Real Estate Investors Association of Greater Cincinnati

Just like a house, you can’t build a financial fortune from the roof down. You need to build a foundation first. 

Have you ever noticed that some people seem to have wealth flowing to them? Yes, some professions tend to pay more than others, but in every field, those with the most wealth are the ones that have a legal foundation already in place.   

This foundation is set up using an understanding of the legal strategies associated with wealth accumulation. Unfortunately, many people are “taken to the cleaners” by less-than-competent lawyers who fail to educate their clients. 

The basic foundation of wealth consists of four legal tools. If you understand the tools and know how to use them, your chances for success are much better. If you and/or your parents don’t have the four tools already, it is time to get moving. It’s worth every effort you make and every dime you spend getting the foundation in place. Here’s a basic overview of the four tools: 

Testamentary Will 

Everyone needs a will. Even if you have a revocable trust, you need a will. The
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Excluding banks and your own capital, there are two commonly used sources of funding for real estate investors: private money and hard money.

Knowing what each source of funding brings to the table as well as where each source may fall short will be important for you as a real estate investor looking to scale your business.

What is Private Money Lending?

Private money lending is typically done by individuals. Their capital may come from extra cash they have on hand, self-directed IRA/401(k), a line of credit, etc.

Pros of Private Money Lenders:

1. They usually lend their money locally, so they know the area well.
2. They may have lower terms than hard money lenders because they have less overhead.
3. They tend to be more flexible than hard money lenders when it comes to making a deal work.

Cons of Private Money Lenders: Read More...

Maybe you’re someone who's completely comfortable asking complete strangers questions like, “How much do you owe on your house” or saying things like, “That’s crazy, you’ll never get that price”.

But if so, you’re unusual—most real estate entrepreneurs have a tough time telling other people that their properties are not worth what they think they’re worth. Whether it’s that you don’t want to argue with a seller who seems certain that his price is right, or whether it’s your fear that YOU’RE the one who’s wrong, or whether you don’t want to disappoint or offend complete strangers who’ve come to you for help, the fact is that you might just have a hard time choking out the fact that you need to pay less for a property than what the seller wants.

I’m the same way. The difference, though, is that I have over 2 decades of trial-and-error-based experience in talking to property owners of all descriptions. And because I’ve spoken to, oh, 20,000 or more sellers, I’ve had the opportunity to try a lot of phrases that get my point across without sounding confrontational, insulting the seller or his ugly house or iffy neighborhood, or asking questions that the seller might find invasive if stated too directly.

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Warning: This is the longest blog post I've ever written. At the same time, I think if you can read it all, you'll be glad you did.

Because there’s a dark secret that a lot of investors know, but that no one seems to talk about much. It’s a secret that every full-time investor eventually discovers for himself or pays the consequences.

So, I guess this “secret” isn’t, really a secret—in fact, it’s right in front of all of us, all the time. Look at any successful investor, and there it will be, staring you right in the face. Yet, you may have never noticed it on any conscious level.

Part of the reason you’ve never noticed it is that the real estate education industry tends to misdirect you, denying the truth of this phenomenon without coming right out and addressing it. Have you guessed it yet? No? then let me drag out “the reveal” a little longer with an example.

Let’s take 2 imaginary real estate entrepreneurs, Investor A and Investor B (well, OK, they’re not all that imaginary—they’re both based on people I know, and if you look around a little, you’ll see examples of both, too).

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Marco is a buyer of seller-financed notes and mortgages who is also a member of our amazing national community of real estate entrepreneurs. He’s co-teaching the all-day workshop on getting started in buying notes in late February and is the author of a weekly “Seller Finance” e-letter.

        Like many other members, I attended the excellent Saturday Workshop taught by Robert Mohon called, “The Ultimate Credibility Package.”

        One of the things I learned was all bankers are taught the four Cs of lending money: things they look at when considering whether to make a loan. These are:

1. Credit
2. Collateral
3. Capacity
4. Character

        This made me think about the differences between lending money and buying seller financed loans that someone else already made, which is what I do. I came up with these four Cs for Note Buyers:

1. Credit
2. Read More...

Note: laws and regulations regarding the advertising, registering, and formalization of private loans vary enormously state-to-state. Generally, these rules apply to the borrower rather than the lender, but even lenders should be aware of what the laws in your state say about these transactions. Of course, this article is not intended as legal, accounting, or other professional advice. Always consult with your legal, accounting, or other professional before making any investment.  Further, nothing in this article should be construed as an offering or solicitation of a security.

Private lending is a strategy in which even moderate-income investors can easily get involved.

There are plenty of real estate entrepreneurs and rehabbers who want to borrow your money; if you let it be known you have as little as $20,000 to lend in most markets, someone will be right there ready to put that cash to work.

If all goes as it’s supposed to, it’s a truly hand-off investment; you just sit back and collect checks. And the return is oh-so-much-better than other fixed-rate investments; you can expect to average around 6-8% per year total (because higher rate loans are generally also shorter term; when you loan money to a rehabber
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        I get this question a lot, especially, during or just after a presentation showing an apartment complex illustrating a ‘cash on cash’ return in excess of 20%.

        If you went to a Commercial Broker and told them you were looking for properties with a 20% COCR, they’d do one of two things; 1-They’d tell you they would buy the property themselves if they ever found one with a 20% COCR or 2-They’d hang up on you because they’d think your expectations are unrealistic.

        You probably won’t find an Apartment complex advertised with a 20% COCR. Just like the broker said, if it fell into their lap, they’d buy it. However, you can increase your chances of finding some great deals by doing a few things differently.

        First off, there’s no big secret in ‘finding’ Apartment complexes for sale. Start by using the same vehicles most investors use. For instance, you can search through Loopnet.com or go to any of the major or regional Commercial Brokerage web sites such as Marcus & Millichap (MarcusMillichap.com), CB Richard Ellis (CBRE.com) or Sperry Van Ness (SVN.com) just to name a few. There are many many more out there.

        You can also peruse local newspapers in the market you’re
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Our business fascinates me.

Whether it’s creative deals or watching how REIA groups develop and maintain individual cultures or observing how different types of people react to the pressures and rewards of being real estate entrepreneurs, I find myself filing, categorizing, reorganizing, and contemplating where real estate investing fits in the bigger world, and how the people in it behave.

One of the things that I started to notice a few years back is that certain people seem to be drawn like a magnet to steel to certain strategies in the real estate business. And from what I can tell from working one on one with students, these tendencies appear to precede any actual exposure to real estate education and strategies.

Before I explain more (and potentially affect your answer to this question), let’s do a little thought experiment.

First, try to gain some neutrality about whatever money “things” are going on for you right now. If you have bills due that you can’t pay, or just saw your social security retirement statement and realized that you can’t possibly live on that, or just got a bonus at work and are feeling flush, try to chill about it for a moment. Close your eyes, take a deep breath, get centered, and read on. Read More...

Many folks believe they procrastinate because they are “lazy”. As a result, they beat themselves over the head and feel bad about it.

(Maybe you do too.) 

It’s not true though.

Procrastination has nothing to do with laziness.

This is just a cop out. It’s a story you tell yourself so that you get to feel bad for a little while “punishing yourself” for not taking action and following through on the commitments you made. Trouble is, it only makes your procrastination worse and reinforces the negative cycle.

You need to break the cycle.

How?

By understanding what really causes procrastination. It’s not what most folks think. There’s something deeper at play, something unconscious, and it’s stopping you from getting into action, staying in action, and following through on the commitments you made to others and yourself.

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