Regardless of where you are on your Wholesaling journey, one of the biggest benefits of Wholesaling is being able to find deeply discounted properties and acquire them for yourself.
But what happens when you find an awesome property to add to your portfolio and you just don’t have the cash to buy it? If you don’t know the answer to the question, this episode will be a game changer.
Our guest, Susan Lassiter-Lyons, is an expert in acquiring private money and author of one of Tom’s favorite books, Getting the Money: The Simple System for Getting Private Money for Your Real Estate Deals.
IN THIS EPISODE YOU’LL LEARN:
- The #1 problem in real estate investing
- How to avoid one of the most common mistakes in real estate investing
- The magic question you can use to find interested investors
The Biggest Problem (and Myth) in Real Estate Investing
FUNDING is biggest problem in real estate investing… But it doesn’t have to be your biggest problem. People have the mindset that there is no money out there but, in reality, this is a MYTH.
Susan has personally raised over $26M in private capital and, collectively, her students have raised over $100M.
You have to understand that private investors only bring one thing to the table: money. You, on the other hand, bring opportunities to invest capital that make higher, safer returns on investment than almost any other way.
The Magic Question You Can Ask Private Investors
Don’t make the assumption that offering a higher rate on investment will equal more interested investors. In fact, investors are often wary of something that sounds too good to be true.
Instead, any potential investor this simple question: What is the money that you are considering investing currently earning you?
As a follow up, offer to double that return. Tom used this technique to secure capital for 4%!
Part 2 of this interview with Susan Lassiter-Lyons is available in Episode 74.
- Get started with Getting the Money: The Simple System for Getting Private Money for Your Real Estate Deals
- Dive deeper and sign up for Susan’s course at GettingTheMoney.com
- Learn more at Investor Insights
If you are Ready to Explode Your Wholesaling Business, Click here to Book a Free Strategy Session with me right now!
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Tom Krol: Okay guys, welcome to another episode of Wholesaling Inc. I want to introduce you guys today to an absolute rock star, a fellow rhino and someone that I am just so privileged to have on the line with me today, guys. We are going to deep dive a book that this person is the author of. It’s Susan Lassiter-Lyons. Did I get your last name pronounced properly?
Susan Lassiter: Yeah, you sure did.
Tom Krol: Perfect. Excellent. That’s good. That’s good for me, because I don’t usually do that. And the name of the book is called Getting the Money: How to Raise $250,000 in Private Money in the Next 30 Days. You guys, this is an absolute game-changer book. Everyone in the tribe knows I am an avid reader of business books, and we’ve read a least over a hundred that we’ve gone through this past year of 2015, and I can tell you with certainty, this is absolutely the Number One book that we’ve read, and that is comparing it to every other book that we’ve read, guys. That compares it to The Compound Effect and 10X by Greg Cardone. This is the book, so if you haven’t gotten the book, absolutely check it out. By far, my favorite book of 2015 and as definitely a Top Three. It’s going to be sitting in my office. It’s sitting in my office right now completely covered with paper clips and little sticky notes and highlighters.
So, I am so excited to have you here, and for anybody who doesn’t know who you are, if you could just do a quick introduction, and then we can deep dive this book. We have tons of questions for you.
Susan Lassiter: Sure, absolutely. First, thank you so much for having me on the show. I’m really excited to do this and really happy to meet all of you guys. Thanks for coming on and hanging out with us, and holy smokes. I mean I’m going to have to call him Darren Hardy and tell him, “Ha ha ha. Somebody liked my book better than you.”
I mean seriously, very high praise, and I love that feedback because anytime you put something out there that’s kind of what I consider to be my life’s work and my life’s mission, it’s out there for public consumption, and people are going to judge it one way or the other. So, I’m just happy to know at least in some corner of the world, somebody is really getting value from my books. [crosstalk 00:05:33].
But anyway, I’m Susan Lassiter-Lyons. I have been a real estate investor since 1994, when I was nine, so for those of you guys… No. Long, long time been investing in real estate., I guess this is my 22nd year of investing. Started out creatively like a lot of people do with lease options, with wholesaling. Did a little bit of rehabbing, which I’m not ashamed to admit I am the world’s worst rehabber. I’ll just go on record as saying that right now. I see you raised your hand. Actually, that’s so good. At least I’m in good company if that’s the case?
Tom Krol: Absolutely.
Susan Lassiter: And then, I went on to really recognize what my strengths were, and my strengths: two things. One was it was always about solving what I consider to be the Number One problem in real estate investing, and that’s the funding piece of it. We need leads, and we need money, and it seems to me that the most difficult part of the whole question was always, “How are we going to get the funding?” With banks and the crazy guidelines that conventional lenders have to follow, from ZenMaid, Freddie Mac, and hard money lenders who, with their outrageous rates and fees, are really kind of sucking the majority of our profits out of deals.
And then in 2009, I decided, after the crazy year of 2008 with the mortgage industry that I didn’t want to be on that roller coaster anymore. So, I closed the mortgage company and thought instead of actually providing the capital, in taking my cut, as a hard money lender and a broker, I’m just going to go straight to the investors from an educational training and coaching perspective. I’m going to teach people how to cut out the middle man, how to raise capital, how to be able to be in charge of controlling the funding on your own deals, controlling the rates, controlling the fees, controlling the terms, doing it on your own terms as opposed to letting some conventional lender or hard money lender dictate to you what the terms should be.
And so, that’s kind of what I’ve been up to for last 22 years.
Tom Krol: Awesome. I love it. I love it. It’s amazing because this book just spoke to me. It’s so simple, and everyone out there who listens to this show knows that I know very little about real estate. As a matter of fact, I always equate the wholesaling business to really more of a pawn shop than to real estate. [crosstalk 00:08:12].
Susan Lassiter: That’s a great analogy. I love it.
Tom Krol: Isn’t that fantastic?
Susan Lassiter: Yeah, that’s a good way to look at it.
Tom Krol: Yeah. They’re like, “Well, Tom, do you ever get into REO deals?” And I’m like, “What is REO? What does the acronym stand for? I have no idea.”
Susan Lassiter: That’s funny.
Tom Krol: So, this book, what I love about it was it’s so simple, and the title says it all, which is How to Raise $250,000 in Private Money in the Next 30 Days. Just for anyone who’s listening who doesn’t know why I love this book so much and what I’ve been up to is that as a wholesaler we make a lot of cash in finding these deals, and one thing that we do as our businesses grows is we cherry pick the pipeline for awesome deals.
But the mistake that I was making, Susan, is that I kept using my own money, and you’ll probably hear the same thing from Clayton Morris, who is one of our tribe members, and he was doing the same thing, which is you save 100,000, you buy a great rental property with a higher ROI, one or two of them, but the problem is it’s so slow. It’s so hard to acquire a lot of properties, so it’s like one, two, three. So, we read the book, and this book I want to say was recommended to us from another one of our clients, Greg Harris, so I just want to say thanks to Greg.
Susan Lassiter: Oh, yay. Thanks Greg. I appreciate that.
Tom Krol: Absolutely. He’s a rock star.
So, I want to deep dive this. I have a few questions. I have some questions from some of our tribe members. Are you ready?
Susan Lassiter: I’m ready.
Tom Krol: Let’s do it. All right.
Susan Lassiter: Let’s do it.
Tom Krol: I am excited. So, first of all, I want to start with this myth that I know is no longer true, but I felt that it was definitely true before I read your book, which is there’s really no money out there. It’s like the only money available… I was looking for some hard money when someone recommended your book, and there was a guy I spoke to in New York who was a friend of a friend of a friend who was like, “Oh, we don’t really lend out a lot of money, but if we do, it’s 15% in three points.” And I ran the numbers and said, “At that rate, forget it.”
Is there money out there?
Susan Lassiter: Yeah, there’s a whole lot of money out there. I wish I had the stat right at my fingertips. I don’t, and if I look for it, it’ll take forever. I have the worst memory for stuff like that.
But when we’re talking about private capital. Private capital that’s flowing into what we call private offerings, and that means the kind of money that we’re talking about, coming into private offerings, which is just kind of a high-level term for our real estate deals. We’re pitching individual investors to invest in our private real estate deals. That’s private money. That’s a private offering. It’s happening all over the United States to the tune this year of probably close to a trillion dollars, for not only like the smaller players like us, because let me tell you, I’ve raised over $26 million in private capital. But that’s just a drop in the bucket compared to what some people are raising. I haven’t formally tracked it, but I have kind of informally tracked it just based on unsolicited testimonials and case studies that we’ll get in from people who’ve read the book and people who’ve been through the home study program of Getting the Money.
But so far, students have collectively raised about a hundred million dollars in private capital for their own real estate deals, and these are not like giant companies. These are people that are maybe doing a rehab deal a quarter, four deals a year, maybe two or three, five deals a year, maybe buying a smaller apartment building, so there is absolutely money out there.
And there’s one thing I just want to end with when we’re talking about this money thing. I think, for some reason, because this myth is so pervasive, we think we have a real scarcity mindset around money and capital. And so we, for some reason, and I’m not pointing any fingers, because if I did, I’d have to point it right back at my own self, because I had these same fears and mindset issues when I first started raising private capital. It was the “Oh my gosh.” It’s A, if this person even has any money, why on earth would they want it invested in me?
And so, when I finally did this kind of mindset switch and realized money is ubiquitous. Money is everywhere. There is no shortage of cash, and in this country, if we don’t have enough, then we just print more. It’s everywhere, and so when I really kind of flipped the switch in my mind, when I started talking to individual investors about investing in my deals and when I realized the only thing that you bring to the table is money, and I can get money anywhere: I could go down the street to the hard money lender. I could go to a bank. I could go to the portfolio lender. I can go to my own IRA. I can go to my own savings. The only thing you’re bringing to the table is money, but the thing that you don’t have that I bring, this value to this deal, is this opportunity for you to put that money to work to make a higher return and a safer return than you could in just about any other investment or any other vehicle that there is out there.
Tom Krol: I love it. and I will tell you right now that you can start saying as of today that my clients have raised 100 million, 340,000 because in just reading your book, without even trying, just on page 27, you guys, 27, get your highlighter out. Where you say your value statement. One thing I started doing is for instance, I met my insurance agent, one of my insurance agents. There’s a new bagel place called Bagel Break in Port St., Lucie, if you guys want check it out. I was there for breakfast, and I had just read your book and it said, “I put lucrative real estate investments together so that my investment partners can make safe, consistent profit.” That is what I said I did. He said, “Well, that’s great. I have $40,000 right now,” and I went through your statement that goes on in the book about, which I love the question of “Well, how much are you thinking of investing in? How much is it making right now?” And we went through that. I said, “Well, 2%, what if I could double that to 4%?” And bam.
It was so easy. It’s easy peasy lemon squeezy, and what I realized is that I thought that all, because I’m on the wholesaling side, or I guess I’m on the real estate investing side, even though I’m not really a big, big investor. But I always assumed we’re all scrambling to find this money. But what I realized after reading your book is on the other side of the equation are all these other people with tons of money in the bank who are looking for us all over the place, and they can’t find us, so I love that it just kind of opened my mind to that whole other side of this. By just saying that one little sentence now when I introduce myself to people is fantastic, and since then, we had another 200 and a hundred come in, and we’ve already leveraged one of those deals. So, it’s been just an amazing journey, and I can’t wait to deep dive it more, but it’s been awesome.
Susan Lassiter: That’s fantastic. You touched on a couple things. First of all, the value statement. So important, because before you probably came across a value statement like that, which other people might call an elevator speech. I just call it what I say when somebody says, “Hey, what do you do?” Because it used to be when somebody would ask me, “Hey, what do you do?” I’d say, “Oh, I invest in real estate.” And then they’re like, “Oh, that’s nice.”
But what does that really tell a person, and even beyond that, what kind of value does it give to them? So when you draw a value statement like that” “I put together lucrative investment opportunities so that my investors make safe, consistent returns,” it’s like, “Wow, okay, so now I know what you do, and now I know there’s actually something in it for me, and I want to do that.” And so, once I started using that value statement, I would get one of two reactions. It was either, “Well, that’s cool. How do you do that?” Or “Well, that’s cool. How do I get involved in that?” And it sounds like that’s your same experience as well.
Tom Krol: Absolutely 100%, and I love this book, because it’s so similar to really some of the books that I’ve read on mindset, and it’s really an exact translation of having an abundance mindset rather than a scarcity mindset. Progress not perfection, and it takes what I’ve learned from so many other books and kind of put it into this one subject of how do you secure private money? And really, what it’s helped me to do now is literally speed the rate of my acquisitions of the properties that I cherry pick off of my pipeline, which my acquisition managers get mad at me. They’re like, “Tom, stop taking all the properties from our pipeline.”
Susan Lassiter: “You’re taking all the good ones.”
Tom Krol: Yeah, I take all the good ones, but it’s so amazing that it’s the mindset, and I don’t want to, but you have so many awesome things in this book. The other part of your book that I love, it’s on page 62, which is one of my… This is like a core value in a tenant of our company, in the wholesaling business, and something we always discuss with our acquisition managers and we always tell them, and even with our clients in our tribe who are learning wholesaling, is we always say, “Don’t assume that you know what the other person knows, or don’t assume that you know what the other person is going to say, and assumption is the mother of all mistakes.” So, we always let them give the price first. Well, I love how you have made that transition over, or also the same tenant in your book, and it says, “One of the biggest mistakes you can make when you get a private money partner is to assume they know how all of this works.”
And I will tell you that’s definitely the case for us. As soon as I say, for instance, one of the lenders was a person who has a lot of money in an IRA account, and the question was, “Hey, I have $400,000. I’d love to give you 200,000 so I can make a bigger percentage. How do I do that?” And just assuming that they would know, “Hey, just write me a check” is not the right answer, so I just wanted to tell you, that’s another amazing-
Susan Lassiter: Thank you. And it’s true. It’s through this whole process. Even when we’re explaining our investment opportunity to people. You said before, somebody said, “Hey, have you looked at REO,” and you’re like, “REO? What the heck is that?” These are the tiny mistakes that we make when we talk to average individuals about investing in our opportunities. It’s like, “Oh, my company invested in bulk REO,” and it’s like, “What the heck is that? It sounds scary.” We just buy a whole bunch of houses at one time.
Let’s make sure that we’re explaining it to them in terms that they can understand. The other question, and we just glossed over this, but I want to circle back around to it, because this is such an important, important piece of that. When I figured this out and started teaching it, this is when, Oh my gosh, things really started to take off for us in terms of increasing our profitability and the earnings that we were able to keep on our deals, and frankly, the rates that we were having to pay out to our investment partners. I think one of the biggest mistakes that we can make when we’re newbies and we set out about raising private capital is the assumption. So, we’ll stick on this kind of assumption topic. Is the assumption that the higher the rate that we offer to our investment partner, the more likely they are to invest with us, and in my personal experience and the experience of many, many others that nothing could be farther from the truth.
When I would come out with, “Hey, I could pay you 15% on your money,” people thought one of two things. Either Number One, that I was lying, because it’s too good to be true, and there’s no way you could do that. Or Two, that I was just going to be a scammer. I was just saying that so that I could get their investment money and then turn into some sort of Bernadette Madoff where I run off and spend the money on fur coats and I don’t know what else. So, I think we do ourselves a real disservice with that kind of old way of thinking, and so we developed the whole kind of what I call the magic question. Instead of leading with “This is what I am prepared to offer you as my investment partner,” we scratched all of that and instead we held that back a little bit. We still crunch the numbers to know what our investment can afford to pay our investment partners to make it a win-win for both of us.
But I want to know the money that they’re considering investing in this deal, what is it currently earning them, and that’s exactly what you did. You asked that magic question, and the answer that you got back was 2%. And then the follow-up comment is, “Awesome, what if I can double that for you?” Well, let’s look at it from a win-win perspective. A, you just doubled the return that your investment partner’s getting, so he’s ecstatic. And B, my friend, you just got private money. You got capital for 4%. That’s how we’re able to pay these very low interest rates. The record with my students is held by a woman named Roberta Eastman, and she has so far got the lowest interest rate at 3.55% by using these magic questions, so we’ll see if anybody out there can beat it, but that’s how you get the low rates.
Tom Krol: This is such a ninja move. It’s so funny. This is like a ninja. This is amazing. I love it, and I want to ask you another question here. It came up in the tribe, and it’s going to sound a little sexist, but that’s all right. We’re going to float on the edge of this. So, some of the ladies in our tribe, we noticed that they’re a little bit shy, and I just wanted to ask you, is there anything that you can say to the women out there who are wholesaling? They’re doing a great job, but they’re kind of a little tentative. They’re a little bit shy, and they hold back a little. Anything you could say to encourage them or get them on the right path to kind of securing private money, and what does that look like?
Speaker 3: Okay guys, that concludes Part One of this awesome interview. You’re going to have to tune in Thursday to listen to the answer there, a little cliffhanger for you, and I really hope you enjoyed today’s episode. So again, Part Two will be airing this Thursday, so be sure to listen to that.
And by the way, if you enjoy this podcast, if you are getting value from listening to this podcast, please, please go over to iTunes and leave us a review, and rate the podcast. It will only take a few minutes, and it really helps this podcast get out to more people, more awesome people just like you. So, it’s a pretty easy deal, and I’m trusting that you’re going to go over there right now and do that for us. Again, just head over to iTunes. If you are an Apple user, you could just go over there, leave us a review, and rate the podcast, and if you are an Android user you could go to stitcherradio.com. Just search us up: Wholesaling Inc, and you can leave us a review over there, too, so we don’t want to leave you guys out either.
Anyway, we really appreciate you going the extra mile and doing this for us, and like I said, it really helps us get to more people on the podcast, get this out there to more awesome people like you, so until next time, have an awesome day.