How Private Loan Lenders Can Jump Start Your Real Estate Investing Business

A Private loan lender is someone who, just like you and me, works and has saved their money to invest. In the past they may have invested in the stock market or bonds. With today’s economic uncertainty the stock market is such a risky venture it makes real estate investing look like a stable market and has investors flocking looking for better alternatives.

Everybody across the country has seen the huge drop in real estate prices and anyone that has some money saved knows now is the time to purchase real estate when prices are low. So when searching for a private loan lender have some facts about the current real estate market in your area right at your fingertips so when you are face to face with a private loan lender you can help them see the golden opportunity in front of them.

The news never paints a truly clear picture of the real estate market. Only the people that day after day study the numbers of sales and new listings, pendings and off market properties will really understand what the current market in your area is. If you are not a real estate agent then becoming affiliated with one will greatly help your real estate investment business. These people can jump start your business ahead leaps and bounds and are one of the most important contacts to have in your Rolodex. Not only can they help you find a private money lender, they can help you find the property you will want to invest in.

Real estate agents also have the added power of being able to look up the current mortgage on a property most counties do not have this information available to the public. So when you set out looking for a private money lender finding sellers that owe nothing on their property is an excellent way to start. Lots of times they will be interested in helping you to purchase their property even if they have to carry some paper.

Although I have found most people who own their home outright want to carry the paperwork because of the low amount of risk (this is only if they are in first lien position and have a very good contract that protects them in case of foreclosure). Finding home owners that owe nothing on their home by yourself without the aid of an agent will be time consuming and your chances of success goes down greatly. Agents are an incredible valuable resource and using their contacts and information will make your business a lot more successful. They will also make finding and securing a private loan lender a lot easier.

Real Estate Agency Business Plan – What Do Conservative Projections Mean?

In reading about business plans, you may have heard the phrase “conservative projections” repeated a few times. Any projections of future revenues and costs for a business require assumptions, because, as we know, the future is always uncertain. However, to meet this definition of “conservative” projections, your assumptions must be reasonable in all areas. Here are a few ways to make sure they are suitably reasonable and your projections are conservative enough.

Market Conditions

Your projections shouldn’t consider that the real estate market and general economy is always booming, nor that it is always in bust. If you lack reliable information with which to estimate how market conditions may affect your business for good or bad, then take a middle-of-the-road approach. Although you can generally prepare for market conditions in the coming six months, your launch may be a year out and you need to estimate five years beyond that. Be clear as to how you applied the effects of the market in general to your projections and find information on how other real estate agencies are affected by the market to back you up.

Effect of Marketing and Sales

You shouldn’t assume that your marketing and sales efforts will work spectacularly at first. Instead of thinking in terms of the greatest possible returns from each marketing channel, think in terms of percentages. If base these estimates on specific percentages readers who ask can get an explanation of exactly how you determined them. For example, if you expect to have 5000 web surfers click on your pay-per-click ad in a quarter, explain that you believe 1% will go on to call, 50% of those will make an appointment to see homes, and 25% of those will make a deal for a home with you, resulting in 6 deals for those clicks. Make sure it is reasonable for you to spend the time needed with all of those calls and appointments to make those 6 deals.

Start From Where You Are

If you will start your firm’s marketing post-launch, no one will believe projections based on sale coming in from day one. There must be a reasonable lag time for your marketing and sales efforts to take effect before deals are closed and revenues are earned in this case. However, if you have a track record of success with a past firm, or if you are already making deals with clients for your new firm, you can make the case that you will show sales from month one onwards.

The A-B-Cs of Buying Distressed Real Estate Homes

Buying distressed real estate homes can be headache-inducing if one does not know the first steps to take when embarking on such a purchase. It can discourage the weak and unimaginative, but then this is what separates the tough cookies from the wishy-washy type in the real estate business. By taking on the hard work and relative risks in stride, a financially intelligent homebuyer or a savvy businessman can make money out of a bad situation – that is, the property that came to the market because of unpaid mortgages.

Donald Trump did not turn into a real estate mogul overnight. He started out with small purchases like middle-class apartment complexes that were foreclosed. Trump turned around the apartment complex to 100 percent occupancy rate and resold the whole lot for millions in profit. Anybody with a good head on his shoulders can do that too, one house at a time, as long as he has the sense and guts to take the plunge in purchasing distressed real estate homes.

First, buyers must use the cheapest available resources at their disposal – the Internet. They should scan online foreclosure lists to save time and money instead of going to banks and government agencies one by one for their list of distressed real estate homes.

The buyer must engage the services of a real estate agent or broker who can appraise the foreclosed property that he is eyeing. It would save him a lot of money in the long run, because he can avoid costly mistakes. The professional eye of a licensed home inspector must also be hired, because what one sees on the outside may not be equal to the truth inside, like termite-infested beams and leaking basements. A buyer must have a title insurance against other problems with the property.

He also has to inspect and have a feel of the neighborhood. The property might be great, but the location may not be that attractive for a family with infants and toddlers. The buyer may just end up with an array of distressed real estate homes in his hands, rotting away.

If he thinks he got a good deal in his hands, the buyer should then talk to the seller – a bank or the government. It depends on how his art of dealing is, but he can get a fairly good mortgage for the property with the right numbers and paperwork to back him up. If he can get a pre-approved mortgage before making an offer, that would be great. As Trump had said, when one is dealing with the government on a foreclosure, they just want to get out of it as quickly as possible, because they are not equipped to handle distressed real estate homes. Smart buyers can have incredible deals on them.

Private Lending – What is it and How Can it Boost Your Real Estate Investing Business

To say that the US mortgage market has changed in the last year is a huge understatement! We have seen the end of easy money financing and it will be some time before we see sub-prime loans, no-doc loans or hard money lending in many areas. Even traditional mortgage lending will require much higher credit standards and much larger down payments for real estate investors.

So how are you going to fund your real estate deals in this new environment?

Few individuals have enough of their own cash to purchase real estate investments, and those who do, generally know better than to use their own cash in their real estate investing business. If you are a serious real estate investor you need cash to buy houses.

It is a common story for new real estate investors to start out with lots of cash and little experience, only to lose all their cash in the learning process and have to learn how to do things the right way the second time around.

Even if you have a flush bank account or a home equity line of credit you’ll eventually run out of money and need a consistent and dependable source of new money to buy real estate investments.

So how do you get this cash?

You can go to a bank and try to qualify for a loan and then wait to be approved. If approved, you will need to put up 20% to 30% down payment for each and every deal and pay all the bank’s closing cost fees. How long will your cash last doing that?!

Or, you can go to a hard money lender, but they will only lend you 65% loan-to-value (LTV) and you must fund the balance with your personal funds. Not to mention, hard money lenders charge 5 to 10 points as an upfront fee. Ouch!

So what is the answer? The answer is using private lenders to fund your real estate deals. Private lending is a consistent source of funds to purchase real estate deals that you can go back to again and again and again. In fact, the more you use, the more will become available as you develop relationships with more private lenders.

What is private lending and who are private lenders?

The definition of a private lender is an individual that you can negotiate directly with on a personal basis to borrow money for real estate investments. The money can be used to purchase rental real estate investments or to supplement funds borrowed from a bank to cover down payments.

Private lenders come from all walks of life and may not know the first thing about the real estate business. But what they do have is extra cash or assets that they can invest in your real estate deals. These individuals are generally middle class people, who have some extra funds to lend. They can be retired business people, corporate executives, professionals such as doctors, lawyers, or business owners or even blue collar workers.

Private lenders are looking for returns substantially above the 3% to 5% they get at the bank with CD’s or money markets. Most private lenders are looking for investment returns in the 9% to 15% range and secured by local rental real estate.

So the concept of “private lending” can be defined as the process of borrowing real estate investment funds from private individuals at rates higher than these lenders can normally achieve using conventional investing institutions like banks and conventional investment vehicles like stocks, bonds, CDs, or money markets and secured by local rental real estate.

Is Mortgaging Real Estate Homes Safe and Sound?

Real estate homes are the most precious personal possessions that anyone can ever invest on for the longest time. Aside from the fact that homes are symbols of financial rewarding moments, it also becomes a lifetime companion. That is why some homeowners involve a great deal of emotional baggage once their properties are either sold or mortgaged.

Whilst the idea of mortgaging your real estate homes is advisable for specific situations, is it safe to hand out your property in gigantic financial corporations? In the United States, gigantic means two firms alone: Freddie Mac and Mannie Mae. They are government-sponsored yet publicly traded enterprises engaged in the market for a public service, mission, or purpose: to provide a smooth and stable flow of low-cost funds for mortgages. Being government sponsored means relating bonds or ties with the Federal Government.

Federal connection bestows them with advantages such as tax exemptions. The bond between these big firms and the government also gives the implication that every security issued by Freddie Mac and Mannie Mae is also a security or a guarantee derived from the government itself. So the belief follows that if something goes wrong with the firms, the government would come in between and bail them out.

Nevertheless, these giants have been set with particular limitations as well, which may also mean a loss for additional revenue. They are not permitted to enter into any disparate line of industry, outside real estate homes mortgage industry, or cut their support for the residential mortgage market. Nor are they allowed to engage in businesses of other housing finance firms.

Regardless of their image to bring public service, these firms are believed to be still profit-driven and high risk potential. Although they do not service or originate mortgages, their purchases and guarantees of mortgages are done through a secondary mortgage market. The mortgage originators sell directly these mortgages or exchange mortgage pools with Freddie Mac and Mannie Mae for mortgage backed securities that carry a guarantee of timely payments of principal and interest to the security holder.

But the Federal bond that contributed to the fact that made their companies really big is also at the same time a risk factor to them. Managing a large amount of credit and interest risk is absolutely risky, because the complexity or risk management and the size of their accounts remain to be seen as a possibility for a larger systematic risk. When something goes wrong with any practice of these two companies, the impact will be felt by the financial market throughout the world. Previous revelations from Freddie Mac in 2007 rocked the world when they announced big credit-related losses, seen to be such a great risk for the whole financial system.

Against other corporations, the Federal ties have also created a somewhat unfair advantage for Freddie Mac and Mannie Mae; it enabled them to provide debts with lower interest fees that are not possible for other companies. Take for example in the year 2007, all mortgages came to a standstill but mortgages of those two firms remained on the line. The Federal bond has made it clear to the public how these firms play a vital role in the financial market. Critics felt that by allowing the market to focus on two financial firms alone poses a bigger danger to the public, said to be at the expense of the American taxpayers.

Don’t Do it Yourself (DDIY) – 5 Easy Ways to Outsource For Your Real Estate Investing Business

If you’re like me and working a full time gig while building your real estate business, it is critically important to figure out how to leverage others and maximize the limited time that you have. Quite honestly, this is important regardless of your available time because that’s the point right?  You’re doing real estate investing in order to free up time for personal interests, time with family, traveling, community work, or whatever else is most important to you.

I know you may be thinking that you can’t afford to pay anyone to help you with your business, but quite frankly you can’t afford NOT to. It’s true that some outsourcing may be cost prohibitive for you, but there are some simple, low cost things that you can do to get started on this Don’t Do It Yourself (D.D.I.Y.) plan.

(1) Hire a virtual assistant (VA) to help with your internet marketing strategy to build a buyer’s list.

Your virtual assistant can post classified ads, submit your articles to numerous websites, and depending on skill level can even write the articles or create videos for you!

So how do you find a VA?  Try websites like elance.com, guru.com, and do a Google search on “Real estate marketing assistant” or “Real estate virtual assistant.” I’d strongly suggest hiring an assistant who has experience with internet marketing and/or real estate marketing.  When your assistant understands the context of what you’re doing, it really helps reduce the learning curve and there’s an appreciation for what you’re doing. A virtual assistant can also do things like look up recent buyer names and contact information in public records or other research that is simple but time consuming.

(2) Pay a responsible high schooler or college student $1/sign to place your bandit signs

Yes, bandit signs are highly effective to find buyers as well as sellers. I can tell you from personal experience that they can be both a hassle and a time killer to put out yourself.  But go ahead and try it yourself first…I’ll let you be the judge!  The last thing you want is to have a bunch of bandit signs gathering dust in your garage for weeks because you dread putting them out every weekend.

(3) Use click2mail.com!

Unless you’re doing handwritten letters, use click2mail.comI can’t recommend this highly enough. You do the work once to set up your template and marketing materials, but then you’re good to go. My direct mail campaign is a breeze and takes less than 10 minutes now – thanks to my friends at Click2Mail.

(4) Hire a responsible person with good handwriting skills to handle handwritten mail campaigns

It’s widely believed that you need to do something special in order to get people to open your letters. A common suggestion is have either handwritten letters and envelopes or at a minimum handwritten envelopes.  If you’re going to do this, by all means, hire someone! A retired person, high schooler or college student, or stay at home mom looking for some extra money…as long as the person is diligent and has good handwriting skills, you’re all set.

There are plenty of people who are looking for additional income – find them (by word of mouth or even Craiglist) and hire them!

(5) Hire contractors to handle rehabs

If you’re a rehabber who has some handyman (or handywoman!) skills…you know, a D.I.Y. person, that’s great. However, if you’re looking to build a real estate investing business, you need to be a D.D.I.Y. person, focus on finding deals and hire contractors to do the rehabs. Yes, it will cost more – so make sure your offers are low enough and take these costs into consideration.

These are just 5 ways that you can begin leveraging others for your business right away.  Don’t delay in freeing up your time. Focus, focus, focus on your most profitable activities and pay to get the rest done.

Trust me. You can (and should) do it! If you have more ideas of how to leverage others (outsource, whatever you want to call it) for your real estate investing, please share with everyone in the comments section.

Happy investing!

Why Its Better To Have Cash For Your Real Estate Investing Business

It’s a shame that many people have the two great things that account for 2/3 of what is needed to be ultra successful in real estate investing. One is potential which almost everybody has and the other being money.

Some are just sitting on money and simply don’t know what to do with it. That’s where “taking action” comes in. With all three of these qualities, your REI business will be booming in no time.

One good reason to have money is that you can flip REO properties. Flipping REO properties is pretty popular but the truth of the matter is, only the more experienced investors do it because almost every home that you get under contract will require at least a thousand dollar deposit. No worries though because if the right strategies are used, you will get this deposit back if you can’t sell the property.

Next good thing is you can hire virtual assistants to pretty much run your real estate investing business for you. This can be a very big help with running down cash buyers and giving them a call or posting your ads throughout the internet.

Those are parts of the business that are very time consuming that if outsourced, will save you tons of time. They can also be used to talk to motivated sellers and return calls. Once again, you must get proper training to efficiently handle a virtual assistant or you will most likely end up calling it quits after a few weeks.

Next is you can do massive marketing campaigns for leads. You can send out huge absentee owner mailers, put out hundreds of bandit signs for both cash buyers and motivated sellers and you can hit the streets with flyers, business cards and postcards.

So basically what I’m saying is, if you don’t have money, it’s not impossible to get into real estate investing. It’s just a lot harder. If you have money, with the right help, you can be flipping house after house in no time.

Sarasota Real Estate Home Buyers Market

The time has never been better for buying a home in Sarasota. The recent growth and expansion in the Sarasota real estate market has been presenting more opportunities to buy every day, especially to those who knows where to start and seek some professional help along the buying process.

One thing that one may want to mull over when intending to purchase a Sarasota home is finding a certified real estate professional that can give the much needed assistance and guidance along the process of buying. The real estate agent will provide a number of beneficial services to render Sarasota home buying experience a less stressful and much easier. Sarasota real estate professionals will offer you access to the most number of local listings, where the greatest number of available homes are listed for sale. The agent or broker you choose will also be able to contribute ideas that can help narrow the search to those Sarasota homes that best meet the budget and needs of the buyer. Furthermore, Sarasota real estate agents can also help when the time calls upon for price negotiations as well as closing the deal. A home is certainly a foremost investment and obtaining professional assistance would be a clever choice for anyone planning to buy one in the Sarasota real estate market, especially first time buyers as well as those who have been in the market for a while.

Acquiring information about the current Sarasota real estate home market is essential. Sarasota real estate home market has grown, along with most real estate markets across the country, and thus many fresh opportunities become available from time to time. Sarasota real estate agents can provide any information one might need about the conditions of the current trends Sarasota real estate market, including the projected future appreciation or depreciation of a particular home property one would be interested in, as well as the local school and employment statistics and characteristics of the local neighborhood. A Sarasota real estate professional can serve as a helpful information resource that Sarasota home buyers can employ to their advantage.

One should not only be considerably up to date about the Sarasota real estate home market, but also about the home itself. Valuable information may be acquired by doing a home inspection and seeking information about the history of the home and of the land. The findings that can be extracted out of such inspections can be vital pieces of information that can present an accurate estimate of the home’s true value thereby setting financing options that are appropriate for purchasing the home.

Whether one has a small or a large budget, finances comprise a major component of the home buying process. Before one is able to make any decisions regarding a Sarasota home purchase, one must ensure to have done a certain degree of planning with regards to the particular mode of paying for the home. Thus one needs to seek information regarding mortgages and home loans, and the most recommended information resource as well as decision guide would be a trusted financial advisor. One must be patient in giving sufficient time to look around for the best repayment options and interest rates. A sound financial planning can usually unburden such a stressful process.

Sarasota home buying can be a seamless yet minimally stressful process for someone equipped with the proper set of information and guidance. By taking advice from a trusted professional and effectively acquire as much information as possible about the Sarasota home buyers market, one would be sure to find the most appropriate home to purchase according to one’s needs and budget.

Insuring Your Real Estate Investment Business

As part of the terms of a mortgage loan, most lenders require borrowers to carry property insurance. But simply meeting the requirements of your lenders does not necessarily mean that you are adequately insured. To be sure that your real estate investment business is properly covered, understand what your risks are, how much liability you are able to accept, and what types of policies are available.

The basic types of business insurance include:

– General liability and property coverage. Liability insurance protects you if someone is injured while on your property. The insurer not only pays the damages, but also funds and handles your legal defense. Property insurance covers your physical assets–building, equipment, furnishings you own, fixtures, etc. In most cases, your property insurance will not cover the tenant-owned contents of a rental unit; your lease should clearly state that tenants are responsible for insuring their own belongings.

– Umbrella policy. Umbrella policies provide additional liability coverage after the limits of your underlying policy are reached. For example, if someone was injured on your property and required $300,000 in medical treatment but the liability limit of your underlying policy is $250,000, your umbrella policy will pay the additional $50,000 (provided, of course, the limit of your umbrella policy is at least that amount).

– Automobile. If your company owns vehicles or if you use your personal car for business purposes, you need appropriate coverage. Such insurance typically includes bodily injury liability for injuries you or another authorized driver cause someone else; medical coverage for treatment of injuries to the driver and passengers in your vehicle; property damage liability; collision (damage to your car from a crash); comprehensive (damage to your car not resulting from a crash); and uninsured motorists coverage. Be sure your vehicle insurance complies with the laws of your state and offers you sufficient coverage to protect you financially–which means you may want higher limits than the law requires.

– Life. Various types of life insurance can be designed to protect your company, investments, and family in the event of your death. Life insurance is often part of buy/sell agreements in partnerships, where the insurance is used to buy out the interest of the deceased.

– Workers compensation. If you have three or more employees, you are probably required by law to provide workers compensation insurance. Laws regarding this coverage vary by state; check with your insurance agent and state insurance department to find out exactly what you need and how it is purchased.

– Business interruption. This coverage is designed to replace lost income, pay ongoing expenses, and cover the costs of setting up in a temporary facility if necessary when a business is unable to operate due to a covered peril (such as fire, storm damage, vandalism, etc.). If you have rental units that cannot be occupied due to a covered peril, business interruption insurance may replace the lost rent revenue.

– Destroyed or damaged records. If your business records are destroyed or damaged by a covered peril, this insurance will compensate for the inability to collect income and the cost of reproducing the records.

Beyond the traditional types of insurance are a variety of specialty policies offering coverage you may or may not need, such as flood, earthquake, and terrorism insurance. If you work from home, be sure your business equipment is covered and that you are protected for business-related liability. Most homeowner policies provide only nominal coverage for business equipment and activities, so check with your agent to determine if you need a separate business policy or if you can add an endorsement to your homeowners policy.

Managing Your Insurance As much as you’d probably like to, insurance isn’t something you can take care of once and then forget about. In addition to making sure you have coverage each time you buy or sell a piece of real estate, you should do an annual review of your needs, your coverage, and what new products are available that might work for you. Keep records of all your assets in case you need them to document a claim. If you make changes to existing policies, follow up to make sure the necessary paperwork was completed properly. It may be your agent’s job to do the paperwork, but it’s your responsibility to make sure you have the right coverage in place.

Keep in mind that insurance companies often structure their policies differently, so if you change any of your insurers, study the new policy carefully to be sure you really have the coverage you think you have. Don’t buy a policy based on rates alone. Be sure the coverage is what you truly need and the company is financially sound with a reputation for good customer service.

Remember that insurance is essentially a gamble–you’re betting that you’ll need it and the insurer is betting that you won’t. Be sure that you can still come out a winner whether you win or lose the bet.

Real Estate Investment Business – Why Don’t I Try to Do This on My Own?

You worked harder than you ever thought possible to get through college and land that corporate dream job. Life was good….until reality set in. Right? The grim reality is that for most, their chosen careers meant very hard work and inadequate compensation for their time. So one day you made the decision to stop working for ‘the man’ and break out on your own. Start your own business.

Your decision to start your own real estate investment business is one that you will not regret…provided you do it right! Unfortunately, most start-up businesses fail a short time after they start. The reasons are many and varied, but the truth remains that it just doesn’t pay to try and go it alone! Remember the old adage: “No man is an island.”

Today we are going to discuss the advantages of working with a group in your own Real Estate Investment business. Isn’t it true that one person simply cannot wear all the hats in a working business? So why try? There is strength in numbers. And the best way to grow and be profitable is to work with skilled people in each area of business management.

For example, there is sales, marketing, accounting, office/personnel management, advertising, website development/maintenance, ongoing education, etc. We could go on and on about the many facets of a business. What kind of accountant do you suppose a salesperson might be, vice versa? Certain personality types lend themselves to certain patterns of thought. Wouldn’t it be unfair to ask your accountant to handle your sales as well? Usually so.

Now imagine yourself associated with a group of investors in a sort of network. You share a common buyers list. Perhaps you all have access to the same training materials. What if you all used a shared Internet marketing machine developed and managed by some of the best in the industry? And let’s say you had someone experienced with whom to discuss your deals and seek advice whenever you felt the need? Each of the foregoing questions address some of the areas in which private investors have longed for support.

One fear that independent real estate investment professionals have is that of competition. As with any industry, competition exists and can kill deal we work so hard to put together. If one is to work with a group as discussed earlier, he/she would have to have assurance that their privacy and autonomy was respected.

Imagine if you could enjoy all the benefits of an investment group or network without fear of competition from your associates. What if you had a designated territory that was owned and managed solely by your private business, but carried the power of a much larger brand than you could exert? That kind of opportunity exists today at one national company. There the training, materials, mentoring, marketing, etc. is all provided for the private business person seeking to sell house cash deals to cash home buyers. In turn they joint venture with the company. This type of business model has great potential because it allows the individual business to operate at their own pace while providing all the support in each of those vital areas already mentioned.

Remember this: There is no longer a need to go it alone. Help is available to serious private business people with a determination to succeed. Why not investigate the available networks that you can join. There are groups for every level of involvement out there. Don’t let the ominous economic climate deter you from your objectives. You can do it with a little help from your friends.