From Ministry to Real Estate – How Scott Poirier Built a Thriving Business

June 18, 2024

Title: “From Ministry to Real Estate – How Scott Poirier Built a Thriving Business”

Episode: 237

Know other people’s stories. It is Scot Poirier’s striking advice for investors on their first deal.

In this episode of the Profit First for REI podcast, Scot, a successful real estate investor and coach, gives you practical advice on investing in real estate and how to get a seller to open up.

He also shares his story of his first deal and the challenges he overcame in his journey. Listen to have the right motivation and hope to pursue your real estate investing journey. Enjoy the show!

Key Takeaways:

[00:39] Introducing Scot Poirier

[02:55] Life before real estate investing

[06:17] His very first deal

[09:57] After repair value

[10:49] The wake-up call

[16:51] Learning about people

[25:28] How can you make people open up to you?

[30:22] Remove ‘permission language’

[33:10] Connect with Scot Poirier

Quotes:

[05:13] “People are people. They have crises, and they need to have a sense of trust to work with you.”

[10:51] “When you don’t know that you don’t know, you might get lucky on a deal, but when the other shoot drops, it hurts.”

[29:12] “Don’t give up. Surround yourself with good people. People that have your interest in mind.”

Connect with Scot:

Website: https://www.facebook.com/scot.poirier

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):

First of all, surround yourself with the right people. You have to surround yourself with people that are pro you and sometimes pro you. People can also tell you what you need to hear.

Speaker 2 (00:13):

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 (00:40):

This episode with Scott Poirier is really good. He gives you very practical advice today on how to get a seller to open up. He’s got one big word, one word, super easy word, and then a couple other things that he tells you with very simple steps of how to get sellers to open up. I think you can make a lot more money. He tells about his first deal, how it was like an accidental home run, and then his second deal was an absolute dumpster fire that cost him years of his life and how he overcame that. So he’s got a lot of stuff here. This should give you hope and wind beneath your wings here because he’s got a lot of experience to help with, and I know that if you listed this, you can end up making more money. So buckle in and learn from Scott. Hey Scott, thanks for being on the podcast today. I’m super excited about this. Number one, because of your background. Number two, we’re a part of some of the same groups that I love being a part of these groups together that tells you who you’re around and what they attract and all the things that we think the same. And then I do like your background too. Like I said, I’m very interested to dig into this. So Scott, thanks for being on the podcast today,

Speaker 1 (01:45):

Man, it’s great to be here. David. I feel like I’m with a rockstar here, so I’m honored, honored to talk with you and to talk with your folks as well.

Speaker 3 (01:55):

I’m excited because when I was reading your bio, you said interpersonal skills. You’ve got rehabbing experience wholesale, you’ve got quite the smorgasbord of experience in your past. So let me just ask you, did you start real estate later in life or was there something early on, or did you grow up on real estate with your family? How’d you even get interested in that side of the world?

Speaker 1 (02:20):

I’m kind of reading into your question here because you’re looking at me going, okay, this is definitely an older gentleman, so I wonder how long really doing this.

Speaker 3 (02:28):

Oh man.

Speaker 1 (02:29):

Actually I started, it was really out of need just to supplement income, and some of that has to do with my background. What

Speaker 3 (02:36):

Stage of life?

Speaker 1 (02:37):

So it was 11 years ago, so I’m two. So I was in my early fifties. Fifties, early

Speaker 3 (02:44):

Fifties. And what did you do before

Speaker 1 (02:46):

Then? So I’ve been full-time ministry pretty much all of my adult life over 30 years as a pastor. Started with youth and family ministry. Most people said I was crazy, but I loved it. You

Speaker 3 (03:00):

Seem like a youth and family. You have that energy. I would not have guessed 62. I would’ve guessed early fifties because you bring an energy to,

Speaker 1 (03:09):

I’m going to send you a card situation

Speaker 3 (03:13):

All I want. Just send me that. No money, just send me the Christmas card. Okay, so youth and family ministries, and then did you become a pastor from there of the lead pastor or something?

Speaker 1 (03:24):

Believe it or not, they let me say, hey. They’re like, man, we want you to just be the pastor here. And to be honest with you, I never changed my stick at all. I’ve always had this energy and I realized that you can talk to adults the same way that you can to teenagers. In fact, I think it’s preferable and really just keep it very straight, very open. Young people. Young people can sniff you out if you’re not playing the game, right? I mean, they really can. So just that transparency and honesty and energy has served me really all these years in ministry.

Speaker 3 (03:54):

It seems like you’ve learned a lot of skills from being in the ministry that have helped in the business world as well too, because I love what you just said right there. You put things on the bottom shelf and you shoot straight with people. Do you think that that’s contributed to anything when you got into the real estate world as well?

Speaker 1 (04:12):

I had no idea. I didn’t come into the real estate world. David thinking, okay, I’m switching from ministry. I fell into the real estate world to go. I got to do something to supplement income, worked. All of my wife and I worked hard all of our lives. It was a calling to do what I’ve done in ministry. I still get to do some things in ministry. It’s not in a paid capacity. I got to rethink that. But anyway, but even when it was pay, it wasn’t anything to brag about, I promise you. Oh, sure, yeah. You’ve never seen me on TV doing this. So we had to do something as I was getting older. So in my fifties, in my early fifties, I thought I got to get another way of getting some income in. So I fell into real estate, and it was in that I discovered, oh my goodness, the stuff that I could be doing here, and I made some mistakes and that woke me up as well. But that’s what led me into real estate and I had no idea that it feels just like ministry. I had no idea that it was going to be really the same thing. I’m just dealing with people. So whether if they’re church people or not, people, people have crisis. They have hangups. They need to have a sense of trust, all this stuff to be able to work with you. It’s the same thing in ministry, man.

Speaker 3 (05:24):

Yeah, no, that’s really good. So it has prepared you. Now, I know you brushed over, but the mistakes, do you mind, do you want to go into that? Do you want to go? I like when people are No, he just walked off screen. I’m sorry. No. Okay. What happened?

Speaker 1 (05:44):

I think I’ve got to share it because I think we set up people when we don’t, first of all, sometimes we get some hiccups. The fortunate thing is, I guess if you can find someone that you really trust and they’ve had a huge hiccup, they can probably save you from a lot if you can learn through that. That’s

Speaker 3 (06:01):

Why I love when people tell that stuff, because I’ve heard some things on here. I’m like, that’s just going to help anyone going through this at this point, because we’re all human, but we just like to hide under a rock sometimes. Yeah,

Speaker 1 (06:11):

Yeah. No, I hear you. I think you might like this because I’m going to talk about the very first deal that I ever did that actually worked out pretty good, but it was purely accidental. I want to own that, right? But I think you’ll like it because of what we did with our IRA money. So we went collect IRA. So a good friend of mine that also came to my church, he and I were talking one day. He was really the technical guy. I’m really not a technical human being. All I know how to do is flat. My gums really, I have a high eq, but not really into the technical kinds of things. You don’t want me to swing the hammer? I can do fix and flip, but I’m not fixing. I flip.

Speaker 3 (06:45):

That’s good.

Speaker 1 (06:48):

So we decided, he did all this research about self-directed IRAs, and he approached me. We had a conversation and we said, yeah, let’s commingle our IRAs, my wife and I and his wife and him, and we bought two, five unit buildings, apartment buildings that we still own to this day. It’s just insane what these things are worth and what the cashflow we lend out of it with all that, with all the profit that’s come in. So I would love to say, man, we were so smart. I might say we had the hand of God on us that blessed us, but later we had lessons we had to learn. We did the first deal. Things were great. And I thought, well,

Speaker 3 (07:24):

And that first deal was the five, the two five units,

Speaker 1 (07:27):

Two five units it was, and

Speaker 3 (07:28):

That you still have today. Okay. Before you keep going onto the mistakes. I do have to ask about that. The technical guy, did he have a background in real estate and did he know that these were going to be home runs and that you would still own these? However many years later,

Speaker 1 (07:43):

International, international Construction worked for the, actually with the company he worked with. They did us contracts around the world, Midea all over the place, billion dollar deals, a financial mine, I mean a really good financial mine. And he would tell you if he were here right now, he’d be like, I didn’t know anything about real.

Speaker 3 (08:03):

It’s great. So it sounds like a happy accident all the way around with you, with him, with everyone. Now you’ve still got it. So I just wondered. I love that it’s your network, right? It’s the network there and provided that first opportunity, because usually that’s the hardest, right? Getting into it just the first time.

Speaker 1 (08:20):

But it was the second one that was the wake up

Speaker 3 (08:22):

Call. Okay. What happened on the second

Speaker 1 (08:24):

One? It warn us. That led us to say, we got to rethink how we do this. Okay. Yeah. So the second one, we thought, ah, we could do fix and flip.

Speaker 3 (08:32):

So you went from the two unit. Did you have to fix and flip that or the five unit, the two five units? Did you have to flip those or fix them up?

Speaker 1 (08:39):

Well, we had to fix them up. Yeah. We had to polish, maybe I’ll call it Polish, Polish one a little bit more than the other. But because there was all this money in the IRA, it didn’t feel like real money. You know what I mean? I, I knew that all the years of investing that that money was in there, but it wasn’t tangible.

Speaker 3 (08:58):

How many years ago was this?

Speaker 1 (09:00):

It was in 2013, 11 years ago.

Speaker 3 (09:02):

So if that was 11 years ago, you couldn’t touch it either, right? Because you were at 52 or at that point. So you still had years until it could become real money in your pocket. Okay,

Speaker 1 (09:14):

That makes sense. And I still haven’t touched it to this day. We’re just letting this and we’re private lending out of every, all even

Speaker 3 (09:18):

Better. Yeah, that’s good stuff.

Speaker 1 (09:20):

I would not have even known to have done that 11 years ago, but it’s because of the other stuff that I learned as a result of getting hit in the back of the head with Scott, you don’t know what you are doing to help fast. So we get this fix and flip this thing. This was a house that we bought it off the MLS, we found it on the MLS, worked with a realtor. We ran our numbers. We even had a private lender that had talked to us and said, I think you guys are, you’re not seeing the property. Your numbers are not right. I went back over it. I thought, no way. I’ve got this thing figured out. I think I know what I didn’t even know it was called a RV at the time after repaired value way for anyone listening. The way I look at after repaired value is this way. It just tells me what the top of the market looks like for a house that’s very similar to this in

Speaker 3 (10:11):

That point in time.

Speaker 1 (10:14):

So we run all these numbers, we got this thing down. We even put a contingency, I think we even did a 20% contingency. I must have read that somewhere, that that’s what you want to do or something, right? So we go into this thing. This house was built in 1800. The place was a disaster. We started opening up walls and it was just none of the place was insulated. I mean, we literally lost our shirt. I mean, we’re well into the six figures. Took us years to recover from it

(10:41):

To pay all this debt back. And we did. I mean, we just hung in there and we just slowly just pay, pay, pay. But that’s when the wake up call came in and said, okay, we clearly don’t really know what we’re doing. We have good intentions, and I run into people all the time with good intentions, but when you don’t know that you don’t know, you might get lucky on a deal or maybe even two. But wait, when the other shoe drops, man, it’s going to hurt. And you know what happens to most people? They just walk away from it after. That’s just bad business. And they walk away. I did was I got help. And since that, I’m telling you since that reality, and I even have a coach today, I’ve always had someone that’s further down the road than I am, and it’s been worth every dime. In fact, it’s allowed me to now build a real estate company. I didn’t come into this for that. I wanted to supplement my income so that I could take care of my family from when I couldn’t work anymore.

Speaker 3 (11:41):

Oh man. So biggest lessons learned, need help, need someone who’s been there. And then I would say another one too. It sounds like you had a private lender even tell you, I don’t know if you’re saying this, someone who was even there. So it’s like, was that also a wake up call of other people that might be in this deal and listening to them down the road too?

Speaker 1 (12:04):

Yeah. Yeah. Always listen to the people. If there’s somebody, like when you play out the private lender, so you got someone who’s eager to invest their money to make money, and you go, yeah, I wouldn’t invest in this deal with my money. Maybe I’d invest in it with your money, but I’m not using my money by the way we invested with our money because we literally lost our shirt. We really Oh, wow. David Painful. So yeah, listen to those other people. I think it’s about, first of all, surround yourself with the right people. You have to surround yourself with people that are pro you and sometimes pro you people can also tell you what you need to hear. I promise you this. My wife is really close to me. She’ll tell me what I need to hear.

Speaker 3 (12:48):

Yeah, shit. There’s no holding back there.

Speaker 1 (12:51):

That’s right. So we want to be with good people that really do have our interest in mind. And you want people that are for you, but you also want people that are ahead of you. And I think even a private lender, if today I was looking at something and I don’t really use a lot of hard money when I use the term private lender, I’m working with people that know me like me and trust me. And

(13:13):

I promise you that those people, they’re not in the industry. They’re putting the paper in front of me saying, sign right here. I’m ready to go. They’re even want to know what the deal is because they really trust me. I feel uneasy with that sometimes. And I’m like, yo, let me just tell you about loan to value. They’re like, okay, where do I sign, Scott? So I like working with private lenders because I can also get a lower interest rate, but there’s a lot of flexibility in what I get to do. But if a hard money lender says, Scott, I’m not investing in this. That’s got to be a wake up call.

Speaker 3 (13:44):

Yeah, yeah. No, that’s big. Sounds like some big lessons learned on deal number two. That does make me ask the question, how did deal 3, 4, 5, 6, how did those next deals go? Were they better while you were recovering from deal number two?

Speaker 1 (14:00):

Never had, and I want to be careful. I don’t want to jinx anything here. Knock on wood in the sense that we never lost again. I’m not saying that. Well, there’s still some other lessons. Sometimes you get eager and you go for a property and it’s so marginal. I’m like, man, yeah, okay, we didn’t lose anything, but I just worked for seven bucks an hour. I don’t work for six an hour, but never back in that situation again, the mistake we made was so fundamental, but we didn’t even know it just didn’t know. Yeah,

Speaker 3 (14:35):

I do like what you said. You didn’t know what you didn’t know. And that’s where having someone that’s down the road helping you get to where they got and then avoid some of those pitfalls and it’s been worth every dollar. That was I think, really, really good advice sometimes. Have you ever seen those posts on Facebook? I’m never going to buy this, or I’m never going to have a mentor or a coach, or I could just find everything on YouTube and I just get sick to my stomach. Yes, you can find a lot on there, but it’s totally different when you have a person walking through with you. But I think what you said is also really good. You said someone that has your best intentions and is really looking out for you. Let’s be honest too. Not everyone has your best intentions out there, and a lot of people are just like, what can I get out of this? So sounds like you’ve found those people throughout your life over the past 10 years, especially the past 10 years in the real estate world, sounds like.

Speaker 1 (15:24):

Yep, for sure. Absolutely. Every dime was worth it. I think it saved me years and a lot of other heartache. I think if I had gotten slammed with another really bad one, I probably would’ve said maybe I could. Nothing wrong with working at McDonald’s, but maybe that’s how I supplement my income and get a free meal every now and then.

Speaker 3 (15:46):

Yeah, no kidding. Good grief. It’s funny that you bring that up. I bring that story up when I tell it about the guy that we’ve been working with for a while and his CPA should have just been working at McDonald’s versus your real estate company if you’re going to do all this activity and not make any money for it. So thank you for sharing the mistake on deal number two, and that really helps. So you got into it to supplement it, you then built a company around it, but then I mean 30 years in the ministry, did you ever think that you would have a business like this or that you would go into the business side of it during any of those years?

Speaker 1 (16:22):

No, there’s just so much, especially when you’re in that kind of a career as well, that first of all, education can never teach you. I think what I meaning formal education.

Speaker 3 (16:31):

Formal education, okay.

Speaker 1 (16:32):

Formal education I don’t think can ever teach you what over 30 years of ministry ended up teaching. I mean, I went to seminary, learned all this stuff, learned maybe how to think critically or whatever, but it’s not until you sit across the table in living rooms and hospital rooms where you learn an awful lot about people, circumstances, crisis. And if you’re really open to engaging people and really wanting to be helpful, you end up having a whole lot more empathy and realizing once you know the story of somebody, I don’t know how far we want to go down this road, but Oh, I love

Speaker 3 (17:07):

This. This is great. I think this is helpful.

Speaker 1 (17:10):

Sometimes we can be judgmental in the way that we see things the way that we want the world to be and all that stuff. And it’s so easy to just paint someone and go, I know what their problem is. Well sit at a bedside with somebody or talk to a mom whose 18-year-old son overdosed and died on drugs and they do have an awful story and maybe they made a bunch of mistakes. But when you can connect with that and empathy really comes out, that’s where you can really be helpful. And that’s kind of a dramatic story I guess. But I have found in real estate, a lot of the people that I get to work with, they do have some crisis. They’ve got a bad story. And I think what ministry taught me, not in seminary, but in just the real world really me really wanting to be helpful, genuinely helpful, forced me to have to deal with people in their story to go, what am I going to do? Am I going to judge it or am I going to still be helpful? I chose to still be helpful and that’s really helped me in real estate.

Speaker 3 (18:16):

So I want to ask this question. When you sit across from a seller, I see you as someone who probably asks about their history, their story, and really trying to get and dig deep. Would you say that’s how you approach it when you talk with people across or do you have a different approach? I’m just very curious on how you approach talking with people.

Speaker 1 (18:35):

Well, I dive deeper when I’m convinced that I should stay on the phone. So I do have some techniques, and this is part of the interpersonal skills that I’ve learned. There are certain things I want to get out of the way on the front end, one of the first things I’m trying to determine is am I potentially dealing with a flexible human being?

(18:55):

If I feel like I say feel, but it’s based on questions that I’m asking. Everything I do is based on questions. If you could hear some of my stuff and I record a lot of my stuff, but I use a lot of loops, a lot of language. If you hung around me for a while, you’d be like, at first you’d be like, wow, Scott, you sound kind of smooth and wow. Yeah. And then you did it again with me and again and again. You’d be like, this guy’s boring man. He says the same stuff all the time, and it’s true, which is why it’s so easy for me to do it. I got rhythms down, right? Yeah. So what I’m searching for on the front end is does this person appear to be a flexible human? Because as soon as I’m convinced that they’re just not a flexible person, it doesn’t make them a bad human, by the way. It just means they’re not flexible. Okay, fine. That’s not the person that I want to invest any more time with because they’re never going to work with me because the thing that I really specialize in is really creative. I’m a creative guy, creative financing,

Speaker 3 (19:50):

Which takes a lot more talking and flexibility. It

Speaker 1 (19:55):

Does. So I got to know that I’m dealing with someone flexible.

Speaker 3 (19:57):

What are the signs when you’re asking people those questions that they’re flexible versus inflexible?

Speaker 1 (20:03):

So I use very open-ended words. So I’ll go ahead and present a possibility of what we could do and the kind of words that, the way that I ask my questions are, would you consider this or would something like this work for you? So it’s not a hard sell. I’m not doing anything that’s hard. So all I’m looking for is feedback. So I may throw something out. For example, I may start a conversation to say, Hey, typically, usually, normally these are very open-ended words. They give me a lot of room to backpedal. If I have to

Speaker 3 (20:31):

Wiggle,

Speaker 1 (20:31):

I don’t say, we only do this. I don’t want to cut myself short. Not only do I not want to cut myself short, I really think I can help a lot of people. I don’t want to cut them short if they don’t understand and give me the opportunity to see if I can really help them and at the same time help me and business. So I’m trying to do both things. So I may say something like, yeah, so typically the way we buy is that we would buy owner financing. And all that means is the great downplay. I love explaining it this way. And all that means is it’s a great downplay that I would make a payment to your, that you and I can agree on a number that has to work for you, David. But you know what, David also has to work for me as well, right?

(21:12):

See, I’m always trying to level the playing field. I’m going to make it about you first, but then I weave me into it. Yeah, that’s good. So technically David, the way that we would buy is we would buy owner financing and all that means is is that we would make a monthly payment that we could agree on. Obviously it’s a number that would have to work for you, David, but it’s also a number that has to work for me as well. And so what I wanted to ask you was this, if we can put something together where it makes sense that we could do that and you could take a payment for a period of time, is that something you would consider doing?

Speaker 3 (21:41):

Yeah, of course.

Speaker 1 (21:42):

That’s a great question. So now a person goes, oh, I would never do anything like this in a wait minute. People would never do anything like that. What’s my chance of ever capturing that person’s imagination to then say, Hey, tell me what your mortgage payment is. Tell me what your mortgage, I get a field out at the front end. Is there even any flexibility in that now, even if the person said, yeah, I don’t think I would ever do anything like that. My next question’s always going to be okay. David, is there a concern with that?

Speaker 3 (22:15):

That’s good.

Speaker 1 (22:16):

I’ll tell you what, this is what I learned in my counseling. Yeah, this is counseling really. Now I don’t want to overcomplicate it. You don’t have to be a certified counselor, but I’m saying when you get these rhythms down, this is how you get people to open up if they really are wanting to do something or not. So once I’m convinced the guy or gal I’m talking to is like, no way, man. That’s just never going to happen in my world. A lot of times I’ll actually say, you know what? I think you have me convinced that that probably wouldn’t happen. Yes. Sounds like we may be on a different page. Is that right? So I made a statement and I turned it into a question. Now I’m doing this. I got one foot out the door.

Speaker 3 (22:54):

Right? Yeah.

Speaker 1 (22:55):

It sounds like you and I are not on the same page that you would never want to do anything like this. Is that right? And then that’s going to let me know at that point if they say, yep, you got it right, pal.

Speaker 3 (23:06):

Thank you. We don’t have to waste any more time.

Speaker 1 (23:08):

Yeah, I don’t want to talk about all the other stuff. Yeah, I do that heavy on the front end and I’m doing it relationally just like I tried to illustrate here that it becomes an easy conversation on both sides.

Speaker 3 (23:19):

Yeah, Jesus asked a lot of questions. He dove into it and told a lot of stories, so I feel like there’s a lot to take from

Speaker 1 (23:27):

They were pretty uncomfortable questions though. Sometimes I’d be like,

Speaker 3 (23:30):

Oh yeah. Yes, indeed. So it was like, this is, and sometimes I feel like, do you feel like you ever have to ask uncomfortable questions in the real estate world?

Speaker 1 (23:39):

Oh, sure.

Speaker 3 (23:40):

Oh yeah. Absolutely. Yeah. I really like this because I feel like that’s very practical where if someone’s listening to this, you could take Scott’s little framework. It’s so simple too. That first thing is person flexible or not? You know how you ask or no, you ask questions. Just ask them some simple questions upfront. Setting the framework and those expectations. That was really good. Something else that you said that was really key and we kept going was you say the same things a lot, so it’s like if people were around you, they’d be bored. Like I feel like that’s really good because that’s really good because that you’re saying the same things because they work and that it also helps get to the root cause of what you’re trying to get to. So that way, can I help this person or not? Am I a good fit?

(24:27):

And you’re asking those same questions, so I feel like that’s very key because I think people love to be excited in business and keep things exciting. Some of the most exciting things are the boring things of just get into that rhythm, something that works and ask those right questions. That was the other big thing I took away from this become a master question asker. I don’t know what that book out there, good leaders ask great questions. John Maxwell, there’s so many things out there to help you with that, but I love how you said too, counseling is one of the big things that helped you. Do you think that’s more because it’s just the basic psychology of a human being? Here’s some key things you need to learn. If you’re going to try and have a conversation, especially with someone who’s not open, and you said that you wouldn’t suggest them becoming a counselor, but where can they learn that type of thing if they’re not going to become a counselor, how can you learn to really help a human being open up?

Speaker 1 (25:28):

They have to hang out with me I guess.

Speaker 3 (25:30):

There you go. Hang out with you. That’s a good answer. That takes care of the mentorship and it takes care of the listen to someone else that’s been down the road and who’s a really good question to ask

Speaker 1 (25:39):

Her. I can tell you with my one-on-one clients and they get, in fact, I’m sort of rethinking it these days. They get a lot of access to me and there’s a lot of effort there, but I let them hang over my shoulder so they hear this again and again. One of the hardest things for newer people is when I hang up the phone, we’re 90 seconds into a conversation and I’ve already determined this is not a flexible person, and they’re almost going and saying, I can’t believe you just hung up the phone. There might’ve been a deal there. And I’m like, trust me, there’s not a deal here. But I can’t explain it just by showing it once. We’ve got to do it again. Again, because what are we looking for on the front end? Flexibility. Flexibility.

Speaker 3 (26:18):

Not

Speaker 1 (26:18):

Really what your question was, but where do you find you’ve got to find people that and trust, that have experience and you have confidence that they know how to do what you and I are talking about right now. There’s only one way to do it. You got to hear ’em. You got to see them do it and hear them do it and go, okay, you can’t make this stuff up.

(26:41):

Maybe I could write about it. There’s one thing to write about it. There’s another thing to do it. Oh, here would be a great illustration. I could write about how to ride a bike, right? Say, man, Scott writes so good. I learned how to ride a bike by reading Scott’s book on how to ride a bike. That is not going to teach you much. You don’t read. I think you want to read, but you’re going to get more out of someone that you can have some level of access to. You’ve already used the term like coach or mentor, but someone that’s further down the road than you that has some credibility. You’ve seen them, you’ve heard them, and you’re like, yeah, I could model something like that.

Speaker 3 (27:19):

Yeah, it’s really good. And I think you keep bringing up the words flexibility and trust, and I think that’s where too it’s you get in those situations and those questions really help you know that I’m not here just to tell you something. I’m here to really dig in of what’s going on. And then if you’re taking those people down the road too that are the people that are following you and trying to learn as well too, it’s really getting them to know, to know what’s going on to then that process and trust that process. Not just you, but then that whole process you’re taking ’em through. Those seem like big words in your life, flexible, like and trust. Some of the things that I think are very foundational too, especially if you’re going to be in the real estate world and talking with sellers and the people out there that haven’t gone through all of this and don’t know this world and don’t know all that. That’s very helpful because I think those are very key takeaways that people can actually, actually use. In the last final minutes here, I just wanted to see is there any other advice that you would want to give the real estate investing community listening to this, and then we’ll point him to where people can find you.

Speaker 1 (28:28):

If you knew the people who knew me, they’re like, you’re giving Scott like two minutes. This guy, I could go for an hour on this, right? There’s so much flooding that’s coming out of me here, but I would first say, you’ve got to have enough willingness to hang in there if you’re new at this, and even if you’re not, by the way, I’ve been doing this now for a while. I don’t know what your experience is even with what you do. There are bumps in the road still along the way that

(28:53):

We got to keep reminding ourselves, man, look at where I am now. And when I look back, I go, man, a year ago I was way over there, but look at where I am now. And by the way, anyone listening, if you look back at the last year and you go, well, I don’t have that. I’m right where I was a year ago, you probably really want to listen to what we’re talking about here. So I would say don’t give up. Surround yourself certainly with good people, people that have your interest in mind. I know I’ve already said that one of the things that at least the skill base that I bring, I’ve worked very, very hard to remove all permission language out of my vernacular. That takes a little bit of practice, but once you get it, it’s very different now in how you approach. In my case would be either a seller or a buyer. I also work with buyers in long-term relationships as well. Can you explain

Speaker 3 (29:44):

That? Removing permission language, what would be an example of that with a seller

Speaker 1 (29:48):

Buyer? So I’ll do one with just a voice message or a text message that I would leave. What I don’t ever want to do is come off salesy because I know how I react to salesy where our culture is right now. Anything that smells salesy, even though we want to buy, even though we want to sell, if we feel any level of pressure, we don’t want to deal with it. And by the way, I don’t want to be, even if it worked, I don’t want to be that guy. I’m not that guy. I’m not cutting that clause. If we can get there through connection and relationship, that’s how I want to do it. Okay, so removing permission language. So it goes to voicemail. I say, hi, David. Hey, I was just calling about my interest in buying your house over at 1, 2, 3 Main Street. Sorry, we didn’t connect right now.

(30:32):

I was hoping that you and I could connect today. Hey, you know what, David? I almost interrupt myself. You know what, David? I’m going to go ahead and text you as well to see if we can get on a call real quick today. Okay? Yeah, thanks. I look forward to chatting with you soon. Click I hang up. There was no permission in that. I’m telling him I’m calling. I’m going to text you so that we can get on a call today. Okay. Then I text very, very similar. I actually talk into my phone. This, I mean, I get carpal tunnel now. I got so much to say into the phone, Hey David, I just left you a voicemail message. I was calling about my interest in buying your house. You may have someone right now going, but Scott, what? I don’t want to buy that house.

(31:11):

But when you see it and you go, oh, I’m not buying this crappy house, then don’t buy it. Don’t worry about it. But do that to get them on the phone. And all I say is, David, are you available now for a quick call question mark? I look forward to chatting with you soon. Thanks, Scott. The next day I’m calling back. I want to do the same thing, but all permission language is out in that. I’m basically saying, this is what I’m expecting you to call me. That’s really doing, when I’m talking about the price of someone’s house or if I want to ask what their mortgage balance is, I don’t say, Hey, is it okay with you that you kind of share maybe your mortgage balance with the answer to That’s going to be no. I can’t tell you last time. I’m going to note to that question.

(31:56):

I just come in and say, okay, hey, so tell me I like to give choices. Hey, tell me, is there debt on the property like a mortgage or is it free and clear? And inevitably, in most cases there is a mortgage, they’ll no, there’s a mortgage. I say, okay, great. So when you make that mortgage payment, do you pay your taxes and insurance together with it or do you pay it separately? You and I probably know that 90% of people pay it together, but this is so I can get the number. They’re going to answer the question. Oh no, I pay it together. Oh, okay. And about how much is that? There’s no permission in that. Hey, David, is it okay with you that you share with me your mortgage payment that’s asking permission, David, when you make your payment, do you pay it this way or that way? Oh, I pay it this way. Oh, okay. And about how much is that? Oh, it’s that much. Oh, okay. I got you.

Speaker 3 (32:40):

Yeah. Oh, that’s really good. And that’s the difference between asking questions and asking good questions. So I like that. That’s so much to learn from here. I love that you gave hang in there. Don’t give up. Remove that permission language and really just set those expectations, which is really good. That was really good stuff. So if people want to, because I feel like even now I want more of Scott. So what if people want more of you? You do the one-on-one, you do the different things. Talk about that and how people can connect with you.

Speaker 1 (33:10):

I probably would say the best way to connect is just go over to my Facebook. I’m posting all the time, I little, I do reels and some videos. I’m always giving content. I’m always giving stuff like this. Examples of conversations I’ve already had. Sometimes they’re with other students, they’re with sellers. I even invite people in on live seller calls, so you can actually call me on

Speaker 3 (33:31):

Phone. That’s

Speaker 1 (33:32):

Awesome. Very interactive. And so they could go over to Facebook, check me out there. So it’s My Deal, Inc. That’s all they got to put in on Facebook. If you forget that, just put my name in and then you can go to my regular Facebook and then you can link to it from there.

Speaker 3 (33:45):

Cool. So they can either find you on Facebook via your personal page or My Deal, Inc. If they go there. And is it Inc INC or INK?

Speaker 1 (33:54):

It’s INC. Oh, that’s a good question.

Speaker 3 (33:56):

There you go. Yeah, he could go either way. So I like that. That’s good stuff. So if you want more of Scott, head over to Facebook. Look him up there content, so that way you can know. I can trust him too. Then you could see him doing his stuff right there and then see if you want to move forward from there. That’s really good. Scott, this has been awesome. This is a lot of practical value from, I love how you gave the second deal hiccup and all the lessons learned from there. Don’t know what you don’t know, and you’re saved from getting the people that actually do know, so you get that help. I also thought too, the flexibility. That was a huge one. And then the know, like, and trust. Hang in there. Don’t give up and remove that permission language. So lots of stuff learned today, lots of nuggets.

(34:36):

So head over to his Facebook page to connect with him. If you’re out there thinking too, like, what the heck? I have no idea what’s going on in my business or what’s going on, especially with the financial department. Where’s all my money going? I don’t know what I don’t know. We can save you years of your life. So go to simple cfo.com and we can put a CFO on your team and help you get to where you know what you make, spend and keep because you need to keep more of it. That’s what we do, and that’s what we’d love to help you do. And head over to simple cfo.com. Scott, thanks again for being on this podcast and for coming on and just sharing all the wisdom that you did today,

Speaker 1 (35:11):

Man. Thanks. Hey. Hey. Second deal was not a hiccup. It was an implosion. It

Speaker 3 (35:14):

Was an implosion. It was a big hiccup. It was a hiccup that lasted years that also gave you lots of indigestion, it sounds like, but I’m glad you worked through it and that you found a lot all the lessons through it, which I think is really good because how we react to things versus going through them. So I think you handled it very well. But this has been great, Scott. Thank you so much for all that you shared today. You got it. Yep. Thanks.

Speaker 2 (35:40):

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):

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.