I love Options. I definitely believe that more people involved in Real Estate should learn and use the power of Options. Unfortunately, not too many are bold enough to try anything beyond the old methods of putting Real Estate Deals together.
Well, one of my readers is venturing further into the creative world of Deal Structuring. I recently received the following message, which I am condensing somewhat: “Hello Jack, I need a little guidance. I have a question about using a Rolling Option. I am a realtor representing a seller who owns abut 30 acres in Florida. we have a buyer who wants to buy 4 acres now, but he also wants to buy the remainder of the land later, in portions. To exercise the Option, can the Option money be made in payments? Does it have to be paid in one lump sum? Also, the seller has a loan on the entire 30 acres and is reluctant to sell of a portion, which might trigger the bank to call the loan due. Because of this, the seller would like to have some kind of ‘Lease Agreement’ on the balance of the land.”
My response to his message was:
“Exercise of the Option can be as agreed by the parties – Examples:
a. Each time a parcel is bought, could be with cash – or
b. Could be by Note & Deed of Trust – Secured by the parcel being bought payable as agreed by the parties.
How is the buyer paying for the Option – Could be
a. Purchase of the portion taken down, keeps Option alive on the remainder of the land – or
b. A consideration could be paid up front for the entire 30 acres, or as agreed by the parties.
If the initial 4 acres are not being released from the bank, then you might want to use a Lease with Option. You could do a Lease with Option for the entire parcel.
If existing loan does not have release provisions, the Owner might want to negotiate with the Lender to create release provisions. For example: Let’s say the loan is $120,000 or $4,000 per acre. The Owner might offer the Lender 125% of the loan amount per acre to obtain release.
Owed portion of loan on 4 acres = $12,000
Offer to pay $15,000 (125%) to release the 4 acres
The release price might also be affected by the lay of the land. If some portions of the land are more valuable than other portions, it would probably affect the release price of the portion being released. For example: Let’s say that part of the 30 acres fronts on a highway or street. The frontage land will be more valuable than the back portions of the land.
Is the buyer going to borrow money to do his Development/Building?
I would like to help you on this; however, not knowing all the variables, it is difficult to make specific recommendations. If you would like to call me to get more specific, please do.
Whatever you do, Good Luck and keep learning creative ways to put Real Estate deals together. It will set you apart from the crowd and will prove to be very lucrative for you.
Jack”
These posts are the opinion of the author who is not engaged in rendering legal, accounting, or investment advice. If such advice is required or desired, the services of competent professional persons should be sought.
Thursday, December 30, 2010
Monday, December 27, 2010
Options Education
What and how much does the average Real Estate Investor or Real Estate practitioner know about Options? Even though there is a fair amount of general educational information and material available on the subject, it is surprising that so few Options are being used. Part of the reason for this is probably due to a shortage of specific, ["This is how you do it"], information and even more so, a shortage of Real Estate practitioners (Brokers, Lawyers, CPAs, etc.) who are knowledgeable enough about Options to give advice and guidance.
If these practitioners, and especially Real Estate Brokers, were to glean the education necessary to become knowledgeable in the use of Options, it would set them apart from the crowd and prove to be very lucrative for them.
I do not know of any Real Estate technique that compares with the “Option” when it comes to Leverage, Profit, Potential, Minimum Risk, Simplicity, Tax Benefits, and Flexibility.
Options can be used in almost any Real Estate situation; such as, investment properties and speculative endeavors. An old friend and mentor, Jack Miller, taught an exhaustive course on Options and their uses. Jack has since passed away; however, one might be able to obtain his instruction material from Common Wealth Press, P.O. Box 24837, Tampa, Florida 33623.
I think what I will do in a few Blog posts is show you some case studies of Options in action. The first one involves a 43 acre parcel of land which my company owned, fronting on Copano Bay in Rockport, Texas (on the Texas Coast). We had owned the property for some time and had anticipated developing it ourselves, at some point, but never seemed to get around to it. [You know what a Round Tuit is, don't you? We are all going to do something when we get one.]
Anyway we were approached by a Developer through a realtor who wanted to make an offer to purchase the property. This Developer planned to develop a mobile home park. Mobile Home parks do very well in this part of the country due to the thousands of “Snowbirds” that fly South in the winter. The Developer’s offer asked for a six month closing date with return of the Earnest Money if the Developer was unable to close due to financing or other problems. He also wanted the 6 months to do his Feasibility Study, and Engineering, etc.
We didn’t have any other potential buyers at the time so we decided to try to work with the Developer; however, we were unwilling to tie up the property for six months with no compensation. After some negotiation we agreed to give the Developer a six month Option to purchase the property. The Option fee was $10,000. In addition, if the Developer failed to exercise the Option, he agreed to turn over to us all his Engineering Work, Feasibility Study, Plats, etc., that he had done on the property.
The end of the story was that the Developer did not exercise the Option, therefore he forfeited the $10,000 plus the work he had done.
If you have some Option case histories, I would like to hear about them. Also, I would appreciate any other comments you would like to share with me.
These posts are the opinion of the author who is not engaged in rendering legal, accounting, or investment advice. If such advice is required or desired, the services of competent professional persons should be sought.
If these practitioners, and especially Real Estate Brokers, were to glean the education necessary to become knowledgeable in the use of Options, it would set them apart from the crowd and prove to be very lucrative for them.
I do not know of any Real Estate technique that compares with the “Option” when it comes to Leverage, Profit, Potential, Minimum Risk, Simplicity, Tax Benefits, and Flexibility.
Options can be used in almost any Real Estate situation; such as, investment properties and speculative endeavors. An old friend and mentor, Jack Miller, taught an exhaustive course on Options and their uses. Jack has since passed away; however, one might be able to obtain his instruction material from Common Wealth Press, P.O. Box 24837, Tampa, Florida 33623.
I think what I will do in a few Blog posts is show you some case studies of Options in action. The first one involves a 43 acre parcel of land which my company owned, fronting on Copano Bay in Rockport, Texas (on the Texas Coast). We had owned the property for some time and had anticipated developing it ourselves, at some point, but never seemed to get around to it. [You know what a Round Tuit is, don't you? We are all going to do something when we get one.]
Anyway we were approached by a Developer through a realtor who wanted to make an offer to purchase the property. This Developer planned to develop a mobile home park. Mobile Home parks do very well in this part of the country due to the thousands of “Snowbirds” that fly South in the winter. The Developer’s offer asked for a six month closing date with return of the Earnest Money if the Developer was unable to close due to financing or other problems. He also wanted the 6 months to do his Feasibility Study, and Engineering, etc.
We didn’t have any other potential buyers at the time so we decided to try to work with the Developer; however, we were unwilling to tie up the property for six months with no compensation. After some negotiation we agreed to give the Developer a six month Option to purchase the property. The Option fee was $10,000. In addition, if the Developer failed to exercise the Option, he agreed to turn over to us all his Engineering Work, Feasibility Study, Plats, etc., that he had done on the property.
The end of the story was that the Developer did not exercise the Option, therefore he forfeited the $10,000 plus the work he had done.
If you have some Option case histories, I would like to hear about them. Also, I would appreciate any other comments you would like to share with me.
These posts are the opinion of the author who is not engaged in rendering legal, accounting, or investment advice. If such advice is required or desired, the services of competent professional persons should be sought.
Friday, December 3, 2010
Packaging Your Project For Your Private Lender
You have found a private Investor who has agreed to consider funding your first Real Estate project. The investor has informed you that he has to be very comfortable with the deal and is utmost concerned that his interest is well secured at all times.
So, let’s say that you have located and negotiated a purchase price on a vacant Single Family Residence (SFR) that needs considerable fixing-up. Let’s take a look at some of the details.
1. The house has 3 bedrooms, 2 baths and has approximately 1400 square feet of living area plus a 2 car garage.
2. You have done your homework and based on comparable sales the house, after it is put back in good shape, should sell for approximately $75.00 per square foot of living area which computes to $105,000.
3. You have negotiated a purchase price of $35,000. You have also received bids from three different contractors to complete all necessary repairs in order to make the house totally ready for the resale market. The average bid comes to $21,000 or $15.00 per square foot. The estimated time to complete the repairs is one month.
4. Because of current resale market conditions being slow, you are considering offering Owner
Financing. Having met several Note Buyers at The Real Estate Investors Association Meetings, you determine that if you financed the sale yourself, you could expect 80% to 85% on the dollar of the face amount of the Note if you sold it for cash.
5. Financing details and costs- Your investor has agreed that if he/she finances the deal for you,
he/she will give you a 6 month loan at 10% interest which can be paid along with the principle due in six months. If for any reason the investor extends the loan he/she will charge an additional 2% of the loan balance.
6. Let’s summarize your anticipated costs to determine if this project would appear to be profitable:
Purchase Price……………… ………………..$35,000
Fix Up (Rehab) Costs………………………….$21,000
Hazard (Fire) Insurance………………………..$600
Title Insurance For Investor…………………..$625
Appraisal Fee…………………… ………………..$300
Other Purchase Closing Costs…………………$300
Interest Expense……………………………….$3,000
Miscellaneous Expenses………………………$2,000
TOTAL………………………………………. …..$62,825
The investor will also require a minimum of 4 months interest, even if you sell the property earlier than that. This will reimburse him/her with cost & inconvenience of transferring funds from other sources.
7. Now, let’s look at your anticipated proceeds from your resale. You may be able to sell the house to a buyer who can qualify for a bank loan: however, let’s look at a worse case scenario and anticipate that you will finance for the buyer and sell the Note:
Sales Price………………………………………..$105,000
Down Payment…………………………………..$10,000
Note back from Buyer payable at………..$95,000
$697.08 per month including 8% interest amortized over 30 years
SUMMARY
Cash Down Payment…………………………..$10,000
Sale of Note (80%)……………………………….$76,000
TOTAL CASH PROCEEDS………………………$86,000
Less
*Closing cost to sell………………………………$9,000
Pay-off loan……………………………………….$60,000
6 months interest………………………………..$3,000
TOTAL……………………………………………….$72,000
*Closing costs include Real Estate Commission of 6% of Sales Price which you won’t
have if you sell the property yourself, which you should do.
NET PROFIT……………………………………….$14,000
Also other things to consider -
If you sell in less than 6 months, which you should be able to do with Owner Financing, you
will save interest costs. Also if your buyer has bank financing, you will save $9,000 in Note
discount. From the information provided, I would say this is a “Go” deal. The better you perform, the more it will enhance your relationship with your investor.
These posts are the opinion of the author who is not engaged in rendering legal, accounting, or investment advice. If such advice is required or desired, the services of competent professional persons should be sought.
So, let’s say that you have located and negotiated a purchase price on a vacant Single Family Residence (SFR) that needs considerable fixing-up. Let’s take a look at some of the details.
1. The house has 3 bedrooms, 2 baths and has approximately 1400 square feet of living area plus a 2 car garage.
2. You have done your homework and based on comparable sales the house, after it is put back in good shape, should sell for approximately $75.00 per square foot of living area which computes to $105,000.
3. You have negotiated a purchase price of $35,000. You have also received bids from three different contractors to complete all necessary repairs in order to make the house totally ready for the resale market. The average bid comes to $21,000 or $15.00 per square foot. The estimated time to complete the repairs is one month.
4. Because of current resale market conditions being slow, you are considering offering Owner
Financing. Having met several Note Buyers at The Real Estate Investors Association Meetings, you determine that if you financed the sale yourself, you could expect 80% to 85% on the dollar of the face amount of the Note if you sold it for cash.
5. Financing details and costs- Your investor has agreed that if he/she finances the deal for you,
he/she will give you a 6 month loan at 10% interest which can be paid along with the principle due in six months. If for any reason the investor extends the loan he/she will charge an additional 2% of the loan balance.
6. Let’s summarize your anticipated costs to determine if this project would appear to be profitable:
Purchase Price……………… ………………..$35,000
Fix Up (Rehab) Costs………………………….$21,000
Hazard (Fire) Insurance………………………..$600
Title Insurance For Investor…………………..$625
Appraisal Fee…………………… ………………..$300
Other Purchase Closing Costs…………………$300
Interest Expense……………………………….$3,000
Miscellaneous Expenses………………………$2,000
TOTAL………………………………………. …..$62,825
The investor will also require a minimum of 4 months interest, even if you sell the property earlier than that. This will reimburse him/her with cost & inconvenience of transferring funds from other sources.
7. Now, let’s look at your anticipated proceeds from your resale. You may be able to sell the house to a buyer who can qualify for a bank loan: however, let’s look at a worse case scenario and anticipate that you will finance for the buyer and sell the Note:
Sales Price………………………………………..$105,000
Down Payment…………………………………..$10,000
Note back from Buyer payable at………..$95,000
$697.08 per month including 8% interest amortized over 30 years
SUMMARY
Cash Down Payment…………………………..$10,000
Sale of Note (80%)……………………………….$76,000
TOTAL CASH PROCEEDS………………………$86,000
Less
*Closing cost to sell………………………………$9,000
Pay-off loan……………………………………….$60,000
6 months interest………………………………..$3,000
TOTAL……………………………………………….$72,000
*Closing costs include Real Estate Commission of 6% of Sales Price which you won’t
have if you sell the property yourself, which you should do.
NET PROFIT……………………………………….$14,000
Also other things to consider -
If you sell in less than 6 months, which you should be able to do with Owner Financing, you
will save interest costs. Also if your buyer has bank financing, you will save $9,000 in Note
discount. From the information provided, I would say this is a “Go” deal. The better you perform, the more it will enhance your relationship with your investor.
These posts are the opinion of the author who is not engaged in rendering legal, accounting, or investment advice. If such advice is required or desired, the services of competent professional persons should be sought.
Friday, November 19, 2010
Finding And Developing Trust With Your Private Lender
So, you want to do Real Estate projects; however, you don’t want to finance your deals through Conventional Lenders, banks, or other Institutional Lenders. Even though you may be financially able to borrow from banks, you prefer Private Lenders for many reasons; such as:
1. They will make loans on properties and projects that banks will not.
2. They are more aggressive and will fund deals much quicker than banks.
3. They will do small loans.
4. you will have more control with your project.
Now, how do we find these Private Lenders? They are everywhere, if you look around. Let’s consider some of the sources.
1. Friends and relatives. You would probably be surprised at the number of people you know who would invest in IRAs, CDs, Money Markets, etc., and who have the funds in which to do it. Most of these people would like to have better returns on their money. So, if you can convince them that you can provide them with better and SAFER yields; some will be interested.
2. Professional people you know who may have funds available. Doctors, lawyers, dentists, CPAs, etc., usually earn very good incomes; however, most don’t have time to personally pursue investing and therefore depend on other people, stockbrokers, etc. Again, if you can get their attention long enough to explain your program, some will be interested.
3. Newspaper ads – Look for ads such as: “Money To Loan”. Also, you can place your own ads ; for example: “Investor needed for local Real Estate Loans” or “Real Estate note For Sale – Excellent Return” NOTE: You may not have a note For Sale now, but your intention is to create one.
4. Talk to Title companies, attorneys who do Real Estate closings, and CPAs who have investor clients for leads to Private Investors.
5. Join local Real Estate Investment Clubs and meet other people who are doing what you want to do. Investors also belong to these clubs.
6. Consider offering classes to Private Investors or “Would Be” Private Investors to explain your program.
NOTE: Be careful with any advertisement you may place in the newspaper. Do Not propose any specific yield in your ads. Do Not ever Guarantee anything in your ads.
Once you have found an investor who expresses an interest in funding your Real Estate projects, you need to develop rapport and an element of trust with that investor. In other words, you have to prove to the investor that you know what you are doing. This is where your written business plan with referrals (if you have them) comes in. If you are new at this and don’t have business referrals connected with Real Estate, get referrals from friends, attorneys, CPAs, bankers, and anyone you know who has some stature.
The main thing to the investor is, as stated before, is your plan and attitude. Don’t be a beggar and don’t be a “Know It All” either. Just lay things out as they are. The investor, who most likely has financed Real Estate deals before, will sense that you are for real. Then you must demonstrate that he is in fact correct; You are for real.
If you need help preparing for this, get help from other Real Estate Club members or seek out someone who is doing these kinds of projects. You can also talk to Realtors, Title Companies, etc.
I would appreciate any comments you may have to this and any other Blog Posts we may write.
These posts are the opinion of the author who is not engaged in rendering legal, accounting, or investment advice. If such advice is required or desired, the services of competent professional persons should be sought.
1. They will make loans on properties and projects that banks will not.
2. They are more aggressive and will fund deals much quicker than banks.
3. They will do small loans.
4. you will have more control with your project.
Now, how do we find these Private Lenders? They are everywhere, if you look around. Let’s consider some of the sources.
1. Friends and relatives. You would probably be surprised at the number of people you know who would invest in IRAs, CDs, Money Markets, etc., and who have the funds in which to do it. Most of these people would like to have better returns on their money. So, if you can convince them that you can provide them with better and SAFER yields; some will be interested.
2. Professional people you know who may have funds available. Doctors, lawyers, dentists, CPAs, etc., usually earn very good incomes; however, most don’t have time to personally pursue investing and therefore depend on other people, stockbrokers, etc. Again, if you can get their attention long enough to explain your program, some will be interested.
3. Newspaper ads – Look for ads such as: “Money To Loan”. Also, you can place your own ads ; for example: “Investor needed for local Real Estate Loans” or “Real Estate note For Sale – Excellent Return” NOTE: You may not have a note For Sale now, but your intention is to create one.
4. Talk to Title companies, attorneys who do Real Estate closings, and CPAs who have investor clients for leads to Private Investors.
5. Join local Real Estate Investment Clubs and meet other people who are doing what you want to do. Investors also belong to these clubs.
6. Consider offering classes to Private Investors or “Would Be” Private Investors to explain your program.
NOTE: Be careful with any advertisement you may place in the newspaper. Do Not propose any specific yield in your ads. Do Not ever Guarantee anything in your ads.
Once you have found an investor who expresses an interest in funding your Real Estate projects, you need to develop rapport and an element of trust with that investor. In other words, you have to prove to the investor that you know what you are doing. This is where your written business plan with referrals (if you have them) comes in. If you are new at this and don’t have business referrals connected with Real Estate, get referrals from friends, attorneys, CPAs, bankers, and anyone you know who has some stature.
The main thing to the investor is, as stated before, is your plan and attitude. Don’t be a beggar and don’t be a “Know It All” either. Just lay things out as they are. The investor, who most likely has financed Real Estate deals before, will sense that you are for real. Then you must demonstrate that he is in fact correct; You are for real.
If you need help preparing for this, get help from other Real Estate Club members or seek out someone who is doing these kinds of projects. You can also talk to Realtors, Title Companies, etc.
I would appreciate any comments you may have to this and any other Blog Posts we may write.
These posts are the opinion of the author who is not engaged in rendering legal, accounting, or investment advice. If such advice is required or desired, the services of competent professional persons should be sought.
Tuesday, November 16, 2010
Grow Your Own Investment Money Tree
OK, so now you have made the decision to become more active in investing in Real Estate; however, your funds are limited, plus your credit may not be too good. You don’t want to have to depend on the fickle banking industry to provide you with funds to do your investing. You know the old story of who a banker is, right? “A banker is a person who will lend you an umbrella; however, he wants it back if it starts raining.”
So, where are you going to get the money to do your investing? Ask yourself a question. Where do the banks get their money to lend to you or other investors? Mostly from private parties; deposits, CD buyers, etc. Well, why don’t you go to the same parties to find the money you need to do your investing? How much do you think the banks are paying people to put money in the bank? Regular depositions? – Nil. CD Buyers? (by the way, that’s Certificate of Deposit, NOT Compact Disc) – maybe 2% to 3%. Hard to get rich on a 2% or 3% Return.
Speaking of 2%, I’d like to break for a humorous story. Back when I was selling Real Estate as a broker, I met a crusty, older investor who eventually became my partner & dear friend. When I first met him I asked him what kind of Return he wanted on his money. His reply was “Two percent”. I repeated to him, “Two percent?” “Yeah”, he said, “If I invest one dollar, I want two dollars back; 2 for 1. Two percent!”
OK, back to more serious stuff. You then, are going to go to these folks who are putting their money in the bank and show them how they can work with you and get a much better Return on their money and do it safely. First though, you must develop a business plan and put it in writing. You are going to have to show these parties (potential investors) what you will do and how you will do it to earn them better yields on their money.
Your plan must be realistic and it must be specific. For example, let’s say that you are going to buy houses that need some fixing-up. After you fix them up and resell them at a profit, your plan should include the following:
1) A Mission Statement as outlined above, of all that you are going to do and how.
2) How the investor will always be protected in that he/she can always have more than
enough security for their investment – i.e.
a. They will hold a First Lien on the property they are lending on.
b. They will always have Title Insurance and Hazard Insurance.
c. They will never be more at risk than a safe percentage of the property value,
say 60% to 75% max.
3) You need to be able to answer questions, such as, “What happens if you can’t pay
me back when the loan is due to be paid off?” Your answer might be, for example:
a. I will pay you a bonus to extend the loan.
b. I will make a new loan with another investor and pay you off. And then,
the ULTIMATE answer,
c. If I can’t pay you off, then you will own the property at 65% – 75% of it’s resell
value, and it will be fixed up and ready to sell.
If you have a specific property picked out which you want to borrow on, bring complete details on that property to present to the investor. Give him/her an inspection tour of the property. If you have details on other properties which you have bought, fixed-up and sold, be sure to present these case histories to the investor. Also, if you have positive references as to your past work, achievements, etc., present those as well – Even if they do not relate to this specific kind of project. What you are doing in these initial meetings is building confidence and trust with the investor.
These posts are the opinion of the author who is not engaged in rendering legal, accounting, or investment advice. If such advice is required or desired, the services of competent professional persons should be sought.
So, where are you going to get the money to do your investing? Ask yourself a question. Where do the banks get their money to lend to you or other investors? Mostly from private parties; deposits, CD buyers, etc. Well, why don’t you go to the same parties to find the money you need to do your investing? How much do you think the banks are paying people to put money in the bank? Regular depositions? – Nil. CD Buyers? (by the way, that’s Certificate of Deposit, NOT Compact Disc) – maybe 2% to 3%. Hard to get rich on a 2% or 3% Return.
Speaking of 2%, I’d like to break for a humorous story. Back when I was selling Real Estate as a broker, I met a crusty, older investor who eventually became my partner & dear friend. When I first met him I asked him what kind of Return he wanted on his money. His reply was “Two percent”. I repeated to him, “Two percent?” “Yeah”, he said, “If I invest one dollar, I want two dollars back; 2 for 1. Two percent!”
OK, back to more serious stuff. You then, are going to go to these folks who are putting their money in the bank and show them how they can work with you and get a much better Return on their money and do it safely. First though, you must develop a business plan and put it in writing. You are going to have to show these parties (potential investors) what you will do and how you will do it to earn them better yields on their money.
Your plan must be realistic and it must be specific. For example, let’s say that you are going to buy houses that need some fixing-up. After you fix them up and resell them at a profit, your plan should include the following:
1) A Mission Statement as outlined above, of all that you are going to do and how.
2) How the investor will always be protected in that he/she can always have more than
enough security for their investment – i.e.
a. They will hold a First Lien on the property they are lending on.
b. They will always have Title Insurance and Hazard Insurance.
c. They will never be more at risk than a safe percentage of the property value,
say 60% to 75% max.
3) You need to be able to answer questions, such as, “What happens if you can’t pay
me back when the loan is due to be paid off?” Your answer might be, for example:
a. I will pay you a bonus to extend the loan.
b. I will make a new loan with another investor and pay you off. And then,
the ULTIMATE answer,
c. If I can’t pay you off, then you will own the property at 65% – 75% of it’s resell
value, and it will be fixed up and ready to sell.
If you have a specific property picked out which you want to borrow on, bring complete details on that property to present to the investor. Give him/her an inspection tour of the property. If you have details on other properties which you have bought, fixed-up and sold, be sure to present these case histories to the investor. Also, if you have positive references as to your past work, achievements, etc., present those as well – Even if they do not relate to this specific kind of project. What you are doing in these initial meetings is building confidence and trust with the investor.
These posts are the opinion of the author who is not engaged in rendering legal, accounting, or investment advice. If such advice is required or desired, the services of competent professional persons should be sought.
Private Financing For Your Real Estate Investments
Flipping houses for fun and profit?
THE BAD NEWS (For Some): The inventory of houses that are available for purchase is at an all time high. These houses range from older homes that may need remodeling to new or almost new homes. This situation has been created by: 1) The previous several years of selling and financing homes for buyers who could not afford them, resulting in record foreclosures at an all time high. And in addition, 2) The present unemployment situation has forced many people to give up their homes to move to lesser expensive lodging, and in extreme cases, resulting in homelessness.
THE GOOD NEWS(For Others): Anytime there is a situation as described above, it is bad news for many people. Conversely, at the same time, it is good news for others because of the opportunities created by the particular situation – In this case, INVESTING IN HOUSING.
Because of the glut inventory of product (houses) available, prices are down from the previous market period; the old “Supply and Demand” syndrome. Therefore, it is a great opportunity for investors, entrepreneurs, etc. to make profits by taking advantage of these favorable circumstances.
So, let’s assume you are or would like to be one of those who takes advantage of the situation. You have some experience in residential housing or you have a mentor to help you make good decisions whenever you may be buying, selling, and/or rehabbing houses.
There are basically two types of investors who would be interested in the housing market:
1. Those who buy for resale later at a profit (hopefully) or,
2. Those who buy to hold for rental income.
Of course an investor could, and many do, fill both roles.
Now, let’s assume you have the knowledge, experience or mentorship to become involved in the housing market that we are discussing. One more thing we need is the funds necessary to buy, fix-up if necessary, and sell the houses. Also, if you intend to hold houses for rental income, you will need long term financing. So, if you have funds of your own, good credit with banks and other commercial lenders, you are all set – AS LONG AS THEY ARE LENDING. BUT,
What if you don’t have your own funds, and you don’t have good credit, or for whatever reason you are unable to obtain institutional funding? What to do then? AND,
Even if you do have good credit with the banks, that could change tomorrow with the whim of the banks and/or government.
Therefore, let’s consider your options: What if you could create a scenario where in you could conduct unlimited business in this and other markets, and not have to contend with banks and other institutional lenders? What if you could depend on always having financing available, short term and long term, even if your credit was not that great?
Well, you know what? You can do that! How can you do that? With Private Financing. This Private Financing will be from Private Investors and individuals who are looking for better and safer investments than they now have access to.
These posts are the opinion of the author who is not engaged in rendering legal, accounting, or investment advice. If such advice is required or desired, the services of competent professional persons should be sought.
THE BAD NEWS (For Some): The inventory of houses that are available for purchase is at an all time high. These houses range from older homes that may need remodeling to new or almost new homes. This situation has been created by: 1) The previous several years of selling and financing homes for buyers who could not afford them, resulting in record foreclosures at an all time high. And in addition, 2) The present unemployment situation has forced many people to give up their homes to move to lesser expensive lodging, and in extreme cases, resulting in homelessness.
THE GOOD NEWS(For Others): Anytime there is a situation as described above, it is bad news for many people. Conversely, at the same time, it is good news for others because of the opportunities created by the particular situation – In this case, INVESTING IN HOUSING.
Because of the glut inventory of product (houses) available, prices are down from the previous market period; the old “Supply and Demand” syndrome. Therefore, it is a great opportunity for investors, entrepreneurs, etc. to make profits by taking advantage of these favorable circumstances.
So, let’s assume you are or would like to be one of those who takes advantage of the situation. You have some experience in residential housing or you have a mentor to help you make good decisions whenever you may be buying, selling, and/or rehabbing houses.
There are basically two types of investors who would be interested in the housing market:
1. Those who buy for resale later at a profit (hopefully) or,
2. Those who buy to hold for rental income.
Of course an investor could, and many do, fill both roles.
Now, let’s assume you have the knowledge, experience or mentorship to become involved in the housing market that we are discussing. One more thing we need is the funds necessary to buy, fix-up if necessary, and sell the houses. Also, if you intend to hold houses for rental income, you will need long term financing. So, if you have funds of your own, good credit with banks and other commercial lenders, you are all set – AS LONG AS THEY ARE LENDING. BUT,
What if you don’t have your own funds, and you don’t have good credit, or for whatever reason you are unable to obtain institutional funding? What to do then? AND,
Even if you do have good credit with the banks, that could change tomorrow with the whim of the banks and/or government.
Therefore, let’s consider your options: What if you could create a scenario where in you could conduct unlimited business in this and other markets, and not have to contend with banks and other institutional lenders? What if you could depend on always having financing available, short term and long term, even if your credit was not that great?
Well, you know what? You can do that! How can you do that? With Private Financing. This Private Financing will be from Private Investors and individuals who are looking for better and safer investments than they now have access to.
These posts are the opinion of the author who is not engaged in rendering legal, accounting, or investment advice. If such advice is required or desired, the services of competent professional persons should be sought.
Tuesday, November 9, 2010
If All Banks Close Tomorrow
You pick up the morning paper and read the headline, “Government directs that ALL BANKS will invest all deposits in Government Securities. NO MORE REAL ESTATE LOANS to private companies or individuals!” You are in the business of acquiring Real Estate, houses, apartments, land, etc. for resale or for long term investment. Will this news TOTALLY shut you down? OR what if the banks are going to continue to make Real Estate Loans; but not to you? This could be for any number of reasons; too many loans all ready, marginal credit, bad location of Real Estate, etc., etc., etc. OR what if you’re just tired of jumping through hoops, kissing the banker’s rear end, and in general going through the hassle of dealing with banks.
There are great opportunities in our current economy for acquiring Real Estate at prices not seen in years. Bad times for some, good times for others. Therefore, for the Real Estate investor, entrepreneur, developer, etc. success will depend a great deal on being able to have or obtain funds with which to acquire said Real Estate.
So, what do we do if the banks are off limits to us? PRIVATE LENDERS ! Create your own funding sources with Private Lenders. There is an unlimited number of individual people and organizations that have funds available to invest. Most of these people and organizations are receiving low returns on their funds. They would obviously like to increase the return on their investments; however, either they don’t know how or they are afraid to invest their money wherein they have no say as to how the money is used. Examples: Stock Market, Mutual Funds, REIT’s, etc.
Investing in these ventures is, in my opinion, a sophisticated “Crap Shoot”. You roll the dice and sometimes win, but mostly lose. Investor’s would like a better way; however, they don’t have the time or knowledge to do better. You can educate these investors and convince them that you can show them how to dramatically increse their returns.
By being diligent, knowledgeable, and honest you can make them feel comfortable at investing with you in Real Estate. You can develop both short term and long term investment funds from these investors. You want to develop a “partnership” and feeling of trust between you and the investor. Once you are able to do that, the news will spread to other investors and you will not have to worry about the banks again.
These posts are the opinion of the author who is not engaged in rendering legal, accounting, or investment advice. If such advice is required or desired, the services of competent professional persons should be sought.
There are great opportunities in our current economy for acquiring Real Estate at prices not seen in years. Bad times for some, good times for others. Therefore, for the Real Estate investor, entrepreneur, developer, etc. success will depend a great deal on being able to have or obtain funds with which to acquire said Real Estate.
So, what do we do if the banks are off limits to us? PRIVATE LENDERS ! Create your own funding sources with Private Lenders. There is an unlimited number of individual people and organizations that have funds available to invest. Most of these people and organizations are receiving low returns on their funds. They would obviously like to increase the return on their investments; however, either they don’t know how or they are afraid to invest their money wherein they have no say as to how the money is used. Examples: Stock Market, Mutual Funds, REIT’s, etc.
Investing in these ventures is, in my opinion, a sophisticated “Crap Shoot”. You roll the dice and sometimes win, but mostly lose. Investor’s would like a better way; however, they don’t have the time or knowledge to do better. You can educate these investors and convince them that you can show them how to dramatically increse their returns.
By being diligent, knowledgeable, and honest you can make them feel comfortable at investing with you in Real Estate. You can develop both short term and long term investment funds from these investors. You want to develop a “partnership” and feeling of trust between you and the investor. Once you are able to do that, the news will spread to other investors and you will not have to worry about the banks again.
These posts are the opinion of the author who is not engaged in rendering legal, accounting, or investment advice. If such advice is required or desired, the services of competent professional persons should be sought.
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