How to Build $1 Million Investor Relationships

Ron: Hi everybody. Welcome back to the real estate investing podcast. My name is Ron Apke, your host for this episode. I’m happy to be joined with our co host Anthony Weiler.

I know we’ve interviewed him on previous episodes. Uh, today he’s going to be a co host with me. You guys will be seeing more of him. Uh, really happy to hear his insight on this topic. And today the topic is deal funding, investor relationships. Anthony is in charge of our deal funding and investor relationships with our company.

So he has great experience with this. Anthony, how are you doing?

Anthony: Uh, doing great. I mean, it’s a little early here in SoCal, but I’m excited to be here and especially talk about this topic. This is a, this is a fun one for me.

Ron: It’s a big one too. I’m like just scaling your business. Like you cannot scale your business without having investors on your side.

And we always talk about it all the time. Like us as a company, Apkeland Apke Investments, like we still get deal funding for a ton of ours. So we obviously fund a lot of deals. We also have deal funding coming in for our deals as well. So like we are huge on this topic. It’s so, so important for scaling any really business, Anthony, like you’re going to need investors, not any business, but in terms of real estate, uh, you’re going to need investors on your side.

So I’m really excited to get, get into this with you.

Anthony: Yeah, same. I mean, that’s one of my notes too, is you’re only going to grow your business as big as the capital that you have available within your network. So I, yeah, I’m, I’m really excited to get into this one.

Ron: Awesome. So we’re going to just start guys really basic, like.

What does traditional deal funding look like in land investing? I’ll take this one on Anthony. So traditional deal funding, we’re not a bank. So let’s say we are funding someone’s deal. We are not a bank where we’re going to be taking interest. We’re going to take you monthly payments, everything like that.

We are partnering with, um, our managers. So we’re the investor and someone brings us a deal. They’re the manager. They’re also not just getting paid out and we’re taking on the deal fully. What we do is we will pay for a hundred percent of the purchase price. And then there will be a profit spill on the backend.

So let’s say we buy it for a hundred thousand sell for 200, 000, the manager, whoever brings us a deal will be responsible for selling the property. Uh, we have that a hundred thousand dollar profit. There’s going to be some kind of percentage profit split. Um, that that’s the easiest way. I it’s such a common question.

I don’t want to skip over the basics, Anthony. How, how did I do with that? What? Anything to add on that?

Anthony: No, I, I think that was pretty straightforward. It gets a little bit more, uh, detailed as you get further along with submitting the deal. ’cause I mean, it’s all dependent on the deal that you bring to the table too.

Yeah. Your experience as an investor. So building those relationships and understanding what the investor, um, expectations are and just building that relationship and going from there.

Ron: Yeah, and it’s going to be like it could be a negotiation with your deal funders with your partners. Like if it’s harder to negotiate the first time you bring someone deal the first time you’re getting deal funding.

But once you provide a service for them, once you get them a good return, like there’s definitely negotiation that goes on with those profits split terms to give you guys a basis. A lot of times it starts around 25% where the investor would get 25% of profit. And then it’s going to scale all the way up to a 50, 50 split.

And a lot of it, like Anthony said, is deal dependent and then also time to sell. As an investor, I want my money back faster rather than longer. So you’re going to get. The manager will get a bigger cut of the pie when you sell it within 30 days, 60 days, whatever it is, something quick that is going to get you a bigger piece of the pie.

Um, I, that is traditional deal funding. There are obviously other ways of getting your deals funded. Um, but that is what I view as for new people, the safest way, because you’re partnering Anthony with an experienced person typically is that, do you think that kind of, it definitely minimizes risk because there’s little risk on the manager, if any.

Anthony: Yeah, I think that’s so important to, especially on w consultation calls that I have a big one for people is like, Hey, I have the capital to fund my own deals. Why would I want to partner with an investor or a funder? And they’re going to be taking a certain amount of profit. Well, my rebuttal to that is, Hey, you, you can do that.

You can absolutely do that. If you want to fund your own deals, um, or partner with friends and family, however you’d want to go about it. But at the same time, what makes you not want to partner with someone that’s experienced in land, you have a second set of eyes, you get a new opinion, and then at some point, too, if you ever want to, because a big thing in these consultation calls, people at some point want to fund other people’s deals to that seems to be a big goal for a lot of people is that.

You want to, you want to get that experience. You want to see what other funders are doing too. And then at that point you have such a better understanding as well, but just, just getting that second set of eyes, having other opinions available. And then, especially with our process and handholding sometimes, um, with people in the process are just giving good guidance and advice, things like that.

You, I think are irreplaceable, especially with, um, first starting off.

Ron: Absolutely. That’s a really good point. So let’s get into like your experience, Anthony, on the manager side. So right now, Anthony is working for us. He’s our chief operating officer officer. He’s taking care of all the deal funding that side.

He’s been on the other side where he’s finding his own land deals and he’s getting deal funding from us, from other people. What’s your experience like on that manager side? And I want to kind of get it from like a mindset perspective, because working with you, we funded Anthony’s deals and that’s how we got to know Anthony really well.

We funded his deals. Um, we were on the investor side. Um, Anthony did an amazing, amazing job. Hit him and his father worked together and they did an amazing job on that manager side, taking care of us. Um, what’s kind of, let’s just talk about that side a little bit, Anthony.

Anthony: Yeah, So. I remember first starting off for me, like the example I just gave, I was pretty new in it.

So especially partnering with you and Dan getting your guys’s opinion was really important. Then at that point, you know, going through the course, it’s like, okay, now I just have to, you know, execute this and get things done properly. So my biggest thing was keeping you guys in the loop as much as possible.

And if we ever hit a wall or came across the situation, we immediately reached out to you guys saying, Hey. We’re coming across X, Y, and Z. What, what do you recommend? This is what we have planned out, but what, what are your thoughts? So just being as communicative and transparent as possible, um, especially because the way we looked at it is we need to build this relationship because you don’t know, um, what opportunities will lie.

And now I’m, you know, the chief operating officer for the company. And I was like, wow, a year ago, I remember submitting my first deal to you guys. It’s like, man, I, I just want to make a dollar. So, um, I think it’s really important. And the mindset is. It gets a little bit tricky, especially as a manager, sometimes you, you get attached to deals and you want to force a deal or you want to push it on an investor.

And I’ve been there at that point too. So I think being level headed and just, um, building those relationships with as many investors, um, as you can, understanding what their buy boxes are, um, what type of communication they prefer, and just making sure that you can be the best available to them because people are giving you, I mean, 50, 000, a hundred thousand dollars on one deal.

And it’s your. I mean, that’s just so crazy to think about and all the risk is on them. So you want to make sure that you can deliver because we’ve talked about this on a previous podcast episode is that there’s not many, um, you know, funders in land. So you have to be really careful and be the best that you can.

So that, those are the things that are always top of mind for me. Um, and then, yeah, just. Be as good as you can because you never know where opportunities will lie because there’s people that are submitting deals to us that are, I mean, you see them all the time. They’re like, what, 400, 000, 500, 000 purchase price with expected sell price of over a million.

So you have to have those relationships because if you just bring that out of nowhere and we haven’t really had much of a relationship or any type of knowledge of you, it’s a little bit harder to fund a deal like that. So, um, as a, as a manager, those were, um, Kind of what I, what I was looking at starting off.

Ron: Exactly. And, um, to go on that a little bit, like one thing we see from the investor side and one thing we feel is like. You need to respect, as a manager, you need to respect the manager’s, uh, the investor’s money. Sorry. Um, you need to have respect for the investor’s money. This is like, you cannot take, submit a deal for 300, 000 and then have half of your due diligence done.

That doesn’t feel good from an investor. Um, it’s, you see it on like Shark Tank all the time, Anthony, when like, um, they’re asking Mark Cuban for 200, 000 for 10% of the company. It’s 200, 000. Like it’s not nothing just because he’s a billionaire. It’s 200, 000. Don’t disrespect someone’s money. You see it all the time on that show.

Um, not that I watched it a ton, but I just remember kind of seeing that stuff like you cannot, it doesn’t matter what percentage percentage of their net worth or their value, um, that you’re asking for. That is how they got, that’s how we got where we are is by putting our money in smart places. Um, so respecting your investors money is.

Such an important thing. And it is something that will turn me off of a deal, a bigger deal, especially with, uh, people, if they’re not like, if they, if I don’t feel that from, like, it’s not like a quick thing, they’re not getting answers fast. All that stuff is red flags. Like there are better places for us to put our money if that’s a situation.

Um, but, uh, that is one thing like you cannot act like, okay, someone’s paying for a hundred percent of this. It’s not my money. It doesn’t matter. Uh, you want to perform and we’re going to get right into that, Anthony. Performing is what creates those long term relationships. So long term relationships with this guys is the name of the game.

If you can’t go to that investor a year from now for a deal, because you screwed them over or something happened, or you didn’t work hard enough for them. Um, that is going to affect your business. So let’s, let’s kind of get into that, uh, Anthony, the importance of being able to go to the person 24, 36, 48 months from now, um, for a project and you don’t need the value in it guys is they’re not going to do much due diligence three years from now on your deal.

If you, uh, provided a good service for them, like they’re going to trust you. You’re going to build that trust. The process of getting funding is going to be way simpler, but let’s talk about that a little bit, Anthony.

Anthony: Yeah. When it comes to, uh, long term relationships, it’s really important. Cause like I was saying earlier is your business will only grow as big as the network that you have available.

Cause you’re going to be coming across deals that are really large. Um, as you continue to grow your business, cause members that. Are in the community. Now, they’re starting off with like these little, you know, two to five acres buy for 10 sell for 20 things like that. Then out of nowhere, they’re like, Hey, you know, there’s a better way to scale this and they’re going after bigger projects.

You’re seeing people starting to niche in certain areas and a big one is subdividing. So we’re getting people bringing us like, Hey, I have a hundred acres. It’s got, you know, a thousand feet of road frontage. I think I can split it up into, you know, this many parcels with this expected profit. And If you were, if we’ve had a bad experience with you, I mean, we’re going to be taking that into account.

So long term relationships are really important. We’re not going to be investing all this time and money because these projects, depending on the state and county, I mean, it could take a, it could take a good amount of time, like six, six months to a year, at least, because you’re going to have five to 10 parcels listed for sale.

You got to get a survey. There’s all these things that come into play. We want realtor opinions, And we need to know like, Hey, we’ve done business before with you in the past. I know that, you know, John Doe for us has done 10 deals and they have been fantastic. They performed every time they delivered their expected sales price, you know, was dead on.

Um, if anything came up, they communicated that to us. As an investor, those are things that we look at. We have a CRM. We’re tracking not only our deals, but we want to track to see what the managers are doing. Like, what was your when you submit a deal? Did you what was your expected sale price? Um, you know, how long did it take for it to flip?

And then at that point, when it comes to, you know, as you get down the road to 3 to 4 years, and you’re You know, coming across those project based deals, then at that point, it’s it won’t be a problem. I mean, there’s people that bring deals to us. We’ve done business before and it’s like, okay, we’ve, we’ve done deals with them.

Very minimal due diligence. Numbers look good. Boom. Send a contract. So long term relationships are so important because Even now, when you’re saying that male, you never know someone’s like, Hey, I have two acres, but I have a thousand acres right behind me that I want to sell to. So it’s like keeping that into account.

And those long term relationships are so important because as your business is growing, so is, um, so are the people around you most likely. And then at that point, you’re all just growing together and you just never know what to come across to your lap. And then you can just partner and strategize with other people.

And I think that’s where it gets really fun, especially us doing our own projects. I think that’s when things start to get really exciting and the profits get even bigger.

Ron: Yeah, 100%. And I want to be clear with you guys is like having a bad, there’s difference between having a bad experience and having like a deal that doesn’t perform how we initially thought it was going to perform.

Like it doesn’t, I’m not going to blacklist a manager. Uh, us funding a deal for 20, 000. They said it would sell for 45 and it sells for 35. Like I don’t care about that. It’s about everything that goes on around that. Were they communicative? Um, were they, uh, actually doing their job, trying to sell the property and like responding to buyers, um, responding to realtors, keeping us updated on the process, those are the things that really can affect and kind of not get you.

It can get you blacklist. Like if we feel like something is not. Being even attempted to be sold where there’s no communication. There’s nothing like that. That’s when we have issues. Like there are going to be deals. Um, you’ve brought us deals, Anthony, that haven’t performed as well as you hoped. Like it happens, but you’re working all the leads.

And that’s why those relationships keep on going. Like you’re working leads, like things happen. But if you tell me an expected sales price for three straight deals is going to be 70, 000, 100, And you sell for 50. 80 and 120, 000. Like I’m going to take that into account. I’m like, okay, um, Mr. Whatever, Mr.

Smith, like you’re selling all of our properties at 80% of what your expected sale price is. That’s what I’m going to expect you to sell your next property for. And we have all the data on that stuff, Anthony. Like it’s like, okay, they’re bringing in with this. They’re consistently telling us about. It’s going to sell for more than what it actually is selling for.

So we take that into account as investors. Um, but that being said, guys, like take care of your investors. Like that is the biggest part of long term relationships. If you do what you’re supposed to do. Um, last part we’re going to get into guys is kind of evolving your deal funding strategy. Uh, so deal funding, traditional deal funding, like we talked about at the beginning is not the cheapest method.

Yes. You can partner with very. Successful land investors. Um, you can probably get some more hands on help than if you’re getting money from a bank, but as you kind of grow your two, three years in, like maybe having a relationship with a bank or a bank like partner is valuable to your business where you can get a million dollar loan for a project based thing.

They know they’re going to get paid back. You have enough. Um, equity and other places where you can kind of pay them off on a monthly basis, if that’s a relationship, friends and family, like finding a way to get cheaper money, the biggest thing with this is understanding your risk bank relationships are risky.

Deal funding relationships are not risky other than losing the deal fund or losing the partner. So keep that in mind. I don’t want to keep this segment too long, Anthony. Keep that in mind when you guys are looking for other types of money. If you’re getting a, an interest rate type money and it’s not dependent on the sale price, you’re going to owe that property.

Like if you’re getting it from a bank, they’re going to have liabilities over you. Um, they’re going to have collateral on the property and that’s what it’s going to look like if you’re getting a small business loan or something like that. Uh, same thing, like there is going to be collateral. They are going to get their money, um, or they’re, it’s going to be an issue for you.

Uh, so just keeping that in mind, I know you, I don’t think you’ve done that for any of your deals. Uh, we do get some other types of money for some of our deals. Um, but I, it’s, it’s all about the balance, Anthony, right?

Anthony: Yeah, I think that’s important to with your own business. You have to understand, like, how much risk are you willing to take?

And especially if you’re, you know, working with friends and family, you give them a certain percentage. It’s cheaper money at the same time. If that doesn’t sell within a certain time frame, it’s like, well, you should probably pay them back or find a way to keep the relationship good because there are certain scenarios to where You know, you could have a bad deal.

It looks great, but you put on the market and it’s like, Oh crap, this is sitting on the market for eight months. I was supposed to pay, you know, grandma back. Um, or, you know, if you’re taking a loan, if you’re taking a loan out, then it’s, you know, you have collateral, it could be your house or whatever it may be.

So there’s a lot of risk in that. So I like how you said three to four years down, you probably have a lot more money in the bank at that point, since you’ve done some deals, you could take on more risks. So definitely just. Weigh things out, um, see what the risk, the risk to reward ratio is, and then go from there based off of, you know, how you have your business set up.

Ron: Absolutely. Guys, we’re going to end it there. Um, if you guys haven’t, please like, and subscribe, uh, to our YouTube channel. Uh, leave us a review on Apple podcasts. Those really, really help us grow. Other than that, thank you so much for joining us. We’ll see you next time. See you guys.