Owner Finance Pro is a fresh course created by Jake Strong and Jon Steltzer. The course was introduced on May 27, 2022 and officially launched on August 2. The course creator claims they have created an effective formula that can make you around $1500 in passive income just by spending about 20 hours a month.
How does their method differ from other owner financing methods and how effective is it? Can their method really build you a passive income business? Read along and we’ll find out the answers.
Owner Finance Pro teaches you how to gain properties through creative financing. By spending only a small amount of fees, you will build a passive income real estate business. Local lead generation is a business model that earns passive income through rent collection. You earn passively by renting out your website to local business owners. Local Lead Generation is a much simpler and easier business model to build.
Who Is Jacob Strong?
Jacob "Jake" Strong is a real estate investor who, together with Jon Steltzer, created the Owner Finance Pro course. He is the co-owner of NBS Real Estate VA, a real estate company based in Lynchburg, Virginia. The 6-year-old company holds over $40M in over 550 properties and nets a cash flow of $40K per month.
Coming from a family of entrepreneurs, he started a custom furniture business in Central Virginia. In his business, he dealt with manufacturing, distributing, and sales. He started in real estate after selling a dirt bike to a guy on Craigslist who was in real estate investment. From there, he got into the real estate industry with his friend Jon Stelzer and started by flipping $1,200 campers.
Who Is Jon Steltzer?
Jon Steltzer is a real estate investor from Lynchburg, Virginia, who, along with Jacob Strong, created the Owner Finance Pro course. He also co-owns NBS Real Estate VA. After finding problems applying for loans from banks to invest in real estate, Jon got a mentor who told him to do owner finance.
Being homeschooled as a kid, Jon helped his parents with their business. His parents ran 8-10 real estate properties where he would help them buy, renovate, and self-manage. Jon is also an active skier and has a business administration degree from Liberty University.
Pros and Cons of Owner Finance Pro
30 day refund policy.
The course is updated regularly. Lifetime membership allows you to benefit from added content.
They set expectations that it will take a lot of hard work and a lot of time before you can create an efficient real estate business.
Access to tools, documents, scripts and templates.
Pricey for the amount of current content.
The course is only a few months old. Too early to see any student success stories.
It is hard to find information about the course, company, or the owners and their previous businesses.
$497 early bird price for a lifetime access to the program. $1,000 regular price.
30 Day money-back guarantee.
Officially launched in August 2022.
Who Is Owner Finance Pro For?
They primarily market the course 3 types of people:
- People with no property or capital and who do not qualify for a mortgage would consider real estate as a means of wealth generation.
- Owners who have 1-5 rental properties but don't know how to get more financing to scale their business.
- Experienced real estate investors who want to grow their knowledge and skills.
What Do You Get With Owner Finance Pro?
The Premium membership of the course comes with 5 hours of over 65 training videos, each of which goes from 4 to 11 minutes long. These are step-by-step lessons that cover the business's theory, processes, and safety nets. The membership includes 7 different modules, some of which you can purchase separately:
The section discusses the foundations of a real estate investment business. This is perfect for beginners who are new to the real estate industry. This lesson will help you create your overall plan for your real estate investment business.
They will teach you that financial freedom depends on how much passive income you bring in rather than how much money you have in the bank.
This section is a 9-video mini-course that teaches how Jake and Jon grew their company large, healthy, and properly leveraged. You will learn how to track the 3 metrics quantitatively by knowing how to read and optimize key financial statements.
The stand-alone purchase also comes with access to the needed templates and mentorship from Jon and Jake via email.
The lesson is a 12-video mini course that teaches the 5 finance methods you can use to purchase rental property without bank approval. You will learn when to use which loan type and go through the advantages and disadvantages of each. They will give you creative finance legal document templates for each of the methods, which will save you up to $400/hr in real estate lawyer fees.
The stand-alone purchase also gets you mentorship via email.
This lesson teaches you how to create and manage your real estate business team. You'll learn the steps on how to take to make sure your business has a healthy infrastructure so you can focus on your role as CEO. They will teach you how to structure your company as a legal entity (LLC).
This lesson teaches you ways of finding sellers in your area who are likely to finance the purchase of their homes. You will learn how to find contact information for the cold call lead property owners. They suggest you find and cold call 50 properties a day with the provided cold calling tips and script. You will also learn how to underwrite a deal using the Pro Forma calculator tool to see if it covers the 1.25 debt service ratio.
The stand-alone comes mentorship via email.
This lesson teaches you how to tighten up the expenses of your real estate business. Learn when and how you should hire employees and when to refinance deals. You will learn the proven cost-saving tactics used by Jake and Jon.
This section of the course is basically Jake and Jon detailing their most creative deals ever. The lesson aims to get you into the right mindset and inspire you to be innovative and creative in your deals.
Premium membership also comes with several perks:
- Access to the exclusive members-only Facebook group.
- A 10% discount on all phone numbers gathered from batchskiptracing.com for cold leads.
- Access to new course content that is created weekly.
- You can download and use the Pro forma calculator, legal documents, amortization schedules, and more.
- Access to the weekly LIVE Q&A sessions.
Owner Finance Pro has a YouTube page where you’ll find videos of Will Scheren (their marketing partner, course trainer, and admin) interviewing Jake and Jon. If you follow the link on the video, it will direct you to the course’s official site where you will be greeted by an hour-long webinar. Signing up for the “premium membership” after the webinar will give you a $250 discount.
10 Tips on How to Make Money With Owner Finance Pro
Jake and Jon list 10 tips on how to make a successful real estate business. It is important to know and follow these tips if you want to create financial freedom using their course.
What are the benefits of using creative financing? For the lender, creative financing is a simple and easy sale process that closes quickly. As for the seller, creative financing shields them from tax liability by spreading the payment throughout the years. And you, the buyer, creative financing offers you a quick and low-risk way to finance your deal.
Make sure that the seller is clear of any mortgages or that the seller’s lender agrees to owner financing. Otherwise, the bank or lender might call a due-on-sale clause effectively putting the property in foreclosure.
You will learn how to use 4 ways of dealing with the down payment on your deals when you don't have cash on closing.
- Zero-down loan - convincing the seller to a 0% down payment on your deal.
- Get a partner to cover the down payment. Your partner will take a percentage of the profit in return.
- Private or hard money lender to cover the down payment. These loans have high interest rates and short terms.
- Target sellers with multiple properties - this is the method that the course teaches. You make a deal where you will buy all the sellers' properties but only put a down payment on one and 0% down payment on the rest. Use a private or hard money lender to pay for the down payment. Once you have gained the properties, sell one immediately to pay back the loan for the down payment.
Know how to find the ideal real estate investors who share these similar traits:
You will use the GIS tax map to identify potential sellers who would agree to creative financing. These searches are by town. They recommended you get at least 50 potential sellers to ensure you can close 1-2 deals.
Use batchskiptracing.com to get the contact information of the potential sellers. It costs 20 cents per contact. Your Owner Finance Pro membership entitles you to a 10% discount.
To hold the seller's attention, you need to humanize the conversation, be professional, and get straight to the point. You need to communicate your goals clearly by:
- Finding out if and why they're interested in selling.
- Conveying that you are a qualified and professional buyer
- Asking specific information about the property, such as maintenance needs, rent prices, asking price, etc.
Follow up leads with soft calls. Always meet face-to-face when closing a deal. Visit each property before meeting with the potential seller in order to get more information that may be useful in the meeting. These are what you will check on the properties:
- Condition of the roof in relation to comparable properties.
- State of the electrical box in relation to comparable properties.
- The state of the foundation in relation to comparable properties.
- Condition of the windows in relation to comparable properties.
At the warm lead meeting, you will need to get the seller to provide you with an asking price. You will also need to schedule a time with the seller when you can visit their properties with them.
If the seller does not give you an asking price and instead asks you to name one, there are 3 ways of dealing with this scenario.
- Let the seller know that you'll need to do some research on the pricing and get back to him.
- You can return the question by asking what the seller thinks you should offer.
- Inform the seller that the purchase price will depend on the terms of the creative finance deal.
You need to identify what problems might arise after purchasing the property. Take pictures of anything that might need repair to get estimates. Inform the owner of the repairs and include the cost in the deal. The course includes a checklist of what you should look for when inspecting properties. You can hire a home inspector to save time and get a professional opinion.
There are 5 things to keep in mind when structuring a deal to ensure that it is low-risk and guarantees positive cash flow.
- You should never accept a deal with less than a 1.25 debt service coverage ratio.
- Always buy a property under its value.
- You need to satisfy the seller.
- There must be an asking price for you to work on.
- The common interest rates are 4.5-7% with 15-20 year terms.
To find out your debt service coverage ratio, you need to follow this formula.
Your monthly gross income minus the expenses is your net income. Remember to calculate only 90-95% of rent. Monthly expenses are:
- Insurance - call a broker to get an estimate.
- Maintenance - $500 per unit per year.
- Turnover - $200 per unit per year.
- Local real estate taxes - contact the local government for info.
- Gas, electric, trash removal, water, sewer, etc. - ask the owner for average.
Divide your total net income by your monthly debt payment. You can calculate your monthly payment of your debt using the special calculator included in the course or by using the pmt formula on a spreadsheet.
Your cash flow must be at least 25% of your debt service to be sure that you hit the 1.25 debt covering. If your monthly debt installment is $1,000, then your net income should be at least $1,250.
The Pro Formula sheet allows you to edit the deal in real time for changes with the terms during the negotiations. This tool will allow you to make sure you hit the 1.25 debt service coverage ratio.
How Effective Is Owner Finance Pro?
As the course is very new, there are no success stories yet to come out of it. There are a few reviews of the training available on their website.
Pros and Cons of Owner Finance
The course teaches you how to build your real estate investment business by using creative financing. Since there is no need for a bank intermediary in owner financing, this kind of arrangement can be favorable for both sellers and buyers.
Pros for Buyers
Fast closing time. No need for a bank loan officer, underwriter, or legal department representatives.
No bank fees or appraisal costs.
No bank or government required down payment minimums.
Cons for Buyers
Interest rate will likely be higher than compared to bank loans.
The seller may have a mortgage which includes a due-on-sale clause that they might demand upon the sale of the property.
The terms may include a balloon payment due in 5-10 years.
Pros for Sellers
Can sell property as is without making costly repairs that a traditional lender might require.
Can sell the promissory note to an investor through a lump-sum option.
If the buyer defaults, you keep the house, the down payment, and any other fees paid.
Avoiding the mortgage process allows the deal to be closed faster.
Cons for Sellers
Dodd-Frank Act adds complications. Depending on how many properties the seller finances annually through owner-financing transactions, you may need to work with a mortgage loan originator.
A buyer may default and not leave, prompting the seller to go through the foreclosure process.
If the seller takes back the property for any reason, they might have to pay for costly repairs.
Is Real Estate Investment a Good Business in 2022?
Millions of Americans can no longer afford homeownership because of the over 30% increase in property prices over the last couple of years. Rent prices are also skyrocketing. The prime culprit is the historically severe housing shortage. Higher prices result from tight supply and high demand. The high demand means there are certain advantages in building a real estate investment business in 2022.
Jake and Jon claim that the strategies they use give you a low-risk way to build your real estate investment business, but high potential returns come with potential risks. Buying property through creative financing still creates a contract in which you must pay your monthly rent debt installment.
The risk comes from the state of the economy and the recession that we might face soon. Tenants that cannot pay will disrupt your cash flow, which might affect your ability to pay your monthly debt payment that could lose you your properties or business.
This is where the local lead generation business model gets its advantages. With this business model, you only need to invest a little time to create and rank your site on google and the fees associated with creating your site are tiny. You also don't have to deal with legal issues and loan interest rates. It costs almost nothing to maintain once you get it set up, both in time and money. Local Lead Generation may be the simple passive income model you are looking for.