TGCI 161: How to scale if you are investing actively in real estate?

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Episode 161: How to scale if you are investing actively in real estate?

Copy of EP #18 - 2 Guests

Summary

In today’s show, Pancham interviews Dave Dubeau – an investor attraction expert, author of seven books, and owner of Results Enterprises, Inc.

Active real estate investors tend to run out of capital quickly as they do deals. Fortunately, Dave has created a blueprint on how to get started with raising capital when you’re actively investing! Starting from scratch, Dave had gotten into real estate investing in 2001 and has done various range of deals since then!

In today’s episode, we’ll get the ultimate guide to raising capital and doing active deals as Dave shares how to connect with potential investors and how to keep the ball rolling! He’ll also share beginner’s mistakes, the challenge to raise capital, and the importance of consistent marketing so tune it until the end!

 

Listen and enjoy the show!

PanchamHeadshotTGCI
Pancham Gupta
Screen Shot 2021-10-11 at 1.10.14 PM
Dave Dubeau

Tune in to this show and enjoy!

Copy of Quote #00 - 1 Guest

Timestamped Shownotes:

  • 1:36 – Pancham introduces Dave to the show
  • 2:31 – His background and how he came up with “Money Partner Formula”
  • 4:54 – On raising capital by partnering with people with close relationships
  • 8:30 – How “warm-up campaigns” will help you gain connections
  • 10:46 – Why should your presentations not be overwhelming with information
  • 13:14 – How consistency in marketing helps in gaining more capital
  • 18:00 – How failures in his business in Costa Rica set him up for later success
  • 23:42 – Taking the Leap Round
  • 23:42 – His 1st investment outside of Wall Street
  • 24:15 – Overcoming his fears when he 1st invested
  • 24:34 – His investment that didn’t go as expected
  • 25:27 – Why investors should get good education and good partners
  • 26:46 – Where you can get a copy of his book, “Money Partner Formula”

3 Key Points:

  1. Novice investors who are raising capital often mistaken anyone as a good investor. It’s best to raise capital with people who you know best, especially when you’re still starting.
  2. When presenting your investing model, it should be simple as not everyone understands the different real estate terms. 
  3. Most investors tend to stop marketing once they’ve gained capital. Continuous marketing is one key to success as we would want them to contact us when they’re ready to invest.

Get in Touch:

 

Read Full Transcript

Welcome to The Gold Collar Investor Podcast with your host, Pancham Gupta. This podcast is dedicated to helping the high paid professionals to break out of the Wall Street investments and create multiple income streams. Here’s your host, Pancham Gupta.



Hi, this is Joe Fairless. If you want to diversify out of Wall Street investments, then listen to The Gold Collar Investor Podcast.

 

Pancham Gupta  Welcome to The Gold Collar Investor Podcast This is your host, Pancham. Really appreciate you for tuning in today. Anyone who’s in real estate, who’s doing it actively will quickly realize that they run out of their own capital very, very soon. They will do one deal to maybe deal three. And you know, things go well, and you know, sometimes they want to do more deals, but they don’t have the money to do the deals. And at that point, they get stuck and in their head, they just had this feeling that okay, you know what, I just cannot do more than what I have. And they stop and then they save the money. And then they go ahead and do the for the next deal, right? So, my guest today Dave Dubeau, actually is, was in the same boat and he actually created a blueprint on how to get started with raising capital when you’re actively investing. He shares with us his blueprint on how to go about doing that. So, I’m really excited for the show for people who are looking to do active deals and raising capital. Before I bring Dave on his background, Dave has been an intrapreneur since 1993, a real estate investor since 2001. In that time, he has done deals ranging from creative no money down transactions to rent to owns, and more recently multifamily properties. He’s the author of seven books and has been teaching and training people about marketing and real estate investing since 2006. He also shared the stage with the likes of Robert Kiyosaki of Rich Dad, Poor Dad, and Robert Herjavec from Shark Tank, and George Foreman, and many others. Hey, Dave, welcome to the show.

 

Dave Dubeau  Hey, Pancham, thanks for having me.

 

Pancham Gupta  Well, thank you for your time here. Before we get started, are you ready to fire up my listener break out of Wall Street investments? 

 

Dave Dubeau  Yes, I am. 

 

Pancham Gupta  Looking forward to that. So, Dave, tell our listeners about your background, and more importantly, the person behind that background.

 

Dave Dubeau  So, background, I’m up here in beautiful British Columbia, Canada, born and raised spent over a decade in Latin America, living and working in Costa Rica at a language training company there for a decade, got married, had kids moved back to Canada 2003 had to kind of start all over again from scratch. And that’s what I got into real estate investing in my first kick at the can was the low money, no money down type, late night infomercial type deals, did a bunch of those for a few years, took some time off, work with an up and coming real estate guru up here as his director of marketing. And then when I jumped back in, I got out of the really creative deals and started needing to raise capital and failed miserably at the beginning. Pancham, to be perfectly frank with you, but yeah, didn’t work very well for me and then because I was trying the old fashioned stuff, dialing for dollars, and networking and schmoozing, and all this kind of stuff, and didn’t like that very much. So that’s what I came up with my own little process that I call the money partner formula, raised a bunch of money for single family homes and then moved into the multifamily space, not as big a deals as you guys do, but smaller multifamily properties, and raised a few bucks for those as well following the same process.

 

Pancham Gupta  Got it? Got it. So, it’s interesting that you mentioned that you ran out of your own money, right? Everyone goes through that problem who is interested,

 

Dave Dubeau  Some of us sooner than others?

 

Pancham Gupta  Exactly. You know, as soon as you get into this business soon, you realize that you’re going to run out of your own capital very, very soon. And one of the big thing that this space provides you is that the ability to raise capital, where the people who are investing in it may not have to do you can structure that partnership in many, many different ways. But there are a lot of people out there who are willing to put money in deals. They just want someone like you who is listening and wants to do their own deals, to be able to take their capital and do what the business plan is really so. So, tell us Dave, if someone who’s listening and you’ve gone through this yourself, how should they go about raising capital, let’s say they’ve done a deal or two. They really like the space. They want to JV, or they want to do more deals, basically and they don’t have their own capital?

 

Dave Dubeau  Yeah, that’s a really good question, Pancham. So again, -inaudible- here, you guys just like Pancham said, we’re talking about getting started with raising capital. If you’re already at pageant’s level where you’re syndicating, and you’re bringing on a whole bunch of investors and accredited investors, you know, raising gazillions of dollars, we’re not quite there yet, we’re talking about just getting rolling. So first of all, we got a backup and we got to be logical about things, right. So, we got to think about, if you don’t have much of a track record, if you don’t have any track record, working with investor partners, then who is going to invest with you, right. And one of the big mistakes I see novice or newbie real capital raisers making patch, and let me know if you’ve seen this before, is they start putting it out there for everybody and anybody, they think anybody with a pulse and a check book, could be a good investment. And that’s a big mistake for a couple of reasons. Number one is logic. If you don’t have a track record, and you’re trying to raise capital, and you’re going out to strangers, well, they don’t know you, they don’t like you, and certainly don’t trust you with their money. So that’s a very difficult hurdle to overcome. The second big challenge is pesky thing that you’ve got the state’s called the Securities and Exchange Commission, we’ve got our own version up here in Canada, so we’re no better off. Which basically, and again, I’m not an expert in this, I’m just sharing, I’m a real estate guy and a marketer, I’m just sharing my understanding. It’s basically illegal for us, as mom and pop real estate investors to raise capital from the general public from strangers, alright, so you can get yourself into some deep, deep, deep doo. If you do that. Now, fortunately, there are some exceptions and some exemptions in generally speaking, again, you have to get your own legal advice, depending on your stateroom. Generally speaking, you are allowed to partner up with close friends, family members, business associates, people that you work with people that you have a preexisting relationship with, you know them, they know you. And what I’m going to suggest is, that’s the most logical place to start. And that’s the best place for us to start. And typically, you can access somewhere in the $500,000 to $2 million range within your current sphere of influence people who have that relationship with so let’s start there. Let’s squeeze all the juice out of that. Let’s get a track record. Let’s get some experience working with these folks and then we can start scaling up and doing the bigger stuff. Does that make sense, Pancham?

 

Pancham Gupta  Yeah, that makes a lot of sense in you. It’s funny, you mentioned that you cast a really wide net, right? When you’re going out and doing this for the very first time. Anyone with a pulse feel like..

 

Dave Dubeau  We gotta be careful, right? Is anybody with a balls and a checkbook, do you think? But no, you got to be very, very careful not, there’s a big mistake I see people doing is they put everything out there on social media. And that’s very dangerous, because that’s a public platform, right? You see lots of people doing it, and they get away with it until they don’t. And then that can be a very, very painful, expensive learning experience to go through.

 

Pancham Gupta  Right. So let me ask you this, to anyone who’s listening, who have never actually asked anyone for money. And they also don’t feel comfortable asking anyone for money. It’s a big responsibility, right? How do they go and break the ice? 

 

Dave Dubeau  Yeah, good question. So, my goal is, instead of us asking people for the money, what if we could get people coming to us asking about our deal instead? Does that make sense? 

 

Pancham Gupta  Absolutely. 

 

Dave Dubeau  Let’s try and flip things around. So, this process starts with let’s create that target group of potential investors first, and let’s break the ice with them on more of a personal level first, before we start talking business. It’s just the right thing to do. And luckily, you can automate a lot of this Pancham.  You can set everything up, and an email autoresponder system, a CRM program, what have you, you create one message, you send it out to all 150 or 200 people, and then the only thing you need to do is reply to their responses. So that way, you can create it once, set it up, send it out, and then your job is to have those one on one connections. We call that the warmup campaign. It’s all about breaking the ice. We send out three simple messages by email. The first couple of messages are just nice, warm, fuzzy messages, saying hey, it’s Dave, chances are it’s been a while since we connected just want to reach say hi that you know what I’m up to find out how you’re doing. Here’s what I’ve been up to, for the last while, catch people up on what you and the family have been doing what’s going on in your life. Don’t try to be sneaky and put in a bunch of real estate stuff there just a genuine personal reconnection. And then when a clear call to action at the end of it, hey, enough about me? How about you please hit reply to this email, let’s connect, I’d love to catch up, send that out to everybody. And you’re not going to get a ton of responses but typically, your clients are seeing somewhere in the, you know, 20 to 40 replies kind of thing. But here’s the magic, there is capital, sitting in those replies and those responses. So, it’s, it’s all about breaking the ice first people we start talking business, that makes sense Pancham?

 

Pancham Gupta  Yeah, absolutely. Absolutely. So, once they’ve broken the ice, then the next logical step would be, so what do you suggest meeting them or?

 

Dave Dubeau  Well, again, our goal is let’s try to get them reaching out to us. So, our second step is to make sure you’re ready to go. If somebody does put up their hand and say, hey, Pancham, what are you up to with this real estate thing. So, most people, if they haven’t done an investor presentation, you’ve done a ton of them. But most of us when we’re first doing that, it’s like a deer in the headlights is like, oh, now what? So, what I’m going to recommend, is the exact opposite of what you’ve probably seen. So, I’m going to recommend we do not overwhelm people with too much data, you know, stacks of spreadsheets, and jargon and all of this kind of stuff because we got to step back for a second, we got to realize that these people we’re reaching out to are probably not real estate enthusiasts, like we are like your followers are, they’re probably regular folks who really don’t care that much about real estate investing. So, what we want to do is we want to create a slideshow presentation that we can walk people through, either on zoom, or at a coffee shop on our computer, or whatever it looks like. But a good slideshow presentation does a lot, first of all is going to help keep you on track, it’s gonna be a lot easier, a lot more interesting to the other person to look at. And if you keep it simple, it’s going to be much more understandable for them. So, it’s all about creating a good, simple, what I call Reader’s Digest level presentation. If you’re not familiar with Reader’s Digest, it’s a magazine that’s written for adults is written for grownups. However, it’s written at a 13 year old comprehension level. That means any average 13 year old, can read that magazine and understand everything. That’s my goal for my investor presentation. If I can show a 13 year old kid, this whole thing, and they get the gist of it, they understand how it works. I’m on target. 

 

Pancham Gupta  Awesome. I remember it’s funny, it’s after so many years ahead, that Reader’s Digest I grew up reading that in my teens. I don’t even know if still exists, but

 

Dave Dubeau  You understand what I’m talking about, right? It was easy to understand, fun, it was entertaining, right? That’s to the greatest degree we got. that’s when we gonna try.

 

Pancham Gupta  Right? So, let me ask you this, like, how long does it take for a person who just as an investor, right, who’s getting these messages, write the warm, fuzzy campaign and in the follow up, and all that, from a mindset point of view to convert into a real investor? I know, it’s a very subjective question. t’s like, you know, depends on the person and the personality and the objectives and all that. But typically, what’s the journey for that guy?

 

Dave Dubeau  That’s a really good question, Pancham., There are actually some objective statistics around this. And what we have found is, let’s say just for simple numbers, you have access to $2 million in capital within that group of people. Now, we don’t know how much it is exactly, or whatever it is, but if you do everything, right, a small percentage of those prospective investors are going to be ready, willing, and able to go pretty quick. By pretty quickly, I mean, within your first 90 days of getting this up in room, okay. But that’s the vast minority that might be 15%. So, we had access to let’s say, $2 million. If my math is correct, you know, you can probably raise 300,000 within your first 90 days. Now, the big problem is most people kind of stop there. Things fizzle out. They don’t keep going with the marketing, they are very consistent about things. And they’re missing out on the other 85% of the capital, that could be available to them, if they kept up with constant, consistent communication. So, the lion’s share the hidden part of the iceberg,  the 85% that’s available to you needs more time. How much time does it need? Well, somewhere between four months, and 24 months for them to feel comfortable, because just because you and I want their money now, you and I want their capital now, doesn’t mean they’re ready, willing, or able to invest with us right now. So, what we want to do, and I’m sure you’ve seen this over and over again, Pancham, we want to make sure that we’re the guy or the gal, we’re the real estate expert they think of when they are ready to invest. And that all gets down to that consistency of your marketing.

 

Pancham Gupta  Got it. Cool.  Some great points there, Dave. So, I want to switch gears and want to ask you, in your background, you mentioned you went to Costa Rica, you came back, and you started in 2003 from scratch up. So why, why did you pick real estate and why coaching? 

 

Dave Dubeau  Well, real estates because I didn’t have too many other choices. I mean, I’ve been gone out of the country for so long when I came back. I didn’t have bad credit. I had no credit. I had not been able to sell my business in Costa Rica, I didn’t have a heck of a lot of cash. We moved to a brand new city. So, I had zero contacts. And I was at the time married to a persnickety woman who was accustomed to the finer things in life. So, I was under a lot of pressure to get my you know what gear? So, I saw when I was late, late, I don’t know if you remember these buddy, those late night infomercials that said, you too can get rich in real estate with little or no money down is perfect. That’s what I got. So, I sent away for that, and took massive action because I didn’t have much choice.

 

Pancham Gupta  Wow. Great. So cool. I asked a couple of these questions. I’m gonna ask you, many guests on the show. So, my first question is that do you have a morning routine that you follow? If so, what is it? And do you think that attributes to your success?

 

Dave Dubeau  You know what, I have borrowed other people’s morning routines, and done them myself? Anything from Wim Hof breathing techniques, action, cold showers, reading for 30 to 45 minutes, exercising more. And all of that is great. And I’m naturally kind of an early riser. I’ve taken a break from all of that for the last about six months, Pancham because lately I’ve been on a real health journey for myself. And I’m following a very strict, regimented dietary protocol and I’ve dropped about 50 pounds. So, I decided to get myself a little bit of a break when it came to the early morning, freeze my buns off in the shower thing and all that kind of stuff. So, I’ve taken a hiatus from that. But I do appreciate those kind of morning regimens. And now, once I’m almost at my goal weight, I’m going to get back into doing more of a regimented thing and more.

 

Pancham Gupta  Got it. So can you speak to any specific failure in your life that 

 

Dave Dubeau  How long it be got my friend, as specific failure 

 

Pancham Gupta  Any one failure that you think sets you up for later success in life? 

 

Dave Dubeau  Oh, yeah, there have been a few life lessons. One that always pops into my mind is when I had that business in Costa Rica, I don’t know about you, my friend. But you find it that when the crap hits the fan, it all happens at once. Have you ever had that experience in your life? 

 

Pancham Gupta  Absolutely. 

 

Dave Dubeau  Yeah. So, I went through a rough stretch was about a six month stretch there were bought our first home. Here’s what you got to remember, our interest rate on the mortgage was 21%, which was a good rate at that time. So anyhow, I was under pressure being a new homeowner. My wife was pregnant with our first child, baby was born very difficult delivery. My ex-wife almost got done in and you know, anyhow, that’s where I started losing herrigel Ray very quickly, that happened, my business partner and I split up, so I had to buy him out. I had a branch office of my business in Panama, which went spectacularly down the tube all at the same time. I had a key employee threatened to go into business against me and swipe all my clients and take all my teachers with them. And then the straw that broke the camel’s back was I had two close friends who worked with me in the business, go into cahoots against me, go into competition against me, and try and siphon off as many of my clients as it could under the radar. So, while I was ,they were still working for me, I was still paying them. They’re busy sabotaging me and my business and all of that happened within about a six to eight month timeframe.

 

Pancham Gupta  Oh my god. 

 

Dave Dubeau  Yeah. So, when that last thing happened, because I consider these guys to be close friends, I was obviously livid, and I really let it get to me. And I just, I was hell bent on revenge. And I hate to admit it, but there were some dark, dark, dark thoughts going through my mind that could have been brought to realization because you’re in Latin America, right? So, things, things can happen a little differently. And thankfully, none of that happened. But I was just this reading all of miserable energy for months, like literally two or three months, I was just focused on this. And my life went to crap. I mean, my health went down, my relationship went down, I had a new baby, my business went down. Everything was suffering, because of Davion, his lousy mindset. And I’m not a religious person, my friend. But this happened at a church. I remember we went to a friend’s wedding. And there we were watching the wedding. And I was still in this miserable revenge mode, plotting my revenge on these guys. And this impression came over me and basically, it might have been a voice from heaven, but whatever it was, was the instantaneous realization voice basically said, hey, Dave, forgive them. And move on. Did not say forget, didn’t say forgive and forget, that’s biblical, but it basically said, forgive them, and move on. And it wasn’t one of these things that I had to think about it just like, the penny dropped, I instantly got it. And in that instant, the weight of the world was taken off of my shoulders. I completely transformed my thinking. I did, I forgave them, then forget.  I don’t want to go have beers with these guys or anything like that, but I don’t have a hard, no hard feelings with them about that a lager. And here’s the cool thing. It freed up my mind within a week, and I’m not kidding. Within a week, I landed the biggest client we’d ever had for that business because I just quit wallowing in that misery. So that always stuck it out. But that’s 20 years ago now, if not more, more than 20 years ago, almost. Yeah, 23 years ago, that has stuck with me ever since. Because we’re always gonna be getting screwed over a little bit here and there by different people. It’s how we don’t want to be a Patsy. But you also don’t want to let that consume. Does that make sense, Pancham? That was a very long answer to your question.

 

Pancham Gupta Thank you for sharing that story and being open about all your feelings, and it makes a lot of sense. And that little voice that came that day from wherever it was in church, some of these events actually really define you as a person.

 

Dave Dubeau  That one was one. That was a big one. Yeah.

 

Pancham Gupta  Well, thanks for that. So, we’ll be back after this message… Have you ever wondered why the rich keep getting richer? What is the secret that they know but you do not? What if I told you that wealthy people make their money work for them in two different places? Yes, the same dollars invested into different places and working hard for them while they sleep. They utilize these special accounts that have been in existence for more than 100 years. Do you want to learn more about these accounts? Then you are in the right place? Listen to the episode number five by going to thegoldcollarinvestor banking.com/banking show. I repeat, thegoldcollarinvestorbanking.com/banking show or visit thegoldcollarinvestorbanking.com… So, Dave, I’m going to move on to the second round of the show which I call taking the leap round. I asked these questions to every guest on my show. My first question for you is when was the first time you invested outside of Wall Street?

 

Dave Dubeau  That would have been in Costa Rica? I did a pre foreclosure type real estate deal without even really knowing what the hell that was.

 

Pancham Gupta  Wow, did you have any fears? 

 

Dave Dubeau  If you don’t count the MLM thing I got wound up in down there Ponzi scheme. I got scammed in that was before that. That was a whopping 500 bucks that went down the tube there but yeah, you gotta make stupe

 

Pancham Gupta  Did you have any fears you had to overcome; manifests invested in that pre foreclosure property?

 

Dave Dubeau  Well, yeah, of course. I mean, I didn’t know what I was doing. Fortunately, I was partner. I was people that did. And it worked out nicely. And it was a good start.

 

Pancham Gupta  Great. My third question, I think you probably already did that, one Investment that did not go as expected.

 

Dave Dubeau  Yeah, yeah, the Ponzi scheme on this team didn’t go as planned. It’s so funny because I was watching an episode of an old episode of E.R, from about 1995 and that’s about when this happened. And it was the exact same thing you put, you know, I can’t remember what it was. But you put 500 bucks in, and you get a couple of people signed up and they just pyramid thing and at the end it spits out $8,000 for it kind of thing. And we knew a number of people that got $3,000 in. But of course, we got in a little bit too late last whatever we put in and the whole thing got shut down and turned out it was, it was a mafia related opportunity. So yeah, that’s I haven’t thought about that for years. But yeah, that was my first major screw up with investing, that’s for sure.

 

Pancham Gupta  Got it. So, my last question for you is, what is one piece of advice would you give to someone who’s thinking of investing in main street that is outside of Wall Street,

 

Dave Dubeau  Here’s a piece of advice, a piece of advice is either A get educated and really understand what you’re going to be doing if you want to be the active investor. So again, I’m assuming we’re kind of talking about real estate here, because that’s my main focus. So, if you want to be the active person, make sure you get some good education about what you want to do, and pick one thing and one market and focus on that until you get the hang of it. Now, on the other hand, might be an even better idea to partner up with somebody who’s already doing what you want to do an actively passive investor. What I mean by that is, pay to play. So, it’s not just handing over your money as a passive investor, but it’s also coming up to an agreement with the domain investor, the general partner, what have you that you’d like to go along for the ride and really get an insider view of how things work, and how the whole thing works. That’s why I recommend again, for smaller deals, patching mirrors, syndicating much larger deals, you don’t want a dozen little puppy dogs take along with you looking over shoulder all the time. So not necessarily for that

 

Pancham Gupta  Got it. Great advice.. Thank you. Thank you for your time today. And I know you have a great book; I know it’s sitting right behind people who are watching on YouTube. It’s called Money Partner Formula. Tell us about that book. If someone were to get hold of that book, what could they get from that boo and also, how can they get the book?

 

Dave Dubeau  Yeah, so I think you’re gonna have the link set up for people, if they want to find out about the book, get a copy of the book. So just click on whatever link Pancham’s got there. And basically, the book goes through my whole five step money partner formula, that in great depth and kind of goes through step by step exactly what you need to do in what order. And the goal is to help you raise your first or your next six figures in six figures or less. That’s kind of the tagline for that. So that’s what the book’s about.

 

Pancham Gupta  Awesome, so yeah people who are listening and they want to get that book, they can email at moneypartner, m o n e y p a r t n e r @thegoldcollarinvestor.com. And they will get an email with a book, link and all the details that Dave asked to share. Thank you, Dave, for your time here today.

 

Dave Dubeau  My pleasure. Thank you very much, Pancham.

 

Pancham Gupta  I hope you learn some new strategies on how to raise capital when you’re just getting started and you’re active investors looking to do more deals from Dave. Thank you for listening. I really appreciate you.  If you have questions, email me at p@thegoldcollar investor.com that’s p as in Paul @thegoldcollarinvestor.com. This is Pancham, signing off. Until next time, take care.



Thank you for listening to The Gold Collar Investor Podcast. If you love what you’ve heard and you want more of Pancham Gupta, visit us at www.thegoldcollar investor.com and follow us on Facebook @thegoldcollarinvestor. The information on this podcast are opinions. As always, please consult your own financial team before investing.

Copy of EP #18 - 2 Guests

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