JF2020: Private Lending With Joey Mure
Joey is a partner at Wealth Without Wall Street, a financial advisory firm. He is from Birmingham, AL and started off his career in the mortgage business in 2003 learning how to become an underwriter and eventually started to see a niche of opportunity to lend money to individuals who didn’t qualify under the mortgage guidelines. He shares the pros and cons of private lending and also shares a unique deal he did with an auto loan.
Joey Mure Real Estate Background:
- Partner at Wealth Without Wall Street, a financial advisory firm
- Started career in the mortgage business in 2003
- Became branch manager and led 25 loan officers, gaining national recognition by 2010
- Based in Birmingham, AL
- Say hi to him at http://www.wealthwithoutwallstreet.com/home/
Best Ever Tweet:
“In terms of a lending perspective, think like a lender, make sure you’re covered and get creative.” – Joey Mure
Joe Fairless: Best Ever listeners, how are you doing? 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, Joey Mure. How are you doing, Joey?
Joey Mure: I’m doing great, Joe.
Joe Fairless: Well, I’m glad to hear that, and looking forward to our conversation. Joey is a partner at Wealth Without Wall Street. He started his career in the mortgage business. In 2003 he became branch manager and led 25 loan officers, gaining national recognition by 2010. Based in Birmingham, Alabama currently. With that being said, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Joey Mure: Yeah, Joe. Thanks for having me. My background and being in mortgage – I realized that there’s a lot going on behind the scenes. The banks make tons of money off of our need for finance, and I realized that I was doing a lot of things wrong in terms of my own personal finances, just from giving up unnecessary cashflows to other people, always paying down debt, always paying taxes…
There’s a number crazy things that I was learning, and I started implementing some of these things myself, that I was learning from a mentor and a coach… And about four years in that personally, I really saw the trajectory of my family’s finances going the way that I wanted, and I said “Man, this is exciting stuff. People need to know this.” I was at a conference, looking around, and there was only about 300 people in the room that were people that are certified to talk about these things, to teach these things… And I said “Man, there’s just not enough people doing this. Why don’t I do this?”
I was at the pinnacle of my career in mortgage, I enjoyed what I did, but I knew that I could have a much greater impact if I could help people implement the same things that I was doing. So in 2014 I transitioned to work with my mentor at the time, Russ Morgan; I think you interviewed him actually, Joe… And we started Wealth Without Wall Street to share this message with the rest of the world. So that’s what I’m doing now.
Joe Fairless: Okay. And with your background in mortgage, and you have a track record with private lending… Can you talk to us about that?
Joey Mure: I worked at one of the nation’s largest lenders, so I got trained to think like an underwriter. You don’t submit an application with somebody that you think “Oh, this person’s never gonna get approved because of this, this and this.” The collateral, the borrower, the credit… You start looking at things in the light of an underwriter.
So when I got out of the mortgage business, I was sitting on a lot of cash. We talk about usually life insurance as a vehicle for funding… I was sitting on all this cash value in my policies and I said “Man, what do I know the best? I understand the lending process.” And it was weird though, because I had never really thought about it in light of that, like “I could be the lender.” Then someone came to me and they said “Hey, somebody just came to my office and they need a private mortgage, because they don’t fit the criteria of a traditional loan.” I said “Really? I’m sitting on some cash…” They said “Would you wanna partner with me on this mortgage? They’re willing to put down 20%, and I told them that we’ll charge them 10% on a 15-year note.” I said “That sounds awesome. I’ll do it.” So that’s kind of my entree into private lending, and I learned some good things, some bad things along the way, but that’s how I got into it.
Joe Fairless: Okay. Well, natural question next – good things and bad things.
Joey Mure: The good thing was this was a really low-risk situation. It was 20% on a piece of collateral… I got an appraisal done, I knew what the value was — in fact, it was here in Birmingham, so I could drive by it; there’s a physical collateralized asset there, and that was great. Their payment history was great, so I knew they’d pay on time. It was consistent cashflow… And it put money at work that was just sitting there idle up to that point. So those were the good things.
It had obviously a note, and a mortgage and all that stuff backing it up. I was the loss payee on their insurance policy… So I had all the things in place to protect me. The bad thing was I realized money in a velocity sense is way more important than money just growing at 10%.
Joe Fairless: Will you elaborate on that?
Joey Mure: Yeah. What I mean is I had — at the time, I guess that was somewhere around 75k of my money sitting in a deal that as I grew this business, I realized “Man, I could be growing my business with a lot higher percentage than 10%, if I had access to that money back.” And here I was, I was committed to a 15-year note. So if they had held on to that note for 15 years, I’d realized that my goals changed. I didn’t want just the money growing, coming back to me at 10%; the access to my money was a lot more important, and it being tied up for 15 years… Gratefully, they paid me off in less than two years, because the interest rate was high enough that they were like “Well, I could refinance now… I’m in a different position.” And they did, so I got my money back.
Joe Fairless: And will you just take that one step further on why is access to your money over those 15 years more important than making 10%? Because some people might hear “Well, 10% per year (like your initial reaction was) for 15 years… That sounds great.” So why is that worse than the alternative that you’re talking about, where you have access to it?
Joey Mure: Well, let me say this – everybody’s goals are gonna be dependent on where they’re headed. And that’s what is so important. If you put into your GPS you have a destination, then you know how to get there. Well, in my position, I realized I was growing a business, and the business was the asset that was going to produce a much, much higher return than 10%. But I didn’t see that at first, so I tied up my money at 10%, thinking “Oh, this is a great deal”, and it was… Until I realized “Man, if I just put in that 75k into marketing, or into hiring a new assistant…”
For instance, in the last year we hired an executive assistant, and that money was far less than 75k, but it’s going to turn into hundreds of thousands of dollars in 1) a tech strategy we implemented, 2) we’re doing some land flipping now that’s gonna be very profitable, and she’s helping us with that… She has helped me to be way more efficient… We always talk about time as money, but when you look at what money I have could be helping me to grow my business, the ROI on that is far, far higher than just the 10%. Does that make sense?
Joe Fairless: It does.
Joey Mure: That’s what I was really kind of realizing within two years of having this money tied up in a mortgage. I was like “Man, I wish I had that money back”, and then lo and behold, they refinanced, so it was a blessing in disguise.
Joe Fairless: Okay. So is that a combination of the good and the bad that you recognized, with the private lending?
Joey Mure: Let’s say that I was in a different position than I was. Let’s say that I was in a regular job, or I had a business that was already really off the ground, and it was mature, and all these things… Then having just 10% working on the side, and money that would have been otherwise useless would be a great thing.
I’m not saying that a 10% private mortgage is a bad thing, I’m saying for me where I was it was holding me back from potentially 100%, 200%, 300% ROI on my own business. So it’s kind of the way that that works, and I had three outstanding at the time; two of those refinanced back, and then the other one finally came back recently.
Joe Fairless: How many years into it?
Joey Mure: That one was three.
Joe Fairless: So all pretty short-term… Because it’s 10%, and once they can qualify for a mortgage rate, then they’re gonna do it, right?
Joey Mure: Yeah, gratefully they had that motivation. Otherwise I may still be waiting on that money.
Joe Fairless: So basically it’s looking at – in anything that we do, especially investing-wise – the opportunity cost. It’s 10% per year – great. 15 years locked up. Wonderful security for 15 years. But are we building a business on the side, or do we have alternative ways of generating that type of cashflow or greater with that level of safety? And then we just make a decision based on our goals, “I’m okay with a little bit more risk, so let me go this direction”, or “I want more safety, I wanna lock it in for 15 years. Let me go this direction.”
Joey Mure: Exactly. And I can tell you, I learned through that I needed to go more short-term, so I actually did an auto loan shortly thereafter. Within a year or two after that I still was growing the business, and I had somebody come to me that had heard about the mortgage that I’d done, and they said “Hey, by the way, do you do auto loans?” [laughter]
Joe Fairless: Really?
Joey Mure: And I was like, “Never have… But tell me what you’re thinking.” And that would actually end up being a really good win for me, because I started thinking differently… And I said “Man, I’ll do it for a year.” He said “I’ve got this Suburban, and it’s owned free and clear.” It’s like a 30k vehicle. He said “All I need is 10k, because I need to get back on my feet on some things. I’ve gotten behind on some bills… It’s worth 30k. Here’s the title, it’s free and clear.” And I said “Man, that’s good collateral against a 10k loan… But then I said “Okay, tell me what’s important to you.”
I knew cashflow was tight, so I set it up on just a minimum $100/month interest-only. I said “But in six months I’m gonna go up to $200/month.” So I’m trying to give him an incentive to pay me off early, to get my money back. Again, I learned a lesson there… And then I said “But when you pay me back, you’re not gonna pay me back 10k, you’re gonna pay me back 11k. And it’s like a lump sum. Use that increased pay-off.”
He said “Well, that sounds great”, because he was actually a real estate agent, he was in the hardest part of the year, like around this time of the year (in December), and he said “I’ll have the money come spring-summer-fall, whenever the real estate market ticks up.” And sure enough, he paid me off. But the ROI on that was 26%. Even though I had that really small payment, it worked really well for his cashflow, and he was happy to do it. In fact, he came back to me and said “Hey, would you do that again another year?” So I did it two years in a row.
Joe Fairless: Was it a 10k loan for a vehicle?
Joey Mure: Yes, just against his current —
Joe Fairless: Right, but what was he using the 10k for? Another vehicle, or something else?
Joey Mure: No, just to catch up on bills and other things.
Joe Fairless: Alright, got it.
Joey Mure: Yeah. But then he paid me off, and then he called me back about two months later and he’s like “Hey, do you wanna do that loan again?”
Joe Fairless: What did you say?
Joey Mure: I said “Yeah, absolutely.”
Joe Fairless: Is that full-circle as well, or is that in the middle?
Joey Mure: Yeah, both of those have been paid back.
Joe Fairless: Okay.
Joey Mure: But then I had come a long way in the business and I realized it was a good learning opportunity… But I said “But man, I actually need to really focus in on where my ROI is coming from”, and it was from the business.
Joe Fairless: Yeah…
Joey Mure: But it was a great opportunity in the meantime.
Joe Fairless: Thank you for sharing that. I don’t think we ever talked about auto loans in 1,900+ interviews on this show, so thank you for that. What paperwork is involved with an auto loan?
Joey Mure: So it was really just a simple note that I had to just agree to on paper. It had to be added to his title. You’re essentially writing that in and then sending it in. Then I was added to his loss payee on his auto insurance, so he had to show me his declarations page and show that I was the named beneficiary if something were to happen and he had to claim it on insurance. And besides that, that was really about it. So it’s pretty simple. I actually had an attorney just draft up a simple note, and we just kind of went from there.
Joe Fairless: And being added to the loss payee on the auto insurance declaration page showing that – that’s if he were to claim a loss… Like if the Suburban were to go away magically one day, and he’s like “Someone stole it” and you’re out of Suburban, then you would get the insurance claim, not him, right?
Joey Mure: Well, I would get paid back.
Joe Fairless: You would get paid. Okay, so how did you think to add that in there? Because someone might not think about that, myself included, if someone said “I’ll do an auto loan.” And I probably wouldn’t do an auto loan, but it’s interesting… And if I did do it, I would do a note, and then I probably would think about being added to the title, but I might not think about the insurance thing.
Joey Mure: Yeah… I think what happened is my background being in mortgage…
Joe Fairless: Oh, right…
Joey Mure: I always had to think like a lender, and they’re always concerned about “Well, how could this money go away from me? What are the potential risks?” And if he were to total the car and didn’t have insurance – well, how was I gonna get the 10k that I owed? Now I have a worthless asset that I can’t get the money back, and I have no way to go back to him except for go to his personal credit, or whatever… So it really just gives you that second layer, that if something happened, I’m gonna get paid back.
Joe Fairless: Anything else that we haven’t talked about as it relates to private lending that you think we should?
Joey Mure: I think the main thing is just like that – if you can put on the hat of thinking like the lender… That was one thing. The second thing that I would say is get creative with the way in which you structure a deal. We had another client of ours in the community the other day. She said “Hey, one of my friends is looking to buy a commercial piece of property, and we wanna do the loan on it… And this is what they’re looking for. They want to do the loan 100% financing on a commercial piece of property.”
I said “Number one, that’s probably not a good idea. You don’t have any skin in the game from the person that’s buying it. They don’t have any money to lose, they could walk away from it any time. But what if you’re confident that the value is far greater? Then maybe there’s something there.”
So we started talking about that, we started talking about “Well, what if we set it up as interest-only payments versus amortized payments? How are the leases on the property? Are they six months, are they twelve months, are they longer?” There’s different values that you can put on different aspects of the deal, so we started thinking creatively, just like we did on that auto loan. If he went and took a title loan company, which is what his options were besides me, he would have probably had to pay $800/month, because they would have just done it on a simple amortized loan of 12 months, for $10,000, right?
But I said, “Man, his biggest need right now is cashflow, so let’s just do it as a really small interest payment, and then have him pay back more whenever he has this lump sum within a year”, and it just turned out to be really profitable for me. By hearing what was important to him, what he was working with, and then structuring the deal to be beneficial to him, it was a win/win.
Joe Fairless: I like that a lot. There are lessons that we should definitely apply towards our business – “we” meaning real estate investors – for sure. Think like a lender, because most likely a lender is gonna be involved, so you might as well start thinking like him, and proactively address things… And then get creative with how you structure deals.
Joey Mure: Yeah, and think about it from that lender’s perspective. You’ve got folks listening to this right now that are going out to maybe get their first private lender… If you’re thinking about it from their side – which, really that’s all of life. If we’re always thinking about how other people are considering what we have to say, then we’re gonna communicate that much better.
If you’re talking about “Man, I just wanna make sure you’re covered in this, so I wanna make sure that we add you on the title, on the deed of this property… You’re gonna be in first lien position…” If you give them the things that they wanna hear, they’re gonna be much more comfortable lending you the money, than somebody that says “Hey man, I promise you I’m gonna get the money back”, and you’re not speaking their language.
This is a great way to walk into that conversation and make sure that you’re set up for success to get that private lending in place.
Joe Fairless: What’s your best real estate investing advice ever?
Joey Mure: I guess I would say I’m not gonna be your best real estate advisor, because I’ve actually done terrible things, like bought a condo that floods all the time, and all this kind of stuff… So don’t take my advice on that. But in terms of a lending perspective, we’ve already kind of covered it, but think like a lender, make sure you’re covered, and get creative.
Joe Fairless: We’re gonna do a lightning round. Are you ready for the best ever lightning round?
Joey Mure: Yeah, let’s do it.
Joe Fairless: Alright. First, a quick word from our Best Ever partners.
Joe Fairless: Best ever resource that you use for your business to stay up to date with the industry? News resource, or something like that.
Joey Mure: Well, I’ll say this – the way that I stay current is doing our podcast. Continuing to hear what other people are doing, and staying close to the trends. I’m learning from all the people that I’m interviewing, and that’s helping me to stay current with our audience.
Joe Fairless: Best ever way you like to give back to the community?
Joey Mure: I’ll tell you the most recent thing… My wife and my five girls and I went and handed out dinners to shut-ins at Thanksgiving. So the people that couldn’t get to the homeless shelter – they allowed us to be a part of distributing those meals to them, their elderly or shut-ins. That was a really cool experience for our whole family.
Joe Fairless: What’s the best way the Best Ever listeners can learn more about what you’re doing?
Joey Mure: Our website is number one, wealthwithoutwallstreet.com. The community that we have – you can find out more there, at community.wealthwithoutwallstreet.com.
Joe Fairless: Thank you so much for being on the show, sharing your advice on private lending, a couple lessons learned, and some things that we can apply in our real estate business… Put on the hat of thinking like a lender, and get creative with how you structure deals; in particular, think about what the other side is looking to accomplish, and then approach accordingly.
Thanks so much, Joey, for being on the show. I hope you have a best ever day, and we’ll talk to you again soon.
Joey Mure: Yeah, my pleasure, man. Thanks again.