In this episode of one of the top rated real estate investing podcasts, Mitch Stephen is joined by Jon & Stephanie Iannotti. They provide some great real estate investing insight to how to sell to un-motivated sellers.
Jon & Stephanie Iannotti have been Entrepreneurs and Business Leaders since 2000. Prior to that Jon worked in a Steel Mill in PA as a Quality/Safety Inspector for 24 years and prior to that was a Policeman turned Police Chief. Stephanie was an Orthopedic Technician and Personal Assistant to a very well known Orthopedic Surgeon in Pittsburgh for 24 years. Then the Real Estate Investing Bug….Bit them hard!!!
They now have over 36 years of combined experience in Real Estate Investing/Teaching, and Mentoring and over 3000 creative deals under their belts, they are considered one of the best in the industry. The Iannotti’s are huge believers in Multiple Streams of Income! To help their students and Real Estate Investors across the country they have come up with some amazing ways to structure deals that are cutting edge. They have done many deals with their student partners using these state of the art techniques which are now being taught across the country and internationally. They are the creators of ACT (Agreeable Contract Terms). This program has totally changed many investors’ lives with the teachings and techniques. Then in 2012, due to even more changes in the Real Estate Market, the Iannotti’s came up with another System called REACT (Reverse Engineered Agreeable Contract Terms). REACT is now taking the Real Estate Investing world by storm as well as their most recent program CATS (Complete Agreeable Terms System), which combined both of the systems.
Jon and Stephanie have trained with and worked with some of the biggest names in Real Estate Investing. To name a few, Ron LeGrand, Robin Thompson, Lee Phillips, Al Aiello, Ted Thomas, Lou Brown, and many others. Not only have they mentored hundreds of their own students, they have also mentored hundreds of Ron Legrand’s real estate students.
Seeing a great need for another Real Estate Investing Association in the Southwest Florida Region to help educate and train Real Estate Investors, Jon & Stephanie approached one of their associates and decided to form the Florida Gulf Coast Real Estate Investing Alliance. They are looking forward to continuing to bring knowledge and training to as many Investors as possible and are always continuing to keep their skills fine-tuned and cutting edge so that their knowledge can be passed to those that they associate with. Their motto for Real Estate Investing….”Knowledge is key, Timing is crucial, Location is important and having a Mentor or Coach will keep you on the path to Success!”
The Iannotti’s are also 3 Time Amazon #1 Best Selling Authors. The books include their most recent Book “Elite Real Estate Leaders” along with their 2nd book “Business Leaders Success” and the 1st book “The New Masters of Real Estate, Getting Deals Done in the New Economy.” 12 of the 18 contributing authors in the 1st book were mentored or coached by them personally.
Jon and Stephanie are also highly sought after National Speakers and National & International Mentors to well over 400 students over the past few 15 years. Owning their own businesses have given them the freedom to live where they want to live, do what they want to do and when they want to do it. By Systematizing and putting their businesses on Auto Pilot, the Iannotti’s have been given the name, “The Cruise Control Couple.”
In this episode of the real estate podcast, you’ll hear about the following real estate investing tips:
- How the flexibility of Jon and Stephanie’s course adapts to the real estate market and prepares their students to handle different scenarios
- The importance of developing the skills that let you recognize when a marketing technique isn’t working and how to shift to different pathways to bring in leads
- How to use creative thinking to survive when the market becomes more seller-friendly, making it harder to get the contract you’re looking for
- How their students benefit from the profit-sharing option offered by getting to work with someone experienced at closing deals while receiving support along the way
- How to make the most of the leads without letting difficult market conditions keep you from success
- Helping sellers get to a place where they’re comfortable saying “yes” to a deal by removing the complexity from real estate terminology and making the upside clear
- How to turn profits on deals where you might initially pay more than you wanted for a piece of property
- How they model themselves after internet loan companies and find paths to funding outside of banks from lots of different sources, selecting the ones that benefit them most
- Being able to recognize when certain selling techniques will work and when to change them to match the conditions of the market
- How to Find long-term success by striking the right balance of adjusting to the needs of both motivated and non-motivated sellers
How Does Owner Financing Work– Episode 161: Problem Properties: How to Generate Revenue Via Owner Finance
Real Estate Podcast – Real Estate Investor Summit Podcast Episodes
Owner Financing Courses – Why Owner Financing is so powerful
Real Estate Investing 101 – Book: Owner Financing 101
Real Estate Investing Classes
Announcer: Welcome to the Real Estate Investor’s Summit podcast, coming to you from the smallest big town in Texas, with your host, mentor, and owner financing master, Mitch A.K.A. “Be the Bank” Stephen. The possibilities of life without a J.O.B. start here. So, grab your pen and paper and listen up.
Mitch Stephen: Y’all just might figure out how to fail forward the financial freedom.
This is Mitch, and welcome to the Real Estate Investor’s Summit podcast. I have Jon and Stephanie [inaudible 00:00:36] on the line. These guys have a long, long list of accomplishments, so I’m gonna do my best here to tell you where they’ve been.
They’ve started in the entrepreneurialism about the year 2000, and then they’ve done over 3,000 creative real estate deals since that time. Jon and Stephanie are three-time number one bestselling authors. They’re believers in multiple streams of income. They have invented the ACT system, which is the “agreeable contract terms” system, and due to some changes in the local market economy and the real estate economy these days, they had to kinda reinvent it, always morphing, changing, and adapting.
They’ve created REACT, “reverse engineered agreeable contracts.” Then they kinda figured out how to put them all together into a system called CATS, which was the “complete agreeable terms system.” You’ve got to take your hats off to anyone who’s morphing and adapting to change, because when you don’t, you become a dinosaur and you die.
They have students all over the country, and interestingly enough they have taught for years, they’re Ron LeGrand’s students and I was a big fan of Ron LeGrand. Still am, and I’ve learned a lot from his methods. Actually, he launched my personal career many, many, many years ago.
I would like to welcome Jon and Stephanie Iannotti. How are you doing today?
Stephanie I.: Awesome.
Jon Iannotti: We’re great.
Stephanie I.: Thank you so much, Mitch. Appreciate it.
Jon Iannotti: Thanks for having us.
Stephanie I.: Yeah.
Mitch Stephen: There’s a lot there when I was reading your bio. I was thinking, my gosh, I might have to put this in two segments. The first where we list the accomplishments and the second where we actually talk about them.
I hope I didn’t skip anything you really thought was important, but I was pulling some stuff out of there, but you guys have been really, really active. My gosh.
Stephanie I.: Thank you, Mitch. We feel the same about you.
Mitch Stephen: Oh, and you’re also coming on the … the Mexico trip, my annual Vacation with Mitch trip which is kinda morphing and changing too. I’m really excited about y’all coming, because someone with your kind of … you’ll be listed as one of the Experts on Vacation.
Stephanie I.: We’re excited too. We can’t wait.
Mitch Stephen: Yeah. By the way, feel free, you know, I say it’s morphing. It’s not just Vacation with Mitch anymore. I’m telling all the Experts on Vacation, advertise Vacation with the Iannottis. You know what I mean? I mean, it’s not about me. It’s just a vacation with like-minded, so it’s not entered around me. It’s about anything. It’s just a bunch of people that do real estate getting together to have fun, and there won’t be any seminar or any classrooms, so.
Stephanie I.: Yeah, that’s awesome. We’ve actually already been doing that, Mitch. Not saying the vacation [crosstalk 00:03:20] but we’ve been already telling people. We got people looking at it and hoping they’ll come.
Mitch Stephen: Yeah, cool. All right, well, I don’t know exactly where to start here, because there’s so many ways we could go. You want to talk about the CATS system, or did you have something that, something else on your mind that you want to talk about?
Jon Iannotti: I think the big thing to talk about is the REACT CATS system, because it, as you said, it’s morphing as we go. We’re constantly changing because of the markets, or markets around the country as well because … We have member across the country, and we call them “members.” We don’t call them “students” because when they come on with us it’s a lifetime membership with us. We give them training of whatever’s going on today. If they were doing ACT and REACT, tomorrow it may be short sales again. You know, who knows?
Stephanie I.: You know, I think that’s one of the biggest and most important thing about it Mitch, is that we adjust with the market, and our training adjusts with the market. Whatever is really happening, no matter what it is, whether like Jon said, it’s short sales.
Jon Iannotti: Yeah.
Stephanie I.: Lease options, REACT, anything like that. That’s what we’re teaching, and our members that come on, that one price is what they pay and that’s it. They have the ability to continue to learn different avenues, whatever’s working in today’s market.
Mitch Stephen: Yeah, are they might move to a different market. I really wanted to emphasize about the morphing and the changing. Even if my book … Failing Forward to Financial Freedom was about getting up, dusting yourself off and going, “Well, you know, that didn’t work.” Or, “That doesn’t work anymore. That used to work but it’s not working now,” you know?
Stephanie I.: [crosstalk 00:05:20].
Mitch Stephen: As an example of marketing lately though, I was talking to someone about in our town, I used to buy hundreds of houses with bandit signs, you know? Just nail them on telephone poles, break all the laws you can and just … It worked for a long time. It’s not working anymore. That doesn’t work. You have to do something else, you know?
You start watching your numbers and you go, “Wow, I put out a hundred signs. I didn’t get any calls.” [crosstalk 00:05:51] I don’t know why that is. I guess there’s just too many people doing it, or there was too many bad things happening from those signs. You kinda got lumped in with the turds.
In this process of morphing, talk about why you changed ACT to REACT.
Jon Iannotti: Okay, well back around, I’d say around ’09 is when we actually put a name to what we were doing. We called it the ACT, and that’s “agreeable contract terms.” As you know, back around ’09 after the crash, we had tons and tons of motivated sellers. “Please take my home.” That kind of stuff.
We say that ACT is the “yes” side of the business, or the motivated side of the business. We were able to deal after deal after deal, and then probably around I’d say 2011, right in that area, the market started to change again and it became more of a seller’s market. Now the sellers … You may have this in your area too, is that most sellers today, they want cash, full retail price or more than retail.
Mitch Stephen: Yeah.
Jon Iannotti: That seems to be what’s going on today. We have to change what we were doing to adapt to, “All right, they’re not motivated anymore. They want retail or they want more. What do we do now.” That’s when we came up with the “reverse engineered agreeable contract terms.”
Now, I’ve got to tell you, the word “terms” throws everybody off, and they think, you know, it’s a lease option course, or it’s a seller’s financing. But yes, we do use those. However, that’s just a couple of techniques that we use.
The two biggest techniques that we’re using today are cash, and loans. Those are the two biggest things that are moving properties today in a market where a seller wants full retail price or more.
Do we find the ones that are motivated? Yeah. They’re kinda like the needle in the haystack right now. Everybody and their brother’s teaching wholesaling and rehabbing. You know, all the … I like to call them the non-reality TV shows out there, about fixing and flipping the properties.
That’s all great. It all works. It’s just there’s easier ways of doing things, and that’s what we figured out with putting ACT and REACT together and making it the “complete agreeable terms” system.
Mitch Stephen: Okay, so you got … You said two major things that I caught. One is, is that, you know, the majority of the people are wanting market price or over, and they’re wanting cash or for you to get them a new loan, or to cash them out one way or the other. Either your own cash or private cash, or a new loan but they want to get paid off.
So, how do you mitigate these two worlds, because it sounds like a dead deal right on the surface. They want market or above market, or they want cash, or they want you to go out and get a new loan. How do you mitigate this deal? How did you resurrect it?
Jon Iannotti: Yeah, that’s the beauty of what we’ve done. If a hundred … if you do marketing, Mitch, and you bring in 100 leads, you probably have two, maybe three, motivated sellers out of those 100 leads.
Mitch Stephen: That’s right.
Jon Iannotti: And the rest of them, they want cash, full retail price, or more and you’re throwing all those leads away. What we’ve done is we’ve figured out a way to not only take those jewels, those two or three motivated sellers, but also the 97 other non-motivated sellers, and we figured out a way to make potential profit on each and every one of those.
Now, we’re not gonna make money on everyone, just like on a [crosstalk 00:10:01].
Mitch Stephen: Yeah. Yeah, yeah.
Jon Iannotti: But we’re gonna … There’s potential profit there that we’ve figured out how to do that, and that is what has enabled us to do. You know, we’ve done over 3,000 deals personally and with our members, we’re over 8,000 deals. It’s pretty slick, how it works.
Mitch Stephen: Do you partner with your students, or was that a separate issue?
Jon Iannotti: We offer that to them. It’s not actually a partnership. It’s more of a profit sharing kind of a arrangement where we give them the training and the knowledge on how to do the deals, and then we do our marketing on our end and they do their marketing on their end. Then hopefully we find a way to close that deal, and then we split the profits.
Stephanie I.: If they choose to do that.
Jon Iannotti: They don’t have to.
Stephanie I.: Yeah, they don’t have to do that. Some of them do one or two deals and they’re like, “Okay, we can handle this on our own,” and some of them with us for years.
Mitch Stephen: It’s like a hand holding opportunity if you need that at that time.
Stephanie I.: Yeah.
Mitch Stephen: If you need someone to look over your shoulder, help you, stand close guard. That’s the cool thing about teaming up with professionals, is a quantification of the deals, a qualification, you know … You could certainly keep a lot of people out of trouble, can’t you? When they come to you and they’re, “Well, we got this great deal,” and you go, “Well, not really.”
Stephanie I.: Exactly, yeah.
Mitch Stephen: It keeps everybody out, it keeps them out of trouble, especially those first deals where it’s so crucial to their career in the long run that they don’t lose on the first deal or two, because I almost lost a whole career because things didn’t go well on my first two deals and I would’ve been out of a career that made me tons of money over my lifetime.
Jon Iannotti: Right.
Mitch Stephen: But if those first two deals would have been, just so slightly have been different I might not be in this business today. I don’t know where I’d be, but …
Stephanie I.: Yeah.
Mitch Stephen: Yeah.
Stephanie I.: Well, it’s just cutting that learning curve. So many investors, they watch TV and they see, “Oh, this is so easy. Look how easy they make it.” Well, you know as well as we do, Mitch. It’s money. It’s a business. Yo have to apply yourself. You have to take action. You have to get out there and talk to sellers. You have to build a team if you are getting really serious about this. You need somebody by your side that can help cut that learning curve, because I mean, we’ve all made mistakes. I don’t care how good you are, you’ve made mistakes.
Mitch Stephen: That’s an understatement.
Stephanie I.: Yeah. I mean, we all have. But you know what? If I can prevent someone from making my same mistake, then that’s really what we’re in this for because we all know how to make money doing this, but helping someone else that is just trying to start? It’s so vital that they understand you need somebody by your side that can help you. It might just be one little thing that could save you tens of thousands of dollars, or like you said, your career completely in real estate.
Mitch Stephen: Yeah. It’s such little things. I had a guy the other day, calls and says, “You know, I got this great deal. It’s on two lots and I’m gonna build a house on the other lot and it’s gonna be,” he had all this, and the numbers worked out. I said, “Have you called the city and found out what the minimum lot requirements are to build a house?” He said, “No.” I said, “I think you better check that out because it looks a little small and I don’t know.” He called me back and he says, “Wow, I can’t build a house on that.” I said, “Well, that’s what you pay for.”
Another guy said, I told him, he says, “Get your shovel, go to the back left hand corner of the lot and dig a four foot hole, call me back and tell me what you see.” Dug a four foot hole, called me back and said, “How did you know that was there?” I said, “I bought a lot like that before. I could smell it.” I knew exactly. I knew exactly what was going on.
Stephanie I.: Yeah.
Mitch Stephen: It’s not that anybody’s a genius. It’s just that you’ve been there before, right?
Stephanie I.: Right.
Mitch Stephen: When you do 3,000 deals like the Iannottis, I mean, man, you’ve seen a lot of things go right and you’ve also seen a lot of things go wrong.
Stephanie I.: Mm-hmm (affirmative).
Mitch Stephen: Let’s talk about someone wants a full price offer on a house and they don’t want to give terms. They just want to get cashed out. Where do you go from there?
Jon Iannotti: Well, the beauty of what we do is today they want cash, tomorrow we might be able to convince them to do terms. What I like to do I’ll go in and I’ll give them whatever they want, so that I can get what I want and what I want is an agreement to buy. Then I can start my magic and start looking for funding for the deal.
Now to us, Mitch, we don’t call our buyers or tenant buyers, we don’t call them “buyers” and “tenant buyers.” We call them “funders” because to us a funder is anybody who brings money to the table for us to do the deal. Now that could be hard money, private money, IRA money. Could be a buyer with cash, a buyer with loan. Maybe a tenant buyer. All those sources fund our deals, see?
What we’ve done is we’ve created some seller-friendly terminology and funding is one of those terms that we use, because you know as well as we do that the seller who is confused will say no.
Mitch Stephen: Yes, absolutely.
Jon Iannotti: We want to make it as simple and easy for them to understand what we’re trying to do here, and our goal is to hang on to every single property that we put under agreement but the reality of it is, most of them today don’t make sense to hang on to because the seller wants too much money. If we can create a situation where we can make some money and our funder is happy paying what they’re paying, and the seller is happy getting what he wants, then it’s a win-win-win.
I even did a deal down here in southwest Florida where one of the sellers, he wanted $400,000 for his $200,000 house. I was able to get him his $400,000. My funder was very happy, and we made $7,000 on that deal, which wasn’t a lot, but it’s all there was. There was nothing else to get. But we took a property that he wanted double what it was worth, that I had absolutely no competition for. Not even the agents would list it. I took that, made $7,000 off of it, had absolutely nothing in the deal, and made nothing but profit which, you know, the ROI on that is infinite.
Mitch Stephen: Infinite. Kinda hard to measure. That’s incredible. Do you care to get into the details of how you did that?
Jon Iannotti: I knew you were gonna ask that?
Mitch Stephen: Was that proprietary there, Jon and Stephanie?
Jon Iannotti: Well, it is proprietary. However, we’re willing to give that away because that’s the way we are. We [crosstalk 00:17:43]-
Mitch Stephen: Let me … This is a great place here, that I gotta introduce my sponsors. We’ll be right back.
Ladies and gentlemen, you’ll now hear a word from my sponsors and then we’ll be right back, and they’re gonna give us a little bit of the magic, the magic in the sauce, okay? Stay tuned. We’ll be right back with Jon and Stephanie Iannotti.
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As your wonderful and all-knowing host at The Real Estate Summit podcast, I feel like it’s my duty to inform you of this app that I’ve discovered. It’s a wonderful app if you like driving for dollars, or you think driving dollars can make you some money, which it can, then I want you to hear me out on this. There’s this app, and you take a picture of the house and it makes a postcard out of the picture that you just took, and then it sends you the taxpayer records information. Now you can check to see if that taxpayer’s address is an address that you would like to send the postcard to, and if it is, you can hit a button and in the click of a button, for 99 cents, you can send out that postcard with the verbiage that you would likely use for a motivated seller. That postcard will be on its way out for 99 cents.
Now, if you look at the address and you see that the address is the same as the abandoned house that you just took a picture of, then you wouldn’t want to send a postcard to that house, of course. You can push for an advanced search. For an additional 99 cents you can get an advanced search information, which might have relatives, phone numbers, emails, who knows, so that you could hone in on the owner of this vacant or abandoned house.
This is a wonderful service. There’s a lot more to it, but I want you to go to reinvestorsummit.com/machine, M-A-C-H-I-N-E, all lower case, and check out this app and all it can do. There’s so much more it can do. It is a wonderful app. I like taking the pictures with, like a selfie, with me in the front and the house in the back. Ladies and gentlemen, if this separates your postcard from everyone else in the business. If there’s 25 postcards on the table, yours is gonna jump out because A, it’s a picture of their house and B, they get to see you and you’re a human and obviously you were there in person or you couldn’t have gotten the picture taken. So, this is a wonderful app. I want you to check it out. Reinvestorsummit.com/machine.
All right, we’re back. You talked about a deal in Florida where a guy wanted $400,000, which was $200,000 more than the property was worth, and you were able to work your magic on this property and make everybody happy. You found a buyer slash funder and managed to profit $7,000 yourself, so I want to point out real quick, the reason why this conversation’s so important is you pay a lot of money for leads.
You pay a lot of money for leads, and you gotta capitalize on the leads that you get, even if they’re not what you were looking for, or not making a ton of money. You still need to try and get as much out of every lead as you can continue to market. Hopefully these little side things like we’re fixing to talk about, this little extra $7,000 that the Iannottis made bought another month’s worth of marketing, just this one deal.
All right, so you got this house. It’s upside-down. The guy wants a lot. It’s only worth about $200,000, the guy wants $400,000. You end up making $7,000. I’m all ears. Ready, go.
Jon Iannotti: Yeah, I’m sure the record button’s definitely working on this one. Okay, here’s what we did. It was free and clear home. The gentleman still thought it was 2005, and it was worth double what it was worth when he called me a couple years ago. I told him, I said, “Look, it’s not worth, you know, $400,000.” Well, in our conversation 24 times he told me, “If I don’t get $400,000 I’m not selling. I want $400,000 for my house. I need $400,000. Can you get me $400,000?” He just kept going on and on and on.
So I kind of figured his hot button was that he wanted $400,000 for this house.
Mitch Stephen: He was a price guy. He was a price guy. He wanted [crosstalk 00:22:56] that’s it, you know?
Jon Iannotti: What I did was, I like to look at, when I’m doing these deals, I want to look at market rents. Whatever the market rent is for this particular home, which in this instance it was $1,900 a month. I look at the market rent and if I can keep my total PITI, “principal interest, taxes, insurance,” and I call it total PITI, because it’s principal interest, taxes, and insurance, and HOA fees or assessments or anything else that might attach to PITI as a monthly charge. I want to keep that total PITI close to market rents.
Now of course if it’s under market rents, not something I’m looking at to hang on to. If it’s above market rents than I may not hang on to the property. In this case he wanted $200,000 more than what it was worth, so I’m thinking, eh, I’m not really thinking of hanging on to it. I may find a funder for my deal and step out and make my fee.
The market rent on this was $1,900. Out of that $1,900 was, $400 was taxes and insurance. There was no other fees. That left $1,500 a month. What we did was we found a funder who was willing to pay $1,900 a month for the property. He liked it but he said, “I can’t afford $400,000.” I said, “Well, what if we do it a little differently, do it a little creatively?” He paid $1,900 a month.
$1,500 of that $1,900 will go towards the purchase price every single month. That $400,000 pays down $1,500. The next month it pays down another $1,500, another $1,500, and eventually after a little over 22 years, you own the property. He said, “Hm. That works.” I said, “How much do you have down, because the more you have down, the better chances I have of making this work?”
Well, he only had $7,000. I said, “What else you have?” He said, “I got nothing else I can do.” I said, “All right.” Now I went back to the seller and I reverse engineered the deal with the seller. I went back to him and I said, “Look, I have finding but it’s not cash.” He said, “I told you I need cash.” I said, “Well, nobody’s gonna give you $400,000 cash for a $200,000 house. I don’t care who it is. But I can get you $400,000. It’s just gonna take some time.”
This is where I call it “selling it to the seller.” I had to prove to him it was in his best interest to do the deal our way, kinda like when we used to, right after the crash we were doing short sales galore and we had to sell it to the bank why they needed to take a discount.
I went back to the seller and I said, “Look, I can get you $1,500 a month towards that $400,000. You’re gonna save $400 a month not paying taxes and insurance.” So, over the course of the 22 years, that will save you … I think it was around $56,000, $58,000. “You’re not gonna have to pay utilities and yard care and pool care and all that stuff. There’s another $106,000 there.” I kept going, showing him benefit after benefit of why he needed to do this. It ended up being close to $600,000 he’s gonna get for a $200,000 house in realized savings.
He finally said, “Well, you know what? Maybe I can do that.” And when he said that I had him and we did the deal. The seller got his asking price. The funder got the property at market rent and we made $7,000.
Mitch Stephen: So the moral of the story is … I mean, and I was wondering if this is where it was gonna go, is that you can almost pay any price for something if you can win on the terms, right? I mean, the price is just one of the factors of the negotiation, so you’re letting this guy win on price, but he had to come around to your terms, right? Because otherwise there’s no room for you.
It reminds me of the pretty houses scenario with Ron LeGrand, where you picked up that seven … How long did this take you? From the time you met this guy to the time you made $7,000?
Jon Iannotti: I’d say four weeks.
Mitch Stephen: Yeah, but how much hours, how much time?
Jon Iannotti: Oh, hours? Oh … three.
Mitch Stephen: So, you’re probably working this in the background, right? ‘Cause it’s not really the hottest deal, right? I kinda like those deals ’cause like, I don’t care. If you don’t want to do what I want to do, you don’t-
Stephanie I.: Right.
Mitch Stephen: There’s nothing I can do. I’m doing the best I can. If it’s not good enough, then I need to move on, but …
Jon Iannotti: Yeah.
Mitch Stephen: We have a saying at my house, in my offices. We never let a deal die on our side of the table. We always push it back with another option and let them disappear with our option in their pocket. We don’t let things die on our side of the desk. If someone’s still talking to us, then we’re making offers, some kind of offer.
Stephanie I.: Absolutely.
Jon Iannotti: [crosstalk 00:28:35] definitely.
Mitch Stephen: So, I want you guys that are out there listening to take a lesson from this because, I mean, a lot of people like you said would have walked as soon as the guy said, “I want $400,000 for a $200,000,” that would have been the end of the story and someone would have just walked out. You spent a little more time, didn’t let the deal die on your side of the table. You pushed back and says, “Ah.” You know? “I know I can get you … “
Like I said, you can pay any price just about. Actually you can pay any price if you get the terms and if they wanted to sell this same house for a million dollars, you could have bought it for a million dollars if you didn’t have any payments for 10 years. I mean, there’s always a set of terms that will overcome, you know, the price.
Jon Iannotti: Yeah, exactly.
Mitch Stephen: You got it. It’s either price or terms. They don’t get to eat both.
Jon Iannotti: Right.
Mitch Stephen: They can glean the field, and most people are savvy enough to understand that. I think this guy was pushing, pushing, pushing, trying to get lucky, see if some dummy was gonna write him a check for $400,000 but came to the conclusion that, “Well, I’m not gonna be able to get it all at one time. So, here we go.”
Stephanie I.: Yeah, and the other thing is, Mitch, you know, when it comes right down to it, he still has the asset if the funder defaults.
Mitch Stephen: Yeah, and that was probably … I would think that might have been the hardest thing to sell this guy on, is that he wasn’t getting any down payment from this, and he was giving up his $200,000 which he thought was worth $400,000, or he wanted people to think was worth $400,000. That was probably the biggest … Was that an objection?
Jon Iannotti: No.
Mitch Stephen: Wow.
Jon Iannotti: Actually, he did not object to that. In fact [crosstalk 00:30:16] I told him. I said, “Look, you’re getting $400,000 plus you’re realizing another couple hundred thousand dollars in savings.”
Mitch Stephen: In savings.
Jon Iannotti: Yeah. “How much more do you want?”
Mitch Stephen: Yeah, and that’s another lesson that people do all the time. Don’t make what you think the problem is the problem, ’cause it may not be the problem in their mind.
Stephanie I.: Right.
Mitch Stephen: Just keep going with all the good stuff and don’t create problems that your seller or your buyer’s not bringing to you. I see that happen all the time. People [crosstalk 00:30:48] they see the problem with the deal, and then they make that the problem, and then the deal’s off.
Stephanie I.: Yeah. When we sit in our workshop and we have people, our members say, you know … We’re like, “Okay, what are your objections?” And man, they just bang the objections out there ’cause in their mind they’re thinking, “These are the things that the seller or the funder are gonna say,” and 90% of the time when we get on the phone with them? Those aren’t the objections at all.
Mitch Stephen: Well, they’re possible objections, but they didn’t come to fruition, so why do you-
Stephanie I.: Right.
Mitch Stephen: Why do you want to stand up and start handing your client what the objections are?
Stephanie I.: Exactly. Exactly.
Mitch Stephen: We’re trying to get them to say yes, right?
Stephanie I.: Yeah.
Mitch Stephen: Don’t talk yourself out of a deal, please. [crosstalk 00:31:40] that was really cool though, because the guy was telling you what he wanted. He said 24 times, he said, “I want $400,000. I won’t take less.” So that was the one thing you had to stick to, so you had to … I love that word that you’re using, reverse engineer. You just had to reverse engineer a deal based on his biggest want. Or need.
Stephanie I.: Absolutely.
Jon Iannotti: That’s right.
Mitch Stephen: It’s not your fault that deal seems kind of out in left field because he didn’t give you much choice, so you presented whatever you could come up with to work. Lo and behold, it works because you just kept taking the assumptive, right? You should take the … This is the reasons why you should take it. This is why … I mean, you did a good job of selling, right?
Jon Iannotti: I like to relate it to … like those finance companies on TV, like [Quicken 00:32:32] Loans and those guys, you know? You put all your information in the computer, you hit Enter, then all of a sudden you get offers for funding from lenders all across the country, right?
Mitch Stephen: Mm-hmm (affirmative).
Jon Iannotti: Well, that’s the same thing we’re doing. I just … I give my seller whatever they want, on the initial agreement which I call the “master agreement.” Of course, it is subject to me getting satisfactory funding to buy the deal. I basically am putting a financing contingency in the agreement. We don’t use banks. We don’t use credit unions. Traditional lenders, you know. Our funding sources, and I go through them with the seller, private money, hard money, IRA money, you know. Buyer with money, buyer with loan, tenant buyer, all those things. They totally understand what I’m trying to do.
We go shopping for the funding, and see who’s interested in funding this deal. Now, I will tell my sellers … My funders will do one of a few things. Number one, they will fund it at full face value. They may fund it at less than face value. They may want to fund it with creative terms, or they’ll come back and say, “Jon, you know, we’re just not interested in funding this deal.”
Whatever I find for funding I’m gonna bring back to my seller and they get final approval on the funding. I tell them, “Do you think that’s fair?”
Mitch Stephen: Jon, that just fits in with what I say. It’s amazing how like, you develop these philosophies and then you go around the United States … I mean, you develop your own personal philosophies and the only way that you put it, and then you go to successful guys out there and they got a different name for it or different way they’re looking at it, but it’s just basically the same philosophy.
You’re just not letting the deal die on your side of the table. You’re just … This is what people are telling me they want to do and I’m pushing it back. You know, it’s not gonna die on my side of the table. There’s a perfectly doable thing. I just handed it to you. If you want to walk off with that in your pocket, then the deal dies on your side of the table.
Jon Iannotti: Right. Yep, that’s it. I tell my guys, my acquisition guys, if we get 100 leads today, you do everything in your power to get me 100 contracts to buy. Then I figure out what I’m gonna do as far as funding. Now, the best way to handle funding, in my eyes, is get your funding lined up first. You want to drive as many buyers and funders and private money guys in as possible.
Mitch Stephen: Sure.
Jon Iannotti: You have your funding first. Then you find out where they want to live, or where they want to buy, and now you target market those neighborhoods for properties. Then you work your magic of doing the …
Mitch Stephen: Another reverse. [crosstalk 00:35:38] you did like, a double reverse, Jon. [crosstalk 00:35:43]. Okay, so this has been really good. You know, I don’t think I’ve ever talked about this in such a dramatic … in visual way, to make a deal, to make a deal out of something that … in a market that’s tough.
I mean, there’s a guru on every corner right now. Real estate’s hot as it’s ever been. It’s been as hard as it’s ever been to find a house, you know? I usually buy it myself. I bought 100 houses a year. I mean, I only bought 88 last year because I’m not following this curb up over into the doomsday part, you know?
You still gotta make deals, and part of it is you gotta make a little bit on a lot of deals just to keep the machine running, you know what I mean?
Jon Iannotti: Yeah.
Mitch Stephen: So that when you do find the ones you’re looking for, either you’re buying [inaudible 00:36:38] or in my case my owner-financed houses … I bought 88 houses to owner-finance 62 of them, and then the other … so the other 26 houses, you know, I had to do whatever they said to do.
You’re kinda like the House Whisperer, right? Stephanie?
Stephanie I.: Yeah.
Mitch Stephen: Yeah. Walk up to the house and you turn your ear and you look down at the ground and you just stand there and people go, “What are you doing?” And you’re saying, “I’m listening to what this house tells me it needs me to do with it.”
Stephanie I.: Yeah.
Jon Iannotti: That’s about it.
Stephanie I.: Very true.
Mitch Stephen: Sometimes the message comes back pretty quick and pretty fast, like you know, this is one of those houses. It’s screaming at me, “Retail me.” The other ones are like, “You know, you’re gonna have to get some terms on me or nobody’s gonna take me up on it.”
Stephanie I.: That’s right.
Mitch Stephen: Again, go to reinvestorsummit.com/iannotti, and check it out. They’ve got some, you know … They’re right on top of what they’re doing out there. They’re staying up with the market. They know that times are changing and they’re gonna change again.
I never would say this out loud in a prayer, but there’s another recession coming. There always is. Until then we gotta do things a little different, and then we’ll go back to how it was when the recession hit, so we’ll flip back that way. Just a matter of morphing and kinda living through the cycles as the cycles go through time. [crosstalk 00:38:12]. Go ahead.
Jon Iannotti: The thing of it is, Mitch, you know, all the techniques that we’ve learned over the years, you’ve learned over the years, and everybody’s teaching, they all work. It’s just that some of them work better at certain times, and that’s what we’ve created is, with the “complete agreeable terms” system is what’s working today. We’re doing it. We’re actually doing it. We’re not just teaching it. We’re actually doing it.
Mitch Stephen: Yeah. Yeah, and that’s a really big part too, ’cause there’s a lot of people out there talking about this stuff and I don’t think they really do a lot of it. That’s a really big plus because things [inaudible 00:38:53] in theory, on paper are different when you start talking to people in real life and you start learning whatever the minutiae is.
Jon Iannotti: Right.
Mitch Stephen: Nothing on paper is the same as it is in real life until you’ve been out there a few times. You can come back and address your paper documents, you know.
I really appreciate you taking the time to come the Real Estate Investor Summit podcast. You have a brilliant, brilliant angle and a line on things. I think you’re right on top of your game, personally, myself. You can just tell. Is there anything you would say to the new folks coming in, because this is a difficult … It’s as difficult a time to find houses as it’s ever been. What do you say to the new guys coming to the market?
Jon Iannotti: Well, you know, the thing we need to concentrate on, Mitch, is not just the motivated sellers but the non-motivated as well. Those people have their hands up and they’re saying they want to sell, for whatever reason. Maybe it’s just to move on up, whatever. They’re not motivated to sell but they want to sell. We can still help those people as well, so don’t just chase after the 65 cent discount on the dollar properties, or the rehab properties, the wholesale deals. Don’t just chase those. Chase everything.
I always liked to say … You know, Warren Buffet always says if everybody’s going in one direction, he wants to go the opposite direction. That’s where we are. We like to go the opposite direction of everybody else, because there’s money over there and why are we leaving it there? Let’s go after it.
Stephanie I.: We have a motto that we run our business by. It’s “knowledge is key, timing is crucial, location is important, and having a mentor will keep you on the path to success.” We live by that, because it used to be “location, location, location.” Well, there’s a lot more to it than just location.
Mitch Stephen: Absolutely. I love that. Say it again.
Stephanie I.: “Knowledge is key, timing is crucial, location is important, and having a mentor will keep you on the path to success.”
Mitch Stephen: Yep. Perfect, perfect. I think that’s a good place to wrap up, right here. I want to thank all the listeners for taking time to get you some Jon and Stephanie Iannotti and I’ll hope that you’re out there pursuing your goals, that you’re getting closer every minute and that you’re getting that knowledge. I can’t tell you how important that knowledge piece is. There’s always knowledge in planning, and without it, without the knowledge you’re just floundering around and a mentor can shortcut that for you.
So, this is Mitch Stephen with the Real Estate Investor Summit podcast. I want you to stop by reinvestorsummit.com/iannotti, I-A-N-N-O-T-T-I, and get a free copy of the newest number one bestselling book, The New Masters of Real Estate. It’s gonna be right in line with what we’ve been talking about today. The New Masters have new ways of looking at things and they’re not just going for the low hanging fruit. They’re making deals where people kinda shy away from. They’re making deals in the hard to make deal places.
Go to the reinvestorsummit.com/iannotti, and check out their book, The New Masters of Real Estate.
This was Mitch Stephen with the Real Estate Investor Summit podcast, and we’re outta here.
Announcer: You’ve been listening to the owner-financing master, Mitch “Be the Bank” Stephen on the Real Estate Investor Summit podcast. Let us now blatantly and without apology bribe you towards financial freedom by offering you a whole bunch of free stuff. Go to reinvestorsummit.com, and get you some. And y’all come back now, y’hear?