Real Estate is Like Playing a Game of Chess w/ Jeff Stephens

[00:00:00] Intro: You're listening to the real fi podcast where we discuss time, tested tricks, techniques, and strategies for pursuing financial independence today, so that we can enjoy a better tomorrow financial independence. Isn't about getting rich quick. It's about cultivating a foundation to grow financially, mentally, physically, and spiritually.

 Let's figure out how to kick the nine to five. Here are your hosts, Patrick and James. 

[00:00:31] Patrick McGrath: How's it going everybody. And welcome back to the real fi podcast. I'm your host Patrick McGrath with my co-host James Ripon. How's it going today, James? 

[00:00:41] James Rippeon: Good man. Got some interesting news on my end, had a my newborn boy brought into the world.

[00:00:46] So we've been celebrating that for the past week and getting, adjust to all the things that that brings to life. And let me tell you it's crazy, but other than that, everything's going great, man. I think we're gonna have a great episode today and I'm looking forward to digging in and sharing some awesome [00:01:00] 

[00:01:00] Patrick McGrath: insights.

[00:01:02] That's right. So everybody out there, we have Jeff Stevens on the podcast. If you guys do anything on Facebook and you follow any of the investor, Facebook groups on bigger pockets or any of that, you have had to see his post he's posting every day. He's got a ton out there. Jeff, how's it going today?

[00:01:23] It's 

[00:01:23] Jeff Stephens: going great. Yeah. Thank you so much for inviting me on here. 

[00:01:25] Patrick McGrath: James, the drill let's get started. Perfect. 

[00:01:28] James Rippeon: Jeff, why don't you give us a little bit of background on you? Just tell us a little bit about where you came from and just bring us up to today and let us know what you're 

[00:01:37] Jeff Stephens: up to.

[00:01:38] Yeah. Awesome. Yeah. Thank you for the opportunity. Yeah, I've been a full-time entrepreneur for 19 years now. In 2003, I left my real job of two years and I, I had a branding and marketing agency for about 10 years and maybe yeah, a few years into that, I like a lot of people are red, rich dad, poor dad.

[00:01:55] And it's Ooh, this is interesting. I was already on the entrepreneurial path, but got me interested in real estate [00:02:00] specifically. And so we, my wife and I had just bought our primary residence. It had shown some at least paper appreciation pretty quickly. So we took out a home equity line and we went and bought our first property.

[00:02:11] It was very conventional type of a deal. It was a triplex on listed on the market, conventional loan. And that was cool. And I thought, wow, we should keep doing this. Now I started to see boy, Doing this stuff, the super conventional way is gonna be a little, maybe slow going. And I started to already not like the questions.

[00:02:27] All the bankers were asking me and I was already self-employed. So that was like a strike against me. So then I became aware of all the really quote, creative ways to do real estate and like concepts, like whole sailing and all this stuff. And I went to a couple conferences where the kinda the pitch Fest sort of conference, if you've been to one of those or run to the back room back of the room and buy the program kind of thing.

[00:02:48] And that got me excited and I started doing that and it didn't feel right though. Honestly, I had, I I had a couple experiences that just felt a little dirty. Maybe that sounds silly to say, but it just not feel like me [00:03:00] and that kind of slowed me down. I was like, there's gotta be something besides these two kind of polar extremes, know, like the sort of underworld of real estate, no offense intended for anybody or the just, get a bank loan, buy something on the market.

[00:03:13] So it took me a while to find my way and find my myself. Another strategy that resonated more with me. And I like to say that I think what people get the most traction is when they're the head and the heart align when the strategy that they discover and employ makes great sense logically to their brain, but also feels right in their heart.

[00:03:33] So in about 2013, I switched over from my marketing agency to doing real estate investing full time. And that's where I'm at today, 

[00:03:41] Patrick McGrath: man. That's that's a great story. And I really love what you said right there with The head and the heart. I think they do have to align because when you find yourself doing things for sometimes the wrong reasons, you have that moral compass changes a little bit, and it's nice to get both of those aligned up.

[00:03:59] Yeah. [00:04:00] So that, go ahead, 

[00:04:01] James Rippeon: James. And I was gonna say, focusing on that, when people follow their mind too much, that creates this shiny object syndrome. And then you're gonna be chasing a whole bunch of different things down the rabbit hole and almost finding no, no focus, no orientation, but I agree a hundred percent your almost putting the why behind it.

[00:04:18] That's where your heart is that's when you can really mesh your activities with your goals and get to where you wanna go. One. 

[00:04:26] Jeff Stephens: Yeah, absolutely. Cuz it, if it, if you're, if something you're doing makes sense to your brain, but it doesn't feel right in your heart, you're never gonna really give it your best.

[00:04:35] Cuz there's you're gonna be holding yourself back. Ah, this just doesn't quite feel like me, but the reverse is also true. Maybe it makes a lot of sense. It feels authentic and it makes sense to your heart, but it doesn't really make like investment in business sense. You're not really gonna get very far that way either.

[00:04:49] So I really think it's the alignment between those two that kind of has to happen before someone can really maximize their own potential. That's my take anyway. So 

[00:04:56] James Rippeon: you got started in 2013, you're transitioning out of your [00:05:00] marketing agency and tell us a little bit about what 2013 looks like to you as you're getting into real estate more full time.

[00:05:08] Jeff Stephens: Yeah. Yeah. We had maybe three or four properties at that point. And transitioning in 2013 was, it was just. Unbelievably exciting. We were, of course at that time we coming out of a couple years of things being a little bit rockier. So I, although that wasn't really a conscious, intentional part of what I was doing.

[00:05:25] I do think that was helpful and the timing there was was good, but it was like, it was a really interesting transition cuz my previous business was a service based business. It was. Just, it was a very, it was a very specific type of business, very straightforward, right? Like I will do this thing for you and you will pay me, but the real estate business is like just all the dynamic, totally different.

[00:05:47] And the, even how you keep your books and all that kind of stuff is just so different. That, that, even though I was already a full-time entrepreneur for a decade, there's still a lot of a learning curve just because it's, it was contextually such a different [00:06:00] type of business. And what was really interesting is I thought to myself okay, all this stuff that I just did over the last 10 years, I was a speaker at marketing conferences basically from my industry and had those skills and that expertise.

[00:06:13] And I thought, oh, all that is now totally irrelevant. Speaking, irrelevant marketing branding expertise is irrelevant. And it took me a few years, but now I can tell you that actually those things are not irrelevant whatsoever. And it took me a while to connect the dots. But I actually feel like that first 10 years of entrepreneurship did set me up well for, for this next chapter too, 

[00:06:33] Patrick McGrath: Yes.

[00:06:33] In today's world, like you are your brand, and you've gotta be on social media and digital is the way to go. I know we're gonna get into off market deals and, all of fi finding that, but a lot of that you have to market for, and you've gotta create a space where, you can be the expert in there.

[00:06:55] And so you've can build upon that. And then you. [00:07:00] We were just talking about this on the last episode is it where you can have your business of real estate and then your real estate? So you can actually now use, your real estate business with the marketing and coaching and all of that to fund your real estate.

[00:07:16] And now you have both sides that's that's really incredible. So tell us where you're at now, sitting here, it's the end of June 20, 22, like what's that portfolio look like, and then what's your real estate business look like? Yeah, 

[00:07:30] Jeff Stephens: absolutely. So today we, so we are in Portland, Oregon and bend Oregon, which is like a resort town a couple hours away.

[00:07:37] So all our portfolios there, I'm not a long distance type of person. I'm more of just like I'm a face to face negotiator. I'm a, I like to be able to see my properties kind of person. Yeah. We have 35, 36 units or so around, around Portland, it's probably 12, maybe 12 different properties. So we have some single family homes, some houses with ADUs, with some fourplexes, [00:08:00] a couple, a plexes and things like that.

[00:08:01] We'll do occasional flips. If I was really on my game, we'd probably do three or four a year. I think at this moment we do probably more like one or two. So I'm trying to be a little bit more intentional about that, cuz I, I call that deal mix, when you've got, it's like a recipe, some one recipe needs like one cup of flour, two eggs, half cup of water to me real estate business is the same.

[00:08:18] It's like great four rental properties, two flips maybe a brokerage commission here and there or a wholesale assignment fee here and there that kind of creates the, like the financial stability that each individual unique person has. But yeah, that's what we do. So I feel like I'm pretty much just a full-time marketer and buyer.

[00:08:36] I feel like I'm always a buyer I'm occasionally a seller when the time is right. And then in the last couple years, yeah, I've been working with other real estate investors to be an advocate for this one, very specific, way of. Acquiring and financing real estate that I believe that I believe allotted.

[00:08:50] And it's really cool too. Speaking of things, I didn't see coming at the time, but it's really awesome to, to be an investor and to be a coach because when you have to explain [00:09:00] things to other people as a coach, it solidifies the lessons yourself, right? And so the it's like the better I coach, the better I become as an investor and the better I become as an investor, the more reps and the more living rooms I sit in, then the better I become as a coach, it is this cool synergistic kind of symbiotic, relationship between those things.

[00:09:16] Perfect. 

[00:09:17] James Rippeon: Why don't you tell us a little bit about your market? Cause I know my wife, she read some personal finance book. I can't remember the name of it. I think it had fire in the title, but I think the people ended up moving from California to bend Oregon. Just because of how beautiful it was, all the nice attractions in the area.

[00:09:34] How close is bend to Portland? 

[00:09:37] Jeff Stephens: It's about three and a half hours. Yeah. Okay. Yeah. That movie was called playing with fire. I started yep. When it came out. Yeah. Yeah. So tell us about, so I'm coming to you from bend today. Yeah, so it really the two markets I would say are. Rather similar. Portland's much bigger than bend, but in terms of, both of 'em I think are considered desirable places to be Portland is interesting because no one ever even heard of [00:10:00] Portland's and then in the, early two thousands and became super popular and it was the place everybody was moving to.

[00:10:07] And then in the last couple years it's been in the news for things like riots and it's very left-leaning overall too. So there's lots of like things like homelessness and the cities are, is very accommodating of that. But to the point now where it's like, boy, we gotta, we're gonna have to do something about this.

[00:10:21] So Portland's been like a little bit of a roller coaster, it's basically like an hour to the ocean. It's like an hour to skiing. It's, pretty temperate type of climate. And so I'm still pretty optimistic about Portland as a whole bend is much smaller, three and a half hours away.

[00:10:36] More of better weather. I'm coming to you from bend right now. It's more of it's kinda like a recreation place. It's got a Colorado sort of vibe. So they're skiing and mountain biking and lakes and fishing, and a lot of stuff like that. But the markets the markets are both very strong.

[00:10:48] I People have want, this is a place that people want to be apparently. I couldn't tell you the exact median home price, but it's pretty high. Probably I'd guess 500,000 somewhere around there, and if I'm gonna buy like [00:11:00] an apartment, like a small apartment building like a Plex, it's probably gonna be like upwards of 300 grand a door, something like that.

[00:11:08] Patrick McGrath: Wow. Okay. All right. That's crazy. All right. I kind of wanna dive into this, 300 grand a door, you said you got an eight PL a couple eight plexes fourplexes. I That gets really expensive, especially if you're financing these, with commercial loans at 20, 25% down, 20 to 25 year amortization.

[00:11:29] You need, a million dollars and to just be able to put down. So how are, how have you been able to acquire this, 35 unit portfolio over these last couple years doing that. 

[00:11:42] Jeff Stephens: Absolutely. So I feel like I'm in the business of buying things and making them better. I almost never buy something that you would call turnkey.

[00:11:51] I see my portfolio, like a chessboard, if I can buy a queen or a king, I'm gonna do that. Cuz that's what I want on the back row of my [00:12:00] chessboard, that's ultimately what I want to build towards. But for the most part, like I'm buying a lot of the other pieces. I'm buying ponds, knowing that I'm going, they're gonna get sacrificed in the pursuit of the better pieces, or the bishops or the Knight or whatever. So I buy a lot of properties with seller financing and I buy properties that I can add value to. And then usually we'll extract. The value that we've created either in kind of a bur sort of a situation or maybe sell something, but constantly moving.

[00:12:29] I would say my portfolio is like a lot of moving pieces where we're not just buying and selling, but moving even pieces of debt around throughout the portfolio to free up equity, that then creates the ability to go buy to go buy something else that's bigger, but a lot O only a couple commercial loans, do we even have really, it's mostly seller financing loans.

[00:12:50] Patrick McGrath: So tell us about how you go about the seller financing process. I know I've talked about on the podcast a few times that I've had, I've been [00:13:00] able to get seller carryback loans, but the longest that I've really got is three years and $85,000 for the down payment. That's how I've used somewhat of a seller financing technique to be able to purchase a couple properties, but, what's your strategy.

[00:13:18] Jeff Stephens: Yeah. I think seller financing is just a beautiful thing, but it's also something. Most of our industry people tend to feel like it's kinda like a unicorn wow, you can't find one of those. If you do. You're just really lucky. But I've learned that there's some myths about seller financing that, it's what people do when they can't sell their property in any other way.

[00:13:37] That's one big one. And if they do, they're gonna do so reluctantly. And so they're really gonna turn the screws on you in terms of oppressive terms. And it's only gonna be really short periods cuz they didn't really wanna do it in the first place and they just wanna get it over with, and I'd say, there's these myths.

[00:13:51] know, They come from some level of truth in the first place, but there is like a whole category of people. And I can assure you I've talked to a lot of 'em who they [00:14:00] actually want to do seller financing. Do they know that they want to do seller financing at the beginning? Maybe not, but a lot of 'em once they start to really understand what their own priorities are.

[00:14:09] And then we start to facilitate a conversation with them about those priorities. Pretty soon. They're like, I swear, almost asking for it because it's the thing that fits their scenario, their situation. So here's what I mean by that. There's a whole group of people who, if they were to sell their property, they would have a nasty capital gains tax bill.

[00:14:29] And not everybody just wants to exchange one responsibility into another one. So with an installment sale, which is kinda like the fancy tax word of saying, carrying a contract that can be structured in a way that can really. Ease the pain of their capital gains tax bill or change the timing of it.

[00:14:46] If somebody says, you know what, I don't mind paying this game, but I don't wanna do it now. I'd rather do it in 10 years. Great. We can structure that. So you get maybe a small down payment. Now you're gonna have a little bit of a tax bill now, maybe some depreciation recapture, but then you're gonna take the rest of that gain and just [00:15:00] punt it 10 years into the future.

[00:15:02] And that they'll deal with it then. So that's one re I'd say that's even probably like the number one driver for seller financing is that the second thing is a lot of people they own. Who has capital gains tax problems? Pretty much landlords, right? Owner occupants in rare situations could, but that's not, the primary thing, right?

[00:15:19] It's landlords landlords tend to own rental properties because they like having income. So now they sell their property. They're not really in the mood to go buy another one. Where does the income go? So the seller financing can be a great solution for that. So they get to continue to have the income.

[00:15:34] And then honestly, a lot of 'em like, they don't really know, great. You're gonna get a wire for 450 grand. What are you gonna do with that? And a lot of 'em don't really know what the answer to that question is. And even trying to answer that question feels like kind of a burden. So there's lots of reasons.

[00:15:49] I I could keep going on, but there's people who would actually rather just get payments each month, have a tangible piece of collateral that they already know inside and out, and that's a way better scenario [00:16:00] for them. So we just have to develop the way of like reverse engineering, the situation where we put ourselves in their living rooms and we start to have that conversation.

[00:16:07] And then you realize it's not quite as rare as a lot of people think. I 

[00:16:12] James Rippeon: think that's super important to analyzes what you just said is reverse engineering, the situation and finding the seller's motivation for wanting to sell and trying to pinpoint that. So you can offer and key in on these benefits to seller financing, cuz once what's driving them to make this decision, whether they're retiring and they need income or they need the cash or you.

[00:16:36] They don't want to pay uncle Sam, cuz they're super conservative. Whatever the reason might be once you identify that you can, you've now found your means of marketing to that person. What works for a mutually beneficial situation between the two of you? I think another benefit to the solid financing is also you get to pay them more.

[00:16:53] Like when you tell them like here's how much you would walk away at the closing table. If we were to do a cash sale or, if I were to get a loan and bring some [00:17:00] money, you'd get $450,000. But if we extend this 10 years and I'm paying you four, five, 6% interest on our finance, you're gonna end up walking away with someone, do the math for me on the calculator at home 650 $700,000, way more than you thought you would've gotten at the closing table today.

[00:17:16] I, it's very invaluable. 

[00:17:18] Jeff Stephens: Yeah, absolutely. Plus 

[00:17:21] Patrick McGrath: that, that sorry that those interest payments are, are taxed differently, right? They're gonna get that income. They're not gonna have to pay gains on everything. I'm in a situation like that, where the guy was like my building's paid off.

[00:17:35] So if I sell or finance it to you, then I'm gonna be missing out on $150,000 over the next five years. And I'm like but I'm giving you $150,000 more than what you could sell it for. If someone went and got a loan. So it's the same, you're, you wouldn't get that 150 grand for five years anyways, and I'm not gonna pay you off for five years anyways.

[00:17:59] You can just [00:18:00] deal with me or you can deal with your tenants in the property for five more years, yeah. And I think they do that too, because they are still getting income. They're still getting paid, but they only have to deal with one person instead of eight, yeah. 

[00:18:11] Jeff Stephens: For sure.

[00:18:12] And when you start to do this a couple times, then obviously you build up some references and so ultimately then it gets a little bit easier. Cause you can point this person to the last two people that you've done this with. But I wanted to just really quick before we move on like double click on that idea of reverse engineering.

[00:18:26] Cause I feel like this is the number one area that people go wrong as they're trying to do seller financing. Most people who are, who. Investors and wanting to do seller financing. They will go look for properties that are for sale, and then ask those people if they will do seller financing, which kind of makes sense, but is also really random.

[00:18:46] It'd be like, I'm sure none of us ever did this, but do you remember the concept of shoulder tapping? If you were in high school, like you go into a supermarket and just tap someone on the shoulder and say, Hey, will you buy me beer? That's a really random process. Don't you think like it's gonna take a while before you just [00:19:00] randomly find someone who's comfortable with that type of a thing.

[00:19:02] But if you reverse engineer the whole thing, then what we're doing is we're actually, and this is sounds weird, but this is to me, when I learned this on mind blowing concept, we're shopping for a person and seeing what a property they have, rather than shopping for a property. And seeing if that person will do seller financing, we're shopping for a person who has that particular set of like attributes that would make them a good candidate for seller financing.

[00:19:24] And then we're talking about their property, right? So it's we're going, most people are going fishing in a pond where there's really no reason to expect there's any fish in here that are gonna be seller financing fish. Instead though, what if we found a way to only be fishing in a pond that's reasonably likely stocked with seller financing fish and know that every time we dip our line in there, it doesn't mean we're gonna catch something, but there's a pretty good likelihood that if somebody bites that bite might be somebody, who's reasonably well-suited for seller financing.

[00:19:55] So let's, I 

[00:19:55] James Rippeon: totally agree that let's that a little bit more, you just [00:20:00] us, this huge nugget that gonna open the playbook for a lot of people, how do you find the people, rather than just looking for the properties? What are those, some of those actionable tips that somebody might be able to put into place and put into practice, to reverse engineer this whole process and find those people who have the properties.

[00:20:20] Jeff Stephens: Yeah, absolutely. And it's, I just have to point out to go back to connecting between my marketing background in this what we do, how we brand it, how we do what we're gonna talk about in a second. Super duper strategic. However, it's also extremely simple. And so I take pride in like how strategic it is, but when I describe it, you're gonna be like, really that's all.

[00:20:40] So here's the thing. If what does the perfect seller financing candidate look like? They would have a big capital gains problem. Let's just focus on that actually. What does that person mean? Probably they're an absentee owner. They've probably owned the property for quite a while and especially during certain market cycles.

[00:20:55] Let's so let's say, I would say today in 2022, they've owned the property 10 [00:21:00] years or more. Cause if they bought it in 2012 or before, chances are it's worth a lot more today than it was then. So those are people, absentee owners 10 years of ownership. They've also, yeah. So they've seen a bunch of appreciation.

[00:21:12] People who have owned a property like this in, for th that amount of time are usually not 32 years old. They're usually older in life. Like it just, that just happens, an eight plus seller avatar, typically what, certainly a 32 year old could inherit one, but generally speaking, right? The APL of somebody who's owned it for more than 10 years.

[00:21:35] And some, if it's a lot more than 10 years, they're probably gonna be 60 or 70, 60 or 70 year old people are starting to think about maybe they wanna spend their time in a slightly different way. So here, I just to make it super tactical, here's what I would do. Or what I do. I go to my market in, in, in the specific neighborhoods I wanna go to.

[00:21:52] And I'm, so we're talking about pulling a list now, right? So you could pull a list on list, source.com. I just called my title company and say, would you please give me a [00:22:00] list that I could buy properties and close them with you? And you guys can make money and they say, sure, no problem. We'll give you a list.

[00:22:05] So I asked for the list, it says this zip code, I want two to four unit properties. For instance, I want them to be absentee only. I want them to have been owned 10 years or more, and that's pretty much it. They send me this list and now I'm, that list is like the pond. That's reasonably likely to be stock full of these, the right type of fish.

[00:22:27] So now I send the right type of letter, which is like the right type of bait on the end of the hook that goes into that. And this is important too. So then the right type of a message to those people and you know that anybody who calls you, there's gonna be a chance that conversation could be directed in that.

[00:22:44] Towards seller financing. But I do wanna just on a tactical level too, I wanna talk about that. The message, because here's, if I said that, asking the wrong people to do seller financing is the main thing that people do wrong. The thing that kind of goes right with that is [00:23:00] talking about seller financing too early.

[00:23:02] Okay. When we talk about seller financing too early, you might as well be wearing a sign on your forehead that says, this is what I want. And I, I'm just here to find out, you will do this thing that I want. You talk about marriage on the first 

[00:23:13] James Rippeon: date. 

[00:23:14] Jeff Stephens: Definitely to, yeah. And it looks so premeditated, right?

[00:23:18] It's just you it's go, Hey, I only reached out to you because I wanna do seller financing. So we, what we have to do is have the conversation in a way. Is not quite so obvious. We ask good questions. We elicit their response. Let them tell you that they're not super excited about capital gains tax.

[00:23:35] Let them tell you that they're not super excited about funding. The current administration, let them tell you that they hate to see the income go away. Now, if you just ask 'em enough questions, chant, like usually people will tell you that kind of stuff. Then when you propose back, like something related to seller financing, it doesn't look like, oh, I've been, I reverse, like I, I planned this whole thing from the beginning.

[00:23:57] Surprise. Yeah. Instead it's based on what [00:24:00] you told me, Bob, you mentioned you're gonna have a big capital gates tax bill. You're not really sure what you're gonna do with the money. Anyway, you love this property. You know it inside and out. I was, I put all that in the blender in my mind.

[00:24:10] And I was like, whoa, what if we did this? And then you make your seller financing proposal. That's completely in the context of what they told you. They need want, like what their preferences are. And then it's not about you and what you want. It's really about serving them to the point where they're not only saying yes, they're like thanking you because it's you tailored something specifically for them rather than just showing up and saying, here's what I wanna do.

[00:24:33] Will you say yes. Does that make sense? 

[00:24:36] Patrick McGrath: Perfect. A A hundred percent sense. That's what I've been telling people too, especially finding off market deals, whether you're gonna be able to seller finance or not, when you're going after these. Small multi families, two to four units or, even 20 units, they're mom and pop people.

[00:24:55] And like you said, if they've owned it for over 10 years, they're real estate investors, they [00:25:00] at least have somewhat of a concept of the strategies and the things that you know, you're talking about. So you're talking to a different category of people. They're an investor too. They might have owned a portfolio of 20 or 30 properties at one point, so you've gotta take your swing.

[00:25:18] But like you said you don't want to do it right off the jump. You want to be a solution, to their problem. They answered your email or your postcard or your letter. They're somewhat interested now don't be like every other person that's sending a letter or a postcard, which is a wholesaler that just wants to get the property dirt cheap and assign it to somebody else and make money being the middleman.

[00:25:42] You need to build that relationship and I love how you said it. It's all about, building that relationship and people. Living rooms and that's the same exact thing, they're buying from Jeff, they're buying they're selling to Jeff, yeah. They're selling to Patrick, to James.

[00:25:57] Like I you're helping me out just as [00:26:00] much as I'm helping you out, it's gotta be a win-win situation for everybody involved because if the deal's lopsided or if you're presenting something that's lopsided, they're gonna know, and it's gonna be a no. And I think that's why these seller financing deals end up going through is because both people are, giving up something and both people are getting something and I just, I love the strategy.

[00:26:25] I love what, I love what you said there. Do you find this is a big one. Do you find that, the interest rate is really a hang up or the price, or is it typically the length of the term that is usually, the biggest negotiating chip when it comes to offering these seller financing type of things?

[00:26:44] Jeff Stephens: Yeah. Yeah. Good question. I don't know that there's one that jumps out as consistently being the thing you gotta understand. When I'm, when I market to somebody whose property is not for sale, like there's not a listed price. Like we're not starting with a predetermined understanding of the [00:27:00] number 700,000 and then going from there, there's really no point of reference at all.

[00:27:04] So that is even coming to light at the same time that maybe the seller financing concept is coming to light at the same time. I'm starting to understand like what their point of reference is around, like for interest rates, for example, Interest rates, as it relates to seller financing almost has nothing to do with like bank loan, interest rates.

[00:27:24] It has everything to do with what the seller feels like. Their alternatives are like the, if the seller says, dude, I'm just going straight to crypto at 19% return, that's their point of reference. And so any seller financing proposal is gonna live in that context. If somebody else says I'm planning to go get a CD I trust my bank it's one point a half percent.

[00:27:45] That's the point of reference. And so the negotiation I find tends to happen in relation to that rather than in relation to like market rates. A lot, again, back to myths people say. Seller financing loans carry higher interest rates. And I would say, that's not there's in my experience.

[00:27:59] There's no correlation [00:28:00] between those at all. Unless you're talking to some seller who is literally saying, I don't wanna seller finance this to you. If I'm gonna do it, you're gonna have to make it worth my, while you can't get a, you can't get a bank loan, you don't qualify at 5%. So I'm charging you seven and a half, but that's like none of my conversation.

[00:28:16] We, I don't know. I add it up. I would guess we have between probably three and 4 million of seller financing debt right now. And it's probably four and half percent average stuff I've negotiated in the last five years. It's not onerous or oppressive interest rates at all. 

[00:28:30] James Rippeon: I think Warren buffet has a quote.

[00:28:33] You might be Charlie Munger, one of the. You set the price, I'll set the terms. And I think that goes to show that, people shouldn't get so hung up on just the purchase price, because when you're doing these kind of negotiated buyer to seller direct deals, there's so many terms that go into this between the interest rate the term purchase price, how the money's paid maybe any delays or balloon payments.

[00:28:58] There's so much more that goes into [00:29:00] it than just the purchase price. We're getting super favorable rates, sometimes that might be able to justify slightly above market purchase price from the off offset. So you can use those kind of chips to bargain with the seller to really hit those pain points for them.

[00:29:14] And it's all in E and. 

[00:29:17] Jeff Stephens: Yeah, absolutely. Would it be okay if I take that idea and take it even one step further? Cause this is a really non-mainstream idea, but I'd love to just hit it real quickly, please. Okay. So when you mentioned, you asked me before, what does the portfolio look like?

[00:29:30] How did you grow and stuff like that? And I said, there's a lot of moving parts. So let's just talk about the moving parts for a second a seller. So first of all, seller financing can mean a lot of different things to a lot of different people. That's a big term people could use to describe like subject two and land sale contracts and lease options and wrap notes.

[00:29:46] Like 99% of what I'm doing is like just a straight like promissory note and trustee, like I'm becoming the owner, they're becoming the beneficiary of a promissory note. They have a piece of collateral, right? Just like a bank scenario, but they're the bank and I'm the owner, [00:30:00] right? So any real estate loan needs a piece of collateral, right?

[00:30:06] And by default, when you buy a piece of property, the property you bought is the collateral. But you have to ask yourself the question does it have to be like that forever? And when you're talking to a regular person, who's gonna be the beneficiary of this promise right now, the answer is no, it doesn't have to be the same at all.

[00:30:26] James what I wanted to just take further was like you said, basically, great terms can make up for a slightly higher price property. I totally agree. And I would say even like to take that further, I often buy properties, right? This is actually really a core part of my personal strategy and how I've grown.

[00:30:42] And then what I coach others on. I buy a piece of property with seller financing and we add what we call supercharged seller financing elements to it. One of the main ones of those is the thing that says, okay, I just brought, I just bought 1, 2, 3 main street from you. The collateral for this [00:31:00] $400,000 loan is initially 1, 2, 3 main street.

[00:31:03] But at some point during this term, let's say it's 10 years. I have the ability to give you a different piece of collateral to secure this loan. I have to show you that it's worth, more than I owe you. And it has cash flow debates, the payments and all that. But I could switch your note your loan from being secured by 1 23 main street to 4 56 Oak street.

[00:31:23] So I will often buy properties that I don't even really want at all. Just for this block of financing that I've negotiated, I'm really buying two things. I'm buying the property and the financing, and I'm way more excited about the financing. So if I can buy this property, let's say the retail value of this property is four 50.

[00:31:41] I can buy it for four 20, big deal, not a big, not a great win on the price side of things, but if I'm gonna get a $400,000 note at 3% for 10 years, oh, now what I'm really buying is the 4% note, a $400,000 at 3% for 10 years. So I'm [00:32:00] gonna buy that property. I'm gonna re I'm gonna substitute the collateral from the property.

[00:32:04] I just bought to a different property. This property I just bought is now free and clear and I'll just sell it. And that's what I'm doing is I'm basically always buying the properties. I want, like the chessboard thing I mentioned, I'm always buying great chunks of debt and then I'm pairing them up in ways that most people aren't thinking about as a possibility does that make sense?

[00:32:23] That makes sense. 

[00:32:25] James Rippeon: I've ever heard of before Patrick, is that something you've ever heard of that this is a total first? 

[00:32:29] Patrick McGrath: It's not that particular strategy is not something I heard of. It's very intriguing, but I did in one of my deals that I had a seller carryback he had a lien against the property and I needed to refinance the, and what we did was is he signed a letter saying that I had paid him off.

[00:32:54] And then he took out a lien on one of my other properties with the with the [00:33:00] equity in it. And then when I went to the bank and refinanced, they gave me a check for 150 grand because I didn't have a secondary lie on the property anymore. So it's the same, it's really the same thing, but I've never heard like the strategy that you had, but I, as you were talking about it, I'm like, man I did that.

[00:33:19] Okay. So yeah that's pretty interesting. So you're still making the payments, but you've collected all of the equity and everything else. And you're like, I'll just make those payments for the next 10 years and figure it out some other way, get another, great seller finance term and be able to do the same thing to pay that off whenever you have to.

[00:33:37] So that's yeah, 

[00:33:39] Jeff Stephens: the seller, he, the seller still has. Just as much collateral as he had. It's just now it's not property aids instead. It's property beat. So there's no interruption to payments or anything like that. It's just basically this deed of trust got released on this property and recorded on the other one at the same time.

[00:33:56] So you basically have taken the debt and moved it from one to the other, [00:34:00] to to illustrate for everybody listening to your, the point that you were just making there too. Patrick is when the debt moves from the first property to the second one, your overall equity between these two properties doesn't change at all, right?

[00:34:14] Cause this one is just encumbered now by 400,000 more. And this one over here is encumbered by $400,000 less. So your overall equity, your net worth, none of that has changed. But the the distribution of that debt through the portfolio is what has changed. But now the property, you just.

[00:34:30] That you remove the debt from while this other one is loaded up more. This one is now free and clear when you go to sell that and there's no debt to pay off. That's a good day because you're selling this property now and just getting a huge wire coming into your world. And so really what you think about, if you think about it this way in that scenario, I just described really what you did is you just went and put a home equity loan on the property.

[00:34:54] You already owned, right? You already owned this property, had already had some debt. You wanted to [00:35:00] extract some equity, like in a birth, for instance, you needed to put additional secondary debt on that property. So where does that debt come from? Most people say, oh, I go ask the credit union for home equity loan, but not a lot of them do that.

[00:35:11] Here's the other way to do that. You just bought that loan from another seller, moved it into that slot that you wanted, and then just disposed of the property. And what are you left with a big chunk of cash. From the closing of this free and clear property. It's a little bit easier if when I draw it out, like on a whiteboard.

[00:35:28] So I hope I didn't go too far into that now and confuse anybody, but 

[00:35:31] Patrick McGrath: I'm a hundred percent there. My biggest question I think is now, what are you doing with that large, wire or that capital gains now, are you 10 31 exchanging this? To me, I feel like I would of did a cash out refinance on the property.

[00:35:51] First, got a new loan, got 75 or 70% of that tax free and then only had to pay the cap gains on the remaining [00:36:00] 30 when you went to sell. That's how my mind's working, but like how are you getting around all. 

[00:36:05] Jeff Stephens: Yeah. So on, on the new property that we just bought with seller financing, when we go to sell that, there's probably not capital gains to be paid at all.

[00:36:13] Cuz I, if I bought it for four 20, I could sell it for four 20. There'd be no gain there whatsoever, but there's no debt associated with it. So the capital gains is not a reflection of how much debt or there is or isn't, but it's more of a reflection on what the gain was. But if I just turn around and sell it within a couple months, there's no really there's no gain to pay.

[00:36:31] It's just cash proceeds coming in. But to your point, I could just keep that property and borrow against it. I could go down to the bank and say, Hey bank, guess what? I own this property free and clear, what do you think? 75% LTV loan. And if they would go for that, then great. Now you get to keep that property and you get a bunch of cash that way too.

[00:36:47] But like you were 

[00:36:48] James Rippeon: saying before, it's likely that property was your paw. You're sacrificing it. Now you're gonna be gone out. You're gonna be buying your rock, your Bishop, and hopefully a king or a queen 

[00:36:58] Jeff Stephens: while you're out. Totally. Yeah. [00:37:00] 

[00:37:00] Patrick McGrath: Wow. You just. Drop some serious bombs there. I really like it.

[00:37:04] That is the first time I've really heard that strategy. I definitely love that. I have that in my arsenal now because it's just got my mind, like really thinking, it's playing a big game of, monopoly and just moving, like you said, just moving dead around, moving pieces around and it's all in who can be the most creative, that that can get further along in this game that we're all listening to this podcast, to figure out which is financial independence.

[00:37:30] So tell us a little bit about like your financial independence goals and what it is that you're actually, trying to 

[00:37:38] Jeff Stephens: build here. Yeah. Yeah. It's a great question. I think. So you're talking to somebody who's in a market where things are expensive and cash flow is low, so no, nobody says I'm gonna create financial independence.

[00:37:51] I think I'll go to the west coast. But that's where I'm at. And I believe a lot in the value of knowing your own market really like the [00:38:00] back of your hands. No matter where that is I believe a lot in local investing for that reason. So anyway, so I've built my portfolio local to me.

[00:38:07] And as I've, I've asked myself these questions over the years, too. Because at this exact moment, does my cash flow for my properties, cover my food and all my, no, it doesn't, but it could, if I chose to restructure my portfolio. So I have developed this thing, I just call optional financial independence, which is basically to say, if you have the net.

[00:38:27] Such that you could restructure. If I sold all my properties and just took a suitcase full of cash to like Memphis, then I could be financially independent, but I'm choosing not to do that because that's just not a move I wanna make. Like it's not a strategic move I wanna make. I like the properties I have.

[00:38:42] I'm comfortable with the financial situation that I have. So I call it optional financial independence, which is like with the flip of a switch, you could reconfigure what you have into not needing to work again. But I also, I believe the philosophical point here, I believe there's a difference between an investor and an [00:39:00] entrepreneur.

[00:39:01] I can give you a couple definitions to that, but what I really mean is an investor is what you do, but I think an entrepreneur is who you are. And the truth is I am an entrepreneur and it doesn't matter. You know what the net positive cash flow is I'm gonna be super bored if I'm not creating new things in the world.

[00:39:18] If I'm not creating a new property the vision for a new property, if I'm not creating a new acquisition, if I'm not creating like a new coaching idea, if I'm not writing a book or recording a song or something like that, I'm gonna be super bored. And so I don't really feel like a lot of motivation to get to a cruise control type of state.

[00:39:37] I just wanna continue to improve grow and improve the efficiency of what I have now. And at some point, if we just wanna hit the easy button that says sell or exchange all this stuff into cash flow markets. Nope, no problem. We'll do it at that point. But at that at this moment I don't really feel like that.

[00:39:52] So tell us about 

[00:39:52] James Rippeon: some of the entrepreneurial things that you're working on now, and some of the things that you got going, that's part of your journey. Cause it sounds like you're [00:40:00] more perhaps interested in the journey and the building aspect of things which is what the entrepreneurial life is not necessarily the S yes.

[00:40:07] So tell us a little bit about some of the pursuits that you're working on right now. 

[00:40:11] Jeff Stephens: Yeah. Yeah. Thanks for asking. Like one thing we created a couple years ago is we have one commercial building. Most of our stuff is residential, but we have one and we had like kind of anchor space was, became vacant unexpectedly and quickly after closing.

[00:40:23] So it was like, what are we gonna do? So it was really fun to create. We basically just created out a thin air a co-working space brand. And we said, we're just gonna run this like a bunch of cubicles, basically like cool cubicles in a greater space, but it's gonna have its own name and branding and logo, and we'll decorate the space that way.

[00:40:40] And it'll have kind of its own like little mission and giving component in the little neighborhood that it's in. So I like one, I guess I think of business as kinda like a canvas. So that's one thing we painted on a canvas, like creating the whole coaching side of everything I do is like another big canvas.

[00:40:56] So we created one about a year and a half ago. And then [00:41:00] now those people are graduating into a new thing that we're creating. So I'm creating like another level of that, but I always have to be creating something totally new. I know, and my own coach is always, he's kicking my butt and telling me I need to be creating things more in the development side of things like that.

[00:41:17] Like he's encouraging me to get more into like development. So I've been, kicking around the idea of RV storage, like developing an RV storage, a place where people, if you got a $300,000 RV, like you probably don't want it out in the weather. So maybe there's a good, cool spot for that with a little clubhouse for all the other rich RV owners and things like that.

[00:41:36] So if that's something I'm, pondering and working on, then there's like a lot of creation content is what I do too. And I've got my kind of book framework right now that I'm sort trying to put things out. And, Patrick too, you mentioned were always publishing lots of posts and things like that.

[00:41:48] So I always need to be like prolifically creating stuff. I. 

[00:41:52] Patrick McGrath: That's extremely interesting. I'd love what you said there, because interestingly enough, I'm also working on an RV boat [00:42:00] storage development that signed a contract for last week on 16 acres. We are starting off with just the, fence, dirt, gravel, the whole nine, and then as it starts developing and filling up, we'll offer those premium, covered spaces and all that down the road.

[00:42:20] Once the cash flow kind of comes in, but nice. Very interesting that you said that cuz yeah, I totally agree. Yeah. Yeah. They're building a ton of storage facilities, but everyone's trying to maximize that, dollar per square foot that they can get out of it. And when you drive by 'em, there's two RVs in a boat, that's all they have available.

[00:42:40] Yeah. So there's so many people out there that can't store them and with HOAs and everything else these days, like there's no place for people to actually store this stuff. And you're right. You're catering to a different level of people 

[00:42:53] Jeff Stephens: about 

[00:42:55] James Rippeon: putting a clubhouse on that.

[00:42:56] That's your next step, man is doing a clubhouse on that thing and making it so [00:43:00] you can have to bar lounge and whiskey tasting for all your RV boat owners. 

[00:43:04] Patrick McGrath: Oh. So everybody can sit out there and smoke a cigar and talk about how their RV's a little nicer than the one over there. Yeah.

[00:43:11] I love it. yeah, I love it. Yeah. With the coaching, that's really interesting. Tell us a little bit about the coaching model. Like what inspired you to start coaching, cuz I'm sure, like you said earlier, you get just as much out of it as you're trying to give.

[00:43:28] Yeah. So is that the reason why you wanted to start that break that down for us a little bit. 

[00:43:34] Jeff Stephens: So to me there's two things. First of all, like I, I feel like I am absolutely the product of an amazing coach and an amazing coaching relationship. There's no way I would've found know no way, but it would've taken a lot longer, way more painful for me to find that head heart alignment.

[00:43:49] If I hadn't connected with my coach, a guy named Greg PEO and it's, it made all the difference in the world to me. And like the moving of the debt stuff. I didn't make that up. I learned that and [00:44:00] then I've tried to quote perfect the art of applying that in my own way. So first of all, like I know the insane benefit that a great coach can delivered to somebody and the impact it can have on their life.

[00:44:11] The second thing is I feel like this approach that I practice this very like relationship oriented, purely off market. Seller financing kind of thing is really not talked about in our industry. And I really think it needs to be it needs more of a platform. Like more people need to know about this, cuz it's so not mainstream, but I know that there are lots of people out there who they would just rather be more relational in the way that they're doing stuff, right?

[00:44:38] Like their head is saying, oh, here's the right way to do this, but it's not feeling good to their heart and they're not getting a lot of progress. And so I, I really believe that this this might sound cheesy, but it's almost trying to create a movement of this like extremely personal relationship oriented face to face, no brokers.

[00:44:52] You're just sitting on someone's couch in their living room type of approach to business, which also on the super practical level. [00:45:00] I think you can grow a lot more when you don't have a banker who's, deciding when you deserve the next loan. To me, that's always like the shadow side of this is that's always felt a little offensive that like some guy wearing a tie gets to decide when I'm being responsible enough to deserve the next loan.

[00:45:15] I'm like, no, thanks. I don't want that kind of scrutiny. And so I really like the idea that you can pave your own path a lot better and feel good about how you're doing it with this methodology. So anyway, product of a great coach, and I think this message needs to be heard by more people. One plus one equals great coaching program.

[00:45:31] so it sounds 

[00:45:31] James Rippeon: like, just everything that you have going on, seller financing can be a great way to get started for those people who. Maybe don't have the best financial situation personally on their either credit, maybe it's something not technically at fault of their own, but, or maybe they just wouldn't qualify for traditional loan and also a great way to accelerate, into growth by taking control of your assets more.

[00:45:54] So it sounds like you, you get into all those different aspects with your coaching and things that you're putting [00:46:00] back out there for people you're working with. 

[00:46:03] Jeff Stephens: Yeah. Yep. Yep, exactly. And I find that most of the common denominator with most of the people I work with, there's a few things that they probably share in common, but I'd say the number one thing is like these people just, they wanna feel good about how the person on the other end of the transactions being treated and they just, they want to have more of a hands on approach to managing the experience for everybody listening, creating a win-win right.

[00:46:24] And I think that's why a lot of the times this, it resonates because, when you're doing things in a traditional way, you call the broker who calls the broker, who calls the seller. Like you have no clue at all about the other people, right? Like you, if you know anything, it's what price that they want.

[00:46:38] And like that is it. But. You have no ability to understand your audience to actually, I would say the more you understand your audience, the better you can tailor something that will get them where they're trying to go. I literally think about a tailor sometimes. Can you imagine a tailor with a client who needs like a perfect fitting pair of pants or something?

[00:46:57] And the Taylor's oh, I'm gonna call my person. Who's gonna call their [00:47:00] person. Who's going to take a measurement and then they're gonna call their person who calls my person. Who's gonna relay the number back to me. It's dude, that's insane. You wanna be able to touch them directly? I'm gonna put the measuring tape around your waist myself so I can see, oh you said you like these types of pants, these types of PA If you wanna like truly create something custom, sorry for all my weird analogies there, there was beer fishing and now making pants, but if you want to truly customize something that fits the other person, like you can't do that with two intermediaries between you have to settle for it's good enough. Let's just talk about numbers. And there's a whole segment of people who don't really want to do it like that. I don't, 

[00:47:33] Patrick McGrath: I know exactly what you're saying because I was in sales for, over 12 years and this is the art of the deal.

[00:47:39] You are Teaching, you know how to do sales, right? You uncovering questions. That's the biggest thing. If you ask enough questions, they will lead you down the path to provide the solution that you are ultimately trying to propose, but at the end of the day, it's press and skin it's like you said, sitting in the living room, be becoming [00:48:00] personable, making them want to sell it to you or making them help you.

[00:48:04] And you helping them and. And that part is really huge. And people do that are really good at sales. They want to make sure that both sides, are achieving that common goal and that everybody is happy. And like you said Steve, and Patrick and you get to make your own deal.

[00:48:20] And that's how it works, and at the end of the day, no one's screwing over anybody else and there's no middle men to interpret things differently. Yeah that's one of the best things. So coaching is fantastic. And I love how you put that in there.

[00:48:32] Like it's a very underserved kind of niche that a lot of people aren't teaching it right now, all over, Instagram and Facebook is wholesaling and Airbnb and, arbitrage and all of that. And people, the an apartment syndication. Just buying and holding some rentals is not sexy anymore.

[00:48:51] And like you said, the owner finance is like the unicorn out there when it really doesn't need to be. I it's just a lot more work than what most [00:49:00] people are willing to put in when they think that you have to be lucky, roll the dice to make it happen. So I'm so happy that you're out there teaching people, all about that.

[00:49:10] And that's great now, what obstacles do you see yourself facing over the next, two to three years with all that you have going on, with your coaching business, with your real estate business, with your book, like what's the main obstacles that you see yourself, facing with the pursuit to that?

[00:49:28] Jeff Stephens: Yeah. I think the obstacles are all. Really quite self-imposed. I The flip side, of course, of this extreme sort of entrepreneurial approach to things is of course, like the shiny object type of syndrome and the ability to like, maintain I'm a world class starter.

[00:49:44] I am like a, I'm an average finisher of anything really, but world class starter. And that's where the joy to me comes from conceiving of a new idea, starting a new idea, RA rather than executing some the same thing forever. So that's gonna always a challenge for me. [00:50:00] I'd say for me also like a weakness that compounds that is I'm not terribly great with collaboration.

[00:50:06] I I'm not I'm more of a lone ranger, that's the truth, right? Maybe a lone ranger with some help, but I'm not like. I'm not really a if you wanna go fast, go by yourself, but if you want to go far, go with others, I'm not really I don't wanna go that far. I'd rather just go fast myself.

[00:50:22] And so I know that can be a limit, a limitation. So to me, it's just I find that working with my coach, coaching myself and coaching others, like 90% of what we talk about is just what's happening between our ears, and just, get out of your own way. As my coach, Greg says a lot of times, so I'm just trying to always get out of my own way and build appropriate support structures that, that, that do help me.

[00:50:43] But like in the way that actually suits me the best, I'm not like a partner kind of a person I'm more like a, maybe a few delegate delegation kind of thing, people. So that's, I'd say those are probably the biggest ones, for me self-imposed things. And then also, all the third and final one I'll say is [00:51:00] also self-imposed one, which is, I don't know if I come across it like here, but I'm certainly more introverted.

[00:51:05] Like I don't. I don't really get excited for making a bunch of funding proposals for private money. People. I think I'm pretty good at it, but it's not something I really get up for. So I can find myself shying away from like making phone calls and stuff. It's I feel like in the time of COVID in a smaller town that I moved here to bend a couple years ago.

[00:51:25] Like it's just easier to just sit here behind my desk and not go out in the world and see people as much as I should. And so that's something I always have to fight too. It's like fighting inertia, it's easier for me to just sit here and oh, I'll think and brainstorm and read and stuff, and it's no, you need to be out there talking to people and whatnot.

[00:51:39] So anyway, I have to fight that inertia as well. Gotcha. 

[00:51:43] James Rippeon: You gotta get outta your comfort zone and that's where most progress happens for sure. So I wanna of get your opinion on the market. And I think that'll be interesting perspective from you to hear, because. I wanna know what you think that the people you deal with in your seller [00:52:00] finance deals are thinking of the market and maybe what you think will happen in future.

[00:52:04] If you had a crystal ball you could break out mortgage rates they're going up. I'm sure when you're talking about seller financing at some point or another, maybe interest rates might be compared to traditional mortgage rates, and we're seeing a lot of changes there. Are you experiencing any changes in the dialogue or the conversations you're having with the seller finance deals that you're pursuing or, is anything changing or, what's your 

[00:52:29] Jeff Stephens: feedback on that?

[00:52:31] I feel like I'm starting to see just the very first couple hints of it. I'm not seeing a ton of real change just yet, but I think if you ask me again in a month or two months, I think we probably would see more of that. I'm. I put like literally no energy into crystal ball thinking or analysis, but I'll tell you what I think is I think that in this next sort of chapter, I think that the things that will there'll be a premium on a person's [00:53:00] ability to have conversation directly with a seller and ascertain what the different like deal structures are that can try to get them where they're trying to go.

[00:53:08] Because I think here in these last few years lately, it's been very straightforward, just like the traditional way of doing everything, put it on the market, a retail price, like all that kind of stuff has worked just fine. For the most, the majority of people selling properties, but I think now people are gonna have more unique sets of challenges as sellers, for instance more unique sets of needs. And to me, it like to, don't know to say that somewhat differently, there's gonna be more of a need for that tailoring thing that I was talking about a few minutes.

[00:53:36] There's gonna be more people who need custom pants than maybe there have been in the past. And so I think a person's. Facilitate that conversation, listen, and know the toolbox that will structure a deal in the way that will get that person where they're trying to go. I think that's gonna be more and more valuable than it has been for 

[00:53:54] James Rippeon: sure.

[00:53:55] I wasn't, I was too young. I guess I wasn't too young, but I was just getting outta high [00:54:00] school to be buying property in 2008, 9, 10, 11, 12. And at that period of time, people needed to sell because there was a financial need to do so know in just around the time that you really started ramping up 2013 until now rates have continuously been dropping real estate prices had been shoot to the moon.

[00:54:21] People have been selling because they wanted to. With rates going up who knows, you might be in this new position where you have to flesh out these custom tailored reasons for why people are coming to you to want to put these deals together, to sell. It might be less of a avoiding capital gains wanting to extend payments this, that, or the other.

[00:54:41] And it might be, I just need to sell this and I just need the income to pay for this transitional life period that I'm in right now. Yeah. I think that's an interesting thing to keep an eye on, it's impossible for anybody to know where, which way the market's going up down left.

[00:54:54] It's in nobody's hands nobody's control. It's just interesting to hear somebody's perspective of what they're feeling [00:55:00] and what they're seeing out in the market. Cause it's on the front lines that, yeah. You can see that first glimpse of where things might be heading if they're heading in a different direction at.

[00:55:09] Jeff Stephens: Totally. I just think it's good. It's easy to say, oh, it's things are getting worse, but I just think things are changing. And that means that the game you're playing is changing the strategies you need to employ to play that change a game are changing the tools that you need to have it at your disposal and know how to use and stuff are changing.

[00:55:25] I think maybe it's like the one trick pony folks who are gonna be left out in the cold or like being forced to learn some new things, but no, I'm optimistic about it. I think, I a couple things I think are really important. We need to own stuff that other people want. Just like the simple principles of demand.

[00:55:40] If you've got stuff that's it, it's not that high demand in the first place, it's gonna be some of the first stuff to fall off in terms of if people start like, instead of two people per household, now it's three people are contracting a little bit like they did. I think in the 2000 8, 9, 10 kind of period, you.

[00:55:55] The first stuff that's gonna get vacated is gonna be the crappy stuff on the fringe. You know what I mean? For [00:56:00] lack of a better term, the stuff that wasn't that desirable in the first place. So high quality, high demand, real estate to me is a fundamental principle. It's like day one of, kind of thing I learned from my eye coach, let's not buy a bunch of random stuff.

[00:56:11] Let's own the stuff that historically everybody else wants to live here. People wanna own this stuff, people wanna rent this stuff. So I think that's a fundamental principle. And then also just providing some flexibility to yourself that OB, probably obviously you don't wanna sign up for a bunch of super short term, like you got a short runway to refinance or sell something you want to you think you can get it done in six months, let's give ourselves 18 to 24.

[00:56:35] Like whether that's negotiating loans or whatever, let's just provide some more cushion and type in, in, in ways, obviously our thoughts on pricing are changing. That's a moving target as well. You could buy something at 301 day and a month later, it could be worth two 80.

[00:56:50] So we just have to like create, I think a lot of cushion for ourselves in all of these different things that could go wrong. 

[00:56:59] Patrick McGrath: I couldn't agree [00:57:00] more with any of that. And I think after all the value that you've been providing, this is really a perfect segue into what we call the big four.

[00:57:11] nice, James, kick it off. 

[00:57:15] James Rippeon: We're gonna hit you with the hard ones, Jeff. So what's something that you do in your life personal finance business whatever you want to, whatever direction you wanna take it, that kind of just feels like a hack. Either things that you know are helping accelerate your financial independence journey in whatever way that means to you.

[00:57:35] What do you do that feels 

[00:57:36] Jeff Stephens: like a hack? Yeah. I think the hack is just remembering that money doesn't have to come from financial institutions. There's money everywhere. People have money in retirement accounts. It doesn't mean that literally everybody opens up their wallet.

[00:57:50] They're like, oh, look, I got an extra 30 grand here in my wallet. Do you want me to loan it to you? It's or in my checking account, but people have, retirement accounts that could be made self-directed there's all sorts of things. And I think [00:58:00] that normal people are much more of a, a reasonable source for funding than maybe most of us, assume, a lot of us say I don't know any rich people, like what, this and that they don't have that kind of money, but we just have to like.

[00:58:14] Get out of our own way. And sometimes just ask the question and know that when you're offering something like there's a big difference between I need 30 grand, could you loan it to me versus I have created a real estate opportunity where we've created a bunch of equity here and some cash flow, and somebody's gonna be fortunate enough to benefit from my entrepreneurship.

[00:58:31] Would you like to be the person to benefit from my entrepreneurship? Like maybe that's a cheesy way of like of saying it, but the point is we have to shift our mentality from, I'm asking for money to I'm offering something of value. And I think when we do that, we can get back to that idea that like money doesn't just have to come from banks.

[00:58:47] Absolutely 

[00:58:49] Patrick McGrath: love it. Love it. Love it. All right. We call this one resources. So for everyone listening out there, are there any [00:59:00] books, podcast. Or people that have really shaped your thinking have really meant something to you that you think our listeners would, would benefit from.

[00:59:12] I, everybody knows rich dad, poor dad, is such a great book. If you're gonna recommend one, one besides that one, but, books, podcasts, people like help the listeners out, fill their Amazon carts. 

[00:59:24] Jeff Stephens: Yeah. I'm not sure you can buy anything on Amazon from this person, but the person I it's like really, the only answer to this question is my coach that I mentioned before Greg Penia It there's nobody else like him, anywhere in terms of content, in terms of personality, in terms of the way he pours into students.

[00:59:41] And he has he has some educational programs, some stuff that's home study course, as they might have called it in the old days, something called the master series, then he has an event that is like just one of a kind thing called power players. And so those are a couple of things that I just cannot recommend those things highly enough.

[00:59:57] There's, it's just a, one of one [01:00:00] kind of a scenario. This is not what you get elsewhere. 

[01:00:03] Patrick McGrath: Boom, everybody go check 'em out. Yeah. 

[01:00:07] James Rippeon: So Jeff it's call this one, the future, you it's five years in the future paint the picture of Jeff's business, his personal life, anything that you got going on that makes you feel excited about what you're doing today.

[01:00:21] Give us that five year picture. 

[01:00:22] Jeff Stephens: Where's Jeff at. Yeah. Yeah. That's a great question. When I think about five years down the road, one of the very first things comes to mind is about impact. Like I said, I feel like this message that, that I've been, asked to be a messenger of, that I am trying to spread now.

[01:00:38] I would love for people to know it as, as well as people will say things like, oh, the bur method. And there's these expressions that we use that just roll off our tongues. I'm trying to find the right way to, name and articulate that. And even if it's not what everybody does, that everybody is at least familiar with it.

[01:00:56] And I, I honestly feel like I just, I feel like buyers and sellers [01:01:00] are, they both get the best wins when. When there's a perfect, facilitated, direct conversation between them. And I would love to have that idea be more of in the sort of mainstream consciousness of our industry.

[01:01:10] So that's a huge one a huge one for me. I absolutely want to still, continue growing in my portfolio totally. But to me, growth is really continuing to get more and more discerning about how one's one spends their time specifically in relation to like utilizing their strengths.

[01:01:28] So if you look at a typical deal, I do right now, and let's just say it's a 40% use of my strength to me five years in the future doesn't mean that I'm buying $20 million properties instead of $2 million properties. It means that I'm now 90% utilizing my strengths in a particular deal.

[01:01:44] I just believe a lot in a person's strengths and that the idea of growth is just doing that more and better and better and more purely. So I don't know, maybe is a weird answer. I hope that even makes sense, but as an example, like I could never see myself doing syndications because my [01:02:00] ability to sit down in someone's living room and to connect with them and ask them good questions and listen and tailor a is completely irrelevant in syndication. So when I think of something like that's for other people, it's not for me because I wanna be doing what I do, like doing my magic better and better, more and more. 

[01:02:16] Patrick McGrath: No, that makes complete sense. And I love your answer there, becoming a better, you utilizing yourself to their fullest potential, growing and trying to just, like you said, create a bigger impact to everybody else out in the world.

[01:02:33] Yeah. And helping, and that impacts you that's with the coaching, with everything, with having such a huge presence online check out all the Facebook investor groups, we'll link to a bunch of them down below, but I think that you've brought a ton of value to the listeners.

[01:02:50] I know you've brought a ton of value to me. So with that being said, where's the best place for our listeners to get in contact with you. 

[01:02:59] Jeff Stephens: Yeah, thank you [01:03:00] for asking, I, I feel like I've made, I've tried to make my Facebook group, my free Facebook group, like a hub for people to go to.

[01:03:06] So it's called rental portfolio wealth builders. You can just look that up or you could go group.re.com and that would take you right there. And then just the second thing I would say is maybe not to connect with me directly, but my, I try to put a lot of energy into my podcast, which is called racking up rentals.

[01:03:22] And so that's a good way to continue to sample this way of thinking and see if see if it's for you. I love it. 

[01:03:29] James Rippeon: We're gonna link to the Facebook group and the podcast link in our show notes. So everyone should definitely go check that out and follow those resources.

[01:03:38] There's gonna be a lot of insightful stuff there. But anyways, Jeff, we really appreciate you coming on, man. I think you shared a lot of great stuff with our listeners, a lot of great insights, and we really appreciate your time. 

[01:03:49] Jeff Stephens: Thank you for the opportunity. Thanks for asking great questions too.

[01:03:51] I appreciate that. Of 

[01:03:52] Patrick McGrath: course. Thank you so much. And you guys know the drill. If you enjoyed this podcast, please follow us on [01:04:00] Instagram at the RFI podcast and leave us a review on apple, Spotify, Google. All of those. It really helps. Thank you so much and we'll catch you next time. 

[01:04:12] Outro: Thank you for listening to the real fi podcast where you learn from the investors that have lived, the hard lessons for you to connect with us during your pursuit of financial independence.

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