Table of Contents - Chris Prefontaine: Create Continuous Cash Flow Now, Without Using Your Cash or Credit
Dave Debeau [00:00:08] Hey there, everyone, this is Dave Debeau with another episode of the Property Profits Real Estate podcast. And today it is my pleasure to be talking with Chris Fontane. How are you doing today, Chris?
Chris Prefontaine [00:00:20] I'm doing awesome. Thank you.
Dave Debeau [00:00:22] So where are you calling in from?
Chris Prefontaine [00:00:23] Newport, Rhode Island.
Dave Debeau [00:00:25] Newport, Rhode Island. I'm here in beautiful Kamloops, British Columbia, which you've probably never heard of, Chris.
Chris Prefontaine [00:00:30] But the second half of that, not the first half, that's all.
Dave Debeau [00:00:35] So if you haven't had the pleasure of meeting Chris before, he is a very, very astute real estate entrepreneur, author, trainer, coach, the whole bit. He's been in the business for over twenty five years, author of the book, Real Estate on Your Terms, create continuous cash flow now without using your cash or credit, which sounds pretty darn good. Start off in construction. He's been a realtor, he's done in his family, are doing two to five deals a month in their personal portfolio, pretty much, you name it. Chris has done it and he and his family have done over 80 million dollars in real estate transactions. So, Chris, it's great to have you on the call today.
Chris Prefontaine [00:01:13] Well, it's always good to be on and heard so much about you in the show, and I'm psyched to chat with you.
Dave Debeau [00:01:18] Well, thank you very much. So. It's it's been a while, but let's rewind and start back at the beginning. Twenty five years ago, what got you into this whole real estate game in the first place?
Chris Prefontaine [00:01:29] You know, I actually grew up in a family company that had zero to do with real estate. But he would buy and sell. He would build his own buildings, my dad and he would permit land. So I was always around it. That was kind of my my foray into it. Then I just had the edge and I was back in the day picking up the Trump books and talking back in the late 80s, early 90s. So that just always had an itch to do it.
Dave Debeau [00:01:50] Excellent. Very, very good. Now, you've done a little bit of everything and you're still involved, you do some construction from time to time. You do some condo conversions from time to time. What would you say is your bread and butter strategy these days? What do you focus on primarily?
Chris Prefontaine [00:02:05] Yeah, there's no question since gosh, 2013 that we do only buying on terms now, which you alluded to in the book. So that would be a lease purchase owner financing or subject to those three things.
Dave Debeau [00:02:18] OK, great. And well, so what. So up here in Canada we're familiar with rent owns the lease auctions, we're familiar with owner financing, that sort of thing. Subject to what? What would that be defined as? You have a
Chris Prefontaine [00:02:35] home. You might be more in the I got to do something now category. That's not always the case. But you have underlying debt and you need debt relief immediately and you may not have any equity. And so you're going to just you're going to sell the home to us for no money. And we'll get you're going to stay on your loan. So that's not subject to the existing loan.
Dave Debeau [00:02:54] Subject to the existing mortgage. Exactly.
Chris Prefontaine [00:02:56] You're going to stay on. I'm not going to sign on it. I'm not going to assume that. I'm just going to pay it.
Dave Debeau [00:03:00] Right. Right. OK, yep. That's so that's not very common here. But I have I've actually done that before, so I'm familiar with that. And it does work up here as well. So that's great. Now you've been doing this and you've been training people, you've been coaching people and the whole bit for a long time. It's always 20, 20 hindsight, but knowing what you know now, if you were starting all over again today from scratch with all of your knowledge of. What, if anything, would you do differently,
Chris Prefontaine [00:03:29] you know, two things jump out. One is not signing personally on any debt like none, zero, unless it's your personal house. And then that's even debatable, too, is get a mentor. I mean, I've always had mentors, but getting mentor day one and then just put the blinders on and go. As the two biggest does mean a lot,
Dave Debeau [00:03:47] yeah, yeah, for sure. So if you don't mind me asking, did you kind of how did you learn those lessons? Because most of my lessons that have stuck have been the ones I've learned the hard way. So, yeah, you bet.
Chris Prefontaine [00:04:00] They're usually the most profitable eventually. But yeah, it was it was the 2008 debacle. I put a whole chapter in my book about it. I'm open about it. I mean, I was on millions in debt personally. And so you can imagine the headache when things slow down, it's just not worth it at all. And then the mentor thing is just looking back. I mean, every time I had a mentor and I was focused on that and laser zoomed in, we had great success in the two times. I didn't have great success. That being one of them. The 08 debacle, I think back I say I didn't have an advisor or board or mentor or anything. Well, why not? So those are biggies.
Dave Debeau [00:04:34] Those are biggies. Right. And I know I make that same mistake myself. If you're a fairly smart guy, can learn this from the book or I can watch a few YouTube videos.
Chris Prefontaine [00:04:44] I got this. You know, I got it. I got to figure it out. I get cocky
Dave Debeau [00:04:47] fact that always bites me at the bottom, I tell you that. So, Chris, now that you've been training people and teaching people and you went through the 08 debacle and I mean, that was a big one. What are some of the biggest mistakes you see other people making other real estate investors making nowadays
Chris Prefontaine [00:05:06] in addition to those? Yeah, I would say mismanage expectations. And you didn't expect that one, but just a lot of TV shows and infomercials and and so people really, really think probably because of the influence on these commercials, that they can actually do it quickly, do it overnight. It's not a get rich quick, I don't know, niche that is in real estate, but it is a get rich for a long time. If you have the patience and you manage expectations, it's got to be one of the biggest frustrations I see out there. Manage expectations. You know, people say they're 50 years old. I'll pick that number. Took them this long to get there. And let's say they didn't have the success they want. And then they expect in one course I want someone how they're going to get rich. It's just not the case. So that's a biggie, I think.
Dave Debeau [00:05:49] Yeah, I see that all the time, Chris, and now that I'm past fifty fifty, doesn't seem that old to be
Chris Prefontaine [00:05:56] using both, but I'm making the turn.
Dave Debeau [00:06:00] Yeah, no, that's that's that's definitely a big one. I was going to ask you, well, so you do you do a lot of coaching, training, that kind of good stuff, who you know, who is your ideal person that you like to work with
Chris Prefontaine [00:06:16] instead of a demographic? It's really I alluded to some of it already. It's the person who's committed and serious that's kind of our beacon, if you will. That's if you're committed and serious. Come look at our information. And then secondly, managing their expectations that they can look at this and say, this is a business. I'm into this for three years. I won't look back. I won't complain, I won't whine. I'm into this for three years. Perfect. Those two things.
Dave Debeau [00:06:40] So if somebody is kind of into it for three years, what what if they follow the rules? They follow the instructions. Yeah. What are they going to get at the end of that three years?
Chris Prefontaine [00:06:49] What we designed a real simple I don't have in front of me, but it's a one page. It's called the three year, one million dollar plan. And it uses a modest price range, you know, median price range of, say, three and a thousand or something. It's not a it's not overly zealous. And it talks about building literally a million dollar business by year three. You have a million cash coming in. Now, some people will take five years. Great. They'll be happy with that. I have a student to hit that in month thirteen. Great. He's happy with that. So but it's a guide. It's a three year guide. And that's why I say three is here. Here's a quick example. Can you imagine if you and I were going to start a business and attract investors, let's say, and we're in a boardroom and you and I come out and they like what we're doing and then we say, all right, we're going to give it a shot for sixty days. They'd say, you don't get my money. So same thing here. Let's commit to this thing.
Dave Debeau [00:07:36] It makes a lot of sense, that's for sure. All right. So so the people that are kind of coming to you, they're they're looking for a solution to the problem. What's the biggest problem that you help them solve?
Chris Prefontaine [00:07:48] Yeah, getting deals done. I know this sounds crazy because you assume when people take a course, they're going to do deals. Right. But I tell you, on a weekly basis, they've we get people saying, I took this course or I spent some numbers, a big like six figures and I haven't done a deal yet, not a single deal. So I call that a gap right now in the education industry, in real estate. And we close that gap dramatically. We kind of lock arms and do deals with them, help them get it done.
Dave Debeau [00:08:13] Yeah, that's huge. We've seen that over and over and over and over again myself as well. So, Chris, you're focusing right now because because you got bit during the downturn ten years ago, learned your lesson. You're focusing on lease options subject to property's owner financing. You know, at least I've got some experience with a couple of those. But it tends to be more short term cash now, cash for the next couple of years, but then you got to replace the deal type thing. You also have like or do you recommend a longer term buy and hold type strategy as well? Or what what's kind of
Chris Prefontaine [00:08:51] the big picture? It's a phenomenal question relative to terms, because some of our terms that go for anywhere from three years to 10, let's say I wrote a bunch of nine year leases years ago, and then what happens is the the rapport and the credibility you gain with the seller typically lends itself to then they're extending that or converting a lease purchase to a subject to. So you own it long term. And so, yes, some of us have been turned into rentals. We've done we've used the same strategies to do four and six unit buildings inside of an IRA, outside of an IRA. And I know it's different in Canada, but inside of my retirement accounts. So, yeah, there's a mix there. You can build some great wealth with these picture. Nine years on a terms, though, you can get some phenomenal wealth.
Dave Debeau [00:09:31] So if you don't mind me asking you, how typically how long are your lease option type deals?
Chris Prefontaine [00:09:36] We write a lot of them at three years, but I've seen again as much as 10 and then those get extended our average paydays. This is important to know. So you mentioned cash, so cash now cash over time and then cash at the end of the term. Our average right now is like seventy five grand, approaching seventy eight grand for all three paydays, I call it. And our students are as low as forty five grand and high is one ten. So we're like right in the middle coincidentally. But that's, those are lucrative deals. When you start talking
Dave Debeau [00:10:02] like I mean that's a hell of a lot better than when I was doing right. And that's for sure. Yeah.
Chris Prefontaine [00:10:07] It's a nice system. We've got set up with the Three Payday's I call it.
Dave Debeau [00:10:09] Yeah, yeah. For sure. That's that's the beauty of rent own, that's for sure. So if somebody is listening to this press and they're kind of wanting I hate to use this term, but they kind of want to dip their toe in the water, and I know there's no way to really just dip their toe in the water. But what is some sort of an action somebody can take to actually start doing this kind of stuff, to start looking?
Chris Prefontaine [00:10:33] You know, you said it right. Actually, they can dip their toe in by I have a free webinar if they don't mind. Listen to me for another fifty five minutes. It's free and there's a lot of content and I go fast. I know I do. And so they'll be at the dip. They're telling, like you said, and say, OK, if I want to go further, at least I know where I stand versus blindly jumping at it now. So I would say go check out the free webinar for sure.
Dave Debeau [00:10:57] All right. And where can they do that?
Chris Prefontaine [00:10:59] They can just go to smart real estate coach dot com or you can put a link. Don't know how that works with your show, but my real estate coach dot com and it's a free fifty five minute webinar.
Dave Debeau [00:11:08] All right. Very good. And so besides watching a webinar with some sort of a tip that you can lead people with that that'll help them get started or get, you know, because you're talking about that so many people and I've seen it myself, do they take course after course after course and they do diddly squat? Yeah. The end of the day, they spend tens of thousands up to one hundred thousand bucks taking idea to. What would you what would be some tip that you could give somebody to actually get their butt in gear and do something?
Chris Prefontaine [00:11:38] I would say this. I'm not so naive to think, even though I love our niche, that this is the niche for everyone. So I would say No. One find a niche that you can relate to ours or someone else's. There's a lot of stubborn issues, as you know, in real estate. Second, find someone that is in the niche that you can relate to as far as a mentor, but still doing deals, as you know, it's so important because the market changes. And if you're not with your finger on the pulse, you're going to get hurt. So you find a niche. You find someone who can show you the way and then go back to that three year commitment. I said those are the three kind of do those in order. Put the blinders on, don't look left or right and go forward for three years. You'll have a great experience if you follow those three steps. No question.
Dave Debeau [00:12:15] And three years to go by either way, the blink. Yeah, it's not that the older I get that the shorter three years. Seems that's. I agree. I know. That's very, very true. All right, Chris. So you've done a lot of different kinds of things, you're focusing on these kind of three primary, the investing strategies right now. We've got a few more minutes as we're as we're going through this. Why don't you just for clarity's sake, would you define each one of them a little bit? Fill in the blanks a little bit for folks that aren't completely aware of it. So let's start with lease options. These options can be called rent on lease, purchase, rent, buy. There's all sorts of different terms for it in a just a big picture nutshell. How does it work?
Chris Prefontaine [00:13:02] Yeah, so one example. Lease purchase. I'm going to purchase your home. You have a little bit of equity, but you want to protect it all and you have underlying debt. I'm going to go ahead and take all of your maintenance, take over your mortgage payment and everything about that house so you have zero worries. And if you had equity, I'm going to protect that exact amount we agreed on. And then I'm going to honor before I let's say thirty six months, get that cashed out. How am I doing that? All right. Home's no matter how we buy, we exit on rent to own the rent to own buyer. So so that's the lease purchase. Now in that scenario, they still get to write off expenses, depreciate the home, etc.. I can't I'm just it's a sandwich. It's I'm in between the seller in the buyer.
Dave Debeau [00:13:45] So what would be some examples of a seller wanting to do this kind of a situation? Because, again, they're not getting a sale today. They're getting a sale in two or three years.
Chris Prefontaine [00:13:55] Yeah, a couple of examples in no particular order. One is if they were on the market and they're an expired listing, they were in their mind ready to pay that commission. And so there's a savings there right now. It might be a little different candidate by now. These numbers are similar. There's like twenty percent of the market that can go get a loan in the United States right now without getting any extra help and credit enhancement, et cetera. So there's fishing in the small pool of buyers. Therefore, they're getting less money for these homes, whereas we can get them the market value. The other would be, hey, I've got a teeny bit of equity, but after I pay my commission, I might be underwater or break even. I'd like to not have to do that. So the short answer is usually more cash out and no hassle.
Dave Debeau [00:14:37] Yeah, no, that makes a lot of sense. OK, that's a great, great definition of of lease options subject to you talked a little bit about that. So what kind of situations would a seller be in for that, that kind of scenario.
Chris Prefontaine [00:14:49] Yeah, two different tiers, so to speak, because owner financing in lease purchase, there's not always people stressed out. I mean, sometimes people in very good shape and they just want the best price. So on the subject too, I find anyway that usually it's people that say, look, I mean, I literally had a gentleman say, my truck's packed, I have custody of my grandchild, I'm leaving. Can you come do that thing where you buy my house? So he left and we bought his home and he had no equity in it. And we have been making the mortgage payment, but it stayed in his name and we own it for the last, I don't know, three and half years or so. And coincidentally, that tenant is about to cash us out. So for him, it was, what, immediate immediate debt relief and and stress relief. And I'm leaving with my grandson.
Dave Debeau [00:15:32] Right. And so basically, if you hadn't come along, he was going to walk away anyhow. He was he was going to lose the house is going to go into foreclosure, all that kind of good stuff. Yeah. OK, good stuff. But that's OK. Yeah. So then in that situation you you own the house he signed over title to you for a buck or whatever it takes to make it legal and you own it. But he's still on the hook with the bank. You're doing it for him. Then you got a buyer in there. You do a rental deal on that property. Correct. And sell the home of that. OK, that's correct.
Chris Prefontaine [00:16:08] And we don't you know, it's all a discussion, but so would the rent home buyers. You can stick to their mortgage or any plan that you give them and really stay on it from an accountability standpoint because you do have an end date. But in this case, I don't have an end date, so I let them take their time. I'm not going to stress and they're not going to dress nice.
Dave Debeau [00:16:24] And you're still getting some you're getting a of cash up front. You're getting above market rent. Typical day. Plus, you set the price of the
Chris Prefontaine [00:16:33] nice principal pay down in the meantime.
Dave Debeau [00:16:35] Yeah, exactly. Exactly. And what was what else was I going? I was going to ask you also. So when you're working with these tenant buyers, again, your clients are going to buy the house, the rental customers. How active are you in helping them to repair their credit and do all that kind of stuff? Because that's a big part of the job.
Chris Prefontaine [00:16:55] It's a biggie. I'm I'm glad you asked because they're our mentors, as you know, and educators out there who publicly say who cares if they don't cash out? You just collect another deposit into that. I say that's bogus. Morally and ethically. You're not getting this home unless we know you have an a mortgage plan and an end date, unless you mess it up. But the intent is you have an end date, you have a mortgage ready plan. So we get very involved with the mortgage broker and a credit enhancement company, get the report that says, hey, so-and-so can be qualified on it before this date. Great. It matches our term. You're accepted with a right down payment and everything. Not just blindly throwing people in there, so, you know, they're going to fail. That's the wrong route.
Dave Debeau [00:17:34] You know, the churn and burn. I hate that
Chris Prefontaine [00:17:36] you just set me up to fail.
Dave Debeau [00:17:38] Yeah, for sure. Most definitely. Well, Chris has been a lot of fun. I really appreciate your time and your wisdom on the podcast, your today as we're wrapping things up. Any final words of wisdom that you'd like to share with our listeners?
Chris Prefontaine [00:17:51] I would just say to the struggling or to the person who's looking to get into to a new really take to heart what I said about managing expectations, because you can do it successfully as clues. This stuff's been done since late. Eighteen hundreds. It's not new to you or I. They just need the right path. And so it's out there for you. You can do it.
Dave Debeau [00:18:07] Awesome. Very good. Chris has been a lot of fun to look forward to it. And who knows, there's been a short podcast. We'll probably have to have you back to fill in some of it.
Chris Prefontaine [00:18:15] I love it. I love it. Thanks for having me on.
Dave Debeau [00:18:17] Thank you. Well, thanks very much for checking out the property profits podcast. And you like what we're doing here. Please head on over to iTunes, subscribe read us and leave us to review it. Very, very much appreciated. And if you're looking to create a regular flow of inbound investor inquiries about your real estate deals, then I invite you to attend one of my upcoming live online demonstrations. And you can check that out at Investor Attraction Demo Dotcom. Take care.