Real Estate On Your Terms With Zachary Beach
Episode 383: Real Estate On Your Terms With Zachary Beach
What an amazing real estate business would it be if you do good during the good times but also boom during recessions. That is undeniably doing real estate on your own terms, and Mitch Stephen’s guest in this episode is someone who does just that. He sits down with Zachary Beach, a real estate coach and the COO of Smart Real Estate Coach. Together, they talk about Zach’s secret to keeping the business thriving even amidst a downturn. They talk about why private money is important, how to find properties, what options to give sellers, and what strategies to use when just getting started. This conversation will surely open your eyes up to the great real estate opportunities that are out there, even when the times make it seem impossible. Dive deep to know more about doing real estate on nothing but your own terms.
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I’m here with Zachary Beach and we’re talking to him from Rhode Island. They sell a lot of properties on terms, buy properties on terms, do subject to, lease options, we’re going to talk about that right after I pay homage to my sponsor, TaxFreeFuture.com. If you don’t have a self-directed retirement plan, tax-deferred or tax-free, then you’re missing the boat here. You need to find out what this is all about. Go there, watch the 37 little video vignettes, find out what your financial advisers are not telling you, find out why they’re not telling you that and let’s decide what you want to do from there. It’s interesting stuff. Zachary, where do we kick this off? You’re a busy man. Tell us a little bit about your background and what a day in the life of Zachary Beach is like.
My background came from a bartender personal training background years ago. Over the last years, I’ve been involved in real estate and primarily buying and selling on terms. Not only do I buy and sell on terms, we teach people how to do the exact same thing. We have a cool family business where I know you’ve interviewed my father-in-law, Chris. Mitch, you’re going to be writing a foreword in a rerelease of our book, Real Estate on Your Terms. I work primarily with him and my brother-in-law and then a fantastic team. My day consists of balancing of buying and selling our own property that we do in house and helping others buy and sell property across the country and help them scale their business, especially with everything that’s going on. We’ve seen a huge uptick. My schedule continues to get compressed.
I find it amazing because if you picked the right strategy and if you have private money, then the downtimes become the boom times. While everyone else in the economy is struggling or fearful, you’re booming. You bought a house a day in the last 30 days.
If you look back in our last month’s calendar, we’ve almost bought a property or had it under contract almost every day. It’s been over 45 transactions in the last months, which is amazing to see that we’re able to set ourselves up in such a way that when things go south, we’re still able to help both buyers and sellers.
Think about that. What a business. When you do good during the good times but you boom during the recessions. You never have to worry. The only thing you have to worry about and tell me if you’re the same. I’ve been planning for the next recession forever, not in a fearful mode. I’m keeping my slate clean, I’m keeping my problems down, and I’m keeping my powder dry. I’ve got plenty of money from private sources, from banks, or from my own personal bank account at this point. I’m ready for the next downturn. Give me a little tick.
What happens in the recession is that banks generally clam up. Most of your competition go away because they are all dealing with bank money or people that are using bank money. That’s how we’re buying our houses. Buyers typically need to get a mortgage from somebody and a lot of strategies. Our buyers don’t need to get mortgages because we’re going to seller finance them. We don’t need a bank on either end. That’s why it works. The recessions are great times. How are you finding your properties?
We find our properties probably in the same markets in which most people fish in, for sale by owners, for rent by owners. Expired listings are probably our largest market of sellers that we end up buying from. We do some niche list. Primarily, if we’re looking to buy property on owner financing, we’re looking for free and clear houses. We’re fishing the same ponds, the difference is that we have alternative solutions other people don’t have available to them. We buy property on terms.A funny thing about the human body is that it will deal with almost anything and everything you give it and figure it out. Click To Tweet
If you’re a flipper and you go to buy a property, you need to buy a property at $0.40 or $0.60 on the dollar. Compared to us, we can buy a property at roughly market value or even slightly above depending on the terms. We have alternative options for sellers in which most people don’t. The amazing thing is, with what’s going on, most sellers can’t even sell their property because the banks are starting to tighten up. Buyers that could qualify 60 days ago no longer fit the criteria.
It’s making it easier for us to be able to present terms, buy on a lease option, owner financing, or buying them subject to the existing loan because sellers don’t have alternatives. The crazier the market gets, the easier it becomes for us to purchase the property. If you turn around on the backside like you’re alluding to, you’ve got buyers that originally couldn’t qualify. Now, they’re looking for ways to be able to buy a property. We’re able to present it through our rent to owner or seller financing so the buyer pool opens up significantly as well. It’s not like we’re doing anything different. The market continues to trench and we’re taking advantage of the opportunities.
I am writing the foreword for your book. Chris Prefontaine got a tight system up there. You are teaching it well. What percentage of your sellers are financing you?
If you look at all of our deals across the board, if you’re asking how many of our seller’s owner finance the properties to us, it’s probably 2 out of 10, 20% or 30%. The rest of it tends to be on either buying it subject to so we’re taking over the debt on the property. When I say that, I don’t mean that we’re assuming the debt, it means we’re closing on the property and we’re acknowledging that there’s debt on the house.
Subject to the debt, hence to.
The other ones we’re buying on a lease purchase. We have full control of the property, the title does not transfer. We’re buying it based on a lease option or lease purchase. That tends to be 6 out of 10 deals. Those are easy to acquire. I say easy once you get used to the business with scripts and everything. I don’t mean you’re going to be able to walk out tomorrow and be able to buy a bunch of property. It’s easier than the alternative options because you’re asking a seller to remain holding the title.
For a lot of people, that’s their main issue. They don’t want to give up the title unless they get all their money or at least a substantial deposit because 9 out of 10 of our deals, we’re putting down $0 deposit. A lot of our deals have no down payment. We’re not signing personally. We’re not using our own credit. We’re typically not even getting investor money. For some of our deals, we do have private money involved but that’s certainly not something that we teach to people when they’re first getting involved in the business. There are alternative ways to be able to buy the property with little to no risk on these deals because you have all the control, but no downside because contracts completely protect you.
You might have been talking right down the alley of, if you’re new and you’re getting started, these are some of the strategies that you use to get started because you don’t have a bunch of money. If you started broke like everyone I know and me included, I’d raise my hand here. I couldn’t rub two nickels together. The strategies I use now are a little bit different than the ones I used to use because I’m more successful and have cashflow and everything else. It opens up wider the more successful you get but I didn’t have those choices. It’s a funny thing about the human body. The human body will deal with almost anything and everything you’d give it and it will figure it out if you don’t run away or let your mind get screwed.
What you’re alluding to is the business evolves. I was a bartender when I first started. I didn’t have much money. That’s something we’ve got in common there. As a bartender when I first got started, I didn’t have money to invest in any sort of deal. We bought on a lease purchase with little to no money down. As our business evolves, we will hold you 60 to 70 properties in our portfolio. We have people that are dying to give us some private money in order to do more deals, but at first, that wasn’t the case. When you’re buying using these types of options, it’s going to help you propel in these recession-resistant types of strategies. We built this company because my father-in-law, Chris, got hit hard in the recession of ‘08. We looked at all the different strategies and said, “Which one of these is going to be the best if the market crashes or if it goes down again?”
When it does, it’s not if. It always goes down again. There’s always another recession.
That’s why we went and structured this way where everything we sign-on is with the company. It’s never personally so we can sleep at night. We don’t have a bunch of investors calling us for money in dividends if for some reason the market crashes and all of our buyers disappear. It was a way to set up to be an easy transition when we go through certain recessions. We continue to build our portfolio, now’s a good time to expand it especially with everything that’s happening.
You’re giving away a free webinar. Tell us a little bit about the webinar.
It’s about 45 minutes. You’ll see Chris on there. We dive into where we find our properties, which we sell. In our different techniques, we have four techniques in which we use. It’s a good way to be able to dive into a surface level and see if this is the type of business that you feel as though it would be a good fit for you personally and to start buying and selling property. A cool way to dive in and get a 10,000-foot view.
It’s hard to be free, especially when you’re new in the business and trying to find your way. One of the most important things is to find someone that’s doing what you want to do. That’s the person that you want to be on and off the field. Do your research, do your homework. After you’ve consumed all the free stuff you can handle and that’s out there, when it’s time to jump in with both feet, jump in and get a mentor or a coach on some level. You’re either going to pay the street or you’re going to pay someone who’s been there before to keep you out of the ditches.The urgency when you're broke is a whole nother ball game. Click To Tweet
There’s no free path to success. Either the streets are going to get your wallet and tear you up. Your mistakes or the things you didn’t know are going to cost you a fortune, or you’re going to pay somebody. Let me tell you, I did it the hard way until I caught on but I was many years down the road until I caught on that I should have a coach. It’s a lot less anxiety, a lot more calm and steady, and less stressful if you’ll get someone who knows what they’re doing to help you. Whether you pick me, you pick them, or you pick someone else, you’ve got to pick someone. This free stuff like this webinar is a way for you to sit down with an organization or some people and say, “This is how they handle things. This is their demeanor. This is how they talk to us and try to educate us.” Find where you fit, that’s the whole point of this whole series that I do. By the way, I’m getting ready to hit my 400th interview. I never dreamed in my life the amount of content that I have.
The point of this show is to try to help people find where they belong. Sometimes, I put stuff on here that’s not even about real estate. One day it was Amazon marketing because many people lost their job. There are businesses you can do from your computer. I don’t care which way you go. I don’t care what you do. I’m trying to help you find yourself and become financially independent so that you can be the person that you’re meant to be on this planet. When you’re broke, you substitute your expertise, your effort, and your time for the money you don’t have. When you were a bartender and you’re broke, what were you doing?
I was broke. I was trying to find my way. I was bartending and I was a personal trainer at night. I was picking up any side gig I possibly could.
When you got into real estate, I’m going to guess, you were a professional dealmaker. You didn’t have any money but if you could tie up a deal on a contract, that contract was worth money. You’ve got at least 50%, I’m going to guess, by saying, “I’ve got this great deal on this property. I need to find someone to put up the money and share it with them.” Are you a professional deal finder in the beginning days?
I walked people through that from the beginning. First, you’re going to probably be treated as a highly paid virtual assistant because you’re making outbound calls. You’re trying to get all the deals, and eventually, you can start managing your leads and bringing them from A to Z. Eventually, you can start closing properties and become that real estate investor, real estate entrepreneur that you truly signed up to be. That’s why your percentage of how much you’re going to make on these deals is going to climb steadily.
Urgency, when you’re broke, is a whole other ballgame as well. When I’m making calls in the middle of the day between bartending and personal training, my urgency level is extremely high because I’ve got overhead that I’m going to need to pay for. A roof over my head, my wife, bills to pay, it’s all about continuing to increase that urgency. As we continue going from brand new to eventually being successful in real estate, I would say one of the reasons why a lot of people stay successful like yourself is they continue to bring that urgency day in and day out to these deals. It’s continuing to profit in which they want to. One thing that you were starting to hit on that we should expand is you talked about your mindset and you pointed at your head.
I said don’t get mind screwed. Don’t believe that it takes money to make money. Don’t believe that because there’s a recession, no one’s doing anything. Don’t get mind screwed because this will figure everything out if it’s positive and it keeps trying to grow in a different direction. If you let it off the hook and you let it sit down, let your mind sit down or let it quit or let it give up, then you’re dead. Whatever you’re trying to do is not going to work for you. You have to keep this going. Part of how you make sure that this keeps going is you hire people like Zach or Chris Prefontaine. Let them show you what happens during the highs and lows of the economy. There’s always a different play.
There are two things I wanted to bring up. The number one thing that I always recognize when coaching a new person is the difference between someone who’s successful and not successful is going to be the 6 inches behind their ears. They’re constantly working on their mindset. If your mindset is there and you can keep things positive, if you can constantly be working on your personal development, those things add up. That’s going to be the difference of you becoming a successful real estate investor.
The second thing is the reason why we’re doing a deal every other day or every day with our community, it’s because they took the positives that were happening throughout this COVID and they ran with it. There was never a moment within our community, we call them the wicked smart community, our associates, that they said, “This is bad. We’re going to bury our heads in the sand,” which 90% of the population did or they went and took a vacation.
The community that we work in all thought that this is positive, how we can capitalize on these different opportunities that are presenting themselves. A huge difference, it was how they looked at the current environment. Because they looked at it positively, we did a bunch of deals. I can tell you that I’ve talked to so many people, so many entrepreneurs. They looked at it completely different, and that’s why they’re not going to have a business when this whole thing opens up again.
Let’s talk about your most successful students. I like to chime in here too. What’s the common denominator in the most successful students? I’d like to start. My most successful students, I usually interview these people for a long time especially the one on ones because I want to make sure I’m taking somebody that I have a good chance to help them. If not, we’ll move them down the ladder a little bit to something a little more affordable and find out if the business is for them.
One of the things I noticed about the people that make it, I call it their had-enough meter. Their had-enough meter is pegged way over in the red. They’ve had enough of this crap of people telling them when to get up, what to wear, when they can go on vacation, if they can go to their kid’s basketball game. They’ve had it up to here and they’re not going to take it anymore. Whatever has to happen, whatever they’ve got to go through, they’re willing to go through because they’re not doing it anymore.
I completely agree with you that they had enough. As soon as you said that, I thought of a couple of our high performing associates or our high performing students. The other thing I would say is that they’re extremely committed. They’re motivated, great, but they’re also committed not only to themselves and their family but also to the process. Secondly, it’s discipline as well. We have a particular system that has worked and produce lots of deals. It has helped many people become successful and grow their own business. People that deviate from that process, especially at the beginning, we tend to see are not successful because they’re not coachable and they don’t follow the system.
They learn even though they came into community, they wanted our system but then did their own thing. They learned and they came back and then implemented the systems and they became successful. Commitment to the system, commitment not only to themselves and their family but to the program. Being extremely disciplined. Day in and day out, they’re getting after it. It does allude to the original thing you talked about, which is they had enough. They need a different way.The difference between someone who's successful and not successful is the six inches between their ears: their mindset. Click To Tweet
You can have had enough and not be smart enough to drink the Kool-Aid, which is one thing about doing the research. You research these people before you jump off two feet. Talk to people that took the courses, and be careful about that too, though. It’s always the 80/20 rule. Sometimes in real estate, it might be the 90/10 rule. Not everybody is made for this business and this business is not made for everybody, like flying fighter jets is not made for everybody.
That’s what this show is about, to help you find where you belong. You take a lot of free stuff. We’ve got a free webinar. Go to REInvestorSummit.com/onterms and check it out. Do some research because when you do go into someone’s fold to learn from them, you’ve got to be open. Quit talking and start listening. When I wanted to take my business to the next level, which I was trying to figure out how to get me out of business, I spent $30,000. I went to a mastermind where everybody in the room was bigger than me. That’s what was important.
It took me a little while to realize that it had been 8 or 9 years that I had been the person that everyone was looking up to and I was talking across or down to. I don’t mean literally, but I was the big guy in the room. One day I woke up and I said, “I’m not growing. I’ve stayed in the same place for way too long.” The problem was I hadn’t gotten a room where everyone was bigger and better than me. I paid $30,000. I let them unwind me. I stopped talking, and then I let them rewind me the way they wanted to wind me. I bought the Kool-Aid, I let them do it to me, I succumbed. I said, “If I’m going to be like these guys, I’ve got to let them put me through the process.”
That was one of the best things I ever did. I haven’t seen the last 350 houses I bought. At least 350, it might be more. I haven’t seen the last 350 people that bought my houses. I’m doing shows and I’m doing other things. My house business runs on its own, it was yet another step on a rung and it happened when I got out of a room where I was the biggest guy or one of the biggest guys in the room. I got into a room where I didn’t even register with the people in the room. I was below them as far as what they were able to accomplish, how much time they had and how much money they were making. Making money is part of the process. You’ve got to have a balance. What good is money if you don’t have any balance and you can’t enjoy it?
Money is also a natural outcome if you do the things that produce money. If it’s setting up your business and doing it correctly, then the natural outcome is that you’re going to produce money. Money is an end result. That’s not the beginning. If you do the right things, then you acquire wealth. It’s if A then B. I’ll have to agree with you. Each and every year, me, Chris, and the internal team, we look at it and say, “Who do we need to hire in order to teach us how to make it to the next level?” Each and every year, we look at it and say, “If we’re going to build our business in this direction, who’s doing it the best? Let’s interview a couple of people and then let’s invest.” We’ve spent hundreds of thousands of dollars on education. It’s important that you alluded to that because once you are the top person in the room then you have to start reaching up.
You have to get out of that room. You can go over there to give back if you want to, but if you want to keep going, you’ve got to get out of that room. You’ve got to get into a different room. You don’t stay in the sixth grade forever. Sooner or later you’ve got to go to seventh grade. They’ve got teachers that are smarter and teach you different stuff. Go to REInvestorSummit.com/onterms. Give me a case study. What was one of your better deals?
One of our better deals that pops up in my head is we bought a property that used to be an owner financing deal. Anytime that you can buy a property, this is typically our measure, if you can buy a property that’s over $200,000 and you can get over $1,000 principal pay down. Typically, the way we buy these properties on owner financing, it’s 0% interest, so full 100% principal pay down. If you get at least $1,000 and at least a 36-month term then you’re going to have a six-figure deal.
On this property, we went and purchased it. It was on an expired listing to give you a source. It was an expired listing, the seller was from out of state. He had a property in Connecticut, it was a family house he’s had for twenty years, on the lake. It was nice. It was the main house but also had a suite over the garage, another income source there. What we ended up doing is we purchased the property on a 48-month term, a 48-month balloon. We closed on it. It was free and clear. We crafted up $1,000 principal-only payment each and every month.
We had to pay taxes and insurance because the title transferred over to us. We bought it for $400,000. We then turned around and sold it on a rent to own for roughly $439,000. We were able to get about a $500 spread on the property because the taxes are super high in Connecticut. It ends up being like if you got $1,000 principal payment, taxes were like $700 a month. You’re probably wondering to yourself why you’re only able to get $500 spreads, it’s because taxes are high. A $500 spread on there and we sold it for roughly 24 months.
If it goes to full 48 months, it’s going to be well over a six-figure deal. The bonus there is that while we sold this property on a rent to own, we still had this suite over the garage, which was producing $750 a month clean because we already paid the taxes and the insurance. A cool deal there because you’re able not only to sell the property on a rent to own one part of it, but you’re able also to access another part as a regular rental. If you end up coming across some of these deals, where there’s a duplex, multi-unit, or in-law suite, you’re able to create two different cashflows from the same property without being a landlord. Because when we sell these properties on a rent to own, we’re not paying for maintenance. We pass on the taxes. You’re just collecting a check on the property. The only thing I would say would be that I wish I got a longer-term because it will cashflow better.
This is why mentors are important, especially if you’re doing the business. To tell you how to capitalize on things that you might not see. One thing I will tell you, if you ever happen to negotiate a 0% down with your seller and the seller finances you the house with a 0% loan, make sure you put in your substitution of a collateral clause. What a shame to have gotten a 0% loan and then you sell the house on terms to somebody, and then that somebody comes and wins the lottery next month and pays you off. They paid off a 0% loan you have on someone, you want to be able to move that 0% loan to another piece of property if that ever happens. It only has to happen to you one time where you have a 0% loan. You’re proud of that loan, you negotiated your pants off, you’ve got it all right and then six months later, the person that bought the house from you on payments pays you off. You’ll remember the substitution of collateral clause every time when that happens. Put it in there.
The only thing I would add on to that is we want our tenant-buyers to be able to be successful and eventually be their own homeowners, although we’re able to get a 0% loan. We’re always willing to take slightly less profit on a property in order to make sure that person is able to be successful, but that’s a good tip, as always. We’re learning about this. I’m always willing to be coachable, I’m always willing to learn.
I appreciate you being on. I’d like to say thank you to TaxFreeFuture.com. Also, check out my book. It’s launched and inspired a lot of careers, My Life & 1,000 Houses: Failing Forward to Financial Freedom. It’s a three-book series, My Life & 1,000 Houses, but that one is a story of how you go from 0 to doing 100 houses a year for over 2.5 decades. Anything you want to add for the newbies out there that are contemplating real estate as a career before we leave?
We’ve covered it a couple of times but I always say it’s a couple of steps or processes anytime I want to get involved in something especially building my career on it. First of all, if you want to be dedicated to real estate, as soon as you dive in, there are many niches. Go ahead and pick the niche that best works for you. The second step is to find the mentor within that niche. Because the truth is I’m from New England, you may not jive with me, and that’s 100% okay. Make sure that you’re able to be coachable by that person, make sure you jive with that person.Money is an end result. It's not the beginning. Click To Tweet
The third is the people that are committed to the process and are disciplined to the process are the ones that are most successful. As soon as that happens, as soon as you pick your niche, as soon as you pick your mentor, put the blinders on, and get after it for the next 3 to 5 years. Don’t look back, don’t look left, right. Continue to look forward. Continue to work with that mentor, and then you’re definitely going to see success. I promise you on that end. That’d be my only advice.
Remember, we all have coaches, we all have someone we’re paying to try to get to the next level that we’re going to. We’re trying to systematize the office. We’re trying to learn to reduce our taxes. I don’t know that there’s ever going to be a time that I don’t have a coach because I don’t see myself ever wanting not to be growing as a person. Whether it’s a real estate coach or some other phase of my life that I want to do, I’m going to have a coach somewhere.
I find that when I sit alone in my room, I get smaller and smaller and less and less. It’s not engaging at all. I want you to check out the free webinars Zach and his guys are giving away. Go to REInvestorSummit.com/onterms. There will be a whole bunch of information over there, you’ll be able to get hooked up with those guys and get more in-depth as to what they have to offer. What it takes to be part of the program and when they have speaking engagements, webinars or seminars. Everything will be over there. Go to that website. I’d like to thank TaxFreeFuture.com. Please visit their website. I have a good idea about what you’re going to be doing after you figure out how powerful this stuff is. We’re out of here.
About Zachary Beach
Zachary is an Amazon Best-Selling Author of The New Rules of Real Estate Investing and co-host of the Smart Real Estate Coach Podcast. He is a Partner, COO, and Coach at Smart Real Estate Coach. In September 2020, they’ll be releasing a revised edition of Real Estate On Your Terms, which Zach will be co-authoring.
At the age of 25, Zach decided to leave the world of bartending and personally training and jump into the family business. It was one of the first big risks that he took in his life, as nothing was guaranteed. Plus, he knew absolutely nothing about real estate. Through hard work, in-house training, and implementation, Zach has now completed over 100 deals and growing. On top of that, he coaches students around the country on how to buy and sell property just like his family still does. Now, as a group, they buy and sell 10-15 properties a month with a predictable and scalable system, controlling between $20-$25 million of real estate at any one time with little to no money in the deal and no banks involved.
Zach has been in the business for over 4 years and now runs all operations of Smart Real Estate Coach, on top continuing to coach his students and Associates. He has an amazing wife Kayla and two small children, his son Remi and his daughter Bellamy. He is a prime example of how to be successful both in business and at home.