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3 Things You Should Never Do As A Real Estate Investor If You Want To Stay Out Of Jail
Joe: Hey, it’s Joe. This video is going to tell you three things you should never do as a real estate investor if you want to stay out of jail. I decided to be dramatic on the title. I think the very first thing you should do is follow the Golden Rule, you know, do unto others as you would have them do unto you. If you don’t treat people badly, you usually won’t have problems. Try to do your best. Have the best intentions. It’s still possible to make enemies, still possible to screw things up, still possible to make mistakes. You know, that’s going to happen. But, most of the time, if you try to do your best to serve other people first, you’re business is going to benefit from that. You’re going to gain trust, you’re gain credibility, you’re going to be able to sleep better at night. You’re going to make more money. So, follow the Golden Rule, even if you don’t think that ethics are important, it’s still a good business practice. So that’s my first thing.
Joe: The second one is don’t mishandle investor money. I’ve seen several investors that I’ve known over the years go to jail because they mishandled their investor money. Make sure that you follow the rules properly, that you have followed the SEC guidelines if you’re using investors’ money. Now, if you use the techniques that I’m teaching you probably will never need investor money. So, follow the techniques that I teach first and then if you ever do get to the point where somebody says, hey, I want to invest $100K or a million dollars, you know, do you have some properties that we can do together? And you decide you’re going to invest in that property and you’re going to be a partner with them, make sure that you understand the rules, make sure you understand how to not intermingle funds, make sure that you don’t ever use their funds to pay your bills – that’ll get you put in jail faster than anything else. The two people that I know that went to jail went to jail for those reasons.
Joe: And they were generally good people. But they were stupid. They made a stupid mistake that they should never have made. Never intermingle your funds. So that’s the second thing never to do.
Joe: Don’t lie on your mortgage, either, you know. If you have a mortgage form, don’t lie on your mortgage form, telling people that you make more money than you do. Be honest with your mortgages, be honest with the bank, don’t try to hide stuff like that. They’re likely that they’re going to catch you, but even if they don’t catch you, it might come back on you later. So stay away from any type of bank fraud. There’s an awful lot of it out there and they’ve tried to narrow down some of it with some of the Dodd Frank regulations and I think they’ve done a pretty good job. I think the Dodd Frank rule is actually pretty good. Seven hundred pages of regulations designed so that we don’t have another 2007 crash. So we don’t have another 1991 crash because of bank failures and because of unethical banking, you know, predatory lending. You want to stay away from the banks that are doing that kind of thing.
Joe: And then the third thing that I would recommend that you not do is don’t get angry. You know, I know that whenever I get into a situation that pisses me off, and somebody across the table from me is trying to screw me or there’s some problem that I perceive that they’re trying to attack me, I know, I try to remember at that point, you know, Joe, if you get angry at this point, you might as well just reach into your wallet and start pulling out cash because it’s going to cost you money. And it’s going to create enmity between you and the person you’re dealing with. Even if that’s already there, sometimes it’s better to deescalate the situation, try to solve the problem, try to look for solutions.
Joe: Doesn’t mean that you have cave in to them, but, you know, I’ve had to go to court with people before. And I’m willing to do that fight, but I try to do it in a polite way and I try not to get angry and I try not to start name calling and I try to keep it peaceful. And if I can find a way to solve the problem that will serve both of us, then we’ll do it that way. So, try to do that whenever you get into these situations.
Joe: Remember, when you’re in business, anybody can sue you for anything – even when you’re not in business. But, in this world, anybody can sue you for anything that they perceive as a slight to them. And if they think they can get money from you, they might come after you. And if that happens, then you’ve got to defend yourself and you don’t want to do it yourself. You want to get an attorney to help you, and that’s expensive. It’s not a fun situation. But I find that if you treat people right, and you try to solve the problem before it ever gets to the lawsuit situation, before you start getting angry with people, or at least showing your anger with people, you’re going to have a lot more, you’re going to be a lot more likely to solve the problem before it ever gets to the lawsuit stage or imprisonment stage if that, if you did something wrong.
Joe: Anyway. I hope that helps. Good luck to you.