RED 27

I am a natural storyteller. In ancient times, I would be the cantankerous, scarred tribesman. Blind in one cataract covered eye, perhaps missing one or two fingers, leaning heavily on a wooden staff for support. My tribe would gather around me at the cookfire as I regaled them with stories of the mammoth hunts of old, before the great beasts dwindled to a scattered few. Storytelling is the main reason I started this blog and I’ve been told that I’m pretty good at it. Most of what I’ve had to say so far has been commentary and teaching, not a lot of actual storytelling. The piece on Moonlight Graham was close, but that’s more like reporting. So today I decided to tell a little story. Gather round me my friends as we warm ourselves by the fire. I’ll lean heavily upon my staff and tell you about finding friends and business partners. Sorry, the mammoths are all gone.

I started in the real estate business at the end of 2012. Literally the end of the year. Just a week or two before Christmas I attended a half day seminar hosted by Fortune Builders. If you’ve never been to a seminar by Fortune Builders, or any of the other myriad gurus out there, I will tell you in advance they are a sales pitch. At the same time, they do provide invaluable information. They also warn you that there is a vast amount of information still out there and, for a small fee, they invite you to their three-day seminar. Over the course of those three days, you really do learn a lot, but it’s also another sales pitch for the Fortune Builders education program. That program will run you into five figures, fairly typical within the industry. If you want to know whether or not it is worth the money, you can check it out in one of my earlier blogs where I discussed that very topic.

I attended that three-day seminar the last weekend of 2012. While taking copious notes, I struck up a conversation with the gentleman seated next to me. Tim and I shared a common interest in real estate with the knowledge of two novices. In short, we hit it off. One of the things the seminars recommend you do, and I recommended as well, is join your local real estate meetups. It’s a great way to network and meet fellow investors. Tim mentioned, in passing, there was a meet up at Coco’s coffee shop the second Wednesday of every month that I should look into. I made a note of it.

For some reason we never exchanged contact information that weekend. I suppose we never got around to it. We had talked about possibly becoming partners on an investment, so I went to the Coco’s meeting the second Wednesday in January, hoping I would find Tim there. Unfortunately, Tim did not attend that meeting, although the meeting itself was interesting. The room had about 25 people and a guest speaker although what the subject matter was that evening, I have long since forgotten. It piqued my interest enough that I decided to attend the following month.

While I was at work the next week, I was in the office and the secretary asked if I wanted passes to a seminar that coming weekend put on by Dean Graziosi. Dean is another one of those big gurus out there. By all accounts very successful in his own right. The passes were free, and I was on a roll so why not. When I arrived at the seminar who should I bump into but Tim. I told him I had been to Coco’s, and we agreed to meet at the February meeting. We also exchanged contact information this time. That is key to networking. One of the first things you should do is have business cards printed up. These days it’s a very inexpensive investment.

Tim and I went to the meeting that next month and the guest speaker was Kevin Oliver. Kevin was also one of the organizers of the meet up and Tim suggested that this is the guy I need to talk to about real estate. Kevin was a local agent with Keller Williams and had a long history in investing. This meeting was much larger than the first one I attended, probably 40 people were there. Afterwards I walked over to introduce myself. Myself and about a dozen other people. Kevin could only spare a moment or two, so I quickly explained that I had come into some money, and I was looking to invest in the local real estate market. He gave me his business card and said I should call him at the office where we could discuss this in more detail.

I tend to be very proactive. By that I mean I go out and create opportunities. I don’t wait for opportunities to come to me and then react to them. I think this is a very important trait to have if you’re going to be in this business. We are in a very competitive industry, especially in the current market situation, and you need to find the deals, not hope the deals will suddenly fall in your lap. That’s a mistake I think many new investors make. Either because they don’t know how to find the deals, or they don’t want to do the work. In the first instance, you can learn how to find deals. Go to meetups. Network with other investors. Go to seminars. In the second case, there really is no cure for laziness.

I called Kevin the very next day. It was an odd conversation. We had only met, very briefly, the night before and I could tell Kevin was struggling to put a face with the name. He knew we had talked the night before, but he had spoken to at least a dozen new people that night. Which one was I? I have a little networking trick I will share here. The name of this site, where you are reading this blog, is Mad Hatter Investments. That is also the name of my company. I didn’t choose that name, rather, it chose me. That is because I am known for wearing hats. Not run-of-the-mill baseball caps either. I have several high dollar steam punk top hats, cowboy hats, a fedora, derbies, and I am always adding to the collection. They’re actually a tax write off because they are part of my branding. You very rarely see me not wearing a hat. I swear, the fact that I have a rapidly receding hairline has nothing to do with it. I realized Kevin didn’t have a clue as to whom he was speaking so I stopped him in mid conversation, and I said “Kevin, I’m the guy with the hat”. He immediately knew who I was. People may not remember my name. They may not remember my face. But they always remember the guy wearing the weird steampunk hat. It’s good to have a gimmick when networking, something people will remember.

Once we established my true identity, and that I am impervious to Kryptonite, Kevin told me to come by the office. Again, being proactive, I was there that afternoon. I explained that I had come into about $100,000 cash and was looking to invest it. Kevin was always working on some project, and he mostly used investor cash. He said if something came along in that price range, he would call me. I left his office feeling pretty good…and didn’t hear from him for over a month. On a Friday in March, he called to say he had a deal and needed about $80,000 to close. He gave me the vital statistics and it looked like a good deal. At least from my novice point of view. What do I know? I told Kevin I needed to talk to my partner, Tim, to see if he wanted to go in on this. Kevin said okay, but he warned me not to waste too much time.

I called Tim, gave him the numbers, and asked if he was interested. He said he needed to think about it, and he would get back to me. Now here’s the thing about a good deal. If it is a good deal, there are probably a dozen other people looking at it. These days probably more than that. As the saying goes, he who hesitates is lost. If the numbers were good yesterday, and they’re still good today, they’re going to be good tomorrow. The numbers never lie. If you spend too much time analyzing a deal, somebody else is going to come along and grab it.  Sometimes the hardest part of any deal is just pulling the trigger on it.

Tim called me late Saturday evening to say yes, he wanted to do the deal. This was a good 30 hours later. It was too late to call Kevin, so I waited until Sunday morning. It really would not have made much of a difference. When I told Kevin Tim and I were interested he said “sorry, but that was gone 30 minutes after I talked to you”. Not surprising. Kevin was on a clock to establish escrow and make a deposit. If he had waited for me, and I decided not to do the deal, he would have lost two full days. As soon as we got off the phone, he was calling the next investor on his list. He told me he would keep me in mind and give me a call on the next deal.

It was another month before I heard from him. I remember it was the last week of April, a Tuesday, just a few days before my birthday. Kevin said he had another deal and needed $80,000 to close. Would I be interested? We discussed the numbers, and they were solid, so I told him I was going to do the deal. I wasn’t going to bother with Tim. I would close this one myself. The only issue I had, was the money was spread out in about four different bank accounts. Kevin said he needed to deposit the money into escrow the following Tuesday. That gave me eight days, plenty of time to consolidate everything and get him a check. I immediately began making phone calls. The following day Kevin called to see how things were going. I told him I had put everything into motion. On Thursday called not once, not twice, but three times to check progress. I understand I was a new investor to him. He was concerned and making sure I would get him the money in time to place it in escrow. But this was borderline harassment. I assured him I would hand him a check by the end of the week. True to my word, on Friday I went to the bank and picked up a cashier’s check. I had planned to drop it off at his office on my way into work that morning, around 11:00 or 11:30. At 10:00 o’clock Kevin called me for an update. I told him I had the check and would be right over.

When I got to his office, I handed over an envelope that contained the check. I asked him “Kevin, why the rush of this? You told me you had until Tuesday to deposit the money into escrow. That’s four days from now. You didn’t need to keep calling me to check up on this.”

He replied “My partner and I are getting ready to leave town. We are going to Las Vegas, and I wanted to get the money before we left.”

I paused to look at him, incredulous. “Kevin, I just handed you $80,000. Now you tell me you’re going to Las Vegas!”

“No, it’s not like that”, he replied. “My partner and I are going to Las Vegas to look at properties. We plan to be back sometime on Monday but, in case we see something we like and decide to stay over, I wanted to make sure this money was in escrow before we left.”

Reasonable. Plausible. What could I do? I had to take him at his word. It helped that he was known in the community. People that knew him spoke well of him. “OK”, I said somewhat hesitantly, “I’m trusting you with this.”

And off he went. To Las Vegas. A town full of temptations. A town that has seen more than one man squander a fortune, or a paltry $80,000. The next day was Saturday, my birthday. I had put the $80,000 and Vegas out of my mind. As much as a man can put $80,000 out of his mind. The wife and I were enjoying television that evening when my phone chirped. It was Kevin texting from Las Vegas. The text was short and to the point. It read as follows; “Hey dude, 27 red didn’t work. Do you have another 80 grand?”

After a short pause, during which I was trying to decide whether I should shoot myself or shoot Kevin, I replied. “Ha! Ha!????” We have been friends ever since. Then became business partners a couple years later.

This illustrates the importance of working with people, whether it be a partner, or a mentor, or even a competitor. You can do this business by yourself but it’s much more fun to take the ride with someone else. Kevin has always said, real estate is not a business, it’s a lifestyle. He is not wrong. I have met a lot of great people in this business. Most of them seem to genuinely enjoy what they are doing. They like helping people, whether it’s a young couple buying their first home or a new investor trying to figure out what to do next when he gets his first flip under contract. Friendships are funny that way. We are all competing with one another to get that property under contract. Yet we are also the first to congratulate a competitor that pulls off a big deal. Sometimes we join forces on a project…I supply the deal, you supply the buyer. And we all have stories to share. Strange things happen in this business. Sooner or later everyone ends up with that one story. “I couldn’t believe this one time I was looking at a property and…”

Oh yeah, that $80,000 I gave Kevin on our very first deal. I made a nice profit on it.

Hope you liked the story. Leave some comments. Mulling my next blog. Why Baseball? Has a nice ring. Someone recently asked me why my favorite sport is baseball. Had to think that over. It used to be football when I was young. Something about angry young men and all that testosterone I suppose. I do need to take a week off and add some content but I will at least post something short. Until then remember, always aim for the fences.