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Flipping the Script: How Bill Allen Turned Education into Empowerment

Title: “Flipping the Script: How Bill Allen Turned Education into Empowerment”

Episode: 228

“The biggest piece of advice I’d give people of what I learned from that is, nobody is going to manage your money but you.”  

In this episode of Profit First for REI podcast, we have Bill Allen. He is a real estate investor and the owner of 7 Figure Flipping. He and his team currently flip and wholesale 200+ deals every year.

Bill shares his advice on how to become a better wholesaler and flipper. He talks about his journey in the real estate world, some of the biggest roadblocks he encountered, and his family program for teenagers. 

Enjoy the show!

Key Takeaways:

[00:46] Introducing Bill Allen and his background                                                      

[02:15] Getting into real estate

[04:30] Educating other people about real estate

[12:15] Tips on becoming a better real estate investor

[15:01] Why do most investors live deal to deal in their business?

[23:21] Talking about the roadblocks in business

[27:19] You have to be financially savvy

[32:24] What is Teenage Tycoon all about?

[41:48] Connect with Bill Allen

Quotes:

[10:02] “If you can figure out where you are weak, there are two options: You need to be higher up those weaknesses, or you can just dive in and strengthen them up.”

[25:54] “The longer you sit on a problem like that, the more expensive it gets.” 

[27:19] “Nobody is going to manage your money but you. Nobody cares about it like you do.”

Connect with Bill:

Website: https://www.7figureflipping.com/ 

Tired of living deal to deal? 

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

Transcript:

Speaker 1 (00:00):

The biggest piece of advice I’d give to people of what I learned from that is nobody is going to manage your money, but nobody cares about it like you do. Nobody, no CPA. If you are not financially savvy, you have to understand you have to get there.

Speaker 2 (00:19):

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

Speaker 3 (00:46):

Hey, we have Bill Allen on the Profit First I podcast today. The more I get to know this guy, the more I love him. He gave a ton of value in this episode. I can’t wait for you to listen to it. He tells you how to be a better wholesaler flipper. Just making sure you know exactly what the next steps are and some of the biggest roadblocks. He talks about his journey. He talks about how he’s helping families and from the teenagers on up, how to get them involved. Just so good things that if you want to make a change, not just in your personal life but at the business or whatever, this is a great episode. Hope you get a lot from it. Thank you for listening and remember, make profit a habit, but also listen to this entire episode. There’s some good nuggets all the way to the end. Thank you for listening. Hey everyone, it’s David Richter of First REI podcast. Have a special guest today, bill Allen. I’m super excited about this. Number one, he took me on a ride in his airplane. That was pretty awesome. So I have to start with that. He’s got his own plane, but he also helps a ton of investors out there and also has a family program for teenagers. It’s so cool. We’re going to talk about a lot of that today. But Bill, thanks for being on the show.

Speaker 1 (01:51):

Yeah, thanks for having me. I’m excited to talk with you today.

Speaker 3 (01:54):

Yeah, I’m excited too. We are in a couple of the same masterminds or same event type things that we’ve gone to and get to really dive in. But I want to, for someone who doesn’t know you, let’s go into, okay, why real estate? Why did you go down this road? Because now you’ve transformed hundreds if not thousands of lives now at this point. How did you even get into real estate?

Speaker 1 (02:17):

Honestly, there’s probably two catalysts. One, I was in the Navy, so when I was at Georgia Tech, so my parents weren’t in real estate. They owned the house that we lived in when we were kids. But when I was at Georgia Tech, I had a commanding officer. I was A-R-O-T-C student there. He said I bought a house at every duty station and I never lost money. And I didn’t realize until probably five or six years ago that that was a big catalyst to me thinking about real estate. And so I moved 18 times in the last 20 years. I retired last year from the Navy after 20 years, and I moved all the time. And so probably about, I don’t know, 10 years into my career, I started buying a house instead of renting it. I wish I did it right after college. So that was a big one.

(02:57):

And the second one was the TV shows. Honestly, it was a lot of the TV shows that I was watching, I don’t know, 15 years ago or so when they just started coming out on which ones, the first one I remember watching was Armando Montelongo. So I watch him down in Texas and he is always had foundation problems and screaming at contractors and stuff. And it was just interesting to watch these flipping shows. And then it was the guys from Fortune Builders fan Merrill, he had that show where him and his partner JD were going out fixing up house. So I just watched that stuff. I started to get interested in it. I was always interested in making money, but that kind of propelled me into saying, oh, real estate is a way to make money. So without those TV shows, I might not even fallen into my radar. I was investing in the stock market just on index funds my whole life. I was saving 50, 60% of my income my whole life, just dumping it into the stock market. So those are probably the two biggest catalysts, honestly. And then from there it was podcasts and books and those kind of things before I paid to join a mastermind and that’s when my business really took off. Okay.

Speaker 3 (04:03):

Yeah, that’s where it seems like a lot of peoples do when your eyes get open and you see other people in the same place doing a lot of the same things and taking you on that journey with them. Okay. I have a big question here though. How did you get into the education space then? You educate a lot of people and you help a lot of people. I hear raving reviews of seven figure flipping and people going through there and actually doing deals and becoming financially free. So what got you into that side?

Speaker 1 (04:31):

Yeah, I guess kind of interesting story, I was flipping houses and I’m not the creator. I’m not the person who envisioned seven figure flipping or building an education company. I was a member, I’m like the hair club for men, RO gang guy, I guess it was hair club for men commercial, not just a president. I’m also a client. So I was one of the first paying members of seven figure flipping. I paid $25,000 to join the mastermind. I was flipping one house a year at the time, and within eight months I did 67 transactions. So I flipped 12 houses and wholesale 55 houses that year. And then the next year I did 135 with my team and I was still active duty military, so I was a really successful student. It was like the testimonial that everybody talks about. I was like the guy on the posters.

(05:17):

I was at the event. And so Justin Williams was the owner of the company then, and he basically just put me on a pedestal and was talking about how well I did. And so then eventually I was just in the Facebook group just giving and giving and giving at the events. I was telling people what I was doing, I was helping them. And then he just saw me doing that and one day he just goes, Hey, you’re pretty much coaching in the community. Can I just pay you a little bit to do that and make it official? And I said, yeah, I’d love to do that. And so I became a coach for him for a couple years and I actually was going to go do my own thing. I remember one year, I just told him in October, I was like, look man, you’ve been feeding everybody pizza and sandwiches and stuff like that and they’re paying 20 5K.

(05:57):

I think we can make these events a little better. I think we could do a little better for the clients. And he just didn’t think about that stuff. And so then I said, if I’m going to stay, I want to actually be able to do a lot. I just want to be a coach. I want to run the coaching department. I want to run the events. I want to do a lot. I really like to be basically an operator inside this business. And I became the COO of the company and about a year later he was thinking about selling the company and came to me and I bought it. So I’ve actually owned it longer than it’s existed now. So a lot of people think that I’m the one who started it. It was me starting a coaching company. Really. I just took over the one that I loved them, I loved it. I really couldn’t see myself going anywhere else. Just poured into that community. It built me up. So who better to carry the torch than me? So for the last five years I’ve been doing that, but I didn’t set off to build an education platform. I kind of just fell backwards into it.

Speaker 3 (06:49):

Yeah. Well, if you’re okay with me saying this, you’re a closet introvert, kind of like me. We’re both introverted people. How is it getting up on stage? You get up on stage all the time. I saw you speak what, three or four months ago and you were commanding, you were up there confident you made a difference and speaking to the room. So how was that journey introvert we’re usually let’s get out of here type thing to actually being in front of the room.

Speaker 1 (07:18):

Yeah. Funny enough, you were introducing me to people at the last event just a couple days ago. Not the guy who’s going to go up and be like, Hey, I’m Bill, I do this. Tell me about you. I will in a small setting, but I would say I can do it. It just drains my batteries really fast. And so after that event, just three days being in Tampa together, really two and a half days I’m like, I need to sleep for a couple days. I got home and I love my kids, but I was like, give me some space. They run up and scream and jump on my play with ’em for a little bit, but I’m like, I just kind of want to go in the other room after I put him to bed last night. So I had to pay someone to help me.

(07:54):

Pretty much everything I’ve done, I’ve had a coach. When I look back, I was a really competitive soccer player, had a coach in an amazing coach named Bill Starra. We were number three in the nation as a soccer team in high school. Really incredible coach. I followed him from one high school to another. Then I went to college, had some other great coaches. I went to the military, had some great commanding officers. When I look back, everything that I’ve ever done that’s been really great. I’ve had a mentor, a leader, a coach. So I saw a guy speak one time at a Brian Buffini event in 2016 or 2017, and it’s the first event I had ever really been to outside of the seven figure flipping mastermind group. And there was this guy named Walter Bond. He was a previous NBA player, played for the Mavericks and in the jazz, he played for the jazz for a while with John Stockton and Carl Malone, and he became a public speaker and he was incredible best public speaker I ever heard.

(08:50):

So immediately I hired him to do our event foot packing live, and he did it for a couple of, and then when I bought the company in 2019, I was like, oh crap, I’ve never been on stage selling anything before. I didn’t have to sell anything. I just, I’d get up and give one presentation about something and I was not very good. I could talk about the tactics of what I was doing, but like you said, I was monotone. I couldn’t control and command a stage. I had no idea that I needed to walk around. My PowerPoint slides still stink to this day. They’re horrible. I absolutely hate PowerPoint, but I paid him $10,000 for three Zoom calls. I just called him up. I had his phone number. So I think I texted him and I said, Hey, Walter, man, I got an event coming up in three months.

(09:30):

I just bought the company. He was speaking at it again. And I said, Hey, Walter, can you help me? And he’s like, yeah, I got you, bro. He coaches public speakers. So three Zoom calls, we crafted the story, we crafted the message. He told me what I was doing wrong, watch some of, he watched the game film like a sports coach. He watched some of my presentations. He’s like, oh, no, no, no, no, no, I remember he’s this huge African-American basketball player, right? So he’s like, no, no, no, no, no. I just can still remember the call today. So that’s really what helped me. I think if you can figure out where you’re weak. And so there’s two options. You can either hire out those weaknesses or you can just dive in and strengthen ’em up. And I usually recommend hiring ’em out, but in this case, you just can’t. When you’re the leader of a group, you take over something like that. I’ve always said I’m probably a better number two, I like to bolt onto other people’s companies and dial it in because I’m a very much like a numbers and data guy, but had to figure it out. I had no option. Got to run a podcast, got to sell from stage, got to do that stuff. So the last five years, I’ve just been trying to perfect the craft as much as I can.

Speaker 3 (10:35):

Well, you’re a great storyteller for sure. I loved hearing your talk on the hero’s journey at Russell Brunson’s last, the one I went to and it was great.

Speaker 1 (10:45):

So that was a stage that was really scary. That was 5,000 people. Five. Yeah, and I mean, I’ll tell you the one thing that I will say is anytime I know what I’m talking about, I know usually if Michael Hague was in the audience and I talked to him a couple days before that he’s one of the creators of the hero’s journey and the structure the way that is now, if he was in the audience, I probably would’ve been a lot more nervous. But when I think that there’s nobody out there that knows the information better than me, I can usually, I’m very confident going on stage, but I don’t know what happened. I felt like, what was that movie? Where Will Ferrell gets up and he’s debating, he’s in the debate and then he’s like, I don’t know where that came from. It’s kind of how I felt after that funnel hacking life presentation. I walked off stage and I was like, I don’t even know what just happened. It was kind of a blur.

Speaker 3 (11:34):

Yeah, well, it was awesome. You’ve grown there for sure. Sounds like in your life masterminds and coaching and mentoring has been a big part in that and getting you to where you want to be and just upleveling you in the areas that you thought, yeah, I need to work on this.

Speaker 1 (11:50):

Yeah, for sure. I always try to find somebody, if I can find the one problem that I have that I need to focus on and just go all in on that, whether it’s a book and everybody, it doesn’t have to be a mastermind. It doesn’t have to be a 25, 50 k, a hundred K mastermind all the time. It really can just be somebody who’s in your life that can support you. It could be a pastor, it could be a friend, a family member, somebody who’s been there and done that. And I just try to pick the people that have the values and they have the life that I want in that area. Somebody who’s really strong in that area that can kind of shepherd me. And when I look back, we had these teachers and coaches and all that stuff we didn’t have to pay when we were younger and then we’re like, oh no, I’m not going to pay someone to do this.

(12:31):

Why can’t I get somebody to do it for free? Well, as we get older and develop, there is areas where I actually paying my coaches without paying. I have a personal trainer right now and I’m trying to get healthy again. Everything like blood work and all that stuff. And I was like fit. My body looked good years ago, but I really don’t think I was eating the right things. I don’t think I had a good balance and I was messing up my metabolism. So I paid him in in the beginning of the year. So I was like, I’m going to pay you in full because I know that this is going to be a hard uphill battle and I’m going to want to quit after three months or six months. So if I pay you in full, then it’s going to be a year of me committing to this and saying that I have to do this and then I’ll just trust you.

(13:17):

And so I paying those people. I really like paying my coaches. Some people are like, you did three Zoom calls for 10 K. I was like the best $10,000 I ever spent because I paid for an outcome and I got the outcome, but I had to put in the work. So yes, very, very important I think. But again, it could be just listening to this podcast, like listening to your show and your lots of people’s mentors just by listening to this show. And then when they’re ready, they can take the next step. It could be finding the right book or just having the right conversation or going to a single one-off event and seeing what you get and then implementing it. I see a lot of people, they bounce around from place to place to place, or they go to lots of events or they listen to 50 podcasts and they just don’t do anything with it.

(14:02):

That’s the most important thing I think, is when I go to a mastermind, we just left and I sat down today, you probably saw my post in the Facebook group. I mean, it took me almost an hour to write. I had to erase some tags. Apparently you can only tag 50 people. But me just going through it and looking at my notes and looking at all the people that I met, it gave me the one or two things that stood out that I need to execute on for the next few months. That’s the most important

Speaker 3 (14:28):

Part. That is great. I like how you said that. It’s like where are you now on your journey? And then attack that issue where you are with the best tools that you have available.

Speaker 1 (14:36):

That’s really good. And stay on it until you fix it. Stay on it until you fix it.

Speaker 3 (14:40):

Yeah, when Bill Allen does something, it goes all in. It sounds like it. That’s right. Yeah, so that was good stuff. I do want to kind of segue then, because on this podcast we talk about profit first and making sure you’re a profitable company. You see a lot of investors out there. You work with a lot of ’em. Why would you say most investors live deal to deal in their business?

Speaker 1 (15:03):

Well, so one of the big reasons, especially flippers, let’s talk about flippers first because we primarily work with flippers, wholesalers, and multifamily investors. So flippers specifically, their problem is they will do one deal at a time, and then as they consistently do that, they’ll step up to two deals at a time, and then they’ll go from two deals at a time to four deals at a time. So they’re basically just keeping more inventory so they have more potential profitability, but they never actually pull any money out and set it aside each time they do a deal. So instead of growing responsibly or organically, they’re just doubling and doubling and doubling. So their business gets bigger, but their bank account doesn’t get bigger. So that’s what I see primarily with flippers. And they’re always broke because they take the 30 K that they made in profit for that one, and they put it into this.

(15:54):

Now they do another one and they do a second one, and they take that 30 K and instead of distributing something to themselves or pulling it out of the business, they just keep it inside the business. And then they think what they say is they’re reinvesting back into the company. But I think that’s garbage to really reinvest back in the company. It’s like, okay, we made 30 K, let’s put it in my bank account. I’m going to put it in my personal bank account, and then the business keeps running it is going to buy another one after that without my 30 k, I just made, that’s profit, that’s 30 k. And then I’m going to decide if I want to reinvest back in the business, I’m going to write a check back to the business for 30 K and I’m going to do a loan that’s reinvesting, that’s intent. Then you’re saying, I’m not going to invest in this other thing. I’m not going to go on vacation. And I’ll tell you right now, when that money hits your personal bank account, you look at it a lot differently than if it’s in the business bank account.

Speaker 3 (16:47):

That’s really good.

Speaker 1 (16:48):

I mean, that’s huge. There’s personal credit card and business credit card. I’m telling you right now, if David, you just went to the airport and actually you probably drove, but other people go to the airport for a mastermind and they’re like, oh, this is a business trip, so I’m going to spend a little bit extra at Starbucks on the business credit card. It’s a write off. Oh, there’s a first class upgrade on my flight. It’s a hundred dollars. Yeah. Oh yeah, sure. Here, here’s the American Express Platinum card. I’ll take it. Yes, yes, yes, yes, yes. They just say yes. And they probably spend two times more than they would if they were on a personal trip. If it was your personal credit card and you’re like, you know what, I’m just going to fill out my water bottle instead of getting that drink at Starbucks, or I think I’m going to skip the breakfast because there’s breakfast at the hotel when I get there.

(17:31):

Oh, $150 for an upgrade on first class, I’ll be fine. There’s not a lot of people on this flight. I’ll just sit in the back. And that’s the difference. Business, personal credit card, same thing. Business, personal bank account. So I see that with all businesses people, they’re not pulling profit out, and then if they do want to reinvest, they’re intentionally reinvesting it back in the company and flippers just like double and double and double. So they’re always broke. And then wholesalers primarily I would find probably don’t know their numbers and metrics as much as they need to. They’re really a marketing and sales company, so they need to know their KPIs better than anyone because there’s so much lost money in all of it. There’s front end marketing that’s happening, there’s other third party softwares a lot of times and all of this stuff. And then you’re paying commissions and everything and next thing you know, you’re not left with very much money. It might be a 15,000 wholesale fee, but your margin is really small. And whereas flippers, they can kind of see at the end, everything runs through. Okay, I made, they don’t have a lot of fixed costs. It’s a lot of built into the project. So those are the two things that I see the most is wholesalers don’t know their margins and then flippers are just doubling and doubling and doubling.

Speaker 3 (18:37):

Okay. So let me ask you, on those first 67 deals you did, did you have a profit first type system from the beginning or did you go through some of those same struggles upfront?

Speaker 1 (18:47):

Yeah, I went through none of these struggles at all. And the reason why is because I was making so much money. And so if you have huge margins and you don’t know it, you’re okay. And I also didn’t need it. I didn’t need the money. So I’ll tell you, I mean this was in 2015. Okay, so 2015 was a different market. If I send out 5,000 postcards, I was getting 3% return calls. There’s only one KPI that I knew in the beginning. I was legitimately growing faster than I could handle. And it wasn’t like I went from doing one a month to doing 20 a month, but I went from one a month to two a month, two a month to three a month, three a month to five a month. And I wasn’t hiring crazy either.

(19:33):

I had to tire two people to get that first deal. And then after that, it was really just the three of us for almost the whole year brought in a transaction coordinator eventually, but it really was kind of, we killed what we eat. And for every dollar, it’s the only number I knew. For every dollar I spent on marketing, I made $7. So for every dollar I spent on direct mail, at that time I was making seven bucks. And then when I added PPCA year later, pay per-click for every dollar I spent on pay per-click, I made $15. And so when you have numbers like that as a wholesaler, when you’re spending a dollar, you’re making $15, you actually don’t need to know all the other stuff. So the problem is now it’s a lot tighter market, it’s a lot more challenging, a lot more difficult.

(20:12):

You got to know your numbers, and if you don’t, you could be upside down and not even know it. And there’s two spreadsheets that I kept also. One was my marketing and deal tracker spreadsheet. So I knew exactly how much money was going out, how much money was coming in and what that looked like. And the second one was my company equity spreadsheet. And that was basically for all of our flip projects. And this is what I see a lot of flippers not do, is they don’t understand how much, you might know how much debt you have on hard money, but you don’t know how much maybe non-secured funding that you have. So a lot of times you’ll take bridge loans or gap funding and stuff like that, and you just keep taking it on. You take on another 30, another 20, and you’re like, oh, I’ll be fine.

(20:59):

And then you have potential money that’s going to be made on those projects that you’re holding in the inventory, but you’re not taking out commissions and all the other fixed costs and next thing you know borrowed 800 K and you only have a million dollars of equity in all your deals if everything goes perfect. And then the market changes by 10 or 15%, like what happened last year and even not even 10 or 15% just stalls. And you’re not selling properties regularly, so your holding costs are going up, starts eating your lunch, next thing you know have no profit in your business, your business is worth zero. And so those are the two things that I watched really closely. And so as an engineer, the data person, I like spreadsheets

Speaker 3 (21:41):

Going to say, how did you even, because obviously most investors don’t even have that upfront where they have the marketing and the equity. So you think it’s from the engineer background and these things? Yeah,

Speaker 1 (21:52):

I like to turn the dials and test things out, but I mean it really is very simple. It’s really very simple. It does not have to be advanced. It’s not like I have all these crazy equations and pivot tables and stuff in there. It’s like I just have a line that says, this is the address. This is how much I bought it for, this is how much money I’ve put into it, this is how much I still have to put into it. So we’re $20,000 in the renovation. I have 20,000 more to go. This is what the A RV is, and here’s my net proceeds that I see happening. That’s it. It’s that simple. And so I’m intending to make about $30,000, but I also need $20,000 more money to do the rehab. So that’s either in my bank or I have to raise it. And so it’s just looking at that because then I have some unsecured money potentially that I have to manage. And I think that’s where a lot of flippers get hurt on raising too much money unsecured, where it’s not tied to a property specifically in an area, in a separate account, all of that stuff. And it just mixes in with operating capital. It’s very bad and very dangerous.

Speaker 3 (22:57):

Okay. Well, I like those answers. That was really good. I like that you didn’t even have some of those issues. You came into it with the numbers and the knowing. This is what I need to track. I do want to ask, have you had difficulties in the real estate business? Oh

Speaker 1 (23:11):

Yeah, for sure.

Speaker 3 (23:12):

Where were the bumps in the road? Was it hiring, scaling? You said I scaled so quickly it was coming in faster. What were those bumps along the way that you learned from?

Speaker 1 (23:21):

Yeah, for sure. So yeah, it’s not all been smooth sailing at all. Actually. We implemented profit first many years ago, however. So the problem that I had is there was a point in my career where I let go of the finances a bit, and when I moved from my real estate company over to seven figure flipping more. And so we had a bookkeeper there and I had my COO. And so when I let go of that equity spreadsheet, that’s when things started to get jammed up because that’s when we hit probably covid. That’s when Covid hit and we started and we were also doing a ton of projects. We were trying to do 50 flips that year, and I had a partner that was flipping the houses with me and it went really well until it didn’t. So we had this shadow inventory. You hear this for foreclosures and banks a lot of times.

(24:18):

So we were selling these properties and making 30, 40,000 on ’em. And so I was like, just keep buying. We were grabbing them off the wholesale conveyor belt and buying ’em to fix up and resell. And the thing is, my contractor and my partner were really good when we were doing two or three deals at a time, but we dumped 10 deals at a time. We thought that they could scale up their businesses as fast as we could and they couldn’t. So they were just like projects were taking longer. They were still selling off one or two houses at a time. It looked like it was going well, but if you really pull back the curtain, you see all of this stuff that’s like that project hasn’t even started yet. I didn’t live in Pensacola where we were doing the projects. I lived in Nashville at that time.

(24:58):

I wasn’t going to the project. My COO lived in Springfield, Tennessee, which is even north of Nashville. So neither one of us are on site. It’s just the project manager, it’s my partner and that’s it. So we’re getting feedback that, oh, everything’s great, it’s going well. And then we realized, uhoh, it’s not going as well as we thought. We have a lot of delays, we have a lot of things that we might be breaking even on some of these houses, maybe even losing money on houses. And so it just turned out to be something that we ended up getting to a point where I was looking at the company equity sheet and a lot of the houses that we held, it wasn’t right, that sheet was wrong. And then my margin started really tightening up and I was like, uhoh, we got to do something here.

(25:43):

I’m going to have to fire sale some of these properties. I’m going to have to take a loss on some of these. And if you ever get in that situation, the key is to move as fast as possible out of it because the longer you sit in a problem like that, the more expensive it gets. I sunk a lot of money into a commercial building down there that we bought because the bank pulled out at the last minute. So I dumped a lot of cash into it, and then some of my investors started asking for their money back. So I gotten to a point where if I wasn’t financially stable personally, if I hadn’t sucked a lot of money out of my business, like I talked about before, I wouldn’t be able to pay off some of the lenders. I had to pay about $300,000 of my lender’s money back out.

(26:21):

And then we eventually just had to sell that commercial property for a much smaller profit than I was expecting to a year later. And then Covid hit. I was writing checks for my staff out of my own bank account for a while, for two, three months, and everything just stalled. And you don’t anticipate something like that. Really, all of our revenue just turned off for three or four months because nobody’s wholesaling houses at that time. And I held on for as long as I could really, probably for six months I was just paying salaries, making sure everybody got paid going through the PPP loans and all the SBA, all that stuff that was going on then. And we just got to a point where I looked up and I was like, wow, there’s probably five, $600,000 of equity that just disappeared what seemed to be overnight, but it was really over six months.

(27:15):

And the biggest piece of advice I’d give to people of what I learned from that is nobody is going to manage your money, but nobody cares about it like you do. Nobody, no CPA, no. If you are not financially savvy, you have to understand you have to get there. So there’s not a CFO in the world, A CPA in the world. They do great stuff and they can really help you find the right one. They’ll do great, but you have got to take some time. And I knew something was going on over there, but I was over at seven figure flipping. It was going well over there. So I was like, okay, I’m just going to focus on this. They can take care of that. Whereas what I should have done is I should have gotten involved earlier. I should have looked over there, kind of had my head buried in the sand a little bit. Like, oh, they’ll take care of it. They’re really responsible. I hired them for a reason, but sometimes we have to inspect what we expect, and I was not doing that. So that’s the biggest piece of advice I can give get. If you’re not financially literate, savvy, any of those things, it’s still important. You hire A CFO, fractional CFO, you guys do CPA, all that stuff. But ask ’em questions like, Hey, what does this mean? Start learning it. There’s nothing better that you can learn than financial literacy and understanding inside your business.

Speaker 3 (28:33):

I just want it to pound the pulpit there or stand up, say amen. That was good stuff. That was really good. No one will manage your money. You. A lot of people like to abdicate, and that’s what it sounds like. Hey, especially if you go and start another thing, it’s easier to do that too, even if it’s people you trust, they won’t manage it like you will at least at the end of the day there. So that was really good. So then now you have lots of different verticals. Do you still have a grasp then or a master sheet or something like that flows in? So what’s going on financially in all those companies?

Speaker 1 (29:07):

So fortunately, my partner, Adam Whitney came in to blackjack. So he takes the responsibility of that company. Now I’m ultimately responsible for seven figure flipping, which doesn’t have a ton of, it’s an information business like that mastermind coaching program. It’s really pretty basic finances. We’re either making money or we’re not a balance sheet that you have to really look at, but I’m constantly looking at expenses. I’m constantly looking at recurring revenue. I’m constantly looking at what that looks like, projections, things like that. And trying to think a lot further ahead months ahead. And really, we’re building a software company right now for live events. So that’s very much a cashflow intensive business as we build right now of potential earnings and a little bit more risky capital that I’m putting at risk there to hopefully the business takes off the way I think it will. And so yeah, I don’t really have any, other than all of our multifamily apartments, we have a lot of those.

(30:06):

So that’s something that we’re constantly looking at those equity type sheets. So that’s really important. Making sure that we’re not upside down in debt, make sure we’re not over raising, make sure people are getting distributions. We’re not undercapitalized. But I think as we get to that point, I mean I also have a farm too, that’s one where it’s really just how much money am I spending a year on the farm? And that has a little bit of inventory management. Like we wholesale products, we buy wholesale and sell retail. So getting everything in QuickBooks, making sure it’s all there, making sure somebody else is doing the bookkeeping is the thing that it drives me a little bit nuts. I’ll log stuff, but I really don’t want to be in QuickBooks. So if somebody can handle that for me, then I can pull all the reports, I can look at it, I can ask the right questions. And that’s where I think most people get overwhelmed is they get a software like that or that’s really overwhelming. In the beginning of my wholesale business, everything was just on an Excel spreadsheet until I hired somebody for bookkeeping. It was all on a spreadsheet. That’s it. And still to this day, my personal taxes, I really just put money and money out on my personal taxes on a spreadsheet and give it to my accountant.

Speaker 3 (31:12):

Yeah, well that’s good. Keep it simple. Keep it simple

Speaker 1 (31:15):

So you don’t

Speaker 3 (31:16):

Financial overwhelm. No, that was really good. I

Speaker 1 (31:19):

Wanted to hit on, that’s the best thing to do in the beginning until you bring a pro in. Once you bring a pro in and then you start asking questions, it’s like, I don’t know. I’m trying to think of a good analogy here. But I mean, when the plumber comes to my house, I’m not like in there doing the plumbing, but I am like, Hey, what are you doing there? I’m just trying to understand it a little bit, just basic understanding. So I know the right questions to ask, and I’ve always been that way. I would say as a business owner, if you can just get a little more curious, it’s probably going to serve you really well. You don’t have to learn everything. Don’t go overwhelm yourself with trying to learn everything. But definitely in the financial world, learn that, get a little curious, understand how taxes work, understand how your money works, understand. Be able to read a p and l statement, a balance sheet, and just start to get a little more dangerous in the money game.

Speaker 3 (32:07):

Yeah, that’s great. I definitely resonate with that. So that was really good stuff. I wanted to hit on one last thing before we land the plane, pun fully intended here. So let’s go to Teenage Tycoon. So you’ve got something that I love because I love when we try and pass on that knowledge to the next generation. What is Teenage Tycoon all about that you’ve got going on?

Speaker 1 (32:28):

So the way that this started was we had kids that started to come to our events in 2017. There was this little girl named Riley who came to our Flip packing live event. She was the only kid there, but her dad is a divorced and this something that he does with his daughter that is they both loved. So she would film his flips and walking around the properties and making a little YouTube channel and stuff like that. And so she came to Flip Hacking Live and we’re like, oh, this, we never had a kid here before. And then she started kind of growing into doing more and more and then eventually got really excited about real estate. So we asked her to speak at one of the conferences in 2021. So she came in 2021 and spoke at the conference. And again, there were more kids in the audience. So her and her dad gave a presentation. I think she was at that point, she was probably 15 or 14. And so she talked about how they work together and then the next year we had a 12-year-old buy a house and fix it up and rent it out. And then we had a 16-year-old do three houses over that year. So then they gave a presentation at the next year in 2022. Yeah, 2022.

(33:46):

And then now we have a 13-year-old who’s flipped three houses. And so this just kept snowballing. So he watched that presentation and then he started flipping houses. And obviously all these kids have parents who are in real estate, so they’re kind of supporting, but they’re not doing the work. Their kids were doing it, they’re learning it through doing. And so we kept seeing this happen and we have more and more kids, kids showing up to our mastermind meetings, kids showing up everywhere. So ever since that 2017 event, we’ve just had kids at our events and started to encourage that. And then this year I said, all right, we got to do something for these folks. We have more and more kids that want to get involved. They’re asking for scholarships into our runway program at seven figure flipping, all these things. And so we built this program called Teenage Tycoon.

(34:35):

It was really a book that I’m writing that I’m really excited about that I was like, I want to do more for the future of our kids. It is not going on in school, it’s not going on in public school or private school really. And I taught in most households, even most homeschool families are not really teaching deep financial literacy, taxes, all that stuff like understanding, investing, growth, compound interest, all those things. And then business, the business side of it. So what I did was I said, you know what? I bet if I asked some of my friends, I’ve, over the years, I’ve gotten more and more connected to other business owners, bigger entrepreneurs in the marketing world all over. And I said, I bet if I asked them to come speak to these kids, they would. So I started reaching out to some friends like Russell Brunson, like Nick Santoso, like Walter Bond, some of, let’s see who else, huge e-commerce people that I know, Amazon resellers, YouTubers reaching out to them like, Hey, I’ve got this group of kids.

(35:33):

Would you come speak to them other day traders and stock market folks, bankers, just bigger people who are well known and said, would you come talk to these kids? And so every two weeks we have a call on Thursday night that one of these celebrities or big time people are talking to the kids. So tonight, this Thursday night, I have Nick Santa Natasa, who’s a world renowned public speaker, was on tour with Tony Robbins, incredible. He’s going to talk to the kids tonight. And then in two weeks from now, Russell Brunson’s coming in to talk to the kids, which I can’t even get one hour zoom call with Russell Brunson. And I pay him a lot of money per year to be in his mastermind. I can’t get an hour of his time on Zoom ever. I’ve never had an hour of Russell’s time on Zoom.

(36:17):

And so all the parents are going to be looking over the shoulders and they’re with the kids. So that’s one thing we do. Every Thursday night we do a call, but every other week it’s with a guest mentor and then every other week. So I do a Thursday and then I bring in a friend the next Thursday, and then I do the next Thursday. And the times that I’m doing, it’s more accountability. Hey, what did you get from that call? What have you guys done since then? How are things going? Do you have any questions? How can I help you and serve you families? And so that’s been great. We do have a course, we have a video course, a financial literacy video course. We’re building a business course next and a real estate course after that. And it’s all based for the kids, but honestly, the parents probably watch my tax course.

(37:00):

They don’t even know what their marginal tax bracket is. So there’s a ton of great tools and information in there. And then we do a book club Every month we read a new book. Cool. So we’ve got, let’s see. We first read Swim with Walter Bond, and then Walter came on after Swim and talked to the kids. He’s the author. And then we read The Millionaire Next Door after that. Very cool. And then we read the Go-Giver after that. And right now we’re finishing the, oh wait, we’re finishing the right now. And then in April we start the Compound Effect, Darren

Speaker 3 (37:31):

Hardy’s book. Okay, Darren Hardy. Very

Speaker 1 (37:33):

Cool. These kids are reading How to Win Friends and Influence People is on the list. Cubby’s Book, seven Habits of Highly Effective People. We just have a new book every month and they’re getting the book, they’re reading it, and they do a book club once a week. So they show up and they talk about what they read, what their take was on the book. And it’s really cool. Parents and kids are all doing this together. It’s really been very special.

Speaker 3 (37:58):

That is very cool. So how do people, if they are like, this sounds awesome. If they’re listing and they’re real estate investor and they’ve got teens, how do they get involved in that?

Speaker 1 (38:07):

Yeah, let me give the age group first. That’s usually the question that most people have is what’s too old? What’s too young? We have kids as young as eight or nine in the group, but really what I say is sixth to 12th grade, that’s about the target that we’re shooting for. So that’s anywhere between 11 and 18 years old is ideal. If you have some younger kids, it’s okay. I will say they definitely struggle with the book club a little bit, and as long as they’re not too crazy, the chat disrupting things during the calls, we have some younger kids that are really, really, I use the word professional, but they’re really mature for their age. So I really try to build this for my 9-year-old and he’s my oldest, and there’s some things that he really loves and some things that he still gets kind of bored on. So definitely somewhere around, I would say 11 to 18 is ideal.

(39:00):

And then it’s like one price per entire family too. So if you have 10 kids, great. If you have one kid, it might be price per kid might be a little higher for you than it’s for lots of kids. So I always make a joke and just say, have more kids. But we really as a family environment and atmosphere. And I will say that sometimes God does come up. It’s not in the forefront of what we do, but it definitely is where I’m a Christian myself, and you might hear some of that on the call and talk about how God made the children and stuff like that, some of their gifts and specialties. So those are all things that I’ll tell you ahead of time. And then if you want to check it out, you can go to, we have a website, it’s called teenage tycoon.com, so teenage tycoon.com.

(39:44):

And just let us know. Let us know that you came from this podcast. I’d love to know that You can write it in the form or you can tell us on a call and then once can tell you more about it and how to get involved. The cool thing is, David, there’s a couple, if you have homeschool kids, there’s grants in certain states where the state will actually pay for education like this. So we have a lot of families that are in there that gave us a check that they got from the state because it’s something that they are not capable of teaching or educated on or those kind of things. And so that’s been really cool to see those families just get it a hundred percent paid for. And then it’s really, it’s like Thursday night at seven, seven o’clock central is my favorite night of the week now.

Speaker 3 (40:27):

Oh, that’s very cool. So teenage tycoon.com. So go there. This is so cool. And I’m liking Bill Allen more and more the more I talk to him there. I love that there’s stuff inside of there as well too. I mean, it sounds like you’re really helping the kids overall with just a lot of different things, real estate and other things as well too.

Speaker 1 (40:46):

Yeah, I mean, honestly, these kids, I think they have a lot of bad examples in their lives. The other piece is even if you know finances and you’re teaching ’em to your kids, your kids are going to listen to somebody else more than you, especially at that age. Mine do. I was a coach of the soccer team for years, and my son was the only one on the team that didn’t listen. And I was like, you know what? I love coaching, but I’m going to stop for a year. And he just got right in line for that next coach. And I was like, come on, man. And I know he respects me. I know he cares about, but I’ll tell you what, tonight when Nick Santoso is on there, he’s going to be watching the Zoom a lot closer than what I’m teaching. And all the other kids when I’m teaching, they’re calling me the goat, they’re in there. This is so awesome, bill. You’re great. It’s just the fact. It’s just a fact. It’s a hard fact

Speaker 3 (41:31):

There. So it’s

Speaker 1 (41:33):

A hard, and I try to bring in great mentors, great people, great examples for our kids.

Speaker 3 (41:38):

No, that’s awesome. I absolutely love that. Well, bill, this has been a lot of fun. How would people besides a teenage tycoon, what else do you got going on or how do people connect with you? Whatever you want to.

Speaker 1 (41:48):

Yeah, I mean, we have a great, I love our real estate platform. So we have something called seven Figure Runway for folks who are just getting going or trying to ramp up, and we got another group called Altitude. But you can just go to seven figure runway.com. It’s like the number seven, just the number seven figure runway.com. And there’s like an application on there. You can pop that in. It’s nothing, no high pressure sale or anything. It’s just my goal is you get on a call with our team and we’ll leave you with more advice than you came with, whether it’s joining us or not. So that’s something that I’m always doing. And then my personal social media is at Bill Allen, REI. So got trying to grow Instagram and YouTube and TikTok and all that other stuff right now. Yeah,

Speaker 3 (42:29):

He’s got a very cool YouTube channel too, where he takes people up in the plane and then interviews them. So check that out too. It’s a very cool series. So I highly endorse everything that he’s talking about here. Go check out the website, go check out the teenage tycoon.com. Like this is such great information. If you were listening to this podcast and you’re like, okay, I don’t know what the heck I’m doing when it comes to my money, I have no idea. I’m not an engineer by background. What the heck are you guys talking about? Go to simple cfo.com. We can hold your hand. If you need that help, we can take you on those baby step journey just to knowing the finances and giving you and being empowered to know those numbers and to get in the right position. So if you need that help, go to simple cfo.com. This has been awesome, bill. Thank you so much for coming on the podcast today and sharing your wisdom.

Speaker 1 (43:18):

Yeah, absolutely. Thanks for having me. And even if you are an engineer, you still need that help, by the way. So you should probably go there.

Speaker 3 (43:24):

Yes, we’ve worked with many an engineer as well too. But remember, if you’re listening to this Make Profit a Habit in Your Business,

Speaker 2 (43:32):

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

 




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

 

Episode: 242


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

 

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

 

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

 

Listen and enjoy the show! 

 

Key Takeaways:

 

[01:01] Introducing Jay Conner

[05:00] Introduction to private money

[08:30] The Great News Phone Call

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

[13:18] Maintaining relationships with private lenders

[15:40] Private money vs traditional money

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

[25:18] Advice for real estate investors

[29:01] Connect with Jay Conner

 

Quotes:

 

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

 

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

 

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



Connect with Jay:

 

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

 

Tired of living deal to deal? 

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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