Rent-to-Own Real Estate Strategy: How Investors Profit From Buyers Banks Reject

Zachary Beach (00:00)
Because the truth is I’ll speak at events all across the country. And when I go to these local REAs or investment summits and things like that, there’s always like the top agent, there’s always the top wholesalers, always the top lender. But there’s never the top creative financing investor. There’s never the person that they’re like, yep, if you get a challenge, this guy can solve it or this woman can solve it.

But what I’ve noticed is as I’ve stepped into my local markets and have kind of played that role, there’s this ebb and flow of deals and leads that come to the table, which require no capital, which require no systems, no software.

Scott Bursey (02:11)
Welcome back to the Real Estate Pros podcast powered by Investor Fuel. I’m your host Scott Bursey. And today we have a powerhouse, a true powerhouse guest who is bringing some serious high octane fuel to the conversation. He’s not just talking about real estate. He’s building the systems that allow others to master it. We’re diving deep with Zachary Beach of Smart Real Estate Coach to unlock the strategies for navigating complex high potential

markets like the Great Lakes region. Get ready to load up pros because this episode is all about smart systems, massive scale, and how to fuel your portfolio growth. Zachary, thanks for being here.

Zachary Beach (02:56)
Scott, pleasure. I’m excited to be here, my man. This is gonna be fun.

Scott Bursey (03:00)
For those of our listeners who may not be familiar with your journey, please tell us how did your career begin and what is your main focus now?

Zachary Beach (03:08)
Yeah, thanks for the introduction. yeah, I started my real estate investment career about 12 years ago now. And before that, I was a bartender. I was a personal trainer. I was living down in Newport, Rhode Island, which is an amazing, beautiful place. But it’s extremely seasonal. So you got to be really an entrepreneur down there because it’s built on tourism. So I got out of college, started bartending.

and then started personal training to fill that gap. But eventually I got extremely burnt out and I’m sure some of your listeners can attest to that. was working extremely late and waking up really early in the morning to really make ends meet. So eventually I was seeking other opportunities and my father-in-law, Chris, who got crushed in 2008 was revamping his real estate investment business using what we all know now as creative financing or back then they used to call it buying on terms.

I ended up joining him, zero real estate experience and kind of started from the ground up. was handed a sheet of ⁓ potential leads in a script that was about a page long and with a couple of commonly asked questions and was told to generate some leads. So in between my other two gigs, right, I started making those phone calls and really ⁓ it took me right around, say, six months to get to my first deal. But once I really got the taste of real estate investing, that’s when I really burned the

ships at with bartending personal training and really started diving head on in into real estate investing.

Scott Bursey (04:43)
That’s an incredible trajectory. And Zach, what really caught my attention about you was the way that you’ve been able to systemize real estate success, essentially building a GPS for investors, navigating challenging multi-state markets and value add opportunities.

Zachary Beach (05:48)
Yeah, for sure. So when I first came into the business, ⁓ it was extremely ⁓ paper intensive. So I don’t know if you guys have ever seen this or used this strategy before, but we had what we would call a one through 31 folder. So it’s either a cabinet or ⁓ one of those plastic foldout folders where literally all it would do was once we got a lead generated from a virtual assistant. And what do mean by a lead is we go ahead and we call somebody, maybe they’re an expired listing.

or a foresale by owner or pre-foreclosure, and we gather a bunch of information and then we decide where they’re gonna go into our pipeline. So when I entered the business, things started to get, we started missing things. So I suggested we started bringing in some software and really utilizing a CRM and then eventually bringing in virtual assistants and call technology and all that as well. And as we’ve developed that plan, and really we broke it down to what we call the seven steps to a taken, which is a property under agreement,

As we developed that plan, then yes, we then started to be able to create a system around it that we then soon discovered, you know, over years that it not just didn’t just work up here in Massachusetts or Rhode Island or Connecticut, it ended up working in Florida and the Midwest and California. And really what we took was that simple seven steps to acquire a property. And then we eventually created another simple nine steps to sell a property. We then had a clear blueprint that allowed us to really be able to

help anybody that was either an active investor or just getting involved in real estate investing to be able to at least have simple steps, simple formula to be able to either get to their first creative deal or to be able to get to their 10th, 20th or build a portfolio.

Scott Bursey (07:32)
I can feel your energy here. Let’s get the fuel flowing, Zach. What’s the biggest competitive edge Smart Real Estate Coach brings to the diverse Great Lakes market?

Zachary Beach (07:39)
Sounds good.

So number one, if you look at any of our strengths, it’s our ability and our depth of knowledge in creative financing. I mean, now creative financing is becoming a hot topic, right? Everybody is starting to understand what a seller financing deal is or a subject to deal is, what a lease option is or an assignment.

All of these creative terms have been something that we have been knee deep in and right and it built systems around for a decade before everybody else, you know, really started to use these strategies. We’ve been doing it before. It was cool. So really what we ended up developing is this vast knowledge of not only be able to do creative deals, but to do them with integrity, meaning that we actually are using these tools for good, not just putting properties under contract and hoping that, you know, we’re able to solve a problem, but to be able to actually solve that problem.

And then we also have really…

honed in on the back end, meaning we sell properties on rent to own. Now, nobody else, in my opinion, is doing it the way in which we do it because we have really been able to capture a significant success rate. And what we’ve done is that there’s roughly 70 % of Americans cannot walk into a bank and get a loan. So we have this giant pool of people. While everybody else is fighting over that, say, 20 % of people out there that can actually qualify for bank loans, we’re working

with these people which is also solving a problem. So if I looked at our strength it’s our ability to buy deals creatively and sell deals creatively at a very high level.

Scott Bursey (09:17)
That systematic approach is a game changer, right there, Zach. Let’s get underneath the hood with this. What is the most persistent operational bottleneck you are currently working to eliminate?

Zachary Beach (09:32)
When I look at all of, especially new real estate investors out there.

The biggest bottleneck is really twofold. One is it’s a mindset shift when you go from say W-2 employee to a real estate investor. We’re used to and we work with a lot of brand new investors or people that are, you know, maybe have dabbled, but now actually want to make it a full time operational scalable business. And there’s a huge shift because what we don’t realize is there’s so many entrepreneurial nuances that are outside of, you know, a W-2 job when you’re used to somebody telling you what

to do and where to be consistently and now all of a sudden you’re now an entrepreneur where you now have to be the one that is running the business and telling other people what to do, how to do it and do it consistently. It makes a drastic difference. But the number one skill set outside of that

Scott Bursey (10:22)
Absolutely.

Zachary Beach (10:59)
Scott is really the biggest factor when it comes to success in real estate investing is how quickly people can really uptick their communication skills, meaning to actually solve problems. Because when we look at our strategies, our strategy is about solving problems that either other people can’t solve or that other people choose not to solve.

Really creative financing is a skill set just as much as it is a real estate investment strategy. So what I mean by this is really about being able to really talk to a stranger and be able to identify what’s happening in their lives and what actually motivates them and moves them and to be able to then have the correct tool to be able to solve that problem. So.

And that unfortunately doesn’t come with osmosis. That’s why what we see is it might take somebody some time to get to their first deal, but once they get their first deal, it’s significantly more quickly to their second deal because now they have the confidence around actually solving that problem and what tools to actually use during that timeframe.

Scott Bursey (12:01)
That communication flow is so essential. And tell us what markets are you operating in?

Zachary Beach (12:08)
We’re in like 80 plus markets at this point in time across the board. My investment portfolio has always been up here in New England, Mass, Rhode Island, Connecticut, sometimes New Hampshire. But we got students and community members from East Coast to West Coast and straight down the middle. So we’re in each and every individual market. Even some of those nuanced markets like a Texas, which if you’re investing in creative deals, you know that Texas has specific nuances outside of most other states. We’re also there as well.

Scott Bursey (12:39)
Where are you seeing the most overlooked profit potential?

Zachary Beach (12:44)
That’s a great question. Actually, I would say the most overlooked profit potential usually comes from a specific lead source. And that lead source is your expired listings. And the reason why that’s the case is because most people believe that if you buy properties creatively that you have to give somebody full price. Well, you don’t necessarily have to give somebody full price, but what you typically can give them is exactly what they thought they were going to put in their pocket if they sold traditionally. Right.

So let’s walk through the mindset of the seller that’s on the market. The seller goes and sells a property on the market. Their expectation is that they’re going to have to pay relative commissions and closing costs. And honestly, what most people are seeing is they’re only getting anywhere from 93 to 97 % of their asking price. if we just threw those numbers together, the average person is bringing home anywhere from, 87 to 93 % of what they thought they going to get on the market. So what does that mean?

That means that you have buffers in there. So if you approach a seller instead of saying hey, ⁓ You had your asking price was say 200,000 Instead you just ask how much did you expect to put in your pocket and a lot of people will give you a dollar amount That’s lesser that’s much less than their asking price because that’s what they already calculate I was gonna go in their bank account. So usually then just approach it from there and say alright. Well now Let’s go ahead and look at ⁓

getting you to that dollar amount, means that you as the investor already saved roughly 6 % on most cases or even 7 % on the price.

And then here’s the key though, because we buy creatively, now you’re to go ahead and you’re going to sell it on a rent to own or a creative exit, which allows us to then go sell it at a premium because these buyers need time in order to qualify for bank loans. So really that’s a huge key. You could go from being at 87 % of buying an ass and then selling it at 110 % the next day because you’re selling it to a different audience, not the traditional buyer. So that’s how we’re able to really create these profit margins right away.

even touching the property because we are not in that fix and flip business or that value add business we’re in the creative financing business.

Scott Bursey (14:59)
And how is that going to move the needle for a Smart Real Estate Coach?

Zachary Beach (15:04)
Yeah, that well that moves the needle because the way in which we built our community is we actually with the key people that we work with, we actually help them do those real estate transactions. And then we have this model in which we all participate in the deal in which we do. So the more deal the more quickly that we can help somebody go from zero deals to 10 deals, everybody wins that that

that investor now has a portfolio that they own. They get the support along the way. This isn’t just about like jumping on a zoom call. This is literally about getting in the trenches with them. So when they win on every single deal and the quicker we can get them to those wins and the more profits we can get them, then everybody wins along the way as well. So what we’ve really created is something unique where it’s, really a real estate investment company disguised as a coaching company, which is a lot of fun.

Scott Bursey (16:36)
It’s really that team effort. Now let’s shift gears. What single external factor, know, be it regulation, interest rates, insurance, are you, are you watching most closely now?

Zachary Beach (16:46)
Yeah.

Yeah, as we were speaking offline, I think that the huge component when it comes to creative financing right now is there’s positive and negatives to popularity, right? So in necessity, because I truly believe that it’s not just populated to do creative deals. It’s actually a necessity because of affordability issues, because interest rates have not moved, ⁓ because the average buyer is unable to qualify for bank loans. There’s just so many factors right now.

So the main thing that we always got to watch out for every single year that shows up on our SWOT analysis, as well as the company is what’s going on in the regulatory industry, right? Or in loss. Because unfortunately, not every creative financing investor is doing things the right way, unfortunately. and this is an integrity based strategy, because if you’re buying something creatively,

and you’re keeping somebody’s loan in place, right, and you’re responsible for paying it or the seller is going to finance the property for you and expect you’re to make payments or or if you’re just going to control it on a lease option and you’re expected to maintain and keep that property up during that time frame, then there’s a huge integrity component because you’re almost partners with the seller during this time frame.

Unfortunately, what we’re seeing is there’s a lot of people that are defaulting on those agreements and it’s only a matter of a time before, you know, laws are going to change, especially state or community wide, right? So it might not be national.

But if there’s huge effects in local states or local counties, eventually there’s going to be some regulatory changes and we just need to continue to watch out for that. But here’s the huge thing to it. It’s important to not be a one legged stool. Right. I’ve seen too many real estate investors right now struggling because they had one strategy. The fix and flip strategy. Right. Where it fix and flip and sell a hotel or sell a retail.

Okay, well, if profit margins change, then all of a sudden your business changes, right? So if you’re to put down more money, are you to get more private money, or your interest rates change on the money that you need for construction or rehab, all of a sudden your profit margins go out the window.

And especially if the market stays flat or goes down, all of a sudden now, I’ve seen too many investors actually losing money on real estate deals. So ⁓ it’s important to have a multiple strategy for both buying and exiting. And that’s really where creative comes down. So if the regulatory things change, we just look at what strategy can we then put in place for those areas to ensure that we’re still able to create a profitable real estate business.

Scott Bursey (19:26)
I appreciate you highlighting that, Zach. If you had to merge one strength with one opportunity to create your next 12 month blueprint, what would that look like?

Zachary Beach (19:37)
Yeah.

Yeah, I love seller financing strategies. That’s always my favorite. And the reason for it is twofold. One is, it’s roughly 40 % of the properties in the United States are debt free. So if 40 % of the properties in the United States are debt free, that means that the seller…

isn’t necessarily in a financial challenging position because if they were, they would have refinanced and take money out. So we have this huge amount of people that have a, what we would call a real estate problem, right? Which is they might not want to manage that property anymore. The tire landlord.

They might want to get more profit than the current market is willing to give them right now a better price. So we have those people. So you have that huge opportunity. So now we take seller financing and we go and approach those sellers and we say, hey, look, you no longer have to be a landlord.

You no longer have to manage this asset. And guess what? I can actually create cash flow for you so that we can still create that dream that you originally had, which is to be able to create passive income. So we approach you seller financing to buy those current properties. And that could be a single family. It could be small, multi-degree commercial, because when you use seller financing, there’s so many tax benefits for the seller.

And there’s also so many benefits for you as the investor, because look, we’re getting deals that are at 0 % interest rates, which you’re not going to get from banks, which drastically improves the wealth of the investor because they’re able to pay down so much debt. They’re to create better terms so they can cash flow properties that probably wouldn’t traditionally if they had to go get regular financing. So those would be the two strategies I would double down at least for the next 12 months or even for the next 10 years, however the market goes.

Scott Bursey (21:21)
merging your proven strategies, those systems with new market products is the essence of smart scaling. That’s just awesome.

And Zachary, it’s time now for the money question. This is where you supply the high octane fuel for the investors who feel stuck doing everything Zach themselves. What is the one deep dive piece of advice you can give them on creating the leverage necessary to go from a few deals to a full time scalable real estate enterprise?

Zachary Beach (21:58)
Yeah, I love this question because there’s a couple of different routes in which you can go, right? Because if you’re looking to go from the solpreneur to the CEO of your portfolio or just purely the architect or the operator, there’s lot of there’s some things that need to come into place. Obviously, you’re going to need software and you need people and especially with AI. mean, things are going to drastically change. But I can give you one small piece of advice that would drastically change things. It would be to build an ecosystem and to participate in the

real estate investment ecosystem that already exists in your area.

Because the truth is I’ll speak at events all across the country. And when I go to these local REAs or investment summits and things like that, there’s always like the top agent, there’s always the top wholesalers, always the top lender. But there’s never the top creative financing investor. There’s never the person that they’re like, yep, if you get a challenge, this guy can solve it or this woman can solve it.

But what I’ve noticed is as I’ve stepped into my local markets and have kind of played that role, there’s this ebb and flow of deals and leads that come to the table, which require no capital, which require no systems, no software.

And it’s by simply solving all the other investors problems. Because if you got 20 wholesalers in the room and they only can close 10 percent of the deals and they’re spending $10,000 a month on ads, right? That means that there’s 90 percent of deals that you might

be able to get a shot at that you could simply and then pay them back via referral where you can acquire these deals and people are sending you the deals and you’re not doing the extra work. So for most people they can actually scale a small portfolio that way without adding anything else and easily get to a deal a month by simply just tapping into your local ecosystem, acquire the deals that other people can’t close and then of course as your leads are coming to the table refer to the other right people and now you can participate.

other deals without using or creating another skill set and everybody gets to stay in their lane and everyone wins.

Scott Bursey (24:03)
Zachary, those were fantastic insights into the mechanics of running a successful investment firm and coaching business. Thank you for that. For those of our listeners that would like to follow your journey or collaborate with you, what is the best way for them to reach you?

Zachary Beach (24:14)
I appreciate you. Appreciate you, Scott. This has been fun.

Yeah, let me first and foremost. I’ll give you guys access to our blueprint ⁓ It’s absolutely free. We’ll ship it out to you I can do is go to 3paydaysbooks.com, 3paydaysbooks.com You’ll get access to that and then of course you’ll be put on say our newsletter and our emails You can stay up to date if you want to follow us on social media is at @smartrealestatecoach on Instagram and Facebook

Scott Bursey (24:50)
Thank you for joining us today, Zach.

Zachary Beach (24:53)
Thanks Scott, I appreciate you.

Scott Bursey (24:55)
And to our listeners, we appreciate each and every one of you. If you got value from today’s episode, please subscribe. We’ve got a lineup of exceptional guests, just like Zach Beach, who are making huge moves in the market. Until next time, keep your standards high and your vision clear. We’ll see you on the next episode, everyone.