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Action + Action: Mike Fitzgerald’s Simple Formula for Massive Results

Episode 106: Action + Action: Mike Fitzgeralds Simple Formula for Massive Results

The Profit First REI Podcast

August 22, 2022

David Richter

Summary:

One dream can change everything. And our guest Mike Fitzgerald couldn’t agree more with that statement. He started with a dream of owning nine rental properties, and now he’s been able to live up to that. Mike is a champion in the REI world. He’s been in the business for quite some time , has purchased over 250 properties, and even gotten an award as “the business person of the year.”

He’s living proof that if you drive towards your purpose and you drive towards excellence, you’ll be able to achieve success. He’s here today to help us create great habits that make us proud of who we are and what we’ve become and step towards our vision and dreams.

Key Takeaways:

[1:35] How did he get into the real estate investing world?

[6:04] What was it like to grow a team for his business?

[8:33] What is the state of his business after years of implementing the Profit First system?

[10:42] Mike talks about the evolution of his money mindset throughout the years

[12:00] What key things and tactics are essential to his success?

[14:22] The importance of having the right people around you

[17:52] Make sure to take massive action to get to where you are.

Quotes:

11:17 “As you evolve, as you move forward, it becomes easier and easier.”

12:23 “If you dream it, you can do it.”

18:48 “Stick with your dreams. If you want to do real estate, it’s going to become your reality,”

Resources:

Mike’s Instagram-https://instagram.com/mike2thefitz?igshid=YmMyMTA2M2Y= 

Profit First Real Estate Investors FB Group-https://m.facebook.com/groups/ProfitFirstREI/ 

Simple CFO-https://simplecfo.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:

Mike Fitzgerald:

When you raise money and you’re showing someone a deal and that they see that there’s value there, but there’s equity there. And that their loan is backed by a piece of real estate, a tangible asset. It, it becomes easier to borrow money. If you just walk in a bank and say, Hey, I wanna borrow money on this property. It becomes a lot harder.

Intro:

Welcome to the Profit First REI podcast, where real estate investors, master financial management, eradicate entrepreneurial poverty, and learn to be profitable from day one. Now for your host, David Richter,

David Richter:

Everyone. Welcome back to the Profit First REI podcast. I’m your host. David Richter here, I have another special guest, very special guest – Mike Fitzgerald, who is he is the king of Hagerstown, Maryland. I mean, this guy owns a lot of real estate, done a lot of deals there. And he is someone that if you don’t know, you need to get to know you need to get on his socials. He’s providing a ton of value all the time out there. I get to see him at a lot of different events too. And this is just someone that in the real estate world that is making a huge, huge impact. So, Mike, thank you so much for being on this show today.

Mike Fitzgerald:

Thank you. I David, you’re an awesome guy and it’s a pleasure to be on your podcast. I haven’t done too many throughout the years. I’ve been inviting on some, but like to do more.

David Richter:

Yeah. Well, I appreciate you coming on and well, let’s go into that cuz you are, you’re a busy guy. You’ve been doing a lot of good things and let’s start right at the beginning. So what got you interested in real estate and why did you get into the real estate investing world?

Mike Fitzgerald:

So I thought I was gonna be a big importer. So I negotiated deal with the company in China with $500 credit cards to buy minibikes. And I didn’t negoti shit a deal for, I think it was a few thousand of ’em and it said I wanted a sample order of 30 used $500 credit cards had a friend loaned me $2,000. And you know, I had probably about 15,000 in the bank and I called her rent the own, a newspaper and the fellow, another line said, Mike, you sound like you make a better investor in running down my house and told me I could buy real estate, no money down. I said, you can buy real estate, no money down. I said, how do I learn? He told me to go to the local real estate associations. I went, I started asking questions and had my first deal three months later, my second deal a couple months after that. And just kept moving forward. And here I am today you know close to a few thousand transactions later over 400 units locally and over 450 in partnerships. You know, it started with a dream though nine units one day because a guy in town I grew up in had nine units. Like, I don’t know, you know, it, things lead to another, if you stick with anything, it’s gonna blossom like a flower.

David Richter:

Awesome. Yeah. That’s, that’s incredible. So tell about all the work that you’ve done in Hagerstown. I mean, they, they you’re like a celebrity in that city, so you you’ve done a lot of real estate specifically in that city, correct?

Mike Fitzgerald:

Yeah. So I started a one bedroom apartment in Hagerstown and when the market had collapsed, you know, Hagerstown took a super hard hit, but I got my first loan. I had ever got a state income loan. It was about two and a half years in real estate. And I paid, it was from a farm deal. I did creatively where I did a lot of equity. I was able to pull 500,000 out. I paid about 470,000 of it in my losses. A mentor told me to cut everything out like a cancer it’s it’s good. I did because it would’ve dropped even more started at the new market with about 20 something thousand in the bank about 600,000 in debt. And just kept moving forward. About four years later, I had over a hundred rental units after banks started working with me two years later. By the time I was I started when I was 20, by the time I was 27, I had 200 rental units.

David Richter:

Wow. That’s awesome. So that’s you’ve done a lot of good work there, a lot of good work in that town and I know they respect you very much. So you’ve also got a T yeah,

Mike Fitzgerald:

Go ahead. A lot of that is this building we’re in the day, the grand piano building, you know, I didn’t used to be my tenant here, but when I bought it, it had 196 weeks down to the first floor of light flicking on and off. I had never done anything bigger than a 5,000 square foot, single family home. And I bought a 50,000 square foot building and people told me, Mike, even if you can get it done. And I, and I was the one top of the contractors, myself managed it myself, got it done in a record number. And the city even contributed 150,000. Oh, wow. I, I was told Mike, it’ll take you 10 years to fill and you’re only gonna take other downtown tennis to fill it. So there’s another city Frederick, Maryland, about 18 miles away. That’s very, very vibrant, you know, in Hagerstown, it’s just getting very, very vibrant. Now it’s a much different story, but so I went door to door to businesses like Tommy boy and asked people if you ever thought of opening a second location, filled the building in three months, the governor gave me a an award with him and the state thanking me for helping with the revitalization of, and you know, never looks back, just kept moving forward.

David Richter:

That’s, that’s incredible. That’s changing lives locally and, and across the world here too. So talk about that trophy that you have on your, your desk. You was that the businessman of the year or something that you had mentioned? I,

Mike Fitzgerald:

I don’t nominate myself. I’ve never asked for any of my awards and any of my newspaper articles. You know, I I get recognized. It’s always humbling and an honor. And so in the last 10 years I’ve been nominated for the county’s business person of the year, business of the year. And about two years ago, it was 2019. I was Washington county business, young professional of the year.

David Richter:

Awesome. Very cool. And you’ve built quite a good team around you too, cuz like you said, you don’t get on a lot of podcasts or whatnot, but now you kind of have some more freedom to be able to do, do this type of stuff and whatnot. And you mentioned having a good team behind you. So how has that been? How has that been growing a team? You know, getting them behind you in the, you know, in the businesses that you do and what can you speak to that a little bit?

Mike Fitzgerald:

What’s exactly right. You know, I had a, I was a HUPO business model for the first 11 years or so in real estate and it was great, but I was a hub. Everybody was a spoke and I was working, working, working, doing a hundred hour weeks. And you know, I said, I want, I want to change this. I want it to be like an actual business. And it took, it took five years to get the right people. You know, you learn a lot of lessons, you keep the wrong people too long. You got a few bad apples along the way. We even start their own companies and you know but now, you know, I, I, I’ve learned a lot. You gotta hire, when you hear in these books, you want to hire the best people around you. You wanna pay higher salaries to get the best.

Mike Fitzgerald:

Trust me, that’s absolutely correct. Not only do you look the best people around you, you want them to perform the best for you. That’s the key right now. I got small stars. You know, I got all star P I got, I, I consider my whole company all stars, but I got five of the best managers I can ever ask for. You know, a lot of people are doing everything around me. The business is vibrant and I love it. So I do have some more time now and I’m looking at, you know, I’ve, I’ve only ever coached a couple people in real estate calling with wholesale of millions, one of ’em, but I like changing people’s lives. So maybe I’ll do a bimonthly thing. Maybe I’ll start helping people. I haven’t decided, you know, what I’m gonna do with my new fail time, but it’s all about having the right people. And I definitely have a lot of good people around,

David Richter:

Well, I appreciate you coming on this podcast. And then also I think that’s so true. We hear that just on this podcast, the last few episodes here, it’s just come up with people who are extremely successful are surrounding themselves with those people that are also SU extremely successful, you know, and making sure that they have the right people on the team and how important it is. Cuz like he, like you just said, Mike, if you’re listening to this podcast right now, that is the key. That is the key to getting to where you want to be in the businesses, those good people around you. So thanks for speaking on that. So, okay. So your real estate investing journey has been quite, you know, quite prolific here. What about cuz this is the Profit First I podcast on the money side of things. You

Mike Fitzgerald:

Honor to be on here by the

David Richter:

Way. Oh, well thank you. And I, like I said, honored to have you on here, but for the money side, cuz you’ve done a lot of loans in the past. You’ve paid off a lot of loans. Can you speak to like just the money side of your business and like how that’s gone over the years with the different projects that you’ve done and managing all of that and paying stuff back. And I know you’ve done quite a few over the years.

Mike Fitzgerald:

It’s all about sticking with it. I I have, and I’ve always, I’ve always overcome. I’ve always knew whether I’ve won or lost. I I’ve paid my loans on time. I’ve never defaulted. I’ve never not paid a debt, you know, no matter what I have to do, I do it down to, you know, if I’m I to take a loss, I’ll sell a property. And it’s important that with banks and with lenders, you do what you, you do what you say and that’s you’re on point no matter what. So that means you have to be willing to sell something. And that means you have to be willing to always move forward. What I find is every time I have a hurdle, I do more deals and it just irons itself out. But with lenders and banks, you know, you have to present yourself, right?

Mike Fitzgerald:

So the best way to present yourself is give ’em who, who your, who your team is. I mean, if you have a small team, if it’s a lawyer, if it’s an accountant, if it’s it’s a virtual assistant, you know, write up who your team is, put it in the packet and write the deal down. You know, when you, when you raise money and you’re showing someone a deal and that they see that there’s value there, but there’s equity there and that their loan is backed by a piece of real estate, a tangible asset. It, it becomes easier to borrow money. If you just walk in a bank and say, Hey, I wanna borrow money on this property. It becomes a lot harder. The other thing is I never just walk in and ask for the commercial lender. I, I usually go straight to the president because once a commercial lender makes a decision, that decision isn’t gonna be changed by the president. But if you have a meeting with the president and you present yourself, right, it’s more of likely the commercial lender will make a, a decision of what favors you.

David Richter:

Hmm. That’s really good. That’s really good advice. So that’s, if you’re going into the bank and you’re talking with them, go to the president first, don’t go to the commercial lender and trying, you know, and the other key thing there is presenting yourself. Well, so that’s awesome. Great advice. Love that. So then let me ask you some general questions just about money in general, cuz being on this podcast, the Profit First podcast, I wanna ask, like what lessons or what, how has your thought process around money evolved over the years? Like, did you think money was scarce before and now it’s like abundant or like what kind of concepts did you think about money in the past? And like how has that evolved over, you know, the past, you know, in real estate?

Mike Fitzgerald:

So I used to always dream about how I could do it. Okay. How I’m gonna make this

David Richter:

Happen. Awesome.

Mike Fitzgerald:

And it’s, as you go on, you know, my first year in real estate, I did two or three deals like next year, six or seven, my next year, 12 or 15. And as you evolve and as you move forward, it becomes easier and easier. And it’s, it’s, it’s hard to say why, other than it’s like an athlete, perfecting their skills. And when you look at it overall, if you don’t really think about how hard it is and you look at it in a much different light, it becomes easier and easier. And there’s a lot of money out there, especially right now that wants to be placed in safe places. And I don’t think there’s a safer sector in real estate, you know, inflation can be unfortunate, but it definitely helps a real estate sector.

David Richter:

Yeah, no, that’s really good. And what would you say, you know, so far up to this point has contributed the most to your success in business and real estate. And one of the things that you would say, you know, these are the, the key things that help me along the way.

Mike Fitzgerald:

Well, I could say my mom praying for me every day. Oh,

David Richter:

That’s

Mike Fitzgerald:

Good voicemail every day. Sweet, sweet, sweet parents. But I would stay sticking with it. You know, I, I always envision everything and I always dream it and I always believe it, you know, while Disney said, if you dream it, you can do it. And I think as I move forward, you know, the bigger my dreams get, they, they come to fruition because I believe in ’em I know I can make ’em happen and they tend to fall into place.

David Richter:

Awesome. So stick with it, get don’t give up on those dreams, make sure you keep moving forward. And what would you say have been some of the biggest pitfalls on your real estate investing journey or some of the things that you wish you would’ve known back then that you know, now, you know, in order to, you know, sidestep some of these landmines?

Mike Fitzgerald:

Well I wish that I wish I knew all kinds of things, you know, I wish I knew what would happen with the market. I would’ve made about five different buys. It would’ve made millions of dollars, but you know, in a bad market, there’s so many good deals, but it’s always like hindsight’s 2020, right? Oh yeah. So how, how do you make your foresight 2020, right? You make your foresight 20, 20 by the positivity of of thought moving forward and seeing it, you know, real estate is most certainly in many, many cases, most likely, always gonna go off. If you buy right today and you buy a property, you say at a 20% discount, 25, 30% discount and on 20 year mortgage, well, 10 years later with appreciation depreciation and and the income that goes with it, you know, you probably owe 30, 40 cents on a dollar. So if I, if I could tell if I could say what I know today, I wouldn’t have made any other mistakes. I made sold any of the real estate I sold for those mistakes.

David Richter:

Right.

Mike Fitzgerald:

That is what everybody would say, right? Yeah,

David Richter:

Exactly. So there you go. That’s Hey, like you said, hindsight’s 2020, but I like what you said there, how can we make our foresight 2020? And it is that those thought processes and, you know, wording what you’ve done and then moving forward. And then I think another thing, like you said before is having those right people around you, like having the people that can advise you and help and make sure that you are on the right track too, you know, getting those really good people around you. But now that was that’s incredible. So in the real estate investing world, like what is, can you tell me about one of the best deals that you’ve ever done

Mike Fitzgerald:

Best deal I’ve ever done? Well, you know, it’s hard to say if I didn’t do the farmhouse, when I, once I got, I got a call, you know, it was technically my third deal in real estate, even though it didn’t close until like my 16th deal, I get a deal from a farmer and he says Mike, I wanna I, I wanna stop my farm for a million dollars. I’m in a one bedroom apartment I have about 40,000 saved up from real estate deal. He wants a million dollars for his farm. I can’t get a bank on yet. What would most people do, David? They shy away from it. Exactly. Let’s make a deal. I mean, to deal with them where I could subdivide it sell or all of a subdivision towards my purchase price, the rest would be an owner finance mortgage, which eventually would be my state of income refinance that refinance allowed me to pay off a mass amount of losses and do the right thing and move forward in real estate. Could that be my number one deal? Well, it’s hard to say, you know, I picked up long metal apartment complex for 2 million, put a million in it today. It’s worth two plus that. So it’s hard to say what my best deal is, but I’d say every deal can be your best deal. If you’re not blind into the deal,

David Richter:

That’s really good. People

Mike Fitzgerald:

Look at one factor or one focus in real estate and they forget that real, estate’s all numbers. If you’re at the real estate game, you know, maybe you don’t wanna be in new construction, but other than that, if you’re buying at the right numbers, how are you losing your focus? So when the right numbers come before me, no matter where they are, like when I had done a deal over 5,000 square feet and I got a call to buy a 50,000 square foot office building I looked at and I looked at it, numbers based.

David Richter:

Awesome. No, I love that. And that is, I like what you said there, every deal can be your best deal. And, you know, making sure that you are, you know, getting something out of it, cuz like that one that you did might not have been like your best profit deal or whatever, but it allowed you to pay off that, you know, that debt or whatnot or get outta some of those holes to be able to bank people. Right. And it’s like that to me is a great deal. You know, cuz that way I was able to do what I needed to do in order to move forward. Like you said, keep moving forward, stick to it and keep doing the right thing. So now that was incredible. So just have a couple last questions here on the podcast. I wanna say number one is there any just general advice, recommendations, whatnot for the real estate investors listening on this podcast that you would wanna give to them

Mike Fitzgerald:

Guys, you all have the same opportunity in life. Me, I barely passed high school and I got quite the real estate portfolio, three commercial buildings, apartment complexes. And, and I did it not because I’m the smartest guy in the room. I did it because I took action. If you take action and you take massive action, you’re gonna get a lot of results. You know, I used to tell everybody action plus action equals massive reaction and you’re guaranteed results.

David Richter:

That’s really good. So that’s what we, there’s that constant theme again around the top people in real estate or just business is that action. I like what she said there. That action plus, you know, plus action, you know, making sure that you are taking that massive action in order to get where you want to be, because you could be have the greatest mentors in the world. You could be listening to this podcast, living, listening to Mike. But if you just go away from this podcast, not doing anything, then what was the point? You know, like what are you doing with what you, where you want to go? So that’s just great advice. Love that. So Mike, if people wanted to connect with you or you know, I always ask, you know, how can our listeners provide value back to you? Because you’ve provided a ton of value here of like your journey, this, you know, mindsets behind that. And I’m just wondering, you know, how do they connect with you? Or is there anything that you need as far as connections or anything? And you know, our listener base can, can help you out too.

Mike Fitzgerald:

You know, a lot of people have told me to put more stuff out there on social media, you know, it helps people. So I’ve been doing a lot more of it. Awesome. My Instagram is Mike, the number two, the fits that’s M I K E the number two T H E F I T Z, Mike to the fit. And you know, everybody stick with your dreams. You know, if you want to do real estate, it’s gonna become your reality right now there’s a lot of 30 year money out there stated income loans and a lot of chance to buy opportunities in rentals in real estate. You know, I, I, haven’t seen a time even in oh seven where you can get a 30 year rental loan for 3.7, 5% with, with no tax returns. And there’s a lot to be said for that. The average interest rate over the last a hundred years is just over 8%. You know, it’s a huge opportunistic time in real estate. I don’t think it’s going anywhere. There was a lot of home building stopped in 2007 and there’s a shortage year in the us, you know, stick with your dreams. Believe in yourself. The universe believes in you.

David Richter:

Awesome. There you go. You’ve got it right from Mike Fitzgerald here. He’s helping you. That is really the way to move forward is making sure that you are, that you’re working on yourself too, working on that Headspace, making sure you’re in the right mental attitude, the right mental space. And then there, that’s how you connect with him, Mike, to the number two, the fits Mike to the fits and that’s his Instagram handle. So you could go there, follow him, make sure you do. He’s got great content. And this is someone who is a mover in shaker. He is literally probably gonna go from this, you know, podcast and go make more deals like today. So this is a guy who’s gonna be out there. He’s gonna, you’re going to watch him, watch what he does, watch what massively successful people do. So this is someone that you should follow. See what he’s doing and just see the action that he takes. And Mike, thank you for sharing today on this podcast, but thank you for sharing more on social and whatnot because you do, you bring a ton of value everywhere. I saw that you were just speaking again last night, somewhere, it looked like too or out at another event. So it’s like all he’s always out there providing that value, helping other people. And so Mike, thank you so much for being on the podcast today. Really enjoyed having you as a guest.

Mike Fitzgerald:

Thank you. And I’d like to say David is one of the smartest people I know in real estate book Profit First makes a lot of sense. You know, you want to keep your Profit First. If you keep money on the sidelines, you’re always gonna be able to pay the road bumps along the way. Yep. Stick with your dreams, create your own reality. You can do it. You’re listening to a smart guy. Keep listening to this podcast. It’s one of my favorites.

David Richter:

Thank you so much for listening to today’s show. If you found this episode valuable, could you do me a quick favor? Could you give us an honest rating within iTunes and be honest, you could say whether you liked it or not. And obviously with iTunes, the more reviews and ratings we have, the better it is for other people that are searching for a Profit First and a podcast. So we’d love to be ranked on there and that’s thanks to your help. So we would really appreciate that if you would like to go give us a rating. Also, if you’re looking to connect with us further, I would highly recommend checking out our Facebook group Profit First for real estate investors. And that’s literally what it’s called. So you can type in Profit First for real estate investors and you’ll be able to find <laugh>, you’ll be able to find our Facebook group right there.

David Richter:

So come join active real estate investors who are supporting each other and growing their businesses and profits together. That’s what that group is all about. The link should be in the description below. And if you’re interested in working with us and implementing Profit First in your real estate business, we offer coaching and guidance. So if you wanna work with someone who’s actually Profit First certified and who works right now currently with real estate businesses, you can actually go start your application process by going to simpleCFO.com/apply, or just go right to simpleCFO.com. And there’s an apply button right on there. If you wanna actually start your Profit First journey with someone who can actually walk you through those step by step and help, you know, and grow your cash flow. Thanks again for joining us for another episode of the Profit First REI podcast. See you next episode of.

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

 

Episode: 242


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

 

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

 

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

 

Listen and enjoy the show! 

 

Key Takeaways:

 

[01:01] Introducing Jay Conner

[05:00] Introduction to private money

[08:30] The Great News Phone Call

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

[13:18] Maintaining relationships with private lenders

[15:40] Private money vs traditional money

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

[25:18] Advice for real estate investors

[29:01] Connect with Jay Conner

 

Quotes:

 

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

 

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

 

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



Connect with Jay:

 

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

 

Tired of living deal to deal? 

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

 


Transcript:

Speaker 1 (00:00):

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

Speaker 2 (00:34):

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

Speaker 3 (01:01):

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

Speaker 1 (02:07):

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

Speaker 3 (02:24):

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

Speaker 1 (02:43):

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

(03:38):

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

(04:27):

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

(05:18):

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

(06:10):

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

(07:02):

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

(08:11):

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

(09:06):

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

(10:04):

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

Speaker 3 (10:38):

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

Speaker 1 (11:17):

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

Speaker 3 (12:22):

Right? Yep.

Speaker 1 (12:24):

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

Speaker 3 (12:33):

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

Speaker 1 (13:22):

I mail ’em checks.

Speaker 3 (13:25):

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

Speaker 1 (13:33):

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

Speaker 3 (13:41):

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

Speaker 1 (13:50):

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

Speaker 3 (14:00):

Yep.

Speaker 1 (14:01):

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

Speaker 3 (15:27):

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

Speaker 1 (15:32):

Options. Does that make sense?

Speaker 3 (15:34):

Yeah, that makes sense. A hundred percent.

Speaker 1 (15:37):

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

Speaker 3 (16:14):

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

Speaker 1 (16:33):

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

Speaker 3 (17:33):

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

Speaker 1 (18:04):

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

Speaker 3 (18:20):

Yeah, me either.

Speaker 1 (18:22):

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

Speaker 3 (18:53):

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

Speaker 1 (19:12):

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

Speaker 3 (19:17):

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

Speaker 1 (19:20):

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

Speaker 3 (20:25):

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

Speaker 1 (20:50):

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

Speaker 3 (21:53):

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

Speaker 1 (22:07):

Well pay ’em on time.

Speaker 3 (22:08):

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

Speaker 1 (22:12):

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

Speaker 3 (22:42):

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

Speaker 1 (23:03):

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

Speaker 3 (23:06):

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

Speaker 1 (23:10):

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

(23:37):

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

Speaker 3 (24:31):

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

Speaker 1 (25:18):

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

(25:26):

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

Speaker 3 (26:11):

That’s so good.

Speaker 1 (26:13):

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

Speaker 3 (27:08):

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

(27:55):

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

Speaker 1 (29:01):

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

Speaker 3 (30:31):

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

(31:13):

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

Speaker 1 (31:51):

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

Speaker 2 (31:54):

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

 

 





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