The Human Side of Business: Tough Decisions and Leadership with Steve Trang

November 21, 2023

Title: “The Human Side of Business: Tough Decisions and Leadership with Steve Trang”

Episode: 207

“Sales is not just about making the money. It’s also about how you make everyday relationships better in your life.”

In this episode of Profit First for REI podcast, we have Steve Trang, a sales coach who helped hundreds of clients generate millions in sales over the past few years.

If you want to close more deals, make more sales, and apply the principles to your family and friends, it is the best podcast for you!

Enjoy the show!

Key Takeaways:

[00:49] Introducing Steve Trang

[04:31] The toughest decisions

[09:31] Sales at Home (Mirroring and Labeling)

[17:01] How is it important for an owner to know sales?

[22:11] Steve’s book recommendations

[24:12] What makes Steve different from other trainers?

[34:03] Getting into the sales world

[38:18] Connect with Steve Trang

Quotes:

[04:32] “Systems is pretty easy… vendor relations, that was harder but the most difficult are always people.”

[11:10] “Asking ‘what’ and ‘how’ questions, we create a psychological safety where they can speak freely. When asked ‘why’ questions, they get defensive and shut down.”

[24:19] “People don’t buy for logical reasons. They buy for emotional reasons.”

Connect with Steve:

Website: https://www.salesdisruptors.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

Transcript:

Speaker 1 (00:00):

So the ones that we use the most are mirroring and labeling and asking what and how questions versus why questions, right? So whatever they say, you mirror it back the words, right? That’s pretty common. You mirror them emotionally, you mirror them verbally, you mirror the physically. All that stuff is happening all at once.

Speaker 2 (00:21):

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 (00:48):

We have the one and only Steve Trane sales trainer extraordinaire on today, and he goes through not only just sales and like the foundation of talking with people, but how does this apply at home? How does this apply to your team if you’re talking to them? Because sales is not just about making the money where that’s a huge benefit, but it’s also about how do you make everyday relationships better in your life, which we dive into that it is so good. He tells stories of his daughters and how they’ve used it back on him. You’re going to learn a ton from here, and if you want to close more deals or if you want to make more sales, this is an excellent podcast to dive into. Steve train’s mind. I really rip it back and say, just bear it all. And he does. So you’re going to get a lot of value. Thank you again for being a listener of this podcast. Hey, it is David Richter here, profit first, REI podcast. I have Steve Train back, which I think Steve, you might’ve been one of the first people on this podcast when we started this several years ago. So thanks for coming back on.

Speaker 1 (01:43):

Oh, it’s my pleasure. I love everything you do. So I love whatever we can do to help the Profit First community because man, that was something that I needed and I’m slowly working my way back into

Speaker 3 (01:55):

Slowly working your way back into, so it’s been a journey in the real estate and the business ownership world.

Speaker 1 (02:01):

Oh yeah. I mean, in case anyone didn’t notice, 2022 was an interesting year, right? Yeah,

Speaker 3 (02:07):

Yeah, for sure.

Speaker 1 (02:08):

Yeah. And so the great risk we had, the great challenge we had is we started believing our own bs, our own propaganda. And so we were kill It and Profit First in 2020. We were Kill It and Profit First in 2021, and then the market shifted and the funds we had set aside, well, how do I put this? We had over-committed on expenses. The expenses matched the rise in revenue, but the moment the revenue dropped 40 ish percentage, it broke our profit first and there was a lot of scrambling.

Speaker 3 (02:47):

So then did you have reserves at that point that you, because you’re still in business, so obviously you didn’t go out of

Speaker 1 (02:53):

Business. We had reserves,

Speaker 3 (02:54):

Yeah, had reserves,

Speaker 1 (02:55):

Had to use all We had reserves, we went past the reserves, we went past the reserves, and now we got a little bit debt, a little bit of business debt.

Speaker 3 (03:05):

So then how’s 2023?

Speaker 1 (03:09):

Oh man, I’m loving 2023, so we’re getting back into it. The wholesale business is doing good. Our education business is doing good, so it is nice to be profitable in all businesses. Again, it’s a good feeling.

Speaker 3 (03:23):

When you say you’re profitable again, was it a mixture of revenue increasing, expenses decreasing or revenue finally went past what you were spending before or what’d you dive into get profitable

Speaker 1 (03:35):

Again? I mean, we were slashing expenses, right? We slashed expenses, and I wouldn’t say it was surgical, but it wasn’t blunt for us either. I would say it was a mix between, here are the obvious, you cut the fat, that’s easy, and then you start getting more precise like, oh man, how much is it going to hurt when we cut this if we want to cut it? And eventually we held off from cutting those painful expenses as long as we could, but eventually we had to make those painful cuts. So it sucks, but it’s also why we get paid what we get paid. We do really well when business is good, right? What the price we pay for that is to when we’re suffering and hurting is we have to make the toughest decisions.

Speaker 3 (04:18):

Would you say the toughest decisions are people decisions or is it systems, or is it people that you like that you just have to let go of vendor relationships? What would you say is if you get into that tough position, some of the hardest decisions to make the

Speaker 1 (04:31):

Toughest decisions? So systems is pretty easy. We went without some systems that was on the easier side, the vendor relations, that was harder. But the most difficult are always people. It’s always people as a person that I want to see everyone rise around me. We say we’re on a mission, create a hundred millionaires, and it always starts at home. So it’s everyone in my organization. And so whenever we come to the conclusion that this is not the place for you, it hurts my heart because that means that I can’t help you create that financial freedom that I wanted for you. That’s where it hurts.

Speaker 3 (05:10):

Yeah, those are tough conversations to have. Now you are an expert sales trainer. You’re one of the most premier, I would say. It’s definitely in the real estate space. You’re out there just helping a lot of people on the sales side. Do you think those types of conversations, our sales conversations, are they more off the cuff? Do you plan for those?

Speaker 1 (05:32):

Oh, they’re not off the cuff, man. You want have a sad drive home, have those conversations off the cuff, okay. No, it is it not written out. I mean, that’s probably the smarter thing to do, but is roleplay in my head over and over and over again. I’m just thinking about it. What are the things I got to make sure I do and the things I want to make sure I do is lay the hammer down as softly and gently as possible. And so I’m going to say, Hey, we’ve got some bad news. There’s something here I don’t want to do. This isn’t working. I wanted this to work. It’s not working, so we’re going to have to let you go. I try to soften the blow as much as possible and look, as far as the leadership component, this is not news. No one I let go where I can’t believe, I had no idea Steve was on the fence. We’ve had multiple conversations about areas to improve, how to improve, sat down with them, created a plan, how can we improve this? We’ve done all those things. So no one was surprised, but even if they’re not surprised, it still sucks as a business owner to do it.

Speaker 3 (06:31):

And you’re always doing these in person?

Speaker 1 (06:33):

I have to. Well, the ones I can, right? The ones that are in my market, yes, I feel everyone is owed. Everyone deserves to be let go properly.

Speaker 3 (06:44):

If they’re not in your market, do you do that over the phone? Zoom? What do you do? If

Speaker 1 (06:48):

It has to be, I haven’t had to do it remotely, but if I did, it would probably a phone call. Phone call. I cannot picture having that conversation over Zoom.

Speaker 3 (06:56):

Yeah, right. Yeah, that’s a tough one for

Speaker 1 (06:59):

Sure. Unless we’re going to have 900 people in there at the same time. Hey, we’re letting you all go. Those mortgage companies. I was

Speaker 3 (07:06):

Going to say, it’s like one of those bigger companies that you see in the news just don’t come in tomorrow. Okay. So yeah, those are tough conversations and that’s where I feel like you teach people sales all the time. That’s what you eat, breathe, sleep, and that’s where, do you feel like having a sales background helps to have tough conversations or is it still It absolutely. Okay.

Speaker 1 (07:28):

Oh, it’s still tough. It’s still tough no matter what. It’s still tough, but the things that we learn about setting emotional anchors, bracing you for impact, it’s the same conversation like, Hey David, as we talked before, we’re going to have to do inspection on your home. And we promised we’re not going to ask for any repairs. Here’s the reality. We estimated 20,000 repairs. It comes back, it’s going to be $45,000. So I’m not sure what to do here. We might have to cancel, right? But I alluded to in a previous conversation, I told you neck I want to hear, and then we had the conversation. So I soften it as much, embrace you for as much as we can. The example we use here is, I don’t know about you, you’re a little bit younger than me, but when I was a kid, when we went to the dentist appointment, they wouldn’t tell you what was happening. You would just hear a worrying sound and then it hurts. And that’s the trauma we get as kids. My kids, we go to pediatric dental and they go there and say, this is going to hurt a little bit or this is going to hurt. Then they kind of tense up and they brace for it. Whenever the dentist does what they said they were going to do, it doesn’t hurt us bad. They were prepared for it. You and I can still hear that worrying sound when we were kids

Speaker 3 (08:49):

Right now.

Speaker 1 (08:50):

And it hurt, right? We didn’t know what it was, and now we’re going to fight or flight. But if you prepare another human being for impact, we’re resilient. They can handle it.

Speaker 3 (09:01):

Yeah, no, I like that a lot. So let’s talk about then sales at home. You’ve got two young daughters and I love interviewing three young three daughters now. Good grief. That’s my bad. So how old are they now?

Speaker 1 (09:15):

12, 10 and six 12.

Speaker 3 (09:17):

10 and six. Good grief. They’re just getting older at this point. That’s crazy. I’ve got a 6-year-old daughter. She just keeps growing like a weeded. So okay, you have three daughters at home. How does that sales anchoring help with them? Do you use sales tactics

Speaker 1 (09:31):

On your own? A hundred percent. We use sales tactics. So the ones that we use the most are mirroring and labeling and asking what and how. Questions versus why questions, right? So whatever they say, you mirror it back. The words, right? That’s pretty common. You mirror them emotionally, you mirror them verbally, you mirror the physically. All that stuff is happening all at once. So there’s a mirroring and the labeling, Hey, it seems like you’re really frustrated about this. It seems like you’re really upset, feels like you’re unhappy right now. It feels like you’re overloaded with school. I kind of get the feeling that you feel like we’re being unfair to you, and these labels are putting out there for her to either correct or confirm. Either. They’ll say, yeah, that’s exactly how I’m feeling. And now they feel validated, they feel seen. Now they feel important.

(10:26):

Or they’re like, no, dad dummy, this is what’s going on. And then when they tell me what it is, okay now, but now that they got to voice it, they get to share it, and as long as I’m paying attention, I can’t screw it up. So they feel listened to, they feel validated, they’re seen, which is what every human wants. And so we do that a lot. I do that a lot intentionally. And then the other thing too is asking what and how questions all lot at home. Growing up when I was a kid and I was crying, what did I get? Why are you crying? Stop crying. Especially being the oldest of six boys, you are not allowed to process emotions. But with my kids when they’re crying, how come you’re crying? What’s going on? And asking what and how questions. We create this psychological safety where they can speak freely.

(11:13):

When we ask why questions, they get defensive, they shut down. Hey, why are you’re crying? Leads to a defensive mechanism. Crying is wrong. I’m not allowed to process my feelings. Hey, what’s going on? Or how come you’re crying? And now they get to speak freely without judgment, without filter to speak as however they want, right? So there was a great video I saw on TikTok, I think about a year ago now, where the husband’s talking about how coming home I was like, oh, I’m so overwhelmed. Your kids are driving me crazy, blah, blah, blah, blah. He’s like, oh, why are they driving you crazy? Or why are you overwhelmed? And then now she gets defensive and now they have a fight. So now he comes, Hey, I’m really overwhelmed. Oh, what happened today that made you feel so overwhelmed? Psychological safety. They can have an open and free conversation.

Speaker 3 (12:03):

That’s awesome. So when’s the sales at home book coming out? I feel like that needs to be a book from Steve Tran. This is great stuff because like you said, this is stuff that everyone wants and it doesn’t just work on sellers or the marketplace. It works at home too. It sounds like the results you’re getting, what I just heard is they feel listened to. They feel heard. They feel seen. They feel like, okay, and it’s a safe place to be able to share with dad. You’ve got the range too. Okay, 12 to six, that’s quite the range you’re getting into teenage territory.

Speaker 1 (12:36):

It’s going to get tested, was going to say the skills. It’s getting tested. Yes,

Speaker 3 (12:39):

It’s going to get tested. I wondered though, since you’ve got the 12-year-old, has she picked up or even your six year, any of your daughters, have they picked this stuff up and are they doing it back to you?

Speaker 1 (12:50):

They have picked it up. They are doing it to me, part of it by instruction, part of it, by modeling dad’s behavior. So they’ll hear me doing it and then they’ll do it back to me. Not intentionally, but I’ll give you an example. So my 12-year-old, they’re using Duolingo, they’re learning, the oldest is learning Spanish. The second is learning German, and then my wife is learning French. Oh, the second is also learning Japanese. And so they’re telling me they should learn, we should get the super package so they can have more whatever, unlimited, whatever. And the single person is like 85 bucks a year, but the family plan is 120 bucks a year. So obviously you go to the family plan. So my 12-year-old we’re at Jeremiah’s Ice Cream, and my 12-year-old is talking to my wife about how you want to do this. And she’s talking about the features and benefits we go to.

(13:43):

The family plan is cheaper and this and that, and she’s doing a really, really good job of pitching. If I was not a sales trainer, I was like, man, that’s pretty good. So when she was done, I say, Hey, Amelia, I just want to let you know that was pretty good. I give you an eight or eight and a half out of 10. And she’s like, well, what would you do differently? And I said, okay, well, let’s take a step back here. If I were you, here’s how I would say this. The reason why mom’s learning French is because her dream is to go to Paris and be able to speak French in Paris. So we know this. So I would say, Hey, and I was talking to her as if she were me. Hey, imagine next year on your summer vacation, your whole family, you guys are in France, and your wife, you can overhear your wife negotiating with a shop owner over a dress in French. How’s that going to feel? Right? So I’m telling her right now, you can picture it or you can picture it. You can associate the feelings with it.

Speaker 3 (14:45):

The feelings, yep.

Speaker 1 (14:47):

Right? Yeah, I want that. It is only going to cost me 120 bucks to get that. Yeah, right. Where do I sign up? So I say this to her and she looks at me not absorbing it because she’s a 12-year-old not absorbing any of it. And she says, dad, you’re telling me that Donald Miller is wrong? And I was like, what are you talking about? And she’s like, well, in StoryBrand, Donna Miller says you have to sell based off survival, and we’re going over the survival. It’s like, well, I don’t hear any of this is survival, but she’s shoving Donald Miller in my face. Oh my gosh. I was like,

Speaker 3 (15:28):

Oh, I love it when it’s at home. And they’re just like, well, this guy’s, what about this guy? Oh man. But I love that she did say, what could I do better? She did give you that question that’s open to the feedback. And then she was like, no, what about survival?

Speaker 1 (15:44):

Then she

Speaker 3 (15:45):

Shut you down.

Speaker 1 (15:46):

Oh, she was like, yeah, I think, are you telling me you’re better at sales than Donald Miller? I said, look, I’ll be really clear here. I think Donald Miller is clearly better at me at marketing, clearly better at me at marketing

Speaker 3 (15:55):

For sure.

Speaker 1 (15:57):

But I think I might be able to give him a run for his money on sales. Oh yeah,

Speaker 3 (16:00):

Yeah.

(16:02):

Oh, that’s great. Out of the mouth of babes, right, man, that’s good stuff. But I love hearing this because okay, if you’re listening to this now, you can look up Steve. He’s got the Real Estate Disruptors podcast. He’s the sales trainer extraordinaire. He’ll teach you the step-by-step. But I like hearing here, how does this apply to real life? Because you interact with your family every day. You don’t interact with the same seller or the same whatever, or you have to interact and have tough conversations with the team. Because right now, just in the general marketplace, things are going just crazy all over the, it’s like elections next year, big election. We’ve got so many things happening that I think this is a core skill just for people to have. So I guess that’s for someone, if they’re a business owner, where would you rate sales skill on the skills that they need to develop as an owner? Obviously there’s marketing, there’s sales, there’s operation, there’s finance, but how important is it for the owner to know sales and to be able to sell?

Speaker 1 (17:01):

I would say as an owner, probably is top two or three. So the evolution I always talk about is marketing is the first skill you must learn. You must be good at marketing because the phone doesn’t ring. Nothing else matters. Game one, step one, you got to figure out marketing, but marketing, you don’t have to master your marketing. You just have to be decent at and you just copy and paste it. Sales, you have to be good at, you don’t have to master it. You have to be good at it. If you can’t close contracts, you can’t get contracts signed. Again, nothing matters. And then after that, it’s leadership. As you grow, you need to lead people. And as you’re leading people, if you can’t lead effectively, then they leave and compete against you or whatever. So I think leadership is probably the most valuable skill.

(17:46):

And then after all that finances, you can have all the leadership, marketing, sales you want in the world, but if you can’t figure out finances, then it’s all going out the back door. It just doesn’t matter. So there’s all these skills you need to learn, I believe sequentially, but had a conversation with someone recently and he’s like, leadership and sales is the same thing. It’s influence, the ability to persuade. And so seeing it as that way, I would say if you’re looking at leadership and sales in a matter of persuasion, I would say that’s the most valuable skill of all the skills. But separately, leadership’s probably more important in sales, but if you combine ’em, it’s the most value, most valuable. And if you can’t get finances right, then you’re going to be same spot financially forever.

Speaker 3 (18:28):

Good. I’m glad you’re saying that on this podcast, what we want to teach people, it’s like it doesn’t matter how much you make if you’re not keeping any on the backend or have a plan, plan when stuff hits the fan, when you’re doing the sales and everything’s going great, and then it’s not. It’s like, okay, what do I do now? But I appreciate you telling your story though, because during tough times, I like how you have to use sales tactics, then you have to use sales tactics in the great times. Like you said, I like what that other guy said, it’s influence. That’s really what you’re practicing is that influence over others. But okay, no, I want to ask this. Do you think you use sales every day of your life in some form or situation, whether it be in business or family or whatever?

Speaker 1 (19:11):

A hundred percent. A hundred percent. So here’s where I figured out that I need to use sales more. So I worked so hard on my sales craft and I could use it well in the living room. And then I realized, crap, I can do it when I’m with a homeowner and money’s on the line, but then I turn it off when I’m dealing with my colleagues, my leadership team, and I turn it off with my spouse and what happens, wife doesn’t feel listened to, wife doesn’t feel validated, leadership feels abandoned at times. Then I have this epiphany, it’s like, oh crap. Every conversation is a high stakes conversation. So now you have to build this mental stamina to be able to have high stakes conversations with your wife. It doesn’t matter what’s going on. You got to pay attention. High stakes conversation with the wife, high stakes conversation with the leadership team and high stakes conversations on every sales appointment.

(20:07):

So in order to get that going or keep that muscle or stamina up, every conversation now is a sales conversation. And the reality is most people have a negative perception of sales. Everyone feels like salespeople have this mal intent. The sales we teach is really understanding what is going on in the other person’s world and understanding such that there’s no ambiguity inside our conversation. So if every conversation I have with another human being gets us to the point where I understand exactly the message you’re trying to tell me, how is that not a high quality conversation? Right?

Speaker 3 (20:51):

Yeah, that’s great. And like you said before with your daughters, you’re trying to create that safety, the safety for them to tell the truth. So it sounds like when did you have that epiphany and have you been practicing that with your leadership team and with your wife and

Speaker 1 (21:04):

On the regular? Yeah, it was in the last two or three years. It was the last two or three years. It was like, man, I’m really good at understanding homeowner’s problems, but turns out I’m not so good at understanding my wife’s problems or my leadership team’s problems. Well, that’s more important than what’s going on in the living room. And so yeah, I’ll say sometime in the last two or three years and is with that, I’ve been able to strengthen those relationships.

Speaker 3 (21:29):

Those relationships. That’s awesome. That’s what I love about it. It’s like I totally understand the perception of sales and having that negative connotation because for a long time sales was, we thought of the used car sales, but I love sales in this context where you’re having conversations to get to the real relationship with people and what they’re going through. You’re just trying to create safety for them, which I think one of the best sales books I’ve ever read that is totally not a sales book and marketed like that. It’s how to talk. So kids will listen and listen, so kids will talk. It’s

Speaker 1 (21:56):

A great book.

Speaker 3 (21:57):

It’s a great book just to talk to human beings to make them feel safe no matter what their age is. So it’s like, do you have any ones that are kind of off the wall that you’ve read where you’re like, this is really good and I

Speaker 1 (22:07):

Recommend Yeah, I mean, I would say that one, I would say that book was really, really impactful for me. I read it when I had my kids and then later on I learned Sandler. I was like, oh, this is just using on your kids,

Speaker 3 (22:21):

Right? Yeah, exactly.

Speaker 1 (22:25):

But yeah, I mean that book was really, really impactful. One of the best lines, it’s not a sales book or a sales concept generally, but one of the best lines I ever picked up was from a poker book, and it was, what you see depends on where you stand. That’s really good. And it really comes down to perspective. And one of the things that we preach, again, our sales process is seeing the world from the other person’s perspective. Because again, if you can see the world through their perspective, through their eyes, this is how you are able to understand what they’re going through and you can articulate back to them what they’re going through. And this is again, how you earn their business. Trey Taylor just spoke at Family Mastermind last month, and his big message in that presentation was, I see you like, Hey, I see what you’re going through. I see what you’re doing. And man, that really cuts to the core of what we all want as humans. We all want to be seen.

Speaker 3 (23:27):

Yeah, that’s really good. I really love that statement. What you see depends on where you stand. It makes me think of listen to understand, not just to respond, some of those core messages, and it’s like we hear them throughout our life. But that’s a really good statement, and I love that you got it from poker book. I was not expecting in a kid’s book where I’m like, oh, this is good. I should just apply this to every single person in my life, not just my child, but other people. And then I love that it’s from a poker book, getting one of the things that you even share on a podcast now, it’s like affected you so much. I absolutely love that. So, okay, if you had to boil it down into five minutes, would you want to just go over high level? What are the core tenets that you teach from the sales trainer perspective that makes you different maybe than other sales trainers?

Speaker 1 (24:19):

I would say the biggest things, so we already touched on it multiple times, just understanding the other person from their perspective. The example I’ve always used is Battleship, if I could play battleship with you and I can see your ships and I could tell you where your ships are, that’s the best way to kind of give you this image. But I think the first and foremost is we have to set proper expectations. I’d say that’s where we’re different. Not to say that some trainings don’t do that, but we we’re really, really big on setting proper expectations, outcome. I’ve you do

Speaker 3 (24:51):

That and you’re incredible at that of just setting great expectations and along the whole process. So yeah, I Kudos that. Sorry to interrupt. Keep

Speaker 1 (24:59):

Going. No, no, you’re good. So setting proper expectations, and it could be like, Hey, after this, we’re going to have a conversation with your wife, or it could be we’re going to put everything in writing, or we’re going to talk to your siblings, whatever it is. But we’re just setting proper expectations for what the agenda is for this appointment. After that is, I would say we go really hard on really understanding their motivations, whether it’s pain or it’s upside or whatever. But we’re really harp on understanding their motivations because people don’t buy for logical reasons, they buy for emotional reasons, and we’re going to get all those emotions out there. We’re going to get the stress, the cortisol, we’re going to max it out. It’s not something that I want to do truthfully, I’m a former engineer. I would rather talk to you straight with logic and do something together for logical reasons.

(25:51):

I would love that, but that’s not how we’re wired. I’m going to play the game the way the game has to be played, right? We’re going to go with motivation, cortisol stress, and this and that. Then after that, I would say the other thing we really harp hard on that separates us is we don’t focus on the price. We focus on how much you need. We focus on how much money you need to fix your problem. That number generally, not always, but it’s generally less than what you want for the home. So we figure out how much you need to walk away from the sale. Then at that point I could say, okay, based on how much you owe and how much you need, is that more or less an MAO? And it’s less an MAO. Great. So we’re buying at a good price. If it’s more than MAO, hey, I’d love to give you all that. I have a problem. Can’t give you all that. So what do you really need from the sale? So I think just focusing on how much they need to walk away with versus the price.

(26:46):

And I think the other thing we do a good job of is preventing remorse. One of my favorite things I took was from a Dave Ramsey book, and we all generally don’t care for Dave Ramsey in this industry, but he’s one of the most successful, he is the most successful realtor in the country. He makes more commissions in real estate than anybody else in this country. No one knows this, of course, unless you’re in the real estate industry. But one of the lines I took from him was I thought was really good, was setting the expectations after I signed contract is, Hey David, sometime between now and we close, you’re going to have this thought of, did I make the right choice? Should I have done this? And I want you to know that feeling is totally normal.

Speaker 3 (27:30):

Oh, that’s good.

Speaker 1 (27:32):

So then later on we’re like, did I make the right choice? Well, he did say I was going to have this feeling. So yeah, I guess I did make the right choice. It’s just cutting it off before it starts to seed and cause all these issues later on.

Speaker 3 (27:45):

And it is, I love that you’re building that relationship and you’re telling people it’s normal to feel this way. And it’s like, I keep thinking of that kid’s book. It’s like it’s a falling, a lot of that of like, Hey, you’re, because a lot of those people aren’t in the world of whatever it is that you’re in, whether it’s real estate or outside of it or whatever. And it’s like, this is not what they do on a day-to-day basis where it is for us. And it’s like you said, you have to stand in their shoes. So man, this is really good. So this is what sets you apart. So you said you set proper expectations, really understand the motivations, don’t focus on price, focus on what they need, and then prevent remorse. Those are some key points right there. This is good stuff. I mean, I honestly could listen to you talk all day on sales.

(28:27):

I’ve been at these meetings and masterminds where you’re at, where you give the masterclass up on stage and it’s like, I love it. I love hearing it each time because it just is another tool I can put in my tool belt of how do I make these relationships better? Because I know this is not just for our industry for when I go and talk to my wife in just a couple minutes in the kitchen, or if my daughter comes home from school today, how do I make sure she’s listened to? I think you are teaching people to be better communicators and just better relationship builders. And the byproduct of that is if you’re in business, you make more sales because you’re really helping the other person with where they’re coming from, but in being able to create that safety. So I love it. I love what you’re doing. I love that one guy did equate it to leadership and influence as well, because that’s something we have in all of our lives, especially if you’re listening to this podcast, you’re probably a little different anyway. You care about the financial side, you care about becoming a great human being, a great business owner, and Steve can help you get there. This is good stuff. So I just have a couple final questions here.

Speaker 1 (29:34):

Before you do that, if I could just do a couple real quick things. So first you mentioned, hey, after school. So one of the things we always struggle, how was school today? It was good. And we’re like, ah, okay, where do we go from here? So for us, am mirroring good or good? How? And then they have to complete their thought. There’s this awkward silence, so they have to elaborate on how it was good. So there’s that. And then the other thing, just another illustration, you talk about someone going to buy a drill. So if you go to Home Depot to buy a drill, you’re going to encounter one of three different types of salespeople, probably not the third one because the third one’s going to be really high paid. So the first guy is like, Hey, I need to drill a hole in a tree.

(30:22):

Okay, great. David, let me show you all the drills we have that can drill holes in the trees. That’s the first guy. That guy’s base pay. Second guy. Okay, so what kind of hole do you need to drill? And they’re going to talk about. So the first guy’s pitching features and benefits, this guy, this guy’s talking about how the benefits of this particular drill. So the first guy’s just telling you, here’s the features. It’s 12 volts, it’s cordless, this and that. The second guy’s telling about the benefits of the drill, well, here’s why you want to go with this drill. This drill can do A, B, C. They can kind of separate drill A from drill B. The third guys is going to be like, Hey, you need to drill holes in trees. Why are you drilling holes in trees? And like, well, I want to build a tree house. Oh, building a tree house for what? Well, I read this book and it says, you have only 18 summers with your kids, and I want to create memories with my kids. So you want to drill holes in a tree, create a tree house. So you create memories with your kids. Got it, okay, here’s the drill to do that. And there’s almost no price tag on that drill that you’re willing to pay to create memories of your kids. So that third one is what we teach in our sales process.

Speaker 3 (31:38):

That’s a great analogy. That’s a really good one. Then you’re getting to the real reasons of what they’re doing and then tying the product to their end result and really creating the win for them. And I like that sometimes you have to lead the people to their own wins. You lead that person and sometimes they don’t even know what they want. Would you say that’s one of the hardest things to get out of people, whether it be ourselves or others, just what they really want,

Speaker 1 (32:05):

What they really want, man, what they really want. That’s really hard, and that’s probably the hardest thing to extract in talking to someone what they truly want. Uncomfortable, because A, no one’s ever asked you these questions. Most people don’t really ask you this question, so it’s really hard to answer it. It’s weird. It’s uncomfortable for a lot of people because the other thing too, you have psychological baggage. A lot of us unfortunately feel like we don’t deserve success. We don’t deserve to get what we want. So whether it’s programming money is evil or the schools taught you to follow the track, whatever, most of us have a hard time dreaming big because we feel like it’s wrong. So pulling out what someone wants, that is one of the hardest things to do. The other one, not as hard, but also difficult, it’s getting a homeowner to realize what their true circumstances are because they shove it all down into their stomach.

(33:05):

Yeah, I’m in foreclosure, but it’s no big deal. No, this is a major deal. The bank’s going to take your home and this is probably affecting your credit card, your ability to get a car, ability to get an apartment. It’s affecting you in a lot of places. So to get someone to understand the reality of the situation is also really difficult. And that goes back to asking questions the right way, creating the safety for them to share. And then once they share it, now they can process it so they haven’t truly processed the reality of their situation usually until we show up.

Speaker 3 (33:43):

Awesome. That’s so good. You’re getting to the core. Get to the core of where they really are and why they really want, and sometimes you have to lead them. You have to lead that horse to water so that they can actually drink it. Do. Okay, one final question. What made you start all of this? Why sales? Why all this stuff? What made you dive deep into it?

Speaker 1 (34:05):

So I never had an intent to go onto the sales world. So prior to 2018, I was kind of resigned to the fact that I would never be good at sales. I about somewhere in the first half of 2018, I had resigned myself again to never be good at sales. I was always pretty good at marketing. I was pretty decent in business. And so for the longest time I was like, you know what? I hate being in the living room. I suck at sales. I’m good at marketing. I’m just going to spend money on marketing, give the leads to my salespeople, hire pushy salespeople and have ’em close deals. That was my business model for the longest time, and it was a profitable model, not something I could say I’m proud of, but it’s a model that works. And there’s probably a lot of models out there that are like that.

(34:55):

And it wasn’t until 2018 where Pace Morby, who you probably know at the time, he was my general contractor, and I was a real estate broker, so I’m a real estate broker. He’s my general contractor. He has a home investor franchise, so he’s getting deals. I’m wholesaling, flipping as a side hustle, but not really intently. And so I keep saying to pace, send me your deals, send me your deals, send me your deals. He’s like, I, I got to send ’em to Jamil. It’s like, I know, but we’re friends too. You can also send ’em to me. And he was saying how, look, if you really want to get deals, why don’t you go where all the home guys are? We hang out every Friday. And I was like, hang on a second. Now you mean to tell me there’s a room where all the home investor guys hang out every Friday?

(35:43):

He’s like, yeah. It’s like, there’s no way I don’t do more business hanging around a room full of home investor guys every Friday. And so I figured out where he went and it was Sandler. So I go to the Sandler sales trainer and talking to him and listen to him. I was like, this guy has figured out sales. This guy is able to fill all the holes I’ve had for more than a decade ahead in sales. I bought my first property in oh five. I got licensed in oh seven, and from oh seven to 2018, I was at best average on sales, but I started with a really low floor. I was an engineer, but this guy was able to fill in every hole I ever had in sales. After doing that for a year. And fortunately, I was in a point in my career where I can go and hang out with this guy five hours a week, two hours on Tuesdays, 90 minutes on Wednesdays, 90 minutes on Fridays for all his different class time. Every time he had an opening, I was there and I was there for two years.

(36:51):

Once I did that, I think you’ve seen me present a collective genius. This is not going to sound humble, but it is what it’s my superpowers are learning and distilling what I’ve learned into an understandable way of understanding it. And so I took everything I learned from him, and I had a lot of people in 2019 say, Steve, I want you to teach me what you guys do. So I said, okay, no problem. And so I started teaching it, and in teaching it, I’ve gotten deeper and deeper and deeper into the rabbit hole of sales, and I am learning as much as possible in sales, negotiation, psychology, and this and that. And so I never intended to go in this direction, but since I’m in this direction and I see how much opportunity there is, and I’m passionate about it, I really enjoy learning. I’m going all in on it. So why did I go down this route? I didn’t choose this route, but once I saw it, I could not unsee it,

Speaker 3 (37:55):

Right? Yeah, it was a calling. It sounds like it’s a calling at this point. Well, you’re helping a ton of people, so I want to land the plane here with aton of value here today. I love you. Even the step-by-step of some of the things that you’re doing and how people getting their appetite wet and some of the things that you do inside of your sales. How do people get ahold of you or how do you want ’em to find you?

Speaker 1 (38:18):

Yeah, I would say there’s a few different places. If you want to digest our free content on Instagram at Steve dot t, Trang, realestate, disruptors on YouTube, iTunes, and Spotify, and then if you want to work on sales, for me, I look at sales. It’s not something you just do once. Look at it as a mastery type of deal. If you want to get really, really good at sales, then we invite you to join our sales community@salesdisruptors.com. We have three live trainings every single week, and everything I’ve ever recorded that we charge thousands, thousands of dollars for, it’s all there included inside our community.

Speaker 3 (38:54):

Awesome, and where’s that again? What’s that site?

Speaker 1 (38:57):

Sales disruptors.com.

Speaker 3 (38:59):

Sales disruptors.com. I mean, if you liked today and you’re listed to this and you’re like, this is something that you could apply to all areas of your life, not just business and making them more money and having it roll in, obviously that’s a huge benefit, but what does that money mean to you? It means that now you have the time to be able to spend it on other things as well. Maybe if you’ve got a spouse at home, being able to communicate better with him or her, you’ve got your children. If you’ve got children, it’s like all those relationships in your life. I think, Steve, you’ve helped a ton of people here today and breakthrough the sales stigma too, and I love how you said it, engineer, you started lower than most other people because you’ve got the logical brain and just filling in a lot of those holes.

(39:38):

So I love it because as a person who grew up with the same mindset around sales myself and being this nerdy just looks like the engineer, looks like the accountant, bookkeeper person, I’ve gone down this hole too, and you’ve been a huge help with that of helping me overcome a lot of the mental baggage I had around it as well too. So if you want to get around a great community, go to sales disruptors.com. I can’t endorse Steve enough. This is good stuff. So Steve, thanks for being on today. Always an incredible guest. Then I also want to say too, if you’re listening to this and you need help on the sales, go to Steve’s stuff and learn to make the money, but then once you’re making it, if you need help keeping it, because a lot of us make money but feel broke, then you need simple CFO in your life. Go to simple cfo.com. We can help you get someone on the team that’s focused on your profitability. So that’s what we do. If you want to head over there, if you’re making the money hand over fist, but you’re like, oh my gosh, all of it’s going out the back door, or we’re going through some tough times, then we can help you at that side. But Steve, again, thank you so much for all the value provided here today.

Speaker 1 (40:40):

Oh, thank you for having me on, and it’s always a pleasure hanging out with you.

Speaker 3 (40:43):

Yeah, likewise.

Speaker 2 (40:45):

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.

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?

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):

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.