Why Chris Thompson Uses Cash Offers Before Creative Finance Terms

Chris Thompson (00:00)

I credit a lot of this to my dad, ’cause he was the one that kind of, showed me the ropes. And when I first got my license at the end of ’06, he kind of sat me down and was like, I’m gonna be a horrible teacher, but I’m a great mentor, so just follow me and take notes and then ask me questions on those notes.

And it worked pretty well for the first five years, my first year as an agent, I sold one house. And then I doubled that for the next five years until I was, somewhat established.

Scott Bursey (01:00)

Welcome back to the Real Estate Pros podcast powered by Investor Fuel. I’m your host, Scott Bursey Glad you’re with us. Today we’re thrilled to be joined by Chris Thompson. Chris wears four hats in this business. He’s an agent, a property manager, a contractor, and an investor. He’s also a second-generation investor and agent that’s been walking home inspections with his dad since he was 10 years old.

Folks around him know him as the bearded guy and the creative guy. Listeners, get ready for some valuable insight on creative finance and on seeing value in a house that most buyers walk right past. Chris, welcome to the show.

Chris Thompson (01:40)

Thanks for having me, Scott.

Scott Bursey (01:41)

Excellent having you here and to help our listeners get up to speed. Please give us the 90-second highlight reel, if you will, of how your career ignited and where you’re pouring your fuel now.

Chris Thompson (01:52)

I like it. well, as you stated, I am a second-generation realtor and investor. I got my real estate career started when I was 10 years old. I was extremely grounded and not allowed to be left alone. And both parents worked, so I got to go to a home inspection with my dad in August. And it was, I think, the hottest day of the year. I was not allowed inside where the air conditioning was, and way back then.

that was when home inspectors still used the carbon copies and wrote the reports on site. So that was probably the longest four hours of my life, especially at that time.

Scott Bursey (02:22)

Man, what a journey. that really is a story with some miles on it.

Chris Thompson (02:26)

Just a few. it’s kinda weird to look back and be like, Wow, that was that long ago. Okay.

Scott Bursey (02:30)

What really caught my attention about you, Chris, is the turn in your path. You bought your first rentals the plain traditional way. Then you learned creative finance. And it kind of changed how you buy, how you help sellers, and how you coach. One new tool opened a whole new lane for you. Taking that a step further, you started walking inspections with your dad at 10 years old. What do you see in a house that most investors may walk?

Right past.

Chris Thompson (02:57)

That’s a good one. for an unexperienced investor and or agent, they’re gonna kind of walk through, no different than a buyer would, and walk through and kind of look at the pretty stuff. The first thing I do when I walk in or just go walk a property is I look at the outside foundation. Are there any cracks in it? are the gutters attached? Are the windows closed? I walked one yesterday in the siding kind of

had a big bow in it and the gutter was, that far off the house. I’m like, that’s gonna be a water damage issue. that’s not good. and one thing I try to teach my buyer clients when I’m walking through with them is when I walk into a room, square rectangle room, I’m looking at the four corners. Are there water stains? Are there cracks? Are the cracks up and down? Are they sideways? If they’re up and down, it’s probably just a drywall,

it got too dry and the seam busted. If it’s a diagonal crack, okay, that might be an issue with the foundation. and of course I look at the pretty stuff too, but mostly I’m looking for where the problems are. Something looks a little off, try to investigate more, take a note of it, point it out to a client if I’m with a client, or if I’m, out filming for my channel, it’s hey, look at this thing. it’s bad.

and just trying to point out things that most people wouldn’t pick up on. And that’s really just time in the market and looking at dozens and dozens of homes every month.

Scott Bursey (04:13)

How much of that can be taught?

Chris Thompson (04:14)

I think a good bit, again,

I credit a lot of this to my dad, ’cause he was the one that kind of, showed me the ropes. And when I first got my license at the end of ’06, he kind of sat me down and was like, I’m gonna be a horrible teacher, but I’m a great mentor, so just follow me and take notes and then ask me questions on those notes.

And it worked pretty well for the first five years, my first year as an agent, I sold one house. And then I doubled that for the next five years until I was, somewhat established.

Scott Bursey (04:43)

Thanks for highlighting that. Agent, manager, contractor, investor. That’s a lot of hats for one head. Where does the work pile up first?

Chris Thompson (05:30)

Well, my main focus is still being an agent, helping buyers and sellers. I’m predominantly a listing agent. And the property management came out right around 2010 after the crash. I was working with a lot of people and talking with a lot of people that said, hey, I can’t afford to sell this and take a loss, but I can afford to rent it and then go buy my new house.

That just stemmed my property management company starting out then, because it was helping essentially forced landlords of people that had, a townhouse, a condo, a small single family, but they wanted to upgrade. So that’s kind of where that stemmed from. the contracting, and I had done plenty of flip properties as an investor.

credit my wife for this because she’s the genius behind the madness. but it was, hey, instead of me trying to lowball and pick up this house from the seller, I’m gonna come in as the agent with the fiduciary duty of helping them and making sure that everything I’m recommending is the best for them because that’s my job as an agent. So I would come in as a listing agent and say, okay,

Renovate this, we can, do a kitchen, we can do carpet, we can do paint, bathrooms, whatever we need to do to be able to maximize the value of this house. I would take a small deposit and then finance the rest until closing. So the sellers didn’t have to go into their pocket for all of that. So I would come in, design it, I would manage the job. Once the renovations were done, we would put the house on the market, especially in 20 and 21.

Within hours we’d have multiple offers, many over list price. And that’s when it was like, huh. Okay, this is now a thing and we’re gonna start doing it. It was three years later when I found out that that is basically called in novation plenty of differences, but essentially it’s an novation

Scott Bursey (07:06)

Thanks for laying that out for us. Chris, talk to us about this. Creative finance was the big turn in your path. Where’s the open door with it right now?

Chris Thompson (07:16)

There’s still plenty out there. and I give a lot of credit to the subject-to community and Pace Morby. that was a community I dove into. And getting in the market at the end of 06, when we hit 20 and 21, I knew something was gonna change. I didn’t know what, I didn’t know how, I didn’t know, really direction. I just knew that I had to start finding the next solution, the next way to help sellers solve problems.

And that’s when I stumbled upon the SubTo community, joined that, learned a ton. And I think more for me, it was more of a mindset thing of, because as an agent, you have to stay inside this tiny little box. And if you vary out, you’re gonna get sued and go to jail. with the SubTo community, I learned that there’s so many different ways to do the same thing. Obviously, yes, everything has to be legal and everybody has to be on board and disclose, disclose, disclose.

Which you should be doing that anyways, whether you’re an agent, an investor, anything. So I would say that was probably the most eye-opening thing of just, hey, there’s so many different ways. And then springboarding off of that, I had a client call me and I walked into this appointment before having the creative finance. I would walk in with we can sell it, we can renovate and sell it, or we can renovate and re-rent it.

But now that I had all of this creative finance extra tools in my tool belt, I now had a fourth option of, hey, I’ll buy it because you have a really good interest rate. I’ll take over the payments and go from there. That was the first subject-to property I ever bought, roughly six months after joining the community. And it’s a phenomenal deal. I still stay in contact with the seller. they just bought a new house about two months ago.

So they were nervous about going through the process with having the SubTo property It never even came up. So it’s a beautiful thing. She’s happy, retired, and I still have another year left on the balloon, so I’m gonna keep running that out. And if I can talk the seller into keeping it going, because that’s a great cash flow property. And I’ve had the same tenant for five years now.

Scott Bursey (09:43)

What type of seller says yes to deal with terms? If you could paint the picture of the seller for our listeners, who are you looking for?

Chris Thompson (09:51)

It’s really the top 5% and the bottom 5%. Everybody else can pretty much go retail listing with a real estate agent. So it’s those bottom 5% of people that can’t afford it anymore. They’re going to lose it to foreclosure or short sale or something of that avenue, or they get a job transfer and they’re all the way across the country and they can’t afford to sell.

On the opposite side of that are the top 5%, which I would say are your high-level, high net worth, whether they’re just regular homeowners or investors. They see the value in being able to spread those capital gains out. Because you can only, if you’re doing a seller finance situation, you’re only taxed on what you collect per year.

So now if it’s not a straight sub to and there’s a hybrid where it’s a subject to and a seller finance, well, that seller is gonna make a lot more money over time than if they would just sell it now. No different than the bottom 5%. If they do have equity, they’re gonna get payments on that equity, they can get a lump sum on that equity. So many different variations. And I think that’s the beauty of creative finance is that no matter what strategy it is.

If it works for the buyer and the seller and the minds meet, then it’s a great deal to do.

Scott Bursey (11:02)

Appreciate you spelling that out. Let’s talk about this. A seller can take clean cash, no strings, and be done. What works against a creative deal?

Chris Thompson (11:12)

they definitely do work against creative deals. And I don’t start out with offering a creative deal. one of the things that the community had, kind of beat into our heads is cash, cash, cash, go for terms last. shout out Carolyn Kane. beat up with that cash offer. Most of the time, it’s gonna be a horrible lowball offer that nobody’s gonna want to take.

So I’ll use a lot of times that cash offer to set up the creative offer. if I’m cash and I have to go get a loan or whether it’s from a institution or private money, that’s gonna cost me more. So now I have to offer you less. If you can give me terms, well now I can pay you X amount more. You just have to take it over time.

Short and sweet, take the cash deal. If you want a long relationship, go creative.

Scott Bursey (11:55)

And that makes a lot of sense. Thank you for breaking that down. And let’s kind of stay on this path for a moment or two. Chris, you coach new investors and you host a local mastermind each month. What is the first mistake you see new investors make?

Chris Thompson (12:10)

probably the same mistake that I made. I’m gonna jump in and I’m gonna do everything and I’m gonna be all things. I was a private lender, I was a flipper, I was a buy-and-hold investor, I never dabbled in the short-term and mid-term space but I was a group home, an assisted living, and now I’ve finally gotten my blinders back on, and I am a boring long-term buy-and-hold.

just rental landlord. real estate is not a get rich quick scenario in any aspect. Can it happen? Of course. But I’m kind of targeting Mike Zuber, One Rental at a Time, stealing his line. I’m looking to get rich for sure, not get rich fast.

Scott Bursey (12:48)

Thanks for taking us inside that. And Chris, you carry two nicknames, the bearded guy and the creative guy. Which one fits you best?

Chris Thompson (12:57)

I would probably say the bearded guy. as you can see, I have this big fluffy beard. I went to a local real estate meetup for investors, and one of the gentlemen that I had gone up and introduced myself to, and he kind of steps back and looks at me and goes, Hey, you’re that bearded guy. And I created the brand around that, and that was about two years ago.

Scott Bursey (13:16)

I love that. Chris, when it comes to your network, who are the people in your corner right now, the ones you lean on in this business?

Chris Thompson (13:24)

for my personal team, my virtual assistant and my property manager, field manager, I lean on them heavily to handle a lot of the back-end stuff. So I’m more forward-facing and they are kind of behind the scenes making sure everything that I discussed with a client or a prospect actually gets done.

Scott Bursey (13:42)

Sounds like you’ve built a circle that has your back.

Chris Thompson (13:44)

it does. And it’s a nice place to be. and even furthermore, great property managers because I do invest out of state Now I kind of keep my hands a little bit, involved, but ultimately I’m relying on them to be my eyes and ears, no different than anybody who hires a property manager. As the manager, we’re the eyes and ears for that landlord. So they know or have the peace of mind that.

Everything’s covered. Everything’s handled and it’s handled properly and it’s handled efficiently.

Scott Bursey (14:09)

Chris, let’s dive deep. If a new investor wants cash flow but has very little cash to start, what’s the first move you would teach them?

Chris Thompson (14:18)

It’s almost split between two.

Live below your means, cut expenses and study. Find one market, build a buy box around it as to what you’re comfortable with and study that market every day. Whether it’s for five minutes, you really probably want to get at least 30 in there. But plan on spending just say 20 to 60 minutes a day studying one market. And then also picking what type of investor you want to be. Do you want to be a flipper?

Do you want to be a lender? Do you want to be a buy-and-hold investor? Short-term, mid-term, long-term. Figure that out and then build your team and your frame around that.

Scott Bursey (14:55)

Thank you for the detail on that. And Chris, you have given us a lot of really good detail insight today. Is there any additional words of wisdom or a golden nugget that you would like to leave with our listeners?

Chris Thompson (15:06)

I would say don’t quit. it’s hard, your first one, two, and three properties, I would definitely recommend self-managing. just so you learn. If you want to pass off management outside of that, great. But now you know what to look for and more importantly, what not to look for when you’re interviewing a property manager.

Scott Bursey (15:24)

Thank you for that, Chris. And Chris, for those of our listeners that would like to keep this conversation moving, stay in your lane or collaborate with you on future deals, perhaps. What’s the best way for them to plug into your pipeline and reach you directly?

Chris Thompson (15:38)

my website, ChrisThompsonTeam.com You can book a call with me there. I have a bunch of free resources for homeowners and investors on there. my YouTube channel @ChrisThompsonRealEstate and for just a quick direct message, Instagram @ChrisThompsonRealEstate also.

Scott Bursey (15:52)

Chris, thank you so much for joining us today on the Real Estate Pros podcast.

Chris Thompson (15:56)

Yeah, that’s been fun. Thanks for having me.

Scott Bursey (15:58)

And to our listeners, we appreciate you. If you receive value from today’s episode, please subscribe. We’ll be fueling your tanks with the lineup of elite guest, just like Chris Thompson, who are accelerating and setting the pace for the rest of the industry. Until next time, keep your standards high and your vision clear. We’ll see you in the next episode, everyone.