E14 Unlocking Creative Finance: Attorney Insights on Subject-To Deals with Joette and Mike

[0:00] This is the Wealthy Investor Show, where we don’t just talk about your wealth, we also talk about your holistic health. I’m your host, Matias. And I’m Erica. And this is the Wealthy Investor.

[0:15] Welcome back to the Wealthy Investor. We are so fortunate to have Erica back. Erica, how are you? I’m doing great. Thanks for having me back. You look a little sun-kissed. What happened this weekend? Well, we just got back from the Red Wing Roots Music Festival. It’s a local music festival happening annually here close to us. And it’s a family-friendly music festival. We’ve gone every year for the past six years camping, except for two years ago. And I was in the hospital having a baby. Yeah, and I think there was one year that COVID happened. Oh, that’s right. COVID happened. And it didn’t happen at all. We’re not about COVID. We’ve hit everyone we could ever since we started. And each year, it’s gotten a little bit different because we add kids.

[1:08] We add kids every year. Almost. And yeah. But so now it’s really cool because, like you said, two years ago, we couldn’t because you were having a baby. Our son turned two at this festival, which was a lot of fun. We got to kind of celebrate him and follow him around in his little hippie pants. Yep. Yep. We camp. We tent camp. And this year was the first year that we were in a space where we had water and electric. But before, like in previous years, we’ve been in other camping areas where there is not amenities like that. And it’s usually pretty close to your neighbors, which is really cool, too. You’re around a lot of really good, fun people. And it’s a strong community feel. But it made a big difference to be able to shower every day for me and have access to water and electric because before we’ve taken what, like solar chargers and generators and it’s a whole nother.

[2:07] Yeah, we bought a generator last year. But before that, it was like scarcity mindset with all my like battery packs like, oh, no, what if I get a contract when I’m out here? And also, we didn’t have self-service very much out there. It would be like a little bit of LTE if you’re out there, you know, when there aren’t like hundreds of people, thousands of people there. But then, you know, it just would worse. Like you get a bunch of text messages in the morning or something because it just was overloaded. But they had a cell phone tower out there. So we just felt very bougie, even though we were sleeping in a tent and it was a heat wave. There was it was in the 90s, like 95 every day. So a lot of people think we’re crazy for taking three kids and 10 camping in that kind of heat.

[2:50] But in some ways, it felt very bougie for us to do so. And we camped with some friends of ours who brought their camper and they had a mini fridge on the outside of their camper that they let us use. So we also, you know, we had a fridge this year. So there are some things that were just new and fun. And this music festival has a lot for children, too. This year, they had a juggler come and do shows twice a day for the kids. They have like a slack line park that was set up. And then there’s some other kids activities. There’s a climbing wall, a rock wall. And then they have like some kind of a game. I don’t even know what that was called. I didn’t do it. But our friend’s son was really into it and enjoyed that quite a bit.

[3:33] And it was it was a great time. Yeah. A lot of people, again, think that we’re crazy for doing this stuff. And we would be lying if we said it was just, you know, easy the whole time. I think there’s every day there was at least one meltdown. Right. I mean, mostly me.

[3:51] But again, I think, you know, like that just kind of goes back to our like mindset with kids and parenting and just kind of the chaos of everything. It’s just we just kind of have to embrace it and just try our best to stay level headed and get through it. Yeah, well, I so I’m doing a I started a one line a day journal because regular journaling is just too intense for me, but I can handle a line and I took it along. And I think this was Saturday. It was I was feeling particularly worn out that evening because with our kids, I tend to be the preferred parent. And so if I leave or if I go somewhere, even if it’s to the bathroom or for a walk or to get water, anything, all three of my little ducklings follow me.

[4:39] Yeah. And so wherever I go, they go. And it’s hard for me sometimes to feel like I can have a break. And so I had finally gotten the kids to bed and I had given them kind of like a mini bath and a bucket. And it was just an ordeal. And we got him to bed and I was writing in my journal and I just was reflecting on the day and reminding myself that Red Wing is really hard. And I think I was telling myself it was OK to acknowledge that, like it’s really hard to take kids camping and to be at a music festival with children. And I know that when we leave, I’m going to look back on all of these pictures and just really, I mean, we’re going to love that time together. And I just wrote, you know, the Red Wing memories and time is just is very precious to me.

[5:23] And I need to remember that. Yeah. Yeah. Yeah. And it’s hard as well for me because when I try to help you take a break and have the kids, I’m like holding these kids. No, no, no. As they watch you walk away.

[5:39] But, you know, we, I did me and I mean the two year old little birthday boy, we had some good bonding time. I was able to be with him, just me and him for, for a while. And he started getting more and more attached to me, which was nice. I think I think it’s especially difficult when when they’re under stress, when everybody’s under stress, especially they want you. It’s like the time maybe you need the most a break. Yeah. They’re going to cling even harder. Yeah. Well, it’s the other piece that or the dynamic that we were juggling or trying to stay mindful of with probably with all of us, but particularly our kids in that kind of an environment, just keeping tabs on who needs like a stimulation break.

[6:29] And because they, they don’t know to tell us that we often see it in their behavior or like meltdowns or kind of starting to act a little ornery, a little hairy and trying to get ahead of that before it gets to be too, too much. And then figuring out how do we give them some breaks and take them away from the noise and the music and all of the colors and all the people so that they can come back in. Cause it’s, that is, yeah, it’s, it’s not so simple as just, let’s just do like a mini TV break or let’s go outside or let’s have some time alone and read books or something. You really have to be creative and how that’s done at a, in a setting like that. Yeah. Let alone, like, you know, you’ve got to figure out food the right times.

[7:15] You’re not always just able to walk to the refrigerator and get food. If we’re going to have lunches, we need to have them ready and we need to either go back, can’t wait too long. And then you have other people’s schedules that we’re out there with, you know, what they’re doing, where they’re at. So navigating all that kind of stuff is, is just not easy, but it was well worth it. It was so much fun. We, so I, my realtor hat, I sponsor that every year. And so we made little hats to wear around, which was fun. And one, one of the other realtors in my firm was there and I gave him one of my hats. I made him wear at least for one selfie.

[7:59] I don’t think he wore it out and around too much, but you know, it’s all right. Yeah. It was really fun. We came back early. I came back feeling very full and, um, can’t wait for next year. It’d be really fun. I don’t think we can go back. I think we have to have water and electric every year now though. Yeah. It’s true. Yep. Matias was researching campers over the weekend. Now that our friends gave us the glimpse of what an AC, AC camper would look like. And well, and last year it was like not hot. It would just downpoured the whole time. So like having a camper in the rain would also be nice, you know, but you know, I think that, I think that overall, like, even though, yes, it was really hard.

[8:43] Like, again, we both loved it. We would do it again. We have amazing memories from it. Like it, we look back on it with Rosie, you know, tinted glasses a little bit, like, cause the good outweighs the bad. And I think that like often you just kind of have to not worry too much about what the bad’s going to be and just kind of push yourself into that situation because if it’s worth it, right? Like, I mean, like when we drove from Rochester, New York to Magog, Canada to see the eclipse, if we sat down and thought about 16 hours in the car in one day with like four hours of sleep, you know, all that stuff would be like clear, clear indications of pain. Maybe you shouldn’t do this, but, but that was worth it.

[9:31] Yeah. 100%. Right. Like that was an amazing experience. And I think that sometimes you just kind of have to not, not think. Well, well, or I mean, cause I feel like we go into those situations acknowledging that this will be challenging and we’re committed to navigating our way through it because we believe in the bigger picture of what we’re doing. Yeah. That translates to life in general, right? I mean, we don’t always feel like doing the hard things, but you know, if you have a clear vision of where you want to go, how you want your life to be. Sorry, that just, that just brought up the memory of yesterday. We left Azra’s, we left Azra’s sandals in the beer garden. We were all packed up, ready to go.

[10:19] And we realized we left them back in the music festival and somebody had to walk all the way back in to pick them up. And you were like, let’s just buy another pair. So we don’t always, always go for the, the harder option. Although I was like, no, I’m going to go walk and pick those up because that took me forever to find a pair that she would actually wear and like, and she has to go school, you know, whatever. I didn’t, I didn’t know all the, you know, the nuances of finding those sandals. I was thinking $12. I’ve walked 10 miles today, literally 10 miles to get our children to sleep in a stroller. And at that point we had just packed up. It was like, we still had to get food and it was already 830.

[11:00] And I was like, you know what? $12. It’s not that bad to just, just pay, but I’m glad. More importantly, I’m glad that we don’t have to fight to, you know, if a new shoe would have a slightly different Velcro strap or something, it could be a whole thing. So I’m glad, I’m glad you were smart and, and went ahead and got them. Yeah. But so today’s guest is somebody that was referred to us from Christie candle, who was on one of our first episodes. And I was super excited about them. Joe is a attorney that specializes in creative finance, our creative deals. And Mike does real estate investing. He’s also a licensed realtor, but mainly focuses on doing deals for himself for their investment portfolio.

[11:51] They are based out of Connecticut and, but they do consult. If you have any questions about how to get a creative thing done or consult with an attorney, maybe even in your state. But creative finance is such an interesting or creative deals are just so interesting because I think each real estate transaction can be different. Right. And often that can be an on-market thing. Like you can often just sell the house on the market and get, try to get the most money for it as possible. You know, prepare the house, all that kind of stuff to get the top dollar, but not every deal fits into that category. And I think it’s really interesting as a realtor who is also interested in investing to just have a, you know, arsenal of tools to best serve your clients.

[12:38] And that we kind of get into that a little bit as well. We also get into a little bit about the family dynamics. You want to talk about that? Yeah. They, so they have three kids who are about the same space in between as ours. And so they, they talk a little bit about their, how they juggle family life relationships, maintaining connection with each other and with their kids. And they, they’re intentional and proactive about making sure they have time and space for each one of those. And really appreciate how, also how much they respect one another. And they value each other and their family before anything else too. And it, it came, it became very clear very early on. And they said this too, that it’s important to them to operate out of a place of integrity.

[13:29] I think they do that out in their personal lives as well as through their business. And so it was, it was fun to hear what family life is like for them and how they juggle it. Cause you know, we have a very similar situation in our family and we’re always trying to figure out better ways to, to do that with, for us too. And so it’s, it’s just fun to hear them talk. It was a great conversation. So without further ado, Joette and Mike. Welcome back to the Wealth Investor. We’re here with Mike and Joette. They are out of central Connecticut and they have a very interesting, I’m really excited about this conversation for a couple of reasons. I mean, a lot of reasons actually. So Mike, you are an investor and a realtor mainly for your own property.

[14:12] And Joette, you are an attorney and you specialize in like creative financing stuff, like subject to, and, and just investor friendly real estate stuff. Right. Correct. And then on top of all that, you all are married and have a family very similar to ours. You’re like two years ahead. We found out your kids are the same genders and like just two years older than our kids. So we are just trying to be you.

[14:38] We’re not that busy. But yes, we have a, we have a, so many things to cover and I want to get right into it. I mean, so to start, let’s just, let’s jump right into subject to, can you explain to me what subject to is? Like, I don’t, I’ve never heard of it before. Just talk to me.

[14:59] So subject to is short. Subject to is short for subject to the existing mortgage. And so what it means is when an investor purchases a property, they are buying the property with the seller’s existing mortgage staying in place. It is different than what people call an assumption. Some people will say that they’re assuming the seller’s mortgage, which means that they are going to the lender. They’re seeking permission and the lender is agreeing to the buyer taking over that mortgage, taking over the payments. And a subject to, you’re not doing that. You’re not asking the seller for permission. You’re just doing, excuse me, you’re not asking the lender for permission. You’re just doing it. And so it’s very nuanced.

[15:45] There’s a lot of gray around it. There’s not a lot of clarity. And there can be some confusion about it coming from other attorneys who are not well versed in that area as well. Speaking of the subject to, there is a clause that will address that, correct? I mean, there is a clause in the note that would address the subject to, and that, is that universal or is it dependent upon the loan? So what you’re referring to is the Garn St. Germain Act. And that is a federal law that states that whenever there is a conveyance of the property, meaning there’s a sale of the property to someone new, that the loan should be paid off and that the loan could also be called due in a subject to scenario. There are exceptions that fall within the Garn St. Germain Act.

[16:33] And if anyone wanted to look it up online, it’s a very specific exception, which is that a seller or a homeowner can convey their property to a trust for estate planning purposes. So they can put their home into a trust, you know, and then they need to be what’s called the settlor, which is the person who founds the trust and they need to be the beneficiary under the trust. And so there’s very specific ways to do, to basically comply with the law when doing this type of loan. Okay. Interesting. So it should, if you’re doing subject to, you should get it within a trust. Is that what I’m hearing? Like that’s the way, the proper way of. There are different ways that different attorneys across the nation might advise their client as to how to do it.

[17:22] My preference would be to do it in a trust because I feel that that mitigates the risk as much as possible for all parties involved. But I have been involved with other attorneys on the other side representing buyers. And they have said, well, my client’s just going to close in their individual name or they’re going to close in an LLC. And that is a blatant violation of the law. But they have their own attorney and their attorney advised them how to do it. So that’s not my place to step in and say, I don’t, I wouldn’t really do that. That’s not the best way. So when I work with my clients, a trust is my preferred way to, to, you know, navigate that complex transaction. Can you help me understand like what kind of a situation a client would want to do this type of transaction?

[18:13] Like pay me a picture of the, like the context around it. So one of my clients, this sub two is generally the only way that he invests. And so what he’ll do is he finds sellers who are maybe behind on their taxes or they’re behind on their mortgages, but they have low interest rates. And so they, this investor will contact the seller. He’ll negotiate a contract usually for whatever’s outstanding on the mortgage amount. So for ease of purpose, let’s just say it’s like a hundred thousand dollars, but maybe they’re behind on their mortgage by $10,000. So the client will pay back what’s owed. He’ll take over the loan, meaning that he’ll make payments on the loan on behalf of the seller, but the loan stays in the seller’s name.

[19:06] And it’s all done legally under the exceptions under the Garn St. Germain Act. And everyone in the deal, including the seller, understands the risks. Everyone signs disclosures. Everyone is fully aware of the risks that are involved. And they all have their, each person has their own legal counsel so that everyone makes sure that everything is being done on the up and up and is ethical and following the pattern of the law. There was one time that I came across some, I know of a deal that happened where the sellers were behind on the mortgage they’re going to get foreclosed upon. And they were behind on their HOA. I mean, everything they were behind on, they needed to, he couldn’t work anymore.

[19:51] He had like a heart attack and, you know, just couldn’t work and couldn’t get caught up. And unfortunately bought it for like, you know, right at market value. Basically bought it and never made a payment for like a year, but he had like a 2.7% interest rate. And so basically he negotiated with the mortgage company to get, to just put the payments back on the back end of the, you know, so that like he could just basically start the mortgage over without having to pay that, you know, whatever was owed for that year about making payments. And then the investor came in and helped him move, like paid for costs to move and maybe a couple thousand dollars because they just needed to move to a different area for their new job.

[20:34] Um, and, and they were so thankful and grateful to get out because they wouldn’t have been able to sell, sell and afford the fees and all that kind of stuff on the open market. And then the investor was super thankful because, you know, they got this 2.7% interest rate with a pretty low down payment. So it was a unique situation that really worked well for, for both parties. And, and then once they do that, then the investor will put in a tenant whose rental payment is higher than what the mortgage payment is. And then they make the difference between the mortgage payment and the rental payment, which is called arbitrage. And so I have one client that this is all he does. Hmm. Yeah. And, and with the, you know, interest rates where they are now and the interest rates, how they were in 2021, it’s, it’s, it can be super attractive for investors to try to find a property.

[21:21] I mean, it, it becomes, you know, the numbers just work way better when you’re paying 3% versus 7%. Yeah. I can see why that would be attractive. So you would be using the already established loan. Right. Correct. Because you’re buying the property and you’re not paying off the seller’s 3% mortgage. You’re keeping it in place. Right. But you’re not asking the lender’s permission, which is an assumption. You’re doing it within the confines of the Garden St. Germain Act. Right. So, and like I said, there’s disclosures being signed all over the place. So it’s a very nuanced way, very complicated way. And that’s why it’s so important to have the right attorney and the right people on your team and the right contracts and the right language.

[22:04] Mm-hmm. Okay. Do you have a recommendation of, obviously, if somebody’s in Connecticut, they could reach out to you, but what about if they’re not and they’re, they’re Virginia, for example, where, where would they go to seek out? How do we find one of those? Yeah. Virginia, is that what you’re saying? How would you find an attorney with special, specialties that understands this like you do? Is there a network or? So there’s been more than one person who’s reached out to me through BiggerPockets forums. I’m on there. That might be a good resource. I also offer consultation services. So I can consult for you in whatever state you’re in and you pay a consultation fee, not a legal fee. So I’m not giving you legal advice because I’m not licensed anywhere but Connecticut and Massachusetts.

[22:55] But I can offer you consultation where I’m giving you general information on how to do the deal. And then you would need to find a title company or an attorney to actually close the deal for you. But I can help oversee it and consult you and kind of assist you along the way. I like that option. That’s actually really good. One thing to keep in mind is a lot of the states are title states. So if you’re going to do any kind of creative deal, definitely get an attorney license in that state to look over the documents. Because we’ve heard of like nightmare stories where things can go south just because a title company is not really looking at it in your best interest. Yeah. Definitely use an attorney.

[23:32] There’s only 12 attorney states in all of the U.S. and the rest are title. So if you’re not in the Northeast where the bulk of the attorney states are, you’re technically closing with a title company. And they are not going to serve you in the capacity that an attorney would serve you. Right. They’re facilitating the title search through a title company and running the numbers to make sure that everything is balanced out at the end. Yeah, we’re not. We can use either in Virginia. So yeah, that makes sense. Joette, how did you choose or land in this specialty? Did you choose it or did it seem to come to you? It kind of goes to our background. So we got started. Yeah. So before I became an attorney, I worked for a real estate guru straight out of undergrad.

[24:23] And that’s actually how I met Mike. I worked for the guru. Mike was attending the guru’s courses because like, I don’t know, 15 years ago, there was no YouTube or Google that you could just go online and watch people talk freely online about this type of stuff. This is the type of stuff that you had to pay anywhere between three to 40 grand on how to learn how to do. Right. So I paid a lot of money to attend this real estate seminar and she’s over here distracting me and getting off my game. So I didn’t have the money to attend these seminars, but I wanted to learn how to do it. So I pestered the guru for six months. Every month for six months, I would call him and say like, can I get your coffee?

[25:07] Can I get your dry cleaning? Like, what can I do just to be in that room to learn this information? Yeah. Yeah. So after six months, he was like, stop calling me like here, have a job, go get my coffee. And I did for five years. And in exchange, I got to sit in the back of the room with people like him who were paying the money. But I was learning. I was getting paid to learn. And then that’s how I met him at the seminar. And then 2008 happened. Everything blows up. I decided to go to law school. But your first year of law school where I went, you weren’t allowed to work. You had to concentrate on your studies. I needed money. So we started fixing, flipping, fixing and flipping mobile homes and then selling them and holding the note.

[25:50] And that’s how we got our start. OK. So Mike would do the demo and paint and put out the tar and I would scrub toilets. I would go to school Monday through Friday. And then on Saturday, Sunday, we’d scrub toilets. We’d eat ham and cheese sandwiches because we didn’t have money to go to Starbucks or anything like that. We literally started from the toilet up. That’s so fun. How do you look back on that time now? It’s pretty crazy. So we were in Springfield, Massachusetts, and the mobile homes that we were flipping were in upstate New York. So we would hop in every Saturday morning into our Civic at the time, a little hoopty. 200,000. 200 miles. Yeah. White doors flapping in the wind. Oh, my gosh.

[26:35] There’s nothing to fit with the mobile home park scene. That’s what we used. You know, every weekend we would drive up and put in the time. And he would sleep on like air mattresses overnight to like make sure the demo was done. And I’d go back and go to school, then come back and help scrub toilets and do whatever was necessary. And then when the mobile home was renovated, we’d sell it and hold the note. And that’s how we paid for law school. Wow. Wow. You guys were in the grind. Definitely. And then from there. But even then, it was crazy because now one of our good friends, he owned a couple of those parks. He’s one of our good friends now and a mentor to us. So it’s kind of crazy where that path led us.

[27:17] Yeah, we used the mobile homes and upgraded from there into single family, multifamily apartment buildings. And now Mike runs all of our flipping that we do. So there’s definitely been a progression. Like we didn’t just start. I didn’t just start out as an attorney that started doing this creative finance. It was, to answer your question, it’s been 17 years on the works where I learned real estate first. And then I went to law school to become a real estate attorney specifically. And then I used my knowledge, our knowledge that we acquired prior to law school and just applied it to our own portfolio. And now I help my clients do that too. That’s awesome. No wonder. Yeah. No wonder this is your niche.

[27:57] Like, I mean, it’s, yeah, it’s perfect. What a great startup story. I mean, you and Mike, you got a pretty good ROI on that class, man. Yeah.

[28:07] That’s the best deal I’ve ever had. It cost him a little bit of money, but no, engagement ring. And now three kids later, it cost him. But I’m pretty sure it was a good investment. Wouldn’t change it for the world. We’re blessed. I’m blessed to have her in my life. And she’s my, she’s my rock. And she keeps me on the straight and narrow. And I appreciate that. I love her very, very much. But you guys are obviously high achieving people. You aren’t afraid of grinding and working hard. How do you balance that all with the three kids? You said the eldest is nine and the youngest is four. Right. Yeah. Mm-hmm. Yeah. It’s, it’s a lot of work. It’s not easy. Number one. So anyone that tells you it’s easy, it’s not.

[28:53] First off, definitely. We think our parents. Cause they’re there. They play a big role. Cause they help with, you know, babysitting. When we’re out at networking events, real estate meetups, CT Rhea, you know, she’s the sponsored lead attorney there and we’re out multiple times every week at these events. So we couldn’t do it without a strong support system like our parents and our babysitters and family in general. So that’s, that’s number one. We also try to make sure that we, at the end of the day, what’s the most important is our family and our marriage, right? All of the real estate, the money, everything goes away if you don’t have a strong foundation here. And so we make sure that even though we are out at multiple meetings a week at night, we still take time to make sure that we’re going on date nights.

[29:46] We’re going on date nights with our kids, like individually, like I’ll take, I’ll take one daughter and he’ll take one daughter. And then they each have mommy, daughter, daddy, daughter time once a month. We have our own, we have marriage coaching that we go to. I have business coaching that I go to. So we try to always make sure that we as people and as a family are whole before we do the whole investment thing. Because like I said, none of that matters at the end of the day if we don’t have our family and our kids. That’s so true. Have you guys found a way to touch base with each other to figure out how, how’s everybody doing? Who needs a little bit more connection or closeness? Who needs a date?

[30:32] How are we doing? When, when are we going to sit down and talk? How do you guys manage all of those conversations or just touch base? Like with the kids, we try to do the date nights like at least once, once a month. And we’re not 100% the best at, you know, keeping that. But if we miss one, we try to try to make up the following month. The kids will let you know. Yeah, the kids will let us. I bet they do. You don’t take me this month. It’s my turn. So the kids will let you know for sure. Yeah. It’s heartbreaking when they say, you guys are always at these meetings. It’s heartbreaking. But that’s why we, when it’s family time, it’s family time. When it’s work, business, you know, we try to have that fine line.

[31:08] So like between five and eight, we usually put our phones away and that’s family time. So when the kids go to bed and then if we got to hop back to, to business, to work, we’ll do that for a little bit. Find that line, boundary, setting boundaries. And it’s easier said than done. It’s always a work in progress, but you know, we do our best. Yeah, that’s really all you can do. I think embracing the chaos in this phase of life is definitely part of it for us. And I think that, you know, we struggle with definitely just finding like time to have logistic conversations and just to plan the date nights. Like I think we had a goal of having about six dates this quarter. And like, I think we talked about, you know, Hey, let’s, let’s get ahold of the babysitter and plan a date for like three weeks.

[31:54] You were trying to cram in one. Okay. No, the end of your quarters approaching and you were trying to cram in three date nights this weekend. So you could meet your goal.

[32:04] You didn’t want to fail on that one. Yeah.

[32:09] That’s pretty good. We’re at, we’re at one a month. So one a month with our, each one of our kids each. So that’s three right there. Then one with each other. That’s four. So that’s one a week right there. So that’s, that’s already pretty demanding. Yeah. So that’s what we try to do is three each with one of our kids and then one with each other. And then, you know, I kind of want some alone time too. Like we were talking about, I’m an introvert. So I kind of want to go off and be by myself. Sure. Plan that too. So it’s definitely, it’s a struggle. Like you said, it’s, it’s chaos, but we do our best to just try to make sure that our foundation is strong. Yeah. So what about, yeah. Individually, like, do you have any other routines or anything that you find important that you need for yourself to keep going?

[32:56] Individually, I would say, you know, we both work out. We like to work out. So the gym time, you know, playing some golf, you know, some time, just same with her. And, you know, she’ll get some girl nights with her friends. I’ll get some guy nights with, you know, my guy friends. And then we’ll do, you know, date nights together with other couples too. So it’s important to have that separation just to have her breather and kind of reset and be fresh for each other and for her family. I was curious too. What’s the dynamic like between the two of you? Because I think you guys work together often. You do a lot of work events together. You do a lot of work things together, but you’re also partners together too.

[33:41] How do you work together? We do the same thing. This is why I’m curious because he and I are both leaders in very different ways. And when we both try and lead at the same time, it’s really, it’s difficult. So we’ve had to figure out how to talk to each other and work together and do this well. And we’re getting there. And I’m curious what that’s like for you guys. So when it comes to the deal, Mike is fantastic about negotiating it, underwriting it, and building rapport. And then I handle all of the legal standpoint. And sometimes there’s, you know, back and forth and we’re just like, hey, like this is my lane, like stay in your lane, you know, because we each know that every deal that comes through the door, he’s going to handle the underwriting.

[34:31] He’s going to handle the negotiation. He’s going to handle the numbers. He’s going to handle the reno and I’m going to handle the legal. But we do have a marriage coach that we go to that helps us to communicate. And when we derail from that, then he brings us back in and we talk about how to communicate in the best way for each one of us. Because sometimes the way that a person says something, you don’t hear it in the way that they meant to say it, or it doesn’t land the same way that they think it’s landing for you. So it’s a lot about learning. And we’re on this path to, I mean, we’ve been married for 10 years, but it’s still a learning experience of how to best communicate with, with one another.

[35:11] And, you know, marriage is not easy. Having three little children at the same time is not easy. And then you add on a very busy business on top of it. It’s just, it’s a lot to juggle, but we do our best. And one thing that Mike and I do, I would say pretty well, is seek out mentors, people who are doing what we want to do, both in business, in marriage and in life and say, hey, like, how do we do this? How do you handle this? What should we do next? What do you advise? How do you advise? So it’s like Mike said, it’s a work in progress. I love it. It sounds like you are very intentional about, about things. And I think oftentimes people hear that kind of thing and think it seems like a lot of work.

[35:53] Like I got to go get a mentor for my marriage or a coach or, you know, for a business, all that kind of stuff. But there’s really, is it, is it Jocko that says discipline equals freedom or something like that? I think there’s a, there’s a lot of truth to like being very intentional and working hard at setting up your life the way you want it to be. And you’ll find the freedom in, in doing some of those extra steps at the beginning. So I, it sounds like you guys are doing a lot to, to really have a smooth, as smooth as possible operation over there.

[36:23] If I can, I want to pivot a little bit to back to, to real estate. So you, you, Mike, you said you do your realtor as well, but you primarily do your own deals. I wanted to talk a little bit to realtors thinking about investment real estate. And if we could touch base on wholesaling a little bit, we had an interesting conversation before we got started. And, and so I have formed an opinion that I think it wholesaling can be very tricky to do if you’re a licensed realtor. If you want to wholesale and be a licensed realtor, you could find yourself having a bit of a conflict of interest. Are you serving your clients best interests by wholesaling a deal? If, if they could really get more money on the open market.

[37:04] So I know you, you had something you said about that. Do you want to touch on, touch on that at all? Mike or Joette?

[37:14] My only comment for a realtor who also wants to wholesale from a legal standpoint would be that I always advise the realtors that I work with, that there should be assigned disclosure with the seller of the home that states that if that realtor is not working in their capacity as a realtor, but instead in their capacity as a wholesaler, that there should be a document signed that states that the seller understands that and that the realtor doesn’t, doesn’t owe the seller an ethical fiduciary duty the way that they would if they were working in their capacity as a realtor. So I think it’s very important to differentiate what role the realtor is serving in because then that will dictate what their duties and obligations are to the seller.

[37:58] And of course, you know, what legal implications that has as well. One of the ways that I’ve approached a seller that might be in a little bit more desperate need for to get a fast sale or just has a house that needs a lot of work to get it to be on the open market is like I kind of say that, you know, I can be kind of a one-stop shop. I’m an investor myself. I have a network of investors. I am a realtor. So if you need your house sold in two weeks, you’re probably not going to be able to put on the market and try to get the top dollar. If that’s what you really need, we can try to work towards that goal. You’re probably going to get more money if you put it on the open market. And if you if you approach it that way, you know, with full transparency and honesty, I think there’s a way that you can make.

[38:40] Yeah, it would work for no matter what situation you’re in, because I think a traditional realtor that doesn’t have that wholesaling side or the real real estate investing side could not help that client that needs to sell that they’re facing foreclosure, that whatever is happening and, you know, they need to sell a quick sale in two weeks. They wouldn’t be tougher than to meet that need. Yeah, I would say a lot of realtors, a good amount of realtors do wholesale. And it’s what you just said. It’s just having all those different tools in your tool belt and understanding your client because not every seller wants to go live on MLS. You know, some some sellers we talk to, they want to be private.

[39:18] They want to have a private sale. They don’t want to smoke it all over the Internet. And they just want to close in two weeks or whatever it is. And they would prefer giving up some equity for a quick as is sale versus having them. Sometimes they don’t have the money to clean up the house. They don’t have the money to make the repairs to and get to go live on MLS. So it just depends on what the seller’s needs are. And that’s exactly what we do is we’re 100% transparent and we provide all the options. And at the end of the day, the seller is the one that picks the best option that they prefer. That’s the right way to go buy business. And yeah, so focusing on their needs, focusing on what they want.

[39:58] If you’re pushing them to go into a wholesaling option because you can get more money from a wholesale fee or something like that, you’re probably not working their best interest, right? I mean, like, yeah, that makes a lot of sense. And I think the sellers can feel that, too. I mean, Mike’s had deals. We’ve had deals close where the sellers have multiple investors trying to buy the deal from them. But when they meet with Mike, you know, Mike is very genuine. And I think my opinion is that they pick us because we are so genuine and they do see that we do have their best interests at heart. And Mike will tell you, like, hey, you know, maybe we’re not the best one for you. Maybe you should list it or maybe you should go about it a different way.

[40:38] Yeah, it’s operating your business with integrity. Our investing side, our company name is Common Good Homebuyers. And our slogan is investing with heart. And that’s something that, you know, we live it, we breathe it. That’s something we want to teach our kids. And it’s just treating people with respect and doing the right thing when no one’s looking. And that’s how we operate. And the sellers feel that. And, you know, I just look at it like I never would want my grandmother or my parents to be taken advantage of by someone that I was just thinking about their bottom dollar there. So it’s just like, you know, God gave us this talent. We’re Christians. We believe in God. And we definitely want to share with anyone that we come in contact with and to help them make the right decision.

[41:22] Yeah, I love that. And I think there’s an education you can do with the sellers as well. And just explain, you know, there’s if you don’t do the work before it goes to the market, that there’s clear things that are needed. Somebody’s going to want to buy that property. That’s going to they’re not going to want to say put $20,000 into the property just to make it worth, you know, that $20,000 more. They need a little bit of extra equity or some extra, you know, sweat equity that’s going to happen from doing the work to make it worth their while. Because there’s risk involved that they’re going to have to manage contractors at minimum. They might have to do the work. And so I think when you approach things that way, it makes sense.

[41:57] Like there’s it’s and I think the sellers are probably prepared for that as well, that they’re not going to be able to get, you know, if the property is worth $200,000 after that $20,000 repair, they’re not going to get $180 for it properly. But yeah, do you all have any working with realtors one way or the other that you probably come across some certain things? Is there anything that comes to mind? Any kind of investing side of this? We talked about how investing is kind of a separate world from being a retail realtor. Is there anything that you wish more agents knew that you come across? I mean, you might be more specific with investors on the day to day, so you may not come across this as much.

[42:41] But I think if agents I mean, there are classes out there to just give the retail realtors a better background on the investing side. And I think if more realtors took advantage of those classes, I think there’ll be a better understanding that, hey, not all investors or not all wholesalers are bad. Yeah. You know, in any business, you’re going to have, you know, the snakes in the grass. But, you know, the majority of the people in the business that are doing it, they’re legitimate and they want to do the right thing. So I think with more knowledge and that’s why we get asked to speak at local real estate meetups around here is to just share the knowledge and to teach others that all of you can do this business.

[43:27] And the more you know about it, the more you’ll be able to help your clients. So just getting more educated at the end of the day. What are some of the questions you remember that realtors have asked you at some of those meetups? Are there any that stick out to you? The ones that I probably get the most are from realtors who think that wholesale is illegal and they don’t understand how is it that a wholesaler can sell or advertise a home without having a license to do so. And so the the illusion is that it’s that it is illegal. It’s at least not in Connecticut or Massachusetts, which is where I’m licensed. It’s not illegal. It doesn’t have the best. Image, right, because a lot of realtors, like I said, have the have the mindset that it is illegal.

[44:21] And so when I work with the wholesalers that I work with, I always tell them that if they are going to be doing a wholesale deal, they need to be up front and they need to disclose it. And I won’t get involved in a deal where the wholesaler is trying to hide the fee or they’ll say, I mean, I’ve gotten I’ve gotten cold calls from investors who have said to me, like, hey, can you do a blind HUD? A blind HUD is where the seller sees one settlement statement. And then but then there’s another settlement statement and the wholesaler’s fee is left off. And that way the seller doesn’t know what the wholesaler is making. I just won’t do that. I’m not going to get involved in a transaction that is not honest or ethical from the get go.

[45:04] And so I just say to the wholesalers I work with, hey, if you’re going to do this, be up front, disclose, make sure you’re being honest, because most of the time what you find is, is that the sellers, to your point, they know that they can’t get fair market value for their property. And they understand that they don’t have the money to put into their home to fix it up, to get what it could get. And so they’re OK with you making some money. They just want to know about it. They don’t want to be cheated. Nobody wants to be cheated. And so I find that if you just have that upfront, honest conversation, it’s not a problem. And so the realtors who come to me at meetups and go, well, isn’t wholesaling illegal?

[45:40] Well, no, it’s not. Not here. And but if you’re going to do it, be upfront, be ethical about it. Yeah, there there’s not the whole like, you know, organization like NAR, which obviously is now getting a lot of spotlight for not the best things or it’s been. Yeah, there’s the whole settlement and then all the drama that’s happened around that. But yeah, they don’t have that code of ethics and that kind of stuff, which which, you know. To your point you made earlier, I think most of the wholesalers and people that I’ve worked with are very upfront, are very, you know, good people looking out for the best interests of everybody involved. But yeah, if you’re not disclosing that that double blind, that sounds like a terrible idea.

[46:20] Yeah. And if people don’t understand how the wholesaling works is they would they would basically a wholesaler would find a property that probably needs to be fixed up. They would negotiate a deal with that owner. Let’s say it’s one hundred and twenty thousand dollars and then they would sell that contract to somebody else for whatever they could get for it. So they might try to get it for one fifty so they could sell that property for one fifty. They would make the thirty thousand dollar difference between what they have under contract with the seller. And so that thirty thousand dollars is what she’s saying. They’re trying to hide. Right. Exactly. OK. Yeah. Yeah. No, that’s that’s it. Is there any other common legal misconceptions in the real estate world that you think that people should know about?

[47:06] When it comes to the creative finance space or investing in general? Yeah. Yeah. Either one. So one is the wholesaling is illegal. Two is that subject to existing financing is illegal. And if you’re not complying with the Garden St. Germain Act, then, yes, it you know, there’s ways to do it right and there’s ways to do it wrong. There’s every every deal can be done that way. And then I’ve worked with a lot of different other types of creative finance, seller financing, structuring your loan with interest, without interest. Novation, which in my neck of the woods means we’re an investor’s renovating the property and is entitled to the equity that the renovation creates. And that’s the way to do it right.

[47:53] And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right.

[48:14] And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right.

[48:37] And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. So what happens is the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right.

[48:57] And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. And that’s the way to do it right. Is there any risk to the person putting the money into it, renovating it? Could they not get the equity out? You can share that example that happened to one of your clients. Yeah. So the answer is absolutely yes. Okay. And I would say that anybody who’s going to do this type of transaction have very specific contracts in place. I had a client, the one that he’s talking about, who offered an as-is price to a seller.

[49:36] And they signed the contract. So the way I do my novation is there’s two contracts. There’s a P&S for the purchase of the property. And then there’s a novation contract, which allows the investor to do the renovation and make the equity once it’s sold. So it’s two contracts that get coupled together. So the client gets the property under contract. They sign it. My client does all the renovation. They go to sell the property. And in that situation, the investor doesn’t yet own the property. So it’s still the seller who has to sign all of the sale documents, sign all of the listing documents. Because in that scenario, once the home has been renovated, it is being put on the market so that it can be sold for the most amount of possible.

[50:18] But even when it’s being sold for the most amount of possible, the homeowner, the seller still only getting the pre renovated price. And so sometimes you have sellers who see what the property is being sold for after the fact and they get a little greedy. So in this particular scenario, the seller threatened bankruptcy and said, if you don’t give me more money, I’m just going to file bankruptcy and all your renovation money is just going to be, you know, wiped under the rug with that. So essentially the investor had to give up more of the pie. And this he was very fortunate in that his pie was very big. The spread was very large. And so he gave the homeowner more money than he was anticipating in order to make sure that she wouldn’t file bankruptcy.

[51:11] Now, the contracts that I had written, I had contemplated foreclosure. I had contemplated back taxes, not being behind on the mortgage. I and maybe you call me naive. I’d never thought that somebody would be so dirty as to go threaten bankruptcy. So now every contract is a bankruptcy clause in it. I learned that. So that was not something that I anticipated. I thought that, you know, my job as an attorney, I try to draft contracts for every specific scenario. And I’m I’m always looking for the boogeyman that’s going to pop out of every closet. Bankruptcy and was not something that I had anticipated because that was not the client. The seller was not in pre-bankruptcy or had was not in was not in bankruptcy at the time that this happened.

[52:01] So I didn’t think that somebody would ever come back and threaten that. But they did. And my client ended up paying more money. I mean, he still made out. I mean, he made all of his renovation back and then some. But just not quite as much as he thought. So, yes, there are things that do come up that even I as an attorney learn, you know, transaction by transaction. Also, what’s important, too, with these creative type deals is to have an attorney not only on the buy side, but you want an attorney on the sell side that understands the strategy, because it happens a lot here, especially like, you know, a lot of attorneys call Joette for advice because they just don’t know how to structure these deals.

[52:43] So with these creative deals, we’re using like she’s referring the other side to another attorney that specializes this as well to keep the deal afloat, because if you go to a traditional attorney on the other side, they’re going to advise their clients to not do the deal because they don’t know anything about it. They’ll just the other attorneys who don’t understand will say, oh, this is illegal. You can’t you can’t do that. And then they’ll kill the deal. That is the case in an attorney state like Connecticut. So there’s very few attorneys in our area that know this area, this creative finance niche. So we ended up just doing deals together because it just makes it smoother. It got to the point even two years ago before sub twos were super popular the way they are now, even two years ago, it was very hard for me to get a deal done because it was there were so many traditional attorneys on the other side who were like, I don’t I don’t know how to do that.

[53:39] I don’t know how to structure that. That’s not legal. And they would just kill the deal. So it’s now that sub twos and all the other creative finance has gotten so popular because the interest rates are so high. There’s a very small community of attorneys who know how to do these type of deals. And in Connecticut, Massachusetts, which are an attorney state like I won’t represent both sides of the deal. Sure. Because I never want to be accused of as not having my clients best interest at heart or having a conflict of interest. So I always want another attorney on the other side. That makes a lot of sense. And to your point, I one time I had just a regular sale closing at an attorney’s office that was not a real estate attorney.

[54:23] And they went through they tried to go through all the paperwork and like it took like two hours. It was the most expensive closing we ever had. And then eventually he just got so tired of like trying to read each page and like explain it that he just like, you know, I don’t really know what this says. But if you want to buy the house, you need to sign it. And he misadvised the people about like, if you don’t make your payment, you’re going to lose your house immediately. And I know, no, no. Like if you’re a day late, he said, like, it was bad. It was bad. So to your point, I mean, I think there’s, you know, we all have our specialties. And, you know, I think that attorneys are obviously, you know, no exception to that rule.

[55:04] And you need to find a special, special one for real estate, especially in these creative deals. Yeah, I mean, you wouldn’t go to like a foot doctor if you had a heart problem. You wouldn’t go to like a personal injury attorney for a real estate closing or vice versa. Yeah. Now with the novation, is that technically a double close then? Is that how that’s structured? No, there’s only one closing. It’s between the seller and the end buyer and the investor in the middle who’s doing the work. They capitalize on the equity at the closing, but there’s only one closing. Okay, cool. And have I, I think I’ve heard something about double closing. Is that sometimes also like considered illegal or? So double closings.

[55:48] The number one question I get with double closings is that the end buyer. The investor will loan their money to the investor and then the investor will use that money to buy it in the first closing. So it’s like a pass through. What a dry closing here. I won’t do those. For me, if you’re going to do a double closing, you have to have funding for both closings, both where the investor buys and then where the end buyer buys. They both have to have to, they both have to have their own clothes, their own money, excuse me. So double closings are not illegal. The investor is buying the property with money and then turning around and selling it. Sometimes the same day, sometimes the next day for more money.

[56:33] But both transactions are fully illegal. They’re fully funded. I won’t, I won’t do a dry closing. Okay. So like they’re getting reimbursed basically right away for the money they bring. Plus some ideally, right? Exactly. Okay. That makes a lot of sense. I think that’s probably the nuance there with, with what people mentioned about there being kind of like, I can’t do that. The dry, what do you call it again? Dry closing. Dry closing. Dry because there’s no money coming to the table on the first closing. But when you’re fully funded on the first closing and you have a second source of money for the second closing, it’s, it’s legal. Yeah. That makes sense. Do you all have any great investing books or personal like betterment books?

[57:15] Like, is there any books that you all have were fundamental for you or that you personally like a lot now? I think one of my favorites, again, real estate’s a relationship type business. And if you have relationships, you’re going to go far. If you treat it like a transaction, you’re not right. So I think one of the books that stands out for me is how to win friends and influence people. Yes. I read it multiple times and every time I go back into it, there’s always, you know, key pointers I’m pulling out still. I mean, that’s, I think that’s a game changer for anybody that really wants to dive into this business or any business that is all about relationships. I agree. For me, some of the classics are the best, like how to win friends is amazing.

[57:58] The richest man in Babylon is a great book. The seven habits of highly successful people is a great book. And I’m currently listening to never split the difference. Also really good book. Yeah, those, those are all awesome. And I completely agree with you about the, I just want to talk about the, how to win friends and influence people. To your surprise, I’m sure. Right. I talked about his favorites. All of these that you’re mentioning are really good books. This is when he talks about a lot. It got me kind of down the path of like reading these kinds of books. That was like my first one. And I, I think also it, I, the point I wanted to make was I think it could also be an interesting, like how to do business in the U S culture book.

[58:41] Like, I think that I, so I lived in Germany after high school for a year and the culture there is a lot more, you just kind of argue more. You’re kind of combative. You’re kind of combative. So you’re actually like, you’re seeking the angle instead of avoiding it. Like, so I think that’s, could be interesting, especially if people are coming from a different culture, wanting to do business and wanting to do it in the U S that’s probably a really good book to learn, to understand how, you know, business and kind of our culture relates to one another. Yeah. I think that’s also, you know, how people like to hear their own name. The people, I think I’m sure that, you know, from your background as a mental health professional, people want to feel good about themselves, but also who they’re doing business with.

[59:26] And I think how to win friends and influence people definitely sets the, sets the tone for the type of business relationship you want to have just throughout the transaction type of person you want to be in general. Right. Mm-hmm. Well, I’d imagine, you know, for that kind of transaction, you want to establish a certain level of trust between you and the person you’re working with. And it can be really tricky to figure out how to do that in a very short period of time, because you don’t have a lot of face to face time before you would establish terms or talk about, you know, what kind of transaction you’re going into. But a lot of, a lot of the assumptions or what they think about you is probably determined within the first meeting or so.

[1:00:04] And so a lot of that comes from just how you interact with people, conversations you have, how you treat them, if you remember their name, you know? Yeah, absolutely. Absolutely. So if people want to consult with you or follow you or seek out any kind of advice, do you have any recommendations, resources for them to go to? So I have a website, which is Trin.law. That’s my law firm. And on there, you can find phone number. I have a Facebook account, Instagram account. And then… Then with our real estate investment side, Common Good Homebuyers on Instagram and Facebook. You know, feel cool to have your guest listeners send me a DM and happy to help out. Awesome. Well, definitely, we’ll link that in the show notes.

[1:00:51] But guys, it’s been a lot of fun. It’s been a really informative conversation. Really appreciate it. Again, maybe in two years we’ll be like you. No, thank you so much for coming on. And this has been a great conversation. Thank you so much for your time. Thanks for having us. Appreciate it. Thank you. Thanks for listening to the Wealthy Investor Podcast, where we talk about wealth and holistic health. If you enjoy our content, subscribe wherever you get your podcasts and hear new episodes every Thursday. If you really like our content, you can follow us on social media at The Wealthy Investor. Wealthy Spell W-E-L-L-T-H-Y.