How Much Private Money is In Your Network - The Private Money Formula

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This is the no Closer show where you get the latest developments in distressed note investing and learn the secrets of how you can control millions of dollars worth of property. For panties on the dollar. Get educated and entertained by someone who has closed thousands of deals and lives to support you in achieving the same. Now here's your host CEO of We Close Nodes, Scott Carson.

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If you have ever wanted to dive into the sexy side of real estate and become a note investor and not just somebody that owner finances properties or buys and sells on terms, but somebody who's actually buying debt from lenders, mortgage bankers, hedge funds on distressed real estate on both residential and commercial properties. Now is the perfect time. And guess what? We have our upcoming three day workshop here in just a few days on July 25th, 26th and 27th. That's right, that's a Friday. Saturday, Sunday. You can join me live on Zoom and our Note Buying for Dummies workshop. We'll go through the Fs of how to find fund and flip non performing notes at huge discounts without having to use your own money. And we'll show you all the different ways you can make money being a note investor. Day one's all about how we find these deals from banks, hedge funds and how you can automate the process of connecting with these people and get tapes and listen to you over and over again. Day two is all about raising capital and marketing. We'll show you how to tap into thousands of IRA investors who are looking for deals to fund and how to communicate and how to contact them and get them to fund your deals. And day three is all about the flip the exit strategies putting deals together. We'll mix in due diligence. We'll mix in the marketing side along with the structure side. So much stuff in three days live on Zoom with yours truly, the note guy, Scott Carson. Make sure you get signed up by going to Note buying for dummies.com or click on the three day workshop tab on our workshop.

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Foreign Good morning, good afternoon and good evening everybody. Welcome to this episode of the Note Clothes Show. As always, Scott Carson. Excited to be with you today. Today's episode I'm going to talk about something that I call the private money formula. Now I did a YouTube short video on this last week and I got quite a bit of responses from people and I wanted this to expand on that a little bit. Now what? First of all, what is the private money formula. And this is a formula that I came up with based on marketing, Based on over 20 years as a real estate investor and how we have raised capital and a lot of marketing. I mean I've taken a lot of marketing classes, been coached by a lot of great people. Private raising, private capital, that's what it really comes down to, more so than anything else is marketing. You got to get the word out on what you're doing. You can't be a secret agent, man or woman, and expect to raise capital if you're not sharing what you're doing with your audience. So the first thing you have to look at when you're looking at raising private capital is look at your audience, look at your network. Now this is usually the number one thing that stops people from doing any type of raising capital. I mean we've all, everybody, when you get into life, many of us let the amount of money in our bank accounts, or lack of money thereof, stop us from taking action, stop us from making offers because we like, hey, we don't have 50 grand, we don't have 100 grand, so I'm not going any offers. So much of real estate investing is financed with opium, other people's money. Bank financing, such a small version is financed with somebody's own cash. Now you've, you've seen the numbers out there. Oh yeah, a lot of cash buyers out there. Yeah, there are a lot of cash buyers out there, but many of them are using other people's money, either accredited or non accredited investors to fund those deals. And what are they doing? They're relying on their network. If you look at any real estate investing club, you look at any fund that's raising capital or hard money, they're constantly marketing to their network, hosting fundraisers and any type of thing to raise capital, pay for things. I mean, look at politics. You pay ten thousand dollar seat for a crappy chicken and mashed potato dinner. That's raising private capital from getting the word out. The great thing about what we have, and by we, I'm talking to anybody listening to this right now, listening or watching this episode, you have some amazing tools at your disposal, at your fingertips to get the word out what you're doing. So the private money formula, it really breaks down in very simple math. Okay? First you have to realize that everybody's worth at least $1,000 in your network. Everybody you know is worth at least $1,000 in private money. Now the older your audiences, the older your network is, that number goes up. So you've Heard people say that, hey, show me the five people that you hang around the most and I'll show you that you're an average of the five, you hang out the most. Okay? That's very normal. If you're a younger cat out there, you know, your 20, 30, I have a lot of money saved. I get it, understand it. So your network may not have a lot of funds, but the very simplest thing is that some people are going to have something. It's going to average out 10 people. Nine people may not have much, but one person might have 10. So that averages out to a thousand. But you also realize that everybody is a referral network for you. Word of mouth. If you share what you're doing with everybody, everybody becomes a bird dog. Everybody has, oh, wait, you need to speak, you need to talk to my friend. All your real estate, you need to talk to my friend Scott, you need to talk to my friend Stephanie. I know that they're a real estate investor or Laura, Steve, whatever. And that's the idea of consistent in your marketing and getting the word out so that you want people understand what you're doing. That way they can refer you introduced to people. Okay, I got a 401k or hey, I'm thinking about investing. I don't know who to talk to, who can I talk to? And that's where the introductions come in. So the formula is very, very simple. First thing you need to do is the number one asset is any type of database that you have. And by database we're talking honestly, you take business cards, you got stack of business cards, that's a network, okay? But any like email list, anybody you have in a mailchimp list, or Constant Contact or infusionsoft or keep or anything like that, that's gonna be your most valuable asset is a database. Now if you got a bunch of people on a spreadsheet, that's great. That's what I started off with. Anybody I'd meet out in a networking group, I go home, put their contact information on a spreadsheet so I could send them an email. Okay, gotta have that somewhere. So taking it off the business cards or out of your phone is the first thing that you need to do. So whatever that. And then we'll just say how many people you have a current email for. So that's the first list. Now second list is then to look at your social network. You'll get your LinkedIn connections, look at your Facebook connections, look at your Instagram followers, look at your TikTok followers, look at Your Pinterest followers. There's a different formula that goes along with that. But you still want to basically say, okay, how many people do have a warm market or database of contacts is one list. And then your social media contacts, networks, followers, that's a second list. So it's two different lists now. They're treated a little bit differently. Okay, but everybody in that list is worth a thousand bucks. Every contact you have, every email you have is worth a thousand bucks. Okay? But the conversion ratio is different. So let me, let me give you. So let's say you have 500 people in an email list, okay? Networks from networking, you know, conferences, your rea club, whatever. You have 500 people. Well, 500 people times a thousand dollars. That means technically you've got about a half a million dollars on the low side in your database. Now the thing to look at is if you send an email out to that database, you're not going to have 100 of your audience open your emails. The average open rate for emails is 20%. So really you don't have half a million. You may have a half a million if you stick with it. But realistically, you have 20% of that, which is 100 grand. Okay? And to tap into that 100 grand, you have to follow the process of connecting with people, of emailing out at least five times. And that's what a lot. This is the, that's the big first, big hurdle that a lot of people have is they don't want to send an email out. They want to send one email blast out and they want everybody reach that. Well, they may not have a lot of people reaching me have, well, hey, I got 10 grand or 20 grand. We can't do a lot with 10 or 20 grand. But it's the first step because you're only going to have the first email you send out. Based on marketing statistics, you have about a 20% open rate, which is normal in real estate. Some will be higher, me lesser. Just depends. But down 20% is 2%. So if you send an email out and get 20%, that means 100, 100 grand. It means you may only have 2% collected from there, which would be 2 grand. Second email you send would be 3%. That's 5 grand total. Third would be 5% conversion ratio. So you're up to 10. Fourth goes a little bit higher up there from there. So this is why I tell people, if you start sending an email out to your database, you got to give it time for your fifth and sixth email to hit about talk about we're doing, not asking them, hey, can you fund my deal? You've got to provide enough content and get people interested in following what you're doing. Talk about case studies, talk about what you're focused on. Talk about a current deal you're marketing on or working on. Those are things that gets people excited. Opens your open rate dramatically. If you want to get another 5% open or you send one email out, you send that same email out two days later to boost your open rates by another 5 to 10%. So instead of going to 20, you may go to 30 the first time you send something out. So instead of 100 grand, it's 150 grand. That increases your number. Okay, so hopefully that makes a little bit of sense. Now let's talk about the other list. Your social media, your networking through Instagram, Twitter, your followers on LinkedIn, you have to. And every social media network's a little bit different, right? You look at, if you're not paying, you know, running ads, which I don't necessarily recommend, because it can be five, ten, you know, bucks to get a lead, depending what you're doing. Take 1% of your network. 1%. Okay? So if you have a thousand followers on LinkedIn, one person is 10 people. You got a thousand people on Facebook, 1% of that is 10 people. So that's why you have to post on a regular basis, so that you grow your network and you hit your followers. Your friends will follow you, they'll start seeing what you're doing. It's harder on the social media side. Unless you're paying for it, you're running ads. It's a different story posting a Twitter because not everybody is sitting around their computer waiting for, you know, Laura to send an email or waiting for Steve to send an email or post a photo. About to do. You got to do it because it's the basis morning, noon, evening, and do it consistently. Okay? So social media has a much lower conversion rate, just a lower viewership rate. First and foremost out there to do it. Now, what you, this is why you want to kind of, as we say, the content spider or the marketing octagon is why you want to share something and share it regularly. Because if you post to Instagram, some people will see it there. That won't see on a Facebook because not everybody's on Facebook anymore. You post a Twitter, some people see it there that they won't see it elsewhere. You post to LinkedIn, some people will see that they don't see. So it's important after you Post something to go back and see. Okay, how many people viewed that video, viewed that post. So it starts to give you an idea how many actual eyes are viewing your stuff. Because there's nothing more frustrating than posting something and not getting any type of feedback, not seeing anybody liking it, not seeing me posting. And that's what you have to look into your marketing. This is, this is why we spend so much time on the marketing side of, of teaching people. You have to get the Emeril Lagasse, the bamboo out, talk about case studies, talk about a new deal, talk about potential returns, talk about what you're working on. Show pictures of the property, pictures of the asset. This gets people interested in the consistency basis of your emails. Not once a day, but once a week will get people interested in what you're doing. And then like I said, people like often. Well, what do I say? I can't say anything daily. Well, post an article, post, pull something from USA Today or something just to keep that conversation going. Because as you post on a regular basis, on a daily basis of some sort, different people will see it which grows your expansion grow from 1% to 2% to 3% to 5% to 10% of people in your network seeing some things because you may be connected with somebody on three different platforms, but they may only see it on one platform. So if we go back to our numbers, all right, yes, you may have if, you know, like I said, 500 people on an email list, at a thousand, that's half a million. Let's just say you've got, you know, total of a thousand people across all your other platforms. LinkedIn, which is one of the best ways to grow because it's a higher viewership rate. Facebook, Instagram, those are more like, you know, 1%. Your YouTube video is about 1%. If you post something on YouTube, podcasting is get a higher. You can't tell exactly how many subscribers you have, but if you get subscribers, you can see the average number of downloads per episode or take your total number of downloads and divide that by the number of episodes. That'll give you a rough average of how many subscribers you have. And you actually on a podcast you can take 86% of your subscribers as listening to your show. So that's a higher number than average. Like if I have like, I average roughly about a thousand downloads per episode. Okay, well at 86 listen through rate, that's 860 people listening to an episode sometime in the first 90 days. Most of the time that's a pretty good hit. Rate if I'm doing any type of promotion for a deal or case there, stuff like that. The same thing on YouTube videos. It's about 11%. So I have 7,000 plus subscribers. Just understanding 100 what 11% of that is. I know I'm going to see somewhere around 780 views on something that's important if I promote it properly on an average basis. Okay. It just takes consistency and getting the stuff out there. So going back to your list, if you just have an email list, 500 people times a thousand bucks, that's 500,000. The 20 open ratio on average means you're gonna access about a hundred grand and it's gonna take you five emails, five to six emails to really harvest that. A hundred grand to get going. So don't give up after the first meal or second or third. Just realize, okay, it's going to take me at least a good six to eight weeks of sending an email once a week to raise 100 to 200 grand to get that, you know, 300 grand to do it. But it gives you something to do and it's much easier. I mean, eight weeks is a lot faster than never trying two months. You know, that's why I say everybody's basically 90 days away from raising private capital now. This is also why we talk about going in and like pulling lists of IRA investors off the counties. That's a higher hit rate. Getting out, networking, growing your audience through BNI groups or networking groups. This is why it's so important to grow your audience. Regular network. Okay, going to social media, let's say three, three year on three platforms and you got a thousand across each one. That's 3,000 people. One percent out of 3,000 people is 30 people. That means you're potentially 3,000 contacts. That's times a thousand. That's 3 million, right? Well, if you take 1% of 3 million, that's not a lot. That's still 3,000, you know, $30,000 potentially on there. Is that right? Yeah, because 10 would be 300 grand. So it's a slower rate on your social media unless it's easier to post on there on a regular basis. Because you can reshare, but you gotta post consistently across something. This is also why it's good to tap into different Facebook groups that are investors or part of a different area. And you'll have a higher hit rate in groups than you would personally on different things. So that's why, hey, look at, look at your numbers, look at your network. And this is why you have to grow your network, connect with new people, get out, get new blood. Because people aren't always ready and willing to drop over and just hand you a check or a credit card or wire you funds. They've got to understand you, they've got to follow you, they got to see what you're doing consistently so they feel comfortable. Here's the thing, if you stop doing this, like I had one fund reach out to me, this guy, smart guy here in Austin, Texas, and I was like, how often, you know, he reached out to me for some help in raising capital. I go, how often are you emailing your list? He goes, oh, just once a month. I'm like, once a month. I go, what's your opener? Oh, about 20. So that's a good open rate. Imagine if you sent once a week, like once a week. That's too much like, no, it's not. Because once a month. And I asked like, yes, did you. Do you send a follow up email to those that didn't open the same email, like two days later? Those. He goes, no, we don't do that. Like, you're basically shooting like a flare gun once a month. You're shooting a flare gun out and you're hoping your audience sees it. You want as many flares. If you're on a desert island, you know, you got to realize, ladies, and you're on a desert island out there, every time you send a marketing piece, it's like a flare gun to be rescued. If you're not shooting that flare gun off on a regular basis, how do you expect to be rescued? Or how do you expect people to show up with a boatload of money to rescue your deserted ass, to fund your fun, fund your deal, okay? And this guy just wanted to argue with me. I was like, listen, no offense, man, your people that are subscribed to you, they want to hear from you, they want to see what you're doing. They want to see the case studies, the deals that you're working on, the past deals or the current deals. They want to see you taking action. People want to work with people that are taking action and making things happen. If you're not sharing themselves on a regular basis, they don't even think you're around. They would rather deal with somebody who's going to market to them. And email is such a cheap way. The market is also the largest ROI when it comes to marketing. You still get a 40 to 50 response if 40 to 50 times. Sorry, not 50. 40 to 50 times your dollar spent. So for every dollar. You spend email, you should recuperate 40 to 50 times. That's a 400, you know, 4,000 to 50,000 return. And we do that. We see that with our email. Because when we send an email blast out, it's getting people to opt into our webinars. It's people signing up for stuff. People take advantage of our training or people looking at deals, people watching videos or listening to podcasts. So share what you've got going. And that's actually one thing we need to do more. We send usually at least a weekly email out about note night in America or something special that's going on. You know, if you send an email out with something valuable on a daily basis, something valuable, not just spam, spam, spam, but something valuable, you'll have a stronger list. And some of the best people that I've learned from that have these huge databases. They're sending out regular emails with content. It may not be their own content. Maybe sharing an article or a news article or doing a short little, you know, paragraph about a specific article, what it means to them. But it adds value. And those are the emails that get open versus going to spam. It's also the emails that they value the most because there's value to them. There's content that they find valuable in their business. And you want to be valuable to your database when it comes to funding, when it comes to being the person that they think about when it comes to investing. So that's the private money formula. Take those numbers added up and the more that you market, the more that you post your regulars up, the more the email, the higher your conversion ratio is. The faster conversion is if you're doing on at least a weekly basis to your audience. So that's the private money formula. It's one of the things that we do. When I'm sitting down with somebody on a coaching, like, let's take a look at your network. And that's what I do. I'm literally going to, okay, how's this? Is this gonna be difficult for them? Raise capital? You know, do they have a network? And if you don't have a network, it's a little harder to do. That's why we often say, hey, you gotta start marketing out to people. And we see this happen time and time again. If they don't embrace the fact that they have to send an email blast out to their database on regular base or the heat haul, I'm like, you can bang your head and wish in one hand, or you can actually do this and see it happen. And it's all about consistency and getting the word out on a regular basis. And that's how you put the, the private money formula to work for you to find success. So go out, take some action, everybody, and we hope we'll see at the top by.