Tag Archives: real estate

5 Deals for Less Than $3K

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In the month of October, we put 5 deals under contract and will be out of pocket less than $3000!

In fact, we used someone else’s money, so it’s not cost us a penny… just some time!

What exactly did we do?

1. Find the motivated sellers!

We started by sending out a direct mail campaign to about 350 property owners. What is different about this campaign versus our standard “absentee owner marketing” campaign is the fact that we found owners of VACANT land that had owned the property for more than 10 years!

2. Screen the leads…

Out of 350 letters that went out, we had about 70 calls! Yes… that’s right! Twenty percent of the people responded to our letter. Typically with other real estate direct mail, I’ll get between 8 – 15%, so this market is definitely hot!

Oh! And by the way… we actually send all of these leads to our virtual assistant who called them all back, filled out lead sheets, and gathered all the preliminary information. In some cases, she even pre-negotiated the price down!

3. Evaluate the deals…

Obviously with 70 deals (give or take), the due diligence took a little time. The great part, however, is that since you’re mailing in clusters, you can duplicate your homework across lots of properties! We hand picked the very best of the best and decided to make offers.

4. Make offers…

Next, we had to put our offers together. Some of the sellers, we called over the phone. Others, we simply dropped offers in the mail and hoped for the best! We gave them 10 days to get the contracts back to us and had 6 contracts back in that time period.

5. Additional due diligence…

The executed contract is just the first piece of the puzzle. Now, I would never suggest you go into a contract on a deal you don’t have every intention of closing on, but you aren’t going to do all the due diligence required on every deal until you have a contract in hand. For example, when we buy real property, we don’t pay for inspections and appraisals until after we have a signed contract. The same holds true for land. There are going to be additional calls to make and some more homework to do, but now it only takes you a short while since it’s the deals you’re actually going to close on.

NOTE: You may have noticed I said that we got SIX contracts back, but that we were closing on 5 deals. Why?

Because during the due diligence, we found some issues that were deal breakers for us. We simply decided to get out of the contract, which was completely within the terms of the contract, prior to closing. THAT’S what this secondary period is for!

6. Closing…

The last step in the acquisition process is closing on the deals! Since we wanted to use someone else for the financing (remember… the more you leverage OPM, the better your ROI is). So, we actually assigned the contracts to the LLC we set up with the partner on these deals. He put up all the money and we did the work!

7. BONUS: Pre-sold one…

We actually run regular ads for our properties on Craigslist and happened to be running a group of ads for seller financing. A potential buyer contacted us and the more we got to talking, the more I realized that one of these new properties was much more appropriate for their needs and pre-sold it while we waited for the deed to be signed off on! They are currently deciding between 2 of these BRAND NEW DEALS!

The Numbers

One of the lots, we picked up for a flat $500. It’s one block away from the lake and would have lake view with a two-story home on it. They are looking at that one for $4900 with seller financing option which will be $900 down and the balance seller financed at 8% for 12 months.

Total profit potential = $4575.44 (5075.44 – $500 purchase price = $4575.44)
Total potential ROI = 915%! (Our ROI is infinite because we had nothing invested)

If they choose the other lot, the purchase price is $8900. We have a total of $2100 into it will all closing costs and additional expenses incurred. If they choose this one, they’re going to pay $8900 with seller financing. This will be $1000 ad the balance seller financed at 8% for 12 months.

Total profit potential = $7190.36 ($9290.36 – $2100 purchase costs = $7190.36)
Total potential ROI = 342%! (Our ROI is infinite because we had nothing invested)

The best part about these types of deals is that there’s NO SHORTAGE of deals AND there are loads of people that are interested in putting up a few thousand dollars to “test” something when you can show returns like that on their money!

Heck, even when you split the profits… that’s still over 450% ROI on the first scenario and over 170% ROI on the second! Show those numbers to investors and they’ll be lining up to do deals with you.

PLUS… if you want to get started yourself… you can use your own money or even a credit card advance for less than the cost of most home study courses these days!

For more information on how we’re picking up these land deals for next to nothing, check out our Simple Land Investing…

Is Your Real Estate Website Getting Results?

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Most people are getting this wrong when it comes to using the Internet in their real estate business. This goes for investors AND real estate agents alike.

The thing is… it’s not their fault. They don’t know any better.

Let me use a story to illustrate this point…

Last week, a friend of mine wanted to “run something by me” to see if it was a good fit for some stuff we’re doing with investors and agents. In a nutshell, it was a guarantee of a page 1 listing in Google in six months or less.

At first, that sure sounds like a big promise, but there’s more to the story and if you don’t know what to ask, then it could either be a total waste of time or money… OR both!

There are a few things that you want to know the answers to…

#1. Who CONTROLS the Website?

In other words, do you own the website and all of the information? Or are you simply getting a “landing page” on someone else’s site? SO, if you stop paying the monthly fee, is your site wiped off the map, or worse… handed over to someone else?

#2. What keywords/keyword phrases will I show up for on page 1 of Google?

It’s real easy for someone to promise you page 1 of Google, but you’ve got to know what you’re getting to page one of Google FOR!

I could promise you page one of Google for the keyword phrase: “3 ways to find buyers online”. But, is that REALLY going to accomplish your goal(s)? Maybe, maybe not. It depends on what you’re looking to do. If you’re marketing to find pre-foreclosure needs, probably not.

But the point is, page 1 of Google is not for anything and everything related to your website. It is for one specific keyword or keyword phrase.

See #1… If you CONTROL the website yourself, you can have dozens, even hundreds or thousands of “pages” come up on page one of Google for specific keywords.

And YOU want to CONTROL what keywords you’re coming up under on page 1 of Google and you may want to come up for SEVERAL keyword phrases.

#3. What is the PURPOSE of the website (or individual landing pages)?

You’ve got to take a few minutes and think about the types of people you want to attract to your website based on your business. Are you looking for:

  • Motivated sellers?
  • People facing foreclosure?
  • People looking for fixer uppers?
  • People looking for INFORMATION on real estate investing?
  • Credibility to support your marketing campaigns?
  • Etc.

Your website, or at the very least your pages, should be very different for each of these types of leads.

#4. Is your site designed for lead capture?

It’s amazing to me to see the number of real estate sites out there that are just plain junk. They do absolutely NOTHING to capture prospects and provide you the opportunity to follow up with them.

According to the National Association of Realtors® 2009 “Profile of Home Buyers and Sellers”, 90% of all homebuyers use the Internet as a source of information.

And of those, 77% drive by the property prior to ever contacting an owner or agent to see the interior. This means, that you’ve got to capture their contact information to follow up with them or risk losing the lead.

#5. Are you actively generating traffic to your website?

Unfortunately, too many people believe the old adage, “If you build it, they will come.” That is simply NOT the case when it comes to the Internet. You must advertise and market the site consistently. The marketing doesn’t have to be difficult or time consuming, but you must do it. PERIOD.

Sure, if you set your site up properly from the ground up, you will have “some” traffic, but you simply won’t get enough to build a business.

It’s also essential to understand that your website is really your HUB. There are lots of other spokes, so to speak, that are a part of your online presence including social media, content marketing, classified advertising, and more.

So to recap…

It is CRITICAL to have an online presence if you want to be doing anything in real estate these days. PERIOD.

Over 90% of all homebuyers start their search online (and for motivated sellers, the numbers are also comparable).

When it comes to your website, you MUST:

  1. CONTROL your own website…
  2. Understand the basics of KEYWORDS and KEYWORD PHRASES and how to effectively use them in your web marketing strategy…
  3. DEFINE the purpose of your website (and/or individual pages on your site)…
  4. Ensure your site is optimized for LEAD CAPTURE…
  5. Actively GENERATE traffic to your website…

To use this article on your own website, include the following:

Looking to use the Internet CORRECTLY in your real estate business?

Visit http://realestatemoneymagnet.com to get my HANDWRITTEN Money Magnet Model and a Comprehensive video that explains each magnet! You’ll discover how to SUCCESSFULLY use social media for you real estate business. You’ll also learn the 2 real estate social media sites you MUST be using if you’re serious about leads!

“I Quit”

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I recently read “The Dip”, by Seth Godin. It was a quick read, but one of those books that forces you to think… I mean REALLY think!

The concept in a nutshell is that it’s okay to quit if you’re on a dead end path. There’s a lot more to it, but that’s the gist of it.

The challenge I was then faced with after reading the book was what to focus on – and what to give up on… Now, I don’t really like the term quit or the concept of “giving up”, but there is a point where you make an educated – unemotional – decision about your life and your business. You cut all the ties that are holding you back and suddenly, you’re released from all the baggage and can focus!

Entrepreneurs often have similar strains of the same disease. We’re easily excited by new ideas, and consequently, easily distracted by the latest and greatest shiny object abandoning those things that we should be putting our effort into.

In the 18 months, we’ve:

• Created 19 different information products (in real estate and Internet Marketing)

• Acquired multiple properties

• Started negotiating short sales

• Started a new company for Realtors

• Launched a done for you product creation system for Internet Marketing

• Liquidated lots of real estate

• Launched a email service company

And more…

So, with the economy being set at a new “reality” and some things that have happened in our personal life, we realized that we had no choice but to cut things out (to “quit” if you will) and to re-focus our direction on 2-3 things that we not only love, but can really spend our time and effort to build and grow.

You see, we’ve spent the last 10 years working morning, noon, and night. We’ve made a ton of money and we’ve lost a lot of money. But, we’ve neglected a lot of the things that are important and we’ve gotten stuck in a rut because it’s consistent.

What’s even more important to realize is that things have changed. Things have changed in the marketplace. Things have changed for us personally. And things have changed in the economy.

I know that we always hear “Never Quit” or “Quitting Is Not An Option”. But that refers to giving up because you don’t want to do the work or because you’re struggling through something and you’ve got to keep on barreling through.

Think about it… If you own stock in a company that’s falling apart and it’s bankruptcy is inevitable, then you’re going to cut your losses and not hang on until the bitter end simply because you don’t want to be labeled a quitter!

Quitting is emotional.

HOWEVER, when you take emotion OUT of the equation and decide to cut your losses, you are making a well thought out CHOICE. You are not acting out of emotion but responding to factors and data that help you to make an informed and rational change in your life.

If you’re quitting because it’s uncomfortable, that’s a different story!

So, for now, start by picking up a copy of the book, “The Dip” and give it a quick read. Then, take a look at everything in your life that is taking your attention and decide where you are going to focus.

Once you’ve made that decision, then eliminate everything else. QUIT all the stuff that’s getting in the way and go for it! Give it everything you’ve got.

Stay focused. Occasionally pause to evaluate your course of action.

And then keep on going.

This is NOT a permission slip to give up and quit because things get hard, but rather permission to cut your losses when the time is right or when you wind up on a sinking ship!

Take some time to really look at where you are now and where you’re headed and what it’s going to take you to push through the “Dip” and reach your goals.

CAUTION: Once you’ve made your decision, stick with it. Close the door on everything else because there’s no turning back. Commit to you plan and follow through.

Facebook Real Estate: 10 Ways to Get Real “Likes”

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Once you’ve created a great Facebook page, it’s time to get REAL people to starting “liking” the page.

Here are 10 ways that you can get people to your new Facebook real estate page:

  1. Invite all of your existing friends (that are related to real estate in some way).
  2. Put a link to your Facebook page on your existing website.
  3. Use Facebook comments on your blog.
  4. Include your Facebook URL on your business cards (BONUS: Give them a special offer for “liking” the page).
  5. Tweet it to all your Twitter followers.
  6. Add the link to your other social media profiles.
  7. Include your Facebook link in your email signature file.
  8. Include your Facebook link on all flyers and other advertising that you’re currently doing.
  9. Run ads on Facebook’s ad platform.
  10. Post comments on real estate-related sites using your Facebook profile as the signature.

The key is to incorporate your social media activities into all of your marketing and make your Facebook page as seamless as, let’s say, a link to your website or email address.

To use this article on your own website, include the following:

Looking to use Social Media for your real estate business? Visit www.RealEstateTrainingAcademy.com/SSMS to get your Simple Social Media System for Real Estate. Inside, you’ll discover how to SUCCESSFULLY use social media for you real estate business. You’ll also learn the 2 real estate social media sites you MUST be using if you’re serious about leads!

Virtual Tours (Video)

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We’re not talking about the Virtual Tours Realtors® were using in the late 90s and early 2000s. What I’m referring to here is creating videos and posting them to sites like YouTube.com and Google Video, among others.

With the increasing popularity of these types of sites, it’s impossible to deny the power of video especially given research that shows between 84%-93% of all buyers start their search online! And of those, you increase your chances of buyers looking at YOUR property when you have a virtual tour, video or slide show.

FACT: Most Realtors® are CLUELESS about how to use video effectively.

FACT: Effective virtual tours do not require any fancy equipment or video editing skills

Virtual tours can be as simple as creating a slide show with some music and narration or as complex as you’d like to make them. Keep in mind, you’re trying to sell prospects on not only the house, but the neighborhood, community, city, and lifestyle. If you’ve got a particular personality that you like to infuse, you may also be selling that in the video. Just remember, your goal is to separate your house from the competition and grab the prospect!

This is why it’s so important to know who your target buyer is. You see, it may not be the house itself that’s the dealmaker. It may be the local schools, the community or proximity to nightlife. Whatever these features are, include them your virtual tour. When possible, it’s best to create an actual video and infuse the personality of someone “just like them”. And keep in mind, a touch of humor is always a welcome element!

Here are a few of the main advantages of using video to market your deals.

  1. Target Market Specific. You can create a video that pinpoints your target buyer and cater to the things that are most important to that person. If it’s lake living, include a clip of the family taking the boat out for the day. If it’s a first time home buyer, focus on the pride that they’ll have when they finally own their own home and stop renting.
  2. 24×7 Open House. One of the best uses for a virtual tour is to simply walk through the property as you would guide a potential buyer through the home. Keep in mind, however, that they cannot experience all of the senses, so add in a few touches that make them laugh or remember you (For example, you could pull back the shower curtain to reveal rubber duckies. Then cut to a screen with a message from the duck!).
  3. Inexpensive. With video posting sites, you can get your videos out for the world to view for free! To create a full video, you can purchase a “Flip” video camera for under $150. With that, all you do is plug it into your computer and click a couple of buttons, and your video is up on YouTube! It’s that simple.


We could go on and on about video for real estate because we are only just beginning to scratch the surface of what’s going to be possible and how video plays into real estate marketing, both for buyers and sellers. We actually cover this in more detail in our Selling Deals System along with 57 other ways to find buyers.

By the way, if you haven’t grabbed your copy of our Selling Deals System: 57+ Ways to Find Buyers In the Current Market, we cover over 50 different ways to find buyers…

To use this article on your own website, include the following:

Need to Find Real Estate Buyers to Sell Your Houses? Claim Your FREE Whitepaper Entitled “10 Ways to Find Real Estate Buyers In the Current Market” at http://www.realestatetrainingacademy.com/SellingDealsSpecial.php. Inside, You’ll Discover Simple Strategies That Work In Today’s Market to Sell Your House Fast – and How to Find Ready, Willing, and Able Cash Buyers, Investor Buyers, and End Buyers For Every Deal.

3 Ways to Find Buyers Online

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One of the big areas of questions we get surrounds the topic of finding buyers.

Today, I want to talk about 3 ways to find buyers using the Internet (and this goes for any kind of deal you have: fixer upper, rental, pretty home, land, etc.).

#1: Facebook Ads

With over 500M users worldwide… and with Facebook occupying so much of the users’ conversation around personal events, marketing actual properties on Facebook is a no brainer. You can target prospects by location, age, interests, and more! Plus, you can easily set up a Facebook “page” for your deal and post open houses, photos, and other things about the property. Facebook also allows you to post an image in your ads.

#2: Google Local

I’m not usually a big proponent of pay per click advertising to “build a buyers list” simply because when people are searching on Google, they’re typically searching for something SPECIFIC. Well, when you are advertising a specific property, you meet those criteria. The key here is your copywriting! You need to be able to attract the person to your ad, and away from giants like Realtor.com and other similar sites that offer hundreds or thousands of properties.

#3. Craigslist

I’ve long since been a proponent of Craigslist. We’ve sold pretty houses AND fixer uppers, rented long term rentals and vacation rentals, and even sold land on Craigslist. The ads that tend to work best for actual properties are “plain” text ads as opposed to “pretty text”, or flyer types of ads. It’s not uncommon to get between 8 and 15 contacts from a single ad!

The key with any online advertising it to know what your buyers are looking for and convey that in your advertising message, whether it’s 4 lines on Google or 40 lines with 4 photos on Craigslist!

By the way, if you haven’t grabbed your copy of our Selling Deals System: 57+ Ways to Find Buyers In the Current Market, we cover over 50 different ways to find buyers…

To use this article on your own website, include the following:

Need to Find Real Estate Buyers to Sell Your Houses? Claim Your FREE Whitepaper Entitled “10 Ways to Find Real Estate Buyers In the Current Market” at http://www.realestatetrainingacademy.com/SellingDealsSpecial.php. Inside, You’ll Discover Simple Strategies That Work In Today’s Market to Sell Your House Fast – and How to Find Ready, Willing, and Able Cash Buyers, Investor Buyers, and End Buyers For Every Deal.

Why Do Some People Succeed in Real Estate While Others Fail?

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There are 5 pillars to success in this current day and age and the chances are, you’re just missing an element from one of those pillars.

  1. Attitude
  2. Knowledge
  3. Belief
  4. Focus
  5. Determination

That may be different than what you’ve heard in the past, and you may be thinking… but what about “money”.

“You see, Heather, it takes money to make money in real estate…”

Well, in just a moment, you’ll see why the money will take care of itself when you have the rest of the pieces in place.

Let’s look at each of these (and we’ll explore each in more detail over the next few weeks).

1. Attitude

I’m not going to sugarcoat things and tell you that you’ve got to get up every morning and yell at the top of your lungs that today’s going to be the best day of your life. (Don’t get me wrong… I’m not criticizing those who do. If that’s your thing, go for it! It’s certainly not going to hurt matters.)

But I also realize that most people simply won’t do it. But there are other things you can do to change your attitude. You’ve got to understand that it is something you’ve got to work on EVERY DAY of your life because things are going to get in the way and there are going to be days where things just come up and you have to deal with lots of fires. It’s called life!

I’ve not told a lot of people this, but years ago I was on the fence of a mild depression. I had some life things going on and didn’t have a job and it was real easy to get up in the morning, move to the couch and watch soap operas all day.

One day, I just got sick and tired of it. I got myself up off the couch. I folded up the blanket, took a shower and went to the bookstore to pick up a few books on attitude, mindset, etc. And I read and I read and I read… Within a week, I was back to normal and my attitude had fully turned around.

There was no more “poor me”. There was no more “why is everyone else doing, having, [you fill in the blank]”

I LITERALLY made the decision to turn off the pity party faucet and that was that! You can do the same thing and I encourage you to do whatever it takes to make that mental shift in your head.

Just remember, it’s a PERSONAL commitment. You can tell 1001 people whatever you want, but you won’t see real change until you have a heart to heart talk with yourself and decide that enough is enough.

2. Knowledge

Next we have “knowledge”. This is a tough one because we almost ALWAYS feel that there’s more to learn.

I’ll keep this point brief here because I’ve got quite a bit more to say about this in future articles.

But there’s a pretty good chance you’ve got all the “knowledge” you need OR you have the access to it at a moment’s notice. You will NEVER know all there is to know about anything.

PLUS, I was recently talking to a very successful “guru” who makes over $20,000,000 per year and we talked about how the information overload is just too much! By the time you get through everything, you’re back to where you started. You’ve just wasted time and confused yourself a time or two.

You need to focus on the FUNDAMENTALS. The basics NEVER change…

Oh and one more thing… you don’t need to buy $1997 courses over and over again! Stick with one thing and work that. It’s not worth the mental energy you exhaust trying to keep up with everything.

Trust me… I know this from experience. I’ve got 10s of $1000s of dollars of “programs” I’ve never gotten around to.

Here’s what my mantra was when I started: Do not buy another product, course or seminar until you’ve implemented the meat of the last one.

3. Belief

It’s easy to second-guess yourself or to think you just ought to give up, but belief is CORE to your success. If you don’t believe in yourself, no one else will.

This is where the “money” takes care of itself. If you’re passionate and have the belief, everything else comes into play where it needs to.

4. Focus

This is another challenge for a lot of people nowadays. We pride ourselves in being able to do 5 things at once and by how much we can get done.

Here’s the dirty ugly secret about multi-tasking: It doesn’t work!

You can only do one thing well at any given time. Your brain can only focus on one thing at a time. So, if you’re watching a webinar, for instance, and checking your email, you might as well turn one off because neither is getting the attention it deserves.

You’ve got to focus and focus hard for anything to be successful.

I suspect a lot of us lack focus because as entrepreneurs, we’ve got to do SO much in the very beginning that it’s sort of a way for us to avoid the things we don’t want to do. I call it productive procrastination.

But, it just doesn’t work. If there’s something you don’t want to do, can’t do, or won’t do, figure out how to offload it. It’s going to keep you from focusing on what you really DO well.

5. Determination

This might sting a little!

Most people are not successful because they lack determination. Determination is not simply, “I’d like to be rich and I just hope that one of these days I’ll find the right info-product that has the magic button”.

There is NO magic button.

Nobody is going to literally do all the work for you and then deposit millions of dollars into your bank account. I hate to break it to you, but that’s just life.

You’ve got to put in effort, a lot of effort.

You have to do things that you don’t want to do sometimes – at least until you can afford to hire someone else to do those things for you.

You’ve got to get your goals out in front of you and not let anyone get in your way. You’ve got to find solutions when problems arise, not excuses. You’ve got to work through the challenges when they arise in order to get results.

Why Invest in Land?

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You may be one of the millions of people considering the idea of investing in land, and now you want to make sure that you’re making the right decision. Here are some of the reasons why you should make the jump into land investment.

Fixed Value
Why should you invest in land and not in, say, the Stock Market? One form of leverage you get when investing in land is the ‘fixed value’ that comes with this kind of asset. While the values of shares can start crashing in the stock market, and the value of your stock may take a dive, you have your land retained at its fixed (if not appreciating) value. Severe crashes in land and property value are quite rare. While there may be some fluctuations depending on the economy and other factors, land over the long term is a stable investment in comparison to other investment types.

A Tangible Investment
While banks are experiencing credit problems and paper value is at serious risk, you have your physical investment intact. If anything, it’s always great to have an asset that you can actually see, visit and walk on. The security you get from a physical investment is simply incomparable.

Greater Long-Term Returns
With the heavy investment in land currently rising from the unstable financial markets, you can expect a shortage in this valuable asset in the future. Hence, you can anticipate the value of land properties to undergo rapid appreciation. As the banking sector weakens, investing in property becomes a wiser option.

Low Risk
Historically, the value of land has always gone through an upward trend. This is mainly due to the fact that there is a finite amount of land. With the growing world population putting this piece of asset in increasing demand, the chances of losing your money with your investment are slim.

Leverage
One advantage with investing in land is that you get to negotiate its price. With the right negotiating skills, you can bargain with the buying price. This is especially true if you are dealing with a seller who is highly motivated in selling the piece of land, or who needs cash right away.

High Return on Investment
If you have the right bargaining skills, you can purchase pieces of land at a low price and sell them later, at a much higher price. You may also develop the land and increase your asset’s value as much as a hundredfold. You have heard about self-made billionaires who made it big because of real estate. This is one of the ways they make those billions.

Easy-to-Understand Investment
You may already have heard about accounting scandals involving the Stock Market and other such investments. You should not encounter this kind of complication with land investing. You can usually get a good picture of why property prices change, and at what rate.

Ownership
It goes without saying that there’s an invaluable sense of pride that comes with the idea of ‘ownership’, and this is the peace of mind you get from investing in land.

Practical Use
You can use your piece of land in a number of practical ways. You can develop the land, harvest the resources, rent it, use it as a campground, subdivide it, build a home or business, there’s endless possibilities.

There is so much to gain and practically nothing to lose when investing in land. When all else fails, or when other modes of investment go shaky, land investment offers solid investment ground.

Find training, information and articles on land investing and learn how to profit with land at ProfitWithLand.com, your #1 source for learning about land investment.

Article Source: http://EzineArticles.com/?expert=Lydia_Quinn

Hard Money Lenders

Hard Money Lenders (A Primer)

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Hard money lenders, are individuals with a great deal of money available for investments. Depending on your investor, some may have limited funds while others have deep pockets.

Based on their own personal criteria, they lend this money, typically on a short term basis to investors who use it for a variety of purposes, primarily buying and repairing properties in distress.

As you develop your relationships with hard moneylenders and prove to them that you treat your investments as a legitimate business, you will be able to negotiate more favorable terms. It is a good idea to learn the requirements of and develop relationships with 2-3 hard moneylenders.

Hard moneylenders will serve as a great resource as you begin your Real Estate investment business, especially if you have limited funds and/or credit blemishes. Having a good hard money lender will help you become more profitable in shorter amounts of time. You will be able to take advantage of deals and act quickly if you need to. You will also be able to refer them to potential wholesale customers in order to help them secure financing and guarantee that your deals close correctly and, more importantly, quickly.

Typical terms for hard money

The terms for a hard money loan will vary from lender to lender, will depend on the investor’s experience, the length of relationship the investor has with the lender, and depending on the lender, sometimes even the credit score of the borrower. However, if the hard money lender does look at the credit score of the borrower, he/she will typically be much more lenient because the property will serve as the collateral

Loan to Value (LTV), Interest, and Points

Generally speaking, a hard money lender will lend between 50%-75% of the after-repaired value of a home with interest rates ranging from 12-18% for anywhere between 6 months to 5 years. In addition, they will charge between 1-10 points as an upfront financing fee.

Payment Schedule

Some lenders will charge interest while some will amortize the loans, though more often than not, for the short term loans, it is easier accounting for the lender to collect interest only payments.

Repair Money

Some lenders will lend repair money and others will not. Many times, this will ultimately depend on the LTV of the property. If you do find a lender that agrees to lend for repairs, frequently the money will be kept in an escrow account from which you draw as the work is completed. In rare instances, or after you have established a level of trust with the lender, he/she may allow you to leave the closing table with the funds

Closing Costs

Provided your Loan to Value (LTV) is within the lender’s requirements, you can often negotiate the closing costs to be wrapped into the loan.

Lending Criteria for Hard Money Lenders

Just as terms vary from lender to lender, so do the criteria. Each lender has his/her own preference with regard to areas in which they will lend and types of investors to whom they will lend.

As you begin to build your list of hard moneylenders, it is important to ask them what their criteria are:

• What is the typical Loan to Value you will lend on?

• Where do you find your comparable sales?

• Do you check credit? (If so, can I provide you with a recent copy of my report?)

• Do you require appraisals?

• Do you charge an inspection fee?

• Are there certain areas that you do not lend?

Property Value vs. Credit

Generally speaking, most hard moneylenders are more concerned with the property value than the credit of the investor. They simply want to know that if the investor defaults, they will take ownership of a piece of property from which they can recover their investment and possibly turn a profit themselves. Basically, the lender wants to feel secure in his/her investment.

Finding Hard Money Lenders

Hard money lenders are, in most cases, private individuals. They are not institutional lenders that must abide by a strict set of rules and guidelines.

This means that they can be extremely flexible, but also very tough at the same time.

More than likely, your local investor club will have several hard moneylenders advertising at each of the meetings. These are great places to meet these individuals, network, and build relationships.

In addition to your local investment clubs, you can find these types of funds in many different places. These lenders can be your doctors, attorneys, friends and even your neighbors. The better the relationship you have with the individual, the more favorable the rates and terms will be.

Try the following question, which we learned to ask from a friend and mentor:

“I know this isn’t for you, but do you happen to know anyone that might be interested in earning 12-15% return on their money secured by a first lien in Real Estate?”

You would be surprised at how often the very person that you are asking says “Yes, I am interested.” You are not asking directly, so the person does not feel threatened. In fact, he/she may even be more inclined to lend you money since you were not asking directly.