How to “Raise the Stakes” So Anyone Accepts Your Deal (Part 1) - Transcripts

September 18, 2022

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Oren Klaff is best known for his groundbreaking book, Pitch Anything. In it, he gives a systematized way to take control of every meeting, negotiation, and deal on your terms without taking a submissive position. Oren has the expertise to back up his claims. As a world-renowned leader in sales, capital raising, and negotiation, he’s been in the meetings, flipped the script, and gotten deals done that most couldn’t even dream of. Now, he’s sharing his wisdom with you. Much of what Oren describes gets a bad rap in today’s world. The terms “alpha” or “in control” are subliminally thought of as violent or harsh, but in Oren’s context, they are completely accurate. In part one of this two-part episode, Oren gives you everything you need to take control of your deal, get negotiations done on the terms you want, and put opponents in the position for you both to succeed, instead of merely butting heads. But this advice isn’t just for the board room. These key principles work in every conversation you’ll ever have, whether you're raising millions to close on an apartment complex investment or merely trying to get your kid to eat their vegetables. The way you pitch, frame, and control a conversation directly correlates to its outcome. And in real estate investing, this isn’t a skill you’ll want to be without. In This Episode We Cover: The alpha and beta dynamic and putting yourself in the alpha position in every negotiation The risk of not taking control and how giving someone else the lead could ruin your deal Shifting perspective and the “frame control” exercise that’ll bring anyone down (or up) to your level Putting your opponent or partner in an “emotional state” so they can see your point of view  Raising the stakes and how doing so will solidify any deal that needs to get done And So Much More! Links from the Show BiggerPockets Youtube Channel BiggerPockets Forums BiggerPockets Pro Membership BiggerPockets Bookstore BiggerPockets Bootcamps BiggerPockets Podcast Get Your Ticket for BPCon 2022 Listen to All Your Favorite BiggerPockets Podcasts in One Place Learn About Real Estate, The Housing Market, and Money Management with The BiggerPockets Podcasts Get More Deals Done with The BiggerPockets Investing Tools Find a BiggerPockets Real Estate Meetup in Your Area David's BiggerPockets Profile David's Instagram Rob's BiggerPockets Profile Rob's Youtube Rob's Instagram Rob's TikTok Rob's Twitter How to Take Control of Everyday Negotiations With One Simple Technique 7 Real Estate Negotiation Tips 4 Reasons Negotiating Regularly Will Make You Richer, Wiser, & More Confident Books Mentioned in the Show: Pitch Anything by Oren Klaff Connect with Oren: Oren's website Click here to check the full show notes: https://www.biggerpockets.com/blog/real-estate-663 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Check out our sponsor page! See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Transcript

this is the bigger podcast podcast show 6 63 write this down, raise the stakes. If somebody believes there is low stakes at this pitch at this meeting at this interaction, it is going to end like this, Hey, this looks great. I love this, love what you guys presented something. We're really interesting, looking at, send me the deck, I'll talk to my committee, my partner, my wife will take a look at it. If we have any questions, we'll get back to the next one that is requires no training. All buyers, all investors say that unless there are stakes, so raise the stakes, what's going on? Everyone is David Greene, your host of the bigger pocket estate podcast here today with my co host rob solo with a fantastic show and I really mean that today rob and I interview or in cloth, the author of one of my favorite books you've heard me speak about often pitch anything or in is probably I would consider him to be the world renowned expert in teaching the concept of frame control and how to hold people's attention so you can get them to see things from your perspective and invest in your deals. He's hired by the big guns to come in and raise money for very big projects and he was gracious enough to share his time with us today, sharing very high level concepts that you usually won't hear anywhere unless you pay tens of thousands of dollars to take courses to teach you stuff. This is the stuff high powered business people will go sign up for and you're getting it today for free. And our show with Orange, I'm just gonna give a disclaimer, we hit the ground running and he's like a Tasmanian devil of value. So in these two episodes, rob and I are actually going to stop at a few different times throughout the show to explain how the concept that Orange is describing would relate specifically to our industry of real estate investing as well. I'll give you some color commentary on how this might apply in your own business rob.

What were some of your favorite parts of the show? Well, Dave, there were a lot. There are a lot of favorite moments in this because he was speaking to my soul. I think I've I've been really going down the investor journey and working with investors. I mean, I think probably in the last year alone, we've had at least 100 zoom calls with different people and we've really figured out who we are, who we want to be as real estate entrepreneurs and investors. And so I really, I reflected a lot just in this episode because he really, you know, he put a little knife in all my wounds and was like, yeah, you were doing it wrong the whole time. And I'm like, yeah, yeah, I was, I was, but it's really nice in retrospect to be like, okay, well, here's the silver lining. I learned it the hard way so that everybody at home can learn it The easy way. That's kind of the role that you and I are in, where the vanguards that go ahead and make a whole bunch of mistakes. Everything gets messy and ugly, you lose money, you lose employees, you go through pain and frustration, and then after you finally go through all that, you figure out the answer are battered and torn bodies, come back and say, okay guys, I went out there and I figured out that's where the tigers are. Don't go there, right, we're all scraped up and clawed, our clothes are falling off and we're like, this is the way that you can go and you can avoid all that pain and that's a privilege we have of sharing that with everybody who listens and that is today's retroactive Quick, quick, quick, quick, Well, you know, this is particularly topical for me because I threw out my back this week, so I'm just, I'm just in shambles, I hit, I hit 32 the old body is just breaking down limb by limb, but it's okay, I'm gonna push through, I'm a survivor rob, You're back in the gym. So everybody should know that rob is taking his role as the co host of the podcast seriously and he's now training for the bigger pockets olympics.

That's right. Well, I was I was back in the gym, I I joined and I am out. I canceled my membership today and I said, I don't know when I'll be back. I don't know when I'll be back. Yeah, So pray for rob's back. He's going to the chiropractor today to get that worked on. I have actually, I'll say public, I have scoliosis, I've had it my whole life and it's horrible. My back goes out all the time. My shoulders get messed up very, very easily in my neck. So jiu jitsu frequently will throw me into problems playing sports, lifting weights. It's always something that can tweak it. So back problems suck.

You'll be on my mind, rob. I hope you get through that. Thank you. Well, you'll always be my braulio sis. So appreciate that when you guys see rob at BP con, make sure that you either give him a free massage or at least a high five and hope that his back gets better. And just a quick word from today's show sponsors, we know you've heard it before. Cash flow is getting very hard to find. There's always long distance investing, but you may be thinking, I don't have a team enough experience or the market knowledge to get in. Well that's where you're wrong and that's also where rental retirement comes in, rental retirement offers fully turnkey properties that are newly built or renovated leased and managed, allowing you to invest out of state with confidence. They've got single family, multi family, new build in syndication opportunities across multiple markets. They even have bird deals with immediate equity rental retirement helps investors learn how to build a bulletproof business plan with the best investment and tax strategies around to help you reach financial freedom through real estate. There is no excuse not to get started in real estate investing.

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Alright there you have it folks. Without any further ado we're going to bring in orange buckle your seat belt and get ready for a wild ride or in cloth. Welcome to the bigger pockets podcast. I'm thrilled to finally have you here. Yeah, you might not be so thrilled, you know, 30 minutes from now, but for the moment, hail fellow well met. Thank you very much. Now if you've been listening to this podcast, you've no doubt heard me mention the book pitch anything as one of my all time favorite books. I often recite this when people say, hey, David, what's a book that I should read? What book do you recommend? I've read this book four times. I love pretty much everything about it. It's helpful in so many ways.

It could have been probably three or four different books because of the concepts that are in there. But warren, do you mind giving from your perspective the gist of the purpose of the book? What type of information is in the book and who it was meant to help? Yeah, so I mean this book was mainly written to help losers struggling you know through life and well, no, that was me, that was me at one point struggling through life. So the book was cathartic in terms of it was meant to help my prior self get to where I am faster. These are the things that I lived through, going into meetings and supplication to the buyer, waiting for business to happen, sending emails, Hey, just checking in, um, doing a pitch and then saying, so what do you think guys are you interested? Can I answer any questions, taking the beta position? Once I learned what an alpha and a beta is just was like, um, for me, it was like I went to the wardrobe, you know, to get a shirt to go to my job at an investment bank, go up an elevator, go to my tiny office, you know, overlooking the freeway. Uh, and, and, and you know, answering to the managing directors and getting them coffee if they wanted coffee. I went home, went to hang my shirt in the wardrobe open up and Narnia was back there right like Holy, there's an entire universe in my universe that is a different reality from what I'm living. And then I didn't ask any questions and I'm like, there's lions and dragons and spaceships and all kinds of wonderful. And I just dove into the wardrobe and living in a different world.

All from understanding what a beta position is, what a supplicant is. And so it wasn't too long answer to a short question, but it wasn't till later when I really started understanding some of the biomechanics of this stuff when you were in the beta position and you are, when somebody else feels powerful over you, there is a physiological response in them, in which they do. The following three things. They view you as transactional. How much can I get from you without investing anything. Second is they view you um as um only at a surface level, they don't care about your family, they're interested that you surf or play racquetball or a squash champion. They don't, they don't care that you have um, a value system or ethic, they just view you at a surface level and that rolls into the third and most significant thing in the way people view you is that they take risks around you. They would not take around their peers, where that means they would take phone calls, check their phone, ask you for incredibly uh, insensitive, uh, gives, trying to reduce pricing, try and get you to give away what you have. So that's what people who feel powerful do physiologically. And so the book is intended to show you how to stop that from happening from from putting yourself in the beta position. You walk in a room and I walk in the room, I don't know you from a block of ice. Everything unfolds from there.

If you're in the beta positions because you put yourself there and by default, by putting yourself in the beta position, you're putting the other person in the alpha position or the power position. And they, even if they've never done a deal before in their life, they're become, become a master dealmaker um, from being in the power position, seeing you as transactional. So you know, the first level and taking huge risks. Uh, and if anybody here is old enough, you guys obviously aren't to have seen treating places uh you know, in the final scene with mortimer and whatever, where, where they say, hey, you won the bet they ruined people's lives. They um exert incredible emotional distress on people and it's all for the bet over a dollar. That's what happens when you take the beta position is that people will bet your life away for a dollar and that's what this book is intended to do or you know that not just the book, but this is why I don't just do deals today and I invest time, um writing and I invest time on these kinds of podcasts because of the millions of people that I've touched, awesome man. Okay, so lots, lots to unpack here. I really do. I want to get into this first. I want to say I very much love the concept of the book and I feel like my life is I'm a walking talking example of the idea of pitch anything. I don't know if anyone really at home knows this, but before I was a content creator, I was in advertising, I was a senior copywriter at an agency for about 10 years. And it was just very funny because you were served a brief and you create ideas that answer the brief and they were never the good ideas.

Right. I would come up with these really crazy out there wacky ideas and I would say, Okay, I'm gonna give them five ideas that answer their problem, I'm gonna bring a wacky one just to let them know that I'm creative. And it always seemed like the wacky ideas are the funnier. The out there ones were the ones that always went through were the ones that were, that would pique the interest of my creative directors. And uh after leaving advertising towards the end of that, I was in improv and improv is the art of pitching anything to your scene partner, no matter how dumb it is. And allowing them, basically, you're really, you're becoming very vulnerable because you're gonna throw a wacky idea out and you are just crossing your fingers that they're going to pick it up and run with it. And so there's certainly this power dynamic that comes, you know from from that, right from the advertising pitching in a boardroom of directors. They're the Alpha, you're the Beta, same thing in improv, where you are the Beta and your partner can be the Alpha. And I'm sort of curious on the actual book here, when you talk about this relationship is the desired outcome to do away with the Alpha and the beta roles or is the desired outcome to become the alpha role within the relationship? Yeah, So this is a great, this is a great question. I mean the Alpha and beta roles exist. There is in my world view, there is no egalitarian flat um where win win, we're all looking for the same outcome.

Even in a win win, right in which you say, hey, we've approached this from both sides. It is impossible to really reconcile, you know, a perfect deal. The, the Alpha and beta exist. Uh, one person will by definition get a better deal than the other. I think most people have in there, I haven't really done a scientific investigation, but experientially from having been in billions of dollars of transactions, people have a notion, you don't get anything you don't ask for uh, in business and once they feel empowered and have had some success for doing that, people are automatically gonna grab the alpha role. Here's what you have to understand. There is an Alpha and Beta. However, most people who occupy the alpha don't know how to handle that role professionally fairly, uh, with parity with integrity with transparency and honesty. So if you believe that if you were in charge of this deal, if you were actually making the pricing points and you were making the closing conditions and you were making the equity to debt, you know ratios and the debt service and you were deciding on which part of the deal, you know, and your guys, uh, terms of art, which part of the deal was interest only what the balloon was, What interest rate was fair, you know, against the Fed, you know, open interest rate window, if you were deciding all of that right? Uh, from the alpha position, would the deal be likely, you know, to be done fairly honestly transparently with parity for everybody involved and survive the test of time. So then people look back on it and say that was a well constructed because if you feel that that's true, you should take the alpha position because the other guy is going to take that position and ruin the deal. All right.

This is a great point. Now, Orrin is speaking in terms that are known to his industry as an Alpha Beta, we wanted to take a quick minute because these can be confusing terms because the phrases Alpha and Beta are often used in different terms, like an alpha male describing a certain kind of guy. That's not what we're talking about here. What we're talking about when you talk about Alpha position is the person that has the most leverage in this situation, that could be the person with the most experience. The person that has the deal in the contract and they're trying to bring investors into their deal. Or it could be the person that has the money that someone's trying to pitch to, which would put them in the alpha position. Now, what, or is saying is when you're in the alpha role, it is your responsibility to put a deal together that works for everyone. And if the person who's in the alpha role isn't doing that, they're making a one sided deal, the deal is not going to get done. And this is why you should strive to be in the alpha role because when you're the one that has the experience, the knowledge, the way to put a deal together, that's a win win. If you're not in the alpha role, you're not able to do that successfully rob. Did you have anything you want to throw in there? Yeah.

This was all what he just described was legitimately just my investor journey for the last two years. My partner and I, the way we structure it is like I obviously I have the content, I teach people how to do this and people send me inquiries to invest with me and then my partner, my C. 00. He basically will go and he'll meet with the investors and there is a bit of an interesting power dynamic because you just never really know walking into the, to the conversation who was the quote unquote alpha, right? A lot of the times you would think it's us because we're like, we're the experts here. But then there is like he was saying that the empowerment, that, that comes from successful investors and they're like, hey, I've done this, I've made the money doing this and I'm giving you my money and plus you have to do what I say. And so over the past year, our entire process of how we work with investors is completely changed. I think getting started. It was all about, oh sure you want this. Okay, great. Yeah. You wanna prep here?

Great. Oh, you don't want a 50 50 split, you want 60 and we get 40. And just over time, I saw how bogged down my, my partner was just fulfilling every single request. And so when people would say, oh, well when you work with investors, do you usually do this? And we would always say it depends. And it's because we were willing to bend over backwards because we were just really, you know, we were getting our bearings on on how to work with investors. But now, you know, I've really had to, to, to be a lot more stringent with people walking through the door for the exact reason that Warren was talking about where we are in this for, for the win win, right? My reputation is at stake here. If I mess a deal up that is on me for, for my career. And thus it behooves me to put together the best deal, that's gonna be worth it for me to put my time into this and that will make my investor a good return. And so we do have people that try to negotiate all the time. And I always tell my business partner The moment you allow negotiations to open, they think it's pond stars and they're like, tell you what, I'll give you a 60, I'll give you 40%, I get 60 and I get a 15% pref.

I remember one time my partner gave that investor a 15 pref and I was like, we're not gonna do this. I'm sorry, I know that you negotiated it. I know that we're at the finish line, but that is not worth it for us. We get nothing out of this. We get, you know, a small equity share in this property. But we're giving up all cash flows to this prep. That's impossible for us to win. And if it's impossible for us to win, it's impossible for us to be motivated to keep this deal alive. And so yeah, I don't know, it's just really interesting to hear it from him. He's obviously all pro because that's kind of what it sounds like. You know, it's like if you're gonna be in the quote unquote alpha position, you gotta make sure that it's a win win for everybody and it checks the boxes and there's no negotiation on that, I think personally, and this is super applicable to our industry of real estate because we're always working on a deal where two sides are negotiating against each other, a buyer and a seller and then you're working on a partnership where two people are looking to get into a deal. Sometimes they're an equal position and then other times when it's a syndication or something, you've got one person setting the terms and the other person deciding if they want to be a part of it.

So this is very helpful information because it will come up constantly in your career, comes up in the world of real estate. I always tell agents who say, Hey, I want a better commission split. And I got so tired of hearing that. I said, okay, fine. You can have it, you name your split. What do you want? You can have 80 20 can have 90 10. Yeah, you can have it all. Just okay. You got it. But you need to know when you walk out the store. When that client comes, I'm going to give it to the person that's on a better split for the company.

And so you won the battle where you got 90% of the commission, but you lost the war because you're not going to get any of the leads. You have to be thinking about both sides at all times. And orrin is just someone who has sort of spent so much time mastering this and being in these environments that he's come up with this way of looking at it where you do have an alpha and beta and we want you as the bigger pockets listeners to be in the alpha position. I want to go back to something so critical that you mentioned improv. So I lived in, I lived in on sunset boulevard in Beverly Hills and West Hollywood for years, I think it was 44 or something. I went, I signed up for improv, right? So I show up in the class and it's a bunch of 22 year old actors and actor arrest says whatever, right? Um mainly, you know, waiters and and waitresses in the class, you know, so I walk in there like, oh, hey, you're looking for the D I Y uh you know, class to get your license back, that's down the hallway, this is improv, right? And like, no, no, I'm I'm here for the improv class. Like what is this 44 year old dude in a suit doing an improv? But like the, it's the ability to create novelty, is I think what is amazing about so in context novelty, right? And, and as the years progressed, what I realized is the way I execute novelty, it raises the stakes.

This is not just another meeting with another dude that you are at the end of the meeting gonna say, hey, yeah, that's super interesting. We really have to uh you know, we really want to invest in this area. We'd like your presentation, you know, I need to talk to the committee and well send us the deck, you know, we'll review it. If we have any questions, we'll get back to you in a couple of weeks. Right? And so with the ability to deliver novelty and differentiation, you can also raise the stakes and saying that's not happening here. This meeting is not uh only to your benefit, it's to my benefit as well. And if you have improv chops, then you have the ability to say David, listen, I'm great, great that you have these questions. Great. I could invest some time in being with you today. And as much as you need to evaluate our investment, you know, um the the whole period, you know, the going incorporate that going out, cooperate um the debt to equity ratio, the debt service coverage, the underwriting on the asset, the competition, you know, environment, make sure environmental has done that the, you know, that the underwriting matches the appraisal where difference for the appraisals document, you got to evaluate all that stuff. But as much as you're evaluating us, our track record and the asset, we also need to leave some time for me to evaluate you.

Um and that is raising so, so that's what improv is gives you the ability to say things that are novel to the environment. You're in with seriousness and raise the stakes. So I think you can agree that that, you know, the goal of improv for an audience is constantly raising the stakes, right? You you each each additional, you know, addition to the scene has to hold somebody's attention longer, make them laugh harder. You know, build to something, build momentum, no audience wants to stay in stasis in in the same emotional state that you've created. So if you know how to raise the stakes, uh then you're driving towards a decision and I'll say, hey, you know, and I can give you some things that obtain frame control immediately, right? Uh and and certainly if anybody listening to this has some time to go spend inside of improv, then you have the ability to say things that you that, you know, you should say, but you're just not sure how to get them out of your mouth, and improv gives you that ability. Yeah, I mean, when you summarize it effectively, what a lot of improv comes to, the number one golden rule of improv is what we call yes, and if you're seeing partner pitches you something, you say yes. And this other thing that makes it crazier, funnier, wittier, more off the cuff. And you keep yes handing each other until you get to a moment where you sort of agree that you're on this concept and you run with it. Um the number one downfall of most improv scenes is no, but right, if you say no, but this, you've now denied your partner and now you're deescalating the situation in a lot of ways. So I think that makes sense.

And there are some pretty useful applications of that, even in real estate because you know, for me in the whole Airbnb world, we're all about creativity and creating unique experiences. And when I'm concept ng a new experience or a new listing with my partner, we are trying to yes and each other to say, how are we getting to the best product versus saying no, no. But this, the logistics here are terrible and shooting ourselves in the foot. So I do think that, you know, this is why I really thrive with a lot of my partners because we're very complementary and making sure that we're basically escalating Every single deal that we have on the table. Well, I think, yeah, if you're listening to this and you want to write something down. Hey, these idiots have been occupying my time for 15 minutes now. I'm not sure I've learned anything, write this down, raise the stakes. If somebody believes there is low stakes at this pitch at this meeting at this interaction it is going to and like this, Hey, this looks great. I love this, love what you guys presented something. We're really interested in looking at, send me the deck, I'll talk to my committee, my partner, my wife, we'll take a look at it. If we have any additional questions, we'll get back to you in the next week. That is requires no training.

All buyers. All investors say that unless there are stakes, so raise the stakes. One thing I just want to revert to improv. This is not a sales pitch for second city in Chicago. Um, or that you should move to Los Angeles, but you should and you should also go to second city in Chicago. But one thing that gave me is the ability to reframe people's own behavior and lens on themselves in an outrageous way I, I have to do and I'll just give you an example of what I mean by that and this is, this is something that you could take home with you and if you use this, this, you know, if you're doing transactions, this is something that you'll make a couple million dollars with that. We're gonna go over in the next 30 seconds. I talked to, you know, billionaires, I talk to guys who manage billion dollar funds, I talked to 100 millionaires, you know, I talked to two private equity groups, I wouldn't say all day long, but at least every day, uh, that I come to work and invariably, you know, a billionaire is busy and for me, you know, I'm in the beta position, going in for that meeting, very high view of themselves, sort of low to middle view of me and they always come late, always never have them come on time, right every once in a while, you have somebody, you know super puncture, but they always come late. Uh, and so I'll say, you know, hey David, um, great, you're here for the 108 call And Hey, David, are you here for the 108 call? So everybody managing a billion dollar fund, it immediately gives them a lens to view their own behavior. And I've had billionaires start off calls, apology, I'm so sorry. You know, we had, uh, you know, a, a $3 billion shipment stuck in the ports of Los Angeles.

They needed my sign, you know, final sign off the dock. Yasin wouldn't load. Um, this, you know, this is food for the food bank of calif for Nya, you know, to save the lives of small Children. I'm so sorry. You know that I created this because they know the value of time, whether you're important or not. They know that they're, you know, ability to show up and do what they say is just a marker of quality in business. And they didn't get to running a billion dollar fund by showing up. You know, the meanings whenever they want. And so that is immediately they're starting off the meeting apologizing to me for their behavior. Now we are becoming peers and now they can see me as a person, as someone with high values and somebody who is not a beta and supplicant for them to order around and tell me to do whatever they want. So there are indications to people that you are appear, even if they're a billionaire, if their billion dollar fund, they, you have to understand that you're not a commodity, that what you have cannot be bought anywhere and they cannot impress their values on you and your value system is as important or more important than theirs. And when they behave awkwardly weirdly out of phase with our culture, you're there to scratch your head and go, hmm, don't quite get what's going on here.

I like you, you guys are super credible. Um, you've done some amazing stuff and your, our dream client, but also I don't understand what I'm saying. Can you help me square this circle? I think something that's fascinating about what you're describing because you know what you're sort of saying is, you know, come in and you're in a beta position. That's a very simple thing that you did that change the dynamic of the relationship. That maybe didn't put you completely in Alpha, but like you said, put you in peers and I just want to highlight very briefly, the point of this is because you need to get your point across, it's not to feel your Ego, it's not to feel 1,000%. Someone will not listen to you, you cannot pitch and you cannot close from the beta position until they perceive you as a peer, you're not closing that deal at anything near numbers, that would be fair to you. Nobody closes a parody deal with lots of margin in it with somebody they believe they have power over. So until you're perceived as somebody who is busy has momentum in their own business, is not needy in any way for this transaction and is offering uh a opportunity uh, you know, for a partner, uh you know as peers, they will continue to negotiate and chip away your deal until they feel like they're in the super majority position. And it's important we highlight that because the phrase is alpha and beta have a stigmatism to them where you go often here, I'm an alpha male, right? It's not about the way you come across. It's in this specific relationship and you're bouncing around them all day long.

There's a position of first position which is alpha or beta which would just be second. So another you know, another word that has a lot of stigmatism with it is control. I am looking for control. Why? Because I am a better governor of your of the outcome for you than you are. You will negotiate too aggressively. You will negotiate a deal that won't hold together or you know all the way through legal and you will negotiate a high friction deal in the same deal between you and I it's better for me to have control because I am going to craft a deal that can be stress tested that will last through legal, that will get to the other side that can withstand an argument that can go through friction and still be a deal. So I want deal control because I'll put together a deal of quality that everybody um will will in the end have a be happy with the outcome. You will put together a controlling deal that benefits you puts me at risk. And my legal, my partners, my, you know, I'm not gonna perform because at the end of day, even if you get one over on me, you know, a year from now, I learned that my desk service coverage is incredibly high. Right? I'm gonna look for litigation.

I'm gonna blow out of the deal. I'm gonna file bankruptcy and the SPV, you know, whatever it is. So I want deal control because I can, I'm going to do a better job with control than you will Not. You, David, you know, of course, we see this a lot in the relationship between real estate agents and their clients, particularly when you're selling a home. So I would notice this if I would go in and I let them stay in the alpha position, they'd say, Okay, well, I want to pay you a 4% commission and you're going to work around my schedule and we're going to list my house for way more than it's worth. And they thought they won. And what happened is I would see repeatedly, they get a terrible experience. No one buys their house. No one's motivated to work hard for them because they chipped away the commission, they out negotiated their own agent, which usually means their agent sucks and isn't gonna fight hard to get them money when you let your client win, they lose. And I saw this is where your book came in. So helpful because I realized I need to be comfortable taking the control because I am the freaking expert. They're not, I still houses all the time.

They don't, if I give them the control, it's like giving the control of an eight year old what they're going to have for dinner. I'm sure they'd like it. They're not going to make good decisions. That's going to lead to everyone being upset. And this is why the concepts in your books, which frankly can, I think they can make people a little uncomfortable because you are learning how to be in a position of control. But if you are the fiduciary, if you're the expert, if you can see the angles better, you gotta have it. So this comes into play a lot for real estate investors that are trying to raise money for their deals that are trying to acquire properties from a from a seller who doesn't know what their properties worth. Like all kinds of scenarios that makes your job so much easier when you understand the dynamics that are actually happening within the relationship. I also think that there's a large contingency of people that want to move forward in a particular endeavor of life, they want to buy properties, they want to build wealth, they want to get a better job. They want to ask for a raise and all they can say is, I just don't feel confident. I just don't have to do it. And they don't understand they're living in that beta position every day and physiologically it changes how you feel.

So this is very interesting to me because again, he's really harping on a lot of the pain points that I've had. And you know, when you think about investing, right, you have your buy box, you have the criteria that you look at when you're buying a property for me, I invest in four different places. When it comes to short term rentals. I invest by national parks, state parks, vacation destinations, and eclectic towns. That's my buy box if you will for short term rentals, I never depart from that because my strategies work there. But as we started to come, you know, into this journey with with investors, I started to realize that there's kind of like an investor box too. If you will, where basically you have to set the parameters of how you work with investors. And when you're willing to walk away, a lot of people think that because money is being offered to you, you have to take it. And when you're starting out, I understand that notion and you probably should. But when your experience and when you've cut your teeth in the industry a bit, you gotta stick to your guns truly. So for now, like when we're working with investors, it's very clear, you know, we take this kind of split. If there's a pref, this is what it is.

We call the shots on the design, we call the shots on the location, we handle everything when we have an investor that wants to come in and basically be another cook in the kitchen, it's a no for us. And so now we have this criteria and as much as we want to work with people that are really nice and that, you know, respect us for what we've done. It's just not worth it for us because the more that we give to an investor, the more that's always taken away from us, not necessarily just an equity, but in time. And really that's what it all comes down to is, you know, he just talked about it for a little while ago, how imp important time is. And so if you're burning all your time trying to make a deal work, it's probably not worth it. Dave. That's a great point. And it also opens the door to another great point, which is that many people that will be hearing this are going to be experiencing a little bit of uncomfortable. Maybe discomfort, possibly some cognitive dissidence because control is a tricky thing when you're in a position of control, it should come with responsibility. So you've always heard that Spider man phrase with great power comes great responsibility. A lot of people don't want responsibility. So they inherently just don't like control.

Others have been in a situation where someone had control over them and it resulted in pain. And so a common defense mechanism is to say, just avoid a situation where anybody has control over anyone else. Then there's other people who just need to be in control all the time. And that can be bad too because sometimes they shouldn't be in the position of control. But the person that should be is the one that has the experience that has the knowledge that can put a deal together that works for everyone. And if you want to get ahead in life, if you want to build wealth through real estate, you're going to have to at some point get comfortable with the fact that you need to own the control you have when you are the buyer in the transaction and there's no other buyers that you're competing with. You have leverage over that seller and using it will allow you to save more of your capital and get a better deal so that you're incentivized to buy more property when you're selling a property and there's eight interested buyers, you have control. You have leverage and you can put a deal together. That makes more sense for you. So that you're incentivized to want to do this again. The same is true if you're the person that finds a deal and puts it under contract and you're bringing in investors, they're depending on you as the person with the control to put a deal together that will make them money. When the, when a mistake is made by someone in control, it could be catastrophic of a mistake is made by someone who doesn't have control.

The limitations are there, that it can't get that bad. That's what I'd like to encourage people to do as they're listening to. This is to ask themselves tough questions. Are you okay acknowledging that there is an Alpha and a Beta in situations like this and it's in your best interest to seek to be the Alpha. If you're not ready to be in the alpha position, what knowledge, what information, what can you do to improve your position so that you do a better job when you're in the Alpha position, when it comes to real estate, you can make a lot of money in this industry, but it's not gonna happen if you don't have the control. And so there's, there's discomfort that can come from that, but it doesn't have to be that way when you know that you make good decisions that make everyone money, you put win win solutions together, you take properties that are not being managed well and you put them in their highest and best use, you should have a form of confidence that comes with that rob. Have you had, I had an experience like that in your life where you recognize I need to be comfortable in this position of power that I never had before. 100%. You got to think about it right? Is what he's saying. You want to win win scenario here, right? That that's the outcome.

This is not a, this might seem like a win win scenario, David, but it's not. Investor says, hey, rob. Um, I'm gonna give you money, go by the house, go by the, you know, here's a split. I take a bad deal, but hey, I get a free quote unquote house. Right. Then at that point, once we've closed the deal, we run it, we perform. We perform well. But then I say, I never want to work with that person again because the negotiation was terrible. Now I'm gonna go find another investor, brief them, pitch them on another property and work with them and find a better deal. That to me is not a good scenario because at that point I'm looking for strategic partners that will invest with me, not just for one deal, but for several deals. So you really have to try to put together a deal. That's a win win.

Like Warren saying for the exact reason that, look, it's either I'm gonna get a crazy good deal and the investor won't. And thus the investor might do it, but they'll never invest with me again or the investor gets the crazy good deal and I get the bad deal, but I go through with it. But then I never invest with that investor again. Both of those are lose, lose scenarios to me. So I think you're really trying to prevent any kind of friction in the future by just setting the stage that it's like, hey, I've underwritten conservatively just so that, you know, so that we are winning across the board and we're getting this thing to the finish line together. That's it, all right. And before the next section of our show, let's hear from today's show sponsors. There's a lot going on in the world right now and more of it than ever seems to be about business, but so much of it can feel a little out of reach, we did judge that a 75 basis point increase was the right magnitude. In light of the data that we

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I'm Nora, Ali, the host of business casual, a podcast for morning brew that brings you conversations with people, you know, and some of you may not know yet to make business less intimidating because money talks, but it does not have to be dull, listen on Apple Spotify or wherever you get your podcasts. It feels like just yesterday we were talking about Blockchain being the future of real estate. Well the future is here. Meet morrigan Son West mortgage company's newest iteration of their proprietary Ai platform. Morgen uses open ledger technology to redefine how real estate sales are transacted, morgen converts your preapproved property specific loan to a property Agnostic tradable N. F. T. Backed by real dollars guaranteed by Sun West. This new technology arms borrowers with the strength of an all cash we offer and empowers all income bracket borrowers with the ability to present offers with certainty and no open ended financing contingencies with morrigan Sun West can review thousands of loan applications within hours so whether you need a preapproval at 10 p.m. On a sunday or instant feedback on guidelines, morgen is free and available 24 hours a day to cater to your mortgage needs, find out how morgan can help you at use morgen dot com that's use more organ dot com. The biggest barrier to entry for real estate investing is the sheer difficulty of it all. But what if you could use a real estate investing platform complete with an app and website to invest in high end real estate like apartment buildings, single family rentals and industrial complexes.

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Uh, yeah, so I mean, I would love for people to read the book and have that for the first time, but maybe I can give you the, the, you know opposite story of that. Um, so right there is, you know, uh, what I would call like a college kids poster, sports car apex, sports car. Like I could walk over and touch it. Um, happy to turn the camera if you want to see it. So I have a friend who is a police officer in the California state police, right? And on christmas we met up in Orange County and um, you know, he got in the car and was driving it, you know, up the freeway and you know, it was christmas and it was fun and he was, you know, he was coming up 100 and 40 miles an hour behind a car and people look and see, you know, some jerk in a super hyper sports car, uh, you know, behind them and you know, and then so they were freaking out, you know, and he was, he was, you know, pointing them to pull over. Uh, and so they were, you know, getting pulled over by a state trooper. Uh, you know, on christmas in a hyper car and if you can, you know, we were having fun with it. Uh, you know, obviously don't want to mention the guy's name, but the, the emotion, you know, people pulled over immediately and just the emotional chaos of being mad at someone. Um, you know, for driving up behind you in a jerk sports car. That's why I'm not, you know, naming which car it is and then they're a state trooper. It's like a massive, overwhelming and you know, and I said joe, hey, let's just stop doing it.

You know, he's six ft three in all, all his gear, you know, and fully showing himself people, I go, let's stop doing it. Like this is massive emotional overwhelm for people in which they can, you know, they were shaking. You can just see them visibly disturbing and stop being funny really quickly. Um, and and so I'm not sure if, you know, if that helps, but but in terms of frame control, you know, people have and and getting this alpha position and controlling people and getting them to see things from your perspective, you've got to put them in some emotional state in which they are in a situation that they're unaccustomed. They want something, they're excited about something and they're in an emotional state in which they're unaccustomed to being in. And I'll give an example that's not in the book, which I think you're looking for. But I do want people to read that and experience it for the first time. Uh, So I was in a meeting with, uh, venture capital investor, uh, for a genetics company. You know, there was sort of 10 of us in the room and they brought their expert into the meeting, their genetics expert. And she was incredibly aggressive about the company's I. P. About the company's technology, about the company's ability, you know, questioning the company's co Claims, right?

And I said Susan this is all fantastic. We can break all but the questions you're asking all require 45 minutes to two hours to answer. And we're here for another 30 minutes. None of your questions are answered answerable. You're looking at one of the best genetics companies in southern California, you guys are 70% on the way to ask to making the investment and you're asking the unanswerable questions. So one, why don't we set some breakout sessions? You can sit with the scientists and get solid answer your questions to, uh, start frazzling everyone in this meeting wanting to help you in a situation in which it's not possible to do so. And third, is there any way you think you could help this deal move forward or you only want it to move backwards? And so it is, that is a complete reframe. And, and so, um, and you know, give you an example, uh, and she completely became, you know, emotionally, uh, destabilized. Nobody talks to her like that. But I didn't confront her that she's wrong or these things.

But, but I did say, what is your values? So if you want to move somebody emotionally, you show them that their values are out of phase with what I would call the moral center values are where you can get somebody emotional without trying to be right or wrong. And so the way you call somebody's values into play. As you say, First of all, there's two steps to this and everybody should be doing this anyway. Take the moral center always show up on, you know, in the navy, they say, hey, if you show up early, you're on time. If you're on time you're late. And if you show up, you're late, don't even come to the meeting, obey the rules of business which are timeliness. Second work hard. Business is about work. Whenever you're working hard, you occupy the moral center, right? Who is out of phase in America with values. People who show up unprepared, don't work hard and want things for free anytime somebody shows up, they have, they want a big win.

They want a deal to really happen. They're hoping to get something for themselves, but they haven't worked hard. They're not timely and they haven't prepared. You can just say, I'm confused. You want this big win. You want something that, that's incredible and hard to get. But some of the things you're doing don't make sense. We, and this is how you summarize that. We cannot work harder on your deal than you will. We don't have the upside. We don't have the benefit. We have other things to do.

We will do what we say, but we cannot work harder on your house on your asset on your deal than you will. So that so one is, you always want to show up doing the work preparing and timely. That lets you have the moral center from the moral center. You can share your values. Once your values occupy the strongest position. Everything they do can be compared to you not the other way around and that is true frame control. Like you can read the book and you can go through the example and everything like that. But but if you want to hear it from me directly true frame control in which other people have to react to what you're doing is when you have the best set of values in the deal and then you control everything. No matter how many billions of dollars they're bringing to the table because you're not needy. One of the core values is I will show up on time. I will work hard. We'll bring everything we're supposed to be will prepare will invest ourselves.

Um and uh but we will not work harder than you will on your deal right? We will invest a certain amount of time in order to try and get to a transaction if we can't visibly see you contributing or a transaction happening, we're out. Another set that goes in value is we like this deal. We like you David. We love what's going on here. Like we were probably over invest in this. Okay. Um but uh the you know, but but it has to fit in our business model. You can ask us to do almost everything, but we won't be bad business people. So we have to, you know, it has to be fair to us, it has to be a timeline that makes sense for our business, right? And the agreements have to happen on um on a pace that every other real estate deal happens on because we're busy and that's where I've arrived at, we are busy acting needy frames you as the beta frames the other person is the alpha puts them in the power position and then they're gonna start to exert control and weird behavior on top of you and you're just constantly have to be reactive to the things that they're doing and saying, how do I know if I'm the beta, I'm reacting to what they're doing, insane. If they're reacting to me, then I'm the alpha and they're the beta.

There are not two alphas are not too betas. This is the function of human interaction. Uh, so to finish that thought I many times will go in and say, Hey, David, um, I love you. I love everything you're doing. I want you in this deal. Like to me, there's no one else. I would even say I need you in this deal. Right? So why would or in clap, who said never be needy in multiple, uh, you know, printed journals and books, say those things Because I have the other side of it, which is to say, um, I need you in this deal. Like your money is the best money for this deal. I like if you're my partner, we're gonna, this is gonna be a love affair. That's gonna last 20 years until one or both of us die will probably be that couple and you know, here's the improv, right?

Well, we'll be that couple that, you know, like when one of us dies within three hours, the other one will die, right? And it's all gonna start here because we just can't live with each other and it's all gonna start here with this investment. You know? Honestly, I mean, I feel that way. So that's, that's prima fascia needy position. But on the other hand, uh, now I exhibit that I'm busy and I don't need it, right? But on the other hand, I'm super busy and you're busy as well. This is two trains passing in the night. Like if we can't get comfortable with each other on this 45 minute call and sort of do two more calls this week, even though it's Wednesday, it's gonna be sad. It's gonna be frustrating. It's gonna be another tear spilt into a full beer, but that's the way it goes. Life is not fair.

So it's the desire and the emotional um state of being ready to work hard and bringing resources table, but also not needing this at all. And that frames the walk away, right? Hey, if I'm willing to walk away from this from you as much as I want it after expressing that I wanted, if I'm willing to walk away within five minutes of starting the pitch. Well, what will happen if you are high friction and difficult to deal with at the end. You've already seen my willingness to walk away and now I say, hey, I don't know like this seems high friction might not be for us that has teeth because you so, so the needy but not you know wanting the deal but not needing it is the ultimate in AlFA beta frame control. Now this is some gold. One of the things that I learned in realtor training is the one who asked the questions is the one controlling the conversation. So they would actually run us through exercises where I would be talking to someone like rob and I would be holding a pen as long as I was asking him questions. But if he could switch the conversation around to where he was asking me questions and I had to reply, he would take the pen out of my hand and when you do an exercise like that, that you realize how real it is that when someone's asking questions, they're the ones that are controlling where the conversation goes. And you notice people doing this to you that are really good that have a very strong frame in certain situations. So if a client walks into an open house or I should say a lead and they say, tell me about the house, tell me about you, tell me about the area and I'm just responding to everything. They say they controlled that whole conversation, they're probably going to walk away and go find a different agent that made them feel safe.

I didn't if I control the conversation, if I say, well, what are you guys looking for in a home? Did you like about this area? Did you know, property taxes are higher on this part of town than they are over there. Did you know? We can get you alone. That doesn't have P. M. I. I put myself into the alpha position simply by asking questions and then was able to reveal to them knowledge I had that would make me a more attractive agent to choose and or is getting into the same thing right here when they're responding to you, you're the one who's in control. When you're responding to them, they're in control. Think about the time you've been on stage and you've been listening to the speaker, Was the speaker responding to you or were you responding to what the speaker said, A speaker should be holding control and you want to look for this at any time in a relationship where you want to be in the first position or the alpha position, people need to be responding to you rob. Do you have any thoughts on that?

Yeah. I kind of feel like one of one of the other things I took away from this was honestly just being honest with your business model because I think what happens, especially when we're getting started is we become yes, people right? So if the investors like, hey, I've got 100 grand to invest. Can you do this? Yeah, yeah, we could do this. Can you do this? You know, sure. I've never done that before, but why not? And so we get into this like yes mentality. Whereas what it sounded like he was saying, it's like I, I actually to the point now where when investors are pitching me wacky ideas, I'm like, look, I appreciate it. I'll handle the wacky ideas. Alright.

I like your idea, but it would be irresponsible financially for me to do that for you, not just for me to go and be the guinea pig with your money, but to all the other investors that I have that I only invest in these capacities. So that's another way that you are, you know, again, taking the control. It's like being very honest with what your buy box or what your model is. Because we have done that. We have crammed a lot of different ideas. We've tried it, we've always, you know, succeed in everything like that. But at the end of it, we're like, wow, the return was pretty much the same and we worked 15 times harder. And so that's why it's like, no, let's just stick to, let's stick to the script and what we're good at. Well, Orrin describes that as your values are dominating in the relationship and he makes another very solid point if you want to control the frame in any interaction, make it that the other person has to operate by your value. So if you think about when you're standing in front of a judge, you don't have a ton of control, you're not there to tell the judge what you think should happen. There is a value system and the judge is the determiner or the judge of if you cross the boundary, if you didn't same as interaction with the police officer, same as when you're a student in a teacher's class that holds strong frame, there are rules to the classroom that you have to follow and you don't get to make them. So the one who makes the rules in the transaction is the one who's in the position of control and that's what you just described, we do our deals this way, we operate like this, you're very honest and transparent here is the code that we operate by in this environment and if you're going to work with us you're going to have to follow it.

Those are always people that honestly I appreciate the most because the world is made up of yes people, you know, everyone just wants to make everybody happy most of the time and there are times where I'm talking to someone, I just want to be like you know I want people to always be agreeable but when people are like no I don't really do that, I'm like oh thanks for being real, you know like that is something that I really appreciate and now they hold your attention more right now, you're like, tell me more, I want to hear more about how this person does things, yep, I'm always like very fascinated by someone who can just be extremely honest and upfront. Yeah, so do that in a way that holds your value. So if rob's putting a deal together, he's gonna tell the investor no, we don't do it that way. Our value system that has to be worth it for us. What Orange described as we're busy, what he's really saying is we have a lot of other opportunities. So if we're going to work with you, this has to align with our value system and by imposing your values on the other party, you put yourself in the position of the alpha and now they have to cater to what you're looking for, which gives you the control to put the deal together in the way that works best for everyone. I understand this is high level stuff, but this is fascinating stuff. If you want to get into the upper tiers of being successful and all of us that have been on the show for a while have learned, we have to get good at this stuff, not just running a deal through a calculator or learning how to fill out a loan application. So thank you very much for your attention. We love that you have spent this time with us and you've gotten to hear some stuff that frankly people have to spend a lot of money to get Orange time and information in the degree that we have. So this interview is a little too long to make it to one episode. So we've split it into two and provided some commentary to make it applicable specifically for real estate investors.

So check out the next episode of the bigger podcast podcast where we bring Orrin back to finish the interview that we did today and provide some more commentary if you want to know more about or in in the meantime check out or in cloth dot com. That's o R E N K L A F F dot com and you can learn about what he has going on as well as rob rob. Where can they find you? You can find me on rob built at youtube rob built on instagram I think as of today I just hit 50,000 instagram followers. A lot of those are the BP audience. So thank everybody for doing. Thanks everybody for doing that. I guess I should say. And if you want to catch me on Tiktok Roberto, you can find me online at David Green 24 on Youtube at David Green Real Estate. Most boring Youtube name ever. But easy to remember any last words before we get out of here rob. No, just go, go listen to this one again.

I really, I'm being very genuine when I say that I wish I had heard this podcast two years ago. It would have saved me a lot of heartbreak heartache and trauma, but not really. I'm always happy to go through what I did. But it will help you take notes, listen to it again and use it to inform how you carry on with your real estate career because this is a big one there it is in the same way that I hear people say rich dad, poor dad changed the way that they look to finance this book. Pitch. Anything changed the way that I looked at interpersonal relationships and dynamics when you're talking to other people. So I would recommend everybody read this book, especially if you want to build big wealthy real estate. Alright, that is our show for today. We will see you on the next one. Be sure to subscribe to bigger pockets so you get notified when it comes out. This is David Greene for rob flower child. Solo signing off.

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