As Thoughtful Real Estate Entrepreneurs, we have a core thesis about how we do business. It’s our strongest belief and the guiding principle for how we go about building wealth through real estate. It says, “Designing your entire acquisition and finance strategy around relationship development directly with Sellers creates better outcomes for BOTH them and you.” In this episode, Jeff breaks down this thesis statement into its many parts and explains the importance of each one. Check out this episode and you’ll find yourself even more excited and committed to growing your rental portfolio as Thoughtful Real Estate Entrepreneur.
You know, you hear us talk a lot on this show and in the thoughtful real estate entrepreneur community about the idea of working directly with sellers and pursuing seller financing. But you might also wonder exactly what does that mean? What does it entail? How far do you have to take that and what really are all of the benefits and in this episode, I want to break down for you a statement that I finally came up with that I feel like really captures the simple essence of the ideology that we practice here. And this is what it is designing your entire acquisition and finance strategy around relationship development directly with sellers creates better outcomes for them and for you. And in this episode, we’re going to dissect that, break it down, and make sure that you are extremely clear on every single point of that, so that you know why this is the path you should be on. Let’s cue up the theme song. We’ll jump right in. Welcome to racking up rentals, a show about how regular people, those of us without huge war chest of capital or insider connections, can build lasting wealth acquiring a portfolio of buy and hold real estate. But we don’t just go mainstream looking at what’s on the market and asking banks for loans. Nor are we posting WE BUY HOUSES signs we’re just looking for quote, motivated sellers to make lowball offers to you see, we are people oriented dealmakers, we sit down directly with sellers to work out Win Win deals without agents or any other obstacles, and buy properties nobody else even knows are for sale. I’m Jeff from a thoughtful real estate entrepreneur. If you’re the kind of real estate investor who wants long term wealth, not get rich quick gimmicks or pictures of yourself holding fat checks on social media, this show is for you, join me and quietly become the wealthiest person on your block. Now let’s go rack up a rental portfolio. Hey, thank you for joining me for yet another episode of racking up rentals. This is episode number 158, which means you can find show notes at thoughtful rt e.com/e 158. Please do us a massive favor by hitting that subscribe button or the Follow button in your podcast app. We so appreciate that. Because not only obviously do you not miss any future shows. But it sends a message back to those platforms that people are listening. And it makes them want to spread the message to other potential thoughtful real estate entrepreneurs who are looking for a show like this. So thank you for that. Onward with today’s episode. You know, I’m always working to articulate what we do here. And the thoughtful real estate entrepreneur community and how we do it. And in some ways, it’s sort of a vexing sort of a challenge, because it seems like it should be easy. I actually consider myself to be pretty good with words overall, I certainly have a background in copywriting and all that kind of stuff. But yet, I find that what we do is different than what most people in this industry due in a few important ways. And I’m always looking for ways to finally articulate that in the most accurate and Representative way. And so recently, I came up with a statement that is simple, that really feels like it captures it well. And I want to spend this episode, really breaking it down because I believe this very, very strongly. Here it is, again, from the intro, designing your entire acquisition and finance strategy around relationship development directly with sellers creates better outcomes for them and for you. So I want to break this down into its different sections and just kind of take a look at the individual pieces because I think there’s a lot of important things to note in here. Let’s take the first part of that sentence that says design around relationship development, design your entire acquisition and finance strategy around relationship development. So first, I want to just point out the word design. What is design mean? Like why is that an important word choice? Or maybe more than just the semantics of picking the right word? Why is the idea of designing important? Well, first of all, I think that when you talk about designing a strategy, you are acknowledging that there are different options. There’s no one default way if there was just one default way of doing things, there’d be no opportunity to design anything, it would just be as it is. But we are acknowledging there’s different ways to do business. And the way that we do business is not like everybody else. And designing is a very intentional type of process. Right? It is a thoughtful and deliberate type of process. We’re not just saying you know, we just kind of do whatever we do. We’re saying we’re very intentionally strategically crafting a process that matches what we are really trying to accomplish. So designing your entire acquisition and finance is strategy. The next thing is that the terms acquisition, and finance. And what I think is important to point out here is that these two topics really go hand in hand, more than most of the rest of our industry probably acknowledges or appreciates. A lot of people think of these two topics as being kind of separate how you find and buy something versus how you finance it, or how you find to negotiate something versus how you finance it. A lot of people see those as disconnected topics, they say, Well, you know, I fund my purchases with loans from this particular community bank. And that doesn’t change whether I got this deal from a letter I set off the MLS, from a wholesaler, none of that really matters. But in our case, acquisition and finance truly go hand in hand. And that’s because when we make a proposal, especially with seller financing, to a seller, we are buying at the same time, both the property and the financing from them, right, we’ve gotten approvals on both of those things at the same time, in a way that they can’t just arbitrarily change their mind, especially on the finance terms later, like a bank could do. When we buy a property off market directly with the seller, it was seller financing, we are getting the acquisition, and the financing, all in one singular negotiation. Now, this sentence continues, and it says, designing your entire acquisition and finance strategy around relationship development. So let’s talk about around relationship development. It doesn’t say have an acquisition and finance strategy, where you utilize some relationships or you are relational in the way you go about it. It says design it around relationship and development, that means relationship development is at the center of the whole process, it is V key concept, it is not just something that kind of gets tossed in there, it is the central idea around which everything else revolves. So when relationship development is at the center, all the other variables can change a little bit. But that’s the thing that doesn’t change because it is the core of the whole strategy. It’s not just an afterthought. You know, there are lots and lots and lots of people maybe maybe even dare I say most people who would claim that relationship is something that is a key part of how they feel like they go about doing what they do. But in those cases, mostly those people are referring to, in relationship like it’s icing on the cake of how they do business. But to us, the relationship orientation process is the cake itself, it’s not the icing on top of the cake, right, because if somebody says, I go about, you know, my business by creating relationships with realtors, so that I can get off market listed properties, or I can get an inside track a list of properties, the core of their strategy is actually still buying listed properties, but they do it with a relationship manner. And to me that would be saying that their cake is the buying listed properties and relationship is the icing on that. But for us, the relationship with the seller is the cake itself. So we’re designing our entire acquisition and finance strategy around relationship development. The next part says directly with seller, so let’s just unpack directly with sellers a tiny bit. Now, as I just mentioned, I mean the idea of relationship obviously applies in other contexts, contexts as well. You can certainly have relationship and be relational with brokers, you can certainly have relationship or be relational with wholesalers or you can be relational have relationship with lenders, but that is not what we mean. And that’s why we use the word direct in there directly with sellers or as I like to say the direct relationship capital method. We have direct relationship, not a relationship with someone who’s ultimately an intermediary. So we’re designing our whole process around direct relationships with sellers because those sellers will be both our seller and our lender. And if we get one yes from them, we’ve actually bought both of the things we need to buy the property and the financing. The next part of our statement here says that this creates better outcomes for them and for you. So let’s take a look at better outcomes. for them, what does that mean? What here is just a simple truth that I’d like you to ponder. A more tailored solution is always better than a less tailored solution. Regardless of the details of that solution, more tailored is always better than less tailored, just pivot that thought in your mind to clothes is, is a pair of pants that you buy off the shelf somewhere, going to fit sufficiently, yeah, probably going to fit sufficiently. But if you had a tailor who took all of your measurements, and then sewed the right pair of pants, precisely for your measurement, which one is going to fit better, the one that came from the tailor is always going to fit better, it’s always going to fit better. And so all else equal you, you will always benefit from having something that is more tailored. So if you’re the seller, your outcome is going to be a function of how well tailored the actual transaction is for your needs. And when the seller is working with you, as the thoughtful real estate entrepreneur buyer, they’re gonna get a more tailored outcome. And that’s always better. Additionally, I would say it’s also important to note that sellers get better outcomes when they have a great deal of comfort. And confidence in the person they’re working from working with that comes from that relationship, right. So when you meet a seller, and you form a relationship, and they begin to have their confidence levels grow because of their level of comfort with you, and the time that they spend with you shows your competency. People value that tremendously. So that too is a better outcome for them. Because they’re they’re growing in comfort and confidence directly from you you are you are a confidence inspiring person when you do business in this way. And that also creates a win for them. So more tailored is always, always better. Now sometimes more tailored comes in the form of the seller getting a better price, but not always. Sometimes it comes in the form of the seller, having an easier situation, that’s often true. Faster. Yeah, that might be true, but not always, it might come in the form of them having a structure of seller financing that differs their capital gains tax obligation into the future, that might be true. But regardless of which of those details is actually the case for them. The simple truth remains, the more tailored solution is always better for them. And that’s what they get when they work directly with you, rather than through intermediaries where they are not being measured by a tailor, so to speak. Now, let’s talk about the last part, better outcomes for you. How do you get better outcomes? Well, just like we provided a simple truth on the better outcomes for them, I want to give you a simple truth on better outcomes for you, too. And there’s a whole podcast episode on this a from a few months ago, which is simply to say that as the buyer, the simple truth is, when you have a say, in all of the elements of the deal, all of the purchase terms, all the financing terms, when you have a say in those, that is a better situation for you. Now, it doesn’t mean you get to go carte blanche, and just dictate all of the terms of the purchase and the financing completely yourself. But you do have 100% A say, in all of the elements of the deal. And when you’re the buyer, and you’re buying a listed property, you don’t really often have a great deal of say, in all of the terms, the seller dictates a lot of those terms. I mean, you can write your offer to say whatever you want, but it’s probably not going to be accepted if it is really kind of coloring outside the lines of what the seller and the sellers agent feel like they can dictate. This is even more true when it comes to bank type of financing. Right? You don’t walk into a bank and expect to be able to negotiate that the interest rate for the first 12 months is this percentage and then for the next 12 months, it’s that percentage interest accrual is deferred for 47 days and then the first payment is actually due however many days after that, that the collateral for this loan could be changed throughout the life of the loan. And if you wanted to exchange this loan for multiple smaller loans of the same amounts that that would be okay. And Oh and if the bank decided to sell the loan, you might have the right to buy the loan from them at a discount you don’t walk into a bank and negotiate Have those elements of a deal like you do with a seller. And so the simple truth is that you have a say in all of the elements of the deal when you are working directly centered around a relationship with the seller. And the second point is, and I’ve alluded to this is that you get one stop shopping. You know, we, we have a store here in my part of the country called Fred Meijer. And they were one of the first to invent the concept of one stop shopping. And now Fred Meijer is a part of the Kroger Company. And this model is more common, you know, maybe even like a Walmart Supercenter, where you can buy everything from a, you know, gallon of paint, to some zucchini to, you know, a pair of pants and some diapers, you can buy all that in one place. And a better outcome for you is when you can get both an approval on your purchase and on your financing, at the same time from the same person. That makes everything tremendously easier and less risky. You’re not sitting around saying, Well, I’ve got an approved deal. The bank has given me a pre approval, but who really knows, I guess we’ll find that at closing if they follow through, and if they choose to go ahead and fund this loan. So sometimes the form the format of a better outcome for you, the better elements of the deal, it might come in the form might manifest itself in the case of like a lower interest rate or a lower down payment or a lower price. But it’s not always those things. It’s the combination of all of those things that you had a say in in every way. So let me repeat our key thesis statement here as thoughtful real estate entrepreneurs. Designing your entire acquisition and finance strategy around relationship development directly with sellers creates better outcomes for them. And for you. Thank you for joining me for another episode of racking up rentals. And that wraps up this episode. Again, show notes for this episode can be found at thoughtful rt e.com/e 158. Please do us a big favor by hitting that subscribe or follow button in your podcast app we so appreciate that. And you know what we appreciate even more is when you take just two seconds to rate and review the show. You don’t have to write a Shakespearean level review but even a few words, a five star rating if you feel if we’ve that we’ve earned that would be so appreciated. Did you know we have a Facebook group for thoughtful real estate entrepreneurs too. It’s true and you should be over there hanging out with us. It’s called rental portfolio wealth builders. Go ahead and search for that in Facebook or you can just type group dot thoughtful r e.com. And the magic of the internet will take you right to that page and you can join if you liked this episode, I hope you did please take a screenshot on your phone post that screenshot to Instagram and tag us we’re at thoughtful real estate. I’ll see you in the next episode. Until then this is Jeff from the thoughtful real estate entrepreneur signing off. Thanks for listening to racking up rentals where we build long term wealth by being when when dealmakers remember solve the person to unlock the deal, and solve the financing to unlock the profits.