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The Titanium Vault hosted by RJ Bates III
Grant Kemp: Creative Cashflow Genius
February 01, 2019 Grant Kemp
The Titanium Vault hosted by RJ Bates III

Grant Kemp: Creative Cashflow Genius

February 01, 2019

Grant Kemp

Grant Kemp is a real estate investor based out of Dallas, Texas that is also the host of "Grant Teach Me Something" on Propelio TV. Grant specializes in creative financing solutions with real estate transactions including seller financing, subject to's among others. We dive into why he believes owner financing is the purest form of passive income and better than rental properties. Later in the episode, we discuss a Texas bill that is trying to be passed to limit the ability to wrap a mortgage. Please visit to help eliminate this bill and allow investors to continue to wrap mortgages!

Grant Kemp is a real estate investor based out of Dallas, Texas that is also the host of "Grant Teach Me Something" on Propelio TV. Grant specializes in creative financing solutions with real estate transactions including seller financing, subject to's among others. We dive into why he believes owner financing is the purest form of passive income and better than rental properties. Later in the episode, we discuss a Texas bill that is trying to be passed to limit the ability to wrap a mortgage. Please visit to help eliminate this bill and allow investors to continue to wrap mortgages!

Episode Transcript

Speaker 1:0:01What's not real estate investors, entrepreneurs and agent's right place unlocking the secrets to real estate investing and entrepreneurship. Welcome there. That titanium vaults posted by rj bates, but third, here's RJ.

Speaker 2:0:25What is up everybody? Welcome to the titanium vault. I'm your host, Rj Bates. Today I'm sitting down with fellow propeller TV hosts. Grant camp. How you doing buddy? What's up, man? Thanks for having me on here. I'm, I'm glad to be here today. Yeah. So if you guys have not checked out every Wednesday on propelling Yo grant has a show called grant. Teach me something that I think you were the official first like outside of Propeller Geo TV host, right?

Speaker 3:0:52Was. Yeah. And actually, um, and it may have been the, uh, I may have been the first, like legit, like propeller gotb thing period. But basically what it boiled down to is, as I was recording the modules for propelling academy and for the creative academy, um, I was there every Wednesday recording these things and, and Ryan, one day was driving in and he gave me a call and he was like, man, what do you think about doing like a, like a live show? Like every week let's just put up a live show. I'm like, I don't know, it was Kinda like grant teach me something or something like that. And that's what flourished into really the propeller Yo Academy and, and propel LTV and all that kind of stuff because we've seen that, you know, the, the, the investor at large, um, needs some assistance, need some knowledge, needs some, some people like, like you and me who have been there, done that and are able and willing to share that information with somebody else to help them get where they need to go. So it's been a really cool experience. It's been a really fun time for us to be able to sit down and, and, and, you know, help everybody out there buy more houses.

Speaker 2:1:58Absolutely. Man. And you know, I guess I owe you a thank you because of the opportunity that you got to open up for people like me to be a part of propeller and the propeller Yo TV family. Um, it uh, I have to be honest like every Monday I kind of dread Tuesdays because it is, you know, I mean it's time consuming to go to the studio and, and, and recording everything. But every Tuesday when I walk out of there, I'm so on fire and pumped up to see all the people commenting and asking questions and giving feedback on man, you know, I listened to last week's episode and I implemented what was taught and it actually worked and there's so much. There's so much different experience on there between, you know, what we do here at titanium with being virtual and wholesaling and then you go on there and talk about owner financing, right? Corey Thompson talking about mobile homes and all the craziness that he does. And then of course you've got Daniel Moore, who's just, you know, he's a genius,

Speaker 3:3:00he's a genius and all things real estate investing. And then he got the quest Ira and then you got the Iron Hill's ladies. I mean it's just, it's, it's an amazing cast of people and then just a ton of great content. So if you haven't checked that out, check checkout propeller Leo on either Youtube or facebook and uh, there's pretty much a show everyday of the week, Monday through Friday. So. And I hate that. I think you nailed something there too when you said the propeller Yo family. I think the sense of community that's been had through a everybody that's watching those things and you know, part of this podcast and that kind of stuff, that's really the winner here, right? That's the fact that we, that we have, we, we've been able to state a standard for what, you know, podcasts and, and education should look like that.

Speaker 3:3:45You're never going to tune in and have somebody say, Hey, pay me $500 so I can teach you how to pay me $20,000 right here to get real actionable information. And that has built a community of folks that, you know, I've got a student down in Houston that, that, uh, actually the story even goes larger. I've got a student here in Dallas that got a deal down in Houston. Well, I've got a student down in Houston that I was like, okay, well, you know, let's shoot it down to them, see if they can do anything with it. They liked it and uh, but they needed an agent to be able to help them. And so, you know, Elizabeth never ready as part of that community and the propeller yo world and she's always watching the videos and got involved on the iron hill stuff. And so I was able to connect her with these guys and they were super pleased.

Speaker 3:4:22She ran, she ran the, uh, her husband ran the, uh, construction for the deal. She found the owner finance buyer for them, you know, and, and all of that being part of this community, um, it took like two or three phone calls and three or four people were able to make thousands and thousands of dollars off just because we were able to connect them all through this type of stuff. So I guess the reason why I bring that up there here is that if you are listening, you are part of the community and we are here to help you. We're not here to. I mean yes, we're going to get benefits out of it. Let's not be disingenuous and act like it doesn't help us in some way, you know, but our are our calling and the reason why the people who are doing these things are where we are is because our calling is to try and help other people succeed.

Speaker 3:5:06And as a listener or as a viewer, you are part of that community. And having access to all of that community is just a massive part of success because it's not about what you know, it's about who you know half the time, you know, absolutely. In, and there's literally nothing that makes me more excited in this business. Then someone reaching out to me and saying, Hey, you know, I listened to either the titanium vault or something on a propos tv, and because of that I now found success because so often, I mean there's people that tune in to either one of these and they're just, they're so obsessed with trying to find their way in this business and they're lost because either they did spend way too much on an education program that did not support them on the back end and they're just, they need that little bit of guidance or that network of people and a propeller has done an amazing

Speaker 2:5:58job of that. So with all that being said, who is grant camp and, uh, why, why should, why should people be interested in listening to us today? Talk about what you're doing in real estate.

Speaker 3:6:12Um, I feel, I feel like a flashback to that. What was the arnold movie kindergarten cop? Who is your daddy and what does he do? That's the best arnold impression you get from me. I can do much better. I'm sure you can. Sure you can actually, as a matter of fact, I want the rest of this interview done via Arnold Schwarzenegger. Impressions from your stand partner Cassie. So happy. She says when I get angry, I sound like arnold sorts of nature. So, um, so my name is Greg camp. I'm from creative where we help you buy more houses and that is our, that is our spiel. That's what I'm doing. So I have spent the last uh, uh, sevenish years, seven or eight years, I guess I'm coming up, I guess it's eight years full time in real estate. In that time I've done 80 to $90 million dollars worth of seller financing transactions.

Speaker 3:6:59Um, I, you know, I founded a company named Texas pride lending, which some of you may be familiar with. I sold that a few years ago after we, uh, uh, you know, it took us only in about a span of two years. I grew that to be the largest low service in the nation. I'm sold that company so I could focus back on my real estate side, the investing side, which is why I quit my job in the first place was to make money in real estate and a and went back into it. And so they're um, I'm doing a lot of owner financing. That's my primary niche. That's what I really enjoy doing. Rap Subject to whatever the owner financing is as a slew of different options. But I do rentals. I do fix and flips. I do wholesaling. I mean if you've, if you've heard of it, I've done it with the exception of tax sales.

Speaker 3:7:38I haven't really gotten involved in tech sales. And then you know, from that I saw, I found that I just, I really have a passion for teaching people how to do this stuff. Quite frankly. I enjoy teaching people how to do it way more than I actually enjoy doing it. And so I've pushed over into that world with a creative and so far I've seen tons of successes for tons of students who have been able to get out there and get things moving for themselves. And like you said a second ago, rj, that's what fires me up. That's what keeps me getting up in the morning, is seeing other people succeed off of that. So that's grant and a 30,000 foot view. I quit my job to invest in real estate. Did owner financing, started Texas pride lending, solid Texas pride lending, uh, went back into owner financing and real estate investing. And now I'm in doing, uh, uh, the training side of things.

Speaker 2:8:20So let's, let's break down to everybody that's listening. Why do you feel owner financing is a better option than a rental property?

Speaker 3:8:31That's a really good question. And, and you know, this is something that we've talked about before off air, but I, you know, just to, just to clarify, I don't hate rentals. You're going to hear me crap on rentals a lot, but I think that it's. I think that it's a, a kind of a necessary evil because I think a lot of people need to have that sort of slap of reality in the face of what a rental is and what a rental isn't. Right? A rental is not a way for you to quit your job, not really have money to get into real estate, not be super loaded by a bunch of rentals and all of a sudden be rich. I think the false logic is that a lot of people have seen that rich people have a bunch of rentals and assume that people got rich off of rentals and that is not the case.

Speaker 3:9:11It doesn't happen that way. You get rich and then you get the rentals, so rentals are good if you don't need to make money on that, and of course I've got probably I probably have 40 percent of the audience right now ignoring what I'm saying because I think I'm wrong and I'm going to ask you, how many people do you know that actually started with no money and got a bunch of rentals and became well often and enrich how many people you actually know that that has literally happened to and my, my, my response will probably not be very many at all. Of course there's edge cases. Of course there's people that have done it, but it's not. It's not common. I know a lot of people in this industry and it's just, it's just not common. So people think, I'm going to get rentals, I'm going to make all this money off the cash flow.

Speaker 3:9:53Everything could be going great. I know I've got another 40 percent of the audience saying, well, I make $500 a month on my rental. And the thing is, is that, you know, of that have that portion of people, most of the time, if I keep digging that 400 or $500 a month that they're quoting is a gross income number. In other words, their rent is a thousand dollars and they're paying $600 to the bank and, and, and Rj, you've got rentals. If I, if that's my case, if I'm getting a thousand dollars rent and my payment to the bank of $600, am I making $400 a month?

Speaker 2:10:28No. You know, in all reality, you're probably upside down. You just don't realize it yet. And that's the, that's the, the, the hard truth about rentals. And, and you don't really realize it until you're too far in. And, you know, this episode is going to be coming out on February first, and so this is right in the state of Texas is the day after the day, tax day. Um, we're, we're all property taxes are due. And uh, you know, that's a time where everybody kind of realizes like, holy crap, like this is not what I thought I signed up for. Um, especially

Speaker 3:11:09their heels dug in and nobody wants to admit that they're not making the money that they thought they were going to be making. It doesn't sound good to say, yeah, I'm happy to break even on my rental. Right? But I guarantee you the vast majority by a large margin of landlords are breaking even. And you know, that's, that's, that's what you're hoping for, right? If you can afford to have rentals long enough for them to be paid off, that's when you get into rentals because then when they're paid office, when you make your money, the other rule of thumb is you better have. If you want to make money, if you need to make money on that cash flow, your rent needs to be twice what your payments the bank is. That's kind of a rule of thumb of like, okay, if you're going to cash flow on this deal, double what your payment to the bank is.

Speaker 3:11:50That's what your rent rate needs to be. If you want to expect to make anything on cash flow. So there's kind of a spiel on, on rentals on that side. Now the question was why did I get into create or to a creative financing and seller financing side of things. And, and the answer to that side frankly, is the fact that I didn't have any money when I quit my job to do this. I had about 1500 bucks that I could, that I could apply to real estate. Um, uh, if you are listening right now with a job and you have $1,500 in your account, I am not telling you to quit your job today and go pursue real estate. But that's what I did. Um, I spent a long time researching, you know, on my Mr Google saying, how do you buy real estate without having any money and uh, and the route that the majority of the people take is wholesaling, you know, and that's, that's where the majority of the people go when they, when they want to get into real estate, don't have the money to buy those properties, are wholesaling is a great option.

Speaker 3:12:41Well, here's the thing with owner financing, when we sell that property, we're getting a 10 percent down payment, which will typically give us four, five, six, $10,000 up front, which is akin to your, you're wholesaling a average, the average assignment fee, um, and then you're setting up 300 $5,400, $600 a month in cashflow. Our average is $350 a month in cash flow. Now the thing is if my payment from my owner finance buyer is a thousand dollars and my payment on my bank loan for that owner financed property is $600, I am making $400 net cash flow that you're in or owner financing your gross is your net. The amount of difference that you have between your payments actually is money that you get to count on and go buy groceries with. And, and, and let me ask you this. Do you have a uh, do you have a mortgage on your, on your own house? Have you ever called that mortgage company and told them that your toilet was leaking? No. That's the beauty of financing, man. We're a mortgage company.

Speaker 2:13:49I, I have owner financed properties before and I have had the, the bb will call me and told me that their toilet is leaking and I have had to have that conversation where I'm like, my name is no longer rj bates. It is actually chase bank now chase bank. When toilet leaks, you need to fix it yourself. But yeah, I think you bring up a great point though. I mean, you know, just breaking down the difference between a rental and an owner finance and you know what your cashflow is on the owner. Finance is reality and in rentals you never actually know what your reality is. It's all looking good

Speaker 3:14:28back over past years and saying, what did I actually make over the last couple of years? You can never say I'm making this money this month that I get to spend this month.

Speaker 2:14:35You could set aside for capital expenditures, you can say set aside 10 percent of your rental income, so say your rent is a thousand dollars and you're setting aside $100 a month for a capital expenditure. So that's if the air conditioner goes out, the roof fails

Speaker 3:14:52and you, your insurance won't cover it. Foundation plumbing, whatever could possibly go wrong, but as a rental you still never know when those problems are gonna arise and how much they're gonna cost. I mean, I liked it. I like to point out because a lot of the averages that we get is about $400. My average that I hear people saying is the difference there. Gross cash flow is about $400, $300, somewhere in there, most of the time. Uh, so I'd like to point out, okay, look, you're making 300, let's say let's say $350 a month and your air conditioning unit goes out. That's five grand, six grand. So now you're not making any cash flow at all for the next couple of years. Right? Well what about in that couple of years if you have a vacancy for a thousand dollars, well that costs you a thousand dollars. So that's three more months until you make a net cash flow.

Speaker 3:15:41Well, what happens in that two years and three months when one of your tenants slides the sliding glass door and it breaks and you have to replace a thousand dollars, like, you know what I mean? Like it always just keeps pushing and pushing on and pushing out, pushing out to where you are really actually not making any money, you're just trying to break even on this deal because of your cap. X is. So let the argument against this is his, but I'm not on an owner finance. I'm not capturing the appreciation and I don't have the large payoff, you know, in 20, 25 years, I don't have a house that's now free and clear that I can sell for a large payday. So what are the benefits of it to the rental side, right? Like, yes, you do get appreciation of the property over time and you do get tax benefits for having a rental that you wouldn't have on, on having an owner finance deal.

Speaker 3:16:39Right. The appreciate the appreciation side is less of an issue though because, and I, you know, I don't want to get too far into the weeds here because I think it can be difficult over audio to try and, you know, sometimes drawing pictures really helps with this stuff, but let's from 30,000 foot view, most of the time if we're getting into a deal, uh, with owner financing, that means that, that we bought with owner financing as well as sold with owner financing and other words, I didn't bring money to the table to buy this house. Um, we are buying, it may be subject to or something like that. Taking over somebody's payments. And most of the time, our average is about four percent on that payment. Okay? Four percent on the mortgage that we're taking over on. And then we're going to sell it to an owner finance buyer at nine and a half to nine point nine percent.

Speaker 3:17:21Okay? So that spread right there. What that ultimately boils down to mean is that we're paying off our underlying mortgage much faster than we're paying off. Or then we're all being paid off by our buyer. Okay? So in other words, when we buy these houses, subject to taking over on payments were typically taking over on a loan that has 22 to 28 more years left on it. If you're familiar at all with how an amortization schedule works, the very first section of those payments. So for instance, on a 30 year mortgage, these first few years are going to be where all of that payment. Say you've got a thousand dollar payment, $950 of that payment's going towards interest. $50 is going towards your principal. As time moves on, that number changes to where like, you know, 15 years in, you may be paying a whatever, $400 in interest in $600 in principle.

Speaker 3:18:12The way that you know, the way that amortization works is it's always the same payment, but as time goes on, more and more of that payment and a percentage form is going towards the principal than the interest. The reason I bring that up is that when we buy these houses and we're taking over on payments, we're already two, three, five, 10 years into those payments, right? So we're at the point where we're hitting more principle towards that underlying payment than we are interest, which means that not only are we paying off that loan more quickly because we're hitting more principle, but we're paying off that loan more quickly because it's interest rate is only four percent. Meanwhile, we're starting a new 30 year mortgage with our buyer and they're good at nine and a half or 10 percent. And so their principle balance is being knocked away very, very slowly because they're still at the very beginning of that amortization schedule.

Speaker 3:19:00So what I'm saying here is that no, you're not capturing the appreciation of the property itself, however your net worth is still growing because the debt that you have on that property is shrinking way faster than the than the receivable that you have on that property. Therefore your net worth is still growing over time. So my response to the appreciation argument, it's like, okay, yes, if you've got great appreciation years, of course that's going to outpace what you get in this race, but your net worth is still raising over time with an owner financed property does not know that's a lot of numbers and a lot of of of a conceptual stuff, but does that, does that make sense? Does that logic out for. And it's something that I always have to tell myself anytime I structured an owner finance deal that way. Let's kind of shift gears a little bit and I want to ask you, what are your thoughts about purchasing a property using either private money, hard money cash, and I'll redo it and then doing a cash out refi for a 20 year amortization loan and then owner financing it on a 30 year amortization.

Speaker 3:20:07What are your thoughts about doing that? I think it's excellent. Um, so you've got to back into the deal. You got to figure out if you're going to be making cash flow, what kind of cash flow you're requirements are going to be, that kind of stuff. But again, we don't have cap x so we don't have to worry about that little buffer, right? My minimum in the stage of the career that I'm in my minimum is one $50 a month and cash flow that I would like to get on my deals right now. However, that's a rule of thumb and that can always be amended and one of those reasons might be, well, I've got really good terms on my underlying debt. I'm not going to be barely making anything on this deal for the next 10 or 15 years, but when that's done, we're going to be, you know, just bringing in like gang busters.

Speaker 3:20:43I think what you've said is a really, really good plan. Now you need to talk with your bank and your lending entity, whoever that is and make sure that y'all are on the same page about you wrapping that mortgage, um, because you are going to be signing personally if you're going to a bank and getting that kind of loan, you are going to have personal liability and you do need to or personal liability and you're going to need to be concerned about your due on sale clause. And that'll be something that we get into here in just a second about this. Um, but I buy a lot of deals with. I mean, frankly, the majority of my properties this year were purchased with private capital out of somebody's IRA that we worked a 15, 20 or 30 year and more on. We're paying them eight ish, nine ish percent, uh, for the money.

Speaker 3:21:20And then I'm wrapping that to a end buyer and that's where the majority of my deals were done this year because subject to for lots of market reasons is not necessarily the biggest strategy right now. Now as that correction happens, our market correction is going to occur in a down market. Subject to is your savior. Subject two is going to be the thing that keeps all you fix and flippers and all you wholesalers. That would have been the guy that works at atmos energy in three years and says, man, I was doing really well in real estate until the bottom fell out. Subject to is your answer to that. Right? But for now, that's not where our market really is. And uh, that I think that private capital, your, your refi option into a rap is an, is an excellent option.

Speaker 2:21:58When you just brought up a really good point about what you were talking about previously, you're borrowing private money at eight or nine percent interest and the reason why you're doing the a because you're buying at a discount, right? But also because of how it's, it's breaking down the amortization with, with your buyer. I mean if you're buying at a discount in your, say you bought a property for $50,000, but then you go owner finance it for $100,000, that's how you're able to do that on the interest rate essentially being almost the same

Speaker 3:22:28and, and even could be more, uh, you know, I think that that's one of the things that I have to train students oftentimes is that we will think, okay, I can only finance my house for a, you know, less than nine point five percent because I'm, you know, I'm, I'm going to be financing it to somebody for nine and a half percent. And, and let me just give you some real quick numbers here. If you did 100,000 dollar loan at nine and a half percent for 30 years, that's 840 bucks a month. Okay. That you would be getting in from your borrower. Now, for the sake of just ease of use, if you're, if you're getting private money and you wanted to make a minimum of $150 a month on your cash flow, that would mean that you would need. Oh No, I'm sorry. I'm sorry. Eight 40 a minus 1:50. I did that wrong real quick. Um, Gosh darn it. I see. I act like I can do this all on the phone with somebody, which I typically can. But um,

Speaker 2:23:27just pushing all the wrong buttons. Get it to where you're at. Six Ninety six is when I pay,

Speaker 3:23:33so I could pay. If I have a lender who's willing to do 12 percent well basically I just need my basis to be $67,000 and I'm still making $150 a month. In other words, if I get a house at 67 percent of the ARV total basis, meaning our loan with our lender is $67,000. We can give them 12 percent for 30 years and still make $150 a month on this deal. Financing it out at nine and a half percent. Yup. Lots of numbers there. But the principle being don't get so scared of what your underlying liens interest rate is for the people that have never done in owner financing deal before. And I know there's a lot of factors that go into this and there's different ways to do it, but real quickly just take a couple minutes to explain all the steps that they need to take as far as what an Rmo is and how you actually structured in explaining to the actual buyer what they need to bring to the table as far as down payment and escrowing taxes and insurance and things like that.

Speaker 3:24:40Right. So, you know, that's, that's a difficult thing to do in a, in a one paragraph. So I, so forgive me for those of you who know more about this and you're like, oh well that's pretty 30,000 foot view because I. because you know guys, I've got a 15 hour course on how to do this. So just to, just to take it from the 30,000 foot view, let's, let's, let's a disregard for the sake of your question, only asking on the disposition side, let's disregard all of the acquisition side. Your question was primarily, if I'm going to sell a property with owner financing, what are our steps? They're steps there. You're going to contract it, you've got to get an idea of what you want it solid for a, I'm going to implore you to never accept less than 10 percent on your downpayment for lots of different reasons.

Speaker 3:25:23Um, it's not a requirement by law or anything but I, but I really, really, really, really, really encourage you to only men take a minimum of 10 percent. And then you know, what you're going to do is you're going to send to that buyer over to and m, l o, that is a dod frank appointed title for a loan officer Dodd Frank had calls it our Mlo. So that's what it is. Now, it's a residential mortgage loan originator and this is going to be somebody that is licensed by the state and country, state and nation. I guess this the right way of saying it, uh, to originate these loans and what they're going to do is they're going to take a loan application from your borrower. They're going to run their credit and they don't make the decision. The arm alone does not make the decision.

Speaker 3:26:02What the RMO alone is going to do is they're going to collect all the paperwork that you need to make the decision on your borrower to where if you say yes to this borrower, then you will have what is called a qm by dodd frank standards. Other words, a qualified mortgage. Now there's a lot of misconceptions about what a qualified mortgage can and can't be. I'm going to, I'm going to say it real short here. You can basically charge any interest rate you want. We don't have a minimum dti. In other words, we are a maximum dti. We don't have a maximum debt to income ratio and we don't have a minimum credit score. Okay? So technically you can put somebody into your house with no credit and a 99 percent debt to income ratio and still have a qualified mortgage, which is what gives you all have your protections in court if they were ever able to fight or if they ever wanted to pursue in the future and say, Oh, this big bad investor put me in a bad position.

Speaker 3:26:54Uh, there's a lot of caveats that go along with that. But again, we're trying to keep it 30,000 foot view. So you send them to the arm of the arm is going to gather all of that paperwork and say, here you go, Mr and Mrs Investor, if you choose to move forward with this person, here's all the information you need to show that you have a qualified mortgage. You're going to say, cool. You're going to look at it. You're going to see their credit report. You're going to see their bank statements. You're going to see that they've signed all the same disclosures that they would have signed if they had gone to wells fargo for a mortgage. All of them, same respite stuff applies. We're gonna get all of that stuff done, and then when you say, yeah, this is cool, this is who I want to move forward with, then what you're going to do is you're going to schedule out your closing with your closing agent.

Speaker 3:27:29Okay, now this, in Texas, um, there's some timelines that need to be adhere to here. Uh, when you contract your, your buyer, if you have an underlying mortgage and underlying lien and other words, you've got debt on the property, you've got to disclose to them that you have debt on the property and you cannot close until seven days from that point in time. So they're a little bit of waiting period there. There's also a waiting period from the time that they go to the RMS low and they sign a, uh, some disclosures there. You have to wait seven days from that disclosure, right? So we typically say 15 days from the, from the signature of the initial contract is a good time to give your attorney's going to take that top documentary, to take your purchase agreement. You're gonna take everything and send it to your attorneys and say, I want to close this deal with this person.

Speaker 3:28:11The attorneys are going to schedule that out and you're going to tell your buyer that they need to bring a one year prepaid insurance policy for that loan. Now what goes on that insurance is a. again, it's another big long explanation. I actually have a entire hour long episode on propelling a grant. Teach me something specifically on how to do insurance. I'm at creative I've got a couple of different insurance agents who have done interviews on how to have this insurance done. Very important that insurance has done correctly, but they're going to pay for a full one year prepaid insurance policy at closing, so they need to come with that. That's gonna typically cost them, you know, whatever. 1,500 bucks or so. They also are going to be responsible for paying all of the closing costs for this deal. You don't pay closing costs when you're selling a property in owner financing.

Speaker 3:28:56The buyer pays that so they may be looking at, you know, with the arm a low fee and with the attorney's fees, they may be looking at about $2,700 worth of closing costs plus the whatever, let's say $1,300. So I can make my math easy on a prepaid insurance policy. So now they're looking at bringing $4,000 to close and you need to collect two months of escrow payments in advance. Okay? You don't have to, but I'm telling you, I'm imploring you. You should. The law dot frank actually allows you to, and I don't know why they phrase it this way because it's the government and they do things stupidly, but in the, in the, uh, in the actual act itself, it says that you can collect one sixth of one year worth of escrow payments, which is two months. Like, why would they say one six of one year?

Speaker 3:29:39Why don't they just say like, are we gonna? Are we planning on changing how many months or in the year? I don't know. But anyway, you get to collect two months worth of escrow. And a really encourage you to do that because that's going to save your butt at d day whenever it comes down and the next year and their insurance has gone up and their taxes go up. It keeps you from having to reach into your pocket to make up the difference. Excuse me, the difference. So they're bringing 4,000 bucks plus two, but two payments of escrow. So they may be looking at four to $5,000 worth of actual closing costs and bringing to the table, plus the 10 percent down payment that they need to bring you in order to buy that house. Once you go to closing, you're going to sign everything. You're going to record everything. And guess what guys? Now it's their house and you are the Bank of Rj, you are the Bank of whatever and your job. This is really passive income. This is what everybody acts like, rentals are, which is mailbox money. You don't do stuff. They pay you on the first and if they don't, you take the house back. That's how that works, you know?

Speaker 2:30:37Well, I appreciate you taking the time to break that down because I know you're so knowledgeable in this area in like you said, you have several classes of 15 hour class just on this topic alone, but you know, it's very important for people to understand some of those additional costs because it's very embarrassing if you, as the investor don't know those things. And I'm speaking from experience. My first couple of ones that didn't go so smooth because I'm so sorry to tell you you need another 3000 bucks. Exactly. You know, and it was like, Oh man, yeah, a full year of insurance and yeah, you gotta do this and you got to do that and all of a sudden it's like man, you know, they only had x amount of dollars and we were just trying to take all of that as the down payment. And so at the end of that, hey, that hurt us.

Speaker 3:31:26Yeah. And I will shamelessly self promote here. So forgive me for saying this,, I have for my members several ways to negotiate your way into that to where like, like in your example you said that, hey, you know, let's say they only had $10,000 in their bank account and you were saying, okay, $10,000 down payment, that's sweet, but then it comes out they need $40,000 more. I've got some pretty creative ways to get about doing that to where essentially you can, you can, uh, finance them, their closing costs so you're not coming out of your pocket for them, but you're still even going to be making interest on the money that they are not bringing to the table at that point in time. And it gets them into the house that they want. So there, there are some solutions to get around that situation a while still being fudiciary irresponsible. I have to say that really slow or else it sounds like I'm drunk.

Speaker 2:32:14Since you shamelessly plugged yourself, I will shamelessly say that is exactly what I did. And I felt like I was one of the smartest guys for coming up with that on the spot. I was like on the phone with my title company and I was like, we could just increase the note amount and actually finance this and then I'm making more positive cashflow over the long run. Okay, let's do that. So, um, you know, but that's a beautiful day back. That's why it's called creative financing, you know what I mean? You can get very creative with it and you can find ways to make deals work. Um, I think you gave some very wise counsel there about, you know, make sure that you're escrowing two months of, uh, of escrow there. And then also, um, do not accept less than 10 percent down payment. I'm also other items that I've learned the hard way, hence why I wanted to have you on to teach us about these things so people do not repeat my mistakes. Uh, so, um, I know that you currently have something that you are very passionate about. Um, if you're not following grant on facebook, please do. Um, because this is a, something that's close to anybody that's interested in doing this specifically in the state of Texas and there's a bill trying to be passed that is going to eliminate the ability to wrap a mortgage with a due on sale clause. Is that correct?

Speaker 3:33:39Right. Yeah. It's Senate bill number 42. Um, and, and we really, I mean, we got to be on top of this stuff guys. So here's the thing is that, you know, if you're listening in Texas, even if you're not listening in Texas, we have a lobby effort nationally and we have a lobby effort here in Texas. We don't have to like that show that, that government is done through lobbyists. But we have to understand that government has done three lobbyists. You know what I mean? So, you know, as mad aycock put it, if you're not on, if you're not at the table, you're on the menu. We got to make sure that we're doing everything we can to get our voices heard because as time goes on, you know, guys, there's, there's, there's crooked people out there, there are snakes in every industry. And this is an industry that has a lot of money, so it causes a lot of people, a lot of snakes to look at it.

Speaker 3:34:25Now we want to run those snakes off and I don't want to parse any words and make anybody believe anything otherwise. We don't want that here. The phrase, you can stop any of my employees in the hall and you can ask them what are we going to do? And they're gonna say we're going to do the right thing, especially when it's not in our favor. That is our motto. We go buy it, we live by it and I encourage you guys to do the same thing. Okay? But there are people that don't agree that don't, that don't play that way, and those guys screw it up for everybody. For instance, if you're listening nationally, you're probably still able to do a contract for deed, which is beautiful for us as investors. Well here in Texas, contract for deed, IEA lease option Kinda got killed for us back in 2005 because there was a.

Speaker 3:35:04There was two bad apples that did a lot of deals with contract for deeds, a property's got torn down with, with a, a tornado, and they didn't pay any of those owners their money. They went to Cabo. Instead, those owners marched down to Austin and got rules changed. So now we can't do a lease option for more than 180 days or three years if you've got specific requirements in jump through a bunch of fiery hoops. Um, so what we're seeing is that as time goes on, if the, if the National Association of realtors had their way, and again, you know, whatever, I'm not trying to speak badly on, but if they had their way, every transaction would be done through a realtor, right? Anything that's not done through a realtor is a threat to them because that means that they're not making money off of that transaction. So we're going to see more and more and more of our strategies that we are using under the gun.

Speaker 3:35:57Okay. We've seen some changes to wholesaling already. We've seen, we're seeing changing things happen with owner financing. We've seen municipalities and cities get on a really creative way to have tax a landlord, which is by causing us to pay for inspections and pay for a certain licenses that you wouldn't have to pay for if you were a owner occupant of that property, you know, and so at its, at its face value like okay, well they're just making sure that there's not slum lord and going on, but at its core they found a way to tax landlords for being landlords. Right? So there's, we have to understand that the government is going to be moving further and further away from us if we do not show them that intellectual ethical people are doing this business, okay? If all they see is the negative we are, we are from a, from a core of our humanity.

Speaker 3:36:53We are wired to overvalue negatives. How many of you are in a situation or have ever been in a situation where you do something in a public way, whether that is wearing a new outfit or you know, performing onstage or doing whatever and you'll have 40 people tell you what a great job you did. And then one person is like, yeah, that's kind of crap. Uh, you're, you know, you look ugly today. Well, which one do you walk home feeling? You walk home feeling the negative one, right? We are wired as humans because that's what has saved us over the years is if we remember vividly negative things and that keeps us from walking off bridges and that keeps us from doing things that are bad. What I'm getting at is the legislators are going to hear these negative stories of times that somebody was screwed over using some kind of strategy that screwed them.

Speaker 3:37:41Let's talk about the tax to landlords. Somebody's got screwed by slum lords, not fixing their crap. So now every landlord in Mesquite and Garland and now Dallas has to pay for these inspections to come out. And the municipalities don't care. They're making tons of money off of it and they're taxing us, but it looks like a consumer protection, but that's what they're doing with wraparound mortgages. Right now. Senate bill number 42 is coming out and very fiercely attacking a wraparound mortgage. When there are ways for us to do wraps the right way, protect everybody, disclose everything, and let adults make decisions for themselves on if they want to accept the risk of buying this house with an underlying mortgage when they have no other options for buying a house. So our argument is let's disclose, let's make sure everybody understands what's going on and if everybody's cool with it, let's move forward with it and that's not what is in this bill.

Speaker 3:38:33Therefore we have to band together and our voices heard. And the way to do that is through Texas. 100, which is www dot Texas. One And I'll be very upfront with you. We need 35 more members. We need 35 more members and we need them soon because we got to pay for these lobbyists. This money does not go to anybody but a lobbyist who is voicing our voice to the legislators to help them put into, into play something that we can live with. So if you're, if you're listening to this, go join. We need a 35 more members giving a thousand dollars a year. That is not much and not only are we fighting for stuff like this that has to do with creative financing, but this is our investors lobby effort. This is us as investors being ready and prepared to fight back when the government is trying to take away certain strategies that we use to feed our families. And I'm very passionate about that because again, if we're not there, if we're not sitting at the table were on the menu and our rights will be getting taken away in a way, in a way, in a way until eventually we're left with another contract for deed situation where we just can't do it anymore even though it's a totally valid strategy.

Speaker 2:39:39So if you haven't noticed yet, um, today's episode is a little bit different than most and I, I would say I purposely did this, but I'm not going to give myself that much credit. But I wanted to talk about this topic because you're absolutely, I mean 1000 percent correct in what you're talking about. That it is up to us to stand up for our rights here and to make our voice heard and make sure that they realize that there are, you know, investors that have integrity and have morals and are doing things the right way. And the thing that stood out to me the most was let adults be adults. I have bakes that actually get excited when I tell them I'm going to owner finance the property when they're giving me a mortgage because they feel like that is more secure than a rental property. Thank you.

Speaker 3:40:36I've been saying that to banks for like why do you have a problem with this? Now you've got two people with blood on paper saying that they have to pay for this thing. I don't. Yeah. So there you go.

Speaker 2:40:47So yeah, I mean and, and that's where [inaudible] steps in. No, I'll be the first to say majority of the time banks do not have logic. So just go ahead and realize that I found it very special bank that has this logic, but this is where logic stood in and like you said, there's two people that have literally given DNA samples to get to get this mortgage and at this point in time it's a, it's a more secure investment for the bank. And, and at this point in time, it is scary for me and I'm sure it's scary for you, probably even more so for you because this is the core of your business that we need to make sure that we keep this as a viable option and we do not have the lease option. You know what happened there, back in 2005 happened to owner financing and rapid mortgages because it is a, I mean, that's, that's why this whole episode was created the way it was.

Speaker 2:41:45I wanted to basically let you guys know how amazing of a strategy is and uh, the fact that it's at risk at this point in time. And a majority of my listeners are in the state of Texas. So if you're listening, please, um, what is the website again? Grant, please go on there. Um, join a if you can't join, if you can't help out now. Um, reach out to grant and see what you can do a post about it on social media. Let's get the word out there. I mean this needs to be broadcasted that this is something that is actually happening. Um, because it's not talked about, you know, I mean at the end of the day, I mean this could just happen and all of us could not even know it was going on. So yeah,

Speaker 3:42:31and that's how it typically is and we've got to really give a lot of credit to guys like Mitch Stephen and Eddie speed who I've worked really closely with over these several years on, on, on this text. 100 stuff because they've really had this up and I also want to give a lot of credit to the Texas Land and Development Association because they have been majorly footing the bill for these investor or for these lobbyists for many years. And we as investors are just now stepping up to to help them. They've been, they've been watching our butts for years and forking over real money for it and it's time that we start forking over money to help ourselves. It's time for us to stop relying on some pie in the sky, somebody else to watch out for us. We have the ability to change things, but, but you know, if we're not, if we're not active and a guys that doesn't take a lot to be active, a thousand dollars in a year to make sure that you can, I mean, you make a thousand dollars on one deal, you know what I mean? Like that is not a lot. We're trying to make this manageable for everybody so that we can all win and all have a representation in the government

Speaker 2:43:30in this all to protect who, in my opinion, the best passive income strategy in single family real estate investing. Agreed. I mean, a thousand dollars is nothing. I will be joining. So we only need 34 million, 34 more people to join. Good. I love it. Um, so there you go. Um, I will make that commitment. I will join and uh, we'll, we'll join the forces there with you guys. I would love to see that this podcast makes a difference. So I am purpose purposely asking each person that is in the state of Texas and even if you're not in the state of Texas, uh, we would love for you all support and help

Speaker 3:44:11and actually if you're not in the, in the state of Texas, what you want to look up. Uh, and, and let me just make sure I'm telling you to write a coalition and I think it's dot org. I'm just making sure I'm. Yeah. Okay. Seller finance That's our website for the national push. So if you are outside of the state of Texas, go join it. The seller finance If you just want to only go towards the national push, but if you're in Texas, understand Texas 100. We are national and we are uh, you know, obviously Texas side. So there's, there's a couple of ways that you can get involved. But Rj, I appreciate your support on this because it is not. I mean, and guys, let me be real clear here, this, this podcast is going to come out sometime and w will just, it'll probably February, February first.

Speaker 3:44:57Okay. So it's right. It's right. It's happening right now that this coming out. Cool. So understand this bill is being presented to go into play September of this year. We got to move now. This is not A. Oh, I'll get around to it. We got to move now. What would that being said? I want to wrap up on that. I want that to be kind of our final thoughts there. And in grant, for anybody that is listening outside of watching grant, teach me something on propeller tv. What's the best way people can reach out, learn more about you and do business with you? Yeah, check me That's where I'm, that's where I do the majority of my, uh, training and communications and obviously follow me on, on socials, you know, facebook and, and, uh, instagram, that kind of thing. And I love communicating, love talking with people and seeing other people succeed. And you know, if you have a success story from, and I'll say this on behalf of myself and, and, and Rj, if you have been successful or something that you've learned from either of us, please reach out and let us know because like we said at the beginning, that's the stuff that keeps us going. Otherwise we're just talking to a microphone. Absolutely will grant. I have to commend you, man. You're,

Speaker 2:46:03you're one of the most brilliant minds in real estate investing. I don't know if people tell you that enough.

Speaker 3:46:11Flattering I am. I am honored

Speaker 2:46:13to be able to, to lead your show on Tuesdays and go on before you, um, I just, you, you blow me away on grant. Teach me something. And, uh, and even with what you're doing with creative cashflow and, and you know, I don't know your exact involvement with what we've got going on here with this bill, but I know you're heavily involved and uh, you're, you're always posting it on facebook and, and trying to build the militia around you. And so, uh, you know, I just appreciate you so much for what you do for the real estate investing community.

Speaker 3:46:51Well, it's incredibly flattering. I especially again will come in front of a beast like you that just super flattering. So thank you. I appreciate you saying that. I really do that. That will, that will get me fired up to keep going, uh, for, for the next however long.

Speaker 2:47:06There you go buddy. Well thank you for being on the titanium vault today guys. We appreciate you listening. If you enjoyed what you heard today, please leave us a five star review that that gets us out some more, more listeners and more people watching and like grant said, um, that's what fuels our fire, is getting our message out there to people and helping people achieve success in real estate investing. So with that said, grant, thank you so much and we'll see you guys next week. Awesome. Thanks. See Ya.

Speaker 1:47:36Thanks so much for listening to the titanium vault with your host, Rj Bates, the third for more info and to stay up to date, visit And on titanium vault. If you enjoyed the episode, please rate and review and we'll catch you next time on the timetable.

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