Private Money Bootcamp Handouts

Transcription

1 Private Money Bootcamp Handouts BUSINESS MODEL Objective- Get them comfortable with what you do and why you do it that way. Tell them the purpose of your company. What do you do? Rehab (do you have a niche?) What type of rehabs do you do? What type of houses do you go after? Colonials, houses with at least 3 bedrooms? Why do you do that? Who is your ideal buyer? What does your ideal buyer want? Where do they want to live? Explain your social mission and your why. Explain company goals and breakdown. FLIP CHART (IDEAL SELLER, IDEAL HOME, IDEAL BUYER, Price/Terms) What price ranges are they willing to buy in? Show them your systems (PROVIDE IRREFUTABLE SUPPORTING EVIDENCE)

2 BUSINESS'MODEL/PLAN'GUIDELINES 1.!Marketing!to!find!deals!(explain!how!you!get!deals!with!equity) 2.!How!you!calculate!repairs 3.!How!do!you!determine!an!accurate!FMV How!you!come!up!with!the!purchase!price 5.!Exit!strategies 6.!Fund!the!deal 7.!Project!Management 8.!Market!to!sell!

3 COMPANY BIOGRAPHY Objective- Show private lender prospect that you have a solid team and how each team member adds value and hedges risk. Partners/Founders- Board of Advisors- Legal Teammates: Real Estate Attorney- Short Sale Attorney- Business Contract Attorney- Zoning Attorney- Insurance Agent- Marketing Teammates: (if applicable) Construction Teammates: Contractor-

4 Project Manager Energy Auditor- Real Estate Pros: Realtor- Home Inspector/Termite/Radon- Architect- Structural Engineer- Mortgage Banker/Broker- Stager- Photographer- Self Directed Retirement Rep-

5 Coaches/Education- Loan Modification Consultant- Surveyor- Bookkeeper- Title company- Credit Repair Consultant- Environmental Contractors: Oil Tank Sweeper/Tester/Clean-up- Lead Based Paint Tester- Asbestos Remover-

6 FINDING PRIVATE LENDER PROSPECTS AT A NETWORKING EVENT Objective- Find someone with the following criteria. 1) They re brand new 2) They have money Scenario- Meeting someone you don t know at a networking event. Step 1) Walk up and introduce yourself and ask them what their name is. Hello, my name is Jon Steingraber with Garden State Property Solutions. What s your name? Step 2) Figure out their experience level. How long have you been in the business? Step 3) Ask them what their goals are. So, how many deals are you planning on doing this year? Step 4) How much they re looking to spend on a deal. What price points are you looking to buy houses in? $100k or $200k? Step 5) Find out if they have money and how much. First repeat what they say. Four deals huh? If I brought you a deal that made sense, how would you finance it? If they say their own money then BINGO! They have money! If they say, I don t know. Then move on! Step 6) What s in it for them? That s awesome, I ve been in the business for a while now and I ve built up a pretty solid team.

7 I remember when I first got started it was hard to find people that were investor friendly and not too many people were willing to open up their rolodex. I like to build mutually beneficial relationships with people and I like to share my resources, how about I take you out to lunch sometime next week? What is your favorite restaurant, lunch is on me? Step 7) Collect contact information and find out something that you can talk about at lunch with them to build rapport. Sounds good, do you have a business card on you? (If they don t have a business card have blank cards already made up and fill it in and then give them a few so they can use them at the networking event. By the way what is your favorite sport? Who s your team? Step 8) Fill in prospect profile sheet with information you just collected. Now move on to the next person and do the exact same thing. Get as many business cards of people that are new and are using their money as you can, these are your prospects!!! Notes:

8 PHONE CONVERSATION WITH PROSPECT THAT YOU MET AT NETWORKING EVENT Objective: Qualify prospect as a potential private lender at a low interest rate Step 1) Research and find a common interest. You can do this by using the following methods. A. Research their favorite team and find out the last time they played, their record, players on the team etc. B. C. Google their name and see what comes up Facebook them or look them up on LinkedIn and do some research Basically, all you re doing is finding something you can talk to them about to build rapport. For example, I once researched this lady named Helen. I looked her up on Facebook and saw that she was born in the Canary Islands so I looked up Canary Islands on Wikipedia and I had something to talk to her about. When I got on the phone I said Example- Jon- Hey Helen, this is Jon Steingraber we met at the networking event the other day. Do you remember me? Helen- Oh yeah hey Jon, how are you? Jon- I said great how are you? Helen- Good, Good. Jon- I love your accent, where are you from? Helen- The Canary Islands Jon- Isn t that by and the main source of revenue for the country is.? I ve heard some beautiful things about the Canary Islands, so you speak fluent Spanish? Helen- Wow how do you know all that stuff? Jon- I study this stuff, in fact I lived in Uruguay in South America for four years and I speak fluent Spanish too! (THIS IS THE COMMON INTEREST, WE BOTH SPEAK SPANISH)

9 Helen- That s awesome so I can talk to you in Spanish! Jon- Chuckled Yes you can. Hey Helen I want to see if we can schedule a lunch for next week I just have a couple questions. How has your money been doing over the past 12 months? Helen- Not so good Jon- What do you think would SATISFY you over the next 12 months? What do you think like 5%?... (PAUSE) Helen- Yeah 5% is good 6% sounds better. Jon- If we talked about you making a safe 7% return and you learning a lot about real estate investing would that be something that interest you? Helen- Yes Jon- Great so does Tuesday at 1pm work? We can go to your favorite restaurant on me? Helen- That works. Other scenario: They say they want too high of an interest rate when you ask them what would satisfy them. Prostpect says- No 5% is really low I m looking to get 15% ROI You say- So would you turn down an 8% return if it was very safe and you could learn how to invest in real estate? They will typically say that they re interested in talking about it. If they say no, 15% is my bottom line just lightly let them go and cancel your lunch like this. Wow, I love your attitude. I typically can build a mutually beneficial relationship with people that are looking for lower returns but that s out of my league. In order to be respectful of your time and mine I think it s better that we don t go out to lunch. If you ever need a resource you can feel free to call me, this is my cell. I don t mean to be disrespectful I just don t like to waste time. I hope you can respect that. (Dig deep and see if they have money but they don t know they do, equity, retirement money

10 Step 1) Pick up the phone and call them. Hey this is from the networking event from the other day. Do you remember me? Step 2) Build rapport through your common interest. Step 3) Qualify them. Hey I want to see if we can schedule a lunch for next week I just have a couple questions. How has your money been doing over the past 12 months? Answer: What do you think would SATISFY you over the next 12 months? What do you think like 5%?... (PAUSE) Answer: Step 4) Schedule an appointment at their favorite restaurant. (make sure it s not too noisy!)

11 SCENARIOS Where%else%can%you%use%these%questions? 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) Practice%the%transition.

12 IDEAL&PRIVATE&LENDER&EXERCISE AGE: GENDER: INCOME: GEOGRAPHIC&LOCATION: WHERE&DO&THEY&HANG&OUT: WHAT&PROBLEMS&DO&THEY&HAVE? HOW&CAN&WE&SOLVE&THOSE&PROBLEMS? HOW&CAN&WE&GET&IN&FRONT&OF&THESE&PROSPECTS? Who&has&money&and&doesn t&know&what&to&do&with&it?& Inheritance,&Law&suit,&etc.&Who&has&access&to&these&people?

13 HOW$TO$FIND$PRIVATE$LENDERS Sphere$of$Influence: 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) Exercise$(Call$3$people$over$lunch$and$tomorrow$and$ask$these$questions) Results: Court$Records: TWO$COUNTIES$ $$$$$$$$$$$$$$$$

14 GOLDEN NUGGETS Under Promise & Over Deliver Give 6 Months worth of interest Secure the funds before you do a deal

15 SELF%DIRECTED+RETIREMENT+ACCOUNTS What+is+an+MER? Why+should+you+know+this? Traditional+Custodians+vs.+Passive+Custodians? Passive+Custodians: Next+Generation+Trust Notes:+

16 PROPERTY'PACKET Full Property Information (Address, Lot/Block, Beds/Ba, what the house will be when repaired.) Listing Link if listed Property Card/Taxes Google Map w/ link to street view Neighborhood Market Data Pictures and Video of Property Comparable's with ARV Detailed Repair Sheet or Scope of Work Contractors Quote even better- Broken down Square Footage Sheet Important details- Flood Zone, Oil Tank, Easements Deal Analyzer (

17 OBJECTION)HANDLING 1.! Answer: 2)!! Answer: 3)!! Answer: 4)!! Answer: 5)!! Answer: 6)!! Answer:

18 PRESENTATION*CHECKLIST*FOR*PRIVATE*LENDER Research(the(lender(as(much(as(possible(to(build(rapport(before(talking(to(them Ask(them(how(their(investments(have(been(doing(over(the(past(12(months? Ask(them(what(their(expectations(are(for(the(next(12(months(that(would(satisfy(them? Go(over(company(biography Go(over(business(plan((Explain(how(private(lenders(are(protected(through(funding(with(docs) Show(them(previous(projects Show(them(subject(property(if(you(have(one((full(details,(pics,(video,(property(packet) Social(Mission Explain(how(they re(protected(with(the(equity(position((tangible(docs,(comps,(etc) Explain*the*terms*for*this*project*(1 st *lien/2 nd *lien,*interest*rate,*months,*mentoring,*etc) Ask(them(how(capitalized(they(are Where(is(the(money(coming(from How(quickly(they(can(fund How(soon(can(they(fund(the(next(deal Close(or(give(them(assignments(to(get(self(directed(account(set(up

19 OUTSIDE(OF(THE(BOX(BLUE(OCEAN(IDEAS Interest'Rates: Social'Mission: Referrals: Bonus/Joint'Ventures: Other: Raise'their'interest'rate'by'.5%'every'time'they'lend'again On'the'10th'home'they'lend'and'get'a'percentage'of'profits Take'them'to'lunch'and'dinner'when'you'don t'even'need'money Get'to'know'them'(kids,'hobbies,'etc.) Send'Thank'you'Greeting'Card'to'Private'Money'Lender

20 FREQUENTLY ASKED QUESTIONS What s the minimum investment? The minimum investment is $100,000, however in isolated situations we have set up accounts with investments as low as $50,000 but these lower investments would be secured by second lien positions. Who handles all of the details? We will. It s our job to get you proper documentation and protect your interest. All of this costs you nothing. The borrower pays all costs. If you make a $100,000 loan, you send a check for $100,000 to the closing attorney and you get a mortgage for $100,000 on the subject property. At the end of the loan term or when we sell the house whichever is sooner you get paid your investment plus interest. How do I get paid? We will set up your account. The majority of our investors prefer to receive a one time, principle plus interest payment after the completion of a project. For accounting reasons, this is a preferred way for our company, as well. What are the fees? No fees. All fees are incurred by us! That s right! Get used to it! Is this a long-term investment? Generally, your investment is tied to a specific project with a timeline ranging from 6 to 12 months. We have lending programs for short term holds of six to eight months. We also have longer term holds of one year and longer. You can pick a term that suits your strategy. It s your money and it s your choice. What if I need to liquidate? If you want out, a 90 day written notice is required, because we will need to replace your funds with another investor s money. You really shouldn t make mortgage loans if you feel you will liquidate this shortly, but the option is always available and we have been able to liquidate in as little as two weeks in some scenarios. Also, unlike with a bank CD, there is no penalty for early withdrawal. Just call us, and we will handle all of the details. Is my investment really as safe as it sounds? Yes! We always follow these common sense guidelines that we ve talked about. Your money will grow two, three, or even four times faster than your current investments and you maintain control.

21 Each one of our properties that we acquire is put through a rigorous financial evaluation in order to evaluate the profitability before the property is ever purchased. For a detailed analysis of our process we can sit down and show you exactly how we analyze a property and it s comparables for you to be 100% comfortable. We make our money when we buy so we re adamant about getting the numbers right the first time around. Remember that making loans is a business and should be treated like a business. If you set up a simple system and let the professionals implement the system, your loan portfolio can be hassle free and produce staggering yields. How do I use my IRA s or pension plan? Making real estate loans is a widely accepted use for IRA s and other Retirement Plans. Most people do not know that you can make private mortgage loans using the funds which are already in your IRA s and other retirement plans. Think of the power of loaning out funds at high interest rates that are Tax free or Tax Deferred! In order for you to use retirement accounts for loans they must first be administered by a third party custodian. One custodian we commonly work with is Equity Trust Company. You can visit them on the web at or simply talk to us and we ll help you with the set up of your account. We also have other custodians that we can share with you so you can investigate them. After selecting your custodian, you simply send a transfer form to them and they ll do all of the work for you. Once you ve done that, you are ready to make private mortgage loans. From there, you simply notify your custodian about the investment you are looking to make and send the check for the gross amount of the loan. Even better, we can do all the work for you and you just sign a few documents, sit back, relax and wait for your money to grow tax free or deferred like grass on a spring morning. What are my options if Garden State Property Solutions, LLC doesn t pay? Actually, there are several options but first and foremost, please be aware that Integrity is an essential part of our business and we only make sound investment decisions. One of Garden State Property Solutions, LLC s distinguishing features is that we have never been late on a payment to a private lender or any other institution for that matter.

22 However, to answer the question: 1. We could restructure the payment schedule on the note. For example, let s say we are behind on payments to you. Now Garden State Property Solutions, LLC can and would like to keep the house, but they can t come up with enough money to bring you current in one lump sum. You could let us continue to make regular payments and make an extra payment on our arrearage in addition, or you could simply add the arrearage to the principal balance and extend the term of the loan. This means you would be collecting interest on interest for the entire remainder of the loan. There are always ways to work it out if both sides are willing. 2) Have Garden State Property Solutions, LLC deed you the house. This is an opportunity for you to get a house at a greatly discounted price. When this happens, you can create tremendous profit by reselling the house. 3) If left with no other choice, you can simply foreclose. Foreclosure isn t as time consuming and costly of a process as most people think. It s as simple as sending your note and mortgage to an attorney and saying foreclose. All you have to do then is sit back and wait. Nine times out of ten, before foreclosure is complete, someone will be calling your attorney s office with a payoff letter, and your loan will get paid off. When this happens, you will collect all accrued interest, your principal balance, and all attorneys fees, court costs, and all other expenses you have incurred in connection with your loan. If you wind up with the house that doesn t mean you have to keep it. It can be sold immediately at a fair sale price and still produce a profit over and above the already high yield on your loan. Due to the low LTV s your investment is 100% secure. Now, we ve talked extensively about default and maybe we ve provided more information than is necessary, but we wanted to make sure you have all the facts and we ve answered any potential questions. What kind of documents should I as the lender receive? Your closing package should contain the following: A copy of the mortgage. The original will be recorded. An original Promissory Note. A hazard insurance endorsement naming you as mortgagee so you re protected on this specific property. Title Lenders Policy Property Analysis Packet ensuring the investment is safe

23 MORE%QUESTIONS%AND%OBJECTIONS: Let s&joint&venture&instead. What&if&there&is&another&real&estate&market&correction? Answer:&&Ask&them&what&they&think&the&market&would&go&down&to?&Show&them&that&even&if&the&market drops&20%&they re&still&covered&because&there&is&a&lot&of&profit&in&the&deal&and&you&were&conservative.&&&put in&on&the&house&because&they re&investing&in&the&house&and&not&necessarily&just&you.&.& What&are&the&risks? What&if&you&don t&pay&or&i&have&to&end&up&foreclosing? How&am&I&protected? What&if&you&die? What&if&house&burns&down? What&if&their&is&an&insurance&claim&on&the&home? What&if&something&is&wrong&with&title? What&if&you&can t&sell&it? What&if&interest&rates&go&up? How&am&I&going&to&know&you re&using&my&money&for&the&transaction? How&does&it&work&with&the&rehab&money?&Do&I&pay&in&waves? This&house&is&a&piece&of&crap! How&low&can&I&offer&as&far&as&interest&rate? Can&I&get&10&people&to&lend&me&$10k&each?

24 DISCLOSURE TEMPLATE FOR WEBSITE Disclaimer*on*website:*This*is*not*an*offer*to*sell*securities.*Any*person,*entity,*or*organization*must*first be*qualified*by*the*company*and*read*all*of*the*offering*documents*and*attest*to*reading*and*fully understanding*such*documents.*(company*name)**and*its*affiliates*are*not*licensed*securities*dealers*or brokers*and*as*such,*do*not*hold*themselves*to*be.*this*website*should*be*construed*as*informational and*not*as*an*advertisement*soliciting*for*any*particular*purpose.*all*securities*herein*discussed*have*not been*registered*or*approved*by*any*securities*regulatory*agency*in*accordance*with*the*securities*act*of 1933*or*any*state*securities*laws. DISCLOSURE*STATEMENT* Please carefully consider (Company Name) investment objectives, risks, and associated costs or expenses before investing. Real estate investments are not guaranteed or insured and past performance is not a guarantee of future performance. Please ask questions and ask for more information before you consider any investment. Determine Your Investment Strategy and Timeframe Many factors should be considered before you make any investment. Real estate investing requires a clear understanding of your risk tolerance. You should also determine if you will require periodic investment returns or if you can wait to gain a potentially greater return on investment by waiting for a property to sell. Go into this or any other investment with clarity and confidence, after asking questions and getting answers that deal with your personal investment goals. Be Confident In Who You Work With The old adage is true, trust but verify. Be sure that the company you entrust your real estate investment money to has a track record of success and living up to its claims. Remember that past performance is not a guarantee of future success. Your investment is not guaranteed and is not insured. A lack of past performance is also something to be concerned about. Remember that any investment is made up of risks and returns. You Are Buying a Business Investing in real estate carries with it a great potential for creating wealth and some risk factors. These include, but are not limited to, rising interest rates, increases in the costs of rehabbing properties, a softening in the real estate market, the failure of renters to pay rent on a timely basis, and other factors. Other risks, such as fire or title problems, can be insured against. If you wish to exit your investment early, you should be aware that a replacement investor will have to be found and the amount of time that will take may vary. Invest with a Professional The Company you work with should know what they are doing and look under every rock! They should be hands-on and understand all the important aspects of finding, choosing, investing in, and selling real estate. Even the most professional company is run by humans and there may be mistakes made. Mistakes may increase costs and you should be prepared for this possibility. A track record of sound business judgment is something you should insist upon when you invest.

25 Failing to Have Adequate Insurance Investment property brings liability. Adequate insurance coverage is an absolute must! Be sure that the company you invest with obtains adequate insurance for its investment properties. Document Your Investment Ask about what kind of documentation the company provides. Do they offer a promissory note that details the investment you are making with them? Do they offer you a first or second mortgage on a specific investment property? Do they file the transaction with the appropriate real estate registry? These steps do not guarantee a profit, but they are all important in operating a successful real estate investment business. It s all part of documenting who owns what and what everyone s rights and responsibilities are. Investment property can be one of the most rewarding aspects of your financial portfolio. Be certain to have all your ducks in a row before you invest. Do your homework and work with professionals upon whom you can rely.