The Low-Cost, High-Return Strategy for Affordable Housing | DJ Thielen

Summary

The Science of Flipping Episode Summary: "The Low-Cost, High-Return Strategy for Affordable Housing | DJ Thielen"

Host: Justin Colby
Guest: DJ Thielen
Release Date: September 27, 2024

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1. Introduction of DJ Thielen

Justin Colby welcomes DJ Thielen, a former professional baseball player for the San Francisco Giants, who has successfully transitioned into the real estate investing world. Their shared passion for sports and business forms the foundation of their engaging conversation.

Justin Colby [02:00]: "He is an ex professional baseball player and played for my favorite team, the San Francisco Giants. But he's also an incredible real estate investor, businessman, coach and just an all-around great human being."

2. The Power of Belief and Mindset

The discussion delves into the critical role of self-belief in both sports and business. DJ emphasizes that self-confidence is paramount for achieving success.

DJ Thielen [03:25]: "If you don't believe in yourself, nobody else is going to. The level that you believe that you can do something is a level that you're going to be able to achieve that."

Justin expands on this by highlighting the contrast between the strong belief people have in Jesus and their often weaker belief in themselves.

Justin Colby [05:07]: "But people won't do the same thing for themselves. That's where I go, whoa, bro. Like, this is insane."

3. Overcoming Adversity and Choosing to Be a Victor

DJ shares personal experiences of overcoming a challenging childhood marked by financial struggles and parental issues. He underscores the choice between becoming a victim or a victor.

DJ Thielen [06:13]: "You either become the victim or the victor, but it's really a choice. There's a lot of people that grew up with alcoholic parents and they either become just like that or they go, I'm never going to do that."

4. The Importance of Mentorship and Avoiding Common Pitfalls

Justin and DJ discuss the significance of having a mentor in real estate investing. DJ recounts his early mistakes, such as purchasing 10 homes for $50,000 each without proper guidance, leading to substantial losses and lessons learned.

Justin Colby [17:08]: "But if you had a coach at that moment, you probably would have avoided the pitfall of the experience you just went through."

DJ Thielen [17:43]: "I can show you how to do that, too. And we did. And he did."

5. Why Affordable (Cheap) Housing is a Strategic Choice

DJ explains his focus on affordable housing, citing its low risk, high return, and low barrier to entry. He highlights the benefits of various exit strategies, such as seller financing and land contracts, which provide flexibility and profitability.

DJ Thielen [19:07]: "It's super low risk, right? So it's a super low entry. Almost anyone can get into it. Low barrier, low barrier of entry. Two is that if you know the right exit strategies... then I just feel like it's a low barrier of entry, it's low cost, high return and low risk."

6. Creative Real Estate Strategies: Seller Financing and Land Contracts

The conversation shifts to advanced real estate techniques like seller financing and installment contracts. DJ provides a detailed example of how he helped a client acquire a property for $1,000 through creative structuring, ensuring both parties benefited.

DJ Thielen [26:38]: "So we're going to use a quick claim deed... we're going to record it... then you take the stamp copy, you go to the house, you talk to the lady, and then here's how you approach them."

Justin adds valuable insights on the importance of using proper legal instruments to safeguard investments and maximize equity.

Justin Colby [28:37]: "Anytime you buy a property on seller financing, you need to use a promissory note, a mortgage and a deed, run it through the title company, get title insurance."

7. Tax Benefits and Turnkey Investing

DJ elaborates on the substantial tax benefits associated with real estate investing, particularly through depreciation. He explains how high-income earners can significantly reduce their tax liabilities by investing in real estate assets.

DJ Thielen [39:13]: "If you're 50 like me, 53, and you live to be 103, I hold it for 50 years, that house will pay me over a million dollars."

Justin echoes the sentiment, stressing that real estate offers unparalleled advantages regardless of one’s age.

Justin Colby [39:27]: "Everybody needs to be in real estate. Yeah, yeah, everyone. I don't care if you're 19 or you're 91."

8. Future Opportunities in Real Estate

In a forward-looking segment, DJ predicts unprecedented opportunities in the real estate market over the next four to five years. He anticipates increased willingness among sellers to offer favorable terms amidst economic uncertainties.

DJ Thielen [43:40]: "I believe that the opportunity in the next four to five years is going to be like nothing that we've ever seen."

9. Conclusion and Final Thoughts

Justin and DJ wrap up the episode by reinforcing the immense potential of affordable housing and creative real estate strategies. They encourage listeners to invest in themselves, seek mentorship, and seize the burgeoning opportunities in the real estate market.

Justin Colby [44:27]: "So the next 10 years is going to be the best 10 years to be in real estate period."

DJ Thielen [44:43]: "Thanks, guys. See you on the next episode."

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Key Takeaways:

• Self-Belief: Essential for success in both sports and real estate.
• Mentorship: Critical to avoid costly mistakes and accelerate growth.
• Affordable Housing: Low-risk, high-return investment with various profitable exit strategies.
• Creative Financing: Seller financing and land contracts offer flexibility and maximize returns.
• Tax Benefits: Real estate provides significant tax advantages through depreciation.
• Future Prospects: Upcoming years present unmatched opportunities for real estate investors.
• Diversification: Investing in affordable housing allows for multiple strategies and sustained growth.

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Notable Quotes:

• DJ Thielen [03:25]: "If you don't believe in yourself, nobody else is going to."
• Justin Colby [05:07]: "People won't do the same thing for themselves."
• DJ Thielen [19:07]: "It's super low risk... low cost, high return and low risk."
• Justin Colby [17:08]: "A coach... would have avoided the pitfall."
• DJ Thielen [39:13]: "That house will pay me over a million dollars."
• Justin Colby [44:27]: "The next 10 years is going to be the best 10 years to be in real estate period."

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Resources Mentioned:

• Cheap Homes University: For mentorship and real estate investment strategies, visit cheaphomesuniversity.com.
• DJ Thielen’s Instagram: Follow DJ at @djtheilen.com for more insights and updates.

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This episode of "The Science of Flipping" provides invaluable insights into the strategic advantages of investing in affordable housing. DJ Thielen’s journey from professional sports to successful real estate investing underscores the importance of mindset, mentorship, and creative financial strategies. Listeners are encouraged to leverage these lessons to build a profitable and sustainable real estate portfolio.

Transcript

[A]

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Good Burger. When the meteor hits the center of the ocean, it takes time for the R for the waves to hit short. Right? And I think that everything that's happened with the debt, with credit card debt, with home foreclosures coming that are being held back crazy. I think that I believe that people to get in now and learn the game now and get in the and understand how to navigate and how to make money with various strategies.

[A]

Yep.

[B]

I think the opportunity in the next four to five years is going to be like nothing that we've ever seen. I really do.

[A]

What is up the signs of flipping family? I am back with an incredible guest. One of my favorites already and here's why. He is an ex professional baseball player and played for my favorite team, the San Francisco Giants. But he's also an incredible real estate investor, businessman, coach and just an all around great human being. Today we're talking to DJ Thielen. What's up?

[B]

What's up my man?

[A]

My man?

[B]

Having me, man.

[A]

Yeah, I'm excited.

[B]

Oh, I got something for you actually.

[A]

Come on, man. I'm hoping.

[B]

Here's. Here's the thing. Yeah, so dude, here's the thing, right? Here's the thing. Rookie card 1993. There's a funny story behind it. I'll tell you later. Um, but yeah, it's only worth a buck fifty but you know, I mean.

[A]

Hey, if you hold priceless, I might.

[B]

Go up to 250.

[A]

Priceless for me right there. That is priceless. Yeah, dude. I mean I was so excited to hear we were bullshitting about, you know, your baseball journey. And I'm like, yeah, I'm a super Giants fan. You didn't tell me it was Giants.

[B]

Yeah, yeah.

[A]

You're like, no way. And so that's how we connected, dude. I'm super excited to have you here.

[B]

Yeah, man.

[A]

So thank you for this. This is phenomenal, dude. Solid and everything. This is phenomenal. Love one of one. My man. Look at you. Young, good looking out in the field. Love that. Right on. Listen, the connection between sports and business to me is so pivotal and I want to jump right into that in because there's something that we want to go through about the mindset it takes to be a professional athlete. What it does Believe it before you can see it. The same is true about business. Let's jump into that.

[B]

Oh, dude. A hundred percent. So I think, you know, look, I. What I come to know at 53 now is where when it comes to anything in life, it all starts with our belief in ourself. Right. And obviously as a guy of faith and a believer, that's a big part of it too. But, you know, if you don't believe in yourself, you're. Nobody else is going to. Yeah, right. So the level that you believe that you can do something is a level that you're going to be able to achieve that. And so just like I was sharing with you right before this, in the third grade, I have that piece of paper back there and I wrote down one time, like in the third grade, I'm a baseball player or what do you want to be? I want to be a professional baseball player. I'm the best player in the minor leagues. Literally wrote that on that. Right. So no. No lack of confidence at 10 years old.

[A]

Right.

[B]

So then I want to play professional baseball, blah, blah, blah. So you fast forward many years later and I thought about it more than once, but I wrote it down in the third grade and something I wrote down once in the third grade ended up manifesting. So I'm a big believer in manifestation, writing out the perfect day, vision board, all of that which we can get into. But I think that, you know, you just have to believe in yourself. You just do.

[A]

So let's stay on this for a second because I say something that could be triggery to some people, but people have this ability to believe in Jesus. Yourself. Yes, myself. Have you ever shaken Jesus's hand?

[B]

Personally have not.

[A]

Me neither. Shocker.

[B]

But now.

[A]

But at what level of faith do you have that Jesus walked this planet, that did everything that was in the Bible your Level of faith and belief is unmeasurable. Right?

[B]

Yeah.

[A]

But people won't do the same thing for themselves. That's where I go, whoa, bro. Like, this is insane. You will believe in a person that rightly so. Walk this earth, change the earth. There's literally like that you haven't seen. Nobody has. There's no one walking the planet right now that has said, hey, I shook. I shook Jesus's hand. Nobody. You don't have one person that can corroborate with you that he is there and what. He's real and all that stuff. But when you. DJ Thielen or Justin Colby or anyone who wants to help people reach limits beyond where they were that they have reached, and we ask them to believe in it blindly, that you can achieve this thing you're trying to do because you've achieved it and I've achieved it and we know is doable. Somehow there's a breakdown in the belief system.

[B]

Yeah.

[A]

That they don't believe they can do it. They can't align themselves. But again, it could be triggery. But they're willing to have such a deep belief in Jesus Christ. And I say there's something amiss there.

[B]

Yeah.

[A]

Because it's the same level of belief, if not probably deeper.

[B]

Yeah. Well, I think a lot of it too. Right. As we know, stems from childhood. Right. If somebody. I think there's a lot of us. I mean, I grew up with. With adhd. Massive. Like, I mean, dude, I can't believe I was never on medication. Like, that's how extreme. So massive adhd? No. Dad had some abuse. You know, poor, financially single mom, working two jobs. And you. And I think that you either take that and go, you know, you learn from it. Like, hey, I understand what it means to work hard. I understand what it means to. To you know, be a good parent. Right. Or the best parent that my mom knew how to be. Right. With what she was given. So I think that you either become the victim or the victor, but it's really a choice. I mean, there's a lot of people that grew up with alcoholic parents and they either become just like that or they go, I'm never going to do that. So I think that in knowing what we want, we can really get to our goals or manifest by knowing what we don't want. Right. Like, for me, it was like my dad wasn't there. It's like, I'm going to be there for my son. And that was the beginning of, you know, he was born and I was going to take Your off and go back and never did. So I think that in knowing what we want is great, obviously, is huge, but also knowing like, how we don't want to be, in knowing what we don't want or how we don't want to be can also lead us to how we want to be, if that.

[A]

So do you. You know, you've coached hundreds, thousands of people. I mean, you've been around a long time helping others achieve.

[B]

Yeah.

[A]

Do you find that the motivation of what you don't want is stronger than what you want, or do you find people's desire or motivation to get what they don't have or the thing they want is stronger than what they don't want?

[B]

That's a good question, man. For me, I think the motivation for what I want is stronger for me personally. And so. But I think the key is, is you have to keep reinventing. So when you hit those goals, you've got to be humble enough to go, okay, these were my goals. I'm getting close to them. Let me move out another five years, 10 years. Right. And you keep moving that, knowing that you're probably never going to hit it. But, like, when, if I do hit it, hey, let me. Let me set some new goals that are bigger and better and. Right. And let me push that out again. So I think that where you don't get comfortable, I think that you always have to be willing to push the envelope and not get comfortable because I just feel like, you know, we can always be better and so just chasing that best version of us, I think.

[A]

Yeah, I think. You know, it's funny, I. I've coached thousands of people in the real estate space specifically, and. And I come to find that people tend to be more motivated by the thing they want. Although for me, I'm a little bit more like you. I didn't want to be my mom, my daddy and stepdad, all alcoholics, my mom, manic depressive, pill popper, like, the whole thing, right?

[B]

Yeah.

[A]

And I'm more motivated, but what I don't want to become or what I didn't want or the reality of what my childhood was, then I'm necessarily mode. I mean, there's a combination, sure, but that definitely was the motivation for me to get off my ass and go do the thing. Now I'm at a place in life where it's definitely more motivated by like, oh, I'm not even. I could achieve even more and there's more out there to go do and. But it is an interesting question. I'm Posing, too, Because I think it's people, you know, are either led by the carrot or the stick. And I think people have to rectify. Like, is it more important for you to not have the thing you don't want, or is it more important for you to excel and achieve? Because I believe we're all here to go to the moon and back. Like, we are here to live our highest highs.

[B]

Yeah, yeah.

[A]

Live the epic life. Right?

[B]

Yeah.

[A]

So how does this kind of getting back to this transition of sports to business, how do we connect those two? Because there's a lot of the mental similarities there.

[B]

I just think that, you know, man, I think that a couple things. So when it comes to anything in life, it comes down to our thoughts, our beliefs, our habits, our routines. Right. Those. That's really what it comes down to. So I think a lot of times people are like, well, how do I believe in myself? How do I get into action? Right? You've got to get into action. It's the. It's the Tony Robbins success cycle. Right. It's like, as I get into action, when I ask people, what do you think it starts with? Is it action? Is it. Is it belief?

[A]

Yeah.

[B]

Is it like, where. Where do you think it starts? Right. And everyone picks it. Wrong.

[A]

Yeah.

[B]

And it's. It's. It's seeing it. It's already seeing it as if it.

[A]

Already happened without actually feeling it.

[B]

Yeah.

[A]

See it before you feel.

[B]

And then you. And then you see it in your mind. So when you see it in your mind, you're going to want to take more action. When you take more action, you get great results. So you see, it starts with. With seeing the results.

[A]

Yeah.

[B]

Right. Then you're going to be motivated to take action. Then you get good results, and then that leads to tap in your highest level of potential, and this thing will spiral. I found, either for you or against you. Right. And so if you think that, if you can see it in your mind, that whole thing, if you see it in your mind, you hold it in your hand, it really is true, man. Yeah, really is.

[A]

Yeah.

[B]

And so I think that for people to see it in their mind, that's why I'm a big believer in vision board. But then you got it. You got to take action. Like, you got to get into. I think that's where the rubber hits the road with a lot of entrepreneurs talking about. Right. Entrepreneurship is people want this, and they say they want this, and. But then it's like, yeah, but. And then they start coming up with all these excuses well, but I'm working. Oh, I got a kid. Well, I've got this or that or whatever. And then you got to get around communities that or events or whatever where there's other people that are actually have, are busier than you and open and you go, oh my God, man. This guy drives three hours a day for work, has to get up at 2:00 to just to get a workout in. And he's done 10 deals. And I've got a guy like that I mentor right now. He's done 10 deals in three months. Right. And so what's your excuse kind of thing. So I think you, I think the more that we're exposed and around people that are doing big things that, that, that nucleus, right, Totally the core group, it, it, it pulls the best out in us. Yeah, really does.

[A]

Obviously the sports and business world. Now why did you go down real estate like it, you know, you leave professional sports and real estate becomes your, your new addiction. Right. So why real estate at all the things you could have been doing?

[B]

Well, yeah. So the funny thing is at first it wasn't so when I, when I left, when I un, unexpectedly left ball like a lot of people, right. Life throws you a curveball, no pun intended, and you just, you gotta make adjustments. So as that journey started and kind of being a dad that I didn't have, right down a new path was I had a guy, Chuck Roberts, actually take me under his wing. He was the number one sales guy in the country for Home Security Systems, took me under his wing and basically started his first company that he built to a multi freaking million dollar company. And he took me under his wing and said, hey dj, I was doing telemarketing. He said, hey, would you want to make some more money? Do you want to make some more money? Right. The power of asking a great question.

[A]

Yeah, yeah, yeah, for sure.

[B]

So I said, I was like, yeah, of course, right. This one year old or whatever. So. So I ended up, he started his first company. I was his only sales rep. It was a huge blessing because he took me under his wing and taught me, I mean I was running 40 appointments, 40, 50 appointments a week. I had a Thomas Guide. We didn't have the phones, right. So that taught me, that really taught me a lot. He taught me a lot about sales. He taught me a lot about, about people. And I always loved helping people. But he taught me a lot about the intangibles of sales. Having a process, you know, you know, how to build a hard connection, how to, how to Build rapport, all of that. Right. The basics. And really that was the beginning of kind of my entrepreneur journey. I left there two years later, started my own company because I thought I knew, you know, you know, everything, Right?

[A]

Of course.

[B]

So I did that and then got lucky and sold it some years later. And when I sold it, that's what got me into real estate. I always wanted to get into real estate. I always watch the Carlton Sheets, Russ Dolby, all that. The old school, Dean Graziosi, who's still, you know, killing it. And. But I used to watch these, Justin. And I used to say, I don't know what it was, man. It was like just something. Something in my soul was like, I just loved. I was just like, I want to learn that.

[A]

Yeah, yeah.

[B]

So after I sold my company, I went to an event. I was Robert Allen and Kiyosaki, like a co event. Sure. And then, you know, they upsell you to the $4,000 weekend. So I did that. And you come away with the big thick books. Now, you and I were talking about this, you know, wasn't. I wasn't the most studious kid in the class, right. So I'll leave it at that. But so, you know, rather than going through these books, I just was like, hey, I. Everything in my life, how to hit a baseball, how to build a business, I just knew myself well enough to know I learned by doing. Yeah, right. So I knew, like, I just got to get in the game and I'll figure it out. So I jumped on ebay, by the way. Never, by the way. You guys never do this. I jump. Get a mentor. I jumped on ebay and I bought 10 homes for 50 grand. Quick, quick story. Bought 10, 50 grand. Thought I was going to make, you know, all this millions of dollars. And everyone was telling me that I was crazy and I was going to lose all my money. And so I fly out there to Ohio, Pennsylvania market. I fly out there and I go to the first home, it's torn down. Second one's like this, right? Falling over. And I. After the first one, I call the guy whose numbers disconnect, just like, oh, here we go, right? Like, here we go. So. So it was like, okay, I gotta make a choice here. And so from that, going back to. How does baseball relate to entrepreneurship? Right? It's kind of like you just, you. You just don't quit, you know, you just don't quit. You just go, hey, this is the cards I'm dealt, right? I had a bad at bat. Get over it and let's and let's have some good at bats.

[A]

I want to pause you there for. Because you said something that I think a lot of people really need to rewind and listen again. But you say get a coach and the reason why that's important is because if you had a coach and that you could call hey, should I spend this $50,000 on these 10 homes? Most likely, if this coach was worth their salt, they would have said no, don't do that. Here's why. These four you're going to lose money. These four you're going to likely break even. And maybe a best case scenario these two you make some money. But that's best case scenario, perfect world. So you probably shouldn't go that route to start.

[B]

Yeah.

[A]

If you had a coach at that moment, you probably would have avoided the pitfall of the experience you just went through. And people get show so short sighted and they go to YouTube University and yes, I get that. We're on YouTube and you're watching this on YouTube now. Right. Or they go to podcasts and yes, I understand the irony of them listening to this on podcast.

[B]

Yeah.

[A]

But they get so shortsighted to invest in themselves with a coach and they're not investing in you. You run an incredible coaching business. Cheaper Homes. Cheap Homes University.

[B]

Yeah.

[A]

Is that their website where they can find you university cheap homes. University.com. incredible coach, incredible human. I encourage you to get there. We'll talk a little bit more about why cheap homes. But I mean the reality is people are investing themselves, not you. They're investing themselves, not me. Because they need to know what you, the lessons you learned, not necessarily the tactic. You need to say don't do that because it was a hard lesson.

[B]

Yes.

[A]

Do this instead.

[B]

Yes.

[A]

Right. That is really pivotal, especially for people like you and me that tend to just blow through walls and ask questions later. Right. I have.

[B]

And build the plane on the way down.

[A]

That's right. You know, build a pack your parachute on the way down.

[B]

Right. Yeah.

[A]

So let's jump into why cheaper homes. I, you know, I'm curious. I've done a lot of real estate over my years. I've done the million dollar flip, I've done developments. I'm currently buying apartments and, and I'm still buying cheaper homes. So I have my answer. Why cheap homes for you?

[B]

So for me, you know, honestly it was my, my initial plan. I was living in Seattle, Washington in.

[A]

2000 where there's no cheap homes.

[B]

But okay, in 2005. Yeah, yeah. Like nothing when I started and So I started there and my, my initial idea was, okay, I have a little money, let me buy these cheap ones, learn on them, and then I can bring what I learned back and do it here in the, in Tacoma, you know, Seattle area.

[A]

Right.

[B]

And that was my initial thought. And so as we know, life doesn't always work out the direction that we, we want. Right. It's. It's like this. So, so I just was going to do it to, just to learn initially. I picked up, my first year, I picked up a couple dozen and you know, I had contractors running off with money, couldn't find a good manager.

[A]

Shocker.

[B]

And I, Yeah, I started to very quickly understand, like, oh my God, like, like, this is, this is not what I thought.

[A]

Yeah.

[B]

And right. All the pain points, all the less, all the life lessons, trusting the wrong people, partnering with the wrong people, you know, you name it. And so. But that was really the beginning and kind of to circle back and answer your question, why cheap homes is. As I, as I started doing this, you know, in 2005, and then 2006, I had a buddy that was like, hey, hook me up with some of these. Right. And so I got him a couple of good deals and fixed them and all of that. And that was kind of the start of the turnkey operation, which we can talk about. But for me, knowing what I know now, the reason that I love cheap homes is one, it's super low risk, right? So it's, it's a super low entry. Almost anyone can get into it. Low barrier, low barrier of entry. Two is that if you, if you know the right exit strategies, which a lot of people don't, they think, oh, I just have to fix it and rent it. That's the only strategy. But if they know the right exit strategies, like being a bank, seller financing, buying them on seller financing, selling them on seller financing, and a bunch of other things, then I just feel like it's, it's a low barrier of entry, it's low cost, high return in low risk. But it really all comes down to having, you know, who are you working with, who are you learning from, who are you taking guidance from? And, and I'm super thankful that like, I'm at a point now, 19 years later and 4, 000 deals that I've literally sold, and that doesn't count our holdings is. I've learned so much that when, when people that I coach and mentor have an issue. I recently helped a guy, Eric, get. He brought an issue to me with a friend that had a Property. I said, dude, I can show. I said, tell me the story. I said, I can show you to get the house for $1,000 free and clear. And it's got a lady in there. She wasn't paying, but we can get her to pay. And I'll show you how to do that, too. And he's like, what? Like, dude, how? Right. And so. And we did. And he did. He's got the deed, got a house for a thousand bucks. The lady's paying 650amonth, and the house is probably worth 60 or 70 grand. So you go, how in the world. Right? And it's just. It's knowing when you've been down that road. All I tell people is where you're usually where you're probably at now. I passed that exit, like, 18 years ago, right? So I'm just farther down the road.

[A]

That's it.

[B]

And so I can just help not have you, like, oh, hey, you know, wake up, you know, like, get back. And I'm like that. What do you. The guardrail.

[A]

Yeah, right.

[B]

I'm the guardrail. So they don't go like this, and they end up. They. Yeah, they end up often, you know, the wilderness and they get. They get turned around and loss. And it takes them five years to get back to the freeway, right? So I'm just further down the road. And so it's great because, like, had I. Oh, dude, had I had a mentor, one, to be honest, when I was in my mid-20s, or I say early-30s at this point in real estate, I don't know if I'm being totally honest. I don't know that I would have really listened to him the way that I would listen now. Sure, right. Like. Like, you think you know it all. You think that. Oh, yeah, yeah, whatever. But now it's like, that's why I'm constantly going to events. That's why I see you guys at Cody's event, right? It's like, I just want to constantly be learning, constantly be growing around other people that are doing more than me. And. And I think that, yeah, knowing what I know now, I absolutely would have. Would have found a mentor, because they would have saved me easy, 10, 15 years, and I would be. I'd be so much farther ahead than where I am. But the blessing is I went down that road, so now I can help other people not have to go and get beat up like that.

[A]

I think every decade, I think I know it all. 20. Thought I knew it all. 30. Thought I knew it all. 40. Right. It's just this. You get. You get perspective based around the Runway you go down. Right. So being in real estate for 20 years, you get perspective of what you do and don't know and how could you have handled these things better? And what. You can only connect the dots. Looking backwards. So what was the moment that changed this thing? And so, you know, to your point, you know, the cheap homes is a. I still love cheap homes. I'm still buying.

[B]

Yeah.

[A]

In Alabama. I'm buying in parts of Florida, which isn't quite as cheap anymore. But I'm buying because what you brought up, the creativity that you have now, you can fix and flip it, you can buy it, remodel it and rent. You can do the more the, you know, conventional, conventional ways that we do this. But let's talk about the creative side of things. I mean, you just talked about the seller, finance notes. Let's talk about some creative deals that you've done. Like, I like this example of the one you did with one of your students. Talk about that. Like, how did you structure that, where he's a thousand dollars into this property, the tenant's paying 650, owns it with the deed. Talk about the creativeness that you can do with cheap homes.

[B]

Yeah. So. And plus, I think, too, Justin, affordable housing right now is huge.

[A]

Huge.

[B]

Right. So in these, in these markets, in. There's. There's a lot of markets, right. You, you know, statewise. Michigan, Louisiana, Louisiana, Ohio, Pennsylvania, Indiana, Iowa. You know, there's some areas you don't want to be, and some you do. But affordable housing is huge right now. Right. With what's happening with inflation and, and cost of living and affordability and everything. So I think that's. That's great. Um, but yeah, to answer your question. So, yeah, long story short, he had a friend that owned this house. The guy. A lot of times people do things and they don't even know. They use the wrong agreements.

[A]

Yeah.

[B]

They use the wrong instruments, like on contracts. They don't really know what they're doing. It's kind of a Chuck in a truck. Backyard Billy kind of Chuck in a truck. Right. Highland. That from Myron Golden. But it's like a Chuck in a truck kind of ordeal. And so. So, yeah, he had a. He had a guy that worked for him that was in financial ruins. He had this house. He didn't have insurance on it because he couldn't afford it. He owed two years of back taxes or no, like a year and a half. So in that state, the state will take it. Right? And basically sell it at a tax check.

[A]

Sure.

[B]

So he was in kind of on the. On the fence of that happening. This lady in there owed him 300 or owed him 300, still hadn't paid him in two years. Right. And so I told Eric, I said, bro, it's super easy. Right. Do a quick title search. We'll make sure it's clean. And then all we're going to do is use a quick claim deed. I have Simplifile, which is a same software a lot of title companies use. I can e record any document anywhere in the country.

[A]

Yeah.

[B]

So I said, hey, let's do a quick title search, check it. And I said, what you're going to do is go to him and say, hey, I know this lady owes you 300. Or maybe it was 400 bucks. Three or four hundred bucks he hasn't paid you to fulfill the original. It was like a land contract.

[A]

Yep.

[B]

And so. But it wasn't recorded. Right. So I said, why don't you go to him and say, hey, look, you're in danger from. So it's all about solving problems.

[A]

Yep.

[B]

Right. Not. It's not about taking advantage of some people go that take. No, it's not. Because he wasn't going to get anything. Right. And so now he's getting at least a thousand dollars, which helped him tremendously in his situation. And. And then Eric just said, hey, would you take a thousand dollars and I'll take it off your plate because if you don't, you're going to lose it because your name's still on the deed. Because the deed doesn't transfer on a land contract. You have to transfer it. Right?

[A]

Yeah.

[B]

So. So anyways, I just helped him solve the guy's problem. And the guy was super thankful, super appreciative. He gave him $1,000. We filled out a quick claim deed, and instead of doing it online form, I taught him. Right. I think that's the biggest thing with mentorship. You can't do things for people. You have to teach them how. That was my biggest mistake when I first started years ago. Now it's like, hey, here's the deed. Go down to the. Whatever, county recorder's office. Go to the county recorder's office. They're very kind. They'll help you record it. Right. Tell you what you got to do. Help you record it. And it'll be recorded, usually same day, next day. And then they'll give you the stamp copy. It's official. You take the stamp copy, you go to the house, you Talk to the lady. And then here's how you approach them. Right. And so anyways, so it's really just. It all comes down to solving problems.

[A]

That's it.

[B]

And using. But. But a lot of people, you know, don't even realize, like we talk about seller finance. So seller financing is huge right now, right?

[A]

Huge. Have you done any installment agreement sales?

[B]

Tons.

[A]

Have you?

[B]

So here, so here's the key on seller finance. This will be a huge nugget for people watching this. To add value. Anytime you buy a property on seller financing, you need to use a promissory note, a mortgage and a deed, run it through the title company, get title insurance. That's the way you want to do it. For a couple of reasons. One, it's safe because, you know, the title's clean. You got in title insurance, Right. Two is that you're on the deed. And so now any equity that you captured, if you got it for 40, it's worth 90. You just made $50,000 in equity just snatching it. Right? Sure. Then not counting the cash flow and all of that. So you want the equity and you want to be on the deed. Right. So if you buy a deal on seller finance, that's the instrument you use. If you sell a property on seller finance, you want to use either a contract for deed or a land installment contract. The reason is, is because. A couple reasons. One, so a contract for deed, land contract, same thing. It's a contract in exchange for the deed when the contract's completed.

[A]

That's right.

[B]

Right. And the reason you want to do that. And we can record them or not record them, it's valid either way. But the reason that's important is you don't like one. You want to give them a reason to make their payments and pay you off.

[A]

Right?

[B]

Right. So now they have an incentive. Hey, once this is paid, you're going to get the deed. So there's a carrot at the end. So that's number one, which is huge. Number two is that you want to be on, obviously, the deed until it's paid for. Because, well, let's say it goes bad, people go, what happens if they don't pay me? So in Pennsylvania, a default on. A lot of people don't know, a lot of attorneys don't even know this. A d. They have a statute that a default on a land contract, if they default past a default date that's in the contract, it automatically, automatically converts to a lease, more or less a rental. Right. So they lose their equitable interest in their Rights. So at the end of the day, it's, it's basically like an advanced eviction. It's not a foreclosure.

[A]

Wow.

[B]

Right. And so, but just knowing, like you can even buy a house on seller finance with a promissory note, mortgage deed, your payments, 200amonth, and you go and you collect 900 or 1,000 and you sell it on a land contract, contract for deed scenario. And you just make the spread. Right. From the 200 to the 7 gross. Right. There's tax and insurance. But that's a great way for people that don't want to have rentals or they don't want to, like, you don't have to fix it. You don't have to do anything. You just pay the tax and insurance and you collect a check and you. Right. So there's, there's a lot of ways to do it that I don't think people just aren't exposed to, you know.

[A]

So, so talk to me a little bit about. Someone just brought this up literally, I think yesterday about installment purchases.

[B]

Yeah.

[A]

Right. What is the difference between that? Interest to seller finance. I know it's, it's essentially the same thing. I just have never structured the paperwork with an installment purchase.

[B]

Yeah, right.

[A]

But do tell me. The difference essentially is, is as a buyer, if you do that or as a seller, are you sharing ownership on the deed? Is that what separates the.

[B]

No. On a, on a, on a land contract, slash, contract for deed. They're the same thing. Article of agreement. They're all kind of.

[A]

Yeah.

[B]

The same.

[A]

So that is what he's talking about. Someone brought it up. You should do a installment purchase on this. You're basically doing a land contract contract for.

[B]

If I'm buying deals, very rare. I never like to buy a deal and buy it on a contract for deed or a land contract.

[A]

Correct.

[B]

The reason is I have, I'm not the owner and I'm paying for everything and I don't, and I don't have the equity and I can't refinance it. Right. So all the benefits, I can't depreciate it. Right. Whereas if I close on it with a promise to renew a mortgage deed, I take title now I can have the depreciation benefits. I have the. I have the equity that I captured. And there. Yeah, you just, it's. That's the only way that I would advise people. When you buy a deal, that's how.

[A]

You want to be on title.

[B]

Yeah. But if you sell properties, never, never transfer that and use installment contracts. They're great.

[A]

Is there any difference in the contract from.

[B]

From a installment to.

[A]

Yeah. Installment from maybe contract for deed, other.

[B]

No, they're.

[A]

They're the same thing. It's interchangeable words. I think that's what I got cut up. It's essentially interchangeable words. Contract for needs. Meaning I'm going to pay you off over time and when I pay you off, I get the deed.

[B]

Yeah.

[A]

It's same thing with an installment agreement.

[B]

Yeah. And a lot of times when we record them online, a contract for deed, a land installment contract, an article of agreement, they record all of them as a land contract. That's what it's recorded under. So it's, it's basically a land installment contract. Official.

[A]

Got it officially.

[B]

Yeah.

[A]

Contract. Got it.

[B]

Yeah.

[A]

Okay. I. So here's the reason why I still love the cheap housing is for. Everything you just said is it creates options on your exit. And that's what I think a lot of people don't understand is a lot of people get in and let's just use wholesaling as an example. You come in as a wholesaler, you're just a wholesaler. Right. You need to go find someone who sees value in that property. If you're a fix and flipper that you are a hammer, you got to look for a nail. You fix and flip, it's all you do. If you're a long term landlord buyer, you're looking for the right buyer. Now you run a turnkey property company so we can talk about that, but that's all the person is. But for the people that actually want to have some level of volume or business is a better way of saying that then they need diversity in how they exit the property. Cheap homes gives you the diversity. You can wholesale it, you can buy in rental, you could fix and flip it, you can sell it off as a seller finance note, a land contract, you just get the diversity in that. And people think I'm getting crazy in my old age. Right. Like why are you buying all this stuff in Alabama? I'm like I'm buying a multimillion dollar apartment for $250,000.

[B]

Yeah.

[A]

I'm going to have affordable housing. I get tax, depreciation and keep it for the long term. I've 40% equity when I'm done with the thing. Like that's why now is it a lift to get it there? Sure. But it allows me to have, you know, 16 or 22 doors in a lower price market.

[B]

Yeah.

[A]

Than Miami.

[B]

Yeah.

[A]

Right. But that's also not for everyone. I mean you run a very successful turnkey business.

[B]

Yeah.

[A]

Who would be the best turnkey type of investor? Who are you talking to there?

[B]

Those are, yeah, those are usually people that are business owners, entrepreneurs. They have a, you know, multiple six figure or even a seven figure job. So they have the capital and they have the money coming in and they just need to leverage their time. And so for like those are usually the kind of people that we get properties for and we get them to them. Justin, I think I sent you one. You know the one I you was 60,000 new windows, new roof, had a tenant pay 950. Right. And so like, and they prices can fluctuate but like you know, like for somebody that's busy, that's working a full time job. Right. Like that's beautiful because it's a, whatever the return is 12, 13, 15%. Right. But in these markets too, what you got to understand is, and kind of a golden nugget is I tell people find, you find the, in the cheap markets, you find the big cities and you go out 30, 45 an hour, hour 15, yeah, even, even up to an hour and a half. But you go to these tertiary outskirt markets and the, and the reason this is so important for people to kind of grasp and this is stuff I usually only share with my coaching, but I want to help people is one, there's not as many, as much competition.

[A]

Sure.

[B]

So you know, you can catch more fish. Two, is that a lot? There's not because there's not a lot of competition. If you're doing emailers and postcards and having a cold caller call them, you're probably the only one hitting them up so you can get more deals. And then three is that in these outskirts tertiary markets the population's growing. Right. People are growing up in a lot of these places now and not leaving because it is affordable and they can make it there and they can work remote. Right? Working remote.

[A]

Working remote changed everyone's everything. That's right.

[B]

So now in these small cities, people are growing up there now and not going man, I got to get the hell out of here. They're just going, hey, I'm going to hang here, I can work remote. I can have an app on my phone and sell sneakers or whatever I want to do, right?

[A]

Yeah, yeah, yeah.

[B]

And so I think that because there's so many options for working remote and because it's affordable, people aren't leaving. Well and the great thing is nobody's building houses in a lot of these small outskirt communities no one's building. So what that means supply and demand is.

[A]

That's right.

[B]

And so everything comes down to supply and demand. And so what's happening in those cities now, like houses we were getting five years ago, 650 to 750. We're easily getting 11 to 1200, no problem now.

[A]

Crazy.

[B]

So think about that. And a lot of times the taxes don't really go up much, if any. Yeah, right. But the rents have just skyrocketed because of supply and demand. And so we help, we help people. The turnkey model is great for people that have money, they have capital, they want to get in the game where they're like, dude, if you can, you know, because we get them the property, we fix it, we rent it, we manage it, we do everything vertically integrated. So it's nice because they deal with me and really my executive.

[A]

Yeah, yeah.

[B]

Which is world class. So they deal with all my gals and. And then it's just a matter of taking care of them over delivering and capturing the repeat business. Once they do one and they see that it works and they trust you, then it's like, oh man, off to the races. Hey, we want to buy four or five of these a year. So you create the repeat business. But you don't forget about the importance of constantly having some new business come in because you never want to be dependent on one source for have anything really.

[A]

Yeah. You know, listen, we're saying the same thing over and over again. But I would tell you guys, if you aren't yet following dj, follow him. Great human being first and foremost. So I give you that.

[B]

Thanks man.

[A]

But you know, he really is the right educator for the time and days of today's real estate education is, is get into the deals. Whether you're a turnkey person with like high earner. W2, you need some tax write offs, you need, you know, return on your investment. Turnkey is the model. I mean that's just if I had no time, all I'm doing is turn key. I want to return on my cash. Right. So if I have high income doctors, lawyers, other real estate investors, like God, let me just dump some money in a turnkey scenario.

[B]

Plus Justin, as you know, dude, these people, a lot of them don't know these high earners. You can the depreciation right now, this year it's 60%.

[A]

I think it goes back up though. I think. Right.

[B]

If trumps get collected, it'll go probably go back to 100.

[A]

100.

[B]

But where you can depreciate a hundred percent of that year. One bonus, accelerated depreciation. There's, you know, criteria, but ultimately not getting hung up in the weeds. Like, dude, most people, if they buy one or two or three or four investment properties a year, they, and they pay a hundred, 200 grand in taxes or 50 grand or 80 grand, they can literally as, you know, eliminate their tax bill. You can flow it through to your personal income taxes.

[A]

Yep.

[B]

And so a lot of high income earners, not just the return that they can get and you know, all of that. Right. But it's the, it's the tax savings that will, it's like you're, you're either going to pay, you know, Uncle Sam or you can take that same money, buy some real estate assets that you have equity and you have cash flow in and you can get great returns. Which one would you kind of rather have? Right? A lot of people too, they don't look at it. I always tell people, you gotta look at things. LTV, what's the lifetime value? If, if you buy one rental for 60 or 70K and it's renting now for 11 or 1200, if you, I already ran the data on this. If you, if you're 50 like me, 53, and you live to be 103, I hold it for 50 years, that house will pay me over a million dollars. Right.

[A]

And it doubles for 10 years.

[B]

They go, oh, I'm making 1100amonth. No, that's paying you $1.4 million over your life. So imagine getting 50 of those, right? That's like, that's like $60 million that those houses are going to pay you over the course of your life, not counting the depreciation and all the other benefits, right.

[A]

There's not a person that can make an argument that shouldn't be. Like, I say this all the time on my social media. Everybody needs to be in real estate. Yeah, yeah, everyone. I don't care if you're 19 or you're 91.

[B]

Yeah.

[A]

You need to be in real estate for everything. You just said income appreciation, tax, write off. Right? Like that is everything. Right? And so guys, I will tell you right now, make sure you're following DJ. Make sure you go to cheaphomesuniversity.com everything this man does, he does it with integrity. He does it with all of his heart. He's an incredible human being and an ex San Francisco baseball player. Brother, I appreciate you coming on. Anywhere else you want to point them?

[B]

No, man, I think, I think, look, I think that, I mean those of you that want to reach out. Also my IG yeah it's just at d period j period thein.com that's d period j period thein t h I e l e n like Adam thielen.com so if you guys want to go to my IG you can literally DM me. You can text me on there. But yeah, you can go to cheap homes university.com and check us out, get in touch with us, you know, jump on a phone call and really just see how we can help you personally depending on your situation. Because everyone's situation is different and you know, we're not high pressure. It's kind of like hey what's going on? How can we help? If we can help, you know, we go, we kind of figure out hey where do we go from here kind of thing.

[A]

No doubt.

[B]

And then. But yeah I think, and yeah, I definitely think it's a great time. I'll end with this Justin because I think this is really big for people to hear and I'm not just saying this to like get business. I really believe this. I went through the last downturn and I believe that I told everyone in 22 when everyone was screaming from the hill tops 23 is going to crash. I said no it's not, it's going to be 25. I literally said this right. My fiance Kristen always we talk laugh about it now and I think I'm, I was right because when the meteor hits the center of the ocean it takes time for the, for the waves to hit short. Right. And I think that everything that's happened with the debt with credit card debt with home foreclosures coming that are being held back.

[A]

Crazy.

[B]

I think that I believe that people to get in now and learn the game now and get in the, and understand how to navigate and how to make money with various strategies. I think the opportunity in the next four to five years is going to be like nothing that we've ever seen. I really do. I just think that there's going to be a lot of fear. When fear is out there and there's uncertainty, people are going to be more willing to sell their, their home, more willing to take a seller financed offer. Right. So there's going to be a lot more ability to get deals, get them cheaper and even get them with, with great terms.

[A]

So the next 10 years is going to be best 10 years to be in real estate period. I'm totally with you. I'm going to buy everything I possibly can in 10 years. I'll look up and I'll say, all right, now what do I want to do? Right?

[B]

Yeah. Retire in Italy.

[A]

Something. I'll take it. Lake Cuomo. Yeah, brother. Appreciate you being here. As always, you're an Incredible human again. DJ TH is here@cheaper homes university.com and if this meant anything to you, found one or two gold nuggets. Share this with two of your friends. I'd appreciate it.

[B]

Thanks, guys.

[A]

See you on the next episode.

[B]

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