Ep 561: How To Raise Capital As A Land Investor

Transcript

Chapter 1: Sharing Wins.)

hey let's start off with some wins right now guys I want to hear some wins for the week last 14 days who in here has a

win that they could share with everybody else in

here I don't know who's in here but one of the gota win I just sent you the contract for

bass trop oh Melissa has a win that's a good win too that's a really good win

how when did you get that lead it's probably been a couple of months really that one the the house one

well he had reached out to me the initial reach out yeah was probably about maybe a month or two

ago it feels like a month because I was just out there yeah me and Mikey drove it I went to go see when uh how high the

grass was because we shredded it when we bought it in December we sold all the

acreage uh we just sold the last 3.5 Acres congrats Martha and Junior

and I drove out there because everybody was complaining like oh it's ugly they said it's ugly said man why is it so ugly when I cut it it looked badass so I

drove out there and it was all overgrown the grass was like six feet high and uh so I said okay let's just cut the grass

how much just cut the grass $2,800 right and I thought okay that'll make it pretty then that'll get it sold quick

while I'm out there I got to that blue house that was in the middle of the 18 Acres that we that's the only piece that

we did not buy the lady was living in it well during this time the bank for

closed on her she lost it and I was like man I I saw the doors and windows open I was like oh shoot she's gone um and I

was like man I wonder how I could get a hold of the bank that foreclosed on this thing you know just to ask them what

happened what are they going to do with it all that crap same night the same

night Melissa calls me hey the guy in the blue house in Bastrop was asking if we want to buy it I was like shut the

up that's crazy I was just out there hours earlier wishing I could talk to this person they gave her a price and

then bam uh I think Junior and Mara just sold it like I don't know so the time you got into contact with them we got a

a contract on the sou side I think as of today it should be ink now so there's three wins right there

just on that one deal the three of you guys congrats to all of y'all that's how it happens guys it's

just magic it's just just working putting in the numbers making something something crazy happen there's no telling how it's going to work but

sometimes it just works itself out like that I was just praying to get a hold of these people and then we got the you got the got a hold of the owners got a hold

of us I didn't even have to skip Trace them so that's kind of being in the zone right now who else has a win anybody else before we get

Chapter 2: Recognizing Deals and Developing Instincts.)

started not a win yet but I think on we're on track on one on a deal I

submitted like that I like it I'm counting it as a win because it's definitely progress for me so is this

Ruben this is Reuben yeah yes ah snap okay all right dude okay yeah let's do

it man I think that one's a deal I haven't I haven't broke too much into it but it has all the signs of a deal yeah

my heart dropped definitely when I saw it so on so what was that you're starting

to fill it now when you see a deal you know it's a deal oh yeah it's definitely coming like almost like a second nature

hopefully pretty soon but yeah we're getting there definitely making progress for sure D that's something that cannot

be uh duplicated you can't fake that the more deals you look at you start to feel

it like in the pit of your stomach like in your chest wait a minute my heart starts beating fast when I know it's a

deal my heart start pounding I'm like contracted so uh are are is starting to become second nature for you now yeah I

definitely felt that feeling when I saw it because yeah it's like like a super easy one we just got to get the terms

right now yeah dude yeah yeah so it's hard to avoid it you can't unlearn it right I

don't know how long it take it took you to put that skill together where when you see a deal your heart's pounding and you just love it and you're like I know

this is gonna happen there's really no way to fake it but but definitely you cannot unlearn it so from now on

whenever you see a deal it that feeling is going to get stronger and then you'll start to be to where when you do see it

there's no more thinking anymore like you see it you see it unfold right in front of you sometimes it takes 180

seconds sometimes it takes six minutes but this is a deal somebody contracted who said this his lead call them back right now call them they're not

answering the phone call them skip trace the owner call like push that thing over the fence because I already know it's

over like no matter what that deal is going to not only pay for for itself but it's going to make a tremendous amount of profit and then you just got to just

tackle it but there's nothing that you can do to fake that you can't take a course you can't you know talk a big

game and not back it up once you start to recognize what a deal looks like and you fill it in the pit of your stomach there's not there's no there's not a

course that you can buy that gives you that feeling in your stomach it's just looking at an awful lot of deals for an awful long time and then you have a

superpower now so the day you die for the rest of your life you'll know how to identify a land deal and under 5 to 10

minutes you know you can identify it's 50,000 profit 100 200 matter you'll start to see it I know

Kyle has it already Daniel has it I think Flores has it Octavio is developing it probably has it already

but once you start to recognize those deals like that then um and it does become magic it become sorcery because

you should not be able to command this amount of capital in this amount of time so congrats man I've never heard you use those words before today but I know you

you've been with us for a long time now and of course it makes sense that you're starting to be able to identify what a great deal looks like and it's only it

only gets better it only goes faster I think people are afraid to put in that time like oh I've been trying for six months or three months and I haven't got

Chapter 3: Submitting and Evaluating Deals.)

nothing like well then good for you I've been trying for six years and I'm still learning you know so you just have to

make up your mind to identif try to identify these deals for the rest of your life and you'll just get better and better and better and

better congrats man uh we're gonna segue into the call a second Mech MK has a

question they raise their hand let's a real quick move forward all right yeah

thanks man so I just wanted to ask like you know I heard like like a deal are you are you

referencing like um something that you've already sent a contract or

referencing you're just looking at the land and the land looks you know pretty good like emits your buy box is that is

that is that kind of what you mean so for the first person Melissa and she contracted a little deal as a home on an

acre and uh that's our the front end contract should be signed as of today and the sell contract as of today uh so

that's deal number one that we're looking at right now uh and then the second person Ruben uh he submitted a

deal to us so once you learn what our exact buy box is you send that into our system to our people we'll underwrite it

for you and we'll let you know uh what offer to make how much we would offer both in cash and seller finance and uh

once we felt like it's a deal like right now like I think Ruben's getting close where we feel like we've already reached a verbal agreement with the the sellers

and the offers that we've made so that's why we're saying that's probably it looks like it's about to Ink

now oh okay gotcha gotcha you know just a quick one I'm a new member here I just joined like two months ago and I've been

joining the zoom calls and and all of that um what what you guys are doing here really is really awesome but I just

like I would like to get more information about how to Summit deals because that's where um that's where I'm

getting a a little bit stock you know I have a very healthy deal pipeline deal

flow but I'm really getting stock just identifying you know how you know how to get the the right price and if if this

is a good deal or not so I love to know how kind of deals to you guys let's dig

into that quickly so the the the more terrible the deal is the less attention that deal is going to get right so if

you just go on Google or red fin and you say hey a million dollars million acres and you send that in and you didn't talk

to anybody you didn't negotiate anything that deal goes into like the Barrel where we're probably not even

going to take a good look at it like it's just going to go somewhere and it'll be on hold probably indefinitely

but if you reach out to that seller and they wanton a million dollars 100 acres within 30 minutes San Antonio and you

said hey we'll give you 500,000 in cash or we'll give you the full million with 5% down balloon in 36 months and this

the the agent said sounds great write it up send it over that deal is going to take priority like we'll help you send out the contract the same day so the

closer that deal is to our buy box the more attention that deal is going to get and if we got to go raise capital for you 50 Grand 100 Grand 200 Grand 300

Grand uh and the deal has the weight for it and it's already been negoti again that that deal takes Capital

priority it takes time priority everything so what is our buy box our buy box is a large tract of land in

Texas as close to major cities as possible agricultural unrestricted the more Road Frontage the better so if you

send me a property and it's 100 acres and it has a mile of road Frontage your deal goes all the way to the front of the line if they're willing to accept 5

to 10% down 0% interest and balloon in three to five years that deal goes even closer to the front of the line and uh

like I said then it just depends on the rise like hey they want a million down like fantastic can we do it yes it better pencil for that if we're going to

put in a million we need to see at least a 2 and a half x a 3X return uh but if if we if you negotiate five or 10% down

and we can get in with 50 Grand 100 Grand 200 Grand and we know we're going to be able to sell everything for a million two million make some you know

multiple six figureure profit then again that deal goes to the front of the line so that's that's exactly what we're

looking for I I'll tell you like the simplified answer is it's 20 acres or more with Frontage under 20,000 an acre

or less and that's the two two sentence answer of what our buy box is now I'll tell you

what we won't do I had a call yesterday some a student here called me and he's like uh I don't know if he's here right

now so if I if you are here sorry but he called me he's like hey I have a call at 4M with with a with a

with the agent they're asking uh asking it's in this part of town it's in a great part of town great piece of land

has Frontage and all that stuff I'm like What's the price breaker didn't even look at the land n of the land listing

like what's the price for acre he's like well it's 50 acres 60,000 an acre okay that we're not going to buy that I'm not

Chapter 4: Raising Capital and Building Relationships.)

going to show up at the meeting if it's 60,000 an acre I'm not going to show up I mean it's just that's a two-year deal

we're not doing two-year deals right now it's got to be 20,000 acre less then I'll look at the I'll look at the listing so if it if you send if you send

me a one of the first things we're GNA ask you is where where's the nearest address how much is it and how big is it

because I'm going to do simple math if it's 100 acres for 10,000 an acre okay that fits our buy box let me see what

the actual parel looks like and then I'm going look a little further but one of the quick toest qualifying questions I'm

looking for is the price breaker if it's under 20,000 an acre I'm gonna look at it immediately and if it's smaller

that's fine too smaller land kind of breaks that that barrier but if it's 20 acres or more and it's under 20,000 acre

I'm going look that immediately if it's under that five acres for maybe 30,000 an acre I still might look at it because

there's a different uh price discrepancy there but if it's 20 acres or more under 10,000 an acre you're you're look at

every single one of those opportunities we like stuff with Frontage so the more Frontage the better

and that's just the quick answer man yeah I was going to say so so I think another embedded question into that last

question was how do we know if it's a deal or not and what price do we have to sell it for our Target exit is a maximum

of about 199k maybe 249 I feel like 299 for 10 acres is no man's l so our Target exit

is sub 20,000 an acre we look for a 2X multiple so if you buy for 10,000 we want to sell for 20 you buy for we want

to sell for 16 and so forth so by the time we have to sell 10 acre tracks for 427,000 we

don't want that deal at all if you're getting it for like that we got to sell it for 40 we're just

all the way out because you can sell it yes 100% chance it's gonna take a really long time so there's no point in raising

that much capital for that deal trying to make that amount of money exit like in the three to 400s doesn't make

sense yep doesn't matter if we if we spend $1

we want to make two so if you get a s Finance dat we put out 100 you know if we

only back two M maybe two and a half maybe three but uh yeah 2x should work

if we spend 100,000 because that's how much the seller wants down and then we're going to sell three or four you

know 100K Lots or 200k lots and we're gonna make at least 200k profit we'll still take a really good look at that

but if we had to spend 100K to make 40K ain't going to happen 50k 60 nothing

that's it yeah Z says we need a Discounter time so that's it you have a million dollar Ranch yes we know retails a million 100% we're not doubting that

but if you want our cash we want I can't accept that okay well best

of luck to you sir have a nice day oh but also by the way I can give you the Millie if I can give you 5% down and pay

you off in 30 years then that's that's a yes every single time because now we have 30 years for that land to

appreciate so we know we'll make money someday so either you give me a discount today or discount for tomorrow that's kind of the whole game so I'm gonna I'm

gonna read you something I saw earlier today real quick it says remember that people are trying that people are

selling remember that people are selling people selling property are trying to

buy your money and you can spend it on anything people are trying to buy your

money your money with their lend they're trying to buy your cash with their lend yeah

and you can spend it on anything so you have to make them understand that so if the sellers want seller

financing if they don't want if they don't want to reasonable cash price Deuces like it is what it is there's

thousands of land sellers out there that will take that and we just haven't found them yet millions of land sellers out

Millions everybody gets two offers guys if you make if if you send out an offer to a property owner and you don't send

two uh two prices then you're doing yourself and them a disservice so you know it's a million retail so our cash

offer is half of retail period that gives us holding cost lender cost taxes everything it's worth the million I know

it sir but I'm only going to give you five 550 that's the best I can do if you want me to move money out of my kids

account and put it into your kids account then I need a crazy discount because I need to know that I can make some kind of profit here without losing

my like life savings right or I can give you the full Millie just like you asked for 100% of it I'll give you 105

actually right I'll give you over asking but I need 30 years to do it that's it do you want to take one of

those no I can't do it okay is it cool if I CAU you back in about you know a month or two and check in how things are going yes done on to the

next you want talk about raising Capital Daniel absolutely absolutely so I want

to talk about raising Capital today a lot of people in this business and I I want to iterate if you're trying to get

to the next level it's so funny me and Anthony talk to a lot of investors and

they all come to the same Epiphany so we're going to break that Epiphany down today the Epiphany is is as in a real

estate investor you come to the point where you need more Capital if you want to grow that is the bottom line Anthony

was talking to a friend of his local in San Antonio and he's like man I've been doing this business for a long time and

I realized I need to raise more capital and it's one of those things you

come hilarious man we laugh we laugh anthy's breaking up a little bit but it's one of those things where like you

we're going to break that break that that cycle is you need more capital and do more business so there's a couple

people in there that have different experience levels whether you're new or have experience you need more Capital if

you have experience you need more Capital if you're new you you need more Capital if you have if you're

intermediate you need more Capital doesn't matter where you're at you need more Capital One of the crazi things I

not to be political or anything but these these politicians they're raising Capital they're already rich and they're

out there raising money so and the thing is is there's people out there giving them money so and they're not getting

any investment Roi at all giving it to politicians so there's plenty of capital

out there willing to invest in real estate to get an Roi Anthony you got better signal now I don't know yeah you

you got better signal now yeah no that's a great point is that we think like well

nobody's gonna lend me a million dollars to flip a wrench but like Daniel just said hey there's people out there that

are giving it away to give it away that was the point the endgame was to not receive anything back right because it's

like some for some kind of cause so think about that you know how much capital is out there if they're willing

to just give it to something where they know they're not getting a return and then there's different people at different stages of wealth where getting

a getting a return is all they care about yeah yeah so yeah you have to

understand who you're talking to so some investors want Roi why is this pertinent to why is this pertinent to what we do

who cares capital or not it's pertinent what we do because it gives you the ability to accelerate and to buy more

deals Anthony if we had infinite Capital how many deals would we do I probably all of them right all of

them because think about this right now like there's nothing that we're doing that's not limited by Capital right so

if we if we raise a million dollars we can place it pretty quick we could probably place it in in in one day maybe

two days tops if you if so let's say you're doing self storages or you're doing apartment complexes and you need to do a 20 million raise to buy this

building downtown Houston right um that's that's one raise so you should only raise enough to take down that $20

million asset there's no reason for you to go out and raise 100 million there's no reason zero reason but if you have

aund million pipeline of land deals and development deals you have permission to raise 100 million

now right and and you can the number start to get exponential based on the the uh the asset and based on the amount

of the raise that you need so I think what we've built here that's special and I don't know if it's ever been done before um we we haven't we can do an

infinite race because we no matter what amount of capital we raise there's there we we

have the assets to satisfy it handsomely with with amazing returns so one thing I think any anybody

can infinite raise but at what Roi so think of like Grant Cardone the more popular you get the less Roi they give

and then the other the other Epiphany is if you come in through an ad you're paying for

it so there there's the there's the the the push and pull of of all these

different Roi so there's like I said gr Cardone he has his own little fun 6% Roi

and there's people that buy into it because it's gr Cardone but there's other places that can produce a better

Roi in better positions in better places and different asset classes all all over

the place so it's one of those things where you you gota you gotta look at at

the far reaches of space to try and find capital and one of the places I get capital is social media which is a funny

funny topic to have but social media brings in a lot of capital and uh it comes about by having conversations

about your transactions so we have a few questions case studies for private money and

structure deals yes so you 100% put case studies for private money and how you

structure deals so the more Capital you you come across the cheaper it gets and that's the other thing too too so

there's there's like different levels of like Capital raising so there could be like you have your own Capital you can

be like I I'm starting to do business and I have I'm starting to leverage capital and then it comes down to I'll

take any dollar I can get and then there's the I have so much Capital but nowhere to place it I'd rather get a

cheaper I'd rather offer a cheaper Roi so gr card's kind of at that tail end where he has so much Capital at his

fingertips he's giving away uh lower Roi but people that have the need for it and

plenty of deal flow they're usually willing to give a large Roi to all the investors involved just because there's

plenty of opportunities still in front of them so you always want to find those

opportunities or offer those opportunities uh you have the opposite end of that Spectrum too Daniel where uh

people yeah they have so much Capital that they don't even want a big RI they don't want they don't want to maximize

their Roi they want something that's very very safe so you go in there and you start saying hey I get you guys 20 25 40% return then they're going to be

afraid of you they rather just be like I wish you would just said I wish you would have just said 9%

yeah uh Zack asked what's the minimum you're looking for from investors and what structure are you using great

question minimum we're looking for I mean it depends use like right now it's

probably like 50,000 or 50,000 or more the bigger the better uh how we structure it is depend on how much

Capital they bring so it's very very hard to give security to 50,000 or less

which is why we're trying to get more of that money and for instance hypothetically we have a $20,000 deal oh

anthy left say hypo hypothetically you have a uh $20,000 deal yes you can offer

security to that transaction but there's not much Roi in a $20,000 deal you might get it for third you might get a $20,000

deal that might have possibly 40 Grand on it after commissions and holding cost

like there's not you're going to break $10,000 after you pay off everybody and it's not really much Roi there's no

really incentive to for that $20,000 hey here's 600 bucks for your money like

like okay thank you I appreciate that let me find a better place for it so usually the smaller amount of money

they're looking for a higher Roi usually the bigger amount of money they're looking for security is how what we've

noticed so with security you can offer better better security so for inance

since say you have a $100,000 deal and you get a $100,000 well hey I need $100,000 I'm going to turn this1 into

150 or 175 whatever that is and it's a lot easier to offer Security on that $100,000 asset just because you can

offer actually offer security that's why it's a lot harder for smaller money because you actually have to buy or hold

the asset in in a good security position and you have better options available to

them so for instance I have a deal in Florida I haven't done a deal in Florida in probably 8 to 12 months and the deal in

Florida is a $100,000 purchase and the property's worth

three two to three two to 300 Grand so it's a lot easier to raise that money

because there's a good security and it's over $50,000 if they we were to raise

hard money to B to buy that property we get off for first position and the

bigger amount of money wants better security so the more of money you can offer better security the less amount of

money you kind of have to do promissary notes and handshakes and it's a lot harder to secure that amount of money on

smaller projects what's a good amount you also look for Capital stacking uh so

some are secured and with Roi and some are not secured yes yes good question so Zach

yes 100% so me and Anthony talk about it we talk about this uh we talked about

this a couple weeks ago but it's the hybrid C Capital stack so you have different positions of debt equity and

security and all those different things so most time when you when you're and this is very important when you're

buying like houses and I know we don't talk about houses very often but you always talk about houses so if you're

trying to buy a house subject to there's always a first lean security from the

bank and say it's Chase so I have this conversation often with uh people from

California because they're expensive properties so they're trying to be creatively buy expensive houses

with a first lean position of a bank essentially you have to have the

seller agree to take a second position or you have to bring the equity to cash out in a different way and seller may

not want to take second position you might not have be able to bring a second position because you have to pay up the first so it's a lot harder to do

creative deals with little capital and provide good

security so it's it's a it's a balancing act based off of your Capital needs and

requirements and what Roi they're looking for so generally the higher Roi

I give is less security so if I need let's say hypothetically $10,000 for EMD

I'm gonna give really and we talk about with this with Gator but the less

security the more Roi I'm going to give the more security the less Roi because they're in a secured position so let's

say hypothetically I need $10,000 EMD for $100,000 purchase so $10,000 EMD I

might give 50 to 100% return on that $10,000 EMD whereas if I bring in a hard

money loan for $100,000 purchase I might want 18% or less which most hard money

loers are doing 12% you know 12 and twos and underwriting and 12% interest which

which you generally hear that stuff so and the reason why they're getting that is because they're in secured position

and they have more Capital to deploy so it's kind of understanding where everybody fits in and what position

they're playing a role in and what Roi you're going to give them hope that answer your question but yeah case studies case studies case studies case

studies this is how you're going to get bring Capital to the table I tell you this all the time is if you're trying to

build up your track record you want to show your either a deal you JV JV in

on or deals you wholesaled because those are all proof of concept that you know how to find a good deal so a lot of

people have there's three things you need to do a deal it's

marketing knowledge and money um and marketing could be time can

be seen as time but you need those three things to do a deal so a lot of people with money they already have access to

money so they're able to do a deal pretty easily and they might not produce the best Roi but they have the money availability to do it now people with uh

low Capital reserves are actually having to put in time equity and knowledge to

produce that deal we talk about this all the time but we've we've gotten to this point through these things so we do a

couple we did a couple deals put it all together hey we did it here's this deal we did at ABC we have another one just

like it we like to invest boom boom boom boom boom you have those case studies we we're now putting together graphics and

I'll put one in in the chat so you can see I kind of show you our graphics and

Allan's seen our graphic little portfolio our Graphics come across lately but we're getting better at every

deal we do we kind of get a graphic made and we're using that as proof of concept

on deals we've done and created and sold and all that jazz so let me find a good

one here so this is a deal we

did that we just sold the last slide on here it comes in the

chat so we're making acquisition graphics and we're making sold

Graphics so we bought this deal for 409 you can see them in the chat bought

to steal for 409 last November we sold three lots in December and then we sold

the fourth lot in August of this year which is this last week we kind of held on to that lot we had no reason to sell

it so we kind of kind of sat that lot for a while but we just sold it Allan has a question this is this is good for

Allan go ahead Allan hey what's going on everybody so what I meant earlier when I when I was

kind of talking about case studies for private money or like the structure of kind of like how some deals went in the

past could you maybe go over kind of like for example kind of what to to give an explanation to somebody right so

let's say I meet somebody at a restaurant and you know kind of just trying to explain to them what we do and

maybe like give like a third person story on hey you know we bought 100 acres you know it was a million bucks

10,000 an acre three 300 Grand down and we did XYZ so can like I guess if we can

kind of hear some case studies like that I would help a lot yeah so let me jump through this I've learned this recently is you never

want to pitch first opportunity you kind of mention it Loosely like hey I I I see

opportunities to invest in land and they know how to produce really good returns and I try not to ask for money

on on the first thing because it seems almost to the people could be too

aggressive so you never want to ask for money just flat out hey I I need money for land deals like I've never done that

before or my partner needs money for land deals it's more of the more it's more of like introduction is this

something you'd be interested in and then you kind of answer questions and then you always leave them open-ended

where this is a good one for you as if if I had an opportunity to come up if I

uh would you be interested if I if if I were to follow up with you and let you know about the new opportunity I have

you never have an opportunity right then and there you always want to leave it open-ended where they they ask for the

opportunity to be sent to them that's important you wait for them to to to

essentially affirm this is this is a sales process this is a sales process we're

just going through it differently so you want them to affirm that they want to be made aware that you have opportunity

coming up in the in the near future once they affirm that they that they're

interested in the opportunity then you bring up the conversation hey I have XYZ opportunity and it's X we need XYZ for

and whatever position I've had many conversations with lenders and they ask they always ask me what's your

experience is G be a question so then you kind of show them exp your experience or the experience of people

that are part in the transaction whether you're raising money so one thing I one

thing you need to understand is that money raisers can participate in transactions that aren't even their own just by bringing the money and there's

different levels of this if you familiar with multif family people do this multi family all the time they're literally called sponsors they bring other

people's money to the table and they get equity in that transaction just by bringing money to the table so there's

people's whole job is all they do is bring money to different transactions that aren aren't even theirs so a you

want to have your track record in a clean concise format or the people you're working with as a clean concise

format and then you want to talk lenders want to know the sometimes they'll ask

you flat out the bad the bad things like we we've been asked what's the worst thing you've done well I lost this

transaction on doing this and this is why we do things this way so you always want to have don't be afraid to talk

about your your L's because your L's is what makes you into a winner and that's okay and not everybody's a winner 100%

of the time and that's okay so it's talk it's it's being open-ended about your

your uh your losses and your wins and we know how to get good wins and here's how

we mitigate losses because of my losses that I've lost so it's it's kind of painting

painting that picture of I know how to win I have taken some losses but I've learned from my losses

and this is how I win us as land investors have a uphill battle every

time we talk to money because nobody understands land as much as we

do so it's an uphill battle negotiating with lenders about land because

everybody's owned a house at some point and they know everything about renting and Airbnb they St at Airbnb it's very

understandable for them to they've seen that that old house get remodeled and fixed up and they they understand how a

Fix and Flip Works they may not have never done one but they understand how it works you buy low you sell high so it's a lot

easier to explain house flipping for land flippers you have to you have to

dig in a little bit deep a little bit deeper and you have to explain a little bit further you might have to show case studies and Huds and show them the

Google Maps and sometimes even take them to the property you know and that's just

what it takes to to raise money on land and it's a lot harder for us from A to Z

on every part it's a lot harder um MEK says uh LPS LPS are more set up

for like a fund structure we do we like doing syndications because we do project by project and that's kind of our we

kind of Syndicate Capital into different money structures but there's a lot of different money structures that can

secure funding for a deal did that answer your question Allan or you want to iterate on that it's a good question

and I appreciate you ask your your caliber asking good questions so keep it up keep it com

I want you to learn but I want everybody else to learn as well all right em K you got a question go ahead yeah just kind

of follow up to Alan's question like you guys have been doing this for a while so you understand you know the process of

you know raising money but for somebody who's getting started when do you start

trying to raise money do you raise money per deal or you should consider raising

money when you have like the deal on the contract because as you said um if you're trying to reach out to lenders

you know you need to have some sort of um deal or something lined up to

approach um lenders so when do you usually start um sourcing for um

Capital that is a great

question

e e

I had a lender I I communicated with for over six months before they even L on one deal it was it just took that long

for them to have confidence and I pitched them multiple times and they were aware of me pitching them and they

wanted to be pitched they just weren't comfortable into seeing multiple pitches till they like oh I understand this let

me let me jump on this one and it just takes multiple times John you want to say something on this yeah I wanted

wanted to add into the conversation because this just happened to me so I I'll give you a real life example of how

this goes down right so met my doctor getting my annual checkup

right and um the first time I did an annual checkup which was last

year he asked me what did I do for a living I say well I'm a real estate investor so you you know you always want

to play in a way you're playing down what you do because you're fishing it's like you

throw in a you throw in the worm right you see if somebody bites because the

first thing I want to know is what what is their reaction when when I tell somebody I'm a real estate investor

because they they either have absolutely no interest and they Buzz right over and they keep going or they say oh well

that's interesting and then as soon as they show any kind of Interest or in

this case he came back to me he said oh Jesus Christ real estate I hate it he

says I just got done I just got done with I had 20 homes investor called me

up one time and talked me into buying 20 homes now this was uh another probably

somebody that he knew that talked him into buying 20 homes to rent out he says

but I'm not cut out to rent uh they were having the you know was one problem after another and we all know the

trouble of of homes and all I did is oh yeah that homes that is not where you

want to be investing your money for sure but I didn't give him the answer I'm still waiting so you can play this

game where you where you have this knowledge they know you have the knowledge and

they know you must be making money but you have you're you're not just stepping up begging them for anything or begging

them to tell to tell them what's going on and then he dropped it very quickly he was just so you know discouraged by

his whole experience well the next year which just happened um he he brought you

know he brought it up again hey how's the investing and what do I say do I do I come on like I'm trying to you know BS

he knows what the market everybody knows what the market is so I use that to my advantage so here's how you use it to

your advantage oh yeah well they're getting very hard to find right now so you know I look I look for very specific

you know nice profit deals but they are getting very hard to find right now they're far and few between so you know

we we look under a lot of rocks before we find a good one and that opened up the other

conversation he goes back into the conversation again about how his terrible homes uh he says yeah he says

I'm I'm just I'm I'm almost done with the homes and so I asked him well so how did how did you get rid of the homes he

says well I ended up um doing seller financing on all of them I said oh so

you ended up creating notes well now see there there's what there's the answer there a perfect way the perfect way of

dealing with it

and Allan's going to appreciate this is you Source Capital at all all times you Source you Source Capital at

all times because you don't know when you're going to need it and sometimes it takes a longlasting relationship to even

pull Capital out of that person

e e

because notes are a lot more secure than rentals no toilets no headaches no

nothing he said oh absolutely he says my problem is I'm I'm just about to the end of those so 20 homes you know he's got

we're talking over a million dollars right so he's at the end of these notes he says I actually love those notes

because you know I was making a pretty good return on there something like 11 10 10 or 11% I said yes see notes are

great he says yeah because and then of course I I reiterate what uh he says I I

I now I need to look for more notes and of course I told him well that's what I do that's all I do is I create notes off

of off land only not houses because you see the headache you had with houses so now I'm breaking down explaining a

little bit more and he's saying yeah but you need to watch those uh you need to watch your cholesterol John and so in

the middle of the middle of what we're doing I'm you know we're just having this little conversation on this side

and and so he as soon as he says he's near the end now he he he realizes hey

but I don't want to put in the bank because all I can get is 5% he says so what what what what are notes paying so

now he's asking me and I'm still not asking him for money I'm still not letting him into the deals yet and so so

then I give him you know the same range we're all talking about here I give him you know some some interest rates that he can make you know on the deal I I

said but I mean they're hard to find so but that's what I do I find the deal I package it I put it together and then I

I sell it to the investor so I make a couple of points whatever and then you know boom we're done and he says oh okay

well let me do this let me give you a call outside of our our our thing so now he's say I don't want to take up any of

the time you know your time is here with me you're paying me for this but I I need to talk to you because I need to

get this money invested because this 5% is not going to work for me

so now that's how you do it so again I never asked him for money I went one

step further and I made sure that I didn't even give him my card I didn't

give him my phone number he has my wife's number not my number so I'm leaving I'm still leaving him in the

cold but he knows right now that if he to find a decent investment he knows

that I'm not desperate to put anybody in there he also knows another thing there are few and far between so now when I

I'm going to approach him I'm not going to wait for him to call me so now we go back into the group here and we say okay

well we got we got a deal here that comes up and this needs funding now I call him up and now I'm say hey I did

have a deal fall into my lap and this is what it looks like this may not take all of your money but that you're looking to

invest but I we can do this one right now maybe we have another one come up a little bit later I'm always looking for

deals so you know it's always a give you give them and you take it away at the same time constantly and then of

course you know you have other you have other clients and he knows you have other clients that you're doing this for

that that you're helping get you know return on their money so that those are the ideas that I have so anytime you

talk to anybody with money lawyers doctors any kind of profession they

don't have time to invest they don't have time to look at the deal they don't have time to manage the deals so they're looking for something passive and these

notes that we're creating it's it's a perfect investment for them and then it

allows you to explain land the advantages of land because you know it's easy to take care of there's nothing

they can do you know I'm always saying the same I say the same thing to everybody I prefer land over houses

because what can they do to my land they can they can mess up a house and it

costs a lot to fix up but my land all they can do is cut some trees hey that's hey I'd like for you to cut some trees

uh and they can't really do much to so I'm good just something real quick and snappy like that and they're going damn

that is right they can't do anything bad to it so all I can do is make a profit from it and you let all that go on in

their head as well so again when you're talking to those guys that's great now

be careful because I've seen some people they get they jump on social media

Facebook or whatever and they start saying hey I'm looking for investor for a deal that will get

you in trouble very quickly okay be careful that you don't do so you got to go directly to somebody

that that you are working with already directly you know them so it's either

you get into a conversation about a deal about anything else and then you re

then you introduce the concept of going in on my next deal type of thing right

but you but you can't lead with that it also makes you look like you're desperate for money you have no money

and you're desperate they're not going to give you the money especially when you post that you need money that's the

last thing they want to do is react to that so you could talk about deals you can talk about a deal that the group is

doing right so we we just found this deal it's this much we're buying it for this we're selling it for that it's an

amazing investment it's going to do XYZ on the r Roi so we're talking about a

deal that's we've already done not something we're looking for and some so a lot of times that will get the

conversation going that you can then come back and say well I'll keep you in mind for the next one comes up right now

man the Market's tight they're far and few between but you tell me what you

want to invest and I'll look for a deal in that in that range yeah yeah you never you never lead

open with a deal thanks John for covering all that uh I I love these like active stories because they're very

they're very real to the conversation and there it's it's very uh ping pong related or whatever if you play tennis

or whatever sport you you go back and forth it's very and fishing fishing is another analogy it's all back and forth

and you're you're kind of fishing for opportunities but not being openly asking for it uh Jackie asked what type

of Roi you're asking for for it depends on what type of what type of where where they're at going to be on the stuff on

on the capital stack so generally with notes we're trying to get as cheap as possible um but generally we can do

eight to 12% 15% it doesn't really matter the ROI for us especially for land investors

is kind of it's just the point of the conversation it's not like we uh I think

House people they have to fight for their cheap Capital because there's a lot of sparton to spr to break apart but

with the with the land there's a lot of money to at stake and a lot of money a lot of money going out there like right

now we gave I can't even say the number we we're paying back one of our lenders we're sending a wire it's going out

tomorrow morning but we gave him over 18% healthily on a on a project um that

he's getting paid out on so so it's one of those things where it depends on where they're at but the notes is it's

easy I think we're we're generally trying to raise money for notes under 12% and it's it's secured cash flow that

people can get monthly on a monthly basis which is the other thing on what lender looking for so L some lenders are

looking for an Roi capitalization some lenders looking for cash flow some L looking for security or a version of

security and it's kind of figure out what they where they fit on that little

puzzle piece and you have to kind of put the puzzle pieces together so every lender is completely different every

lender I have we've done completely different Roi terms deal terms um

security terms on every single one of those and it's completely different for every single person so there's no set

Roi that we offer standard across the board it's really up to the lender and

what they're open to based off of what security position they want versus what Roi they want versus the timeline they

wanted in like all that's going to vary um significantly so that kind of changes

the conversation for each lender and it's it's literally it's a sales conversation so just like we do when

sellers is we try and pull the price out of them we try and pull hey well I want

to sell my property well I want well you want like 150 or 125 or 100 like well I

want I want a fair offer like I don't know what a fair offer is to you fair offer could be 50 Grand is that okay

well that's not okay I want 200 okay well you should have just said that so

it's kind of the same conversation you have with lenders lenders like well I want I want 15% well what type of

security do you need well I want first position 15% and I won't do anything

over 25,000 I'm like okay well that's GNA be hard to find I'll let you know if I find something but it's gonna be

really hard to find First Position up to $25,000 and you want

15% well what do you have like well I mean I could do a little bit more but it's unsecured what does that look like

and then you kind of you kind of have that conversation it's just it's it's a back and forth depending on how much Capital they want to allocate and for

different people that they might not want to throw a lot of money at it especially if they it's something new

sometimes they break the waters with a smaller project on different things so that that's another conversation too we

kind of fish some people have a preference of deal size and they don't want to jump into too big of deals

they'd rather be in smaller smaller transactions and in more deals so it depends on their on their preference on

Capital and where they want to be we Market Financial products and have cherry-picked our affluent clients to multif family syndications plan on doing

the same with land eventually absolutely absolutely everybody every nobody invests for fun or exercise everybody

invests for an Roi so you have to pull that R what Roi meets their personal Target of of of

of benefits L literally I I if you follow me on Twitter I have fun on Twitter I

had a meeting today with somebody he didn't show up today but I initially got the meeting because he's on Twitter

talking about how he's investing in a project and it was kind of risky but he was getting 11% return so I literally

commented I can get you an 11% return without all the exercise and then he set up a call so it's one of those things

where you got you kind of have to open the conversation ation sometimes oh this is the big thing too me and Anthony talk

about this all the time I know we got a couple minutes I'll probably take one more 2 two more questions but be open on

social media open being open and transparent on social media brings in a lot of capital partners that they most

people know any Real Estate Investors need money to do transactions it's just a given so if you're open and

transparent on social media people will people that are interested in invest will openly have that conversation and

DM you about having uh investing Capital so I think the hack to raise money is

just being open on social media uh I think we got a question here in the chat give one second how do I get

up to date on how to present those different offerings once someone's interested a lot of times it's it's

doing an introduction especially so it depends on where you're at on your personal investing career

so if you're I'll start off at new if you're new and you're trying to have that conversation if you're new trying

to have that conversation you want to leverage other people's credibility and you're trying to a bring their your

their money to a transaction and leverage uh Equity so you want to leverage whoever's credibility you're

trying to use if you have some experience it's probably best to use

your own case studies and have those ready and if you're if you're heavily experienced and I think Allan fits this

and there's a couple people from Angie you want you want to show your pretty much all your experiences um you can

kind of cherry-pick different things so like like whenever I have these conversations with lenders I I have a general pitch in my

mind that I go a through z I kind of go through those steps but I pull things different I pull things out of my uh I

have things ready on the side that depending on where the conversation leads which I don't know where it's going to go by the end of the

conversation I kind of pull those things and adjust the conversation to each individual lender because I don't

know what where they're going to fit to the to the conversation so I kind of

feel the conversation out early on and then I kind of guide the conversation to where I think they want it to go so it's

kind of you kind of have to play it's playing playing chess when you're having these conversations and as as a more

experienced investor you want to have multiple endings of where you want to

end up at the end of the conversation and the more you have that conversation you can kind of realize who you're

talking to and what type of investor they are and you end up at the at the expected end of the conversation with

that investor because you don't want to and this is for experienced people you don't want to take an investor down a

conver a conversation where they're not even interested in so it's kind of gauging the conversation and kind of

ending up on your multiple tiered result and that's the short answer for

experienced people I hope they answer your question go ahead Marvin I was actually just gonna say if we could go

over this RV Park working Pleasanton I can just text it to you if you don't

have time yeah text it to me absolutely I would like to stay on a

topic for money money raising but yeah that that's the Des General synopsis is you wanna you want to a leverage other

people's credibility B show your track record or three kind of have multiple

results to your money raising conversation and it's kind of like the tiered level of

money raising what carve outs are you offering fundraisers it depends on the money they bring and the amount of money

they bring so if you can raise cheap money you get a lot

more if you can if you can raise a lot of money and it's expensive you still

get something but it's uh any amount of money works but um it's one of those things where it depends on what type of

terms you can get on the money but we're we're open to any any in all situations

but a lot of people they they know money I've been introduced a lot of my money

connections have been introduced to me through others and that's important too so you have open conversations with with

people and then they introduce you to other people so like John Alexander said he talked to his doctor about this his

doctor might not ever invest but his doctor might go to a doctor's conference and like hey I'm met a guy who's

investing in land he's a client I have his number maybe you'd like to talk to him

and then you'll get a random phone call one day and that's the person that's going to raise you money is the connection through the connection so the

reason why we have conversations like this is because there might be you somebody in this room might have a connection to Capital that opens a door

for more Capital which everybody gets everybody benefits from whether you get carved out or some type of equity

position or whatever but that's why these conversations are important add on top of that real quick

absolutely so I was at a Meetup uh the other day and we're actually discussing Capital

raising and this dude was saying he mainly uses his doctor like that's his

main source for his flips and he only wants like 10 12% and then there was a lady it was

like three of us talking and the lady she you know was uh she invested as well

and she's like oh I'd never do it for that I need at least like 15 18 so doors you know they probably

aren't as you know they're not as Savvy investors so they won't want as much as

someone that's more experienced and the other thing too is that it depends on where they're at in

their investing career some some investors got wealthy off of uh working

with one or one one one a handful of of good operators and that's how they got wealthy some people got wealthy through

working their 9-to-5 job that may was a doctor or a lawyer or a dentist whatever that is some people get wealthy

different ways so they have different risk tolerances and depends on how much money they have as well somebody who's

super wealthy they might they might be very risk averse or they might they might take a lot more risk on $100,000

or less once you cross into 300,000 or more they're like yeah I need to look at

this a little bit deeper so it depends on how much capital reserve they have and how they earned it a silver spooned

hedge fund kid might have a lot more risk he might take on more risk because

he didn't actually earn the money it was handed to him through inheritances so he may be open to taking

on a lot more risk because he didn't know what it took to earn the money so it there's a lot of different

scales of that that that come in and everybody's completely different which is why you have to measure each person

individually and kind of have to create in curate that conversation individually

because everybody's completely different Jose his word of mouth is Major absolutely okay so long story short the

goal is to always be raising money preferably from A lender that doesn't want so much percentage back and

depending on how much they want and how soon they want the return we figure out what they what what deal they fit while

into if I find a lend or how to present the hype M absolutely sometimes

it's uh if you're doing introductions you kind of want you just do introductions sometimes the the

person that does the pitch is better off pitching that way you don't confuse or

and they can go straight to the source so I like just being

introduced and for instance uh somebody somebody did an introduction for us a couple weeks ago and I don't know if

they're here or not but I guess I'll talk about it I don't know if they're here or not but um somebody did an

instruction for us they said they knew somebody that uh was investing in fix and flips as a as a lender through their

self-directed I met with them I had the conversation we kind of I

I did it with with the introductory person there as well just so they understood and they learned like oh I didn't even know this like once you make

the introduction I kind of go into the weeds and you learn a lot as in as

instructor person so that's the other thing too is you learn you learn a lot by being in that conversation and it's

if you're playing Chinese telephone which I don't know if Mark gonna be mad at me

I see you brother if you're playing Chinese telephone it's hard to pass that message

along clearly and thoroughly and effectively especially when you're having important conversations so if

you're trying to make the connection if you're trying to make the connection sometimes just it's good to

make the introduction connection and then have them go through the Spiel which that's something I do day in and

day out I have a lot of money conversations so I'm very good at it so if you want to learn how I raise money make it introduction I'll show you how I

raise money um and it's I I enjoy it it's fun it's very uh I enjoy the game

of raising money like the the pingpong match of hitting back and forth and trying to trying to discover what their

needs and wants are and it's kind of painting a picture and to them they need operators this is the other thing too

investors need good operators to invest in and it's a cohesive

relationship you as an investor especially if you're raising money for your own deals you have to get over that

that mindset shift that in investors need money just like you need money to

do a deal investors need good deals to invest in and uh you as a as an operator

need good investors to work with to invest money in your into your deals so it's a

very cohesive equal relationship and once you understand that you don't you

kind of overcome that mental barrier of this it feels kind of gross and sticky

Chapter 5: Questions and Final Thoughts.)

and I've never I don't I don't do this very often you kind of overcome those personal feelings after doing it for a

long time and it's just understanding that everybody like I love I love paying my investors in Roi higher than

everybody else because I know it's to their family and to their retirement and whatever however they if they buy a boat

next year or if they buy a rental and give that to their kids or if they buy a note and give that to their kids I don't

know however they however they disperse of the the ROI I gave them through my working effort

I know it's a it's a good symbiotic relationship that everybody everybody wins and I'm okay with

that that's the big thing is understanding that it's okay if everybody wins and there's plenty of Roi

to go around all right let me check messages that's it for everybody here

you have somebody let may know but if you need money go raise money yourself for your own transactions that's what gets you to the next level if you're

experienced get your pitch down practice pitch on friends and family uh learn

what it takes and uh you'll get better over time and keep practicing if everybody here we'll see you next time

on the next Tuesday call thanks for coming in we'll see you next time thanks guys