Scott goes over the KPI’s (key performance indicator) and FIN (financial independence number) in working in your note business.
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Your KPI’s and Financial Independence Number
I really love a lot of our guests and what they shared in the last couple of days here in the podcast’s episodes, especially Wayne Snell and Adam Adams back to back episodes. If you have not, check out their episodes in the library of the many, many great guests and discussions we’ve had not only here on the podcast but also if you’d like to check out some of the recordings, you can always go to Vimeo.com/WeCloseNotes to check out the first 149 episodes. Today’s topic falls into what Adam Adams and Wayne Snell discussed. I think a lot of people miss that underlying current of what is driving their business.
Adam talked about how he loves to do notes, but he loves to be lazy. That’s a good thing. He has earned the right to be lazy in a good way. I don’t mean that in a derogatory way. In a good way, he likes to take naps. He likes to relax. He likes to travel. He’s working on bringing Jen home, his wife, from her full-time job even though she loves her job. He’s working on cashflow. Why cashflow? As he reiterated, he would rather have $200 a month coming off a deal versus getting a $10,000 check and going back to work. Wayne also reiterated that same fact he’s looking for cashflow. He’s looking for notes that are going to be reperforming that he can basically deduct that monthly payment from his overhead each month. The extra they have been saving aside and using that to buy and fund their own deals.
Today’s topic, I want to go through KPIs, Key Performance Indicators and your FIN, your Financial Independence Number. A lot of people don’t start with the end in mind. As our good buddy, Aaron Young, from one of our previous episodes always likes to say, “Start with the end in mind.” As a real estate investor, what is your big goal? Is your big goal to fix and flip a thousand homes? Is your goal to modify thousand homes? Is your goal to have a thousand rentals? Probably, honestly not. My personal goal is I want to have 400 plus notes that are bringing in $250 to $500 a month in cashflow to me. That’s a great number for me. Everybody’s number is different. Wayne’s is different from Adam’s. Adam’s is different from mine. It’s totally different across the board.
One of the things you have to keep in mind is if you’re really going to be successful, you’ve got to have a game plan. You’ve got to have a blueprint to your success. Wayne and Adam and Jay Tenenbaum and a whole variety of people out there; Cody Cox is on his way as well, Karen and Stacy Wall are doing a great job. We got to give a big shout out to Pari today. Pari closed on a deal, actually got cash out of the deal. A sixteen-month deal is going to make him about 16% return on his money. His own money funded the deal, 12,000 and some change, the borrower paid them off in a cash pay off. Sixteen months later, he made a 16% return on his money, which is great, especially in San Francisco where ROIs on investments are basically none out there because it’s so expensive.
Keeping the end in mind and building a foundation, how many deals do you have to do to really retire if you want to or to hit financial independence? Financial independence means a variety of things for people. For me, it means you have enough cashflow coming in that if you want to take a month, two months, three months off, your bills are covered. Everything is running and maybe even growing a little bit. If you don’t work, you’ll have the money coming. That’s what’s called a business owner or investor, if you’re investing your money that way. Too many people are entrepreneurs or they end up the business runs them. They’re doing so much work to stay on top of things that they don’t get to have any fun. That’s not the way you want to be. You want to try with the end in mind.
I think anybody who has ever run a company at some point has had the company run them for a while. Listen to Aaron Young’s Unshackled Owner podcast and you’ll see what he’s talking about. I love what I do. I enjoy it on a daily basis. I love getting up and coming to the office, hanging out with this crew here, making things happen. I love helping students out there across the world. I really, really do enjoy helping people, but I like making money. Let’s not call a zebra a leopard. I enjoy making money and my goal is to make money on what I do. If I wasn’t making money, I wouldn’t enjoy what I’m doing as much. I do love it. I do enjoy helping people but I got to cover my bills, too.
What I want you to keep in mind this morning is your Financial Independence Number is going to be completely different from everybody else. How do you get to that number is one of the things that we’re going to do as far as backwards engineering today. On our virtual note buying workshop, we always start the workshop off with making $250,000 or six figures in the next twelve months. We’re going to do a little bit of spin on that.
Let’s look at what your monthly is. Look at what your bill is, look at our houses, your rent through your bills, you cable, your car payments, your insurance. What does that number need to be? Let’s just say, it’s $5,000 per month. $5,000 a month is what you’ve got to make. If you have your own money and you want to make $5,000 a month, great. If you don’t have your own investment funds and you need to borrow some of these funds, the way I always like to look at it is just assume you’re splitting cashflow, splitting monthly payments. Figure it out being $2,000 a month is what you really need to have cashflow with a JV partner or partners. $5,000 a month was just solely you. Now, adjust these numbers. If your number is a different number, $10,000 for yourself, by all means, that’s fine. Just adjust the numbers.
Wayne mentioned that on average, he is shooting for around $400 a month in cashflow, and I think that’s pretty fair. We ran some numbers on some stuff that we were working on. Some of the stuff is $340, $350 somewhere around there, which is okay. We’ve got stuff that’s higher than that. Let’s say $400 a month is what you need to get. Take $5,000 divide that by 400. What’s that come to? It should be about thirteen deals, twelve and a half deals. If you’re going to do that with $10,000 is what you need to have coming in, divide that by 400. That should come to 25 deals that you need to close if they’re averaging $400 a month. If the cashflow on it is a little higher, the rate is less. If it’s a little bit lower, it’s going to be a little bit more. The idea is how many deals do you need to do or really how many offers you need to offer on to hit that number? The big misconception we see a lot of times is that a lot of investors that make one or three offers, one or four a month, they get one maybe accepted or they don’t get any of them accepted and they get jaded. They’re not making enough offers.
If you were in the traditional fix and flip business, the traditional real estate business, and they told you that you needed to send out 5,000 postcards to get five deals, would you send that 5,000 postcards? No, a lot of people send out 500 or 1,000. Most note investors have about 10% close ratio with the deals they’re bidding. That’s closing, that’s not acceptance ratios. You can adjust your numbers a little bit and your numbers are going to get better when you submit bids more often when you figure out with where you’re at and what prices makes sense. We’re still seeing probably around a 35%, 40% acceptance for our goals.
Let’s say you have thirteen deals. If you’re going to need thirteen deals and you’re using your own funds and you got a 10% closing rate, that means you multiply thirteen times ten to 130 offers. If you need to do 25 times ten, you need to make 250 offers. If you’re going to get to this number here, that’s the work you’ve got to put in.
One thing a lot of people mess around with is they make offers and they don’t get accepted or they’re too low, they don’t fall back up with what was the winning offer. What was the winning bid? That way you have a good idea to see, “Did my bid makes sense or was the guy that overbid way tremendously? Did I miss out just close?” If you’re close, just keep making offers. If you’re way off, look at the source. There’s a few sources that’s sell notes out there but there are some really expensive, really high, pricy notes because you get all these newbies that don’t know what the hell they’re doing and they’re overpaying for assets. What happens a lot is people or sellers will approve bids and then deals will fall out in 30, 60, 90 days because of a variety of things. A, they’re either doing completely due diligence or B, they just walked away from it. You’ve got to put the work in if you’re wanting to get that 5,000.
Let’s talk about that. What’s that come down to? If you need to make 130 offers and you want to leave your job in a year. That means we divide the 130 divided by twelve, what’s that come to? It makes almost ten a month. That’s equal to eleven a month or roughly three a week. That’s not hard to get to. Let’s do the other one. If you needed to get 250 divided by twelve, it’s basically 21 a month. That’s basically five plus a week. If you look back at this, to get $5,000 coming in, that’s a $60,000 a year income off of that. If you got $10,000, it’s $120,000 or $60,000 to you and $60,000 to your JV splits.
A lot of people aren’t making enough offers. As you get better at what you’re doing, you’ll get more accepted. If I wanted to get 40 deals closed in a month and I have a 40% closing rate at an approval rate, I need to make 100 to get that 40. That’s just about what we do on a monthly basis. We didn’t make a lot of offers this month because we’re busy going through and working. One thing to keep in mind is are you going to have 100 of your deals stay and re-performing? No, I wish that was the case. The thing you’ve got to keep in your mind is about half of your deals are going to end up foreclosing honors or selling off or getting people move and making big chunks of change, $10,000, $15,000 and $20,000 on those deals. Those are nice chunks of change but obviously cut down on that $60,000 really fast. What you do with that money is up to you. Do you take that money and spend it or you take that money and double down? Do you reinvest, instead of buying one asset, you’re buying two assets now? If you take those numbers and put those in your favor of doubling down, you’ll get better deals. You’ll have more deals that happen faster and a whole lot of things long-term.
The thing to keep in mind is how do I get to that number? A great case study is what we’ve been doing lately. I’ll give you some number stats on what we have done. We have closed on 71 contract for deeds in roughly the last 90 days. With servicing delays and collateral delays, we didn’t really get servicing going until just recently. The previous servicer dragged their feet, half didn’t send out anything to the borrowers if not more. That’s the hardest thing is waiting for the previous servicer to get their shift in gear. We could not wait around for it. We want to be proactive on doing this. As you guys remember, we talked about we’d set letters out and the phone was ringing off the hooks. As of to date, out of the 71, how many of them have responded and look to want to reinstate and stay in the house? We have 41 are reinstate. Jen, you found that they’re making just their principal interest amount or they’re making extra besides PITI?
No, they’re paying additional.
They’re paying additional. A lot of them are raising up on forbearance or trial payment plans. Nicole, you ran the numbers on that. If we added the 41, what number is that coming right now? What’s the total cashflow? 13,000 roughly, up and down. We added a little bit there. The thing is we’re getting so many people, phone calls, at the end of the day, they go back and filling all the files because there’s a lot of great information for people. People are like, “We want to stay. We want to work out with you. We’re willing to make our payment. We’ll bring a little bit extra to the table.” There’s only a couple where the borrowers are like, “We’re really strapped on what the payment was, can you adjust it down?” We’re working through those with those people.
$13,000 already on just these 41. We basically have a 57% reinstatement rate right now. It’s pretty good. Why is that high? It’s high because of the fact we did a lot of due diligence in the frontend. These guys worked their butts off calling realtors, calling the city, drive-bys, all that fun stuff, talking to the city utility department. Even some of the borrowers we talked to yesterday, they’re already in payment plans to the city.
We’re joint venturing people on this stuff. What we’re doing on this stuff, we’re splitting cashflow. $6,500, that’s just the low end, that’s not the extra. This is just taking their existing PNI payments, not the PI plus the extra. This is just the extra. This is just based on that. The beautiful thing about that is our investors are pretty happy because they’re seeing $150 to $200 a month coming into it, which is what we expected based on the funding amount. Basically, we’re splitting at least a 24% ROI to us off of the funding amount. The fact is we bought these at roughly 34% of current market values. What does that mean for us? It means these people keep paying, we’re sitting cash. If my Financial Independence Number to cover my bills was $6,500, great. I just hit it. Everyone one of these files is funded with other people’s money. We don’t use our own money because we’re buying such a great percentage of value. We’re also doing a lot of due diligence.
We’ve had a couple that are vacant. One is trashed a little bit. It’s going to need some work but not as bad as I think it’s going to be. Another one is just vacant. The next door neighbor wants to buy it. We can sell that to her today and still make some money on the deal. I have somebody that’s interested in joint venturing with us to help with the fix repair of it to help it move. The beautiful thing is these numbers. We’ve got the 41 that are working that way. If you turn around and take the 6,500 divided by 400, that’s coming to 16.25. We’ve got a few more deals because the PI payments are a little bit lesser. If we actually put in what they’re paying, it’s well below that 16.25 is what we needed. I’m assuming that with the reinstatements, we’re sitting closer to probably $17,000 and $18,000 in cashflow coming from them. We just haven’t had the chance to institute that information into our spreadsheet across the board.
What are we going to do with our remaining 30 assets? We’re going to make one phone call, “You need to give us a phone call, let’s talk.” Then we’re going to just dump those to our special servicing company, let them run with it. Look how much money we saved. We saved a bunch in attorney fees and in special servicing fees by a one-letter campaign, “We want to talk with you. Your loan was sold. We’re now your lenders. We want to keep you in your property. If you don’t call us, we’re going to start the eviction and foreclosure process. Your last payment was this month. Here’s what you owe. Here’s the house we’re talking about. Please call us.”
Jen had a couple of these conversations recently where one, the borrower’s sister is also on and didn’t know that her brother wasn’t making payments and so she wants to jump in and make the payments to get caught up.
I don’t know what the situation is but she’s the one that called back and said that she’s the one handling the finances. She didn’t know he was behind, so she wants everything rectified in and taken care of.
We had another one who were some elderly couple. They’re only $1,300 a month coming in. We’re going to make a little bit of adjustment, try to give them a little breathing room. We’ve got some flexibility there. I know it sounds way easy. It took us weeks to go through the due diligence on this. It took us raising capital. The thing is, what’s my ROI on this money that comes in? Infinite, because I don’t put my own money into it. Do I have passing fees? Do I have cost here, salary and an overhead? Yeah, I have cost obviously. A lot of people were given their home, their offices and things like that, or Starbucks, or the beach or other places like that, and you’re doing great.
The thing to keep in mind is if you want to leave your job, you want to do this full-time, it comes down to two things. One, you’ve got to figure what your number is. Two, you’ve got to figure out your KPIs. Your KPIs in this case is how many offers you got to make, how many deals you got to do. That all works in this case, “How many do I need to make a week? Did I hit it this week? No. I really need to double down.” You’re going to fail initially. You’re going to fail and you’re going to have peaks and valleys. Some months you’re going to close on 40, some other months you’ll close on ten. Some months, you’re not going to close on anything at all because you’re busy going back and working on your deals, and that’s okay.
This is not a get-rich-quick scheme. This is not that I’m going to hit a grand slam every time I set off the plate. You will win if you just hit singles and doubles. You are playing the long game. It’s totally the long game of cashflow. We’re going to have a chunk of these other 30 that we end up selling off. If they don’t do, we end up evicted and selling off. Will some of these existing 41 that we have do cash outs? Potentially. Are some going to fail on the reinstatements? Yes. We’re just going to have to follow back up with, “Did you make your payment? You get deadlines to make payments by.” Luckily, our two servicing companies, ClearSpring and Madison Management, they’re aware on what’s going on. They’re already accepting hand offs. Jen is basically, “Here you go. This is where you make your payment.” We’re calling to make sure that this is the correct information they give to our borrowers. The borrowers are happy. They want to talk to somebody. Maybe they’re extremely happy that they’re no longer with their previous seller.
They’re able to get in touch with us along with their servicer, which they didn’t have that before.
A lot of people are talking about how they had issues where they would be transferred to a phone number and will just go to a black hole of the voice mailbox and don’t have any type of correspondence. The bigger you are, the less available you are. The idea is we spend a lot of time on the first month with these people. It gets a whole lot easier after they’re marketing their payments on time, it’s going good and we’re getting statements, and we’re rock and rolling. We did the first line of defense and really clean house on this so far and we still got a chunk to reach out to.
Anybody have any questions about figuring out their KPIs, their financial independence number? Anybody has something that they want to throw out there as a number or as a number of deals you need to make offers on that they like help with? I can’t give you sources. I’m not going to give you sources. That’s the biggest thing, is reaching out. There are a lot of low-hanging sources out there that you make offers on. The idea is, are they providing enough for you to do that?
We look at Joe and Jimmy Kubiak. They got 33 deals accepted at once with a hedge fund from a bank in San Antonio. The bank is selling the whole portfolio at roughly 55% UPB, which is below fair market value. Out of these assets, 21 of the 33 are performing. Basically, they need to figure a 55% purchase price off of UPB. It yields at roughly an 18% cash-on-cash return right now. It’s ridiculous. There’s no real workout to it. It’s basically a servicing transfer and it’s done. They could go ahead and start selling some of these notes off to another fund with performing notes relatively quickly. That’s the beauty of what they’re doing. They went out and find some stuff. They avoided low-hanging through they’re doing a great job with it. It took a little bit longer. They didn’t initially submit some bids but they went and found it and they’re making things happen. Kudos to them, they’ve got enough private money raised already to close the whole thing.
Financial Independence Numbers, this all works to making offers. If you’re like, “Scott, that’s great but how do I raise capital for those deals?” If the average purchase price is $20,000 and I’m buying 70 of these, that’s $1.4 million. That’s a chunk of money. That’s okay, everybody can raise a million dollars on private capital. It’s just a matter of going out and talking with people. I talked to a couple of guys that called me out of the blue, reached out to me via BiggerPockets. I got on the phone with them. They’re doing some stuff in Indianapolis. They’re buying low-value houses, fixing them up, turn around and owner financing them, put renters in it and bring in higher rate money to refinance out their hard money on the frontend. They’re making a difference in the spread.
The company is bringing in the IRA investors to cash them out and is charging ten points to bring in the money and the mortgages rate in them. The guy said, “I paid $120,000 in points last month.” I was like, “That’s cheap because you’re not having a lot of market from any IRA investors. How many of these deals have you done?” He goes, “I’ve done 80.” I said, “Do you know who bought these notes?” He goes, “Yeah, I have all the closing statements.” I was like, “There you go. Why don’t you just reach out to those people and see if they want to do now a deal with you directly?” He’s like, “I didn’t think about that.” I was like, “Why don’t you reach out to the local counties in Indianapolis or around that neck of the woods and find IRA investors?” He’s like, “Yeah, I guess I could do that.” I’m like, “Could?” “That’s a lot of work.” I’m like, “Are you kidding me? You’re paying $120,000 in points in a monthly basis. You could hire somebody for $60,000 a year to come in and just handle your paper stuff.” He’s like, “I didn’t think about that.”
Sometimes you just got a thing that, “I don’t want to do a lot of direct mail.” Really? You’re going to be dealing with people that already own a real estate, they already have IRAs, they have money. That’s like shooting fish in a barrel. That’s the marketing that we focus on to raise capital for our deals. If they get a 12% return of money, they’re phenomenally happy because their money is probably not making them anything while it’s sitting there in an account at Quest or whatever. We love Quest IRA. You can always sign up for you IRAs at QuestIRA.com. They are doing tremendous job.
Some people may have forgotten about this, I have not. This goes back to June 30th. We threw a social media challenge out to everybody. June 30 was National Social Media Day. Here in Austin, we’re celebrating for the first time. I was speaking at a panel that we got live streamed out, has about 10,000 people that viewed it. National Social Media Day is something that is celebrated across the world now. The cities are picking up and it’s a great way for you to expand your business. That morning, on the Facebook Live that we did, I threw a gauntlet out to people to build a habit of focusing on their Instagram account for 66 days. 66 days from June 30th is September 4th or Monday, which is Labor Day.
What we did is we set a challenge out to those to focus on their social media, especially their Instagram account. I pulled up my Instagram account last night just to look at it. In the last 62 days, I have added 103 followers, averaging two followers a day. The only way you’re going to grow a following is to take action. A lot of people are like, “I’m going to do this,” and they’re like, “I’ve fallen off and I’m not doing anything.” We’re going to touch briefly. If you follow this, we’d love to hear from you if you were part of that and watched that and taken that challenge on yourself. It’s not that hard to do. Just post something. Post a picture of a property. Post a picture of where you’re at. Technically, do a food porn. A lot of people do that, they’re drawing following. Share with us, we’d love to hear what you’re doing in success.
Take it upon yourself to make something happen. Start building habits on a daily basis. It doesn’t take 21 days to build a habit. It actually takes 66 days to build a habit. 21 days is just the start of it. Honestly, it takes 60 plus days for you to build a habit of success especially in marketing. If you start doing that stuff, I guarantee a couple of things are going to happen. One, people are going to pay attention to what you’re doing and reach out to you. Two, you’re going to start attracting other private money especially we’re talking about the deals you’re working on and the cashflow and the workout strategies and what you’re focused on.
If you get likes and stuff like that, that works out well. We had that social experiment work for Adam Adams helping him with his YouTube channel become up to over 100 and now he can customize it. We did the same thing for Karen and Stacey Wall. They used that to leverage the Basecamp relationships with the Mastermind and a couple of groups to help that. Leverage your tribe. You never know who is listening. You never know who is watching, who’s just waiting to do something.
Like I said, 80% of sales happen after the fifth contact. I say that religiously. People out there are looking to do some stuff. They’re literally looking to put money to work most of the time and you have a lot of opportunities out there. You can raise capital, you can do the things we tell you to do and go out and raise capital or close deals like Wayne, Adam and so many others are doing or you can sit around, twiddle your thumbs, waiting for Santa to show up. You have an option to hit your KPIs or hit your FIN. It’s up to you. Either you’re going to do it or you’re not going to do it. The idea is to put a plan in place to make things happen. Your plan is going to get adjusted. Maybe it’s 30 notes instead of 60. Maybe it’s 90 instead of 60.
I guarantee you’re going to feel really good if you got 90 deals. It would be a lot further than the Joe Shmoe sitting next to you or the Joe Shmoe who’s got a house next to you and he was upset and angry and just has no dreams anymore because life has killed him. You have a dream. We all have a dream. Martin Luther King said it right, “I have a dream.” Make it happen. Do the things that you need to do to get it done. If you’re scared, it’s normal. It’s very nerve wracking. It’s very nervous. Somebody is not going to run down and smack you in the head. That’s not going to happen to you. What’s the worse that people are going to say? You got to get in the habit of saying, “Next,” and realizing that ‘no’ now often means ‘not now.’ Once people see what you’re doing and once people see that you’re really committed to what you’re doing, those no’s will turn to yes’s later on or maybe’s. You just have to stick to your plan and keep doing it.
For those of you out there who are struggling, there’s a few of you I get emails from and I know you’re not making bids. I know you’re struggling. Or you made bids and you chickened out on all of them. We’ve had that happen plenty of times. Don’t chicken out. “I’m scared.” Why are you scared? Did your due diligence say all these good stuff? “Yes. I’m just scared.” First time you were riding a bike, you were probably scared, shaking like a leaf.
I’ll give the great example. They’re doing a tremendous job of marketing and doing some things, Katie and Chris Moton. Chris is overseas in Afghanistan. He’s communicating via text message and via Google Live to Katie each day and night going through some things. Those two cats are brand new. Katie is brand new doing real estate investment. She’s doing a good job of journaling and sharing her videos online, Colletta Street Capital. They make a couple of offers initially when they came to a fast track. They got a couple of offers accepted. We figured out the rough IRA would be around 30% based on them reinstating. I’m only giving Chris kudos because he’s still to pull the trigger on that stuff. They were scared to death, Chris was. Katie didn’t know any better, “Do I need to be scared or happy?” That’s not a bad thing. Sometimes, ignorance is bliss a little bit.
He was calling me, “What about this?” I’m like, “Those are all good things.” He goes, “Yeah, but?” “What but? There’s no but about it. It makes sense. The deal is there, you got a realtor drive by, you see what market rent is, you see the payments are here. Pull the trigger.” Of course, they pulled the trigger and they’re doing well on those two deals. I had to give Chris a little bit of a pep talk. I was like, “Quit trying to psyche yourself out. You’re over analyzing things.” Katie is like, “He over analyzes anything,” which is okay because they have a very good Feng Shui aspect; yin and the yang on that stuff. Katie is like, “Come on, let’s go.” Chris is a little more cautious.
I’m very proud of what they’re doing and they’re out making things happen. She’s out marketing. She’s getting comments. She’s growing their YouTube channels. She’s sharing videos, going out to other real estate and like, “That was ridiculous, but I’m picking up contacts.” That’s a good thing. They’re working towards their financial independence. They’re working one day, each day, one offering, one event, one email, one deal at a time to make it there. That’s where it all comes down to.
Get your first deal closed. Get your first deal done and double down. Look to get two, look to get three, look to get four accepted. Put your systems in place and make them work for you because you can hit this if you make enough offers. If you find yourself making offers and constantly losing offers, it’s probably not the right place to make offerings too because there are a lot of sources out there. If you’re finding other investors who get deals accepted, it’s probably time to find your own source. It’s probably time to do a little different marketing through a different list to find deals.
The worst thing you could do is go to this exercise and then not do anything with it. The worst thing is you go through this exercise and figure out how many deals you’ve got to make offers and how many deals you need to close and what’s your financial independence number and just leave it there. Write it down. Post it somewhere where you can see it. Post it on the fridge, post it on the TV, post it in the bedroom right next to the bed so you see it first thing in the morning or the mirror in the bathroom; “6,500 Financial Independence Number. I need to make 60 deals done. I need to make ten offers this week.” Those are the simple things that will help you drive to success.
Why post it? Because once you write down and post it somewhere, it becomes engrained. Just one day I was thinking, “Maybe I want a Range Rover. I want to drive a Range Rover.” Suddenly, I start seeing white Range Rovers and black Range Rovers everywhere I would go. I guarantee if you put something up there, you’ll start seeing more deals. You’ll start seeing things happen if you focus on what you focus on.
Jack Canfield is a great example. He’s the author of Chicken Soup for the Soul. I got a chance to meet Jack a year and a half ago in Houston at the Lifestyles Unlimited. That’s what he did. He wanted to hit a million dollar check. He wanted to make a million dollars as an offer. He wrote himself a check for a million bucks and posted it on his bed so it was the first thing that he saw when he woke up. Lo and behold, when he sold Chicken Soup for the Soul, he got a million dollar check and a royalty right off the bat. That’s a great story. Jack said it was true because I asked him. He chuckled and said, “Yes, it’s a true story.” The thing to keep in mind is what’s your story? What’s your million dollar check? What’s the thing that you’re focused on? What is your FIN to get to the end?
Keep that in mind, what is your end number? What is your Financial Independence Number? What’s the FIN to you working at your job that you enjoy so much or you talk about so much? What’s really going to be your story? We all have different chapters. I have a lot more chapters ahead of me and everybody out there has a lot of chapters to write. What’s really going to be the driving factor behind it? Is it going to be you closing deals or you’re just talking about it or you continue to work at your job? We all want to do some different things. You heard that in Adam, you heard that in Wayne. I love hearing those guys. We can travel more for ourselves. We’re going to do stuff that we want to do know at our convenience versus the job’s convenience.
We have one question, “On raising capital, can you give us a thumbnail on what you put on your marketing to IRA investors? Surely, you don’t promise a percentage.”
Have you seen a Monday Note where I talk about performing notes and things like that? That’s what I talked about. I talked about the deals that we’re closing. I’m talking about sample deals. I talk about, “Here’s what we’re working through. Here’s the sample deals we closed.” I was just at a Quest IRA event. I just talked about the deals that we close. I talked about the deals and their ROIs and why these deals make sense. I also talk about the deals that we close in the past. Don’t get me wrong, this deal here is going to be a marketing piece. When I buy chunks or pools, I always keep track of where those pools are going so I can use them as marketing. “Here’s a deal we just went through. Here’s a funding we just went through.” It’s not rocket science. You got sample deals, just talk about the types of deals that you do. “Here are the types of deals that we do. We have a couple of different strategies.” That’s all it comes down to.
If I send a letter out to self-directed IRA investors, I talk about a little bit myself, which is a one-page letter. “Here’s what we do. Here’s what we’re looking for.” I included a copy of my executive summary which talks about the business and I include some sample deals. “Here are the types of deals that we do. If you like to get more information, give me a phone call.” When I get deals in, A, B, C, D, E investors, “I know you guys were interested. Here’s a pool that we’re looking at buying and here’s why we like the merits of it. Is it always going to be this way? No. Here’s what we do with option A. Here’s what we’re going to do with option B. Here’s what we’re going to do with option C.” What I don’t do is I don’t advertise the huge cash payouts on stuff. We talk one off deals. If I’m talking to investors one off instead of doing a bulk thing, “Here’s the sample deals we just closed.”
Pari’s post, very easy, 16% ROI. Great for him, a little bit tougher to make money on a JV deal, but he uses his own fund so he’s happy at that. Why wouldn’t he? That’s all it comes down to. It is not rocket science. It is not thinking crazy. It’s literally just talking about what you’re doing. Talking about the sample deals that we’re closing and other people are closing. Use those as discussion pieces.
Let me give you an example. Al Curiel out of Chicago, Illinois works his ass off. He sent an email out to IRA investors that he pulled from us and some self-directed IRA investors. He sent an email to 500 IRA investors. He had three meetings. One guy wrote him an $80,000 check at dinner. He’s funded four deals with that $80,000 for that one investor and that investor has introduced him to other people that he had dinner with the other night. He’s just looking for deals. He’s just talking about sample deals that we do. He uses the same piece of paper that many people have used on our sample deals on our Basecamp.
You also realize, work came in the Mastermind. There’s lot of sample deals that people are sharing at the Mastermind. We got through a lot of case studies in the Mastermind. We have about twenty and they are free to use in your marketing. That’s all you’ve got to do. Just share the resources that are available to you online and in other places and go from there. Leverage your team. “I’ve got a team that backs it up.” We have a team behind us. We have a group of investors that we can bounce ideas off and then leverage. The Mastermind is just phenomenal as far as sharing ideas and strengths and weaknesses and overcoming obstacles and also growing our team exponentially nationwide, instead of you just being here in Austin and that’s all you’re focused on.
Go out and make some stuff happen. Once again, thank you so for listening. If you really enjoy what you’re hearing, leave a review. Share it with your friends. Share the nuggets. Use some of the hashtagable quotes that you hear us talk about throughout the episodes. We’ll see you all at the top.