GI152: Using Seller Financing to Acquire Multifamily Properties with Gabriel Hamel

Gabriel Hamel is a Real Estate Investor who focuses on creative strategies to acquire investment Real Estate. These strategies have contributed to him amassing a Real Estate Portfolio consisting of Single-Family Homes, Multi-Family Apartments, Commercial Real Estate, & Mobile Home Parks.

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Announcer:
Welcome to the Global Investors Podcast, a show that focuses on helping foreign investors enter the lucrative US real estate market. Host, Charles Carillo, combined decades of real estate investing experience with a professional background in international banking to interview experts in all areas of US real estate investing. Now here’s your host, Charles Carillo.

Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host Charles Carillo. Today we have Gabriel Hamel. He is a Real Estate Investor who focuses on creative strategies to acquire investment Real Estate. These strategies have contributed to him amassing a Real Estate Portfolio consisting of Single-Family Homes, Multi-Family Apartments, Commercial Real Estate, & Mobile Home Parks. So thank you so much for being on Gabriel.

Gabriel:
Yeah, Charles, thanks for having me appreciate

Charles:
It. So give us a little bit background on your story. I think you started investing right around the downturn away, the great recession. So let us know a little bit about your background both personally and professionally prior to jumping in and getting involved in real estate investing.

Gabriel:
Sure. Yeah, it’s a little bit of a long story, so I’ll do my best to con condense it down. You know, I, I, in high school, like school was just not my environment. You know, I knew that I knew that pretty early on. I, I really stayed in school for the social aspect. I was a high school wrestler that really kept me in school. I just knew that there was something different. I didn’t, I didn’t want to go to school forever. I didn’t wanna go work for somebody else. So I actually joined the army national guard, my senior year of high school. I was doing the one week and a month thing. And then a couple years after high school, I had read the book rich dad port at. And so I’m sure a lot of your listeners have, have read that book that opened my eyes and really just gave some words to kind of the, the underlying thoughts that I, that I had.

Gabriel:
I, I, I picked up that book. I used to be embarrassed to say it was the first book I read cover to cover. Now I’m, I’m thankful for that, but it’s the first book I couldn’t put down that I was like, yes, this makes sense. This is what I wanna do. So even before I ever bought a property, I knew in my mind that that real estate would be my path to financial freedom. And so that was around 2002 and then I got called up and was deployed to Iraq in oh three and spent most of oh three and oh four in Iraq. But I constantly kept, you know, thinking about the lessons in that book. And so I told everybody, I knew, Hey, I’m gonna come back. I’m gonna buy real estate. And they were like, how you gonna do that?

Gabriel:
You know, I was, I was literally living in a friend’s addict for a hundred dollars a month prior to the, the deployment. So living in an addict and saying, I’m gonna go build this million dollar million dollar real estate empire. People laughed at me. But I actually started buying. So I came back in oh four, I bought my first house in 2005. So it was actually the, the peak of the market. And you know, I just didn’t know what, I didn’t know. I, I spent about a year looking I was one of those guys that got approved for a loan, even though I really wasn’t financable <laugh>. And you always hear the horror stores, but I bought, I bought, well, I mean, I, I rented out two of the rooms now they call it house hacking and yep.

Gabriel:
It just made good financial sense then. So bought a home in oh five, another one of those six, another 1 0 7. So with those three houses, two were no money down. One was 5% down. And then everything kind of changed in, in oh eight. So 2008 my first son’s born and that was kind of my, you know, really my, oh moment of, you know, I have these couple homes, but it’s not enough to support a family. I had a small nutrition store that I had to shut down, and that was kind of the siding moment of like, what do I do? And so I went back to the bank and said, Hey, I’d like to buy another property. And they said, too bad lending guidelines have changed. You actually need a down payment. You didn’t come, you, you need to qualify.

Gabriel:
None of which I have, so I wasn’t, I wasn’t financial. And I just went out and took a bunch of odd end jobs. And so I, I literally anything from Craig’s Craigslist help wanted ads to just odd end jobs. And I finally landed a, a job in a high school, special education class. It was a, a minimum wage job working less than 30 hours a week. And, and three months into that, I just started thinking about my goals and just, what do I really want? And I had to make the decision of like, I could just keep working this low paying job, or I could get serious about real estate. And so 2008, I spent the, that whole year, really every night on Craig’s was just looking up you know, seller financing, owner financing, and had a lot of conversations with agents, with brokers to to sellers and, and really just got a better understanding of what seller financing was. And after about a year of that, 2009, I bought my first seller finance deal and it cash flowed almost to the dollar I was making at the, at the job. And I, I stopped I finished out that year and I stopped working. I stopped working then.

Charles:
Oh, that’s crazy. Yeah. So were those three properties you bought in oh 5 0 6 0 7. Those were single families.

Gabriel:
Those were single family homes. So I essentially bought the first one, rented out two of the rooms a year later, bought the next one rented out those rooms and kind of went, kind of went that route. And, you know, I knew I, I was clear that I wanted to buy assets. I was very clear on the difference between an asset and liability and I wasn’t buying a lot of stuff. I, I couldn’t afford. I mean, even, even, even after quitting my job, I was technically financially free, but I was still really poor. I mean, my, my cashflow was less than $1,500 a month, but my expenses were low. So I became financially free, very fast and very young, but I was still very poor when I, when I stopped working.

Charles:
Yeah. Yeah. And and I can agree with you on 2008, I bought my second multifamily property at the end. I think it was October 1st, like 2008 or something. And it was like two months after like Lehman had just gone down and there was like a month out. I collected the rent and then like a month later Madoff happened, like, it was just, oh, wait, it was just like crazy. So I, I, I mean, I looked back and I was like, ah, must’ve been crazy, like doing this stuff, but you know, oh, nine was, I bought a property in oh nine. And just like you, I mean, you could, if you bought it, I mean, you bought it and you had, you couldn’t get bank financing. I was getting banks were telling me, like banks I’ve worked with for several years. They gave me 20, they would say they gave me 20% loan of value. Yep. And you’re like, oh, okay. All right. So you’re not lending at all. That’s what you’re saying. But so it was really crazy, but let’s talk about like what you’re acquiring now and why types of properties. Cause obviously you’ve grown out of a single family rentals. So yeah. Lay us on that.

Gabriel:
Yeah. I mean, every, everything I bought, oh, 90 13 was all multifamily, small multifamily. That was all seller financing, all seller financing deals. Those were all, no money down seller finance deals. And that was kind of the initial my only metric back then was cash flow first. Right? It was, I kept it real, real basic. Here’s the money coming in. Here’s the expenses is there cash flow at the end of the day and I would add buy it. So that’s right. During that, that time of everyone thought it was crazy to, to be getting in, into real estate. To me, it just, it, it still made financial sense of it was cash flow positive. My risk is my risk is pretty low. More recently my last four purchases have all been in the mobile home park space. I, I like, I like the mobile home park space a lot.

Gabriel:
It really fits that model of similar to the properties I was buying the small multi families that I were buying. Previously they were poorly managed under rented, and there was a lot of upside, but they still penciled the day that I bought ’em. And so same with these mobile home parks. You know, a lot of times I’m going in buying these parks that had, you know been owned for years by usually husband and wife. Couple they’ve self-managed really good. People just really burnt out. Rents are low not billing back utilities, just, just some little tweaks that you can make to really make a, a mobile home park go from a decent property to a great property.

Charles:
Yeah. Yeah. They’re not maximizing that income cuz they don’t want to, they want to work less, I guess you would say, yeah, they don’t wanna have turnover they don’t wanna have, and I know exactly how it goes. I self management properties for six years. So I know how you kind of are not a professional landlord in the sense where you’re just trying to save time and avoid any type of hiccups in your business. So you’re really coming in and you’re like, okay, you know, you’re now you’re coming in and you’re fine tuning what they’ve already started and making changes that you know, that the market will allow you to raise rents on.

Gabriel:
Yeah. And it’s interesting. I mean that the first mobile home park you did for, for me, it was kind of proof of concept. I actually financed it. I got a hard money loan, but the down payment that I used was one of the initial single family homes that I had bought with no money down. So I actually sold one of the single family homes. I did a 10 31 into the mobile home park as my down payment. So I was essentially into that first mobile home park, no money out of pocket. Now it cash flowed with that hard money. I bought that for 1.3. I just refinanced that two weeks ago. And one of the very first things that I did with that park is a small rent increase rents. Hadn’t been increased in almost five years. So they were still below market, but that small rent increase and then six months later started building back utilities.

Gabriel:
So it was still fair rent. Nobody moved out because you know, the rent went up or they had to bill back utilities, cause it was still fair. I didn’t wanna go up and, you know, Jack the price way up on them, but that added 30,000 a year to the NOI without having to spend money. So unlike an apartment, I didn’t have to go in and do a bunch of rehab work and spend a bunch of money and time and, and energy. It was a notice went out six months later, another notice went out and that added 30,000 to the NOI of that property. And so that just appraised out. So I bought that for 1.3 that just appraised out at just under 2.8. Wow. And did a refin on that. So.

Charles:
Awesome. Awesome. So let’s go back to kind of how you utilized seller financing to purchase many of your properties. And first off, explain what seller financing is. If, if people haven’t heard of it before.

Gabriel:
Yeah. So seller financing, it’s, it’s rather than getting a bank loan, you’re essentially asking the seller to be the bank. You’re asking them to carry the financing. And so the, the easiest way to explain it, I think is rather than making your mortgage payments to say a Wells Fargo bank of America or some other lending institution, you’re making your payments directly to the seller. So the seller is going from the position of the owner to the position of the bank and every seller’s in a different, in a different position. You know, when I, when I first started looking the seller financing I knew since I wasn’t bank financ, but my options were basically hard money, private money or seller financing. I, I, I read very, you know, or, or raising capital and I didn’t feel at the time you know, I knew nobody with money and I didn’t feel comfortable raising capital.

Gabriel:
I literally had only owned a couple houses. And so I just had decided, Hey, seller financing is gonna be my route. And I just started talking to potential sellers and, and owners of property and asking to them if, if they were interested in carrying financing. And, and what I found is there’s a lot of reason sellers want to carry financing. So most of the sellers who have carried financing for me, they’ve only asset for a long time. In most cases, they’ve self managed and they’re just burnt out. They’re tired of being landlord. They’re tired of being a maintenance person. They’re tired of dealing with tenants. And so they see it as a new level of passivity for them. And the, the advantage to me as a buyer is I can go in there in a most cases with a lot less money than a bank would require

Speaker 4:
To put down. And so that’s the, that’s the biggest advantage I think of seller financing is you can be as creative with

Gabriel:
The term as you and a seller is willing to get you know, you go to a bank and they’re telling you, Hey, these, these are the terms like you first, you have to qualify. This is a down payment, this is the interest rate. And in most cases, properties don’t pencil that well, or you have to put a lot of money down to get such a little return. And with seller financing, a property that may not work well with traditional financing still may be a good candidate for, for seller financing.

Charles:
Yeah. I’ve seen a lot with smaller properties now, smaller multi-family properties where there’s such a chunk for a down payment plus everything else. And I’m like this, this can’t cash flow for someone more than one or 2%. Yep. And it’s that’s kind of what I see in a lot of hot markets with smaller multifamily with people getting into it. But tell us why a seller would actually finance a property you are purchasing.

Gabriel:
Yeah, it’s a good question. And, and initially I, I didn’t know. Right. And it wasn’t until I started talking to different sellers and, and really just listening and hearing their stories. Right. And so what I found initially is sellers were either stuck on price down payment or interest rate. And I was very fortunate to not have any money. So I, I, and I, and I do say fortunate because it did force me to get creative. And so I would talk to some sellers at one, or needed a large down payment, other sellers. It was about the monthly payment. Some sellers were stuck on price. But typically the, the reason that I found the biggest reason I found that sales would carry financing is for one, they didn’t wanna pay the capital gain all at once. So in a lot of these cases, not all, but in a lot of cases, they’ve owned the asset for a long time and they own it free and clear.

Gabriel:
And so they, they don’t have the interest that they can write off on taxes. They’ve already appreciated the value of the property. So two of the biggest write offs they don’t have anymore. And then it’s the headache of dealing with the tenant. And so not only do they wanna, if they were to get cashed out by say a cash buyer, or even a bank loan paid them off. Now they’re paying a huge capital gain. The other part of that is a lot of these sellers, they’re getting older and they don’t wanna actively invest. So even if they were to do a 10 31 exchange, a lot of times these sellers are at a place and they’re investing life that they don’t wanna go actively invest into a new deal. And so this creates a scenario for a seller where they’re not having to pay the capital gains all at once. They don’t have to go actively invest or find a place to, to place that money. And they can continue to get that cash flow. It’s almost like an annuity for them. They’re basically getting a payment every month in some cases every month for the, for the rest of their life. And it becomes very, very hands off to them. It’s just a new level of passivity. It’s, it’s true mailbox, money for them.

Charles:
Yeah. The other thing too, is that you know, they’ve owned this for so long. They trust the asset. It’s not like you’re bringing some asset that they’ve never even seen to them. And Hey, time to fi you know, do you wanna finance this? And they’d be like, no, but they know you bring asset and they’ve had it for, you know, 25, 30 years plus in some instances, and they know how it runs, they know everything about the property. I mean, they know, you know, where whatever issue there is, they know exactly everything about it. And they know that it’s a cash flow machine. They know exactly how strong the rent are and everything else that goes with it. That’s why they’ve owned it so long. So it’s actually a no brainer for them, especially if you’re putting money down onto it, or if you’re going in, I’m gonna do a value add. And now they’re just like, okay, so my asset’s just gonna get more. There’s it’s gonna become you know, the value’s just gonna increase while you’re doing your work on it. And if I have to take it over, you know what I mean? Then I can, you know, it’s, it’s a win-win for me. So that’s something I’ve also found too, is that the longer they’ve owned it, I think it’s easier for them cuz they probably want that price and they’re willing to skimp a little bit on the down payment.

Gabriel:
Yeah, no, you’re, you’re exactly right. I think it’s a, it’s a piece that doesn’t get doesn’t get mentioned enough is yeah. Like when I was initially doing these, I was looking at what’s my worst case scenario. Now I had never missed a payment and never had to, I’ve never defaulted on the property, but I was looking, you know, risk versus reward. I did all these initial seller finance deals. It was all non-recourse notes. The worst case scenario I were to default on any of those early seller deals, they would just get the property back. And because I was going into these with, with no money, I had already, you know, earned cash flow. So I was looking at this okay, worst case scenario, I’ve cash flowed the whole time I’ve owned it. And if for any reason I had a default on this, they just got the property back. And so yeah, that the, the loan is secured by an asset. Like you just said it that they’re very comfortable with and they’ve owned for, for a very long time. And so I never had to be, you know, I was never in that scenario or in that position to have to give a property back. But if that was the worst case scenario, it’s not, it’s not a horrible scenario.

Charles:
Yeah. That’s awesome. And so you mentioned nonrecourse debt and I would like you to explain that, but as well, and I wanna kind of know together with how do you try and structure these seller financing deals?

Gabriel:
Yeah. So non-recourse really, their only recourse would be to get the pro the way that we had it written up, their only recourse would be they’d get the property back. And so they couldn’t come after me personally or any of my other, any of my other assets. If I, if I were to default then that all the, the only recourse would be to get the property back. Mm-Hmm

Charles:
<Affirmative> now you have, sorry, you have one of your attorneys. I imagine that’s very well versed in this that you have, right? All these contracts, this is very important because you’re actually drafting the mortgage paperwork versus a bank that has like a legal department doing it.

Gabriel:
Yeah. If, if it’s UN free and clear, sometimes the title companies will have an in-house attorney that I found an attorney that was had a lot of experience doing this. And so me and the seller both felt very comfortable with them writing that up. If there’s a loan on the property and you do it differently as a land sell contract subject to, it gets a little, little trickier and, and, and some more important legal language that needs to be in there. And in that case, I’m gonna have my own attorney draw that, draw that up. And I’m sorry, you asked something else about,

Charles:
Sorry. No, I, I mean, I’m just sorry. As something comes up, I just want to clarify so how do you try the real question was how do you try and structure a seller financing deal? So like you know, when you you’re speaking to them and you kind of want to explain to them, how do you, like, what’s the term you’re asking for? Where do rates start? Where do payments start and where do you negotiate to?

Gabriel:
Yeah, that’s, that’s a good question. That’s probably what I get asked the most is either, Hey, what’s your, what’s your script? And how do you convince or talk a seller into carrying financing? And the other part of that is that what’s typical terms, and I’m not this hard negotiator. Like, Hey, here’s the offer, take it, leave it. In fact, I, I really come in with just with trying to listen and just hear what are the sellers need. So I actually, you know, if I know they want to carry financing, I always start with like, Hey, if I’m dealing directly with the seller, Hey, are you interested in carrying financing? I keep it really simple. If it’s a listed property, same thing, Hey, is the seller interested in carrying financing? Would they consider carrying financing? If I already know the, the seller is willing to carry financing, I keep it.

Gabriel:
I, I keep it the most basic questions I say, Hey, what kind of terms would you be interested in? And I just shut up and I listen, and those sellers will talk, they’ll talk forever. So it’s like, I don’t want to, I’ve actually never convinced or had to educate a seller on what seller financing is. I, I, early on, I did think I’d done a few of these seller finance deals. And I did think, oh my gosh, this is amazing. Like, they didn’t even ask me for a down payment. They, they weren’t interested in down payment. I need to go out and educate all these sellers on the advantages of carrying financing. But then I realized I didn’t educate any of those sellers. They actually told me why they wanted to carry financing. They told me what terms they were interested in. And then I went back, looked over the terms they wanted and tweaked a few things to make the deal, to make the deal work.

Gabriel:
But I never go in with saying, Hey, here’s what I need or here’s my offer, or here’s what I want, cuz it doesn’t really matter what I want. I always go into with that question of, Hey, would you be interested in carrying financing if the answer is yes. I just say, Hey, what kind of term did you be interested in? I listen to what they have to say. I never make an offer right there. I take the information that they have and I go back and, and I, you know, put pencil to paper with, Hey, here’s what they wanted. Can I give them some aspect of what they wanted? Whether it be the price, whether it be the interest rate, can I give them what they want and tweak the other aspects of the deal to still make it work for me and really create that win-win scenario.

Charles:
Nice. Okay. Yeah. I’ve the times that I’ve like spoken about seller financing to owners, it’s you? I, I like say, Hey, I give ’em a percentage of down payment, this, that, and then they’ll say like, well, I think you’re a little low they’ll come back and just say, talk about one thing. Yep. They’re like, okay. The rate is what really matters to this person. You know what I mean? So it’s like all now I have to work on that. They don’t, they’re fine with this or they’re okay with this and they’re okay with this. It’s like that one outta three, like you talked about this is really what they want, and this is really what they want you to find, you know, to sharpen your pencil, let’s say in your underwriting a number for them.

Gabriel:
Yeah. And I, and I think people really want to you know, the, these sellers want to sell the property. And so I don’t ever wanna be interested where I’m trying to like talk them in or selling them on it. So like I’ve had deals where one in particular, the seller said it, it wasn’t even a specific interest rate. They just said a dollar amount. I need X amount per month. This is what I need per month for this property. And so it’s like, it was really easy to take that information and structure it, to give them what they wanted. Right. They what, they weren’t even stuck on price or down payment, or it was, it was a dollar amount. I had another unique scenario where I bought a portfolio of properties, a commercial property, and then several single family. And some multi-family properties from one guy.

Gabriel:
And his thing was, he said, Hey, I just need income for the next 15 years. And I have no family to pass this down to when I pass away. But he had a nonprofit organization that was very important to him. And so for him, it was very important that the structure was set up in a way where if he were to pass away, this nonprofit organization would continue to get those payments. Or if I, if he were to pass away and then I were to refinance or pay off that loan, that, that nonprofit would, would get, get those funds. Right. And so for him, it was getting that monthly payment while he was alive. And that, that organization got those payments after he passed. And it was structuring to give him what was important to him and still make the deal still make the deal work for me.

Charles:
Yeah. In these deals. I mean, you’re literally writing, you know, your, your, your council is writing these contracts. You can put whatever you want. I mean, my dad had a had apartment of that bought a property and he like used for part of the down payment, like an old BMW or something. Yeah. You know what I mean? So like you can wheel and deal to your heart’s content and to your, you know, the owner’s content of what you’re, what you’re trying to do and what they want. And it’s, it’s amazing what you can kind of what you can kind of work out with them. So that’s, that’s very interesting.

Gabriel:
Yeah. I never try to make them fit into my box. I really wanna know what is their box for their parameters. I mean, and, and can I make that a scenario where it’s win-win, I mean, I’ve done where anything from interest only payments to direct principle payments I’ve delayed payments, six months after closing. And a lot of it just comes down to like, what are their needs and, and what are your needs for the property? Can you marry those two things to really create a scenario? That’s good for both sides. I’ve never walked away from a deal feeling like, hell yeah, I’ve won. I got, I got the best of them. I mean, every deal I’ve ever walked away from especially with the seller financing, I feel that both parties feel good about it and are happy with the deal at the end of the day.

Charles:
Yeah. What I really find with these type of sellers as well is that they have other properties and they’re very integrated into that neighborhood or into that area. They know the other landlords too, so you don’t wanna screw anybody ever. But the thing though is that you definitely don’t want to win somebody that you’re gonna do, but you think, well, this is the only property they have, or you don’t know, usually that’s somebody, they they’re talking about 12 units and then they go, well, I have 35 other units in this area. You know what I mean? So it’s just like,

Gabriel:
Yeah, I think every seller who’s carried financing for me has had multiple properties and I’ve bought multiple properties from those sellers. And, and that, that relation, those relationships are important. I mean, I used to hand deliver you know, early on, I would hand deliver my mortgage payment to the seller at their other business because I wanted to build that rapport. I wanted that FaceTime with them when I a story that I share a lot when I went and refinanced a lot of these early seller finance deals, one of the sellers said, Hey, what am I gonna do with all this money? You know, when I, when I paid her off and I said, you could lend it back to me. And I had never borrowed private money. She had never lent private money, but she became my first private money lender. We had six years of trust. We had six years of a track record of me making monthly payments to her on time every month for six years. So of course she was happy to relend that money back to me. Right. Because we had that trust. We had that relationship. And so it didn’t end just because I just, because I paid her off.

Charles:
Nice. Awesome. So is it possible, I imagine not every property and owner you speak to has a free and clear property, obviously 15 plus years, we, you know, all these things you’d look for. I imagine when you’re looking for someone to offer you seller financing on their property, what happens if they already have a mortgage on it? Is there a way of structuring it that way? And how would you go about that? Say similar, they have a small mortgage on it, but they still have one.

Gabriel:
Yeah. I mean, I did that with the deal and I mean the majority of the stuff I have bought with seller financing, the owners did own the property free and clear. That’s, that’s pretty easy. It’s a note and trustee but you know, a way around that to not the trigger, the due on sales clause. So most banks have a due on sales clause mean if you transfer title they’re gonna call, they could call that note due. And even though it’s rare, it could happen if it, if it goes from a seller’s name to a new buyer’s name, and they’re still an existing loan that bank could potentially call that note due. Every state’s a little bit, a little bit different, but typically subject to, or a land cell contract would be and I’m, and I’m not an attorney, so I don’t wanna go too deep into this, but it essentially a legal structure to not to buy the property with seller financing and not trigger that deal on sales clause.

Charles:
Yeah. Which, which really comes to having a good attorney, which is kind of what I’ve kept on saying through this whole show, because I think it’s so important that find an attorney that’s done seller financing deals before that’s done creative financing, whatever you want to call it subject two deals whatever your particular situation is or what your goal is when you’re looking for properties and use them. And and then tell them what you want. They’ll put it into the LOI with you, or you can do that. And then you can provide for them when you’re doing the purchase and sale agreement. So find good counsel, always for whatever you’re up to. One, one last thing on this. How are you finding your seller financing deals? I mean, we’re talking about mainly deals. I would imagine a half million dollars, $2 million, something like this that you’re really focusing on. What have you found to be some of the best ways of of, of locating those deals?

Gabriel:
Yeah, I think, I think the best for me and, and everyone’s different, right? Like I think there’s a lot of ways to be successful in, in real estate. There’s a lot of ways to market yourself. I’m not the one that, you know, sends out a million letters every, every month. For me, it’s just been building genuine relationships just organic networking with people and telling people what I’m, what I’m looking to do. You know, a lot of, a lot of the seller, early seller finance deals I did, I found on Craigslist. I mean, and, and people laugh about that, but it’s funny because I’ll, I’ll jump on these podcasts and I I’ll get messages after saying, Hey, I went on Craigslist. So I just closed my, my first seller finance deal that I found on Craigslist. And so I’m not saying there’re gonna be, there’s gonna be a ton on there.

Gabriel:
I mean, it took me a year. But again, I, you know, I had that minimum wage job and each night spending a couple minutes on Craigslist typing in those keywords of owner financing, seller financing owner terms. I looked at every first sale by owner, I would call and just say, Hey, would you be interested in carrying financing? Some were some weren’t, but I kept having those conversations. So even the ones that were like, yeah, I need 50% down, you know, and, and I had no money when I started I still had those conversations cause it helped me learn the language. It helped me understand what different sellers wanted. And I just wasn’t, I wasn’t afraid to just tell people what I was, what, what I was looking for. I mean, to this day, I can trace every, every deal I’ve done.

Gabriel:
I can trace back to a conversation or relationship. And I, and I, and I can’t say that enough because I think, you know, the, the more people you tell whether it’s a seller finance deal or not, the more people you tell what you’re looking for. And especially if you can get specific the types of properties and the, and the neighborhood, and, and you start becoming the person that either it’s an agent or broker or a neighbor or a friend or whoever it might be that you’ve told you wanna be the person that they think of when they see that type of property for sale or coming for sale. So even going back to that very first house I ever bought was a friend of the realtor’s son. The second house was a guy at the gym that I said, Hey, I’m trying to buy more property. You know, it was off market 2006, the market was still hot, but I was able to still go buy a property and get a good price because I opened my mouth and told them what I was looking for. And so the majority of the stuff I’ve bought, it’s just because I’ve been willing to say, Hey, here’s what I’m looking for. Here’s the asset class. And here’s the neighborhood.

Charles:
One of you normally seen from the time that you contact or your first conversation with the seller and the time that you’re actually getting serious or putting, giving them an LOI are really like buying the property. Cause I imagine the times I’ve seen it, it’s been quite the process. You know, that I’ve been involved with, of these star financing deals, quite the process to, you know, of kind of nurturing and billing rapport before you’re actually buying a property.

Gabriel:
Yeah. It, I mean, it, it really does depend. I mean you know, I’ve, I’ve done ones that are, that are pretty quick when, you know, the, if the seller knows what they want, I can decide pretty quick. Like, are we close? Are we, are we so far off that it’s not worth pursuing? Right. Like if it’s a deal that I, I think makes sense to come in with say 10% down and, you know, they want 50% down and an interest rate that just doesn’t even make sense. You know, yeah. I might offer something. You know, and, and there’s times that I just know we’re so far off it’s, I’m not gonna spend a lot of my time and energy there other times, you know, I know pretty quick, like, okay, we’re close. Like this deal, what they want actually works, but maybe we just need to tweak a couple things. I, I don’t, I don’t try to overcomplicate it. I mean, for me it’s does the deal work, you know, is it close with what the terms that they want are, or are they so far off, it’s just not even worth putting the time energy into,

Charles:
Yeah. Okay. What are common mistakes? You see real estate investors make as a, as a coach and being in the business?

Gabriel:
Gosh you know, I, I mean, I think mistakes are an opportunity to learn. You know, for me, I’ve really tried to learn from others’ mistakes, you know, at, and I, I met a lot of people who lost a lot of money in 2008 and oftentimes they were speculating and whether that was on price or rent increases. And so you know, something I’ve done just to hedge and, and everyone’s got a different risk tolerance. I think I have a pretty high risk tolerance, but one of the things I’ve done to really, to hedge that risk is I, I make sure the proper’s pencil out the day that I buy ’em. I make sure they cash flow today. So almost everything I buy has upside potential. I, I buy most of the properties I buy are under rented, poorly managed. There’s some ASTE aspect of a value add.

Gabriel:
But I don’t rely on that value add. So you know, a good example would be, I bought an apartment complex where, you know, rent should have been at 1100. They were at 6 25. I, and I know that market, I have other homes in that market, other rentals, like, I know my numbers are solid, but I base it on the actuals. I base that property, that price and those terms on what the property was actually doing today in the last couple years. And yes, that property performs much better today, but that’s just the way I, I hedge my own risk is I’m, I’m not banking on that, that upside. I don’t rely on the upside to, to make the deal work.

Charles:
Yeah. That’s, that’s great. One thing is that I always tell people if you wanna really limit your risk in real estate, it’s have reserves and also long term fixed debt. So just what type of term are you? I imagine you have no prepay penalties and all these great things that are put into your contracts, but what type of term are you really outta the gates looking to get from a seller 10 years?

Gabriel:
Yeah, yeah. It’s yeah. I want longer the better. I mean, and, and sometimes, you know they’ll say, you know, they want something shorter but I’ll go and, and, and oftentimes too, like if they say every once in a while, I’ll have a seller say, well, tell me what you want. And so I’ll ask for a low price and a low interest rate and a long, long term, I’ll tell ’em to, to carry it for 30 years. And I’ve had sellers carry it for 30 years, but it still goes back to like, what are the, what are the sellers needs? And I think it’s, you know, the, the having reserved thing and going back to the risk, like, and, and, and maybe, maybe some of the listeners will have a hard time with this, but like my, when I started, I had no reserves, right.

Gabriel:
But I also didn’t have another option. I didn’t give myself a plan B. So I actually think having a job is fairly risky. I think not, not getting into real estate is risky. So I had a lot of people saying, oh, isn’t that risky? Isn’t buying those properties risky. You don’t have a bunch of money in the bank. And I said, I think it’s more risky if I don’t buy these properties, all the, what ifs that could happen was way riskier than what would happen. If I bought the properties, I knew buying the properties, gave me opportunities to create cash flow and, and potentially create this financial freedom for myself and not buying those properties. Weren’t gonna do that. So early on the risk of not doing the deal way, outweighed the risk of, of doing the deal. But again, those were no money down deals. And so to me, because they were positive because I wasn’t going and doing these big, extensive remodels, it was cash flow. First, these properties penciled the day that I bought ’em, they were cash flow positives and, and everything else, everything else would just work. Its work its way out.

Charles:
Nice. so what do you think are the main factors that have contributed to your success other than you went through kind of your buying philosophy and stuff like that, but what about, you know, personally main factors that have contributed to your success?

Gabriel:
Yeah. I mean, I, I, I think I wanted it, you know, I, I think that you know, financial freedom and building wealth, I, I really do think is a, it’s a choice. And I think you gotta want it in your mind. Like, I didn’t know anything when I get started, I was just clear and convinced that real estate would be my path to financial freedom and there’s people that are doing it. And so I’d figure out the how later, but I had to be convinced in my mind first. So I was a hundred percent sold in my mind that that would be my path. And I would figure out how later. And it’s like, I’m still fi I mean, I’ve been doing it for 15 years and I’m still learning new stuff. Like I’m not afraid to learn. I’m not afraid to say, oh, I don’t know what that is. And, and keep learning. I didn’t even think I liked learning. I didn’t think I even liked education until I found something that I was actually excited about learning.

Charles:
Yeah, definitely. I, I can agree with you totally on that. So how can our listeners learn more about you and your business Gabriel?

Gabriel:
Yeah. my website’s Haml investments.com and then I’m, I’m pretty active on Instagram. And it’s just at Gabriel, our Hamel.

Charles:
Okay, awesome. I will put those links into the show notes and I wanna thank you for coming on today and looking forward to connecting with you in the future.

Gabriel:
Absolutely. Thanks for having me on. I appreciate it.

Charles:
Have a great week.

Gabriel:
Yeah, you too.

Charles:
Hi guys! It’s Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in get involved with real estate, but you don’t know where to begin, set up a free 30 minute strategy call with me at schedulecharles.com. That’s schedulecharles.com. Thank you.

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About Gabriel Hamel

Gabriel Hamel is a Real Estate Investor who is passionate about Real Estate Investing, Business, Financial Freedom, and Time-Freedom. Gabriel focuses on creative strategies to acquire investment Real Estate and this creativity, drive, and determination has contributed to him amassing a multi-Million-dollar Real Estate Portfolio consisting of Single-Family Homes, Multi-Family Apartments, Commercial Real Estate, & Mobile Home Parks. Gabriel is a strong advocate of financial literacy through self-education. Family, Health, Wealth, and Happiness are most important to Gabriel.

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