The Ultimate Strategy

The Ultimate Strategy™

for Buying & Selling Houses

Creating a Free & Clear

Real Estate Money Machine

with Richard Roop and Dan Doran

Section 6

Funding & Raising Cash:

Buying Better than No Money Down

Section 6

The Ultimate Strategy™

Creating a Free & ClearReal Estate Money Machine

Funding & Raising Cash:

Buying Better than No Money Down

This Section includes:

1)Cash you may need when buying

2)How to fund your purchases

3)How to pay off your houses

4)What is a hard money loan?

5)What is a private investor loan?

6)How to find hard money lenders

7)How to find private investors

8)How to use your private investor’s money

Resources

How to Raise Millions in Private Money Over the Next 45 Days
7 Ways to Raise Cash for Real Estate Deals without Banks - Part 1 of 2
6 Ways to Collect Cash when Buying with No Money Down
17 Ways to Generate Monthly Cash:How to Overcome Real Estate Cash Flow Challenges
General Disclaimer
Private Investor Flyer/Postcard/Letter – Example

Additional Resources

Maximizing Profits with Private Lenders
7 Ways to Raise Cash for Real Estate Deals without Banks - Part 2 or 2
17 Ways to Generate Monthly Cash - Million Dollar Coaching Call Replay
Equity Trust Company
Volume #2: Generating MonthlyCashWhileBuilding a Fortune

1. Cash you may need when buying

Down payment to seller
Paying off existing liens and encumbrances
Funds for rehab, remodeling or repairs
Closing costs to buy
Holding costs until sold or occupied
Collecting part of your profits in advance

2. How to fund your purchases

Borrow from the seller
The Ultimate Strategy
Borrow from private investors
Always plan to have at least a small first
Unless buyers down can fund the deal
Borrow from hard money lenders
Sometimes quicker and easier
OK until you get private money
You can replace them later with private money
Use your buyer’s cash down payment
Purchase deposit from tenant buyer
Down payment from contract buyer
Use your buyer’s cash from a new loan
Move your seller’s 0% money to seconds other properties

3. How to pay off your houses

Use the net positive income
Pay off 12-15% hard money loan
Pay off 7-12% private investor loan
Pay off 0% seller carry back loan
Use additional non-refundable purchase deposits paid monthly from tenant buyer
To pay off hard money or private money faster
Use buyer down payment or deposit
3-5% down or more form tenant buyer
5-20% or more from contract buyer
You can buy the note back from first position lender
Keeps seller in second position
Pay off 12-15% hard money loan first
Pay off 7-12% private investor loan next
Pay off 0% seller carry back loan last
Negotiate a discount for paying them off early
Use your buyer loan proceeds
Move your seller’s 0% money to seconds other properties

4. What is a hard money loan?

Collateral loan against high equity
Sometimes easier and faster than private money
Up to 70% loan to value (LTV)
May consider a second lien position
Not to exceed maximum total loan to value
May hold money back in escrow until repairs are completed
Should loan on value and not purchase price
Lender should be OK with owning the property in case of default
Loan fees of 2 to 10 points
Term is typically one year
May get 2-3 years
May charge you points to extend
May require a personal guarantee
Signing as trustee
When property is owned by trust
House is responsible
Signing as President
When property is owned by your corporation
All corporate assets are at risk
Best not to HOLD investments in a corporation
Use LLC or other
Signing personally
Added security for lender
All your personal assets are at risk
May require a credit check
Wants to make sure you are not a deadbeat
Lender may do their own appraisal
Could just do online research and a drive by
You can provide most current appraisal and comps
May charge you extra for this
Costcould be included in the loan fee
Lender may do all the closing paperwork
Could be included in the loan fee
Lender’s Title Insurance policy required
“For business or investment purposes”
They may prefer not to do owner occupied loans
Home Owners Equity Protection Act (HOEPA)
Hazard Insurance
Have valid policy at closing properly endorsed
Use an insurance agent

5. What is a private investor loan?

Collateral loan against sufficient “cushion of equity”
Up to 85% loan to value (LTV)
Investor probably does not what to own the property
No loan fees
You could offer 1% to investor if needed
You could offer 1% to a private money manager
Someone you hire to find and manage private investors
Term is flexible
Get 3 years minimum
Ask them
Shoot for 7-10 years
May require a personal guarantee
Only if they ask
Don’t offer it needlessly
It’s up to you
Are you willing to do whatever it takes to protect them?
Should not require a credit check
They are protested by:
Cushion of equity
Seller in second position
Income from the occupant
Lien against the property
In case of your default, they get
The property through foreclosure
All their principle
All accumulated interest
All collection, legal fees and any other lender disbursements
May require an appraisal
Follow federal or state guidelines
Lender may be happy with you value estimate
OK to provide list of comps
Use your resell price or contract price as the value
Paperwork is done for them
Use FNMA note and deed of trust
Can be done in houses – For experienced buyer only
Best handled by attorney or title company
You pay all the costs
Explanations in paperwork
No payments
Interest only payments
Special provisions to add
First right of refusal on the sale of the note
Substitution of collateral
Subordination agreement
Due on sale clause
Get the right to sell on a wraparound
Don’t let other assume your obligations
Lender’s Title Insurance policy may be required
Discounted when getting with an Owners Policy
Will you do it on all purchases?
Will you do it when pulling cash out of a house you already own?
Hazard Insurance
Have valid policy at closing properly endorsed
Update policy endorsements as required over time
If you replace or add a private investor
Use an insurance agent

6. How to find hard money lenders

Local REIA
Newspaper
Yellow pages
Mortgage brokers
Referrals
Mortgage brokers
Other real estate investors
Online research
TUS Membership Site updates

7. How to find private investors

Inner Game verses Outer Game
Outer game is the technical step by step process
Inner game is your “check up from the neck up” (Zig Ziglar)
Habits
Attitudes
Beliefs
Expectations
Create your program
So you can easily explain it o anyone and everyone you come in contact with
Example:“How to Raise Millions in Private Money Over the Next 45 Days”
Create a 60 second “elevator speech”
Examples:“How to Raise Millions in Private Money Over the Next 45 Days”
Build you information and credibility kit
What to include:“How to Raise Millions in Private Money Over the Next 45 Days”
Create your presentation
Deliver one-on-one
Deliver to groups
Deliver online
Print out and add to kit
Example:
Jake Jordan’s Presentation – use as example only
Michael Moulton’s Presentation – use as example only
Flap your lips to everyone you know
Do before advertising for cold leads
List of ideal prospects:
“How to Raise Millions in Private Money Over the Next 45 Days”
Indentify interested prospects and follow up
Meet with someone weekly
Create goals and milestones
Track controllable inputs
Number of postcards, letters or phone calls
Number of presentations

8. How to use your private investor’s money

Questions to ask:
How much do they have to work with?
Where is it tied up now?
When will it be available?
Is it in a retirement fund?
Are you most interested in income or growth?
Good to know:
Will they do land, mobile or modular homes?
Offer them a deal like this first and then see if they object
Do they want to get a higher return on deals where you need a second lien?
They will do it for more money
Smaller seconds may accrue interest with no payments
Offer payments if you wish to reduce your payoff obligation later
If you have a deal now, present your opportunity
I’m buying a house worth $220,000
I’m going to borrow $40,000
I’m will to pay my investor 9% secured by a first mortgage
If you were my investor you’d get $300 a month
Or offer principle and interest
Or offer to have the interest compound each month, or each year
Or offer simple interest for the term
Do you have any money you’d like to get 9 % on?
How long would you like to get that type of predictable return?
If you do not need cash now
“I’ll put you down as one of my investors and call you on my next deal”

Action & Implementation Plan

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700 W. Hwy 24 Suite E ▪ Woodland Park, CO80863

Customer Service: (719) 687-4472 Ext. 105 ▪ Fax: (719) 687-4471

Sales & Coaching Support: 1-877-932-9725

How to RaiseMillions in Private MoneyOver the Next 45 Days

By Richard Roop

If you're being challenged by recent market changes... or struggling from a lack of cash... here’s a solution for you…

Raising and using private money can help you enjoy more profits in a slow, normal, hot or post-hot real estate market. I want to help you start buying more, holding more and flipping more houses... all without ever using any of your own cash or credit.

Many cities and counties across the nation have recently shifted from a hot or normal market to a more challenging slow or pot-hot market. This is especially true for regions like California, Florida, WashingtonD.C., etc. If you're having any trouble collecting cash when you buy, collecting positive cash flow each month or building long term wealth by capturing lots of equity, this article will give you the competitive and strategic advantage you want and need to achieve your financial goals as a creative real estate investor.

Dan Doran and I work one-on-one with hundreds of real estate entrepreneurs each month. One of the keys to some of our most profitable strategies (that are working best right now) is finding, nurturing and using private investors as part of your house buying operation.

The benefits of developing your private lender program and lining up dozens of investors eager to give you cash are substantial and significant:

First, you can begin buying more houses for 'all cash' at significant discounts... up to 70% off retail value.

Second, you can structure offers on houses that have lots of equity... receiving $20,000 or more of your profits in advance... in cash... on the day you buy... even if you plan on holding a property for many years.

Next, you can get back all the cash it takes to find, fix and occupy a deal so none of your money or credit is tied up in a house... allowing you to collect dozens (or hundreds) of 'free houses' each year for long term wealth accumulation.

Finally, you can turn many non-deals with no equity into super profitable deals with substantial equity by paying off existing debt at a discount... using private money.

Here are the steps to systematically raising private money:

1)Create your “program” so you can explain it to others

2)Write your 60-second ‘elevator’ speech

3)Build your info/credibility kit

4)Create your presentation

5)Flap your lips to everyone you know

6)Follow up on your leads

Understand lots of people that you come in contact have idle cash savings or retirement funds that are experiencing little or no growth. Offering double digit returns secured by local real estate is a great opportunity for them. Your private investors can enjoy higher profits … thanks to you. And you can make for money, thanks to them.

It’s quite simple…

1)Create your “program” so you can explain it to others

Private Lender Program – EXAMPLE:

I pay my private lenders 9% interest on a first lien. I prefer paying monthly interest only payments supported by the income on the property but I can pay principle and interest if needed. Interest only payments keep my lenders entire investment working and they make more money.

I pay my private lenders 11% interest on smaller second liens. I prefer to have their interest accrue with no monthly payments. My investor can earn interest on interest and I can avoid a negative monthly cash flow.

I prefer making no payments on a first or second lien when rehabbing a property that I expect to be sold and cashed out within 6 months.

I prefer my note payments are due on the 15th of each month allowing the properties income to help cover the payment.

My minimum investment is $10,000.

I am confident that I can payoff an investor early with 60 days advance notice by replacing them with another private investor.

I offer a minimum earned interest of 6 months in the rare case I pay off my investor in less than 6 months. Since they probably do not want their money back that fast I will attempt to substitute the collateral or reinvest their payoff into another property.

Interest begins on the day their cleared funds are received by my closing or escrow agent.

I will never pool funds together. If I need more than one lender to fund a deal I will give one lender a lien and the other lender a junior lien.

I will buy my lender title insurance when acquiring a new property. I may not buy a lender title insurance policy if I’m borrowing against a property I already own.

I always keep valid hazard insurance on all my properties and each and every lender on the property will be added to the policy as a mortgagee.

I will never accept private money from my lender until they have received an original promissory note and the security instrument (deed of trust) has been sent off for recording.

I will never pressure an investor to do a deal. It’s pass or play. If they pass I will offer it to my next lender waiting for a deal. If I cannot find private money I will use hard money lenders as a back up. I structure my offers taking into account the cost points and higher interest I might have to pay to a hard money lender. Using a private lender instead just increases my profits. If I can’t raise hard money or private money from my existing contacts then perhaps the deal is not really a deal.

I keep all my promises. If a lender wants me to sign personally I will do so since I am committed to take care of them first if anything goes wrong with the deal. However, I never offer to “guarantee” my lenders investment as that may violate federal or state rules and regulations related to securities. I prefer to sign as trustee or as president.

I follow state and federal rules and regulations related to offering securities and seek expert legal advice as needed.

Now create your own program using the example and ASK YOURSELF…

Will you pay simple interest or compounded interest?
Will you pay a higher interest for no monthly payments?
Will you do second liens, and if so, will you pay a higher rate?
Do you ever want to make quarterly or annual payments instead of monthly?
What day of the month will you pay all your notes?
What is your minimum investment?
How will you handle a lender’s request for early pay off?
How quickly can you respond to such a request?
Will you offer a minimum earned interest or prepayment penalty?
When will interest begin?
What will you do if you need two lenders on one deal?

2)Write your 60-second ‘elevator’ speech

How can you quickly grab someone’s attention and peak their interest about your private lender program? What do you say to someone you know or meet? Review these examples and then develop you own, brief script. Then practice it.

Example #1:

“I’m a professional buyer of single family homes throughout <area>. I buy and fix up houses and can offer my sellers call cash… plus a quick and easy sale. When I pay all cash I use private lenders. We make excellent profits helping our buyers and sellers and that allows me to offer a high rate of return to my private investors. Do you know anyone who might have cash savings, other investments or retirement funds that are not consistently and safely getting them a high rate of return?”

Example #2:

“My company is always looking to buy several houses each month throughout <area>. We can pay all cash and close within a few days if needed. When we pay all cash for houses, we use private lenders and pay them a very high rate of return. Do you have any idle cash or retirement funds that are not getting you a well-secured, double digit return?”

Example #3:

“We buy houses and when we pay cash for a house we use private lenders. We pay 9% to 11% on notes secured by local real estate. If you are not getting that type of predicable return on some of your money, I’ll be glad to get you the details. We could sit down sometime, whenever you like and show you how it works. Or I could send you some info. If it looks good just let me know how much you’re looking to invest and how long you can have your funds tied up. I’ll put you on my list and look for an investment opportunity that meets your needs. When I find one, I will call you. At that time you can pass or play. There’s no obligation.”

Example #4:

“I’ve been building my real estate investment company here in <area> over the last <X> years. We buy and sell a number of houses each month and can pay all cash quickly and easily. That’s because when we ‘buy houses cash’ we use private lenders. My private lenders can make 300 or 400% more money than they can get sitting in a savings account or in bank CDs. Do you know anyone that might have a retirement account or some other investment that is not paying a consistent 9 to 11%? That’s what I pay on notes well-secured with local real estate.”