Mastering Creative Financing Strategies

Mike Hambright (00:00.81)
Hey everybody, welcome back to the show. Today I’m here with my buddy Ashley Abbott. We’re be talking about solving complex real estate problems. If you have kind of more tools in your tool belt, especially in the way the market’s been the past couple years and the way it might be for a little bit going forward, you’re simply gonna do more deals. if you’re not really doing a lot of creative finance, sub two type stuff in your business, this would be a great show to listen to. So Ashley, welcome to the show.

Ashley Abbott (00:26.136)
Hey Mike, thanks for having me today.

Mike Hambright (00:27.87)
Yeah, good to see you buddy. So you told me a couple things that we were friends for a couple years here. You told me a couple things as we were getting ready here that I didn’t even know about. So I was like, wait, save that for the show. But looking forward to getting to know you a little bit better today and learning a little bit more about some of the stuff you’re doing to solve complex real estate problems. you know, it’s interesting. always one of things I love about doing the podcast is I always ask people for their background and tell us a little bit about you before we get started. And even when I have folks on that I know,

fairly well, I’m like, I didn’t even know that, right? I didn’t know that about you. And so why don’t you tell us a little bit about your background? You’ve got an interesting background for sure.

Ashley Abbott (01:06.99)
Sure, okay, so I got my first fix and flip in October of 2021. But before that, I had been pretty much a stay at home dad for a little bit over a decade. My wife was working at a hospital as a nurse’s aide and I had…

just been hanging out, had three awesome kids, had an opportunity to be able to stay at home, watch all of their first steps. Back from 2000 to 2005, I was in the Marine Corps and also an Iraq War veteran. I had had a couple injuries when I was in the service and a back surgery and some neck problems that gave me the…

a pretty nice pension that I got out with, a medical discharge, and so had that opportunity to really spend a lot of time creating a family, spending time with them. And when my youngest son, Julian, so I’ve got three kids, now they’re 15, 13, and nine, when my youngest boy, Julian, was five.

in preschool, I knew he was about two years from kindergarten and I thought to myself, well, you can’t really be a stay at home dad when you don’t have any more kids at home. So at that point I had a bachelor’s degree in finance and business and I went back to school to get a master’s and I did a master’s of science in IT management out in San Francisco and I would commute from Kansas City to San Francisco

once a week for this program because the the the Montgomery GI Bill with the Veterans Benefit will pay a housing allowance based off of the zip code of the school and so San Francisco had the highest housing allowance in the country and so by doing the the program out there they were they would pay a 4600 tuition bonus

Ashley Abbott (03:28.366)
to fly out there and it would cost me $200 a week. So for a year and a half getting this master’s degree, would collect $4,600 a month in housing allowance and maybe spend $1,000 or $1,200 on travel. I…

Mike Hambright (03:44.106)
You were a deal maker before you were even in real estate. Arbitrage-ing.

Ashley Abbott (03:46.934)
I was, so I was saying, I was saving up that money with the intent that, Hey, here in a couple of years, I’m going to buy my first rental property. I had listened to Bigger Pockets every day, probably two hours a day on my headphones, like on my plane flights. When I’d go for a walk or go to the gym, I was constantly absorbing real estate. I wanted to be in it so bad. And

Over that course of two years, COVID had happened, everything went virtual. So my schooling ended up going virtual and I was still absorbing all this real estate stuff. And I ended up graduating with my master’s of science in information technology and data analytics. And as soon as I got done with that, I was like, I’m not really interested in IT. I’ve always been, had this kind of like nerdy, techy,

thing about me, but it was more like hobbyist stuff. So I love researching about technology and things, but I realized it wasn’t something I wanted to work in. And so in October of 2021, a little bit after I graduated school, a few weeks after my son started kindergarten, I partnered with a buddy of mine and we bought our first fix and flip property.

here just outside Kansas City, Missouri. And we renovated that in about two weeks and we bought it for 101,000, it appraised for 155, and it just kind of took off from there.

Mike Hambright (05:30.944)
Yeah, that’s awesome. So I know you started, when you first got in, was your goal to primarily fix and flip or was it to build up a rental portfolio or what was the kind of plan?

Ashley Abbott (05:43.724)
So I was hoping to build up quite a few rentals. had actually, so for that first previous year, I had actually bid on about 20 houses and I was trying to buy a duplex or a fourplex with my VA loan and.

live in one side and rent out the other side. the market was just going bananas and every single house I bid on, I was consistently getting outbid. Everything was going above market from, you know, 2019 to 2021, it seemed like. And one time there was this duplex I bid on and I bid $26,000 over the asking price. And I was thinking, this is finally the one.

And I still got outbiddened and I literally cried that day because I was so discouraged that I would never be able to get in and get a rental property. And finally I had, I was calling off market properties and I called about a fourplex and it, the deal didn’t work out but they had another fourplex that we struck a deal on and I was able to house hack that one.

Mike Hambright (07:01.92)
Yeah. And when you say bid, were bidding on properties on the MLS. Is that what you’re saying? Yeah.

Ashley Abbott (07:02.474)
and

Ashley Abbott (07:07.246)
Right. I had an agent that was consistently putting in offers for me and I had no, I had no idea what that even meant. And so I just had an agent on market and I was, I had used that college money, tuition money to pay off all my bills. So I had no debt whatsoever, no car payment. I was just trying the biggest, to buy the biggest house that I could get with my.

Mike Hambright (07:10.504)
Right. You weren’t going direct to seller yet, like direct seller.

Yeah.

Ashley Abbott (07:35.726)
my VA pension. And so got that fourplex and then we got the first fix and flip. And so for that first year from October 21 till probably spring of 2022, I had added about six rental properties and then we sold.

Mike Hambright (07:38.048)
Yeah.

Ashley Abbott (07:59.328)
sold two or three fix and flips, and then the rates went from four and a half percent to eight and a half percent in a matter of months. And it just didn’t make sense to do the burst strategy because the eight and a half, you just couldn’t hardly cash flow. And so I was listening to Bigger Pockets.

Mike Hambright (08:17.834)
Right.

Ashley Abbott (08:22.51)
still consistently and I was so caught up I was going back like 150 or 200 episodes trying to find something I hadn’t listened to and there was this episode 527 300 doors all seller finance with pace morby

And was like, oh, this sounds kind of cool. And I listened to that and he talked about how he bought all these houses subject to, which is where you just…

you’re basically buying the property subject to the lien that is already in place. So you, you come in, you, you got a deed of trust here that secures the debt and you got a warranty deed over here secures the ownership and you just, you get the ownership, but the debt stays in place. And so I, I listened to that podcast five times in two days as I still thinking this is, there’s no way this is real. No way you can just take over payments and not tell the bank.

Mike Hambright (08:58.091)
right?

Ashley Abbott (09:23.99)
And it’s a legit thing and it’s been around for at least 60 years or maybe longer. And at that point, I realized I could scale way faster taking over people’s loans than renovating a house for two to three months and getting an 8%. And so I immediately hired a virtual assistant.

Mike Hambright (09:29.622)
Right.

Ashley Abbott (09:51.592)
and I paid for a list of houses of homeowners that had either bought their house or refinanced from 2018 to 2022 because I knew that they would have really low interest rates but they would also have lower equity so it would be a lower barrier to entry if

Mike Hambright (10:13.396)
Mm-hmm. Yep.

Ashley Abbott (10:14.926)
If somebody’s got a 100k loan at 2%, but it’s worth 200,000, generally that seller probably wants most of their equity out. But if they’ve got $180,000 loan and it’s only worth 200,000, it’s easier to probably negotiate that.

Mike Hambright (10:23.167)
Right.

Ashley Abbott (10:32.654)
So once I learned the creative strategies, I went from, you know, adding four or five doors in the first year to buying 19 properties creatively in, uh, in the next 12 months there from the rest of 2022. I started cold calling and, um,

Mike Hambright (10:48.95)
Mm-hmm.

Ashley Abbott (10:57.119)
And then I learned what wholesale was. I had no idea what wholesaling was either. I didn’t even know you could really get houses off market.

Mike Hambright (11:00.724)
Hahaha.

Mike Hambright (11:06.302)
Right. Well, I didn’t when I first started either. We were just looking at the MLS. We didn’t know what we were doing. And then I realized that there’s got to be a better way. Like, this isn’t how everybody does it, right? And then lo and behold, there’s other things out there you just have to find.

Ashley Abbott (11:19.95)
So yeah, so in the last two years I bought one house on the MLS and the other, I think I bought about 70 houses now in three and a half years and only two have been on MLS. One of the first ones I ever bought and then one more I think last year.

Mike Hambright (11:38.804)
Yeah. Yeah. And so in terms of kind of direct to seller marketing, acquiring properties, like talk a little bit about, I know you have very much like a seller first like strategy where, you know, you focus very much on kind of identifying what their challenges are and then coming up with solutions for that. So talk about that a little bit.

Ashley Abbott (12:00.322)
So I think the biggest success that we’ve had with the Sellers, especially getting direct to Seller, we were able to get in front of them. So you don’t really have a middleman with an agent there. You can actually go in, sit with them on their couch at their house, building good rapport, and really finding out.

what the pain is, what the problem is. Generally when somebody is selling, especially a home in distress, there’s something going on. They could be behind on the bills, maybe they have to move out of state because they have family that is sick. so I usually present a couple of offers.

and always try and ask that seller if we’re not able to strike a deal here to make things or is there anything else that I could help you out with? Do you need assistance moving from the old house to the new house? we?

loan you a trailer even. We’ve actually moved trailer loads in our contract that we would move up to three trailer loads per seller.

more recently, I asked the seller this question and he said, we’re downsizing significantly to a much smaller house. have, I’ve got three dogs and a cat and I have to, I’m going to have to get rid of one of my dogs. And I think we have to take them to the pound because we can’t find anybody to adopting. We can’t find a pet project that can take them right now. And.

Ashley Abbott (13:52.234)
It just so happened my daughter has been begging me for a dog for probably four months straight. And I just kept telling her, honey, not right now. We, you know, I’m out of town a lot. just, I can’t handle a dog right now. And so I just, I looked at this dog and he was probably the sweetest, sweetest guy ever. six year old, boxer pit mix, really sweet dog.

And it just, something about that situation says I have to take this dog. And so I said, regardless of what happens here, I will take care of Mars. That was his name. And we will, I’ll test him out. I’ll see how things go. At least at the bare minimum, I will foster him, you know, for a month or two. And if we have to find him a new home, we will, but.

Mike Hambright (14:27.956)
Hmm.

Ashley Abbott (14:48.558)
I’m really hoping we can make it work out. Now he’s like part of the family already. is, everybody loves him. We did and we actually, we did, we ended up buying the seller’s house on this deal. And so we had a few problems is the house had some deferred maintenance. It probably needed about 30,000 repairs and.

Mike Hambright (14:52.64)
Yeah, you solved two problems. You solved a seller problem and you solved your daughter’s problem. Or maybe that was you. Maybe that was your problem. Yeah.

Ashley Abbott (15:16.406)
They had gotten around three months behind on the mortgage. It was in forbearance, so it hadn’t hit his credit yet. They gave the seller three months to make the payment, but it was $7,200 payment and they didn’t have the funds for that. And so, and they didn’t really have a lot of equity to put it on the market. So we solved the dog problem. We came in and,

Took over the mortgage and paid up the forbearance of 7,200 and the seller just wanted out all he wanted was time to move on his terms and he didn’t want to have to make that that Forbearance payment and he didn’t want his credit affected. So we were able to take over a $215,000 mortgage at 4.6 percent and $1,800 mortgage payment

And this is a 3,500 square foot, six bedroom, four bedroom, colonial home that is just gorgeous. And we read it all of the hardwoods. We’re doing some really, really gorgeous high-end paint scheme on it. And the comps are like 350 to 380 on the high end on this. And…

We, I think we’re going to owner finance it in the 350 to 375 range with a 35,000 down payment at probably eight and a half percent. So we’ll make a 4 % spread on the bank’s money and then we’ll make eight and a half percent on the difference between our loan and the.

Mike Hambright (16:50.667)
Yeah.

Ashley Abbott (17:02.922)
in buyer’s debt.

Mike Hambright (17:04.458)
Yeah, so you really cut your teeth. When you came in, you pretty much had to go straight to creative finance because of the timing in the market. That effectively just became your main strategy,

Ashley Abbott (17:16.878)
It did. We, I was really feeling the effects of the interest rates. think everybody was the, and by summer of 2022, the market stagnated quite a bit. And I, and I’d only been doing this for about a year, but I’m very much a numbers guy. And when I, I saw that opportunity to get a two, three or 4 % interest rate,

and not have to pay a couple points in closing cost to a lender. You could execute on these and close in a week or less, as long as you can get a clean title report. There was so many alarms going off in my head that this is absolutely mind blowing. So there’s just, there’s so much education in real estate that if you unlock all of these different tools,

It can make anything a deal. Houses that you would never think are a deal, you can make work and you can unlock cash flow. You can solve seller problems. You can find buyer’s homes that wouldn’t necessarily qualify for homes. And so I did, I hit the ground running on that. Now we’ve got about 51 properties and 32 of those are all…

seller finance or are subject to 51 rentals. I think we have 46 rented now and we’ve got five projects that we’re actively working on or trying to find buyers for. So some of those we might end up holding depending on the opportunities.

Mike Hambright (18:42.006)
51 rentals you say or yeah.

Mike Hambright (19:00.362)
Yep. So how do you decide when to offer cash versus creative options? How do you decide what to go after? Is it based on the seller’s situation? Is based on the interest rate on their mortgage? Clearly if they have a 6 % mortgage, you’re not interested in assuming that generally. But how do you decide which tool to pull out of your tool belt?

Ashley Abbott (19:25.134)
I like to listen to the seller, all their needs and identify the number one problem. So sometimes it’s, I need to move right away. So I need to sell this house today because I got a brand new job making twice as much money out of state and I don’t need money today, but I need to move today. And so on those,

You know, I’ll take in, take in all that knowledge. Sometimes people need, need cash today because they are, they need to put a big down payment on, on a new house that they’re contingent on selling their house to buy the new house. And I typically, I offer three, I identify the problem. offer three solutions and then I’ll recommend what, if I was in their situation, probably what is the best solution.

generally, at least in real estate, you know, in wholesale and creative is one is we have a cash offer.

Generally cash offers are 70 75 cents on the dollar because I have to I have to go pay a really expensive lender to borrow this money within a few days and then I have to fix the property up and Then I have to pay an agent to sell it for me. So I need a significant discount, but I can move really fast Option two, let’s get you full retail For this house we can list the property for you

but you’re gonna pay five to six percent commission to us as agents. You’re gonna pay another two percent to the buyer in seller’s concession because everybody wants some closing costs in or a home warranty or a new water heater. And then you’re going to…

Ashley Abbott (21:24.942)
probably pay a half or three quarter percent in title work. And then you probably have to hold the house for two or three more months, which is a few more payments. So even if we get top dollar, best case scenario, you’re only walking with 90 cents on the dollar anyway, retail. And then there’s option three. This is my favorite option. Sell the property to me on creative terms. I’ll give you top dollar of the best comp. So I’ll give them a list of the

Mike Hambright (21:42.806)
Bye.

Ashley Abbott (21:54.848)
Hey, this is what the market looks like in your neighborhood, but this is still best case scenario. I won’t charge any commission, but I want to take over your loan payments because you have a 2.75 % interest rate. I’ll also close in 10 days without inspections or contingencies. I’ll do a walkthrough for my own knowledge so I know what I’m getting into. But…

Sometimes that’s not the best case because they might need the cash today. Usually if there’s equity in the property, I also want to make payments on equity. If they owe 150 and it’s worth 200, well, I want to pay you $200 a month for…

you know, 100 months or more on that 50k. I don’t want to give you 50,000 today. If they need that for the new house, we take that off the table too. And so, okay, let’s work out a cash deal that maybe works for everybody, or we do have to list it. But, I…

Mike Hambright (22:43.83)
Yeah.

Mike Hambright (22:55.766)
Yeah, I think one of the problems I was talking to somebody the other day with the sub two model, when people have, if they just give them cash, then two or three years later, all of a sudden they have amnesia of what they agreed to and they’re like, I don’t know why this house is still in my name and they’re calling their bank and the loan might get called due. But if you’re paying them out over a longer period of time, they’ve essentially still got skin in the game to do what they originally agreed to, right?

Ashley Abbott (23:19.98)
Right.

Ashley Abbott (23:23.934)
I haven’t had to deal with that yet. I actually, do have a few sellers that have mentioned, man, I really would like to get paid off on the equity a few times. And I usually say, hey, second position money is really expensive right now. So if I had to borrow that, we’d have to, you know, do it at a discount.

I did have a seller, we bought nine houses on a portfolio loan at 4.8 % a few years ago. And he came back the following year, he had opened five doggy daycares. And that’s his passion was doing these doggy daycares. And so he said, hey, I’m really trying to expand my business any way you can pay off this $60,000 note. It was at 4 % interest rate and

If I go borrow private money, it’s at least going to be 12%, 12 to 15 % in second position. said, over five years, you know.

the difference in that money, I could, I can give you 40,000 on the 60, it’ll probably be close to net even of what it’s gonna cost me in interest. And he took it, he was good with that. And actually it kind of beat us up because I really kind of needed that capital, but I wanted to make him happy because he went, he kind of went out on a limb, letting us take these over subject to doing the second position, lean.

And he got a good deal on the property in the first place of the terms we bought it at. And he was happy taking, 40,000, you know, four years early on that debt. So, but it did work out for us. got, you know, a 20 K reduction there and, everybody ended up happy. So you can always renegotiate those things, I guess, down the line.

Mike Hambright (25:20.254)
Yeah, yeah, for sure. Well, what would you recommend, Ashley, if folks want to, you you’ve listened to podcasts, you know, like this one, I think Investor Fuel is the best podcast, what would you recommend for folks that want to learn more creative finance techniques? Like, what’s the best way to just kind of keep your ear to the ground and learn different things?

Ashley Abbott (25:44.498)
I keep absorbing information. mean, you can reach out to me. I love to JV on deals with people. I’m consistently buying sub two deals. We, we do wholesale a few of those more so in the Kansas city market. if, people are interested, I’m, you know, happy to share some information. you can reach.

Mike Hambright (26:06.346)
Yeah, how would folks connect with you if they wanted to?

Ashley Abbott (26:08.814)
I’m pretty active on Instagram at Ash Buys Homes and you can also email us at info at kchomeoffers.com

And then our office line is 816-203-0648. And then I’m all over Facebook quite a bit. I think getting into a lot of Facebook groups in your market, like wholesaling or creative finance, stuff like that, can be really helpful because there’s a lot of groups like that pretty much in everybody’s market. So networking in your local communities, networking with people

and creative. The sub 2 community has been really great for me. I’ve done dozens of deals with them. I’ve done deals with Investor Fuel Network as well. It’s been phenomenal for me too, the people that I’ve met through.

through fuel, and so just reach out as much as you can and educate, read books. That’s how I have 10xed my business in just a couple of years is by consistently going to networking events, paying for education, paying for masterminds has given me more results than I could get from trial and error. When you go and when you pay for these masterminds and stuff like that,

you’re paying to relieve problems that you would otherwise encounter in real life mistakes. So if you educate yourself upfront, you’re gonna make a lot less costly mistakes in the long run.

Mike Hambright (27:58.806)
Yeah. Would you mind sharing just an experience on being a part of Investor Fuel?

Ashley Abbott (28:05.398)
Yeah, it’s been great. I’ve met, I mean, probably almost 200 guys in fuel, but there’s at least five to 10 people that I reach out with at least weekly that we collaborate and.

call each other, hey, how would you do this? How are you doing your mail campaign right now? Who are you skip tracing with? So a lot of the things that I have picked up in Investor Fuel are connections that I wouldn’t otherwise know how people that are making a quarter million dollars a month.

are doing their mail campaign, you know, I haven’t I haven’t been in rooms very often where people are even yet making 50,000 a month yet 250, you know or even a million dollars a month so the the more elevated rooms that you can get into where you are the Probably the least intelligent or the least successful Is is the best opportunity? So I I consistently try and be the

least successful guy in the room. I know that sounds kind of weird because you want to be at the top of your success, but if you’re always putting yourself around people that are at that next level, that’s where you make the connections. that’s what, you know, Fuel provides for me is consistently meeting people that are on a level that I’m trying to get to that next place in my business.

Mike Hambright (29:41.236)
I appreciate that man. Yeah, we’re glad to have you so awesome. Well guys if you want to learn more about Ashley Hope you got some great insights from today and what he’s doing We’ll put his contact info down below that he just shared a moment ago. Hope you guys got some good insights I think it’s it’s important to have a lot more tools in your tool belt right if you only do a couple things at the end of the day

you’re gonna have limited solutions for people’s problems. The more tools you have in your tool belt to solve those problems, the better off your business is gonna be. So Ashley, thanks so much for joining us today. Yeah, everybody, I hope you have a great rest of the day and we’ll see you on the next show.

Ashley Abbott (30:12.162)
Thanks Mike, appreciate it.

Ashley Abbott (30:17.858)
Cool, take care.