Tenant-Free Cash Flow: A Strategy to Scale Your Real Estate Business w/ Nick Disney

Nick Disney: [0:00] In any business, there's times when you want more cash in it, less cash in it, and cash goes in and out. We're also able to as you develop some relationships with banks, you can take these notes in just like you could refinance a rental property. And I will tell people this is not gonna happen on day one. These are long these are long term relationships, but you can take these notes and you can park them as collateral just like you would your rental property with the bank. So let's take that note that we talked about earlier. I've got $1.35 in it. If I go to the bank and they're like, well, this note's $1.70, we'll give you this much return on it. If I can pull that out and basically I'm refinancing it, but it's the paper. I'm not I don't own this house. I sold this house to somebody else. Welcome

Speaker 2: [0:42] to the Collecting keys podcast. The show where you'll learn how to use real estate to create massive income, not just passive income. Real estate doesn't have to be a get rich slow game. Listen to the country's top real estate operators, and you'll have all the tools you need to replace your w two income and go beyond in under twelve months. Ready to take things to the next level? Let's

Mike DeHaan: [1:09] jump in

Speaker 2: [1:09] with our hosts, Mike DeHaan and Dan Austin for today's episode of the collecting keys podcast.

Mike DeHaan: [1:19] Alright. Nick Disney, my man, I'm super excited to have you on the show. It's funny. I said to you when we hopped on that you said people usually remember your name. I don't know. I'm a visual guy. We followed each other on social media for a while, and I made some connection when we got on here. I just saw your name on my calendar, and I was like, oh, it's that guy.

Dan Austin: [1:37] Yep.

Mike DeHaan: [1:37] Super excited to get into the show today, man. And just for a little preview for all of our listeners, Nick is a big time wholesaler down in the San Antonio market, and we are going to be talking about his specialty today, which he referred to as tenant free cash flow. And if that doesn't get you excited, then I don't even know what you're doing in business, because that sounds like pretty much the best thing I can think of. So Nick, man, I appreciate you coming on. Yeah. Thanks for having me. Yeah. So before we dive into all the details, just give a little bit of an overview, kind of who you are, where you're from, and what exactly your real estate business looks like.

Nick Disney: [2:13] Nick Disney, I'm in San Antonio, Texas, and we are only single family, that's our specialty, that's the only thing that we we do, mostly focused on long term cash flow, and we do most of that by creating owner finance mortgage notes, which is where we create our tenant free cash flow. Awesome.

Mike DeHaan: [2:32] So how did you, I guess, get started in this? Like, what sort of brought you to that tenant free cash flow position mindset? Because, I mean, that's that's like an experience thing. It's not like you just like got into the game and you were doing that right away.

Nick Disney: [2:46] No. I was years into it. I had built a small rental portfolio at the time, and rentals are great. I'm pro rental, but they just accomplish something different as far as the cash flow side. And so I met some guys here who were doing a lot of owner finance in San Antonio, and a couple things clicked for me because I was already marketing. And what I wanted is rentals didn't necessarily fit some of the deals I was finding that would make good owner finance properties, And instead of wholesaling those off and at the time, you know, the wholesale fee was like 4 or $5, I was like, well, hang on. I could actually owner finance this house and create cash flow. And and when you when you do owner finance correctly, there is work up front, but once you have it set up and you're you don't have a tenant, you don't have that same tenant turnover because you're holding this mortgage, so then you're just getting paid principal and interest every month. And so found that to be much more scalable for what I was doing versus trying to own. Instead of trying to own a 100 rentals, was like, well if I could own a 100 notes, then I've got all the cash flow that I need, and I'll figure the rest out.

Dan Austin: [3:52] I mean, easy enough. The math seems to work out in my mind right now. It did, You know, like the idea too, you know, and I'll have tons of questions for you, Mike and I are working through selling a property on a seller finance right now. We've done some lease to own exits. And so I'd love to go into why not that? And why seller financing? But right now, yeah, I've got a ton of questions. So maybe we'll start with what is the return on a seller note versus owning the property? Like, why how did you get to that? Because obviously the work seems easier to have a note, and we all wanna be the bank. That's what everybody says.

Nick Disney: [4:24] So the simplest way I would have people look at it is the rental properties, and you own them, I own them, they're but they accomplish one thing. And it's not typically cash flow, just because by the time you pay the mortgage, I don't know what your tax bills are, but mine's crazy, we pay insurance, we pay for some repairs. There's not a whole lot of cash flow left over. You avoid a lot of those things when you're in the bank and you're holding this mortgage because you don't you're not responsible for taxes, insurance. And so your cash flow is very predictable, and it's principal and interest just like where you guys pay principal and interest on your properties. You're not collecting that. So it's very predictable. And when set up correctly, there's not a lot of work. Like, mean, I've had notes that I've had for years, and I don't do anything. I just get paid. And so that is that is the big advantage is creating cash flow in the single family space for the amount of work once it's set up and running. Yeah. Nice.

Mike DeHaan: [5:19] Yeah. So let's walk through one of these deals, guess, kind of like start to end. So I imagine most of these deals you're sourcing your sourcing yourself because you have a wholesale background. Yep. So I'll do in direct to seller. What's your typical marketing strategy? Just curious.

Nick Disney: [5:33] So most of our marketing's online. We do do some direct mail, and we've been around San Antonio a long time, so there's a few wholesalers that we'll buy from who we've had relationships with for years.

Mike DeHaan: [5:42] Fair enough.

Nick Disney: [5:43] But the majority of ours come from online marketing, and that's a combination of SEO and and pay per click. So, yeah. So we'll go direct to seller, we'll purchase this property. In San Antonio, for people that aren't familiar with the market, it's not as high as higher priced market as many areas in the country. So we like to own or finance a house that we can sell for 200,000 or less.

Speaker 2: [6:02] Damn it.

Nick Disney: [6:02] That's our specialty, that is our prime market. So what we'll do is we'll purchase that property. That property is like any other off market deal, needs some repairs, so we're gonna buy that at a discount. We're gonna go in, we're gonna rehab that property. We're gonna make sure there's different people who do wanna finance different ways. This is our method and and what we found that works best for us, but, you know, we we will we'll check foundation. We have an electrician on the team now. We have a plumber that works for us. We have a roof. You know, we'll check everything, make sure it's good. And we wanna create a good solid it looks like a rent ready property. Uh-huh. And so then we'll sell it. When we sell it, the interest rate for us right now is 10.9%. Wow. So if we bought it at say, like, I mean, if I just took like, we we contracted one last night for sale. So we bought that house for 100, it needed about 30 in work, and it was a good deal, sold it for $189.09. So but when you sell $189.09 at ten point nine, we don't have $189.09 in the property. Right? Uh-huh. So if we have say, 135, a 140 in there, your return obviously is higher because you don't have, you're getting 10.9 because you're off this number, but you only have this much in it, right? And if you will give a quality product and you will sell the right product to the right person, you can set up a long term win win. Folks are more than happy to pay their mortgage, and we have a lot less issues with payments on our mortgage notes than we do with our rentals. That's just the experience we have here.

Dan Austin: [7:36] Are you pricing them higher than market because of more of a captive audience, or are you just capturing that in the interest rate?

Nick Disney: [7:42] Yeah, we're not. Some people will suggest that, but for us, it we don't need to.

Mike DeHaan: [7:48] Uh-huh.

Nick Disney: [7:48] We make plenty of money Yep. Selling them at market value, and also we will sell our mortgage notes. So Oh. If we sold it and say say, Dan, say you wanna buy one. Right? Well, sold the property $189.09. We got the down payment. The the note is, say, $1.70 is left on this note. If I go to sell you that, you're gonna go look and see what the value of the property is, and you're gonna wanna make sure that that note is less than the value of the property. So to sell your note to anyone that does any research at all, they're they're gonna be like, woah, you just sold this for too much and now you've got a mortgage, I don't wanna buy that. It it decreases the value if you ever wanna sell it. So we'll price ours right at market value, we make our money in a combination of the spread, and then the return on the interest.

Dan Austin: [8:29] That's fascinating. Okay. So I didn't think about the fact that you can sell these notes because in my mind, was like, man, you're gonna run out of cash quickly if you just keep buying these cash and then and then flipping them, but you know, only like you said, leave $1.35 in there or something like that.

Nick Disney: [8:43] Mhmm.

Mike DeHaan: [8:44] So I was gonna dive into that finance piece too. So you're doing this, you're so you're $1.35 into the deal. Is this you bringing all that cash or do you are you bringing in like another lender and you're like arbitraging this? You know, you're basically creating your spread on your sale interest versus what you're paying. So you're almost doing like a I guess that point it would be a wrap, but you're doing these straight seller finance. Like, what what is

Nick Disney: [9:05] what is the financial situation on this? We will use our own cash or lines of credit that we've have with banks. And so but typically, we're gonna bring in a private lender. Right? So, you know, I go to Dan. Hey, man. We've got this project. It's $1.35, and we'll borrow the $1.35. Takes us, you know, three, four months. Before we sell it on our finance, we will cash down back out. We will pay off that lien. Mhmm. The reason is because I wanna create a first position note so that if I wanna hold it, it's a better note. If I wanna sell it, nobody's interested in buying my wrapped note that, you know, so it has a lot more value. And if we create the best possible mortgage note we can, we can sell it for more and it's more desirable product. And if you create a better product, it just it makes everything flow long term. So by not keeping every I would love to I would keep every single note, but to your point, like the capital we would have in it would be insane. So to create the best note you can and to keep as many as we can, we'll create some, sell them. And I mean, a 10.9 return for fifteen, twenty, or thirty years is very attractive to a lot of people.

Dan Austin: [10:12] Would you sell oftentimes those notes to your private lenders that are helping you acquire them? Are they, is that the same audience for these, or is there a totally different market? There's both.

Nick Disney: [10:21] Okay. What happens a lot is with short term lenders, so I'm sure you guys have had this same experience. A lot of private lenders start off with, well, they only wanna lend for three months or six months.

Mike DeHaan: [10:31] Uh-huh.

Nick Disney: [10:31] It feels safe because they got it back. The problem with getting it back is as soon as you get it back, you have a 0% return when it sits in your account, so they wanna put it out back. Yep. And as you build a relationship, then they'll typically want to like, wow, man. Okay. We know you. Like, I just can I just buy one of those notes? I'm getting the same return, but then it's just set for a long time. And and when you just look at the math on a mortgage, right, because these are amortized over thirty years as well. So you start playing with that number Yeah. It starts to get incredibly attractive Mhmm. To have a few of these. So that'll happen a lot. And then we will we typically don't sell them to other investors. They'll be individuals who want to invest in real estate but don't want to do anything.

Mike DeHaan: [11:14] Yep. Yeah. That's fascinating. So, I mean, you need a lot of capital to be cashing out all these investors. Are you just you're generating that from your business? Like, you said you have some lines of credit. So this is just your way of heavily investing back into your business. It's your way of acquiring properties that have using the, like bank finance. And then I'm guessing you probably choose to sell some of your notes, you just need some more liquidity to roll back into the next deal. Right? At what point do you decide to sell these notes? Like how do you kind of decide which ones you wanna keep, which

Nick Disney: [11:45] ones you don't? It just, you know, like in any business, there's times when you want more cash in it, less cash in it, and cash goes in and out. We're also able to so as you develop some relationships with banks, you can take these notes in just like you did refinance a rental property. And I will tell people this is not gonna happen on day one. These are long these are long term relationships, but you can take these notes and you can park them as collateral just like you would your rental property with the bank. So let's take that note that we talked about earlier. I've got $1.35 in it. If I go to the bank and they're like, oh, this notes $1.70 will give you this much return on if I can pull that out And basically, I'm refinancing it, but it's the paper. I'm not I don't own this house. I sold this house to somebody else. And those lines will will come and go. Sorry.

Dan Austin: [12:31] I'm looking at Mike, and he's just like, I I know when Mike's excited. I'm just like, Mike, you got my gears turning, dude. Yeah. I'm excited about this too because what you're saying is I could call my guy, Matt, who works at our bank and say, hey, wanna trade some paper on this so I can get liquidity. Mhmm.

Nick Disney: [12:46] You can. And as you talk more to Matt, what you can do is you build the relationships is okay. So let's say you guys made this note, you sold it on a thirty year. And you went over to Matt, and you're like, hey, you know, we'd like to pull some back out. The paper's worth $1.70. He's like, you know what, guys? I'll I'll give you $1.35. So let's just, you know, for simplicity's sake, you pulled all your money back out, but guys, I need I'm not gonna do it on thirty year terms. I wanna do it on ten, twelve, something like that. You're like, darn. Well, I'm just gonna kinda break even, but you have no money in this deal now. And if you sold it on a 30, and you paid it off in ten, you have twenty years of gravy. And so we have a lot of those where we don't have any money left in them. We know we just have to wait a little bit, and we do that.

Mike DeHaan: [13:29] So I guess in that situation, where you have that, you know, let's say the $1.85, you're selling it, he's giving you $1.35 for the note, there's this there's that, you know, think like a loss that basically you're keeping that spread on like cash flow from what you're paying them or did I miss that?

Nick Disney: [13:45] Typically, with the banks that I've worked with that will allow us to put up the paper as collateral, they're not gonna do that on thirty year terms. It's not even up There's not even a discussion Oh, I

Mike DeHaan: [13:55] got you extrude. You're getting like the twelve year debt tied to that other debt, that's the collateral for the new debt.

Nick Disney: [14:01] Right. So basically what I'll do And in a lot of these, I'm fine with breaking. If I have a thirty year note and I can pull all or almost all my money back out, I'll ride it break even Gotcha. For ten years and then take twenty years. I love the long game, A pure gravy.

Mike DeHaan: [14:20] A pure gravy. Especially because you don't have to worry about like maintenance and those sort of things. You might it doesn't matter if it cash flows positively at all because you're getting the pay down on your on your debt. Exactly.

Dan Austin: [14:28] As long as it's breakeven and you're not having to pay out of pocket, which I mean, you could potentially whatever. But once you, like you're saying, once you get to the ten years where you've paid off the bank note, now all that principal and interest on the rest of that thirty year you originated is just you into your account. Boom, boom, boom, boom.

Mike DeHaan: [14:43] Yeah. That's freaking awesome. So this is so interesting, because like, this is what massive corporations do Yeah. On like a corporate level when they have like these different corporate debts and things. But you're doing it on on a smaller scale with homes that are, you know, under $20,000.

Dan Austin: [14:57] Yep. Serving, I'm assuming, an underserved market.

Nick Disney: [15:00] We're definitely we're serving an underserved market. And Yeah. Yeah. You know, we've made a lot of mistakes over over a long time, but once you once you learn people that really I mean, it's not some pie in the sky fantasy idea. They really want the opportunity to own a home, but they are not bankable.

Mike DeHaan: [15:18] Uh-huh.

Nick Disney: [15:19] This is not people who have bad credit and have foreclosures and repossessions and things like that. They just don't have any established credit. I've sold lots and lots of houses to people who have no fixed debt, no truck payment, no car payment, no mortgage payment, no credit card. Yep. The only fixed debt they have is the mortgage that we're making for them, and they make plenty of money.

Dan Austin: [15:37] That's actually a very, very good question. How do you underwrite these? What what kind of background checks, credit checks, all that stuff? What are you doing to say this I'm originating a secure loan, I trust this person to give them this money?

Nick Disney: [15:47] We're advertising and, you know, we have a salesperson on the team now who sells all the properties for us. He'll interview them at first. He knows what we're looking for, what questions to ask. And in broad terms, we're not doing bad credit, but no credit is great. Right? And so okay. So they don't have any bad credit, so they but they have a secure job and they have the income. Okay. And they've had this income for a good amount of time, or least in the same field is something that we would look for. Right? And maybe you change jobs a few times, but you could see where somebody will work up in their career. Uh-huh. Contractor is a good example, a business owner, a restaurant owner, and they've had this for a long time. And then let's also look at, do they have a down payment? So there are people that'll tell you, oh, I'll get 2,500 down and sell them the house. That is not our model. It's not what I recommend. We're typically gonna require about $25,000 to buy one of our houses, and that's at that price point. That 25 is usually closing costs and down payment, you know, escrows and everything put together. But $25,000 is a substantial financial commitment, and it also tells you a a lot about a lot of people because they've worked hard to save that money, which does show some additional responsibility.

Nick Disney: [17:01] So after we do that and we interview everyone that we sell a house, they have to come to the office, they have to sit down with us for a face to face interview. So they provided their documentation, proving their income, showing their work history, etcetera. Once we feel good there, we will all of our loans are created with an RMLO, a residential mortgage loan originator. One, you should be doing that. It's the right way to do it, And they will also just kinda help you cross your t's, dot your i's, make sure everything's in order. But they will do a dish they will do a credit report on everybody. They have a quality measures report, which they also send to us. And they also make sure that every even though no one's made mistakes, like, though we're trying to do everything the right way, if we are out of line or we're creating more or something's not right, they just they're very, like the line is firm. They're like, hey. That won't work. We can't do this. And so once we've gone through all those steps, we have a very good chance of having a a successful mortgage that and so those things altogether, and then not overpricing the property Good. Not trying to push the interest rate at, you know, to 12.9, thirteen, fourteen. Because legally, we could, but we don't. Uh-huh.

Nick Disney: [18:06] We want something that pays, and we want something that pays every month long term. And so you can create a very, very good mortgage note with just some simple.

Dan Austin: [18:16] Is that part of the using this residential mortgage originator, does that help you on the back end to sell it to you because you've met some specific criteria?

Nick Disney: [18:24] 100%.

Dan Austin: [18:25] Makes sense.

Nick Disney: [18:25] Most people that are looking to buy a mortgage for you, that's a very common question. Not everyone does it. People have their own ways of doing business, but I've been asked all the time as a first question, do you use an RMO? They don't so much care who you used. I think it is important who you used, but they wanna know if you used one. Yeah. And then, you know, we set them up with a third party servicer.

Mike DeHaan: [18:46] Uh-huh.

Nick Disney: [18:47] So we're not collecting payments. They will collect the payments. They will hold escrows for taxes and insurance. And so let's say that Mike had bought the note from us. Hey, Mike. We use this servicer. Would you like to continue to use them? We'll transfer it over to you. We send a couple emails and the paperwork saying, you know, Mike has bought this note from us. And the next payment goes to him, and so they'll go ahead and escrow taxes insurance, and then every month they'll send Mike his principal and interest.

Mike DeHaan: [19:11] Yeah. That that makes so much sense. That's so smart to use the loan originator like that because that's always one of the biggest things with seller finance stuff is people have these really loose Very of trust, these prom story notes. These things that are kinda they exist, but are they actually enforced or are they actually put together? Well, I don't know. Rocket lawyer sure says

Nick Disney: [19:30] they are.

Mike DeHaan: [19:31] Who knows if that means anything in your market. Right? So and it's funny because like, you're talking about going and and selling these to corporate institutions. That's absolutely the first thing they're gonna ask. Like, that just makes so much sense. Yeah. You you gotta figure it out, That that's awesome. I I love just like all the different different things that you put together here.

Nick Disney: [19:49] Yeah. No. I appreciate it. And it's not that hard to set them up right. Like, we we everybody buys a house, you have to get a title policy. Even if they don't want to, and we we got one on the front end obviously, and then, nope. You have to close a title. The docs are done by the attorney at the title company. We use it like, this is the system. You know, get with it or Yep.

Dan Austin: [20:10] It's down.

Nick Disney: [20:11] Or we'll pass it and move on to someone else.

Mike DeHaan: [20:13] Yeah. I I guess to give a perspective on it for, all the house flippers, this is basically the same as, you know, if you're building a house, you're doing a renovation, and people say they wanna see, like, the electrical inspection. They wanna know if you used a licensed electrician Mhmm. To do the parts of this renovation. Doing all

Dan Austin: [20:28] the right steps. Right? Mhmm. So let's talk about then when these things go bad because obviously there's a chance that people don't pay. And what are the risks of that and the results? Like, what have you experienced and how

Nick Disney: [20:40] do you make that so it's not detrimental? So there's a few things that you wanna think about, and nothing's all candy canes and unicorns, Right. It's it's sometimes people aren't gonna pay no matter how how much work you put into it. Right. Rarely do they go bad right away in our experience if we put in all the effort upfront. But if they stop paying, couple reasons like, if it's our note or if we sold the note to somebody else, we make like, everyone has come to the office and met with us. So if we call, they know why we're calling. Mhmm. And so usually we can talk to them, find out what's going on. The majority of time when they miss a payment or two, something happened in their life and they were scared, and we can talk to them. They're like, hey, you know, I'm glad you called. I mean, truthfully, they're like, well, glad you called. Hey. We're gonna make the two payments. Cool. I don't care whether you paid me in, you know, January or March, whatever. Just pay me. If that doesn't work out, you know, or they're they're not responsive, then, you know, we'll move forward. The foreclosure process in Texas is not is not difficult. You wanna do it the right way. We're not gonna do it ourselves. I'm gonna email the attorney. I'm gonna be like, hey. You haven't paid. Can we start the process?

Nick Disney: [21:44] And they'll send the letters. Most of the time when they get the letters from the attorney and the packet, I mean, it's obvious it's from attorney, they're gonna reach out. If they don't and you foreclose, it's I don't know if you got how your auctions work there, but, you know, foreclose on the property, and we'll take the property back. And then whoever takes that property back with the trustee's deed at foreclosure auction, it's it's your property. You can you can then rent that property, you can fix and sell it, you could own or finance that property again. You're gonna be out a couple of months of payments, but because sometimes you can we try to set up everyone for long term success. But if somebody pays you on a 10.9 mortgage note for say five years, and then they default, you've probably collected interest. You probably got $7,080,000 interest without getting that calculator out that you've already gotten back. Well, if you bought it for this, you know, you've got such a spread plus what what happens typically, you know, like, probably values go up. So The house is likely not worth zero when you have to take it over. Right?

Dan Austin: [22:49] It's it's not legal. Even the land.

Nick Disney: [22:52] Yeah. I mean, sometimes it works out great. Like, I ended up with one back that I'd sold. I got it back a couple years ago. I sold it, you know, four or five years before that for a $100,000. That was the value at the time. They paid for a few years. They made some mistakes. And it was very cordial. I just like, hey, I'm gonna have to foreclose, no problem, took it back. We put, you know, about another $15 in, I sold it for $1.60.

Dan Austin: [23:14] Is there That's good. Is there a is there a situation where like you said this was cordial, where you don't have to go through the foreclosure process, but they'll just deed it back over to you, so they're not hurt by it, and you're you get the property back, that seems like a good way.

Nick Disney: [23:28] If we have communication, and that is not uncommon. Okay. If we went and talked to them, most of the time they're, they just had a hiccup in their life, and they're gonna make back up these payments. Totally. If they can't, usually we can talk to them like, hey. Here's the situation. The option you know, it is your choice. Like, we'll either foreclose and take this back if you'd like to. It's deed in lieu of foreclosure, you can deed it back to us. We'll we'll research to make sure there's no other liens tied to the property and stuff. But we'll take it back like that. It's not uncommon to say, hey. You know, we didn't pay. Sorry. We'll we'll sign it back, and we'll leave. That happens a fair amount.

Dan Austin: [24:00] So here's another question for you. Because I guess the the worst case scenario in my mind would be is you loan somebody money, and then they fail to pay you, and then they trash the house. They break all the windows and they trash it. Do you have like a maintenance clause or anything in your documents that they have to maintain the property while they own it, or why you have the position, is that just an inherent risk with it? Because I know like, when you do, you know, lease to own and some other types of exits, you can put like maintenance clauses in your documents that they have to sign. I just didn't know if that was something that's common for this type of transaction.

Nick Disney: [24:35] It's a little difficult to hold people to that. Of course. So you're gonna wanna be listed as the mortgagee on the insurance. Just like any property that you have, the bank is gonna be the mortgagee on that insurance. So that's another level of protection. And it it does say that you have the right to secure and keep your property in good condition. They can't just let it fall apart. Uh-huh. If it ever does come to that, there's gonna be some balance. So you never want to have a mortgage where this property's worth 200,000, my note is also 200,000, I have no money out of that.

Dan Austin: [25:04] Uh-huh.

Nick Disney: [25:05] But the one we contracted last night, they're putting 30,000 down plus closing cost. So I've got $30,000 worth of spread, which is another piece that helps protect me if something was to go bad in general. So there are people tell you just to to owner finance any junk property that you get. Don't fix it up. Just sell it like that. And here's the problem, because I have made plenty of mistakes. When you sell someone a piece of junk, if you ever get it back, you're getting a worse piece of junk back.

Mike DeHaan: [25:31] Right. Totally.

Nick Disney: [25:33] Period. And you just create a headache. If you give somebody a quality product that is their home, typically, they treat it better Okay. Than one, if you give them a piece of junk, or two, even if it's a rental property where it's not theirs because people take care of their stuff better than other people's stuff. So if you do enough, probably gonna find one of those, but we can really do our best to kinda avoid that situation. Totally. Totally. I mean, the same thing

Mike DeHaan: [25:57] even applies to rental properties. Right? Like, if you have a shitty rental and you put someone in there, they're not gonna treat it that well. Like when I was in college, I had some buddies that moved into this house. It was like the worst house. Everything about it sucked, know, nothing worked, all these things. So of course, they were like throwing knives at the wall. They were like doing like dumb shit. And because that's that's the way that it came in, you know, but then I I I personally lived in like a nicer apartment. And you bet like when me and my roommates wrapped up, that thing was spotless. It's just like we moved in because we don't wanna trash it because we're gonna get billed because you can tell if you move into a nice place and it's Yeah,

Dan Austin: [26:30] it's a lot easier to spot.

Mike DeHaan: [26:31] Right? So do you think that these kind of deals, you think they work everywhere? Or do you think that just like in your market, there's like a cultural thing that makes these more acceptable? Because I I'm fully assuming that you probably sell a lot of things to Hispanics or immigrants that don't have credit, don't really do the banking thing, which is very common culturally for them. Am I am I right in that?

Nick Disney: [26:57] You're accurate.

Mike DeHaan: [26:58] Nope. You're spot on. So I feel like if I we tried to do something like this in say Washington State, it would be a lot harder because it just isn't something that's as normal as it is down there. Do you think that that's probably true or is that a limiting belief that I have?

Nick Disney: [27:12] It's probably a little bit of both. We have some people that have come to this country and these I mean, some of the folks that we've sold houses to, they I mean, they are just so rock solid that there's 0% chance that I ever think they're gonna miss this payment, and that is a cultural thing. I'm not as familiar with Washington, but I would say, I would look for, okay, where can I make it where the price point of the properties? Is this gonna work with $7,800,000 houses? I highly doubt it. Okay? But if you say you had properties in 200, 250, something like that, where when you did them at ten point nine that the payments were so huge that you're setting people up for failure, so that's one piece. And then I would look for people who have worked hard to save a down payment and don't have established credit. I'm sure there's people there. So business owners, people that might own a restaurant that are there that work hard. They save their money, but they don't have any credit history. I would look for someone like that and get a substantial down payment. I think you could definitely do it. You may not have the same market, you know, the same size market we do have here, but I think it's definitely possible if you could put all those other pieces together.

Mike DeHaan: [28:24] Yeah. Yeah. It's just it's such an interesting thing. Because I mean, like, thinking about like some of the people that we have up here. So we just I guess you signed with him today. You said, damn, we have a place that we're selling on a seller finance. It's it's We have a verbal. Yeah. Yeah. It's a verbal. It's technically a wrap because we have a seller finance note and we're selling it at a higher price with a margin. But when we were trying to advertise the thing, like, the appetite for it was generally very low. And ultimately, the guy that we found is exactly what you described. So he's an immigrant from was it Russia?

Nick Disney: [28:56] I think you

Mike DeHaan: [28:57] said He is a Russian.

Dan Austin: [28:57] Yep. Yep. From Russia.

Mike DeHaan: [28:59] He's a general contractor. He makes good money. Doesn't have credit. He offered us he's like he's like, I'll pay you the, you know, $40,000 down or whatever we're getting and negotiated the payment also stuff exactly like we needed it. So he's willing to put that up There you go. But he's not able to get credit. But finding that person up here is a lot more difficult just because where we live is, you know, there's not a lot of people that don't have credit. There are a lot of white people.

Dan Austin: [29:22] Well, that's a good question. How do you advertise? Do you advertise on the MLS? So we didn't advertise on the MLS on this one. I'm wondering

Nick Disney: [29:28] if that would change things. Very little. So we'll advertise on Facebook, different places on Facebook, and we'll advertise. We sell a lot of houses with signs in the yard and sign on those streets, so similar to banded signs. Yep. We lay it out there, and the sales guy will filter the calls. Mhmm. You filter a lot of people out right away who don't have a down payment. Mhmm. And so that's kinda one of the first ways that we'll filter is, do you have this? Well, yes, you do. And just because they have the money down, that does not mean that they that we're gonna sell them a house. Right. And then you look for the other pieces similar to your guy. And I think some of it is we've just done so much more, like, in this space that it's you know, after you've done something long enough, you're like, oh, It just works. Just go do it. But until you've you've had those reps in Mhmm. It's a little hard to see it. But we do cater to the Latino community that we have here. A lot of people have immigrated here, and we have a lot of success in creating that win win.

Dan Austin: [30:21] Yeah. Juan, it's nice too though because you you kinda have like a lead funnel for people that maybe aren't qualified yet, but you can coach them up, hey, once you have a down payment, we'll have more houses, so come back to us. And so now you're building up this buyer's pool that's exclusive to you almost, right?

Nick Disney: [30:36] And we will sell a lot of houses to say, one person, and then, hey, well, my brother wants to buy a house. Right.

Dan Austin: [30:43] And The cool thing is is that they come to you and like, hey, my brother wants to buy a house, like, cool, we'll

Nick Disney: [30:47] go find one. Yeah. You know? Yeah. Right. We'll have one and

Mike DeHaan: [30:50] we'll have one.

Nick Disney: [30:50] You know, it's they can't pick any house. Right. This is what we have available Yeah. But you can tell a lot because they won't bring their brother over if he's not gonna pay. Yeah. Yeah. Yeah. Here's this. So that helps a lot. Lots of families we've sold multiple houses to. We sold one last month. It's a third house we sold to this family. They buy them and they somebody moves in and then they move on to the next one and save their down payment and they bought another one. I mean, let's sell them a 100 if I could.

Mike DeHaan: [31:15] Right. What's because you serve them well, right? Like, you're giving them a good product that they're obviously happy with, and you're making it a way where they can ultimately have long term success in a way that they wouldn't have had previously, so that makes pretty sense. That's awesome, man. You found a really, really cool niche. Man, I've heard people talk about this style of business before, but I love how you're sort of putting it together because a lot of the people that I've talked about are exactly what you're kind of ripping on. I would say like, they like they should be rightfully ripped on of the, oh, just take like the disgusting house and sell it to somebody on seller finance and set them up

Dan Austin: [31:50] to exactly. Set them up to fail, just turn and burn.

Mike DeHaan: [31:54] Yeah, dude. I always remember the first time I heard about this, there was a guy also in Texas, and he was on this group coaching call that I was on for this mastermind group. And dude like had strong Southern Texas accent, he's got his big cowboy hat, and he comes on, he's like, this is how I sell the same house to people over and over and over again. And he was so proud of himself, but all these people he was ripping off. And I got off the call and I was like, man, I feel dirty for even having listened to that guy. Like what a sleazebat, you know?

Nick Disney: [32:20] I'm not a fan at all. It's not that is not tenant free cash flow. That is not putting good stuff out in the world, that is just not Okay. And and you can make plenty of money if that's your goal without doing any of any of those things. So Mhmm. Agreed.

Mike DeHaan: [32:36] Even though landlords and real estate investors get a bad rap, believe it or not, you really can improve neighborhoods and provide opportunities for other people that you serve, whether that's your tenants, whether that's your buyers, whether that's other investors. It doesn't all need to be like just you versus the world, which I think a lot of new investors kind of feel that way. But awesome, Nick. Well, really, really good stuff, man. So what does your total portfolio look like right now across all this? You've been doing this for a while.

Nick Disney: [33:01] I've been doing this for a while, and I don't know what the total number is, you know, almost certain like, I know that we have 47 rentals. I don't know what the notes look like. That's great. And I'm pro rental. I am. It's just I'm more pro Of course. We've kept and sold, and now that we've gotten relationships with the banks, this allows us to hold more over long term, and it's been able to grow since then and super fortunate. Works super hard, but also super fortunate and I really love it. I just like everything about it.

Mike DeHaan: [33:33] Yeah. That's great, man. It's all about that consistent action and then finding the best opportunity for whatever lies in front of you. Uh-huh. Awesome. Well, very, very cool. Right on, Nick. Well, I appreciate all the information, man. You've dropped some really incredible knowledge. You've you've got you really got my gears turning, dude. I I love when we get somebody on here that, like, you really are doing something that I find interesting And that's like, you know, that's unique. Like it you've obviously been around the block for a while because you've found this great way to make money that I haven't just heard about it on every single podcast I listen to, you know, bought BiggerPockets hasn't been talking about it for the last five years. They haven't brought on the guru to do what you're doing yet and completely ruin the entire industry.

Nick Disney: [34:14] So Right.

Mike DeHaan: [34:15] Exactly. So awesome. We're gonna dive into our end of show questions here. These are the same three questions we ask everybody that comes on the show. And the first one, which is always the group favorite, is what is your craziest real estate investing story? And I know you have some good ones based off the face that you made when I told you before the show that we were gonna ask. The craziest one?

Nick Disney: [34:36] I'm gonna shorten this one because I still think it's one of the craziest ones, and I'll give We you the brief we had contracted to buy this guy's house from a nice older man, he's like, hey, I'm ready to retire. I'm gonna go live with my son up in Dallas. He was, you know, awesome, no problem, everything's good. He was quite a bit older, and so he was gonna drive like his pickup truck down the feeder road all the way to Dallas to Lagola with his son. And it's like, he's gonna drive 25 down like, man, this is not safe, like what do we do? Can we drive him? We can't just drive this guy up there, but like we were just worried about him. So we're like, alright, we'll call his son, we'll see if his son will come come meet us. Right? Meet us halfway. Get the number for the son, we call his son. This guy's been telling us for a couple months, right? I'm gonna live with my son. Son doesn't call us back. We're like, call him again. Well, what do we do? Like, the son won't answer us. I'm thinking, man, we're ripping on this son pretty hard, right? And so I was like, I guess, like, we'll just, we'll help him because he's gonna go anyway, right? And so the son then calls us back finally. Yeah, hey, man, know, about your dad's house. Well, I haven't seen or heard from my dad in over fifty years. What? I'm sorry? So, oh, okay.

Nick Disney: [35:49] So you bring him up here, and it's really my dad, we'll take him in. Oh, okay, sir. And so we go back to talk to him. We're like, hey, sir. You didn't mention you hadn't spoken to your son in a little while. No, no, it's been a little bit. Sir, has it been like fifty years? Maybe. And the son's like, I didn't even know he was alive. And so like Wow. What do we do, right? We're like, and I was we were giving the son a hard time and I was like, oh, and so we drive him up there, you know, they were like this got old, so his son was probably like in his sixties and they took him and I was like Jesus. We're just gonna call this good or we're gonna leave. Yeah. I was just like, what? That was probably one of the wildest

Dan Austin: [36:32] Long lost father son connection right there.

Mike DeHaan: [36:34] Mean, Oh, that's crap.

Nick Disney: [36:36] It was crazy.

Mike DeHaan: [36:38] Yeah. There's this guy that's like whose dad went out to buy milk when he was 15. He didn't see him again Right. Until the son Until the until the son was on social security, then dad came home from the grocery store.

Nick Disney: [36:49] And could you imagine, like, you get that voicemail from us? Like, oh, we're bringing your dad, you know? Bought you his house.

Mike DeHaan: [36:58] That's that's crazy. You mind beating up

Nick Disney: [37:00] with this? Yeah. I wouldn't have called me back.

Mike DeHaan: [37:03] Oh my god. Woah. Wow. That that that is a crazy one. That's insane. And the fact that they were like cool with it. Yeah.

Dan Austin: [37:08] They're looking at amenities on that. DNA testing.

Mike DeHaan: [37:12] Oh, fuck. Yeah. Right?

Nick Disney: [37:13] I hope so.

Mike DeHaan: [37:13] Right? Wow. But they just brought some old vagrant into their house and

Nick Disney: [37:17] they're just like He's done. Never mentioned it. Just never mentioned it. I was like, cool. Thank you, sir.

Mike DeHaan: [37:22] That's crazy. That's crazy.

Dan Austin: [37:24] That's you guys under the bus too. Like, yeah, we'll figure it out. Was That nice you guys like help him out. Jesus. Yeah. Yeah.

Nick Disney: [37:29] Yeah. We were worried about him. He was old.

Dan Austin: [37:31] I bet.

Mike DeHaan: [37:32] Yeah. That's funny, man.

Dan Austin: [37:33] That that's that's a good one. That's a really really good A happy ending for once.

Mike DeHaan: [37:38] Yeah. Know. There's a happy ending.

Nick Disney: [37:39] It was definitely happening.

Mike DeHaan: [37:40] Yeah. Usually, it's someone that's like died. Like, though, I I had an interview this morning and the lady said about how you like, there's a murder in the property, and I was like, lots of death in

Dan Austin: [37:48] these in these stories. But

Mike DeHaan: [37:50] yeah. Part of it. But Well, well, good stuff. That's a great one. Alright. Second question. What is the number one tip you have for an investor trying to scale their real estate investment business?

Nick Disney: [38:01] You're not focusing enough on raising capital. You'll probably say the same thing that I said, which was wrong, is, oh, no. I'm okay. I'm gonna have enough money or the money's gonna come. If you're trying to scale, you should be focused on raising capital and building the relationships on that side because I know. For me, I waited too long to start doing it. If I could go back in time, I would have started sooner. And it'll really help you scale, and then as soon as you can get with local banks, that will because they the banks have more money than individuals. If you can build those relationships, that is another thing I would do, which has really helped us do a whole lot more than than we could without

Dan Austin: [38:38] Are you doing that with like local banks, I'm assuming? Like credit unions to build those relationships? Or are going like Wells Fargo and US Bank?

Nick Disney: [38:44] I tried Wells Fargo. I tried them all at the beginning Yeah. And a lot of them laughed me out of the office. Yeah. Like we're good. When I say local, I'm saying six branches, eight branches, like local, local, local.

Mike DeHaan: [38:55] Mhmm.

Nick Disney: [38:56] And focus there. There's somebody in your area who has relationships with them. If you can get an introduction, it makes all the difference in the world. That's the type of local banks I'm talking about. Yeah.

Mike DeHaan: [39:08] Yeah. That's a great tip. But that was a huge thing for us too when we were starting especially when we were in 2021 and it was just like rapid acquisition mode for us.

Dan Austin: [39:17] Totally.

Mike DeHaan: [39:17] We had our our local banker. We could just text them. He'd like, yeah, I'll do a job by appraisal. We can get refinanced in two weeks. Yep. Great. Great. We're just doing that over and over and over again. Perfect.

Dan Austin: [39:26] So good. So much easier.

Nick Disney: [39:28] So yeah. Great tip. Alright, Nick. Last question. Where can people find you and follow you and reach out to you? Instagram is probably the best one. Real estate underscore Nick, and then the number one. You know, we try to put a lot of good information out there, but you can definitely message me, reach out to me through there. Or the website, you know, our marketing website if you got questions or thoughts about that, sellmysanantoniohouse.com, and then my email is Nick and then then the website. So feel free to reach out to me if I can help. Let me know. I'll try.

Mike DeHaan: [39:55] Nice. Absolutely, guys. You heard it from Nick here. You should definitely reach out to him. Definitely. And if you did not just have your brain kind of explode a little bit from a lot of stuff that he dropped in this episode, I don't know what to tell you because that was a clinic on a very, very cool way to very literally have tenant free cash flow. I And love everything you spit out. So Nick, my man, thanks so much for coming on the show. We really appreciate your time here.

Nick Disney: [40:19] Thanks, Nick. Nice, guys. Thanks for having me. Appreciate it.

Mike DeHaan: [40:21] Awesome. Well, cool, guys. Reach out to Nick. You got his socials. Check out his website. Remember, people do come on these shows because they want you to engage with them. They didn't wanna talk to you, they would just stay in their lane and not do podcasts. But remember, they come out and they do these things to put themselves out into the sphere. Don't be afraid to reach out, hit them up on social media, see what they're doing, tell them what you're doing, they probably would also love to expand their network as well. Besides everybody, we really appreciate all listening and we'll talk to you next week. See you.

Speaker 2: [40:49] Thanks for listening to collecting keys. Drop us a five star review on iTunes and send us a screenshot to Mike@collectingkeys.com for your chance to receive a free collecting keys t shirt.