Friday, November 5, 2021

Step 3: How to Structure Successful Deals! | Street Smart Investor


How you structure your deal makes all the difference.

Lou Brown shares his secrets to deal structuring, why banks destroy your structure, how to move renters into homeownership, and more!


Create a solution for a seller. Find Pain and build a solution around it. Existing financing? Free and clear property? Equity? Details of the deal impact the deal structure.

Timestamps: 

0:01 - Introduction - “Structuring the Right Deal for the Most Profits” 

0:43 - Lou’s wins of the week

1:33 - Get Connected with your Community

2:29 - Tucker Day Committee

3:40 - Get Your Message to the Market Doing Good While Doing Well

4:42 - Johnny & Pricilla’s Path To Home Ownership Moving-Up Level

8:15 - Path To Home Ownership Program Wall of Winners

11:50 - F.I.R.E. up Your Biz

12:05 - Structuring the Right Deal for the Most Profits

19:20 - Cost to Sell Worksheet

25:14 - Millionaire Deal Maker

26:56 - Tip of the Week: Structuring the Right Deal, Solving the Seller’s Problem Can Make You A Fortune

27:41 - Learn the most powerful entity  https://www.MaximumAssetShield.com - October 14th - 17th, 2021

32:37 - Can you give a better price than your competitors?

34:51 -Next Week’s Topic: Ten Steps to Real Success - Building Your Team


If you are JUST getting started in real estate investing, you NEED to attend my ONE-DAY virtual training. I teach it LIVE over ZOOM, and it's only $1 (yes, one dollar) for SIX HOURS of solid how-to training!  https://www.wealthbuilderworkshop.online


If you're ready for a more in-depth experience, then you owe it to yourself to investigate my THREE- DAY Millionaire Jumpstart Event. I host it four times a year in various locations, and you can attend LIVE and in person. I'll be your coach all three days.


You'll discover how to start investing in real estate (or do it easier and more profitably) at either Wealth Builder Workshop or Millionaire Jumpstart.

Need help deciding which power-packed "one-of-a-kind" training on making money in real estate investing is best for you!

Call 1-800-578-8580  or visit us online at https://www.streetsmartinvestor.com

Visit our YouTube Channel: https://www.youtube.com/user/StreetSmartInvestor


Listen to our Podcast:

https://streetsmart.mypodcastworld.com/11351/how-to-structure-successful-deals-street-smart-investor



How to Structure Successful Deals! | Street Smart Investor

Lou Brown (00:04):

Yeah, baby. So we are here today. This wonderful, beautiful Tuesday to teach you about real estate investing. And today I'm going to teach you about structuring the right deal for the most profits.



Lou Brown (00:35):

Welcome. I hope you've had a fantastic week and are getting ready for another fantastic week as well. We had some great things happening last week. In fact, one of the wins we had was a Wealth Builder Workshop on Saturday. It was phenomenal. We had a great group of people from all over the country. It was just exciting. And so many people took advantage of the great offers that I made there and said, "Hey, I'm ready to move forward in my life. I'm ready to move forward with my business." I'm so excited and I welcome all of you on board. No doubt about it. You've made a great decision, a wise and brilliant decision in doing that. And we're going to back that up. And many of you joined us on the Sunday night call and we had a fantastic Sunday night training. So, welcome, to all of you who have joined us and I have some other things to share with you on wins for the week. I've got some slides here.



Lou Brown (02:04):

All right. So one of the things I teach you guys about getting connected with the community is that you will definitely get deals that nobody else knows about. You're going to have to give of yourself, but you should do that anyway, being a part of the community, giving of yourself, helping others and causing your community to be better in every day, in every way. And one of the things that Janice and I have done is be part of the Main Street Tucker Association. Since our office is, literally, right there at Main Street, and they've had this association together for decades. And one of the projects they put on is Tucker Day.



Lou Brown (02:50):

And you've heard me talk about Tucker Day before, where we have a big booth there and we have all kinds of excitement. We get some great customers out of that relationship and that exposure. And so it's just a great opportunity for you to connect with the community and really let people in the community know who you are and what you do. It's up to you to tell them who you are and what you do. And we had a debriefing after Tucker Day, and that's what happened on Sunday evening. So one of the members had a beautiful set up for us. This is the only picture I took, unfortunately, but this is only a handful of the people that were there and they had a wonderful meal for us and a wonderful time together.


Lou Brown (03:36):

So, definitely, you've got an opportunity to connect. But one point I wanted to make about this is the person actually whose home we're in right there, is a real estate agent. And that agent, because of my involvement in this committee, bought me a deal earlier this year that netted us over $100,000 in profit. So when you think to yourself, is it going to be profitable for me to spend these hours and this time helping the community? Let me assure you, it is. And it's definitely something I teach as part of what we do in building the relationship with the community. People don't hate people they know, generally speaking. So just be someone that they know, and therefore they're not going to put you down or talk bad about you out there in the community, not really knowing what you do. You've got to get your message to the market.



Lou Brown (04:32):

Let people know that you are doing good while doing well, and that you offer the Path To Home Ownership. Now we have another win of the week where Johnny and Priscilla were able to move up their Path To Home Ownership. And we are so proud of you guys. You did what you said you would do. You committed to the path. They started at the rent level, then moved to the rent-to-own level. And at the rent-to-own level, our clients buy a 3-year option to purchase the property. Well, they've made a very wise choice and a very wise investment 3 years ago when they joined that level because what happened was they secured not only their right to buy that property, they secured the right to buy that property over the next 3-year period of time. And they secured the price point.



Lou Brown (05:34):

And that is so critical for everyone to understand that our program has a price point in it, in that option. It does have an increase during the period of time that they're in the option. And when they finally exercise their option, that price, whatever it is, is what they have the ability to purchase the home for. In the case of Johnny and Priscilla, such a great plan for them was the fact that they purchased the option to buy. And even with the growth of the price point of the option, they were at about $115,900. The big news is the house they live in is over $150,000 in current value. So they were very wise to purchase that option. And they were very wise to exercise that option to purchase this past week. And that moved them to our gold level, which is the agreement-for-deed level.



Lou Brown (06:34):

Now they have ongoing payments on an ongoing basis where they are building up their equity in the property. They're paying down the mortgage, building up their equity, building up their credit because every month that they're making their payment, it's being reported to the credit bureau. Now they're building another trade line of credit. That's such a powerful thing that whatever issues from the past may exist with credit, it doesn't matter when you are now making a payment. At some point in the future, they'll be in a position to actually refinance the loan that we've made to them. So, such a great opportunity for them to advance their lives. Big congratulations to Johnny and Priscilla for being a part of our program. For being intelligent enough to get involved in it in the first place, realizing that we were going to do what we said we're going to do, which we do. We do what we say we're going to do.



Lou Brown (07:36):

And sure enough, they were now able to advance to the next level. And at any point that they have good enough credit and since they've already built up a down payment, they could go on  into a bank loan anytime they want to. And we don't force them to do that. They can pay us off anytime they want to, over the next 40 years. So they've got plenty of time to make that choice to move up. And of course they would even obtain, perhaps, a reduced interest rate depending on when they obtain that. So congratulations again, and then just wanted everybody to know that the Path To Home Ownership is a real thing. And we do have successful folks. This is a picture of our wall of winners at the international headquarters there. And these are just folks within our local market that we are serving.





Lou Brown (08:30):

And here's another wall over here. So you can see that there's a lot of people that have taken advantage of it. And they've got a real opportunity to advance themselves in their world. Here's another one of our gold members. It’s an exciting thing that you're actually helping people to end up with home ownership.


Scott Paton (09:17):

Lou, we happen to have a video of Priscilla and Johnny.



Lou Brown (09:22):

Actually, play it.


Scott Paton (09:23):

Okay. Just give me two seconds here.



Path To Home Ownership Rep (09:37):

Congratulations on getting your new home and graduating to the gold level. And we're looking forward to you moving on up to the platinum level.



Pricilla (09:44):

All right!


Path To Home Ownership Rep (09:46):

So are you excited about what happened with the Path To Home Ownership program that you are a member of?



Pricilla (09:51):

Yes.



Path To Home Ownership Rep (09:52):

Has it helped you?



Pricilla (09:53):

Yes, it has.


Path To Home Ownership Rep (09:54):

What do you think about it?



Pricilla (09:56):

It was good. It was educational.


Path To Home Ownership Rep (10:02):

And please say a few words about how this program has worked for you.



Pricilla (10:06):

Well, that's up to you cause you were more involved than I really was.



Johnny  (10:09):

Actually, it was a good program if you are in the process of trying to buy a home. It's a little tough, but if you stick to what you're supposed to do and pay everything on time, it works out for the best. So I recommend anybody that's going to do a past shift to ownership, I would recommend that you choose this program to go through.



Path To Home Ownership Rep (10:31):

And did Trust Properties treat you right?



Johnny  (10:35):

Oh, Trust Properties made us feel like we were family.



Pricilla (10:38):

That's true. That's true.



Path To Home Ownership Rep (10:39):

Thank you so much.



Lou Brown (10:42):

Excellent. What a great story. Such an inspiration, Johnny and Priscilla, for everybody that's seeing that. I hope you guys realize that there's such an opportunity out there in the world. And really one of the things I love about being the founder of Certified Affordable Housing Provider is the fact that not only can we help families in our local market, but all of our licensees across America are helping families in their area as well. And to me, that's what I'm up to. I really want to change the trajectory of home ownership in this country. It's been going down, down, down. I want to see it go up, up, up, and it's people like us that caused that to happen in other people's lives. And all we ever ask anybody to do is do what the agreement says. That's all we ever asked anybody to do, follow the agreement and you will have tremendous success. So again, congratulations to Johnny and Priscilla for moving up to the next level.



Lou Brown (12:00):

Well, we are going to fire up your business now because I'm going to teach you some things about what to do and how to do it on structuring deals that we've been talking over the last couple of weeks about becoming a real estate investor and becoming a successful real estate investor. And I'm teaching you each week, a different aspect of becoming successful. We've got a 10-week series here. And so this one I wanted to give you the opportunity to learn that deals do not exist, they are created, at least in the world of Street Smart. As a Street Smart investor, we know that there's more to the story. And let me just explain. So there's people, there's wholesalers out there, real estate agents. There's lots of folks buying from the bank, et cetera. Those are all cash deals.



Lou Brown (13:00):

Meaning, if you're going to put a contract on a property, you're going to have to come to the table with cash. And you're going to have to obtain that property, that cash, either out of your pocket or from someone else's pocket. Now that might be a private money lender. That might be a hard money lender. That might be a traditional lender, but in Lou Brown's world, and what I like to teach is that the seller can actually be the bank in the transaction. Now you'd say to yourself right off the bat, "Well, okay, I'm going to call a bunch of people. I'm going to ask, ‘Will you do seller financing with me?’ " Well, the answer is “no.” So why don't we erase that from your thought pattern because that's not a good plan. Don't call up the seller and ask, "Will you do seller financing?"


Lou Brown (13:49):

Now there's a gracious few that sometimes will advertise and even market and even list their property, who will consider seller financing. But it's very rare. So what do we do instead? We educate. First, we interview the seller. We interview them to discover what's going on in their world. What challenges do they have? What are they trying to accomplish with the sale of this home? Sometimes, it's just to get rid of the property. Sometimes, they're sick and tired of being worried about this property. Maybe they don't live there anymore. Maybe it's sitting vacant. Maybe they inherited it. So there's many different reasons that people end up with home ownership. And with this extra house that they don't need, maybe it was a family member that they had the house for. Now that family member has moved on and they don't want to worry about mowing the grass, cleaning, painting.



Lou Brown (14:50):

One of my clients told me the story. It was great. He was one of my platinum mastermind members. Once platinum, always a platinum. So he's platinum now and here’s his great story. He says, “Lou, I did my marketing like you told me to do. This lady calls me up. She tells me about a house. I asked her if it's vacant. She said yes. I asked how long it has been vacant. She said, ‘14 years.’ Lou, I almost fell off my chair!” Not only that he says, “Lou, they've been paying the property taxes. They've been paying the insurance. They've been paying the water bill all of these years on this house.” They thought they would get around to it. They thought they would do something with that property. They never did. He ended up buying that property from the seller. The seller ended up being the bank for him.



Lou Brown (15:45):

That means that the seller owned the property free and clear. The seller really didn't have an immediate need for any cash. They just had a need to get rid of this property. Now you're going to find that's very common out there in the world. Earlier in this broadcast, I was sharing with you about being in the home of the real estate agent that brought me that deal. Well, guess what? The house he brought me had been vacant for 5 years. They had paid the property taxes. They had paid the insurance. They had paid the electricity, the gas, and the water all of that time, but they never got around to re-leasing the property. So it had been a rental property. Tenants moved out, never got around to re-leasing the property. I went over there, mowed the grass. You can just imagine. So know that there are deals like that out there.



Lou Brown (16:45):

I asked the next-door neighbor, “How long have you lived here?” He says 4 years. I asked, “Have you ever seen anybody over here?” He said, never, not one time in 4 years. I said, “That is amazing!” So just know that I've seen this happen over and over and over and over again. So my point is this, there are many sellers out there that do not have an immediate need for the cash. So many times they're willing to wait. Now I like to structure the deal in a way that solves the seller's problem. So the first thing you got to do is find what their pain point is. What is the pain? What is the reason that they're selling? Inside that answer is your way to structure that deal. Because again, our goal is to solve their problem. Our goal is to give them something that gives them a reason to say yes to you.



Lou Brown (17:48):

And one of the things that we do once we find that pain, is we put together 3 offers to make with that seller before we even go see them. Now, when we go to see them, we prepare to make a presentation. Because what we found is one of the most powerful things you can do is to present to your seller a story about who you are and what you do and how you operate and how you can help and how you're different. What the real world for sellers following the traditional selling process is. And then numbers, as it relates to that, how you are different from a traditional buyer. You have things that you're bringing to the table that a traditional buyer cannot bring to the table. That's powerful. You can take the property as is. You can work with them on the timing of their move.


Lou Brown (18:53):

They need 2, 3 months to get packed up and move. You can do that. A traditional buyer can't do that. So I give them a whole list of things that we can do that a traditional buyer can't do. And then I give them examples of people that we've solved their problems with. So in this process, we also get down to our cost-to-sell worksheet. This is where the magic occurs with the seller because we start with their asking price right there. And, boom! We have a number of things that are going to cost us to sell their home, that we have to calculate. They actually participate in that process. We come up with a final bottom line number and as a result of that, they are participating in coming up with the offer. They see exactly how you arrived at it.

Lou Brown (19:49):

If they liked that bottom line number, we're off to the races, we're ready to buy that house. We've already got our agreement ready and in our back. Why? Because we already knew that we had 3 offers to make. We already provide software to you so that you can put in those offers, basically, very detailed on a small entry-level piece of software, boom! You put in these numbers and it spits out 3 different offers to make. Actually 4. So we now go equipped, ready. If they don't like offer number 1, we've got offer number 2. We've got offer number 3. We've got offer number 4. Now, we don't lay them all out on the table. We don't want to confuse them. We give them one offer. If that works, we're done. We don't want to confuse anyone. Now, another thing is right there on the sheet, is a way to adjust that offer if they don't like your bottom line, offer price. Because your bottom line offer price is a cash offer.



Lou Brown (20:53):

Well, cash is king, right? Cash costs money. You have to raise that money. You have to pay points and closing costs and all kinds of expenses in getting that money to the table. But when the seller is willing to be the bank, that money can be saved. We don't just save it in our pocket. We give it back to the seller. We say, if you're going to be the bank, instead of this hard money lender, we'll just give you the money in the form of an increase in our offer. We increase our offer when they're willing to do seller-financing. So as a result, they win because of agreeing to be the bank. Now, what did you just do? You just saved yourself the pain and suffering of borrowing money from the bank. So now you don't have to fill out all those forms, endless forms that you have to complete and pictures and appraisals and credit reports and pain and suffering, and lots of checks that you have to write to cause that to happen.



Lou Brown (21:55):

Well, we've got a seller right now with equity in the property. They will be the bank for you. I love this. This is the way that I have built my business for over 40 years. Now, me, Lou Brown, I've never been to the bank. I've never qualified for a loan on a single-family or small multi-family property. Is that a beautiful thing? Now think about yourself. Maybe you already have been to the bank and qualified for a loan, even for your own house. Well, imagine you don't have to do that. Imagine that life looks completely different when you don't have to go to the bank and qualify for loans. So structuring the deal is all about the seller's pain point, how to solve their problem, how to solve it quickly and efficiently in a way that provides them with a solution. So when you're making your presentation to the seller, you want to be aware that that's part of the story.



Lou Brown (22:57):

You have to tell them here's the solution to X, Y, Z. In other words, bring back the pain point to the conversation, bring back what they were trying to accomplish when they made an appointment with you. So you now show up, you've got a story to tell, you go through the presentation, you get to that final bottom line. And then you impact the story with how this will solve that, whatever that is, whatever that problem, that pain point is for them. So be thinking about when you're structuring the deal, what's in it for them. And if there's any possibility that the seller can be the bank. You definitely want to do that. Now, another way that we structure the deal is if there's existing financing on the property, we can take that over. We can take over the payments on the property.



Lou Brown (24:02):

Now that's a wonderful and powerful thing. We do that with recognition that there's a huge benefit in it for both parties. The benefit in it for the seller is that you're actually increasing your offer price because you're able to take over the existing financing. The benefit for you is you're going to save a fortune and pain and suffering going to the traditional bank. So everybody wins in this scenario. Now I want to say this. If you're going to take over existing financing that you make that commitment that you're going to make those payments. In fact, you make those payments before you make your own payment on your own house. Why? Because that person has given you a gift from God, and that is the ability to take over that existing financing on the property. Do the math. If you've ever borrowed any money from the bank, get out the closing statement and look at what all your costs were.


Lou Brown (25:03):

You're going to be amazed. Thousands and thousands of dollars can be saved in that one strategy, right there, taking over existing financing. Now you do have to have something in order to protect yourself. And that is an amazing thing called “trust.” So when you learn about trusts, I'm going to teach you that because I learned it myself and it was a powerful thing to learn, but in structuring deals, that is one of the ways that you can set yourself up for success. Now I've identified over 37 different ways that you can structure a transaction. So we do have training on that. It's called Millionaire Dealmaker, a 4-day training where you actually bring deals to class. We work with them in class. We split up into teams. It's just a very powerful educational experience and causing behavior, causing you to get deals you otherwise would not have gotten. So definitely that's something to put on your agenda. We do that once per year. It's a 4-day event. Definitely want you to have that as part of your overall learning, how to be a very successful real estate investor.



Lou Brown (26:30):

Well, I guess real estate is the IDEAL investment, right? You know that I gave a series on that one. Income. Depreciation. Equity buildup. Appreciation. And Leverage. So those beautiful things that happen as a result of being in real estate are available to you. And in fact, I'm going to give you the tip of the week.



Lou Brown (27:11):

The tip of the week is structuring the right deal. Solving the seller's problem can make you a fortune. Yeah, baby. All right. 



Lou Brown (27:41):

Well, one other thing I was going to mention is that I just covered something in structuring the deal and making the most money. And something you have to keep in mind is that when you are structuring the deal to take over existing financing on the property, you do need to learn a very powerful strategy, a very powerful entity called "trusts." I do have a 4-day event. I only give it one time per year and it is coming up in October. October 14, 15, 16, and 17. And I want you to definitely get yourself enrolled in it. MaximumAssetShield.com. And what we're going to do is actually teach you about buying property subject to the existing loan on the property using trusts. But we're certainly not going to stop there. There's many other things you're going to learn about trusts, frankly, the most powerful entity I've ever discovered.



Lou Brown (28:49):

I've looked at all the other entities out there. I haven't found anything that even comes close. There's 30 different benefits of trust that you cannot get with any other entity. Cannot get it with a corporation, cannot get it with an LLC, cannot get it with a limited partnership. You can only get these extra 30 benefits when you use them, when you use a trust. Now, what I want you to know is you can use the trust in combination with any other entity. So those other entities that you may already have, you can still use those. Imagine that you use them in combination with something that gives you 30 more benefits. So I want you to know about those benefits. And I boil it down into 4 Ps. It's Privacy, which they say is dead, but it's not. On public record, your name does not have to appear as the owner of the property.


Lou Brown (29:45):

You've got Protection. You certainly have asset protection when your name is not on public records. So if somebody's coming after you, somebody wants to sue you, they're going to have to go through that trust. And they're going to have a hard time getting through that trust because the trust didn't do anything that maybe you have a reason for, or they have a reason to come after you. Well, they don't have a reason to come after that trust. So that can certainly give you some protection. Probate avoidance, something that you do not get with any other entity. Again, not a corporation, not an LLC, not a limited partnership, and certainly not having properties in your own name that will not avoid probate, but a trust can avoid probate. And it's a powerful thing because now we don't have the courts and the judges and the attorneys and the expenses and the delay, all of that can be eliminated with the use of trust.



Lou Brown (30:44):

So I want to teach you that. And the final one is Profits. And that means that the use of trust, learning about trust can give you the opportunity to take over existing financing on property, which of course is going to boomerang your profits way up because you've got the opportunity to now avoid all the expenses that typically go with borrowing money. So I definitely wanted you to learn about that upcoming event. It's Maximum Asset Shield. This'll be like my 20th year teaching this course and it's amazing. We've helped a lot of people build amazing multi-million dollar businesses and protect themselves and their family as a result of what comes here. Now, you're actually going to bring a deed with you to class. We're actually going to do it right there in class. You're going to bring a title with you to class, and you're going to fill out your own paperwork sitting right at your seats.


Lou Brown (31:39):

You're going to be able to ask questions. We're going to go through it line by line, step by step. So you're not left behind, not understanding something. We want you to be aware. We're going to have a tax attorney there. We're going to be teaching you about tax savings. We're going to be teaching you about the ultimate trust, which I call the “elite trust.” In addition to the land trust, personal property trust, and living trust that you're going to be learning there. So definitely I want you to get enrolled, MaximumAssetShield.com. Don't miss this opportunity. It'll be another year before I give that class.



Lou Brown (32:30):

So now that we've covered these 10 steps, Scott, I know you got a bunch of questions. So, I'm ready.



Scott Paton (32:36):

So one question was, you teach people to buy the right house cheap, but when you were talking about not going to the bank, does that sometimes mean that you can give a better price than maybe some of your competition?



Lou Brown (32:54):

Well, that's exactly what I said. So what happens is that when you go through this cost-to-sell worksheet and you get down to the final bottom line, the first offer is always cash. It's a cash offer. And if they say no to that number, okay, not a problem. We've got a backup plan. We've got the ability to offer them more for their property, simply by taking over the existing financing on the property, or if there's equity in that property, that's due to be paid to the seller, then that seller can carry that equity back in the form of monthly, quarterly, semi-annual, or annual payments. So there's a way that they can have an income stream off of the same property that they used to own, right? So they sell the property, they still have a mortgage against the property, and they're still owed money against that property.



Lou Brown (33:52):

So they've got security and they've got a dependable, predictable income stream. And that is such a powerful thing for a lot of people. So many times in my life, I have been absolutely pleased that so many sellers have been excited about the fact that I was offering them a monthly income. Sometimes I say, "Would an extra $300 a month make a difference in your life?" And they say, "Yes, it would!" I say, "Fantastic. All right, that's what we can do. We can give you an extra $300 per month until paid, would that work for you?" And they loved that. So there's just a real benefit and gift that you're giving to the seller solving problems for them as well. They might need that supplemental income and you're providing it to them.



Scott Paton (34:42):

Wonderful. That's all the questions that we have today, Lou. And I think it's time to wrap her up.


Lou Brown (34:49):

All right, baby. Well, I'm just looking forward to seeing every one of you. Of course, next Sunday night, this coming Sunday night for all of our licensees, we have a training that we do every Sunday night, 9:00 PM Eastern Time. Want to remind you of that. Secondly, next Tuesday, we'll be doing another one of these powerful sessions. I'm giving you the 10 steps to real estate success. And this week we did structuring the deal. We've got an upcoming one next week. Building your team. We're going to be teaching next week about building your team. All right, Scott. So thank you all. Thank you for joining us. We appreciate it. Look forward to seeing you soon. Definitely check out my YouTube channel. We have lots of videos there. Lots of information. You know the drill. Subscribe, like, love, share. Let other people know. We appreciate your support. No doubt about it. Looking forward to seeing you soon. Yeah, baby.

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