I went to an event called Mega Partnering hosted by JT Foxx. Several millionaires stood up on the stage over those two days and each shared the secrets of how they got where they are. In contrast with most celebrity-filled events, they didn't try to sell us anything. With very few exceptions, there weren't any books or tapes available for sale at the back of the room.
In addition to the millionaires up on the stage, there were many sitting in the audience. JT taught us how to network with them and then gave us the chance to do just that.
I met one guy who represents a hedge fund that invests in real estate. I met another who has created a deal exchange where deals and money come together. Some of these folks are looking for deals that start at $2 million and go to $200 million. Others are more in my zone, looking to fund purchases of single family homes.
Some of these are just money lenders. Others are looking to partner with quality people in select markets so that they can work together to make a lot of money in this crazy market.
Why would an experienced real estate investor like me be interested in working with these folks? The reality is that there are many more opportunities in the market right now than I can make happen. So, I need lots of money to be able to buy lots of homes at prices significantly below market so that I can sell them at a discount to people looking to buy a home for themselves but don't want to pay retail.
Why go to a private money source instead of the bank? There are several reasons why a private money source often works much better for buying real estate instead of using a bank.
- Right now banks aren't lending. I know the newspapers, the ads, and the TV commentators talk about how much the banks are lending. It is largely a lie. The number of loans that banks reject these days is at an all-time high. This means that more people than ever before are jumping through all the hoops the bank puts up only to find in the end that the bank has found some reason not to do the deal. I don't need that kind of frustration only to lose the deal in the end.
- Banks limit the number of loans they will make to one person, and sometimes they limit the number of loans the person can have regardless of where they got them. As a real estate investor, I have many loans. Don't get me wrong. I understand why banks don't want to make too many loans to one person. It is good risk management on their part. Still, it acts to limit the size and profitability of my business. I am not keen on having someone else tell me that I cannot earn more than a certain amount! I don't like the notion that someone else can tell me I cannot buy more houses than they think I should.
- Banks are restricted by government regulation. They have to jump through many hoops to lend me money, and in turn they make me jump through many hoops.
- Private lending sources don't have the limits I mention above. They look less at me and more at the deal. They aren't afraid for me to fail, that will just be an opportunity for them. Because of that, they will fund deals that the banks won't.
- Private lending sources use common sense - bank employees use policies and procedures.
Not all private lenders are millionaires. Most of them are ordinary people with a few thousand dollars in an IRA, a CD, or a 401K with a former employer. Working with these kind of folks, I am usually able to give them a return that is much better than what they are getting from their current investments. I like helping other people to succeed. When I can succeed with them, that is the best.
I have many friends who have let me use their money to buy real estate in my business. They have made tens of thousands of dollars in interest while sitting at the beach, letting me do the work. Private lending is a powerful tool to turn ordinary folks like you and me into millionaires like I met with in Chicago.
Tom ~
Why Buy Retail?
http://www.buyahousebelowmarket.com/
See my latest blog about what we do at The Gold Seal Homes Group: http://www.youtube.com/watch?v=ACJx3wpKezQ
Thomas K Sheppard has been successfully investing in real estate since 2001. A veteran of the US Marine Corps and more than 17 years in the banking industry, he is focused on helping 100,000 families to find quality, affordable homes. He buys, sells, and rents homes in the Charlotte, NC metropolitan area, including Mecklenburg, Cabarrus, Rowan, Union, and Gaston counties. If you are looking to buy, rent, or sell a home, condo, or apartment in those areas, or would like to learn about how you can help 100,000 families find quality, affordable homes, contact him at tsheppard@adbproperties.com or visit his website www.buybelowmarket.com.
No comments:
Post a Comment