How To Find Money For Your Next Deal

Speaker 1 [0:00] So quick outline of how it's going to go tonight. What even is a tariff? Quickly, define that for everybody? The economic theory behind tariffs? That'll be fun. Supporting arguments for tariffs, opposing arguments, and audience arguments, where you're gonna take it to the tables, you're gonna vote, and we're gonna talk about it a little bit after that, all right? So side note, look, terrorists are very complicated. 10 minutes, not gonna do it justice, especially 'cause I gotta cut a couple minutes out of that 10 minutes. So, some grace, if you hear some errors, let me know, but we're just gonna keep on tracking. All right, so what even is a tariff? What is the point here?

We're gonna read from the slide. A tariff is a tax imposed by governments on goods imported from other countries. I'm pretty sure most people have that part, right? So they make imported products more expensive and less competitive compared to domestic alternatives. Why are we even talking about this tonight? So, obviously, this is happening. Right now, there's must see TV. Trump is gonna address the Congress, he's probably gonna talk about this. But every single person that's in here trying to do a flip or build, the costs of your goods are gonna go up. We're gonna talk about that, and that's why it's super relevant to kind of discuss and game plan. Second, big misconception.

We're gonna break it down for you. They are paid by the importing business, the U.S. business, right? To its home country's government, the U.S. government. How does it work? The importer who brings the product into the country, whether it's a car, avocado, wood, maple syrup, whatever it is, right? is responsible for the tariff at the port of entry. The customs officials collect the tax, and the money goes to the U.S. Treasury. Right? So they're paying for it, which is why when you look at alternatives, you're like, why would I pay 25% more when I can buy it here. That's the idea. But that's who's paying for it. Don't let anyone tell you otherwise.

They directly increase costs for domexist consumers who purchase these goods, at least temporarily, until things catch up. That is undeniable. And they serve as a source of government revenue, because, obviously, right, they're collecting that. Right, so the economic theory behind tariffs. But why? Like, why would we do this? Right? Here are a couple super high level things, price effects, all right? Prices arise from the world price, which is what we're paying now, to the higher tariff price. That lets the domestic producers eat a little bit more because it does that, and hopefully brings up their business, all hopefully, right?

Quantity effect, domestic consumer, our consumption increases while domestic production increases. So unless people are cool with the new price, they have to wait until there's enough supply, right? Redistribution of effects, you'll see it went higher, because there are a couple points. So domestic producers gain through that higher price and market shares, kind of like cheating for the home team until everything catches up, right? Consumers lose, because it's gonna cost more, and reduce choices, at least initially, and the government gains new revenue from the tariffs as long as it works. There's the strategic effect. That's already happening today.

It can be used as leveraged in international negotiations, right? We're gonna see that it's happening live and direct in real life, right? And so, just like that, it's the Matrix. You know, everything there is to know about tariffs. So let's talk about some supporting arguments. Why would you do this? One of them is strategic infant industry production. That is what Alexander Hamilton was talking about, right? So new industries need temporary shelter from the established foreign companies. Now, you might say, lumber is not a new industry. Well, if we start doing it from the U.S., it's new to us, right? And so they're gonna have infrastructure and all this stuff that we do not have in place.

Taiwan's semiconductor industry. Maybe you guys have heard that they're having a $100 billion investment in the US now. Right? So they developed under strategic government protections, ensuring that they were the number one. South Korea, transformed from an agricultural economy to an industrial power, using the same. They tariffed, protected, got to scale, lowered them. National security is another one. Reliance on foreign nations for essential goods creates political leverage, right? So construction materials, like think steel, for example, much more than construction, much more than construction. That is something of national security.

Domestic capacity preserves policy, autonomy during negotiation. So when they try to hold us over the fire, we're like, well, we can make it ourselves. Right? And then building materials, right? So we know this. During COVID, when we had supply shortages of everything, because we couldn't get them, because we didn't make them, and nobody liked that. So these are part of the arguments for it. Counteracting unfair trade practices, right? So now we'll give some examples. Did you know? More than 70% of software lumber imports are from Canada? Right? And so now they're about to have a 25% tariff, all depending. worth talking about. Approximately 71% of basically drywall.

The ingredients there are coming from Mexico. They're the other side of that tariff. Good to know. Right? Protect us supply disruptions, like we just saw, and it's leverage, so let's talk about this. Uh, Canadian Prime Minister Trudeau attempted to prevent the, or prevent the tariffs. He's like, Hey, if I do this, will you stop them? and invested almost a billion dollars in border security. So it already is used as leverage, that's happening live and direct, right? Well, it doesn't always work that way. So, uh, economic inefficiency. Excuse me, they force resources into less efficient productivity. For example, maple syrup. I love Canadian maple syrup.

We have no business making Canadian maple syrup. But if we can't get it for the right price, people are gonna start, and that's not exactly economically effective, right? By some estimates, here's my little face. I dont like this. Construction cross could rise 4 to 6%. about 17 to 22,000, but that's based on the average cost of construction of $4,000 or $422,000. I think that number is suspect, but I gotta use the sources I have. So do the analogous math. Right? And they could worsen the existing affordability crisis. Right? That's a pretty strong argument against it. Poor historical track record. Well, the historical evidence doesn't exactly say it's all that hot.

The protected industries often remain uncompetitive, so it doesn't even work out. And even the success stories, depending on your economist of choice, fail the cost benefit analysis, right? Then there's retaliatory damage. If you're watching the news, everyone's putting tariffs on us now. It is a trade war, right? So they respond with counter terrorists. That's happening right now. Complex global value change. Well, you can stop lumber, but it turns out it takes a little bit more than lumber to make a house. So it's a little bit more complicated than that. And then unforeseen cascading effects.

We don't know what's going to happen this time, but historically, it's been a little bit more complicated. So now, those in the audience, but we're gonna go back to this, all right? We're going to break it into the audience, you're going to scan a QR code, and you're going to get to vote on the table question. Here it is. This is live. As you vote on this, and I would discuss amongst yourselves before you vote, you'll see the results here, so we'll see where the room's at. We're going to pass around this mic, and if you want to share your opinion, share it.

But just remember, the tariffs are here, there's happening, how are you going to let it affect your business and what moves you're going to make? That is the question. So I'll read it. How will the proposed 25% terrorist on Canadian and Mexican imports ultimately impact American construction industry, what we're talking about, over the next 5 years?

Teresa Karnezis [0:00] I know when I first started, my biggest fear was, um, why would anyone lend me money? I don't know what I'm doing.

Unknown [0:08] All right, well, Hit it. No time like the present.

Speaker 2 [0:14] Oh, apparently I'm starting. You're starting. All right, guys. So, in the intro questionnaire to everybody, one of the questions was, do you think it's harder to find the deal or to find money? And predominantly, people said finding the deal was harder. So the 1st question starts there. What comes first? the money or the deal? Which one important? And, uh, how much your day do you spend finding money? So let's start at the beginning. Sorry. What's more important? money or the deal? What's harder to find? Katie, we can start with you.

Unknown [0:41] All right, I'll say the deal. Katie's with the deal.

Speaker 3 [0:44] It's hands down harder to find the deal than it is to find the money.

Teresa Karnezis [0:48] I agree completely. Yes.

Speaker 2 [0:52] All right, so how much of your day, then, do you spine? Do you spend finding money or is it, I'm just hunting deals and the money will come?

Speaker 3 [0:59] That's what I'm doing. The money will come. There's a lot of money out there, believe it or not. So I'm really just trying to find the deal. Yeah, agreed.

Katie Ciochetti [1:08] Especially if you have a base, if you have experience. The money comes a lot easier.

Unknown [1:14] We'll get to that.

Speaker 5 [1:16] Yeah, so the first part of his question was, which comes first money or the deal? So it sounds like you guys are saying you're looking for the deal first, and then you'll go find some money.

Speaker 3 [1:22] And it's, like, to speak on that. So if you get a deal under contract, then you can go find a lender pretty easily. Because if you say, hey, I got this deal, hear what the numbers look like. I don't know exactly how it's gonna go, but, you know, this and that. they're going to be down to work with you. If you try to talk with someone and say, hey, I just want to get it set up. So in the future, if I find something, they're like, okay, like we can shake hands, we can network, but like bring us a deal. And so that's why we're looking for the deal first.

Katie Ciochetti [1:50] I'm just gonna, I'm gonna tee off that just a little bit and say, that is true once you have experience, but I would strongly recommend that you make a relationship 1st because, you know, most companies, especially if you're going with bigger lenders, they want to see 7 to 10 deals under your belt before they feel safe with you. So if, and a lot of the bigger lenders, they want your social security number, they run more like a mortgage company, but on the commercial side. And so if you don't have some of that documentation in place, deals move fast, and if you're not prepared, you're not gonna get the deal.

Speaker 2 [2:24] So, on that note, quick pause. Where are the lenders in the room? I know the gentleman from Alfie are here, look at this. These are all people willing to lend you money. Some of their hands aren't that high. That's crazy. There you go.

Speaker 5 [2:38] I love it. So what do you think is the biggest misconception about raising money? Katie, or go ahead, Katie?

Teresa Karnezis [2:47] or Teresa? Kick us off. go first. Um, I think the biggest misconception is um, fear. So many people are afraid to ask for money. They're afraid to share what they're doing and how, um, they can actually make money for the lender. I know when I first started, my biggest fear was, um, why would anyone lend me money? I don't know what I'm doing. I'm trying to learn. Um, But if you've got a game plan together, I know when I started, I did like a whole, um, I guess you would say it's kind of like a resume, but not a resume. I don't know what you call it, but I had like a game plan together. If I did find a deal. This is how much I'm willing to pay interest. This is how it would work.

Um, I'd pay the lender back at the end, you know, after I sold everything. I had it all printed out. So when I did find somebody that might be interested, I was able to send that to them. And I think that was very helpful. The fear is... fear is the biggest thing.

Speaker 5 [4:02] I mean, same question to both you two, if you want to answer, what's the biggest misconception in your minds around, uh, raising money?

Speaker 3 [4:09] I mean, the misconception is that people won't lend to you unless you have a ton of experience. I mean, a little, to her point, a little experience on the resume does help, and there's ways to get there, which I'm sure we'll talk about later. But, I mean, folks want to win to you. By the way, they're not doing this as a favorite, usually. They're not doing this as a favor to you. They want to make money off of you. Like, they want to lend you the money so they can make money doing the easiest job. And it's hard, but like, you're the one out there every day on the job site and then they just get the money. So I would love to be a lender one day. But they want to lend you money.

So, like, it's, it's, they won't lend adjust anyone, but surprisingly more people than you'd think, will they lend money too?

Speaker 2 [4:49] Lenders, what's the biggest misconception about lending money?

Unknown [4:54] Katie.

Katie Ciochetti [4:56] Yeah, I mean, I concur with everything that they've said. I think just realizing that it's a mutual relationship. And, um, you know, kind of go into it, understanding what you would want to see, if you were lending someone that money, knowing that you're going to get something back, and, and, you know, they're going to make your money work for you. I mean, this kind of is an ideal time for that, with the stock market and everything. People want to put their money, places where it's making more money. And so if you can bring that to the table, I feel like, you know, you've got a good place right now.

Speaker 2 [5:27] Absolutely. All right, so on that, we'll just keep zigzagging back and forth, all right? So what are the different types of lenders that you've worked with, and what are the pros and cons of each? And if you've only worked with one, that's fine too.

Katie Ciochetti [5:37] I've worked with a lot of lenders from, like, seller finance to commercial loans to home trust bank, uh, private hard money, um, larger, hard money, corporations. Uh, I think each of them have their own challenge. Typically, like when I find a deal, if it's, say, a million, $2 million, then I know I'm going to one of the bigger companies. I have to jump through more hoops for the money. because they have regulations like a bank does. But if I'm going to do, like, a 250 deal or something, I may go to one of my private lenders that just knows me and will hand over the money. So I think the biggest thing is just, how much money do you need?

Because private lenders only have X amount of money, and if you need a lot of money, you're gonna have to go to the bigger companies. That's a great point.

Speaker 3 [6:28] Yeah, I've basically worked with three different kinds of lenders, there's many more out there than three, but the three I've worked with. One is like the big box shops. They're like um, the commercial lenders. They're, you know, lending one finance of America, folks like that. I mean, there's the normal banks, you know, TD Bank, blah, blah, but, you know, the the big box shops, um, the, the pros, the rates are pretty low, you know, compared to other methods. Their rates are pretty low. The cons, total pain of the butt to work with. But sometimes that's worth it, you know, and for me, my early-ish earlier days, that's the route I was going.

The 2nd of those routes is like the private commercial money, you know, not mom and pop shop, but, you know, the smaller shops. Their rates are higher, but God, they're great to work with. Heritage, where you guys, heritage private, they just lended me on a ten unit department building that I bought via wholesaler from AVLmeetup. So snaps to them. yep. Um, they're they're easy to work with. And shops like that in general, you know, are easy to work with.

The 3rd that I've worked with in the early, my 1st days was working with family, which is kind of a touchy subject, you know, people are like, well, I don't know, you know, the pros and cons, um, easy to get the money, you know, and if you do it right, then that's your inheritance later. So all is well. Cons, if you really screw it up, then like you've really screwed it up. That's a personal relationship and there goes your inheritance. Um, that's right. in your family. But, you know, my dad was definitely one to help me in the early days. He lent me money to get started.

And, you know, Katie was saying, um, when you show if you got experience, then people lend you money, but like, which came first, the chicken or egg kind of thing. Well, by my dad lending me money, that was like huge. By the way, Sam Carey, we stand up for me real quick. stand up. my dad a round of applause.

Unknown [8:29] Yeah.

Speaker 3 [8:30] It's a family affair tonight.

Unknown [8:32] This is great.

Teresa Karnezis [8:37] So, I have worked with mostly private lenders. Um, I did some seller financing on a couple of things, but I am I'm a flipper and I do mostly older homes that are major renovations. So I don't do a lot of, you know, I don't do a lot of quantity. Mine are just really big projects, but I've got some private lenders that I use. Um, I've done some seller financing. Private lending is, You'll be surprised at how many people will lend you money if you have the right things in order. Um, and so that's that's all that I've used. I haven't used any hard money and I haven't used banks. Um, I'm doing some new builds now, and I may consider that, but, you know, it takes longer the private money.

I've got it. I know that if I find a deal, I can just get it. So that's what is very attractive about the private money. It's really quick. Banks are really slow.

Speaker 2 [9:46] So back to, uh, you might be surprised who'll lend you money. So the first, like, real home run deal I ever had was seller financing, and the key moment that changed the negotiation, is when I showed them, the immortization table, the money they'd be making as interest as the bank, and they're like, oh, I hadn't thought of that. Like, that's pretty sweet. And if you mess up, I get it back. I was like, yep. And they're like, oh. So it's being in these conversations and just having your ducks in a row and the stuff prepared. Might be surprised how far it'll get you. love it.

Speaker 5 [10:16] Worst case ask dad. Um, I like it. So what is your thought process for deciding to raise money from a private individual or a more traditional route? I think we said a couple things. I heard you say time, um, you were kind of saying preference. So other than those things we've already said, anything else that jumps to mind of where you are in the thought process of who decide to work with on a particular deal.

Katie Ciochetti [10:39] Sure, yeah. I mean, I would, at this point, I would never go to a traditional bank for, um, what I do, but actually, FHA, not for me, but just to know, just release a new product that is an uninhabitable house purchase with 12 month, uh, in the rears of payments for a homeowner to purchase and fix up their house. But, sorry, side tangent. But, um... Great. You know, typically, I close deals in two to three weeks, which is, you know, it won't work, and also, most of the products that I'm working with are commercial, because I'm not gonna live in it.

Speaker 3 [11:21] Yeah, I'd say, I mean, what I'm using as my base is to pick who I'm working with. It's really just the ease, you know, having getting money quick. They're not beating you down on saying, oh, you've only gotten 70% of the painting done because you got this one little room and all that kind of jazz. Like, it's way easier to work with the smaller lenders, the private lenders than it is with the big box shops. And I'll pay more on the interest to do that, um, because cash in hand is key.

Teresa Karnezis [11:50] And for me, and the people that know me, I I like to do what I want to do, and so it's very easy with a private lender, the private lenders that I have, um, and I do have a track record at this point, and, but it's easier to work with that private lender that just says, hey, give me my money in 8 months, and this is what it's going to be. They're not breathing down my neck and they're not following every step. So that's that's why I choose mostly private lenders for that.

Speaker 2 [12:27] So, my turn? I think it's my turn. So, um, we're kind of talking about kind of the next thing, right? So you were saying, yes, if you have some experience, then lenders will take you a little bit more seriously, but really we're talking about kind of the relationships. That's much more valuable. So the question is, what's the best way to maintain relationships with these new lenders, right? Do you do it differently if it's a new relationship or an existing one? How do you maintain the relationship with the lenders? And we can start with Teresa and head back.

Teresa Karnezis [12:52] Um, the way that I have done mine. Um, and I've got 5 private lenders that I kind of go in between. And the way that I've done that is I will consistently send them just emails on what I'm doing, what I'm looking for, hey, are you interested if I find something in this? Um, Communication is key with private lenders. And I stay in communication with mine, every step of the way, through a project, or even before a project, just telling them, you know, where I am with other projects that I'm working on, and what I'm looking at for the future. So, um, I just think communication is key for me.

Speaker 3 [13:42] I don't want to just totally repeat what you said, but yeah, communication is huge. Business partner of mine calling a Barry. We do much of our work together. He is really good at saying on top of doing the communication. The last deal, he was busy with other things. I took on that 10 unit apartment building. So like Drew and Mark over at Heritage, I borrowed from them 6 weeks ago to buy it. I don't think I've said a word to them in 5 weeks and I should have. So thank you guys for staying with me. But I should have been keeping up on communication there. I did send them a walkthrough video the other day, so I think, and they're here and they don't hate me, I don't think.

But yeah, keeping up with communication with them, it shows you they're not hiding from anything. And so that is the key word there.

Katie Ciochetti [14:27] Overall, I think just abiding by the terms of the loan. Like, you know, if you have a monthly payment, making that payment on time. Uh, if you have a term, making the term, and, of course, lenders love it, if, uh, you're paying it off, if you can turn it, the faster you can turn it. You know, the more benefit that you're gonna get out of it, because they're making more money.

Speaker 2 [14:48] So I think we all kind of hit communication during the deal. What about in between? You know? Like, how do you come back to them? Hey, you haven't heard from me in this long. Do you do anything in between? Are they in your little CRMs? Happy birthday, all this good stuff?

Speaker 3 [14:59] Do you mean in between deals or in between the project you're working on?

Speaker 2 [15:02] No, in between deals. Or do you just show up every time you have a deal?

Teresa Karnezis [15:05] I stay in touch with mine. I'm always telling them what I'm doing. Um, hey, I've got this going. I'm still looking for this or what, just so they know that I didn't disappear and just stop doing it. So I just think communication throughout whatever you're doing.

Speaker 3 [15:26] Uh, another lender that I have used, um, reached out to me recently to Colin and me recently saying, hey, the kitty is pretty full right now. Do you have anything going on? He let us know that he's looking for deals? which one tells me, um, that he likes working with us, so that's good. Two tells me if he's looking for deals, then maybe if we bring him one, we say, hey, normally we were an X percent. Let's say we were at 12%. Maybe we'd be like, well, can we can we do this one at 11? And if he's looking to put his money somewhere? Because if it's just sitting there? It's not making any money, then he'll probably say yes. So again, I mean, I say this to bring up the point.

Wenders want to lend you to make money off of, so don't be scared of that.

Katie Ciochetti [16:10] I'm kind of horrible at communication. I have one lender that's just a private, just one person, and I end up typically doing remodels or any kind of favor that she asks of me. Other than that, it's larger entities and I just call them when I need them. Appreciate your honesty.

Speaker 5 [16:30] So, same, Katie, we'll start with you going back. How has your approach to funding changed if at all in the lending environment we are currently in?

Katie Ciochetti [16:41] I think, for me, I'm just more particular now about who I want to work with. because I have been doing it for 20 years, and I have a lot of experience, and I do turn properties fast. And so, I think I value my side of the relationship more now than I did back then, and, um, so if we're gonna work together, it's kind of gonna be partially, at least, on my terms. Would you say you're exploring new relationships, or do you feel like you've got your people? I'm always, I typically, every year I try at least one or two new lenders. Um, 'cause a lot of times, more in the past, but if people want to learn how to invest or renovate houses, build houses.

You know, I don't mind doing some mentorship, and so I typically try to a big box, or someone that, uh, someone less experience can easily get money through, and, uh, that way, just that I have the knowledge to help them. Yeah.

Speaker 5 [17:40] I love that. So the original question is, has your approach changed to funding in the environment we're in?

Speaker 3 [17:45] Hey, I'd say to both your 1st and 2nd to her, mine would be exactly the same, so I won't just repeat it, but exactly the same as Katie.

Speaker 5 [17:51] Ditto. Teresa. Do you have any different approach in the current climate? No.

Teresa Karnezis [17:57] Mine are all private lenders. Only is private lenders right now. So, okay. No.

Speaker 5 [18:03] Same question. Do you find yourself seeking out new private lenders or do you kind of got your people?

Teresa Karnezis [18:07] No, I mean, I'm always looking for money. I'm always looking for money. Um, and I think you have to be, because it's always changing, well, in my, in for private lending, because it's always changing, everybody's financial situation is always changing. And so it may come a time where these lenders that I'm using, they can't lend or, you know, whatever. Um, so I'm always telling people what I'm doing and always, always trying to build those relationships.

Speaker 2 [18:44] So we're going to go slightly off script for a question that with the tariffs, right? So there has to be a change in how you're approaching lending in deals right now because the numbers aren't the same anymore. especially if you're mid-project, right? And the new projects, whatever spreadsheets you've been working on, have to be updated for costs, the selling price right now going down currently and everything. So no changes in lending, are you sure? Let's just let's poke a little bit.

Katie Ciochetti [19:12] I mean, I think the change has to be in how we buy. Absolutely. And so, you know, I mean, interest rates are, you know, they set their interest rates kind of based off of the banks plus whatever. Um, and so the only thing, you know, I try to work in affordable housing a lot, um, which tariffs make it that much harder. Absolutely. and government regulation. So all I can do is just try to find better deals, you know, and hold out for the right ones if I'm looking for an affordable resale.

Speaker 2 [19:45] Well, so, like, when they're talking about, hey, we'll lend you so much of the after, right, after renovation value and all this and everything, are you guys potentially gonna be interested in compressing that, so making a little less, or just find better deals with more meat on the boat?

Katie Ciochetti [19:59] I mean, I think I would assume all of us, since, you know, year 2 of COVID, when it was crazy, is getting 100,000 over asking price on houses, you know, that has halted, um, and I feel like we're kind of, like, in 2017 with, like, you know, I'm not used to a house sitting for a day on the market, but now meeting a week or 2 weeks, 3 weeks, and I'm getting asking price. And so I think we've already felt some of that depreciation. Um, And I mean, I think, for me, I take it on myself to try to make what I do more affordable. So cut costs where I can, make smarter purchases and still get out to the public. what I'm trying to do which is an affordable product. Absolutely.

Speaker 3 [20:45] Yeah, if you're getting a construction loan, if the difference between getting 13% or 11% makes or breaks the deal, then you don't have a very good deal, you shouldn't take it in the 1st place. There should be so much meat. I mean, I'll say should be. You know, luckily for me, as my career has progressed, I've been able to only go for those home runs or infield doubles worst case instead of just anything that'll get something going, but if there should be so much meat on the bone that it's not going to make a significant difference. It's just, do you get more icing on the cake if not. And luckily, I'm not in that position.

I, you know, 8 years from now when things have surely changed a lot, maybe we'll be having that conversation, but luckily, we can all celebrate that we're still in a strong economy.

Teresa Karnezis [21:25] Um, I think for me, the way that I structure my private lending, it has changed some, um, over the years, I've been doing this for 13 years. So it's changed some in the interest rates that I'm offering. It's changed in the points that I pay. Um, and it probably will continue to change, but it just depends on the market, the cost of construction, and um, so we'll just have to watch that and see how that goes. But one thing that I do feel more in control of is what I am willing to pay. You know, when I first started, I piggybacking on what we were talking about earlier is... I almost felt like I was doing the lender a favor, like I was... asking, begging for money.

Um, so that's really changed for me, um, and so that gives you a little bit of, of, um, not, I don't, I don't describe it as power, but confidence in what you're offering for someone else to make money. Um, so anyway, I think it will continue to change for me, um, just based on what the construction costs are going to be, and what the resale value is, what I'm willing to offer.

Speaker 5 [22:51] Yeah, I love it. So kind of good follow-up question, you kind of alluded to. If you had to start over today with no money, no connections, how would you go about finding and funding your 1st deal? Start with you, Teresa.

Teresa Karnezis [23:03] Um, Gosh, if I had to start over? Um, If I had to start over, I would just start with networking. That's how I funded my 1st deal. I went to every event known to mankind. I talked about what I was doing with everyone. Um, and the way that I funded my first deal was, I went to look at a property. There was another couple there that was looking at the same property. He was an investor in Wilmington. We struck up a conversation, yada, yada yada. I found my first deal, and he funded the whole thing. So, I just think, that I would just talk to everyone. I mean, that's what I do now. I just talked to everybody, tell them what I'm doing. And then they will ask questions.

And so be prepared to tell them what you're willing to offer and kind of, you know, have a structure together before you start talking about it. But that's what I would do, just talk to everybody.

Speaker 3 [24:12] And where you would start on that is in this room. This is this is definitely like the best resource you've got in town. I think that's kind of a no-brainer. One example of somebody starting like on step one, Sandra is somebody who's normally here, she's not here right now. She and Dustin, who they work together as well, and a 3rd person, they just got their 1st flip going on. They pulled three way of resources just to like scrape together the funds to do their 1st flip. That was exactly the right thing to do. They did the right thing. They networked in this room. They found good people, you know, and that's where I would start.

Speaker 5 [24:46] Yeah, I was going to say, to add on to that. So Dustin is a colleague of mine, but to your point, I mean, he just started putting themselves in the rooms. You know, he's joined other organizations in the area, but just showing up, and showing that you care and putting in the time, and, like I said, finding the deal, and working with others if you need to.

Speaker 2 [25:02] You know, shameless self promotion for the room, right? Everyone here saw the topic, how to fund your next deal, thought, hey, I should go there. You should meet these other people. The team is sitting here right now. So I'd encourage you, right? This is targeted marketing. We're not randomly here tonight.

Katie Ciochetti [25:21] I mean, I think the only other thing I would say, if you want to really set yourself up for success, would be to find a mentor, someone who has done, at least a couple, one, has some knowledge of construction, and, um, take all, be a sponge, you know, just soak up everything that you can, um, you know, I'm always happy to give away any knowledge that I have for free. And I think most people in this room probably are, not because we love ourselves and think we're so great, and we want to tell everybody, but because, you know, I want to see everybody come up with us. And so a big part of that is teaching.

Speaker 3 [26:03] Can I... So did you have a mentor on day one?

Katie Ciochetti [26:08] I came from a background of carpentry, and so, I think, I had a little bit of a benefit. And when I started, banks would lend anyone money, to, you know, like, it was a different world. It was a different world, but, yes, I aligned myself with, like, good contractors, and, you know, good subs, uh, until I built my own company where I had all of the people. But, I mean, over the last, I'd say, 10 years, I've probably mentored, you know, a dozen or so people, and helped in any way that I could.

Speaker 3 [26:47] I asked that, too, because I did... You brought it up, and I'm like, Oh, yeah, that's one thing that I did, and it was kind of some dumb luck. Rodrigo, this is Rodrigo right here. Yeah. So, Rodrigo, when I was looking to leave my W2 to go full time into real estate, and I'm like, man, I went like a part-time job because I'm still like living off ramen off of the rentals. I've got, he put me in contact with an investor out of Hendersonville. And so I went and kind of shadowed him, worked as his project manager. I told him I'd work for you for 2 or 3 years while I learned this. After like 6 months. I'm like, oh, this isn't that hard. I can do this. But finding a mentor, you are right, Katie.

That's a slick one.

Speaker 2 [27:25] So another Rodrigo connection, who is the better host for this panel. Unfortunately, we're missing him tonight. Speaks very highly of you, Katie, for that specifically for the mentorship component that you bring into it.

Katie Ciochetti [27:35] I did mentor Rodrigo a bit. There you go. I brought him out of the wholesale world, but very nice. But, you know, he definitely helped me along the way. I don't know how many dozens of deals I bought from him.

Speaker 2 [27:47] So that's my follow up question for you. You kind of hit on something that's not here. And you mentor people, so you like that. If you're just starting out, yeah, okay, you gotta find money, you gotta find the deal, right? There's a lot more that goes into it. One of them being wholesaler relationships, potentially, to get these off market deals that they're hunting down, but then also you mentioned the contractors. How do you recommend people meet contractors? How do you do that? Not on Craigslist. Um...

Katie Ciochetti [28:11] I mean, I kind of think the best way to do it is, um, word of mouth, like, people that have experienced, uh, working with the people, like, for myself, when people ask me for recommendations, like, I have a handful of contractors, or licensed, or unlicensed, that I will recommend, because, you know, I know their work. It is really easy to get a bad contractor or a bad sub. You know, I think as far as, like, the subs go with, like, plumbing, electric, you always want to have a licensed person. Like, don't ever let anybody who walks up to me and says they can do everything, is like a red flag. I'm like, you're on meth, you're definitely gonna screw me.

Um, so I think it's just, you know, getting their references, making sure that they're licensed. If you're doing a deal under, you know, a remodel under 40. It's okay to just have a handy person doing the carpentry part, but I would still get references on them.

Speaker 3 [29:14] Finding subs for me, um, like tradesmen, plumbers, electricians, anything that you could get licensed for. Word of mouth is word great. Most anybody will share their good subs. Everybody goes through bad ones before they get good ones, so you can learn from their mistakes and go straight to the good one. As far as the every the carpenter, the guy that's putting in your cabinets and putting down your flooring, most people don't want to share those because they've got them so busy, that they don't want you to take them away. I'm the same, so I will never tell anybody who that is, but I've got every other trade in a, this, that's your short answer.

Teresa Karnezis [29:46] Um, For me, when I 1st started, I found a lot of my subs, um, at Lowe's, um, Lowe's, the pro services, they know who's busy and we see each other. We see each other at Lowe's a lot. Um, And Jesse says hello, by the way. relationships. So when I 1st started, I couldn't figure out how in the world am I going to know who to choose and who not to? So I'm in Fortune Builders. I don't know if anybody's heard of that, but I'm in Fortune Builders, and it's an education program for investors. And one of the things that they, um, really emphasize in that is make your contacts with Lowe's and Home Depot. And so I did that.

And at pro services, I just kept asking, do you know any electricians or plumbers or, you know, any kind of anything that I may need? And that is how I found the guy that, he's my handyman. He does everything under the sun. Um, I found, I found him, uh, there, and then I found my tile guy there. So it's, they know who's busy, and they also hear, who is terrible, and they will tell you, they're fine with that. Um, so that's how I found my originals, but then word of mouth, with other contractors and things like that, that's that's been very helpful to me.

Speaker 2 [31:26] So turning the panel this way. to Kimmy of the Allied Home Inspector Fame. When you guys do the inspections of the homes and everything, do you recommend subs, how do you find them or do you just give them the list and say, hey, figure it out?

Speaker 5 [31:39] Uh, I mean, at the point we're doing the inspection, the construction's already complete. I often don't know who did the construction, but fun fact, I also am a licensed general contractor. So I agree with everything they're saying, kind of word of mouth. And my favorite way is by word of mouth. I ask all my people, my trusted people. I do ask inspectors because we can hear by word of mouth, you know, pros and cons. But if you have a plumber and you need an electrician, ask the plumber for the electrician, ask electrician, vice versa. Um, but yeah, word of mouth, and unfortunately, it's a little bit of trial and error.

I mean, you're never gonna get it right, but stay on top of it and you'll learn early on and kind of get ahead of it, right? Don't give that contractor like, ooh, that was not great, but I'm just gonna, we're just gonna keep on trucking on. Like, nope, early on, you know, if you need to switch gears. Don't be afraid to do that.

Speaker 2 [32:25] Maybe Crom did that. Still, no.

Speaker 5 [32:28] No, no.

Speaker 2 [32:29] All right, so slowly but surely wrapping it up here. It's kind of like a war story, right? What is the most created deal that you guys have been a part of?

Unknown [32:36] Start with Katie?

Katie Ciochetti [32:38] Okay, I think most creative slash, ooh, out of the norm, about two, a year and a half ago or so, I bought an apartment building. and converted it into condos. Um, and I had the seller finance, like, three quarters of the deal, and then I had a junior loan come in for the rest, and as soon as I closed, then I did the condo conversion, which maybe took, like, six weeks or so. and then sold off three of the units to pay for the deal, so that I could keep one of them and a lot.

Speaker 2 [33:16] Amazing. That was a lot, but hopefully everyone caught that.

Katie Ciochetti [33:20] It was scary 'cause it was unknown. It sounds, like, really daunting, but it wasn't too bad. That's amazing.

Speaker 2 [33:27] We have audience Q&A coming up, so...

Speaker 3 [33:29] I haven't done a whole lot of creative financing. Um, I've actually never done a seller financing, even though I know that's like the pot of gold that if you find that you're typically good. I've wanted to do a syndication. Like, I've, like, the dream is like by a 40 unit apartment building, do a syndication, which, of course, is like, you're the, you're the main person who brings in some money and then you get a whole bunch of other people who also bring in money, but you run this show. Um, so what I've done is I've practiced doing that.

And even though this wasn't like a big apartment building, My dad and I have bought a couple properties together, and I've kind of structured it as a syndication, which is totally overkill just for 2 people. Like, you don't necessarily need to do that, but I've structured it so that way I can, like, learn the pros and cons of that.

Speaker 2 [34:13] So just, you know, plug here is the father in the game here? Should someone go talk to them if they want money?

Speaker 3 [34:18] Uh, you'll have to ask him. Okay, okay.

Speaker 2 [34:22] Daddy, dear. does not give his sources.

Teresa Karnezis [34:27] Um, I've done a couple of things. are my readers, but I don't need those. make sure they don't get crushed. Thank you. I was trying to think of this earlier. I've done a couple of things. Mine are mostly just a single person that will fund the purchase and then I get another private lender or 2 on the rehab. Um, But the probably the most creative that I've ever done was kind of a syndication, sort of. Um, I had 4 lenders that went in together from California that I never met, um, that did the purchase of a lot. And then I had 3 other lenders that did the build on some new builds. So I ended up with 7 lenders on one project, which was kind of a nightmare.

I don't think I would do that again, but it was kind of when I was 1st starting and I was like, okay, fine, whatever. It doesn't matter. Um, there were a lot of moving parts, so that had a lot of notes, a lot of deeds of trust, a lot of those kind of things, but, um, That took a lot, but my attorneys took care of most of it, but that was probably the most creative. And then I've done, um, one where there was an estate in the, the owners of the estate, other, uh, parent that had passed away. They did seller financing for that one. And then I carried that note to the end, and then I had some other investors that did the rehab on that, and then we paid them at the end.

So it was kind of creative, but, um, there's all kinds of lending ways to do things. So I encourage you to check all those out.

Speaker 2 [36:22] Yeah, I think the point that should be striking home is when you go for a mortgage for your primary residents, they say, how much do you make? You can have this much, this percentage of it. if you don't meet that, you can't get the house. Not the case. Not the case, if you're wheeling and dealing. So.

Speaker 5 [36:37] Yeah. So speaking of 7 lenders on one particular job, what are mistakes you may have made when seeking financing, and what did you learn from that? So Katie, we'll start with you.

Unknown [36:48] Okay.

Katie Ciochetti [36:49] I felt like, uh, one of the biggest mistakes, especially, I mean, it can be a twofold, when you're starting out, and when you're doing a dozen houses at a time, is not appropriately budgeting for the rehab. So, in the beginning, I came out of pocket so much for every deal where it was like, this doesn't close, we're not eating tonight. But, um, you know, like, as you build up, you know, you realize, okay, I'm gonna set up the draw schedule where it's heavy on the front end so that I can help support me. I'm gonna make sure that I get enough. I'm not gonna underestimate, to make the ARV look better.

Um, you know, so I think it, it's just really, uh, looking at what you need through the deal so that you can survive because, If you can't eat dinner, it really sucks.

Speaker 2 [37:38] So we have a podcast where I went over the deal I did with Alfie, and one day the difference between the construction payment and the loan payment wasn't good. There was a big difference. And I was like, oh, I have to pay this now. So.

Speaker 3 [37:53] One mistake I made, um, I was working on a deal. I had a lender that was offering super favorable rates. Everything was looking good. They assured me, oh yeah, this is looking really good. Everything's good. Luckily, well, spoiler alert, I didn't go with him. But there was a couple other lenders that I'd kind of planted the seed of working with as well. I'd kind of like shopped rates amongst three, but there was one that seemed to be the best. We got almost to the finish line and they pulled the rug out from under me. So I was left in a position where I was kind of scrambling on these super favorable rates. It's almost like I should have known that that wasn't gonna work.

and ended up going with the 2nd lender. It worked out really well, but I shouldn't have waited till the last minute because I had very little time to scramble and try to salvage the deal before the closing date. So don't count your chickens.

Teresa Karnezis [38:43] Um, I think the the mistakes that I made in the very beginning was not structuring the deal, the way that it would work for me. Um, and I learned that early on, um, payment schedule. The interest rate, how am I gonna, how am I gonna structure draws and that kind of thing? Um, I learned that I needed to be heavy on the front. Because I always was very optimistic. Um, and that's great, but you have to be realistic. So, um, just structuring it the way that works best for me. That's, That's what I've learned.

Speaker 2 [39:28] All right, so last question, then we'll move into lightning round, an audience Q and A. So in one sentence. What's the most important takeaway you want the audience to remember from today's discussion?

Katie Ciochetti [39:42] I think, uh, just know that there are people out there that are willing to help you that are willing to let their brain be picked and take full advantage of it because, uh, you can't beat experience, um, let somebody else take the hard hits and just take advantage of that.

Speaker 3 [40:00] Mod would be, uh... You are just as important as the lender. You do have what it takes. So just go get the deal.

Teresa Karnezis [40:09] Um, mine would be, don't hesitate to tell people what you're doing. Don't be afraid to talk about your business and your plans and all that, and don't discount someone as being a lender because I made that mistake one time. They've come back and they are a lender. Um, But I didn't know that they would be a lender. So just talk to everyone because you never know. You never know what their financial status is and you don't know what their plan is. So just talk about it all the time.

Speaker 5 [40:50] Yeah, as I said, some of the most powerful people I met were the people who were kind of sleuthing in the corner and had no idea who they were and the impact they had. So ding, ding, ding, we're on the lightning round now. So we'll start with Katie. What is a book you would recommend does not have to be business related.

Katie Ciochetti [41:06] All right, I'm gonna shock everyone here. I am not a big reader. I know, my head's so big you'd think I was. Um, but, uh, I do like audiobooks, and there is an author, Lisa Jewel. She does, like, crazy character development, and everybody reads British accent, and so I highly recommend that when you go to sleep. Nice. Those are, like, murder mysteries. I love it. Go on.

Speaker 3 [41:35] I hate to keep another theme of the night, but the book that's my favorite is rich dad, poor dad. Nailed it. Nailed it. Daddy's boy.

Teresa Karnezis [41:42] That's actually my favorite one too. I love it. Yeah, it's great.

Speaker 2 [41:47] All right, beautiful. Next. Is the market gonna be stronger or softer in 2025 than 2024? I guess we're going Katie first.

Katie Ciochetti [41:56] Sorry, Katie. picking on me. You know, like, I feel like our market is a little bit different because of the storm. You know, um, it's affecting tourism and and home sales, uh, my gut says that come spring. I know like the city is hoping to have things cleaned up. I think June is the goal for everything. Um, so my gut says that we should see an increase of tourism and sales about them.

Speaker 3 [42:31] I'm kind of gonna say the same. I think 25, because of Lane, let's just go ahead and match it with 24, but 26 is when we, like, get back on track. So, yeah.

Teresa Karnezis [42:43] I'm being very optimistic because I have lots of projects coming on the market. 25 is gonna be great.

Speaker 5 [42:52] Okay, so again, kind of same, same trend. Are interest rates going to be higher or lower this time next year? I think they're going to be lower.

Speaker 3 [43:06] Yeah, I'd say on par or lower.

Katie Ciochetti [43:14] Fine, I'll just copy everybody. I think they're just gonna take a slow tick down, which isn't gonna make a huge difference, but...

Speaker 3 [43:22] By the way, interest rates are good, just because they're not 3%. Does it mean they're not good? There are still, I think, less than the average of the last 30 years. So don't be discouraged by yourself. I'm never sawing my house with a 2.7 interest rate. And a lot of people are thinking that, so... you can make plenty of money off of the interest rates right now.

Speaker 2 [43:41] All right, so last lightning question. Are you currently looking for money always? Or do you have a deal you'd like to sell?

Teresa Karnezis [43:48] I'm always looking for money. Um, don't have a deal right now. I have my plate crammed full. I've got 4 new builds going and a remodel. I can't take anymore right now, but I will. I will be looking.

Speaker 3 [44:05] Um, Of course, I'm always looking for money. aren't we all? A deal to sell. My 2 other business partners and I bought a fourplex. It got flooded into lean, 4 feet of water. Sounds so terrible. We did have flood insurance. I got really lucky. So we've done a like a killer remodel on it. We're looking to move money. You know, it's not the property's great. Um, so we're looking to sell a fourplex in for 5 months. So that's the deal, if you're looking for. You heard it here first?

Speaker 2 [44:35] A bunch of ears perked up.

Katie Ciochetti [44:37] I will always take money. Feel free to set it at my feet. No, yeah, like I said, I'm always willing to try new lenders. I do have a couple of, you know, a lot over the last few years. I've been doing a lot of, like, bulk purchasing where I'm subdividing and breaking things up. And so I have a couple of houses that I haven't gotten to yet, that if somebody's hungry for a deal, I'll let it go.

Speaker 2 [45:01] Come talk to the panelists. All right, if we can get a round of applause for our panelists.

Unknown [45:06] Do you want to throw the...

Speaker 2 [45:09] Hey, guys, Rodrigo here wanted to say thank you for taking the time to listen into this month's panel conversation. We hope that you join us in person at next month's meeting. You can find out more at AVLmeetup.com. We primarily meet on the 1st Tuesday of every month, but be sure to check out our website, AVLmeetup.com. You can also watch this conversation on YouTube at AVLmeetup. Also, I have a quick announcement. We started a property management company called Vesta Property Management. So if you're looking for 3rd party management for long-term rental, we'd love the opportunity to talk to. Our goal at Vesta is to turn houses into homes and investments into returns.

If you're looking to work with a third-party management company, that will allow you to have peace of mind and experience freedom around rentals. Reach out to us. We can help make that happen for you. bestpm.com. What's going on, everyone. Zach here to close it up before you sign off for the day. If you liked the data driven portion of today's meetup, then I'd love to take a moment to tell you about the Ruiz Report and REMC.co. If you're a real estate professional, then you know that you should become the local economist of choice, but you're probably unsure of how to learn the skills required. That's where the Ruiz Report comes in.

We offer customized marker reports to promote your business, training videos so you learn how to interpret the market data, and monthly quizzes to keep you sharp. Learn more at resreport.com and sign up for a free account to watch all of our training videos at no cost. If you're more interested in the live data and some data and analytics dashboards, then I highly suggest you check out ramc.co. REMC.co is the 1st of its kind data and analytics dashboards for the real estate industry. Now you have to be an active participating member of the MLS in order to sign up, but it is unparalleled data on every market participant, whether that's an office, a listing, or one of the realtors.

Again, you can find out more about REMC.co at REMC.co. As always, thanks for listening, and we hope to see you at one of our next meetups. If you can't make it and you still want to be part of the movers and shakers, then sign up for a free account at AVLmeetup.com and get yourself into our member directory. Thanks again. See you next month.