Poor Kids Path to Millions

Mike: Welcome back to the FlipNerd.com REI classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.

Joe: We’re at the REI classroom. FlipNerd is in the house. My name is Joe Calloway. My company’s called RE360, and RE Investor Professor. Today I want to share with you how I went from a poor kid to making millions of dollars in real estate. But most importantly making those millions by raising millions off of people outside of my inner circle. I want to share some tips and tricks with you on how to raise millions to get your deals done.

Mike: This REI classroom real estate lesson is sponsored by UglyOpportunities.com.

Joe: I hear a lot of people in this game talk about how I wish I had the connections that you have, Joe. Connections to a lot of wealthy people, wealthy organizations, who’d lend me millions of dollars to invest in residential and multi-family properties. I get furious when that happens because a kid like me who came from inner city Pittsburgh, really had nothing, single parent home, two-bedroom apartment, low income should not have connections to wealth. And I look at those people and I say, “If I can do it, you can do it.” And that is the truth, that is the bottom line.
So what I want to do today is to share a few tips and tricks that I’ve used over my career to raise the money that I invest in the real estate and how we became the largest home buyer, single family home buyer, in Pittsburgh, Pennsylvania. The first thing is so everyone talks about why they can’t raise. So the first thing of the problem is you usually don’t have a product. If you’re going to be investing in real estate and then you’re going to go in front of someone, you better know what you’re going to be investing in.
An idea is not what they’re investing in, they’re investing in you. They’re investing in a flip. They’re investing in a high end flip, a low end flip. They might be investing in rental properties. They want to feel comfortable that you know what you’re investing in. So make sure you have your product that you want to identify or the product you’re asking them for money identified before presenting to them.
The next thing is package your product. Make sure you have nice information on what you’re going to be asking from them. Fifty thousand, $100,000, $200,000, $1 million dollars. You’re asking them for a big check. You’d better have something to give them, and that is something as simple as a glossy brochure of what the product they’re investing in, the house that you’re asking them to invest in, what you do, who you are. Have a decent website, have a great presentation so these people don’t think you’re some guy who doesn’t know what they’re doing.
So then I want you to identify your investments, another important part. Everyone thinks a rich person is a sports star or a famous person or a CEO of some multi-million dollar company, but we’re surrounded by wealthy people everywhere. A guy who owns a gas station is probably after a 20-year career a millionaire, if not in excess of a millionaire. Hard work makes money over a long period of time. So don’t think because you don’t know Donald Trump that you don’t know a millionaire.
Look all around you and if a kid like me knows a bunch of millionaires, you do as well. So once you identify these people, for instance, two people had good jobs for 10 or 20 years retire, probably millionaires and have some money to invest it. So you are their avenue to getting to a very sexy investment product like investment real estate. So then once you identify those people who actually have the money, you then have to ask.
The biggest portion of this is just simply asking people to borrow the money. Once they know you do this, they’re going to love you for it because it’s a very interesting investment considering most of their money is tied up in Wall Street or really mundane stocks that they don’t even know what they do. So they constantly are giving money to some financial advisor in a fancy suit, and then you show up, you’re the white knight in shining armor who says, “Hey, do you want to invest in real estate in a great investment market?” Stuff that you can touch, you can feel, something that is actually tangible, and you deliver this great investment product. So you have a great product but if you don’t ask them, they will never ever invest with you.
Then after you ask, obviously you’ve got to do a little bit of selling, telling them why it’s safe, what they’re investing in, who you are, why you’re going to succeed. And don’t doubt when you’re putting this package together, the sexiness of you. You are sexy because you’re going to work hard, and you’re going to kill yourself to make sure you deliver.
Their financial advisor doesn’t care if Google goes under, despite them having a large holding in Google. They don’t care, they get paid either way. But you are going to be tied to them. So if you win, they win. You’re going to deliver, and that is one of the most important parts.
If you deliver for your investor who you give them a return, you start out small, and then you scale the investment up, you are going to have an investor for life. So you start with 50 or $100,000. You do one flip. You turn it over. You return them a very handsome sum of money, and they are very happy and you ask to do it again more and more. They tell their buddies, and everything keeps getting bigger and bigger and bigger.
Last tip, last trick, exactly how we do it. What we do is we used to give up equity stakes, and that got a little too complicated. Now, we offer simple debt. Oh, sorry. There was a message popped up on the screen. We offer debt. So what we tell our investors is we want you to be the bank, and we will give you, and we offer between 8% and 12% interest. They become the bank while we buy, construct, and then rent the properties. We rent a lot of properties, and then the bank, the original bank, will come in and refinance us out of this property and we give that money back to the investor and do it all over again. So very simple debt structure. It’s how RE360 and how we do it and how we scale home portfolio.

Mike: HomeVestors, the “We Buy Ugly Houses” folks, is a franchised system of hundreds of real estate investors that have purchased over 65,000 houses. If you’d like to learn more about the most powerful real estate investing system in existence, whether you’re a pro looking to take your business to the next level or whether you have no experience at all but a burning passion to be successful in real estate investing, please visit FlipNerd.com/ugly to learn more.
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