In this episode of the Paper Trail Podcast, Chris sits down with Beth Johnson, co-founder of Flynn Family Lending and author of Lend to Live, to dive deep into what it really takes to build a sustainable, ethical private lending business.
Beth shares her accidental journey from being a real estate side hustler to running a boutique lending firm alongside her husband. She talks candidly about the challenges of managing investor capital, the importance of due diligence, and why private lending is as much about relationships and risk management as it is about returns.
From how to vet borrowers and avoid common lending pitfalls, to navigating the emotional side of working with other people’s money, Beth’s perspective offers both practical advice and a reality check for new and experienced lenders alike.
Beth will be a featured speaker and panel moderator at the upcoming Paper Trail Conference (September 18–20 in Chandler, Arizona), where she’ll cover risk management, structuring deals, and why private lending isn’t a get-rich-quick business.
To meet Beth in person and gain the tools to lend smarter and safer, grab your tickets at papertrailconference.com.
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Transcript
Episode Transcript
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(00:42):
On this episode of the PaperTrail podcast, I host Beth Pinkley
Johnson as a guest who Great conversation.
I've known Beth for a few years.
Beth has been in the privatelending space for over 10 years.
She's wrote a book on biggerpockets called Lend to Live, has
a awesome private lendercommunity where she provides a lot
(01:04):
of content, education anddirection for private lenders.
There's the institutional sideand then you know, there's individual
private lenders and she reallyfills that gap to getting people
off the ground in that privatelending space.
And she is going to run the,I'll call it the curriculum at the
(01:27):
Paper Trail Conference onprivate lending.
So I've mentioned on otherepisodes this is the one event that's
out there that brings all thenote industry together from private
lending to seller finance tonon performing loans.
All of that is going to be inone place September 18th to 20th
in Chandler, Arizona.
(01:47):
Make sure to get yourtickets@paper trail conference.com.
hey Beth, how are you today?
Doing well, thank you.
How about you Chris?
Good, good, good.
So it's been a long week as wewere talking before recording of
some of the wonderful journeysI have dealing in the non performing
(02:10):
note side where sometimes yourdays go by, go like roller coasters
where Beth deals in theprivate lending side which is you
know, even more lazy riverishthan you know, the non performing
side which we'll talk about today.
So let's just kind of diveright into it and tell people a little
bit more about your backstoryin regards to getting involved in
(02:33):
the private lending space.
Sure.
I mean I think like mostprivate lenders I got into this space
on accident.
It's not like we all joinedbigger pockets and I like I should
do private lending and nonperforming loans.
Like that sounds really cooland sexy.
So we end up starting out andflipping and I've done some buy and
holds and just kind of landedin private lending where I am now
(02:54):
running a private lendingbusiness with my husband Matt Flynn.
We own a small boutiqueprivate lending business in Washington.
We just lend in a handful ofmarkets and just kind of got bit
by the bug.
It's just a little bit easierto do loans and still maintain a
work life balance and be therefor my children and not really have
(03:15):
to race off and deal withtenants or you know, short term rentals
in the middle of the nightswith lockouts and can't find the
hot tub, you know, turn onbutton, whatever.
So our, you know, we've beendoing private lending for about a
decade now and I Helpfacilitate loans for other private
lenders as well that want tobe a little bit more passive in it
too.
Too.
(03:36):
No, that's awesome.
And as you mentioned, mostpeople stumble into this space and
you mentioned like BiggerPockets, which you've also written
a book for them, right?
That's true.
That's true.
Published a book in 2022called Lend to Live Earn Hassle Free
Passive Income in Real Estatewith Private Money Lending.
Yep.
(03:56):
So I know that book comeshighly recommended to anybody getting
involved in a space in Bigger Pockets.
When somebody asks about that,people always tag Beth 10,000 times
with the information on that book.
So you've been in the space 10 years.
Curious.
What's something about thejourney that you've gone through
(04:17):
that maybe most people don'tknow about?
You could be a win, a pivot, aloss, you know, just curious.
Interesting fact about, youknow, the space that you've been
in the last 10 years.
Oh, goodness, I don't know.
I mean I.
We started this out as apassive hustle.
I've talked about it a littlebit, but yeah, really for me, I grew
(04:39):
up in a real estate as a sidehustle family.
My dad was a wood shop teacher.
We just did it on the side.
So did I ever find myselfwanting to run a private lending
business or a real estateadjacent business?
No.
So I think that what peoplemight be surprised about is that
I didn't really want to run abusiness and I'm very happy with
(05:00):
what we've created now.
However, it has come with alot of challenges and so part of
the impetus to writing thebook and helping educate others in
private lending was because Ireally struggled early on with having
this turn into a full fledgedbusiness with investors capital that
I felt very responsible for managing.
And there just really wasn't away to navigate it gracefully because
(05:25):
I was learning the ropes allon my own.
So I think it might come as asurprise if the people think that
I'm, you know, prettycompetent in this space.
I talk about it a lot, but I,you know, at the end of the day,
I'm an accidental entrepreneur.
Didn't really want that.
Didn't really want to be outthere publicly speaking and kind
of being the face of private money.
But here I am right now and.
(05:46):
It'S interesting becausepeople come to me and I'm curious,
people come to you as well andlike, well, I didn't go to school
for finance or I didn't go toschool for this or you know, I don't
have this type of background.
And, like, I don't know if Ican do it.
And I always tell them I'm notsure anybody I really know has a
true finance background.
(06:07):
That is, in this space, there's.
I'm sure there's people andstuff, but, you know, it doesn't
matter what your background is.
It really boils down to setsof principles, philosophies, and
understanding of the spacewhere, you know, it's a space that
takes time to learn.
But I also will say it's notrocket science.
(06:28):
Would you agree?
It's not.
I mean, it's really commonsense in connections for me.
And you're right, I'm not anumbers girl.
I'm a words girl.
This is why I wrote a book.
Very much catered to myexpertise, and I'm the gal that doubled
down on a nine and a three ata blackjack table.
I really kind of suck atnumbers, but that's why I partner
(06:49):
up with my husband, who's likea Rain man when it comes to numbers,
and it really just gels together.
And I'm the one that's reallyconstantly thinking about what could
possibly go wrong.
And that's where the commonsense comes in.
And creating connections sothat you are resourceful enough that
if I do have a question, thenI can come and hit you up too.
Right, Chris?
And just ask for a secondopinion and how I might want to work
(07:10):
out a loan that's in default.
But it's not really knowingall the answers.
It's just seeking it and beingcurious and then making sure that
you're surrounded by peoplethat can help.
Help lift, you know, when youneed to.
Yeah.
And like you mentioned,reaching out to others and having
these conversations.
One of the interesting thingsI truly find about this space is
(07:31):
the resources available to people.
Unlike traditional realestate, which I feel is very cutthroat,
because I spent many years inthat business of everyone chasing
deals and people trying to,you know, get in front of somebody
for a deal, wherever the casemay be.
The lending space is aboutrelationships, but it's also about
a lot of collaboration.
(07:51):
And I think part of that isbecause most of us see an abundance
of deals and we have certaincriteria or buy boxes, like you mentioned,
there's certain states youinvest in, certain states you do
not invest in.
So when people see things thatdon't fit their criteria, they're
very willing to provide thatinformation or offload either that
deal or assist somebody ifthey're in trouble on a deal or need
(08:14):
an attorney or whatever thecase May be.
Do you find that pretty commonaround what people you work with
as well?
Yeah, I mean, I think likewith other aspects of real estate
investing, there's somecutthroat parts of private lending
and note investing.
I think you know that too.
But those that have anabundance mentality really know that
if they're going to providethe most value to their clients,
(08:36):
their borrowers, if it doesn'tfit for their buy box, then they
need to find and haveresources available to help make
sure that they don't have tosay no to that borrower.
So the ones that really do itright and provide full value to their
clients are the ones that arethinking, hey, I need to make sure
that I have a strongconnection and network so that if
this isn't right for me orit's not the right market or I don't
(08:57):
have enough capital available,then I can call a handful of people
on my Rolodex or my cell phoneand make sure that I can place them
and so they'll come back to metime and time again.
So.
But the hard part about allthat is that private lenders are,
it's only because speakeasy ishow I typically referred it to because
we eventually just come intoit by accident.
Most of us are invest in notesby accident.
(09:19):
And so trying to find thoseother peers to be able to connect
with that truly want tocollaborate can be, it can be an
uphill battle at first whenyou're first getting started because
very few people are coming outsaying I'm a private lender.
They're just saying like, hey,I'm a wholesaler and I need to connect
with flippers and things ofthat kind which make it rather difficult
(09:39):
to establish connections early on.
No, you hit the nail on thehead with that.
And because there's some verylarge institutional providers that
you know, do things in thespace and like on the note side,
again, I stumbled upon it byaccident but when I was getting started
it was hard to find peopleagain that truly were in the space.
(10:02):
Because you have some peoplewho might be brokering certain loans
or like, but people who arereally in that day to day doing it
and trying to network and justcollaborate because it's, it's a
small niche industry where itboils down to it, which is one of
the reasons why like forexample, you know, the paper trail
conference that you know,we're hosting and you're, you know,
being a big part of is tobring everybody together to network
(10:27):
and get to know other peoplealong with the content and education
you're going to get, but alsoreally building those relationships
for the long term for people.
And one of the questions I wasgoing to ask you is, you know, as
part of, you know, yourinvolvement, what's, you know, what
are a few things you wouldlove for people who attend the conference
to get out of it?
(10:48):
Well, I want them to geteducated, right.
I mean, I think that there'senough out there in social media,
YouTube, to really whet yourappetite to want to invest in notes
to create a passive source of income.
These are just some of thosebuzzwords that are out there, but
there's not a lot of reallydeep education on it.
And so I find that when I'mworking with new and aspiring private
(11:09):
lenders and note investors,they just, they're, by the time they
say yes, they're ready to fundthe first deal that comes across
their plate.
And, and I will both say thatwe know that like that's absolutely
not what they're supposed todo, right.
And so really creating thatplanning and being at an event like
this where you can get areally wide swath of education and
workshops across all three nonperforming loans, seller financed
(11:32):
loans, how to find and fund aprivate money loan, there's a lot
of synergies between all threeand quite frankly, it's not mutually
exclusive either.
And so to be able to beexclusive, exposed to all three different
facets of passive investingand note investing I think is really
incredible because dependingon your station in life, you might
(11:54):
choose to want to do note investing.
And depending on your risktolerance or how autonomous you want
to be and controlling you needto be on that, you might want to
go and find your own loan andfund it yourself just because you
want to make sure that youhave that initial connection with
the borrower.
Everybody comes at it fromdifferent perspectives and different
(12:14):
stations of life.
And so that's what I think isreally unique about this conference,
is that it will really giveyou some deep exposure and help you
create a lot of connectionswith people who are already in that
space to help you make areally well rounded decision on where
you want to place your capitaland how.
And perfect example was weearlier this week received a pool
(12:35):
of assets from somebody whereyou had to buy was eight assets,
so you had to take all of themdown and reviewing them.
One of them was a rap note andI'm like, wow, I have never seen
a rap before.
And you know, I bought, youknow, hundreds and hundreds of loans
and first thing I did is like,I know this person I, you know, had
them on my podcast previouslywho has done wraps and I reach out
(12:58):
to him, got on the phone and,you know, pulled up, you know, the
zoom and went through the, thedeed of trust and just tried to understand
kind of the logistics of it.
It made sense, but there wasnuances that I just wanted to make
sure I understood in regardsto the whole process.
And if I was just gettingstarted out like when I did almost
10 years ago, I would havejust basically been like, nope, I'm
(13:21):
not even going to consider anyof these because, you know, one loan
in that thing, like, couldkill me because I don't know, you
know, and I'm an engineer, soI need to know everything, of course,
and it's like, I don't knowit, so I would miss some of these
opportunities.
But I think a, like you said,getting that education component
to it, but also understandingthe breadth, the depth of everything
(13:45):
and knowing those people,that's half the battle a lot of times
is if you don't knowsomething, it's knowing who to go
to to get that.
Answer and being exposed tothe potential pitfalls up front before
you get started.
Right.
And you and I have talkedabout like, one of the key sessions
I want to have is about takingthe fun out of funds.
There's a lot of hype aboutstarting funds, there's a lot of
(14:06):
hype about wrapped notes,there's a lot of hype about second
liens, and there are greataspects to those types of investment
strategies.
And there's also a ton ofconcern about it as well.
Right.
And so what I want to makesure happens in my sessions, and
I know that you and Fred andTracy do as well, is to ensure that
(14:27):
we're really giving them awell rounded picture so that they
understand what are some ofthose key considerations you need.
You certainly might decideafter that that you want to proceed
forward with it.
But what are some of thegeneralities and some of the foundational
things that you need to beaware of before you get started?
Because oftentimes, note,investors and private lenders, they're
ready to pull the triggerright away.
And what they lack is perspective.
(14:49):
Perspective on differentdeals, perspective on legalities,
perspective on how it shouldbe structured and what the protection
measures are.
And you can only get that bygoing and seeking out the education,
talking, others being atconferences like this so that you
really can gain exposurebefore you place your money down.
(15:10):
Because most times privatelenders I see, they're funding the
first deal that comes acrosstheir plate and it's unfortunate
because generally they runinto some areas that are kind of
scary.
Most of them don't necessarilylose all their principal, but they
do lose sleep at night.
And so it's good to be able toget out there and just learn as much
(15:30):
as you possibly can beforepulling the trigger.
Yeah.
And like you mentioned, youknow, with these things, you know,
the education component too, alot of people will take some education
and a lot of it sometimes ismarketing based.
And they'll go on this weekendand they'll learn.
They're like, I'm gonna go,I'm gonna go buy it.
And they don't know what theydon't know.
(15:50):
And one of the things that youknow, I think is great about this
conference is the fact thatthe people who are involved not only
are spending the day to day inthe business, but they're not afraid
to share the good, the bad andthe ugly.
Because a lot of times all yousee, sometimes depending on, you
know, you got to make sure youaffiliate with the right people because
(16:12):
some people only share thegood side of things.
And it's like, oh, it's risk free.
You'll make all this money,you can do this.
And if you just follow mythree step program, you know, you're
going to make all this money.
And it's, you know, that's farfrom the truth in many instances
because there's a lot of duediligence and just a lot of intricacies
(16:33):
involved in this space thatpeople gotta be aware of.
Well, yeah, and you and I seea lot of those.
Right?
Because we're out there andtrying to educate others and talking
to a lot of people about our space.
Heartbreaking stories comeacross our plates time and time again
and it's hard not to developcompassion, especially as stewards
(16:54):
managing other people's capital.
I feel like you and I are kindof that same we have, that possess
the same value in that we justdon't like to see people, good people
who have worked really hard toearn that capital lose it because
they just trusted somebody.
And that's human nature, is totrust them.
Right.
But I think that getting outthere and making sure that others
(17:17):
really ask the right questionsand have a healthy dose of cynicism
is kind of what you and I are about.
Right.
Because we just don't want tosee people make poor decisions because
it's really hard to come backfrom that now.
I saw somebody reach out to melast night and they haven't bought
any real estate yet and theyhired an Attorney.
(17:38):
An attorney recommended thatthey set up a wyoming LLC with three
California LLCs.
And I'm sitting here like, youknow, I put my head down and I'm
like, how much real estate doyou own?
Or, like, nothing.
We're just getting started.
And I'm like, you just spent.
I mean, California LLC is like800 or $900 for every LLC every year.
(18:01):
So I'm like, you're spending$3,000 a year just on, you know,
a corporate structure that ifyou're just getting started, you
don't need.
Like, you know, and sometimes,again, it's this person went on Google
and.
Or saw a YouTube video, andthis person looks very trustworthy.
And then, you know, but theydon't, you know, do that next step
(18:21):
or, you know, reach out topeople and ask the question or a
lot of times people ask that,unfortunately, ask that question
too late.
And it's sad when I hear thesestories of people who, you know,
go through some of these losses.
I had someone reach out, andagain, we run a fund, and somebody,
one point in time made acomment to us, hey, I can invest
in a fund that matches your fund.
(18:42):
But basically they might.
Well, you pay in a year, theypay in a quarter.
And I was like, well, I don'tknow how they can do that.
I don't know any, you know,I'll say note, investing, lending
fund, or anything that canoffer, you know, 30 to 40% returns.
I just don't know how they cando it.
So they must have some magicsecret sauce.
(19:03):
But I'm surprised they'reasking for money from a regular investor
and they don't have some Wallstreet company basically knocking
down, bulldozing down theirdoor, and six months later, it's,
you know, on the news of, youknow, a complete scheme where people
have lost, you know, prettymuch everything.
It's just unfortunate when youhear people go through those stories.
(19:26):
And again, that's just on oneside of things, but every part of
investing is about kind of due diligence.
So 100%.
I just did a localpresentation about how not to get
to get scammed and had to,unfortunately, use a number of those
examples.
I mean, in the markets thatwe're in, we don't see a lot of these
Ponzi schemes come outlocally, like on American Creed or
(19:48):
in the news.
They seem to be isolated in certain.
Certain states and marketsquite a bit.
But it does happen.
And unfortunately, you know,honestly, sometimes it's just a simple
Google search with their name,and we actually pulled up somebody
Locally and, you know, puttheir name.
A lot of good stuff comes up.
And he has started entityafter entity does a lot of training.
(20:10):
Does.
Brings a lot of people in.
Just a lot of.
I.
You can't even call it scamsor fraud.
It's just negligence.
And ignorance can lose youmoney too.
Right.
They don't have to benefarious in what they're trying
to accomplish or take your funds.
It could just be stupidity.
And if you put this guy's namein and afterwards then put fraud
or scam or Ponzi, then all ofthe indictments, then all of the
(20:35):
allegations came up and it wasjust a simple search, you know, and
so some of those things thatjust need to be taught.
It's unfortunate that we haveto sort of burst people's bubble,
but I think it will help themin the long run to know that, yeah,
bad things can happen in anyinvestment, and we just want to make
sure that you're doing it assafely and securely as possible.
(20:57):
Yeah, it's funny you mentionedthat, because I know of an investor
who runs a fund and they weretrying to, you know, expand and get
a line of credit.
And basically there's publicrecords in regards to the lawsuit,
high level.
They essentially had to prepaylike a year's plus interest as part
(21:20):
of trying to get the loan.
They wired all of this money,which was millions, to this entity
that was going to give themthe loan.
And if you would have justgoogled the three people or two people
were involved in this entity,they have been, you know, fraudulent
in many different transactionsin the same exact manner.
(21:40):
And you know, one thing, andI'm not saying this in this case,
but I'd say this overall ingeneral with anybody.
Don't let your ego get in the way.
You know, don't pretend youknow it all.
You know, listen to yourattorneys, do, you know, do the diligence
and just, you know, make surethat you just talk through everything
(22:02):
with, you know, people that,you know.
And, you know, this person, Ibelieve, ended up getting it resolved
or whatever the case may be.
But it didn't, I'm sure,happen overnight and took a very
long time, which I can onlyimagine how many sleepless nights.
But like you said, a quickGoogle search before any of this
would even started, itwouldn't even have been down that
path.
(22:23):
We had somebody reach out tous about a loan recently that we
would potentially keep on ourbalance sheet.
And person appeared like verygreat background.
But then again, did a Googlesearch on this person and they had
some criminal history that waspretty nasty.
And it's like, this isn't thetype of person I kind of want as
(22:44):
a borrower.
So I don't even think it's ego.
I think a lot of these peoplejust really want to believe.
Right?
Yeah.
It's that fear of missing outand that confirmation bias because
everyone's telling you, yeah,this is great.
And taking everything at facevalue rather than doing your due
diligence, which honestly justtakes a lot more work.
Cool.
(23:05):
Well, Beth, as we wrap up thisepisode again, we want welcome everyone
to please sign up for get yourtickets@papertrailconference.com September
18th to 20th in Chandler, Arizona.
Beth is moderating andspeaking on many panels there.
Last question I'll ask you iswithout giving away the entire secret
(23:29):
sauce of everything you'regoing to be teaching people, what's
something that you want themto definitely walk away from after
the conference?
What do you want them to feel,learn or think differently about
attending the conference?
I want them to feel as thoughthey have a strong confidence and
competence level in becomingand growing as a private money lender
(23:53):
and really being in tune withwhat their why is why they want to
get into it, whether that'sbeing an active business owner or
doing it as a passive sourceof income.
And then to create someconnections because private lending
really is a team sport.
All note investing is.
So creating some connectionsthat you can call down on after the
conference is over to continueyour education and your curiosity
(24:16):
and your learning beyond thosereally packed three days is going
to be incredibly important andthat's what I hope they get.
Great.
If people want to reach out toyou before the conference, what is
the best way people can get intouch with you?
Well, you can find my contactinformation on lend to live.com that's
(24:36):
lend the number two live.comI'm also on Instagram @lendtolive
Beth and I'm on Facebook asBeth Pinkley Johnson.
Great.
Well, Beth, thanks for comingon today and I look forward to seeing
you in a few months.
Likewise.
Thank you everybody.
On this episode of the PaperTrail podcast, I host Beth Pinkley
Johnson as a guest who Great conversation.
I've known Beth for a few years.
Beth has been in the privatelending space for over 10 years.
She's wrote a book on biggerpockets called Lend to Live, has
a awesome private lendercommunity where she provides a lot
(01:04):
of content, education anddirection for private lenders.
There's the institutional sideand then you know, there's individual
private lenders and she reallyfills that gap to getting people
off the ground in that privatelending space.
And she is going to run the,I'll call it the curriculum at the
(01:27):
Paper Trail Conference onprivate lending.
So I've mentioned on otherepisodes this is the one event that's
out there that brings all thenote industry together from private
lending to seller finance tonon performing loans.
All of that is going to be inone place September 18th to 20th
in Chandler, Arizona.
(01:47):
Make sure to get yourtickets@paper trail conference.com.
hey Beth, how are you today?
Doing well, thank you.
How about you Chris?
Good, good, good.
So it's been a long week as wewere talking before recording of
some of the wonderful journeysI have dealing in the non performing
(02:10):
note side where sometimes yourdays go by, go like roller coasters
where Beth deals in theprivate lending side which is you
know, even more lazy riverishthan you know, the non performing
side which we'll talk about today.
So let's just kind of diveright into it and tell people a little
bit more about your backstoryin regards to getting involved in
(02:33):
the private lending space.
Sure.
I mean I think like mostprivate lenders I got into this space
on accident.
It's not like we all joinedbigger pockets and I like I should
do private lending and nonperforming loans.
Like that sounds really cooland sexy.
So we end up starting out andflipping and I've done some buy and
holds and just kind of landedin private lending where I am now
(02:54):
running a private lendingbusiness with my husband Matt Flynn.
We own a small boutiqueprivate lending business in Washington.
We just lend in a handful ofmarkets and just kind of got bit
by the bug.
It's just a little bit easierto do loans and still maintain a
work life balance and be therefor my children and not really have
(03:15):
to race off and deal withtenants or you know, short term rentals
in the middle of the nightswith lockouts and can't find the
hot tub, you know, turn onbutton, whatever.
So our, you know, we've beendoing private lending for about a
decade now and I Helpfacilitate loans for other private
lenders as well that want tobe a little bit more passive in it
too.
Too.
(03:36):
No, that's awesome.
And as you mentioned, mostpeople stumble into this space and
you mentioned like BiggerPockets, which you've also written
a book for them, right?
That's true.
That's true.
Published a book in 2022called Lend to Live Earn Hassle Free
Passive Income in Real Estatewith Private Money Lending.
Yep.
(03:56):
So I know that book comeshighly recommended to anybody getting
involved in a space in Bigger Pockets.
When somebody asks about that,people always tag Beth 10,000 times
with the information on that book.
So you've been in the space 10 years.
Curious.
What's something about thejourney that you've gone through
(04:17):
that maybe most people don'tknow about?
You could be a win, a pivot, aloss, you know, just curious.
Interesting fact about, youknow, the space that you've been
in the last 10 years.
Oh, goodness, I don't know.
I mean I.
We started this out as apassive hustle.
I've talked about it a littlebit, but yeah, really for me, I grew
(04:39):
up in a real estate as a sidehustle family.
My dad was a wood shop teacher.
We just did it on the side.
So did I ever find myselfwanting to run a private lending
business or a real estateadjacent business?
No.
So I think that what peoplemight be surprised about is that
I didn't really want to run abusiness and I'm very happy with
(05:00):
what we've created now.
However, it has come with alot of challenges and so part of
the impetus to writing thebook and helping educate others in
private lending was because Ireally struggled early on with having
this turn into a full fledgedbusiness with investors capital that
I felt very responsible for managing.
And there just really wasn't away to navigate it gracefully because
(05:25):
I was learning the ropes allon my own.
So I think it might come as asurprise if the people think that
I'm, you know, prettycompetent in this space.
I talk about it a lot, but I,you know, at the end of the day,
I'm an accidental entrepreneur.
Didn't really want that.
Didn't really want to be outthere publicly speaking and kind
of being the face of private money.
But here I am right now and.
(05:46):
It'S interesting becausepeople come to me and I'm curious,
people come to you as well andlike, well, I didn't go to school
for finance or I didn't go toschool for this or you know, I don't
have this type of background.
And, like, I don't know if Ican do it.
And I always tell them I'm notsure anybody I really know has a
true finance background.
(06:07):
That is, in this space, there's.
I'm sure there's people andstuff, but, you know, it doesn't
matter what your background is.
It really boils down to setsof principles, philosophies, and
understanding of the spacewhere, you know, it's a space that
takes time to learn.
But I also will say it's notrocket science.
(06:28):
Would you agree?
It's not.
I mean, it's really commonsense in connections for me.
And you're right, I'm not anumbers girl.
I'm a words girl.
This is why I wrote a book.
Very much catered to myexpertise, and I'm the gal that doubled
down on a nine and a three ata blackjack table.
I really kind of suck atnumbers, but that's why I partner
(06:49):
up with my husband, who's likea Rain man when it comes to numbers,
and it really just gels together.
And I'm the one that's reallyconstantly thinking about what could
possibly go wrong.
And that's where the commonsense comes in.
And creating connections sothat you are resourceful enough that
if I do have a question, thenI can come and hit you up too.
Right, Chris?
And just ask for a secondopinion and how I might want to work
(07:10):
out a loan that's in default.
But it's not really knowingall the answers.
It's just seeking it and beingcurious and then making sure that
you're surrounded by peoplethat can help.
Help lift, you know, when youneed to.
Yeah.
And like you mentioned,reaching out to others and having
these conversations.
One of the interesting thingsI truly find about this space is
(07:31):
the resources available to people.
Unlike traditional realestate, which I feel is very cutthroat,
because I spent many years inthat business of everyone chasing
deals and people trying to,you know, get in front of somebody
for a deal, wherever the casemay be.
The lending space is aboutrelationships, but it's also about
a lot of collaboration.
(07:51):
And I think part of that isbecause most of us see an abundance
of deals and we have certaincriteria or buy boxes, like you mentioned,
there's certain states youinvest in, certain states you do
not invest in.
So when people see things thatdon't fit their criteria, they're
very willing to provide thatinformation or offload either that
deal or assist somebody ifthey're in trouble on a deal or need
(08:14):
an attorney or whatever thecase May be.
Do you find that pretty commonaround what people you work with
as well?
Yeah, I mean, I think likewith other aspects of real estate
investing, there's somecutthroat parts of private lending
and note investing.
I think you know that too.
But those that have anabundance mentality really know that
if they're going to providethe most value to their clients,
(08:36):
their borrowers, if it doesn'tfit for their buy box, then they
need to find and haveresources available to help make
sure that they don't have tosay no to that borrower.
So the ones that really do itright and provide full value to their
clients are the ones that arethinking, hey, I need to make sure
that I have a strongconnection and network so that if
this isn't right for me orit's not the right market or I don't
(08:57):
have enough capital available,then I can call a handful of people
on my Rolodex or my cell phoneand make sure that I can place them
and so they'll come back to metime and time again.
So.
But the hard part about allthat is that private lenders are,
it's only because speakeasy ishow I typically referred it to because
we eventually just come intoit by accident.
Most of us are invest in notesby accident.
(09:19):
And so trying to find thoseother peers to be able to connect
with that truly want tocollaborate can be, it can be an
uphill battle at first whenyou're first getting started because
very few people are coming outsaying I'm a private lender.
They're just saying like, hey,I'm a wholesaler and I need to connect
with flippers and things ofthat kind which make it rather difficult
(09:39):
to establish connections early on.
No, you hit the nail on thehead with that.
And because there's some verylarge institutional providers that
you know, do things in thespace and like on the note side,
again, I stumbled upon it byaccident but when I was getting started
it was hard to find peopleagain that truly were in the space.
(10:02):
Because you have some peoplewho might be brokering certain loans
or like, but people who arereally in that day to day doing it
and trying to network and justcollaborate because it's, it's a
small niche industry where itboils down to it, which is one of
the reasons why like forexample, you know, the paper trail
conference that you know,we're hosting and you're, you know,
being a big part of is tobring everybody together to network
(10:27):
and get to know other peoplealong with the content and education
you're going to get, but alsoreally building those relationships
for the long term for people.
And one of the questions I wasgoing to ask you is, you know, as
part of, you know, yourinvolvement, what's, you know, what
are a few things you wouldlove for people who attend the conference
to get out of it?
(10:48):
Well, I want them to geteducated, right.
I mean, I think that there'senough out there in social media,
YouTube, to really whet yourappetite to want to invest in notes
to create a passive source of income.
These are just some of thosebuzzwords that are out there, but
there's not a lot of reallydeep education on it.
And so I find that when I'mworking with new and aspiring private
(11:09):
lenders and note investors,they just, they're, by the time they
say yes, they're ready to fundthe first deal that comes across
their plate.
And, and I will both say thatwe know that like that's absolutely
not what they're supposed todo, right.
And so really creating thatplanning and being at an event like
this where you can get areally wide swath of education and
workshops across all three nonperforming loans, seller financed
(11:32):
loans, how to find and fund aprivate money loan, there's a lot
of synergies between all threeand quite frankly, it's not mutually
exclusive either.
And so to be able to beexclusive, exposed to all three different
facets of passive investingand note investing I think is really
incredible because dependingon your station in life, you might
(11:54):
choose to want to do note investing.
And depending on your risktolerance or how autonomous you want
to be and controlling you needto be on that, you might want to
go and find your own loan andfund it yourself just because you
want to make sure that youhave that initial connection with
the borrower.
Everybody comes at it fromdifferent perspectives and different
(12:14):
stations of life.
And so that's what I think isreally unique about this conference,
is that it will really giveyou some deep exposure and help you
create a lot of connectionswith people who are already in that
space to help you make areally well rounded decision on where
you want to place your capitaland how.
And perfect example was weearlier this week received a pool
(12:35):
of assets from somebody whereyou had to buy was eight assets,
so you had to take all of themdown and reviewing them.
One of them was a rap note andI'm like, wow, I have never seen
a rap before.
And you know, I bought, youknow, hundreds and hundreds of loans
and first thing I did is like,I know this person I, you know, had
them on my podcast previouslywho has done wraps and I reach out
(12:58):
to him, got on the phone and,you know, pulled up, you know, the
zoom and went through the, thedeed of trust and just tried to understand
kind of the logistics of it.
It made sense, but there wasnuances that I just wanted to make
sure I understood in regardsto the whole process.
And if I was just gettingstarted out like when I did almost
10 years ago, I would havejust basically been like, nope, I'm
(13:21):
not even going to consider anyof these because, you know, one loan
in that thing, like, couldkill me because I don't know, you
know, and I'm an engineer, soI need to know everything, of course,
and it's like, I don't knowit, so I would miss some of these
opportunities.
But I think a, like you said,getting that education component
to it, but also understandingthe breadth, the depth of everything
(13:45):
and knowing those people,that's half the battle a lot of times
is if you don't knowsomething, it's knowing who to go
to to get that.
Answer and being exposed tothe potential pitfalls up front before
you get started.
Right.
And you and I have talkedabout like, one of the key sessions
I want to have is about takingthe fun out of funds.
There's a lot of hype aboutstarting funds, there's a lot of
(14:06):
hype about wrapped notes,there's a lot of hype about second
liens, and there are greataspects to those types of investment
strategies.
And there's also a ton ofconcern about it as well.
Right.
And so what I want to makesure happens in my sessions, and
I know that you and Fred andTracy do as well, is to ensure that
(14:27):
we're really giving them awell rounded picture so that they
understand what are some ofthose key considerations you need.
You certainly might decideafter that that you want to proceed
forward with it.
But what are some of thegeneralities and some of the foundational
things that you need to beaware of before you get started?
Because oftentimes, note,investors and private lenders, they're
ready to pull the triggerright away.
And what they lack is perspective.
(14:49):
Perspective on differentdeals, perspective on legalities,
perspective on how it shouldbe structured and what the protection
measures are.
And you can only get that bygoing and seeking out the education,
talking, others being atconferences like this so that you
really can gain exposurebefore you place your money down.
(15:10):
Because most times privatelenders I see, they're funding the
first deal that comes acrosstheir plate and it's unfortunate
because generally they runinto some areas that are kind of
scary.
Most of them don't necessarilylose all their principal, but they
do lose sleep at night.
And so it's good to be able toget out there and just learn as much
(15:30):
as you possibly can beforepulling the trigger.
Yeah.
And like you mentioned, youknow, with these things, you know,
the education component too, alot of people will take some education
and a lot of it sometimes ismarketing based.
And they'll go on this weekendand they'll learn.
They're like, I'm gonna go,I'm gonna go buy it.
And they don't know what theydon't know.
(15:50):
And one of the things that youknow, I think is great about this
conference is the fact thatthe people who are involved not only
are spending the day to day inthe business, but they're not afraid
to share the good, the bad andthe ugly.
Because a lot of times all yousee, sometimes depending on, you
know, you got to make sure youaffiliate with the right people because
(16:12):
some people only share thegood side of things.
And it's like, oh, it's risk free.
You'll make all this money,you can do this.
And if you just follow mythree step program, you know, you're
going to make all this money.
And it's, you know, that's farfrom the truth in many instances
because there's a lot of duediligence and just a lot of intricacies
(16:33):
involved in this space thatpeople gotta be aware of.
Well, yeah, and you and I seea lot of those.
Right?
Because we're out there andtrying to educate others and talking
to a lot of people about our space.
Heartbreaking stories comeacross our plates time and time again
and it's hard not to developcompassion, especially as stewards
(16:54):
managing other people's capital.
I feel like you and I are kindof that same we have, that possess
the same value in that we justdon't like to see people, good people
who have worked really hard toearn that capital lose it because
they just trusted somebody.
And that's human nature, is totrust them.
Right.
But I think that getting outthere and making sure that others
(17:17):
really ask the right questionsand have a healthy dose of cynicism
is kind of what you and I are about.
Right.
Because we just don't want tosee people make poor decisions because
it's really hard to come backfrom that now.
I saw somebody reach out to melast night and they haven't bought
any real estate yet and theyhired an Attorney.
(17:38):
An attorney recommended thatthey set up a wyoming LLC with three
California LLCs.
And I'm sitting here like, youknow, I put my head down and I'm
like, how much real estate doyou own?
Or, like, nothing.
We're just getting started.
And I'm like, you just spent.
I mean, California LLC is like800 or $900 for every LLC every year.
(18:01):
So I'm like, you're spending$3,000 a year just on, you know,
a corporate structure that ifyou're just getting started, you
don't need.
Like, you know, and sometimes,again, it's this person went on Google
and.
Or saw a YouTube video, andthis person looks very trustworthy.
And then, you know, but theydon't, you know, do that next step
(18:21):
or, you know, reach out topeople and ask the question or a
lot of times people ask that,unfortunately, ask that question
too late.
And it's sad when I hear thesestories of people who, you know,
go through some of these losses.
I had someone reach out, andagain, we run a fund, and somebody,
one point in time made acomment to us, hey, I can invest
in a fund that matches your fund.
(18:42):
But basically they might.
Well, you pay in a year, theypay in a quarter.
And I was like, well, I don'tknow how they can do that.
I don't know any, you know,I'll say note, investing, lending
fund, or anything that canoffer, you know, 30 to 40% returns.
I just don't know how they cando it.
So they must have some magicsecret sauce.
(19:03):
But I'm surprised they'reasking for money from a regular investor
and they don't have some Wallstreet company basically knocking
down, bulldozing down theirdoor, and six months later, it's,
you know, on the news of, youknow, a complete scheme where people
have lost, you know, prettymuch everything.
It's just unfortunate when youhear people go through those stories.
(19:26):
And again, that's just on oneside of things, but every part of
investing is about kind of due diligence.
So 100%.
I just did a localpresentation about how not to get
to get scammed and had to,unfortunately, use a number of those
examples.
I mean, in the markets thatwe're in, we don't see a lot of these
Ponzi schemes come outlocally, like on American Creed or
(19:48):
in the news.
They seem to be isolated in certain.
Certain states and marketsquite a bit.
But it does happen.
And unfortunately, you know,honestly, sometimes it's just a simple
Google search with their name,and we actually pulled up somebody
Locally and, you know, puttheir name.
A lot of good stuff comes up.
And he has started entityafter entity does a lot of training.
(20:10):
Does.
Brings a lot of people in.
Just a lot of.
I.
You can't even call it scamsor fraud.
It's just negligence.
And ignorance can lose youmoney too.
Right.
They don't have to benefarious in what they're trying
to accomplish or take your funds.
It could just be stupidity.
And if you put this guy's namein and afterwards then put fraud
or scam or Ponzi, then all ofthe indictments, then all of the
(20:35):
allegations came up and it wasjust a simple search, you know, and
so some of those things thatjust need to be taught.
It's unfortunate that we haveto sort of burst people's bubble,
but I think it will help themin the long run to know that, yeah,
bad things can happen in anyinvestment, and we just want to make
sure that you're doing it assafely and securely as possible.
(20:57):
Yeah, it's funny you mentionedthat, because I know of an investor
who runs a fund and they weretrying to, you know, expand and get
a line of credit.
And basically there's publicrecords in regards to the lawsuit,
high level.
They essentially had to prepaylike a year's plus interest as part
(21:20):
of trying to get the loan.
They wired all of this money,which was millions, to this entity
that was going to give themthe loan.
And if you would have justgoogled the three people or two people
were involved in this entity,they have been, you know, fraudulent
in many different transactionsin the same exact manner.
(21:40):
And you know, one thing, andI'm not saying this in this case,
but I'd say this overall ingeneral with anybody.
Don't let your ego get in the way.
You know, don't pretend youknow it all.
You know, listen to yourattorneys, do, you know, do the diligence
and just, you know, make surethat you just talk through everything
(22:02):
with, you know, people that,you know.
And, you know, this person, Ibelieve, ended up getting it resolved
or whatever the case may be.
But it didn't, I'm sure,happen overnight and took a very
long time, which I can onlyimagine how many sleepless nights.
But like you said, a quickGoogle search before any of this
would even started, itwouldn't even have been down that
path.
(22:23):
We had somebody reach out tous about a loan recently that we
would potentially keep on ourbalance sheet.
And person appeared like verygreat background.
But then again, did a Googlesearch on this person and they had
some criminal history that waspretty nasty.
And it's like, this isn't thetype of person I kind of want as
(22:44):
a borrower.
So I don't even think it's ego.
I think a lot of these peoplejust really want to believe.
Right?
Yeah.
It's that fear of missing outand that confirmation bias because
everyone's telling you, yeah,this is great.
And taking everything at facevalue rather than doing your due
diligence, which honestly justtakes a lot more work.
Cool.
(23:05):
Well, Beth, as we wrap up thisepisode again, we want welcome everyone
to please sign up for get yourtickets@papertrailconference.com September
18th to 20th in Chandler, Arizona.
Beth is moderating andspeaking on many panels there.
Last question I'll ask you iswithout giving away the entire secret
(23:29):
sauce of everything you'regoing to be teaching people, what's
something that you want themto definitely walk away from after
the conference?
What do you want them to feel,learn or think differently about
attending the conference?
I want them to feel as thoughthey have a strong confidence and
competence level in becomingand growing as a private money lender
(23:53):
and really being in tune withwhat their why is why they want to
get into it, whether that'sbeing an active business owner or
doing it as a passive sourceof income.
And then to create someconnections because private lending
really is a team sport.
All note investing is.
So creating some connectionsthat you can call down on after the
conference is over to continueyour education and your curiosity
(24:16):
and your learning beyond thosereally packed three days is going
to be incredibly important andthat's what I hope they get.
Great.
If people want to reach out toyou before the conference, what is
the best way people can get intouch with you?
Well, you can find my contactinformation on lend to live.com that's
(24:36):
lend the number two live.comI'm also on Instagram @lendtolive
Beth and I'm on Facebook asBeth Pinkley Johnson.
Great.
Well, Beth, thanks for comingon today and I look forward to seeing
you in a few months.
Likewise.
Thank you everybody.
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