Seller Partnering Strategy: A Win-Win Deal For Homeowners And Investors with Tyrone Glover
Episode 453: Seller Partnering Strategy: A Win-Win Deal For Homeowners And Investors with Tyrone Glover
Do you have the property but don’t have the means to rehab or the other way around? No matter where you fit in this dynamic, then this episode will be a treat for you! Mitch Stephen sits down with Tyrone Glover of the Partnering Experience to talk about a new investing strategy that is perfect for both investors who don’t have the property and sellers who can’t flip—the Seller Partnering Strategy. Tyrone takes us deep into this and shares the ways he makes a win-win deal for everyone, maximizing their sale and profitability. He also taps into the role of realtors, where they fit in the picture, and how homeowners and investors can get the value they are looking for with their property minus the risks.
I’m here with Tyrone Glover. We’re going to be talking about a subject that I don’t think a lot of you have maybe even ever thought about. I haven’t seen this idea except for maybe the last time we talked several years ago when you were bringing it up. You stuck with this strategy. It’s all about partnering with sellers who don’t have the money to do a rehab, to maximize their sales and profitability. It used to be, “Sell it to me as is for cash at a low price or you, Mr. Seller, go find the money, do a rehab that you’re probably not even experienced at all in doing,” and then take your chances and go out and see if you can create a higher value for that house. This is in the middle step where the house needs work. The homeowner doesn’t have the money, and they’re going to team up with an investor to share in the revenue.
We’re going to get to all of it here, but I have to pay homage to our sponsor, TaxFreeFuture.com. You won’t believe what your financial advisors are not telling you. We’re going to tell you what they’re not telling you and why they’re not telling you. It has everything to do with tax-free or tax-deferred retirement plans, 401(k)s, educational plans, health and savings accounts. It has everything to do with that. Check out TaxFreeFuture.com. Be sure to give some of your little micro information. We promise not to beat you up every day with a bunch of emails or texts, but give that micro information because that’s going to open the door to 37 little video vignettes that you will be amazed at what you can do with a tax-deferred plan. It changed my life one day when I went to one of these seminars and they showed me what I could do. It completely changed my life. I had to pay $3,000 for that twenty years ago. These 37 video vignettes are completely free. Tyrone, we’re about to open up the subject first. Can I get a little bit of your background so people know where you are, where you’re from and how you came to this day in life?
My background is I’ve been in Corporate America for the last 30-some odd years. My goodness gracious, time flies. My primary background is in the supply chain. I go in there and I’m the one that helps these companies put in supply chain systems to do their planning, how much of the demand they’re going to have, what’s the supply, and where they should manufacture and so forth. This idea came out of a divorce I was going through roughly in 2011, where we were having to liquidate all our assets, including the house. When I looked around the investors that were looking at actually buying my house from me because my house couldn’t sell for anything more. We had just started a renovation on our kitchen when things fell apart. The kitchen was apart and our relationship was apart.
I didn’t know that renovation can ruin a marriage.
Within one year, it did it. We were shoestringing the renovation anyway. Here we are trying to sell a home, and I’m being offered probably half to a quarter of what I should have been offered. Here’s a property that is two blocks away from the main strip as far as restaurant alley is concerned, two blocks away from the train station directly in Philadelphia, and one block away from the trolley. I was centrally located in 1892 Victorian. I know I was being low-balled. I spoke with an investor about possibly doing a partnership with me. When we started talking about the numbers and I started putting it into Excel, I began to understand the opportunity that exists within my property. I began to recognize that there’s so much money there that I shouldn’t necessarily just be giving it away to the investors. I should do this myself.
Going into a long story short, I started thinking, how do I pivot this and maximize this opportunity because I sure I’m not the only one that thought of this? The solution came from that, which is an online marketplace, allowing those homeowners to log-in in an anonymous and secure environment, post their property, and have an understanding of what that property is truly worth based on the noncomplex financial numbers that are presented. It’s easily a way for those homeowners to put some very basic details and other property. It will automatically calculate out what that renovation could cost based on three levels of condition, and what that investor may be willing to pay based on a 70% purchasing role and so forth where that’s variable as well. Therefore, that homeowners should be able to get a better understanding of at least the ballpark that they’re in with regards to their property.
If I have it right, you’re talking to homeowners that want to sell their house. It’s in disrepair and has some problems. They don’t have the money to fix it, so team up with an investor and you may not get all of the upsides. They don’t have the money for the repairs so the investor is putting in all the money for the repairs. It’s a way to get the house repaired with none of their own money. They’re not going to get all the profit, but they’ll get some or half or whatever the deal is.
That was key for me. When I was going through that situation, I didn’t know what my property was worth. I also was embarrassed about being in a situation that I was in the first place, having to sell the home. I didn’t want to talk to investors about it. By having that secure anonymous environment where I can put the numbers out there, and then what happens is investors can see that property. They can see it listed, and any number of investors can submit what they think the property may be worth to them based on the amount of money that they need to get from a standpoint of an ROI on each investment they’re involved in. The amount of money they may want to spend on a particular investment and what they see that neighborhood looking like with regards to the potential of it. Once they do that, they can submit that information back to that homeowner, which now gives that homeowner an opportunity to have multiple offers as compared to right now that homeowner may receive a yellow letter in the mail, or may see a bandit sign driving down the road, and then they’re locked in with one potential opportunity to sell their property. Here, you’ve got a marketplace where investors will come in and potentially submit proposals for your property.
How did your personal experience turn out with your house?
I’m still in my house. I was able to keep my house through determination and stubbornness. It had so much potential that I wasn’t going to let it just go for nothing. This was the end result of that. I started to recognize that the homeowners need to make more money. It’s not a matter of want to, they need to. I spoke with one investor, and I shouldn’t have asked the question but I asked, “What about the homeowners?” I saw some shoes on the floor or whatever. Honestly, the investors are not worried about the homeowner, they are worried about the home but I couldn’t stop thinking about the homeowner that was impacted by that situation. The investor said to me when I asked about it, “They don’t care. They just threw the keys at me.” That hit me because no one cares. No one cares about giving up money. We all care about making as much money as we can from whatever we do. A homeowner who’s losing his home cares about making as much money as they can make. It wasn’t necessarily a matter of them not caring, they didn’t have any other options. This is another option that gives them a chance to be able to put it out there in the marketplace and see what it’s going to go for.A homeowner who's losing their home really cares about making as much money as they can make. Click To Tweet
How is it that you were having to sell your house and then you teamed up with an investor and ended up keeping the house? How did that work?
To make a long story short on that one, I didn’t partner with the investor. I stepped away from it. I didn’t do anything with my property. I was able to negotiate some refinancing on a property to keep it. The idea was there and the idea led to me writing a book. I started putting together a book. The book, I had it out there published for a little bit, then I recognize it wasn’t where I wanted it to be. I pulled it back but the next thing that came in was the idea for the online marketplace. It’s a matter of maximizing opportunities, and this was a tremendous opportunity that I wanted to take advantage of.
I didn’t look at my notes, are we giving away anything? I should have looked at this first.
We do have a free membership as far as signing up for homeowners. Homeowners can sign up and upload one property or add in the details for one property for free but we’re low costs. My goal is not to make money off of people using the site because the marketplace is necessary for people who are out there. For wholesalers or even realtors, we’re $9 a month. It’s a very modest price. For investors, we’re only $19 a month and that includes being able to post properties, but also being able to go and look in, and submit proposals on properties. The big thing about this company is my background is in sustainability. I’m one of those green guys, triple bottom line, business practices. What I’ve done with this is I’ve recognized the fact that the most important people in this deal are the homeowners and the investors. They are our primary number one stakeholders. We do have stakeholders that are realtors and even the workers themselves. All the folks that are going in there swinging hammers and putting in the time, that may not necessarily be what they want to do as well.
With regards to the realtors, we give them an opportunity to be able to post those properties, bringing their 100-plus-day old homes, add them into the portal. Also, we have a new position that we’ve created within our structure called Envoy. These envoys are able to go in those areas where they know there are a lot of these high potential value properties. They can go and license that territory, and own that specific space. Any property that comes in organically into that zip code, they own those properties from the standpoint of moving it through to the renovation and through to the onward sale where they’re potentially going to get that actual final listing and being able to sell the property. That means you can sell more properties because you have a differentiated service that you’re being able to offer the customers. You’re also being able to sell those more properties at higher prices, which is a real, tremendous benefit for realtors who are struggling to make it past that 87% that fail every year once they get their license.
When it comes to workers, we’re looking at setting up training programs. I see the numbers on the market. I see the number of homes that are sold each year and the amount of Baby Boomers, the amount of the Silent Generation and even Generation X that are going to be retiring or have retired and don’t have enough money to live on in retirement. It’s a crisis that we’re not looking at or dealing with at all. That’s why I keep saying homeowners need to make more money when they sell their most valued assets. We want to be able to bring in workers who can become investors. That’s how I feel. We’re going to grow this marketplace to be able to not just go after that regular supply of contractors that are out there, but also bring in new folks into the space itself.
What is the Silent Generation?
That’s the parents of the Baby Boomers. Some call them the Greatest Generation, but those are the parents of the Baby Boomers.
I hadn’t heard that before.
There are only about 20 million left, but 77% still own their homes. I think 74% of Baby Boomers own their homes. It was near $45,000 short per year of being able to retire with dignity, having financial mobility. It’s a dire situation that we’re in.
I want everyone to go to 1000Houses.com/Investout and take a look at the website. Check it out, see how it works. Figure out if maybe you have a property or if you want to buy a territory out there. Is it a lead generation for some people?
There are opportunities. For example, you had mentioned the affiliate program. We do have a pretty strong affiliate program that allows for anyone who’s outside of the space. Maybe they’re not even interested in real estate investing but they like our mission which is what I believe I’m going for, a mission to being able to help the folks, the realtors, and the workers itself as well as the community that we’re involved in. Anyone who’s interested in spreading the word about our mission and things, we’re looking at doing some great thing. They can share the affiliate link and they can get involved that way because we want to grow it. There are ways to do that as well.
Is this so new or have you had success stories already with people partnering up with homeowners to maximize a sale?
We are loading properties. We’re working with a couple of relatives to load properties into the portal now. 2020 has been a pretty incredible year. For me, it was a pretty good year. I say I’m COVID positive because a lot of positive things happened within my space. I never realized how much work was involved in bringing this site up, especially when you’re shoestringing it, but we shoestring it.
It’ll be fun to tune in with you sometime and see how it’s going. When you forge out into a frontier, you never know how it’s going to go, if it’s going to go. Most of the time, if it goes, it is a semblance of what it was intended at first. I had the guy who started a HomeVestors, Ken D’Angelo was a friend of mine. He said, “Entrepreneurs rarely ended up with the business that they start out.” They usually end up in a completely different business because they’re into morphing to the fastest way to the least resistance. It may not have anything to do with what you started out with at first. I’ve known that to be true in my life. I have started a lot of things and when I got to the end of it, I thought, “This doesn’t even look that much about how I started.” The most important part though is that we figured some way out to accomplish whatever the mission was. Your mission is out there to help the community, help the sellers who have only had one choice if they couldn’t fix up their house, which was to pick a low-ball offer. It’s a very admirable endeavor that you’re trying to do out there.
This started around 2017, the ideation of it. I went through the book phase. We started to pivot into recognizing what we are as a business probably within the last few months. Luckily, it didn’t change the attributes that were going to be available on the site. We started to recognize that my biggest challenge was having an educated or knowledgeable discussion about the value that may exist there. That was the big point for me. When I’m being approached by these investors, I had no clarity as to what they’re offering and whether it was a valid offer or not because there’s nothing to bounce it off of. Being able to crystallize around that point and then coming up with some good front end that very clearly says, “Seller, this is much how much you’re going to make guaranteed. Seller, this is how much you’re going to make increased value based on the percentage that you accepted or the percentage that you want to make.” It’s very crystal clear for the actual investor.
It’s also very crystal clear from the same standpoint for the actual homeowner itself. To your point, I don’t know where this is going to go outside of the fact that I believe that there are a lot of legs here being triple bottom line. I also want to be able to bring the realtors in and turn this into a more or less realtor-owned business because they are going to be the ones who can lift this entity up and make it profitable from the standpoint of bringing the homes ins and maximizing the values of these homes. We’re trying to move towards being more or less a stakeholder-owned company with realtors and with our workers or our laborers in mind.The greatest risk for an investor is how much they’re going to pay and how much they’re going to get. Click To Tweet
It’s an interesting concept and offering a middle-of-the-road choice for sellers.
I think about it from the standpoint of an Airbnb or an Uber. If you think about it, we’re part of the crowdsharing community. We’re not any different from that. Airbnb provides housing. People provide rooms. They go to Airbnb. They list more in Airbnb. People who need rooms, go to Airbnb. They partner up. Uber, a person who needs to go from A to B and has money to do it, and a person sitting at home possibly who has a car and doesn’t have money, they’re partnering up. We’re in a very similar space as that.
Even in Airbnb owners list their property to Airbnb businesses. Airbnb can increase the revenue and make room for themselves by renting by the room or renting by the day or whatever. I see the similarity. It’s like Uber got a guy with a car and he needs to make some money, but doesn’t even have the means to market himself. The marketing company says, “I’ll share with you. I know how to get the customers to you.”
It’s partnering up. From what we’ve seen thus far, I’ve had a number of different investors say to me, “Why didn’t I think of it?” It’s such an obvious thing. Why would you want to buy the property when all you’re trying to do is get the profit out of it? If you don’t go through the experience that I had experienced or a lot of folks are experiencing and will experience. When you look at the number of foreclosures that are pending, they were close to 22,000 typically foreclosures that occur every month. There hasn’t been a foreclosure. There have been only 385 foreclosures in total since August 2020, which means that when we start to go normalize, and they start to open up the floodgates and litigation, and they allow for the foreclosures to occur, the floodgates are going to open. You’re going to see a huge number of properties being listed and going up simply because they’re being foreclosed on. That’s another area that we’re going to be targeting as well because we have to see where we can provide that softer landing for those homeowners.
Part of the problem in 2020 was as a home buyer myself, there was no force point because they delayed evictions and they delayed foreclosures where they shut down the courthouses. No one had to make any decisions and so no decisions got made. Even if they needed to make a decision, they couldn’t because the courthouses were shutdown. Also, MLS listings were down because people didn’t want strangers in their house because of COVID. I still had a pretty good year myself. I’ve bought a house every 4 to 5 days for over two and a half decades, so about 100 houses a year for over twenty years.
What do you do? Do you simply sell them out or you’re wholesaling? How are you working it?
I borrow money from private lenders to buy them. I borrow 100% of my acquisition, closing costs, and rehab costs. I sell my house, owner-financed on a 30-year fixed mortgage to someone who has at least 12% down. I carry the note for 30 years. It’s like a flip but it’s not a flip because I’m still in the game for a long time. I’m the bank instead of the landlord.
It’s nice to be the bank.
When I collect my payment, it’s my money. If you collected, you don’t know if it’s your money or not. If the air conditioner breaks, apparently this was the air conditioner-man’s money and I got to give it to him. When I collect my mortgage payment, whether the air conditioner broke or not, it’s not my house anymore. I don’t own it anymore. I don’t have any liabilities. The landlord is responsible for everything from the back fence to the front mailbox. Anything that breaks in between, the mortgage company is responsible for collecting the payment and that’s it. For foreclosure, there’s no reason to give any of the money back. I have about 1% foreclosure rate even through COVID because I found homeowners stick. I learned the hard way that renters move in, tear down and move out. Homeowners move in, fix up and stay. If they do have to leave sometimes, I usually end up with a house that’s much more than the house I originally sold because as a homeowner, people would do all kinds of improvements and renovations, put up fences, paved driveways, add porches, put in pools or whatever. They did a lot of stuff. I never had any renters do all that. I never had that happen.
I don’t think you’d want that to happen either.
This is a new subject to me, so I don’t know exactly how to cover it. Have we touched on all the basis for this conversation? Is there something else I should be asking you that I’m not smart enough to ask?
You’re hitting the main points. This is a venture. The bottom line is at first, all we’re doing is we’re bringing the portal up. We’re allowing for anyone to be able to add their properties and anyone to be able to go in. We don’t touch any of the profits associated with any of the sales or the partnerships or anything. It’s just people doing their thing and us providing a marketplace for them to be able to do it. Our goal is to be able to leverage our realtors and what we call our envoys to be able to start doing value-added services to each one of those partnership deals that go through. We recognize the fact that the greatest risk for an investor is how much you’re going to pay and how much you’re going to get. We can reduce that risk associated with how much you’re going to pay for the property. Our realtors should be in there looking at those comparables and knowing that better than anyone else, so we can reduce the risk on that side. The last part is how much is the renovation going to be? Our team wants to have an understanding of that property better than anyone else. Detailed inspections greater than that 100-point checklist that are being done so we know what’s happening with the roof. We can reduce the risk for the investors, so when they do get involved in the deal, they can potentially even reduce the amount that they need to make because they don’t have to buffer for the risk that they would normally have to buffer for.
Let’s say I’m on your site, I find somebody and they owe $70,000 on their house. Their house needs $20,000 rehab to get in shape. Am I having to put my money in a second position or how am I protected? My first fear is I’m going to put this renovation in and then they’re not going to show up to sign the papers when we have a sale.
That’s part of the piece. That’s part of that process that we’re going to work through with our envoys. We need to make sure that there’s equity in the property. If there’s no equity in the property, then the property is not a viable candidate for the process. Maybe it’s viable for the sale portion of the process sale outright, but it’s not a viable candidate for the partnership deal.
What I’m saying is even if it is viable, $100,000 was an upside to make. How do I know after I put my $20,000 into that rehab that the owner is going to come and sign the papers for the sale? He could say to me, “Mitch, this house looks so good right now. I don’t want to sell it.”
The way that’s being covered is it’s legal agreement as well, the joint venture that they’re going into together. They’re also encumbered from the standpoint. It’s very similar to a mechanic’s lien being placed on the property, where before that house can sell that all those different encumbrances have to be covered off on and paid out.
Will there be a place for them to call you or talk to you or get some counsel or if they have questions, they can talk to you about it?
I’ve got my email address. I can put it down there and I can also give you my contact number as well.
I would like to thank Tyrone Glover for taking the time to come on and share this new idea. It’s going to be interesting to see how it works. I was amazed at the idea of Uber. I was amazed with the idea of Airbnb and they all seem to pan out. Maybe we’re talking to the next legend right here.
I believe you are.
There we go. We’ll keep our fingers crossed. I’d like to thank all the readers for stopping by to get you some Tyrone Glover and learn about how to partner with homeowners to maximize the profit for both sides, a way to get into a deal without having to buy a house, just having to do the rehab. I’d also like to thank TaxFreeFuture.com for sponsoring this episode. Please go to TaxFreeFuture.com and watch that little 37 video vignette. You’ll be amazed. If you have IRAs or 401(k)s, and you’re not able to take control of your financial future, and invest in what you want to invest in with more tangible assets and more accountable. When you invest in the stock market, you don’t know what’s going to happen and you have no control over it. When you start investing for yourself, you can get a lot more control. Take control of your financial future. Check out TaxFreeFuture.com because you will not believe what your financial advisors are not telling you. We’re out of here.
About Tyrone Glover
Invest Out was conceived through adversity and the recognition that homeowners need more options when selling a home in need of repairs to maximize their profit.
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