Books mentioned in this podcast
The following is a transcript of the podcast audio.
Welcome to the High Speed podcast. The official podcast of the High Speed Alliance taking you further, faster, together. We are setting our course for freedom and legacy through mastery of business, finance, family and lifestyle.
FB: Welcome to the High Speed podcast. I’m your host Dr. Forrest Bryant and I’m very excited to have 2 of my friends on today Bill Fairman and Wendy Sweet of Carolina Hard Money. How you guys are doing today?
BF: Excellent Forrest. Great to see you. Or hear you.
FB: I could see you and hear you, right? How are you Wendy?
WS: I’m doing fantastic. Thank you for asking.
FB: Great attitude. I know you’ve been through some things here lately but you’re still kicking. So, appreciate you being here.
WS: Yup, were teasing me what do they call it? A bad wing.
FB: Yes. Yup2x.
WS: Move shover injury but I’m almost back.
FB: Alright, Excellent. Well, I know you’re a trooper. Well, I’m excited to have you guys today Carolina Hard Money. I have been a big fan and an investor of yours for several years. I’m just really proud to have you guys on today as we are getting to launch our High Speed Alliance with our first meeting coming up soon. Thank you guys for being on today.
BF: Hey listen, we’re proud that you asked us to be on.
WS: And we’re looking forward to the meeting coming up in July too.
FB: I’m excited that you all are going to be there and be one of our sponsors. And it just, it means a lot to me. Thank you so much. So let’s tell our listeners a little bit about Carolina Hard Money. I know you guys have been doing this for awhile. And you’re brother and sister. You both have a lot of experience in commercial and residential real estate. And you’re doing hard money and private lending. So, you know why don’t you guys a little back story about you know how you guys got into this business. And just give us a little bio personally and professionally.
WS: Well, I always want to start it off with I was born, a poor black child. We just watched a movie “The Jerk” last night. Again, for my kids to be able to see it. What a funny movie. But anyway, really it kind of started out by chance for both of us. You know Bill’s he’s gonna give his story about being in the mortgage business. And he got me into the mortgage business which I’m really grateful for. After 4 months with him I figured I knew everything so I went out on my own. So, I actually opened up a mortgage company that we only specialized in investor loans and that what’s so awesome about working with Bill. Is the company that we were representing and that he was definitely the head representative there. Only did investor loans and their best products was an investor loan products. So it gave us the opportunity and really, really understand investors on how they work for those particular loans. No other mortgage companies wanted to mess with us. So, we took it on with a vengeance and because that’s what we specialized in and that’s what we did the most in. After doing that for such a long time I have the ability to be able to see investors, real estate investors who were wanting to qualify for loans. Some of them could qualify for a loan but they couldn’t find houses. The others they could find houses but they didn’t qualify for loans. And because we were underwriting those types of loans we’ve got to see how much money they have in the bank. So at that point, we were able to hey this guy have a self-directed IRA or this guy got some extra money in the bank maybe he’d be interested in lending you some money for your hard money loan. Things that we’d qualify for a conventional loans. That’s really that hard money part got started. And as it grew, Bill with all his experience in commercial and we just got together and blew this thing up, right?
BF: I got almost 30 years of experience in the mortgage industry.
WS: You started at 12.
BF: Yeah, 13 actually. That was back in the good old days the investor loans where you didn’t need any money. You didn’t need to prove that you could pay any loans.
BF: You didn’t got to have a good credit scores. Thank goodness those days we’re over with. But with anything that happens in life it tends to bring available new opportunities. And with all the regulations after the you know the mortgage crisis. It really opened it up for the private sector to get in there, fill the void that the bank’s left. So it was a great time to get into this business, full-time into the hard money space specifically for small builders and you know experienced rehabbers. Because they really had no resource for capital. Unless they had an equity line on their home. Frankly, they had nowhere to turn to get money because banks are not going to lend on a property that’s not ready to be occupied, you know. Unless it’s for owner occupied first.
FB: Well, you all you’re really filling the niche there. And I would say looking at things what you all started off in business is still very valid today. You still have a lot of capital out there. You still have a lot of borrowers that need access to their capital to operate their businesses.
BF: Yeah. And that never changes. It doesn’t matter what the market is. There’s always going to be a need for capital. And there’s always going to be people that need the capital. And there’s always people that wants to invest because they’re always going to be afraid of the stock market. They have no control number 1. And their stock market investment is not backed by anything, you know. There’s no security there other than the goodwill of the market. And you know how that is, it’s only good for the very large players.
WS: Right. And you know I’ve been doing this for 16 years. I’ve been doing hard money for 16 years. And even when everything was really high and when everything had crashed. Hard money was still a necessary mode of lending. It was what people needed to be able to do business. And what’s really funny too is our interests rates are right about the same that they’ve always been through that entire time. Points are still for us in the Carolinas right about the same that it’s always been. And what’s really interesting, is the same things that the formulas that you’ve used. The types of properties that you lend on. The type of people that you lend to. All of that if you’re going to remain solvent, has remained the same as well. So as we survived the crash, that’s what I tell everybody. So, it’s really amazing you know it’s one product a lot of things change about it but the base never really changes. If there’s a formula, there’s common sense and as long as you go by that you should be able to make it in this business.
FB: Excellent point. Solvency is usually a requirement for most businesses.
WS: It sure helps.
FB: Very good point, well. I know you guys you’re experts on a lot of topics. Especially the hard money lending, investor loans, private lending. Let’s kind of just get an overall view of where you think we guys are. Where we are right now just you know. I know you specialize in North Carolina, South Carolina real estate markets. But if you just have any. I know you guys are plugged into a lot of different groups. It gives you access to a lot of trends nationally. I know a lot of people think we’re kind of hitting the top of the cycle here. Do you all feel that way? Or do you buy in to that? Just give me some comments on the current real estate national market and then kind of dial in a little bit on what you guys are seeing in the Carolinas.
WS: Let see what day is it? Uhmm..Go ahead Bill.
BF: Well, it’s definitely a sellers market. It’s funny you have people that are trying to buy still even though it’s a sellers market. But a big problem that you have is a lot of people are afraid to sell their existing home because they can’t find another place to move into. But specifically in the Carolinas there are still a lot of upside to this market because the appreciation that we see is from a lack of inventory not from speculation.
BF: We have specifically in Charlotte an average of 45 people a day move into Charlotte metro area alone. And for at least 5 years after the crash there was no new building going on. So, there’s definitely a need for housing. Nationally, we’re finding the same things are true. There’s not an oversupply. Then you have to keep your eyes on those numbers if you have appreciation that seems like it’s unsustainable and you have an oversupply. You’re looking it you know the possibility it going to be- it’s going to drop at some point quickly. But we do not have an oversupply. In Charlotte for example in the $250-$500,000 price range there’s barely over 2 months supply of homes. And to be in a market in equilibrium you’re really looking for 6 months supply. So, that tells you that we have a lot of room. Now, at some point it doesn’t matter where you are in the country. Affordability becomes an issue. The benefit of the tightening of the lending guidelines on the conventional side is that they only allow for certain mortgage products. So, when the affordability becomes an issue prices will start to come back down a little bit because houses will stay on the market longer. And they won’t have those exotic mortgage programs to make you think you can afford the house that you really can’t really afford. And that’s what happened on our previous cycle. Wendy?
WS: Having said all of that. One of the things that we all need to be aware of is our history. And in history you know since the history of the World Part 1 every 7 years you’re going to see adjustments. It just seems to fall into that category. We need to expect that’s it going to happen. What goes up must come down. It’s just you know, it’s a law. It’s the way it has to be. And we need to expect that and it amazes me even today how people are making moves based on “boy it will never happened like it did last time”. And that’s silly and everyone should have a healthy fear that it’s going to happen again and be prepared to that. And understand you have to change with the market you know. Is today a buy and hold market more so than a flip market? For me, it is. It’s much more of a buy and hold market than it is a flip market because you are going to start to see some changes. It’s one of the reason why we are involve in so many masterminds across the country you know. One of my favorite is “collective genius” which it has a lot of investors. High energy investors that are really well.
BF: High caliber.
WS: High caliber that’s great word Bill, thank you. That come all over the country. You know, another one would be is “freedom founders” people that comes for freedom founders. There’s some awesome people on that group. But what they do is they bring the knowledge of the area that they’re investing in. And each person understands their market thoroughly. And they share what’s going on in their market so we can easily see what’s going on as it’s coming down the pipe, you know. We saw long before the crash, we saw what was going on in California, then we saw it hit Nevada, we saw it hit Florida. We knew it was all coming. We had plenty of time to get prepared for it. You know when the hedge fund started coming in and buy a lot of stuff. We saw that coming down the pipe so by the time it got to us where all the hedge funds were buying up so many houses. We were prepared to turn them into our friends rather than oh no what are we going to do now? So being involved in so many other opportunities around the country it allows us to be able to start turning that ship before it hits us. Even now in our market we can see that the real high end luxury markets going soft. And what I mean is that it’s just sitting on the market a little bit longer than normal. The prices are staying up and they’re selling. But there just sitting a little bit longer than normal we’ve been seeing that in California for awhile now. So, we just need to see what’s around us and don’t you know close our eyes and say- Oh no it’s not going to happen again. We need to be prepared for it.
BF: Yeah, you just need to keep you know your finger on the pulse and these networking groups and mastermind groups that we’re all a part of is a great insurance policy. It helps you understand the numbers. And the numbers will tell you a lot of things. I think there’s going to be a correction in the next year or maybe 2 or maybe 3 don’t know exactly but it’s going to be a slight correction. One thing that I’m happy about with this correction if we lose half of our appreciation we’re down to the 30 year normal appreciation which is 3 and a half. Or 7 and a half percent appreciation in Charlotte. Taking it down to a normal historical it’s still positive, right? But, and I know you and I were in an event recently and our friend Dave has a all the facts and figures and research. And if you’re one of these people that swing for defenses- this is not a great market. He’s thinking that you know it’s got more downside than upside. Those of us that like to be in the steady markets it really doesn’t bother us that much. We’re still looking and making sure but we’re not too concerned.
BF: Because we’re not trying to swing for the fences, we’re just trying to be steady eddy.
FB: Now, that’s a very good summary of current conditions. Wendy, you mentioned the hedge funds at the meeting we’re at this weekend. There were some comments that maybe some of that money were drying up and it’s not as not as hot as it used to be. Any comment on this hedge fund activity in your area?
WS: Well, there were really 2 things that hedge fund have been doing. The first thing that they did when I checked our area and everyone else’s. They came in and they bought all the houses that were worth between 125 and I don’t know 220. And they somewhat fixed them up not much but they started renting them because they were buying these houses on the basis that these houses were going to appreciate. So they could get current cash flow on it and in 5 -7 years they’re going to turn around and sell these houses. We can see now where they’re starting to dump these houses. It’s not a big dump but you can see them starting to do that. The other thing that a lot of hedge funds have been doing is they’ve got what I call stupid money. There are so many people throwing so much money in there and they just got to deploy it. They don’t care what they’re deploying it on. They do have concerns about it. I don’t want to sound like there just willy nilly but they are taking more chances than say we would take because they’ve got to get that money working. Now, the interest that they’re paying out is a lot lower than what we are paying out but they’re at least getting that money working. Now, I am yes I am seeing some of that money dry up just a tad with some companies but I’m aso seeing it become more how should I put it. More directed or used properly. Focus would be a great word. It’s much more focused I’m getting a lot of people now that have formed smaller companies. When I say smaller I mean they’re not 500 million they might just be 250 million or you know a little bit smaller. And what they’re doing is they’re coming to people like us like Bill and I who are focused on a certain area. We’ve really got at home on what we do, they trust on what we’re doing, they see that we have our ducks in a row and they’re wanting to invest in what we’re doing. They’re wanted to buy our loans and just trying to get their money deployed in what we’re able to put out because they just don’t have the understanding of each individual market which absolutely make sense. So why not invest your money in the people that do. And that’s what I see a lot more happening.
BF: Let me add to that too. The hedge funds have really stop buying properties and are moving more towards paper. They want to get into more on the lending side of things. So that’s one reason they’re shifting over to try and get into the hard money space with us. Now, they’re great at raising money but they’re not good at being bankers. So, even though they have stupid money they don’t have stupid managers. So they’re smart enough to deal with the people that know lending and know lending in a specific area and work with those folks to try and spread that money into the lending side versus buying a home. And the other thing that I wanted to point out is that yes they are going to be dumping these properties but they are not dumb enough to dump it all at once because if they do that then what do they’re doing? They are lowering the value of the properties that they have. So, they’re going to do it over a long period of time. Make sure the appreciation stays in place.
FB: Well, I got so excited with that you know this first part of the podcast we’re supposed to kind of keep it on a high level. And keep that kind of for new investors I just got so excited that I have to dive in that’s a little bit more of an advanced topic for kind of for the members only section at the back. That was a freebie for our listeners there. So, let me get back up. No, it’s okay I love it. I love it.
BF: Let me get my crayons back.
FB: Okay, okay, alright. Let’s circle back around. Let’s take it back up to a high level. Let’s start, let’s define some terms. I want to talk a little bit about the fund that you run and then talk a little bit about investor loans or private lending. So give us a little definition, define these terms. What is hard money? And how does that different from the other things that you do?
BF: Well, what do you mean by that?
WS: Let me give them my third grade answer.
BF: Go ahead.
WS: So, when people asked me what hard money is I always say this. Hard money is a high interest short-term loan that allows the borrower the opportunity to buy a house, fix it up and turn around and either sell it or refinance it as a buy and hold. Today’s banks the conventional lenders will not lend money on a house that needs work. So, that’s where hard money steps in and the way we lend money is we lend it based on the after repair value of the house not what it’s worth right now. That’s another thing a conventional lender would do is that a conventional lender would do is based on what it’s worth now. So, what we do is we take the list of repairs we give it to an appraiser and we have the appraiser to do what we call a subject to appraisal. And we loan up to 70% of the after repair value. So, in our case we lend a 100% of the purchase price and 100% of the rehab amount and we control all of the rehab money. We lend that to the borrower so they come to the table by bringing the points that we charge and other small fees that we charge. And we give them the money to buy the house, fix it up and then kind of oversee it until they’re completed and ready to sell it or refinance it.
BF: And, okay. So the difference between hard money lenders and private lenders? People asked that all the time, what’s the difference? Hard money lenders have a business. Private lenders they’re just using their own capital. And so, you can get lower rates and fees with a private money lenders. We always tell people if you can find a private lender to do this then you need to go there first. But if they’re trying to scale their business up private lenders typically don’t have infinitely deep pockets and you know they’re going to ride a cash available at some point. And if you’re trying to scale your business up you need to have a relationship with the hard money lender. Does that help?
FB: That was excellent I love it, I love it. So, let’s kind of transition into talking about your fund a little bit but before we do that let’s think we got to define the accredited investor because that’s important-important term to define. So let’s talk about that.
BF: Sure, and accredited investor must meet 1 of 2 criteria. You don’t have to do both just one or the other. One is the income side. So if you are a single person 200,000 a year or actually or yeah, 200,000 a year or greater per year for the last 2 years. And we’re assuming that you’re going to make that going forward. For a family it’s 300,000 a year. If you don’t meet the income components then there’s a net worth so it’s a million dollars in net worth not counting your primary residence. Now, you’re not going to have to worry about the mortgage on your primary residence because as we can’t count it as an asset we also count it as a debt. So if you’re figuring your net worth just eliminate the primary residence and eliminate the debt that’s on the primary residence as well. So we have a lot of people that qualify on the asset or the net worth side because frankly it only takes a couple of 3 rental properties and you know a nice IRA account and you’re pretty close.
FB: So that’s a really good point. I’ll make sure my listeners understand that because we have a lot of doctors, dentists, CEOs and a lot of them are going to qualify as an accredited investor. So when we talk about some of these investments like the fund. If they need those accredited investors standards they will be eligible to invest in not only the fund but some other investments that will talk about. So, when people under our meetings we kind of talk about different types of investments that’s the really important thing. Okay, so let’s lead into the fund a little bit. Tell me a little bit about the fund, how long have you’ve been doing it and what types of real estate transaction does it investing.
BF: So when we started in the business we essentially were brokering other people’s money. So if you had an IRA, a self-directed IRA and you wanted to get a good return on it we would make a loan it would be in your name and you would be the lender and we would take the origination fee and then the lender would receive all the interest. And that was great until we reach the point where average loan amounts were getting higher and we were doing a lot more loans. So we decided that it made a lot more sense to start a 506 deregulation fund. And there’s 2 types of elections. You can do a C election or a B election. We invested over $50,000 in setting up the fund in the first place. The B election allows you for a non-accredited investors but guess what you are not allowed to advertise it. So, we’ve decided that if we’re going to invest that much money in the fund that we would have to go the C election which is the accredited only. Because we wanted to be able to tell people about it.
WS: It’s a secret.
BF: That’s right. You know what if you have a secret fund you wanted to have people know they can get into. So what the fund investing is you know we make loans as a business. We make 6-9 months interest only construction loans. And that’s where we get the money to make the loans with. The beauty of the fund is that you have a bunch of short term, high yield loans zone. If you have enough fund you are diversified over 35, 40, 50 loans depending on how many loans they’re in the fund. If you’re a lender on your own you’re putting a large chunk of chains under one asset and all that deal may go south at some point it doesn’t mean you’re going to lose money but we talk a lot about return on effort. And if you have to wait for the disposition of the property. Worst case scenario you have to foreclose on somebody. Those are payments you’re not receiving and that’s grief you’re having to put yourself through. If you’re in a fund you don’t know any of that stuff going on. It’s just like putting your money in your local mutual fund and you’re just getting a yield and a return and the end of every quarter. The other positive thing about short term loans is you know they are high yielding. The downside of the short term loans is they end before I’m going to get a new one, right? So, if you’re an investor, I’ll just going to give you an example. Let say you’re making 13.75% interest payments on a private loan and it lasts 6 months. And then you can get your money back because it’s paid it off and they return the initial investment to you. Well, it was nice you made, you get 6 payments at 13.75 but in reality if you don’t have that money reinvested this year. You only made 6 and 7/8 return on your investment. So when that money is returned to you that’s idle money and there’s a gap that’s lowering your yield. The other thing about a fund is that not all funds our’s does this specifically but we allow for reinvestment. So if you’re receiving monthly interest payments those payments that come in is also lazy money. It’s sitting there not doing anything it’s too small of an amount to reinvest into another loan. So that money is sitting there idle there as well. So in our fund you’re allowed to reinvest your earnings each time. So I’m going to give you a rate example. Let’s assume our annual return is 11.5% and again this is getting kind of into the weeds a little bit but about approximately 6 years using the compounding effect if you have by reinvesting your earnings. You should double your money in 6 years. And if you backed that number into to it you’ve actually earned north of 16.5% in that 6 year period. So that’s the beauty of the fund it’s diversity, it’s no headaches. You don’t have to deal with all the stuff of being the lender. And you know that your investment is secured by real property. Because in a fund you’re actually a part of an LLC. And LLC, is the company that’s got the security of the note. The deed of trust, the mortgage. It’s all in the company that you are actually a partner in.
FB: That’s excellent. That kind of actually leads right into the next question. If you’ve got a doctor or a dentist or a CEO and they’re looking for something very passive and very simple. I would think the fund would be the perfect place to park that money.
WS: We would think that too.
BF: It’s a no brainer. I kind of laugh at people that go through all that grief to you know earn 11.5% when you can earn 11.5% and not really do anything. But just admire your statements once a quarter. Or receive distributions I mean you can do it either way. But why reinvent the way when the ways are already there.
WS: And you know we have money in the fund. And even more importantly our mother’s money is in the fund. So, we really have to be on our P’s & Q’s there.
FB: Alright. Your own cooking so. Let me reinforce that point that a lot of funds for credit investors won’t allow you to reinvest because those small amounts. So that’s a huge difference between which you all do and some other funds that are out there. That’s a huge huge benefit.
BF: Well, again it depends on the type of fund. We are a mortgage pool fund and all we do with that fund is lend the money. Other funds we have syndications and how do I get to deep into the weeds but they’re not designed to reinvest. They’re designed to give you a return for a certain period of time and then it stops. And then you get your investment back and then you have to start all over again. So ours is open-ended and it continues as long as you know you want to continue to keep your money.
FB: So, without getting too deep in here but I was going to ask you this question but are you all,I know you do one of the deals with your favorite investors is that open to the public? Do you still do that for other investors outside of your networks?
BF: Well yes, we absolutely do that. However, for this year a responsibility to make sure the fund money is working at all times. So, those one of investors do have an opportunity to get involved but it’s going to come secondarily to the funds. And I don’t want to get by misunderstand by this. It’s the same loans, the same criteria it’s just if there’s available money in the fund it goes out first. So, it’s not like you’re getting a second hand loans. You’re getting, we are just at a point in time where all the money in the fund is being used. And now, they have an opportunity to get involved and do the private lending side.
FB: Right, okay. Very good, good clarification there. Alright, so let’s kind of bring back in a little bit. We’re getting close to the end here for the public section but let’s see. What’s the biggest mistake that you made and what you’ve seen in the real estate investment.
WS: Oh my goodness.
BF: Alright so I can tell you my biggest mistake and the greatest thing we did all at the same time. The biggest mistake was going into business with your sibling. And the best thing that I ever did was going into business with my sibling.
FB: Go ahead Wendy.
WS: No, I think that was it.
BF: No, when we first got started. We made the mistake of making a loan. Now, we didn’t get burned on this but we could have. We made a loan in a resort type of an area. And part of the criteria that we used is that, the house has to be in an area where there is 90 days or less on market for the area. So if the house is up for sale it should take 90 days or less to sell. Now, we normally don’t lend in resort areas but this appraisal came in 90 days. I mean comps the 2 of them 30 days and one of them is 60. The problem with resort areas is that tends to change and our poor borrower they made all the payments on time and continue the throughout the whole time with this deal. Again, it could have been one that came back to us it took us really 2 years to sell the house. And that was a big mistake and we won’t make that again. We stick to the major metro areas and if you’re thinking about lending money make sure you stick in a place that is going to sell quickly. Because that money doesn’t do you any good. If it’s sitting in a house you can’t get rid of. And you got into lending because you don’t want to be a landlord.
WS: When we look at a property we always, always, always ask ourselves this question. How long is it going to take me to sell this house when I have to take it back? Not if, we assume when. And when a lender thinks that the borrower should be thinking the same way because it’s a protection for them. And it’s you know time is money on both sides. Whether it’s ours or whether it’s the borrowers money. Time is money. I’m getting in out of that deal as quick it needs to be as quick possible. So, you know that’s the one question we always asked ourselves. And I always tell the borrower just when I talked to them on the phone have you asked yourself that question. How long is it going to take you to sell this property when you are done?
FB: Okay guys. You know if somebody is listening to this podcast and they you know get inspired to go off and get involved in real estate investing. Do you recommend that they try that on their own? Or how do they do that?
BF: Well, it’s funny you ask. We are getting probably every month. We get a radio commercial about the newest real estate guru is coming to town. And what really makes me laugh.
WS: It’s all a freak.
BF: Right. And the commercial is we have a 2 hour intensive real estate class and you’ll be able to go out and do all this and not the other. Well, you know I’ve been in the mortgage business 30 years. Wendy has been in real estate and mortgage business for 25. Again, she started when she was 11.
WS: And yes, I’m much younger than him.
BF: And we’re learning all the time. We were still learning because the industry changes all the time, right? We have our fingers on the pole so the first thing that I suggest people do is get involve in their local real estate investor club. There’s a national reia, R-E-I-A. Hard for me to spell 4 letters. But they can go on the national REIA site and fact see if they have any clubs in their area. It’s really about education it’s $125 a year depending on your local chapter and it’s the best education you can get. And the next thing, that you want to do is make sure that you network with right-minded individuals. Now, you know we’re on a higher level in business. We do a lot of masterminds in real estate. We do masterminds just becoming a better business people as well. You need to always strive to challenge yourself to be better. But what’s most important is if you’re going to get involve in real estate especially if you’re new. You need to get involved with people that are already doing it for a business for a living. There’s if you have capital for example. All these companies need capital they need access to capital. I mean we need access to capital. We’re lending money out. You’re much better off investing in a fund with us for example than going out and try lend money on your own. How do you know how to evaluate the property? How do you know how to evaluate the borrower? We’ve been doing it for years and years and years. You’re better off and you’re safer in getting a mentor and getting involved in your local real estate investor community.
WS: You know my role in the company. Is I put the money out Bill raises it, I put it out. So, you know I’m the one on the front line talking to the investor when they are trying to get a loan in the first place. And that’s absolutely part of my interview question with them on my first contact. Is you know how long have you have been investing? Are you involved in your local real estate investor association? That’s just a standard question that I ask and I’m always surprise that how many of them say no. Because it is truly the cheapest, deepest education you’ll ever get. It really is. The exposure that you get to all types of investing by attending those meetings and then the key to not just go into those once a month meetings is they have sub-groups throughout their town, throughout the week at breakfast, lunch and dinner that are you know 5, 10, 15 people. I lead 1 here at Charlotte at 7am on Friday mornings called “sonrises S-O-N”. It’s a faith based investor group. We have 55-60 people that show up every Friday morning. And everybody in there I should say everybody. 80% of the people in there are heavy hitters and have been investing for years. So, I encourage people no matter where you are find out where those sub-groups are meeting and go to those meetings. Because people are just willing to share. And that’s where you are going to meet the person that you’re going to hook with and get into a deal with. Or find a wholesaler that’s looking to sell properties or if you’re wholesaling there’s other people who’s going to buy them from you. So you can’t get a better match than that.
BF: And the biggest mistake in the people are getting in the real estate is that they start off as a speculator because they don’t know enough about the real estate industry. They just assume it’s like the stock market. You buy low and sell high. And most people only get into a particular industry wherein they hear how hot it is. And if it’s a hot market you’re already buying it high you’re not buying it low, right? So, you know the mass majority of the people that lost money in the last cycle was because they bought high and they ended so low. You need people that are in the business, understand the business, been in this business to figure out when the cycles are. Why are you’re buying this property? Are you buying it for cash flow? If you’re going to fix and flip it that’s the only way you’re going to make money on appreciation and we like to call that force appreciation. Our people are adding square footage in making the house more expensive. Unlike the flip and flop, fixer up and the good stuff you see on t.v. they make it look really nice.
FB: And that’s one concern I have right now. I’m sure you all see it. So many weekend warriors are out there. And they watch flip this house and they think they know what they’re doing and they get out there. There’s a lot of that happening right now. That’s one indicator that things are getting a little bit off. Everybody thinks real estate is basically but I agree with you getting into a network with trusted advisers is really critical. And that’s what we do in High Speed Alliance is we teach doctors and CEOs on how to do this in a safe manner. And so I appreciate those comments. So, what about- do you have a favorite quote? Or a favorite book? Or resource that you want to share?
BF: Well, you and I talked about this earlier. You know my favorite quote is Jim Rohn- ”You are the average of the 5 people you spend the most time with.” And that is also true, the more that I’ve gotten involved in masterminds and networking the smarter I’ve become. And my wife will tell you I’m no rocket scientist.
WS: Sure you are Rob.
BF: And then, the book that I really like is that it’s short, sweet and the kind of I like. It’s in depth and short into the point is “ Change your questions, change your life.” And what it does for me is it allows you to look at a situation from somebody else’s shoes or from another point-of-view. For example, Let’s say someone that’s assigned on your team is assigned to production numbers. Instead of saying “why aren’t you hitting your production numbers?” that automatically they’re going to be defensive about that, right? You would say, “in your opinion (because we see you haven’t hit those numbers). In your opinion, what do you think the obstacles are that are keeping you from hitting those numbers? Instead of all of a sudden blaming them right? You’re taking that fail of them automatically becoming defensive. And you’re there to find out the answers not blame anyone. And sometimes we get to the habit of asking the wrong questions. Just rephrase it and think about it first. Then this book goes a long way in helping them.
FB: How about you Wendy?
WS: My favorite book is the Bible. And you know there’s so many good one’s out there but that one tops them all. And I often tell people I’m so surprised and how the best business plan you will ever have is Proverbs. It is so business oriented that you really read through that with the attitude of how, what are the things to run my business properly? It’s step by step. And it’s amazing. It’s amazing on how that call awaits. But ah.
BF: Okay, I want to change my answer.
FB: She puts us all to shame but maybe she’s an ordained minister, correct?
BF: That’s correct.
WS: I did graduate from seminary, yes.
FB: Excellent, excellent. Okay so, what about freedom? We’re all about freedom. So what is your definition of freedom.
BF: Well, my definition of freedom is not needing to go to work but I do it because I love doing it. I almost there. I do love what I do but I also appreciate the paycheck.
WS: My definition of freedom would be able. Would be being able to give back 100%. Now, what I mean is not just money but time. I really, really look up to the guy from Caterpillar Tractors. That guy gives 90%of his income, did you know that? That’s amazing. It’s amazing. I just admire him and would love to emulate that. And be in the position where you know giving back would be my daily routine, just my daily routine.
BF So, I’m thinking if he invested in real estate and he had a nice passive income from real estate. He can afford to give up that.
WS: That’s right. That’s right.
FB: That’s the goal we give the passive income up and we don’t have to worry about the active so much. Well, this has been great if our listeners would want to get in touch with Carolina Hard Money how do you recommend that they do that?
BF: Well, the easiest way is carolinahardmoney.com. Our website is easy to get to, easy to navigate. All of our contact info are is there. And also, it goes in depth of what it is we do for both borrowers and investors. (carolinahardmoney.com)
FB: Alright we’ll put that in the show notes. This has been fantastic don’t go anywhere. We’re going to wrap up our public session of the podcast here. Then ,we are going to go the our members only session. We’re going to go a little bit deeper into some of these topics. And to our listeners out there thank you for listening. Thank you Carolina Hard Money. Thank you Bill and Wendy for being here. And you guys have a great day and we’ll talk with you soon.
WS: Thank you.
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