Solving Seller Problems

Mike Hambright (00:33)
Hey everybody, welcome back to the show. Today I’m excited to my good friend, Mr. Forrest McGee, with us here joining us from Richmond, Virginia. We’re gonna be talking about how to solve seller problems. At the end of the day, a lot of folks that are in the real estate business, especially early on, don’t quite understand that if you can’t solve a seller’s problem, you can’t get paid. So we’re gonna be talking about ⁓ how to solve specific problems. We’re actually gonna go through several different case studies of kind of complicated problems that Forrest has helped.

solve recently in his business that’s allowed him to do deals and make money from. And so a little bit of a different kind of approach to the show, but I think you’re gonna enjoy it. So Forrest, welcome to the show, buddy. Always good to see you.

Forrest McGhee (01:08)
It’s great seeing you, Mike. Thanks for having me. I appreciate it. ⁓

Mike Hambright (01:11)
Yeah,

yeah, yeah, we’ve been friends for a long time now. And we’re be friends for life too, right? You’re not going anywhere, are you? You might get in that plane and take off somewhere, but you gotta let me know where you’re at. Yeah.

Forrest McGhee (01:17)
Not today.

You’ll see me.

Mike Hambright (01:25)
Yeah, before we jump in, let’s talk about, you’ve been a real estate investor for a long time, you’ve done a lot of things. You do a lot of creative things, which I always enjoy because it keeps things interesting a little bit, right? But tell us a little bit about you and your background as a real estate investor.

Forrest McGhee (01:39)
So I’ve been investing for over 11 years. I did my first property in a partnership that ⁓ ended. Everything hasn’t ended, and so the partnership and the property ended. ⁓ And then I went out and my father and I started a business together and kind of learned how to do it right and took on a mentor.

and learn how to do it correctly. And then when my relationship, business relationship with my father ended, I went and started my own thing about ⁓ eight years ago now, maybe a little over eight years. And been doing forest buys houses ever since then.

Mike Hambright (02:20)
Yeah, that’s awesome. So let’s jump into, ⁓ I think over the past couple of years with the market been where it’s at, there’s really been a movement I would say over the past few years. I think you’ve done probably creative deals for a long time, but that’s really kind of become more common. Like they’re not so creative anymore that nobody’s ever heard of them before, right? ⁓

But ⁓ what are your thoughts on just kind of the market, where it’s at? People are navigating, I think you have too, in Virginia, navigating laws changing around wholesaling and stuff like that. Any thoughts on just kind of where the market’s at with needing to get creative or having to get creative? And we’re gonna talk about some specific things here. ⁓ compared to where it’s been and kind of where you think it’s going, maybe.

Forrest McGhee (03:05)
So there’s always going to be a need for us in the marketplace. I think ⁓ where the market is right now is with the retraction of inventory and available opportunity. You have a lot of people that are showing their shoe colors and they’re scraping the ground and they’re…

over promising and under delivering. And so, you know, that continues to hurt us. And that’s why, you know, that’s why the real estate, you know, the realtors lobbyists groups can actually, you know, get their foot in the door and change legislation is from, you know, the bad characters that are in our, in our industry, just, you know, doing.

whatever they feel it takes to get a deal done. so whether that’s untruthfulness or that’s misrepresenting facts or that’s locking in high prices and then renegotiating down. there’s just a lot of things that people are doing that aren’t really above the bar. then,

Like you said recently with creative structuring, not being so creative anymore and more, you know, mass marketed people, you know, feel that, you know, they can go and they can, you know, slap whatever against the wall and it’ll stick. And they think that they can, you know, take a subject to property and wholesale that sub two for 20 to $40,000 down payment. And, you know, maybe they can, but I don’t, I don’t believe that, you know,

doing creative deals where people were just happy that we were able to save their mortgage and they weren’t doing any money down. I remember a couple years ago there was a lady that

She me up and she said, well, how much money do I get down? I said, well, you’re $8,000 behind on your mortgage. So what do you want? Do you want good credit or do you want some money? And she goes, I want good credit. And I said, okay, well, I’ll take care of the 8,000. That was the first time that I put any money down on a sub two other than getting it ready to be rented.

you just don’t do down payments and now that’s like, you know, the norm and it takes years and years to recover that money as a down payment on a sub two. It’s not financially smart. It’s just a market sexy right now. And so, you know, because everybody else is doing it and they bought the course, so they got to do it.

Mike Hambright (05:24)
Mm-hmm.

Yeah,

I think a lot of people have been convinced that like if you can pick up a really low interest rate mortgage that the real asset is the mortgage itself, not necessarily the house. And so here’s why that makes sense for you to pay more for it because the interest rate is only three and a half percent or something like that.

Forrest McGhee (05:52)
real asset is the deal, right? The real asset is the tenant buyer, right? So, you know, if we’re gonna do something like that, we’re gonna lease option it out, and that’s the real asset.

you what you can what you can do on the back end to make that deal work and then also get paid in a timely manner because you know three to four hundred dollars a month cash flow if you can you know 10x out or 20x out that’s one thing right but ⁓ Really, you you want you want an exit and you know a few years You don’t want to carry a 25 year note for 25 years Jesus Christ, right? We’re living on Mars by then so You you want to get your money out of the deal in a few years. That’s that’s my strategy anyway, so

So picking the right lease option buyer is the goal in this. And I’ve been very fortunate. Most of the deals I’ve done, I I have more success exits than I have taken the house back. But certainly taking the house back is a good exit as well, because then you’ve got more options. You can get another down payment, or if there’s enough equity in the deal, you can just go ahead and move that one down the line and exit that deal entirely.

I’ve found that most people who take the option of us protecting their mortgage through that program.

I found that in two to five years, they’ve forgotten the problem that they were in and they want to either buy again or they, you know, their credit’s tied up or something like that. Or they start asking, Hey, you know, when are going to get out of this deal? They, they forgot why they’re there. They just know that they’re there. So it becomes a different, more and more challenging situation to manage. The longer you have, the longer you’re taking care of somebody’s mortgage.

Mike Hambright (07:39)
Yep. Well, let’s jump into some very specific examples. So we were just talking ahead of time about some complicated problems that you solved recently. And so let’s start off with kind of inherited properties.

Forrest McGhee (07:51)
So this is not, so I got one that I thought of that is an inherited problem, not an inherited property. Let’s go there. So I this lady call me up one time and she had two properties that her boyfriend had and her boyfriend was incarcerated. so.

what she forgot to tell me is that, you know, she’s not ⁓ an angel either. And so, you know, she was ready to do the deal and these two properties, she had a POA for this person. And we were, we, we started talking some numbers and next thing I know she just ghosted me. And I was like, gosh, man, I was so close. I wonder what happened. Well, about two months later, her mother called.

and said, I’m now the POA and this lady is now incarcerated as well. And so we need to get rid of these properties. And, you know, I was talking with my daughter the other day and she said, you know, call Forrest. I’ve been working with him. And so she called me and got those things in a contract and I was able to, you know, close that deal and took two properties well below market value and, you know, whole tailed both of them. And, you know,

made a decent exit on them. But you know, that lady who called me, she was just so distraught because you her motivation and even, even the fellow who owned the house was still, you know, emotionally tied up with this lady that had reached out to me originally that their motivation was just to get the girl into rehab. And that’s what they were going to use their funds for. wasn’t, you know, how much money they can make on a house is they had a real life problem. And you know, this lady was taking care of the grandkids. That was his daughter.

She wanted her daughter back and wanted to get her in rehab. And this was the money that they could find to do it with. so we were able to make that happen.

Mike Hambright (09:41)
Sometimes sellers tell you all that stuff, but often they don’t. So like, what do you do to kind of pull back that onion and find motivation from sellers as to what their real ⁓ objective is?

Forrest McGhee (09:54)
A lot of it is the time of the conversation. A lot of it is just like, you know, it’s not jumping to the conclusion.

When I got good in this business, ⁓ it was when I realized and I had became a believer of the fact that we are doing the best thing by the customer. We are serving our customer correctly, even though conventional wisdom and real estate says that you need to get the most money for the deal. Oftentimes the value is not in the money, it’s in the solution that we provide.

Once I got that belief instilled in me that I really am solving people’s problems and I really am a solution provider for people, even though I know and you know and a lot of people know that they could go get more money if they had just a little bit more knowledge. But I’m just solving a problem.

to answer your question, it takes time to get people to talk. You know as well as I do and everybody listening to this knows that the more people talk, the more they say. And you know, and it just takes that time to understand what the true motivation is. And once you do that, it doesn’t happen every time, but a lot of the times you can become the solution.

through your knowledge and your skill set.

Mike Hambright (11:22)
Yeah, you become that trusted advisor, right? Like they’ve told you more than they’ve probably told anybody else, probably most of their family even. And you’ve earned their trust to kind of help them through. could be your knowledge, like you said, it could be relationships you have, like, hey, I know somebody that can help with this, right?

Forrest McGhee (11:41)
Yeah, it’s just, you gotta take the time. There’s a saying that I try to tell myself often is it just takes what it takes, right? If that person’s slow rolling or.

you know they got a problem, but they’re just, you know, not coming out with it is, you know, you throw a carrot out there and you get them, you attempt to get them to pick up the phone next time. And, you know, it was some kind of carrot or, and that’s what I pivot to. I tell my team all the time that it’s, it’s always about the next date, right? Until, until we’re closed, until we have, you know, a contract, until we have a check in the bank, it’s about the next date, right? Because you are not the only person that can solve their problem.

I mean, this is a large industry and further than that, you’re not the only one trying to get that lead and get that deal. We have a property under contract right now that… ⁓

we put it out on all the sites that people would know that we’re selling this property and stuff like that. And ⁓ these people are hitting us up and they’re going, hey, what’s the address? And then they’re skip tracing and they’re calling them out. And they’re trying to get us out from the deal. So there’s all kinds of people out there that can do or trying to do what you do. ⁓

If you just stay, you if you stay in your fundamentals and you stay in your lane, you know, you’ll be successful, you know. And if you’re a snake, stay in that lane. And if you’re somebody like me that just kind of cares about people, then stay in that lane.

Mike Hambright (13:17)
Yep, yep. So next one we …

Forrest McGhee (13:18)
Because I’ve tried changing

my stripes and it didn’t work out for me. I lost sleep. I got stressed out about it. And there was a time where I doubted my strategy. And there was a time where I was like, that’s too high, but let’s just take it anyway and renegotiate it. And it’s just unnecessary. It’s not my lane.

Mike Hambright (13:39)
Mm-hmm.

Forrest McGhee (13:39)
There’s a guy I learned from one time that says, I want to do business with people that are looking for me. I’m not trying to be somebody else. I’m trying to be the person that they’re looking for. And if they want me, great. And if they don’t, then not so great, but not so bad.

Mike Hambright (13:59)
Yeah, move on. ⁓ So let’s talk about dealing with nasty judgments against the house.

Forrest McGhee (14:04)
The problem with real estate judgments is they don’t necessarily go away. I ⁓ kind of said that a minute ago that ⁓ people forget the problems that they have. They get into these problems years and years ago. They don’t even really know they got a judgment or they got that piece of mail and they’re like, what is this? They don’t know. They’re too busy watching TV. ⁓

So, you know, we’ve we had this property, we have this property right now. We just have it execute a quiet title search. And it’s about the price of what the judgments would be. Maybe just a few thousand dollars more. But still.

it’s going to be a solution because the problem is with these judgments, they’re so old that the companies don’t exist anymore, but they’re still tied to the property. And you know, we’ve tried and tried and tried. And if you’re not the person who’s dead, right? You can’t, know, you can’t even speak on their behalf anymore because we’re just, you know, we’re just a trans actor, right? You know, we don’t even own the property at that point. So,

Those judgments, ⁓ they stick like glue, that’s for sure. And they take some time to get off.

Mike Hambright (15:16)
If you can get them off, sometimes you can’t get them off, right?

Forrest McGhee (15:18)
Sometimes I think the easy part is getting the contract. Getting it to closing sometimes is more difficult than actually getting the contract.

Mike Hambright (15:22)
Hahaha.

Yeah, yeah. Well, let’s talk about sellers that are in, or siblings, I guess, probably that inherit a house that are kind of in disagreement of what to do with the house.

Forrest McGhee (15:38)
Yeah, so we had a deal just recently.

This guy was talking to us and he was like, yeah, I’m gonna sell the house. Me and my brother, I have his POA for some reason. This one happens to be in prison as well. he goes, I said, yeah, but there’s another name here and it’s a lady’s name. He goes, that’s my effing sister. I said, okay, well, I said.

But she’s on the deed. He goes, I don’t talk to her. I don’t give, I don’t give two craps about her. was like, well, that really doesn’t make any difference. I said, the fact is we’re going to need to talk to this person and get them on board with this. And he’s like, well, I ain’t talking to her. I said, okay. All right.

Would you mind if we talked to her? And he goes, yeah, yeah, yeah. So anyway, we ended up talking to the lady and her feelings pretty much match and mirror his feelings. And, ⁓ but you know, you told, you know, ⁓ a few thousand dollar check in front of somebody or potential check in front of somebody, you know, that changes the tune, especially when they weren’t expecting anything. And so we were able to, you know, get the whole family in agreement and,

At the same value, at the same price, we were able to navigate that and get everybody to agree to the sale of the property. ⁓ And they still don’t talk to each other. So we’re just doing all the family communication. We’re like the counselor.

Mike Hambright (17:03)
That’s right, yeah. The worst is when they don’t agree or they think that there’s some pot of gold there waiting for them and they don’t really realize, well, it needs a ton of work and I had a mortgage on it, whatever, right? I mean, there’s a lot of things that could happen, but that’s more common, right, is that they don’t agree on the price.

Forrest McGhee (17:21)
Yeah, that’s, yeah, that’s oftentimes or they have a realtor friend. I have a friend of mine that his ⁓

they’re selling their primary residence and the wife thinks that the house is worth more than he does and he’s a realtor and she thinks that he’s selling it for too cheap. And so yeah, you always have somebody somewhere that thinks you’re not doing your job correctly or in a…

⁓ The other one that I think is really good is when ⁓ they’ve all told each other that they’re going to get like a $10,000 check. And so that’s what the house is worth, is worth the siblings plus times $10,000. And that’s what the house is worth, even though it has no true value of the real estate in question here. But everybody feels like they’re not going to get less than a $10,000 check. that’s that. We had one of those deals. was a piece of dirt.

And we had everybody’s signature on there. We had an agreement. We had eight siblings in agreement. And then we just couldn’t offload the property. And so we tried to renegotiate to a respectable level. And everybody’s heart was set on 10 grand. They wouldn’t Yeah, exactly. That used Lexus, right? Yeah.

Mike Hambright (18:33)
They already had it spent probably.

So let’s talk about tired landlords. So a lot of people don’t realize like, you know, if the homeownership rate in America and it’s different by state, it’s something somewhere around 62 to 65%. The rest of that is rentals, right? So it’s like one in three houses in America is a rental property.

And when I tell people that sometimes, people that are not outside of our industry, like when I’m talking to newer coaching students or things like that, I’m like, hey, when you drive home tonight, like one in three houses you drive past on average is a rental, right? And people are like, wow, I never imagined that. But the other interesting fact is something like, know, north of 80 % 80 to 90 % of those are owned by somebody that owns one, right? So they’re not professional landlords. They’re usually

landlords by accident like they just kind of inherited or they have they have you know They bought a move-up house or they got married and this and one of them had you know They had two houses and they just kept one as a rental or so. They’re not professional landlords and it’s easy for them

You know, I say if you’re a landlord and you have a rental, you either are having a nightmare or it’s okay for now. But the nightmare’s coming, right? Especially if you just have one. But we buy a lot of houses from tired landlords. so talk about like some of the things that you do to help make those deals happen.

Forrest McGhee (19:56)
⁓ We do whatever it takes. ⁓ So we had the ability to purchase these properties with the tenants in place. ⁓ And, you know, the selling point is, you know, if there’s a tenant in there, ⁓ the selling point is the owner just doesn’t want to deal with it anymore, whether they haven’t gone up on the rent or whether they, you know, aren’t getting paid, ⁓ whatever that happens to be. We had a property one time. ⁓

Not too, not too long ago, maybe last year that, uh, this thing, this lady called me, she was an older lady. It wasn’t inherited. She had had it for a long, well, yeah, it was inherited from her husband, but she had had it. She had dealt with this problem for about 15 years and the tenant was, I mean, God bless him. He was a, he was a, you know, air force veteran. He was, you know, dying of cancer and he, uh,

He was paying $400 a month where market rent was like $1,400. And he just mailed the rent and a check every month. And she hadn’t even heard from him in like five years. And then finally he called and said, hey, the toilet’s falling through the floor. Can you have a repair person come through and take a look at it? And so.

So she had a repair person come and take a look at it and say, said, this house is termites holding hands. That’s all this house is. And, ⁓ the, the floor was literally caving in. so like there was, there was gaps this big between the bottom of the wall and the floor and certain places of the house where it’s just been collapsing. And so she said, you know, what do I do? And I’m like, well, you know, we can, we can try and we can take a look at it. And so we entered into an agreement.

⁓ I went pretty low and then I went and actually took a look at it and met this fella and he showed me some of the problems and I went back to her said ma’am this house is insolvable and she goes well what am I gonna do I said I mean I’ll help you you know I’ll take wall I’ll take the property but you never gonna have to

revisit the conversation on this. And so we did, we ended up coming to a pretty good number. And then I took Walt and I said, Walt, said, you know.

we’re going to have to, we’re going to have to take some time and figure out, know, where you’re to go. I’m going to keep your rent the same, but you know, we pretty much, I’m not going to kick you out, but you pretty much need 90 days to find somewhere to go. So I helped him, you know, reconnect with his, with his son in Florida and ended up moving down there and you know, getting, you know, getting resettled down there. And then we cleaned the house out and sold it to, uh,

somebody thought it was a really good deal and started doing a bunch of unpermitted work and city shut down and still shut down. So glad that’s not my problem.

Mike Hambright (22:54)
Those are bad ones where the seller keeps the rent really low because they feel bad or something. And then the tenant doesn’t complain about the deterioration because their rent’s too good. They don’t want it to go up. And it’s just a matter of time before things come to a head, I guess.

Forrest McGhee (23:11)
Yeah, if you’re a landlord and you’re not paying attention to your properties, ⁓ that’s that nightmare that’s going to creep up on you, Yeah. The worst thing that can happen is no communication or no checkups on those properties, that’s for sure.

Mike Hambright (23:27)
Yeah, yeah. So you were telling me about another one ⁓ where a woman was going and needed to go into hospice, but she was a hoarder so hospice wouldn’t come into our house. So tell me about that one.

Forrest McGhee (23:36)
Yeah, ⁓ that was just an inbound lead and that’s how we do most of our leads. And we just got this lady that called, it was actually ⁓ the sister. And she said, my sister needs somewhere to go. We have this property, we can’t afford anything. And she needs hospice care and hospice came to do it.

welfare check to look at the property and they said ⁓ this house is unsafe for their staff. So they refused to come and give her the care she needed. So they reached out to us looking for solution and it was a pretty good deal for us because I got to do what I like doing. I got to solve somebody’s problems, genuine problem. And we were able to get her into a single-watt trailer that was clean. was, you know, it was…

single level, had a ramp going up to it. It was easy for her to get in and out of. was hospice, you know, it was cool with going in there. And then, you know, we took that quarter property and had it cleaned out and then ⁓ we actually did that in one of our holding companies and then we ended up seller financing that out. And so we got right ⁓ on the first day of closing with seller financing. We had no money in the deal.

trying to say and we just with the down payment on seller financing and so now we get ⁓ monthly check every month as a reminder that we did a good job.

Mike Hambright (25:05)
That’s great. Yeah. So what would you say, we talked about a couple of case studies here, a few different case studies, like overall, like what do you, I guess if you were gonna give advice to real estate investors that are ⁓ not focused on solving seller problems, they’re more focused on themselves, like what advice would you give people as to how to make these deals happen?

Forrest McGhee (25:26)
I just be you right, you know, I know some people I know some people that you know, we’ve talked to and I remember one guy in particular he goes, I don’t care about any of that shit. He said I’m sorry, I’m not a customer probably. I don’t care about any of that stuff. I don’t care about any of that stuff. You know, I just want to you know, make as much money as possible. And you know, that’s his goal. That’s his why you know, and so

Mike Hambright (25:41)
You can cast, yeah.

Forrest McGhee (25:51)
If that’s your goal, that’s your why. And you know, it’s about you and your family and then, you know, be authentic, you know, just be you. Right. And, know, uh, but, you know, don’t, don’t try to, I mean, if you, these creative deals are going to come, um, you know, all these opportunities are going to come all the time. As long as you’re looking for them, they’re going to come and, uh, you just, you know, try to tie your name to as many of them as possible. And, uh, if when,

Mike Hambright (26:16)
Yeah, this is

why people sell it at discount, I mean, if it was a clean, pretty house with no issues, they would just sell it on the MLS.

Forrest McGhee (26:24)
Most of the time, most of the time, people have talked to somebody else already, right? Whether it’s a friend, whether it’s a family member, whether it’s a realtor friend or something, most of the time, they know why they’re calling you, right? They know that they got a problem, whether it’s a time.

whether it’s a property condition, or whether it’s a health issue. They know they got a problem. And kind of back to what we said earlier, if you take the time required to get that information, you can figure it out. But it just takes time. I I know people in this business that they don’t care about nothing. They just sling contracts and hope that enough of them stick to where they can go and make enough money.

They just don’t care, but that’s just not me. I just gotta be true to myself.

Mike Hambright (27:19)
That’s great. Well, Forest, if you don’t mind, let me ask you. You’ve been a part of Investor Fuel for a long time now. You’ve been in forever. ⁓ Would you mind just sharing your thoughts on being a part of the Investor Fuel community?

Forrest McGhee (27:27)
Six years.

Yeah, I love the group. I do. I love you. I love, you know, the people that I’ve met, the relationships that I’ve met. I talk to people that I’ve met in this group on a daily basis. ⁓

I think that what you’ve created and what has grown is just an amazing tool. I came to Investor Fuel, I went to a carrot camp and got a free pass to Investor Fuel and it was in our swag bag and I was like, well that’s cool. And so I ended up coming to the first one and I just, know.

been coming ever since, know, when my time permits. I I miss a couple here or there, but for the most part, you know, I enjoy it. ⁓ Another thing that is good is, you know, the ongoing content, you know, during the week and every week consistently. And you’ll see that, you know, I know you guys have a lot of members, but I think that, I think that the…

you kind of get lost from the group if you’re not attending these weekly events. ⁓ people that don’t know your name and stuff like that. And you’ll see that it’s a smaller core group that go to these events. And I value that a lot as well, because I…

I can proudly say that I am a member of that small core group that usually tries to go to these events, ⁓ you know, in the zoom calls and so forth. So yeah, if you’re looking for a place to grow, when I, when I started, I didn’t have, I think I had one VA and you know, we built a business out of it and business, you know, always has challenges, but you know, we ended up building a business through, you know, the education and the growth and you know, the networking through, you know, other people that have been.

you know, I was so yeah, it was invaluable. Investor Fuel has been invaluable to me.

Mike Hambright (29:25)
Yeah, well we’re glad you’re a part of it, buddy. I think part of it too is you’re a big giver, like you’re willing to do anything for anybody. I think that’s part of our culture is that I think a lot of real estate investors, not certainly most, but a lot of the type of people that would be interested in our group also want a place to come share and give their knowledge and give back and help one another. It’s this reciprocal kind of peer-to-peer relationship thing that doesn’t exist in a lot of places, you know.

Forrest McGhee (29:51)
No, there’s a lot of takers. But I don’t see that in investor fuel. I see ⁓ there’s definitely more givers there than people just trying to come and trying to absorb the information.

Mike Hambright (30:06)
Yeah,

yeah. Well, Forest, I appreciate that. If folks want to learn more about you or connect in any way, where can they go to connect?

Forrest McGhee (30:12)
Yeah, so my front-facing website is forestbizhouses.com. But that phone number goes straight to my cell phone. And anybody can reach out to me. And we can have a conversation if you’re in the Richmond, Virginia area and you want to connect. Richmond, Virginia is kind of small. So we have 60 miles either direction. You’ve got water mountains in Northern Virginia. So reach out if you’re around here, and we’ll connect.

Mike Hambright (30:39)
Awesome, well we’ll add some links down below in the show notes. So good to see you buddy, thanks for joining us today. Everybody appreciate you for listening in. We’ll see you on the next show.