Owning a Business and Buying a House
Episode 993: Owning a Business and Buying a House, with Steve and Lauren Mernick
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Owning a business and buying a house—Discover how to navigate the unique challenges of successfully owning a business and buying a house.
How do you overcome the challenges of owning a business and buying a house? It could be a stressful situation for some people, which is why we invited Steve and Lauren Mernick to give us solid advice on how to handle it like a pro!
Steve and Lauren are the founders of Home On Your Terms and are based in eastern Connecticut. Steve serves as the company’s Acquisitions Director and loves crafting up creative solutions for sellers, while Lauren works as Sales Director and enjoys helping deserving buyers achieve their goal of home ownership. When not working on their own business, they are mentoring other investors who wish to learn the terms of the niche of real estate.
In their free time, they are with their two young children and two dogs. Steve can also be considered a Cornhole connoisseur, so you may find him outside perfecting his form. Lauren is a huge fan of “The Office,” so she may or may not quote some of her favorite lines while on a call with you.
What you’ll learn in this episode is about owning a business and buying a house:
- How Lauren and Steve work to help business owners buy or sell homes through their “terms deals”, and how they’ve brought their background experiences into their work
- Why owning a business and buying a house presents unique challenges that make it harder to qualify for a traditional mortgage, and how terms deals can be the ideal solution
- How terms deals, which have been around since the 1800s, are often an overlooked niche within real estate, and how these deals provide alternate solutions to big problems
- Why a terms deal can help a business owner quickly sell a home and get out from under the obligations to that property, freeing funds that can be put back into the business
- Why a terms deal is the ideal way to sell for someone with little-to-no equity in their home, or for someone who wants or needs greater monthly cash flow
- Why these deals can be a great way to avoid high real estate agent fees and guarantee that you can put the full equity of your home in your pocket
- Why Lauren and Steve specialize in creative solutions to meet the needs of both buyers and sellers, and why flexibility is a key feature of terms deals
- Steve and Lauren walk through the process from start to finish and offer example deals to illustrate how terms deals can result in more money for the seller
- How a part of the buyer process involves a pre-qualification check and a thorough credit repair process if necessary to get them mortgage-ready
- Why Lauren and Steve feel passionately about helping connect buyers and sellers who have unique challenges and finding mutually beneficial solutions
Resources:
- Enhance your understanding about owning a business and buying a house by tuning in to this episode: Buying a house as a business owner, with Brian O’Neill
- Learn more about owning a business and buying a house, you can find Steve and Lauren here
- Facebook: www.facebook.com/homeonyourterms
- Instagram: www.instagram.com/homeonyourterms/
- Twitter: @HomeOnYourTerms
Additional Resources:
- Free Executive Leadership Summary report from Predictive ROI: https://predictiveroi.com/research
- Sell With Authority by Drew McLellan and Stephen Woessner: https://amzn.to/39y7x13
- Predictive ROI Free Resource Library: https://predictiveroi.com/resources/
- Stephen Woessner’s LinkedIn: www.linkedin.com/in/stephenwoessner/
Owning a Business and Buying a House: Full Episode Transcript
Get ready to find your recipe for success from America’s top business owners here at Onward Nation with your host Stephen Woessner.
Good morning. I’m Stephen Woessner, CEO of Predictive ROI and your host for Onward Nation. I interviewed today’s top business owners so we can learn their recipe for success and how they built and scaled their businesses. Before we welcome today’s very special guests. Onward Nation, I want to make sure that you’ve heard about our, how to fill your sales pipeline open mic Q & A’s with Erik Jensen. He’s my business partner here at Predictive ROI how Erik and I host these sessions every Wednesday at one o’clock Eastern. So Erik and I kick off of each Q & A with about five to 10 minutes around one of our latest strategic insights, best practices, or some test results.
I mean, we think of Predictive ROI as a lab where we’re running experiments all the time on what works and what doesn’t work. Erik would like to call us the canary in the coal mine. And I think that that’s probably true. And so we share these insights because we think that they are going to be helpful to you and your team in generating leads with right-fit prospects. But after we go through the first five or 10 minutes, then we will open mic to answer all of your questions about lead gen and how best to feel your sales pipeline. So, you have a steady stream of leads flowing into your business. We started the Q & A’s because we wanted to help you brainstorm ideas, lead gen strategies and actions, and steps that you can use to fill your pipeline as you work through 2021 and beyond.
So just go to PredictiveROI.com/QA, and you’ll be able to register for the next Q & A and Erik. And I look forward to seeing you there. Okay. So, let’s shift gears. I am super excited. In fact, I’ll say I’m over the moon and excited for you to meet and learn from our very special guests today. Lauren and Steve Mernick. So Lauren is Steve our real estate expert. Specifically, their expertise is in helping homeowners and home buyers put together deals that are based on what they call terms.
So, to be clear, Onward Nation terms are based on real estate deals. They are not new. They’d been around since the 18 hundreds, but they are gaining in popularity. And right now, terms deals are surging Why well, even before COVID and the recession, because maybe you felt this personally, it can be an uphill climb for a business owner. In fact, it feels more like running a gauntlet to get a traditional mortgage at a bank to buy a home. Even if you, as a business owner, have really solid credit, during the recession, getting a mortgage through conventional financing is even more challenging for business owners. Okay? So now, let’s flip that scenario.
Let’s say you are a business owner who already owns your home, and you’ve got some equity, but because the world is much different today than it was just this time, last year, strategies that can help you get out from under your mortgage to reduce monthly expenses may be just what you need in order to steer your Business back to calm water. So I asked Lauren in Steve recently to come onto the show to share some of their insights and expertise regarding How a Terms based deal can help a business owner either quickly shed debt and free up some flexibility in a short period of time or just be able to reposition themselves with some additional flexibility.
Owning a Business and Buying a House: Steve and Lauren’s Introduction
So Onward Nation, if you’re a business owner who already owns your own home and think you might want to sell, or if you wanna buy, but running what you know is going to be a gauntlet is not going to feel awesome with a traditional lender to get financing. If that doesn’t sound appealing, then this conversation with Lauren and Steve will be super, super helpful if you map out your next steps. So, without further ado, welcome to Onward Nation, Lauren and Steve.
Aw, thank you. Good morning, Onward Nation. Thank you for this opportunity.
You’re very welcome. Thanks for saying yes. I appreciate you taking the time. We were excited to be able to have this opportunity to learn from you. It’s always nice to be able to hang out with experts who are generous in sharing their smarts. So thank you for saying yes. Before we dive in with what it is, I’m sure going to feel like a litany or a barrage of questions that are going to be peppering you with. Before we do that, take us behind the curtain and tell us more about you. Tell us more about your path and your journey, and then we’ll dive in,
Ah, as you mentioned, we are real estate investors, but that’s really what we do, and it is not necessarily who we are. We are people who really value family. We value helping others. I actually have a background in psychology, and I have worked in the mental health field for a very long time. And I’ve really used that as my foundation for what I wanted to focus on here. So it’s really important to me for people to have very basic needs met before they can really focus on anything else. So basic needs, of course, to me, it means food shelter, air, or that sort of thing.
And if that’s something that people are worrying about all the time, it’s going to be very difficult for them to be their true selves but be what they can be. So I love that we have been able to take that piece of me
And incorporated it into this business. You know, my background, where I come from — it gets about almost eight years of a family business. My family and my grandfather started an actual Foundry, believe it or not originally, which was a building will took recycling metal, melted it down into literally liquid metal, and then created propellors railings, all sorts of stuff that was shipped overseas. And he created that business over about 50 years, and then one of his kids grew up. They’d worked with him as well, including my father and my mother, so my entire family worked for this business when I was about 11 or 12 years old.
That’s when I started. Instead of going to summer camp, I would go to work with my family, who were 13 years old and driving. Bobcats, I probably shouldn’t have been, but yeah, a family business is what I grew up on. It worked for my family from officially working for my family illegally from about 18 to 20. I think it was 10 years of about 28 at the time. It actually had changed to a woodworking business, which is that we just kind of changed it over with the times all of this stuff that they were shipping overseas actually stayed overseas. Then we change to audio and video. We are a working company. So I spent a lot of time doing that.
Owning a Business and Buying a House: Building Homes and Dreams
Woodworking is my passion. And then, when real estate kind of came into play, Lauren and I, in our first house, purchased a crazy fixer opera, but it was from our family members. And because we have the vision and skill set to be able to work on the house, that’s what we did. And we ended up selling a house two years later, or if we made a bunch of money and then moved to Connecticut, we are really originally in Rhode Island and to put our kids in a good school. So, some things actually came up before that. So that’s kind of a little bit about a story of where I came from and where, how we jumped into real estate.
Awesome. Okay. So when, let’s think about the business today and the real estate business that you’re running today, going back to something that Lauren said about basic needs being met and being able to be helpful to people. And my guess is I’m just gonna make the assumption that you’ve seen. Lauren, you’ve seen people at their best, and you’ve seen people at their worst. And so how did the two of you blend that together into the business, so that, so that when you are helping people in the business, you’re also feeling like in, in, and maybe this is the reality is that you’re helping people meet their needs.
So, how did you find that? Yeah, that’s a great question. So you’re exactly right. I have seen a lot of things in my time in mental health, and I have been working with very young children and their families for a large portion of my professional career in that regard. And it was so consistent, sadly, that these very young children who are really struggling, struggling with their own mental health, their behavioral health sometimes their parents were, were facing eviction and they didn’t have enough money to feed their kids and they didn’t have enough money to pay their rent. Well, how are we going to do this? You know, coupled with a very, very difficult home life, it seems it was incredible to see the strengths in the resiliency that came with these families when they were facing these crazy things.
Why owning a business and buying a house presents unique challenges? The most important thing for me is that every child has a safe home. That is one or something. It actually makes me feel emotional when I think about it. We have been very fortunate in our lives, and our children have a very safe home. I feel very grateful and very blessed to be able to offer that same potential solution to other people who may feel like there is no other option for them. So once we realized when, as Steve mentioned, we were interested in real estate and real estate investing, but we didn’t really know, of course, about terms because, as you said, he has been around for a long time, but I feel like it’s less known than some of the other things.
Owning a Business and Buying a House: Transforming Real Estate with Creative Terms
Most people think of flipping wholesaling, that sort of stuff, buy and hold, but Terms, while growing in popularity, was still sort of unknown to us. So once we realized, wow, we can help sellers who need it, we can help buyers who need it. And we can help in terms of profit. I mean, why wouldn’t we do this? It seemed absolutely like a no-brainer. Steve, about the terms business, a typical transaction involves working with people with unique problems where we can come up with a unique solution. So, just being able to provide an alternate, I want to say to people who need this that it’s just a win-win.
The same thing applies to Lauren, who comes from a background of loving and helping people. And I think where we kind of come from a similar feel about wanting to do that, one of the things that I like to do when I’m on like around groups of people on the surface, I would look at, well, I’m a goofball. I like to have to have fun and all that stuff. But realistically, I think I’m doing this because I want everybody around me to feel safe and be themselves. And I think it probably comes through with having the opportunity to do that. It’s kind of like a mess when it comes to their real estate, being able to help people who need it and truly need it. We don’t have the traditional person who has; you need the creativity or the skills to do that.
If I remember a conversation that the three of us had months ago, and I don’t remember which of you said this, I’m so sorry. I can’t give whoever said to his credit, but anyway, one, one, have you said that, that you really, you really find joy in being able to help somebody who’s been turned away Who did it right?
Who didn’t have all of the options laid out for them, and maybe it was going to be a challenge. And so when, when, when I heard you say that, I’m like, wow, not only is that like inspiring, but it really speaks to your grit and resolve and encouraged too. Right. And so, did I get that right? A few months ago?
Owning a Business and Buying a House: Navigating Real Estate Beyond Traditional Financing
Yeah. I think it was me. Well, I am energized by helping people, which is something that fuels me. It makes me feel good. You know, it just serves me. It’s that we all have our thing, right? We all have our thing. And I, again, I’d been lucky enough to realize what my thing is, and helping other people is it. However, I can do that. I’m all about it. You know, again, mental health, helping them work through some pretty significant things, helping them find a home when they think there’s no other possible way. You know, and as you said, it’s less known.
So people don’t realize how many other options there are out there apart from, like you mentioned, walking into a bank and asking, Hey, can you find me? Can you loan me this amount? I want to buy a home but save for a self-employed person. You know, the Get that gets really tricky, but they want to make sure that your, they want to see that you document all of the income, that you are making things for some people that can take like two years, three years sometimes. So it can be very difficult to navigate this, especially on your own when this sort of information, again, becoming increasingly more popular, but it’s still not very well known. You know, it’s like, how could you ever navigate this alone?
Well, and you know, when you’re talking with a tribe of business owners right now who to go through that gauntlet of traditional financing, we, we, we, and if we own an LLC or maybe we’re filing as a Corp, we don’t want a whole bunch of money of fall into the bottom line on our tax returns. Right? I mean, we want to be able to invest that money. We want to be able to do something with it or whatever, get it off of the income statement as much as we can in order to mitigate our tax liability. But then we also have to turn around and use that same tax return to be able to say, no, no, no, not really. Honestly, I do have money in it and try to qualify for an answer for financing.
It’s very paradoxical, how great that we’re self-employed in where generating income and all of that, but then where we’re also spending appropriately
And we want to spend it. So that’s like you pointed out, and our taxable income is as minimal as it can be. But then, what do we do when we can’t get a home? Because we are trying to minimize our taxes. It can be very, very tricky and very frustrating. So here’s this awesome responsibility of creating a Business, right? That’s why we get all of those tax benefits: because the government likes that we can employ people as business owners, but then we were stuck because now it’s just very tricky. Well, it feels very, very difficult to navigate.
Owning a Business and Buying a House: Bridging the Gap in Real Estate Transactions
Onward Nation, and this is exactly why I wanted Lauren and Steve to join us because they’re gonna help bridge that gap. Right? So you might be a business owner who wants to buy, but this gauntlet is going to feel like a whole lot or not. Awesome. And so you are looking for solutions, or let’s say that you are a business owner that already owns their own home, but because the last 12 months have not felt great. There have certainly been some silver linings, but maybe you think I would really like to be out from under this mortgage and the responsibility of this property because I would just like to have a little bit of flexibility as I continue to steer my business back to calm waters.
So that’s why this is going to be a great conversation. So, let’s think first let’s think about the business owner in this scenario if he or she owns their own home currently in this thinking, I would really like to sell this house as quickly as I possibly can, but I’ve heard some things about realtors taking a lot of time and expense. So it would be a term deal that helped me fast if I were the homeowner and wanted to try and sell it as quickly as I possibly could.
Why owning a business and buying a house presents unique challenges? Yeah. So what we have from what I’ve seen, at least from my talk to so many people, as you can imagine, Steve, a lot of the people that I speak with would either potentially become clients or need help. A lot of them are you no job relocation we do with a lot of the military as well. And we look back at all the transactions that we’ve done. There’s some kind of military avatar pooled in this. Clearly, we’re tracking something. And that obviously we want to work with anyway. But what we’ve noticed, too, is with real, where people can afford realtors a lot of the times, it’s just because maybe they bought a house this year and their job relocated them across the country, or like a stay with the military. And they just got a military notice saying, lesson, you are going to be gone to Texas, and they don’t have enough equity ’cause they just bought a home.
What’s another tactic to owning a business and buying a house? Maybe they have a VA loan. Did it have to put anybody down? So, there are loans to finance the whole property. What happens is that they end up moving to the end of relocating land or buying another house. They have two mortgages while they’re trying to sell their house with a realtor, and they have to pay the realtor out of pocket, which is not advantageous to them. So that’s where we kinda come in, where we can go ahead, and we’re not going to charge them anything, but we’re going to be able to relieve them or responsibilities, relieve them, have the financial burden, have two mortgages. And we just do that over an amount of time that we’re both comfortable with. And then what’s nice is that we lock in their equity. So they don’t have to actually pay somebody to sell their house, potentially come out of pocket. That’s what happens. A lot of times, people don’t realize how much equity is in the home.
Owning a Business and Buying a House: Bridging Financial Gaps in Real Estate Transactions
They say they pay some of the 6% to sell their property, and they have to close the cost of paying somebody. They are actually out of pocket for the bread. And a lot of people don’t have those kinds of funds sitting there ready to do that. And it’s just that they have to sell and buy a house, which isn’t stressful enough, adding a way to go above your head. That’s scary. So that’s what we were able to do. We were able to bridge that gap. We’re able to keep money in people’s pockets because that’s their heart and equity. And we’re able to take over their pain, pain threshold, which is usually an extra mortgage Steve, you just pointed out how this works really well for people that may have little to no equity, or they have to relocate, but it also works really well for people who just want to maximize their equity.
How to overcome challenges to owning a business and buying a house? You know, if they want some business owners, ideally, we’re in a pretty comfortable financial position; ideally, that’s our goal. So if we don’t need our equity today and we’re willing to wait, I dunno, but you know, whatever the length of the term and is it, that term is again a Steve pointed out what they are comfortable with and what we’re comfortable with. There is no way that they are going to make any more money than unless they use us. You know what I’m saying? Like, they’ll keep all of their equity. If they use AR solutions, they do; you don’t have to pay us anything. We charged no commissions. We charge no fees. As Steve pointed out, we should lock in their equity so that they are guaranteed to get that chunk of money at the end of the term honor, before the end of the term.
Yeah. So while it works great for us, for folks who might have, like I said, literally with little or no equity, it also works great for people who have tons of equity and don’t need it today. And I just want to maximize their profit.
What are the common expenses that come with owning a business and buying a house? Okay. So, let’s do a little bit of math here. So let’s say that, let’s say that my house is, I don’t know, a $300,000 house, and I’m paying like $2,000 mortgage and in the end, and I’m a business owner in the weight of that $2,000 mortgage, it feels pretty heavy right now. Like, like I would love to be able to go rent an apartment. You know, we might have to downsize a little bit. I’d love to go rent an apartment, or maybe it’s a thousand dollars, but that additional thousand dollars a month right now feels pretty good. And, but given that maybe there was a bit of a dichotomy here that, like if I can free up a little bit of a monthly cash flow, I might still be willing to wait to get my equity because I realized that is still an investment in the property.
Owning a Business and Buying a House: Simplifying Real Estate Transactions for Homeowners
Right. So, do I understand you correctly that I might be able to get out from underneath the mortgage? I would also no longer be responsible for taxes, maintenance, and that kinda stuff, which is also a drag on my monthly cash flow. But, yeah, the money that I have invested essentially in the equity stays there for whatever period of time. And then, and then, and then, at the end of whatever that term is, I’ve saved some money on a monthly basis, and then I cash out later. It might track it with you.
You’re exactly right. So, if we enter into an agreement, our contracts will clearly say that we would be responsible for that $2,000 a month. In addition, we also are fully responsible for maintenance, repair, and upkeep, and all of that is off of your plate. So, having that off of your mind is awesome. But then also having your, in your scenario, move into something where it’s half the price of what you would be paying, you’re also saving yourself at a thousand dollars a month, which seems like a no-brainer solution. And you are guaranteed to get your equity. So, say your house is 300,000.
Why owning a business and buying a house is necessary in 2024? You have a hundred thousand dollar mortgage or a hundred thousand left. You are guaranteed to get that 200,000. Whereas at the end of the term, if you were using or selling traditionally with a realtor, the six average, 6%, some charge, less, some charge, more average, 6% write off at the top. And then you factor in closing costs and translate to have all of that stuff. So that’s a big chunk of your $200,000 equity and write off the top. And also Steve, we like to be extremely clear with people who have this, isn’t a fit boy, that’s just as important as you know who it is. And I’ll tell people if you need to access your proceeds from this property to buy your next home, let’s say you just put that actual equity into another home or on another investment.
We are definitely not the best fit, but if you are looking to maximize your time in your hands or what we usually average as netting people around 10 to 12% higher than they could ever on the axle, the traditional market is the reason why it’s a copper, for reasons outside of Lauren is already mentioned for all of our properties. So as you know, when you put your property on the market, what ends up happening is, traditionally, you’ll have a buyer find the house that is ready to get financing. If you have an inspection and the inspection comes back, they want a list of things to be fixed in a home. And then generally, I think it’s like a national number, like 94 to 96% is what people typically get a lot. They’re asking a lot of their asking price and when they sell their home. So when you start adding all these things up, it costs people a substantial amount of money.
Owning a Business and Buying a House: Stress-Free Solutions for Sellers
So with that, at least with what it is, we were able to provide some sellers, that’s how they were able to get that 10 to 12% higher, just because we’re, we’re not only not charging those things, but we’re also streamlining the process. So, it is a stress-free situation for these people until we go ahead and close it or agree upon a date.
Hey, Onward Nation. I wanted to take a quick break from the episode to share a practical and tactical resource with you. Well, we first released a profitable book, podcasting. It became a number-one new release on Amazon in less than 18 hours. Well, that was nearly three years ago, and we’re still getting great feedback on Hill. Helpful. The book has been to business owners just like you, as they launched a podcast to build their business. When I think of a strategy that you can apply right now during these challenging times, having your own show, which would be a conduit that you could use to teach and share your insights with your community, launch a podcast, or grow your existing show really should be at the top of your list.
I want to help you get started by giving you access to a free chapter of my book. Just go to PredictiveROI.com/Resources in you’ll get the chapter where I show you how to confront and overcome your three biggest obstacles to success. And we will send it right to your inbox. So what is the typical term, or is there not a typical term in it? It varies. Like, what is the length of time?
Yeah, that’s a great question. And so again, one of the greatest things about us in our solutions is that we are very creative, and we don’t like to put anybody inside a box, right? With that said, though, for some of them, we offer multiple solutions for people. So, for some of our solutions, the minimum term would be 36 months. And there’s there’s a reason for that. There’s another solution we can offer people where the term is 24 months and again, right, exactly. All of these are or less. And we just give ourselves out. And when the time comes, again, we like to overdeliver and underpromise, and you mentioned one thing about it: ah, it depends on the reasons why we had these terms.
Owning a Business and Buying a House: Tailoring Real Estate Deals to Unique Situations
An example of a situation of owning a business and buying a house – So here’s a reason why, like, for example, when we go ahead, and we look for a third-party buyer, someone who is just outside of finance ability, that’s our typical buyers. You can’t get a mortgage today. We actually pre-vet them. We know that they’re going to be mortgaged ready in three or three months of time, which is usually 6 to 12, 12 to 18, and 18 to 24, 36-month terms. We would like to give ourselves an additional 12 months, a month, to buffer because we are responsible for selling this property. And no matter what. So that’s why we give ourselves an additional, say, a year or if it was a 36-month length term to go ahead and complete the sale, as well as our whole point is we’re looking to close these deals out sooner than what we’ve promised ourselves. Still, you know, our typical buyers, they need around that much time to be able to qualify for a mortgage.
So if we give them a little bit of a buffer, just in case ’cause, of course, and things can happen or something like that.
What if some of our listeners are thinking, okay, I’m tracking with it and understanding the math and the transaction so far? It would be lovely to be able to save that thousand dollars in free cash flow. Then, the other things we talked about, maintenance, utilities, taxes, or those kinds of things, can certainly relieve somebody’s burden as they are trying to steal their business back to comb waters. Are there ever any scenarios where the majority of the equity stays put, but there’s a down payment of some sort to the seller?
Yes. So this is almost like a Lauren set of being the fact that we don’t fit any boxes. In all of the deals that we do, the whole point is to have our actual cellar to spell out the deal for us because we’re worth taking whatever it is that they are our needs. We are going to work around it, but I can’t go ahead and structure a deal. That is good for me. Where I’m working with, where are you working with people who have unique situations that need unique solutions? So we are going to work around it or whatever it is. And I do. We typically put it down. Payments are not a hundred percent at the time. It is just because we paid for a market value, but not that we have it enough to say we would. And it just needs to be a fit for both of us. That’s something that we obviously go through, and we’re having those conversations while Steve mentioned that it isn’t a fit for people who need equity out of their homes.
Owning a Business and Buying a House: Leveraging Terms-Based Deals for Real Estate Investors
Immediately, there are options for people to say, if they need it, say, if they have $200,000 equity guaranteed to them and they need out a new 20, 30, or whatever, to put up for a down payment on another home, as an option for them, it would be to refile and pull out some of the equity that they need, put it into their new home. And then we’d take over that new mortgage payment, or we would make those payments on their behalf. So they get the cash that you need. They are still guaranteed to get their new that new equity paint chunk of equity coming to them at the end of the term. But it also satisfies that need for a down payment. So usually, that’s a good option for people if they need a more substantial down payment upfront, and that’s not for everybody, but it works great for some people on the bank that is up to 80% for you to take out of your equity.
So what’s nice is when we do work with people who, who do have a time of equity that are looking to go ahead and purchase another house and have put down a down payment at the property that substantial their actual payment is a lower, more affordable. So that’s a nice little solution to refine it as well. But at the same time, I know that it’s so unlike a Lauren IRA, just to check on that patient or whatever that is, that what we specialize in that, that would have that new payment is going to be one of our responsibility is maintaining that payment while still getting them to the finish line. So they’re not in a pocket after they do that.
Okay. So, let me give you a different scenario. Let’s say that an Onward Nation listener is a real estate investor and his thinking. Hmm. I can see some interesting threads here, and I wonder if a terms-based deal so that he or she is not concerned about the monthly cashflow spread and where they’re really concerned about is getting their philosophy price. And so my assumption is, as I’m just trying to think of things like scenarios through my head here of what our listeners might be asking themselves, like, OK, I’m a real estate investor. Stephen, what I’m really concerned about is my asking price.
Yes, all of these other things are lovely. Could a terms-based deal help ensure that they are going to get the full asking price? And it may be more than their asking price. I don’t know. How does that work?
Owning a Business and Buying a House: Maximizing Returns with Assignment Transactions
What are the types of transactions that we do, especially with either investors or someone who is looking to invest in investing? We do what’s called assignments. So, the idea behind an assignment is very simple. It just means that we, as the business, will facilitate a deal for them. That means that we are going to lock into a place like we did before that is all the same or agree upon the full value today. But that then at that point we were going to do is we are going to bring your property at the market that above they’re asking price, and we are going to go ahead, and we’re going to make sure that the lease payment is going to be in an area where they can cash for it. So this is a situation where instead of us streamlining the process and taking on everything, we are actually going to set them up with their investment, so they can cash flow the property for a shorter term, but with a buyer that has so not only they got to get there, let’s use your example of Steve or a 300,000.
Have you used them before? Say they were looking for a thousand dollars. Okay. So we locked in the three and $5,000 where we bring the properties to the market to find a buyer at that point, and let’s say your payment was 2000 a month. You were looking to get it, or is that? Why is that covered, or is that your With? You know, if you are a cash flow, is that covered, let’s say I’m sure. Let’s say that all in on that. So let’s say we brought it to market 2,500. Let’s just say we use an example. We are gonna find a buyer. Who’s gonna purchase the property above your asking price? And we usually sell it at about seven to 10% higher. Let’s see if we sold it for 30, 30. Okay. Well, we are going to find a buyer, and we are going to pre-vet them to see who can afford $330,000 a house.
They can afford $2,500. If they’re going to make the payment, we are going to get their down payment or the actual diamond down payment plan in order. And what we do is after we have pre-vetted, we know exactly how long it’s going to take them to purchase the home. We know their credit scores are the answer to the entire background, or we’re going to wrap ’em up in a ball. And when we present them too, the actual seller investor can say, listen, if this was my home, this is why we should move with, so you’ll have the final say, who’s gonna Mark that’s who’s gonna move in the home because you are going to work directly with them. So you can cash flow the property. And our Sell will say, Hey, I looked at this packet, and I really liked this buyer. Let’s move forward with them. We go ahead with clothes with the buyer. Now, what they have is a short-term lease to own the buyer.
Who’s working directly with them instead of working with us? They are able to not only get their asking price of three hundred thousand dollars but also cash flow the property on a monthly basis. And with our lease-to-own buyers, none of their actual monthly payments go towards the asking price. Just the down payment is what incentivizes them to get a mortgage faster. So let’s say four 24 months, ah, it took for this actual buyer to close out. For 24 months, they have had cash flow. The property’s five hundred dollars, as you said, is after expenses of 2000 a month and is also cash along with $500. So in 24 months, you’ll have made $12,000 and rent spread.
Owning a Business and Buying a House: Harnessing the Power of Assignment Transactions
Okay. Let’s say he has a mortgage. I’m going to make up numbers again. Say the principal part of your P-I-T-T-I-S is $500 a month as well, which would make it easier. Do you have the benefit of the principal paying down your mortgage? Not the buyer. As I said, the only thing that’s going towards the asking price is the down payment. So let’s say they paid down another $12,000 of principal of your RV or a mortgage at the end of this as well. And you’re also the benefit of that. So right now, just based on those two things there, you’ll have made an extra $24,000 from both your rent spread for 24 months. Also, pay the principal out of your mortgage for twenty-four months. In addition, what we do is share 20% of our buyer state with the seller just from working with us.
In other words, they say we sold it for 35 to $30,000. Over 20% of that is like $6,000. Yeah. Yeah. So if we got $30,000 saved, we sold it for three 30, and that was their down payment, 30 grand. We would get an additional six grand to them, which is also on top of their asking price and 300. So now what we did, yeah. So now they’re at three 30 selling their house in 24 months, whereas in the traditional markets. So you went and sold it with a realtor at $300,000, and you paid them 6%, 6% for 30 grand, that’s $18,000 out of your pocket for selling your house, plus your closing costs or the transfer taxes. So now you are more like almost 25 to 30 grand under $300,000.
So what’s the difference? What is the assignment if you’re in a position where you are looking to create, whether a turning your own personal into a residence or, say, an investment property that you had a vacancy with a renter and you are looking to sell the property and do it in a safe way because the house is sold as is the buyers are a hundred percent responsible for maintenance repairs in the home and zip, the house is theirs. So it’s not like putting a renter, and you’re putting in a buyer who is financially financial, what’s the word I’m looking for a financially
Responsible, responsible, and financially invested in a home. But that’s what we do for a lot of other investors as well: facilitate these deals. They obviously have the last say and approval of the buyer that moves in a house while we make it so that they have a short-term investment back in return. Then, in two years, they can make it 30 grand in the house. That’s pretty impressive to be able to do that outside of what you can do in a traditional market.
Owning a Business and Buying a House: Retaining Property Title in Assignee Transactions
Agreed. Okay. So Lauren, in that scenario that Steve just described, if it, again, if I’m the investor in that scenario, do I still maintain the title on the property, or does the title go to the buyer like it at closing? Like, When does that translate?
Yeah, that’s a good question. So, in that scenario scenario, no, you hold and maintain the title. The title does not transfer until the third party has been a buyer, obtains their financing, and officially closes on the home. So you still see the depreciation, right? Which is awesome. You are still able to get all of those tax benefits, you know? Well, for all the people paying your mortgage, okay. Awesome.
But it was Steve who was going through the numbers there. And I was thinking of as like putting my investor hat on, I’m thinking, okay, that’s, that’s a pretty sizable return. And I’ve mitigated my risk by, with what Lauren just said, still owning the deed. I still maintain the deed and title to the property. Then, if for some reason the buyer doesn’t work out or whatever, I’ve still been making to Steve’s point the $6,000 per year. And if I’m a good steward of that additional money, then wow. That’s okay. I get that. That’s really cool, okay? So let’s say that a buyer comes to you and maybe this is why you go through the six-month kind of increments in the deal like Steve was talking about before, like six months, 12 months, 18 months, 24 months, all the way up to 36 months or, and probably even further, is that, is that because, excuse me, is that because you are helping them sometimes either repair their credit or strengthened their credit?
Like you give them a really solid footing. We are talking about the buyers here, the tenant buyers. Is that why?
Yeah. So again, as steep as we’ve been talking about our buyers or just outside of the finance ability usually So again, for a self-employed buyer, they didn’t have enough income. You know, on their tax returns, if that’s all there is great. However, there are other people who may have had some dings to their credit, and we need some credit repair, which can also be very difficult to navigate on your own. So, part of our buyer process is that we, as Steve had alluded to, send them to a tenant screening company, and they provide us with a bunch of information. One of the most important things for us is to know when they would be quote unquote, market-ready, and as their credit is insufficient, we require them to enroll in credit repair.
Owning a Business and Buying a House: Navigating the Path to Homeownership
So those people are the third-party credit repair company or the experts. They know exactly what to do. They know what you should do. They know what you shouldn’t do. They will literally tell you, okay, you need to get a revolving credit card. You need to pay this debt down. Or we can expunge these XYZ things from your report, whatever. Yeah. Whatever it is, they know what they’re doing. And they’re the experts at that time. So we have that window in that report, apart from all of the things they give us. So they tell us within this chunk of time, 18 to twenty-four months, for example, they’ll be mortgage ready. So that gives us enough, but that gives us a great, sort of a sense of how much work they need to do and what it’s going to take for them to get to the window of a finance ability.
And we actually have a great lender that we work with regularly, and he knows the ins and outs of these deals. So we also have, our buyers are in touch with her maybe six months or so, maybe even a year, if they want to start talking with her on the second day, we went to the Home even better visuals, great initiative. But that way, she knows, and she can tell them, okay, this is what our underwriter needs to say. Let’s focus on this. So we have a bunch of different players involved here, all with the same goal of getting these buyers to the finish line and helping them achieve that goal. That’s been alluding to them for however long.
Does this. This was awesome. Okay. So I know that we’re quickly running out of time. So let me try to summarize something or a link, something else that you just said back to our earlier conversation when you say giving them across the finish line. So I’ll be in a slum, or I’m going to make an assumption that you’ll be on my litmus test. My sense is that when the two of you help, maybe an investor will get a great return. And in that same deal, you find a tenant-buyer who needs some help. They need some help getting across the finish line. Unfortunately, they have a long track record of everybody telling them, no, that is not possible.
Did you can’t have your dream that you can’t do this? You can’t do that. And so my guess is, and the assumption is that when you’re able to bring both parties together and knit that together in that tapestry, the deal is then done. My guess is that you’re two hearts with a whole lot of joy when that happens.
It absolutely does. Even as you talk about it, I can feel it because it is such an amazing feeling. And seeing them right across from you and you have tears in their eyes like, Oh my God, you know what I mean? It’s like I can literally do this all day. This was the most amazing thing about having two completely opposite parties.
Owning a Business and Buying a House: Bridging the Gap to Homeownership
They have exhausted, like all these other options, and nobody can help them. And then for us to be able to put these two parties together in complete the transaction of people who are, everybody deserves a second show. And to be able to do that with our bars means you have some credit blurbs in our history, and then they were 18 and 30 years old. And these things are still hanging over their heads. And they’ve been spending the last 12 years trying to get out from under this. These are the kind of people that we are looking to help on a daily basis. And we, our whole business, are based on investing in people. That’s what we’re looking to do. We’re looking to bridge that gap between people who don’t have the traditional solutions and maybe banks that have turned their back on them. Whatever it is, we are willing to invest in the process as long as they are willing to invest in the process as we are.
We want to work with anyone that we can see the special needs, any kind of him. And I mean, again, we’d been talking a ton about people that have had maybe some credit issues are people that just need a little bit more time to share their income, but with this year and COVID turning everything on its head, we even have buyers who have stellar credit scores have a great income history, but they are still getting turned away at the signing table. Yup. Because the bank just happened to do another employment check or something like that. Two days before, something punky came up, and now they’re completely at the signing table with the closing table, you know? So, it’s not just for people who might be struggling in one way or another at this point. I, again, of course, am as effective this entire year as everybody else, as I would love for things to go back to the norm, whatever really needs a light before this.
But again, I don’t know what’s coming; nobody knows what’s coming. All we know is what we’ve seen. And we’ve seen a huge increase. As I said, in these normally acceptable buyers in the bank, eyes getting turned away at the closing table, which is painful to think about it.
I can’t imagine how devastating that would be for a family who’s on a day that they are super happy thinking that they’re signing for their new house and they’re getting ready to move in, and they’ve made plans and all of that and told family and friends.
Great excitement. It’s terrible, terrible. For those, I think of every possible scenario for these four people. What if they just sold their house? Now, they have nowhere to go. So well, at least for the opportunity to, as Lauren said, they may not be your traditional person that goes out there. They are self-employed. Is there some kind of credit card? It could be as somebody who is using a lease to own a vehicle to be able to save up for a down payment or a position to have some more affordable monthly payments. There was a myriad of reasons as to why, or at least, and I’ll give you a beneficial answer. This is not like they don’t have to fit in a certain box, but it’s amazing.
Owning a Business and Buying a House: Last Bit of Advice and Connect with Steve and Lauren
You know, all the situations that people are in don’t allow them to have your traditional, like the look of a house in your home. What is the home provider? I think it can be like a family dinner as well with my family, where we rotated for, or every week, it’s somebody else’s, it’s my sister. So to see my mother, my other sister, and us, I think of these things that we may look at and as maybe a take, take it as it took it for granted. Yeah. People could be living in an apartment right now and not be able to have they’re burning money for an apartment when they w they have two years to fix something instead of money apartment that can get in the house today where they can go ahead and have these experiences and be proud of where they are living but still be working on getting financing, but having all at the same time, what’s beautiful about having that opportunity.
Alright. We had somebody actually, one of our favorite buyers, not that we play favorites, but one of our, and so they ended up saving like $1,500 a month by moving into their own rent on home from the apartment that they were renting, like a two-bedroom apartment in a city, they moved into their own home the land and they’re saving $1,500 a month also paying my trip months in advance. They’re just like the most amazing buyers they love. They’re so appreciative of what they’re doing, what they have, so it’s a very fulfilling feeling.
That is very clear how fulfilling it is for you guys to be able to solve problems for people who need it: investors, business owners, and tenant buyers; you guys do a great job in sharing the insights and wisdom, your insights and wisdom with Onward Nation. I know we covered a lot, and we did some math along the way, but before we go and close out and say goodbye, and anything you think we might have missed, and anything else that you’d like to share, then please do tell Onward Nation the best way to connect with you.
Anything we missed? I don’t think we missed anything. You just want to say, Steve, I’m super appreciative of having this opportunity to be in front of you and your audience to thank you for having us. And if you guys have any kind of situation that you feel is unique, there are plenty of people out there like us who can help you with plenty of resources. Feel free to reach out at any time to be there for us or anybody in your ears. Yeah. Well, I mean, I just feel especially grateful for this opportunity to be here.
And I also feel especially grateful for our buyers and our sellers that are open-minded enough to hear about how we can possibly, and, you know, doing that might be a little success because it makes me feel so good, but I just feel very grateful and very thankful to have the opportunity to do what we do. You know, it’s rock solid. Awesome. Holy moly. Bananas. Oh my gosh. That was rock solid. Awesome. And Holy, but in the Steve, you stole my line in it, but it isn’t that awesome. When we can do something that we’re obviously passionate about, and it’s helpful to others.
And as you said, I could do this all day long. Right. Because it gives you that’s when you know that you’re in the right business when you were here, and when you truly get that.
No, it’s totally amazing. Yeah. Okay. Onward Nation, no matter how many notes you took or how often you go back and relisten to Lauren and Steve’s wisdom, which I sure hope that you do, the key is you have to take the math, the process, the strategies, everything that they so generously shared with you today, take it and apply it into your business, into your personal life and accelerate your results in guys. I thank you again for saying yes to come on to the show, to be our mentors and guides, and to help us move our business and our personal finances forward.
And Onward to that next level. Thank you so much. Lauren and Steve. You are so welcome. Thank you.
This episode is complete. So head over to OnwardNation.com for show notes and more food to fuel your ambition. Continue to find your recipe for success here at Onward Nation.
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