Ep 515: Money and Relationships

In this episode, host Daniel Martinez interviews guest Joe Evangelisti, focusing on the importance of strategic partnerships in business, particularly in real estate investment. Joe emphasizes that not all capital is equal and shares his belief that money should bring more than just financial value; it should also come with strategic benefits like advice, connections, and hands-on support. He recounts his personal experiences where paying a higher price for capital early in his career proved beneficial by providing him access to mentorship and opportunities that facilitated his growth. The discussion highlights the crucial lesson that building strategic relationships can significantly outweigh the initial cost of capital in long-term business success.

Strategic Value of Capital (0:17-0:35): Joe Evangelisti discusses the lesson that not all capital is beneficial unless it brings additional value such as strategic insight, which is more important than the monetary amount itself.

The Importance of Experience in Lenders (2:01-3:00): Joe shares a story about his first real estate deal, emphasizing how his lender not only provided funds but also crucial advice and connections that helped him succeed.

Learning from Early High Costs (6:56-7:02): Joe advises new investors to accept higher costs in their initial deals as a trade-off for gaining valuable experience and establishing important relationships in the industry.

Long-term Benefits of Strategic Partnerships (8:17-8:28): He concludes by highlighting how early partnerships and the willingness to overpay for capital can lead to substantial long-term benefits, including increased access to funds and growth opportunities.

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Transcript

hello welcome to the high with us

podcast I'm your host Danny Martinez

today we have a special guest I just met

recently the last couple weeks uh Joe

evangelisti all right so I have I have a

question this is based off the

conversation we had in Louisiana yeah

but you're you you mentioned you're

always sourcing capital and not all

capital is good Capital which we we but

you said when we were in Louisiana you

said something interesting that it stuck

with me but money needs to bring more

than just money to your relationship can

you talk about that because I think it's

such a great it such a great lesson and

we're stuck with me even since today and

now that we're talking today I want I

want to share that with the world

because we don't record that

conversation yeah you know I've had this

I've had this theory in my mind for a

very long time and I think a lot of Real

Estate Investors specifically and I'm

sure actually I shouldn't even say Real

Estate Investors but let's focus on Real

Estate Investors first first for a

minute right a lot of businesses need

cash and I think they tend to lean on

different private lenders or any lender

for example short of a commercial bank

right because you know any banking

institution is not going to fall into

this category but let's say anything

outside of a bank for example I'm always

looking for this the Strategic effect of

the money right so a lot of people can

cut a check and I think that when you're

early on especially I was actually I was

in an event about two months ago and

Damon it was a very small event there

was only like 25 or 30 people in there

and this event had um Damon JN was one

of the speakers okay super good guy I

don't know if you ever met him I've

actually had the pleasure of meeting him

a few times one-onone or or in small

groups and Damon said I don't want to

mess up the quote but something to the

effect of the earlier you ask for money

the more expensive it's going to be and

that's you

know in all in in every sense of the

word we all know that that's the case

right the earlier you ask for it the

more expensive it's going to be in my

first deal I ever did when I flipped the

house I was telling a story about this

on one of my podcasts a couple months a

couple weeks ago my first deal my

private lender and and I'm telling you

the story for a reason I'll Circle back

to why right yeah my first lender and I

always say if you want money ask for

advice and if you want advice ask for

money okay so I asked my first lender

for money gave me a bunch of advice he

tried to introduce me to a bunch of

Banks and long story short after about

four months he couldn't find me any

money and I had this smok and hot deal

and it was a short sale and I ended up

buying it and I was like I was like dude

like this is a great deal do you know

anyone that can give me the money and

finally he caved and he was like okay

I'll give you the money but it's going

to be at ridiculous terms I said okay

what there the terms he said I want 15%

interest and I want 20% of the profit

said fine let's do the deal right and I

forget exactly what I borrowed but the

bottom line is I flipped this house in

under 90 days from start to finish I

bought it I rehabbed it put it back on

the market and we killed it we knocked

it out of the park I made him so much

money that we had lunch about two weeks

after closing and he brought a check to

lunch for $5,000 and he handed me $5,000

and he was like you paid me too much

money I feel bad he gave me

$5,000 and I was a broke kid man like I

had just flipped my first house I had

like I mean obviously I just made some

profit but I'm still broke right yeah

and and I ripped the check up and I gave

it back to him and I was like dude a

deal is a deal this is what we agreed to

and this is what I this is what we said

we're going to do and I and and I will

tell you guys this this it wasn't

because I had some kind like I'm some

kind of honorable guy or something like

that it was just because a deal is a

deal right and I believe when you do a

deal that's the way you should do a deal

yep and

so from that point forward first of all

I think he lent me 150 Grand or

something like that I I worked my way up

to 8 million at at one point with him

eight million dollar of his money on the

street okay from 150

Grand all right and so the point is I

think at the beginning when you're doing

deals with somebody it doesn't matter

what it cost you to do your first deal

your second deal your fifth deal for

that matter you have to prove your worth

number one however I also believe this

is a guy that I knew going into it had a

lot of experience lending money on the

single family level like he owned a

title company

he knew a ton of flippers he knew where

to Source deals he knew how to find

deals he knew contractors he knew where

to get materials right so in other words

what I'm saying to you is he didn't just

know how to write a check he knew how to

cover my ass if I got in trouble yep how

to bail me out okay and let me tell you

I got in trouble a lot and when I had $8

million of his money on the street I got

in trouble a few times and he bailed me

out

right so so a partner that writes you a

check is not important if they can write

you a check it's are they a good

strategic partner can they help you make

connections can they help you become a

better whatever you do flipper developer

you know can they can they create you to

become better but you have to get your

ego out of it right because if

somebody's writing you a check but you

think you're so good you don't need them

well then it don't matter matter right

because your ego will be in the way the

whole time you're just like give me a

check I don't I just need your money I

don't care about I care more about today

maybe because I'm older and wiser and

you know i' I've just been doing this

longer I care more about the Strategic

relationship than I care about the check

right lots of people can write you a

check and by the way you're you might

find if you've just started doing this

or maybe you've been doing it for a

while there's lots of people that can

write you a check and they're complete

deags

maybe you guys have borrowed money maybe

you haven't or maybe somebody listening

has borrowed money there's a lot of

people that write checks and they're

complete pain in the ass right they buy

they bug you they're it's the opposite

of a strategic partner right they drive

you crazy I just give them their check

back I don't want their money right if

you're gonna give me money and then and

then drive me crazy I don't want that

money right I'm starting to look for

more alignment right money is one thing

how can we create strategic

relationships and grow together and how

can I help you help me and vice versa

right because writing a check is is just

one part of the equation but if we can't

grow together then there's really no

sense in in in me taking your money if I

can't help you and you can't help me so

I think the Strategic piece of it is

just as important as as the money and

that right there I don't even want to

add to that that is amazing I'm gonna

cut that whole part into a clip because

I think more people need to hear that

because it is it is it's such an and a

lot of people don't understand this like

pay whatever it costs in your first deal

your first five deals pay whatever it

costs it doesn't matter and I love that

you you've got it up to 8 million I love

you tell the story because I I tell

people this all the time like I I told u

a new partner they like oh I know you

guys got private Capital what it gonna

cost to do the deal I'm like 50% yeah

Oho expensive I can't do it all right

Deuces people burn Bridges like that

it's so aggravating it's like dude you

have no especially if they have no

experience right it's like you have no

experience and you're trying to write

the rules it's like dude you got

somebody who's got 10 20 years of

experience and they're trying to tell

you this is what I need and you're

all over the deal before it's

even gotten started it's like that

person could help you do your next

hundred deals yep you're on

them for the first deal yep it's like

that dude that guy by the way could have

told me he wanted 50% of the flip and I

would have gave it to him yeah matter it

it doesn't matter because the the

biggest thing is you knew he had

experience and you're willing to take to

you're willing to pay him for the time

and you understood that so you're

willing to pay him through the

transaction yes you're still going to

get paid it's less than what you want or

would like but you're paying him for his

experience and then that opened up the

door to where you're at now 10 years

later and you had $8 million on the

street at that point but he was more and

it's such a great story I love that when

you're starting out overpay Capital find

a strategic partner that's going to

bring more than that's so I love that

man this best part of the whole episode

in my opinion that amazing

[Music]

Ep 515: Money and Relationships

Daniel Esteban Martinez

Joe Evangelisti