How this power couple used Profit First to rebuild their business with Adam & Amanda New

February 2, 2023

Episode 152: How this power couple Adam and Amanda New, rebuilt their business by taking a Proft First approach and become the principal owners of The Cash Offer Company

The Profit First REI Podcast

February 2, 2023

David Richter

Summary:

Today on the Profit First for REI podcast, we’ve got twice the guests for twice the value! Adam and Amanda New are the principal owners of The Cash Offer Company, buying houses from motivated sellers in Richmond, Virginia, and helping them with a hassle-free process.

Adam and Amanda had worked together in some form for a very long time before they decided to focus on their wholesaling business. They got off to a rocky start, almost going out of business several times until they rebuilt their business by taking a Proft First approach.

Catch the insights this power couple shares their story and the benefits of applying the Profit First method from day one of your business! Tune in to this episode!

Key Takeaways:
[00:54] Introducing Adam and Amanda New

[02:04] Adam and Amanda’s Start in Real Estate

[10:00] Why Realtors Often Live Deal-to-Deal

[14:17] On Their Recent and Future Deals

[16:18] On Applying Profit First Into Their Business

[23:20] How They Managed After the Setback They Experienced

[25:24] Planning Around Your Taxes Through Profit First

[28:18] Adam and Amanda’s Future Ventures

[31:10] Adam and Amanda’s Advice for the Audience: Why Profit First is a Benefit for Your Business

[35:50] Connect With Adam and Amanda

Quotes:

[28:36] “I think we’ve built up a sizable enough war chest at this point, just kind of being unaware of where the economy is gonna go…We don’t like to spend a lot of mental energy predicting things…We’re just prepared, regardless of what direction it goes in. We’ve achieved the education that it doesn’t really matter which direction the market goes, and we’ll be prepared for that, too.”

[31:29] “We started [Profit First] from day one, and what it did is it created space and grace for us to recognize when we can be aggressive and when we need to be concerned. And it gave us so much confidence in what the next step needed to be, whether it was growth or maintain.”
[32:09] “[Profit First] has created firewalls. It has protected us, and it has given us all the confidence we need to know what the right decision is at the right time. And I don’t know what price tag you put on that.”

TikTok: @newinvestors
Adam’s Instagram: https://www.instagram.com/theadamnew
Amanda’s Instagram: https://www.instagram.com/amandanew

Tired of living deal to deal?

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

Transcription:

Adam:

<affirmative>. And so you were just David sitting next to me, <laugh> and I’m like, what do you doing?

David Richter:

Still just David

Adam:

Like this

Amanda New:

<laugh>.

Adam:

No, but you know, funny, you just, you sit down next to a person, you don’t know who they are. You don’t know their background, you don’t know what they’re a subject matter expert in. You don’t know what kinda value they’re gonna bring to your day, right?

David Richter:

Yeah.

Adam:

Um, and then you’re just like, I like this book Prophet First. And we’re like, okay.

David Richter:

<Laugh>

Adam:

And it was, you know, and then there you go. And so then it was like, so I think we read that. Learned about it.

Outro:

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

David Richter:

We have Adam and Amanda New, which are two of my favorite people that on this, that I’ve met in the real estate investing world. They are also diehard Profit First fans because it has saved their business multiple times. They tell the stories of where they were in 2021, 2022, and how Profit First has come in and been a huge part of their business and has saved them from going out of business several times. And not only that, what some of the bonuses they’ve been able to do being on this since day one inside of their real estate investing business. And they’re only a few years into it. So if you’re just starting out, these are the habits that you want to create. Thank you for listening. So we have Adam and Amanda new, probably two of my favorite people that I have interacted with, uh, across the real estate investing world. Anytime I see them, they’re upbeat positive, which, unless they prove me wrong on this show, but I don’t think they will <laugh>. But Adam, Amanda, thank you so much for being here today. And doesn’t, if you’re watching, doesn’t Amanda’s hair look great?

Adam:

<laugh>

David Richter:

Because did her hair

Amanda New:

looks fantastic,

David Richter:

Right? Yeah. There you go. So thank you both for being here today.

Adam:

Thanks for having us.

Amanda New:

Thanks.

David Richter:

So these two are real estate investors. You and we talked a little bit before, two and a half years you’ve been in the real estate investing world.

Adam:

Yeah.

David Richter:

Can you tell you, tell a little bit of your journey. What were you doing before? Why real estate? You know, just tell, uh, I don’t know a few minutes here of giving that background and where you are now.

Adam:

Yeah. So the two of us were working corporate banking jobs, um, sales roles mostly. We worked together, um, for the same company. We don’t know how they ever let us do it. Um, and we went there for about eight years. I got laid off

Amanda New:

March of 2020.

Adam:

March of 2020.

David Richter:

Okay.

Adam:

Immediately found a new role within days making even way more money than that. So like everything was looking good, but this was like peak covid, like when everything was shutting down.

David Richter:

Yeah.

Adam:

So I was like, better paying job, I’ll take it. Um, very quickly realized like we were not the right culture fit. Um, we had our daughter in there too. Mm-hmm. And we were like, we need to spend more time with her and less time traveling for work. And so very quickly we were like, we need to stand up a business and make this happen quickly. So

David Richter:

That’s awesome.

Adam:

We worked really hard, really fast to make that happen.

Amanda New:

Yep.

David Richter:

Oh, very cool. And before I go further, I’m gonna here team, pause this and we’re gonna cut this out. If you see your screen going wonky, the recording on the other side is a lot smoother. So if that’s like messing you up or anything, it’s like the, cuz I know the video sometimes goes really crazy.

Amanda New:

Yours is going fuzzy, ours is not.

David Richter:

Okay. And like vice versa. So I just wanted to make sure that you’re good there and that doesn’t throw you off. But let’s jump back into it. 3, 2, 1. That’s an <laugh>. I love this because I get the inside scoop a little bit more cuz I remember Adam, you told me the story of like how much you were making and it was a significant amount. Like this was not your average American household income

Adam:

Yeah.

David Richter:

That they were able to bring in. And then you started a business a wholesaling business, right?

Amanda New:

Yes.

David Richter:

From scratch.

Adam:

That’s right.

David Richter:

So that’s right what you started with. Are you still wholesaling or are you flexing and flipping now? Like how has your journey progressed on the real estate investing side?

Amanda New:

So now at this point we still primarily wholesale. Um, because if you look at like what we are the best at, it’s obviously our sales background talking with sellers, kind of working through that process. So we stood up that business throughout the summer of 2020 and ended up quitting our job September of 2020, both of us. Um, which in hindsight was, uh, a really bad idea. It worked out fine for us,

Adam:

<laugh>

Amanda New:

I just wouldn’t recommend anybody else do that. Um, it just, we were, uh, very naive and every contract goes through and everything’s fine. So we, I had two things under contract and we said, okay, that’s good enough. And then just like mic drop and walked out. Um, now flash forward, um, we use our wholesaling business to basically cherry pick the properties we would like to keep for ourselves. Um, whether that means that we keep it as an Airbnb or a long-term rental, whether we keep it just to flip it. Um, we usually do some like light cosmetic flips, so maybe only like a couple a year and then the rest be wholesale. So that’s now kind of the evolution of where things have headed.

David Richter:

That’s pretty incredible. What is that like around six months? Like you had, you know, you got the job or a few months there and then started your own business and said, see you later to the other job. So

Adam:

Yeah.

Amanda New:

Yeah, yeah. It was, uh, it worked out fine. We were never destitute, nothing ever bad happened to us, but I just, I tell that story and I don’t want other people to be like, oh, so that’s what I should do. No.

David Richter:

Right.

Amanda New:

That’s not what you should do. <laugh>,

David Richter:

Let me ask this. Okay, go ahead Adam. Well

Adam:

I’ll say it’s one of those things I think we gave ourselves on a runway.

Amanda New:

Yeah.

David Richter:

Okay.

Adam:

You know, we saved up enough at that point and then we got to a point where she was maybe putting like eight to 10 hours into the business and working a full-time job and then was just like, I can get this much accomplished in eight. Imagine what I could do if this was my sole focus.

David Richter:

Mm-hmm. <affirmative>

Adam:

And I believe in her. So I said, I believe in you and then let’s go do this.

David Richter:

Yeah.

Adam:

Right. So that is a risk, but I was still working at that point, which then made even more money because she was able to focus her time and attention exclusively on the business. And that was very profitable. So it was like, okay, well if your efforts equal X, what happens when the both of us are doing this? Unless they’re like, and then at that same exact time. And then I call it like, one of the cutest things a couple could ever do is just look at each other and say, well, I believe in you too. So

David Richter:

<laugh>

Adam:

<laugh> next thing.

David Richter:

You guys are so amazing. I love this.

Adam:

Yeah, exactly. And listen this not every day’s like that, but like, those were two really good days.

David Richter:

<laugh>

Adam:

Two the Beaver. They’re like, oh,

Amanda New:

I love

David Richter:

The Beaver fan. They’ll leave it Beaver

Amanda New:

there you go,

David Richter:

Like it. Right. This is great. But no, honestly, all kidding aside, that’s incredible because a lot of people go down that rabbit hole and it’s usually one or the other. The one of the spouse is the wife or the husband saying, we’re gonna do this. And the other one’s like, oh my gosh. You know, like, how are we going to do this? But it sounds like your values have been aligned for Alonda. Like you found the right person that’s really going to stick behind you no matter what. And you know, you both jumped into a job that you could both do in a business that you could both start, you know, and work on together. So would you say that’s been, you know, like you said, there’s never perfect days, but were those some of the contributing factors? Cuz I feel like that happened quickly. We went from job to like, yeah, there was transition and runway, but it was a pretty, you know, relatively quick time going from job to no job and business.

Amanda New:

Yeah.I think a couple things happened that, uh, helped us get lined up.

David Richter:

Yeah.

Amanda New:

We were gained the same education. So it wasn’t like he was doing all this education then coming to me and saying, babe, we gotta do this. And I’m going, you’re a psycho. Like, no, we’re not doing that

David Richter:

<laugh>

Amanda New:

We were aligned in what we were learning and we were aligned on the vision for what, not just we wanted, but what we wanted for our family. What style of life did we want by design? And what did we want to pass to our next generation? So if you were aligned on those things and you have those conversations, which we’re really, this is something actually has been coming up a lot recently in our sphere of influence

David Richter:

mm-hmm. <affirmative>,

Amanda New:

This is something that’s really important and most people don’t talk about, they just get so bogged down in the day-to-day life, they can’t really think about what they want their life to look like five to 10 years from now. Um, and that was all we talked about. So it’s like we were aligned on our education, we were aligned on our mission, we were aligned on what the vision needed to be

Adam:

mm-hmm. <affirmative>.

Amanda New:

So it, as long as the decisions we were making, whether I was making him or he was making them lined up with that, it made perfect sense. And that’s kind of why it moved so quickly.

David Richter:

Where would you say you picked that up from? Was that inherent to you? Or was that from the education you were getting together? Or like how did you know to kind of go down that road and you were making like that? Because like you said, I don’t feel like a lot of people have that framework when they make those decisions, especially big life decisions.

Adam:

We’d worked together like in the corporate world for eight years prior to that. So our entire married life, we’ve worked together in some capacity.

David Richter:

Okay.

Adam:

I mean, it genuinely was as crazy as like, I got a job right after we got married and my boss said, I love your energy. We need to hire someone else that’s just like you. And I kind of sarcastically said like, well, you could always hire my wife. And they said, do you think we could get her on the phone

David Richter:

<laugh>

Adam:

Like that like,

David Richter:

<laugh>

Adam:

That was it. So like, you know, some of it’s happenstance Right. Some of it’s just like, you know, right place, right time.

David Richter:

Yeah.

Adam:

Um, and you’re blessed in that regard. Um, but I also think too, like being in that environment and really saying, okay, if we’re working for the same company and we’re in similar careers, like where are you going? Where am I? We were always kind of headed in the same direction. So it wasn’t like she was an ER nurse and I was an airline pilot.

David Richter:

Right.

Adam:

So we were always just kind of headed in the same general direction. And even then, like education, we’d always had a lot of sales training. We’d always had a lot of manager

Amanda New:

leadership training

Adam:

And leadership training.

David Richter:

Yeah.

Adam:

So we just kept heading in that direction.

Amanda New:

Mm-hmm. <affirmative>.

David Richter:

I know. That’s really good stuff and I’m glad that you’re saying it on this podcast as well, because one of the things about, you know, profit First that we’re even teaching now, number one is people don’t know what they need just to support their lifestyle or like, don’t know the foundation of that. And a lot of people don’t have any plan, which it sounds like you were talking about there too. Like, they don’t know five, 10 years from now, they don’t know a year from now, so

Amanda New:

mm-hmm. <affirmative>,

David Richter:

Why would you say a lot of people in the real estate space live like that? Or they’re living deal to deal, you know, like they go from a W2 job where they might have been a living paycheck to paycheck, but now they took the leap outta they’re not Adam and Amanda where you know, like, hey, this worked out. Where are this, uh, you know, aligned. But now it’s like, what the heck did I get into? Why do you think a lot of people go down that road?

Amanda New:

I got two.

Adam:

How much time

You guys <laugh>?

David Richter:

<laugh>

Amanda New:

Okay, So it’s two reasons. And, and my humble opinion, one is shiny object syndrome.

David Richter:

Okay?

Amanda New:

All their education came from YouTube. And on YouTube, every video is the same. X, y, Z methodology is the best way to do it. And all the other ways are dumb. And you gotta listen to me NPS by my course. So there’s no focus on what is the goal of the business in terms of what is it going to do. You

David Richter:

yeah

Amanda New:

Cannot jump in and start a business and wholesale flip substitute this, that you can’t do all of it. You have

David Richter:

right

Amanda New:

To get so focused and master the art of whatever it is you feel passionate about doing. And then the other thing that I think happens is you get shiny object syndrome in your life.

David Richter:

Mm-hmm. <affirmative>.

Amanda New:

Um, you get, you know, you see your friends buying bigger houses, nicer cars, and so you kind of wanna keep up with that. Um, and that plays a really big part in, in how you spend your money and how you spend your mental energy. Um, and that’s tricky. And then the biggest thing, one other, sorry. There is a third thing. The biggest thing that we ever noticed. So we used to sell credit card processing for the bank. And consistently the theme we found is that a lot of times small business owners are experts in their craft, but that means absolutely nothing. And they’re not an expert in running a business. They’re great at making a taco, they’re perfect at working on cars, but that doesn’t mean they understand how businesses get run. They’re an expert in their craft.

David Richter:

Yeah.

Amanda New:

And you, if you are going to be independent and not working for somebody else, that is a skill set that most people think just kind of happens. Like you make enough money and it all works out.

David Richter:

Mm-hmm. <affirmative>.

Amanda New:

And that is not accurate as you can prove with thousands of case studies in your own personal business. <laugh>.

David Richter:

Yes. Very much so. No, but I love hearing it from you because I think, I love how you said shiny object for business and life, because I liked how you explained it too, because it’s very much you go down the rabbit trail of YouTube or a lot of the education and then it’s like, yeah, I wanna do 15 different things and you know, like I have 15 different coaches and they’re all telling me different things to do, then the life as well. I thought that was great with the cars, the lifestyle. Like obviously you’re gonna, and I think it, I would you agree with this, when you get into real estate and you can start making more money, you can almost see more of the dangerous side because you see some of those people that have bought into the lifestyle or you are

Adam:

mm-hmm. <affirmative>

David Richter:

Exposed to it more. Would you say that it’s even easier on the shiny object life once you get into your own business and that part?

Amanda New:

Well, you get to see people that are further along in their career, their real estate career than you, and they get

David Richter:

yeah

Amanda New:

To do these big things and they get to go on these amazing trips and you feel like because you’re doing the same thing, you should be able to do the same thing. And it’s like, no, they have 10 years of a portfolio developed, or 10 years of a flipping business developed. Like

David Richter:

yeah,

Amanda New:

They should be in a different place than you. Like you’re still scrappy. Like we are still very much in our scrappy mode. We are not in a big 80 person business mode. Like

David Richter:

right

Amanda New:

They’re just different things. Um, so they require different levels of attention and money, you know, personally.

David Richter:

Yeah. That’s so great. And then I did all of your third point about expert in the craft, not the business. You know, like they’re good at making the pies but bad at selling them. Exactly. So it’s like making sure that you know, that you can, uh, run the actual business, which we’ll talk about more. It’s the profit for star AI show. We’ll make sure that we cover that

Amanda New:

<laugh>.

David Richter:

But I also wanted to cover just a little bit more about your business as well. You say you’re in scrappy mode, you know, now still, is that because you’re just trying to, are you still in the, like, I still need to bring in the active properties, like where I sell properties or like have you started a portfolio? You didn’t mentioned that some of your exit strategies are like short-term or maybe long-term rentals, but how many deals have you done in the last few years? Or like, what are you on track to do?

Adam:

Oh gosh.

David Richter:

For 2022.

Adam:

So I, yeah. So I think I said we’re pretty much sitting at, I think somewhere around 75, 80 deals.

David Richter:

Yeah.

Adam:

Like total. Total.

Amanda New:

Yeah.

Adam:

Um, we’ve taken down multiple Airbnbs, we’ve taken down multiple long-term rentals at this point. Um, and we continue to do that. Some of them through things like sub two, some of

David Richter:

yeah

Adam:

Them just through traditional purchase methods. Um, we’ve along the way just met a lot of good lenders and private money and just, you know, solved a lot of the problems that allowed us to continue to fund, you know, continuing acquisitions. Um, and we’ve made a lot of the mistakes along the way, but because we ran our business correctly from a money standpoint, none of those were ever business enders. They were always like, well, that was an interesting lesson to learn.

David Richter:

Yeah.

Adam:

Um, and so I think that’s kind of one of the reasons why we’ve always been drawn to you is that from day one, we had that education of, okay, this is how you run the business in such a way that you’re not gonna run into some of the traditional pitfalls that business owners have. And so, like, we just, we have always felt blessed that from the get-go, like we’ve had that, and I know plenty of other people that are far wealthier than we are that didn’t learn that until year 15.

David Richter:

Right.

Adam:

<laugh>

David Richter:

Yeah. That’s the sad part of, so, you know, a lot of people that work there rear off and then they, you know, make the decisions that might cost them time or something. And then it’s like, what, why’d you do this for the last 12 years like this? And now, you know, now it’s to a better place. But let’s talk about that. Speaking of Amanda’s third point there, the expert in the craft versus the business. And then you just mentioned having the financial grasp, well, better and being able to handle the mistakes more. Did you have the profit first mentality going into the business? Or like, when did you pick up on, you know, profit first in that whole methodology, that mindset?

Amanda New:

Probably a year and a half before the business ever started.

David Richter:

Oh, wow.

Adam:

Yes, because if i think about the timeline, um, before we’d ever even started the business, I was sitting next to you at Jimmy, one of Jim Ingers salsa events.

David Richter:

Yeah.

Adam:

And so you were just, David sitting next to me <laugh>, and I’m like, what do you do

David Richter:

just David

Adam:

like this

Amanda New:

<laugh>?

Adam:

<laugh> No, but you know, it’s funny. You just, you sit down next to a person, you don’t know who they are,

Amanda New:

yeah

Adam:

you don’t know their background, you don’t know what they’re subject matter expert in. You don’t know what kinda value they’re gonna bring to your day. Right. Um, and then you’re just like, I like this book Prophet First. And we’re like, okay, <laugh>.

David Richter:

<laugh>

Adam:

And it was, you know, and then there you go. And so then it was like, so I think we read that, learned about it. I think we, you and I hopped on a call like before I was even starting the business, like,

David Richter:

yeah,

Adam:

Is there anything that you think that we need to know before we even attempt this? And you were just, at the time, and rightfully so, you’re just kind of like, I don’t know, maybe I’d do a deal or two first just to kind of see if you like the business

Amanda New:

<laugh>

Adam:

Before you really kind of commit to this thing. And I was like, okay, cool. And then I came back, you know, how many months later and was like, all right, I’ve done some deals now. You know what now? And you’re like, okay, well then what have you done? Okay, well then I Yeah, you’re good. So let’s, you need a bookkeeper, gimme a call. <laugh>.

David Richter:

<laugh> That’s great.

Adam:

So yeah.

David Richter:

Oh man, I remember that man. Because when you have that knowledge and like when people know you could bring the value, then they’re reaching out to you and it’s like, okay, they’re gonna do the deal. Okay, sure. But then you at that time you’re just Adam and Amanda.

Adam:

Yeah.

David Richter:

You know of like, okay.

Adam:

Exactly.

David Richter:

Are they gonna be the other people, the thousand other people that reach out and say, oh, should we do this? And it’s like, well let’s see if you actually do it first. And then, that’s what I love about this. If you’re listening to this, you have to take action. Like you heard Adam say that they’ve made mistakes and you’ve heard Amanda say they’ve gone through certain things and it’s like you just have to go through those things. Like even if you read the books, you go to these conferences, you’re still gonna have those things come up. But I guess talk about how did <laugh> some of those mistakes hurt less since you had the profit first mentality and system in place?

Amanda New:

So I can tell you exact, I can give you our biggest mistake, um, and exactly how we dug ourselves out of it. <laugh>. So,

David Richter:

okay.

Amanda New:

Um, so at the end of last year, so end of 2021, um, cuz that’s actually now not last year, uh, end of 2021, uh, we got real excited about, uh, we figured out the private money piece and we figured out

David Richter:

yeah.

Amanda New:

That we could actually put mortgages on properties through D S C R lending cuz we had to quit our jobs. So we didn’t think that we qualified.

David Richter:

Okay.

Amanda New:

And then we had figured out we did, um, cause we had great credit, but you know, you just, you didn’t know about DS C R loans. So we figured out those two pieces and we’re like, we’re gonna build ourselves a portfolio, let’s go. And we <laugh>, we bought seven properties in a quarter.

David Richter:

Okay.

Amanda New:

Properties that normally we would’ve intended to wholesale

David Richter:

mm-hmm. <affirmative>.

Amanda New:

Um, and we just kept them. So that was fine because when we had bought them, we basically had borrowed money at 75% L T V Refied at 75% L T V and enough our rehab budget was less than that gap. Then we got to keep what was left over.

David Richter:

Yeah.

Amanda New:

Sweet. Well what we did not calculate is that there’s tax titles and fees to everything you do. Budgets always run over and what we got to keep was less than what we would initially usually get if we had to wholesale that same property.

David Richter:

Okay.

Amanda New:

Okay. So that means between, uh, less money coming in because you’re rehabbing all this stuff. And then simultaneously we had a marketing channel that I wasn’t paying close enough attention to that blew through $15,000 in cash in 45 days <laugh>, where normally I’d pay like five.

David Richter:

Yeah.

Amanda New:

We had gone through almost six figures worth of lost revenue.

David Richter:

Oh Wow.

Amanda New:

Um, in 90 days <laugh>.

David Richter:

Wow.

Amanda New:

Oops. <laugh>.

David Richter:

Yeah.

Amanda New:

Um, big oops. But here’s what happened is, and here’s why Profit First helped, I realized that, you know, what was going to hit the fan about 60 days before it did.

David Richter:

Okay.

Amanda New:

Because I have all the money in the different accounts. I could see how much we were spending and I could see the operating budget account going smaller and smaller. And I could really tell you to the day when we were gonna run outta money,

David Richter:

huh.

Amanda New:

To the day. Cuz I can tell you when we pay our bills, I can tell you when’s gonna happen. So on the one hand you’re like, oh my God, that’s terrifying. On the other hand, what that meant was that we had more time to undo the mistake we made.

David Richter:

Okay.

Amanda New:

So we could cut off that marketing channel, we could start getting a little scrappier and doing more of like manual labor to find more opportunities to wholesale. Like we could do different things to kind of dig ourselves out. Um, because we had time where it wasn’t like we got to that 90th day and said, uh, we’re done. Yeah.

David Richter:

Right.

Amanda New:

Um, so does that mean that it was all great? No. Um, it took us months to undo what we had done <laugh> and we’ve learned a very valuable lesson along the way.

Adam:

Sure. Yeah.

Amanda New:

Um, but it was not a business ender because I knew what was happening about 90 days before it happened.

David Richter:

Huh. That’s, uh, that’s pretty incredible. I’m not that you went through that, but that you were able to back yourself out of it. You know, like of course it’s one of those things where it’s like once you go through it, then now you have the experience and it’s not like you could have read that in a book or whatever. It’s like this is

Adam:

yeah

David Richter:

the situation that was presented before you type thing.

Adam:

So we genuinely thought we were gonna have almost an unlimited runway to just keep acquiring and

David Richter:

mmm-hmm <affirmative>

Adam:

Had everything gone according to our original calculations. That would’ve been true.

David Richter:

yeah

Adam:

But you know, the, what we found is that as the market, as the markets has made adjustments, mostly that’s with the CR lenders and so we just continued being like, okay, so we know we can only do this much.

David Richter:

Yeah.

Adam:

Like it’s gonna hurt for a little while. It’s not gonna ruin things. So we were continue to make money, we were able to continue to pay ourselves. We were con you know, so we were still able to do all the things that function as a business. We just were like, okay, we just can’t spend any more money acquiring right now. So effectively that was our punishment. You can’t buy any more houses for the next three months. No.

Amanda New:

And Ruth freaking who we got a portfolio of we have a portfolio now that we didn’t have.

David Richter:

Yeah.

Amanda New:

14 months ago. Yeah.

David Richter:

Huh. That is so interesting cuz I love what you said. You were still able to pay yourself, still able to do those other things and the only punishment now was I can’t buy more properties. But the other one is going outta business or you know, realizing on day 90 <laugh>, oh shoot, what the heck? You know, there

Adam:

yeah

David Richter:

Did all the money go, which I’ve heard so many times just like I a call yesterday, you know, like I made $357,000 that my net profit says, but I have like $10 in my bank account.

Adam:

Where did it all go?

David Richter:

You know? Exactly

Amanda New:

yeah

David Richter:

So it’s like we hear this all the time in the real estate space. So then my question is, since you got, you have that process in place with Profit first, I guess going through the rest of the year and with the market changes and everything, were you still able to, even with market changes and everything and you know, going through that process there, did you still acquire properties? Did you still pay yourself the rest of the year? Like were you still okay like with

Adam:

Yeah.

David Richter:

You know, the business after that setback of not being able to acquire more during that time?

Adam:

Yeah.

Amanda New:

Yeah. So we didn’t, we did not end up acquiring anything last year. Um, but it’s funny cuz now we’re about to acquire like two or three in the next 30 days that were like leads that kind of bubbled up. Yeah. Um, but the actually the big win, um, and I hadn’t even got a chance to tell you this David, so you know, a percentage of your business is go source taxes.

Adam:

Yeah.

Amanda New:

And every single quarter I paid our estimated quarterly taxes, like per our CPA’s recommendation.

David Richter:

Yeah.

Amanda New:

And per our income now somewhat made up because we didn’t really have a full year of business to figure out what the quarterly taxes needed to be.

David Richter:

Yeah.

Amanda New:

But you know, we paid it out. Okay. And then we had this like war chest sitting there cuz at the end of the year I was like, are we gonna owe something or are we gonna refund? I got no idea.

Adam:

Right.

Amanda New:

Like cuz we just hadn’t done this before.

David Richter:

Yeah.

Amanda New:

Between the refund we ended up getting, because we had overpaid and the money I could now take out of that tax account because, I didn’t need this big old war chest. We actually at the end of last year, um, end up getting almost six figures worth of income that we got to just do whatever we wanted to do with

David Richter:

Nice,

Amanda New:

Um,

David Richter:

oh man.

Amanda New:

As a result of us being super conservative.

David Richter:

Yeah.

Amanda New:

And like, just doing what I was supposed to do. But because we had so many deductions and because we had this war chest, we could now just redeploy it to whatever we wanted to do with it.

David Richter:

So let me ask this cuz that is a huge win and like being able to not have the stress of not paying the taxes and then number two, like having the extra money, like that would be an insane relief for most real estate investors. I wanna play devil’s advocate for some of the people that don’t like Profit First or maybe, you know, like they’re still on the, what you said, they’re expert in their craft but not the business. So they don’t under, they might not understand what they might ask. Did you lose opportunities by not having access to that money in that tax account? Were you or did you ever think like, like I would rather be using that money or not. Cuz I know because

Amanda New:

It was money that was hiding. Not hiding, but it was money

David Richter:

okay, yeah

Amanda New:

That like outta sight outta mind. Like it just wasn’t a part of a budget until it came to quarterly tax time and I wrote a check out of it.

Adam:

Mm-hmm.

Amanda New:

So like, you don’t plan your business around that money. That money doesn’t exist.

David Richter:

Yeah. Awesome.

Adam:

And I can fundamentally see where someone begins that argument. Right. You know, what would an extra a hundred thousand dollars in your checking account due for your business? Well, for a lot of people it’s what would keep them in business. Right. But at the end of the day, like it goes back to would you rather it be an exercise and maybe I just bought a little bit less <laugh>, maybe I did

David Richter:

Right.

Adam:

Maybe I did one less acquisition. You know, like, would you rather have that or would you have rather have the potential for the tax man to come and then all of a sudden you realize we don’t have a business anymore, yeah.

David Richter:

Yeah man, that’s really good because so many people get into that situation cause they hear,

Adam:

yeah,

David Richter:

They had a hundred thousand, I could have spent a hundred thousand more. And then it’s like, wait a second. Like they were able to do what they wanted with that a hundred thousand. You know, it’s not just going back to feed the machine and the monster. So that’s,

Adam:

You were also talking about a delay of what months. I mean, we’re just talking about months.

David Richter:

yeah

Adam:

It’s like, be patient a couple more months and then know for sure that’s fun money.

David Richter:

Right. And if you’re listening to this now, Adam and Amanda are displaying true wealth. True wealth is not spending every dollar that you make

Adam:

<laugh>

David Richter:

It’s not doing that. So this one gave them peace of mind during tax time and like an added bonus because when is it, I don’t know if you talk to a lot of real estate investors like I do, but you probably do being in the real estate investing world, when did they ever tell you got a big bonus or like something great like that happened?

Amanda New:

Never.

David Richter:

It’s usually the war stories, right? It’s the horror stories. It’s the story you told at the beginning, but without a happy ending.

Adam:

yeah

David Richter:

It was more like I had to go out and get a loan from my second cousin’s wife’s brother, you know, just because to keep me a float during this time or whatever. So that’s where, oh man, that’s, that’s good stuff. If you’re listening to this, can you open one account? Well open one account, call it taxes. If that’s all, if that’s the big thing that’s a headache or profit or paying yourself. Because I love what you said too. You said you were able to pay yourself during the, during the hard time of that the biggest mistake that you’ve made so far still we’re able to run the business like a business on the financial end and just, and had the wherewithal 60 days in advance to know like, hey, this is going to be an issue. We need,

Amanda New:

yeah<laugh>

David Richter:

To adjust something. So No, that’s great stuff. So then now with the business continue to grow and continue to keep going, what are some of the things that you are investing in for the future? Like, are you going after, you know, like the different types of properties? Sounds like you are buying more rentals

Adam:

mm-hmm. <affirmative>

David Richter:

And long term. So like, what is the plan for the new family, you know, into 2023?

Adam:

I mean, we’re continuing to acquire, you know, I think we’ve built up a sizable enough war chest at this point, just kind of being unaware of where the economy is gonna go, right?

David Richter:

Yeah.

Adam:

We don’t like to spend a lot of mental energy predicting things. Uh, we’re just, we’re we’re just prepared re regardless of what direction it goes in, um, we’ve achieved the education that it doesn’t really matter which direction the market goes in. We’ll be prepared for that too. And that’s really it. We’ll just continue to acquire, we’ll continue to grow the business. Um, we’re putting the people and the processes in place to, you know, expand significantly in 2023. Um, so we’re excited about everything that brings, we’re expanding our family, we’re expanding our business. And so yeah. I mean, we’re ready for

Amanda New:

<laugh>.

David Richter:

Yes. And congratulations. They are expecting their second child in July, which is very exciting. So congratulations to both of you. And I can’t, the the words that you just said there, I can’t tell you how much that good that does my heart. That you know what the plan is that if all the other plans fail, we’ll still be okay. <laugh>.

Adam:

<laugh>

David Richter:

You know, it’s like that’s

Adam:

yeah

David Richter:

What you really want to get to in business. And if you’ve ever read the book great By Choice, by Jim Collins, like a great book. And I, Adam and Amanda are displaying that book right now because they talk about productive paranoia of making sure you have cash. So that way, whatever the market does. So I absolutely love what you guys are doing. I think you’re a, a great model for business owners, not just real estate investors, but business owners to look at, to say, here’s the first few years, here’s the setbacks that we’ve had. Here’s the wins that we’ve had. But then during this time, we were able to pay ourselves, we were able to still do this, look at what we were able to do with the tax money at the end of this year. So this is a couple you need to be watching and following. Also, I see Adam interact more on Facebook and all his stuff is hilarious. Like he’s just got the dry, witty, sarcastic humor,

Amanda New:

<laugh>

David Richter:

And I like every time see his stuff and just crack up. But that’s where you gotta follow both of them. I know they’re gonna tell at the end how you can get ahold of ’em, all that good stuff, but search these people out. These are good people to be able to model after with what you’re hearing here. They’ve gone through difficult times, but you’re going to do that too. But they’ve gotten through them because of good business practices and being on the same page, what they shared at the beginning, man, I can’t <laugh> express that enough. Same education, alignment with family, you know, the mission and the values. Like those are the decisions they’re making together. Man, this has been incredible. And I just have a couple last questions. And so going through all of that ton of knowledge, what would be some last minute advice here that you would give to the real estate investors listening to this podcast?

Amanda New:

I would say, so what Profit First has done for us, if you really just, all the stuff that was been swirling around for the past 30 minutes, we started it from day one and it, what it did is it created space and grace for us to recognize when we can be aggressive and when we need to be conservative. And it gave us so much confidence in what the next step needed to be, whether it was growth or maintain, because you can literally look at the bank account and say, this is what has to be done next.

David Richter:

Hmm.

Amanda New:

I could tell you, I just knew. So like right now we’re sitting in a much better position than we were this time last year. That’s why I can sit here and say, with utmost confidence, it’s time to scale. Um, it has created firewalls, it has protected us, and it has given us all the confidence we need to know what the right decision is.

Adam:

Mm-hmm. <affirmative>

Amanda New:

At the right time.

Adam:

Yeah

Amanda New:

Um, and you can’t, I don’t know what price tag you put on that. Like, people

Adam:

yeah

Amanda New:

Are always wandering around saying like, I don’t know what I wanna do. I don’t know what I wanna do. My bank account tells me what I can do.

David Richter:

Yeah.

Amanda New:

If my bank account had $5 in it, which it doesn’t, um, let’s be clear.

David Richter:

Yeah.<laugh>

Amanda New:

Um, if my bank account has $5, I can’t go buy a mentorship program that’s five grand.

David Richter:

Right.

Amanda New:

If my bank account has a hundred thousand dollars in it, I can go buy something.

David Richter:

Yeah.

Amanda New:

Whether it’s a property, whether it’s a mentorship, or whether it’s buying employees like you’re scaling. So the decisions become very clear if you know where you’re at and it protects you and gives you a lot of confidence that you’re making the right choice one way or another.

David Richter:

I need to bring Adam and Amanda everywhere I go.

Amanda New:

You Really Do

Adam:

We tell you where Evangel evangelists, I mean, that’s

Amanda New:

All. Have you seen how many times you’ve gotten tagged on TikTok? Like I’ve at least made three videos that you’ve been referenced in.

David Richter:

Yeah

Amanda New:

Absolutely.

David Richter:

Oh!, thank you. No, I’m not even on TikTok. I need to.

Adam:

Well, you’re on TikTok. We’re just talking about, we’re talking about <laugh>.

Amanda New:

<laugh>

David Richter:

<laugh>

I am hopefully

Amanda New:

Behind you get at least a hundred followers just from us.

Adam:

Yeah,

David Richter:

Right. No kidding. But now we

Adam:

Have a lot of conversations with investors in meetings and in person and on the phone and whatever, and there’s a lot of nervous energy out there.

David Richter:

Oh yeah.

Adam:

And just for our personal are really more so me. Yeah. My nervous energy is better put to use in a profit first environment because

David Richter:

Hmm.

Adam:

That’s not the piece I’m worried about.

David Richter:

Right. Yeah.

Adam:

So we can focus on the things that make us profitable and then the rest of our life instead of having to worry about money constantly. And I think when people set themselves up with their bank accounts and with their finances in such a way that it’s just kind of up and down, up and down, up and down, yeah. That’s where their mental energy is going.

David Richter:

Yeah.

Adam:

And I just, I hate seeing talented people spend all of their time and energy focused on how they’re gonna pay payroll this Friday and not on doing what they were put on this earth to do.

David Richter:

Right. Man, that’s really good. That is really good. And I agree with you, a lot of nervous energy out there, but the people that are coming on this podcast, a lot of ’em have the same theme of Yeah, you know, where we are now, it’s time to scale <laugh>. It’s like, and where the nervous energy is for other people, it’s like, well, this is no, this is where we are and what we can see, or we know where we stand. So I appreciate that. That’s awesome. I think that is, honestly, I’m biased for sure being on the Pro for Star I podcast here,

Adam:

but

David Richter:

<laugh>

Adam:

But i think that’s great advice if you want to end up like Adam and Amanda here, where they’re not worried about the market, you know, what they’re worried about. Like they’re worried about like, where do we put the money to make sure

yeah

David Richter:

That it’s most effective for us and our families? So that’s the, I’d rather have that issue than, like you said, payroll’s Friday. Oh shoot. You know, like that’s,

Adam:

yeah,

David Richter:

It happens again. So that’s where, uh, that’s good advice. I really appreciate that. Now you’ve given a lot of way here. Like I said, I went through that list. I mean, you can get three, if you listen to the beginning of this podcast, go back again. Listen to, especially if you’re a husband, wife team or if you’re a, you know, you’ve got your spouse on board or if they’re not on board, there were some of those steps there that they took together, you know, exactly. Like this can help them. But then also at the end there too, just talking through their whole profit first journey and then how it helped them in the hard times as well. But since you’ve provided a ton of value here, how can they provide value back to you and what are you working on or how to connect with you or whatever it is that you’re looking for at this time?

Adam:

Yeah, we love connecting with folks. So TikTok is probably the easiest way to connect with us and just kind of see what’s going on on any given day. Um, so we’re on Tiktok@newinvestors.

Amanda New:

Mm-hmm. <affirmative>,

Adam:

um, so we’re gonna make a punt on that one. Um, <laugh> and then just from there, Instagram, I think, you know, I’m on Instagram, Amanda’s on Instagram, so I’m at the Adam New, she’s at, uh,

Amanda New:

@AmandaAnew. You’re just gonna see, I’ll be honest with you on Instagram, you’re gonna see a lot more like really cute pictures of our daughter and like me throwing weight around because I decided CrossFit’s a good idea.

Adam:

Yes.

Amanda New:

Um, so it might not be quite like the real estate, hard hitting content you were hoping for. Um, TikTok is where you’re gonna see a lot more of the real estate stuff if you just wanna make sure that like we’re doing okay. Then come all along with us on Instagram, <laugh>.

David Richter:

<laugh>There you go. See the real side as well too. The real estate and the real side.

Amanda New:

yeah

David Richter:

So that’s right. You get all the aspects there. But that’s great. Make sure to follow them on Instagram. Like I said, TikTok, I mean Adam stuff. I see his stuff more and you know, like he’s got the dry humor. I see you on Facebook. That’s where I see you cuz I still circle around. Uh,

Adam:

I’m giving people a hard time

David Richter:

<laugh>.

Amanda New:

<laugh>

David Richter:

Yeah, exactly. Yes he does. But there you go. Adam, Amanda, thank you so much for being here today. This was an incredible interview and I believe that you’ve inspired a lot of people. I think giving people a lot of hope to because it’s like, hey, they started small and then now they’ve grown to where they are now with and made sure that the, that the financial systems were there for them and working for them. So if you are like Adam and Amanda and you’re like, I don’t want to worry about my cash ever again and I’m stuck, maybe you aren’t like Adam and Amanda now and you’re stuck in the cesspool of like, oh my gosh, you know, like, I’m just spinning my wheels living deal to deal. You can head over to simplecfo, see if we’re a good fit at simplecfo.com. You can schedule a call. If we’re not the right fit, we’ll pin you to someone else. But we just want you to have the freedom that Adam and Amanda have. That’s literally our mission, is to help you have that freedom so that way you don’t have to be worried about the money all the time. So remember, make profit a habit in your business. Adam, Amanda, thank you so much for being here today.

Amanda New:

Thanks.

Adam:

Thanks for having us.

Outro:

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 at simplecfo.com right now. We’ll see you next time on the Profit First for REI podcast with David Richter.

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

Episode: 242

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

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

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

Listen and enjoy the show!

Key Takeaways:

[01:01] Introducing Jay Conner

[05:00] Introduction to private money

[08:30] The Great News Phone Call

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

[13:18] Maintaining relationships with private lenders

[15:40] Private money vs traditional money

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

[25:18] Advice for real estate investors

[29:01] Connect with Jay Conner

Quotes:

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

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

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

Connect with Jay:

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

Tired of living deal to deal?

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

Transcript:

Speaker 1 (00:00):

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

Speaker 2 (00:34):

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

Speaker 3 (01:01):

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

Speaker 1 (02:07):

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

Speaker 3 (02:24):

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

Speaker 1 (02:43):

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

(03:38):

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

(04:27):

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

(05:18):

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

(06:10):

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

(07:02):

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

(08:11):

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

(09:06):

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

(10:04):

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

Speaker 3 (10:38):

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

Speaker 1 (11:17):

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

Speaker 3 (12:22):

Right? Yep.

Speaker 1 (12:24):

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

Speaker 3 (12:33):

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

Speaker 1 (13:22):

I mail ’em checks.

Speaker 3 (13:25):

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

Speaker 1 (13:33):

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

Speaker 3 (13:41):

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

Speaker 1 (13:50):

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

Speaker 3 (14:00):

Yep.

Speaker 1 (14:01):

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

Speaker 3 (15:27):

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

Speaker 1 (15:32):

Options. Does that make sense?

Speaker 3 (15:34):

Yeah, that makes sense. A hundred percent.

Speaker 1 (15:37):

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

Speaker 3 (16:14):

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

Speaker 1 (16:33):

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

Speaker 3 (17:33):

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

Speaker 1 (18:04):

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

Speaker 3 (18:20):

Yeah, me either.

Speaker 1 (18:22):

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

Speaker 3 (18:53):

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

Speaker 1 (19:12):

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

Speaker 3 (19:17):

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

Speaker 1 (19:20):

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

Speaker 3 (20:25):

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

Speaker 1 (20:50):

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

Speaker 3 (21:53):

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

Speaker 1 (22:07):

Well pay ’em on time.

Speaker 3 (22:08):

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

Speaker 1 (22:12):

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

Speaker 3 (22:42):

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

Speaker 1 (23:03):

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

Speaker 3 (23:06):

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

Speaker 1 (23:10):

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

(23:37):

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

Speaker 3 (24:31):

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

Speaker 1 (25:18):

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

(25:26):

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

Speaker 3 (26:11):

That’s so good.

Speaker 1 (26:13):

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

Speaker 3 (27:08):

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

(27:55):

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

Speaker 1 (29:01):

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

Speaker 3 (30:31):

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

(31:13):

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

Speaker 1 (31:51):

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

Speaker 2 (31:54):

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

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