Rocket Your Dollar Ep. 27: Hard Money Lending and Private Money Brokering

A Self-Directed account can be used for is hard money lending and private money brokering. Pat St. Cin is a private money broker, hard money lender at REI Capital resources, and a Rocket Dollar customer. He shares how he uses his Rocket Dollar account to execute his business.

Transcription:

Thomas Young: Thanks for joining us and let's jump in. Today, I'm super excited to have Patrick St. Cin on the show. Patrick is a Rocket Dollar account holder among a ton of other things. He's a former financial advisor. He's had a long career in real estate. He's a private money broker. He's a hard money lender and he's really, he's someone to know, in the Austin and Texas real estate community. So thank you for being here Patrick.

Patrick St. Cin:
Well, thank you very much. I appreciate it. I enjoy being here.

Thomas Young:
I know that we've had a couple of chances to speak and you've come into our offices a couple of times to talk about what your thoughts are on our products as a customer. And, and it's been great learning from you. You know, sort of the good, the bad, the ugly. One of the things I always appreciate is that you don't sugar coat it. You tell us what you were doing well and you tell us what we're doing not so well and work with us to fix it. So I appreciate that.

Patrick St. Cin:
Yeah, not a problem. It's what I do. That's just me.

Thomas Young:
Well it's, it's been great for us. I want to talk about a couple of things today. You have a long career in the financial world, right? As a financial advisor, you've, you've seen sort of the good and the bad through a lot of people and a lot of different situations. So I want to, I want to pick your brain a little bit on that and sort of what you've seen and then we'll talk a little bit about how you transitioned into your real estate career that you're engaged in now. So first off, how did you decide when you got into financial advising that that's what you wanted to do?

Patrick St. Cin:
It was an interesting thing because I was, had a long career in actually in engineering, but I wasn't everyone's quintessential engineer with the slide rule type of thing. I worked with customers directly and I was, I was the customer to our company and I was the company to our customer when I went out to see the customer, so I was more of a marketing role than anything else. I left that job after, a series of those jobs, after 25 years and felt that the financial world was similar. Sounds crazy. It had numbers. I got to deal with people, which I enjoy doing, and the analysis portion of it was, was what got me into it.

Thomas Young:
Nice. It seems like I've heard a couple of times that a lot of people have, not a lot of people, but a few people that have gone from an engineering role to, to finance just because it's, it's all numbers at the end of the day, but what I love about the financial industry is that there's a whole lot more than just numbers. I mean, because you're not only dealing with, with the numbers, right? You're also dealing with the emotions and the work and the family and the planning and the outcomes and it's, it's a lot.

Patrick St. Cin:
Yeah, it is. It is. And that, that was, that was quite a shock to me because I had always dealt on a professional to professional basis.

Thomas Young:
Right.

Patrick St. Cin:
Engineer to engineer type of thing. And then when I got into the financial advising, it was `like, oh yeah, I know people. Well, not. Then I learned about people.

Thomas Young:
Right.

Patrick St. Cin:
Because as you said, the emotional side of it, there's a tremendous attachment to money.

Thomas Young:
Right.

Patrick St. Cin:
That I didn't realize at the time. And so it took a few months to get used to that. But once you learn that aspect of it, then it became a little bit easier to work with the folks.

Thomas Young:
Right. There's a, there's a big difference between dealing with, in a B2B relationship where you're, you might be dealing with money, but it's not their money. It's the company's money.

Patrick St. Cin:
Right.

Thomas Young:
And now it's, now it's like the fruits of your labor. What have you done right and wrong? And I've talked to a couple of other advisors on the show, even where we talk a lot about the concept of, of a shame really around money, and maybe not shame, but, but the feeling that you're behind or the feeling that you're not doing the right things. And I'm sure that you had to deal with that quite a bit as you were, as you were advising, right?

Patrick St. Cin:
Yeah. There were, there were times when people would come in and, and kind of have that feeling. I don't think it was as much shame as you say.

Thomas Young:
Right.

Patrick St. Cin:
Maybe it was more, I don't like talking about my money, was a lot of it. Right. And so what I had to learn as an advisor was to try to make people comfortable within the first, literally 10 to 30 seconds.

Thomas Young:
Right.

Patrick St. Cin:
If they were not going to be comfortable within that period, you had to make a personal connection somehow.

Thomas Young:
Right.

Patrick St. Cin:
Once they realized that I wasn't here to take their money, I wanted to help them utilize their money to make it work for them.

Thomas Young:
Right.

Patrick St. Cin:
Then it became, okay, let's have a conversation.

Thomas Young:
Right.

Patrick St. Cin:
That was, that was critical to the entire process.

Thomas Young:
Yeah, for sure. And like you said, that first 20 or 30 seconds, I mean it can drive weeks or months or years of their perception of you. And so it's, it's an important piece to be able to connect. And that's, that's one of the things that I like too, about what, what Rocket Dollar does is that it's very direct to consumer, right? We interact with people, that people are interacting with our product directly.

Patrick St. Cin:
Right.

Thomas Young:
And there's no middleman, there's no middle anything. It's, you're getting sort of the quote-unquote raw data of what people are thinking and doing and working towards. And I'm sure that you've got that at an even higher level cause you were the advisor, which we're not.

Patrick St. Cin:
Yeah.

Thomas Young:
I want to talk about just sort of in your career as a financial advisor, what are some of the common challenges that you saw sort of generally that people are going through with, with their own money and some of the things that were not unique situations that sort of felt like, Oh wow, everybody has this problem.

Patrick St. Cin:
I would say the first thing was their perception of what they spent because we will do financial planning for them.

Thomas Young:
Right.

Patrick St. Cin:
And so they had a lot of people had an idea that they were only spending, I'll just use X amount of dollars per month. And then when we got into doing the analysis, they found out that, Oh my gosh, it was not an X, it was X plus Y plus Z.

Thomas Young:
Right.

Patrick St. Cin:
And then they realized, I had one client that came in, not to get too specific, but they were fast-food junkies and they would just spend money. They would go to the vending machine at the office, they'd buy something at some fast food place on the way in for breakfast, for lunch, for dinner.

Thomas Young:
Right.

Patrick St. Cin:
And they didn't realize where all their money was going. They just saw a dollar here, $5 there.

Thomas Young:
Yeah.

Patrick St. Cin:
And it wasn't until we pulled it all together and they went, Oh. And so it was, it was interesting to see that aspect of it were, where people finally realized how much money they were just tossing out the window.

Thomas Young:
Right. It's, it's like the death by a thousand cuts sort of.

Patrick St. Cin:
Yeah. We used to call it, the Starbucks money.

Thomas Young:
Right.

Patrick St. Cin:
I hate to pull Starbucks into it and give them a negative, but we would tell people if you could, and it was literally if you could stop having one Starbucks a week.

Thomas Young:
Right.

Patrick St. Cin:
Then stuck that money into a retirement or savings account of some nature, it would be amazing how fast that would grow.

Thomas Young:
Right, right. No, I, I, I sort of went through that when I first got out of college. I, my first paycheck was more money than I'd ever had, right. And it wasn't a big paycheck. I didn't make it, made very little money. But man, every two weeks it showed up. And, and then that first year I just, I didn't have anything to show for it.

Patrick St. Cin:
Yeah.

Thomas Young:
And it's not like I made a ton and I could save a ton, but I could save a little bit. And then I started using about a year in, an app called Mint, just to track by category and my food and going out a budget, not budget, spending was, it was, it was shocking to see where money was going and, and, and I think that that happens to everybody. I mean, when you have kids you don't realize, how much you're spending on your kids. When you buy a car, you don't realize how much you're spending on your car.

Patrick St. Cin:
Yeah.

Thomas Young:
And things like that. And, it adds up so quickly.

Patrick St. Cin:
Yeah.

Thomas Young:
And it's, it's shocking. So I want to get just some broad general advice. Just we're going to go the 20s, 30s, 40s, what financial goals, what things should people in their 20s be looking at? The 30s, 40s, but what would you say to someone that's, 22 fresh out of college, just starting. I just got their first job.

Patrick St. Cin:
I, I had one of those clients before and he was going into college.

Thomas Young:
Well, the fact that he had an advisor going into college means he's probably.

Patrick St. Cin:
Yeah.

Thomas Young:
Way ahead of the curve.

Patrick St. Cin:
Well, his mom was my client. And then she goes, okay, I want you to sit down with my son.

Thomas Young:
Right.

Patrick St. Cin:
So, I talked to him. So my advice to someone at that age in your late teens, early 20s, it doesn't sound like much, but just try to put $50 away per month in an account that will generate 5, 6, 7%. It doesn't have to be exact, it just has to be in that general category.

Thomas Young:
Right.

Patrick St. Cin:
And it just has to average out to that. This particular young man that I was dealing with, it was funny, he was going to be an engineering student. So I said, Oh, you must be a spreadsheet kind of guy, cause you're going. And he found a calculator to do this. And he said, okay, $50 a month, that's 6% a year compounded monthly. And he walked in the office two days later to fill out paperwork and he goes, Oh my God, I'm going to be a millionaire and you know, a handful of years.

Thomas Young:
Right.

Patrick St. Cin:
And I went, yes you will.

Thomas Young:
Yeah.

Patrick St. Cin:
So, but at your age, you need to see what that's going to take to be a multimillionaire.

Thomas Young:
Right.

Patrick St. Cin:
Doing the same thing.

Thomas Young:
Right.

Patrick St. Cin:
And so if you're in your 20s, take 50 bucks, a hundred bucks, it's just mad money that you're going to spend on something silly.

Thomas Young:
The Starbucks that we were talking about earlier.

Patrick St. Cin:
Yeah. Going out with your friends.

Thomas Young:
Yeah.

Patrick St. Cin:
Put it away and put it into an account that is somewhat remote or difficult to get to.

Thomas Young:
Right. It's not, you can't walk into.

Patrick St. Cin:
Yeah, don't put it in your bank account.

Thomas Young:
Right.

Patrick St. Cin:
It's going to stay there.

Thomas Young:
Right, right.

Patrick St. Cin:
Put it in.

Thomas Young:
Yeah.

Patrick St. Cin:
So that's what I would say for somebody in their 20s just start, it's easy. 50 bucks, a hundred bucks a month. You're doing great.

Thomas Young:
Let's transition a little bit from your career as a financial advisor to what you're doing now. How long ago did you leave, retire? Quit being a financial advisor in sort of the traditional sense?

Patrick St. Cin:
I left that job and I guess it's two years ago now.

Thomas Young:
Okay.

Patrick St. Cin:
The reason for doing it was several life changes occurred where we found out we had benefits that we forgot about in our lives. So it made it a little bit more comfortable for me to move into something that I could do. I thought this was going to be like kind of a casual type of thing. No, no. When you work for yourself, it's a 24/7 kind of thing.

Thomas Young:
Yeah. I mean you work 80 hours so you don't have to work 40.

Patrick St. Cin:
Yeah, exactly. Yeah. So let's say it was a couple of years ago that I got out of it. I had been doing, even when I was, let's say, back before the recession, I had done some flips, real estate flips, and got into the financial advising and held off until I got to this point. I did a couple of more flips, what they call wholesaling or that kind of thing. And in the midst of all of it, I realized that there was an opportunity for me to add a service to the networks that I belonged to. There were several other lenders out there, but I felt that educating my client was, was paramount, so that I will spend time on the phone with a client to my bosses [inaudible 00:12:02], and that's my wife. I will spend 30 or 45 minutes on the phone with somebody making sure that they're educated about what they're about to get into with a loan.

Thomas Young:
Right.

Patrick St. Cin:
So that was my first thing. And the other was the fees that were being charged, coming from an advisory world. Wow. If I would've gotten 4% every time, I would have been fat, dumb and happy on that. That doesn't happen.

Thomas Young:
Right.

Patrick St. Cin:
So the lending world for hard money, you have to be careful who you're working with because they can take you to the cleaners and you didn't realize it.

Thomas Young:
Right.

Patrick St. Cin:
And so that's the that was my second goal was to make sure that the client was being charged an appropriate fee for what they wanted, not just an arbitrary, we're charging X percent because that's what we can do.

Thomas Young:
Right. It's not about what you can get. It's about what's fair for both parties.

Patrick St. Cin:
Yeah. Because I'd rather have people come back to me and that's what I've got. I've got a small clientele of repeat clients now.

Thomas Young:
Right. And just so that we talk about it, so, cause I don't think we touched on it. What you're doing specifically inside the real estate space is you are a hard money lender.

Patrick St. Cin:
Yes. That is correct. I am a hard money lender and I also broker private money.

Thomas Young:
Okay.

Patrick St. Cin:
So people who have IRAs or they're just bank account type money, the extra money that they have. And I will broker that. Matter of fact, I'm doing one, it'll close next week.

Thomas Young:
So that the way that would work is, for example, I have, I don't know what your average check size is, but let's say I have a $100,000 lying around that I need to put to work.

Patrick St. Cin:
Right.

Thomas Young:
So I could go to you and say, Hey, and you broker the deal for me.

Patrick St. Cin:
Yeah, I will broker the deal and then I service the loan and then we make sure that it gets closed appropriately or if there's an extension necessary, we do that as well.

Thomas Young:
Right, okay.

Patrick St. Cin:
So yeah.

Thomas Young:
That makes sense. Then why specifically did you choose that segment of the real estate industry? Because there's a lot of things that you could be doing. Why hard money specifically?

Patrick St. Cin:
Coming out of nine-plus years of the financial industry, the underlying goal of a financial advisor is to move money.

Thomas Young:
Right.

Patrick St. Cin:
And so, the same thing in the real estate financing world. You've got to move money to make money.

Thomas Young:
Right.

Patrick St. Cin:
And so I knew how to do that and that's, it just was second nature at that point.

Thomas Young:
Right.

Patrick St. Cin:
Also, I've gotten to the point where, yeah, I, I did my flips recently in the last few years and I appreciate what those guys and gals do who do flips.

Thomas Young:
Right.

Patrick St. Cin:
But I don't want to slop a paintbrush and swing a hammer anymore.

Thomas Young:
Right. It's a lot of sweat equity that you're putting into the property.

Patrick St. Cin:
Yeah, yeah. And or managing something that I was not completely attuned to.

Thomas Young:
Right.

Patrick St. Cin:
Put that way, you know.

Thomas Young:
Yeah. I mean, it makes sense that to double down on what you know and what you have done and that, I mean, that's the biggest value that there is, right. Bringing your experience to...

Patrick St. Cin:
Yeah.

Thomas Young:
To something versus trying to learn something completely new and, and may or may not be appropriate for your goals.

Patrick St. Cin:
Right.

Thomas Young:
And for what you're trying to do.

Patrick St. Cin:
Yeah.

Thomas Young:
So talk us through a little bit about when, if I come to you with a deal, what is your due diligence process look like before you will write me a loan if I have a flip that I want to do. What do you, what kind of questions do you ask? What should` someone have prepared if they're looking to get a hard money loan.

Patrick St. Cin:
Okay.

Thomas Young:
Walk us through a little bit of how that looks like for you.

Patrick St. Cin:
Yeah, a hard money loan primarily is based on the asset itself, the property. So I need to know as much as possible about the property, what you're going to do to it, what kind of experience you have in doing flips. If that's what we're, we'll assume that's what we're doing...

Thomas Young:
Yeah.

Patrick St. Cin:
in this conversation. Then, I want to know how much you've done in the past also. Experience speaks volumes...

Thomas Young:
Yeah.

Patrick St. Cin:
in this business and then there's the, either I get a personal financial statement of some sort of an application, they're equivalent. And the other thing would be your, if you're going to hold it in an entity, I need to have all the documentation that goes along with that entity.

Thomas Young:
Right.

Patrick St. Cin:
We will eventually, on a hard money loan with a rehab budget, we will do an appraisal and it's kind of a double appraisal. What we do is we send out the appraiser and they look at the as-is value. So you've got this lovely, lovely piece of stuff sitting on the ground and you're about to go make it look lovely. So that's the as-is value. And then you have to have the budget, your rehab budget put together so that the appraiser can look at that and say, okay, this is what this person is going to do. And if you've done some in the past and you have photographs, always photograph what you did.

Thomas Young:
Right.

Patrick St. Cin:
Because that shows an appraiser that you know what you're doing.

Thomas Young:
Right.

Patrick St. Cin:
And so we submit some photographs with it if possible, of past flips. And they go, Oh, okay. So this is the quality that they do. This I`,``s the after repair value that I will assign to this.

Thomas Young:
Right.

Patrick St. Cin:
It may be a little higher than if you had nothing to show from your previous experience.

Thomas Young:
Right. And so you touched a lot on, on experience. What would you recommend to someone that's trying to do their first flip or how do you get into the game?

Patrick St. Cin:
Yeah.

Thomas Young:
The first one is probably the hardest, right?

Patrick St. Cin:
Yeah.

Thomas Young:
Zero to one is a huge step. So what, what advice would you give to someone that's going out to get their first hard money loan or they're, they're doing their first flip.

Patrick St. Cin:
Doing their first flip.

Thomas Young:
Right.

Patrick St. Cin:
I would, my recommendation there is hope you're part of a network of other similar minded people and partner up with somebody who has done a flip. Yeah, it might cost you some equity in the end. You split the value of the equity at the backend in some form or fashion. But, you've now gained their experience and you've been able to pull that into yourself and say, okay, now I have a flip under my belt.

I know at least the fundamental aspects of all of this. So at that point, and you've got to paper the deal properly so that your name shows up, by the way, if you, if you paper it and Bob Smith's name and your John Doe, you got to make sure that it's Bob Smith and John Doe.

Thomas Young:
Right.

Patrick St. Cin:
Okay. So otherwise, that experience is for not.

Thomas Young:
Right, right. That makes sense.

Patrick St. Cin:
We got to see that you did it.

Thomas Young:
Right. So it's, I mean, it's very similar to, for example, starting a tech company or a new company, a startup that you're going to raise money. It's the second time founder, third time founder has a whole lot easier time raising money than...

Patrick St. Cin:
Yeah.

Thomas Young:
the first time founders. So it's, it's the same. And what's sort of the timeline for a hard money loan for you? Typically, if someone, if I come to you and we signed today, what, what's the typical payback time? What, what are you expecting on your loans?

Patrick St. Cin:
That's a, it's an interesting question because a lot of lenders will do a six-month term. I can do anything as short as one month and out to 24 months.

Thomas Young:
Okay.

Patrick St. Cin:
On the same loan. So...

Thomas Young:
It just depends on the project.

Patrick St. Cin:
It depends on the project. It depends on market conditions. For the resale of the property and in the central Texas area, I've, I've just learned over time doing this that somebody comes to me and says, okay, I need a loan for, for three months, and it's like, okay, we're going to write the loan for at least six.

Thomas Young:
Right.

Patrick St. Cin:
I would suggest we write it for nine. There's no prepayment penalty.

Thomas Young:
Right.

Patrick St. Cin:
And it doesn't cost anything extra to write the loan for an extra few months.

Thomas Young:
Right. It's just the interest that you pay, but it's not going to cost you any more.

Patrick St. Cin:
Right. It won't cost you any more. If you, if you're successful in selling it and in three months, well then yay...

Thomas Young:
Great.

Patrick St. Cin:
You did. But yeah, I'm saving you money in the extensions.

Thomas Young:
Right, right. Because those costs money every time you have to make an extension. It's...

Patrick St. Cin:
Right. That's one to one and a half percent every time you do that

Thomas Young:
Of the whole loan amount or what's left?

Patrick St. Cin:
Of the whole loan amount.

Thomas Young:
Of the whole loan. Wow. So it's, it's expensive.

Patrick St. Cin:
Yeah, it gets to be expensive.

Thomas Young:
Wow, it's fascinating. Sort of the hard money game and how you got into it, and we were talking a little bit about, about this before we started recording, that you've gotten to the point where your phone's ringing, just because of your repeat clientele. How hard was it to find the first loan that you did? I mean...

Patrick St. Cin:
Oh goodness.

Thomas Young:
Cause it's the same thing. You know, if you're doing your first flip, it's hard to get started.

Patrick St. Cin:
Yeah.

Thomas Young:
If you're writing your first loan, it's hard to get started.

Patrick St. Cin:
Yeah.

Thomas Young:
Zero to one is difficult.

Patrick St. Cin:
Oh zero to one was, was very difficult. Fortunately I, I belonged to a couple of networks here in town and me, I stood up in front of them and said, this is what I'm doing. And sure enough, somebody finally called and said, okay, I need whatever amount of money it was. I don't remember. And actually, it came from actually a personal, I was at a, a network you found and I started to just walk around and, and kind of work the crowd. And this one young man, I just walked up to him and said, hi, this is what I do. I, this is who I am, yadda, yadda, yadda. And I think we're on loan number seven right about now.

Thomas Young:
Oh, that's awesome.

Patrick St. Cin:
So, but he was, he was like, I'm just starting, I need money.

Thomas Young:
Yeah.

Patrick St. Cin:
He thought that okay, that I knew exactly what I was talking about.

Thomas Young:
All right.

Patrick St. Cin:
That's, that's where the, just the experience of life comes in.

Thomas Young:
Absolutely. And did you offer different terms at the beginning just to sort of getting started, maybe have the cheapest money or, or did you go and knowing sort of what you wanted to, what you wanted to do?

Patrick St. Cin:
What I did with the private money, and I haven't changed the terms to my borrowers, but I've changed the terms to my lenders.

Thomas Young:
Right.

Patrick St. Cin:
So the borrowers are still seeing a certain percentage on an annual basis and a certain number of origination points. That hasn't changed that much. But on the other side where my lender is coming in, I do a little arbitrage.

Thomas Young:
Okay.

Patrick St. Cin:
On their money.

Thomas Young:
Right.

Patrick St. Cin:
They're getting slightly less than what the borrower's paying back out.

Thomas Young:
Sure.

Patrick St. Cin:
I take a little bit on the front end on it as an origination point as well.

Thomas Young:
Right. Which is all fair.

Patrick St. Cin:
Yeah. And that's how I've, I've shifted and actually over this holiday season I had a chance to look at my hard money side as well and go, everybody that I've talked to has been, they have two concerns. Either they don't want to pay high points.

Thomas Young:
Right.

Patrick St. Cin:
Or they don't want to pay or they want to extend this thing for the full 24 months so they want to have a lower interest rate. So I've revamped my hard money offerings to match that.

Thomas Young:
Right.

Patrick St. Cin:
Depending on what their needs are, I'm, I'm a little more flexible now than I was before.

Thomas Young:
That makes sense. And yeah, I mean it's, it's two-sided, right? You have to respond to what sort of the market wants and the market has to respond to what's sort of out there.

Patrick St. Cin:
Yeah.

Thomas Young:
You've got to meet somewhere where it makes sense for, for both parties. Real quick, I want to, I know we were, we sell solo 401ks and Self-Directed IRAs. We haven't even touched on that, which might be a whole other episode, but I want to talk to you about, how did you learn about the solo 401k and, and talk us through a little bit about what your process was deciding that this is something you wanted and how you use it a little bit.

Patrick St. Cin:
Okay. So as a, as a former advisor, we, the company I worked for had, and we called it a solo 401k, but it was not a Self-Directed type of situation that, that Rocket Dollar offers.

Thomas Young:
Right.

Patrick St. Cin:
So I, I had the idea of what it was supposed to be and I, I, that was a big positive for me. But then when I, I started getting into the real estate world here...

Thomas Young:
Right.

Patrick St. Cin:
I was still a financial advisor at the time and I'm listening to the presentations on Self-Directed accounts and I'm just standing there going, Oh my gosh, this is, this is amazing. I didn't know you could, I had heard of these types of accounts as, an advisor but never was allowed because of my company's policies.

Thomas Young:
Right.

Patrick St. Cin:
Then I realized why they don't have advisors on these accounts as well.

Thomas Young:
Right.

Patrick St. Cin:
Because we become fiduciaries and that's a no, no, but the 401k versus a Self-Directed IRA. I looked at the differences there and the flexibility that a 401k, solo 401k gave me...

Thomas Young:
Right.

Patrick St. Cin:
Was the reason that I went that direction and the amount of money that I could put into it, contribute to it.

Thomas Young:
Right.

Patrick St. Cin:
It was, it was, it was like almost, almost 10 fold over what you can do in an IRA.

Thomas Young:
Right? Yeah. For those that qualify for the Solo 401k over the, over the IRA, the solo 401ks, I think of the superior product and, but there are some qualification things around it. And so the Self-Directed IRA fill fills the need of, of people that don't have Self-Directed income or aren't managing their own.

Patrick St. Cin:
Right.

Thomas Young:
Sole proprietor or single-member LLC type businesses. But yeah, the solo 401k is fantastic.

Patrick St. Cin:
Oh yeah. Yeah. It's, it is a wonderful product for someone to get into. But my conservative side comes back and says, you got to be careful how you do it though.

Thomas Young:
Right, right.

Patrick St. Cin:
Because I, yeah as my former life, I consulted with a couple of fellows that had done something similar to the Self-Directed 401k, invested in their own companies and then one of them failed. And so there went all his...

Thomas Young:
Yeah.

Patrick St. Cin:
His retirement of money.

Thomas Young:
Right.

Patrick St. Cin:
The other one had hired employees and didn't realize that he was supposed to bring them into the 401k.

Thomas Young:
Right.

Patrick St. Cin:
There was another issue there. So you got to be careful, you got to pay attention to the rules.

Thomas Young:
Absolutely. And, and that's, that's a big thing of what, what we're working on is making sure that the, the bumper rails are there.

Patrick St. Cin:
Yeah, yeah, you do.

Thomas Young:
Because it is, it is, it is, it allows you, it's still money, right. And so it should still be treated as such. Just because you can do it doesn't mean you should do it...

Patrick St. Cin:
Right.

Thomas Young:
A lot of times and you're taking on more risk if you're, if you're using your solo 401k to invest in cryptocurrencies or, or startups or, and and and and whatever, whatever you decide to invest in, you have to know that it's just because you can, doesn't mean it's the most prudent thing to do.

Patrick St. Cin:
Right.

Thomas Young:
If you want to deal with some of your money, you should, or if you want to do it with all of it. I mean, it is, our thesis is sort of like, it is your money, but it's still money.

Patrick St. Cin:
Yeah.

Thomas Young:
You want to hang onto it.

Patrick St. Cin:Right. And I, and I, I kind of recommend to people that if you're going to take a chunk of your retirement funds, whatever that may be, whatever it's registered in, that use a small portion of it initially.
Because it is, you're talking about some high-risk type stuff.

Thomas Young:
Right. Right. And you know, for, for investors like yourself who have a lot of experience in a certain field, it's a great way to accelerate...

Patrick St. Cin:
Yeah.

Thomas Young:
what you're doing, but you have to know what you're doing.

Patrick St. Cin:
Yeah.

Thomas Young:
Right. Just because, if somebody hands me a couple of million bucks right now, I mean, I would go get help, right?

Patrick St. Cin:
Yeah.

Thomas Young:
I would, I would find someone that has the experience and knows what they're doing and, and we can talk about what I want out of that and then maybe take, 5% and then I go do sort of the fun stuff that I may or may not know a lot about. And that's one of the things that I think a lot of people get hung up on or not hung up on, but you know, it's still money and just because it's, just because you can all of a sudden do all of these cool things. It doesn't mean that prudence goes out the window.

Patrick St. Cin:
Right.

Thomas Young:
It's still, it's great that it's got some tax advantages. If you, if you do hit it big with something, you're going to save a ton of money on taxes, but it's the same as cash. Like you still want to hang onto it as much as you can.

Patrick St. Cin:
Yeah. Yeah. Really. I mean, because I mean there's no one else is going to bail you out when you decided to retire.

Thomas Young:
Right.

Patrick St. Cin:
Do you know?

Thomas Young:
Right. Absolutely. So Patrick, what are you excited about, for this year? What are you working on that, that's exciting and new?

Patrick St. Cin:
Well, I'm working with a partner on actually offering an equity system for people that want to get into flipping houses.

Thomas Young:
Okay.

Patrick St. Cin:
So you've got your 90% is what we'll finance on the purchase. Well that 10% is still, it's a hurdle for a lot of people to get past. So, my partner, we came up with this idea that if we put together a bucket of money and then we use that for an equity position in the property...

Thomas Young:
Okay.

Patrick St. Cin:
and cover that 10% but we get a much higher return at the back end.

Thomas Young:
Right.

Patrick St. Cin:
We'll get more than the 10% back in the long run. So that's up and coming. We'll be doing that pretty soon and we'll be looking for people that would like to participate in the investment side of that.

Thomas Young:
Okay. So, you're going to maybe raise a little bit of money for it.

Patrick St. Cin:
Yeah, yeah, we're, we're looking at, it's a small raise, I mean very small by most standards. So we're probably looking for, a half a million or, or thereabouts...

Thomas Young:
Cool.

Patrick St. Cin:
to get this thing off the ground. But it's, it's a new way or not necessarily a new way, I, t's just a new way for us I guess, is the way to put it.

Thomas Young:
Right.
Patrick St. Cin:
And it's to help people who, as you were talking about that zero to one...

Thomas Young:
Right.

Patrick St. Cin:
this is the zero to one, maybe the zero to five...

Thomas Young:
Right.

Patrick St. Cin:
group...

Thomas Young:
Right.

Patrick St. Cin:
That doesn't have that, that 10% on hand all the time.

Thomas Young:
Right.

Patrick St. Cin:
So we're looking at that and I'm just looking at hearing the phone ring more and more.
Thomas Young:
So are we.

Patrick St. Cin:
Yeah, yeah.

Thomas Young:
The phone's ringing is a great sound.

Patrick St. Cin:
Oh yeah, that's true.

Thomas Young:
Well, Patrick, thank you so much for coming on and we're going to have you back on a few times this year. I'm sure as you, as you, launched new things, as we announce new products that you're going to be hitting, playing with and, and seeing, but I can't thank you enough for coming on and sharing your experience and if someone wants to get ahold of you, if somebody is doing this, what, what is the best way to get ahold of you?

Patrick St. Cin:
Ah, well they can give me a call. I'm here in the Austin area. That's 512-213-2271 or if you just want to send me an email, hopefully fairly simple. patrick@reicapital.cash.

Thomas Young:
Beautiful. I love it. And Patrick's someone that has a lot of experience and, and someone that, that you want to talk to. If this is your world and this is something you're seriously interested in getting into, Patrick's the guy. So thank you again.

Patrick St. Cin:
Thank you very much. I look forward to the next time.

Thomas Young:
Thank you for listening to this episode of Rocket Your Dollar. If you enjoyed this episode, please subscribe and share the podcast with your friends. Learn more about Self-Directed investing or to get started with your account, please visit us at rocketdollar.com. See you next week.