From Failed Flip to Marketing Maven: Bob McIntosh’s Real Estate Success Story

November 28, 2023

Title: “From Failed Flip to Marketing Maven: Bob McIntosh’s Real Estate Success Story”

Episode: 208

“Provide good value. If you do that, you will find success.”

In this Profit First for REI podcast episode, we interviewed Bob McIntosh. He is an expert in the marketing space, particularly in online marketing.

Know more about marketing, internet marketing space, and providing value to find success. If you have trouble making money, this episode is for you!

Enjoy the show!

Key Takeaways:

[00:49] Introducing Bob McIntosh

[01:58] Why Marketing?

[03:37] Internet marketing then and now

[09:30] Are you utilizing all available tools to their top performance?

[11:04] More time than money, more money than time

[16:01] Bob’s advice for those starting in their real estate journey

[22:37] Connect with Bob McIntosh

Quotes:

[06:03] “If I look across time, the thing that always works the best just provides good value… if you do that, regardless of what changes in the technology went today, you will gonna find success.”

[11:05] “Every single form of marketing requires one of two things and sometimes both, either time or money. Sometimes it takes both.”

[14:55] “If you find something that works, just dial up the volume until it doesn’t work anymore.”

Connect with Bob:

Website: https://go3dc.com/bobmcintosh/

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):

If I look across time, the thing that always worked the best though and still even today does, is just provide good value. Make people feel like, Hey, there’s a whole reason that you’re here and you want to be here and you want to be in my sphere of marketing influence. And if you do that regardless of what changes in the technology landscape, you’re going to find success.

Speaker 2 (00:21):

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 (00:48):

We have Bob McIntosh on today. He’s a marketing extraordinaire in the real estate investing space and he tells you what do you do if you have more time than money or money than time? And really goes into marketing specifics for right now, whether it’s your first deal or you have multiple deals under your belt, just very good marketing strategies that you could implement. So I believe this is one where if you are having trouble making money, this is an episode that can help you make more money. Thanks for listening. Appreciate you. Enjoy the show. Hey, thanks for listening to the first REI podcast. It’s your host, David Richter. I have Bob McIntosh here today. He is a marketer extraordinaire in the real estate investing world. I’ve seen him speak a few times now and part a couple of the same masterminds, so lots of knowledge going to be dropped today. So Bob, thanks for being on the show.

Speaker 1 (01:38):

I appreciate you having me and I’m excited to be here for everyone listening in, thank you for your time. I don’t take that lightly that you chose to listen to this and to me.

Speaker 3 (01:46):

Awesome. Well, let’s talk about, first we’ll talk about your real estate background, but what drove you to marketing? Why that world and why helping people with the leads and getting things in the door, what drove you to that?

Speaker 1 (01:59):

So it was a couple of things, actually. This is a funny story. So we started, bought our first flip and all I’ve done was write a couple of books, bombed it miserably. We lost like $40,000 on our first flip it as a disaster. And I remember we joined this education program and they’re like, Hey, go watch this eight week marketing course. It’s like, I don’t care about marketing, I don’t want to do marketing, I don’t want to be a marketer, I just want to flip houses. And it took me probably a good year, year and a half to really understand that if I wanted to flip more houses, marketing was how you get more houses. And I was young, I was in my twenties, so I didn’t really understand the concept. And then what ended up happening is we started open houses in Buffalo, New York, but I moved out to Los Angeles and this is 2010.

(02:44):

So I was like, how do I add value from 3000 miles away to give context? It doesn’t seem crazy today when I say that, but you got to understand that we’re like iPhone two or three, you’re still doing Skype and it’s grainy as all out sharing files via the internet was this new thing. Dropbox had just come out. It’s like, oh my god. So it’s a very different time. So I figured out I got good at marketing, I could do that from 3000 miles away. Specifically, I got very good at internet marketing more than anything else. And I did that and I raised money because both of those things didn’t require me to be in person in Buffalo. So I got good at that and kind of actually realized I like it. I come from a technology background, so digital stuff kind of already resonated with me and just went from there. And here we are now, what, 13 years later.

Speaker 3 (03:31):

So what did internet marketing look like back then versus now? What were you doing back then?

Speaker 1 (03:37):

That’s a great question. Yeah, so back then we did a lot of SEO. That was the major thing that we spent a lot of time on and I’ll get to a couple other

Speaker 3 (03:46):

Things. What’s SEO main just for? So people who might not know given that context

Speaker 1 (03:50):

For moving search engine optimization. So the idea of getting yourself to the first spot on Google and in the cities that we were flipping in at our peak, if you Googled sell house fast in that city where we buy houses in that city, my site was number one, usually number two and sometimes number three. And we just drove a lot of leads that way and it worked well for us. So we did that. And then I was one of the early people doing email marketing to people, Facebook ads, back when you could actually run Facebook ads for real estate and hyper target people. It was very interesting back then as well. And I remember, actually, this is really funny. There was a thing that we would do, so we bought an email list of agents and I emailed them all and at the same time, I uploaded the entire list to Facebook and I marketed it with my face.

(04:42):

They’re like getting emails, phone calls and seeing me. I was just blast these people for two weeks while I’m emailing and the number of calls, they’re like, I don’t know who you are, but you’re everywhere. You must be legit. And so we said we started getting more deals that way. So it was more of the wild, wild west than it is today. But the funny thing is everything was still kind of manual. There was all these tools that make things easier and faster, didn’t exist either, so it’s harder. It’s harder now than it was then, but you also, it’s easy in terms of getting results, but it’s easier in terms of time having to be spent.

Speaker 3 (05:17):

Okay, so then today, back then it was the SEO, the email marketing. You still do a lot of that stuff still today too because you’re still in the internet marketing space. Is there anything you’ve added that wasn’t available back then?

Speaker 1 (05:30):

Yes, we do a lot of retargeting that was just coming out at that point in time. The ability to, we need to do it through third party companies. It was clunky. That’s the best way I can say it. Back then, that whole idea was interesting. And then, yeah, the other things that we did is we did text marketing vis-a-vis Google Voice. I built a little essentially a Chrome extension, which now it doesn’t function anymore because Google realized that was a terrible idea, but they kind of make it into a texting RM, if you will. But I think the thing, if I look across time, the thing that always worked the best though and still even today does, is just provide good value. Make people feel like, hey, there’s a whole reason that you’re here and you want to be here and you want to be in my sphere of marketing influence. And if you do that regardless of what changes in the technology landscape, you’re going to find success.

Speaker 3 (06:21):

Okay, so let’s pretend that you’re talking with a client and you’re giving them a marketing overview. What are some of the questions you ask them to know what they’re doing currently and if it’s working or not, or what should questions be asked by a real estate investor to know if their marketing’s working?

Speaker 1 (06:39):

That’s a great question. So first question I ask is, what’s your cost per lead across your marketing channels? And 85% of the time someone come to me says, I don’t know, which already means I know your marketing sucks. Because if you don’t know that, then you don’t know what you’re doing. You dunno what you’re spending, you dunno what’s coming in. There’s either no trackability, no KPIs, or what’s most common is they’re just doing whatever gets the phone to ring and they’re not really tracking how it’s working on the backside, which is not inherently wrong. If you’re getting leads and you’re doing deals, then great, then we’re all here to make money doing this, otherwise why would we be doing it? But if you don’t know that cost, that’s already going to be problem number one. So you got to ask yourself that. What is your cost per lead or cost per acquisition?

(07:24):

Usually for most people they start with cost per acquisition first because that’s the easier number to track. And it’s also the more important one when we look at that. Now, when you start getting into a multi-tiered marketing campaign where we’re overlaying 5, 8, 10 different layers of marketing, then cost per lead actually becomes more important because we are going to find different things as we go through. And you’re also going to find that the more layers you add, one of the hard things today is attribution, right? So let’s say I’m running Facebook ads, Google ads, I’m doing bandit signs and door hangers and direct mail, which is not uncommon for an intermediate or advanced level investor. Well, maybe they got my door hanger, then they looked at my company on Google, so now they’re getting retarget on Facebook, then they click from Facebook into my website and now they’re getting retargeted on Google and they’re searching for other companies and mine shows up.

(08:15):

And then they click that and then they submit their information. Okay, well what piece of marketing gets attributed to that sourcing? And that becomes harder as you go on. You just have to pick a methodology and stick with it and just go with it. But what you’re going to find, the second question is if you don’t know what your cost per lead is, do you know what you’re actually spending on marketing per person that you’re reaching? And a lot of people don’t know that either because, and that becomes important because as for most marketers, when we start at the top, we just think, well, what’s my cost to get a deal? But as we drill down to deeper levels, there’s different metrics that become more important and become leading indicators for the one, whereas cost per acquisition is really a legging indicator because I’ve already bought the house.

(08:59):

That’s how I know there. So you mean I can’t make adjustments until later? Well, not later, but sometimes too late. But as we drill down deeper, you get there. So understand, start by understanding your cost per acquisition and then drive into your cost per lead and then drive into your cost per house or person, individual reached. And that becomes more interesting as you dial that in. And then the last question that I would ask is, are you really utilizing all of the available tools to their top performance? And usually the answer there is no. For example, we have our own CRM and I know a lot of people, even within the ones that use our CRM, and I’ve taught them how to do this. Okay, well, are you doing email marketing? No. Are you doing tax marketing? Maybe Are you doing this? Are you tracking all these things?

(09:44):

Sometimes the interesting thing that’s happened in the last 10 years is that we’ve gotten more and more and more and more tools available at disposal and more and more of these tools are available and the things that we’re already paying for anyways, but we don’t use them. And it’s not necessarily because you don’t want to use them. Other times we don’t know or we don’t know how or things of that nature. But I would be willing to bet in almost every company that I go into, I can look and say there is probably one to two more deals per year to be had just by turning things on that you already own that you’re not utilizing effectively. And sometimes just that little bit right there can make a difference in the cost to hire someone like me.

Speaker 3 (10:20):

That makes sense. Okay, I like that a lot. So then those are good questions to ask if you’re going down that rabbit hole yourself or if you’re working with someone like Bob here. So then let me ask this. Do you see it be more advantageous for most real estate investors to pick one channel, get really good at it, or should they go or when should they go? Or what’s your take on doing different marketing avenues? Or should they pick one or should they do multi at the beginning? What’s your take?

Speaker 1 (10:54):

Yeah, so this is going to depend on what your budget is and how much you can spend across different channels. So for example, well, let me back up for a second. Every marketing, every single form of marketing, regardless whether it’s online, offline, doesn’t matter, requires one of two things. And sometimes both, either time or money, sometimes it takes both. Usually when it’s both, it’s the best deals, but they’re not easy to be had either. So you’ve got to understand where you at right now, do you have more time, then you have money? Do you have more money than you have time? If you’re out of both, then you’re going to find yourself in a bad position and just either finding and making more time or finding and trying to find other ways to get more money. You have to have one of those two to make marketing work really.

(11:35):

And so understand that first, and then that’s going to do basically more or less narrow down your marketing channels. If you’ve got more time than you’ve got money, then you’re going to do things like door knocking and driving for dollars and going to meet wholesalers and things of that nature and vice versa. So understand that first. And from there, my recommendation would be try a bunch of different channels, and this is going to work one of a couple ways. If you’ve got enough money, run ’em all simultaneously and see what happens. If you don’t, that’s okay. Then stagger them, maybe run one for two months and try another for two months and try another for two months. But you have to track your stats because what you’re going to find, and every market’s different. What worked for me in Buffalo didn’t work in Rochester an hour away, which is different than what works in New York City.

(12:21):

So I can’t tell you this is the secret sauce to winning, but if you do it that way, you structure this all out, what you’re going to find is you’re usually going to have a winning campaign. There’s going to be one that’s going to be better than all of the rest. And when you find that one double down and maximize your spend in that single one as much as you possibly can, there will be a limit that you’ll reach and we won’t know where that is. You’ll just keep spending more until you either reach limit of people, reach limit of budget, reach limit of what you can spend on that marketing channel, et cetera. At the same time, run your other ones as supplemental, even if it’s just in small increments to support them. And here’s a couple of reasons why I recommend doing this.

(13:04):

First and probably most important, if you’ve been in real estate for long enough, you’ll realize that we run in cycles. Marketing comes, marketing goes. So cold texting, for example, has been great until about four months ago, and now it’s like a pain in the butt to try to make cold texting work. So if you become reliant on a single channel and you don’t have anything else running, number one, it becomes more difficult to switch to something else when regulation changes or a marketing channel gets crowded or stops working as well or whatever the case might be. And then number two is if these other channels are already working for you, and let’s say one goes down, that’s your good one, we can very easily usually increase either one other one or all the other ones to get back to where we need to be. And because they’ve already been running, it doesn’t take as long for them to start producing results.

(14:00):

We simply increase the results a lot more dramatically. And so when you look at marketing from this more granular data-driven perspective, it becomes easier to realize that the more marketing you run, the better off. Now, just like anything, imagine you’re flying a plane, right? We’re twisting knobs and turning dials, or if you’re a dj, we’re seeing what’s going on and you’ll figure out the secret formula that works in the market or markets that you’re in. And then once you figure that out, you just maximize what already works. And this is a big mistake that we made early on in our time, is rather than maximizing what is working well, was trying to do other things. And funny story I learned back in marketing school, we had this marketing game and the first week we came out my team and we crushed it and we’re like, yeah, and then we changed everything we did instead of just doing more of what, and then we lost every other single week from there. And I never forgot that lesson in my head of like, Hey, if you find something that works, just dial up the volume until it doesn’t, until you either A, it doesn’t work anymore, or B, the, what’s the term for it where it’s like each iteration is a little bit smaller and smaller and smaller. I’m totally spacing on the wording for it, but yeah,

Speaker 3 (15:13):

I can’t think of it either.

Speaker 1 (15:14):

Yeah, I know, right? I was like, diminishing return. There’s a lot of diminishing returns. So at a certain point for every dollar increase, you might’ve gotten $2 out, then a dollar 90, then a dollar 50, and then if you’re down at a dollar 10, it might still make sense, but you might also find that the extra 10 cents, I can go turn something else up that’s giving me a dollar 30. So I’d rather turn that up than the other thing.

Speaker 3 (15:36):

Okay, that makes sense. So okay, if someone’s listening to the podcast, that was really good advice if you have more money than time and time to money. But what if they’re just getting started out? What would you recommend for someone who’s just getting started in the real estate space? Is there something that you usually point them towards or is that market specific? Or if you’ve got someone that’s just trying to get their first deal?

Speaker 1 (16:00):

So if you’re trying to get your very first deal, here’s what I would recommend. If you are in the more time than money category, then you’re going to do a couple of things. You’re going to drive for dollars, you’ve got the time to do it, you’re going to do door hangers. They’re very inexpensive to get printed, and I can just literally go hang ’em. It just takes time. And you’re going to go to wholesalers. Now, the goal should be to get your first deal. And honestly, I tell everyone, make your first deal wholesale. And I get a lot of flack for this sometimes, but the reality is if you have more time than money, the only way to scale is to reverse that because your time is only scalable to a certain point. Money is infinitely scalable. And so if you are in that space right now, and you might want to flip, but get a wholesale deal done first, make the five grand or 10 grand or whatever you can, or if it’s more even better, but take that money and then take half of that and put it into a marketing campaign that you can do dollars with.

(16:55):

Why? Because your time is only scalable again to a certain level. So the other piece of this is going to be on the other side. Let’s say you have more money than you have time. In that case you’re going to do, I would still do wholesalers. They’re going to be expensive in that case, but you can email market to them to find them. You can pay someone to go scrape all their lists and build it and get on their email list that way so you don’t have to spend the time. And then number two is I would pay for cold calling. I think at least right now in what are we, November of 2023, what’s going to work the best for dollars out in that capacity? And then if you use the right systems and tools in the backend with your cold calling, you can follow up with text marketing, email marketing, you’re going to close a lot more deals that way and it will require very little of your time.

Speaker 3 (17:44):

Awesome. Well, that’s great. If you’re trying to get your first deal, you’ve got some just brass tacks. There you go. There’s the first things you could do. So then as an owner of a company, which is hilarious that you were like, I don’t want to be a marketer and I don’t want to go down that road, how important do you think it is as an owner to understand marketing principles or because most people just go out there and hire someone like you and then just expect them to take it all over. But what do you think? How much knowledge on marketing should an owner have?

Speaker 1 (18:15):

So I would say the answer depends. Well, first, if you like marketing, then master it. Because the best companies are the ones that market the best and sell the best. It’s find me a case where that’s not true. I’ve not found one yet. And the reality is when you look at the people who are good at marketing and good at sales, they never have a problem with leads and they never have a problem with getting dollars. And both of those things are required to scale a company and go from there. Now, for some of us who are like, Bob, I don’t want to be a marketer. I don’t care to be a marketer, it’s not my jam. And that’s totally cool, but you do need to understand if nothing else, what are the metrics that determine your marketing’s success? You don’t necessarily have to go as deep as me and say, okay, do I understand all the granular details of it?

(18:58):

But if you don’t understand the numbers and the KPIs behind why your marketing is working and what is working, then you’re never going to truly be able to scale. And I can speak from personal experience if you don’t know your numbers either. I used to do this, I go to my accountant and be like, can I afford to spend money? And they’re like, I don’t know, we’ve got to look. And I’m like, well, how do I not know this? At some point, we should know that if we’ve got the right team in place, we should know those things. And I get for a lot of us, if we’re just starting, it might be much easier. I’ve got one deal, did I make money? Yes or no? Okay, cool. But as we grow, it becomes more important to really dial that in. And then I always end it with, look, you might find yourself, me who is anti-marketing, but then when I realized how much, I don’t know if I was anti-marketing, but I didn’t want to learn it, I realized how important that actually became to moving the lever of my business.

(19:51):

And when I would do something essentially pull a lever and see the business go, I’m like, Ooh, that feels good. I like that. It’s fun like a dopamine hit, if you will. And so then I just dove down to it. And if you find yourself in that same arena where you’re like, oh, man, that’s fun. I like doing that, then I would say, make marketing your jam and hire out the thing you’re not good at. I was just joking with David here before, I was like, I’m terrible at accounting. I have someone that does all the other stuff for me. I know I’m terrible at it. I understand just enough so that when they talk to me, I know what they’re saying. But if you ask me to log into QuickBooks right now and reconcile, I would’ve no idea how to do that. I would be like, maybe, but I don’t need to know that I can hire someone who’s an expert and I can go do the thing that I enjoy doing, which in this case is marketing.

Speaker 3 (20:36):

Yeah, well, I like that. Know your numbers, knowing that it’s important on the front end to know how much is coming in and where’s it coming from. And then I like how you said that on the backend too. Where’s it all going to and where do we pour the most into it? How much do we have to spend on a new marketing channel? So I definitely resonate with that on this podcast.

Speaker 1 (20:56):

I want to add one real quick thing to that, and also think about your business like a funnel. The top of the funnel is marketing. It’s leads, it’s prospects. And so one of the things always, I told someone, I was like, okay, so you’re great. It was at a conference I was speaking at and he’s like, oh, well, I’m really good with contractors. I was like, cool, how much do you realistic think you could bang a contractor down in price across an entire rehab project? 10% maybe. He’s like, that’d be hard. I was like, 5%. He’s like, yeah, I could probably get five, maybe six. I was like, cool. So you’re saving, but let’s call it 10% on a $50,000 rehab. So you saved yourself $5,000. Fantastic. That’s awesome. Congratulations. You probably had to piss off your crown hunter to do it. It was a lot of work, a lot of effort, a lot of energy.

(21:37):

I was like, now imagine if you increased your lead flow into deal conversion by simply 1%. That sounds a lot easier to do, and it is a lot easier to do. And now all of a sudden, 1% there because it’s top of funnel impacts every other stage all the way to the bottom. And so if you get good at marketing, or at least understanding your marketing, again, going back to knowing your numbers, your KPIs, so that you can pull the right levers, whether it’s you pulling them or hiring someone to do it for you, that becomes your business grows significantly faster because marketing influences every single step all the way to the bottom line, whereas other things do not.

Speaker 3 (22:13):

Yeah, that is very true. You got to make the money. It doesn’t matter if you don’t make the money, you can’t keep any money. So I love this. This has been awesome. Just diving into the marketing side, the questions you should ask if you have more time than money or money than time, if you’re doing your first deal, lots of value here. So Bob, how can people find you if you want to point ’em to get in touch with you?

Speaker 1 (22:37):

Yeah, the best thing that you can do is reach out to me. So if you go to go 3D dc.com, that’s go the number three dcs in delta charlie.com/bob Macintosh, and there is no a in my last name, so it’s M-C-I-N-T-O-S-H. You’ll find on that page, my contact card down. It’s got my cell phone, my business line, all my social handles, my email address, everything. Just reach out to me. Please do tell me that you saw me on this podcast so that I know where you came from, because I always want to know what we just talked about, knowing your KPIs, what’s working, what’s not, right? So just let me know that you got to me from here and I’d love it. And look, if whether you’re a brand new investor or you’re an experienced investor or anywhere in between, I promise you that a simple conversation with me will probably help you. And if I can’t, I’ll punch you in the right direction to someone who can. My goal is I know I’m not going to win everybody. I don’t need to. I just need to win a handful and help them grow because when we do, everyone wins together.

Speaker 3 (23:28):

Awesome. Well, that’s good stuff. So that’s how you get, tell ’em again one more time, the place to go.

Speaker 1 (23:33):

Yep. So go 3D dc.com/bob Macintosh.

Speaker 3 (23:38):

Awesome. So there you go. That’s how you get in touch with him. And if you need help on the marketing side, Bob knows what he’s doing, and you just saw here the questions to ask, diving into it, helping you get that stuff set up. Then as well, if you don’t know the numbers on the backend and you’re making it, you could go to simple cfo.com, click down, schedule a call there, and we can make sure that you know the numbers from the accounting and the back end so you can actually keep more as well too. So you’ve got the yin and yang here. You got to have leads and money coming in the door, and you got to make sure you’re keeping it on the backend. That’s what we do. So if you want to head over to there, simple cfo.com, remember to make profit a habit in your business. And Bob, thanks again for being on the show and for being a great guest.

Speaker 2 (24:19):

Thanks for having me. 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?

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):

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.