Hard Money Real Estate Investment Loans | Toby Potter #social333podcast #28

Hey everyone, welcome to the Social 333 podcast. I'm your host, Chris Bentley. Today, my guest, Toby Potter. Toby. Hey buddy, welcome to the show.

Thank you so much, man.

Awesome. Tell the audience a little bit about yourself and a little bit of your journey.

Sure, sure, sure. But before we do that, Chris, I'd love to say thank you. It's an honor to be here. I've kind of followed you through your podcast. What you're doing for the community is awesome. It's an honor to be here to, to kind of help expand that and grow and help you guys reach other people. So thank you so much for having me here on the show. Absolutely.

Appreciate you coming on.

So as you said, Toby Potter, Global Integrity Finance. So we are a direct hard money lender, been in the real estate industry for about 30 years, Chris, and have gone through everything you can imagine, whether it be the real estate crash in 2008 that devastated a lot of people. Thought we'd jump right back in around 2015 and then had the big COVID debacle in 2020, bounced out of that and then jumped right into the high interest rates and the high inflation of real estate today. So our industry is at a tremendous amount of turbulence and why we've taken these 30 years of experience and decided to start coaching and mentoring, helping people get into real estate investing. Because even though it's in these disruptive times, there's so much value, so much support, and as an asset to invest into, it's the only thing that's going to stabilize and continue to appreciate.

Oh yeah, I agree. I survived barely, um, that 2008 crash, 2009. I think I had a job, I talked about on a couple different podcasts, but I had to get a job at the government. I was a contractor for DEA, and it was definitely an interesting time. I think a lot of people just don't remember that time, or they weren't really— they were too young to remember. But banks weren't lending. No, nobody had jobs. Um, I worked Man, I really hate to say it, but I was working at a bar. I was broke and I was working at a bar and I would do loan applications during the day. Back then it was before you could do, you had licenses in both.

Right.

I would do loan applications during the day and then go work at night and I was bussing tables and I was making like, I don't know, $40.

Yeah.

And I would fill up ketchup bottles at the end of the night and I'd make an extra $5 because the waitresses wouldn't want to do it.

So they were tipping you to do that?

Extra $5. And back then I was like, oh man, like, this is great. I got— I made like $45 today. But yet, like, yeah, you know, months ago I was making like $50,000. So easily. It was just— it was definitely hard on not only my ego, but the fact that, like, my finances— I had to move back home. It was just a bad, bad time. And those people that don't remember it, it's not anywhere near where it is right now. People are still lending money, people are still buying homes, and not at the same rate, but it's just Totally different times.

It was, it was probably one of the biggest impacts our nation ever saw in the real estate factor because it controlled so much other of the infrastructure of economic society. And so when you had all these real estate foreclosures, you had this huge supply of real estate that was overvalued, overleveraged. And this is where hard money lending really had its first conception was around 2010 because like you said, banks weren't lending anymore, right? They'd all pulled back even though So if you watch the movie The Big Short, you know, they really brought in the big 10 banks and said, hey, we're going to— the government's going to inject billions of dollars. We need you to deploy that to keep the society stimulated. And they're like, hell no, we're going to take the money, but we're going to hold onto it. And if you watch it, that's what really happened.

Yeah.

We had over 252 of our banks that we worked with, uh, go bankrupt during that time. And so, but then hard money lending came out and it's been a phenomenal opportunity for real estate investors. But what we see, Chris, is that demand, and there's a huge demand for it. We've got a big shortage today. And so if you want to get into real estate investing, there's not a better time for that.

I agree. And there's a lot of deals to be had, especially with sellers that need to move. Yes, I deal with a lot of that where, hey, look, like, you know, just give me the face value of the home, the tax rate, let's just roll. Yeah, I need the money to go move into different investments. Um, another point of that 2009 and 2008 crash was like there was whole blocks for sale. It was all boarded up. Like, I'd go out to Baltimore to sell life insurance because it was one of my other gigs. I mean, I was just trying to sell something to make some money, right?

Yeah.

And I went out there and literally it would be kids playing in the street, in the trash, and it would be boarded up, the whole block just boarded up. And, uh, it was pretty wild. I had a guy in the office, I was an investor, and he would fly out to like Ohio or on one of these different states that, um, you know, just had a lot of like just blocks for sale and he would just buy the whole block.

Detroit was that way. Still is. Detroit was that way. One of the fastest things when, when, uh, the auto dealership closed out of Detroit and all those unemployment took off and then you had that debacle, you could buy 2 or 3 city blocks at one time, but then, you know, there's nothing you could do with it because the crime rate was so high.

Right.

So who's going to move in there even though you buy them for 2 cents on the dollar? It just wasn't a good valuation.

And the same thing with Baltimore.

Yep.

Yep. Talk a little bit about your Unshakeable and the stuff that you went through. Yeah, a little bit about that.

Yep. So that is our new platform, The Unshakeable Self. It's a, it's a program, it's a book that I wrote. It's on Amazon. And it really, because of the turbulent times that we're in in real estate and to be able to coach somebody and to really get them to understand what the, the, the task is at hand to, to buy into real estate, to, to fix it, to flip it, to retail it, you really gotta back that bus up and have a, a solid core foundation spiritually, mentally, physically. And so when I go back and look at all the things that I went through, whether it be the 2008, whether it be COVID, whether it be the high inflations of interest today, all this turbulence, we, we got hacked. Half a million dollars was taken outta our accounts overnight one time. Wow. And, and there's so many things that most people just throw in the towel and say, I'm done. It's just not for me. But we've always overcame it. We've always adjusted to it. And I believe that the reason why we persevere and why everybody that you've talked to on your podcast persevered and have success like yourself was because they were strong mentally, spiritually, and physically. They didn't let the stress of that beat them down. They didn't crawl in the corner and suck their thumb. They were able to overcome that. First, mentally, knowing that they had confidence and belief in themselves. Secondly, spiritually, they had— they knew that there was a bigger, higher authority that controlled everything in their life, that they were destined for some greatness, and then physically to be able to physically overcome and adapt and do that. And we all know, you work out, I work out, if you, if you physically work out, you always feel better. Just the endorphins and that energy just gets going. But when you're spiritually and mentally and physically all in tune, then you're ready to take on the world. So The Unshakeable Self is a book and a course that we've created to help really start the foundation of a coaching training for somebody wanting to get into real estate. And the unique thing, Chris, that everybody you've talked to, everybody I've talked to, nobody said, hey, I just want to get into real estate. I'm just, you know, I'm getting out of high school. The first thing I want to do is I'm become a real estate investor. Unless they had somebody in their past that showed them that success. Most people today in the last 10, 15 years that are getting— have gotten into real estate investing. Simply because they were sick of their financial situation. They were tired of waiting tables at the bar, busing tables. You didn't get to wait, you were busing tables. They got tired of that. They got tired of filling up ketchup bottles. They wanted a better financial future and their 401, their retirement plan at their job wasn't cutting it. And so they said, you know what, this real estate deal may be the way. And 2015, '16, '17, '18, was remarkable times. Don't get me wrong. Rates were low, valuations were good. HGTV made us wealthy because every fix and flip show was on TV and it sold and it sold. Yeah. And so, yeah, I could go in there, I could buy it, I can flip it, I can sell it. I was making money. Oh my gosh, this is great. Yeah, yeah, yeah. Multiple offers, standing room only. So let me get into this deal. And it made us wealthy as lenders. But today's times aren't those same things. Higher interest rates, over, over-saturated of investors. So we built this coaching program to take people from beginning to end. But first and foremost, we need to make sure that you are emotionally, physically, spiritually sound because it's not easy. As everybody knows, real estate, anything that you do that's worthwhile is not easy, but real estate investing is tough and you got to be able to go through the, the school of hard knocks and be prepared for that. And so that's what that's all about.

Talking about school, I know that you said like 85% in real estate is about like getting the right deal. I, I think it's more like 100%, right? Uh, yes.

Um, I tried to be nice.

I tried to give him some, some, something to look forward to there. I get it. Uh, I run into a lot of people that go to these like weekend seminars. Yes. And they get taught by somebody.

Yes.

And some of 'em are good. They actually learn something. And some people, you know, they want to do like these seller finance deals and these other deals because they don't have the money to front up.

Yep.

Um, what are you— I know you've walked away from some deals. Like, I know I've walked away with plenty of deals, and like, some of them I wish I would have like done it right, kept them. Yeah, yeah, right. But like, I think Grant Cardone is a really good example. Like, he talks about how he wasn't getting into multifamily for a long time. He always wanted to do it, and then he like, you know, he looked and looked and looked for a long time. He walked away from a lot of deals. Tell me about like kind of the mindset that you have and like deals and like some of the ones that like maybe you wish you would have pulled the trigger on or something that you are glad you didn't pull the trigger on. Because I know I've— I'm pretty glad I didn't pull some triggers on some stuff, um, because I was an investor and tenants and all kinds. I know like everything except I didn't do multifamily. It's something that maybe I'll do, explore in the future. But talk a little bit about that.

So you're right, 85— and we talked about this in our coaching classes— 85% of the time of an investor is looking for the right deal. And here's what we need to clarify, Chris, is that there's so many deals out there. You go to realtor.com, you go to Zillow, you see listings in every neighborhood at any measurable amount, but that doesn't mean they're good deals. That doesn't mean they're the right deal. And so we teach how to look at a deal, how to evaluate it, because you will walk away from more deals than you do. We, in the last 10 years, have underwritten as a lender over 6,000 deals. Wow. We've only funded a little over 3,782 deals, meaning we've said a lot of nos to a lot of people. But those deals have to make sense. And for a real estate investor, and this is something else we teach, and I'm sure you went through it, Grant Cardone talks about it, Brad Sumrock talks about it, everybody talks about it. But when you first get into real estate investing, the hardest thing you're going to have to overcome is finding the right deal and all the deals that you walk away from. But walking away is more times better than to take a bad deal and lose it. Because for a real estate investor, the first deal they do, we tell them, if you can break even on that deal, you're money ahead. You're money ahead. I would say probably out of, out of the 7,000 clients that we have, almost every one of them lost money on their first deal. Almost every one of them, and they'll tell you, I lost money. But what they did gain was life experience and education. So if you get with a good partner, an educated, experienced partner or a coach or a program like ours, and you still break even, you're money ahead and you've got that experience and that education to grow and build and do the next ones and start accumulating that profitability. Every deal must make sense. You must have everything lined up to ensure success and profitability, and even then you still may only break even or lose.

I've seen, uh, I don't know if you follow a lot of investors on like Shorts and Instagram and stuff like that. I don't know the Asian guy's name, he's an older guy, he speaks a lot.

Um, Robert—

I forgot his name.

Robert Kiyosaki? No, no, no, no, you know him.

Yeah, uh, he's an investor and he talks about like all of his investor deals and stuff like that. I wish I had his name off the top of my head, but he shows like a lot of the stuff that he made mistakes on, which is really, really cool. And I think it's a really good benefit for a lot of people. And one of them was we don't have basements here in Dallas, right? But he went and bought like a home that had a basement in it, and then the tenants were there and all that stuff. And he had carpet, put in new carpet in the basement, and the basement flooded because it rained and he didn't know. But like, you know, I know just because I used to live on the East Coast, but they have cinder block walls and the water comes in and then it seeps through the cinder block and then you can't stop it. It's just coming in. And yeah, like he said, he had $40,000 in damage.

Ouch.

He's got tenants and like all that stuff. So he has to deal with the tenants and all that good stuff. So that was something. And he was like, you know, I lost my, my rear end on this one. And he ended up— but he talks a lot about like different things, which I think could help a lot of people. Looking to invest. And I think some of the stuff out there is just like— not his stuff, but a lot of other stuff, it's just bad stuff.

A lot of hype, Chris. And that's what, you know, you mentioned about going to those 2-day events, going to these, uh, coaching seminars and all this stuff. And here's the thing that, that I caution everybody— I caution everybody that's listening, I caution everybody that I talk to— you want to, you want to get with somebody who's going to have skin in the game. And so when you go to these 2-day events or you go to these 3-day events or whatever it is, and they're selling you a, a coaching course, that's all they're doing. They're selling you a course. Now, here's what happens. You pay a lot of money, $10,000, $20,000, $30,000, $40,000, $60,000 for this course. And then they hope you succeed and they don't care that you don't. This is where Global Integrity Finance, The Unshakeable Self is different. And I'm not here to to just badmouth somebody else. But we not only will coach you, mentor you, but we'll fund it. And then if we need to, we'll partner. So if we're going to put our money into a project with you, then we're going to ensure success on that deal. And that's where you need to understand that when you're finding or looking for the right program, the right product, you need to know, does that person who's pushing that deal, do they have skin in the game? 90% of those courses out there are just a course. They haven't really walked the walk. They're talking a little bit of the talk, but they're not making sure that you succeed. They're giving you a course, they're selling you an online course, or they're selling you a 2-day event and then turning you loose. And I'm telling you, it ain't possible. It's not possible to have success from that. You need a partner, you need a mentor, you need a coach, and you need somebody who has just as much to gain is you have to lose. And that's what's so important about those events that you were talking about.

Tell me, I'll give you a bad one first and then a good one. All right. Tell me like a bad story. Like you got into a deal and it was awful. And then tell me a good one.

All right. So we did a deal. So when we first started in 2015, I made it, I made a deal that I'd only lend money in a 90-mile radius. Our office is in McKinney. And so we'd only lend money in a 90-mile radius so that I could inspect every deal. Okay, so we're doing this, we're trying to get our feet wet, but we are lending in a 90-mile radius. We did 100% purchase and 100% rehab. So you had no down payment, you just paid your closing costs. And yeah, and we'd done a couple of deals with this client and we kind of overextended with him on this deal down here in Midlothian. And so he— and this was out of my 90-mile radius, number one, but we had inspected it, we had looked at it, and we— this guy started defaulting, wasn't making his payments. And so I had a number one rule. Your payments are due on the 1st. On the 5th, I called you, and on the 11th, I filed for foreclosure. And in Texas, it's really easy to do. It's a 21-day notice. So on the 11th, I filed for foreclosure. So, so I called this guy, and it was a young lady who was up-and-coming, and she had a mentor, and we'd done a couple deals. She did— there were small deals, and they did really good. Well, then she did this one deal, and she got this other partner involved, and outside the 90-mile radius. I called her. She's like, yeah, yeah, yeah, they're going to get you the money. So this went on for about 30— and I liked her, so I kind of gave some latitude. Long story short, we go to file for foreclosure. I go down to the property. They had taken a 3-bedroom, 2-bath house, poured another slab of concrete beside it, had framed it up to a 2-story Um, was going to do a master bedroom and then 2 bedrooms above it, took all the brick off the existing house. Now, none of this was in the scope of work. None of this was in the scope of work. And so when we call her on this, it's like, oh yeah, they're going to do this. They're doing this cash out of pocket. I'm like, that's not allowed. We fund 100% of the, of the rehab to ensure the house gets done the way it needs to be done. This additional crap doesn't work with us. So we're foreclosing. We foreclosed, we sent our crew in. That was the one thing I liked is I could always send my crew in there to finish it, and I made more money when we sold it versus the interest. But so I sent my crew in there, we finished the house, we sell the house to a first-time home buyer, cut them a sweet deal because I need it out. Within a week we get a call and their master bedroom toilet starts backing up. Yeah, like, oh crap. So we send a plumber out there. Number one, it was first, I think the first call was we got that there was flooding in the yard. So we send the plumber out there.

I know where this is going.

Yeah. They forgot to tie the septic line into the aerobic system. Number one. Okay. We get that all tied in. Number two, we get a call. We now have the sewer backing up into the, to the shower. We go to find out what's going on. They forgot to tie in the old house to the new plumbing. So we had to go bust up concrete in their kitchen. Cut all that tile out, redo all the plumbing. This was a total nightmare. And I, I mean, I, I paid for 100% of it and, and apologized to the client forever, but we probably lost $30 grand on that deal. That was a bad deal. And so I, I was— so then from there on, we inspect— I mean, I literally gave nobody latitude. My eyes are on every house every time an inspection is requested. So that was a bad one. Yeah, we lost our shirts on. And it was one of those, you get comfortable with people and you just assume they're still being transparent be honest with you, in today's society, you, you inspect what you expect, 100%.

Also, that investor was probably looking at it like, okay, I did a couple deals, I made some money, right? Let me go for the home run.

That's right. And they— and here's what we see almost every time, Chris, especially back then, was they expanded too fast. They did a $20,000 rehab, they did a $30,000 rehab, they did a $35,000, and they're making $20,000, $30,000, $40,000 on each flip, and they're just churning and burning. Now we're going to go do a $200,000 rehab or a ground up or multifamily or multifamily, and they lose their shirts. Uh, so that's one that we, we, I will always use as a testimonial and a training course with. Um, a good one, a good one, a good one. I'll tell you a good one, good one we just did. So we had a deal come across our desk. It was a 109-unit senior living facility that had gone bankrupt up in Evansville, Indiana. Wow. Yeah. 109-unit. The guy had no clue what he's doing building and running a senior living facility. COVID happens, of course bankrupt him. Uh, he, he, they foreclose on the property, they shut off the utilities and then Evansville, Indiana, it gets cold and it had the fire suppression system running through it because it was a senior living facility. They forgot to shut the water off.

Freeze the pipes.

The pipes freeze, the pipes bust, and nobody finds out for days. So you got a 3-inch line just flooding this 4-story with a basement building. Anyway, they finally get it shut. Anyway, it comes across our desk early last year as a, hey, you know, the city wants something done with this property. So we looked at it online only and I bought that building. It's a 66,000-square-foot, 4-story with a basement. Building, I bought it for $750,000, went to the city and said, I'm buying— and this is downtown Evansville— said, I want to buy this building. I want to convert it to apartments. I'm a— and I kind of give my resume, but I need some money. I need some help from the city. So I know you guys do a lot of, uh, inner, inner district, uh, inner city, inner city grants and all that stuff. And they said, well, we don't have any money. We're out. Long story short, went to the mayor and said, hey, I need help. We're going to do this deal. This is what I'm going to do. I'm going to put about $4 million into it, but I need some money from you to do this. Calls him about 30 days later, says, hey, I've got $2.5 million I'll give you on a grant, but you better make this thing happen. We jumped in, got it done, flipped or converted that thing into a 60-unit apartment complex, and it is now rocking and rolling, worth about $10 million.

Wow, that's nice.

So these are the kind of deals that we work with, we do, and we, we teach and train on.

What do you think the biggest thing holding people back from getting into investing?

Taking the first step. Fear. Fear. Just like you said, you've done multiple flips, but you haven't got into multifamily, right? Everybody's scared because they don't want to— they don't know what they don't know. And that fear of failure is so profound. You know, I've got $200,000 and if I put it in this deal, I might make a million, but if I lose it all, I'm back to zero. And this is where, yeah, fear is valid. Fear is real. And we tell everybody, number one, and the other thing that everybody tells us, oh, I'm going to wait for rates to come down. I'm going to wait for valuations to come down. It's never going to happen. Now is the best time to get in real estate. If you go back, you just run that clock back and you tell me, was there any better time? No. Every time is the right time to get into real estate, whether it's single-family, multifamily, mixed-use, it doesn't matter. But the fear of, well, I'm going to wait because I don't know what I don't know. So we tell everybody, find you a mentor, find you a coach, find you a partner to remove that fear of failure, help you walk through this, get some success under your belt, and then you can walk that path all alone.

I agree. Well, fear holds a lot of people back. I think the, the issue is a lot of the bad stories.

There's a billion of them out there.

Yeah. I mean, I have some friends that decided that they were gonna flip and then they end up with a Lost their shirt.

Yeah.

And lost their shirt.

But I can go back to, if you go back to your friends, was this their first deal?

Right.

Inexperienced. So I tell everybody, you have to have 3 things to be successful in real estate investing. And this is the absolute solid guarantee. If you have these 3 things, you will always have success. Number 1, the right property. Okay. Number 2, capital. And number 3, knowledge. Now you can have one, the right property, no capital, no knowledge, find a partner, make that deal work. You can have capital, no property, no knowledge, find a partner, make that deal work. So, but those 3 things guarantee and ensure success in real estate investing. The right property, capital, knowledge.

Mm-hmm.

With that, there's not anybody that's ever failed.

Toby, if somebody wanted to come out and go to one of your seminars or get taught or learn anything about you, where would they go to go find you?

So the way they can find us is, uh, through Instagram, through TikTok and all that, @toby potter official. Uh, that is our handle there. You can go to globalintegrityfinance.com or you can email us info@globalintegrityfinance.com.

Awesome. Toby, thank you for being on the show.

Chris, it's an honor and a pleasure, buddy. I love what you're doing and I love to be here and we want to help you grow the community.

Awesome. Appreciate it. Thank you.

Thank you.