PODCAST

How to Work Less in Your Business Using the Right Systems

Mitch Stephen|By January 25, 2017

Episode 52:

Mark Ferguson’s purpose is to help as many people as he can to become financially free through real estate. He teaches his methodology for how to work less in your business using systems during the podcast.

Mark Ferguson is a Realtor, real estate investor, author and the creator of Investfourmore. Mark’s real estate team sells hundred of homes a year, he has flipped over 100 houses, owns 16 rental properties and has written five books. Investfourmore is a real estate blog with over 300,000 views a month, over 20,000 subscribers and a wealth of free information.

Historically Mark averages:

Over $30,000 profit on each flip he completes
Over $8,000 a month income from his rental properties
Over $600,000 gross commissions per year on his real estate team
Over 200,000 unique visitors to Invest Four More per month

These returns and profits do not come from secret, unknown, get rich quick schemes. They come from knowing the fundamentals, knowing them better than anyone else, and execution.

Mark has created coaching programs for real estate investors and real estate agents to show them how to make solid investments that will pay off over time. Mark also loves to teach business and time management as he is a proud father of 5 year old twins. With four extremely successful businesses he only works about 40 hours a week. He would work less, but he loves what he does.

What you’ll learn about in this episode:

Mark’s five books he has available
How to work less in your business
How Mark got into real estate
How much profit Mark usually makes on his flips
What keeps traditional real estate people from getting into investing
How Mark uses systems to work less than 40 hours a week and never on the weekends
Why you need to reward the good employees financially
Why Mark has more subcontractors than employees
Books Mark recommends you read
What changed for Mark to believe he could be successful and how that got him over the hump
Why you shouldn’t be afraid to ask your friends and family for money
What’s next for Mark in the future

Resources:

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 aka “Be The Bank” Stephen. The possibilities of life without a J-O-B start here, so grab your pen and paper and listen up. Y’all just might figure out how to fail forward to financial freedom.

Mitch: This is Mitch, and welcome to the Real Estate Investor Summit podcast. Hey, I’ve got Mark Ferguson on the line. This guy’s done all kinds of stuff. He’s the author of five books, he’s done over a hundred houses here in the recent past. He averages $30,000 profit for a flip, he averages over $8,000 per month in income from his rentals. He does over 600,000 gross commissions per year in his real estate brokerage/agent sales team. And he has over 200,000 unique visitors to his website every month. His name is Mark Ferguson, he’s from Colorado and we’re gonna hear a whole bunch about this guy in just a minute. But first, let’s give our sponsors a little time and I’ll be right back.

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Mitch: Welcome back, this is Mitch. We’re gonna get ya some Mark Ferguson today. Yep, gonna get ya some Mark Ferguson. He is the author of a free guide on how to buy real estate below market value, and you can get that guide for free. Just go to the link 1000houses.com/mark. That’s all lower case, M-A-R-K. 1000houses.com/mark. All lowercase, M-A-R-K. Hey, Mark Ferguson. How are you doing today?

Mark: I’m doing great, Mitch. Thank you for having me on the show, I appreciate it.

Mitch: Well, it’s always a pleasure man to talk to the movers and the shakers out there. So, tell me a little bit about these five books you’ve written. That’s a lot of books. I’ve only written three books and every time I found myself when I’m finished with that last page of the book, that it’s the hardest thing I’ve ever done. Do you feel that way or not?

Mark: It is. I started writing when I created my blog in 2013, and I hadn’t written anything except a simple letter since I graduated college in 2001. I just started writing and people liked it, so I kept writing the blog and eventually I took a lot of my material and put it into some books and people liked those. I’m like, “Hey, you know, this is kind of fun.” Creating some books from articles is a little different from writing a full length real book. And yes, it is very difficult, very time-consuming, very frustrating editing those books as well because you can look at it ten times and still find typos. But it’s fun for me to write, and I really love educating and helping people along the way.

Mitch: So tell me, what are the titles of these books?

Mark: My most popular one is Build a Rental Property Empire, and that came out last year. It’s been in the top ten real estate books on Amazon right behind Trump for a while, so that’s done really well. I actually just came out with an audio book for it too, which a lot of people were asking for that. I’ve got Fix and Flip Your Way to Financial Freedom, all about flipping, how I’ve flipped houses over the years. How to Make it Big as a Real Estate Agent, so just being successful as an agent, what it’s like to be an agent, what to be prepared for. I also have a book on mindset and positive attitude and how much that affects our success, I try to change your mindset to become more successful. Then I also have a free book on how to buy real estate below market value, I have a couple other e-books on Amazon on financing. I’ve got quite a few out there.

Mitch: Okay, well look at the show notes. You’ll be in touch with my staff and they’ll put any kind of links to anything you want there. You’ll have all your links there, so I’m gonna drive everybody to the show notes if they’re interested. It’s 1000houses.com/mark. So they can see anything there, Mark, that you want to post up. Your event schedule or whatever it is you want, all right?

Mark: Great, appreciate it.

Mitch: Okay, so tell me your backstory. Everybody’s got this back story and I’ve got a lot of questions for you so don’t go too long. How did you get into this business we know as creative real estate investing?

Mark: My dad was an agent. I grew up with it. I went to college to get a finance degree, graduated, couldn’t find a decent job. So I said, “I’ll work part-time with my dad,” even though I never wanted to be in real estate. That turned into a full-time gig. I became an agent, and he flipped houses once in awhile. That was the part I really liked, and I kind of ramped up the flipping with him a little bit. Then I found my niche as an agent by listing HUD homes, foreclosures for banks. That’s when my career took off. I was selling 200 houses a year by myself. Then I took over, bought him out, ramped up the flipping, started buying rental properties, created my own team, and got to where I’m at now. Now my focus is mainly on my blog, education, and also the flipping business where I’ve got 16 flips going right now.

Mitch: Wow, 16 flips. You’re a busy guy, you have multiple businesses right off the bat, you have your flipping business, you have your rental business, and you have your traditional real estate business. How do you manage all that?

Mark: With a lot of help. There’s no way I could do it by myself. I’ve got a team of 10, and 6 of them are licensed agents. I’ve got my own personal assistant/project manager, I’ve got another assistant, and I have a team manager for my real estate agents. So I try and be hands-off on the real estate agent team, I don’t do a whole lot there. The rentals, I have property managers who take care of them. I don’t do anything on them. My focus is really on writing, and then I love to find deals. I’m out there looking for deals all the time, and that’s where I spend my time.

Mitch: When did it dawn on you that traditional real estate was one thing, but there was an avenue towards investing? How long did it take you to pick that up, the investing side?

Mark: It took a while. I loved flipping, but that is more of a job. That’s not really investing because once you sell a flip, it doesn’t make you any more money. When I started making good money from the REO and HUD side, I was investing in the stock market and I’m just like, “There has got to be a better way,” because it crashes and my money’s gone. I have no control, I don’t have time to research all these companies and mutual funds and I really started looking at everything. I looked at franchises, I looked at buying another business, I looked at bonds, stocks, anything I could. Real estate kept popping up, rental properties, as the best way to invest. So I really focused on rentals. I bought my first one in 2010, bought 16 more the next 4 years, and sold a couple this last summer because the market’s so crazy but I still think rental properties are the best way to invest your money.

Mitch: So tell me about the appreciation in Colorado. What part of Colorado are you in?

Mark: I am in a town called Greeley, which is about an hour north of Denver. We’re kind of close to Fort Collins area, Loveland. Our median price in 2012 was about $110,000. That was after the crash, we had quite a few foreclosures here. Right now our median price is over 260,000. So our prices have more than doubled in 4 or 5 years. It’s been crazy.

Mitch: Yeah, and in markets like that I can understand the buy and hold because it’s ultimately worth it. But in some markets where there’s not appreciation, I much more prefer the owner finance strategy. Do you ever do any owner financing?

Mark: I do not. I’ve never done owner finance. When I buy my rentals I’ve always made sure they cash flow really well. I’m not buying them just hoping they go up in value because no one predicted the market would go up that hot, that much here. It never had in the past. It’d been steady increases but not like that, so I always wanted a certain amount of cash flow per month and that’s when I stopped buying here is because prices are so high you just can’t cash flow on the rental properties anymore.

Mitch: Yeah. So if you’re not looking for houses for rental properties, what do you do? You just do some flips or you do some coaching for some people, or what?

Mark: Yeah. Like I said, I spend a lot of time on the blog. I’ve got over 453 articles on there, I’ve written the books, I have a few coaching programs where we do calls a couple times a month. But really, my main focus is the flipping. I have 16 in progress which takes a lot of time. These aren’t wholesale deals where we’re just turning in without doing repairs. These are all rehabs we’re completing, doing a lot of work on them. I’m really focusing on the flipping right now until I find either a new market to invest in rentals, or a different segment here to invest in rentals in.

Mitch: How much do you think your average on your 16 flips? How much profit do you think you’ll average?

Mark: Historically, I’ve averaged about $33,000 in profit per deal, and that’s after finance costs, after repairs, carrying costs, everything. Not the HGTV fake costs they like to put out there. On these I’m going to average a little more, because I’ve got a higher end one that I’m doing where I might make 150-200,000 on it. But for the most part, I’ll make around that $30-40,000 per house. I usually put about $30-40,000 of work into each one.

Mitch: There’s a lot of questions here. How instrumental is your real estate agent team that you have under your brokership, how instrumental are they in helping you find these houses and sell these houses and in allowing you to work less in your business? A little, a lot, what?

Mark: They’re very helpful. One nice thing is my manager and my assistant are licensed agents, so they actually pay for themselves by selling houses. They sell once in awhile and those commissions that come in I get part of, so they actually pay for their own work which is awesome. I think the biggest benefit to me being an agent is I can go see houses so fast, I can write contracts so fast. I can see a house that comes up for sale, go look at it, text my assistant for him to write an offer while I’m looking at the house, he can send it to me through DocuSign in email, and I can send them an offer in an hour. Then I have the other agents who are always networking, talking to people. They meet a lot of different people who bring me deals once in awhile. It’s a huge benefit to be an agent and also have a team who can help you with your business.

Mitch: Let’s talk about that for a minute, because some people think that having a real estate agent license is a liability to an investor. And it does have its responsibilities, I agree, but it also has its upside. The responsibilities that people think are extra burdens on a licensed real estate agent or broker is the disclosures. But I feel you ought to be giving those disclosures anyways, you know what I mean?

Mark: I completely agree with you. I think that if you’re worried about not being able to disclose, then you probably have some other issues in your business that are going on. I have to disclose I’m an agent. If I buy an off-market house, I have to disclose I might make a profit on it. If you can’t disclose those items to people or feel bad about it, then there’s something wrong with the way you’re doing business. You should be able to explain, “Yes, I’m in this business to make a profit. That’s why I’m doing these things.”

Mitch: Oh, yeah.

Mark: I tell people what the house is worth and be honest with them, and I think it might be a little bit tricky for bandit signs, things like that, depending on your state laws if you have to put your agent disclosure on those. There can be some reasons why it’s not beneficial, but to me the benefits completely outweigh those small downfalls. Being able to act fast, I save a commission when I buy a deal, when I sell a deal. I save so much money every year on commissions. And then just networking, too. I have other agents bringing me deals because they know me, they know I’m a good investor. I do what I say I’m gonna do. It’s a huge benefit.

Mitch: Yeah. And plus, this is one of the benefits I was thinking, it’s one of the biggest benefits on the planet. I don’t know about you, but sometimes I look at 15-20 houses before I buy 1 house. The rest of those are listings for an agent, right?

Mark: Right.

Mitch: That’s actually how I get into the MOS, is I become a realtor’s listing assistant. In the state of Texas we can do that. I become their listing assistant because I tell them, “Give me the pin number to get into MOS, I’m gonna be your listing assistant which is perfectly fine around here. And the reason why you need me as your listing assistant is because I see a lot of houses that people want market price for, and I can’t pay market price for the house, so guess who I’m gonna tell them to list it? You.” It’s a great team, it’s a great trade off, it’s a great way for me to get MOS access and not have to have dues and be members and all that and get the accurate information. And it’s good for the broker. I just make a promise that if I’m on the MOS when he needs to be on, he just texts me and says, “Get off. Get off the MOS.” Okay, you’re first, you know?

Mark: You can do the same thing in Colorado, be a licensed assistant, so yeah. Great benefit.

Mitch: So if you’re out there and you don’t have access to MOS, this is a way to get it. Don’t ask someone for the pin for nothing. Don’t offer to pay their dues or anything because it feels illegal, because you’re not supposed to be on it, because you have no place in this man’s organization. Offer to be their listing assistant and to bring them listings. In order to bring the listings, you need to be able to do comps. That’s how you do it, and you should be able to pick up MOS access for nothing, really. If you’re a full-time real estate investor and you’re not sending a guy 20 listings a year, I don’t know what you’re out there doing. I don’t know what you’re out there doing. Do you have any idea why so many realtors never find their way to investing? It just boggles my mind that even the least sophisticated realtor on the planet runs into 2 or 3 deals they ought to buy every year and for whatever reason, they don’t. Do you know why that is?

Mark: It’s crazy. I think there’s a couple reasons, but you’re right. I would say 90% of agents never buy an investment property. I think there’s some crazy statistic like 50% don’t even own their own house. It’s mind-boggling like you said. I think part of it is when you become an agent, you’re running your own business, you’ve gotta be your own boss. It’s a lot to take in and most people aren’t organized enough to handle actually being an agent, let alone investing, so they never get to that point. And it’s weird how many people have a negative view of investing, even in this business.

When I first started buying rental properties agents were like, “Oh my god, why are you doing that? You’re gonna lose so much money. What’s wrong with you?” I’m like, “What are you talking about?” It’s weird, people have this mindset that rental properties are bad because of these weird stories they heard from random people they don’t even know. They have such an advantage being in the business. A lot of it’s financial, they don’t have their business set up to make enough money to buy the properties because they’re scatterbrained and not focusing on it. And then too, it’s just this mindset that investing is a lot of work and not worth it.

Mitch: Wow. What a bunch of misconception, huh? Sometimes realtors bring me deals and I’m going, “$30,000 for $100,000 house.” I’m happy that they brought it for me but I says, “Golly guy, you’re gonna give away $70,000 in profit because why? Why are you doing that?” At the end of the day, of course I don’t say anything because I’m happy to have the deal but I sometimes slap my forehead and go, “Man, this poor person’s walking over goldmines and they’re not even bending over to pick up the gold.” Which is where you and I come in, right? We’ll help people with that problem.

Mark: All day.

Mitch: So do you mentor people? Do you have a course or anything that you’re offering to the general public out there that wants to learn how to do this stuff?

Mark: I do. I have a course on rental properties and how I bought my rentals and what I look for, actually figuring real cash flow, not just basic numbers but what it really costs to own a rental. Along with that I created a flipping course as well that comes with it. It’s called A Complete Blueprint to Successful Real Estate Investing, I think you’ve got some links to it. We do conference calls twice a month with me. I do those live, take questions afterwards. It’s a lot of fun, include email coaching with it as well. Then I’ve got an agent coaching program as well where we do the same thing. Conference calls twice a month, email coaching with me, just to help agents become successful. Not just selling houses, but how to create a team, how to actually create a business where you’re not working for everything yourself but you have help. You have other people who are making you money as well.

Mitch: I was reading your bio. You have 4 year old twins, right?

Mark: They’re 5 now, but yes.

Mitch: 5 year old twins.

Mark: 5 year old twins.

Mitch: Boy/girl twins. Wow. So you have to have systems if you’re gonna want to spend time with those kids, right? You have to have a system.

Mark: Yes, for sure. People never believe me but I work less than 40 hours a week. I almost never work on the weekends. I’m home by 5 or 5:30 every day, and I usually have time to golf a couple times a week. Learning how to work less in your business is all about hiring really good people. I have a really awesome project manager on my team who manages our contractors and our invoicing. I have a person who does accounting on our team who uploads all the accounting things, because I hate accounting. That’s one thing I always tell people, “If there’s something you really hate doing in your business, that’s the first person you should hire to help you out with that because it makes your life so much easier.” We’ve subscribed systems for our agents, for training for them, to help them network, get business. I try to have as many assistants for as many things as I can.

Mitch: I’ll confess. I was a great house buyer when I was younger and more energetic. I was a great house buyer, but I was a horrible systems person. One year I bought 150 houses exactly and sold 97, most of them with owner financing. And my system was so bad that I would have been better off just buying 50 great houses and keeping control of them, because I wasn’t able to stop the money going out the back door as fast as it was coming in the front door. A lot of it was going out the back door because I didn’t have checks and balances. It took me quite a while to grow into being the CEO of a business and working on it from 1,000 feet above than being in my business.

Today, 2015, bought just under 100 houses. I bet you I didn’t see 10 of those houses that I bought. I know I didn’t see any of the buyers. I didn’t see any of them unless they just happened to be coming and making a payment while I was standing there. I never saw any of the buyers. 2017, probably about 77 houses are gonna be bought by the end of this year and I haven’t seen any of those. I have seen none of the buyers. It frees me up to really work on some real important aspects of the business, parts that really make the money, and to find the key people to put in key chairs so that it flows.

I think one of the reasons why I’m successful and I think I heard you say it too, Mark, is that you pay them good. You reward them when the money hits the table. Everybody gets paid really good. I’m giving up a lot of the money that’s hitting the table but I’m also gaining this huge amount of time freedom. Honestly, I could make more but I would have to work tremendously harder and wear more hats. I don’t think it’s healthy, I don’t think it’s good, and I’m really happy where I’m at. What do you think about the pay scale for people that are helping you?

Mark: I think you’re right on, because when you start your own business and you start hiring people you realize there’s not a lot of good people out there. They’re out there, but sometimes you have to go through a few to find the really good ones. If you find someone really good, they’re gonna make you a lot of money. You want to reward them, you want to motivate them. Like Nicky, my project manager, I pay her on every flip we complete. She’s got motivation there. She also makes money as an agent, she makes money hourly too for different work she does.

The same with everyone on my team, they probably get paid more than most real estate assistants but I know they’re good. I know they’re gonna do what I ask them to do, I know they’re proactive and will help me out with things that I forget. To find good people takes a lot of time, and you have to reward them when you find them. The same side, if you have bad people or people who aren’t helping the team or have a negative attitude, you can’t keep them around either. You’ve gotta get good people in there.

Mitch: Yeah. I have like 5 things going through my head. My ADD is going crazy here. I’m gonna back up. We’re talking about the employees. I tie every one of my employees – and I use the word employees loosely, I have one real employee. That’s my daughter that runs the show, does every closing, in and out. I tie her to that bottom line too. For every house I buy she gets a bonus, and for every house I sell she gets a bonus. It’s not really big, but everything in my company runs through her. It adds up to big. It gives everyone the right incentive.

Almost everyone else in my office, almost everyone else, is a subcontractor paid upon success, which is another great thing to remember if you want to know how to work less in your business. I never have to worry about where the money comes from to pay them because they don’t get paid unless the money hits the table and everybody gets paid. I really find that to be a challenge, how to set up everything so that you have the minimal amount of employees which means FICA tax and employment tax, insurance and all that stuff. That’s so stressful to have employees under the current administration that I just said, “You know, if that’s how they wanna do it, I’m just not gonna have any employees. How’s that? I’ll do this whole thing without employees.” Do you take the same look on it or do you have a whole bunch of literally employees?

Mark: I have a couple of employees but most of them are subcontractors just like you said. All the agents are subcontractors, my team manager is a subcontractor, my assistant is an employee, another assistant is an employee. I hired a full-time maintenance guy this year who I wanted to be an employee so I have control over everything he does. But besides that, they’re all subcontractors. That makes it much easier.

Mitch: Another thing that helped my business, I’ll tell you, Mark. I stopped hiring with just an interview and everything. I started giving people personality tests. The people that the personality test is telling me to hire were not the people that I was hiring. I was hiring exactly opposite. It seems like every time I said, “I really like this guy,” the personality test says, “Don’t hire him, he doesn’t fit what you want.” Some of my best guys, I thought, “They’re not gonna make it, there’s no way they’ll make it.” And the personality test said that they would, and they did. If you guys are out there trying to set up your systems and find people, I strongly suggest that you look at these personality tests and give them a lot of weight because it’s] been a better good and good teammate picker than I’ve been. Do you ever use those tests?

Mark: Not for a while. Justin does most of my hiring right now. Honestly I have to check with him and see if he is using them. But my sister has a doctorate in physics and her own businesses and she used those personality tests for everybody she hired and she loved them. I know I’ve used them a couple times when I first started out, but that’s a great reminder. I’m gonna talk to Justin and see if he’s using those. She swears by them and says the same thing like, “People I thought would be horrible are awesome, based on their personality test.”

Mitch: Yeah. What I’m looking for when I’m looking for a house finder, someone to find houses, the last thing I want to do is go to the real estate club and go find them. They all want to be me, or they want to be you. They’re not around very long and they’re much more aggressive. I much rather just go find the top Hoover vacuum cleaner sales guy that doesn’t know anything about it and say, “This is the lane you’re gonna be in. You’re gonna go find houses and this is what you do to find houses. And this is how you get paid.” I don’t wanna teach them about how to sell houses, I don’t wanna teach them about the cash flow or the model or anything. I just want them to go out and do their job, and I give them a test for that job. The minute they start asking around about this, that, and the other I say, “Look, I just need someone to do this job.” You know?

Mark: Yeah.

Mitch: “Do you wanna do this job or do want me to find someone else to do the job?” I need to fill like 7 core seats in my business to get this done. 8. I just need someone to do those jobs. I’m gonna pay them well. It is probably gonna be a commission based thing, but they’re gonna get paid very well. And I have ways for people to make more money. It mostly has to do with their negotiation skills. I put all the carrots in the right place, but the better they do or the better they negotiate, the better they get paid.

Mark: Yep.

Mitch: The guy I’m looking for, especially in the house finding market, he’s self-motivated, he’s very responsible, super responsible. He’s money-motivated, but here’s the kicker. He’s not an entrepreneur and he’s not a good money manager. That’s the things I’m looking for. That’s just for people that find my houses. I want everyone out there that has a real estate agent’s license out there to listen up, because Mark will help you set up some systems and help you up your game in that. I love the business model of being a real estate broker/agent and being in the investing. I think it’s a great model and if I had it to do over again I might do it that way, because the network that you’re privy to as a realtor is huge. How many licensed agents are there around Greeley?

Mark: There’s probably 500. It’s not a huge town. It’s 100,000 people. There’s at least 500 to 1000 agents just around here.

Mitch: That’s a heck of a network, right? When you’re looking for houses.

Mark: Oh, yeah.

Mitch: That’s 500 people that are right in the house business. What more do you want out of a network? In San Antonio we have 8,000, so it’s a trick. You gotta call that down to 200 people who actually know what you do.

Mark: Quality over quantity, every day.

Mitch: Absolutely. What are you reading these days? Do you read?

Mark: I do. I have a stack of about 20 books I need to get through. I haven’t gotten through them yet. I do try to get audio books as well because I do a lot of driving. I actually enjoy driving, I’m a bit of a car nut. But right now I don’t have anything I’ve been reading really recent. A couple books I really think are awesome for people are Millionaire Real Estate Investor is awesome. I love self-help books too like Think and Grow Rich, Jack Canfield books. I did that coaching program, it really helped my life out personally and professionally. John Assaraf, all those guys. I love reading them and listening to them. I need to get some new books going, or I need to finish the stack I’m reading is what I need to do.

Mitch: I think that Audible.com is a great thing because I love the double dip. When I’m driving, I’m 40 minutes from my market. When I’m driving to the main city, I can take in a half a book on the way in there or a good chunk of a book. Always helpful. What would you contribute your success to?

Mark: I struggled for a long time as an agent. When I was working with my dad in the beginning, I was not selling many houses. I was barely getting by and what really changed my life was when I accidentally set a bunch of goals. I wrote out this letter to my dad basically complaining about why I wasn’t making enough money, and showed him how many houses I’d have to sell to make as much as someone else on his team. I thought it was some crazy, ridiculous number. I’m like, “Look how unfair this all is.” And he looked at it and said, “Oh, yeah.” Didn’t do anything, didn’t change anything. But somehow that got stuck in my head that, “Oh, maybe I could really sell this many houses and I could make that much money.” And two years later I started selling that many houses. Setting those goals even on accident, changed my whole perspective, my focus and told me, “Maybe I should be doing this myself and not complaining to other people about my success.”

Mitch: Take a little responsibility, huh? So it dawned on you that to actually make that kind of money you were gonna have to sell a couple hundred houses and then finally, you got to where you believed you could. It goes right along with a statement I love, I wrote this somewhere. It’s stuck in my own head, my own comment, quote. It was, “Success begins when your belief system concludes that it can be done.” I find one of the biggest obstacles in the belief system for my students or people I talk to is private money. They don’t believe they’re worthy, that someone would loan them the money to buy these houses. How are you funding your houses?

Mark: It’s a mix. I use local banks for some of it. I’ve got a really good reputation, I’ve built really good relationships with them so I can get 1 year loans for my flips at 4-5% right now. I also have private money like you said, from 3, 4 different people ranging from 6-10% based on the deal and how much money they’re investing. I probably have 6 or 700,000 dollars of private money being loaned to me right now. Actually, more than that. And then my own money too. I put a lot of my own money into the business to help it grow faster. I had the same mindset where I’m like, “How am I gonna get private money? Who’s gonna loan to me?” Once I started looking and made it a goal it’s like, “Well, there’s a lot of people out there.” People actually started coming to me once I started writing a blog and I’m like, “Hey, that wasn’t as hard as I thought.”

Mitch: Well the first thing you had to do was you had to get the word out that you were looking for the money, right? Because most people are complaining about, “Well, no one’s gonna loan me money.” I say, “How do you know? You haven’t even talked to anybody.” Where people who actually say, “You know, I’ve been really having trouble finding private money.” I say, “Great, how many people have you talked to?” There’s times that they haven’t talked to anybody, or they talked to one person and got shot down and they stopped. And I said, “Well, are you serious? You think that you’re supposed to get private money and you talked to one person? Are you serious?”

You know? I got a goal for you. Actually I have a goal for anyone out there that’s looking for private money. You’ll have to get your elevator pitch or get your story straight, and that’s one reason you need a coach because you need someone to teach you some kind of process to get someone to say, “Yes.” On anything really, but let’s just stay on the private money subject. I have a goal for you. Don’t even start to think you’re deserving of private money until you set this goal. Go out there and get 50 no’s in a row. I bet you can’t do it. I bet you can’t go out there and flounder around and stutter and stammer and not even be good at it. I bet you cannot get 50 no’s in a row. I’m just challenging someone out there.

After the first 4-5 no’s, maybe you ought to readjust or re-figure out why people are saying no or not, or just re-look at your pitch, your presentation. I have a very simple presentation. If you go out and you do it and try to get 50 no’s, you will not make it. No one I’ve ever challenged that’s ever taken me up on it seriously and gone out to get 50 no’s, talking to 10, 12, 13, 14, 15 people. They can’t make it to 50 no’s without getting yes’s. They can’t. So my pitch is really short and sweet, and I never ask anybody for money. They usually plug themselves in which is a great tactic. It takes about 7 minutes to present it, and you need a blank piece of paper and a pen.

Once you run it, you’re off to the races because I will attest that the difference between making a good living in this business of creative real estate investing and being a multi-multi-multi-millionaire, is private money. I’m gonna tell you straight out. You don’t need good credit and we have to change that belief system. We have to change the belief system because once I show you the reasons why people are telling me “yes” and I show you how to do that pitch, your belief system is gonna go, “Wow, this could work for me too.” And as soon as you get one person to say “yes”, how much did that change your life, Mark, when the first private lender said they’d give you money? How much did that change your life?

Mark: It’s huge. It was actually a family member but it gave me capital I could use for anything. You don’t have to wait for a bank, you don’t have to do an appraisal. Probably could buy 3 more deals a year by having that, which is a lot of money.

Mitch: My point about from a confidence factor, what did that do for you saying, “Wow, someone really will loan me money and trust me with this money.”? It’s not really they’re trusting you with the money because they got collateral assets as backups I’m guessing in your formula, Mark, right? They got a collateral asset.

Mark: Yep.

Mitch: So you just have to explain to people why they’re either gonna get or they’re gonna get. They’re either gonna get paid the interest rate we agreed them, or they’re gonna get this piece of property. If they believe that those two choices are true then it shouldn’t be that hard to get the money for your deals, provided that you have good deals. If you’re trying to buy $100,000 house and you’re trying to buy it for $95,000, that’s not a good deal. But if you have $100,000 house and you’re trying to ball 50,000 you should be able to do that if you’re in jail. You should be able to do that from a jail cell with a telephone. I read a book called Psycho-Cybernetics by Maltz which changed my life.

Mark: That’s a great book. I love that book, I have it in an audiobook too. I listen to it all the time.

Mitch: I think the new edition was revamped by Somers. S-O-M-E-R-S, I think was her name. I want to say Somers. It’s a girl. She took over the torch for that book. It’s all about your self-talk. What you’re telling yourself is possible and what you’re telling yourself is not possible is all happening because that’s what you’re telling yourself. It changes when you change your self-talk. Just like when Mark, you said you wrote down those goals, something must have clicked because you said, “You know, that’s what I gotta do. I wonder if that’s what these people are really doing to make this kind of money. How come they can do it and I can’t?” Then you start figuring out how they did it. What were they doing differently than you back then?

Mark: For one thing, I always thought I was smart enough and good enough to do everything on my own. I didn’t have goals, I didn’t get much coaching or help from anybody. I just tried to figure it all out, and that was one of the biggest mistakes I made because you can learn from someone who’s done it. It cuts your learning curve by 10 times. That was one thing. I hadn’t found what I liked to do. I was being a traditional agent which did not fit me well. Once I figured out a niche that fit me really well, my personality, that’s when things changed.

Mitch: I suppose when you get that coach, that goes a long way to changing your belief system too because they’re telling you it can be done. They’re telling you there’s other people on their calls that are doing it. They’re telling you that they’ve done it. So if you’re gonna sit there and not change your belief system after … I would have never believed that you could buy 100 to 150 houses a year. And there’s people out there who do more than that. I know there is because I’ve met them.

Mark: Yep.

Mitch: I know there’s people out there doing 1,000 houses a year. They’re not doing exactly what I’m doing and it’s a little bit different niche, but I know it can be done. I never would have thought if you’d have asked me 20 years ago, “Do you think that private people would offer to loan you over 12 million dollars combined?” I would have told you, “You’re crazy.” First of all, I wouldn’t have even known how to get it all out. I had to open up a hard money loan business to keep it all out, because I found that if I didn’t keep the people’s money out when they offered it to me that they went and they lost it.

Half of them would lose it and the other half would go invest it in something and it wouldn’t be there for me. So I opened up a hard money loan business so that I could keep this money as occupied, because I just couldn’t buy that many houses in my home town. Either I couldn’t or I didn’t want to, but at any rate I found a way to keep the money out. What are you having to pay for private money these days? What rate and terms?

Mark: It depends. Some that I have from family and friends … that’s one thing too, don’t be afraid to ask for money from your friends and family is what I always tell people because you’re benefiting them. It’s not like it just benefits you. They probably have their money in some low-interest account or some high-risk investment and you’re helping them by investing their money with you.

Mitch: In something that’s not so risky, you know? It’s good pay for very minimal risk. Worst case scenario is you end up with a house. Honestly, you should be able to stay in some kind of comfort zone. I like what you said. Stop begging for money, and start offering to help people. It’s a whole different language. It’ll get you to the same place but when you offer to help people, it gets you there faster, right?

Mark: Exactly.

Mitch: So what are your terms and rates? What’s some of the first money you bought and has it evolved down to a lower rate now? Tell me about your funding.

Mark: I’ve got a couple different loans that are 6-7% and I borrow that money on a yearly basis, all of it. It’s backed against a couple of my rental properties, no points on it, 6-7%, I guarantee I’ll use the money all year long so they’re always getting that rate. Then I’ve got a couple other investors who are about 10% and 2 points for investing on different deals. They’re buying houses, they’re doing 100% financing on it. I’m paying for repairs still but they’re doing the entire purchase price, and I can get those loans in 2 hours if I need it. That’s a super nice thing. They know me, they don’t have to see any numbers or even look at the houses. I’m just like, “Hey, I need a loan today. Is that cool? Do you have money?” They’re like, “Yep, I’ve got money.”

Mitch: After a while that’s how it gets, right? Let me humbly suggest that whenever you borrow money from someone, give them some kind of piece of collateral. Give them the first lien on something, because they need to have that. What if you get hit by a train, heaven forbid, tomorrow or something? They need to have a position on something, it’s just the right way to do it. You give someone a position. It’s always in writing, just because it’s the right thing to do. What’s next for Mark Ferguson?

Mark: Like I said, I haven’t bought any rentals recently but I still have a goal to buy 100 single-family homes which has been put on hold because of our crazy market. I’ve looked at investing in different states, I’ve looked at Florida. Lately I’ve looked at changing to more commercial/industrial buildings in my area. Buying distressed buildings, vacant buildings, fixing them up, maybe splitting them up into different units and leasing those out. They’re pretty big projects, over a million dollar properties.

Of course I have to have private funding for that. I have banks that’ll help me but it takes a lot of money to do those deals. That’s on the horizon. Also, I’ve got a new book coming out just on the basics of buying and selling houses this year. There’s so many people who don’t have a clue about how the process works. Investors are just regular people and they trust agents and lenders, and I really want to educate people about that more. Then, yeah, I want to complete 30 flips this next year. That’s one of my goals.

Mitch: Wow. Your average price range is probably a little higher than around here. What do you average your average flip? Tell us the number from an average flip.

Mark: My average purchase price is probably about 120,000, which is the very bottom of our market. That’s really cheap. It’s almost impossible to find a house under 100,000 right now unless it’s a tear down. I usually put about $30,000 of work into it, probably sell it from around 210 to 220, in that range. Then I’ve got some I buy for 150 and put 100,000 into, and sell for 400. Those are rare. Most of them are in that low hundred purchase price, put 30 in, sell them from 180 to 220 depending on the house.

Mitch: Good. Well, you go to 1000houses.com/mark. M-A-R-K. All lowercase. You’ll get there to the show notes and he’ll have some links. If you’re an agent, boy, get with Mark and up your game. He’s got some ideas on how to up your game. Certainly knows what he’s doing in that department. If you’re thinking about getting into the creative real estate business, he has some stuff out there for you on quick flips and on buy and hold if you think you’d like to be a renter. Mark, I really appreciate you being on the show today. I think that Colorado is a wonderful place to be. Not only can you make some good money there, but the countryside there is beautiful. I appreciate you being on the show, anything you wanna add before we go?

Mark: I think one thing, a lot of people I get questions from are like, “How do I do everything you’re doing? How do I start out?” And I tell people, “Focus on one thing at a time. Don’t try and do too many things at once because that’ll get you in trouble.” That’s one piece of advice I always like to give people. Focus on one thing, become really good at that one thing and then once you have it set up maybe you can move onto other stuff. But don’t scatter yourself too thin. That’ll help you succeed much better.

Mitch: Absolutely. Stay in your lane for a while until you know exactly what you’re doing. Don’t get involved in a shiny object syndrome where you’re buying a different course every week. Make no mistake, you’ll buy some courses and you’ll go through until you find the right one for you. I don’t think there’s anyone out there that hasn’t gone through a couple of gurus or more to find out exactly where they fit. Once you figure it out man, just stay in there. I get offered all kinds of things all the time and sometimes I look at them and say, “It’s not what I do.” Unless I know someone who does that, then I might get in the middle and pass it along for a small fee. But most of the time I’m looking for my company and staying in the middle. All right, man. This was really great. 1000houses.com/mark. Mark, I appreciate you being on today. You’ve been really gracious with your time. I can’t thank you enough.

Mark: Thank you, Mitch. It was a lot of fun. Glad to do it and let’s keep in touch.

Mitch: All right, my friend. This is Mitch, the Real Estate Investor Summit Podcast, and we are out of here.

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, without apology, drive 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?