Are You Making These Common Private Money Getting Mistakes?

by Patrick_Riddle
Filed under Private Money Monthly

Hopefully, you either haven’t yet made or never will make these private money getting mistakes.

One of the best ways to learn something new, is to learn what NOT to do. In this instance, mistakes to avoid.

Learn from these common private money getting mistakes so that you get private money for your deals safer, easier, and faster.

3 Private Money Getting Mistakes You Must Avoid

1) Advertising Directly for Investors Without Registering with the SEC

Here’s an example of how NOT to advertise to get private money:

Investors Wanted!

10% Returns Backed By Real Estate

Guaranteed!

Contact us at xxx-xxxx

If you were to run an ad like this in your local newspaper, that would be considered a general solicitation. And without registering with the SEC, that could land you in some big time trouble.

Here are a couple tips …

Never, and I mean never, say that an investment is guaranteed. That could get you in major hot water with the SEC … not where you want to be. Like Benjamin Franklin said, “Nothing is certain but death and taxes.”

I recommend that your primary strategy for finding private money leads is to network at REIA meetings, chamber of commerce, rotary, small business associations, BNI, and other similar organizations.

But, for those of you who still want to advertise, here’s how to structure your ad so that you stay SEC compliant.

Position your ad as if you’re teaching how to become a private lender rather than directly offering an investment. For instance …

Learn How to Make Great Returns

Backed by Real Estate

Contact us at xxx-xxxx

That would not be considered a general solicitation.

2) Presenting a Specific Deal During the First Appointment

The private money getting process we teach our Private Money Blueprint students entails getting a prospect into a formal appointment and presenting your private lender PowerPoint presentation.

During the presentation, rather than presenting a specific deal, go over general terms for your private lending program.

You see, it’s much easier for someone to object to a characteristic of a specific deal than to an ongoing investment program.

If you present a deal at this point, your prospect may not have the required funds, may not like the property, may not be able to meet the time frame needed to fund the deal.

However, once you sell someone on your investment program and you find out exactly what range of funds they have, time frame available, expectations from a good investment opportunity, etc., you can transition to passing specific deals by him or her; deals that match the information you already elicited.

3) Telling Instead of Selling

To get private money, it’s not about you telling a prospect about you, about your company, about your real estate investing strategy, about your private lending program.

True, that’s part of it. But only part.

You’re selling an idea; an idea of how to make a good return on investment dollars. And the best way to sell that idea, believe it or not, is by asking good questions; the type of questions that elicit information about your prospect’s pains and goals.

Here are some good examples of questions to ask when borrowing private money.

Making mistakes in the private money game can cost you dearly. By steering clear of these 3 common mistakes, you’ll be on your way to getting private money safer, easier, and faster …

Happy Private Money Getting!

If you guys and gals have any questions, put ‘em in the comment area.

- Patrick & Trevor

Tags: borrow private money, private lender powerpoint, private money, private money blue print, private money blueprint, private money lender, private money lending, private money mistakes, private money powerpoint

7 Tips For Buying A House In A Down Market

by Trevor
Filed under Private Money Articles

Basic… But Profound Tips To Buying In A Down Market (or any market for that matter)

This fantastic (simple but true) article brings up some dynamite points to remember when searching for your next deal… in ANY real estate market. While I’m not going to go over the whole article and all “7 Tips” for you (you can check out the full article over at Investopedia).. I’ll go over a couple of the ones that are more noteworthy for us investors.

Do Your Homework Upfront… It Saves You Hardwork On The Back

The article says to, “#1 Do your Homework!”

For me, the bulk of my time when acquiring a new property is in the due diligence phase.

Before I buy, I want to see the comparable sales of neighboring properties. (we have a great 75 minute full tutorial in our PMBP members area for our students on A-Z analyzing deals and finding comparables… good stuff. If you’re not a member… learn how to become one here).

On the MLS you can look at the houses that sold with similar sizes and characteristics of your target property. You need to check out the MLS’s pictures of the interior and exterior of the comparable properties because there is a strong likelihood you’ll want to renovate your acquisition to meet the standard of the neighborhood. Also, the pictures (and a drive by) will show you what “style” of house it is. “Style” can mean a big price difference between two houses that are otherwise pretty much the same #’s wise.

Housing Styles In Brief

For instance, in our part of the country people really like “Craftsman” and “Ranch” style homes (as bread and butter homes that sell fast). So, those will be more popular and get a bit higher price… then lets say… a Victorian may in our area with the same basic house specs. So, learn what styles are the most popular in your area… because they’ll need to go into your comparables analysis.

Here’s a cool article that does a run down of “housing styles” so you can save that for future reference.

Crunch The Numbers

Before you make an offer, for heaven sakes crunch the numbers first! Know what your profits and ROIs are going to be as a worst case scenario for the different exit strategies you have in mind for the property. Always have a maximum amount you are willing to pay for the property and if you can’t get it for that number…….walk away, don’t look back and find the next deal.

Once you can get to a point in your business where all of your property acquisitions are 100% #’s based (no emotion) and you set specific buying criteria that you MUST meet or you walk… you’re life will be much easier and you’ll never have to agonize over negotiations. If you hit your number… awesome… it’s a deal. If you don’t, no biggie… onto the next one.

Get Your Ducks In A Row

The article’s second bullet point is to “Get Your Ducks in a Row!” If you are following the Private Money Blue Print course, you are already going to be in great shape to have the cash you need to POUNCE on the smokin’ hot deals the second they pop up.

Great deals tend to have a short shelf life. If you have your financing solution ready, you’ll be light years ahead of your REI competitors to win the super deals that you may have otherwise lost using SLOW traditional methods of money getting like using banks that can take 30 days to close a deal (IF you can even get qualified with a bank at all)!!

So, that was a quick short primer on buying… especially in a down market. The rest of the article on Investopedia goes over it a bit more… but I just wanted to highlight the “#’s” side of it since that’s what my position is in our real estate division.

So, enjoy… let me know your comments below!

- Tim

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Tags: 7 tips to buying real estate, buying real estate, buying real estate in a down market, investing in real estate, private money, tim krulia

The Most (and Least) Affordable Cities In The U.S.

by Trevor
Filed under Real Estate Market News

9 Comments

by Tim Krulia – Private Money Blueprint CFO

But, I’ll summarize it here for ya to save you some time

The Most Affordable Real Estate Markets To Buy a House

According to CNN Money… they did a vast survey and came up w/ the most affordable (defined by the median income versus the media house purchase price) in America… enjoy

Most Affordable

Indianapolis -
Median home price: $105,000
Median income: $68,100
Affordability score: 94.5%
Youngstown, OH
Median home price: $72,000
Median income: $54,300
Affordability score: 93.9%
Detroit, MI
Median home price: $84,000
Median income: $57,100
Affordability score: 92.2%
Warren, MI
Median home price: $140,000
Median income: $79,000
Affordability score: 91.8%
Grand Rapids, MI
Median home price: $103,000
Median income: $63,100
Affordability score: 91.4% — 5th best

That does it for the top 5 MOST affordable places to buy a home. What this shows you is where the home prices are depressed… a lot of these markets are being hurt big time by foreclosures… which is a good thing right now (for buyers).

Notice 3 of the top 5 are in Michigan…

Now, for the LEAST affordable.

The Least Affordable Real Estate Markets To Buy a House

New York City, NY
Median home price: $425,000
Median income: $64,800
Affordability score: 19.2%
San Francisco, CA
Median home price: $598,000
Median income: $96,800
Affordability score: 23.6%
Honolulu, HI
Median home price: $598,000
Median income: $96,800
Affordability score: 23.6%
Santa Ana, CA
Median home price: $598,000
Median income: $96,800
Affordability score: 23.6%
Nassau/Suffolk, NY
Median home price: $380,000
Median income: $101,800
Affordability score: 39.6% — 5th worst

If you look at these markets, you can see that their pricing is still high compared to median incomes in those areas… and when you look a bit more deeply at why… most of these areas are places that a lot of companies are either already located or are locating too… and they are in typical areas that tend to be at the top end of the pricing scale anyway and have not been affected as much by foreclosures (at least… yet).

Tell me about the Benjaminz, Timmy!

This article hits home for me, literally.

Sure, I’m an Atlanta, GA resident now, but I was born and raised in the mid-west and these cities are still the homes of most of my friends and family. When I was a mortgage broker in Columbus, Ohio we would write mortgages for properties in some of these cities and typical a water cooler convo would be about how ridiculously cheap you could purchase one.

A friend of mine bought a house in Youngstown, OH for something like $7K cash about 15 years ago and sold it for a whopping $24K about ten years later (ok, nothing exciting there but the sales price was about 3X the purchase price). I was the loan officer on the sale and the seller was really happy about it (he sold it back in 2005 before the markets got rough too).

He charged about $600 a month for rent and sold it to his long time renter who did a good job keeping the house up while living there. That’s really awesome cash flow for a $7K investment!!! I guess the point is that even though these cities sound gloomy in this article, there’s tons of positive cash flow to collect with tiny capital risks. Just think about how far $50K of private money could take a smart investor in one of these cities!

So, as a take away for you from this article… is to look at areas where the affordability index are still high (aka, where the median income is close to the median house purchase price) to buy rentals… and to find markets where you’ll find great buys. Of course, do your due diligence on the areas you’re buying for rentals… but now is the time to once again get cashflowing properties… and PRIVATE MONEY is of course the easiest solution to get the funding to buy those properties.

Good luck!