Conquering Financial Challenges: The Roadmap to Economic Freedom

May 23, 2023

Episode 181: “Conquering Financial Challenges: The Roadmap to Economic Freedom”

In this episode of Profit First for REI, Chris Naugle joined us to share hope in his real estate investing journey! Chris is an innovator and visionary in wealth-building and real estate.

He is part of the movement BYOB – Be Your Own Bank, and empowers others with his knowledge of how money works. Chris also dedicated his life to being America’s #1 Money Mentor.

Listen and know more about Chris’ Six Laws of Wealth, and how he got back from the lowest point of his life to the other side of it!

Key Takeaways:

[00:45] Introducing Chris Naugle

[02:16] Chris on what he does in BYOB

[08:45] Lowest point of his life

[11:37] Impact of money on his family

[13:32] How Profit First Impacted His Real Estate Journey

[24:16] “I built my own banking system.”

[28:46] Six Laws of Wealth

[37:38] Connect with Chris

Quotes:

[04:36] “There are only two types of people, people with money and people that need money, and both have a problem. People with money, they want to make more. People that need money, they need money to make more money.”

[11:45] “Money is the number one cause of divorce in this country.”

[28:52] “Pay yourself first.”

Connect with Chris:

Website: https://www.chrisnaugle.com/

Tired of living deal to deal?

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

Transcript:

Speaker 1:

I read the book and I didn’t apply everything in the book. You know, I, I, I wish I could sit here and say I applied everything he said. I didn’t sure I applied only what I needed. Every single property I had, I went to the bank and I opened a separate bank account up nice and actually opened two bank accounts for each property.

Speaker 2:

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 re 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:

Hey everyone, this is an awesome episode. You will get to hear from Chris Nale. You might have known him as the Money Man and he is also got to be your own banker. It’s like he’s got a lot of stuff going on, but he was a real estate investor and he talks about honestly, the lowest points of his life where he literally was thinking about jumping off a bridge and what turned it around and what helped him get back on the other side of it, this we go deep and I want you to have hope this episode and this podcast is about giving you hope will matter where you are on the your financial journey. He also gives some great information of how to take your finances to the next level as well. There’s so much jampacked Get value. Thank you so much for being the listener of the prof.

First r I show. Hey everyone, welcome back to the Prop first r i podcast. Really excited to have you here. We have Chris Nagle, which I think we’ve had him maybe one time way long ago back on the podcast, but lots of things have happened so I wanted to make sure that we had him back. He’s part of a movement, B Y O B and being your own banker, the infinite Banking concept. Lots of good stuff there, but I wanted make sure we brought him back and talked about that, but then also talk about his pro first journey cuz I don’t know if we even talked about that back in the day as much. But Chris, great to have you back on the show.

Speaker 1:

Hey, it’s an honor. Thanks for having me back on. Excited to dive into this.

Speaker 3:

Yeah, yeah, well, excited to talk about what all you’ve been up to and like how you’re helping people. And then talk about your prof first journey. But just so people know, just get a high level overview, like what are you doing now? And like you and tell ’em about like real estate, your career in the past there as well.

Speaker 1:

Yeah, so today I, I’m mostly teaching and traveling around and speaking about the infinite banking concepts, which, you know, we call it A B Y O B become your own banker. And it, it’s a very simple concept that involves changing just one thing and then adding one step. So that’s the majority of what I’m doing. But I’ve also gone in and I’ve also created a technology platform called Private Money Club because with the infinite banking concept, which is basically a circle, your money starts on the left, okay. And it goes into an insurance company, actually, especially designed an engineered whole life that we build. Then we move that money out as quickly as we can to an opportunity. That opportunity could be a real estate deal, it could be lending on a real estate deal, it could be paying off debt, buying a car. And then once we find the opportunity, the goal is to take the money from the opportunity, the interests we’re earning, the profits that we’re earning from the real estate or the recapturing of the, the debt payments that we used to make to somebody else’s bank.

That now we then are the bottom part of the circle. Bring it back into that specially designed whole life. It’s, it’s like apple, it’s end to end control cuz that’s what we teach. We teach people how to be in control of their money and how to take back control of their money by becoming their own bank. And, and one problem that I found in my own journey on the infinite banking concept is after I paid off all my debts, after my wife’s car and my car were both funded solely by my policies and then I’m recapturing the payments back to myself, I ran out of places to really keep my money moving. And then I started trying to lend, but the lending thing became difficult because I couldn’t find good borrowers. I’d found garbage borrowers, but who wants to lend to money to somebody that’s not a good risk.

So I started creating good borrowers through educating through books and then also through a four week masterclass. And then one day it hit me kind of probably like for you where profit first hit you one day and you’re like, oh my gosh, I’m sitting down having a beer. And I, I grabbed a napkin and me and my, my colleague Steven were talking and I just drew a circle, like, kinda like that circle I just mentioned with infinite banking. But then I drew two lines down the middle of it. And then on the left side I wrote down people with money. And on the right side I wrote down people that need money because there’s only two types of people. There’s people with money and people that need money and both have a problem because people with money, they wanna make more and people that need money, well they need money to make more money.

And then that is where it hit me. This was just like a dating site. It was just like every dating site anyone’s ever seen. There’s two types of people, men and women community in the middle where they come together, they communicate, they talk, they chat, and then after that they go off and they date, maybe they go steady, maybe they ha get married, have children, blah, blah, blah. Money can be the same thing cuz there’s only two types of people that need connection and community in the middle that then go off and make babies maybe. But the babies they make is called money checks that show up in the mailbox. That’s all I did. I created a technology platform called Private Money Club that fulfills that need for two different types of people. And the two infinite banking concepts in B Y O B and private money club fit like two Ps in a pod and maybe even three Ps in a pod soon.

Speaker 3:

Okay, well very cool. So that’s active and up and running private money club. Yes it is. Awesome. Well that’s very cool. I, if you’re listening on this show, I’m a real estate investor, you need to check that out cuz I’m sure you’ve fallen to one of those two camps. Usually it’s one of the, it’s extreme on one or the other end, but that’s what the show is about. So let’s talk about back in the real estate days, like, and you’re a pro first fan and you’re also a pro first implementer, like you implemented it inside and saw some j like we were talking about this on his podcast. So check out Chris’s podcast, I’ll make sure you tell them about your podcasts as well. But talk about pre-pro first, like talk about your business back then. Do you remember it? Do you want to go to that dark hole?

Speaker 1:

I don’t, I don’t wanna remember it <laugh>, but I do remember it. So pro pre profit first, just like anyone else, I don’t care what business you’re in, but let’s just specifically talk about real estate cuz that’s what I was doing. Yeah. I had one bank account per entity and it was my operating account, just like all of you do. And they’re all thinking, yeah, duh. Well, when I was doing real estate deals, that entity would do more than one flip and more than one real estate deal. We’d might have 2, 4, 10 deals going on in one entity, and all the money flowed into a single account. I today call that the black hole of debt. But anyway, you can call it whatever you want. It didn’t matter how much money came in, didn’t matter how many, you know, flip profits came in, how much rental came in, how much private money or bank money came into that account.

It always seemed like that account ha was empty. We were always struggling to find cash flow to pay for renovations, to pay our staff to pay our bills, our insurances and everything. And it just, there was never any money. And I literally felt like I was in this vortex. I felt like I was doing everything wrong, but I just kept doing more. I thought the answer, do more deals. So we went from doing one deal to two to 10, to doing 20 deals a month when we were getting ready to have our show on HGTV called Risky Builders. Chaos is the only word I can describe it. Bookkeeper after bookkeeper quitting a CPA is telling me we’re crazy. This is too much. They couldn’t handle the volume. It just was, it was insanity. And then, I can’t remember who told me about the book, but somebody said, Chris, you have got to read Prophet First.

And I said, oh, okay. I, you know, I’m kind of busy. And they’re like, no, no, no, no, you have to read this book. It’s not a long book. It’s very easy to understand. It will give you the answers to why you feel stressed when it comes to money every single day of your life. I’m like, okay. So I got the audiobook and every day in my car when I was driving to work or traveling, I listened to the audiobook that was pre prophet first after Prophet first. I had learned a simple couple simple things. Now the book. So before

Speaker 3:

You go there Yeah, I want, I, I wanna dig in a little bit more. I wanna see, like, I know I, I know you don’t wanna remember that time, but did you ever think about throwing in the towel? Like that’s a lot

Speaker 1:

Of, oh my God, so many times. Holy crap, dude, listen, there was a period of time and, and I don’t ever talk about this, it was probably 2000, try to get it in perspective. 15, 16. Okay. We were doing a lot of deals, me and my wife and I remember, you know, I’ve only been depressed two times in my life. Sure. One was in 2014 when I had to sell off all 36 rentals that I had bought from 2009 to 2014. Yeah. Because the bank froze my lines of credit. And because they told me they couldn’t lend me anymore money, I didn’t fit in their little square box because up to that point, that’s all I knew was banks. I didn’t know hard money. I didn’t know private money. All I knew was banks. And the banks put it to me. One bank put it to me because they were selling to a large conglomerate and they were getting rid, rid of the people like me that didn’t fit the profile for the Okay, the new bank that was buying.

And I had to sell ’em. And I spun off into one of the, the deepest darkest places I’d ever been because everything that I had built, I almost went bankrupt in oh eight as an advisor. I, I got caught up in the whole mix of it. I wasn’t ready for it. And then in 2014, I had made it back, right? 36 units, still an advisor. I had sold off my retail stores, my skateboard snowboard shops. But now all of a sudden the bank one decision, one no in one frozen line of credit. And all of a sudden now I felt myself in a vortex and I had to sell all those properties that I knew were good properties. So I was in a hard place. So this moment, okay, 15, 16, we’re flipping a lot of houses, we’re getting back, we’re starting to make some money, things were looking better.

And then all of a sudden this vortex I’m talking about kicked in, where it just always seemed like we were out of money. We had contractors stealing money, filing lawsuits against contractors, mostly roofers stealing money. And it was just like nothing seemed to go right. And life, they always say it comes in threes. This was like a 10 pack. Okay. <laugh>, you know, and usually bad news comes in threes, right? This is like a 10 pack. Yeah. And I slipped into the deepest depression that I’d ever been. I didn’t even wanna get off the couch, I didn’t wanna get out of bed in the morning. So that’s how bad it was, man. That’s why I try not to remember it. Yeah.

Speaker 3:

Well, <laugh>, I appreciate you open up here because I’m sure there’s a lot of people that have either been there or want to avoid that at all costs. So it’s like there’s been <laugh>, lots of people I believe in the real estate world, especially that if there was more talk of this at the Mastermind, there’s probably be a lot of people that spent lots of nights on their couch hurling or in the bathroom, you know, like just from all the stress that they’re under. Because you did a lot of deals too, you said like 270 or something. 274.

Speaker 1:

Yeah. I mean, compared to you, I, I’m like, you know this, but like, I guess yeah, it was a lot of deals. 270, 74.

Speaker 3:

No, that’s, yeah, but see there’s that comparison game. It’s like, well, yeah, but that’s still a lot of deals. Like if you’re listening to this, like, it doesn’t matter if you’re doing like one deal or 200 deals, like this stuff affects everyone. It affects everyone. So then, okay, man, can I, is this too deep to ask, how did it affect your relationships at home? Was it stressful?

Speaker 1:

Dude, it was, it was bad. I mean, Larissa stuck it out, but it wasn’t a good period of time. Let’s just put it that way. I mean, you know, if you really look at it, I mean, money is the number one cause of divorce in this country. Number one, it is the single solitary reason for families getting split apart and torn apart because that’s very hard. And I was in the middle of that as well. Now, we didn’t have a child at that time. But it was still, it was a very stressful period of time. And one that I, I have all but erased it from my memory. Yeah. Unless somebody brings it up like this. And, and there was a, there was a movie I watched that kind of pulled me out of it. You know, everybody’s got their story about that. Like that one thing that pulled, one thing that pulled me out and, and it was oh gosh, what is it?

A Wonderful Life I think it was or something. It’s an old movie. Yeah. It’s a wonderful watch, A wonderful Life. Yeah. And I watched that movie and, and just something in that movie snap me out of it. And then I’m like, I gotta pick myself up and, and get this fixed. And the book came a little bit after that. But yeah, that was it. And, and yes, every day I felt like throwing the towel in. And in my signature talks that I used to do, I don’t really talk about anymore, but I always talked about throwing the towel in. I actually, in my, if you wa listen to any of my earlier talks that I did, that was always in there, I wanted to throw the towel in just like Rocky in that movie where he is ready to throw it, but he didn’t. Right. And I, I’m glad I didn’t throw the towel in, but man, everything inside of me said, throw it in. This isn’t working. Yeah.

Speaker 3:

Well I’m glad it’s a wonderful life was there for you and being able to help you. That’s a great movie, man. It really is. It, it really is. And I’m sure that resonated with you at that time as well too. Lots of things in comparison there. But then from there, talk about now, okay, you’re starting to dig yourself back out. You know, maybe you’ve, that was the linchpin. It’s a wonderful life. Now you’ve heard about profit first. You’re starting to implement this. Like, so let’s go on the nice journey. So then how did it start turning around? Or like what differences did you start seeing?

Speaker 1:

Well, the book just made all the sense in the world, right? Okay. It was, it was just like, holy crap. The problem is so simple. It’s just like, I have no account. I mean, I had accounting. Yeah. I had accountants, I had c you know, bookkeepers and, and I had QuickBooks. Like I wasn’t, like, we, I’ve been in business since I’ve been 16. I know QuickBooks really well. So it wasn’t like I was not doing the things the way that they quote unquote teach you to do and run a business <laugh>. Right. But here, here’s all I did folks. And, and I’m not gonna glorify or, or vilify this. I read the book and I didn’t apply everything in the book. You know, I, I, I wish I could sit here and say I applied everything he said. I didn’t sure I applied only what I needed.

Every single property I had, I went to the bank and I opened a separate bank account up nice. And actually opened two bank accounts for each property. One of the bank accounts was set up for any private money or hard money that I borrowed. Okay. So I would get the money from the hard money lenders, I would put it in a separate bank account. And I would tell all private lenders, listen, one of the things that makes us unique in the ways that I’m gonna protect your money is the second you give me the money, when the deal closes, your money’s gonna go into a separate bank account. And Mr. Lender, if you want me to give you access to this so you can see every dollar, how it’s being used. Wow. And I can give you reports on a monthly basis. I am happy to do that.

Very few ever asked for that. A few did, but they never did it anyway. But I gave them that peace of mind that listen, you’re entrusting me with this money. Yes, I’m paying you a ridiculously high interest rate, but still I want you to see how we manage money. So I did that. The second account I opened up was an account for profit because up to this point, I’d never paid myself first. It was always pay the contractors, pay the bills, pay the debtors. My needs and my goals were always put last on the list as if, you know, my needs meant nothing and everybody else meant something. So I changed that each deal. When we would analyze a deal, we would put in there what we wanted the profit to be. Okay. We would come up with that. So in this account right from the get go, I would put a majority of that money in the profit account.

Now, it didn’t, didn’t always materialize that all that money stayed there, but it was there and I looked at it every day. When I’d pull my bank accounts, I would see this much money. 30 grand, 40 grand, whatever it was, was in that account. Yeah. And all I needed to do was finish the darn thing. And then I got to use that. Certain accounts, like sometimes I’d have to go in the profit account and transfer it over into the, you know, the investor account or transfer it into the, the OPEX account or just the operating account. Cause there was always, each property had three total accounts. We had the one for the investors, we had the one for profit and we had the main operating expense account. A and sometimes I floated between those. Yeah. But very rarely did I ever touch the investor’s pot.

That was just to pay the interest. And then just, that was it. So that’s what I first did. Yeah. And all of a sudden things started getting clear, okay, hey, look at, there’s nothing hard about that. It didn’t take me much effort. Open a couple bank accounts and at that time, like I had a relationship with a bank, you could just call ’em up and they would send me the paperwork. I didn’t even go into the bank and do this. It was just in all transparency, I did called ’em up, said, Hey, I need three accounts. This is the property I want to title the accounts, 1, 2, 3, Buckeye or whatever the property was. Yeah. And they would do that. And then my bookkeeper and, and in QuickBooks I would just set these three accounts up. That simple change. All of a sudden I didn’t feel broke anymore.

All of a sudden I knew what I was working toward. I knew what the goal was at the end. Whether it happened or didn’t happen. I mean, that was not the point. I, I had a gold and I saw it every day. So then once that started working, I said, wow, this is cool. And I did this for every property. So I wanted to all imagine how many accounts I had at that time. It was probably like 70 accounts. We talked on my podcast about how many I have today. And with my private banking policies, those, you know, especially designed whole lives. I have over 50, but I have 47 accounts still today. And I don’t even have a lot of real estate anymore. Yeah. But I saw this work in the business, in the real estate side. So I said, Hmm, my personal life’s kinda like that.

All the money goes into one account. I pay all the bills and for some reason it never seems like there’s anything left. So I’m like, well what if I just changed it up in my personal account? Now I called these something different. Yes. I called one a war chest. Yes. And I called the other a reserve account, the war chest. What that was for is future opportunities. And every single month, cuz most of my pay was done on a monthly basis, every month, X amount of percentage went into that war chest. And then I put 10% into the reserves account. And, and then I even went further. I ended up, like when I was doing real estate, I didn’t have a lot of tax problems because you could depreciate all these, I had so much real estate, you know, so I didn’t really have a tax problem.

But when I started selling the real estate, uncle Sam showed up and said, he’s my partner in my business. I said, you son of a pup, you’re not my partner. He said, I am now, cuz you sold your properties and we want our depreciation back. So all of a sudden I had a whole new problem. I never saved four taxes. Ah. So all of a sudden now I’m like, hey, I remember Mike and I remember Mike’s book said, you need a tax account. So all of a sudden I set up a tax account. But here’s how I did it different. I didn’t set it up at the same bank. I actually went to Charles Schwab and I set up an account at Charles Schwab and I just swiped money from that account. Okay. My personal account into this. Okay. And you know, the funniest thing about this, all these sweeps that I had and, and, and, and bef let me, let me go back a step before I had all these different accounts, the tax account, the war chest, the reserves, and I’m talking personally now, we already covered my businesses.

Everything seemed like I was always broke. I was always like short on cash. But now I opened these different accounts and I swept money every month. Automatic transfers. That’s how it would. And some actually the the, the tax account I did weekly because I just wanted to make sure that it got in there. Nice. So I’m like, all right. Cause it’s easy. You can set up transfers anytime. Yeah. And you know what’s funny? I thought this is gonna be so hard. I’m gonna run outta money. I didn’t, nothing changed. I didn’t have any more and I didn’t have any less money. But now the money I got to keep, like the money was in the right accounts for the right things. I have gone so much further than the hat now. It’s, it’s actually insane. And I, and I don’t wanna even go down that David, but today I use this concept, this profit first model in everything.

But I, it’s so, it’s so evolved Now. I use trust, complex trust strategies. I use policies instead of bank accounts for most of my stuff. I still have all the bank accounts, but I have limits. My bank accounts. If I get over 10 grand in any bank account, I start to freak out. And I gotta sweep it over into the policies because I’m so, I, I just hate banks. And I’m, I just so love being my own bank that I’m like, why would I ever leave any more than 10 grand for those dirty banks to use my money and make my money work for them? I want my money working for me. Yeah. So I’ve got all these shifts and transfers and I’ve got a full-time bookkeeper, which, you know, not everybody listening is gonna be able to do that, but you’ll get there. And now my bookkeeper has been trained on this.

I made her read the book. So now she just pushes money all the time. And, and, and it’s just weird because now every month, or well every quarter, let’s just talk about it that way. I get all these profit checks, I get all these profit checks. It doesn’t hurt my businesses, it doesn’t put my businesses in cash flow problems. It’s because the money was all separated. The profit’s there, it was always saved for like every month the money gets swept into the profit account. Okay. I don’t care if you call it a war chest, a reserve account, whatever. I just did what I wanted. And I have literally never had, since I started doing this, I’ve never had a quarter where I haven’t gotten a check. Not once, even in hard months. There hasn’t been a single quarter where I haven’t taken a prophet.

Speaker 3:

That’s awesome man. I, if you’re listening to this, this is the hope. I mean like listen to like where Chris went from like deep dark holes where, I mean if you know it’s a wonderful life, he’s throwing himself off the bridge. Almost correct. At the end. I mean it’s like that dark and it’s like a lot.

Speaker 1:

I was there man, I was there.

Speaker 3:

And a lot of people, a lot of people never love to talk about that. But if you have been there or you’re listening to this now, like listen to Chris. Like just listen to where he went from to where he is now of like, don’t let the money control you for that. Like, there’s simple systems, like once he read the system, it was like boom. Like duh, this makes sense. Then he took it a step further. Like, that’s where I want you, if you’re listening to this like list of what Chris has to say and like take it the steps further. Like implement this and implement what he is got for being your own bank because oh my gosh, we could go down that rabbit trail. Very much so of like, I, I’m reading the Creature from Jekyll Island and like all this stuff, like lots of these books I’ve read and whatnot on just the economy and just everything.

It’s like you don’t wanna give your money to banks. Like that is probably like the biggest thing that I’m thinking right now is like, like what Chris will say. Like don’t keep the money there. But man, I don’t wanna, I don’t wanna go too far extreme. I just want you, if you’re listening to this, listen to Chris right now of like where he was to where he is now. And I want you to also think if you’ve never been there, if you don’t get it under control, it goes there for everyone. Everyone. So just please listen. What, Chris, thank you so much. I wanted to say number one, thank you for being open and honest, like with where you came from. Cause I know that’s not a fun place to go to. And then where you are now today, I want to now go to like, because I think your message is so important. Like talk about be your own baker. Like I know we, like, we have about 10 minutes left here on the show. So it’s like, I want you to give the snippet and then I want you to give like your website and like where, how to reach you. But can you give an overview of like, you know, like maybe going a little bit deeper then at the beginning of the show, just what you’ve got going on. Yeah,

Speaker 1:

So you all heard my story and there was a period where when I was doing all the real estate, I had borrowed money. This is when I transitioned from banks and hard money to just private lenders. And I had met this one private lender. His name was Mike. He was a very wealthy guy. He was in Salt Lake City and he had his own show on a and e. This is before we had our show. I was in Salt Lake snowboarding cause I, I was used to be a pro snowboarder and I met with Mike at Cheesecake Factory and I’m sitting with Mike and you know, I was an advisor. At that point, about 13 to 14 years I’d been a financial advisor and just sitting with this guy. And I just asked him a question. I said, so Mike, how do you do all this private lending?

And he just says, I lend from my private bank. Now I, I wanted to hear what I just said. You’re sitting there with this really wealthy guy and he says, I lend from my private bank. What’s the first thing you’re thinking? You’re probably thinking, whoa, right? Mike’s got that much money. He’s got his own bank. So my very next question is, Mike, can we go see your bank? Can we go to your bank? And you know, hey, well we’re there. Let’s get some dumb dumb suckers cuz there’s not a bank in the country that gives you any other sucker, than’s, dumb dumbs, <laugh>, dumb dumbs, ding, ding, ding. Anyway, right? So I I he says, no, no, no, no, I don’t have a bank. I built a banking system. I literally mimic everything that a bank does. But I don’t put my money in a bank.

I put my money in insurance companies and I’m like insurance companies. And so I didn’t really dive into that cuz he just keeps talking. He says, yeah, the insurance companies, what they do is they pay me guaranteed interest on my money. I get dividends every single year cuz they’re mutually owned insurance companies. And, and then he’s like, it’s all tax free. And then he says, you know, because I’m in real estate, we get sued just like most real estate investors. All the money in my private bank is all protected against judgements and liens. So he just keeps going on. He’s like, literally just give me a laundry list of all the things this thing does. And I’m just like thinking to myself. Cause as he’s saying this, remember I’m an advisor. I’m thinking to myself, okay, what? Oh no, it’s not that. Is it a Roth?

No, it can’t be a Roth. No, no, no. And then he hits me with two more things. He says, so he says, when I put money into my, this insurance company and he kept calling it his private bank you know, when I put money into my private bank and I take that money out, Chris and I lend it to you. My money never leaves the account. Hmm. And he, and he said, so my money never stops earning interest in dividends and, and it always compounds uninterrupted, but yet then I give you the money for your deal and you pay me interest again. So he said, Chris, I literally found a way to make money twice on the same dollar. My mind was like, but then came the almighty answer cuz I said, I said, so Mike, what? It’s an insurance company, but like, what is it?

How do, how do I do this? He said, oh, it’s easy. It’s especially designed whole life insurance policy from a mutually owned company that pays dividends. Now let me reverse, I just said some swear words in there. Whole life <laugh>, right? I didn’t swear, but I said whole life. For some of you that’s a swear word. You’ve heard Dave Ramsey, Suzy Orman. And so many people say whole life is the worst place you could put your money. It’s an overpriced, high commissioned product. You’d be a fool for putting your money there. Well, me being an advisor, guess what I was taught to do? Buy term and invest the difference. Cause I managed money. So that was the strategy. Sell your clients cheap term. Get them to take the difference and invest with me. Cuz that’s how I made my money as an advisor. So when he said whole life, it was like nails on a chalkboard.

You see, I missed the part where he said specially designed in engineered whole life insurance. I missed that. And then I leaned into him and I said, Mike, there’s not a whole life that does that. Dude. You can’t put money in a whole life and immediately take that money out. All the ones I’ve seen, like it takes years to get cash value. He said, Nope. These are these ones I put money in and I can immediately take it out and lend it to you. For example, I could put money in today and I could take that money out as soon as my check clears and lend it to you. And I’m like, oh my God, what, what am I missing? And then he, he even said, well the banks do this. They’ve been doing this forever. And I had known that bully, B o l I bank owned life insurance.

I knew banks did this. So I’m just like, oh, there’s something I’m missing. I just wasn’t exposed. And I said, Mike, can you teach me this? And he says, no, I learned it from this Brent guy. So clearly you can imagine I wanted to end the lunch meeting immediately <laugh>, right, and call Brent and I did. And I get Brent on the phone and I’m rattling it all off, like reciting everything he said, yeah, cause I’m an advisor. So now I understood it. And Brent stops me mid-sentence and says, Chris, have you watched the 90 minute video? And I’m thinking to myself, no, what, what 90 minute video, dude, you, I, I didn’t. 90 minutes. I don’t have 90 minutes. And he says, listen, watch the video and then we’ll set up a call. I need you to watch that video. I can’t do a call with you until you watch that.

And I’m thinking, you jerk, you’re just brushing me off <laugh>. But I did that Sunday, I went down into my basement reluctantly because I didn’t want to spend 90 minutes doing this. And I thought I’m gonna need a big old cup of coffee. So I set the coffee cup down, I got a pad of paper and a pen just like all of you maybe right now do. Cause you’re like, oh yeah, what did do you learn? And I hit play. 90 minutes went by and what felt like literally five or 10 minutes, I had four pages of notes and it was the closest thing I can explain to where I had an epiphany. I felt like I saw the future unfold in front of me. Nothing has been the same. Now let me just quickly explain this. I kind of gave it to you with Mike, but let’s just do this again really quick.

Now with money, all of you in your lives are in one form or the other making, I don’t care if it’s passive, I don’t care if it’s W2 or 10 99. You have income coming in and outta that income, you should be following the ru, the rules of gold or that’s from Richest Man and Babylon or what I’ve come up with outta the six laws of wealth modern day times. And I have all sorts of stuff out there, including a TEDx talk. The first law of wealth is pay yourself first Profit First talks about this all the time. Yep. So when you pay yourself first, that means you save money. So I just want you to picture, this is the money you worked for and now what we’ve gotta do is we’ve gotta save it. And I always say 10 percent’s the minimum. So where are you gonna put that savings?

Now some of you are like, oh, I put it in a 401k wrong cuz you give up control number two P. Some of you are like, oh, I put it in the bank account. Okay, let’s stop there. Now remember I just told you I fi figured out how to create my own banking system and my own banking system pays me compound interest guaranteed on an uninterrupted basis. And I still have control and liquidity to use that money. So clearly I’m not putting my savings in a regular bank anymore. So I change one thing. And that is, and I, I don’t know if you can see this, but I change where my money goes first and I put it into a specially designed whole life. So now let’s go back to the circle. And all I want you to do is in your mind, envision a circle.

If you’re watching this, you see me kind of making a circle, you’re gonna change where your money goes first. You’re gonna put your savings on the left side of the circle. So now your money is in a especially designed whole life in this circle on the left side. Now the goal for the infinite banking concept and be your own bank is not to leave the money in the specially designed whole life. Absolutely not. The goal is to find the fastest way to get the money out of the whole life into an opportunity. So let me just hit it really easily. All of you have a car or or want a car or buy a car? What? Whatever You got a car, you buy cars four different ways or you can get a car four ways. Number one, you can pay cash. Number two, you can finance it, you can lease it or you can steal it.

So now we got the four ways you can get a car. Let’s just pretend you wanna pay cash for a car. The first thing you gotta do is save money for the car. So we’re gonna do that now once we’ve saved up money for car, the car, let’s use a $25,000 car. I’m going to then take the money out of my policy in the form of a loan. Or listen, maybe you save it up or maybe you just had the money in a bank account to buy the car. You’re just gonna change where it goes. Remember now it’s in that whole life. So we take the money out of the whole life as a loan. You heard me right as a loan and we buy the car. Now, couple things you need to understand here about this first step. The money in the whole life was earning interest and dividends.

The interest is guaranteed for the rest of your life. The dividends, they’ve never not paid one for the entire existence of these insurance companies. When I take the money out, let’s use 25 grand. So I got 30 grand in the account. I take 25,000 out and I buy a car. How much money’s left in my specially designed whole life. I started with 30, I took 25 out. Most people say five, most people would say five. Yeah cuz that’s how your bank would work. Yeah, no, I have 30,000 in my account earning interest in dividends. And then you’re probably confused. You’re like, well where’d the 25,000 come from? Well, it came from the insurance company. They loaned it to me. Why would they do that? Well, because they made a second promise outside of promising me a guaranteed interest rate. You see, they promised me that someday when I graduate.

Nice way of saying when I die, okay, when I die, they’re gonna pay a death benefit to my family tax free. Right? We all know that that’s how term and, and all life insurance is. It’s a death benefit when we die. But see, in the contract of a whole life, it doesn’t say that you have to wait till you die to use that death benefit. So the insurance company just says, Hey, you got 30 grand in your account. We will allow you to take out up to 30 grand of your debt benefit as a loan and we’ll just use your cash value as collateral and then we’re gonna charge you interest on that loan. Okay? But hear me out. The interest in dividends you’re earning on the account are more than the interest that they’re charging you. So that is exactly what a bank does.

A bank pays you interest on your deposits and then they loan the money out at a higher interest rate. True. Right? And in the middle is a spread. I just told you how to do the exact same thing as a bank, how make a spread. But see the spread with your bank is way better because every year because of compound interest, your spread is bigger Because mathematics, every year you make more. Every year you’re compounding on more. Every year that spread goes up. So now we got the top part. Remember we started, we changed where the money went first, we moved it over, we bought the car game is not over. See if you’re gonna be a bank and you’re going to treat your money the same way you used to treat traditional banks money, then there’s another step cuz you’ve never ever taken a loan from anyone else’s bank and not had to make a monthly payment of principle and interest.

So I buy this car for 25 grand. Now what I’m gonna do is I’m gonna go on some calculator and figure out how much would a traditional bank charge me for a $25,000 loan. Let’s just say it’s $500 a month, 6% interest. Okay, I’m just using a number Now what I’m gonna do is I’m gonna set up a bill pay from my main operating account for $500 a month. Why 500? Cuz that’s what Bank of America, ally and all the other banks would’ve charged me for a car loan. I’m gonna pay my bank the same amount I would’ve paid their bank. And that $500 a month bill pay every month is gonna go back to my policy as a loan repayment. So remember now I’m compounding on a higher amount every year, but I’m paying simple interest to the insurance company on a declining balance every month.

So one’s going down and one’s going up. So I’m making even more now because I treated my money the same way I treated the bank’s money in the entire time. I got to make a spread. So really even just buying cars, I made money twice. But the simplest thing is, is if you apply this just for buying cars, if that’s all you ever did with this, with it won’t be. But if that is, here’s what will happen. Guaranteed. If you do what I just described or what that 90 minute video on my website describes, or in my book, you will get all the money back for every single car that you ever buy, drive, and own, no ifs, ands, or buts. So if you wanna get all the money back for every car you buy, drive and own change where the money goes first and add this one step, which is called the infinite banking concept.

If it works for cars, folks, what else does it work for? Planes, trains, automobiles, real estate, private lending, you name it. My partner just bought a plane this exact way. So there is no restriction on what it can do. This folks, what I just described you in the simplest way has been being used by the wealthiest families in history for hundreds of years. The Rockefellers, the Rothchilds, the jps, the Morgan or the JP Morgans, the Stanleys, the Ray Crocks of the world. Okay, the Walt Disney’s, look it up. Walt Disney World was started with a whole life insurance policy. Ray Crock built his real estate empire with a loan from his life insurance. Doris Christopher started Pampered Chef the same way Warren Buffet uses it, but on a whole nother level, the Kennedys use it. Biden love or hate, he uses it. And McCain eloquently used it to fund his political campaign.

So you’re gonna tell me why all the wealthy families use this and you don’t? Is it because Dave Ramsey told you whole life’s the worst place to put money? Dave Ramsey did a video and I did a rebuttal showing he doesn’t have a slightest clue that you can do what we do with whole life. He just thinks whole life is a whole, life is a whole life. That’d be like, tell me, telling you there’s only one color rabbit in the world and then you believe me. No, there’s white rabbits, there’s brown rabbits, there’s gray rabbits, there’s black rabbits, there’s mixed color rabbits. Like you’re, there’s not just one color rabbit. There’s not just one type of whole life and one type of design on a whole life, folks. You have so much to learn and everything to gain from it. Let me just add one additional element.

Profit first. So that whole description I just made, I, I left one thing out intentionally. When you take the money from your policies, that money has to go to a bank account because you can’t go direct from the policy to buy the car. It has to stop in a bank account. So what we did is we just applied Profit first here. We went to the bank and we set up a separate bank account. We call it the segregated account. And we take the money from the policy, it goes into the segregated account from the segregated account. It pays for the car from the car. That monthly payment that we derive from that goes back into the segregated account from the segregated account. We set up an automatic repayment of the loan back to the policy. Why do we do that? The same reason we talked about everything else with Profit First. Segregates your money keeps you accountable for that money and most importantly, provides books and records for your private banking system. You see how this all comes full circle, folks? Everything we just started with in the beginning just came full circle at the end. But I just told you how to make uninterrupted compound interest on every dollar of your savings or your money that you earn for the rest of your life. And you don’t have to work any harder, any longer, or take on any more risk to do that.

Speaker 3:

Awesome. So how, where’s the website where they go give the 90 minutes,

Speaker 1:

90 minute video. You just go to Chris noggle, a u g l e.com. A 90 minute video will pop up, watch the video, book a call with our team and we will ask all the questions to figure out your needs and goals. And if you want my books for free, I’ve got five books, you can get ’em all for free on that website as well.

Speaker 3:

Awesome. So there you go. Go to chris noggle.com. That was an awesome explanation. I do this myself. So if you’re wondering like, is this guy full of it? Like no, he’s not full of it. I, I love this method because it’s like you’re taking the money and then you’re able to use it again and again. And it’s like, I also love it for the death benefit as well too. It’s like this is a guaranteed legacy that you’re gonna be leaving your family as well. It’s like there’s so many different things that are, that are just great about this and you get to use the money and you can invest in real estate. Like, okay, win, win, win, win, win. You know, all around. So great stuff. This has been a great episode. If you’re listening to this as a real estate investor and you were feeling like Chris was a long time ago, like you don’t have to live there.

And if you’re like, I wanna stay away from that place as far as possible, reach out to us simple c o.com. Let us put a, let us get this implemented with you, the Profit First system and just help you get on the right path. And then I wanna make sure you pair up with Chris. So go to chris nale.com, watch that 90 minute video, listen to what he’s doing there. I want you to make sure that you have a exposure to that cuz it’s hon, it’s, it’s a, honestly, it’s an, it’s a bigger pandemic or epidemic I should say than you think. Like just the banking system, it just, everything in America. It’s like, let’s try and do some things and buy different assets and put our money in different places. It’ll just go a long way in a lot of different ways. But that’s where you could go as well too. Chris noggle.com. Make sure to listen to this episode several times. Listen to his story, listen again to his explanation. Go watch that video. Chris, thank you so much for being a great guest on the Pro First II show today.

Speaker 2:

My pleasure. Thanks so much. This episode of The Prophet 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?

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.