What is happening, YouTube family? My name is Matt Faircloth, and this is the DeRosa
Group program called Mentorship Monday. I am grateful that you guys are here.
Now let's bring our guests in. Today I've got two brothers that are going to join us,
Andrien and Andre. What's up, guys? Welcome. What's going on, guys? How's everybody doing?
Yep. What's going on, everybody? Thank you for having us, Matt.
Thank you. You're welcome. What part of the world are you guys in?
New Jersey.
Where in New Jersey? Jersey City.
Jersey City, okay. We've been everywhere.
We've lived in Philippines for a minute, and then now we're here in America.
And as for me, I actually dorm in Rutgers Newark.
Okay. Okay. So you guys have been over for... Jersey City is a changing town, or it's changed
a lot over the last 10 years. I don't know if it's still changing now or if it's fully changed, but
it used to be the ugly stepsister of Hoboken, and now I've heard the Hoboken energy has
pushed down into Jersey City, correct? It definitely has, and it's expanding
more towards Bayonne. And Bayonne used to be like,
don't go there unless you got lost. Yeah, exactly.
If you're going to have to go take a cruise, [crosstalk 00:03:12] Bayonne, but that's about
it. But now that whole area is becoming the sixth borough, as they say. Well, good stuff,
man. Well, listen, I appreciate you guys for reaching out to us at helpeme@derosagroup.com.
What can I do for you today, guys? We sent our question of how we can better
raise capital and reach out to more leads, because we are struggling to find more capital these days,
even though we have more deals coming in. And right now we actually have two under contract.
Thankfully, in between our questions, we managed to raise the money needed for two properties, but
how can we increase our leads and how can we reach out to more people and have them
trust us the way they're trusting you. Well, obviously I can't help but mention it,
have you guys read the awesome book, Raising Private Capital?
Oh, I haven't. [crosstalk 00:02:09]
No, you haven't read it yet? Not yet, no.
It's fine. You should check it out. It's a great book. And I wrote it. Because if you guys love me,
you'll love the book, because it's got a lot of my personal story,
a lot of myself in there, but I'll give you a little bit more too. Now,
what kind of deals are you guys doing? Are y'all doing stuff up there in north Jersey?
Yeah. Two to four-families here all over north New Jersey, really.
Okay. What's a typical private money check that you're looking for?
We're averaging around 75,000 per property. Okay. What's the business plan? You buy
a property, you get 75 grand. What do you do? Do you renovate it and lease it? Do you
buy, fix it and flip it? What are we doing with these houses when you're in on them?
We're only doing light renovations on these properties. So we're finding properties that
has a lot of equity, has working utilities, are occupied by the tenants already, and we're coming
in and doing light rehab and refinancing. We're actually just going through our first process of
refinancing a property this coming November. You guys are doing the BRRRR strategy.
Yeah, exactly. We are [crosstalk 00:03:11] to the cashflow idea of the BRRRR investments.
Yeah. Oh, that's a good deal. The BRRRR strategy is a millionaire maker. It's a great method to
get into real estate or to expand quickly in real estate, as long as you're bankable
to get the loan. So when you refi, are you have, I know you've only been doing it for a minute,
but have you been able to get most of the investor capital, or more importantly,
all of the investor capital out of the deal? So what we're doing is we're partnered with
someone who has experience already in this field. He's a broker owner.
He's done 90 properties himself. So we're actually mentoring under him right now.
So our main job really is to raise the capital. And then while we're doing that, we're partnering
with him on these deals that he finds and he's slowly teaching us how the entire system works.
But he's not raising any capital himself. No. He really doesn't need to, we're just being
put to test because if we're going to scale up on our own business, we're going to need to use OPM.
And one of the lessons that he wanted to teach us first is how to raise capital properly so
that we can be proactive in our own business. All right. Fair enough. So, first rule of thumb,
if you're putting capital in, and if you guys want to expand in that, then you need to be the
mouthpiece and the controller of the capital in your deal. So somebody that writes a check in the
deal can't all of the sudden be reporting to your partner that's over here. And then he can't be
in the loop to them and then that, because then they become an investor with him. You
guys want to keep that investors yours, so Andrien and Andre can build your business.
Your partner over here can know who the investor is, but communication to that
investor should only be from you guys. Okay? Yeah. That's what we're always planning to do,
because that's one thing that they taught is keep your leverage with your investors,
because you don't want them to skip you and go over the other person.
Okay. Here's a few steps I would give you guys. Investor relations is a trickle, it's
like a drip of water, that turns into a trickle of water, that turns into a little bit of a flow,
that turns into a stream, that eventually turns into a river. There is no big water valve I can
show you how to find that just goes like this and all of a sudden, you're getting 50 calls a week
from investors. It's not like that. People have to learn to like and trust you, to tell their friends
about you. If you're going to do a social media thing or a thought leader campaign or whatever,
that's great, but it still takes time for those things to propagate out and to have a lot of
the evergreen messages out there for people to find. So, the biggest thing that you guys can do
in investor relations and in manifesting more investors for yourself is repeatable processes
and doing a thing over and over and over again. Here's the first couple of steps.
Make your investor list. And in my book, Raising Private Capital, it talks about
the three different places that people, or the only places where capital can exist
to invest in real estate, and that's cash, retirement accounts, or real estate equity.
Raising Private Capital talks a lot about how to find those three things in your network. And
so read the book and use those tips, but then sit down and make your investor list and say, "Okay,
these are all our aunts and uncles..." And I get if you guys have a lot of family still
overseas or whatever, then that may not qualify. But my guess is you have some US-based contacts.
So make the list. And when you learn what to look for for a retirement account,
you're like, "Oh, these three people in my network or these 30 people in my network qualify for
the retirement account possibility, and these people qualify for the real estate possibility,
and this person qualifies for cash." So make your investor list. And it will likely be
north of a hundred people, just to start with.
I started by doing a newsletter. I just started doing a monthly newsletter, or maybe earlier,
maybe more frequently than that. And if y'all are doing deals now in your market with your mentor,
get your mentor's permission to start marketing the stuff that you're up to, and maybe even let's
start marketing some of the other properties he's got and saying, "Hey, listen, we represent
this person. And so this is some stuff he's into, isn't this awesome? Don't you think this
deal is neat? We're going to be finding more stuff like this." Because you got to start
talking real estate to your base, to those 90 people or a 100 people, or whatever that like
and trust Andrien and Andre, because you guys are Andrien and Andre, not because you guys are
these real estate tycoons. You're going to be, but you're not there yet. 4.
And don't fake it. Don't bullshit these people and act like, we're making millions or whatever.
You're doing well, but they like and trust you because of who you are. So play that.
Utilize that. Questions so far? I got more for you, but let's take a pause. Any questions?
No, that's good for now. We can keep going. Really good.
All right. All right. So next step, do those e-blasts and then take the top 20% of that list
you got and call them. And it's Uncle Charlie, or somebody you know from your other networks,
or somebody you met at a real estate circle. By the way, a lot of people that hang out at
these real estate circles and real estate REIA meetups, either already are private investors,
but they're not going to broadcast themselves that way, or they are private investors that don't
realize that they probably are better off private investing versus trying to do it themselves.
These are people that have cash that think that they want to invest in real estate themselves as
the operator, but they realized, this actually kind of sounds like a pain, maybe I should just
partner up with somebody as their private money. Play those circles too, play your circles and
constantly be adding to your database, your newsletter, and then cold call the top 20%.
And then when you got a deal, broadcast it, as long as it's not equity. If it's an equity deal,
you got to be careful, because now you're soliciting. But if it's a loan deal,
if you're looking to borrow that 75 K, then that's okay. You can be like, "I want to borrow money and
here's the rate of return I can pay, and here's what I'm looking for" and everything like that.
You can put all that out there in the e-blast. If you don't do that, if you put that out there
and you're looking for equity, then you can get yourself in trouble with the SEC, because
you're soliciting and talking about rates of return and whatnot. And all that's in the book,
but just be careful about solicitation. Okay. Yeah. So that's the only thing that
we really promise is whatever rate of return that we promise for investment, that's it.
In equity stuff, if you're offering equity, you can talk about deals you did in the past,
historical deals. "Hey, listen, my partner bought this apartment building or this four-unit,
and his investor made 15%. Isn't that amazing? If you guys want to hear more about that,
give me a call." You're not promising future returns, you're just talking about stuff that
happened already. This is factual back here, and you're saying, you should talk to me in the future
about other stuff. You're not broadcasting, "You can invest with me with your equity,
and I'm going to make you 15% on your money." That's soliciting. You can't do that.
So when you're talking about money to your family and friends, how are you
able to segment them to trust the process more? Because a lot of people, when they
hear investments or just money in general, they have a negative perspective of it.
Some people are like that. Some people, if you're talking to a close relative or whatever,
and they're just conservative, they want to sit on their hands, then you know
these people are sitting on $200,000 sitting in a CD, making them a half a percent a year, and you
know you can help them. You know you can create a phenomenal rate of return for them. Sometimes
it takes straight talk to say, "Listen, I can help you. And we're able to pay you 8%, 9%, 10%, 11%"
whatever. And sometimes it takes that. Sometimes it takes, "Hey, did you know that real estate has
collateral? Did you know that if the market goes down, you still have a lien on that property?"
I find that most of the time real estate investors, it's our main duty is to become
an educator. Educate your network on the benefits of real estate investing. And if you can position
yourself as an educator to people, that's the better off you're going to do, you know what I'm
saying? For those that are like, "Oh, it's risky, it's this, it's that" then try and teach them
like, listen, conversation is what's going to dissolve a lot of their concerns. "Tell me what
you mean by risky. What are you worried about? What's the [inaudible 00:11:44] of the stock
market?" So I would have... A conversation is what will likely create understanding.
Okay. And in terms of meeting strangers through, for example, Facebook, because that's what we're
doing primarily right now is we're joining these Facebook groups and talking to literally everyone
in that list, and trying to find someone who's interested in investing through us, but
we just don't want to come out of nowhere and be like, "Oh, we have this great opportunity
right now and trying to raise capital" because we noticed that that wasn't working. Do you have any
advice on how we can approach people better? People are going to see that as inauthentic,
when you do that. You're kind of preaching to the choir when you go to those groups. I personally
wouldn't spend... I would spend time in those groups from a means of just talking to people
and getting to know others and everything like that, that are in the industry, and just getting
some best practices out and stuff like that, and maybe meeting some potential partners and all, but
I would spend... I don't think that real estate investment circles like that are the place to
go and meet lots of passive investors. You have a lot of passive investors off of BiggerPockets,
but that's different. BiggerPockets is not the same as a Facebook group.
If you're going to do that, if you're going to do online reach outs, first of all, don't be like,
"I got a deal on and I need investors." You're going to get, you're just noise at that point.
What you could do is to do posts that are just like,
"Hey, here's three things I learned from my last deal that I did. Hey, do you guys know Jersey
City is growing faster than any other city in New Jersey?" Or, "Hey, did you guys know that Jersey
City rents are stable. Manhattan rents are doing this, but Jersey City rents are doing this."
Find interesting facts, and position you two, yourselves, as experts on that market.
So find some interesting facts, or just generate conversation like, "Hey, I'm in the middle of
renovating this three-family property over here and we're having a problem negotiating a deal with
a plumber. Anybody have problems with plumbers? Anybody, have a..." Whatever it is, just put a
theoretical question out there that you may be actually dealing with, but start conversations
in these communities that are authentic, real conversations versus, invest with me,
conversations. It's the long game. Yeah it is. Exactly.
Wow. That's an awesome marketing strategy. I never thought of putting facts
as the conversation starter to meet with people, to network with people.
Yeah, man. That's how I, I've gotten a bunch of investors that way, by just by being a guy
saying... "Hey, let me tell you guys something interesting. Did you know that Philadelphia..."
And people would be around the corner like, "Hey, Philadelphia, I saw that post about Philadelphia,
that you did." If you guys brand yourself as the Jersey City experts, you're going to get a lot of
calls as the Jersey City experts. I think that's the answer, by the way, newsletter and expertize
yourself, not as these real estate gurus that own all thousands and thousands of units. Don't
bullshit people, you don't. You'll get there. But you own that market. This is my turf,
my market right here, and I know every block and everything there is to know. I got the data,
I got the markets. And if you don't, get it first, and then start putting things you learn and things
you think are interesting out there, and people will start to know Andrien and Andre are the two
guys that are really active in Jersey City. And that will get you referrals for that.
And this is how, based on your experience, when you started off, this was the best method that you
took to raise capital for your deals. Right? I didn't use the letter thing. Being the
expert, "Hey, this is some things I found out." I did that later. I did that later than I should
have. But for folks like yourself, I think that... I ended up having to become really good at real
estate investing, and then I was able to put that out online. But you don't have to do that. You
don't have to become this good at real estate investing to have a conversation with people.
If you have a conversation about real estate investing strategy, and you're just getting going,
and it could be authentic and just questions and helping me grow and helping you get to this point.
But you can be a market expert and have very little real estate experience.
Just by being consistent with your [crosstalk 00:16:24] .
It's about being consistent with your messaging.
Okay. Totally makes sense. Don't be talking about Jersey
City one day and then Piscataway the next day, and then upstate New York the next day
and wholesaling the next day after that, because people don't know how to, what brush should I
paint you with? I don't even know what you guys are talking about. Does that help?
How about you, Andre? Do you have any other questions? Yeah. So far it's helping a lot,
and I think we're going to start implementing these lessons for sure in our business.
Yeah. You pretty much covered my question, Matt. I was going to ask you other marketing strategies,
because we've been in Instagram for quite a while now and we have some traction going on,
but I want to get to the point where I'm consistently posting pictures and updates.
My brother is already doing that. But we're not only investors, we want, like you said,
to educate people and to start conversations. And what you said about the newspaper and just
talking about just specializing in one area to conversate about, really helps a lot with
our social media, and we appreciate that. Yeah, man, no problem. And I think that you
can use Instagram to just put stuff out there and make friends, whatever. And bear in mind,
the age range of Instagram is that you're going to get a lot of younger folks. And so use
Instagram and talk to the audience you're getting there. It's going to be people,
probably anybody below 40, a lot of those folks are going to be on Instagram. And that's okay. But
just understand that those folks are going to have more access to IRAs. So I would put out there,
start doing educating on Instagram, or just pictures on Instagram about IRA investing.
A lot of people you guys are connected to on Instagram are,
I don't know, 35, 30 years old, whatever, used to work at this company, doesn't work for this
company anymore, now works for this company, and doesn't realize the retirement account
they had at this company can now be freed up to invest in real estate with you guys.
[crosstalk 00:18:31] run up the stock market has had in the last seven or eight years.
Exactly. It's a pretty good time to at least rebalance their portfolios if that's-
Yeah. Folks in their late 20s, early 30s, are not going to have cash.
They're going to have a retirement account they don't realize they can invest with you.
Okay. Alrighty. Thank you. [crosstalk 00:18:51].
I appreciate it. We don't want to take up too much of your time.
No, no, no. You're welcome, guys. This was great. I hope it was a
value. And I appreciate you guys joining us on Mentorship Monday, man. Thanks for joining.
I appreciate it. Thank you so much. I literally just ordered your book just now.
Thank you. Enjoy it. I think it will do well for you.
Have a good one. Bye-bye. Have a good evening.
Cool. That was a great show, guys. Listen,
the bottom line is, when I first got started in real estate and investing and everything
like that, I didn't reach out and ask for too much help. Andrien and Andre are going to be successful
because they're reaching out for help on deals. They've got themselves a mentor they're working
locally with, and they're coming to folks like myself and to BiggerPockets and online
communities and buying books and things like that to learn how to do this thing. Do not make
the mistake of trying to do this thing yourself. There's other people out there that can help you
guys that are more than willing to help pull you up, whether that's through this YouTube channel,
the Insiders group, BiggerPockets. Whatever lane you choose to get that from, there are resources
out there for you guys. Thanks for watching, guys, have a great and profitable week.