In today’s episode, we are with David Pupo, a realtor and one of the owners of Florida House Buyers, a local real estate investment company offering services such as short-term and long-term wholesaling, multifamily investments, and property renovation. David is passionate about continued education and creating solutions. These allow him to help other investors avoid rookie mistakes and accelerate their success toward creating an efficient and profitable business.
David and his team have sold over 300 properties while simultaneously building a portfolio of rentals. But this was not that easy with the adversities caused by inexperience and poor decisions made along the way.
Today David shares with us how he started raising private capital with the help of local REIAs and the lessons he learned along the way.
Key Takeaways:
- Start somewhere and build a good brand and reputation – connect with your local REIAs
- Learn to take a step back and consider possible risks.
- It is essential to have a complete property analysis ready when getting investors on board.
- Pay to play: Seek the lowest payment that benefits you and make the most of it.
- How to utilize the BRRRR Method
- Approaching Investors and understanding their expectations
- Not being assigned to an aspect of the business does not mean having zero knowledge about it.
- Hiring virtual assistants helps run a business efficiently.
- The Tripple Offer Calculator and How it could help you
- Novation Offer: An untapped source of mortgage buyers
- Make sure to reach out to the right people.
Resources:
- www.questtrustcompany.com
- Who Not How: The Formula to Achieve Bigger Goals Through Accelerating Teamwork by Dan Sullivan and Benjamin Hardy
Connect with David:
Website: www.tripleoffer.com
E-mail: david@myfloridahousebuyer.com
Phone: 407-603-5263
Check out my book: 7 Reasons Why Private Money Will Skyrocket Your Real Estate Business and Help You Build Incredible Wealth!
Get it here for FREE: www.jayconner.com/moneyguide
Timestamps:
0:01 – Raising Private Money with Jay Conner
1:15 – Today’s Guest: David Pupo
07:05 – Local REIA’s Helped Build Reputation And Connections.
10:45 – Self-Directed IRA Connects People For Properties.
14:07 – Networking Event Helps Real Estate Investors Find Loans.
15:14 – Jay’s Free Money Guide: https://www.JayConner.com/MoneyGuide
16:00 – Pay to Play For Self-Directed IRAs.
19:19 – Understanding Lender Objectives For Property Investment.
24:33 – Outsourcing Work, Leveraging Virtual Assistants For Efficiency.
26:11– The Coaching Program, Triple Offer, Customizes Three Approaches.
28:00 – What Is Novation?
28:54 – Connect With David Pupo: https://www.TripleOffer.com/Calculator
29:06 – David Pupo’s Parting Comment: Go Out There! Make Your Name Known! Provide Value! Manifest What You Want!
Can You Really Raise Private Money At Your Local REIA?
Jay Conner [00:00:01]:
Welcome to another amazing episode of Raising Private Money. I’m Jay Conner, the private money authority. And wow, have we got an exciting show lined up for you today. My guest today has raised private money, $680,000 of private money just on the last three projects, and he’s going to break it down for us step by step, exactly how he got the money, how he structured the deals, et cetera. Well, in addition to that, he and his team, since he started in real estate investing, they have sold over 300 properties while simultaneously building a portfolio of rentals. In addition to that, he’s learned some very important lessons about what you can learn from a bad partnership. A lot of people think you got to be in a partnership to be in this business. So we’re going to talk about that as well. Don’t go anywhere because right after this, you’re going to meet my guest, Mr. David Pupo.
Narrator[00:01:06]:
If you’re a real estate investor and are wondering how to raise and leverage private money to make more profit on every deal, then you’re in the right place on raising private money. We’ll speak with new and seasoned investors to dissect their deals and extract the best tips and strategies to help you get the money because the money comes first. Now, here’s your host, Jay Conner.
Jay Conner [00:01:46]:
Well, welcome to the show, David.
David Pupo [00:01:48]:
Thanks for having me, Jay. I appreciate it.
Jay Conner [00:01:51]:
Absolutely. Now, what year did you start investing in real estate and what kind of deals have you been doing?
David Pupo [00:02:00]:
Yeah, started in 2016 and I actually started off with another real firm here in the Orlando market. So I was brought in under the wing of a broker to really learn how to do real estate investments. And that was a phenomenal introduction, being able to understand a lot from a lot of different caveats, learning from a manager, learning from a boss. Some of the people were in charge of acquisitions, so they were in charge of acquiring properties. And also there was another department called Dispositions, and that was who was in charge of selling the properties. So it was primarily just a wholesale brokerage.
Jay Conner [00:02:39]:
Okay, I was going to say, it sounds like it was a wholesaling operation, a wholesaling firm where they were primarily focused on wholesale deals, getting them under contract, and then making money by collecting assignment fees and assigning those contracts out to another real estate investor that would take the deal down. Right?
David Pupo [00:03:01]:
Absolutely.
Jay Conner [00:03:02]:
Got you. So you did that for a while. So what year did you go out on your own? I’d say on your own. Sounds like you started a partnership as well. But when did you leave and start being out there doing deals yourself?
David Pupo [00:03:17]:
Shortly, a little after a year. At that time with the brokerage, I was able to do really well with the Disposition side and then got promoted into doing acquisitions and was starting to get really great at that too. And at the end of the day, I was locating the properties, and bringing the buyers, but then I wasn’t making the full profit, right? I always had to pay the house and that was fine for a good amount of time. But then at a certain point, once you feel like you have a lot of the skill sets, it made sense to then go off on my own. And so I was on my own for a little bit of time there for about a year, a little bit less than a year. And then that’s when, as you just mentioned, bringing on a partner.
Jay Conner [00:04:01]:
Got you. So let me ask you this. You went out on your own. How long were you out on your own? So did you keep doing wholesaling or did you right away start getting into some flips what did you do?
David Pupo [00:04:16]:
So I still was actually in a fair amount of wholesaling, but at the end of my term with the brokerage, I was starting to actually work with a little bit more developers, actually around here in the Orlando market. And so I found myself in a bit of a weird niche where I was helping developers, being able to find the land or houses that they’d want to demo and then build a brand new seven-figure house on it. So that was something that was actually a very weird niche I fell into. But it was really cool to be able to work with a lot of developers with infill lots or like I said, demoing them. What I didn’t like about that world at the end of the day was that there was a very long cycle. Not only I would make a little nominal fee upfront, we’d get the listing on the back, but when you’re building these seven-figure houses, they take a while to be able to build and then hopefully in a good market, they sell quickly. In somewhat of a neutral market, they stay on the market a little bit longer.
Jay Conner [00:05:18]:
Got you. So how long were you out on your own, so to speak, before you started raising private money for deals?
David Pupo [00:05:28]:
Yeah, I would say that it was in that world I wasn’t raising capital, I was obviously just mainly feeding them to developers. It wasn’t until I was really getting a lot more leeway with the local Rios, local real estate investment associations, and I would still have opportunities being able to come in and I would use their money for short-term things, right? Like, maybe we found a property that didn’t need a lot of work, but we found it in a weird little gap where it was like 75% of whatever we think the retail value is. Right. Didn’t need a lot to be able to do a full rental, full renovation. We could pay a little bit higher for it, but they still needed a quick close. So that was when I started raising private capital for people where we were in and out, taking it down, putting it on the MLS probably the next day, and then letting an end buyer buy it from us.
Jay Conner [00:06:27]:
Got you. So when you first started raising private money, what were some lessons learned about what didn’t go so well? What did go well? And the reason I asked that question is I have new real estate investors asking me all the time, well, how do I approach or how do I locate private lenders to loan me money when I haven’t been borrowing private money prior to that? So what was your experience when you first started raising private money?
David Pupo [00:07:05]:
That’s when the Rios really came into effect. So anybody in your local audience right now goes to your local Rios and provides value? I could tell you that was the quickest way I was able to start getting a good reputation, a good brand with a lot of the local real estate investors. It was really going to the local meetings. I was starting to be sponsored and on panelists for a couple of different events here and there. And it all comes with exposure. And if they see that you’re somebody that’s always treating people right, always treating people with respect, and then that you’re learning, they understand, especially a lot of the local people, they understand that you have to start from somewhere. Right. But it took a little bit of time. I would love to be able to say that it happened overnight, but for me, it was really just being able to consistently go out to these events. They started seeing I had more and more properties to sell, so they were like, okay, this guy is progressing, he’s helping out, he’s given back, he looks like a good person I want to work with.
Jay Conner [00:08:05]:
So initially, did you raise all of your private money from your local RIA fellow members?
David Pupo [00:08:17]:
Yes, I would say the first, a lot of what we’ve been able to do has been a lot more for the short-term stuff. Of course, I would call it my bias from wholesaling. I like to be in and out of projects as quickly as possible. Right. And I was able to use multiple people from the Rios for at least five or six of those short-term kind of deals. In our world, we call them wholesale deals. Right. You buy them at wholesale and sell them at retail.
Jay Conner [00:08:46]:
Yeah. Got you. Very interesting. So that’s good advice you’ve got. I was going to ask you, from your own experience, what advice would you give to a new real estate investor that wants to raise private money but’s never done it before.
David Pupo [00:09:06]:
Yeah, take a step back. I would say that most of us are very optimistic. Right. We want to believe only things can go right. But I think what an investor is going to respect is, do you have any kind of contingencies or any other ideas that happen just in case? Right. The just-in-case is something that’s how they have to understand that they’re putting their money into an investment. Right. We would love to be able to think all investments turn profitable, but I know between you and I, probably have several stories of opportunities that have also gone wrong.
Jay Conner [00:09:47]:
Absolutely. Well, and it’s for that reason in my private lending program that I teach my new private lenders and that I offer to them to invest in. As a rule of thumb, we don’t borrow more than 75% of the after-repaired value. And that’s going to give the lender what we call a 25% cushion. So that if Murphy shows up, and Murphy always shows up, that is, if something can go wrong, it will. Do we ever get the repair estimate exactly right? Of course not. I mean, the estimate on repairs is always that’s what it is. It’s an estimate. So for that reason, we don’t borrow more than 75% of the repaired value. So have you raised any private money outside of your local RIA members or has it been all from your RIA?
David Pupo [00:10:45]:
Yeah, so it started with that and then with the RIA. A lot of people were connected to a self-directed IRA company. The local one here is called NewView and the self-directed IRA. So those are retirement accounts. Right. So those are people that got wind of when I was being able to do more properties. They were also connected to the RIA people. It was a word-of-mouth thing for quite some time. And for the newer people that are being able to go through this, what I would also recommend is being able to have an entire analysis of that property ready, like a CMA being able to understand what you believe the rehab estimation will be, understanding what the closing cost might be, an estimate for what is your acquisition price? What are you thinking about? The exit and an estimated timeline. If you give a lot of the investors that they’re going to see, okay, he’s thought through a lot of these different scenarios and a lot of different parts of it. Sometimes I think we allow technology to make us a little lazy, Jay, and we just go, hey, I got a deal. And you think that the floodgates will open and everybody’s going to be in front of you waving like thousands of dollars. I want to invest. I want to invest. No, it’s not how it works in real life. You have to be able to build to that. And the self-directed IRA community was a really great opportunity for me to be able to do that.
Jay Conner [00:12:15]:
Well, you bring up a really interesting point there, David, of mining Carol Joy’s 47 private lenders, and that’s how many we have right now. Over half. Over 50% of our private lenders are loaning us money on deals. Investing in these deals with us from their retirement accounts. And as you brought that up, and I’m so glad you did, the reason that’s an important topic is that I didn’t know about self-directed IRAs. And so my advice to a new real estate investor looking to raise private money, you need to establish a relationship with a reliable, trustworthy, credible, self-directed IRA company. I refer all of my private lenders that are using their retirement funds. I refer them to Quest out of Houston, Texas. Their service is phenomenal. I get my deals funded in three days. In fact, just earlier today, we just sent the promissory note and the deed of trust. Most states call it a mortgage to Quest. And I will get that deal funded within the next three business days, probably within the next two business days. So the reason that this is such an important topic that you bring up, David, is because 71% at least, of Quest account holders, over 70% of those self-directed IRA account holders want to loan real estate investors money.
David Pupo [00:13:53]:
Right.
Jay Conner [00:13:54]:
They want what we call a totally passive investor by using their retirement funds to loan out. So just stop and think.
Jay Conner [00:14:07]:
If you’re networking with people that have retirement funds and they want to loan it to you, well, my land, you’re in the right room. I mean, for example, quest.com, holds a monthly networking event that’s virtual on Zoom. It’s the fourth Wednesday of each month at 07:30 P.m. Eastern time. And they put you in breakout rooms. And so if you’re a real estate investor looking to raise money, and you know you’re going there to a networking event virtually that you can attend from anywhere, and now you’re going to network and meet people that are wanting to loan money out. Well, David, let’s take a quick pause right here because I want to let all of the listeners and viewers know about my Private money guide that you can download for free. It’s called Seven Reasons Why Private Money will skyrocket your real estate business and help you build incredible wealth. This guide will get you on the fast track you can download. It gets you on the fast track to getting private money. You can download it at www.JayConner.com/MoneyGuide. And that will get you on the fast track to getting private money. So these last three deals, you raised $680,000 on these most recent three deals. Tell us about how you raised the money for these three deals.
David Pupo [00:15:45]:
Sure. And I wanted to offer one additional little ninja trick that I learned once I was getting involved with some of those self-directed IRA people. And what I would certainly suggest that I learned really quickly is you got to pay to play, but you can actually make it a pretty low payment. This means I opened up an account with that company’s new view and then suddenly I was getting invited to all their events. Right. Because they want to make sure that they have what you made out with is the breakout rooms let’s make sure all these people that are our clients are working together so they stay our clients. Right. So I’m sure Quest has. And I’ve heard of Quest before. I actually wrote that down just as a reminder to probably just go open an account with them and get yourself into those rooms. The same kind of mindset as Masterminds and any of those conferences you got to pay to play go into those rooms, you got to pay the fee. But once you get in there you get to do what you want. Just don’t be annoying about it, I guess is a good way of putting it.
Jay Conner [00:16:56]:
Yeah, well, you know, Dan Kennedy says to set your business up to where you are a welcomed guest and not an annoying pest.
David Pupo [00:17:06]:
That’s good. That is good.
Jay Conner [00:17:09]:
Which is one of my favorite phrases. So did this $680,000 that you got in private money, did come from your local RIA or did that come from people that had a retirement account at the self-directed IRA?
David Pupo [00:17:25]:
Sure. So I’ll actually go through the last three. Not a problem. So one of them was a burr. So for anybody who doesn’t know what a burr is, it’s a way to be able to get a property with cash and hard money terms. And you go ahead, you buy it, you rehab it, you rent it, you refinance it and then you repeat it. So that’s the burn method. And that’s what I just did. I just exited out of that not but a week ago on a four-unit here in Florida. And what I did with that person, that person only was able to fund the down payment that I did with actually a hard money lender, but they were recorded in second I was just.
Jay Conner [00:18:10]:
Going to say let’s stop right there and get you to talk through I think you were getting ready to. So how can you use private money in the second position along with the hard money loan?
David Pupo [00:18:22]:
Yeah, so what we did with this one is that I had the person, and they understood it. This is actually my broker. So you want to talk about being able to build the right business. Right. It was actually from somebody I work with every single day and it was something where I just wanted him to be able to fund the down payment for the hard money loan.
Jay Conner [00:18:42]:
Exactly. So of course you still protect your private lender by giving them their own note and their own mortgage. It’s just in a junior position, right?
David Pupo [00:18:52]:
Correct.
Jay Conner [00:18:53]:
Excellent. I pay all of my private lenders in the first position. I pay them 8% interest, no points, and no fees. And we either let the interest accrue or we may make payments. If they need payments. But for our private lenders that are in second position, I pay 10% to them because it’s in a higher risk position. How much do you pay your private lenders?
David Pupo [00:19:19]:
That is exactly what I do, actually. For the second position, I pay 10%. So I’m right there with you on it. When it comes to the first position, I always like to just see what are we trying to do with the property. And I think people need to understand too, what is your lender trying to do. Not everybody wants to be passive and not everybody wants to be active in any deals. And I think you have to understand that with who you are approaching to get money lent to who is lending you money? I’m sorry, from the people that are lending you money, what are they looking to do? You have to understand their objection objectives. If you understand their objectives, then you can be like, you know what? I don’t think you know what, Jade? This might not be the right one for you because I’m looking for somebody that wants to be a little bit passive on this one. Not too much on the equity side. It’s very important that you have the conversations when you are first approaching people, what are they looking to get out of it? But anybody that’s passive like that, it’s usually between exactly what you said, 8% to 10%.
Jay Conner [00:20:43]:
Did you lose your connection, Jay? He did. He’s gone. You have the podium, David. Tell us a little bit about your business and how you got started in it.
David Pupo [00:20:59]:
Yeah, absolutely. So our company is based here in Orlando. It’s like a local real estate investment company. Right. It’s not only focusing in just primarily on short-term wholesaling. There are strategies that Jay and I will probably go into where we have short-term opportunities, and longer-term opportunities for any of the investors that we work with. But we’ve taken down properties for multifamily. We’ve been able to flip properties. And actually, as I bring into that subject of being able to have partners, we’re going to be bringing on a partner to be able to now go into a new world of scaling now the flipping and new construction business. The person that I’ve worked with is a local person here in Orlando that’s been actually a really great friend of mine for several years. And we started realizing that we’re going on parallel paths. So how can we do some more business together?
Jay Conner [00:21:58]:
Excellent. I lost connection there for a second, David, so whatever you just said, I’m sure it was brilliant.
David Pupo [00:22:07]:
I hope so. I’m good at ad living, right? I’m in Toastmasters. So sometimes they throw me in there on a topic, you don’t know what’s going to happen and you got to do the best of what you got, right?
Jay Conner [00:22:18]:
I love it. So I want to change gears a little bit. You mentioned to me before we got started that you thought that you needed a partner in this business. And a lot of real estate investors, when they’re starting out, they think they need partners. And my suggestion is, well, I’m not going to tell you what my suggestion is. I’m going to let you do the talking. So tell us the story of why you got a partner, to begin with, and then what happened?
David Pupo [00:22:48]:
Yeah, so I decided to bring on a partner because I felt like my time was getting absolutely strapped. As anybody that becomes an entrepreneur in their business, we feel like we throw in our obligation to do everything right. And that is when I was like, man, I need somebody else to help me out so I can be able to focus in on some of my superpowers and be able to get this thing really going. Right. So I brought somebody in that would help out with a little bit more on the systems, the technology side. In a book like Rocket Fuel, we refer to traders. Right. So somebody that could help out with what visions I had, how we could put them into place. And we were business partners for about two years and from there, what ended up happening is he just wasn’t as dedicated to be able to be in that position anymore and left me with a pretty nasty tab to be able to get fulfilled. So he was somebody who was in charge, able to do when we were doing Google pay per click and didn’t let me know what that tab got up to. And some of the valuable lessons there are, just because you’re not the person that’s responsible for it, that doesn’t mean you can’t oversee it.
Jay Conner [00:24:08]:
Right. So what’s your advice to a new real estate investor as to whether to get a partner or not get a partner?
David Pupo [00:24:17]:
Yeah, I would see that what book really helped me out there, Jay, was Who Not? How is that book? I Believe It’s by Dan Sullivan Don’t quote me on it, but I’m pretty sure that’s who it is.
Jay Conner [00:24:28]:
It is. It’s by Dan Sullivan and also Dr. Benjamin Hardy co-authored.
David Pupo [00:24:33]:
There it is. So who is not? How was the revelation? I started realizing, well, who can I be able to get to do these things? And then slowly but surely, I realized I could replace 80% to 90% of that person with people that could be virtual assistants, people that could be able to do something part-time, or people that were full-time, but maybe they just didn’t need quite the amount of money. And suddenly we were able to start realizing that very quickly. And I think that you have to have when it comes to really having that conversation with people that are going to do partners, is understanding who is going to be responsible for what. Do you believe that a one plus one can equal a three? Because if one plus one equals two, that doesn’t make sense. Right. Because then you’re just simply at an absolute symmetrical scenario, which if you’re at one, then you’re still getting you have to make sure there’s a multiplier effect there. Right. And so when you were out there, Jay, I was mentioning that actually, I am bringing on somebody to help out with scaling out our divisions of Flips and new construction. And also we’re going to be having one that’s going to be doing some for just capital raising. So that is where we’re going to start seeing multipliers really happen.
Jay Conner [00:25:54]:
Perfect. Now, one thing that you were telling me about, David, is you were telling me about this triple offer calculator that you’ve got and how that works. So tell us about that.
David Pupo [00:26:11]:
Right. The coaching program that I have is called Triple Offer. What we’re doing with Triple offer.com is very simple, Jay. We have people that are getting leads or they’re in a situation where they don’t know where to start. And many times, as my students can tell you as well as any of the employees that we have, I want to be able to first understand what’s going on with the person, what is really going on with them. And then I like to be able to curate or custom an approach. So we come up with three offers. Triple Offer. Right. And so what we’re being able to do there is being able to see how we can help them out, what is going to best suit their needs. So what we did is we created something called the Triple Offer Calculator, which just really helps out in the time. One of those offers that we are providing is seller financing, right? And for anybody that tried calculating seller financing deals, sometimes you’re pulling up separate tabs and you’re going down this amateurization schedule, and then you get a shiny object, and now suddenly you’re on Facebook, and now that property isn’t getting assessed. Right. So I put everything in-house on just something where we can quickly assess a cash offer, a Novation offer in a subject, or create a financing offer.
Jay Conner [00:27:33]:
Awesome. Now, some people don’t know what Novation is. Give the 32nd seminar on what Novation is.
David Pupo [00:27:42]:
Novation is a way for people who are doing, like, say, wholesaling to now get to that untapped source of mortgage buyers for the longest time. Most people that understand wholesaling know that they can’t put assignment fees with somebody Jane and John Doe is trying to buy the house and live in. Innovation is a solution where it’s completely been underwritten by all the attorneys that I work with that you can now be able to act as attorney, in fact, for the seller and be able to now sell a property on their behalf to now people that have mortgages. And now you’re collecting a finders fee as opposed to an assignment fee. And the mortgage companies are excellent with that.
Jay Conner [00:28:27]:
There you go. Well, David, it’s been so exciting to have you on again. Check out David’s Triple offer calculator at www.triplefer.com. David. Final comments?
David Pupo [00:28:43]:
Yeah. Don’t be overwhelmed when first talking with people about private lending. Go out there, make your name known, and provide value, and when that time comes, you will be able to start just letting people know. Manifest what you want. Let people know, hey, I’m going to be looking for private lending. Because the best time to raise capital isn’t when you already have a deal. It’s when you are having that in-between time. And now you have a property and now you’re like, I know, call for this, as opposed to scrambling when you have a deal and you’re like, oh my gosh, who am I calling? And then you’re in a frantic mindset there. Take your time. Make sure you are reaching out to the right people, provide value for others, and see how you can also help them out. Right. Because as you’ve mentioned, 70% of the people at Quest want to do this. So just make sure that you are shaking the right hands to be able to introduce yourself to the people that are looking to lend.
Jay Conner [00:29:43]:
Absolutely. David, thank you so much for your time and sharing your expertise. God bless you.
David Pupo [00:29:49]:
You too, Jay. Thanks so much for having me on.
Jay Conner [00:29:51]:
You got it. Well, there you have it, another amazing episode of Raising Private Money. I’m Jay Conner, The Private Money Authority, and we really appreciate your reviews and five stars. And if you’re listening on iTunes, be sure to follow me. If you happen to be watching YouTube, be sure and click and ring that bell so you don’t miss out on any more of the upcoming amazing episodes of Raising Private Money. Here’s to taking your business to the next level. And I’m wishing you a very profitable future by getting all the private money you would ever want. God bless and we’ll see you right here on the next episode.
Narrator[00:30:30]:
Are you feeling inspired by the knowledge you gained in this episode? Then head over to www.JayConner.com/MoneyGuide. That’s www.JayConner.com/MoneyGuide and download your free guide that shares seven reasons why private money will skyrocket. Your real estate investing business right now. Again, that’s www.JayConner.com/MoneyGuide to get your free guide. We’ll see you next time on Raising Private Money with Jay Conner.