Posted on: July 13, 2017

This episode is Part 2 of a two-part interview with Susan Lassiter-Lyons. If you haven’t checked out Part 1, you can find it at WholesalingInc.com/podcast.

 

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.

Susan Lassiter-Lyons is an expert in acquiring private money and the 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:

  • Why authenticity is attractive to investors
  • Myths you shouldn’t believe about lenders and investment partners
  • How Susan leveraged private capital for real estate investment

 

How Susan Used Private Capital

Susan has raised over $26M in private capital through a combination of one-to-one deals and group investments.

She started out by purchasing a number of multi-family residential properties with an average all-in acquisition price (purchase price + repair costs + closing costs) of $175,000.

  • She secured capital for these purchases by finding individual investment partners who could offer the full price of the property. This type of one-to-one investing is called trustee investing, and there are fewer guidelines to follow in these deals.
  • She rehabbed and sold some properties as turnkey rentals to other investors using seller financing by “wrapping” the underlying private money mortgage (and then kept the best properties for her own portfolio). The result is Susan makes money off of these deals and then positions herself as the bank, as opposed to the landlord.

After raising a lot of capital to fund these one-to-one deals through her mortgage company, she started brokering out money for other people’s deals

  • She was paying 7% on the capital she raised, then utilized that money to become a hard money lender.
  • She lent out at 15% with 4 points to investor borrowers with a six-month term through her mortgage company and then kept half of the interest rate in the spread.
  • Put very simply: she borrowed money from Joe and then lent it to Mary at a higher rate, for more money.

Are you ready to start Getting the Money? Pick up the book and get going.

 

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Episode Transcription

Susan: So when I first started trying to raise capital by trying to pretend to be someone that I wasn’t, I was not successful. When I finally gave up and said screw that, I’m just going to wear my flip flops and my jeans, and instead of meeting people as some fancy, schmancy conference room to raise capital, let’s just go to [Aloma 00:00:24] my favorite Mexican restaurant and have like giant fishbowl margaritas, and chips and salsa and let me just tell you what I’m doing. Then all of a sudden my business exploded.

Speaker 3: This is game changing information guaranteed to raise your real estate wholesaling business with actionable steps you can take immediately to navigate the ins and outs of wholesaling and start making money today. Join us as we put our guests in the hot seat and dive deep to dissect their strategies for success to enable you to duplicate their results. Investor Grit presents Wholesaling Inc, the only show dedicated to making you a fortune in wholesaling with your hosts, Tom Krol and Cody Hofhine.

Speaker 4: Okay. We are back for part two of Tom’s interview with Susan Lassiter-Lyons author of Getting The Money. So if you haven’t yet listened to part one, please go back and do that before you listen to this. And if you have listened to that episode then get ready for part two of Susan Lassiter-Lyons’s interview where she shares some killer, and I mean killer strategies for getting the money. Enjoy.

Tom Krol: So, this is amazing. I love it. And I want to ask you another question here that 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?

Susan: Get over it.

Tom Krol: Nice.

Susan: Seriously. Here’s the thing, I get it, right, because I’m a woman. I understand. I’ve heard all the things, I’ve experienced all the things from, why don’t you wear a skirt and pantyhose to you’re not wearing makeup to, I did an event one time and a woman actually came to the microphone, it’s like during a Q and A period. And her question was, “Why do you stand the way you stand?” She’s like, “It’s very … it’s kind of like you’re posturing yourself in kind of like a power stance or a power posture.” And I was like, “Really? I do?” Maybe it’s just because I’m carrying some extra weight and my thighs don’t fit together the way they used to anymore. It’s like it’s not on purpose people.
But here’s the thing, we hear it a lot and I hear it a lot and I think the word itself is overused, but I’m going to use it in this context to make a broader point, and it has to do with authenticity. Back in the day when I first started raising private capital, I did and assumed the identity of, or the persona of a person that I thought I had to be or had to present to the world in order to be successful in real estate and finance. And so I became an inauthentic version of myself.
I don’t like to wear dresses. I don’t like to wear pantyhose. I don’t want to wear Spanx. I’m speaking to the ladies now. I don’t want to have to traipse to business meetings wearing high heels. It makes me uncomfortable when I’m wearing those things and because I am uncomfortable wearing those things, then I’m projecting this air of uncertainty, uncomfortableness, and people kind of subconsciously pick up on that.
So when I first started trying to raise capital by trying to pretend to be someone that I wasn’t, I was not successful. When I finally gave up and said, screw that, I’m just going to wear my flip flops and my jeans and instead of meeting people at some fancy, schmancy conference room to raise capital, let’s just go to Aloma, my favorite Mexican restaurant and have like giant fish bowl margaritas, and chips and salsa and let me just tell you what I’m doing. Then all of a sudden my business exploded, because then I wasn’t pretending to be somebody that I wasn’t. I was just my authentic self.
So that’s the first thing I’ll tell you, just be yourself, right? Because people are going to either align with that or they’re not going to align with that. And when people are looking at investing, they’re looking at investing in the person first and they’re looking at the deal second, right?
It’s like if somebody likes me, and they feel like they can trust me, then they’re investing in me and the deal that I’m going to be managing and putting together. The deal is secondary, that’s just how we’re going to make money together, but they’re investing in me.

Tom Krol: Right.

Susan: So that’s the first layer of it. The second layer of being a woman in a very male dominated industry, the bottom line is that what I just said about how you need to be your authentic self and about how people are going to align with you. You need to flip that script and you don’t have to do business with assholes.

Tom Krol: Love it.

Susan: Ta-da. How about that?

Tom Krol: Absolutely.

Susan: I, As a woman, a 22 year veteran in the real estate business, will speak to you, ladies of the tribe and say, you don’t have to do business with people that you don’t want to do business with. If you’re sitting across the table from some pompous, arrogant, you know, $3,000 suit, Maserati rental car wearing millennial and you’re just not feeling it, then be gone, right? You do business with the people that you feel comfortable doing business with.
It’s the whole tribe concept, right? It’s like there are certain people that would go, “Oh, I don’t want to be part of this.” And there are a ton of people that look at you and what you’ve built and go, “Oh my God, I don’t want to be a part of anything else. I feel like I’m home. I found my people.”

Tom Krol: Right. Absolutely.

Susan: It’s the exact same thing in this business and in investing. So do business with people that you resonate with.

Tom Krol: I absolutely love that advice and we had, there were actually two ladies in particular who, they’re awesome and I think you hit the nail on the head. It’s all about being congruent and being authentic and it’s so key to your success. So I want to encourage all the guys in the tribe but the girls too, we’re going to have a contest, that’s what we actually should do is we should have a contest in our tribe and Wholesaling Inc and we’re going to see who can raise more private money and at a better rates. And, you know, we haven’t even talked about the fact that the money I raised had zero points, which I just want to point out is amazing because everybody, as soon as you talk private money or borrowing money, they say, well what’s the rate and the points, I have no points I have to pay.

Susan: Yeah. I don’t pay points. Somebody asked me “Do I get points?” I’m like, “No, I can give you pointers. But no points.”

Tom Krol: Well I remember when I first started, before I read your book, I was asking about private money for somebody that I knew and I went about it completely the wrong way. And I said, I was trying to sell them, you know, because I wasn’t doing it properly. And I said, “And plus I’ll even give you points.” And they’re like, “Well what are points?” And I’m like “Well I’ll give you three points up front.” I’m like, why did I just say that?

Susan: Right? I’m going to give you three points up front. And they’re thinking is this … is he like going to … what’s happening here? Is he going to kicks like some field goals or …

Tom Krol: Right, well-

Susan: I don’t know the plan.

Tom Krol: He actually said, well what is that like go $100? And I’m like, well no, it’s 1% of the whole amount. And it was like … it’s just like …

Susan: You’re like it shouldn’t be this difficult to pay this man this much money.

Tom Krol: Right, right, exactly. I’m like oh, so that deal didn’t work, but then obviously we had it, we got it to work that with other people. But I also wanted to ask you, so again, what I use the money for is I use it to fund, and this is what we’ve been doing now and we’ve now done two deals, we have another deal lined up this week to do, which is I’ll buy the property with the private money and I’ll do a short term loan and then I’ll refinance it out with the bank loan. But I wanted to ask you, it sounds like you raised a tremendous amount of money and I’m just wondering what are you using the money for?
So what do you actually do? So you have all this money, you have access to all this capital, what do you actually do with it once you get it? What does that look like?

Susan: Well, first of all, you get it all in hundred dollar bills and you spread it out all over your bed and then you just roll around in it.

Tom Krol: Got it. I hear you.

Susan: That’s the first thing. Then two, no I’m just kidding. I’ve never done that. I was tempted one time, that’s a story for another day. Anyway, I [inaudible 00:09:24] give people that visual, they’re like, “Oh, my eyes, my eyes.”
So here’s the thing. It really depends on how you’re structuring it, right? So when I say that I raised, you know, $26.2 million, it was a combination of what I call one-to-one deals and group investments. So for example, let’s say it was back when I was buying, when I was really rocking it hard I was buying residential multifamily properties here in my area in Denver, Colorado. Go Broncos, by the way, we’re going to win the Super Bowl.

Tom Krol: Woo.

Susan: No worries. So bet with us, not against us, that’s going to be my pick for the day.

Tom Krol: I like it.

Susan: Thank you. So my average purchase price, and so I would look at it in terms of like a 100% loan to cost. So what’s my all-in cost going to be to do this deal? So between the average purchase price, the average repair costs and the average closing costs, my average all in acquisition price on these multifamily residential properties was about $170,000 at that time. So I was approaching individual investment partners that could pony up 170 grand so they could fund one deal for me at 100% on a one-to-one basis. And that’s a true, what we call a trust deed investing.
And so there’s, very few hoops that you have to jump through with any in terms of satisfying guidelines either at the state level or at the federal level with regard to raising capital from people as a security.
And so I did a bunch of these $170,000 deals and then I raised a bunch of one-to-one money on that basis to fund one-to-one deals to my mortgage company that I was brokering out for other people’s deals where I would make money in the spread. So I would, I was raising capital and paying at that time 7% for my own deals, no points. And then I started raising and utilizing some more of that 7% money to become a hard money lender and lend it out at 15% and four points to investor borrowers through my mortgage company, so I positioned myself as a hard money lender.

Tom Krol: Okay. So, if we can, let’s just slow down for one second cause I want everyone to understand how much awesome sauce we are talking about right now, guys. So this is so key. This is sauce. So, first of all, the first thing that you did is … now were you rehabbing these properties or were you …

Susan: Minor. Minor rehab.

Tom Krol: Okay.

Susan: Yeah, we weren’t doing anything crazy. It was just pretty much cosmetic.

Tom Krol: And so you had multifamily $170,000 properties that you would buy for 170 you would do cosmetic work. Would you populate them with renters first?

Susan: Yes.

Tom Krol: And then you would resell them on the market?

Susan: Yeah, I either kept them … kind of the same cherry picking deal, right? So I would look at, and it was again, duplexes, triplexes and quads. Those are the residential multifamilies, less than five units. And I would cherry pick the ones in the best areas with the best tenants, the ones I liked the best, and keep them in my own rental portfolio. And then I would take the others and I would sell them, now get ready for your mind to be blown.

Tom Krol: Okay.

Susan: I would sell them as turnkey rentals, to other investors using seller financing by wrapping the underlying private money mortgage.

Tom Krol: Okay. So yes, I love it. I mean I was just talking to Mark Evans about this, who I know you’re a friend of-

Susan: Oh, he’s a great friend of mine. Yeah.

Tom Krol: Absolutely. And I’m actually having lunch with Mark next week. He’s an awesome guy. But I wanted to ask you, okay, so let’s just … so what you just said, we want to break it down in childlike terms. So you would borrow the money from one person, you would buy the property, you would do cosmetic rehab, you would put tenants in the multifamily and then you would sell it with seller financing. Awesome. All right.

Susan: To a separate investor, yeah. Either keeping that underlying, private money in place, right? So it really depended on my investment partner. So if my investor who was loaning that private money said to me, “Hey Susan, I want a longterm deal.” And that’s again, another myth, very pervasive myth for some reason about private money partners is that they only want to fund short term deals. That’s not the case.
Hard money lenders only want to do short term deals because they make their money on points. So they want to keep re loaning out that money and re loaning out that money. So the shorter the terms, if you’re a hard money lender, the more money you make. But we’re going direct, we’re kicking out that middleman, and we’re going direct to our investment partner. What I found was that every time I tried to give somebody their money back after, you know a short term deal that had paid off and I was all proud like I was going to create one of those big publishers clearing house checks and take my picture with them cause I was paying off their loan to me they were like, “Whoa, what are you doing man? Step off the porch, I don’t want that money.”
Because then it’s going to cause a taxable event for me, I want that money to be reinvested and I wanted to keep working. And so it’s like, hey, then how about if I’m just going to keep your underlying financing in place. Now we have additional equity in this property so I can wrap their mortgage, create a second mortgage of my own, to create another little stream of cash on this property that I’m already making money on and sell it off. So now I’ve positioned myself as the bank, right? As opposed to a landlord.

Tom Krol: Awesome.

Susan: Which is a better place to be in, in my opinion, because I don’t like being a landlord.

Tom Krol: I absolutely love it. So a lot of our tribe members, they’re like, we don’t deep dive this stuff guys, but this is definitely something worth checking out. And I want to also go back to what you also did, which is amazing. You guys amazing. So listen to what Susan is about to say. So this is basically what she did. She borrowed money from Joe and then she lent it to Mary at a higher rate for more money. That is pretty amazing, guys. So Susan, could you just tell us in basic terms, kind of a snapshot of how that works. So if you are able to get all these people who have money to lend it to you, what you can do with it without even really touching real estate at all and what that looks like?

Susan: Yeah. You know, and this is something that I teach to like high volume real estate companies. Like, you know, like the company that Mark has, for example, where they’re doing just, they’re crushing it in terms of the volume that they do on an annual basis, honestly to like mortgage loan originators and mortgage brokers who are relying on having to broker like conventional money or institutional funds for their real estate investor clients. Don’t mess with that, right? All you have to do is you can become the hard money lender. You can use these same exact strategies to go out and raise private capital, right? At 4%, Tom ,like you did, and then you could turn around and you could set yourself up as a hard money lender and say, “Okay, I’m paying this investment partner 4% for his money.” Just like a bank would, by the way.
They just say, hey, invest in my certificate of deposit or put your money in the checking account or the savings account and I’m going to pay you like what 0.01% or something insane? That’s the return that you’re going to get. And then they turn around and loan the money out to their mortgage clients, to their business loan clients like you know, seven, eight, nine percent or higher.
It’s the same concept, right? So when I was doing it, I was raising capital direct from my individual investment partners at 7% and then I was loaning it out, I was brokering that money, I was loaning it out to investors who are rehabbers in my market. I was doing it for 15%, four points and it was a six month term. So I kept all the points and I kept half of the interest rate in the spread.

Tom Krol: I literally am in love with it. I love it. So, that is so amazing, because when I talk to people who, so as a wholesaler, one thing that I do is I constantly sell our pipeline, our properties to rehabbers and people like that, investors, and they will constantly tell me that they’re paying between 12 and 15% with two to four points or five points and that for them is absolutely common. It happens all the time. So guys, I can tell you right now that you will have no problem moving that money.
What I want to do is just for our audience who’s not familiar with this, because a lot of our audiences is very new to real estate investing. I just want to explain a point just to be clear, and Susan, tell me if I’m wrong here, is 1% of the overall amount of money that they’re going to borrow from you. Is that right?

Susan: Right. It’s 1% of the loan amount,

Tom Krol: Right. So if I borrow $50,000 or if I borrow $100,000 it would be $1,000 for one point, if it’s four points it would be $4,000 that they’re paying me upfront to borrow, which is amazing. So besides the [crosstalk 00:19:29]-

Susan: And that’s just cash in your pocket.

Tom Krol: I love it. I love it.

Susan: And then let’s keep it in the context of your wholesalers and your business, and this is something that Mark figured out, right? And this is one of the reasons why his company has had such explosive growth in the volume that they’ve had us. It’s one thing to be a wholesaler and bringing the value of the lead and a pre vetted property to someone. Okay, that’s certainly one aspect of it. You elevate your business and your value to that investor that you’re doing business with to a whole other level when you’re able to bring not only the property, but then also the financing. Not only am I bringing you the property, but I’m also bringing you the cash to take it down and perform the rehab. Then who’s going to be able to compete with that?

Tom Krol: That is amazing. I love it. This is such a game changer, Susan. I really, I love it. And so I don’t want to keep you because I can literally go through, I mean if you look at this book I have highlighted every … there’s a highlight on every page. So first of all, everybody out there, you guys, the name of the book is called Getting The Money. You absolutely must buy this book immediately. It’s a game changer for sure. And Susan, I know that you do coaching, how are you available if people want to get ahold of you, what is the best way for them to get ahold of you? How could they reach out? What does that look like?

Susan: Yeah, so a couple of ways. First of all, if you’re interested, just specifically in Getting The Money, you can always go over to gettingthemoney.com and you can read all about the next level program that we have, that’s kind of really about implementing what you’ve learned in the book. The other thing which is really just kind of my main brand is called the Investor Insights, and I have an award winning blog over there that I’m actually really proud of. We work really hard on our blog and putting out valuable posts and so if you wanted to head over to theinvestorinsights.com that’s going to be my main hub site and it’ll give you information a little bit more about like who I am, you know, what we have to offer. And then of course click on the blog link and read some of the blog posts, and obviously if there’s a very extensive private money category where you’ll be able to read about a lot more private money strategies and ab my philosophy with regards to that as well. But those would be the two places I’d point you to.

Tom Krol: Awesome. So we’re going to put that in the show notes for you guys and that’s awesome, Susan. So I want to ask before I let you go, because I will definitely keep you on this line the whole entire day and I’m sure you’re busy so I don’t want to do that to you. But anybody who’s just kind of starting to, I know for me it was speeding the rate of acquisitions of my rental properties, but anyone who just wants to get started, any advice for beginners who want to get started in learning more about private money? What would you say to encourage people who are kind of like, “Oh, what does all this mean and I don’t understand.” What’s a good source?

Susan: Start with the book. Really, that’s going to be your best bet. The way that I structured the book was hopefully to, my goal was to make it entertaining, first of all, because I think this topic can be kind of boring and dry in and of itself, and one of the biggest compliments that somebody paid me one time is my friend Barbara. She’s like, “I’ve got the best nickname for you.” Really what is it? I love nicknames, so tell me what it is. And she’s like, “You’re Susan I put the fun and funding.” I was like yeah.

Tom Krol: I like that.

Susan: If I could put the fun in funding, and make it an entertaining read, but also an informational read, then then I have succeeded. And I laid out the book in such a way that there’s a framework to it, right? It’s my private money framework that I talk about extensively in the book. And so I think it makes a lot of sense when you approach it systematically, I’m a real big systems person, I’m very process driven, there’s nothing that I do that doesn’t have a purpose with regards to raising private capital. And I think sometimes if you kind of try to cobble it together from like blog posts, or online articles or something without the proper context and the proper order and with kind of some of these little magic tricks that we’ve talked about here today, you’re not going to be as successful. So for those of you guys that are just getting started and want to find out what it’s all about, what does it mean, what are the opportunities for you, and how does it all work? The book obviously is the place to start with that.

Tom Krol: Awesome. So Getting The Money, guys. Susan, it has been such a privilege. I cannot even tell you, this is like by far, I am going to be picking your brain all the time.

Susan: Works for me.

Tom Krol: Absolutely. And I’m definitely taking your course, my buddy and fellow tribe member, Clayton Morris, from Fox News and Friends who’s a good friend. He and his wife Natalie just took it and they’re just getting started. I was jealous that they’re already a day ahead of me. So I’m looking forward to that. And thank you again. I really appreciate you spending time with me. So it’s been a privilege.

Susan: It’s absolutely my pleasure and my honor. I love what you’re doing over there at Wholesaling Inc, I think that, I love what you’re building with your tribe and I really, really have to applaud you for incorporating these private money strategies into your wholesaling business, because I know on the surface it might not seem like the two really go hand-in-hand, but you, my friend, are one of the very few educators out there educating and coaching at this level who really understands exactly how impactful and ultimately profitable it can be for people. So you [inaudible 00:25:26], so all of you guys that are hanging with Tom here in this tribe here, you guys deserve a big pat on the back because you’re aligned with the right guy. He gets it. So stick with it.

Tom Krol: Awesome. Thank you very much. And I hope that you and I can do something in the very near future where we can put something together for these guys and I would love to do that with you.

Susan: We’re going to do that.

Tom Krol: So that is awesome.

Susan: Okay.

Tom Krol: Sounds good. Well, Susan, thank you very, very much for your time today. It has been a great adventure having you on this show and I can’t wait to have you on again cause I’m going to continue to go through this and take the course and I know I’m going to have … I have like 11 questions I haven’t even gotten to.

Susan: Oh no. Yeah. Then we’ll have to have a return appearance for sure.

Tom Krol: Absolutely. Thank you very much. Enjoy the day and thanks again. We’ll talk to you soon.

Susan: Talk to you later.

Tom Krol: Alrighty. Bye. Bye.

Susan: Bye.

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