How to Raise Private Money The Right Way With Justin Morgan

Justin Morgan: [0:00] So when we were flipping high volume houses, I learned how to raise private money. Now I made the mistake of not hiring a coach or mentor on how to raise private money, which led to an SEC investigation.

Speaker 2: [0:14] Welcome to the collecting keys podcast. The show where you'll learn how to use real estate to create massive income, not just passive income. Real estate doesn't have to be a get rich slogan. Listen to the country's top real estate operators, and you'll have all the tools you need to replace your w two income and go beyond in under twelve months. Ready to take things to the next level? Let's jump in with our hosts, Mike DeHaan and Dan Austin for today's episode of the collecting keys podcast.

Mike DeHaan: [0:52] What's going on, guys? On today's episode, the collecting keys real estate investing podcast, we have Justin Morgan out of Saint George, Utah, and we are going to be talking about everything, private money, and how he has grown his, like, real estate business portfolio heavily utilizing social media and private money. And so we talk a lot about different strategies on that way and, like, how to actually get, you know, I guess credibility from investors and how you can structure deals and how you don't need to be finding people that have like hundreds of thousands of dollars to use them for private money, you can use, you know, smaller investments for people as well. You go into that a lot. But also too, I really enjoyed this conversation because we go into how he got into real estate wholesaling way back in like 2005, way before it was cool. Yeah.

Dan Austin: [1:40] He's a he's an OG, and I think that's where it speaks to a lot of his, like, I'm listening. We're bringing him into the Instant Investor Group because we really vibe with him, and his experience from starting in o five all the way till now, and he's getting into commercial real estate, and talking about using private money there even, like he has done most things under the sun and survived major ups and downs, and so I think what he has to say is extremely valuable, and we should all listen.

Mike DeHaan: [2:01] Absolutely. Yeah. You know, it's it's very uncommon for us to find people that were doing wholesaling, you know, earlier than like, 2013, you know, let alone way back before the crash. And some of the tactics that he gets into, they used to do are just like pretty wild, honestly, stuff that you could never do now. Not that they're like illegal. They're just like not even possible. So we go into that, we go into how he transferred over to start doing a commercial assets and like how the skill sets sort of one to the other that way and help them grow that side. Go into mentorship programs, go into private money. It's a great just all inclusive real estate investing conversation with a very, very good operator and there's a ton you can take away from. So anyways, guys, hope you enjoyed the show with him. Absolutely reach out to him at all of the links that he talks about at the end there. He'd be more than happy to chat with you. And as Dan said, we are planning to bring him into our instant investor coaching program as well to talk about some of his private money tactics with all of our members there. So tons of value if we're looking to bring him in front of our people, you know, obviously, we believe we say it. So anyways, enjoy the show.

Mike DeHaan: [3:04] Reach out to Justin, and we appreciate you all. See you. Alright, Justin Morgan out of St. George, Utah. It's been a good getting to know you over our little ten minute pre roll chat here, man. I'm super excited to dive into this conversation today. So I guess people that don't know you, let's start off with a little bit of a background about what exactly you do in the real estate space and the kind of stuff, know, we'll start at the beginning and then we'll work on the kind

Justin Morgan: [3:30] of stuff that you're doing right now. Start all the way back at the beginning, Yep.

Mike DeHaan: [3:34] Yeah, yeah, yeah. Where were you conceived,

Justin Morgan: [3:37] let's start there.

Dan Austin: [3:38] Yeah, let's start without story.

Justin Morgan: [3:40] Keep it to real estate, that's what we wanna, yeah, Yeah, so I did what most kids were kind of expected to do, coming out of the nineties, and that was go to college and get a degree. My dad was a commercial airline pilot, so that's what I went to school for. I graduated in 'five in commercial aviation, and at the same time, my wife was working a job, real estate market was just crazy booming in 'five, kind of like it has the last few years, and we were buying a small little condo, and that small little condo took about ninety days to build, and in that process, the sales guy came to me as I was just trying to figure out what to do with my career, and he's like, Hey, I got a buyer, I got a buyer that wants to take your position in this new build, in this new construction, and he'll pay you $21,000 Wow. And so, you know, 'five, kind of the Wild West of real estate with a lot looser rules back then, a light bulb went off in my head and said, Man, if I can make $20 just kind of inserting myself into these deals, there's something here, thinking I was real smart, right? So I got through the real estate, we just started doing, we call it flipping paper back then, you might call it wholesaling. But really it's just a creative angle of real estate from those days, and again I say Wild West because you can't do some of that stuff now, but it got me real interested in real estate in 'five as a young recent college grad.

Mike DeHaan: [5:05] That's awesome. So we very, very rarely have people that were wholesaling even earlier than like 2013. Like you find someone that's like, 2013, '14, they've been in this for ten years, that's like an OG in this business. Right?

Justin Morgan: [5:19] Not Not many.

Mike DeHaan: [5:20] So so I guess doing it in 2005, what did the business look like back then? You're saying it was Wild West style. I guess what are the main changes? How did you even generate leads? Because I can imagine there were like large mail houses, or you couldn't just go and get a bunch of Filipinos to cold call people for you.

Justin Morgan: [5:36] Yeah, yeah, so we did it, right? Because 'five, coming out of college, you know, mid twenties, I was just thinking that this is kind of what everybody was doing, and it was appreciation was the game, right? Or speculation and gambling, as you might wanna call it. I was taking new construction properties, going and putting a thousand, a 3,000, a $5,000 deposit down on a new build, and then in that construction process, I was assigning, there comes the term wholesaling, I was assigning my position in that contract and in that new build, so I was shortcutting someone else's journey into that new home. That could be a primary occupant, or that could be an investor that was also, you know, just playing the game of appreciation or looking, and so we didn't do a lot of direct to seller marketing until 2008, and from 'five to 'eight it was all just contract speculation and new construction. Interesting.

Mike DeHaan: [6:37] That's freaking wild. That's so different than

Justin Morgan: [6:40] You can't do it today, right? Well, I mean, you kinda can, but not really, so.

Dan Austin: [6:44] Yeah. I mean, you could have essentially, you could kinda do that in 2021 to 2022 new Because construction, people were their houses were selling for or appraising for 20% more than when they started the build process.

Mike DeHaan: [6:56] Yep. Well, mean, and and well, and some people, like, in order to do that, you kinda need to, buy it though. To be able to assign that to, like, a retail buyer, no way you could do that now.

Dan Austin: [7:05] Oh, just assign it? No. Probably not. Yeah.

Mike DeHaan: [7:08] But I mean, so like when we had Aaron Butch Steggi on, this probably a couple months ago. I don't know if you know him down in Austin. Yeah. Texas, Justin. But he, like, earlier in 2021, he was just buying whole new build subdivisions. Yeah. Right? Because then he would set his own comps, and then he would just resell everything for 15 to 20% higher. Yep. But you're doing it without ever actually having to close. Yeah. So that's pretty insane.

Justin Morgan: [7:31] And that's kind of the difference, right, is now there's more disclosures, gotta consider double closing, it's not really just an assignment, yeah, just some different rules. I mean really we needed to clean up the industry a little bit. Yeah, yeah. Some regulation helped, some didn't. But yeah, it all just speculation, appreciation, gambling.

Mike DeHaan: [7:51] Yeah, yeah, that's cool. So I guess, you started doing that in 2008, obviously 2008 happened, what did that do to your business, and I guess what sort of pivots did you start to make?

Justin Morgan: [8:02] Yeah, I'll give you one word. So 2008, I actually had just bought another condo next to one that I had seen a massive amount of appreciation, and home equity line of credit for a down payment on the next property, just right around the corner, thinking we were just gonna keep playing this $30.50000 a year appreciation game. A month later was the credit freeze, and subsequently rents began to just tank as more inventory came to the market, landlords were trying to figure out what to do with subdivisions of vacant homes, and so I ended up losing between 2009 and 2011, I lost 11 of 12 properties in short sale. Oh wow. I got my license as a real estate agent in 2009 at the recommendation of a broker that was helping me navigate the short sale game, so that I could be part of my 3% transaction fee in my own short sales created a little income for me.

Dan Austin: [9:08] Right.

Justin Morgan: [9:08] And I don't even know, you know, the legalities of that, you know, now thirteen, fourteen years later, but that's what she recommended, I got my license, and I transacted my own short sales. The twelfth property was a deed in lieu of foreclosure, so I escaped without any foreclosures on my record, and I learned a lot in that process, but yeah, that was the one word there for us, kaboom, in 'nine.

Dan Austin: [9:38] How did you, because most people, like not most, but a lot of people we talk to, they're like, yeah, just lost everything, like it went to zero, How were you able to navigate on 12 properties, an exit that didn't end in foreclosure?

Justin Morgan: [9:50] How was I able to navigate it? Who did you call?

Dan Austin: [9:53] Like who was the first person you called your bank?

Justin Morgan: [9:55] Well, the agent, gosh, I don't even know how I got introduced to this short sale agent, but I'm gonna say with pretty much a surety, I just started going behind on payments, and she reached out as a short sale specialist. And so we still have a relationship today, interestingly enough via the social media world. But yeah, so I think she did the first one or two like by herself, and then it was like, hey, we wanna do more of this, you know, the creative guy in me, the grit guy in me said, well, let me get involved, and really I didn't know what to do with my career at that point, so it became getting a real estate license, and here's the silver lining of that story, it wasn't until 2013 that I figured out, as a licensed agent, I could help other people navigate through the same nightmare that I navigated through, and from 13 to 17, I processed hundreds of short sales that really built back into our investment and fix and flip and a lot of other stuff, but sometimes when we're in the midst of A, adversity, that we don't realize what that's going to give us as opportunity later on, and it created a massive life changing opportunity for me later.

Mike DeHaan: [11:08] Yeah. Yeah. It's so interesting because we've had several people on this show who have had, I don't know, major hiccups during that period of time and, like, lost it all. And, you know, I I've heard this conversation starting to come up amongst, like, more and more, I would say, like, high profile investors. You know, I have Brandon Turner talk about this recently. I've heard Ken McElroy talk about this as well about like, what happens if stuff does turn over and all these, you know, big investors that are, you know, by all intents and purposes, good business people, they have done right by people, but they're just highly leveraged as different assets. What happens when they all start going bankrupt? Right. Right? Or, like, the banks start taking back all the properties just because all of a sudden everybody's underwater. And just like hearing you talk about it and hearing other people talk about it is a really big reminder that that can very legitimately happen. Right? And also too, it's something that people pretend like they are conservative and all these things, or they say they are. But, I mean, it can very seriously happen. And not only that, but you can get out of it, and you can still live to fight another day, it's just not gonna be very fun during the process.

Dan Austin: [12:17] Yeah, you just can't throw up your arms and quit. Mhmm.

Mike DeHaan: [12:20] Yeah, and it's just so interesting to just hear the different journeys, and you're saying it actually set you up to do even better.

Justin Morgan: [12:26] Didn't know it at the time, I mean at the time it was about like not filing bankruptcy and just throwing up my hands. Mean that's just never been an option. Know, somewhere, grew up with good parents and good mentors in my life, they taught me just to keep fighting, and so somewhere that's just part of who I am, luckily, because the fights turn into education, and that education has turned into dollars and really opportunity. And so whether you're doing a sport, a race, there's those times where you just have to dig deep and push through. I was talking to a climbing buddy this morning, climbing oftentimes free soloing and doing some of these big mountains, it's a matter of going up and then back down to go back up, because you misrouted. But in that process, learned things. And so real estate's no different, you know, you you wanna be the best version of yourself, the beauty is every day's different in the real estate space. Absolutely.

Dan Austin: [13:23] Well said. Very well That's great.

Mike DeHaan: [13:25] Yeah. So so awesome. So you get into 2013, you know, you start making all this money while helping other people with short sales. Obviously, we're ten years further along than that now, so I guess what did that lead you to for the rest of your business to, you know, get where you are right now?

Justin Morgan: [13:41] Yeah, so we had a journey in the fix and flip game, part of processing those short sales. Interestingly enough, short sales going across a title company's table led me to my first really private money and partner to get back into investing, and instead of, I don't even know if you wanna call speculating investing like we did from 'five to 'eight, But it was buying some of these big properties, and he saw what we were negotiating, he wanted to be part of it, he saw the value I was bringing, and he made the offer to partner up with me and bring money to the table. So that got me back into the investment game, or really kind of the beginning of buying it at discounts, which then as the distressed properties went away, 2017, 2018, we started going real heavy direct to seller, and about two years from 'seventeen to the end of 'eighteen, that's a tough business of running a marketing company, running a flipping company, doing some wholesaling, we got to the point where we did 48 deals in 2018, but at the end of the day, my net was pretty ugly, like I wasn't making much more money, and yet we were doing a lot more volume, and I looked, I looked ahead, I said, I'm approaching my 40s, like do I wanna be flipping houses at volume in my 40s, in my 50s?

Justin Morgan: [15:08] And I decided no, I didn't, I needed to figure out the cash flow game, and I needed to look ahead at where guys were, and it was really in commercial real estate,

Mike DeHaan: [15:17] and so

Justin Morgan: [15:17] that was my opening into the commercial real estate space that has accelerated through some of the skills that I learned in the residential to compound and to cash flow commercial real estate, which has led us to today.

Dan Austin: [15:31] I wanna go back for a second, just to clarify some stuff. So when you started getting into the short sale game, it reminds me of an episode we had at Bobby Vieira was he's like a short sale expert that we had on the show. I figured this is where you were gonna go to where you pivoted. You were finding these these short sale opportunities as an agent. So then, two questions. How are you finding these? Tactics were you doing to find short sale opportunities? Then two, how are you actually able to negotiate that? Because it's not just selling the house for a price, you have to get the bank to accept a short sale, so I'd love to just have a quick breakdown on that.

Justin Morgan: [16:07] How we're finding the deals and how do we work with the banks, is that

Dan Austin: [16:10] Yep. Okay. Yep, exactly.

Justin Morgan: [16:12] Yeah, so how we found the deals, I was doing everything I could, 2011, 2012, just to do deals as an agent and just stay alive. Things were pretty tough, they were pretty bleak at times, and pretty behind at times. One of my neighbors was running a radio station, and he just kinda threw the idea, and he's like, Look, I've never had a real estate person on the radio, yeah, I'm literally talking about radio, like this is going back, back twelve years, but he's like, Let's get a, and really radio felt like it was dying back then, because we still had a lot of streaming going on, He's like, Let's get a real estate guy. And I'd been, I kind of survived 'nine amongst my own short sales, but I started doing creative financing, seller financing, just take contract for deeds and lease options, and I'd been to some seminars, and I figured, well, I could keep doing that in 2011, 2012, so we started running radio ads in that space, and got a ton of buyers, but we couldn't find enough inventory because things were going down so fast and upside down. That then led to, well, what's your story, Justin? What can you really help people with? And so we started running radio ads specific to the short sale game, and I've got this deep scratchy voice that's somewhat recognizable at a town of like 70,000 people, and that resonated with sellers really, really deeply via the radio. So I'm on, you know, I'm running these ads, I'm on projects, meeting with sellers or doing the fix and flip, being a contractor, if you will, and we had an 80% closing ratio over the phone with these short sellers. Wow. It's crazy what a medium of marketing can do to build trust with somebody, like it's scary, scary, crazy, I can see where people that can create a cult or a following can really get slippery slope fast, and people were sending me all their personal information and everything without ever even meeting them, and I had one office gal that I had hired, and by the time that we were into this thirteen, fourteen, 15, there started to be short sale processing software and systems to communicate with the banks, and so she was my girl, and I would get the files, I would talk with the sellers and figure out what the game plan was, and then we were giving the file to her, and she was just doing the daily follow-up, the daily processing.

Justin Morgan: [18:38] You know, the good news is, as an investor with an investor mindset, I was able to work with investors, so we didn't have to deal real heavy with all the showings and then all the cancellations, because we could work with investors that had cash, would close, and that kind of streamlined the process quite a bit, just because we had the right system and process in place to make it easy for the seller, and to make it easy for our buyers, so that ultimately, we didn't end up in foreclosure, we actually got the approval.

Mike DeHaan: [19:08] Yeah, that's interesting, that makes sense. Something that Yep. You don't hear a ton about these days, because there isn't a whole lot of people that are underwater on their houses.

Justin Morgan: [19:16] It's been six years, right? Five, six years, easy.

Mike DeHaan: [19:18] Yeah. Yeah, no, that's cool. So let's talk about your transition into commercial. So, you obviously, you know, made good bit of money, would imagine, even though your net wasn't awesome doing the wholesale business that you said. But switching over to the commercial game is very different. Right? Like, the expectation of whatever transactions you're doing drops tremendously. Like, you know, you're be doing maybe one or two a year as opposed to, you know, five a month. Right? Much higher price points, much for ways to analyze things. I guess what did that transition look like for you? Did you have a mentor? Did you just like start like making offers on commercial properties and trying to figure it out?

Justin Morgan: [19:57] Yeah, yeah, great, great questions. 100% had a mentor, because I'd learned a few years earlier that getting a mentor was what allowed us to scale, and it allowed me to really see the path before me. Not rocket science, just follow success leaves clues, just follow what someone else has done, and put your twist on it if you need to, put your style, be true to yourself, but it's really a simple process of seeing what happens for somebody else, and you can go do the same. Sometimes better, sometimes a little worse, but you're gonna do it a whole lot better than on your own. So I joined up a few masterminds in the single family space, and that's the very first thing I did when I wanted to get into commercial real estate is joined a high ticket mastermind. That accelerated things real quick.

Dan Austin: [20:44] That's awesome. What about, like, maybe, like, the top one or two things from you joining those masterminds that you would attribute to that acceleration? Because that's what we we get with a lot of people talking, you know, maybe dipping one foot in, one foot out, like, sure what to do. Should I pay for it? Is it actually worth the money, honestly?

Justin Morgan: [21:00] Yeah, I don't know that all of them are worth the money, but I would say for me, they've always all been worth the money, I've chosen to learn something from them, right? Even spending $30 for a mastermind, I mean, that's one fix and flip deal done right, profiting, I mean, it's such a huge investment, but with where we can go in real estate from learning, it's a small investment. And you can try to figure it out on your own, you can go to college and do this thing for four years, or you can hire a mentor and get the shortcuts, but the second part of your question was, you know, what did I gain from this? And it's the ability to take action and know that somebody else that's been there before is in your corner be able So to fall back it's the curation of the network that can almost be more valuable than the talking head at the front of the room, because now I can go fail forward, and I'm really gonna minimize my failure because somebody else has already been where I'm at, and that's being willing to partner, being willing to ask questions, being willing to bring them into the deal, but a lot of these masterminds with the right people are willing to share even without partnering on it or whatever, so I was able to just do what I do, generate leads, fail forward, and bring people into the process.

Justin Morgan: [22:20] Take my assets and amplify them.

Dan Austin: [22:22] That's a great perspective, and I do think that most people that fail if they join a mastermind or have a bad taste in their mouth, it's because they didn't choose to be successful. Like you just said it, you could pay $30,000 for a really high ticket mastermind, that's just one flip. So, if you learn how to flip a house really fast, then you could go do it, pay that back, and now you have a skill set to make $30,000 every single time,

Justin Morgan: [22:46] and you're

Dan Austin: [22:46] right, you're limiting the bottom of how far you can fall, because you have support network of people that can help you through those failures, which is like the biggest key.

Justin Morgan: [22:54] I love that, limiting how far you can fall. I love that, yeah. I honestly think one of

Mike DeHaan: [22:59] the challenges with that whole sort of space right now and the different coaching and masterminds and it says that someone that has our own, is there are just so many different people that are running ones out there. And, know, obviously, there's a bunch that are crap, you know, that aren't really finding much value, but there are a lot that are good. And what happens in our current phase of humanity, there's just like the instant gratification, is people want things to be easy. Right? And they will join these different groups, and then they will get frustrated when it isn't just like, oh, I'm in here, and now I'm making money. But you still have to put in the work. You still have to have a lot of intention about what you're doing with your involvement in that group. And, you know, I think you said it completely right, is you went in it with the intention to learn something, and, you know, just not everyone does that unfortunately, but

Justin Morgan: [23:44] it is what it is. I say the word shortcut, and people go, oh, sweet, it's like a microwave, I just have to open the door. Yet, you know, sometimes you gotta go back into that bowl and stir it up so it heats up right, sometimes you gotta, there's work to be done in that process, so we say shortcut, but it's not like a freebie, right?

Dan Austin: [24:02] Yeah, absolutely. It's still hard work.

Mike DeHaan: [24:04] Yeah, yeah. Is that your primary investment strategy now is commercial real estate? Yeah, so

Justin Morgan: [24:11] we did like three fix and flip projects last year, and they're just all low hanging fruit, no direct to seller marketing, kind of the network. I didn't visit one of the houses, I only visited one of them once, just the stuff that's there. Mean, part of that's the market, but part of it's, you know, if we can't really add value to a seller, like stuff was moving last year, still pretty good in state and city, so my strategy now is kinda what you just said a few minutes ago, a couple deals a year in the commercial space, and we've got a portfolio of single family, short term rentals, some commercial, so I'm just right now living life and adding some value through some coaching and mentoring students, and then looking for those one two projects that

Mike DeHaan: [24:53] we can work on. So what kind of commercial assets? Are you buying like strip malls? Are you buying, you know, warehouses? Like, obviously there's a lot of different kinds you can get into, and I guess how do you find them as well?

Justin Morgan: [25:05] Let me add some value where I can in regards to that question, if you kind of back up to that 2018, 2019. So, when we were flipping high volume houses, I learned how to raise private money. Now I made the mistake of not hiring a coach or a mentor on how to raise private money, which led to an SEC investigation a few years later. Lucky for me, no fines, no letters, nothing at all, it's all gone away. It doesn't go away with like a hard stop, you just find out they're no longer pulling your bank statements, or asking you questions. So, you know, it's one of those things, but go ahead. Yeah.

Mike DeHaan: [25:39] So what did you do to trigger that SEC investigation? Because that's gonna be

Justin Morgan: [25:43] I fired an employee. You fired a

Mike DeHaan: [25:46] home, so they reported you? Yeah. Yeah. Okay. But I guess, there must have been something though that you did outside of that, that was like kind of the flag. Were you like advertising on social media that you were raising money for a fund at 8% per f, so you were, you know, not looking to accredit investors, like what were you doing?

Justin Morgan: [26:02] We were real careful, we were just doing the friends and family game, you know, we weren't doing, I say we weren't doing any syndications, I'll talk about one syndication that I've been involved in if that comes up, but we started with the friends and family and just talking about what we're doing and having people reach out to us. So like I said, I didn't hire a mentor, and so I made some mistakes in the process, both secure and unsecured notes, but because there's a preexisting relationship, all of that went away without any fines or penalties from the SEC, not even a slap on the wrist, it just went away because we did it right enough, you know, not to be in any sort of trouble, but I did fire this employee, his dad had invested with us in a longer term deal, he wanted his dad's money back, and that wasn't the promissory note, that wasn't the way the deal was set up, and so he decided to do whatever he could to make my life difficult, and really he did, he scared the crap out of me for a moment, but it's become wonderful education for me, way more valuable than college. Yes, wish I'd hired a mentor to help me step through it, but I'm grateful I did things right enough that I didn't end up in big trouble or even leading the industry at the end of the day, but it was the point of the private money conversation was taking what I'd done in the single family game, and that accelerated my journey into the commercial game, because that was my second big deal, which is a self storage project. The developer came to me and said, We know you're raising money, we see what you're doing on social media, can you help us raise money for this project? And I got my first big piece of a GP deal in the self storage space. Nice. So using your assets to just move forward and letting other people do what they do, I mean, totally wild to look back on, and it's a $13,000,000 project, I've got a good percentage of the GP, and my partnership is me and relationships to money.

Justin Morgan: [28:00] Nice.

Mike DeHaan: [28:01] I mean, that's a huge skill set, right? And even though people talk about how easy it was to raise money over the past couple years, I mean, it's not like that easy. Like, it's easy for people that have like a following. But any Joe Schmo can go out there and try to like, just raise money from random people. The problem was over the past couple years, opportunities were a dime a dozen. So someone would have to choose to invest with you. Right? And like, there's a ton to be said about how exactly you're presenting it in your personal brand. I mean, there's a reason that Grant Cardone can raise insane amounts of money at, like, 6% or whatever his fund is that's abysmal when you have other opportunities that are offering 9%, but they don't know that person. Right? So I guess, what was your strategy do you think that allowed you to be so successful with that? Or what is your strategy since you still do it?

Justin Morgan: [28:46] Yeah. You know, the the strategy then is is talking about it. The strategy is what I what's being actually industry wide referred to right now is getting your business card out in the right hands, and our business card today is social media, our business card today is podcasts, our business card today is being a go giver and sharing and educating and then inviting or being asked and not even having to invite. So you're crazy if you're not handing out your business card ten years ago, twenty You're years crazy today if you're not on social media, because that's where eyeballs are, looking for opportunity. And Mike, I'll push back on you a little bit saying that it's difficult to raise money right now. The reason I'll push back on you is there's more money in circulation now than there's ever been, right? And in fact, money's begging for a place to go because it's tired of the crypto roller coaster, it's tired of the stock market Right roller now, it's kind of a debate, do I put it in some bank at 4% or do I go out and I look at real estate? And real estate right now, and it continues to be through this little bit of shakeup we've had the last year and a half, to be performing. And so with money in the right hands of the right operator, it's looking for a home. There's a lot of it out there.

Mike DeHaan: [30:00] Yeah. As like a fellow white dude in real estate, which is like everybody listens to this show, right, and like almost everyone that we know, what do you think are like some good tips to stand out with that? Right? Because that's always, know, there's different ways you can go about it. Obviously, you can have a certain deal, like better deals than other people, but generally the LP offerings are gonna be similar across the board.

Dan Austin: [30:23] Right.

Mike DeHaan: [30:23] So I guess like what are your main ways that you you find to stand out to capture all this money?

Justin Morgan: [30:29] So I work with small and medium sized investors that are fix and flippers, wholesalers trying to do more fix and flips, small multi family or small commercial deals, so guys that are just getting into the private money game. And so the business card they need to get out there is talking about what they're doing and releasing their secret identity via social media. Oftentimes they're scared to talk about it, they don't want sellers to see it, they don't want their friends to know they're making money, or their family. Come on, like get out there and just talk about what you're doing, and then really if you do it from a go giver mentality, and you're trying to help educate or share, you know, people want to know what you're doing. Lucky for us, real estate's like the sexiest asset out there, right? It's on every channel, there's HGTV, fix this, flip that, renovate this, renovate that. You know, there's never shows about crypto on TV, on mainstream media, there's never shows about the stock market. People want to be in real estate, they want to play in that space, and so people want to tell their friends they're investing with Grant Cardone. It's only a 6% rate, but Grant Cardone's my guy.

Dan Austin: [31:36] Yeah, Gives him something to talk about and yeah, like, hey, I work with a guy who's a billionaire. It's like, yeah, his name's Grant Cardone. Amen. I kinda appreciate what you're saying, that's what I tell people too, is like putting it out there, and it's partially because in our culture is that, you know, sometimes or it used to be kind of poo pooed on to talk about finances or how much money you make and people have been historically concerned about that, but now it's a little bit easier and you can go out there and you can say, hey, I'm flipping houses or I'm a buy and hold investor, use social media as your business card and you'll be surprised by the people that will reach out to you. Yeah, you might be worried about people like, oh, you know, whatever, he's an idiot, Dan sucks, whatever. Who cares, you're not doing it for those people, really. You're You're doing it for those people that inevitably do reach out to you, and it's surprising how, I was just telling this to our instant investor group, I think just on a monthly basis, have a reoccurring four to five people, some I haven't even talked to for twenty years, will reach out and say, hey, let's chat about real estate, I see what you're doing and I like it. And so that right there should just be kind of a testament in itself that it does work, and it is a valuable resource for many different things.

Justin Morgan: [32:39] It's really a snowball, right? You've got it like, it's a snowball effect, like you can build it, but you gotta start now. Know, when's the best time to plant a tree twenty years ago? Chinese proverb, when's the second best time to plant it? Today, like get the tree in the ground, that snowball building, and it's the guys that like don't do that, that you probably don't want to invest in, because if they're just like, Oh crap, I got a deal, I need money, like they don't have the long game in mind.

Dan Austin: [33:04] Right,

Justin Morgan: [33:04] yeah. Right, it's just like the flashy. I would say never post on social media how much you make, but I love posting on social media how much our investors make.

Dan Austin: [33:15] Good point.

Justin Morgan: [33:16] And so, you know, even though that dollar amount is sometimes $4,000 in private money that they've earned, I'm thinking back, like I think our most was like $14,000 in private money. I might've not even made 14 on that deal, but my lender did, right? And so sharing that, and you know, if you look back and you go, Well, oh my gosh, look at where Justin's at today, look at what he's done. Yeah, go back to 2016 when I started posting on social media, and see how much I talked about our investors, our team, what we're doing for the community, and that just has built into a snowball. The tree has shade, and it's a little bigger now.

Mike DeHaan: [33:58] We should start posting about how much we pay our investors out of our fund, Dan, which is literally just us.

Dan Austin: [34:03] Yeah, we are the investors in our own hard money fund. Yeah. Which actually brings me to my next point, is talking about private money, because Mike and I have leveraged and we coach people on leveraging all these different spectrums of available money, right? Because at some point in time, there's different levels of availability for sort of whatever. You got hard money, easy hard money, you have long term financing, private money, your own money. What are you doing with private money versus hard money, and you're coaching folks on how to raise it, so can you talk about like the big differences, and why going private money when possible over hard money, and how you've used both?

Justin Morgan: [34:39] Yeah, so I think two of the most recognizable differences, well first off, one is gonna be easier to do than the other, right? Gonna be just call up a hard money lender, pay their points, and get a deal funded. And I still recommend talking with a hard money lender, because oftentimes a hard money lender can be a second set of eyes on your deal to tell you if it's actually a deal, right? They're gonna do their own little underwriting. So even if you're hoping to go the private money route, or you've started that snowball and you have people that have raised their hands privately, talk with a hard money lender. It's not something you can just say, I gotta fund a deal in two weeks, and expect a friend or family to be like, All right, here's a $250,000, right? You gotta start that conversation. From a SEC standpoint, from legalities, you want that preexisting relationship too, right? Hopefully you have that with most of your network, but I'm finding Facebook is oftentimes a new LinkedIn, like you're just getting business requests that don't even know you, right? So establishing a relationship, right? When getting that understanding of what a hard money lender is offering, private money typically and should never want points. So if you're doing one deal at 250,000, which in most markets that's cheap, one deal at 500,000, I mean, that could be anywhere from a 5 to $10,000 savings by not doing hard money, by not going that route. The second route is institutional funding, and institutional funding, transactional funding is gonna have one, two, three points attached to just getting a long term loan, and private money doesn't, so you're saving that as well. So private money, that tree, that snowball, it needs to start today, because if you're gonna scale your business anywhere, it's gonna save you tens of thousands of dollars this year, or next year, maybe even this next month, if you've already got an established network of people to work with.

Dan Austin: [36:40] Yeah, I agree. And the one thing I was thinking while you're talking about that, and you're saying establish that snowball now is, you can't, like, people, especially in your personal network sometimes, the most, like, those people you have to prove to the most, like the friends and family, that you're successful before you just go and ask them for money, and you should be doing your own due diligence on yourself and saying, yeah, I can produce, I am doing good enough to go and take on other people's money, because we hear so often at real estate, OPM, use other people's money, you don't have to have any money in the deal at all, and it's like, that is a tool and a skill in itself, once you've earned that. But like, if you're just going out and asking your parents for $200,000, you've never flipped a house, and you lose their entire retirement savings because you're a dummy, like that sucks. So you do need to get out there, and you do need to plant that tree now, so that when you do have that opportunity to use their money, you're successful and you're ready to rock and roll, and they can trust you, and you can trust yourself. For sure.

Justin Morgan: [37:37] And that trust can come by following what I said like giving your deal to a hard money lender and saying, Hey mom and dad, this guy's willing to lend to me.

Dan Austin: [37:46] Look at this.

Justin Morgan: [37:47] He looked at it, but it also comes from mom and dad seeing that you're out there working, right? Sometimes it's like, Okay, I wanna put stuff on social media, but I don't know what to put, I'm that green, right? Well, then just go look at houses and say, look at the transformation between this kitchen and this kitchen, somebody else did a wonderful job, but you can show that you're educating yourself.

Mike DeHaan: [38:09] Yep.

Justin Morgan: [38:10] If you're listening to a podcast, listening to this podcast right now, reshare it, and say, hey, listen to these guys that are at where I wanna get to, look at what they're doing in the real estate space. That is education that it shows your friends and family that you're serious about what you're building, whether you're doing it full time or part time.

Dan Austin: [38:29] Yeah, that's fantastic in itself actually, the way you said that and the way you phrased that, because that is a huge part of the process that we all go through, and as you're, if you're being intentional about planting this tree today, yeah, showing that learning process, because those are things we all have to do to get to our first deal. You have to figure this out. If you didn't learn anything, you might get yourself in trouble, but that, I like kinda your explanation there, that's really a good explanation. And also teaching people that are listening now, they haven't started yet, start educating yourself. Start looking at houses that have been flipped in your neighborhood, and then saying, oh, redid the kitchen. I'm gonna call the owner or the seller of this property, see who their contractor was that redid the kitchen. Call that contractor and say, hey, how much do

Justin Morgan: [39:06] you charge that guy? Now you know what a kitchen costs. Here's another angle to that. Today I looked at this house in this neighborhood. Interesting that this house with a remodeled kitchen sold for $50,000 more than this house that didn't. Hashtag real estate investing.

Mike DeHaan: [39:24] Yeah, seriously,

Dan Austin: [39:25] right? Hashtag learn how to comp properties.

Justin Morgan: [39:27] Yeah, learn how to comp properties, right? So like, anything that you're doing in the game, like with the right twist in your mind, it's like, I could share this, I could educate my friends and that I'm in this game, and I'm also holding myself accountable, because it's really fun if you're like, look, I need to comp three deals today to feel comfortable. Well then just share one of them on social media. Maybe you can cop a deal, and it'll be opposite of the numbers, and you're sharing with your friends and family and yourself what not to do in the deal. And what not to do is just as educational as what to do for yourself and for those that wanna follow you in this journey of real estate.

Mike DeHaan: [40:03] Yeah, absolutely. Yeah, it's great stuff. Awesome. So we're getting to our time here. But before we dive into our initial questions, I know that you have a little group that you've started to talk about some of this private lending stuff. So let's let's talk about that really quick, then we'll go into our initial question.

Justin Morgan: [40:18] Yeah, so we've gotta weave that conversation throughout this whole podcast. I wanna probably just close with saying, if you're not taking the money game seriously, you're going to wish you had in the next couple of years, because one, there will be pain in the market. There will be different segments of the market, if not the whole market in and of itself, that's going to have some pain, and you're gonna want opportunity to expand your portfolio, to expand your business. Really, money controls everything, there's nothing worse than having the right deal and just being told no, no, no, no, no, no, right? Whether that's banks or whether that's hard money lenders. So when you have money, you control a lot of it, or access to money, you control a lot of the opportunities. So prepare now, plant the tree now, and know that that tree is going to cache in the future. I also think that designing your business card is incredibly important, and so creating that social media presence, which is your business card, is going to get prettier with time. So if you can lean into it and fail today, fail meaning it's not what you want it to be, or what it will be in the years to come, you gotta start learning. I started doing Facebook Lives in 2016, but I really started putting myself in front of my camera years before that and never doing anything with it, right?

Justin Morgan: [41:33] Just recording myself and getting comfortable, a lot of self consciousness there, a lot of self doubts, a lot of imposter syndrome. So start right now, and in our group, small and medium sized investors, guys that are just looking to say, look, I know I'm spending money with points, I know I'm spending money with banks, I know I wanna extend my time horizon on some of these projects instead of three to six months, so I want six to twelve months, that's the private money game. The private money game is very flexible on terms, so we're not talking about syndications, we're not talking really about even raising millions of dollars, we're talking about just having funds that might allow you to not wholesale that deal, and instead have an investor that's gonna participate on the rehab money. They're gonna participate on maybe a creative finance deal and give you the little bit of the down payment you need to the seller. So raising private money, we're not talking millions, we're talking you can pick up deals for tens, twenties, dollars 50,000, and a lender has $10.20, dollars 50,000 can become your lender, your partner, allow you to get into that deal. Perfect. So small dollar amounts matter.

Mike DeHaan: [42:44] Yeah, and so you go into helping people sort of build that virtual business card, build that identity, and sort of set the framework so they can have those more productive conversations with people.

Justin Morgan: [42:54] Yeah, you're gonna get every post that I've done over the last six years of social media, you can tweak it, you can steal pictures. We're gonna talk about all that online marketing, which I really, I look at that as like, you put it out there, but you pull them into your world, right? We also talk about offline marketing where you're pushing, where you're reaching out to other lenders that are already funding deals in your market that you don't know that are even out there today because you're not looking, but those lists can be created and pulled just like a seller list can be created and pulled. You can do the same with private lenders and they're already funding deals, they just need to know what you're up to. And if you're already established doing deals, they want to know what you're up to, because their game is velocity of money, right? They make no money if it's sitting in the bank, and so lenders that are already lending, they wanna know who you are, that's offline. Yeah, that's a great point, absolutely.

Mike DeHaan: [43:47] I love it, awesome, good stuff. Cool, so we're gonna go into our end of show questions here. First off is always the crowd favorite. And that is what is your craziest real estate investing story? And this can be a big win, it can be a big loss. The only rule is it's not allowed to be about finding a corpse in a property because we had a stand where we had a bunch of those in a row and just got real weird, so we lost the story.

Justin Morgan: [44:10] Well, I've found plenty of animal corpses in properties, no human. So my craziest story was actually my very first creative finance deal in 2008. It's a long story, but the long and the short of the story is, I bought a house from a contractor, just took over his payments, the project had taken a long time to build, it wasn't selling, the market had slowed down, and I just came in and I took it over subject to, seller financing, right? And his mom caught wind of that a day later, and a mama bear came out that investor had come in and taken advantage of her son. So I promptly got a call from an attorney that said, I hate your contracts, I don't like what you did, I'm coming after you. I received a $25,000 retainer from this young contractor builder's mother, and she's coming after you. So, you know, the first thing I did is freak out, right? I'm a new investor, back then hearing the word attorney scared me a lot, and I called my dad, like, Oh, what should I do? What should I do? And he's like, Have a conversation with the attorney, right? So I had a conversation with the attorney and the attorney said, Hey, I've spent about $2,500 worth of billable hours looking into this and preparing a case against you. This retainer is $25,000 so there remains 22,500. If you come in and sign deeding the property back to the contractor, to his mother, I'll give you a check for 22,500. So in the course of seventy two hours, I literally bought and sold a property from the same person made 22,500.

Dan Austin: [45:54] Then he probably lost his asset when to foreclosure, so thanks Yeah,

Justin Morgan: [45:57] yeah, right, like, yeah. You know, I really wish I could delve into that story. I did try buy that house about a year ago, and that house today is worth about five times what it was then, but

Dan Austin: [46:07] Gosh, that's an incredible story. I love the hustle of that attorney, and basically just making a flat business decision, probably in the best interest of everybody.

Justin Morgan: [46:18] Yeah, he could have milked those hours for sure, could have made my life miserable. That's when the pot came to mind, it was one of the first, the first creative finance deal that I did, but very profitable, very quickly. That's so fun. Like do you

Mike DeHaan: [46:33] think that the client was like aware that he did that? Like they just, they gave you $22 to walk away from it?

Justin Morgan: [46:39] Well, I mean, she had said, Go solve this problem, right? Here, attorney, go, Yeah.

Dan Austin: [46:44] There's $25.

Justin Morgan: [46:45] I don't know who delivers a $25,000 retainer to an attorney, that seems crazy, right?

Mike DeHaan: [46:50] I don't know, it's even worth more money than cents.

Justin Morgan: [46:52] Yeah, I mean, just as crazy, you're a contractor, you've got permanent debt, you've gone and gotten a mortgage, you're willing to sell or finance, take it over subject to, and you don't talk to your mom, that's crazy, So a lot of craziness that ended up being something that almost caused me to run and hide and disappear, but then ended up being profitable. That's awesome. Wow.

Mike DeHaan: [47:13] That's a cool one. Yeah, it's a very, very interesting one, don't think I've ever heard that before.

Dan Austin: [47:17] I wanna say one nuance to that too, to not overlook is, you just had a conversation with attorney of your dad's advice, because you could have lawyered up, and now the lawyers are talking to each other, That's

Justin Morgan: [47:26] right, yeah.

Dan Austin: [47:26] And it's funny because we didn't have nearly the same issue, but we did have a lawyer reach out to us on a property that we had a memorandum against, because we had a PSA on the property, seller backed out, there's a whole story around that, but we had filed a memorandum against the title, so when that seller passed away, the dad took over, and had hired a lawyer to basically try to strong-arm us to give everything up on that property. And what solved the issue, so we talked to our attorney that helped us draft the memorandum, and it was kinda getting muddy, so I just ended up talking to this attorney, and we solved the problem straight away. I negotiated with the attorney what we would do, and it was a no problem, but I think going through our attorney to their attorney, the miscommunications, and what our attorney would have interpreted, could have made that much muddier, and same thing with your situation. Had you paid your attorney to do this, it could have gotten way messier, when it didn't need to be.

Justin Morgan: [48:18] Well, and really, if you look at what you just shared, right, like having mentors, having people in your corner that are more mature or have been there are gonna lend you that advice that's priceless. Yeah,

Dan Austin: [48:29] right, absolutely.

Speaker 2: [48:30] For

Justin Morgan: [48:30] sure. Need to be willing to ask. I hear people post stuff on social media and like start asking like, be willing to ask, like be willing to do that, be willing to humble yourself, and next thing you know, you get a big fat check. Totally. Absolutely.

Mike DeHaan: [48:45] Yeah. No, that's cool. That's a great that's a very unique story. I've not heard that one before, so so congratulations. Very Thank you. It's not super often we have something that like I've never even come close to hearing it before,

Justin Morgan: [48:56] yeah. Gotcha.

Mike DeHaan: [48:57] Yeah, so cool. Alright, next question, what is the number one piece of advice you would give to either a new investor looking to get started, or to a small time investor looking to take their business to the next level?

Justin Morgan: [49:08] One piece of advice, well since we've already talked about mentorship, and that kind of sounds cliche, you know, from our seats, but the other piece of advice is I'd really start with the end in mind. Like sometimes we chase the dollar, we chase the toy, we chase the girl, we chase the flashiness of real estate, and that sucks, because it's brought a non professionalism to the industry, but if people enter this industry with the end in mind, and they really look at where they want to go, then just waking up and doing the grind isn't so much a grind to get to the dollar, but it's just part of the process to get to the end result. With that being said, cash flow changes the game, So I encourage to think about where you wanna go for lifestyle, and cash flow is what gives lifestyle. Dollars are great, you can make a million dollars, put it in the bank, and then what do you want with that million bucks in the bank? You wanna figure out how to get cash flow. Yeah, yeah. Figure out the end, and really one deal can produce $10,000 a month, and $10,000 a month is 120 a year, 120 a year would be a 12% return on a million bucks. So do we really want a million dollars in the bank, or do we just want $10 a month? Really at the end of the day, cash flow can have us living like a millionaire very, very quickly without ever having a million in the bank. And you sleep better at night, because it's not money sitting in the bank that you're worried about.

Dan Austin: [50:35] Mhmm,

Mike DeHaan: [50:35] sure, very true. I love it. Good advice. All right, and then last question, where can people find you, follow you, and reach out to you if you'd like them to do so?

Justin Morgan: [50:43] Hang out a lot on Facebook, a little bit on Instagram, we'll put the links hopefully, where they can follow that, but just Justin C Morgan, and then Raising Private Money Matters, M A T T E R S, or the short of that is RPM, like revolutions from minute, right? Rpmmatters.com. So I believe heavily in raising capital and private money and what it can do to your bottom line, and you can find us there, or justincmorgan.com. Justin C. Morgan. Perfect, Right

Mike DeHaan: [51:14] right on. Well, Justin, thanks for coming on the show, man. It's been an absolute pleasure. And I hope you guys got a lot of value out of that. Because if you didn't, don't know what to tell you. He had some great bombs in there. And you should absolutely reach out to Justin on all the social platforms and go and check out his private money group as well. I say it every single time people come on the shows because they want you to engage with them. So don't be shy, reach out. None of us are scary. Like we have a platform because we want to talk to you. So anyways, guys, we appreciate you all listening. Please share this with anyone you know that might be interested in real estate investing or learning how to raise money. And we appreciate you all. We'll talk to you guys next week.

Speaker 2: [51:53] Thanks for listening to collecting keys. Drop us a five star review on iTunes and send us a screenshot to Mike@collectingkeys.com for your chance to receive a free collecting keys t shirt.