The Science of Flipping - Episode 2 – Show Me the MONEY! | Real Estate Investing Podcast

Episode Date: August 30, 2013

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Welcome to the Science of Flipping Podcast. I'm your host, Justin Colby. Welcome to the Science of Flipping Podcast, Episode 2. I am your host, Justin Colby. If you are new to the podcast, welcome, welcome, welcome. I strongly urge you to go check our website out, thescienceofflipping.com. There you will get the best, most important e-book that has ever been put on the market, guys. This is our e-book that we created, and it is the 15 most costly mistakes that real estate investors make today. This e-book, hands down, will help you do more deals. This e-book will help you avoid the mistakes that myself and my business partner and countless other real estate investors have made along the way guys if i had this ebook we would have made more money quicker in a in a more systematic way than we currently did. This e-book, you need to get this e-book, guys.

Visit our website. We're giving it away for free. This material is top-notch. Go to thescienceofflipping.com. Get this e-book, guys. Today's lesson, guys, is going to be about raising private money. This subject matter is very close to my heart because this is what I do, so I'm very, very passionate about it, guys. Strap on, pay attention, and make sure you're listening to this because this is how you're going to take your business from doing two deals a year to six deals a year, raising private money. So get excited because this is a great subject matter. Again, if you are new to this podcast, guys, I just want to review what you will be hearing about this podcast. This is a podcast. The science of flipping is the systems that we use in our business to take our flipping business to the next level. To take it from doing 26 deals we did

several years ago to last year we did 96 deals. This year we have done close to 50 deals. You need systems in your business and this podcast is set up for you to do flips while you're on vacation. To teach you the systems that you can be in another state, another country, or the comfort of your own home. And flipping deals. That's really what we want. We want to be able to teach you to live the life that you want to live. To be able to spend time with your friends, with your family, and still consistently flipping these deals. This podcast is for a rookie investor.

This podcast is for an experienced investor. If you've done 20 deals this year, you're still going to be learning certain golden nuggets in this podcast that will help you take your business to the next level. If you're a rookie investor, this podcast will help you figure out exactly how to start, exactly where to start. If you listen to this consistently, you will be putting more money in your bank account in a quicker amount of time and will take your business to the next level. It's all about creating the life that you want. Create that life so you can spend time with friends and family, that you can have the things you want. That is why this podcast has been created by myself and my business partner, Eddie Rosefield.

And while I bring that up, guys, if you don't know who I am or you don't know my story or our story here at Phoenix Wealth Builders, we've been flipping homes since 2007. And it has not been by any means has this been all puppy dogs and rainbows, guys. We absolutely took our lumps in the beginning. It took us almost nine months to get our first deal done. So if you're out there listening to this and struggling to get your first deal done or struggling to get deals, more deals, just understand, it was not always this way for us. We did not always have the ability to do these 96 deals. Fast forward to last year, like I said, we did 96 deals. This year, we've done 50 deals. We actually have become

developers of this deal and have taken our business to the entire next level and taken that next leap primarily because we set the systems in place in our fix and flip business to take on another project. We realized that we probably were working two to three to maybe four hours a day in our fix and flip business and realized we could take something else on, get to that next level. And so my business partner and I have really focused on how to flip deals while on vacation, while in a different country while sitting on our couch from the comfort of our home rather than having to be in the field. So, you know, again, we started off and we've taken our lumps over the years. You know, it took us nine months to get our first deal. So if you're out there struggling to get

your first deal, your second deal, your third deal, understand we've been through it. You guys are hearing me now and it's a picture in time of where we are now, but it wasn't a countless podcast for you to listen to. I want you guys to listen to these podcasts so you guys can take your business to the next level. I want you guys to listen to these podcasts so you guys can take your business to the next level. Again, guys, this is very important. It's a passion that we have because we know you guys want to live a certain life, whether that is vacationing all the time, traveling all the time, spending all your time with your friends and your family. That's why we created this podcast, guys. Right on. Okay, well, let's jump right into this.

Today, I'm excited to announce we are going to be talking about raising private money. This is primarily what I do in our business. A lot of times, I'll take on the creative side of our business and how to get a deal to work and what type of money do we need to put towards that. But guys, what is the number one rule, regardless of whether you're a real estate investor or you're investing otherwise, you always want to leverage other people's money, OPM. You've heard it over and over again. I know you guys have.

So we took that to heart. We've read countless books. We've listened to countless people speak on it. We have friends in the banking industry as well as the financial industry. And time and time again, they hit home about using other people's money. This is what you guys do when you buy a home for yourself to live in, right? You get a bank loan. It's not always your money. You leverage your money with other people's money. Now, a bank is an institution, but nonetheless, you're using their money rather than your money. So, when you're thinking about raising private money, guys, this is, it's a funny way to think about it because there's no right or wrong way to raise money. You know, I was on stage this last weekend and I was on stage for about eight

hours on Saturday teaching a group of 25 to 30 investors from, you know, all the way from Pennsylvania to California. And I spoke in depth about this subject. And I had tons of questions about how to structure certain deals. There's no right or wrong. At this point, we prefer to take certain money structures on. We no longer like to take on the 50-50 deal where it's a joint venture. They provide the money and you run the rehab. But I'm not going to tell you that you should not do that. I'm going to tell you that at this point, we like rate of return money. We like 8% to 10% money structured in a way that we can just pay

them quarterly or pay them annually or possibly pay them when a deal closes. And that's what we do today. But again, I was talking to 20 to 30 real estate investors and they had multiple questions about certain situations that they have, whether they may have a deal but they don't have money and they have a potential lender for that specific deal. And they asked me how to structure it. How do I present it to them?

So let's start there guys that's the number one key to raising private money you need to have a certain presentation right so you know we've raised private money a number of different ways but let's just use the example that you have friends and family that have a decent amount of money. They might have money in CDs. They might have money in their IRAs. They have money sitting somewhere that you could use to borrow and give them a better rate of return than they're currently getting. So let's use that example. Let's say your parents, your grandparents, your aunt, your uncle, your friends, for example, have money sitting somewhere that you could get them a better rate of return.

Well, how do you go to them? What are you structuring? How are you presenting it to them for them to see this as an actual value that they would want to invest their money with you to get a certain return? Well, first of all, let's start talking about what kind of return they're currently getting. If they're in a bank somewhere or a CD or an IRA, they're getting one, two, three, I think 4% is the highest it's getting nowadays. I'm not a financial advisor, but I know the banks aren't giving you a ton of money.

You're not getting a ton of interest back. When I had my CDs, which I no longer have because they were nothing, I think I was making close to 3%. 3% nowadays is not much money. There are ways, obviously, that I now invest my money in real estate, which I get a much higher percent.

So let's talk about maybe how you're going to present them with an opportunity to make a higher return than they're currently making. So maybe you do a little due diligence. An opportunity to make a higher return than they're currently making. So maybe you do a little due diligence. Maybe you ask them if they're friends and family about what are they getting as a return. Are they interested in making a higher return? Now you need to figure out what type of return would push them over the edge so that they would lend money to you. Is it 8%? Is it 6%? I've found in doing this for as long as I have,

most lenders now won't lend for less than 8%. Traditionally, you're probably going to be a little bit closer to 10% to 12% as a rate of return. But then you can structure your money in a certain way, right? So if you're able to get a lower interest rate, you may be able to offer them some points on the front end. So to use $100,000, if you're getting 8%, you may be able to say, you know, I'll pay you a point or two on the front end so I can get an 8% loan. So if you're paying a point or two, you're paying $1,000, $2,000 up front so that you have 8% in case you have to hold that home for a little bit longer. Now, there's multiple ways to structure this deal. Again, utilizing the idea that you're speaking to a friend, a family member, a close colleague, someone that you know,

you need a certain presentation. Now, if you know these individuals, you're going to know exactly how you're going to want to present. What's going to push exactly how you're going to want to present. What's going to push them over the edge? Quite frankly, again, I'm suggesting you start with your ideal situation, with your ideal scenario. Because quite frankly, if you're able to pitch that, they might accept it. They may take you up on that. They might take the 10% because they're only getting 3% in the CD or whatnot, whatever else their money's invested to. So come to the table

with a presentation saying, I have a deal here. It looks like we're going to be able to buy it at $100,000, put about $30,000 to $35,000 into it and sell it for close to $200,000. We're looking to borrow money at 10% interest. Would you be willing or wanting to invest with me? You would be making 10%. I would be doing the rehab and we would pay you monthly, quarterly, annually, however that may be structured. But you need to go to them, whoever that lender may be, and right now we're just speaking to friends and family, close colleagues. You need to present it to them of what's in it for me.

At the end of the day, lenders typically only care about two things. What's in it for me, meaning how much money am I gonna make, or how am I protected? And it's not really an or, it's an and. Okay, what's in it for me? How am I going to make? Or how am I protected? And it's not really an or, it's an and. Okay, what's in it for me? How am I protected? You need to present those two things. Now,

the way that we protect here in Phoenix is simply by a deed of trust and a promissory note. The deed of trust gets recorded by the title company and the promissory note gets held in a file signed off by both myself, the borrower, and the lender. And then that gets recorded in the file as well. So now I have a promissory note saying, I promise to pay you back what you lent me. Okay, so again, formulize that presentation. Now maybe you don't have a deal. Maybe you're working on just raising the money first because you feel like, you know, I need to have the money before I can even go get a deal. Well, now your presentation may be a little bit different. You don't have a deal to entice them, right?

So the argument always comes to, you know, what comes first, the chicken or the egg? Well, you can make an argument for both, quite frankly. And I've raised money in both ways, where we had a deal and we said, hey, we need $100,000. Will you lend on this deal? And then I've also just raised money saying, we're doing five to 10 deals a month. We need $500,000. Will you lend us as a company the $500,000, which we will pay you 10% interest quarterly. I've done both of them. Both of them work. So it's depending upon how you are looking at it. So let's use the example of you're going to your friends, your family, your close colleague and simply saying, we're going out here to flip deals. We want to flip deals. We want to flip two deals before this

year's over. We're currently in the ninth month, which gives us three more months of the year. We're looking to flip one to two deals. Price point's going to be $100,000, $150,000. Rehab's going to be close to $30,000 to $40,000 per home. The returns are going to look like this. What do you say about giving us a loan for 10% interest paid quarterly and putting your money in a title company and a loan towards my company, Phoenix Wealth Builders. Now here's the thing, guys. Everybody in the world knows about real estate. Why is that? Because no matter what channel you go to on TV, there is a real estate show showing you how to flip deals, how to buy from the auction, how to renovate your kitchen, how to do it yourself, how to take a backyard from nothing to something. Every single channel now has something to do with flipping homes. And that's

great for us, guys. I have raised so much money leveraging people's excitement about flipping deals, their excitement about real estate. This market has been in crazy over the last 12 to 18 months. Great time to get into real estate because the market is going up. Now, you want to be aware of how much is going up and how long it's been going up for. Obviously, because of the crash several years ago, you have to be aware of that. But it is a great time to get into real estate because right now, you can buy a deal, hold it for two months, and sell it for a profit. That's what's happening right now. Great time to get in real estate.

Everyone's excited. So I leverage everyone's excitement about it. I leverage people watching all these shows about flipping homes and buying from the auction and doing the rehabs yourself and whatever else is out there. They're excited about it. So I say you want to be a part of it. This is what we do. And if you're first starting out, guys, again, this podcast is for the first beginner looking to get their first deal done. It's also for the investor who's done 20 deals already this year alone or 50 deals already this year alone or more. You'll get that golden nugget. So if you're looking to get your first deal, it may take a little bit of time. It may take you getting trust from them. You might need to

leverage someone you know who's currently doing it saying, you know, these are my partners. You may need to give a little bit more money than you're originally wanting. If this is the first time you've raised money or the first time you're raising money to flip homes. So you might have to do that guys, but formula, formulize your or formulate your presentation first. What are you going after and what is the rate of return you're going after? Now, always start at your ideal situation. You don't have a house. You're looking just to get a loan at 10%. Now, what happens if they say, you know what? I'm really not looking to be a lender on this deal. I'm really not looking just to lend you money. But what do you think about maybe partnering on a deal? Okay, well listen, I'm of the opinion, you got to take that

money if you can. Here's the deal guys, I would prefer to take 50% of something than 100% of nothing. When we first started guys, I had lender after lender say, you know, I'm not really looking to just be a lender. I want to be a part of it. So then you get creative, right? Because you don't, again, you don't want to go all the way to the let's do a deal 50-50 right away. You don't go there yet. You say, okay, well, listen, why don't we put a spin on this? Why don't we give you an either or? Give us a loan at 10% or take 15% of the profit, whatever's greater. Now they have an option, right?

Now they technically can look at it as, well, the 10% would have given me more return or 15% of the profit is going to give me more return. Now they're a part of the deal. Now you're psychologically giving them the idea they're flipping a home as well. That gets people excited, guys. Again, I was on stage all day Saturday teaching this group of investors. And time and time again, as they were asking this question about a certain deal and certain creative financing, I kept saying, what's going to get them excited about it? And the answer is they want to feel like they're a part of something. So if you need to spin it and offer them possibly 15%, one five, not 50, but 15, and you need to say, you know, give me a loan at 10% or 15% of the deal, that pushes people over the fence. That gets them excited because you're going to say the homes

we're looking to buy. Again, you're raising the money first, right? In this example, you're raising that money first. You don't have a home yet, but you're going to give them the presentation about I'm looking to buy in this price point. The rehabs are going to be this price and we're going to sell there. I buy for a hundred. I put $30,000 into it when I sell for 200. You got to lay that out for them. And then you get them excited by saying, we'll give you 15% of the profit. Or we'll give you 10% interest on your money, whatever's greater. Now you're getting them excited again, guys, right? You're getting them excited.

Now this is for someone that you know. So a you know, a lot of people say, well, and I'm one of them, Eddie Rosefield and I did not get into real estate investing because we had rich friends and family and, you know, we didn't have a dime to our name. In fact, guys, remember our story when we started and I've told our story on every single podcast, and I'm sure you guys know it verbatim now, but we went both feet in. Ed quit his job, I stopped being a real estate agent, and we went both feet in to real estate investing. Now, at the start of this podcast, I told you guys it took us nine months to get our first deal done. Nine months. That is a long time to go with no income. That is a long time. Now, we didn't do that because we knew our uncle was super rich and

would lend us money or that we had family that had a bunch of investment properties that we know we could get a deal done right away. We didn't start investing because of that. We started investing because we wanted something more for ourselves. We wanted to create a lifestyle for ourselves beyond what we currently had. We have a vision to where we could go and we stuck to that. So, you know, what I've been speaking about to this point is typically going after either friends, family, or otherwise, someone that you know, and how to present that. Now, let's talk about going after someone you don't know. How do you find them? Where do you go to find a lender that doesn't know you from Adam? I'm telling you, this is the fun part to me. This is where I start getting creative,

guys. There is, so let's start with subject one as far as how do you find anyone that you don't know that would possibly lend? Well, there are public records that you have access to. It doesn't matter what state you're in. I don't care if you're in Florida, New York, California, or Kansas, there are public records that say who is lent on the deal. You go to the county recorder's office and it'll pull up who's loaning money on your deal, on a deal, ever. And there are databases that you can go buy a list from that will give you a list of private lenders who have recorded a deed on a property. Private lenders. This is who you want to be focusing on. In future podcasts, we're going to be going over the difference between private lenders and hard money lenders and conventional lenders like banks, but right now we're focusing on private lenders.

There are databases and list providers and title companies that can get you that list. That list is how you then use for direct mail to mail to those people. And what would be on your piece of direct mail could simply say something like, I saw you lent on property 123 Main Street. We're looking at buying a property right near there. Would you be interested in lending again? And if you are, please contact me at your email address or your phone number. That's as simple as it can be, guys. And we do this here in our business, in Phoenix, every single month. See, the reason why we do this, even though we have millions and millions of dollars to utilize in our fix and flip business, we do it because we never want to stop.

We always want more money so our business can be bigger, right? And again, I go back to it eddie and i don't come from families with a lot of money we don't have friends that have a lot of money we don't have a lot of colleagues that we can go ask for a loan to so we started by using direct mail and the funniest thing about that is the direct mail has given us a return of millions of dollars. Millions of dollars. I can give you a story right now that we sent out a piece of direct mail to a group. I think we did 500 at a time.

And one of those people happened to be in California and gives us a call based off the mailers. We have a 20-minute, 30-minute conversation. He says, what do you do? How do you do it? What have you done over the last little while? Okay, this is what I do. I've lent privately on close to 300 homes out there in Arizona. I have a big-time investor that is flipping homes out

there and has been for 10 years. So I've been his lender and guys, I'm looking to lend some more money. So why don't you find a deal, send it over to me. I'll do a very quick analysis of it. And if I like what I see, I'll lend you guys money. Not only will I lend you guys money, but I'll lend you a hundred percent of the money. How awesome is that? I don't know this gentleman. His name is Tony, by the way. If you're out there listening to me, Tony,

what's up? What's happening? Thank you again for the good business. I just met Tony for the first time last month after doing deals upon deals, after borrowing millions of his dollars, I just met him for the first time last month. How cool is that, guys? That is absolutely awesome. Think about that. Never knew him, never met him. He wired us the first deal. He said, hey, here are the terms. If you're good with that, I'll wire the money the second you're ready to close. He wired in two days before we were closing. Title had the terms. If you're good with that, I'll wire the money the second you're ready to close.

He wired in two days before we were closing. Title had the money. We were set to close. We closed the deal. Easy. Now, I tell you guys that because a lot of you are probably asking, well, how do you get the deal? Well, I'm going to be an advocate of direct mail. How do you get that lender? Go find them from the lists, the list providers, the MLS, utilize MLS and go find it. There are databases. We use a database here. If you want to know more, of course, go to our website, the science of flipping.com, but we will help you find the database to use and send out direct mail, guys. This is how we raise millions and millions of dollars.

And here's the thing about that. We don't ever stop. We can never have enough money. So that's how we find them. There are several other ways to find lenders. Utilizing Craigslist and putting up Craigslist ads is one. Networking is another. You guys are probably laughing at yourself because I bring up networking all the time.

I ingrain it into these podcasts because this has been so helpful for our business. We have gone to the REIA meetings. We have gone to the title company meetings. We have gone to the real estate agent meetings. We've gone to real estate seminars. We have paid tens and tens of probably close to $100,000 worth of real estate education. But out of that real estate education, we have found lenders. You can never be too creative to find money. What about financial advisors? What about lawyers? These are people that deal with individuals every single day. Financial

planners, financial advisors, kind of two different things, one and the same at times. People who are in charge with other people's money tend to have a lot of money, to have people who they know would lend on real estate. So maybe you start doing a campaign to financial planners or advisors or possibly lawyers. These are people who know people. They may even become your lender. Now guys, I'm going to give you another great story. I've actually been able to utilize a buyer. One of our buyers that comes in and buys properties to hold his rentals turned out to end up being a private lender for us. How did that happen?

Well, he came into town. We drove him around. We showed him some homes. He wanted to buy a couple rental homes. He's from Colorado. He loves Phoenix as a great place to buy rental properties. So we were able to drive him around, had some lunch with him, and I simply asked him,

hey, listen, I understand you're buying a lot of these homes cash. Have you ever thought about lending to investors? Someone like myself. Have you ever thought about that? He says, no, you know, I've never really thought about that. And I said, well, you know, you're buying these homes and you're getting an 8% cap rate, which is basically saying after he pays everything out

and he pays off everything and the taxes and the overhead of holding that home, his rent gives him basically an 8% return on his money. Hey, listen, I think I'd be willing to give you a 10% return consistently on your money. Would you be open to that? He says, absolutely. Next thing you know, he wires us $100,000. $100,000 he wires us a hundred grand, a hundred thousand dollars. He wires over and we have an extra a hundred thousand dollars to do two deals. We did

two deals with him. He loved it. He got his return. We give him all his money back plus his interest. He loves us. He thinks we are the best investment he's ever made. And now he's looking to do more. Guys, so you can find lenders anywhere. You can take a buyer and turn them into a lender. There's no right or wrong way to find the money. So again, when you have someone you don't know, now you got to look at it again. Do you have a deal that you can present them? Because it all goes back to your presentation, right? I just gave you the story of

the lender out in California who said, hey, present me the next deal you guys are going to buy. I'm going to take a quick look at it. Now he's advanced, right? So he has experience on lending deals. But what if someone doesn't? Then you need to put a presentation together. If they don't know you and they don't have experience in lending, you need to do the work for them. Don't expect them to understand what you're talking about. I have a current lender here in Phoenix

who they've never been a lender before. So I've spent time and time and time getting them to understand how lending works and how it would work specifically with us. But I'm presenting them how that would work so that the next deal that comes around, they're ready to pull the trigger. In fact, we have a deal lined up.

I think it closes in the next three or four weeks. It was off the MLS. Got a deal off the MLS, and they're going to close on it as a lender. They used to want to partner with us, but we were able to say, listen, instead of trying to partner with us, you're going to end up making more money as a lender than you would if you were a partner.

So why don't you go that route? So realize it takes time, especially when you're dealing with someone who has never lent before a, and then that doesn't know you, you are going to have to put in the time to raise the money. And again, I want to go back to the subject of being creative. Figuring out how you're going to borrow their money. Again, I go to, I would present my best circumstance. How do I really want it? I want 10% flat. I'll pay them monthly.

I'll pay them quarterly. I'll pay them at the end of the year. I'll pay them at the end of the deal. But I just want to give them a flat interest rate, similar to banks, right? That's how I now structure our money. That wasn't always the case, guys. We, again, it wasn't always puppy dogs and rainbows. We had to take whatever money we could when we could.

So we had to do joint venture deals. But I'm an advocate of saying I would rather 50% of something than 100% of nothing. So if you have to get to that 50% point, if you have to partner with someone, do it. Absolutely do it. Get your first deal under your belt or get two deals done at the same time. Leveraging is key right now. I'm a huge advocate of leveraging. And the reason being is because whether you can do one deal or 10 deals, leverage other people's money. I was just talking to a student again after I was on stage and he was able to pull me out to the corner and ask me a couple questions and he was using his money to buy all his deals. And I said, okay, that's not a huge

problem, but I'm not an advocate of that. Why don't you go find someone else's money to buy your deals? And if you want, use your money to buy more deals. So why don't you go take the 14 deals that you're working on that has your money in it right now, go find a lender to buy you out of those deals at 10%. This individual happens to have really good credit and has a high net worth and has good income coming in. So he could probably go get a bank to give him a line of credit is what I suggested he go do and buy his money out. Use someone else's money. And then take your money and do more deals if you have the bandwidth, right? This is all about creating systems.

So if he doesn't have the systems, he's not gonna be able to do more deals. He's not gonna be able to do 28 deals to the 14 he's doing right now if he doesn't have the systems. So he's gonna have to create those systems. And I told him I'd if he doesn't have the systems. So he's going to have to create those systems, and I told him I'd work with him on creating those systems. But he's one of our students, and he's already doing 14 deals,

but I told him leverage is key right now. In this economy, while the market is going up, this is when you want to leverage other people's money. So again, let's get back to the point of there's no right or wrong way to get a deal done. If you're presenting this to your family or otherwise or a lender that you don't know, if you need to offer them a joint venture situation, if you need to offer them a partnership agreement so that they could get a percentage of the deals, do it.

But don't sell yourself short. Guys, you have to understand, people love 10% money right now. They will take 10% on their money all day long. All day long. So start there. If you have to go to 15, go to 15. If you have to go higher, you might just need to build them into the deal. They may need to be a percentage owner. They need to get equity out. As far as profit sharing, they may need to be able to have 15 or 20% of the profit. I don't suggest going much more than 15% because there's a hard money lender somewhere near you that will do the deal 18%. There's tons of hard money out there. And again, in another podcast, you're going to be hearing me talking about the difference between hard money, private money,

and conventional money through banks. But guys, it's okay to give away part of the deal so you can get the deal done. Guys, I'm passionate about this. And I can go on and on and on about this. It does not matter whether you find the home first or you raise the money first. The argument is chicken before the egg. Well, what are you more comfortable doing? Are you more comfortable presenting a lender a deal you already have lined up? Or are you more comfortable saying, I need money before I line up a deal? I'm not able to go get that deal until I feel like I have money ready to pull the trigger. Either way is fine,

guys. Either way is fine. We chose to go find the deal first. Because guess what? If the deal's really a deal, if it's really that good, you're gonna go find that money. There is plenty of money out there that will do the deal if it's good. Guys, if you have a deal and it's good,

give it to me, send it to me. I'll do the deal. I'll lend the money, I'll JV with you. I'm just saying there's money out there. It's closer than you think. So there's no right or wrong way to do that. It's really your preference. However you want to go do that, right? So if you feel like you got to raise that money, go raise that money, but don't sell yourself short. Don't go try to raise money at a 50, 50 profit split right away. Understand you're willing to do it. Know that that is in your arsenal that you can say, okay guys,

I'll, I'll, you know, do this deal with you at 50, 50, but start at 10%. Start at 8%. Shoot, start at 6%. Why not? You never know what some people are willing to accept. If you want to raise the money first, if that's your focus, if it's, I don't feel comfortable doing this unless I'm raising the money first, then I can go get a deal. Well, then you need to talk to your friends and family. You need to talk to colleagues. You need to network. You need to get out there and go to the auction, go to the REIA meetings, go to the title companies, network with real estate agents. Simply ask questions. Do you know of people lending money? And if you don't do that, another great way to find private money is simply send

direct mailers out. There are list providers and databases that have that information. MLS has that information. You can find those lenders who record a private deed of trust, who have promissory notes on deals. That is all public information. You can go find that. Buy a list, utilize a database, and send out mailers. They absolutely work. You will be shocked at how many people lend in your area. You'll absolutely be able to do that. Now, if you're someone who says,

I need to find the deal first before I can even raise that money, okay, that's a little bit more of what I do. I'm going to go find that deal because if it's really a deal, I'm going to be able to find money, period. Whether it's 10% money or a partnership money, a JV money, maybe I give them the option. You can make 10% on your money or 15% of the deal or maybe 20% of the profit, maybe I give them that option, then go get the deal first because now you can have a clear, concise presentation to those people. Now, here's what I would suggest. If you're going to go get the deal first, guys, go get the deal, but also be looking for the money. Putting your feelers out,

are you looking to lend money? Are you looking to get in real estate? Again, everyone wants to be in real estate right now. It is all over the TV. I promise you, you would be shocked by just simply asking if they want to be in real estate, if they want to look at lending on money, if they want to do any of that, people are going to say, yeah, what do you got? Let me see what you got. But it's work, guys. I'm not going to sit here and say you can make one call and go raise a million dollars. You might be able to make one call and go raise $20,000, but you're going to need more money than that, right? So realize, even though I'm telling you how to do it and I'm telling you where to go find it, it's going to take you to take the action. You're going to hear that over and over again. You need

to be the one taking action and pushing forward every day. Don't expect results if you're not going to put in the work. You've got to put in the work to get the results. You need to send out the mailers. You need to go to the networking meetings. You need to go down to the auction. You need to send out the mailers. You need to go to the networking meetings. You need to go down to the auction. You need to call your family. You need to call your friends. That's what's going to help. Guys, I'm going to end with this. I want to tell you the story about how we raised our first fix and flip money. This is a great story, guys. This is something you guys can do because you never know who you're talking to, right? And so again, this Saturday I was on stage and we were speaking and I told this exact story and people said, huh, all I need to do is start talking about it. That was the end result.

So the way that Eddie and I raised our first $100,000 to do our first true fix and flip was simply we were at a 49ers game. And by the way, the 49ers won this Sunday. Go Niners. We were at a 49ers game and by the way the 49ers won this sunday go niners uh we were at a 49ers game and we're throwing the ball around and i hear my name called hey colby and i look around and it's one of my friends friend he knows me we're friends we're mutual friends and he says hey your buddy coleman's right over here we're throwing the ball around why don't you come say hi so i go over and I say hi to my longtime buddy. We've been friends for years, but we've just kind of lost contact.

He's doing well. He's a fireman. He's at the Niner game. We love the Niners, and we're just BSing, shooting it. And he says, what are you guys up to nowadays? Or what are you? And I introduce him to my business partner, Eddie, and say, we're flipping homes out in Phoenix. We've gotten a couple homes done. It's awesome. It's fun. It's exhilarating. I just kind of talk it up because we're excited.

At this point, I think we finally had our first two deals done and we're excited about where we're going and I'm just talking. You know, I didn't really think about him being a private lender, but I just started talking about my business, about what we were going to do, about the goals that we were setting for ourselves. And he got excited and he said, hey, that's awesome. I just got this large inheritance. I have no idea what to do with it. Why don't we talk next week and let's talk business? I said, hey, let's do that. Let's

talk business. So we all had a good time, went to the game. And I went over to his house the week after and he said, listen, I need to invest my money somewhere. I trust you. I've known you for years. Let's figure out a way that I can lend you some money. I said, not a problem. Let's write up a contract that you're going to loan us money at 10% interest. I said, not a problem. Let's write up a contract that you're gonna loan us money at 10% interest. I said, how much are you looking to loan? He said, $100,000. I said, not a problem.

We put up a contract, got it notarized, recorded it. He lent us $100,000 that week. That is how we raised our first $100,000. I didn't do anything that you can't go do. All I did was start talking about our business. And I was excited about it. And it got him excited about it. And right time, right place, you know, the stars are lined.

Whatever you want to say. But I was simply just talking to a good friend about what we were doing. And he happened to be the one that had the money. Now guess what? Because he loves what we do, he started telling people. That's the easiest way to raise money. Do good by others and they're going to tell other people about it. Trust me when I tell you that. So guys guys I end today's podcast by simply saying there's no secret to what we do the way we raised

the first $100,000 was simply talking to a buddy about what we were doing with excitement from there it just took off we started doing mailers raised another $100,000 found a group out of California that looked to lend some more money

and partner on a couple deals, and we would be the feet on the streets. So we partnered on a couple deals. They brought the money, we brought the deals, and we partnered on a couple deals. And then a friend of ours, her boyfriend obviously had some interest in it. We started talking. He raised some money. He sent us a quarter of a million dollars. Guys, just talking about what you're doing, sending out some direct mailers,

putting your feelers out, you can raise money. We're not doing anything that you can't go do. If you don't have a lot of money to put out direct mail network like crazy talk about what you're doing with an excitement because people will get excited about what you do get out there you're gonna have to spend something you're gonna spend your time or you're gonna spend your money you're gonna spend or both so figure out which one you guys are willing to do guys i'm excited about this week. It's going to be a great week. Our 49ers won.

Football season has started. I'm in a great mood, if you guys can't tell. So I look forward to giving you guys another great podcast here. Again, this is podcast number two for The Science of Flipping. Go check us out on our website, thescienceofflipping.com, and I'll see you guys on the next podcast. Peace.