PODCAST

Raising Private Money

Mitch Stephen|By October 27, 2016

Episode 15:

Dennis Henson is President of Vanguard Marketing and Investments, Inc. and the AREA (Arlington Real Estate Association of Investors. He is the inventor of “EvaluateMyDeals.com”, and the author of “Becoming Wealthy in Real Estate” an Investor’s Guide to Riches.

Dennis is an expert at controlling property for profit without taking a title, along with many other creative techniques he teaches in his program. He has over 38 years investing in real estate, and has completed numerous and profitable real estate transactions throughout the Southern United States.

He specializes in single family investing, but his complete knowledge of real estate expands with Options, Rent to Own, Land Contracts, Contracts for Deeds, Pre-Foreclosures, Foreclosures, Bankruptcies, Probates, Subject To’s, Wrap Around Mortgages, Seller Carry Back Notes, Land Trusts, Leases, and learning how to design creative financing are just a few subjects offered to his students.

Dennis stays on the cutting edge of his trade by actively seeking out and teaching the latest innovative ideas in real estate. As a mentor and teacher, he has helped hundreds of investors get to the right start within this business. He also works with experienced investors helping them take their business to the next level.

Regardless if you a new, or experienced investor, your ability to make money buying and selling, or buying and holding Single Family real estate lies in your knowledge, and implementation of the “The Seven Secrets of Successful Real Estate Investing.”

What you’ll learn about in this episode:

The seven secrets of real estate investing
Why there’s more money out there than you will ever need
The 12 ways to get money
The downside of getting conventional loans
The upside of private money
Why you shouldn’t borrow more than 65% of a property’s value
The biggest mistake people make when looking for private money
Why you can’t feel like you’re taking advantage of the people you’re borrowing from
What private money is
How to find private money
Why you have to exercise your “asking for private money” muscle
Why Dennis goes to country clubs and Bass Pro Shops to find private money lenders
Why you should talk to CPAs and attorneys
Why giving someone your card is not enough
Why you need a coach — and make sure it’s the right one

Resources:

Commercials:

Fund and Grow
Capital Connection

Transcript:

Welcome to the Real Estate Investor Summit podcast. Coming to you straight from the smallest big town in Texas with your host, mentor, and owner financing master Mitch a.k.a. “Be the Bank” Stephen. The possibilities of life without a J-O-B start here. So grab your pen and paper and listen up.

Mitch Stephen: Y’all just might figure out how to fail forward to financial freedom!

Hey investors! Are you tired of struggling to find financing for your real estate transactions? Are you tired of overpaying your hard money or private investor? Introducing Capital Connection. The world’s first and only true source of sources. We at Capital Connection focus 100% of our efforts, time, and resources on finding the absolute best sources in the nation. We then connect you directly with those sources. It’s really that easy. Please go here to learn more now: 1000houses.com/capital.

This is Mitch! And welcome again to another episode of the Real Estate Investor Summit podcast. I have a very interesting guest on the line today. His name is Dennis Henson and he is the president and founder of the AREA which is the Arlington Real Estate Associations of Investors. Man, this guy’s got so much in his bio it’s hard to, we’d be here all day. But let’s go through some of it.

Dennis is an expert in controlling property without taking title along with many other creative real estate techniques. He has over 38 years of real estate investing. This guy has made multi-, multi-millions in the single family housing investment arena. His ability to succeed in the real estate investing business lies in his understand of implementing the seven unchangeable laws of nature. And if you fail to follow these great principles, business is doomed. However, if you learn the wisdom of these seven principles then you can no more fail than water can run up hill. I really love that, Dennis Henson, how are you today?

Dennis Henson: Great Mitch. Good to talk with you.

Mitch Stephen: You know you talked about those seven secrets to real estate investing and I’m curious, what are those? That jumps right out at me. I’ve gotta know what those are. What are the seven secrets?

Dennis Henson: Well, they’re a 45 year search for wisdom. I didn’t write these overnight. This is a compilation of many many books and CD’s and work. And what I’ve done is I’ve looked at other people who have been successful and I’ve tried to find things that flow through all of those successful people and what I came up with were these seven things.

The first one is, you have to have your mind right. You have to believe that you’re doing is going to work. Like Henry Ford said, “If a fellow believes he can do a thing, he’s probably right. And if a fellow believes he can’t do a thing, he’s probably right.” The second part of getting your mind right is you need to have, as Napoleon Hill said, “a burning desire to succeed.” Absent the burning desire to succeed in that business, you should probably find something else to do because it’s gonna get hard, you’re gonna get knocked down and without the burning desire, you’re probably just going to fail. So just go ahead and quit now.

The second secret is to seek wisdom, people who are turned in today are seeking wisdom. Seeking wisdom means that you read everyday and you listen everyday to CD’s. You’re always looking for people who know more than you do. You pick their brain, you got to mastermind groups. You know 10 years from now you’re gonna be 10 years older. Are you gonna be the same person or are you gonna be 10 years wiser? If you read and listen everyday, and do all these other things, you’ll be a different person and it will show up in your bank account.

The third one is to develop skills. We’re gonna cover those I guess in a few minutes. Every business or sport has skill that have to be mastered. In basketball it’s running, dribbling, shooting, passing, and there’s a number of others. In real estate investing I call the skills The Five M’s of Real Estate Investing. Mining, money, maintenance, marketing, and management. Mining means finding good deals. Money means finding the money, which we’re talking about today. Maintenance means getting the property fix up accurately, inexpensively, done right the first time. Marketing means not having a lot of houses sitting there empty, being alligators. And then Management means property management. You want to be a real estate investor you better master those skills or you’re on the road to failure.

Number four, make detailed plans. I have all my students do a detailed business plan. A quality business plan will go a long way when you’re trying to borrow money. People want to loan money to people who know what they’re doing. Know where they’re going. Know how the business works. So a quality business plan, you just have to have it.

Number five, taking massive action. Now massive action means that if you had planned to go out see 20 houses this week and the sun’s shining and you don’t have a cold and you’re feeling good, you go out and see 40 or 50 houses. Or 60 houses. But, if it’s snowing, and you have a cold, and you just don’t feel good, you get up and go see the 20 houses anyway. Now successful people will do things that unsuccessful people simply refuse to do. People who work for you they think well if I’m sick I don’t have to go into work. Well if you work for yourself and you’re sick, you don’t have that option. You’ve got to do what’s necessary in order to become successful.

Number six is forming great alliances. Now Mitch, you are an example of what forming great alliances will do. Much of the stuff that I do I took directly from your book and from my relationship with you, the mastermind groups that we attend every year. If you form alliances with quality people, successful people, it will pull you up to their level. But now if you form alliances with people who are below you, it will also pull you down.

And then the seventh one is the simplest one. That’s being persistent. Now when this business knocks you down, and it will, you just get up, dust off your pants, and go at it again. Now if you’re to do those seven things, you’ll have a hard time failing.

Mitch Stephen: Well I think that’s a wonderful set of seven rules there. Also, thank you for the compliment, as far as being one of your great alliances. Because I feel the same way about you. It’s always nice to be in the room with someone who has a driving desire to get better everyday. And that’s what it’s all about. All of us started out with our first house and some of us will get to our 1000th or 2000th or 5000th house and some of us won’t. I love one of your quotes because today’s segment’s gonna be on finding private money and the importance of private money. And one of the quotes you had was, “All the money you will ever need is available to you.” And that was a quote from yourself, I remember you saying. And I thought it was great because it’s all about your mindset, right Dennis? If you believe the money’s out there then you’re gonna find it. If you do not believe it’s out there for you then you are not gonna find it.

Dennis Henson: That’s true. And there’s plenty out there. I mean there’s more money out there than you could ever possibly possible use. You just have to develop the skill to find it.

Mitch Stephen: And I can agree with you 100% because at this point in my career, I have raised so much private money that I can’t buy enough houses. I had to open up a hard money loan business to loan all the money that I found out to my competitors at fifty cents on the dollar, just so I could keep it working so I wouldn’t lose access to it myself when I needed it. So I know that that happens and I’m here to testify that you’re absolutely right. There’s more than you could ever spend.

One of the things I like about your business attitude is failing is a big part of developing your skills. And you also have a quote from Thomas Watson, the chairman and CEO of IBM who once said, “Would you like me to give you a formula for success?” And of course the audience said yes. And he says, “It’s quite simple, really. You just need to double your rate of failure.” Double your rate of failure. I thought that was terrific. Because failing is part of the plan isn’t it Dennis?

Dennis Henson: Well it is. They pay baseball players millions and millions of dollars to go up to the plate and strike out seven out of ten times. What if a baseball player said, “No. No. I’m never gonna fail. The only way not to fail is you never strike, you never go up to the plate.” So you can’t be the baseball player so you can’t make millions of dollars. In any business you have to be willing to lose everything. And most super successful people have. They’ve lost everything several times but they just got up, dusted off their pants, and went back again.

Mitch Stephen: Yep. And I think this is a great time, right now to introduce our listeners to our sponsor of today’s show Fund & Grow. My friends at Fund & Grow Mike Banks and Ari Page are doing a fine job helping my students find funding for their deals. So I want you to go to 1000houses.com/grow and listen to how they’re getting my students 0% interest money and/or very very affordable bank lines of credit. Now I want to remind you that yours truly has interviewed Mike and Ari personally on this podcast. So you might want to go back and catch that. But I also want to tell you that to date 60 of my students have raised a combined six million dollars in credit that is tailor-made for the creative real estate business that we’ve been talking about.

Don’t have good credit? Well let me tell you about that. I have another 20 or 30 students that are working on their credit. And my friends at Fund & Grow can help you with that as well.

So I want you to go to 1000houses.com/grow and check it out. The right funding source can change everything. There you have it. Thank you Fund & Grow for sponsoring today’s show. So let’s start talking on the subject of money. Where do the average people think to get money?

Dennis Henson: Well I think there’s 12 ways to get money for real estate investors. Your own money, hard money, partners, mortgages, state bank, credit card, lines of credit and thrifts, buyers, seller financing, and then the best of all is private money. I think those are pretty much it. There’s probably some variations and combinations of those but that pretty much covers the gap.

Mitch Stephen: Yeah. Now a lot of people always think that you go to the bank or they have to be creditworthy. X amount of the people are not creditworthy, the other percentage of the people are credit-worthy and could go to the bank. And I don’t want to spend a lot of time on this. What’s some of the downside of getting conventional loans and going to traditional banks and traditional lenders?

Dennis Henson: Well, they’re hard to get. It takes a lot of time. There’s a limit to the number of loans that they will give you. You need to have a lot of money down. You need money for repairs. There’s a high closing cost. Every time you close with any lending institution you’re gonna have lots of numbers in that closing area that you have to pay for. The terms are not so friendly. They never give you any money in reserve. You have to put some money in. And it hurts your cash flow.

Now a bank can call those loans anytime. You just need to read the contract. I had that come to me in a stark realization when one of the banks called me and said, “We had a board meeting. And we’re closing down all the lines of credit. You need to bring in $60,000 by the end of the week.” And I thought my goodness, I’m a good customer. I’ve never missed a payment. “It’s not you, that’s just what we’re going to do.” Takes time to get these loans, there’s lot of fees. It’s not dependable.

You could have a million dollar line of credit today and the bank calls tomorrow and changes their mind or closes the bank or any other number of things could happen. Your contact at the bank could leave. Then came one who you’re not good with. You go back and you think, “Oh yeah, I’ve got this guy’s gonna help me out.” And he’s not there anymore and it’s some new guy, this has happened to me too. They report everything to the credit bureau so if you’re late it can hurt you. And they don’t appreciate your business. Like a private lender where they’ve been making 1% on a CD and all of the sudden now you’re paying them 6%. They appreciate that if you know what you’re doing. That’s just some of the downside.

Mitch Stephen: Yeah, well I’ve been on a lot of the bad sides of these. I had a three million dollar line of credit and they came in and told me they needed me to pay it down by half. You know what’s the problem with a line of credit is, it’s easy to get the money out. When they tell you they want it back, you’ve got it in places. You can’t just make a phone call and say, “All right everybody, bring the money back.” So anyways it worked out fine because I had lots of private people that I just called them up and I replaced them with private people in like seven days. It really impressed the bank and they said, “We’ll give you half a year to do it.” I said, “You know what? How about we just do it right now?” And it kinda aggravated me. So it taught me a lesson, luckily it didn’t hurt me. What’s the advantages to private money?

Dennis Henson: Well private money is totally different. You get to decide how it works. So you don’t have any credit checks, no loan apps, no banks. They can happen the same day, no waiting. Small closing costs. Usually if you know how to do deed of trust and the note you don’t have any closing cost except for the recording, which may be $20. Less stress. None of your own money. You can borrow all the money to your projects with none out of your pocket. Your interest rates and negotiable. You can set your own interest rate. I have students that are borrowing money at 3%. And then they will actually loan your money for operating capital which means, when you purchase a property it doesn’t hurt your cash flow. In fact, I always borrow more than I need-

Mitch Stephen: Absolutely.

Dennis Henson: I take out five, ten thousand dollars extra so that I can pay my light bill and my gas bill and my secretary because it costs money to run the business. So the more deals I do the more cash flow I have.

Mitch Stephen: Yeah, it’s a wonderful thing when you can put some money in your pocket when you buy a house, isn’t it?

Dennis Henson: It is.

Mitch Stephen: You want to talk about changing your life, that’ll change your life. I always borrow a minimum of $2000 more. Depending on how strong the deal is, I can borrow four, five, six, seven, eight, nine, ten, twenty thousand if I get the deal at a really super, but I’m not a big fan of over leveraging. So I never borrow more than 65% of a property’s value. That’s my own personal rule, so that I’m protecting my private lenders in a very strong fashion. My private lenders are very important to me. Heaven forbid. They’re gonna get paid no matter what, that’s the bottom line. No matter what I have to do because I can’t come back in this business or I can’t continue in this business without these private lenders. They are the lifeblood of my business. How about you?

Dennis Henson: Well I agree. I think that 65% is a great number because that’s the one I use also. It gives them a lot of equity, a lot of security. And you’re not over leveraged. If something goes wrong then you’re in good shape.

Mitch Stephen: Yep. I average about a 52% loan to value. And I think this is the owner finance strategy. I mean if I’m going to owner finance a house and I figure out that I can owner finance it for like $100,000 then I’ll go ahead, I average borrowing $52,000 which is a 52% LTV. Now I could definitely borrow $60,000 though and put 70 in my pocket, still be under my own person limit which was fantastic. My own personal borrow is I don’t want to go over 65%.

Now have I bought houses over 65%? Sure. I bought some houses at 75 and 80% because I knew I could flip them and make 20% on $200,000 really quick. But I had to put in the extra money myself because that’s just my personal rule. I’m not letting my private lenders in over 65%. It’s just the way I feel about it. I know a lot of people are doing more but I just don’t care to put my private lenders at any kind of risk really. You know what I mean?

Dennis Henson: I agree totally.

Mitch Stephen: So you gotta get your mind right in order to go out and find this money. I believe that the biggest mistake, Dennis, that most people make when they’re contemplating going out and finding private money is they give themselves too much credit in the transaction or the sales pitch. It’s not about you. It’s about the deal. The private lender wants to know one of two things. What are we gonna agree on that you’re gonna pay me interest rate for my money if I loan it to you? And then what happens if you don’t pay me, what do I get? So in that example where I’m buying a house I can owner finance for $100,000 and I’m trying to borrow $52,000, I mean he either gets paid or he gets my $100,000 house for the $52,000 investment. So actually the worst thing that can happen to his guy is that I pay him on time, the interest rate that we agreed on. Cause he’s gonna make a whole lot more money if I don’t pay him, right?

Dennis Henson: Exactly, yes. And part of this is if you want to be good at private money, you need to not feel like you’re taking advantage of people. You need to feel like you’re helping people, which is true. Most of the people who loan me private money are taking money away from somewhere where they’re making 1% or 1.5% or nothing on their money. And then they’re turning around and I’m giving them six, seven, eight, nine percent depending on how the deal is structured. Securing my first lien with lots and lots of equity. So you don’t feel like you’re taking advantage, you feel like you’re both getting a really great deal.

Mitch Stephen: Yeah and I think we both agree, because I’ve heard you say it before, you don’t go and beg people for money. You go to offer to say, “Could you use some help sir, getting up off the bottom 1% interest rate, could you use some help? I can help you get that money up to 8%. You want some help?” I’m helping people. I don’t need to beg people for money. And I think that’s the positioning of you, and I want to call it a sales pitch but that’s not the right word, your presentation. The positioning of your presentation should be more like, “Do you know someone we can help? Because I know this place where you can get 8%.” You really don’t even have to ask people for money. Just asking if they know someone you can help, they’ll plug themselves in. And you don’t put them on the defensive.

Dennis Henson: Exactly. And you haven’t broken any laws.

Mitch Stephen: Right.

Dennis Henson: You still can’t openly solicit money from strangers. But you can, in your normal conversation, say, “I know you might not be interested,” and I got this from Bill Barnett, by the way. “I know you might not be interested but do you know someone that would like to receive 6-9% return on their investment secured by first lien in some good Texas real estate?” You shut up. Now they’ll either say, “No I can’t think of anyone” or they’ll say, “Well how does that work?” Now if they say “how does that work?” you just got the hook firmly established to be able to reel their private money in.

Mitch Stephen: Yeah so the better deal you have, the better chance you have of getting the money. If you have a marginal deal then, some people ask me, “Why do you say you get the deal Mitch, before you get the money?” I say well a lot of people don’t have a choice. A lot of people don’t have the money right now. And what’s gonna attract the money is the deal. Let’s face it. If you had a million dollar house and you only needed $50,000 to buy it, wouldn’t it be pretty easy to get the $50,000?

Dennis Henson: Yeah, I’d probably-

Mitch Stephen: So that’s kind of a grotesque really skewed example but you get my drift is that the better deal you have the easier it is. So what’s the main marks of the private money? What is private money? For those people out there that don’t know.

Dennis Henson: The private money is money from individuals, from investors who are loaning you money. Not partners. Not someone who is going to get part of the profit from your deal. Private money people are people with self-directed IRAs, 401(k)s, 403(b)s, whole life policies with cash value, bank CDs, savings accounts, and money market accounts. Now in Dallas-Fort Worth if you say well how many people meet that criteria you’d be talking about millions of people. And billions or trillions of dollars.

Mitch Stephen: Yeah, there is billions of dollars on the sidelines right now because so many people got afraid of the stock market, right? A lot of people used to be worth a lot more, and they’re worth half now because they lost it in the stock market and they’re not going back. So their money’s sitting around in 1% CD rates or less and they’re starting to figure out that they can’t stay there because they’re not even keeping up with inflation, their money’s actually losing value. They say inflation’s around 3% per year. I think it’s more than that. I go to the grocery store I don’t even need a calculator to know that the groceries have gone up more than 3% since the last six months or eight months.

Teaching people on how to self-direct their 401(k)s and their IRAs is a really great way to get them to take control of their own financial future. Because half of them are living by this ticker tape at the bottom of the TV screen. Now that’s not way to life. These people, they’re usually retired or they’re in their … I don’t know about you, this is a good question for you Dennis. My investors are usually 65, 75, 80 and they’re done. And however they made their money probably doesn’t even exist anymore. And they cannot afford to get their wealth cut in half because the whatever boom is over. The tech boom or the whatever the next boom is. And they’re watching these ticker tapes wondering if they’re gonna be able to survive. What’s your average investor look like, feel like? What’s their profile?

Dennis Henson: It’s about the same. I have some younger investors but most of them are retirement age. I have some schoolteachers. A lot of schoolteachers have some money but they put it in the bank and that’s the worst place to put it. But there is a wealth of money in self-directed IRAs. Once people put their money in self-directed IRAs they don’t know what to do next. And consequently there’s a great deal of money earning 0% interest.

We had a speaker at one of our meetings from Quest IRA and I asked Quest, I said. “Well in Dallas=Fort Worth area how many self-directed IRAs are there where the people are earning nothing?” He said, “Right now there’s 157 million dollars in Dallas and Fort Worth earning 0 in self-directed IRAs.”

Mitch Stephen: That’s unbelievable. That’s just incredible. I’m sure it’s true. I just have a hard time fathom that people are so scared of life and the stock market and everything that they just said, “You know what? I’m just gonna let it sit.” So how might we find some of this private money?

Dennis Henson: Well it’s everywhere. You know, I have a friend, he’s probably the most successful private money gatherer or person to get private money that I know. And I asked him one day I said, “How do you do that? You just literally have millions and millions of dollars ready to spend on deals. How do you do it?” He said, “It’s easy. I make my presentation to three people everyday. When I get up the first thing I think about are who are the three people today that I’m gonna make my presentation to.” He said, “Once I started doing that I had more money than I’ll ever possibly need.” So that’s a pretty good habit to get.

Mitch Stephen: I had the same habit when I started but I didn’t even do three. My goal was to do one a day. One person a day. And if that person, say maybe it was towards the end of the day and then I slapped my forehead and go, “Oh shoot. I didn’t get my one person.” I would just pull over to the bus stop, grab some poor unsuspecting guy that was waiting for the bus that I knew didn’t have two nickels to rub together. But I gave him my elevator pitch really quick, which is, “Hi, my name’s Mitch Stephen. I help average people achieve above average rates of return on their idle money using very valuable Texas real estate as collateral. Are you interested or do you know someone who would be interested?” And of course the guy looked at me like I was nuts, but here’s the point. I got my one. And it’s a muscle-

Dennis Henson: It’s a habit.

Mitch Stephen: It’s muscle that I believe that you had to learn to exercise, that you had to build up. When I first started I talked to people that weren’t so intimidating. Like I would talk to people that didn’t look so sophisticated. But as I started to learn that these people don’t get angry at you, they don’t hit me in the mouth. They don’t spit on me. Some of them just kinda laugh and go, “Well that was very nice.” I started to move up the ladder of more and more sophisticated looking people. And today I walk up to a banker in the middle of the bank and tell him. I’m not intimidating or I’m not as shy as I used to be.

Dennis Henson: I can’t imagine you being shy.

Mitch Stephen: Well 20 years ago when I first started out and I didn’t have all this success behind me. It’s a little intimidating at first. I understand it. But you gotta get through it because being comfortable is not what makes you successful, right Dennis?

Dennis Henson: That’s true. Yeah, you gotta get out of your comfort zone.

Mitch Stephen: Okay well let’s keep going so when I started out to private money lenders the first thing I do is I kinda stay with my families and my friends and people that knew me. But I did something really smart, just like what Bill Barnett did. I don’t ask those people for money. I never asked the person that I was talking to directly for the money. I asked them to review my plan because I admired their business acumen. And then I’d say, if they didn’t ask me first, “So where you getting this 8% money?” I tried to get them to ask me, “Where are you getting this?” And if they don’t then I’d say, “By the way do you know someone we could help that needs this 8%?” I never asked the person I was talking to for the money. I don’t have to, they’ll plug themselves in. It’s part of the soft close that Bill Barnett teaches and that you use all the time, that I think is very effective.

Dennis Henson: Yeah. You need to approach people that have money. Willie Sutton the famous outlaw, back in the early 20th century, someone from the newspaper said, “Willie, why do you rob banks?” He looked down and he said, “That’s where the money is.”

Mitch Stephen: I know there’s money there.

Dennis Henson: That’s right. So if you’re gonna try to find private money you probably need to talk with people who have money. Doctors and attorneys and your mentor. They might ask you for some money.

Mitch Stephen: Yeah, I also find that once you get tuned into this art of mining for private money, you start to hear things with different ears, don’t you Dennis? Like one time I had a UPS driver. I became friends with him because he was always coming into my building delivering packages to all of the tenant and of course my office too. And we kinda got to be friends. He was a neat guy. And I saw him one time when he wasn’t working and he was driving this old beat up car with a bunch of junk in it. And I didn’t really associate him with being really successful based on just what my eyes could see. And then one day he told me, I was there and I saw him outside like at a Wal-Mart somewhere. And I said, “Hey, how long you been dealing with UPS? I’m just curious.” And he said, “25 years.”

And you know what my ears heard? It heard “401(k).” My ears heard this guy’s got to have a 401(k). So then I pushed it a little bit and I said, “25 years? That’s a great company to work for. I heard from some people that they have a really good 401(k) matching plan where if you put in so much money they’ll match you.” I knew what the criteria was but I wanted to see if he would tell me. So he says, “Yeah, if we put in they’ll match us up to X%.” And I said, “Wow, in 25 years you must really have done well in that department.” And he said, “Well I was worth 1.2 million but now I’m only worth $600,000 because of the stock market.” And then there was my opening. I said, “You don’t have to live like that with the ups and downs of the stock market. Would you like to talk about it?” And he said, “Absolutely.”

And we went off and talked about it. But you would have never guessed the guy at one point had 1.2 million dollars. He just didn’t have it in his own bank account, so he wasn’t wearing a Rolex and he wasn’t driving a Mercedes. He was only 40-something years old and it take 59 and a half for all this stuff to get vested. You have to be 59 and a half. So anyways, I thought it was interested that I had started listening with different ears. What he said and what I heard was two different things, but it all worked out.

You said country clubs and Bass Pro Shop. Tell me about that. Out of all the things we have listed here, places to find money, this is the one that jumps out at me. Country clubs and Bass Pro Shop. Explain that.

Dennis Henson: Well my daughter Maria was here one time and she lives in Mexico. And right before she left she said, “I want to stop and get something for my boyfriend.” So we pulled over to a golf pro shop. Just a small one and I was sitting out in the car listening to training CDs. And this guy drove up in a Stutz Bearcat which is a very expensive automobile. He got out and he had a little French beret on and had a big nice watch and he walked into that golf shop and I thought, “My goodness. You know if somebody stood around here for a while maybe they could find.” So when Norma came out I said, “Norma, here’s the story.” And she said, “No, Dennis. If you want to find people with money go to Bass Pro Shop. They sell boats there.”

Mitch Stephen: (laughs)

Dennis Henson: My wife’s pretty smart and I tell you what. So if you want to find people with money just go stand around at Bass Pro Shop on Saturday. If somebody comes and looks at a boat, strike up a conversation. I guarantee you what. If they’re looking to buy a boat they’ve got money.

Mitch Stephen: Yeah those little fishing boats aren’t $1,500 and $2,000 anymore. They’re more like, I saw a little John boat, I don’t know, couldn’t have been fourteen feet long or whatever. It was all decked out with everything. They wanted $90,000 for that boat and apparently this guy paid that price for it because he was driving it.

Dennis Henson: Right. And there’s boats on the water. There’s country clubs. I mean you can find places where people hang out and have money.

Mitch Stephen: What about public records?

Dennis Henson: Public records is another good way. It takes time to do that. What I do is I just hire someone else to do it. There’s already people that search public records in most big counties. And if you ask the people at the courthouse they know who they are or maybe they’ve got their number and pretty easy to get in touch with. So rather than spending my time I would just pay someone else to search the public records.

Mitch Stephen: So they’re searching the public records, what are they looking for?

Dennis Henson: People who have loaned money on real estate transactions in the past. If they’ve done more than one there’s a pretty good chance they may want to do another one.

Mitch Stephen: I see so you’re looking for a lien holder or someone who’s been a lienholder a bunch of times on properties they don’t live at.

Dennis Henson: Right.

Mitch Stephen: Okay, well we could go on and on but I’d like to, there’s a long list here. You got public records, bulk mail, ad meetings, meet-ups, round tables, doctors, realtors, mentors, financial advisors, bankers, but the one that I like the most I’m gonna tell you. There’s two that I like the most. One you don’t have on here.

One is CPAs. I like to get a meeting with a CPA, tell him, “I’m looking for a CPA to be on my round table, I need someone who understands my business. Let me show you what I do.” And then I show them what I do. And when I get to the part where I borrow the money at 8% I don’t say “I borrow this money from private people.” I just say I get this money at five, six, seven, eight percent and then … and if they’re any businessmen at all they’ll stop you right there and go, “Okay, wait a minute, wait a minute. Where you getting that money?” That’s usually the first opening. But I just talk to CPAs to see, under the auspice that I’m going there to see if they understand my business and would they be a good fit for me to hire them. And no one turns down an appointment for you to talk about, no CPA will turn down an appointment that you’re going to talk to him to see if you could hire him for his business.

Dennis Henson: Right. I have a CPA in California that sends me his customers all the time. I sell deals to him all the time. And he-

Mitch Stephen: Well the one thing about CPAs is, if the CPA himself doesn’t just plug himself into the equation, they know everyone who’s got, in all their coffers, all their clients, he knows the clients that have their money sitting around doing nothing that desperately need to make a decent rate of return. So that’s one reason I like CPAs because they just know people and they know how much they have and they know when the money’s idle.

But the other one that I really like, I can’t stress this enough man, I like attorneys. Attorneys because this is why, it’s kind of twofold. You go in there to help solve their problems because what happens at an attorney’s office? At an attorney’s office people walk in. You think the people that are walking into the attorney’s office have a problem or not?

Dennis Henson: That’s why you’re there.

Mitch Stephen: Everyone who walks in, 98-99% of them have a problem. You’d be amazed at how many of those problems are caused by real estate. And then the problems that aren’t directly caused by real estate could be solved if they could sell a piece of real estate and get the money to solve their problem. And so you walk in to tell attorneys what you can do for them, that I’m an expert at liquidating these problems. I can liquidate this real estate to solve these problems for you and your clients. A lot of times people have to liquidate their real estate to pay the attorney for whatever trouble they’re in.

Dennis Henson: Oh yes, right.

Mitch Stephen: I can’t tell you how many houses I’ve bought because this attorney’s client is gonna go to jail in three days if he doesn’t come up with $20,000 for past due child support. So guess what I buy the $100,000 house for? I buy it for $20,000. He doesn’t have time to mess around, he’s gonna go to jail for ten years. But here’s the other thing. Those attorneys also have money or know people or have clients with money so I almost like the attorneys better than the CPAs because I’m gonna get business from them, but I may pick up private money from them as a residual effect of being a good steward and solving their problems.

Once I become friends with them it’s real easy for me to ask them and say, “Look, I bought that $100,000 house for $25,000 the other day and I borrowed it from a private individual. And I’m gonna put him in a first lien. And I’m gonna pay him X% interest. Do you know anybody that could use some help like that?” And he goes, “Well you should have told me, I would have loaned you the 25” except then it’ll dawn on him that I couldn’t cause it’d be a conflict of interest. And I would point it out if he said that. I said, “Well you can’t really do that, might be a little bit of a conflict of interest. Well I can find you deals from other places that you’re not involved in. And I can loan you money on those deals. They’re the same kinda deals. You just don’t have a conflict of interest.”

So many this is a long list. Mortgage brokers, insurance people, title companies, relatives, dentists, accountants, optometrists, psychiatrists, store managers, I mean basically who knows who has money. You really never know.

Dennis Henson: Everybody.

Mitch Stephen: Everybody.

Dennis Henson: Guy standing on a street corner has money in his pocket. Everybody’s got money. You just look ones that have, that need to put their money somewhere and there’s a lot of those.

Mitch Stephen: I bet you in any metropolitan areas like Dallas and Fort Worth and Arlington and San Antonio and Austin, just go across the country. Miami, Las Vegas, there is network clubs up and down and meetups on the internet with like-minded people in rooms. You could never go visit all these places and meet all these people. It’s an endless stream. So there’s no excuse for not having one to call on. Just start signing up for some networking groups and start handing out your card and giving people your elevator pitch.

You know the easiest way to get someone to ask you what you do so you can give them your elevator pitch? Ask them what they do, that’s right. Ask them what they do for a living. I had really sharp guy standing in an elevator one time, literally in an elevator, I’m trying to figure out how to do my elevator pitch for this guy on the elevator because that’s what made me thought about it. I was on an elevator. And I thought, “I wonder if I can really get this done in between floors.” I looked at him. He was a very sharp-dressed man holding a briefcase. And I said, “Sir, you are one of the sharpest dress men I have seen in a long time. May I ask what you do for a living?” And he went on to tell me. And this is the trick. I said, I always say, because I have to get the card so that I’m in control. I don’t say if you ever want to talk to me call me here’s my card and I give them my card and they walk off, I never seem them again. I have to get their card and able to revisit this.

And so he said what he did and I said, “I’m not really in the market for that. Or that’s not really me. But I know someone who probably is. Can I get a card so I can give it to them?”

Dennis Henson: Beautiful.

Mitch Stephen: And so I got the card. And then I’m standing there thinking and then there’s this silence and I’m thinking dang it, he’s not gonna ask me what I do. And then right about the time the door opened and he started to walk off, I decided I was gonna walk off with him because he started to talk to me. And when the door opened as he went out I just went out, it wasn’t my floor. And he said, “What do you do for a living?” And that’s when I got to tell him what I do. I help average people achieve above-average rates of return on their idle money and it’s backed by very very valuable Texas real estate as collateral. If you ever want to talk about that. Do you know anybody that might need my service?”

And he said, the conversation went on, I didn’t hit this guy. I mean I didn’t land, the lead wasn’t successful but the point is I went through the exercise and I got my one for that day. I got my one that day. And the more that you practice it the better off you are. But I did have his card and I did later call him and say, “Hey, I’m the guy you met on the elevator. Can I buy you a cup of coffee and show you what it is I do?” I wasn’t successful on that one, I’ll tell you straight up. Because that’s the way it works sometimes so you get a no. You’re gonna get a lot of nos. But it’s not a matter of how many no’s you get, right Dennis? It’s how many yeses you get.

Dennis Henson: There you go.

Mitch Stephen: So one of the things I find very interesting is that the difference between just making a good living in this business and being a multi, multi, multimillionaire, that difference is private money. Would you agree Dennis?

Dennis Henson: Absolutely.

Mitch Stephen: I’m gonna go ahead and hand out a link so people can get ahold of Dennis and find out all the things that he has to offer. You have a tremendous plethora of stuff that you give to people and help people. I mean Dennis is like one of the greatest collectors of materials I have ever seen in my life. I don’t think you could ever get through some of the stuff that he has, it’s just so deep. It’ll also be in the show notes but the link is 1000houses.com/Fortunes. F-O-R-T-U-N-E-S. That’s 1000Houses.com forward slash “fortunes” with an s on the end, plural. F-O-R-T-U-N-E-S. We could probably talk for another three hours Dennis, on this topic. Anything you want to add before we go?

Dennis Henson: No, it’s like you said. We could talk and talk and talk. There’s just a lot to learn about private money but it’s like everything else. If you want to seek wisdom you read, you listen, you go to seminars, attend webinars, you meet people like Mitch Stephen and make friends with them and before long you become the expert.

Mitch Stephen: Absolutely. And I have challenged many people on my weekly Q and A, if they wanted me to hold them accountable or not but I’ve challenged them. “I bet you you cannot sit down and present to 50 people and get 50 nos in a row.” As a matter of fact that’s how I preface it. “I challenge you to get 50 nos.” Just go out there and expect to get 50 nos. I bet you you cannot make it to 50 nos before someone says yes.

Dennis Henson: Right.

Mitch Stephen: I think it’s almost impossible. If you make it to 50 nos, if you make it to 20 and you’re not really close or have got people hovering around, then we need to sit down and talk about your pitch real quick because you’re doing something-

Dennis Henson: That’s it.

Mitch Stephen: You’re doing something wrong.

Dennis Henson: Your elevator speech is the key. If they use yours or mine, they’re not gonna get to 20 nos. They’re saying the right thing.

Mitch Stephen: Yeah so Dennis and I challenge you all to go out there and get 50 nos, I bet you can’t do it. In the process you’re gonna find some private money and you’re gonna change your life. It’s gonna change the path of your career. And make sure that you get hooked up with some kind of professional coach who is where you want to be and has a reputation, the kind of reputation that you want. And is doing what you want to do. And that way, that coach or that mentor can help keep you out of trouble, can help make sure that you do the right thing by these private lenders, we want it to be a win-win for everybody in the transaction. For the person borrowing the money, for the person buying the property and living in it, and for you the investor.

We need everyone to be protected and it needs to be done right. So make sure if you haven’t done it before, you don’t completely understand it, make sure you get a coach. Me or Dennis or someone who fits the bill. But don’t try to do it by yourself right out of the box because there’s no need to. It’ll cost you more than the coach will cost you. What do you think about that?

Dennis Henson: Oh I agree, absolutely.

Mitch Stephen: Right? Because people go out and think that they don’t want to pay a coach $10-, $15-, $20-, $25,000 and it’s nothing compared to the money you could lose or the money you might not make because you just don’t know what you’re doing.

Dennis Henson: That’s so true. It’s hard to explain that to someone. They’re just afraid or they’re not sure. But the way to check out your coach is to talk with the students. If you go and visit with several of the students and they say, “Oh it’s absolutely worth it, we got our money back.” Then jump on that coach. If you talk with the students and they say, “No, he’s a crook.” Don’t use that coach.

Mitch Stephen: Yeah, yeah. And there’s a lot of people out there that are more interested in your money than they are really helping you get there. You gotta find the right guys and that’s the whole thing. And I think Dennis is right. Just follow up and do some research. Don’t make a snap decision. Do a little bit of research on the guy you’re looking at. Find out what he’s about, who he’s been teaching.

All right Dennis, it’s been a real please. Again, that link is 1000houses.com/Fortunes, F-O-R-T-U-N-E-S. Anything else Dennis before we go?

Dennis Henson: No, that’s it. I look forward to getting to be with you soon at our mastermind group and thank you so much for inviting me to be here today.

Mitch Stephen: Yeah, by the way let’s just mention that real quick. Every year for the last four or five years, I guess it’s been five years now. Dennis and I, we go on a vacation someplace and we invite everybody to come join us. And there’s no agenda, no seminar, no one’s selling anything. We just go there and I think we’re gonna have like 35-40 people this year in Cancun. For anybody interested it’s 1000houses.com/Cancun but you better act really fast on that because it’s September the 25th through October the 1st. But it’s always fun. A lot of great minds at the pool, at the buffet, on the beach. There’s people having a great time talking about real estate and everyone’s very open. It’s really a great event. Thanks a lot Dennis, I’ll be seeing you soon in my bathing suit, okay?

Dennis Henson: Okay Mitch.

You’ve been listening to the owner financing master, Mitch “Be The Bank” Stephen, on the Real Estate Investor Summit podcast. Let us now blatantly and without apology bribe you towards financial freedom by offering you a whole bunch of free stuff. Go to 1000Houses.com and get you some. And y’all come back now, ya hear?