82 Carolina Hard Money Roundtable

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82 Carolina Hard Money Roundtable

Paul White
https://www.realnumberz.com/

This comprehensive real estate portfolio management software not only stores all of the necessary documents and contacts in one place, but an investor is able to track the performance of their entire portfolio as well as asset classes and even individual assets on their smartphone or desktop. And that’s just the beginning! An automated alert system will inform a user when a rent is overdue or when real estate taxes need to be paid and so much more!

RealNumberz gives real estate investors an assurance not possible with a spread sheet and with much less effort. With RealNumberz, a real estate investor will have the confidence that comes with KNOWING their numbers and the FREEDOM every investor seeks through truly passive income!

Wendy Sweet and Bill Fairman have been successfully lending money primarily in the Southeast to investors, rehabber’s and builders. They also manage a real estate fund for accredited investors, in addition to, brokering loans for those with money to invest.

Bill Fairman (00:03):
And we are live! Hi everyone, Bill Fairman. Jonathan Davis is on another line and he’s holding, currently.

Jonathan Davis (00:12):
There I am!

Bill Fairman (00:13):
Wendy is not with us, she is traveling today. She’s at a Tom Olson’s mastermind up in Indiana, hopefully the weather’s nice there. Bill Fairman, CarolinaCapitalManagement, that’s our website. If you’re interested in borrowing money, then go to the borrower tab, if you’re interested in passive returns, click on the investor tab. Don’t forget to like, share, subscribe to our channels. We have a question or a chat box over there on the right hand side. Again, it may be on your left or underneath on your screen, I have no idea, I’m on my screen but you can leave a question and we’ll get to it during the show, all right? So I have great guest today, Dr. Paul White, I’ve known him for several years, he came into a mastermind that we’re involved in called freedom founders. I’ll ask him how he was dragged into the real estate investing side of things but Paul just wasn’t investing, he had to figure out how much he was investing in where the heck it was going. So he and his son put together this great app to help keep all that easily on your phone. You can do everything mobile on there, and we’re going to talk to him about that. So Paul, great to have you!

Paul White (01:47):
Thanks Bill, thanks for having me. Hey Jonathan, how are you?

Jonathan Davis (01:50):
I’m good, I’m good.

Paul White (01:51):
You know, I’m a little disappointed. I thought I was hanging out with Wendy today so I guess I had no idea, otherwise I might not have signed up so that’s why I love you guys!

Bill Fairman (01:57):
Well, Hey now you got to hang out a little bit the earlier. I know you were on with her and her sunriser’s group.

Paul White (02:07):
Yeah, that was great. We had an awesome time!

Bill Fairman (02:08):
And you got some really good comments from there too so I’m happy that you agreed to come on “The big show”! as it we’re. Actually in a lot of cases, there’s more people at sunrisers than our last broadcast throughout the world. I will tell you most of our listeners end up engaging in viewing on recorded versions.

Paul White (02:34):
So it’s just the three of us is what you’re saying, right now?

Bill Fairman (02:36):
Yeah, pretty much.

Jonathan Davis (02:37):
Could be, could be.

Bill Fairman (02:37):
No, we actually have four others.

Paul White (02:46):
Fine! We’re up on the numbers.

Bill Fairman (02:46):
I always love to tell people that we have tons of fans out there hanging on every word.

Paul White (02:52):
Well, I’m one of them.

Bill Fairman (02:54):
Well and we appreciate it. So Paul give us a little bit of your background how you got involved in dentistry and then eventually into real estate investing.

Paul White (03:03):
That was a great question! Well, I got involved in dentistry because my Dad who is a dentist told me to go into medicine and of course I never listened to anything he told me to do. So after I got into dentistry, I realized that I still had another calling. So I ended up actually going back to school, which was hard after I’d been working for a while and became an orthodontist and so that was just my passion, my true calling and that’s been a great thing. It was actually in my pursuit of being better at orthodontics and managing the office and the practices and things like that I met David Phillips so that’s how I got into freedom founders as well.

Bill Fairman (03:41):
So at least you chose a section of dentistry that paid the most.

Paul White (03:49):
Yes, it does. It’s also getting expensive to do as well but it turns out when we were closed for COVID that I’m not essential, which was a big blow to my ego cause I thought it was pretty good and I had a lot of patients who were supposed to get their braces off that thought I was pretty important at least for that one event. So we had to do this for awhile.

Bill Fairman (04:07):
Especially if you’re a teenager and you had braces on for a while.

Jonathan Davis (04:13):
and prom’s coming up, come on!

Paul White (04:16):
Well, prom didn’t come up, that was the thing.

Bill Fairman (04:20):
They had virtual prom.

Paul White (04:21):
Right. We had graduation, all these plans ready to get braces off and of course, none of that happened.

Bill Fairman (04:26):
That’s pretty interesting. So where are you from?

Paul White (04:31):
We’re North of you guys, I’m in Richmond, Virginia been here for the most of my life.

Bill Fairman (04:37):
That reminds me, did you fare okay through the storm? I’m assuming.

Paul White (04:41):
We did! You know, we thought that down at the river, we’re gonna have a little trouble but we brought everything in and whenever I bring a boat or a jet ski, then it’s guaranteed that the hurricane will not hit when we leave him on the pier, that’s when all heck breaks loose and we lose stuff. The first thing my neighbors sent me to do, “are you bringing your jet ski in or your boat?” Yup, all good.

Jonathan Davis (04:58):
Good, it’s gonna miss.

Bill Fairman (05:03):
You know what, it’s somewhat humorous my next door neighbor on Sunday, he came over and told me that they were going on vacation and you know, keep an eye out for things like we do. And they went to Oak Island, North Carolina, where basically the eye came ashore. Oak Island and I think the official landfall was the Island, just South of it but you can almost walk to it.

Paul White (05:32):
Holden beach?

Bill Fairman (05:38):
No, it was another one.

Paul White (05:39):
Stinson Beach?

Bill Fairman (05:39):
I forget it now but they had storm surge that actually pushed their vehicle to the other side of the road so they were back yesterday because they had just gotten, they just let them off the Island and they had no power for days. I feel terrible because I remember we were vacationing in Atlantic beach, North Carolina and over the week of the fourth, we had a really early hurricane show up. So it was the week of the fourth and we had the eye of the hurricane comes straight across to the beach and it was just a category one and we were in a two story home and I remember I got up around midnight, I had to go to the bathroom, I lifted up the toilet seat and I look in there and the water in the toilet is back and forth and I’m on the bottom floor going. Wow! This is some serious wind. Can you imagine being in a two or a three or a four?

Bill Fairman (06:44):
That would be really scary. All right, so I digress.

Paul White (06:52):
You know, I only set aside a couple hours for this, I need to talk to people there.

Jonathan Davis (06:57):
Yeah, you were smart.

Bill Fairman (07:01):
Remember, that’s why they asked me to do these things because I can stretch it out.

Paul White (07:07):
Stretch it out.

Bill Fairman (07:07):
So were you interested in real estate investing prior to getting involved with David?

Paul White (07:16):
Only on the fringes, I’d done some real estate port. Most of the guys that even show up said, yeah, I tried real estate and it didn’t work and mainly because we just don’t have the expertise so what I find is most of us have more money than sense, which is a really dangerous combination so that’s how I think. Most of the guys in the group have said yeah, I tried this and doesn’t work, you know?

Bill Fairman (07:37):
I feel like the main reason for it not working is because you buy a rental home or you buy, you know, a single use facility. It’s hard to get a footprint when you only have one or two assets, you know, you need to buy 20.

Paul White (07:58):
You know, what’s funny is I always say that a lot of guys and even the serious investors I meet sort of treat this like a hobby and not a business and I think if you have that mindset, that’s how you get in trouble and you don’t get the returns and you’re not protected against downturns and COVID things and things like that. So I do think we have to take it seriously, you know, we’ve got a big chunk of the money that we saved, you know, from the old days and we got to put that in and we just don’t give it much thought and it’s just a crazy. We would never run our businesses like that but we do investing like that.

Bill Fairman (08:28):
Sure and if you’re full time making money in your chosen profession, sometimes it’s easier just to diversify into other funds where you don’t have to get too much involved and again, the key word there is diversify. You don’t want to be in one fund you want to be in several that you want to make sure the funds are diversified themselves geographically, as well as, you know, different spaces. But if you’re doing this full time as an investor, you have a wonderful tool that I want you to talk about.

Paul White (09:02):
Yeah, well, you know, I guess what got me into it was that aha moment when, you know, Warren Buffet famously said that, you know, if you don’t make money while you sleep, you’ll work till you die and I went, “Wow!”. And when I finally understood the difference between income and wealth, I started thinking about this and I’d always done stuff in the stock market and saved money in the stock market and I was doing pretty well, you know, finally listen to a friend of mine’s dad who said, look, just buy blue chip stocks that pay a dividend and stop messing around and stuff. And so I did that and I’m making a decent amount of money from that but I called my broker who was a broker named Moline cause I had it at swab and I said, “So just curious, how much passive income is this generating?” And it’s a decent amount of money and he gave me the number, he said, “I’ll get back to you” gave me the number and it was enough for a month. So, you know, it’d be a problem I needed to severely restrict my lifestyle or I needed to start looking for other avenues for passive income.

Jonathan Davis (10:02):
Yeah and that’s one of the, you know, and you hit the nail on the head. You should treat this with utmost importance when you’re investing, whether it’s full time or part time. I mean, it’s how you build wealth, it’s making money in your sleep, it is very important. If you trade hours for dollars, you can have income and you can be that kind of air quote rich but you can never be wealthy unless you are taking it seriously and protecting those assets with the amount of, I guess, thought that you need to have.

Paul White (10:38):
Yeah, that’s says great point. You know, it’s so funny and not that he’s a bad guy but you know, Dave Ramsey sort of impacted a lot of us older guys growing up or just that general philosophy, which is great. If you’re in debt, he’s a great guy to follow but he’s not going to make you wealthy. So, you know, I’ve gone from Dave Ramsey who says “Pay off all your debt, save your money, don’t spend” you know, restrict all the stuff and there’s good in that but it’s not the way to wealth and so I’ve gone from Dave, Ramsey’s to sort off the George Anton model where he say, look, debt is a good thing if you have the right kind of debt and use it in the right way. It’s actually a huge hedge on inflation so, you know, it takes a huge mind set shift to really understand how to be become wealthy and not just have a lot of money, you know?

Jonathan Davis (11:23):
Yup.

Bill Fairman (11:23):
Dave speak to the masses.

Paul White (11:27):
Yes.

Bill Fairman (11:28):
And the vast majority of people don’t want to deal with their own finances anyway, they don’t understand and it’s a shame that basic high school educations teach you very little about real finances, real-world finances and you’re right, you don’t need to be spending all that extra money on stuff that you want. Your embeddedness should based on needs or making an income so if you’re leveraging a investment property, you’re doing it because if you have a really good low rate and it’s projected out 20, 30 years, you’re paying today’s dollars in the future and we all know that the dollar won’t be worth the same 10 years from now as it is today.

Jonathan Davis (12:22):
Correct.

Bill Fairman (12:22):
So you’re spacing that out where your asset grows in the price or wealth and then you’re paying it with shrinking dollars.

Paul White (12:38):
Yes and prompt call to let you know, real dollars in nominal dollars. So you’re owning the asset in real dollars and painted back in nominal dollars that are in the future where it worth less so I think it’s a really important concept. And along with that, Dave Ramsey mind, you gotta remember probably a generation or two ago, you know, when my grandparents were poor, right? And my dad had some income but he didn’t ever really build wealth cause he didn’t have anybody to teach him that and so one of the things that I look forward to doing is to teach in younger people especially about how to build wealth and so I think it’s such an important point because you can just buy an asset and have money or have cashflow or things like that but it’s really this mindset, this education thing that has to go with them. So one of the great things is my son has been going to these masterminds in these RIAs and things with me so it’s really impacted him and I feel like probably one of the greatest things that I’ve done is to give him a new way of thinking, not only as an investor and that knowing the difference between income and wealth but also having the mind of an entrepreneur and not just somebody has to be a w two employee your whole life. Right now is not such a bad thing to be a w two employee but in general, there is such a mind shift that has to happen so one of the things when you were talking about Dave Ramsey, I thought about this, when we were little kids, we would go around and collect empty Coke bottles and Pepsi bottles. Actually, Pepsi you’d get a nickel for a Coke bottle but you get 10 cents for a Pepsi bottle. We would collect these things and we’d go to the drug store, you know, so we collect the bottles, probably outside the grocery store and they go to the drugstore and get a cherry smash about five or 10 cents and we get some candy but you know, this is how you did when you’re a kid, you just hold out your hand to the guy and he just picks, you know, whatever it is cause we didn’t know how to count money that well, right?

Jonathan Davis (14:25):
Yup.

Paul White (14:25):
We do the same thing with guys that invest our money for us, right? We go, “Is this enough money?”

Jonathan Davis (14:30):
Exactly, yeah.

Paul White (14:30):
And we have no concept of what’s going on. I still see that pervasive today and guys that even supposedly know what they’re doing is that we just don’t pay attention. Either we’re too busy, we don’t want to be bothered or it’s not important enough to us to spend the time to do that. So our mission has been to create tools that make that easy for you and less time consuming cause I’m, you know, I’m intimidated, you know, like crazy by spreadsheet. So when we first started investing, so I had some pretty good investments going forward cause I had some money saved up, I had done what Dave Ramsey told me but I had no wealth and so, you know, I started buying assets and buying some rentals and getting involved in some funds and syndications and doing a lot of private lending and feeling really good for like for the first time in my life, I feel good about, you know, what’s going on and then the phone starts ringing, I’m like, “Oh my God!” and it’s like a deer in the headlights moment and so, as you know, Bill with private lending, you get these emails or calls, “Hey, look, we want to pay this note off, can you verify this pay off amount?” And to be honest with you out of big know notes or laziness or whatever it is, I just go sure, it’s right. Well, I came to find out it was wrong most of the time and so we created a tool that investors can use that tracks all of your papers. So here’s what used to happen, I got an email. So the first couple I just said yes, and they were wrong to my detriment and then once I started sort of paying attention, I got one of those emails to look, we want to close this thing out pretty quickly and he said can you give us an amount? I go, well, you know, I don’t really have my stuff here, I’m working, I got my hands in somebody’s mouth so, you know, I didn’t really have the stuff there with me as a matter of fact, you know, people said you had a messy desk, mine was on a pool table back get home, right? And I just had it in piles and my wife at least had the forethought to actually put them in folders that had addresses on them and sort of organized it a little bit more and cause I was just acquiring, that was all I was doing, right? The rest of it, I was just leaving a sea of stuff behind me, I didn’t really think about it and so I go home and I think this folder was in the corner pocket, you know, I’m not sure and picked it out and I find the note and I do the math, you know, and I didn’t even know what daily interest was, I was kinda doing the math here and sort of figuring it out. So I figured out I was supposed to get back and then I go into my self directed IRA to the portal, sign in find the asset and then go down and look how much money they have been paid and take that number back to the pool table math and go, alright, well here’s how much I’m supposed to be owed plus how much I invest it and I’ll go five hours later, here’s my instant payoff, right? And I was like, there’s gotta be a better way and so that’s one of the things, you know, our app, RealNumberz with the Z is it’s sort of broken down into four buckets: real property, which has all the kinds of real estate you can think of, multifamily, single family, self storage, all those kinds of things and then private lending mortgage notes, and then funds and syndications. So one of the features of the private lending is the whole app has a general ledger. So you can follow along the income that’s coming in to your whole portfolio but each individual asset also has it’s individual ledger, right? And so what’s the beauty is if I have a note out, number one, all the documents, everything that’s, there is stored right there in the app so anything I need is on my phone or on my desktop or in an iPad and so everything you need to know; who’s managing it, what the details of the note are, the note are, a picture of the property, what it looks like, all those kind of things and then it also has the ledger. So every payment that comes, in you’re tracking, right? So when it says I need to pay off, all I do is pull up an asset, right? And I have a button that says pay off, I push the button that says pay off. I pick a date and boom! It’s done like that.

Bill Fairman (18:04):
Wow.

Paul White (18:05):
And it’s amazing! so, you know, it’s all about saving time for me cause I’m too busy to do some of those things and yet the business that I was using an excuse cost me thousands and thousands of dollars. And so, you know, I wanted to have a way that I could look like a rock star and I had to put a whole lot of effort into it and that’s really what, one of the features, the whole app does this kind of stuff but it’s just one of the really cool features that’s actually paid for itself hundreds, and hundreds of times for me because it saved me lots of money. As a matter of fact, I closed five lending deals in January and every one of them was wrong to my favor, right? And I’m like, Whoa! And so now guys don’t even argue with me, they know what I got and they go, yeah, I need to change mine, I think we need to redo our spreadsheet and and that’s a problem with spreadsheets, you know, to be honest with it, they intimidate me, you know? I mean I just, I don’t like numbers and things like that. I like to straight teeth that’s, you know what I do and spreadsheets are great but that’s sort of a nineties technology, you know? And if you want to make it work, you have to have a programming capability to be able to hook all this stuff together and then if you do that and you want to change any of the formulas, you gotta go back down to their very first formula and come all the way back up, which is so much work, no one does it so you just live with what you’ve got. So there’s a certain laziness and using the same old thing that you’ve always used the same old technology and what we don’t realize is time is money and if there’s something better out there that can make us better about what we do and more efficient that saves us time, we ought to think about that. So that’s the whole idea behind, our RealNumberz happen but I close these five deals in all this, every one of them was off and now guys don’t even argue with me anymore, they used to argue till I show them the math and then they stopped arguing. And it takes me seconds to do it, it’s so cool to do that.

Bill Fairman (19:42):
It’s amazing what happens when you have data backing up your argument.

Paul White (19:45):
You know, there is a NetSuite commercial, it’s been around for a little bit. It says, if you don’t know your numbers, you don’t know your business, right?

Bill Fairman (19:54):
Yep.

Paul White (19:55):
And this is what I was sort of alluding to earlier when I said, you know, so many people treat this like a hobby, right? So one of the guys that you actually know in our group had a fair amount of money, probably several million dollars invested and he was sort of my big brother in the group and I just gotten in and I’m like, alright, I got this money in my hand, I’m doing this again and I’m saying “So, what are you investing in?” And he gave me some ideas and I said, how’s it doing? He goes, I think, okay, so “What kind of return are you getting?”, right? And they said, “Well, I think about 15%” I go, “Why do you think that?” he goes, well, that’s what they told me I’d made and I’m like..

Jonathan Davis (20:28):
Yep.

Paul White (20:29):
And I say, “Well, don’t you think you ought to know?” And again, I like the guy, you know, it wasn’t that I was concerned about him but if I was gonna put my money there, I want to know what that was gonna make, right? We sort of handle it a little bit and he and his son put in about 60 hours, think about that and went back to all his properties and all the investments and track the transactions, right? And you can imagine his shock when his 15% return was actually 3.7%.

Bill Fairman (20:55):
Ugh.

Jonathan Davis (20:55):
Whoa!

Paul White (20:55):
And for the amount of money he made that was several hundred thousand dollars per year, different. And I’m like, so you can have money, he has cashflow. So he’s like, all right, I’m making money, I’ve got mailbox money, It’s doing great but think about the difference between and how much that would make year after year after, year in your returns and your ability to do the things that you want to do and I was like Oh, you’re kidding, right? And so the us took note and actually, when he did that, it was a pretty dramatic presentation that he made. He actually changed the type of investments that he does and he does mainly lending deals now because of the math that he did. And I’m a little more diverse in that but again, I’ve got numbers to back up what I’m doing to make sure that what I’m doing makes sense and again, it doesn’t take that much time if you do it the old way, it takes forever so you don’t do it, right?

Bill Fairman (21:42):
Sure.

Paul White (21:43):
So that’s really one of the coolest things. It was funny when we mentioned that a self directed IRAs, right? I had no idea what the word custodian meant, right? I thought that they were tracking all the payments and calling those guys, if I didn’t get a payment or no and they were giving me a return and I’m like, so what do you mean you can’t give me a return? And they go, well, look, we’ve got people invested in Bitcoin and Cal futures and everything else. How are we supposed to give you a return on that? Right? Because I just assumed everybody did real estate and I was like, that part makes sense and so I looked up the word custodian in the dictionary and it means we hold your stuff, you know, we do a little documentation for you and what became real to me is after we had already closed some lending deals out, I went back after we created the app and even though the deals were closed, I just entered the match just to see what it’s like, I missed a few $1,500 payment, had no idea and they settle the account like that payment that had been made. So boom! 1500, gone. And it was way too late to go collect it cause it was done, it was closed. Here’s the problem we have, at least in our group, you know, professionals like dentists and doctors, I almost said lawyers, but I didn’t mean to say.. Dentists and doctors, you know, chiropractors, vets, look we tend to do whatever it takes to make things right for our patient, right? Even if it costs us money, right? I mean, because what’s important to us is that our patient be healed or cured or get the treatment that they receive and we just assume that the rest of the world is going to treat us like that and what I’ve found is it’s not that way and so we have to be our own best advocate and so, you know, I’m on this bandwagon to do due diligence before you do a deal and then track your results and understand the numbers that you’ve got and understand how your portfolio is performing and we just don’t do that cause it’s too much work. We’re not trained to do that, we’re out of our field of expertise, right? We can talk teeth all day long but when it comes to real estate, we’re learning, you know? So that’s why we have to be so careful and that was the whole point about creating the app that we created. So my mission used to be, to make, you know, orthodontics better in the area, in the Richmond area and now my why is to help investors get to freedom faster by knowing their numbers, that’s really our mission now and it’s awesome! But I can tell you, having gone around from masterminds and RIAs all over the country, most people don’t know their numbers and I’m talking even the guys that have people, you know what I mean? I’m talking to guys that have big operations. They go, we don’t look at anything but cashflow and at the end of the year, when we do our tax reporting and all that, when we start looking at some analysis, right? Cause it’s some work, you know? And I go, well, cashflow is great but it can hide an underperforming asset so you’re gonna have this dog for four or five, six months until the end of the year, then you realize it’s a dog, then it’s actually a few more months to do something about it, right? Well look how much time that is affected or pulled down the returns that you have in a portfolio. So, you know, cashflow is great but it’s not everything, you know, so we need to have some analysis underneath all that to understand truly how our portfolio is performing.

Jonathan Davis (24:35):
Well said.

Bill Fairman (24:37):
And that’s, and I’m not doing this to promote our own fund because there’s plenty of other funds that do the same thing. That’s what I like about the being able to compound your return so that cashflow or that passive income just gets reinvested every time and now you’re reinvesting a higher balance and so when you’re doing the compounding, if it’s for growth, you know, obviously the cashflow, which is great for income if you’re living off of it and growth is gonna help you a whole lot but if you’re doing it for growth on the front end of your investing, it’s a great tool to really jack up your returns. Just for a quick example, if you had a nine and a quarter percent annualized return and you reinvested a quarterly over a 60 month period, you’re now at eleven and a half percent. And while, you know, the investment may still be only doing nine and a quarter, your actual returns are a lot higher but at the same time, you want to be diversified in different asset classes as well and a lot of the asset classes aren’t going to allow you to know reinvest those returns but you can take that money and figure out something else to do with it. That’s one of the downsides of the custodian account where you’re getting in monthly money, you have to build it back up enough to make another investment with the monthly returns you are getting. But there’s some great ways for small dollar IRAs to get invested but then here comes the dilemma, you had to spend a bunch of time to figure out where to put it and if you’re busy with your own profession, that’s very difficult to do. I just added in the chat, somebody asked what the name of your app was and it’s realnumberz.com with a Z. And Steve Babcock was kind enough to actually put the URL in there for us, so I appreciate that. I just typed it out. I wasn’t not paying attention to you, I was being the guy behind the curtain in front of the camera at the same time.

Paul White (27:00):
I think Steve probably appreciate you mispronouncing his last name too. I think it was Babcock cause what I saw,

Bill Fairman (27:10):
Oh Babcock well, [Inaudible] Sorry Steve!

Paul White (27:11):
Well, yeah. And you know what? You make such a great point about funds and so here’s that trust thing again though because with funds, there’s trade offs and everything, you want a higher return where you gotta take more risks, right? Well, you want something you don’t have to manage, somebody else is going to manage it for you, right? And so there’s where the person, you must know the people that are managing your fund because you guys are trustworthy people and we all know it and we trust you but not everybody is and not everybody has skin in their own investments. And you have to be careful about that because you essentially give up control and here’s another thing that I see investors do. They go for a high yield, they would chase yields, right? Another guy I follow, Randy, he goes where everybody’s drunk on yield, right? But you don’t pay attention to the things underneath that yield and I’ve seen people make really bad decisions cause it’s a 15% return or 11% return and then they don’t have anything when it’s all said and done and that’s a zero assets and it’s a negative return when you lose your capital. You know? So, you know, at least for guys in my age, the first thing you need to do is protect your capital, preserve your capital and so the type of investments that you make, we get a little bit greedy about getting this number, right? And we just see that number and all due diligence goes out the window, right? I see it time and time again and that’s what’s great about a fund is because yours is sort of set. It’s governed by the government and all that stuff and so if you have somebody you can trust like you and Wendy, that’s a safe place to put your money but you know, again, you don’t have any control over that. You just, you’re at your whim so if you decide to get a big yacht or something one day, I guess we got.

Jonathan Davis (28:42):
And you kind of said, I mean,

Bill Fairman (28:46):
Don’t say that, he just bought a boat! It’s not exactly a yacht, but yeah.

Jonathan Davis (28:51):
Yeah, some would say it’s a yacht, yeah. But yeah, you don’t want to be chasing yield. You want to be chasing investing partners who have aligned interest with you. So whether they have the same skin in the game or they have a delayed return or they have a return that’s based on the performance of the asset that they’re in with you on, like you want to chase people who have aligned interest with you and your investment.

Bill Fairman (29:17):
That’s really well said.

Bill Fairman (29:19):
I am sorry, It’s not that I wasn’t paying attention to you, John, it’s just in the chat. So Diane is asking about the, “Does your app handle the payoff calculations when you have odd payments, maybe catch ups or if somebody hadn’t paid on time?” As long as you fill in all that information, it’ll calculate it, right?

Paul White (29:40):
It does. It absolutely does and we sort of make a distinction between mortgage notes and private lending. So private lending is typically simple interest but it also accounts for shared equity and it also counts for points as well and so actually one of the cool things about our feature, cause one of the great things you can do with private lending is actually bringing in partners, you know? The guys don’t like the word JV because it implies a fiduciary responsibility but you can bring in partners that you can wrap in a note and so I do a fair amount of that and it keeps track of everything. It keeps track of who your partner is, it keeps track of the total deal, what your deal is, what their deal is and then it closes out, it lets you know, what you get and what they get and you have the option. If so, you know, some of these guys that borrow in there, you know, they have a system set up, they’ll either pay, pay you and then pay your co-borrower, co-lender with them but if you’re going to do it and all the money comes to you, they have the option to have a reminder sent to you. So one of the cool things about our app is there’s a reminder, some automated reminders set up. So if you have a payment due on a certain day and every time you cut the app on, it looks for that payment on that date. If it doesn’t see that, then it sends you a reminder that says, Hey, you know, this payment’s due and we don’t have it. So then you start looking for that but what it saves you from having to do is constantly searching up and down, making sure you’re getting paid because it’s there or it’s not there. So, you know, I spend about an hour or so a month and I spent maybe a little bit longer cause I just looked a little bit deeper into my investments to make sure they’re doing what they’re supposed to do but you know, the idea is to save you some time and then to automate things, to make it easy for you. So to answer your question, yeah, it would keep track of all that but the great thing is it will send you a reminder to send a payment to a partner that you’re wrapping or it’ll send you a reminder to you know, when it closes out, you will get the whole deal. So everything’s sort of taken care of you care for you and automated other than they won’t do the due diligence for you, they won’t do the deal for you. So it’s to help you after the deal.

Bill Fairman (31:41):
Right.

Jonathan Davis (31:41):
Let me ask you this question, Paul, if you are doctor, Dr. Paul, if you don’t mind.

Paul White (31:44):
Oh Paul is good.

Jonathan Davis (31:46):
I don’t want, you know, I mean if I went to school that long, I don’t want to, I would want somebody to acknowledge that.

Paul White (31:49):
No.

Jonathan Davis (31:51):
But my question is, so does it calculate or have the ability to calculate interest? Not only based on a 3`60 day calendar but also on a 365, does it have that distinction where, cause some people like just to throw this out there, like if you do a a hundred thousand dollar loan at 12% interest and you calculate it on a 360, you’re going to make $12,000. If you do it at on a 365, you’re gonna make $12,166.

Paul White (32:18):
Right.

Jonathan Davis (32:19):
So does it have that function?

Paul White (32:21):
It does have that function now, we built it and to be honest with you, I can’t remember if it’s 12, we did it on 360 or 365. Whatever we did, we sorta talked around, you know, there’s a lot of things that it does and we didn’t want to get this thing so complicated. We, you know, here’s, what’s crazy about this. What’s what’s amazing to me is I have, you know, when I was growing up and I asked my parents how to do a math problem and said, no, that’s a new math, we don’t know how to do that, right? And I’m like, come on, you know? But nowadays when my son opens that computer, you could hold a gun to my head and tell me the program so you might as well just shoot me cause I have no clue what he’s doing. I mean, it’s just words and stuff all over the place and he’s talking to me like, I understand what he’s doing. Here’s the really cool thing. So what’s neat for me is I’ve taken this, what would I want to do if I had this particular asset I’m trying, what do I want to know? What functionality do I want to have? And I just sorta tell him and then to see it come up on the computer, it’s just amazing to me now in the tech world, this programming world, they call it a wireframing, right? So I keep saying I’m wireframing he goes, dad you’re breaking a bunch of crap on a piece of paper, you know what I mean? He have to ask me a bunch of questions after it, I’m so proud about what I’m doing. I told him as a way for me to get some of my investment in his education back so it’s really great!

Jonathan Davis (33:34):
That’s good.

Bill Fairman (33:37):
That’s awesome. So you can, you can originate a note, you can buy an existing note, right? It’ll calculate if you were selling a piece of that note to someone?

Paul White (33:56):
Yeah. If you do a mortgage note, it does that. If you start the deal together with a partner, it will calculate your partner would be. I want to say JV cause that’s what I was taught but I’m trying not to say as much. So if you set the note up at the beginning, then yes. In mortgage notes, one of the features that we’ve added, two features that we’ve added before for a mortgage note is really two things you can do with a note. You can sell it, all of it or partial or you can borrow against it. So we’ve added those two features into it, so you can sell a partial of a note, amortizing note, you sell the partial and not only does it record, so you set up the terms of the deal and when you set the partial up, you decide how much money you want to get back and a lot of people, the beauty of parcel and get a lot of your money back, or if not, all of it and so what it does, it’ll calculate the number of payments that you have to sell at a given rate and you just say, yeah, I’ll take that, execute the sale. It’ll ask you who the buyer is of your partial of that and you record all that.

Jonathan Davis (34:59):
That’s really cool.

Paul White (34:59):
And here’s what’s great. Let’s say you sell 10 years of a note, well, in 9 years and 11 months, you’re going to get a reminder backstage and this note, the payments are coming back to you in one month. So it allows me to plan things out and then the other thing with it, if you borrow against it, whatever the terms of the note that you’re that you’re borrowing, it’ll actually give you the spread of what you are getting for your note and how much you’re borrowing against and give you the spread annually and monthly for that.

Jonathan Davis (35:23):
That’s nice.

Bill Fairman (35:23):
So in a second, you just pull out. I’m not a spreadsheet guy so fill in this number, filling this number, push your button. I love it, it’s just simple, right? So it’s made for guys like me.

Bill Fairman (35:35):
So the hardest part of this thing is to actually type in stuff as it happens.

Paul White (35:43):
Yeah and as hard as that is, I’ve had a couple of guys that were busy guys and all that. I got some stuff and he said but what I convinced them of when they came to believe that is once you have all this stuff in, it’s almost, you know, you gotta spend a little time every month. What you should be doing, you should be looking at your assets, right? And so it helps you to do that and just, boom, boom, boom and then you just get instant feedback on what’s going on. So it’s pretty cool to know what’s going on cause the first year or two in that group, I was like, I have no idea what I’m doing. I just know I got some stuff on my pool table and money’s coming in. That’s all I know, right? And it turns out I was leaking money to the tunes of thousands of dollars and I didn’t know it because I was making money, right? And you know, for me, you know, I don’t know numbers that well but I know I like things nice and straight and neat And I don’t look at my desk at the office but you know, when it comes to these kinds of things, I want to make sure everything’s like it should be and so that’s really the whole idea behind doing all this. So their reminder system, it just sends you reminders when things aren’t doing what they’re supposed to do and one of the really cool things, you can actually, through another software, you can securely add an encryption active or connect to your bank accounts that are associated with your business and so it will pull numbers when you call it, when you cut the app on it, it’ll call those numbers by tokens so it doesn’t store any of your data, it just pulls a token and you’ll know what the balances is on your account and so that’s pretty cool to know and eventually we’ve got this big dashboard that we’ve worked on and part of it’s working but there’s such a huge build. One of these days, I want to see how much money do I have to invest, how much of it is qualified and not, how much debt do I have and I can, with a link, dive down into all of that and then how much money do I have invested in and how is it performing and all the different categories and so it’s a huge bill that we’re building, you know, we’ve got a lot of functionality going on but there’s a huge, you know, software’s never done and you know, if my son didn’t shoot me before, it’s all over, then it’s going to be better than it is now and now there’s nothing out there like this app so it’s a pretty cool thing.

Bill Fairman (37:35):
Well that, listen, that’s a great segue into bringing up a couple of friends of ours, Mike Zlotnick and Parsons. Well, they’re real big and especially Ryan is real big into taking your risk factors and putting them into quadrants and then each person in their investing life is going to have a larger percentage of different quadrants in their portfolio at a time and then as you grow through your life there, it’s always going to be moving and you always have to look at it and if you have a dashboard, then you can just pull up and say, all right, well, this quadrant was great when I was 30, I’m going to have to shrink this down quite a bit because I’m more about, you know, preserving my capital than chasing the yield. Then you start making those adjustments and you can do that if you have a dashboard in front of you all the time, right? And that’s beautiful thing there. And one of the things that I also noticed about folks coming into a group where they’ve been used to having their money managed by someone else and then they come into a group and they, well, the thing about it is now it’s being all self-directed and you definitely need to have a tool that organizes what it is you have, and they get the investing part of it great and then, you know, the understanding where it’s going and what it’s doing is kind of left to the side. I don’t want to say it’s a dangerous thing not to know your numbers, but it’s not a good thing.

Paul White (39:17):
Well I would say it’s dangerous because you know, and a lot of what you’re talking about with Mike and Ryan is it has to do with your runway, right? Your burn rate and your runway. Well, my runway is a lot shorter than a lot of people’s out there, right? So I have to make different decisions but you know, you might be able to take more of a risk if you’re 30 or 40 years old, just starting out and go for it, right? Try to hit a home run but you know, at my age, you want to be preserving capital and you want to be consistently making returns that you know are there and then you’ve gotta be checking to make sure things are doing what they’re supposed to. What are the things we know in real estate? Nothing goes like it’s planned. I mean, all the time, right?

Bill Fairman (39:52):
That’s true!

Paul White (39:52):
And if you don’t know that then you’re the victim of somebody else not paying attention, right? So you have to, you know, here’s what’s interesting, guys when I first got in and said, look, once you get all this down, you figure out what you’re going to invest in and how you’re going to do it and what’s important to you, then your job becomes one of managing the managers, right? And so I, you know, this keeps happening but the first time it happened a few years ago, I got an alert on my phone that said you’ve got late rent and I look into that, the amount was $50 ago. What is that? So, because all the documents are stored in the app and I could access the app on my phone, I pulled up the lease and it turned out that the tenant had renewed the lease, the rent had gone up by $50 but they paid the old amount. Because I have the contact for the property manager, I call them right there and say, Hey, what’s the deal with this tenant? You know, they didn’t pay their own rent. They go, Oh, we didn’t even see that and I’m like, alright, $50 times 12, that’s a little bit of money there, right? And then at the times however many properties you got. That has happened with, and these guys are sharp, sharp people like collective genius, kind of people but there’s one I have had that same conversation four times with him, you know? I’m like look, all right, here’s the conversation we’re having. I don’t want to see you charge me your property management fee till you take care of this because, you know, why would I pay you when you’re not even collecting the right amount of rent, right? And so it’s managing those people to give you the tool and again, it took me no time to find that out, right?

Bill Fairman (41:19):
Right.

Paul White (41:20):
What’s the beauty of all this is to understand that we need the tools so we can manage our stuff properly and what we don’t think about it, let’s say we lose, you know, $50,000. Well, you don’t just earn it, you got to think about what 50,000 represents to you, right? It’s not $50,000. It’s a heck of a lot more, depending on your tax bracket and all these other things, right?

Bill Fairman (41:38):
Right.

Paul White (41:39):
To work extra over and above all the other stuff you need, that’s a lot. That’s worth way more to you than $50,000. So this is why we have to be so careful, we have to do the due diligence and not go grabbing for that golden ring on trying to hit a home run every time, especially my age, right? And so you have to maximize your portfolio to make it home like a Ferrari and not put along like a Hugo, right?

Bill Fairman (42:00):
Absolutely. You think about it too, it’s just not about what it costs you to acquire the 50,000 but it’s also the lost opportunities of that $50,000 would’ve earned if had you had it, right?

Jonathan Davis (42:15):
Yeah and based on the years, that’s infinite, you know, so that’s a lot of money lost!

Bill Fairman (42:20):
[Inaudible].

Paul White (42:20):
Yeah, the last time I checked, I don’t have infinite year, so..

Bill Fairman (42:26):
I’ve been, I’m sorry, Diane, I’ve been teasing you all this time. I was going to ask him, so this is kind of like one of those TV shows where they teach you about the next commercial. They just say, I’ve got this great story right after this message,

Jonathan Davis (42:44):
But wait, there’s more!

Paul White (42:46):
Right. So Paul, how much does the app cost?

Paul White (42:50):
That’s a great question! Diane, thanks for the question cause I always forget to talk about this kind of stuff. It’s on a subscription model, right? And so we based it on how many assets you have, so five assets or less, you get the full functionality of lending deals and real property and it’s like 47 bucks a month or something like that and there’s a 30% discount on the– there is a free trial to answer your question, a 14 day free trial and then there’s a 30% discount on the back of the site as well that we offered to giving you guys access to and if you have unlimited properties and you want the mortgage notes feature as well, that’s just under highness, $97 and a little bit of change and again, we had one of the guys or one of our first beta users was paying an accountant and a bookkeeper, a thousand dollars a month just to track his real estate and that didn’t include the tax reporting. It just was tracking all that stuff and I was like, wow! So we found that a lot of our clients have sort of been, not only excited about how much money they’ve saved but also how much time they’ve saved and time is really the, I mean, I guess you can’t put a value on your time but you know, as much as I love real estate, I don’t wanna be doing all the time, I want to have a little fun too.

Bill Fairman (44:02):
Sure.

Jonathan Davis (44:03):
Yeah. I mean, do you keep up with all that information? That is a phenomenal price, that’s amazing. Well, you know, we do some coaching with, they call it SAS soft software as a service and those guys say all the technology, you know, you should be charging more. I said, we just want people to use the app and get excited about it and tell other people about it because we’re just on this mission to, you know, to just change the way real estate investors run their portfolios. Here’s what happened, so I go back to this group and I said “All right, so what are you guys doing to organize?” And I mean, I’m shocked, I would say 90% said nothing, so I guess they had a desk instead of a pool table, there’s only difference between us. And then a couple of other guys are pretty sharp guys, they had spreadsheets, right? Well, spreadsheets, you know, the one guy said, I said, “Well, what’s the format? What’s the layout of the spreadsheet?” And then one guy said “Well, I found this one on the internet” and the other guy said “I got this from a friend of my brother-in-law.” They weren’t even a thing, you know, and we like stuff, uniform orthodontist, right? And so, and then I started looking at it and said spreadsheets are great for a couple of things but they can’t store stuff, you can’t access it anywhere. So then you got to go put it on Google Drive or some other places. Now you’re starting to add different soft wares and you gotta go here and you gotta go there and you gotta go here and then, so I said, “Well, there’s gotta be a better way”. So I started looking out and say, is there anything, you know, I started looking for software and there’s nothing out there that does this an and so my son and I, when he started, first thing I did for him was, can you build me a spreadsheet? And not that I even know how to use it and so he started building me a spreadsheet and then he said “I started listing some of the things I wanted to, I’m gonna have a sun and a skylight here.” He started asking me some other things and then he said “Just make me a list of all the stuff you want” and I made, I started just going to town and he said, “Dad, a spreadsheet can’t do this stuff.” I said “Well, so what do we do?”, He goes “You need an app.” And I went, “Okay, what’s an app?” And so that’s how we came to RealNumberz in my mission because I just keep traveling around and I just see the same, it’s like a Groundhog day, all over. Every day, everybody gets up and do the same thing, trying to figure out how much yield they get, the biggest yield. No one’s paying attention to due diligence and no one’s tracking their success or their lack thereof and so that’s in our mission, is to preach due diligence to people but our mission as far as RealNumberz goes, is to help people have a tool or an instrument that helps them save time and save money and save stress and that’s really what we’ve been trying to do.

Jonathan Davis (46:23):
Now, you know, what you have is basically a servicing and management model or an app, you know, what you would pay for something like that, with a servicing software is probably hundreds if not thousands of dollars per month is what that’s gonna cost you if you went with like a true servicing management software for like a lender, like a bank or someone that uses it. Like it’s going to cost a lot of money, this is phenomenal for what it does and the price that you’re offering it, that’s pretty cool. I’m on the website so,

Paul White (46:55):
You know, what’s crazy is we got, you know, so I’m writing, I’m paying all the bills for this stuff. We’ve got technology all over the place blended into here, again, something you can’t do with a spreadsheet but you know, those bills are due no matter how many people are using this thing, you know? And so that’s where, we just want to get enough to cover our cost, develop some more stuff and get people excited about using it because I think real estate and I would say, most people in the call would agree with this, real estate and real estate related investments is the key, I think to passive investor. You look at all the wealthy people, every one of them has lots of real estate including Warren buffet, who said “Look, if I could, I’d have a single family home.” So you know, billion dollars worth of single family homes, so it’s pretty amazing.

Jonathan Davis (47:33):
Oh yeah. I mean, they realized quicker than most that inflation is real and the value of the dollar is going down and, Oh wait, but the value of real estate is going up, maybe I’ll shelter my dollars in real estate.

Paul White (47:47):
Yeah, and then you add, if you add a smart debt on top of that, then you’re actually leveraging against inflation and actually increasing your returns as well but again, you’re going to have lots more moving parts so you gotta be able to track all that stuff.

Bill Fairman (47:59):
All right, one last question from Diane, and I’m with her on this one cause I hate manually uploading it or inputting anything. Is there a way to download the information you already have onto a CSV file and upload it into the app?

Paul White (48:13):
Yes. Those are great questions, now it does but as anybody that knows software knows if you have a category that says rent and you put rents, ain’t gonna pick it up, right?

Bill Fairman (48:23):
Right.

Paul White (48:23):
So spreadsheets are a little bit funny but there is upload capability with CSV there. I think what’s gonna eventually happen this way, I think the investment in your time and effort now is worth it, I think eventually we’re all going to be API with everything so it’s going to automatically upload everything, it’s going to be really cool. We’ve already been exploring that a little bit but that’s a huge lift and we still got some of the app to build out and some other really cool features. Most people don’t need them but I do think eventually we’ll be at API or something even cooler so all you’re doing is opening your phone and getting an email from us, sentence how much money you made and you don’t have to do anything, right? But I think there’s almost a problem in that because when we get to autopilot, we just let things slide, right? You will get a reminder or an alert that says “Hey, this is not right.” You’re going to have to call somebody to do something, right? But again, it’s a tool in our hands, even now that’s an incredible tool that has nothing out there like that and it’s only going to get better. That’s, you know, you can hear my excitement, I love it. I mean, I love orthodontics, I’ve done it for years but I’m fired up about this stuff, this is really cool. So it’s been my passion, it still is, to help people, you know, maximize their, you know, I want to treat your portfolio like a Ferrari or turn it into one so that’s why we’re doing this.

Bill Fairman (49:34):
Well, listen, it sounds like an awesome app. Everything you’re talking about is helping people understand and make sure that they are performing, like they’re supposed to and at the same time, it is saving you that precious time because there’s no point in being financially free. If you’re winding down and having to handle all this and again, most people aren’t used to managing their own money. They’ve had others do it and I think that’s why there’s not a lot of software out there for people to do that because very few people are in self directed IRAs and let’s face it, the vast majority of real estate investors that are doing this on the side have a self directed account of some sort and that’s why they’re doing it but there’s only like 7% of the population even though that there’s self directed capability.

Paul White (50:29):
And then it’s even more important for us because the savvier guys are starting to do the solo 401ks and things like that. You’ve got to have something like this to track it or you’re gonna get in trouble and lose it all if you’re not careful so that’s really where you gotta know what, you gotta be on top of your game to be able to do something like that but it’s a great way to go.

Bill Fairman (50:45):
So I guess your next feature is going to be whether it’s a prohibited transaction or not, I’m just kidding.

Paul White (50:54):
You know, you won’t think about it, but all the legal implications for all this stuff, you just have to be careful about what you’re telling people, right?

Bill Fairman (50:58):
Yeah, that’s your custodian’s job.

Paul White (51:06):
Right, “holding your stuff.”

Bill Fairman (51:07):
Alright Paul, It was awesome to have you, let’s put the,

Bill Fairman (51:08):
His wed address.

Bill Fairman (51:08):
Web URL there again, if you don’t mind and they just go there and sign up, I’m assuming,

Paul White (51:18):
Yeah, and there’s little chat feature there, a chat bot there so if you have a question just type in the chat bot, I’ll get back to you within a day or so and you know, so for me with this COVID thing, what’s really funny and there’s another feature. I did a really cool thing about how you can stress test your properties. There’s an I pro form, a built in which helps with due diligence of private that you have or private you’re considering cause it pulls data from Zillow and it will pull from more eventually but with this COVID crisis, one of the things that I cannot do is work from home, right? And that’s why so many of us are working towards these other things that are more passive and passive is not a really good word for real estate but you know, I’m not quite sure there’s a good word for it, it does take some work and due diligence,

Bill Fairman (52:01):
Turn it in revenue streams.

Paul White (52:03):
Yeah, he’s right! So these are the things that allow you, these tools allow you to have this sort of freedom lifestyle where anywhere you can go, anywhere there’s an internet connection and manage your stuff, right? You’re in real estate investments, you can see them, you can call, you can look at doc documents and data and all of it’s secure, all of it’s protected. It’s on a bunch of different servers and it’s just a tool to have in your pocket that lets you manage things so how do you like to manage your, you know, pocket management of your real estate portfolio? It’s pretty cool things.

Bill Fairman (52:33):
Yeah. That’s great.

Paul White (52:34):
Really excited about it, I’m really proud of my son too. I don’t tell him I said that, it I’ll give him a big head, he’ll even cry with that, so

Bill Fairman (52:39):
It’s great that you’re able to work with him as well.

Paul White (52:42):
Well, you know, he would say days are not, you know, cause he gets so, I mean, literally he’s like this and I’m like throwing stuff up and seeing what sticks, right? So we’re working through that, right?

Bill Fairman (52:51):
So for those of you who are not watching but are listening, the URL is RealNumberz.com. So that’s R E A L N U M B E R Z.com and it’s an awesome app, you go check it out and it looks like you’re going to save a bunch of time and a bunch of money.

Paul White (53:14):
Amen.

Bill Fairman (53:14):
You gotta have your numbers in front of you, we all have to have dashboards to run our business, you need to treat real estate investing as a business. Paul, it was great having you on as guest.

Paul White (53:25):
Thank you.

Bill Fairman (53:25):
You’re a super guest and look, you can’t see on your screen but behind you, there’s rays of sun coming. Great damn, that look like a halo.

Paul White (53:36):
I kept trying to move and it keeps, manna from heaven, what is this, right?

Bill Fairman (53:44):
This is our graphics trick, thank you Scott for putting that behind his head.

Paul White (53:48):
Making me look all angelic, that’s a lot of work.

Bill Fairman (53:53):
Folks, don’t forget to share, like and subscribe to our show. If you want any information about us, CarolinaHardMoney.com. If you’re looking to borrow, hit the borrower tab, if you’re looking for passive returns, click on the investor tab. Ya’ll have a great week and we’ll see you here next week, same time, same channel.

Jonathan Davis (54:17):
Yep, see you guys.

Bill Fairman (54:17):
Actually it’s not really a channel, but same time!

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