Private Money Lending for Real Estate Investors: Build Trust, Fund Bigger Deals

Mitch Messer (00:00)
And you’re approaching them from a position of strength because you don’t need them. I mean, it’s not like you’re desperate to get their funds. You could get the deal done without them, but because you’re bringing them in at a time when you’re strong and solid, you don’t have that stench of desperation that lenders can smell a mile away. The last thing anyone wants is to see someone who’s desperate to get the long clothes because it comes across as needy and creepy. And so here you’re like, Hey, look,

I’m doing this not because I need your money, but because I want to build a relationship with you and nothing makes a lender feel warmer and fuzzier than having someone say that they want to build a relationship with them. And if you treat them right, then off you go.

Cody Crabb (02:09)
Hello and welcome back to the Real Estate Pros podcast, by Investor Fuel. I’m Cody Crabb and today I’m talking to Mitch Messer, owner and operator of Home Pride Capital. Mitch helps real estate investors use private capital strategically, not as a last resort, to buy better deals, build better relationships, scale without getting trapped by their own situation.

⁓ And he’s gonna he’s gonna talk to us about a lot of really cool stuff We we’ve already chatted a little bit in the before we started recording here. So the year I know you’re gonna get a Kick out of this one. So thanks for thanks so much for joining us Mitch

Mitch Messer (02:45)
Hey Cody, thanks for having me. I’m really excited to talk about this kind of stuff.

Cody Crabb (02:48)
Yeah, so first of all, just as a kind of just intro to to you, can you give us a little couple lines on kind of who you are, what you do? And that way we can kind of dive in.

Mitch Messer (03:00)
Absolutely. So I will say that I am an engineer by training and I did engineering things up until the mid to late nineties. In 1999, my wife and I started investing in real estate full-time from Atlanta, Georgia. We’re primarily buy and hold investors. And we did that successfully right up until and

Tremendously successfully. We probably had a $10 million portfolio just before 2007 and 8 hit and the global

Cody Crabb (03:36)
in 2007.

Mitch Messer (03:38)
Yeah,

just a few small things. Atlanta, the entire country went through a recession, the Great Recession. Metro Atlanta got crushed. Most investors in Metro Atlanta got crushed and we got crushed along with them and had to lick our wounds for many, many years. But the experience taught us the importance of network and understanding one’s financials and also

the value of private capital, access to private capital, because we use private capital extensively throughout our career ourselves. So in 2021, I started helping other investors to get access to private capital so they could grow their business. Because I think private capital is the best thing since last spread. And so I’ve been trying to help people understand how it works so they can get access to this money because it’s there and it’s abundant.

but most people don’t know how to use it. So that’s what I’ve been doing since 2021. I love what I do. I get to do it from anywhere in the world. We can talk about that, I guess, later, but it’s what gets me up in the morning.

Cody Crabb (04:43)
Awesome. Awesome. Yeah, I think you’re going to bring a pretty interesting perspective here. You mentioned in the pre kind of pre call before we were on the on the podcast, ⁓ you mentioned private lending is a skill. So I’d love to know kind of what you you know, why why you said that and also kind of what does somebody need to get good at before they start to ask for money or do they need to get good at anything?

Mitch Messer (05:53)
Yeah. So it private lending or being a recipient of private funds is a skill that involves communicating to someone else, sincerity and professionalism and competence such that they were willing to give you their hard earned money that they earned over the last 20, 30 years of their lives. Give it to you so that you could put it to work.

And they can collect interest from that and then hopefully get it all back safely. It’s a huge commitment on the lender’s part. It’s a huge amount of trust and engagement that they’re looking for from the borrower and people who understand the importance of relationships do well. People who just pay lip service to relationships don’t do well. so.

Part of what we try to help people understand is that it’s like any other relationship. You have to have, I’ve been married for 33 years. Communication is an important part of every relationship. Unmet needs can’t be filled because you don’t know what I need. How do know how to fulfill that need? And similarly for a borrower, private lender relationship, understanding what makes the lender uncomfortable.

Cody Crabb (07:04)
Yeah, yeah.

Mitch Messer (07:13)
Long silences without any feedback. No payments. mean, these are things that make people who who have lent you money, if you’re supposed to be making monthly payments, you’re not making the payments on time and makes the lender anxious. So doing private lending well is about not just saying the right things, but also doing the things that bring everybody’s anxiety levels down so that when they’re done with the loan, our typical loan is about six months. When they’re done, instead of going, thank God, I’m never going to have to see you ever again.

They go, wow, that was great. I got my money back. You paid me interest every month. Let’s do it again. And again, and again, and now you’ve got someone on your, on your side in your corner. And as you start to get more and more people like this, eventually you get to a place where you can get deals funded by making a phone call or two. You know, you need a million dollars, make a phone call. And that’s possible. A lot of people look at that as, look at that as only the thing that the moguls can do.

But anyone can do that if you start building those relationships now and establishing that bench of people who know you, like you, trust you, and have made money with you. And as we talked about before, the mistake that people make is waiting to start building that relationship until they need it. And that’s a huge, huge mistake. You want to start building this skill early because part of the skill is the length of time you’ve had it. The value of this relationship is the…

how long you’ve been in it with those particular people. So if you’ve been, I’ve done 10 deals with you before as a lender, I feel pretty good about deal number 11. If this is deal number one or two, it might work out, but I don’t have the track record with you yet. So the sooner you can start building that track record with people who have money, the better off you’d be. And also by the way, people who have money talk to other people who have money. They have people who have money in their families. And so one good relationship spawns five, six,

seven others that come on board because they now know that you’re someone that they can trust. And so all of that happens because you’re building that one initial strong relationship with somebody that benefits both sides. And then you just rinse and repeat.

Cody Crabb (09:20)
So what would you recommend for somebody who is trying to get into, ⁓ they’re trying to break into it. They’re looking for their first, like you said, someone just getting started. ⁓ How can they manage to get that first relationship? Where do they go? Who do they meet? What can they do?

Mitch Messer (10:13)
Well, I would argue that they talk to me, but let’s talk, conceptually speaking. And that is a lot of folks who self-fund, let’s say you, you’re an investor and you have a hundred thousand bucks sitting in the bank and you’re going to do a deal that requires a hundred thousand dollars. And so you can fund the entire thing out of your pocket. Great. And you might think that person doesn’t need private money and they don’t need it now. Sure. But they’re going to need it down the road. So what I suggest, and I know my wife hates this.

term, but I’ll use it because the best one I’ve got so far is I suggest carving out what I call a debt snack. I need a better name. I know. But so let’s say you normally would do a deal that requires a hundred thousand dollars instead of paying a hundred thousand dollars for your own cash, carve out $50,000 and let someone be the lender for you on that deal. You’ve got the money, you’ve got the whole thing yourself. You don’t need their 50, but you want to get them on board with that 50.

put them in the first position because of their debt and pay them the interest. And at least over the next six months, treat them right, learn how that relationship works. And at the end of those six months, assuming that you do everything you’re supposed to, they get paid back. And now they go, wow, this guy was great. This person really did what they said they’re going to do. And in almost every situation that I’m dealing with, people have more than 50,000 bucks. They may have half a million bucks, but for the first deal, since they don’t know you and you don’t know them,

They want it to be small. And since there aren’t a lot of deals that you can do in most cities for 50,000 bucks, maybe a Detroit, you can still do this kind of strategy even in large expensive markets, just carve out enough for someone to get a taste, a feel for what it’s like to work with you and then work that relationship like your life depends on it. Communicate with them, show them the progress that you’re making, show them pictures and videos, wind them and dine them. This is the dating phase, wind them and dine them for the six months. And so at the end of that,

They go, wow, that was awesome. I can’t wait to do it again.

one of the ways we recommend that people get the ball rolling is to, if you can find it yourself, just bring somebody in, even though you don’t need them right now, because you will leave them at some point down the road, but bring them in now. And then let’s kind of walk that relationship through to completion. Now you’ve got one on your side. You’ve got one successful deal with one private lender and then just keep doing that over and over again and building that bench of lenders who now knows you, likes you and trusts you.

Cody Crabb (12:38)
Hmm. I love that. think that’s a great, that’s a really good strategy because it’s like you’re kind of underplaying your hand ⁓ to start out, which is smart because then if something does come up, you’ve kind of got the relationship already started and you’ve established a little bit of, yeah, that’s a really good idea.

Mitch Messer (12:58)
And you’re approaching them from a position of strength because you don’t need them. I mean, it’s not like you’re desperate to get their funds. You could get the deal done without them, but because you’re bringing them in at a time when you’re strong and solid, you don’t have that stench of desperation that lenders can smell a mile away. The last thing anyone wants is to see someone who’s desperate to get the long clothes because it comes across as needy and creepy. And so here you’re like, Hey, look,

I’m doing this not because I need your money, but because I want to build a relationship with you and nothing makes a lender feel warmer and fuzzier than having someone say that they want to build a relationship with them. And if you treat them right, then off you go.

Cody Crabb (13:36)
Well, and especially because it’s like you’re paying them to do it. So no one’s going to say no to that. Yep. Yep.

Mitch Messer (13:43)
Absolutely,

but it’s well worth it. It’s an investment. tell people that is an investment in your future because that relationship, when you do come across the big deal and you come across the deal that requires $250,000 and you don’t have that much money in your bank account, now you go back to that person and say, look, I got this great deal. It’s going to be 250. I can do maybe 50 of it. Can you do the other 200? And they’re like, you sure. You’ve gotten a deal that you would have had to pass on before.

Cody Crabb (14:07)
And now you

Mitch Messer (14:11)
and that makes all the difference.

Cody Crabb (14:13)
Yeah, I think ⁓ that’s very clever because you’re not saying, you’re not doing anything dishonest to any in any way, but you’re making it, you’re making it them kind of just make some assumptions about you right away, which is cool. Yeah, that’s a really great idea. So to kind of shift gears a little bit. you, you know, we talk about relationships, you know, we’re talking about building.

lender relationships and building kind of general industry relationships. know, you, you mentioned, LinkedIn in our kind of pre-interview as a place where you’ve really gotten some good use out of it. And I definitely was like, ⁓ no, another person told me to use LinkedIn. I’m going to have to do it eventually, but I don’t like it. so I, I’m curious, like how did LinkedIn play into that for you? And where did you, you know, you, you are singing its praises big time. And I’d love to hear why.

Mitch Messer (15:45)
Yeah, I’m a huge, huge fan of LinkedIn. Mostly because, and I know this is, it’s not a popular take.

Cody Crabb (15:53)
I

what you should have said was, am the huge fan of LinkedIn, or the only, yeah.

Mitch Messer (16:00)
I may be the only one left. don’t know. But, I’m okay with that because people are missing out on the reality that so it is, it is not trendy. It is not novel. It is, it’s been around for what decades. and that’s what makes it so powerful because the people and, and for me, mean, if you’re going after Kardashians, then probably not LinkedIn, but I’m going after baby boomers.

who have retirement funds who are trying to figure out how they’re going to fund their lifestyle for the next 20, 30 years. those people, LinkedIn is lousy with people like that. They’re all over LinkedIn. And so for my audience, they are definitely there. I’m looking for people who aren’t baby boomers, are pre-baby boomers, who are working a corporate job, but who also have retirement funds in 401ks or IRAs or what have you.

So those folks are, maybe they are singing and dancing on TikTok, but on LinkedIn, they’re talking about business and commerce and opportunity. And I can build my network easily in LinkedIn. And my favorite part about LinkedIn is I can use, once I connect with you, I get access to your network. So once you and I become first level connectors, or connections,

Your entire network is accessible to me and I can and I can and I can and I should reach out to you and say, Hey, I see this person’s in your network. Can you make the introduction between me and that person? wife and I did a volunteer gig last week at a local high school. came in for an hour and we talked to the students in English. got to practice their English. really cool. The organization is called Keep Kids in School, KKIS. It’s actually started by a lady from the US.

And I posted in LinkedIn about our experience. up a little picture and lo and behold, she responds to, Hey, this made my day. It was really cool that you talked about this, this, you know, event. And so now she and I are connected. So I’ve got her whole network at my disposal and it’s, it’s an opportunity for me to help the organization. I’d love to be to help it, but I also get to know who she knows. And so, and you just keep crawling through this network one step at a time.

and building it and hopefully adding value to other people. Cause not only is relationships an important thing for private money, it is, if there’s one linchpin of my investing career, my career in general, it’s been relationships. And so for me, having access to other people’s network and being able to see who they know and how I can help those people and serve those people, that’s heaven for me. So for me, LinkedIn is my favorite place to hang out because it’s so easy to designed exactly for those kinds of behaviors.

So my only recommendation to people is at least have a presence on LinkedIn. Maybe you don’t spend as much time there as you spend on Instagram or Facebook or TikTok, but when I go to check you out on LinkedIn and I find nothing, that’s not a good sign. Especially if you claim that you’re an investor or lender. If I find nothing on you, not that it’s bad, it just makes it harder for me to figure out how I can connect with you. Cause I don’t know who you know and I don’t know who knows you.

So I would urge people to at least, it’s a free account. It’s not gonna cost anything. Take a little bit of time and please for the love of all that’s holy, use the same photo across all your, at least all your major social media platforms so that no one has to figure out is this the same person?

Cody Crabb (19:35)
Or at least like make sure you can relatively the same. Yeah, I cannot tell you how many times I’ve done that. Yeah. Yeah Yeah, something I struggle

Mitch Messer (19:45)
That’s

my LinkedIn pitch. I urge people to try it.

Cody Crabb (19:49)
Well, I’m going to rebut this. so I’d love to hear your response to this. So one of the problems I have with LinkedIn is every time I use it, people that reach out to me and when I reach out to people, I feel like it’s so transactional that it just seems so fake and like weird. And I know like sometimes they happen organically, like, hey, it was nice talking to you. You you met somewhere else and you link together or whatever like that. But

Sometimes I struggle with that. That’s one of the reasons I don’t like LinkedIn is because I feel like everybody’s there for something. They’re trying to get you to do something. how would you, first of all, what’s your response to that and how would you combat that? What’s your advice for that?

Mitch Messer (20:29)
My response is that it absolutely can be that way. It doesn’t have to be that way. A lot of people misuse it transactionally. And I get these same requests. get people who, I don’t know from Adams, who reach out to me in the DMs and have a conversation with themselves. They never respond and they have five or six different messages. Yeah. And I’m like, okay. But in my thinking is, those people are really missing the boat because let’s use this example. The woman that runs

KKIS, I now have an authentic reason. I had an authentic reason to post that and I didn’t post it so that she would respond, but she responded. And so I reached out to her and now if I said, Hey, you know what? I have some thoughts on how we might fundraise for your organization. Is she going to take that connection? Of course she is. I’m offering to help. I’m not asking you for anything. I still get to look at her network and say, I see, you know,

Beth Johnson from AT &T. And I’ve been trying to reach Beth for the last six months. Could you introduce me to Beth Johnson? I mean, maybe after I’ve done a bit more for her, but my point is that I can, there are ways to do it. It’s like anything else. mean, we don’t, we don’t say that meeting people is inherently transactional. We just say if there are people who are transactional in their meeting of other people. So networking in itself is not transactional. It’s how you do it. And yes, I think if you just, if you’re always

thinking about what you’re going to extract out of this relationship, then you’re never going to succeed because people can feel that. And it feels creepy and needy and icky. If on the other hand, to your point, you say, Hey, look, here’s how I can help you or ask the question, Hey, how could I help you achieve your goals? You have an organization that’s operates in both the U S and Mexico. What do you need? Does it, would it be helpful for me to, mean, my post hopefully helped give us some visibility, but there are plenty of other things I could be doing. could do a fundraiser.

I could make that my number one charity for the next, I can do a bunch of things. And so instead of thinking about how she can help me, maybe I spend a little bit time thinking about how I can help her.

Cody Crabb (22:32)
That’s that’s secretly brilliant because first of all you’re planting in their head I should do something back not like that you should only do it for that but like that’s just in their head now Yeah, and also you don’t even have to ask like you can just make it let that be totally unsaid and they can just come to you that is Wow I’m that is brilliant because I feel like that’s a lot of the problem with with the people have is they don’t want to look like That you know what? I mean, they don’t want to look like they’re

Mitch Messer (22:41)
It’s human nature.

Cody Crabb (22:59)
They’re trying to do as much so they get back to their. Yeah, exactly. Yeah. So I’ve heard of the other way I’ve heard is like you like slowly like maybe you like add them and then you like, you know, like a couple of their posts and then you like, you know, comment on a couple and then you maybe say, hey, I’ll DM you about it like, but that’s this is so much better because who are you going to remember the guy that commented on one of your posts or someone that said, I actually.

I actually have a really good website designer. can, let me introduce you cause he’s really great. And I’ll see if I could, I’ll see if I can get you the same discount I got. And that seems like, he’s actually helping me. What can I do for him? So I love that.

Mitch Messer (23:35)
It is so much easier. It’s so much more organic and it’s a lot more satisfying, honestly, because you can do that no matter what your circumstances are, but you can have zero dollars in your pocket and you could still create opportunity and value for somebody else. And people remember that stuff. It’s kind of like referrals. In fact, it’s effectively a referral. And if you have a big enough network, like playing the,

You may, you probably remember a lot of kids these days don’t remember the game concentration rehab. You know, the cards out 10, but, then you turn this one over as an ACEs that that’s what this is like. Someone says, Hey, I need something. You make me go, Hey, someone two weeks ago mentioned that they were really looking for that. And you go, yeah, was James Smith. And you put them together and now you’re the hero. You didn’t provide a solution other than putting them together, but both of them sing your praises.

You’re right. And so for me, it is one of the most powerful things that you can do. so, yeah, that’s why I’m a huge, huge fan of LinkedIn

Cody Crabb (24:38)
Yeah, well, you may have just made me a huge fan of LinkedIn just by based on saying what you just said. So thank you for that. kind of follow that a little bit further. So what sorts of relationships should someone kind of try to build first as a newer investor?

Obviously, you think, ⁓ other investors for lots of reasons, but brokers or mentors or lenders of some kind. Is there a certain list of people that you would say this is probably who you… I’d say mentors, obviously, up there, but I’m just curious if there’s anyone else.

Mitch Messer (25:22)
Well, here’s the secret sauce that I haven’t said out loud, but I’ll say it here just for you and your The people who are, many of the people in our case who have capital to put to work, have funds that they’re sitting on, used to be investors. So they…

A, they get a kick out of helping the next generation of investors get their start. So they like the idea of being able to just provide the funding and not have to do any of the work. just lend you the money, you do all the work, but they know a ton. I’ve got, I work with folks who have been doing this themselves for 20, 30 years. And so if you have a challenge or a problem that comes up, they can say, Hey, look, I know I’m just your lender, but I’ve been through this before. Here’s some things that they used to consider that might make things easier for you.

And because they’re potentially a lender, the lender on that deal, they have a personal stake in you succeeding. so they don’t just, it’s not just information. They want you to do else that they can take back. So if you run into situations that you’re not sure how to address, then your lender can be one of your mentors. Your lender can be one of your advisors. I recommend people use your private lenders as effectively your own board of directors.

people who understand your business, who are pushing for you to succeed, and who in many cases have decades of experience that they’d love to offer to somebody. And so what you’re really building is not just a bunch of money sources, you’re really building this wise panel of experts who can guide you through this real estate business, because they’ve seen a ton. And people who aren’t using their private lenders that way are missing out. If you’re just getting the money,

Money is nice, but the wisdom that comes along with that money is invaluable. And if you’re not getting that, you’re missing out. So that’s the other reason why, in my opinion, people should be looking at private lenders as a resource, not just for the funds, but for the explanation, the understanding, the learning, because that’s where the value is.

Cody Crabb (27:27)
That’s a great way to put it. Well, I think you’ve done a lot for our audience today. You’ve explained a lot of awesome stuff. really think sometimes people need a little bit of kind of clarity from someone in your position just because I think we hear a lot from other investors and then sometimes we just need to hear from the money side because like you said, we need to be prepared for those situations that we don’t know are coming that could be huge opportunities.

I really appreciate you giving us some time today and audience. Thank you so much for, for joining us as well. If you liked what you heard today, go ahead and give us a like and a subscribe and a follow and all the things and make sure to not miss a single episode so that you don’t miss more great conversations like this. I’ll see you all on LinkedIn now. I’ve I’m a convert now I’ve decided it, based on what we just talked about. but Mitch, seriously, thank you. This has been, it’s been a real pleasure.

Mitch Messer (28:17)
My pleasure. All your folks, when they join LinkedIn, they should come find me and link up with me.

Cody Crabb (28:21)
Yeah, yeah, and how can they find you?

Mitch Messer (28:22)
So they can, I mean, I’m the only Mitch Messer, I think, on LinkedIn, so they can easily find me. And my picture is the same as what you’re looking at right now. So I’m easy to find there. Find me, connect with me, and let’s figure out how we can help each other be more successful. I have those kinds of conversations on a daily basis. So I’m excited to see how we can help each other be more successful.

Cody Crabb (28:42)
Fabulous. Well, thanks again. Have a great one and audience. We’ll see you next time.