David: Alright guys, welcome back to the Discount Property Investor podcast. This is your host David Dodge, and I have a special guest on the show today, Mitch Stephen. Mitch I actually had the pleasure of being in Mitch's city for a seminar. I just interviewed Mitch a couple of weeks ago. Mitch was so nice, he took me to his ranch, we did some hunting. It was a great time, but I wanted to bring Mitch back on the show because I had so much fun with Mitch. Let's welcome back Mitch. Hey Mitch, how you doing, buddy?

Mitch: Dave, we did have fun, didn't we?

David: We did, we had a great time, man. Your ranch--.

Mitch: We were on them.

David: We were on them, that's right. You have a beautiful ranch, Mitch. I want to thank you and I appreciate you. We had a great time, it was a lot of fun. I wanted to bring you back on the show today to talk about private money, and how private money changes everything. In the last episode that I had interviewed you, we talked about owner financing, and how your strategy has been owner financing for a long time, and how you have had tremendous success with owner financing. The piece of the puzzle when it comes to owner financing that is really, really important is being able to buy those homes and you are using private money. I wanted to bring you back, I wanted to have a conversation today with you about private money, how you are finding private money, what you're doing, how you are utilizing it and so on and so forth.

Mitch: Well I mean-- private money really does change everything. It's the difference between being successful or being-- making a great living and being a multi, multi, multi millionaire and on and on. You don't have to worry about , you can go out and buy as many deals are you can find. The challenge becomes-- you quit focusing on-- I can't do this because I don't have the money, or I don't have enough money, or I am going to have to find more partners. When all that goes away, you just focus on finding deals. You know that which one you find, or how many you find that day or that week, that you can take them down.

David: Take them down, right.

Mitch: Right now I have 22 million dollars worth of private money.

David: 22 million? Holy cow that's a ton.

Mitch: It didn't happen overnight, but I didn't need 22 million when I first started out.

David: Right.

Mitch: All I needed when I first started out was 500'000 or a million. I was like, okay, I'm off to the races, you know? Depending on what strategy you use. I mean if you're doing fix and flips, then your money is coming back to you every six, seven, eight months. So you don't need a ton of it, all you need is one, two or three million dollars, you are keeping five or six houses up in the air, the money goes out and it goes back in every six months. If you are doing owner financing strategy, where you are selling houses-- not many people do this, but I sell my houses on 30 year fixed mortgages, no balloon, no need to go re-fi. As a matter of fact I prefer you don't re-fi. I'd like 30 years of payments, please.

David: Right.

Mitch: So that money has got to be a little bit long. When I have money I have to have it out for five, ten, fifteen years, you know what I mean? I got to keep going out and getting more money. Now the average--.

David: That well dries up quick whenever you're not flipping, whenever you are borrowing it then you are buying something, selling owner financing. If they make their payments for five, eight, twelve, fifteen years, there is no reason for you to-- you know-- stop that or slow it down, yeah, yeah.

Mitch: Money is tied up. So there is a lot of reasons to use private money. One is-- potentially or theoretically you never run out. You only have so much money you can buy houses with. The private side never runs out of money if you learn ho to cultivate it, you know what I mean? It is an endless steam of money in theory. The other thing is that it is always on your terms. If you go to a bank, they are going to tell you what they are offering. I am talking to private people, I'm telling you what I'm offering. It's my terms I'm offering. So today-- I started out because I had mostly older people, they were five or six people, they were older, and they were loaning me money. Older people were really worried about their principle. They were not overly rich, so they were-- they were always--.

David: Wanting to protect the capital, they were not as worried about the rate.

Mitch: Every time I send them a payment they want to know how much is interest and how much is principle, because I have to take the principle and put it back in my bank account. I was like, well why don't I make this interest only payments, then you don't have to worry about that. You take the one little small check I send every month and you can spend it all because it is all interest.

David: Yeah and the principle is protected.

Mitch: That really big check, that's your principle coming back, you know? That worked for a long time. I got-- 16 million dollars of 8%, five year interest only money. To go further, payable monthly here's the terms.

David: You said 8% five year?

Mitch: Yeah, interest only, payable monthly. First [00:06:46.09 - inaudible] position, [00:06:51.11 - inaudible], and I never borrow over 65% of the OFV, or owner finance value, or you might say if you're a flipper, the value, the appraised value. But make no mistake, the owner finance value and the appraised value are not the same number. I am promising to never borrow over 65% of the owner finance value. I know I am going to sell that house for if I carry the paper.

David: So you're owner finance value is less than your appraisal typically?

Mitch: No, it's more. I can get more money because I am offering terms to people that can't get a loan. I can sell over their market.

David: Oh the owner finance is-- is it always higher or typically higher?

Mitch: Right now because the markets are so hot it's even. Owner finance value is equal with the value. when the recession hits, and these prices drop, 50/60/70'000 in price or 50% in price, my-- the rent is still going to be the same, so my owner finance value is still the same. I could be selling 100% over the market which I was in 2010 and 2012, the houses I bought for 27 were selling for 59 because the houses that we were

for 27'000, we were renting for $850 a month.

David: I get it, yeah, it makes sense.

Mitch: In the recession you really sell over the market. In a really hot market like you have now, it's about even, the owner finance value and the regular value is about the same.

David: About the same, right.

Mitch: Yeah, these are my terms; 8%, five years interest only, payable monthly, wrapable, which means I can borrow the 50'000 to buy the house, and I can sell it to someone for 100'000, 10'000 down and they make a payment of 20'000 for 30 years, but I don't have to pay you off. They pay me, I pay you and I keep the spread. Let's say they are paying me 850, I owe you 500, I owe you 350, I keep 500 in the middle, which is my average, really close to my average cash flow on every house is about 500. So they are paying me 850, I am paying you 350, I'm keeping the 500, this is not rent, this is a mortgage payment. I don't own the house, I just own the payment. So if the air conditioner breaks--. Here's the point; I got to have that money out a lot longer, so I am asking five years, and the reason I get interest only is because my people were a little bit older. When you start dealing with younger people like-- 75% of the people I borrow money from are getting it from their IRA. I've taught them to self direct their IRA's so they can get in control of their financial future and where that money is going and being invested.

David: You said 75% is from IRA?

Mitch: Yeah. I teach people how to convert. They all go to TaxFreeFuture.com. That's where I send them. The reason that I send them there is that it has an upfront fee to-- form the self directed IRA with check book control. It has a flat fee for the rest of its life, and it will out run-- most people's back hand is bigger and it's forever. I suggest you pay upfront a little bit, then have a really low back end that is fixed forever.

David: That is self directed IRA?

Mitch: Check book control, you have to have check book control.

David: Right.

Mitch: TaxFreeFuture.com-- once they learn how to do that, I notice that if they are younger people with IRA's, maybe they are 28 or 30, they can't get to this money until they are 59 and a half. So when I am talking to a younger person, and it's coming from their IRA it doesn't matter if I send them principle interest payments, because it is just getting plowed into the same account, all of it, you can't spend any of it until they are 59 and a half.

David: That's a great point. I have not looked at it that way. When you're younger you can't touch that money for so long.

Mitch: I just want to set it and forget it.

David: 30 years in some cases.

Mitch: Normally what I do-- this is what I offer. I have been offering these terms lately; I have been offering 15 years fully amortized, wrapable, first [00:11:07.13 - inaudible] position, 65% LTV, but 10%. If you give me a 15 year loan I'm done.

David: Wait, say that again. Start over with what you're offering these days or in some scenarios.

Mitch: I will pay my lender 10% if they will give me 15 years fully amortized loan, okay?

David: Okay.

Mitch: I will pay 9% if you give me a ten year fully amortized loan. I will pay 8.5% if you give me a fifteen year amortized loan with a seven year balloon.

David: Fifteen year with a seven year balloon?

Mitch: Yeah 8.5%. I will pay you 8% if you five me a fifteen year and a five year balloon. Sometimes I can offer a five year amortization, fully amortized if you will accept 6%. But that's a special property that I have to find myself. Properties will small balances that I just want to refinance and pay off or something, that 6% five year fully amortized loan, you can't run out and buy a $100'000 house with that kind of money. It's for little things I have dangling around that I just want to get off the books.

David: Right.

Mitch: Let me just pay this thing off in five years, you know? But that's 6%. You think about an amortizing loan as opposed to an interest only loan, and an interest only loan, the lender's risk kind of stays where it's at, because you never pay anything down. In an amortized loan the lender-- with every payment you make you are paying down some of the principle, so the exposure is less and less every month.

David: Right.

Mitch: As if it wasn't-- as it his exposure wasn't minimal enough at 65% of what the value of the house was, it's getting less every month.

David: It's getting less every month, right, and the interest is only applied to the principle balance, so as you get further and further into the-- still 10% or whatever it might be from the get go, but that amount that is being paid is shrinking as well too.

Mitch: This is how I am using the private money, but let's talk about how you get it.

David: Let's do it, I'm ready.

Mitch: When I start to coach people about raising private money, my first goal is to figure out why you haven't done this without me. Where is your mental block? Where is the obstacle? My partner was really good at getting money from his dad and his uncle, then-- when they ran out it stopped. I said, what's your problem, man? You were really getting money, but once you had to go outside the family you couldn't get it. He says, well I don't know what it is. We need to figure out what it is, because I can't fix--.

David: *laughs* You need to figure it out.

Mitch: Fix it if you don't know why you're afraid.

David: Right.

Mitch: He calls me back a couple of days later and goes, I know what it is. I said, what is it? He says, I am going to these people in their 60's and their 70's and their 80's and they are rich, they are wealthy beyond compare, they are successful people. I am 25 years old, I don't even own my own house, why would they loan me money? I am so young, I haven't had a chance to prove myself. I said, ah there you go. You have given yourself way too much credit, no one gives a crap about you, they don't give a shit what you are. What they care about is the deal. What are they going to get if you don't pay them back? If that reward is big enough-- Charles Manson should have been able to go out and get these loans from prison after killing all those people. Hey warden, I need $50'000 for a loan. Charles, I'm not giving you a loan, you're crazy. Look I got a $100'000 house, I will give you a first lean on. If I don't pay you the 50'000 back you will get my $100'000 house. It's like-- you can see the warden right now pushing the button; hey guards let Charles out and don't give him a pencil until you have your pens drawn. Don't give him a pen because we are looking to sign papers.

David: Right.

Mitch: It doesn't matter who Charles Manson-- doesn't matter what he did. You are either going to get paid, or you are going to get this piece of collateral that is well worth the extra effort it might take when you get in that position. So right after that conversation he was out getting private money like crazy. There are ways to manipulate this. Say you have a $100'000 house and you can get it for $65'000. Maybe someone doesn't want to loan $65'000 on a $100'000 house, maybe that's a little too much. Why don't you just put $20'000 of your own money into this big fish that you have never met, but you know he has deep pockets. Everyone knows he has deep pockets, the man is very successful. He doesn't know me from Adam and he is not going to pay attention to me, and he is not really going to listen to me when I want to borrow $65'000 on a-- $80'000 on a $100'000 house, not enough incentive.

David: Too much risk on his end.

Mitch: -- put $30'000 of my own money in, now I just want $50'000 on a $100'000 house. I am in the second position, I am going to loan the 30'000 for the [00:16:31.28 - inaudible] in the first. I know the deal is not going bad either way. I just want to meet this guy and so-- if that doesn't work I will out $40'000 in, just loan me $40'000 on a $100'000 house. If that doesn't work I will put $50'000 in. Loan me $30'000 on a $100'000. I've got to do something to get in this guy's head. Then once we know each other he will get reasonable.

David: Right, yeah. Once you start sending them payments every month for a couple of months he is going to say, okay this guy wasn't f'n around, he knows what he's doing.

Mitch: In essence we are in business together.

David: Right.

Mitch: You know? Now-- hey I have another couple of deals I want to show you, do you want to go to lunch? Just get closer and closer. You are tied to him now, you know?

David: Right.

Mitch: If you don't have 20 grand, we need to talk about going to 1000houses.com/grow and getting some 0% credit card money and go ahead and put 20'000 on a 0% credit card that has a 12 month window, and you are going to flip this thing within 12 months, the margin that you are clearing for him isn't even costing you any damn money, nor your own money. I mean there is a reason I buy hundreds of houses. I bought a house every four to five days in and about San Antonio Texas where I live for 22 years. That's about a hundred houses a year. There's a reason why. I figured out, and I didn't invent these things. A lot of people I bumped into had great ideas, I just kept stealing them, okay? I just kept borrowing or using them and I kept putting them in my back pocket. Now I am just passing them along to you. There is a reason why I buy 100 houses a year for 22 years plus or minus. The big part of it-- now I have 22 million dollars worth of private money. A funny thing happens when you borrow money and pay people back on time as agreed. You get more money either from them-- as soon as they run out the next-- hey I got another house, man I am about tapped with all I'm going to do in this bucket. I say, okay that's great. Certainly you know somebody who needs to make 8/9/10% with this kind of security, right? Don't you know someone we can help? Who do you know? Oh yeah well, my ex wife could sure use that. I know she has at least half a million because she took half a million--.

David: *laughs* She took my half a million, right? Yeah they typically do, they know somebody else, or they may have another bucket of their own that they need to invest.

Mitch: Let's talk about pitching, pitching to a stranger. First of all, there are instances where you know people get enough and you can say, I want to talk to you about this thing and see if you want to loan me some money. If you know I'm good enough or you want to be that transparent with them because you are that close. Typically I never go ask people if I can borrow money. When you ask people to borrow money they get into a boxing stance right off the bat. As soon as your lips stop moving they are in a defensive position.

David: I love that strategy, just don't ask. I love it. Got it.

Mitch: -- excuses to show people your business model, and make them start asking questions about your business model. We use NLP to get them to ask us what we want them to ask us so we can start to explain what we always wanted to explain in the first place. So NLP, neuro linguistic programming. We are programmed to go certain places in a conversation by what has been said previously. So if I want to get you to ask me what I do for a living so I can give you my elevator pitch, David. I would say something like-- play along with me here. Pick any profession except real estate investor, okay?

David: Got it.

Mitch: I notice you have a pretty damn nice-- that's a very expensive watch, I've been admiring it. You must be successful, may I ask what you do for a living?

David: I'm a dentist.

Mitch: Wow, I wanted to be a dentist and I almost went in that direction but I chose a different path. What's the next thing you got to say to me?

David: Well what path did you go?

Mitch: I help people-- I help average people achieve above average rates of return on their idle money, and I do it by giving very valuable Texas real estate as collateral. I can pay as much as 8,9,10% with collateral that is worth 35,40,50% more than what your risk is. Now I messed this up, because in the real plan this is how it should go. One more time.

David: Okay let's do it.

Mitch: Well I notice you have a really nice watch, I want to get a watch like that. You must be very successful. May I ask what you do for living?

David: I'm a dentist actually.

Mitch: You know my kids are going to need some dental work pretty soon, do you have a card?

David: I like that.

Mitch: Whether there is a call back or not is now up to me not up to him. You know, thanks for the card I appreciate that. Where is your office? Is your office downtown? Okay, it doesn't matter, you seem like a cool guy, I will just drive wherever you're at.

David: Right.

Mitch: But you know I almost went into dentistry, but I chose a different path. Now he is asking me you know-- what do you do for a living? I give my pitch, and we try and set the appointment. One of the easiest times to get money is during a stock market fall. When the stock market is starting to crash, just walk around town and ask everybody-- it;s very decieving, so you can't really judge a book by the cover. But go to the people that look successful first I guess, if you have a choice and say, wow did you see that stock market today? If they hang their head and start shaking their head, you know that they lost money.

David: *laughs* No I didn't see it, yes you did.

Mitch: Listen to this NLP. Man, I am so glad-- I quit putting my money in the stock market ten years ago because I found a way to make-- to invest my money that didn't involve that risk. I am so glad that my money is not in that stock market, I put it where I put it.

David: Where did you put it? *laughs* I love it. Hey Mitch, what's the elevator pitch? So you-- compliment them on something? Tell you what they do, right? Build some rapport with them to get a card, and then-- I almost went in that direction, I chose a different path. Then they are going to ask which path you went in, then boom! Now you are at the elevator pitch, and how does that go? The way you do it is elegant and short but powerful.

Mitch: Well the pitch is the pitch, then there is like this human element that comes in where you are just conversing again.

David: Of course.

Mitch: -- the pitch. I help average people achieve above average rates of return on their idle money. It's all back up by very valuable Texas real estate. You know, Dave, it's like you are going to get paid the return you're promised or get a piece of real estate that is a lot more than what you have in it, like way more. If you ever want to talk about it let me know.

David: Man, I love it.

Mitch: You don't have to live by this [00:24:03.15 - inaudible]. I used to get sick, I was worth money then I wasn't worth money. I know what I'm going to make every year now. It's good-- it's decent, it's 8,9,10% for sure, or I am going to get the property which-- I wish they would fail every time. The worst thing that happens to me is they pay me on time, I really wish they wouldn't pay me, because I would make a lot more money if I could get my hands on their damn real estate.

David: So whenever you say that and somebody says, well what happens when they don't pay, then you do have to get your hands on the real estate.

Mitch: If they don't pay I have a freaking party because now-- last deal I did I had 50'000 on loan to this guy, and he had $120'000 piece of property. He didn't pay me, shit, I got the property and I sold it at a discount for 100 and I made 50 grand like that. I wish it would happen every time, but these guys, they don't miss. They are pros, they don't miss, but I wish they would miss more.

David: Right, man I love it. So I help average people achieve an above average rate of return on their money--.

Mitch: On their idle money.

David: On their idle money.

Mitch: And it's all backed by real estate. So in essence I either get paid the return on promised, or I get a super more valuable piece of property. Is that a word? Super more valuable.

David: *laughs* Say that last part again, I either get paid on time--.

Mitch: I either get paid as agree on the paid on return as promised, or I get this piece of property that is usually worth way more than the rate of return that I was promised, or that is more valuable to me than the rate of return that they promised me by a long shot.

David: Man, I love it.

Mitch: You have to learn how to get into these conversations and start stating your case with-- if you open a door and try to push someone through the door, they don't want to go.

David: They don't want to go, but if you can lead them through it--.

Mitch: You can get them to the point where they open up the door and you are walking through with them--.

David: And they are pushing you through the door. *laughs* Hey let's go talk about this some more, man. I am losing money in the stock market, it's not invested at all, or I am 35 years old and I can't even tough this money for 30 years. So many scenarios.

Mitch: I know what you are going to end up being worth in 30 years. If you go with me I can tell you what you are going to end up being worth in 30 years. If you go with the stock market I can't tell you shit.

David: Yeah, no, that's so true. Mitch, how do you overcome-- I have a couple of quick questions for you here real quick. So whenever-- the very first loan we were talking about was an 8% five year interest only.

Mitch: Yeah.

David: Payable monthly, firstly position wrapable, right? So what happens if you go out and you buy a property at 50 cents on the dollar, get a 50k property that is worth 100, you are paying your lender 8%, and the-- person that you sold the property to is paying you 12/15 whatever it is--.

Mitch: -- pay me 10% for 30 years fixed. It will take them 17 years to get down to what I owe that guy.

David: *Laughs* Okay. So that was the second question, I love it. The first question is though--.

Mitch: What do you think that property would be worth in 17 years? And what do you think the note balance-- I mean-- I probably won't have any problem replacing this guy if it makes it 17 years, but I have a five year problem.

David: That's where I'm going, I am just curious how you handle, because I am so intrigued, that's why I'm asking.

Mitch: Are you sure? Because this is a long conversation and I want to get more on how to get the money, we will worry about what to do after you get the money later. To solve that problem go to 1000Houses.com/-- and go to my website, go to my blog, and look at the blog post 'why I borrow at the terms I do'.

David: 1000Houses.com/  -- what?

Mitch: No, it's just got to 1000Houses.com. Just find my blog post there on the page, click on the blog post and search for the article, 'why I borrow at the terms I do'. Now I have since grown, I am starting to borrow on fully amortized terms and stuff, but if you want to talk about how at the 8% five years, how I handle that potential train wreck that's coming, there are all kinds of ways out of it.

David: Okay, cool. Let's not focus on it now, I'm just curious because-- I would think most people would want to renew anyway. But some people are like well you have that money, you know in advance anyway and you just slide someone else in, right?

Mitch: Right, but you have to stop it at some point.

David: Right.

Mitch: You are better off if you amortize. I will-- that thing-- I said it once perfectly in about ten or twelve pages, all the different angles on how to do it.

David: Perfect, I will go look it up and will send all the audience over there too.

Mitch: What I want to do here is teach people how to get the money.

David: Absolutely. I am taking really good notes here guys, I know you may be driving or on the road or whatever it might be. All this information is going to be at DiscountPropertyInvestorPodcast.com/Mitch. So we will put the links to all the different things he is talking about. He's talking about tax free future, a thousand houses, Mitch has a course which we will get to here in a little bit. All that information will be at DiscountPropertyInvestorPodcast.com/Mitch.

Mitch: So you want to get in positions to talk to people about what you do, then I will show you these little NLP tactics to get them to open the door and go into the room of the conversation that you want to have. Here's one, David, you look like a very successful man, I am about-- I have always admired you, we have been friends for a long time. I am about to go in eyeballs deep into a strategy, a business, and I would really really-- appreciate if you would just take a look at it, see if you can poke any holes in it.

David: *Laughs* Okay.

Mitch: Then we make the coffee, you're going to try and poke holes in my plan. Here's the deal, I am going to go out and buy houses, and I buy this house-- let's say I'm going to buy a house for $50'000, then I am going to sell it with owner financing-- or I am going to fix it up, fix it and flip it for a hundred grand. Here's the deal; i am getting this $50'000 at 8% interest only for five years. Dead stop pause, the close pause, stop talking.

David: Back up a little bit there. Say that again.

Mitch: To buy these houses, I am borrowing money at 8% interest only for five years.

David: That's when you stop, got it.

Mitch: Stop, a business man not under the pressures of being in an act like this, 50% of the time they are going, where are you getting that money? That's what I want him to ask me. If he doesn't ask me, if he is like this conversation right here, and you didn't ask me, then I start prodding him to ask me who it is. Now don't you think 8% for this entity is a pretty fair rate of return given that they got this house, this $100'000 house secure, don't you think this entity is pretty secure?

David: Yeah, absolutely.

Mitch: Also, don't you think also-- no it's pretty secure, and don't you think 8% is fair for this entity? You know this entity, entity, entity, entity. When are you going to ask me who the hell is that entity?

David: *Laughs* I get it, I think it's great.

Mitch: Say it to me. Who is it? Where are you getting this 8% money? Who is that entity? Ask me.

David: So who is this entity? Where are you getting this 8% money?

Mitch: Well, Dave, you take your hat off, you take your glasses off, lean back in your chair, cross your legs and say, Dave, I am getting it from people who are sick and tired of living by tick and take by the stock market, and they are sick of 1%. They realize that the worst thing that is going to happen to them is that they are going to get paid 8, 9, or 10%, or they are going to get this $100'000 house for a 50k investment. Why? Do you know someone we can help, Dave?

David: *Laughs* You just spun that around, I didn't see that coming, man.

Mitch: I don't need to ask you, you will tell me if you want to do it. 80% of the time it's hell yeah I know someone, me!

David: Me, right. I love how you don't approach it to where you ask them, you never ask them.

Mitch: You have to ask me and I'm going to explain it.

David: Divert a little bit. Do you happen to know somebody who might want that? I already have people that I'm working with, yeah I love it, I think it's great.

Mitch: You never beg for money. Number one, I never beg for money. I am helping you, where else can they go get 10% with this kind of security? Where can they do it off the top of your head? You can't think of anything. There is no other place. So I am doing them a favor by showing them where the 10% interest rate is with this security. I am definitely helping people. The people I get money from-- I don't deal with a lot of wealthy people, I deal with a lot of average people that their whole life time they have managed to put away $4, 5, 600'000. Maybe $300'000.

David: That is an entire lifetime's worth of work, right?

Mitch: Right, and if they don't make 10% on it, it's just a waste of effort. They don't have enough money to make anything at 1 or 2%.

David: Yeah, you can't really afford to loose money whenever your entire nest egg is 2 or 300 grand. I mean try living on retirement for 20 or 30 years with that kind of money. You are going to burn through it in a year or two.

Mitch: In essence if you had in in a bank at a 1% CD rate you are losing money because of inflation.

David: Inflation is higher, right. One bad medical trip to the hospital and your are going to be out 150-200 grand, you know?

Mitch: So the key is to-- I have this-- I am trying to deliver as much content here, because I hate selling courses, I don't like to sell on these kind of things. Private money changes everything, we are going to put it over in the show notes. The thousand dollars that it costs-- this course, it's not very thick, it's not heavy, it's not bulky, it's kind of like cheesecake. It's not very big on the plate, but you can only eat one piece because it's rich, you know? This is really content rich, seven steps, how to go about it, who to call on. I can show you at least two places to go that you will never run out of people to call on. You could call on one everyday for 365 days a year and never run out. They will all sit down and talk to you if you preface why you want to meet them. You are going to go meet them for a perfectly legitimate reason, but it's not going to be the only reason. The conversation about 90% of the time is going to switch from why you are there to what they want to talk about, which is-- loaning me your money.

David: Right, okay, very interesting.

Mitch: You get in positions to talk to people that could be on your round table. I would like for you to be on my round table, I would like you to be able to do my legal documents. I would like you to be my CPA, let me show you what I'm doing, tell me if you can help me, you know? An attorney. I have to find an eviction attorney and have people do documents, I heard you are a good attorney, let me show you what my business is, see if you can be my guy. Can I get a free 30 minute consultation? Who is going to say no to that? When you get in there you're like, let me show you what I'm doing and what I need. I start explaining my business, and I made him ask me, where are you getting that money? I turn the conversation. It's brilliant, it's simple, and then were are 21 objections. I have all of them listed out, the objection and the answer, it is the only 21 objections I have ever heard. If you find an objection that I haven't heard, make sure you get it over to David or me so I can add it to the list.

David: That's right.

Mitch: And you just-- I tell everybody. Put it up where you brush your teeth in the morning and in the evening, and read the objection and the answer for about three or four days in a row twice a day, once in the morning and once in the evening. I have this other sheet that just has the objections. Put it up and start going through the objections and reciting the answer from memory. When you can do that, you are ready to go meet with people.

David: It's that easy, I love it.

Mitch: I even have a PowerPoint that will take people through what I do that is-- with my voice, where I'm explaining it. Then, there is also a PowerPoint that doesn't have any audio so you can explain it. You can make them your own, you can put your own profile up there or whatever. I am trying to make this as easy as I can for you. I even have credibility packages and funding opportunity packages where you can put a real house in with all its particulars, and say this is what I have today. I think I have one, I am getting ready to go over to someone and show them those opportunities. Let me show you the one I have got right now. There is this house for $100'000, I just need $45'000 deposition. Here's all the comps, and here is-- I just accidentally seem to have this on me.

David: *Laughs*

Mitch: I've got it somewhere, oh no it's here, I've got it in my pocket.

David: Right. *Laughs*

Mitch: You know the funny thing? I told myself I wasn't going to say this, but I am going to say it anyways, because I never do what I tell myself I'm going to do.

David: *Laughs* Me and you both, man.

Mitch: I like to push it. You know one of the things I did was-- you have to hear me all the way through with this, I studied the conman. The conmen were the greatest in the world at separating people with the money, a genius, the best conmen were some of the greatest salesmen in the world. I just wanted to learn what they were doing, then do exactly what they did, exact where you get to the part where you screw the person you took the money from, you don't do that.

David: Yeah of course.

Mitch: The talent of the conmen. The only thing that is hard to overcome that a conman does that I can't do, and it's a big part of his game, is that he promises overwhelming returns. I have to promise realistic returns. But other than that, so I can promise overwhelming returns too good to be true returns, and I can't screw the person at the end. So if I take those two things out of the conmen's equation-- now I am studying the con guy, what he does. They are experts at NLP, they are experts of getting you to think that it's your idea to invest with them, or to buy or whatever. I was studying those things and I was watching how they used this NLP. I thought, how do you take that evil and turn it into good for everybody? Just like seller financing houses, if you get an evil investor out there, he can take that to hurt people. An evil person can take this course to raise private money, he can use that to go out there and hurt people if he is evil. I am teaching all the ways to stay inbound and not have those problems. For example, one of the issues and objections, I am afraid I am going to lose my parent's or my friend's money, I'm petrified that I would mess up. I say, you know I was the same way. It wasn't because I thought my business practice wasn't sound, it was just when your promise to pay someone back, like when you sign a personal guarantee at a bank, you are signing for everything that could possibly happen on the planet earth; hail storms, wind storms, atomic bombs, tsunamis, fires, you know? How in the hell can you have the audacity to guarantee a loan with anybody? When you do you are guaranteeing against war, against everything. That was what always petrified me, what if something happened beyond my control and I couldn't honor my word? So I had to preface the offer so I could always honor my word. Here's the offer; here is-- in those terms I told you about, you might want to write this down because there are two very important parts I left out.

David: Okay.

Mitch: The 8% was five year, it was interest only, it was payable monthly, it was a first lean position, it was wrapable, it was not more than 65% of the value, and it was non-recourse collateral only. So if I ever can't pay you, my plan B is that I walk a deed over to you and I have honored my word. So I look all my lenders in the eye and I say, here's the deal; I am going to agree to pay you 10% for a 15 year amortized loan. If I ever can't pay you, I absolutely have to right every day of my life that this loan exists, I absolutely have the right to walk over the deed to this property over to your house and sign it over to you. I absolutely have the right everyday to do one of two things, to pay you as agreed, or to hand you the deed to that property. Those are my two rights everyday. If you don't like that property for the amount of money you are loaning me, don't make this loan, because I have the right to give it to you anytime I want. I also preface after that, harsh statement is-- now that being said, I have been 22 years and 2000 houses and I have never given a house back yet. I know if I give you a house, doctor, you are not going to loan me anymore money because you are not in the house business, you are in the doctor business. So I know that, but you have to understand; I have the right to if the fit hits the shan, then I have the right to give you-- and that's why you make 10%. You are sharing in this tiny minuscule piece of risk. So that's how I sleep at night-- owing 22 million dollars right now to people. I have always had two rights. If I ever don't want to owe it, I just take those deeds and walk them right down to those people and I'm done. I have honored my agreement, because I told them explicitly that I always had two rights. Pay you as agreed or hand you the deed. Here's my promise, you will never chase me for a deed. If I can't pay you I will walk it to you myself. I sleep very well at night because I am always going to be able to honor my word, always. I can always walk my deed down there.

Think about the banks, the banks says, how much do you owe on all these houses? 22 million, that's a lot of debt, it's all non-recourse. What?

David: *Laughs* It's all non-recourse.

Mitch: They jump out of their chair. I hope I have made some sense to you. I don't want to beat this horse to dead.

David: No, you made tons of sense, Mitch. I appreciate you coming back on the show, man. It has been--.

Mitch: Go over to the show notes, see what it offers over there. I mean for $997, if you only get someone to loan you $30'000, it's worth more than a thousand dollars. How much can you make on a $30'000 chunk of money out there in the real estate world?

David: Right, a ton.

Mitch: A lot more than a thousand dollars. I think it's great value. I think some of those lessons in that private money changes everything can be used in all kinds of things, not just raising money. You have to think about your business and what you do everyday. NLP could be used for buying houses from motivated sellers. You might be able to take some of those ideas and sling them around to that angle. So it's very interesting. I didn't come up with this stuff over night. I had developed this pitch for private money over a long string of failures, and over a lot of input from a lot of people.

David: Right.

Mitch: I finally honed it to where I have a very high success rate. If they have the money, and I teach you how to handle nay sayer spouses, nay sayer CPA's-- nay sayer attorneys, or how to at least breed people to expect nay sayers, especially if they have a financial advisor, where the money is going to leave his hands and come to your hands. He is not going to talk good about you at all. You have to prepare people for those things.

David: Right.

Mitch: They have a better chance of them surviving it.

David: Absolutely. Well Mitch, thank you so much for coming back on the show, man. I learned a ton. Private money changes everything, guys. That is so true, it is important to know and to understand. There is going to be some awesome show notes here at DiscountPropertyInvestorPodcast.com/Mitch. It will be access to all the different sites and products that we have talked about on this show.

Mitch: By the way, man. I got so much free stuff on this stuff. I've got free-- the gurus out there have told me-- man you give everything away. I say, you know-- if people want to go and try and do it on their own, I will give them everything they need, but people know they need a little help. You are either going to pay the street or pay the coach, one way or another. It is just which way is less stressful? I think paying a coach is less stressful. You want to take all this information I give away for free and want to make a run at it yourself, I mean-- there is about 2% of people like that, that can really take it and go.

David: I would agree, 2%, that's about it. People need help most of the time. It is difficult to learn it all on your own, I totally agree.

Mitch: I like to say the courses are-- to the-- you just can cover every situation that 22 years of experience could pick up in a conversation with you, when you start telling me how your buyers are talking to you, or how your sellers are talking to you. I will say something like, hey Dave, alright I have heard what you're saying about this conversation with this motivated seller, but I want you to do something before we make a decision. Why don't you get a shovel and dig a four foot hole in the back left hand corner, about four foot deep and four foot wide, and call me back and tell me what you find. You go call me back and say, how in the hell did you know that was in the ground down there? Because I have talked to this asshole before and I know exactly what he's trying to do to you, I could hear it, I could smell it. Ask me how I know about what is buried in that back corner. I bought houses that had that buried over there, and this is exactly how the conversations went. There you go, I just saved you that problem.

David: *Laughs* I love it. Well Mitch, thank you so much for coming on. Guys, check out all the show notes, DiscountPropertyInvestorPodcast.com/Mitch. I am going to link to all of the free stuff he talked about as well as his course, and a couple of other products that Mitch has, like the self direct IRA, the blog post we talked about on all the different terms he borrows at. Mitch, thanks for coming on the show, thanks for spreading some knowledge today and sharing some knowledge with our audience, our listeners, and our viewers. I love this strategy, I have been talking to my business partner a lot about it lately, about maybe pivoting from us to just acquiring a ton of rentals to start acquiring some owner finance deals, where we own the note--.

Mitch: You take your crappiest rentals first, and when they go vacant or when you evict them, take that house that has a black cloud over it, owner finance that thing. That's where you start, you start-- you have your rentals-- the best ones and the worst ones. You start with the worst ones, and that's the one you owner finance. You kind of prove this thing to yourself. Watch how good it works-- watch that crappy rental turn into a beautifully cash flowing owner financed house, that someone else is putting a lot of money into.

David: Yeah I love that, there are so many advantages.

Mitch: -- the one or two at the bottom of your list, your rental list. You and your partner will see by doing [00:50:18.01 - inaudible]. Once you start living it you go-- why the hell did I ever do any rentals? I know you do it for appreciation and deappreciation. Other than that, if they are a pain in the butt, just owner finance them.

David: Love it. I totally agree. Well, Mitch, I appreciate your time today. Thanks for coming on the show, enjoy your afternoon. I know you are going to be heading off to the ranch to do some hunting. I'm jealous, I want to come with you, but I'm in St Louis, can't do that today. Enjoy the rest of your day.

Mitch: Who is your partner?

David: My partner is Mike, he is out in the field today. I didn't have him on either of these podcasts with me.

Mitch: Mike who?

David: Mike Slane.

Mitch: Bring him.

David: *Laughs* I will, that would be fun, we will have to come back down in the near future, that would be awesome.

Mitch: Alright, man. I got to run too.

David: Alright guys, signing off. Until next time, we appreciate you listening. Don't forget to show notes will be over at DiscountPropertyInvestorPodcast.com/Mitch. Until next time, thanks for listening, guys