How Profit First Shaped This Father-Daughter CPA Firm with Byron McBroom & Melanie Sikma

January 26, 2023

Episode 150: How Profit First Shaped This Father-Daughter CPA Firm with Byron McBroom & Melanie Sikma

The Profit First REI Podcast

January 26, 2023

David Richter

Summary:

On the Profit First for REI podcast, we hear from many investors and other business owners about their first-hand success at applying the Profit First method. While there is no better person to relay its benefits than the entrepreneurs who have used it for their businesses, someone else is just as close to your finances as you are—your accountant.

Today we’ve got Measured Results CPA joining us for the show, namely its Founder, Byron McBroom, and Business Development Consultant, Melanie Sikma. They have been hard at work helping business owners plan their taxes through Measured Results and manage wealth through Abundant Life, where Melanie serves as the CEO.

Stay tuned as this father-daughter tandem gives us a new perspective on why Profit First is the biggest boon for managing your finances!

Key Takeaways:
[00:36] Introducing Byron and Melanie of Measured Results CPA

[03:54] Why Profit First Appealed to Their Firm

[06:23] Why Business Owners Live Paycheck-to-Paycheck According to CPAs

[09:08] How Profit First Fixes Profit Challenges

[10:50] Measured Results CPA and What They Do

[14:39] Wealth Management at Abundant Life

[18:22] Abundant Life and Savings

[21:32] Measured Results and Its Dedication to Simple Communication

[23:44] Tax Tips From Our Guests

[28:25] Connect With Byron and Melanie

Quotes:

[10:34] “The real beauty of Profit First is it forces [you] to address the problem early. It does not wait till the business is struggling to stay in business.”

[13:18] “My job is to sit and create questions for people to ask, so we get the answers we need to…have them pay as little tax as legally possible, and stay out of trouble.”

[22:05] “We say we don’t speak accountant, as we speak English and [put] it in simple terms. That’s something that we try we strive for, actually.”

Melanie’s Instagram for Tax Tips: https://www.instagram.com/melaniesikma
Measured Results Instagram: https://www.instagram.com/measuredresults/
Measured Results Website: https://measuredresultscpa.com/

Tired of living deal to deal?

If you are a real estate investor or business owner who is tired of living deal to deal, and want to double your profits, head over here to book your no-obligation discovery call with me. Either myself or someone from my team will hop on a short call with you to get clear on your business goals, remove any obstacles holding you back, and map out a game plan to help you finally start keeping more of the money you work so hard to make. – David

Transcription:

Byron McBroom:

The real beauty of Profit First is it forces ’em to address the problem early. It doesn’t wait till the business is struggling to stay in business.

Outro:

If you’re a real estate investor who’s sick and tired of living deal to deal, then welcome home. Hear from everyday real estate investors just like you, and discover how they’ve completely transformed their business by taking a Profit First Approach. This is the Profit first for REI podcast, where we believe revenue is vanity. Profit is sanity. It’s time to start making profit a habit in your business. So here’s your host, David Richter.

David Richter:

This is a special episode of Profit First for Real Estate investing because we are showcasing the people that we have put our trust in on the tax side because they’re Profit First centric and they gel well with our philosophies, but then they are getting actual results of putting more money in your pocket from the tax side. They want to be a profit center for you and not an expense, and they back that up with the results that they get. But we dive into a bunch of different stories too, of how they’re doing this and then that we’re, we dive into how they’ve seen Profit First help people achieve their goals. And I want to get that for you too, because he tells what is success, you know, like with Profit First. He also says, what is success that he’s seen with his clients and some of the things that they’ve instilled from the people that they’ve learned from. Then they also talk about where investors are and like where business owners in general, like just emotionally when they have to think about the money. So you’re going to get something from this episode. There’s lots of gold nuggets in here for you to take action on immediately. Can’t wait for you to hear this. Byron Mcbroom and Melanie, his daughter as well too, is on here. So I’m really excited for you to get to hear both of them.

Hey, I have the Melanie Sikma and Byron McBroom here, and I am super excited because we’ve partnered with them. They’re the, some of the CPAs that we use, uh, in the business that we do. So there you go. I mean, some of, you’re probably just gonna go out right now and look up their website, but I wanted to get them on to talk about their philosophy, why they’ve partnered with us, like, why they like Profit First. This is a father son, uh, father daughter team. And they, they’ve also got another daughter that works in the business as well too. This is a family run business, but they run quite a great operation over at Measure Results cpa. So I’m really excited about that. So thank you both for being here today.

Melanie Sikma:

Thanks for having us.

Byron McBroom:

It’s good to be here

David Richter:

And Byron keeps, yeah, Byron keeps trying to kill himself too.

Melanie Sikma:

<laugh>

David Richter:

I don’t know what’s up with that? That if you can’t see him and you’re listening to this, he’s got a neck brace on. And it reminds me, uh, cuz I think it was you, Melanie, when we were having one of our conversations and it’s out in a, like this, I don’t know if you’ve seen Groundhog Day with Bill Murray, but he is like,

Melanie Sikma:

oh yeah

David Richter:

I’ve tried, I’ve stabbed shot, you know, like electrocuted. Like he’s going through all the things that he’s tried to do in order to like stop the day over and over again. And it’s like, my dad’s been, you know, like, yeah, no, all these different things. So,

Melanie Sikma:

oh yeah,

I don’t know what’s up with that, but I’m glad he is here today. He does have the neck brace on. He is doing that for added sympathy. I think it’s,

Byron McBroom:

<laugh>

David Richter:

He doesn’t need it anymore. Just kidding. He totally needs it. But I just, I did wanna thank you for being here today, even though you’re trying your hardest just to put yourself outta commission. So thank you for being here, Byron.

Byron McBroom:

Well, it’s good to be here, you know, when

Melanie Sikma:

You try, uh, but, uh, we’re not letting

Byron McBroom:

Teary-eyed emotional on that one. But when you’re in recovery, like, there

David Richter:

like you go, So

Byron McBroom:

There’s just not much you can do. So you just look forward to stuff like this to talk to people. I’m a high eye influencer, so I like to talk to people anyway, so just getting outta the house and talking

David Richter:

okay

Byron McBroom:

To people is just a treasure for me. My wife’s already heard my story. Oh,

David Richter:

There you go. There you got to peek behind <laugh>

Melanie Sikma:

<laugh>.

David Richter:

So you can’t just sit home and, and tell this story. But before we go into your story and like what you guys are doing, I don’t have to hear from your guys’ perspective, like why profit first, like why do you like that philosophy? And uh, Byron you’ve even mentioned you’ve read several of his other books as well too.

Byron McBroom:

Mm-hmm. <affirmative>,

David Richter:

Mike Mackowitz, but you know, like what was appealing to you about those systems?

Byron McBroom:

Well, what I like about the system, I work with nothing but small business owners. And small business owners usually are focused on their business and not on their numbers. And so they, and usually by the time they get in trouble, it’s too late to fix it. And what I love about Profit First, particularly like with the payroll, you know, if you set aside a percentage for payroll, when you run outta money in that account, you have an early warning system. You know, taxes are a big deal. I like to have profit first for

David Richter:

Yeah.

Byron McBroom:

You know, figure out what percentage of taxes you’re gonna pay. Taxes aren’t a burden if the money’s set aside. And if you’re not setting aside, at least you know that you’re borrowing it or stealing it from the government’s money. Some people will even label that account the government’s money,

Melanie Sikma:

<laugh>.

David Richter:

right

Byron McBroom:

They might use it in the business, but at least they know

David Richter:

yeah

Byron McBroom:

They’re using it. I’ve had a lot of clients used to do a lot.

David Richter:

That’s really good.

Byron McBroom:

I used to do a lot of CFO F work and a lot of people really just don’t understand their numbers. And a system like Profit First just really pulls ’em in and forces ’em to address the problems that they don’t want to, but they have to. So, and you mentioned about

David Richter:

yeah

Byron McBroom:

talking about the other books.

David Richter:

I agree with that.

Byron McBroom:

I’ve read the one of my favorite.

David Richter:

Yeah.

Byron McBroom:

I mean, he’s a funny guy to listen to and I loved his book, the Pumpkin Plant. So I actually went out and bought some of those seeds. They come in a Ziploc bag and they all have numbers written on him. So I planted number one thou 179 and 182. I planted ’em in my yard and in the pumpkin plant, yet you plant several plants and as they come up, you kill off the bad plants, which he, he’s referencing to the customers that are not as good. And so then you finally get that one plant that you fertilize and all the fertilizer and all the water goes into it, and then you start killing off the weaker pumpkins. Well, my nickname in my gardening world is Brown Thumb, Byron. And, uh, the Pumpkin Plan was not a good plan for my gardening. So <laugh>, but I think it’s a good plan in business

Melanie Sikma:

Is Brown Thumb Byron, because he kills everything he tries to keep alive. Although he had a pretty good garden for a while there.<laugh>.

David Richter:

There you go. Those are some great philosophies too. And why I want to get, you know, dig a little deeper. Why do you think a lot of business owners that you’ve seen, I’m sure you see this in the small business world, you know, live deal to deal or live paycheck to paycheck and need a system like that to, you know, for the warning signals and systems like you were talking about.

Byron McBroom:

Well, it’s like small business owners and accountants, you know, we’re the stepchild, we’re Cinderella, we might be a beautiful thing, but they’re just not paying attention to us. Okay. And it’s because they’re just so busy. It’s so difficult as a business owner, people don’t really appreciate, you know, most business owners are working 60, 70, 80 hours a week. They’re ignoring their family. They’re making, some of them are making less than minimum wage. And a system like this just forces ’em to address what their systemic problems are. And if you can fix the system, then the business usually can flourish and take off and make you know, get people wealthy. But they have to fix the system first. And Profit First is just, I’m just so high on it as far as giving people a systemic way to make a profit in their business and make sure money’s set aside for the right things.

David Richter:

Why do you think that profit for profit businesses have trouble making a profit?

Byron McBroom:

Well, it’s like farmers. Okay, farmers, if somebody makes money on wheat, everybody starts planting wheat. And so then they plant it till some farmers don’t make money. And out there in the business world, there’s efficient operators and there’s inefficient operators now in the last couple years

David Richter:

mm-hmm. <affirmative>,

Byron McBroom:

It’s, I think in, for some businesses, not all, because Covid has, with all the P P P money and all the EM employment retention credits, if you’re not making money now and with construction being as high, you know, high priced as it is, if you’re not making money now, you’re never gonna make money in the business. But there’s, you just have to learn how to be an efficient operator in your business. And most people are so busy putting on the tool belt with their business. Well, regardless of what the business is that they don’t really study the business. They don’t take time to work on the business. And like I said, profit First, since you have an early warning system, forces you to address why is this happening? And they just forces ’em to do, to address it unless they choose to ignore it. And that’s their own fault anyway.

Melanie Sikma:

I’ve also seen a lot of business owners think, you know, the top line revenue is what they’re making, what’s, you know, they think that that’s the money in the, the bank.

David Richter:

Yeah.

Melanie Sikma:

Andso they think they have a lot more to spend than they actually do. And so there’s no real budgeting. Um, and so I think profit, the Profit First mindset and strategy really addresses that too.

David Richter:

Awesome. How would you say it addresses that? Because I see that all the time too. So like in your words, how would you make, you know, like if they are looking at the top line and it’s, they’re thinking that is that, you know, what they’re making, how does Top, how does Profit First fix that?

Melanie Sikma:

Yeah. Dad, do you wanna address that one?

Byron McBroom:

Well, what it is with Profit first, you can’t just look at the top line because the top line comes in, you rat hole a certain amount for payroll, you rat hole a certain amount for materials. You rathole a certain amount for operating expenses depending on how far di how far you deep dive into the different accounts. But everything is accounted for. And let’s say you’re running on a 20% profit margin and you’re taking 15% of that for owners pay, that 15% owner pay is rat hole. So if your profit is not that 5%, it shows up loud and clear for you. It yells at you really. And

David Richter:

yeah

Byron McBroom:

It just gives, it just forces

David Richter:

I think that both of you hit the nail on the head.

Byron McBroom:

David Richter:

Yeah, exactly. Forces people to address the problem, gives them a good system and then they can move from there, you know, like to where they, you know, where they need to be and it gives them a very clear view. I really like that cuz obviously, you know, this is what we do all day long, but it’s nice to hear from other people

Byron McBroom:

<laugh>

David Richter:

That are in the financial world as well too, of like how they’re seeing how other people are, you know, using the money and, you know, viewing it as well too.

Byron McBroom:

Mm-hmm. <affirmative>.

David Richter:

So, okay,

Byron McBroom:

Let’s

David Richter:

Get into a little bit about what you guys do.

Byron McBroom:

Mm-hmm,<affirmative>. The real beauty of Prophet first is it forces ’em to address the problem early. It doesn’t wait till the business is struggling to stay in business.

David Richter:

yeah

Byron McBroom:

Okay. Melanie, let you take the lead on

David Richter:

Right.

Byron McBroom:

On what we do.

David Richter:

Yeah, that’s very true.

Melanie Sikma:

All right. Yeah. So we just help, uh, small business owners. Like my dad said, we work with small business owners anywhere from two to 25 million in their top line revenue. We help people under that as well, but that’s really where we come in. That’s our sweet spot. Um, and we help them save money on their taxes. That’s kind of the bottom line. We help, um, give less to the IRS and keep more into their business, which can keep more in those different buckets.

David Richter:

Yeah, I love that right there, because that’s why we want to partner with people like Byron and Melanie because they’re profit first, conscientious as CPAs and they wanna make sure that they’re working the system for you. Like making sure that they’re not just there for the irs, they’re there for you, the business owner, and making sure. And then one of the things that honestly sold me on them upfront was when Byron took me, like through the seventh step or something, like process of what they do with every business owner of like helping them with actual planning and strategy as well too.

Byron McBroom:

Mm-hmm. <affirmative>.

David Richter:

And because I feel like in, especially in the real estate investing world where we are, that’s all anyone really cares about. Like they want the preparation and stuff done, but they want the strategy planning because I don’t know if you have a lot of real estate clients or if you’ve worked with real estate investors that you love, you know, to buy the properties. And there’s a lot of things that they can do with that. So I, I would just want to at least point that out where I, you know, where I connected with you and what, you know, resonated with me as like why would we partner with someone?

Melanie Sikma:

So yeah, if you’re making any money, if you’re a small business owner, your CPA should be a profit center for you instead of a cost center. And we find there’s a lot of CPAs out there, they’re really good at filling out the forms, um, but they’re not good at strategizing. And so if, you know, if you’re not meeting with your C P A before the end of the year, we’re about to enter into tax planning season and our firm’s actually busier during this season than it is during tax season because that’s where our clients get the most value out of us.

David Richter:

Yeah, I really do like that, It’s this season. Go ahead, Byron.

Byron McBroom:

The big thing you should notice when you’re talking to your accountant is do they ask you questions to fill out the forms or do they ask you questions to save you money? Most accountants just fill out the forms.

David Richter:

Hmm.

Byron McBroom:

And, but they’re doing a great disservice to people. But we like to have is part of what I do is I don’t fill the, I don’t actually do the returns anymore, but my job is to sit and create questions for people to ask. So we get the answers we need to save, have ’em pay as little tax as legally possible and stay out of trouble. But it’s take a look at the questions your accountant’s

David Richter:

yeah

Byron McBroom:

Asking you and if they’re save money questions, that’s good. If they’re fill out the form questions, then something’s being left on the table.

David Richter:

Yeah.

Melanie Sikma:

And I’d say what my dad’s done really well, cuz he’s not a spring chicken, he’s, a <laugh>. He’s getting up there. We joke that he is an old fart here, but, uh, <laugh>, he’s kinda gearing towards, you know, wanting to work less and just work on the ideas in the business. And that’s where he’s done a really good job of systematizing tax planning, where a lot of the times it’s just solely dependent on the CPA and the person that you’re working with, where he’s done a good job of building out a system so that not, it doesn’t only ride on his shoulders to be able to save our client’s money, but every CPA in our firm can do the same, you know, bring the same value to our clients.

David Richter:

Yeah, that’s really good. That’s why I liked it cuz I mean, when he broke it down to me it was like, these are the things we can do with every business owner no matter what. And these are the steps that we take. I’m like, I really like that. That’s something that, you know, like every business owner needs. So it was

Melanie Sikma:

oh sure,

David Richter:

Very informative. Awesome. There you go. Well I want to keep going here that, so you’ve got the CPA side, you know, and you’re doing that and then you’ve also got like the wealth building side as well too. You do some things on that. It’s not just, this is why I really like the measure results. It’s not that they only do the CPA work and have it be a profit center then like what do you do and manage the wealth. So do you want to go into that at all, Melanie or Byron?

Melanie Sikma:

Yeah, I can do that since, yeah, that’s my own side of things. I, uh, have built my own company. I’ve partnered with, um, measured results and it’s uh, my company’s Abundant Life services cuz I, you know, want to create abundant lives for my clients. And then also I donate 25% of my profits to orphans worldwide to create their own abundant life. And um, what we do there is we do a lot of the infinite banking stuff. And the reason for that is it goes really well with our tax strategies. So we take money that our clients would’ve owed the IRS and instead we turn it around and we fund their future and we put in a tax-free vehicle so it’s gonna grow tax free and they’re not gonna ever have to pay tax on that dollar again. And that’s when it really gets powerful is when we can take tax savings and then fund a tax-free retirement with that.

David Richter:

Yeah man, we could definitely go down a rabbit hole here for sure because there’s a ton of questions around it. But I want to say too that I believe that what they do on that side goes very well with what they do with tax planning and also profit first.

Melanie Sikma:

Yeah.

David Richter:

Cause it’s like you gotta be profitable here. What’s set up another account and like, let’s fund our future because everyone that comes to us, like for our services, wants to create wealth, wants to be, you know, get off that rat race.

Melanie Sikma:

Yeah.

David Richter:

And this is another way to do that. So I really like that you have that side of it as well too.

Byron McBroom:

Cool.

Melanie Sikma:

Yeah, that’s a, as long as many, I think as many areas in your life that you’re being strategic is really powerful. And having somebody that’s a professional behind your back is, you know, that we, I actually just did a post on this yesterday on Instagram. Um, my dad a while back, he tried to cut his own hair and he came into the office and <laugh> his hair was all jacked up in the back. It was hilarious. And I go, dad, like, did you try to cut your own hair? And he says, yeah, why? And I said, well, it, it looks like he did. And so he said he was just in a hurry and so he tried to do it himself when in reality he had to go back and do it. And so my whole post topic was don’t do it yourself, find a professional. Um, I just talked to a stone fabricator that was trying to do their own bookkeeping and it’s a hot mess, so it’s gonna cost him more money than it would’ve if he just hired somebody. Um, you know, find a professional. And like you guys, the value you guys bring for your clients is huge.

David Richter:

Yeah.

Byron McBroom:

Well, a cool thing

David Richter:

that’s really good

Byron McBroom:

David Richter:

alright go ahead.

Byron McBroom:

If you’re setting aside a percentage for taxes, it’s, and let’s say that’s 7%, whatever the number is, it’s 7% with some planning and doing it with intention, maybe you only have to set aside 3% or 4% and then all of a sudden you have that three or 4% working for you instead of working for the government. And you’re still not surprised, but it just gives you a lot more working capital.

David Richter:

Yeah, that’s very true. And that’s what the business owners want. They want to pay as little taxes as possible and use any of the extra to fund

Byron McBroom:

mm-hmm. <affirmative>

David Richter:

The wealth fund, the future fund, the things that they wanna do. So I absolutely love that.

Byron McBroom:

Mm-hmm. <affirmative>.

David Richter:

So then when you do work with people and they come to you, what are some of the biggest results that you see from working with them? You said, you know, like there’s, you know, that it should be a profit center for them.

Melanie Sikma:

Yes.

David Richter:

So what are some of the things that you’ve seen with your clients? Obviously disclaimer, not all results are gonna be the same

Byron McBroom:

<laugh>.

Melanie Sikma:

Yeah.

Byron McBroom:

But I just wanted to see like, what are some of the things that you’ve done to help people?

Melanie Sikma:

So the average person that I talked to saves about 38,000 in permanent savings.

David Richter:

wow

Melanie Sikma:

That doesn’t include any of the deferred savings that we get them. Um, I just, you know, there’s been a couple people recently we’ve been able to get them about a hundred grand in permanent savings and then, uh, about a million dollar deferral. So it’s just depends on the person and what they’re

David Richter:

yeah

Melanie Sikma:

Currently set up at. Um, one tip, you know, if you have kids you can put your kids on the payroll and you can pay them 12,950 and tax free money. And my kids are my little models that I post to my Instagram and it builds rapport with people that I wanna work with. So that’s the way that I justify it. Um, so that’s just a little pointer out there for them. But those are, those are the things that we look at is what are areas in your life that you’re already have going on. What can we use strategically to be able to offset your taxes?

David Richter:

Yeah. It’s really good. Byron, do you wanna add anything on that point?

Byron McBroom:

Well, I’d like to let people know the difference between a permanent savings and a deferral savings. For instance, if you pay your child 12,950, you get a tax deduction for that. And maybe that saves you, depending on your state, five or 6,000 bucks. Okay. That’s a permanent savings cuz you never have to pay that money back if you put money into a traditional IRA and take a deduction for it, at some point in time when you pull that money out, you have to pay the taxes back. That’s called a deferral savings. And of interest, and Melanie, maybe you can explain this, we have a big super big deferral program where you can get a massive tax, basically a tax-free loan from the government and use that in your investments. We had one client in particular that did this and this guy was pretty substantial, but he invest, basically we were shuffling the funds around a year in and he was deferring the tax on 15 million bucks. Now he started this process in about 2010 and the tax on 15 million in California is about seven and a half million dollars in tax that he hasn’t had to pay. He still owes it, but he hasn’t had to pay it. But he took that seven and a half million dollars and invested it in real estate. So can you imagine seven and a half million dollars in cash invested in real estate in 2010, 11, and 12? How much money this guy’s made just on money from the government. And this is what

David Richter:

<laugh>

Byron McBroom:

We do a lot for people. We also take that money, you know, if you know somewhere to invest it, it’s a great thing. But a lot of times people don’t know what to invest it in. And they also, you don’t wanna lose the principle on this cuz you still owe the irs. And that’s where we do a lot of investment with insurance products

Melanie Sikma:

mm-hmm. <affirmative>,

Byron McBroom:

Because the principle is guaranteed never to go down so that you, the money that you owe the government, you never lose, but you still can have that grow. And Melanie works a lot with people on that particular example.

David Richter:

Yeah.

Byron McBroom:

But there’s a big difference between deferral money and permanent savings. I always try to get the permanent savings first and then get the deferral savings.

Melanie Sikma:

Yeah.

David Richter:

Awesome. That’s why I love that you can put it in simple terms too. You know that a lot of CPAs that I’ve had run-ins with, you know, they’re either talking way up here like over people’s heads or way down here or like they’re talking down to them and it seems like, like you’ve got a very simple process to be able to say, these are the things that you could do that are very simple. Like, and not without, you know, beating them over the head or making them feel small. Like, do you feel like you run into that a lot with other CPAs or is it just me, you know, like is this something that kind of separates you guys from other people that are out there?

Melanie Sikma:

Yeah, we say we don’t speak Cantonese, we speak English and

David Richter:

Okay.

Melanie Sikma:

So it’s putting it in simple terms. That’s something that we try, we strive for actually.

David Richter:

Yeah. Well and well good, that’s what I like and I like hearing that for sure.

Byron McBroom:

Yeah. A lot of CPAs like to let their clients know that they’re smart people, so they gotta talk in big words and all that. But you know, all they’re doing is complexifying everything. What we wanna do is put it in terms that you understand. I mean, for the most part, you’re not gonna study this and get a real super knowledge on it. You’re gonna have trust that we’re doing it right. You know, that’s the way it normally works. But we want you to have a fundamental understanding of the basics so that way there’s some education in there. Or get it educated as much as you want. Some people want it all, some people don’t want to have just take care of it for me. But yeah, we like to educate people as much as possible, as much as they wanna be educated in the language that they want to talk in.

David Richter:

Yeah, absolutely love that. Because that’s what people are looking for. They just want to know that someone’s there, they have their back and that they’re gonna help them and walk along here. So that’s why they’re on this podcast, that’s why we’re working with them. We wanna make sure that you have a partner in someone who actually understands you on the tax side and likes, you know, and likes you, wants to work with you and wants to help you get to where you want to be and not just another, you know, another person they need to feel smart around and prove their,

Byron McBroom:

hmmm<affirmative>

David Richter:

Prove their worth. So absolutely love that. But uh, yeah, I just have a couple last questions here. What is, okay, you talked about Melanie, you talked about the tax savings, you know, or the permanent savings like with your children. Do you have any other tips tax-wise or anything else that you could share with the audience?

Melanie Sikma:

Yeah, so one thing that my dad does with my grandma is he utilizes her lower tax bracket and uses that, you know, he was supporting her anyways and so he just, um, utilizes her lower tax bracket, lets her keep a certain amount of that and then she gives back the rest. And there’s a way to do that and it depends on everybody’s circumstances, but the biggest thing is looking at the lower tax brackets around you and how you can use those and leverage those to offset your tax exposure. Um, and tho that’s where we get a lot of the big permanent savings is looking at different, you know, we can get kids colleges, um, deductible and kind of use that to pay for colleges. Um, and yeah, dad, do you wanna add to that at all?

Byron McBroom:

Yeah, I wanted to give you some specific numbers on that. Okay. And so what I did with my mom is I formed a corporation, my mom owns it and I put, I pay that company $75,000 to do services for the CPA firm. That 75,000 now gets taxed to my mom. She just has social security income, so she only pays seven or $8,000 on that, but I save 37. So there’s about a $30,000 savings, about 29, 28, $30,000 savings. And from that, I give her the money that I give her anyway. And she makes a gift to me every year of the remaining money. And it, you know $1,500 a month extra to someone that’s just on social security changes their life. And so I get all the credit for it, which is great, but the government’s really paying for it. So it’s kind of a win-win for me

David Richter:

<laugh>

Byron McBroom:

And my mom <laugh>. But those are the sort of things you wanna look for.

Melanie Sikma:

Mm-hmm. <affirmative>,

Byron McBroom:

Who around you is in a lower tax bracket? You have an indigent brother-in-law in the basement, you know, you have, do you have kids in college? That’s a huge plan that we do for a lot of people. Uh, there’s just lots of the secret is just to look at the whole atmosphere that you’re in the ecosystem and how do we pay as little taxes as possible as a group? And that’s where a lot of our savings come from.

David Richter:

That’s really good. Okay. So that’s good information on the tax side. What about just general business advice? Like, could I get a little snippet from both of you of, since you’ve worked with a lot of small business owners, what are some of the things, the key things that you’ve seen, you know, successful people or just some last minute advice here for the people listening?

Melanie Sikma:

Um, what I’ve seen, a lot of people, the people that are most successful that I’ve talked to, they’re really good delegators. They’re, you know, they find people that they give a clear explanation of what they want and they have a good picture, but then they delegate it and they trust, um, whoever they’re delegating to basically complete that process. Um, and so I think that’s where it goes along with the professional side, find it professional. It’s find somebody that you can trust to delegate to and then figure out what you can delegate. So kind of what I’ve seen really a lot of successful people do

Byron McBroom:

And

David Richter:

Right

Byron McBroom:

What I’ve seen people that are real successful is they really understand, they have a focus on what their core values are. You know, I know that you’re, David, you’re familiar with core values and all that, but we hire fire and discipline to core values here at Measure Results. And if you can have someone who’s pushing in the same direction as you and your whole team of, I have a team of 40 and we hire fire and Discipline the core values. So in theory we’re all pushing in the same direction, you really can get a tremendous amount more accomplished when you’re all trying to achieve the same thing. So a real focus on what your core values are.

David Richter:

Yeah.

Byron McBroom:

And making sure that your team’s on the same page and in alignment with you on what’s trying to be achieved. And the other thing I noticed is that

David Richter:

Mm-mmm

Byron McBroom:

People that are really successful, they pretty much know their numbers. And that’s where I can’t over exaggerate how much of a value a CFO service is because you’re sitting there focused on the business and they’re gonna basically, uh, tell you, Hey, here’s where you’re doing right and here’s where you suck and you need to hear that. That way you can fix it, but you gotta know the numbers too. It’s really critical.

Melanie Sikma:

Mm-hmm.

David Richter:

<affirmative>. Yeah, those are really good points. And I think if you’re listing right now and you’re downloading this podcast and just consuming it, those are three big areas that core values is critical. That’s like your North Star and then you’re delegating to those people then that have those same core values and now you’re showing your trust in them. I love how Melanie had that. And then setting those clear expectations and then knowing those numbers, like making sure you know where you stand. So that’s some really great last minute advice here. So I wanna say, where would people find you like and what’s the best place to reach out to you? It sounds like, you know, for the tax side, you’ve got the CPA service and then Melanie, where would they find you as well for, you know, for the wealth building, the I B C, that type of stuff, the infinite banking, uh,

Melanie Sikma:

yeah

David Richter:

To get both of those.

Melanie Sikma:

So I do a lot of tax tips and um, just kind of all around tips on Instagram at MelanieSikma, that’s my handle. And then sikma and then we do some tax tips. We try to be pretty regular about posting on Instagram at Measured Results. So that’s another handle you can follow. Otherwise you could just check out measuredresultscpa.com and you’ll be able to find us that way. Um, we’re revamping our website, so it’s got some work going on there, but uh, you’ll be able to get in contact with us that way.

David Richter:

Awesome. Well this has been amazing here. I loved, uh, being able to interview both of you, the father daughter team, and they do have an awesome team behind the scenes as well too. Their other sister works with them and then there’s, they’ve got a lot of good people there. We endorse them. I love that they have, like I said, the profit First mindset. They really care when they talk to you about what your situation is, they want to help you not only like eliminate and save these taxes and defer them, but then also on the wealth building side and being able to help them, you know, help you grow, help you grow your wealth,

Melanie Sikma:

Mm-hmm,

David Richter:

Because that’s what you really want as the business owner. You don’t wanna just say, Hey, didn’t pay a bunch of taxes, or I paid a bunch of expenses this year. You want to see your net worth grow. So this combination here, like on this screen, or if you’re listening to all three of us here, we can help you get to where you wanna be. So I just wanted to end with that. If you are a real estate investor, you’re listening to this right now and you want to get this help, go to their website and if you need the CFO help, go to simplecfo.com. Like we are here together as a team to get you where you want to be. I want you to have more money in your pocket. You saw, you heard Byron

Melanie Sikma:

Mm-hmm

David Richter:

Just tell about how he’s doing a tax strategy with his mom and you know, like in a different tax bracket. Like these are the things that can actually put physical dollars back into your pocket. So just go there. We would love to help you. We also connect you to them as well. If you’re working with us, like you will be working with them. So I just really wanted to get that out there as well. Remember to make your profit a habit. And thank you Melanie Byron, for being on the show today.

Byron McBroom:

Thanks for having us.

Melanie Sikma:

Course. Thanks for having us.

Outro:

This episode of The Profit First for REI podcast is over, but there are plenty more where that came from. Are you ready to learn how David and his team can help implement the Profit First system in your business? Schedule a discovery call at simplecfo.com right now. We’ll see you next time on the Profit First for REI podcast with David Richter.

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implementing Profit First...

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Title: “Profit First Strategies with Jay Conner: The Power of Private Money”

Episode: 242

There are 15 reasons to love about borrowing private money over traditional money. One of them is making your own rules for your private money.

In this episode of Profit First for REI podcast, Jay Conner, a nationally renowned real estate investor and the king of private money. He talks about how private money works.

Jay helps you get your money from private lenders and will share with you the mindset that will get you money in the door without you ever having to worry about it.

Listen and enjoy the show!

Key Takeaways:

[01:01] Introducing Jay Conner

[05:00] Introduction to private money

[08:30] The Great News Phone Call

[11:23] Why don’t you use your own money?

[13:18] Maintaining relationships with private lenders

[15:40] Private money vs traditional money

[22:05] Things that make them want to recommend you

[25:18] Advice for real estate investors

[29:01] Connect with Jay Conner

Quotes:

[07:34] “If you are talking about private money and raising private money with an individual and you got a deal for them to fund, you already sounded desperate.”

[12:07] “If you want to scale your business, private money is the way to go.”

[16:05] “In this world of private money, we make the rules. We set the interest rate, we sent the length and all of that.”

Connect with Jay:

Website: https://www.jayconner.com/book-details/

Tired of living deal to deal?

If you are a real estate investor or business owner who is tired of living deal to deal and want to double your profits, head over here to book your no-obligation discovery call with me. Either myself or someone from my team will hop on a short call with you to get clear on your business goals, remove any obstacles holding you back, and map out a game plan to help you finally start keeping more of the money you work so hard to make. – David

Transcript:

Speaker 1 (00:00):

I got 15 reasons I love private money over traditional money. I won’t share all 15, but the biggest one is it puts you in the driver’s seat. The traditional way to borrow money is you go to the bank and get on your hands and knees and you’re begging and chasing. Well, they are making the rules right? Like the lender is making the rules. But in this world of private money, we make the rules, we set the interest rate, we set the length of the note and all that.

Speaker 2 (00:34):

If you’re a real estate investor who’s sick and tired of living deal to deal, then welcome home. Hear from everyday real estate investors just like you, and discover how they’ve completely transformed their business by taking a profit First approach. This is the profit first for REI podcast, where we believe revenue is vanity. Profit is sanity. It’s time to start making profit a habit in your business. So here’s your host, David Richter.

Speaker 3 (01:01):

We have Jay Connor back on the podcast. I love Jay Connor. He helps you get your money, the money from private lenders and that whole framework and process, but he does it from a passion and a place of heart. And servant Teachership. I feel like he goes out there and is a servant teacher of how private money works. Listen to this episode. He gives the magic question he tells about desperation and private lending, and I thought his perspective was so good, and then ultimately the mindset that will get you money in the door without you ever having to worry about it. So listen to this episode. Can’t wait for you to get value from it. Thank you for being a listener of the Profit First. RII podcast. Have a great episode. Hey, here’s the profit first RI podcast. Really excited to have Jay Connor back because he’s the came of private money. And this is where I love to go into this topic because I don’t care what kind of business you’re in, you probably need help with this, but especially if you’re in the real estate world, this comes up all the time at every event I’m at with every conversation I have. So we’re having the cane here talk about private money today. So Jay, thanks for being on the show.

Speaker 1 (02:07):

Hey David, thank you so much for having me come on here to talk about my most favorite topic. Of course, that being private money. And why is that? Because private money’s had a bigger impact on our real estate investing business than any other strategy that we’ve implemented in our business.

Speaker 3 (02:24):

Why did you go down that road though? I mean, you teach this all the time. You’re helping a ton of people, like anyone I’ve ever talked to that works with you is like he taught me how to do and I got money and it actually works. So I mean, how did you even go down that road where it made a difference on you and then you wanted to get it to others?

Speaker 1 (02:43):

Well, I actually backed into it. I didn’t do it on purpose. So here’s what happened. So my wife, Carol, joy and I, we’ve been investing in real estate, single family houses, other real estate full time here in eastern North Carolina since 2003. And here’s what happened. From 2003 until 2009, David, all I knew to do in my real estate investing business was rely on the local banks to fund my deals. I mean, all I knew to do was go to the bank, get on my hands and knees, put my hand underneath my chin, raise my skirt up so they could look at all my personal financial statements and stuff and actually beg to get my deals funded. That’s all I knew to do. And so I had a big wake up call in January of 2009 after being in this business here in Eastern North Carolina. I called up my banker.

(03:38):

I told him about these two deals I had under contract in Newport, these two single family houses. And David, I learned like that over the telephone that my line of credit had been shut down with no notice. My banker, his name was Steve, and the bank was bb and t at the time. I said, Steve, what in the world are you telling me? My line of credit is shut down. I got two deals under contract. You gave me no notice. Why is the bank closing my line of credit? He said, Jay, don’t. There’s a global financial crisis going on right now. I said, no, but now you just gave me a global financial crisis. Financial crisis, yeah, I ain’t got no way to fund my deals. And I got ’em under contract. So I hung up the phone and here’s what happened, David. I sat here and I asked myself a very important question.

(04:27):

And so I’m going to share this question with your audience right now. This question I’m going to share with you will help you solve any problem you’ve got. I don’t care if it’s business, financial, career, health, relationships. I don’t care what your problem is. By the way, David, these people going around and saying, any problem, you got some opportunity I want to throw up. I didn’t have no opportunity. I had a problem of not funding my deal. So here’s the question I asked myself. The question I asked myself was, Jay, who do you know that can help you with your problem? And when I asked myself that question, I immediately thought of my good friend Jeff, who lived in Greensboro, North Carolina at the time, and he was investing in real estate. And so I called him up and I told him what happened. And he said, well, Jay, welcome to the club.

(05:18):

I said, what club? He said, the club of the bank shutting you down and losing amount of credit. They shut me down last week. I said, well, how are you funding your deals, Jeff? He says, well, have you ever heard of private money? And I hadn’t. So Jeff told me about private money. He told me about self-directed IRAs and how people can use their retirement accounts and funds that they currently have and move them over to a self-directed IRA company and then loan that money out to us real estate investors, either tax deferred or tax free depending on the type of account they’ve got. Well, that just opened up my whole world. I’d never heard of that. And so what did I do? How did raise $2,150,000 in less than 90 days after being cut off from the bank? Well, here’s what I did, and here’s the secret sauce I put on my teacher hat.

(06:10):

So I put on my teacher cap, which is my private money teacher cap, and I just started teaching people in my own network what private money is, how they can earn high rates of returns safely and securely. And what’s interesting, Carol, joy and I, we got 47 private lenders right now. Not one of them had ever heard of private money and private lending. Not one of them had ever heard of self-directed IRA companies and what a third party custodian is. That’s important by the way, to establish a relationship with a self-directed IRA company because over half of my private lenders are using their retirement funds. And if I didn’t have that relationship to introduce them to move their retirement funds over, I’d be missing out on over half of my private money. So how did I go about raising all this money when I was cut off from the banks?

(07:02):

I led with a servant’s heart. I led with education. And here’s a really, really important point. I separated the activity. I separated the conversations of telling people what private money is and how they can earn high rates of return safely and securely and having a deal for them to fund. You see, desperation has got a smell to it. And when you talk about is that not true, David? Yeah, very true. So if you’re talking about private money and raising private money with an individual and you got a deal for them to fund, you’re already sounding desperate and you’re not even trying to sound desperate. So we don’t talk about deals and when we’re first exposing somebody to how they can earn high rates of return, we talk about private money. So how do we separate those conversations? Well, when someone has told me that they’ve got, let’s say they’ve got $150,000 they want to invest and get high rates of return conservatively, I’ll say, great, I’ll put your money to work for you just as soon as possible.

(08:11):

I don’t talk about a deal upfront. If they’ve got retirement funds that they want to get higher rates of return on, I’ll introduce ’em to the self-directed IRA company that I recommend. They’ll get their funds moved over. And so here’s what happens and here’s the magic sauce, David, I give ’em and I call ’em up with what I call the great news phone call. What in the world is the great news phone call? Well, the great news phone call is not a pitch. I’ve never pitched a deal in my life ever since I started raising private money in 2009. I pick up my handset with my cord attached to it here in North Carolina and I call some of your, don’t even know what that is. And let’s say, David, let’s say you’re one of my private lenders. So I’ll put my phone right up here and you’ll answer the phone and we’ll have a little chitchat and I’ll say, Dave, I got great news for you.

(09:06):

I can now put your money to work. I got a house in Newport with an after repaired value of $200,000. The funding requires 150. Closing is next Tuesday. You’ll need to have your funds wired to my real estate attorney next Monday. I’m going to have my real estate attorney email you the wiring instructions end of conversation. Notice I didn’t ask If you want to fund the deal, of course you want to fund the deal. You’ve been waiting for the phone call. I’ve told you the program. I’ve taught you the program, you know what kind of rate you get, what the maximum loan to value is, the program that I’ve taught you. And so now you’re waiting for the good news phone call, which I just gave you. And in addition to that, if you as my private lender, if you’ve moved your retirement funds over to a self-directed IRA company, you ain’t earning any money until I put your money to work.

(10:04):

You moved it at my recommendation. Now I’m ethically bound to put your money to work. You ain’t earning any money until you actually put her to work. So again, we separate conversations, we leave with a servant’s heart, we educate, and by the way, David, these people going around saying don’t just get the deal under contract. The money is show up. I want to throw up where is the money going to show up? Is it just going to rain out of clouds or something? No, get the money lined up and you can get it lined up fast. Just like me. There’s always going to be deals.

Speaker 3 (10:38):

Yeah. Oh man, that’s really good stuff. I love how you went down that road and it helped you personally. Now you’re just teaching a lot of people. I love that magic question. Who do you know that can help me with my problem? It’s that who, it’s not always the how. It’s the who did I know, and in that point it really helped you. I also run into a lot of times, I don’t know if you see this, where there’s someone who’s like, I could save a couple interest points if I just use my own money versus a private lender’s funds. What are your thoughts on that of always taking down your own deals versus going out there and putting the work into getting a private lender?

Speaker 1 (11:17):

Sure, I get that question all the time. They say, Jay, you making all that money? Why don’t you use your own money to invest in real estate? Why are you still borrowing private money? Well, here’s the answer. If you’re just going to do one deal, that’s a great use of your money. That’s a fantastic use of your money. But do you want to scale your business? I mean, right now we’ve got seven different projects going on, single family houses simultaneously. Well, I don’t want my money buried in seven houses or projects simultaneously, which here in our local market can easily be over 3 million with the prices of our homes. So if you want to scale and really, I mean most people have got a bottom of the bucket in their checkbook. So if you want to scale your business, then private money is the way to go. Another answer to that question is, do I want to pay myself 8% or do I want to use my money for something else,

Speaker 3 (12:22):

Right? Yep.

Speaker 1 (12:24):

So that’s a couple of answers to why I use private lending and why I’m still using 47 private lenders,

Speaker 3 (12:33):

Which is great. I love what you said. If you want to scale, it can run out of cash real quick. If you just keep using your own money where a lot of people have to choose between, okay, paying some percentage points or sleeping at night, and it’s like, I think I like your option a whole lot better, especially if you’re looking to grow. But I like how you said that one deal. That’s okay, but if you are looking to be a real estate investor, this is something you’re going to have to go down that road. Now, last time I asked you some questions about the private lending process. I don’t think I asked this one though, is how do you maintain a relationship with that many private lenders? You’ve got 47 people in your network that you call up with the good news call. So is it like how do you maintain a relationship with all those people?

Speaker 1 (13:22):

I mail ’em checks.

Speaker 3 (13:25):

I love that. That’s a great answer. Oh man. No better way to keep a relationship there.

Speaker 1 (13:33):

I mean, they love getting money in the mail, right? Yeah. They love mailbox money, so I mail ’em checks.

Speaker 3 (13:41):

So you mail ’em checks. So you’ve built a good enough business where you can keep 47 lenders busy and their money active.

Speaker 1 (13:50):

Well, to be totally transparent, I mean, it is a juggling act to tell you the truth. I mean, there’s more money than there is deals.

Speaker 3 (14:00):

Yep.

Speaker 1 (14:01):

There’s more money than there is deals. And so we got 47 private lenders. Some of them have got $30,000 with us, some of ’em have got a million dollars with us. I can’t buy a house for 30,000, but I can use 30,000 for rehab money. You can use private money, borrow private money in a junior position, you’ve got to disclose that. But I can put private money in a junior lien. But what comes into play there is what we call total loan to value. So I’m not going to be borrowing more than 75% of the after repaired value. I didn’t say the purchase price 75% of the after repaired value. But let’s say back to that example that we just talked about, David, where if I’ve got a after repaired value on a home of 200,000 for easy figuring, I can borrow up to 150,000. That’s 75% of the after repaired value. But if I buy it for a hundred thousand, which I do all the time, 50% of the after repaired value, I can have a private lender in first position at a hundred grand. I could have another private lender in second position at 50 grand. So add a hundred to the 50, now one 50 divided by 200,000 after repaired value, I got a total loan to value of still 75%.

Speaker 3 (15:27):

Yeah, I love that. And it seems like private money gives you flexibility and

Speaker 1 (15:32):

Options. Does that make sense?

Speaker 3 (15:34):

Yeah, that makes sense. A hundred percent.

Speaker 1 (15:37):

Oh, absolutely. Flexibility is where it’s all at. I got 15 reasons. I love private money over traditional money. I won’t share all 15, but the biggest one is it puts you in the driver’s seat. The traditional way to borrow money is you go to the bank and get on your hands and knees and you’re begging and chasing, well, they are making the rules, right? The lender is making the rules. But in this world of private money, we make the rules, we set the interest rate, we set the length of the node and all that.

Speaker 3 (16:14):

I love that. Flexibility is the ultimate play in real estate. You want to have flexibility and you want to be able to have that. So I love what you teach. Who is the person that you’re trying to teach out there? Is it the person that’s done one deal a thousand deals? Who are you trying to help the most with your business?

Speaker 1 (16:33):

Yeah, that’s interesting. At my live events, which is called the private money conference, and my live events, we have about 60% or so have already done deals. They’ve already done deals. They want to scale their business. They are real estate investors wanting to scale their business, and about 40% are looking to get their very first deal. So I’m helping everybody. I mean Stu and Harriet Baldwin from New York State, they enrolled and joined my mastermind membership community and they already had a portfolio of a hundred houses. They’d already raised over $2 million in private money, but they wanted to see how I went about it. Well, just one webinar that I recorded with them brought in 1.2 million in additional private private money. So I’ve worked with real estate investors that are brand new and those that are also seasoned to help them get more private money ready to go for their business.

Speaker 3 (17:33):

I love that. It sounds like a lot of people out there need private money, and even if you’re just getting started, if you don’t have the funds to do that first deal, like you mentioned, you do that first deal, that one deal at a time, it might be okay, but this sounds like a great spot where if you’re getting into it or if you’ve got lots of stuff going on, this could be another way to make sure your company can keep running without what you ran into with the banks back in 2007, eight or oh nine. Would you say that’s true as well?

Speaker 1 (18:04):

Absolutely. Absolutely. I mean, I’ve met very, very few people. In fact, I can’t even think of one. I haven’t met any real estate investor that says, I got enough money.

Speaker 3 (18:20):

Yeah, me either.

Speaker 1 (18:22):

I can’t use any more private money. However, David, you are looking at one right now. I got about almost $2 million right now, what I call sitting on the shelf waiting to be deployed. And I tell you what, I’ve had new private lenders come into my world that want to invest and just to prove to them that I can perform. I’ll take the new private lender’s money and pay off a current private lender, refinance the deal so I can get their money to work for ’em, right?

Speaker 3 (18:53):

Ah, yep, that makes sense. I like that. As you grow and scale, you might run into that issue and you make one lender a little bit happy. I mean, at least they’re getting paid off, but then they probably come back to you and say, I want you to put my money to work again. Do you have that come up a lot?

Speaker 1 (19:12):

Quite frankly, when I pay ’em off, they’re not happy.

Speaker 3 (19:17):

That’s why I said just a little happy, maybe a little bit.

Speaker 1 (19:20):

But when I pay ’em off, they’re not making any money on that money. In fact, with a new private lender, I’ll get ready to pay ’em off cashing out on a deal and I’ll call ’em up and say, Hey, just want you to know that you’re going to have a check coming in the mail from a real estate attorney’s trust account. We’re paying off this house. And they’ll say, Jay, can’t you just keep the money? And I’ll go, no, I can’t keep the money unless I’ve got your money secured by a property because we do not borrow unsecured funds. Now, here’s maybe a little advanced strategy for some folks, but I do substitutions of collateral or loan modifications all the time. If it’s a small amount of money that a private lender’s invested 30, 40, $50,000, and we use it for rehabbing a property. So when I’ve got another property I’m getting ready to start on, I’ll substitute the collateral and keep that 30 or $50,000 note in play. So they keep earning money on that money, but we will substitute the collateral just to a different project that we’re moving to.

Speaker 3 (20:25):

That’s awesome. So then sounds like you have a good problem. It’s like, I want that. Well, I think a lot of real estate investors would rather the problem, I have too much money versus I’ve got these deals and I can’t fund them. So I really like how you teach people that and where it could snowball into this, where it’s like, I’ve got 47 private lenders, I’ve got to go out there and get the deals for ’em. Absolutely. And I really like that. And

Speaker 1 (20:50):

For goodness sakes, you don’t start out with 47 private lenders. I started out with one, right? I started out with one and then that quickly became two and three and four and five because private lenders tell other people what’s going on. So I haven’t actively attracted private money for years because our current private lenders just keep sending us people. In fact, day before yesterday, day before yesterday, I got a phone call from the mother of a good friend of mine, his name’s Craig, lives in Newburg, North Carolina. Craig had told his mother about this investment thing that I got going on and she had never heard of it, which is really funny. I’ve been doing it now private money since 2009. So she calls me up and she says, Hey, my son’s been telling me about this investment thing you got going on. Tell me about it. So word of mouth gets around very, very quickly when you start doing business with private lenders the way I do.

Speaker 3 (21:53):

Yeah, I like that a lot. So in order to get people to talk like that, what are the biggest things that you do for your current private lenders that makes them want to recommend you?

Speaker 1 (22:07):

Well pay ’em on time.

Speaker 3 (22:08):

There you go. That’s a big one. Sounds like that would be a really great place to start.

Speaker 1 (22:12):

Pay ’em on time. But I also have three times a year I put on a party for our private lenders at the Dunes Club. So we have three times a year a VIP reception over at the Dunes Club on the beach, and it’s just an evening of private lenders getting together and we have a good old time and I feed them and give them all the soft shell crabs they want, and I tell ’em to bring their friends with them.

Speaker 3 (22:42):

Yeah, that’s awesome. So number one though, that anyone can do at any stage is pay people on time. So actually pay, would you say, what about communication? I hear that come up sometimes too. How do you do a good job on the communication with your private lenders as well?

Speaker 1 (23:03):

Well, it must be good enough. They never go away,

Speaker 3 (23:06):

Right? Yeah, that’s the big things I hear.

Speaker 1 (23:10):

Here’s one thing I have not delegated as far as communication. I personally, I mean my relationships with my private lenders are very, very important. So I personally pick up the phone, pick up the phone, and call my private lenders when I have got a deal for them to fund. I do not delegate that out. I could

(23:37):

Delegate that out, but I don’t, when I got a deal for them to fund, I’m the person on the phone keeping that relationship When I’m getting ready to pay them off. I don’t have a check just show up in the mail. Of course they got to sign a payoff instruction letter if a different closing agent is closing it for a buyer. But before any of that happens, I personally call ’em up and I tell ’em that we’ve got that property sold. We’re getting ready to pay you off. Or I’ll call ’em up and I’ll say, Hey, we’re getting ready to pay this property off, but I will keep your note open so you can keep earning money. I’m just going to substitute the collateral. We got some documents we’re going to email to you for you to sign and send back the communication. I’m personally involved in putting their money to work and letting them know when we’re cashing out and where they are on the deal.

Speaker 3 (24:31):

That’s awesome. Then since it’s the profit first I podcast here, I love this concept of the private money because you need your cash in your accounts. So to be able to run your business, do those things, and then setting up a separate account just for your private money lenders, so it makes it easier to do what Jay just told you to pay them back, to pay them back on time to be in good communication with them. So now this has been really good. Do you have any other advice before I ask you? How could they work with you? How can they get in touch with, because I know this is something that is needed desperately, that I send people your way all the time. I know I trust you to help people, but any other last minute advice here that you would give to the real estate investors listening to the podcast?

Speaker 1 (25:18):

Sure. I appreciate you asking that question. It’s going to be very hard to own a lot of real estate

(25:26):

Until you own the real estate between your ears. So what do I mean by that? People ask me, how do I start? How do I start raising money? I can tell you how you start raising private money. You get your heart right, you get your mindset right. So what do I mean by that? Well, what do you do? You lead with a servant’s heart, you lead with education, you put your private lender money hat on, you private lender, teacher hat on, and you leave with education, don’t pitch deals, and you really, really are concerned about the other person and realize, part of this mindset is realize you’ve got an opportunity to change people’s lives, right?

Speaker 3 (26:11):

That’s so good.

Speaker 1 (26:13):

We’ve got countless people that are particularly in their retirement years, that have thanked me and Carol Joy for making a difference in their retirement years to where they can, I mean, they don’t want to touch their principal. They want to live off of their principal investment. So they’ve been able to travel, go see grandkids, do all this stuff that they couldn’t do otherwise until they got involved in our program. So just know that you’ve got a way to really make an impact on other people’s lives. And lemme tell you another part of mindset. It ain’t about reaping. It’s not about reaping. It’s all about sowing. It’s all about sowing. I can’t be reaping all that private money and deals until I have sown and given and led with value first. So how you sow is how you’re going to reap.

Speaker 3 (27:08):

Yeah. Oh man, this is so good. I’m glad I asked that question because I hear the passion in your voice and I hear that you really care about the people you work with, the people that have private money lenders out there, you care about that relationship. I love what you said. Get your heart right, get your head right. I also think, like you said too, that if they don’t have that desperation has a smell. So if you’re out there, you’re desperate and you’re just going out there, then you won’t have people like you have that want to keep coming back, that want to continuously invest in you. So that was, I think, the best advice that you could give right there. Get it between your ears and get your heart right. I absolutely love that. And just to recap too, I love your magic question.

(27:55):

Who do you know that can help me with my problem? Then one day you’re going to wake up and you’re going to be like Jay, and you’re going to be helping other people with their problem. I’ve got money. I want to put it somewhere, and you’re the able to get them to where they can be. Desperation has a smell. I love that. And then honestly, I love that pivot. You are like, it’s not about the reaping, it’s not about the interest that I’m making or the profit I’m making for the deal. It’s more about sowing those seeds and ultimately you’re changing lives. That’s why you get private money, and it’s like that interest that you’re paying them is twofold. It’s like you get to sleep at night, you’re not using all your money and you’re getting to help someone else get a return that they wouldn’t be able to get anywhere else or in someone that they trust as well too, and that’s a little bit more tangible than the stock markets or all this other Bitcoin, some of that stuff that’s floating around out there. So this has been awesome. So how do people then, Jay, take that next step with you? Do you have a book? You talked about an event. What can people do?

Speaker 1 (29:01):

Absolutely. Well for your audience, David, I’ve got two gifts. First of all, I finished writing my book Where to Get the Money. Now, this is not a ebook. This is a book book that we actually send in the mail Autographic where to get the money. Now the subtitle is How and Where to Get Money for Your Real Estate Deals Without Relying on Hard Money Lenders or Traditional Lenders. It’ll walk you through step by step how to get all the private money you would want. Very, very easy to read. It’s $20 on Amazon, but you can get it for free. Being David’s audience, just cover shipping. You can go to www dot j Connor, J-A-Y-C-O-N-N-E r.com/book. So I’m an er, not an or. So that’s j Connor, J-A-Y-C-O-N-N-E r.com/book, and we’ll three day priority mail it out to you. Now, in addition to that, I’ve got an upcoming $3,000 per ticket live event right around the corner. But for your audience, Dave, I’m going to let everybody come for free with a measly $97 registration fee. This private money event. You can check it out at www.theprivatemoneyconference.com. The private money conference.com. That’s coming up right around the corner in June. Get on over there. Registrations are open, and I’d love to meet you in person at the private money conference.com.

Speaker 3 (30:31):

Awesome. I’m excited about that too. I love what you’re doing and you’re solving a big need that we hear all the time. Just like all people always needing to sharpen their acts when it comes to private money, you graciously have also invited me there to speak about Profit First. So I’m excited to get to tell people about that so they can get more private money and be more confident and not be desperate when they go and ask for people. So I’m really excited about that as well. So make sure we’re going to put those links there, but make sure either get his book or go to that event. I cannot endorse Jay Moore because I know how many people he helps, but then he also has the heart. You heard it right here. That’s how he wants to help you too. It’s very much a heart and a mission and a passion for him.

(31:13):

So Jay, thank you for coming on, for sharing your wisdom, your knowledge today. If you are listening to this episode and you feel stuck like, what the heck is going on? Where is my money? I don’t know what to do. I’m a little bit nervous to go out there and get private money. I can’t keep my own house in order. That’s where you could go to simple cfo.com where we can help you walk you through that process. We’ll link you up to Jay too. If you need private money or need to learn about private money, this is who we recommend. I recommend Jay to many people, so make sure that if you need that help you go to simple cfo.com. But Jay, again, thank you for being on the show and sharing your wisdom here today.

Speaker 1 (31:51):

David, thank you so much for having me. God bless you.

Speaker 2 (31:54):

This episode of the Profit First for REI podcast is over, but there are plenty more where that came from. Are you ready to learn how David and his team can help implement the Profit First system in your business? Schedule a discovery call@simplecfo.com right now. We’ll see you next time on The Profit First for REI podcast with David Richter.

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