Real Estate Investing School Podcast

Episode 89 – REAL DEAL: How To Make Deals Without Using Any Of Your Own Money With Brody Fausett

Date: September 14, 2023
Host: Brody Fausett (Solo episode)

Episode Overview

In this Real Deal episode, host Brody Fausett shares an in-depth, behind-the-scenes look at a standout real estate deal from his own portfolio: the purchase, renovation, and operation of a fourplex near a college campus in southern Utah. The main focus is on how Brody structured the acquisition using creative financing—specifically seller financing and strategic partnership—to buy and operate the property without utilizing any of his own money. He breaks down each step, from sourcing the deal to maximizing cash flow, so listeners can learn actionable strategies and the mindset needed to replicate similar deals.

Key Discussion Points and Segments

1. The Power of Real-Life Deal Breakdowns

[00:38 - 03:16]

• Brody emphasizes that hearing about actual deals from other investors was a major factor in accelerating his growth as a real estate investor.

• The episodes are designed to show not just what went right but also what could have been done better, helping listeners learn from real experiences.

  Quote:

  "One of the biggest things that helped me get ahead was hearing deals that other people had done. And you start to understand the psychology of it, how they think, why they did that."
  — Brody Fausett [01:35]

2. Deal Overview: The Fourplex

[03:17 - 07:00]

• Fourplex located in southern Utah, near a college campus.

• Two units upstairs, two downstairs; mostly rented to college students and newly married couples.

• Owned in partnership (50/50 split in cashflow and expenses).

• Utilized seller financing.

• Currently generates over $2,500 in monthly cash flow.

• Brody underscores the importance of understanding a deal’s full financial picture—not just headline cash flow numbers.

  Quote:

  "Even if I were up here saying, like, hey, I have a property that cash flows $20,000 a month… What should go through your mind is, okay, that’s cool. But what did he have to pay to buy the property? What is the property worth? ...You want to understand all the pieces to the puzzle before you just say, 'Oh, that's good,' or, 'Oh, that's bad.'"
  — Brody Fausett [06:10]

3. How the Deal Was Found: The Power of Asking & Networking

[07:01 - 13:00]

• Initially was chasing an off-market 8-plex through a realtor but missed out; asked the seller if he had anything else for sale.

• Seller mentioned a 4-plex that he was willing to sell only with seller financing.

• Brody highlights the critical nature of networking with realtors and being specific about one’s investment criteria ("buy box").

• Importance of directly asking sellers if they have additional properties or would entertain certain terms like seller financing.

  Quote:

  "One of the other things we negotiated in there was he paid for a new roof. They put a brand new metal roof on it."
  — Brody Fausett [27:00]

  Takeaway:

  • Always ask, “Do you have anything else?”
  • Open conversations around seller financing; many sellers are more open than you might assume.

4. The Seller Finance Structure

[13:01 - 23:30]

• Purchased for $420,000.

• Negotiated 10% down ($42,000), 4% interest, amortized over 30 years.

• Seller continued to receive roughly the same monthly payment (~$1800) as he did from the property's rents, while offloading responsibility for maintenance, management, and capital gains taxes.

• Seller installed a new roof as part of the terms.

• Brody highlights the flexibility that seller financing brings compared to bank loans—everything is negotiable.

  Quote:

  "What’s so cool about seller finance is it’s whatever you want to negotiate. Like however you want to structure a deal, you can structure. You don’t have to go by what the bank requires."
  — Brody Fausett [18:22]

5. Value-Add: Rehabbing and Rent Increases

[23:31 - 25:55]

• Property had long-term tenants with grossly under-market rents ($1,800 total, as low as $450/unit).

• Brody invested ~$40,000 in renovations (split with partner): exterior paint, new flooring, paint, light fixtures—cosmetic but impactful.

• New monthly rent roll increased to $4,400–$4,800.

• After all expenses (mortgage, insurance, taxes, minor utilities), cash flow reaches $2,750/month.

  Quote:

  "He hadn’t raised rent in like 15 years. Like, I know I can go and easily get double the rent easily, right? And that’s probably like the biggest value add..."
  — Brody Fausett [20:33]

6. Partnership to Eliminate His Own Cash Requirement

[25:56 - 29:11]

• Rather than fund the down payment and rehab himself (“I actually had enough money in my bank account at the time”), Brody chose to split the deal 50/50 with a partner.

• Partner contributed 100% of the down payment ($42,000).

• Rehab (~$40,000) split evenly; Brody invested ~$20,000.

• This allowed Brody to keep more capital available for further deals.

  Quote:

  "Half of a deal is better than 100% of no deal. And if I could take my money ... and save that and go buy a different deal that I own 100%, and I can bring someone in on this—because I know the margins are that good—then it’s really attractive."
  — Brody Fausett [25:58]

7. Returns Analysis

[29:12 - 31:30]

• Brody’s investment: $20,000; annual cash flow per his share: $16,500.

• Annualized cash-on-cash return: 82.5%.

• Partner invested ~$62,000 total (down payment + half rehab); cash-on-cash return: 26.6%, without involvement in finding, managing, or rehabbing the property.

  Quote:

  "So crazy, crazy return, right? I’m almost making all of my money back year one... just looking at that, it’s awesome."
  — Brody Fausett [30:55]

8. The Importance of Creative Strategies—Forcing Value

[31:31 - 35:01]

• Brody summarizes all the ways he "forced" the deal and value:

  • Getting the seller to think of alternative properties and financing structures.
  • Maximizing property value and rents via cosmetic rehab.
  • Using partner capital to avoid tying up his own.
  • Leveraging the resulting equity for further deals.
  • Building a track record to reference for future seller-finance deals.

• Example: The same partner joined him on a subsequent, similar deal, reinforcing the power of a successful partnership and process.

  Quote:

  "So many different things ... from how you asked if there’s anything else they have available for sale, how we rehabbed the property to be able to charge more rent, how I took the equity and leveraged that into another project, how I strategically found a partner instead of putting all my own money down. There’s a lot of different ways that I, quote-unquote, force this deal to kind of make it happen."
  — Brody Fausett [32:47]

Notable Quotes & Lessons

• Ask the right questions:

  "You never know. Just ask, right? Ask people, especially investors selling stuff—do you have anything else that you’d be willing to sell for the right price?"
  — Brody Fausett [12:09]

• On seller financing:

  "It’s so cool to be able to structure it how you want."
  — Brody Fausett [18:31]

• On creative partnerships:

  "Half of a deal is better than 100% of no deal."
  — Brody Fausett [25:58]

• On resilience & creative thinking:

  "If somebody tells you no, you just ask, no why or no how. Okay, but how. Okay, but why?... There’s always a way to get something done."
  — Brody Fausett [35:08]

Actionable Takeaways

• Networking with local realtors and making your investment criteria clear opens access to off-market deals.
• Always ask about additional opportunities and seller financing—even when facing setbacks.
• Negotiate seller-finance terms; nearly every element is up for discussion.
• Creative partnerships enable you to scale faster, even if you have the funds to go solo.
• Invest sweat equity or cosmetic updates to create dramatic rent and value increases.
• Leverage equity and track record for further deals, compounding returns and opportunities.

Final Thoughts

Brody wraps up by encouraging listeners not just to learn passively but to take actionable steps towards replicating these strategies. He reiterates that the flexibility and creativity in deal-making are pivotal, and that most successful investors succeed by persistently asking “how can I?” instead of accepting the first “no.” The episode is packed with both mindset and practical tactics to advance in real estate investing—especially for those eager to acquire property without using (much or any) of their own money.

For the full story, numbers, and more detailed insights, listen to the full episode of Real Estate Investing School Podcast, episode 89.