Welcome back Freedom Fighters! My guest today is my pal Blake McCreight, and today we’re talking about using the best exit strategies to maximize your profits. Sometimes it’s wholesaling or assigning, sometimes it’s rehabbing. Heck, sometimes you have to make your decision based on how fast you need the cash, or how much capacity you or your team has to put into, say, another rehab. Great lessons here to help you maximize your profits and your organizational capacity!
Mike: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 were trained our entire lives to work for someone else and 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. Whatâ€™s up, freedom fighters? Hey welcome back for another episode. This is actually episode number 469. And today Iâ€™m with my buddy, Blake McCreight. Kind of an interesting touchpoint here, Blake and I are from the same general kind of hometown where we grew up at. Didn’t know each other when we were growing up but it’s always funny when you live 1000 miles away from home when you meet people that are kind of from your hometown, especially when itâ€™s like a smaller hometown. So that’s cool.
And another cool interesting thing about Blake here before we kind of get into it is that he was on the show Episode 173, which is like 300 episodes ago. And we figured out thatâ€™s probably about four years ago. But excited to talk today really about exit strategies. So sometimes, you know, if you look at social media, Facebook groups, for example, there’s a ton of stuff on wholesaling because that’s where a lot of real estate investors start.
But the truth is, is most real estate investors that are establishedâ€”been doing this for a whileâ€”have different exit strategies they use. Sometimes you rehab, sometimes you wholesale, sometimes you might keep as rentals, other things, it depends on your goals. But if you have just one exit strategy, the truth is, is you probably are leaving money on the table sometimes. And so we’re going to talk a little bit about exit strategies and what Blake does. So Blake, how’s it going, buddy?
Blake:Going great, Mike. Thanks for having me on the show.
Mike:Yeah, yeah, always good to see you. And so before we get jump into this topic, why don’t you tell people your background about how you got started, how you made your way out of the Quad Cities up in Illinois?
Blake:I mean, out of QC or East Mo as you put it, right?
Mike:By the way, for those of you that are listening, we might have a couple of little inside jokes. Some old time humor. Old time humor, that sounds really old.
Mike:Yeah, we’re not old timers.
Blake:Not that old yet, Mike.
Mike:But anyway, go ahead, Blake.
Blake:Yeah, awesome. Thanks for having me on, Mike. And like you said, it was four years ago, I think so. But, yeah, my background I came out of corporate America. You know, much like most folks probably, you know, go to school, get good grades, and have that corporate job. And, you know, that was awesome, I’m very thankful for it. And, you know, set me up to learn a lot of things that prepare me for owning my own business. But, you know, in 2000 . . . I guess in 2006, I decided to jump into real estate which is probably not the best idea.
Mike:That’s when the lessons began, huh?
Blake:Yeah, right. That’s when I learned everything what not to do in real estate. So it prepared me for the downturn. But, yeah, really what happened was I started buying rental property in the Quad Cities. As you know there’s a depreciation that . . . huge depreciation back there. I mean, it was . . . so everything cash flowed that I bought, but I was doing it all on bank money. I mean, literally, I borrowed from Wells Fargo, I borrowed like 80% to finance it. And they actually gave me an unsecured loan for the other 20%, which is hilarious. But it all cash flowed.
Mike:They were learning too. Like, what not to do.
Blake:Exactly. So, I had to help them hit their loan products [inaudible 00:03:44]. Anyway, so, yeah, so that’s . . . like I got started like, in three months. I bought a seven-unit building with a house. That was our first purchase. And then we bought a duplex the next month, a duplex after that. And my dad was a contractor so we partnered up on it and we didn’t know anything about property management, managing tenants. And, you know, that was . . . luckily, things cash flowed and we were able to make some money that way.
But surely after that, the market crashed and I really had no other idea how to do real estate other than if the bank would give me money, right? And then through that we had, you know, tenants, we rented to college kids who left over Christmas break and the heat went out and flooded the whole duplex with frozen pipes. So all this is just, you know, putting bad tenants in. I mean, you name it, we learned a lesson. So that was kind of the end of our investing.
It was about 2012, I had hooked up with a high school buddy of mine that was . . . they’ve been machine shop worker and been really successful and kind of, I sat down with him and figured out how to, you know, this whole wholesaling. So in 2012, it was kind of really when I got started. I just jumped in and, you know, he kind of said, â€œThis is how you do it. And you need to go get a cash buyers list and, you know, call me back in a week. And if you do it, then we’ll keep working on it.â€ So I bought the buyers list and then figured out how to, you know, start running bandit signs back in . . . we didn’t have these cool tools that we do today, like software systems and cold calling.
Mike:Yeah, itâ€™s evolved a lot.
Blake:Yeah, it was like old school bandit signs. And you could buy off the MLS back then too. So, yeah, so we just went out and, you know, I started wholesaling. It was really how I really got my business started. And then, you know, I started flipping houses, you know, taking leads and I’m like, â€œOkay, I can flip this one,â€ and flipped one and kept wholesaling and flipped another one and just kind of, you know, one after another over the last really six, seven years.
Mike:Yep. Yep. And now you operate . . . just for clarification . . . just primarily in the Chicago market, right?
Blake:Yeah. We’ve operated in a couple different markets. You know, it’s really, I mean, with . . . I don’t know, 9 million, 9.5 million in the Chicagoland area there’s plenty of deals . . .
Mike:Plenty of opportunity there, yeah.
Blake:Yeah, no reason to go outside our market.
Mike:So today we’re going to kind of talk about different exit strategies. And like you said when you first started off and you were keeping rentals. And some of that is you still had your corporate job then, right?
Blake:Yeah, I did. Yeah, I still work with my corporate job . . .
Mike:Knowing the market that you were buying in there which is this older smaller market like it’s possible . . . you know, when you were getting your first few loans as a rental and you can get Fannie and Freddie type loans or bank kind of traditional bank loans, I guess, which you can only do that on a few deals, and then you’re kind of out of that weapon.
You could conceivably in some markets like where you were at up in the Quad Cities and some Southern markets, few different markets, you could conceivably buy for almost full retail price and make those at least appear to work on paper, right? You couldnâ€™t make assumptions like, â€œWell, 10% of vacancy, 10% maintenance and then when you get into them and then you have something like pipes burst, you’re like, â€œOkay, well, what if it’s like 60% maintenance issue?â€
Mike:[inaudible 00:07:08] popping and your cash flow is gone for like the next five years if everything else works well. So probably like you when I started . . . like me and sounds like you when we started, on rentals, you make some assumptions that are like totally BS. They very likely will not work out the way that you . . . youâ€™re probably, you thought you were conservative, but you weren’t even close, right?
Blake:No, I had no idea. I had no idea to plan for like, you know, any big expenses that are coming out of the first 20 years old, but it works.
Mike:Yeah, yeah. And then you started wholesaling and then you realized, â€œHey, I could make more money by doing a fix and flip or something else, right?â€ And so that’s kind of the evolution of exit strategies and like some people only rehab because they don’t know how to buy so they’re just buying from wholesalers.
And there’s all these different models out there. And the beauty of our model, the way that we run it and the way you run your business now, is we’re buying direct from sellers and that gives us the opportunity to do a number of things. You could wholesale it, you could rent it, you could fix and flip it, or you could do what we call wholetailing and kind of a hybrid of wholesaling and rehabbing I guess so. So it pretty much makes up your business today. You’re doing all those things, right?
Blake:Yeah, absolutely. So I don’t think I’ve wrote . . . I mean, you can still probably get deals on the MLS if you’re on it every day and, you know, really working it hard. But we really focus on lead generation and bringing in direct to seller leads and then we assess the lead as far as what the opportunity presents. Is it a wholesale deal? Is it a flip? Is it a rental? Or can we wholetail it, just clean it up, and put it back on the market?
Mike:Yep, yep. Yeah, and I want people that are listening to understand like, how to get there. Like, how you got there and how you evolve because sometimes it’s not clear. When you’re first starting you’re just like, â€œI’m wholesaling. I don’t have access to a lot of capital.â€ And it’s like, well, most people don’t when they started, so you can get there. But what we’ve kind of found, I mean, I think you’d agree with the reason you have different exit strategies is you’re trying to always maximize your profit, right?
Blake:Right. And then actually, that kind of leads into my first flip, it was a lady that I was going to wholesale her house and to a buyer. And she had like, 60% of the work already done. So when I got there, I was like, â€œWhy are you selling this?â€ And she had two contractors run off with her money. I had like 30 grand in the bank, so I ended up . . . I said, â€œWell, why don’t we just partner on this?â€ Which in her mind it sound like a horrible idea after two contractors. She’s like, â€œWell, why wouldn’t you just buy the whole thing?â€
And I’m like, you know, I didn’t really want to . . . well, I don’t have the 90,000 to buy it. But I had the rehab money and I said, â€œWell, I could pay more, if we just, you know, let me rehab it. And then in 90 days, when we sell it, weâ€™ll split the profit.â€ So that was kind of the evolution of raising money for me and using people’s money was because instead of me paying her 60 grand to buy the house that day, I paid her 60,000 plus we split . . . I renovated it and sold it, you know, three months later, and then we split the profits. She got like . . . she ended up walking with 85,000. And I got my 30 plus another 20.
Mike:Yeah, yeah. So talk about that a little bit. What are some of the reasons that you . . . well, I mean, talk about your mix a little bit far. So, like, what percentage of your business are you doing and where you’re . . . I know you’re doing some decent volume up in Chicago, but how frequently roughly, are you rehabbing versus wholesaling versus keeping rentals or wholetailing?
Blake:Yeah, so I would say our business is probably . . . If I broke down, the numbers are about 40%, rehab, 40%, wholesale, and then the other 20% we’re wholetailing.
Blake:And then in that mix is probably . . . on the rehab, we also will take down rentals to make sure they’re stabilized and then, you know, it’s probably mixed into that 40% on rehab, which is probably 10% of that is, we stabilize rental properties of leads that come in. They’re already tenant occupied. And then we’ll sell them those cash flowing investments to other investors.
Mike:Okay. So, and you probably agree with us too just for people that are listening here, your exit strategies, let’s talk about like, why you do some exit strategies. And then we’ll kind of later get into how that might shift over time, right? Because, like in a really hot market, sales market like it’s been over the past couple years, like you’re probably rehabbing more now, I’m guessing than you did in years past. And if the retail market starts to slow down, you’ll probably rehab last. You just kind of shift to different strategies based on what’s going on in the marketplace, right?
Blake:Yeah, absolutely. So, basically we’re looking at when we get leads that come in, if it’s one, we assess it, like, is it an area that we invest in? Because sometimes there’s higher crime areas that we stay out of or donâ€™t want to . . . my wife runs innovation, so she has to go to the properties. Yeah, you know so those leads will . . . if they’re higher crime, weâ€™ll wholesale those because there’s still a lot of opportunity for investors and a lot of investors that buy that product. We also will . . . we’re kind of taking a step back from doing like large renovations like 80,000 and higher. So if it’s larger than that, we’d probably wholesale that if we can.
Mike:Yeah, in the city . . . in Chicago, I just know because I used to live in Chicago too, but there’s some . . . you can spend . . . there’s some like major renovation [process 00:12:35], some really old buildings that you could just sink a ton of money into. But they take a lot of time, right?
Mike:And it’s a lot more risky. It’s perceived as risk and you’re like, â€œI don’t want to take that on.â€
Blake:Yeah, we have such a large . . . I mean, you got to think how long Chicago . . . there’s a lot of homes that are 1900s and 1930s. So you’re doing basements to, you know, roofs and everything in between. You got to pull permits, plans, and wait on inspectors and that. So we try to stay away from those and wholesale those off to the guys that, you know, really enjoy that.
Mike:Sure. Yeah. They’re more of ultimately like builders, right?
Blake:Right. Yeah, you know, those are six to nine months rehabs just, the permits and plans.
Mike:Yep. Yep. Awesome. So in terms of, what makes you decide other than . . . let’s talk about, that’s time wise and then like money, like how do you decide whether you’re going to . . . you know, I have a general rule of thumb but I want to hear like how you decide like, we should take this on to maximize profit or not? Like, how do you know if it’s going to be a wholesale deal or a rehab?
Blake:Yeah. So I think if we can make on the wholesale side . . . I mean, if we can make 15,000 or more on the wholesale and still leave it big enough spread for our end buyer who said it’s going to rehab it, we would love to wholesale it. And then that’s one avenue for us to maximize it. Otherwise, if it’s just the . . . you can’t buy it at a big enough discount to wholesale, and you’re only going to make 3, 4, 5 grand, but we can make 20 to 25 on the rehab ourselves, then we’ll go ahead and we’ll rehab it ourselves.
Mike:That makes sense.
Blake:So also we look at cash flow, too. Money is always the [inaudible 00:14:22].
Mike:Oh, yeah. The reason I said, “Oh, yeah,” I’m not allowed to manage the cash in our business or we would have been out of business a long time ago. My wife handles that. But like, oh, yeah, the cash flow thing. That’s [all so critical 00:14:32], right? So sometimes you just, you know, you might not have capital, like, you might have a bunch of houses in inventory, or you’re like, â€œHey, we got some bills to pay.â€ So . . .
Mike: . . . investments. Talk about that a little bit.
Blake:Yeah. So I mean, like right now we’re literally we had an investor that he had 400,000 out with us and it was at any point in time we’d write a check when he decided to open a restaurant. And so the money went away real quick, like I had to get it all back to him. So, you know, we’re raising more capital with other investors in that. But it’s one of those things where, you know, it depends on your private money that you have available too. We look at what we’ve spent. You know, we obviously like to take down properties ourselves with our own cash to maximize our own returns if we can. But, you know, this business is cash intensive. So, you know, we want to make sure we got enough capital in the bank to be liquid, so . . .
Mike:Yeah, and to cover your bills too, right? I mean, we kind of . . . you know, I do a lot of coaching and one of the things I always tell people is, â€œHey,â€ you know, we tell people to keep their . . . keep your operating funds, like covering marketing costs, paying your rent if you have an office, admin costs, like those costs separate from your property funds. So we have an operating account and then we have a property account. A property account, like we don’t commingle because we’re borrowing money from private investors too. I don’t want that money to be paying for my admin salary or, you know, whatever, like my lunch with my wife today or whatever, you know. Try to not commingle that.
But, you know, it’s important to . . . if you know what your monthly overhead is, like, â€œHey, we spend $5,000, $10,000, $15,000, $20,000, whatever it is on advertising. And, you know, by the time you figure in salaries and stuff like that your overhead is something, let’s just call it $20,000. Like, you got to know that you got to cover that cost. You don’t want to like have to say, â€œHey, I need to finish this rehab. So I can’t advertise this month.â€ Like that’s like the kiss of death in this business.
Blake:Right. Absolutely. Oh, yeah. We’re always looking at cash flow expenses. So I don’t know, for me, it’s six months, I like to have at least six months of . . .
Mike:Yeah, that’s good.
Blake:Just enough to the side, so we know weâ€™re good.
Mike:Right. Right. And that’s a good metric. You know, early on we were kind of looking at like three months. But of course, some of the more the better, right? But for . . . I want people that are listening to that, to really can understand what we just said. Like, you’re going to be hesitant to hire people or grow your business or commit to advertising consistently, if you have inconsistent cash flows. And so it’s kind of nice to have this bank of money, like you said, six months.
So if your overhead is 20,000 a month, you’re saying you need to have 120,000 in the bank or more in terms of covering your operating costs. And if that starts to whittle away, you know, you may have to pull back on advertising and/or may have to fire somebody if you can’t pay him or those things, which none of those things you want to do, right?
So you’ve got a solution there to say, â€œHey, I can bridge the gap, as long as effectively my operating account has that cushion in there, then we’re good.â€ And if by the way, it starts to come down a little bit then and you have a deal coming up, you’re like, â€œHey, we need to wholesale that and ring the register so we can kind of get those reserves built back up,â€ right?
Blake:Oh, yeah, absolutely. And I think that those people listening too, I mean, it takes . . . you know, I didn’t start with money. So, you know, it takes time to build up to that, but I think you know, you can make good . . . a lot of mistakes I see new people make or investors is, you know, they pull back on the marketing if something doesn’t work, you know, within one or two months and you don’t see the results from it, which, you know, sometimes it takes, you know, three, four months for the sellers to come around.
Now you pull back because cash flow is tight, you know, you’re unsure and then now you’re missing out on new leads coming in. And it’s a constant chasing yourself. So if you have the capital to sustain that ups and downs, then you can make good wise decisions and feel good about, you know, pushing through. So . . .
Mike:Right, right. And one of the things that we mentioned a little bit want to dig into a little bit deeper is, how your mix might shift with the market. So if you or your inventory situation, like if you saw your inventory is building up, like, you know, right now we’re holding, if you said, you know, last month, we were holding 5 houses and now it’s 8 and, you know, we’re on our way to 10 here, whatever, and things are slowing down, then you tend to like wholesale more right? Because you’re like, you’re less likely to build up your inventory if it looks like you’re having a hard time selling houses, right?
Blake:Yeah, yeah. So like last August, I mean, you got kind of sleepy, I think across the country, but it definitely didnâ€™t in Chicago. So I’m we were looking at the price points that were in and said, â€œHey, let’s wholesale, you know, instead of holding this and see whatâ€™s been happening. Let’s go ahead and wholesale them.”
And then as, you know, things have picked back up again and we’re not sitting on as many properties and so it’s like, let’s just . . . you know, we can buy more and kick those down and feel good about it that we know that we can, you know, that we’re going to be able to sell them.
Mike:Right, right. Yeah, I think it’s when the Fed announced last fall, like, they raised rates a couple times and a lot of people got a little worried. Like, retail market slowed down and then we saw . . . even in Texas which is on fire, like we saw it here too. Like, things just started to slow down and we’re like, â€œWhat the heck’s going on?â€ Because it was moving so fast, and like, certainly in November or December last year, it was just like, almost like a screeching halt.
Like, the houses that we bought and the average days on market were like, three, four or five days. Like they were just opening weekend. You’re selling your house, you know, and next thing you know, we’re sitting on it for like 90 days and weâ€™re like, â€œWhat the heck is going on right now?â€
Blake:Yeah. And I think the other thing in Chicago too for us, you know, our property taxes in Illinois are really, really high. So with the $10,000 they capped it and believe it or not, that’s, you know, houses over 300 or 400 grand have property taxes of $10,000. So I think with that, combined with like the new tax laws, people are kind of unsure in that $400,000 like, what their tax situation was going to look like. So those middle price point homes, you know, it was sleeping there. But I think that’s all changed. Everyone kind of knows what it’s going to look like now. And rates are . . . looks like they’re stabilized for a while. So . . .
Mike:Yeah, yeah. Yeah, things have . . . I mean, you know, there’s like, the political environment is like, it is crazy, but people have started to accept crazy, right? And then, of course, when the next election comes around, people will . . . they’ll feel good or bad about it one way or another, you know. So that’ll impact the market one way or another, but we’ll worry about that when we get there, right?
Blake:Exactly. So, yeah. So we’re buying . . . I mean, I think right now, we’re trying to buy. We’re buying as much as we can but I think there’s a lot of investors out there that are feeling good about where the market is. So we just kind of obtained . . . you know, it depends on how many rehabs we have going too.
Blake:Contractors, you know, I don’t know in Dallas if you guys are seeing the contract pricing is gone up.
Mike:Yeah, no doubt. No doubt. Yeah. Yeah, it’s interesting when you think of like, all the ways that you might make a decision to rehab, for example, which is the kind of like your biggest . . . probably like your most risky, I guess. You’re like doubling down on it. Like, if you could wholesale it and you choose to rehab it, like you’re taking on some extra risk, you know. But it’s like, do you have the cash flow for it? Iâ€™m sorry, do you have the capital to close on the deal that you can get from hard money or private lenders or whatever? Do you need faster cash flow?
And if so, then you probably wouldn’t rehab. Like, do you have enough capacity to manage contractors? Like, I know, Wendy, your wife does all the . . . manages the contractors. And then do your contractors have capacity? And like, you gave them another job and they’re like, “Hey man, normally this takes me 5 weeks, but this one’s going to be like 10 because I’ve got a . . . ” they’re backed up on jobs. So you got to think about all those things, right?
Blake:Yeah, there’s a lot of things that go into it. Absolutely.
Mike:Yep. Yep. Cool. So talk a little bit about, you’re doing more rehabbing stuff now than you did in years past because the market will bear it. But also, because you have started to raise private money and you started to find sources of capital that would enable you to do that. So talk a little bit about that evolution for you and maybe in a way that people that are listening can see the vision for themselves to raise money as well.
Blake:Yeah, I think, you know, if you can raise . . . so raising capital, it’s kind of scary, obviously, for new people and like, you know, on friends on who’s going to give you money. But what’s been successful for us is really just being excited about what we’re doing and sharing our story and how we’re . . . you know, just recently and I think we talked about it before the show, you said, â€œHey, you’ve been more . . . â€ youâ€™ve seen me a lot on Facebook lately.
But I’ve been talking. Iâ€™ve just been sharing like houses I’ve been in that we bought and saying, â€œHey, this is a seller that we helped out of a situation so they can move on with their lives. You know, we bought it and we actually used, you know, our investor who works a full time job and has money in their 401k or savings account, not really earning much. They actually funded the deal for us. And then when we sold it, they got paid back the capital plus the return on money. And we did all the work.â€
So just the showing the homes and being excited about what we’re doing. And then just in two weeks, I think I raised probably close to $150,000. I had a college buddy who said, â€œHey, I got 25 grand, and I’d love to get . . . you know, if we can put it into a deal.â€
And then my roommate from college he hit me up and said, â€œHey, my dad and I were just in Hawaii, and my dad’s retired now and he’s wanting to do real estate. You know, maybe you could help him out.â€ And so now that’s going to be like probably another, you know, 125 right away. Just by me telling my story and being excited about our better business. So that’s how I kind of started early on too.
I mean, just at dinner, friends and family or whoever and it’s like, â€œHey, you know, this is the deal we just bought and the return that we got.â€ Being excited about, you know, sharing and asking people like, â€œHey, do you know anybody that would be excited about making, you know, 10%, 12% on their money? And when you start sharing those deals, they all of a sudden feel like, â€œWell, I don’t know anybody but I would be.â€ Because they want to be excited about it.
Mike:Yeah, the pros, the folks that teach how to raise money typically say to use that angle instead of saying, â€œHey, would you be interested?â€ It’s like, â€œDo you happen to know anybody? I know youâ€™re well connected. Do you know anybody?â€ And people are like . . . they might self-select. Well, I’m interested.â€
Mike:Well, they might not. They might know other people but itâ€™s a little less direct, yeah. So what do you do, if I can ask? Because I think a lot of people will say, â€œMan, all my friends and family are broke. Like, I don’t know . . . â€ which for a lot of people is true, because a lot of people are broke, right?
But you said you had a friend that had like $25,000 and so people would be like, you know, what do you do if they have a smaller amount that . . . like, if you invest just say, your average loan just to keep the numbers around, like you needed $100,000 for an investment, but you know some people that have like 10,000 or 20,000 or 30,000, like a piece of that. How do you structure that deal?
By the way, for those listening right now, neither one of us we’re both very handsome, intelligent people. Neither one of us are attorneys. So don’t take legal advice from us. But how do you kind of structure those situations?
Blake:Yeah, that’s a great question. So like in that situation for $25,000, what we do is, either early on, if I don’t have any of my own capital. I mean, I might find a hard money lender in my area. They wouldn’t give up, maybe put up $75,000 and let’s say we need $25,000 to bridge the gap or to, you know, for the rest of the renovation and maybe they want 10% down. So that $25,000 that we take in, we would put it on a note to our company. So whatever your LLC is, we’ve just taken it as a company loan. Thatâ€™s what my attorney and CPA would advise me to do.
Mike:Yeah, yeah. So itâ€™s like unsecured loan against, I guess you or your company, but . . .
Blake:You or your company, correct. And we explain that to them upfront saying, â€œHey, you know, if it’s with a small dollar amount, you’re probably going to have to come in behind somebody or behind the money that’s going to be in first position. So you’re not going to be able to get a mortgage. So basically, you’re just, you know, what they called gap funding the remainder of the loan.â€
So, you know, and we explain to them the risk. We say, â€œYou know, this is awesome, you can make 10%, 12% but here’s what happens if we default and what you’d have to do.â€ I think, you know, it’s always . . . I always find it interesting like some people never ask those questions and it’s like, you need to know like, what your risk is.
Mike:Right? Right. Right. Yeah. But you want to . . . you know, for people that are listening to this and think about raising money, like, you should always protect your lenders. Like, even if it means you got to come out of pocket somehow, like you should never, you know, just say, â€œWell, it didn’t work out. Sorry, man, we lost your money.â€ I mean, I would never allow that to happen. Like, I literally would . . . my son wouldn’t go to college or something, if I had to do that, you know.
Mike:But I mean, you know, you should never get yourself . . . It’s easy, I mean, it’s easy to see how people could be a little more sloppy when it’s not their money. But your first interest should always be protecting your lenders. And your second interest is your own success with that deal, right?
Blake:Correct. Yeah, you got to . . . I mean, I would never let my lenders . . .
Mike:Yeah, yeah. Honestly, that’ll be the end of your being able to lend from anybody because the word spreads fast on things like that. So, yep.
Blake:So, yeah, otherwise . . .
Mike:Sorry, go ahead.
Blake:Yeah, I mean, if they have all the capital then, you know, they come in as a first mortgage position and, you know, rather than the whole project. So . . .
Mike:Yeah, yeah, awesome. Blake, hey, I didn’t mention to this up front, but if I can catch you off guard a little bit, you’re a member of our Investor Fuel Mastermind, you and your wife, Wendy. And, you know, what are your thoughts on the mastermind? You just kind of tell people a little bit about it and help spread the word. I mean we found that when people come in and, you know, we’ve got some really good people in our group, as you know, and you’re the best one, by the way.
Mike:I’m going to edit this out. No, Iâ€™m not. But, you know, if you could just kind of share some thoughts on the group because a lot of people see what we’re doing, but they don’t necessarily know what it is. And I’m biased when I say things and so you could pretty much validate right now that I didn’t even tell you that I was going to ask that question. But perhaps you could just share your thoughts on Investor Fuel.
Blake:Yeah. I think, you know, as entrepreneurs and business owners, it’s funny we find, you know, it sounds so cool to own your own business and go do your own thing. But as you leave, you know, corporate world or any job, you find yourself kind of on an island. And, you know, I think some of the most important things are being surrounded with. . . you know, they say if you want to be . . . hang out with your five wealthiest friends or, you know, if you want to . . . you’re the average of the five people you hang out with, right?
So I was looking probably about a year and a half ago, two years ago, and kind of when you first rolled this out, and obviously Iâ€™ve been on your show and known you’ve done a lot of great things, but I joined in what, February, I think, of 18. And was kind of looking for that place to just be surrounded by good people that were doing great things. And you guys have put together an amazing group of investors around the country. And it’s been very instrumental in our business because I use it for like what I call 90-day sprints. So we’re just talking about 90 day goals. And that’s kind of like our benchmark, you know, from meeting to meeting to see how our business is doing.
But I think the relationships that we get from it have been awesome. And tools, you know, for, like lead generation to, you know, done deals now with a few of the investors, the other members of the group, just the camaraderie of guys that’ll, you know, accountability calls that you guys have. And I apologize I wasn’t on the last one. But, you know, I guess, it has been fun with Ted, you know. Like we were talking, he had a challenge on one of his properties he’s going through and so like, you know, we both have helped each other out over the last year, like, helping each other stay accountable and just staying in tune with our business.
Mike:Yeah. Would you say . . . I think probably most people like you . . . you and I knew each other a little bit because you’ve been on the show and we talked a couple times. And there was that probably early element of trust. I want to see what this Mike guy is doing right. And, you know, I’m the ringleader there, but I think the real magic is in the group itself, right? I mean, would you say that you probably like how coming there like you probably didn’t really know what to expect, like to be part of that community before you actually came and started to be a part of it, right?
Blake:Yeah. I mean, I kind of expected, you know, most people will be like, fairly good people you want to hang out with. And I figured it’d be like a handful of pumping their chests and I’m so awesome. And there’s like no arrogance in the room. I mean that from the bottom of heart. Itâ€™s like everyone is there to give. And you and Stinson, I mean, you guys just kind of facilitate everyone just coming together. But I think that’s been one of the coolest things was there’s been a lot of great friendships that have been created from that room. And like true . . . like what I’d say true friends.
Mike:Yeah. Yeah, no doubt. It’s kind of funny because, you know, I’ll say this. I don’t always admit this or like to admit this socially, but I’m extremely well-connected in the industry. I know a lot of people, but I would say I have a lot of acquaintances, but I don’t have a lot of great friends, right? I mean, it’s just like, everybody’s busy.
And it’s not like, I wouldn’t do things people or they wouldn’t do things for me, but it’s just like, you know, some people have that, like, best friend that they’re just like, talk all the time and like . . . It’s hard to find that in the industry unless you’re part of a group like this where you can break bread with people, and, you know, we all went skiing together here a couple months back and just doing different things together. It really kind of forges these friendships that a lot of us crave that are hard to get in everyday life because we’re crazy entrepreneurs, right?
Blake:Right. Yeah, absolutely. I think we . . . you know, the lifestyle, right? So it’s like, everyone’s . . . you know, it’s been fun to get together and do some cool trips together and just step here on things outside the box.
Mike:Yep. Cool. And if you remember, then you get to come to Chicago and hop on Blake’s boat.
Mike:On a lake. Yeah, yeah. Cool, man. Well, hey, thanks for sharing that, Blake. I appreciate it. So for those that have been listening, and, you know, want to learn more and you’re looking for potential lenders in the Chicago market and probably always looking for ways to do deals with the people and things like that, how can folks get ahold of you?
Blake:Yeah, they can . . . Am I supposed to give my cell phone on here, Mike?
Mike:You don’t have to do that. Iâ€™ll just going to connect you on Facebook or something if you want to. You don’t even really have anything for sale, so.
Blake:No. But they can they can reach me at my email address, [email protected] And . . . yeah, [email protected] So yeah, I’d love to . . . I mean, I know you said raise money and I’m always looking to do that. But honestly if there’s any way I could just help out . . .
Mike:Yeah, that’s awesome.
Blake:Move forward with their business I’d be happy to do that.
Mike:That’s great. That’s great. And well, if it’s okay we’ll add a link to your, like your Facebook account.
Mike:Itâ€™ll be in the show notes here for those that are driving right now or something and want to come back to it. So, awesome. Well, hey, thanks so much for joining me on the show again.
Blake:Mike, thanks for having me on. It’s been great.
Mike:Good to see you. Of course we’re going to see you at Investor Fuel here in just about two and a half weeks and looking forward to that.
Blake:You bet, man.
Mike:Weâ€™re having our Casino Night, you know, we’re having a casino charity, money raising of it. By the way, by the time the show comes out, this will actually just be pretty quick after our recording here. So if anybody . . . gosh I don’t have the link. I’ll put it down in the show notes for the Casino Night.
But we’re doing . . . this the first time I’ve kind of mentioned this, I guess publicly other than a couple of little posts on Facebook but we’re having this charity casino event where we’re like bringing in . . . we have a company bringing in blackjack tables and roulette tables, craps tables and stuff like that and trying to help folks in the industry raise money for some great causes. So it’s going to be a fun thing that we haven’t done before. So it’ll be a good time.
Blake:I’m looking forward to it.
Mike:Yeah, yeah, cool. Well, everybody, hey, this is episode number 469. If you haven’t yet subscribed to FlipNerd, this is like five and a half years in, so if you haven’t, where have you been? But better late than never, we’d love it if you go out and subscribe on iTunes, Stitcher Radio, YouTube, Google Play, wherever you watch or listen to us. And of course, you can watch and listen to all of our shows five and a half yearsâ€™ worth of shows on flipnerd.com. So appreciate you, until the next episode. Keep on fighting for freedom. See you then.
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