Zero to a Million – How a Strong Mentor, Great Partner & Profit First Got Him There with Michael McDonald

January 30, 2023

Episode 151: Zero to a Million – How a Strong Mentor, Great Partner & Profit First Got Him There with Michael McDonald

The Profit First REI Podcast

January 30, 2023

David Richter

Summary:

Having a good life partner is also one of the keys to real investing success.

We have Michael McDonald, a well-respected real estate investor, who shares his journey from having a debt of 45,000 and how in 2022, he was able to buy his dream car through his success in real estate investing.

Listen as Michael shares how having a good life partner, trusted mentor, and Profit First helped him achieve a million deals from having zero deals.

Key Takeaways:

[01:32] Introducing Michael McDonald

[02:06] Michael Shares His Journey in Real Estate and What He Do

[04:20] The Moment He Knew Her Wife is Pregnant

[05:46] Michael’s Experiences in His First Real Estate Deal

[15:02] Michael Discovered Profit First

[18:28] How Profit First Impacts Michael’s Real Estate Investing Journey

[24:43] Michael Shares His Plan for 2023

[28:20] Things He Has Done Differently When He First Started in Business

[29:21] Connect with Michael McDonald

Quotes:

[15:47] “Books are a disaster if you don’t make it a priority.”

[21:11] “Treat yourself, take a trip, go on a vacation. You earned it.”

[25:51] “To have a team, the business can move on without your full attention.”

Connect with Michael:

Website: https://www.thevirtualmillionaires.com/home

Socials: https://www.instagram.com/michaelmcdonaldrei

Tired of living deal to deal?

If you are a real estate investor or business owner 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 I 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:

Michael McDonald:

The first thing I did was I just followed the book. I set up all the accounts, and as soon as we got the accounts set up, we had fumbled through the allocations for quite some time. It was very inconsistent. And then I realized that if this is gonna work, we have to take it serious. And so we finally, you know, we had a spreadsheet set up, we, at the end of the month, we, uh, distribute all from the income account. We do, we follow the thing. And that’s when it started to get fun.

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:

This episode is going to bring you a ton of value. If you have done a million deals or zero deals, you will get something from this because Michael tells his story from the lowest of Lowe’s where he was 45, $50,000 in debt. His wife just told me he was pregnant. And how in 2022 he was able to buy his dream car and how his journey in real estate, but also Profit First has helped him immensely. I believe this episode will give you a ton of hope and a lot of people will resonate with his story because a lot of people have been there and I hope that this resonates with you. Thank you so much for listening. Hey, hey, welcome to the prophet first REI podcast. We have Michael McDonald here. Super excited about this one. He and I are in at least one mastermind together, if not more, but that’s where we get to see a lot of that stuff behind the scenes. And I know he’s very well respected in the real estate investing circles. Michael, thank you so much for being here today.

Michael McDonald:

Dave, good to be here, man. Excited to jump on the show.

David Richter:

Yeah, excited to have you be here and then tell your profit first story. But before we get into that, tell a little bit about what you do with Rocket Home Buyers. You’re getting into the education space too. Just tell a little bit about your journey and real estate and high level overview.

Michael McDonald:

Yeah, so I think, uh, I have to take people back to how I got into real estate and uh, maybe you’ll get into that too, but I think it’s important for people to understand, um, that, because the rest will makes some sense then. So it all started when I found about, found out about education or real estate investing four years ago.

David Richter:

Yeah.

Michael McDonald:

And I ended up at a real estate seminar with, um, no idea that I was going to be jumping into real estate. And what they sh uh, showed me there was that you can make money in real estate with little to no money down. And

David Richter:

Nice.

Michael McDonald:

I was talked into, go into the three day, I think we spent 2000 bucks to split it with a buddy. And what they said at that was like, Hey, you can cash 20, 30, $40,000 checks without even owning the property. I’m like, is this real

David Richter:

<laugh>?

Michael McDonald:

Like, seems too good to be true for me. But they pitched it and at the time, David, I was completely broke. Um, I had no money to my name. In fact, I put the 2000 on credit to even be at that next event.

David Richter:

Nice.

Michael McDonald:

And at that next event, they said, Hey, um, if you’re gonna be successful in this business, you’re going to need some help. And um, here’s an offer we can show you how to get the money to pay for it. So, um, long story short, to help me raise, I think it was like 40 or 50,000 bucks on credit cards because I had decent credit at that time, um, into my credit tank. Naturally, once I got that money and I bought the education and put it all on there. So that was my entry to real estate. And when I got home from that, uh, event, David, my wife told me that we’re expecting, so now I have $40,000 on credit. Um, had no clue how to wholesale a property or even do real estate at all. And that was my entry into real estate game

David Richter:

Alright. That is a, I think that’s gonna resonate with a lot of people cuz I think a lot of people start at some point there, at least with education or something on that side of things. But, uh, which is, I think it’s hilarious to see you’re going to this thing to buy real estate with a little to no money down. And now what you’re into this for 45, 40 $6,000 or something at, at this point. So, you know, you haven’t bought a property, bought a lot of education, but, and then you were expecting to, okay. How was that moment walking in the door, you know, and her telling you you were pregnant? Like what was going through your head at that point?

Michael McDonald:

Dude? Uh, ab my heart just dropped. I mean it was

David Richter:

okay.

Michael McDonald:

It, I was a wreck because there was all of these emotions of excitement, um, fear, um,

David Richter:

Yeah,

Michael McDonald:

The uncertainty of not knowing what it’s like to be a new dad. And so, um, it was a whirlwind man. Um, and it made me realize that okay, if I wasn’t motivated before I found out that news, I’m definitely motivated to take action and figure this thing out now.

David Richter:

Yeah, that makes sense. So let me ask you this, did you have any financial education before this not real estate? Cuz this sounds like it was more real estate, but just any financial education before this, uh, either on your own or in school or from your parents or anything?

Michael McDonald:

That’s a great question. No, I came from a lower middle class family. Um, I went to college for nutrition. I did graduate, uh, with my degree in nutrition. But I’m sure you can imagine how much education they taught about finance in a nutrition degree.

David Richter:

<laugh><affirmative> Um,

Michael McDonald:

Yep. It was none. And so I, I had no experience about running a business, real estate, any of that before that investment was made. Obviously it was an emotional investment looking back.

David Richter:

Yeah. Okay. So then let’s talk about that a little bit. So you made the investment, your wife has now laid the bomb on you that the glorious bomb that

Michael McDonald:

yes<affirmative>

David Richter:

She’s pregnant. And then what happened from there? You said you were motivated, so did you get your first deal or like what happened from there to get you to the next level?

Michael McDonald:

Yep. So this is where the transition to rocket begins.

David Richter:

Okay.

Michael McDonald:

Um, the first year I was following their instruction, I was making offers on the MIS I was failing forward as they say.

David Richter:

Yeah.

Michael McDonald:

And after six months my wife looked at me and she says, this is not working. Um, the minimum interest payments were crushing us, uh, barely making ends meet. And I figured out that I needed to do something different. And so I found a local mentor, somebody who was actually boots on the ground who had experience. He actually had mentored Rob. He had mentored through Rich Dad Port Dadd, which is Robert Kiyosaki’s

David Richter:

okay

Michael McDonald:

Company.

David Richter:

Yeah.

Michael McDonald:

And so he’s like 2,500 bucks, I’ll take you into properties, we’ll show you how to negotiate, we’ll show you how to find them. All this stuff. Cause the $45,000 that I spent just wasn’t cutting it for some reason. I don’t know

David Richter:

yeah

Michael McDonald:

What he clicked it just was old school. It wasn’t well it wasn’t working. So long story short, I partnered with him on my next six deals. As soon as we got into some properties, he helped me negotiate. We got my first deal and it fell through.

David Richter:

hmm

Michael McDonald:

And that was about seven months in. Then finally after that, I got a deal. It cash a $20,000 check on a wholesale deal. It was a fourplex and it completely changed my belief and it showed me that this is possible. And that was the whole time I was working a full-time job in this transition.

David Richter:

Okay. So let me ask though, that property that you actually made, the 20,000 on what month in, was that? So seven months you got your first deal, but it fell through. What was the month mark for that first deal where it actually closed?

Michael McDonald:

It would’ve been month eight, cause it took about 40 days to close, give or take. And what it was nothing, but it was not smooth whatsoever.

David Richter:

Yeah. So that was eight months into this journey. Does that mean you’re a month away from having a baby or had, you know, like or did this overlap a little bit or like what, where was the timeline of the little one coming?

Michael McDonald:

Yeah, so the timeline was, it was August that I got the deal and the check.

David Richter:

Yeah.

Michael McDonald:

It was October when my daughter was born.

David Richter:

Okay. Okay. So

Michael McDonald:

Eight months. The credit cards were stacking up, man.

David Richter:

So that $20,000 had to be a huge relief for your guys.

Michael McDonald:

It was a huge relief. Um, I did split that with the guy cuz I, the agreement was we’d do deals together.

David Richter:

Was it 50 50 split?

Michael McDonald:

Yep, 50 50.

David Richter:

Okay. So you got 10 Ks. 10 K’s still not bad for your first deal.

Michael McDonald:

Yeah, I mean it was about half as much as I was making at my full-time job at the time. Yep.

David Richter:

You mean like for the year you were making 20 k

Michael McDonald:

I was making like 30,000 as a Nutrition. It was a dietetic technician at a hospital. Yep.

David Richter:

Oh wow. Yeah. You were barely making ends meet.

Michael McDonald:

Dude, I was scraped to buy, me and my wife and I had a house payment. Uh, we just bought probably

David Richter:

yeah

Michael McDonald:

A year before that. And, you know, graduating college.

David Richter:

Yeah.

Michael McDonald:

Your first job into after college, they don’t pay you a lot of money. And I was talking to the dieticians cause I was considering getting my master’s degree and they’re like, yeah, we’re making like 45,000. I’m like, I can’t provide for a family doing this.

David Richter:

Right.

Michael McDonald:

Which is what prompted me to jump into, real estate in the first place. But what ended up happening, David is I had wholesaled the same guy about five deals.

David Richter:

Okay.

Michael McDonald:

And that guy ended up becoming my business partner in Rocket Home Buyers. And at the very end of that year, I had wholesaled about seven or eight deals. Um, so from weeks August,

David Richter:

August to December, then

Michael McDonald:

December.

David Richter:

Okay.

Michael McDonald:

I started catching some momentum. I started figuring this thing out cuz I started having some money to be able to put back into marketing.

David Richter:

Yeah, that makes sense.

Michael McDonald:

And so

David Richter:

How much did you make on those seven to eight deals? Do you mind me asking? Like, between the split

Michael McDonald:

With him, I had probably made 50,000. We’re probably meet a hundred thousand together and then Okay.

David Richter:

Together then. See that’s so awesome. I love that. You know, like

Michael McDonald:

yeah,

David Richter:

Six months can change your life if you put that work in, but okay, I sorry to interrupt you. That was just very curious of like what you were able to do in that last six months of the year.

Michael McDonald:

Yeah, so what it, what it was is after that, that money was made, my wife actually came to me and she says, so I can tell that you’re starting to get this figured out. However, it doesn’t, it seems like you’re getting burnout. Like, she looked at me in the eyes one day after work, I’d work from eight to five. I came home, I would eat dinner and I’d go cold call and I would get back to work on my business. And she’s like, there’s, there’s no way that you’re gonna do this forever.

David Richter:

yeah

Michael McDonald:

She’s like, you will literally kill yourself. Because I was just drained. I was waking up before work until nine. It was just ridiculous. And so long story short, she says, you gotta quit your job. And I’m like, well what do you mean that sounds terrifying? And she’s like, well you made more money this year doing this part-time than you did at your job. She’s like, you’ve gotta quit your job. I’m like, okay, well how are we gonna do that? I’m like, we still have credit cards to pay back

David Richter:

<laugh>.

Michael McDonald:

And so, uh, long story short, uh, we decided it’s time to, well let me rewind real quick. I had partnered with my business partner. He quit his job in January. So he went full-time and I’m like, I need to get a little bit more money. I needed some more cushion to be able to do that. And she’s like, well we can sell a house. I’m like, you wanna sell a house? Okay, I didn’t think that you would wanna sell a house, but if that’s what you want to do, then we’ll consider it. So David, this happened so fast. Uh, it was March and my wife came to me with that idea and we listed her house a week later. We sold it two days on the market. We cashed out, I think $30,000 of equity paid off the rest of the credit cards. The day that that money hit my bank account, I put in my two week notice, not my job.

David Richter:

Nice. That’s awesome.

Michael McDonald:

And then the rest is history man. Uh, this is obviously a lot that goes into the next part.

David Richter:

Sounds like you have a great life partner by your side.

Michael McDonald:

Dude, I can’t even begin to tell you how thankful I am for her. And then it’s not like that for everyone. Right?

David Richter:

Yeah.

Michael McDonald:

Like for sure the support system, the encouragement, the belief. It was more than I think I had in myself at that time.

David Richter:

<laugh>. That’s awesome. I mean, not for you not believing in yourself, but for her being there

Michael McDonald:

By yourself. Well I’ve changed a lot since then. Well, that’s, how was that a little

David Richter:

<laugh>? Yeah, for sure. Oh man, that’s good stuff. I let what’s her name, just so she gets mentioned on here. You gotta

Michael McDonald:

Yeah. Shout out to my wife. Regina.

David Richter:

Regina. There we go. Yeah, Regina, this is why we’re even on this podcast probably. So thank you to you and I’m pretty sure she might be able to hear us cuz he’s in his home office. I heard the kids beforehand too. So how many kids do you have now? Do you have multiple kids?

Michael McDonald:

I have two year old, a four-year old boy,

David Richter:

Two-year old and four year old. So it’s, yeah. Wow. And uh, that’s awesome. I love that journey. That sounds like where a lot of people could have gotten tripped up by that, the $45,000 in debt, you know, getting that first deal and then having it fall through. I can’t imagine that call cuz like if you’re doing the deals you expect that call on deals that happen, but like your first deal, it’s actually happening. So I’m sure there was a lot of emotion there. And then actually doing those deals sounds like you, so those seven to eight deals at the end of the year, I do have one question there.

Michael McDonald:

Mm-hmm. <affirmative>,

David Richter:

Was it you negotiating at that point or was it your partner negotiating those deals still?

Michael McDonald:

I was negotiating

David Richter:

By that, but

Michael McDonald:

Point, 80 to 90% of the deals I would call him for advice on

David Richter:

yeah

Michael McDonald:

Specific situations. But I would find the deals, I would negotiate the deals and then, um, he was benefiting from the, just the fact that he showed me

David Richter:

yeah

Michael McDonald:

How to get those deals in the first place. But I honored my six with him and we split

David Richter:

yeah

Michael McDonald:

Him 50 50 and yeah, he made about 50 grand that year from just hanging out and

David Richter:

yeah.

Michael McDonald:

Showing

David Richter:

Me the way, being able to teach you. No, that’s awesome. That’s where I think a lot of value can be for if you’re listening to this as well. He invested in himself a lot. Michael did, then he went to a mentor and had to dish out some more money upfront plus some of the deal profit. Michael, do you regret any of that in that first year?

Michael McDonald:

Absolutely not. I learned so many valuable skillsets. I mean, my belief system changed the way that I spoke to sellers changed. Um, it changed everything like by having somebody who had 25, 30 years of experience in the real estate business, literally as a phone call away.

David Richter:

That’s awesome.

Michael McDonald:

Yeah.

David Richter:

I love that. So I’m not promoting mentorship on here, like Yeah. You know, like I’ll eventually mentor people but like, um, that’s not what we’re promoting on this show. But I do want to say that if there is a local person that you can sync up with that is just so good. And then yeah. All that journey, I think there’s just so much that, uh, people can resonate with there of like, Hey, I spent money on this education didn’t really get anywhere. But then, you know, stick it out if that’s what it’s meant for you. So I thought that was really good. So let’s talk, it’s the profit first for real estate investing show. So let’s talk about post year one and then selling your house, getting into it. When did Profit First, either Mike Mcow it’s book or my book, cross Your Path and you started to get that mentality?

Michael McDonald:

It was the end of the first year in business with Rocket. Um, I have to mention this cuz I think this is important.

David Richter:

Yeah sure, go ahead.

Michael McDonald:

Because after we got our first couple deals in as Rocket my business partnership,

David Richter:

yeah

Michael McDonald:

I asked him if I could move to Las Vegas from Nebraska, which is where I was living. And so not only did I quit my job, but I moved across the country simultaneously.

David Richter:

Okay, Yeah,

Michael McDonald:

Great idea. Right?

David Richter:

Right.

Michael McDonald:

But um, what it forced us to do though David, is it really taught us to, we’re gonna have to delegate, we’re gonna have to get people in place. And the biggest thing that I learned, uh, through one year in business and a lot of deals later, cuz we were just like going, cuz we both had to make this work is books are a disaster if you don’t make it a priority. And we were making some decent money.

David Richter:

Yeah.

Michael McDonald:

Um, but we didn’t know we were making decent money.

David Richter:

Okay.

Michael McDonald:

We always felt broke and poor. And after the first year we’re like, okay, well we did about 30 some deals,

David Richter:

yeah

Michael McDonald:

35 deals, and it just doesn’t seem like we have any money. We’re putting all of our money back into marketing. We’re have all of this, this money out on, on these flips. Um, where did it all go? I’m sure I see so many people where where’s all the money?

David Richter:

Yep.

Michael McDonald:

And that’s what it felt like. And it was really scary because we knew we were making money, but we just didn’t know where it was. And I was putting together spreadsheets of like, okay, we have all these properties. They got this much ment on this property with all these renovations and it was just like super unorganized. There was no thought process behind it. And then it was 2020, I think I had heard you had an event or a podcast or something and then I bought your book and it just clicked. I’m like, well of course. Why wouldn’t you pay yourself first? Why wouldn’t you pay yourself 10%? You work hard, you take a lot of risk in this business. Gosh, I’ve taken a lot of risk.

David Richter:

Yeah.

Michael McDonald:

Uh, over the last four years I’ve, we’ve done hundreds of deals. We deserve to get 10% of the profits.

David Richter:

<laugh>. Right.

Michael McDonald:

<laugh>.

David Richter:

Oh man. And I, if anything I’ll just, if I could jump in right here, being able to hear your story and that journey that you went on, I think everyone listening would agree that if anything you deserved to be able to make money from your business because you were able to go out for like a bunch of money in debt. You know, having your child that first year when now this was going on to getting those deals under contract to then the next year doing the 30 deals and actually not just now it’s proof of concept. Not only could you do the seven to eight deals, you could actually run a business and do 30 deals in a year and get that out there. That which now it’s like at the end of that year, why aren’t we making ’em out? Like where is it all going? So I think your story will resonate with a lot of people because it’s like, hey, well look at all the stuff that we had to go through. Like, why in the world is this not making me feel better than when I was working my nine to five or my eight to five? So that, I think that’s really key. So thank you for saying that cuz you do, you do deserve that. And if you’re listening to this too, you’re putting that hard work into it, you deserve it as well. Now I appreciate you bringing that up. I wanna give people hope. So, okay, so keep telling the story. Okay. You read it, what, did anything change immediately or was it like, hey we’ll get to it? Or was it like, Hey lights, the lights are on. Go from there.

Michael McDonald:

Yeah, I wish, I had a different answer for you on this part.

David Richter:

Okay. <laugh>

Michael McDonald:

It didn’t change immediately. So we probably kept doing what we were doing for another at least six months. And I was telling my business partner about it. I’m like, dude, like we shouldn’t be feeling like this. We shouldn’t be wondering where all of the monies that we’re flipping a bunch of property, um, we’re making them decent money. I think, that the next year we had made a million bucks, like

David Richter:

okay

Michael McDonald:

On our tax return after our accountant figured out how to clean all the books up

David Richter:

<laugh>.Right,

Michael McDonald:

And um, I was like, where’s it all at? You know, and at the end of the year I’m like, here’s profit, there’s this profit first model. I think I’d sent him your book. I’m like, read this book. We need to implement this and I don’t care what it takes to do it, but we’re gonna implement it. So the first thing I did was I just followed the book. I set up all the accounts and as soon as we got the accounts set up, we had fumbled through the allocations for quite some time. It was very inconsistent. And then I realized that if this is gonna work, we have to take it serious. And so we finally, you know, we had a spreadsheet set up, we, at the end of the month, we uh, distribute all from the income account. We do the, we follow the thing. And that’s when it started to get fun because we started seeing, okay, we are making money. I can see that from the top line to here. I can allocate this much money to the profit account. And we decided to do a quarterly distribution and one of the first quarterly distributions that we made, David was probably earlier this year.

David Richter:

Okay.

Michael McDonald:

And this last, well sorry, last year.

David Richter:

Yeah.

Michael McDonald:

It’s 2023. So it was last year. And I just remember the quarterly distribution. I was so excited at the end of the corks I’m like, oh my gosh, like this is awesome. Like this distribution’s gonna, this is awesome. I don’t even know. Like I can buy pretty much whatever I want with this. Like, and I treated myself and we can get to that, but I bought myself a a pretty sweet, it was like a dream car of mine.

David Richter:

Nice.

Michael McDonald:

Um, this last year. And it made sense cuz it was also a tax deduction from the section 1 79 6,000 pound car for are you?,

David Richter:

Yeah, you don’t have to convince me that it a good idea. This is from your profit account. Spend it on whatever the heck you

Michael McDonald:

Want. I know, but I didn’t even spend it

David Richter:

<laugh>

Michael McDonald:

All because, um, I financed it cause it was

David Richter:

Nice. Oh, even better. Yeah.

Michael McDonald:

Yeah.

David Richter:

I love it.

Michael McDonald:

But I could have bought it in cash with the profits from the last year. So it was all of that to say it was an absolute game changer because it showed me that we did make money and you preached this to not try to invest that money. Cause I wanna invest it, I wanna keep reinvesting it, but it’s like, no, treat yourself with that. Take a trip, go on a vacation. You earned it. And so yeah.

David Richter:

That’s awesome. Well, I love to hear that. So let me, let me ask this then, since your wife has kind of gone on this journey with us here, and especially with you specifically, but Regina, on that first year when you did the 30 deals, how was she feeling at the end of that year? Was she thinking like, Hey, you did a lot of deals, but where’s the money? Like were those types of talks happening at home or not really?

Michael McDonald:

Not really. We’re pretty open with each other about how things are going. That’s good. I definitely don’t let her feel like if things are feeling tight, I do my best to not let her feel that. But I’m also open about it too. And so I feel like she thought we were doing pretty good.

David Richter:

Yeah.

Michael McDonald:

Um, because we were,

David Richter:

yeah, for sure.

Michael McDonald:

But we just didn’t know where all money was. We were tying up our own cash for the down payments

David Richter:

<laugh>.

Michael McDonald:

We were tying up our own cash for the renovations. And when all of those flipped sold, I told my business partner, I said, we’re never doing that again. We gotta use other people’s money.

David Richter:

There you

Michael McDonald:

Go. So we know where our money’s at.

David Richter:

Oh man, there’s so many points here. Like this it feels like the perfect case study just for like 180 degrees, like all the way around turning around because you went from all investing, you invested in yourself, which was great, but then you invested in the right person and then got you to the first deals. And then it was like, okay, the first year in where the heck’s the money and then getting the cash in order. Okay. So it wasn’t really an issue at home that first year, but how about this last year when you were able to actually enjoy the money 2022. Was she able to see that this year was a little bit more fun for you and for the business?

Michael McDonald:

Absolutely.

David Richter:

Okay.

Michael McDonald:

And that was, I try to, I shouldn’t say I try, I set an intention every year and

David Richter:

yeah,

Michael McDonald:

Last year my goal for the year was to have four have more fun Okay. And make more money. And I did just that. I traveled the most. We’ve traveled, we’ve went on a bunch of vacations and we made the most money we’ve ever made in our real estate business.

David Richter:

Oh yes.

Michael McDonald:

And so my wife gotta enjoy the fruits of the labor. Um, we gotta take ourself out to eat to really nice restaurants and really just indulge and really enjoy the fruits of the labor of the business. Which was amazing.

David Richter:

That is amazing because you see a lot of this stuff on Facebook. Okay. Or like Instagram or TikTok, wherever, and you see people taking those trips and you’re just, and you automatically think wealth and that they are wealthy. That’s where I love when Michael, like when you come on or other people come on and you say, Hey, we’re having fun and we’re doing this because you actually have the money <laugh>, you know, and you’re not ruining your business, you’re not ruining your life, you’re not going into a ton of debt. It’s like, yes, this is true wealth. So I just wanted to point that out too, that it is fine to post stuff on Facebook to buy that dream card, to do the things that you want to do. So, and Michael’s just a, a shining example of this. This is, has been a lot of fun. So, okay, so then 2023, what are your plans for this year? You’ve got now some education pieces as well too. I’d love to know what the Virtual Millionaire show is about. Like if you can’t, if you’re just listening to the podcast, he’s got a big bright neon sign behind him, which looks really good. So look at us up on YouTube for that. But talk about that, like where you headed this year, you know, real estate and you know, the education piece as well.

Michael McDonald:

Absolutely. So I am, first and foremost is I’m not getting into the education space because I need to make money to provide for my family. I feel like a lot of the educators out there, um, may just do education and that’s great if that’s what you wanna do. But for me, I’m running a business. I have 10 full-time employees.

David Richter:

Wow.

Michael McDonald:

Real estate. I eat, sleep and breathe it and I do it. So that’s my baby. That’s what bought me my dream car. That’s what I absolutely love. I’m passionate about real estate investing. And so our goal is to double our business from last year. So in our real estate business, rocket home buyers, we wanna do 4 million in revenue and we wanna do 200 deals. We did 93 deals last year and surpassed 2 million in revenue. So the goal is to double that.

David Richter:

That’s awesome.

Michael McDonald:

So that’s what I’m really laser focused on. Um, and then on top of that, I’m extremely excited about the Virtual Millionaire. It’s a brand that I’ve created where we show, um, real estate investors how to start and scale a business. Okay. So if you are in your business, um, we basically show you the departments that you need, how to remove yourself from the day-to-day to have a team that can go out and buy houses and the business can move on without your full attention. So for example, right now I have five acquisitions who are in my system, making calls, talking to sellers, buying houses as we speak. And the goal with the virtual Millionaire Man is just to impact as many people as I possibly can. Um, I know what it felt like to be at the low, to struggle to get through it. And all of the things that I’ve invested in in the last several years has taught me a lot of lessons. I’ve learned a lot of things that I would not do and I want to help other people avoid some of those pain points and uh, challenges. And so, um, my goal is to impact as many people as I possibly can.

David Richter:

Sounds like one of the things you need to tell them is get a Good Life partner. <laugh>, that was, that seemed like that was very key in that first year. Cuz you know, if you, if you didn’t have the right support right at, on the home front, it could have had a very different story. We would not be talking here. This is probably the bottom line. So

Michael McDonald:

sure man

David Richter:

I, that’s a huge one, number one. But then I, some of the things I’ve pulled out from here is the mentorship. Like you found a local mentor that was able to like, sounds like you went on appointments with him and hel saw him negotiate and do that type of stuff, which is awesome. So that was a huge tip. I think <laugh> going into the business, even after that first deal falls apart, like I feel like that was a low emotional point. Probably seven months into it, wife is very pregnant, you know, like here we go, like this deal’s falling apart, what the heck? So then you did seven to eight deals after that, which is awesome. Then the next year getting into that and actually expanding, but then realizing, hey, something’s missing. Why I don’t I not have cash? Then going through that, and actually I love what you said, you started to implement Profit First like a lot of people do when they self implement, but they are inconsistent, they’re focused on the deals. And I get it, you’re the business owner, but then you said, if we’re gonna actually make this work, we have to take it serious and be disciplined. So I thought that was great too because that discipline, it sounds like this last year has cashed in immensely with the new car, the most you’ve ever made, the most you’ve ever kept, the most you’ve been able to do with your family, which is amazing. So I think there’s been a ton of value here. I just have two final questions. Number one, is there anything you would do different at that first year when you first started your business? Officially

Michael McDonald:

I would’ve found a, uh, I would’ve found somebody to provide value to, even if it was splitting the deals right away.

David Richter:

Okay.

Michael McDonald:

I had heard that I should be connecting and going to local meetups and looking for people who are players who are actually doing deals, I would’ve found that person immediately and I would’ve done everything that they said to do and I would’ve brought them all the deals until I figured out how to do it myself.

David Richter:

There you go.

Michael McDonald:

So I wouldn’t been wasted seven months

David Richter:

<laugh>. Right. That sounds like a great first step for a lot of people. And I would just say too, if you had profit first from the beginning, it’d probably be a different story as well that first year. So that’s another thing. But, uh, okay, you’ve provided a ton of value here. So then how do we get in touch with you? How do people get in touch with you? Like how do they provide value back? Because I wanna know about the virtual millionaire, how to connect there and then if they just wanna follow your journey or wherever, you know, like, cuz I love seeing your stuff. I saw that exotic car, I’m like, this is awesome. Like, I know that he’s following this stuff and that, you know, this was his reward. So how can they follow you at the different places or the virtual millionaire?

Michael McDonald:

Well, I gotta thank you, David, because

David Richter:

yeah, for sure.

Michael McDonald:

I honestly, I think it’s so crazy and silly to me that people need permission to take the profits and go treat themselves, but growing up in a different environment

David Richter:

Yeah,

Michael McDonald:

You just don’t feel like you deserve it sometimes.

David Richter:

Yeah.

Michael McDonald:

And when I saw that 10% distribution from our best quarter ever, I was like, I could buy my dream car. This is awesome. I’m gonna do it. And I did it and I did. I, it was, you know, anyway, long story short, thank you because I think a lot of people would probably not be doing this stuff if you didn’t teach this. And so, um, working people learn more about Me. The Virtual Millionaire Show is a great place to listen to of the podcast. Um, you can follow me on Instagram at Michael McDonald,REI and if you wanna follow my content on Facebook, it’s The virtualmillionaire.com And, um, excited to share and help more people, um, by some of the lessons I’ve learned.

David Richter:

So Michael’s the real deal, so follow him. He’s doing the deals and he is also gonna show you these things. I mean, if you got value from this podcast I did, I loved hearing his story, but then all the twists and turns of like where he is today. So follow him the virtualmillionaire.com. Also the different Instagram handles and the Facebook, we’ll make sure we put that in the show notes. And if you are like Michael and you’ve had any of those types of experiences growing up, I don’t deserve the money. I’m poor, I don’t, you know, like money doesn’t grow on trees. If these were some of the things that were fed to you, like is fed to a lot of us in the poor middle class mindset, we need to get out of that. I want you to enjoy your business. So if you needed the Profit First System implemented what you can head over to simplecfo.com. We would love to be able to help you and be able to put someone on your team to implement Profit First. And even if we don’t have that person, we’d left to pin it to the right person. We just wanna provide value, even if it’s just listening to this podcast and you got one nugget out of here and you took it and then you ran with it. I mean, Michael went out there and he implemented it and got serious about it and has reaped the rewards this last year. So that simplecfo.com remember to make profit a habit in your business. And Michael, thank you so much for being on the show.

Michael McDonald:

Thanks again for having me, David. Appreciate it, man.

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.

Zero to a Million – How a Strong Mentor, Great Partner & Profit First Got Him There with Michael McDonald

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