EP 624 – 10×10 Pro: Creating Massive Income, Contribution, And Fulfillment With Real Estate Investor, Bill Barnett

NCS 624 | 10x10 Pro

NCS 624 | 10x10 Pro

 

Do you want to become a 10×10 pro, earning $10,000 a month in passive income? Then this episode is perfect for you. Scott Carson talks with long time real estate investor and speaker, Bill Barnett, about this 10×10 model to create massive income, massive contribution, and massive fulfillment with your real estate investing. They also discuss the current market, the power of having Uncle Sam as your client and tenant, and why coachable investors find success. More than making a profit and achieving success, Scott and Bill also share how you can give back to your community, making a great living not just for yourself but helping others in the process as well.

Listen to the podcast here:

10×10 Pro: Creating Massive Income, Contribution, And Fulfillment With Real Estate Investor, Bill Barnett

In this episode, we’re going to be talking about how you can become a 10 x 10 pro, $10,000 a month in passive income, and giving back to your community. If you’re interested, make sure you join us on the show.

I’m excited to have a friend who’s also from the Lone Star state, up at I-35 on the DFW market. My good friend Bill Barnett is joining us here on the show. If you don’t know who he is, you’ve probably heard or even read his book, Are You Dumb Enough to Be Rich? If you don’t have yet, you better go out and buy it. He’s done several years of his weekly radio show as well, Real Estate NOW! with Bill Barnett. He’s also been on TV with over 102 episodes of The Dynamic Achievers World Network. He’s been investing in real estate for many years and does a lot of note investing out there. Bill, we’re honored to have you. It’s good to catch up with you. It’s been too long.

I’m tickled to be here. It’s been way too long since we’ve had some time together. It was great catching up. I’m excited to be here and be part of the show.

For those few stragglers out there across the country that don’t know who Bill Barnett is, you got your radio, your TV and the book. I love the title of the book. It’s one of the best ones out there for you. It has great content. Why don’t you share a little bit about your focus? You can do some cool stuff out there for investors besides note investing. We can get to that a little bit, but let’s talk about what your main focus is and dive in there first.

I start with trends of the market and I’ve been consulting for many years for new investors and seasoned investors, getting them over the hump, getting them rocking and rolling. That’s what the books are about. That’s what my business is about. I’m investing myself. I got four rehabs going on. I love flips and I love buy and holds for passive income. That’s where I do a lot of note business in the flips as well. I own a brokerage firm. In 2010, I bought a traditional brokerage firm, DFWProperties.net. If you remember back in 2010, the market was in shambles. I had people that were friends of mine going, “Are you crazy? Why would you buy anything real estate right now?” I’m like, “That’s when you want to buy.”

I bought a brokerage firm and now I play both sides of the game. I’m working with traditional agents in a traditional business, and then doing the investing, and teaching my agents how to work with real estate investors. I love that. A consultant is just a teacher. I never thought of myself as a teacher. Another friend that we share, Mark Victor Hansen. He is the guy that got me speaking many years ago. I found out that I absolutely loved it. I love seeing the impact that it can have on people’s lives, futures and families. That’s what we’ve been doing.

I love that aspect of things. I love the fact of working to help get people over the hump. I’ve been teaching note investing for many years and seeing people. The thing that invigorates us who are educators and teachers, besides the fact that we like going out and do deals, is seeing people pull that trigger and get beyond them themselves.

I was talking about this with a former student, Kevin Mills. He and I do a podcast together. I was talking to Kevin about one of the big stumbling blocks that investors have, especially new ones, is pulling the trigger. If you’ve got your money lined up, then it’s easier to find properties. If you’ve got properties lined up, it’s easier to find money, but you got to have those two things in play. When you got that, it gives you the confidence to pull the trigger. If you learn from somebody like Scott or me, they’re going to teach you how to do the business the correct way. You get familiar with your numbers. When the property works, move on it. Do it there. You can’t wait around a couple of days and have contractors go look. If you do that, it’s going to be gone.

That’s definitely the truth in all spaces of real estate, whether it’s buy and hold, fix and flips, or note deals. You’ve got to pull that trigger and get rock and rolling because otherwise, somebody else is going to see it and gobble it up there for you. The whole waiting around for that perfect deal, that’s where I see a lot of investors go, “I don’t know. It needs to be perfect for me to do it.” There is no perfect deal out there. We can always agree that some shit is going to go wrong at some point along the way.

Once I get into a contract, the longer that contract goes before closing or after it’s closed, the longer it goes into rehab and things are going smooth, I start sweating. Something is always going to happen. Let’s get it done quick and out of the way. It’s the nature of business. It’s when you’re able to pull the trigger. I’ll tell you how timely this market is. I was out looking at property and I forgot my iPad. Usually what will happen is when we find a property, we go ahead and put an offer on it while we’re there at the property because we got everything set up already. The real estate agents all have it and I’m not licensed myself.

I just own the brokerage firm. I still use an agent that works for me. I called my buddy, Ron who works for me. I said, “Ron, I want to get an offer on this property.” I had to leave him a voicemail and it was about ten minutes before he calls me back. In that amount of time that property had a contract accepted on it. I’m in as a backup on it. I’m a smidge higher than what they accepted. I think I got a shot at it because there are some unique contingencies that make it pretty doubtful that they might be able to close it. That’s how fast the market is. If you’re prepared, pull the trigger and get this thing going because there’s nothing more fun than getting out there.

This is what I tell people all the time, Scott. When you’re out looking at property and you’re in these ratty old houses that are trashed out, if that gets you grinning from ear to ear, this is not your business. You got to love that stuff. You get out there and start making offers. The whole business, in my aspect, boils down to money and offers. You’re such a key component on the money side of it. It goes hand in hand. If you got the offers made and you don’t have the source of funds, you don’t have anything. If you got no money, you got no offers. You don’t have anything. They go hand in hand. That’s what I always tell people, “Money and offers, which comes first?”

I always tell people that if the deal does make sense, you market it. Get the word out about what you’re doing to your network and everything. That money will show up if the deal makes sense. You’ve got to share what’s going on and not be a secret agent in real estate. I’ve never found somebody that wanted to be quiet and never talked, never market ever do anything long-term besides maybe use a little bit of their own funds, but at some point, your own funds are going to run out.

I caution people about using their own money and it’s a crutch. You won’t learn to do the business the right way if you get hung up. Pick a number. We got $250,000 in our retirement account. We’re going to start using that to do deals. It doesn’t matter what the number is. You’re going to run out. I’ll tell you where I learned this in spades. Years ago, I did some work for President Trump long before he was president. I did some work consulting for his company and training some trainers for him. A lot of what I did in preparation was go through his books. There’s a great book I’m going to reference. It’s called Billionaire Lessons for the Small Investor. He co-wrote it with George Ross.

George was his real estate attorney and may still be. He’s a fabulous guy. It’s the only one of the Trump books I read that is specifically about deals in real estate. Most everything else is business philosophy and they’re great books, but this one is about deals. It tears deals apart. It walks you through them, top to bottom and I love that. One of the things that hit home in there was that he always uses partners. He has the ability on a ton of these deals to go out and do it himself, but he uses partners. One of the reasons that he does that is the fact that you always run out of money. It doesn’t matter if you’re a billionaire or if you’re a thousandaire, if you’re using your own funds, you’re going to run out. When you do, your business comes to a halt. If you learn on the front end, how to use OPM. You’re using notes, working with hard money lenders, there are 1,000 different ways to fund these things, but you’ve got to put together funding. That is crucial. If you do that, then your business grows a lot faster. It will grow exponentially for you.

NCS 624 | 10x10 Pro

Are You Dumb Enough to Be Rich?: The Amazingly Simple Way to Make Millions in Real Estate

What’s your favorite tip to raise capital? Tell us a little bit about it without giving away the secret sauce.

I come from an investment banking background. I started with Merrill Lynch in the mid-‘80s and managed some money out in California for a bank out there for years. In the course of all of that, I dealt with a lot of private money. That’s what I love about the note business. I had this ability to raise private funds. That’s just a conversation piece that you have to have with people. What I found in real estate is it works even better in real estate than it did in investment banking. That’s my number one fun way to raise funds for deals. It’s private money. You’re able to give people a great rate of return, better than they’re going to get most anywhere else. It’s certainly less risky than what they’re going to get in the stock market, even if they get a better return. A lot of people prefer to have a little bit less of a rate. I do 10% to 12% and that’s up to you. You have that ability to go out and help people get a great rate of return who love real estate, but aren’t like you and me and want to be involved in the deal. They want to have the money side of it and get a great rate of return.

A conversation is talking with people. You said two good things there that a lot of people miss out on. A lot of people get into the whole nitty-gritty, “I want to be the jack of all trades. I want to be the person rehabbing the property and listing it and doing it exactly.” The things that you’re focused on is the raising capital, but also finding the deals and using your sources to locate those deals that make sense.

I was the worst when I got started in the business. I’ll give you two brief stories here. One of them was my very first deal. A buddy of mine and I who played at West Point, he and I were roommates at the time. We bought a house together. We decided, “It’s a house. How difficult can it be?” We started rehabbing it. We spent all day, every day for six days a week. Four months into this thing, it was a mammoth property. It was almost 1,800 feet. We’re still not done. We finally got to the point of, “We’re going to have to bring in some contractors to finish this thing out.” I started interviewing contractors. I didn’t tell him the work that Brad and I had been. It was like, “We got this house and we’re going to flip it. Come and take a look at it.”

I interviewed three separate contractors. All three of them said the same thing in different ways, “Whoever did this work don’t know what they were doing. We’re going to have to undo all of this and redo it.” I had the pleasure of doing it, seeing it undone and paying for someone else to do it correctly. It taught me a lesson about letting the people that know how to do that, do that.

I had one of my favorite consulting clients through the years and the guy was a professional painting contractor. When we started consulting together, he was like, “I agree with almost everything you say, but I’m a high-end paint contractor and you’re not going to find anybody that can do a better job for me. I’m going to be doing my own painting on my property.” I’m like, “That’s okay if you have your crew do it, but you’re not, right?” He goes, “No. When I go out with my crews, I go with them and I’m not above doing that.” I’m like, “That’s not the point. The point is what you make as a painter is a very different number than what you make as the investor or as a sheet rocker or as a flooring expert.” Any skill that you might have pales in comparison to being the investor.

You end up working for minimum wage or below minimum wage when it’s all said and done. Let’s talk about the note side of your business. What do you love about notes? What’s your niche? What’s your focus when it comes to the paper business?

When it comes to the paper side of it, I love funding deals with notes. As I said, I got started in investment banking and after five years, I was in LA. Some buddies of mine from Merrill Lynch called me and said, “We’re going to strike out and start our own firm.” In the business, it’s what was referred to as a merchant banking firm. It’s not really a bank. It’s more a venture capital, but it’s not quite the size that most venture capital firms are. We specialized in $2 million to $20 million raises for companies. We clean them up and repositioned them in the market place, and got them to what I would call the real venture capital firms.

Those numbers now would probably be like $50 million, but at the time it was the early ‘90s. I left and started that. When we were doing that, I love funding deals. That became the nature of a lot of who I am. I love putting the deal together and funding the deal. Those were corporate deals. When we came along and started doing real estate, it was an easy transition. I like using the private note to fund the deal. You can do it on a buy and hold. It’s a little different scenario there. Flips are easy to do. Sometimes we’ll combine notes. We’ll do somebody that comes in and they hold the first, and then we’ll do somebody separately for the rehab funds. Here’s the other thing you look at. I have people a lot of times that they go, “It hurts my rate of return.”

In my case, I teach them 10% to 12%. “If I paid that out, it hurts my rate of return.” I’m like, “Really? If you’re 100% financed, how much money do you have in the deal?” “I don’t have any.” If you don’t have any in the deal, you cannot calculate your rate of return. It’s infallible. Get over this thing about somebody else is going to make some money as well. That’s the beauty of it. It helps somebody else make some great funds in what you’ll find. My first thunder in real estate, we did a $50,000 property. This was years ago. Over the next couple of weeks, I got this feeling that this must have been his last $50,000. Maybe I shouldn’t have taken this because he would call me almost every day, “How did it go with the house today?” I was like, “This is crazy.”

The house was fine. We sold the property. Everything went according to plan. After I closed it out and he got his funds back, a couple of days goes by and he calls me. He goes, “Do you have any more properties? I came across a little bit more money. I think I could probably do about $75,000.” Over the course of the next couple of years, he ended up with about $3 million. What he was doing was vetting me. The more we did, the less I heard from him because he got more and more comfortable. When you find somebody, it doesn’t matter whether they’re a whale or not, but they have confidence in you because of your performance. It puts you on that plane where you can strike. The way we refer to it in my consulting business is when you see a deal and the numbers work, strike. Don’t mess around, pull the trigger right then in having that funding put together. I love the private note. Maybe we’ll do the solid gold money script sometime during the course of the show.

You’ve got a great program that you’re doing. You’re more than, “Let’s make as much profit as possible.” You’re also big about being conscious and giving back. You’ve got a new thing that you’re launching and have been doing for a little while called 10 x 10. Do you want to explain that and what goes into that?

It’s a website and a podcast 10×10.pro. Please join us on the podcast. What 10 x 10 is all about is getting to a minimum of $10,000 a month in passive income and then a commitment. I have them sign what I call an emotional contract. It’s not legally binding, but it is a contract between me and them that says they’re going to give 10% of their income back to their church, charity or community. I’m going to mention Mark Victor Hansen again. For years, I’ve been working with Mark. I’ve known Mark since 1978, but some years ago he wrote a small book that’s so powerful and it’s called The Miracle of Tithing. For anybody that spends any time in the Bible out there, one of the things that the Bible teaches is that you give 10% back and the Bible says you give that to your church, which I agree with. It’s the first 10%.

Through the years, I’ve been trying to look at how do I incorporate that? It all came together with 10 x 10. It is built on passive income. I can teach you how to put $10,000 a month into passive income, and Scott, you know the way I do things. It’s not just classroom, it’s all experiential. The classroom part of it, we’d go out and take them by the hand and we go say, “Yes, buy this one. Here’s what we’re going to need to do to it.” We’ve got this going in multiple markets right now. A lot of these markets have amazing values for rental, much better than what we have in Texas, which is shocking. When you can find that you get up in the Rust Belt and you can get rental property $40,000, $50,000, $60,000 for a duplex and put $5,000, $10,000 into it. It’s rent ready. What we do is we teach people how to get a cash-on-cash return of a minimum of 50% per year. Somebody will be like, “You must have said that wrong.” No, that’s the basis of 10 x 10. We’ll get you making the money that you want to make. We want to get you being involved in giving back.

It’s a big thing. Anytime you can give back to something, it adds much more passion to it because it’s all about when you see what that money does as far as good out in the community and helping people, whether it is your church or your charity. Whatever it is, it adds a whole different layer to things. A lot of people will strive and be much more motivated to help that cause versus trying to help themselves. That number is how they fund that stuff, getting things rock and rolling. Fill your own cup first before you go out and try to fill the world.

NCS 624 | 10x10 Pro

10×10 Pro: If you don’t have any in the deal, you cannot calculate your rate of return.

 

You can’t help anybody else if you can’t help yourself. We always make sure that you get your financial house in order so that you can now take on this other piece of it. A lot of our folks end up giving more than 10%, but it’s because of the income that they’re creating. $10,000 a month is typically enough for most folks to get along fine with, especially in the South and that’s a minimum. That’s where we say, “Now you’re at a minimum point.” That’s not when you start tithing by the way, but that’s the goal. Let’s get over this first plateau of $10,000 a month and then build from there. I’ll tell you about a couple that I used to work with, the Sacramento Kings. I had met them and consult with them years ago.

I always want to find out what makes people tick. Why are you doing what you do? The couple said, “We want to get into this business because we have a passion for kids and we’ll tell you about what we do.” They made nice money. He was a retired player. For fifteen years, they had scraped and saved every penny they could. They built a house that was free and clear. They filled that house with wards of the state. They were like, “This is our passion. This is what we live for. We’re hoping that you can teach us how to do that faster, better and quicker so that we can build more houses. If it’s going to take us fifteen years to do it again, we’re only going to have 1 or 2 more houses in us and that’s it.”

They came into the consulting program. About two years after that, I bumped into them speaking out at a big real estate convention at the MGM Grand in Vegas. I had come off stage and we had gone through a break. I hear somebody calling me by name and I look. He was like 6’9” and she was like 6’1”. They were pretty easy to spot. That came up and big hugs. We start talking like, “Tell me what’s going on.” As soon as I said that, the waterfall came on. She started crying. In the two years since we had done our consulting, they had built five houses. This is the most wonderful thing about real estate. Do it for the money, we all get in it for the money initially, but that’s not going to keep you moving forward. You’ve got to have something in you that’s bigger than you that you’re looking at. How does this world become a better place because I was here and because I had a real estate business? When you find that, it explodes the amount of fun and success that you’re going to have because you’re going to be infinitely more diligent. I love their story and I needed to touch base and find out where they are now. At that time, they had gotten to a total of six and were continuing to rock and roll.

That’s the beauty of it because it comes back tenfold. When you give 10%, it definitely comes back tenfold for you in goodwill and karma in a lot of cases.

My youngest son said, “Dad, you’re a Christian, aren’t you?” Yeah. He goes, “Why do you use the word karma? That’s not real.” Absolutely, it is. The Bible says, “What you sow is what you reap.” That’s about as karma as you can get. He’s like, “I never thought of it that way.” It absolutely is a ton of karma out there. Business karma, that’s no different than a personal karma. You’re out there doing good things in the marketplace. What 10 x 10 is all built around is you being able to make a great living for you and being able to help other people in the process, help them getting into properties. We do a lot of buy and hold properties there.

Getting into properties that they might need some help getting into and providing them a great opportunity to have a good home. If you’re doing that and then you’re also giving back to your church, charity or community, it opens up the heart. It’s a great place to be. It’s a great philosophy and pattern of business life. I learned a lot of this stuff from Zig Ziglar who was my second father for about seven years. You mentioned the TV show that existed. I created it, but Zig gave all the credibility to it that got it up and running. I miss him dearly. If you’re one of those few people out there that haven’t experienced Zig, he’s got a ton of great books, See You At The Top, the original. Get you a copy of that. There are great audio recordings and a lot of stuff on YouTube. Tom, his son, runs the company now. He’s a great guy. There’s some terrific information out there for you and how to get things going so that you’re helping others while you’re helping yourself.

We need that more than ever with everything going on in the market these days. I’d love to get your feedback and opinion on what’s going to solve a lot of this stuff. A lot of investors are caught between a rock and a hard place. They’ve got their mortgage that they’ve got to pay a lot of. Luckily, a big chunk of borrowers or tenants are paying on time, but you still got those that aren’t paying that had been furloughed or laid off. It’s like rock and a hard place that a lot of investors are at.

We do some Section 8 stuff and we do a lot of it. The program has changed through the years. A lot of investors shriek in horror, “I don’t want to be involved.” You’re missing the boat. We teach you how to do that correctly in 10 x 10. Here’s the thing, when all of this stuff happened, guess how many rent payments got cut back or were late? Uncle Sam didn’t pay late. If you’re going to have a tenant, the best tenant on the planet to have is the guy with the deepest pockets. That happens to be Uncle Sam. I’ll tell you, there’s a middle shift that happens. Years ago, while I was doing real estate, in fact, I got to do this because of real estate.

I used to travel around working on the weekends with country music acts all over the country. A lot of Toby Keith, Kenny Chesney, Tracy Lawrence, guys like that. Merle Haggard back when he was still alive, Willie. I had been on the Willie bus and came off, and all those stories are true. This was all funded by Coors. There’s a law that says that a beverage company, whether it be alcohol, liquor or beer, cannot sponsor any event directly. If you’ve not been living in a cave, they sponsor everything. What they do to work around that law is they hire a third-party contractor. That’s who I worked with, a guy named Roger Huskey, Hollywood’s Productions.

One of the things that I learned was I always thought that these companies like Coors, if I walked into 7-Eleven and bought a six-pack of original Coors Light, I’m their customer. They were like, “No.” I’m like, “7-Eleven is your customer then?” They’re like, “No, our customer is the distributor. What the distributor does with it is their business, but that’s who we work with.” How that fits into this real estate game and especially in the Section 8 is I understand who my customer is. My customer is Uncle Sam. My client is Uncle Sam. What Uncle Sam wants to do with that, do we have some input on that? Absolutely, we do. What they decided to do is what makes this thing work so good. If you think that this market is going to change, you’re absolutely spot on.

It doesn’t matter who wins the election. It might matter the severity of the change, but real estate is a cycle. We are in the tail end of an up cycle. It has been going on since the end of 2012. We’re due for a correction and that’s nothing to get panicky about. It is just the nature of the business. If you understand the cycle, it takes the fear out of it. It allows you to get prepared for the change in the market, which is coming. I can’t think of a better time to be involved in passive income. There’s not a single city in the country that I’ve seen, and I’ve seen most of them, that has enough Section 8 housing. We teach some real tricks of the trade on how to get the absolute best tenants in there for that for the people that are in. We don’t manage those. We use outside management firms for all of that. It’s a great rate business. It’s mailbox money. You’ve got to love it.

I agree with you there 100%. Almost every city in the country needs more affordable housing. We hear all across the news, “Affordable housing needed.” We’re going to see a lot more need of that, especially with the defaults that are going on and we’re at a high 8.22% across the country when it comes to people being in default on a mortgage. Those people are going to be moving out or looking for places to live. FHA loans are almost 16% default rate across the country too. That’s your first-time home buyers. We get a big push and looking at the 40 biggest markets out there. Religiously across the board, your biggest default numbers are in that $200,000 below market. That’s where we’re going to see a lot of the inventory hit in the market here.

A ton of those people are going to look at rental properties to tie them over for a few years until they get back up on their feet again. Here’s one of the things that I love about the note business is that you look at what’s going on the money side of the real estate game. I tell people all the time, and I talk about this on the show and in the podcast, about how to dissect the market from a standpoint of future predicting, if you will, just seeing the trend in the market. This is not the stock market. It doesn’t change in a news flash. Somebody does a press release in the market and the market goes crazy. That doesn’t happen. This is a battleship. It changes very slowly.

We started looking at what are the underlying factors that predict where the market is going. We start to see defaults go up and it will go on a long time. It’ll go on many quarters before it becomes big public knowledge. Guys like Scott and I look at the underpinnings of the market, study those things to see where the market’s going. That’s where we’re going. We’re seeing more new foreclosures than existing foreclosures being sold. That means the foreclosure market is growing. It may not have hit in your particular buying sphere yet. That doesn’t mean it’s not happening. We’re seeing prices cooling off. They’re not dropping yet, but they’re staying pretty flat right now. We’ll see that continue before they start going down. We’re seeing days on market get longer. All of those are trends that are telling you the market is changing.

It’ll get way down the road before the public goes, “The real estate market changed.” If you’re learning how to react to where the market is going, it’s going to be a great time for you. It’s a shift. You don’t get stuck in, “This is the only way I can do my real estate business.” If you do, you’re going to have a short career. You look at all the different aspects. Right now, we’re still doing a lot of fix and flips, but we’re shifting more and more into the buy and hold because that’s where the market is going. What do you do with those buy and holds? I love passive income. People that buy notes that fund our deals, they’re looking at the same thing. They want the passive income. They’re one step removed or arm links removed from the transaction. They don’t necessarily want to do the real estate. They just want to get a great rate. If you know that, this is a fabulous time to be in the business.

NCS 624 | 10x10 Pro

10×10 Pro: What 10 x 10 is built around is you being able to make a great living for yourself and being able to help other people in the process.

 

You got plenty of investors out there that focus on one aspect like your short-term rentals. Airbnb market got a lot of people that are going crazy because nobody’s traveling. They’re hanging out in their house on the beach these days for the most part. You got to be flexible and figure out what the trends are and where to act. If you’ve been in that area looking to do something. We’ve loved buying distressed notes in the past few years and then working those out. I was looking at a deal in Maple Heights, Ohio. The borrower was paying me $450 a month principal and interest on a $21,000 balance that I paid $5,000 for. I reached out to my estimate. I said, “How long did we modify this for?” “It’s for five years.” I was like, “Bless us.” In a year, what I paid for the note, we get back with our principal and it’s all rock and rolling. The borrower’s house is worth $60,000. If they don’t fall through, we can go through and take the property back if we need to or foreclose or get paid off in full if they do refinance it out. I love the note business and there will be a lot more of it on the market here.

Back in my investment banking days, it introduced me to several different pieces of the real estate market. At one point for about four years, we ran a $10 million fund that did nothing but tax liens, deeds and certificates all over the country. Also, what got us started is way back when Countrywide was still around. I stumbled into a piece of the market where mortgage notes had quality control checks on them. FHA would come in and they would look at the underwriting. They got mortgage companies and banks out there making all these loans. Through the course of a year, they’d pull about 8% to 10% of the underwritings. They would re-underwrite it themselves to make sure that everybody was following the rules.

What they found out was that about 10% of that number ended up being fraudulent mortgages. Maybe the homeowner had said they made a lot more money than they did. These are not defaulted. These are notes that are walking along and they are doing quality control check on the underwriting. Once they found out that the underwriting guidelines had not been adhered to properly, now it became a tainted note and they sold those off. We would go in and buy those and go back to the homeowner and say, “We’ve got to get this worked out. We’re not in here to foreclose on your house. That’s not what we’re about. You did do some things that weren’t kosher when you were getting your mortgage. It doesn’t matter that you’ve been on time every time. You got to get this note rewritten so that it is underwritten correctly. It’s likely there’s going to be an increase in your interest rate. If you do this, it gets you out of any legal exposure. After a couple of years, you can go back and refi and probably get a better rate than you had to begin with.”

We did that for several years and Countrywide took notice of what we were doing and started going into our big suppliers that are doing contracts with them. What would happen is once FHA found out that something was not adhered to properly, they would go back to the originator and say, “You’ve got to make this good for us. You’ve got 30 days to refund us the money that we put in this or you get your funding cut off. You lose their warehouse line,” which basically put them out of business. They would sell those off and take the loss. We move in from there. We have a lot in common.

There was enough stuff there not just on the borrower side, but even when you think back to Ameriquest and some of the other companies out there that were creating W-2s, creating pay stubs in some cases. It was a very small amount of bad apples out there doing it, but it led to some opportunity now to tap into that stuff and make lemonade out of lemons for some things.

I hope as we go through this next cycle that there’s more public information. I’m certainly going to do my part, I know you will, about letting the public know, “Don’t freak out about this.” The Obama administration during all of that painted this as, “This is all the mortgage company’s fault.” Yes, there are some bad apples there. There are bad apples in everything. When you have a big number of people doing anything, there are going to be some bad apples in there. The overwhelming majority of the banks and the mortgage companies were making those loans in good faith and expecting people to pay them back. If we understand the process, if we understand the cycle, we’re going to understand that when this thing starts to happen, and right now you’ve looked at money is pretty easy to get ahold of. That is a natural tendency of an extended upmarket.

Money freeze up and they make it easier to qualify for because all the banks in the mortgage companies had started over the years. They ease up on their credit requirements and they do that to encourage refinancing. That’s their business model. They don’t make any money if they’re not loaning money. They start easing up on the credit and there comes a time that the market starts to shift. When it does, some of those loans are not going to survive. It’s the nature of the beast. If we know that, we can react to it and participate in it. Think about it this way. There are 330 million Americans in our country. There’s only minute microscopic percentage of it that live under bridges. The rest of it live in houses, apartments and condos.

They got to live somewhere. This is how big the real estate world is. Roughly every five years, the average American is living in a new home or living in a different home. You take this massive number of properties across our country. It’s like a deck of cards. It gets reshuffled and people are living elsewhere, but they’re living somewhere and that’s the market you want to be involved in. It’s so huge. As long as there is an America, there will be a housing market. If the housing market ever goes away, there won’t be an America. It is the single largest part of our economy. It’s much bigger than stock market. It also affects more industries. When you look at how big it is and how much it turns over on a regular basis, you want to get in the flow of the money. This is the place to do it, real estate.

You’ve done a great job over your years of experience of not only understanding a lot of stuff, but making a lot of deals happen. More importantly, you’re helping others to pull that trigger to get rock and rolling. For somebody who’s reading this and thinking about getting rock and rolling and like your approach, what’s the best way for them to find out more information on your 10 x 10 program?

The website is pretty easy. It’s 10×10.pro because what we’re going to teach is how to become a 10 x 10 pro. Jump over to the website. It’s a limited program. It’s not a come one, come all thing because of the intimacy involved in the consulting. We have an application process. Jump over there. It’s short, but it gives me some insight into what you’re doing. Once we go through the application process, I or somebody from the team will give you a call. We’ll do an interview process. At some point in there, I’ll be speaking with you personally, and we decide if this is a good fit for both of us. If it is, we move forward.

Are you looking for people of all types of experience, brand new or seasoned?

Absolutely. We find that a lot of seasoned investors, they get to a certain point in their business and they stagnate. I’ve been around long enough that a lot of times. A fresh pair of eyes on the way they do their business is easy to see the spots that’s holding them up. We work with a lot of people that are already in the business. I love working with a greener than green. It’s so much fun to see the light bulbs come on, the changes that happen in people’s lives, get them up and running, and get them on the right foot to begin with.

It definitely is when somebody, I don’t want to say like a puppy, but they’re excited, motivated and coachable. They maybe have built some bad habits along the way or gotten stagnant in their activities.

You said something right there that is a mouthful. You said they’re coachable. You and I both played college ball back in the days and it’s the greatest compliment I ever had. I didn’t find out until I was about ten years out of Alabama. The guy who was my offensive coordinator, later on in his life, went on to be AD for many years there, Mal Moore. He passed away a few years ago. Through relationships there with your coaches, you’re hanging with them forever. I learned several years after I had spent my time there that one of the things they had talked to my high school coach. My high school coach said, “He’s not the biggest guy or the fastest guy, but he’s maybe the most coachable guy I’ve ever had.”

That went along way with me being accepted at Alabama. I’d look at that with people all the time. I’ve done a ton of coaching youth baseball, which I absolutely have a passion for. For several years, I’ve coached as many as four teams in a year. I love it, but the thing I look for with these kids and I talk to them about it all the time, is coachability. I said, “You’re never going to play for a guy that wants success for you more than you do. It’s got to come from you.” A coach is always wanting to give you the tools for you to be your best. That’s how we do our business consulting with real estate. We look for people that are coachable. For years, I would have people ask me when I was speaking. I spent eight years as one of the lead trainers for Robert Allen. I was on the road 42 weeks a year, teaching every weekend.

NCS 624 | 10x10 Pro

10×10 Pro: As long as there is an America, there’ll be a housing market. If the housing market ever goes away, there won’t be an America.

 

I would always have people ask, “Is this perfect for anybody? Can anybody do this?” The answer is yes, anybody can do it, but I’m going to tell you, I have also come to realize that there are certain aspects of the population that do better in our business. I look at people that have military police or medical backgrounds. They tend to do extremely well. Former athletes tend to do well. It’s that coachability thing. For the law enforcement, the medical and for the military people, they are used to being told what to do and then going and doing it and not going, “Let me see. I think I know how to do that better.” I still run across that and I crack up. My comeback line is always, “How many deals have you done so far?” Typically, the answer is none. “Why don’t you do it my way for six months and let’s see where you are and see if you still feel that way?” The thing I look for there is a common thread in people’s coachability.

It’s one of the most important things. A lot of people, especially as an athlete, we’re always worried about when the coaches stopped chewing on our butts. That’s not a good sign. As long as they’re chewing on your butt, then throw them a hat down.

It took my young one a long time to accept that. He played a lot of baseball for me. It’d be after a game. “Why do you yell at me during the game?” I’m like, “First of all, when we’re in a game, you’re a part of the team. You’re not my kid. I’m not going to treat you any differently. I might treat you a little harder, but I’m not going to go any easier on you at all. Know that anytime a coach is ragging on you, they’re doing that because they want you to be better. They spotted something that can allow you to be better.” Most of us that have done any coaching at all, no matter what level it’s at, we’re pretty gregarious. We get loud sometimes. It’s one of those things. They’re telling you, they’re yelling, they’re getting in your face because you’re doing it wrong, but it’s because they care and they want you to be better.

It’s the same thing in business. I have people that say stuff to me all the time. I have a lot of mentors that I still work with. I have coaches that work with me. Sometimes they say things that I don’t want to hear, but I know it’s coming from a place of love. When I know that, they can be as rough as they feel like they need to be as long as I know what the intent is. That’s the same thing I tell my consulting clients all the time. “I try to handle everybody a little bit differently because I try to adapt a little bit to what works best for you, but there’s going to be some times when you’re going to need a kick in the butt and I’m going to give it to you. You got to know that I’m not doing it to be mean, rude or make you feel bad. I’m doing it to help you be better at what you’re doing.” That’s the philosophy there. Coachability is hugely important for me.

Also, when it applies in real estate, it’s because we as investors, as educators, as coaches, we’re not telling people to do something that we haven’t done ourselves or experienced ourselves or have gone through that. That’s why I tell people, seek counsel, not advice. Counsel, you’re going to get that from your mentors and your coaches and stuff like that. Advice is like assholes. Everybody has one. It doesn’t mean you’re good.

When you’re taking advice from somebody and this is how I coach it in my own life. That’s why I still use coaches and mentors in my own life. Look at somebody. This is the level that your business is at. I want somebody that’s at this upper level. How do I get here? I’m not going to find somebody that has a lower level than that telling me how to get there. I want to go with somebody that’s there saying, “This is how I got here. This is what I see you doing that you could do better at. Maybe you’re not doing this at all. If you’ll do this, this gets you to this level.” There’s always somebody at a higher level. That’s what I’m looking for. That’s why I always tell all my athletes, “There’s always somebody bigger, stronger, faster. What you can do is be the kid that nobody can outwork. If that happens, there’s always a place for you and coaches will find a place for you.”

Business is no different. The business will find a place for you if you’re willing to work. There’s a lot of, “This business is so easy.” It is very simple. It is very straightforward. I’m not the guy to tell you it’s easy, it’s work. If you’ll work at it, the rewards that we get out of this business are typically exponentially larger than anything else you might have worked at. Likely, when you compare it to a traditional job that you’ve had at some point in your life, you’ll go, “It was easy,” but it’s because of the disparity of the reward.

One of the things I love about you, Bill, is you’ve had not only many different experiences out there from playing for Alabama to being a NASCAR part of a pit crew for a couple of years. You’ve got mentors. We’ve mentioned a few of them. I know that you’re going through something similar like us working on our marketing with Russell Brunson and going through some things. It’s constantly working to better ourselves on a variety of things. That’s one of the things that a lot of people forget about. They think, “I’m going to be in real estate. I’m going to chill. I’m going to live that 10:00 to 3:00 lifestyle and not have to put any hours in.” It’s not the case of all.

If you want to make sure that your day is full, go to work for yourself. You’ll either starve or you’ll have a busy day. I love Russell. I love what he stands for. That’s another one of those things that we have to come to grips with at times in our life. I’m going to have some mentors that are younger than me. At my age, that’s pretty easy. When you’re in your 30s, a lot of times that’s a hard pill to swallow but again, watch the level of achievement? I don’t care if they’re nineteen. If they’re where I want to be, I want to hear from them how they got there, what they’re doing, what’s different about what they do than what I do. How they spend their day? What makes them tick? Those kinds of things open up the door for us so that we can change. The business part becomes pretty simple. It’s the internal part, who you are and what your makeup is that dictates where your business is going to go and where you’re going to go.

Bill, you and I could sit here and talk all day. I know we’d have a great time. We’re coming to the end here. What’s the best way for people to get ahold of you to find out more about everything you got going on?

The best way is to jump over to the 10×10.pro. Join the podcast. If you think this is something that has interest to you, there’s an application there. You can fill that out to learn more about what 10 x 10 Pro is. I’d love to have you listen to the podcast. Pick up some of the books. I have a new book coming out and it’s how to become a 10 x 10 Pro. Originally, I thought about calling that Over the Hump because of what it does. The whole concept behind getting better, being better and not being about me and not being about the money, that’s what 10 x 10 is. It does teach you how to take care of yourself first and then how to share that with others.

It’s a great way to go out there and feed the world with the overflow from your cup. Bill, as always, it’s great having you on here. We’ll catch up in sometime soon. Maybe catch some baseball at some point.

Let’s do that. Now they’re playing again, the Rangers were semi playing, but now the MLB is back on. I love baseball. It was on TV, but I got to watch some live high school football. It’s great.

We’ve got the college football kicking off and then coach. The tide is rolling out here as well for you.

Let’s do this again, roll tide. We’ll see you next time.

Check out the website and his podcast as well. As Bill said, “Go out, take some action, pull that trigger and you’ll be one step closer to being at the top.” We’ll see you out there, be safe and we’ll see you in the next episode.

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