252 – How To Use Creativity To Turn Good Deals into Great Deals! With Gary Boomershine

Synopsis

Gary is back from Episode 138, where he talked about finding more deals in changing market cycles. In today’s episode, he’ll discuss some innovative seller financing strategies and ideas for finding amazing deals in today’s real estate market.

Key points

Background

Gary is a long-term real estate investor who grew up in Fremont, California. They moved to the mountains in the California foothills from Danville because they wanted to liquidate their assets due to COVID. They like being in their new house since it has opened a plethora of opportunities for them.

He received his bachelor’s degree in computer engineering from the University of California, Davis. Following that, he worked for companies such as Accenture and Andersen Consulting. During those arduous working hours, he kept thinking about how he wanted to gain financial freedom to work outside of the typical work hours, and he viewed real estate as a means of achieving this goal.

Getting Into Real Estate

He grew up in a household that was engaged in real estate. His parents owned a real estate brokerage in Oakland Hills, so they had a bunch of rental properties. Since he was essentially born into the business, he got his real estate license three weeks after turning 18 years old. He paid for college by working in the family business, but he didn’t like what he was doing back then because he had no interest in real estate.

He chose to pursue a career in tech since it was booming at the time. He subsequently switched to sales since his coworkers thought he’d be brilliant at it. While working, he found himself constantly on the move, 80 to 90 hours per week, so he did not have a life outside of work. Since he wanted to have more control of his time, he and his wife opted to try real estate again.

Fortunately, he succeeded in the real estate industry. He was able to enjoy financial freedom, passive income, and build wealth. His experience has taught him to hold for the long term, keep the best, and sell the rest. According to Gary, he finds great deals through direct mail. Additionally, he shared that everyone should follow three buckets of strategy, whether a rookie or a seasoned investor: cash now, cash flow, and cash later. Cash now is when you do some work and make some money, like wholesaling the property under contract. It involves none of your own money, and you flip it fast. Cash flow is rental income. It involves bringing in income, paying the expenses, and keeping the profit. Lastly, Cash later is long-term, which is how investors get wealthy. The value of your property goes up over time, and you have a renter paying off the mortgage.

Finding Deals

When asked how he finds good deals despite COVID, Gary revealed one of his secrets: choosing a good area. He is working with real estate agents to identify good deals. They are aware of the kind of properties that Gary is looking for, so they continue to send him potential deals. He then sends direct mail to these individuals and has a phone team that calls the clients.

Seller Financing

Gary struck a deal with a 75-year-old lady who was selling her property for $350,000. He acquired it using owner financing because she wanted to avoid the capital gains tax. According to IRS laws, if the property will be purchased with owner financing, it is referred to as an “incomplete sale” or an “installment sale.” The seller only needs to pay capital gains on the money they receive from the buyer in the case of an installment sale. So, in the old lady’s case, Gary will pay just $800 per month for the first three years, compared to a standard amortized loan of about $1,100. Gary intends to spruce up the home, so it will most likely be rented for $2,200 to $2,300 per month. Overall, he’ll spend $800 each month and receive around $2,200, implying a monthly income of at least $1,000 to $1,100.

Exit Strategy

Gary claims that he does not have a prepayment penalty, which means he can pay off the property whenever he wants. Furthermore, when he conducts owner financing, he includes the substitution of collateral in the contract, enabling him to transfer the note, deed, and deed of trust to another property. In other words, he may sell the home, and if he still owes $300,000, he can use that money toward his primary residence or another property.

References

More from our guest

• If you want to know more about Gary, you can visit his company’s website at realestateinvestor.com/growth. You are free to sign up there to access his upcoming book, “The Freedom Code.”
• He’ll also be releasing a podcast about how to survive and thrive in this COVID world, which you can find on his website as well