Alan Cowgill

Alan Cowgill’s
PRIVATE LENDING MADE EASY NEWSLETTER
Issue #28

http://www.PrivateLendingMadeEasy.com

In This Issue:

1. What’s happening!
2. Getting Out Of Trouble
3. Important Tip
4. Links

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1. What’s happening!

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Did a whirlwind tour of three cities in Canada in three days.
Vancouver, Calgary & Edmonton. It was great.
I met a bunch of wonderful people and I had my SEC
manual updated for Canada securities regulations.

June 23 Spoke at Richard Roop BC, Las Vegas, NV

Upcoming speaking events:
June 26 Strategic Alliance Group, Orlando, Fl.
July 13 Dave Lindahl’s BC, LA, California
July 20-22 Michigan REIA evening meeting and Sat. Workshop
July 27 Dave Lindahl’s BC, LA, California

Other news…
In my seven boot camps, my students have
raised over $81.1 million dollars in the first 24 hrs.

Just think of the pride, confidence and the wealth building
they have achieved after attending my boot camp. They not
only get great tools and techniques, they get immediate
results.

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2. Getting Out Of Trouble!

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This very possibly could be the most important newsletter I
have ever written for some of you.

What do you do when you have cash flow issues?

This can cripple your business whether your are an experienced
RE investor or if your a beginner.

In early 2002, I had hit the wall. A $10,000 a month negative
cash flow problem. I’d just quit my J.O.B. of 17-1/2 years so
I could achieve my dream of becoming a fulltime RE investor.

I thought I had this business all figured out. I’d attended
great live events and studied at the feet of the masters. I
didn’t forsee the downturn in the rental market in my city
and it reached up and bit me. I hadn’t done the job of finding
private lenders, so I couldn’t fund my business.

Ouch!!!

Fortunately, I had a 15 minute coaching phone call with Ron
LeGrand because I had signed up for a mentoring program with
him. That 15 minute call got me on the right path.

He even made me the feature article on a monthly newsletter he
published that month.

Some of actions he gave me were:
1) Get out 10 pointer sign for each empty house. Replace the
ones that come up missing each week. Get the empties filled.
2) Get a mortgage broker that will handle C&D credit and get
some of my lease option tenant/buyers cashed out.
3) Cut spending on buying houses and focus on selling.
He had more actions and I’ll share them in a future newsletter.

Let me list a few ways to get out of trouble or at least
generate some near term cash…

1) Refi!
Yep, if you’re paying a private lender 15% and you are holding
the property longer than planned, you need to make sure you
don’t get upside down on the property. Watch your profit
margin. If you need too, either bring in a private lender at
a lower rate or find a lending institution for 6% or 7% and
refi. Now, you’ll need to do the math and see where the
breakeven is:
a) Loan x 15%/12 = interest per month
b) Loan x 6%/12 = interest per month
c) A - B = $ saved per month
d) Closing cost $ / $ saved / mo = breakeven

So if the breakeven calculation comes out to 6 months then if
you are going to hold the property longer than 6 months, then
do the refi.

2) Find at least 3 mortgage brokers and let them compete for
your business.

3) If you have a bunch of equity in the property…
a) Sell at full price and if need be, carry back a 2nd.
mortgage and then sell the 2nd.
Hint: How to sell a 2nd? Run an ad in the local paper.
b) Wholesale to a RE investor
c) Cut price and look for a cash buyer

4) Look at your ‘model’. What I mean by that is to take
a hard unbiased look at the structure of your business. Is it
making you money? Do you know your real numbers?

Let me give you an example. When I got into the business, I was
using a buy & hold philosophy of low end properties. It
worked but I wanted to make more money and not wait years to
payoff the property to have a great cash flow.

So, I decided to buy, fix & sell the same houses with a lease
option exit strategy. I’d fix the property to sell and not to
rent so I had a larger lien on the property.

It didn’t work. The reason it didn’t work was because the
tenant/buyer had a ‘renters’ mentality on these low end
houses.

They would live in the property for a few months to a year and
then quit paying. I’d evict, put $3,000 back in the property
to get it up to speed and then do it all over again (and again
and again).

When I did the math, I realized that I wasn’t making the
profit I had expected. To top it off, when I did get one of
these closed, I’d end up carrying back a 2nd mortgage. Ouch!
That just added insult to injury.

Let me give you a model that might work for some of you..
1) Target a medium price range property or higher.
2) Purchase for all cash using private money. Let the
money accrue.
3) Fix and retail.
4) If not sold by 6th month, then refi at 6-7% interest
5) This frees up the private lenders money so you can use it
again.
6) Put a lease option tenant or land contract (contract for
deed) buyer in the property. This covers your monthly
expenses.

Look at all the upsides to this model. You buy a property for
all cash and have zero holding cost. You are trying to retail
and get quick cash. If it doesn’t sell you go for soft terms,
free up the private lender money so you can use it again and
get a cash flow property because you refi the property at a
low interest rate.

This cookie cutter approach will make you wealthy.

5) Tenant/buyers that have credit challenges…
a) If they need to open up a credit line to get financed,
I hand them the form when e do the lease/option or land
contract (contract for deed for some of you).
b) Put an escalation clause in the contract both on the
price of the property & in the monthly rent/mortgage.

Something I am currently testing…

I am purchasing credit repair packages and then offering them
to my tenant/buyers that have credit challenges. I’ll keep
you posted.

In closing, I realize some of the items above might not be
very popular with some of you but on the other hand, it might
be a life saver to others.

The key to all of this is to take action.

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3. Important Tip

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The foundation of a successful real estate business is a
solid education. Alan Cowgill

Our Toll free number 866-831-3540. Please put it in your cell.

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5. Links

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SEC information…
http://www.privatelendingmadeeasy.com/sec.shtml

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Free Downloads…
http://www.privatelendingmadeeasy.com/free-downloads.shtml

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only $167.53 per month. It’s dirt cheap…
http://www.privatelendingmadeeasy.com/products/private-lending-made-easy-package-f-mega-package.shtml

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Please forward this newsletter in its entirety to your real
estate friends today. We appreciate your help in making
Private Lending Made Easy grow!

Sincerely,
Alan Cowgill

E. Alan Cowgill is the President of Integrity Home Buyers, Inc.
He is a full-time real estate investor, investing in single
family and small multi-family properties in Springfield, Ohio.
Since 1995 Alan has bought and sold over 200 properties and
uses private lenders to fund his real estate deals.
http://www.privatelendingmadeeasy.com/products