Real Estate Investing School Podcast

Episode 148: REAL DEAL: Creative Partnership Scores a Golf Course Gem with Blake Erickson
Air Date: April 11, 2024
Host: Brody Fawcett
Guest: Blake Erickson

Episode Overview

This episode of the Real Estate Investing School Podcast’s “Real Deal” series dives deep into a recently closed, creatively structured short-term rental partnership deal in Hurricane, Utah, overlooking a premiere golf course. Blake Erickson, the guest and capital partner, breaks down how he and Alex Mashburn acquired a coveted property via seller financing, revealing actionable strategies for listeners interested in creative deal structuring, win-win partnerships, and maximizing returns. The conversation highlights not just the numbers but the emotions and mindset behind successful collaborations in real estate.

Key Discussion Points & Insights

1. Deal Background and Context

• Property Details: A luxury townhome (twin home style, pool, hot tub, golf course frontage) in Copper Rock, Hurricane, UT.

  • Only a limited number of short-term rentals allowed in the community.
  • Alex owned the neighboring unit, enabling creative “combo rentals” for large groups.
  • [01:31] Blake: “Alex owned the property right next door and...the opportunity to do a dual rental...they can put two houses next to each other.”

• The Team:

  • Alex Mashburn — Lead on sourcing and negotiating the deal.
  • Blake Erickson — Brought capital and structure to the partnership.

2. Finding and Negotiating the Deal

• Sourced through direct, persistent neighbor-to-neighbor negotiations by Alex.
• Seller originally listed at $1.5M; property acquired for $1.4M.
• Seller owned outright, opening doors for creative finance approaches.

3. Deal Structure & Creative Financing

• Purchase Price: $1,400,000 ([03:57])

• Down Payment: 10% ($140,000, ended up closer to $150,000 with expenses) ([07:38])

  • [07:38] Blake: “We did 10% down. I think it's gonna be 25 to 30 if you go conventional...so put a hundred, put 150 down.”

• Seller Finance:

  • 3% interest rate
  • 30-year amortization, 5-year balloon (“5-year bubble”)
  • Payments: Less than $6,000/mo (with all expenses), compared to $11,000+ if financed conventionally
  • First payment not due until July (over 3 months free cash flow post-closing)
    • [05:00] Blake: “We close March 15 and we don't have to make a payment till July 1. So it gives us three and a half months of just pure profit.”

• Blake’s Take on Seller Financing:

  • Avoids capital gains tax for seller
  • Opens up flexibility for buyer
  • Example of non-conventional terms (“interest only” periods, deferred payments) making deals possible
  • [06:27] Brody: “If you finish the project in eight months, guess what, you can stack some extra cash during that time. Guess what that does for your cash on cash return. Right? It's through the roof...”

4. Partnership Dynamics & Lifestyle Fit

• Ownership Split: 50/50 between Alex and Blake

• Capital Contribution: Blake brought all of the down payment.

• Guaranteed Cash Flow: Alex guaranteed Blake a minimum of $1,000/mo in cash flow, even in slow periods.

  • [11:53] Blake: “I need to make sure...my deals are giving me a 20% cash on cash return. And so worst case...I can make a thousand bucks a month in cash flow...He said, I'll go ahead and guarantee that.”

• Lifestyle Motivation:

  • Blake emphasizes the emotional “win,” not just the financials.
  • [08:44] Blake: “It's something that just, I had this high for like two weeks afterwards...I've never been happier to partner.”
  • [10:26] Blake: “My emotions were very triggered...It's like, cool, where's the wire transfer?”

5. Exit Strategies and Planning

• Five-Year Balloon: At the end of the seller-finance period, options include:
  • Selling and trading up if the property appreciates
  • Refinancing into a conventional loan if rates are favorable
  • [14:33] Blake: “If interest rates are down...we could go conventional and...pay off the seller finance guy. So those are the two, I guess, options that I see.”

6. Forcing Appreciation & Creative “Wins”

• Key Levers:
  • Seller financing with a deferred first payment enabling immediate positive cash flow
  • Joint use/rental potential due to side-by-side homes
  • Lower down payment than a bank loan; less red tape; no impact on personal DTI
• [16:16] Blake: “Anytime you can do seller finance...a great way to force the deal. Once again, I don't think if we would have gone conventional on this deal, I would have never done it...I don't even know if we would cash flow…”
• [16:57] Blake: “...knowing that I have three and a half months to really boost the bank account...my cash on cash return just jumped up significantly.”

7. Actionable Lessons & Mindset

• Most sellers focus only on price; savvy buyers can negotiate for terms that benefit both sides.
  • [19:48] Blake: “Majority of times, the buyer's just worried about the purchase price. So it's like you throw these intricate little things that, like, move the needle significantly for you, but doesn't change anything for them. They're gonna say yes more times than not.”
• The emotional draw of a deal (lifestyle, vision, use) can be as compelling as the projected returns—hitting both is ideal.
• Building a bank of creative real estate strategies is invaluable.
  • [17:41] Brody: “If you want an average return in real estate, you gotta think average...It's so important to know and to understand how to get creative and think outside the box...That’s the difference maker, right?”

Notable Quotes & Memorable Moments

• [03:57] Blake: “Originally listed for 1.5 million...we end up getting under contract for 1.4 million. Here are the terms. So the cool part was the guy owned it outright. Anytime that someone owns it outright, the ability to do creative finance goes up.”
• [05:00] Blake: “We buy the property for 1.4...first payment’s not due until July.”
• [06:27] Brody: “Go and ask him if he'll do, you know, interest only payments for the first year...What’s the worst that could happen?”
• [07:38] Blake: “We did 10% down. I think it’s gonna be 25 to 30 if you go conventional...put a hundred, put 150 down.”
• [08:44] Blake: “It’s something that just, I had this high for like two weeks afterwards...I've never been happier to partner.”
• [11:53] Blake: “I need to make sure...my deals are giving me a 20% cash on cash return...He said, I'll go ahead and guarantee that.”
• [16:16] Blake: “Anytime you can do seller finance is a great way to force the deal...if we would have gone conventional on this deal, I would have never done it.”
• [17:41] Brody: “If you want an average return in real estate, you gotta think average...It’s those little things...what make the difference in an average deal versus a home run deal.”
• [19:48] Blake: “You throw these intricate little things that...move the needle significantly for you, but doesn’t change anything for them. They’re gonna say yes more times than not.”
• [21:18] Blake: “That’s when real estate’s the most fun, man.”

Important Timestamps

• 01:31: Deal overview; neighbor-to-neighbor connection
• 03:57: Purchase price and initial creative terms
• 05:00: Deferred first payment, cash flow upside
• 07:38: Down payment structure; conventional vs creative
• 08:44: Partnership arrangement & Blake’s “lifestyle buy box”
• 11:53: Guaranteed return for the capital partner
• 14:33: Five-year exit/balloon planning
• 16:16: Seller finance as the essential lever
• 17:41: Building a creative deal structuring toolkit
• 19:48: Negotiation mindset—focus on more than price

Connect with Blake

• Instagram: @theblakeerickson
• Blake encourages listeners to DM him and network for advice or partnerships.

Key Takeaways for Listeners

• Creative partnership/financing can make otherwise impossible deals work.
• Seller finance opens doors for flexible, win-win terms—especially with free-and-clear properties.
• Hitting both lifestyle and financial “buy boxes” leads to more fulfilling and successful investing.
• Ask for what you need in your deals—often, you’ll be surprised at what’s negotiable.
• Build a running list of creative real estate strategies as you learn—these details separate good deals from great ones.
• Network, learn, and take action!