Episode 331: Getting Started And Picking Partners With Tie Lasater
When you what you really want right from the start, you can surely have that when you set your path towards it. In this episode, Tie Lasater teaches us how to get started in business and create success! As a serial entrepreneur, real estate investor, and philanthropist, he imparts his knowledge on entrepreneurialism and offers a step-by-step process on how you can systematically approach business. Mistakes are normal in any venture, and for Tie, realizing his errors early on allowed him to prevent more failure and scale up quickly. Learn more from Tie as he shares interesting facts on real estate business such as the Lincoln effect, finding the right network and partner, and establishing trust from others.
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Getting Started And Picking Partners With Tie Lasater
This guy’s doing well. He’s Mitch times five. He’s on steroids. He’s got about thirteen businesses. His name is Tie Lasater. We’re going to be talking about entrepreneurialism in general and probably talking to the newbies out there and I say wannabes with all the love and affection that I can. You want to be an entrepreneur. You want to get out of that job. You want to be your own guy. You want to be in control of your own destiny. You want to control your own personal finances. I want to talk to that guy. If you’re afraid to jump or having trouble jumping, that’s what we’re going to talk about too. Tie, how are you doing?
I am fantastic, Mitch. I’m super happy to be here with you.
Thanks for indulging me through that. Everybody in the world, whether you’re in real estate or not, needs a tax-deferred or a tax-free environment to grow your funds. You’re crazy if you don’t.
I’m starting to see that more and more. In the last couple of years, I started seeing that it’s fun to see what you owe when you owe that much, but it’s also not fun to be sending that out to somebody who probably isn’t putting it to use as well as I can put it to use.
They put it on pallets and send it to places like Afghanistan and shoot. We were talking about a major deadline for taxes and it was one of those crap moments. I always thought if you’re going to open up an IRA or whatever, you’d always want to Rothenize it and pay tax and then grow it so you can take it out tax-free. There is a definite purpose for traditional IRAs because I have a solo 401(k) and at the end of this year where I did well, because I’m over 55, I can take $26,000 and my company will match me $26,000 and my wife can take $26,000. It turns out to be about $107,000 I get to take off my income if I put it into my solo (401k) in a traditional lineage where I’m going to have to pay tax when I take it out. It helps.
There are two arguments. The tax bracket may be as low as it will ever be in the history of the world. You may want to watch your money right now. If you’re facing a big number, you may want to take $107,000 off your income before you start recalculating. It might throw you down into a lower tax percentage, which could really multiply your savings. These are technical stuff. There’s a place in the world for a traditional IRA and a Roth IRA. Believe me, you should have both.
That goes into about every aspect of business. Many people think that business is black and white and it’s not. You’ve got so many choices that you have to make. That’s throughout your business, whether it’s deciding whether to grow and scale, add another business, add another product or buy a property and how you approach the marketing towards the properties that you’re approaching. There’s no black and white. You can’t take business and say systematically approaching it. Here’s the exact step by step process that you’re going to take. Somewhere along the line, there’s a human decision that has to be made.
You touched on a lot of points right there. I could blow up on what you said right there. One of them is when we buy houses, what’s your strategy? I started out with a very minor strategy and I mastered it and then I added another strategy. Be careful not to try to take on too many strategies at one time because it’s hard enough to learn one in the beginning until you get acclimated to the vocabulary and the ways of that world. Get on one. Use the internet to study everything there is, gravitate towards one. When you’re sure that’s the one, drill down and get help on that from a professional who’s already done it and then buy or spend some money when you’re sure that’s the strategy. After you’ve mastered that, that’s when you start expanding multiple streams of income. You’ve got to start with one. Do you agree with that?
Absolutely. I always say focus, narrow and cast wide. I use a fishing analogy. Basically, a fisherman doesn’t go out and decide to start casting all over the lake, especially when they’re on a new lake in a boat or something like that. You’ve got to focus, where are the fish going to accumulate? This is the strategy I want to approach. I’m going to approach this area and then when I get there, I’m going to cast as wide as I can a big net across that area. You can’t say, “I’m going to do this a little bit, and if that’s not working in the first week, I’m going to go move on to this,” because you’re never going to become successful at that.
It doesn’t matter what you do, whether you’re a professional football player or you’re a professional real estate investor, it takes 10,000 hours to be successful at whatever it is you’re going to do. You can do my approach to where I tried to get to that 10,000 on my own and realize after a while that’s going to take a really long time. At that point, you decide what it is that you want to do. You start getting good at it and then you can start buying that $10,000, if you will, from somebody else who has already created it. Find out what made them so efficient at doing it. You can leverage your time that way. You should focus.
I have eight businesses. You have thirteen businesses. What happens is you get that one business and that business has got an exhaust pipe and something’s blowing out the back end. It’s not being used. I like to use an example. Let’s say you have sawmill and people bring chopped down trees to you and you cut them into boards and you get paid to cut those trees in the boards. What you’re left with is a big old pile of sawdust. You’re going to have to pay to haul that to the dump or you can figure out what you’re going to make out of that sawdust. Am I going to put poison in it and put it in a bag and call it ant pesticide? Am I going to glue it all together and make a board out of it? What am I going to do with this?
I got it for free. It’s piling up over here and I either need to pay to get rid of it or I’m going to waste it. You open up the next business. I didn’t start out wanting to own eight businesses. What happened was I got so many people that I’m talking to that need to convert their IRA. I started TaxFreeFuture.com, got with an attorney that’s been doing it for years. It has these 10,000 hours and I’m the part that brings the business in. He’s the one that does that other side because I had all these people coming to me for that.
It’s the exact same thing that we did. It’s exactly your approach. I got good after I finally decided to start paying to play and I figured out what I wanted to do in real estate. I found a couple of coaches that were successful in that area and I started implementing that into my business. I got successful in real estate. After about two years, we did a multifamily project and realized that it was going to be more cost-effective. One of my partners had done international business before, so we went to Southeast Asia, found some suppliers that we could get our product from and then realized if we’re bringing it over, we might as well provide that to other people that we’re working with that are doing projects as well. Now we’ve got an import business. We’ve got a construction company, we’re doing construction on 100 houses a year. We might as well offer that to other investors. Now, we own a bunch of properties and we get to manage these properties. If we retained some ownership in the properties with our partners or we partner with our broker, now we’ve got a management company and it continues to pile from there.
We have servicing companies. I was servicing my own notes and I was servicing a few people. You go find out some of these servicing companies when you build on what they sell for $5 million, $6 million, $7 million. I said, “I could do that. I’m already doing it.” Anyways, one is focus, get good at it then pay attention to what the residual around you and there’s some natural fit for the next business. You’re not going from flipping houses to making shoes. You’re using some knowledge or all the knowledge from the core business that you do and is bleeding over. I was going to say, I started with one strategy but now I know all the strategies for the most part. I’m good at a lot of them and when I buy, people go, “What’s your strategy with all these houses?” I said, “I don’t know.”
I buy houses for a good price and I let the house tell me what it needs. I’m the house whisperer. If it’s in the slum, I probably don’t want to go down there and collect payments from people. I’ll probably flip it or wholesale it even. If it needs these cosmetics, I’ll probably rehab it and retail it. It doesn’t have much of what we have. If it’s got a lot of rehab to do, I’m probably going to owner finance it to someone with the wherewithal and the money to make them on my collateral worth a lot more money. The houses tell me what to do.
On my podcast, I talked about something very similar. I get so many people to ask me, “What’s your acquisition strategy?” Same answer and it’s, “My acquisition strategy is marketing.” I focus my marketing on a certain couple of areas, but I don’t approach every deal with the low cash offer because that’s not always the best outcome or the best solution to the problem that the potential seller has. You’ve got to go in with an open mind of I’m in the business to solve problems. What is the best way to solve that problem for us?
What is the problem? Many people go on to try and make an offer. I haven’t figured out what the guy’s problem is. What does he want? Ask him what he wants. Ask him where the pain is. Figure out where the pain is, figure out what he wants and then see if there’s a mutual thing to get together. It’s negotiating 101. Even the pros sometimes have to go back and visit the basics.
For six years I was focused. I was like, “I’m going to be a real estate investor.” The only thing I knew is I’m going to fix and flip houses and retail sell them. If that’s your only approach, you’re pigeonholing yourself and in a market where the market begins to fall down, then you’re starting with your pants around your ankle with five, six, seven properties or how many of you have that you’re flipping at the time. You’re like, “I can’t sell them now. What’s my exit strategy?” Like you were talking about, what does the house say is the best use for that house? Let that determine your exit strategy.
When did you think real estate was it? When did it first dawn on you?
I had always been interested in real estate. I played football in college and I found out that if I went and convinced my dad that if he would buy a house with me and partner with me on it, that my two roommates, who also played football, their scholarship would more than cover the cost of a three-bedroom house. I could live for free, plus we could make some money. I decided this is a good idea. We did that. Along the way, somewhere I read Rich Dad, Poor Dad and I was getting my Accounting degree. I ended up going into the Accounting field, but I wanted to be in real estate. Reading a book gives you ideas but it doesn’t give you implementation. I was like, “I’m going to be a real estate investor and I can do this on the weekends.” Me and a partner bought our first house to fix and flip it and it’s meant to be, it’s up to me. I’ve tried to do all the work myself.
That project that should have taken about seventeen days took seven-and-a-half months and I decided I’m going to go ahead and try this again and I’ll learn from my mistakes. It started train rolling from there until we got to the point where I had to quit my job if we were going to keep doing that. I quit my job and I basically took a 50% pay cut and realized I was responsible for my own insurance at that point and didn’t know what I was doing in real estate. I made a big mistake. About that point, I think within probably the six to nine months after that, I realized there are other people that are highly successful at this. I went and did the same thing you said you did. I spent about $35,000 on a mastermind. I had five properties at the time that all I knew was fix and flip.
For those five properties, I learned some creative finance exit strategies. We turned those. That’s when we started doing our owner financing at that point and ended up being profitable on four out of those five projects that otherwise we would have probably lost ourselves on. That’s when I started to learn after that. I actually brought in a business coach soon thereafter as well. That whole year I had done twelve properties the next month in about a 40-day span from getting a coach to implementing what I was learning. I did fourteen deals in those 40 days and made almost $500 million and I realized I was onto something at that point.
Everything’s relative. How much were you spending on these coaches?
I spent on the first one, $35,000. On the second one, in that first year I spent almost $100,000. In total that first year I spent $130,000.
It sounds like a lot of money and it is a lot of money.
That was about 10% of my income that year after that.
It’s money well-spent. You can’t think of a better cause. You were improving yourself.
Once you realize that you’re your best asset, if you focus on that asset, you know what it is that you want to do and you can start building on that. That went back to I guess my college playing and I understood that. I’m a little guy. I weighed 190 pounds while playing college football. I knew that in order to be good, I had to have coaches outside of what I was doing at the time. When I started seeing what it did to my business, I was like, “If I’m doing this, what you would do here?” I’ll pay to figure that out. I got good at this and that’s when you can start scaling quickly. In about two years, we went from one business that was struggling to now thirteen businesses and that’s exactly what it was. Had I not found out where my mistakes were that I could prevent and/or keep from happening, then I wouldn’t have been able to scale so quickly.Once you realize that you're your best asset, focus on that, and know what it is that you want, then you can start building on that. Click To Tweet
It didn’t take you long to catch on to, “Get the hammer out of my hand. I’ve got to delegate this job.”
For six years, I did the bathtub surrounds. I was at least there when we would have more. My brother and I ended up partnering in that process. I would be at one house, he would be at another one. We would have a team with this and then we would have a team at one or two other houses and we would try to bounce back and forth. You’re completely inefficient because I didn’t even know what exactly I was doing, much less trying to have four hourly people working for us that aren’t professional contractors and don’t know what they’re doing. I realized, “Why don’t I go partner with a contractor that knows what he’s doing? I’ll provide the work and the scalability for him, he’ll provide the knowledge and the hammer in hand, then we can start growing.”
People think I don’t flip houses because one of the best strategies on the planet as far as I’m concerned in creative real estate investing business is to buy it, don’t fix it. Owner finance it for double, watch the guy making payments to you, go over-budget fixing up your collateral. The coolest thing about that plan is I buy it at 9:00 AM at a closing table. It’s for sale by 3:00 PM. All the risk is in the rehab. Tie, I haven’t invented much in this world, but there are a few things I came up that are original. One of them is this saying, “You make your money when you buy and you lose it in the rehab.”
The one half, “You make your money when you’re buying,” someone invented that way before me, but I’d put the tagline on it and you lose it in the rehab. If you’ve got a plan where you don’t have a rehab, that’s where all the time is. That’s where all the risk is. That’s where all the over-expense is. When you’re not doing that anymore. You got to learn a new trick. You’ve got to learn how to make sure that the guy you’re owner financing, has the wherewithal to actually get it done in a reasonable length of time and has the money or the funds or the expertise to do a decent job.
When that plan comes together, it’s wonderful because let’s say you buy a house for $60,000 then owner finance it for $120,000 or you could have put $40,000 in it and sold it for $200,000, but that would have taken 90 days. Now you’ve got $100,000 in it. You’ve got to sell it for $200,000, that’s doubling your money. You’ve got $100,000 in it. Sell it for $200,000 or you buying it at $60,000 and you owner finance it at $120,000, you still doubled your money. You cut the 90 days out and then this guy goes and spends $48,000 because we thought it was $40,000 but it’s always $48,000. If you buy it for $60,000 and sell it $120,000, you still doubled your money. I’m for sale by the end of the day. What makes the money, Tie?
Finding the deals.
I train my sales guys how to sell and how to market to find the buyer for the you-fix-it house. I’m going to give you a great note, 30-year fixed, no balloon, but you’ve got to convince me that you can fix this house in the next 30, 40 days. You’re going to make progress. Don’t make this mistake. If it needs a roof and a foundation, make sure you spell out that the foundation has to be fixed first before they do the roof. People will fix the roof before they fix the foundation. I discover all these things by having it happened to me and it’s not fun.
A smart person learns from their mistakes, but a genius learns from somebody else’s. As long as you’re not repeating those mistakes and a few of them, you can learn it from somebody else and you’re okay.
No, Tie. I’m the guy that’s making all the mistakes that all the geniuses can learn from. Make no mistake about it. I got to learn this crap the hard way. I’m the guy that touches a stove, not twice, maybe three times to find out if it’s really going to burn my fingers. After that I pretty much get it. Although a year or two I might walk over and touch the stove again. Give it a year or two, I would like to say that I was one of those genius guys, but I’ll be lying. I’ve got to do it my way until it finally pans out that the reason why they say not to do it this way is exactly what’s happening to me. I have students like that and I’ve learned to recognize them. “I told you not to do it like that. You’re going to go ahead and do it. Hopefully you don’t get the result I think you’re going to get. If you do, I’ll say it now. I told you, but maybe you’re one of those guys that got to learn as I learned.” I get it. I’m not going to bad mouth them.
I like to say I got lucky and I think it was by design. I found a partner who was able to speak to me in a way to where he seems to always make it sound like it’s my idea when he’s telling me not to do something. It’s genius by him and he knows that if he challenges me in the direction that he wants me to go, then that’s the way that I’m going to go instead of wanting to go the way that I originally thought I wanted to go.
I like him already. This guy is no dumb ass. What’s your Lincoln effect? First of all, why do you call it that? I found that interesting, the Lincoln effect.
I call it that and it’s been before that, but it’s one that made it stand out to me, especially in the car industry. You walk through an airport and everything that you see on every billboard is Julia Roberts or Nicole Kidman or Hugh Jackman selling everything, Tag Heuer, Rolex, Chanel or whatever the case may be. The car industry, especially since their implosion, had not implemented the branding by association in that celebrity branding until Lincoln, who was widely known for a long time as the old person’s car. They were really niched in a market that, not to be morbid, is a dying market. They went out and they got Matthew McConaughey to be the face of their name. I like to think my face is pretty, but my wife likes a Lincoln Navigator now. You now get that young female attraction because of that. Now all the guys, they can attract the woman again now if they go out and drive the Lincolns. That Lincoln effect is what makes you stand out. Not be the clown, the guy that shows up with blue or orange hair, but what makes you stand out?
Business has never been easier to start with social media, with the internet the way that it is. That’s good and bad. It’s good in that you can go start any business. If you know how to do it, you can be good at it. It’s bad in that it creates a bunch of competition. How do you stand out from your competition? I call that the Lincoln effect. For me, once I learned how to start doing the real estate that I wanted to do, that the markets in the niche that I wanted to be in, I wanted to be in the small multifamily, under 50 units and then single-family houses. I really like college towns. Once I figured out how to do that really well, then I need to figure out, how am I going to raise my capital and do things like that?
That first business coach that I got showed me that celebrity branding. I did an interview with George Ross and I positioned the interview where I could show it. He’s Donald Trump’s right-hand man, had done $400 million in real estate deals themselves. That one interview raised me $7 million in six months. I turned around and met Vanilla Ice and got a promo video with Vanilla Ice. I positioned it with the Vanilla Ice Project and his $500,000,000 real estate business that he’s created. That interview and that promo video raised me $10 million. Within a year, I had raised $17 million. Prior to that I’d only been able to raise about $250,000. I realized that I was onto something at that point. I call it the Lincoln effect because it registers to me, but it’s random.
I was thinking Abe Lincoln, but now it makes perfect sense. That’s true that the Lincolns and a Mercury Lincoln, all the geezers drove those cars. They brought it in. They made it cool. I’m going to tell you one of the reasons I do these is because when talking to smart people like you and many others that I’ve talked to, I always have a revelation. I have missed the boat on my unique selling proposition for 22 years and you pointed it out to me. I sell with 30-year fixed notes you don’t have to qualify. I have not pushed that at all. I could get it further down the road if I had a celebrity standing down with me. I can be the only guy in town and everyone know me, but I’ve got to have someone more popular, famous than I am to pull me into that light in this one little town and say, “That’s the guy that does the 30-year-fixed seller mortgages.” You don’t have to go refi. It’s not an option. It’s not a contract for deed. This guy makes you the taxpayer record, the owner. From day one, you’re on the deed. He’s the lien holder and you don’t have to go get a new loan in cash him out ever. You can pay for 30 years. I don’t really know anyone that really does that except my students.
There are not many people at all. I did learn that a little bit. Vanilla Ice, he decided to be the bank. He’s got a mortgage company as well, but he does it more to the high-end buyers that could qualify otherwise, but he decided to create a bank anyways.
He’s creating on rate and point. He’s more like a mortgage company. My people can’t get a loan.
That’s how our people are. It’s the same exact model.
It’s the reason why I decided not to have balloons anymore after five or seven years.
You’re never going to qualify.
They aren’t. I got tired of making the decision. Do I take these people’s houses and their $15,000 down payment away from them? Do I prove to them that their written word and their signature is not worth crap and forgive them? Both ways, it sucked. I didn’t like taking people’s houses and their down payments. I’m not in this business to pull the rug out from under people and run off of their down payment. I’m not in that business for that. I don’t want to be in that business. It’s an unholy business. Now I got to take some because I got to defend myself.
They’re going to take them out. If you set expectations, typically they’re pretty good with expectations.
It kept happening. I said, “I’ve got to come up all the way. I’m way more sophisticated than they are. I’m going to give them a 30-year mortgage. I’ll figure out how to fix the issue.” I did and I do. Morphing, what’s the problem? Why does this keep happening? How do you stop that from happening? What’s the good result? How do I make that happen more often? Morphing all the time. This is my personal beliefs and I’ve talked to you earlier and I know you’re the same way. It’s got to be a win-win for everybody. A business can’t be set up to hurt people if you want to have it go into perpetuity and maybe even be a legacy long after you’re gone.
That’s not sustainable.
This model sucks in its morality and it’s not going to work. I’m not a real big fan of building a flash in the pan stuff.
That’s building a house on sand, that’s all that is. Eventually, it may be beautiful for a short little while and it’s going to fall. You always hear your network is your net worth. For a long time I was like, “That’s great, but what does that mean? How do I go start networking with people that have the net worth that I want to be in?” I get on a plane and one of my business coaches told me to always fish where your fishes are at. I used to look at traveling and how do I save? I had never flown first class. When I started flying first class, I started doing it because I knew that I could raise capital one out of every four flights. Doing that, you also will meet some celebrities sometimes flying. I’m not the guy that will sit next to somebody and say, “You’re so and so,” and talk like an idiot about it. I understood finally when I started using that branding, I was like, not that other people care or not care, it’s that face. They are able to recognize that. Nobody recognizes my face. I’m not known, but they recognize the face of whoever it is that I decide to put on that marketing piece with me and for whatever reason that I’m doing it. That’s when I really started to understand your network is your net worth and it’s branding by association at its best.
The people that reading are probably sick and tired of hearing this, but you don’t know this. I’ll tell you, I have $20 million worth of private money from people. The majority of it, it’s because that’s what I asked for. Many of my private lenders were way up in years to make it easy for them. It’s five years, interest-only, 8%. They get a first lien on my property and every deal stands on its own. If you have $500,000 and you want to get out, you don’t send me $500,000. I’ll send over a deal and say, “I need $60,000 to buy this house. I’m going to owner finance it for $120,000. I’m going to put you in a first lien position and I’m going to do a wrap on your mortgage.” That deal stands on its own. Now we’ve got 60. Now we got 440 left to go. I send the one deal over time. Every deal stands on its own. It has a basis and it has a collateral value. When that value gets to be the big spread between those two values, it’s a relatively low-risk deal for anybody on the planet. I never let my guys in over 65% of what I can owner finance the house for and I average 58%. If I can buy a house at 40%, I’ll borrow 40%. I don’t borrow up on my equity.
That was actually one thing that Scott taught us and I think it’s because he went through 2007, 2008 and maybe he had his pants down a few times.
I watched people in 2001 and then I saw in 2008 by not over-leveraging how everyone was dropping like flies and I was still doing amazingly well and actually boomed in the recession. The reason I boomed during the recession was I had $20 million of the private money. In the recession, the banks closed. The bank closed, but I didn’t need banks to buy houses. I had private money and then my buyer didn’t need a bank to buy my house because I was financing him. When the banks are closed during the recession, I was one of the few people open for business. I was buying at the lowest of the low and selling it at the higher and the highest. As a matter of fact, in a recession when no one can buy a house because the mortgage companies and the banks and everybody tightens up so tight, they’re not even loaning money, that makes everybody a renter.Your network is your net worth, and it's branding by association at its best. Click To Tweet
They’re coming in the market and they have to rent because no one’s loaning any money unless they have cash. That’s very far and in between. There’s a lot of pressure put on rents. During the recession, the rents are going up and my owner finance sales price is based on the rent. I back into the rent payment to arrive at my price. That’s why my little niche of the world is $160,000 or less because in that price range, I can trade the rent payment for a PITI payment. We only separate it like, “Do you have a down payment that makes me happy? It has to be 10% or more.” I’m averaging 12% down in nine days on the market right now. We did the numbers.
That’s impressive, nine days on the market, 12% down payment.
Even I said, “Figure it out again. That’s too good. Look at it again. Something’s wrong.” No, it came back good. I have a 2% fallout rate, which during the recession will go up to 8% or 10%, maybe 12% but I’m in the business of reloaning these houses. That’s what I do. It’s not like when a bank gets a house back, they don’t know what to do with it. I’ve been reloaning houses for 2,000 houses in a row.
You’ve got way more volume than I have, but we’re running at about that 2% fallout rate as well. That’s tough to do as well. I think when you require that down payment upfront and require an amount that you’re comfortable with it, these people that are looking for this they have a big ego and they’re not the type of people that are okay with walking away from a mortgage and being foreclosed on. Most of them don’t want to do that.
Even if they don’t value that credit history because a lot of my people don’t even have a credit history because they’re Mexican nationals. Because I live in San Antonio, Texas in a town where 65% Hispanic. It’s a natural fit for me. It’s a natural fit for them. They work hard $10,000, $15,000, that’s a lot of money in anybody’s book. It’s a whole lot of money to someone who makes $50,000, $60,000 a year. It’s a ton.
They’re going to do whatever it takes to stay in that house.
That culture does band together to work together if there’s a crisis. I don’t know if we’re going in the direction you wanted to go or not, but these are interesting topics.
I love talking business. I love business and I love real estate in our real estate market that we’re in. I am absolutely fine with the direction.
There are two potential giveaways here and Tie’s written two books. One of them is established and another one will be coming out pretty soon. The first one you can go over and get right now. You go to REInvestorSummit.com/tie. He’s got an eBook you can download, Getting Started in Real Estate with Tie Lasater. He also has Partner Your Way to Millions with Tie Lasater. These two can be tied very closely together, Getting Started in Real Estate and Partnering Your Way to Millions because usually the way you start in real estate strip it down to the basic. Tell me if you agree. Typically, you’re just a professional deal finder and you’ve learned how to write a good contract and get a good price. That’s your value. You don’t have any money, you don’t know what to do with it. If you could even buy it, you’re probably going to get yourself in trouble. That’s what you learn how to do. You should either wholesale, which is okay as a start, but you should move very quickly to partnering up with partners. Why?
I’m glad you positioned it that way because that’s exactly my process. That first 40 days that we started figuring this thing out, out of those first fourteen deals, seven of them we wholesaled, but I knew that I was not going to be wholesaling definitely. As I was wholesaling those, the other seven that we were working on, I was working on putting partners together to partner on those deals. Because the issue that I’ve seen with so many of these fly by the night wholesalers that are popping up now, it’s a lot like the Mom-and-Pop industry and the oil and gas. Those are the first people that are not going to have a sustainable business when the market has a downturn effect. What happens is if all you focus on is wholesaling, and you do that for a very long period of time, you target yourself as a wholesaler. No partner is going to look at you and they’ve been buying properties from you at a pretty good discount at what they like. The minute you go to ask them to partner with you on a deal, they’re going to say, “No. I want to keep buying the properties from you.”
They diminished their position. They’d have been buying for a fee and buying for 15% and making the other 85% or whatever. They’re not going to want to. It’s like trying to ask someone who’s been your partner if they’ll start loaning your money.
I’m not going to go to an 8% return when I’ve had a 50% return or whatever you give them. That’s exactly right. What I started doing is instead of asking for referrals or anything like that, I started asking for introductions. Anytime that I’ve got a partner that I’ve been working with or an investor that’s either lending us money or partnering with us on deals, instead of going around and asking for referrals, no wealthy person is always asking for referrals. They want an introduction, how can I have a face-to-face and meet somebody? When you are working with an investor who has money, you can guarantee that they know other people that have money. That’s how we started. Our investors, most of them are doctors, lawyers, attorneys or engineers, high paying individuals that have the golden handcuffs, they like what they’re doing but they don’t have the time to deal with their excess capital.
They’re smart enough to come to the conclusion that they need to let the money work on its own and they need to stay with their job and then enjoy their time that they give off from that job. Both jobs are stressful jobs too.
We started asking for introductions with those people and that’s how we started building our doctor network and things like that. Those introductions were, “Who do you know that you can set me down with a 30-minute coffee or an hour-long lunch on me that we can sit down and together, have a discussion on what it is that we’ve been doing together?”
I’ll expand on that. You don’t want an introduction to a young doctor two or three years in who’s building his practice. He’s going to take his money to build his business. You need the guy that’s way down the road. He’s ready to stop and he wants to go travel the world and he wants his check in is freaking mailbox on the first. Spend a little time asking that. If someone wants to introduce you to somebody, if this guy is growing their own practice, it’s probably not the right fit. Although I’ve learned not to preclude those meetings, especially if I don’t have something better to do, because they can lead around the corner. Also, I used not to take meetings with people I knew that didn’t have very much money. It’s a big mistake. You treat people who don’t have very much money exactly like you treat wealthy people because the minute they come to you and confess what you already know, “I don’t have any money,” you say, “Don’t worry about that. Certainly, you know someone who we can help. Who do you know that needs this return?” “My grandmother’s worth millions.” Instead of going one step, sometimes you’ve got two steps.
That’s that introduction. That’s a perfect point. In a lot of the times, that person that you are talking to, they know the person who has money but they’ve never known how to go to them or what problem to go with them at to take that money and utilize it. That’s where you can come in and really create an opportunity there.
The person without money is usually enamored with you because you do have money and you’re talking to them about how you are successful and you’re giving them behind the curtain look at things and they feel honored to be in the same room. I don’t mean to sound cocky with this, but I’ve seen it a lot of time. They feel really privileged to be with you and they want to return the favor. They want to do something for you because they sense that you’re trying to help them even though they have nothing to give to you.
Success is a magnifier of however you’ve approached life before you were successful and that’s a great point too. It doesn’t matter who you’re networking with, who you’re meeting, you’ve got to always treat everyone the same. That’s creating that loyalty and that commitment to yourself and so that everybody sees that it doesn’t matter what you do, you do what you say you’re going to do and you say what you’re going to do and then people can trust you to always do that instead if they see you treating one person differently than how you treat another person. That’s phenomenal. That’s one of the biggest things that helped me grow in business.
That’s the direction I wanted to go. You hit my pet peeve. You’ve got to do what you said you’re going to do even when it hurts, even when it sucks. By the way, I quit drinking and smoking. I’ve been drinking and smoking in my whole life. I never got in trouble. I never did anything, but it’s enough. I learned a long time ago when I was drinking at the Christmas party, don’t make deals because after the Christmas party, I’d wake up in the morning and said, “Why did I tell that guy who was going to partner with him on this thing? I don’t need a partner on this thing.” My bulldog mouth said it. My poodle dog ass better do it in the morning. I did it every single time. You learn to keep your mouth shut, even leave the drink on the side or whatever. You’re getting the eggnog, things are warm and fuzzy, the fireplace is going and everyone’s having a great time and you’re having this great conversation. You wish you wouldn’t have agreed to so much but you did.
With our first couple of partners, I wouldn’t say we gave away the farm, but we got close to doing it. It’s like you’re getting started and you need that partner to come in and invest with you. You’re going to give it away. We made a commitment to them, and it’s one of the most painful things, but it doesn’t matter the partner. The first partner gave us $15,000 versus the partner that we’ve got a couple of partners that are in the seven and eight figures even. It’s like, “I’m going to do whatever I said that I’m going to do it.” That first partner that gave us money, we still do deals with them, even though we know that we’re going to have to give away the farm every time that we do. Every time we do deals with them, they increase what they’ve invested with us. That’s part of it. You do what you say you’re going to do.
There are different buckets. Let me tell you a funny story. One of my partners, he’s Sam Andre in the first book, My Life and 1,000 Houses: Failing Forward to Financial Freedom. His real name is Sam Madrid. He’s since given me permission to use his real name. We did our first 450 houses together, but we were talking about our very first deals before we met each other. Sam said, “I was so dumb. I had this deal and I was so scared that I went and got a guy to be partners with me. I put up the money and then I fixed it. I sold it and then I gave half the money to him and he didn’t do anything.”
I’m glad somebody actually was confident enough to put that in the book and in public because I talked to so many people that are out there and they want to get into real estate and they don’t have any money. They think that, “I’m going to go partner with somebody else who doesn’t have any money and we’re going to split deals.” It’s the blind leading the blind. Your partner has got to offer and bring something to the table that you don’t bring to the table. You don’t want to marry yourself. That’s a disaster. My wife and I are two Type-A personalities. Our arguments are fun for everybody else, not for us. When you get into a partnership with somebody, that’s the same thing. If you’re partnering with somebody who is you and brings the same things to the table, you’re not going to get anywhere.
It needs to be inexperienced with money or a contractor and a house finder. It’s got to be something different. We’re talking about this book, Partner Your Way to Millions. Let’s talk about good partners. First is why you would want to have partners. One of the best reasons is you want to partner up the best you can. If you’re a great deal finder, one way to find people, one way to get in a room with people that you would never, ever be able to get in the room with is bringing them a great deal. I can buy this $200,000 house for $78,000. Can I come talk to you about it? The guy’s a billionaire and doesn’t need you for crap. Come on over. That’s a good way to get in. Why would you want to partner with this guy? One, he has the money. If you go with people that have money, like doctors and lawyers, the problem with that is your partnering to people that have money but they have no expertise. If you’re young, you’re not getting anything else but the money. The money almost can get you in trouble if you can get too much of it too fast. The best partners are someone who has already done a 100, 200 houses and has money.
Be very cautious about how you use what you find here, but you’re going to eventually meet all their contacts. You’re going to meet their attorneys, you’re going to be their plumbers, their lawyers. Don’t go start talking to them on your own, but take note. Attorneys, no one cares if you call their attorney. They do care if you steal their plumber, if it’s a full-time plumber from them. Go ask them, “I’ve got a house, can I use your plumber?” “No, but I know another guy that I used to use.” Be careful. If you partner with someone who’s already gotten their 10,000 hours in the house business and they have the money, now there’s a partner.
They’re at the point now that they’re ready to leverage. They don’t want to be overseeing every deal that they do and that’s where you’re going to have the opportunity to step in and offer something that they don’t want to do. As you bring that up, that’s funny. I’m in the process of finalizing a deal with my first real mentor. That was the exact same situation. I was introduced to him. He’s a real estate investor and had a construction company, had done hundreds of deals and had a heart attack and was really ready to start slowing it down. He didn’t want to stop flipping houses. I was able to come in, manage projects for him and we partnered on deals together.
You take the load off of him.
Now, you’re going to give up something to do that because you’re paying to play at that point.
You pay 50% or whatever the agreement is.Success is a magnifier of however you've approached life before you were successful. Click To Tweet
Whether you’re paying for that mentorship or you’re paying somebody to consult you on whatever it is to do, you’re paying to play. Fast forward a couple of years and he is owner financing me the multimillion-dollar property that he had lived in in his estate, but now I don’t have to go out and do that. That’s a relationship.
There’s a whole different way that those relationships happen. One is you think that, “I’m going to go find the deals, he’s going to put the money.” If he’s been in that business that long, there’s going to be deals that walk right through his door and lay down. You’re going to get 50% of that you would have never found. There’s a whole bunch of things that can happen. Sometimes the old-timer can say one sentence that will be worth tens of thousands if not hundreds of thousands of dollars over your career because he pointed out this one thing. I’ve had those a-ha moments where someone said something to me, “I want to take my hat off and throw it and slap my forehead and go, ‘If I would have known that the last ten years, I’d be worth another $10 million.’”
I meet so many successful business owners, successful entrepreneurs. One of the things that we all have in common is we’re very Type-A personality, high-B personalities. We’re very driven. We all like to be the voice that’s heard, but you’ve got to learn. You’ve got to be aware of your surroundings. I’m the type of person where when I walk into a room, I want to be the one that’s noticed. I’d want to take command. I’ve mentioned some of my partners and now I’m sitting here speaking with you. I know when to shut up and to listen. There are so many people that haven’t figured that out yet that they think they know it all. They want to be the person that knows. You’re going to have a very difficult time partnering with that person who has that experience if you had that attitude. That’s why I’ve mentioned Scott, my other partner, Bob. I had the ability, they’ve got the same personality as me but when I walk into that room, I know when to shut up and use my ears since the good Lord gave me two to listen and only one mouth to speak. When I’m in front of people who I have more experience, then you can guarantee that I’m going to take control of that situation. You have to have that situational awareness, I think. That’s something that’s helped me to be successful.
Let me tell you about my partner. I didn’t want a partner. He calls me, he wants me to mentor him. He wants to pay me my fee. I don’t mentor people in San Antonio for a whole lot of reasons. It’s not a lack of abundance. Although one of the reasons that I don’t do it is I cast a very large net in my town. Inevitably, I am going to be competing on a house with my student and it’s a bad deal. I don’t know whether to crush him or to let him go, but either way it’s a bad deal. I’m going to lose $40,000, $50,000, $100,000 on this house if I give it to him or I’m going to crush my student and compete with them. There are lot of different reasons. He’s from San Antonio. He keeps calling me. I kept telling him I’m not going to do this.
I learned one thing about him. He put himself through college with no debt at Texas A&M. He did it selling commercial real estate in his twenties in Bryan College Station. When I heard this and I confirmed it, it took him seven years, but he had a full-time real estate job. Not only that, his father had told him on his eighteenth birthday, “You’ve got 30 days. Find a place where you live. You’re on your own. You’re a man now. You’re going to do everything on your own. You’ll get no support from us financially. You’ll have all the love and respect we can muster, but you’re going to go do it all by yourself and you’re going to go to college and you’re going to make me proud. Figure out how you’re going to do that stuff. You’ve got 30 days.”
He went and did it. He’s paying for his own house, his own car. He paid for his college, everything. I’m thinking, “Why meet this guy? He’s 25 years old. He’s a full-grown man.” He had no excuses for nothing, doesn’t blame anybody for anything. He’s all up straight up a man. I thought, “I still don’t want to coach him.” What does he do? He brings me deal after deal. That’s a no freaking brainer and says, “I don’t have the money, but if you want to put the money, I’ll partner with you.” I try one. He does. He doesn’t call on me for anything except for when he needs to. He didn’t need to ask me where to buy paint. He’s smart enough to figure out. He asked me about, “Are there colors? Do you have a routine?” I get in with him for two deals, three deals. We started making money 33 deals later.
My office administrator, who’s my daughter, who has been sitting in the middle of my office closing every deal for 24 years in and out, calls me and calls both of us on speaker and says, “You all need to get your asses to the office right now. We’ve got problems.” I’m thinking, “Crap.” We both head over there. She says, “Either you’ve got to get out of his company or he’s got to get out of your company, but this isn’t going to work and the books are messed up.” I looked at him and said, “Do you want to be partners?” He’s now 32, a multimillionaire. That guy knows how to do it. Do your work and never let there be one penny in your pocket that’s not supposed to be in your pocket.
You brought up a good point with that story, persistence.
When I asked him, “Do you want to be partners?” there was a moment and he said, “That’s what I’ve been shooting for the whole time.” He had his eye on me the whole time. I never knew it. I didn’t know it. I thought it was happening naturally. This guy had a plan and he worked that plan all the way.
Forward-thinking and persistence and that’s what business takes.
At 32, I had my head so far up my rear end, I couldn’t even read a book. There’s this guy at 25. He’s been a great partner, still is a great partner. He’s one of the reasons I can do the 120 houses a year, 100 houses a year average and not have to be there all the time. It’s his turn to pull the wagon and my turn to make sure it’s loaded with supplies and got everything it needs that it runs from. There are other reasons to have partners, one is to have their network. One, you can ride their reputation. Be careful the partner you pick. There are a lot of people out there doing a lot of big things, but if they’re not the person you want to be off the field, nix that deal right now.
It’s got to be someone you want to be on the field and off the field. Because you stand next to crap, you start to smell like crap. Be very careful of your reputation. Always edify your partners. You’re always lifting them up in front of people. We do that. This is not happening by accident. We know to edify each other in all the circles we’re at. We don’t talk about us. I talk about my partner. When he’s in the room, he talks about his partner. We’re standing next to each other. It still rubs off. I’m helping a student now.
If you’re not sure about someone or if you want to be partners, the great thing about real estate is you can partner one deal at a time. When you started out with your partners, you jump in and form a corporation and say, “We’re going to be partners.” You do a little something and then it became apparent that you were on the same page. You think alike. You guys both bring something different to the table and it works. Usually it’s a romance, believe it or not. It’s really hard to find.
My first partner, we were great friends and we had known each other for years, had grown up together, but we thought very differently. After our first deal, we realized once we actually started doing business together, it’s like being married. We realized like if we’re going to keep this friendship, the way that we approach the business is too far different. We can’t keep doing that. We did a deal, we moved on, went on, and we’re still friends because of it.
I told one of my students, “Do six deals with this guy and if you don’t like it, you buy him out of three and with one partner, divide the six houses into two piles. One guy will divide them up into two piles and the other guy gets to pick a pile.” It’s easy. We could probably talk forever. I want you guys to go check out Getting Started in Real Estate with Tie Lasater. Also be looking for Partner Your Way to Millions with Tie Lasater and I want you to go to REInvestorSummit.com/tie. Tie, it’s evergreen. If you ever want to add your events or your bootcamps or whatever you’ve got going on, if you have coaching or whatever, put it over there. You can see everything that’s going on in Tie’s life. You have a pretty big life. How many events do you hold a year?
I’ve done nine.
You’ll do 50, 60?
It varies. I’ll go in spurts. When I do it, I’ll do three days in a row at three different cities that are close by and then we move around. I start doing it to build up. I’ve got ADD and I like the challenge. What I did with my real estate business is we’ve made it boring and systematized 80% of it. I only have to be available to sign off on 20% and so it makes it boring for me. I want to go out and create a challenge. That’s how I do my events. When I’m ready to do them, I do them and then I’ll scale back and it varies.
Tell us a little bit about the event you have where you bring in the celebrities and you talk about celebrity branding?
The one that we’ve got coming up in November, that’s a 4-day-event. We actually have the first day, we’ve got a property investor panel. Hugh Hilton, Vanilla Ice, George Ross will all be on it discussing real estate and then buying and selling businesses. The next three days, there’s a day of basically like a trade show. We’ll have all of our vendors there and stuff like that for people looking to partner and do deals. We’ll have two and a half days of our clients interviewing celebrities, our clients speaking on stage. Basically, it’s building a brand around them and helping them escalate their brand so that they can take that out and use that in their business and their marketing.
It’s probably 50% real estate investors, but it’s not all about real estate. It’s about entrepreneurial-ism and business in general or marketing in general. Marketing is marketing. You bend it to whatever avenue you need to bend it in.
Those events that I do, like the nine that I’ve done recently, it’s about half and half. Half of them around branding and marketing and entrepreneurship. The other half is real estate specific. It’s here’s how you build a successful real estate company. I am niched. We’ve done some large multifamily, 100-plus unit multifamily deals and done well. We do the one to four family and then now we focus on the smaller apartments. I don’t really do many storage units. I’ve done a couple of mobile home parks. We no longer own those. We own or financed those two other partners or buyers. It’s not in our focus. I curtail those real estate events around what it is that I’m really good at.
If you’re ever down in my neck of the woods, look me up.
I am definitely going to do that. I’ll reach out to you here later.
You’re over in Dallas. I’m in San Antonio, so we’re not that far apart. Go to REInvestorSummit.com/tie. Take a look at the eBooks. Take a look at the events that he has scheduled. I want to thank you for taking the time, Tie.
Mitch, thank you. I appreciate the invite. I love being on here. It’s fantastic talking to you and getting to know you a little bit. I look forward to staying in touch and I’m definitely going to hold you up and I’ll reach out to you when I’m down in San Antonio. I’m doing an event in February. I’m actually partnering with somebody down there doing an event in February. I’ve got Vanilla Ice at that event, but it’s going to be a real estate related event. I’ll reach out to you before then. Maybe I’m down there before, then we’ll have to get together.
I want to thank TaxFreeFuture.com, my sponsor. Please, check them out. You won’t believe what your financial advisors are not telling you. There are 37 video vignettes there. They’re eye-opening. There’s a reason why the wealthy are wealthy. It’s because they take what’s out there and it’s available to them. It’s available to everybody. I get to be mad at these rich people. They’re all somehow connected or special. They’re not. Those families know how to find information and use tools that are available to the whole world. They talk about money at the dinner table, like Kiyosaki. They discuss how to minimize taxes and maximize profit. It’s all about education. That education is open to everybody. It’s not just blue bloods. You can get it out there. I’m not blue blood. Were you blue blood? Were you raised with any money?
Nope. My dad worked hard. He did have his own business and finally got a little bit successful, but we never talked about money. I never knew. There’s that first six years of me learning what is the wrong way and finally figuring it out. Now, I talk about all my businesses with my kids. My kids know the situation that we’re in financially at all times and that’s good. What you don’t know is always your biggest issue, your weakest link.
Thanks, TaxFreeFuture.com. Thank you, Tie Lasater. Thank you for all the readers out there. Thanks for stopping by to get you some Tie Lasater. Be sure to check us out. We’ve got over 300 archived now at REInvestorSummit.com. If you think of somebody who would be an interesting interview, give me an email, Mitch@1000Houses.com. If there’s a show maybe I need to be on or Tie needs to be on, let him know, give us a call. Thank you very much.
- Tie Lasater
- Tie Lasater’s podcast
- Rich Dad, Poor Dad
- My Life and 1,000 Houses: Failing Forward to Financial Freedom
- Getting Started in Real Estate with Tie Lasater
- Partner Your Way to Millions with Tie Lasater
About Tie Lasater
Tie Lasater knows how to create success! He is a serial entrepreneur, real estate investor and philanthropist. With business interests in over 7 countries and three continents and clients all over the world. Tie Lasater is one of the top up and coming real estate investors in the U.S. He and his team have acquired multiple millions in properties across the U.S. He has built one of the top real estate and business coaching organizations centered around a unique selling proposition that most other real estate coaches are missing, he is currently actively investing in properties acquiring 30 to 40 every month. With numerous success stories from clients who use his strategies, he is focused on his clients first, his driving force and the motto he and his team go by is “Driven By Your Legacy” and he is 100% committed to building his clients legacy.
One of his students, Cleburn, says, “As a single father of 5 kids, I was a successful car salesman for Audi but I had reached the peak, I was the top salesman and really had no more room for growth but I knew I needed more to support my family. I was making just enough to cover bills every month and there were some months that I didn’t even have enough and I had no savings and it stressed me out. I took a huge leap of faith and trusted my future and my family’s future with Tie and his team. I went through his real estate training and within a week I had raised $45,000 in capital and acquired four significantly discounted off market properties that provided me an extra $1,200 dollar a month in cash flow all within my first month of doing real estate.”
As an extremely successful real estate investor and entrepreneur who now has more than 10 highly successful companies, he is now obsessed with sharing the successful Legacy Builder strategies with his clients and help them take their lives and businesses to the next level. At his events, Tie brings together some of the most influential business leaders, investors, celebrities, and startups that he has worked with, done business with and spoken with on stages all over the world. Influencers like, Mel Gibson, Kathy Ireland, Michael Irvin, Vanilla Ice, Randi Zuckerberg and Bruce Buffer to name a few. he has built to other entrepreneurs and real estate investors worldwide.
Most important to Tie, is his amazing wife Karah and their 3 kids. Tie and Karah are passionate about their work with charity’s. Karah manages their charity focused on building a future for young teenage single mothers. And Tie and Karah both are passionate about their charitable work for orphaned children in the US, China and Africa. Tie is currently in the planning stages for the orphanage they are planning to build in East Africa.
Tie has been described by Celebrity Apprentice Judge George Ross as “The person you want to be involved with if you are looking to build a successful real estate business.”