Creating Long-Lasting Cashflow & Wealth Because Of Profit First With Chris Miles

March 2, 2023

Episode 160: Creating Long-Lasting Cashflow & Wealth Because Of Profit First With Chris Miles

The Profit First REI Podcast

March 2, 2023

David Richter

Summary:

The ultimate goal of investing is to generate long-term wealth, not just earn more. You want to make money work for you and not the other way around. It takes effort and stability, but with guidance and an effective system, you will be more equipped to reach your financial goals.

Our guest today is someone who dedicates himself to helping others achieve being wealthy. Chris Miles is a cash flow expert, investor, and the founder of Money Ripples, with a mission to teach other entrepreneurs to create quick cash flow.

His career is a testament to tenacity, grown into success after suffering from the crash in 2008. So tune in for education and inspiration as Chris shares his story, work, and why you should implement the Profit First method into your life!

Key Takeaways:
[00:52] Introducing Chris Miles and His Background

[02:41] On the Profit First Message

[05:11] Experiencing the Real Estate Crash and What Happened After

[10:18] Before and After Implemented Profit First into His Business

[16:08] On Profit First Allowing Chris to Reinvest in His Business

[18:17] On Profit First’s Effect on Chris’s Mindset

[22:22] Passive Real Estate Investing

[26:36] Advice for People Who Want to Implement Profit First

[28:16] Connect with Chris

Quotes:

[03:38] “[Profit First] really took hold of me…I talked about cash flow all the time [you’d] think I would [already be following] it.”

[11:16] “I think too many entrepreneurs get into a hustle habit. Or they get stuck in hustle mode, even though they don’t have to be, they start getting caught up working harder—not even smarter or working right.”

[27:40] “Just [having separate buckets for different expenses and profit] alone, that kind of discipline, it actually just eye-openingning.”

[25:10] “When [you have] profit, don’t spend it unless you know that money you want to spend will give you more money.”

Connect with Chris:

Podcast: https://podcasts.apple.com/us/podcast/money-ripples-podcast/id895555599

Website: https://moneyripples.com/

Tired of living deal to deal?

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

Transcription:

Chris Miles:

<affirmative>, a business owner’s mindset is one of the biggest things you gotta protect and foster. Uh, even just as important as if you’re try to protect both an entity trying to protect in the sense of, you know, having insurances or liability protection or lawyers and attorneys and good CPAs and all that kinda stuff to protect the business. But ultimately, the way, best way to protect your business is protect this your mindset, right? Yeah. How do you stay an abundant state of mind so you don’t make bad decisions?

Outro:

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

David Richter:

Chris Miles is a good dude. This guy is a passive investor, passive real estate investor, but he also helps people find and free up cash in their business and does a lot of other great things. He talks about how he lost a ton when upside down, like being from a millionaire to an upside down millionaire during the last crash, 2008, nine, how that helped him get lean in the coming years. And then how Profit First also revolutionized his business once he heard about in 2015, even though he had become lean, mean, and a better steward of his finances up until then, he said Prophet first put a system in place and just how talking through that, if that doesn’t give you hope, I don’t know what will, but I just, I know that this episode can really help you. He’s got a great mind, super smart, and also just knows how to put it on the bottom shelf for people like me. So hopefully you enjoy this podcast. Thank you very much for listening. Hey, Chris Miles is here with me. We are on The Prophet First. I podcast. Chris, thank you so much for taking the time to be on this show today,

Chris Miles:

Man, I’m so honored to be here. I’ve, I love everything you’re about and everything you teach with Prophet First, so I’m excited to have a chat today.

David Richter:

Well, and Chris comes from a unique perspective. He’s a passive investor, but he is also very good with the money as well too because he helps a lot of people with building and creating wealth, like generational wealth and just, and he does a great job, like a great job with people. But then he’s not the typical financial advisor, you know, type person. He just, he loves real estate, he loves, you know, the infinite banking. He loves lots of different things that traditional financial advisors wouldn’t, so I’m sure we’ll get into that. But he is also a big fan of Profit First. He’s implemented in his business. We’re gonna talk about that today. But I guess let’s start there then Chris, so we can, uh, get through that and then we can see what else on the other side. But what got you excited about the Profit First message when you first heard about it?

Chris Miles:

Uh, cuz I

David Richter:

Okay. <laugh>,

Chris Miles:

If I would be perfectly blunt, right? Yeah. I mean, I remember I first heard about it in, I think it was 2015 is when I started

David Richter:

Yeah.

Chris Miles:

Like really starting to absorb it and, and take the concept in. And cuz I was guilty, I was the entrepreneur that was paying himself last.

David Richter:

Right.

Chris Miles:

It was always quote unquote reinvesting in my business, which really means I had no profit. Um, I mean, I took money home, but there were some months that were really lean months. I wouldn’t take much home. There would be contractors or people like that would take home more than me, you know? And, and that was a tough thing. I mean, I was always a fan of paying yourself first. I believe as a C E O you should be

David Richter:

yeah

Chris Miles:

The best paid employee of your business. You know? So, uh, so be able to hear that concept in reversing the roles of, hey, you build it around trying to create an income for yourself and then you f factor in the expenses of the business. And I’ve always kind of been lean and mean anyways.

David Richter:

Yeah.

Chris Miles:

But, um, that was something that really took hold me really reversed that psychology on myself to kind of call me out, so to speak and say, Hey, you better focus more on profit. Which of course I talk about cash flow all the time. You’d think

David Richter:

Yeah,

Chris Miles:

I would follow it. Right,

David Richter:

Right. Exactly. <laugh>, a lot of people hear this in the real estate space and now I cash flow, I get that. But then they’re like, whoa, this is totally different than just a rental property giving me $300 a month. You know, or whatever it might be.

Chris Miles:

Yeah.

David Richter:

So talk about where you were at that time. Where were you in your business journey? What were you doing at that time? Like when you first heard that message?

Chris Miles:

Yeah, I was, I had just launched Money Ripples in 2012.

David Richter:

Okay.

Chris Miles:

So I was a few years in, it was starting to grow, you know, I was proud of the growth we were making. We were increasing revenue every year.

David Richter:

Yeah.

Chris Miles:

But my profits really weren’t, you know.

David Richter:

Okay.

Chris Miles:

And that was frustrating. Right. And it was inconsistent revenue. So it’d be like big month, low month.

David Richter:

Yep.

Chris Miles:

Big month, low month. Right. It was like that. Um, and I kinda had the belief I went through the last recession. I got my butt kicked during that time.

David Richter:

Okay.

Chris Miles:

So I learned how to get lean and mean during

David Richter:

yeah

Chris Miles:

Those tough times, you know, so that I can, you know, get more money reinvested. But it really wasn’t getting traction. Uh, funny enough, it was actually another, uh, MCEITS book that actually helped me really get it in 2016. But, um, for me it was, it was really that rough go, it was just like that feaster famine

David Richter:

Right type of place. Plus I was actually about to go through a divorce too.

Chris Miles:

Oh wow.

David Richter:

So emotionally I was up and down and my revenue, my income was doing the same thing.

Sounds like the message came at a pretty good time then. Sounds like there was a lot of different things going on in your life. Before we go down that road, I want to ask about how did, if you don’t mind, how did you get your butt kicked in the last recession? Was a real estate or was it a different business or was it something, you know, like how did you learn those lessons to be lean and mean, you know, company?

Chris Miles:

He was both, actually, it was real estate and a new business. I had launched in 2007.

David Richter:

Okay.

Chris Miles:

Um, I actually launched a partner, um, I dunno if you’ve heard of a guy named Garrett Gunderson. He wrote

David Richter:

yep

Chris Miles:

A book called Killing Secret Cows. Uh, we launched the predecessor of Wealth Factory together and uh, it was Ray at the wrong time cause all of our market were real estate investors, but there were more active flippers, you know, people like that,

David Richter:

hmm-hmm

Chris Miles:

That were flipping and

David Richter:

Okay.

Chris Miles:

It’s a little bit of wholesaling too. I even did a little dabble of that of, or more like unpaid wholesaling is what I did for friends and family

David Richter:

<laugh>. Okay.

Chris Miles:

But, uh, but yeah, during that time everything dried up, credit lines dried up and especially you’re really relying upon appreciation versus, you know, actually cash flow.

David Richter:

Right.

Chris Miles:

Which is what I preach now. Right. Um, during that time, like I went from millionaire to upside down Millionaire, you know,

David Richter:

Okay

Chris Miles:

And, uh, and we launched that new business together and our market, I mean, obviously our business was failing. People were quitting or dropping out left and right.

David Richter:

Yeah

Chris Miles:

Um, it was a rough go. It lasted for nearly two years from about, you know, for me about summer or fall of 2007 all the way through to about summer of 2009 before we started to pull out of that, that tailspin really

David Richter:

Then, so that I guess would be, uh, some pretty big lesson there of

Chris Miles:

mm-hmm. <affirmative>

David Richter:

Being lean and mean. So, do you mind me asking then, from 2009 before you started Money Ripples, were you still in that business with him? Or like, did you do something else at that point? Or like what happened before you start, you went off on your own?

Chris Miles:

Yeah, we were definitely in business together for about six. Yeah, I guess it was six years,

David Richter:

Yeah

Chris Miles:

Um, that we were doing that business. It had nearly gone bankrupt. The only thing keeping it going was just, uh, we’re just barely making ends. You know, we weren’t even making ends meet. I mean

David Richter:

Okay.

Chris Miles:

I was personally not taking home money from that business hardly at all. Like, by the time I paid my expenses in the business, I was left with very little. So I had a few little side hustles I was doing, I was doing like some of the infinite banking stuff on the side as well.

David Richter:

Okay.

Chris Miles:

But what was amazing is that I created kind of a new aspect of the business I was able to apply to his business. And then that eventually became part of Money Ripples too. Uh, which was more about really finding and freeing up cash. Because up to that point in 2007, we were teaching people how to get outta the rat race.

David Richter:

Okay.

Chris Miles:

Because we had all done it. But when I found myself back in the rat race, I’m just the worst BSer in the world. I cannot teach something I don’t do.

David Richter:

Right.

Chris Miles:

You know, and so I ended up, uh, like I, people would come, you know, I’d talk to some people, you know, about becoming clients. They’d say, Chris, I would love to pay you right now, but this recession’s been hard on me. I can’t even find the money. And in the back of my mind, I wouldn’t say it verbally, but in the back of my mind, I’d say, I guarantee your situation’s not as bad as mine. I’m about a million dollars in debt now. Um, 16,000 the whole each month between my personal and my business.

David Richter:

Right.

Chris Miles:

Like, that’s why I was negative, you know, showing a loss in my numbers.

David Richter:

Yeah

Chris Miles:

Right? And so I was like, Ugh, I can guarantee I could find the money. So I would tell him, I said, listen, if I could find the money for you, would you pay me? Well of course. That, yeah, that’s sounds like a fair deal. Great. And then I finally like creative ways to help them find money. Whether it’s, it’s, you know, just tracking money in general, which is a basic necessity if you’re gonna go do anything like Profit first. Right. I mean even just that or creative ways to pay off debt. Cause I was having to do the same thing is

David Richter:

yeah

Chris Miles:

How do I pay off debt when I have basically no savings left, no credit left to do anything to refinance, how do I do it? You know? Um, so I was starting to teach ’em those kind of things and on average what happens, we were able to apply that in the business and over a couple years we had like 600 people go through the process.

David Richter:

Oh wow.

Chris Miles:

And they freed up on average like $34,000 a year.

David Richter:

Wow.

Chris Miles:

You know, sometimes it was in taxes, sometimes

David Richter:

Yeah

Chris Miles:

It was paying off debt or just, you know, tracking money, um, saving money on insurance costs, you know, if they’re overpaying on certain things or whatever it might be. Right.

David Richter:

Yeah.

Chris Miles:

We’re just finding money wherever we could, um, where they didn’t realize it was there. And that became, you know, that whole business. I kinda left it with them. My old process took it with me and Money Ripples in 2012 when I decided to launch my own business. Um, and then implemented also the whole passive income investing aspect to it as well, which kind of sets us apart that way. We’re kinda like anti financianal advisors.

David Richter:

Right,

Chris Miles:

Right Teach people not to put money in the markets. We’re more like, Hey, let’s do passive investing things like, you know, long-term rentals or syndications or oil and gas or land or whatever it might be. Mostly real estate based type of investments, um, that allow you to generate passive income without you having to work for it.

David Richter:

Okay. Well that’s awesome because sounds like you took a bowl of crud and turned it into that ray of sunshine there to help other people and that was so I love what you said too. You were an ingenuitive at that time too. Like, look at this. Like, if I can free up the money for you, can you pay me? You know, like I will do this.

Chris Miles:

Yeah

David Richter:

And it sounded like that became almost a linchpin for what you do, cuz that’s, you’re finding and freeing up cash. I mean, who doesn’t need that? Cuz like you said, most people don’t even track it. Once you track things, it usually goes up, so

Chris Miles:

mm-hmm. <affirmative>

David Richter:

And it sounds like you got a nice little turnaround there to be able to say, this is what I can help people with. So then do you mind me asking then from 2012 then 2015 you hear Profit first. How did that factor into your business? What did your business look like before you implemented Profit First? Because it sounds like you had the fine and free up cash. So how did it change once you learned of that message and that concept and system?

Chris Miles:

Yeah. You know, like I mentioned, I was already pretty lean and mean. Right?

David Richter:

Yeah.

Chris Miles:

Because exactly I had that PTSDs from the recession. You know,

David Richter:

Right

Chris Miles:

It affects you, it sticks with you.

David Richter:

Yeah.

Chris Miles:

Um, that’s what why I have a lot more faith and confidence going to this next recession because, you know, I know that I know how to get lean and mean. I know how to adjust and move quickly, you know,

David Richter:

yeah

Chris Miles:

If I have to. Um, but, uh, but yeah, like in 2015 though, like when I start first ran into profit first, even though I was lean and mean, the problem was I was still trying to, you know, use things as excuse of, well I just have to do this, right?

David Richter:

Mm-hmm.

Chris Miles:

I had

David Richter:

Okay,

Chris Miles:

A lack of money freedom. And I especially had a lack of time freedom cuz I was just in the constant hustle mode.I even got in a, I call it a hustle habit. I think too many entrepreneurs get into a hustle habit,

David Richter:

<laugh>

Chris Miles:

Or they get stuck in hustle mode even though they don’t have to be, they start getting caught of working harder, not even smarter or working right.

David Richter:

Yeah

Chris Miles:

They just work, work, work, work. You know? And then they have guys like Grant Cardone. They give ’em the excuse, keep doing it more Right. Or

David Richter:

Right.

Chris Miles:

You know, they hear, you know, little sound bites. They’re like, that’s it.

David Richter:

Yeah.

Chris Miles:

I’m gonna wake up at 4:00 AM I’m gonna crush it. I’m gonna beast mode. And you’re like, dude, you’re being an idiot. Like

David Richter:

Right.

Chris Miles:

You’re just bashing your head against the wall is what you’re doing. Um, and that was kind of me, right? Like, you know, for example, um, I mentioned the other Mike Mceits book that kind of woke me up in 2016

David Richter:

yeah

Chris Miles:

As well was was, uh, actually I found out it was a predecessor to, it was The Pumpkin Plan.

David Richter:

Yeah.

Chris Miles:

Right. And the pumpkin Plan. Like, it kind of created that imagery for me about that, you know, that one prize-winning pumpkin that eventually cut off all the smaller pumpkins until you’re just feeding that vines feeding the one giant prize-winning pumpkin. And when I started to not just analyze my numbers because I couldn’t cut back much more, right?

David Richter:

Right.

Chris Miles:

I was already cutting back to the point I was sacrificing revenue and profit as well. Um, but when I started to look at what was really worth my time and energy, and I included some money too, some of my profit was going towards it. Like for example, networking groups.

David Richter:

Yeah

Chris Miles:

I mean, I would spend easily 10 hours a week going to local, you know, networking groups around the state of Utah, you know, trying to go and present stuff. But when I really looked at it, it’s like, well, is this productive?

David Richter:

Right?

Chris Miles:

And I would look at it, I wasn’t making much revenue from that, but I was sure spending a lot of money. But most importantly I spending more time

David Richter:

mm-hmm. <affirmative>

Chris Miles:

And energy into those areas versus areas that actually were producing results. And so what I did, I started shifting over, I said, well, what’s like the parades principle? That 80 20 principle, right?

David Richter:

Yeah.

Chris Miles:

The 20% that gives you 80% of your money. I wanted to go to level deeper. I said, what’s my 80% or really what’s my 20% of my 20%? Which is really your top 4% that generates 96% of your results. And for me, I realized it was my podcast. You know,

David Richter:

hmm

Chris Miles:

I had, I’ve had my podcast now my eighth season with, now it’s the Money Ripples podcast. It was at that time the Chris Miles money show. I was really creative.

David Richter:

Yes. <laugh>.

Chris Miles:

Um, but I was doing the podcast and I was even on interviews like this and I realized most people were coming to us from the podcast more so than they ever were. For me going to networking events, even for me life speaking on stages, I mean, that was a lot of energy and time and money. And sometimes I never really produced many results. And I’m not saying that’s not gonna be the case for everybody. Right. And I’ve spoken on stages since and done well, but I realized that for me, I could actually parret down and get my business ultra-simple to the point where I didn’t even need a VA anymore. Like my VA was like, I’m down to four hours of work a week. It’s not even, I, Chris, I’m just gonna go start my business now <laugh> because it’s not even worth working for you anymore.

David Richter:

right

Chris Miles:

And now she actually has a business still to this day that she’s got going. But, um, but yeah, I was able to parret down, like I didn’t need all the labor that I needed. And so my expenses actually did drop

David Richter:

Yeah.

Chris Miles:

A little bit even though I was pretty pared down at that point. But as a result, my income, my revenue increased dramatically. So what it looked like is my profits overall, even though I doubled my revenue the next year by pairing it down my profits, uh, what would be octupled. Right?

David Richter:

Wow, yeah.

Chris Miles:

Big time. Eight x,

David Richter:

<laugh>

Chris Miles:

You know, not quite 10 x, sorry Grant, but I did eight x my profits because I was able to pair it down and then focus on the most money producing activities that generated the best results and even better clients.

David Richter:

Awesome. So then it sounds like because 2015 was when private first came out and I know pumpkin pan plan was like right before that as well too.

Chris Miles:

Yeah.

David Richter:

So then you’ve been running on this for a while. How has you seen it affect your business over time and how has it maybe evolved or have you kept it super simple and now it’s just like, hey, now I know revenue’s coming in, profit’s going out. Like can you give us the journey from then until now?

Chris Miles:

Yeah, it’s definitely matured a lot more

David Richter:

okay

Chris Miles:

Just because now my team, I have a team now, I’ve grown it. Um, we’re in a much more scale mode with our business and

David Richter:

yeah.

Chris Miles:

And so now, um, it’s still the same concept. I still build my lifestyle. Like I make sure I still have a good lifestyle with what I have. And not to mention on top of what I have coming from the business, I also have passive streams of income coming from my real estate to where I don’t even need the money for my business. Right?

David Richter:

Nice.

Chris Miles:

So I still pay myself the salary that I gotta pay myself so that the IRS thinks I look awesome as well as the lenders if they wanna,

David Richter:

<laugh>right

Chris Miles:

Lend me money. Um, but you know, it’s a lot of it’s just profit, you know, on thrown on top of the wages that I pay.

David Richter:

Yeah.

Chris Miles:

But, um, but the nice thing is that now I have that covered and I got this nice stable income. I actually have a salary for the first time, you know, over the last several years

David Richter:

Yeah.

Chris Miles:

That I never had before, before was just well account, you know, cpa, figure it out, whatever you can, whatever I have just, you know, reduce it. And based on all these dividends, I didn’t even pay myself a wage figure it out to state a wage essentially. Right?

David Richter:

Yeah.

Chris Miles:

Now it’s like I’m paying a stable, steady wage every month. That’s great for home. Um, but at the same time now I also got more profits that I’m now actually I’m reinvesting in the business to really scale and increase our growth. And kinda like the true rein investing.

David Richter:

It’s the true reinvesting like you’re taking,

Chris Miles:

It’s the true reinvest. Yeah.

David Richter:

Right. The where you’re smart about it, you still have profits, but now you can take a portion of that and say, do I want another person to grow the team or do I just wanna be profitable? So it’s

Chris Miles:

exactly

David Richter:

<laugh>, Right. Because I love what you said, it’s like reinvesting to most people is just covering up that they’re just spending it all, you know

Chris Miles:

mm-hmm. <affirmative>

David Richter:

And it’s just going back to everything, you know, burn all the money that’s coming in. So I love that matured. You grew the team, you know, I love going <laugh> how you’re now taking the profits and actually reinvesting, you know, if you want to grow. Um,

Chris Miles:

yeah.

David Richter:

Which is a much different position than just living on the edge all the time. So, well

Chris Miles:

You definitely, yeah. That’s, I think that’s the key is that a business owner’s mindset is one of the biggest things you gotta protect and foster. Uh, even just as important as if you’re try to protect both an entity trying to protect in the sense of, you know, having insurances or liability protection or lawyers and attorneys and good CPAs and all that kinda stuff to protect the business. But ultimately the way, best way to protect your business is protect this your mindset, right?

David Richter:

Yeah. Yep. Sure.

Chris Miles:

How do you stay in an abundant state of mind so you don’t make bad decisions? Because if I learned anything from the last recession, at first I was like, oh, I’ll solve and work my way out of this. But then when all of a sudden every door started closing on me, I went into panic mode.

David Richter:

hmm

Chris Miles:

I was not making wise decisions. Like I was staying in that desperate place longer because I couldn’t have a clear head

David Richter:

yeah

Chris Miles:

Or I wasn’t keeping a clear head long enough. Right. Um, so if you can keep a clear head as a business owner and at the same time now you’re trying to look growing and scaling or whatever you’re trying to do with your business or even just try to stay, you know, in a good place where you just have good stable profits coming in and you just want to not grow it, just keep it stable, great. Stabilize it and you know, enjoy it.

David Richter:

Yeah.

Chris Miles:

I think that’s the biggest thing is just really protect your mindset.

David Richter:

That’s awesome. So I guess that is one question cuz it sounded like a lot of stuff was happening around that time. You know, that when you started implementing, you said going through some major life things, some major

Chris Miles:

Yeah.

David Richter:

You know, work things as well too. Did it help to stabilize that mindset during that time? Was it more, at least you don’t have to worry about the money <laugh>, you know, at that point or like, I don’t know, what, what were you feeling at that point once you started implementing it?

Chris Miles:

Yeah, it was fascinating cuz when I was going through my divorce,

David Richter:

yeah

Chris Miles:

Like I actually like emotionally was crushed. So financially I was crushed more by the last recession. Right?

David Richter:

Yeah.

Chris Miles:

That hurt.

David Richter:

Right.

Chris Miles:

But if someone had asked me what was worse going through the divorce or going through the recession, even though the divorce was a quicker situation, it was emotionally worse. You know?

David Richter:

Okay.

Chris Miles:

Um, to the point where I could barely function.

David Richter:

Yeah.

Chris Miles:

And that was kind of the divinity behind it because it, that’s what got me to really implement this stuff like the pumpkin plan,

David Richter:

Sure.

Chris Miles:

And really pare down because I could only, I even though I had all the time in the world at that point, I was working 50, 60 hours up until the divorce.

David Richter:

Okay.

Chris Miles:

During the, after the, or during the divorce process and everything else, I could barely function. So I was like five, 10 hours a week.

David Richter:

Okay.

Chris Miles:

So I had to figure out what was my most productive use of my time during that time. Right?

David Richter:

Yeah.

Chris Miles:

So it was kind of an accidental or was it accidental? Maybe it was divinely

David Richter:

right

Chris Miles:

Appointed to work that way, but, um, but it did help in that sense where I was able to get out of it. Cuz again, my income was just tanking.

David Richter:

Sure

Chris Miles:

My ex thought I was hiding money. I’m like, I guarantee I’m broke. I’m going to the goodwill store to buy silverware right now. You know, I’m shopping at Walmart for everything, you know.

David Richter:

Right.

Chris Miles:

I even had somebody loan me money during that period of time, like just for like a month just to get me through

David Richter:

mm-hmm. <affirmative>

Chris Miles:

And uh, it was a rough go. Um, but once I was, but the thing is I did learn from the last recession, like those emotional things. Right?

David Richter:

Yeah.

Chris Miles:

How to like really control that mindset, how to focus on the little bit of good, even if there’s everything else looks negative around you. Um, I learned how to do that. So when I started to do that focus on relationships too. Um, that’s one thing I didn’t do in the last recession as I started, I tried to live a life of quiet desperation. I didn’t want to talk to people about my problems. I didn’t want people to feel like I was desperate or my ego was getting in the way. I don’t want people to think less of me. And so I would stay quiet, but during the time of my divorce I said, okay, I know that relationships are everything. Like I should have been open, I should have been talking about some of these problems. Not just like people not to the whole world.

David Richter:

Right, Yeah.

Chris Miles:

But just like people and ask for help, you know? And so I was trying to, you know, get, you know, good relationships going, even business relationships as well as personal ones helped me through those times. And uh, and it was a matter of months getting through that versus two years with the last recession. Right?

David Richter:

Right.

Chris Miles:

Um, for me it was on a matter of months, and the next thing I know my business came back stronger than ever. It felt like an eternity when you’re going through it. Cuz crap always does when you’re, when it’s hitting the fan. But, oh

David Richter:

yeah.

Chris Miles:

You know, when it came out on the other end, like maybe six months later, um, it was way better. Uh, and everything is just rebuilt stronger again from that point forward.

David Richter:

Yeah, no, that’s, you’ve hit on a lot of good points there. <laugh> like number one that I heard was one of the biggest, well you no, you said the biggest struggle in your life that you’ve had up to this point. You saw where, you know, the silver lining even out of that, you know, like what, what came out of that that was good. So I thought that was really good cuz no matter what it is divorce or bankruptcy or like just some of the big wild swings like that, it’s like what can we take from that? Then you’d said, you know, not talking about your problems during the like the first recession. Uh, that’s such a good point that there’s people out there that want your help, you know, that or want to help you. You know, it’s like those people that really, you know, want you to rely on them and want to be able to be that arm for you, you know, and help you up when you fall down. So if you’re listening to this right now and you’re in that position, you know, there’s people out there that care about you. That’s an extreme form of trust too. I think we both realize that now. It’s not just that, oh, what are they gonna think about? Like Chris was saying, it’s more of you trust them to, with your deepest, darkest things that hey, I’m going through a difficult time. So I thought that was a another really great point here. Uh, so there’s been a lot of good stuff on this podcast. So Chris, I really appreciate sharing a lot of this with our listeners. I only have a few last questions here. I wanted make sure number one the real estate investing, you specifically like to invest in the passive side. So did you, did that ever flip? Like were you ever in the active wholesale fix and flip and you went to passive or you were like, Nope, it’s the passive game for me, I just love cash flow. Like did you ever have that mindset shift from active to passive or was it always passive?

Chris Miles:

It’s fascinating cuz in 2006 I was actually able to get outta the rat race and be more of a passive investor.

David Richter:

Okay.

Chris Miles:

You know, focusing on getting the cash flow right.

David Richter:

Yeah.

Chris Miles:

Because that was the thing that really opened my eyes. I actually quit being a financial advisor in 2006 because I realized financial advisors nor any of their clients were financially free.

David Richter:

Right.

Chris Miles:

They were all broke.

David Richter:

Yeah.

Chris Miles:

The only financial advisors, the only thing that gets them financially free is really the commissions they earn.

David Richter:

Right.

Chris Miles:

From keeping assets under management, but not actually from the investments they’ve been recommending to,

David Richter:

Right.

Chris Miles:

So that’s why I had to quit. I was like, this is crap I can’t teach anymore. But I found that real estate investors, there were people that were legitimately financially free investing in real estate. So I went down that path instead. And, um, and so it was interesting the very simple, the small and simple principles that you talk about. Right. Which is, you know, having enough passive income to replace and pay off your expenses.

David Richter:

Yeah.

Chris Miles:

I got there in 2006. Nice. Then 2007 I went to launch that business with Garrett and um, and part of the thing they didn’t like is I had multiple streams of income coming in. Ironically.

David Richter:

Yeah.

Chris Miles:

Since that’s what we’re preaching. And so they said, no, we want you to focus wholeheartedly here. So I started cutting off the streams of income and I got greedy. I got really, I was 28 years old, 29 years old. I was kind of young and dumb. Right. And I say young and dumb even though that’s not that young, but you know, when you’re in your twenties and I know you’ve seen it, and especially in the real estate space.

David Richter:

Yeah.

Chris Miles:

You make a little bit of money, it goes to your head.

David Richter:

Right.

Chris Miles:

You think you’re amazing.

David Richter:

Yes.

Chris Miles:

When really it was a market swing that helped you out a little bit more. Yeah. And so I started doing more with flipping.

David Richter:

Right.

Chris Miles:

I was like, oh, well who cares if it’s negative cash flow as a property because there’s equity in it so I can always sell it or flip it and make profit off of that. You know? And besides making a $50,000 or more on a flip is way sexier than $300 a door.

David Richter:

Right.

Chris Miles:

Come on. You know? And uh, and that was my, I mean, between that and a new business where I wasn’t tracking my money, I actually stopped tracking my money when, when money was coming in so abundantly like air.

David Richter:

Mm-hmm.

Chris Miles:

You just, you forget about it, you know?

David Richter:

Right.

Chris Miles:

And so I got lazy on the very principles that actually got me out of the rat race I stopped doing in 2007.

David Richter:

Yeah.

Chris Miles:

And uh, and that’s what really kicked my butt.

David Richter:

Okay.

Chris Miles:

And so the next go around like in 2000, uh, really like by the time I felt safe to do real estate investing again cuz I was really burned hard by it. Um, and I didn’t even file for bankruptcy. So that was the harder part. I had to dig outta that hole paying off that debt. Right. Um, the harder part was trying to go back to it. And so when I went back, I went back to more like turnkey rentals at first just starting out with something that was like, I’m not managing the property cuz I suck as a property manager. Um, I’m just seriously putting money in a property that I know ahead of time how much money I’m gonna make, right?

David Richter:

Yeah.

Chris Miles:

I can’t guarantee anything, but at least with a turnkey rental, I know the numbers up upfront. I know what I’m gonna make. Um, you know, and it’s easy, you know, it’s kind of, you know, I can’t screw it up too badly if I have the

David Richter:

right

Chris Miles:

Company to work with. So I started doing that and uh, and after some time then I started to gain more and more experience. I realized I’d like the passive route

David Richter:

yeah

Chris Miles:

And so nothing against me, an active investor, but I realized that there’s kind of its own rat race when you’re

David Richter:

Yeah.

Chris Miles:

Trying to do wholesaling and flipping. You really have a business, you’re not financially free. And many of our friends, our mutual friends that we have in groups, they usually admit that to me. They say, you know what, I want passive income because I have, I hate having to keep hustling. Especially when they get to their forties,

David Richter:

right

Chris Miles:

They start realizing, I’m getting too old for this crap.

David Richter:

Wait, I see,

Chris Miles:

I need to like, actually, I don’t care how many millions I make, how do I actually have enough passive income that my family’s protected? So even if this business blows up, I’m okay.

David Richter:

Yeah.

Chris Miles:

And that’s exactly, that’s kinda what I purport for a lot of people to do today.

David Richter:

Yeah. No, I love that cuz that’s like the long term mindset. That’s a wealth mindset versus rich, right? It’s like,

Chris Miles:

Yes,

David Richter:

Okay, we’re building wealth, we’re not just building income. So

Chris Miles:

mm-hmm. <affirmative>,

David Richter:

Because I both are very important, but <laugh> like you said, people get to a certain age and they’re like, okay, this, you know, get me off the merry-go-round here. So, okay. I absolutely love that. So the one final question and then we’ll go into the actual last question here, but I just wondered if for people implementing Profit first, what would you, especially for real estate investors, what advice would you give to them if they were looking to implement Profit First in their business?

Chris Miles:

Well, first to start somewhere, um,

David Richter:

<laugh>

Chris Miles:

Whatever’s easier for you.

David Richter:

Yeah.

Chris Miles:

Um, I really enjoyed the whole Buckets conversation. Like, for whatever reason I didn’t pick that up in the Profit First book.

David Richter:

Yeah.

Chris Miles:

But I remember when we had Mike Mceits at one of our mastermind groups speaking and he mentioned about the different savings buckets to have, you know,

David Richter:

yeah

Chris Miles:

Even a spending bucket, right? I was like,

David Richter:

yeah,

Chris Miles:

Well duh, this is just budgeting in business. Like I get that concept, but it was just done in a way that thought, you know what I need to do that I need to actually like disperse X amount of dollars to each bucket or whatever, you know, and you don’t have to have it in separate accounts. You can keep it easy, but, you know, I kind of have a certain bucket, you know, where I move my certain operating expenses into. I have my profit bucket that gets away from my account. So it’s a separate from that. Um, and just doing that alone, that kind of discipline, uh, it actually just was eye-opening. So

David Richter:

Yeah.

Chris Miles:

Um, if you’re already kind of looking into it or you’re already starting to implement something, like really have a separate account to put profit in. I don’t care if it’s 1% of your, of your revenue or you know, money goes in, great. That’s profit. You know, even it means you have a 1% profit margin cuz you’ve got the money away from you.

David Richter:

Right.

Chris Miles:

You know, got it outta the business so you don’t reinvest it.

David Richter:

Right

Chris Miles:

Everything, you know, that you have, it’s a great habit to start.

David Richter:

Awesome. There you go. Start where you can and then just start wherever you are. You know, like even if it’s 1% and the concept of the bucket. So that’s good advice. Then final question here. You provide a ton of value, talk about Money Ripples, talk about how people can get ahold of you. You’ve got your podcast. Like what’s, what’s something that if they wanted to g give value back, you know, how could they get ahold of you?

Chris Miles:

Yeah, I’d love to have you guys follow our podcast. The Money Ripples podcast. You can follow on iTunes, YouTube, you know, we have our own YouTube channel, the Money Ripples channel. Um, yeah, great podcast there. Uh, we even talk about things on our website, moneyripples.com. We even have like different sections, even like infinite banking, you mentioned that. Like how does that work with real estate investing? I teach a lot of that concept as well as actually a way you could use as part of your profit bucket, right? Like where can you use it and maybe even start to generate more wealth with creating passive income in other places or just using your business where you can get your money to pay you three times.

David Richter:

Yeah, there you go. We’ll get that moneyripples.com sounds like you could get the podcast, you could go to his website, you can follow him in on his YouTube channel. He’s got a lot of great information. He is a content producer, so he puts out there and helps, tries to help as much as possible. So that’s awesome. I wanted to just say too, if you’re listening right now and you felt like Chris at any point, like 2007 89 or the ninth of the 12 and you were like, Hey, where’s all the money going? You know, I’ve, or you had good principles and you stopped. Or if you’re like, Hey, I’ve never even touched the money. You know, like even if didn’t even identify with that. If you need that help with the cash flow, go to simplecfo.com. We can make sure that we help implement Profit First, get you the right buckets and the bank accounts like Chris was talking about. If you need that help, we’re there. If you don’t need it, we can pinion to someone honestly good. Like Chris or other people in this space as well too, depending on what you’re needing, if you’re needing to find and free up the cash. I love that statement that he said, but that’s where if you need that help, we can usually point it to someone really good like Chris and other people as well too. That’s simplecfo.com remember to make profit A habit in your business. Chris, thank you so much for being a guest today. It was awesome.

Chris Miles:

Such an honor. Thank you.

Outro:

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

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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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