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So the big question is this, what would you do if money didn’t matter? So you had millions in your bank account, what would you focus on? Would you spend more time with your family, with your wife, with your kids? Take family vacations.
Would you pursue your gifts and talents and dreams? Serve your local community, teach others, serve your church. You see if what you would do if money didn’t matter, it was pursuing your gifts and talents and dreams to serve others, and that is probably what you should be doing.
The problem is most people are in the rat race, living five inches in front of their face with no time to pursue what they were born to do. That is the problem, and the solution is to develop enough passive income to replace your working income so you can quit your job and be free to live your life the way you were created to.
That is a solution and this podcast will show you how…
Ryan Enk: What’s up everybody? This is Ryan Enk with Cash Flow Dad Life coming at you with another awesome episode. We have a really awesome guest with us today, Chris Prefontaine.
He has a family real estate company, they’re doing, you know, they don’t just a mentor people, but they’re also out there in the trenches. They’re doing two to four deals a month. They also partner with students in certain geographical areas and what they really specialize in is buying on terms.
So a super excited to have him on our show today to share with you guys some of the wisdom.
I always talk about a different creative ways to purchase real estate. It’s always awesome to get as many brains together to put that wisdom together to see if there’s new ways of doing it that, that we may be not be exposed to before.
So it’s a huge pleasure to have on the show Chris Prefontaine. Chris, can you hear me all right on your mic?
Chris Prefontaine: I can, if you can hear me, we’re good and thanks for having me.
Ryan Enk: Awesome. So, uh, so give me a little bit about your backstory. How did you, you, you’ve got a family owned company. How did you get started in real estate? What was the appeal there?
Chris Prefontaine: Well… so this business was 2013, but I’m going back to. I’m gonna date myself here in 1991. So I started building homes. We, I called spot building back then we would just put signs on people’s lots and not buying a lot. Preselling it over that with a new construction package. And then everybody cashed out at the end. It was pretty cool. I know money to start it.
So that’s how we had started it…
Chris Prefontaine: Did that all through the early nineties where you put signs on other people’s lots without owning it for nothing but to sign on, get a building and put a package together on it and presold that whole package and everyone, including the suppliers wait until the very end to get paid. So it was pretty neat.
So that was just kind of like a wholesaling type thing. Ah, actually we built, we actually built the home to visit and I a back then. So that’s what got us started, a 95. I bought a realty executive franchise.
So I put the rail to hat on back then. And then 2000 and I sold that to coldwell banker and then in the early two thousands we were doing a bunch of the condo conversions, you know, two, three, five, six, 12 unit building, turn them into condos, resale macros, crank.
Chris Prefontaine: And then it was good. And then in the lovely, a 2008 debacle, a causes to reevaluate, reevaluate everything, which is what we, what we have today, which is, you know, not using our own money, not taking off bank, owns all the mistakes I’ve made. And oh wait. So what were some of those challenges back in, oh, eight, well signing personally on bank loans.
And then when the market dove, you know, major headaches…
And so that took from literally, I can remember like it was yesterday, February of [inaudible] eight through about February of 12 to clean that mess up foreclosure, a sales liquidate everything we could, 27 properties and then reevaluate, readjust 2013 and just do terms.
Ryan Enk: So, uh, it sounds like back then, were you trying mostly to flip your, just like developing and flipping these properties?
Chris Prefontaine: Uh, prior to the crash, uh, we held some commercial, but yeah, all those Condo, a condominium conversions, yeah, you’d buy them and try to flip them.
And then what happened was, I can remember one project running, we had um, one slash 70 sales price is six units. We sold three like that and then literally like a switch was turned. We couldn’t get 50 grand farm when the market dove. That’s a big, that’s a big guy. He has a huge, huge dive. Yeah. So the construct, the whole construction thing is, you know, you know, the LTV shows out there and I think it’s a tough market now.
So I stay away from it…
Ryan Enk: So you mostly focus on buy and hold investments. Are you still flipping?
Chris Prefontaine: We don’t flip. I mean if something comes our way, we do not do it,and everybody should write. We know how to pivot if we got a deal, but we primarily by a on a financing or lease purchase right now.
Ryan Enk: So that’s interesting how you came across that strategy.
Chris Prefontaine: So it uh, it spawned from kind of this, this pain in the market where you had some stuff that you were flipping and then all of a sudden that dove and now you’re all of a sudden saying, all right, banks are a problem and flipping is a problem. It’s kind of this speculation game and you don’t know what the market’s going to do at the end of the day. Some people knew, you know, but, uh, but most people didn’t.
Ryan Enk: And so now you’ve developed a strategy around buying on terms. Can you tell us a little bit about that and how that works? Show us.
Chris Prefontaine: So we buy three ways. I’ll focus on one with you. We buy owner financing, owner financing. People say, well, yeah, I get that, but owner financing to us means what it means. We’re going to buy a property that’s free and clear and we’re going to buy that with no money down.
And then we’re going to set up monthly principal only payments to the seller for some term. Usually it’s four to six years and we get it, you know, think about if you, if you’re hammering down principal every month, you’ve got a nice little hedge against any market changes. You get some serious equity building every month and of course no banks.
Ryan Enk: So how does that negotiation work? Because getting a owner to finance something to you and convincing them that they should not get interest on that financing. That’s got to be a challenging conversation. This is good. You brought this up because people said, “Come on.” I mean, why? Why would people do that?
Chris Prefontaine:We just did a 10 acre estate in Pennsylvania for, let me think. Bought a… for 29. It wasn’t about price. He was trying to sell it with a relative for five, nine, nine, and then five, 5:50. Then for something, what became the issue was he had to go to Texas to see his family and relocate. So he just ran out of time. He, he had no debt on it. He just wanted to get no lower than the four to 29. So we said, great. We’ll give you a price and we’ll pay you $1,540 a month. It’s never about commencing. It’s always about looking at what their motivation is.
Always, and I tell our students that say, “What do you think about this? What about this?” They’ll just tell me what the motivation is like, what are the dates that they have to move somewhere. All the other stuff can be worked out, right?
People we can help is if someone says, I need cash now to go buy Xyz House with my family. Okay. I’m not a fit for you.
Every other scenario you can throw out as we’re a good fit, and then we exit all our properties, buy rent to own all of them. Okay. So how do we sell them?
Ryan Enk: Awesome. Yeah. So that gives you that cash flow on that up front payment as well?
Chris Prefontaine: Yeah, yeah, yeah. It’s nice. I mean my book is… he talks about the three pay days. I’m big on that because everybody, everyone that you and I talked to them, she’ll could use three pay days per deal. Everybody loves three paydays.
Ryan Enk:Yeah. So tell me what market range does this work best in? You know, as far. Okay, good topic?
Chris Prefontaine:So in my market, one 92, like five slash 90, but every market’s a little different. We have a uh, one of our associates, we call them, we do deals with students. He’s in DC so he’s like 7:50 to one point two and just killing it because the numbers are all big. The bigger deposits, um, he’s doing more than us on average per deal.
So that’s his sweet spot and every market’s a little different. A lot of markets are in that kind of two to six though. Okay. Now when you buy these things, are you buying them on lease options and then selling them on lease options or are you using a different instrument to buy them? We buy them on a lease purchase and then we exit rent to own or we buy it on a financing where we actually take title and like I said earlier and then we still exit rent tone.
Ryan Enk: Does that only work when they own it outright or are you doing like a bond for deed or a deed in lieu on some of these? Uh, on the, like, on the leases when you purchased a on the lease purchase. Most of them have underlying debt. So we’re paying the mortgage company directly and if there’s some cash amount that their equity that we agreed on, they’re going to get that.
Chris Prefontaine: The back end when I buy or rent to own buyer cash? No.
Ryan Enk:I missed this part of it or glazed over my head. How long are you holding the properties? After you purchase them?…
Chris Prefontaine: I like them least purchase 36 months that protects the seller and uh, any headaches relative to the capital gains, potential issue, you know, the two out of five years. So we don’t put them in a tough spot. And then on the owner financing I like 48 to 60 preferably because of buying it. And um, I liked that principal pay down.
So in three to five years typically. So it’s critical when you do that, that you find you can’t find just a regular lease tenant, you have to find a rent to own tenant, that’s you. You’re asking for a headache. They have right to be a landlord. So we put them through a…and I know there’s differing differing opinions as you do on this topic online.
You have mentors saying, well who cares if they don’t cash it out, you just do it again, I can’t morally and ethically deal, you know, live with that. So we put, if you’re a buyer, you’re going to go through prescreening with credit enhancement, with all the regular prescreening, you know, criminal and all that.
But relative to this prescreening to see when there’ll be mortgage ready, what are the housing front end and backend ratios, debt to income, all that. If they look like there’ll be mortgage ready within that term than we accept them.
If not, we’re just setting him up to fail so we don’t put them in the home. So you do a good bit of prescreening beforehand. Just we have to. They pay for it too. It’s 50 bucks and we get a report back that says, yeah, that’d be mortgage ready by this time or not.
And then we can call them and have a meeting with them if it warrants it…
Ryan Enk: So what do you think, in your opinion, what is the thing that prevents people from getting started with this strategy the most? Because the strategy is, it’s actually the best of seven different worlds in my opinion. I agree. What do you think is. What do you think is the thing that holds most people back from doing it is just a lack of understanding of how it works? Or is it fear?
Chris Prefontaine: I think the latter. I think fair, a lack of confidence. Um, you know, I think you’ll agree with this, if you look at a lot of trainings out there, there’s like this enormous gap, you know, people selling stuff and then deals, well how do you get there? Right?
The implementation and so no one’s kinda holding their hand and that’s what we try to do it with our family, all, every single one of us coaching these guys to really walk them through this.
Ryan Enk: So I think it’s, it can be overcome the fear and the lack of conference with the implementation, you know, if somebody with you holding your hand, that’s a lot of people is they, they, they know things in, in concept.
You read things in a book and then you know, a lot of people you know are, if are action takers, they’ll go out there and they’ll just kind of figure it out. But then there’s this whole element of you’re making all these mistakes so you know when you’re going out there and figuring out and putting all the pieces together.
So it’s helpful to have someone kinda walk you through it and that’s what you guys do. Yeah. You know the analogy I gave recently, someone actually said it to me. I came to take credit for it, but he said, Chris, what you’re doing is equivalent to surfing.
Chris Prefontaine: Because I took surfing lessons once. I was miserable. Came out, but the fact is on the, here’s what they do first, they put you on the beach, right on the surfboard. So they say, Oh, this is what you do. You get up and you do this. And you go, oh, that’s easy. I can do that. And they put you in the water and it’s miserable. It’s the same thing with this. So I’m in a bootcamp, like, oh, that’s easy. That’s great.
All the fluff, they give you all the good stuff and then you go to do it. Now when I do it, all these nuances that came up, right, right. No, that’s exactly, that’s a great analogy because it’s, it’s something that’s for most people, easy to comprehend. It’s when you actually go out there, the little tweaks that, uh, that are really the problem.
Ryan Enk:What do you think is the biggest challenge that you have and what some of your students have in and getting from point a to point b?
Chris Prefontaine: This one may surprise you, but I think it’s just mismanaged expectations. And because of his, what I mean by that, unfortunately, lot of people touting, you know, get rich quick, just do this and you’ll have up millions of dollars in real estate and it’s just not the deal.
You’re gonna work hard, you’re gonna have a, a bit a better return. And in my opinion, in your opinion, I’m sure to than anything else you can do, but not mismanaging that expectation.
Thinking, “I gotta get five deals in six months.” It’s just not reality…
So I’ve had people set the wrong expectations in nine days later. I can’t find them. Well, what business would you do in and try it for 90 days.
It’s just insane…You know, banker would laugh at you if you said I need to get a loan for this business and launching and I’ll give it a shot for 90 and see if it works. That’s crazy. So you’ve got to commit to this thing for at least I tell people three years.
Ryan Enk: Yeah, I mean that’s actually something that I say all the time as well as that successful people don’t say, I’ll try this to see if it works. No, it works. It’s been proven to work over generations and generations.
Successful people say, I’m going to do this until it works to think. I think part of the problem is would you agree that people understand real estate is passive income, which it is, but it does take a lot of work to get that knowledge in your head and to get out there and figure out how to do it.
Chris Prefontaine: Absolutely. And it’s, it’s a setup and let it go, but you got to do some upfront work to get it going. Yeah, and I always tell people, look, you and I talked to a lot of people, right? Both of us do, and I tell people I’m not so naive to think you relate to me.
Find someone you can relate to, find it, find a niche for us so you liked it and some of you can relate to. Then make sure that doing the deals and then don’t let go of them for three years. You know, you have a great experience.
Ryan Enk: Yeah. Yeah. That’s awesome. So, so what’s next for you? What mean? Are you continually trying to find new strategies or are you just going deep in this one strategy? We’re staying with these three by strategies.
However, we’ve engineered what I call payday for out of a lot of deals, so it’s more advanced for, for the students that are doing deals now, payday for might be things like, okay, I had A. Gavin recently had a, a building, a full unit that was owner financing that was supposed to be four year term.
Chris Prefontaine: We’re at about 36 months. We’ve got a nice offer on it. I called the owner and say, look, I know you’re waiting another 12 months for your cash out. He’s got two daughters going to college. How about if I could put a sale together or if I could come up with the money, would you. What would you take if I could get you cashed out earlier and with one phone call you pick up the 12, the 15 to 20 grand, so it’s like a payday for that.
You didn’t even plan on and they every single time without a doubt, they give you some number, so things like that. So we’re just tweaking what we’re already, what we’re already doing. Okay. So just figuring out what. It’s always great to figure out another way to get paid. Yeah. Right. What can we eat out at this particular deal?
Ryan Enk: Right? Yeah. It really is a tremendous strategy. You can. You can make any particular property a cash cow. You know what? What do you do though? Is it a benefit when someone doesn’t pay? How big of an option payment are you asking for people? We make sure that they’re in the three to 10 percent range.
If they’re at the lower end of that, they’re going to do payments with us. It might be tax refund time, it might be had a state trooper that had retroactive Sajan pay he knew about. So he’s scheduled that as another like six grand.
So we, we work with them and say what’s coming up are there raises quarterly, other distributions quarterly and we get their deposit up higher and higher does a couple things right. It vests them more in the house, right? Number one. Number two, it puts them in a better position to win with the bank.
They’d probably going to get a better rate. They’re going to look stronger. So it’s a great. When, when, um, do we have people that have life events that default regardless of how many times we’ve screened them? Yeah. You get two to four a year unfortunately. So you either resell the property conventionally or if you have more time left in the term, you put another tenant buyer there.
But because of the screening though, that’s not the norm…
That’s the exception. So you knew you. That’s different than a lot of people that do. This is the high level of screening. Yeah. I hear it all the time. And so a lot of students have come and go. That’s what I liked about you guys because you actually have a moral and an ethical compass that says you’re going to help people.
You know, it feels really good to help people become homeowners again…
Ryan Enk: It’s amazing. They’re not able to do as they thought. They’d never do it. It’s just, it’s amazing experience. So awesome. Well what is the number one thing you would recommend for anybody looking to get started with this?
Chris Prefontaine: Um, there’s enough free material as you know, all over the web, so it lets them on their own, go do some due diligence and then do what I said earlier, find a niche. There’s so many.
Don’t get caught the shiny objects, but find a niche that you’ll just stay with you, you look left or right. And then find a person in that niche you can relate to that’s currently doing deals. And then like I said, don’t let go of this shirt tail, just, just stay with that head down for three years.
Ryan Enk: Awesome. So you’ve actually got a free training just to kind of go over some of these things in detail is about an hour, hour and a half an hour.
Chris Prefontaine: If they can deal with listening to me for an hour, they get a free waiver if he enjoyed the accent, the Rhode Island at all. So we do throw, oh man, like a couple grand worth of stuff and that my book and in a thumb drive with my mastermind calls and all kinds of cool stuff just for watching it and then they can say no, not for me or hey, I want to chase this down further and they can look deeper into the home study course. Centering. Cool.
Ryan Enk: Well, we’ll put this for anybody interested in and in increasing your education on this particular topic. We’ll put Chris’s, I’m a link in the show notes on our website for this pop for this podcast and uh, you can get started there…
Anything else, Chris, that you would like our listeners to know about, um, about real estate and what you do and know they can find that at http://www.smartrealestatecoach.com/.
Chris Prefontaine: And then as far as them, like, just, just do what you said, don’t let the fear getting away and uh, put the blinders on. You can do it. It’s like you said, we’re just a delivery mechanism, but it works. We just happened to be the delivery mechanism right now.
Ryan Enk:Right. Well, thank you so much Chris. I appreciate you coming on. Uh, definitely some unique strategies there. I uh, I actually didn’t know about the prints. Well, I knew about principal only payments. I didn’t know that it was so effective so often. Um, but that is really smart.
So you have literally no debt and uh, also just recapping on some of the, some of the really awesome bullet points of this is, you know, it doesn’t really matter, uh, what, what price or anything like that. What matters is the motivation. Once you have a motivated seller you really can put into anything, you know, you can put terms in anything and there are also a lot of benefits to sellers as well, like making it an installment sale so they don’t get taxed on it right away.
More money sometimes. You know, real, real quick before we leave, before we got on the show, you were telling me about the million dollar deal that you guys are doing right now.
Can you, can you tell me a little bit about how that one got set up and um, and uh, how you structured it, how you negotiated it? Just walk me through that whole process.
Chris Prefontaine: I spent a lot. I actually did it the whole deal from start to finish. It took about six months. It’s a, believe it or not, it’s a real estate. So a lot of these pieces will surprise you. It’s a million dollar house. I think we did 9:45 on the water in Massachusetts. I don’t know if you know Cape Cod, but it’s towards that direction. I’ve heard of it yet. We did a 9:45. We broke the rule. We did $10,000 down.
Now it’s a very unique. People say, well, she’s a realtor. Why don’t you just sell it? Um, she’s got a sick mom and she didn’t want the stress of the house and we actually let her, she’s in the house now and for every month and we own it. And for every month she’s in there, we’re not making the physical payment.
We’re letting you live there for free. But $2,500 a month is coming up for principle and then when she moves out and we put a tenant buyer in and we’re going to then cut the checks for 2,500 principle every month, but it’s going down right now without making a dime payment every single month.
And I think that one was a three or four year term. And what are you going to do with it? Once you own it, you’re going to put a rent to own person…
And we closed on it already, but she’s in it until the spring coming up. We have some options there. Ryan. We may do rent tone. We may actually airbnb it. It’s on the water. I’m not 100 percent sure we’re going to put it all out and see. We actually have relatives calling now conventionally, which I wouldn’t mind. It’s a few hundred thousand dollars no matter how we do it out of this deal, probably quarter of a million.
Ryan Enk: Awesome. Awesome. I love hearing about the million dollar deals that the great thing about those bigger loans is that, uh, the principal gets paid down faster. But in your case, the principal gets paid down absolutely at a hundred percent every time. Awesome. Well real pleasure having you on Chris. Definitely a ton of wisdom coming from you and lots of years in the field and uh, it was just, it was just great having you on our show. I appreciate it. Good to chat with you.
Alright, take care.
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