Agents Building Cashflow

EP 163: Why Rent-to-Own is the Best Model to Get into Real Estate Investing with Adam Zach

• Adam Zach

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Civil Engineer turned real estate investor and the Founder of Home Equity Partner, Adam Zach, shares his expertise on the rent-to-own model in real estate. Adam breaks down his innovative approach to matching tenant-buyers with investors, allowing them to purchase homes even if they don’t initially qualify for traditional financing. He discusses the benefits of selling homes on a lease with an option to buy and explains the various structures he uses to maximize cash flow while minimizing risk. 

With over 400 successful deals under his belt, Adam’s insights are a goldmine for anyone interested in creative real estate investing. Tune in to discover how Adam is disrupting the market and how his strategies can help you achieve consistent cash flow in real estate.

Key takeaways to listen to:

  • Leveraging the rent-to-own model to match tenant-buyers with properties and investors.
  • Selling homes with a lease option offers tax advantages and avoids the complications of foreclosure.
  • Buying properties at full retail value can still be profitable with the right structure.
  • Diversifying investments across multiple states and using syndications to scale real estate portfolios.
  • Using creative financing strategies to maximize cash flow and minimize risk.

About Adam Zach

Adam Zach (pronounced Adam “Zock”) has a magnificent obsession with learning and is addicted to personal growth. He is a family man with a business, not a businessman with a family. He retired from the Civil Engineering profession at age 32 through real estate investing. He currently holds 50 single-family rentals in 13 different states along with various alternative investments. 

His main passion is helping dads with young kids achieve time freedom through real estate investing. At age 35, Adam lives in North Dakota with his amazing wife and 3 young kids ages 6,4, and 1.

Connect with Adam Zach:

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To connect with Randal and learn more about passive investing, visit www.ridgelineig.com and follow our social media pages below!

[00:00:00] Adam Zach: If I'm selling a home, I like to sell it on a lease with an option to buy it because then I still am on title. It's an eviction versus a foreclosure. I can continue to depreciate the asset and then I can 1031 exchange it where I can't do that on a contract for D because it's technically an installment sale.

[00:00:14] Adam Zach: So if I'm buying, I want to buy on seller finance. If I'm selling, I want to sell on a lease with an option to buy just from. Tax, rent, and more favorable terms just as me as an investor versus a buyer. And so depending on whoever's listening, like flip flopping that and then contract for deeds in the middle.

[00:00:27] Intro: If you're a real estate agent earning 200, 000 a year, and you want to grow your passive income, this show is for you. Learn secrets other agents use and hear from experts in our field who will guide you on your journey to investing in assets like apartment communities. So you can take your commissions and turn them into cashflow.

[00:00:47] Intro: Here's Randall, let's dive in. 

[00:00:50] Randal McLeaird: Hey, welcome back. Today's guest, Adam Zock. This guy, he's got so much going on and he talks quickly. And so the conversation is awesome. [00:01:00] Like I really enjoy chatting with him and hearing how he's built his business and what he's working on. So Adam is the owner of Home Equity Partner.

[00:01:07] Randal McLeaird: He tells me what he's working on now. He's actually building a platform to pair rent to own buyers with properties and with investors who are buying those properties. So it's a very cool, Platform that he's creating now and how he got the money to actually start this. He talks about, and so I won't spoil that, but the conversation, again, we talked about how he's ramped up and how he is paying full retail for properties and still making a lot of cashflow on a per deal basis.

[00:01:31] Randal McLeaird: He's done over 400 of these deals rent to owns. And yeah, we just break down. You're going to get something out of the show. If you're curious on how to structure this type of deal, or if you're a real estate agent and you're looking to maybe. Make some money on some rental buyers that you aren't sure exactly how they are going to qualify for a property or maybe their lender didn't qualify them.

[00:01:54] Randal McLeaird: Adam has a program where he's paying 1, 000 for every person that you bring to him, plus paying a commission if you're out there finding the house [00:02:00] for them. Very cool program. Again, he's got all kinds of stuff going on and I just, I enjoyed the conversation. Hope you do as well. If you're getting some of that show, please go on, rate and review, helps us a ton.

[00:02:08] Randal McLeaird: On our front, again, I just want to remind, we have the Ram Cap Fund going on right now. We're raising capital, we're raising 5 million, we're buying single family properties in the Texas market. We're fixing them up and then we're owner financing those properties. That spread allows us to be able to pay you, the investor coming into the deal 10 percent or up to 10 percent as a preferred return.

[00:02:26] Randal McLeaird: So jump on Ridgeline, ig. com, go to the offerings tab. You can check it out right there and see what we're working on and jump into that fund. So without further ado, let's jump in. Adam Zock, here we go. Adam, welcome to the show. It's good to have you on man. I'm looking forward to this conversation. We were just talking a little bit just now about the different structures that you have and the different types of investment activities that you're working on.

[00:02:46] Randal McLeaird: So why don't you break it down and let's talk about, you were saying you're buying stuff off the MLS and then you have multiple exit strategies and you have a business that's set up specifically to target rental and buyers on the backend. So that you have a pool of buyers ready to go for [00:03:00] anything that you buy.

[00:03:00] Randal McLeaird: So let's just break it down and explain it to the audience so that we understand. Your business and what you're working on. 

[00:03:06] Adam Zach: Sure. Yeah. It all starts with the people that are actually going to be living in the home that want to move in on a rental agreement with the option to buy. So home partners of America, Divi homes, zero down, they're doing tens of thousands of these homes in the major cities.

[00:03:20] Adam Zach: So it's nothing groundbreaking, but it's just very different. Like it's normal. Like you go to Zillow and it's for rent or for sale. There's not like a rent to own option like on Zillow. So it's not as mainstream, but there's 50, 000 people searching rent to own homes near me every month to Google. And so all we're doing is solving that pain point.

[00:03:36] Adam Zach: And so there's some people that are like, I have no credit and no down payment. Give me a rental and home. I'm like, you shouldn't even be in a rental. I'm not going to approve you just to move into my normal rental. However, what we're sifting through then is that rare people that was like, Hey, I'm like, This close to a mortgage.

[00:03:50] Adam Zach: I can put down five, 10, 20%. I might even have a 700 credit score. And for some reason, my DTI doesn't quite work out or I'm self employed. So they want to see my 2024 [00:04:00] taxes, but Hey, I want this house now. And I want to lock in a rent price and a 4 percent appreciation per year price. If you can do that for me, like great.

[00:04:08] Adam Zach: And I was like, awesome. Let's do that all day, every day. So you're telling me that I can buy the house. You're going to move in day one. So I'm gonna have no vacancy. You're going to take care of the home and then you're going to buy back the home, from me. And it's that sounds pretty cool.

[00:04:19] Adam Zach: So that's essentially what we started the model around. So that's what we do all day, every day. It's like our company home equity partners, we're just sifting through and tapping into that market. And then we're giving them the equivalent of what's like a rent to own pre approval letter. So similar to the investor going to the bank, getting their pre approval letter, like we're issuing them like, Hey, go pick out a home in San Antonio, Texas.

[00:04:37] Adam Zach: That's for 400, 000. And because the property taxes are high in Texas, your rent for a 400, 000 house is 5, 000 a month. Will that work for you? And if you're like, no, I'm like, okay I can't make any money on that because my PITI is four grand a month. And so for me to make anything, on this, it's gotta be this.

[00:04:54] Adam Zach: And so they say, no, they say yes. We're just like, Hey, we're just another option. You can wait for a bank or you can go rent a house for three grand [00:05:00] a month. But then. Two, three, four years down the road, you got to be in the same spot where you got to either move houses may have appreciated and different things.

[00:05:07] Adam Zach: So what we found out is that if I can just get 4 percent per year for me or for the investors that we assign these to that's good for me. And if the home happens to appreciate by 10%, good for the tenant buyer, like that's all I want is cashflow and a 4 percent appreciation per month. And I'm willing to sacrifice a little bit on the upside by just protecting on the downside and getting the cashflow.

[00:05:25] Adam Zach: What it looks like is we essentially get the homes under contract and then we'll either a close on them ourselves, be assigned them to an individual. Who's Hey, I just want a cash flowing deal or three. We started a syndication where we're like, Hey, we're raising 400, 000 every quarter, and we're going to buy.

[00:05:41] Adam Zach: Six homes every quarter and we have this pool and then we do a quarterly raise versus what would normally go on in the syndication, which is normally Hey, raise 3 million. It's a value add and then you're going to get the money on the exit. It's literally where we set up the syndication, which is really strange or a different way of doing it on the single family front where we're going to a lender [00:06:00] like, Hey, we're going to buy.

[00:06:01] Adam Zach: 5 million in real estate. And I don't know what city or state they're in, but it's going to crush the 1. 3 debt service coverage ratio, because that's the only way that we're buying a house, which makes the banks somewhat happy. That still has to appraise out. We're still doing a home inspection. We're still making sure that it generally passes FHA guidelines.

[00:06:17] Adam Zach: Cause you got to get a rental certificate, but that's the whole premise is just buying a home. As a normal investment property with a normal rental, it's just this added option agreement, which they have a, an option fee down payment ranging from 2 percent to 20 percent and then giving them the option to buy it and a little bit of equity that they're building every month.

[00:06:35] Randal McLeaird: Okay. Ton of questions, man. Okay. So first things first, you're finding these houses you're buying in multiple states, correct? 

[00:06:41] Adam Zach: Yeah. And it's, you have two different ways of doing it. You can have the asset and fill it with what I call a tenant buyer or a rent to own tenant. Or you can find the person first and they go pick the tenant.

[00:06:51] Adam Zach: So we have zero homes. We just have the tenant go pick an agent of their choice, which is why agents usually like us is because we'll basically, they're like, Oh, [00:07:00] my, my buyer can't get pre approved. We go cool. Send them to us and we'll at least give them an option. Are we more expensive than a bank?

[00:07:04] Adam Zach: Yep. But if someone's motivated, send to us, we'll pre approve them. And then now I'm actually your buyer. You're now my buyer's agent and you still get your 3 percent on the closing. And so then we're actually pre approving people first. Then they go with the agent. They just pick a house. That's within their, basically their rent to own pre approval terms.

[00:07:20] Randal McLeaird: Okay. All right. Let's break it down house. And then we're going to talk about the borrower, the rental buyer. So the houses themselves, let's say easy numbers. You find a house, it's a hundred thousand dollars retail sale, right? That's what it's worth. Easy numbers. Are you guys paying for retail? Yep. So we'll 

[00:07:36] Adam Zach: offer what the tenant wants to offer.

[00:07:38] Adam Zach: If they want to offer 125, 000, we'll be like, all right, you got to come up with the extra 25, 000. But they're essentially naming their price, just like you would with a bank. And the only caveat is it's got to have a praise out. And if it doesn't, there's either an appraisal gap or something. We've had some investors get a little bit savvy and be like, all right, I'm going to come in all cash, buy it for 90 K and hope for an equity margin spread.

[00:07:57] Adam Zach: But in general, it's paying. Pretty close to [00:08:00] list price or whatever the offer price is that the tenant is driving it, which is why we like to give them control versus us. Although we're signing the purchase and sale agreement or the end investor is. And so they have final call. We like to give as much power to the tenant where they get to actually name their price.

[00:08:13] Adam Zach: And if the seller doesn't want to accept it, that's fine, but we give them more power. 

[00:08:15] Randal McLeaird: Okay. So you guys are getting it under contract and the ones that you may close. And you actually own those things you turn around and you're rent to own that with an end buyer are you sounded like you said you are then selling that to another investor.

[00:08:30] Randal McLeaird: So you guys are exiting completely and you're just wiping your hands and you're done or is that what's happening? 

[00:08:34] Adam Zach: Yeah, it's either like we'll literally close and take title. And then we have a rental agreement with this individual. We'll assign it to, call it a doctor in California. Him or his LLC will take title.

[00:08:43] Adam Zach: He has, the rental agreement or we'll assign it. And so we don't close on it and then sell the home. It's literally assigning the contract to this outside investor. Or what we have is our syndication fund, which is Hey, we can take six deals a month. 

[00:08:57] Randal McLeaird: Okay. So I guess explain the numbers to me then [00:09:00] again, 100, 000 house.

[00:09:01] Randal McLeaird: It's full retail value. ARV, whatever you want to call it is 100, 000. Yep. You guys are buying it for 100, 000. Where are you getting an assignment fee in there? Okay. How are you, so you're, somebody's paying over retail essentially for this house. Is that sure? 

[00:09:14] Adam Zach: So on the smaller price homes, the numbers don't work out as good.

[00:09:19] Adam Zach: So I'll play with it. Sure. So if it's a 400, 000 house and we're taking a 10 to 15 grand assignment fee, that's roughly three or 4 percent of it. The tenants coming in somewhere between two and 20%. And so to negate our 3%, let's say the tenant came in with three and we came in with three, you're basically breakeven where you're paying exactly 400, 000 for it.

[00:09:40] Adam Zach: If the tenant buyers fee is higher than ours, then you have a, you're buying it at a 98, whatever LTV. But you're not really getting your wealth on the buy. And so then you're selling it at a 4 percent to 5 percent appreciation per year. So you're buying it at 400, selling it at 416, [00:10:00] 432, 452, for each subsequent year to the end buyer.

[00:10:04] Adam Zach: So your spread is when they 

[00:10:05] Randal McLeaird: exercise their option. Got it. I got it. Okay. Again, say it's a 400, 000 house. The tenant buyer is going to give you call it 15, 000. Is that not getting credited to their purchase? If you are selling it. 

[00:10:18] Adam Zach: Yeah, no, it still is. So let's say you're buying it for 400. You're selling it to them for call it 414.

[00:10:24] Adam Zach: Yes, their balance to you after one year is 400, 000 because they already gave you 15. You have that initial spread. And if it's negating our, call it our 15 grand, you're basically your profit on that deal would be roughly 15 K. Yeah. Yeah. Got it. Okay. Just if you literally bought it and sold it the next day.

[00:10:43] Randal McLeaird: Yeah. So what I'm, I guess the missing link there was the actual, the resale is based on the And so what are you giving? You're giving them five years to execute the option two years. Yeah. Most of them 

[00:10:54] Adam Zach: it's three years. You can go up to five, but yeah, for most of the parts, it's three years and then you give them the [00:11:00] option to extend.

[00:11:00] Adam Zach: And the reason for that is when us or investors are typically buying it, it's on a commercial loan, not in their personal name. So it's a five year fixed, 20 or 25 year am. So the five year fixed term at whether it's four or five, six, seven, or 8%, I know that I'm not owning that house after five years, no matter what they're either buying it or I'm liquidating it within five years.

[00:11:18] Randal McLeaird: All right. I got you. Okay. So you're talking about that. All right. And then you have the, you have investors. So you're doing this, it's a great model because then you can pay a lot more than any other investor that's out there trying to buy a property. And you're not competing with, so are you guys doing rehab on these things?

[00:11:34] Randal McLeaird: Or is it basically you can buy things that don't need rehab and it's really just a paper. Nope. Nope. Nope. 

[00:11:38] Adam Zach: Preferred. Preferred. Non rehab. So our sweet spot is probably between 200 and 600, 000 from North Dakota to Texas to probably over to Florida and up to New York where the price to rent ratio makes sense.

[00:11:48] Adam Zach: I can't make the numbers work in California. Cause it's like 600, 000 house rents for three grand a month. I was like, you're just hoping for appreciation versus the same 600, 000. I was in Texas. We get 7, 300 a [00:12:00] month in rent from it. And I was like, okay, that actually cash flows. 

[00:12:03] Randal McLeaird: Yeah. Yeah. Awesome. Okay.

[00:12:05] Randal McLeaird: So that you guys are making the market on the back end because the borrowers. And all so that's the house on the buyers, like, how are you guys going about qualifying them? How are you making sure that they can make that additional rent bump if it's a 4, 000 mortgage payment and they're now paying 5, 000, how are you guys qualifying them?

[00:12:21] Adam Zach: I passed the MLO last year, just to understand this a little bit better. So we screen them almost like a loan originator and a rental. So we're doing full credit, verify income, calling past landlords, doing the criminal, the collection, all of this where we get to see their full. Profile. And having done, I think 450, some of these, you start to see some patterns on what's going on.

[00:12:42] Adam Zach: But in general, it's if they have a high credit score, it's a lower down payment. If they have a lower credit score, it's a higher down payment. It's almost just like a seesaw and there's nothing super groundbreaking from it, but me as an investor, I'm just like, Oh, this person's riskier. What reduces my risk 20 percent down from a tenant, which is [00:13:00] basically repaying two and a half years of rent. And I was like, there's almost no way I can lose money on that. If someone moves in six months, three months, seven months down the road, they would like literally have to trash the place, stop paying rent because you can evict, because this is at least an option to buy, which is different than a land contract or seller financing, which is a foreclosure, which we learned out.

[00:13:19] Adam Zach: Cause we were doing contract for deeds. Then we're like, Oh, it turns out if they default, I got to foreclose in a North Dakota, that's like a nine month process. And I was like that. That can really hurt you, but on a normal eviction where it's like 45 days or 60 days, and then on top of that, we make the tenants pay for rent guarantee insurance, which is like the equivalent of private mortgage insurance.

[00:13:35] Adam Zach: And there's three main companies, like the guarantors leap easy. And then I think single key is trying to break into it, but it's maybe two or three months of coverage of basically lost rent that they'll cover and each one has a little bit of a different policy, but it's if the biggest risk is they default, I want two or three months of consistent cashflow until I liquidate.

[00:13:53] Adam Zach: The asset and people have either liquidated it or sometimes they'll find a new renter. Our version is we usually just liquidate it because [00:14:00] Hey, I got a 600, 000 house. Average rent is 5 grand. They were paying 7, 300. They dropped in, 35 grand. And really the intent is, Hey, I want to. You can keep it.

[00:14:10] Adam Zach: It can still, either cashflow neutral or something, but like we typically buy the asset for a purpose. And if it doesn't work, that's different, which is different than some other strategies that I have is Oh, I'll just buy a property in Tampa Bay, Florida, buy it for 30 years, do nothing with it.

[00:14:22] Adam Zach: Just, appreciation, debt, pay down and cashflow. And it's Oh, that's one strategy. We've just found that this rent to own strategy. It's I just wanted to maximize my ROI. I want the least amount of capital in. And when they're bringing, most of our clients are bringing 10 percent down. The average, I think is like 12.

[00:14:35] Adam Zach: 5, which really helps negate. If you're coming in with 20 or 25 percent down, like now your cash down is less, your cashflow is typically higher than a normal rental. So like the cash on cash, our allies like that, we're going to take on a deal, is 20 to 30 percent and. Before Brennan Turner told me that 8 percent or 12 percent is like what I needed.

[00:14:54] Adam Zach: And I was like, I still can't find any deals. Like to this day, if I was just buying a property off the MLS that actually [00:15:00] cash flows. So this was just our way of generating our own cash flowing deals. And that's really what I cared about. There's still team wealth versus team cashflow. And I think both are important, but for me, cashflow is what freed up my time over wealth.

[00:15:14] Randal McLeaird: Yeah. Yeah. For sure. And having that consistent cashflow coming in, put your mind at ease quite a bit as well. So you can focus on other things and actually grow business while you're working. For sure. And that reoccurring revenue. Yep. Yeah, for sure. So how many do you keep and how many are you? I guess selling off like of the 400 plus deals you've done what are you trying to do with your portfolio?

[00:15:35] Adam Zach: Sure. So I would say we probably own half of the overall deals that we've done and moving forward, it's probably like a third of them were keeping a third of them were sending to individuals and a third of them are going into the fun. We played around with the fund idea. Cause this was a little bit new.

[00:15:49] Adam Zach: Our investors like, Hey I don't really want to do this. Like they didn't want to own the property, find a property manager, and sometimes we can be asset managers for them. They're like, Hey, what if I was just truly passive? That's a little bit different. That's some security stuff.

[00:15:59] Adam Zach: [00:16:00] And what can we do? So we actually did a five or six B as an unsecured. Line of credit, just like a promise, no mortgage. So that was, five Oh six B number one where people are literally just loading our company money. And I was like, great. I can give someone 10 percent just as working capital and I can go out and buy assets.

[00:16:14] Adam Zach: And it's okay that's one version of doing it. But I was like, that's not as great of a sell to investors. I was like, Hey, what if we do the normal syndication model where it's like a 10 percent preferred 70, 30 split. We'll raise all the capital, do all that. We'll get some split for the profit, but we don't really need to bring capital, even though that we co invest on all of our deals, because I think it's the best cash flowing deal that I can.

[00:16:33] Adam Zach: So I'm personally investing into all of our individual funds that we're creating as well as in addition to being a general partner. And so it was just like, Oh, how can we do that? And it's okay, great. Now they get all the LLC benefits of depreciation, a write off. They're getting diversified across 20 single family homes across 10 different states.

[00:16:50] Adam Zach: And so then assuming that we can still package that together find the deals, then it's just aligning the capital with the deal flow. 

[00:16:56] Randal McLeaird: So are you raising in advance? This is like a blind pool and then you [00:17:00] deploy the capital or are you, how are you structured on that front? 

[00:17:03] Adam Zach: Yeah, it's a, so let's say we're going to do like a 5 million raise, which is like, all right, we're going to raise 400, 000 every quarter.

[00:17:09] Adam Zach: And so it's Oh, so yeah, basically raise 400 grand. Cool. Now here's our deal with pipelines. Use up that capital. If we've used it up super fast, it's okay we got to wait till the next quarter. And that's where we keep some or assign some to some others. If deal flow was slow, maybe the next raise is only a hundred grand or 200 grand to align with the deal flow, which is tricky when you're doing like deal performance and whatnot.

[00:17:27] Adam Zach: But like right now, capital raising is not. Really an issue for us because it's okay we're doing it at least for our, past ones, it was like, Oh, a 10 percent preferred return with a 70, 30 split. Cause I was like, we're one of the only syndications that can hit cashflow, like literally day one, because we're just buying the asset versus a value add, which, in some ways can have a higher equity multiple, but for us, it's for me, it was like designing it more around cashflow.

[00:17:50] Adam Zach: And so that's how the deal structure goes and it ebbs and 

[00:17:52] Randal McLeaird: flows a little bit. Yeah. So then when you exit the syndication. You are assuming they're either going to refinance those borrowers. [00:18:00] Yeah. Yeah. Or they are, or you're going to what wholesale it at that time or what are you going to do to exit?

[00:18:05] Adam Zach: Yeah. So it's either they buy or we liquidate the asset. And so we're like in our underlying portfolio, we're like, Oh, let's just assume 50 percent of them buy and 50 percent of them don't. And of the 50 percent that buy it's okay, great. That it meets basically proforma exactly how we wrote it of the 50 percent that don't buy, there's probably more of a stock market volatility where it's like, Oh, some of them we lose money, but then some of them we actually make a bunch.

[00:18:27] Adam Zach: Cause Oh, I bought a home two years ago and now the home was 400 and now it's actually worth four 50 plus I had 40 grand from them. So it's Oh, we actually. Made more money on them now exercising the option, but that's not the intent. Yeah. But then you can have some where it's oh, we bought it for 400.

[00:18:40] Adam Zach: It's still only worth 400. Then we list it with a real estate agent, by the time you pay, 8% or something like that it takes away that 40 grand that they were initially contributing. So it's oh, that's maybe more of a heads I win tails, I break even type mentality. 

[00:18:52] Randal McLeaird: Yeah.

[00:18:52] Randal McLeaird: Yeah. Okay. Interesting. So have you guys closed any of those funds? Or is it you have one syndication that is set up [00:19:00] and it sounds more like a fund than a syndication because you're buying a bunch of different assets, right? 

[00:19:04] Adam Zach: Yeah, I don't know if I looked into the difference between a fund and syndication.

[00:19:07] Adam Zach: I typically interchange them. So maybe I need to be educated on the correct way of doing it. 

[00:19:12] Randal McLeaird: Syndication typically is one asset. So you're going out every, so that's why I was like, how are you syndicating single family houses? That's why I kept going back to that. But yeah, you have a fund you're raising the capital and you're deploying that capital into multiple different assets.

[00:19:24] Randal McLeaird: You got it. So you set up one, it's a 5 million total fund. Yes. Okay. And then you have multiple closes is what it sounds like. So you're closing every quarter, you're doing a close. 

[00:19:34] Adam Zach: Yeah. So the goal is for the main holding company is one home under contract per week. And so we're pretty close. We're batting about 80 percent this week.

[00:19:41] Adam Zach: We typically do more deal flow on quarter three and quarter four. But in general, yeah, it's Hey, if we can close on a deal a week, that's a pretty good year for us. 

[00:19:49] Randal McLeaird: And so the majority of the business driver has to be your borrower lead generation. Is that correct? Yep. Yeah. You could buy, if you're buying off the MLS, painful [00:20:00] retail, you could basically buy at any time you want.

[00:20:02] Randal McLeaird: Yep. And 

[00:20:03] Adam Zach: so there's a couple of tricky parts where it's okay, it ebbs and flows between capital and deal flow. Cause it's oh, we got 10 percent down, If I'm buying nine homes, at 50 grand a pop, it's okay, all of a sudden that's, 500, 000 of cash. And it's okay assuming that we have a syndication, it's relatively easy to, to ebb and flow and make that work.

[00:20:22] Adam Zach: But what gets really tricky is the debt financing. Because it's Oh, you're buying these all over the place. And so it's Oh who's going to lend to you? Because it's not Fannie Mae, it's not Freddie Mac. It's Oh, we got to find a local bank or a community bank. That's Hey, this is what we're doing.

[00:20:34] Adam Zach: And Get the general partnership to be strong enough on paper that they pretty much just give us like a 3 million guidance line, like, all right, assuming that it meets a 75 percent LTV on a 20 year am, and it meets the 1. 25 debt service coverage ratio, you're generally good to go with that. But that's harder to find than anything else.

[00:20:50] Adam Zach: Cause if it's just a single asset, it's Oh, it's under contract. Let's underwrite it. Here's the deal. And away we go. But it's like, Hey, we want to buy homes across 25 states. And I'm not going to tell you which city or [00:21:00] state or condition yet. And I just want to blanket 3 million guidance line to go buy homes, over the next six months.

[00:21:06] Randal McLeaird: So 

[00:21:06] Adam Zach: how are you guys handling that? Do you have that guidance line set up? Yep. So we have a couple of banks. That have it set up, that work really well. And so now it's just okay, how do we continue to do that? And it's usually just bring in probably the equivalent of a key principle to what the multifamily guys do, which is like, all right, this guy's got 5 million sitting in the bank and he's willing to personally guarantee it.

[00:21:25] Adam Zach: We just give up part of our general partnership stake to this individual who's willing to personally guarantee it. Cause now the bank's okay, I feel pretty good. I'm at a 75 percent LTV. I got assignment of rents. And then I have this personal guarantee from this whale. And in addition to a mortgage on the asset.

[00:21:39] Adam Zach: So you do, you have that set up that is actually running. So that's what we did on our first syndication last year. That one got fully funded. We bought all the homes. Now it's just in performance mode. And so we're hitting performa there and now this next fund launches it's may now, so we're going to be starting the very first capital raise on this next one in probably the next 30 days.

[00:21:58] Randal McLeaird: Awesome. Yeah. Awesome. [00:22:00] And so the first one is just going to run. How many assets do you guys buy in that first one? And 

[00:22:04] Adam Zach: the first one we started off, cause it was like a proof of concept in that fund. It was like, let's start off small. It's like a million raise Hey, does this work? Is the bank going to work?

[00:22:13] Adam Zach: Can we actually match the deals with it? And so it took us about six months and we bought, I think, 15 homes. 

[00:22:18] Randal McLeaird: 15. Yeah. With a million. Did you raise a million bucks? Yeah. Awesome, man. Congrats. That's a very cool concept. It's yeah, we have a crowd fund that we did the same, very similar with, and you can set it up and you can take on unlimited number of investors.

[00:22:32] Randal McLeaird: And it's, you can market, you can do everything. So are you doing a 506B? Yep. That's what 

[00:22:36] Adam Zach: we're doing on both of these. I looked at the crowdfunding and I was always curious on how easy or hard that is to set up and if it's still an equity dilution or if you guys are doing it as debt structure or how you're doing it.

[00:22:45] Randal McLeaird: It's a debt structure almost. It's an income fund. So it's a straight flat return, quarterly distribution up to 10 percent depends on how much money you invest. You can have so many investors in it that it doesn't matter how small the minimum investment is, but you were capped at 5 million. [00:23:00] Okay. So the total raise is 5 million and then you have to close it down, but we set it up and structure it in a way where we could do what you're doing, which is have multiple successive closes.

[00:23:08] Randal McLeaird: So we find a house, we say, we need 150, 000 for this house. We can go raise 150. They put it in, we can do a closing and then draw the money down. So that's one way to do it. But again, yeah, you've got this set up to where it's almost. Like just the model in general, who else do you know? That's doing this?

[00:23:26] Randal McLeaird: Anyone? 

[00:23:26] Adam Zach: I know some of the bigger companies that are like, Hey, I've like a whole part of America got bought out by Blackstone for, I think like 6 billion where they're like, I have a ton of cash. I'm just going to buy properties and it's a rental with an option to buy. And it's really just a glorified I'm buying in the top 30 cities, but this this kind of matchmaking effort in Adam's perfect vision.

[00:23:45] Adam Zach: I'm going to have a rent to own marketplace where you got a bunch of investors ranging from institutional to individuals. And then you got a bunch of what I call tenant buyers on the left side, all various location, credit score, monthly rent payments. They each kind of named their price. And [00:24:00] it's like almost like a March madness bracket where they're meeting in the middle, or I guess the equivalent of what I've been told is like some version of Tinder where you're like trying to match make with instead of mortgage loan originators and bankers, it's Oh, who's interested in doing the rent to own.

[00:24:11] Adam Zach: And so it's just like getting really. Didn't know that's the space that I would be in. I remember watching like a Chris Krohn video. I was like, Oh, what is a lease option or creative financing or subject to? And it just happened to be like, I was like, Oh, and then I think it was probably because I got hooked on Google ads pretty early.

[00:24:25] Adam Zach: And it was like, Oh man, this is like people are literally searching rent to own. And if that goes away, we would have different marketing channels, like Facebook or whatnot. But man, it was just like, Not that it was easy because Google will take your money, very quickly, very easily if you don't have a good, if you don't have a good conversion, but like for me, it was just like, oh, that's super cool where it's like pay per click, I don't have to do social media, I don't have to do outreach, and it was like a business that was more of a, so it's real estate, plus it's a business, so it's super passive, so like we can have a sales and operations person, and then Adam gets to focus on more strategy and investors and different things, but it was just like this target market where it was like, Cause I went through the first 10 properties were various flips that we [00:25:00] sucked at.

[00:25:00] Adam Zach: It was various turnkey properties. That was like 25 percent down that cashflow 200 a month. And I was like, man, I can buy like one house every four years. Cause it's it just wouldn't go. So it was like, oh, how do I just juice the ROI? And then I hated turnovers. Cause turnovers is like, oh, you lose one month of vacancy and it just crushes your entire ROI for the year.

[00:25:17] Adam Zach: And then plus there's like grand or more of turnover costs and having the property manager. I was like, man, how do I. And so there's just like slowly start chipping away at that. We actually, the first idea was college kids go pick a house and you can rent it at the 1 percent rule just to cashflow.

[00:25:32] Adam Zach: And so that was the idea of just renting houses on the open market. And then I was like then they leave. I was like, I don't really want that. I want them to either buy it or do something else with it or have more skin in the game. 

[00:25:42] Randal McLeaird: So then it evolved into this. Yeah. Yeah. So again, you mentioned about compared to owner finance.

[00:25:47] Randal McLeaird: So the rationale was really because North Dakota was problematic with foreclosure timelines. 

[00:25:52] Adam Zach: Yeah, if I had to put it into three buckets, I call it. Owner financing, which I guess you'd call seller financing. Number two is a land contractor. What's [00:26:00] called the contract for deed. And then number three is rent to own, which is like lease option, lease purchase option.

[00:26:05] Adam Zach: So if I'm buying a home, I want to buy it on seller financing because I am 100 percent on title and there's just a mortgage, that's it. On a contract for deed, it's like a vehicle warranty. Like the actual deed doesn't transfer, but there is paperwork at the County that says, Hey, they have an equitable interest in this property.

[00:26:24] Adam Zach: They pay for taxes, insurance, and are responsible for all the repairs. But that is, it varies in different States and you get really creative on a contract for deed. Like you could have them sign a notice of cancellation and hold that in an attorney's trust. And just so that you can avoid the whole foreclosure process, but that's like a whole loophole.

[00:26:37] Adam Zach: But if you're doing it legit. It's okay, you have to give them the redemptive rights of whatever the foreclosure States are. Some are super quick, but like North Dakota wasn't, I was like, Oh, I don't like that. So if I'm selling a home, I like to sell it on a lease with an option to buy it because then I still am on title.

[00:26:50] Adam Zach: It's an eviction versus a foreclosure. I can continue to depreciate the asset. And then I could 1031 exchange it where I can't do that on a contract for D because it's technically an installment sale. [00:27:00] So if I'm buying, I want to buy on seller finance. If I'm selling, I want to sell on a lease with an option to buy just from tax, rent and more favorable terms, just as me as an investor versus a buyer.

[00:27:09] Adam Zach: And so depending on whoever's listening, flip flopping that and then contract for deeds in the middle. 

[00:27:14] Randal McLeaird: Yeah. I am plan contract. Yeah. I've done each of those back in the day, like in Texas, I know you had, there's a bunch of rules. I worked for an attorney and it was like, okay, you can't go over six months.

[00:27:22] Randal McLeaird: You have to rewrite your contract every six months. I don't know if that still exists or if that is something that you guys have to pay attention to or not. Or if there's a new regulation, this is like in 2009, like when I started doing these and I did a number of them, but I would just rewrite the lease every six months, which was not ideal.

[00:27:36] Randal McLeaird: But, and then like the owner finance side of it, love the owner finance side of it, because I'm really hands off completely out of the deal, except for the servicing of the note, contract for deed, the title companies here in Texas have advocated not doing that. So I don't know, do you do some of those?

[00:27:50] Randal McLeaird: Have you done some? We completely 

[00:27:51] Adam Zach: got out of contract for deeds either just from industry or kind of those reasons that we indicated. It's just that, yeah, it's just, it is, from the perspective, maybe not specifically Texas, but [00:28:00] from us, it's typically a little bit more clean where it's okay, they have a clear amortization schedule and interest rate, a buyback period, a terminology, whereas at least with an option, it's okay, what's their buyback price?

[00:28:09] Adam Zach: Oh, it changes per year. And what's the rent credits? Okay. Did they pay or did they not pay? And so it's a little bit more gray than the contract for deed, which is a lot more, concrete from the ones that we've done. I've probably done maybe a dozen contract for deeds, but then now mostly, 60, 70 lease options.

[00:28:23] Randal McLeaird: Yeah. How do you manage all these men? Like you've got rent payments coming in left and right. What's your setup and operation look like? 

[00:28:30] Adam Zach: So instead of it being an awesome software, just go find yourself an awesome business partner. So I could probably talk about this all day, but being in five different LLCs with three different business partners, like I'm so fan of a partnership.

[00:28:42] Adam Zach: It's not even crazy. I know Dave Ramsey will say the only sale that doesn't ship is a partnership. And I was like what about marriage or what about something else? And so it's it's tricky. Like my business partner, he like, He can live and breathe or he can do that. Like I get all worked up.

[00:28:53] Adam Zach: If someone doesn't pay rent, I'm like, Oh, are we doing eviction? Are we doing that? And I can't sleep if someone sends me a text and he's just like a steady [00:29:00] Eddie, like all day. He's like, all right, we're going to self manage all these because they're rent to own. It's pretty much just payments. And if we have to, evict or someone, it's Oh, you call the real estate agent that we bought the home for him.

[00:29:10] Adam Zach: Hey, do you want to list this home for us? And by the way, who's a good attorney and who's a good handyman. And then that's literally like his one phone call. And then the real estate attorney takes the rest. And because we don't have to do repairs or different things, we had looked at doing like a hemline or some sort of virtual, property management.

[00:29:23] Adam Zach: But otherwise it's just like very simple, like apartments. com, like check on the rent, follow up with tenants, do that once a week. And for that, for the syndication, we'll charge different things, but for now it's man, he just does all that himself. And eventually as we get bigger, we're bringing in staff that help with the underwriting or sales or operations a little bit.

[00:29:39] Adam Zach: And so we're bringing that more so in house, but just on a macro scale. I don't know that I would be anywhere near where I am today. I feel like I'm a pretty creative and driven person, but it's also Man, I get shiny ball syndrome, like nobody's business. And it's Oh, you know what we should do is this, Oh, what would be cool is if we just did that and flip houses.

[00:29:56] Adam Zach: And he's no, it'd be awesome. If we just kept doing the same thing we did for five years and then just [00:30:00] crush the rent to own space. And it's you know what? I need that every now and then. And so if you have, it's different, I feel like with employees, because it's maybe a little bit of a different mindset.

[00:30:07] Adam Zach: So I think I've gotten lucky. I've had partnerships where it's literally I've. I've been holding the bag on 100, 000, like to the bad. And but still it's almost like real estate. Like I've lost, over 120 grand on a single deal in real estate. But it's man, if you just do the reps, you learn a lot more and you just get smarter and smarter.

[00:30:21] Adam Zach: And I was like, if I fear doing real estate or fear getting into partnerships, like I just, I don't think I'd have any luck or I just get stuck doing nothing. And so I'm so far, like I'm starting up another business. And the first thing I did is Ooh, Who can I pair with? You're like, that was like my first question before, like the idea before the execution, because it's I, it's not built well for me on a lifestyle design to be just be like the sole owner.

[00:30:40] Adam Zach: And some people want the control. Some people want to go fast and have the flexibility. And sometimes I want that where it's like, Ooh, you know what I'd want today is just everybody to listen to me and do that. But then other days you know what? I'm really glad they didn't because like it can be whiplash and I can get the entrepreneur and the, and just the turn left, turn right, do this, do that.

[00:30:56] Adam Zach: I read this awesome book called traction. Okay. Then I read this book and I'll go to [00:31:00] that. And it's like, all right, my team's like, where are we? Where are we at? 

[00:31:02] Randal McLeaird: Yeah, that's funny, dude. Very similar, dude. Very similar. So what is the latest shiny object? Then you said you're starting a business. What are you doing?

[00:31:11] Randal McLeaird: So we are going 

[00:31:12] Adam Zach: to sassify our home equity partner model. So the idea with home equity partners, we find the tenant buyers, we'll get it under contract. And it's like a white glove, we're going to make a 10 to 20 grand assignment fee on each deal, or we just have a great cash flowing asset.

[00:31:25] Adam Zach: And I was like, but in order to do that, I have to charge five grand on a 400, 000 house. I don't really like that. In a perfect world, I want some family office that can buy that 400, 000 home, all cash, charge 3, 500 a month in rent, and both sides be okay. There's not enough room for me in it to be hand holding, get it under contract, underwrite, assign it, manage it, get it to closing.

[00:31:48] Adam Zach: But if I was able to just be like, you know what? Chris wants a home. Turns out, Jill has money. Can I just make a connection? And so we got some state of North Dakota dollars to actually launch this thing, which would [00:32:00] be, we're not quite sure exactly what it's gonna be, but it's essentially instead of us playing telephone operator, which is a little bit what we're doing now, right?

[00:32:05] Adam Zach: We're basically handhold. We find a deal, we get the asset where we're going through it. It'd be more so of a, Hey, here's a thousand people that all said, here's my credit profile. Here's how much I want to pay in rent. Here's my purchase price. And then you get investors where we just say, Hey, give me four numbers.

[00:32:21] Adam Zach: Like, where do you want to buy? What's your cash on cash ROI? How much capital do you have? And what sort of lending? Underlying debt financing. Can you get as a conventional commercial, you're doing it all cash and then we're building up a software that literally matches people then, and then you can just start having a conversation and which is Hey, do you literally want to buy me a house, whether it's a rent to own a contract for deed or seller financing.

[00:32:40] Adam Zach: And so we'll see if it takes off, but it was fun. We got some grant dollars to at least test that idea and hopefully be an industry disruptor, but it turns out it's a, an idea is great. It all comes down to the execution and persistence. So that's the latest shiny ball, but there's been. About nine other ones that were like yeah, we really shouldn't be doing that.

[00:32:56] Adam Zach: So this is the one shiny ball. That's actually getting [00:33:00] more of Adam's attention. But for every one of 

[00:33:01] Randal McLeaird: those, there's about nine other ideas that you've got floating around. Yeah. It's hard to stay focused sometimes, especially when you have all these things going, but yeah, if you have the team, man, that's fantastic that you can do that.

[00:33:12] Randal McLeaird: So how did you get the grant? What was that process like? And was it, we have a thing here where you can go pitch an idea and do something like that. Is it very similar to that? Or what would you guys have? Yeah, 

[00:33:20] Adam Zach: I was surprisingly shocked at North Dakota. We got a little bit of oil money, so they started some different funds, but it's crazy what local like sponsorships are available.

[00:33:29] Adam Zach: Like whether it's the SBA was the small business development committee, whether it's the chamber of commerce or it's the economic development committee, like there's literally all these free resources for entrepreneurs and small business owners that like. You hear about it and like their government or their business.

[00:33:42] Adam Zach: So it's it's clunky and it's a little bit inefficient, but it's Oh, they got score mentors where it's just Oh, you have a bunch of 50 to 70 year olds who have done a bunch of stuff. They're just going to mentor me for free. Oh, I didn't even know that existed until somebody told me about it.

[00:33:53] Adam Zach: So it was like. I didn't even know this existed. They say, yeah, can you build a business that brings money into North Dakota? That's software based. I was like, [00:34:00] I don't know. This sounds like a good one. So if they'll give me some free cash to do it, I'm certainly willing to do it. And I was like, okay, then once they do that, then Oh, we have an angel match program.

[00:34:07] Adam Zach: So for every angel investor that you get, we'll match it dollar for dollar up to 250, 000. And I was like, Ooh, so then like my brain's Oh, if they got all this incentive programs to trying to bring money into North Dakota versus just cause some businesses just want to, vitalize, have more spending local, have do this.

[00:34:21] Adam Zach: But North Dakota is we're getting everyone leaving. We had a population of 700, 000 people, which is probably like a quarter mile, just circle around you. So like your entire city, a quarter of your city is our entire state. So okay, how do we get more revenue coming into North Dakota? It's okay can we be some little mini version of Silicon Valley here in Fargo, North Dakota?

[00:34:37] Adam Zach: And so they started like a little ecosystem. So it's been cool where they got like the wonder fun. Which is Oh, I forget one of the shark takes Mr. Wonderful where he's like, Oh, like I'm starting this. So they, they have all like these incentives to now try to get startup programs and like Oklahoma has one.

[00:34:51] Adam Zach: And, I'm not familiar with Texas, but there's all these different like accelerator grant and other things I was like, turns out if you just, if it's who you talk to and Oh yeah, you should totally try this. And I think about [00:35:00] just Oh, if someone said, Hey, do this and we can do that, I was like why wouldn't I just try to go to the least path of resistance as opposed to just trying to do my own things?

[00:35:07] Adam Zach: It's if I can get some free capital to test out an idea, I was like, man that's fun. Even though it costs my time. I'm like, this is cool. Cause it's like incentivized with the state. So you have a little bit of a backwind to you and you can put that as a testimonial, you can, use that as a leverage point of, opening up things.

[00:35:20] Adam Zach: Cause it's it's a cool thing. Even if it was a dollar, if I was like, Hey, the state literally paid me to start this business. I was like, that's just a cool thing to say 

[00:35:26] Randal McLeaird: for sure, man. 

[00:35:27] Adam Zach: Yeah. 

[00:35:28] Randal McLeaird: Yeah. That's awesome. And so what you're building out is basically a platform and how do you monetize a platform?

[00:35:33] Randal McLeaird: You're going to charge someone to list their property. Are you going to charge a monthly fee? What's the thought process there? High level. Yeah. The initial idea 

[00:35:39] Adam Zach: is that each would just pay like a monthly subscription of call it 49 a month for the opportunity to be connected with investors and the investor to be connected to deals.

[00:35:47] Adam Zach: There's other options of if it's similar to Zillow where it's like, Oh, we have real estate agents, cause like on every transaction, there's gotta be a real estate agent. And so it's Oh, you know what, would we ever be, a friend to like the Zillows? Cause that's, their main revenue source.

[00:35:58] Adam Zach: So there's been a couple of those. [00:36:00] And then we can charge like a success fee for matching and without getting into securities issues. At least that's what we're currently told. So it's Oh, could we. In addition to a membership, it's Hey, if there's actually successful matches, can we have different tiers?

[00:36:10] Adam Zach: And then if some investors want us to like, hold their hand, is there different like premium packages, almost like a base, high and then above, and then selfish, it was like, Oh we can just start creating syndications as well and actually participating as the investors. So if we just own all of the tenant buyers, if they can get literally like the lowest pricing of anything compared to the competitors, and it has even the high risk, high reward type.

[00:36:31] Adam Zach: Call it like sub mortgage type rent to own things. If we can just build out all of those investor profiles, we can start handing out the same equivalent of the rent to own pre approvals. And then there might be some version of the equivalent of a loan officer. So I want networkers.

[00:36:44] Adam Zach: So I was like, Hey, you know what? At least not in the software model, but this is a standing offer to anyone. If you bring me a rent to own tenant. I'll give you a thousand bucks. And because it's I'm already paying Google a thousand bucks to get that same lead. So if someone's just [00:37:00] send two emails, send one to your favorite real estate agent and say, Hey, do you have any clients that can't get a bank loan?

[00:37:06] Adam Zach: And then you send it to a loan officer and you say, Hey, have you denied anyone that you think is pretty close to a loan officer and if they're able to give you a list, are you able to get that? And they're able to come through our program and we end up approving them and buying a home. I would be happy to pay that.

[00:37:17] Adam Zach: Similar to an agent would be happy to take a referral fee for 25 percent if they just get a brand new, buyer's contract or a listing agent or something like that. So that's always a fun standing offer just to be like, all right, how do we get the word out to more people? Because we want to help more people 

[00:37:29] Randal McLeaird: too.

[00:37:30] Randal McLeaird: Man, you got a lot of stuff going on. I love it. So you have five different LLCs. Is that what you're saying? What is getting the majority of your attention right now? So home equity partner is number one, but then we have like 

[00:37:39] Adam Zach: various real estate holding companies. 

[00:37:41] Randal McLeaird: Yeah. 

[00:37:42] Adam Zach: That own real estate. Then I have a company that will fund flips, not as a debt position, but as an equity.

[00:37:48] Randal McLeaird: Yeah. 

[00:37:48] Adam Zach: So literally we'll fund it. They find the deal, we'll fund it. And then we split profits 50, 50, like a joint venture. So that's another little business. And then we got the matchmaking one. That's another one. So those are the main, [00:38:00] they're all centered around real estate, but it's trending more towards the rent to own space, which is just like the domain that we just have a lot of industry knowledge on.

[00:38:07] Randal McLeaird: Yeah. And I want to ask you then about the hard money, like partnership type deal. So yeah, let's do it. Have you run the numbers on, if you were just doing 10 and three or 12 and three or whatever it is, like 12 percent with three points compared to what you're doing now, are you far and away exceeding the returns doing a 50, 50 split?

[00:38:26] Adam Zach: It is if the deal goes right which is always some version of some risk. And so what we do is if it meets the 70 percent rule, I'll fund it and we'll split it 50, 50. And what I found is assuming that we can get in and out of a deal in six months. That's roughly a 30 percent annualized ROI.

[00:38:42] Adam Zach: And so equivalent to the 10 and three, depending on what volume and how many reps you can do, you can get that same thing, or doing it similar. But with this one, it's a little bit more work. It's a little bit more reps. Cause I always say similar to those, not to the tenant buyers, but to the flippers out there, you Like some of them don't have the 10 or 20 percent that the hard money lenders want.

[00:38:58] Adam Zach: And for us, I was like, [00:39:00] that's our value propositions. Like I'll literally fund the thing a hundred percent, but it's got to meet the 70 percent rule and it's got to be legit. Cause I was like, people are killing for those. So like the wholesalers or different ones will come and approach us. If they're like, yeah, I literally have already done some deals, but I'm tapped out on capital, but I have, these smoking deals.

[00:39:14] Adam Zach: I was like, if you have the deal, if you're local, you have the contractors. You just don't have the velocity of capital. I was like. I got that. I got the velocity of capital. If you want a hundred grand, 200 grand, 300 grand. And then if I have to get underlying debt financing myself, if I don't want to do the cash myself, I just like playing that game and betting on that.

[00:39:30] Adam Zach: And if it sucks, if I have a joint venture partner that doesn't have the contractors or doesn't follow through, eventually I have to take it over. But it's that, yeah, it's literally my money. Most of the time I want them to have the earnest money or inspection or something. So they're literally not like walking into it with zero dollars, but pretty darn close to a hundred percent.

[00:39:44] Randal McLeaird: Yeah, that's I guess the biggest difference, I always look at the hard money side of it as if you are in that position, you're getting deal flow like nonstop, right? Which is awesome. And then if they are putting anything down, even if they put 10 percent down to the purchase price or something, then you're [00:40:00] even more in the money from what they're buying it at if they mess it up or whatever.

[00:40:03] Randal McLeaird: Yep. But you're financing, you're doing a hundred percent, splitting 50 50. Doing like a true partnership. Yeah. It's awesome. Yeah. 

[00:40:09] Adam Zach: Cause it's more lucrative to them if they just got debt financing, because then they get a hundred percent of the profits, assuming that it actually is a pretty good deal. So it's a higher ROI, I guess you could say, because they're not putting any money in, but it's a lower overall profit.

[00:40:22] Adam Zach: So if people can use their own debt financing, like I actually say Hey, that's probably a better option for you. It just for people that want to preserve some capital 

[00:40:29] Randal McLeaird: or use it for something else. Yeah, for sure, man. You got a lot of stuff going on. Love it, man. It's it's always invigorating for me to have these conversations because I can see what you're working on.

[00:40:37] Randal McLeaird: And I'm like, all right, is a dig it. I like the platform idea too. We had a a deal a while back at Geekdom is like a startup place here in San Antonio. And you go in, it's like you pitch and then they pick a few people and then businesses actually are coming out of this thing. So it was very cool to see that.

[00:40:54] Randal McLeaird: And so the fact that you've gone down that road and you have the capital and you're working on that, it's pretty exciting, man. And [00:41:00] it's funny because it definitely didn't start 

[00:41:01] Adam Zach: there. So yeah, 10 years ago, I had one investment property, like one. And it was like, I was a civil engineer. I was sitting at my desk where my foot was tapping.

[00:41:09] Adam Zach: And I was like, man, I gotta. I got to do some day trading or fantasy sports betting or start my own business. Cause like this, I'm going nuts. Like engineering has, checks the boxes and it was good income, but I was like, man, this is like killing brain cells. I got to do something else that has like a quicker return on investment.

[00:41:22] Adam Zach: So then when I got hooked on bigger pockets or the fire or different things, it's man, I just gotta do this. The one thing I was always like pretty good at it was like the taking action and then be like, all right, this is like a calculated reward to risk. And I was always trying to use the Tony Robbins, like disproportionate reward to risk.

[00:41:36] Adam Zach: I was like, yeah, heads. I make money tails. I either break even, or I learned something, incredibly valuable. Cause I think a lot of people just get stuck in either the zero or it's tough to scale. Cause man, nothing really works. And I was, I guess I'm more willing to take on risk.

[00:41:49] Adam Zach: And so that's why I probably surround myself with people that are, can compliment that. Cause I've definitely got into trouble, but it's that was the mentality. It was just like every day, just feeding the mind with bigger pockets and different things. But I think the [00:42:00] quickest one.

[00:42:00] Adam Zach: It was when Tim Ferriss was like, yeah, you could spend 30 grand on an MBA. Or you could go buy a piece of property. And even if you lost the 30 K do you think that's better than an MBA? And I was like, Ooh, that kind of a light switch went off in my head. It was like, you know what? Why not use the capital instead of going for an MBA and like actually build a business, buy an investment property.

[00:42:17] Adam Zach: And it's Oh man, the hard knocks of what to do and what not to do was by far. Way better than reading spreadsheets and other things. And some people, it can work the other way, but I remember that being a pretty powerful motivator for me of like how to use the capital and invest instead of in education, literally into just like a business or a piece of property and then do it myself.

[00:42:35] Randal McLeaird: Yeah, man, the action learning from experience, I think is key. That is like one of the biggest takeaways. Look man, I thoroughly enjoyed our conversation. I love what you're working on. I'm going to throw your info in the show notes. So if anybody's looking or if anybody has any rental on borrowers that you want to throw Adam's way by all means, reach out to him directly and he's going to throw you some money.

[00:42:54] Randal McLeaird: So yeah, thanks again, man, for jumping on, sharing your knowledge, information about your business. Yeah, this 

[00:42:59] Adam Zach: is awesome. I [00:43:00] know. Thanks for asking the good questions and it's always fun to talk with another dad that has young kids and gets it where it's man, like there's a lot of stuff going on.

[00:43:06] Adam Zach: And for me, it's okay, what can real estate really do for me from a, Hey, I'm working virtually in my home right after this, we're going to my kid's graduation. I was like, you know what? Some people have that flexibility in their job, but I was like, it's pretty true that with, I had a 10 to 15 year plan and it was like, it just, by the way, it's Two homes a year for 10 years.

[00:43:25] Adam Zach: And I was like, if I can do that, man, wouldn't that be something? But it's yeah, that's right. And it's Oh, if you just start off with that plan man, you get the one to like your level of learning is just like crazy. So it's just fun to look back. 

[00:43:36] Randal McLeaird: Yeah. And for sure. We didn't really touch on that.

[00:43:38] Randal McLeaird: I know you do some coaching and talk to dads. Is this correct? 

[00:43:44] Adam Zach: It's not the primary focus. It's mostly one off, but like in groups like front row dads and the dad's edge. So like nothing that I'm affiliated with, like I'm a participant in them. So I'm a big fan of masterminds. I do coaching on the side, for some dads that have young kids that kind of want to get into real estate.

[00:43:58] Adam Zach: Cause I was like, Oh, I. I can uniquely talk [00:44:00] to that where I was like, I can buy a piece of real estate easier than I can get my toddler to get out the door in the morning. And so it's like having both of those conversation and using Chris Voss's techniques on a four year old and like doing some mirroring and imaging.

[00:44:10] Adam Zach: But yeah, it's mostly the investments and just excited for what people can do when they actually get some free time. Cause once you do that, it's amazing what people can 

[00:44:18] Randal McLeaird: do. And so I just want to share that. For sure. For sure, man. Again, love it. Love what you're working on, man. It's good catching up.

[00:44:24] Randal McLeaird: Again, if you want to reach out to Adam, just click through the show notes and you will be in touch with him directly. So thanks again, man. Good catching up. Take care. Did you know that 80 percent of the agents we speak with got into real estate in order to gain passive income so they could obtain financial freedom and become work optional?

[00:44:40] Randal McLeaird: If you want to stay up to date, the best way is to make sure you're subscribed. So if you haven't done that, go ahead and do it now. We'll catch you on the next episode. 

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Randal McLeaird

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