Transcription
The quick cash flow or the quick cash is awesome. I'm thinking, you know, five years from now, 10 years from now. I want to sell a property today, but still be getting checks every month, you know, a long time from today. It's cool to see like your business evolving so much over just the last 6 months. Seen your business evolving and like you're learning so much. And I'm sending postcards now, but I put in a QR code with the landing page. The seller can just scan it and by the time they're reaching out to me, they've already seen my video. They know who I am. They know what I'm offering, right? So, it's kind of just filtering out the BS leads, right?
All right, everybody. Welcome back to the Real Estate Investing Podcast. Happy to have Roy Cantto back with us. He was uh on about six months ago. Roy, welcome back.
Thank you. Thank you for having me. I love doing these follow-ups, everything like that. But before we do that, just give everybody kind of a uh high overview of what we kind of talked about last time. What was your business like six months ago? Give a high level overview of where you kind of were six months ago.
Sure. So, six months ago when we did the initial interview, uh we talked about uh about the notes space, how I was going to hold the notes, right? Uh so that's kind of, you know, where we were at. Out still buying and selling these properties on terms and uh so that was that's pretty much where we kind of left off back in November.
Nice. So what what did your note business look like at that time?
So we were or I was pretty much originating these loans and then selling them on terms and then selling the notes right after, right, for the capital.
Mh. Uh, so that was pretty much I was doing I was doing that on every single note that I created, right? Uh, now it's a little change, but that's how it looked like.
Well, let's get into how it's changed. What what's changed? What are you up to now?
Sure. Sure. So, it's the same game. So, so I I kind of shifted my my business to where when I look at a parcel, it's it's always going to be a a seller finance exit strategy now. I'm not looking to flip it. Like if a if a cash deal comes in or a cash offer, I'll take it if it makes sense. But but that's not the end goal. So that that's one thing that that shifted. And also, you know, after after learning and researching how to how to how to hold the notes, but then also sell part of it to get the capital back, I I I found something. Now there's something called uh a second lean. Pretty much what that means is is instead of just creating one entire note, you can create two, right? And then the idea is you sell the first note to get part of the capital back plus some profit and then you keep the second as cash flow.
Wow. Yeah. So that's I just implemented that last month and every deal I'm moving forward with.
So, you're getting you're getting all your money back and still having some cash flow, less cash flow than you would have if you own the entire note.
Correct. But you uh well, obviously Yeah, obviously I guess with that you can't have the can't have both sides of it, but you're getting your capital back and then you are having cash flow.
What is that?
Um Oh, that's interesting. Where where do you do that through? What does that look like?
Sure. So, I'll give you uh an example of one I'm doing now. So, uh let's say you have a deal, right? uh and you're selling it for 40 grand, you get 3,000 down. That that leaves you a note of 37, right? So So instead of 37, what I what I'm doing is I'm putting a lot of the debt on the first lean. So I did a $29,000 first lean and a $8,000 second, right? Um I'm I'm in I'm in the deal only 12 grand.
12 grand, give or take. So, the idea is to sell the 29,000 uh to a note buyer at, you know, I'm probably going to sell it at around 2021, right? So, you're still getting your 12 grand back plus profit and then the $8,000 uh second lean, I'm I'm shorting it. So, it's a 10-year term, but on the second lean, I did it I did a short I think we're doing a five or six year to where it cash flows me 200, right? So, the first lean is a $29,000 lean uh first note at 10 years, but the second the 8,000 is like it's a it's a mini note, right? Five six years that'll cash flow 200.
Wow. So, you're getting five or six years 200. Wow. That's And you got all your cap. You're getting all your capital back.
Exactly. Plus more. Plus more. Right now you're not always I mean I'm looking at other deals. I'm like man this is just a a slam dunk but not buy for 12 sell for 40 which you're not going to have every day. So if it was buy for 20, sell for like 40 like you would be maybe getting your money back at the very Yes. And you'd be able to pull your your capital back and do it again. And you're you're building that cash flow, you know, after deal after deal after deal.
Yeah. That's really really cool. I haven't I haven't heard about that. So are you who are who is buying those notes that I guess you'd call it the first lane notes.
Sure. So I've I've been selling all my notes on paper stack. Paper stack is a like an online marketplace for notes. Think of it like a for your audience. It's like a Facebook marketplace for for mortgage notes is what it is, right? So, you know, I' I built uh relationships over uh with no buyers and and now I'm I'm reaching out to them. And, you know, if I list it on the on paper stack and it doesn't sell, I'll just, you know, pitch it to the no buyers I've been working with. And so, that's that's who will will buy the these first lane notes.
Yeah. So, let's talk about your like acquisitions. What does that look like? Your marketing to get these type of deals is just typical mail, texting, what what does that look like right now?
Sure. So, last time we spoke, I was all in in text, right? Texting. Uh, just about a month, month and a half ago. I'm experimenting on a new marketing campaign to where I'm I'm mailing postcards to sellers, but I'm offering them full market full market value for Right. But the the the catch is, right, is is I'm willing to buy them on terms. So, right. So, and I it it's very experimental. I'm just doing I've been doing it for about a month, month and a half. I've had a few calls, but I haven't gotten the contract yet. So, I'm I'm anticipating, you know, to switch back to texting very soon. Uh but but but the idea, just you know, free audience, the idea of this is is uh let's say a property is worth 40. I'd be willing to pay 40 for the property, right? over, you know, 100 months or 120 months or whatever it is, right? And then my exit strategy with that would be to to wrap sell the so, you know, buy it on terms and then sell it on terms and at an interest rate. So, you asked, you know, what what's my marketing looking like? That's primarily how I'm doing it now. Um, and I'm also uh I'm actually getting MLS leads, too. So, I'm calling it like the last three acquisitions were one was on the MLS and then one was an expired listing. That 12 grand deal I'm telling you about was from an expired listing on the MLS.
Yeah. And are you on that 12 grand deal, are you under contract to sell that right now or
No, not yet. It's pending.
Okay. Pending. Pending. Yeah. Wow. That's really really cool. So what uh so let's talk about this strategy because that's a new strategy as far as offering market value on seller fin on essentially you are financing it and then kind of broker you're essentially brokering it and making an interest rate like what are you offering to buy it for in terms of the percentage and then what are you trying to sell it for uh in terms of an interest rate.
Sure. So, an example, uh, let's say the, you know, the seller is agree. I get the seller to agree, hey, look, uh, I'll buy you, I'll buy you out, you know, 40 grand. That's the full market value over a hundred months. If you, you know, if you do the math, it's about a $400 monthly payment. All right? So, so that's the idea. And then the exit strategy for that is to not even mark it up that much. So, you can you can go ahead and sell it, let's say, $44,000 with a $4,000 down payment, but that $40,000 note that that you create, you can charge a 12% rate. So, you know, the the payment to you from your end buyer is, you know, 66 600 650, but then the payment to your seller is 400. You know what I mean? So, so that's the idea. Just making the spread. Uh, that's what I've been trying to push. It's I'm not going to lie, it's not it's not yielding the results I wanted so far. So So I may revert back to offering cash offers and then if they don't want that, you know, that 50% 40% cash offer, then pitch the the term offer. So I'm thinking of of switching back to that, but that's that's the that's the extra strategy idea.
Yeah. I mean, we're only 8 minutes and 47 seconds into this podcast, Roy. There's two new strategies that you've uh you've already mentioned. So, uh, that's the the multiple leans on a note. And then obviously this is kind of brokering essentially based on an interest rate, uh, to even if you sell it for the exact same amount of money, you'll make money based on the interest rate difference. Uh, so it's cool to see all the different things you're doing. Have you thought about that? Like, uh, the interest rate brokering is what I'm going to call it. Have you thought about that via text to get a little cheaper marketing, cheaper leads?
That's the That's the next plan, man. Yeah, I'm going to do that soon.
Yeah. Mhm. You're you're very obviously like cash flow based like you want to build a cash flow portfolio it seems like.
Correct. Yes, that is the goal. What what are your like what where are you currently at? Do you have a lot of notes you're holding because obvious you are selling notes before it completely? Do you have a lot of notes you're holding? And then what are kind of your goal? What's your goal for uh I guess your c monthly cash flow?
Sure. So I uh year to date I've sold so far I've sold and closed is it nine or 10 deals? One of the two nine or 10 deals. Um out of all of those there was a few double closes. A majority of them were uh you know uh seller finance deals. Um right now I am keeping one one. It's actually it it was a wrap deal. So what it what it was was one of my investor buddies here in town owned 2 acres and I called him up and I was like, "Hey man, can can you sell me these two acres? I I want them." Right? So he did, but he he sold it to me on terms for what was it 20 grand. So it was 20 grand. I gave him five grand down. Then I went ahead and wrapped it at 43 with six grand down. Right? So I got my money back plus a,000. My payment to him is 150, but the payment to me from the borrower is, you know, net 565.
Wow. So, I'm Yeah, I'm cash flowing, you know, four little north 400 bucks.
Mhm. So, so far that one is the only one I'm holding because it's wrapped. Yeah. Uh it wasn't until about a month or so that I've learned about these these second leans and and hopefully now, you know, by the end of next year we'll have a the goal is at least, you know, 10 grand in residual. So I'm sure we can achieve that.
Yeah. I mean, you got 400 already from that or four whatever that is around 400 with one deal and it it hasn't been a focus of yours. So if you're able to kind of refocus on that.
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What is the uh what's the driving factor behind not not flipping and then just wanting cash flow is more stability like I want to know what I'm getting each month. What's the driving factor behind that?
Right. Yeah, it it is stability. It's it's it's uh owning an asset that just pays you over time and you can you can build it. the quick cash flow or the quick cash is awesome and I know that's you know preaching in the in the community a lot but but you know I want to emp I'm thinking you know five years from now 10 years from now you know I want to sell a property today but still be get getting checks every month you know a long time from from today so that that's the idea that's why I'm you know focusing on that.
Yeah. One thing that's cool is like you're constantly learning and trying new things. Um because there's literally two new strategies in the last couple months that you're testing out. Uh were these the second lean thing I assume you learned from someone else and then was the brokering the interest rate. Is that just something that came about or are you like always watching things learning like how can I implement this in my business?
Yeah, I've already So the the wrap the wrap financing I already knew about. I just didn't understand how regulated it is. So, so, uh, like on this first one I did, uh, man, you know, I did it, but then I had to back. You have to disclose that there's an underlying lean to the to the end buyer, right? You have to close it at an attorney's office. Like, there's no if ends or buts. If you don't do these things, they could resend the deal. Uh, so meaning they can just cancel out the the the deal, you know, six, seven months from now. You have to pay them all their payments back if if if you don't do it correctly in the beginning. So that was a learning curve. The second lean I I was thinking about it one day, man. And and I was like, "Man, why don't I just create two notes and then I reached out to uh uh one of my investor buddies who who is also a note person here in in in Houston and he's like, "Yeah, man. You you can do it." Then I bought a course and then I took the course for a week and and and I'm I think I understand it at this point. So I'm implementing it 100% on every deal now.
Just kind of clicked. That's amazing. And you you said you've and this is this like a complete shift or are you going to still do some double close stuff like if because you mentioned like okay maybe I go back to 50% offers and kind of combine things or you like I want to build this note business I'm all into this.
Um yeah so I have decided no more double closes. Uh I came across a pretty good double close recently. I don't know if you saw but I went ahead and just assigned it to somebody in the group for a small fee. Yeah. Uh, so I'm not I mean I could make some money on that, but I'm I'm just focusing on one thing, right? So, yeah, man. So, that's kind of where I'm I'm at uh you know, with the business at this point. It's just no creational.
Yeah, that's awesome. What are your what are your thoughts on kind of the future land business? Because obviously, you're taking it a different direction than a lot of people. Like, what what are your thoughts on the land business now? Did you make this uh did you make this transition because you might have foresee some things coming or like or is it just like I I just want this cash flow?
I just want the cash flow, right? Uh I just want it. Uh and land is great because you know when when you really look at it like like think about it, right? Think about it. What lenders what banks are lending on vacant land? You know, very few, you know, very few. But if you ask yourself like what lenders or banks are lending on homes almost everybody, right? So there is uh there is a need in the land space for financing, right? And we can fill in that gap, you know? So I I think it's just a huge opportunity and and everybody in in the community too can can take advantage of it because there's there's a whole lot less competition, you know, in the land business versus home. So yeah.
Yeah. Yeah. And I think just having like strategies like this like in your in your tool belt. I think like that's why I always put I love having people like you on the podcast who aren't like doing exactly what we talk about all the time obviously. But that being said like just learning from different people is so valuable for sure and learning how like different strategies. Some people are going to really connect with this I'm sure and kind of like uh okay maybe this makes a lot of sense and dig deeper into it and then they're going to build a note business. And I think a lot of people look at land like there's not that much you can do with it. In reality, there's so much in terms of like some people have some there's 50 businesses within land that you can have that are completely different. So, I think that's one of the coolest things. And like you said, there there still is so little competition.
How has uh how's the business model changed? I I think you've been in around two years. Is that correct? How has the business model changed since you joined?
So, so far uh marketing seems to be primarily direct mail from the people I you know I speak to. Texting is big. a lot of people are switching to text even though it's getting regulated but people are still doing it and I see some cold calling right so these are the three main uh marketing channels that I've seen in the in the business and what other fellow Atlanta investors you know do so I think at this point you know in order to to keep make making sure we we stay profitable is is make sure we get competitive right make sure you get better in your sales make sure you get better in in your marketing right like for example and and I'm sending postcards now, but I put in a QR code with the landing page, right? So, if the bar if the seller can just scan it and by the time they're reaching out to me, they've already seen my video. They know who I am. They know what I'm offering, right? So, it's kind of just filtering out um the BS leads, right? And so, that that's what I'm just saying is is just getting better in your marketing, getting better in your in your sales and your pitch and and getting creative, right? Don't just look at one deal like and say, "Okay, you know, I'm buying it at 70% on the of of the retail value. I can't find a funer." No, you can still make money on that. You can double close it or you can buy it on terms and rapid and cash flow, right? So, there's still ways to to execute. You know, I think making making adjustments in your business is so important. Like that's the people who are successful in this business are making adjustments. they're not like sedentary with whatever they're doing whatever they were doing two years ago.
Uh quick question about those QR codes. Are those unique codes for everybody um for each seller?
Um no it's not. It's just I talked with a company. It was a couple days ago I talked with the company and they're like yeah how we do it is like we have a unique QR code on every single letter. It takes them to the same landing page. But what happens is when they scan your thing it will ping Roy and it will tell like Roy this person just sign this person just did it. even if they don't fill out information. Um,
Every QR code is unique, and it'll be attached to the mail, which I thought was really, really interesting. Um, that's why I asked you about that because it's obviously something where they don't have to give you any information after they scan that. Like you, you get pinged that they just did that. So, you cold call or you text or whatever it is. Um, so I was curious if that did that.
Sure. No, that's amazing. I need to check that out.
Yeah, I, I'll give you some uh information on where that was coming from uh after we get off of here.
Um, what advice do you have some for someone like looking to get into this business? You've, you've given some amazing kind of pointers for people looking for different things, but what advice would you have for someone looking to get into this business?
Uh, I would say start with education, right? Uh, buy the, spend the money to, to, to get the information, right? If no one's giving it to you for free, pay for it, right? It'll, it'll be worth it. Once you get the education, execute, right? Don't wait. Um, once you execute, work the leads, right? Work the leads and make sure, you know, if you need a second pair of eyes, the group is, is a great resource, right? You can, you can send it to your deal reviews that you guys have and, and just move with it, man. Like, there's, there's almost no excuse why you, you, you can't make money, you know, in this business, to be honest.
Yeah. It, it's cool to see, like it's cool to see having people on the podcast and like your business evolving so much over just the last six months, but you've been in the program for almost two years now. So, just seeing your business evolving and like you're learning so much and making so many adjustments. It's amazing to see. So, credit to you on that. And you're doing this full-time, you said, correct? You've been doing this full-time. I think last episode you were doing this full-time as well. How long have you been full-time in land?
Yeah. Yeah. Uh, so since I started by your course, so December 2024.
Yep. Were you flipping couches before?
Yeah, you were the one flipping couches. I knew.
All right. Yeah, you are. Okay. So, you're flipping. So, you're an entrepreneur by, by trade. So, you know how to do it. But, uh, yeah, just kind of flipping bigger things, I guess, now in terms of land, uh, bigger potential things.
But, Roy, I, I appreciate you coming on here for a second time. Uh, I'm excited to see your note business grow, all those different strategies. I, I, I think this is going to be really valuable to people who are watching, listening, uh, to learn from for sure. Like, like I said, like you start with the basics, make adjustments in your business and keep learning. That's how the most successful people other people I talked to are doing two deals a year. They're doing entitlements. Roy wants to build a huge note business. Some people are subdividing. And like as you grow, you do some flips and that's what Roy started with. They just made adjustments and now he like, "Okay, what are his goals? He wants to have cash flow. All right, that makes a ton of sense. Let's do notes. Let's try to do these second lane stuff. So, you're building your business around like what your goals are for sure.
Um, but uh yeah, if you guys are watching on YouTube, hit the subscribe button below, listen on Spotify or Apple, share this with a friend. Roy, thank you so much for coming on. And we'll see you next time.