Many investors miss the obvious financing for their real estate deals that is available to them while they negotiate with the homeowner. In fact, I can often get 90% or more of the purchase price financed without ever taking another step.

Investors have the mistaken notion that all motivated sellers are financially challenged and will receive no equity from the sale of their house. While I agree that the percentage of potential sellers who have enough equity in their homes to sell at a discount price and still receive any substantial cash is relatively low, the act is you’ll come across them regularly. In these
instances, your first thought should be seller financing. In other words will the seller accept a small portion of their proceeds now, and the balance a year or two from now.

The way I start this conversation is to ask what they plan to do with the money from the sale of their house. Most will recite a list of several items they want to buy or pay off, but have no clue what they’ll do with the balance except to put it in the bank. That’s when I pounce on the opportunity.

My script goes something like this…”I’m sure that you want to get as much as you can for your house right? If I could pay you more for your house and give you the $xx dollars you need at closing to handle the bills you have, would you be willing to allow me to pay the rest of the money I would owe you 1 year from closing?”

That almost always gets a positive response. Now notice, I said I’d pay more, but since we have not yet discussed a price, it’s more than what? In other words, this will not cost you anything, and you’ll have some financing already built in.

The other financing that is available at the negotiations is the existing loan on the property. In other words: purchasing the property “subject to” the existing mortgage. Title (ownership) to the property transfers to you, but the loan remains in the original borrower’s name. By purchasing the property subject to the existing mortgage you take over the existing financing without having to obtain a new loan.

Another advantage is that the loan will never show up on your credit report. That doesn’t mean you don’t have to make on-time monthly payments. It simply means that the loan will not affect your loan to income ratios. You must still make timely payments, and the lender still has a mortgage on the property to secure their interests.

Now let’s put these techniques to work. Suppose that the seller owes about the same as what you can afford to pay for the property. The first thought should be to take over the existing loan – which means you’ll have almost 100% financing on the property right from the start. If the seller has significant equity, think about offering the idea of seller financing for their equity. Even if you have to offer 6-8% interest – isn’t it worth it to have the loan already in place?

Finally, if the Seller has a loan and significant equity, simply combine the two strategies taking over the existing loan and pitching seller financing for the balance. Using any and all of these techniques you’ll be able to take title to properties with a very small down payment.

Tomorrow we’ll discuss how to take care of the small down payment along with all of the other costs associated with the purchase and rehab of a property. Be sure to look at for Part 3 in the series.

Please don’t forget to leave me comments about this article. I love to hear from you. Just click on the “Read More” button below.

When investors think of financing real estate deals, their first
thought is to use an institutional lender. And while I believe there
are cheaper, less risky and more effective means to fund a deal,  
institutional lenders definitely have their place.

Let’s start with my definition of an institutional lender: a company
in the business of making loans – secured and unsecured by real estate.

Banks are of course the first thought. They are great for financing
rental properties for the long term. The interest rates are relatively low;
points are fairly low; and payments can be amortized over 30 years.

You also need to understand the limitations with banks that can destroy
your deal and your business.

• They do not like ugly properties;
• They will not loan on uninhabitable properties (must have working kitchen & bath)
• They do not recognize Assignments of Contracts, so wholesalers – don’t allow your buyers to use banks)
• They are slow to close
• You never know what’s going to happen in underwriting – the loan may never get approved
• They base their LTV (Loan-to-Value) on the purchase price for new purchases – regardless of the value of the property.
• They typically will not loan additional dollars for rehab

 You can see that their service is really limited to a small niche for investors.

A source that investors often do not consider – or maybe it’s that they don’t remember – is home equity loans; signature loans; and even credit cards. These sources used individually or jointly can provide the additional funds necessary to complete funding for a deal. Don’t be afraid to explore all of your resources, just remember to pay yourself back on these loans when the property sells to keep these accounts available.

Finally, there are hard money lenders (HML). These lenders are in the business of making real estate loans to investors. They understand the property may be ugly and will require rehab; they will allow loan proceeds to be used for repairs; and they typically will allow the wholesaler to collect an Assignment Fee. They can usually close within 7-14 days with a simple underwriting process. Most HML do not report the loans to the credit bureaus as longs as payments are current so the borrower’s credit is not tied up.

Hard money lenders get a bad reputation however because of their rates and terms. Interest rates can range from 12%-20% with points (fee paid up front for the loan) ranging from 3%-10% of the loan amount. These are short term loans which usually mature somewhere between 90 days and two years requiring interest only payments in the interim with a balloon payment of the total balance at maturity.

Some investors refuse to use HMLs out of principle because their terms are so “hard”. I agree to some extent – if you have a better alternative certainly use it; but if the deal supports the cost of the financing and you have no other option except to pass on the deal and the profits; then I think it would be ridiculous not to use the HML.

As with any service, there are good and bad providers. Get to know the institutional lenders in your area, and keep them as an additional resource when the deal is appropriate for one of these type lenders.

In our next article, I’ll discuss the more creative types of financing.

One of the biggest questions we get on a regular basis from students all over the country is “how do I get started driving traffic FAST, without spending a ton of money?”

Well, as we all know in life and business everything we want to do comes down to having the time or the money to do it. So, today I want to share with you one of the best traffic strategies we use today and show you how a few simple contacts can help you change the face of your business forever.

I’m talking about Joint Ventures. A joint venture is simply a business transaction between two like minded individuals for the betterment of both parties. So basically, if you d something to help me, I’ll do something to help you. It’s simple – and using joint ventures to build your list is simple too, if you do it right!

There are many different ways to pull off a JV (joint venture) and quite honestly the possibilities are endless for you as an entrepreneur. The more creative you get the more opportunities you’ll see become available, but doing a joint venture always boils down to a few simple tasks.

Step 1 – “The Find”

Before you can pull of a reap the benefits of a JV relations hip you must first FIND a person or company to joint venture with. This part is really the easiest for everyone, all you need to ask yourself is…”where can I find likeminded folks who are also in my business?” For real estate investors there are a few places where you can tap into a goldmine of possible JV partners.

1. REIA’s – Real Estate Investor Associations. If you’re not currently a member of yours, you need to be! www.NationalREIA.org has a listing of all the reia’s in every state nationwide. Think about who attends those reia meeting each and every month. It’s people just like YOU! It’s a gathering of real estate investors from your area and it’s the perfect place to find ‘like minded’ individuals in your business!!!!
   
2. The internet – one of the fastest and easy ways to find JV partners is using the internet to search for business owners and marketers just like yourself. I call this fishing for JV’s and in essence that is exactly what you are doing. However, there are a few pluses and minuses to the internet ‘fishing’ strategy.  Biggest Pro – It’s easy, cheap, and can be done in your underwear from your apartment at your mother-in-laws basement. Biggest Con – You’ll always get a better response and build better rapport when you can pick up the phone and actually talk to a human (yes, I said talk J) Hint: Use the internet fishing strategy to build a contact list and then send both emails and place a call to the contact regarding your JV proposal.

Step 2 – “The Approach”

The 2^nd piece  to the JV puzzle is “The Approach”. Most people kick themselves in the butt here and totally ruin any chance at success because of a fault in their approach.  Most people go into a Jv approach thinking one thing and one thing only…

“How Can I USE This Contact To Make MYSELF Money?”

…and if you’ve tried this approach before and never gotten a call or email back it’s because you started our relationship off on the wrong foot. The first contact you made with me was all about YOU and how I could help YOU, but the problem is…

…I don’t care about you yet and at the moment ALL I CAN THINK ABOUT IS ME!

So unless you’re going to tell me how you can help ME…I really don’t care.

If you approach your business (and most personal) relationships this way you’ll find you have  a ton more opportunities open up for yourself.

So here’s what every JV approach letter or conversation needs to have:

1. Introduction – Introduce yourself and who you are and quickly get to why you are emailing/calling them (should be benefit focused for the JV contact)
2. Your Idea – Explain how you were hoping the two of you could work together
3. Next steps – always get a commitment of some sort and layout the next steps so that the joint venture actually come to fruition
4. Pleasant Follow up – There is a VERY fine line between persistence and annoyance so be careful not to be too pushy, but sending a follow up email a day or two after your initial contact to thank them for their time and review what you’ll be doing together is always nice. Plus, it shows your JV you have your stuff together.

Step 3 – “The Follow through”

Once the Jv has been setup, you will continue to keep finding more joint ventures. As the date approaches for your joint venture to actually take place you’ll wan to make sure you:

1. Write/call the Jv a week to 10 days ahead of the scheduled JV date to just make sure they have everything they need and see fit here is anything you can help them with.
2. Send the email or promo materials you’ll want your Jv partner to be sending to them at least 1 or 2 days before the date so they have everything right in front of them and it’s fresh on their mind.

Hint: Do anything and EVERYTHING you can for your JV partner, the less they have to do, the better chance that they’ll do it when they are supposed to. (this is a human trait not necessarily tied to JV partner sonly

Joint ventures are a great (FREE) way to started getting traffic to your sites and dollars in your  pocket fast. Just always be sure to follow these simple steps and you’ll do just fine. O’ yeah and remember: If you treat your business as a hobby you’ll get paid like it’s a hobby. If you treat it as a business you’ll get paid like it’s a business. (Ho much money has that train collection made you lately)

P.S. Read the article and leave a comment. The person with the most informative or creative comment will win a 30  minute business building consultation with me next week!

Hey Guys & Gals,

I’m writing this post from 39,000 feet above texas on my way back from a great weekend in Las Vegas!

I just wanted to comment and share my complete adoration for this industry, I love it! I mean how cool is it to be able to check your email on a plane and make sales while heading back home. It’s Awesome.

So today I want to challenge you to do something GREAT for you or your business. Be Bold and make your life happen the way you want it to happen!

I’m going back to my movie and these peanuts.

Have a great weekend!

Josh Brown

What drives you? What makes you get up in the morning and start your day? What is your core motivation? The answer is your “why”. Your reason for being. Many think it’s money when actually money means nothing to us in and of itself. We want the money for some benefit that it brings.

For me my “why” is my family. I’m proud that we created a family business and that our entire family works together. Another major plus: we all get along like friends.

I wrote more about this in the upcoming edition of The Edge newsletter, and I’d like to hear your point of view. What about you? What is your “why”? Why do you do what you do? I’d love to hear. Share your thoughts with a reply below. Who knows – you may change someone else’s life with your thoughts.

Lou

Hey,

I’m posting these pics from the hospital while my wife is enjoying a much deserved nap.

Thanks so much for all the kind words so many of you have sent in!

We appreciate it!!!!!

Josh Brown (and Family)

Some years ago I ran into a little old Canadian lady that shared with me the
secret to reading a customers mind.

This simple little trick revolutionized theway I connected with my customers
almost instantly! Here’s a little hint:

W – _________
I – _________
S – _________
G – _________
A – _________
T – _________

WATCH THIS VIDEO – THEN LEAVE YOUR COMMENTS BELOW…

Enjoy,

Josh

The US Postal Service announced this week that they plan to close 700-1,000 (I’ve heard conflicting reports) local post offices because the USPS is still losing money despite their recent rate hike.

Is anyone surprised they’re losing money? Look, I know that we have the absolute best government run postal service in the world. And when you think about it 44 cents to mail a letter across the US is still a bargain, but geeeez – don’t they think they need to try and be competitive on service?

Everytime I go into a post office, they have 1 lone person at the counter with a line out the door – and that 1 clerk is never in a rush. Other workers walk around, but no one helps. The other day I asked them to apply metered postage to a stack of evelopes and they informed me they don’t do that! What???!! I can go down the street to the little Mom & Pop mail store and they do it.

Furthermore, they offer me a choice of carriers for all of my outgoing packages; they will provide a mail box address that I can call a “suite” and receive packages from ANY carrier not just the postal service. And they do it all with a smile.

The USPS still operates like it did 25 years ago before there was any real competition. No wonder they’re falling behind.

Lesson learned: In order to remain profitable make sure your business is focused on customer service and always keep up with the current external environment. Don’t become a dinosaur.

Do you agree with me or not. Post your comments – I’d love to hear.

Lou