Jay and his special guest, Josh Cantwell, the CEO of Freeland Ventures & Strategic Real Estate Coach talk about raising capital.
Josh also shares how was he able to combine his knowledge of financial investing with real estate to create a very successful business, which quickly grew into closing over 100+wholesale and short sale deals per year.
He has vast knowledge and experience in helping to coach clients and mentor students and borrowers from across the US in finding, structuring, negotiating, and closing various types of transactions for a profit.
Josh is the host of the Accelerated Investor Podcast, which has hosted past guests like Kevin O’Leary, Barbara Corcoran, Donald Trump Jr, Jack Canfield, Rod Khleif, and JV Crum III. He is the founder of a variety of successful businesses including Freeland Ventures, Strategic Real Estate Coach, Accelerated Investor Office, and more.
In 2004, Josh took his knowledge of raising capital and the financial markets and started investing in real estate full-time. He founded Strategic Real Estate Coach in 2007, and since then has been involved in 1,000+wholesale, rehab, rental, foreclosure, and apartment transactions, and has taught thousands of investors how to replicate his success.
Timestamps:
0:01 – Get Ready To Be Plugged Into The Money
1:22 – Jay’s New Book: “Where To Get The Money Now”- https://www.JayConner.com/Book
2:01 – Today’s guest: Josh Cantwell, CEO of Freeland Ventures
3:34 – How Josh Cantwell got started in the real estate business.
6:17 – The Secret to Raising private money
10:24 – What is a Self-Directed IRA?
14:51 – Did you know there’s a way that you can use retirement funds and earn unlimited money per year, penalty-free, tax-free, or at least tax-deferred?
15:32 – Where do you find private lenders?
21:49 – What do you see happening in real estate for the next six months?
24:48 – Connect with Josh Cantwell – https://www.FreeLandVentures.com
Private Money Academy Conference: https://www.jayconner.com/learnrealestate
Have you read Jay’s new book: Where to Get The Money Now? It is available FREE (all you pay is the shipping and handling) at https://www.JayConner.com/Book
What is Private Money? Real Estate Investing with Jay Conner http://www.JayConner.com/MoneyPodcast
Join the Private Money Academy: https://www.JayConner.com/trial/
Jay Conner is a proven real estate investment leader. Without using his own money or credit, Jay maximizes creative methods to buy and sell properties with profits averaging $64,000 per deal.
What is Real Estate Investing? Live Private Money Academy Conference
YouTube Channel
https://www.youtube.com/c/RealEstateInvestingWithJayConner
iTunes:
Listen to our Podcast:
Private Money Insider Secrets with Josh Cantwell & Jay Conner, The Private Money Authority
Jay Conner (01:55):
Well, my guest today has got quite the story. In fact, he manages over $40 million in private money. You’ll see why he is one of my favorite guests for this entire year. We’re going to be talking about private money. And these funds are deployed into multi-family real estate and apartments. And my guest has been involved in over 1,000 – that’s right – 1,000 wholesale, rehab, rental, foreclosures, and apartment transactions. Just about any real estate transaction you can think of. And he currently holds a portfolio of over 3,000 cash flowing apartments. In addition to that, he’s the founder, the CEO of a company called Freeland Ventures. And also, he’s a strategic real estate coach. He’s a true entrepreneur. In fact, he has never had a boss, an employer his entire adult life. Quite a story, a lot of experience to share with us. And of course he’s an expert when it comes to raising capital. With that, my good friend and guest, Josh Cantwell, welcome to the show!
Josh Cantwell (03:16):
Hey, thanks so much, Jay, for having me on. I’ve been looking forward to this all day. So excited to be here. So, thanks for having me on.
Jay Conner (03:25):
Absolutely. I’m excited to have you on, we get to talk today about my favorite subject, which is private money, but before we get on the subject of private money, first tell everybody how’d you get into real estate.
Josh Cantwell (03:38):
Listen, Jay, I kind of fell into it just through life experiences. When I graduated from college, my dad, who’s an entrepreneur, almost ripped my head off when I went into the financial services world. My dad was in financial services. He did employee benefits. And, so I followed in his footsteps. I did internships for him when I was in college and I jumped in and got my series 6 license, my life and health licenses and things like that. Fast forward a few years, I was making a great 6-figure income as a 24 year old, but I realized that a lot of my best clients, my biggest clients, did not have all their money in the stock market. They actually owned apartment buildings. They own strip centers. They own rental properties. They leased those buildings out and were making positive cashflow. And no matter how hard I tried, Jay, I couldn’t pry those dollars out of the real estate business and get them into the stock market. So I actually took notice and said, “Well, they must be up to something because they seem so married to those assets. They won’t give them up, the real estate.” So I paid attention. Quickly, I realized that they were up to something and they knew something that I didn’t, which was passive income. And I quickly started learning about real estate, bought my first few investment properties, and ultimately decided to quit my job as a financial planner, cold turkey, back in 2005 to jump into real estate full-time.
Jay Conner (05:10):
And how old were you when you went full-time real estate?
Josh Cantwell (05:14):
I was 29 years old. I had a number of years of experience, but kind of doing both, doing real estate as a side hustle and still serving my clients in the financial services world. But one of the benefits, Jay, of that is, talking about your expertise and your niche of private money. I was very fortunate in my early age, in my early 20s to have clients that were 3 and 4 times older than I was, right? In their 60s. They were in their 80s. And I got very comfortable talking to people about private money, about capital, about raising money, deploying it, being in the stock market, talking about their financial goals, objectives, risk tolerance. I got very, very good at all that at a very young age. And so today, now I’m 45 years old, and that experience, which again, my father almost killed me for doing it. But that experience at a very young age has really helped me the last 10 years, especially in raising money and doing much larger commercial deals.
Jay Conner (06:15):
Yeah. What I have observed with myself in the world of private money and also the many students that we’ve helped raise a lot of private money. It seems as though one of the best skills to have to be successful in attracting the funding and teaching other people what it’s all about, really comes down to not only your confidence in knowing what you’re talking about, but also, your communication skills. Would you agree with that?
Josh Cantwell (06:46):
Oh, no question about it. No question about it. Being able to communicate honestly, Jay, as you well know, raising money, talking to people about money is really just a conversation, right? It’s about leading a person down a path, asking the right questions and having a conversation. It’s truly not a pitch. People think, “Oh, I pitched this. I’ve raised and deployed $80 million.” We have 40 million deployed right now as we’re doing this discussion, but I never felt like I was pitching to someone. Especially with my experience being in the stock market was that I’m just kind of comparing the stock market, the volatility of the market, the ups and downs of the market, to the safety, the security, and the predictability of real estate. At the end of the day, I leave it up to that investor, what they want to do. And fortunately, they’ve usually made what I think is the right decision of investing in real estate, at least with a big portion of their portfolio.
Josh Cantwell (07:46):
The reason why I still like stocks, bonds, mutual funds in some cases is simply because it’s so liquid, Jay. As you know, you could snap your fingers, you could get liquid, you could go buy something else, you can pay for whatever you need. It’s super liquid. Real estate, as we know, is not so liquid. So having these types of discussions around, look, the stock market for the last hundred years has averaged a 9% return. If you talk to any financial advisor, they’ll use a 7% blended return on a portfolio because you make it make sense. Stocks, bonds, mutual funds, and secure investments, 7%. That’s before, right? And I’m talking to you, Jay, like I’m talking to one of these guys that I’m presenting to. So hopefully this is valuable for your audience, but that’s before the 7% before fees and commissions. So you’re really down.
Josh Cantwell (08:38):
The average mutual fund has a 3.14% internal expense ratio between the commissions, the 12B-1 fees, the expense ratios. There’s 13 different fees in your average mutual fund that’s not even disclosed upfront. It’s buried in the perspectives, 13. So when you take that 7% average return, and then you take out those fees, the average investor doesn’t know it, but over the long haul, they’re going to get about a 4 to 5% net return. And when I just educate people about that, and then I talk about, “Hey, you can make a private lender loan, or you can invest in an apartment, or you could do a loan or a JV deal on a rental property. And you’re going to net over 10% plus possibly more with equity.” It’s just a discussion. It’s not a pitch. That’s what I think people need to understand that we just educate the common investor, the mom and pops, whether they’re accredited, non-accredited about what actually has been happening in the stock market for the last a hundred years. That’s irrefutable proof. We just have to educate them on it and let them make a good decision for themselves.
Jay Conner (09:49):
I tell people all the time, of course I don’t have 40 million deployed. I’ve got 8 million deployed right now on single-family houses.
Josh Cantwell (09:57):
Hey, that’s good. 8 million is a lot. That’s great!
Jay Conner (10:00):
And I tell people all the time, I’ve never asked anybody for money. And it all comes down to exactly what you just said, Josh. And that is, they say, well, how do you do that then? Well, you do what Josh just said. And that is you put on your teacher hat and you educate them. So we’ve got 47 private lenders right now that are running this money on deals, investing in our deals. And first of all, not one of them, and they’ll tell you this, not one of them had ever heard of this world of private money. They didn’t know what it was. None of them had ever heard of self-directed IRAs, which I hope sticks around for a while. That’s back in the headlines these days. But, anyway, self-directed IRAs. So, Josh, why don’t you take a moment and tell our audience why is it important to know what a self-directed IRA is and how does that relate to attracting private money?
Josh Cantwell (11:11):
Sure. Yeah, self-directed IRAs are of course a huge part of being a successful real estate investor. And, Jay, what I tell people is funding equals freedom, okay? Funding equals freedom, and I’m not talking about first mortgage debt. Anybody can get that. What I’m talking about is true private money from private investors. Like you teach your members getting those dollars, not hard money, not bank financing, but true mom and pop private money. That’s what provides freedom because even if you do a $20 million apartment deal, I’m actually making an offer on an apartment deal next week for $100 million. So I have to raise $30 million of private money. A big piece of that 30 million will come from a private equity fund, but we’ll probably have to raise 10 million from mom and pop private investors. And a lot of them have self-directed IRAs.
Josh Cantwell (12:09):
Self-directed IRA is simply an IRA, but instead of investing it in traditional investments like stocks, bonds, or mutual funds, you can invest your self-directed IRA into alternative assets. It could be crypto, could be oil and gas. It could be cannabis. It could be some sort of e-commerce deal. It could be a private placement memorandum and apartment, but it’s self-directed so people are sourcing self-created deals. Now, Jay, you and I both know that some of the very best deals are the deals that are not going in the public markets, but they’re done in the private markets. We all know that Facebook was founded through a private friends and family offer, right? And Peter Thiel, one of the original investors in Facebook, invested through his self-directed Roth IRA, which is now worth like $5 billion. So self-directed IRAs are one of the great wonders of the world because you can direct your dollars into almost any type of asset.
Josh Cantwell (13:13):
There’s a few that are excluded, like life insurance and alcohol and some other weird stuff. Stamps and rugs and weird stuff like that. But you can invest in almost anything you want. And that way you can control the investments and invest in what you know, invest in what you’re familiar with. And often, as long as you invest with a good operator, those returns can be far better and more secure than the stock market. So those are just about finding the right operator, or finding a guy like Jay or one of Jay’s students, finding someone like me, or finding a good operator that’s going to care for that money and have full disclosure, a lot of transparency. That’s the challenge, right? So, Jay, a lot of people invest in the public markets because they perceive them to be regulated. They perceive them to be normal.
Josh Cantwell (14:03):
They perceive them to be more safe, but that’s not really the case. The safest deals I’ve done have been deals with people that I personally vetted and then took my self-directed IRA and gave them money, or they gave me money, vice versa. So the idea of self-directed IRAs is huge. And I would encourage all of you guys to create your financial friends. You cannot take your self-directed IRA and limit it to yourself, but you can loan the money to a friend of yours and that friend of yours, if they like your deal, they can invest or lend to you. So you create your financial friends, your network, which Jay does a great job of connecting you guys, all your listeners together, create your financial friends, use your self-directed IRAs, to help each other.
Jay Conner (14:51):
One of my favorite questions, when I’m having a conversation with someone like a one-on-one social event out to lunch or whatever, one of my favorite questions begins with the 3 words – did you know? Did you know? And one of my favorite questions, Josh, is, “Did you know, there’s a way that you can use retirement funds and earn unlimited money per year, penalty free and tax-free, or at least tax deferred?” And like you ask that kind of question and they go like, “No, I never heard that there was something like that.” So talk about the attention-getter. Now, Josh, I want to ask you a question that I get asked all the time and I want to hear your answer. And here’s the question – Josh, where do you find all of them mom and pop private lenders to loan you money?
Josh Cantwell (15:50):
That’s a great question. Look, man, they’re everywhere, but I’ve learned over the years of raising a lot of money, there’s really two sort of proven places or ways. Okay, the first one is meetups. This is a category that I look at, meetups. What I mean is face-to-face events, seminars, could be inside of Facebook groups. Places to meet with and talk to people one-on-one. Okay, this is important. One-on-one, Jay, like you and I are talking now. Where can you go to meet more people one-on-one? It could be the yacht club, could be the golf club, could be the homeowners association, the home builders association. Could be the apartment association, could be the next real estate investor networking function. But meet-ups are a great place to meet people one-on-one. Okay, now the secret sauce to those meetups, like everyone used to carry business cards.
Josh Cantwell (16:54):
Lot of people don’t carry business cards anymore. When I meet with someone at a meetup, I offer them my cell phone number. So I say, “Hey man, great to meet you. Great to talk to you.” When people ask me what I do if I’m at a meetup, the best thing to do, Jay, is to ask someone else, “Hey, so what are you up to? Like, what do you do?” Right? And of course, they’re going to say, “Hey, I’m in sales. Hey, I’m a doctor. Hey, I’m a teacher.” What are they going to do in return? They’re going to say, “Well, Josh, what do you do?” Especially the guys, right? Like the women, they can talk about all different kinds of important things. Like guys, we usually talk about sports, the weather, and then what do you do?
Josh Cantwell (17:36):
That’s what we do. Like, that’s how guys operate. So when I’m at a meetup or a function, a seminar or a sporting event, whatever, and I ask somebody, what do they do? Of course, they’re going to reciprocate and ask me, what do I do? Well, when I answer that question, Jay, what I say is, I don’t say I’m a real estate investor. I don’t say I’m in apartments. I don’t say I own a private equity fund. What I say is I raise capital through real estate. We buy, and then you can insert whatever you buy. For me it’s apartments now. We buy distressed apartments and we pay our investors a fixed double digit rate of return. And then I just stop. And I’ve done this so many times, Jay, let me tell you how people respond.
Josh Cantwell (18:21):
Number one, if they’re older, like us, they say, “Hey, oh, kind of like Carleton Sheets?” Cause they remember Carleton Sheets back in the day. I say, “Yep.” Or if they’re a little bit younger, they’ll say, “Oh, kind of like HGTV?” And I’ll say, “Yeah, yeah, sorta like that.” Or they’ll say, “Hey, I’ve always wanted to buy a rental property” and they’ll say, “Well, how does it work?” And I’ll say, “Well, it works great. You know, if you’re interested in learning more or talking more, let me give you my cell phone.” Right? So giving starts the receiving process. So I say, “Hey, look, you know what? Like we’re at this game or at this function we’re networking. We can definitely dive into it. Love to share it with you.” And you can even use the comment, Jay, you just used, which is the – did you know?
Josh Cantwell (19:05):
Right? That ‘did you know’ comment, add that in. That’s a good, little, get a good spice right there. And then what are they going to do? I say, “Hey, let me give you my phone number. Why don’t you text me back with your number. And you know, next week, I’ll follow up and we can get on a Zoom call or we can get face to face, get a beer, grab some soup, whatever.” So that’s the first place is meetups. Now any more for me? I don’t do a lot of these meetups, but it’s great for people to get started. There’s one-on-one. What I do today is what I call the ‘one-to-many approach.’ The one-to-many approach is that we’ve created a content machine. We’re leveraging technology – podcasting, YouTube, StreamYard, blog posts, Facebook groups, Facebook lives, LinkedIn groups.
Josh Cantwell (19:59):
And we put out so much content. And honestly, Jay, it starts with podcasting because I have a voice. I don’t want to sit and type and write or create graphic images. What I want to do is talk. I want to put out my message. And then my team of writers, content creators, graphic designers, they can create all kinds of things from podcasts. And then that always leads to the next step, which is engagement. Engagement is when we’re asking them to opt in. Right? So whether you’re at the meetup, the opt-in comes in the form of exchanging the cell phone numbers. If you’re running and building a content machine, you can recruit investors online. The next step is to get them to engage through an opt-in which means they visit your website. They opt in, they opt in to your investor portal or they opt in for a free report or they opt in to buy one of your books, Jay, like you just offered and they engage.
Josh Cantwell (21:01):
And then there’s a follow-up process from there. But that’s really where it starts in those 2 ways. I don’t do a lot of meetups anymore. I do speaking engagements from time to time, but we are a content machine. I put out about 3 or 4 podcasts a week. And we recruit hundreds and hundreds of new investors a year because they opt-in, they feel we’re authentic. They like our content. We’re following up constantly through new content and then they opt in and engage. And then we take them down another path from there, but that’s where it begins.
Jay Conner (21:38):
Wow. I love it, Josh. I love it. Well, I’ll tell you what, man. I can’t believe the time is going by so fast. We have one participant here shot in a question. What do you see happening in real estate over the next 6 months?
Josh Cantwell (21:54):
Oh yeah. Great question. Look, we’re an inflationary market. No question about it. So for sure in 6 months, values are going to be up. And when you look at it, there’s a lot of great marketing, right? I feel like I’m a great marketer, Jay. You’re a great marketer. There’s a lot of great marketing from real estate gurus out there. And generally, in my opinion, I don’t want to trash talk anybody, but there’s a lot of like your pending foreclosure doom and gloom type of messaging right now that’s really not accurate. Look, right now, there’s only about 1.2 to 1.4 million properties on the MLS. Across the country, normally, there’s about 3 million to 3 and a half million on the MLS. A good friend of mine is the VP of Market Economics for Auction.com. And so I get it directly from the guy, the economist at Auction.com. And look, inventory is down about 55%.
Josh Cantwell (22:57):
So right now, Jay, simple supply and demand, there’s more demand than supply. So prices are going up. And then when you look at how COVID impacted the supply chain, again, we’re in an inflationary market. So for sure prices are going to go up. By this time next year, around September, October, November, December of next year, 2022, some of this foreclosure inventory will start to hit the market from the foreclosure moratoriums. But I’m predicting, and then my buddy at Auction.com is also predicting that only about 15% of all of those distressed assets from COVID are actually going to hit the market. Remember, Jay, we’re in a totally different environment now than we were in 2008. In 2008, people got in trouble and prices were going down. Today, people got in trouble because of COVID, but prices are going up. So that’s going to bail out a tremendous amount of people.
Josh Cantwell (23:50):
And so here’s what’s going to happen over the next 6 months for sure: prices are gonna continue to go up. Supply will start to creep back, but not as much as demand. Values will continue to go up. Interest rates will start to creep up, but not very much. The Federal Reserve has said that they’re going to keep interest rates low, but in an inflationary market, you want to own the asset because there’s a phenomenon called “asset inflation,” which means your rental properties, your rehabs or apartment buildings, they’re going to go up in value also. Rent values are going up. Look in Dallas, Fort Worth, the rent prices are up 20% year over year. Even in Cleveland, which is where I’m from, which is a relatively stable, normal rust belt market, rent rates are up 5%. Normally they’re only up about 2%. So even for Cleveland, values are up. So that’s my opinion of what happens here over the next 6 months to a year.
Jay Conner (24:46):
Awesome, Josh. I agree with you as well. Josh, I know that we’ve got a lot of our audience members that want to stay or get connected with you and what’s the best way for people to reach out to you and continue the conversation?
Josh Cantwell (25:02):
Ah yeah, just go to our main website, go to FreelandVentures.com. FreelandVentures.com/passive. There you’ll find our portfolio – the buildings that we own, the different prices and things that we do, what we’re trying to buy, what our buying criteria is, some of our YouTube videos just, you know, go to our main website, FreelandVentures.com/passive/criteria. Those are some of the places to go or just take a look at our portfolio and engage with us.
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