Achieving $20 Million in Real Estate Volume: Tony Clark’s 12-Month Success

October 3, 2023

Title: “Achieving $20 Million in Real Estate Volume: Tony Clark’s 12-Month Success”

Episode: 200

Telling about his Profit First journey, we have Tony Clark in this episode of the Profit First for REI podcast.

Tony is a real estate agent/investor who did many things in real estate, including wholesaling and helping other agents become successful.

Listen as he shares some money mindsets many people have gone through and how he was able to break through them and come out better on the other side.

Enjoy the show!

Key Takeaways:

[00:56] Introducing Tony Clark

[01:51] Why Real Estate?

[04:50] About his team and finding the right niche

[12:03] Life before and after Profit First

[16:54] Being stuck in a start-up mindset

[21:52] One habit that contributed a lot to Tony’s success

[26:14] Connect with Tony Clark

Quotes:

[02:17] “Real estate is just a really tangible option for running a business, and I can see it, I can feel it.”

[12:13] “Implementing Profit First made my wife much happier… before, I was just always chasing the next deal and didn’t have a system in place.”

[17:12] “Things that can be healthy for a period of time aren’t always healthy forever.”

Connect with Tony:

Website: https://www.agentos.io/

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):

For me, even mentally, I didn’t give myself the freedom to put money into marketing dollars because I viewed everything as here’s what I made this month and what I made and it’s in our account. And once I started implementing the Profit First system, I said, okay, what do we need to live? Okay, great, let’s pay ourselves that. And then everything else I can reinvest and allocate it according to the different accounts and how I can take care of the other thing.

Speaker 2 (00:29):

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 r e I 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 (00:56):

We have real estate agent slash investor, Tony Clark on the podcast today telling about his profit First Journey, but also just some money mindsets that I believe a lot of people have and how he was able to break through them and come out better on the other side. And honestly, it helped his personal relationships with his spouse, with a lot of the people in his life, just of some of the things he was able to work through. And he tells about that on this podcast. I know that this can help you. Thank you so much for being a listener and enjoy this next episode with Tony. Welcome back to the Profit First r i podcast. Excited. We have Tony Clark here. He is not only a real estate agent who’s done a lot of things. He’s also done wholesaling. He’s run a successful team. He now helps other agents become successful too. But most importantly, especially for this podcast is that he’s run Profit First and it’s helped him on his journey. So Tony, thanks for being a guest today.

Speaker 1 (01:49):

Absolutely, David. Thanks for having me.

Speaker 3 (01:51):

So why real estate? Why did you get into it? Is there any light bulb moment or was it always in your blood?

Speaker 1 (02:00):

Growing up, I was that kid who was selling baseball cards to his friends and just slowly traded up from baseball clubs. I flipped golf clubs in high school and then got into, it’s just the toys get bigger and bigger as you get older, but I love the deal making process. And then real estate is just a really tangible option for running a business and I can see it. I can feel it to me is a safer option than trying to trade stocks that I don’t understand or get into all of that. And so really for me, that’s all it is. It was like I’m not smart enough to figure out some of these advanced strategies, but real estate is something that’s tangible to me.

Speaker 3 (02:46):

How long did it take you? I read your bio, which I know usually people read the bios. I hate reading the bios from a page and stuff, but 20 million a year you got to in the volume in the real estate. How long did it take you to get there as an agent?

Speaker 1 (03:00):

So it was right about 12 months, 12 to 15 months. So I had a little bit of an unfair start where I started in the private equity space. And so I had a bit of a real estate investing background, but then jumping in as an agent, things started pretty quickly. I was in Nashville, Tennessee, which is a market that everybody was looking at. This was 20 21, 20 22, and so just was able to start pretty quickly there.

Speaker 3 (03:32):

Okay. So what does 20 million in volume equate to revenue for your company?

Speaker 1 (03:41):

Yeah, yeah, so 20 million in volume. Most commissions are, I was averaging about 2.7% commission, and so that would be 20, it’s 500 ish per year in gross revenue, and I was running at about an 85% margin. I didn’t have much overhead. So taking home right around 400 grand,

Speaker 3 (04:04):

Most people don’t know those numbers, first of all, like their profit margins or those things. But that’s pretty impressive in the first 12 to 15 months getting to there because I think most agents do not. You don’t know the statistic of the first 12 months as a real estate agent, what the average agent earns it’s got to be out there. I probably could just Google it and I would think it would be in the maybe 10,000 or less. I feel like for the average agent,

Speaker 1 (04:29):

Those stats are so tough because there’s so many people who get their license and then they’re like 90% of agents quit in the first year. It’s like, well, yeah, because everybody and their mom gets their real estate license. Exactly. But yeah, yeah, it’s been a fun time.

Speaker 3 (04:45):

Okay, so talk about that you had really high margins. What was the team size when you did that?

Speaker 1 (04:50):

So that was just solo agent. I got to that 12, 15 month mark and then started bringing on a couple of team members where more just at a default than anything. Both of them were past clients of mine who then wanted to get their license and work with investors. And I said, Hey, sure, I’ll figure out this team thing. And so started a little bit of a team with ’em and just kind of organically, I didn’t really grow the team much. I had the peak three agents that were working with me and it was lean team with not a whole lot of overhead.

Speaker 3 (05:28):

That’s pretty cool. So then would you attribute your background as the consummate salesperson from even it sounds like a young boy into growing up and then going into this, this was a good fit for you because it was sales and you already had that edge almost?

Speaker 1 (05:48):

I think it was a good fit. Everything that when I think about real estate is it’s so much, it’s a sales role, but even more than that, it’s an advisory role. And I think taking that approach where in trying to give people options for investing, there were plenty of times where I would say, Hey, you’re looking at these four markets to buy property in Nashville is not the best fit for you, but here’s people that I can connect you with in these other markets. And then they came back to me and said, Hey, no, we actually just really trust you and want to work with you and we can find a good deal here because you didn’t try to hard sell us. And I think that overall approach where not having the commission breadth or not being so focused on what can I make from this transaction and just helping people, I think it’s overlooked, but that’s something that I really attribute a lot of the growth to.

Speaker 3 (06:41):

Okay, well that’s very cool. Then a lot of agents usually shy away from the investing market. What made you embrace it?

Speaker 1 (06:52):

Yeah, for me it was just when I started out there, I think there were more real estate agents than there were listings in Nashville. And I said, well, what’s everybody doing and what’s a niche that I can get into that everybody else doesn’t like? I very much am just a believer in if you find something people don’t like to do and do it well, then there’s money in that niche. And for me it was investing. And even within the investing world, I said, well, I flip houses personally. I don’t really like working with house flippers. You write hundreds of offers that are way too low for sellers in hopes that you get one accepted. So I said, well, I don’t want to do that, but there’s a whole subset of investors who are looking to just buy rental property that maybe they can fix up a little bit and rent out or they’re looking for a good deal, but they’re not looking for the screaming deal every single time.

(07:43):

They’d rather have less effort and they need a loan. And so that was really the niche that I started working in was these people who had saved up enough money for a down payment but couldn’t come in all cash and I could just then really narrow in on those usually high income earners who were looking to diversify into real estate. And it made it a lot easier to go after clients and find the people that I wanted to work with because they’re all a lot of medical professionals or high income W2 earners or financial planners. I could find those people instead of just having to shotgun network with everybody.

Speaker 3 (08:21):

And would you say that was a big part of that first year was finding that niche and then going to them?

Speaker 1 (08:26):

Yeah, I spent the first three, four months just piddling around trying to figure it out and then from there it started to take off pretty quickly.

Speaker 3 (08:36):

Okay, that’s cool. So then we were talking before we started recording that you got into wholesaling. So how did you wholesale some of the houses or even know about that exit strategy?

Speaker 1 (08:46):

Yeah, so wholesaling was something that I learned back when I was working at the real estate investment fund before becoming an agent. And the wholesaling piece was something I brought in kind of after that first year where I said, well, I’m starting to do more direct to seller marketing to try to get listings, but I want to be able to offer these sellers a solution that fits well for ’em because some of ’em didn’t want to list their houses or they did just want out early. And so I’d always go in and say, Hey, I’m a blank slate right now. I don’t represent you, I don’t represent anyone else. Here’s some options for you. I can give you the CarMax option where here’s the trade-in value essentially for your home, but I’ll buy it for cash. I can list it for you and help you get top dollar. Here’s what I think you could get on market with comps and everything else. Or if you don’t want it on market but you’re open to an offer, I have buyers who are looking, just let me know and I can try to bring them to you and do something off market that probably gets you something in between. So the wholesaling was really kind of an add-on service, so to speak, for those sellers who did just want to get out quickly.

Speaker 3 (09:59):

For those, did you see that most of those took the wholesale option or did they want to invest in make it into get top dollar? What would you say what the percentage was?

Speaker 1 (10:11):

It was super interesting. I would’ve thought that more listings would’ve come out of it, and we can even get into, I’m in California now, so life circumstances just, I wound up moving back to where my wife’s from out here and I’m starting up some of the same marketing, but in Nashville what I saw is a lot more people wanted the wholesale option than I would’ve thought I would’ve. Most of them would want to list their properties, but I think they get solicited so many times by agents that for them to say, oh, here’s someone who actually has an offer on my house that is a licensed agent and isn’t some Yahoo wholesaler off the street who’s just calling me and offering whatever that did have a little bit more weight than I thought it would’ve.

Speaker 3 (10:54):

Yeah, you always hear that too, should an investor get their license? And I’m like, I see hear cases for both sides, but if you’re like in this situation, it’s a great option, then you can give ’em multiple exit strategies. You’re learning the market better, they trust you a little bit more in that situation and you can say, I’ll just buy it from you then if you don’t move forward with the listing.

Speaker 1 (11:17):

Yeah, for sure. And there’s extra disclosures with which I always think are great, whenever someone asks, what do I have to tell people? I’m like, you’re asking the wrong question. Just be upfront with people, say, here’s what I’m doing. And then people, then they’ll trust you. You get to their motivation. Exactly.

Speaker 3 (11:33):

Yeah, and they’ll be more open with you too. It’s like you keep hiding things to the chest and they all start hiding things and it’s like, well, that doesn’t help anyone. And then you get to the closing table and there’s 15 family members that you have to fight off to. They didn’t tell you about it or whatever.

Speaker 1 (11:50):

Exactly.

Speaker 3 (11:51):

Okay. Well then talk about, you say systems have been a big part of your journey and you found Profit First and started implementing that system. So how did that life before Profit First and then Life After Profit first? So tell about that journey a little bit.

Speaker 1 (12:08):

Yeah, so Life Before Profit first, I’ll basically just say implementing Profit First made my wife much happier and helped our good answer more than anything. As in before, I just was always basically chasing the next deal and I didn’t have any sort of system in place. Everything came into our personal account and it was like, oh, we made a ton of money this month and then nothing comes in for three weeks, or it was the highs and the lows and it was fine. I mean, we made enough money that we were never struggling for how are we going to pay rent, but it was just this, for me, even mentally, I didn’t give myself the freedom to put money into marketing dollars because I viewed everything as here’s what I made this month and what I made and it’s in our account. And once I started implementing the Profit First system, I said, okay, what do we need to live?

(13:02):

Okay, great, let’s pay ourselves that and then everything else I can reinvest and allocate it according to the different accounts and how I can take care of the other thing. Taxes was a whole different story where I didn’t put any money aside for taxes and then had a huge bill the end of the first year. And then that was kind of what pointed me toward Profit First as well, but the combination of just saying, Hey, I feel like I’m in control and running a business instead of just being a really highly paid salesperson would be in a nutshell how I felt once I started implementing that.

Speaker 3 (13:38):

That makes sense. So what actually pointed you to it then? Were you at an event or did it just get brought up somewhere or, I’m just wondering where you go from the Leap I’m living deal to deal, but there is a solution and someone introduces it.

Speaker 1 (13:53):

Honestly, I can’t remember where I heard it first. Yeah, I can’t remember where I heard it first. I think I was just looking around saying, talking to there a better way, other investors or realtors. Yeah, I was like, I’m not doing this the right way, but what is the right way? And then just kind of stumbled on

Speaker 3 (14:13):

It. Okay, that makes sense. Because a lot of people could masterminds or meetups or events or friends and it’s, I’m always very curious of how people hear about it because so many people struggle with it. It’s usually brought up in the circles of here, this might help you get to where you want to be. I love what you said though, that this helped the most with your wife and made her happier, and it’s like, well, if you need any other encouragement, there’s a huge one right there. It makes your significant other happier in your life because I’m sure she probably struggled with the ups and downs of real estate too, even though you said you made enough and it was going well, there was never any worry. It was still probably a little bit tolling on her too.

Speaker 1 (14:58):

Absolutely. Well, for my personality, I’m very much a, we’re always broke, we’re always broke. Let’s invest everything that we have. And that freed up, I mean the change in mindset from my end, and then for her, she’s a W two, she’s a nurse, and so she has the stable income that just kind of pays the bills and whatnot, but I think it really freed her up to say, Hey, we now have this profit first system that’s helping me run my business. Then in our personal life, we’ve got this budget where a budget isn’t constricting anymore. It’s saying, no, please go spend money on yourself, because I’m not saying, oh, we need to go buy another rental or a flip or whatever. It’s just, no, this is what’s coming in. You have the freedom to go get your nails done or go do whatever you want to do with it, and I’m not going to be up in arms about whatever.

Speaker 3 (15:51):

Yeah, no, that’s awesome. Okay, so you gave a little glimpse of one of the money scripts you were running in your life we’re always broke. Where do you think that originated from? Was it like your risk taking or when you were growing up, or why do you think that you always lived on that edge of just constantly investing everything?

Speaker 1 (16:14):

I think it was initially, so I wasn’t always very money aware as far as saving. That kind of shifted. I did read the Purple Bible back in 20 18, 20 19, the Rich Dad Poor Dad thing, and that was when it really switched and I went from, okay, here’s what I make. Here’s what I spend to, I want to have the ability to retire my wife by the time she turns 30, I’m 26 right now, she’s 25. We said, okay, let’s get on this aggressive financial freedom journey. And I think that was great to start off with, and it’s kind of the idea that the same things that get you from zero to a hundred thousand or zero to a million are not the things that take you from a million to 10 million. So I think starting off that was really good where we cut a lot of our expenses. We did live really frugally, but then as things grow, it’s like things that can be healthy for a period of time aren’t always healthy forever. And I think it was one of those where we needed to transition out of that, and I was still stuck in the small business owner mindset or the startup mindset.

Speaker 3 (17:25):

That’s really good. I like what you said there, things that are healthy now aren’t healthy forever. So I think there’s a lot of wisdom in that because it’s different stages of life too. It might be frugal to be frugal and when you’re first starting out, but then when you get a little bit bigger and it’s like, okay, you can spend a little bit more and still be at the same percentage that you were and you just have a bigger pie now that you’re working with, so

Speaker 1 (17:53):

Exactly.

Speaker 3 (17:55):

That’s really good. I think there’s a lot of wisdom there that I think a lot of people, do you think this too, a lot of people hold themselves back from what they really can do with their business?

Speaker 1 (18:06):

Absolutely. I think everyone has limiting factors and it’s figuring out what those are for you, where everyone’s are different. I know I have friends who their limiting factors are very different than mine. They’ll go drop six to eight grand on marketing because that’s just, they see the money in money out, but maybe some other operational things are harder for them to figure out. And it’s just, I think for everyone it’s identifying what those weak points are and just saying, all right, how can I overcome those?

Speaker 3 (18:37):

Yeah, which sounds like at one point of your life it was the money and then PR first helps you get from one side to the other. Is that correct?

Speaker 1 (18:47):

Yeah, absolutely.

Speaker 3 (18:48):

Yeah, I see that a lot, especially on this show and hearing a lot of people’s stories because a lot of people struggle with it. So if you’re listening to this now, we understand we’ve both lived this out before in our lives. Definitely. I think that really resonated with me. Things that are healthy now aren’t always going to be healthy forever, and I feel like that’s where I had a limiting belief of no, I need to be the constant, I was the opposite side. I was always the saver I wanted to save. I never wanted to really spend a lot of the money and the Profit First helped me with, I need to be able to spend and I need to be able to do these things and invest in the business and invest in myself and be able to, like you even said, there’s a budget there now that the wife can’t go out and get her nails done, it’s okay. You don’t have to invest every dollar into real estate. So you got to also make sure your relationships are healthy and that you’re not always broke when you don’t really have to be, but it’s just gave it a system. Like you said, a system like you’ve run a lot of systems, so profit first obviously for the financial side. What other systems have helped you on your journey?

Speaker 1 (19:55):

So I kind of just break the business down into a couple of different sections that helps me kind of think through things better. So Profit First, really for the financial side of the business really operations wise, I’ve got, I call it my five step funnel framework for basically in my business. And then what the businesses I work with now is saying, Hey, here’s the customer journey, essentially, let’s break it down into five sections where you’ve got prospects who don’t know, you’re trying to get ’em to know who you are, leads who know who you are, and might buy from you clients who you’re actively working with, and then you’re fulfilling on a service and then repeat business once it’s done. And so just depending on where I’m at in my business, I try to audit each one of those areas or spend time on one of those at a time to say, alright, where am I lacking in this in my follow-up?

(20:47):

Do I need to go implement a new email campaign or retargeting ads or whatever it is to bring more people in the door or, okay, I don’t have the Google reviews that I need to have. Let’s figure out a way to drive that repeat business and just add one more step in. Because I think what I love about the Profit First system and kind of how I think about business is it’s one step at a time. It’s saying, Hey, here’s the framework. Really, once you get that in place, it’s just maximizing everything. And that’s kind of how I think through my business now is it’s just a series of small steps. Maybe some people can see the whole thing and work on a bunch of things at once. I’m not smart enough to do that. So I said, let’s break it down and just do one thing at a time, and that really helps compound and grow a pretty solid business over time.

Speaker 3 (21:39):

Awesome. I really like that. So then what would you say with all the success you’ve had with real estate, with helping other people with going through these journeys, what’s one habit that you’ve had that has really contributed a lot to the success that you’ve had up to this point in your life?

Speaker 1 (21:58):

That’s a great question. I think

Speaker 3 (22:01):

Try

Speaker 1 (22:03):

The habit. If I were to pick one, I think the habit would be taking calculated risks, and whether that’s financial or time-wise, I’m much more, not generous is the wrong word, but I’m much more of a risk taker with my time where I’ll go invest time into something that may or may not work, and I think that has paid off. I think there’s that bar of knowing enough to get started, but then not knowing too much so that you decide it’s not for you. I think that’s one thing that I’ve tried to jump in where it’s like, Hey, I have a good theory. I have a hypothesis on how I think this business could play out. Let’s go test it knowing that it’s not going to bankrupt me if it doesn’t work, but I’m going to give it a go because I think I see something here. And knowing that, I mean, I forget the staff, but most entrepreneurs, I mean, our batting averages are pretty low, so if you can get a hit every once in a while, that’s a win right there. And so I just try to get up to the plate as many times as possible.

Speaker 3 (23:10):

Awesome. Now that’s a really good one. Take calculated risks. Okay, so couple last questions here. If you were to meet an investor or if you wanted to tell the people here, if you were going to implement Profit First, what would you say is one of the best things to get up and running?

Speaker 1 (23:29):

Yeah, I think the first step is always the hardest. So it’s really, it sounds dumb, but just opening up the different bank accounts. I think once those are open, then you’ve done it, you’ve done the step, then it’s just you can on to the next one. But I think there’s a lot of people that I’ll talk to with anything, and it’s just like, oh, I’m thinking about this or thinking about that. It’s like, alright, just go to the gym, walk in the doors, and then you can turn around and leave. If you want to go open the bank accounts, then you can shut ’em all down if you want to and whatever, but once they’re open, you’re not going to do that.

Speaker 3 (24:04):

Right. That’s really good. Take that first step, put that one foot in front of the other and then you’ll see that it leads you right through that door. But awesome. No, this has been great. I like it. I think one of the biggest things I took away is that things that are healthy now aren’t always healthy forever. And then I did, how you say, implementing Profit First helped your wife and made her happier. I think there’s so much wisdom there of get systems in your life that help your personal life too and help your relationships overall. And then I liked how you say take calculated risks niching down. I thought that was really interesting too. That helped you really scale quicker and get to the people that really had the money that you wanted to be able to deploy into real estate and being able to help them. There’s just a lot of gold here. And then make sure to just go out, open up that first account, open it up, start using the system, get on the right track there. It sounds like it’s helped you a lot on your journey now, just talk about what you’re doing now. You provide a lot of value here. How can people get ahold of you or what do you do for the real estate agents? Or tell us a little bit about that side.

Speaker 1 (25:12):

Yeah, so I’m a systems nerd. Kind of what Profit First is to the financial side of the business. I am an operations nerd on all of that, and so I primarily work with real estate agents. I have an active real estate license in California. I do a few deals a year or whatever on that, but my main gig is I work with real estate agents and some small business owners. I’ve worked with moving companies, lighting companies, whatnot, just saying, Hey, let’s put systems in your business so that you’re not either writing everything down on paper and trying to keep track of all this stuff, or for real estate agents saying, let’s really systematize this because you’re running a business, you’re not just a salesperson. And so that looks different for everybody. I try to take as much of an individualized approach as possible. I’ve got a team that are specialists in different areas, and we just try to do what we can to help people build systems that allow them to find more freedom as a business owner.

Speaker 3 (26:11):

Awesome. So how do they find you? Where do they go?

Speaker 1 (26:14):

Yeah, so a couple places. Instagram is going to be the best place to just directly connect with me, Tony Clark Realestate. You can go to my website, agent OSS io. So either one of those will be a great place to just learn more and get connected.

Speaker 3 (26:30):

There you go. That’s how you could connect with Tony. This has been awesome. I liked hearing about your first journey, but then also just about your journey in real estate and some of the money mindsets that you’re able to get over has been really good. And then if you’re listening to this podcast episode and you’re like, I am running around a chicken with my head cut off, or I feel what Tony was like, I always feel broke. You can reach out to us as well too simple cfo.com, we help you put a financial leader on the team, just like Tony’s a systems nerd on the operation side. We’re definitely systems nerds on the financial side. So if you need help there, go to simple cfo.com, just click schedule a call and we’ll get on a call to see if we can at least point you in the right direction. And no matter what if you work with us or not. Thank you so much for listening. Make sure to make Profit a habit in your business. And Tony, thanks for being a great guest.

Speaker 1 (27:18):

Hey, thanks David.

Speaker 2 (27:21):

This episode of The Profit First for R e I 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 r e I 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):

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.