Cash Flow Guys Podcast

Today, we are going to change things up a bit. You could call this a back to basics episode, but it's not. Today is going to be some of the most critical information delivered to you ever done on this podcast. This is a two-part series. I'm bringing in my management team from Memphis for this one. On the phone is Danny Quinn, my man on the street, the guy with the boots on the ground. He's the guy that makes it happen in Memphis for us and keeps things the way they should be. Without Danny, I'm convinced I wouldn't be in business in Tennessee. We're going to talk about how what we do in Memphis comes from the mindset of how we take care of our clients in Tennessee. We look at our tenants as they are our clients. That's our mindset.

I am beyond excited to bring you my guest today who is going to talk to us about investing with “Subject To” deals. Jonathan has over 30 years of real estate experience and runs his own Facebook group with over 11,000 members, where he brings incredible value to the market. Subject To is something that I personally have had issues with, specifically with people abusing the deal structure. Subject To needs to be done more conservatively and the deal HAS to be able to pay for itself. Murphy’s Law can strike at any time, so there’s no reason to invite him in to the party. You need to make sure that you are taking care of YOUR seller when Murphy does decide to come call. The one key reason for a seller to allow an investor to take over their payments on a mortgage: because it solves THEIR problem. Usually the problem is more than just money, such as death, divorce, or some other life issue. Working with Subject To sellers is an honor, both because of the opportunity to make money and the bonus of avoiding the high interest rates of the banks. Don’t forget: visit us at CashFlowGuys.com to learn more about what we do. If you want to interact with us directly, head on over to CashFlowGuys.com/Group.

Today I’m going to be talking with you all about investing in debt, or what we investors also call the “note investing” business. To be honest, I wasn’t a huge fan of this investing strategy when I got started simply because I didn’t understand. But thanks to my note investing partners who “dumbed it down” for me and did a breakdown of the process, I’m a lot more confident working in this market. And that’s my goal today, to help all of you understand how to invest in debt, acquire notes, and not be afraid of the unknown. Because you’ll know! There are 2 types of notes in the market: performing and non-performing notes. Performing notes are when the borrower is paying the bill and there’s no back payments, no issues. A non-performing note, however, happens when the borrower is having trouble making payments. Now why would you want to invest in a note where the borrower ISN’T making their payments?! Well, that’s because when they fail to make payments, the terms of the note is violated. When this happens, there are a lot of options of how to make a profit BESIDES just collecting payments every month. Examples are foreclosure, short sales, “deed in lieu”, etc. Every exit strategy is an avenue to continue to make profit. To get started on repairing your credit in 2 years or less, then visit us at CashFlowGuys.com/CreditRepair. If you’d like to get started in note investing, then head over to CashFlowGuys.com/BookTyler. To join Paige Panzarello’s next note investing class, go to BuildingWealthWithNotes.com to purchase your seats. You can also email Paige directly at info@cashflowchick.com Don’t forget to visit us at CashFlowGuys.com and join our Facebook group at CashFlowGuys.com/Group. Get out there and make some CASH FLOW!

Today I’m joined by Jason Hartman, an investor with THOUSANDS of transactions under his belt in 11 cities and 17 states. Jason began working in real estate at the age of 19, brokering properties for clients, while at the same time building his own portfolio. Jason became one of the top 1% of brokers in the US and earned many prestigious industry awards.

This week I’m going to walk you through the steps you take AFTER you’ve placed the offer. But before we get into that, I’d like to remind all my listeners about my FREE 4-part email course, "Mailbox Money".

In this episode, I will show you EXACTLY how amazing real estate investing is for your life and your pocketbook! In December of 2014, Jill and Tyler Sheff purchased a fourplex using a VA loan. Not only did we NOT have to put money down, but we WALKED AWAY from the negotiations with money in our pockets thanks to our fantastic team of lenders and title companies. If you already own property, go out and BUY ONE MORE. We're going to use our equity to purchase MORE cash-flowing properties, rinse, and repeat. It is genuinely not rocket science folks, and it's not a pipe dream only for the elite!

Today I’m joined by Ben Leybovich, a real hands-on investor, owner of “JustAskBenWhy.com”, contributor to Bigger Pockets, and author of “House Hacking”. I’ve been a HUGE fan of Ben’s for years now since I began my real estate investing career (again), and I am beyond excited to have him joining us today. Ben is one of my favorite people because he backs up his knowledge with REAL ACTION. In today’s market saturated by “guru theorists”, that is a rare feat and one that needs to be celebrated and repeated as often as possible. Ben was formally a concert violinist and also suffers from Multiple Sclerosis (MS), which can cause pain daily for sufferers. Despite this diagnosis, Ben made the choice to charge forward in his investing career rather than let the disease bring him down. Ben has also created a system, named by his friend Brandon Turner, “House Hacking”. This concept is meant to create a lifestyle you’ve dreamed of now without the traditional deferred gratification of a 9 to 5 job, trudging toward retirement. He’s changing the traditional mindset of “How can I afford this thing?” to “How can this thing pay for itself?” To learn more about Ben and the House Hacking method and book, visit him online at JustAskBenWhy.com.  Don’t forget to join our Facebook group at CashFlowGuys.com/Group.

Today’s show is a pretty big departure from the norm. Usually, I teach you an aspect of real estate investing or a wealth-building strategy, but today I’m joined with Dave Fulk, President of National Credit Federation. Dave is going to show you how you can protect yourself against creditors and bottom-feeder lenders so you don’t end up paying an arm and a leg in interest and fees as you’re building your portfolio. As a former mortgage loan officer, Dave knows how the bank thinks and how you can present yourself in the best light to get lines of credit.

In recent weeks my trust has been violated by people that I chose to do business with.  I trusted these people to do the right thing, to follow through on their promises and was instead left wronged and disappointed. On this podcast, and while working with students and clients I preach to always document everything and to be sure all parties sign agreements that are prepared by attorneys. My mom raised me to be honest and ethical in all my dealings, to not take advantage of people and to be transparent and not feel that I have to hide from people or the truth.  My Dad (who I loved dearly god rest his soul) had a tendency to “stretch the facts” so to speak.  That always bothered me growing up.  Sometimes family and friends called him a “BS Artist” which upset me although I must admit that was partially true. In my early twenties I “stretched the truth” to a friend and was found out.  This person was very hurt by this incident, and knowing that my poor choices had a negative impact on another person bothered me deeply.  I will even go so far as to say that the thought of me hurting someone else by my statements changed my life forever.  Even though I was 19 or 20 at the time, I knew better.  Since then, I have always remained vigilant in telling the truth and not ever intentionally misleading anyone. As a father, I have raised my daughters with the same principles I learned from my mother.  I encourage my daughters to not live in fear and to be open and honest with people.  I taught them to work hard and help other people whenever you can.  I thought them to make a difference in the community instead of ignoring it or destroying it. As investors, trust plays a huge part in our success.  When someone violates that trust it sets back everyone.  We exist in a society where we are constantly lied to, where critical facts and figures are either not reported or worse, manufactured with no basis.  Americans have actually coined the phrase “little white lie”, Really? Lies in marketing: Have you ever seen a sign that says “We Buy Houses Cash”?  How about “We will close in 7 days or less”  or “No Commissions or Realtor Fees” If you post a sign like this, and do not fully intent on paying cash, closing in 7 days or intend on working without any compensation then you are part of the problem.  You can use all the fancy interpretations you want but that won’t change the fact that you are simply lying.. I see Facebook posts and ads promising specific returns for those willing to invest in another person’s real estate deal, I wonder what the Securities and Exchange Commission would have to say about that?  It amazes me to what lengths people will travel to attempt a shortcut.  Raising private money involves the development of a relationship and adherence to a strict set of rules, yet these rules often go ignored. I have seen ads on Craigslist offering properties for sale with the seller conveying only a quit claim deed which is a super high risk transaction. Ladies and gentlemen, nothing good comes from deception..ever. When advertising, simply don’t make false claims. Deal Structure: When two or more people agree on something it used to be such that the word of those people was their bond.  We have gotten away from those ideals over the years but I still want to believe that there are good honest folks out there that do good honest business. Larry Harbolt teaches to negotiate at the kitchen table.  Part of the reason he teaches this is that it is a highly successful means of negotiating.  To look someone in the eye is uncomfortable for many, and for those who do good honest business it is a proven deal maker strategy. Liars, thieves and cowards have a tough time looking you in the eye.  They will look everywhere else but at you.  Liars, thieves and cowards exemplify everything that is wrong with this country. When you structure a deal, PLEASE make sure it is in writing, clearly understandable and signed by all parties (with witnesses for good measure).  Try not to get suckered into the belief that “it won’t happen to me” when it comes down to seeing a deal through.  Our most recent lesson taught both Jill and I this very fact.  Sometimes, people are so paranoid that they are making a mistake or getting screwed that they actually convince themselves that details exist that are not real.  By this I mean they actually talk themselves into a scenario that is not actually happening.  When fear sets in to this degree, your best bet is to take a step back and let the dust settle.  Fear is a natural emotion to have, but we all must realize how crippling fear can actually be.  Try your best to not let fear drive you to make irrational decisions that are not based in fact.      

The band “The Eagles” wrote and published the song “Life In The Fast Lane” many years ago.  It was a popular song that headed to the top of the charts.  If talked about living large, running at full speed and so on. In today’s real estate world, many investors seem to be running in the fast lane which is concerning to say the least. Why is it that broke people turn to real estate as the solution?  What is the lure to real estate that attracts so many people with dreams of riches and fame? We Americans tend to idolize those who are perceived to be rich and successful.  Those who are “stuck in the rat race” view those that are not as “different”, mysterious and worthy of attention. What is the rat race?  Robert Kiyosaki wrote the book “Rich Dad Poor Dad” which is what first educated me about the rat race.  It kinda goes like this..get up, go to work, come home, pay bills, go to sleep, get up and go to work again. Many Americans are stuck in this rut with no hope of escaping.  Many believe that achieving riches in real estate is easy...which I disagree with completely.  Simple? Yes, that is a better word, because it certainly is not complicated. Hard work is something that many folks these days tend to shy away from.  Confrontation (or that which is perceived as confrontational) is another thing that spooks many people. Here’s the deal...you can lose your job tomorrow.  You can also lose your big business or government funded pension tomorrow.  Getting out of the rat race is all about building up your passive income to an amount that exceeds your expenses. Let’s discuss how we can accomplish this: First off, “get your money right” as Grant Cardone says.  This means not blowing your money on silly things that do not put money in your pocket.  Eating out is a huge expense incurred by Americans that is costing us millions. Pay off credit cards sooner than later.  Begin with the cards that have the smallest balance, this helps gain that feeling of accomplishment. Avoid the end caps at your local store.  These are specifically designed to entice you to buy, don’t get suckered into that (especially at Lowes and Home Depot!) Before you get started investing, you have to first establish financial prudence.  We have to know what is going out every month, where does our money go if you will.  Too many “investors” are financial trainwrecks and cannot figure out why real estate investing has not solved all of their financial problems yet. If we cannot control our finances, real estate investing will likely make your financial situation worse before it gets better. Once we know what our monthly expenses are, we then know where we need to be in order to escape the rat race.  Remember, the expenses only provide a “break even” point which does not allow for future growth or expansion.  It generally does not include retirement contributions, college savings or anything else outside of basic survival. The lower we can get our expenses the easier it will be to escape the rat race.  Cut out that which you don’t absolutely need until a later time when it will be affordable, trust me it will be worth it.  After all, for a couple years I had to stop buying electronics and firearms.  I am so glad those dark days are over. Many people find it rather easy to escape the rat race, only to be unknowingly back in the rat race quickly after escaping it the first time.  This happened to me at the beginning of our “second act” of real estate investing.  We acquired a bunch of properties (26 in the first year) and because I was so focused on quantity of properties I made a few dumb financial decisions along the way and had to streamline how I do things.  I fell into that “rockstar” lifestyle however I was able to jump right back out (after a swift kick in the ass from my wife).