Private Money Lending with Robert Orfino

TRE 15 | Private Money Lending

 

In Reality, money is the easiest part in real estate business. However, have you wondered where to find the money? Jason and Robert talk about where to find the money for your real estate deals. They cover three critical things where to start finding the money. They also talk about private money lending and starting a new relationship with someone that’s in the lending world. In this episode, Jason and Robert talk about the power of connecting and building a network in finding capital. After all, there is no cost involved starting to move forward in this business.

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Private Money Lending with Robert Orfino

Where To Find Money

We’re going to talk about money, cash or credit. I feel like there’s so much of this stuff that I don’t know that I’m supposed to be doing. There are all these books I was supposed to have read to be a real estate investor. We’re supposed to do these incantations. I’m supposed to know Tony Robbins stuff. The only Tony Robbins thing I ever saw was a Netflix special and I thought it was absurd. It’s all this weird voodoo stuff. He and Tim Ferriss are in it. I’m like, “Can’t you wake up in the morning, put your pants on and get to work?” Do you think Steve Jobs had a plunge pool and he is in a state? He just got up, went to work and crushed the world. Let’s do that instead.

I’m going to disagree. Steve Jobs had Steve Wozniak because there was someone to bounce that off with. Even at the garage, there was still someone out else there to bounce off, to lift you and to raise you, all that good stuff and to work off of you. As it grew, there were five, ten, fifteen and thousands of people. Steve Jobs could run the hallways, walk into any office and say, “We’re going to do this.” He can get that motivated. Our business is lonely.

If you’re the solopreneur.

That’s where all that stuff comes in because it gets lonely.

I want to do a show at some point entrepreneur versus an investor. This is part of what Gary Vaynerchuk has been all over lately being where they put entrepreneurism on this pedestal. I keep telling people, “I don’t want to be known as an entrepreneur at all. I want to be known as an investor.” That’s a different place to be.

I don’t think Gary Vaynerchuk is an entrepreneur. He’s running a massive media company.

He’s not, “An entrepreneur.”

It’s still in his blood, but for sure he’s running a massive media company. He is a spokesperson for his company. At this level in the media world, he’s like Steve Jobs. I wouldn’t call Steve Jobs at the end of his career as an entrepreneur either. These guys come up with good ideas, but he’s working in a massive environment, full of people, bankers and it gets to that convoluted point where you don’t have any idea who owns your company. You’re not an entrepreneur if you have no idea who owns your company.

Apple starts to get interesting when you look at what they do now. They have a hedge fund inside of Apple. All that hedge fund does is deploy cash. This is what’s hilarious. They deploy cash to buy a lot of times grade A corporate debt, the most risk-averse stuff you could buy. I’m on the Lyft IPO now. I put another post up. This is what I do for fun, sit down and get a couple of beers. Then I watched what the IPOs are doing. I read 8-K, 10-Q and all that nonsense. I think it’s lost 20% of its value inside of a few weeks and the investors are already suing.

Not going to college doesn’t mean you stop learning. Click To Tweet

It’s about 30% down.

The hilarious part is people will tell me, “Jason, I don’t invest in the stocks. I don’t do those stocks and bonds.” Where’s your retirement? “I’ve got a pension.” I’m like, “I guarantee you, your pension, whatever mutual fund your pension invests, buys this hot dumpster fire nonsense. They all do it.” “I don’t buy it.” “You do buy it, trust me.” Somebody is subscribing to that IPO.

A lot of people don’t realize that there is a massive amount of pension debt out there.

This corresponds well with Mindset Monday. We’re talking about money. A lot of folks are worried about what’s the next asset bubble. “What’s now, Jason? There’s a bubble coming.” I always say, “I don’t think it’s in the place you think it is. Where do you think it is? It’s in real estate.” It’s not in real estate. I’m telling you it’s not in real estate. “Where do you think it is?” It’s in higher education.

Its student loans.

We are in the worst ever grade inflation. That’s probably the best way to put it. Everybody needs to go to college. Therefore, if everybody goes, it’s not as valuable as it used to be. Things that are rare are not necessarily valuable but typically they are. When you flood the marketplace with that, is there enough demand or is there enough demand for that supply? It’s interesting to see this whole change. What’s a graduate degree going to be worth many years from now?

I had two thoughts. One was that Gary Vee is not an entrepreneur. He’s on his second fund. I believe he raises money with a bunch of buddies. They go out and they buy IPOs and invest in tech companies.

They’re doing like As and Bs, early round Angel investing.

I thought when you’re done with real estate, you should go on and create an education series for the alternative college education track. We sometimes talk down about college. We’re not saying to be stupid. We’re not saying you got through high school, you’re good to go. That’s not what we’re saying. There should be another 30, 40 to 50 years until you’re dead that you are constantly learning. In that scenario, just because you don’t go to college means you don’t stop learning.

TRE 15 | Private Money Lending
Private Money Lending: We built this institution now that feeds itself based on loans.

 

I always loved the Khan Academy concept but for adult learning. I always thought that was cool. If you are not familiar with Khan Academy, you can learn anything from college level stuff all the way down to elementary school stuff. You got to be learning. Is college the best place to do that? One of the things that are always fascinating me is with improving technology, it still takes four years to get an undergraduate degree. Does it take that long?

We built this institution now that feeds itself based on loans. The more loans you get, the bigger these institutions grow and that’s the knack. You’re going to spend $30,000 a year for Franklin Pierce University. I was looking it up, Franklin Pierce University is $30,000 a year. I’m like, “That’s crazy.”

I don’t get it. An interesting parcel of this was I was watching Russell Brand with Joe Rogan. I’m not a big Russell Brand fan. It’s almost like a celebrity for celebrity’s sake because he married Katy Perry and that whole thing exploded. He’s had some drug issues and all of that, but he’s an interesting writer. One of the things he said, “The idea that we can reform the system from within when the system is there to protect itself is naive.” That’s paraphrasing. You have this idea like, “I’m going to get into the system. I’ll get in the education system. I’ll get in the healthcare system. I’ll get into the system to change it from within.”

The reality is if you look at how the systems are built, they’re first designed to protect the system. Whenever someone comes to me and says, “Jason, I’m not successful in real estate because I don’t have a system.” I’m like, “I don’t think you understand what a system is designed to do. You’re trying to implement something and develop something for your business that you don’t have any idea how it works. Now, you’re taking this other system that some real estate guru sold you and you’re telling me that’s going to meet your goals and your expectations in this industry.” It doesn’t make any sense. Going back to this issue where, “We’re going to take this system. We’re going to go into the healthcare system. We’re going to go into the education system and reform it from within.” I’m like, “You’ve already failed before you even started.”

Year one, you’re failing and learning. Year two, you put systems in place. In year three, you throw everything you learned in the first two years away and start over. Because now you understand the business, “None of this works. I’m getting rid of all this stuff.” Even though you spent thousands of dollars on it. We’re going to get into the three things you absolutely must be doing to get your real estate business moving forward, to get your real estate career going and to get your investing career forward. We’ll talk about that on the backend here. For sure education is a part of it and unfortunately, in our business, it’s the pitfalls of education. We’re here to try and explain this stuff to you at a simple level. You can jump into this stuff and move forward on it. There are lots of people out there looking for your money and don’t have a good education or your best interest in mind. You want to be cautious about that.

We’re going to talk about the three things that everyone should do. The number one and which I believe you have to do every day is you have to be in front of your network constantly. What I want everyone to do is open up their cell phone and start texting any of their private lenders. Any folks within their immediate circle, family and friends and let them know that you’re in the real estate investing business. You think you might have some deals coming up. You wonder if they’re still interested in investing, “Would you like to have coffee this week?” If you have 100 people in your network, do twenty a day for the next five days. Text them, “How’s it going? I appreciate you. We talked about doing a deal together. I might have something coming up. Do you want to grab coffee this week?”

It’s very non-salesy. It’s not desperate. It’s like, “I hadn’t talked to you in a while. Do you want to get together for coffee or a happy hour? I’m working on a couple of deals. Let me know what your schedule looks like if you’re game.”

You need to get in the habit of doing that every day, reaching out to folks every single day. You don’t need to have a radio show. You have a phone and it’s just as good.

The phone is better than the radio show.

Take action to clear your mindset. Click To Tweet

You can text and stay on message. This is critical about your network. If you’ve ever had this happen to you, you know that you need to improve your ability to stay in front of your network. Here’s what happens. Your neighbor comes up to you, Jason and says, “Jason, you do that real estate thing? I totally forgot because my sister-in-law sold her house to some guy. He didn’t put it on the market. He said he does what’s it called, wholesaling? He’s one of those guys. I’ve totally forgotten that was you. You did that too?”

This happened to me in our old neighborhood, a caddy corner across the street from our house. The neighbor in the middle of the night, “Why are there moving trucks there on Monday night? That’s weird. Why didn’t they move over the weekend?” Auction is Tuesday. Sure enough, the next day there’s nobody there. They literally disappeared in the middle of the night. I can see an investor bought it a couple of weeks later. I’m sitting there and looking at this thing. I’m like, “It was across the street from my house. I didn’t even know.” If I told her about,” I’m a real estate investor. If you run into any challenges or anything, let me know.” It was awful. You got to let everybody know.

What’s worse is, “My sister came in with some money. She invested it. She put it out there at Wells Fargo. She’s getting 1.5%. I totally forgot you do investing.”

They went and bought the Lyft IPO. It’s working out well for them. They were thinking about jumping into Uber because Uber is supposed to come out.

It’s a tick off for those Uber guys watching that Lyft thing tank. All those guys who were putting in to get an IPO must be scrambling and freaking out.

When I heard that IPO is coming out and it was before Uber, I’m like, “These guys are brilliant because it’ll be the first one out of the gate.” There’s no doubt they all make a lot of money. They’re done. There is something to be said for being first to market. It’s now been spoiled for Uber. What is it worth?

You know what the promise over at Uber?

What’s that?

They don’t have the right mindset right now. They need to have a good Mindset Monday.

TRE 15 | Private Money Lending
Private Money Lending: Always be in front of your network to make sure nobody forgets about you.

 

T-Mobile now is targeting me on Facebook. I’m getting all their updates from their CEO. I love that guy. He’s a wild man. Google the CEO of T-Mobile, he is a blast.

Staying in front of your network is tip number one. I want you to do this. Please do this. If Jason or I are part of that network that you thought, “I want to reach out to those guys. I want to talk to them about lending. I want to talk to them about their mastermind or some of the stuff they’re coming on.” You can text us. We’re up (281) 401-9008. If we’re one of those things you’ve been meaning to do for whatever reason, you want to learn, you want to work with us, joint venture, brings us a property or any of those things, then do that. Make sure that happens. That’s number one, staying in front of your network. Always be in front of your network. We do that on Facebook. We do that on the text. We do that with emails. For sure nobody forgets about us because we send them about 30 emails a week.

We had somebody tell us one time like, “Why is Jason always on Facebook, YouTube, doing radio shows and all this other stuff?” I’m like, “We’re touching that network every single day.”

We got three wholesale deals that we didn’t market for.

I didn’t market for any of that.

A guy threw it out there and the universe brought it back.

He and I’ve been meaning to get together for a while. We got together. A few weeks later, he sends us this great deal. It’s like, “That’s why we’re doing this.”

Three people in our group, our mastermind, and big game hunting are happy with the deals we’re about to get. That’s how it works. Make sure you’re staying in front of folks. Number two is we want you to introduce yourself to a new lender, banker or private lender. Definitely, for sure scope out a new lender and start building that relationship. If you’re with Jet, great. They’re awesome. We love them but they’re not the only folks in town. You always need to have a backup. Jet does most of our hard money but that doesn’t mean we shouldn’t have relationships with other folks.

It is funny because we ended up doing stuff with Jet anyway.

Never mess the money tree you grew over the years. Click To Tweet

If you don’t have a relationship with Jet, start one now.

A lot of people that go to the Redneck Country Club, they know all the guys, but they’ve never sat down and had that conversation with the guys or gals over at Jet. I’m like, “You should probably do that.”

You have to absolutely start that relationship. There’s more than hard money. There’s real money out there. There are conventional loans. Go find those folks. I don’t care who it is. Start a new relationship with someone that’s in the lending world.

We’re going to have one heck of a Jet story when this deal closes. We’re going to have a wild case study of a deal we’re doing with Jet because everyone else was like, “What are you going to do here guys?” You start to learn real quick who are the professional investors and who isn’t?

When we do our Mindset, it’s not about the rah-rah stuff. We’re assuming that you’re reading and you already want to do that. There is a desire. I don’t need to give you coaching to get out of bed. Now, that you’re out of bed, now what? The first thing is every day put a little reminder on your calendar to stay in front of your network, whether you’re texting people or going out for coffee. We do the greeting card thing and the postcard thing, “We’re still here. We like you.” Get out in front of your network. Making sure that your network is aware that you’re still in the business moving forward because there was a lot of churn in this business.

That was one of the things that I was thinking about. I’m like, “It’s eighteen months. That’s the number. I started putting together a list. I started it in 2013. That was full-time. I started in 2011 part-time and I think back to how many people I’ve known for many years in this business. It’s a handful. It’s not many. It’s a really small percentage of people. A lot of those people were personalities in the past. If they were to post on Facebook on my feed, you’d not even know who they were. There’s one in particular. We’re chatting at least once a week. I always joke with them like, “You want me to put it down on Facebook?” He said, “You put any of that on Facebook, I will kill you.” Years ago, he was putting on classes and stuff. Now, he doesn’t. It’s so funny to me. It’s for eighteen months. Wait for eighteen months and there’ll be a whole new churn of these guys.

I saw a guy came up on my feed, “The first 50 people to respond to something or other, I’ll show you how to make $35,000 in one week.” I didn’t want to go in and start a war, so I blocked him. “I’ll show you how to make $35,000 in a week.” He didn’t say, “This week, just a week.” It could be seven, eight, ten years. You’ve had weeks where you’ve made $1 million, four or five closings. You could show them that. Stay in front of your network, which is important. Number two is introduce yourself to a new lender. Number three is you better be a little self-aware. Let’s figure out where you’re at with your FICO score. That’s important.

We have someone coming in. He’s going to be fantastic. This guy’s name is Merrill. He was going to be on the radio with us for a couple of days. He is going to do some events at night. He’s going to come back and do a big two-day event. He’s probably one of the best guys that we know around the money world that can help you understand why you’re not getting loans, why you’re not getting financing and the elusive line of credit. The real line of credit, not the 10 Biz credit card type deal. You could go on any number of those sites, Credit Karma, all those stuff and get your free credit report. You need to figure out where you’re at. Even some of your credit cards. My USAA shows me what my credit score is.

There’s that service you can sign up for USAA. It’s all the credit monitoring. They give you the updates and all that stuff, which is pretty sweet. We’ve used a service in the past that I can see all of my FICO score. This is one thing a lot of people don’t understand. There are nine different FICO scores. What gets pulled at Fort Bend Toyota is different versus at Ford Motor Credit and Tommie Vaughn or Chrysler can be totally different models, which is different than what your mortgage banker is going to pull. We’re going to have the folks from Merrill and Company here. You should pull that. We ought to see where we’re at.

TRE 15 | Private Money Lending
Private Money Lending: Understand exactly where you are at this point in your career so that you can improve.

 

We’ve covered three things. One for sure breakout your phone and text at least five people, twenty would be better. Texts at least five people that you know in the real estate world and you know in the investing world and say, “I’m still doing this. I’ve got a couple of deals coming down the line. Would you like to grab some coffee this week?” All you’re trying to do is get a coffee date. That’s it. That’s critical. Two, we said, “Go out and introduce yourself to another lender and I don’t care who it is. If you don’t have a relationship with Jet, call Jet. Get that relationship going. If you already have relationships with Jet, call someone else. Get a second relationship going.

Third, it’s time to be a little self-aware. Go ahead and run your FICO score, which I’m scared because I’m broken. I’ve maxed out my credit cards with all the flips and everything I’ve got going on. Now it would be a little scary for me, but you got to go ahead and do it. Understand exactly where you are at this point in your career so that you can improve. Those are the three things that we covered and I think they are helpful. If you’re finding them helpful, let us know, comment on Facebook. If you want to text us, if there’s something you want to do with us and you want to talk about lending. You want to talk about some of the funds we have going, talk about maybe joint venturing on a deal or you got a deal you want to wholesale to us, you can always text us. It’s (281) 401-9008.

You put this in my mind. They’ve got a Mercedes dealer real close to River Oaks. I’m going to start a free car wash and they got a putting green. That’d be so much fun. I’m still stuck there.

It’s in my head. You come over a little bit of rise in a highway and the Back Bay is right there. The Laguna Beach Back Bay is absolutely beautiful. You can’t make the left. You got to go down and make a U-turn and come back up and there it is, the three big white buildings. It’s always the top five Mercedes Benz dealerships in the country. I was blessed to sit down one of their sales meetings at one time. That got real fast. For sure guys, take action. Your mindset is clear now. We’ve given you three things that cost absolutely nothing to do. There’s no cost involved that you can start doing to move your real estate investing career forward, to build your network, to become a more powerful individual and to move forward. We know it’s a lonely business, so start connecting.

We’re talking about mindset as it relates to money. This isn’t the pooh-pooh guru.

If you are part of our membership and our mastermind, we have a series of webinars that we do every Monday night. We have money coaching. We’re going to bottle everything, give you some more actions items and good takeaways.

Money should not be a problem. Money is the easiest part of this business. It’s the most fun for me. One of the reasons that I brought in partners in other investors and all that is because I knew that the alternative for the places in which they can put their money would not work. Lyft will not work as an IPO. Your pension is not going to work. I’ve already done the math and all that stuff. It’s not going to work long-term. What does work is real estate and it works well. You could be the active participant like Rob and me who are going out, finding deals, rehabbing, putting tenants, and all that stuff or you can be more passive as an investor in syndication or in our fund or as a lender.

I met with an investor, husband and wife. They came to office hours. Many years ago, he set out to have a goal. He’s exactly where he wanted to be. He’s looking at me, “What’s next?” I was like, “First, before we talk about what’s next, I want to let you know if no one’s told you, you won. You won the game, #Winning. You’re retired at the age of 50. You have a number of duplexes. You’re throwing off $15,000 a month. Your wife was going back and getting more education. She loves her career. She has a purpose there. You’re looking to do something else. Let me tell you, you have won.” Now, we’re talking about whatever else, but let’s never mess with the money tree you grew over the last several years.

I agree with that. I see that so often where people like, “Let’s kill the money tree to do something else. Thanks for reading.

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