Real Estate on Your Terms-with Chris Prefontaine-EP47

During this episode of the Lab Coat Agents Podcast, host Jeff Pfitzer speaks with Chris Prefontaine, Founder of Smart Real Estate Coach, real estate investor, and author. Learn how real estate agents can create a secondary income by becoming a niche expert, and new solution provider for clients who need financial options when buying or selling homes. This is a fascinating episode with lots of great takeaways. Episode Highlights:  Chris Prefontaine started his career building homes in the 90’s. He then practiced real estate, then pivoted after the market crashed to become an investor and coach. He no longer operates as a realtor. Chris buys and sells his own properties exclusively. Almost all of his exits are rent-to-own. They make sure that their mortgage-ready date coincides with the terms they have with the seller. There's an enormous pool of buyers who can't walk into a bank and get pre-qualified. This is who they serve. They have a 2-10% drop out rate vs. a 2-10% finance rate. Most dropouts happen due to life events and most of those are quite amicable. If that happens, they sell the property conventionally with a realtor. Or, if the term allows it, they just do another rent-to-own. Coming out of the '08 crash Chris wanted to buy without using money or credit. His wife had the idea to help people who needed to recover their credit. They carry 50-60 rent-to-owns at the same time. Mostly they find buyers online. The important thing once you find buyers is the pre-qualification process. They must understand that they are acting as if they own the property. The buyers will come if you are priced right and meeting your monthly, and you're fair on your sale price. What does it mean to buy and sell a property on terms? These are often properties that have expired. Maybe they're over-leveraged or they can't afford to pay a commission. You can buy it either on a lease-purchase or owner financing. Not many agents know how to do this skill-level wise. First Jeff and Chris talk through a Lease Purchase deal. If the seller has a home worth $300k and they owe $250k, you guarantee them the $50k cash out. Here's how it works: At the end of 36 months you pay them their $50k, you pay off the underlying debt. That accrues to them. They carry the note. Make the deal contingent on finding the tenant-buyer first. Then 30 days after the tenant-buyer occupies, the company takes over the mortgage payment. They're collecting higher rent from the tenant-buyer. You're relieved of maintenance, repairs, and your mortgage payment. Go into the home and ask what's best for the seller. With this strategy, there aren’t too many sellers you can’t help. Another example: They took many properties in 2013-2014 that were in theory over-leveraged. They pushed the term way out, 9-10 years so they have time to have that principal paid down. That usually takes care of it. You can target free-and-clear owners. There are plenty of people that want to do this for estate reasons, tax reasons, and cash reasons. They want to push the term out if it's free and clear. Payday #1 is the non-refundable down payment from your buyer. Payday #2 is the monthly spread. Payday #3 is the back-end markup in price and principal paydown. They average around $78k per deal. They have students as low as $45k per deal and as high as $200k. Their average price point is the $280k-$680k range. Jeff and Chris talk through a Free and Clear deal.  If you have a home that's free and clear and $200k and higher you can structure an owner financing deal, with principal-only payments, four-year term or better, and you get a six-figure deal on all three paydays. Free and clear are more profitable than lease purchases. So many people are tied ego-wise to price. They'll give people fair market value as long as they get their terms. To get recession-resistant they push their terms out longer. As a real estate agent, you need to open up more options for sellers. Their contract will be with you, with your right to assign it or sublet it. You might as well wealth-build. There's a lot of free stuff online to help you become a real estate entrepreneur. Find a niche that will help your business online. Then find someone you can relate to.  Follow that and integrate it into your business for three years. Invest in a platform, get into it, and commit to it. You'll expand how many deals you can do. In those, you'll create wealth, not just one pay-off. If you acquire twelve of these, you're looking at potentially $500k in income. A new investor should prioritize the lease/purchase. A twist to that is a one pay-day model where you reassign the renter-buyer to the original seller. You've got to have the right forms. If you're not using the right forms, then you're just setting yourself for a lawsuit or a headache. If you don't have a personal assistant, you need one, even if it's just eight hours a week. The personal assistant will take care of your forms and with light follow-up. Put aside some time to learn in the morning or evening. A lot of their system is automated. They've grown their online course through social proof. If they do deals with their students, there's revenue sharing. It's important to show students what might go wrong and how they might pivot. Get as close as you can to recession-resistant. Diversifying is a cool way to become resistant. Learn where to find out more about Chris and Smart Real Estate Coach. 3 Key Points: You can structure deals with terms that create a win for sellers, a win for renter/buyers, and a win for yourself. When you’re in real estate, you should get into real estate investing to build your wealth and to diversify your income streams. There truly aren’t too many sellers you can’t help. You can provide out-of-the-box solutions to financial problems. Resources Mentioned: LCA Marketing Center: LCAmarketingcenter.com Lab Coat Agents: LabCoatAgents.com Smart Real Estate Coach website, YouTube, Facebook Real Estate on Your Terms (book) -- Get a free copy when you mention this podcast! The New Rules of Real Estate Investing (book) Email questions to [email protected] Connect with Lab Coat Agents: Lab Coat Agents on Facebook Lab Coat Agents on Twitter Lab Coat Agents on Instagram Lab Coat Agents Facebook Group