9 Ways To Do A Deal With Bad Credit And No Money

by Ed Garcia

In my workshop, How to Get Lenders Fighting to Give You Money, I teach that there are at least nine different ways you can do a deal with poor or bad credit.

Now before I give them to you, I want you to know that I'm really supportive of learning deal structuring. The first thing you need to do is "investigate your deal" to know what I call "where the bodies lie" in other words, what is the seller's main objectives or motivation.
That allows, you to have an idea of what approaches are going to be compatible with the sellers needs, allowing you to do the deal.

Here are the nine ways that I've mentioned:

1.) Partnership: Find a 50/50 partner. It doesn't have to be 50/50; it can be what ever you can negotiate.

2.) Flip: The best way to flip houses is to find a potential buyer first and then find a property. You can do this by running an ad on a property to see what kind of action you get. Once you have a potential qualified buyer, you'd be surprised how easy it is to find him a house.

3.) Lease Option: Many times you can buy and sell with a lease option. We call this a "sandwich lease option." I'm not going to go into any great detail, you can find this information all over this forum.

4.) Seller Carry back: This is one of--if not my favorite way to buy. Now the best way to use this system is to do a second seller carry back in order to give the seller some cash from the deal. If money doesn't exchange hands, the seller may not feel that they consummated a sale.
Example: I find a house that has a small balance on the first mortgage. Let's say the house is worth a $100,000; the balance on the first mortgage is $30,000.
If I wanted to buy this house for . . . let's say $80,000, I could ask the seller to carry back $15,000 and go to a hard money lender to borrow 65% of AMV (Appraised Market Value), which is $65,000, and the seller carrying $15,000 in second position, would ad up to $80,000.
It would also give your seller $35,000 new cash, and $125 income on the $15,000 loan that they carried at 10% interest only for 5 years.

5.) Hard Money: Hard money is an equity loan made at approximately 65% LTV (Loan to Value Ratio), based on the equity of the property only. Credit is not a consideration.

6.) Hard Money/Seller Carry Back: Again, You can have the seller carry back a second and refinance the first, giving the seller some money. You can do variations of this system.

7.) Subprime Financing: Many national lenders will provide financing at 70% with poor credit and won't verify money down.

8.) Subprime/Seller Carry Back: Again, this combination can provide money to the seller, rather than ask him to carry the whole thing.

Also there are local independent portfolio lenders as well as mortgage companies that will lend, and I always recommend seeking them out. National lenders would be Associates Finance, American General, Beneficial, etc.

9.) Create Your Own Mortgage: In our workshop, Terry Vaughan covers this and shows you how to create your own mortgage, discount it, and market it.

About the author...

Ed Garcia has been a lender and investor since 1968. He is the CEO of American Heritage Financial Corporation, located in Rancho Cucamonga, California. Ed is also affiliated with Independent Mortgage Company and has the ability to make loans in 42 states. In addition to his extensive financial background, Ed is also a seasoned real estate investor. His current holdings include two distribution warehouses located in Columbus, Ohio, as well as other commercial and residential holdings in California. Ed is a lender with a dealmaker mindset.

Private Capital Is Essential for Long-Term Success

by Dave Lindahl

As you start doing more and more real estate deals, as an investor (unless you have unlimited resources--the consummate deep pockets), sooner or later you will reach the limits of what you can do on your own.

Some investors find this upsetting, but I like to look at this as a path to boundless opportunity. I say this, because it gets you into the habit of networking to find private capital, one of the best ways to work the business that exists.

Private capital is everywhere and arguably limitless

This is because private capital is not limited to banking institutions or subject to the rules that govern the world of commercial finance. In short, anyone you pass on the street could be a private lender.

Those Americans who are sick and tired of seeing their stock investments go in the tank are all potential private lenders. Anyone who see value in real estate but otherwise doesn't really know how to proceed is an ideal private lender.

The key here is that you need to go out and find these people. Most don't advertise or wear t-shirts that say "I have money to lend." You must first be a promoter of what you do.

For example, apartment houses as investments make perfect business sense because when they are purchased properly, they have proven income streams that are almost "economy proof."

Unlike other businesses, apartments put roofs over people's heads, and that gives them lasting value. In fact, it could be argued that apartments are an even better investment when the economy is bad because fewer people are looking to buy homes.

This is the message that you must deliver to potential private lenders, and the business model you follow will be more than logical; it will attract the capital you need.

The pursuit of private capital is critical for your long-term success. So, know that it exists, it does work, and once you know the rules for how and when to use it, the sky's the limit.

About the author...

Dave Lindahl did not *luck into* a fortune. He earned it using tested and proven systems he developed over time. In 2007, he attracted over $22 million in private money to fund 11 deals with a market value of $87 million.

Though he got started with no money, no time, and no experience, Dave now controls over $160 million in real estate across the country.

Dave has turned his time-tested systems into easy-to-follow home study courses, so YOU do not have to repeat the mistakes he has made along the way.

 

Beginner's Guide To Getting A Hard Money Loan

by William Bronchick, JD

So, you just got that great bank-owned property under contract and now you need a loan to buy, fix, and flip. You went to three hard money lenders, and they turned you down. Why? Because you STINK at selling your deal.

That's right, you need to learn how to SELL your deal to a lender.

You start by getting a binder from the office supply store with a set of tabs you can print on. Here's what you need in each tabbed section:

About Me. This section should contain a FNMA 1003 loan application, a copy of your credit report, a copy of your driver's license, and a brief resume of your experience. If you have no experience, at least put a list of books and seminars you've taken. A list of references would help, too.

Purchase Contract. A copy of the purchase contract with addenda goes here.

Appraisal. Ideally an appraisal, but at least a real estate broker BPO (broker's price opinion) goes here.

Insurance Binder. A copy of a commitment to insure from your insurance provider goes here.

Title Commitment. A copy of the title commitment goes here.

Photos. Detailed, color photos inside and outside of the property go here.

Inspection. Have a professional inspection done of the property and put the report here.

Repair estimate. A repair estimate from a licensed general contractor and a copy of his license go here.

Numbers. Insert a spreadsheet of the breakdown of the numbers: your purchase costs, closing costs, holding costs, repairs, realtor fees, etc.

Timeline. An outline of your construction project goes here.

Now, you've got a product you can SELL. Go out and approach hard money lenders and see if you don't get much better results!

About the author...

William Bronchick, J.D. is an author and attorney who regularly presents workshops and do-it-yourself seminars at real estate and landlord associations around the country. He is the president and co-founder of the Colorado Association of Real Estate Investors.

How to Find Good Private Investors

by Zack Wiest

Looking for private investors? It is not easy, but it is completely possible. Private money is an amazing thing, and it will make real estate investing so much easier once you find it. If you find a deal--I mean a real money maker, the money will always be there.   Step one: Target prospective investors First, you need prospects, right? You need to target people who CAN (if they decide to) give you money. Some ideas are relatives, friends, co-workers, doctors, dentists, lawyer, accountant, neighbors, etc. Once you have a couple prospects you need to know what to tell them.   Step two: Create a plan for both you and them [You] Buy houses in need of repair at substantially less than fair market value. Renovate the house and resell it quickly to an owner/occupant for a profit. We call this retailing. [Them] They lend you money at 10%, 12%, even 15% simple interest for a term of twelve months. You pay them interest only payments monthly, quarterly, or whatever you agree. You promise them you will not ask for more than 70% of the after repair value ensuring their loan will be protected by sufficient equity should the deal go bad. You give them a title insurance policy, a homeowners insurance policy, a first mortgage position, a personally signed promissory note, and an appraisal on the property. You share with them your plan of what you are going to do to the house (buy, fix, sell, etc.).   Step three: Turn your plan into marketing tool Now that you have a plan, convert it into a marketing tool you can use to recruit private investors. Create an "Introduction" to your opportunity explaining what it is you do and what you can offer them. Jazz it up with questions like, "Are you happy earning 4.9% on your CDs? If not, I can help." Stuff like that will keep their attention. Put this Introduction in the hands of all of your prospects.   Step four: Prepare your presentation Prepare a presentation to sell this opportunity to your prospect. Create a package building your credibility, for instance, a credit report, list of assets, previous deals, referral letters, employment information, whatever makes you look good. Present the opportunity educating your prospect on what Private Lending has to offer.Pay, pay, pay them back and do another deal. Here's how I did it I have successfully raised over $1.3 million in private money in the last eighteen months. I found two people--one started me out with $100k; he is now up to $500k, and the other started me out with $50k, then $100k. I showed him how he can make money by raising money from other people. He has since raised over $700k from family and friends, and he takes three points off of every deal they do with me. Half of his people use their IRA money and run it through Equity Trust Company in Ohio. This guy now makes about $50k a year raising money for me. Sweet, isn't it? Good luck!

Why You NEED Private Lenders to Fund Your Deals

by E. Alan Cowgill

I started my business by using banks, savings, credit cards, lines of credit, creative techniques with sellers (like land contracts or lease options), and partners. But, once I was self-employed, I was concerned that it was going to be harder to get loans to purchase properties.

I had always been unhappy about how long the banks take to get the job done--it took 4 1/2 months on one house without a furnace. The bank didn't know if they wanted to make a loan on that kind of house, but that's what my rehab business is all about. Buy 'em ugly, cheap, and fix 'em.

Just think, if I would have used a private lender on that deal, I could have bought, fixed, and sold the house and pocketed $20,000 by the time I got to the closing table with the bank.  One major benefit is SPEED to purchase a property  With private lenders, I have funds available all the time. When a good deal comes my way, I can grab it because I know the money is waiting for me. While my competitors are scrambling around applying at the bank, I've made an offer and closed the deal. My rehab crew is all over the property like ants before the competition knows what happened.  I love having private lenders for my business! How private money improved my monthly cash flow.

Let's look at another major benefit of having private lenders. My first private lender was my mother. My dad had passed away in 1989 and Mom had insurance money. She proudly invested it on bank certificates of deposit (CDs).  When I became a real estate investor, I learned about finding private lenders, and so I talked to Mom about it. She loaned me $5,000 and received 10% interest in return. I paid her monthly just like her bank did with her CDs. She was delighted, and so was I.

As my use of private lenders increased, I learned that some of them didn't need monthly payments. I started to structure my loans, so there was no payment until the property sold.  This is a huge benefit...Think about what this has done to improve my monthly cash flow. Now my mom will always get monthly payments from me because she is retired and depends on that income. BUT anyone who can wait on their money, I'll let the money accrue. So the second major benefit is improved CASH FLOW because you don't have to make monthly mortgage payments--just let the interest accrue.

Why private money?

This topic is near and dear to my heart. When I started my career, I heard about the necessity of finding private lenders. In fact I even found two. But then I stopped.

For four years I procrastinated. I didn't get it! For four years I continued to go to banks and jump through their hoops. I also used hard money lenders, but found them VERY expensive.

It wasn't until I quit my J.O.B. and found that banks wouldn't loan me money that I realized that I needed to bring private lenders into my life quickly.

When I took that step, everything changed for the better.

If you haven't decided whether or not to use private money, I'll to lay it on the line here for everyone to see.

14 advantages of using private money for your real estate

Fast--you can buy at a discount

Monthly cash flow

No credit check/doesn't show up on your report

Unlimited funds

Control, you set the rules

You can help friends, family

You get some of your profit when you buy

The ability to be flexible

You can make offers with confidence

You can structure quick, more profitable exit strategies

It saves you money

It's cheaper than a partner

You can fund the purchase of defaulted paper

It is the foundation for a very profitable brokerage business

When a deal comes along you have to move fast. Many investors have watched a deal slip through their hands while they waited for the bank to approve their loan. Once you have private money available, that won't happen to you!

You can make an offer knowing you can set a closing date. Meanwhile, your competition is wondering how you did it so quickly!
 

Need Private Lenders To Fund Your Deals?

 http://www.autopilotriches.com/app/?af=900384

About the author...

E. Alan Cowgill is a full-time real estate investor in single family and small multi-family properties in Springfield, Ohio. Since 1995, he has bought and sold hundreds of investment properties.

Alan uses private lenders--not banks--to fund his real estate purchases. By doing this, he has created his own private bank of $2,000,000 in funds. In all deals, Alan looks for win-win solutions, where the seller, the lender, and the end buyer all benefit.

He is an author, consultant, and national speaker, teaching both new and seasoned investors how to find private lenders for their own real estate business.

NEW: The LLC-IRA for Real Estate Investing

NEW: The LLC-IRA for Real Estate Investing by William Bronchick, JD

By now I am sure you've heard that it is legal, permissible, and profitable to invest in real estate using your self-directed IRA, SEP, or Roth IRA. If you've been using this technique, you know the drawbacks: delays in funding, fees from your custodian, potential lawsuits against your IRA.   Well, there's a solution...the LLC-IRA.   Instead of investing directly from your IRA, you set up a single-member LLC that is owned by your IRA. Your IRA account is the MEMBER of the LLC. The LLC is a legal entity that has powers and protections that are not possessed by any individual or by any regular IRA. The combination of the self-directed IRA custodian and the LLC produces great results. This is an entirely new type of LLC, not your run-of-the-mill LLC you may have done before. It generally requires an attorney to draft the operating agreement and provide an opinion letter to your IRA custodian. If the LLC operating agreement is improperly drafted, the entire LLC-IRA may be disqualified and taxed.   Lawsuit protection of your IRA account   A single-member LLC (Limited Liability Company) is a business entity that gives the liability protection of a corporation but is "disregarded" (ignored) for federal income tax purposes. It is a separate legal entity under state law, so creditors of your LLC (as in the case of a tenant injured on the property) cannot go after the member (your IRA account) or you (the Manager).   "Checkbook" control   As manager of your LLC-IRA, you can write checks as you need to for purchasing property, paying property expenses, or loaning money. If you want to do a deal in a hurry, you can run down to your bank and get a wire or certified funds the SAME DAY, as in the case of a foreclosure auction. Keep in mind that any transaction you can't do in your IRA account, you are also prohibited from doing in your LLC-IRA. You should not attempt any transaction in your LLC-IRA without competent tax and legal advice.   Steps to form your LLC-IRA First, you need to transfer your existing IRA to a custodian that allows complete self-direction of your account. Big firms like Fidelity and Schwab generally don't allow you to direct your account into real estate investments. Second, you need to hire a professional to create the LLC. Third, you "fund" the LLC by directing the money from your IRA custodian to the LLC's bank account. Fourth, you start investing in your LLC-IRA. Custodial fees are much lower because the IRA only has one asset, the LLC. Is this all legal?   The legality of an IRA owning an LLC is based on the case Swanson vs. The Commissioner in 1996. In Swanson, the court ruled in favor of the taxpayer using a corporation owned by his IRA, where he was the president. The LLC, by implication should be the same. Should you have any questions about the legality of your LLC-IRA, speak with a qualified attorney to advise you through the process. About the author... William Bronchick, J.D. is an author and attorney who regularly presents workshops and do-it-yourself seminars at real estate and landlord associations around the country. He is the president and co-founder of the Colorado Association of Real Estate Investors.

NETWORK TO MEET THE PRIVATE MONEY

By Private Money Lending Expert (CM YATES CAPITAL)

So you have a very special real estate deal  in sight: the right time, right property, and right price. All that’s standing in your way is lack of funds . It’s time for you to consider talking with private money lenders. Private money lenders can provide cash for investors that allows them to purchase, rehab and sell properties minus a lot of the time-consuming requirements associated with qualifying for a traditional loan. The main concern of these private money lenders is getting a good return on their investment. If you approach them with a solid business plan, can prove that you are able to pay back the loan in a timely manner, and have equity in the target property, you should be qualified for the loan. There are private money lenders in every city and networking is key. The investor can encounter them at real estate seminars, investment clubs, or through a mortgage consultant.

REI clubs are an excellent resource for connecting to investors with funds to spend who are looking for great investment opportunities. Private money lenders are a diverse breed – it could be just a wealthy individual with cash to invest, or possibly portfolio investors, hedge funds, real estate brokers or REO agents. Don’t make the assumption that a certain individual or group is not in a position to be a private money lender. Talking about your investment opportunity is frequently a way to gauge interest and identify a potential partner. Everyone in the real estate industry should have associations with potential private money lenders, so use all connections to explore the possibilities. All private money lenders will want to learn about the property: its cash flow and potential, location, condition, and equity. Properties that have been maintained are lower risk for unanticipated additional repair expenses.  A popular location can boost resale price. Substantial equity is always sought after, as are properties with positive cash flow or long-term tenants. Selecting a viable property and presenting a well considered plan will help the borrower get fast financing from the private money lenders.