Epic Real Estate Investing - Creative Financing, Landlording and Raising Private Money | 1127

Episode Date: February 25, 2021

Are you ready for 3 in One? And NOPE! We are not talking about oil, nor about coffee! Today, you will get 3 EPISODES INSIDE 1! That said, Mr. Matt Theriault shares: Audio from his recent YouTube video on how to use 3-Option Letter of Intent in your Creative Financing How to become a LANDLORD PRO with Edward O’Daniel from the Veteran Landlord, and How to raise private money to invest in real estate with Jay Conner, a CEO of the Private Money Authority Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Success in real estate has nothing to do with shiny objects. It has everything to do with mastering the basics. The three pillars of real estate investing. Attract, convert, exit. Matt Terrio has been helping real estate investors do just that for more than a decade now. If you want to make money in real estate, keep listening. If you want it faster, visit R-E-I-A's.com.

Here's Matt. Hey, their Epic Investor. It's Matt Terry O from Epic Real Estate, where we show people how to invest in real estate using more of their mind than their money, using creative real estate investing strategies. The more creative you get, the less money you need. It's never a money problem, just an idea problem,

all with an emphasis on retiring early. And if this is your first time here, really glad that you found us. If you like what you hear, make sure you hit the subscribe button before you go. And if this is not your first time here, welcome back and thank you for sharing this with your friends and family. You're the absolute best.

No, the all-time greatest for doing that. So thanks again. All right. So I've got three very exciting guests for you today. One will share their secrets around raising private money. The other about their secrets of being a landlord today. And the third to share his creative financing strategies that enabled him to retire from real estate in less than 18. months.

All right? So first, though, in the news, COVID's back in the news. It hasn't really left. Depends what new cycle you're in will determine how much coverage it gets. But good news. The FDA said Johnson and Johnson's single dose coronavirus vaccine is safe and effective. That's a good sign. And that's ahead of tomorrow's meeting to discuss whether to approve it or not.

But meanwhile, Moderna will begin clinical trials of its new vaccine, which is designed to offer better protection against the highly contagious variant B-1-351. And let's see, what else? Oh, also with Johnson Johnson adding 20 million more vaccine doses next month, this U.S. will be able, or the U.S. will be able to fully vaccinate 130 million Americans by the end of March. That's per Bloomberg. So that's good news. And with all that said, though, it doesn't look like we're going to ever really discuss a healthy immune system, does it?

We're just going to let this fly right on by. It's going to be masks and social distancing and washing your hands and that's it. Anyway, we're going to discuss it here. Get your exercise in, eat well, and get plenty of vitamin D, C, and zinc into your system on a daily basis. Studies show it will not prevent you from getting COVID, but the studies do overwhelmingly show that a healthy immune system minimizes symptoms, speeds up recovery, and keeps you out of the hospital. That's what the data says. That's what the science says. It's the real science.

I don't know why they're keeping this science away from us. But they are, but I'm here to make sure that you hear it. And I didn't make any of that up. That's all certified studies. We've referenced all of those studies in the past. And just exercise, just eat right. And take your vitamins, especially that vitamin D thing. That's the big one right there.

All righty. So let's see, markets, the stock market specifically. Stocks love language is Fed Chair Jerome Powell saying he's not anticipating higher inflation anytime soon. Energy, industrial, and financial stocks powered the Dow to a record high yesterday and seems like it all came shifting down today. And it was download two days ago. It seems very volatile in the stock market right now. Everyone's trying to figure it out. I think we all know or we can sense that we're on the verge of significant change. We're just not sure which way it's going to move. And other investment news, this year, NFT went from

an NFL spelling error to the business world's busiest acronym. What is an NFT? Have you heard of this thing? It's pretty interesting. It's a non-fundgible token, meaning it's a unique token. They're distinct, easily verifiable digital assets that can represent items from virtual real estate to cherished moments in NBA history.

In other words, owning an NFT, is owning a piece of the internet and some examples. It's been applied a lot to artwork lately and design stuff like that. It has a lot that's been really kind of popular inside of the gaming arena. But Nyan Cat, the decade old rainbow cat meme, sold for about $580,000 last week. You got that? The digital meme sold for more than a half a million dollars. And it lives on the internet.

You can't like hang it on your wall. A video of LeBron James Dunking raked in $208,000. And then three LAU's newest music album featuring a song, The Buyer Can Creatively Direct, goes on sale today. So this NFT market is, as they say in professional circles, blowing up. It tripled in 2020 to $250 million, according to emerging tech brew. and NBA Top Shot and NFT Marketplace for Basketball Highlight Reels just cleared $95 million in sales in seven days.

I'm still trying to figure this one out. You're like, you're owning this stuff on the internet. So it's like it's on the internet and you own it. And it somehow has millions of dollars of value. Maybe I'm just getting too old. Maybe you understand this. But more to come on that for sure. I got into crypto a little while ago a couple years ago.

and that was all based off of fear of missing out. And it turned out, I didn't miss out on a thing. I actually did very, very well for myself over the last two years. And I'm just kind of looking at this NFT thing. Like, maybe this is something else. I don't know. But a lot of words that I don't understand and a lot of prices, though, I do understand. So I got a little bit of FOMO creeping in here too.

So I'm going to look deeper into that. And if I find anything interesting and worth sharing, I will. So yesterday morning, electronics chain fries announced on its website that it will shut down and close all of its stores. I don't know if that's a West Coast thing. I'm not sure if they're a national chain. But fries electronics, I'm kind of sad about that. It's one of my all-time favorite stores. It's just a ginormous store with just electronic anything.

I mean, from entertainment stuff to home, good stuff to it's just everything. I love that store and it's sad. They just apparently fell behind and did not embrace e-commerce as quickly as the best buys of the world and the Amazon's of the world. So poor guys, say goodbye to them. Postmaster General Lewis DeJoy said the postal service was in a death spiral and needed financial help during testimony on Capitol Hill yesterday. He also apologized for delays in service. Real estate news. Let's talk some real estate.

U.S. home prices jumped 10.1% in December, their biggest monthly gain since 2014. You got that? They jumped 10% in one month. Their biggest monthly gain, and that would be what, seven years, according to S&P CoreLogic Case Schiller Index. The hottest real estate markets, where do you think they are? Phoenix, 14.4% price growth year over year. Seattle, 13.6% growth year over year. in San Diego, 13% growth year over year there.

Prices also jumping in more unexpected places, homes in Atlantic City, New Jersey, which has fallen on some tough times since Nucky Thompson roamed the boardwalk. Saw a 30% bump in fourth quarter 2020. As the Wall Street Journal reports, the pandemic has accelerated the city's shift from gambling resort to livable seaside community. And if we zoom out a bit, a mix. of historically low interest rates, the pandemic pushing people out of small apartments and an inventory squeeze have juiced prices to unaffordable levels for many potential homebuyers.

In the past week, mortgage rates have shot up with bond yields, but they're still well below last year's levels. And lastly, starting March 2nd, that's this Tuesday, depending on when you're listening to this, the Legends Challenge returns to help you get a signed contract in 10 days or less. And what this is all about, I'm getting together with a small group of investors starting Tuesday to close an extra deal for them each this month. That's the goal. And if you'd like to join us, you can. We're going to be meeting two days a week for three weeks, live over Zoom video conference as me and you. And if you want to jump in, I'm going to be showing you exactly what to do to get leads, to get contracts, or both. Essentially, you'll be looking over my shoulder as I walk you through every step of this process, keeping it really simple, very fun. So you'll actually implement and leave this challenge with a new skill you can benefit from forever. So I'm going to teach you this by demonstration. There's not going to be any theory, no long-winded filler or any outdated junk that doesn't work anymore.

And not only will I tell you exactly what to do and how, you'll literally see me get leads, contracts, or both in real time. It's like we'll be sitting right there side by side working on your real estate together. So I'm going to show you everything you need to know. I'll give you everything you need to do, including what to say, what to type, to target. I'm going to give you everything. So if that sounds like it's something up your alley, go to the legends challenge.com. We get started on Tuesday, but registration is open right now. So go to the legends challenge.com. All righty-a-A's private client, he shared his creative financing experience recently on the Epic YouTube channel that you can find by just typing in

EpicREI.tv into your browser. That'll take you right to our YouTube homepage, Epic rei.t. TV. And in case you missed it, I went ahead and ripped the audio for you to play it right here. I think you really enjoy it. Private REI Ace client, Josh Miller, sent this rejection letter in the mail to 1,103 unmotivated sellers in a 12-month period, and it resulted in 55 extra deals. And I'll walk you through step by step how he used this creative financing tool so you can use it in your market. Let's go. Hi, my name is Matt Terrio, CEO of Epic Real Estate, where we show people how to invest in real estate so they can escape the daily grind and retire early.

This is Josh Miller, a private RIA's client of mine, and he attended one of our Epic Intensives a few years ago when he was dabbling with real estate on the side of his corporate job, and I showed him one of the creative financing tools that I used to acquire most of my real estate investments without ever needing a bank or even my own credit score. The creative financing tool was this letter, the three-option letter of intent. And I've used it for more than a decade as a negotiating piece with sellers and as a blind marketing piece. But Josh used it in an entirely different way as a rejection letter and achieved his own

spectacular results. And if you'd like to hear it from him and how he was able to pull off 55 extra deals in one year doing this, let me know by giving me a thumbs up. So Josh, when we first started working together and I showed you a little, you a little bit of the three-option letter of intent. What was it about it that it originally resonated with you? Honestly, like, I didn't know any better. So I was just following your instructions and you said to do this. So I was like, okay. And I started doing it. Got it. So when we met, you had already been dabbling a little bit on the side and you were working a full-time job. And what problem were you looking to actually solve?

And how did you see this rejection letter fitting in? I wanted more deals. Like clearly, I wanted more deals. And, you know, I had been working with you closely saying, hey, here are my numbers, here are my stats? And one of the things that you brought up was, well, are you using this LOI letter? It's on the checklist of things to do. And I said, no. And so you said, do it. And I did it. So it was ultimately to get deals to, you know, to make more money. Perfect. So if this would have helped you get more deals, what would that have meant to you professionally? Yeah. So at the time, I was still working a full-time job. and I really wanted to be out of the job. I was also, I had, you know, a certain goal I was trying to reach as far as profitability.

So I could, you know, eventually someday retire and get the number of rentals that I wanted. And this, you know, this, it was all about, okay, hitting that passive income so I could live the life I wanted. Yeah, I would say the one thing that helped more than anything was, yeah, following your instructions and using this letter. Great. So I really appreciate that. And it's always nice to see people actually go out and do what they've learned to do. But you did put your own little twist on it. You didn't do it exactly how I told you to do it.

So can you just kind of walk me through your process and how you use this rejection letter? Yeah. So we sent a lot of letters out and took a lot of time from my acquisition managers and my lead managers running the numbers. But essentially the way it worked is when we got a solid no from a homeowner where we presented them the cash offer. We tried to show them why we would be the best solution to help them. And they still said, no, like, nope, I'm not interested. I 100% reject your offer. Go away. At that point, once we got to go away is when we would send out this letter saying,

okay, you told us to go away on this cash offer. But what about the second finance option or this third finance option? Maybe one of these will work for you. So over that time, how many of these rejection letters do you think you sent out? So many. And, you know, my acquisition managers hate me for it because they spend so much time putting these together. But, you know, it obviously works. So during the first year, I know we sent out 140 letters. And from those 140 letters of people that said, no, 100% go away. From those 140 people that we sent it to, we got 55 that we ended up closing the deal. maybe not that first day, but months and months down the road. Whoa, hold up, right?

Well, Josh is not a speaker or a podcaster or a YouTuber. And he admitted before we started recording that he was a little nervous, so much so that he misspoke here. And he sent me this text message almost immediately after we finished recording. I am an idiot. I said we sent out 140 letters of intent, which was stuck in my head, but we sent out 1,103. Ha ha, no idea why I had that 140 in mind.

Do we need to redo or does it not matter? Still, crazy numbers, though. And he did ask me if I wanted to re-record the interview and I was like, nah, it's cool. I'll clear it up. So those are the actual numbers. 1,103 rejection letters sent. 55 extra deals closed. I find that remarkable because, you know,

when you shared that with me, I was like, really because I've never used it in that fashion or to that much consistency in the way that you did it. Why do you think it worked so well? I mean, particularly after all these people flat out said no to you. Well, I think there's two things. I think the first is, especially with outbound marketing. So whether you're cold calling or using direct mail or texting, you're not necessarily hitting these people at the right time. And so because it's not the right time for them, they need something to essentially for you to stand out. because they're constantly getting hit by tons and tons of people. So who do they go to?

Do they go to the latest person that just hit them? Or do they go to the person that they worked with six months ago that actually gave them a good solid, you know, options with different letters? And I'm following up on that. And so it's not that it just, it really, really helps on that follow up to actually call that guy up and say, hey, Mr. Jones, how, you know, let's talk about those offers, I think. you. So that's part of it, part one. And then part two, I think, is what other wholesalers are

offering, you know, sometimes full asking price and saying, hey, I'll give you exactly what you want, exactly what Zillow says. Yeah, there's going to be some terms associated with it. And no one's doing it. So it makes you stand out. And yeah, at the end of the day, they may not go with those, but you're the only one giving them that Zillow, magical Zillow number that they're so looking for. Of option one, two, and three, and you got 55 deals out of that, which one do you think came up more commonly? Oh, 99% of them would call back for option two or option three.

Yeah, absolutely. We'd almost all of them, though, we'd end up selling with a cash price, the option one. I would love to go on and more of those seller financing deals and 0% interest, but it just doesn't work for everybody, especially when people have mortgages and everything else. But it's amazing how it opens up the door and allows you to work with that person and help and realize, like, yeah, maybe that cash offer at 70% is the best option for you.

They actually called back interested in option two and three, but ended up closing on option one, the all cash offer. Almost always, yeah. So in hindsight, how important do you think this rejection letter was to your real estate investing business? I mean, it was everything. Honestly, it was a reason for my success. I mean, it was a reason that we got so many deals, not just that first year, but it

continues to work. And everyone talks about how, you know, the marketing and all of that, but really, the magic is in that lead follow-up. And I can't think of any better form of lead follow-up than this. There's nothing compares to it. Well, thanks, Josh, for taking this time out of your day. And, you know, at the end, I'll let people know exactly. what you're up to now.

So if they want to align with you or reach out to you, they'll be able to do that. Cool. Yeah. No, I love this L.O.I letter. Like, whether you're doing one deal a year or a year, it doesn't matter. Like, you should be using this. So, uh, owe it all to you, Matt, like this 100% got this from you and really appreciate it. So thank you. Perfect. Take care about talk to you. See it. So this letter obviously was a game changer for Josh. And it can be for you as well. And to explain a little bit more of how it works. Look no further than the title of the the letter. It's a letter of intent to purchase real estate in one of three different ways. It's not

a letter of obligation. It's a letter of intent. It's kind of like three different types of potential offers in one. And there are no rules other than this. As a real estate investor, you want to buy properties in one of two ways by either your price and the seller's terms or the seller's price in your terms. As long as you can control one, you can always make a deal for yourself. With the logic being, if you want a super discounted price, you'd likely be expected to close quickly. But if the seller wants a higher price, then you'd propose a longer term to pay it, like some money now and the rest later. In its simplest form, that's how it works. Now, a property owner can sell their property in any way that they want, even for a plate of hot wings if they wanted to, or a pen of goats, or a bucket of baseball.

I mean, you can offer whatever you want. and the seller can accept whatever they want. So price and terms can be anything, limited only by your own creativity. So here's the typical way that I structure these three different options. I don't use chicken wings, by the way. Option one, a deeply discounted fast cash offer. Somewhere typically in the realm of 60% of market value.

Then option two is a seller-financed offer, somewhere typically in the realm of 80% of market value, offering a small down payment, and then the same type of traditional financing terms you may see a bank offer. And then option three, another seller financed offer. Some were typically in the realm of 100% of market value and sometimes even more. But the financing terms are more of an unconventional nature incorporating principal-only payments to the seller.

Anyway, I've used it mostly as a negotiating tool. A couple of years ago, I started to send it blindly via direct mail as a marketing piece. And Josh used it, as I do most certainly now too, as a follow-up tool that he sent to everybody that ever rejected his discount cash offer. Thus, the rejection letter. So it has multiple uses, all of which have proven effective. Okay, with over 12 years of experience, our guest has developed a deep understanding of the real estate market and developed strong skills and property development and management. and he knows what it takes to grow and protect a real estate portfolio. And his clients are confident in his ability to lead them through every step of strategically managing their portfolio.

And when he's not working with clients or students, he's connecting with his community by volunteering at church and spending time with his family. Great overall dude. So please help me welcome from the veteran landlord, Mr. Edward O'Donnell. Edward, welcome to the epic real estate investing show. Thanks, Matt. It's great to be here. Yeah, good to have you. We met recently in St. Louis and you do property management there.

And I want to talk all about that. And then you do management and you teach people how to manage their own. But take me back a little bit. What were you doing just before you got into this? Got into what exactly? Matt, real estate or? Yeah, property management. Yeah, yeah.

Well, property management is actually how I got into real estate. Okay. 2005. It's sort of my very first deal. I wasn't a wholesaler. I wasn't a rehabber, kind of like we do now. But, you know, just went straight. into rentals. So we had a good paying W2 job like I know a lot of people out there have and

they just wanted to achieve that financial freedom and that passive income. So we had some money from actually a refinance we did on our house. We had I think about 35 grand or something sort of in cash back from that that we took and we wanted to find a place for it and we're like, hey, you know, I think I had probably the year before I'd read the rich dad poor ed book. I kind of convinced the wife that this would be a good fit and then I would handle all of it. So that was our first acquisition. Actually, we lost money on that acquisition. But sucks. I know not a lot of people like to say that, but that was the price you paid for your education, right? Yeah, exactly. I mean, 2005, if you remember the market, it was high. You know, you were like the market is right now.

And you're paying a premium for properties. And, you know, people don't tell you that. They don't tell you what to look for. And I didn't have the education. So yeah, exactly. I paid for it one way or the other. Right. Cool. So it started with the one property. And then what did that, that, that, that transition look like from you leaving that day job to becoming full-time real estate guy well eventually um i have a i was an i t guy so i mean i i spent the world in i i did as much as you can had every certification and plaque probably that you could have i've got a lot of IT people listening to this so i already know that this is going to resonate exactly i was certified this and certified that um but bottom line it comes down to is in IT you're eventually going to hit a ceiling and that ceiling is that you know

IT is one of the most highest paid people in companies. So when companies start dropping people, you know, IT people are the ones they look for. You know, can I drop this guy and hire two more to replace them? Kind of the thing. Now, that wasn't my situation. I actually left voluntarily, but I just got tired of trading my time for money. I wanted the freedom. I did have an entrepreneurial spirit.

It's just unfortunately I was at the time, my wife and I had two smaller daughters. You know, you kind of like that stability. So whenever I finally got to that transition point, tipping point, where we had enough in savings, retirement, and we had a plan, I kind of quit the full-time job and opened up to actually the property management company. A lot of my friends were just complaining on how badly property managers suck. And I just said, you know, that's interesting because I don't have that problem with my rental properties. Now, granted, I struggled for many years until I got up to that point. But they're like, hey, you know, why don't you just manage my properties? You know,

you're talk to talk, walk to walk. So that's kind of why I started my own brokerage here in St. Louis and developed St. Louis property management and just started managing rentals for other people, mostly out-of-state investors. Got it. All right. So how many, that was back then, how many units do you have under management at the moment? Right now, I think we stabilize right around 140. So we have about to select 45 or so clients that we manage it.

We're just slowly kind of picking up clients. The clients are very important to us. And we really want to make sure we can work with people, that people have the right mentality of what it means to own rental property and for us to be the property manager to do it effectively. So we've just been acquiring clients slowly but surely, but just been cherry picking the ones that we want to work with. Yeah, I think that's wise being able to select your clientele, especially in this business, because there's all kinds inside of real estate on both sides, right? Well, and I've taken on clients and I've wasted a lot of my time.

and a lot of my money having to service them only for them having the wrong expectations. They get into the game and they have the wrong expectations about cash flow, about buying rentals. You know, St. Louis is a great rental market, but they just don't have the right expectations and that kind of butts heads with our sort of core beliefs that we have here at a company. Got it. What are your core beliefs? I knew you were going to ask me that here. Well, you brought it up. Now I want to know what is a property manager, actually believe. I mean, yeah, I know I should probably know these here.

I'm trying to pull up this file. It's right here. Okay. It's, what am I doing? Right now, we're pretty much client focus. I mean, we want to make sure our clients make money. We want to make sure we increase the income as much as we can, keep the rents at market rate, charge people for what we can charge them for, to optimize the income and reduce as much expenses as we can for the client. But overall, our first loyalties are to our clients.

You want to make sure that they're successful, that they make money because if they don't make money, then they can't afford to do anything with us. And they probably aren't going to buy any more properties. And eventually, they're probably going to turn around and sell their properties and we're going to lose them anyway. Right, right. You know, I always say that you want to do as much due diligence on your property manager as you do your cash flowing properties. Because without the management, those properties don't perform, right? And one thing I've noticed, and being a, I mean, I've got, shoot, that probably almost give or take a few, 50 properties right now, rental properties.

And I've got to love, hate relationship with property managers. The, I've gone through a lot of them. And I'm going to ask you some tough questions, all right? I'll be honest and up front. Okay. What can I answer for you here? Beat up the property manager. Beat up the property manager.

You had no idea you're going to be ambushed, did you? No. But what I notice is with property management, it's a lot of thankless work, right? Because you don't really hear from your clients unless something's wrong. I don't know if you get too many calls with a great job this month, Edward, and collecting the rent. But you don't do you, right? Okay. So it's a thankless job.

It doesn't pay a whole lot either if everything goes right. And what I've always kind of found and what I've recognized over the years now with my hundreds of units now in my history is, how they align the incentive for the property owner and the property management are kind of out of sync out of alignment because if everything's going well, that's when you, Edward, make your least amount of money. And if things go bad is where you make more money. Right. So how do you, being a business owner and you're not a not, I mean, you're a for profit business. How do you manage that? I would actually disagree with you. Okay. I'm a little bit. I hear what you're saying, but making more money means that you're doing more work.

So ultimately, when you say what's being profitable, it's better for us to actually keep tenants in there, to keep the property functioning and just renew, renew, renew. That's still a better business model for us than putting people in and renting it because a lot of people don't understand that the back end behind property management, what's involved with it. You know, and I know it's not the same here in all areas, but when a property goes vacant, there's a lot of things that we have to do. There's a lot of foot on the ground we have to do, communicate with the tenant, get them out, do the sort of exit walkthrough, evaluate the damages.

There's lots of stuff there. Then we have to get the unit turned back over to get it refreshed up. And a lot of times, you know, we have a certain spending limit that we have. And in my company, it's $300. But anything more than that, which make ready is going to be, we get a bid. We present that to the client. We get approval for what's going to be done. They transfer the money to us and we begin the work and we pay the contractors whenever

the work has been visually verified that everything is done. Our contractors really don't require any money up front because we have such a great relationship for them. They know that when it gets done, we're going to pay them. But there's a lot of work involved with that. So, you know, you're doing all that. And yes, you'll end up getting the first month's rent for leasing it up. But to be honest, I don't want that money, you know, as a business owner.

much rather just keep somebody in there and keep them happy because the model that we have we're still able to make money stay in business and service our clients, but that's the exact same model. It's whenever our clients lose money whenever we go through that particular process. That's why we don't like to go through it. When I have a vacancy, there's vacancy costs, there's going to be a make ready cost that we're going to have to do, our time involved with it, all the things I just talked about. Our average time is probably somewhere between 30 and 42 days. By time a unit gets empty and by time we actually put physically a person in the unit. And, you know, that depends on what time of the month, you know, that stuff goes vacant and

things like that as well. So that, that varies. But I would much rather keep people in there. I mean, myself. Now, I know a lot of things, a lot of the common complaints I hear is, well, isn't it your best interest to turn that property over? Because then you'll get another lease fee for it. Well, yes. But then we have to do all of the work involved with it. Now, not in every area, but in St. Louis, and I'm sure you know this, Matt, we have to get inspections. We have something called an occupancy inspection, which they have to come verify the unit first before we can get stuff done. That really slows things down, too. So we have to get that done.

Sometimes that could be a week or 10 days out from the time that we're actually scheduled it. So now we're waiting a week or my client's losing 25 to 30 percent of their monthly rent, just waiting on an inspector to come out to give a thumbs up if we can put a renter in there. Now, we're trying to rent it all at the same time, but there's a lot of stuff that happens behind the scenes. But to be quite honest, I would much rather have the latter or the previous one we talked about where people stay in there and we just make our management fee. We handle basic maintenance and just keep the tenant happy because if that's the case, then my client is getting a renewal. They're not experiencing that vacancy, that make ready costs and everything else. They don't have to go through that. So all of that costs that would generally incur yearly or even every two years,

if we can extend that to three, four, five years on the lease period, that means our clients are making a lot more money. And all that means is they want to buy more properties because now they're making more money. And of course, because we're such a great property manager, they're going to want us to take care of it for them. Right, right. So good. So you're one of the good ones.

Let me just tell you that. So that's good. I mean, we try to minimize expenses. with our clients. Now, at some point, this is the problem that I, that I told you earlier, some clients buy properties with a lot of deferred maintenance. Then they expect it to perform. I mean, you just can't have a, you know, you just simply can't have a, whatever, a Mercedes and no pun intended with your wife, but I mean, just, you can't have a Mercedes car and just have junk oil and junk fluids and expecting it to, you know, junk gasoline, expect it to perform.

Right. The way it is. You just can't have that. So if the property is fixed up, which is what we do, we go in there and we get all that stuff fixed so that maintenance is minimal. That might take a little bit of a hit initially, but once we do that, the tenant's happier, maintenance costs go down, and then it becomes easier to manage it, and our clients just get paid every month, which is the end goal. That's what they want. They want their check every month, minimize maintenance. Now, Matt, earlier, you said that, you know, do you get a call every month saying congratulations, thank you so much? No, we don't get those calls, but I actually, it's kind of funny. I actually like it when my clients don't call me back. Because when my clients don't

call me back, it tells me I'm doing my job. Because I'm communicating with them. I'm giving them an update. Hey, this is what's going on. Hey, you know, COVID's happening. The tenant's a little bit late. You know, here's the plan. We're doing this, that with them. That's it. And because I give them enough information proactively, they don't have to come back and ask them questions or be worried about what's going on because I've already answered their objections before they even get to them. So they don't even, they might reply back and just say, thank you for the update. But that's about as, that's about as much as I get. Fair enough.

Let me ask you this then. Because like I said, you're one of the good ones that you're not the majority, at least from my experience. I mean, I went through the whole city of Memphis and decided just to leave because I couldn't find one. Right. I mean, I've worked with probably six different ones in Memphis before I was like, okay, I give up. I think I had a very similar experience in Cleveland as well. And St. Louis is a similar type of market as those as far as the price to rent ratio. And so let me ask, let's do it this way.

If you were going to a different market to look for a property manager to manage your properties, what were the some of the things that you would look at to determine whether this was a good property manager or not? What types of questions would you ask? What would you look for? Well, the first thing I would do is just the oversurface Google due diligence. Okay. Do they have some form of credibility? I know this is going back to sort of Internet 101 basics. Does the company have a website? You know, are they technology driven? Because in this world, they have to be technology driven. You can't have a mom and pop who still write everything down and pencil and paper in a journal. They are not going to be able to give you the information they want in the time. They have to have a technology, a set of tools and processes that will make managing your property much easier for everybody. So that's the first. Are they online? Do they have a Google My Business listing? Do they have reviews, positive or negative? What are people saying about them? You know, can you even get a referral? Do you have anybody in that

market or some influencer, realtor influence or something like that that may be able to at least point out some high level people that she knows, you know, some good referrals. And from there, you can just drill down into giving them a call. Of course, doing like the secret shopper type set up. You know, what do you charge? How do you handle your price? How do you handle your price? processes, when do you do evictions, all these type of stuff. The property manager really should be able to answer those questions on the spot without even blinking. And I've had phone calls like that before. And people are just very impressed because I tell them exactly the way it is, good, bad or ugly. This is how we do things. This is our process and procedure. If something happens,

I'll consult with you, but this is how we do things. And is there anything else? And I'm just completely upfront and honest and transparent with them. And another thing is that they need to make sure that they're completely transparent financially. Meaning, do they send you owner statements every month? You know, are they on time? You know what I mean? I know you probably couldn't determine that unless you're a client, but just asking their policies and procedures. But financing is another big one.

Do you send out statements? Is it clear to read them? Do you send invoices with the work that gets done? So you see that somebody didn't, you know, bill you for 80 and you built somebody else 140, or something for it and you're trying to mark stuff up like that, just be completely financially transparent. So speak to them and just go with your gut. If you feel like somebody's like,

well, let me check into that and I'll get back to you. Well, I'm not sure about that. Let me do this and I'll get back to you. They're not going to be a good property manager. Because if that's the person you're calling to and you're a new client, then that company did not do a good job with setting you up with the right person that can ask the questions because that's every time I get those calls, these are the questions we're going to get asked.

What do you charge? How do you do this? What do you do for that? And I simply explain our process and procedures. Here's our belief. We believe in providing good housing for people. And in return, we expect them to take care of it. And if they don't, we will charge them for the repairs that they have.

And that shouldn't be your expense. But that's our job to maintain that relationship. Make sure they feel safe and make sure they just renew. Keep paying rent and keep seeing your unit. Where do you, you know, sign right here. sign up right now. Right. Super.

So you might have said it, but aside from the lack of Googleness and the lack of technology, there's some things that you could recognize right away that would be deal breakers, whether to not work with that property manager or not. Well, I guess one deal breaker would just be their response time. Response time. If you're communicating with people, now I'm not going to. say that every property management company is going to be able to answer something live for you. Most of the time, if you're going to speak with a property manager, they're not going to be

readily available to sit back and answer your phone call. I'll just let people know that right away. Sometimes they are, but a majority, you're going to have to leave a message for somebody. I'm interested in your service. Please give me a call back. But the response time, do you get a call back in the same day, you know, within one business day, something reasonable that or do you get a call back a week later? Yeah, I got this message on my desk. And, you know, you know, just kind of calling you back and seeing what you want, that probably, you know, that's probably going to be a red flag. You know, if it took a week for them to call you back and your new client, imagine if you're a

client, you know, how long are they going to take you to call you back then? Yep. Yep. That's one of the things that we have on our property management checklist is we'll call and leave a question on the voicemail after hours to make sure we get the voicemail. And we'll see how long it takes for them to get back to us. All right. I like it. So I'm a big advocate. kit and I've got a bunch of rentals myself and that's what we promote here mostly. Flipping and wholesaling is all a means to the greater end of creating the passive income is my perspective on it. So property management is just such a huge, huge thing.

But some people do get kind of concerned with the expense that's involved and I can take a part of my rent and I can do it myself. What type of person should manage it themselves and what type of person should delegate? Is that a good question? I'm not sure. No, I completely understand. And it really comes down into, are you an investor or are you a landlord? I mean, that's really a question that you have to decide right up front. You know, it's almost like intro into property management. Is this something that you want to be completely passive about or is this something that you want to be active in?

That mean, that's, that's really about it. An investor, you know, they buy real estate like they're buying stock or buying something else. It's strictly an investment, a place for them to put their money. they do the numbers. Here's the number coming in. Here's all the other expenses. Here's the number I should be coming out. There's a percentage interest rate and I'm good to go.

I just need somebody to handle that. I'll pay somebody to do it. Somebody else, they're a little bit hands-on. They're the kind of people that don't like to pay somebody to do something when they feel they can do it themselves. Those are the people that are going to be self-managing. Those are the people that really want to just sort of, I kind of just say, go over with a sort of a baby diaper and just rub their house and just want to make sure they give it lots of

love and everything like that and they're just going to take real good care of it. But I mean, I would just say that's the biggest differentiation. You know, are you an investor or are you really looking to be a landlord? Because you need to make that decision up front. I mean, there's several other decisions you need to make getting into rental property, but that's going to be the first one because that will take you down a whole completely different path of how you do things. Because what I find as investors, they want to be. to buy the turnkey rentals. You know, the stuff that your company sells and they want to buy to just, hey, it's already one and done. I buy it, write a check. Next month, I start getting a

return. That sounds good to me. Let's move forward. Let's get it done. The people who want to be the landlords, those are the people who you have probably maybe even in your wholesaling a rehabing course where, hey, I'll find the property. I've already got a system set up. I'm going out and talking to people instead of me wholesaling this property. I'm going to cherry pick this one, move it over here, and I'm going to do my own rental rehab and rent this one and take care of this one myself because they already have the underlying structure to do so. Right. So that's kind of what it is.

The investor, they don't have the infrastructure. They don't want the training. They don't want to know how to acquire property, have to deal with rental analyzers and everything else to really make it complicated, meet with people, get contracts. They don't want to deal with that. Right. People who are landlords, they want to be sort of in the know. I'm going to be closing on this. I'm going to be doing all this stuff to it.

And here's all the things we're going to do to it moving forward. But what they find out is that that turns eventually into a job. Yeah. You know, so, I mean, you keep growing. It becomes a job unless you have good systems put in place that at least help minimize that. That's a lot of what we talk about at the veteran landlord.com is how to put simple, low cost of free solutions in place that's going to help landlords grow their business. And eventually maybe, you know, once you acquire enough units, move to the point where you can hire your own.

management team, in-house management team through virtual assistance and things like that to actually help run your property on a day-to-day basis so you can go take a week-long trip and know that the maintenance and knowing that all the other stuff is handled every day. Right, right. Well, good. So speaking of veteran-landlord.com, veteran, you were in the service, I presume. Retired Army. Army. I'm so sorry about that. I know. I know. I saw the haircut and I was like, Oh, high and tight. He might be a Marine. Might be one of the good guys.

You know what? There was a Marine told me a joke once about, you know, do you know what Army stands for? Is that a common Marine joke? Probably. It's been a long time, but no, I don't remember it. No, it's just like, you know, hey, do you know what Army really stands for? Ain't ready to be a Marine yet. I like it.

I think I want to write down. I have never heard that before. That was a good one. Anyway, thank you for your service. I appreciate it. So what do you do at veteran landlord.com? That's not the, that's not St. Louis property management. No, veteran landlord is just more or less.

What I've got into is I love taking care of our clients, but there's a lot of people that I meet locally here that come up and talk to me as I speak at local rea group clubs. And I try to help people out because I told you on that first deal that I did, I lost money on that deal. And I lost money because I didn't buy it right. I didn't take care of it right. I didn't prep the maintenance.

There's lots of, without going into a ton of, But there's a lot of stuff in there that I didn't do. I didn't know how to find a tenant. I didn't know how to screen people. There's just all the things involved with being a landlord. I didn't know what I didn't know. Just said, hey, let me just wing it.

I'll just buy it and, you know, we'll put it for rent sign and throw something on Craigslist. And you know, we'll move them in. Yep. But yeah, that can really come and bite you, especially if you had a bad tenant that's taken advantage of you, which I have. And, you know, how could I prevent people from doing that? Well, I keep getting tired of seeing people get into the real estate business, only get out of it a year or two later after they've had their teeth kicked in because they didn't know what they didn't know. So being a landlord is not difficult. There are several things that you need to know.

I categorize them sort of in five key areas. But that's kind of what I teach people at the veteran landlord. But I just have a ton of free stuff out there that people can log in. It's a membership site. Just create a membership. it goes into all these things from marketing to leasing to maintenance to how do you handle your finances and how do you handle your legal legal is something that's not very sexy if you get forgive the expression but people need it they don't understand that you can get sued with fair housing law

if you say something to the wrong person and you can mean it innocently enough but that one comment you're a property owner now they can sue you for discrimination and now you've got a lawsuit and that's an easy way to get out of the landlord business. But you get sued because you advertise and had the wrong content or copying your marketing, put the wrong thing in there. And just simple things like that, I hate to see people shoot themselves in the foot right from the very beginning because they didn't know what they didn't know. So I just wanted to create something for them.

And that's why I go on podcasts and I go on speaking events and I just talk for free just to help people out across the country because it's what I'm passionate about. I love helping people succeed in rental properties. and achieve that financial freedom. Nice. Appreciate that about you. That's good. Coming out of 2020, a year like none of us had ever experienced.

What surprised you most about 2020 with regard to your business? How many people will actually do the right thing and contact you or communicate with you to make payments on their rent even though they're financially struggling? Most of the common people think with COVID, oh, people are using this as an excuse not to pay. They're going to use this as a way to get over on the landlord. And we can't kick them out and all this other kinds of stuff. But I think if you choose the people correctly and you have good communication with them, meaning you treat people with respect. You don't treat them like you're less than me and you're my tenant.

And I'm going to squash you like a bug if you don't do exactly what I say. Just treating people with respect, people will then in turn respond with that respect, just saying, hey, I don't have this. I don't have it. Here's what I can do. We'll work out payment plans with them. Just how well people are able to communicate with us. Now, you have a fair amount of people that did not communicate with us.

And, you know, of course, we have to go down that road of being a little bit more aggressive with them. But I was just really surprised at just how many people were affected, how many people did the right thing? Because several people just, they said, hey, I'm not going to hold you up. I'm not going to live here for free. But I don't feel comfortable with this. I'm just going to move out. I'm going to move out and move in back with my parents or whatever because I lost my job and I just, I don't want to sit here and be that burden to you. So, I mean, people think that's a bad thing, but it's not.

I mean, that's terrific when somebody just moves out and gives you control of the property again. Yes. That means you can rerint it, you know, versus having somebody stay in there and not pay rent. That's the thing that sucks. But anyway, that's one of my biggest takeaways from 2020, just how good if you have good tenants and you choose them correctly, how they'll work with you. and do their best to pay the rent and do the right thing. Yep. I was totally blown away by that myself.

And all of as many real estate investor associates and peers that I have, that was a common consensus of like, you know what? I'm not really pretty much 90, 95% collected on everything for Mercedes and myself. We only had one person. And that exact scenario, you know, they volunteered to move out two months after quarantine. and says, I'm going back home with my parents. That was the exact same scenario and left the keys and left it in great shape. And we found a new tenant very, very quickly.

We haven't had an issue since. So I just got off the phone with somebody saying that California just extended their eviction moratorium a couple months or into June. And I think nationally, it's still March 31st, but there's a lot of press just in the last 24, 40 hours of landlords going through and proceeding with the eviction. the eviction process. What is the current state of affairs right now and what do you see and say over the next six months? Well, let me comment about one thing first here.

I'm a big proponent of I try to work with people to get moved out versus evicting them. I would much rather do that. I would much rather just have an intelligent conversation, intelligent and respectful. Here are your options. You know, I don't want to evict you and I know you don't want to be evicted. Move out next week. Give me the keys. I won't come after you and we won't do this.

If that's the case, then we'll let you go. But you know, you need to do it quickly. I can't leave you in here for six more weeks to do this. So if that doesn't work, we can definitely go through and evict people. Now, we personally, ourselves, we've been dealing with probably 10 or so people out of our unit. So about 10 people that had payment plans set up that we actually put them into eviction in January. So earlier the very first week of January, and we had a certain criteria that had to be. be over a certain amount and so forth. But the only reason we did that is because, again, I'm an

advocate for my client. Right now, we have stimulus money that's going to be released here shortly. And as you know, people didn't use their stimulus money last time correctly, at least not with some of the people that we knew. So I don't know if they're going to use it effectively this time. And right now we're actually coming into tax returns. That's actually going to have people going to start getting their tax returns back in February. I put them into eviction, basically, basically so that they didn't have a choice to move. I didn't want them to take this money and bounce and leave my client and a lurch, owing them thousands of dollars and let them move into another unit free without letting the other person know that this person is behind of their rent.

So we kind of did that as a tactical measure to make sure that we had our handout first for our clients saying, hey, pay me and we'll satisfy your eviction. But, you know, if you want to move after that, then we can work with you. But we definitely want to get the money up front. So I can see that, you know, people putting people into eviction. But moving forward here, I see people, at least in our area in St. Louis, evictions are skyrocketing. People are definitely putting them into eviction because they can't basically work with them on a payment plan. And at some point, that's one of the other reasons we had to do it too. I mean, after probably five months of calling them, here's your payment plan.

Then, of course, next month, the payment plan changed. And then next month, and it's just like, we can't keep track of all this kind of stuff. It's just too much, too many moving parts for it. So having a payment plan through the courts is a good thing because now when they get that summons that the court's going to be due, they're going to make that payment because they know there's going to be consequences if they don't. So a lot of people are doing that here. They're putting people into eviction. Pay your rent and we'll satisfy your eviction. You know, we'll consider it satisfied and make sure we do the right thing by you.

but I see evictions rising. I even see, I mean, there's even other separate landlords that are doing illegal evictions. And I'm just going to throw that out there because people are just like, hey, they're going through and they're changing the locks on the doors when they're off at work, securing the property and just, hey, you need to get out. And, you know, police typically, they're, you know, they're getting called, but they don't like to be involved in that. That's more of a civil matter type of thing. But I see people reaching a breaking point. that's what I do. You know, right now people are struggling and what the people don't understand is my clients are the ones that's suffering because they're the ones that either have to do one or two things.

And people like yourself, Matt, you either have to go negative and take money out of your savings to make payments in which you're not getting rent payments for a particular house. And you're only doing that to keep your credit well maintained so you don't have any late payments or foreclosures that's going to affect your credit, which in turn can affect your lending ability. or even your cost of insurance down the road. So that's going to be affected or the people, my clients just don't make the payment. And then at that particular point, now they have to go into a forbearance plan or they have to have 30, 60, 90 day late.

And the banks, we try to give our clients instructions on how to do that effectively based upon the Freddie and Fannie rules. But some of these things came back just the banks were requiring, which is crazy, you know, documentation that they required in order to prove that the person was more, COVID, which the client couldn't get. So it really puts my client in a bad situation. So again, I try to balance as much as we can with that, but I see people hurting. I mean,

the people in real, the clients that are buying properties, just make sure you get the right person. And for the most part, you have to understand really the part that we hit with COVID really kind of hit more of our, well, let me just be honest, our lower end properties. People who have jobs in the service industry, people who have jobs in like the Walmarts and the fast food places. These are the people that were really hurt. Those people, if you invested in properties that are in areas that have like, I guess your B areas or even some of your C areas, these people have an educated job. You know, they have a job with education.

And those people weren't too much affected by COVID. They work from home, but their income remain the same. So I would have to advise people, you know, in this kind of situation, you're investing. class really is going to determine how badly you're hurt by that. Because if all of your eggs are in one basket on the lower end properties, you're probably going to be hurt more than if you have the higher end, good school district properties that you pay more for, but maybe not cash flow as much.

Yeah, I see it the same way. I do see, and I think it's happening right at this very moment. I don't know exactly when this is going to air, but at the moment we're right here at the top of February. the people are going to hit their breaking point. You know, they just are. It's like here we are. None of us thought we're going to be in this for a year.

Right. And now there's like six months, nine months more of the projections. And I think people are just like, oh, hell no. You know what I mean? It's like, wow. It's a sad situation. And, you know, it's sad on both sides. And I think that the tragic part of it is that each side is really kind of pointing the blame

at the other side when it's not either one of their fault. You know what I mean? You're right. But I mean, right now I think, unfortunately that you get the situation where the tenant has no place to go. Right. There's nothing for them to do. They're homeless that they're not living there.

But that's really a bad situation, unfortunately. But things are going to start happening. We haven't actually done that ourselves. We've been trying to work with people. As a property management company, one of the things we did proactively back in September maybe. Whenever all this CARES Act money and things like that came out, all these local organizations popped up. We have such a good eviction attorney. He actually was proactive and actually sent us a list of here's everybody that has CARES Act money that your people can apply at to get funding that can

help them with their local resources and the rent. And we just simply took that information and pass along to all of our renters, you know, through email and the text message that, please apply in these places to help out with your funding so that we can help you move forward. and get your balance down and keep it up. But I mean, I would think property managers would want to do that and go the extra mile to help people out. That goes back to what I said earlier about just having a good relationship with your tenants. If they see you're trying to help them out and you communicate with them effectively,

they'll communicate back to you. For sure. You do have the outliers, the jerks. And just don't. Yeah. You know, exactly. We're all human beings that we should treat each other fairly and with empathy. just in just the craziest circumstances that are really putting that type of a goodwill to the test, you know.

Edward, it's been an absolute pleasure. Thank you for sharing your expertise with us. Let's do it again. Let's stay in touch. If someone wanted to get in touch with you, what would be the best way for them to do that? I would just say, just log into Facebook, Edward O'Daniel. I'm out there on Facebook. You can message me.

I have a public figure page, and we also have the veteran landlord page that you can send messages through. We monitor and maintain those. But please, I'll do my best to answer questions that I can during the time that I'm allotted myself to do so. But I'm just here to help people. I just, I really hate, I like to see people succeed in real estate. Yeah, I want them to be able to buy properties and grow a portfolio. And I like you, man, I try to teach them how to do that, you know, even acquire properties for free if they get the right deal and the right financing. But how do I do that?

Just find me on Facebook, please, and hit me up. I'll be happy to answer any questions. you have. But Matt, thank you, man. It's been a pleasure. It's good to see you. Yeah, absolutely. Check out Edward on Facebook, Edward O'Daniel. And you can also find him over at veteran-landlord.com. Thanks, Edward. Talk to you soon. All right, man. Have a good day. See you move. Hey, we're not done. If you're looking for private money sources and how to get it without even asking for it, I can't wait to introduce you to my next guest. But first, When you go to work for your money, does it return the favor?

If not, no worries. You do not have a money problem. You merely have an idea problem. We're cashflow savvy.com, and we'd like to share a new idea with you around income real estate that can transform your financial future and accelerate its arrival. Go to cashflow savvy.com and download a free investors package. Cashflow savvy.com. You do not have a money problem.

Merely an idea problem. Cashflow savvy.com. More ideas, less worries. Cashflow Savvy.com. Okay, on the phone, I'm joined by CEO of the Private Money Authority. He's been buying and selling houses since 2003 in a population of only 40,000 people with profits averaging $67,000. He's rehabbed over 300 houses and been involved in over $52 million in transactions.

And for the past seven years, he has completely automated his seven-figure income business to where he works in his business less than 10 hours per week. He's consulted one-on-one with over 2,000 real estate and investment. investors raised more than $2 million in less than 90 days in private money when he was cut off from the banks. So please help me welcome to the show, Mr. Jay Connor. Jay, welcome to the epic real estate investing show. Thank you so much, Matt. It's exciting to be on here with you. It is. You know, I was on your show a little while back in, uh, we kind of lost touch, but then we cross pass again and I got to spend some good time with you. And I was like, you know what? Why didn't

you come on my show. You should come on my show because you talk about such an important subject. It's a mystery to so many people and it's a deep desire for so many people and that we're talking about private money. But first, just kind of share with me what you were doing just before you got into real estate and what inspired that transition. Yeah, so I was raised in the mobile home business, manufactured housing here in eastern North Carolina. And I was in that industry until 2003 when all the consumer finance for that product, mobile homes, virtually went away. But I've known for years. So I was raised around helping people own a home in what we call the affordable housing industry, if you will.

So I've always been around, you know, homes and et cetera. And so I know if I ever got out of the mobile home or manufactured housing business, I wanted to get into investing in single family houses. So we started doing that, my wife, Carol Joy, and I, We started that in 2003. We've been full time ever since. And from 2003 to 2000, since that time,

we've rehabbed about 420 single family houses in a small town of only 40,000 people. But those first six years, Matt, I relied on traditional funding and local banks and mortgage companies. And in January 2009, like the rest of the world, I got cut off with no notice. from the local banks. So I knew I had to find a better way real quick to fund my deals. Super.

So when you were going into these new deals, we switched from mobile homes and we went into what? Single family. Single family. Got it. Okay. So I'm glad you actually brought that up because I really enjoy talking to people that have been in the business for a while and had have gone through a downturn.

and we're here anticipating a downturn at some point. We know we're overdue. We look at all the economic indicators, and they're kind of pointing towards we should be experiencing some sort of downturn. But there's other stuff that's supporting it, and it just hasn't manifested yet. But I know it's coming. I just don't know when.

But I'd like to get your opinion on that. But kind of tell me, what did you learn in 2008, 2009, that you are carrying those lessons forward for this next shift? Well, I learned some very, very important lessons. The first lesson I learned when I was on the telephone with my banker, telling him about my two deals that I had under contract, profits were over $100,000 on those two deals combined. The first lesson I learned when I hung up the phone and learned I didn't have any

funding. The first lesson I learned was the most dangerous number in any business is the number one because I was relying on one relationship. I was relying on one lender to fund my deals and didn't have any backup in place. And of course, I didn't know anything about private money and private lending and what that looked like. But the fact remains, whether you're doing business with, you know, a traditional lender, a hard money lender, or a private lender, you don't want to just have one of those relationships. So today, I got 45 relationships with private lenders. Of course, you know, most real estate investors don't need 45 relationships or 45 private lenders. Two or three I get the job rolling. But that's the first lesson. Don't put all your eggs in one basket.

don't have just one relationship with one general contractor, one lender, one attorney, one plumber. Right. You know, I want to have a, I want to have a backup plan. So I've been blessed since that phone call. I mean, have I had some private lenders come and go? Sure. I've had some private lenders come and go, but they weren't the only lender I was doing business with. The next big lesson I learned is when you are making the rules for your business and somebody else ain't making the rules, it sort of gives you a whole lot more control of your destiny.

So for funding my real estate deals these days, I make the rules. I set the interest rate. I set the term. And it's like I offer a program. So that was like a big, big dichotomy shift in the way. I was thinking about borrowing money to fund deals. Another big lesson I learned or I was reminded of was it's impossible for me to fail in business until I choose to quit. And so you know, when I got cut off from the bank, quitting was an option, but it wasn't a choice for me. actually was a choice.

We get to choose whether we want to quit or not. And so, you know, when I learned I got cut off, you know, my choices and options were well, do I want to quit or do I want to look for a better and faster way to fund deals? So I just encourage everybody that's, you know, following you on your show. Yeah, are we going to have dips here and there? Are we going to learn lessons along the way? Sure. But you are not a failure until you crawl in the corner and quit.

Right. And that's happened. I mean, it's been, I've been doing this for almost 11 years now, as far as the education side goes and helping other people, you know, be become successful in real estate. And I see a lot of them quit, right? You see a lot of them get frustrated and you see them walk away. And I think they kind of forget the real reason that they got into real estate in the first place. I've come to know it as the final frontier where the ad, person has a legitimate shot at creating real wealth for themselves. And I'm just like, if you quit, what else are you going to do? I mean, if you got into real estate for the money, like, where are you going to go where your chances are better, right? The same lessons are probably more painful and more difficult lessons lie right over there, wherever that is, is they lie on here. But do you set something really key right there that made me just go off on that little tangent was the lessons, right? It's going to deliver lessons. And when you, when you experience frustration and setbacks, make sure you get the right lesson and not the lesson

to walk away because those same lessons and probably even more impactful and powerful lie right over there to whatever else you're going to do next. Yeah, man, I'm glad you asked me the question of what lessons I learned because as you were just talking, another big lesson I was just reminded of that that experience gave me. And that was, don't try to do this business by yourself. Surround yourself with people that know more than you know. That includes a coach like Matt Terrio.

That includes other people that have, you know, gone through the mine field. And so how did I put that into action? I joined a mastermind. I've been in masterminds ever since. I hired a coach. And because up until that time, Matt, I had tried, well, I had done this business by myself for six years.

And even though that was a blessing in disguise, it was a way, I mean, you and I wouldn't, I wouldn't be here on your show today with you unless I'd had that painful experience. but up until that point, I didn't have a reason to look for other ways, you know, to fund my deals. But the point remains, since that experience, I made a decision, Jay Connor, do not try to stay in this business by yourself. It changes all the time. Yes, there's principles that remain the same that do not change. But as far as what resources and strategies and et cetera are really working in today's world, it changes. So stay connected with the movers and the shapers. Yep. For sure.

Yeah, behind every self-made success is a very powerful team, right? Absolutely. Absolutely. Super. So, okay, so now here we are right now. As we've gone through this last year of the pandemic, what has been your experience? What lessons have you learned there? Yeah.

So the biggest lesson I've learned is unless you can dance with the best of them and be flexible and don't feel like that, hey, just because I've done business one way, I've got to continue to do it the same way. Well, you know, as far as like, you know, communicating with sellers of houses, we had to learn how to do virtual, like very, very quickly. And so one lesson was, or that I'm reminded, of is be adaptable, be fluid. That's another reason to stay connected with other people that are in the business and are staying successful because you can like learn from each other as to what have I got, you know, what have I got to adapt to to to still make, you know, make things work.

Well, what else did I learn? Did some private lenders get scared and pull back? A little bit, not much. But you know what was really interesting, Matt. We weren't long into COVID and this pandemic. I'd say about six months into it or so. And more money started chasing me. I mean, people realized, particularly what was going on with the stock market and its volatility,

that they didn't have, couldn't find other secure places to put their money. So what I've discovered and experienced over the last few months is I got a a good problem. And my good problem is, I got more private money pledged to me now, sitting on the shelf that I'm trying to find a home for. But back to your core question, stay flexible, change it. I mean, business is going to change. Nobody saw a pandemic coming. And I promise you, there's something else coming down the pipe that nobody has thought of either. Remain flexible and remain connected. Yep, I'm actually thinking that because I've been doing a lot of research, a lot of stuff here on the show here, but even more so on my YouTube channel and just analyzing the different market indicators that real estate investors would look at under normal conditions, right?

We look at the foreclosure rates. We look at the delinquency rates. We look at the evictions and we look at the jobs and we look at the interest rates. We look at all this stuff. I mean, inflation has become a big hot topic right now. And so we look at all that stuff. And so I've become much more educated over the last year, really focused and looking at that stuff. But everything I see, everyone's predicting crash, crash, crash. And everyone, and still in everyone's memory right now is 2007, 2008.

And what most people don't realize is that was like a once in a life. event to be of that magnitude, right? I mean, you have to go back to the Great Depression to find something that, you know, compares. But that would be most people, that's a different lifetime. So when I say once in a lifetime, that's what I mean. And the chances of that happening back to back are very, very slim. It's never happened before. The other part is what caused that crash in 2007, 2008. Those conditions don't apply today. That's not the environment that we're in. And so, and then with all the data that we have, there's definitely two perspectives. You can look at this and say, oh, my God, look at all those mortgages. That's bad or those delinquent mortgages.

That's terrible. That's a lot of people behind. Or you can look at, wow, every time they, they loosen the pandemic restrictions, people start paying their mortgages again, right? So you can, so there's a connection there. And there's multiple perspectives on both of those. But what you had said is what I'm really thinking is there's something else coming up. That's unexpected. Right? The black swan. There could be potentially back to back years with black swans.

And I think if anything brings it down or at least any time soon, it's going to be something like that. And you're right. You've got to be flexible for it. Your lesson number two is to make the rules for your own business. Right. And if you're making the rules for your own business, you can change the rules for your own business and how you operate your business.

Absolutely. Absolutely. And you know, the last question you just asked me, triggered me to comment this. And that is one of the most common questions I get these days is, Jay, what's the best way I should be preparing for what is coming down the pike, say, this year, over the next year and a half or two years? Well, there's one thing we know that's getting ready. to happen. Well, we don't know anything that I'm pretty, I'm pretty sure. Let me just say. Okay. That is, from what I see, Matt, there are two categories of foreclosures where it's going to give us real estate entrepreneurs a really huge opportunity to serve a lot of people. And the reason I say serve, coming from the space of the servant's heart is, you know, we get a bad rap a lot of times. You know, I have real estate investors out there and take advantage of people, taking advantage. I'm not interested in taking advantage of anybody. I'm here to create win-win solutions.

So there are two categories of foreclosures that we're looking at here now. One category of foreclosures or people that are in foreclosure, they were already in it when the pandemic and COVID came along and everything shut down. they were already facing foreclosure when times were fantastic. Well, the majority, not all, because things have started to open up a little bit, but the majority of those are still, you know, on hold on pause. However, we are coming up right around the corner. And when I say right around the corner, I'm talking like weeks.

We're coming up on when that category of foreclosures, in my opinion, the government is not going to keep a stay on those. I mean, they can't keep the mortgage companies and the banks from not receiving payments forever. So people are going to start getting behind on those payments and they're going to be moving to foreclosure. The second category of foreclosures are all these people that due to the pandemic are now going to be going into foreclosure, right?

So are we going to be seeing the number of foreclosures that we saw in 2007, eight, and nine? I don't believe so. But we're going to see a whole lot. It may not be to that degree. And you said something very important a moment ago. What we're experiencing right now is for totally different reasons. Yeah.

What we experienced in 2007, eight, and nine. So since we've got all these opportunities come along to help people and also for it be win-win for all of us. How do you prepare for that? Well, there's two ways. Number one, know how, learn how to get up with these people to serve them. And of course, Matt, you and your coaching can do all that, but you got to learn how to find them and how do you find them before the rest of the world finds them, right? So how do you locate them to serve them, okay, whether that's knocking on doors outbound calling or direct mail or all the above. And that's the first preparation.

You've got to learn how to do it. Number two, have the funding lined up ready to go. So there's two ways to fund these foreclosures. Number one, you got people that are behind. The sale hasn't come up. And now we can serve those people by buying what you've taught people forever. And that is buying subject to the existing note. You can fund those deals, subject to the existing note.

bring the payments at the rearage current and help them get back on their feet with some money. And then you got those foreclosures that are not going to go to sale or will not be bought at the courthouse steps. Now that's going to be, we're going to have more bank owned properties in the multiple listing service than we've seen in quite a while. Well, the only way to fund those deals is with money, is with cash. Not going to buy bank owned property subject to the existing note because we're not. dealing directly with the owner. So how to prepare. Get rid of to serve a bunch of people by knowing and getting educated on subject to the existing

note and having private funding lined up ready to go for the bank owned properties. Right. And so that might be a good transition to talking about your specialty, and that is raising private money. Tell me, you know, everyone thinks like there's a secret place or a secret website or a secret meeting or a secret club. Like, how do I get private money? Right? So kind of big picture. We're going to get together next Wednesday. And you're going to go through the details of this in a workshop that we have. And if you'd like to join us, you can go to Wednesday webclass.com.

You'll see the time. It's going to be next Wednesday. Wednesday, I think is what March 3rd is what we said it was. If I'm correct. Yeah, I got March 3rd. So that's 3 p.m. Pacific standard time. Wednesday webclass.com. You can register there. there and you can join for free. And Jay said just before we started recording, he's not even going to be selling anything. He's actually going to be giving you something for free. So if you like to join, that's going to be a nice training that Jay's agreed to do for you. But kind of big picture. What is private money? Like let's define it first. Excellent, Matt. So first of all, when I talk, when I talk private money, I'm not talking hard money. I'm not talking hard money

brokers. I'm talking doing business, private money is doing business with individuals, human beings like you and me, that loan money primarily from just their liquid investment capital or from their retirement funds. So I didn't know anything about self-corrected IRAs, which became very, very important to learn about when I learned about private money. Because over half of our private lenders are loaning to us from their retirement funds. That's a whole different conversation. But in answer to the question, we're doing business with individuals that have investment capital and or retirement funds and they're loaning to us very safe and very secure. Right. Okay. So why would they do that? Why would these individuals give you some money?

Well, there's three big reasons. Number one, they're going to make a lot of money. Right. So the kinds of returns that we're going to pay them, but we're not going to pay them crazy hard money rates, right? But we're going to pay them rates and return, which I'll go into in your web class next week. But we're going to pay them rates and return that they cannot get anywhere else

safely and securely. So number one, they make a lot of money. Number two reason is what I just said. their investment with us, their loan to us is safe and secure. And here's how. First of all, it's safe because we loan and barred from them at what we call a conservative loan to value. Meaning when we borrow money from the private lender, we're not going to be borrowing 100% of the value. But you know what? Since we're going to be buying these properties at discounted rates, we're going to always borrow more money than we need to fund the deal.

So we always bring home a check. But keeping the focus on your question, why do they want to do business? It's safe. So we will borrow typically a maximum of 75% of the after repaired value on a property, which gives them a large equity cushion. The second reason when I say safe, I mean, it's secure. I'm not borrowing unsecured. funds from these private lenders. All the notes are backed by real estate. All the notes are

collateralized. Now, can we legally and ethically borrow unsecured funds from them? Sure, we can. I mean, it's legal. I mean, there's unsecured notes all over the place. But I have chosen to only borrow money from my private lenders to where their notes are backed by real estate. And that gives them security. The third big reason they would give us money, and my older private lenders absolutely love this, is because their principal investment, their principal loan amount is not volatile, meaning this is in contrast to them investing in the stock market. So I compare in contrast the private lending program to investing in the stock market. When you invest in the stock market, you already lost money.

You had to pay fees. You had to pay commissions. And the principal value or the asset value that you invested in, say, a stock yesterday can be less today, can be less next week. So in this program, the principal loan amount investment remains the same until we sell the property. So the reason that works is because we pay to the private lenders interest only or accrue interest only payments. So what they love about that is it's a win for them and it's a win for us as the borrower, the real estate investor. When we pay interest only payments or accrue interest only payments, the private lender is keeping all of their principal amount totally invested with us so they make more money.

If we pay principal and interest payments, we're paying down their principal amount, which means they don't have their full amount invested and they don't make as much money. We as the borrower, we prefer interest-only payments because interest-only payments are less than an interest and it helps our cash flow. Now, as a side note, that's assuming there are even payments because, you know, we can structure deals to where we have no payments, right? until we cash out on the bill. But again, the three big reasons are they're going to make a lot of money.

It's going to be secure and safe. And their principal loan amount or value is not volatile like the stock market. Who are your favorite people to borrow money from? My favorite people are retired people using their retirement funds. And the reason for that is typically you're not dealing with small amounts. like $30,000 or $20,000. Those people have got large amounts to loan out because they've, you know, been saving up their retirement money for many, many years.

Another reason that I like to work with retired individuals, retirement funds is because they could care less if payments are being made or not because they're not living off that money, right? All that earning, all the earnings are going back into their retirement account. So it's not like they're counting on checks, you know, coming in the mail. Got it. So give me an idea of how you find those people. Do you go to the retirement club?

I'm sorry. Go ahead. I was going to say, do you go to the retirement club, the retirement meetup group? Like, how do we find these people? I got you. So there's three primary categories of where you find these private. at lenders. The first category is what we call your own warm market or your own connections, people that you have in your cell phone, your email list, your Christmas card list,

your Facebook friends, your own warm market. And I'll teach on the webinar the five steps next week to contacting them and going from, you know, what do you say to start with to actually having your deal funded, right? So your current warm market. The second place you go is to what I call your expanded or your newly expanded warm market. Sometimes I'll have folks say to me, say, Jay, my warm market is broke. My people ain't got no money. Where in the world can I go?

Well, first of all, Matt, I don't believe them. I think all of us have got connections in some kind of a way. Most people do. However, I get it. There may be this level of intimidation of even contacting. people that you know and you know they're loaded and, you know, we'll deal with that next Wednesday as well. All right. But the newly expanded warm market is how do you, how can you grow and expand your warm market to have, you know, more connections? Well, like you just sort of said, go to where

the money is. I mean, what I say is the more money you waller in, the more money sticks to you. So where is that? It's called getting involved. So what I'm going to say now is not an overnight play. This is a long-term investment play. Getting involved in your community, the Rotary clubs, the civic clubs, church, any kind of nonprofit organization, put on your servants hat and become involved and the money will start chasing you. That's a long-term play. The third category is what we call existing private lenders. How do we find these existing private lenders. Well, there's more than one place you find them. You can find them in public record looking for in individuals that have loaned out money that's secured by real estate.

So I'm not talking about institutions there. I hired software developers years ago to write software for me that goes out and does skimming across all across the nation. So I got a data feed that updates every private under loan that happens every month, every year. So I've got contact information on those pieces. So there's that way. But then another way is what you just sort of said in jest. So we're not going to go to the retirement homes, but we are going to go where those retired people are that are looking for a place to put their money. And guess where that's at? Self-directed IRA, networking events. Self-directed IRA networking events.

I mean, that's like the perfect storm vortex. Yep. Of people wanting to borrow money, people wanting to lend money, and that's just a party right there. Yep, yep. There's a lot of those. Those are everywhere. I mean, a Google search, I'll probably find you two or three a month at least just

in your own city, right? Exactly. Yep, yep. Agree. I think that what you're kind of, of touching on generally or overall. And this is what I, people will call it private money, but I think when you hear private money, you know, it can be a little bit, uh, oh, what's the word? Mysterious, right? Okay, private. Where do you go find it? And I just, I just like to refer to it as

relationship money. That's what it is. Yeah. Yeah. And I think it's relationship. And I'm so glad you said that because that's really what it is. You're, you're doing business with people that you either already have a relationship with or you're doing business with people that you make a relationship with, right? And so time permitting, I will teach on next week how to develop the relationships to where, like one big mistake that I see people make when they first learn about this private money thing is they've got this deal. All right?

So I'm just going to pull the curtain back here. a little bit. They got this deal they won't funded. And they got and they're going around looking for somebody to fund this deal. And that is not at all what I do. It's not what I teach. What I say is get the money lined up first. Okay. Have the relationship in place. And I say put on your teacher hat. Okay. Put on your teacher hat. You know, we're going to be talking next week about how to raise millions of dollars without ever asking for it. I've never asked anybody for money since started using it in 2009. I put on my teacher hat and I teach people because you know what's wanted. You say it's mysterious. It is mysterious if you've never heard about it and most people have

never heard about it. The people that are going to loan us the money, most of them have never heard about it because those existing private lenders, they like they already got their program in their head. I want to teach people about this opportunity. This is like brand new to them. I want to teach people about self-directed IRAs because they never heard of that. And so here's the steps or here's the order that I do it. I teach people what private money and private lending and self-directed IRAs are. I teach them the program, what kind of interest rate, you know, that my program will pay. And that's what I, that's what I share everybody else. You need to have your own private lending program, you know?

Right. So now they say, yeah, I love it. I love it, Matt. I love your private lending program. Here's how much I got to work with. How do we get started? And Matt says, no problem. I know you got X dollars.

It's either an investment cap or retirement funds. I'll go find us a deal ASAP. Then you come back to them with your deal and you don't. Hey, look, this is the most stupid thing I ever heard. don't call up somebody and say, do you want to fund my deal? That's the most stupid question you could ever ask. Of course they want to fund the deal

because they already told you they love the program. They told you how much they got to work with. So on next week's show, I want to teach your people the four pieces of information that you call up and tell your new private lender or your existing private lender. And they cannot wait. for the phone call, they always say yes, and they're ready to fund your deal.

That sounds like something sounds rather irresistible, Jay. So the four pieces of information that you're going to share, so you're basically going to teach people next Wednesday how you teach private lenders to give you money. That's it. That's it. Yes, I got it. And how they'll always say yes, and they'll always fund your deal. You got it.

That sounds fantastic. If you'd like to join us, you can go to Wednesday webclass.com. Wednesday webclass.com. All the details will be there. Registration link, all that stuff. And this will be a Zoom call. It's next Wednesday, March 3rd at 3 p.m. Pacific, 6 p.m. Eastern. And you are invited.

And Jay is going to, he's going to be teaching, he's going to be training. But we're also going to open up for Q&A at the end as well. So bring your private money questions. I know this is a hot topic for people. I just, I don't, I don't, I don't, I don't remember her name. I just had an email just now that said, uh, I need help finding money. And I, and I was kind of like, great. So what type of deals do you have under contract right now for, for that money?

Just I don't, but I got my eye on one, right? And so I was like, and that comes up frequently. And I think maybe you and I have, initially I was thinking you and I have a different approach doing this, but I bet what you reveal on Wednesday were probably more similar then we're different in how we do raise private money and get our money funded. So I'm interested to attend myself. I will be there. Okay. That sounds exciting, man. I'm so excited if you've invited me and given me the opportunity to share what I've learned. I've been doing it since January of 2009. And we got about between seven and a half, eight million dollars right now that we just rotate

from house to house to house here in our little teeny tiny market. So I will come. with as an open book. They ask, I'll answer. Perfect. I're looking forward to it. Well, thanks, Jay. I'll let you go and I will see you here in just about a week's time. You got it, Matt.

See you next week. All right. Take care. Go back. All right. If you found this episode valuable, who else do you know that might? There's a good chance that you do know someone else. And when their name comes to mind, please share it with them.

And it asks them to click the subscribe button when they get here. I'll take great care of them. And also tell them about Wednesday. Webclass, Wednesday webclass.com. Have them go there. We're doing a training each and every week. At least that's the intent. That's the goal.

And you can find all those details, plus all the replays at Wednesday webclass.com. All righty, that's it for today. God loves you, and so do I. Health, peace, blessings, and success to you. I'm Matt Terrio, living the dream. Yeah, yeah, we got the cash flow. Yeah, yeah, we got the cash flow.

Yeah, yeah, we got the cash flow. You didn't know home world, we got to dash low. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.