $12,000 that you made, $13,000 that you made. So having this property and keeping it, it was very smart even though it may not have seemed like it at the time to you.
Bill: That’s not what my wife thought at the time.
Joe: Because you’re talking about $50K, $60K, $70K that you’ve made on this property simply by holding onto it. Just by making sure somebody cut the grass.
Bill: I never thought of it before, but, yeah, you’re right.
Joe: Yeah. I mean, owning a rental property, I don’t know why everybody doesn’t just keep their properties. It’s insane to sell your properties. And I don’t know why people don’t do it. So, anyway. I think I can get this thing going for you. We can probably get it, you know, somebody in here in the next three weeks, you know, month, you know, maybe even quicker than that. I’ll get it out to my list immediately.
Bill: What happens if you find somebody and I don’t like them? I mean –
Joe: You don’t have to take them, but, I can tell you that if I like them you’re going to like them. Because I don’t put somebody in my properties that I don’t think can make the payments and is going to do a decent job for, you know, so, I don’t think you’re going to have a problem with anybody that I bring you. But, you know, it’s right in this agreement. You know, on this agreement that I’m going to send you. It’s a one-page document, you know, it just says that you’re not happy with them, you don’t have to take them. And if you are happy with them then you take them. You know? So, it’s not, you know, it’s not rocket science. And we’re going to do all the background check on them. You don’t have to mess with that. We’ll do a background check. We’ll make sure that they’re copesetic and that they’ve got the income to pay this for you. So, it’s not going to be a big, big headache.
Bill: Let’s do it. It sounds like something I want to do.
Joe: Okay. Are you close to a computer right now?
Bill: No, but I will be in a couple hours.
Joe: Okay. So, I’m going to send you a .pdf file. All you have to do is – or I’m going to send you a link. And all you have to do is go to this link and fill out this form. You’ve got to fill in the price, fill in the three years, and you fill in the monthly payment and you hit send and it’s an electronic signature and it sends it to me and it’ll send you a copy of it. And we’ll be good to go and I’ll start the process and we’re going to put a lock box on the front door. I’ll need to get a key from you. I’ll send somebody over to get the key from you. Put a sign in the front yard. We’ll put it on Zillow and we’ll market it to my list. You know, we’re going to do everything we can to get this sold as quickly as possible to a good lease option buyer that you can feel comfortable about and continue to start making, you know, continue to make money and make even more money than what you made previously.
Bill: Good. Okay, yeah. So, I’m going to go into a meeting and when I get done with that I’ll get on the computer and check it out. Is your phone number on there in case I have a question?
Joe: Yes. I’ll put my phone number on there. Just give me a call and we’ll get the ball rolling.
Bill: Sounds good. All right. Cool.
Joe: Thanks, Bill, I appreciate it.
Daniel: How come you were so nice to Joe?
Bill: I think he’s right. I didn’t realize this until just now. It’s like, you kind of like, do the thirty thousand view level and he went down and kind of got into the details and kind of got into like –
Daniel: He does – I want Joe to do my phone calls for me. That’d be awesome.
Bill: If you could get Joe Crump to do your phone calls –
Daniel: I’ve already given – he’s not doing that. We already have an agreement that he’s not doing anything and I’m doing all the work and I agree with that. So, that’s just how it is. It’s true.
Bill: Joe was good on the phone. Because he got you to sign the documents to do all that, right?
Daniel: Yeah. Yeah.
Bill: Honestly, just, just point blank, I mean, it felt comfortable with Joe. It didn’t feel uncomfortable with you, but it was a little bit – there was some vagueness there.
Daniel: Meh – I’m kind of pushy. I hear that I’m kind of pushy.
Bill: Well, anyways, it was good because of the details and he just kind of covered it. Just – on the receiving end of it, that’s all I meant.
Daniel: I haven’t done it in so long. I mean, I’ve actually done more role plays with you, I think, than I’ve actually talked to real buyers lately. No, that’s not true. It’s different because they call me. So it’s a completely different conversation if they call you.
Joe: I think that it really comes down to a person having knowledge of the situation and then being able to express that to people and really listening to what they need. And listening to, you know, listening to their – they’re going to give you all kinds of signals about, you know, I think one of the signals Bill was giving Daniel is I’m not ready yet. And by the time he and I had the conversation, he was ready. And so you just have to keep digging and keep finding out where the problem is and keep saying are you okay with this? Why not? You know? If you’re not okay with this what would you be okay with? And so you have to figure out what’s going to work for these people and if they’re not okay with something then explain why, you know, what their other options are. Because I think that it really does come down to what are your options? You know, you could keep this property, you could sell this property for cash right now and you walk away with the $25K you make and everybody’s happy. But, what if you could actually make another $50K or $100K over these next three or four years. Would you want to do that? Would it make more sense to hold onto this property? You know, and when you start putting it into those terms and you start showing people where they’re actually making money, they’re going to start thinking, you know, and especially if you have the attitude that you’d have to be stupid not to do that. You’d have to be stupid to give away $50K. Why would you want to give away $50K? I’m not asking you for $50K out of my pocket. You’re giving it away.
Daniel: It sounds different coming out of your mouth, calling somebody stupid, than if I did it.
Bill: I think we should play a little game if you let us. I think people that are listening should type in the chat why, just a couple of words, why I was selling the house? What was my purpose in selling the house? I’d be curious to know what they think. Like, why am I selling this house? What did Joe work on when he was talking to me? Because he got it out of me. Daniel didn’t, but he did. So, type in the chat – is that okay, Joe, we do that? Just a couple words, like, why did you think the wife wanted to sell and he said he wanted no hassles, okay? So that is right, Esther, it was – see, I didn’t want – I gave up on this house when I moved into my house six years ago. And the fact that it’s over there and it wasn’t bothering me, I didn’t care. So either I sold it, I got my cash, or I didn’t want the hassle. It wasn’t about making money, it wasn’t about like, I’m under pressure. I just – I want to live my life and I don’t want to deal with that house. Now, it seems like it’s a slight of hand, like I don’t want it, but – it doesn’t take much to have somebody call me and say something with that house to kind of set me off. That’s kind of like what was going on. It’s like, I just don’t want to deal with it. The fact that I put a relative in there, that she was low maintenance, and I told all that – so that is correct. The reason why I was selling is is because I didn’t want the hassle. I wasn’t making money from it anyways, I’m like –
Joe: He didn’t think he was making money from it, even though he was.
Bill: Right. And then Joe comes along and he summarized how I was making money. Yeah, Joe made it worth my while, right. But he –
Joe: I suddenly showed you it was a cash cow instead of a liability. And that it would actually be dumb to get rid of a cash cow.
Bill: Yeah. And he eloquently made it nice and easy and smooth and like, in a couple paragraphs, or, you know, a couple minutes, he was like, oh yeah, I never thought of that. But it happened because I did my tax returns for six years and there it was. I never added it up.
Joe: What I did for that seller was I threw out an idea bomb, you know, that just exploded his idea of what his reality was. Because he had one reality and I exploded it and turned it into something else. Because he missed that whole, he missed that whole point of why that property was valuable to him.
Bill: And realize, I mean, last even we did some live calls, but realize, very, very, very soon you need to realize that these calls are very conversational like what we’re doing here. There is no roteness to this at all. They’re very relaxing, very conversational, like, you’re talking to your brother or sister on a Saturday night while watching the football game and drinking beer. That’s a good thing. I mean, I don’t know if you do that or not, but, you know, my point is it’s, it’s very, it’s just a relaxing conversational, by the way, type of a conversation.
Joe: You remember Columbo?
Joe: That’s what he’d do.
Bill: He’s got his hands on door, went – ah, I was wondering…?
Joe: Surprised you decided not to keep it. You did decide to keep it, though.
Bill: Yeah. No. But my point – but I did – I was doing that because I said that to Daniel, like, why don’t I just do this myself? Like, why do I need you?
Bill: And that’s what I think he’s saying is, I could have rented it on my own and kept it myself, but, you know, honestly, so, Jerry, if that does come up – so if that does come up, realize that Joe – Joe point blank said to me I’m going to try to make $5,000.
Joe: No, that was Daniel. That was Daniel that said that.
Bill: Oh, was it?
Joe: Yeah, because I would have tried to make more than that.
Bill: Okay – so the point –
Joe: I want 10%. I want 10%.
Bill: So the point is is that – so if the buyer is paying the fees and it’s not costing me anything, then why wouldn’t I want Joe to do it all for me? He knows how to do it. I mean, I am keeping it myself, because he’s going to get me the tenant. So technically whatever money Joe makes or Daniel makes, it’s for doing the matchmaking, right, and doing all the paperwork. So I have to go hire an attorney, I’d have to do some expensive marketing or go spend my time on it and it’s not really worth it if the buyer’s paying it already anyway.
Joe: And if somebody asks, somebody asks well, what, you know, why, why shouldn’t I do it? Say, well, you know, it’s kind of like hiring an attorney. They always say that if you act as your own attorney you just hired the stupidest in the world. If you want an idiot as an attorney you should hire yourself. And that’s kind of the way it is with selling your property. You want to get somebody who knows what they’re doing. If I hire an attorney I want to hire somebody who’s qualified. If I hire somebody to clean my house I want to hire somebody that does a good job, you know, then I don’t have to do it. I don’t necessarily have to do everything in my life like, I hire that stuff out to other people.
Bill: My one-sentence response to that is I don’t prescribe myself with my own medicine. Why would you, you know, because that’s really what it is. I mean, you could, with the medicine you could take one pill and then it changes everything. The wrong pill and it changes everything. This real estate transaction for that guy’s the same way. He could have one document that could be wrong and change everything.
Joe: Yeah. Or, finding the wrong tenant. That’s why newbie landlords are so adamant about not wanting to do it. Because one bad tenant makes your life miserable. There’s always a risk of that. Even with a qualified investor, but it’s a lot less likely.
Bill: I just bought a two-family house. The reason why I bought it is because it needs a roof, they put an insurance claim in for the roof, got $19,000 for the root. The tenant stopped paying at the beginning of 2021 and for some reason there’s a property management company that did a really shitty job. And it took them 10 months to get them out and she used the insurance money to pay $11,000 to get them out. And now it doesn’t have enough money for the roof and has a house that is completely, like, a hoarder house and it cost $3,000 to clean it out plus a whole bunch of damage, about $10,000 worth of damage. So, like, that, she was buried. And I bought the house. I took it over subject to, and I’m the winner right now. And it’s just all the stuff you’re talking about. It was one landlord with one house. They were too busy running their life, they’re both, you know, they both have high power jobs. Oh, the property manager’s taking care of it. Out of sight, out of mind, and then all of a sudden one day they wake up – Bam! Like, what is this? What is this bill? What is that for? What is this? And they’re like, what do you mean? And they’re like, oh, my God. They just – they wanted out. And I know these people and I’ve seen them a few times and every time they’re like, oh, my God, I can’t believe you made it so easy for us to get out of that property.
Joe: Yeah, they’re grateful. They don’t feel like you screwed them. They’re grateful.
Bill: Every time I see them they’re I can’t believe you helped us get out of that property so easy. I mean, I’ve been at it for two months now. It’s a total nightmare, but, I knew that when I went in. And the upside is tremendous. I think this thing will probably pull $1,300 to $1,500 a month positive cash flow. On a two-family.
Joe: On nearly every deal that I’ve done, especially when I buy properties dramatically under market value from individual sellers. When I was a realtor especially, I would tell them, you know, I can list this property for you and it’ll take this long to do. I can make you this much money or I can buy it from you but I’m only going to give you this much money and I’ll just pay you cash for it and we’ll close it within 30 days. You know, which one do you prefer? And they almost always take the lower price. And when we started working on absentee owners we did a bunch of those for a while and we were trying to get them all on terms. And so we’d offer them $40K on terms for this, you know, wreck of a property and, or we’ll give you $20K in cash. And over and over they just kept accepting the $20K. You know, so it was like, well, I’d rather do the terms, but no, they’re taking the cash. And actually getting that $20K was not that difficult.
Bill: You have to realize when we’re doing this that the cool thing that you don’t realize until you start talking to enough people is they’re reality check, right? So, first of all, like, if – once you start to do a couple deals, or even just a little bit of homework, you’ll know what you’re buyers are willing to pay in your area. So if, you know, like, Daniel knows that he can get $125K for this house. He knows that because he sells them, or he knows that already. He also knows that he can get $1,100, $1,200 a month for a rent. So once you do a couple of them, once you know what you can sell for, you’re negotiating comes a lot easier because you know what you’re caps and your parameters are, right? So you know you’ve just go to be below $125K or below the $1,100 or $1,200. Or, you know that you can push it from $125K to $135K because you know that you have some benefit there, right? And then the other thing is which I – it took me a long time to learn. You should always bounce what we’re doing off of the realtor because they’re the other game in town. So it’s like, you’ll say, well – they say I don’t want to do 90 days. Well, a realtor would want six months, right? And they’ll be like, oh, yeah, I guess you’re right. You know, know so you want to bounce off their other choices, or their other available resources. You know, like, for example, like, we were talking about with the buyer when we were doing the buyer phone call. I just had this happen to me yesterday, it’s like, they’re putting down $25K on a property and they’re a little skittish about it. And I’m like, look. It’s very simple. You’re doing a lease option with me. If you were to buy this house right now and put down $25K toward your mortgage, put down $25K and got a mortgage for the rest. You buy the house. You would do that, right? Oh, yeah, we would do that. Okay, good. So. If you didn’t make your payment and they foreclosed, would you lose your $25K? They’re like, yeah, of course. Well, this is the same thing. You’re putting down $25K, if you don’t make your payments you lose the money. It’s the same thing. But you’ve got to think like, that could happen to them, right, so you’ve just got to, you’ve got to realize that, you’ve got to come out of your cocoon a little bit and realize that what other choices they have out there and what we’re offering them is much better than all of that stuff. I went off on a little tangent there, but you’ve got to think of that stuff.
Joe: Conventional wisdom is what people are thinking all the time and we’re showing them something that’s an alternative to conventional wisdom, something that works better and serve more people in different ways. Not everybody fits into that paradigm. You know, 75% of the people can’t get a mortgage, can’t have the American dream. And everybody that we’re selling lease option on, you know, none of them can go get a mortgage. So, we’re giving opportunities for people to have properties that they could not have had any other way. Jerry, you asked the question what made you decide to provide a tenant for the seller rather than try to buy it? Jerry, I was just doing the For Rent Method. You know, if I was having this conversation about the property we’d probably buy it. And that’s the thing that both Daniel and Bill do regularly. They don’t usually do the For Rent Method. They usually just buy the properties and keep them for their portfolio. The reason I’m teaching you guys the For Rent Method is because it’s an opportunity to get cash without any liability or any risk. And it allows you to put a deal together and start from beginning to the end and see how it all comes together and put a chunk of cash in your pocket. That’s the For Rent Method. And you can do that over and over again and then you’re going to start looking at it and saying what if I kept those properties? You know, that’s, that was the Step 7 in this thing where you actually start building a portfolio. And that’s what these guys are doing that turns them into millionaires. That’s what, you know, that’s what gets you to the seven figures and starts building a portfolio that’s going to serve you for the rest of your life. And that doesn’t take that long. I mean, that takes a couple of years, you know, if you do one deal a month. I’m going to show you how to do that on the Millionaire Matrix when I get back from, when we get back from lunch. And I’ll show you exactly how those numbers play out because I think once you see those numbers and you start to realize wow, the power of compound interest. The power of compound properties and what it does for your bottom line, for your portfolio and your asset base. It really happens fast. Once you get this, once you get this concept down and once you start putting together deals, you know, you put together one, you can do the second one. You get through the second one, you get the third and fourth and fifth. And even if you only did one a month, or one very two months, it’s still, it can be a great living. It doesn’t, you know, a couple of these, you know, one every two or three months and you replace most peoples’ income. You’re making $50K, $75K a year, you can replace that with one every two or three months. More than that probably.
Bill: What will happen eventually, right now you’re just trying to make a deal. You’re doing whatever you can do to make a deal. And what will happen, this is kind of like, you’ll realize, so, so, Daniel buys a $125K house. I’m going to buy an $800K house. Daniel could make $50K on a $125K house, I could make $100K on an $800K house. It’s just money on money. It’s just the ratio, right? Just for an example. Here’s the important thing. I do the same work that Daniel does for more money. It’s the same work. It’s the same conversation. It’s the same paperwork, it’s the same effort. It’s the same deal hunting, it’s – everything’s the same. Except I’m in a place that has more profit, right? So, what you’ll do is, it’s kind of like that. As you’re doing your deals, what Joe’s saying, as you’re doing your deals, you’ll realize you’re doing the same things but you’re starting to be more aware of them. And you’ll be making better deals for yourself because you’ll be more aware of them. Especially if you come to the coaching calls, you’ll be more aware of, well, maybe I don’t want to do rent to own on this. Maybe I do want to keep this and like, make this much money. You’ll realize that as you go through the process of talking to people, but right now you just need to figure out what to say when and get a deal and go through the process at least once to see how it works. So, as you progress then these things will work out in your mind and you’ll start seeing things you didn’t see the first time. Make sense?
Joe: Yeah. Making those calls is going to be important and getting that ball rolling. I know I sound like a broken record, but making the calls. Making the calls. Because the people that succeed in this program make the calls. That’s the only people that succeed. 100% of the people that made the calls made money. And 100% of the people that didn’t make the calls didn’t make any money. So, it really does come down to that. And you don’t have to do it forever. I’m an example of that. I don’t make these calls anymore. And even if you talk to Bill and Daniel, they don’t make them nearly as often and when they do, they’re much more productive with them. So their closing ratios are much, much higher so that they have to make way fewer calls. They don’t make a hundred calls to put a deal together. They make two calls to put a deal together. Or three calls to put a deal together. So it’s a really – it changes the world when you have the competence and the experience and the ability to do that.
Bill: It sure does, and the interesting things is is I, for many years, turned it on turned it off. I need some money, so I would make some deals. And then I’d have plenty of money and I’d got off and do something else, and then it was like, no, I need some more money so I’d got make – and you can turn it on and off. Once you have it you turn it on and off, whatever you want. You should never turn it off, but I did a few times.
Joe: Yeah, if you put it on auto pilot, you automate it, and you outsource it, then it just keeps going.
Bill: Yeah, years ago it was harder to do automation. But nowadays it’s so simple.