By: Larry goins
To allow yourself the opportunity to find great deals, you need to look into including private lending within your bag of tricks. This article will give you a quick overview why this is a must-have within real estate investing and the quick steps.
Private lending simply involves soliciting individuals with excess cash to invest in the real estate deals you have. You first need to identify those who have this excess cash. This may be difficult to do because you may not know who you want to look at. You may look for those who have strong investment portfolios or who own their own companies. They may have a great deal of excess cash sitting around.
When you are looking for these individuals, be sure to place advertising in your local newspaper and potentially on a website if you have one. This will allow those with excess cash to raise their hands and announce their interest. This will cut down on you trying to actively solicit people you think may have money but you are not entirely certain. Once you have gotten the interest of several individuals, you may want to schedule a group meeting where you can make a presentation and hand out a report how you can make these people more money.
These individuals with excess cash will be interested because you can offer them a high rate of return. When they lend you money, you will then put a mortgage against the property you buy so that their money is secured by collateral. Those are the two keys whenever you talk with any individual: what kind of return can I expect and how safe is my money? If you talk to these points satisfactorily, you will have great success.
Private lending is so important within the industry because of varying reasons. You do not have to worry about bank financing or about your credit. The turnaround time in doing a deal with private lenders is infinitely quicker than those applying for investment property mortgages. You often can find the best deals if you are able to move quickly and private lending allows you to do that.
If you have bad credit going into your real estate ventures, this is a perfect opportunity to still get involved in the field while not having to include your personal financial history. You can do infinitely more deals when you have more people with excess cash so private lending allows you to grow your business exponentially.
Author Resource: For more articles and a 10 part e-course on how to create your own Ultimate Buying and Selling Machine! plus over 50 training audios, simply go to www.LarryGoinsFreeOffer.com where you will gain instant access
Tuesday, July 8, 2008
Monday, July 7, 2008
Fannie and Freedie - Good Lord They Need $75 Billion to Stay Alive!!!
Fannie and Freedie - Good Lord They Need $75 Billion to Stay Alive!!!
Can this be good for the real estate market - I believe Congress will have to come thier help and bail them out and that means massive write-offs - can not be good for the real estate prices
Do you want some great tips and stratergies on how to raise private funds to help fund your real estate deals go to http://www.realestatewealthtoday.com/
Can this be good for the real estate market - I believe Congress will have to come thier help and bail them out and that means massive write-offs - can not be good for the real estate prices
Do you want some great tips and stratergies on how to raise private funds to help fund your real estate deals go to http://www.realestatewealthtoday.com/
Saturday, July 5, 2008
Apartment Rents Up 1% for 25th Consecutive Quater
By Dan Levy
July 5 (Bloomberg) -- The vacancy rate for U.S. rental apartment buildings was unchanged at 5.9 percent in the second quarter as the housing slump and a weakening economy deterred people from buying homes, Reis Inc. reported.
The average monthly U.S. asking rent rose 1 percent to $1,047, the 25th consecutive quarter that rents increased or stayed the same, according to Reis, a New York-based research firm.
Home prices in 20 U.S. metropolitan areas declined in April by the most on record and new home sales fell 40 percent in May from a year ago.
The slumping housing market means apartment rents should remain steady even as gasoline prices rise and U.S. companies cut jobs, Sam Chandan, chief economist for Reis, said in an interview.
``Our projection is rent growth will moderate through 2009, but we don't think it will turn negative as it did in the early 2000s,'' Chandan said. ``The bias will be weighted toward rental, in our view. People fear home prices will fall further.''
The last time U.S. rents fell was the first quarter of 2002, when they declined by 0.2 percent, according to Reis.
The five-year housing boom that ended in 2006 attracted investment to homebuilding, so fewer apartment buildings were constructed, Chandan said.
``There has been very little apartment development because all the money was made in housing development,'' he said. ``We don't have a strong pipeline of apartments.''
July 5 (Bloomberg) -- The vacancy rate for U.S. rental apartment buildings was unchanged at 5.9 percent in the second quarter as the housing slump and a weakening economy deterred people from buying homes, Reis Inc. reported.
The average monthly U.S. asking rent rose 1 percent to $1,047, the 25th consecutive quarter that rents increased or stayed the same, according to Reis, a New York-based research firm.
Home prices in 20 U.S. metropolitan areas declined in April by the most on record and new home sales fell 40 percent in May from a year ago.
The slumping housing market means apartment rents should remain steady even as gasoline prices rise and U.S. companies cut jobs, Sam Chandan, chief economist for Reis, said in an interview.
``Our projection is rent growth will moderate through 2009, but we don't think it will turn negative as it did in the early 2000s,'' Chandan said. ``The bias will be weighted toward rental, in our view. People fear home prices will fall further.''
The last time U.S. rents fell was the first quarter of 2002, when they declined by 0.2 percent, according to Reis.
The five-year housing boom that ended in 2006 attracted investment to homebuilding, so fewer apartment buildings were constructed, Chandan said.
``There has been very little apartment development because all the money was made in housing development,'' he said. ``We don't have a strong pipeline of apartments.''
Monday, June 30, 2008
PRIVATE LENDING MINI-COURSE LESSON 1: SOURCES OF FINANCING
********************************************************
Learn the secrets of using private lenders to fund your real estate deals
For more info visit: http://www.privatelendingfunding.com
********************************************************
PRIVATE LENDING MINI-COURSE LESSON 1: SOURCES OF FINANCING
There are many sources of financing available for us to use as real estate investors. Being informed of the options available is important for structuring your real estate business.
Conventional Financing - This is the type of financing provided by banks and conventional lenders. It is long term and requires a lot of paperwork and qualifying. In addition, conventional lenders will only let one individual acquire a certain number of properties before they won't finance any more.
Hard Money - This is also referred to as rehab financing. It is short term and high interest and is intended to be used only for acquiring and rehabbing a property. It usually requires less qualifying on the part of the investor because it is loaned at a very low LTV.
Creative Financing - This is a blanket term for techniques such as lease options, subject to, and owner financing that will allow you to acquire control of a property without putting money down. These techniques are great when you can use them but are not applicable when the seller needs to sell for cash.
Revolving Credit Sources - These are sources such as business lines of credit and credit cards. While these can be flexible sources of financing, the interest rates tend to be high, and they require monthly payments to be made to service the debt. They also limit you to the size of your available credit line.
Business Partners - You can partner up with a wealthy individual or funding partner to get the cash for your deals, if you are willing to share control of your business.
Cash - If you have sufficient personal cash you can use it in your real estate deals, but why not put it into more passive investments and leverage the power of other people's money in your real estate business?
Private Lenders - These are private individuals with money to lend for investment purposes. They may or may not be wealthy but they do have excess capital available, over and above what they need to live on, that is earning a lower return than that which you are willing to offer. The advantage to working with private lenders is that you can set the terms by which you borrow.
Learn the secrets of using private lenders to fund your real estate deals
For more info visit: http://www.privatelendingfunding.com
********************************************************
PRIVATE LENDING MINI-COURSE LESSON 1: SOURCES OF FINANCING
There are many sources of financing available for us to use as real estate investors. Being informed of the options available is important for structuring your real estate business.
Conventional Financing - This is the type of financing provided by banks and conventional lenders. It is long term and requires a lot of paperwork and qualifying. In addition, conventional lenders will only let one individual acquire a certain number of properties before they won't finance any more.
Hard Money - This is also referred to as rehab financing. It is short term and high interest and is intended to be used only for acquiring and rehabbing a property. It usually requires less qualifying on the part of the investor because it is loaned at a very low LTV.
Creative Financing - This is a blanket term for techniques such as lease options, subject to, and owner financing that will allow you to acquire control of a property without putting money down. These techniques are great when you can use them but are not applicable when the seller needs to sell for cash.
Revolving Credit Sources - These are sources such as business lines of credit and credit cards. While these can be flexible sources of financing, the interest rates tend to be high, and they require monthly payments to be made to service the debt. They also limit you to the size of your available credit line.
Business Partners - You can partner up with a wealthy individual or funding partner to get the cash for your deals, if you are willing to share control of your business.
Cash - If you have sufficient personal cash you can use it in your real estate deals, but why not put it into more passive investments and leverage the power of other people's money in your real estate business?
Private Lenders - These are private individuals with money to lend for investment purposes. They may or may not be wealthy but they do have excess capital available, over and above what they need to live on, that is earning a lower return than that which you are willing to offer. The advantage to working with private lenders is that you can set the terms by which you borrow.
Tuesday, June 24, 2008
S&P/Case-Shiller U.S. Home-Price Index Falls 14.4%
The headline number is down by 14% but when you look at the details there is some good news (not much but some) - new home sales are up in April and Charlotte is actually up for the last 12 months - however the bottom is not in for the real estate market
Mike
By Bob Willis
May 27 (Bloomberg) -- Home prices in 20 U.S. metropolitan areas fell in March by the most in at least seven years, pointing to weakness in the housing market that will constrain economic growth.
The S&P/Case-Shiller home-price index dropped 14.4 percent from a year earlier, more than forecast and the most since the figures were first published in 2001. The gauge has fallen every month since January 2007.
Prices continue to slide as record foreclosures put more homes on the market and stricter lending standards make it harder to get loans. Falling home values are slowing consumer spending, threatening to halt the six-year expansion.
``There is excess supply, weakening demand, prices are falling and will continue to fall,'' said Kevin Logan, senior market economist at Dresdner Kleinwort in New York. ``Housing sales are still trending lower.''
Prices dropped 2.2 percent in March from a month earlier, after a 2.6 percent decline in February, the report showed. The figures aren't adjusted for seasonal effects, so economists prefer to focus on year-over-year changes instead of month-to- month variations.
New-Home Sales Rise
A government report showed new-home sales unexpectedly rose in April after readings for the prior month were revised down. Sales increased 3.3 percent to an annual pace of 526,000 from a 509,000 rate the prior month that was the lowest in 17 years, the Commerce Department said today in Washington.
Another report from the Conference Board indicated confidence among U.S. consumers fell this month to the lowest level in more than 15 years.
Treasuries fell, pushing yields higher. The benchmark 10- year note yielded 3.91 percent as of 10:09 a.m. in New York, up 6 basis points. Stocks were higher.
The index was forecast to drop 14 percent following a 12.7 percent drop in February, according to the median estimate of 9 economists surveyed by Bloomberg News. Estimates ranged from declines of 12.9 percent to 15.1 percent.
The group's 10-city composite index, with a history back to 1987, fell 15.3 percent in the 12 months ended in March, also the most ever.
Charlotte Up
Nineteen of the 20 cities in the index showed a year-over- year decrease in prices for March, led by a 26 percent slump in Las Vegas and a 25 percent decline in Miami. Charlotte was the only area showing a gain with a 0.8 percent increase.
Compared with February, homes in 18 of 20 areas covered dropped in value.
Prices remained under pressure in April, a report last week showed. The median price of existing homes sold last month fell 8 percent from April 2007, the National Association of Realtors said. Existing home sales fell 1 percent and were 33 percent below their peak in September 2005. The number of unsold homes rose to its second-highest level on record.
Most economists and investors say housing prices have further to fall after more than doubling in the early part of the decade to a peak in 2006.
``The decline in housing prices is still accelerating and is going to overshoot on the downside the same way it overshot on the upside,'' billionaire investor George Soros told a conference at the London School of Economics last week. ``We are not yet halfway in the decline in housing prices.''
Recovery in Demand
The slide in prices may have contributed to a recovery in demand in some areas. Sales in the San Francisco region jumped 29 percent in April from the previous month, the biggest March- to-April gain in at least 20 years, according to DataQuick Information Systems in San Diego. The median price was $518,000, down 22 percent from the $655,000 peak in June and July 2007, the real estate data company said.
The two-year housing recession has reverberated across the economy, hurting job growth, investments and consumer spending. Falling home prices leave Americans with less equity to tap for spending on appliances, cars or home-improvement projects.
Retailers have been hard hit. Home Depot Inc., the largest home-improvement retailer, last week said first-quarter profit fell 66 percent as consumers cut back on remodeling.
``The housing and home improvement markets remained difficult in the first quarter,'' Chief Executive Officer Frank Blake said in a statement. ``In fact, conditions worsened in many areas of the country.''
Declining home prices also leave Americans with mortgage balances that are more than their houses are worth, pushing up new foreclosures to an all-time high at the end of 2007, according to the Mortgage Bankers Association. Record foreclosures threaten to drag out and deepen the downturn.
The government is seeking to reduce the foreclosures and limit financial losses. Lawmakers at the Senate Banking Committee last week approved legislation to create a program at the Federal Housing Administration to insure as much as $300 billion in mortgages for struggling borrowers after lenders agree to reduce the loan amount.
Mike
By Bob Willis
May 27 (Bloomberg) -- Home prices in 20 U.S. metropolitan areas fell in March by the most in at least seven years, pointing to weakness in the housing market that will constrain economic growth.
The S&P/Case-Shiller home-price index dropped 14.4 percent from a year earlier, more than forecast and the most since the figures were first published in 2001. The gauge has fallen every month since January 2007.
Prices continue to slide as record foreclosures put more homes on the market and stricter lending standards make it harder to get loans. Falling home values are slowing consumer spending, threatening to halt the six-year expansion.
``There is excess supply, weakening demand, prices are falling and will continue to fall,'' said Kevin Logan, senior market economist at Dresdner Kleinwort in New York. ``Housing sales are still trending lower.''
Prices dropped 2.2 percent in March from a month earlier, after a 2.6 percent decline in February, the report showed. The figures aren't adjusted for seasonal effects, so economists prefer to focus on year-over-year changes instead of month-to- month variations.
New-Home Sales Rise
A government report showed new-home sales unexpectedly rose in April after readings for the prior month were revised down. Sales increased 3.3 percent to an annual pace of 526,000 from a 509,000 rate the prior month that was the lowest in 17 years, the Commerce Department said today in Washington.
Another report from the Conference Board indicated confidence among U.S. consumers fell this month to the lowest level in more than 15 years.
Treasuries fell, pushing yields higher. The benchmark 10- year note yielded 3.91 percent as of 10:09 a.m. in New York, up 6 basis points. Stocks were higher.
The index was forecast to drop 14 percent following a 12.7 percent drop in February, according to the median estimate of 9 economists surveyed by Bloomberg News. Estimates ranged from declines of 12.9 percent to 15.1 percent.
The group's 10-city composite index, with a history back to 1987, fell 15.3 percent in the 12 months ended in March, also the most ever.
Charlotte Up
Nineteen of the 20 cities in the index showed a year-over- year decrease in prices for March, led by a 26 percent slump in Las Vegas and a 25 percent decline in Miami. Charlotte was the only area showing a gain with a 0.8 percent increase.
Compared with February, homes in 18 of 20 areas covered dropped in value.
Prices remained under pressure in April, a report last week showed. The median price of existing homes sold last month fell 8 percent from April 2007, the National Association of Realtors said. Existing home sales fell 1 percent and were 33 percent below their peak in September 2005. The number of unsold homes rose to its second-highest level on record.
Most economists and investors say housing prices have further to fall after more than doubling in the early part of the decade to a peak in 2006.
``The decline in housing prices is still accelerating and is going to overshoot on the downside the same way it overshot on the upside,'' billionaire investor George Soros told a conference at the London School of Economics last week. ``We are not yet halfway in the decline in housing prices.''
Recovery in Demand
The slide in prices may have contributed to a recovery in demand in some areas. Sales in the San Francisco region jumped 29 percent in April from the previous month, the biggest March- to-April gain in at least 20 years, according to DataQuick Information Systems in San Diego. The median price was $518,000, down 22 percent from the $655,000 peak in June and July 2007, the real estate data company said.
The two-year housing recession has reverberated across the economy, hurting job growth, investments and consumer spending. Falling home prices leave Americans with less equity to tap for spending on appliances, cars or home-improvement projects.
Retailers have been hard hit. Home Depot Inc., the largest home-improvement retailer, last week said first-quarter profit fell 66 percent as consumers cut back on remodeling.
``The housing and home improvement markets remained difficult in the first quarter,'' Chief Executive Officer Frank Blake said in a statement. ``In fact, conditions worsened in many areas of the country.''
Declining home prices also leave Americans with mortgage balances that are more than their houses are worth, pushing up new foreclosures to an all-time high at the end of 2007, according to the Mortgage Bankers Association. Record foreclosures threaten to drag out and deepen the downturn.
The government is seeking to reduce the foreclosures and limit financial losses. Lawmakers at the Senate Banking Committee last week approved legislation to create a program at the Federal Housing Administration to insure as much as $300 billion in mortgages for struggling borrowers after lenders agree to reduce the loan amount.
Sunday, June 15, 2008
URGENT - REI Summit 2008 - I am Speaking
I've got something special for you, but it's rather time-sensitive:
On June 19th, at approximately 9 PM (EST), my friend and millionaire real estate coach, Susan Lassiter-Lyons, is kicking off the 2008 REI Summit Teleseminar series… and it's going to be a real eye-opener.
To quote Susan:
"This is your once in a lifetime opportunity to listen in to the most profitable ways to position your REI business for massive success in 2008 from 11 of the world's foremost real estate investment strategists and authorities all FREE!"
---------------------------------------------------
Here's where you can
sign up:http://www.reisummit2008.com
---------------------------------------------------
You see, if you're like most of us, you've probably had your doubts about REI and the "state of the market" over the past 12 months.
Maybe you even "hung it up" and went back to your day job for a bit… until things settle down.
Well, I'm here to tell you…
+++THIS TELESEMINAR COULD CHANGE THINGS FOR YOU+++
Look, when you did your first deal, did you give up at the first sign of trouble?
Heck no.
And if you would have, you wouldn't be where you are today.
Well, it's the same with changes in the market.
You simply side-step the hurdles, and adapt to what DOES work. And thankfully, Susan has lined up 12 speakers (including ME) who are absolute experts in this market right now.
For YOU to learn from and "replicate"
---------------------------------------
Here's where it
all starts:http://www.reisummit2008.com
---------------------------------------
In addition to learning which REI strategies are working RIGHT NOW, you'll also learn:
+++ How to Eliminate the Banks in 2008...and Raise All the Private Money You Could Ever Need for Your Investments!
+++ How to Create a Continuous Flow of Motivated Sellers Online and Off for Your Real Estate Business for Next to Nothing!
+++ How to Pay Off a Mortgage in as Little as 3 to 9 Years, Without Increasing Your Monthly Expenses!
+++ How to Find Hundreds of Discounted, Competition Free Properties in Your Own City!
+++ How to Break Into Commercial Investing Without Fear! (and without cash or credit)
+++ And much MUCH more!
------------------------------------------
Head on over and
sign up now:http://www.reisummit2008.com
------------------------------------------
But you have to act TODAY …
Here's why:A similar email is being sent to 45,000 OTHER savvy real estate investors just like you.
So what's the big deal, you ask?
Well, unless something changes, there are only about 1,000 spaces available for each summit call, and that means you'll have to fight and kick your way over RIGHT NOW to make sure you get a spot.
--------------------------------
Here's the link
again:http://www.reisummit2008.com
-------------------------------
I hope you'll take this opportunity to join Susan (and myself!) on this one-time only event.
You can get the full details and list of speakers here:
http://www.reisummit2008.com/
I'll talk to you soon
Mike Lautensack
http://realestatewealthtoday.com/
On June 19th, at approximately 9 PM (EST), my friend and millionaire real estate coach, Susan Lassiter-Lyons, is kicking off the 2008 REI Summit Teleseminar series… and it's going to be a real eye-opener.
To quote Susan:
"This is your once in a lifetime opportunity to listen in to the most profitable ways to position your REI business for massive success in 2008 from 11 of the world's foremost real estate investment strategists and authorities all FREE!"
---------------------------------------------------
Here's where you can
sign up:http://www.reisummit2008.com
---------------------------------------------------
You see, if you're like most of us, you've probably had your doubts about REI and the "state of the market" over the past 12 months.
Maybe you even "hung it up" and went back to your day job for a bit… until things settle down.
Well, I'm here to tell you…
+++THIS TELESEMINAR COULD CHANGE THINGS FOR YOU+++
Look, when you did your first deal, did you give up at the first sign of trouble?
Heck no.
And if you would have, you wouldn't be where you are today.
Well, it's the same with changes in the market.
You simply side-step the hurdles, and adapt to what DOES work. And thankfully, Susan has lined up 12 speakers (including ME) who are absolute experts in this market right now.
For YOU to learn from and "replicate"
---------------------------------------
Here's where it
all starts:http://www.reisummit2008.com
---------------------------------------
In addition to learning which REI strategies are working RIGHT NOW, you'll also learn:
+++ How to Eliminate the Banks in 2008...and Raise All the Private Money You Could Ever Need for Your Investments!
+++ How to Create a Continuous Flow of Motivated Sellers Online and Off for Your Real Estate Business for Next to Nothing!
+++ How to Pay Off a Mortgage in as Little as 3 to 9 Years, Without Increasing Your Monthly Expenses!
+++ How to Find Hundreds of Discounted, Competition Free Properties in Your Own City!
+++ How to Break Into Commercial Investing Without Fear! (and without cash or credit)
+++ And much MUCH more!
------------------------------------------
Head on over and
sign up now:http://www.reisummit2008.com
------------------------------------------
But you have to act TODAY …
Here's why:A similar email is being sent to 45,000 OTHER savvy real estate investors just like you.
So what's the big deal, you ask?
Well, unless something changes, there are only about 1,000 spaces available for each summit call, and that means you'll have to fight and kick your way over RIGHT NOW to make sure you get a spot.
--------------------------------
Here's the link
again:http://www.reisummit2008.com
-------------------------------
I hope you'll take this opportunity to join Susan (and myself!) on this one-time only event.
You can get the full details and list of speakers here:
http://www.reisummit2008.com/
I'll talk to you soon
Mike Lautensack
http://realestatewealthtoday.com/
Saturday, June 7, 2008
Should I Buy Another Rental Property
In my last post I discussed the opportunity costs associated with making investments. Inevitably you are forfeiting one opportunity in favor of another. I'm I'm seriously contemplating pulling money out of the stock market in order to invest in my second rental property - despite the fact that I'm young, that I just bought my first rental 4 months ago, and that I'd be putting a serious dent in my liquidity.
Analyzing opportuntiy costs is only relevant in terms of what risks and potential upside the new opportunity has to offer. So here is specifically what I'm considering:
WHAT I'D GET:
My realtor let me know about a development of new construction duplexes and single family homes in a rapidly growing and developing suburb about 20 minutes away from where I live. They are brand new 3 bedroom 2 bath units on each side with an attached 2 car garage, granite counters, nice appliances, full size washer dryer connections, the works. A recent appraisal for the builder valued each side at $124K for a total deplux value of $248K.
The rent would be $1,150 on each side, for a total of $2,300 per month. Cash flow would be $466 per month after mortgage/tax/ins and HOA (for lawn care) but before vacancies and maintenance (this assumes a 20% down payment and an interest rate of 7%).
Maintenance costs would be minimal for years, given that the units are brand new and warranties will be in place for everything. And vacancies should be minimal; apparently people are lining up to lease these units; some that aren't even finished are pre-leased to tenants. And the area population and job market is growing at a sharp pace.
WHAT IT WOULD COST:
The builder's price is fixed and non-negotiable (allegedly) at $229,000 per duplex. Assuming a 20% downpayment I would have to put down $45,800. Sure, I could put down less, but that might make my rate higher, and it would affect my cash flow as well. Plus I'd have to pay PMI. Including closing costs and miscellaneous start-up costs, I'd count on $50,000 out of pocket for the purchase.
There are 6 properties left out of approximately 40 that were built. You must buy the whole duplex, though the units can subsequently be sold individually as single family residences. Additionally, there's a property management company you can (but don't have to) use who are charging a relatively low 5.5% of gross rent for that development. If I ever did move or get sick of landlording, I could get them to manage it and still at least breakeven.
So the question is - where is my money better off??
RUNNING THE NUMBERS
Stocks: Assuming 8% annual appreciation, that $50,000 would grow to $54,000 in one year, $73,466 in five years, and 107,946 in 10 years. In the meantime I literally wouldn't have to do a thing - no research, no maintenance costs, no stress (unless the market tanks).
Real Estate: Assuming 4% annual property appreciation, breakeven rent, and a 30 yr fixed mortgage at 7%, I'll start with $45,800 in equity - a $229M property on which I owe $183.2K (until I get an appraisal of my own I'll assume the property is worth what I pay, not what the builder's appraisal says). After one year I'd have $56,756 in equity, after 5 years I'd have $106,160, and after 10 years I'd have $181,762.
And the winner is...Based on these assumptions my $50,000 investment would be worth more through real estate in 1, 5, and 10 years based on appreciation alone. This is the power of leverage. You can quibble over my assumptions, but 4% for real estate over a decade is conservative, especially in the Dallas - Fort Worth area. And 8% for stocks is a big fat maybe; if stocks average 6% a year over the next decade, my $50K will turn into only $89K - making the real estate even more appealing.
Naturally I don't invest in real estate solely for appreciation - in fact I never plan to sell my properties, so the appreciation is moot. The real upside is the cash flow - which in this case starts out positive and should only increase as rents go up and my mortgage payment stays fixed over the years. Once the property is paid off then it really turns into gravy.
Even after assuming 5% vacancy and 2% maintenance, my cash flow would be $300 a month. That's $3,600 a year. That's a 7.2% return on my $50K in the first year alone, not including the above mentioned property appreciation and principal reduction. Plus that figure will increase with rents (and in light of the foreclosure situation, demand for rent in this demographic is likely to remain very strong and/or increase).
Note: I haven't considered taxes for purposes of this superficial analysis. But suffice it to say that the tax advantages that come with purchasing a rental are very enticing. Check out a previous post for the top 10 rental property tax deductions.What do you think? Any insights as to what I may not be considering?
Analyzing opportuntiy costs is only relevant in terms of what risks and potential upside the new opportunity has to offer. So here is specifically what I'm considering:
WHAT I'D GET:
My realtor let me know about a development of new construction duplexes and single family homes in a rapidly growing and developing suburb about 20 minutes away from where I live. They are brand new 3 bedroom 2 bath units on each side with an attached 2 car garage, granite counters, nice appliances, full size washer dryer connections, the works. A recent appraisal for the builder valued each side at $124K for a total deplux value of $248K.
The rent would be $1,150 on each side, for a total of $2,300 per month. Cash flow would be $466 per month after mortgage/tax/ins and HOA (for lawn care) but before vacancies and maintenance (this assumes a 20% down payment and an interest rate of 7%).
Maintenance costs would be minimal for years, given that the units are brand new and warranties will be in place for everything. And vacancies should be minimal; apparently people are lining up to lease these units; some that aren't even finished are pre-leased to tenants. And the area population and job market is growing at a sharp pace.
WHAT IT WOULD COST:
The builder's price is fixed and non-negotiable (allegedly) at $229,000 per duplex. Assuming a 20% downpayment I would have to put down $45,800. Sure, I could put down less, but that might make my rate higher, and it would affect my cash flow as well. Plus I'd have to pay PMI. Including closing costs and miscellaneous start-up costs, I'd count on $50,000 out of pocket for the purchase.
There are 6 properties left out of approximately 40 that were built. You must buy the whole duplex, though the units can subsequently be sold individually as single family residences. Additionally, there's a property management company you can (but don't have to) use who are charging a relatively low 5.5% of gross rent for that development. If I ever did move or get sick of landlording, I could get them to manage it and still at least breakeven.
So the question is - where is my money better off??
RUNNING THE NUMBERS
Stocks: Assuming 8% annual appreciation, that $50,000 would grow to $54,000 in one year, $73,466 in five years, and 107,946 in 10 years. In the meantime I literally wouldn't have to do a thing - no research, no maintenance costs, no stress (unless the market tanks).
Real Estate: Assuming 4% annual property appreciation, breakeven rent, and a 30 yr fixed mortgage at 7%, I'll start with $45,800 in equity - a $229M property on which I owe $183.2K (until I get an appraisal of my own I'll assume the property is worth what I pay, not what the builder's appraisal says). After one year I'd have $56,756 in equity, after 5 years I'd have $106,160, and after 10 years I'd have $181,762.
And the winner is...Based on these assumptions my $50,000 investment would be worth more through real estate in 1, 5, and 10 years based on appreciation alone. This is the power of leverage. You can quibble over my assumptions, but 4% for real estate over a decade is conservative, especially in the Dallas - Fort Worth area. And 8% for stocks is a big fat maybe; if stocks average 6% a year over the next decade, my $50K will turn into only $89K - making the real estate even more appealing.
Naturally I don't invest in real estate solely for appreciation - in fact I never plan to sell my properties, so the appreciation is moot. The real upside is the cash flow - which in this case starts out positive and should only increase as rents go up and my mortgage payment stays fixed over the years. Once the property is paid off then it really turns into gravy.
Even after assuming 5% vacancy and 2% maintenance, my cash flow would be $300 a month. That's $3,600 a year. That's a 7.2% return on my $50K in the first year alone, not including the above mentioned property appreciation and principal reduction. Plus that figure will increase with rents (and in light of the foreclosure situation, demand for rent in this demographic is likely to remain very strong and/or increase).
Note: I haven't considered taxes for purposes of this superficial analysis. But suffice it to say that the tax advantages that come with purchasing a rental are very enticing. Check out a previous post for the top 10 rental property tax deductions.What do you think? Any insights as to what I may not be considering?
Wednesday, June 4, 2008
Business Cards! Learn the 10 Secrets Every Successful Real Estate Investor Must Knows To Make An Ordinary Business Card Into A Marketing Machine!
The purpose of any business card is to get potential sellers to call you. It is not to impress your family and friends, show off creative art work or flash an impressive title you gave yourself. But simply to get motivated sellers to call or email you that they are interested in learning more about how you may be able to solve their real estate problems.
Here are 10 things every real estate investor should include on their business card to be truly effective in getting motivated sellers to call.
1. Business cards should always be two-step marketing; offering a FREE Report or FREE Consulting in exchange for them calling, emailing or going to your website. You cannot make a direct sale with a business card. It is only the first contact in the sales process. You are simply trying to get the potential seller to call, email or visit your website where you can capture their contact information for future follow up.
2. The business card must feature your Unique Selling Proposition (“USP”) as a headline such as “We Buy Houses – FAST” or “How to buy a new home without bank qualifying or a large down payment.” Be compelling with the USP and it will attract attention. The worse thing you can do is to bore your prospect with your headline.
3. The FREE offer or FREE consulting should be of such value that the potential seller actually treats the card like a “gift card” versus a business card. If they do not take immediate action, they will actually make a mental note to save the card for later use if the offer is compelling enough.
4. Attract attention with a business card by making it stand out, such as a $100 bill or use bright fluorescent yellow or orange card stock. You can also make your card stand out by making it oversized, an odd shape or with rounded corners. Again, do things that make your card stand out from other business cards.
5. Tell people what you have to offer, such as a full price offer, quick sale or take over back payments – but always put it terms of benefits to the prospect. Tell them what’s in it for them, and not all about you and the awards you have won.
6. Provide multiple ways to contact you including cell phone, office, fax, toll-free, email, website and snail mail address. Not everyone prefers to communicate in the same way, so be sure to allow them their preferred method.
7. Add social proof by including testimonials from customers, sellers, tenants, or anyone in your network. Just be sure it shows a great customer experience and is clear and concise.
8. Do not waste space telling people how great you are, how long you have been in business, how you offer “great service”, announce an award you won or show a photo of yourself. These are all a waste of valuable space. People do not care about this stuff. They want to know how you are going to help them solve their own problems.
9. Tell people exactly what to do next. Do not assume they will figure it out on their own. Tell to them to “Call xxx-xxx-xxxx” or “Visit http://www.xxxxxxxx.com/ for your FREE Report!”. You can also add a post script such as P.S. Don’t forget to get my FREE Report!
10. Lastly, the single most important thing to do with business cards is to get them out to potential sellers. I have never seen a business card create any business sitting in its original box.
About the Author:
Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, PA and creator of the Private Lender PowerPoint Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE Real Estate Wealth Newsletter go to Real Estate Wealth Today or visit our blog at Real Estate Investment Blog.
Here are 10 things every real estate investor should include on their business card to be truly effective in getting motivated sellers to call.
1. Business cards should always be two-step marketing; offering a FREE Report or FREE Consulting in exchange for them calling, emailing or going to your website. You cannot make a direct sale with a business card. It is only the first contact in the sales process. You are simply trying to get the potential seller to call, email or visit your website where you can capture their contact information for future follow up.
2. The business card must feature your Unique Selling Proposition (“USP”) as a headline such as “We Buy Houses – FAST” or “How to buy a new home without bank qualifying or a large down payment.” Be compelling with the USP and it will attract attention. The worse thing you can do is to bore your prospect with your headline.
3. The FREE offer or FREE consulting should be of such value that the potential seller actually treats the card like a “gift card” versus a business card. If they do not take immediate action, they will actually make a mental note to save the card for later use if the offer is compelling enough.
4. Attract attention with a business card by making it stand out, such as a $100 bill or use bright fluorescent yellow or orange card stock. You can also make your card stand out by making it oversized, an odd shape or with rounded corners. Again, do things that make your card stand out from other business cards.
5. Tell people what you have to offer, such as a full price offer, quick sale or take over back payments – but always put it terms of benefits to the prospect. Tell them what’s in it for them, and not all about you and the awards you have won.
6. Provide multiple ways to contact you including cell phone, office, fax, toll-free, email, website and snail mail address. Not everyone prefers to communicate in the same way, so be sure to allow them their preferred method.
7. Add social proof by including testimonials from customers, sellers, tenants, or anyone in your network. Just be sure it shows a great customer experience and is clear and concise.
8. Do not waste space telling people how great you are, how long you have been in business, how you offer “great service”, announce an award you won or show a photo of yourself. These are all a waste of valuable space. People do not care about this stuff. They want to know how you are going to help them solve their own problems.
9. Tell people exactly what to do next. Do not assume they will figure it out on their own. Tell to them to “Call xxx-xxx-xxxx” or “Visit http://www.xxxxxxxx.com/ for your FREE Report!”. You can also add a post script such as P.S. Don’t forget to get my FREE Report!
10. Lastly, the single most important thing to do with business cards is to get them out to potential sellers. I have never seen a business card create any business sitting in its original box.
About the Author:
Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, PA and creator of the Private Lender PowerPoint Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE Real Estate Wealth Newsletter go to Real Estate Wealth Today or visit our blog at Real Estate Investment Blog.
Saturday, May 24, 2008
Friday, May 23, 2008
New Private Lending Tips....
Guys:
We just posted a new article on tips and ways to raise private lenders - pleased go to and tell me what you think.
Go to http://www.squidoo.com/PrivateLendingMagic
Thanks
Mike
We just posted a new article on tips and ways to raise private lenders - pleased go to and tell me what you think.
Go to http://www.squidoo.com/PrivateLendingMagic
Thanks
Mike
Sunday, May 18, 2008
The Time Has Come - Rental Markets Are Back!!!
For the last several years I have been saying that the foreclosure epidemic would be a good thing for real estate investors. Real estate investors have such a great opportunity when foreclosure rates go up. What opportunity exists? Real Estate investors can buy foreclosures, of course, and they can also rent to the displaced owners of the foreclosures. They now have “tenants” for their new purchases and their existing properties.
For the most part, from 2000 until early 2007, if you could fog a mirror you could qualify for a mortgage. This easy qualification process lead to two things: 1) The tenant base decreased causing higher vacancy rates and lower rental rates and 2) it put so many people in a situation they couldn’t afford. Many people had no savings and barely squeezed into a home with minimal down. They couldn’t afford any blip in their lives or with their new home. Unfortunately, things happen in life. \ Also, many people got put into the interest only adjustable rate mortgages. They qualified when it was interest only or a negative amortization loan, but when it adjusted, they found themselves way over their heads financially.
The Wall Street Journal published an article on May 3, 2008 that addressed how rental homes are now going for a premium in many markets around the country. Many home owners that have gone through recent foreclosure are having a difficult time finding a rental home. There is now competition of renters added to the market.
The article also addressed how many renters are looking for a new place due to the foreclosure on the home they were renting (they didn’t know their landlord was in foreclosure). Many of them have little or no time to move. Some have only a few days notice, as they did not know the owner was loosing the property.
I have waited for this time with baited breath. I, personally, am excited that lending requirements have tightened. It keeps out many investors that can’t qualify for a loan, AND it keeps many of my tenants renting from me. For investors that can’t qualify for a loan, my lease option and subject to strategies will be key. Over time when the rental rates stabilize, it will drive up property values for landlords/investors. What does this mean for you?
BUY NOW!!!! What are you waiting for?
Wendy Patton
For the most part, from 2000 until early 2007, if you could fog a mirror you could qualify for a mortgage. This easy qualification process lead to two things: 1) The tenant base decreased causing higher vacancy rates and lower rental rates and 2) it put so many people in a situation they couldn’t afford. Many people had no savings and barely squeezed into a home with minimal down. They couldn’t afford any blip in their lives or with their new home. Unfortunately, things happen in life. \ Also, many people got put into the interest only adjustable rate mortgages. They qualified when it was interest only or a negative amortization loan, but when it adjusted, they found themselves way over their heads financially.
The Wall Street Journal published an article on May 3, 2008 that addressed how rental homes are now going for a premium in many markets around the country. Many home owners that have gone through recent foreclosure are having a difficult time finding a rental home. There is now competition of renters added to the market.
The article also addressed how many renters are looking for a new place due to the foreclosure on the home they were renting (they didn’t know their landlord was in foreclosure). Many of them have little or no time to move. Some have only a few days notice, as they did not know the owner was loosing the property.
I have waited for this time with baited breath. I, personally, am excited that lending requirements have tightened. It keeps out many investors that can’t qualify for a loan, AND it keeps many of my tenants renting from me. For investors that can’t qualify for a loan, my lease option and subject to strategies will be key. Over time when the rental rates stabilize, it will drive up property values for landlords/investors. What does this mean for you?
BUY NOW!!!! What are you waiting for?
Wendy Patton
Saturday, May 17, 2008
Is the Bottom in for the Real Estate Market?
The US real estate market has been in free fall mode for so long, that many investors and homeowners have been looking for signs the bleeding is slowing down. While it's no guarantee that the market is yet ready to turn around, there is room for cautious optimism with the news that sales of existing homes unexpectedly rebounded in February. True, 2.9% isn't wonderful news; however, for an industry that has seen precious little good news, it's almost cause for dancing in the street.
According to the National Association of Realtors, this equates to a seasonally adjusted annual rate of 5.03 million housing units. In case you're not familiar with the definition of the word “units” – that's either a single-family home or a condominium.
Your reaction to these figures is probably related to the area of the country in which you live, because existing home sales continue their steep slide on the West Coast, following another 1.1% drop. Fortunately, the West Coast is the only region of the country that actually saw a decrease. Sales were up 2.1% and 2.5% in the South and Midwest, respectively. But the Northeast is the star, surging by an astonishing 11.3%.
As welcome as this news is, new home sales figures once again posted a loss for the fourth straight month to the lowest level since 1995.
I think that these figures will probably run hot and cold for awhile, but if you're investing – or thinking about it – the next year and a half or so represents a tremendous opportunity for any investor willing and able to capitalize on this unprecedented chance to buy property at rock bottom prices.
The reason for this thinking is because home prices for the moment are continuing to fall. The median price of a home is down to about $244,000 – down almost 3% in a year. Right now, about 8 million homeowners have negative equity. If prices drop another 10% as most analysts seem to think they will, that would push that figure up to 16 million.
With so many people with negative equity, people are going to continue walking away from their homes – leaving the door wide open for investors with ready access to cash to waltz in and reap the rewards.
Whether you're doing short sales or pre-foreclosures – whatever your specific market niche really doesn't matter – if you have the cash you can put these deals together. You might have the means to get some cash from your local bank, but increasingly lenders are tightening their purse strings and making it more difficult to borrow money.
If you don't have access to a pool of private money, it would be in your best interest to develop a pile of cash you can tap into at a moment's notice. When you see a hot property you can get at a great price, you have to be able to pull the trigger and move on it quickly, or you run the risk of losing it to an investor who can.
To learn more about how you can build a list of private money lenders, click here.
About the Author:Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, Pa and creator of the Private Lender PowerPoint Presentation Kit. This kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your business. To learn more about this powerful step-by-step kit and receive your FREE Real Estate Wealth Newsletter go to http://realestatewealthtoday.com/.
According to the National Association of Realtors, this equates to a seasonally adjusted annual rate of 5.03 million housing units. In case you're not familiar with the definition of the word “units” – that's either a single-family home or a condominium.
Your reaction to these figures is probably related to the area of the country in which you live, because existing home sales continue their steep slide on the West Coast, following another 1.1% drop. Fortunately, the West Coast is the only region of the country that actually saw a decrease. Sales were up 2.1% and 2.5% in the South and Midwest, respectively. But the Northeast is the star, surging by an astonishing 11.3%.
As welcome as this news is, new home sales figures once again posted a loss for the fourth straight month to the lowest level since 1995.
I think that these figures will probably run hot and cold for awhile, but if you're investing – or thinking about it – the next year and a half or so represents a tremendous opportunity for any investor willing and able to capitalize on this unprecedented chance to buy property at rock bottom prices.
The reason for this thinking is because home prices for the moment are continuing to fall. The median price of a home is down to about $244,000 – down almost 3% in a year. Right now, about 8 million homeowners have negative equity. If prices drop another 10% as most analysts seem to think they will, that would push that figure up to 16 million.
With so many people with negative equity, people are going to continue walking away from their homes – leaving the door wide open for investors with ready access to cash to waltz in and reap the rewards.
Whether you're doing short sales or pre-foreclosures – whatever your specific market niche really doesn't matter – if you have the cash you can put these deals together. You might have the means to get some cash from your local bank, but increasingly lenders are tightening their purse strings and making it more difficult to borrow money.
If you don't have access to a pool of private money, it would be in your best interest to develop a pile of cash you can tap into at a moment's notice. When you see a hot property you can get at a great price, you have to be able to pull the trigger and move on it quickly, or you run the risk of losing it to an investor who can.
To learn more about how you can build a list of private money lenders, click here.
About the Author:Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, Pa and creator of the Private Lender PowerPoint Presentation Kit. This kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your business. To learn more about this powerful step-by-step kit and receive your FREE Real Estate Wealth Newsletter go to http://realestatewealthtoday.com/.
Sunday, May 4, 2008
High Return Investments With Low Risks Is Possible If You Use Private Lending
Higher returns require higher risks. You've probably heard that saying before. Well, the problem is that it's just not true in all cases. With the stock and bond market, that general statement may be true. But with private lending, that statement is false.
Here are three examples that demonstrate that you can have solid security and solid returns in the same investment.
1. Private lenders base their decisions on the asset first. Private lending is also called asset backed lending. The asset is the foundation that the investment is built upon. Most private lenders choose to use real estate as the asset that collateralizes their lending. So if you have a great asset and you structure your investment properly, your risk is substantially reduced.
2. Private lending gives you the protection of a bondholder and the returns of a stockholder. You can have greater protection than stocks while earning a higher return than most people think is possible.
3. Private lenders usually earn a better rate of return than institutions because they meet needs that a bank typically will not. For example, a real estate investor may find a property that they can purchase below market value but they may have to act quickly to secure the opportunity.
When you solve problems for other people, you gain more rewards than those who do not realize the opportunity. The key to private lending is following a system that recognizes opportunities and protects your assets. You can have high returns with high security.
Saturday, April 19, 2008
Using Private Money to Fund Your Real Estate Deals
One of the most valuable abilities you can have at your disposal as a quick turn real estate investor is the ability to raise cash from private sources to meet any funding need. If you become an expert at raising private money you will have developed a skill that is highly valuable to you as well as to those you work with.
The potential uses of funds from private money are limited only by the bounds of your creativity, but there are some common scenarios where they can be applied to great effect. For rehab investors (you or your buyers) private funds can be used for purchase and repair costs and paid back when the property is sold or refinanced.
If a juicy deal is about to go down the tubes due to a premature foreclosure, you can use private funds to postpone the foreclosure and save the deal, paying the money back when it closes.
Another instance where fast private funding can come in handy is any time you want to execute a double closing and the title company requires that you have the cash on hand for the purchase.
This money can be borrowed and paid back extremely quickly, perhaps within a few days. There may also be a circumstance where an individual who can’t qualify for conventional financing has enough equity in a property to convince a private lender to lend money for a purchase or refinance.
Who are private lenders? Basically they’re ordinary people, with the qualifying feature that they have some sort of substantial savings or assets that are not earning them a significant return. This might exist in the form of cash in a savings account or CD, in the form of low yield bonds or stocks, or it might be held in the form of a self directed IRA.
It is important to realize that your private lender does not necessarily have to loan you the cash themselves, but can use their assets to secure a loan on your behalf from a conventional lending institution. For example, if your private lender owns some municipal bonds earning 6% which she is willing to pledge to secure a loan on your behalf, you could offer her a 6% return on the cash you borrow and she would double her earnings, since her bonds would continue to earn 6% while you are using the cash.
Knowing who private lenders are is important, but so is knowing how to acquire their contact information. If you handle your business appropriately finding these individuals should happen on a regular basis.
There are three techniques to build your list of private lenders.
The first is networking; as you talk to your colleagues and others in the business, make a habit of asking what private lenders they use and granting favors in exchange for referrals. The second is canvassing your existing wholesale buyers by asking them if they lend money for real estate transactions. The third is cultivating new private lenders by asking “Have you considered investing in real estate?” whenever you encounter a qualified individual.
Negotiating with private lenders should not be difficult. Simply offer them security with a low LTV and guaranteed repayment and an interest rate that will be better than what they’re already getting, and ask for reasonable terms in exchange: long term or short term amortization, a balloon note at the date of your choice, no monthly payments; these are all reasonable things to ask for if your deal is solid.
Omar Johnson is a successful real estate investor and author of the home study course “Secrets To Making Big Money In Real Estate With Little Cash and No Credit” For more info visit http://www.gettingrichinrealestate.com
The potential uses of funds from private money are limited only by the bounds of your creativity, but there are some common scenarios where they can be applied to great effect. For rehab investors (you or your buyers) private funds can be used for purchase and repair costs and paid back when the property is sold or refinanced.
If a juicy deal is about to go down the tubes due to a premature foreclosure, you can use private funds to postpone the foreclosure and save the deal, paying the money back when it closes.
Another instance where fast private funding can come in handy is any time you want to execute a double closing and the title company requires that you have the cash on hand for the purchase.
This money can be borrowed and paid back extremely quickly, perhaps within a few days. There may also be a circumstance where an individual who can’t qualify for conventional financing has enough equity in a property to convince a private lender to lend money for a purchase or refinance.
Who are private lenders? Basically they’re ordinary people, with the qualifying feature that they have some sort of substantial savings or assets that are not earning them a significant return. This might exist in the form of cash in a savings account or CD, in the form of low yield bonds or stocks, or it might be held in the form of a self directed IRA.
It is important to realize that your private lender does not necessarily have to loan you the cash themselves, but can use their assets to secure a loan on your behalf from a conventional lending institution. For example, if your private lender owns some municipal bonds earning 6% which she is willing to pledge to secure a loan on your behalf, you could offer her a 6% return on the cash you borrow and she would double her earnings, since her bonds would continue to earn 6% while you are using the cash.
Knowing who private lenders are is important, but so is knowing how to acquire their contact information. If you handle your business appropriately finding these individuals should happen on a regular basis.
There are three techniques to build your list of private lenders.
The first is networking; as you talk to your colleagues and others in the business, make a habit of asking what private lenders they use and granting favors in exchange for referrals. The second is canvassing your existing wholesale buyers by asking them if they lend money for real estate transactions. The third is cultivating new private lenders by asking “Have you considered investing in real estate?” whenever you encounter a qualified individual.
Negotiating with private lenders should not be difficult. Simply offer them security with a low LTV and guaranteed repayment and an interest rate that will be better than what they’re already getting, and ask for reasonable terms in exchange: long term or short term amortization, a balloon note at the date of your choice, no monthly payments; these are all reasonable things to ask for if your deal is solid.
Omar Johnson is a successful real estate investor and author of the home study course “Secrets To Making Big Money In Real Estate With Little Cash and No Credit” For more info visit http://www.gettingrichinrealestate.com
Wednesday, January 16, 2008
Credibility One Of The Most Over Looked Items In Real Estate
There are several different ways I built credibility.
First of all, like it or not, people make value judgements about you before you even open your mouth. Think about it. What preconceived ideas do you have about a bag lady vs. a movie star? You get an image but the reality is you don't really know anything about them. It is in your best interest to present a well-groomed professional image and make sure your staff members comply as well.
This professional image extends to the meeting location you choose, the marketing items you provide, and your presentation.
This is whether you want to borrow money, buy their house or sell them a home.
The first verbal message should be to gain rapport with the guests. I share that I have lived in the area for 10 years and I have kids in school. I establish credibility as a member of the community. We are in this together. If you lose, I lose - and I'm not gonna lose because I have a lot at stake.
The actual presentation sends one clear, consistent message such as "you loan me money and I'll give you high interest payments". That's it. While I have other facets to my business and other interests, I do not waiver in my message.
Sending a straightforward message in an easy-to-understand way, to convey credibility because there is no "small print." You let them know this is a simple program. These are the simple forms. This is the way it works. Period.
Current action conveys credibility. I always mention one of my most recent deals which is usually that I bought and/or sold a property yesterday or within the last few days.
In my presentation I acknowledge their fears and openly address a big one when I show the slide that says, "What Happens to my Investment if Alan Dies." They usually chuckle because they thought of that but didn't want to say it. I let them know that the corporation is structured to sell properties and their principle and interest will be paid as agreed. Talk about credibility. Have I not crossed all the T?s and dotted all the I's with this presentation?
Also, If you say you are going to do it, DO IT.
Someone might be testing you by loaning a small amount just to see if you are for real. Make sure you send them their interest check at exactly the agreed upon time for the correct amount. I've seen this happen time and time again where the lender comes back a couple months later with more money. Then a few months later they come back with even more money. You must prove that you are for real and that you do what you say.
If you break that trust, it's over.
Finally, I build credibility by being reachable. I have an office that they can stop by. I have an answering service that picks up my calls 24 hours a day, 7 days a week and relays important messages quickly. I have a web site where the lender can see what I'm doing and, they can send me email and I respond promptly.
Credibility is powerful… Learn to use it to your advantage.
Alan Cowgill is a national speaker, author and real estate entrepreneur. Alan has bought or sold over 200 investment properties. His step-by-step system ?Private Lending Made Easy? teaches Real Estate investors and mortgage brokers how to find private lenders. Contact Alan at 937-390-0816 or 866-831-3540. For a FREE audio CD go to http://www.PrivateLendingMadeEasy.com
First of all, like it or not, people make value judgements about you before you even open your mouth. Think about it. What preconceived ideas do you have about a bag lady vs. a movie star? You get an image but the reality is you don't really know anything about them. It is in your best interest to present a well-groomed professional image and make sure your staff members comply as well.
This professional image extends to the meeting location you choose, the marketing items you provide, and your presentation.
This is whether you want to borrow money, buy their house or sell them a home.
The first verbal message should be to gain rapport with the guests. I share that I have lived in the area for 10 years and I have kids in school. I establish credibility as a member of the community. We are in this together. If you lose, I lose - and I'm not gonna lose because I have a lot at stake.
The actual presentation sends one clear, consistent message such as "you loan me money and I'll give you high interest payments". That's it. While I have other facets to my business and other interests, I do not waiver in my message.
Sending a straightforward message in an easy-to-understand way, to convey credibility because there is no "small print." You let them know this is a simple program. These are the simple forms. This is the way it works. Period.
Current action conveys credibility. I always mention one of my most recent deals which is usually that I bought and/or sold a property yesterday or within the last few days.
In my presentation I acknowledge their fears and openly address a big one when I show the slide that says, "What Happens to my Investment if Alan Dies." They usually chuckle because they thought of that but didn't want to say it. I let them know that the corporation is structured to sell properties and their principle and interest will be paid as agreed. Talk about credibility. Have I not crossed all the T?s and dotted all the I's with this presentation?
Also, If you say you are going to do it, DO IT.
Someone might be testing you by loaning a small amount just to see if you are for real. Make sure you send them their interest check at exactly the agreed upon time for the correct amount. I've seen this happen time and time again where the lender comes back a couple months later with more money. Then a few months later they come back with even more money. You must prove that you are for real and that you do what you say.
If you break that trust, it's over.
Finally, I build credibility by being reachable. I have an office that they can stop by. I have an answering service that picks up my calls 24 hours a day, 7 days a week and relays important messages quickly. I have a web site where the lender can see what I'm doing and, they can send me email and I respond promptly.
Credibility is powerful… Learn to use it to your advantage.
Alan Cowgill is a national speaker, author and real estate entrepreneur. Alan has bought or sold over 200 investment properties. His step-by-step system ?Private Lending Made Easy? teaches Real Estate investors and mortgage brokers how to find private lenders. Contact Alan at 937-390-0816 or 866-831-3540. For a FREE audio CD go to http://www.PrivateLendingMadeEasy.com
Saturday, January 5, 2008
Private Lending: An Alternative Funding Source
Private Lending: An Alternative Funding Source
From Lil Sawyer
Where do entrepreneurs go when the bank says "No"?
It happens everyday. Well-prepared entrepreneurs are walking into the banks with brilliant business ideas with well developed business plans — and are walking out empty-handed. Many of these professionals are ultimately able to obtain financing from private lender, like Tom McKenzie through business capital brokers.
For individuals who do not want to give up a certain percentage ownership in the business as is often required by venture capitalist and deal with the angel investors who may demand a board position or significant day-to-day control, the private lender may be an alternative worth considering.
On the whole private lenders are looking for the same information and will conduct a similar due diligence as the banks to make a positive funding decision. They are looking for great business ideas, at the right time, with an airtight business plan, that includes contingency scenarios and realistic forecasts, backed by experienced and professional people with some financial stake in the business.
However, most private lenders are “specialists” who engage in higher risk ventures because they clearly understand both the opportunity and risk associated with selected business types or market segments. Private lenders will not only fund project the banks rejects, they will creatively structuring loan repayment and sometimes be a helpful resource.
For example, Mr. McKenzie has a background in the automotive market; accordingly he has funded projects such as automobile dealerships, transportation and trucking businesses and manufacturing for the automobile sector. While he does not have a professional background in medicine, he has also developed an interest in providing capital to medical practices because of the doctor shortage and because doctors on the whole are responsible debtors. Additionally, businesses like wineries are attractive because they are high asset based and offer more security. He will also provide funding in emergency and rescue situations.
When asked how he makes the decision to fund a project, Mr. McKenzie laughs and said, “you do the best due diligence you can and then it’s just like gambling at a slot machine. You put your money in and take the risk and hope for the best. Knowing that statistically some of the businesses will do well and others will fail. You learn the most from failures.” After twenty years of investing in both winners and losers he has developed an evaluation methodology to help him select the businesses with the highest probability to be profitable and succeed long-term.
Given the relatively low profile of most private lenders, Mr. McKenzie says that a significant number of the best projects come to his attention via business capital brokers. “The brokers screen the projects, giving me a wider selection of projects that match my specific parameters”. Business capital brokers will normally develop relationships with hundreds or thousands of lenders and investors, so the key is to sell the broker on your business plan and get him or her sufficiently excited about your project to recommend it to the right lenders or investors.
Lil Sawyer is Managing Director with FundingLinks, a business capital broker company in Toronto that assists entrepreneurs and businesses to secure capital worldwide. She can be reached at 905-427-9726 or by email at lil AT fundinglinks.com.
Private Lending
From Lil Sawyer
Where do entrepreneurs go when the bank says "No"?
It happens everyday. Well-prepared entrepreneurs are walking into the banks with brilliant business ideas with well developed business plans — and are walking out empty-handed. Many of these professionals are ultimately able to obtain financing from private lender, like Tom McKenzie through business capital brokers.
For individuals who do not want to give up a certain percentage ownership in the business as is often required by venture capitalist and deal with the angel investors who may demand a board position or significant day-to-day control, the private lender may be an alternative worth considering.
On the whole private lenders are looking for the same information and will conduct a similar due diligence as the banks to make a positive funding decision. They are looking for great business ideas, at the right time, with an airtight business plan, that includes contingency scenarios and realistic forecasts, backed by experienced and professional people with some financial stake in the business.
However, most private lenders are “specialists” who engage in higher risk ventures because they clearly understand both the opportunity and risk associated with selected business types or market segments. Private lenders will not only fund project the banks rejects, they will creatively structuring loan repayment and sometimes be a helpful resource.
For example, Mr. McKenzie has a background in the automotive market; accordingly he has funded projects such as automobile dealerships, transportation and trucking businesses and manufacturing for the automobile sector. While he does not have a professional background in medicine, he has also developed an interest in providing capital to medical practices because of the doctor shortage and because doctors on the whole are responsible debtors. Additionally, businesses like wineries are attractive because they are high asset based and offer more security. He will also provide funding in emergency and rescue situations.
When asked how he makes the decision to fund a project, Mr. McKenzie laughs and said, “you do the best due diligence you can and then it’s just like gambling at a slot machine. You put your money in and take the risk and hope for the best. Knowing that statistically some of the businesses will do well and others will fail. You learn the most from failures.” After twenty years of investing in both winners and losers he has developed an evaluation methodology to help him select the businesses with the highest probability to be profitable and succeed long-term.
Given the relatively low profile of most private lenders, Mr. McKenzie says that a significant number of the best projects come to his attention via business capital brokers. “The brokers screen the projects, giving me a wider selection of projects that match my specific parameters”. Business capital brokers will normally develop relationships with hundreds or thousands of lenders and investors, so the key is to sell the broker on your business plan and get him or her sufficiently excited about your project to recommend it to the right lenders or investors.
Lil Sawyer is Managing Director with FundingLinks, a business capital broker company in Toronto that assists entrepreneurs and businesses to secure capital worldwide. She can be reached at 905-427-9726 or by email at lil AT fundinglinks.com.
Private Lending
Tuesday, January 1, 2008
Real Estate Investing in 2008: Are You Crazy – Well Maybe Not!
The latest data from the real estate industry shows a marketplace in steady decline and no bottom in sight. Residential home sales are in freefall mode with an expected 25% decline in the total number of home sales in 2007 versus 2006. Additionally, homes sales are currently off by more than 35% from the record year of 2005 when over 7.0 million homes sold.
Industry analysts estimate that we're on track to sell only 5 million houses nationwide for the entire 2007 year, which is the slowest pace since 1999. Equally sobering is the fact that at any given time there are about 4.4 million unsold homes for sale. Based on the number of available houses, it would take about 10.5 months to sell all the houses on the market right now.
It's not just the number of homes sold that is falling; it's also the sales price. The median, or average, home sales price is expected to dip below $211,000 for the year, which represents the first time since records have been kept that the year-over-year price of a home fell.
While home sales are plummeting and sales prices are falling, the only thing that seems to be rising is the number of foreclosures. During the first ten months of 2007, the foreclosure rate nationally surged by about 94%, which puts about 573,000 homeowners at risk of losing their homes.
As bad as things are right now, we might just be at the tip of the iceberg, because more than 2.2 million home loans are going to reset in the next year and a half as introductory and teaser rates end. Homeowners are faced with payments that are considerably higher than they had banked on – or budgeted for. Bush’s new homeowner bailout plan will save some, but will excluded most of the homes that are close or already in the foreclosure process.
Aright enough of the doom and gloom. With all financial bubbles there are many losers but a few big winners. Despite all of the above, now is the time to consider real estate investing. With prices down and motivated sellers everywhere real bargains are popping up and the long term returns on real estate should be outstanding in the coming years. Much of the risk has been taken out of real estate investing.
The housing market has undoubtedly changed, but I still think real estate is one of the best long-term investments you can make. I also think if you know what you're doing, there’s a whole lot of money to be made right now by investing in real estate.
The key to this opportunity is the ability to raise cash or credit quickly to make low all cash offers. The ability to have a combination of cash, credit lines and access to private lending will allow you to make low and compelling offers. In many cases, buyer will forced to accept any reasonable offer.
If you do this, you'll discover that this is possibly one of the best times in more than a generation in which to make tens of thousands of dollars -- or more -- by playing your cards right and timing your real estate purchases in a way guaranteed to help you build a fat real estate portfolio.
Industry analysts estimate that we're on track to sell only 5 million houses nationwide for the entire 2007 year, which is the slowest pace since 1999. Equally sobering is the fact that at any given time there are about 4.4 million unsold homes for sale. Based on the number of available houses, it would take about 10.5 months to sell all the houses on the market right now.
It's not just the number of homes sold that is falling; it's also the sales price. The median, or average, home sales price is expected to dip below $211,000 for the year, which represents the first time since records have been kept that the year-over-year price of a home fell.
While home sales are plummeting and sales prices are falling, the only thing that seems to be rising is the number of foreclosures. During the first ten months of 2007, the foreclosure rate nationally surged by about 94%, which puts about 573,000 homeowners at risk of losing their homes.
As bad as things are right now, we might just be at the tip of the iceberg, because more than 2.2 million home loans are going to reset in the next year and a half as introductory and teaser rates end. Homeowners are faced with payments that are considerably higher than they had banked on – or budgeted for. Bush’s new homeowner bailout plan will save some, but will excluded most of the homes that are close or already in the foreclosure process.
Aright enough of the doom and gloom. With all financial bubbles there are many losers but a few big winners. Despite all of the above, now is the time to consider real estate investing. With prices down and motivated sellers everywhere real bargains are popping up and the long term returns on real estate should be outstanding in the coming years. Much of the risk has been taken out of real estate investing.
The housing market has undoubtedly changed, but I still think real estate is one of the best long-term investments you can make. I also think if you know what you're doing, there’s a whole lot of money to be made right now by investing in real estate.
The key to this opportunity is the ability to raise cash or credit quickly to make low all cash offers. The ability to have a combination of cash, credit lines and access to private lending will allow you to make low and compelling offers. In many cases, buyer will forced to accept any reasonable offer.
If you do this, you'll discover that this is possibly one of the best times in more than a generation in which to make tens of thousands of dollars -- or more -- by playing your cards right and timing your real estate purchases in a way guaranteed to help you build a fat real estate portfolio.
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