Mindful Money Management: Real Estate Tips Inspired by Profit First Principle

June 6, 2023

Episode 183: “Mindful Money Management: Real Estate Tips Inspired by Profit First Principles”

Entrepreneurs having trouble managing their finances is more common than you’d think. The constant feeling of stress and anxiety over your cash flow, being in the dark about where your money is going, and ending up living deal-to-deal. Our guest today has gone through the same process—until he implemented Profit First.

Alan Walker is a realtor and the owner of Origin Real Estate, dedicating his wealth of knowledge and experience to all his clients. In this episode, he shares the story of his personal struggles with money and how he overcame them with the Profit First method, and shares many insights on money management and saving. You’re in for an enlightening and inspiring episode! Tune in!

Key Takeaways:
[00:00] Introducing Alan Walker, His Background, and His Real Estate Career

[09:43] Before and After Implementing Profit First

[21:06] The Profit First Method’s Effect on His Taxes

[24:28] The Importance of Having Cash Reserves

[28:06] Connect With Alan Walker

Quotes:

[10:27] “ When I started to read [Profit First], he broke it down in such a way that was so easy to understand. All I had to do is like create a spreadsheet, and anytime money came in it divided it for me and I just made my transfers.”

[22:59] “The biggest thing that I always hear people talking about is ‘Oh, it’s so hard to set up these accounts, there are so many online banks now.’ It is not hard to set up these accounts—you can have it done in 20 minutes, so stop making that as an excuse.”

[26:56] “As real estate people, we always think that we have to have our money working for us, and putting it in the bank is like a cardinal sin. [We call it] lazy money…it’s not lazy money. You actually need that money.”

Connect with Alan

Website: https://www.originutah.com/
Podcast: https://www.youtube.com/@alanwalkerplayyourgame

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:

So when I started to read it, he just, he broke it down in such a way that was so easy to understand, and all I had to do was like, create a spreadsheet and anytime money came in, it divided it for me and I just made my transfers. And it really like, just clarified so much by doing it. So it was huge.

Speaker 2:

If you’re a real estate investor who’s sick and tired of living deal to deal, then welcome home. Hear from everyday real estate investors just like you, and discover how they’ve completely transformed their business by taking a profit First approach. This is the Profit first for R EI 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:

We have Alan Walker on today. The whole purpose of the show is to give you hope, hope that you can get out of the financial mess. And man, Alan has a great story for you going from anxiety and stress to the other side and saying, okay, I know where my money is now. D he was in a lot of the same position as a lot of people before where, okay, I don’t know where every dollar’s going. I don’t know what’s mine. I don’t know what the, the IRS is to setting up Profit First. And I’m this one, if you listen to it, can give you practical steps and can give you what Profit First is all about. And Alan is not a numbers guy and he talks about just the whole experience around implementing. So I know this episode can help you. Thank you so much for being a listener and enjoy the show. Hey. Hey, it’s David Richter here. We have Alan Walker in the studio. Really excited about this one because he is a prophet first fan and implemented it had me on his podcast. So really excited about this. Alan, thanks for being on the show today.

Speaker 1:

Absolutely. Thanks for having me.

Speaker 3:

Yeah, well, thanks for being on. And he was a great energetic host when we did it for his, it was Play your game, right? Is your podcast. Yes. Yeah, that’s, it’s a great podcast. Make sure to go and listen to that if you’re an agent or real estate investor. He’s got a lot of good stuff and the real estate world. But Alan, before we dive into the profit first side, why don’t you just give like a couple minute overview of like where you’ve been and what you’re doing in the real estate world today, just so people get to know you a little bit.

Speaker 1:

Yeah, absolutely. So I started my career out in technology, so as a software developer and manager of software teams for about 15 years. And then I read Rich Dad Port Ad and it turned my life upside down like it does. Nice everybody else <laugh>. Nice. Yeah, same here. So 2017, well, 2016 I started buying properties 2017 and became a realtor and then a flipper. And that’s really what I do now. I’ve got 14 rental doors and then I’m a real estate agent and a flipper.

Speaker 3:

Let’s talk about that because I think some people when they first get into real estate investing think it’s taboo to get their license and vice versa. You know, like if you’re a real estate agent, it’s like investors sometimes get, you know, like the cross hand signals. Like, no, I don’t want to go on that side. So how did you get into, it sounds like you were, you bought your first property in 2016, but then you became a realtor and then a flipper. So like how did that whole progression go and why, how was your mind open to playing both sides?

Speaker 1:

Yeah, you know, I’ve been going to a lot of the estate investor meetings probably since like 2014. It took me a couple of years to get to a place where I was like, okay, I can actually do this. Cause even though I owned my own home, I was still really afraid of like, I had the money. I just had this fear that like, I couldn’t do it. Right. so in 2016 I was still working at my job and I bought my first property and then a month later I bought a duplex. And it started dawning on me. Oh. It’s not as like, difficult as I thought it was gonna be. How

Speaker 3:

Did you get over that hump of fear though? Like what, what was that?

Speaker 1:

I just had to jump in. I mean, the funny thing is, is that I, I just started telling people that I was looking for my next investment property. That

Speaker 3:

Was interesting.

Speaker 1:

It wasn’t even like, I wasn’t doing some massive search or anything. I just was like, Hey, I’m looking for my next property. And I had a friend that’s a realtor that just reached out to me randomly one day and just said, Hey, I’ve got some folks that are selling their investment property. I, it’s in your neighborhood, do you want to go check it out? And I said, yeah, absolutely. So you know, I bought my first property, it was like 20% down. There was nothing about it that was a deal. It wasn’t, it was retail price, like everything. Yeah. And and I was fine with that, right. Because it was, it got me into my first property, which I still own today, so, huh. I yeah. And then the duplex I bought a month later because I was working with a different agent and she brought me a deal and I had the ability to buy that one too. And so, yeah, within like two months I had two different properties.

Speaker 3:

Well, that’s pretty cool because then you went out there, you had the fear of getting started, even though you had the money, could, could actually do it. It’s like, okay. Yeah. Then you just started telling people. I think that’s pretty cool cuz like, if you’re listening to this and you’re like, oh, I need to get my first deal. Just start telling people you’re looking for a deal, <laugh>. That’s it. Yeah. It’s amazing what comes to you from doing that. So that, that’s awesome. So then when did you become the realtor then? Well, so it was after you bought those first two?

Speaker 1:

Yeah, so I bought those two properties and then I got laid off from the tech job I was working ok. And they gave me a nine month severance, and I had been trying Wow. To figure out. I know, right? I mean, it was like a huge blessing. So I I had been trying to figure out how to get into real estate full-time, but it’s really hard to turn down like a high paying job with great benefits Right. To go pursue real estate. But then this just like, kind of gave me the opportunity. The universe was like, I’m just gonna kick in the butt and go do it. So I jumped into being a realtor that next year and it, you know, it was slow. I mean, like my first year I did like four transactions, I think. I mean, it was okay. It was not, I was not like this, like, oh, the moment I started doing it, it was amazing.

But, you know, the next year I got better and that next year I bought another four rentals. And I, the funny thing that I found is, you know, like when my, when I got my first rental, I say there was nothing about it. It was a deal, but it was a deal because I got it right. Like Yeah. It was like the, you know, I think everybody in my experience and, and maybe I was probably a little this way too, I wanted it to be this amazing deal and I was like, waiting for this, you know, I’m gonna put down $500 and get something seller financed and like, you know, woo. Yeah. but that, that wasn’t my experience. What, what I found is as I started progressing deals started getting more, like better deals and more complex. Mm-Hmm. and so in 2018, like I did two seller finance deals. I did a couple of like, bird strategies. And and so like, it just, like, you have to progress it’s baby steps, right? Like, it’s, so often we look at somebody and say, oh my God, they have x I’ll never have that. It’s like, well, they didn’t start with that. You know, like that’s, yeah. That’s years of baby steps moving in the right direction and making choices. Right. So, yeah.

Speaker 3:

So that’s interesting. So then you got laid off from your job, got the nine months s average, then you went into being a realtor. Was that, do you look back as that being a pivotal moment in your life of like, this was the worst thing, best thing, you know, like, that’s ever happened to me type thing. It’s like, it seems like that’s, that could be one of those crucial points <laugh>,

Speaker 1:

I think, in your life. I think it absolutely was. I mean, I think for me, I was unhappy. I’d been in technology for so long, I was just unhappy with the field. Unlike 15 years. I just, nothing was new to me. And and it was really like, the reason I was in tech was for money. Like, I wasn’t like in in love with tech. I’m good at it. It’s one of those things where like I, you can be good at something Yeah. And make a lot of money doing it and not really enjoy it a hundred percent. And so that’s kind of where I was. And so, you know, it was really scary because like, you know, I’m coming from making like the six figure salary to making nothing mm-hmm. <Affirmative>. And I really, I mean, desperation has a great way of motivating you, right? Yeah. and so I just like jumped in and, and you know, I’ve been a realtor now for six years and you know, it’s been, it’s been ups and downs. Like this market right now is ridiculous. And so everybody’s kind of like struggling with that. But it was people in the sense that I realized like, I, I don’t wanna waste any more time not doing what I love doing.

Speaker 3:

Okay. So scary and desperate. So you’re scared and desperate at this time. Yeah. So then that begs a question, like you did four deals your first year. Were you still pretty scared and desperate at the end of that first year, even with the nine month? Absolutely.

Speaker 1:

Yeah. Severance, absolutely severance. I think what it was though is I realized I actually loved what I was doing and the idea of having to go back to corporate felt like such a, like, soul crushing experience. Yeah. That I was just, I’m, I was willing to do whatever I needed to in order to make it work.

Speaker 3:

Yeah. I, I’m right there with you. I think if anything went south, ever with real estate or like with what I’m doing, I would like do anything to stay away from the corporate world, but knock on wood there, you know, like <laugh>.

Speaker 1:

Yep.

Speaker 3:

Okay. But I totally get that. Love the real estate game. So then got into start again. Rolling, but mm-hmm. <Affirmative>, what did that turn into? So, okay, you, you now you’ve got the couple deals, you got it rolling. What did that turn into? Like, where, where did it turn into and what do you have today?

Speaker 1:

So it turned in, so I started in 2018. I started flipping I’ve probably flipped about 30 homes right now. Awesome. and and continued being a real estate agent. So I started actually building up a team within my company. And one of the things that I realized is like more is not always better. Yeah. and so I scaled it back down. So now I just, I I manage my own flips. I have my sons, but nobody’s on my payroll anymore. And and I found that that’s much better for me because I just don’t want to deal with, I mean, I, I manage people long enough, I don’t wanna do it anymore. <Laugh>.

Speaker 3:

Yeah. So it was the managing of the people. I wondered if it was Yeah, yeah, yeah, yeah. That can, that could definitely be fun sometimes. And you know, I didn’t know if that was your bottom line too. It’s like, have too many staff need to cut back. That type of thing too

Speaker 1:

Was, it was kind of like, it was so incremental, the increase in my bottom line to have all that headache, that it wasn’t worth it for me. <Laugh>, like I was making more money, but I, I didn’t enjoy it as much. And so it’s like, well

Speaker 3:

It’s, that makes sense.

Speaker 1:

It’s this much difference. So I’m gonna go back to something really simple cuz then I don’t have to have 30 flips a year. I can just do five and be quite content, you know? So yeah. That’s, that, that was what I’ve really been trying to focus on that this last year.

Speaker 3:

Well I love that cuz that’s like the profit first mindset. So where did that come into play in all of this profit first? And like was it around this time? Was it later on or earlier? I don’t know. I

Speaker 1:

Would say it was earlier. So probably like in 2020 is when I found what I found profit first and I started implementing it. I am I’m not a numbers guy. I mean, I’m technical. That does not mean I’m mathematical. Yeah. and so big difference, I, I don’t love like staring at numbers and so I kind of had I just resisted really getting into it. Right. It was like, well there’s money in the ba It was so funny cause when I read the book it was like, you know, most of us just look at our bank account and if we see money in the account. And I was like, oh my gosh, that is actually like, that was like on my phone. Like, do I have money in the account? Okay, cool. I think we’re all right. So so when I started to read it, he just, he broke it down in such a way that was so easy to understand. And all I had to do was like, create a spreadsheet and anytime money came in, it divided it for me and I just made my transfers and it really like, just clarified so much by doing it. So it was huge.

Speaker 3:

Okay. So then 2020, what? Mm-Hmm. <affirmative>, what period of time was that, had you been flipping at that point? Because was it 2018? In 2019

Speaker 1:

When I started flipping? Yeah. Yep. Okay.

Speaker 3:

So then what did 2018 up until profit first look like? Like was money going in and out

Speaker 1:

Or? It was okay. It was like, I ha it was, I had no security blanket. Right. Like, like I had no reserve. Oh, okay. Yeah. Cause I didn’t know what I had. So it’s like I had money in the bank, but I didn’t know if that was enough or, so there was this anxiety of like, yeah, am I gonna be able to make all my bills before my flip cells? You know? Yeah. Like, and it was like, I just didn’t know. Yeah. And that was probably the biggest, it was that cognitive burden of just like, oh man, like, do I have enough money? Like I, I’m not, can I take this vacation? Like, I don’t know. Right. So that was, that was what it was.

Speaker 3:

Okay. So I’m sure that was that was a fun time of life. You know, having the banks and just, you know, the one bank account keep rolling and like, okay, can I take money out? Can I not, can I

Speaker 1:

Do this one word of it? Yeah, that’s,

Speaker 3:

Yeah. Yeah. One word.

Speaker 1:

But

Speaker 3:

I think you hit the nail in the head. You were like a, a lot of people, you know, like when he says that in the book, a lot of people do this. So why mm-hmm. <Affirmative>, why do you think a lot of people do that? You know, like look at the bank account or like, don’t have the clarity inside of their business?

Speaker 1:

Well, I, I mean, for me personally, it was nobody ever taught me that growing up. So like, you know, I, I didn’t have any kind of financial framework. Like, we didn’t talk about money in my family. And so like, you know, I, like, I had to kind of teach myself to be comfortable talking about money. And I think a lot of that pre preceded getting to profit first because I was like, okay, I have to learn how to talk about it. And then he was like, great. Like, this is why you wanna do it. Mm-Hmm. <affirmative>. And that’s really what like, got me interested in it because it was like, oh, it makes sense. And I still am not a huge numbers guy. Like I do my financial statements, like, you know, I’m not, I’m still a business owner, but like, I don’t I don’t feel as hmm.

I don’t feel as like nauseous when I look at them as I used to. Yeah. <laugh>, you’re right. Cause that’s how I felt. Like I was like, okay, I guess I like, is this a good thing? Is this, yeah. So but that was what it was for me. It’s like nobody ever told me how to do it. And even though I went to, I got my master’s in Information Systems management and we did a ton of like company management finance stuff. Like, I don’t remember any of that. Like, that was forever ago. Right. So so I just had to learn it all on my own, you know, which I think is common for us real estate people, right? Yeah. We’re, we’re usually movers and shakers and we wanna make stuff happen. We don’t wanna spend time looking at numbers. Yeah. and so I had to teach myself to be able to do that.

Speaker 3:

And that’s where I want to ask, because I love that you brought that up. You’re like the non numbers person. You’re the entrepreneur, the visionary, you’re the go go, go real estate, you know, investor and agent. Right? Yeah. So how was it reading the book? You know, like as a non numbers person, cuz I like how you said he put the Y in there that, so that helped a lot. But like, was it an easy read for you? Did you have to pick it up several times? Or like, was it more of a, you know, like to, I’m just wondering how the pill was to swallow when you first <laugh> heard about it. You know,

Speaker 1:

It was I read it, it was an easy read. I guess I understood the concept really quickly. Right. That’s good. That’s good. He explains it so well in the book. Yeah. and it, but it was a little harder when I had, you have to get to that place where you’re able to self search like all your finances. Right. And like identify everything that’s going on. Yeah. That was a little daunting for me. And that probably took me a little longer. I won’t, I won’t lie. Like, I definitely procrastinated through that process, like don’t have power of it today, you know, like I don’t <laugh>. So but then once I got it, like once everything was in place, then it made sense. And it’s also, it’s helped me to identify like holes in my leaky bucket. Right. Oh, okay. Because I’ve separated things out and so now I can really start to see like, okay, these subscriptions don’t, I don’t need these anymore, but I can see where they’re coming out of.

And so I’m like, okay, not gonna use those anymore. So it’s, it’s been helpful on a lot of levels, I think more than anything else. It’s the, like, when I first had my first six months of owner’s comp put away. Hmm. That was the first time I was like, wow. Like I’m okay. Like if a, if a deal falls through, it’s not the end of the world. Wow. You know? And that’s how I was like, living my life as a realtor, as a flipper. It was like, oh my gosh, if a deal fell through, it was like game over. And now I was able to go like, oh, okay. Like I’m, I’m good. Like, you know, I don’t have I just basically started taking a two week transfer as my paycheck. Yeah. And so I knew exactly how. So it’s like nothing affected my like, you know, daily living just because the deal fell through and that was really powerful. I think

Speaker 3:

That is powerful. That’s very powerful. So then how long did it take you to get to that six month of reserve mark? Like were you like, okay now that I’m managing the money, it happened real quick? Or did it happen like No, this is what, a ramp up time?

Speaker 1:

It probably took about a year. Yeah. Awesome. It probably took about a year. That’s still

Speaker 3:

Good to get six

Speaker 1:

Months of reserve. No, that’s great. I mean, like, you know, I, I think the nice thing was is that I was just, I was seeing it incrementally grow and that’s also part of it. Right. That’s powerful. If I think if I would’ve had the money and just like threw it into a six month Yeah. Account, it wouldn’t have felt as good as it did because I, like, I saw it growing over time. Yeah. and making sure that like, I was getting enough in there. So yeah. I think that it was, it was the building it up that made it feel so much more of an accomplishment, you know? Yeah. Yeah. Like, it’s like, okay, I got this. It’s all right. You know? Yeah.

Speaker 3:

So then at that point you now had clarity that you had the money that you needed, you know, to pay yourself. And it’s like, that’s great. So you got the clarity, you got your owner’s comp in place, like Okay. To, since there was a lot of fear, anxiety, the deal to deal type stuff mm-hmm. <Affirmative> on the other side and you know, now on this side of profit, first you’ve got the clarity, you’ve got the money for yourself. What other, well, you said there was a lot of different things, so I’m wondering like, I don’t know, the taxes or like the profit, like have you bought anything fun with that account or done anything fun with it? Yeah. You know, I’d love

Speaker 1:

To know. That’s thing you ask. Like, I I remember a couple, two years ago, I think I bought like a really expensive well for me expensive Yeah. Electric bike. That like, it’s like one of those things that I never would’ve bought cuz I felt like it was frivolous, but like sure. It was in, I had my, I had it at my profit account and I was like, well, like you have it, like it’s sitting there, it’s not gonna affect anything else. So that was kind of nice. And I started, I took a couple trips with it. Like it really, it changed. What I learned is even when I don’t have a ton of money in the profit account, anytime something goes in there, I do a little something with it. Okay. And that, that was just like a cultural change for me because previously it was like, I don’t wanna ever spend money cuz who knows when I’m gonna have it.

Right. so I was able to say, no, it’s okay. Like I got like, you know, maybe I like a deal went through and I got like 600 bucks of my profit or whatever. Yeah. but I’m like, okay, great. Like I’m gonna take half of that and we’re gonna go do something wrong for a weekend or, you know, like that the freedom you feel and like the lack of of stress around doing it. Yeah. Is it, that’s, that’s pretty big. I didn’t expect that that was something that like, was like, it kind of happened and I was like, oh, I didn’t expect that. I would feel so good about being able to like, spend this money without worry.

Speaker 3:

Okay. So that’s, that’s very interesting too because before Profit First or before like you had implemented it, it sounds like they had the one I, I had someone on and he called it the Black Hole account. I love that terminology. Oh yeah. <Laugh> for like the one account where it goes in and out, you know, it’s just, it gets into the black hole, but then on the other side it was more of the, now you know that things are there and it gave you the mental capacity and freedom to be able to say, yeah, I can use this money too. Yeah, exactly. So that, that’s huge because I, I see that a lot. You know, some people come and they’re like, I never wanna spend the money or they’re just spending, spending, spending all the time without any looking at it and they live on the edge no matter what. But that’s what I like about this. That was an unex. It sounds like an unexpected like bonus of Oh, it was what Prof first did, did for you. Yeah. Well that’s very cool. So then, okay, I’m just gonna keep prodding you then. Was there anything else that was either a surprise or any other like from, or any accounts that you’ve set up or anything else that is on the other side of this now, you know, has been good for you?

Speaker 1:

I think so what I also learned is marketing has always been one of those black holes for me. Like I, I spend money on it, but I don’t really know if I’m getting a return for it. And I don’t know really how much I’m spending until I’ve looked at like, the report a month later. Yeah. And so one of the things that I did is I created a marketing account. Like one of my buckets was marketing. Yeah. And anything that I was doing in marketing had to come out of that. And if there wasn’t money in that, then I had to find another way of doing it. Right. That’s the beauty of it. It’s like, it’s just like, well then you gotta find another way. Like you Yeah. You don’t have the money, it’s not in your marketing account and it doesn’t matter if you’ve got other money in these other accounts.

Like this was your marketing budget. And so that, that’s been good for me. It’s also allowed me to like do experiments. Like I’m willing to try $3,000 on this marketing campaign for, you know, two months, three months, whatever. So like set up an account that’s just for that and like it’s nice. Like I, I use like Ally Bank and so you can just basically create as many accounts as you want. I’ve got, yeah. My account, I just met with my accountant yesterday and he was like moaning about the fact that I had all these accounts. I’m like, <laugh>, you said you knew Profit first. Cause this is profit first. But I, but that’s what I, it’s been good for that like, like controlled experiments in the business. It’s been good for that.

Speaker 3:

I really like that cuz I don’t hear that as much, you know, on here. Cuz I hear a lot of the, like I get clarity, I get the freedom and the, you know, the lack of stress. I really like that perspective though of mm-hmm. <Affirmative>, it helps you do controlled experiments. Now when you’ve done that, have you, have you seen the return or has it been easier to see the return from that one specific campaign? Like if you’re doing it from that level?

Speaker 1:

It’s almost always been that I am able to determine that it’s not working. <Laugh> it’s like, it’s like every time I’ve done it, I’ve been like, okay, so it’s been three months I spent this much money, here’s my return. Nope. Turn it off. Yeah, yeah. You know, versus where I would’ve like kept it running for a year without even like, you know, just like, you know, hopeful that it would happen, you know, <laugh> and so like that, that’s powerful. That was what was good for me. Yeah.

Speaker 3:

Yeah. Oh man. No, that is really powerful because you’d rather do something like that and do only three months versus like, oh yeah, I just spent a whole year’s worth on this whole campaign and what did

Speaker 1:

We do? Bucks dollars this year on?

Speaker 3:

Right. Yeah. <Laugh>. Yeah. It’s like double, triple, quadruple what you would’ve spent, you know, like before. So now I love that where you have that control controlled, you know, being able to go in there and see what your returns are and then just a lot more mm-hmm. <Affirmative>. Oh yeah. Like you said, being able to see exactly what you’re getting for the money and seeing where the money goes. Awesome. Then how about the tax side? Has it helped you on the tax side, like a tax time? I don’t know if that was ever an issue before mm-hmm. <Affirmative>, but how about having that tax count? Oh, it was,

Speaker 1:

Yeah. So 2018 was my first full year as a realtor. And I did really well that year and was under the impression that because I did well, it will always be that, well, like, I’ll always do that. Good. Okay. So I bought this rental property like in December and then I didn’t have another commission for like two months. Oh. And I like had spent all my money on the repairs on this rental property. Yeah. And I just realized, I was like, oh, and then taxes were coming due and I was like, oh. So that was before I found Profit First, but since then I’ve never had to come up with extra money for taxes. Like every time, like there’s been enough in the account and my tax account also pays for my accountant’s monthly fee and my accountant’s like fees for the tax return.

Like all of it’s in the, in the tax account. And so I, I don’t even have to like really worry about it anymore. It just kind of happens from that account and that’s it. So that’s, that’s been really big because again, it’s just like, is it taking burden off of my mind? Right. I was like, right. Like am I no longer worried about it? And so like when that happens, I feel like you can start to open yourself up to different thinking and come up with like, different ideas in your business that if you were constantly worried about those things, you just never see past the noise. So that’s, that’s what it’s been really helpful for for me.

Speaker 3:

Oh man, that’s really good too because it wasn’t just about the taxes there. It sounds like it helps you like get stuff off your plate that, so that way you can focus on the things that really matter and not have to be worried about money all the time. So Yeah,

Speaker 1:

Absolutely.

Speaker 3:

Awesome. No, I love that. That’s really good. So coming down to the last few questions here, what would you say advice to someone who’s, who’s thinking about implementing Profit First? Like what would be their first steps? Or like what would you say to them if they were on the fence of if Profit First is worth it or not?

Speaker 1:

I think that, so, so the biggest thing that I always hear people talking about is, oh, it’s so hard to set up these accounts. There are so many online banks now, <laugh>. Like, it is not hard to set up these accounts. Like, you know, you can have it done in 20 minutes. Like yeah. So stop, stop making that as an excuse would be my first recommendation. And then also like, you don’t have to like, it’s not turn on a switch and everything has to be perfect. Like just start with a tax account or start with an owner’s compa. You know, like, it, like it doesn’t have to be like, oh, I got now I have all these accounts and I gotta do everything right now. It’s just like, great start with one thing a month. You know, like it doesn’t, you can build into it, you know, it’s just like when he talks about like the like the allocation percentages, you know, like start where you are and then work towards the, the like perfect allocation.

Right. So I think that’s it. It’s just like, just try it. Don’t, it’s not like it’s not like you’re signing up for keto or something and like everything has to change right now. <Laugh>, you know, it’s like you can, you can work yourself into it. And I think that’s the biggest fear is especially as real estate people, we all want to do it right now. Like we’re high implementers. We wanna like do it immediately and like, cause all this like hurricane drama within our business to like Right. All of a sudden get this all done and it’s like, it doesn’t need to be that like crazy. You can, you can literally like take say in 2023, I’m going to do this. Yeah. And then just like monthly figure out what it is you’re gonna implement until you’re there, you know? Yeah.

Speaker 3:

Yeah. A hundred percent. No, I, I love that. That’s good. Just get started. Don’t take the bite size chunks. That’s good advice. Yeah. So then what would you say up to this point has been your biggest lesson in just in real estate in general?

Speaker 1:

I don’t, what, what do

Speaker 3:

You mean? I guess I, the best thing that you’ve worn from real estate, I’m, it could be something from growing the team or it could be from doing a deal. Like anything that you’ve learned in real estate might’ve been hard, might’ve been like the biggest win. Just anything. I

Speaker 1:

Think cash reserves, that’s the number one thing, right. Especially in this market right now where like, you know, things are topsy-turvy and last year flips weren’t going as well for everybody. I think just like really remembering when times are good to save your money. Yeah. that’s been the biggest thing because like then, then you can kind of ride out the storm a little bit. Yeah. You don’t have to like be so freaked out like every moment. And I see a lot of people that are leaving the business both on the flipper side and the realtor side right now because like, they just never saved anything. Hmm. and so as soon as the market turned, like they were kind of like completely, it’s one of those like, you know, the tide goes out and you see who’s, who’s swimming naked, that kind of thing. Right?

Speaker 3:

Yes.

Speaker 1:

But I think that’s what I’ve learned cuz I’ve, you know, I’ve felt that pinch often on throughout my business and I think like that pain taught me enough to like save. Mm-Hmm. and so that, that’s my biggest learning is like, you know, because also I want to take advantage of great opportunities when they come up and it’s like the people that have saved are the ones that get to take advantage of that.

Speaker 3:

That’s awesome. So how much do you recommend, or like what would you say for people that, if they were getting into that, what what’s the first benchmark that they should go

Speaker 1:

After? I, I think it’s starting with six months of your your living expenses. Right. Okay. Like that owner’s comp stuff. Like start with that because once that’s full then you can start saving for like, longer term stuff or Yeah. You know, or even like more high risk bets, but you’ve got like your, your living expenses taken care of. I think that’s the num, it’s, it’s so not sexy. Right. It’s not a sexy answer. Like nobody’s on YouTube going like, yeah,

Speaker 3:

<Laugh>

Speaker 1:

Living expenses. But like the honest truth is like that really makes such a huge difference. And so I would say starting with that, that that’s my biggest learning. Yeah.

Speaker 3:

Well it sounds like that gave you a lot of peace of mind once you had that you, you even mentioned it on the show like as a major milestone. So it’s like it’s affected you greatly know. So it’s like getting that for other people too, cuz I think a lot of people want that peace of mind. They just wanna know that they’re gonna be okay no matter what. So I thought that’s great. I wasn’t expected that, but that was awesome cuz I feel like that message needs to get out more <laugh>.

Speaker 1:

It’s also that like as real estate people, we always think that we have to have our money working for us and putting it in the bank as like a cardinal sin. Mm-Hmm. Right. Good stuff. And I fall into that too. Like I just say, oh, it’s lazy money, it’s just sitting in, but it’s like, it’s not lazy money. You actually need that money. Like Right. You know, it’s not money you can deploy, like it’s money that should be sitting there waiting for you. Right. but, but that’s it. You’re kind of at odds with feeling like an entrepreneur I think when you, when you look at it that way.

Speaker 3:

Right. It’s like the what we’re, what we’re fed versus what is reality and Right. What will really help our business. Exactly. Especially yeah. Especially with the hustle grind culture, you know, out there it’s like, ah, everything’s always a go go go. Yeah. And like you said over overachiever implementers, you know, like the, the ultra implementers. Yep. Awesome. Well this has been incredible Allen. Like I feel like with this show, my whole goal is like giving people hope a prophet first. And you have exceeded that today of like, I feel like if someone was listening to you of like, they could have a lot of hope that Prophet first could help them get to where they wanna be. Get clarity, get the, you know, fill, fill those leaks and make sure that you don’t have that, get the six months of reserves, like the peace of mind, just all that type of stuff. So that’s been incredible. How do people get ahold of you? Like what are you into right now? I know you do some coaching, you’ve got your podcast like Point people where I

Speaker 1:

Do. Yeah. So if you go to just origin utah.com, that’s my website. Yeah. that’s my realtor site, but you can get ahold of me there. And yeah, I do, I do some real estate coaching. I’m involved in crypto, like I do a lot of a lot of different things. But real estate’s my main focus. So yeah, if anybody has any questions around that, I’m always happy to chat with them.

Speaker 3:

Awesome. Well, Alan’s of Wealth of Knowledge, go listen to his podcast too. Play your game. That was it was an honor to be on there. It was an honor to have you on here and if you’re, if you’re listening to this and you feel like Alan was in 2018, 19, like, hey, all this money’s coming in, but it’s all going out the door and I don’t know what’s mine and like what’s, what can I take out or not? Or if you’re just feeling like I need a system, I just need something simple. Just a lot of the things that we talked about today, I, if you have any anxiety around money, I want you to go to simple cfo.com, get our free resources, schedule a call, listen to more of this podcast. Like, just get this information cuz it’s not being taught a lot of different places.

So get it out there. If you wanna schedule a call with us, we’d at least be able to point you in the right direction of a good, you know, bookkeeper, c p or maybe a C F O from our team, if that’s a good fit for you. Thank you so much for listening, for actually taking the time to listen to Alan and all the guests on here, but especially today, take Alan’s words and get some hope from them. Go implement, start small, like you said, start with where you are. That was such good advice. Alan, thank you so much for being on the show today. Thank you. I appreciate it. Thank you. So this was awesome. And remember, make Profit a Habit in your business. This

Speaker 2:

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

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

Episode: 242

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

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

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

Listen and enjoy the show!

Key Takeaways:

[01:01] Introducing Jay Conner

[05:00] Introduction to private money

[08:30] The Great News Phone Call

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

[13:18] Maintaining relationships with private lenders

[15:40] Private money vs traditional money

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

[25:18] Advice for real estate investors

[29:01] Connect with Jay Conner

Quotes:

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

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

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

Connect with Jay:

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

Tired of living deal to deal?

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

Transcript:

Speaker 1 (00:00):

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

Speaker 2 (00:34):

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

Speaker 3 (01:01):

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

Speaker 1 (02:07):

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

Speaker 3 (02:24):

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

Speaker 1 (02:43):

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

(03:38):

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

(04:27):

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

(05:18):

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

(06:10):

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

(07:02):

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

(08:11):

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

(09:06):

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

(10:04):

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

Speaker 3 (10:38):

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

Speaker 1 (11:17):

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

Speaker 3 (12:22):

Right? Yep.

Speaker 1 (12:24):

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

Speaker 3 (12:33):

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

Speaker 1 (13:22):

I mail ’em checks.

Speaker 3 (13:25):

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

Speaker 1 (13:33):

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

Speaker 3 (13:41):

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

Speaker 1 (13:50):

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

Speaker 3 (14:00):

Yep.

Speaker 1 (14:01):

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

Speaker 3 (15:27):

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

Speaker 1 (15:32):

Options. Does that make sense?

Speaker 3 (15:34):

Yeah, that makes sense. A hundred percent.

Speaker 1 (15:37):

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

Speaker 3 (16:14):

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

Speaker 1 (16:33):

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

Speaker 3 (17:33):

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

Speaker 1 (18:04):

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

Speaker 3 (18:20):

Yeah, me either.

Speaker 1 (18:22):

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

Speaker 3 (18:53):

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

Speaker 1 (19:12):

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

Speaker 3 (19:17):

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

Speaker 1 (19:20):

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

Speaker 3 (20:25):

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

Speaker 1 (20:50):

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

Speaker 3 (21:53):

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

Speaker 1 (22:07):

Well pay ’em on time.

Speaker 3 (22:08):

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

Speaker 1 (22:12):

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

Speaker 3 (22:42):

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

Speaker 1 (23:03):

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

Speaker 3 (23:06):

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

Speaker 1 (23:10):

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

(23:37):

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

Speaker 3 (24:31):

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

Speaker 1 (25:18):

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

(25:26):

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

Speaker 3 (26:11):

That’s so good.

Speaker 1 (26:13):

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

Speaker 3 (27:08):

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

(27:55):

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

Speaker 1 (29:01):

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

Speaker 3 (30:31):

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

(31:13):

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

Speaker 1 (31:51):

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

Speaker 2 (31:54):

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