5.17 | Decentralizing Real Estate Through Seller Financing with Mel Dorman
>> Isha Vela: Welcome to Waking Up Wealthy, the podcast for visionaries and rebels who are ready to revolutionize their relationship with money and create powerful collective ripples with the money they make. I’m your host, Isha Vela, trauma psychologist, somatic practitioner, financial professional and minimalist, bringing you practical money tools, unconventional wealth perspectives, and Aquarian era business strategy to guide you in building wealth that’s aligned, ethical and empowering. Let’s wake up to the true meaning of wealth together.
If you’ve ever wanted to purchase a home and didn’t know how you would be able to save for a down payment, or if you’ve wanted to diversify into real estate and haven’t known how to break into that and you want to do it from a place of heart and community care, you’re going to want to listen to this episode with Mel Dorman. They are a former social worker turned financial activist, real estate investor, and author of bank on your neighbor, which is a book about seller financing. And Mel has been selected as a TEDx editors pig who’s built a multi million dollar portfolio using seller financing and now teaches others to do the same through the seller financing academy. And that’s a program that helps everyday people buy real estate without banks, while also helping sellers turn their equity into steady income. It’s incredible. It’s going to blow your mind. And their mission is to decentralize wealth and strengthen communities through Win Win partnership. I’m so excited for you to listen to this. Let’s get into it. Hi, Mel, I’m so glad that you could. That we could sit down together here and have this conversation because I, you know, in full disclosure, like, I sit down with people all the time who wa wantna buy homes. And it’s just I see the prices going up and sort of what they’re like, people are having to save, you know, 10% of a million dollars or $500,000. And when I came upon your Instagram feed, I just was filled with this, like, I felt your rebel spirit and I got so excited. So this is for me, gonna be like educational and also for the people that I serve and listen to this podcast. It’s going toa be incredible. So thank you for being here.
>> Mel Dorman: You’re so welcome. It’s a pleasure to be here and to bring this to your community. So thank you for the opportunity.
>> Isavela: Yeah, absolutely. So you, tell me about seller financing. Cause that’s what you focus on. Like that’s the, that’s your work. So tell me what that is and how it works and how you came into it. I know that’s a big question, but wherever you want to start. And we’ll, you know, we’ll pick up the threads.
>> Mel Dorman: Yeah. So maybe I’ll start a little bit about what got me into seller financing to just get around on who I am. But basically I was like most Americans, I came from a blue collar, middle class family. My parents were construction workers and I was actually a social worker. I used to do humanitarian work. And When I was 23 years old, my dad, who’s the breadwinner of our family, he was diagnosed with Alzheimer’s. And as a 23 year old it was a big wake up call to realize that I had more money in my checking account than my parents had, which was $10,000. And doctors told us it was going to cost $7,000 a month to take care of my dad. And I was suddenly in this crisis, with my family. And that’s what prompted me to start to learn about how money worked. I was a social work, I didn’t care about money. I wanted to be away from the system. I didn’t like capitalism, I didn’t want anything to do with that.
>> Isavela: Right.
>> Mel Dorman: But I realized that I needed to understand how money works so that I could help my family and help myself, not to be in the same fate as my dad was seeing. So I started reading all the books, listening to all the podcasts, trying to understand how this thing, real estate, works. And I sent out what I call love letters. So just letters to my neighbors, trying to get to know them, trying to find somebody who would be willing to sell to me directly because I wasn’t a very good buyer, I didn’t have very much money. and I eventually stumbled across a person who was an out of state realtor selling her parents duplex and we put together a deal. And I’ll never forget when the appraisal came back and it was $50,000 more than I was paying for it and the light bulb turned on. Wait, $50,000? That’s what a social worker makes in a year. And I’m making that because I am just working directly with somebody and they’re selling it to me at a discount because they’re super happy. They’re making a bunch of money too. So they weren’t like very greedy about it and the light bulb switched on. I realized that real estate was a vehicle to build wealth. unfortunately my dad passed away just months after I bought my first property. And so all of my efforts to try to help my Family were in vain. And I realized when my dad passed away that this was my turning point. I didn’t want to clock in for anybody else’s dreams anymore. I just wanted to create my own path to financial freedom so that I could do whatever I wanted and I wouldn’t have to work the rest of my life. So I, quit my job. $16,000 in my checking account. Wild. Don’t recommend it. Talk about your nervous system rough. and so I did that, though, because I was all in, because I just discovered this thing called seller financing. And once I understood that this thing existed, it changed everything for me. And you’re probably, what is seller financing?
>> Isavela: No, but I just want to pause for a moment because, like, you took a huge risk there, like, when you’re father was diagnosed. And I just. I feel chills because it’s like, it’s such a. Right. It’s such a, it’s so confronting. Like, when a parent is sick in that way and vulnerable in that way, and you’re just like, I want to help. And then you’re also feeling like you have your own limitations with money. People feel like that all the time. It’s like, I want to do more, but I can’t because I’m, you know, I have this, work that I have to do and I don’t have. So you took a huge risk in, like, with the educ education, educating yourself and then reaching out to your neighbors and just like, all right, let’s freaking do this, and. And writing them love letters and really figuring out another way as this was all happening. So I just wanted to, like, acknowledge that. And, yeah, like, I’d love to know more about seller financing. I did. You know, I’ve been doing my own research, obviously. but. But yeah, like, when. When you. When you sent out love letters to your neighbors, like, this was the first time you were doing this, and did you feel confident doing that? Like, yeah. What was the process?
>> Mel Dorman: Yeah, I definitely didn’t feel confident. If there’s anything that entrepreneurship has told me it taught me is that you should just jump in and learn as.
>> Isavela: You go do it.
>> Mel Dorman: And you’re. You’re gonna learn by failing, and you’re gonna fail in front of people. And as long as you’re good at doing that, you get good over time. So.
>> Isavela: Okay. Okay.
>> Mel Dorman: So, yeah, I just. I jumped all in. And, in fact, I had about $16,000 in my checking account. I quickly spent half of that on a boot camp learning how seller financing worked as one Doesing through, ah, free falling through air, trying to figure out a way out of this.
>> Isavela: Right, right.
>> Mel Dorman: but you know, it worked. I learned, I learned what I needed to know at that two day boot camp and I brought it back to Portland, Oregon where I live and I started immediately implementing it, trying to find sellers or neighbors who had equity in their property. So the reason I was doing that is because seller financing is really where the seller becomes the bank. So as long as they own the property outright or they own a lot of their own property, they have very little debt on the property from a bank, then they can lend that directly to you in installment payments. So in other words, instead of sending a check to Chase bank each month or USA Bank, I’m just making it to a neighbor down the street and I’m slowly buying their property from them. But I have title day one, so I own the property and I paid them instead of Wall Street.
>> Isavela: That’s amazing. And that’s so revolutionary to just like bypass the banks. Yes, because. Yeah, because when you do the debt calculation of how much you pay on a home, when you, even when you have like a 3%, 3 to 5%, interest rate, y, you pay almost double, close to double, sometimes double. And so this is, you know, to be able to pay that to someone or to be able to pay less to someone, and do it over time and not like be house poor when you actually purchase the home. That’s an important piece too. That’s revolutionary.
>> Mel Dorman: Yes. And when you’re writing the terms, when you’re creating the mortgage yourself between you and another person, that means you get to pick your interest rate, you get to pick how much the down payment is, how long you have until that you pay off the loan. Every single component of the mortgage document is something that’s negotiated and built together. So in other words, you know a lot. The reason why people can’t afford today’s housing is not just the prices. It’s because interest rates are where they’re at, at 6 or 7% and that makes the overall payment unaffordable for most peoplees. But if you have the same price, or I even offer above asking price, often I just do a better interest rate and I do something that’s called interest only payments, which means that I’m not paying principal each month and it drops the payment down by about a third. So Instead of paying $3,000 a month for your home, paying $2,000 a month of home for your home, and you’re saving that $1,000, which can go towards groceries or diapers or whatnot. And when it comes to the end, yes, the full amount is due, but most people can refinance at that time or sell and make a profit. Buy the next home. You know, when we have an amortized loan with a bank, you’re hardly paying any principal. You’re mostly paying interest. If you’ve ever seen an amortization calculator, it, it’s very heavy interest for the first five, six, seven years and that’s how long most people own their home. So it’s basically renting from the bank. You’re spendingorb amounts of interest only to stay in your home. But if you do interest only payments, it drops the payment down a lot and it allows you to have a much more affordable payment.
>> Isavela: Wow, that’s incredible. And I saw, I saw in doing some research that you can start, you can start doing this with just about like don’t anywhere from like 2 to $4,000.
>> Mel Dorman: O. Yeah.
>> Isavela: As a down payment. Like can explain that. That’s amazing.
>> Mel Dorman: Yeah. So I’ll tell you about my first deal to kind of give. and I did this on the TED stage last fall and it got editor’pick so if anybody wants to check that out, It’s a great TED talk.
>> Isavela: Okay.
>> Mel Dorman: Almost a quarter million views already, but basically, maybe eight, nine years ago, I was trying to find my first seller, Finance Deal. Just quit my job, $16,000 in my checking account. Right. I’m broke. I’m the worst buyer. No bank could ever give me a loan whatsoever. I could, I couldn’t even I couldn’t even qualify to rent a place. Luckily I owned one at the time, but, you know, so I’m the worst F ever. And I just started cold calling neighbors, sending out letters, that sort of thing. And one day this guy named Kelly answered the phone and I was looking for a guy named Joe. And Kelly tells me, well, Joe’s dead and I used to be his attorney, but you know, nice to meet you. So, okay, so we hit it off over the phone. It turns out that Kelly was a bankruptcy attorney and I was former social worker. I was helping people out of foreclosure as a realtor at the time. So we had a lot of the same values. We wanted to help people on the margins. So we became friends. We got to drink that night. You imagine cold calling somebody and they asked you out. And he’s a 65 year old guy and I’m a 30 year old lesbian. Like we’re not like that. But we love each other today dearly. but we just met up and a few months into the friendship, he texted me one day and was like, hey, I want to. I want to sell my triplex. Could you give me an evaluation for what it’s worth? So I looked it up on my phone and I could see right then and there that he’d owned it for 15 plus years. And I knew that meant he had the most important ingredient that I was looking for, which was equity. Equity to lend me. So I had it top of mind. I was like, okay, this is going to be my first seller finance deal. And when we walked the property, before I could even say anything to him, he turned to me and said, I’d like to sell or finance this to somebody. And it was like, it was like manifestation. Like right then and there, I was like, oh, my gosh, I’ve been saying this in my morning affirmations for six months. And you just said it back to me like, this stuff works. So, you know, that night we just went to a bar and we sat down, we talked about it. And at first he was being very reasonable. He was asking for 10% down, which would have been $75,000. Now, again, I have 15, $16,000 in my checking account. So I’m that so quick on my feet. I just asked him, you know, I was like, you’re an attorney. What would it cost for you to foreclose on me? Like, if I don’t pay you, what would it cost to get the property back? And he thought about it for a second. He’s like, about $15,000. $15,000. That’s it. You know, you hear the word foreclosure and you think, oh, this isn toa be this epic, really expensive endeavor that most person, you know, human beings could not afford to do not. It’s $15,000. So I basically, well, why don’t I give you $15,000 as the down payment? And if I don’t pay you, you can use my own money to take the property back. So your security is built into it. And he thought that was fair and he agreed, which is surprising.
>> Isavela: That is clever af, by the way.
>> Mel Dorman: Clever was right on the spot. And, you know, I didn’t have $15,000 either, right? I was living on that, so I only solved half the equation. So afterwards that night called, I called a bunch of friends and this lesbian couple that used to mentor me in LA. They said they lend me $10,000. So I was like, great. I can come up with the rest. So at the closing table, I brought 5,000 of the down payment, remaining down payment, and I brought $2,000 for closing costs because, unlike banks, it’s not 10 do $20,000 for closing costs, it’s $2,000 for an attorney to draft a document that’s five pages. Like, it’s so simple.
>> Isavela: Yeah.
>> Mel Dorman: And anyway, so I get to the closing table and I realize two of the three units are vacant. And I go, okay, Kelly, how am I supposed to pay you when I have no money coming in this month? You know, like, what am I going to do? So again, everything’s negotiable. So I said, well, why don’t we just delay the first payment by two months. We can take that money, put it on the principal balance. He’d make interest on interest. It’s a good deal for him too. And in those two months, I recouped 6,500 of my $7,000 and I was all in. $500 on a triplex. And a great part of town in Portland, Oregon. And it cash flow day one because of those interest only payments. So after a year I paid off my friends at $10,000 at cash flow 1,100 doars. Today it’s cash flow is around 2,500 do a month and it’s an asset in my portfolio.
>> Isavela: That’s crazy.
>> Mel Dorman: Yeah, doesn’t take a lot of money, just takes a, lot of creativity.
>> Isavela: But you, you knew, you knew enough about how seller find anding work to be able to be scrappy and like quick on your feet and be able to say like, well, how about this and how about that? Right? And to negotiate that sweet deal. And obviously you had like amazing community around you to support you as well. So I think that, that I think that makes a major difference is having the education piece to be able to ask the right questions and right. you need the other person.
>> Mel Dorman: You need what you need to have the financial literacy to do this, you know. Exactly a year studying how real estate worked. And then I spent another, you know, several months just understanding how seller financing worked. And we spend lots of time in school. Right. A lot of people go to college, they get a master’s. We spend like 18 to 25 years being educated. And so spending a year and a half learning how real estate worked, learning how I could buy properties without banks and just use people. And by use, I mean help people their requirements, like sends their kid to college. Like it only took me about a year and a half to Understand how it all worked. And then it radically changed my whole life because after I did that first deal, I went on to buy 34 rental units this way. And I was able to retire in five years from being a social worker, quitting my job, saying goodbye to my father at his hospital bedside and saying, I’m not going to let this be my life. To fast forward five years, 34 rental units, six figure financial freedom, get to be a stellar landlord, take great care of my tenants.
>> Isavela: Right.
>> Mel Dorman: Don? like a community member who’s building up people and also just having these connections with sellers that really is mutually beneficial.
>> Isavela: Yeah, there’s something very sweet about that part of the process too. Of just like human to human. Right, not human to institution. of just kind of like, yeah, like what would be good for you? And then what would be good for me? It just feels very relational and very like just thinking about the principle of reciprocity and that community care piece of just like, yeah, like I know you and I’m selling to you and we’renna make a deal that feels good for both of us.
>> Mel Dorman: Yeah. You know, we live in this capitalist society that constantly tells us there has to be a win, lose, that like in order for you to get ahead, you have to get one over on somebody or you got trick them or you some sort of extractive process. And so we have that lens, that’s all really we can see. And we think real estate investing has to be that. But I think because I came from a humanitarian background and a social work background, those ways, those strategies just didn’t really appeal to me. You know, I didn’t want to just find somebody down and out, take advantage of them, beat them up on the price and then quickly flip the property, make a quick profit and gentrify the neighborhood. And then like, wow, look at me, I’m a real estate investor. Like that, that path didn’t sound very exciting. Yeah, this path of, let me go find people who are responsible in their community, who have been landlords for a long time, own their home for a long time, they understand responsibility and they are my equal, they are my partner and I’m not getting one over on them. I’m building a strategic long term relationship where I’m invested in their future and they’re invested in my future and there’s a financial relationship there that is interdependent and so other. The seller is not trying to charge me, know, 10% interest because if I fail, they fail. Right. If I provide good housing for the tenants Because I’m paying so much interest, if they’re exploiting me, that’s going to end up, the whole thing fails. Right? We can’t take care of the tenants, the property and they lose. So really it’s a relationship that’s built on, I want to make sure that they succeed, that they get the retirement that they need so they feel comfortable saying yes to this deal and it needs to cash flow for me so it’s a sustainable project so that we can take good care of our housing.
>> Isavela: And when you say, when you say the thing about retirement. So they’re selling their home and what you mean is that they’re making enough money so that they can like have their retirement that they can sort of retire with that money.
>> Mel Dorman: Yes, exactly. So it’s basically turning their equity into an income streameses. So I’ll give you an example. I had a woman, named Cynthia that came to me about March and she said her mom had passed away and left her triplex and a duplex. And as I’m on top realtor in Portland too, I have a lot of experience with transactions obviously. And so I met with her and I told her the triplex is probably worth this, the duplex is probably worth 550. But I said hey Cynthia, how would you like to make 610 on that duplex instead? And her eyes got really big like what, what are you talking about? And I said well if the property came with financing it would open up the buyer pool and there would be more demand for it and we could probably find a buyer who was willing to do interest only payments. And that means we could charge them sixl hundred ten and our payment would still be less than a borrower with a bank who was paying 550. So even it was 10% more essentially it was still cheaper for the borrower. And so she said that sounds great, like I would love to sell the Property to make 10 more. So she, in fact I know who could do it. the tenant, his name’abdul and he’s a doctor, he makes 350 a year. He’s been talking about, you know, renting out the bottom unit for his mother in law to move in, because they live walking distance to the mosque and he’d love to have everybody under one household. And so said but the problem is he’s Muslim and he can’t pay interest. His religion bars him from doing that. And so I said well that’s no problem because we write the contracts here, we write the mortgage, we can do whatever we want. And so I called up Abdul and I said, Abdul, would you like to pay a 0% interest loan and buy this property from your landlord? And he’s like, yes, of course. And so I said, okay, well how many years would you like to buy this over? And he thought about it like seven years. And so I just got a calculator out and I estimated what would be about 6% over seven years. And I took that and I added it to the principal balance to the price. So he was doing a 0% loan with a higher price. So would it would adhere to his religious principles?
>> Isavela: Yes. And it would still be like, like an interest rate, but not.
>> Mel Dorman: Yeah, exactly. Yes. She’s still able to afford to sell it this way to him and he’s able to get in without violating his belief system. So basically all in. Cynthia sold it for not 500ars 50, for 725 over seven years. And Abdul is now the owner of this property and his mother in law is moving in downstairs and they can walk to the mosque together each week. And this is the power of creative finance. When we don’t lock ourselves into what the bank says, who’s allowed to buy, who’s allowed to have ownership in this country, who’s allowed to build? When we stop believing those myths and we start to take control and agency in our own lives, neighbor to neighbor, we can solve problems together just like this.
>> Isavela: Absolutely, absolutely. And do you feel like, do you feel like enough people know about seller financing so that you know when you are sending letters to your community that people kind of like they understand what you mean with that? Like, yeah, yeah.
>> Mel Dorman: So’get it. Well, sometimes. Okay. So generally most people, especially folks that are my age and younger, don’t have never heard of seller financingkay. Very niche. It’s like in the real estate investing, community, it’s in the rural communities, it’s in selling businesses, it’s in selling commercial property. People who have an understanding of money tend to understand what solar financing is versus your general public does not. And so when you’re sending out, when I send out my love letters to people, I’m not leading with, you do you want to do a seller finance deal with me? That’s like showing up on a first date and being like, would you like to get married? Like just whoa, whoa, too fast, too much. Right. So we’re just leading with I just want to get to know you because I’m interested in buying your property. I want to go on a date. Right. When you’re you’re starting to get to know them. You’re learning their values, learning what they need, learning if they’re really a candidate for seller financing. Maybe they don’t even have equity. Maybe they’re not the right person for this. You’re building a relationship and it’s through that relationship that you start to discover what are the green flags or the red flags for this person being a good candidate. And they, as you start to reveal those, those become clues that you bring back into the conversation. When you present your offer, for example, might, I might ask somebody and say, okay, so it sounds like you don’t want to be a landlord anymore. That’s a green flag. They want to sell the property. Sounds like you don’t want to do what’s called a 1031 exchange, which is where we sell one rental property to buy another one very quickly to save taxes. They don’t want to be land, they don’t want to do that. Great. That’s a green flag. you want to, you like passive income, right? You’ve enjoyed mailbox money, but you don’t want to be a landlord. You don’t want to deal with tenants and toilets anymore. Okay, that’s another one. Right. And I slowly, just one by one, discover with them in these conversations, is this a good fit? And once I’ve gathered all those clues, then I bring it back in an offer. And this takes multiple meetings. This is not one time. This is not a phone conversation. This is not one conversation.
>> Isavela: right. This is nurturing. Y.
>> Mel Dorman: This is a relationship. This is not a transaction. So this is over many weeks or months just getting to know them and understanding. And then basically I just bring it back in two different offers. It’s like, hey, here’s your seller financed offer. It’s been custom tailored to meet everything that you’ve told me. It has this, this, this, this and this. All the things you said. Or there’s this bank finance offer which is going to be cheaper because I the interest rate and because the terms I can’t quite get there with you. So there’s this offer that boilerplate and there’s this offer that’s custom tailored to your needs. And I think when you have that deep listening and that authentic and genuine relationship with somebody, this one becomes very appealing. The seller finance one becomes very appealing if they’re the right candidate.
>> Isavela: That’s amazing. And I think that, yeah, you bring, you bring that wonderful point again of like, this is a relationship and this is again like about care. This is not a Transaction it. Right, there’s a transaction is part of it, but it really is an exchange at the very foundation of it. And yeah, getting to know like, what are your needs, what are your, what are your sort of goals or desires about like, you know, selling this property? Yeah, that makes a lot of sense and I love them. you know, you talk a lot about decentralizing Wellalth.
>> Mel Dorman: Yes.
>> Isavela: Yeah. Say more about that.
>> Mel Dorman: Yeah. So, you know, a lot of our economy right now is really made up of a version of capitalism that is called shareholder capitalism. So you know, this is in juxtaposition or in contrast to what we used to have, which was more of a, stakeholder capitalism. So I’ll describe the difference. So stakeholder capitalism. Think mom and pop shops. You know, they, they know their customers, they know their employees, their suppliers, and they know the neighborhoods that they’re working in. And so when they’re making business decisions, they’re thinking about each one of those, participants, those stakeholders, and they’re making decisions for everybody. Right. With everybody in mind. The problem is we’ve moved increasingly from the stakeholder version of capitalism to what’s called a shareholder version of capitalism. Now, shareholder is really like a corporation or a financial institution where the CEO is responsible not to the employees or to the customers or to the neighborhoods that their businesses are in. That’s not their focus. Their focus is they report to the shareholders. So basically shareholders have one objective. They want to make sure that their stock price grows every, every quarter. That’s what they want. So the CEO is then chasing profit margins at whatever expense so that they can keep and maintain the capital in the company. And what that means often is that it’s at the expense of the workers, of the neighborhoods, of the suppliers, of the people in the equation. And so with beautiful about seller financing is that it’s a return to a stakeholder version of capitalism. It’s not hedge funds buying up neighborhoods, renting out houses and apartments to people forevermore and making all of their business decisions on what is the highest rent we can possibly charge. That is a profit version. That is a profit driven version of real estate. It is, it is people, people first version of real estate where we’re making our decisions because we know each other. I know the seller, I know the tenants, I care about them. When they lose their job, I’m trying to help them, you know, hey, burn through your security deposit while you look for another job. You know, like I’m going to have those types of concessions because I’m a human Being who cares about another human being versus, corporation’never going to do that. And so the way that we can change our economy and our version of capitalism and how we do business together is to return to this more stakeholder model.
>> Isavela: That’s amazing. Yeah, no, that’s fantastic. And, you know, just thinking about, you. So I’m jumping around because there’s so many pieces of this that I want to understand and I want the listeners to understand. you talked about in one of your. I think that’s so important, the piece around, like, bringing it back to community and people again. Right. Sort of like reversing the major damage that has been done by stakeholder capitalism. And then the piece that I like, you know, a lot of people are worried about, like, okay, so what if, like, you have to. The person that you are selling the home to, you know, they go through some difficult life things and they can no longer pay, make the payments? Right. What happens then?
>> Mel Dorman: Yeah, so just like a bank would, you’d have the authority to be able to foreclose. You’d also have the authority to be able to work out different terms. So, for example, you imagine, like, during COVID when there was, you know, a lot of landlords weren’t unable to pay their bills because their tenants were unable to pay their bills. They were unemployed. banks did all of these workarounds, right? They remodified the loan agreements. They allowed for several months of just forbearance of not paying it. Well, people could do the same thing. You know, we don’t need a big institution to do that. Like, I could have just as easily had any of my tenants stopped paying. I could have called up Kelly and said, hey, he having a little problem right now. We have this thing called Covid. Could you give me a few months? And it’s really a person on the other end who’s making that decision. Not a huge bureaucocrtic system, not a legal policy that has to go down the pipeline. Not a corporation that has to say, you know what? We care about people enough to do this. Not all that white tape’s literally another human being saying, okay, yeah, that makes a lot of sense. Let, let’s work around that. So, I think it’s a, you know, rebuilding the fabric of our communities through these interdependent relationships, and not only is good for the financial health of our communities and really creating a more sustainable and regenerative, model of wealth building, it’s also socially really important because we start to trust each other more because we have a vested interest who we’re paying our payment to each month and who’s receiving it. So it’s really about restoring social trust. It’s really about rebuilding our communities and stop overlying on institutions because really we can rely on one another.
>> Isavela: Yeah. And even when I think about Mel, like I’ve lived in neighborhoods where I don’t know my neighbors. yeah, right. Like I think the experience of a lot of people is that people don’t really talk to each other. I think the communities where everybody knows each other is a little bit more rare and just, you know, even this model is supportive of like that more communication and like, oh, I see you and I know you and Right. Even that aspect of it that you don’t, it’s not really like something that you’re aiming for, but the result is that you do know your neighbors better. You are more aware of who’s in your neighborhood and you kind of work together more. Like that becomes a, ah, lovely side effect of all of this as well.
>> Mel Dorman: Yeah, yeah. You start to get to know people’s stories and you start to care and be invested in them. You know, we such big sprawling cities in modern worlds, it’s very confusing on who’s trustworthy and who’s not trustworthy. And so, you know, our very tribal brains can hold about 150 relationships and assess about 150 people of like, is this a safe person? Should I have them on the inside? but after that our brains get really confused in what modern day capitalism has done with that is it has put brands and it has put colors and mottos and it is convinced us that we can rely on this company because we’re used to it. We see it at the store all the time and like it’s very like we see it in our household, we see it somebody else’s household. We develop a relationship with a brand familiar. And so what that tells us is we can’t trust our neighbor. We got to trust this corporation who knows what they’re making. I’ll just go buy this instead. And it’s like the more that we make those decisions, the more that we become disconnected to one another. And I think a simple way out of that is to, you know, seller financing is a great way to start investing back into your own community and not, not over relign institutions.
>> Isavela: Yeah. M. And you wrote a book about this called bank on your neighbor. Can you talk about that a little bit?
>> Mel Dorman: Yeah, yeah. So you know, I came up with this idea about A year and a half ago, I reached my financial freedom at 35. I decided, you know, joy, keep scaling and just buying more and more and more real estate. Or is this enough? And for me, it was enough. I felt like, it’s not a race to the top. It’s about having enough and how do I want to spend my time. And so I pivoted from building wealth to creating reach and impact. And I spent a lot of time thinking about who would I want to empower with this knowledge. Who would I want to know, how to build wealth. And for me, that was women, people of color, trans queer, marginalized communities. because those are the folks that don’t have books written to them about financial literacy. there’s this very broy, extractive, not values aligned way of talking about real estate that is predominant in our culture. And so I wanted to bring a very different perspective. I wanted to teach people how to do real estate in a way that was additive and not extractive. That really was people centered and not profit driven. And so, I wrote bank on your neighbor as a guidebook on how to do all of this start to finish. I wanted to empower people. And so, so, this is my personal journey. It’s a, a little bit memoir, It’s a little bit, educational. It’s a lot educational. And I basically just walk people through the idea that there are these different myths that keep us stuck in our financial illiteracy. Ideas, like money will make me bad, or that I need a bank to buy a home or you know, debt is bad. There’s these ideas that float around that are common sense that actually keep us stuck in cycles of proxy without being aware of it. And so first we have to deconstruct these ideas that keep us, entrapped in this social conditioning and to be able to start to build something new. So this deconstruction before rebuilding and then the middle of the book is really start to finish. How do you go find somebody in your neighborhood? How do you negotiate a win win deal? How do you use super creative terms to do some, really cool stuff like move debt from one property to another, which is how I quickly scaled my portfolio. And it’s got just some really nerdy, fun real estate stuff in there. And then, yeah, I just basically I’m teaching people how to do this process with their neighbors.
>> Isavela: That’s amazing. Amazing. And you also have an academy. You also teach people like, you know, in communities, like one to many kind of things. So tell us about that.
>> Mel Dorman: Yeah. So this year, I knew my book was going to be done and I did the TED Talk and I was like, okay, what is the next thing to really empower people? And I thought the best way to do that would to create an academy, an online learning platform where I’d invite people from all over the United States. And I even have students who are interested in different parts of the world to learn this process side by side. Because, you know, when I learned it, it was at a boot camp. It was two days. It was, good luck, hope you got everything. Here’s two worksheets. You know, I hope you know how to do it now. and to be honest, 90% of the people that I graduated with didn’t do anything with it. They left that boot camp and it was just fun knowledge. They accepted and it didn’t change their life. And so when I went back and volunteered after I’d reached my financial freedom, I realized that. And to me, what stood out about why I was different was I just built community. I built people. I built a small community of people that I worked. each week we would just sit together at breakfast, talk about our deals, encourage each other, keep each person accountable. And success just became through osmosis. It became sitting next to these people. It was normal to go ask 100 people this week if I could buy their home. It became normal to sit in a living room and talk about amortization schedules. You know, it was just, it was like they modeled it and I modeled it. And slowly by slowly, we built our portfolios. And so when it came to teaching other people how to do this, I knew it had to be within the context of a community so that people could model the behavior and really create a new imagination for possibility. I mean, we have to see it in order to believe it. Often we need to be able to see that other people are successful at this before we believe it’s a possibility for ourselves. So I think having a cohort based model has been really successful for that reason. So this year I have already 70 students in my program. they’re out sending mail, they’re meeting neighbors. I got folks that are pending on 10 plexes that they’ve only had one rental property before, and now they’re like, oh my gosh, I’m in conversations to buy at 1.8 million dol 10 plex that’s going to cash flow 25 grand right off the bat, like just working out deals with their neighbors and structuring terms like this and taking really taking the baton from a tired landlord who’s maybe in their 70s and 80s, who has a big portfolio, who understand seller financing because they were alive during the 70s and 80s when seller financing was very popular because interest rates were 17, 18, 19%. So you know, there are millions of boomers out there right now in the United States who have a lot of equity, who have a working knowledge of how seller financing works. They are the folks who have done it. And if you find those people, they often want to do a deal because they understand how lucrative it is to be the seller.
>> Mel Dorman: M often’how they bought their first home. You know, that’s how first home, my seller, that’s how he bought it. Really? Very common.
>> Isavela: Yeah. Wow, that’s incredible. And so you re, your seller financing academy has rolling admission, is that right? So people can join any time?
>> Mel Dorman: Yes. Yeah, yeah. You just jump on a call with me, I’TELL you all about the program. Everything that we do, but the nuts and bolts of it is I help you do your first deal and I walk you through the whole process. We’ve got group coaching, individual coaching, guest speakers, 110 videos, worksheets, deal analysis, calculators. I’m really taking the person who has a good heart and is gritty and wants to try something new and starting them from no knowledge whatsoever all the way to the top through real estate. And I have people that, you know, they’re, they’ve never done a deal before and I have folks that have a hundred doors already. So like it’s, it’s a wide range of, real estate entrepreneurship. But what s is we’re all in there trying to do ethical and sustainable wealth building.
>> Isavela: That’s amazing. I’m just so, so grateful that this knowledge is spreading and that more people are learning about this and that you are spearheading that, that effort. I’m so, I’m excited for people to do more of this.
>> Mel Dorman: Yeah.
>> Isavela: Thank you so much for sharing today and obviously I will include all of the links and the links to your ig because your, even your social media is so informative already. Right. Like you, you’re very like open about like how you can do this even there is it away. Exactly. You’re delivering knowledge like giving it away for pries. So amazing. Thank you so much for this conversation about this has been just so valuable in so many ways.
>> Mel Dorman: Yeah, thank you. Asish, it was a pleasure being with you today and I’m just like so excited for your community. I hope you get tons out of this. And yeah, hit me up if you ever need anything.
>> Isavela: Thank you, thank you, thank you for listening to today’s episode. Remember to hit the subscribe but but to get notified of new episodes dropping on the new and full moons of each month. And if you haven’t already, leave us a five star review on itunes to make sure that everyone who needs this transmission receives it. Until the next episode, I’m sending you fierce, fierce love.