How to Find Off-Market Real Estate Deals & Structure Seller Financing

Gamaliel Serrato (00:00)
Depending on what you’re getting into, and I always say start small because that way you’ll be able to grow safely. The pain points, what is someone going through? The bigger problem they—if you’re able to fix a really big problem, you’re going to make money and you’re going to be able to help. When it comes to single family, multifamily, if someone needs to sell for a reason and you can be there to help them out, you’re going to be able to walk away with a reward.

Scott Bursey (02:00)
Welcome back to the Real Estate Pros podcast powered by Investor Fuel. I’m your host, Scott Bursey. Glad you’re with us. And today we are delighted to be joined by Gamaliel Serrato, widely known as Coach Junior, the founder of Home Help Solutions. Gama is a master real estate investor specializing in off-market deal sourcing and creative financing strategies, including seller financing, fix and flips, and multifamily investments. In this episode, listeners, you can expect an inside look at how to find, fund, and structure win-win deals while creating impactful housing solutions through sober living, recuperative care, and behavioral health. Gama, welcome to the show.

Gamaliel Serrato (02:40)
Thank you. Thank you for having me. It’s a pleasure to be here.

Scott Bursey (02:43)
It is an honor having you here and help our listeners get up to speed. Please give us the ninety-second highlight reel of how your career ignited and where you’re pouring your fuel now.

Gamaliel Serrato (02:54)
Okay, sure. Again, I’m Gama. Some students know me as Coach Jr. I was born in Mexico. I came over when I was around eight years old. We started with nothing, like a lot of people start with nothing. Been dabbling into real estate and investing for about twenty-one years now. My goal right now, as we’re looking at everything, is to acquire properties, zero out of pocket or very little out of pocket. We all use OPM, other people’s money. We connect with lenders, PMLs. Our goal is to try to help people get into deals and cash flow heavy. Here in California, you have tenants, we like to convert our facilities into sober living and recuperative care. As my wife Maria has Healing Oasis Recovery Inc., that’s how we mainly do it. We acquire properties with nothing and help the homeowners get out of a terrible situation or help them sell. We either buy the property, convert it, rehab it, put it on the market. Our goal is just to make sure that if you’re on our team, you’re making money before the pen touches the paper. And if you stay on the deal, that you’re making money as we work together.

Scott Bursey (03:59)
Thank you for sharing that incredible journey with us. And Gama, what really caught my attention about you was the way you’ve been able to seamlessly integrate community-driven housing models like sober living and recuperative care into your creative financing playbook. Expanding on that, curious to know, what do you consider your absolute biggest strength when structuring creative seller financing deals in today’s market?

Gamaliel Serrato (04:24)
I think our biggest strength, we go back to zero entry, or if you’re doing subject-to, it’s almost zero entry, you might help the homeowner. That is the biggest strength, is how are you able to acquire a property without having to park all your money? As investors, we all want to cash flow, passive income. Passive is not really passive. We still have to do a little work, but we go into it knowing that we’re not going to spend a lot of money. If the deal has equity, we’re able to use that equity, rehab the house, then pay the homeowner almost everything that they’re looking for while we make some money and hold on to the property. We’re able to bring in sober living and provide housing for the community because every home that we look into, at the moment it comes to the table, we shoot it out to different members and we try to dissect it. How are we going to be able to structure this deal? Will the community be served better for sober, recuperative? Some facilities will do great for behavioral health, some won’t. It needs to be far away from the city, it needs to be a little more luxury because it’s more private pay. But that is one of the main strengths: looking at a home and seeing how we’re able to get into it—minimal money out of pocket or zero, preferably.

Scott Bursey (05:39)
And wanting to understand, how do you ensure that same strength or strengths is passed down when teaching new investors to structure their first deal?

Gamaliel Serrato (05:48)
We like to almost do like hold you by the hand approach with your first, second, or third deal until you completely understand it. I have a lot of people that understand subject-to and have a concept of the double stack that we do, but the way they structure it is how a lot of people structure, where the homeowner will still get an interest on the second they carry. I prefer to teach how to get on an LLC or prefer how to negotiate with the homeowner on how they can carry zero interest by giving them a little more up front. We hold you by the hand until, if you sign up or if you want to be a part of a team, you say, “Hey, I want to do sober living.” Okay, let’s help get you into a home. Let’s help you set it up. Let’s help connect you with the agencies. That’s where my wife comes in. She’ll connect with the NPIs, connect with Medicare. I help more of: let’s find the perfect home that’ll fit for what you need. Some people would say, “Hey, I want to stay close to my house,” and we’ll let them know that’s not possible because you live in Orange County, there’s not a lot of need there. You need to go to LA. They’re like, “I don’t want to be in LA.” Well, I’ll tell you what, we have a home by Slauson and Crenshaw, it works great, there’s Metro. You have to understand what the need of the community is if you want to do sober living. If you just want to do a basic rental, Orange County, Riverside, all those areas work great. Holding you by the hand, either myself or one of the students, especially one of my sons and my wife that’s been doing this for a long time with me, they’ll guide you through every step. That way you’re not tripping and falling.

Scott Bursey (08:00)
Appreciate you breaking that down for our listeners and eager to find out, where do most investors encounter their biggest operational bottleneck or weakness when transitioning into specialized housing like recuperative care?

Gamaliel Serrato (08:14)
It’s the cost. When you purchase a house for 500 grand, if you have money parked, then you don’t have money to furnish the home. That’s the biggest obstacle, or you have to start bringing a lot of investors. And if you don’t have a lot of money, some students come to us and they’re like, “Well, we’re going to arbitrage.” And I’m like, “Okay, but if you’re renting a property at Long Beach for $5,000 and you’re going to go into sober living, you’re going to make nine thousand minus the two thousand.” We already have everything drawn out for the areas. If not, we’ll do very good, detailed investigation of the areas, how much they pay, how much you can make. You have to expect a specific amount of expenses when it comes to having six or eight people living in your home and the lights are on almost all the time. Those are the things that you don’t want to have, and because of the experience that we have doing it, we’re able to guide you through the steps or guide anyone through the steps—team members, students, whatever they want to be. And that’s where you start making money: if what your expenses are going to be, where you can trim them, or how you can increase your cash flow.

Scott Bursey (09:11)
Thank you for pointing that out. And keen to learn, what is the greatest market opportunity you see right now with off-market multifamily properties?

Gamaliel Serrato (09:20)
Value-add. A lot of the off-market we get to us, and it’s someone that has had either the building in the family for years and someone has passed away… Or we have thirteen buildings that came my way. The kids don’t want anything to do with the buildings, they just want to cash out. And the parents were a little older, and most of the time it happens to be like that. They’re a little older, the maintenance is deferred. As we’re walking through the buildings, you could add a lot of value to it. It just has to be a really good deal. And spent my entire life doing construction. I can read blueprints. I know how things get built from the ground up, what the cost will be. And if you don’t—let’s say you don’t have that experience—well, you need to have several contractors do the walk with you. That way you get different ideas, cause one contractor will give you 600 grand, the other one will say 200 grand. You’re like, why is it like this? And that’s where you’re able to see. And that’s the one thing that you need to understand.

Scott Bursey (10:14)
You highlighted value-add. How quickly can an investor position themselves to capitalize on that specific opportunity?

Gamaliel Serrato (10:21)
Very quickly. For example, a five-unit in Santa Monica that came up to us, was brought to us by Oscar, one of our team members. She’s looking for 2.6, but it needs foundation repair at 130. You look at that and you’re like, “Okay, I can’t give you 2.6.” What you want to do is, I send out an LOI and I broke it down into three structures. I let them know that right away, if they want 2.6, they have to give us an opportunity to work on the property. We fix that foundation. From there, we fix the interior. All of it can be done if the homeowner is willing to work, and it can be done within three to six months. The homeowner is going to get—after all the repairs and it goes to the market—she would be getting about 2.3 million. And we would get our five to six hundred grand that was put into the deal back. That’s back into your pocket, and the unit would sell for 3.9. And it’s rent control. I don’t want to hold on to it, I just want to sell it off. Now we would pocket about 32%. That’s what you want, you can look at it right away. And since we have the experience, we know that we can be in and out in six months. And that is a space that needs a lot of work. Typically, I don’t like projects, but if it’s a good deal, you can get into it. And there’s some units that will come to you, and all you need is—the realtors call—lipstick on a pig. You just need to do some paintwork. You might need to dress up the unit a little bit. You go in with—it might shake your cabinets, countertops, a big nice bell, stainless steel appliances. You might do twelve thousand for each unit, but you can be in—we’ve flipped properties like a five, six-unit within thirty, forty-five days. It doesn’t take that long. You could add a lot to it if you have some experience. And I say that’s very important if you have experience. If not, connect yourself with someone that has experience. Because if you don’t know that I can get an entire kitchen for a single family home—for the countertops, cabinets, hardwood floor for the living room and the room—for twelve thousand dollars here in Southern California, and a contractor comes in and says, “Yeah, 48 grand,” if you don’t know that, you’re paying a lot. You have to understand the difference.

Scott Bursey (13:05)
That’s a powerful takeaway for everyone tuned in right there. Gama, interested to know, what is the biggest regulatory or market threat currently facing investors operating behavioral health or sober living facilities?

Gamaliel Serrato (13:20)
Well, for sober, it’s just the neighborhood. Some people don’t want you in there. But in the state of California—every state varies, and counties vary, and municipalities—but in the state of California where we’re at, they can’t deny six people. It’s considered single family. If someone is in Connecticut and they’re like, “Hey, I want to start this, I’m gonna buy a property,” we say, “Hey, hold on. What property are you looking at? And let’s pull up everything.” Because you don’t want to get into, let me say, especially if you’re coming out of pocket, “Yeah, I want to buy this five-hundred-thousand-dollar home and I want to do this.” Okay, you’re gonna buy the house, and then the county or the city is not gonna let you, or they might cap you. Now in Georgia, I know that Augusta, Georgia, the property we just bought for 15,000, we can essentially get eight people there. But we can’t split the lot—huge lot, but we can’t split it. And that’s something that I wanted to do. But as I looked at it, I was like, well, it’s still a good deal. The mortgage is $1,016 or $1,160, and we can get $5,200 out of it. It’s still gonna be really good money. But that’s the first thing you wanna do: you wanna make sure that where you’re going into it, you’re gonna be able to do that. Behavioral health, again, six people here in California, they can’t really tell us anything, but then the neighborhood starts complaining. Even though our facilities, we make them look like really nice Airbnbs, no one can tell. We’re very strict on our rules. We have a zero-tolerance policy when it comes to sober living and recuperative care. We’ve known some places where they allow people to vape, but we don’t allow people to vape cannabis. It just—if you’re trying to reshape your life however you see it, you need to make sure that you’re employable. Right? And you came to us for a reason. You’re like, “Hey Gama, hey Maria, I came here. I want to be clean. I want to be employable.” You’re more than welcome to do whatever you want. The problem is, will your employer employ you like that? And it’s just community. Besides that, you have a few regulations. As long as you’re able to see what they allow you to do before you purchase or get into a property, you’re gonna be fine.

Scott Bursey (15:14)
Coach Junior, when evaluating potential off-market deals, what internal metric acts as your ultimate filter to decide if a property fits your portfolio strengths?

Gamaliel Serrato (15:25)
If you’re just looking at single family—we’re just talking about single family here—a basic house, let me say it’s move-in ready. It’s not turnkey because it’s not upgraded, but if it’s move-in ready, you can buy it at 70%. Right, lipstick on a pig, something like that. New paint, you can put people in there. But if it’s something that needs a lot of repairs—for example, we had a property in Palmdale that a wholesaler brought us, four and a half acres. Homeowner touched everything, no permits, no nothing. That one, normally when it’s a flip-flip, you don’t want to—I do 62% because you’re gonna do about 60 to 65 dollars a square foot in rehab costs, material and labor. If the number doesn’t fit what your formula is or whatever you set up for yourself, don’t break it. If it’s 62 for a hard rehab and it’s at 70, and you’re like, “I really want the property,” just don’t do it. There’s too many properties, too many homes. Just move on. Because then you’re gonna be that flipper that’s like, “Well, I made 50k or I made 30k, I’m fine with that.” Six to nine months of work and you took 30k? No. Minimum I say, if I can’t walk away with 30% after all the numbers, then I’m not touching the property.

Scott Bursey (16:31)
How do you pivot quickly if that initial property falls short of the initial benchmark?

Gamaliel Serrato (16:37)
Are you referring to like if you’re in it, but you’re losing money?

Scott Bursey (16:41)
The margins that you just went over, yes.

Gamaliel Serrato (16:43)
Yeah, I mean, that’s why thirty percent is important. At thirty percent, if I get into a property here in Southern California—let’s say I’m at twenty percent—I’ll still make about a hundred. Then you just figure out what you’re gonna do. Sometimes it happens, and you just have to be willing to say… I prefer, like let’s say if I’m going to convert a home, a complete rehab, do a junior ADU and a detached ADU, I can take a quarter-of-a-million home, but there’s delays. There’s a county—I don’t like, no offense to anybody that works for the county, I don’t like working with the county. We pay for third-party inspectors to come out. We can call them, they come out, and they submit it to the county. It works really fast. If I have to wait on the county, I could be waiting a whole month. Time is really what kills you. My wife’s favorite line for everyone who starts with us is, “Did you calculate your holding cost?” Your holding cost is what you’re talking about, Scott. That’ll kill you. If you thought you were going to be in this flip for 60 days, and now you’re in it for six months, yeah, you’re not gonna be walking home with a lot of money.

Scott Bursey (17:44)
Flexibility and clarity are key. Yeah. Thank you for sharing. And eager to find out, what does your professional network look like right now, Gama?

Gamaliel Serrato (17:53)
We’re part of the subject-to community. We’re part of multifamily communities, several subject-to communities, but right now we work with a lot of the subject-to community by Pace Morby. We go to a lot of events. We go to a couple events with Bill Walsh. We have a lot of network connections, and we go to some events where they’re with builders right off the ground, ground-up development. We’re actually looking into that. And we have some connections; we have about two locations that we’re gonna do that. We’re working with the city of Stockton for about 200 units, low-income housing, and six buildings downtown. We like to connect—especially my wife—we like to connect with mayors, we like to connect with facilities. Last time we went to an event that was for Kaiser just to meet with nurses, doctors… What do you call the dispatch nurses? You just want to make sure that you’re connected, they have your information. The more people that know you—it’s not who, it’s who knows you. That’s very important. That’s why we try to network a lot.

Scott Bursey (18:55)
Surrounding yourself with high-caliber partners is vital to scaling up. And Gama, interested to hear, if you could give our listeners just one piece of high-level advice to unlock their first creative financing deal this month, what would it be?

Gamaliel Serrato (19:12)
Depending on what you’re getting into, and I always say start small because that way you’ll be able to grow safely. The pain points, what is someone going through? The bigger problem—if you’re able to fix a really big problem, you’re going to make money and you’re going to be able to help. When it comes to single family, multifamily, if someone needs to sell for a reason and you can be there to help them out, you’re going to be able to walk away with a reward. If you are chasing the market, the online market, the MLS, they can wait. One of the things that I tell the wholesalers is—nothing against realtors—but if you’re gonna bring me a deal and it has a realtor in the middle, and the first thing the realtor says, “Well, my seller is not in a hurry to sell,” now you’re begging for a deal. Now that it’s gonna cost you. An off-market deal on a house that’s 600 grand that needs repairs, you’ll be able to do it 60 cents to the dollar. You can purchase that easily. You can put 15 cents to the dollar of repair, and now you have a really nice—even if you’re brand new—25 cents that you can pocket after you sell, or you can have 10 cents to the dollar that you can pocket after you refinance.

Scott Bursey (20:21)
Thank you for dropping that wisdom, Gama. And you have dropped a lot of wisdom for our listeners today. But is there any additional golden nugget or two that you’d like to leave for our listeners?

Gamaliel Serrato (20:33)
Yeah, of course. Always surround yourself and always be into like the podcast of Investor Fuel. And you’re looking at the videos and you have a lot of entrepreneurs that give a lot of free advice. That’s one of the things that you’re chasing when you’re first starting off or your intermediate: free advice. These are individuals that spent their entire life taking losses. And people think, “You guys learned this overnight.” My nieces always tell my wife, “You’re with your husband for the money.” When we got together, we didn’t have two dollars to rub together. It was like we had nothing of nothing. We had no furniture when we moved in, we could just afford our apartment. If you’re able to listen to people that have been doing this for twenty, thirty—sometimes I’ll just sit when someone who’s retired, they’re like 80 years old, and me and my wife would just sit there for about two, three hours and they’re just telling us what’s going on, what they did, and the things that they’ve gone through. Obviously, the market changes, but not really. The market just goes up and it goes down, and it goes up and it goes down. If you’re able to sit there and learn from others, you don’t have to repeat those mistakes, because especially when you don’t have a lot of money, they cost you. Sometime there was a deal that I went into, my wife’s like, “Don’t do it, don’t do it. She’s not gonna leave, she’s not gonna leave.” Guess what happened when we rehabbed the entire home? She became a squatter. Husbands, I will say, maybe they don’t wanna hear it, but sometimes take your wife’s advice (and wives the same). But yeah, that’s the biggest golden nugget that I can leave: learn from others and surround yourself with individuals that have been doing it for a very long time and individuals that can teach you. Sometimes you’d be surprised, you could just sit in a room and it’s completely free, especially podcasts, and sometimes you might have to pay a little bit for that education. We have, because sometimes there’s no other way around it and you need to learn more so you don’t have to lose that much money. I say ten, twenty thousand dollars is worth having to prevent a three-hundred-thousand-dollar loss.

Scott Bursey (22:27)
Excellent words of wisdom right there. Thank you for that, Gama. And for those of our listeners that would like to keep this conversation moving, stay in your lane, or perhaps collaborate with you on future deals, what is the best way for them to plug into your pipeline and reach you directly?

Gamaliel Serrato (22:42)
So they can go to our social media, right, Instagram: Home Help Solutions LLC. They can reach our website, same thing: www.homehelp-solutions.com. And if they’re interested in doing sober living and recuperative care, they can always fill out an intake form for my wife. Same thing at Home Help Solutions, but for my wife, which is Healing Oasis: it’s www.healingoasisrecoveryinc.com. They can fill out an intake form, and they can just leave a message and say, “Hey, I’m not looking for a bed, but I’m really interested to know how to get into this. I need more information,” or “I’m already doing this, I just want to connect.” We get a lot of facilities that just want to work together because a lot of times we don’t have beds. It’s funny because we’ll do five or six flips and we think, “Okay, we got enough beds,” and we fill them and the phone’s ringing. So my wife has to reach out and find partners. Everyone is a partner; you could work with everyone. We don’t charge for referrals, this is for the community. So it’s the same thing when they want to JV with us. If you have a deal and you just don’t know what to do, you don’t know how to close it, if you want to partner up, more than happy to reach out. Our website or our social media, leave us a message. And if you just need some advice, same thing. I’m more than happy to give you some advice, or one of my sons or my wife would just jump on. We have about 40-something team members that have been doing this for about five, six years with me. They’ll be able to say, “No, that’s a subject-to deal, or you could double stack that. You might be able to do this, or you might have to do a hybrid, or you might need a little bit of money.” It never hurts to ask for help. If you just reach out, we’re here to help.

Scott Bursey (24:27)
Gama, thank you so much for joining us today on the Real Estate Pros podcast.

Gamaliel Serrato (24:31)
Course. It was a pleasure.

Scott Bursey (24:32)
It was a sincere pleasure. To our listeners, we certainly appreciate you. You brought the fuel and then some today, Gama.

Gamaliel Serrato (24:41)
Thank you.

Scott Bursey (24:42)
And for our listeners, if you received value from today’s episode, please subscribe. We’ll be fueling your tanks with a lineup of elite guests, just like Gamaliel Serrato, who are accelerating and setting the pace for the rest of the industry. Until next time, keep your standards high, your vision clear. We’ll see ya in the next episode, everyone.

Gamaliel Serrato (25:00)
Thank you, guys.