Epic Real Estate Investing - EPREI 050 : How to Find the Money for Your Deals

Episode Date: March 18, 2013

The most common question asked of Matt is "How do I find the money for my deals?" On this episode Matt addresses that specific question in detail and provides a thorough explanation to his standard answer of "Find the deal and the money will find you." After completing this episode, there will be no more mystery behind that statement and you will completely understand what it means, why it works, how to implement it into your business and why failure is impossible using it. If you're struggling to find funding for your deals, this episode very well could be the missing piece of the puzzle that could turn your business around. If you have a question, comment or concern that you’d like Matt to answer or address live on the show, please share your thoughts on the Epic Real Estate Investing hotline at 1-888-891-7203. And if you enjoy the show... it would be a great favor to Matt if you stopped by iTunes and left him a rating and a review. Click here to leave a rating and review at iTunes. Download Matt's free real estate investing course at FreeRealEstateInvestingCourse.com Learn more about your ad choices. Visit megaphone.fm/adchoices

If you do those two things, you will never have an issue finding the money to fund your deals ever again. Without further delay. Your guru. Sorry. Your guide to a better life through real estate investing. Matt Terrio. Hey, this is episode 50 of the epic real estate investing podcast. Seems like somewhat of a landmark episode, doesn't it?

Episode 50. We made it to number 5-0. This is Matt Terrio, the rat race escape artist, here to show you how to get out of the rat race. And if I were to sum that up into one sentence, that advice would be to stop focusing on making money and start focusing on creating cash flow, on creating residual income. You know, and that's easy to understand, but it's a little more difficult to do in the real world. But that's why we keep the education flowing. That's why we keep educating ourselves.

You know, repetition is the mother of learning. It's the mother of skill. you want to keep educating yourself. You're never going to know at all. So keep the education flowing for yourself. And then I want you to keep taking action on what you actually learn. And you'll get a whole new type of education that no podcast, no book, no seminar, no boot camp, or program can provide.

And that's called experience. I mean, you can educate yourself on real estate investing through books, podcast, seminars, but you'll never actually learn how to invest in real estate unless you take action on what you learn and start collecting real world experience. I mean, nothing replaces that type of education. Nothing replaces the education that experience can provide. And I know that firsthand. And that's why I created a simple, easy to follow course for you, one that won't bog you down with a bunch of unnecessary information. Nothing to overwhelm you. I keep it real simple so you can take action and you can start gaining and earning and experiencing that real world experience.

and you can download that free course at free real estate investing course.com, free real estate investing course.com. You know, just so you know, when you sign up for that course, one of the very first emails that you'll receive from me is asking you about your biggest challenge in real estate. I want to know what your biggest challenge in real estate is. And I do answer all of those emails personally, by the way. And, And overwhelmingly, the most popular answer to that question is, guess, money, right? And it comes in several different forms. How am I going to find the money? Where do I find the money?

My biggest challenge is that I don't have any money, something like that, something to that effect. So to save me some time instead of me, you know, typing out an individual, lengthy answer to every person that asks the same question. as I've been doing for over a year now, I'm going to cover the answer on this episode. And I've already discussed it on this podcast several times probably in several different ways, but I'm going to answer that question specifically now and completely. And I'm going to do that right here today.

So now when I get that question email to me, part of my answer can be, I'll still respond personally, but part of my answer can be listen to episode 50 of the podcast. Got it? All right. So in the free course, I am constantly encouraging. you to move at the speed of instruction. I say that over and over again. You want to move at the speed of instruction. And what that means is that, you know, once you learn something, you want to go out and do it. Don't worry about step two. Okay. Don't worry about step two until you've actually completed step one.

Just do step one. Then you can concern yourself with step two. And that's how you keep progress going. And, you know, that's a huge, that's a huge lesson right there. I mean, so many people never get started investing in real estate. They never even get started. I mean, good, honest, hardworking people with the greatest of intentions. They never get started because they don't yet understand some step down the road, that they're not even there yet. And they're so concerned about the answer to that step way down the road that they never take the next step. And they're never going to need to understand it because they're never going to take the first step to get there. And a perfect example of this is, where am I going to find the money? I mean, to be honest with you, I mean, to be honest with you,

I mean, that one is not difficult to understand that you want to know where you're going to find the money before you take the first step. I get it. I've been there. But here's another example. Among many, I frequently get questions like, should I open up an S-Corp or a C-corp to start my investing business? Or should I open up an LLC?

Something like that. You know, at this point, when you're getting started, it doesn't matter. You don't even have a business yet. Don't even worry about what entity to choose before you complete your first transaction. You can set up your entity after you complete your transaction. You don't need to burden yourself with this expense yet. And actually, in all actuality, I mean, unless you do enough transactions, it might not make sense for you to open up an entity at all.

And I could go on with countless reasons as to why people don't get started. There are many, but what they all have in common is that what's stopping them typically comes after step one. Step one, they're clear on. But because they don't understand step two, step three, or step 10, they don't take that first step. So don't get so concerned with the steps down the road when you've yet to take that first step. There's so much to know about real estate that you'll never know it all. You'll never know it all.

So don't wait until you do to get started. Does that make sense? That's what I'm saying. All right. So of the 10 steps in the free course, I don't believe I even bring up the subject of money until step eight. There's 10 steps. I don't even bring up the subject of money until step eight. And that means there are seven steps to take before you should even be concerned with the money.

And here's why. Aside from what I just mentioned, you see, there is something inside of real estate that is far more valuable than money. There's probably actually more than this one thing, but to which I'm referring right now, I believe it's the most important when it comes to the value of what you do as an investor. and that is finding a deal, knowing how to find a deal, a real deal. Okay? A real deal has, it has greater value than the money needed to acquire it. And I've said it before, and I'm going to say it again.

You'll probably hear me say it long after this episode. Just go out and find the deal and the money will find you. Go find a deal and the money will find you. Now, this time, I'm not just going to leave you with that, because I know there's a little bit of mysticism around that and people are like, yeah, I don't even get that. That doesn't even make sense to me. So I understand. But it's 100% true. So I'm not going to leave you with just the phrase. I'm going to get very specific with what I mean when I say, focus on finding the deal and the money will find you. And I'll start this way. I'm going to explain it in the most

simplest form that I can. So you really, really get it. Let's say you start, walking up and down a busy street. Okay, you're just walking up and down a busy street. And each person you pass, you stop and ask them, do you have 75 cents? The reason I'm asking is, because if you do and you loan it to me, I'm going to go find someone else with a dollar that will trade for 75 cents. And then I'll give you 90 cents back and I'll keep 10 cents.

So can I borrow 75 cents until I find this person that's willing to trade me a dollar for it? how many people would you have to approach before you found someone willing to loan you the 75 cents based on that scenario how many people would you have to approach before you found someone that would be willing to loan you the 75 cents a lot probably right i mean first of all the person with the 75 cents has a few things going through their head for sure i mean they're wondering well well, in fact, first of all, they're probably wondering, who is going to trade 75 cents for a dollar? Who in their right mind would do that? And what's so special about you that I should believe you could find such a person?

So first, everyone you ask flat out wouldn't believe you. Or they would seriously doubt you. Or they'd be skeptical at best. And if you did happen to find someone that was open, to the idea of lending you that 75 cents, they're definitely wondering, what happens if you're unable to find someone else willing to trade you my 75 cents for a dollar? If you do, when am I going to get my 90 cents? If you don't, when am I going to get my 75 cents back?

And what happens if you lose my 75 cents? I mean, these are the types of things going through the head of the person with the 75 cents. and they are completely normal and completely justified thoughts. You would actually be thinking the exact same thing if someone on the street approached you with the same question, right? Yes, of course. In fact, because you know that you would be thinking the same thing, you won't even ask anybody for the 75 cents

because you yourself believe it's a long shot and somewhat of a ridiculous proposition. And if you don't believe it's possible, nobody will believe it either. So all that to say, trying to find someone in that manner to loan you 75 cents will be a challenge for sure.

Now, let's look at it this way. Let's say you have a dollar in your hand. Okay, you have a dollar in your hand. Now, how many people would you have to ask just walking up and down the street, same scenario, Walking up and down the street, how many people would you have to ask if they would trade your dollar for 75 cents? Do you have three quarters for this dollar? How many people would you have to ask for that question?

Probably just one, right? Do you need to have a sidewalk full of people to ask so you can feel confident in making that trade? No, you could just walk up and down the street and be pretty confident the first or second person you ask would be willing and able to make that trade. Your dollar for their three quarters represents a good deal in just about anyone's eyes. In fact, people would want to stay in touch with you in case you are willing to make that trade again, right? I mean, you might not need to ask anyone ever again to make that trade. I mean, once the word got out after you made that trade a few times, they'd be checking with you a couple times a week to see if you'd be willing to make that trade again. You see, in this example, the dollar, it represents the deal.

The 75 cents represents the money that you need to buy the deal. It's much easier for someone to give you the money when you have the deal in hand, when you have the deal under contract. So what you need to know first is how to find a real deal. Because it's going to be easier to find the money when you actually have the deal in hand as opposed to loan me the money. I'll be right back and I'll go find a deal. You know, some of you might have had a deal under contract and couldn't find the money to close it.

I get it. And if that's the case, there are only two reasons why you are unable to find the money. There are only two reasons why you were unable to find the money. Either you didn't try hard enough. You asked a person or two and you were shot down so you quit. Or you didn't actually have a deal. There's only two reasons. Meaning you tried really hard.

you asked a bunch of people and they all said no. You didn't have a deal. There is a possible third reason, actually. The third reason is you didn't present the deal correctly, meaning you didn't adequately show the money person what's in it for them. Specifically, you didn't show them how much they'll get back, when they'll get it back, and how their money is safe in the event your deal doesn't work out.

That's what's going through their mind always. They want to know how much they'll get back, when they'll get it back, and how their money is safe in the event that what you propose doesn't pan out. And so you have to make sure when you're asking for the money that you cover those three bases. If I have a dollar in my hand and I ask you to trade me 75 cents for the dollar, all of those questions are answered. I mean, you know how much you're going to get back for your 75 cents because I got the dollar in my hand. You know when you'll get it, because I'm going to make that exchange right now, and you're not really concerned if the deal doesn't pan out because the exchange is being made right here on the spot. So all three of those scenarios, or all three of those concerns of the money person are answered in that situation.

So that's why it's really easy to say, well, of course I'll trade you a dollar for 75 cents. So you need to present your deals, the ones you have under contract, in a way that all those questions and concerns of the money person are answered. and the more you can simplify the deal, such as exchanging a dollar for 75 cents, the more money you'll be able to raise and the easier it will be. So specifically, you'll need to present your deal like this. Mr. Moneyperson, I have this dollar in my hand. And several dollars, just like it in the last 90 days, have sold for $1.25. Hopefully you can see the opportunity here.

In order for me to capitalize on the opportunity this dollar represents, I first need 75 cents to become the rightful owner of this dollar. So here's my proposition to you. If you become my partner and loan me the 75 cents, I'll go to work, put the dollar on the open market at full market price for a $1.25. And when it sells, I'll give you back a whole dollar for your $75 and I'll keep the $25 profit. How does that sound? The seller might say something like, well, what happens if you don't sell the dollar? And you respond with something like, good question.

I'm glad you asked because I have a plan for that. I'm going to first put the dollar on the market for $1.25. And if within two weeks the dollar has not sold, I'm going to lower the price to $1.20. And in a couple weeks, if it still hasn't sold, I'm going to lower the price again to $1.15. and I'll keep doing that until the dollar does sell. But as you can see, what the market has recently done, I mean, several dollars just like this one, have indeed sold for $1.25.

So would you like to be my partner? See, now you've presented this deal to demonstrate the value of the dollar you have in your hand by showing what the market is paying for such a dollar. You have this dollar, and you showed them evidence that in the open market, people are actually paying $1.25 for this dollar that you have in your hand.

And you've demonstrated you know what you're doing by having a strategy in place in case your plan A doesn't work. So you've done a good job. And the money person is probably now giving your deal serious consideration. But they still might be a little bit nervous and ask you something like,

what happens if something goes wrong? Like the market shifts in the wrong direction or you're off in your evaluation. How do I get my money back then? Totally natural. Totally natural response. And you respond with something like another good question. I'm glad you asked because this is what's great about this opportunity.

Is your 75 cents is secured by this dollar. If I'm unable to sell this dollar at all, which the market gives no indication that that's what could happen, it might, but the market is saying that's not going to happen. But let's just say it does. I'll make payments to you on your 75 cents until you get your money back. And in the event, I'm unable to make those payments, this dollar becomes yours. That's how your 75 cents is safe. The worst possible scenario is that you own this dollar free and clear and you got it for 75 cents. So from here, we can either focus on the remote possibilities that this might not work,

or we can focus on why it probably will. Does this make sense for you to partner up with me on this deal? And that's how you'd respond to that. Now, after this simplified example, I hope you can see how finding the money, the 75 cents, is easier to find when you already have the dollar in your hand, the deal under contract, than it is when you don't. It's easier to find when you already have the dollar under contract or the deal under contract than when you don't have a deal under contract.

And like I said previously, when this deal successfully closes, and you pay the money person back the dollar you said you would within the time that you said you would, I guarantee this next part. I mean, I guarantee this. And then, you know, I'll put this on everything I know and love. That money person will say something along the line, something to the effect of, hey, that was kind of cool. If I loaned you 75 cents again, do you think you could go out and find another dollar just like the last one?

I guarantee that something will be said that suggests that that 75 cents is there for you to use any time that you need it. And, you know, it's something that really beautiful that happens. I'd say probably at least 50% of the time, probably closer to 75% of the time, but 50% at least, that money person will come back to you in a few days or a few weeks and say, hey, I have a friend who has 75 cents to loan. Do you think you could go find another dollar for him like the one you found for me? Yes.

When you pay back the money that you borrowed, the amount that you said you would pay back in the manner and the fashion and the time frame that you said you'd pay it back. Not only are you going to get to use that money that you borrowed again, you're going to get referrals as well from their buddies that also have money to loan. It happens every single time. It's amazing. So here's the two key things for you to focus on here. The very first is to get good at finding these dollars. You got to go find these deals. And you've got to find these deals below what the market is paying for them.

You got to buy low. That's where the saying comes from. You make your money when you buy. So you must first get good at that. That's where you make your money. Not knowing where to find them. You make your money when you find the deal below market value. In fact, you really don't have the right to ask anybody for a loan until you do get good at finding

deals. Let me go even deeper. In fact, I'm revoking your right to use your own money until you get good at finding deals. I don't want you out there blowing your own money until you get good at finding deals. I don't care if you've got it to spend. I don't want you to use it until you actually are good at finding deals. So get good at finding deals before.

you ever worry about the money. And the second thing to focus on is executing that deal in the manner you told your person that you would, your money person, honor your word, keep your word, do what you said you were going to do and do it when you said you were going to do it. If you do that, money will never be a challenge to you, ever. The more excuses you make as to why you can't pay back your money person when you said you would, if you got to call them up and give them excuses and ask for extensions and all the stuff, the more that you do that, the less money will come your way. And it won't take too many excuses

before that money person's well completely dries up to you. But don't even try and track it. And don't try to track your excuses. Don't try to keep score. Just eliminate the excuses all together and just keep your word. Keep it simple. Keep your promises. I mean, I have countless examples. I mean, I really, I don't think I could count how many times that this has happened. And that's how, you know, many times that I've experienced this, it's happened that many times. When I pay back my lenders, the amount that I promised to them, and I pay them back within the time frame I promised them, is I'm handing over their check to them, they tell me to keep the check and let it ride on my next deal. Do you get that?

when I show up at their door or I show up at the coffee shop to give them their money back or I send the wire or I'm getting ready to mail the check to them, they tell me to keep it or they tell me or they give it right back to me. They say let it right on the next deal. And it's this phenomenon that I've experienced countless times that gives me the conviction. It gives me the confidence and the passion around the subject of finding the money and how I teach it. This is not theory.

This is real world practice. This is how it works. This is how it goes down out there on the streets. And if you go back to earlier episodes when I've interviewed other real estate investors, every single one of them. And these are the real estate investors that are real estate investors. They don't have a blog. They don't have a podcast.

They don't have any product or seminar to sell. They don't have a coaching program. Real real estate investors. And I did that intentionally. Every single one of them, without exception, have confirmed exactly what I'm telling you right now. They confirmed it in recording on the air. they had no idea what I was going to ask, and they answered it, and they answered it just how I answer it.

So first, find the deal. Focus on finding the deal. That's where all the value is as a real estate investor. That's where the value you bring to the table. And second, keep your word. If you do those two things, you will never have an issue finding the money to fund your deals ever again. Now, some of you might be getting all fired up in your business.

getting this and you understand and you're going to go out and you're going to take that leap of faith and you might get stuck and you might not be able to find the money and if that's the case I want you to check two places as to why it might not have worked for out for you first check your deal do you really have a deal and be honest with yourself is there enough market evidence not your opinion, not your idea, not your vision of what this thing could be, but is there enough market evidence to show that your deal is a real deal? Check there first. And if, hey, there is, there's a bunch of market evidence that proves that your deal is a deal.

The second place I want you to look is your presentation to your money person. did it demonstrate how much money that they would make, how much money they would make, when they would make it back, and how they were safe in case you were unable to execute your deal. How much are they going to make? When are they going to get paid back? And how is their money safe in the event that it doesn't pan out?

If you don't answer those three questions and simplify them as much as you possibly can, like a 75 cents to dollar exchange, most people will not give you the money. Check those two places when it doesn't work out. Because it's there somewhere. You just got to kind of look for it. And there are only three reasons this won't work. One, you didn't ask enough people and you quit.

Two, you don't have the deal you thought you had. And three, your proposal to your money people didn't simply and clearly answer their three biggest concerns. Now, what if you did everything wrong? Or even if you did do everything right and your money people still didn't lend you the money? What if you go and you do everything right and they still didn't give it to you? No problem. You have your three CYA clauses in the contract, the same three that I give you inside the free course. As long as you put those in your contract, you just cancel the deal. Take note of what you think went wrong, don't make the same mistakes again, and go find another deal. Not every deal is going to work out. You know that.

So don't let one deal or a string of no deals or even an extraordinary challenging time in just getting started derail your efforts. A lot of deals aren't going to work out. A lot of lenders aren't going to see your vision for your deal. you're going to have to cancel some contracts. That's just the name of the deal. That's the name of the game. And you can do it legally. You can do it ethically.

It's written right then the contract. You have the right to do it. There's nothing to be afraid of of canceling the contract. It just wasn't the deal that you thought it was. And your money partners didn't think it was the deal that you thought it was either. So don't let one deal or string a bad run of deals. Don't let that derail your efforts. Don't let that, you know, don't let that.

you know, don't let that take over and take your dreams away from you. Thousands and thousands of these 75 cents for a dollar transactions, they take place every single day. It happens every day. There's evidence that it happens every single day. And I've met many people. I've met a lot of people, people not nearly as bright as you, not nearly as smart as you are, not nearly as educated as you are, not nearly as experienced as you are.

I've seen so many people that aren't nearly as smart as you execute these deals one after another. And if they can do it, why can't you? Actually, let's ask this in a different way. Why can you do this? Why can you do this? Ask yourself that question over and over and over, and you'll come up with a lot of great answers as to why you can. Okay, that's it for today.

If you happen to have a question, comment, or concern that you'd like me to answer or address here live on the show, please share them with me on the Epic Real Estate Investing Hotline at 1-88-891-7203. 888-891-7203. And if you enjoy the show, it would be a great favor to me. If you stop by over at iTunes and left me a rating and a review there, I love to know what you think of the show, and I love to hear it. how this show has helped you. All right? It really keeps me going. So I appreciate that. That's it. Until next time, as a very wise person once said, first find the deal and the money will

find you. Hmm, who said that? Sounds very familiar. To your success, I'm Matt Terrio, living the dream. Thank you for spending this time with Matt Terrio and the epic real estate investing podcast. When you have a moment, stop by iTunes to leave your comment. and let us know what you think of the show. And if you haven't done so already, get started investing today by visiting free real estate investing course.com to access Matt's free course,

how to do deals, no money required. No money required. Until next time. To your success. To your success. This podcast is a part of the C-Suite Radio Network. For more top business podcasts, visit C-Sweet Radio,

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