What do investors really want? They want money. They want a return on their investment, but they don’t know how to find good deals. They need someone to solve that problem, and that is where you come in. Bill Tan, a real estate and note investor with over 30 years of experience, says the secret to building a sea of private investors is to look at every deal from the investor’s point of view. If you can do that, it’s like being a salesman and you can come up with answers from whatever the prospect is going to ask you. One important thing he stresses is you have to be transparent with your investors about the deals because when you talk to them about the deal, some of them get the stars in their eyes and all they hear is how much money they’re going to make. You have to be careful and show them the pitfalls so that if ever anything goes south, they know they’re fully responsible for taking the risk. Private investors always appreciate good, open, and clean deals.

Listen to the podcast here:

Building a Sea of Private Investors with Bill Tan

We’re here with Bill Tan. Bill is the President of BT Investments and he’s here to talk to us about how to develop a pool of OPM sources that are willing to invest with you. A fun fact about Bill, he always has all these wonderful Hawaiian print shirts. Bill, I will let you get started.

Hello.

Thank you for being with us.

I’m here to talk to you about developing a pool of private money sources that are willing to invest or to lend with you. First off, this says, “Don’t believe a word I’m saying. Don’t trust me. Don’t believe anything I say. In fact, don’t trust them. Do your own due diligence.” Don’t know what due diligence is? Listen to Paige’s wonderful presentation. You’re more than welcome to contact me. I’m a teacher and I love to answer questions. I’ve been doing real estate for longer than I’d been doing notes. I’m doing notes more than 30 years. I won’t say exactly how long. I run a real estate club and I am currently doing things on a more modest level than I was before. I’ve been watching Note CAMP also. I had been paying attention. They are long-time note buyers and I had been dealing with them for over 25 years. They’re wonderful people. He is one of the more intelligent people not just in the business but in the land.

When you’re developing these sources and meeting people, be very careful. Beware. There’re some things you need to seriously pay attention to because you’re dealing with money and because you’re dealing with investors who have spent their lives recruiting this money. If you lose it, then you will cost them the part of their life it took to earn it, especially if you’re dealing with the retirees, so be very careful. Do not accept money that people have borrowed. This was what I call one of my scars and t-shirts lessons. I have a scar and a t-shirt for every lesson I’ve learned and this one was don’t accept money from people who have borrowed it because something in their life may change. If it changes, they’re going to hound you for that money even though they readily accepted at the beginning that they were not going to get repaid for a certain amount of time. Let’s say it was a five-year deal. In two years, their life turns upside down. They say, “I need the money today.” Until they get that money back, they will be on you like ugly on an ape truly.

Really important, do not cross state lines with money. You will come under the regulatory of the SEC, Securities and Exchange Commission. I have a very dear friend who borrowed money across state lines, and going back to getting money from investors that borrowed it, these people borrowed money and then they got into a jam. Even though their investment was stated for five years, they needed the money right away. My friend had it at the time in real estate investments and they couldn’t get liquidated easily. Same would be with notes. Because of that, they went and complained to the government. In one day, the SEC stopped his business. They went into his business, they closed it down, they closed his bank account, they closed his personal bank account, they closed his personal credit cards. They did not care that he could not get any money. They didn’t care if his family were to starve. He may have some people to have lost their money illegally and because it was maybe, they shut everything down. It’s been five years. It still hasn’t been settled and they’re talking to him about accepting a plea bargain. If you’d like to have your life turned upside down, don’t heed that call.

Be very careful when you cross state lines. If there’s no problem with that deal and everything goes alright, you probably never have a single problem. It is just that if the investors have a problem, they make trouble for you. Realize that each and every state has different rules regarding investing and lending. This is a good quote that I live by and that is “Real estate and notes and just about anything else that you can do is a thinking man’s game, not a running man’s game.” That means you make more money using your head than you will ever make from cash. You will make more money using your own mind and thinking than anybody can just using cash. As I go through this presentation, think about how to apply things that you have learned, maybe at Note CAMP 5, and apply them to your own situation or deals that you’re seeing that are coming across your desk and using your mind to put together those deals from things that you’ve learned as opposed to just using cash. You’ll do much better.

SW applies to everything, “Some will, some won’t. Stop whining about it because someone else is waiting.” Biggest problem I see beginners and experienced investors alike make is beginners, they grab one deal and they squeeze it to death. They should be out looking for more deals, not just concentrating on that one deal, the possibility of deal. With experienced investors, it’s the big one. It is the one that if they do, it’ll set them up for the rest of their lives and to do that, they drop everything else. Don’t do that because if those deal stop, you’re left with a bunch of wasted time and that’s one thing we don’t have in this world to waste because once it’s lost, it’s gone. You can always get more money; you cannot get back more time. Some will do deals, some won’t do deals. Don’t quit chasing them. Stop whining that they aren’t going to do the deal because someone else needs your help.

All deals find money and money finds good deals. All good deals get done, if not by you, by someone else. What do investors want? Think about that, “What do investors want?” The answer I always get whenever I do this presentation is “They want money.” They want a return on their investment. They want a yield. Truly, is that what they need? What do they need? They need someone to solve their problem. You got to ask yourself, “What’s the problem? They got all this money.” They have a big problem and it is they have this money but don’t know where to put it. Their problem is they don’t know how to find good deals. That’s where we come in.

If you become someone who is excellent at finding good deals, first you have to find deals, then you have to evaluate and discover if they’re good deals and you have through experience learn what are good deals. I’ll have to say this. If you just took a class, any class, I don’t think you probably know what a good deal is unless you bring your experiences from somewhere else. When I came into the note business, I had already been doing real estate investing, I already knew and understand how to value properties because what is the ultimate payer on a note? This is Note CAMP and we’re talking primarily about notes. Who is the ultimate payer on a note? Is it the borrower? No, it’s not. It’s the property, so you need to know and understand and value properties before you can evaluate notes for being a good deal because the very ultimate payer is the property. Once you have found the property, then you got the payers on the note. That’s when you started evaluating payers on the note and start evaluating the quality of the note. When you put all those together, then you have deals for people who have money.

Always ask yourself, “Am I tuned into my favorite radio station? WII FM? It’s everybody’s favorite radio station. What does WII FM stand for? “What’s in it for me?” That’s what everybody is listening to, “What’s in it for me?” You have to look at every deal from the investor’s point of view. If you can do that, if you can train yourself to look at it from the investor’s point of view, it’s like being a salesman. They always come up with answers for whatever the prospect is going to ask them, so they’re prepared. You need to do the same thing for investors so that when they have questions, how were you going to answer those questions? What are your experiences? If you don’t have experiences, you can always say, “I have a colleague who’s done a deal just like this and this is what he did with his investors.” You may not have done that deal before. However, you know someone who did a deal just like this or maybe you can work with someone who’s already got the experience and they’ll help you look at it from an investor’s point of view because what is every investor most caring about? What’s most important to them more than anything else? It’s return of their investment.

They are terrified that they will lose they’ll money more than making money. That’s not to say that when you talk to them about the deal, some of them get the stars in their eyes and all they hear about is how much money they’re going to make. Be careful of that because when you’re dealing with investors, you can show them all the pitfalls, but if anything ever goes south, all they’re going to remember is “You said I was going to make 15% on my money. I was going to make 10% on my money. I was going to get 5% on my money.” That’s all they’ll remember. They won’t remember where you said, “The risk is here and the risk is there,” so be very careful and be sure and look at it from their point of view. Also, deal with people who have money to invest, that you’re not taking their last dime from them. Please don’t ever do that. Don’t borrow money and don’t take all their investment monies. You must deal with people who have more money than that. This is a lesson that I hope you’ll never run across.

Look for opportunities to find money. These are how I have found some money sources that I will talk to you about later that I don’t think most people have come across. It required me thinking about niches, specific niches. People in specific niches, what are they looking for? They may not have been note investors. As a matter of fact, most of the people that I initially got money from were not note investors. They did not know and understand notes. They had to learn about that from me first. Work with partners. If you can’t do it yourself, you can’t take down a deal, a note portfolio by yourself, work with partners. A partner may be an investment partner. A partner might be someone who’s in the business who doesn’t have the time to work the deal. Think in terms of partners, they bring the money to it. What do you bring? Remember, you have something very valuable. You have what they don’t have. You have deals, so come to it on a mutual basis. You have something they need. When you work with partners though, they must feel safe. They must feel safe, so you must do everything you can to show them what the risk is and show them what you’re doing to mitigate that risk.

You need to make a paradigm shift. What comes to mind when you see other people ask for money? Do you want to appear to be begging for money? Here’s where the paradigm shift comes into play. Wouldn’t you rather have money come to you? You must make yourself attractive, so make yourself attractive to money and how do you do that? Learn how to discover and find good deals. You’ll catch more money bees with honey than vinegar. Become an expert, become their expert, and they’ll turn to you for help. This next step is create a presentation package. Ever since I created a presentation package, I’ve had so many more deals accepted by investors usually without any question whatsoever. What’s a presentation package? I have a list for presentation package for investors and partners. Realize it isn’t particularly for one deal. You can expand it for multiple deals. If it’s for one deal and it’s one note, show pictures of the property, have pictures of the property tells a thousand words that you don’t have to, get a property profile. Here in California, just contact the local title company. It may be different in whatever state you are in different states.

There are title companies all over the country and most of them are out to get you business. A lot of them give you a property profile for free. Include a map of the city, whatever city it is, show a map of the area, have a parcel map where the property is located and highlight that parcel. If the property is on the Multiple Listing Service or was on the Multiple Listing Service, get a printout of their multiple listing service and include that MLS listing. Include an aerial picture of the property highlighted. This comes under what Paige Panzarello was doing. She showed this picture about a property that was securing the note and she did Google picture of it and the house wasn’t there. It had been demolished. You want to get a recent picture to see if that’s the case.

For example, back when I was just doing real estate investing on, before I was doing notes, I went to a HUD auction. I looked at a few of the houses that were going up for auction. I went to this one house and from the curb, it was gorgeous, beautiful house and it had this nice security hedge all around it. It was thick and it was high, couldn’t see over it. I went in the back, pushed my way through that hedge, got scratched to ribbons, got tore up, walked in the backyard. Obviously the backyard was a mess, but what was interesting is the house was a burn-down. The only part of the house that hadn’t been touched was the very front of the house that you could see from the street. The rest of it was completely destroyed. I was laughing when I saw Paige’s presentation because if I had one of these things that hover, take a picture of a local aerial view, I would have known about that.

Going back to the parcel map, I’m telling a story about that. That was a good one. I was approached to buy a private note. The guy had lent money to his CPA. The guy got into an opportunity, he needed the money. His CPA couldn’t pay him up, so he needed to sell the note and offered the note to me. I went and I looked, that CPA’s office building was a historical monument. It was on the historical register. It was beautiful, but when I checked the parcel map, I realized that the description of the parcel wasn’t for the building that the CPA had his office in. It was the vacant parking lot next door. I went back to the note seller and I said “I can’t buy this note at what you’re asking for. I would have to discount it tremendously and I don’t think that’s what you want to do. You have to go back to the CPA and either get them to correct it, in which case then I could buy it, or talk to him why he gave you security for a loan on a vacant lot.”

Further on, you want pictures of nearby houses up and down the block. You’re investor would like to know the quality of the neighborhood. Is it an A, B, C or D neighborhood? You might want to get an appraisal. A lot of note brokers don’t get appraisals. A lot of times, they get a realtor to give them their appraisal of value. For an inexpensive amount, you can get a realtor to do this for you. However, that is a retail price, and then if you ever needed to liquidate the property, you may not have three to six months to sell it, so you would want an immediate price, not a retail realtor’s price. A lot of times, no one understands this, so be careful of an evaluation from a realtor. However, you want to get a list of all the recent comparable retail sales in the area. You want to show the investor a copy of your purchase agreement. Cover the particulars so that you don’t have to show them the address of the property. You don’t have to show them the amount you paid for it. You just need to show them that you do have a legitimate purchase agreement. If repairs are necessary for the property, you need to include that too because a lot of times nowadays we’re buying non-performing seconds. Non‑performing usually means the property is not in good health, so you want to get an estimate of the repairs.

Lastly, most importantly, you have to give them details of what the investor’s investment will be and how much money they will make, “What’s in it for them?” You always want to end it with “What’s in it for them?” because that’s what they’re going to be most interested in. Many times I give prospective investors a presentation package. This will set you apart from everybody else. If you have the information, they’ll skim through it and go right to what’s in it for them. If you don’t have all this information, they will inundate you with questions. You just don’t give this investors package to anybody. You give this to someone who has proven to you that they have the money and that they can stroke the check. You need to only deal with people who have the money and can prove that they have the money and can move quickly.

Finally, where do you find investors with money? These are my thoughts in reverse order of importance. Family members, be ultra careful as investments can cause irreparable damage to family relationships. Money does funny things to people, especially family members. I deal with many people and probate and estate situations. It’s amazing how members of the family put an entirely different face when it comes to money, dealing even with their own members of their family. Let all my family members know what the investment is expected to be and it’s risks. I like to call all the family members in one time, sit them down and explain to them. If you have family members across state lines in different parts of the country, you can use stuff like video chats. They work wonderfully. I don’t use them. I have an iPhone and I use it all the time to talk to my family members all over, but if you want to talk to more than one family member at the same time, you can use Google Voice, and the other one from Microsoft. These things work so you can talk to all the people at the same time. Keep it strictly business, dot every single I and cross every single T, business. Sometimes they hear you and sometimes they won’t, so make sure it’s in writing. Absolutely make sure it’s in writing. It’s amazing how people’s memories seem to go along with exactly what they want to remember, which may not be exactly what everybody else or you were saying. Get it in writing. I record everything, so you might consider doing that too. If you have a smartphone, it’s easy to record, and all those online things like the Google and Microsoft, they allow you to record.

Start a real estate or note club or Meetup. Understand that it takes a lot of time and preparation. Meetups are easy to set up, fairly easy to run, and very hard to be successful. I’m sure you’ve seen Meetups all around where you are. Where I am, at one point, new meet-ups were showing up every day. At least a couple times a week, I hear a new Meetup in my area. The biggest challenge you will ever have is putting on the program and getting speakers. Your success of a Meetup or any meeting whatsoever will be determined by the quality of the programs you put on. The reason a lot of these Meetups don’t succeed is because they’re a pitchfest just for the people who put the Meetup together and people get tired of it. All they do is hear, “I’m wonderful. I’m great. You need to work with me and you’ll be beautiful too.” People get tired of that and they will move on. You’ll see over here that I have another icon, National REIA, which is a great resource when starting or growing a real estate club in particular. You don’t need them for a note club. I’ve run note clubs. I’ve run real estate clubs. With real estate clubs, it’s easier to attract people and people will keep coming back. Note is much more specific, note clubs, and they wane with time we are in the cycle. We’re in a cycle where we still have lots and lots of bad notes, non-performing notes. We still have several millions of those. That doesn’t mean they’re good notes. However, note clubs are available.

I’m in Southern California and there are several note groups that meet here. They have challenges. One of them just changed from just being notes to cashflow. The other one is a note group and it’s run by a friend, Gerald Lemoine and he’s a note investor. It is all about deals he’s done and he’s educating people, whereas he may not actively be looking for money, it’s out there. Just by chance, I run a real estate club and it’s LA REIA, and it is now called the Los Angeles Real Estate Investors. We meet on the second Wednesday of every month that in the LA area. In my humble view, it is the best real estate investment group in the Southern California area. That’s just my humble opinion. However, it’s opinion of other people. I get 80 to 100 people at every one of my meetings and I have a variety of subjects from notes to lending, and all that. The reason my group has been successful is I’m very careful about who gets in front of the group. It’s not a pitchfest. There are speakers that I allow to get out there that educate and then sell at the end. However, they must educate first. I run a group down in San Diego. It’s called SDCIA. It was at one point, the largest and definitely one of the largest in the country, definitely largest west of Houston. We grew that to where it is 250 to 300 at every meeting.

It’s a wonderful platform and if you do it properly, people will learn what you do. The best way to do it is have a deal profile at every meeting, so you’re telling people about deals, you’re not asking for their money. It is showing them deals that you’re doing or other people are doing. However, when you’re up in front of the group, you’re the expert. Successful professionals and entrepreneurs that run their own business and have IRA accounts or pensions, these people have money and are successful at what they do, so they don’t have time to look for deals. I’ve had the most success working with dentists. What did I do? I taught a class Real Estate Investing for Dentists.” Original and I charged $29. That’s not an exorbitant amount. In fact, it’s a tiny amount. The only reason I charged money was that I wanted them to show some commitment because if it was for free, a lot of people say they’ll come and they don’t. I’ve had the least success with small businesses. They may want to invest, but they’re more concerned with survival. Make sure if you’re doing it, it is a mature business and they do have the money. Remember I said “Show me the money.” I’m not Cuba Gooding from whatever that movie was, but make them show you the money.

What you want are highly placed executives. Even if they have a company sponsored retirement plan, they have money but don’t have the time or knowledge for real estate investment. How do you find highly placed executives? Think about it. At the top of high buildings. That’s not altogether true anymore because a lot of entrepreneurs are very highly placed executives. Know where they are, find places that you will find successful executives. A really big one that I found that I do is offer to do charitable work. If you work for a charity and you do a good job for them, they will notice it and they will ask you what you do. I have a good friend. His name is Aaron Norris, maybe you’ve heard of him, he’s gotten in with charitable remainder trusts, big charitable organizations, and it has truly helped his business. I work with universities that have a great deal of donations. A lot of times they either get an investment which they don’t understand or they get a note or they get money and they have to do something with the money. A lot of times they maybe not have a capital improvement, but what do they need? What are they concerned with? They are concerned with income so they can plan their budgets, their future budgets. Go to charities, work with charities, work hard for them and then you’ll meet people with money, you will.

Target very successful salespeople and sales organizations. Find out who the best salespeople are, they are great at what they do, they make lots of money, they pay lots of taxes, they need to invest. Show them you’re the expert. They’re the expert in sales, you’re the expert in finding deals for them and see if potential investors can roam over their IRA or their pension to do self-directed account so that they can determine where it goes and that they can determine to work with you. Social media. Our host, Scott, he has met a lot of the people he knows through social media. He is very big on social media. He does podcasts every Monday. I have done Meerkat, I’ve done Periscope, Facebook Live, and Google voice. Use them. As you can see, I’ve gotten real good on it. I prefer not to do it but other people do. I know many people, several in particular, who just would go on to Facebook. Facebook was huge for them, and on Facebook they would just discuss the deals they were working on. Then they would show the deals as they bought them and then they’d show them afterwards the effects, successful or unsuccessful. People will start saying, “I want to work with somebody who’s doing these deals because they have all kinds of these deals.”

The other presenters on this camp, they’re doing these presentations. We’re all doing these presentations to get exposure out there. We’re the experts. We’re hoping that you will find us smart enough, experienced enough, done enough deals that you will want to work with us. I do deals. I teach. I hope maybe someday I’ll get an opportunity to teach one of you, I don’t know. I only teach in Southern California. I’ve taught all over the country. This is Facebook Live, let me start looking at that to start doing teaching all across the country. This social media is powerful now and people are branding themselves by use of the social media. Really look into it. You don’t have to be the expert. People will watch your journey and they will become part of your team because they will like you and then they will say, “What is so and so doing this week?” or “What are they doing now?” Social media is very powerful. These are the ones that I’ve been most successful with. The IRA means self-directed IRA. Look for self-directed IRA representatives. There are many of them out there. There’s Quest that’s part of this one, Entrust and Equity Trust. They’re all very good. You want to work with the representatives. Why do I say that? It’s my understanding that there are literally trillions, $25 trillion in retirement accounts. Tons of that money, billions and billions of that money, are in self-directed IRA accounts. Self-directed IRA representatives can’t recommend you. They can’t refer you. What you do is you talk to the self-directed IRA representative.

We have one out here called uDirect. Her name is Kaaren Hall and she’s the only one I know that does this and it’s a very successful. Meet and greets between her, the people who invest their IRA monies through her group, through her company, so her clients. Then she invites real estate and note investors into there so that we have the money and we have the people who supply the deals and she allows them to mingle. It’s been very successful, so consider that. I don’t know any other person throughout the country who has talked to a self-directed IRA representative for meet and greets. Maybe they do it true for classes. That’s a good one, but not for meet and greets. Consider meet and greets. Classes are great. Meet and greets are very good also.

Successful real estate investors, this is one of the most people don’t think about because real estate investors, many of them want a larger return on their money or their equity than they’re getting currently from real estate. You’re looking for real estate investors who have large portfolios. It means they have a lot of rental properties. Then you want to look for those real estate investors that are tired landlords. They’re getting tired of this, so you want the tired landlord or the retiring landlords. You want real estate investors who are tired landlords or maybe the successful fix and flip ones. They’re tired of doing the work and they want to put their money to work for them. Almost all the real estate investors I know who have been successful eventually get tired of landlording and they start investing in notes and making loans. These are the people you want to target, successful real estate investors.

Where do you find these people? Real estate clubs. If you are running the real estate club, they’re coming to your club. They you will talk to you. You have all these people who are beginning but you want to have programs for the successful investors also. Foreclosure borrowers, this is one I haven’t heard anybody ever speak about. Who has money, who has cash? People who go to the courthouse steps to buy foreclosures. They go there with bundles and bundles of money, so what do you do? What have I done? I go to those courthouse steps when they have those options and I just talk to them. They are looking for a yield or return on their money. Most of them are not buy and hold, they are mostly fix and flip or they wholesale them out, so they want a return on their money. If you can show them how to get it from the note business, they have cash. This one has been wildly successful for me. When our friend Tony said, “All these people come to these foreclosure auctions. They hall have cash.” The light went on.

Remember what I said? Opportunities niches. Here’s a niche. Foreclosure buyers at auctions. Great one. It’s been so amazingly easy. You have to educate them too because most of them still think in term of the box and the box being real estate. However, when you can sit there and say, “You’re buying a property site unseen. You don’t know the good, the bad, or the ugly of these things, I can give you a presentation package about this note and you’ll know exactly what you’re rate of return will be because I will give it to you and the loan investment, the value on a note, is much better than the 100% investment value on a foreclosed property, much less risk.” You always got to point out to them “Much less risk.” You’re expecting for them to receive less for their money, less rate of return.

This one has been tied for best, referral sources. To this day, my business is from 90% to 95% referral sources. These are deals that are referred to me. I close a note deal that was referred to me. I’m doing three real estate deals that were referred to me by a real estate professional. Going back to the first rule, real estate professionals, real estate agents, can bring you deals. For many years, I used to go around real estate offices and teach them how to use seller financing to put together deals that they couldn’t have put together otherwise, and because of that, they were able to get commissions. Buyers would use a small down payment, most of the down payment would go to the seller of the property for closing costs. A second would be created. That would be the note to the realtors and they were getting an income from that note, and a first will be created and I would buy the first. Most times, even today, I only buy a portion of those firsts.

You can sell notes to FNAC, First Natural Acceptance Corporation out of Michigan, a wonderful Group. There are a lot of other buyers out there, not just them. If you find investors, private investors, they will do it too. FNAC is an institution. These referral sources, they’re the best and other referral sources. If you have someone’s attorney refer you to their clients, you have no competition. It’s a done deal. Best attorneys I’ve found for notes are bankruptcy, divorce and estate/probate, absolutely good. They would say, “Bill Tan buys notes.” I never had any other competition. If you get a referral source, no competition, built-in. Some of my clients have lent money to him for deals. They were successful. An attorney is not going to refer someone unless you’ve absolutely developed their trust and you proven to them that you will not do anything bad because they don’t want to look bad. They don’t want their investor to lose money at all. CPAs are wonderful. They know that people have money to invest or need to invest for tax purposes. Bookkeepers, fee-based financial planners, maybe you can think of more.

I teach classes. As a matter of fact, I can’t do Note CAMP because I’m teaching one of my real estate finance classes and that’s real estate finance by using a financial calculator. I use the _00:52:55_because it’s the easiest calculator to teach from, and I teach them real estate finance. During that, I also show them about investing in note investing and investing in real estate. They become my best referral sources, some of my best referral sources, those and professional ones. Classes on how to invest in notes, who’s going to show up to class? People who are interested in how to invest in notes. Work with an IRA representative on teaching how to use their self-directed IRA and invest in notes or invest in real estate. I used to teach for one of the self-directed IRA companies. They wanted to learn how to use IRAs. The classes they teach aren’t good, so you want to teach for them and then have them approve it because they’re putting their neck on the line, their clients necks’ on the line, so they’re going to want to look at it.

If you don’t know how to do these things, find somebody who does and you bring the people to them. I teach all the time. I have somebody else, some of my students or other people, they bring the class and I come in and speak. The people who put the class together are associated with the professional up front, me, because I’m always referring to them and I wish to thank them. I worked with Stephanie to put on this thing. Private money lending classes. Who attends to private money lending class? People who want to lend private money. The elderly have money, senior centers, housing complexes. Caution about taking money from the elderly. You take money from the elderly. They will chase you to the end of the world. However, there are some people in these senior centers that could probably buy the senior center. Why are they in there? They want to be with people their own age. They want to have the community.

We’ve gone through how to find them. Please don’t forget the three most important steps of developing these sources for private money and what are they? Number one, find good deals to fund or invest in. Two, create a presentation package. I will share it. I’ll be happy to share it with you. Three, most importantly, after you do all this, ask for referrals. I didn’t include the referrals, but if you’ve already done good by somebody and you ask for a referral and you ask them just after they successfully completed a deal, aren’t they willing to tell everybody they know that has money, “Bill did good by me. You can use him.” This is very important, before I give the investor their money back, find another home for their money before you pay them off. It’s always harder to get the money from investors after they received it because they’re going, “I got the money.” There’s something about dollar in-hand.

What did we learn today? Be cautious with other people’s money. You’ll make more money with your mind than you ever can with money. Some will, some won’t; stop whining about it because somebody else is looking for your help. All good deals get done. If not by you, by somebody else. Private money people have a problem. That’s finding good deals and you want to be their solution. Always remember what radio station? WII FM, “What’s in it for me?” Remember to consider niches and opportunities of where to find money. Remember, I didn’t know anybody that was looking at the foreclosure auction steps for money. I don’t anybody. Most people don’t think about asking real estate investors. Consider working with partners and making them feel safe. Be careful about looking for money from family. Be careful about that. Start a real estate or note club or meet-up. Work with professionals: professional real estate agents, dentists, entrepreneurs. Use social media, local self-directed IRA representatives, referral sources, teaching, making presentations. What are the three most important steps? Finding good deals, creating a presentation package, and asking for referrals after successful deals. Go out and show me the money.

“Am I pooling money?” from an audience.

No. Do not pool money. SEC, Securities and Exchange Commission. You like to do one investment, one note. If you’re going to pool money, I’m sure Jillian Sidoti is doing a presentation or already did it. She’s marvelous. Kim Taylor out in Florida. She’s marvelous. Work with these people.

“What do you typically offer investors? JV? ROI? What do you use as an agreement?”

Remember I said to put it in writing. Absolutely have agreements. That might be a JV agreement, a JV for particular deal, the JV might be an LLC. Return on investment, I ask them what they want. They may be fine with 4% or 5%, so am I.

“How do you get paid if you do one investor per note?”

Great. You do their expertise, they put up the money, 50/50 split; 75/25. Whatever you do, you have an agreement with them. It might be joint venture for just one deal. It might be a trust. I’m not going to tell you the exact way to do it. There’re many ways.

“What do you mean you can’t lend out of state? In California, I can access California money.”

I didn’t say not to. I said be very careful because if it goes wrong, then the SEC will come in and they have a lot more money and a lot more attorneys than you will ever have, so just be careful. Be careful anyway. When you cross state lines, you’re not dealing with just states, you’re dealing with the feds. Feds are no fun whatsoever.

“If you do a meeting and you’re not the expert, how do you find a good speaker?”

Find an expert that’s in your area whatever they do and then work with them to put together a presentation. Work with them before they do the presentation because some people, what is everybody’s number one fear? Speaking in front of a group. Realize this, you’re reading this, you’re giving me what? You’re giving me the most valuable thing you can possibly offer me. That’s not money. It’s your time and don’t you want me to do good? Didn’t you want me to do a good job on this? That’s the way it is with every speaker. The audience wants you to speak or do well. If you just understand that and talk to one person at a time, they want you to do well.

“How do you communicate to people who have lent their money?”

Always stay in touch with the people. Let them know how it’s going. You want to deal with more experienced investors, maybe accredited investors, because supposedly they know more than anybody else because they’re not going to worry about each and every deal. Just let them know, keep a running commentary, “This is where we are. I got this month’s payment.”

“How can I go back with my meeting for dentists?”

What I did was I went to the local dentist association and I offered to teach for the dentist association and the dentist association just happened to have a meeting room. They offered the meeting room to me. It was wonderful. I told them, “I’m of offering $29” just so people have something invested so they’ll show up. Charging $29, I use that rate for my classes. It truly works wonderfully.

Going back to professionals. I know nobody’s talked about this one. Real estate exchangers, when they sell their property, they’re looking for deals. A lot of times they can’t find the deal. If you work with real estate agents and worked with exchangers and exchange accommodators and you let them know that you have notes to help solve their problems. That’s one of my biggest ones. I work with exchangers. I have learned how to exchange deals because of it. Exchange deals, exchange companies, because there’s always money in an exchange deals; always money coming out of it.

People in the note industry. Has Scott ever looked for money? Has her ever needed money and showed somebody a deal and they went, “Take me.” He is just doing one and they’re asking “How can I invest with you?” “Talk about using a title company to close the deal with them so done professionally?” In other states, other than California, you have to use an attorney or real estate or note deals. They got it rigged, so you have to use them. I don’t know how to answer it any other way. Title companies are wonderful for providing information because they want your business.

“Can you 1031 exchange into a note?”

Directly, yes. If you do, then they owe taxes on the profit. However, if you show them how to use before they didn’t do 1031 exchange, show them how to use seller-financing on the property that they’re selling, then they have just received a personal. It’s not real property, it’s personal property, and you can trade them portfolio notes or a note you have from another property that the pair just stops making payments that they could foreclose on. We don’t IRS agents here to know. There are ways around it. There are ways that can be done. I learned it from exchange agents and professionals.

I teach classes on notes. I teach classes on real estate finance. I teach classes on real estate investing. I created a real estate investing class. I call it solution-based. The very first thing I do is I have everybody close their eyes, and say, “I want you to stand up.” I have them stand up, close your eyes, put their hands on their hips, get the image of Superman, look at their face, could be Superman, and the emblem on their chest says, “PS,” and it stands for problem solvers. The amount of money you will make in any venture is determined by the quality of the problems you solve, not the quantity. Make more money in notes by solving problems that other people didn’t know how to figure out with almost every deal, especially non-performing notes. There are challenges. Every single one of them, there are challenges. You learn how to solve the hard problems, you make more money. Exchanging is like buying properties, so you want to do real projects on real property. However, if you take back a note, when you’re on the sale of real estate, you have don’t have the real property but you have a personal property to note that can be exchanged for another note.

An audience asks, “If someone does that before doing a 1031 exchange in seller finance, doesn’t that then make their side taxable at a higher rate anyway? How do you make that an attractive idea to an investor seller?

I am not a CPA. I remember that part at the beginning that says “Don’t believe what I’m saying.” I’m not offering tax advice, so see a tax professional about that. However, I might be doing one now or in the near future. Instead of doing a 1031, they did a seller finance and then they exchanged that. I apologize for confusing you. Rather than doing a 1031 exchange, they created a seller-financed deal and then they exchanged their note for another note. That’s exactly what I’m doing. That passed the CPA.

This has been fun. I hope people got something. The whole idea was to get you thinking in a different direction. Remember what I said, you make more money with your mind than you do with your money. The neat part about the deal that I’m doing now, I get cash to do things with and that’s wonderful. They don’t have a taxable event. They’re twisted my arm and I’m giving them 6%. I told everybody that. You’re a better negotiator than I was this time.

Bill, do you have anything else to add for today?

My favorite subjects are real estate and notes, lending on notes too, and I love to answer questions.

What’s the hardest deal you’ve done or the most creative? They may well go together. It is not a problem. You love case studies.

This includes how to find a deal. This was a real estate deal however, it evolved. I was walking around my neighborhood. Everybody else who has ever been a real estate investor, I went by a house and squirrel, obviously not being taken care of. I knocked on the door, nobody answered the door. I came back the next day, knocked on, nobody answered the door. What are we? PS, so I went and knocked on the neighbor’s door. I introduced myself, told them who I am, told them I love the neighborhood, and I was just thinking about buying a house in the neighborhood and I wanted to talk to the people next door because it looks like they’re having problems. The neighbor went and knocked on the neighbor’s door, the owner answer it then and introduced me. I’m getting referred by a neighbor, so I’m not cold. It’s not a cold call per se.

I sat down with Sarah. Her husband had passed away. She’d been living in the house 25 to 27 years. She was having trouble getting around. She was no longer able to keep up the house and so what I did was I went and found her a senior assisted care facility and I then I took her to those facilities, let her choose which ones she wanted, and then I bought her house from her. I paid her $2,000 a month. It was a $360,000, $2,000 a month until paid, zero interest. By the way, she essentially adopted me, so I bought the house from her. If you look at my hands, I don’t have the big calluses on them, so I turned around and I flipped this house to a family that could not rent in the area. They had lived in the area, moved up, lost that house, wanted to live in the area. They had three St. Bernard’s and they weren’t going to be able to rent any house. I happen to know them and I offered to sell them the house with a very small down payment and seller financing. The majority of the down payment was going to fixing the house because it had 27 years of deferred maintenance. I got an income from that and then I paid Sarah.

The part that is creative is that they made the property more valuable. They bought it from me for $20,000 more than what I paid for it. Today it is worth about $900,000. Nothing I did. I get one-third of the upside because I put them into an area they never would’ve been able to get to, they never would’ve been able to qualify for a loan. I provided the financing and I get one-third of that upside, which to this point has been about $600,000. Did I do any work? They did all the work. The cherry on top, Sarah adopted me. I hope not, but if she passes away and the note runs out, who gets the note? Who’s been paying on the note? Me to me. I liked that payer. I think she’s a great payer. His credit is fantastic with me. I don’t know if anybody has ever done anything like that before. They’ve done similar things but not get a piece of the pie, they’ve done shared appreciation mortgages, but I also got on the other side there. Yes, I got one-third of the upside.

Another deal I just did is where we did seller financing. I’m in the middle, I’m selling to somebody else, he to sells me, I sold it to someone else. I gave a note to the seller and I got the cash from the ultimate buyer. Peter Fortunato was one of my teachers, absolutely one of the best. If I had been thinking about it, I would’ve locked in and I would have said that they could have brought me and I would have kept the property and not sold it or just leased it to them. That’s a Peter thing and then in fifteen years get it back and it appreciates all that much. Peter just taught a class out here, One Step Beyond, a wonderful class. I have fun doing this. I enjoy doing this. If you haven’t been able to tell that. I got to tell you this story. Last Note CAMP, my first time ever, and she was doing moderating the presenter just before me, and we were waiting for another speaker to come on. I came on and I wasn’t wearing a shirt, because I just came in from outside, Southern California. It was a beautiful day outside and they’re going, “Who’s that? What’s going on? Who is that?” and I was ignoring because I was just wearing a suit but my video was working and then she put up a sign, “Bill, put on his shirt please.”

We had such a good laugh and laughing ever since. That’s awesome. An audience said her dad knows a lot of Jack Miller students. Are you a Jack student?

Yes. He’s been gone for a while. There’s Cash Flow Depot, a site that has all his education. He’s gotten but his education is still wonderful. Still works.

On that note, our next is Rhonda Britten. She’s the CEO of the Fearless Living Institute and if you want to talk to somebody about learning particular tools and methods to get over your own fear in all the variants that it stands for and getting out of your own way and learning how to master yourself and step into your own power, as people are fond of saying, she has some great tools to help you do that and she has a fantastic story to boot.

Bill, thank you for coming out. I appreciate it. We will see you soon. Thank you.

Bye.

Important Links

• BT Investments
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• First Natural Acceptance Corporation
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• Kim Taylor
• Peter Fortunato
• Cash Flow Depot
• Rhonda Britten
• Fearless Living Institute

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About Bill Tan