Scott: We’re honored to kick off the day with our buddy, Grant Kemp who’s an amazing investor. This guy rocks, he kicks butt. You may know him from showing up on Teach Me Something Grant on Propelio.com, but he’s much more of a well-known real estate investor with a big passion for owner financing. Welcome, Grant. How’s it going up there in Dallas?
Grant: It’s awesome. I’m honored to be on the show here and looking forward to chat in some owner financing because I just love the strategy. It’s great for everybody and not enough people fully understand and appreciate it.
Scott: Tell people a little about yourself, who you are, your company. We’ll go from there first.
Grant: I’m one of the stories. I didn’t start with anything. I was in a small thousand-foot house growing up with gang signs tagged on it. I didn’t have a penny to start with, but I started searching for, “How do I buy houses without having any money?” That’s what my Google searching was, “How do I do this?” Fortunately, I got led down the path of owner financing and this was back in 2011 when I first got started. I got out there and saw that it’s an awesome strategy to do. I partnered up with Scott Horne for a long time and buying houses that way. I ended up seeing that there was a big need for compliance because a lot of guys were out there just Wild Westing it like, “Whatever, nobody’s ever going to find me,” and so I created a company named Texas Pride Lending that you may be familiar with, which we grew that to be the largest RMLO service in the nation. I sold that company a couple of years ago. Now I am still focusing on investing, doing the training stuff and the mentoring.
Scott: That’s where we met.
Grant: I came out and spoke at one of your things about the compliance side of all of this.
Scott: You came out to one of our virtual workshops here in Austin.
Grant: That was a fun time. You had a bunch of people out there.
Scott: Are you buying properties here in Texas primarily or you do it in other areas?
Grant: Pretty much all of Texas. I’m a DFW guy. I like buying in DFW.
Scott: What’s your big strategy? Do you buy property and turn it into cashflow with owner financing or fix and flip it? Let’s talk about your basic strategy.
Grant: My favorite strategy is that of buying a house subject to and then fixing it up, sell it around on a wraparound mortgage. With that, you’re getting cashflow and you’re getting a down payment up front. I do wholesale, I do fix and flips, I do rentals but the one that makes the most money with the least amount of risk on the line is if you’re able to buy sub to and wrap it. That’s my favorite strategy. That’s what I push for first and foremost.
Scott: Let’s talk a little about sub to because there are a lot of people out there that’s like, “What? You can buy a house with an existing financing in place?”
Grant: That’s the key to when I say I was Google searching for, “How do you buy houses without having any money?” That’s the key to it because essentially what you do is you’re going to sit down in front of your seller. It’s on these guys that owe $0.85 on the dollar. They can’t sell it to a cash buyer for $0.70 or $0.75 and so cash buyers are having to pass up on it. Whereas what we can do is sit down in front of them and say, “I’ll buy your house. I’ll become the owner of the house but we’re going to leave the mortgage in place as is, with your name on it and everything. My name’s not going on it, but we’re going to keep making those payments on your behalf moving forward.” It’s an existing financing in place. I like to refer to it as unlimited non-institutionalized non-recourse money. What better money can you get?
Scott: Let’s make sure we state a couple of things here. I agree with you. It’s a great source. I love sub to. We do a lot of those here in town. Then we turn around, wrap the mortgage, and sell the house owner financing, technically the wraparound mortgage, to somebody else in a higher interest rate, higher payment, higher sales amount so arbitraging the difference. It’s totally not true with the non-recourse aspect of it because if the banks do find out sometimes, they do have the right to call the due-on-sale clause.