12/3: Hedge Your Bets

Real Wealth Blueprint
Sunday, December 3rd

Can you invest with less exposure than your actual investment? You bet! Find out why private lending provides some protection from market volatility.

00:48:07

Transcript - Not for consumer use. Robot overlords only. Will not be accurate.

From the nodal capitol studios in Austin taxes and this isn't real well blu. Where we bring real wealth strategies T the real world let's start the show here's your heads straight throughout time. Hi this is Chris Wragge Lyndon welcome to the real well blueprint show a real talk show for the real world. I'm joined today by my cohost mr. Ron Navarro yes thank you Chris I join mayor goes from the Navarro who's fresh off the route that's right you went to does your family in Florida and yet you talked about some of years things you've done in Florida a few times welcome home yes think he actually install some of those things well boils down to respond but I'll tell you what you never know. How bad it matter how tired you get until you drive for Tonys and an hour yet when somebody has an in car with licensing kids that's your your crazy beat down on still I'm still trying to sleep it off and that will welcome back and if you're walking just tuned in who is this what he timeouts so the real blueprints show we talk about alternative wealth strategies. Primarily for retirees. And of course our cornerstone is private lending that's what we do and have been doing for sixteen years now. Helping our lenders and investors earn between 60% on their money. Using Texas real state so. That's what we do that's what we're all about and we're gonna dive into that today but if you wanna learn more about us playing our show and now some of the guests that we've had in the past. Or listen anymore episodes you can do that bat real well blueprint dot com yet you also follow us on Sosa. Media we've got very active FaceBook page we've got a fairly active Vince aggrandizement and page. And amber were always responding Sosa reach out and we will will and will touch someone. Yeah it was great I mean you know the last week's episode we of course last week we're joined by team Newman CEO and founder of noble capital which is the company we work for. And I saw. I saw out of than the photos came out as a great photo but they put Jay in the middle of it. And menu and are sitting in these chairs and other side in kinda looks like a giant. And then to like small human beings. Like all gathered around the campfire something is pretty funny they're really twenty yards backers right if you never met. G-8 and it may seem like. Which is you know where were about the same size it's really funny. We need to we just are kind of a mean going there the other day got on got to see a partner on the office speaking at JB we're gonna start patting him on the show more more often next week in fact we are going to have a more and as as a permanent fixture of the shows so this is really exciting and something we've been trying to do but his travel schedule especially with the speaking engagements and what not just doesn't allow for. Yeah let's go to they're really get tired just talking to you though yes I'm pretty boring. S and isolate the last week we talked about mailbox money which is you know kind of a way is talking about and describing our regular income recurring product of private lending. I mean it's it's wonderfully you know kind of the idea is good to your mailbox once a month and boom there's you check in nine. Boy that's a great feeling from an investment standpoint. You know you're not having to console and watch the markets and wonder what's gonna happen sonic complex vehicle you don't understand you know you're a private lender. On real state that's pretty cool C a we're talking about lending money to people that are out there in Texas flipping houses say you see on television. They got to get them in from somewhere and that's what we do you were private lenders. We put that money together it's it's funny man on it our business has been has grown so much of the last fifteen years we're we're a lot more sophisticated today. Anywhere even 79 years ago pressure and I remember. All the conversations he's had 678 years ago and telling people. Yeah it's mailbox when you literally just go to your mailbox opened it up and there's going to be check in there yeah and actually we actually sent our. Our team internally did you know we still have some of our lenders investors and like can I just like that mailbox money they're real in the era for me I mean I think you have anything to dude yeah. Just go without your mailbox grab my game once a month another run at that I can't wait till they have predictable income mailbox money so what are we talking about this week. And again another portion in an area that's really important it's kind of the cornerstone if you will for prize winning we're talking about. Quote hedging your bets rate in in for us when we mean by hedging your bet or your investment here. We're talking about. The powers being able to invest. And do so it peonies on the dollar for the investment so to break that down a little bit we're talking about oh we refer to. As loan to values so were only going to extend. So much not the full par value just so much on that investment. In that you know gives us that added protection ranked so loan to value were only inning gives. And when these guys flipping houses and maximum of seventy cents on the dollar of what that investment will be worth a sort Tucker yeah. Works just like any other and you loan or mortgage you've ever seen out there it's exactly what do you think that's right so what would have bank does it gives you leverage on a property in the end there's going to be some equity in the air to secure your investment banks investment. Ray well what we do is we take the role of the bank so we do the same thing we just do their little lesser basis. Yellow so there's more equity Wright says no way so as to sizes equation there's gonna be the exposure the debt. And then there's you know a lower bases or there's many more equity in the property and and how you get equity in a property how does that work. All the way that we do it right the way that we do is we lend a fraction of the value of the property sort of properties worth say a million dollars that's a big property while at today but yeah we might lend that person. 625000. Dollars okay all right so now all so we have 375000. Dollars of protective equity rights but what if they need a loan to buy the property what do they do. Up well there's there's a couple ways to break that one down and and did have some examples are one. Sure I know get into later yeah that a door talking about is essentially. Protecting your investment and strossen parallels here. Let's take a look at what a lot of people think of when I think of investing in and think of purchasing stocks right so when I buy a stock in and whatever it is. You know how much was my exposure let's just say the stock cost you one dollar okay extra hit make it easy staggering one dollar a dollar stock what is it worth on the day that I purchased it at a dollar what is it worth. A dollar yacht and actually. Canada's idea you do originally carried out yeah actually there's some fees in there so although I'd paid a dollar for the stark and then I've probably paid some bees in there. I'm actually in my stock and like. Who knows could be a 10102%. Knows the value of my stocks I'm actually Ari starting behind so I just lost money after my main stock investments that lay your basis is a hundred isn't at all the basis is a dollar which is a 100% of the value of that stock and now goes up by 10% and your stock in in your what's nice you're at a hundred your dollar ten I make some money or if it goes down 10%. You're at ninety cents you have in years actually any he sell it right now. You lost 10% yes he does Boston present okay but it went in alone and that's really what we're talking about here from exposure standpoint. If I get in the lone year talking about my million dollar loan. And it goes down by 10% now that million dollar property is now worth 900000. Yeah but my alone was only what six say he's talking five. All I can so probably tomorrow in what's my main investment worth and you realize all of that upside and profit are a so it does is just really counterbalance is that market volatility. Yeah this stuff that exists when the markets down right now market is hot right is it oh yeah but that there's so many people taking chips off the table. Because it is so hot sure absolutely Maria what we're talking about is being the bank right so we did an episode on either being fits it you know has some of the similar tax information that we're talking about today. And that's really what it is right so when you're the the banking you're looking for a consistent return. And in our case our lenders typically earns somewhere between 60% of their money owning annualized basis. And they do so by extending credit providing loan. 21 of these investors that are out these are small business owners that are purchasing renovating and selling property. But as the investor ourselves when we're giving them that money were not expose that a 100% and that's that's really the magic. Or talking about here what other investments. Are you able to get into you where your true exposure is less than the actual invested amount European banks have been around for ever. We're just talking about being the bank a private bank yes so this is it's no different I mean the bank's work for a reason. Yeah I should say from my regulators listening to me that we're not actually a bank or advocating do you think net benefit but if there were certain lobbying and being in the Linder right SE essentially you are incredibly you know. We're talking about providing alone and things have been around for a long time but when when most people think of banks that think consumer loans these are not consumer loans when you are nine go to buy a property. As you know people average guys. Well and the bank is willing to give us so much more leverage may be 95 may be nine he says then maybe you know some include ways that a 100% weren't too long ago they weren't or worse but you know we're talking about seventy cents on the dollar. I can say or ninth banks could charge money and make money and only give you seventy cents on the dollar times it would all day long tracking. Yeah maybe then we we do it for a reason and the reason we do it is because as you mention these are not consumer loans these are business to business loans. We are getting a untrue nor the ability to go improve on property and sell it for profit. So we're gonna send any sense he or she's trying to tap into that 30%. Yep that's that's where they make their money out if you're kind knowing how does this work you know that some of the the deeper mechanics here is. They are actually making the money on that 30% or. If they can drive that value that homes even above what we have praised it for right so that million dollar home might be worth. One point one and write something nice if he does a really great job or the market appreciates Wally has not loans and he could actually even hit a bigger home run he might not just get 30% he might get 40% of that if he does a great job on the contrary it also seats 40%. But you know what he still made money yep and we're still in that seven you were okay super cool and as so when you look at this investment vehicle from a lot of different perspectives are so many different benefits to this. And it really boils down to you again the cornerstone. Of private lending is all about your exposure alone to value so. We're gonna in the next segment are a couple of next segment we're gonna dive into you some of the the ways that this provides benefits prosecuting decent examples. And really try to break this down. At a at a numbers level civil Milwaukee there were a couple of deals also tell you how we. We've seen people screwed up firsthand you know we're not perfect either we've we've made mistakes over sixteen years of doing this and we certainly learn from that so we're gonna break that down here in a second. OP stick around for that this is this is our passion this is what we do clearly there I mean we were definitely all about private lending its. We we actually organize it through a number of ways. You know we've we've done direct lending we've done it their funds which is what we do today we have a number of funds that have different strategies so that's how are investors get involved. Is they make an investment to a fund and then we turn our and we managed that and put it out to all these guys router flipping houses. Yeah there's a gigantic market forward at the moment and even when there's not a big market for it there's still a huge need because guess what people still need a place to live. Yeah and that's also you know who would just probably some don't wanna talk about here within the next thing mentally you're talking about the asset class into residential real estate we're talking single family residential bills there. RA when we get back we're gonna break into some of the benefits. Being able to hedge your bets we'll be Red Sox. We interrupt our program him to activate the capital area emergency alert system on talk thirteen seventy important information will follow. This isn't tennis tip of the emergency alert system. And oh. Top thirteen seven. The right choice. You're listening to drill wells blueprint. If you wanna ensure retirement with the lifestyle user can then this is this show for you. And hi this is Chris goes to the real world blueprints show welcome back joined as always by mr. Ron Navarro you know we don't have Cheney on the show right now and she has an introduction to business that's the problem so. Been hard to calendar with her but she's actually the rest of her job responsibilities have really taken off that noble she's been working with several financial advisors. Around not only state but the country that have been contacting us at the show and in saint hammock financial advisor and in hearing your show or I've got clients have been colonies and what is this private lending things. And how can my client skated. Well good news there's a way free to do if your financial advisor anti needs here is who had been on the show it's on time that's a primary job responsibility is supporting advises around the country. And helping them. Deploy our vehicles so that their clients can earn 60% on their money so I shout out to teeny doing a great job about continuing miss having you on here because you know I'm just talking around me on day. It's as if destiny is great she cut it up with us and Shia and she left us that she she did it for good reason. You study you know what's funny about as clients on that earned us those people out there don't know. Lot of times it feels like people are looking for permission from their financial advisor. Ya so it's that you're listening think about that. If you could talk to us but the attendees and working with the advisors to educate them so until later educate EU and then worked through the way of you know and it worked through how to. Position your nest egg where private lending is kind of one of the cornerstones in your retirement. Yes alleged to be clear you know our radio show is to bring awareness and really the Texas community in terms of whites. These you know what types options are available right from. Alternative investment primarily private lending and so we focus on. And yes we also has an in house retirement advisory services. I'm in where we're happy to meet with anyone and we actually holds seminars where we can talk to you about how to create income strategies and plans for you in retirement. I'm our cornerstone known as private lending that's what we do so Teaneck she supports other franks advise our on the country it's pretty cool. That it disagrees agrees that we we primarily focus on the state of Texas that's what we do but yes we now have financial advisors. All over the country coming to us thing I'd like to me I'd like to get a little more information on this I talked this to some my clients. And all this is it were we've got in Tampa we've got one in Brooklyn we've got when. And in Boston I don't remember Ross are we got these people coming that's for advice on how to position part of their in their clients nest eggs and you and it's all because of Texas real estate so as we talk about how to hedge your bet. We're talking real estate. Yeah we are about real estate and in our business we're specifically talking about Texas residential single family residential real state so. One of the benefits being able to hedge your bet using this strategy that we're talking about. That we are very my very focused for very passionate about is we. Focus on singles in your as intrastate why. And it's because everyone means a place to live yes there other types of real estate investment that may be more profitable. In eighty more profitable to develop commercial property. Enormous tracks and in development properties on evenly into some degree Cain be more profitable. Then just your cookie cutter single family residential home however. And we're speaking from a place of experience them when you go to that next downturn which will occur. Single family residential property is one of the best places to be because you can flip your strategy. Very quickly into a landlord strategy increase in income producing assets. We're not just lending money in speculative real state we are able to actually insert ourselves. And become landlords and holed that property through the trough in a downturn this is really critical. In our platform. Residential real state in the you know it gets me thinking about those days of 2000 eight's nine's remember driving through the neighborhoods remember driving through to let's say you know pack in Austin. Or 75 in Dallas what was what did you see that was deacons was it a bunch of house is great to see each other was it eighty gigantic building. Right they weren't vacant houses or not they can't Damien had foreclosures you know in Texas whose brother insulated that's a whole other topic we can get to put. Even in places where I went to. Around the country right cousin during 2008 I work for a national platform so I had exposure everywhere in the country Howland going cities. And I would see massive amounts of foreclosures but you know what happened very quickly after foreclosure. Bloomberg or I was real property like you leave right after it and that's not liable going on in my mind l.s like me and I wanna be able to be a part of a platform. That can do well in the up and down and that's that's old really what we've creates. Men I remember driving every single day 20082009. Back home and sometimes they drive with my wife. And we tried by this property was this gigantic probably need 75000. Square foot office building their tunes was probably 150000 square feet total. And their vacant that they are years. Actually questioned that's it and how you know what I'll be honest with you that there are still plenty of places. Where strips sinners were developed in very speculative. Areas that never fulfilled. There were foreclosed on that some are still vacant I mean that's sounds crazy. There are some there are some on strip centers and the ones that aren't they continue longer and must earn a really desirable area were filled up with you know kind of you know I'm not a does not necessarily the most desirable any you'd like you know some men's and there and it's grade they're gonna do it is the pay the books you know but you know anyway. That's why we stay away from those other asset classes is because when you go through recession they're not as easy to recover from. Yeah I'm and that's the asset class level but not talking about the actual investment. What what happens when you're investing pennies on the dollars you really protect yourself to to the market volatility in the market is going to is going to change its gonna go up and go down it's. Generally speaking all markets have gone generally speaking. But they go up and they go down deep go flat Beagle they're completely repeat themselves break but with some insulation you can actually. You you could eat. You could live through it you can let it it's great when it's going up and when it's going down you don't have to constantly worry about how you can unwind your investment because you have. That insulation of that protective equity super critical portfolios down 30% you lose 30%. My loan is down 30% in our example where we then seven cents on the dollar. You get all of your money back here breakeven on our bomber you know death as a Byron euros along the way I'm sorry got your money backing better return on investment that failed yeah I mean it's just that reason we do we do we talk about it every single day but it's the reason we do would we do because it is predictable and I think that's the next part that it's really important so. What happens when you do something like this where you don't get the the sexiness of the gigantic returns trim you you're stuck at 6789%. Maybe if you're lucky. Yeah I'm sorry we're so boring rounding these. But it's always there it is always there and look let's be honest like a lot of the people that give us money make investments and noble capital. I think of them as like parents or grandparents you know when I do you get to meet with some of our end investors and in my case. This is really cool thing here apart you know and and that that is me feel great because for them. That's what they're looking for they want predictability. Especially if this is part of an income strategy for them like look how do you account monthly quarterly or whatever that vehicle is delivering. I want that income to be coming back and then and they don't necessarily need anyone choose a reinvestment option inhabit just par lay back and good for them they can do that too and compound their interest. But most people are looking for some form of predictable income on the way. That also their actual investment is not at significant risk. And provides a decent return mean hey that's great oh by the way we're providing you know the protective equity component. In an asset class that can be reconfigured during a downturn system providing comments like. It just click click click click all these things are to Adam yeah. You say the Trammell thing. One of my very first if not my very first client who invested in the system in the program with us on several years several years ago with somebody who reminded me of my grandma. Quite a bit age wise mannerisms everything she was investing something to the tune of about 250000 dollars in us. And I'm. In in talking her through this situation out there is this really does to a program I felt a sense of I owe this to this lady to make sure everything goes right prey on conceded that the deal we we went into the deal everything worked out. A year later she said that Thanksgiving with us residents there was a good week at the office right now isn't at Thanksgiving with us that the author of trade and and I just saw earlier that day in the law because she is coming back to just make sure her for phones also and think that's the type person that this makes sense because not only is the predictability important but it's the peace of mind that predictability burns. Yeah a peace of mind is a major component right and that's because I think what we've developed tends to be very interesting for people that. Our median retirement right because it's not a huge swing right we're not trying to aim for the fences hearing get a major pop and make a million dollars for someone that put in a 100000 we're not we're not doing that would tonight. Incredibly speculative. It's kind of boring. You know when you killed in the delve into the mechanics of this you know or investing something at a very conservative rate. You're gonna make a very predictable return. And then that money's been turned back over and you can do it again or you don't have to eat sleep and I kind of boring and that's great you know there's a there's a portion of every portfolio. That needs to be boring. And you know traditionally declassified is an all turn alternative than those two need to sexy ones right the cool ones but in boys were not we know we're providing consistent. You know 60% returns to our investors through a highly diversified portfolio. Every single thing residential properties at Texas that's great right on the next segment. How the heck is a sport we talked a lot about and we talked a lot of benefits and cool things and finally she feel good let's. How does this work so we get back. Running iron and actually give you a couple of examples. Structure some deals and talked about how you can get those benefits of prime lending. We'll be right back. This go real well blueprint. That shows the brings an unexpected take on all things financial. I'm no real well blueprint we will give you the tools to plan grow through tax and yes finally enjoy your well. I guess is Chris Wright when your host for the real well flipper and show and welcome back today were talking about how you can essentially invest. Pennies on the dollar essentially how can you get into an investment for far less. Then what you normally would have to be you don't necessarily have to put up the full value of investments he gets in an investment. And that's what people don't realize about private lending that's or talking about were reviewing in detail on the segment. How you can get involved in being the the bank essentially providing a private loan. To someone's out they're flipping how's so running iron actually indecent and we've never done before on radio. Or lies in front of clients frankly I'm we're going to look constructing deconstruct the deal right now on the radio. So we're gonna pencil it out and by the way we're really gonna pencil it out so we got a couple of notes we're gonna actually break it down dollar my dollar here to see what the deal looks like. I'm its interest in them before we get too far incidents. The majority of our clients had invested in rules. And that's good so that's great most of our clients are real estate stands or they have some exposure to it and I think that's great so you can understand some of this even if you've never done before but. Look what we're about to do right now. We do actually we have a presentation. If you want and you're like okay this is that what I just heard was nuts right this number down. I'm gonna challenge like if what we do right here on the radio isn't exciting to you then don't call us sir if what we're about to do right now on the radio is exciting TU. Called the number. Come on in our office and we'll show it to you again in elections to take home copies in the Judith well this is the kind of stuff. That people charged tens of thousands of dollars to do to teach people how to do this were donor and on the radio and I want to come in our office call us. At 877. 281931. Or begin writing down if this is not exciting to you go away. If you wanna do this call a number here's one more time 8772819314. Ironic I was also Nelson has to do you like that. This and that everybody has invested in real saves some of our clients have already invested in real estate but honestly everybody listening understands real estate. The 101 yeah property is worth what it's worth it will sell for that value to let's keep it high level were talking about a property here in Austin this would be something and eighty would selling crest view and and if you were in Dallas. Man eighty Plano maybe the higher end side a plus KI and median home price a little bit lower but nevertheless these houses are going to Gordon. Itself means a multi socialist at the end of Riley to start. If I was gonna finish with this property at the end of the day because member talking about our loan to value so like what is this property going to be worth once it's finished so we're we're driving around maybe not as the investor that person's gonna take the risk the person's gonna make the big pop driving around seize the property in it's a little bit distressed for whatever reason. And it's he realizes and 5600000 dollar neighborhood does his homework. And and assigns number is worth 575. So he thinks if I improve his house actor probably suffered by 75 it's its in its its rundown it's whatever it may be yeah -- just being poorly managed it might be somebody died several years ago but right now I do a couple of things is thing fives and fives of the marketable and that's and that's the key it's he can't describe buyer retail properties got to find a deal got to find one that's being sold it under market even though it hasn't been renovated and he needs some work and that's that's usually the the tricky here's your fine property little distressed Torres we say is go hair on it right so it's like. Let's look at that property so I think I can make this property with 575. But what do I need to bide a sucker for right now to make the steel work shareholders. It did the spectrum is largely due by exit for zero make a ton of money pray he's not gonna buy it for zero. All he could buy preferred 500000 dollars and depending on his budget maybe make a little bit of money LT bottom five doesn't ease into his own money yeah he's very very tight and so let's just kind of fast forward a little bit here this guy has now. He's done his homer and his research that is negotiating and he's contacted it for 325000. Dollars an abandoned home in the middle playing in summer and it up so. He's done his homework Bodiford 3.5 under contract. Then he sends his cruiser near tell exactly what it's gonna cost to do it. To look like what he said it should look like the scope of work he's suggested. They go in there and they say boom boom boom it's gonna cost you. A 125 grant rate so he's in the deal at 325 purchase. 125 renovations well once he's all the way to their innovation right now ask anyone of the secrets will come back. A hundred and fickle or 450000. Dollars he's got some closing costs to write her finest summer so we get to the closing table he needs 325 to pay the seller or can't he needs a 145000. Dollars in the bank I don't construction OK but he also needs to pay us for our services the title company for its services insurance company all of that stuff that happens on closing the rules agents. So they say that's ten grand. The 450 hard cost plus the 101000 dollars in. The golden cause closing cost him he's in this whole deal 460 grand. So 460. Is his total exposure and he knows his properties Gundy were 575. But that's not necessarily good enough for us to get this guy alone or something else is gonna have to happen right correct so he's now stands to make it's it's happens that hundred and what is it 1151000. Dollars in equity or some great games he says to make all that money so. We look at the deal. Let's just say we agreed for once we agree that it was a worthless 35 because we don't we always stress DelHomme are really down 85 joining confidence as a reality situation meaning eat your eyes get bigger when you're when you're taking those shares and share on when we take the risk off the table is got a little bit more. Disciplined Rangel let's say we agree by semi five as the value and we look at his budget we've also agreed his budgets couldn't conflict and scope of work we like that. And the titles clear the closings gonna happen it's at a reputable title company. His entire you know cost if you are aware he's. The capitals stack is 460000. Dollars debt but he's got to have some skin in the game doesn't so we look at the deals worth 575. How much are we gonna Clinton. So we do our little calculations this is say the basic 7% number and I'm rounding years the folks that has just bear with me and about 400000 dollars. Can yep that's the Max that we would lend on this property. Brent in exactly so Ruben in the Max we will give this guy's foreigner grand and he needs to bring 460 to the table at his make up the difference okay. 400 comes from us right we put it we give part of its alluded to the seller rights and about where the title and that's the big greatest seller the original seller of the distressed seller and we're getting paid off correct content and part of that stays in an escrow account to be used for future for featured. Purpose is a very important and that's the construction part yes that you have to hold onto and it trust account. As the lender that I magic formula if you don't hold your gonna yea every time to be on registered if you if you don't have hunt when you do not give the bar or the money cousin named by new truck and they're on. But I guess he needs for sixty Wii game 400 words is exe come from. It comes from him skin in the game that's exactly it is skin in the game that's right so now now capital sack is complete the closing is taking place yes and 400 from us from sixty from him the closing is finished he owns the property where the Linder. That's why we're secured it seventy cents on the dollar. But that's seven he says seventy you know that that number. It's really a theoretical value of the completed property right. Absolutely and how do we make sure he gets there all week we retain the construction money out when this case a 125000. Dollars. It's click any secured bank account that we hold onto it and we basically say. Our I get so yeah and he gets to work so that day one think about this for a second we're seeing a lot of numbers and we're probably losing people but. But were with us in fact if you read licences online slowed down guys slid down a deposit write it down we gave him 400000 dollars and we're retaining a 125. Day war in our bases in this properties 275000. Yeah did you get those guys who forehead and act 275. And money by a foreign he bought it for 325. Right to save. And he warned you're safe in and I wanna kind of slows down for a second year and thank really kind of highlight that. That's where a lot of other people that are doing this I find are going at this really wrongly. They're actually providing too much money up front meaning the purchase price was low enough or the numbers didn't work out. And then if something goes wrong on day one. They're exposed them and you know I am sorry to say that I've actually talked with a couple of people out in the industry and then they were investors not with us both their investors and they were like. I don't know how this happened like how is it and you know this property when ironic and understands things go wrong even in the beginning sometimes the how is it on day one I'm in trouble and on an inside introduce him. To this concept right we're talking about loan to costs if you wanna get in this whole other area here but they essentially provided too much exposure. On day one. You were not protected here so the back to this we've given alone for 400. This Truman brought in sixty K that made up the entire like all the money that's needed to do the project if he does a great job. And finishes if it's worth 575 but today. 325 spirit is what's worth sweaty bodies for writing but we're not expose there too because we're holding on to a 125. Of our 400. Yeah a 125 for construction and for improvements in this guy gets to work yeah okay so there's there's a lot that goes into construction project and. His name we get a whole show on how we manage that so if you're really curious Orion like how does this work how you go in and and how do you manage all of that. You know we've we've got a hold showed just on that he can actually go listen that if your heart and in fact I think it's like answered when he won drawing on experience when it was called so you go listen to that. Yeah but that's how the stretch or so let's let's passport let's assume he did everything and you're supposed to he finished the construction we gave him a little bit that once when he five. Every diddle on the way so he's doing Rawls and he's getting money back and now this sucker is worth. 575. Ya it's a beautiful property just kind of shining and now he's the media whole process from. Basically closing. To renovation to marketing which takes time to say ill at the very variants was caused six months dot K. Got to play happens now let's say he's he's got to make payments along the week's holiday that very important as we always talk about returning 670%. How do we do that. Somebody has to make the payments for that take place in a summons the bar we're experiencing at the bar or guarantees that yet and you don't investor you have to wait for that money into the union that's the cool part is the borrowers make consistent payments every month along the way. And that's how we're able to achieve that. Essentially that investment cash flow to our investors. So just kind of assigning a row round number two it six months let's say every month he's writing a check for 3300 bucks that's about 10% interest payment on his part. The majority of that goes TU the investor then and we keep some of that for the servicing in the asset. Manage with the collateral management Murray somebody needs to make sure that the the values being at a price of six months 33 endless round a little Willis called that Tony ran twenty grant yeah so now all of a sudden. That's for sixty total bases you had twenty grand to it. He total basis net net 480. Reich is on the Barak how deep MI in this how much money by putting and that's my upfront money remember that sixty care about the table. Plus mile loan servicing on the lane the Tony that's 80000 dollars that I put up. But I have my loan of 400 so I'm in this for eighty deep. Yeah sun nice I sold the property sold for 575 maybe you'll hired a good market. So I cleared some money denied guess first things first you have to clear your debts are paid alone up that's 400 K. On all of a sudden you've got to 175. Gross on the table just to do the math or more times 575 purchase not talking about closing cost 575 purchase. 402 the bank TU listener 400 grand a 175. Gross left on the table. Then I put money in the beginning writes I gotta pay myself Bagram rocketed sixty gave on the borrower yet so there's sixty that comes off that's announce a 115. Net left on the table okay but I had a service it for awhile member that toy indicate that evidence that take that's when he came back from a genetic true our allies are several 115 minus the twenty uneasy with the 95 net net not you but the entrepreneur who's out their flipping the house pets waiting and making sure everything goes right that's how made her money found the barn dances. Yep you got it so. That's pretty cool let's let's talk about this for second so all of that happened this guy just made didn't do enough on this this guy made. Greater than a 100% return on his investment we I mean his real and he got back at sixty Kate it was at risk. You don't really count that that was paid back but the what was at risk was that service that debt service on the way which is how are investors make our money that. That Tony grant. But I just made and sounds like I made 95 K on Tony is that right that he killed. He killed he hit the cover off the ball this is a home run but here's why it's important this is why I think we. We like being born. On. Our investors didn't make a 100% return on their investment help they were in the driver's seat the whole time making 8% in the secede on your and that's because if anything went wrong. On anyway. We would be able to foreclose stepped in finish the property and realize this profits. Many jump and then on the next segment because that that that ate up a lot of the time Fiat but I hope you guys appreciate that his listeners a scan in deconstructing a deal I can send items you can take a seminar on behalf. And actually charge you pay. 101000 dollars to learn how you do this but. Commend our authors looked they edited for think we lost due to blast on fees yeah we'd love to hear you guys what did you just do did you know you went nuclear on me I think we'll wade TD but does fund I. I loved it that was really great guy when we get back Ronnie don't forget I'm winning here what are real tip of the week is and when we get back we're gonna talk about. Other ways to kind of hedge your bets in terms of what we do as private lenders in the state of Texas so. Hope you enjoyed that when we give back we will won't bore you with the number six in the rule will be shared a wrap of the show emotion how you can pageant that's. Thanks very much will be right. The right choice. And now to drill well blueprint where you'll learn the secrets once reserved only for the wealthy. Hi this is Chris your host for the real wealth blueprint. Welcome back. We just got off of a heater we really does continue. A deal. I'm can deconstruct it wind from the top down and showed you how does this work I mean that was fun. Yeah and that's the one you have to go back tune listen to on line and just please slow motion yes OK but to recap if you pay close I'm not doing on nine and I we were. We're trying to show you how to deal really works along the way you were the Linder you're the one that put it that 400000 dollar loan for this individual to go out and flip this house. In your collect team. You're 60%. Fining guys basis monthly on payments enough and that's how this works that the reason. Why you're not making as much as this individual we gave you a home run scenario that individual. But it's because you're the one with all of the protection they're the ones with all of the risk so something goes wrong they don't get to sixty K back. They don't getting into debt service back. You know in fact we actually go after them and has we have personal guarantees on these loans. You get the real stage we get to finish the property with use split some of the profits with you in in the day you will make more money than you would as the beginning. But you know as a failure and in and it's tough but they have all of the risk. And that's why when they do hit a home run they contend to make a lot of money in this game so. I hope you guys enjoyed that a thousand a lot of fun that the let's kind of bring it back to reality first two seconds here. We're talking about very eat like intimate level understanding in terms of our asset class single family residential and Texas. By the way is also another reason they were real passion in this is all we do it's because we are incredibly knowledgeable about that asset class. Especially in the state of Texas and that's that's why we're here in any kind of the lesson here is. Don't invest in something you don't understand. Yeah I and I'll never forget I was working in the real citizens and I was working in his title company offending title company my immune to a title company in South Florida. And one of the first deals and they did that resembled this one no we do is we DeLong a cousin and I did loan for property in Jacksonville. Through. Mainly to Jacksonville a gazillion miles. I had no idea what was going on taxable rate one thing I knew about Jackson goes like man that's a 40000 dollar deal we its deal. It on and we mean this is they got burnt. Yeah ever for a number of other reasons that these are exposures is on us because we we did all the wrong things we need you got money at don't know that yet you do there are things adios a donut in the market yet we we but you know we always had though. We always had debt urged secured lien on the property trim so and so says that's another big piece of ours were talking about first position liens on property. I but back tonight knowing your market that was that was a burn in an and I think everybody here it feels that some version of that they've ever listen rules until just a little bit outside of your comfort zone in terms of words that. You realize that the pain is a little greater the out as you can see. It's true here's something else to consider especially in prime lending. I like the idea of being peer to peer I'm a lender amid India's a guy over there are some money in and watch him do adamant drive by there every Sunday. Whoa that's sounds cool and it is actually it's kind of neat but a 100% of your money is that risk in one investment. And that's that's another thing that I see is a mistake. I understand philosophically why some people like to do that. But if you can find a diversified fund and diversified means in our space. Across multiple properties. That way when something does go wrong because it does. Your money is not 100% stock in one deal not performing wider having the work finished yourself. If you're inning I learned when the money is split across all these other properties. You can afford to have meaning of them actually stop working right in and but you're still gonna continue to received your return as an investor so. That's another lesson that I want people today here is. Yet you could do a lot of this for self and and many people are equipped to do so if you have the time to DOD that good for you but also. All of your money is stuck in one deal I don't you know that doesn't make any sense if you're looking at this from a conservative incomplete. If you think about it for for just a second to. You let's let's say you're playing with about 250000. Dollars that you want to associate it to this you know this one income stream for feature for feature income. And you land one person 250000 dollars everything goes according to plan you get your turns and everybody's happy a deal one thing goes wrong. Everything is I think. Elena handle and for that that year you may and zero you know yes they literally and then yes you will get your money back by next year. Earlier after if you're equipped to take over the property first of all if you're equipped to finish the construction and fix whatever problems that they ran into exactly. He knows that if you have to have infrastructure and that's one of the big differentiators. Overeat noble aim at are really believe this and we even talk about this when where you know at that trade shows. Our power asset management team like the the teen and jumps in and handles things when things go wrong. I'll I'll put us up against any Bain. Instead Texas and I mean that it's on my fellow banker friends. So I literally I will put up our processes and our team against anybody else on single family residential dispositions or Texas. And that's where we differentiate ourselves from everybody else. Exactly and then in that is absolutely the truth that was what that means accidental I was in good asset management but I back to this fund that's the whole point of the delegates if you are missing the property you need to really be thinking about your your disposition strategy. If you're finding your diversified. Yes it still needs to be there in need you know whoever is operating net fund can do that but you know longer have to have that Horry to Germany's diversified. Over a vast amount of properties adds that the same example saint 250000 dollars in one deal one thing goes wrong you might have earned 0% interest for a whole year yet let's struck repair low it's like one stock or mutual fund exactly own it's really simple 250 grand into a hundred deals or just one you know yeah I think he has. 2030 of them could go wrong you still getting that dividend return. I like it man so if you wanna learn more about it on again we gave me the phone number I was Nicki like good downloaded again to listen to it because we don't normally get up a phone number enough but. We do need a number again if you wind and you can actually come in and schedule some time to to actually sit down with us and we'll show a team but we also host seminar so get in on a second but. If you want give us a call it's at 877. 281. 9314. Would be happy did bring in the office showing how the stuff works and will actually heard people go through that whole deal. You know there's there's many people in our office that are trained to do that and am so proud of of that entire team and we've got a very sharp people. That can from memory on a white board completely deconstruct the entire program the entire Prosser I don't I'm not not just the deal we just did the last segment. But it actually what happens when things go wrong it's a horrible and make the call BS on deals expensive minute they see it there like. Next the app that's like a game and player on the office frank we yes we played BS early show people BS deals with. We should do with the with the with the listeners to read into it back to our ankles so. Next week. When we are all really were trying to get down to the crux of that yes is is right for you. Exactly I think that's who we should spend a lot of time in in the widow wanna Freeman next week is let's let's break it down to ten things you need to know. To make a decision on whether or not pregnant when these record rate you know that'll be fine because because we're gonna to the good news and things yeah I'm just kidding we know like the back of our hands I mean it. You pipe lending is right for you if we're gonna discuss that. Yeah and say well we talked about seminars to this country's tiny but we're full rest here in Austin. Yeah so 1980 come to our office if you're like if your agent has to learn more about this and you want to just let us know we'll bring you any office if you're in Austin you don't have to wait for a seminar but if you wanna hear about on the seminar. We actually were able to schedule an overflow event in Dallas as we've had so many people come to our summer and by the way he's our retirement focused and in a large portion. I'm we do talk about private lending because that's our cornerstone but we actually do you have wind come up in Dallas coming up too so. We do you have time availability for that actually going to be on Tuesday December the twelfth. At Lowry is I'm so it was pretty cool so we do have a no full event for you in Dallas the innocent. It's gonna come in the office I what's the relatively weak hitting let's get it done when it comes to investing you do not have to take all of the risk. Okay true. And maintain these you know they were to shorten quit being it was so long sorry. I am working on the paragraph yeah. Thank you chopped it down to pay those pretty good and honestly yes that's true and those people don't know that that such I go aha moment. You can actually make investments in you don't have to take all of the risk. Yep they know takes a result table you're really doing don't have to sub had a great time today with Hugh Romney has been good and now we'll see you guys next week great show everybody. Yeah. 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