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Cash is king in any real estate market, especially when high interest rates eat into your bottom line.  Without cash, you are digging into your savings, chasing after people to fund your deals, or getting burnt out.

Some investors don’t even survive in today’s market because they run out of cash too quickly.

But when you have a creative financing strategy in place, you can avoid making the same mistakes unsophisticated investors make that bankrupt their business.

In this episode, Chris Prefontaine from Smart Real Estate Coach, joins us to discuss creative financing strategies that the market is craving for in a high interest rate environment.  Use it to create deals that bring you consistent cash.

Listen Now!

Show highlights include: 

  • How to survive nightmare crashes like the 2008/2009 real estate bubble (3:03)
  • Use this “On-point” strategy to get your team to crush your cashflow goals in half the time.  (6:49)
  • How masterminds help you master creative financing strategies with ease (without having to make all the mistakes yourself) (7:40)
  • The unique characteristic that “ethically forces” your team to be high performers (9:17)
  • The 50-year average interest rate and what it means for the future of real estate investors (12:23)
  • The ready-to-use creative financing strategy that’s working today to pump cash into your business (15:18)
  • How to create secret clauses within your deals so that you aren’t worried about market fluctuations (15:58)
  • Why you must never make short term deals in today’s market (and what to do instead) (18:32)
  • The “whiteboard” technique for analyzing your deals (so that you hit a homerun every time) (21:52)

To connect with Chris Prefontaine, please visit:

http://www.smartrealestatecoach.com/mastersclass https://wickedsmartbooks.com/dan | www.smartrealestatecoach.com/action

To get the latest updates directly from Dan and discuss business with other real estate investors, join the REI marketing nerds Facebook group here: http://adwordsnerds.com/group

Need help with your online marketing? Jump on a FREE strategy session with our team. We'll dive deep into your market and help you build a custom strategy for finding motivated seller leads online. Schedule for free here: http://adwordsnerds.com/strategy

Read Full Transcript

You're listening to the REI marketing nerds podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of AdWords nerds, a high tech digital agency focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition and live a freer, more awesome life. And now, your host, Dan Barrett

(0:40) All right. Hello, and welcome to this week's episode of the REI marketing nerds podcast. As always, this is Daniel Barrett here from AdWords nerds.com. And look, you know, if you need more leads and deals online for your real estate investing business, you know where to go. It's AdWords nerds.com jump on a call with my team, we will help you put together a strategy for your market for free. All right. This week, I've got a really fun interview with Chris Prefontaine.

Now, if that name sounds familiar, Chris was on this podcast in May of 2020. Right at the beginning of the pandemic, and since then Chris has not only led his team through that incredibly uncertain and frankly tumultuous time, he has thrived, and he's got a solid strategy for thriving in this market today. Now Chris is one of these people who I love having on the show at times like this, because he has been through multiple ups and downs, extremely uncertain periods in the real estate investing market in his career, and he has managed to build an incredible business all throughout. So Chris has a ton of insight, a ton of great advice. I cannot wait for you to hear this interview with Chris Prefontaine from smart real estate coach.com. Chris, welcome to the show, man. Thank you so much for being here. I really appreciate Yeah, it's been a bit we were saying since COVID. We haven't chatted, so we ought to hook up every two and a half years.

(2:11) I was gonna I was gonna say like, it so much is happened. Yeah. And we're gonna touch on a whole bunch of it. Before we dive into it. I do want to say we were talking about your book, we're doing a free giveaway of the book, as you mentioned, it's actually literally free. You don't have to pay shipping or anything, you can go to wicked smart books.com/dan. And you can go grab that wicked smart books.com/dan. Before we dive into the last couple years, give people an overview of like, what the books about why what's, why should a real estate investor go check this book out?

(2:44) Yeah, we're gonna throw two in actually two best sellers. The first one came out in 17. But then during COVID, I think literally when you and I talked when we met in May ish, we were going through a revision. So we were lucky in that sense, because we got to revise it all current COVID stuff, post COVID. It's called real estate on your terms. And it's going to bring you from A through Z, what we do my story from the nightmare crash and awake all the way through how we generate leads stories about some of our students, so we don't all back in it.

And I'm not saying you read it and go make a million dollars, many people will tell you that I am saying it to whet your whistle. We're creating real estate. The second one is all it's called deal structure overtime. And it's all the nuances that again, nobody wants to tell you that happened behind the scenes on deals. You can go to YouTube and see the deal. This is like overtime, we call it meaning all the stuff that you don't catch. All right. All right. So I love that. So we got a deal structure overtime. We

(3:33) got real estate on your terms, you can go to wicked smart books.com/dan. All right. Let's start with the last couple years. You mentioned COVID You are on the podcast in May of 2020. We were just talking before we hit record. Yeah, it was kind of like early days, still like you know, it's like to me like Kobe Bryant died. And then Kobe COVID started happening like almost immediately after those two things are kind of like smashed together. Right. So that, as I'm saying that it feels like a million years ago.
Yeah. So much has happened. Walk us through like, first of all, what was that experience like for you? You know, being the leader of a real estate company working with so many different real estate investors? What was it like for you to lead people through that? And ultimately, what do you think the impact was?

(4:20) Yeah. I feel like, in a sense, there's a little bit of that going on now. So I'll comment on it. And it's applicable today. So people were there was so much uncertainty. I remember like it was yesterday. I was coincidentally being coached, right during that timeframe by Tony Robbins son, Jared. And so he helped me a lot of stuff going on, but I remember specifically I brought him to a team meeting even and so I started screaming to the community, that wicked smart community the investors could not sit to double down literally go double down on your efforts and ideal intake, the amount of homes we put on a contract skyrocketed like those three months, and then of course the market got busy and that was tougher to get they all sort of calmed down a little bit. But right the time of the uncertainty deals went through the roof.

That's because we can be the guy, right? That's what we do we provide value. That's what a good investor can do. So that that was great in that sense, obviously going virtual was different. When you and I talked, we had a we had a two week notice to put on a virtual event, which we never did. And I look back now how rinky dink in unprofessional that was even though we did fine, we provided value. Now everything we did was virtual for the next two and a half years, we did hit as a company, I'll just side note, we hit Inc 5000. That year in the next year, two years in a row.

And that's no easy feat. So I don't I'm not downplaying what happened with COVID. But I am saying it was positive for us very, very much so. And so now we have to make that a positive for the people out there that want us lucky, you know, that buyers and sellers. That's kind of what my head is.

(5:48) So you, you know, I was thinking about your you kind of painted that picture of, you know, Bree, you are being coached by Tony Robbins son and sort of bringing him in. And I'm assuming that there were people in your organization, like you said, are very uncertain, right? The whole market was very uncertain. You know, it seems weird now, but you can remember back to when, you know, we couldn't buy toilet paper for odd. Because what's going to happen, right? So when when you when you were in that moment, as the kind of leader of the business as someone who is being coached, right?

How do you give people the certainty they need, so that they can change what they're doing and pivot and provide that value? Like you mentioned, right? You're like, if you're a good real estate investor, you can provide value in uncertain times, how do you pull your team with you? Is it just a matter of really setting a vision? Did you have to really pump people up? What was that experience,

(6:47) like, from from the comp other two sides from the company side, we went to you just made me think about I forgot, we went to daily huddle in the morning. And that was, again, one of my coaches, which is a different coach, but elite, elite entrepreneurs, so we belong to, they gave us an idea. So every morning, because we weren't, we used to be on that in my office, every morning, we would get together, it was like a 15 minute thing. And you go through what you accomplished yesterday, and what you're taught needed, what was offered today.

And that went on gosh, we didn't stop that until I think the end of 21 that we kept doing it kept the team together, cohesive, confident, you know, Vision wise, and then to the community so that they wouldn't all panic and feel like they weren't there. We doubled down on how many zooms we were doing the mastermind calls, etc. So they so that they could plug it in, and we could keep being the voice and helping them that we did on both fronts.

(7:35) Yeah, it's funny that you read you mentioned elite, because I remember that was one of the connections that we made, because I also cool, a couple programs at elite and how great that is from that program. Is there great people, so Okay, so that makes a ton of sense. I am curious, what was the experience like being coach, so at the time you're being coached by Tony Robinson, obviously, someone that you know, is very well known, but for people who have maybe have never worked with a coach, or maybe like, I don't know what it's like, what does that experience been?

Like for you? Yeah, I think people look at you, as someone who's very successful, someone who's very confident in themselves, you know, they might think like, well, he knows everything already know. So what's the experience like for you of like, receiving that coaching?

(8:18) Does that make sense? Yeah, it does. I just got off. This is very applicable. I literally 15 minutes before this interview, got off a two hour mastermind with my highest level associates, we did I go, and I shared with them, some of them didn't come prepared for the call. And they shared with them that I have a coach today, I always have a few. And if I come to the call and don't have prepared questions and challenges, then the call is over. It's not about a sunroof. It's about getting whatever things you know, you have to go from A to B in this stuff in the way that's always in forever.

Everybody has that. So what was it like? It was comforting to know that you could pick up the phone text or email and say, What would you do along the way, the biggest mistake I made, I may have said it on your show last time it was in 2008 not having that personal lien on. And the for the first time ever. And that's probably why it took me four years to get out of that mentally. So it was great in that I could pick up the phone and call and that a lot of stuff came from him in a leak during that process because everybody's going through it together. Right? Nobody Nobody had done it.

(9:17) Yeah, I think it's here we were talking about leadership a little bit right. And it's not something I really necessarily plan to talk about a ton but I do think it's the it's the sign of a strong leader that they are also willing to receive feedback, right all for sure. Feedback, ask questions sort of approach situation with humility. I think people in the organization see that right. And then it they're more open to receiving it from you or at least it feels like that would be the case.

(9:45) Yeah, or going out themselves. She just made me think of this because we now are big on spending money on our team to get outside coaching as a team and as individuals for their specialties. Right like our our affiliate manager right now needs help. upon how do I get sponsors? How do I work that well, so we found our coach. So they're more apt to do that cuz we all do it it just like culture now, and I think COVID Or not COVID interest rate changes are not like, at any one time you lead by example.

So you gotta you, we don't just preach it, we do it and we say Come with us, you know, yeah let's find motivated seller leads online but don't know where to start. Download our FREE motivated seller keyword report today, AdWords nerds have spent over $5 million this year researching the most profitable keywords for finding motivated seller leads. And you can grab these exact keywords when you download our report at www dot AdWords nerds.com/keywords.

(10:51) So Alright, so let's fast forward a little bit. Because I you know, we've talked about 2008 in the past and I think for people want to sort of walk through your experience of going through 2008. We touched on that in the in the earlier podcast episode, Chris Prefontaine, you'll find it but so let's talk about the current market. Because I think we are now as we're recording this in another period of a fair amount of uncertainty or maybe uncertainty is not even the right word, maybe a little bit more pessimistic than anything else.

And you know, I've I've been asking this question of many people come on this show, everyone's got a slightly different take some people kind of lean on, yes. Where, you know, we're, we're in a recession already. We're not going there. We're in one, it's going to be really tough times for several years. There's people who feel more like, you know, it's not necessarily that now is particularly bad, it's that the last few years were particularly weirdly good. We have these artificially low inflation rates. And what we're seeing now is more normalcy. I've got people have said like, now we'll be back in six months. You know, like, I'm curious, first of all, just as an overall kind of picture, how do you view the current market? Like, how do you view what is going on now? Do you view it as good, bad, indifferent? And why?

(12:10) Okay, good question. On a bunch of fronts, I think I'm gonna answer two ways indifferent, globally, like on a bigger scale, but very good for our community. Because again, I'll just throw some metrics out our 50 year, I was just sharing this with my wife on our trip, our 50 year interest rate average, is 7.7%. We're not even there yet. And people think this is astronomically high. We're not there yet. Number one, number two, because of that, we have for the third time in 50 years and affordability issue already. And it's not even at 7.7. Yet we have a massive amount of buyers just got pushed to the sidewalk, who thought they were going to buy homes.

So the all these things are going on at the same time. That just changed dramatically the need for creative financing for one, but to your point, the pessimism because a lot of people have lived through a 10%, let alone 7% interest rates. My first house was 10. It was no big deal. So I think it's different. But I think for the creative community was great. You mentioned that how good it was, you know, prior to now, it was actually harder for us to get a deal. creative financing is great in any market, it just gets harder or easier. Right now, it just turned entirely in our favor, because people need a guide again.

(13:19) Yeah, I think it's it is funny, right? Because it does strike me as a bit of a relative change issue. Or it's like, you know, if you're cold, and you hop into a bath, that's like, basically room temperature, you're gonna perceive it as hotter than it is right. And similarly, if you're relaxed, good analogy. Yeah. So it's like the occur the economy, we're coming off of a so profoundly bizarre in many ways, but we all just kind of gotten used to it. So let's talk about creative financing.

I know this is a big thing for you were to mention this briefly before. And I know that it's you know, I've had other people talk on the show at least a little bit about what makes a good for this kind of market. But for people who aren't maybe super in the know on it, or aren't familiar with why it's such a strong strategy right now. Walk us through it. Like what makes creative financing such a powerful strategy for investors start adding to their portfolio?

(14:10) Well, okay, so it's gonna start with the other end of it, I'm gonna start with the buyers and sellers, because I ended with that saying that sadly, got kicked to the side, which means now the sellers aren't getting the same demand. That's a lot of emotion. So when you can fix something like that, or help mitigate, you can't fix it, you can help mitigate it, you are providing a lot of value and you could pay it according to how much value provider what business you're in. Right? So that that's why it's so cool. But how is it? How is it so cool?

Well, all these people that could barely afford, let's say they're on the cusp at 3% or 4%. Now it's six or seven and they can't afford it. They can they have good credit, they have downpayment all bunch of they just need a little more time now to maybe save up some more cash, some of them maybe improve their credit so they can get that that better loan that so all they need is time and sadly, if you don't have to do that they're safe. Think forever, they lost so often they're stuck. So now we have a way we have a path for them to within two usually years, go ahead and get mortgage ready again, like get back on their feet. And there's, I couldn't have 10 ties my company and help enough of them. So the demand is very high right now. creative real estate in general, buying property with least purchase owner financing and subject to existing financing, which is only ways we do it. Now the sellers who went Oh, man, I just lost all those buyers that are flocking to us go on, hey, I'm open. I don't even have cash right away. Show me how we can do this over time. So we got both ends.

That's why creative, so cool. There's one constant, right and real estate, it's gonna change. So it's the night people go, I can't buy now I can buy now I can't buy No, you can buy all the time. If you know how to pivot in the market, you know how to create terms that are long enough. So you don't care about these little blips. It's like the stock market. My brother said to me, he sold the company did. And he said a lot of his money's in Iraq, but he's not in real estate. And he said, If I checked it every day, I'd go nuts. But he said, I know they got me long term. He's confident what's the same thing if you do a long term real estate deal?

(16:06) Yeah, very similar knitting, right? Like I think, I think it's gonna seem to lead, right. We're like anti fragile and Fooled By Randomness, right? He talks about how the losses feel worse to us, than our gains feel good. And so even if you are exactly breakeven, so you didn't lose anything, you didn't gain anything, you will actually feel worse if you are aware of every individual gain and loss, right? Because the losses just feel worse than the good ones feel good.

And so I think I think it's, it's very insightful in a lot of ways, right? Because you could have the exact same portfolio as someone else. But because you get emotional about it make much worse decisions over time, and ended up with a much lower ROI than someone who may be almost takes more of a hands off approach to it. Is that kind of like what you're saying? Yeah,

(16:57) a lot of your analogies were really cool there. Because how we make decisions, yeah, is really beat up by what's either chasing us or what's chasing us in our in our head, right? You know, though creative real estate allows you to do something else, you're not forget the economy for a second, when you're not signing personally on loans. Your decision analogy made me think of this. And you know, have that because I had that prior toy, you know, have that on your head, when you go to sleep at night, you make better decisions, plain and simple. So you don't have anything chasing, you know, the stress of that says it really yeah, really cool analogy.

(17:27) So you, you know, you mentioned, you know, the importance of being able to pivot when things change, right, and you said, you know, the only constant in real estate is change. I say the exact same thing about online marketing, right? The only constant online marketing is change. And there's a lot of change. And I personally believe that the rate of change is speeding up. So it's not just changing, it's changing more often. So when you go through those moments, and you've been through several in your career so far, is there like a process that you go through in order to be able to not just survive, but thrive? Like, do you sit down with a piece of paper and map it all out? Do you call like a board of directors and talk it through? Like, how do you walk through those moments where you have to pivot? Does that make sense?

(18:18) No, because I just wish I could tell you I was that smart to do that. I'm not just, you know, you I have people around me that I asked Yes. But in in creative real estate, I've got the level of confidence now to say, not how I pivot, but okay, given what's going on in the next two or three years, what might be things that are going to be challenges. So exactly right now, while K prices may come down again, say 10%?

If that's the case, am I am I more apt to do a deal, that's a three year term or 10 year term? 10. So I gotta get, I gotta tell myself, my team, and my students stop creating two and three year deals and rockets, maybe going flat or down, things like that, but it's not. So it's not a panic. It's a let's revisit it. And we have it is, you know, the elite culture, we have trimethylene meetings where we go over, what are the opportunities? What are the threats? You know, we do the SWOT analysis. So that's where that stuff comes up, that surfaces up and we go on man and think about how do we how do we deal with that for its every trimester? Well, I

(19:16) think that's, I mean, I know, I know, you're sort of joking that like, you know, you're not smart enough to do it that way. But I think even that approach of approaching it from a point of view of saying, what are the potential downside risks, and how do we mitigate them? Right, right. Perfect. That's incredibly powerful, because I think most people approach potential investments from well, what has the most potential upside, right? Like, what which number looks bigger? I'm going to do that one. But ultimately, I think a lot of investment in real estate in particular, but stock of all investment ends up being the same even entrepreneurship being the same. It's like, well, you have to survive. You have to stay in the game long enough to work to get that pay off at the end. All right and so capping that downside strikes me is like really powerful just kind of a really powerful like he said sort of accompany cultural way of approaching it.

(20:08) I think it's now you say that it's also important February understand the list is so okay so here we are with interest rates going up. Yeah, well don't forget we had however many deals called 50 6070 deals are already in the hopper meaning a house under contract, three paydays were created from those and they're going for five years, six years, seven years. So while the pivot is going on, because the beauty of the three paydays, it's not a one check deal, we have all these deals that are paying us so you have time to sit down and go, I gotta pivot, let's do this. Even if it takes three months, you have money coming in constantly, that's a lot different than I'm flipping high end houses, or I'm flipping houses or I'm wholesaling at all, it just stopped. Okay, you're done. Because you gotta go do a deal to get paid a lot different.

(20:51) Yeah. Yeah, I think that's that idea of like a cash flowing asset versus just a transactional based business, I think. Yeah. Right on. That's it. So if investors are interested in creative financing, is there anything particular that you recommend for them to get started in that to start learning about it? Like, if I want to start adding that to my business model? How do I go about doing that?

(21:17) Yeah, adding more brand new auto, you're just trying to escape your job? Same answer. That is I said, you ready for the show? I think there's just too good, bad or otherwise, there's too many programs out there that you get marketed by, right, that they might do the programs. But what their goal is, is to market to a program. What I'd like to constantly screen for the mountaintop about is I want to bridge this gap of the time when someone looks at information or seminar and does a deal and sadly, sometimes people never get that. So free, free, free, free. Free. You offered the free book earlier. If you go to YouTube, we post I don't know where it's at Dan.

It's probably 150. Now maybe more of our deals where we whiteboard and say, hey, here were the wins. This one was crappy. Here's why. Here's the three paydays like we expose them all. You might look at that and go, Oh, that doesn't interest me. Great. You did a free due diligence. Well, you might look at and go that's really cool. I like helping people and I liked it three pays, in which case now you can dig deeper, but at least you can do it for free. And find out if you're passionate about it. It's not for everyone, right? I'd be naive to think that but yeah, I think it's cool, but go and look it for free and see what you get out of it.

(22:24) I mean, I think that's just so awesome. And again, like for people that are interested right, you can go to smart real estate coach.com You can go check it out. And obviously we mentioned the books and wicked smart books.com/dan go there and check all out all the stuff that Chris is doing. Hey guys, hope you enjoyed part one of this episode is just too good to limit to one show. Join us next week to hear the rest

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