Getting denied a mortgage is a huge blow to any person wanting to buy a home. As a solution to this problem, Austin Largusa from Simple Real Estate Investing offers creative financing strategies. From doing virtual wholesaling through Facebook groups to lease-to-own options, Austin shares his own amazing real estate journey that has led to buying 13 properties in a year!
In 2019, Austin’s wife had their third child. He applied for a mortgage and got denied in the process. This blow led him to research more into this. He found that 11% of all mortgage applications were denied in 2019.
Austin felt compelled to become a part of the solution. So he took a deep dive into learning about real estate investing. He got into BiggerPockets, Googled everything, watched videos on YouTube, and called other people like real estate agents and property managers asking for help.
With his sales background, he wasn’t afraid to pick up the phone and call anyone. So he kept doing this. Austin believes that if you really want something then you should keep at it until you figure things out. So keep running the experiment, collect the data, come to a conclusion, make a pivot from that and then repeat until you get it.
Austin started wholesaling in 2020. Living in California, he focuses on out-of-state investing. Now, he owns 3 single-family homes in Tennessee and 8 single-family homes, and 2 duplexes in Ohio.
From wholesaling, he moved to creative financing either through seller financing or subject 2 (existing mortgage). This allows him to offer rent-to-own lease options to tenants. His goal is to help 1,000 home renters become homeowners in the next 25 years.
Austin has been using the same process he used on his first deal for every wholesale deal he has done. First, he goes to PropStream, chooses the categories he wants, and gets a list of vacant properties with out-of-state owners.
Second, he pays the 12 cents per property fee to skip trace the list. He has to do this because the list contains only the first and last name of the property owner but with no phone number.
Next, he gets a free Google voice number, which he uses to text the people on the list. Working full-time, Austin doesn’t have the time to cold-call people. Texting gives him the leisure to respond to replies in his own time. Plus, he can just copy, paste the same message over and over again.
There are a lot of benefits to skip tracing and texting. If you start with a text message, people who respond to you are already warm leads. And based on the data Austin got, he found skip tracing to be accurate with only 11% leading to bad numbers or getting flagged as spam and 23% responding to him.
After getting a ton of rejections and even being called a fraud, Austin finally got a response from a guy named Justin. Justin had just bought a new house and was interested in selling his old house.
Austin proceeded to build rapport with Justin. He got more information about the property and paid a runner or someone who lived in the area to do errands for him. The runner took pictures of Justin’s property and did a walk-through. After that, Austin finalized the terms and got the property under contract. A title company handled the rest.
Austin had two ways of finding the end buyer for his properties. First, he joined a lot of Facebook groups and identified the big players who are ready to buy.
Once he got a deal, he’d offer it to that handful of potential buyers to fish out any interest. Next, he posted the property on Facebook marketplace and that’s where he found a buyer.
The property was a 4 bedroom, 2.5 bath with an attic located in Garfield Heights, Cleveland. The seller owned under $40,000 on it. It was put on contract for $52,000. Austin listed it for $65,000, and the buyer settled at $62,000.
His next deal, a single-family home in East Cleveland pretty much followed the same process though he pocketed a much lower amount. He made under $5,000 on an assignment fee.
When it came to building his rental portfolio though, most of his properties came by through referrals he got on social media.
Austin does two types of creative financing for his rental properties. The first one, seller financing, involves the seller still owning the house outright, but becoming like the bank or lender.
They would have to work out the end purchase price, the length of the term, the down payment, interest rates, and amortization.
With the second one, subject 2, this is done in a home with an existing mortgage. The buyer will take over payments for the seller before the title will transfer to them.
Seller financing works for people who care about cash flow and getting a decent purchase price in the end.
Austin’s first rental was a $130,000 home in Clarksville, Tennessee that had seller financing. It had a $14,000 down payment over 5 years, amortized at 30 years. Interest was at 3.25%
The property owner had owned the house for a long time and had recently done a full rehab. He didn’t want to be a landlord, didn’t need the cash upfront, but just wanted to know he’ll get money in his pocket in 5 years.
Another rental in Clarksville Tennessee where Austin did a subject 2 involved an owner about to get married. His fiance also owned her own home, so he just wanted the cash and have the mortgage taken care of for the next 5 years and have it paid off.
So Austin did a wrap. It had the same down payment as Austin’s first rental, with a 2-year term, and there would be an increase in the end purchase price by $55,000.
Austin was paying $600 rent to the original seller while his tenant-buyer was paying Austin $1,200. Austin gave the tenant-buyer a 2-year term with the option to buy the house at the end of 2 years or to extend for another year with the additional down payment.
Austin loves learning about concepts and ideas from YouTube and other online resources. It gives him the opportunity to shift and mold the ideas to what he’s going after. Some of the people he learned from included Investor Mel & Dave and Sean Terry.
But while the internet offers a ton of free stuff that anyone can use, Austin still recommends paying for an attorney to draft your contracts like promissory notes, purchase and sale contracts, and rent-to-own agreements.
Using a free contract online could potentially have issues or gaps that could backfire later on. But paying one time for an attorney to draft your contracts already provides you with a template you can keep reusing.
The average family size in America is 3.12 people. From that, Austin set a goal of 312 properties structured as lease-to-own options.
Another major goal for Austin is to buy an apartment complex by 2030. By reaching this goal, Austin will be able to have the cash flow to pay for his bills and can afford to work only when he wants to. He can then spend more time with his family.
Right now, Austin has a very structured routine every day that starts at 4:10 am and ends at 10:30-11:00 pm. He works full-time as a pastor in a church in the North Bay. But he still makes sure to spend time on his real estate business at set hours during the day. Being internally motivated, he knows he has to do this to ensure his family’s future.
Austin started on Instagram purely as a selfish thing. He wanted to be around the right people, people who were a couple of steps ahead of him. Through Instagram, he was able to create really cool relationships with a lot of people.
With YouTube, Austin got into it because he loved teaching. He wanted to teach people that they didn’t need degrees, accolades, or a ton of money to be able to do real estate investing. Anyone can do it.
Austin lately also joined Clubhouse where he has been jumping in rooms, listening to conversations.
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