Transcript
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Explains why someone with a good job should use active income to buy passive assets, especially RV parks. The speaker outlines a practical learning path for underwriting deals, finding operators, and gradually gaining ownership.
What's another asset type that's better than Airbnb that has an average RV parks, but nobody talks about it?If you told me, Pace, I have a job I hate, my boss is the worst, and I'm barely making ends meet.
I would tell you, jump into single family right now
and replace your active income with other active income.Got
it.
What you need to do right now because you have good active income
is you need to get supplemental income from passive income.
Okay?which would be an RV park.Here's what I would be doing, a daily activity.I would go on like Krexy, Loopnet, and I would go into the sub two underwriting zooms.There's four of them a week.Just pick one that you like
and go in there and say, "Hey guys, can you look at this and tell me why this is not a good deal?"
And I'd spend three months literally just learning why something's not a good deal.Why 3 months pace?Cuz you're only going to do one Zoom a week.
You don't need to overwhelm yourself with 5 hours a day.It's like, let me do two hours this week and then I'll spend the rest of the week 20 minutes, 20 minutes, 20 minutes, 20 minutes every day just looking through the sites finding next week's reason why I'm goingto go into that Zoom.
You go into the Zoom, they underwrite it for you.Within 3 weeks, 4 weeks, 5 weeks, you're going to go, I kind of know kung fu.
I know kung fu.Show me.
Like, I know what I'm looking at now.Okay.Now, what you're going to do is you're going to go find somebody that's buying RV parks in owners club and go, I want to bring you an RV park.I'd like to get 10% and a little bit of money up front so I can gain confidence and bring you a second one.
Okay?
And within 6 months, you're going to have ownership in a park.You're going to probably have made 50 grand in finders fee for bringing that deal to somebody and 10% ownership.Well, pays 10% ownership ain't going to change my life.Yes, it will.Because now the second one you bring, you can be like 20, 30, 40%.And by the third one, you go, I think I could just do the third one by myself.So your first deal, it's like I I tell a lot of people that are jumping into passive, I'm like,
list out all your bills and start chiseling them away with each asset you buy.
Okay, rent's gone, car's gone, cell phone, groceries gone, and now you're like in four assets, I'm I'm free, right?So that's what I would be doing if I was somebody who has a good paying job.Stay at the job, especially if you like it.
Yeah.
And it's the cheat code and go buy a couple of assets by the This is what Jordan Rays did.He bought a park with me.
Yep.
He got a second park, brought to me, got another check for 90 grand.And then on his third park, he went and bought a $5 million park on his own.
Nice.
And now he's on to like his fourth, fifth, sixth park.He's like, and he's also simultaneously buying businesses with creative finance.He just bought a handyman business and a painting business.
Yeah.
So, he's doing other things with creative finance, too, to bring in more income, but he has the confidence now because he knows I don't have to worry about money because I have passive money coming in.
Breaks down seller financing using simple examples like buying an Apple Watch on monthly payments. The speaker shows how creative terms, promissory notes, and negotiated payments let buyers structure deals that work for both sides.
Okay.So, how does it work?It's really, guys, seller finance is self-descript.Meaning,
it means exactly what it says.The seller is financing you.Okay?Okay.So, if I go to Adler, who's holding this camera, and let's say this is Adler's gear.Is this your Apple Watch?
Uh-huh.
Okay.What do you think this is worth today?
Oh, 100 bucks.
Okay.You want to upgrade that Apple Watch at some point, right?
Yeah.
Okay.
Or you want to get rid of it?You want to retire from it?Right.Okay.So, I go to you, the seller, and I say, "Hey, Adler, I'd like to buy your Apple Watch.What would you sell it to me for on cash?"You go list it for a hundred bucks.Right?This is I'm describing how it works right now because this is exactly what happens.Him, the seller, goes and puts it on a broker, which is Craigslist, eBay, or whatever, and he tries to get the highest number possible on a cash offer.So, let's say I take this $100 watch and I put it on Craigslist.Am I getting a hundred bucks?No.because you're going to have wholesalers or cash buyers or investors come along and go that $100 watch I need to make sure I got a deal to feed my family.
So, I'm going to pay I want to buy that for 50 cents on the dollar in order for me to make money.Follow?
Yeah.
Okay.This is exactly how real estate works, guys.It's no different.Okay.So, this seller is belligerent.He's owned this this Apple Watch for x amount of time and he really has emotional ties to it and he wants to make sure he gets his hundred bucks.So, this thing sits on the market for a significant amount of time.That's where creative investors come along and go, "Hey, uh, ring ring.Hey, Mr.Seller, I see your watches on Craigslist for over a 100 days.Have you sold that thing yet?"No, I haven't.Okay.Well, what's been keeping you from selling?Well, everybody's lowballing me.Bro, I'm literally describing every conversation you're going to have in real estate right now.This is happening right now.And I go, cool.Um, okay.Well, I would probably guess you're getting offers somewhere around 50 or 60 bucks for your watch.
Oh, yeah.Well, how how do Yeah, you're right.How do you know that?Well, cuz if I was going to give you a cash offer, I would also give you that that number.Seller then says, "What do you mean if you were going to give me a cash offer?"Well, I'm not going to give you a cash offer because if you were going to accept a $50 or $60 offer, you would have already sold the watch.
Yeah.
So, how about I give you a $90 offer as close as possible as I can get to that number, but I need to make monthly payments to you instead of one lump sum.
Yeah.
And you, Adler, let's say you haven't sold this watch for six months.It's been on the market for a hundred bucks and you're sick and tired of looking at it and having to recharge the thing, right?maintenance on the property and somebody comes along after 6 months and says, "I'll pay you close to that hundred bucks, but I need to make you monthly payments to do that."What is the likelihood of you saying yes to that?
Yes.
Yes.Now, here's how this works.Again, how does this work?If the Apple Watch has been on Craigslist for 3 days, do you think Adler's really going to be motivated to give me seller finance?
No.So, when people can say, "I called the seller.They said they're not interested."Okay.Well, what's the listing look like?And I look at the listing.I'm like, "It's been on the market for three days, you idiot.There's no motivation.
You So, I call the seller and I appeal to their greatest pain, which is I'm not getting the number I want."And I go, "Great.I'll get you the number."And the seller goes, "Yeah, I'll do creative.I'll do seller finance.That makes sense.Well, what kind of payments are you looking for?"I go, "Well, look, I've got to make money on this,
and here's what my terms would be."So, for example, I reverse engineer everything with my sellers.So, I'll tell my sellers on an RV park or a multif family, I go, I need to make sure that after all my team is paid, after my payment to you, after utilities, after capex, which is like monthlyrepairs and capital expenditures is what that's called.After everything, I need to make sure I'm netting $10,000 a month.That's my biggest concern.
Okay?
So, I reverse engineer.And that's the beautiful thing about creative finances.You can skin the cat a thousand different ways.And I start with the end in mind.They go, "If I can get to a point where I'm netting $10,000 a month and I'm paying you a monthly payment and you're happy with it, I can get you that number."And that's how that works.And guess what?We create what's called a promisory note or a an IOU.And we record that with the state, okay, as a lean.And that is now a debt instrument or a security or a lean or a promisory note.Okay?It's an IOU.It's a fancy way to say I and I owe you and I make a monthly payment and guess what you became?You became the bank, didn't you?
You financed me.You gave me the asset and you let me make monthly payments on it.So that is um how that works.
Uses a 43-unit property in San Angelo to show how purchase price, monthly payments, and long amortization periods can create strong cash flow. The speaker explains how understanding a seller's emotional pain and motivation helps close creative finance deals.
So with that, that's how you like you can negotiate terms of like how how many months you're going to like
Yeah.Like I'll give you we haven't been to this property in a couple of years, but I have a property in San Angelo just like four four hours away from here and the seller wanted a really high number.
So obviously you were going to negotiate like, hey, if I got to make X amount of money, let's say it's the $10,000.
Yeah.He wanted Here's what I told him.I said, I need to make $8,000 a month on this property.
It's 43 units.It brings in 40 grand a month.
Okay.
Okay.
What's the the cost?
So 40 grand is what it brings in revenue.you've that's revenue.That's topline, right?I I have 43 tenants.The average rent is under $1,000.So, I'm bringing in $43,000 a month.I'm sorry, bringing in 40 grand a month off of 43 tenants.
Um, your average vacancy is going to be about 5 to 7%.
Okay?
So, 5% of 43 is basically three units.So, I have 40 units paying me about $40,000 a month, right?
Cool.
I collect that 40 grand because I'm the new owner.His payment, it goes to him.His name is Mario.I pay him 16 grand a month.
Yeah.
3% interest.That's He's the bank.That's my bank loan.16,000.I've got handymen.I've got insurance.I've got maintenance.I've got repairs.I've got all sorts of things.And after everything's said and done, I take home about $11,000 a month.
Okay.
Okay.In order for me to get there, in order for me to get there, we had to stretch my payments out to 50 years.So, this is what's crazy.You can skin the cat in ways you don't even you can't even comprehend.I will pay him well after he's dead.Why?How did I structure this deal?I structured this deal by saying, "Mario, that's a really high purchase price.$3 million for these 43 units is really high.I probably should be buying this for about $2.3 million.And he goes, "Well, let's make it work.How can we make your payment low enough to justify the $3 million purchase?"I said, "Well, we got to stretch this to maybe 50 years, maybe 60 years, so my payment stretched out over a longer period of time."And he goes, "Well, I'll be dead."And I go, "Yeah, you will be dead, and maybe even I will be, but my team won't be.
My company won't be.My kids won't be dead.And wouldn't it be cool if my kids are still alive paying your kids who are also still alive?So, the case study of Mario is a good it's a really good case study.I've interviewed Mario.He's on the channel.We should pull it up.
Okay.
And Mario and I have had multiple conversations on live Zooms where Mario's like, "I got another property for you.Got another property for you.I'm going to make you rich base."I I bought that property from him three years ago in San Angelo.And the way I got the deal is it was with a broker on the market for a really long time.We called the broker and the broker said, "Oh, Mario fired me a long time ago.I don't even know know why that listing's on there."Okay, but this goes back to the Apple Watch, doesn't it?It was on the market for a long time.So, I call Mario and I go, "Hey, man.Are you open to seller finance?"He goes, "Yeah, of course I am, but it just kind of depends on what your terms are."And I tell him, "I need to make $8,000 a month net."
And he goes, "Well, you've never seen the property."I go, "Well, if you're interested in creative financing, you're not going to waste my time.I'll fly out and I'll meet you."So, I go out and I meet him at the property, 43 unit deal, and we were in the parking lot and his Escalade was running and we were sitting there on the hood of his car with his runningvehicle.And I'm like, "Why are like turn the car off, man?It's loud."My kids's inside.And I go, "Why doesn't he play on the playground, right?The 43 unit has an a playground."He goes, "He hates this property."I go, "Why?That's interesting.If he hates the property, why would I buy it?What's wrong with it?"He says, "Well, let me put it this way."On his 11th birthday, when my wife asked him what he wants for his birthday, his answer was, "I want my dad to love me as much as he loves his tenants."
Okay?See pain.And on his 12th birthday, which was about 6 months ago, this is when he put it on the market.Okay?This is you got to understand people's motivation.He puts it on the market because for his tw 12th birthday, Mario had to miss his son's baseball game to go fix a problem with a leaky toilet.Okay?And so his son didn't want to talk to him for like a month.Like my dad misses games.He loves these people more than he loves me.And so Mario put it on the market and tried to sell it for a high purchase price, right?Because he cared about his legacy and passing something down to his kids cash-wise.And so I go, "Interesting."And so the way I structure the deal, understanding what his pain point is, is I said, "Well, what better way, Mario, what better way to show your child that you love him than to send him a check every
single month for the rest of his life for $16,000 a month."He goes, "Where do I sign?"And that's how I close the deal.
Compares Airbnb to RV parks and explains why many investors chase Airbnb for tax benefits rather than sound fundamentals. The speaker argues that poor CPA advice and oversupply have made many Airbnb deals weak or unprofitable.
The other thing is like you want to There's a couple of questions I would be asking like what are asset types that are going to be around in 10 years, right?Because
you also don't want to would you go marry I know it's a stupid question but would you go marry an 85year-old woman right now by default you're going to usually be like no she's going to she's going todie in 10 years right or five or whatever it's the same thing with Airbnb like think about Airbnb it is d it's not dying off
it's just dwindling this is the number one reason why people jump into Airbnb you want to know what it is
yes
no you have no clue
I
it's going to make so much sense it's tax benefits because they have a high income W2.
Yeah.
And their CPA is a
what is the what how can I qualify as a real estate prof?You can't get the tax benefits unless
spend a certain number of hour 100 hours a year, right?
100 hours a year more than anybody else on that asset.
You can't do it as education.You can't be like, oh, I'm in a mentorship that gives me 200 hours a month or whatever.
Ask that question to Carl, too.Yeah.So the number one qualification is it has to be an asset that has 7 day stays or less on average.What are some assets that do that?Section 8.No stay forever.
Multif family.
No.
No.That's year to two years, right?Okay.So what about Airbnb?That makes sense.Okay.Average stay for Airbnb is like 5 days.What's another asset type that's better than Airbnb that has an RV parks?but nobody talks about it.I think that there's a really massive misunderstanding of what actually is an RV park versus a trailer park, an RV park, and a mobile home park are three different things.And here's the thing is that there are a lot of RV parks that also have trailers in them.We call those hybrids.So my these RV parks that I'm we're going to right now, the average stay is not 7 days.It's much longer.
Okay?
Why?Because the people that are renting from me in Big Spring, Texas, are oil workers and they stay the whole year because they're this is their job.They work they move around for their job, right?So their average the average stay here is like 3 or 4 months.Do you see we're in oil country by the way?
Oh yeah.
This is why my RV parks are long.The stays here are much longer cuz all the guys that are renting my spots are working these oil pumps.And so there is some challenging parts there.But here's the reality.Most Airbnb operators do not make money.But what are they doing?Here's what they're banking on.This is why Airbnb is up.One, CPAs lie.Not because they intentionally lie.They're uneducated.So, this is interesting.From your path from 0 to a million dollars net worth.How many times does the average entrepreneur change their CPAs?Four times.
Four.
Four times.Why?Because you learn that most CPAs don't know.Then you realize the only CPAs you should be working with are their average clientele is worth a hundred million bucks.Okay?So you but you those why would that CPA work with you
if you're not worth millions of dollars.And so CPAs are meant to be upgraded along the way.And so what happens is low-level people I was also a low-level net worth.You end up getting low-level CPAs.a recommendation by a guy named uh Brian about seven years ago.And I go, "Dude, I need a better CPA.This paying money in taxes and blah blah blah blah blah."He goes, "Yeah, here's my here's my lady."And I go down there and I said, "How many of your clients don't pay taxes?"She goes, "100% of my clients pay taxes.What are you talking about?"I go, "You are the wrong person for me immediately.I need a CPA that is like,"None of my clients pay taxes."That's a CPA.The difference between a a bookkeeper, they just track your expenses.you then have a an accountant who then files your taxes.
So these CPAs that are lower level, they go to these conferences or whatever and somebody goes, "Oh, just tell your clients to do Airbnbs."So imagine 200,000 CPAs around the country telling their clients who have a 9 toive job, hey, if you want to get out of your taxes, go buy a Airbnb.So all these Airbnbs have gotten oversaturated.Did you see the article last year that 400,000 Airbnbs were dumped off the platform because they're such operators?These are poorly done Airbnbs and that I look I don't hate Airbnb.I hate the people that think Airbnb is their solution.There's literally I think one person I've ever met, Bill Faith that actually teaches Airbnb properly.He says you're going to be buying super properties and you're going to be a super host otherwise you can't compete.
Yeah.
And your properties are going to be $800,000 to $2 million.going to have incredible experiences.So anyway, that is the reason why people jump into Airbnbs is because they want the tax benefits.
Argues that investors focus too much on exit strategies like Airbnb, Section 8, or flips before learning how to acquire good deals. The speaker emphasizes that the property and acquisition method determine the exit, and that limiting yourself to one strategy slows growth.
The other thing about Airbnb, guys, let me tell you what Airbnb is.It's a exit strategy.So if I tell you how to manage an Airbnb, how to go market it, fill the tenants, cash flow, blah blah blah blah blah.Where do I find the property?That's an acquisition strategy.
So I acquire the property and then I make money on it, which is an exit strategy.So flip is an exit strategy.
Um section 8 is an exit strategy, right?People go and learn exit strategies before they've learned acquisition strategies.So what happens is I go to all these Airbnb conferences.Your people in the hallway, they come up to me after I speak and they go, "We've been here 3 days.Nobody's once talked to us about where these deals come from because they're being educated on an exit strategy to apply this to Adler who's holding the camera.If you go, hey, I want to be a videographer.And I go, cool.Let come to our videography seminar for three days.And the only thing I teach you is how to edit and bill your client.
That is called an exit strategy.What I acquired, which is the video, video, the camera, the sound, the audio, the equipment, the acquisition is more important than the disposition.Okay?In fact, the disposition, getting rid of or the exit strategy, the house determines the exit strategy, not you.Here's what I mean by that.If I send you a house in an HOA and you're an Airbnb investor, interesting.So, like 99% of the houses on the planet do not apply to you.What you told me is you don't know how to find deals.Why do I know that?Because if I, let's say I go and I do an acquisition strategy, which is foreclosure, probate, tax leans, creative finance, sub 2, seller finance.I'm acquiring an asset, right?I go and acquire the asset and it's in an HOA that does not allow Airbnb.Oh well, all of a sudden Airbnb doesn't work.
The house determines the exit strategy, not you.So, what you need to learn when you first start real estate is how do I acquire leads, motivated sellers, and then determine what category they go into.So, for example, if I'm a videographer, I go into the wedding and I go, "Okay, I'm going to acquire all these shots.I'm going to get video, still photos, drone shots.I'm going to acquire all this stuff."And then based on the bride that I'm working for will determine what I edit and what I create.Does that make sense?So, it's the same thing in real estate.What I do is I I now go, "Okay, well, somebody sent me a deal.Well, it doesn't work for me because I'm an Airbnb investor.I'm not an Airbnb investor.I will I will put stuff in section 8 when it's appropriate.I will put stuff in a co-l livingiving when it's appropriate.
I'm an investor.Imagine Walmart's like, "Yeah, we only sell milk."No.When you limit yourself to one exit strategy, you get screwed.And you also go, "Well, I don't know how to find deals.I just need people to send me exactly what I'm looking for."And that's okay, too.But you're just going to grow really, really slowly.