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More Profit, More Savings, and Less Stress with Chris and Julie Gould

Episode 117: More Profit, More Savings, and Less Stress with Chris and Julie Gould

The Profit First REI Podcast

September 29, 2022

David Richter

 

Summary:

In this conversation with Chris and Julie Gould, sibling business partners for a real estate wholesaling company, we get to hear all about how implementing Profit First can change your business and your personal life for the better.

They share how they experienced the feeling of almost living paycheck-to-paycheck despite having good numbers and the stress of the lack of clarity–that is until they heard of Profit First.

Now they enjoy financial comfort in their personal lives, running a business independent from its visionary, focusing on new ventures, and diving deep into creating more clarity in their business to make better data-driven decisions. 

Check it out on this episode of the Profit First Podcast!

 

Key Takeaways:
[0:57] Chris & Julie Gould and on Working With Family 

[6:44] On their Wholesaling Company

[10:53] On Profit First

[15:27] On the Stress Before Profit First 

[17:00] How It Felt to Implement Profit First for the Business

[19:23] Profit First and Owner Compensation

[25:04] How Profit First Helps Make the Business Be More Independent From Chris

[29:38] On the Growth of Profit First and Their Business

[32:21] What Was The Best Thing You’ve Done With The New Profit Distribution?

 

Quotes:

[12:12] “Before we implemented the Profit First system, there’s this question that we ask a lot: ‘Are we actually making money?’”

[14:37] “[Before implementing Profit First], it’s almost like living paycheck to paycheck, even though the numbers are a lot bigger .”

[15:04] “A huge part of looking toward Profit First, and implementing more infrastructure in the business, we’re depending more on data than gut-feeling. We have numbers in front of us.”

[18:42] “It’s not worth it to NOT implement Profit First.”

[25:36] “I think a big part of being able to separate and pull [Chris] out of the business was having Profit First to lean on.”

[35:5l; 9] “You live your whole life thinking there’s not another way, and someone pops up and is just jlike, ‘Hey, it doesn’t have to be like that at all.’”

 

Links:

Level 10-https://level10official.com/

Profit First Real Estate Investors FB Group-https://m.facebook.com/groups/ProfitFirstREI/ 

Simple CFO-https://simplecfo.com/ 

 

Tired of living deal to deal? 

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

 

Transcript:

Chris Gould:

Our parents like having to transfer credit card debt from one card to another card because it had zero interest. And like, just the stress that you feel as a, as a kid around not being prepared and not having your financial house in order is something that for us was really impactful, that we said we don’t wanna ever be in that position. So that’s why when you came on and you spoke to us about Profit First, it was like exactly what we needed and what we wanted to hear.

Intro:

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 brother sister Duo, Chris and Julie Gould here today. All my word you are in for a treat because they told us about their whole Profit First Journey before Profit First, how he felt out of control. Sleepless Night Stressed, built his company on hope. And if you’ve ever felt that, listened to his journey of where it came out on the other side, he also talks about in his past, like both of them said their parents were in credit card debt, they would just transfer their money all the time and they did not want to live there anymore. So they talk about how the mindset completely shifted and changed. They also talk about the two keys to business of how to remove the owner from the owner’s seat and being able to get out of operations outta the finances and giving the owner back control of the business.

David Richter:

So if you wanna learn about that, listen to this episode, I promise it will be a treat for you. You will get them some gold nuggets to be able to implement right away and enjoy the episode. Hey. Hey. So we have Chris and Julie Gould here, which is a brother sister team. So making sure everyone knows that they are not married <laugh>, they are a brother sister team, which I found out before I put my foot in my mouth. I’m just gonna tell people here, I I just tell like it is. But I met them a couple different times. One with Jerry Green’s group, one with Josh and Tiffany Hyde. These are go-getters action takers. They’ve also implemented Profit First, so we’re going to talk about their Profit First Journey today. But Chris, Julie, great having you on today.

Chris Gould:

Thanks David. Good to be here. Yeah, good to be here. We I also have another sister who works for our company and so most of the time they’re like, Oh yeah, your wife Jennifer, she sent me a deal. I’m like, That’s my sister <laugh>. So the joke is kind of that they’re my sister wives because Okay.

David Richter:

I was just gonna say Sister Wives was going through my head right there with that, cuz I’m sure you get that more than just on that side. Oh man, that’s great. So yeah, it’s you don’t see, you honestly, you don’t see a lot of brothers sister teams in the real estate investing world. There’s a lot of husband wives or bro, you know, like brothers and that, but I love this, the brother, sister. How has that worked out for you? Okay, I want the deeds on this before we go into Profit First and that side. How is it working with your sibling?

Chris Gould:

I, I look at the entrepreneur’s journey in and of itself as this, like it’s just about personal growth and, and really like, you know, you changing as a person, as you push yourself cuz you know it’s on you to succeed or fail. Right? And so doing that with someone you love that you grew up with, like to me it’s challenged us tremendously but also like helped us both grow tremendously. Like some of that politicalness that can happen in a company and maybe you don’t exactly say the thing, You’re not being radically candid with a family member. You kind of have this like, I’m gonna love you no matter what and we’re gonna, we’re not gonna break up, right? We’re a family, like we’re gonna stay together. And so having that as the foundation and then adding on top of it, like this need to be professional and to communicate honestly and effectively I think has just like helped me grow as a man as a business owner.

Chris Gould:

And then it’s brought our relationship like so much closer together. And you know, operating, getting on the same page all the time. Yeah. Has just been, you know, such a huge part to it. And I think what it does is it’s helped me bring that way of going about communicating that we’ve had to develop as brother or sister. It’s helped me get better at other relationships as well. How to like put your ego aside at times so that you can solve a problem, Right? How to hear feedback that’s like, Hey, you messed this thing up and not get defensive and just see like, yeah, you’re right. You know? So that’s kind of my, my take on it.

David Richter:

Okay. So now I hear have to get Julie’s part cuz this could be the part where she says, no, it’s completely, that’s completely wrong and that’s a normal sibling relationship. So Julie, would you concur or disagree with that?

Julie Gould:

I would concur for the most part. I think, you know, a big benefit of us working together is that our skill sets are so complimentary. I think that’s a big credit to Chris seeing that and knowing that there was a vision where we could both work together and respect, you know, work boundaries with, you know, when am I wearing my sister hat and when am I wearing my employee hat? Mm-Hmm. <Affirmative>, you know, that was a, that was something that we just had to work on and be dedicated to respecting and and wanting to have. And because we’re able to do that, it creates an environment where we’re able to be, you know, business professional, but also enjoy the fact that we get to work with family. And and yeah, I mean Chris had a vision from the business from the beginning and I feel grateful to be a part of it. I mean, he’s given me a lot of opportunity, personally, a lot of personal growth, financial growth, and we were just talking about, you know, my earnings quadrupling over the last couple years of working with him. I mean, and I wouldn’t have seen that elsewhere, you know? Yeah. Knowing that like he has my back and wants me to work hard for the business, but also reward that very directly. Yeah, it’s a good mix. It’s, it’s not easy, but it’s totally worth it. Mm-Hmm. <affirmative>

Chris Gould:

Awesome.

David Richter:

Another very emotionally intelligent answers there. I think you’ve taken it and actually done something with this, with this business that a lot of people that work with family members aren’t able to do. But it seems like you even brought up candor in your, you know, like being very candid with each other. And that’s where I feel like you probably have that as part of your culture in there to make sure of it and like, even when it doesn’t matter if we’re related or not. So I, I really like that. But let’s go back, let’s go back just a little bit before we go into Profit First, can you tell people what are you doing right now? Are you flipping wholesaling, rentals? Like, tell us a little bit, just very high level of the business.

Chris Gould:

Yeah, so primarily we do wholesaling. We did 98 deals last year. Wow. Just, just under a million in revenue. And we’ve, I think we’ve already beat that this year. We’re gonna probably, we’ll beat it this week, we’ll beat it this week. And we’re looking probably like somewhere 1.5 for this year. Hoping to get even higher than that. Wholesaling only I should say primarily we’ve dabbled in, taken some properties down and regretted it every time we’ve done it. We’re a virtual wholesaling company, so we’re located in Denver, but we invest in the Midwest with the intention that we’re gonna expand to be doing more nationwide wholesaling. But we’ve always built this so that we’re never gassing up the station wagon, going out to appointments, which is what a lot of people do. And we think that that really helps set us apart because we’ve had to develop a really strong process cuz you can’t put on your Superman cape and go save the deal in person.

Chris Gould:

You have to do things the right way over the phone, check all your boxes, et cetera. We also have eight properties and 10 doors we just took down a package deal. It’s super messy right now and it’s pretty difficult to get our hands around, but we got these properties at like 45 cents on the dollar and they were all occupied when we got them. So having to do some work, but that’s kind of also adding some complexity to Profit First and how we’re looking at those things. So I know we can kind of touch on that later. We wanna get away from doing any holding and flipping whatsoever. So we maybe did four or five of those last year and we just decided let’s stay in our niche and just be really good at that. So that’s sort of our focus here going forward.

David Richter:

Awesome. Well that gives us a good overview. And then behind the scenes, before we started, Chris told me he’s the visionary and his his sister there. Julie is the operations person, integrator, whatever you wanna call, whatever operating system you follow, she’s that person that helps implement all of Chris’s crazy ideas. So that way you could get a little bit overview of who they are. They’re like you, I don’t know. Okay. One. Okay. I keep saying we’re gonna go to Profit First by keeping keeping coming up with these questions. You said 98 deals, did that bug you last year that it wasn’t a hundred

Julie Gould:

Totally. Or were

David Richter:

You like now

Julie Gould:

We’ve finished like 30 grand under a million, so, and that’s about our average deal. We do two more deals. We’re right. We’re hitting triple digits and the deal count we’re hitting a million. I mean, it bugs you and then it just kind of motivates you Right. Pushes you forward in the next year.

Chris Gould:

Yeah, I think our goal for last year was 800,000 800 4840. So we beat our goal by a hundred K and then we went into this year and said, let’s double what we did. Let’s go for 2 million this year. And we, we really just were like, it was very ambitious. I don’t know, we didn’t bring on enough people quickly enough that we’re gonna hit that goal. But yeah, there was something really cool about surpassing our goal. But yeah, hitting the million mark for this year is gonna feel really good. Mm-Hmm. <Affirmative>, you know, surpassing that by

David Richter:

A lot. Well congratulations. Can I just say that I mean that you are out there hustling, grinding you last year you beat your goal. Like I know some people would be ah, shoot you or most people would be like, Oh shoot, we didn’t get to the a hundred of the million mark, but like, you blew pass your goal, you did a good job. Like sometimes you just need to pat yourself on the back a little bit. So it sounds like you did an amazing job and then this year already, like you’re gonna be blown past that goal. And if you’re listening right now, we’re recording this at like the end of September, so they’re still three months for them to do their magic. So they are going to get to that, that market sounds like of where that 1.5 million with, with where they are on track to be. So that’s awesome. So congratulations. Thank you. Let’s talk now about Profit First. Now go into those questions that I know that we, why we’re even here today. So what got you excited about the Profit First message?

Julie Gould:

Yeah, I mean I remember sitting on that call and really the big one for me was Chris and I had been having some ongoing discussions about like, you know, how do we pay you? What does the structure look like? How do we make sure you’re seeing something consistently from the business? You know, Chris was of that mindset of like, I don’t have to take anything, right? Like I, I have the business and like that’s what I have and so like whatever, then you know, we cover my bills and then that’s that. But it just didn’t seem like enough and really just kind of write an alignment with that. Was joining that call where you spoke words to say like if you’re one of those kinds of people, like here’s the new system that you need mm-hmm <affirmative> and I remember ordering before your book was even available at that time, you know, ordering Mike’s book right off of Amazon and I started reading it the next day and you know, blew through it and then just told Chris like, I’m gonna open up five new business accounts. And just like started to do the thing and just said, we’ll talk about what are caps and taps, what we want them to be, but just like this is something we have to start doing. Like it just makes total sense. And we just really never look back after that. Mm-Hmm.

Chris Gould:

<Affirmative>, I think, I think also David from my perspective, before I started doing or before we implemented the Profit First system, there’s this question that you ask a lot like, but are we actually making money <laugh>? Like I think we’re making money. Like I see money in there, but like I’m just like randomly taking 20 grand and being like, well that’s my pay cuz I didn’t take anything for the last three months. And it’s like we just kind of didn’t know exactly what was going on. We had bookkeeping. I feel like you go from nothing to bookkeeping, then you can get pro then you can do Profit First. At least that was our evolution of it. But kind of feeling like I don’t totally know what’s going on and if we’re doing good or bad other than looking at my, my login on my bank account being like, there’s good, there’s money, there’s more than there was yesterday and that’s not really a way to run business.

David Richter:

Right. Man, that’s really good stuff because I don’t know about you, but back when I was in it before Profit First it was like living deal to deal. You know, like what are we doing? You know, running around like a chicken with your head cut off. So I get you randomly taking the money. Are we actually making money? You know, all the questions you ask yourself as a business owner, I guess during that time too, because you were on, you started your business in 2018. Correct? That was when you had officially started and then you didn’t get private first until it was a 2020, Right. The end of 2020. Cuz we talked about this offline. So, so that’s when he implemented. So during that time, did you also feel like the business owner, you know, like the, the time before Profit First? Like how were the thoughts of, you know, like, are are we actually making money? You know, like am I able to take this money out? Like did that help you feel like a business owner? Like where were you mentally during that, during that time?

Chris Gould:

I felt like in Traction they talk about being the genius with a thousand helpers. I very much felt like the genius with a thousand Helpers. I felt out of control. I, it was stressful and it was very much operating on like Hope <laugh>. Okay. And yeah, I mean I just didn’t have a handle on the finances of the business. It was just do we have enough to pay everybody and pay for marketing? Yes. Okay, cool. Oh wait, we did a big deal. I’m gonna take some of that. You know, it’s just, it’s very like, it’s almost like living paycheck to paycheck in a way. Even though the numbers are a lot bigger, it still has that same energy to it. Yeah. Yeah.

Julie Gould:

I something we read interaction that I think we used a lot was the idea of like data over drama. You know, so much of Chris creating the business was not like actual drama, but just like the gut feeling, right? Like going with that. I mean that’s what made him be able to start a business and take those risks and just kind of go for it. And I think a huge part of looking towards Profit First, implementing some more just like infrastructure in the business was like, we’re depending more on data than that like gut feeling, right? Mm-Hmm. <Affirmative>, we, we have numbers in front of us, we have things to look at to tell the story versus us just deciding what the story might be, might not deal.

Chris Gould:

Right. Right.

David Richter:

Yeah, that makes sense. Cuz I’ve seen a lot of people in that, in that place and it’s just not a fun place to be before, you know, like where, like you said, still feel like paycheck to paycheck, but the numbers are bigger now. You said you were, you felt out of control, stressed, operating on Hope. Was there any time there when you felt like, is this worth it? You know, like what we’re doing? Oh, I don’t know. Did you ever get to that point?

Chris Gould:

Yeah, I mean, in the beginning, especially before I had hired anyone, I definitely had a lot of, is it worth it? I think I had a mental commitment to myself at some point that just said either I’m gonna make this work or I’m, it’s just gonna completely burn to the ground. Yeah. And I’ll just have to crawl back to my corporate job and beg them to hire me back. So yeah, I I think that honestly, I forgot what your question was, I just No,

David Richter:

That was good.

Chris Gould:

The feelings of that. Yeah. Yeah.

David Richter:

It was just the feelings of, of that, of like, did you ever want to give up? Which it sounds like you had that plan of like, it’s gonna work or it’s not and I might have to crawl back to, you know, my employer. So that’s where a lot of people that we’ve seen, you know, have those thoughts before they implement it. Like it’s, it’s just so prevalent out there. It’s nice to hear it from other people because a lot of people think they’re on an island unto themselves, you know, like, oh, everyone else has it figured out, you know, like they’re making the money, so mm-hmm. <Affirmative>, that’s where I do wanna ask then. Okay, so you listened, you know, on that call where I was with Jerry Green and then you went out, bought the book, Julie went out, bought it and started implementing it. So how did that feel when you finally broke through on the other side? Like can you tell about that journey, setting it up, When did you start feeling like, okay, it’s giving me clarity or like it’s not out of control or some of those other things that you had mentioned. Like do you remember that part of the journey when you first started? Either Julie or Chris?

Julie Gould:

I, I think it, it still took us, you know, about November. I was like, cool, it’s open up some new accounts, etcetera, et cetera. You know, we had some people issues, like some other things going on in the business aside from just maybe finances that like had to get sorted. So I would say it probably took us about six months to really feel the, the effects of, you know, getting distributions at the, the end of a quarter and putting that money into, you know, Chris’s pocket and seeing kind of a, a better picture of our business. So I would say like, at least about that amount of time, we had a, we had a rough Q1 for 2021, so, you know, we looked a little closer at numbers, but they didn’t necessarily make us happy when we looked closer mm-hmm. <Affirmative> and then things kind of started to take more of a turn as we went into Q2 and q3.

Chris Gould:

I think from the visionary perspective, like for me when it really hit me was when I logged into our account and we had like 90 grand in the tax savings account and I was like, Oh this is Profit First. Cause before the, the year long stress about the uncertainty related to what I’m gonna pay in taxes and and needing to save is just like, it’s, it’s terrible and it’s not worth, it’s not worth it to not implement Profit First because of, you know, maybe you’re afraid of putting some of that money aside. You know, when I, when we got to the end of the year at, I mean with all of our deductions and stuff, we had tens of thousands of dollars left over that we just got to retain. So we over assessed our tax burden, which we’ve done again this year and came to the end of the year and had tens of thousands of dollars and we were like, Oh cool. Like we can distribute this, like we can put this back in the business. That was the moment where I, where I became a disciple of Profit First forever

David Richter:

<Laugh>. Awesome. So it was the tax account for you. What about, I wanna ask too, because Julie alluded to this with, you know, being able to take distributions and pay your, you know, more consistently, how was that process as well? Because it sounded like before you had mentioned like, I’ll take 20 grand out when a big deal closes, like to feel like I’m paying myself. Did that light bulb ever come on as well too for you of like, hey, paying myself consistently have distributions. Like how was that process as well? Cuz it sounds like the tax account was the one that really pushed you over the edge of like being a, you know, disciple of it. But what about paying yourself?

Chris Gould:

Yeah, I mean having the profit distribution at the end of the quarter is like, like I’m looking forward to it. We had a great quarter Q3 and we’re, you know, continuing to finish it out strong. And it’s, it’s also requiring me to have more patience and not act on the drama of like, Ooh, I just wanna take 20 grand. Oh, we did 150,000 in revenue last month. I’m taking 20 grand. And like that’s a very, as the, as your business grows, I feel that like you can’t make those snap calls to just those snap call gut profit polls from your business. And they’re not even profit polls, they’re just like taking money from it. Mm-Hmm. <Affirmative>. So it’s helped me treat this business like a true business. Not like, almost like a, a side hustle where I’m just like taking cash out of the register for myself.

David Richter:

Mm-Hmm. <Affirmative>. Yeah.

Chris Gould:

Man’s

Julie Gould:

Really good. But we forget that aligned was, you also weren’t seeing any money kind of on the front or back end. It was just like at the end of the month, these lagging indicators, we have some you can take, we don’t have some you can take. Okay. We go with that. We don’t, you know, versus now you see Mon money throughout the month as well as at the end of a quarter. Right, Right. Like we’re, we’ve restructured in a way where you’re not just like waiting outside the door to see like what’s the final, what, you know, what’s the final or bottom line I guess. Right,

Chris Gould:

Right. I Julie before we had the employees we have now, I was getting a commission on all the, all these deals and I was helping out, I was closing, now I’m totally operationally removed and I was like, okay, I guess I’m gonna give up what my commission is on each deal. And Julie, knowing what Profit First says and like this is part of that sibling thing, her looking out for me as well, she was like, No, I want you to keep getting pretty much all the commission you were making when you were operationally in the business. We gotta figure out a way that you still get a cut of every single deal no matter what, and we gotta make the numbers work somehow. And so that’s when we finally installed like not just that profit distribution, but like owner’s compensation as a part of every dollar that comes in. Mm-Hmm. <Affirmative>. And that was a big game changer because then I was getting bigger checks more often as opposed to like, nothing, nothing, nothing. Massive check, nothing, nothing, nothing. Again, there’s that paycheck to paycheck rat race sort of mentality and lifestyle and and that’s kind of how we shifted out of that mm-hmm

David Richter:

<Affirmative>. Yeah. Feast and famine. Right. That’s how most entrepreneurs are, are living. And it sounds like the owner’s comp was able to give you more of that, you know, real estate’s already up and down like a rollercoaster enough then you’re paying yourself like on a, you’re on a rollercoaster and then, you know, it sounds like that helped to even it out in good job to Julie for looking out for you cuz that’s, I mean, they’re giving you keys. Yeah. They just did a fist bump if you’re, if you’re just listening. But the keys here that they’re giving you is that the visionary had someone looking out for him as well too. You know, like a lot of times people don’t have that in place and that’s where it’s like the visionary just feels like they’re getting burnt out. No one’s watching out for them. Like they’re the ones that started the business, has the vision and then, you know, they’ve got no one there to walk out for ’em.

David Richter:

But that’s what I love about this system. It sounds like Julie really took a hold of it too and said, Hey, we gotta put some safeguards in place for you as well, especially for you to get paid throughout the month and not just the profit distributions at the end of the quarter. So that’s awesome. I I love hearing those types of stories cuz that’s what Prop First is about. It’s not just even about the money, it’s making sure you’re okay that you’re feeling like that business owner getting that clarity and knowing you can pay yourself. Okay, let me ask this. When you took out the bigger chunks in the past, you know, before Profit First, did you feel guilty about taking money ever from the business or were you like Yeah, it’s okay.

Chris Gould:

For sure. For sure. We’ve had one and, and we had one time this year where I just took a bunch of money out at the beginning of the year. Yeah. beyond the profit distribution. And I felt really guilty about it cuz it felt like it was outside of our operating guidelines. It almost felt like going back to the old ways now, it felt good to put 20 grand in my bank account just like Snap. And Julie got a cut. She got her nice fat cut of that too. But like looking back as you asked me that, did I feel guilty about it? Like Yeah because it was like that wasn’t, that wasn’t in the playbook mm-hmm. <Affirmative> and and then going even farther back, did I feel guilty when I took it out? Yeah. I felt like I was almost like stealing from the business in a way.

David Richter:

Yeah. A lot of people get there. So I get that. So it’s like how has it felt taking those distributions or paying yourself like did does the guilt ease at all? You know, like as you’re going along now, like now that you know where the money is

Chris Gould:

Oh. N meaning now that we have like a, a system with the distributions, how does it feel Exactly.

David Richter:

Yeah.

Chris Gould:

Yeah. I mean no guilt. I’m just like that’s my money. Give it to me. <Laugh>.

David Richter:

Oh that’s good stuff.

Julie Gould:

And I wanna just speak to that cuz you mentioned something David, about like, you know, it’s more than just finances and Chris you mentioned about how you are totally out of the operations of the business and I feel like those two things, like it doesn’t happen without Profit First. Mm-Hmm. <Affirmative>. Like you don’t trust me to step and in and run all of the day to day and run the business and to keep your nose out of it in a lot of ways. To not come in and try to steal the ball. What’s going on with this particular deal, You know, I wanna know, I wanna be in the loop because you know, that like the numbers are gonna just speak for themselves mm-hmm. <Affirmative> and I think that was a big part of being able to separate and pull you outta the business was having Profit First to lean on mm-hmm. <Affirmative> to benefit our operations in a way that yeah. I don’t know if it happens otherwise.

Chris Gould:

I I agree. Yeah. I think that we’re big disciples of traction in the EOS model and I feel like they marry really well with Profit First and I just look at like, you know, I needed both of those to remove myself and get out of being in the business and now being on top of the business zooming out. And I think just for the visionaries that are out there that are wearing multiple hats you know, you have to let go of control of every little thing. And that’s what I found was the biggest piece for me was letting go of control and like trusting that this person I hired that’s better than me and smarter than me at the things I’m not good at is going to take us in the right direction. And part of that was giving up control of the finances, which is a big one as the founder of a company to give up control of the finances to someone else.

Chris Gould:

But the ultimately, the more that I’ve been able to let go of and give over to my integrator who has complimentary skills, the more I can zoom out. And now we’re working on things like building predictive analytics to find the best sellers that are gonna be off market building, like building out an amazing CRM that we are probably gonna resell one day. Like those are things that if I was still in the business holding onto everything, I wouldn’t be, they wouldn’t even cross my mind. Yeah. So you have to let go to float Up and Elevate. And I just think that our path has been the perfect example of, of that that journey.

David Richter:

Nah, that’s, that’s really good stuff because you have to have those systems. You see that, you see that in your business, but I’m sure you go out to other events, you know, into these places and it’s like if you have the operation system like an operating system like eos, then you can feel like okay, I can let go of the operational portion, but if you don’t know what the money’s doing, then you’re like scared and like what the freak, you know, like I can have all these KPIs in line, but like on the other side, if I don’t know what the money’s doing, but then it’s the same thing is in reverse. If you have the money in line but you can’t get the reins away to someone else, then you’re like, then it’s a different issue. Maybe you not, might not be losing sleep at night because of the money situation, but now it’s like, okay, can I trust them to run it cuz don’t have a system to run the business, you know, and just the operation. So I really like that if you’re listening there, he gave you a huge clue to successful businesses that run without headaches and without being, without the visionary running around being the firefighter. Cuz when you’re the firefighter, you’re usually the arsonist too. So like making sure youre getting outta there, that’s where, you know, you wanna get out of that as soon as possible. So, Oh is that they’re both laughing so that must have hit a chord there with them. I don’t know,

Chris Gould:

I was just gonna say firefighter, but I I agree. I started a fire and then I have to go

David Richter:

Put it out. Right. Oh, I get you. I’m there as an owner. I, yeah, we create so many of our own fires, it’s not funny. So I, I think we do that a lot. This helps you at least though, have a system to say there’s an issue, I don’t have to take care of it right this second all the time. Like, let the team, let me empower them. So that was good that if you’re listening EOS and Profit First very Well together. If you’re like, what the heck is eos? He talked about Traction the book by Gen Wickman. Make sure you pick that up and make sure you pick up Profit First for real estate investing. So that’s, you gotta get that book as well too. But there you go. This was some good stuff there. I want you to also, in the last few questions here, talk about going 2.0 like your business is changing, growing. You talked about that at the very beginning that you were, you know, like we just brought this, you know, 10 door unit, you know, that we’re, you know, growing as well too. So talk about like how Profit First to You needs to expand or you know, like how your business is growing and changing

Chris Gould:

Mm-Hmm <affirmative> I, I think the evolution of how Profit First it works in, in a business from, from the perspective I see in our business is this. You go from having one bank account to five and that’s okay. That’s, that’s a big step. We have to figure out how to, how to distribute to each of those. So you do that, then you’re running for a while on that and that feels good and it works. Then there’s this point where we’re at right now where we want additional clarity around, well wait, within Opex there’s kind of like 15 mini buckets and some of ’em are kind of owners comp and some of ’em are kind of more profit, but they don’t feel like profit cuz I’m not putting in my bank account, it’s paying for things like my mortgage. And so we’re getting into this gray area and it’s this natural breaking point where it’s like we need more division to have more clarity to make better data driven decisions and also to not get caught up in the drama of we are this profitable, but maybe we’re not because I’m taking some of this and it, it just gets muddy.

Chris Gould:

So we’re, we’re moving really to that next level of financial analysis and I think Profit First ties really well into, into that and, and is gonna provide us the roadmap for that. So yeah, that’s kind of what 2.0 looks like in my mind. Mm-Hmm.

Julie Gould:

<Affirmative>, I think the only missing piece is just like starting from scratch with this rental business. Like we’re immediately implementing Profit First, right? There’s no one bank account, et cetera, et cetera. We just set it up right from the, from the get go and like that feels great. Mm-Hmm.

Chris Gould:

<Affirmative>. Yeah.

David Richter:

Awesome. Now I I I love that having those good habits when you form a new company right from the very beginning. So getting into that and, and I get you because a lot of people go through, if you’re a real estate investor, you’re probably not gonna stick to one thing your entire lifetime as a real estate investor, especially if you start out in the active game, I feel like Right. Wholesaling, flipping eventually you want to own the real estate and build the wealth and eventually, you know, like have that portfolio. So we see a lot of people go that direction. It’s just like making sure you have that clarity. So that’s where it’s like getting, you know, what do I do with a rental company or with these other things. So totally get where you’re coming from, but I like that you’re starting off on the right foot with the thing I do. I have kind of a, a fun question to ask here. So since you’ve been running on Profit First since the end of 2020, you’ve probably had a couple, you know, profit distributions up to this point. Have you done anything crazy, like either with that money, like bought something crazy or like went somewhere crazy or like what’s the best thing that you’ve done with the profit distribution up to this point?

Chris Gould:

Oh wow. Or your favorite thing? I bought I bought a house, which is pretty cool.

David Richter:

Oh, okay. That is cool.

Chris Gould:

Yes, the house in Denver, so it was an expensive house. Yeah. that was pretty cool. I’m trying, I yeah, I found out Julie went to the Dominican Republic on a trip. Okay. And while she was there, I said, As soon as you get back, I’m gonna go to the Dominican Republic myself. So

Julie Gould:

I, he sent him one photo of me at the beach. He saw the water and he was like, That’s where I’ll go.

Chris Gould:

So I booked a trip for one week from that day that I saw the pictures and then I, I was gone for a week all inclusive. Yeah. And I, I mean, you know, it’s, it’s, the thing though about it is David, it’s less about anything crazy. Yeah. And it’s more about like getting to live your life the way you want on a day to day basis. Yeah. To take my girl out and go to whatever nice restaurant we want to go to, to play golf whenever I want to buy my dad new golf clubs for his birthday and not have to blink mm-hmm. <Affirmative> to be able to like create a pension for a family member that’s struggling and just do it and not have to worry about it. And so it’s, it’s that the comfort around the entire lifestyle has increased so dramatically for me. I know for Julie as well. So that’s the, that’s kind of the big crazy thing is that every day is a lot more safe and comfortable and less anxiety inducing than before.

Julie Gould:

Yeah. I, I totally agree on the day to day and yeah, I see, I see a cut of the profit distributions at Awesome. The end of the quarter. So, you know, I think it’s, it’s the same thing like you mentioned like taking it and trip to the Dominican Republic and not putting it on a credit card, not then paying it off for four months after that, et cetera, et cetera. It’s just, I booked it, it’s paid for, we’re done here. There’s certainly something that’s very empowering about that, especially when you grow up in a family where, you know, thing money is tight or, you know, there’s not this like wealth, you know, that exists and then you carry that into your early adulthood and then you’re able to start making different decisions and decisions based out of financial stability mm-hmm. <Affirmative> rather than just, you know, financial need or, you know, requirement kind of deal. So I would agree with you that it’s just the subtle power of

Chris Gould:

It. Yeah, totally. And I, I think David, just to speak one more, like go back a little more you know, we were talking just earlier today about how we remember our parents like having to transfer credit card debt from one card to another card because it had zero interest and like, just the stress that you feel as a, as a kid around that, around not being prepared and not having your financial house in order is something that for us was really impactful that we said we don’t wanna ever be in that position. So that’s why when you came on and you spoke to us about Profit First, it was like exactly what we needed and what we wanted to hear. And so yeah, I just, I, I think it’s important to get into like your why even with Profit First. Like for us it’s like we don’t ever want to get in that position where we’re having to put money from one card to another card. And I think the other big thing that you did is Julie bought a ring for her partner and like just paid for it straight up. Nice, nice one too and a nice expensive one too. So that’s another big win I would say.

Julie Gould:

Yeah, totally. And I think it’s just that initial wake up call, right? Like you live your whole life thinking that there’s not another way and then someone pops up and it’s just like, hey, it doesn’t have to be like that at all <laugh>. And you’re just like, Oh shit. Like yeah, I don’t want it to be. And then you just, you course correct in that singular moment and then just kind of press on in that new direction. Yeah,

David Richter:

I love that because what I heard there with all of what you were saying is that you wanted the freedom, the freedom that real estate really provides. You wanna do what you want when you want make those decisions on a, you know, the drop of a hat, Oh I need to help a family member, I need to go over here, I wanna find the Dominican. That’s what it’s really all about. It’s not just about the bank accounts and setting them up. It’s like, what does it really provide you at the end of the day? And I think you hit the nail on the head there. So that was really good and I really appreciate you opening up cuz a lot of people say they, they learn the habits from, you know, the people that were in their life, whether that be parents or teachers or friends or family or what, whomever and a lot of us get those things inside of us.

David Richter:

So I’m glad that you acted on it and said, Hey, I want it to be different than it was and you know, in taking those different steps. So man, this has been really, really, really good. So I’m gonna just, I’m gonna recap here cuz there’s so much good stuff that came out today. So before Profit First they were feeling like they were living, you know, paycheck to paycheck. He wasn’t paying himself, you know, like, just like a lot of business owners randomly taking the money fell outta control. Then it took them, you know, through the transition going through Profit First came out of a bad core. Then on the other side of that, able to pay themselves, have the clarity around the numbers. You, they also, if you’re listening to this, they also realized as they’re adding another business, that they get to start Profit First from day one and be more profitable with that new entity right away.

David Richter:

So just going from full circle, it sounds like, like an out of control business owner running around like a chicken with their heads cut off to what they just said here, More freedom, more power, more control, have the business. They gave the big tips about EOS to like have an operating system that you run in your business. I mean, this has been an incredible episode. So you both have dropped a ton of gold nuggets here today. Is there any way our listeners can provide value to you? Like either connect with you on socials or connect with you on your, you know, like maybe on your website, like if you’re looking for buyers or lenders, sellers, whatever, who might be listening to this. So how do you want people to connect with you?

Chris Gould:

Yeah you can head over to level 10 official.com. We have some educational resources and offerings there. We also have podcasts where we talk to some of the best real estate investors in the country. Jerry Green, Tiffany and Josh High are some of the folks that have been on there. And we’re also launching by the end of this year, a artificial intelligence driven predictive analytics tool to define awesome. Who are the best sellers in any given market, most likely to sell off market. So that’s predictive seller.com. You can head over there and learn more about that and we’ll be launching that here in the next couple of months.

David Richter:

Cool. Well that’s where you can find both of them. Make sure you look them up. These people are going places. They are on their entrepreneurial journey here and already this year, it’s already a killer year for both of them. Thank you both for coming on today. Like this has been an awesome episode and if you are listening to this now and you’ve ever felt like Chris, or if you felt like Julie, like what in the world is going on with the money, if you out of control, I feel like I’m living deal to deal paycheck to paycheck, you can head over to simplecfo.com. That’s where we have our part-time financial leaders and CFOs that come and implement Profit First. Make sure that you are heading that right direction. If you don’t have a good Julie by your side, you know, that’s where we come into play.

David Richter:

Making sure that that gets implemented for you so you can have that freedom. If you want the freedom and come full circle like Chris did, make sure that you get that implemented. And if we can’t help you, we’ll point you in the right direction. I just wanna bring value through this episode, which, oh my gosh, you got a ton of value here today from both of them. But if you wanna do that, go to simplecfo.com. We’ll have to help you. I wanna make sure that you remember, if you’re listening to this make profit a habit in your business. Chris, Julie, thank you so much. Thanks

Chris Gould:

David. Thanks David. Appreciate it.

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 @ 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.