Hey everybody, welcome back to the Real Estate Investing Secrets show! I’m really excited because my buddy Josh Cantwell is joining us on the show today and we are going to talk about something critical for all real estate investors and that is lending. The truth is, more established real estate investors really know that to run a business efficiently, you need to find sources to get access to private money. There’s always hard money and there’s a lot of lending out there, but as you grow, you need to get those rates down and you need to get more competitive so you’re doing more profitable deals. That’s what we are going to talk about today, let’s get started!
Mike:Hey, everybody. Welcome back to the show. I’m really excited to talk to my buddy, Josh Cantwell today. We’re going to be talking about something that is critical for all real estate investors, and that’s lending. And the truth is, how do you . . . ? More established real estate investors really know that to run a business efficiently, you need to find sources to get access to private money. There’s always hard money. There’s lots of lending out there. But as you grow, you need to get those rates down. You need to get more competitive, so you’re doing more profitable deals. That’s what we’re going to talk about today.
Welcome to “Real Estate Investing Secrets.” We’re all looking for freedom and the opportunity to live better, more fulfilling lives. But most of us, we’re trained our entire lives to work for someone else to chase their dreams. How can we use real estate investing as a vehicle to achieve financial freedom? My life is dedicated to answering your real estate investing questions, and helping you build an investing business that allows you to change your life and the world around you, and to enable you to turn your dreams of financial freedom into a reality. My name is Mike Hambright from flipnerd.com. And your questions get answered here on the “Real Estate Investing Secrets” show. Hey, Josh, welcome to the show.
Josh: Hey, Mike, thanks for having me on, man. Looking forward to . . .
Mike:Yeah, good to see you.
Josh:. . . share ideas with you again, man.
Mike:Yeah, it’s good to see you. And, you know, it’s a good time of the year, beginning of the year. A lot of folks are getting started, some people have made resolutions to, like, 10x this sucker this year, you know, and all those things. And so the reality is a critical piece of every real estate investor’s business is finding how to get capital. Because a lot of people are timid. They don’t want to step on the gas because they’re like . . . It’s kind of like the proverbial dog that catches the bus sometimes. You’re like, “Yeah, I’m ready to go. But what am I going to do if I get one and I don’t have money,” right?
Mike:And so, yeah. So, but before we jump into it, I know you’re going to share today, kind of seven steps to raising money. And I think it’s going to be really awesome for folks to write this down. So if you’re listening right now, make sure you have a pen and paper. But before we jump into that, tell us a little bit about your background and how you found your way into real estate.
Josh:Yeah. So I’ll just go back to 30 second sort of introduction is coming out of college, I was a financial advisor. I get my series, 66, 63, life and health license. I was 21, 22 years old. And my clients were, like, three times older than I was. I loved the finance game. My father was an entrepreneur in the financial services world. I got very comfortable there, but I realized really quickly, Mike, that my most successful clients owned real estate. They did not have all their money in the financial market, stocks, bonds, mutual funds. They owned hotels. They owned apartment buildings. They owned single family rentals. They owned buildings and then they leased them out to restaurants. And so I took notice of that because when I was talking to those clients, I was like, “Hey, man, take this money and put it in mutual fund portfolio.” And they’re like, “Dude, shut up. I got all my . . . All my real money’s in real estate.”
Well, I took notice and all the way back in 2001, I bought my first income property. It was a duplex. And I was three years removed8 from college and I bought my first duplex. My parents thought I was nuts. They thought I was a total moron for being 24 years old, and buying a duplex, and being a landlord. But what they didn’t know was that I rented out the upstairs for 700 a month. The downstairs was a three bedroom, I lived there. One of my buddies moved in with me. He paid me 300 bucks a month, and I was essentially living mortgage free. I got thousand dollars a month in rent. My mortgage was 1,100 bucks. And I’m like, “Mom, I’m living here for nothing.” If I rented an apartment or bought a house, I had this big expense.” And so I learned the power of income properties, rental properties, and real estate at a very young age.
And finally, in 2004, I quit my job jumped into real estate full time. Like, most people, I started with wholesaling and wholesaled properties for a long time. Then I got sick. And then I, you know, really fell in love with private money in 2012. We can jump into that whole story. But, you know, going all the way back, that’s really where it started with seeing real people with real money with big balance sheets that owned cash flowing income properties.
Mike:That’s great. That’s great. And by the way, Josh has been on the show before. I can’t even remember when. It’s been a while. It’s probably been like three years ago or something. So if you do a search . . .
Josh: It’s like the third episode? Like six years . . .
Mike: If you do a search on FlipNerd for Josh Cantwell, you’ll find . . . And I’ll try to make a note to put it down in the link to his past show. So just take a look at the show notes, but I can’t remember. We’ve been running this show for six years now. So I can look that up in advance, but it’s in there somewhere. It’s in the archives. And so, well, it’s really exciting to have you here.
Honestly, it’s interesting to see the evolution of real estate investors because I think it’s pretty common. I’m in the same boat. I know you’re doing multifamily stuff now. I started doing a little bit of lending this year, nothing to the level that you’re doing. And I think part of the evolution of a real estate investor is you start off with wholesaling because it’s quick, less risk. You know, you’re hungrier, probably not that you’re not hungry now, but you’re willing to hustle more because that’s where you’re at, right? And then you mature in your business and you start to stack up some assets, and you start to, like, maybe not want to hustle as much as you used to. You use your mind. You use your . . . You know, even Robert Kiyosaki says, “The ultimate kind of quadrant to get to is to be an investor,” right, to effectively be the bank, right?
And so I think no matter where . . . People who are listening right now, no matter where you’re at, you know, you need to take note what we’re going to talk about today, because you either need a bank or you need a private lender to find money. And someday, you probably want to be the banker as much as much as you can. So, yeah, yeah, awesome. Awesome. Thanks for sharing. So let’s talk a little . . . Let’s kind of get into the seven steps of raising private money here. So what’s the first one?
Mike:Well, it really starts, these seven steps, and this is a 20-year process that I’ve sort of perfected. You know, my experience as a private lender, investing in real estate, and then ultimately, using this exact seven steps on hundreds of people really, really dial this in. And so step number one is not marketing. It’s not branding. It’s thinking. And step number one is to create an irresistible offer. When I think of an irresistible offer, Mike, you don’t want to be one of those guys that’s a real estate investor that goes to your friends and family and says, “Hey, will you lend me?” You want to have, number one, an irresistible offer.
When I say irresistible, when I was really in a big fix and flips, and I still do some fix and flips now, I do tons of fix and flips, London. I created an offer by mistake where I told one of my buddies, “Hey, listen, if you invest in one of my deals, become my private lender, I’m, you know, not going to pay any points. What I need is . . . I need 150 grand, I’ll pay you 12% interest or 15% of my profits, whichever is greater. Now, what you’re going to do for me . . . ”
My buddy’s name was Mike. And I told Mike, “Hey, listen, what I need you to do, I need you to defer all the interest until the end when I either sell the property or refinance it so that I don’t have any cash flow crunch. It’ll allow me to move faster. It will allow me to do the deal quicker.” And I talked to Mike. And there’s a whole way to present it, which I’m going to get to in a minute. But the whole idea is irresistible offer. Like, being overly generous.
Another irresistible offer is, like, “I’ll give you a 10% interest and 10% of my profits.” Or if you’re doing income properties, maybe paying somebody 8% to 10% preferred return, and giving them a certain amount of ownership in your deal, maybe 10% of your net free cash flow in perpetuity. So I always wanted to come up with a way that investors felt like, “Hey, if I just get the minimum of 8% or 10%, or 12%, that’s great.” But there’s this sort of cherry on top of the cake that I could get that too, this is a no-brainer if my floor is 10% or 12%, at the opportunity for this upside.
And what actually happened, Mike, is I did a couple of deals. One of them was with a former neighbor of mine, and we were able to buy a property, fix it, flip it and sell it in four months. And when we factored in his 15% of our profits, he ended up with a 34% annualized return. And I started to tell that story to more and more people, I was like, “Look, your minimum is 12%.” That’s an irresistible offer. You got to start with that. That’s step number one, right?”
Josh:Yeah. And that’s a . . . You know, especially if you’re getting started raising money, right? Because if you don’t have a track record, you don’t have a lot. Of course, you and I both know, after you’ve done 100 deals, you’re probably paying less than interest of those private, more established, right? Because then somebody else will start to compete. That’s how competition works. They’ll start to compete for the ability to lend to you even, right? They’re like, “Well, heck, I’ll do it for 8%. You don’t have to pay me anything on the backend,” right? So, when you’re first getting started, you know, you got to pay a little bit more. You got to prove yourself. So good, good. So what’s the second one?
Mike:Yeah. The second one is to create what I call a project 100. Project 100, step number two. This is something I learned in the financial services world. It’s something that Gary Keller talks about in his book, about, you know, millionaire real estate agents. It’s something that most financial services shops teach. It’s something that if you’re building any business, and it’s a service business, a lot of people start with their project 100. And project 100 is a list of people that already know, like, and trust you, or places that you can go, where you can meet more people that know, like, and trust you.
You see, when you’re raising money, there’s very specific Securities and Exchange Commission rules. You can either do what’s like a friends and family offer or you can do what’s called a 506(c) and go to the strangers and do general solicitation. But the truth is, I’ve done 506(c), I have a 506(c), I can solicit the public for money, recruit money from accredited investors, but none of them will invest with you unless somebody else has gone first.
And so, when I think project 100, I don’t think of, Mike, who can I pitch for private money? That is not on my mind at all. That’s, of course, one of the end goals. But what I think about, and again, I did this when I first started building my real estate business in 2004. I did it again after I recovered from cancer in 2012. And what I thought about was, who do I know that can buy a property from me, that I could sell a property to, that could be a private investor or private lender, somebody that can cheerlead for me or somebody that can just refer me to other people so I can become the top of mind real estate professional in their world?
So I didn’t make any judgment calls, Mike, whether they had money, didn’t have money, they live in a huge mansion, they didn’t, they live in a mobile home park. I didn’t care. What I cared about was going and presenting this opportunity, this strategy to them. At the end, which I’m going to in a minute, not even asking them for money. And that’s part of the strategy is not pitching them, not asking them right specific way to do it. But the project 100 is a way to start to build your sphere. And then, when we move on to one of the lower steps, step number four, I’m going to talk to you about getting out a physical newsletter. I’ll talk about that in a minute. But that’s a big part of this project 100, getting the word out to colleagues, maybe people that used to work with, people in your neighborhood, just making no judgment call at all about whether they’re wealthy or have money or not.
Josh:And that includes like, up front, you’re going to make a list of who are the hundred people that I want to go talk to you like, specifically, you have specific people that probably like and trust you, know, like and trust you, right?
Mike:Yeah, your top 100 contacts from your Facebook profile, your cell phone, your email marketing, or top 100 people that you communicate with the most. I don’t need say like, “I’m going to go pitch my friends and family.” Like, don’t think that at all. That’s not what we’re going to do here. But just the people that you’re already communicating with, already talking with, pick those 100 out, write down first name, last name, email, phone number, physical address, get it all together. That’s step number two.
Josh:That’s great. I don’t want to steal your thunder, but I know you’re going to probably get to this. So you’re going to touch on this somewhere in there. As often when you tell somebody like, ” Hey, can I just give you my pitch?” This isn’t you, I just want to give feedback on to help me make it better than people hear your pitch and they’re like, “Well, I want to do that,” right? Anyway, I don’t want to steal your thunder. But go ahead. So that’s awesome.
And there’s a couple things that we’re doing in some of our businesses where Russell Brunson talks about a few other people talking about kind of your Dream 100. Dream 100 clients who have, you know, run obviously an Investor Fuel Mastermind. So I have this list of, like, people that aren’t in yet, who are my Dream 100 people that are out there that are heavy hitters? Like, who do I want to get into the group and there’s some things that we do to try to attract them? So that’s great. So what’s the third one? Josh?
Josh:Yeah. So number three is to tell everyone what you do in a cool way. And when I think about telling people what I do and people ask me like, “Hey, Josh, what do you do?” I don’t say I’m a real estate investor. I don’t say I invest in apartments. I don’t say I flip houses. I don’t say any of that. The specific thing that I say is, “I raise capital for real estate. We buy foreclosures and distressed properties. And we pay our investors a fixed double-digit rate of return.
So very specific, because . . . Like, it’s funny, I’ve learned on how men operate versus women. Like, women can meet other women, and they can have, like, a real conversation about each other, and their kids, and what they know, like, and trust, and what they love. And dudes are totally different. Dudes are like, we talk about the weather. I talk about sports. And then we talk about what do you do? Like, that’s just the natural thing, right?
So I know if I’m, like, at a kids baseball game, or I’m at a football game, or I’m out with my friends, and I meet a new friend, the natural part of that conversation between dudes is like, “So what are you into? What do you do?” And I don’t ask people like, “What do you do?” Like that’s, like, the 1975 version like my dad’s version of meeting people. But I usually ask people like, “Hey, man, so what are you into?” Like, if I don’t know anybody, no clue, just met somebody, “So what are you into?” And of course, they’re going to tell me a lie. You know, “We’re into football and we’re into riding, you know, dirt bikes and, you know, we’re into real estate or you know, I’m a doctor.”
What are they going to do? They’re going to ask me in return, “Well, you know, man, what are you into? What do you do?” So then I’m setting them up to be able to explain to them, “Hey, I raise capital for real estate. We buy foreclosures.” Just fill in whatever you do. We buy income properties. We buy rentals. We buy apartments. We buy rehab houses. Whatever you do, whatever your version of real estate is, right? And then at the end . . . And we pay our investors a fixed double-digit rate of return. And just let that simmer, let that sit with that person. Because whatever they’re going to say is . . . Again, I’ve delivered that hundreds of times to people. The answer is, “Hey, like, I just read a book. I just bought a book.” You know, back in the day, it was, “Oh, like, Carleton Sheets or like Robert Kiyosaki?” Now, there’s so many real estate, you know, expert, spinners, gurus, like I have this book, I have that book, you know, or, you know, “I’ve always wanted to buy a rental property.” Or what they’ll say is, “Well, how does that work exactly?”
Mike:Right. It’s like an icebreaker. You stick it out there. And then you just like, “Shut up.” And it’s like, for you the conversation is over. Unless they unless they open it back up like, “Well, tell me more about that.” Or I might just say, or you of course what you get sometimes it’s like, “So you’re a realtor?” You’re like, “No.”
Josh:Get that all the time. Like, “Absolutely not.”
Josh:[inaudible 00:15:26] real estate and I sold it. Well, yeah, absolutely not. But the idea there is, like, we want to be different. Like everyone says, “I’m a doctor. I’m a teacher. I’m a nurse. You know, I’m a garbage man. I’m in sales,” whatever they do. I tell people, “Hey, I raise capital for real estate. We buy foreclosures, you know, insert whatever you do, we do rehabs. We buy apartments, whatever. We pay our investors have fixed double digit rate of return.” People are like, “Bam, like, Josh just punched me in the face.”
And I say all the time to my staff in my office. It’s right down the hall. I say, “We need to punch people on the face before they punch us in the face.” So and that’s my weird way of saying we want to surprise them, like, get them on their heels and have them, hit them with something that they’ve never heard before, memorable, something that’s going to stand out. Punch them in the face before they punch us in the face. So, you know, that’s what telling everybody what you do in a cool way. That’s step number three.
Step number four, Mike, it’s very simple, like, it’s just a have a pitch. Have a pitch book ready and not a pitch book, like I’m going to sell people. But I have a very specific just, it’s only 10 slides, 10 PowerPoint slides, it’s not 72 slides, it’s not an hour long. It’s 10 slides on what we do and how we do it. So, if I do end up sitting with somebody face to face, which I do often or I do a lot of calls on GoToMeeting and Zoom like this, I do presentations. I don’t want to be long winded. But I want to educate somebody through an education-based conversation. I want to be conversational on what we do without asking for money, okay?
You know where this came from, Mike? I tell you, crazy story. So when I was about 24 years old back in 2004, I went with my buddy down to St. Thomas and St. John in the Virgin Islands. And I met a girl down there, right? So I met this girl, have a great time. She’s done the vacation. I’m down there on vacation for like a week. We’re hanging out, you know, and the last night we’re there together, I’m flying out the next day. She’s flying out the next day, and we’re sitting at a bar. And we’re talking about, like, boyfriends and girlfriends, right? And I’m describing, like, my ideal girlfriend like that she would have this and she’d had that and she’d be this tall and she. And she looks at me dead in the eye like pissed off. And she’s like, “Josh, what about me?”
So, and then I get into my real estate stuff. I started thinking like, because I was describing this and I don’t know why I remember that. But it resonated with me, as I got in real estate when I started describing what we did and it, you know, I buy, let’s say you buy rehabs. We buy properties, you know, at a discount. We renovate them and bring them back to market. We buy them at 60%, 70% of their value. And there’s so much equity in that property. We can pay our investors, you know, 10% interest and 10% of the profit, or 12% interest, or 15% of our profit, whichever is greater. And I explained that to investors.
I remember explaining this to my friend Scott [Tress 00:18:30], and Scott said, “Well, dude, I would do that. I’ve got 150 grand in my old retirement account, like I would do that.” And I never pitched him. Just like that girl. I never said to her like, “Hey, why don’t you be my girlfriend? Like you’re awesome. We had a great time this week, blah, blah, blah.” It wasn’t that at all. It was this like exclusion mentality of because I described such an awesome thing, but didn’t pitch them, they’re more interested.
Mike:Yeah, right. It’s an old You know, there’s . . .
Josh:There’s also no pressure. Like I don’t want to be that weird, crazy salesman with my friends.
Mike:Right. Yeah, it’s like, you know, there’s a sales technique. So it’s kind of the takeaway, right? You’re like, “Well, that’s probably you know . . . ” Instead it’s doing it another way to say, “Well, this this probably isn’t a fit for you.” and people like “No, no, wait. Why not?” You know, that’s a little bit the takeaway.
What’s number five?
Josh:Yeah, you got to have that type of confidence, right? That’s a great point. Is having the confidence, the confidence, the confidence to be able to go away?
Mike:Yeah, you definitely never want to sound needy, right? Like, I really need this money. Like you want almost sound like you don’t need it. And there’s a special club that you’re not a part of right now, right?
Josh:Absolutely. Absolutely. So step number 5, is what I call a multimedia marketing approach, right? So we call it the 2R3M method. So it’s the regular recurring, multimedia marketing approach, the 2R3M methods. So when I say regular recurring, it would mean a system for marketing. Now, this can help you with everything, from raising money, to getting more deals, to personal branding, building your company, getting you into larger deals like apartments, getting you into more private equity opportunities, you know, getting more respect and admiration from your peers that they want to do deals with you, right?
So this little multimedia marketing approach for me, Mike, and for someone like you that enjoys being on camera, kind of enjoys being in the front of an audience, like, I want to do all these things, blog posts, Facebook Lives, Facebook posts, a direct mail newsletter campaign, email marketing. But we’ve got to create content that, you know, up levels us that we’re above all these other people, that they want to reach up and they want to grab our coattails. They want to invest with us.
A lot of my investors, they’re like, “Man, it’s kind of a privilege.” I don’t say this to be disrespectful or to brag, but they’re like,” I get to do deals with Josh Cantwell. That’s freaking awesome.” That’s how a lot of them look at it, right. It’s not like, “Hey, Josh,” you know, beg for my money. It’s like, “Hey, dude, holy, I can’t wait to invest with Josh. He really knows his stuff.” The reason why that happens is because we have a very specific approach to marketing.
So for me, Mike, it starts with, I got to get on camera, I got to get front of a whiteboard, I got to get on a podcast, I got to create content for my list, my people. And then we’ve got a whole distribution system, where we have a digital marketing company. And for about 1200 bucks a month, they’ll produce and push out two podcasts a week. They’ll create YouTube videos for us. They’ll create blog posts for us. We do email broadcast twice a week. And all this content goes out to all these people that started for me with this little list of 100 people in my project 100, now that list for me is 70,000 people that follow my content.
Josh:And I started doing this in 2012, coming back from surgery when I didn’t have a lot of contacts. I didn’t have a lot of people. I was recovering from surgery. So this regular recurring multimedia approach starts with everything from, like if you don’t know anybody, go to meetups, go to live seminars, grab business cards, go into Facebook groups and start interacting, start communicating with people, start talking about joint venture opportunities that you want to do if you have no list.
Step number two, that are this multimedia marketing approach, for me, is to get on and teach something, a podcast, a YouTube video, a whiteboard, a solo cast. And then from there, my team takes that content, starts to distribute it. Another piece of thing we do in this multimedia approach, Mike, is once a quarter highly recommend this piece is you got to send a physical newsletter, something physical in the mail, because everyone’s bombarded with digital marketing. Again, YouTube, podcasts, email marketing, Facebook Lives. It’s everywhere. What I don’t get is the actual physical mail. Nobody gets that shit anymore.
Josh:So, to send out basically a little, like, one or two or four-page brag book of the deals you’ve done, or the deals you’ve passed on, or how you would structure a deal, or some real estate commentary. I had friends of mine that now invest with me, I never pitched them once. I never called them once, but I sent them the newsletter. And they were like, “Hey man, your newsletter is sitting on my kitchen table or it’s sitting next to the toilet. And I read it, and I see what you’re doing. You’ve got to tell me what it is that you do. Like, you’re investing in real estate. I’ve got a couple hundred thousand dollars. I’d like to put it in play. Like, come present to me. Show me what you do.” And I didn’t pitch them, but they saw the marketing. They saw the newsletter. They reached out to me, right? Which was awesome.
Mike:That’s great. That’s great.
Josh:Yeah. So it’s huge, this multimedium approach. Again, I’ve got a team of about 8 to 10 people that distributes out all my content. But you don’t have to have that. I mean, I started years ago by myself with a physical newsletter and a project 100, and email marketing.
Mike: And that’s how . . . You know, Trevor Mauch as well. Trevor is a good buddy of mine. I mean, he talks about content marketing a lot. And obviously, Josh and I have created a ton of content as we both have podcasts and all the stuff that Josh just said. But, you know, the way that Trevor says it, he has this analogy of like, hey, when you . . . And he’s really talking about more with, like, SEO, like creating content online to generate leads, but it’s the same general concept with content. I think a lot of people are like, “Man, I could never catch up to that guy or whatever.”
But Trevor uses this analogy of, like, it’s like a brick wall. Like, you put down one brick, and then you put on another one, and people can still step over. They’re not going to see it. They can see it or they don’t see you, right? But eventually that wall kind of builds up. And you get to a point where you have hundreds or thousands of pieces of content out there. And it’s constantly when it’s on the web, people are constantly like bumping up against you. And so, at some point, they can’t, like, step over you anymore. They have to, like, go out of their way to avoid you. If they want to avoid you. You’re like, “This person is everywhere. Like, they must be legit. Maybe I should be paying attention,” right?
Mike:Yeah. Awesome. Awesome. So where are we at?
Josh:We just got to start somewhere. You get?
Mike:Yeah. Yeah, the point is don’t say, “I’m too far behind, I can’t get started.” Like, if you’re going to run a marathon, anything you do, it all starts with one step, right? You got to get started.
Josh:And real estate is a long game, right? Because you buy an asset now, it’s about becoming wealthy long-term. And that’s where you got to make the decision, am I always going to be a wholesaler doing wholesale deals for income or am I going to own some assets that pay me long-term? It’s no different with marketing. Are you just going to do email marketing? And that’s, like, a short-term fast way to get attention, or are you going to build those bricks like I talked about, Mike, that you’re going to get attention for the rest of your life, like owning an income property? So very, very good point.
Mike, step number 6 is to follow a proven sales process. And the sales process that I have works like this. After I send out my physical newsletter, all this marketing is out, if people . . . Let’s assume that nobody calls me. Let’s assume that nobody’s responding to my marketing. Let’s assume everybody thinks I’m an idiot, marketing sucks. You can still win here. You can still win. And what I did, especially, you know, 6, 8 years ago, 2012, I was reaching out to the people I was sending the newsletter to and I would just say, “Hey, I sent out my latest version of my newsletter. I just wanted to know, what did you think about it?” That’s it.
And again, people that were on that list, colleagues, friends, family, anybody that was already a real estate investor, I was sending it to. And it would just start these conversations like, “Hey, I got your newsletter. I haven’t read it yet.” Or “Got your newsletter, looks awesome. Got your newsletter, Josh, yeah, I was hoping you would call. I’ve been so busy. I got 150 grand that I’ve got to put in place somewhere.” “I’ve always wanted to do a fix and flip.”
And what I would tell people is “Look. Well, that’s great. I’m really happy that you appreciate the newsletter. Why don’t we just connect? Let’s get together face to face. Let’s grab a beer. Let’s grab a coffee. Let’s grab some soup, whatever. And I can just tell you a little bit more about what it is that I do.”
That is a technique that works in the financial services world. It’s worked for 100 years. “Let’s just get together and I’ll tell you a little bit more about what it is that I do.” Let’s put it in the calendar, go meet with somebody. Simple as that. Now, when you’re sitting down with somebody, and I have these 10 slides I use. And ultimately, it’s about presenting them. Here’s what I do in real estate. I buy these foreclosure properties, or I buy apartments, or I buy these properties. And I’m working with private investors. I don’t work with banks. Banks, you know, the underwriting is ridiculous. They’re too slow. I need to execute quickly. So I’m using private investors that fund my deals. I pay them 12% interest or 15% of my profits, whichever is greater. And so, if you know anyone who is interested in real estate or know anybody that’s looking to invest actively or passively that I should be talking to, just keep me in mind, refer me to them. Here’s my business card.
And then you kind of wait for it, which is at the end of that conversation, Mike, it’s the what about me response. It’s the same from my very first private lenders. It’s the same about the girl in the bar back in 2004 that I told you about. It’s the what about me response, which is exactly what we’re looking for. I’m interested in this. And especially because we didn’t pitch them. We’re not pitching our friends. We’re not pitching our family. We’re being super cool about it and saying, “Hey, I’m assuming that you’re not interested at all. I’m assuming that you don’t have any money. I’m assuming this is not for you, but who do you know?” Then they self-select. They select themselves and say, “I am interested.”
And when you do it that way, Mike, you know what’s happening? They’ve invested more often, more money. They’re raving fans, as opposed to somebody who tests me out with a very small investment. Because I did it in a way, the take-away clause you talked about, was just cool about it. You know, they weren’t afraid. They self-selected. So they said, “I’m in. I want to invest with Josh,” and they invest more money and more often by doing it that way.
Josh:Step number 7, super simple, is just follow up. You got to have an easy way to follow up. You’re putting all this stuff out there. You’ve got to have a system. Maybe it’s a software that we use. I use a program called Accelerated Investor Office. I also use a program called Infusionsoft. I’ve also used Google Docs in the past. There’s a million different spreadsheets you can set up for follow-ups. You got to follow up. And then you’ve got to get people onto, like, an email marketing drip campaign and those physical newsletters to follow up.
Again, the story, Mike, I was golfing with a friend of mine. He took me down to Trump National Golf Course in Charlotte, North Carolina, all the way back in 2015. I went down, my buddy Sean took me down there. We were golfing with a bunch of his buddies in Charlotte and didn’t think anything of it. We’re playing golf, we’re drinking beers, we’re having a good time. Three or four of them that we’re golfing with, around about the 12th, 15th hole, they’re like, “So Josh, what do you do?” Right? So right back to the same thing. “I raise capital for real estate. We buy foreclosures. We pay investors fixed double-digit rate of return.”
We had been at the clubhouse and funny story, the former CEO of Lowe’s, like the home improvement store, was sitting at the table next to us. The dude’s like worth, you know, $400 million, sitting right next to us. It’s amazing. So I meet with a guy named Brandon. Brandon’s interested. He’s already in real estate. He owns about 20, 30 rental properties, but he’s got a full-time corporate job. He’s very busy. Three years later, 2018, after following up with Brandon, using this approach, following up with him through follow up email broadcast, physical newsletters, Brandon’s now invested with me. Right now as we record this, probably 650,000 bucks.
Josh:So, again, long-tail approach, taking my time, using this methodology allows me to have access. And now, you know, Mike, we’ve got about $34 million of true private money, none of it’s institutional, real private capital that I currently have deployed in my fund and in deals, fix and flips, loans, apartments using that exact seven-step process.
Mike:That’s great. That’s great. There’s a couple of things I want to point out that you mentioned that we kind of glossed over so to make sure everybody understands it is ask for referrals. So that during point six about, like, you wouldn’t happen to know anybody? The truth is, sometimes people self-select, sometimes they self-select and say, “You know what? And I’ve got these other friends who would be interested in that too,” right? And so you should always be asking for referrals. Pretty much even when you’re buying houses, you should always ask, “Is there anybody else that you think we might be able to help out?” Right?
And so that one . . . And then I think a couple of things that are the importance of systems. I mean, I’m a systems guy. We’ve got all sorts of stuff dialed in over here, constantly trying to dial it in for sure. But one thing that’s critical there that you’ve mentioned that we didn’t explicitly say, but I want people to get is, it’s so easy for us these days to have thousands of friends on social media. And we know a bunch of people, right, but those relationships and the long-lasting ones, especially if you just keep, you know, kind of touch, tapping people on the shoulder, like whether it’s through email campaigns or physical reach out, or sending a newsletter . . .
You know, I’ve got a buddy of mine, Todd, that we were talking about earlier, I just saw him the other day that he needed to replace some glass in his house, like some windows and stuff. And he had somebody do it like eight years ago. And he’s like, “Glass guys are, like, a dime in a dozen. I don’t know any of these guys. But the guy that did it eight years ago, I haven’t talked to him in eight years, but he sends me a Christmas card every single year like clockwork.” And he’s like, “It was a no-brainer who I was going to call, the guy that’s trying to maintain a relationship with me, right? So those relationships are so key these days and those relationships, you know, have to kind of come outside of social media to be really meaning.
Josh:Yeah. Mike, I got one more tip. So we’ve actually now, we’ve taken all of our company gear, like this gear that I’m wearing, we actually set up our own store. So there’s actually white-label platforms that have thousands of products. Let’s say, you know, this one program that we actually use 9,000 promotional products, you know, coffee mugs, yetis, golf clubs, shirts, hats, you know, golf towels. For about 1,800 bucks, you can white label that store. You can select the gear that you want, throw your logo on it, and then have a store. And so what we do with our investors, we’ve got about 250 private investors that invest with us now. Twice a year, we send them the link to the store and we give them a certain amount of money that they can spend.
Josh:Here’s 50 bucks. Here’s 200 bucks. Here’s 100 bucks, whatever. And we say, “Go to the store and buy whatever you want. And, you know, here’s basically your budget, let’s say it’s 100 bucks. Here’s the budget. Go spend whatever you want.” So they buy gear, like cool golf shirts, hats, you know, t-shirts, whatever they want. And they’re buying stuff with my gear on it, but totally free. They personalize it, throw the logo on it, ship it to their house, and our clients get to buy the stuff that they actually will use.
Mike:Yeah, that’s awesome.
Josh:That’s part of the problem with swag is just like, what size do they wear? Like, what kind of coat do they want? What kind of golf shirt? Do they want two-tone, regular? Do they want Dri-FIT? Who gives a shit? Right? Go to the store, buy whatever you want, here’s $100 credit, use this code. If they go over that, then they just pay the difference themselves. But three weeks later, they get a gift in the mail with a specialized letter from me with exactly the swag that they want that they’re going to use. And so people just freaking love it. They can’t wait once or twice a year to go to the store, buy gear, use it, and actually get something that they’re going to like, as opposed to, like, I bought everybody a golf shirt and nobody wears it. They’re buying stuff that they like and they’re going to use, which is awesome. So I’ll shoot you an email, Mike, with the store that we use if you want to . . . ?
Mike:Yeah, that’s great stuff. That’s great stuff. We’ve heard a lot about a lot of swag too and we’re like . . . You know, we always do, like, a crew neck, and people are like, “Oh, can I get a V neck?” And, you know, I really like red instead of black. It’s like, “Oh, man.” You’re right. You’re exactly right. So that’s awesome. Well, hey, this is great stuff. Thanks for sharing today, my friend.
Josh:Yeah, absolutely, Mike. Thanks so much. Appreciate it.
Mike:Everybody, if you haven’t subscribed yet to us on iTunes, Stitcher Radio, Google Play, YouTube, anywhere where you’re watching this right now, I’d love it if you go out and subscribe. Give us a positive review. We’ve been doing the show for over six years now. And, you know, honestly, your reviews, your subscription, stuff like that is really, Josh knows this too, like, that’s what we feed on because we want to know, like, is our voice being heard or we have an impact on anybody? We’re helping anybody. So, if you go out there and show us a little love, we definitely appreciate it. Josh, if folks want to learn how to get ahold of you and learn more about what you’re working on, where can they go?
Josh:Yeah. So the easiest thing to do is actually . . . I put a lot of these strategies into this book that’s called “The Flip System.” It’s available right now through our web store for free. You just pay the shipping. Then you want to go to getflipsystem.com. Then you can get a free version of this, we’ll send it out to them. And a lot of these techniques and strategies that we talked today on this interview are in here, as well as my story of fighting pancreatic cancer, a lot of the things I did well in my real estate career and also the big mistakes that I made that you guys can avoid, check that out. It’s a great way to learn more about me and a lot of our, you know, residential investing strategies.
Mike:Awesome. Awesome. I’ll put a link down there, getflipsystem.com. Go check out Josh’s book. So Josh, thanks again for spending time with us today.
Josh:Absolutely, Mike, thanks for having me on.
Mike:Absolutely. And everybody, thanks for joining us today. Appreciate you following along. Like I said, go out and subscribe and give us a little love, we’d appreciate it. Until then, we’ll see you on the next show. Thanks for listening to today’s show. There are three ways I can help you start or grow your real estate investing business. If you’re a new investor and just getting started, the FlipNerd Investor Coaching program is the most effective program in America. I’ve been coaching and mentoring new real estate investors for 10 years, and my students have literally purchased thousands and thousands of properties. Many of them started with little to no experience at all. Our program is a paint by numbers program, where we tell you exactly what to do week by week, to make sure that you don’t get distracted on your way to results. We show you how to build a real business, not just create another job for yourself. New memberships are limited. You can learn more and apply or schedule a call with me and my team at flipnerd.com/coaching.
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