JF1023: The 4-Prong Test to Raise Money LEGALLY and Avoid Fines!

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She’s an investor and securities attorney, it’s safe to say she knows a thing or two about legal ramifications when your business isn’t setup correctly.  She has a four prong test for determining if you need to follow securities laws and file with the SEC. Jillian also explains why the SEC may not be your biggest problem if you’re not fully protected.

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Jillian Sidoti Real Estate Background:
-Partner at Trowbridge Sidoti, LLP
-Expert on money raising techniques for real estate companies
-Speaks at seminars educating real estate investors on how to legally raise capital for investment projects
-Prior to her legal career, Jillian owned and operated a record label enabling her to tour worldwide with artists
-Based in Los Angeles, California
-Say hi to her at http://www.crowdfundinglawyers.net
-Best Ever Book: How to Win Friends and Influence People

Click here for a summary of Jillian’s Best Ever advice: The 4-Pronged Test to Raise Money Legally and Avoid Fines, Lawsuits, and Jail Time

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Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate podcast. We only talk about the best advice ever, we don’t get into any fluff. With us today, Jillian Sidoti. How are you doing, Jillian?

Jillian Sidoti: I’m doing great, thanks for having me. I can’t believe it’s the BEST EVER…!

Joe Fairless: I know! I love to under-promise and over-deliver… [laughs] Setting expectations really high right out of the gate, but that’s okay…

Jillian Sidoti: I love it, I love it!

Joe Fairless: I have heard a lot of good things… As I was mentioning before we started recording, I’ve heard a lot of good things about you in particular — I don’t remember from who, but I’m pretty sure it was multiple people. Again, we are setting the bar really high for our conversation…

Jillian Sidoti: [laughs] I’m the best ever interviewee!

Joe Fairless: Yeah, there we go! So a little bit about Jillian… She’s a partner at Trowbridge Sidoti, LLP. She’s an expert on money-raising techniques for real estate companies; she speaks at seminars, educating investors on how to legally raise capital for investment projects. Prior to her legal career she owned and operated a record label, enabling her to tour worldwide with artists – what an eclectic background!

She is based in Los Angeles, California. With that being said, Jillian, do you want to give the Best Ever listeners a little bit more about your background and your current focus?

Jillian Sidoti: Sure, absolutely. As a matter of fact, what I always love to tell people who I meet for the first time is that I was in their position once, where I was trying to raise money for my commercial real estate deals. That was actually before I started practicing law. I did condo conversions down in San Diego, and I literally didn’t know how to get any more money.

We had leveraged all of our properties to the hills and we needed more money to get more deals done. So I am speaking from not just an attorney’s point of view, but also from a real estate developer/investor’s point of view. I get it, and I get the struggles with raising money and how it’s sometimes easier/cheaper/faster to not do it legally correctly, but it’s also way, way, WAY riskier. And at the end of the day, if you take shortcuts with money and going around the law, you’re only going to realize that it’s not easier/cheaper/faster, but actually more expensive, slower and harder.

Joe Fairless: Let’s talk about taking shortcuts around the SEC guidelines, because this is really rarely talked about. What are the legal ramifications in terms of jail time or fees or whatever else that I’m not thinking of?

Jillian Sidoti: The biggest thing that I think most people have to worry about isn’t so much the jail time, because jail time — you really have to commit a crime to go to jail, which means you have to commit fraud, and you have to have the intent to commit fraud, the intent to steal (if you will) and take money from people, and that’s very hard for the government to prove. We see it happen all the time, but it’s hard to prove.

Most of the people who come to me or I run into have no intention whatsoever of committing fraud or stealing from anybody. They just want to run their real estate business and make money doing real estate.

Where I see the shortcuts being taken is with the actual paperwork. What ends up happening is really two things. One, the state and the SEC catch up with you and they run on fines; that’s how they make money, that’s how they justify their existence, by generating revenue through fines. They’re looking for people who are not following the rules, and in recent history you may or may not know that the [unintelligible [00:06:01].09] changed it so the rules are a little looser. This doesn’t mean that regulators stop regulating; they’re just gonna look harder for people who are violating those rules, so that they can raise money for their coffers.

So the fines is the big thing, but I think that the real threat is actually not the government itself, but your investors… Because if you don’t do right by your investors, that not doing right by your investors, not following the law in the first place is going to be exhibit A against you in the trial against you when your investors come to see you. And nothing necessarily even has to go wrong, it just could be you have a falling out with an investor, or an investor needs their money back in the middle of the project; well, how are they gonna get it back if you’re not very willing to give it to them? They’re gonna sue you and they’re gonna use all of this as evidence against you in order to get their money back.

Joe Fairless: Let’s talk about the most common legal mistakes that you’ve seen that investors make when raising money.

Jillian Sidoti: The absolute biggest one is when people don’t understand what a security is, because that sets them up for failure. I’ll use joint venture agreements as an example. I often hear people say to me “Well, if I just use a joint venture agreement or call it a joint venture, then that’s not securities and I’m in the clear”, but that’s not necessarily true. And by the way, I feel for real estate entrepreneurs and investors who are out there trying to do these types of technique to avoid securities laws because there’s a lot of bad information out there.

I’ve sat in seminar myself where people say “If you just use a joint venture agreement then you don’t have to worry about any of these securities laws and you can do whatever you want”, and that is simply not true. If you don’t mind, I’ll just real quick give everybody the tests you can use to know if securities laws apply to you.

Joe Fairless: Can I guess what it is?

Jillian Sidoti: Yeah, do it! This is gonna be good!

Joe Fairless: Is it if they are passive and expecting your expertise to generate a profit for them, then it’s a security.

Jillian Sidoti: That’s very close – the 4-Prong test. Investment in money – that’s kind of implied in what you said. They have an expectation of profit – absolutely; there’s more than one investor, and one investor doesn’t mean one investor in the deal, it means one investor and you become the common enterprise. Several states have rules that say “Look, you can have one investor per property, but if you have more than one investor period, you’re the common enterprise.”

And the fourth one you got, which was that through the efforts of a promoter, meaning that you’re doing all the work, and the implication is that your investor is expecting for you to make money work, not the other way around.

Joe Fairless: I know we probably shouldn’t think this way, but it’s probably something that some listeners are thinking… What is the bare bones…? if we wanna say, “Boy, this security stuff… A lot of paperwork. I’d rather do a joint venture.” What’s the bare bones minimum to qualify as a joint venture where you’re skirting the line, but you’re on the joint venture side of the line?

Jillian Sidoti: That’s a great question. I get this all the time. It doesn’t help me to take somebody’s last dollar to do legal documents for them. One of the things that always makes me cringe is that attorneys get paid and then everybody else is left empty-pocketed, if that’s even a phrase; maybe I just made that up.

Joe Fairless: Is that why you all don’t charge a fee and you just do equity ownership in every deal?

Jillian Sidoti: That’s exactly what we do! [laughter] I’m so wealthy right now because of all the money I made on equity ownership… [laughter] No, a lot of the times — I feel for people like this who are trying to do their first deal and they want their first joint venture partner and they don’t know what to do. So I have a solution to the problem, but I wanna tell people how to solve the problem and solve it without necessarily coming to me…

What you wanna make sure you do with your investors is not just simply have a joint venture agreement, but tell them all the risks associated with investing. Tell them the who, what, where, when, how, how much and why… Like how much money do they need to invest, how are you going to use the money, who are you – you have to disclose who you are, not just do a handshake and expect everything to be okay, because if they find out you filed for bankruptcy five years ago and you didn’t tell them, that is a material fact that could have influenced their decision to invest… And that’s the test right there on what is it that you need to tell the investor – it’s what material facts would influence an investor’s decision to invest, and that’s what you wanna disclose to your investors… So that’s how you can do it yourself.

Joe Fairless: Is there a template? Is there somewhere we can go and just like — okay, you just rattled off five or six questions, which is great… Is there somewhere we can go and be like “Okay, we’re gonna make sure we address these things, and here’s the copy for it”, or do we have to go to the attorney for that?

Jillian Sidoti: That’s my solution, actually. So by end of April — there is no worldwide template you can just google search for, that I know of… You very well could, and I just don’t know about it, but I do happen to know everything, so… There’s that. [laughter]

But we do have a software that’s gonna come out. It’s gonna be a per-use software that you can go on… You literally put in all the information, you put your partner’s information in and it will spit those documents out for you and it will be much less expensive than using an attorney. It’s kind of like legal zoom for the securities industry.

So hopefully by the end of April we’ll have that launched and I’ll let you and all your listeners know about it.

Joe Fairless: Outstanding. Where can they go to stay updated? They just go to your website, CrowdfundingLawyers.net and look for that?

Jillian Sidoti: Yeah, that would be perfect right now; they can just go to CrowdfundingLawyers.net. We haven’t built out the site yet because we’re kind of hemming and hawing on what to name it… Because there’s a couple of groups out there, real estate educators if you will, who all want this software for their own platform. So you’ll be able to find it in a couple of different places, and I’ll let you know all those places where you’ll be able to find it in the future.

Joe Fairless: But as far as where do they go, they can go to CrowdfundingLawyers.net and they’ll get more information on it, right?

Jillian Sidoti: Yeah, I wanna encourage people to e-mail me at Jillian@CrowdfundingLawyers.net and we’ll add you to the list when it all comes out, too.

Joe Fairless: Alright, sweet. There we go. So what other legal mistakes have you seen investors make that you’ve had to clean up?

Jillian Sidoti: The big one is people who start funds and then don’t file Form D’s. Form D is a really simple form that gets filed with the Securities Exchange Commission and the state’s securities boards. It gets filed in the states where you have investors. For example, you guys are in Colorado. In Colorado it’s actually really simple to file that Form D; you just send it in and it’s a $75 fee there. It’s not expensive at all.

There’s other states that are much more expensive. For example, the state of Texas is $500, the state of Pennsylvania is $525. So there’s some states that are really expensive, and then there’s some states that are not expensive at all. For example, the state of Florida is free.

But one of the first things a state securities regulator will go to when realizing that perhaps something is wrong is they’ll look to see if you filed the Form D. In certain states they’re very rigid about this. For example the state of Arkansas – if you don’t file your Form D in a timely fashion, they charge you I believe $500/investor in the state of Arkansas.

Joe Fairless: Ouch!
Jillian Sidoti: It’s expensive, it can get costly.

Joe Fairless: You only have to file in the states where you have investors?

Jillian Sidoti: That’s absolutely correct. And honestly, if you haven’t done it before and you’re not sure about it, I strongly encourage you to call somebody like myself to help out with that, because there is a learning curve on how to file them. It’s a simple form, but some of the states take it electronically, some take the paper; the SEC only takes it electronically… So you wanna kind of figure out how to do that, and there’s a process.

Joe Fairless: Do people actually file actual syndicators without lawyers, file their own funds?

Jillian Sidoti: You’re gonna laugh at this… I had this group call me and ask if I would fund for them, and I said “Sure, I’d be happy to.” I don’t hear from them for a while; I hear from the again and they go, “So we did our funds, but we want you to take a look at it. We want you to do the next one… We had to get the last one done in a hurry… Blah-blah-blah-blah-blah.”

So I said, “Okay, that’s fine. Why don’t you send me your old fund, so I can take a look at it?” and it was funny, because they sent me my own paperwork. They had gotten a copy of paperwork I had created before and reverse-engineered it and put their own information into it and called it a day… [laughter]  And I don’t think they realized that it was our firm’s paperwork…

But I see that all the time, and I knew the answer I was gonna get when I asked them “Did you file your Form D’s and where did you file them?” The answer was pretty much, “Um, what’s that?” It happens all the time.

Joe Fairless: I don’t understand that… I don’t understand, and this really is nor here, nor there; I just don’t understand why a group would take it upon themselves to file the fund… You have to file it through the SEC, right?

Jillian Sidoti: Yeah. So the thing is all you’re filing is the Form D. The fund itself is your own documentation. So all you’re filing is a five-page Form D with the Securities Exchange Commission. The Securities Exchange Commission, nor the states review your actual offering documents. All we’re saying in the Form D is that “We’re using this exemption; we’re letting you know we’re using this exemption”, and that’s it.

It’s the drafting of the paperwork by the attorney that’s vital, and you wanna make sure that it’s correct, and you wanna make sure it’s as tight as a drum as you can possibly get. I mean, there’s always holes you can poke in something, but that’s why you wanna use a securities attorney. I’m an attorney, so it’s hard for me to say “Don’t use an attorney”, but I feel like it’s kind of foolish to not use an attorney when you’re doing this type of stuff. It’s just so risky…

Joe Fairless: I agree, yeah. It makes a lot of sense. I can tell you one thing I’m guilty of, and it’s along these lines, so I don’t wanna act like I’m purely innocent of bypassing all the processes with an attorney… One of the things I’m guilty of – after three or four syndications and seeing the PPM, my partner and I realized “Hey, there’s some redundancies, or there’s a path that seems similar every time with the updates that the attorney is doing.” So what we did in order to save time and money, we made the updates track the changes and sent it to the attorney, and then they updated it. That saved us time and money. What are your thoughts on that?

Jillian Sidoti: I don’t have a problem with that per se. We generally speaking don’t send Word documents to our clients, but sometimes if a client is so “Hey look, this is the way we wanna do it”, I am happy to comply with that. It’s more for their protection than mine, being a control freak. I’m not a control freak, so I don’t mind if you wanna change your own documents, but it’s really just for your protection more than anything else.

Joe Fairless: Anything else come to mind as far as common mistakes? You mentioned not knowing what a security is and talking about securities versus a joint venture; you were also mentioning filing Form D… Anything else come to mind?

Jillian Sidoti: So the biggest mistake I think people make beyond all this — because all of this is irrelevant if you’re not raising any money. The biggest mistake I see people make in raising money actually isn’t a legal thing, but a marketing thing. That marketing thing is that they’re not consistent with the marketing message at all. You’ve gotta pick a marketing message and then stick to it.

I’ll be honest with you, Joe – you’re a perfect example of this. You have this “Best Ever” moniker… Or tagline, or I don’t know what you would name it – branding… And you stick with that throughout your branding. I think that’s really key to giving the same message so somebody knows exactly who you are and what you’re doing and what tone they can expect from you going forward.

It reminds me of one of my toddlers… I have three boys, and one of them when he was a toddler, he would try something for like 30 seconds, and then go “Oh, I can’t do it… Too hard, too hard.” And that’s kind of what I feel like with real estate entrepreneurs – when they go out to start raising capital, they try (say) a Facebook ad campaign, and after a week they give up because they’re not getting any traction… Yeah, because you have to have a consistent marketing message going forward.

Joe Fairless: Only if it’s 506(c) they do a Facebook advertising campaign, right?

Jillian Sidoti: Correct! But the thing is it’s not just 506(c), because people were raising money for their deals before 506(c) ever existed, and what were they doing? Well, their consistent marketing message just wasn’t about raising money, it was about the company itself.

Joe Fairless: Right, right.

Jillian Sidoti: For example, I won’t even use a real estate company, I’ll use Apple as an example. Apple never went out at a shareholder meeting and said “Hey everybody, buy our stock. We think it’s gonna go up.” Steve Jobs would come out with all this bravado and talk about “Look, I just created this iPod and it can hold a thousand songs, and there’s nothing else like it on the market.” And the market recognized that, and then reacted to that. They didn’t recognize that Apple needed shareholders, they recognized that this iPod was an amazing invention that they could capitalize on, and it’s the same with real estate.

“I invest in apartment buildings in Texas, and here are some of our apartment buildings that have done really well. We’re really excited to make this acquisition in Houston”, and just to always have that consistent marketing message. It doesn’t need to be about “Hey, everybody… I’m looking for investors.”

As a matter of fact, I think the education-based push/pull strategy is way better than a push strategy of saying “Earn 15% on your money. Act today!”

Joe Fairless: I agree, by the way. My background is in marketing and I embrace everything you’ve just said about that. Based on your experience, what is your best real estate investing advice ever for investors?

Jillian Sidoti: My best ever real estate investing advice — my investing advice might be different than somebody else’s because I’ve learned very much the hard way that I’m a much better passive investor than I am an active investor. So I really do rely on others for great real estate opportunities. Right now personally I’m pulling out of all single-family. I might be a little premature in that, and everybody’s telling me I’m a little premature in that from what I can hear, but I’d rather be premature than too late. So that’s what I’m doing right now, and I’m trying to get into more self-storage and some value-add opportunities.

I’ve invested in some apartment buildings, I just haven’t seen anything in recent history that I’ve been super comfortable with investing in. I have invested in some office buildings as of late, but that can be scary, because if the residential industry in a certain marketplace [unintelligible [00:21:17].03] office building goes down, the office space is certainly going to take a hit… So I’m not the best person to ask for that. [laughter]

Joe Fairless: Well, that’s good, you’ve given some incredible advice from a legal standpoint and that’s really the focus of our conversation today. Are you ready for the Best Ever Lightning Round?

Jillian Sidoti: Oh, yes! Okay, let’s do it!

Joe Fairless: Doesn’t that sound like fun?

Jillian Sidoti: That sound exciting!

Joe Fairless: [laughs] First, a quick word from our Best Ever partners.

Break: [[00:21:45].12] to [[00:22:42].07]

Joe Fairless: Alright, what’s the best ever book you’ve read?

Jillian Sidoti: I think How To Win Friends And Influence People. That’s probably it.

Joe Fairless: What’s the best ever deal you’ve done, knowing that you also are an investor?

Jillian Sidoti: Oh, the best ever deal I’ve done… I think the best ever deal I’ve done is actually a biotech firm if I’m gonna be fair, but the best ever real estate deal I’ve ever done was I invested in an apartment building in Kansas City and they refinanced the apartment building and they paid all the investors back, and yet we’re still owners in the building… So that’s gotta be a great deal, because I got all my money back and I’m still making money from it.

Joe Fairless: Absolutely. What is the best every way you like to give back?

Jillian Sidoti: I have a couple things I do. I’m actually the CFO – which is glorified bookkeeper – for a nonprofit that tries to prevent human trafficking. That’s the biggest thing I donate to. Actually, one of my goals is to give $100,000 away in a year, so I’m working on that now.

Joe Fairless: What would you say is the biggest mistake – or any mistake that comes to mind – on a deal or a transaction that you’ve done?

Jillian Sidoti: Not necessarily in real estate but in life in general is not looking into more carefully the partners that you partner with. I’ve gotten into some pretty terrible business relationships and I think at the end of the day at least one of them could have been solved with a quick couple of phone calls to a quick couple of references.

Joe Fairless: Any particular question that you’d make sure that you asked during those reference calls?

Jillian Sidoti: Basically how did they handle conflicts? How did they work under pressure?

Joe Fairless: What is the best place the Best Ever listeners can get in touch with you?

Jillian Sidoti: Probably e-mail Jillian@CrowdfundingLawyers.net. Also, find me on Facebook, Jillian Ivey Sidot is my full name. You can friend me, I don’t bite. [laughter] If we don’t have a lot of friends in common, just make sure you write me a little note so I know to accept your friend request and that you’re not some weird person fishing from Nigeria, or something like that. [laughter]

Joe Fairless: Well, Jillian, I really enjoyed this educational conversation, that’s for sure… And the most common legal mistakes that you’ve come across as it relates to raising money, not knowing what a security is – we have that 4-Prong test… Investment of money, expectation of profits, more than one investor and they’re passive.

The other takeaway is people who file on their own for whatever reason – I don’t know why – but not filing a Form D, just make sure you work with a securities attorney on that; that’s an easy one. And then the third is not necessarily a legal, but more of a success mistake (or lack thereof) is not having consistent marketing messaging throughout your entire presentation or your business approach.

Then also talking about the ramifications of what happens when you don’t follow the rules, and you talked through that at the very beginning of our conversation.

Thanks so much for being on the show. I hope you have a Best Ever day, and we’ll talk to you soon.

Jillian Sidoti: Thanks!

 

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JF1009: Need Money for Your Deals? Talk to This Guy!

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He connects investors to the big money, and he is on track to fund $1 BILLION in private equity! Hear where he sources his capital and what deals he funds!

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Lee Arnold Real Estate Background:

– CEO at Secured Investment Corp & Manager of the Secured Investment High Yield Fund
– Secured Investment Corp is one of the fastest growing companies in the private money marketplaces in the United States
– Lee connects investors to lenders from all over the United States and Canada
– Featured as an investment strategy expert by Forbes, the Boston Globe, Market Watch, Reuters and Business Week & taught for Donald Trump Companies
– Based in Coeur D Alene, Idaho
– Say hi to him at: http://www.securedinvestmentcorp.com
– Best Book Ever: How to Win Friends and Influence People

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Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.

With us today, Lee Arnold. How are you doing, Lee?

Lee Arnold: I’m doing fantastic, thanks for having me, Joe.

Joe Fairless: Well, my pleasure, and looking forward to diving in. A little bit about Lee – he is the CEO at Secured Investment Corporation, and manager of the Secured Investment High Yield Fund. He connects investors to lenders from all over the U.S. and Canada. He’s been featured as an investment strategy expert by Forbes, The Boston Globe and a whole bunch of other publications. He is based in Coeur d’Alene, Idaho. With that being said, Lee, do you wanna give the Best Ever listeners a little bit more about your background and what you’re focused on?

Lee Arnold: Yeah, I started investing in real estate about 22 years ago. At that time I was a penniless broke grocery store bag boy making $3,90/hour, and finding deals was easy, but for an investor it’s always about “Where do I get the cash?” So as I had success finding and fixing and flipping houses, I quickly moved into the lender role where I was doing private money loans. From there I started traveling and doing seminars across the country, meeting a lot of real estate investors that we kind of in the same boat as I was, which is I’m finding all these great deals but I don’t have any money. That’s why, Joe, we put together our Secured Investment High Yield Fund 1 and High Yield Fund 2, so that we could lend directly to real estate investors nationwide, so that they could get their start in investing or maybe take their business to the next level. Even those that are utilizing some of their own cash reserves to invest with could be leveraging that cash through our private equity fund, which would allow them to double, triple or quadruple their current volume.

Joe Fairless: Okay, so you are a lender and real estate investors come to you, they get loans and you on the backside make profits from the loan origination, and then whatever interest you make and your investors do as well who invested in the fund?

Lee Arnold: Correct.

Joe Fairless: Cool. So how large is the fund?

Lee Arnold: To date, the fund has done over 100 million dollars in deployed capital for our investors, and we’re on track to do a billion dollars in private money loans.

Joe Fairless: Holy cow! Alright, 100 million dollars in deployed capital in what? What did you say?

Lee Arnold: And we’re on track to do over a billion dollars in private equity loans in the next 36 months.

Joe Fairless: One billion in private equity loans… But as far as the hundred million, how did you define the hundred million? A hundred million in deployed capital?

Lee Arnold: 100 million dollars in deployed – so we have lent out over 100 million dollars to real estate investors across the country.

Joe Fairless: And then a billion in private loans?

Lee Arnold: They’re all private loans, so we’ve lent out over 100 million dollars so that investors could buy a house, fix it up, and sell it for a profit.

Joe Fairless: Got it! So the second number, the billion, is the valuation of the properties in total, but you’ve lent out of pocket 100 million to get to that billion, right?

Lee Arnold: Well, we’ve lent out 100 million and we’re on track to lend an additional one billion dollars.

Joe Fairless: Got it, I’m with you. So it’s the same thing, but you’re just increasing it. I’m with you. So you’re at 100 million, you’re gonna get to a billion… Where is this money coming from?

Lee Arnold: That’s the best part, it’s coming from private investors, or other people across the country that maybe at one point were real estate investors themselves, did very well, and are now looking for more of a passive income. Private money creates a great vehicle for them, because they can deploy 50k, 100k or 200k either into a private one-off note where they are the lean holder lender and they’re getting a check every month and we service that for them, or if they are an accredited investor, they can come into one of our private equity funds where we essentially do all the work, it’s hands off, and they get a check every 90 days.

So what we do, Joe – we actually have a process within our company that we call “The Circle Of Wealth”, and “The Circle Of Wealth” is this – we will take anybody… Anybody who’s listening right now – we can literally take that listener, teach them how to find great deals, give them the money to buy those great deals, give them the money to fix up those properties so that they can sell them for a profit, do that a couple of times a year or ten times a year… It’s really how motivated they are to get to that next level, but our first tier, the first goal we have for every listener is to help them achieve $250,000 in liquid capital. I believe that most investors are missing the mark because they continually have to go back and borrow again and again, and let’s be honest, private money, though great, it’s not cheap; it’s not a bank financing at 4,5%-5%; these notes are gonna run 9%-12% interest. So as quickly as we can, we wanna get our clients off of private money, so that they can retain and keep more of those profits for themselves.

Once they get to that quarter million dollars, now our next goal is to get them to a million, and once they have a million dollars in liquid investable assets, now they become an accredited investor. Now they can start diversifying – they can be buying real estate, they can be buying private equity loans, or they can be investing in one of our private equity funds. So that’s our process or our plan for each one of our clients.

Joe Fairless: 100 million dollars in deployed capital so far – roughly how many accredited investors does that comprise of?

Lee Arnold: Hundreds.

Joe Fairless: Hundreds… So 500-ish?

Lee Arnold: Our minimum investment amount is $50,000. People can invest as little as $50,000; there’s no limit. We have some investors that are coming in at $50,000, some that are coming in at a quarter million, some that are coming in at a million… There’s no limit. There’s a minimum, but there’s no maximum.

Joe Fairless: So 100 million dollars… I know with my investors — my average investor, when I remove one investor who’s invested 20 million, because that would influence the numbers greatly… If I remove him, then my average investor invests about $126,000, I believe. So let’s just say you’re right around there… That means you’ve got 800 or so investors, and these are just rough numbers. How do you find 800 investors?

Lee Arnold: Predominantly through our education. So as we’re outputting on real estate investment seminars across the country, teaching people how to buy these types of investments and how to do it properly, inevitably in every room 5% of the room is somebody that’s recently retired, has a 401k, a self-directed IRA… They’re looking to get better returns that what they’ve been getting in their CD or even what the stock market’s been producing – which has been pretty good lately, but now there’s a fear that it’s gonna turn and go the other direction, so they’re trying to get their profits out so they can get in something safer.

But in every room, there’s at least 5% of that audience that’s going to want a more passive investment experience, so for them we have our one-off loans where they can invest and lend directly, or our private equity fund.

We’ve been in the education space for 15 years and we speak to tens of thousands of people every year. Over the years, the accumulation of those relationships is to where now our database is in excess of over 500,000 people.

Joe Fairless: That makes sense. The education piece, if you’ve been doing it for 15 years, what did it start out with and how has that education piece evolved, either content-wise or structurally, with logistics, like maybe from meeting in a hotel conference room to something else now?

Lee Arnold: In 2002 I was doing a lot of short sales. Now, short sales really didn’t become in vogue until 2009-2010 post-crash, where home owners were literally upside down on their homes – they owed $300,000 on a house that was now worth $180,000. So short sales became household terminology in 2008-2010.

In 2002 my office was located in Salt Lake City, and we saw the Olympics come in. The Olympics came in in 2002, and when they left, they sucked out about 30% of the value of that market, because it’d been overheated in anticipation of this three-week event. So when the Olympics left, we had a lot of properties that were overvalued, and I was doing a lot of short sales. I literally had 400-500 clients at a time that I was in the process of negotiating short sales for them.

Of course, in doing this, we were the largest short sale [unintelligible [00:10:42].01] in the entire state of Utah; I was approached by a marketing company and I said “Hey, we put on seminars. Can you write a book and a tape for us on the right way to short sale?”, which I did. And we took that concept and started putting on events around the country. That then led to short sales, to foreclosures. As the market heated up, foreclosure options were a great opportunity. Then we went into tax lien sales, and then we went into rehabbing, teaching people the proper way to rehab; now we have seminars on the proper way to retail sale, how to market your homes, to sell them in 48 hours or less every time… So there’s so much involved in the process of buying, fixing and flipping a house successfully that there’s all of these niche concepts that come up around it, and we create seminars and training programs around those niches, because as you and I both know, “There are riches in niches.”

Our ultimate goal is to teach our clients the strategy that will allow them to find these really good deals, because ultimately we want to be their preferred lender. So our education feeds our lending arm.

Joe Fairless: Yeah, it all comes full cycle. You do that education, you educate people on how to do these things, then they find deals and they borrow from you, which helps your backend investors make money, and then eventually if they do it long enough and they’re successful, then they become accredited investors and they start investing passively, and it just goes full cycle.

Lee Arnold: You got it. That’s exactly right. That’s what we call our Circle of Wealth.

Joe Fairless: What has been the most recent challenge that you’ve had as the CEO?

Lee Arnold: The most recent challenge has been the market itself. When we started doing a lot of lending — in the 2002-2008 it was me and some investors and we were doing a couple million bucks a year. In 2010, most areas had really hit rock bottom. That’s when we started seeing a lot of investors coming into the marketplace, buying this real estate, and there was such a demand for private equity that we couldn’t raise money fast enough. Now, fast forward seven years, there’s an abundance of money. The stock market continues to close above 20,000, and investors are rich with liquidity, and they are yield-starved. And when investors and hedge funds and private equity is yield-starved, it becomes desperate money, and desperate money will do things for 5%, 6% and 7% margin. So our greatest challenge as a CEO is getting our money deployed and still being able to retain earnings North of 12%.

With all of this available capital, we’re seeing substantial yield compression, where it wasn’t uncommon to get a 14%-15% yield; now we’re excited if we get anything above 9%. So that’s a good message for the listeners to know – if you have an opportunity that an investor could put money into, it’s not longer you being beholdened to the lender; I really believe that the market has flip-flopped to where now the lender is beholdened to the borrower, and that’s an unpopular message for Wall-Street to hear, but that’s true. Wall-Street needs investment opportunities more than borrowers need capital.

It’s a great time to be out looking for capital for larger projects, for commercial construction, for large development opportunities… Capital is cheap, and it’s readily available.

Joe Fairless: And on the “capital is cheap” part, what type of expectations do you set with the accredited investors before they’ve done a deal, in terms of projected returns?

Lee Arnold: Well, our fund is structured in that we give our investors a 9% preferred return, and then we split any upside. We as fund managers are motivated to produce a greater than 9% yield because it’s the only way we’re going to be able to participate in any of that upside.

Joe Fairless: What’s the upside split?

Lee Arnold: The upside split is 50/50.

Joe Fairless: Okay.

Lee Arnold: So we just finished Q1 and our investor payout was 11.3%. The fund produced 13,5% annualized return, investors get 9%, and then we split 4%, so they get 11% and we keep 2%.

Joe Fairless: And then everything above that is 50/50. Is there some sort of provision later down the road when you exit that they get paid their money back that they originally put in and there there’s a split above that?

Lee Arnold: No, because we pay out quarterly, so we’re not sitting on any retained earnings. All earnings are paid out quarterly, based on investor participation… Which is really nice for a lot of people, because we have a lot of investors that are literally living off of their earnings from participation in our fund. Where other funds are growth or accumulation funds where they get a letter every quarter that says “Hey, your account went from 100k to 112k”, our letter is “Your account is still 100k and here’s 12k… Great job last quarter.”

Joe Fairless: What would you say is your number one talent as a business person?

Lee Arnold: You know, in all my years I don’t know that I’ve ever been asked that question. I always turn it into a core competency, and I think it’s the same question. But my core competency is the ability to communicate to the least common denominator and make it understandable. I think that that’s a core competency because I started investing in real estate when I was 18 years old, while attending community college. Once I flipped my first house and got that first check and I was hooked, I decided “I don’t even need college. I’m just gonna be a full-time real estate investor for the rest of my life”, and that’s what I did. So I don’t have the four-year degrees, the BAs, I don’t have the pedigree the Wall-Street wants to see, with the Yales and the Harvards on the wall. I am a community college dropout turned hedge fund manager. Because of that, I can make complex things easy to understand. I would say that’s probably one of my greatest strengths.

Joe Fairless: Lee, what would you say is your best real estate investing advice ever?

Lee Arnold: Don’t be in a hurry to buy anything. The way that you avoid getting yourself into that situation — a lot of people do this; they say “I wanna invest in real estate, I’m gonna become a full-time investor, so I’m quitting my job and I’m just gonna do this. That’s the worst thing anybody could ever do.

You hear it in a similar fashion where somebody quits the job because they wanna go be a real estate agent, so they get their license, and 86% of all new agents will be out of the business within six months. So to be in a situation where you have to make money is a very bad spot to be as an investor of anything, whether it’s real estate, stocks, bonds or mutual fund. You can’t be in a situation where you have to make money tomorrow. So my recommendation to anybody that’s interested in investing is to keep your day job. Do this on the side. Begin to amass a small sum of capital that will continue to feed your investments. And I don’t recommend anybody quitting job to do this full-time until they’ve got at least two years of their current salary saved in some type of an account where they can continue to draw down whatever their current income is, so that as they leave job to go do this business, there’s still that consistency of income. That’s how you avoid getting into a desperate situation where you just negotiate bad deals.

Joe Fairless: For a Best Ever listener who has some deals that they’re putting together and they want to raise money from accredited investors, what would you recommend their approach be when trying to find the investors?

Lee Arnold: Well, there’s so many crowdfunding places now you can go… There’s Kickstarter and some others where you can go and in a short period of time you can raise money. Those platforms have made the process of raising money relatively easy. The problem is raising money is not the challenge. The challenge is taking raised money and getting it to produce returns. I’ve seen a lot of investors that are like “You know what? I’ve gotta put a million dollar fund together” and they can do it pretty quickly. I’ve seen people raise a million bucks in a week, first [unintelligible [00:19:01].24] Kickstarter or some of these other crowdfunding platforms. But now you’ve got this million dollars and the clock’s ticking, because your investors are now waiting for returns and they’re looking to you as “How are you going to manage my money and how are you going to manage and lead the team that you have assembled to develop and deliver returns?” and that’s the part that’s missed.

The first time I put a fund together, I formed a simple LLC – this was back in the late ’90s. I formed a simple LLC and I allowed people to come in at a minimum of $5,000. I spent more time managing investor expectations than I did actually investing investor capital. What’s fascinating is the lower the amount of contributed capital, the bigger the pain in the rear the investor is… Which is why your minimum is $50,000.

Anybody where $5,000 is literally a lot of money, that investor is gonna be a problem. That’s one of the reasons that we’ve never gone the crowdfunding route. We didn’t want to make it available to those that were not accredited, simply because they need to go cut their teeth on buying, fixing and flipping houses successfully, and buying a couple of notes and making a profit successfully. I believe that the ability to make money is learned. It is not a skill that you are born with or you inherit, it’s learned, and you only learn it through doing it.

Joe Fairless: Great points. You mentioned earlier the education piece has been the primary component – in addition, I’m sure, to referrals… But as far as outside people, who aren’t within your sphere of influence yet, the education piece, doing these courses has been the primary component to help you bring in investors. How many courses do you have in this calendar year, roughly?

Lee Arnold: By courses do you mean event dates?

Joe Fairless: Help me define that question.

Lee Arnold: Okay, so to us an event is either a Friday, Saturday, Sunday event at an event city throughout the country and we hold them all over the nation. An event can also be specialty classes where people fly into our corporate office here in Coeur d’Alene, Idaho, and we will put on a three or four-day event here, Monday-Wednesday or Monday-Thursday. Either of those will be referred to as an event, and we have 47 event dates booked this year.

Joe Fairless: What is the cost involved to putting on a three-day event in a city? I know it varies, but just generally what number are you looking at?

Lee Arnold: Our average cost for an event runs somewhere between $35,000-$60,000… Per event, per weekend, per location.

Joe Fairless: $60,000 for a three-day event?

Lee Arnold: Yup.

Joe Fairless: Huh… Do you charge tickets?

Lee Arnold: No, those are free.

Joe Fairless: Those are free… Wow. And clearly, you have a lifetime value of a customer identified… What is your conversion rate roughly for a three-day event where you’re investing $60,000 in putting in together?

Lee Arnold: We look for a 4:1 conversion.

Joe Fairless: So 25% of the people to attend do something with your company?

Lee Arnold: Yeah, that’s about accurate. But when I say 4:1 I’m referring to if we invest 60k, we want to at least generate a quarter of a million dollars from that audience.

Joe Fairless: Oh, okay.

Lee Arnold: And $60,000, a lot of that is gonna be on marketing spend. We’re spending a lot of money on radio, television, direct mail, to bring awareness to that market that “Hey, we are a private equity fund that wants to lend you money. Come and see us and we’ll teach you how for free.” So from a unique selling proposition, I know of other groups out there that are putting on a very similar event and they’re charging $25,000. We’re doing it for free.

Joe Fairless: So $250,000 is your goal for dollars invested in either on the frontend to loan them the money, or on the backend for accredited investors actually passively invested, right?

Lee Arnold: Correct.

Joe Fairless: Okay. Are you ready for the Best Ever Lightning Round?

Lee Arnold: Let’s do it.

Joe Fairless: Alright, first a quick word from our Best Ever partners.

Break: [[00:23:19].08] to [[00:24:20].19]

Joe Fairless: Best ever book you’ve read?

Lee Arnold: How To Win Friends And Influence People.

Joe Fairless: Best ever deal you’ve done?

Lee Arnold: Converted 20 duplex lots into 40 single-family homes and made $480,000 in three weeks.

Joe Fairless: Will you elaborate?

Lee Arnold: Sure. I had a builder that was selling lots; he’d developed in these duplex lots. Duplex lots are worth less money than a single-family lot, because single-family homes typically bring a higher marginal return. So I bought them, went into the city, got them rezoned to be single-family and sold them to another builder as 40 single-family home lots.

Joe Fairless: [laughs] When did you have the a-ha moment that you could switch them over? Do you remember having that idea?

Lee Arnold: I put them under contract thinking I could do it, but I made the contract subject to inspection, and my inspection was not inspecting the dirt, because that was pretty obvious; my inspection was going to the county and seeing if the zoning would allow it, and they were voting on a blanket rezone the next week I knew that the builder didn’t.

Joe Fairless: Best ever way you like to give back?

Lee Arnold: My wife and I had a nonprofit ministry called HesTheSolution.com. It’s a non-denominational Christian organization, and we have a church at all of our events. So if there is an event over a Friday, Saturday, Sunday, we will have church services at our event.

Joe Fairless: What’s a mistake you can think of on a deal that you’ve done?

Lee Arnold: Moving too quickly, always.

Joe Fairless: Can you elaborate on how you got burned in a specific instance?

Lee Arnold: You make money when you buy, you realize your investment when you sell. It was 2006, the market was crazy hot, and I swung for the fences. I started developing three 15,000 square-foot homes that were gonna be [unintelligible [00:26:04].23] on the backside of a ski resort in Utah. My post-construction appraisal was 21 million, my construction cost was 7 million, and [unintelligible [00:26:15].06] and came to market July of 2008. [laughs] I should have read the market better, and I didn’t. I got caught up in the same euphoria as everybody else, going “Okay, what’s driving this thing?” And I don’t think we have the same bubble presently that we did then. I know that there’s a lot of talk that there’s a bubble – that might be true on the stock market, but I’m not a stock guy so I can’t speak to that. But on the real estate side, I believe this thing that’s driving value and why the market remains hot is there’s such a shortage of inventory because we had five years where nothing was getting built. I believe that that trend is gonna continue.

So where I got burned was not looking at common sense indicators that would have told me immediately that this is the bubble that can’t sustain itself.

Joe Fairless: Where can the Best Ever listeners get in touch with you or your company?

Lee Arnold: CogoCapital.com is our lending arm. If you need some capital, let us know. If you’d like to look at being one of our investors, you can enquire there. That’s the best place for them to go.

Joe Fairless: Lee, I really enjoyed our conversation. Thank you for being on the show. Thanks for talking about the business model that you all have and the cyclical nature of it, where you teach people how to get deal, then they go get deals, they lend from you, and then eventually (hopefully), assuming things go well, they end up being investors in other people’s deals down the line, and it just keeps on perpetuating itself.

Then also talking about the number one talent that you mentioned, the ability to communicate to the least common denominator and make it understandable. It’s important to ask that question, because your team is achieving at a high level, so we’ll wanna know what’s the CEO’s strength to help propel that business and the team – that’s why I asked that question.
Then also the deal that didn’t go too well, the one you just shared, and the one that did, with the builder developing the duplex lots, then you got it rezoned to single-family and you made I think a little over $400,000 in three or so weeks. So thanks so much for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

Lee Arnold: Thanks, Joe.

 

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JF965: Why He SOLD All He Had, Went to War, then Returned to Develop Land and Syndicate BIG Deals

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Best Real Estate Investing Crash Course Ever!

He found the best and highest use of real property, and brings it to life! This exciting episode showcases the complicated yet rewarding nature of syndicating and developing deals. Scott, our guest, literally sold all he had and went to war to be a soldier, he learned leadership and initiative, and came home to build an empire. This is a must listen!

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Scott Lewis Real Estate Background:

– Co-founder of Spartan Investment Group, LLC
– In 24 months, SIG has completed 4 projects totaling $2.5M with an average ROI of 36%
– Currently has three more projects underway, and raised over $3M in private equity
– Led several successful real estate developments ranging from single-family flips to raw land development
– Based in Denver, Colorado
– Say hi to him at http://www.spartan-investors.com
– Best Ever Book: It’s Your Ship by Michael A

 

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Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluffy stuff.

With us today, Scott Lewis. How are you doing, Scott?

Scott Lewis: I’m doing great, Joe, and Best Ever listeners.

Joe Fairless: Well, nice to have you on the show and I’m glad you’re doing great. A little bit about Scott – he is the co-founder of Spartan Investment Group. In 24 months his company has completed four projects, totaling 2.5 million dollars, with an average ROI of 36%. Currently, he has three more projects under way, and has raised over three million dollars in private equity for those projects. He has lead several successful real estate developments, ranging from single-family flips to raw land development. Based in Denver, Colorado… With that being said, Scott, do you wanna give the Best Ever listeners a little bit more about your background and what you’re focused on now?

Scott Lewis: Sure, thanks Joe. Best Ever listeners, my background really started Chemistry and Marketing major coming out of Michigan State University. I went into the corporate world for a little while, I had a regional sales job with a biotech firm, and kind of got sick of that, so I did the crazy thing and sold everything I owned and joined the army and went off to war, which actually was a really good experience. It got me some really good leadership training and what not, and when my active duty time ended I came out, I went into government service, which gave me some additional really solid training – less on leadership, but more on strategic planning, which I’ll talk about… Which ultimately lead me to build the strategy for my company. Currently – Spartan Investment Group. We’re real estate syndicators and developers. We go out, we find deals and then we put together the money for them. We also develop deals as well.

Joe Fairless: Real estate syndicator AND developers… When you say “develop”, are you talking about ground-up development?

Scott Lewis: Absolutely. We specialize in taking raw land and then developing it. As I’ll get into a little bit later, we look in two different areas. There are larger single-family developments with multiple units, or self-storage, but we like to focus on raw land.

Joe Fairless: Larger single-family development or self-storage… The four projects totaling 2.5 million that I mentioned earlier – what were they?

Scott Lewis: They were all single-family flips. We started, like a lot of folks do, in renovating single-family homes. I will say that I was a little bit non-traditional in that the smallest renovation budget we’ve ever worked with is $165,000 on an 850-square-foot house in Washington DC. One of the houses of those four projects was a raw land development, and that’s kind of what wet our appetite for that. This is a little bit more difficult, so there’s a little less competition in that asset class.

Joe Fairless: It is a little bit more difficult, that’s for sure, the raw land development. It’s interesting… We talked in Denver, and Scott was a speaker at the Best Ever conference, and I really enjoyed getting to know Scott, and I took a lot of notes whenever he was talking. We had some drinks afterwards, and one of the things that I’ve noticed with all of the interviews I’ve done is when I ask a developer “Okay, you’ve been developing for a certain amount of time – is it really worth the risk vs. reward?” and sometimes they’ll say “You know what? I just like doing it. I don’t know if it’s worth the risk versus reward, because there’s so many uncertainties and so many grey hairs that I got through the development process.” What are your thoughts on that?

Scott Lewis: Joe and Best Ever listeners, it’s definitely true. There’s a lot more risk in the development side of the house, but with risk comes reward… And maybe I’m just a glutton for punishment like some of the other developers, but I really enjoy doing it because that’s where the real money is made. Once somebody has figured out the best and highest use for a property, and then entitled it so that it’s ready for the construction phase, they can suck a lot of the juice out of the deal because they’ve done the real work, they’ve done the real risky work.

Being able to go in and do that work and then take it all the way through to fruition to whatever the project is, whether it’s a single-family home, ten townhouses, a four-phase condo development  – whatever it is, that’s where the real excitement is, and then also the real payoffs.

Joe Fairless: So let’s talk about a specific project, any one of those four that total 2.5 million on the four over the last 24 months. Can you give us some numbers and just tell us about the project?

Scott Lewis: One of them was the development deal, and it was not quite raw land… A hole had been dug in the ground, so not quite raw, but our contractor that we’ve partnered with over the last six years had a stuck project that he had kind of started and stopped, and we got in there and we helped him look through a [unintelligible [00:07:02].08] which anybody that got the fluorescent tag on their door once in a while knows that that’s a bad place to be.

So we helped him work through that, we did kind of a partner deal. He owned the land already, so he brought the land, we brought the money, split 40/60, 40% going to him 60% going to us. [unintelligible [00:07:21].19], I wanna say we were in at about $450,000 for development and construction and sales and everything, and the out was about $750,000. So we made about $300,000 with $450,000 in, and split – 40% going to the contractor because he did all the work at cost, and then 60% going to us for bringing all the money and helping him work through the city and the utilities and all of the other tangential things that go with development that aren’t there during construction.

Joe Fairless: What would be a couple things – knowing what you know now – if you were presented with those same scenarios on a future deal, that you would do differently?

Scott Lewis: Joe, that’s a great question, and Best Ever listeners… That scenario was presented to us in July of this year and then again in December. Joe, at the Best Ever conference I referenced a deal that I had two different raises on, at two different time points, and which we kind of combined them because we took two pieces of land that were just raw, and one had a house on it that we were going to demolish and get rid of. But the two pieces of land, independently, could get a total of seven townhomes, but combining them and leveraging a special zoning exemption where we were building, we were able to actually get 11 homes.

So one of the things that we’ve done right upfront is we’ve started engaging the utility companies, because that was one of the things that we waited on for our first development project, and it caused us a 60-day delay because those guys were just so backed up, and anyone that’s worked with utility companies in the past knows they are not the most motivated and efficient folks. They’re incredibly burdened, they’re under-staffed, coupled with just how it is out there, that can really stop a project. So in any of the development projects now, after we make sure we’re good with zoning and the tax guide and everybody else from the government, the next thing we do is get everything we need to do with the utility companies going right away, so that we can adhere to their traditional timelines and not be worried about delaying the project.

Joe Fairless: What type of timeframe do you have to allocate for the utility companies?

Scott Lewis: We just got a notice back from the gas company that their timeframe is 8-12 weeks. [laughter] So we’re doing another project that’s a condo conversion, and we’re basically taking a single-family home and we’ve dug out underneath the house and it’s a row home… So there’s a row of probably five or six homes; our property is the second in from the end, so we’re actually digging underneath the two other houses, on the walls and underpinning and going out the back, but we’ll also have to dig out the front a little bit to have an egress to the seller’s condo, and with that there’s a gas line there, so we have to do what’s called gas line abandonment.

The gas company has to come out and [unintelligible [00:10:17].29] and then take it out so that we can dig out, and that’s 8-12 weeks… Which is fine; this isn’t a surprise to us, we knew it was coming, so it’s built into our timeline.

Joe Fairless: How much does that cost?

Scott Lewis: The gas line – they just have to come and turn it off, and then our contractor does all the digging. So it’s just part of our construction cost, it’s not a ton to us. But sometimes the utilities can be upwards of $30,000 if you have to bring new service in… We don’t have the final bill yet, but we have to increase the size of the water line from the street because of the new sprinkler system requirements, and we don’t have the final cost there. We usually budget around $30,000-$35,000 for our projects per unit for utility cost, so it can be pretty significant.

Joe Fairless: Yes, they can be. Let’s talk about the three projects you have under way and have raised three million dollars in private equity for those projects. Have those projects closed as far as you’ve bought them, you’ve got the equity and now you’re implementing the business plan?

Scott Lewis: Yeah, so one of them is actually closed, constructed and sold. Last Friday we just closed on the property. That one went pretty well, it took a little bit longer; we missed our timeline by about two months, so we gave our investors a 2% equity bump just for us missing our timelines. So that one went pretty well other than the timeline. Our budget came in as we wanted it, so that was good.

Joe Fairless: What type of project was it?

Scott Lewis: That was a single-family flip. That one was actually a favor to our contractor. He owned the house since 2006 and he came to us and asked us to help him put it all together and get it ready, just because he didn’t want to. We put some of our money in it, we went to some of our really close investors, and just asked them if they wanted to be in it. Three of them jumped in. We raised $200,000, so not very much for that one, but it was projected to be a six-month timeline for a 10% return. We actually gave the investors 12% because of the eight months… So pretty close to a 24% annualized.

Joe Fairless: What was the all-in price, what was the exit price?

Scott Lewis: The all-in price was about $630,000, and the out price was $785,000. That normally doesn’t meet our 30% ROI criteria, but because of a favor to our contractor and the short timeline, we decided to do it.

Joe Fairless: Cool, $185,000 profit in eight months. Let’s talk about project number two.

Scott Lewis: Project number two was the condo conversion. We’ve been working on that — our plans went in in June 2016, and we actually split those plans into foundation plans and building plans, so that we could go ahead and get started with all the underpinning and foundation work that we needed to do, while the [unintelligible [00:13:04].00] was running its course through the normal application process.

That one is kind of our gold standard, we got a pretty sweet deal on that. We worked on it for about 18 months, trying to track down the owner, and just a random, fortuitous meeting at a corner bakery with an attorney to talk about another project, he referenced having a client with a property on L Street, and we immediately knew who it was. We had talked to the owner a couple of times and she had told us that she had an attorney and we didn’t think that it was even remotely possible, but it turned out it did. The financials are pretty good, we’re gonna be all-in at a million and out at 2.6 million.

Joe Fairless: Condo conversion – is it just one condo?

Scott Lewis: No, so we’re actually taking a single-family and we’re digging out underneath it and we’re adding a floor and a half, so when we’re done we’ll have four two-bedroom, two-bath condos. Three of them will be about 1,000 square feet, and the third one will be about 1,300 to 1,400 square feet.

Joe Fairless: Wow… Okay, I wanna make sure I understand that. You have a single-family house and you’re converting that into four condos?

Scott Lewis: Yes. The real sweet deal about that is we acquired the property as a single-family home, but because we’re converting it to condos, that allows the financials to change a little bit, and that’s where the deal is. It’s a big thing that’s going on in the district of Columbia right now – the condo conversions, because the housing is so limited… And DC – there’s a number of reasons the housing is limited in DC, but one of the things folks are doing is they’re row houses, so you can’t really go out to the sides, and you don’t really wanna go out to the back too much, because you kill the property, and sometimes the lots are really small, so the other way is to go up and down.

Some folks have taken it to an extreme – those are called pop-ups, and they look pretty bad. We probably could have gotten a six-condo out of it, but it would have looked really bad. We’ve actually made the top choice to go with what’s better for the neighborhood and just do the four condos. And even on the fourth condo, we’re only going half a floor, so that it still holds the charm from the street.

Joe Fairless: And you said your all-in price was a million – did I hear that correct?

Scott Lewis: Yeah, the all-in, after everything is done, is about 1.5 million, to include acquisition, construction…

Joe Fairless: And what are you projecting it will sell for once all four condos are sold?

Scott Lewis: Right around 2.6.

Joe Fairless: Nice! What do you do if anything while you’re building it to secure the condos’ sales?

Scott Lewis: That’s kind of a balancing act. As soon as we get the drywall up, we’ll go through and we’ll start soft-marketing them… But with condo conversions there’s a lot of documentation that needs to get approved before you can get your certificate of occupancy, so there’s only so much that you can do prior to the certificate of occupancy.

With this particular one, our agents work consistently in this particular area of Washington DC, so probably maybe 45 days out or so we’ll start letting them pocket-list it, and then once we get the certificate of occupancy then we’ll really go full bore, because we can’t close before that comes in anyways, so we don’t wanna market them too early.

Joe Fairless: You mentioned it was a fortuitous meeting, that you knew exactly who your attorney was talking about when he mentioned the other client… You said before that you had tried for 18 months to track down the owner – what were you doing and why didn’t it work?

Scott Lewis: We were just using the traditional methods that a lot of wholesalers and direct marketers use. We weren’t doing anything crazy. We do have an aggregation process that we use to bring a lot of different data sets together to identify sellers. Whenever we do direct marketing campaigns – which we’ve actually stopped doing – we only do maybe 50 letters at a time, but those 50 letters have been vetted through multiple levels within our organization, so it probably takes us as much time to hit 50 people as some of the wholesales could hit 2,000 people, because we take a very focused approach, versus a wide blast of mailers. Every one of our letters is personally written to the person that we’re trying to get at, and we’ve actually got really good response rates that way.

This one was no different. We got the person’s phone number, we actually talked with her and she confirmed who she was… We met her later because one of the things that we do for any of our sellers is we help them try to reduce any client’s fees/taxes; it doesn’t help us at all, because our contract price is our contract price, but the mission of Spartan Investment Group is to improves lives through real estate, and we’ve had some pretty good luck working with the District. We’ve saved one of our sellers $50,000 in bad taxes and fees; it didn’t go to us, it just gave her $50,000 more. She was a DC firefighter, so that really helped change her life.

This particular seller, she was in her late seventies, her husband had died quite a while ago, and it was probably pretty intimidating to have us call her on the phone. But once we actually got in contact with her lawyer and he vouched for us and verified who we were… I actually went over to her house a couple times and took her down to the District of Columbia, so she would be there in person, and we were able to save her about $10,000 in fees and fines. That was 10k that went right back into her pocket that she wouldn’t have gotten.

Joe Fairless: So your process which does work for other deals didn’t work initially when you were reaching out, because they might have been intimidated, or for whatever reason, but when you talked to her attorney, that proved to be the door that opened up and you were able to get the deal done. As a result of that, do you now make a more focused effort on speaking to attorneys about clients they have and just reverse-engineer that process?

Scott Lewis: We’ve actually moved away from going after the probate guys or the estate attorneys. We’ve got a couple attorneys that will occasionally pitch us deals, that we have relationships with, but we made a strategic pivot in October 2016 to kind of get out of the single-family and direct marketing. Just too much competition down there in that red ocean market, so we recently haven’t even been engaging.

We’ve got relationships with two attorneys that occasionally send us projects that they have as estate attorneys, but other than that we really haven’t even been engaging sellers.

Joe Fairless: So let’s talk about what you are doing and the shift that you’re making. What are you shifting towards? I would suspect it’s self-storage, right?

Scott Lewis: Yeah, Joe, that’s it. We’re 100% going after self-storage, and we are using some of the same methodologies. Lindsay, who is our director of business intelligence, comes from the Intelligence Community in DC, so she takes some of the methodologies that she used there to do the same thing for our business, to identify sellers and to identify pieces of property that we wanna go after.

We found that when we’re going after commercial deals, it’s not a big deal if we contact the sellers, because commercial deals are based on numbers, there’s no emotion involved. I mean, occasionally there is, but the vast majority is based on numbers, so that as long you present a reputable front from your company and that you are reputable yourself, we found that it’s much easier to deal with sellers for commercial deals.

Joe Fairless: Have you gotten a self-storage deal under contract?

Scott Lewis: Yes, using our research methodology we identified a piece of land in Washington state, went through the whole process and engaged — the seller was using a broker, so he pointed us to the broker; we engaged the broker, and now we’re under contract and we’re in the due diligence period now. It’s a piece of raw land, so it’ll be ground-up development.

Joe Fairless: How many storage units would be able to be built?

Scott Lewis: That’s a good question, Joe, and it’s one of the things that we’re trying to look at right now. There’s wetland on the property, so we had our biologist out there last week, and he is delineating the wetland on our survey, and then he’s also classifying them; there’s various classes of wetlands, and depending on the class, they can either be easily moved, or you have to go through board of zoning approvals to get an exemption to move them

Once we figure out what we can do with the wetlands, we can then go ahead and develop our site plan so that we know our unit mix and how many units we’re gonna put there.

What we did initially was we looked at if we couldn’t use any of the wetlands, and we could only use what turned out to be about 40% of the acreage that we’re buying, is this deal still feasible? Could we still pull this off? And the answer to that question was yes, which is why we wrote the contract, and the contract is contingent upon the biologist’s report on the wetlands.

Joe Fairless: Okay. When I was trying to interrupt you, you read my mind, so I’m glad I didn’t interrupt you… [laughs] That’s what I was gonna ask, how you identify what you make an offer if you don’t know how many units can be built? Let’s just say you cannot use any of the wetland area… Do you know how many units can be built just for that 40%?

Scott Lewis: We could do approximately 50,000 square feet of self-storage. Again, we haven’t done our unit mix yet, we’ve just used averages at this point, which a lot of folks might say we’re treading in dangerous waters, but we have the contract written as such that we can kill the contract if necessary if we can’t get what we need, so that’s why we’ve decided to go this route, versus having the complete feasibility studies, which usually include the unit mix, which we’ve done kind of in heuristics to see whether the numbers would work out… And there’s also some self-storage land acquisition heuristics that are out there that kind of point the needle at what your per-square-foot land cost needs to be based on your monthly cost for a 10-by-10 and a 10-by-15 unit.

We’ve done that projection, and if that’s correct, then there’s actually a lot of value in this land already, so we’re okay.

Joe Fairless: How much does it cost your company to qualify a deal like this before you can actually say yes or no definitively?

Scott Lewis: That’s a good question. We’ve done our internal feasibility studies. Lindsay, our director of business intelligence, does our internal feasibility studies, so currently it hasn’t cost us anything, other than her time. And feasibility studies cost anywhere from $3,000 for a desk audit where folks don’t actually travel to your site, up to $7,000-$8,000 if folks travel to your site to do the feasibility study.

Joe Fairless: Didn’t you say you had a biologist or someone going out to look? Aren’t they charging you something?

Scott Lewis: They are. We think we’re gonna put about $10,000 on the line before we actually know whether we can do this or not.

Joe Fairless: And the bulk of the $10,000 comes from where?

Scott Lewis: All of our money, we don’t use investor money.

Joe Fairless: No, I mean what are the expenses that make up the 10k?

Scott Lewis: There’s three major ones; four in this case, but normally it’s three. In this case we need a civil engineer to give us an initial site plan to take to the city. Then we need our biologist to go out there to delineate the wetlands and any protected or invasive species of plants or animals. We need a geotech report, so they can go out there and test the soil and tell us what type of soil it is, so that we can then have the civil engineers calculate the concrete mix, and for this particular area, we actually need a mine hazard report, because there’s some old mines that are there, so we have to make sure that there is no mines underneath. With all pooled, it’s probably gonna be about $25,000, but $10,000 of it is probably money that we’ll have to spend before we make a decision. The mine and the geotech we really don’t need to do before we make a decision, but the biologist and the civil engineer we do, to see what the site plan is, and then ultimately the unit mix. Then we can tighten up our proforma.

Joe Fairless: Based on your experience as a real estate investor, what is your best real estate investing advice ever?

Scott Lewis: Best Ever listeners, the best advice is broken down into two categories. One is just starting out, and if you’re just starting out, take some time to learn yourself before you start. There’s some personality assessments out there… DISC and Myers-Briggs are two that are out there. I really recommend you go out and you figure out what type of personality you are. Then once you figure out what type of personality, build your tribe around your weaknesses.

Myself, I’m a DISC D, that means I’m a driver – I just wanna get stuff done, I don’t really pay attention to details. So I went out and I found a partner who is very into details and he’s very detail-oriented. The two of us, plus a couple other members of our team kind of really round that out.
Once you figure out your team, then start with an education period. Just figure out what asset class you wanna focus on, and then go. For those of us that have been out there and have been in the trenches, constantly challenge your assumptions and operating models.

We recommend a devil’s advocate. The Israeli Mossad, which is their version of the CIA, they call that the 10th man. This person is just the person on the team that disagrees with everything that’s going on. What that does is it ensures that groupthink doesn’t cause you to make a bad decision.

Joe Fairless: Does that person rotate on the dissension, so that they don’t get punched in the face eventually?

Scott Lewis: Absolutely, Joe. So Best Ever listeners, there’s two key components actually. One is (absolutely, Joe) they have to rotate. Somebody else has to come in and be that person. And then second, there is no personal attacks on that person whatsoever.

Joe Fairless: Makes sense, yes. Alright, are you ready for the Best Ever Lightning Round?

Scott Lewis: I am.

Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.

Break: [[00:26:44].16] to [[00:27:26].08]

Joe Fairless: Best ever book you’ve read?

Scott Lewis: “It’s Your Ship” by Michael Abrashoff.

Joe Fairless: Best ever deal you’ve done?

Scott Lewis: Our condo conversion in DC. There’s a million dollars of profit in that one.

Joe Fairless: Best ever way you like to give back?

Scott Lewis: Mentoring and education.

Joe Fairless: What’s the biggest mistake – or any mistake you can think of – you’ve made on a deal that? One that you haven’t mentioned earlier.

Scott Lewis: We had the opportunity to buy a church that was right behind where my partner and I lived when we were in DC, and at the time they needed two million bucks to make the deal work, and we were pretty novice and had no idea about raising money, and we’ve been able to raise two million dollars in like two hours over the last couple months… So that deal, the guy that bought it is building 36 units there that will probably have a sales price of probably 22 million dollars for that deal. We could have had it, but we didn’t know how to raise money.

Joe Fairless: What’s the best place the Best Ever listeners can get in touch with you?

Scott Lewis: Best Ever listeners, if you have any questions about what I said, you can reach me at my e-mail address, which is Scott@spartan-investors.com, or our number is 202 827 5483.

Joe Fairless: I enjoyed our conversation in Denver, and I enjoyed this one just as much, because we’re talking just about you; it was less back and forth, and I was learning more about you and I really enjoyed that, and I know the Best Ever listeners got a lot out of it as well, specifically some of the takeaways…

Utility companies – they are slow; we’ve got to allocate in the timeline for the amount of time that they need (in your case 8-12 weeks). And condo conversion – holy cow! – 18 months to track down the owner, and eventually it ends with you getting in touch with their lawyer coincidentally, and then using that as a conduit into the deal that has over a million dollars in profit, that is yet to be realized but looks really good.

Then the self-storage evolution that you’ve taken in your company. As you said, the red ocean versus the blue ocean strategy – I think it’s a book, I’ve just heard a podcast on it – where there’s not a bloodbath and a feeding frenzy, and that is in self-storage and ground-up development. And the amount of money that you have on the line prior to making a go/no-go decision on that deal.

Thanks for being on the show, we learned a lot. I hope you have a best ever day, and we’ll talk to you soon!

Scott Lewis: Joe, Best Ever listeners, thank you very much!

 

 

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JF963: Why You Should Raise BILLIONS in Capital with a 506(c) Offering versus a 506(b)

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Raising capital for cash flowing projects it’s exciting, but only one of these offerings will allow you to talk about it. Publicly soliciting potential transactions can boost your ability to close for obvious reasons, you get the word out! Follow Mark as he walks us through some case studies and shares why he would prefer to let everyone in on the deal!

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Mark Mascia Real Estate Background:

– Founder and CEO of Mascia Development
– Mascia Development LLC, is a long term value investment real estate investment company
– Over 12 years experience in real estate
– Presently an adjunct professor at New York University‛s Schack Institute of Real Estate
– Based in New York City, New York
– Say hi to him at http://masciadev.com/

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Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluff.

I hope you’re having a wonderful — no, best ever weekend, and because today is Saturday, we’ve got a special segment for you that we do sometimes, called Situation Saturday. You’re gonna love this is you’re a money raising machine or want to be a money raising machine, because we are with an investor who has developed over one billion dollars – yes, with a b – of property, and he has over 12 years of experience in real estate. We’re gonna talk about why he chose (or is choosing) to do a 506(c) offering, versus a 506(b) offering on his current deal. How are you doing, Mark Mascia?

Mark Mascia: Good, Joe. Good to hear from you.

Joe Fairless: Nice to have you on the show again. If you recognize Mark’s name, that’s because you’re a loyal Best Ever listener. He’s given his best ever advice once before, and he’s been on the show a couple times. You can just search his name at BestEverShow.com and hear his best ever advice.

A little bit more about Mark – he is presently an adjunct professor at NYU Institute of Real Estate — how do you pronounce, NYU’s Shnack…?

Mark Mascia: Shack, unfortunately… [laughter] It’s the most unfortunate naming of a real estate program.

Joe Fairless: No kidding, the irony… NYU’s Shack Institute of Real Estate – he’s an adjunct professor there. He’s also the founder and CEO of Mascia development, and he is based in New York City, New York, where his company is. With that being said, Mark, before we dive into the 506(c) stuff, do you wanna briefly give the Best Ever listeners a refresher on your background and your focus now?

Mark Mascia: I started my own company about ten years ago, Mascia Development, as you mentioned. Before that, I had worked for large companies, small companies, doing development of all kinds throughout the New York City and DC area; some, like you mentioned, as big as half a billion dollars. That’s pretty easy when you’ve won a project that is that large to get to a billion dollars in development.

So I started my own company ten years ago, and we’ve since always focused on retail and medical office. We focus on properties all over the country, and we’re really a long-term value player, so we buy undervalued assets for the long haul. Cash flow is focus, so we’re not buying vacant buildings and fixing them up; we’re doing development, and it’s all in a cash-flow driven strategy.

We work with some of the largest family offices in the country for the majority of our capital, but we also allow and enjoy having individuals invested alongside those large capital sources. Our sort of egalitarian model is everyone invests at the same terms; there’s no special treatment, even if you have a billion dollars, like some of the families we work with do. So that’s just kind of how we operate, and have owned – I think we’re up to 86 assets right now.

Joe Fairless: What’s your total portfolio value?

Mark Mascia: It’s like 515 or somewhere million dollars… It’s hard for me to keep track because I don’t really look at it every day.

Joe Fairless: Yeah, just ballpark. You don’t track that like the stock ticker.

Mark Mascia: Yeah, right. [laughs]

Joe Fairless: Okay, got it. And Mascia – I apologize for mispronouncing it. Before we started interviewing, I triple checked how to pronounce it and I wrote it phonetically in my notes, but I didn’t write it correctly phonetically in my notes, so I apologize. He’s a friend of mine, I shouldn’t be butchering his last name.

Alright, Mark, thanks for the context. The reason why we’re here is why you are choosing to do your current deal under a 506(c), which you can publically advertise, versus 506(b). We’ve spoken to securities attorneys (a couple of them) on this show, and they’ve walked through the pros and cons of 506(b) versus 506(c), but they’re not doing the deals, so this is gonna be interesting because you’re actually doing the deals. Walk us through your thought process.

Mark Mascia: First and foremost I’m not an attorney, so none of this is legal advice, but it’s just our own experience what I’m sharing… So I like give attorney advice, but I’m not an attorney.

Our current deal is a retails strips center in Spartanburg, South Carolina. It’s a pretty growing, booming market, largest growth center of basically the South. They’ve gotten over a billion dollars of investment in the last couple years, so it’s an interesting market that we track for a really long time. We found this property there that has some vacancy, it has really low rents, it has some great tenants, long leases, so a pretty straightforward retail deal to what we do. Cash flowing day one, around 7% levered, and it goes up to 9% over time. Nothing to blow the doors off, but just sort of a very steady, down in the middle, strong deal that has great [unintelligible [00:06:50].02] cash flow.

We have good reserves, long-term debt – all the kind of stability things you want, and that exactly follows our model. What I just told you – I couldn’t have told you any of that if I was doing 506(b), the old way of raising capital.

Case in point, the first and foremost reason that we like it is because we can talk about what we’re doing actively, and not have to keep everything a secret or know you personally before we talk about it. It just makes logical sense, in my opinion, from a business perspective, to be able to talk about things you’re excited about, and things you’re excited about are usually the newest deal, or the newest thing you’re doing in your business, and before September 2013 you couldn’t do that legally. It’s kind of crazy to me, but that’s the way that we used to do it, and it was the only choice before that date.

So first and foremost, the ability to communicate openly about what you’re doing is exciting and it is the only way to do that – under a 506(c) deal. So that’s kind of the deal in a nutshell.

What we specifically do every time – I mentioned our capital sources are predominantly family office in the beginning, but now have made a huge focus on not just diversifying the investments we make across different locations and different properties, but also our investor capital base. What we saw in the beginning was we have these few families that have deep pockets, but if any of them decided not to do any deal we found, for any particular reason, and some were as funny as “Oh, I’m going skiing for a month, so I’m not gonna do any deals, regardless of how good they are” (that literally happened), to any other reason… They just don’t like Spartanburg – let’s say they grew up there and they hate it and they’re never going back, so they don’t wanna invest there. That didn’t happen, but things like that happened in the past, and we just don’t wanna have any sort of single source of capital, just like we don’t wanna have any single tenant or any single property that can sort of wipe out our whole business.

With that being said, every deal we do, we have the ability to raise all of the funds from these large, big-pocketed family offices, but we specifically choose not to… 1) so that we can keep relationships with our friends and family and other investors who have been with us for a long time, but 2) to meet new investors. I think it’s really important – when you think about this, it’s very easy to go and say, “Oh, Sally invests half a million dollars with us every time. She’ll write another half a million dollar check every time”, so it’s easier just to go to her and get that half a million dollars.

What I would suggest – personally, it’s worked for us and I’d suggest to form your own perspective – is consider what happens if Sally one day stops writing that $500.000 check. It’s gonna be a lot harder to find a bunch of $10.000 people if you don’t know any of them, versus if you’ve already had many 10k, 25k or other hundred-thousand-dollar investors that you can replace Sally with.

With that all being said, every deal we do, we do a portion of it crowd funded, which really is nothing more than just advertising online through one of these third-party platforms for new investors. So it’s a straight general solicitation out there, advertising on the website, and they advertise on other platforms, but they’re aggregating individuals who are interested in investing in real estate, and putting our deal in front of those eyeballs. So every deal we do, we reserve at least a few hundred thousand dollars for that specific purpose.

In this deal we’re doing that as well. We’re on CrowdStreet, but we’ve been on just about every platform out there in the past, so we don’t have any one that we love or don’t love more than the others. They’re all good for their different reasons. In this case we went with CrowdStreet, so our deal is up there and we’ve gotten some investors directly from them. These are people that I would otherwise have never met in my life, that are interested in investing with us, and some of them have already invested with us.

So it’s a great opportunity to grow your network of individuals that either might be interested or are definitely interested in investing. Again, something you couldn’t have done prior to 506(c), or that I couldn’t do now even, if I chose a 506(b) type of raising capital.

Joe Fairless: You couldn’t do a 506(b) with CrowdStreet, even if you have a relationship with CrowdStreet and CrowdStreet has a relationship with their investors?

Mark Mascia: Yeah, there are some platforms that do 506(b) and crowd fund it and they sort of backdoor a few of these “relationship” angles. What you’re alluding to, which I agree with, is you have to have a pre-existing relationship before you can market something to someone. You and I know each other, Joe; I can tell you anything privately I want about any of our deals, regardless of how we’re raising money, because we have a pre-existing relationship. But to any of your Best Ever listeners – I’m sure many of them I’ve never met – I can’t tell them anything about the deal until we have a relationship. But it’s kind of catch-22, because how do you establish a relationship with someone so you can tell them about what you’re doing? They’re not just gonna invest blindly and send you money before you can tell them about the opportunity.

So there are some loopholes to this, and I’m not a super-expert in what those loopholes are. We’ve tried to stay pretty clear of those and just say, if we’re generally soliciting – which online advertising, in my opinion, clearly is generally soliciting – then you wanna use 506(c) to stay out of the gray area. But again, there may be other ways around that if you talk to your attorney; it’s just not my expertise.

So crowdfunding – the primary source of “advertising” for this deal in terms of new investors. We are also in this particular investment trying out for the very first time Facebook advertisement, because we’ve heard in the past a lot of great reviews from friends about how they’re acquired investors that way, because you can be super targeted. We know very clearly that 90% of our investors are 40 years and older, live all over the country, but mainly in population centers of 100.000 people or more… Things like that. It’s pretty easy to target those types of people on Facebook, because they’ve already given all of that information out there.

Joe Fairless: Is it primarily males, too?

Mark Mascia: Yeah, unfortunately it is. One of our largest investors is a woman, and I’m really excited about that because I really love to see a more diverse investor base that’s not all male. But yeah, it’s probably 95% male in terms of number. Just because one of our investors happens to invest a lot of money, it skews a little bit when you consider percentages of dollars, but…

Joe Fairless: Any other things you target for?

Mark Mascia: Like I said, this is the first one we’ve done. I’m not a super-expert, but those are the main things that we’re looking for. Well, I guess education I didn’t mention, as well. So generally they’re all college educated. To the extent that you can target more professionals – doctors, lawyers, executives or small business owners, those tend to be good users. But that covers a large population, it’s not exactly a narrow niche of people; that’s a lot of people, so…

Joe Fairless: Okay.

Mark Mascia: So Facebook advertising – we’ve just started that and we’ve seen a ton of traffic. We haven’t actually converted anyone yet on that, just to be perfectly open and transparent, so I don’t know if that’s something we’ll do again or not – stay tuned on that side – but it’s certainly something we’re doing now and something we couldn’t have done under a 506(b) deal.

We’re also trying old school newspaper advertising, because our investor base tends to be a little bit older. In some cases we have investors 70, 80, 90 years old, and newspaper still happens to be a very relevant source for those people.

And because we’re local – we’re not local in terms of our operations are in New York, as you mentioned at the outset, but our property is located in South Carolina, so what we’ve chosen to do is try to get investors that live in that general area, so we will make an extra target, either on Facebook and also in this newspaper advertising, that focuses on North Carolina, Greenville, South Carolina – markets that are very close to these areas. Charlotte’s an hour away, Greenville is about 45 minutes away, Charleston… Those types of things, because people tend to like investing locally; even though long-term I think that’s a bad strategy, it’s a great gateway if they can drive by the property and see it.

So newspaper advertising is something else we’re doing and something else we couldn’t do under a 506(b).

Joe Fairless: And you did – I believe, if my memory serves me correctly – newspaper advertising in Omaha for a deal, didn’t you?

Mark Mascia: That’s right, and we actually did get investors directly from that, so that’s why we’re doing this again.

Joe Fairless: Okay. Do you happen to know any type of return, or how do you look at that? One dollar spent in a newspaper ad, and you get an investor… How do you measure the return on your investment there?

Mark Mascia: It’s a great question… I don’t have a mathematical model that works yet, because honestly some of these people start out and invest 5k, 10k, 15k, 25k – some smaller check size because they’re testing the waters with us and seeing how we operate. That may be all they ever invest, because they don’t like us. Or, generally what happens is they try us out for that amount, and the next time they write 100k check, or half a million dollar check.

It’s kind of difficult, because they lifetime value of that customer to us could be extremely high if they invest a lot of dollars or refer a bunch of friends, or things like that. But if they only invest one time, 5k, or they don’t invest at all, it’s very difficult to see the clear — I mean, it’s not like purchasing a product… They bought my book or something, and then I’d be like “Okay, that’s a clear conversion of one to one.” In this case, first of all it’s a high dollar value that they’re dealing with. If they write a check for 100k, that’s obviously worth a lot to us, versus somebody who would buy a $20 item on eBay, or something.

I think typically we’re trying to stay in that 2%-3% of capital raise to cost to convert. That’s about what happened: we spent about $3,000 in newspaper advertising and converted somewhere in the $150,000 range from that, so I think that math works our roughly. But it’s not an exact science; that’s what we hope for. Sometimes it will be 20% cost to convert, but over the long haul that will decrease itself drastically.

Joe Fairless: Okay.

Mark Mascia: We also did a webinar, which is something else… I’m sure you’ve seen the “be everywhere” strategy, that kind of like blanket/carpet marketing, whatever you wanna call it… We’re definitely trying to follow that strategy. I mentioned Facebook, I mentioned newspaper, we did a webinar, we’re on CrowdStreet… Those are all things that get our name out there.

The webinar was helpful because we get one-on-one questions, we get a bunch of people and interest built around that specific concept of hosting a webinar, and you can record it and then send it to others, so it gives you sort of a platform and another contact point to reach out to people.

Then we did a video. We always do a professionally recorded video, including drones footage and all types of different angles of the property and the surrounding area. That’s probably our most expensive question about if we should do this, because…

Joe Fairless: How much?

Mark Mascia: Well, there’s multiple different pieces, because you have the voice over, you have the actual video editor, you have the video recording – all those different things. I think when you put them all together it’s probably $10,000-$15,000.

Joe Fairless: Oh, Mark! I gotta get you my video guy. $3,000, all in. With a drone. We’ve got a drone, text overlays, everything.

Mark Mascia: Alright, awesome. I definitely have to check that out. I appreciate it! See, that’s why we do this, right? We all share and learn; I’m learning, too.

So yeah, that’s something… It’s also just a piece for existing investors, family offices to feel like they’ve been to the property instead of having to fly down there themselves. That’s what we used to do… Not on our dime, but we used to fly down and meet them and do a physical tour, and now we do more video, which is better for everyone.

I mentioned existing investors – the referral, probably in everyone’s experience has been why you start with your friends and family, because they know you, in terms of raising capital. If you perform for them, they will refer you to their friends and family, and so on and so on. That’s typically been the best source for us overall.

Joe Fairless: Do you have a way that you encourage that? Any intentional way?

Mark Mascia: I tend to let them know that it’s actually benefitting them, because people are wonderful; I think inherently people wanna do what’s right and be good and help others, but people are also sort of like short-term selfishly motivated, so what I try to do is focus on the benefits to them and why they should take action, because ultimately that’s what motivates most people in the short term. So by showing them that it actually lowers the cost of capital if they can refer somebody – I don’t have to pay the 2%, 3% or 4% to use crowdfunding or to do this advertising avenue that I’ve been speaking about… So it’ll decrease that, and then it’s also a social proof thing. From the standpoint of what I’ll try to do is people that do know each other or people that don’t know each other, some of the family offices that didn’t know each other, I introduced them to each other. Now they know each other, so when I say “XYZ family office is investing. Don’t you guys wanna to invest as well?” they go “Oh yeah, of course. If they’re invested, we’ll do it, too.”

So there’s a little bit of trying to get people in the same room or same social network of some sort, even if it’s just because I introduced them, so that there’s that social proof aspect where people feel obligated or inclined to invest because of someone else.

Joe Fairless: Any other pros, before we get into the cons?

Mark Mascia: The ability to develop this kind of long-term relationship quickly. What I mean by that is in 506(b) you had to know somebody for long enough to prove that you had a relationship with them. Now it’s like, I don’t have to prove any relationship. As long as they’re an accredited investor and they can invest, and as long as they’re a human on earth, I can talk to them about what I’m doing, and that’s just the base thing.

The costs are the same. You’re not spending any more money to file these documents, to do anything else. So from that standpoint, there’s really no reason not to do it in that way, in my opinion. It’s still got the same unlimited amount of money you can raise, so it’s not like you have a certain maximum doing it this way, so sometimes you should go the other way. You can raise unlimited funds. I think those are all important points.

Joe Fairless: What are the downsides of 506(c) versus 506(b)?

Mark Mascia: Definitely the overwhelming upsides, in my opinion; that’s why we’re doing it here. We’re only raising like 2.8 million dollars for this current deal, it’s a very small deal. But some people who raise much larger dollars and deal with very sophisticated investors, especially those that they’ve dealt with in the past, this can be a little bit of an annoyance… Because what has to happen under a 506(c) is they have to actually be accredited by a third party. So either they need to send you personally documentation of their accreditation status – and just as a reminder… I’m sure you’ve heard it a million times, but to be accredited as an individual, you need to make $200,000 a year, or with a married couple you need to make $300,000 a year, or have a net worth of a million dollars, excluding your personal residence.

So you have to have proof of either W-2 income statements, tax returns or a proof of your net worth. A lot of that, people don’t like to share. If they’re super wealthy, they’re very protective of their privacy and things like that and they don’t want people to see that, so generally they’re not gonna wanna send that to you. Well, that’s okay, the 506(c) allows you to do it under a third-party. That means either they need to send a letter and all their documentation to any attorney that [unintelligible [00:20:53].29] a currently licensed CPA can do that, or a stock broker. So there’s three other avenues where a third-party, not you sponsor or them the investor, but a third-party can verify them.

But again, this process – filling out that paperwork, proving that they’re wealthy, can be frustrating, can slow down the process, and can sometimes offend people, honestly. We’ve had people that have invested with us in the past who were like “Well, I never had to do this before” or “I’ve never had to do this with any other real estate deal I’ve invested in. Why are you so difficult? What’s wrong with you?” So there’s definitely a bit of more of an education problem… Not that they’re not smart or educated in life, but they’re not necessarily educated to the ways of these rules… Because these are not my rules, these are the SEC’s rules, and that’s what I always tell them. It’s not that I’m trying to be hard-lined about this, it’s the SEC has these restrictions and I’m just trying to follow the law. So that’s a definite downside.

Now, how real that is is really gonna depend on your investor base and on your relationship with them. Most people, when you walk them through why and how easy it is once they’ve done it once, they tend not to care… But again, you have to do this every 90 days, so that’s the other annoyance.

Joe Fairless: You have to do what every 90 days?

Mark Mascia: Get them accredited… Not for the investment that they’re in, but let’s say I’m raising money for this Camelot center deal in Spartanburg, South Carolina today; we have another deal under contract. If I don’t get that next deal ready and in front of that same investor within 90 days, they have to do it twice. So even if it’s the 91st day and I wanna get them to invest in that second deal after they invest in our deal that we have now, they can’t, unless they resubmit all the paperwork. And that’s just kind of like stupid. You just invested in that last deal, you just proved to me you’re accredited in the last deal 90 days ago, now all of a sudden the SEC magically things that it all completely changed and now you’re worth nothing or make no income… It’s a little onerous in that respect as well…

So just to be clear – not once they’re invested. If they’re invested with you, as long as you’ve got the accreditation paperwork upfront, you never have to do that again in that specific deal. But for all future deals, every 90 days you need to get a new update on whether they’ve accredited or not. That’s frustrating.

Joe Fairless: One strategy is to do 506(c) but only bring in new people, and then the next deal do 506(b) with your current people and funnel the new people in there. Then do another 506(c), bring in all new people… That way there’s no changeup in the process for you existing investors.

Mark Mascia: Yeah, that would definitely work. The problem is if any of your existing investors wanna get in on your new deal… The biggest problem we have is finding enough good deals for our investors. If I could find 20 deals, they would be happy. Unfortunately, we find a handful of deals every year that are good enough… So if I say, “Hey, by the way, you can’t invest in this one because it’s only new investors, I think that would be more of a turnoff than anything else. But if you can tailor it that way, it definitely would work, I agree with you.

Joe Fairless: I guess you could always say, “Yeah, you can invest in this one, but here’s the wrinkle in the process.”

Mark Mascia: That’s a good point. I hadn’t thought of that, so I appreciate it… But again, for us certainly that wouldn’t work, but for other people it definitely might.

I think the other thing is from a 506(b) standpoint you’re also a little bit more protected in terms of it’s been around forever. It’s been around since the 1930s or 1940s or whatever it was when it was originally enacted, so there’s been tons of case law, lawsuits, all types of things that you put you very clearly in the right or in the wrong, with very limited gray area… Whereas 506(c) – the new regulations have only been around since September 2013, in which case there’s been almost no clarifying points beyond. There hasn’t been tons of lawsuits and things like that because it just hasn’t been around that long.

So there could be some additional risk there. How to quantify that risk – who knows? Clearly, I don’t think there’s that much risk because I’ve talked to a bunch of attorneys and this is what we’re doing, but time will tell what that actually looks like.
The other thing that gives you protection is under 506(b) it’s self-accreditation. That means if someone comes to you and says “I’m wealthy, I’m accredited”, and you as the sponsor have the right to rely on that, they will essentially have committed fraud if they tell you otherwise, in which case that nullifies their ability to sue you.

So in a lot of ways you’re sort of saying, “I’m not in this process. They told me they’re rich.” If they’re not rich and they try to sue you and say “Hey, you shouldn’t have let me invest in this deal. You should give all my money back”, you say “Hey, you told me you’re rich, so clearly you lied. That means you can’t sue me.” So there is some additional protection in that respect as well, that you’re losing here because you’re now using some sort of verification process and they could say, “Well, I just called somebody and they signed off on it. It wasn’t true, so you shouldn’t have let me invest.”

Joe Fairless: Sounds like those are the three main downsides that you can think of. That is, they can be annoying for the investors because they have to be accredited by a third-party, there’s some gray area because it’s rather new, and then the self-accreditation process likely protects you more because they’re saying they’re accredited by completing the paperwork, so they would have committed fraud if they actually aren’t accredited.

Anything else that we haven’t talked about as it relates to why you choose to do a 506(c) versus 506(b)?

Mark Mascia: No, I think… Like we’ve mentioned before, they’re both the same in terms of the amount of money you can raise, in terms of the process, in terms of what you’re allowed to risk, whether that’s real estate development or real estate investment of long-term nature – anything can be done. Unlimited amounts of money, the same blue sky paperwork in terms of what you have to file with all the states… So in that sense it’s like you have to learn this and do this the same either way, so you might as well do the one that gives you more flexibility in what you could say.

Joe Fairless: Mark Mascia, where can the Best Ever listeners get in touch with you?

Mark Mascia: E-mail is always best. It’s mark@masciadev.com, and I’m sure you’ll have that in the show notes as well.

Joe Fairless: Yeah, well I’ll put your website in the show notes, and that way the internet trolly things that some people have don’t grab your e-mail address. You’ll thank me for that.

This has been wonderful. I loved talking about this stuff, and this was such an educational experience, coming from someone who’s currently in the middle of it, and you’ve got half a billion dollars worth of assets under management that your company has part ownership in… So talk about the pros, as you so succinctly recapped – it diversifies your investor capital base, that way you’re not relying on one source of capital, because you’re able to publicly advertise and you’re able to meet new investors just to make sure that you have additional investors coming in and you’re not relying on one, which kind of ties in the first thing.

You can convert people quicker, versus having the pre-existing relationship, because you are doing the 506(c), and then the raise is unlimited, just like the 506(b), and the cost is the same, just like 506(b). And then I love how you got into the equity raising tactics, the crowdfunding website, Facebook advertising, who your target audience is, newspaper ads, webinars, the video, and then ultimately the word of mouth, referrals and how you social proof and mention how it lowers the cost of capital, because you lower your advertising budget if they refer their friends or whomever.

Then the three downsides… The primary one, I believe, the risk in the legal liability for the gray area, but the here and now is it can be annoying because there has to be verification by a third party. And then the other two – there’s more gray area with 506(c); with 506(b) there’s a self-accreditation process.

Thanks so much for being on the show, Mark. I hope you have a best ever weekend. Enjoyed it, as always. We’ll talk to you soon!

Mark Mascia: Thanks a lot, Joe.

 

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JF814: How He Turned $10,000 into Over $10 MM in Real Estate Developments

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Starting with $10,000 in his bank account our guest was able to surround himself by the right people and begin his fix and flip ventures. Developments, fix and flips, and other ventures have built his total net worth above $10 million. Also, find out how he is able to only do a project the year and make it out alive!

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Slava Menn Real Estate Background:

– Principal at Labrador Real Estate & Contributing Writer at Inc. Magazine
– Guest lectures at his alma maters, BU & MIT, and writes for Inc Magazine
– Started with a $10K savings and has developed $10M worth of real estate
– Since 2013, Labrador Real Estate has developed over $6.5MM in real estate
– Based in Boston, Massachusetts
– Say hi to him at http://www.labradorre.com
– Best Ever Book: Unique Ability by Catherine Nomura

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JF703: $10,000,000 Emails, Multiple Income Streams, and Why You Should Consider Improve #followalongfriday

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Joe and Theo are at it again spilling the goods in the multifamily investing realm! Joe shares how his emails will eventually lure millions in capital to fund his apartment syndications. The two cover the pros and cons of multiple streams of income and placing focus on the streams that you are talented and passionate about. Joe did improve, surprise! Send Joe an email info@joefairless.com to possibly see a video of his performance. Follow Joe on YouTube!

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JF673: How Speaking Engagements, Education, and Obeying the Market Helped Him Raise MILLIONS For Big Deals

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Today’s guest is not afraid to open his mouth, and at the same time he is a great listener. Hear how our guest is funding huge projects and developments from simply adding value to other investors. He is raising big money, speaking at REIA’s, and helping others along the way!

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Alex Franks Real Estate Background:

    – Principal of Bowler River Developments
– Closed over $15 MM in single family and commercial deals
– Based in Rock Hill, South Carolina
– Say hi at 8033706189

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JF672: Why This Investor Won’t Touch Single Family Homes Now

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Today’s guest is an accomplished real estate investor that purchases multi family properties including large multi family commercial zoned land. He shares his concern for having multiple exit strategies and why single-family resident purchases are not the best investments, hear his Best Ever advice!

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Rod Khleif Real Estate Background:

– Host of “The Lifetime Cash Flow Podcast”
– Participates in Tony Robbins seminars
– Started the Tiny Hands Foundation
– Based in Sarasota, Florida
– Say hi to him at: http://www.lifetimecashflowpodcast.com/

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JF671: How this Lender Uses a Fund to Process Your Deals

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Today’s guest is a partner in a hard money lending group that uses a fund to process your fix and flip deals. They have a low interest-rate and are ready to save you that extra cash, hear how he got started.

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Jeremy Rehwald Real Estate Background:

– Owner of Wildcat Lending
– $25 MM residential lending
– BASED IN Dallas, TX
– Say hi to him at wildcatlending.com

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JF668: How a Mobile Home Park was Flipped to a Church

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Our guest is from the hot hot valley of Arizona, and he is cranking deals! He is a one stop shop real estate investments boutique with the tool for every transaction. He shares many stories including one of purchasing a mobile home park and finding a buyer across the street!

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Stuart Gethner Real Estate Background:

    – Founder of Phelps Capital Consulting
– Invested over $10,000,000 in AZ
– Based in Scottsdale, Arizona
– Say hi to him at http://www.phelpscc.com

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JF664: How to Raise Money to Be a Successful Startup

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Today’s guest has done it all! He is an ambitious startup enthusiast who has created companies from the ground up. Hear how he was able to fund his lending company and learn valuable lessons along the way.

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Matt Humphrey Real Estate Background:

– Co-Founder of Lending Home
– Funded over $515 MM Transactions
– Startup enthusiast
– Reach out to him at lendinghome.com

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You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors.

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JF655: How This Company Allows Anybody to Invest in Their Portfolio

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Interested in plugging in the cash to get a return without dealing with the common stresses of being a real estate entrepreneur? Today’s guest has a solution for you and invite you to invest in his portfolio to earn a better income on your investment than any CD or money market out there.

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Sterling White Real Estate Background:

– Co-founder of Holdfolio, a buy and hold platform
– Buy and hold investor
– Based in Indianapolis, Indiana
– Say hi at Holdfolio.com

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You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors.

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JF653: How This Private Money Lender Beats ANY Competitor Lending Terms Nationwide

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He is a seasoned private money lender willing to beat any competitor terms. He flexes and flips around 50 homes a year and sees over 200 loan applications a day. Be sure to hear this episode has a good benefit you and your next fix and flip!

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Lee Arnold Real Estate Background:

    – Private money lender
– Funds private money loans and some of the rehab
– Based in Coeur d’Alene, Idaho
– Reach him at cogocapital.com

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You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors.

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JF650: How an Appraiser Levels Up to Control $8 MM in Portland Real Estate

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He was just about to purchase a car wash to convert it into a food truck lot. Only in Portland Oregon! Today’s guest was an appraiser and has worked the real estate investing field for some years now with his partner. They control over 8 million in real estate assets and allow for a select few to invest with them. Hear his show and how he creatively structures deals!

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Mike Nuss Real Estate Background:

– Licensed appraiser
– Controls over $8,000,000 in real estate
– Owner/Founder of Rare Bird Real Estate
– Based in Portland, Oregon
– You can reach him at myrarebird.com

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors.

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JF648: How to Host a Rockstar MEETUP Where all Deals Find You

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He and his partner host four meetings A week, no mistake, four meetings a week! It makes sense as the majority of all his deals came from these meetings of adding value to other investors and has been diligent in doing so. He has raised a following in Charlotte and is quickly establishing himself as an authority in his local market. Hear how he sets it all up and what success he has seen.

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Taylor Peugh Real Estate Background:

– Holds 4 meeting a week for real estate investing (over 15 hours)
– Acquired properties via meetings
– Based in Charlotte, North Carolina
– You can reach him at taylor.peugh@gmail.com

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

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You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors.

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JF646: How He STOLE This Deal Off of LoopNet

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Most people don’t try to browse through LoopNet as it’s known to be saturated with high priced multi family and commercial properties… little room for an investment. Today’s guest had his eyes on one, a 22 unit, and got it for a huge discount! It wasn’t that easy though, here are the struggles of our guest and how he prevailed!

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Bill Manassero Real Estate Background:

– Founder of Old Dawgs REI Network blog and website
– Acquired a 22 unit in Indianapolis
– Served as a missionary in Haiti
– Based in Orange County, California
– You can reach him at http://olddawgsreinetwork.com/

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors.

We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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JF644: Ex Financial Planner Creates LONG TERM Retirement Program Backed by His Portfolio

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It’s complicated, but ingenious! He is currently working on a long term fund that allows others to invest in where dividends are paid and the whole thing is backed by real estate. Turn up the volume!

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Peter Mackercher Real Estate Background:

– Realtor and broker
– Investor with his own construction company
– Based in St Louis, Missouri
– You can reach him at stlmogul.com
– Read about his worst mistake here http://www.stlmogul.com/blog/my-biggest-mistake-in-real-estate/

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors.

We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

Subscribe in iTunes  and  Stitcher  so you don’t miss an episode!

JF642: All You Need to Know about Real Estate Syndications #skillsetsunday

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Today’s guest is an attorney who specializes in the creation and legalities of a proper real estate syndication. He speaks of the private placement memorandum and the total makeup of a security. He shares the importance of verbiage and proper documents. He also advises that you need to hire the right professionals to complete the syndication.

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Gene Trowbridge Real Estate Background:

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors.

We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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JF636: Why Going to Church May Make You a MILLIONAIRE

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Today’s guest was very creative when he and four others founded their lending company, they used investors! He collects on the spread and creates financing terms for investors using OPM. The best part is he found his true calling in church, so you better attend!

Best Ever Tweet:

Isaac Blocher Real Estate Background:

– Owner of Boaz Capital Group
– Previously a fire fighter and television editor
– One of five founders
– Reach out to him at isaac@boazcapitalgroup.org

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors.

We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

Subscribe in iTunes  and  Stitcher  so you don’t miss an episode!

JF631: How Grandma Helped this NYC Investor Get Started in REI

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Today’s guest used $7000 of his grandmothers money to get started! He shares with us properties he purchased in a drug trafficking area, student housing, and other opportunities that he took advantage of over the years. New York City New York and Ann Arbor Michigan are two places he invests. Tune in and hear how he did it!

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Tiga McLoyd Real Estate Background:

-23 years in the business
-Broker and investor
-Based in New York, New York
-Reach out to him at Tiga.nyc

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors.

We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

Subscribe in iTunes  and  Stitcher  so you don’t miss an episode!

JF630: Why You Need to Call this Lender TODAY!

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Today’s guest is one of our sponsors and of course he’s a sponsor for a very good reason, amazing terms! Tenant to hear how his fix and flip company has a program called Rental 30 and what it can specifically do with your assets, even if you’re not making a lot of money!

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John Warren Real Estate Background:

– Founder and CEO of Lima One Capital
– Former Marine
– Raised over $500 MM
– Based in Greenville, South Carolina

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors.

We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

Subscribe in iTunes  and  Stitcher  so you don’t miss an episode!

JF628: How this Private Lender will Lend 100% LTV and NO DOWNPAYMENT

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Today’s guest is a private money lender with perks! What sets her apart from the others is that she sees value if a great deal has been secured. Tune in to see how you are able to have 100% of your loan funded with zero down payment.

Best Ever Tweet:

Susan Naftulin real estate background:

-Co-Founder and president of Rehab Financial Group
-has law degree
-Based in Philadelphia, Pennsylvania
-Find her at rehabfinancial.com

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Do you need more leads for your real estate business and a platform to grab more leads?

Danny Johnson has a solution for you, go to leadpropeller.com set up your website for success and get more leads!

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
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JF616: How This Marriage Raised Over $3MM Without Using Any of Their Own Money

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Today’s Best Ever guests are persistent! They struggled in the beginning and started with literally nothing. They first started with a duplex and then slowly built momentum with additional funding from their private circle, hear how how they do it!

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Matt and Liz Faircloth real estate background:

– Founders of The DeRosa Group and has done more than $10,000,00 of transactions using private money
– Raised over $3,000,000 in private money without investing any of their own money into the deals
– Based in Trenton, New Jersey
– Say hi to them at http://www.derosagroup.com/
– Check out landlord tips on their YouTube channel, Landlord Chronicles

Please Take 4 Min and Rate and Review the Best Ever Show in iTunes. 

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Sponsored by:

Do you need more leads for your real estate business and a platform to grab more leads?

Danny Johnson has a solution for you, go to leadpropeller.com set up your website for success and get more leads!

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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JF614: How to Avoid Securities Fraud and Properly Raise Capital #skillsetsunday

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Everyone hears about crowd funding today on the radio, podcasts, and many publications. It didn’t always work that way. Thanks to some recent securities laws established a few years ago, it is much easier to build crowdfunding platforms and advertise the activity. Our best ever guest plays a big role in many crowdfunding operations today, tune in!

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Mark Roderick real estate background:

  • More than 25 years of experience as has in-depth knowledge on capital raising and securities law
  • He spearheads Flaster Greenberg’s Crowdfunding Practice and works with investors and crowdfunding portals
  • Based in Philadelphia, PA
  • Say hi to him at markroderick.net

Please Take 4 Min and Rate and Review the Best Ever Show in iTunes. 

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Sponsored by:

Door Devil – visit  http://www.doordevil.com and enter “bestever” to get an exclusive 20% discount on your purchase.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
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JF607: “Keep Your Day Job!” Didn’t Stop Him from WINNING! #skillsetsunday

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Raising money can be tricky, and especially when an attorney
barks at you about wasting his time! Today’s guest is no stranger,
Nav is the co-founder and CEO of Realty Shares, and he is about to
share some humbling experiences in the beginning of the his journey
to success. Hear his words of persistence and begin implementing
these beliefs in your business…you’ll go further.

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Nav Athwal real estate background:

  • Co-founder and CEO of RealtyShares, an online marketplace for
    Accredited Investors to securely invest as little as $5,000 into
    private real estate investment properties
  • REaltyShares has done over 320 invsetments and raised over $160
    million through the platform
  • Guest Lecturer to UC Berkeley Law
  • Electrical engineer turned attorney turned real estate
    entrepreneur based in San Francisco, California
  • Say hi to him at realtyshares.com
  • His best ever advice can be heard here:
    http://joefairless.com/blog/podcast/jf121-crowdfunding-tips-from-a-crowdfunding-wizard/

Please Take 4 Min and Rate and Review the Best
Ever Show
 in iTunes. 

Listen to all episodes and get a FREE crash course on
real estate investing at:http://www.joefairless.com

Need financing?

Are you a buy-and-hold investor or doing fix and
flips?

I recommend talking to Lima One Capital. A Best Ever
Guest told me about them after I asked how he financed 10
properties in one year. They are an asset-based lender with unique
programs for long-term hold and fix and flippers.

Click to
learn
more or, better yet, reach out to Cortney Newmans at Lima
One Capital. His cell is 404.824.6121.

Subscribe to Joe’s YouTube Channel here to learn
multifamily and raising money tips:
https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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episode!

JF606: Fix and Flip Goes South in MULTIPLE Ways! #situationsaturday

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Today’s story starts off sounding like a homerun deal, a $50,000
purchase on a $350,000 turn around could be exciting, except there
were many roadblocks in the way. Hear how this situation turned
into a hairy one every step of the way, and got worse and worse
until the end.

Matt Faircloth real estate background:

  • Co-Founder of The DeRosa Group and has done more than
    $10,000,00 of transactions using private money
  • Raised over $3,000,000 in private money without investing any
    of their own money into the deals
  • Based in Trenton, New Jersey
  • Say hi to them at http://www.derosagroup.com/
  • Check out landlord tips on their YouTube channel, Landlord
    Chronicles

Best Ever Tweet:

Please Take 4 Min and Rate and Review the Best
Ever Show
 in iTunes. 

Listen to all episodes and get a FREE crash course on
real estate investing at:http://www.joefairless.com

Need financing?

Are you a buy-and-hold investor or doing fix and
flips?

I recommend talking to Lima One Capital. A Best Ever
Guest told me about them after I asked how he financed 10
properties in one year. They are an asset-based lender with unique
programs for long-term hold and fix and flippers.

Click to
learn
more or, better yet, reach out to Cortney Newmans at Lima
One Capital. His cell is 404.824.6121.

Subscribe to Joe’s YouTube Channel here to learn
multifamily and raising money tips:
https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

Subscribe in iTunes  and  Stitcher  so you don’t miss an
episode!

JF602: Not Your Typical Crowd Funding Platform and Why They are Different

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Today’s guest claims that his crowd funding source is the one and only accredited and non accredited investor backed lending source. He’s also one of the fastest approvers of a loan you need. Tune in and hear today’s opportunity to be a borrower or an investor!

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Brian Dally real estate background:

  • Co-founder and CEO of GROUNDFLOOR
  • Started a wireless company called Republic Wireless and built
    it as a division of Bandwidth
  • Has a JD from Harvard Law School, an MBA from Harvard Business
    School and a BA with Highest Distinction from University of
    Virginia
  • Based in Atlanta, Georgia
  • Say hi to him at: https://www.groundfloor.us/about

Please Take 4 Min and Rate and Review the Best Ever Show in iTunes. 

Listen to all episodes and get a FREE crash course on real estate investing at:http://www.joefairless.com

Need financing?

Are you a buy-and-hold investor or doing fix and flips?

I recommend talking to Lima One Capital. A Best Ever Guest told me about them after I asked how he financed 10 properties in one year. They are an asset-based lender with unique programs for long-term hold and fix and flippers.

Click to learn more or, better yet, reach out to Cortney Newmans at Lima One Capital. His cell is 404.824.6121.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:

https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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JF599: BIG Money Raised, Investor Partners Set, and on the Closing Day the Lender Says…#situationsaturday

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Today’s guest has been here before. He shares a suspenseful yet agonizing account of funding a large medical building in Nebraska, well, almost funded. Hear how after all the due diligence, raising money, and cutting red tape the deal goes south.

Best Ever Tweet:

Mark Mascia real estate background:

  • President and CEO of Mascia Development and has over 13 years of experience in real estate
  • Based in New York City, New York
  • Prior to forming Mascia Development, Mark was in charge of developing over 2,500 residential units and multiple retail and mixed use properties with a total portfolio of over $1.1B
  • Presently an adjunct professor at NYU teaching Real Estate Development Principles and Practices as well as Advanced Real Estate Financial Modeling
  • Say hi to him at https://invest.masciadev.com/properties/find/

Please Take 4 Min and Rate and Review the Best Ever Show in iTunes. 

Listen to all episodes and get a FREE crash course on real estate investing at:http://www.joefairless.com

Need financing?

Are you a buy-and-hold investor or doing fix and flips?

I recommend talking to Lima One Capital. A Best Ever Guest told me about them after I asked how he financed 10 properties in one year. They are an asset-based lender with unique programs for long-term hold and fix and flippers.

Click to learn more or, better yet, reach out to Cortney Newmans at Lima One Capital. His cell is 404.824.6121.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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JF597: Where You Could Back a BIG Deal with People Who Don’t Even Live Here

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Our Best Ever guest is able to put together large New York City long-term cash flow syndications backed by people that don’t even live here, all international! He is a licensed agent with a keen sense of Manhattan and the Bronx inventory and the path of growth, and he has already completed 20!

Best Ever Tweet:

Russell Putterman real estate background:

  • Started Focus Real Estate in 2010 and merged with Keller Williams in 2014
  • He is based in New York City, New York
  • Began career as a tax consultant and senior auditor
  • Real estate investor since 2008 and has about 20 properties
  • Say hi to him at focusreg.com
  • His Best Ever book: Slight Edge by John Olson

Please Take 4 Min and Rate and Review the Best Ever Show in iTunes. 

Listen to all episodes and get a FREE crash course on real estate investing at:http://www.joefairless.com

Need financing?

Are you a buy-and-hold investor or doing fix and flips?

I recommend talking to Lima One Capital. A Best Ever Guest told me about them after I asked how he financed 10 properties in one year. They are an asset-based lender with unique programs for long-term hold and fix and flippers.

Click to learn more or, better yet, reach out to Cortney Newmans at Lima One Capital. His cell is 404.824.6121.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

Subscribe in iTunes  and  Stitcher  so you don’t miss an episode!

JF592: He Scrambled to Raise Capital for this Deal #situationsaturday

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Today’s guest needs no introduction, and he’s about to share with us a sticky situation that tight hugs m a most valuable lesson, always be raising private capital. Hear this episode and begin raising money for your next investment!

Best Ever Tweet:

Nav Athwal real estate background:

  • Co-founder and CEO of RealtyShares, an online marketplace for Accredited Investors to securely invest as little as $5,000 into private real estate investment properties
  • REaltyShares has done over 320 invsetments and raised over $160 million through the platform
  • Guest Lecturer to UC Berkeley Law
  • Electrical engineer turned attorney turned real estate entrepreneur based in San Francisco, California
  • Say hi to him at realtyshares.com
  • His best ever advice can be heard here: http://joefairless.com/blog/podcast/jf121-crowdfunding-tips-from-a-crowdfunding-wizard/

Please Take 4 Min and Rate and Review the Best Ever Show in iTunes. 

Listen to all episodes and get a FREE crash course on real estate investing at:http://www.joefairless.com

Need financing?

Are you a buy-and-hold investor or doing fix and flips?

I recommend talking to Lima One Capital. A Best Ever Guest told me about them after I asked how he financed 10 properties in one year. They are an asset-based lender with unique programs for long-term hold and fix and flippers.

Click to learn more or, better yet, reach out to Cortney Newmans at Lima One Capital. His cell is 404.824.6121.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

Subscribe in iTunes  and  Stitcher  so you don’t miss an episode!

JF581: He’s 22 and Has Completed Over 40 Flips!

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Our guest is a young one, 22 years old and he began when he was 19. He’s a very mature investor for his age and has had experience with over 40 fix and flips. Listen to his advice and see if you can begin your fix and flip adventure, the way he raises money is awesome!

Best Ever Tweet:

Kevin Ramirez real estate background:

  • Moved to the United States from Caracas, Venezuela and is based in Raleigh, North Carolina
  • Rehabbing and wholesaling properties and has done 42 of them between 2014 to today
  • Did first 4 deals when he was 19 years old (currently 22 years old)
  • Say hi to him at nchomebuyers.com
  • His Best Ever book: Traction by Gina

Please Take 4 Min and Rate and Review the Best Ever Show in iTunes. 

Listen to all episodes and get a FREE crash course on real estate investing at:http://www.joefairless.com

Need financing?

Are you a buy-and-hold investor or doing fix and flips?

I recommend talking to Lima One Capital. A Best Ever Guest told me about them after I asked how he financed 10 properties in one year. They are an asset-based lender with unique programs for long-term hold and fix and flippers.

Click to learn more or, better yet, reach out to Cortney Newmans at Lima One Capital. His cell is 404.824.6121.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

Subscribe in iTunes  and  Stitcher  so you don’t miss an episode!

JF545: STOP, and Hear These Hard Money Lessons from an Industry Consultant

She knows Hardmoney, our Best Ever guest is a consultant in the Hardmoney industry and she sees how money is professionally borrowed, lended, and the mistakes both borrowers and lenders make. Here this episode to be informed before you keep borrowing Hardmoney.

Best Ever Tweet:

Jamie Seaton real estate background:

  • Began career in 2000 as a property manager based in Auburn, California
  • In 2002 got her appraiser license and serviced Northern California for 7 years
  • Since 2009 she has been a hard money consultant where she advises investors, brokers and borrowers
  • Say hi to her at dcuprivatemoney.com
  • Her Best Ever book is The Four Agreements by Don Miguel Ruiz

Please Take 4 Min and Rate and Review the Best Ever Show in iTunes. 

Listen to all episodes and get a FREE crash course on real estate investing at:http://www.joefairless.com

Are you committed to transforming your life through Real Estate this year? If so, then go to http://www.CoachWithTrevor.Com and claim your FREE Coaching Session.  Trevor is my personal real estate coach and I’ve been working with him for years. Spots are limited, so be sure to do it now before all the spots are gone.

Have you tried REFM’s Valuate software yet? It makes investment analyses a breeze, and makes you look like you spent all week on them. Go to app.getrefm.com to sign up today.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

Subscribe in iTunes  and  Stitcher  so you don’t miss an episode!

Listen to the Episode Below (25:17)
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JF544: How to Change Your Employee Mindset into the Entrepreneurial Mindset #skillsetsunday

We must be interdependent. Employees exist to depend on the paychecks month after month while entrepreneurs work diligently while depending on many variables. Hear his incredible story of financial and mind transformation while he travels the road the road to freedom!

Best Ever Tweet:

Ivan Leger real estate background:

  • Based in Phoenix, Arizona and created $60,000 in residual income this past year
  • Two months away from becoming job optional
  • Top 1% in his industry of network marketing
  • Started with zero previous experience as a business owner
  • Say hi to him at http://lifeunleashedaz.com/

Please Take 4 Min and Rate and Review the Best Ever Show in iTunes. 

Listen to all episodes and get a FREE crash course on real estate investing at:http://www.joefairless.com

Are you committed to transforming your life through Real Estate this year? If so, then go to http://www.CoachWithTrevor.Com and claim your FREE Coaching Session.  Trevor is my personal real estate coach and I’ve been working with him for years. Spots are limited, so be sure to do it now before all the spots are gone.

Have you tried REFM’s Valuate software yet? It makes investment analyses a breeze, and makes you look like you spent all week on them. Go to app.getrefm.com to sign up today.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

Subscribe in iTunes  and  Stitcher  so you don’t miss an episode!

Listen to the Episode Below (23:13)
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JF542: Top 7 Tactics You Should Use to Build Your Real Estate Business #followalongfriday

Are you in need of basic marketing fundamentals to grow? Look no further! This show will share the skinny on all the strongest business building tools Joe uses, so listen closely!

Best Ever Tweet:

Please Take 4 Min and Rate and Review the Best Ever Show in iTunes. 

Listen to all episodes and get a FREE crash course on real estate investing at:http://www.joefairless.com

Are you committed to transforming your life through Real Estate this year? If so, then go to http://www.CoachWithTrevor.Com and claim your FREE Coaching Session.  Trevor is my personal real estate coach and I’ve been working with him for years. Spots are limited, so be sure to do it now before all the spots are gone.

Have you tried REFM’s Valuate software yet? It makes investment analyses a breeze, and makes you look like you spent all week on them. Go to app.getrefm.com to sign up today.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

Subscribe in iTunes  and  Stitcher  so you don’t miss an episode!

Listen to the Episode Below (19:44)
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JF541: How a Young Commercial Investor Raised Over $1M to Purchase a 30-Unit Deal

He’s tenacious! Only 28 years old, our Best Ever guest is a real estate agent and investor in New York, New York. He is relentless with his marketing efforts and uses direct mail. He understands the buy and hold market in NY and has observed how others have liquidated and purchased large multiunit buildings. He knows his numbers, listen in and be inspired!

Best Ever Tweet:

Josh Jaouli real estate background:

  • He’s a 28 year old commercial real estate agent focusing on multifamily properties in the New York Metro area
  • He’s also an investor and raised over $1M to purchase his first 30-unit deal valued at $3.5M with a close date in about 4 months
  • He’s raising money for his first distressed debt fund and you say hi to him at multifamilyny.com
  • Based in New York City, New York
  • Here is his guide he uses: https://goo.gl/Y3eVag

Please Take 4 Min and Rate and Review the Best Ever Show in iTunes. 

Listen to all episodes and get a FREE crash course on real estate investing at:http://www.joefairless.com

Are you committed to transforming your life through Real Estate this year? If so, then go to http://www.CoachWithTrevor.Com and claim your FREE Coaching Session.  Trevor is my personal real estate coach and I’ve been working with him for years. Spots are limited, so be sure to do it now before all the spots are gone.

Have you tried REFM’s Valuate software yet? It makes investment analyses a breeze, and makes you look like you spent all week on them. Go to app.getrefm.com to sign up today.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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JF538: How Playing a Board Game Built His Credibility and Network

Our Best Ever guest has vision. He even helps others learn how equity and passive income works by playing Cash Flow, a board game inspired by Robert Kiyosaki. Hear his story of building capital and relationships through fundamental skills of service and networking.

Best Ever Tweet:

Jason Myles real estate background:

–          Been in the real estate industry for 15 years

–          Done hundreds of deals from single family, multifamily, new construction and raised almost $20,000,000 for his deals since 2008

–          He is based in Atlanta, Georgia

–          Author of The Home Finders Guide, First Edition

–          Say hi to him at: http://www.jasonomylesrenetwork.com

 

Please Take 4 Min and Rate and Review the Best Ever Show in iTunes. 

Listen to all episodes and get a FREE crash course on real estate investing at:http://www.joefairless.com

Are you committed to transforming your life through Real Estate this year? If so, then go to http://www.CoachWithTrevor.Com and claim your FREE Coaching Session.  Trevor is my personal real estate coach and I’ve been working with him for years. Spots are limited, so be sure to do it now before all the spots are gone.

Have you tried REFM’s Valuate software yet? It makes investment analyses a breeze, and makes you look like you spent all week on them. Go to app.getrefm.com to sign up today.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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JF518: He’s Funded Over 6,000 Deals by Being a BETTER Lender

Our guest today is able to fund deals when other lenders hesitate. His step-by-step process and seasoned experience allows him to break down the numbers, Investor, and the deal strategically and fund in record time. Hear his feedback about funding private and Hardmoney deals and what he is specifically looking for.

Best Ever Tweet:

Please Take 4 Min and Rate and Review the Best Ever Show in iTunes. 

Ken Vesely’s real estate background:

  • A hard money and private money lender specializing in funding rehab and construction loans
  • Based in Toms River, New Jersey
  • Say hi to him at hardmoneyman.com
  • Involved in over 6000 deals spanning 18 years totaling over $800M in transactions
  • His Best Ever book: Think and Grow Rich by Napoleon Hill

Subscribe in iTunes  and  Stitcher  so you don’t miss an episode!

Are you committed to transforming your life through Real Estate this year? If so, then go to http://www.CoachWithTrevor.Com and claim your FREE Coaching Session.  Trevor is my personal real estate coach and I’ve been working with him for years. Spots are limited, so be sure to do it now before all the spots are gone.

Have you tried REFM’s Valuate software yet? It makes investment analyses a breeze, and makes you look like you spent all week on them. Go to app.getrefm.com to sign up today.

Listen to all episodes and get a FREE crash course on real estate investing at:http://www.joefairless.com

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JF512: How She Moved from Medical Billing to Million Dollar Developments

She started out in medical billing, and knew there was something bigger out there—she fell in love with real estate. She works now with investors, general contractors, and planners to develop large multimillion developments. Hear how she did and her Best Ever advice!

Best Ever Tweet:

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Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Michelle Wong’s real estate background:

  • Real estate sales agent and is based in NYC, NY
  • About $5M in total transactions over the last 12 months
  • CEO of The Wym Group which is focused on single family and commercial real estate
  • Focus on conversations and large renovations and development in markets across the US
  • Say hi to her at http://www.thewymgroup.com
  • Her Best Ever book is Think and Grow Rich by Napoleon Hill

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JF507: How to Raise Money and Network With these Three TIPS!

Urge to raise money and syndicate big deals? Who does have that desire!? It will take a network of professional relationships derived from productive communication. Emails, webinars, and other communicative mediums are powerful tools to create an image and a vision for success. Hear what Joe has to share and follow along!

Best Ever Tweet:

Made Possible Because of Our Best Ever Sponsors

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Are you committed to transforming your life through Real Estate this year? If so, then go to http://www.CoachWithTrevor.Com and claim your FREE Coaching Session. Trevor is my personal real estate coach and I’ve been working with him for years. Spots are limited, so be sure to do it now before all the spots are gone.

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JF498: How He Raises $$$ and Engineers Transactions

Please Take 4 Min and Rate and Review the Best Ever Show in iTunes. . 

Our Best Ever guest puts together deals in Canada, and he is a pro at raising money! He attended a few seminars by Don R. Campbell and eventually found his niche. He is especially passionate about crunching numbers and showing everyone how they going to win in the deal. Hear why he is not a fan of rehabbing and what he does instead!

Best Ever Tweet:

Jules Mckenzie’s real estate background:

  • Successfully investing in small multifamily buildings, condos and town houses in Ontario, Canada since 2001
  • Has acquired 34 properties with his investor’s capital and been featured in the REIN Report and in Canadian Real Estate Magazine
  • Based in Ontario, Canada and is still a police officer in Ontario
  • Say hi to him at http://www.mckenzieproperties.ca
  • Real Estate Investing in Canada by Don R Campbell

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Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

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JF494: Targeting a Business Idea, and How to Raise $$$ For It #situationsaturday

He has raised over $2,000,000 for his lending business. Our Best Ever guest shares the secret in building capital, which has NOTHING to do with money! His patience and persistence was rewarded and now he heads Fund That Flip! Tune in to see how his company can benefit you!

Best Ever Tweet:

Matthew Rodak

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

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Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

What’s the Best Ever health plan for YOU?

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JF474: How He Raises Money for REI and other Businesses #skillsetsunday

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He went to college to become a computer programmer and later found that he was actually an entrepreneur. Our Best Ever guest is a returning pioneer of the show as he was the guest of episode 2. He shares the reasons why real estate is most likely the best reason to raise money. He also spills the risks in restaurant development and purchasing through raising money. There are many was to raise the funds for specific projects and he shares tips on creating the best rout to start today!

Best Ever Tweet:

Michael Blank’s real estate background:

  • Raising Money for Various Biz
  • Raised money for a variety of different businesses
  • Full-time entrepreneur for 10 years
  • Raising money for single family houses, apartment building and 2 restaurants

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

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Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

What’s the Best Ever health plan for YOU?

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JF472: We’re All On the Same Team #followalongfriday

Raising money from investors is the name of the game with the majority of Joe’s deals. Everyone participates and everyone is paid…no one person takes it all. Everyone wins! Joe shares his underwriting abilities and partnerships with other skilled investors. Hear about the team advantage and learn how to collaborate skills and funds.

Best Ever Tweet:

Listen to all episodes and get a FREE crash course on real estate investing at:http://www.joefairless.com

Subscribe in iTunes  and  Stitcher  so you don’t miss an episode!

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

What’s the Best Ever health plan for YOU?

Go to http://www.stridehealth.com/bestever and find a better health plan in 10 minutes or less. On average you’ll save $418 on coverage and care.

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JF470: What This Partnership Did to go from $0 to $25 Million in 3 Years

A three step repositioning program is what you’ll need to take a poorly maintained multifamily to a healthy market rate cash cow! Our Best Ever guests are putting multifamily deals together and adding value to C class units. There are many ways to raise money and they share their methods. Be sure to hear them now!

Best Ever Tweet:

Gino Barbaro and Jake Stenziano’s real estate background:

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Please Take 4 Min and Rate and Review the Best Ever Show in iTunes. . 

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Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

What’s the Best Ever health plan for YOU?

Go to http://www.stridehealth.com/bestever and find a better health plan in 10 minutes or less. On average you’ll save $418 on coverage and care.

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JF 401: 20-Year-Old Puts Together a $2.3 Million Deal

Too young is too lame of an excuse…our Best Ever guest decided that raising millions to syndicate a mid-size multi-family property he found on Loop Net would be more than possible if he simply did one thing well…hear what it was!

Best Ever Tweet:

If you want to be mentored, make sure you’re bringing something of value to the table.

Nick West’s real estate background:

  • Currently a junior at CSU Channel Islands getting a business degree
  • A 20 year old based in Camarillo, California
  • Participated in a syndicated deal which funded over $2MM for purchase
  • Wants to run a REIT/private equity group one day
  • Say hi to him nickwest@live.com

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Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

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JF 396: Nuclear Pharmacist Funded 2 Million in Real Estate

He’s a pharmacist…and invests in real estate, IT IS POSSIBLE! Our Best Ever guest is an advocate of sharing what he has learned about real estate through his experiences with the investor community. He shares a construction project, info about his portfolio, and beliefs on being a self-sustained millionaire. Hear how he also funds local projects using his own money earned from his investments.

 

 

Best Ever Tweets:

 

 

 

 

Jeff Rabinowitz’s real estate background:

  • Based in Farmington Hills, Michigan very close to Detroit, Michigan
  • Began his professional career as a Nuclear Pharmacist in 1982
  • He then got his real estate license in 2003 several years after beginning a career as an investor
  • He owns and manages a portfolio of single family homes
  • He also buys building lots and shares in multifamily properties
  • He has funded over $2,000,000 worth of real estate transactions as a private lender
  • Say hi to him at https://www.facebook.com/damntherecession
  • realestate@pharmerjeff.com 

 

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Made Possible Because of Our Best Ever Sponsors:

Patch of Land – Could you do more deals if you had more money? Let the crowdfunding platform, Patch of Land, find investors for you and fund your next deal…and your next deal…and your next deal…and…well, just go find out more at http://www.PatchOfLand.com

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JF 378: How to leverage MILLIONS of Dollars with Other People’s Money

Our Best Ever guest is perfecting syndication. He is putting together large scale multi family deals with OTHER PEOPLE’S MONEY! Structuring deals that are more complex, our Best Ever guest began flipping…and found it wasn’t for him. As a sponsor, his offers for the bigger deals are backed by one thing the majority of investors and syndicators would hesitate to include, hear how he closes! 

 

 

 

Best Ever Tweet:

 

 

 

 

 

 

Ryan Dunigan’s real estate background:

 

  • Raises money and invests in apartment buildings in Arizona

  • Has syndicated 188 units and manages another 29 units for a 3rd party

  • Based in San Diego, California 

  • Went to school at Colorado State and big snow boarder

     

     

 

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Made Possible Because of Our Best Ever Sponsors:

 

 

Patch of Land – Could you do more deals if you had more money? Let the crowdfunding platform, Patch of Land, find investors for you and fund your next deal…and your next deal…and your next deal…and…well, just go find out more at http://www.PatchOfLand.com

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JF257: How and Why You Should Find Money BEFORE You Find a Deal #skillset Sunday

Today, we discuss how to ensure you find the money for your deal BEFORE that deal. There is a lot of money out there and even more deals out there, so what’s stopping you?

Best Ever Tweet:

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Made Possible Because of Our Best Ever Sponsors:

Norada Real Estate Investments – Having a hard time finding great investment properties?  Unfortunately, the best deals are rarely found locally. Norada Real Estate’s simple proven system provides you with the best deals across the U.S. to create wealth and cash-flow.  Get your FREE copy of The Ultimate Guide to Out-of-State Real Estate Investing

Patch of Land – Want to learn more about crowdfunding? Let the leading expert in the crowdfunding space, Patch of Land, give you all the info you need to get started. Grab your FREE copy of Top Ten Answers to the Top Ten Crowdfunding Questions athttp://www.PatchOfLand.com/bestever

The Art of Commercial Real Estate Leasing– You’ve heard him here before, and now he’s back with a book you must read. Buy Craig Coppola’s book, The Art of Commercial Real Estate Leasing and learn the 19 things to look for in a lease.

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JF218: How to get Private Lenders to Fund 100% of YOUR Next Deal!

Mmmm, a large cheese pizza just for me! What do private lenders and ordering a pizza have in common? Today’s Best Ever guest shares with us how private lenders fund 100% of his deals, and how they can for you too! Let’s sit back, relax, and cook up YOUR recipe for success!

Best Ever Tweet:                                                                                                                                      

 Alan Cowgill’s real estate background:

           Alan Cowgill is owner of Colby Properties and President of Integrity Home Buyers, Inc.

 –          He invests in single family and small multifamily properties in Springfield, Ohio

 –          Board of Directors for Clarke County Property Management Association 

 –          Adjunct Professor for 5 years at Clark State University

 –          http://www.privatelendingmadeeasy.com/

 –          Author of Walking With the Wise Real Estate Investor

 –          Since 1995 Alan has done hundreds of transactions and uses Private Lenders to fund his             purchases

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 Made Possible Because of Our Best Ever Sponsors:

Norada Real Estate Investments – Having a hard time finding great investment properties?  Unfortunately, the best deals are rarely found locally. Norada Real Estate’s simple proven system provides you with the best deals across the U.S. to create wealth and cash-flow.  Get your FREE copy of The Ultimate Guide to Out-of-State Real Estate Investing

 Patch of Land – Could you do more deals if you had more money? Let the crowdfunding platform, Patch of Land, find investors for you and fund your next deal…and your next deal…and your next deal…and…well, just go find out more at http://www.PatchOfLand.com

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JF163: Wanna Raise Money? Here’s How to Do It Properly.

Today’s Best Ever guest shares how to use a turn-key model to raise money and get your paperwork in order. You want to use OPM (other people’s money)? Then, listen up my friend!

Best Ever Tweet:

Douglas Ruark’s real estate background:

–        Principal at Regulation D Resources based in Denver, Colorado

–        Recognized expert in Regulation D offering programs

–        Say hi to him at http://regdresources.com/

–        And…he’s a descendant of Scottish royalty

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Sponsored by Patch of Land – Could you do more deals if you had more money? Let the crowdfunding platform, Patch of Land, find investors for you and fund your next deal…and your next deal…and your next deal…and…well, just go find out more at http://www.PatchOfLand.com

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JF158: Achieve Success at an Auction…Insider Tips Revealed!

Hear directly from an auctioneer as he gives you his Best Ever advice to be successful at an auction. Going Once…Going Twice…Let’s go!

Best Ever Tweet:

John John Genovese’s real estate background:

–        Owner of Malama Auctions based in Hawaii and specializes in Real Estate auctions

–        Host of the popular podcast called Fundraiser Solutions which helps nonprofits improve the quality and financial results of their events

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Sponsored by Patch of Land – Could you do more deals if you had more money? Let the crowdfunding platform, Patch of Land, find investors for you and fund your next deal…and your next deal…and your next deal…and…well, just go find out more at http://www.PatchOfLand.com

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JF156: Discover the Hidden Rules of Raising Private Money

Learn how the mantra “funding = freedom” has catapulted today’s Best Ever guest’s career in real estate. He shares with you a ton of tips on how to raise private money and busts up some myths about private money.

Let’s go!

Best Ever Tweet:

Josh Cantwell’s real estate background:

–        Chief Executive Officer at Strategic Real Estate Coach based in Cleveland, Ohio

–        Bought and sold almost 700 properties in 25 states

–        Strategies include rehab, rental, foreclosure, pre-foreclosure and short sale

–        Primarily focused on raising capital and doing larger real estate deals

–        Say hi to Josh at http://joshcantwellcoaching.com/

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Sponsored by Patch of Land – Could you do more deals if you had more money? Let the crowdfunding platform, Patch of Land, find investors for you and fund your next deal…and your next deal…and your next deal…and…well, just go find out more at http://www.PatchOfLand.com

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JF152: EVERY Single Answer to EVERY Single Crowdfunding Question You Have

Welcome to the Best Crowdfunding Crash Course Ever presented by Patch of Land. In today’s episode you get EVERY answer to EVERY question you have about crowdfunding. And…if we don’t answer it on the show then tweet your question to Patch of Land – @patchofland.

Who we’re talking to today:

AdaPia d’Errico, Chief Marketing Officer at Patch of Land

Here’s a nibble of just some of the answers you’ll get in this episode

–        How all your money is ALREADY RAISED – you just have to qualify yourself and the deal

–        Knowing when it’s the right time to use crowdfunding for your deals

–        Why a little bitty 8% stat will blow your mind

–        Differences between all the types of crowdfunding platforms

–        How crowdfunding platforms make money and the fees you can expect to pay

–        How quickly the underwriting process takes to get approved

–        The paperwork you’ll need in order to get approved for a crowdfunded deal

Want a treatski?? Unlock the Top Ten Answers to the Top Ten Questions asked about crowdfunding by downloading it for FREE here: http://landing.patchofland.com/white-paper-top-ten-answers-to-the-top-ten-crowdfunding-questions

Oh, and BTW, did you know that Crowdfunding is an acronym!?!? AdaPia enlightened me about that during our conversation. It stands for…Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure Act.

This episode is bought to you by our Best Ever sponsor, Patch of Land.

Could you do more deals if you had more money? Let the crowdfunding platform, Patch of Land, find investors for you and fund your next deal…and your next deal…and your next deal…and…well, just go find out more at  http://www.PatchOfLand.com

 

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JF134: Discover these Expert Tips on Raising Money and Operating Properties

Do you want to raise money? Do you want to become an effective asset manager? Want to get better at operations? Then listen up partner. Today’s Best Ever guest has some treats for you.

Best Ever Tweet:

Bruce Stein’s real estate background:

–        Principal of Real Property Partners based in Los Angeles, California

–        Managed brokerage transactions in excess of $1 billion

–        Executed over $1.2 billion in financing

–        Managed commercial real estate portfolios of more than $850,000,000

–        Raised $185MM in equity for two funds

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JF132: She Raised $5,000,000 in ONE WEEK – Here’s How…

It does NOT happen overnight. It happens over time from having a successful track record in business and through building mutually beneficial relationships. That said, there are some tips from today’s Best Ever guest about how to expedite the process of gaining influence and being able to lots of money.

Tweetable quote:

Kathy Fettke’s real estate background:

–        CEO of Real Wealth Network based in Walnut Creek, California

–        Author of best-selling book, Retire Rich with Rentals

–        Active real estate investor and agent and host of the popular podcast, The Real Wealth Show

–        Been named a Top 100 Most Intriguing Entrepreneurs by Goldman Sachs two years in a row

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Sponsored by Cozy – Simple, free online rent payments, tenant screening and credit checks. Get Cozy for free at cozy.co

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JF91: Raising Money from International Investors

How do you set up international investors so they can take their money and invest in your deal? Today’s Best Ever guest shares with you the process.

Tweetable quote:

Decide what you want not what you think is possible.

Ben Gray’s real estate background:

–        Founder of American Properties International based in New York City

–        Match up international investors with turnkey American investment properties

–        Say hi to him at http://www.Americanproperties.com.au

–        Experience raising money and working with international investors to invest in United States properties

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Sponsored by: Twenty Four Sound – visit http://www.twentyfoursound.com and mention “bestever” for an exclusive 20% discount on your purchase.

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JF75: Crash Course on Self Directed Retirement Accounts

How is it possible to have millions of dollars in your IRA when the government only allows a certain amount to be deposited annually? Self-directed accounts. Today’s Best Ever guest talks about the pros, cons and misconceptions of self-directed accounts.

Tweetable quote:

David Coe’s real estate background:

–        Gold Level Realtor representing homeowners & investors, with COE Real Estate Team

–        Based in Hermosa Beach, CA and specializes in the South Bay area of Los Angeles

–        Helped raise over 15MM in capital for deals over last 7 years

–        Runs Freedom Growth (http://www.freedomgrowth.com/) and co-founded South Bay chapter of For Investors, By Investors

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JF 64: Success Systems for Flippers

Today’s Best Ever guest shares with us the systems he implements to continually grow his flipping business. From morning routine to overall psychology – you’ll get a full dose of how to make it happen!

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Justin Colby’s real estate background:

–        Founder of Phoenix Wealth Builders based in Phoenix Arizona

–        Flipped over 300 homes in last 7 years

–        Building 79 town homes in Mesa, AZ

–        Host of top ranked podcast The Science of Flipping and author of The Science of Flipping available on Amazon

–        Say hi to Justin here: http://thescienceofflipping.com/

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JF 62: Getting Conned by a Con Man 

Today’s Best  Ever has raised over $3,000,000 and flipped over 200 homes but it hasn’t come without challenges. Major challenges. Like starting his company with $80,000 in debt, selling a car to finish a flip, and being conned by a con man. He tells his story in today’s episode that you don’t want to miss.

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Glenn Schworm’s real estate background:

–        Flipped 200 houses since then 2007

–        Founded Signature Home Buyers with his wife, they buy and sell 50 houses a year

–        Raised about 3MM in private investor funds

–        His website is http://www.signaturehomebuyers.com/

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JF 51: A Multifamily Biz Model that Quickly Scales Your Wealth

Today’s Best Ever guest shares with you the biz model he uses to quickly scale his apartment investing business. Next week he is closing on a $12,000,000 property – I think you’ll want to hear what he has to say.

Tweetable quote:

Chris Urso’s real estate background:

–        Raised over $15,000,000 of private equity

–        In last 4 years his company has acquired over $45,000,000 worth of apartments

–        He and his wife began investing in 2001 originally focusing on residential

–        Co-founder of U.R.S. Capital Partners & Elite Apt Coaching, a multifamily coaching and training program (http://www.eliteapartmentcoaching.com/)

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JF44: Money Raisin Tips Revealed by a Money Raisin Master  

Want to raise money for your next deal? Then slap on those ear buds and hit play. Today’s Best Ever guest is a money raisin master and he shares with you his best real estate investing advice ever!

Tweetable quote:

Joel Block’s real estate background:

–        Raised money for more than 40 syndicated deals

–        CEO of Bullseye Capital Real Property Opportunity Fund

–        Spent 15 years in venture capital business

–        Started his career as a CPA

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JF31: Scale the Top of the Real Estate Mountain by Learning This One Skill

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What if, instead of specializing on a particular niche in real estate investing, you raised money for the deals and partnered with experienced real estate investors who actually manage and execute the deals?

Today’s Best Ever guest considers himself a money manager.  He believes raising and organizing money is the top of the real estate mountain and thinks other investors should learn the skillset. I agree.

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Bryan Hancock’s real estate background:

– Currently has over 40 development projects in Austin, Texas

– His funds have raised more than $13,000,000 for real estate development in Austin, Texas over last 2 years

– Plans to raise $25,000,000 in the next year

– Founder of Inner 10 Capital (http://www.inner10capital.com/)

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JF 12 : Continually Evolve Your Approach…or Become Extinct

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Ankit Duggal has successfully invested and exited in over $50,000,000 worth of real estate assets since 2008. He focuses on multifamily deals and tax liens in the Northern New Jersey market and discusses with us the importance of maintaining your focus on what you know while evolving how you make the deals happen.

Ankit’s real estate background:

  • A wide variety of experiences from hard money lender to brokering deals to deal syndication
  • His company Real Estate Renaissance Group (www.rernj.com) has deployed over $90,000,000 into investments

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JF 06: Cautionary Tale of Joint Ventures from an Attorney

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Douglas Dowell has been involved in many areas of real estate but we’re going to focus on his background as a real estate attorney. He gives us incredible insight into joint venture agreements and what to look for prior to creating one. He also talks about raising money for syndicated deals.

Douglas’s real estate background:

  • Over 4+ years as an attorney working on litigation and landlord/tenant cases
  • Worked at Marcus & Millichap, the nation’s largest commercial real estate brokerage firm

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JF 02: Real Estate Syndication and One Lawsuit Happy Tenant

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I always love speaking with Michael Blank as we share a similar philosophy about getting your mind right before you get your money right.

Michael’s real estate background:

  • Put together multiple syndicated deals
  • Flipped over 30 homes in 2 years
  • Consults investors on apartment investing, raising money and deal syndication

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