Creative Finance Secrets for Property Managers

Today, Jason sat down with Caleb Christopher to break down how creative finance is actually being used in today's real estate market, especially for property managers looking to grow beyond traditional deals.

In this episode of the #DoorGrowShow, property management growth expert Jason Hull and Caleb Christopher discuss strategies like subject-to deals, the due on sale clause, wraparound mortgages, and other creative transaction structures, along with how property managers can use these tools to acquire more doors, help investors expand their portfolios, and even build their own.

You'll Learn

[00:09] Introduction to Creative Finance in Real Estate [01:01] Caleb Christopher's Entrepreneurial Journey [04:39] Understanding Subject To Deals [10:10] Opportunities for Property Management Business Owners [11:45] Navigating Legal Counsel in Creative Finance [14:17] Understanding Wraparound Mortgages [19:45] Creative Financing Structures [22:27] The Role of Creative Transaction Consulting [27:06] Building Relationships in Property Management

Quotables

"If you have a business and you don't know what to do with those opportunities, other people do, and you can get paid a referral fee."

"The due on sale clause is always going to be a stone hanging over your head. You can't get rid of it."

"Your low-interest mortgage is an asset I'm willing to buy."

Resources

DoorGrow and Scale Mastermind

DoorGrow Academy

DoorGrow on YouTube

DoorGrowClub

DoorGrowLive

Transcript

Jason Hull (00:01)

Five, four, three, two, one. All right, welcome everybody. I'm Jason Hull, the founder and CEO of DoorGrow, the world's leading and most comprehensive coaching and consulting firm for long-term residential property management entrepreneurs. For over a decade and a half, we have brought innovative strategies and optimization to the property management industry. At DoorGrow, we are on a mission to transform property management business owners and their businesses. We want to transform the industry, eliminate the BS, build awareness,

change perception, expand the market, and help the best property management entrepreneurs win. Now, let's get into the show. All right, so in today's episode, I'm hanging out here with Caleb Christopher. Welcome, Caleb. And we're gonna be chatting about creative finance and what it really looks like in today's real estate market. And Caleb's gonna share practical insights from his time in the industry, breaking down strategies like Sub 2, Subject 2 Deals.

Caleb Christopher (00:46)

All right, thank you.

Jason Hull (01:01)

the due on sale clause, wrap around mortgages and other creative transaction structures to give a helpful real world perspective for anyone looking to get started in creative finance. for property managers, know creative finance is how you help your investors get into more units and they all want to manage more units. So cool. Welcome Caleb.

Caleb Christopher (01:24)

Thank you. I live creative finance, so ask in any direction.

Jason Hull (01:26)

So, yeah, it's your

thing. Yeah, yeah, you live it. It's your middle name, right? Yeah. So Caleb was showing me he has paint on his arm from right, like, I don't know where he, yeah, he's been doing some stuff. He's like legit into the work. He's got rental properties. So he's down in the, in the paint. So Caleb, give us a little bit of background on yourself.

Caleb Christopher (01:32)

Yeah.

Yeah. I've got rental properties.

Jason Hull (01:51)

at kind of your, how did you get into doing what you're doing now? What's sort of your entrepreneurial journey for the entrepreneurs listening?

Caleb Christopher (01:58)

Yeah, so entrepreneurship has gone way back for me. What, I'm 38 now? I'm almost 39. 39 feels a lot closer to 40 than 38, by the way. ⁓ As an entrepreneur, I'm like, wait, that's like one of those. Anyway, so.

Jason Hull (02:06)

Yeah, yeah.

It's a milestone, yeah.

I'm a decade older than you. was born in 77. So I'm feeling even older now. Keep going.

Caleb Christopher (02:18)

Okay.

You look fantastic.

So entrepreneurship in fifth grade, I found these mechanical pencils that would come apart in the middle and they were different colors. And I bought them in bulk at Costco and resold them to my classmates in whatever color combinations they want. Mates started making money. I was like, this is kind of cool. And I like customizing stuff. So that was cool. And then a bunch of little stuff like that. And it ended up where I ran a paintball field out of my parents' house in the woods. I liked working. like work as my hobby.

Jason Hull (02:23)

Thank

Yeah. Okay.

Yes.

Caleb Christopher (02:48)

but also paintball. I've got a 12 year old, we're building a paintball course in my, at my house now, cause he's just starting to get into it. So, but I did that and I bought rental gear and I funded my paintball journeys by having other people rent from me. And so that was that. And then I got into IT and cybersecurity consulting. So entrepreneurship has been a thing where I'm just always adding value, always had a second job, some, some other gig where I like to help do creative problem solving.

Jason Hull (02:48)

Yeah, fun.

Yeah, good time.

Nice.

Yeah.

Caleb Christopher (03:15)

And then I discovered real estate when I couldn't sell my house. The one I'm in right now was right next door to family, which was great, but I couldn't sell the one I was in. And so I had to rent it out and I became an accidental landlord and refinanced the property. And then I read Rich Dad Poor Dad and I was like, thank God I have a rental property. And that was the beginning of the real estate journey.

Jason Hull (03:27)

Yeah.

Right, right. And everybody, you have to read Rich Dad Poor Dad. I think it's a requirement. And then you want to get out of the rat race and yeah, yeah. We would play.

Caleb Christopher (03:41)

Yeah.

Yeah. Start building wealth. Just

treat, treat houses like a retirement account. Slow building. Even if you don't do anything else, if you get a few rentals, you're in a pretty good shape.

Jason Hull (03:56)

Yeah. Have you seen Robert Kiyosaki's game, the board game? Yeah, probably. Maybe it does all the math for you. ⁓ yeah. We did it the hard way and I would just make my wife do the math. I'm like, go ahead, Sarah. You do this. She's like, she likes it. She thinks that part's fun. Yeah. Right. That's why she's the COO and not me.

Caleb Christopher (03:59)

Yeah. It's easier to play online than it is the board game.

It does. Then you don't have all the little cards handing back and forth. So yeah, I highly recommend just running a private game on a computer.

Okay, what a blessing.

Jason Hull (04:25)

All right, so cool. Well, let's get into this. Let's get in this topic. So tell us about the first thing mentioned in the intro was like the subject two deals, like this strategy.

Caleb Christopher (04:39)

Yes, so sub 2 is when you take a property subject to something else. It could be a federal IRS lien. It could be the person's mortgage. It's always, by the way, everybody does sub 2 deals and they just haven't thought of it this way. When a utility company comes to dig up a chunk of your yard and you can't say something about it, that's because you bought it subject to easements, rights of way, etc. So...

Jason Hull (04:52)

Okay.

Yeah, easements.

Caleb Christopher (05:04)

There are external things that can act upon you or your property because you bought the property subject to them. What we do in subject to deals is we add the loan to the list of things taken subject to. So if the mortgage company notices that you sold a house to me without paying off the mortgage, right? The deed transfers to me and I'm making your payments now. That's a sub two. ⁓ if they notice and if they care, they can accelerate that loan because of the due on sale clause. So kind of two birds with one stone with this description. It exists in every.

Jason Hull (05:24)

Yeah.

Yeah, doesn't that void most loans or?

Caleb Christopher (05:34)

loan I've ever seen. Maybe not in a seller finance loan if you explicitly exclude it. It's not required, but a due on sale is a good protection for a lender to have because if you transfer and if they care, they can accelerate. It doesn't require them to. They can.

Jason Hull (05:36)

Right.

but they can and

some terms in loans I believe also if you if it switches ownership, they it says it maybe negates the terms of the agreement or.

Caleb Christopher (05:59)

Nope, it doesn't cancel anything else. it's, and a lot of people are like, is sub two illegal? No, it's not illegal. Here's when it is illegal. If I'm borrowing with the intent to hand it to somebody else, the deed, it was never my intention to occupy the property or to satisfy the requirements. And I'm misrepresenting or providing materially false information. That's fraud and that's illegal. However,

Jason Hull (06:04)

Thank

Okay.

Okay.

Caleb Christopher (06:24)

If I buy the house and I move into it as my primary residence or whatever the occupancy requirements are, and then I decide later on to sell it subject to the mortgage, I can do that. And that's a violation, a civil violation