AI Live - Land Shark Mastermind

Thursday, going through all the things. Okay, live streamed. So what was cool was yesterday we had some people watching us on Facebook, and I think it was Facebook Live, I don't know, we're on all the live streams, and caught our conversation or a snippet of our conversation, and then circled back and we had a whole conversation, which was really great about, again, how people are using Land Shark and Deal Hunter. And like, I hope Cecily pops on this morning to share with us more about how she ran that deal and whatever they discovered. So we actually just got off an hour-long call with a family office who are wanting us to raise capital for their deal. And going through all the things. And again, the power of all the tools that we've built and being able to not only raise capital for them, but find deals for them, which I want to go over with everybody here what the parameters are that they're looking for because they have a really clear buy box. And so everybody is using Deal Hunter to go find what's in this buy box. It's another way to create deals, be a part of deals, and even if it's a small part of the deal, again, when you're a small part of hundreds of deals, you know, that's where the freedom definitely comes from. So Tommy, I'd love for, Laura, I'm trying to figure out like, do we create a spreadsheet which has like the buy box options and anybody who's part of the club gets access to that and then they can go find those type of deals.

We could. Um, I at one point, uh, let me look while you're talking because I had created a kind of a deal tracker for this, you know, like as we were going through different deals. So I can add a tab to that. Let me just find it. It's sort of— we used it for a hard, uh, you know, half a minute and then got distracted. Squirrel got squirreled off on other things. Imagine that. Like that never happens. Squirrel. Right.

You know, golden retrievers are good at retrieving, not staying focused.

Right. I had a border collie. It would like run after and then herd. No fetching, no retrieving.

Girl.

All right. Where the heck did I put it? Now is the problem.

And you got Blake over there not doing anything.

He got a haircut though, it looks like. Did you get a haircut, Blake?

He lowered his ears.

Yes, I did. Created room additions on the side of the head.

Yeah.

Yep. Don't worry, bro, I come from the big ear club too.

I don't know, that's longevity. Somebody told me big ears means longevity.

Yeah, buddy.

There you go.

So, um, all right, well, if, uh, if we're going to dig around a little bit, I'm going to pull something up so we can talk about it. We were just talking with these people, so I've got this deal up right here, um, that, that we're going to throw in there real quick and do a little, do a little digging up and digging around on, um What's crazy is, is like, compared to your deal, Blake, this place has 24 acres, a rail spur, 11 acres, uh, of improved, like, ground. There's 12 acres of, of greenfield, which, whatever, so it's only actually 11 acres. Um, you got 26-foot, uh, ceilings in all these buildings— 1, 2, 3, 4, 5 Buildings right there, heavy industrial. Seller's asking price was $12 million. They, they got them down to a $10, $10.7 million price tag. Okay, so they're proud of it. It's got— I think it's got tenants in it. So let's do this. I downloaded it. This is, this is a demo, right? So I download it. I like this deal. I'm going to shrink this up. Go to Deal Hunter. We were showing them spots where we're going to buy a new property out there. They're like, you look at property like that? I'm like, yo. So new conversation, we're gonna go get that file I just uploaded or downloaded, whatever. Downloads, Stockton. They want us to get investors to run this deal, right? And so Deal Hunter— we presented Deal Hunter to them so they could understand what, you know, what we do. And they're like, you know what, This looks great. We want you guys to go out and find deals for us because if you guys do this, we want to go look at them. Right. So it says here the verdict is that it's pitchable but not set it and forget it. So the sponsor is targeting a 21% LP IRR and they have a 2.25x multiple on that with a 5-year exit. And that 5-year exit says that the value of the property in 5 years is going to be at a 6.25% cap rate. Based on basically them increasing the opportunity to, uh, grow income there. So that's what I'm believing. This is core investment the— uh, thesis is that this is an iOS product in a tight market. It's the— it's scarce, right? Scarcity below market to— and that's— so if it's below market, then it's value-add. Catherine and I learned about that last night. 2-step value creation, right? They have a Phase 1, make ready and lease up, and then Phase 2 is heavy development, paving the rear acreage, that other section back there, and, and building out more, more shops. So, and then there's the tax angle, which you could probably get accelerated depreciation of over $11 million, um, which then, uh, is equal to about 136% of the call to LP equity. So basically giving these guys 100% bonus depreciation, they invest their cash and then they get to write off all of that. So investor objections and rebuttals, we can look at this and see that objection one is the property is vacant at acquisition. Correct. Now what we do is, you know, go after, go after the fact that the scarcity, that there's not a lot of places out there for rent like this. There's going to— there's shoppers in the market, there's blood in the water. Phase 2, and you know, it adds development risk. Exactly. By adding to it, we're going to be, you know, having, having to go through a lot of costs and stuff like that. But the goal is to get that value add where right now we're buying it at a 10 cap, we're getting it down to a 6.25, right? What happens to the value of the property when the price cap rate goes down. What does the value of the property do? Goes up, right? So if we're buying it at a 10 cap and driving it to a 6.25, that's value adding, right? So, um, the, uh, refinance is critical. Absolutely. Getting, you know, getting out from underneath anything like that, that, that would be the goal. And then phase 2 lease-up is too slow. What if Yeah, what if, you know, like, what if the world ends? Like, duh. So you minimize that by, again, going through and knowing that there's a need for that out there, if you will, right? So not because it's a bad asset, it's because the returns rely on execution. What does that— so what does that tell you, Catherine? If the returns rely on execution, who's the, who's the person you got to look to.

Well, 100,000%, it's them. Like, and what is their track record?

The operator, right? Yeah. Yeah. So if it's on the operator, then when you're doing your due diligence, you got to look at their model more than anything.

Right. And I noticed on the last sheet that they sent us that they went through Where is it? Risk factors, past projects. So they got 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 10 examples of past projects on that sheet. So, and then, of course, doing the full background check, due diligence, all of that.

So I'll just ask it, do they have a history at Westlake?

Uh, yeah, right?

So it analyzed the deal, it didn't analyze the operator, but it said go with conditions, no-go triggers, right? These are important. So Westlake, yes, Westlake shows a meaningful operating history. And so it's going to show here where they have reported highlights, and these are things that they've already done, all industrial. Right? California, Texas, Cali, Cali, Cali, Cali. So do you think they know Cali? They know California pretty well.

That's their sweet spot. And they're smart enough to know what's happening here in Phoenix too, right?

And then here you go, 2.8 on the net multiplier. 2.8x, 2.1x, 2.1x, 2.3x, 1.5 gross. This, this is where, like, value add, right? So says a 64% gross IRR at refi. So not bad. 2.3, everything's 2+ on the, on the X multiplier. They got good X multipliers claimed. Okay, they can't make these claims, uh, if, if it didn't come true. Um, so one of the, one of the things that, that, um, we did discuss while they were on the phone with us was, uh, the fact that they, they do not raise capital through SEC filings. So what we're going to talk—

that was really interesting.

They said they couldn't, Tommy?

They don't have it set up so that they do.

They have minimal reporting to the SEC. Minimal reporting to the SEC. So with— that's interesting. Yeah, well, and, and so not that I find it to be horrible, but, um, again, like, there's two things that happens with that. One, it, it kind of blocks them from getting other capital, but then also, like, concerns me about their, their, uh, claims because they don't have any way, any way for us to back it up. You have to report claims to SEC CC. Um, with these guys, there's no claim, so we're kind of stuck, right? They're like, they made claims, but how do they prove it? Like, there's no SEC filing to back it up. So yes, are they public or, or they're, they're private, right?

Yeah, it's a private family office, right?

So how— I mean, it's, it's I mean, it's a very basic term. If you're taking someone's money with an expectation, that person has an expectation of a return. Yeah, it's a security. So how are they not—

it's through a 506, which is a— which is— so you got to go back to the, the, to the, uh— yeah, I do, right?

I know that, but it's— I understand the Bs and Cs, but it's still a security, B or C or otherwise.

Correct.

The difference between the C and the B is how it's marketed.

Marketed and reported on.

Right, exactly.

So they have minimal reporting. They don't have to report how much they made. They have to report— it's— I'll have to go look real quick.

I want to see if they still have to report, but they still have to register it.

They have, right? They have to register it, but they don't have to report it. And they're registering Uh, they actually, if they do a syndication, they don't have to do that at all because they're, as a syndication, they're not even having to create a 506. So they could just create an LLC and, and give away, um, memberships, and then each person— it's kind of like the fractional program that, that we do, 5-7 Streams. As long as they hold a position in the company that has an active role, it's not security.

Yeah. Is it? So it's kind of— it's more of like a joint venture than a—

Correct.

Right. So that's okay then, right? They don't have to register. But if it is— if it's an LP position, then they should register.

If it's truly passive.

Right.

And that's the key. If it's truly passive, then yes, you have that consideration.

Right, exactly.

Okay.

So it's a joint venture they're setting up.

So inside of this, let me see. So I'm going to share— this is our, this is our fund, fund, our PPM ops. And so we can feed it the deal, put it right in there like this and say we want to start Uh, disclosure docs. And what it'll do is, is tell us, you know, okay, so here's where we're at. And it'll analyze, it'll analyze the deck and then come back and tell me what we might need to do. I can sit here and continue to have a conversation with it back and forth about doing that. So Um, here's the questions that it has for everything to start that. Um, so here, let me have just a conversation. We want to present Westlake with an opportunity to work, uh, let Titan 23 raise capital for them. Titan 23 would like to raise 35% of the, uh, uh, 35% of the, the total they're seeking to raise. Um, through the Titan 23 Fund, um, and we would like to do this as a co-GP with Westlake on this. Um, so, uh, put together an email, uh, for us to present to them on this, or ask questions to make sure that this is good alignment based on the PPM, or based on the, uh, presentation you just seen. And so this will, this will help us, you know, foster that relationship outside of the, uh, conversation we had. I can probably feed to this, uh, some more information to, um, like I could feed it the whole conversation we had and, and it'll address that as well. So But this is what Catherine taught me to do with inside of GPTs and how useful they can be and all the cool little tricks that they can do. So I just thought I'd share that, throw that out there. But yeah, I think we can totally raise capital with these guys through the Titan 23 deal, even if they just do a syndication because their lower-tier entity would be a member. Of that disclosure doc. So that's how that works. Um, and then Blake, um, did we, uh, did we— were we able to, uh, make any headway on that deal out there in Oklahoma? Not just yet. I know we're still waiting on getting the call with Tracy because I know she mentioned talking with that. I'm going to schedule that today, but just from what we talked about yesterday after we just ran the numbers. I haven't gone too much farther than that right now. Right. Okay. So based on the program you pulled, though, would you be able to run each one of those documents through individually and get a report breakdown on it? Um, so that when we do talk with Tracy, me, you, and Tracy can— it, it will already have the knowledge base built into it. You're on mute, Catherine. Oh, never mind. I don't know if she's talking to me or not. Are you talking to us?

I don't know.

Sorry, I'm having issues with my sound. Um, I also want to talk about Cicely. I want to bring that in, the comment she made yesterday and how that led to the call with Chandler and all of that.

So I want to dig in back on that for Thor, because we, we, we had a good conversation with Chandler. But, um, yeah, Cicely had mentioned that she, she saved somebody from wasting a lot of money by using Deal Hunter.

That was great.

Ended the call yesterday. That was awesome.

Cicely, are you able to talk, honey?

Hi there. Sorry, I'm here. I'm coming on. Yeah, I'm coming on.

Okay.

So yeah, we, we're live streaming across all the social media channels, which is part of what I'm trying to manage. And you had, right at the very end, had mentioned about that. So I'd like to dig into that further because what happened was somebody actually heard that snippet of the call and our conversation and ended up having a call with us yesterday and led into a whole bunch of other things, which is really cool. But the point being, I would love to hear— and this is what I love about this, like Tommy just said, like I taught him, you know, this piece, I use this piece, I taught him this, he took it to another level, he built these pieces, you guys are taking it to another level, like, you know, and that, like, I love that. So what you did, I— we all want to hear more about how that conversation went.

Okay, so, so my— I'm working with a developer and he's working right now, so he has connections in Santa Cruz and we're— um, Indiana. He does tax credit, um, development. He went to some institute, learned how to do the tax credit There's a lot— there's some pieces that I know that he's, he's very skilled in certain areas. There's some pieces where he's the who on the tax credit and he's pulling the whos together to do, to do more. So he went over it with me. He's like, you're in real estate. I know you know a lot about, you know, real estate and you're learning about investments. And so he went over it with me and I was like, okay, well, why not just use my brain? Like, I have Deal Hunter. So let me throw it in Deal Hunter. And I asked the question, I said, okay, I'm the investor applying for this tax credit. I'm going to be the owner of the LLC that's going to own this community. But when I looked at the agreement that he was getting ready to sign, it said that he had no land ownership rights. And he's going to have— so he's getting a payment of $1.5 million. And then the— he's actually signing on a debt for, for $1 million, but the co— the co-developer is receiving— so out of the $1.5 million, the co-developer is receiving $750,000, he's receiving $750,000, and the owner of the land is receiving a new, a new structure built on site. So he's getting money, plus he's getting a structure built. Co-developers getting his pay. This guy is getting $750,000, but then he's signing a million-dollar debt. And I was putting all the pieces together and I'm like, this is a bad deal. Like, you're literally signing, you're getting $750,000 for a million-dollar debt. But it broke it down. It was like, wait, who's responsible for this note? That Land Hunter was like, who's responsible for this debt? Why are you the only one responsible for this debt? You're not receiving any type of collateral on anything. You don't have any— you don't have any owner. He can't even sell the land after this 32-unit apartment building is built. He can't sell the land. He can't sell the apartment building. The co-developer now is gone, and the church still owns the church land. That corporation still owns the land. So I was— I've been fighting with him all morning. I'm like, do not sign that agreement, do not sign that. So I'm like, let's keep digging. And he's like, okay. So we're digging still, but that's kind of what happened.

So are you looking for help in like helping guide him through this process that he's protected?

I am. He's not 100%, um, he's not listening 100% to me because he—

well, right, he just sees all the unicorns and butterflies. He's not seeing the The red flags and the pitfalls. So, um, I mean, Tommy, is this something that we could show Cecily how to have the conversation to say, like, what the negotiating terms he could come back with so that he is protected and it's a win-win?

Well, it showed me on there, it showed me what to say instead, even rewrote the whole contract. So I had— I said rewrite the contract to protect this, the buyer and his LLC, and have more, more built-in protections. And it had everything typed out, written out, and it created a whole new agreement, which I have, I have ready for him.

You want to, you want to preface that with have your attorney look this over first. And the second thing is, is you keep hitting a key word that I think Catherine has not heard Yet she keeps saying church.

Oh, I heard it.

And that's like, like, like I feel like there's 3 people you do not want as property owner joint and, you know, as partners in a joint venture. There's 3, there's 3 people you don't want in that joint venture with you. One of them is the Native American, any of the Native American tribes in the country, because they, they have what's called sovereign nation. So you can buy property in there, but it's not yours. Like, it doesn't matter what you do, like, it won't be yours.

Right.

The second one not to mess with in a joint venture property deal is a cemetery. Because you cannot, um, sell, uh, anything but a burial plot in something marked cemetery. Okay, so you cannot build a house there, you cannot park a car there, you cannot nothing. It is a zoning you will never ever ever ever change. You can only sell burial plots there and the like. That's it. Third, church. Church. Churches do not joint venture with a church on a property because they own the land and whatever you put on it. And so if at the end of the contract you're like, okay, can I have my million dollars now for all the work I did? They say, ah, young lad, Jesus will let you into heaven now faster. Have a good day.

Well, okay, so that's what I noticed. I noticed that he has actually nothing to sell. So you're the owner of this, of this debt, but this debt is not attached to the land. So you have nothing actually valuable to sell. Who's going to buy this note in the future?

Right.

Nobody. The co-developer walked away with his money. The church now has this structure built on their land and they've also received payment for it. But now they have this lien, this, this debt to them. And he's got— he can't pass the note around. So I was like, I would never sign this deal ever. So there—

it's interesting because there's a multi, multi-million dollar deal here in Phoenix that's being presented similarly, but everybody's missing it, which is interesting. And I had another one presented to me the same way, that my nonprofit would get this money, but at the end of the day, I was actually responsible for how the profit was being spent for— in a company I had zero control over. And if they didn't follow the regulations, then the IRS would come after my nonprofit for the money they spent in their profit company.

And so just so we understand though, it is possible to work with a— it is possible to work with a church. I want to make it clear that there's two ways to do that. One, you buy the property and the church no longer like operates the property. They're no longer there. You buy the actual building, the rectory, the everything, whatever it is, whatever they call it. You buy that and it becomes rezoned to be commercial or multifamily or whatever. I've seen, I've seen conversions of that. Catherine and I actually went to a place called the Taco Guild in Phoenix where it's an old church, Presbyterian church. It's still got all the stuff in there, but they worship tacos now.

Yes. So, okay, he mentioned, and I'm learning, he mentioned that there's some tax credits, huge tax credits for buying, for building affordable housing on religious land. So he actually had me go to a title company and we pulled all in Santa Cruz, we pulled all the religious land, we pulled all the contacts so we can start But so there— but, but now that I'm seeing that, like you said, like you never actually own the land unless you buy the land first, right? So if you buy the building, you buy the land, you own it, then you could build and have those same tax benefits. Is that right?

Well, you can get tax benefits for building the property. Like there's churches that will, will do what's called lifetime leases on property. And that's where, that's where the other part too to doing anything with the church is, is that you get the lease, you get the the church to give you a lifetime lease, 90, 50-year, 99-year, whatever. And it— and you make sure that there's a lawyer on it that will literally fight for tooth and nail to make sure that you never get it taken away. But after that lease is up, it becomes property of that church. If the mission is to house veterans or house—

yeah, it is.

Yeah, my family built the house, the house that, that the nuns lived in. For St. Denis Church in Lockport, Illinois, in 1958. My grandfather did not get paid for that job because he did not own the land, lease the land, or nothing. They literally said, oh, well, you'll always be seen as a great parishioner here. Thanks for your help. So again, it's all about the protection of the property and how you structure your deal. If they want— if you're like, yeah, I want to build this, this 32-unit a homeless shelter on church property, you're going to need to show that you have all this grant stuff and it all comes in your name. It doesn't come in the name of the church. It comes in the name of the nonprofit that is actually doing the work. But you need to have a— so there's an entity structure that needs to be formed. Yeah, for-profit, you have to have a nonprofit, you have to have an operating company entity. Like, there's 3 or 4 entities that has to be created just to do that deal and have it structured in a way that everyone's protected, including the church, because the church is going to make sure they don't get messed up either.

So what is he on the contract? What is he attempting? Why would he sign a million-dollar note at a 3% rate? There's no on there. There's— it said no term. There was no term of payments, monthly payments.

What the—

what, what, um, who presented him with that opportunity? Opportunity.

The co-developer, the co-developer.

And yeah, so let's start with a background check on Mr. Co-Developer and see how many, how many, uh, red flags that we have or green flags that we have, right? We're not going to assume this guy's got any red flags, but I'm assuming he looks like a Swiss slalom slope. Um, so, uh, if that, if that be the case, he's, he's loaded up., with, with a history of doing this. And I would bet to say, I would actually bet to say I know who the guy is, to be honest with you, because there's very few people out there that have this business model of screwing people out of money using church property. And they're good at it. They're really good at it. Catherine, what's his name?

I'm not going to say it live here.

Okay, darn it. Well, yeah. If Catherine's not going to, neither can I, because my name says Catherine and I just look like I'm wearing a big shark costume today. Um, I can't say it either, but I, I will get off the phone with you and we can have a meeting and you could tell me.

Yeah, yeah, I can.

I would, I would venture to say that it's 100%, you know, McGill, you know, he's going to be the, the McGillicuddy, as my, as my dad would say.

So Um, yeah, we can talk to you offline. Given that we're live streaming, we're not gonna go there. Mike got his hands raised.

Okay, let me just say one thing, one more thing, Cicely. You're 100% correct. Without the correct terms of a contract, it's pointless, useless. No payment schedule, no end of term, it's 100% bogus. Go ahead, Michael.

No, just to add to that, at a high level, it's— I have to ask the question, is he trying to use it as a construction loan maybe? But, but there's no terms. So to your point, Tommy, it just doesn't— is that the exit for the church?

Yeah, even at a million dollars. Even at a million dollars. And that's what, that's what the deal is. I don't know if Cicily got into that. The guy put up $750,000 cash for a million-dollar loan.

So basically, no, No, no, no. The tax credits they're getting. So the co-developer put up, I guess he had to put up, they had to see $5 million in the bank plus one something. I don't know if I'm exactly correct. I'm just remembering what he said.

To get underwritten, he has to have some collateral behind it.

Cash.

Yeah, he had to show the assets. So that's what the co-developer is putting. He's not actually putting up any money. The tax credits, they're getting the money from the tax credit. So they're submitting to I don't know where they're submitting it to, but they're submitting it somewhere to get the tax credits, and that's funding the project. Yeah, it's—

to me, it sounds like they're— either they can't get a construction loan, a traditional construction loan.

What is the— what is the amount of money the person you're working with— what is the amount of money they're putting up, and what is the amount of money that they're getting on the note?

The, the amount of money that they're putting up— he's put— he, he showed the, the assets He's not putting up any cash. Um, there— he's not received— I didn't see anything which saying he's receiving the cash from the co-developer. It just says—

I'm saying, what is he— what if he's investing? What is he using to invest? Is it collateral, credit, or cash?

Collateral.

And what is the collateral?

$5 million and then $1 million. So $6 million is what he had to show proof of.

So he's got $6 million of, of of liquid cash in a bank account that he's using as the collateral to get what, a million-dollar note?

Um, to get approval for the tax credit.

The tax credits, right. But you said that he's got a note with no terms, no payments. What is—

oh, my, my— the developer I'm working with, he's putting up nothing. He's just the connection applying for the tax credit. He opened up an LLC We opened up an LLC together. So he opened up the LLC and he is helping manage the project. He's submitting to, I don't know where they're submitting it to, Indiana. I don't know. They're getting, and they're getting the tax credits approved.

Got it. So the guy that the developer you're working for, does he, what does he put in? Cash, collateral, credit? What is he putting in?

He's just putting up his, his experience and knowledge. He's not putting in any cash.

He's not putting anything. So no, what is he— what then? What— where is this note that we're talking about? Like, I'm— I'm—

so the note is gonna be from the church to, to his LLC. So his note is going to be— it's so the total— so they're buying 4 parcels. They appraised— they appraised them. I don't know where they came up with the figures. That's why I'm digging into that too, because Jill Hunter was like, how did they come up with this number? Um, they appraised it for $1,350,000 for 4 parcels. And so they're saying in exchange, they're giving $300,000. The church is walking away with $300,000 out of whatever comes from the tax credit. And then the debt is $1 million from my co-developer that I'm working with to the church.

And it's— That's what I need to discover right there. So the co-developer you're working with owes the church $1 million?

Yes. With no— with no— I don't know. That's what I'm trying to figure out.

I don't—

I'm like, where's— why are you paying this million dollars? I'm like, don't sign it. What is this million dollars going for?

I don't know.

And then he's— oh, then he's getting a leaseback of $10 a month, and it just says $10 a month.

It—

that's all it says, $10 a month, every single month.

So, and again, I think it's, I think if we're going to get into it, this is, this is the important part of, of, of Deal Hunter by Land Shark is that like, there's, there's deals out there that have a lot of, a lot of moving parts and pieces to them and Deal Hunter can kind of sort through them. But if you don't know what you're doing, you don't know what questions to ask, you can end up with Deal Hunter providing you with you know, question marks and, and, and like, I don't know, right? So, um, you know, if the guy you're working with right now is not putting up any capital— and, and when I say capital, I mean cash, credit, uh, uh, collateral— like, I don't know what his loss is except that if he's signing on, on a debt like, and he has no down payment, no monthly payment, no, no end of term for that debt, like, then it's not debt. So I, I'm so, yeah, um, I, I have no idea what, what the actual, uh, opportunity would be there for the guy.

Um, I'd like to see what the, what the, what the note actually says.

I don't know.

Yeah, I have everything.

And if it saves somebody, if it saves somebody from spending money, that, that, because that, that to me is the important part, is if it saved him from spending $1 million on something, then that would be great. But it just sounds like the guy's getting scammed and it just needs to like, it's not a deal. It's not a deal. It sounds like a scam buster.

Well, they're building veteran homes. They're building veteran homes on the church land. But I'm like, who owns these homes? I'm, I'm assuming—

well, if, if they, if they buy the property from the church, the developer owns, owns the homes. So if they buy the property from the church and the church is owner financing it for them, then that's, that's how that's working out.

Okay.

You know, um, I'm, I'm digging in, I'm digging in probably more than he's requested, but I'm like, wait a second, this isn't making sense to me. So Yeah, yeah.

And, and again, this is why, like, for the free version, we keep it down to a, you know, we keep it down to a minimum. When people want to get serious in this, we have that due diligence fee that they can pay, and we use the paid version of Deal Hunter to really nail down and, and, and, and pin down what's going on. So if the guy really wants to know, then he'd have to— you could get him to, you know, you could, you could, you could get him to invest into that due diligence report, we can help them out that way. But, you know, that's a, you know, that's another discussion for another time, right, Catherine? Yeah, it, this is because, yeah, we can do preliminary poking the weeds with it, but, but this sounds like something that's going to take a couple hours. And so they would need to invest into that.

Well, and I just want to take this opportunity as a coaching moment that there's 3 types of entrepreneurs.

Right?

There's the skilled producer, the one who's really good at doing the things. So say like an electrician or a plumber, like they're really good at the thing. Then there's the manager, leader, somebody who really loves to manage and lead people. Then there's the true entrepreneur, which is somebody who sees opportunities everywhere and they love to get in, build it, exit out the other side and do it again. Now the problem with Each one of these is the skilled producer, is our Chicken Little. They see everything that's wrong with everything and they don't understand how to manage people or have the ability to be able to get in, build, and exit out the other side because they, they identify as their business and their business is them. That's their, that's their baby. The second entrepreneur, the manager leader, loves to lead and manage people but doesn't really have the skill to get the thing done, nor has the ability to be able to fully see how to build it and exit out the other side. The third one, the true entrepreneur, is unicorns and butterflies. They see opportunity everywhere. Everything's an opportunity, and they love that whole process. But they miss is the part that Chicken Little brings in, which is seeing all the, all the ways that it can actually go wrong and blow up in your face. And they don't have the skills that necessarily to manage and lead all the people. So when you have all 3 personalities inside of a company, which is what you need now, and give everybody equal voice, now you can truly build this out. And it sounds like he's a true entrepreneur. He sees opportunities in everything and he's not seeing the pitfalls so that he can be able to mitigate those pitfalls responsibly. Right? So none of them is fully right, none of them is fully wrong. It's all voices need to be there. So the question is, is he seeing— is he actually listening, or is his ego fully engaged and just wanting to move forward with this because somewhere, you know, he gets to look good and be the hero somewhere for somebody? Meanwhile, on the back end, he's totally gonna, you know, get screwed.

Well, and I threw a fit because he had a meeting with them, with the co-developer at 6:00 in the morning. He's East— Eastern Standard Time. I woke up at 5:30 because I discovered what I discovered and I was like, do not sign that deal. Do not sign that deal. And he was like, I'm here. I'm already meeting with him. And then he got— they said it was supposed to be 50/50. And on the co-development agreement said 70/30. And I mean, I stayed up for 2 hours just waiting for him to call me because I was like, do not sign that deal. And he didn't even call me back. So he called me today, but he didn't call. He just— it's like he wanted to do what he wanted to do. And I was like, all right, I'm telling you, I'm like, alarm, alarm, alarm. I feel in my gut and in my heart, and I know how to read contracts, so pretty, you know, pretty well. I'm like, don't sign it. But I don't know what his— like you said, maybe hero, maybe he's just trying to have a quick win, maybe he sees everything as possible, but Personally, knowing what I know, I wouldn't sign it. And I'm grateful for LAN, you know, LAN, this, this program now, because like I was able to just say, I use my own brain first, and then I put, I put it over there and I was like, oh my gosh, like I can literally see all the flaws. So it was amazing. And I've been using it for almost every challenging, um, I'm, I have another, um, situation where I'm fighting with the mobile home park community. And it pulled all their lawsuits, all the things on them. I have, I have so much ammo, and we are going— I feel like I'm like this lawyer, and I'm like, no, this, this, the civil code, this, this, this. And they're, they're ignoring me now. They don't even want to deal with me. But I put it in Land Shark. So yeah, it's a definite— it's definitely a great tool, and it has the, it has the blind spots that I don't have. That's, that's what I discovered about it. It has the blind spots that I would never know, and I would, I would spend maybe hours researching different perspectives or different ChatGPTs. And so it's just there, boom. So yes, thank you.

And that's why it's built.

So, um, all right, appreciate that, Cicely. Uh, Blake, um, sent out a message and it looks like he had to get off onto doing some other things as well. Um, I think I seen him driving around or something. I'm still here, just my internet's super spotty, so I had to go on my phone. Got it, got it. Yeah, we, uh, we have some of that going on as well. Um, so What time it is? We've got like 14 minutes left. I wanted to take an opportunity right now to kind of go into something else we're launching out here. We're going to be checking people to— checking in with people to expand this. So— oh, crap. I didn't want to do that. It's making another slide too. Um, so as many of you know, I'm a contractor, um, have been for, for a long time. But, uh, Deal Hunter is built outside— built out of my experience in, in contracting and, and free estimates as well. And so something I came up with many, uh, months ago, probably like, I don't know, 72 months ago, um, was a, uh, plan called Contractor Scale Up. And it came after I read a book by Grant Cardone called 10X. And when I read, uh, the book 10X by Grant Cardone, um, I was, uh, I was moved by the fact that, like, what he pointed out when he explained was like very, like, very much, yes, this is, this is like my problem. I don't think big enough. I don't solve bigger problems. Right. And so it was important for me to hear that because I was in the middle of building my 6th company because I continued to hit what I call a ceiling inside of my companies. I couldn't make it past $3 million a year gross annual sales. So I came up with this growth ladder that helped me understand how back when I was in my 20s, I went past $3 million to $10 million and past $10 million to $20 million. And then like $20 million, we like— I finished my career with a $220 million gross annual sale year. We kept somewhere about 22% of that as a company. So, but my gross annual sales the last year I was in roofing was $220 million. So I went back. 6 years ago after I read 10X and started thinking about how I could 10X, uh, everything I was doing in life. And one of them was to just continue to help build blue-collar businesses. And I came up with this growth ladder called Contractor Scale Up. And basically I replicated the way that I did all the businesses that I've done. So I went back to remembering what did I do in the first part. And so it's before I made my first $100,000 in, in anything, I had to invest in myself. $1,000 was the investment I made into myself. And what I was able to get was, uh, focus on, on business fundamentals. Those business fundamentals were my pricing and estimating, my sales process, lead generation, and using AI to help me do it. And, and back then, I didn't have ChatGPT. 6 years ago, I didn't have ChatGPT. I had Facebook Marketplace, and it was automated, so I'm going to call that AI. Right? Because it could help me manage my listings and leads and do things for me that a human being couldn't do, right? And so that's the boot camp stage. And when I got to my next stage, which was making over $100,000 a year, I had, uh, I had a path to go from $100,000 a year gross annual sales to a million. I could do that within a year. I could actually— got it to the point that after I'd done it so many times, I got it to where I could get to that million in gross annual sales within, within like 6 weeks, depending on the, you know, depending on the, the business that I was getting into. But I was spending $1,000 a month to do it, and I had, I had to focus on systems and processes. Like, that was the biggest part there. Um, the deliverables that come from that is implementing like, uh, our client relations management, our electronic document management system, And the reason why this is important is like, if you can't recover your money on a job, you'll go out of business. So if you do a job for somebody and you can't get your money, like my grandfather who built for the church, he couldn't get his money back. He went out of business. He literally went and got a factory job after that job and never stayed a contractor again after that. Broke the cycle for a while. My dad went back to being a contractor after he came out of the, the repair business of repairing appliances and stuff like that. So there was a 30-year hiatus in my family of when my grandfather left construction to when my dad went back to it. So, and then I just picked up where he left off. I took a 10-year hiatus in the healthcare. So anyway, um, some of the other things that come with this is the financial visibility, um, and the fractional back office support. This is huge when you're in a business that's trying to grow, uh, to, to above $1 million because That's in Tier 2, where in, in Tier 2, we're going from $1 million to $3 million. You're gonna spend at least $3,000 a month to do that. And you're looking for management capacity now. And the deliverables you're getting inside of this is departmental structure. You're getting your, your bookkeeper, your secretary, your office manager are helping put things together. You're receiving leadership coaching and giving leadership coaching. You're setting up recruiting systems and you're getting advanced KPI dashboards. So that you can start to really refine your, your system and turn your business into a machine. Um, the, uh, Tier 3 is moving into the executive scale where your, your gross annual sales are $3 million to $10 million. And I, I encourage people to understand, like, uh, why I use gross annual sales. And it goes back to, um, when you start in boot camp with $0 um, in your bank account, you're at $0 in your bank account, but you're going up to $100,000. That's 100x. And then when you go to Tier 1, you're going from $100K to $1 million. That's 10x. And then when you go from $1 million to $3 million, that's only a 3x. And those are broken down specifically because as you're adding people in, you can scale too fast You can get too much work and it costs you more money. I know people that literally do 4 times the amount of business and they make 10% less than they did when they started. And it's because they didn't scale and implement properly. And so that's, that's down here in this $3 to $10 million bracket because here we're just, we're literally just doubling our money as you can see, as we try to get into bigger brackets. What we're doing is we're, we're taking it from a 100x down to a 2x. And the 2x is because it's harder to scale $10 million than it is to scale $100,000 because of the amount of effort you got to put into it, the amount of resources. In a 3— in a Tier 3, you're going to spend $10,000 a month to get, to get yourself situated and, and make between $3 and $10 million. You've got velocity of money coming in, and, and the focus is that velocity with the leadership that you need to have inside of that. You might have to give up equity participation, meaning like bringing on a partner that's going to be 5 to 10% owner. You got acquisition planning that you have to look forward to, like buying your competition, and then, and then getting an enterprise evaluation. An enterprise valuation means like, what is your company worth? Because when you move into Tier 4, Tier 4 focuses mostly on, on your net operating income, not your gross. But if we focus just on net operating income to get through these tiers, the issue is, is that we would not properly scale because some jobs give us, you know, 72% net and other jobs give us -5%. And so when we end up in that situation, that's where we get kind of stuck anyway. The fourth tier is the $10 million revenue month. And what we end up doing now is we— I position myself to give all the equity to most people. I take 10 to 15% of the company's worth and I use that to be a C-suite person or exit strategy just to get out of it. I operate as a CEO, CFO, or whatever. I manage the board. I get ready to sell to private equity like Catherine., or set up strategic mergers and acquisitions. The goal is to get generational wealth going so I can pass this down or I can just exit it. And so that mind map right there kind of outlines everything that, you know, that I've, I've done and looked at, um, and, and how I scaled multiple businesses over the last, uh, over the last 7 years. And so what I came up with is this program called Contractor Scale Up. And so what we're going to be doing is we're going to be promoting out the Contractor Scale-Up Program, where we're going to be bringing in all these blue-collar business owners and helping them scale from $100,000 to $10 million. We're going to be doing that through the different tiered systems. And then these contractors are going to be helpful for us as investors in getting us, you know, fix and flips done or We're going to be making relationships for these guys, uh, so that we can, we can get with them and, and, and build with them, uh, not only their business but also the investments that we're into as well. Um, I broke down each one of the foundations here. Boot camp, how to, how we do it and put them through a 30, 60, 90-day program. Um, tier 1, again, how we build it, maintain it, operate it, what it does. You know, a lot of these blue-collar contractors, they don't have AI to work with. They don't even understand it. But we can, we can teach them it. We understand it. We built it. You know, this is another thing, the blue-collar back office, having that secretary, office manager, and bookkeeper. It is, it is absolutely important to a business. But the, the thing is, they don't need them full-time until they're in that $3 million bracket. So we break it down into a fractional load. In the beginning, they're only going to be using those people about 10 hours a week, but by the time they get to, to, you know, $3 million in revenue, gross revenue, that could be in a 6-week period, it could be in a 6-month period, it depends on that owner. But once they reach the $3 million revenue, uh, per year gross annual sales, they, they are 100% needing 40%, you know, 40 hours a week from those people in that back office. Now that back office is locked in, you go to Tier 3. What you're going to be doing is you're going to be looking for that extra partner to come in. Somebody who's going to run sales, somebody who's going to run the field, one or the other. Because I'm going to do the other. I'm going to run the field, the other guy's going to run sales. That's what Roman, my partner, does, um, for us, is he handles the sales and the customer side. I handle the field and the labor side. And we're in tier 3, we're shooting for that $10 million now, because again, I've done this with multiple partners And we've been able to break that $3 million threshold that, that I kept bumping up against. And we've been able to do that because now we're implementing all these tiers here. Tier 4, again, going into when we make $10 million gross, I'm going to have to become a CEO. Roman's going to have to become a COO. We're going to step into those roles because that business is going to be running itself and we're going to switch out of the operator language and into institutional language instead of calling them the gross sales, the cash flow, the job costing, and the number of leads we're getting. We're going to be looking at in Tier 4 things like EBITDA, cash on cash, what's our DSCR and cap rate for value. So what we're attempting to do is create the, the high exit, high value exit for us, or, or creating that keep it and pass it down or sell it off. So I appreciate everyone giving me the opportunity to kind of pitch on that a little bit this morning. It's something that I've been working on for a long time. However, it's starting to come to fruition now. So anybody got comments or questions about it?

I do. I think that's super exciting. I mean, I love that you're sharing how you built your businesses, and I think that that's amazing that you're sharing that with others. So this is just being— I mean, I know that I'm not in that business, but just being in the room and learning, like, I know there's valuable things that I can learn, um, just for my little small business, you know. So I think that's very valuable.

Well, and we're, we're planning to recruit, uh, quite a bit of, of what we call, uh, service-based industry people to this because it doesn't just cover people that build houses. I can do this with a, uh, I can do this with a, an auto manufacturer, somebody that, that, that, uh, uh, does the automotive industry. It could be a tire shop, it could be a mechanic shop, it could be an oil change place. Like, I can apply this to any of those models as well. Anything blue-collar service-based industry, I feel like this is what this is leading to because we missed out on the Uber opportunity, right? So, um, and that's kind of where we've been at with it. So, um, Damn it.

I think this is super important just given like how many people are either inheriting their family's company or buying these blue-collar companies. But again, they, they understand what needs to happen but may not necessarily have all the pieces or the team in place. And this is the, um, the, the missing piece, the of the who that knows how so that they can, uh, either acquire or, you know, take over the— these blue-collar companies and like really take it to the next level.

Yeah, no, for sure. So, um, I appreciate that, Cecily, and thank you, Catherine. Um, so it is 10 o'clock. I'm going to wrap up with a prayer if everybody don't mind. We'll, we'll wrap up back here tomorrow. Um, make sure to come in today, register for our, our podcast webinar later on today at 3:00. We're going to be talking about employee housing at 3:00. So head over to our—

Laura, can you put the link to that? Yeah. And then of course, we've got— I've also got the— if you want to learn about luxury housing, we're doing that one at 5:00.

Good MOA podcast today. Dang.

We are. Today is podcast day.

Podcast day, baby.

Podcast day.

Hang on.

I'm trying to find that. Too many places that I have stuff saved.

All right.

Here's the other one. I'll give you guys again.

Yep.

If this one works. I know sometimes—

oh, no, not that one.

Hang on. It's being stupid. Uh, there's one. That's the same one. That should get you to be able to register for today's webinar.

And then the one I put in is What Wall Street Doesn't Want You to Know.

What's that?

For what doesn't want you to know?

Quick question, Tommy, uh, your program, is that available up now?

It is available now, and we're actually going to be— we're doing a soft launch with it right now. We've currently got 22 members, and so what I'm hoping to do is with these 22 members is to get them to give me some, uh, testimonials, get them through the things that they're doing, and get like, you know, the, the, um, uh, um, proof of concept nailed out. But we're looking to raise capital for this. I'm looking to probably get some investors behind it because we want to roll it out to a national level. And we're going to white label Free Estimates and white label Deal Hunter to like help expand people's brands. So Free Estimates, I believe, will end up becoming a white label for all contractors. That way, they— that's, that's going to be the tool that everybody uses from now until eternity, until something better comes along. Um, in getting estimates and, and, and doing contracts with people.

So the reason why I ask is that our son's in, um, HVAC, just started, loves it, wants his own business, and this I think would help kind of build that business knowledge for sure.

Like, our— I mean, I, I can deep dive with— and right now that's what we're doing intentionally, is deep diving with contractors on it, because we don't like, I, I don't want any failure rates. So I'm, I'm, I'm very particular about the contractor or the startup we work with, because the last thing I want is somebody be like, oh, this don't work because I'm a dumbass or I'm too lazy, right? You know, type of thing. So I'll talk to you about it.

I'll reach out to you.

Oh, absolutely. I'd love that. So thanks.

Thank you, sir.

Awesome. Well, thanks for contributing today as well. Um, we look forward to, uh, doing more things very soon. So, uh, again, if nobody's got anything else to add, we wrap it up with a prayer. Heavenly Father, we thank you for the blessing of this day, blessing of this life, and that all things that we do, uh, come through your will. We ask this through your Son's name, uh, and, and it is in his glory that we get to do all things. We ask this, uh, in your grace. Amen.

Thank you.

So, an amazing day, and we'll see each other again tomorrow or later today.

Perfect. Thanks, everyone.