Just a quick reminder that we do have a free webinar on raising private money coming up in two weeks on February 11th, 2009.
I’ve invited Patrick, an experienced real estate investor that has raised a ton of private money on for the webinar and he will be training us on the best ways to find private money lenders, how to present to them and much more.
There really has not ever been a better time for raising private money for all your deals because interest rates are extremely low and there are more great deals out there than ever before.
Register for the free webinar using this link: https://www2.gotomeeting.com/register/321236082.
Until my next post,
James
If you have a property that you need to fund and you have been growing your email list of potential private lenders, use the Email Blast for Private Money Checklist to contact them to line up someone to fund your deal.
In this checklist we cover making sure you have setup a webpage or at least a single PDF sheet about the deal so that you have something to show your potential lenders about the basics of the deal.
We walk you through using your email broadcast service—and definitely not your regular email account—to send out the email message to them.
We remind you to check your key information in the email like your links and contact information. We have you check each link to make sure that you are not about to send out an email with an invalid link.
We also remind you to send yourself a copy of every email blast you do and to archive them so you can look back through them if you ever need to.
And finally, we remind you that you need to process all remove requests from people that no longer wish to receive your emails to be in compliance with the law. This is just one of many reasons why we do not recommend you use your regular email account to send out these emails, but insist that you use a professional email broadcast service.
Until my next post,
James
P.S. We have a huge amount of information on how to raise private money for our Real Estate Investor Bronze Members in the Real Estate Investor Wiki.
I just ordered some new business cards that focus solely on giving people information on investing in trust deeds in general.
The business card, shown below, has my contact info and suggests they go to my website to get information.
The business cards were just under $10 for 250 cards. You can create similar business cards to use for yourself using this link.
Until my next post,
James
If you have been interested in the great returns that real estate has to offer, but have been reluctant to start the long, hard journey of acquiring the expertise of finding great deals, negotiating with sellers, structuring financing on properties that make sense, overseeing fix up and maintenance, finding and qualifying tenants or buyers and everything else that goes into being a professional real estate investor, then I’ve got some great news. The great news is that as real estate professionals develop their skills at buying amazing deals and turn them into rental properties or sell them with terms to maximize their profit and cater to a changing market, they often quickly outgrow their personal capital for funding deals.
This presents a great opportunity for investors that are looking to take advantage of our real estate market, but in a much more passive way. Here’s one way to do it.
Skilled real estate professional can negotiate to buy properties that are 25 to 30% or more below current fair market value even when you factor in the cost to repair the properties to get them into top selling condition. These investors are often willing to pay high, fixed rates of returns for private lenders that are willing to loan money that allows them to purchase these properties. That’s a huge opportunity for many that are looking for a return that is fixed and well secured by actual real estate they can see and touch if they wanted to.
Let’s examine an example. A real estate professional that you know and trust finds a great property that is worth $200,000 fixed up. The property will need about $20,000 in repairs to get it in a condition where the real estate investor can offer it to a tenant-buyer who will rent it for a year or two before they get a traditional loan from a bank and buy the property from the investor.
The investor can purchase this property for $120,000. Combined with the $20,000 that is needed to repair the property, they are looking to borrow $140,000 from a private lender to purchase the property and fund the repairs. Remember the property is worth $200,000 so you, as the private lender, would be lending $140,000 against an asset that is worth $200,000. That works out to be 70% loan to value. Which means there is a $60,000 cushion of equity in that property. The investor is willing to pay a healthy fixed rate of return to you as the private lender on that property of let’s say 9%. When the property sells the investor makes a healthy profit between what he owes to you and what he is selling the property for (minus costs of course).
With this type of setup, you as the private investor win with a great return on your money well secured by the full value of the property. The investor wins because he can do the deal and make a nice profit when it sells. The buyer wins because they have found a flexible seller that allows them to get into a house with creative terms while they are waiting for their bank loan. It truly is a win-win-win situation.
Until my next post,
James
P.S. For our Real Estate Investor Bronze Members we have exclusive training materials on raising money for deals. Upgrade now.
As I continue to answer some frequently asked questions from the private lending FAQ, you may choose to answer today’s question significantly different than I have.
The question for today is: Is there a maximum I can invest?
My answer:
Since the overwhelming majority of the properties we buy are at or below the median price of houses in that market and we borrow only up to a reasonable loan to value on a property, there is a practical upper limit to how much you could invest on any one give property.
To put numbers to what I explained above, if the median price of housing as approximately $250,000 and we are borrowing 70% loan to value, the most you could expect to lend on that deal would be $175,000.
Of course, if you wanted to invest more than that you could lend on additional distinct and separate properties. Each deal though would be an independent and separate loan since we do not pool funds.
Until my next post,
James
As we continue to cover the FAQs that you may need to set up as you prepare your ownprivate lending FAQs, today I am sharing yet another question and my answer to it for you.
The question I address today is: Do these loans pay down or are they interest only? Here is my answer:
Usually our private lenders want to keep their capital working for them and so we set up the loans that have monthly payments to pay just the interest each month. This keeps the full amount of your loan working for you.
If you have a specific need for amortizing the loan (paying back the principle as well as interest earn month), let me know and, in most cases, we can accomodate that.
Until my next post,
James
