The following is adapted from Creative Cash by Bill Ham.
There’s one thing that is common among all people: problems! It doesn’t matter if you’re rich or poor. It doesn’t matter if you’re just starting in the real estate game, or if you’ve been here for years. Chances are, you have problems. See where I’m going with this?
The people who have the deals you want to buy are likely to have problems, too. If you can find ways to solve problems for these sellers, then you will create cooperation.
Remember this simple equation: Cooperation = Cash
Most sellers have problems. At the very least, they might be having trouble finding someone to buy their property at the moment. They may have occupancy problems. They may have repairs that haven’t been done for a while. They may not be able to manage the asset anymore. They may be a “burned-out” landlord.
If you can solve the seller’s problems by creating cooperation, then you don’t need to be rich to start in the real estate business. Creative and seller financing (CSF) is based around creating value through problem solving. There are a few easy ways to identify problems in your market. These problems are seller problems as well as investor problems.
Here’s a list of problems to look for in your markets.
When Working with Sellers
These are some of the problems you can look for with sellers.
Distressed assets: This can include deferred maintenance, low occupancy and bad management.
Burned-out landlord: They’ll be tired of dealing with current management (bad management), tired of spending money on the property or are an “accidental” landlord. Some people inherit property and don’t really want to be in the business.
Can’t find qualified buyers: This can be a real problem in a down cycle for most sellers. Many buyers have exited the business or are waiting on the sidelines to get back in during an up cycle. Or you can look for sellers who’ve had a deal fall out of contract more than once. These sellers will be motivated and educated on the lower value of their property.
Taxes: Creative financing can be a way for sellers to mitigate tax liabilities. If a seller finances a deal to you, they will pay taxes only on the profit they receive. This is usually the interest you pay them for financing. Get with an accountant to verify any tax mitigation plan before making an offer.
When Working with Investors
Investors can have their own problems. Look for any of these:
- Getting low returns on current investments
- IRA/401(k) giving low returns
- Don’t know how to invest in real estate
- Don’t have a real estate education
- Can’t manage or run a property but want to be in the business
- Don’t have the time to find good deals
- Unaware that there are people who want to borrow their money and give them higher rates of interest
- Unaware that real estate provides great tax benefits
I built my entire portfolio on the single concept of creating value by solving problems. I started with almost nothing in a bad neighborhood. I clawed my way out of that area by creating more and more value through real estate problem solving. I found sellers and investors who needed my services, and I was rewarded within my portfolio and the income that it produced. I never had a job after that and have been my own boss ever since.
What I’m suggesting is not easy. What I’m teaching you will take a lot of work. You will need to be prepared to bring a lot of “sweat equity” to the table when dealing with sellers and properties.
Some people want the secrets to getting rich quickly. I hate to disappoint, but you will not find them here. What I’m teaching is how to build a real estate portfolio with as little risk and money out of your pocket as possible.
Results Come from Cooperation
Find sellers with problems. Figure out how to solve those problems. Some of the best deals I have ever done were not distressed assets at all; they were just with distressed sellers.
For whatever reason, they were motivated to sell. Usually, they were tired of dealing with the asset because they never got a proper real estate education. Cooperation is the key to creating wealth. Find out what you need and want. Find out who has it, and then figure out how you can be valuable to that person. This is the art of creating money through cooperation.
For more advice on solving problems to close deals, you can find Creative Cash on Amazon.
What started out as a conversation at a live event one hot, sunny day in downtown Atlanta has blossomed into an amazing collaboration between Bill Ham, Jake Stenziano, and Gino Barbaro (Jake & Gino). Bill was instrumental in helping Jake & Gino launch their mentoring program and is one of the lead trainers in the company. With over twenty-five years of experience in operating vertically integrated real estate businesses, and over $100 million in assets under management, Bill, together with Jake & Gino, strive to teach others the strategies that have allowed them to become financially free.
