From Crisis to Prosperity: How Chris Prefontaine Navigated the 2008 Crash

July 18, 2023

Title: “From Crisis to Prosperity: How Chris Prefontaine Navigated the 2008 Crash”

Episode: 189

“What hinder success is mental blockage and mindset issues.”

In this episode, best-selling author Chris Prefontaine talks about Real Estate on Your Terms, a book he wrote in 2017. He also tells about his experiences with the crash in 2008 he went through.

Listen as he also talks about cash positions and how Profit First helped along his real estate investing journey. Enjoy the show!

Key Takeaways:

[01:01] Introducing Chris Prefontaine

[03:22] What is Creative Real Estate?

[06:54] Why do people struggle with money in real estate?

[08:17] Chris before his Profit First Journey

[11:41] Getting and meeting the right people

[15:35] Hardest lessons on his entrepreneurial journey

[19:17] Get an Executive Assistant

[21:18] Chris’ advice to people starting in real estate investing

[22:10] Connect with Chris Prefontaine

Quotes:

[07:16] “If you try a bunch of courses and it didn’t have the same success… you get a little bit less aggressive.”

[10:45] “Exposure means so much more than we think, more effective than we all realize… it means a lot.”

[15:54] “Don’t utilize your personal signature to sign on debt, especially for investment.”

Connect with Chris:

Website: https://smartrealestatecoach.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:

And the lesson was, if I, if I just pick one, it was to not well, they’re all combined kind of not utilize banks unless you absolutely 100% have to because it’s a family move and you’ve gotta be in an area and you gotta get a mortgage. You better not, don’t utilize your personal signature to sign on debt, especially for investment. Just don’t do it. Don’t mix the two and then be conscious through profits first. Coincidentally, right, not coincidentally on purpose here I’m saying it of the cash positions.

Speaker 2:

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

Speaker 3:

This episode we have Chris Prefontaine super excited because he talks about real estate on your terms. He tells about the crash in 2008 and how he went through that and some of the things where he got out of the funky was in and the key components. I think that’s gonna be a huge benefit to you no matter where you are in the real estate game right now. If you have any mental blockages, any mindset issues, that’s a big one. Then he also talks about cash positions. The first hire you should make right now today if you are unsure of what that one is. And then another secret he said that has been huge for him that he hasn’t done since 2008. That almost took, that did take him down in 2008 as well. This is a great one. He’s a big fan of profit first. So he talks about his mindset there and how that helped him along his journey. Thank you so much for being a listener of this podcast. I appreciate you and enjoy the episode. Hey, so Chris Prefontaine is back. I’m excited about this because he is a avid proponent of Profit First uses it in his business, has helped other people see the light and now having him back on the show. So Chris, glad to have you back.

Speaker 1:

I’m glad to be back, Dave, especially you have to just chat with you recently, so we gotta hang out more.

Speaker 3:

Yeah, yeah, we do. Yeah, for sure. So tell people, it’s been a couple years since you’ve been on, so just tell people in the last couple years, what have you been up to? Where have you, what are you doing these days?

Speaker 1:

Yeah, yeah. So, well that brings us back to Covid, right? So at Post Covid we got back to live events which is awesome. As good as everybody thought Zoom was. Live events are nice. What’s cool in the real estate world is all these low interest rates that everybody saw, two, three, 4% we’re buying properties now with those as underlying interest rates. Meanwhile, the market’s at whatever it’s at, right? 5.86, whatever. So really cool times. Right now we’re back to some record months and properties under agreement and this is the time, in my opinion, the time to be in creative real estate. I, in my three, two years, I’m saying this is like one of the best segments I’ve seen to be in market right now. It’s pretty cool.

Speaker 3:

Yeah. Is there’s any particular reason for that? Why would people jump into creative real estate?

Speaker 1:

Well, okay, I just said this on a show. I I it, it’s so tiring when people go, well I’m waiting for the, the bottom, I’m waiting for the top. And listen, it is one constant real estate. It changes constantly. So how about you get really good at understanding how to find motivation with a seller and then structuring the deal, that’s the key thing. And be able to pivot in any market up, down and sideways. That’s the whole nature of creative, the word creative real estate in what we call on your terms. So that’s why I love it. You do, you don’t have to worry about the market. Like you literally don’t stress with it.

Speaker 3:

I love that. ’cause A lot of the people that are listening probably just wanna get into real estate or start in real estate. And I feel like this is a good tool to have in your tool belt no matter what you’re doing in the real estate game. Would you agree?

Speaker 1:

Well, yeah, because to your point, once you have that tool, right, you have it for life. It’s like profits first. Okay, I learned it. I, I I want to talk to Dave on and on and on, I want to use, but if I don’t, I learned it. It’s the same with creative real estate. I try to tell people, you go to school, people go to school for what, four years, eight years, sometimes more. It boggles my mind that they don’t think twice about that. But when we talk about spending time and money and resource on yourself for a skillset that’s gonna, you know, return our investment’s crazy, then they balk at it or they could balk at it. It just, no, doesn’t even con I can’t contemplate that.

Speaker 3:

So why do you think it is if you can’t contemplate put yourself in their shoes? Do you think there’s specific reasons for that? ’cause I feel like it’s the same thing walking down the profit first road sometimes too.

Speaker 1:

I do. There’s probably a bunch, but here’s one that came to mind right when you said it. And that is the, it’s every industry. The, the marketers are really good at marketing. And so therefore I unfortunately can’t always get the person before they’ve been tainted or sold a product. Yeah. That didn’t in their eyes work. And I, I know it’s a fact, there’s a gap between a time when someone sees a, takes a course or sees a seminar in the time they do a deal. And unfortunately, sadly the gap is sometimes they, you know, forever, right? They just don’t get to a first deal. There was two students, this probably a whole bunch more I don’t know about, but there are two students in our community right now that have done, actually sadly one passed away, sorry, he was in our community and the other one still is.

They’ve done over a million dollars in accumulation of three paydays with our system. But they came to us and said, my wife or my spouse and my significant other, they don’t want me to do this. Why? Because I bought all these courses and those two had spent a hundred grand Dave, six figures Oh wow. A hundred grand before meeting us. So I said, okay, I get it. I know you’re bummed, but treat that as I stacked an education is what you did and then you now you’re gonna parlay it into what we got going on. You just went to school too long and you paid too much, but it’s okay.

Speaker 3:

Yeah, it sounds like they’re one of the ones that came back and were actually able to get on the right side of that. ’cause You hear a lot of people that not only their spouse is tainted, they’re pretty tainted after a lot of that as well too. So

Speaker 1:

I agree. Yeah, I agree.

Speaker 3:

No, that’s good. I, it sounds, it sounds like in what you’re doing that you’re helping people actually <laugh> turn their life around as well and get to where they really want to be, even if they’ve invested too much in their education or that stuff as well too.

Speaker 1:

Well, our written purpose, and it’s not behind me ’cause I have my banner up, but my written purpose is everywhere in my office, is to help individuals and families create the life of their dreams. That’s not a, that’s not create a, a real estate deal that’s not helping family do real. It’s so, it’s a big endeavor we’re on and, and it does take getting in the trenches and helping them do deals and really understanding what goes on and then build a life, not just a deal.

Speaker 3:

Yeah, yeah. And I hear nothing but good stuff on that side, so, which is, which is great. So then, okay, flip side, why do you think most people don’t understand or struggle with the money aspect on in real estate or just business in general? So if they’re struggling on like the deal side, and we talked about that a little bit, what about the money side?

Speaker 1:

Well it probably goes deeper than you and I can do, but it’s this, we all have money habits, right? Yeah. We all have a money blueprint and people call it different things, but, and, and it’s not always conscious. For four years after the crash, I was stuck in my head about what was going on and was it my fault? You know, so, so sometimes you don’t know consciously, number one. Number two, when you’ve, if you were someone that tried a bunch of courses and I, and I’d like to see if you, you agree with this, I don’t care what industry, you tried a bunch of courses and if it didn’t have the same success, you get a little bit less aggressive with saying, oh I, this works no matter what. I’m gonna trust the blind faith and I’m gonna find the resources. I’ll find a partner or whatever I gotta do. I, it’s harder to do as you get painted. So unfortunately we have, to me, you everyone has to kind of like wipe the whiteboard, clean the slate clean and go, I trust it. And I, and, and if you do that and you do it for three years with blinders on, I know you all have a great experience, meaning you, you follow someone, you, you get that tutelage and you do that for three years without deviating any shiny objects. I think you’ll have a great experience and you’ll get rid of that. But it’s tough.

Speaker 3:

Yeah, no, I, I understand that for sure. I think a lot of people struggle with the financial side. So what about you? Let’s talk about just about some of your profit First journey and like, ’cause I know you’ve been a big, a big fan of this for a while. So what did life look like before Profit First? Did you have that type of system before the crash or did it come after the crash when you

Speaker 1:

Started? We started profits first at a offsite meeting in 2000 and let me think. We brought the table in 19, at the end of the year was in place. Okay. So it was, it was just before coincidentally. And it’s all spreadsheeted out and Google Sheets is super sweet and predictable. So again, it’s almost like that. So you don’t have to stress thing about the real estate market. Same with profits first. Once you have it, you’re not stressing, it doesn’t matter what the market’s doing, doesn’t you, you got it.

Speaker 3:

Yeah, no, I And so then before that, ’cause you said after like the first four years after the crash that things weren’t fun. So you know, you’re stuck in your head. So what were you thinking back then? Was it just like fear of doing a deal or was it more like fear of going out there and having it all crumble again? Like what was the big thing that was in your head for those four years after the crash?

Speaker 1:

Well a, can I even do it right? Okay. Even though I’d been in the business for whatever, 18 years before that, it was, can I even do it? ’cause You get tainted mentally was nothing to do with skillset. It’s all mental. Okay. be before, you know, coming outta that crash. So for four years it was working out of the junk right. And getting set up. And then when I ran into, just to tie these things together, when I ran into proves first to me, it was like another stackable thing that I can go, okay, it’s another solid foundation. Right, okay. Because this is all things, it’s the mental work and there’s, you know, there’s the right people, but this is another solid foundation to go, okay, tack it on. It’s another good thing to solidify a position.

Speaker 3:

Okay. So that helped you just create more of the foundation for what you needed in your business, but what would you say when, how did you get over the, can I do it? You know, like a lot of people go through that and then they stay stuck. They, they don’t have what you have now where you’re very successful and you’re making a big impact with other people and helping them be successful, but you got through that mental garbage of the, can I do it? What was one of the big things coming out of that to help you?

Speaker 1:

I’m gonna use the word exposure here, David. Because I thought all that stuff was bad that I went through until I got with, there was actually two people, but a couple individuals that when I laid it all out, one of ’em literally chuckled, like laughed at me in a, in a loving way and going, okay, lemme tell you why I just did that and laid out all their headaches problems, pivots, changes. And I went, okay, I guess mine’s not that bad, so how do I get out? So it was exposure to people and exposure to the right people because if you just stay in your head like I did for that long, I could have got outta there. I could’ve got out of it in hindsight in one or two years instead took four. Hmm. So exposure, exposure is it, it means so much more than we think. It’s so much more effective than we all realize. It means everything, like who you hang out with, who you listen to, who you read, everything, it means a lot.

Speaker 3:

Yeah. So would you say during those four years, you had people in your life that were keeping you in that cycle as well too? Or was it a mainly a internal struggle?

Speaker 1:

That’s a good question. I I’m gonna say not consciously. Right. Okay. It wasn’t like they, they would do anything wrong. It’s just that I I we get to choose who we hang out with, right? Yeah. And so if you choose to hang out with people that are walling about that or talking about that or going backwards that you’re gonna have more of that. It’s just no way around it. So yeah, c not consciously, but yeah, I, I put myself in that position, I’m sure.

Speaker 3:

Okay. So then where did you find the right people? Did you go to an event or was it like through your network and referrals or was it just like, I’m tired of that, like I gotta find someone else that’s been through this or what, how did you get to that to even get around the right people?

Speaker 1:

Yeah. One was a past relationship in, in the past business and I knew he had a bunch of businesses and so I just looked for people. The short answer is I looked for people that built businesses, but that I knew went through some economic challenges. Okay, so it’s like you, you, you have clients in different industries. I, you know, in real estate it’s, it’s real simple. Make sure you follow someone ’cause of what I just said, that has been through at least one, preferably two cycles. Why? Because you’re gonna go through a cycle no matter how you, you gotta come up with one. And frankly Dave, I, I like people that have been through other stuff too. Meaning that both these guys had families and had challenges other than real estate and business. Right. Because Oh, so how did you get through that if you went through all that? So I like, I went through my son’s head injuries and a coma went through nine 11, you know, so there’s all kinds of things that I lived through. So I just sought out people that lived through what I was going through. That’s all.

Speaker 3:

That makes sense. No, that’s really good because did you ever at that point get into a community? Like did those people have a community of other people or were these just one-on-one mentors?

Speaker 1:

Let’s see. One was a one-on-one, definitely I sat in his office. The other one had a community that I from afar tapped into. Yeah. but to your point, that is huge now too because especially since Covid, but the community thing is enormous. So that when you have challenges you just go to them and put it out there and you’d be amazed at what happens. We do this in not just in real estate in our community, we do it in the mindset space like you’re asking me we had mind, we have a mindset mastermind one out of the four every month now. It’s pretty important. Okay. You’d be surprised. People are very vulnerable and open and we all help each other. So. Good point.

Speaker 3:

Yeah, I was gonna say the community aspect sounds amazing as well too because then you then you can find a lot of people that are going through the same thing and a lot of people that think like you as well too. ’cause These are people that all want to grow and become better and become better business owners. But it also sounds like you’ve got life of dreams. So these are actually people that like their life and want to create a better life as well too. Is that a lot of what the community, community is centered around?

Speaker 1:

Yeah. If you look at our, sort of our avatar, right? You say who, who likes what we’re doing? Okay, well people that are really into self-improvement. Like you don’t listen to a podcast with me and you talking for half hour if you don’t love self-improvement. Right? You so that’s a big one. People coming from corporate that are saying to heck with that, I’m tired of it, I just don’t wanna do that anymore. It’s not the future. So, you know, they, so they got a big why with that. Or someone that like me went through some you know, nasty stuff and wants to fix it. Like there’s gotta be something, there’s gotta be an impetus to to, to push. Make sense?

Speaker 3:

Yeah. Yeah. That makes sense. How long have you had this community going?

Speaker 1:

Unofficially like 13 ish if 14 probably it started, but now it’s grown to, ’cause I say unofficially it was, you know, 12 people I was coaching on a maximum call and now it’s, you know, 150 people on Slack and weekly calls and you know, it’s a lot more involved now. So it’s been since 14 unofficially.

Speaker 3:

Yeah. So it’s what, almost 10 years now that you’ve got this community going? Yeah. And it sounds like just helping people get to where they need to be then I, I think that goes well with your story ’cause you came out of this funk of, can I even do it, got around the right people who have been, had the battle scars and now you with your battle scars are helping other people get to where they want to be. So kind of set yourself up there for like, okay, I can help you get through those as well too, it sounds like.

Speaker 1:

Yeah, it’s important I think when, when people are stumbling it’s super important to be able to reach out and, and you know, get an arm, get a, get an ear, get an arm, and, and be able to do that in the inside the community. Yeah, for sure.

Speaker 3:

No, that’s awesome. So then what would you say, because you’ve got a lot of experience from crashes to, you saw Covid, you saw everything. What was one of the hardest lessons you’ve learned on your entrepreneurial journey up to this point?

Speaker 1:

It was definitely the oh eight headache and the, and the, and the lesson was if I, if I just pick one, it was to not well they’re all combined kind of not utilize banks. Unless you absolutely 100% have to because it’s a family move and you’ve gotta be in an area and you’ve gotta get a mortgage. You’re probably not, don’t utilize your personal signature to sign on debt, especially for investment. Just don’t do it. Don’t mix the two. And then be conscious through profits first, coincidentally, right. Not coincidentally on purpose. Yeah. I’m saying it of the cash positions because you’re, you’re, I noticed when I downsized from a two and a half acre lott overlooking in the water with an enormous mortgage and I went to a 900 square foot apartment, I noticed what that did for my cash after the crash. I noticed what that did for my mental ability to make decisions and operate and grow a business versus the opposite. So if you do those two things and you put, and you plug in what you do, you, you not gonna stress as much plain and simple. You just not ’cause your buckets are gonna be set up.

Speaker 3:

Yeah, no, that makes a lot of sense. And that’s where those are some good lessons. So I’m guessing then you had utilized banks before and that was one of the things that hurt during the crash was

Speaker 1:

<Crosstalk>. Yeah. Signed personally. Yep. And then so in the market dipped by, you know, anywhere from 20 to 60%, some of my projects, well what happens, banker does what a banker does. They gotta come looking for the guarantor.

Speaker 3:

Yep, yep, exactly. And then the cash positions too. So you feel like after the crash, that was said a better focus and sounds like you put yourself in a better position too in your personal life and some of the changes there that affected also how you were able to make business decisions. Is that correct?

Speaker 1:

A hundred percent. My, my father’s the one who used to say the expression he used is, you gotta make a move to stop the steamroller behind you during the crash. Yeah. You know, it’s like you’re always running right. So, yeah, absolutely. It, it, it, it made a world of difference. So big house two or three outbuildings gorgeous going into a 900 square foot, one bedroom apartment. My wife and I, that’s what we did to make the sacrifice and it, and it did the trick. ’cause We, we built what we built and, and now most if not all the things we do are cash. And it’s a different night when you lay your head on the pillow with that situation versus having a bunch of mortgage out there.

Speaker 3:

Yeah. Yeah. That’s, that’s a wildly different situation, which is great. A great position to be in. Okay, just a couple, few last questions here. If you were to start from scratch, what would you do differently? Like I, I think I know the answers ’cause you’ve kind of alluded to them pretty on this episode. But what would you do if you were to say, okay, I’m gonna start all over again

Speaker 1:

In addition to what we just said? To your point, I would in any market I would do this, I would just go in with my ability to get on the phone but hire an executive assistant right away. Okay. That would be the big difference. I didn’t do that right away. I just muscled that out. So it probably took a little longer and people go, I can’t afford. No, you can’t afford not to. So that would be a big change. I would, I would make and I’d find every resource to do it.

Speaker 3:

Awesome. So that would take a lot of the ticky tack admin type stuff off your plate and what you’re able to do. The revenue producing activities. That’s Yeah.

Speaker 1:

That goes back to the other point where you asked, you say, well why don’t they people do it. So if you knew you a shadow of a doubt that what we said earlier was you can put the blindness on for three years and have a great result. If you know that okay, then you hire an executive assistant, you don’t do any of that crap. It’s when you go, ah, I gotta try it, I gotta try, I gotta dip my to you try it in any business, especially real estate, you will not have success if you try you you telling the want no such thing.

Speaker 3:

Yeah, no that’s, and when you say an ea, an executive assistant right up front, would you suggest virtual assistant, an in-office person, someone that’s there in your area? Like what would you say is the best way? Like when someone’s getting first started?

Speaker 1:

I prefer, I’m gonna give you two answers. I prefer a person in with me, however. Okay. Since Covid, my building that I’m standing in right now went from us occupying everywhere to 21 people on our team being all around the country except for my son and I in a bookie, you know, so, okay. It’s changed. So we have some great, great great executive assistants that because of the ability to travel and be loose and do zoom, they’re, they’re phenomenal and that’s why they, they came to our team. So I don’t mind that anymore. I used to mind it. Now virtual is fine but there’s a difference between, let me just say this. Between a, a VA service, a virtual assistant service. Yeah. That’s runs like between five and 15 an hour and an executive assistant service that gets you sort of that corporate person that’s got some serious talents that then ’cause of covid pivoted and just wanna be an EA somewhere. Yeah. You know, flexible. That’s a big difference. We have one EA now she’s phenomenal. She’s in Spain most of the time and then comes to the states the other time and she’s an assistant from myself and my son-in-law. She’s super efficient. That’s super, super cool. But not just a virtual assistant for a few bucks an hour. I’m talking about someone quality.

Speaker 3:

Well there you go. No, I like that qualification ’cause I feel like once people hear that they’re just like oh I’ll just get a va. Yeah. And that only, like when I first started this business I had a virtual assistant but I had been working with him for like six years and he knew me inside and out. Like that’s a different situation than, okay just let’s get someone that’s just off the street for five bucks an hour and it’s like, okay wait a second. Like did you want them to actually take stuff off your plate and for you to be actually selling what you’re doing? So no that’s, I like that answer a lot.

Speaker 1:

You know what though David, on on that point, let me just add this. Once you do what we said earlier and you get the EA and you go to work, you are gonna need VAs <laugh> because you can business <laugh>.

Speaker 3:

Exactly. So we’re not, he’s definitely not knocking them. It’s more like you gotta set yourself up to be able to have someone that can do the five to $10 per hour task. So Yeah, no that’s great. This is good stuff. So then if one last question here. What advice would you give to an investor looking to implement profit first?

Speaker 1:

So I can’t go against what I just said with everything, which was get the right help. Getting your hemis, your circle your community and stay with it for goodness sakes. It’s just like I said about real estate, stay with it far along three years. I just used three years for everything. ’cause It takes more than you think. Always takes longer than you think. It’s always higher than you think but if you have someone with you for three years, it’s not so bad.

Speaker 3:

Yeah. Well there you go. Get the right help around you. Which has been a pretty much the theme of this episode from the can I do it and getting outta that funk and getting in the right, you know, the mentorships and then the right communities to okay, who do I need on the team? It’s the who not how. Right? So it’s finding those right people. But Chris, this has been awesome. If someone wants to join the community ’cause you provide a lot of value here, obviously you’re gonna be providing even probably 10 to a hundred x more like in the community with people that you’re on all the time. Like how do they get a part of that or how do they even research that?

Speaker 1:

Yeah, thank you. I appreciate it David. I’ll give a couple links and, and you know, if they’ve heard me out there and shows and they just wanna apply, they can go go on the website and apply to be an associate. But if you’re brand new and you’re kinda looking, I’m big on free, you can go to YouTube channel, type in smart real estate coach for example, and get 200 deals. You just see what we do. But I wanna give a free book. It’s not one of those put your, put your credit card in for shipping. I mean free. We’ll ship it out of this office hard copy book, not electronic. Go to wicked smartbook.com, wicked smartbooks.com/profit first. That’s for the book. If they don’t mind listening to me with my New England accent for another hour, then I got a free class. It’s worth it. ’cause You’re not gonna be bothered by anybody. You’re on your own watching it. It just go to smart realestate coach.com/masters class.

Speaker 3:

Awesome. Well then there you go. There’s the two links. Make sure to check those out. Chris and his team are legit. They do a lot of great work. Help a lot of people you will benefit from be in his circles and in his community. Then if you are listening to this and you’re like, man, I feel Chris like I understand where he was coming from, from either cash positions or not being in the right head space, go to simple cfo.com. We can help you with the cash position side. Like if you need that profit first, help simple cfo.com. You could book a call there. We’ll help you get outta that rat race, teach you the money game and how to win and make sure that you’re on the right track so that way you can hire the EAs and the executive, you know, the virtual assistants and all the people down the line too. You don’t have to worry about the cash, but remember to make profit a habit in your business. Thank you for listening and Chris, thank you for being a great guest on the show.

Speaker 1:

Thanks buddy, appreciate you. Good to see you.

Speaker 3:

This episode

Speaker 2:

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

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

Episode: 242

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

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

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

Listen and enjoy the show!

Key Takeaways:

[01:01] Introducing Jay Conner

[05:00] Introduction to private money

[08:30] The Great News Phone Call

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

[13:18] Maintaining relationships with private lenders

[15:40] Private money vs traditional money

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

[25:18] Advice for real estate investors

[29:01] Connect with Jay Conner

Quotes:

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

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

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

Connect with Jay:

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

Tired of living deal to deal?

Transcript:

Speaker 1 (00:00):

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

Speaker 2 (00:34):

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

Speaker 3 (01:01):

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

Speaker 1 (02:07):

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

Speaker 3 (02:24):

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

Speaker 1 (02:43):

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

(03:38):

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

(04:27):

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

(05:18):

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

(06:10):

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

(07:02):

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

(08:11):

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

(09:06):

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

(10:04):

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

Speaker 3 (10:38):

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

Speaker 1 (11:17):

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

Speaker 3 (12:22):

Right? Yep.

Speaker 1 (12:24):

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

Speaker 3 (12:33):

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

Speaker 1 (13:22):

I mail ’em checks.

Speaker 3 (13:25):

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

Speaker 1 (13:33):

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

Speaker 3 (13:41):

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

Speaker 1 (13:50):

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

Speaker 3 (14:00):

Yep.

Speaker 1 (14:01):

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

Speaker 3 (15:27):

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

Speaker 1 (15:32):

Options. Does that make sense?

Speaker 3 (15:34):

Yeah, that makes sense. A hundred percent.

Speaker 1 (15:37):

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

Speaker 3 (16:14):

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

Speaker 1 (16:33):

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

Speaker 3 (17:33):

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

Speaker 1 (18:04):

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

Speaker 3 (18:20):

Yeah, me either.

Speaker 1 (18:22):

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

Speaker 3 (18:53):

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

Speaker 1 (19:12):

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

Speaker 3 (19:17):

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

Speaker 1 (19:20):

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

Speaker 3 (20:25):

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

Speaker 1 (20:50):

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

Speaker 3 (21:53):

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

Speaker 1 (22:07):

Well pay ’em on time.

Speaker 3 (22:08):

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

Speaker 1 (22:12):

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

Speaker 3 (22:42):

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

Speaker 1 (23:03):

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

Speaker 3 (23:06):

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

Speaker 1 (23:10):

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

(23:37):

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

Speaker 3 (24:31):

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

Speaker 1 (25:18):

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

(25:26):

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

Speaker 3 (26:11):

That’s so good.

Speaker 1 (26:13):

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

Speaker 3 (27:08):

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

(27:55):

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

Speaker 1 (29:01):

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

Speaker 3 (30:31):

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

(31:13):

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

Speaker 1 (31:51):

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

Speaker 2 (31:54):

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