Nick Prefontaine 0:00
However, generally speaking, the homes that we’re working with our home saw that have had trouble selling on the open market. So were able to, generally speaking, we’re able to give them a price that’s a little bit higher than what the conventional market, all cash will bear at this time. That comes in the form of a delayed cash sale. So whether there’s underlying debt, whether we’re buying it with owner financing, and there’s the only way that we do that, or one of the ways that we do that is if there’s no debt on the property with our principal only payments and we’re able to make a little bit I’m able to bump up the price a little bit because of that.
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J Darrin Gross 1:13
Welcome to Commercial Real Estate Pro Networks, CRE PN Radio. Thanks for joining us. My name is J. Darrin Gross. This is the podcast focused on commercial real estate investment and risk management strategies. Weekly we have conversations with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio.
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Today, my guest is Nick Prefontaine with Wicked Smart Real Estate and Common Goal. And Nick’s an author, a trainer and investor. And in just a minute we’re going to speak with Nick about how you can overcome the challenging times ahead.
But first, a quick reminder, if you like our show, CRE PN Radio, there are a couple things you can do to help. You can like, share and subscribe. And as always, we encourage you to leave a comment. We’d love to hear from our listeners. Also, if you want to see how handsome Our guests are, be sure to check out our YouTube channel. You can find us on YouTube at Commercial Real Estate Pro Network. And while you’re there, please subscribe. With that I want to welcome my guest, Nick Prefontaine, welcome back to CRE PN Radio.
Nick Prefontaine 2:57
Hey, Darrin, I’m excited to be here. And it’s been too long.
J Darrin Gross 3:03
Yeah, definitely. Yes. No, I’m excited to be talking with you today. But before we get started, if you could take just a minute and share with the listeners a little bit about your background.
Nick Prefontaine 3:17
Sure. So back back in back in 2003, I was at Ski Club with my friends. My friends and I had gotten ready for snowboarding for ski club on the bus so we wouldn’t miss a precious moment once we got to the mountain. And we got to the mountain and because we already had a tree for there, Tom when the rest about school headed inside to get ready on the way up there and we noticed that people were wiping out everywhere because it had been raining earlier in the day. Needless to say, it wasn’t our first go around we weren’t beginners we know we’re doing so I got to the top pocket than my snowboard took a breath of that Chris winter air and constantly charged towards the biggest jump in the terrain park with all my speed. And going out to the jump I caught the edge of my snowboard on the so going up the jump which threw me off balance. And that was the last thing that I remember. I was told later that I landed on my head and I wasn’t wearing a helmet. Something else that I learned was that my goggles were the only protection that my head had. They told me that with each subsequent him my goggles mysteriously moved to cushion each blow as I roll down the mountain. And they wanted to because of the severity of my injury. I wasn’t wearing a helmet but the guard was protecting me but because of the severity my injury they wanted to bring a helicopter to the mountain to run Train to the hospital. And they couldn’t because it was too windy. So they sent in an ambulance. So the ambulance there was only on the team, all paramedics that were working around the clock, there was only one of them specialized enough to intubate right on the spot. And because of the severity, my injury, I needed that to be able to breathe. And luckily for me, I was fortunate that he was one of the ones that showed up to the mountain that day. So there were several things that broke in my favor by goggles that and then when I got to the hospital, I was lying there, in a coma, in the ICU, unable to communicate with anyone and my parents were the only my family and my parents, my immediate family and parents were the only ones who are allowed in that room. Definitely during the beginning, and the doctors would, this is a third thing that I really point to the doctors would come into my room. And they figured out he’s in a coma, he can’t he can’t hear what I’m saying. So they went to share the grim news and was worse and worse, more negative, more negative is time they came in to share updates from my parents on the progress on how I was doing. And fortunate for me. And really the rest of my life, my parents stopped them. And they said, no, no, no, not, not here, not in front of him because they knew, even though I was in a coma, I was still taking information. And as I mentioned, especially in the early stages, these updates, and the doctors were not very positive, they had to give them the worst case scenario. So once out of the room, the doctor shared with my parents that I probably wasn’t going to be able to walk, talk or eat on my own ever again. And even if I was able to come out of my coma, there was a good chance that I will need 24 hour care for the rest of my life. So 14 For me, my parents didn’t accept this, like so many others do so many other families and patients do as a death sentence. They took the information, realize that it was the worst case scenario that the doctors legally they had to share that so they they took the information, thank the doctors, and then this allow me to treat it like any other situation. So I would say a month after that I was in a coma for three weeks. I don’t remember a month because it was a partially induced coma due to the severity of it. Once I was aware of my surroundings, and the work that was left in front of me, I got up, did the best that I could not kept getting better every day. Now this support was instrumental in laying the foundation for the rest of my recovery. And I didn’t realize it at the time, but I was starting to use the very framework that would help me to overcome and achieve any obstacle throughout the rest of my life. And that’s a step system. Watch. If we have time later on we can go into but what the steps Step is an acronym that we created, and I unknowingly use. It stands for support, trust, energy, and persistence. And I’ll just remind me, when we get little later on at the end, I can I can share more about that. And listeners if they want to learn more about it. Then, after running what I did, as soon as I could communicate, I knew I heard that my family and parents had the goal for me to make a full recovery. What family or what parents wouldn’t want for their their son or daughter to make a full recovery from that accident. Of course, however, Darren I heard in the back of my head that no you’re not, you’re not just kind of make a full recovery, you’re gonna run out of the hospital. So then running out of the hospital became our common goal. And we organized all of the doctors and therapists with a common goal. And we would schedule weekly meetings to keep everyone pulling in the same direction. So if you fast forward a little bit for the sake of time here. Less than 60 days later, I ran out of the hospital and after running out of the hospital. It wasn’t like my work was done and to continue to go to outpatient therapy for another six months along with being tutored all summer long, five days a week in order to continue on to to high school with the rest of my classmates. And looking back on it, it’s a little surreal that only 18 months out to that I was knocking on the doors of some distressed sellers that hadn’t paid their mortgage and months, sometimes years, these are noticing default doors that I was knocking on. And looking this was reflected back to me by a mentor by my mentor, Tricia Brooke, recently, a little over a year ago, she said, Wait a minute. So you were after recovering and finishing your outpatient rehab, you were only a few months later going into some not so not so nice areas of CVS and knocking on knocking on these doors of these homeowners that had missed a few payments, or, let’s face it, it was, oh 506 had missed like 10 to 12 payments, and the bank still hadn’t foreclose. She said that was really, that was really a part of your recovery, going door to door and helping people out of their unfortunate situation. And I realized I was like, Oh, wow, it was okay. Cuz when you’re younger time is compressed. Two years, 18 months seems like a lifetime when you’re when you’re a teenager, but it’s really not a lot of time at all. That led me after I after I got out of high school, I got my real estate license and started selling helping buyers and sellers as a realtor. And then I actually in 2014, my dad approached me at the end of 2014, he approached me, because he was as an investor, buying homes creatively. So without using any of his cash or investor cash, or any of his credit. So he was getting all these properties, buying them through a rent to own, I’ll just throw out a couple examples like a rent to own sub closing on a subject to closing on it with owner financing. And then however he was buying them creatively, he was always selling on a rent to own. So that’s where that’s where I came in. And that’s where he needed my help putting them on the market. And then after I put them on the market, I he said I need help dealing with all these buyers, because he was busy on the road, I getting more property. So I started helping with the buyers. And over a year my income shifted, where I was making 90% of my income working with him as an investor. So it didn’t even make sense for me to keep my real estate license. So I had let it go in January 2016 and joined him full time. And really, what I did with him was, yeah, work with the buyers, but not just not just answer the phone and be an order taker, I developed with him develop their process, like a very physical process that we have to bring the buyer through. So they’re able to not only get into a home on a rental agreement, but they’re going to get to the end and be able to qualify and get their own loan. And where a lot of the investors out there probably only have 10, or 20% of their rental home buyers actually buying the home, we have an inverse inverse percentage, so 80 to 90% of the buyers that we work with end up buying the home. And that’s because of the very strict process and stringent process that we put them through initially and over the course of a term that’s going to enable them and equip them to be able to qualify for their own loan at the end. So I will go ahead and take a breath because I’ve been talking a lot. So if you have any questions, we can dive into it.
J Darrin Gross 14:12
No, you said a lot. And I think the the kind of and I appreciate you doing that in order for us to kind of set the stage here so we can get into a conversation. Given that we’re recording this in May of 2023. The current economic situation has a few challenges, especially around real estate with interest rates being haven’t risen from where they were for for the last couple of years being very, very low. There is a cloud of uncertainty that’s hanging over us with Lots of recession talk. And it’s been kind of lingering and, and, you know, as of yet, and nobody’s officially said, we’re in a recession, I’ve heard whispers and other things that suggest that, that conditions on the ground may may represent more of a recession kind of thing. I think we’re, what I was hoping and maybe we can get into a little bit is an investor that’s, that’s either wanting to start today, or somebody that’s new, and has started, but it’s trying to grow. You know, they’re facing some challenges. And given your, your personal experience with the the accident and your your, you know, coming through to living a full life, when you were, you know, the medical professionals thought that that would never be the case. Your experience in real estate and this, you know, the multiple ways you, your you and your family’s company have have structured the the acquisition and also then the sale? I would, I’m thinking that like just kind of focusing on how the listeners can position themselves today, so that they have success tomorrow, and how to work through that. And, in fact, maybe the year your step process plays along, you know, in part of that. Does that sound like something you can you can speak to? And if that makes sense? I guess the question.
Nick Prefontaine 16:49
Yeah. Let me do this. I actually think to do this justice. why don’t why don’t we dive in unless you think no, no, that wasn’t, wasn’t what I was thinking about at all. Why don’t we dive in a little bit into the, into the nuts and bolts about our actually like, who we’re helping as far as the sellers, and then who we’re helping, as far as the buyers are just to give the listeners a better idea? Because I know, I glossed over that. But I think that’s really important.
J Darrin Gross 17:27
Yes, I think that kind of qualifies, it sets it up. So they understand.
Nick Prefontaine 17:31
Yeah, I just wanted to go in a little more detail that so I think generally speaking now we buy from a number of different we buy homes from as ambassadors from a number of different people in a number of different situations. However, generally speaking, the homes that we’re working with our home saw that have had trouble selling on the open market. So were able to, generally speaking, we’re able to give them a price that’s a little bit higher than what the conventional market, all cash will bear at this time. That comes in the form of a delayed cash sale. So whether there’s underlying debt, whether we’re buying it with owner financing, and there’s the only way that we do that, or one of the ways that we do that is if there’s no debt on the property with our principal only payments and we’re able to make a little bit able to bump up the price a little bit because of that. If someone has an existing loan, we’ll we’ll work with that either on a rent to own agreement or we’ll close on it and buy a subject to our whatever we’re buying it though, and those are just a few examples. However, we’re buying it though, we’re always selling it on a rent to own and like 90 to 95% of the time, were able to get our buyers to a point where their mortgage ready inside of 24 months. So the majority of the terms that we do with our buyers are 24 months, and how we’re buying these properties. Our terms are generally speaking three to five years and more recently, sometimes even 10 years and beyond. So it’s really important to mention that the buyers the like just just to touch on the process, we bring them through it requires a dat it’s gonna require a down payment. So it requires three to 10% down of the purchase price. And then initially if as every property is different, but if it’s a little bit lower on that range, like more in the three to 5% range. We’d like to see a plan that gets them up close. closer to the 10% over their core, sell us their lease scuze me so that once they do come to the end, and they do go for their own loan, they’re they’re much more likely to be approved for their own loan. They’re responsible for all maintenance, repair and upkeep over their term. And then any repairs and upgrades that they make to the home and subsequent increase in equity. That’s their benefit because of walking in their price day one. So that’s a little bit just jumping, jumping into, into the trenches about, like the nuts and bolts of how it works, just to give your listeners a better idea.
J Darrin Gross 20:45
Got it. So so let’s talk about where maybe a good place to start is just kind of the opportunities, what the focus on on your imagery, there’s two different points that you guys focus on. One is acquiring the properties. And then the other is the buyers, creating a, you know, a list of or a pool of buyers for the properties. On the acquisition, can you speak to a little bit more? Is it primarily, you know, stuff that hasn’t sold as a is that kind of the low hanging fruit that you’re able to come in and make an offer that that? You know, hey, seller is more willing to work with you on?
Nick Prefontaine 21:40
Yeah, exactly. So I’ll give you, I’ll give you I’ll give you an example of a deal. That is, gosh, it’s actually closing, going to be closing in a couple of weeks. We actually came in and we got it on a believe it was a nine year lease purchase agreements. So we’ve had this property, we’ve had this No, I think it was closer to a seven year lease purchase agreement. We put a rental homebuyer in there. And it didn’t work out they had a light, they had a life event. And then we we had to do some upgrades and improvements to the property and we put another buyer in there. And then they were self employed had their own business. And then COVID happened. And every you know, we they were at a point where they didn’t have income coming in. And then with the moratorium and everything for evictions and everything like that. We just cut that property back earlier this year. We got a realtor in there got it listed. And we’re going to be closing on it in a couple of weeks. That was someone that couldn’t sell the property on the open market. So we said to him, Well, we’ll give you will give you a higher price, we’re gonna, what we’re going to do is take care of your underlying debt, because there was a mortgage on the property. So we continue to pay the mortgage monthly, and we have for years, and he didn’t have to worry about all maintenance, repair and upkeep over the course of his term. That is something that we got contractually, and then we pass that along to our rental home buyer that was in the property now, when they weren’t able to purchase and COVID happened and everything. Of course, we had to come in there and take over responsibility for that. But the other thing that no one sees they only hear the or see the HUD or the settlement statement. They say, Oh my god, you guys made 100,000 on that. Well, that’s not the whole story, because we had to, like we had to do a lot for that for that 100,000 That that we’re going to be getting in a couple of weeks.
J Darrin Gross 24:16
So, you know, the extent of the work that you had to do to that was it was that what was keeping the original seller from being able to sell it on an open market or
Nick Prefontaine 24:27
now it was a different time. Okay, it was it was it was a different time this was back in this was back in 2015 2016. So the market wasn’t in a position where it was people talk about and this is something that I wanted to touch on this I’ve just been thinking of this people touched on it all the markets the markets tough now I’m like, really? You think the markets tough right now I got my real estate license in March of 2008. Like the markets strong right now. I feel like And I just anyway, that that’s, that’s just it was a different time in 2015 and 2016, it was a different time. Meaning that homes weren’t were moving like hotcakes and selling when multiple offers in a weekend, so he wasn’t able to get his price. So we benefit, he doesn’t benefit but we benefit from have benefited from the principal pay down over the call at seven or eight years, we benefited from that. So every time every month we make a payment, the mortgage is continuing to come down, along with the benefits of appreciation and everything like that. We were gaining in that upside as the investment.
J Darrin Gross 25:54
Yeah, so So you guys, you acquired it when the the market was kind of in a challenging state. You put tenant second tenant in there ended up having to make the payments. But the the the end is approaching here, you’ve got a retail buyer in today’s market, and like you said you still had to carry the mortgage, all during that time when you had a renter that wasn’t paying your structure of the purchase with the buyer. Was that a a cash payment? Or did you did you make was a cash upon sale? How was it that what what were the
Nick Prefontaine 26:45
reason the buyer that we’re closing in a couple of weeks you talking about or
J Darrin Gross 26:49
the seller the seller to you purchased the you acquired the property from?
Nick Prefontaine 26:53
Yeah, I was the I don’t believe memory, just coming from memory here. But I don’t believe we did a down payment, we just told them that we’ll we’ll leave you all of your of your monthly payment of your mortgage payment. And we’ll take overall responsibility for the property until such time that we can cash you out in the future. There wasn’t, there wasn’t an option for him at that time, because he was at a point where if he saw with a realtor, conventionally, he would have had to show up at the closing table and pay 10 or 15,000 for the realtor. Whereas now because we’ve had the properties and the property fears the mortgage has come down the markets appreciated. Yeah, we’ve had to deal with a few life events that have happened in tenant buyers lives. But that’s reality. That’s, that’s real estate investing. So I mean, of course, we would have liked to see the buyer succeed. If the buyer was able to succeed, then everyone would have been able to move on sooner. However, they weren’t able to sell in this in this case, it’s unfortunate, but we’re still able to do okay.
J Darrin Gross 28:14
Got it in but just again, for the the seller that you acquired the property from was there any any? Or will they benefit anything? Will they receive anything? Or was it just more matter that you took a headlock, you know, took the pain that they were facing off, they’re gonna took it away from them to where they didn’t have to deal with him?
Nick Prefontaine 28:38
There, their mortgage, the underlying debt will be paid off. Their name will be off title. But that’s yeah, that’s it. Nothing else? Got it. Got
J Darrin Gross 28:52
it. Yeah. No, and I think so, here’s kind of the thing, I guess I’m kind of curious about it. It’s interesting, you know, when you say that, you know, these are amazing times, you know, and truly in comparison to, you know, history, we’re in good shape. I mean, interest rates are not like, Oh, my God, the market is still full of, you know, more buyers than sellers. And I, you know, when you keep that in mind, it’s it’s a good, you know, the market is in a good, good position. I think sometimes the, you know, just as you were talking about it, I recognize that some of the people I’ve been observing or like paying attention to are people that are more reflective of just recent times as opposed to now. And, you know, I think there’s also a sense of like, we’re due for a some sort of an event or a crash just based on the economic cycles in that and so there’s more of a looking for a, a challenge, so that, you know, having having listened to you just for a minute Aaron and him kind of thought about it. Reality is that it’s a good time, it’s a good time to get into real estate.
Nick Prefontaine 30:08
Always a good time, there’s
J Darrin Gross 30:09
always a good time, right? There’s never and I’ve got clients have made money in all markets. whenever, whenever there’s a situation, they’ve always been able to find the opportunity in the market. And, you know, play to the strengths of the market, rather than trying to make the market do something that that it no longer is doing. And, you know, so I think the takeaway I’m kind of hearing is that, hey, it’s a good market, there’s always a good opportunity. It’s up to you, the investor to find the opportunity and play to the opportunity, rather than trying to get yesterday’s deals to fit today’s market. And I think that that’s, that’s pretty wise.
Nick Prefontaine 30:53
Yeah, you’re not going to do yourself any favors by living in the past.
J Darrin Gross 30:57
Yeah, yeah. For somebody that’s that’s looking to get started. Any or anybody’s currently looking to grow anybody? That’s, that’s still looking to get started? Are there any, any words of wisdom or, you know, ideas you can share that that you would encourage somebody to consider in order to start or grow their portfolio?
Nick Prefontaine 31:29
Yeah, that’s a great question. So I am not going to pretend and we’re not going to pretend to be all things to all people. We get that our niche creative real estate. I’m a little bias, I think it’s the best niche to be involved in were a little bias. However, I know it’s not reality, and whatever niche that you’re interested in, just get get with someone who’s doing deals, not just teaching it, but actually doing deals in that niche and follow them. And that’s, that’s kind of what we’re doing with our associates. So if anything, what I said today, are rings true, and you want to learn more about what we’re doing. You can go to our website, which is smart real estate coach.com. And if you scroll down, you can get registered for the free masters class. That And there you’re going to learn about all about our trade, our trademark three paydays system, our where you can get paid up to three times on a deal as opposed to just one way and when I was a realtor, it was just one way sell a house, get a commission. And now this is up to three different ways. So you get money. Number one, when the buyer puts their downpayment down to get in the house, you make money monthly, the spread between what you’re able to create between the mortgage or the payment to the seller, and what you’re able to collect from the buyer. We call that pay day two. And the third is an oftentimes, it’s the greatest. That’s why incentivizes us to get buyers to the finish line, as I mentioned the deal in a couple of weeks as closing. That’s 100,000, though. So that’s the just like a high level overview of the three paydays system that you’re going to learn about in that Master’s class, and a little bit more about how we buy and sell in terms of that answer your question?
J Darrin Gross 33:44
Was all that nice. Yeah. No, that’s, that’s that’s kind of what I was looking for there. Perfect. Hey, Nick, if we could, I’d like to shift gears here for a second. By day, I’m an insurance broker. And as such, I work with my clients to assess risk and determine what to do with risk. And there’s three strategies we typically consider, we first look to see if we can avoid the risk. And when that’s not an option, we’ll look to see if there’s a way we can minimize the risk. And if we cannot avoid nor minimize the risk, we look to see if we can transfer the risk. And that’s what an insurance policy is it’s a risk transfer vehicle. And as such, I like to ask my guests if they can look at their own situation. How you could frame this however you you would like could be your clients investors, the the the Fed rate the government, anything political, however you consider whatever you consider to be the the biggest risk. And just for clarification, while I am an insurance broker, I am not necessarily looking for an insurance related answer. And so if you’re willing, I’d like to ask you Nick Prefontaine what is the BIGGEST RISK?
Nick Prefontaine 35:04
What is the biggest risk? So the biggest risk to me is not following that voice in the back of your head. Now I’d like to frame that in, in a few different ways if I can. So when I was in the hospital, that voice was no, they said, You’re gonna make a full recovery. My parents were, that was their goal, you’re gonna make a full recovery, I followed the voice that said, No, you’re gonna run out, then all throughout my life, no matter what I’m doing, as a successful realtor, as a successful real estate investor. And then as I moved into being a coach, and a trainer with smart real estate coach, as well as still do deals, I’ve always had that voice in the back of my head, which has told me that I have to be speaking and sharing my story, and helping others that are going through a trauma life challenge or adversity and helping them get through to the other side. I think the biggest risk is not listening to that voice and rationalizing it away. Two years ago, I reached out, I got to a point. And I reached out to my mentor to have a to have a conversation with her and share my, my goals and my vision about what I wanted to do. And I said, What do you think I should do? She said, the speaker salon in New York City, our community for six weeks in a row in New York City. That was in the fall of 21. During that she presented or pitch the idea of working with her one on one, she helped speakers to build out their speaker platform and really fine tune their craft and their message. And I said, Yes, I didn’t know how I was going to do it. But I said yes. And a week later, I walked in with her. And without her. And without listening to that voice in the back of my head, I wouldn’t have common goal and the speaking Korea that I have to go stay. And she was one that actually helped me develop the step system, which I trust, which I touched on support, trust, energy and persistence. I know we didn’t have time to really go over that today. But if any of your listeners are interested in downloading the free ebook step, where they’re going to learn all about support, trust, energy and persistence, they can go to Nick prefontaine.com, forward slash step two, download the step system for free today.
J Darrin Gross 37:55
Awesome. I appreciate you sharing that. And I would encourage anybody to check out the the book, and also some of the other books that are available through the wicked smart. I mean, there’s
Nick Prefontaine 38:10
Thank you, thank you for. Yeah, thank you for reminding me, I have a free book for our listeners. So if they go to wicked, smart books.com, forward slash C, R, E, P, and then get a free copy of The New Rules of real estate investing, which I’m an author, and I’m a co author on that as well. And they’re going to learn from 24 leading experts, like SFM, where we’re biased, we think our niche is the best, but all these different experts share their niche and their strategy and everything so you can decipher for yourself, what is the best and when I say we’ll send it to you for free. We’re not going to hit you off for shipping and handling. I mean, totally free. 100% free, we’ll get that out to you.
J Darrin Gross 39:05
And it’s a great, the book you just referenced. I know I’ve read it and I found it to be a great book and can encourage enough. Anybody that’s looking to get into real estate and or, you know, in real estate, looking for some some pearls of wisdom. It’s a great, great book there. So appreciate that. Nick, I cannot say thanks enough. We’re taking the time to talk again today. I’ve enjoyed it again, and continue to learn every time we speak. And I look forward to doing it our next time. So we will be in touch soon.
Nick Prefontaine 39:43
I had a blast as as I did last time I had a blast. We gotta not let so much time go by when we’re doing this.
J Darrin Gross 39:50
You got it. You got it. All right for our listeners. If you liked this episode, don’t forget to like, share and subscribe. Remember, the more you Know the more you grow. That’s all we’ve got this week. Till next time. Thanks for listening to commercial real estate pro networks CRE PN Radio.
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