Millionaire Real Estate Investing with Jim Pellerin
Episode #132 - Why Do People Detest Network Marketing

Episode #132 - Why Do People Detest Network Marketing

November 5, 2020

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I detest Network Marketing. So that's one of the responses I got today when talking to this particular person about this new opportunity that I'm trying to promote. And so it's interesting. Network marketing has a bad reputation. It's not because it doesn't work. It's not because it's not good. I know people who are doing six and seven figures a year in network marketing, it is because of some bad promotional, some bad sales practices out there. But like anything else, there are some good people, and then there are some bad people. There are some good businesses and there are some bad businesses.🤔👨‍💼👥⏳


So really what network marketing is? 


It's a business structure that allows us to get paid. It allows you to get paid which allows you to build your team.


I mean, what is Network Marketing? Like the word says, it's network marketing. So you hire agents. You bring in a team. You build a team of agents that go out and promote the business for you; just like you're doing for the person that you're reporting to, that your sponsor is.👥👨‍💼📈


How is this different than what a realtor does? So for example, a real estate brokerage is made up of a number of agents, and those agents all pay him or her, a commission based on their sales; they split the commission with the brokerage. That's a multi-level marketing plan. The broker gets a residual from any deals that the agents do. Within those brokerages, there are also teams of people. Those teams are usually made up of a team leader who has multiple agents working for him or her, and those team leaders have buyer's agents or seller agents. So again, it's the same thing.👨‍💼💲👥


But just about every business that you would look at is structured that way, a big corporation has vice-presidents of sales, who have sales directors, who have sales managers, who have business development, people, or salespeople, all a hierarchy of salespeople, sales by default works best when you have a multi-level marketing approach to a commission structure. So really that's all MLM is.📊👨‍💼💲📈👥


It's a way in which you can benefit from a commission structure that allows you to get paid for multiple levels below you and allows people above you to get paid from you and your people as well.

So, I detest Network Marketing. If you get a response like that, just move on. And obviously, they haven't done a lot of thinking about what network marketing can do for them. And they were bombarded by some bad people out there trying to solicit them and trying to sell them the wrong way. Okay.👥✖️

Episode #131 - What Do You Say to People to Recruit them Into Your Network Marketing Business

Episode #131 - What Do You Say to People to Recruit them Into Your Network Marketing Business

November 4, 2020

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One of the things you have to consider when you're running marketing, or when you're talking to people is what you're trying to sell these people or what you're trying to encourage these people to do. 


And a lot of people will lie, they get nervous or they get resistant because they think that they're trying to push something on somebody, they're trying to sell them on these ideas or they're trying to scam them. And there are lots of different ideas that go through people’s heads when they try to talk to people about the possibility of becoming a member of their team, specifically in network marketing, because network marketing has a bad rap because there are a lot of people out there that have done a poor job at their network marketing business.👨‍💼🤔👥💲


And also but there's a bunch of pyramid schemes out there, which get confused with them along the lot as well.🔺🤔


The thing about network marketing is just a financial model that allows you to make even more money than you would if you were just trying to do direct selling without network marketing.


Because what you're doing with network marketing, you're selling two things, you're selling the business and you're selling the product. So that comes back to the point, I'm trying to make about what you tell people. What you're trying to do is you're trying to help people.👥💲📦👨‍💼


You're not trying to sell them on anything. You're trying to get them involved in either the business.


And so, these are people that are either, don't have a job right now, or looking at generating a second income, or there may be people that are trying to get out of their day job. They're people that are stuck in their day-to-day grind. I know people that were running a million-dollar business but never had a life. And they got out of the business to get into network marketing so that they can create a more passive income stream for themselves and a better lifestyle for themselves.👨‍💼💰⏳👥

And the other thing, depending on the product you're selling, but most of these products if you believe in the product, it should be easy to sell. And a lot of the clients or a lot of the team that you're building can also become customers. So it depends on what you're trying to sell, if you're trying to sell the customer on the product or if you're trying to sell the agent on the business. So those are a couple of things to think about when you're talking to people. And don't worry about any negative feedback, because really if you focus on the fact that you're trying to help them, everything else should come secondary to you. 📦👨‍💼💰🗣️

Episode #130 - How to Use Social Media for Your Network Marketing Business

Episode #130 - How to Use Social Media for Your Network Marketing Business

October 27, 2020

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Hi, everyone. Today, I want to talk a bit about what's the best social media platform to use for your online business.


So the quick answer to that is it depends. It depends on the product that you're selling and depends on what and who you're trying to recruit. If you're looking at an online business from a network marketing perspective, you're possibly looking at recruiting people to help you build out your team and build out your downline.📦💲👥👨‍💼


The different social media platforms that are pretty obvious are things like Facebook and Instagram. I put those two together because Instagram is owned by Facebook, and is just the visual version of the picture version of the video version of Facebook. Certainly, it's been cutting a lot of attention. The other thing is age and demographics that you're looking at anybody that's going to be purchasing your products or helping you build out your team.💻🖼️⏳📈


So Facebook would be very good for attracting demographic, it's a general demographic, people out there looking for information, they're having fun and they're chatting with friends, relatives. It's not necessarily a business-oriented type of discussion💻👨‍💼🗣️🗞️

Facebook would be a good place where you would attract individual people.

People may be entrepreneurial type people, maybe people looking to buy things. So you could definitely do some marketing on Facebook and Instagram to attract that level of clientele.


Another big platform that I recommend is LinkedIn. LinkedIn is if you're looking for people that are more business-oriented, people that are looking at maybe starting an online business, and people that are in a current business and looking for a change. So it depends on how you position your marketing and depending on how you want to promote your business. LinkedIn could be a perfect place to promote your business and maybe your product depending on your product.💻📝📦📨

LinkedIn is about trying to get people on board to help fill out your team, to help build a downline, to help promote your business, to help you grow your business through your network of people that you would be recruiting.

And then Facebook might be more product sensitive, meaning you're promoting your skincare line, you're trying to promote your juice company, or even your essential services company.💻📦💲📈


So those are the two that I would focus on. I mean, there's a bunch of others out there, like Snapchat, like Twitter, like Tic Doc. And sure those all work. But Facebook and Instagram are definitely the top ones, and so is LinkedIn from a business perspective.

Episode #129 - How to Develop an Education Plan for Your Network Marketing Business

Episode #129 - How to Develop an Education Plan for Your Network Marketing Business

October 26, 2020

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Hi everyone. Today, I want to talk a bit about what to do when building up an education plan and looking at how much knowledge you need to acquire for your online business.


The first thing you need to do is do skills analysis. Looking at all the different skills that you require whether it's presentation skills, product skills, and sales skills, and closing skills. And once you come up with those skills, then you can start looking at where the biggest gap is. Where do you think you need to augment your education and your training?👨‍🎓🤔📊


The first place is depending on the business that you're investing in and the business that you're in if it's a network marketing business. A lot of these businesses have good training programs. They have training programs on their product. They have training programs on their product, training programs on their techniques, like how to sell on how to recruit and how to close.👥👨‍🏫🖥️💰


Normally, if it's a good network marketing product, there’s a lot of good information in there on how you would go about getting training on your product that you're going to sell. And there are two things to look at.👥📦👍

You're trying to train on how to sell people on your product and also how to get people to build up your team and how to recruit people on your team.

And that's very important too.


The other thing that you want to look at is where else can you get more information? There's a ton of people out there that are offering information on network marketing. In general, there’s a lot of books out there. I mean, when I first got started in this a while back, I went online and I just bought two or three or four books that I thought were relevant to the information that I needed to look at. And then I just went through. And most of these books they're not like they're very specific; again, it's network marketing product-based. They're fairly good books; you can read them fairly fast. Like, a lot of them say, you can read these books in three to four to five hours. So it's not like a big book.👀📑👥📚


The other thing you can do is there are a lot of events that these network marketing companies have, and you certainly can attend those. Most of these events are focused on motivation. Trying to get people hyped up, right? Trying to get them to get out there and sell their product, which is good. It's just like any other organization, like when they have sales teams, meeting sales teams, or sales team meetings. So those are good.👥📈👨‍💼💰


The other one is online. There's a ton of stuff out there online, whether it's on your Facebook groups, there are things on blogs.

There's a lot of blog information and there's a lot of webinars out there on how to build an online business around network marketing.

So that's what you should be doing for education.

Episode #128 - How to Look at the Financial Viability of Your Online Business

Episode #128 - How to Look at the Financial Viability of Your Online Business

October 23, 2020

If you would like to learn more about starting your own business and how you can start making money fast...  then click this link


One of the things you need to do when looking at the financial viability of any business is you want to analyze a couple of numbers.


The first number is you want to understand what the lifetime value of a customer is.♾️👨‍💼

So in a typical network marketing business, the lifetime value is how much revenue you think you can generate from a particular customer.

And that revenue can be from initial purchase, from ongoing purchases, from future purchases, from any type of product sales that you think a typical customer could do. And that could be over a period of one year, two years. In the business I'm involved in, it could be a lifetime. And lifetime, it'd be as long as you want to be in the business. So that's the lifetime value of a customer.💲👨‍💼⏳♾️


And that cost you want to figure out is the customer acquisition cost. That is how much you think it's going to cost to acquire a customer. And those costs are generally related to people's costs and marketing advertising costs. So how much money do you think it's going to cost you to go out and advertise either on Facebook, on Google Ads, or just in general on any other platform.💰👨‍💼💻

There are a number of platforms out there that are geared towards generating leads for you to acquire customers.

What about events? Are you going to attend events? What about follow-ups? If you've got an assistant in place that's going to help you or yourself who's going to do some of the follow-ups, right?


So there are people costs which sometimes people don't take into account. But if you're spending all this time searching for new clients or two for a new people, you have to take that into account because you can't scale, if you, as an individual spending an hour or two or three hours trying to acquire a customer, and if you value your time at a certain dollar value, then that's going to contribute to your customer acquisition costs.🔎👨‍💼⏳💰


So a typical scenario or typical calculation you can do when you're looking at building your business is how much is your customer acquisition costs, and what's your lifetime value of a customer.


And you'd look at the difference between those two, if there's a significant difference then maybe you have a business model, because there's also overhead or what's called fixed costs that you have to take into account.💰🧮💲


So really what you're doing is you're gathering all the information to do a proper business, a financial pro forma.

Episode #127 - What Skills You Need to be a Good Online Business Owner

Episode #127 - What Skills You Need to be a Good Online Business Owner

October 22, 2020

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Hi, everyone. Today, I want to talk a bit about what skills you need to be a good online business owner, specifically multilevel marketing.


So a couple of the things you're going to need is good communication skills. And by that, you're going to be able to talk to people. And it's not just talking down to people where you're telling them what you need to do, or you've got to build rapport and being able to be generally a nice kind of guy. So when you talk to people, it's not just like, how's the weather.👍🗣️👨‍💼


If you want to understand their needs, their principles, and be able to get people to, build a rapport.


The other thing you need is because you're going to be trying to get these people interested in your business. You're going to have good presentation skills. And by that, you're going to be able to present to them your business and why it makes sense for them to come on board with your business. Because what you're trying to do here is you're trying to recruit people to help you build your business. So you want to present to them the opportunity and you want to be able to get them to sign up with you.📊👌📈


Another thing is prospecting. So going out, looking for people and that could mean online prospecting through your social media, just going out and doing a simple outreach or running advertisements, which leads into your marketing. And also just generally talking to people, this could be offline as well. So if you're out at a restaurant and you see somebody that you might want to recruit for your team, you go up and you talk to them, “Hey, what are you doing to make money? Have you ever thought about starting your own business, your own online business?”💻🗞️💲


So just general prospecting, and you don't want to do it so that it sounds too scummy or spammy through their face. And that’s why these types of businesses have such a bad name, the old kitchen party kind of presentations. But I do a lot of online marketing and you can approach people differently and you want to have good PR prospecting skills.💻👨‍💼💲


And the other thing I talked about marketing and generally marketing skill, the ability to advertise to the market. And I do a lot of social media marketing, so we can do Facebook ads, we can do Google ads and the kinds of things you're looking for.💻📧📈


The kinds of content you're trying to get people interested in are working from home, having their own business, early startup costs.


All the different sorts of key points’ benefits that people are might be interested in coming on board with you. 


And then finally closing, you have to be able to close. You have to be able to make an offer and you have to be able to ask for the close. So it's okay to say, “Hey, I've got this interesting business, this is what it can do for you.” But in the end, you got to say, “Do you want to sign up, or let's get you on board?” Or, “There are many different closing techniques. It's only 199. Do you have a credit card handy all signed up right now?” So there are different ways to close people. So you've got to develop those skills too.🚪💲👨‍💼


So those are all of the skills that you need when you're trying to build up your team.

Episode #126 - How to Automate Your Business

Episode #126 - How to Automate Your Business

October 21, 2020

If you would like to learn more about starting your own business and how you can start making money fast...  then click this link


One of the things you can do to build your business is to automate it. And by automated, try to generate leads automatically, try to market to leads automatically, and try to follow up automatically. Now, depending on the price point of your business, if it's low enough, you could actually get people to convert automatically. So let me just walk you through a typical process. And this process in online marketing specifically is known as a funnel.📈📊👨‍💼📧


So what you would do is you would create a landing page, which you would generate traffic to. And then, that landing page would capture the email address of the individual, the name and email address. And you do that by offering something in return, so like a lead magnet, it's called. And the lead magnet is usually something that provides value to the individual that they're anxious to learn about or anxious to consume or anxious to read. And then, they take that and they'll read it. And in exchange for that, they'll give you their email.📃🚦📧🧲👥


And then what you will do over a series of different emails or you will follow up with them in various ways. So you create a blog post, or you create an email with some more content and you constantly are giving them value. So this is all part of the process. So it's part of the nurturing process, part of developing a relationship process.📧📃📈👥


So it may be that these people will come on board right away, or it may be that it'll take a while to come up to for them to sign up. I've seen people get follow-up emails for four weeks, for months, and even over a year where eventually they say, “Okay, I want to sign up with this guy.”👨‍💼📧⏳


So that's a lot of automation and you can get tools to do this. There are landing page development tools. There are autoresponder form builders. I mean, I'm not going to go into the technical detail, but… 


Building automation can go a long way with you to grow your business.


The other thing you could do is you can have a webinar out there. So that could be one of the lead magnets you give people. So rather than just give them a PDF or a report on something, you could get them to register for a webinar that's very popular. And then, all you have to do is you just have to send traffic to that funnel and you send traffic in various ways. Number one would be through paid advertising and you have to do that right away. So that's Facebook or Google ads. And buy right away...💻🧲👨‍💼 


You have to do that short term because it'll take a while for you to build up any kind of long-term credibility, which means, you're sending people through search results.

On Google, when people do searches, the other thing you can do is you can pay for Google ads. So those are some of the ways in which you can automate your process, automate building your business, trying to generate more clients, trying to bring in more people to help build out your team with.

Episode #125 - How to Go To Market with Your Network Marketing Business

Episode #125 - How to Go To Market with Your Network Marketing Business

October 20, 2020

If you would like to learn more about starting your own business and how you can start making money fast...  then click this link


So one of the things you need to think about when getting started with network marketing is how to go to market.


What I mean by how to go to market is what do you want to be promoting? Do you want to be promoting the business or do you want to be promoting the product? So it really depends on what you're good at and what you're interested in. So for example, a lot of people get involved with network marketing. They pick fitness products, nutritional products, health food products.👥💰📦

They're very interested in promoting those products and they want the benefits of those products for themselves.

What they do is they end up going into it and choosing a product more related to what their interests are. And so for them, it's easy to promote that type of a business because it's aligned with their thinking, it's aligned with their interest, so they go to market trying to promote the benefits of their product.📦🤔📈


The other aspect of it is going to market promoting the benefits of the business. And by that, how you can make money selling these products or these services. So for example, are you selling products out there that allow people to earn a good residual income? How people can make money by recruiting new members… but not new members make money by recruiting a new customer.💰📦👨‍💼💲

Every time you bring in a new customer, you get paid a bonus type of payment.

What you can do with this business, either not just the income potential, but there's the downline potential. So you can build a huge residual business around certain most network marketing products. So that's the business side of it. So you're tired of working nine to five. You're your own boss. You can work from home.📈👥📦

There are all kinds of benefits that you can highlight if you focus on the business versus the product.

And I wouldn't recommend doing both, because first of all, you want to build your brand. And by building your brand, you want to be associated with that brand. So you either want to be associated with the fitness example of the brand, or you want to be associated with the business side of the brand. So how do I make $10,000 a month by selling this product, or by being involved in this business? How I left my day job and now working from home on my t-shirt and my gym shorts? And something like that. So the whole marketing message changes depending on whether you're promoting the business or whether you're promoting the product.📦⤴️📦💲👥

Episode #124 - Navigating a Changing Real Estate Market with Jim Pellerin

Episode #124 - Navigating a Changing Real Estate Market with Jim Pellerin

October 19, 2020

Jim: Hello Angelique.

Angelique: Hello.

Jim: How are you?

Angelique: Good. Thank you for staying up so late for us.

Jim: No problem. I'm about to… when this is done I'm going to watch another episode of some TV show on Netflix. I'll find something.

Angelique: All right.

Jim: I'm a night owl.

Angelique: Okay. Okay. Good. Good. So Mike and you have a lot in common. He loves lease options too.

Jim: I thought you were going to say because I shaved my beard about five years ago.

Mike: How's it going? Hey Angelique. Hey Jim. How are you doing?

Jim: Hey Mike. Good.

Mike: Fantastic.

Jim: So how are things over there in Washington State?

Mike: We're making good, we're doing all right.

Jim: Well, you got a couple of companies there that are doing well in that state, right, um, Microsoft and Amazon.

Mike: And Amazon. Yeah. They seem to be doing really, really well.

Jim: How close is Puget? How do you pronounce it, Puget Sound?

Mike: Yeah, Puget Sound. So I live on Bainbridge Island. And so, it's about 200 a yard to my west over here’s Puget Sound. So I don't have a view, unfortunately. But we're right by the Sound.

Jim: How close are you to Seattle?

Mike: A half-hour at the fairy.

Jim: Good, good.

Mike: I take the car on the boat be there in a half-hour. So it's not so bad.

Jim: So the advantages of the big city and the conveniences of the simple life.

Mike: That's right, exactly. Now, where are you from?

Jim: I'm up in Ottawa, Canada.

Mike: All right.

Jim: Actually, I don't know if it's up you're probably higher than I am and if you go.

Mike: Yeah. We're pretty close to the border. Yeah.

Jim: Yeah.

Mike: Fantastic. How are you doing Angelique?

Angelique: Good, good. We already have 20 people on, people are getting on quick today.

Mike: Wow, that's good. That's good. 

Jim: So you have a fairly good-sized membership?

Angelique: We have about 450 members. And we usually have about 35 to up to 135 sometimes people on these zoom calls.

Jim: Yeah, nice. Yeah, I was just looking because of the lockdown right? I said, well you know I can't get out and can talk to many people, so I had my assistant just start poking around to see if I could find some of these events to attend. And so, you guys were nice enough to invite me to have a conversation tonight. So thank you very much. Maybe share some of my history, some of my wisdom.

Angelique: You're welcome. When I saw the lease option on your history, I thought you and Mike would connect well, so that's why you got to meet with him.

Mike: I've done quite a few leases out. Well, I don't know quite a few. But it seemed like a lot… not as much lately because this is a lot more when the market dictated the need for lease options. So yeah, it was tougher to get a mortgage, we did a lot more of them, and we kept them more just as straight rentals and we flipped houses. It’s all very good.

Angelique: So Jim you want to fill us in on your background?

Jim: Give you an overview?

Angelique: Yes.

Jim: Yeah, okay. Let's see. I started real estate investing probably about 25 years ago. I was in a small town for this wedding. My niece was getting married. And I saw this ad said, live in one unit and rent out the other unit, right? So i went in between the reception or the wedding and the reception, I went and looked at this property just because I, I wanted to. And so, I went in and I talked to the guy and he was an investor and he was trying to get rid of the property, he said, “What you can do”, he says, “You can move in this”, for moving to this property. And then, the rent from the other half will help carry the property. And I said, “What if I wanted to rent out both sides?” So what we ended up doing, we ended up putting together a deal where, I was going to pay for the property over a period of time and it's a deferred agreement of purchase and sale, when I found out later it's all it was almost a lease option. So I didn't buy the property. He held the property on a mortgage for three years. And then, after three years, what I did is I used the rents from the property for the down payment to purchase a property. I think I put like a thousand dollars down on a credit card or something like that. So I did my first lease option without even knowing I was doing my lease option. At the end of that… he had a bunch of other properties. So at the end of the three years, I think I went and got a mortgage and purchased the property. And then, I did two or three more like that. So I was buying duplexes. And then, as everybody knows, if you're over-leveraged by the time you get into your fourth and fifth property, the banks don't want to talk to you anymore, right? So I got my brother involved. He was out of work. So I said, “Well, I heard about this thing called lease options”, okay? So what's that all about? So we started looking into it. And I said… oh and prior to that too, I remember with some of these purchases, I'd done another purchase. And I'm just trying to give all sorts of nice creative things that I want to bring up in this. So one of the things I did there was a duplex for sale and I got my niece who was new in real estate as well. I said, “Well, here I want you to go make this offer and get them to take back a mortgage.” Like this was her first deal to write. She said, “What do you mean?” I said, “Just ask for a vendor take back.” So I remember her coming back from the office, she's saying, “They agreed, they agreed.” So I ended up buying that property for nothing down. And this was back in the days where you, where you could right you, where you didn't really need to have any skin in the game. So then, I got into the lease options. And I remember it was kind of difficult because at first, I was trying to figure out how to position this, doing a bunch of marketing on Craigslist, Kijiji here in Canada, looking for somebody that had a property that would fit into this idea of a lease option. And because I couldn't get a mortgage, I wasn't really looking to purchase it. So what I wanted is I want the owner to hold the property, so in a sandwich lease option. And I don't know how much detail you want me to go into this stuff with explaining any of these types of scenarios or you can ask questions, or maybe if somebody has any questions. So what I did in my first lease option was actually a sandwich lease option, right? So I got the property. I released it from this person. And then I went out and found a tenant-buyer and put a person in there to rent it… I was in the middle, all right. I collected rents from the antenna buyer and then I used the rents to pay the property, and I structured that again that was a three-year deal. So at the end of three-year, I was going to buy the property or I was going to just assign it to the tenant-buyer. So I'm starting to market pretty aggressively. So I'm getting people interested. And what's happening at this point, I'm getting a lot of interest from accidents… or from motivated landlords, people who wanted to get into real estate who didn't have, what wasn't making a good go of it, right? They were finding that the whole thing about managing tenants wasn't fun. So I was getting all these, I guess, investors or landlords coming to me saying, “Hey, I've got this property, let's put it in your program.” And then what happens is, I'd get the property, and then I'd get another property from the same guy, repeat offenders. So for some of these guys, I was getting two or three properties, and I was renting them out to tenant buyers, and… Yeah. So that's how I grew my portfolio. So when I got into release options it was 2007 or eight. And then I grew my portfolio like within three years with my brother's help. We grew it to over 100,100 properties in three years.

Mike: Wow.

Jim: And then, the subprime crisis hit right? So I lost 30% on all properties across the board. And I was on the phone every day negotiating with sellers, negotiating with tenant buyers. So the scary part of this I think I lost about a million bucks in that about a six-month time frame there, not just on in value, but out of my pocket, because I was trying to keep some of these owners alive by paying my out of my pocket just a bad business decision in hindsight, right? So that's sort of where my whole lease option. I did lease options in and I kept doing these options in another city which was a more stable economy with less impact, because of the Subprime Ottawa, being the capital, it saw some fluctuations, but not as bad as this small town which was my hometown. Yeah. And so, I started doing some there. I've done a few development projects, small development, like six-unit townhomes, development projects. I've done a bunch of… I've owned rentals for a while. Now the funny thing is I don't own any properties. So I've graduated up through the starting in wholesaling, I guess, I've done and… I mean, we can get into some of these creative financing deals, because I think I've done just about everyone that you ever hear about… never purchased any property with my own money. I always brought in joint ventures or did seller financing or creative financing. And then, so now what I do is I spend most of my time raising money for other people's deals. I got most of my money into private equities doing some training. I started my own training program, now my training course. Yeah. I mean, once I hit 65, I said, “Okay, well, that's… I don't like dealing with tenants anymore either, right? And disgruntled the investors. So that's mostly what I'm doing now. So is that to give you a good framework here? 

Mike: Yeah, for sure. So you said your first deal started as a sandwich lease option.

Jim: Yeah.

Mike: And then, and that was a pretty good strategy. So you started doing quite a few of those or did you ever just start to close the deal yourself and then put a tenant-buyer in there?

Jim: Yeah. Eventually, but most of them like the first 50, I think I did was all sandwich lease options.

Mike: Wow.

Jim: And the way I did sandwich lease options, I did the standard whether where the owner holds a mortgage. So I shouldn't say sandwich lease options, I did a couple of subject tubes where I did take ownership of the property, right? And then, I've also done some double closings there which is always interesting, right? And I have the exit strategy on a lot of these things. It was pretty creative too. I mean, I don't know. Have you ever done sandwich lease options, Mike?

Mike: Yeah. I've done a few.

Jim: Yeah. The tricky thing there is when you go to close is where you do the assignment right because you've got two leases. So you can do two option agreements. So you can either assign your owner or the seller's agreement to the tenant or you can sign the tenant’s agreement to the owner. And so, I've tried it both ways. And there's a lot of paperwork because you've got to do all these options for these options to execute the option agreements. And I remember being in my lawyer's office, signing all these papers and just for double closing so it gets pretty onerous. Now what I ended up doing, later on, is I got out of the… I was still the middleman from a property management perspective. So this is interesting. I don't know if people do this. So what I did is I had all the agreements between the tenant-buyer and the seller. And then I had a property management agreement and an assignment agreement at closing. So the property management agreement said, every money I collected from the tenant I would give the owner some, but I would keep some for my management fee. So that's how I got my ongoing profit from being in a lease option. And then in closing, I always had a clause in there that when they closed I would get whatever profit I had built into as part of an assignment agreement.

Mike: So let me get that straight. Then so when you would close a sandwich lease option, you weren't collecting, you're collecting the payment forwarding into the owner, you're collecting the difference.

Jim: Yeah.

Mike: That sounds pretty normal. But then, in the end, you said that you would step out of the way instead of it being an A to B, B to C transaction? Or it would be an A to C transaction?

Jim: Yeah.

Mike: You would get paid a fee.

Jim: Yeah. Initially, I was doing a lot of A to B like I would do assignments of the agreements to one of the two parties, right? And they would execute on those agreements. So there was never any double close or any type of transaction where I was involved, or what I would do. I got smart because I didn't want to put all these agreements in place. I don't know if I could be smart… I'm sure there are some tax rules and some legal rules about this, but my lawyer like I had lots of lawyers working for me back then. But what I would do is just put the agreements in place. So I had the lease agreement between the owner and the tenant-buyer, and then I had the option agreement between the owner and the tenant-buyer. But in the option agreement, I had… at closing, you will pay color and realty, whatever the amount of money was as part of that assignment. And then the property management agreement is where I got my monthly profit. And then I also usually got to keep… because I used to get paid three ways, I got paid from the option amount. So when they came in and they put so much down, the tenant buyer gave us anywhere from $10,000 to $20,000. I would take a portion of that or all of that as my finder's fee, but I would lease the property from the owner for one dollar. So I was always making a good spread. The sellers that I was negotiating with, we're always very motivated sellers, right? And that's the key, right? When you're in real estate… or at least the way I was doing real estate, there were two things you were looking for all the time, motivated sellers and investors that are all you need to look for, right, because you don't want to get involved with properties. There are lots of properties out there that you can invest in, that isn't going to cash flow very well, that you're not going to make a lot of profit. Those are easy to find. What you want is you want to get properties from sellers that are very motivated, motivated for one of two reasons. The properties run down and they can't get rid of it, or motivated, because they are personally in a bad situation, unfortunately. I mean they call it what is a death, divorce, and debt, or the three Ds.

Mike: Right.

Jim: So somebody who's accumulated a lot of debt, somebody who's had a death in the family, who's either inherited the property or were co-owners of the property like a spouse and now they can't carry it anymore, right? Or that divorce, death, divorce, and what was the other one death, debt, right? Somebody in a lot of debt… yeah or went for a divorce, that was the other one, right? So I was always finding the most motivated seller, was a landlord, who tried to become an investor. And there are a couple of bad tenants coming in trashing their place and putting it out on the market, they said I don't want to deal with this anymore here Jim. I have my property, right? Literally, I had people coming into my office throwing their keys on the thing saying here, “What can you give me for this?”

Mike: What were you doing for marketing? How are you getting sellers to contact you? 

Jim: Again, I'm just thinking back in 2008, 9, 10, it was mostly online classifieds. So in your case, it would be Craigslist. In Canada, the equivalent is something called Kijiji. But I was just running a ton of ads. What was interesting too… that's to get tenant buyers. But now I find profound properties is I would… I'm an IT guy too, right? So I'm a bit of a geek. So what I did is I had an RSS Reader, if you're familiar with RSS. And what it would do is I would read the entire listing of all the ads on Kijiji or Craigslist. I can do Craigslist too using a tool called Inoreader. And so what it would do, it would show me the list of every property that got listed that day, and I had a VA that would go through that list and say, “Which one haven't I contacted yet?” right? So she'd take all those and put them in the spreadsheet for anything that I hadn't contacted, and we just sent an email out, saying, “Hey, would you be interested in selling your property, if I could make you some profit on?” Something like that, right? So invariably, I'd get one or two leads a day that we'd follow up with. And you know, within a week or two I'd have a deal that I could put together. But it's volumes and like it's hundreds of contact points to all of you. Literally, as I said, I was contacting every listing. Not every listing. What I meant was every new listing, right? Because you know, with Craigslist, people will post the same property over and over again, right? So what I would do is I post, I'd contact them the first time, the reason I had the Inoreader and the spreadsheet is I didn't want to keep spamming this person every day with the same offer, right? I'd maintain it in the spreadsheet, and then I'd do a follow-up every… maybe a couple of weeks I would offer them again. And then, what I would do is I would take all that and then I'd put it into a CRM, and then I'd just manage anybody who had some kind of interest, and then it would go into the next level of follow-ups, right? And the money's in the follow-up, right? 

Mike: That's right, yes, because it's a numbers game and a lot of people… I'd imagine what you're offering a creative solution and were you contacting people to have their house named for rent or for sale or for both?

Jim: Both. I mean that's the ideal situation. Initially, you find that…

Mike: You got better success with one or the other.

Jim: Yeah. Well, first of all, I was just offering everybody who put their house up for sale and everybody who put their house up for rent, okay? And then, what I would do is when I was looking at them, I would also look at the other listing to see if they were in both, because then you know, they're really motivated. And even though there are some times when people say, a very motivated seller, it doesn't really mean it's very motivating… and the other thing is with these tools you can exclude realtors. For example, you don't want to copy, you don't want to reach out to any of the realtors who are posting, because they're not willing to make deals, or at least that was my experience with this type of thing that they're always looking for… obviously, they're in business to make money, so they want their realtor fee. Whereas the deals I'm making with the sellers, I'm not paying them anything, right? I'm just taking over their property, putting a tenant in there, and then getting out of the way or… well at least, just managing it for the period of time.

Mike: Yeah. My personal experience when I was marketing a lot for on Craigslist and online people that are advertising their house for sale and for rent, it seemed to have more success with the folks that had their homes for rent than they had for sale.

Jim: Okay.

Mike: It was easier, my experience to get a seller who was considering renting the property to think about renting it to me.

Jim: Yeah.

Mike: And buy it on a future date, rather than somebody wanting to cash out and asking them to delay that. But obviously, you get both.

Jim: Yeah. And I think that's probably because you've also got landlords that are in the rental area, the disgruntled landlords, the unhappy landlord.

Mike: Yeah. They probably just got rid of a tenant or somebody that they weren't very happy with.

Jim: The other thing I've done which wasn't a good experience and I'll just add that is I've found tenant-buyers for some of these people, okay? So I've placed tenant-buyers in there, got my finder's fee, almost like a wholesaling, I call it the lease option wholesaling. So you get a tenant-buyer and then you just charge a fee for doing that. And what's happened… one time anyway, the tenant didn't… what didn't turn out to be very good, even though I gave them the option, I said, “Listen, I can manage this for you for three years or I can just find a tenant for you and I'll give it back to you. And you only have to pay me a finder's fee.” You know, the difference between, let's say a $30,000 or $40,000 profit over the three years that I would get, versus just a $10,000 finder fee for finding a tenant-buyer.

Mike: You see out of it?

Jim: Yeah. And what happened, the tenant-buyer didn't turn out very good. So they ended up taking me to court. And so, I and the realtor split the fees on the cost of doing business. I remember taking courses way back when on the old rich dad courses years ago or the Whitney courses if anybody's old enough to remember the Russ Whitney training.

Mike: Russ Whitney?

Jim: Yeah, yeah. And I remember the instructor saying, “If you're not being sued, you're not, your business isn't growing fast enough.” Right? So I've been there quite a few times. And my lawyer's… three thousand dollars, four thousand dollars, he says, you just got to pay attention, it's the cost of doing business, right?

Mike: Yeah. So, Jim, we have… do you have a couple of questions, uh…

Jim: Okay.

Mike: One, David asked, is all of your investing in Canada, which provinces and, are you familiar with some of the differences for above and below the border.

Jim: The kind of stuff I do… there's not a lot of differences. I guess, I mean I've talked to people. I've been on Biggerpockets. I've given a lot of advice there. I've coached some people too. I don't think the nuances of the lease option, the fundamentals of the lease options are the same. There are some variables per state, I understand, what is the Dodd-Frank's rule, right, where you have to be careful. And you know, as far… and also, there are some tax rules, but I've never really been concerned about all that. I just go to my lawyers and say, “Can I do it?” you know, go to my accountant and say, “Does this make sense from a tax perspective?” I let all the experts do it. That's like… people have asked me all the time whether the, what are the lessons I've learned right over my 25 years. And the number one thing I would say is trying to do some of this stuff by myself, thinking I could put out my own offers, think I could do my own marketing, think I could do my own legal research, I've built offers from scratch, I've made offers and in hindsight and learning from all this… now, when I was very active, I just went to my lawyers and my realtors, using the professionals to do the job, made a big difference, and that's what really helped me scale.

Mike: Right? And Brandon asked us. Is there any special insurance available when you're in a sandwich lease option? For that, but I thought maybe a few.



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Episode #123 - The Advantages of Network Marketing

Episode #123 - The Advantages of Network Marketing

October 14, 2020

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Hi there. Today, I want to talk a bit about what are some of the advantages of being in a network marketing.


So you hear a lot about people talking good or bad about network marketing and why people are involved in network marketing and why you shouldn't be involved with network marketing.🗣️👥💲


One of the big advantages is that you get to start your own business. You get to do what you want when you want.


You don't have to adhere to any schedule. You set your own appointments. You set your own deals. You pick your own products. You start from scratch. You do your own marketing. You build your own teams.📋🤝📦👨‍💼


The other big advantage is that you get to work from home


A lot of these network marketing, you don't have to go out and meet people. You can actually work right from home.


Especially, with today's situation, a lot of meetings can be held through virtual meetings using products like Zoom or Google Meet. And so, there's an advantage. Obviously, you have to set up those meetings and you have to keep those meetings. So you don't have total freedom where you don't have to do anything else.👨‍💼🖥️📧📈


If you want to build a business, you have to build a clientele, which means you have to have meetings and you have to propose solutions to these people, and you have to sell them on the product, on the service, on the job, on your downline.


The other advantage of network marketing is the commission structure. So the idea is you sell a product, you get a commission, you bring in a team, people that will work for you in your downline. And when they sell a product, you also get a commission. So there are residuals. And in certain products, these residuals… so residual by default means, you sell something once and you get to receive commissions on an ongoing basis. So some network marketing products have residual, some you have to keep selling. So make sure if you're looking for residuals that you pick a product where you have residuals.🏗️📦👨‍💼💰


Another big thing is it's very cheap, very inexpensive to start a business with a network marketing product. Most network marketing wants two, three, or $400 as an initiation fee, which is only fair, for you to take advantage of their products and their systems. And then you only have to pay a minimal amount to maintain that business.📉💲📦


So in my case, I think I paid something like $25 a month just for the right to be able to have access to their business. This is so cheap. Especially if you're looking at acquiring a franchise or going out and starting your own business, whether it's an affiliate business where you've got to spend a ton on marketing and developing, or it's bricks and mortar business where you're going to go out and you've got to find office space. So there are all those extra costs.💰⌛🤝

The other thing is, there are advantages, they've already had the products and they already have the brands. So you don't have to build the product. You don't have to build the brand. Sometimes they're reselling. So you're actually having access to bigger products, big-name products. So those are just some of the advantages of being in a network marketing.

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