Private Money for Real Estate Investing - Step One

If you want to create a pathway to an unlimited supply of private money for real estate investing, you need to build a foundation of trust with your prospective lenders. One of the very best ways to impress them, and show them you know where you?re going, is if you really DO know where you?re going.

As a lender, before I loan one penny of my hard earned private money for real estate investing, I ask to see one very important document? the investor’s business plan. If they have one, that?s a good sign; if I can read it, that?s a better sign; and if it clearly shows they know where they?re going, well? that?s a great sign.

What am I looking for? Well I?m NOT looking for flash or glitz. In fact, a business plan doesn?t need to be fancy, or even long for that matter. It does have to be clear, concise and simple enough for an eighth grader to read. Yes, I read at a higher level than an eighth grader, but some people looking to loan private money for real estate investing may not, so keep it simple.

How should you write your business plan? First, think about the kind of investing you have already been successful with. Ask yourself how you achieved the success, and what steps you took that are repeatable. List the steps, and create an outline. Do that and you have the perfect outline for your private money for real estate investing business plan.

There?s lots of material on the internet for creating winning business plans. I don?t need to repeat that here. The purpose of this article is to get you thinking about how you can and should create a business plan that appeals to potential lenders of private money for real estate investing.

That kind of business plan reveals in plain, simple language how you propose to make money with your investing, the kinds and sizes of the loans you will need, and most especially, how the LENDER will benefit? in other words, how much will they make, how will it be repaid, and how will their investment be secured?

That?s the kind of business plan that will appeal to those who might lend you private money for real estate investing. When you write that kind of business plan, it shows you have thought it through, and you know where you?re going and how to get there. It also show you know how to take your lender along for the ride.

That?s what a potential lender will be asking themselves as they read through your plan? ?What?s in it for me?? Remember that as you write, and write with them in mind, stressing benefits, benefits, benefits. Create a feeling of confidence in your prospective lenders as they read, so they feel confident loaning you private money for real estate investing.

Step one in your quest for private money for real estate investing? Develop a business plan.

Understanding The Real Estate Investing: Hard Money Vs Conventional Investor

Real estate investing: hard money vs. conventional investor is not as difficult topic as it looks to be at first sight. People get confused because they cannot differentiate between the hard money loans or HML and conventional investor loans or conventional mortgages. They keep on asking questions regarding hard money loans. Here are answers to those frequently asked questions that will be of great help in understanding the real estate investing: hard money Vs conventional investor.

How to Obtain the Hard Money:

The first question is regarding the working methods of lenders of hard money loans. HML helps in real estate investing by making asset based capital available to investors. The biggest benefit is the fast pace at which these HML work. You may receive the amount in as little as three days after furnishing all required documents. You can get hard money as loans against collateral security, for both residential as well as commercial purposes. If we compare it with conventional mortgage then we will find that conventional mortgage takes about 4 to 6 weeks of time in processing.

Interest Rates:

The second but very important question is related with interest rates. In case of hard money, the interest varies with the lender. The average interest rate is between 14 % and 18 % per annum. Most of the lenders require monthly payments. For a conventional investor this rate of interest for obtaining hard money is a little bit on the higher side.

You may get hard money for real estate investing up to the 70 % of the value of the property. The amount of loan can be as little as $ 25,000 and as high as $ 1,000,000 depending upon the case. Duration of loan is from 6 months to 12 months varying with your requirements and the conditions of lender. Some people ask that is it possible to make the interest payment at the end of the loan term. Although, some lenders have this kind of provision, yet it makes your presentation week because they believe that if it is difficult for you to make the monthly interest payments then you are not eligible for getting the loan.

As we are discussing the real estate investing: hard money Vs conventional investor, it is relevant to compare the monthly payments also. For every 100,000 dollars borrowed you will have to make the monthly payment of $1166.66 in case you opt for the hard money. While for the conventional investor, it comes to $1098.00 per month. When we compare the prepayment, it is possible in both the cases. However, in case of hard money time period is a minimum of 3 months, while up to 24 months in case of conventional mortgage.

Real Estate Investing - Matching Buyers with Properties

One of the things you have to consider as a real estate investor is matching buyers with properties that you acquire. When you develop a buyers list for your properties, whether you?re trying to wholesale or rehab, you will find that the simple saying, ?Different strokes for different folks,? applies. Some of the different ?strokes? might be low-end rentals, high-end rentals, multiple unit rentals, and rehabilitation projects.

The different ?folks? will often match these properties. For every investor, there is a niche they specialize in. If you want to wholesale properties, it?s up to you to offer the greatest spread of properties to fellow investors. Also, you must take into account, your regular home buyers (owner-occupants).

Part of any building block of a business is to identify the target market. For instance, with this site, we identified the people who would be visiting it most likely. We tailor the articles with content that is basic in order to meet the ?customer? needs. We don?t overload the articles with complexities, but we do offer the basic 1-2-3 steps for beginning a real estate investment business or a business in general. Part of this required developing a ?character? for our visitors. In doing this, we are constantly developing new avenues of interest that we think our visitors will benefit from, including hard money financing (coming soon).

So, for matching buyers with properties is to simply define what each potential buyer prefers. When you decide to advertise for buyers, you might put out ads like this:

Deep Discounts-Properties need Rehab, Priced to Sell, Call XXX-XXX-XXXX

or

Excellent Cash Flow Rentals offered at Discounted Prices, Call XXX-XXX-XXXX

This may attract buyers who are looking for rehab projects. Thus, you?ll be matching rehabbers/contractors with properties in need of rehab. However, when the phone starts ringing, you?ll need to distinguish the type of homes each potential buyer wants. For instance, some might want 4 bedroom, 2 Bath, high-end rehabs, while others will want your basic ?bread and butter? home, 3 beds and 1 bath. Also for the second advertisement, you?re looking for landlords. Additionally, you?ll need to identify the different areas each buyer will consider.

You may also run an ad like this:

Stop Renting-Starter Homes Available-Mint-Discounted Prices Call XXX-XXX-XXXX

These buyers might be your owner-occupants that are currently renting that you?ll add to your buyers list. Part of your strategy here might be buying, rehabbing and selling them yourself.

Of course, running one ad might be most economical:

Deep Discounted Properties for Sale, Home Buyers, Investors Call XXX-XXX-XXXX

Now, how do you determine what each investor/buyer wants? You may ask the following questions:

What type of property are you looking for?
Specifics? (# of bedrooms, baths, rooms)
What locations are you primarily interested in?
Have you closed on properties in these areas before?
What are your overall objectives for properties you buy?
What is the ideal return on investment you?re looking for?
What type of rentals do you prefer?
How do you continue to grow your customer base (the amount of people you can sell a property to)?

Well since money is always the bottom line and not all buyers have cash to buy (and you should never expect or rely on that solely), expanding the pool of investors and buyers you can sell to comes down to having contacts. If your buyers don?t have the contacts or the cash, you will need them. So four simple things you should do are:

Make contacts with good mortgage brokers and use them to qualify buyers
Make contacts with good hard money lenders to qualify investors (noobs)
Make sure these brokers and lenders can close deals quickly
Make sure you know the process inside and out so you can expedite the process
Lastly, you may look for ads that offer rehabbed homes for sale. For example, if you see a for sale ad that says, ??renovated? or some variation, call that number and begin the process of adding that individual to your buyers list. Visit the property to get a completely true feel for what they look for. This can be a very effective way of getting investors who are actually involved in performing on a contract because they already have demonstrated the ability to do so!

Always remember that you?re running a business. Every successful business has a well-defined strategy for marketing, sales and growth. Real estate investing is no exception!

?2006 noobdogs.com

Real Estate Investing: Always Have a Back-up

Over the last two weeks, events have unfolded that have reminded me of an important truism in real estate investing.

“Always have a back-up!”

This was played out in dramatic form with a deal I’m closing tomorrow. A wholesaler friend of mine brought me this great little three bedroom one bath home tucked away on a dead end street where pride in ownership is alive and well. The electric and plumbing is already upgraded and this rehab is cosmetic with the exception of adding a bath.

I’m buying it for $52,500 and the as-repaired appraisal came in at $86,000. Not a bad spread. This is the kind of deal I like!

When I called my hard money broker, she was delighted and we moved quickly toward closing. I was only waiting on the closing time…

That’s when the wheels fell off.

It seems my broker’s money source decided he was only going to invest in property valued at $250,000 or more. Yikes!

So, I went to back-up hard money broker number 1.

The broker took his time…about 5 days…to finally tell me that he only wanted to loan about 60% of the as-repair value. No way. Not when I can do better (70%) with back-up hard money broker number 2.

Back-up broker number 2 is probably who I should have went with in the first place. I’ve borrowed from this source before. It took one phone call, and the money is there and I close in a couple of days. Wham-bam, the deal is arranged.

It looks like it’s time to shift around the players in my core team a bit. Back-up number 2 is now my starter. Back-up number 1 (foot-dragger, doesn’t-loan-the-70%-he-said-he-would) is benched.

I tell this story to illustrate that it’s absolutely CENTRAL to your business to have back-up plans in all aspects of the business.

I strongly recommend having two or three:

- Hard money brokers - Appraisers for quick value assessments - Rehab crew leaders - Plumbers - Electricians - Roofers - HVAC techs - Realtors

In fact, have two or three of any trade or profession lined up, ready to spring into action as a moment’s notice. Sure, I have my favorites in each of these areas, but I am striving to have 3-deep hot back-ups in each. Thing happen. Life happens! Be prepared for it.

Don’t stop there. Have back-ups when you rent or sell a property. A property isn’t rented until the rent and deposit (or lease/option fee) is paid and the keys are in the hands of the new tenant. So, encourage back-ups until the money is in your hands (in cash).

I’ve had appointments set up to sign leases, and the potential tenants never show up, no call, and they quit answering their phone. This is despite being hot for the house an hour earlier! If you are in this business long, you will learn that people will disappoint you and they will fool you. So, establish policies and make one of them “it ain’t rented until it’s paid for!”

Encourage back-up offers to purchase. Deals fall through all the time! Take as many back-up offers as you can.

Having back-ups is a mental frame of mind that fits within being a big-picture thinker portion of the Mind of the Real Estate Investor. In addition, rearranging your core team is thinking big and long term. It’s a constant process of improvement and adjustment. This approach is crucial to your business! Apply this principle and profit!

About the Author

———- Bruce W. Ford publishes the “Nothing Held Back” newsletter, a free service of Rehab Real Estate Central (http://www.Rehab-Real-Estate.com). Get a free copy of his mini-course entitled “The Mind of the Real Estate Investor by clicking here!.”

Real Estate Investing - Matching Buyers with Properties

One of the things you have to consider as a real estate investor is matching buyers with properties that you acquire. When you develop a buyers list for your properties, whether you?re trying to wholesale or rehab, you will find that the simple saying, ?Different strokes for different folks,? applies. Some of the different ?strokes? might be low-end rentals, high-end rentals, multiple unit rentals, and rehabilitation projects.

The different ?folks? will often match these properties. For every investor, there is a niche they specialize in. If you want to wholesale properties, it?s up to you to offer the greatest spread of properties to fellow investors. Also, you must take into account, your regular home buyers (owner-occupants).

Part of any building block of a business is to identify the target market. For instance, with this site, we identified the people who would be visiting it most likely. We tailor the articles with content that is basic in order to meet the ?customer? needs. We don?t overload the articles with complexities, but we do offer the basic 1-2-3 steps for beginning a real estate investment business or a business in general. Part of this required developing a ?character? for our visitors. In doing this, we are constantly developing new avenues of interest that we think our visitors will benefit from, including hard money financing (coming soon).

So, for matching buyers with properties is to simply define what each potential buyer prefers. When you decide to advertise for buyers, you might put out ads like this:

Deep Discounts-Properties need Rehab, Priced to Sell, Call XXX-XXX-XXXX

or

Excellent Cash Flow Rentals offered at Discounted Prices, Call XXX-XXX-XXXX

This may attract buyers who are looking for rehab projects. Thus, you?ll be matching rehabbers/contractors with properties in need of rehab. However, when the phone starts ringing, you?ll need to distinguish the type of homes each potential buyer wants. For instance, some might want 4 bedroom, 2 Bath, high-end rehabs, while others will want your basic ?bread and butter? home, 3 beds and 1 bath. Also for the second advertisement, you?re looking for landlords. Additionally, you?ll need to identify the different areas each buyer will consider.

You may also run an ad like this:

Stop Renting-Starter Homes Available-Mint-Discounted Prices Call XXX-XXX-XXXX

These buyers might be your owner-occupants that are currently renting that you?ll add to your buyers list. Part of your strategy here might be buying, rehabbing and selling them yourself.

Of course, running one ad might be most economical:

Deep Discounted Properties for Sale, Home Buyers, Investors Call XXX-XXX-XXXX

Now, how do you determine what each investor/buyer wants? You may ask the following questions:

What type of property are you looking for?
Specifics? (# of bedrooms, baths, rooms)
What locations are you primarily interested in?
Have you closed on properties in these areas before?
What are your overall objectives for properties you buy?
What is the ideal return on investment you?re looking for?
What type of rentals do you prefer?
How do you continue to grow your customer base (the amount of people you can sell a property to)?

Well since money is always the bottom line and not all buyers have cash to buy (and you should never expect or rely on that solely), expanding the pool of investors and buyers you can sell to comes down to having contacts. If your buyers don?t have the contacts or the cash, you will need them. So four simple things you should do are:

Make contacts with good mortgage brokers and use them to qualify buyers
Make contacts with good hard money lenders to qualify investors (noobs)
Make sure these brokers and lenders can close deals quickly
Make sure you know the process inside and out so you can expedite the process
Lastly, you may look for ads that offer rehabbed homes for sale. For example, if you see a for sale ad that says, ??renovated? or some variation, call that number and begin the process of adding that individual to your buyers list. Visit the property to get a completely true feel for what they look for. This can be a very effective way of getting investors who are actually involved in performing on a contract because they already have demonstrated the ability to do so!

Always remember that you?re running a business. Every successful business has a well-defined strategy for marketing, sales and growth. Real estate investing is no exception!

?2006 noobdogs.com

Private Money for Real Estate Investing - Step One

If you want to create a pathway to an unlimited supply of private money for real estate investing, you need to build a foundation of trust with your prospective lenders. One of the very best ways to impress them, and show them you know where you?re going, is if you really DO know where you?re going.

As a lender, before I loan one penny of my hard earned private money for real estate investing, I ask to see one very important document? the investor’s business plan. If they have one, that?s a good sign; if I can read it, that?s a better sign; and if it clearly shows they know where they?re going, well? that?s a great sign.

What am I looking for? Well I?m NOT looking for flash or glitz. In fact, a business plan doesn?t need to be fancy, or even long for that matter. It does have to be clear, concise and simple enough for an eighth grader to read. Yes, I read at a higher level than an eighth grader, but some people looking to loan private money for real estate investing may not, so keep it simple.

How should you write your business plan? First, think about the kind of investing you have already been successful with. Ask yourself how you achieved the success, and what steps you took that are repeatable. List the steps, and create an outline. Do that and you have the perfect outline for your private money for real estate investing business plan.

There?s lots of material on the internet for creating winning business plans. I don?t need to repeat that here. The purpose of this article is to get you thinking about how you can and should create a business plan that appeals to potential lenders of private money for real estate investing.

That kind of business plan reveals in plain, simple language how you propose to make money with your investing, the kinds and sizes of the loans you will need, and most especially, how the LENDER will benefit? in other words, how much will they make, how will it be repaid, and how will their investment be secured?

That?s the kind of business plan that will appeal to those who might lend you private money for real estate investing. When you write that kind of business plan, it shows you have thought it through, and you know where you?re going and how to get there. It also show you know how to take your lender along for the ride.

That?s what a potential lender will be asking themselves as they read through your plan? ?What?s in it for me?? Remember that as you write, and write with them in mind, stressing benefits, benefits, benefits. Create a feeling of confidence in your prospective lenders as they read, so they feel confident loaning you private money for real estate investing.

Step one in your quest for private money for real estate investing? Develop a business plan.

Real Estate Investing - Matching Buyers with Properties

One of the things you have to consider as a real estate investor is matching buyers with properties that you acquire. When you develop a buyers list for your properties, whether you?re trying to wholesale or rehab, you will find that the simple saying, ?Different strokes for different folks,? applies. Some of the different ?strokes? might be low-end rentals, high-end rentals, multiple unit rentals, and rehabilitation projects.

The different ?folks? will often match these properties. For every investor, there is a niche they specialize in. If you want to wholesale properties, it?s up to you to offer the greatest spread of properties to fellow investors. Also, you must take into account, your regular home buyers (owner-occupants).

Part of any building block of a business is to identify the target market. For instance, with this site, we identified the people who would be visiting it most likely. We tailor the articles with content that is basic in order to meet the ?customer? needs. We don?t overload the articles with complexities, but we do offer the basic 1-2-3 steps for beginning a real estate investment business or a business in general. Part of this required developing a ?character? for our visitors. In doing this, we are constantly developing new avenues of interest that we think our visitors will benefit from, including hard money financing (coming soon).

So, for matching buyers with properties is to simply define what each potential buyer prefers. When you decide to advertise for buyers, you might put out ads like this:

Deep Discounts-Properties need Rehab, Priced to Sell, Call XXX-XXX-XXXX

or

Excellent Cash Flow Rentals offered at Discounted Prices, Call XXX-XXX-XXXX

This may attract buyers who are looking for rehab projects. Thus, you?ll be matching rehabbers/contractors with properties in need of rehab. However, when the phone starts ringing, you?ll need to distinguish the type of homes each potential buyer wants. For instance, some might want 4 bedroom, 2 Bath, high-end rehabs, while others will want your basic ?bread and butter? home, 3 beds and 1 bath. Also for the second advertisement, you?re looking for landlords. Additionally, you?ll need to identify the different areas each buyer will consider.

You may also run an ad like this:

Stop Renting-Starter Homes Available-Mint-Discounted Prices Call XXX-XXX-XXXX

These buyers might be your owner-occupants that are currently renting that you?ll add to your buyers list. Part of your strategy here might be buying, rehabbing and selling them yourself.

Of course, running one ad might be most economical:

Deep Discounted Properties for Sale, Home Buyers, Investors Call XXX-XXX-XXXX

Now, how do you determine what each investor/buyer wants? You may ask the following questions:

What type of property are you looking for?
Specifics? (# of bedrooms, baths, rooms)
What locations are you primarily interested in?
Have you closed on properties in these areas before?
What are your overall objectives for properties you buy?
What is the ideal return on investment you?re looking for?
What type of rentals do you prefer?
How do you continue to grow your customer base (the amount of people you can sell a property to)?

Well since money is always the bottom line and not all buyers have cash to buy (and you should never expect or rely on that solely), expanding the pool of investors and buyers you can sell to comes down to having contacts. If your buyers don?t have the contacts or the cash, you will need them. So four simple things you should do are:

Make contacts with good mortgage brokers and use them to qualify buyers
Make contacts with good hard money lenders to qualify investors (noobs)
Make sure these brokers and lenders can close deals quickly
Make sure you know the process inside and out so you can expedite the process
Lastly, you may look for ads that offer rehabbed homes for sale. For example, if you see a for sale ad that says, ??renovated? or some variation, call that number and begin the process of adding that individual to your buyers list. Visit the property to get a completely true feel for what they look for. This can be a very effective way of getting investors who are actually involved in performing on a contract because they already have demonstrated the ability to do so!

Always remember that you?re running a business. Every successful business has a well-defined strategy for marketing, sales and growth. Real estate investing is no exception!

?2006 noobdogs.com

Private Money for Real Estate Investing - Step One

If you want to create a pathway to an unlimited supply of private money for real estate investing, you need to build a foundation of trust with your prospective lenders. One of the very best ways to impress them, and show them you know where you?re going, is if you really DO know where you?re going.

As a lender, before I loan one penny of my hard earned private money for real estate investing, I ask to see one very important document? the investor’s business plan. If they have one, that?s a good sign; if I can read it, that?s a better sign; and if it clearly shows they know where they?re going, well? that?s a great sign.

What am I looking for? Well I?m NOT looking for flash or glitz. In fact, a business plan doesn?t need to be fancy, or even long for that matter. It does have to be clear, concise and simple enough for an eighth grader to read. Yes, I read at a higher level than an eighth grader, but some people looking to loan private money for real estate investing may not, so keep it simple.

How should you write your business plan? First, think about the kind of investing you have already been successful with. Ask yourself how you achieved the success, and what steps you took that are repeatable. List the steps, and create an outline. Do that and you have the perfect outline for your private money for real estate investing business plan.

There?s lots of material on the internet for creating winning business plans. I don?t need to repeat that here. The purpose of this article is to get you thinking about how you can and should create a business plan that appeals to potential lenders of private money for real estate investing.

That kind of business plan reveals in plain, simple language how you propose to make money with your investing, the kinds and sizes of the loans you will need, and most especially, how the LENDER will benefit? in other words, how much will they make, how will it be repaid, and how will their investment be secured?

That?s the kind of business plan that will appeal to those who might lend you private money for real estate investing. When you write that kind of business plan, it shows you have thought it through, and you know where you?re going and how to get there. It also show you know how to take your lender along for the ride.

That?s what a potential lender will be asking themselves as they read through your plan? ?What?s in it for me?? Remember that as you write, and write with them in mind, stressing benefits, benefits, benefits. Create a feeling of confidence in your prospective lenders as they read, so they feel confident loaning you private money for real estate investing.

Step one in your quest for private money for real estate investing? Develop a business plan.

Real Estate Investing: Always Have a Back-up

Over the last two weeks, events have unfolded that have reminded me of an important truism in real estate investing.

“Always have a back-up!”

This was played out in dramatic form with a deal I’m closing tomorrow. A wholesaler friend of mine brought me this great little three bedroom one bath home tucked away on a dead end street where pride in ownership is alive and well. The electric and plumbing is already upgraded and this rehab is cosmetic with the exception of adding a bath.

I’m buying it for $52,500 and the as-repaired appraisal came in at $86,000. Not a bad spread. This is the kind of deal I like!

When I called my hard money broker, she was delighted and we moved quickly toward closing. I was only waiting on the closing time…

That’s when the wheels fell off.

It seems my broker’s money source decided he was only going to invest in property valued at $250,000 or more. Yikes!

So, I went to back-up hard money broker number 1.

The broker took his time…about 5 days…to finally tell me that he only wanted to loan about 60% of the as-repair value. No way. Not when I can do better (70%) with back-up hard money broker number 2.

Back-up broker number 2 is probably who I should have went with in the first place. I’ve borrowed from this source before. It took one phone call, and the money is there and I close in a couple of days. Wham-bam, the deal is arranged.

It looks like it’s time to shift around the players in my core team a bit. Back-up number 2 is now my starter. Back-up number 1 (foot-dragger, doesn’t-loan-the-70%-he-said-he-would) is benched.

I tell this story to illustrate that it’s absolutely CENTRAL to your business to have back-up plans in all aspects of the business.

I strongly recommend having two or three:

- Hard money brokers - Appraisers for quick value assessments - Rehab crew leaders - Plumbers - Electricians - Roofers - HVAC techs - Realtors

In fact, have two or three of any trade or profession lined up, ready to spring into action as a moment’s notice. Sure, I have my favorites in each of these areas, but I am striving to have 3-deep hot back-ups in each. Thing happen. Life happens! Be prepared for it.

Don’t stop there. Have back-ups when you rent or sell a property. A property isn’t rented until the rent and deposit (or lease/option fee) is paid and the keys are in the hands of the new tenant. So, encourage back-ups until the money is in your hands (in cash).

I’ve had appointments set up to sign leases, and the potential tenants never show up, no call, and they quit answering their phone. This is despite being hot for the house an hour earlier! If you are in this business long, you will learn that people will disappoint you and they will fool you. So, establish policies and make one of them “it ain’t rented until it’s paid for!”

Encourage back-up offers to purchase. Deals fall through all the time! Take as many back-up offers as you can.

Having back-ups is a mental frame of mind that fits within being a big-picture thinker portion of the Mind of the Real Estate Investor. In addition, rearranging your core team is thinking big and long term. It’s a constant process of improvement and adjustment. This approach is crucial to your business! Apply this principle and profit!

About the Author

———- Bruce W. Ford publishes the “Nothing Held Back” newsletter, a free service of Rehab Real Estate Central (http://www.Rehab-Real-Estate.com). Get a free copy of his mini-course entitled “The Mind of the Real Estate Investor by clicking here!.”

Real Estate Investing: Always Have a Back-up

Over the last two weeks, events have unfolded that have reminded me of an important truism in real estate investing.

“Always have a back-up!”

This was played out in dramatic form with a deal I’m closing tomorrow. A wholesaler friend of mine brought me this great little three bedroom one bath home tucked away on a dead end street where pride in ownership is alive and well. The electric and plumbing is already upgraded and this rehab is cosmetic with the exception of adding a bath.

I’m buying it for $52,500 and the as-repaired appraisal came in at $86,000. Not a bad spread. This is the kind of deal I like!

When I called my hard money broker, she was delighted and we moved quickly toward closing. I was only waiting on the closing time…

That’s when the wheels fell off.

It seems my broker’s money source decided he was only going to invest in property valued at $250,000 or more. Yikes!

So, I went to back-up hard money broker number 1.

The broker took his time…about 5 days…to finally tell me that he only wanted to loan about 60% of the as-repair value. No way. Not when I can do better (70%) with back-up hard money broker number 2.

Back-up broker number 2 is probably who I should have went with in the first place. I’ve borrowed from this source before. It took one phone call, and the money is there and I close in a couple of days. Wham-bam, the deal is arranged.

It looks like it’s time to shift around the players in my core team a bit. Back-up number 2 is now my starter. Back-up number 1 (foot-dragger, doesn’t-loan-the-70%-he-said-he-would) is benched.

I tell this story to illustrate that it’s absolutely CENTRAL to your business to have back-up plans in all aspects of the business.

I strongly recommend having two or three:

- Hard money brokers - Appraisers for quick value assessments - Rehab crew leaders - Plumbers - Electricians - Roofers - HVAC techs - Realtors

In fact, have two or three of any trade or profession lined up, ready to spring into action as a moment’s notice. Sure, I have my favorites in each of these areas, but I am striving to have 3-deep hot back-ups in each. Thing happen. Life happens! Be prepared for it.

Don’t stop there. Have back-ups when you rent or sell a property. A property isn’t rented until the rent and deposit (or lease/option fee) is paid and the keys are in the hands of the new tenant. So, encourage back-ups until the money is in your hands (in cash).

I’ve had appointments set up to sign leases, and the potential tenants never show up, no call, and they quit answering their phone. This is despite being hot for the house an hour earlier! If you are in this business long, you will learn that people will disappoint you and they will fool you. So, establish policies and make one of them “it ain’t rented until it’s paid for!”

Encourage back-up offers to purchase. Deals fall through all the time! Take as many back-up offers as you can.

Having back-ups is a mental frame of mind that fits within being a big-picture thinker portion of the Mind of the Real Estate Investor. In addition, rearranging your core team is thinking big and long term. It’s a constant process of improvement and adjustment. This approach is crucial to your business! Apply this principle and profit!

About the Author

———- Bruce W. Ford publishes the “Nothing Held Back” newsletter, a free service of Rehab Real Estate Central (http://www.Rehab-Real-Estate.com). Get a free copy of his mini-course entitled “The Mind of the Real Estate Investor by clicking here!.”

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