Hello, everybody, and welcome back to the property apprentice course. I'm your host, Steve Monti, author of the property apprentice how to earn while you learn. And when I come back, Adrian, thanks very much for having me again. Yes, right. It's been going pretty well so far. I hope everybody else is enjoying the course just as much as you do.

And so today we're going to talk about financing the deal, which is one of the biggest I think, obstacles firstly in people's mind. And secondly, also in reality, really, and how to find the money for a deal. And so that's going to be our next module. But before we start, as usual, it's declaration time. Okay, so repeat after me and for the audience as well please. I am a successful property investor.

I'm a successful property investor, I take actions again, my goal is, I take action to get my goals. I love generating more and more passive income. I love generating more and more passive income. I make money when I bind. I make money when I buy, I switch off my emotions for making investment decisions. I switch off my emotions when making investment decisions, or come my fears, I overcome my fears.

I'm blessed and grateful now that money comes to me easily. I'm blessed and grateful that money comes to me easily I'm financially free. I am financially free. Okay, great. So let's get right into it then. So, next module about financing, the money matters and how to find money.

Literally. Not talking about a 10 cent coin on the street, although actually if you see one to pick it up or leave it on the street. I pick it up because I'm a Money Magnet. That was a tip for what else to write, if you love money, it'll find you. But if you reject it, it will run away from you. Actually, that's what one of my mentors previously said, you know, set money is like a donkey.

If you chase it, it'll run away from you. But if you let it come to you, it will come. So night. So that's what we talked about today. Now, there's various ways how we can find money to finance these positive cash flow deals that we have been discussing all this while during this class. Now, before I share from from my perspective, let me ask you, and also maybe for the audience, give it some thought to yourself, be creative.

I mean, obviously, you can get money from the bank. That's a no brainer for mortgage for property, but besides that, there's many many other ways we can actually creates a win win situation so that you can finance a deal if you don't have the money to do it. Because no matter how much you have, if you start with 5000 is 50,000 is 500,000 or 2 million eventually gonna run out of money or money, and then you need to find other sources. So what could you think of how we can find in steals besides the mortgage, which I obviously will cover as well, and what to look out in mortgage loans. But other than that, do some brainstorming. Yeah, so I guess one more obvious one is probably other investors.

Yeah. So people who have capital that don't have a deal to match with that capital. Yeah. That could be one source. Another source could be, I guess the vendor, the person who's selling the property. could be some way of arranging some sort of vendor finance where they they fund your purchase your rights, we can talk about that.

That's quite an advanced and creative strategies indeed, which not many people know about. And people who listen to this might be wondering, huh? How's that possible? It is yes. Excellent. Yes.

Okay. And I similar to having other investors, they could be investing clubs or people like several people with a little bit of money and bring them together into a partnership to to finance the deal together. All right. And if you take that a little bit further than just, you know, things like crowdfunding where they do this systematically, Yes, excellent. I might be out of ideas. Okay, good.

No, but he's brilliant. I'm going to share with you in a moment what what I have to say here. But before that, what do you think? And if you've been, which I'm sure you have listening to this course, intensively, so far, you will know the answer. What do you think is the biggest obstacle in accessing these money sources? Yes, that's mindset that said, you were afraid to ask.

So that's why I was teaching mindset first, overcome that mindset, right? If you have a great deal, that makes good money, but you don't have the money, why not share it with somebody, whether it's an investor, or maybe small investors, or investment club all of these that you've mentioned, then they will be happy to give their money. If the deal is really good, right? You don't want to cheat them or you know, take advantage of them or if you're able to create a win win situation for both parties. It's absolutely nothing at all one was asking to the contrary. It would be depriving you and them of the opportunity if you don't ask.

So overcome your limiting belief that's asking for money is bad. can be very lucrative, if it's in the right context, obviously. So from my perspective, one of the rules here is, every deal must pay. What I mean by that is that you obviously gonna create a positive outcome for you, whether it's a flip and you make capital appreciation, or whether it's a passive income deal that pays you monthly income. But if it doesn't pay if you lose money, obviously, don't always write it quite obvious, but I need to say this here again. And I mean, if the deal is right, if it's a good deal, and you're not afraid to ask, the money will come to the deal, you will find the money for it because somebody has the money to do it.

If it's not your and you will find them. That's how the universe works. So some of these people that you can ask, firstly, what we call angel investors, these are people with money happy to invest in if it's the right opportunity. So there's two sub versions of that, which sort of you partially mentioned already just now, again, so what are people who might not be interested in a property opportunity? Because of whatever reason, usually, obviously fear they're afraid it might go down what it is and what if they're happy to get a good interest on the money so the bank pays 0.5 0.8% in Singapore here right now, in your soul, actually, you have to pay the bank money if you leave your money wisdom, negative interest rates in Japan that happened before as well. Right?

So it's not lucrative to put money in the bank. But if you are paying somebody 56789, whatever the number is percent interest for, let's say, a loan, they might be happy to do that. If that was to obviously, you take their money, do your deal. And obviously the risk as well, but you make a profit and all you have to pay them is their fixed interest rate. So that is very straightforward, obviously, requires some legal contract and all that to secure. Yes.

Yeah, so my question on that was just gonna be Can anyone do that? Or do you need some sort of kind of financial advice or qualification to get money from other people and pay them interest? Very, very good question. Have you borrowed money from a friend before? Yes. Did you need a license to do that?

No, it's correct. So, just pouring money. You don't need a license. In most countries, I cannot speak for every second country in the world. However, you have to be, you cannot advertise that. You cannot put an ad in newspaper and say, please give me a loan.

That would be considered dentists money lending, and that indeed needs licensing and all that from the monetary authority. But if you talk to a private person, your friend on a one to one basis and they loan you money and you pay them Some interest that is permissible in many countries, but if you're not sure in your country, as always, please before you do such things, ask for qualified legal advice from your preferred lawyer solicitor or whatever you call them as well as the contract itself it personal gives you the money, they will not just give it to you like that, they would want some assurance that they get it back right. So you will need a legal contract to do that, that regulates the terms and conditions when they will get it back how much interest you pay. And if the amount is pretty large, you can give them collateral, why to can give them some share in the property or other collateral that you have for them might be interested in to secure their loan.

But don't advertise it. It's just on a one to one basis that we can For two people for this, what is possible? Right, thank you that makes sense. DRL form of that would be joint venture, angel investors. These are people who come into the deal together. That's, for example, what I've done with the Thailand property that I showed you previously, where one of my apprentices, my mentees, and we bought the steel together as joint venture partners in this particular deal.

So he owns a part of the property so he's obviously gets part of the firstly equity that we made when we bought the meat. Secondly, the rental income and thirdly, the price when in the future, right, so he's pulling up sort of his matrix difference between these two I because as a joint venture you owns part of the asset as a straight Angel, he doesn't. And you only have to pay them interest, I actually would prefer personally the straight interest, one because then I get all the profit from the property. But some people also want to part of that. So we we forget. Right?

So these are people with money, who just happy to finance you come into the deal together if you find a great deal, which they wouldn't have found don't have the time and knowledge to do so. And then you can obviously talk to them and agree on the terms and conditions like how much was 5050 or 7525 or whatever, you know, makes sense for you in that context. So this could be where I find the deal, but I don't have any money. Someone else has some money for the deposit. And we take a share of the property and then get a bank loan together, or is it where they have enough money to fund the entire property? And I bring them the deal and they basically pay for the property.

It could be either one. I can later show you some examples, perhaps of that. It really depends on the situation. How much is the property? How much money do they have? I've done for example, one in Pattaya, what I did was the mentee had sufficient money to buy half the property.

So he bought half this cash. Now he gets like 10% rental yield instead of 0.8% in the bank. And my part I finances a mortgage. So I didn't have any money. Actually, you can do what you said I've some modern West To that you just have somebody with a deposit. Let's say you want to buy a Singapore property or you have to cough up 20% deposit.

And then either you can take the loan, or you can take a loan together, whatever makes sense, right? There's many, many different ways how you can structure that. Whatever makes sense to you and him or her in the context. That's the beauty of poverty. There are so many ways how we can structure things because there's it's not, you know, willing buyer willing seller, willing investable, whatever works for them. You can make it work.

Okay, make sense? Maybe later, I give some concrete example of that. Yeah. So this is just one little bit of an overview. Here the slide and then we can dig into more details. For mortgage loans and all that what you have to look out for when you take one on that, then not one, which I frequently access is equity release.

What does equity again mean in property? equity is how much we would have left a net of the mortgage So, or whatever is going on the property. So if it's $100,000 property we borrowed $80,000 from the bank 20,000 is our equity. And let's assume I take this number as you mentioned, that's all the time. Few Years Later, the property value has gone 250,000 and you paid off 20,000 of your mortgage. So now we have 90,000 equity and 50 minus 90 sitting in there, right?

What you can do is go to the bank and simply refinance your loan on 250,000 basis, if you take, let's say 80%, then it's hundred 20,000. So you can release hundred $20,000 all of this property minus the 60,000 you still owe, but you have now 60,000 additional in your pocket that you can use for the next purchase. Yeah. Okay, so maybe later so can you give a concrete example, some numbers here, but I actually did just know verbally, but I can put on slide so it's more visual on AdWords. Initially, I would recommend go for high cash flow deals right so can of course cover your interest payment and all that really, I think know that. Just to reiterate this point.

This is the next one is Another rule, it's just something you might not want to refinance to refinance the same property many, many times over, eventually let some equity build up also. So then you can increase and it was quite an always pulling out every last dollar. But it's really how much to pull out of your equity is really up to your personal preference and risk appetite, how much leverage you want to take. What you also can do although in Singapore, you have to be careful with that but in the UK or in Canada or in Australia, I think this should be okay. If you find a great deal, and make can make a good money, but you don't have the money and right now we don't have a investable Angel, that you will have found items you can pass on the deal to another investor and just charge A saucing fee.

That's actually what associations do for a living, right? But you can do the same thing. You can be a sourcing agent for others as well. If you if you choose to be. In Singapore, you need a license for that. But in many countries you don't.

So did you say in Australia, you don't need a license for that? Are you not sure? Okay. Then syndication. That's what I've done, for example, with some Malaysian and London properties live where we bring simply group of investors together, who can do a large deal together. And that could be idle.

See above concept, pooling our resources into a large property or it could be what what we have done more In that context previously, a new launch property for developer, but then we say, Hey, mister developer, I don't buy one unit or two or five. I buy 50 how much discount Can you give us? Right? And then each investor combined own individual name their own property, but because of the large number of units that we are purchasing, obviously they get a good discount. Actually today, I don't know whether you read a newspaper already. There was a report that one of the richest bankers here in Singapore bought 45 units that were unsold in one development here in Singapore.

I'm pretty short. That is close, but I'm pretty sure we got good deals. So if a developer if you're gonna do that and go to a developer and offer to buy a block of properties, you can do that and then buy them ultimately as individual names just go to him as a group negotiation. Okay, and what so I guess we'll talk about it more later but would you what, what would be a big discount for for that sort of situation if it was a neuron? It's quite, it depends for some in UK you get only a very small discounts, maybe see 5% they might not give a lot more light on our on our cm thousand pound property. 5% is money also by Malaysia they tend to give for some quite good discounts.

That's why I've done this deal in cyber Jaya outside of Kuala Lumpur via every bought like 70 units from available So we got 30% discount. Wow. And I got 70% loan from the bank from the developer. Right. But your loan was on the original price over discount process in Malaysia that was in Singapore does not. So you have to again check your law of your by the Malaysian words so 70% from the bank and 30% that I didn't have to pay means I paid nothing.

Well, and if you're Malaysian, you can actually get 90% of the one in Malaysia. You actually get paid for. And that's because you went with a syndicate and bought 70 units out of a big development. Okay, how big how. So a syndicate can be any size right? It just means that it's not a formal, you know, legal structure.

It's just getting people together wanting to same thing. There's no connection between them, you know, it's no membership of a club or whatever. It's just asking your network, Hey, I got this opportunity, would you been clean? And if not, people say yes, then you have better bargaining power. Right. So, again, property investing is a team sport.

So gets your team together. Nice. Okay. And now one of the more advanced strategy that most people don't know about, but obviously you did. So well done. Seller deposit finance.

Think later on, we're going to To be more detail, but it basically means to sell finances you will deal. So Mike asking Hmm, why would you do that? How's that possible? it largely depends on excuse me, it largely depends on the situation. So let's say this guy wants to sell his property, and you're interested to buy it. Then you ask him, Hey, Mr. X, what are you gonna do with the money?

After you sold the property? Do you really need it? If he needs it, then it's unlikely we'll, you know, participate in this. But if he doesn't, he says, No, I just wanted to, you know, offload my property. I'm getting old or this or that or whatever. But I don't really need the money.

I just got to put it in bank. Then you can ask him, how much does the bank pay you? 2%, whatever number comes up. This Then what if Mr. seller, I pay you a lot more. So I don't have to pay you the price of the property right now. You loan me the money so I can pay your deposit, you have a loan agreement in place.

So similar like the option strategy, you pay them interest on the money that they would have put in the bank, if you had paid to them which you did not. So you pay them all interest. And so essentially, there's no capital flowing. You get the property, you pay them the interest on the money that he would have received, which is obviously higher than what the bank would have paid him. Since he doesn't really need the money. He might be happy with such an arrangement, at least for period of time.

Eventually, he probably will want his money, but he wants it a lot later. By then you can sell the house again fulfill profit and all that So, the seller is the one who actually uses the money to pay his or her house a little bit rude, but sorry. So this would be the seller would give you the money for the deposit, and the bank would provide the finance for the rest of the money doesn't even flow for the rest of the house. This was 9000. So hypothetically, if the seller would receive 10,000 from you, he would put it in the bank and get 2000 per annum interest. Yeah, so instead of that you are his bank.

You keep your hundred thousand, which you don't have. You don't pay to him. You only pay him to 8000 interest a year. For a period of time, so it's a little bit similar to the options strategies that we learned in the previous module line, where essentially you get control on the property and you pay him a sum of money for that, right? But you don't need 100,000 either from the bank or from anywhere else. So you don't even have to give it to you, okay.

Presumably there's also multiple combinations of this. If they want some of the money that don't need some of it, then it could be a combination. Willing, willing to negotiate anything. Right, okay. Because if the seller didn't need some of the money, then we could borrow that from them throughout the posit for the bank. And then the bank could finance some and then it's basically we have two loans if you like for the source the property and still have no money down and the ability to buy unlimited property interest in the ability to find money, somebody who's willing to loan you money.

Yep. Now simply instead of an investor, the person who loaned you the money is the seller. That's pretty much it. Yeah, okay. Make sense? That's good.

I like that. Cool. Okay, so this is just an overview, right? So we can look into details of what to look out for when you take out housing nodes. Then there's something called bridge loans, which is a bit more short term and some of the current creative financing methods Like the seller financing, for example, a bit more detail item actually. You can buy in theory, unlimited properties.

Obviously, not billions, but more than 1235 or 10. Because that's theoretically unlimited money in the world. Somebody will have it. You just got to find other people's money. One of the most addictive drugs, I know, OPM, and it's even legal in any country. Even in Singapore, yeah, I think I mean, this is a, this is a big block of something has been for me, and I guess it would be for a lot of people say, Well, I can't get loans if I can't get a property.

That's very limiting thinking. Right. That's why many people don't even start to say I don't have the money. So I can't buy properties. So I'll stop it right there. But if you overcome that limiting belief and you take action and actually do it, then you can you know keep going because every property pays you then every time you do such a deal you get more positive cash flow more income.

And once you do that and have a track record, the bank's like you better investors feel like better. And you know, I mean money attracts money the more you have, the more you will get. So, like many people when I was young, my parents, I mean, we all come from reasonably, you know, poor not tozi four, four ish family. So, I was thought that you know, being in debt is bad So do you think having that says quarterbacks? Well, I mean, my background is probably a little similar to you. But the answer depends on the type of shirt means bad this bad, definitely bad debt, credit card debt or consumer loans for appreciating things like TVs and furniture and all that sort of stuff.

That's all bad. But, you know, debt that makes you money has to be good that you are obviously better than 90% of people already. We don't notice Yes, the answer is absolutely right. It depends on what type of Let me see I have set here. What type of data it is now. If the data doesn't make you money, you gave some good examples TV loans.

Car Loan, anything that doesn't make you money, that's bad debt, and that's food avoided credit cards not paying off and all that at high interest rates, but good debts and debts that make your money like in property if I get a positive cash flow, but only if I can take a mortgage to finance a property, which otherwise I could not get it, then it's good, right? Because without that, that I wouldn't have made that money, then it's good debt. That's also a type of thinking that maybe people have to adapt to a little bit not to be afraid to be in debt as long and I have to emphasize this again, as long as it makes you money. Avoid credit card TV. car that's what if it makes him money like in public Then obviously that's a good thing. So and why do we do that?

Why it's because of my best friend, I was calling my best friend, my best friend is called leverage. And you can leverage for many things, not only money, which I will demonstrate here, but also obviously on time that other people work for you. That's why we have teams, you can leverage on expertise, right? That's what you're doing here right now. My expertise and what your students are doing this you delivered from your stock expertise. So it's celebrities, very powerful thing.

So if you had $100,000 and don't need them, and you put them in a bank at 1% interest rate component compounding is also very powerful all the time, as you definitely build on to after 20 years, you would have a whopping hundred and $20,000 sitting in your bank Yes. Which in 20 years, you probably can't buy a lot of things for you to inflation. So what if instead you put it into a property or for discussions sake also a financial product, if you can find one that gives you consistently 6%, which is probably quite half in your bank already, at this level, I think three to four, you can use them again, six is already bit dicey. But let's assume again, but as a property with a rental yield of 6%. Or a financial product is 6% that you again, accumulate over time and you don't take it Money you reinvest the money.

So, after 20 years you would have approximately 325,000. So, as soon as it was out of that investment, so more than three times now, what if instead of buying one property was hundred thousand and reinvesting the 6%, you still only get 6% but you buy four properties for 25,000 each and to find in 75% or 75,000 each, then you have four properties and you pay 3% to the bank in mortgage loan rate, which is quite high and probably can get it for one and a half to 2%. But I calculate these three To be conservative, you basically descend and you get 6% yield. What do you think after 20 years, if you invest at the same rate? How much do you have to guess? We should be a lot more.

Much more. Oh, no, maybe? twice, three times more. Okay. Actually, I think this graph I have to adjust a bit, it's slightly dry, but it's about 1.6 million 1.6 million. Wow.

So even if you can't reinvest and do everything perfectly, if you make only half of that, you still have 800,000, which is still almost three times more than if you don't leverage. That's how powerful leverage is. And that's why we need to leverage right so even if you put pay or property in full cash, I would not do it. Buy for and leverage. If you don't want to live 75% if that's too high for you, we want to be conservative. Okay, then you only buy sweet and leverage 66% and pays you 33% down then you still get usually different numbers than if you lived in cash.

So that's why we need to, to leverage what and how can we leverage other people's money.