EPISODES
Episode 38.
Chris Prefontaine, Founder & Chairman of Smart Real Estate Coach
We are taking it back to day one in this episode. First Time or early in your career. Real Estate Investors, take note. Chris Prefontaine of Smart Real Estate Coach joined me and do you want to know about the biggest misconceptions that he finds a students have listen to this episode. We’re going to loop you in. I’m Dalton Elliott. This is the real estate of things podcast. Thanks for listening. You’re listening to the real estate of things podcast. Welcome to the real estate of things podcast. I’m your host, Dalton Elliott. I am joined today by Chris Prefontaine. Chris is the founder and chairman of Smart Real Estate Coach. Chris is sitting in his office and Rhode Island. Chris, thank you very much for jumping on the podcast. You Bet. I’m glad to be here and hope we can give some cool nuggets for the listeners. I love it. I love it. So, first off, you nailed the name, smart real estate coach. That’s that’s a ten out of ten name. How long have you been running smart real estate coach? Oh Man, I’ve been at this thirty and a half years, but this follows thirty one years. But it’s smart real estate coach is officially hatched in two thousand and fourteen. I think we recently did a video on this now. That’s why I’m racking my brain for the for the team. I think we did like twelve or fourteen thous our first year in business. It’s funny to see what has transpired to, you know, now multiple seven figures. So it’s been a bit it’s been a bit of a ride. Yeah, it’s been incredible to kind of chat with you and then look back and you have we also have one of the better websites I’ve seen, which is always something. I appreciate the thought from. I appreciate that. But talk to me about smart real estate coach. You know, very interesting group. Talk to me about what you do, how you do it and the your why, like why in the world did you get started in this thirty and a half years ago? Yeah, so real estate in general, I…
…can go there first. I grew up in a non real estate business. My father had a welding supply business, but he would build his own buildings and I was too young to understand how it works. He said he used to tell me he leases them back to himself, and I’m thinking why do you do that? It’s the same person, but now I get it with entitias and whatnot. So I got the H way back then. It’s about real estate. Coach now, in my opinion, fills any enormous gap. And again my strong opinion this is that in real estate a lot of businesses, but real estate has sort of a I sorry, course or a Webinar or a seminar live and then the timeframe to then do a deal. The gap is enormous. Sometimes people don’t get out of the gap and they call us gone. Yeah, I spent a lot of money on programs. How are you different? And it just it’s very frustrating because it’s good markers out there but not doing anything about it. So we get the trenches, Dalton. We we do what I call interactive real estate. If you’re not program we’re coaching with you, we’re locking arms with you, we’re doing we sell our calls with you by our caught we’re doing everything with you. We’re in the trenches so that when you hit all the curveballs, because you will, then we can easily guide you. Not Easily, we can simply guide you through those. So that’s kind of where we live and that’s in that interactive space. I don’t know if I answer to you questions. I think that was at least two of them out of the two or three. Yeah, we yeah, we’re in the hall of fame numbers one, so you’re good to go there. What do you find folks looking to get into the real estate investment space like? What are the some of the biggest misconceptions that you hear about and have to crush? Miss mismanaged is the best way of saying this. Expectations. Why? Because they watched the commercials and it says you can get rich tomorrow. It’s just again frustrating. So this is a misperception that there’s a misperception in the in the creative real estate world, which is where we live. We called the terms niche, but it’s create a real estate and there’s a misperception there because a lot of people on shows will say to me, why do you, you know, egg see your property so…
…quickly if you do an honor francing or least purchase, why do you exit so quickly? And the answers we don’t have to. We can stay in these deals from one year to thirty. It just depends on the level of sophistication of the deal and the student or US our level of expertise in structuring the deal frankly, so you can control that you’re destiny in the creative real estate. And then we’ve gone one step further. We trademarked, in United States anyway, the three paid a system. So for eighteen years prior to the crash, I was paid once I was okay with it. I made really good money and real estate. I don’t have any doubts about or any regrets rather about my lifestyle. But to get paid three times is better. I don’t care what business you’re in. We get paid right up front, we get paid over time, monthly, and we get paid long term while we create. Well, well, that’s a cool business model for anny business, for real estate or not. So that’s what we’ve done. Yeah, that’s great. And what geographically like? Where are you and your students active in terms of investing? We Are West Coast to east coast. We are also in Canada. We’ve got some stuff going on like Australian UK, but that’s just in our course. No, no one actively doing deals with us out there, because we do deals we rep share with students as they learn, they learn with us. But we have all across the country right now. Got It? What markets have your attention right now? which ones are the most interesting ones, for better or worse? You know what most of most shows like this or radio, they’ll go yeah, do you pick your marcket? What’s hot, WHAT’S NOT HOT? You know where do we? I my heart market, so where I have a student that wants to work quite frankly, that’s coachable its disciplines, get the work ethic that it really wants to get after it, because the way we do real estate, the deals are literally everywhere. It’s a matter of getting someone in that geographic Garrea that wants to work it and run alongside us. But outside of the cities, a little bit on the outskirts, is always a little bit easier to deal with what we’re doing. If you want to do a bunch of deals, if you’re someone that wants to do, you know, one, two,…
…three, four deals a year, you can do it almost anywhere. And when I say that all I should probably put a number of that in the three pay day system, the average pay days throughout the community. That I’ll tell you. Our family team throughout the community arrange is like forty five grand to two hundred and fifty grand, depends on the price rangers, but that’s the average per deal three pay days. Our family teams around seventy five to seventy eight. We’re in the lower end of it just because our price range is a kind of low in this area and Rhode Island. But that gives you an idea of what one deal is were it. That’s why some people do want to come out and just do two, three, four five deals a year part time. It’s okay, it’s good money. Yeah, no doubt, no doubt, no doubt. So you’re I guess we color you an optimists and say that you think no matter the market, there’s good opportunity to be had. Yeah, most definitely you can call optimism or, quite frankly, if when a person learns how to deal structure the right way. So I call it my book the transaction engineer. When you learn how to do that, you don’t care what the market does. You actually welcome change, you welcome chaos. You because as it changes in the media gets all caught up in all the HOOPLA and usually they’re wrong. We get to structure deals and do so creatively, all while helping buyers and sells. So I we say sometimes it’s not the niche, and this isn’t meant to be negative people who don’t like this, but it’s not the nish. If you don’t like helping people and talking to people. Some niche is like I got a good budy. It does land flips. He can do it all from his computer. All right, that’s you then that’s great for me. That’s more like a one, one deal, you know, one pay deal. When when you’re into what we’re doing and you can create three pay days and you can help a buyer who thought they lost hope on a home like there’s a lot of win win there. So just depends on your mindset. With that got it makes sense. And let’s stay on the topic of deal structuring a little bit like how you know I I’ve been in the real estate, in the mortgage space since six weeks after graduating college and I came to leap one capital, and so a lot of my education and knowledge, all of my education and knowledge right was through the lens of the lending side and you…
…talk with customers constantly, so you get an understanding. But in terms of formal education around credit philosophy. You know, go down the list of things that are in our wheelhouse as a lender. Like all of that’s on the landing side. So deal structuring, I think about it from, you know, our side of the fence. But whenever you are coaching up someone the deal structuring side who’s looking to get into real estate for the first time, only investor side, what does that look like? What are some of the core principles that you kind of push? Sort of depends on the deal. We buy three ways. least purchase on a financing, when they’re free and clear, we do on a financing, meaning no mortgage, and then subject to existing financing. So there’s a lot of nuances in each one of those. But generally speaking, especially when there’s a market like this that just came off of and still is, in most pockets, pretty hot, you want to you want to make sure that the terms as long as you can. I don’t care what kind of structure you’re buying on. least purchase on a francing doesn’t matter, the longer the term. Like I’m sitting in my building right now where we’re filming you and I, and this building was bought on on a financing no bank underwriting, and you know, if you’re in the business, what that’s like. It’s commercial building and we close it very quickly and it’s, it was, principle, only payments for a while. That’s how we structure most of our deals. Well, that’s kind of cool. So why do I not care about the market? With this building? It’s twenty a term. I don’t care. Like the market can change three times. It will probably and I don’t care. So longer terms is a key component for deal structuring. And then the longer term was out, your three pay days increased dramatically, dramatically. I’ll give you some criteria. Actually, let me. Let me give more specific metric. So in and on a financing deal where I’m dealing with you, you’re the seller and you own a home. Let’s say I’m buying your home. It’s free in Claire. There’s no Morgan. A third of the proper United States are free and Claire. So your home is free and clay. It’s about two hundred grand or more,…
…but let’s use two hundred and I structure at least a four year deal. That’s easy now, as you getting five and more, and I structure at least a nine hundred all monthly principal payment. Those metrics I just gave you equals six figure pay day in forty eight months on a two hundred Grand House. That blows People’s minds. It’s because they’re power of the principal pay down and it’s how out three pay days work. But think about that. That’s pretty cool. You don’t need a ton of those deals. Yeah, that’s a that’s definitely a novel piece to it. On any so, like you said, markets go up and down. So I guess one one topic on the podcast lately, of course, has been reading the tea leaves and like what is the next twelve, eighteen months look like? I’m I guess from you, know, from chatting with you, like your perspective, is that there’s generally opportunity available in every market and doesn’t really matter what happens right, like how you know it’s somewhat of a roller coaster sometimes, but at the end of the day, like as long as you’re you’re underwriting deal structuring is solid and you were conservative right. That’s one thing that’s popping up more and more now is that you see deals that are penciled into the very edge of the cliff. You like. These are just the glossiest assumptions and I’m worried that if, you know, every part of the economy doesn’t continue to go up into the right these assumptions are not going to pan out. Are you finding, or do you kind of find that that is a habit that needs to be ingrained or broken in a lot of folks? Is that the you know, to too optimistic and assumptions and projections when they’re looking at a deal? Yes, I into safeguard that. I would go back to structure longer terms, at least buffers. You’re you know you’re you’re maybe your nonsense or your mistake, but yeah, it’s usually from newer investors. Don’t and I feel I look at Ashtood in base anyway, so I can’t judge other communities. They usually too anxious to get a deal, too ano the structure on the edge of Youse, the two anchors, to calm back to it…
…just you know the first few deals. Is Super Important to not do all that. But I guess, and I don’t know what it was like in your mortgage world, in the finance world, but if you have someone on your shoulder that’s been through that super important. Better yet, if you have some run your shoulder that’s been through a few cycles, where you can turn to them and go hey, what’s going on here? What I do with this? So I do care what the market does. It’s just it just tells us where we’re going to pivot. So, for example, when the rates were up right like they did recently, crazy amount, almost double that, that meant. What that meant a lot of buyers got push to the sidelines. That means they need us, because we do rent to own and help them get mortgage ready over time. And then also means that, naturally, it’s not a prediction. Like, naturally the demand came down little bit with the cells. If follows, buyers could push the side. So if that’s the case, I have to talk to less cells to get a deal than I did about six months ago. Running into covid match of twenty deals quadrupled in two months up. Why? Because people panicking, like I don’t know what to do. And then, of course it got hot and they got a hrder to get deals and now it’s easy, easier or again, it’s such a matter of where we where we fish for sale. By owners expireds. You know, free and Claire, where we fishing depends on the market. That’s all bear fair fare. I want to stay on the market piece a minute and one market I haven’t talked about on the podcast at all Rhode Island. Talk to me about Rhode Island like words as yeah, just I’m going to leave that as a completely open question. Tall to me about the Rhode Island real estate market and start wherever you would like. Well, Rhode Islands the smallest state in the country, right, so we’re dot. On top of that. I live on a Freetown Island in Rhode Island. So there are I say that just to set up this. There are pockets, and this is goes for anywhere. But if I can say this about Ryland, you can say what every state in the country, and that is I love when people say what do you think the markets going to do? You ask the better question, like what about our island? Like that specific, because there’s no market. In my opinion. There’s pockets of markets and…
I can I’m on this island if I go over the bridge in either direction. I mean I’m in rude island one way and mass the other way. Different market all together. So in general, a lot of a lot of waterfront right in general, because right islands so tiny. So so there’s some hot pockets still, but like anywhere else, there is some pockets that are that are slow. We’re expireds and now tripling and quadrupling down where we’re going to call them. We’re going to go there. Usually then a fifty mile radius Dalton. Any one of our students within a fifty mile radius can get enough deals to really build a nice business. So I’m okay with with being just in this tiny state. But we did expand, because it’s so tiny, to Rhode Island and Connecticut for our own personal deals. I see doing everyone else does if you want to, you know, nationalize this and that is it’s it’s pretty flat right now and hot right now and some pockets. Who knows what’s going to do. By the way, if you and I knew, we wouldn’t be on the podcast right the billion is don’t know. So we don’t know. We’re just going to be able to pivot as a pivots. Yeah, that’s it. Just progno usticating as best we can, for sure. For sure. What’s what else about smart real estate? Coach, you’re missing and I know you. You’ve author a couple of books, so tell me about those real quickly. Yeah, I’ll. Will give them all to your tribe. I got to link. Make sure we say at the end that’s specifically for your tribe and it’s not put your cred account for shipping. It’s free, but put your credit. We’re going to ship it. It’s all our cost. You won’t put a ten cents in, so we’ll give you at the end. But one is called real estate on your terms. It’s basically what you and I’ve been talking about generally, about how we operate our business. We don’t hide anything. We throw it on the book a through Z got some school student updated stories and there it got revised during covid. We didn’t plan it. We just happen to be middle revision. Covid hit. We said, all right, great, we’ll just make it, you know, appropriate what’s going on. So that’s very current. And then the new rules of real estate is a great one because it’s a bunch of different niches given their opinion on what’s going on, more broad versus our niche. And then smart, resty, coach. I guess the only…
…way to talk about is the we’re the only one in our space in the ink fight thousand in twenty and we’re waiting for the decision on twenty one. I know will be in it again they decide by August of twenty two. And and I an’t sad to say, look at us. I said to say you go through some pre grueling auditing. That’s this is not like pay a fee and get into ink fight thousand. You have your audited in every way. Our CFO are accounting everything, and so that’s a bit of a trust fact. I think when there’s no one else in our space that is that as a comper set as well as the best places to work. So we really give a hoot. We’re family based. We tend to attract a lot of people leaving the Corporate America and we tend to tract a lot of families because we’re a family biz. So just a little bit about us for background. Yeah, yeah, that really glad you call that out and it is a notable distinction. Like you said at the beginning, there’s no shortage of folks in the real estate education space and we on the private lending side have kind of our version of that real like the old the hard money lenders. It’s like we are not, you know, lean one. We are not a hard money lender, we are a private lending firm. So it’s a yeah, I empathize with you on that one, but similar distinction and call out, like you and the crew to a spectacular job at what you do and you are just, at the end of the day, really good, honest, above board people trying to help other people. So greatly appreciate you in the team, Chris, and thank you for joining me on this recording. You bet the link for you guys, specifically Galt, in this wicked smarting bookscom forward slash real estate of things beautiful. Thank you. We will make sure to put that up as well. Hey, Chris, pleasure connecting with you and I hope this is not the last time we speak. Thanks so much for joining my friend, you bet. Thank you. Be Safe. Thanks everybody for listening. Take care. Are you a real estate…
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