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Podcast Transcription
Dave Dubeau [00:00:09] Welcome to Free Flow Friday, powered by the Property Province Real Estate podcast. I’m Dave Dubeau and I’m very excited to give you an over-the-shoulder learning experience around raising capital, as well as other tips, tricks and strategies to help you on your real estate investing journey. So let’s start. Let’s discover together you get the old commercial voice on and you get the old commercial demeanor and you’re doing your presentation, and it seems like it’s not you. Then you’ve killed the trust, right? You seem it seems fake. Why does it seem fake? Because it is fake. So now you. Three things that are preventing you from raising money, or they very well might be preventing you from raising money, these are things that are holding most of us mere mortals back from accomplishing a lot of things that we want to do in life in our lives, including in very specific to finding investors and raising capital. So if you’re struggling with real estate portfolio that isn’t really delivering what you were originally hoping it would when you got in this whole gig and you had that initial passion about real estate, you had those goals, you had those dreams, you had those aspirations, then you’re probably going to resonate very, very well with at least one or two of the things I’ll be talking about today. And, you know, especially when it comes to real estate, there might be a lot of different things holding you back. But today I want to look at what I think are three of the really big ones, and we’re going to do it kind of David Letterman style, and we’ll do it in reverse order. My opinion of, you know, number three to one. And the number three issue. Well, first of all, a little shout out here, I see some folks there on your live, Charmaine. Good to see you. Welcome on the live, Lorna. Great to have you on the live as well. Thank you, guys. So the third issue, the number three issue. It’s something I feel I’ve suffered from all these, but I can really resonate with this one, it’s something. I was really focused on when I first got into the real estate game in a serious way, way, way, way back in 2003, when I first came back to Canada, it’s kind of insidious. It’s something that I don’t know, at least I kind of grew up with, especially being basically an only child. My brother is 13 years older than I am, so it was kind of like I grew up on my own. And once you move beyond this, it can really open up the world and your ability to grow yourself and your real estate portfolio as much and as big as you want to. And the issue at hand is number three issue is what I call the me, me, me mind issue me, me, me all mine issue or the Lone Ranger syndrome. All right, so that’s the first one. We’ll talk about that in just a second. The second roadblock is really more of a logistical issue, and that can be solved if you’ve got the right tools and the right training at a bit of practice. Once you’ve got this dialed in, your confidence is really going to soar. You’ll be ready to have a productive and effective conversation with any potential investor, and you’ll be able to do it with style and with poise. So the second issue is all about what to say to people and how to say it when it comes to real estate deals and how to get them to pay attention to you. All right, Steve. Good to see you. Good to have you on board, Mr James Ed. Good to have you, my friend. Long time, no. See. So the second, that’s the second issue now. The number one issue again, is something that I think most of us tend to face, at least at one point or another, and it really paralyzes us when it comes to raising money. And it’s the biggest bottleneck that gets in our way and gets in the way of otherwise really, really smart, talented, forthright, great real estate entrepreneurs. And it’s this issue of the fear of rejection. So especially when it comes to raising capital, talking to people about your deals, that’s a big one. That’s the biggest one that gets in our way in a certain way. The other ones kind of tie into that. So if you’re suffering from any wonder all of these issues, at least you can take comfort in knowing that you’re not alone. I’ve suffered from all of them still do in one way or another. But I’ve found ways around them. I’ve found hacks, so to speak for that. We’ll talk about that as well. So imagine if you’re if you’re stuck in that me, me, me or mine or the Lone Ranger syndrome, then you’re really, it’s going to take you decades and decades to save up the money that you need to go buy your own deals to do your deals all on your own. It’s just it’s virtually impossible to create a significant portfolio that way unless you’re just making a whack of cash. All right. And most of us don’t have that kind of income, so you need to work with others. The other one is if you’re really hung up on how to talk to people about your real estate deals, you’re not sure what to do or what to say or how to say it again. That’s going to be a big handicap. It’s going to stop you from moving forward. And then again, the big one is that fear of rejection. If we get that, if we let that hold us back, it’s really, really going to slow things down. All right. So and of course, there are big, big costs involved in not dealing in any one of these three. So biggest cost is time. If you don’t do all this and if you’re focusing on having to build your portfolio all under your own financial steam, it’s going to take you a year. It’ll take a lifetime to get anywhere that way. All right. Unless you’re immensely high income earner, in which case you probably don’t have time to do that on your own anyhow. All right. I mean, I’ve got a good friend of mine who’s a doctor makes amazing money. He still works with tons of investors for his deals because that’s what he recognized that he needed to do to build a portfolio to where he wanted it to go. So even if you’re a high net worth individuals, you’re going to want to work with investors, right? So if you don’t get this dialed in, it’s going to stop you from accomplishing whatever those dreams were. When you first got into real estate investing, you’re going to have to continue punching the clock at a job you don’t really like. You’re going to have to continue living a life less along the lines of what you’re hoping for. You’re not going to be the example to your, your family and your friends that you’re hoping that you would be. You’re going to kind of know that you’re not playing full out. So those are some big cuts. All right. So now let’s go through each one of these issues and busted open and really kind of see what can be on the other side. So again, if you recall, issue number three is what I call the me, me, me all mine syndrome or the Lone Ranger syndrome where you kind of think, you know what? I want to have this deal. I want to own this piece of property. I don’t want to have a partner on board because quite frankly, it boils down to you don’t want to share the profits. Okay? It’s kind of like the kid in the sandbox when you. All the toys to themselves. And we usually know how well that works out, right? So when I first got into real estate investing in a serious way back in 2003. I was focusing on low money, no money down, tight deals, because that’s what I had at the time and I had no clue about using other people’s money. So as I did write, little claim to fame is 18 deals in 18 months, which is OK. But quite frankly, a lot of those deals weren’t all that great. Some of them were pretty good, so I made some pretty good money on. Most of them were just kind of mediocre. Few grand here, five grand here, maybe 10 grand, maybe up to 30 35 grand once in a while, sometimes zilch. Sometimes nothing, right? So it’s kind of all over the place. And I realized very quickly that I had to leave a lot of really good deals on the table because I didn’t have the cash to go in and buy all cash, or I didn’t qualify for financing to be able to go in buying it that way, either. Right. So I left a lot of really good deals on the table. So, you know, it was great to have all the profit to myself. But what would you rather have? Would you rather have an entire $5000 $10000 profit to yourself? Or you rather split a $100000 profit 50 50 if you didn’t have to come up with any of the cash? I think splitting a $100000 in profit 50 50 or even 730 or 80, you know? Well, not maybe 80 20, but any kind of combination like that is a lot better than having all of one crappy little deal to yourself, right? So and then over the line over the long term, I realized that typically speaking, short term in and out deals are good for a quick little pop of cash, but you’re really leaving almost all of the profits on the table. The real magic to real estate in my mind is holding on to it long term. So the longer that you hold onto a piece of property, the more of the seven or eight different profit centers, depending on how you count them. You can take that advantage up. So most really good deals are a lot of really good. Deals require capital. You’re not going to get older financing and all the best deals. You to have to actually come up with some cash and do deals with a down payment and traditional financing. And if you can’t do it, then you need to be able to do that with investor partners so that you can grow your portfolio and take things where you want to take them with your real estate investing. All right. So, yeah, if you bring investors on board, yes, you have to share the profits. But on the other hand, now your scope is virtually unlimited, right? If you’ve got investor partners lined up, you can do as many deals as you want to and grow your portfolio as quickly and as big as you’d like to as well. And you’re going to be able to create the cash flow, the network, the lifestyle that you want. Well, a big bonus is helping somebody else to do the same thing your investor partners. All right. Now it’s kind of interesting. Just yesterday, I was talking to a relatively new real estate investor at her on the phone. She got her first deal under her belt. She self-financed like most of us, and now she’s run out of cash and credit to do more deals. She wants to do more. But she really hadn’t clued into this whole idea of working with investment partners using other people’s money. And she was really stuck on the idea of getting a hold of some cash and going out to buy a property herself and own the whole deal. So I explain it to her. I explained, Hey, you know, when you dial in on getting investor partners, you can buy as many properties as you want. Right? So yes, you’re going to have to share the profits. But you know, two deals with investor partners would be the equivalent of having one on your own. And how long is it the kind of property she’s looking at? She’d have to save up a hundred grand. How long is it going to take you at your $35000, your salary to save up a hundred grand? It’s not going to happen right, darling. On investors, you may be doing that deal. You’d be doing the next deal, the next deal within the next few months. Right. And then just keep going from there. So that was kind of an eye opener for her really shook things up and hopefully she takes action on that. All right. So the whole me, me, me, all mine issue, this is very, very limiting. So once you get your head around the fact that, like good old Zig Ziglar said, you can have everything in life you want to if you just sell enough, other people get what they want in return. Right. And those other people we’re talking about are our investor partners. All right. So that’s issue number one. Let’s jump into issue number two, which is a big take up, a big handicap for a lot of people, which is, well, Dave, let’s say somebody shows some interest in what I’m up to is the real estate business. How the heck do I explain it to them? How do I talk to them about what I’m up to with my deals? All right. It’s like, Yeah, somebody is interested. Oh crap. Now what? So do I try to explain it to them over the phone? Do I give them a long spiel over the phone? Do you meet up with them and grab a good ole pad of paper and a and a Sharpie and try and do an old fashioned? I remember these things from Amway days, you know that triangle and divvying things up and levels in dollar signs and all this stuff. You try and do it that way on a back of a napkin like I’ve heard some gurus say or on a on a piece of paper and get it. Go through that or do you go the other direction and bring out reams and reams of data spreadsheets where you got through the course, the whole property analyzer and explain to them every single detail and in minutiae? Do you bring out reams of data? Do you bring out the performers and just take them through that in depth? So they really, really understand everything to the last little itsy bitsy detail right now. Are you supposed to be super salesy or you know, you’re supposed to follow the Hollywood movie version of a sales ABCs of sales? Always be closing. Remember that movie Glengarry Glen Ross? That was pretty, pretty harsh, that’s for sure. You know, and chances are you experienced that firsthand on the other side of the table of somebody trying to sell to you that way. Is that the way you have to go about raising capital? Or maybe you not only have to be a really good salesperson, but you have to be a super slick presenter. You have to be able to present your idea, your opportunity. Just like Tony Robbins, which is the natural presenter, you have to be that way and just kind of get people to invest with you based on the sheer power of your personality and your charm. Right? And then once you’ve kind of met with somebody, then are you supposed to follow up with them like a mad man or a mad woman and just always be following up and always be trying to close and grind them down and get them to invest with you? How does that whole process work? Well, personally, I think all of those are really, really crappy ideas like trying to explain. So, for example, trying to explain everything over from a bad idea. Why is this a bad idea? Because it’s kind of a, you know, especially if you’re talking to a person who hasn’t invested in real estate before, which chances are that’ll be where most of your prospective investors are. They might have purchased their own home, but they haven’t. You know, over 90 percent of people have never purchased an investment property. So be trying to explain it to them all over the phone. First of all, it’s too much detail. They’re not going to be able to capture it. Second of all, they can’t actually see anything, and a lot of us are more visual learners than auditory or learners. And the other big thing is you can’t see them, so you can’t see their body language. You can’t see if they’re really understanding what you’re talking about or looking confused, dazed and confused. Right? So phone, I think trying to explain stuff over the phone is a bad idea. The other old idea, you know, get that, get the Sharpie in there and the pen and draw some lines and do the Amway presentation idea. I think that’s a really bad idea as well because. Your deal is too complicated to explain that way, even simple deals have a little bit more involved than what you can just be writing down on a on a piece of paper. Now, I have seen some guys and gals do this effectively, but I haven’t seen them do it effectively, consistently, very, very few people can do this effectively and consistently. And quite frankly, they’re leaving a lot. Out of the picture, right, so they’re probably just talking about the high level pros of the deal and not talking about any of the potential pitfalls or not explaining exactly how things work. It’s just a lot of razzle dazzle and long term that’s not going to be very effective, right? And again, it’s hard to do this consistently that it’s hard to do it well consistently. But remember, this isn’t like a MLM presentation of MLM business opportunity, where it’s like 397 bucks to get started. We’re talking about getting people to invest 50, 75, 100, 200, 300 thousand dollars or more with you. It requires a little bit more than just jot down a few pictures on a page right now. What about going to the other extreme and bringing hauling out your property analyzer and your spreadsheets and your data? And you know, our whole pro forma and all this contracts and the whole bit and just kind of laying it all out and going through every bit of that with your prospective investor. Another bad idea. And chances are, I know quite a few real estate investors tend to be analytical sorts. And if you’re analytical, that’s great. That’s a very good strength to bring to real estate investing. Personally, I’m not all that analytical, but my big brother Dan is, and he kind of had this challenge. So he when he was explaining things to prospective investors because he’s kind of a numbers guy, he figured everybody else is a numbers guy too. And they aren’t right. 90 percent of people are not analytical. They’re not numbers, people. They’re not dumb. They’re just not really into super-duper detail, right? So when he would present things, when he would show them stuff, they’d get that glazed over. Look, they kind of the old lies would roll back in the back room so they bore them to tears is basically what he did right? And nobody’s nobody wants to say, you know what it is too much. I don’t get it. It’s too complicated because nobody wants to look stupid. So he lost out on many, many, many prospective investors because he went too far. The other way. You gave them too much information. Yet, you know, there’s a delicate balance there between too little and too much. You got to have enough that people can make an educated decision and know the big picture. You have to have all the details available if they want to see it, that’s for sure. But you don’t want to go over that, especially in your first investor presentation. All right. Now what about the whole salesy thing? What about always be close? Well, I think that’s a terrible idea, right? I mean, that’s old school sales 101 from 1950s 1960s Mad Men on TV, whatever. Right? That’s not the way you need to do it. In fact, that’s going to turn way more people off than it’s going to work for. And here’s my thoughts on this. If you’re have to close somebody on investing with you, if you have to pressure them, if you have to manipulate them, if you have to do any of those sleazy sales closing techniques on them to get them to invest their 75 or 150 grand with you. It’s setting things up for disaster for you and for them further down the line. Why? Because when somebody feels pressured into something or tricked into something, they’re going to feel resent resentment. We’re going to feel resentful right against you. And the first time there’s a hiccup with the deal. Let me ask you this. Has there ever not been a hiccup with a deal? Right? First time there’s a hiccup or a challenge or a problem. They’re going to want to jump ship and they’re going to want to take their money with them. And that’s going to cause you a world of hurt, right? Plus the other ideas we want to be working with our investor partners long term. This isn’t a quick wham bam. Thank you, ma’am kind of thing. This is something it’s a long term relationship that we want to be developing with people. And we also want to encourage them to refer us to their friends and their family. So we don’t want to piss people off, pressure them, manipulate them, trick them into investing with us. All right. It just doesn’t work well. All right. So what about being a super slick presenter with a presenter? You know, whether you just got your presentation dialed in, your super smooth, all that kind of stuff? Well, that’s great if you’re that way, naturally. OK, but here’s the thing, right? Remember, always remember, people need to know you like you and trust you in order to invest with you. So if your normal self is pretty easygoing, laid back, not a super slick presenter kind of person. And then you get the old commercial voice on and you get the old commercial demeanor and you’re doing your presentation. And it seems like it’s not you. Then you’ve killed the trust. Right? It seems fake. Why does it seem fake? Because it is fake. It’s not you. So what you want to do is you want to be the best version of you. You want to be natural; you want to be relaxed, you want to be confident with the way you present your investment opportunity, but you don’t want to come across as overly slick or overly practice. Does that make sense? All right. So what’s the solution? Best solution to this is to have a super effective what I call slide while a slide show presentation like a PowerPoint or keynote presentation, something that you can use on your laptop. That’s my preferred way. You can use it on a tablet as well. That’ll work as well, but something that you can take people through in a logical order. Now, the reason I like slideshows multiple, multiple reasons. Another reason I like a really good slideshow. Number one, it keeps me on track and make sure I cover all the bases, all the questions that I want to ask my prospective investor to make sure they’re a good fit. Everything that I want to go over, all of the benefits, all of the case studies, if I have them. Example deals the pros and the risks of the investment. How I mitigate those risks. Overcoming the objections before we hit them. Having a logical sequence to the whole process that not only shows people the deal in the best possible light, but also lets them know what’s involved, what the potential risks are, what we do to minimize those risks and what’s in it for them. All right. Because when you do it that way, then it’s what I call a friendly, grown up conversation. You’re not trying to twist somebody’s arm to invest with him. You’re showing what you got. And you’re allowing them to make an educated decision, whether it makes sense for them or not. All right, that makes sense. So having a good, well laid out, well-thought out slideshow presentation, it’s also much more interesting for the other person. It’s more visually interesting. You got something to look out there, not just watching you and your crappy drawings on a piece of paper or they’re not. Just listen to you over the phone drone on and on, or they’re not just overwhelmed with a bunch of data and spreadsheets. It’s a much more interesting process for them to go through. So hopefully that makes sense. And the other thing is, you can go through this and you don’t have to be sales. You don’t have to be manipulative. You don’t have to use high pressure techniques, either. It’s just a good presentation. Now, I think a really good presentation so important that in fact, in my own case, I remember years ago I actually invested twenty thousand dollars, flew down to Tampa, Florida, and spent a day with some guys who helped me work on one presentation. That’s how much emphasis I put on that. And that was money well, well invested because the very first time I used that presentation, I got a 300 percent return on my investment. I made three times back what I paid to have that done just by the first time I had a presentation. I’ll think about this from your point, your standpoint, how much is a deal worth to you, right? How much is your average deal worth to you long term? That’s how much one good presentation can be worth to get an investor on for that deal. Use the same presentation. Get another investor on for another deal. That PowerPoint that slide show presentation is priceless for you. OK, now let’s delve into the number one issue that’s holding people back, and that is the. Fear of rejection. Ed, good to see you, Mary. Good to see you, Sonia, good to see you as well. Welcome everybody on the line. So again, the number one issue that’s holding so many of us back from really reaching our full potential when it comes to raising capital is fear of rejection. And you know what? It makes sense. Nobody likes to be rejected. I know. I think it probably somewhere in the back of our heads just takes us all back to our playground days when we were little kids and something happened and everybody pointed at us and laughed. OK, that’s probably happened to everybody one way or the other. And that just kind of sunk in that social shame, that rejection that just that fear of having something like that happened again sticks with us to this very day, you know, could be 40, 50, 60 years later. We’re still controlled by this fear. And that’s normal. I mean, most of us have this fear of rejection, but it holds us back from so much, right? We’re worried about what if they say no? Or what if they laugh at me? Or what if they think I’m a complete doofus and they tell all their friends and family what an idiot I am? Or what do they slam the door in my face or hang up violently the phone like we are there? What? What if this ruins a good friendship, right? So it’s crazy how much of this stuff bubbles up in our head. I remember personally little aside, beg your indulgence here, but years ago? And James and Jim Sandy, you remember this, you know, I’ve talked about years ago, I signed on with a fellow and became a licensee of a little advertising business called doorknob ads. And this guy sold me on the fact that, hey, these ads sell themselves, but they’re new. They’re different. Nobody’s seen them. You know, you just basically need to show this to a business owner. And the ads will sell themselves. That’s all you have to do. Little did I know that this guy had only sold like two ads himself, and those were two of his own buddies. He’d never actually gone out, pounding the pavement, selling his own damn ads. So I took him out at his word when I started trying to schlep these ads and quickly found out the guy was fibbing. It was. That’s not how it worked. I’d walk into businesses. They’d be thrilled to see what they thought was a potential customer coming in the door. That look of thrilled anticipation would quickly turn into remorse when they realized there’s just another sales guy right there, they’d be like, Oh shit! Another sales guy. Yeah. So then I do my little. If I could, I try and do my little song and dance and vast majority of the time I get shown the door. Right. It got so bad. Got to the point where I can vividly remember sitting in my vehicle, white knuckling the steering wheel, petrified of having to get out and get rejected that way again. And that’s kind of that’s kind of what we think of when it comes to sales. That’s kind of what we think of a lot of the time when it comes to finding investors and raising money. It’s almost like we’re thinking we’re going to be like the Electrolux vacuum cleaner salesman trying to stick the foot in the door to get a word in edgewise. Well, you know. That sucked so bad that that I just couldn’t do it anymore, I suck at it, I couldn’t do any more. Luckily, I pulled my head out of my, you know what? And got kind of focused, and I realized that I could apply marketing to what I was doing and get people to come to me kind of pretty interested in what I had instead of me having to push it on them. And that that made a complete difference with not only that business, but every business I’ve ever been in at once. Once I got into, once I clued in to using other people’s money for my own real estate deals and realize that there’s lots of investors out there. I said, Hey, why don’t I apply this whole marketing idea to attracting investors raising capital? Right? So it works just as well. And. You know, you can do it the old way you could be picking up the phone dialing for dollars cold calling, you could do the old turn every conversation into a real estate conversation. You can try your hand at having a really slick elevator pitch to tell anybody that’ll listen to you. You can, you know, spam people with your deals. I’ve tried that as well. I’ve tried all of that as well. And bottom line, you’re going to get a massive amount of rejection. On the other hand, when you get smart and you start using marketing and you focus on a target group of prospective investors and you do it consistently, constantly and consistently communicating with people, educating people about what you’re doing and getting them to put up their hand and self-select and say, Hey, you know what? I’m interested. Tell me more about what you’re up to with real estate investing. That is a completely different conversation. Then you can go and you can sit down and somebody show them your Spanky new slide show presentation and have an adult conversation with them. Show them what it’s all about. Show them what you’ve got. Show them the pros. Show them. They can show you. Show them how you minimize the cons and see if it makes sense for them. If it does, great. If it doesn’t, that’s OK, too. Time and circumstances might change your minds. It might not make sense for them right now, six months down the line or a year down the line. It very well could make sense for them then. It’s still not a rejection. It’s just not right for them at this time. And who knows that might even turn into a referral. If you do it right as well. So it’s all about taking out that rejection, right? And bottom line not chasing after. OK, you guys buy it. Things have gone a lot longer than I thought they were going to on this, but it’s something that’s really important. So there you have it. The three biggest issues I see holding smart real estate investors back. Number three is the me, me, me or mine, the Lone Ranger syndrome trying to, you know, have the whole deal. Just yourself trying to just do it with your own money under your own steam. All that kind of stuff. You know what? That’s going to keep you slot. It’s going to be very, very hard to grow a significant portfolio quickly that way. All right. When you work with other people, when you cooperate, when you share, you’re able to create. That would be like having a little pop tart or a little butter tart. Right? Working on your own. That’s the size of your portfolio, you can do it all on your own, but you’re going to have some that size versus having someone go this way. Having the whole pie, a pizza pot, right? Sure, you have to share half it with your investor partners, but you’ve got so much more because you’ve done it that way. Hopefully, that illustration makes sense. Issue number two What to say to people about your deals how to get them to listen. Again, the old ways of trying to explain it over the phone and, you know, on the back of a napkin or sharpies and illustrations and all that kind of stuff being super sales, manipulative, high pressure, all that crap, don’t do any of that. Again, a really well in slideshow presentation that when I call, you know, when I work with my clients, we call this the million dollar investor presentation. It works like gangbusters. And then issue number one is fear of rejection. The way we solve that is encouraging the other person. To. Put up their hand, encouraging the other person to reach out to us, saying, Hey, I’m curious, tell me more about your deal. How do we do that? We do that by having a focus group of prospective investors and doing constant, consistent communication. In other words, marketing to them and encouraging them to reach out to us, put up their hand and ask for more information. And then that’s where we get the chance to have that presentation and see if it makes sense. It doesn’t make sense for him to now, for them now. Maybe it will allow them further down the line or they know somebody else. There could be a good fit right now. OK, take care. God bless. Well, hey, there, thanks for tuning into the Property Profits podcast, if you like this episode. That’s great. Please go ahead and subscribe on iTunes. Give us a good review. That’d be awesome. I appreciate that. And if you’re looking to attract investors and raise capital for your deals, I mean, I invite you to get a complimentary copy of my newest book right back there. There it is, the money partner formula. You got a PDF version, an investor attraction book dot com again. Investor attraction, book dot com. Take care.