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More Real State Advise from a Multifamily Investing Academy Creator, Charles Dobens

Episode 174: Treat Your Business Like A Business with Founder of Multifamily Investing Academy Charles Dobens

The Profit First REI Podcast

April 20,  2023

David Richter 

 

Welcome back to the Profit First for REI podcast. Our guest today is Charles Dobens, a multifamily attorney investor with years of experience in the real estate industry. He is the founder of Multifamily Investing Academy, the creator of the MultifamilyOS™️ System, and the host of the award-winning Multifamily Investing podcast.

 

Charles joins us to share his insights on the business of real estate and emphasizes the importance of treating it like a business. He also delves into the three parts of a real estate deal, breaks down the benefits of holding real estate, and offers practical steps for those looking to build wealth through real estate investments.

 

Whether you are interested in transitioning from single-family to multifamily real estate or simply want to keep more of the money you make with your investments, this episode is packed with valuable tips and insights that you won’t want to miss. 

 

Key Takeaways:
[00:18] Introducing Charles Dobens

[04:08] Why It’s Easier to Treat Multifamily as a Business Compared to Single-Family

[05:12] Ups and Downs and Lessons Learned in His Investing Journey

[08:42] What is a Cap Rate?

[15:43] The Five Ways to Make Money in Multifamily

[18:47] Transitioning From Single-Family to Multifamily

[22:16] Asset Management and Property Management

[26:24] Connect With Charles Dobens 

 

Quotes: 

[15:34] “[What] I really loved about multifamily was no emotion involved. It’s just a formula. And if the formula works, you buy the property.”

[23:45] “If you set it up right the first time, and you build the systems to be constantly taking care of your clients, your investors? Yes, then you’re going to have yourself a nice business.”

[26:46] “I spent over $200,000, building a CRM for members of my multifamily OS program. That helps because…acquisition Management is all about finding the deal, right? 90% of the business is sales and marketing and finding the deal.”

 

Connect with Charles and get a copy of his book, How to Get 1,000 Apartments in Five Years:

Website: www.multifamilyos.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 



Transcription:

 

Charles Dobens:

That’s the beautiful thing. That’s what I really loved about multifamily, was no emotion involved. It’s just a formula. And if the formula works, you buy the property.

Outro:

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

David Richter:

Charles Dabbin is our guest today. This was an awesome episode. He talks about the business of real estate. He specializes in multi-family and goes back and forth and we go back and forth between single family, multi-family, but then he talks about being treated at white gay business. So that’s where you’re gonna get a lot of value from this episode. He breaks down too, the three parts of a deal. He talks about the emotions like in single family and in multi-family. He talks about the different benefits of just holding real estate. You want to become wealthy. That’s what this show is about, keeping more of the money you make. There’s practical steps from this episode. Can’t wait for you to listen to it. Thank you for being a listener of the Pro First r I podcast. Hey everyone, this is David Richter, your host again with Charles Dobbins, and he is a multi-family attorney investor. He’s been in the real estate game for years now. He’s gonna give us some great knowledge, especially I think he could talk about going from, uh, you know, single family, multi-family and talking about that journey, but also just making sure you know exactly where your money’s going to here on the Profit First podcast. Charles, thank you so much for being on this podcast today.

Charles Dobens:

Thank you for having me, David. I appreciate it.

David Richter:

He’s got an award-winning podcast too. He was showing me his award right beforehand, and if you’re watching it on YouTube, he’s, it’s right there. The aoe award for I think best podcast.

Charles Dobens:

Best podcast,

David Richter:

yeah.

Charles Dobens:

Best Real Estate podcast. That’s it.

David Richter:

That’s awesome. So

Charles Dobens:

I know

David Richter:

You get to hear an award-winning podcast host. Uh, actually be the guest on this one,

Charles Dobens:

<laugh>.

David Richter:

So why don’t you, just for the people that don’t know you, Charles, give a bit about your background. Like, how’d you get into real estate? How long have you been in the game? Did you start with multi-family? Just give people a taste of Well,

Charles Dobens:

Yeah. I, um, from a real estate investing standpoint, I did start with multi-family. I owned businesses beforehand. I owned a benefits administration company. I had about 35 employees working for me and I hated life.

David Richter:

Okay.

Charles Dobens:

It was absolutely miserable. And so I, um, you know, at one point I told my wife, I can’t do this anymore. I gotta get out of this business. And she goes, what do you wanna do? I said, I’ve always wanted to own apartments ever since I was young. I’ve always wanted to be in the real estate game. And so she says, okay, let’s do it. So I sold my business and we started buying apartments and never looked back. And the thing is that when we were getting our feet wet, we were trying everything, you know, fixing and flips all that stuff. We were, you know, learning about everything.

David Richter:

Sure.

Charles Dobens:

Yeah. And none of it felt right. None of it felt comfortable. And a part of the reason my wife has her mba, you know, I own businesses with the single family side. It just seemed like there was too much emotion. And if I didn’t do it right, I could lose my shirt in a big way with multi-family. It really, and as I teach all my members my program, I said, it’s really not about real estate, it’s about the business of owning multi-family. It’s, you have to understand that we sell a product and nobody makes a dime until that profit, uh, until that contract is signed. And that’s the thing that we buy. We buy paper.

David Richter:

Yeah.

Charles Dobens:

And multi-family is a business. And that’s the way I’ve always looked at it. And that’s what I teach.

David Richter:

That’s so interesting that you bring that up because getting to see a lot of the people’s backend and like their, how they run the finances on the single family side, a lot of people we work with, a lot of people don’t treat it like a business. Why do you think it’s easier to treat multi-family as a business versus single family?

Charles Dobens:

Because the millions are locked up in the spreadsheet, in the trailing 12 financial.

David Richter:

Okay.

Charles Dobens:

And if you understand how to unlock the value of the property by understanding the financials, you are gonna win. I had, um, I always talk about my buddy Paul Moore. Uh, he was, he wrote a blog post, uh, for um, bigger pockets. And he said, you know, as a real estate investor, we don’t care what the market’s doing, we don’t care if interest rates are going up. We don’t care if they’re going down. We don’t care. We are investors and our job is to unlock the value within that property, the value add proposition.

David Richter:

Yeah.

Charles Dobens:

In order to create the millions. That’s how millions get made. Not whether you bought it at the right time. You know, you, have to be able to look at that property and say, nah, that’s not a good deal at that price. So that’s how, that’s how we do it.

David Richter:

Okay. I like that. So then when was that year? Or how long have you been in the multi-family space?

Charles Dobens:

Oh, so I started about 2005 and I’ve been doing it ever since. And, um, you know, I started getting in on the, you know, as a lawyer. Um, I represented some multi-family owners and yeah, you know, back during the crash. Um, and there was really nothing I could do for them. I mean, I just held their hand through their losing their properties. And, um,

David Richter:

Did you lose any property during that?

Charles Dobens:

Oh yeah, I did. Oh, absolutely. But I mean, the way I lost them, uh, was because the value had gone down so much during, when Fannie and Freddie filed for bankruptcy, I paid the bills every month. I met the mortgage payments, I did everything right. I ran that, those properties perfectly. And at the end of the day, the cap rates had ridden risen from what I bought it from. And you just couldn’t get out of it. Uh, you just, you had to drop the keys back on the bank’s desk, which is another benefit to commercial real estate. If you purchase your properties with what’s called a non-recourse loan, um, with a non-recourse loan, it’s just, you know, a couple of business guys, sorry it didn’t work out. Here’s the property back and you walk away and there’s no harm no foul on a single family side. If you screw up and you can’t do it, that destroys your credit, you know, it’s gonna set you back years. Um, so that’s how it works with, uh, multi-family.

David Richter:

So there’s another plug for multi-family cuz of the non-recourse loans. Okay. So then, cuz you said you have, you unlock the millions, you know, like with the spreadsheet with the numbers. Did you learn that after 2008? Like, did you have to go through the ups and downs? Like what lessons did you learn during that time that you’re still using?

Charles Dobens:

Oh my gosh, I tell you as I tell the members of my program, I say, listen, sign up with me because I’ve already made all the mistakes

David Richter:

<laugh>

Charles Dobens:

And I’ve made ’em for both of us. You don’t have to do it ever again. Uh, oh my gosh. There are so many mistakes I made early on, uh, that I didn’t understand. Uh, you know, how to unlock the value. Yes. It was, um, uh, you know, that took years of understanding and learning about cap rates and the power of the cap rate, uh, is one thing that I like to talk about. Um, you know, the beautiful thing about multifamily is when you to make a profit, when you own a subway franchise, you’ve gotta sell that sub for a dollar more than what it costs you to make it.

David Richter:

Right.

Charles Dobens:

And that’s the only way you’re making money in that business. On multi-family, there are five ways to make money on one particular property.

David Richter:

Okay.

Charles Dobens:

And one of the, and when you, the appreciation side is, if you generate that same dollar that the subway guide did, you take that dollar and you divide it by the cap rate and that’s what your new family’s net worth is because of that. I mean, if you go out and buy a four cap property and you increase the rents by $1, your family’s net worth is now $25 more. The subway guy cannot ever make that claim.

David Richter:

Right.

Charles Dobens:

That’s how multi-family works. It’s the most amazing business.

David Richter:

So then for the people that are listening, maybe new to real estate or new to multi-family side, can you explain cap rate? What is cap rate?

Charles Dobens:

Okay. So, uh, David, I was on uh, a live program one time and the woman who was, who was running the show, we started a bantering and I had a, my set schedule and um, so just off the top she says, why don’t you explain to everybody on the call right now, what is cap rateon, how does it work? And here I am the expert, the multi-family attorney, she caught me so flatfooted and I was like, ha ha. And I couldn’t,

David Richter:

<laugh>

Charles Dobens:

I couldn’t come up with an explanation. I said, that is never going to happen to me again. I’m going to explain cap rates and I’m gonna explain it in a way that makes everybody understand what we do. Let’s say for instance, you have two multi-family properties right next door to each other. Location is irrelevant.

David Richter:

Yeah.

Charles Dobens:

In the analysis here, both of them generate $1, one property on one side generates a dollar, the other one generates the same dollar. The difference is that one of those properties was built yesterday and the other property was built 50 years ago. Which property is more valuable, David?

David Richter:

Hmm.

Charles Dobens:

They both generate the same dollar.

David Richter:

Yeah.

Charles Dobens:

But what I’m not telling you is the effort that takes place to generate that $1.

David Richter:

Okay.

Charles Dobens:

And the cap rate is essentially a measure of effort. This is the way I like to describe it. So if the cap rate’s higher, that means there’s more effort required to generate that same dollar.

David Richter:

Okay.

Charles Dobens:

If you have a lower cap rate, it’s less likely because, just think about it this way. You own a property that was built yesterday, you got the best tenants. Everything is brand new. Nothing breaks on it. The tenants pay their pay their rent on time.

David Richter:

Yeah.

Charles Dobens:

Every single month. New roof, nothing. Life is easy. It’s effortless to own that property. So that property’s cap rate is gonna be lower, let’s say a four. The other property, you haven’t hit it yet, David, but when you hit 50 years old, like this property, everything’s breaking right. You’re in a lot of maintenance. You got the worst type of tenants cuz they can’t get, they can’t live anywhere else and they can only afford the 50 year old property. That property takes a lot of effort to own and operate. So that’s gonna be a higher cap rate. So if you both generate the same dollar, the person that owns the newer property that say is trading at a four cap every time they increase by a dollar their family’s net worth increases by 25. Let’s say the other guy’s at 10 cap every time that he generates one new dollar, his family’s net worth increases by $10. Is that right? 12 and a half. Six. Yeah. 10. Do the math

David Richter:

<laugh>,

Charles Dobens:

Their net worth increases by $10. So you wanna own the lower cap rate property because every time you earn one more dollar, it generates so much more. That’s why the you know, the big institutions, the insurance companies pension money, that’s why they all invest in those big properties. And there’s new properties that have the low cap rates because they make a lot more money. And it’s all because of the cap rate. The cap rate I like to explain is a measure of effort when you’re looking at a property and David, every CFA and every financial advisor out there listening to your call right now is saying like, that’s so soft more, I give an explan explanation. I said Yeah, but people get it. People understand it now

David Richter:

Because there’s an actual formula Correct. To get the cap rate.

Charles Dobens:

Oh right. But the thing, the formula for the cap rate is the net operating income divided by the purchase price.

David Richter:

Okay.

Charles Dobens:

But the thing is, the purchase price is a moving target. Obviously the seller has a different price than the buyer. And eventually you come to what ultimately is the closing price. So that becomes the denominator. The net operating income is the number that you know in income less expenses. And that’s the net operating income. And that is the equation for giving you the cap rate. So from a financial equation standpoint, cap rate equals NOI divided by the price.

David Richter:

And that would be why in your example where you were cuz I like, I like simple for sure.

Charles Dobens:

Yeah.

David Richter:

Because that’s what helps people understand more. Helps me understand more.

Charles Dobens:

Yeah.

David Richter:

Where you say it’s a measure of effort, the newer property is probably gonna be worth more. So in your example that’s like, you know, it’s worth, you know, the a hundred thousand divided by the dollar or whatever, you know, it’s like

Charles Dobens:

Exactly

David Richter:

Whatever it is just around numbers. And then the other one, you know, it’s like worth less but you get a bigger cap rate, but then you have things that you’re gonna have to replace and

Charles Dobens:

Exactly.

David Richter:

You know, the tenants might not be paying as much. So that’s where it’s like, okay, it makes sense the property value is lower as the cap rate’s higher, but I’m gonna have to put more work into it to get the dollar out, the same dollar out that that new property over there, you know, right next door is generating as well too.

Charles Dobens:

Exactly.

David Richter:

Okay.

Charles Dobens:

Yep.

David Richter:

Well cool. So that’s a really good No, I like that the measure of effort cuz I’ve never heard it expressed like that. And I think that’s a really good, I like that a lot. So then

Charles Dobens:

I’m gonna trademark it now, David. I invent it.

David Richter:

Sure

Charles Dobens:

Yeah, that’s good stuff. I mean it’s, cuz it makes sense cuz then if you think about it like that, you know the higher cap rate, it’s not necessarily your friend <laugh>

David Richter:

No.

Charles Dobens:

Of uh, where everyone goes after that.

That’s what everybody look, I remember when I listened to somebody said, oh, I like to buy it at a high cap rate. I’m like,

David Richter:

yeah,

Charles Dobens:

well yeah, everybody likes to buy it at a high cap rate and then, you know, bring it down to a lower cap rate. But you know, the cap rate is uh, not set by mere mortals <laugh>, it is set by the market.

David Richter:

Yeah.

Charles Dobens:

And you know, you can’t just say, well I’m gonna sell this property at a four cap.

David Richter:

Yeah.

Charles Dobens:

I mean the guy that owns the 50 year old property can’t say, well I’m gonna sell this property at a four cap. Okay. If you’re gonna sell it at a, that property at a four cap, then plug that four into the equation. And the NOI is whatever the NOI is, I mean that’s, it’s a number that we all come, come to a conclusion over and therefore what if you’re selling at a four cap and the NOI is and that that’s your x and the NOI is a y the purchase price is just going to be a the uh, z. And so you just need to figure that out. And it’s, that’s the beautiful thing. That’s what I really loved about multi-family was no emotion involved. It’s just a formula and if the formula works, you buy the property.

David Richter:

Awesome. So you said there’s five ways to make money with multi-family. What are the five ways?

Charles Dobens:

Oh my gosh. What is this like a quiz? Come on David.

David Richter:

It’s a podcast where I interview you with questions. So yes, it’s basically the same thing.

Charles Dobens:

<laugh>.

David Richter:

<laugh>

Charles Dobens:

Okay. Um, the first one is obviously, uh, the monthly cash flow. You know, if you’re, if you show a profit every month, that’s one way you make money.

David Richter:

Okay.

Charles Dobens:

The second way you make money is by, uh, if you purchased a, uh, an amortizing mortgage and your tenants are paying down the note every single month, that’s another way that you’re making money. Um, the other one is on what we call forced appreciation, or that’s just you being a good steward of the property. And unlocking the value within the property. And that is, uh, by increasing the noi, take that increase divided by the cap rate. That’s what your new net worth is. Um, another way that we make money is the acquisition fee. Like if you’re putting together a deal and you’re raising money with from friends and family and other investors,

David Richter:

Yeah.

Charles Dobens:

You can build in a percentage of the purchase price as a fee to you. And then we also put in there a disposition fee. So when you go to sell a property, which takes just as much work as you buying the property, um, uh, you get paid again. Um, so lemme see,

David Richter:

Uh, that was five. It sounds like cash flow tax.

Charles Dobens:

Well the acquisition and disposition I counted as one.

David Richter:

Oh, you counted that as one.

Charles Dobens:

Let me see. You paid down the mortgage, you got the appreciation, um, uh, cash flow. Oh, oh. The most important one of all. And the one that you are gonna love.

David Richter:

Yeah.

Charles Dobens:

The property management fee.

David Richter:

Okay.

Charles Dobens:

I teach all my students that you will ultimately own your own property management company because that is 5%. Every dollar that comes in, you get the first 5% of that dollar and that is the money that’s gonna pay your salary, that’s gonna pay your kid’s tuition, it’s gonna pay your mortgage. You see the cash flow every month. Well, you might not have a good month and you don’t make a dime. The acquisition fee you get one time.

David Richter:

Right.

Charles Dobens:

The um, uh, paying down the mortgage and uh, the forced appreciation. You only realize that when you sell a property.

David Richter:

Yeah.

Charles Dobens:

The rest of the time, the only money that you can absolutely be sure of is the property management, uh, income.

David Richter:

Awesome.

Charles Dobens:

Yeah. That’s key.

David Richter:

I love that. Cuz then it sounds like there’s, like you said, those five key ways, then there’s also Right. The huge upside of the tax benefits. Correct.

Charles Dobens:

Oh my gosh. Oh, I don’t even count that.

David Richter:

Yeah.

Charles Dobens:

You know, because I, everyone’s gonna be different, but I mean those five things are the same on every property.

David Richter:

Yeah.

Charles Dobens:

You know, uh, but for the syndication, but yeah, absolutely. The tax advantages are huge.

David Richter:

Okay.

Charles Dobens:

Absolutely.

David Richter:

So in your multi-family experience, I’m sure you do you run into a lot of single family investors? Like do you talk to them? Because I’m just wondering why don’t more people go from single family to multi-family?

Charles Dobens:

Oh, they do. That’s like my number one, you know, buyer persona. My avatar for my program are people who are done with single family. One guy said it best and I really surprised he said it, but it was so true. He was, when I got into fixing, flipping, I just got a new job. I didn’t, I just, you know, I went from one job to another job.

David Richter:

Yeah.

Charles Dobens:

And you know, it’s like when I sold insurance, you know, I, with my father I’d come in, you know, after making a big sale and say, dad, I made a thousand dollars today. He goes, okay, what are you gonna do tomorrow?

David Richter:

Hmm.

Charles Dobens:

I’m like, you know, can I just kind of rest on my laurels a little bit? Now you’re only as good as your last sale. And so that drove me crazy because I thought I gotta keep doing this for the rest of my life.

David Richter:

Right.

Charles Dobens:

And that’s as tough. It’s the same thing with single family. You’re only as good as your last deal.

David Richter:

Yeah.

Charles Dobens:

And, but the thing is, multi-family, everybody ultimately wants to get into multifamily. It’s like monopoly. Y’all buy the little green houses, but y’all want the red hotels.

David Richter:

Yeah.

Charles Dobens:

Because they pay you the cash. So, nah,

David Richter:

I like that. So it sounds like, sounds like uh, a lot of people want to go from single family to multi-family.

Charles Dobens:

Yeah.

David Richter:

What do you think holds people back from getting into multi-family?

Charles Dobens:

Fear?

David Richter:

Fear.

Charles Dobens:

They’re just afraid. I mean, I had Brian Burke on my podcast yesterday. The guys owned thousands and thousands and thousands of apartment units. And I said, Brian, how’d you get your start? He goes, fix and flips,

David Richter:

huh.

Charles Dobens:

Yep. That’s how I got started buying foreclosures. That’s how we get started. But he realized that it’s just he’ll have to be doing that all for the rest of his life. And for some reasons people, I try to keep the concept, all the concepts of multifamily very, uh, easy to understand. Sure. Because once you overcome it, it’s really a very simple business. It really is a simple business.

David Richter:

Do you think people have to go through the single family route first? Or can

Charles Dobens:

No

David Richter:

They just jump into multi-family?

Charles Dobens:

No, I didn’t because I didn’t feel comfortable.

David Richter:

Yeah.

Charles Dobens:

No, you don’t have to do that. You really don’t. Um, it really, it’s just, it’s where you feel most comfortable. Some people may feel they need to do that just to say they’re in their real estate business.

David Richter:

Sure.

Charles Dobens:

But I’m telling you right now, single family fix and flips and multi-family, two totally different businesses. I mean, I, you know, my book, where is my book? Why do I always never have the book around when I need it? How to own a thousand apartments in five years? That’s my book.

David Richter:

Yeah.

Charles Dobens:

Um, and in that book, I teach you that there’s no way that you can get from zero to a thousand units in one deal.

David Richter:

Yeah.

Charles Dobens:

It’s just not gonna happen. The only way you get to a thousand units that I’ve had, many of my members start with zero and are now over a thousand. The way you get to that level is by building a business that runs that the machine.

David Richter:

Yeah.

Charles Dobens:

I mean there’s three levels to that business. There’s the acquisition management, there’s the asset management, and there’s the property management. And once you understand the three concepts and un how they all work and tie together, you’re gonna build yourself a very nice business of owning and operating multi-family property.

David Richter:

So acquisition, you said the asset management and then the property management.

Charles Dobens:

Exactly. That’s all it takes.

David Richter:

The differences between those, obviously I can get the acquisition and property management. I feel like acquisition’s acquiring it, like the whole process there.

Charles Dobens:

Yeah.

David Richter:

Property management’s actually the management, once you have it under the, what’s the asset management portion?

Charles Dobens:

Asset management is for those people. Because once you own the property, you gotta take care of it. Not just from a physical standpoint, but from an investment standpoint.

David Richter:

Yeah.

Charles Dobens:

They’re so, especially if you’re looking to, uh, raise private money and bring on, uh, investors, you’ve got to work with those people. Remember they become your customers.

David Richter:

Yep.

Charles Dobens:

And so your business needs to take care of those customers. The most successful students that I’ve, that have been in my, through my program are the ones who have repeat business from all their investors because they’ve taken such good care of those people.

David Richter:

Okay.

Charles Dobens:

Yep.

David Richter:

That’s good. So let’s, a lot of the people that we work with or that we see don’t treat the business like a business.

Charles Dobens:

Right.

David Richter:

And they don’t know that, you know, like what they don’t know. It sounds like that asset management piece is a lot like what we see on the single family side of just people not knowing the best way to take care of the, their private lenders or the people, you know, like this is where the money’s going. Would you say that, I guess have you seen a lot of that in the multi-family space or do you think that it’s a lot more buttoned up that people know what they’re doing? People know the cash flow, they know their numbers, they know that side.

Charles Dobens:

No.

David Richter:

What do you think?

Charles Dobens:

No. They, no, they see if you can, if you set it up right the first time

David Richter:

Yeah.

Charles Dobens:

And you build the systems to be constantly taking care of your clients, your investors, yes. Then you’re gonna have yourself a nice business. But David, like you just described on the single family side, the same is true on the multi-family side. People don’t set it up the right way. They don’t take care of those investors and you know, they miss out on the big portion of their business or what their business could do. I mean, that was like the podcast I had the other day. I said, where do you get your investors? And he says, they just, I’ve had ’em for years. These are people that just keep investing with me because he took care of those people. And what he did, uh, when he put them together is he said, in order to raise good investors and build a business with good investors, you’ve gotta close the three loops of trust. And they’ve gotta, you’ve gotta get your investors to trust real estate, to trust you

David Richter:

Yeah

Charles Dobens:

And to trust the deal. And that doesn’t happen on a 30 day period when the escrow is opened. That takes months

David Richter:

Yeah.

Charles Dobens:

To develop that type of relationship with your investors.

David Richter:

Okay. No, I like that a lot. You have to trust the real estate, you and the deal then I like you, there’s been lots of good stuff here. Three parts of a deal. The acquisition, the asset management, the property management. You’ve got the five ways to make money in real estate. I love that you ni name-drop your book too. Uh,

Charles Dobens:

<laugh>

David Richter:

Have a thousand dollars. How to get a thousand doors at five years.

Charles Dobens:

I got, hold on.

David Richter:

That’s great stuff.

Charles Dobens:

Got it right here. Geez,

David Richter:

You found it.

Charles Dobens:

I got it right here. There it is.

David Richter:

There it is.

Charles Dobens:

I own a thousand apartments. Five years. That little shit. Yeah. But I gotta do what you do.

David Richter:

No, this is good. Is that right? Just have a honey.

Charles Dobens:

Yeah

David Richter:

It’ll be there all the time.

Charles Dobens:

I really, I gotta get on a game man.

David Richter:

Exactly.

So that

Charles Dobens:

I gotta get the game

David Richter:

You’ve gotta, I’ve got the video channel, but that’s where this has been awesome. This is, I feel like you’ve helped people go from they, if they’re single family, they could jump into it. If they’re not even in real estate, they could jump into multi-family.

Charles Dobens:

Yeah.

David Richter:

I love these different things that you’ve been able to give ’em. Broke it down, broke down the cap rate too. Made it very understandable. I’ve never heard it explained that way. And I really like that. It’s just the measurement of efforts of the lower the me usually the lower the cap rate, the less effort it takes to generate that dollar on the other end, which was really cool. And then I like that you said multi-family is really not about real estate or the market, it’s about the business, about the business of multi-family. So that was awesome. This has been very informative. So my last question is how do people,

Charles Dobens:

Here it comes. Everybody here it comes. He’s saving it. Right Here it comes.

David Richter:

And this one’s not the trick question. How do people find you? I mean like now that you’ve gotten all that experience, how do they connect with you? You have the book, where do they find the book? Like obviously you’ve got a lot of knowledge.

Charles Dobens:

Yep. Go going multifamilyos.com, multifamily operating system.

David Richter:

Operating system. Do you have an operating system for multi-family

Charles Dobens:

Investors? Yeah, we do. Okay. I mean all of those things, those three things have a system. I mean, I’ve spent over $200,000 building a CRM from my members of my Multifamily OS program.

David Richter:

Yeah.

Charles Dobens:

That helps cuz you know, asset management, I mean acquisition management

David Richter:

Yeah.

Charles Dobens:

Is all about finding the deal,

David Richter:

Right?

Charles Dobens:

And 90% of the business is sales and marketing and finding the deal. And I’ll tell you the CRM manages the flow, the systems for the three customers of you as a multi-family real estate investor. Do you know who the three customers are?

David Richter:

No tell us

Charles Dobens:

The property owner because he’s your first sale. Okay. If he doesn’t accept your offer, you haven’t made a sale. The second one are the brokers because they are agents for the owners. And so we still have to work with them and cultivate those relationships. And the third one is, um, is investors. And so the C r M is set up to help build tho your investor database. Help you uh, automatically, systematically reach out to the owners in your marketplace. Let them know you’re there. I mean we handle all of that and we give you your own VA who helps manage those tasks. And a cold calling VA who sits there every day on the phone calling owners, Hey, do you wanna sell? Hey, do you wanna sell? Hey, do you wanna sell? Uh, so we’re really working when you sign up, it’s like you’re getting a franchise. You get, uh, all of those systems on day one.

David Richter:

Awesome. Well that’s very cool. So it was multi-family os that’s a very simple website, multi-family.

Charles Dobens:

And it’s trademarked David, I actually, I got the trademark for it.

David Richter:

Do they, is the book there too? Like if they want that

Charles Dobens:

Oh yeah,

David Richter:

You

Charles Dobens:

Exactly. Yep. Awesome book could call and we’ll send you the book.

David Richter:

Look at that. So that way if you want to know how to get a thousand apartments within five years, and if you wanna just, I love that he’s got an operating system, he’s got the crm, he’s got a lot of that stuff that I think a lot of people just need that organization and treating it like a business from day one.

Charles Dobens:

Yeah.

David Richter:

You know, that’s what we’re really trying to get you to do and that’s awesome. So that go to multifamilyos.com and if you’re also listening to this and you’re like, oh man, I am not treating my current business like a business head over to simplecfo.com, we could put one of our fractional CFOs on your team to make sure that you can have the direction of the business of where you need to be spending the money, where you’re making it, where you’re keeping it if you’re not keeping any of it. So head over to simplecfo.com if you’re like, oh shoot, I’m definitely not treating it like a business. Like they were talking about

Charles Dobens:

David, I just hired a fractional CSO

David Richter:

What’s a CSO

Charles Dobens:

A Chief Sales Officer.

David Richter:

Nice. Okay.

Charles Dobens:

Yeah. Very cool. Oh man. The fractional component. I love that. That’s brilliant. Absolutely brilliant.

David Richter:

You don’t need a full-time person sometimes in some of these CSO roles, so I get something in there that can help you from that perspective. So there you go. Charles, this was awesome. Thank you so much for dropping all the knowledge here and for coming on the

Charles Dobens:

Thanks David!

David Richter:

First podcast.

Charles Dobens:

Gotta get you on mine. Gotta get you back on mine.

David Richter:

There you go. Thanks Charles.

Charles Dobens:

All right.

David Richter:

Mm, bye.

Outro:

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

 

 

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

 

Episode: 242


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

 

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

 

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

 

Listen and enjoy the show! 

 

Key Takeaways:

 

[01:01] Introducing Jay Conner

[05:00] Introduction to private money

[08:30] The Great News Phone Call

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

[13:18] Maintaining relationships with private lenders

[15:40] Private money vs traditional money

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

[25:18] Advice for real estate investors

[29:01] Connect with Jay Conner

 

Quotes:

 

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

 

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

 

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



Connect with Jay:

 

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

 

Tired of living deal to deal? 

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

 


Transcript:

Speaker 1 (00:00):

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

Speaker 2 (00:34):

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

Speaker 3 (01:01):

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

Speaker 1 (02:07):

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

Speaker 3 (02:24):

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

Speaker 1 (02:43):

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

(03:38):

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

(04:27):

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

(05:18):

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

(06:10):

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

(07:02):

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

(08:11):

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

(09:06):

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

(10:04):

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

Speaker 3 (10:38):

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

Speaker 1 (11:17):

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

Speaker 3 (12:22):

Right? Yep.

Speaker 1 (12:24):

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

Speaker 3 (12:33):

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

Speaker 1 (13:22):

I mail ’em checks.

Speaker 3 (13:25):

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

Speaker 1 (13:33):

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

Speaker 3 (13:41):

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

Speaker 1 (13:50):

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

Speaker 3 (14:00):

Yep.

Speaker 1 (14:01):

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

Speaker 3 (15:27):

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

Speaker 1 (15:32):

Options. Does that make sense?

Speaker 3 (15:34):

Yeah, that makes sense. A hundred percent.

Speaker 1 (15:37):

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

Speaker 3 (16:14):

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

Speaker 1 (16:33):

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

Speaker 3 (17:33):

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

Speaker 1 (18:04):

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

Speaker 3 (18:20):

Yeah, me either.

Speaker 1 (18:22):

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

Speaker 3 (18:53):

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

Speaker 1 (19:12):

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

Speaker 3 (19:17):

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

Speaker 1 (19:20):

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

Speaker 3 (20:25):

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

Speaker 1 (20:50):

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

Speaker 3 (21:53):

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

Speaker 1 (22:07):

Well pay ’em on time.

Speaker 3 (22:08):

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

Speaker 1 (22:12):

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

Speaker 3 (22:42):

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

Speaker 1 (23:03):

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

Speaker 3 (23:06):

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

Speaker 1 (23:10):

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

(23:37):

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

Speaker 3 (24:31):

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

Speaker 1 (25:18):

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

(25:26):

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

Speaker 3 (26:11):

That’s so good.

Speaker 1 (26:13):

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

Speaker 3 (27:08):

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

(27:55):

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

Speaker 1 (29:01):

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

Speaker 3 (30:31):

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

(31:13):

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

Speaker 1 (31:51):

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

Speaker 2 (31:54):

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

 

 





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