January 24, 2024 • 33 mins
Our candid conversation dives into the trust factor essential for fruitful collaborations between private investors and real estate experts. We offer a roadmap for navigating the diverse investor profiles, emphasizing how their unique investment history and requirements must align with property deals to ensure mutual success.
As we chat, anecdotes reinforce the golden rule of investing credited to Warren Buffett: safeguarding your capital is key. I recount tales of loss and recovery, driving home the importance of a well-balanced portfolio and strategic allocation to weather market storms. Jay and I also unpack the intricacies of demographic insights, risk comfort levels, and the role self-directed IRAs play in fortifying an investor's financial fortress.
Rounding out our discussion, the spotlight turns to the critical aspect of risk management in note investments and the concept I call Hypothecation. Transparency with capital partners, the safeguarding measures in place, and the process of risk mitigation come to the fore as we emphasize the importance of building lasting trust. I also share pointers on spotting potential red flags in investment deals and offer practical tips to private investors, ensuring they step into the investment arena with their eyes wide open.
Resources and links discussed:
- Videocast on our YouTube Channel
- ANB Funds Website - https://anbfunds.com
- Cassidy Investments - https://cassidyinvestments.com
About the Host:
Justin Bogard – Note Investor specializing in performing Residential Real Estate Debt. He finds deals and acquires them for his own portfolio as well as educates investors while walking them through the process of owning a Real Estate Note!
Connect with the Host:
Facebook - bethebank
Twitter - bethebank1
Instagram - bethebankpodcast
American Note Buyers - https://anbfunds.com/
Monthly Broadcast - https://youtube.com/playlist?list=PLzc944w1xydt5aLDrrEPHJhdJeDkBjjD4
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Narrator (00:01):
Interested in real estate.
How about wealth?
Well, they go hand in hand, andhere you'll learn all about it.
Welcome to Be the Bank, apodcast where we discuss and
debate the topics centeredaround real estate investing.
Your host, Justin Bogard,shares insights into investing
in real estate to create realwealth and passive income for
(00:22):
you and your family.
He'll share stories of realestate investments done right,
Walk you through the process ofowning a real estate note and,
most importantly, educate you soyou can Be the Bank.
This is Be the Bank, brought toyou by American Notepad.
Now here's your host, JustinBogard.
Justin Bogard (00:45):
Hello listener, and welcome to the Be the Bank
podcast.
This is season six, episodenumber two.
Today I got my good friend, mrJay Redding.
He only lives a couple hoursaway from me and we're going to
be talking about passiveinvestors or sometimes we'd like
to name this as privateinvestors and we're going to be
having a good discussion aboutthat today.
So stay tuned.
Mr Jay Redding, how are youtoday?
Jay Redding (01:18):
Hey, justin, doing fantastic Good seeing you, and
thank you for having me on board.
I appreciate it.
Justin Bogard (01:25):
You're welcome, my friends, Since we're only a
few hours apart.
I'm in Fisher's Indiana, You'rein Fort Wayne.
I think we've teased each otherbefore.
Jay Redding (01:33):
We've got about a half degree difference between
us and temperature A half ormaybe a degree on a really good
day yeah.
Justin Bogard (01:40):
Yeah, so it's currently, as we're recording
this, it's about eight, ninedegrees outside Full sun, though
I mean you can't go wrong fullsun.
Luckily for me, I have enoughwindows where I'm at to where
the sun heats up the livingspace here, so I don't have to
turn on the heater very often.
Jay Redding (01:59):
You probably get a little bit more sunlight than
what we do up here, because weget the effect off of Lake
Michigan with all the clouds inthe winter, so there's days at a
time that it's cloudy, so Now Itell you what.
Justin Bogard (02:12):
That is probably the worst for me.
I'm sure most people like ustoo.
But when it's cold wintertimeand it's really cloudy and the
sun doesn't come out for acouple of days, it's just like,
man, you just can I just stay inbed Like it's just, it's just
bad.
So I've learned to not makereally major decisions when the
weather is like that, becausethey're probably going to be a
(02:34):
bad decision.
It's good to see the sun,though.
It's a great day, it's good.
Oh man, it feels great.
I kind of put my hands outthere by the window when the
sunlight comes out to me, like,okay, I'm going to get some
vitamin D going in me, get myenergy up, get excited.
I got Jay Reading on today.
So, jay, I started opening upthe package here with talk about
(02:54):
private investors slash passiveinvestors.
You know they basically arepassive investors.
Jay Redding (02:59):
So I call them capital partners.
That's what I call capitalpartners.
Justin Bogard (03:04):
Yeah, this is great.
What other names have you heard?
Jay Redding (03:07):
Oh I, private investors, yeah, or private
lenders, but I just like callingthem capital partners.
Justin Bogard (03:13):
No, I'm glad that you mentioned that, because I
guess that's something that weneed to explain is that there
are so many different thingsthat we call these types of
individuals and basicallythey're just looking for people
to spend their money activelywhile they are receiving the
passivity of it A good way toexplain it.
Jay Redding (03:29):
Yeah, I mean many times.
They're busy professionals,they're busy individuals.
It's already you know they'rebusy in their career.
They want to get a betterreturn with essentially without
the volatility of the market.
They're looking for a betterreturn than a savings account or
a CD and they're willing totake on, you know, or they're
(03:51):
willing to accept some moderaterisk for that, but not
extravagant, but they just wantit to be.
You know they want their moneyworking for them, but they don't
want to be in the middle of thegame.
They trust.
Honestly, the most criticalpart here is they trust you.
They trust me.
All right that we're.
(04:12):
We know what we're doing, we'reexperienced, we have a track
record behind us that shows thatwe are doing it in the right
way and performing and they gainthe benefits of it, and allows
us to have more capital to beable to find deals and create
greater cash flow so that we allbenefit.
(04:33):
So it's a win-win for everyone.
Justin Bogard (04:35):
Jay, I want to dive a little bit deeper into
the the past of investor hereand have you modeled or profiled
the investors that have workedwith you for all the stuff that
you guys do with real estate andraising capital as far as like,
what specifically have theybeen investing in before they
kind of came to Jay, or maybethey most of them have already
(04:58):
been in real estate and try todo some sort of real estate
lending?
Jay Redding (05:00):
Sure, oh, that's a great question.
I think there there's a coupleof different avatars here that
you have to be aware of and itkind of depends from this
standpoint of who you arelooking for, your particular
type of investment.
All right, on the real estateside, and for the people who
(05:26):
don't know, we have 40 rentalsof our own.
We've done over 100 retailflips and we we buy, we create
notes and we sell notes as well.
Okay, so we're all in this samegeneral space.
But if I'm looking for apassive investor who is, I'm
(05:46):
going to bring him on board forus to do a retail flip.
Okay, particularly when I wasjust starting out.
That's a totally differentProfile then, someone that looks
that wants the long-term play.
So I think it's alwayscritically important on the
investment that you have is whatis the Individual or your
avatar that you're looking forfor the investment that you've
(06:09):
got going on right right now?
Justin Bogard (06:12):
That's fair we have.
Jay Redding (06:13):
Yeah, we have found for us.
We've we've had people who arebusy.
Basically they're busy in theircareers.
My typical avatar avatar issomeone who's willing to be with
us five years, all right, andwe typically set up things like
five years at a time with theability renew and, quite
(06:34):
honestly, most of them renew.
Justin Bogard (06:36):
Okay, once they start receiving that income,
they'd like it.
Jay Redding (06:39):
Yeah, exactly so.
The scenario is is that they'rebusy in their own careers there
, you know, they've got kids,wife, they're active.
They just want a better returnand know that it is.
I won't say the risk is minimal, all right, it's not an
extravagant risk, all right, andthey've got something that's
(07:00):
backing that.
That is a solid asset Versuswhat's all called the securities
high.
Yeah, yeah, so it's secure ties,there's something that can
protect them.
It's always, and just so.
You know this.
We both have talked enoughpeople.
It is always number one.
The first priority is thepreservation of capital.
(07:20):
Yeah, it gets to all right.
What kind of returns are youlooking?
How does this look when I getpaid?
You know all the other things,but you got to make sure that
your capital partner feelscomfortable, that their capital
is preserved, and that's that isfirst and foremost.
Justin Bogard (07:38):
Have you seen a lot of your investors that that
you get private money from?
Have they been burnt by asimilar other type of investment
or they just simply looking forsomething else?
I'm saying that because a lotof people that end up Following
me or end up coming over toAmerican note buyers is they.
(08:00):
They really are getting tiredof the stock market Is the very
common thing I want to say.
Rarely do I hear anything elsebut about the stock market.
Is that?
Is that the same with you?
Jay Redding (08:09):
Yes, it is.
You know, and a lot of peopleI've had people who have
Challenged me whenever I've beenmaking my presentation, as I'm
sure you have as well.
Oh yeah, all right.
They'll say, well, I can makemore money in the in the market.
I said exactly, and you canlose a lot more too, very
quickly.
Yes, that's not the game thatwe're playing.
(08:30):
Yet.
You know, I always say all right, every Knowledgeable or
experienced investor has acertain amount of money that
they have for immediate needs.
They have in a conservativearea's fixed income assets, and
then they have some into.
Know, they have money.
It's in the markets.
All right, where, where?
(08:53):
Which bucket are we playing in?
We're playing in the fixedincome asset bucket and I can
always argue from the standpointyou know.
What are you getting on your CDs?
What are you getting?
What are you getting oninsurance products?
What are you getting in bonds?
What are you getting in T bills?
All right, we're paying you ahigher return back by a solid
(09:13):
asset that will never be worthzero.
Okay, you could be in the stockmarket and your paper can be
worth zero, all right, andYou're rewarded for that.
But do you want to play thesteady, eddie?
I always do the analysisbetween the tortoise and hare.
You know the hare?
The rabbits going all over theplace.
That's the stock market.
Where do you want to be thetortoise?
(09:33):
That's green, nice and steady,and Eddie and predictable, and
you sleep well at night.
That's us.
We're boring, okay, but we makeyou good money, okay.
Justin Bogard (09:48):
Right, we're the Babe, the brave Ruth of
investments.
We're just getting base hits,right.
Yeah, I'm sorry, not Babe Ruth,pete Rose, there we go Pete.
Narrator (09:55):
Rose investments yeah, we're just getting base hits
all the time.
Justin Bogard (09:58):
I don't know why I said Babe Ruth Exactly.
I guess they might be somewherein size at some point in their
careers.
Jay Redding (10:04):
We get home runs for once in a while in there.
He certainly had plenty of them, but he had probably more
strikeouts than most people do,that's true, I don't have that
to get hits.
Justin Bogard (10:15):
Yes, yes, so most the common trait that I'm
hearing from your side is theyare interested in more
conservative type of investmentsas opposed to more aggressive
type of investments, correct?
Jay Redding (10:28):
Consistent team predictability is what they want
.
These would not be Bitcoinshoppers.
Justin Bogard (10:32):
These would not be people looking at, maybe like
oil and gas, maybe I don't knowif oil and gas would be more
risky or not.
I honestly don't know.
I'm just saying that out loud.
But yeah, okay, that's theprofile that fits us as well.
Jay Redding (10:51):
They might invest in those things.
They might invest in oils andthe stocks and gas and all the
other things, but they don'twant all of it there.
Narrator (11:03):
Correct.
Jay Redding (11:04):
Yeah, they want a portion of it somewhere else.
That's pretty well protected.
Justin Bogard (11:09):
They want a lion's share of what they're
investing in.
They want it more conservative,controlled and obviously
secured.
So they're okay with taking alower return because they
anticipate they'd much ratherhave safety than they would
volatility.
Jay Redding (11:23):
Yeah, and that becomes more and more important
as people get closer toretirement age.
Oh yeah, oh my gosh, I can backin 2008.
I can remember for many of youwho do not know my background, I
actually was in pharmaceuticalsales for 17 years.
I remember back in that erathere were some physicians that
(11:46):
I called on who actually hadretired right before 2008 and 10
.
All that hit and they had tocome back to work.
Oh geez, okay After all that,because they lost so much in
their portfolio.
What people don't realize isthat, okay, you lose 20% or 10%
in your portfolio and yourfinancial advisor is going to
(12:10):
say, oh, you don't want to getout.
You don't want to get out nowbecause it's a dollar cost
averaging, but what you know?
And maybe you're up 20% thenext year.
Well, do you not realize yougot?
Even if you increase 100% inthe next year, you're only
halfway there to what you lost.
All right, previously.
(12:31):
I am much more of the warmBuffett camp.
It's like his.
He essentially states and hehas said this on more than one
occasion so you know this islike.
Your first rule of investing isnot to lose money and the
second rule of investing isdon't forget the first.
Justin Bogard (12:48):
Don't forget the first rule Okay.
Jay Redding (12:49):
Don't forget the first rule.
It's like okay, I get that, Allright, so you know, if you
don't lose money, you don't haveto have huge returns.
Justin Bogard (13:00):
Right.
Jay Redding (13:02):
And that's and that's.
You know, everybody's lookingfor the huge returns on the
market and everything.
And then you get burnt.
Well, now you're.
You've lost everything that yougained.
Don't lose.
Justin Bogard (13:12):
Yeah, sorry, yeah .
So so can we refer to you nowas Jay Reading the drug lord,
because I forgot that youweren't.
Narrator (13:20):
No, no, no, no, don't do that.
Justin Bogard (13:22):
Okay, all right.
All right, we'll delete that.
Jay Redding (13:25):
I'm not even going to say what I sold, okay.
Justin Bogard (13:29):
Now I got to change the podcast episode.
I ruined my one liner here.
Oh man, what?
I?
At some point I wanted to findout more demographics about my
investor and I say my investorsingular, but I mean you know
plural and plural sense and so Isent out a survey and I asked
(13:52):
some specific questions and Ikept it private and I said, hey,
this is, this is secure.
You know, no one's going to seethis but me.
But I'm trying to gain clarityon all of you that trust me and
want to invest with me so that Ican go advertise to people just
like you, obviously right,Trying to build, build my report
that way.
And so I was asking themquestions about, like how long
they've been educated, you know,what kind of degrees do they
(14:14):
have?
Was it just college, Was itjust high school?
Or they, you know they'vedoctorate and just talking about
, like what kind of salary theymake with their W2s, Like where
do they work.
And I asked them other questionsabout, you know, like their
retirement, like what are theiropinions on their retirement?
I gave them some multiplechoice answers and stuff and I
was really surprised by theanswers that a lot of people
(14:38):
that happened to be in ourdatabase.
At the time, the answer tothese questions a majority of
them were like very welleducated people.
They were obviously reallyconservative and stuff.
So they had a lot of similartraits and I kind of knew that,
but I didn't really know thattill I asked the question.
So have you ever done anythinglike that with your investor
database?
Jay Redding (14:56):
I have not.
I was really curious to seewhat you uncovered.
If I was going to guess, justknowing, just thinking off the
top of my head of our investorprofile all of them are well
educated.
Okay, they're business owners,they're physicians, they're
(15:18):
upper management, they make agood income, they've got
investable income, they have a401k.
I mean some of our favorite andhelping people get started.
One of our favorite avenues ishelping people who maybe had a
401k at an old employer but theydidn't necessarily roll it over
(15:38):
.
We'll help them get that rolledover to a self-directed IRA and
start making that make money.
Justin Bogard (15:47):
So that brings up my next question to talk about
and do you have most of yourinvestors just use their
retirement account to invest inthis stuff passively, or has it
been cash mix of both, like whathas been your experience in
your database?
We?
Jay Redding (16:04):
have both.
I mean, we have some who have.
We have one couple that's withus, that we actually help them
sell their real estate portfolioand they decided to invest with
us because we helped them selltheir portfolio.
So the bottom line is thatwe've got both self-directed IRA
(16:32):
money as well as people whojust have funds and an LLC.
They have investment money thatthey have and an LLC that
they're maybe buying some otherthings, or they've got loose
chains.
They don't know where to moveit right now, so they're willing
to do something with this.
(16:53):
I'm thinking of a couple here.
They're a little bit moreaggressive and they're wanting a
higher return, but for thesafety, particularly in a
volatile market, they're willingto take a little bit lower
return because they actuallyhave their money deployed and
it's making something ratherthan sitting idle somewhere
because they didn't have a dealto invest in at that point in
(17:14):
time.
Justin Bogard (17:16):
That's a yield killer.
Right there is when.
I say that we kind of have amixed bag, so we're more strong
with the fund that we have.
We got probably 75% retirementmoney and the other is cash.
When I was doingHi-Po-Thic-Tions and flipping
notes to people, it was honestlyprobably 50-50, 50% cash
(17:39):
investors, 50% retirementinvestors.
So I thought that was kind ofan interesting stat as well.
Jay Redding (17:45):
So interesting.
Now I'm curious for you, thosethat you Hi-Po-Thic-Tied with,
or have those ended up beingsome investors who have put
additional money into the notefund?
Justin Bogard (17:59):
Yeah, exactly right.
Yeah, they fit the profile ofthe fund perfectly because it
says exactly what they're doing.
So for those of you that don'tknow what the Hi-Po-Thic-Tion
term is, we're just basicallysaying Jay, I'd like to borrow
some money from you and I'mgoing to go invest in this loan
with your money.
But I'm going to put in some.
I'm not going to have some skinin the game too, but I'm
basically leveraging your moneyto go out and buy another loan.
(18:20):
That's what the Hi-Po-Thic-Tionis.
So it's like for the landlordthat goes out and get a mortgage
for a rental.
It's like how we get a mortgagefor the mortgage that we're
buying.
Jay Redding (18:29):
Yeah, we go about it.
We typically will buy the noteourselves.
That's what we'll do with ourown capital, and then we will
Hi-Po-Thic-Tied to pull ourcapital out.
Same thing right.
Yeah, yeah, it's the same way.
We're just backing into alittle bit different direction
and how you typically go Okay.
Justin Bogard (18:48):
so when things go bad, I want to know how that
never happens, that neverhappens.
Jay Redding (18:52):
You know, you know that never happens, it never
happens.
Justin Bogard (18:54):
Not on camera.
Jay Redding (18:56):
We'll say that Not on a camera.
It never happens.
Justin Bogard (18:59):
Though Now the cameras are front of you, buddy.
By the way, you guys can checkout the YouTube channel American
Notebuyer's YouTube channel andlook at the video stream of
this podcast as well.
You can see Mr Jay Redding inhis beautiful mahogany cabinet,
behind him with his trophy ontop of the curtains.
No, that's just the figurine upthere, and you can't want people
to—we could have got more viewson YouTube if you would have
(19:20):
just said something fancy man,all right, when things go wrong,
how do you handle it?
Meaning?
So, let's talk aboutHi-Po-Thic-Tied, for example.
Sure, so you're borrowingsomebody's money and you're
going out and buying a passiveinvestment with it and you're
getting cash flow from thispassive investor.
If that passive investmentdoesn't give you the cash flow,
(19:42):
you're still on the hook to payyour investor.
What do you do in thosescenarios and how do you handle
that with your investors?
Jay Redding (19:51):
And do you say, oh crap when that happens.
Justin Bogard (19:57):
That says oh, I want.
Jay Redding (19:59):
So well, there's two things, all right.
Number one is that we alwayskeep reserves back for that type
of situation.
All right, we will continue topay the underlying borrower, the
person that we have borrowedfrom.
(20:19):
We will continue to pay them asour obligation, yeah.
However, in our legal documents, we do have the right to stop
payment if we determine that weare going to pursue foreclosure
on the note and we take a lot oftime to explain that to the
(20:41):
borrower, excuse me, to theprivate lender, to our capital
partner.
What they need to understand is,just because we're not paying
at that particular time, theinterest that is due to them
does continue to accrue.
(21:04):
And when we up through theforeclosure process and when the
note is foreclosed upon and thejudgment is made and the
property is sold at the share ofsale, all of that kind, those
are all legal collectiblebalances that come back and
(21:25):
they'll get paid at one lump sum, and that's why it's critically
important that we explain thatyou need to be using money.
That's investing money, notmoney that you are looking to
live on.
Exactly, we typically will notgo that route unless it gets to.
We're not going to jeopardizeand put the company into a
(21:45):
negative position, but as longas we potentially can and we
keep funds in reservespecifically to handle that, it
does come back and we have gonethrough that process before it
does come back and they get madewhole at that point they just
need to understand and we haveit written in our documents.
(22:08):
If a loan gets 90 days behind,we give them a call and let them
know where we stand at thatpoint in time is what we
basically do.
Fortunately, that has onlyhappened once, so that's a good
thing.
So hopefully we continue topick good notes.
Justin Bogard (22:25):
Yeah, I think that's the key is, whatever
you're buying with their money,you want to make sure it's a
strong asset that does performor at least have some low risk
in the deal.
Because in the event of goingthrough a foreclosure and I'm
glad that and I wasn't surprisedthat you gave that answer,
because you're a good guy andyou're a good fiduciary and
(22:46):
steward of other people's moneyand I try to instill the same
thing as well so we'll do thesame thing.
We'll definitely fold thepayment as far as we'll start
paying on it if our borrower isgetting behind.
But we'll also put a and youprobably do this too so if the
borrower that on the loan that Iam getting, where I'm receiving
the passive income, if they'redue on the first of the month,
(23:08):
I'll probably change to myinvestor, my lender, like
they'll get paid on the 10th or15th of the month.
So it gives me a little bit ofbuffer as well.
So I'm not going to be negativecash flow very often, but if I
am, obviously I'm going to makesure that they're paid to take
care of, because, you're exactlyright, the clock of accruing
interest is Turning if I'm notmaking the payment to them.
So no matter what happens onthis side of the investment,
(23:31):
there side of the investment,they're still going to get paid
and taken care of.
It's just that they might notget the cash flow.
So, and knowing your investorand knowing how they would react
to that and and having thatconversation, that Transparency
with them is absolutely criticalbecause it builds and fosters a
relationship for the future.
So all of our investors luckily, they like us and they still
want to do business with us andI've tried to instill that stuff
(23:52):
and it sounds like yourlong-term relationships have
experienced the same thing withyou.
If anything goes bad, you'regonna take care.
Jay Redding (23:58):
We're gonna oh, we're gonna take that sword.
Yeah, we're gonna take thatsword.
Before we ever.
Well, I've been doing this downfor almost 20 years and there
has been no lender or capitalpartner that has ever lost a
dime while working with us, so Ithink, that's a good I think
that's a good track recordbehind us and that is the only
stat to keep track of rightthere.
Justin Bogard (24:18):
Yeah, no one really cares.
If you've done 20 million indeals, no one cares about that.
How many times have you lostsome of his money?
That's what they would neverthey never had.
Jay Redding (24:29):
So you know the other.
The other thing with that Ithink dovetails very importantly
on this as well, justin, isthat yeah and I know you do this
also when you're purchasing anote there's a couple fail safe
things in here that you need tolook at.
So we talk about, okay, if, if,then if the note that we
purchase happens to go bad andthey can, any performing note
(24:51):
can go bad at any time.
That's just the nature of thebusiness.
All right, we want to determinewhether it's something short
term or whether it's somethingit's insurmountable.
So, and we'll, we'll deal withthat as it may need be.
But as that interest isaccruing, the other fail safe
that we have in In thissituation, we typically are not
(25:13):
buying newly created.
All right, I don't know aboutyou, but I'm typically not
buying newly created notes, allright, the highest Default rate
of notes is typically in thefirst two years of her after
origination and we're nottypically buying that.
Or if we do buy one like that,then the amount of the loan in
(25:36):
relationship to the value of theproperty there's at least 30 to
40 percent of equity in thereto protect us as well.
Yeah, absolutely so that if wedo have to take it to share of
sale, all right, it, we can getall of our legal collectible
balance and there stills.
It still is Viable for anotherinvestor to purchase it and
(25:59):
rehab it and put it back on themarket.
We, we want that property tosell up the share of sale.
We don't necessarily Want totake it back.
Can we and do we have theexpertise to handle it?
If it does, yes, we do, allright.
But that's not the preferredway because we want to make sure
that our, that our capitalpartners, totally paid out at
that time and we want ourcapital back at that point as
(26:20):
well because we've we've frontedthe foreclosure process and
that takes money to go throughthat, paying attorney fees, etc.
All right, and we're frontingthat also.
So we're we're in the same boatwith the capital partner in
that respect, jay let's talk.
Justin Bogard (26:36):
Let's talk about some of the the bad actors in
our business a private investor.
They need to hear what are somered flags when they're talking
with somebody that is Kind ofpreaching.
What we're doing is like askingfor private investment capital
going to buy this asset.
What have you seen out thereReal quick that people are doing
(27:00):
that?
You need to be like hey, that'sa red flag.
You shouldn't invest withsomebody that that is like that.
Jay Redding (27:06):
Someone's not really to sit, not willing to
sit down with you one-on-one.
I love one-on-one conversationsin talking with our capital
partners to really find out whatare they wanting to accomplish.
If I can understand whatthey're trying to accomplish in
their investing, in the purposeand what's their timeline, then
(27:29):
we can Typically customizesomething that's going to fit
that they help them to achievewhat they're wanting to do.
If it's, it's just someone,it's a slick talker, they're
making a presentation and weboth make presentations, all
right, but they're not willingto give you a direct, definitive
answer on certain things or youknow.
(27:50):
In that respect, that should be, that should be one really red
flag.
I'd say another real flat redflag is if they don't have a
track, you know a track recordbehind them, okay, you know, and
we all have to start somewhere.
Okay, I mean, I get it.
All right, I understand that.
(28:12):
You know that's the firstprivate capital partners that I
had that you know they invested.
They tip their toe in the waterinitially, all right, until
they got to see how ouroperations are, what we do, that
we pay consistently every month, those types of things.
And now you know they'vethey've opened up a whole lot
more money All right to investwith us, because if you're
(28:34):
comfortable in what we do andhow we operate, disclose,
disclose, disclosures.
Yeah, you got.
You got to be forthright,honest.
You know you can't, you can'tsay here oh no, these don't ever
go bad, they do okay.
So you got to have thecontingencies in place to be
able to do that, to handle that,and do you have the knowledge
(28:55):
in which they handle?
Justin Bogard (28:57):
Those are questions that you need to be
asking I, whoever that you're,you're, you're looking to work
with, that respect I would sayprobably all the things that you
said are exactly what what Iwould say to somebody.
But also keep in mind, you know, you know you try to get from
(29:17):
them like a reference.
So who is the last person thatyou've done a deal with?
Who are the last three peoplethat you've done a deal with?
I would like to have theircontact information and talk to
them about their experience withyou, especially if you don't
know them personally and thenyou put the nail on the head
with my favorite one is theslick car salesman.
(29:37):
If it's too good to be true, itprobably is.
And what I tell people,especially if I've never met
them before, and I say look, ifyou can't put your head on your
pillow at night without beingrestless about this investment
or working with me, then walkaway, Just walk away.
Jay Redding (29:56):
We're not a fit.
Justin Bogard (29:57):
We're not a fit, then I don't want you to feel
like every time you go to bedwondering, oh my God, is my
money, am I gonna ever see mymoney again?
Like that is the last thing Iwant and I don't want you to
work with me if that's how youfeel, or with anybody else, and
so that's kind of other teststhat I tell people Like look,
there's way too many people outhere doing this type of business
(30:17):
.
There's a lot of differentpeople to choose from.
You need to find the personthat matches with you.
So I like what you said aboutthe track record.
I definitely think you shouldget some references and if
somebody's being pushy about it,that's not the person you want
to be in bed with, withespecially-.
Jay Redding (30:30):
Who did you learn from too?
I mean, I know who you learnedfrom.
You know who I learned from.
Oh yeah, yeah, yeah, if theyhappen, if the I'll say the
sponsor okay.
Or in this yeah, where did theylearn how to do this and find
out who that is?
Do they have a good trackrecord who they learned?
Narrator (30:50):
from.
Jay Redding (30:51):
All right, that's critically important.
All right, and do they have theresources?
If we say, if either one of ushappened to run into a situation
we're not sure to handle, whodo we go to?
Okay, well, I know in both ofour situations here that we have
people to go to that have beendoing this 30, 40 years.
(31:14):
I mean collectively.
They've got like 90 to 100years of experience, right?
Do you think that there's notprobably anything they haven't
dealt with?
Justin Bogard (31:24):
Right, that's our backup.
Jay Redding (31:26):
Exactly, that's our backup.
All right.
So the strength of the trainingand the knowledge and the
relationships that we have withthose who have gone before us
successfully and continue to besuccessful, that's invaluable.
That's absolutely, and that'sthis goal.
Justin Bogard (31:42):
That's what that is.
That's perfect.
Well, thanks, Jay.
I appreciate all your feedbackand your honest counter back and
forth with what we're talkingabout as private investors today
.
Jay, you, your company, isCassidy Investments and it's
cassidyinvestmentscom.
Is the website correct?
That's?
Jay Redding (31:59):
correct, that's right.
Justin Bogard (32:00):
And the best way to get ahold of you is info at
cassidyinvestmentscom.
Jay Redding (32:05):
That's the easiest way.
It comes in right into ouroffice and we'll address it as
they come in and respond, getback to you.
Justin Bogard (32:13):
That's what we'll do, and then those of you who
wanna check out Jay and hisson-in-law, kyle.
They do a note.
Talk on the last Thursday ofevery month, from 12 to one
Eastern time.
I believe it's on.
Is it your Facebook Live?
Is that what you?
Jay Redding (32:26):
do.
It's a Zoom.
It's a Zoom.
If you wanna sign up and bepart of that, just go to our
website and sign up for the livemeetings and we'll send you.
We typically send anotification out about a week
ahead and then like a day or soahead is what we basically do,
and we do it for 12 to one andpretty much we talk all things
notes.
We typically have an agenda,but we want it to be a situation
(32:51):
where it's helping you, so wetake questions directly from
whoever's on at that point andanswer your questions.
So if you have something that'sa burning question that you
don't know, the answer to bringit we're.
If I don't know, if we don'tknow, we'll go find out and get
back to you.
So how's that?
Justin Bogard (33:11):
That's all right, jay.
Thanks again for being on theshow today.
Really appreciate it.
This is season six, episodenumber two.
I'm Justin Bogart.
I got my friend Jay ready here,cassidy Investments.
You can email him info atcassidyinvestmentscom and we
will see you guys on the nextepisode.
Take care.
Jay Redding (33:24):
Jay, thank you.
Thank you, justin, my privilegebye-bye.
Narrator (33:32):
Thanks for listening to Be the Bank.
Interested in real estate.
How about wealth?
Well, they go hand in hand, andhere you'll learn all about it.
Welcome to Be the Bank, apodcast where we discuss and
debate the topics centeredaround real estate investing.
Your host, Justin Bogard,shares insights into investing
in real estate to create realwealth and passive income for
(00:22):
you and your family.
He'll share stories of realestate investments done right,
Walk you through the process ofowning a real estate note and,
most importantly, educate you soyou can Be the Bank.
This is Be the Bank, brought toyou by American Notepad.
Now here's your host, JustinBogard.
Justin Bogard (00:45):
Hello listener, and welcome to the Be the Bank
podcast.
This is season six, episodenumber two.
Today I got my good friend, mrJay Redding.
He only lives a couple hoursaway from me and we're going to
be talking about passiveinvestors or sometimes we'd like
to name this as privateinvestors and we're going to be
having a good discussion aboutthat today.
So stay tuned.
Mr Jay Redding, how are youtoday?
Jay Redding (01:18):
Hey, justin, doing fantastic Good seeing you, and
thank you for having me on board.
I appreciate it.
Justin Bogard (01:25):
You're welcome, my friends, Since we're only a
few hours apart.
I'm in Fisher's Indiana, You'rein Fort Wayne.
I think we've teased each otherbefore.
Jay Redding (01:33):
We've got about a half degree difference between
us and temperature A half ormaybe a degree on a really good
day yeah.
Justin Bogard (01:40):
Yeah, so it's currently, as we're recording
this, it's about eight, ninedegrees outside Full sun, though
I mean you can't go wrong fullsun.
Luckily for me, I have enoughwindows where I'm at to where
the sun heats up the livingspace here, so I don't have to
turn on the heater very often.
Jay Redding (01:59):
You probably get a little bit more sunlight than
what we do up here, because weget the effect off of Lake
Michigan with all the clouds inthe winter, so there's days at a
time that it's cloudy, so Now Itell you what.
Justin Bogard (02:12):
That is probably the worst for me.
I'm sure most people like ustoo.
But when it's cold wintertimeand it's really cloudy and the
sun doesn't come out for acouple of days, it's just like,
man, you just can I just stay inbed Like it's just, it's just
bad.
So I've learned to not makereally major decisions when the
weather is like that, becausethey're probably going to be a
(02:34):
bad decision.
It's good to see the sun,though.
It's a great day, it's good.
Oh man, it feels great.
I kind of put my hands outthere by the window when the
sunlight comes out to me, like,okay, I'm going to get some
vitamin D going in me, get myenergy up, get excited.
I got Jay Reading on today.
So, jay, I started opening upthe package here with talk about
(02:54):
private investors slash passiveinvestors.
You know they basically arepassive investors.
Jay Redding (02:59):
So I call them capital partners.
That's what I call capitalpartners.
Justin Bogard (03:04):
Yeah, this is great.
What other names have you heard?
Jay Redding (03:07):
Oh I, private investors, yeah, or private
lenders, but I just like callingthem capital partners.
Justin Bogard (03:13):
No, I'm glad that you mentioned that, because I
guess that's something that weneed to explain is that there
are so many different thingsthat we call these types of
individuals and basicallythey're just looking for people
to spend their money activelywhile they are receiving the
passivity of it A good way toexplain it.
Jay Redding (03:29):
Yeah, I mean many times.
They're busy professionals,they're busy individuals.
It's already you know they'rebusy in their career.
They want to get a betterreturn with essentially without
the volatility of the market.
They're looking for a betterreturn than a savings account or
a CD and they're willing totake on, you know, or they're
(03:51):
willing to accept some moderaterisk for that, but not
extravagant, but they just wantit to be.
You know they want their moneyworking for them, but they don't
want to be in the middle of thegame.
They trust.
Honestly, the most criticalpart here is they trust you.
They trust me.
All right that we're.
(04:12):
We know what we're doing, we'reexperienced, we have a track
record behind us that shows thatwe are doing it in the right
way and performing and they gainthe benefits of it, and allows
us to have more capital to beable to find deals and create
greater cash flow so that we allbenefit.
(04:33):
So it's a win-win for everyone.
Justin Bogard (04:35):
Jay, I want to dive a little bit deeper into
the the past of investor hereand have you modeled or profiled
the investors that have workedwith you for all the stuff that
you guys do with real estate andraising capital as far as like,
what specifically have theybeen investing in before they
kind of came to Jay, or maybethey most of them have already
(04:58):
been in real estate and try todo some sort of real estate
lending?
Jay Redding (05:00):
Sure, oh, that's a great question.
I think there there's a coupleof different avatars here that
you have to be aware of and itkind of depends from this
standpoint of who you arelooking for, your particular
type of investment.
All right, on the real estateside, and for the people who
(05:26):
don't know, we have 40 rentalsof our own.
We've done over 100 retailflips and we we buy, we create
notes and we sell notes as well.
Okay, so we're all in this samegeneral space.
But if I'm looking for apassive investor who is, I'm
(05:46):
going to bring him on board forus to do a retail flip.
Okay, particularly when I wasjust starting out.
That's a totally differentProfile then, someone that looks
that wants the long-term play.
So I think it's alwayscritically important on the
investment that you have is whatis the Individual or your
avatar that you're looking forfor the investment that you've
(06:09):
got going on right right now?
Justin Bogard (06:12):
That's fair we have.
Jay Redding (06:13):
Yeah, we have found for us.
We've we've had people who arebusy.
Basically they're busy in theircareers.
My typical avatar avatar issomeone who's willing to be with
us five years, all right, andwe typically set up things like
five years at a time with theability renew and, quite
(06:34):
honestly, most of them renew.
Justin Bogard (06:36):
Okay, once they start receiving that income,
they'd like it.
Jay Redding (06:39):
Yeah, exactly so.
The scenario is is that they'rebusy in their own careers there
, you know, they've got kids,wife, they're active.
They just want a better returnand know that it is.
I won't say the risk is minimal, all right, it's not an
extravagant risk, all right, andthey've got something that's
(07:00):
backing that.
That is a solid asset Versuswhat's all called the securities
high.
Yeah, yeah, so it's secure ties,there's something that can
protect them.
It's always, and just so.
You know this.
We both have talked enoughpeople.
It is always number one.
The first priority is thepreservation of capital.
(07:20):
Yeah, it gets to all right.
What kind of returns are youlooking?
How does this look when I getpaid?
You know all the other things,but you got to make sure that
your capital partner feelscomfortable, that their capital
is preserved, and that's that isfirst and foremost.
Justin Bogard (07:38):
Have you seen a lot of your investors that that
you get private money from?
Have they been burnt by asimilar other type of investment
or they just simply looking forsomething else?
I'm saying that because a lotof people that end up Following
me or end up coming over toAmerican note buyers is they.
(08:00):
They really are getting tiredof the stock market Is the very
common thing I want to say.
Rarely do I hear anything elsebut about the stock market.
Is that?
Is that the same with you?
Jay Redding (08:09):
Yes, it is.
You know, and a lot of peopleI've had people who have
Challenged me whenever I've beenmaking my presentation, as I'm
sure you have as well.
Oh yeah, all right.
They'll say, well, I can makemore money in the in the market.
I said exactly, and you canlose a lot more too, very
quickly.
Yes, that's not the game thatwe're playing.
(08:30):
Yet.
You know, I always say all right, every Knowledgeable or
experienced investor has acertain amount of money that
they have for immediate needs.
They have in a conservativearea's fixed income assets, and
then they have some into.
Know, they have money.
It's in the markets.
All right, where, where?
(08:53):
Which bucket are we playing in?
We're playing in the fixedincome asset bucket and I can
always argue from the standpointyou know.
What are you getting on your CDs?
What are you getting?
What are you getting oninsurance products?
What are you getting in bonds?
What are you getting in T bills?
All right, we're paying you ahigher return back by a solid
(09:13):
asset that will never be worthzero.
Okay, you could be in the stockmarket and your paper can be
worth zero, all right, andYou're rewarded for that.
But do you want to play thesteady, eddie?
I always do the analysisbetween the tortoise and hare.
You know the hare?
The rabbits going all over theplace.
That's the stock market.
Where do you want to be thetortoise?
(09:33):
That's green, nice and steady,and Eddie and predictable, and
you sleep well at night.
That's us.
We're boring, okay, but we makeyou good money, okay.
Justin Bogard (09:48):
Right, we're the Babe, the brave Ruth of
investments.
We're just getting base hits,right.
Yeah, I'm sorry, not Babe Ruth,pete Rose, there we go Pete.
Narrator (09:55):
Rose investments yeah, we're just getting base hits
all the time.
Justin Bogard (09:58):
I don't know why I said Babe Ruth Exactly.
I guess they might be somewherein size at some point in their
careers.
Jay Redding (10:04):
We get home runs for once in a while in there.
He certainly had plenty of them, but he had probably more
strikeouts than most people do,that's true, I don't have that
to get hits.
Justin Bogard (10:15):
Yes, yes, so most the common trait that I'm
hearing from your side is theyare interested in more
conservative type of investmentsas opposed to more aggressive
type of investments, correct?
Jay Redding (10:28):
Consistent team predictability is what they want
.
These would not be Bitcoinshoppers.
Justin Bogard (10:32):
These would not be people looking at, maybe like
oil and gas, maybe I don't knowif oil and gas would be more
risky or not.
I honestly don't know.
I'm just saying that out loud.
But yeah, okay, that's theprofile that fits us as well.
Jay Redding (10:51):
They might invest in those things.
They might invest in oils andthe stocks and gas and all the
other things, but they don'twant all of it there.
Narrator (11:03):
Correct.
Jay Redding (11:04):
Yeah, they want a portion of it somewhere else.
That's pretty well protected.
Justin Bogard (11:09):
They want a lion's share of what they're
investing in.
They want it more conservative,controlled and obviously
secured.
So they're okay with taking alower return because they
anticipate they'd much ratherhave safety than they would
volatility.
Jay Redding (11:23):
Yeah, and that becomes more and more important
as people get closer toretirement age.
Oh yeah, oh my gosh, I can backin 2008.
I can remember for many of youwho do not know my background, I
actually was in pharmaceuticalsales for 17 years.
I remember back in that erathere were some physicians that
(11:46):
I called on who actually hadretired right before 2008 and 10
.
All that hit and they had tocome back to work.
Oh geez, okay After all that,because they lost so much in
their portfolio.
What people don't realize isthat, okay, you lose 20% or 10%
in your portfolio and yourfinancial advisor is going to
(12:10):
say, oh, you don't want to getout.
You don't want to get out nowbecause it's a dollar cost
averaging, but what you know?
And maybe you're up 20% thenext year.
Well, do you not realize yougot?
Even if you increase 100% inthe next year, you're only
halfway there to what you lost.
All right, previously.
(12:31):
I am much more of the warmBuffett camp.
It's like his.
He essentially states and hehas said this on more than one
occasion so you know this islike.
Your first rule of investing isnot to lose money and the
second rule of investing isdon't forget the first.
Justin Bogard (12:48):
Don't forget the first rule Okay.
Jay Redding (12:49):
Don't forget the first rule.
It's like okay, I get that, Allright, so you know, if you
don't lose money, you don't haveto have huge returns.
Justin Bogard (13:00):
Right.
Jay Redding (13:02):
And that's and that's.
You know, everybody's lookingfor the huge returns on the
market and everything.
And then you get burnt.
Well, now you're.
You've lost everything that yougained.
Don't lose.
Justin Bogard (13:12):
Yeah, sorry, yeah .
So so can we refer to you nowas Jay Reading the drug lord,
because I forgot that youweren't.
Narrator (13:20):
No, no, no, no, don't do that.
Justin Bogard (13:22):
Okay, all right.
All right, we'll delete that.
Jay Redding (13:25):
I'm not even going to say what I sold, okay.
Justin Bogard (13:29):
Now I got to change the podcast episode.
I ruined my one liner here.
Oh man, what?
I?
At some point I wanted to findout more demographics about my
investor and I say my investorsingular, but I mean you know
plural and plural sense and so Isent out a survey and I asked
(13:52):
some specific questions and Ikept it private and I said, hey,
this is, this is secure.
You know, no one's going to seethis but me.
But I'm trying to gain clarityon all of you that trust me and
want to invest with me so that Ican go advertise to people just
like you, obviously right,Trying to build, build my report
that way.
And so I was asking themquestions about, like how long
they've been educated, you know,what kind of degrees do they
(14:14):
have?
Was it just college, Was itjust high school?
Or they, you know they'vedoctorate and just talking about
, like what kind of salary theymake with their W2s, Like where
do they work.
And I asked them other questionsabout, you know, like their
retirement, like what are theiropinions on their retirement?
I gave them some multiplechoice answers and stuff and I
was really surprised by theanswers that a lot of people
(14:38):
that happened to be in ourdatabase.
At the time, the answer tothese questions a majority of
them were like very welleducated people.
They were obviously reallyconservative and stuff.
So they had a lot of similartraits and I kind of knew that,
but I didn't really know thattill I asked the question.
So have you ever done anythinglike that with your investor
database?
Jay Redding (14:56):
I have not.
I was really curious to seewhat you uncovered.
If I was going to guess, justknowing, just thinking off the
top of my head of our investorprofile all of them are well
educated.
Okay, they're business owners,they're physicians, they're
(15:18):
upper management, they make agood income, they've got
investable income, they have a401k.
I mean some of our favorite andhelping people get started.
One of our favorite avenues ishelping people who maybe had a
401k at an old employer but theydidn't necessarily roll it over
(15:38):
.
We'll help them get that rolledover to a self-directed IRA and
start making that make money.
Justin Bogard (15:47):
So that brings up my next question to talk about
and do you have most of yourinvestors just use their
retirement account to invest inthis stuff passively, or has it
been cash mix of both, like whathas been your experience in
your database?
We?
Jay Redding (16:04):
have both.
I mean, we have some who have.
We have one couple that's withus, that we actually help them
sell their real estate portfolioand they decided to invest with
us because we helped them selltheir portfolio.
So the bottom line is thatwe've got both self-directed IRA
(16:32):
money as well as people whojust have funds and an LLC.
They have investment money thatthey have and an LLC that
they're maybe buying some otherthings, or they've got loose
chains.
They don't know where to moveit right now, so they're willing
to do something with this.
(16:53):
I'm thinking of a couple here.
They're a little bit moreaggressive and they're wanting a
higher return, but for thesafety, particularly in a
volatile market, they're willingto take a little bit lower
return because they actuallyhave their money deployed and
it's making something ratherthan sitting idle somewhere
because they didn't have a dealto invest in at that point in
(17:14):
time.
Justin Bogard (17:16):
That's a yield killer.
Right there is when.
I say that we kind of have amixed bag, so we're more strong
with the fund that we have.
We got probably 75% retirementmoney and the other is cash.
When I was doingHi-Po-Thic-Tions and flipping
notes to people, it was honestlyprobably 50-50, 50% cash
(17:39):
investors, 50% retirementinvestors.
So I thought that was kind ofan interesting stat as well.
Jay Redding (17:45):
So interesting.
Now I'm curious for you, thosethat you Hi-Po-Thic-Tied with,
or have those ended up beingsome investors who have put
additional money into the notefund?
Justin Bogard (17:59):
Yeah, exactly right.
Yeah, they fit the profile ofthe fund perfectly because it
says exactly what they're doing.
So for those of you that don'tknow what the Hi-Po-Thic-Tion
term is, we're just basicallysaying Jay, I'd like to borrow
some money from you and I'mgoing to go invest in this loan
with your money.
But I'm going to put in some.
I'm not going to have some skinin the game too, but I'm
basically leveraging your moneyto go out and buy another loan.
(18:20):
That's what the Hi-Po-Thic-Tionis.
So it's like for the landlordthat goes out and get a mortgage
for a rental.
It's like how we get a mortgagefor the mortgage that we're
buying.
Jay Redding (18:29):
Yeah, we go about it.
We typically will buy the noteourselves.
That's what we'll do with ourown capital, and then we will
Hi-Po-Thic-Tied to pull ourcapital out.
Same thing right.
Yeah, yeah, it's the same way.
We're just backing into alittle bit different direction
and how you typically go Okay.
Justin Bogard (18:48):
so when things go bad, I want to know how that
never happens, that neverhappens.
Jay Redding (18:52):
You know, you know that never happens, it never
happens.
Justin Bogard (18:54):
Not on camera.
Jay Redding (18:56):
We'll say that Not on a camera.
It never happens.
Justin Bogard (18:59):
Though Now the cameras are front of you, buddy.
By the way, you guys can checkout the YouTube channel American
Notebuyer's YouTube channel andlook at the video stream of
this podcast as well.
You can see Mr Jay Redding inhis beautiful mahogany cabinet,
behind him with his trophy ontop of the curtains.
No, that's just the figurine upthere, and you can't want people
to—we could have got more viewson YouTube if you would have
(19:20):
just said something fancy man,all right, when things go wrong,
how do you handle it?
Meaning?
So, let's talk aboutHi-Po-Thic-Tied, for example.
Sure, so you're borrowingsomebody's money and you're
going out and buying a passiveinvestment with it and you're
getting cash flow from thispassive investor.
If that passive investmentdoesn't give you the cash flow,
(19:42):
you're still on the hook to payyour investor.
What do you do in thosescenarios and how do you handle
that with your investors?
Jay Redding (19:51):
And do you say, oh crap when that happens.
Justin Bogard (19:57):
That says oh, I want.
Jay Redding (19:59):
So well, there's two things, all right.
Number one is that we alwayskeep reserves back for that type
of situation.
All right, we will continue topay the underlying borrower, the
person that we have borrowedfrom.
(20:19):
We will continue to pay them asour obligation, yeah.
However, in our legal documents, we do have the right to stop
payment if we determine that weare going to pursue foreclosure
on the note and we take a lot oftime to explain that to the
(20:41):
borrower, excuse me, to theprivate lender, to our capital
partner.
What they need to understand is,just because we're not paying
at that particular time, theinterest that is due to them
does continue to accrue.
(21:04):
And when we up through theforeclosure process and when the
note is foreclosed upon and thejudgment is made and the
property is sold at the share ofsale, all of that kind, those
are all legal collectiblebalances that come back and
(21:25):
they'll get paid at one lump sum, and that's why it's critically
important that we explain thatyou need to be using money.
That's investing money, notmoney that you are looking to
live on.
Exactly, we typically will notgo that route unless it gets to.
We're not going to jeopardizeand put the company into a
(21:45):
negative position, but as longas we potentially can and we
keep funds in reservespecifically to handle that, it
does come back and we have gonethrough that process before it
does come back and they get madewhole at that point they just
need to understand and we haveit written in our documents.
(22:08):
If a loan gets 90 days behind,we give them a call and let them
know where we stand at thatpoint in time is what we
basically do.
Fortunately, that has onlyhappened once, so that's a good
thing.
So hopefully we continue topick good notes.
Justin Bogard (22:25):
Yeah, I think that's the key is, whatever
you're buying with their money,you want to make sure it's a
strong asset that does performor at least have some low risk
in the deal.
Because in the event of goingthrough a foreclosure and I'm
glad that and I wasn't surprisedthat you gave that answer,
because you're a good guy andyou're a good fiduciary and
(22:46):
steward of other people's moneyand I try to instill the same
thing as well so we'll do thesame thing.
We'll definitely fold thepayment as far as we'll start
paying on it if our borrower isgetting behind.
But we'll also put a and youprobably do this too so if the
borrower that on the loan that Iam getting, where I'm receiving
the passive income, if they'redue on the first of the month,
(23:08):
I'll probably change to myinvestor, my lender, like
they'll get paid on the 10th or15th of the month.
So it gives me a little bit ofbuffer as well.
So I'm not going to be negativecash flow very often, but if I
am, obviously I'm going to makesure that they're paid to take
care of, because, you're exactlyright, the clock of accruing
interest is Turning if I'm notmaking the payment to them.
So no matter what happens onthis side of the investment,
(23:31):
there side of the investment,they're still going to get paid
and taken care of.
It's just that they might notget the cash flow.
So, and knowing your investorand knowing how they would react
to that and and having thatconversation, that Transparency
with them is absolutely criticalbecause it builds and fosters a
relationship for the future.
So all of our investors luckily, they like us and they still
want to do business with us andI've tried to instill that stuff
(23:52):
and it sounds like yourlong-term relationships have
experienced the same thing withyou.
If anything goes bad, you'regonna take care.
Jay Redding (23:58):
We're gonna oh, we're gonna take that sword.
Yeah, we're gonna take thatsword.
Before we ever.
Well, I've been doing this downfor almost 20 years and there
has been no lender or capitalpartner that has ever lost a
dime while working with us, so Ithink, that's a good I think
that's a good track recordbehind us and that is the only
stat to keep track of rightthere.
Justin Bogard (24:18):
Yeah, no one really cares.
If you've done 20 million indeals, no one cares about that.
How many times have you lostsome of his money?
That's what they would neverthey never had.
Jay Redding (24:29):
So you know the other.
The other thing with that Ithink dovetails very importantly
on this as well, justin, isthat yeah and I know you do this
also when you're purchasing anote there's a couple fail safe
things in here that you need tolook at.
So we talk about, okay, if, if,then if the note that we
purchase happens to go bad andthey can, any performing note
(24:51):
can go bad at any time.
That's just the nature of thebusiness.
All right, we want to determinewhether it's something short
term or whether it's somethingit's insurmountable.
So, and we'll, we'll deal withthat as it may need be.
But as that interest isaccruing, the other fail safe
that we have in In thissituation, we typically are not
(25:13):
buying newly created.
All right, I don't know aboutyou, but I'm typically not
buying newly created notes, allright, the highest Default rate
of notes is typically in thefirst two years of her after
origination and we're nottypically buying that.
Or if we do buy one like that,then the amount of the loan in
(25:36):
relationship to the value of theproperty there's at least 30 to
40 percent of equity in thereto protect us as well.
Yeah, absolutely so that if wedo have to take it to share of
sale, all right, it, we can getall of our legal collectible
balance and there stills.
It still is Viable for anotherinvestor to purchase it and
(25:59):
rehab it and put it back on themarket.
We, we want that property tosell up the share of sale.
We don't necessarily Want totake it back.
Can we and do we have theexpertise to handle it?
If it does, yes, we do, allright.
But that's not the preferredway because we want to make sure
that our, that our capitalpartners, totally paid out at
that time and we want ourcapital back at that point as
(26:20):
well because we've we've frontedthe foreclosure process and
that takes money to go throughthat, paying attorney fees, etc.
All right, and we're frontingthat also.
So we're we're in the same boatwith the capital partner in
that respect, jay let's talk.
Justin Bogard (26:36):
Let's talk about some of the the bad actors in
our business a private investor.
They need to hear what are somered flags when they're talking
with somebody that is Kind ofpreaching.
What we're doing is like askingfor private investment capital
going to buy this asset.
What have you seen out thereReal quick that people are doing
(27:00):
that?
You need to be like hey, that'sa red flag.
You shouldn't invest withsomebody that that is like that.
Jay Redding (27:06):
Someone's not really to sit, not willing to
sit down with you one-on-one.
I love one-on-one conversationsin talking with our capital
partners to really find out whatare they wanting to accomplish.
If I can understand whatthey're trying to accomplish in
their investing, in the purposeand what's their timeline, then
(27:29):
we can Typically customizesomething that's going to fit
that they help them to achievewhat they're wanting to do.
If it's, it's just someone,it's a slick talker, they're
making a presentation and weboth make presentations, all
right, but they're not willingto give you a direct, definitive
answer on certain things or youknow.
(27:50):
In that respect, that should be, that should be one really red
flag.
I'd say another real flat redflag is if they don't have a
track, you know a track recordbehind them, okay, you know, and
we all have to start somewhere.
Okay, I mean, I get it.
All right, I understand that.
(28:12):
You know that's the firstprivate capital partners that I
had that you know they invested.
They tip their toe in the waterinitially, all right, until
they got to see how ouroperations are, what we do, that
we pay consistently every month, those types of things.
And now you know they'vethey've opened up a whole lot
more money All right to investwith us, because if you're
(28:34):
comfortable in what we do andhow we operate, disclose,
disclose, disclosures.
Yeah, you got.
You got to be forthright,honest.
You know you can't, you can'tsay here oh no, these don't ever
go bad, they do okay.
So you got to have thecontingencies in place to be
able to do that, to handle that,and do you have the knowledge
(28:55):
in which they handle?
Justin Bogard (28:57):
Those are questions that you need to be
asking I, whoever that you're,you're, you're looking to work
with, that respect I would sayprobably all the things that you
said are exactly what what Iwould say to somebody.
But also keep in mind, you know, you know you try to get from
(29:17):
them like a reference.
So who is the last person thatyou've done a deal with?
Who are the last three peoplethat you've done a deal with?
I would like to have theircontact information and talk to
them about their experience withyou, especially if you don't
know them personally and thenyou put the nail on the head
with my favorite one is theslick car salesman.
(29:37):
If it's too good to be true, itprobably is.
And what I tell people,especially if I've never met
them before, and I say look, ifyou can't put your head on your
pillow at night without beingrestless about this investment
or working with me, then walkaway, Just walk away.
Jay Redding (29:56):
We're not a fit.
Justin Bogard (29:57):
We're not a fit, then I don't want you to feel
like every time you go to bedwondering, oh my God, is my
money, am I gonna ever see mymoney again?
Like that is the last thing Iwant and I don't want you to
work with me if that's how youfeel, or with anybody else, and
so that's kind of other teststhat I tell people Like look,
there's way too many people outhere doing this type of business
(30:17):
.
There's a lot of differentpeople to choose from.
You need to find the personthat matches with you.
So I like what you said aboutthe track record.
I definitely think you shouldget some references and if
somebody's being pushy about it,that's not the person you want
to be in bed with, withespecially-.
Jay Redding (30:30):
Who did you learn from too?
I mean, I know who you learnedfrom.
You know who I learned from.
Oh yeah, yeah, yeah, if theyhappen, if the I'll say the
sponsor okay.
Or in this yeah, where did theylearn how to do this and find
out who that is?
Do they have a good trackrecord who they learned?
Narrator (30:50):
from.
Jay Redding (30:51):
All right, that's critically important.
All right, and do they have theresources?
If we say, if either one of ushappened to run into a situation
we're not sure to handle, whodo we go to?
Okay, well, I know in both ofour situations here that we have
people to go to that have beendoing this 30, 40 years.
(31:14):
I mean collectively.
They've got like 90 to 100years of experience, right?
Do you think that there's notprobably anything they haven't
dealt with?
Justin Bogard (31:24):
Right, that's our backup.
Jay Redding (31:26):
Exactly, that's our backup.
All right.
So the strength of the trainingand the knowledge and the
relationships that we have withthose who have gone before us
successfully and continue to besuccessful, that's invaluable.
That's absolutely, and that'sthis goal.
Justin Bogard (31:42):
That's what that is.
That's perfect.
Well, thanks, Jay.
I appreciate all your feedbackand your honest counter back and
forth with what we're talkingabout as private investors today
.
Jay, you, your company, isCassidy Investments and it's
cassidyinvestmentscom.
Is the website correct?
That's?
Jay Redding (31:59):
correct, that's right.
Justin Bogard (32:00):
And the best way to get ahold of you is info at
cassidyinvestmentscom.
Jay Redding (32:05):
That's the easiest way.
It comes in right into ouroffice and we'll address it as
they come in and respond, getback to you.
Justin Bogard (32:13):
That's what we'll do, and then those of you who
wanna check out Jay and hisson-in-law, kyle.
They do a note.
Talk on the last Thursday ofevery month, from 12 to one
Eastern time.
I believe it's on.
Is it your Facebook Live?
Is that what you?
Jay Redding (32:26):
do.
It's a Zoom.
It's a Zoom.
If you wanna sign up and bepart of that, just go to our
website and sign up for the livemeetings and we'll send you.
We typically send anotification out about a week
ahead and then like a day or soahead is what we basically do,
and we do it for 12 to one andpretty much we talk all things
notes.
We typically have an agenda,but we want it to be a situation
(32:51):
where it's helping you, so wetake questions directly from
whoever's on at that point andanswer your questions.
So if you have something that'sa burning question that you
don't know, the answer to bringit we're.
If I don't know, if we don'tknow, we'll go find out and get
back to you.
So how's that?
Justin Bogard (33:11):
That's all right, jay.
Thanks again for being on theshow today.
Really appreciate it.
This is season six, episodenumber two.
I'm Justin Bogart.
I got my friend Jay ready here,cassidy Investments.
You can email him info atcassidyinvestmentscom and we
will see you guys on the nextepisode.
Take care.
Jay Redding (33:24):
Jay, thank you.
Thank you, justin, my privilegebye-bye.
Narrator (33:32):
Thanks for listening to Be the Bank.
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