Latest / Results Driven / Episode 178: The Real Reason You’re Afraid to Raise Private Money

Transcript

Episode 178: The Real Reason You’re Afraid to Raise Private Money · Results Driven

• 0:00
  SPEAKER_00: Well, do you really want to be in real estate then?
• 0:02
  SPEAKER_00: Because at the end of the day, if you're betting on yourself, then it's your job to educate yourself to feel like you're the expert in what you do.
• 0:10
  SPEAKER_00: And if you genuinely think you're the expert in what you do, you're buying right, you're starting to systemize things, et cetera, then you would want those people to allow you to have control over them getting double-digit returns versus being in a stock market where someone comes out tomorrow, we just put a bomb on Iran and boom, everything tanks, right?
• 0:29
  SPEAKER_00: Like they can't control that.
• 0:44
  SPEAKER_00: And this is the Results Driven Podcast, where we share proven strategies to build systems, master sales, grow your team, and create a self-sustaining business with predictable income.
• 0:55
  SPEAKER_00: Whether you're a one-person operation or building a team, our mission is to give you the tools, support, and mindset shifts you need to succeed.
• 1:04
  SPEAKER_00: Let's dive in.
• 1:09
  SPEAKER_00: So, you know that private money could help you close more deals, but you still haven't raised it.
• 1:14
  SPEAKER_00: Yesterday I did a big training inside of our community around how to raise private money, where to find them, um, how the pitch works, how to overcome the fears, how the process works.
• 1:24
  SPEAKER_00: And one of the big things that I thought was surprising was a lot of folks' fear around raising money in general.
• 1:32
  SPEAKER_00: So I wanted to attack that topic today.
• 1:34
  SPEAKER_00: Most people don't necessarily struggle raising the money once they understand the process.
• 1:40
  SPEAKER_00: They just think they don't know anyone with money, which we're going to overcome that today.
• 1:43
  SPEAKER_00: Or they think, what if I lose their money?
• 1:46
  SPEAKER_00: What if I can't pay them back?
• 1:47
  SPEAKER_00: What if I'm just begging?
• 1:49
  SPEAKER_00: What if I look like a scammer?
• 1:51
  SPEAKER_00: These are all, I would say, justifiable fears, especially if you were raised in a household where like money was not a thing that you would talk about, right?
• 1:59
  SPEAKER_00: But after raising millions of dollars for real estate deals, I can tell you raising private money is not just about like convincing people to give you money.
• 2:08
  SPEAKER_00: It's about understanding the process, presenting a real opportunity the right way, and allowing the other person to decide whether it fits their goals.
• 2:18
  SPEAKER_00: And if you didn't know this, me and Josh have recently become large private lenders.
• 2:22
  SPEAKER_00: And it has been mind-blowing for me personally at how many people are submitting us really bad deals and just the lack of structure in how they send you a deal, the lack of the ability to come up with the proper ARVs, et cetera.
• 2:38
  SPEAKER_00: But I give them credit for trying to raise money for me.
• 2:40
  SPEAKER_00: That means that they overcame some type of fear and at least approach me about it.
• 2:45
  SPEAKER_00: So these are all the reasons why people fear raising money.
• 2:50
  SPEAKER_00: Okay.
• 2:51
  SPEAKER_00: One is they think I'll owe someone, especially if it's a family, friend, et cetera.
• 2:56
  SPEAKER_00: And what if I can't pay them back?
• 2:59
  SPEAKER_00: So let's talk a little bit and maybe I'll move to some other slides on the PowerPoint around how we protect a lender.
• 3:06
  SPEAKER_00: Okay.
• 3:06
  SPEAKER_00: So I think that's important.
• 3:07
  SPEAKER_00: But the only reason you would be nervous about not paying them back is if you're not confident in your systems and processes.
• 3:14
  SPEAKER_00: So if that sounds like you, I would recommend that you get coaching because there's something broken inside the operation that you yourself are not even up like confident in your own ability to perform.
• 3:25
  SPEAKER_00: And as long as you're buying it right and you've systemized how you do construction, even if there's blips that happen, it should be covered.
• 3:33
  SPEAKER_00: And in addition, as long as you bought the house right, the lender itself, even if worst case scenario, they had to foreclose on the property, at least they have a tangible asset that they can go get.
• 3:45
  SPEAKER_00: And a lot of times they still make money off the foreclosure or break even.
• 3:49
  SPEAKER_00: Okay.
• 3:50
  SPEAKER_00: The second one is I'm afraid to talk about money.
• 3:53
  SPEAKER_00: This one was me for a little while.
• 3:55
  SPEAKER_00: And what I've learned after coaching 10,000 people across the country over the last several years, guys, I've been in hundreds of these conversations.
• 4:02
  SPEAKER_00: I've trained this topic forever.
• 4:04
  SPEAKER_00: And this is a big one.
• 4:05
  SPEAKER_00: And I actually want to give you an example of something that recently happened.
• 4:08
  SPEAKER_00: I was at my lake house on Lake Erie, and I had some family friends visit who or teachers, and then they brought their kids with them.
• 4:16
  SPEAKER_00: One of their kids was like 21, 22 years old.
• 4:19
  SPEAKER_00: And ultimately she's like, Hey, like, I'm confused.
• 4:22
  SPEAKER_00: What do you guys do in real estate?
• 4:24
  SPEAKER_00: So she's asking us all these questions.
• 4:26
  SPEAKER_00: And she's like, Wait, so how much money do you make on a deal?
• 4:29
  SPEAKER_00: And I forget what I said, like 25,000 or something.
• 4:32
  SPEAKER_00: And she's like,$25,000?
• 4:34
  SPEAKER_00: And then her dad immediately shut her down and was like, honey, that's bad etiquette.
• 4:39
  SPEAKER_00: We don't talk about money.
• 4:41
  SPEAKER_00: We don't ask about money.
• 4:42
  SPEAKER_00: And I'm like, no, no, no, it's okay.
• 4:44
  SPEAKER_00: Like, I love talking about money, right?
• 4:46
  SPEAKER_00: I love talking about making it, investing it, saving it, spending it, all of that.
• 4:50
  SPEAKER_00: So I noticed in that household, there must be like a shun on talking about money, especially asking for money.
• 4:57
  SPEAKER_00: And so we have to break that generational curse, right?
• 5:01
  SPEAKER_00: I challenge you to break that curse because I doubt that you want your kids to be nervous about talking about money and how to invest it, how to multiply it, how to save it.
• 5:11
  SPEAKER_00: And so if that's how you were raised, I was raised very similar.
• 5:14
  SPEAKER_00: We have to break that curse and get comfortable.
• 5:17
  SPEAKER_00: And so I've intentionally, as I meet with friends and family and all that, I bring up money on purpose.
• 5:23
  SPEAKER_00: So that way it forces me to get out of my comfort zone.
• 5:26
  SPEAKER_00: Another big one is like why I feel like I'm begging for money or asking for a favor.
• 5:31
  SPEAKER_00: Let me give you an own personal story.
• 5:33
  SPEAKER_00: When I was, I think 25 or 26 years old, I don't remember the age, I was in corporate America and I got my year-end bonus.
• 5:41
  SPEAKER_00: And I don't remember how much it was.
• 5:42
  SPEAKER_00: Let's just say it's$8,000.
• 5:44
  SPEAKER_00: Like, you know, nothing crazy.
• 5:45
  SPEAKER_00: My cousin, who was one of my mentors and he flipped houses, he said, Hey, I want you to understand the concept of making money while you sleep.
• 5:54
  SPEAKER_00: So what I'm gonna do is teach you how to private lend.
• 5:58
  SPEAKER_00: So he taught me what a mortgage was and first lien position, promissory note, how I earned the interest, all of that.
• 6:04
  SPEAKER_00: He educated me and I said, Okay, cool.
• 6:06
  SPEAKER_00: So I took that$8,000, I signed a mortgage and a prom note, and I don't remember how long, call it four or five months.
• 6:12
  SPEAKER_00: I got the money back plus interest.
• 6:14
  SPEAKER_00: And it changed my life forever since that day.
• 6:17
  SPEAKER_00: Cause I was like, wait a second, I just made that money and did nothing other than write you a check.
• 6:22
  SPEAKER_00: And so ever since that day, that's actually what got me really thinking about real estate.
• 6:27
  SPEAKER_00: So I started buying rentals back then, and my life forever changed after that.
• 6:31
  SPEAKER_00: And so we have to remember, guys, and let's get into a little bit about like stock market versus real estate.
• 6:37
  SPEAKER_00: In the stock market, you can't, well, one, you're buying in at market value, right?
• 6:42
  SPEAKER_00: Where at private lending, you're lending against a property that was bought at a 30 to 50 percent.
• 6:48
  SPEAKER_00: In the stock market, any crazy politician can come out and say something stupid today and the stocks tank.
• 6:54
  SPEAKER_00: In real estate, that doesn't really happen, right?
• 6:57
  SPEAKER_00: In the stock market, you are not protected against anything.
• 7:01
  SPEAKER_00: In real estate, you are protected with a lien against the property where you're paid first.
• 7:06
  SPEAKER_00: You are protected by the investor having hazardous insurance.
• 7:09
  SPEAKER_00: So if a tornado hits the house, it's you're still getting paid.
• 7:12
  SPEAKER_00: But if you're backing a company in the stock market and a hurricane takes down their headquarters, you aren't protected.
• 7:19
  SPEAKER_00: In real estate, you're backed by a lending policy, hazardous insurance, a lien against the property, equity cushion because you bought it at a discount.
• 7:29
  SPEAKER_00: You can't get that in the stock market.
• 7:31
  SPEAKER_00: And so as you start to get educated around how big of a deal private money is.
• 7:36
  SPEAKER_00: Oh, and by the way, you get to negotiate fixed terms in the stock market.
• 7:40
  SPEAKER_00: You have no idea if it's gonna go up or down every day.
• 7:42
  SPEAKER_00: In real estate, you're negotiating double-digit fixed returns.
• 7:46
  SPEAKER_00: So, hey, Billy, I agree to pay you principal plus 1% a month until the time I close this property.
• 7:52
  SPEAKER_00: Okay.
• 7:52
  SPEAKER_00: And if I don't pay it, you get to foreclose on me.
• 7:55
  SPEAKER_00: Now, I've never in 10 years ever been in a foreclosure myself.
• 7:59
  SPEAKER_00: I'm also a private lender and I've never had to foreclose anyone.
• 8:01
  SPEAKER_00: So just keep in mind that is rare, but it is possible as long as you're buying right.
• 8:05
  SPEAKER_00: So we have to start reframing things in our head because people are like, I'm afraid to go to my family and present this offer to them because, like, what if, what if?
• 8:16
  SPEAKER_00: Or you could think, I want my family to thrive.
• 8:19
  SPEAKER_00: I want them to succeed, I want them to do well, I want them to have double-digit returns.
• 8:23
  SPEAKER_00: I don't want them backed by the stock market that's so volatile, especially when we're in war with Iran.
• 8:29
  SPEAKER_00: Like, guys, this is a life-changing opportunity, and we have to change that up here and change our self-leaned belief around it so that you attack that conversation with confidence.
• 8:40
  SPEAKER_00: If you think you're gonna lose someone's money, that's surely out of your lack of confidence in your systems and processes.
• 8:46
  SPEAKER_00: That's an easy gap to close by just getting coached.
• 8:49
  SPEAKER_00: Okay.
• 8:49
  SPEAKER_00: This is a big one.
• 8:50
  SPEAKER_00: I don't know anyone with money.
• 8:52
  SPEAKER_00: Yes, you do.
• 8:53
  SPEAKER_00: So all of my private lenders are everyday people.
• 8:56
  SPEAKER_00: They're corporate America employees, they're nurses, they're cops, lawyers, you know, whatever.
• 9:02
  SPEAKER_00: I'm really good at finding people who maybe recently changed jobs and have an old 401k, and I educate them on how to self-direct their 401k, lend me in it.
• 9:11
  SPEAKER_00: But guys, these are your everyday people that I personally educate about private money and raise money from them through their old 401ks typically.
• 9:20
  SPEAKER_00: So I would challenge that you sit down and write down 20 people that you know, or you might know someone of a friend who works in corporate America, is a manager, is a nurse, is a cop, you know, anything like that, especially people who have recently changed jobs.
• 9:36
  SPEAKER_00: Okay.
• 9:36
  SPEAKER_00: And I want you to realize how many people in your life who are everyday people, teachers, I have tons of teachers that private lend me.
• 9:44
  SPEAKER_00: Trying to think of, I mean, you guys get the point, right?
• 9:47
  SPEAKER_00: Guys, they're not gonna think you're a scammer.
• 9:48
  SPEAKER_00: When you handle the pitch and the process of sending them a deal packet professionally, they're not gonna think you're a scammer.
• 9:56
  SPEAKER_00: But that's not as big of a self-laying belief that I hear out there.
• 9:58
  SPEAKER_00: I don't want to be responsible for other people's retirement.
• 10:01
  SPEAKER_00: Well, do you really want to be in real estate then?
• 10:04
  SPEAKER_00: Because at the end of the day, if you're betting on yourself, then it's your job to educate yourself to feel like you're the expert in what you do.
• 10:12
  SPEAKER_00: And if you genuinely think you're the expert in what you do, you're buying right, you're starting to systemize things, et cetera, then you would want those people to allow you to have control over them getting double-digit returns versus being in a stock market where someone comes out tomorrow, we just put a bomb on Iran and boom, everything tanks, right?
• 10:31
  SPEAKER_00: Like they can't control that.
• 10:32
  SPEAKER_00: And so if you're lacking confidence in that, again, I encourage you to get a coach because there is a gap that we have to close in order for you to bring that confidence level up.
• 10:43
  SPEAKER_00: People will judge me if I ask.
• 10:44
  SPEAKER_00: Guys, I've been asking for private money for years.
• 10:46
  SPEAKER_00: No one judges you.
• 10:47
  SPEAKER_00: And I think what I'll do another video on how the pitch works.
• 10:51
  SPEAKER_00: And when you hear how simple it is, guys, you'll be like, oh wow, that was so easy and so natural.
• 10:57
  SPEAKER_00: Like, why would they judge me on that?
• 10:58
  SPEAKER_00: Okay.
• 10:59
  SPEAKER_00: If anything, they should be like cheering you on.
• 11:01
  SPEAKER_00: And if they're not, we really shouldn't be around them, anyways.
• 11:05
  SPEAKER_00: So, anyways, these are the biggest cell phones beliefs that I see in people raising money.
• 11:11
  SPEAKER_00: And then we can also talk about the process as well.
• 11:13
  SPEAKER_00: And maybe I'll go a little bit deeper in another video around the stock market versus private lending and how people are protected inside the process.
• 11:21
  SPEAKER_00: Until then, I do lots of free trainings, guys, inside of our free community.
• 11:25
  SPEAKER_00: I'm gonna put the link in the description.
• 11:28
  SPEAKER_00: I go live every Wednesday at 3 p.m.
• 11:30
  SPEAKER_00: Eastern, join the community.
• 11:32
  SPEAKER_00: I rotate topics of what is happening today in my real estate business that I think can add value to you today.
• 11:39
  SPEAKER_00: See you on the next one.
• 11:41
  SPEAKER_00: This episode has come to an end, but your journey continues.
• 11:45
  SPEAKER_00: Subscribe to the podcast so you never miss an episode.
• 11:48
  SPEAKER_00: If you want direct help from us, join our free community by visiting the results driven podcast dot com.
• 11:55
  SPEAKER_00: That's the results driven podcast.
• 12:01
  SPEAKER_00: We'll see you next time on the results driven podcast.