Private Lending - What’s Wrong with Real Estate?
Real estate is a great investment, right? And a lot of investors I know are making a killing. So, why all the negative press? The answer is very important to you, because your potential private lenders are reading and watching this very same media, and thinking it’s a smart move Not to invest in real estate.
Well, first of all, the press is partially right–real estate values are falling in many (but not all) parts of the country. And people with ARM mortgages are getting foreclosed on right and left! In 2007, Atlanta had over 70,000 foreclosures! And, of course, this whole crisis was brought on by greed. Greed of the banks and mortgage brokers that qualified people for mortgages they couldn’t possibly afford once the rates re-adjusted.
And now, in a move that gives hipocracy a whole new meaning, the banks are tut-tutting over the “shock” and tightening credit so it’s even harder for legitimate borrowers to buy property. This is really bad news for many sellers, because with fewer buyers and more foreclosures, prices are being driven south.
And this is what the public and your potential private lenders hear about. However, the other side of the story. It’s a great buyer’s market where you can pick up property at huge discounts. And this has to be the core of the story you tell your private lenders.
Now, you also need to provide a story about how you’re going to protect their money from all the negative news and other things that might happen. So, when you tell them you can get property at a deep discount, let’s be clear about what price is a “discount”. First, a discount does not mean, a price lower than it used to be a year ago. A discount means a price very much lower than the current market value. In other words, a price below what the house would sell instantly by any qualified buyer where you would still make a hefty profit after paying off your loans and your investors. This is what I call, “making your money when you buy!”
In other words, your acquiring property for an amount that even if things didn’t go as planned you’d still come out ahead. If you don’t know how to figure that, you really should own my Deal Evaluation Tool. It’s an expert system that will perform the “what if” calculations for you and give you a thumbs up or a thumbs down on any real estate purchase. I wouldn’t consider any property without it!
Richard Odessey has been investing in Real Estate since 1999 and have bought, managed and sold over $5MM in assets over that time period. He has created a national network of RE investors that are a source of continual on-the-ground intelligence. Richard has also developed unique and proprietary tools to zero in on only high profit-low risk transactions.
