Cool. So we re going to have a little Q & A. Why don t you go ahead and sit - Bob, you re sitting on my seat man.

Transcription

1 I want to bring up a couple of people. Remember yesterday at the very beginning of the day - come on up guys. Les, Bob, Bill come on up, and Bill get a microphone too. When I said, Alright everybody, if you ve never raised any private money, sit down if you ve raised 100,000. Remember when I did that? There were a couple of people left standing like it was the Wild West, like who s going to sit down first because I ve got like 5 million and stuff. So there were a couple of guys that were standing toward the end and so I want to bring them up here so that I ll ask them a couple of questions and we kind of elicit like, What s going on in their business? Exactly what are they doing? What s working for them? And, What are some of the challenges that they are facing as well? I also have Coach Bill Walston up here who is a master lease option investor which is basically just doing lease options on commercial properties but now that he had a chance to do what he calls Try it before he buys it, right? Because he controls that commercial property without owning it, now there are a couple of the 33 deals that he has under his control that he wants to buy out. So he has just started raising private money to buy out those buildings and I m going to ask him about his experiences too. So I always like to learn from the real people who are doing it. I mean I can stand up here and say, Alright guys, this is how I did it and then you do this and this and this but isn t it cool to hear from regular people that are really doing it too? Respondents: Yes. Cool. So we re going to have a little Q & A. Why don t you go ahead and sit - Bob, you re sitting on my seat man. Bob: Oh, you want me to move over? Yes. Bob: Okay. Did I just bust a frame? [Laughter] You re not in control up here Bob. Alright. So, first of all just say who you are, say where you re from [Laughter], tell them what you do and go down the line and then we ll all start asking you some questions. 1

2 Bill: I m Bill Walston. I m from Johnson City, Tennessee. I m a fulltime real estate investor and also a coach with Lassiter Marketing. Bob: I m Bob Malecki. I m from Kingston, Washington near Seattle. I m a fulltime real estate investor and partner with Chris Odegard in REI Capital USA. We purchase distressed properties and reposition them so that our partners can earn a large income from our projects. Les: Hi. I m Les Jepsen from Minneapolis, Minnesota and Sarasota, Florida. I invest fix and flips and buy in commercial and residential. So Bill you re probably the newest to raising private money, okay? Your former life, you re JOB, you were CPA and you started off doing residential lease options but you kind of got bored with that and the returns and so you went to commercial lease options and you Bill was one of the first customers to buy my Master Lease Option Method Program and Bill: February [Laughter] [Laughter] In February of With just like minimal coaching, he contacted me and said, You know I just need a little bit of coaching around this. I was like, Sure, I can do that. Minimal coaching went on how many deals? Still 33? Bil: Thirty-five. Okay. So 35 Master Lease Option Deals which means that he controls 35 apartment buildings you guys. Can we get a hand for that? This is a guy that takes massive action and he knows real estate like nobody s business, and one of the things that Bill and I have been working on together is you know, Bill, these lease options are nice. And I know he likes them because he gets the control without ownership but there are a couple that are just such sweet deal deals that it makes sense for him to actually now exercise his option and buy. So Bill is just using methods, started raising some private money. I want you to tell us about a little bit about your decision to get started doing that, what you re targeting in terms of the amount of money that you need and some of the things that you ve done to initiate getting your private money partners. 2

3 Okay. What I was going to do with my master lease options was to do first, hopefully a subject to with the seller because we build out relationships; my other option is going to be raising private money like Susan said. I ve actually started that now since the last event we were at and I am just shy of 500,000 Cool. right now. Most of So the last event ended on June 30 th? Yes. Okay. So just under $500, in, was that two and a half months? About two and a half months. Yay. I m going to clap for that. Awesome. Except I got commitments for that, we ve not had the exercise yet. But I ve got commitments on it and its relationships like you ve always said, and knowing where the people are. I go to a lot of charity events and things like that and just let people know what you re doing. A lot of people did know in there that I was doing Master Lease Options and so we were talking about that and I said, Yes, now I m going to have start exercising those options and I m going to be giving selected people the opportunity to do that with me. Because who s the prize? I am the prize. That s right Bill. Bill s the prize. Cool, and here s the other cool thing that I think is just going to kind of explode your business. Now that you have this half a million dollars and commitments, you re still out there marketing every day for Master Lease Option Deals, but often times, you re asking people to do a really creative 3

4 strategy. Right? So maybe if he talks to 10 building owners, maybe only one of them is really going to go for a Master Lease Option Deal where he takes control of over a property without ownership. But the other nine want to sell their property and now that you have $500, in cash spend, it opens up a lot more opportunity. Right. We ll be looking at some of those as well. Yes. Not just a creative deal anymore but now you have that cash to back it up if you do want to take down one of those deals. Yes. Cool. When you presented these people, I know that you just gave us a line that you gave but tell us a bit more about your process. Do you sit down with them? Do you walk them through a presentation? How do you get your commitments? Mine a lot of time is we have a meeting and we don t do it there. Usually this is like, I said at that the events we talked and we ll set up a meeting, just sit down. Okay? We don t have the Mexican restaurant kind of thing that you do. What? Yes, I m sorry. We don t. But we ll go out and eat something and sometimes we ll go see a property because I m looking at people who are in the areas with the property and we ll just talk about the opportunity. I ll explain what I m doing with the master lease and then I ll explain what I m wanting to do by taking out the property, and most people, they re excited about that. Cool. By taking out the property, that just means that he s going to be exercising his option to buy and actually closing on that property to take the ownership. Does that make sense? Yes. 4

5 Okay. Cool. Thank you. So Bob, when did get involved with the getting the money program? Probably early last year. I think I attended the getting the money event last spring with Wendy, and then we deployed a lot of the things you ve thought us. In fact I was just going through your checklist of all the website stuff, Check, check, check. Yes. Done, done, done. And all the social media. So, thank you very much. I m cool with that. I ve been flipping houses for about six years in Kitsap County which is west of Seattle, it s a more rural county and a little more isolated. Built up a great set of power teams, my real estate brokers and escrow agents and some title companies and so forth and contractor teams. So I had this really nice system going through virtually where all I was doing was making phone calls, writing checks, negotiating prices and visiting my properties once and a while and so forth. I was working with a lot of private lenders. I probably raised and utilized somewhere between $1.5 million - $2 million over the six years but you have to keep going back to the private lender each time and get another project. One of my private lenders at one point when we exited out of a project, I went back in for the next one, and he said, Oh, I m going to invest that money in my nephew s vineyard in Vancouver, Washington. So, I lost him; and that s when I kind of just thought, You know, it d be much better just to build a pool to execute this and expand my instead of doing one or two projects every three months, do five or 10 projects every two or three months or whatever we could deploy as we grow. So Wendy and I started the fund and the goal is to raise up to $5 million dollars on a 505D and we hired a security s attorney and got our PPM and got all of our registrations done and then began to send mails out to our friends and family and do some test presentations, and one of private lenders that I ve worked with for many years and treated each other very well, I sat down with him in his kitchen, he s retired from the social like military. Anyway, he s retired and I sat down with him and I had this presentation where I showed him that when we buy a property, we re going to take the capital fund that we ve created and we re going to leverage each property, 70%-80% with hired money. So we re only putting in 20%-30% of our investors money into that project and when you flip a house and you invest $50, for down payment and rehab and you get back $30, in profit on top of that, 5

6 that s a 60% return on your money. As soon as I got to that one slide, he just said, Stop. Do I write the check to you? [Laughter] So you know, it was very convincing but it was a trust relationship I had with that private lender and he put in $100,000.00, he was our first guy to come in. I really hit a homerun on my first guy. From there though, things stalled out quite a bit and Wendy exited the company, Chris is coming to the company and we re re-deploying our efforts both in terms of using social media and friends and family but Chris and I are going to conduct a with the thing I really wanted to do is get out then market. So we re conducting basically how to invest in real estate seminar next month at the Seattle Airport Double Three, we ve rented a room, we ve bought a mailing list of medical professionals. We re going to invite up to 75 medical professionals who own real estate already, who are what I call busy professionals who don t have time to do this but may want to get more information on it. We re bringing in speakers, Karen Hall from udirect IRA is going to speak on using your IRA and bringing in our attorney to talk about asset protection and we re going to bring in one of our local real members to talk about property management, give them a nice, well rounded, four hour discussion on real estate and asset protection and hopefully, some of those people in that audience, we re not going to promote our fund, we re not allowed to, you know, it s prohibited but we re hoping maybe we ll draw some of those individuals back to ask us about our fund and become passive investors versus active investors. It s an experiment, it s going to cost us probably $ between the mailing list and the rooms and all that stuff but if it s successful and we do bring in some investors, then we ll just repeat that every quarter in addition to doing our friends and family real groups, things like that. Cool. Awesome. So, completely different tactic and approach than like what Bill s doing, right? Okay. The point I was trying to make yesterday, when people were like, Well, how should we structure? And like, What should we pay? It s like it s not cookie cutter. Right? It just depends on what your goals are and what your investment criteria is and what it is that you want to accomplish. What Bill wants to accomplish is something very different than what Bob wants to accomplish. Right? Bill just wants to take out some creative deals and to take ownership instead of control of his master lease option deals, Bob has got a whole other route, right? With putting together a fund. Okay? So, Les, Jepson, what s the scoop? 6

7 Well, I started fixing and flipping with a business partner; he was doing that since 2000 and he want to play golf one day and he said, Would you be interested in parting me some deals? I said, I ll take after profits, I ll fund the deals. And he said, Great. So I just wired the money, I signed the purchase agreements and then in May of 2011, one of my basketball teammates from Iowa, handed me with a shopping mall, there was a 20 cap well actually, he showed me another deal before that, they got bought and bought again and I said, Well, I got to really look at this. We ended up doing that deal. That was my first commercial deal and I raised private money but it was for my family, pretty much a couple of teammates but then I just kept going from there. So, Les is a member the Million Dollar Club, which is our coaching program. How long have you been in coaching program now? A little over six months. Six months? Less than a year. So, you had other people coming at, you would like with this other opportunities and I think, correct me if I m wrong and you can probably explain more about this but you came to us because you were like, Look, I want to learn more about doing this for myself. Instead of being a passive investor and some of these things, you have some big ideas like you want to be a private lender and you want to figure out how to structure that and you want to know how to do some other types of investing. So, tell us a little bit about your growth like in the last six months and how some things have - if anything has changed for you or how your business has changed or improved. Yes, I mean I had a coach, a real estate coach through the Mike Ferry Organization about 10 years, that s more sales-based, it s nothing to do with private equity or raising money. But my coach in the Mike Ferry System, he just sold like a $60 million shopping center they were developing in New Jersey. So he knew what he was doing, so he kind of walked me to the first couple of deals, how I did that and then but you know, I wanted a resource like yourself. You have webinars and you 7

8 have your websites. I could click through it and watch your video or talk to Bill. That was the extra resource that I needed. I learned about a portfolio lender versus traditional lender, little things like that I didn t know; and so every time I get an idea, now I capitalize on it and so I m just trying to just keep moving on. Yes, and that s a thing about Les, is that you can have a conversation with him. Like last night, we were at dinner and we were chatting and we re chatting a lot about like travel and experiences that we ve had and I can t remember exactly what I said but all of a sudden like his eyes glazed over and like, Oh, I wonder where Les went. We re talking about like Ireland or something or the ice hotel in Sweden, and then all of a sudden Les is like, Well, do you think that if with private lending we did a dadadada, do you think that that would work? I m like, Dude, we re talking about sleeping on an iceberg. We re not talking about private lending right now. But he s always thinking of an angle and he s always thinking of different things that he can be doing in his business to like monetize and leverage the activities that he s already doing, which I think is really cool. Cool. So, how much money total have you raised in private money? It s between $3 million and $5 million. I never really counted. I don t know. Or maybe it s more and I don t know. What is your process? I call the osmosis process. I mean people just say, What are you doing? I was like, Well, I just bought a shopping mall. I was like, How can I get involved? and he s like, Well, I ll let you know if I get another one. I kind of use the same 20 people but with the websites and stuff, I ve never done the LinkedIn thing. I mean, if I want to expand I could but I wasn t ready to that yet. I m excited about that. Cool. Bob, how much total in private money have you raised? Somewhere up to $2 million, yes, between all my projects over the past six years. Okay. Tell us about your future plans for raising private money if you are going to do another fund or what s going to happen when you close up this fund or just how are you going to grow and how was your business going change? 8

9 Yes, I think that right now our short-term goal is to get as much capital raise into this fund while the market is still hot. Our goal is to start with single family and small multi-family in the Puget Sound area of Seattle. We re a 505 fund with a $25, minimum, so a lot of our investors want to see local properties. We talk about buying a multi-family in Oklahoma City and they re like, We don t want you to go there. So we re starting small and spending out, not out of control but just spending out in terms of geographic region and asset classes. Our PPM does include larger multi-families and so as we raise the capital and we start getting up into the $2 million and $3 million range of capital, then they ll give us the opportunity of the equity go out and buy a multi-family. This is a five-year fund, so we have to exit out of it at some point and depending what assets we have under management, we may spend those into another fund or depending where the economy I mean in five years, things are going to probably change somewhat drastically, that s why I love this business, it s always a moving target. So we have to exit out of it and we ll probably exit and transfer those assets to another fund and grow another fund from there. Okay. Les, I don t know for sure but I would wager that 100% of the people that you talked to about raising private money, I bet they don t all do it. Right? You haven t gotten 100 yeses out of 100 asks. Is that a fair statement? No. I can t remember who didn t say yes but I don t know. I can t remember or may I just forgot. I don t know. So you re telling me that every single person you ve talked with about raising private money and investing and deals with you has said yes? I think maybe one said no but I pre-qualify pretty well, means all. So, for those of you that are out here, planning in advance to fail at this, alright? You know who you are. What do you think about that? Here s a guy, he s telling you, Yes, I just what are you doing? I don t know, just bought a shopping mall. [Laughter] How can I get involved? I don t know, I guess I ll call you if I get another one. You know, it s like I love him but I mean, really? Not a whole lot 9

10 of credibility, right? On the surface. But look at how he positions himself. Who s the prize? Respondents: He is. He s the prize. It s not about him sitting down in front of somebody, with somebody like making him feel inferior. I would imagine you re kind of an imposing presence, he s like 7 feet tall. I m not sure that many people can make you feel inferior, at least to that extent. I ve met a few. But here s a guy who doesn t have to rely on probably formal presentations, doesn t put himself in those situations but has a frame that basically says, I m credible because I m doing it. I m the prize. If you want in, yes, I ll call you. Give me your info. Casual chill. Okay? Now, I m teaching you like the steps. I m teaching you like, Okay, this is the professional way to do it. This is how you do it. But at the end of the day, it s about relationships and building relationships. Right? It can be just as casual as that. How would it feel if you got to sit in a room or sit on the stage and have me say, I m sure every pitch that you ve made hasn t been successful. Has it? To really have to think about it and go, Well, I think somebody told me not once but I don t really remember. How awesome would that feel? Respondents: Awesome. Awesome. Way to go Les. Sure. Just a few personal experiences. Last year and the year before I started looking into multi-families and I was making offers on properties, 150 unit multi-families in Oklahoma City and Memphis. Without any capital, I had a partner who was supposed to raise their capital but I was doing the opposite of what I m doing now. I was getting the property and their contract and trying to very quickly find $2 million for the down payment and I failed on every one of those. One thing that drove me into this, a blind pool is realizing I need to raise the money before I get 10

11 the properties and another note too is that my brother-in-law who has invested with me, and he s a really skin flint, my wife was like amazed, he went in but What s a skin flint? Just really a miser. Cheap? Cheap guy. Oh, okay. Skin flint. Very practical. It s a Cleveland term. It s a what term? Cleveland. No, I was just kidding. Oh it s a Cleveland term. Okay. Skin flints. All you skin flints from Cleveland. He was investing in one of my flip projects really this year. He had $90, into it and so I figured when he exited that and got his money back, he was going to get into our fund. No problem, I ve worked with him for years. Well, he read the PPM and he says, So this isn t backed up by a mortgage. I don t have a security in this. I said, No, it s higher risk but better performance. He says, You know, I think I m going to hold off for a while and see how you do. I mean it really shocked me that this guy I ve worked with for years wouldn t come into this fund that I established because being a skin flint, he was not real secure with not having any security I mean not good about having any security in them. So, interesting that that you can People will surprise you. I was doing one to one private money lending for a while. I was brokering money on a one to one basis so I would get a deal in. If the investor needed a $150,000.00, I would go to one investor who could fund the whole thing. Then I said Oh. Well, now in order to gain efficiencies, I m going to put together 11

12 this private equity mortgage pool. I threw this great lunch for all my existing one to one investors and I invited them, I m sharing the information about how it s going to be so awesome and now we re all going to go in this pool and you won t have that leftover money at the end of the day that you re always yelling about me to deploy like some random $35, that isn t earning any interest and I don t have any use for unless I pool it with somebody. They came in and they got their food and I walked them through the whole thing. I had 10 people there and four of them were like Nah, we ll just keep doing it the old way. I was like What? Are you kidding me? and I m really trying to explain. No, we just really like the one to one model. So there s sometimes no rhyme or reason. I didn t call them skinflints because I never had even heard of that and I wouldn t insult somebody with something I had never even heard before knowingly. But it was like I was shocked that they didn t want to come in to the pool but that s fine, right? The bottom line is that they do what they feel comfortable doing and if that s their comfort level and it s the way that they ve been working with you all along, the thing that I said to them was That s awesome but what you have to understand is that the deals primarily that I get in are going to get funded from the pool. If there s an opportunity left over, then it may trickle down to you but the guys that are coming in to the pool are the guys that aren t going to get the deal. That got a couple more to jump off the fence but I still had a couple of holdouts. So sometimes there s just no real rhyme or reason into why people decide what they decide to do. Bill, what have been some of the challenges that you faced with raising private money? My biggest thing when I first got started was getting over that idea of thinking that you re borrowing money. I was like someone else who had the same breakthrough that you re offering an opportunity. It s really strange that I would feel that way because when I m doing real estate and selling real estate and I m talking to a seller, I m always of mind that Hey guy, I m not going to jump through hoops for you because I am offering you a solution to your problem. You want to get rid of your property and I want your property but I wasn t at that same place with raising a private money and once I got there, it s like a conversation. So one thing I would say is don t be afraid to let people know what you re doing because it s like let s say he bought a shopping center. I thought the people about while I m doing mass release option deals on apartment buildings, they say Gosh. Well, how do you do that? and you just talk about what you re doing and I m saying that I m 12

13 going to be taking those properties out or I m going to be purchasing those properties. I have a lot of people say Well, how do I do that? Well, it just so happens, okay. It s just a conversation from there. That was really, really the big thing for me. So you re hopefully noticing picking up on a couple of themes here and this is why I want one of these guys to come up here just really briefly and just kind of share a little bit what they re doing. I wanted you to see they re just regular guys, right? There s nothing super special although you re all special in your own right and I adore all of you but there s nothing super special about these guys that would make you look at them and go Oh of course he s going to be able to raise a couple million bucks because he s Les or he s Bob or he s Bill or she s Susan, right? They re just normal guys. A couple of themes that I really want you guys to pick up on here, theme number one is that as each of them have described the way that they present their opportunity, it s all just a conversation, right? It s just talking to people. It doesn t have to be formally sitting down in front of somebody. It s just letting people know what you do and having a casual conversation with them. Number two is that even though the lowest amount of money that we have raised is a half a million and the highest is several million dollars, these guys are still at a getting the money event, learning and mastering their craft. I think that says an awful lot about them, their character, and the dedication that they have to mastering this business and like Les, always looking for new opportunities that he can use as existing businesses to leverage himself into. So thanks so much you guys for sharing a little bit with us. Let s give them a hand guys. So you re obviously going to be able to find Les in the crowd because he s the tall guy. Bob might be a little tougher to find but he s telling me about these awesome pants he s wearing today so look for the guy with the expandable pants, but talk to them, right? Because part of the reason why you re here in this live environment instead of sitting at home, watching on a webinar or listening on a teleseminar is part of the experience is networking and being able to talk to people, real live people who are doing this and making it happen every single day in a small way, in a medium way, in a really big way to get inspired and to be able to get those extra nuggets of information and those extra knowledge bits that might help you further what you re trying to do in your private money business as well. So Les is going to be here all weekend obviously, Bob is here all weekend obviously. Chat with these guys. Ask them additional questions that you have for them. 13

14 -End of Recording- 14