Alan Cowgill's Blog

Where do I find private investors to fund my real estate deals?

Alan Cowgill — Thu, 14 Aug 2008 05:00:29 +0000

My burning desire to finally become a full-time real estate

investor had come to fruition when I quit my full-time job of

17 years in November of 2001. With this career change, I

immediately needed to face the nagging problem of “Where do I

find private investors to fund my real estate deals?”

Without a serious influx of cash in my business to acquire and

rehab properties, I would not be able to take my business to

the next level.

This was when I developed the idea to hold an investor luncheon

to present my program to local investors. When I started

searching to find how to proceed, I found there was very little

information out there about this topic. So, I had to develop

my own system.

After my 1st two investor luncheons, I had over $1 million

dollars to go buy houses. So I know this works.

I decided to produce a newsletter because I realize there

is a huge need by most RE investors to learn about this

concept. I am excited about this topic and I want to help you

avoid the pain I experienced in my RE career by not bringing

private investors into my life early on.

So let’s get started.

I started my business by using banks, savings, credit cards,

lines of credit, creative techniques with sellers (like land

contracts or lease/options), and partners. But, once I was

self-employed, I was concerned that it was going to be harder

to get loans to purchase properties.

I had always been unhappy about how long the banks take to get

the job done. I had it take 4-1/2 months on a house without

a furnace. The bank didn’t know if they wanted to make a loan

on that kind of house but that is what my rehab business is

all about. Buy ‘em ugly, cheap and fix ‘em.

Just think, if I would have used a private lender on the

above deal, I could have bought, fixed & sold the house and

pocketed $20,000 by the time I got to the closing table

with the bank.

With private investors, I have the funds available all the

time. When a good deal comes my way, I can grab it

because I know the money is waiting for me. While my

competitors are scrambling around applying at the bank, I’ve

made an offer and closed the deal. My rehab crew is all over

the property like ants before the competition knows what

happened. I love having private investors for my business.

So, a major benefit is SPEED to purchase a property.

Let’s look at another major benefit of having private lenders.

My first private lender was my Mother. My Dad had passed away

in 1989 and Mom had insurance money. She proudly invested it

on bank certificates of deposit (CDs).

When I became a real estate investor, I learned about finding

private lenders and so I talked to Mom about it. She loaned

me $5,000 and received 10% interest in return. I paid her

monthly just like her bank did with her CDs. She was delighted

and so was I.

As my use of private investors increased, I learned that some

of them didn’t need monthly payments and so I started to

structure my loans so there was no payment until the property

is sold.

This is a huge benefit… Think about what this has done to

improve my monthly cash flow.

Now my Mom will always get monthly payments from me because

she is retired and depends on that income BUT anyone who can

wait on their money, I’ll let the money accrue.

So the second major benefit is improved CASH FLOW because you

don’t have to make monthly mortgage payments but just let the

interest accrue.

Important tips

Other benefits to having private lenders include:

- No down payments

- No points to pay like you have with mortgage brokers

- Reduced closing cost

- None of your own money needed

- No prepayment penalty

Alan Cowgill is a speaker, author, and real estate entrepreneur. Alan has bought or sold over 200 investment properties. His step-by-step system “Private Lending Made Easy”

teaches others to find private lenders. Contact Alan at 937-390-0816 or 866-831-3540. For a FREE audio go to www.PrivateLendingMadeEasy.com

What sort of disclosure should I give my private lenders?

Alan Cowgill — Tue, 12 Aug 2008 05:00:34 +0000

When you are reaching out to private lenders, whether it’s just a handful or a large group, it’s very important that you disclose the risks and benefits of the private lending opportunity you’re offering them. There are several reasons you should do this. Some are for the benefit of your private lenders, who will want to know what your business is and how they can make money lending to you.

Securities laws also work to protect private lenders, so you must disclose to them what the potential downsides are. These might include how long it will take to sell a property; mortgage rate changes, housing market pricing fluctuations, or the cost of rehabbing a property. There are others you’ll want to mention.

Disclosure documents will also help you protect yourself and business against possible claims that you didn’t describe the business properly. A strong disclosure document will help you protect your reputation and protect you against frivolous litigation. It will also help you comply with securities laws and regulations and, should you get a question from a regulator, help you demonstrate to them you are working to be in compliance.

Topic: Commissions

The bottom line on paying commissions is: don’t. Unless you are using a proper registration or exemption and using a licensed or registered broker/dealer, almost every state prohibits paying commissions for the sale of securities.

Now, in Ohio, it is possible to pay someone to help you get potential private lenders to a luncheon, but only if you pay him or her whether or not these folks end up lending you money. That means that you can’t pay them based on their success rate or anything that connects their compensation to getting private lenders. Other states won’t even let you do that unless the people you’re compensating are registered or licensed broker/dealers.
Topic: Public Offerings

You will hear the term public offering discussed in my interview with Attorney Ralph Sherman. You may also hear it discussed in your investing business. It’s easiest to explain what it means by explaining what a public offering isn’t.

Generally, any offering that is not exempt under the private offering exemption of the securities act of 1933 (Regulation D) is a public offering. This means that if you aren’t using an exempt offering, as we talk about extensively in the interview and in the course materials, then you are getting involved in a public offering. Each and every state has its own definition of exempt offerings and these aren’t considered to be public offerings. We talk about some of these exempt offerings in Ohio and other states in the interview and in the course materials you’ve received.

Exempt offerings are what open the door for you to run your real estate investing business successfully and in compliance.
Topic: Doing Business

Remember, securities laws and regulations offer you many opportunities to do your real estate investing business and stay in compliance. Yes, there’s going to be some paperwork that goes with these laws and regulations. It’s just part of doing business, and that’s what Alan’s course is all about, helping you get into business and do it the right way and successfully.

Alan Cowgill is a speaker, author, and real estate entrepreneur. Alan has bought or sold over 200 investment properties. His step-by-step system “Private Lending Made Easy” teaches others to find private lenders. Contact Alan at 937-390-0816 or 866-831-3540. For a FREE audio go to www.PrivateLendingMadeEasy.com

What is a security?

Alan Cowgill — Sun, 10 Aug 2008 05:00:43 +0000

The term “security” is broadly defined to mean “any certificate or instrument, or any oral, written, or electronic agreement, understanding, or opportunity, that represents title to or interest in, or is secured by any lien or charge upon the capital, assets, profits, property or credit of any person or of any public or governmental body, subdivision or agency.”

That’s the language used on the website of the Ohio Division of Securities. This definition includes such common items as shares of stock, warrants and options, promissory notes, membership interests in limited liability companies, bonds and debentures. Limited partnership interests are considered to be securities, while general partnership interests are generally not considered to be securities. The statutory definition additionally includes the term “investment contract,” which has been construed by court decisions to include numerous investment opportunities and business opportunities, which at first glance may not appear to fit within the definition of “security.”

Topic: Does that mean private lending may be considered securities?

When you are borrowing money from private lenders, you are offering them a security. You’re making an IOU to them, by borrowing their money and promising to pay them a fixed interest rate over a certain time period or when the sale of a property is concluded.

When a company sells shares or stock, it’s giving the purchaser of the securities an ownership interest. Shareholders make their money when they get dividends on their investment or when they sell their stock. Private lenders are lending you funds and they make their money by receiving the interest rate you’ve promised them.

Ohio and most other states allow securities to be offered to investors when they are either registered or offered under a proper exemption from registration. Securities laws do define debt as a type of security. This means that your business has the same kind of opportunities as businesses that sell shares of their company to the public. It also means that securities laws and regulations apply to the business.

Topic: Who regulates securities?

Each state regulates investments offered to its citizens. The federal government, through the Securities & Exchange Commission (SEC), regulates offerings across state lines. This means that you’ll have to look at the laws and regulations in your state when you’re only working with private lenders in your state. If you’re working with folks across state lines, you’ll need to comply with the laws in each state you’re working in and comply with the SEC’s rules too.

What is a Disclosure Document?

Alan Cowgill — Fri, 08 Aug 2008 05:00:46 +0000

When you are offering private lenders the opportunity to work with you, you must be sure to disclose to them the risks and rewards of the business. You should prepare a disclosure document.

A Private Placement Memorandum is a critical disclosure document that has legal consequences. If a private lender is not given sufficient, material information and suffers a loss, he may have a claim against you and your business. The information you give private lenders must be accurate and not misleading. The key test is if you have given private lenders all “material” (significant) information about your business at the time the investment was made. It is therefore important to follow the SEC’s disclosure regulations in your Memorandum.

What are these guidelines? In general, they are:

 The Business of the Company -This information generally includes a description of your private lending business, location of the company’s facilities, trends in the industry, and the company’s marketing strategies.

 Risk Factors -These factors vary depending upon the company and the nature of its business. They may include cash flow difficulties, market competition, inexperience of management, dependence upon an unproven product, absence of operating history or profitable operations, potential conflicts of interest with management or affiliates, or the absence of a trading market for the company’s securities.

 Use of Proceeds - The use of the funds to be received from the offering should be set forth with a high degree of specificity. Categories of expenditures may include such items as leases, rent, utilities, payroll, and purchase of equipment, payment of notes, advertising costs, insurance, supplies, and payments to be made immediately to officers, directors, or promoters.

 Key Personnel and Shareholders - Individuals who direct the company’s operations or who make significant contributions to the business of the company as employees, independent contractors, consultants, or otherwise are identified and important background information such as education, age, and business experience of these persons is disclosed. Principal shareholders of the company are identified with a description of the number and percentage of shares beneficially owned.

 Financial Statements - Financial information, such as balance sheets and statements of income and cash flows that accurately describes the financial condition of the company, is typically provided. In some circumstances, these financial statements must either be audited or reviewed by a Certified Public Accountant.

You should distinguish between facts and beliefs in your Memorandum. Restrained language should be used throughout the text. At the practical level, most investors are accustomed to reading carefully worded Memoranda and they are suspicious of broad, unqualified claims. An understated, factual Memorandum can deliver a powerful message to private lenders.

A Private Placement Memorandum should avoid arcane jargon and technical terms. Provide definitions for terms that might not be easily understood. Don’t make private lenders learn a new language if they want to understand your Memorandum.

What is required for Private Placements?

 A sound business plan

 A private placement memorandum (PPM) disclosing the full facts of the investment and business

 A law firm or lawyer experienced in private placements.

Although it is not possible to write a PPM that would work for every student’s business, here are some pieces you can consider using in your PPM.

The Business of the Company- (Name of Business) is a real estate investment company. We work with private lenders and put their funds to use in residential property investments that are secured by mortgages. These transactions are done in compliance with relevant laws and regulations and in compliance with appropriate securities registrations or exemptions in every state in which we do business.

Risk Factors - Market conditions, interest rates, and economic, regulatory, or financial developments could significantly affect the real estate industry, and these securities could react similarly to these or other developments.

The real estate industry is particularly sensitive to economic downturns. The value of securities of issuers in the real estate industry can be affected by changes in real estate values and rental income, property taxes, interest rates, and tax and regulatory requirements.

The management, experience, knowledge and capability of the company also affect the performance of our business and our ability to properly run our business. Past performance is not a guarantee of future success.

Use of Proceeds - The funds raised from private lenders will be used to invest in residential properties in (name of city, region, state or states). We will use these funds to purchase such properties and improve their condition and appearance and then sell these properties. Some properties may be used for a rent to own or lease to own investment. Other, similar forms of real estate investment in residential properties may also be made.

Key Personnel and Shareholders - This is where you should tell people about yourself, your partners, if any, and any other owners of your business. Highlight your experience; let people know if you lack any relevant experience. If you are new to this business, tell people this and tell them what you are doing to gain knowledge and experience, such as taking this course. You must disclose any problems that are on the public record or, if private, would give private lenders reason to be concerned about your business. For instance, bankruptcies or criminal records should be disclosed, as should less problematic issues.

Financial Statements - This is where you should give people access to information about your business. If you’re new to this business, give people some projections of what you hope to do with the business that are reasonable and conservative. It’s good business to under-promise and over-deliver.

Alan Cowgill is a speaker, author, and real estate entrepreneur. Alan has bought or sold over 200 investment properties. His step-by-step system “Private Lending Made Easy”

teaches others to find private lenders. Contact Alan at 937-390-0816 or 866-831-3540. For a FREE audio go to www.PrivateLendingMadeEasy.com

What about advertising?

Alan Cowgill — Wed, 06 Aug 2008 05:00:29 +0000

It’s important to understand that each state sets its rules for advertising investment opportunities, which includes private lending. Every state has opportunities for you to advertise to bring in private lenders.

In the course materials prepared for you, you’ll see this referred to as from 1-9 private lenders or the 3(H) exemption. In states where you can’t advertise to this small number of private lenders, you should step up to the equivalent of a 6(A)2 (in Ohio that’s 10-34 private lenders) or a 6(A)1 (35 and more private lenders). By doing this, most states will allow you to advertise to private lenders and grow your business.

Topic: What about advertising across state lines?

As you’ll see in the course materials, this kind of approach is referred to as a Reg. D offering, and we suggest you use the approach under Rule 504 of Reg. D. If you’re looking at using this approach to reach out to private lenders outside of your home state, it is possible to advertise to private lenders.

You would use a state exemption that allows you to advertise and only advertise to accredited investors. Accredited investors are defined elsewhere in this package of information. As a reminder, the Securities Act of 1933 has several definitions of accredited investors. The most important for your business are likely to be these two:

1. a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase;
2. a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.

Three Groups of Real Estate Investors

Alan Cowgill — Mon, 04 Aug 2008 05:00:38 +0000

When it comes to complying with the SEC regulations, I see

three groups of real estate investors…

Group #1: You don’t have any private lenders but are ready to

jump in the water and start bringing them on board.

STOP!!

Listen, this is the time you need to do the following:

1) Create your disclosure document to be handed out to lenders

2) You need to understand your states SEC compliance threshold

3) Find an SEC attorney and let him in on what you are doing.

4) Make a decision:

a) I am going to work with family, friends and associates and

stay under the state threshold so I don’t need to file.

b) I am going to advertise, pool and/or work with strangers

so I need to file with my states SEC office before I

approach my first private lender. So I have a registered

security.

c) I’m going to cross state lines and I’ll need to go for the

federal filing too.

d) I am in one of the 10 states that require me to notify the

state SEC office before I get my 1st private lender. So file

now.

5) Get your disclaimer statement completed too.

Group #2: You have a few private lenders but are under the

states threshold. You need to do all of the above plus

there is a form to look back and let the SEC office know what

you have been doing.

Group #3: You are over the threshold and have made a mess.

Hire an SEC Attorney and let them guide you through the

jungle. You won’t like it but I believe it is better to

put all your cards on the table face up and take your

spanking rather than wait and hope you don’t get in trouble.

The bottom-line…

Look, your dancing with a gorilla. Why take a chance. There

are rules on how to play the game. The SEC controls the rule

book and they are there to protect the consumer, not you.

The flat easiest way to be in compliance is to do it before

you secure your first private lender. So do yourself a favor

and start your business off on the right foot.

I find so many real estate investors are scared of the SEC.

If they would only follow the rules from day 1, it would

make life a lot easier and safer for all.

Important Tip

I have a bank of attorneys on my dream team. One for

evictions. Another for real estate closings. I have PrePaid

Legal for documents. AND I HAVE AN SEC ATTORNEY.

You should too.

The “Interest Form”

Alan Cowgill — Sat, 02 Aug 2008 05:00:42 +0000

Sometime I have to learn things the hard way.

When I held my 1st luncheon, I didn’t know what to say at the

end of my talk to get my audience to take action on my private

mortgage program.

It was an awkward moment.

There is a nano second of time that I needed to give them

some direction and I blew it.

Yes, I still had folks lining up to loan me money but I could

have done better.

In my 2nd luncheon, I did much better. I created an 8-1/2×11

form for them to fill out and provide me key information to

see what they wanted the next step to be.

It is the one thing that pulls everything together. It

determines your luncheon success and whether or not your

guests take action on your program! All of your efforts and

the focus of your presentation come to the point where they

have to make a decision. When I held my first luncheon, I

knew this, but frankly, I had to learn how to make a strong

close and get them to let me know their decision. The one

critical item in the program that forces the potential lender

to make a “yes” or “no” commitment is what I call the

“Interest Form”.

I want them to make a commitment and let me know immediately

following my presentation, BEFORE we sit down to eat whether

or not they are going to pass or play. I don’t want to have

to guess or follow up later with each one and waste valuable

time.

Because I didn’t have the “interest form” in the 1st luncheon

I felt like an ambulance chaser when I attempted to follow

up with the folks the weeks after the luncheon.

I’ve found that getting an answer on the spot even if it is

a definite “no” is always much better than a “maybe” or “I’ll

have to talk to my friend or spouse, and I’ll get back with

you.” Not knowing can have you running around like an

ambulance chaser and getting frustrated.

Remember, some people will want to lend and some won’t.

Spend your time and efforts working with those savvy lenders

who see the value in your program and are ready to take

action. If others are on the fence, but later decide they

want to lend with you, they have your phone number and they’ll

call.

I’ve had one lender call 18 months after the luncheon to start

their loan.

At the conclusion of my luncheon presentation, I direct their

attention to the form I gave them when they arrived entitled,

“Please Fill Out And Turn In

This Form Before Leaving.”

I hold it up while I’m talking and ask them to get out the

form, fill it out, and I tell them to return the completed

form to me or one of my assistants before they go back to the

dining area. We MAKE SURE we get a form from each and every

guest.

We collect the forms and scan them to make sure they are

filled out and we say “Thank you” without making an issue of

their choice.

Since I respect their privacy, and I’m a gracious host, I

don’t embarrass anyone or reveal who has made which decision.

We all sit together and enjoy a nice meal.

Since this is such an important issue, let’s talk a little

about the parts of the “Interest Form”. Note: If you have my

Private Lending Made Easy system, take out the “Interest Form”

and follow along.

- Their contact information

You are going to need their complete information for your

records so you might as well get this up front. Most of

the people gave you some information when they made their

reservation. You still need to ask for it again and this

will also take care of the people who didn’t have reservations

but were invited by your other guests.

- Their decision

This form cuts right to the heart of the matter.

Plain and simple. What a tremendous tool to let me know

immediately where I stand and where they stand!

- Referrals

Now not only will you find some people ready, willing, and able

to give you wads of cash, you will find that these folks tend

to associate with people who are just like them — people who

have been financial responsible and have available capital.

Some of these people will see the value of lending with you

and want to share this with their friends. Even if they don’t

provide names and phone numbers immediately, this will get them

to start thinking about referring someone in the future. It

lets them know that you are interested in getting referrals

from them.

- Their level of commitment

This bottom section lets you know the level at which they want

to lend. If their initial amount is lower than you expected,

don’t be discouraged. Typically, they want to test you and see

if you are for real and will do what you say. I’ve had this

happen where someone will lend a small amount and then more

and then more. It’s exciting for me because it makes my

business grow and it lets me know that we are building a

strong business relationship. It’s exciting for them because

they are able to make a safe loan and frankly, it’s more

fun than sending their money off to some faceless organization

in a distant city. When they see my “WE BUY HOUSES” signs,

they know they are an important part of a strong, local

business that is taking distressed properties and creating

homes for local families.

What a great feeling to have a big stack of these “interest

forms” in front of you at the end of the luncheon. You have

immediate feedback.

I love this business!

Important Tip

Always keep in mind that some people will pass and some people

will play. You never need to put pressure on anyone.

The Audio Business Card

Alan Cowgill — Thu, 31 Jul 2008 05:00:37 +0000

We’ve had some questions about the vinyl holder for the

cassette tape and literature so we thought we’d look at that

this month. These are also called Audiocassette Albums,

Clamshells, Audiocassette Holder, or Audio Business Cards.

This impressive, convenient marketing tool keeps your tape and literature together. Just the fact that it is so nicely

packaged gives the perception of value and people are less

likely to throw it away than just a letter or a cassette by

itself.

The outside of the holder has a see-through sleeve. You create

a cover with your company information, logo, and so forth then

slip the cover into the sleeve.

On the inside of the holder on one side is an indentation that

holds your cassette securely in place and under that is a slot

for your business card.

The other side is a bookwell that holds several pages of

information. The bookwell is about 8 1/2 inches x 5 1/2 inches

so we create our literature on a regular 8 1/2 x 11 page,

landscaped and folded in half to make a booklet.

We hand these out at luncheons and they can also be

conveniently mailed to lenders who are not able to attend.

They are also impressive marketing tools to hand to lenders at

one-on-one meetings.

You can use a white or black holder. We prefer the white holder because of the crisp, clean look.

This is one of those marketing items that can be created well

in advance of your luncheon. And, you don’t have to be

concerned about having more than needed for a scheduled

luncheon. In fact, it’s a good idea to have several on hand at

all times to use anytime you meet someone new who might want to

take advantage of your awesome program.

Let’s look a little closer at each piece of the audio cassette

holder.

- Cover

- Cassette

- Business card

- Literature

- Cover

You can create this yourself or you might choose to have

something professionally created for your company. When I

started out, I created this in Microsoft Word by going to Page

Setup and selecting legal sized paper (8 1/2 x 14) with

landscape orientation. Keeping in mind that this would be

slipped into the audiocassette holder clear cover sleeve, I put

the back cover information on the left side of the paper and

front cover information on the right side. I used our company

colors, my photo, a little biographical information, a little

background about the company, and brief highlights of my

program.

The focus with the cover it to make it visually attractive and

the text intriguing enough for the lender to want to open it

and learn more. Don’t try to put the entire program on the

cover and fill every inch. Leave open space. This will draw

their eyes to the specific points you want them to see like:

“Tired of earning 2% interest on your CDs?”

“Learn how you can earn 15% interest on your

investment dollars!”

The purpose of the attractive cover is to get them to open it.

Clearly stating your program’s major features will cause the

lender to want to learn more and open the holder.

Initially, I printed these out on my color laser printer and

slipped them into the cover myself so I know you can do this

too if you care to. Now I have the office staff take care of

this task. Of course, you are welcome to use my cover included

in the course as a template and insert your own information.

That would be a great time saver.

- Cassette

You can make your own cassette about your program; however, we

use a pre-recorded cassette that we purchased from Ron

LeGrand’s organization. It clearly explains the program in an

entertaining manner. Lenders can listen to this at their

leisure at home, in their car, or while exercising and using

headphones. People like cassettes and almost everyone has

access to a cassette player. Tapes are fun and interesting and

this one is packed with information about the benefits of

private lending.

Like with everything else in life, you can make more money if

you leverage your efforts. If you have the skills and equipment

to create your own cassette, that is your choice. I just find

that it is more cost-effective for me to use something that is

already available in this area and I spend my time buying,

rehabbing, and selling houses, talking to private lenders, and

making money.

- Business card

The audiocassette holders we use also have a slot for your

business card. If you are one of those “I BUY HOUSES”

entrepreneurs, you may have wild, bright orange or lime green

cards or the card that looks like a $100 bill or something

else equally jazzy. These are for the buying/selling side of

your business. They are NOT the kind of card to use for the

private lender side of your business!

You are reaching people who are used to dealing with bankers

and are usually professional and conservative. If you give

them a wild business card, it will have the opposite effect of

what you want. Frankly, it will look a little “flaky” to them.

Don’t try to be cute. These people are serious about their

money and expect you to be too. If you don’t have one already,

get a professional business card made and use it in all

instances with your lenders.

- Literature

If you use my cover template and Ron’s cassette, here is where

you will be spending a little more time and effort because this

is specific information about you, your company, and your

program. Again, you are welcome to use my examples in your

course as a template but insert your particular company

information.

I started with a regular 8 1/2 x 11 piece of paper and turned

to landscape orientation. I searched my other marketing

information and found things that I could shrink to half a

page. For instance, I have a one-page information sheet that

lists the documents that protect the lender. I shrank this to

fit on one side of page. I then shrank a copy of the

promissory note and put that on one side of the page. I then

turned the page over.

I took my introductory letter and shrank it for one side of the

page and then did the same with a one-page information sheet

about my company.

So, I’ve just squeezed four pages of information onto one sheet

that folds neatly in half and can be placed in the information

bookwell.

I insert my newspaper article regular sized but folded.

It will be easier if you already have marketing pieces. If

not, you will have to create them.

This generous sized book well can hold as much or as little as

you like. Just remember, the more you tell, the more you sell.

Which means, tell them a lot about your company history, your

established presence in the community (office location and

years in business), the teams you have sponsored, the

professional organizations you belong to, family information,

before and after photos of properties you have rehabbed,

courses you have completed, etc. You get the idea. All this

information lets them know you are not a fly-by-night

operation. You are a serious businessperson and a company

that plans to be in business for many years.

If you are uncomfortable with or unfamiliar with putting

together this type of marketing piece, just gather all the

information you can, including photos, and hire a writer to

create something that you can be proud of.

(Hint: No professional writers in your neighborhood? Since

you have Internet access, search for a writer on elance.com.

You put a job out there, someone bids on it, and when both of

you agree on a price, they create the product you want!)

There, you’ve created an Audio Business Card, a powerful

marketing product that you can use repeatedly in a variety of

situations. You can hand this to a lender with confidence. You

are a step closer to realizing your goals! Go find some

lenders!

Important Tip

Leverage your work effort. Do what you do best to create huge

piles of money and pay a $10 per hour person to do the rest.

Why Private Money

Alan Cowgill — Tue, 29 Jul 2008 05:00:02 +0000

This topic is near and dear to my heart. When I started my RE

career, I heard about the necessity of finding private lenders.

In fact I even found two. But then I stopped. For four years

I PROCRASTINATED. I didn’t get it!!! For four years I

continued to go to banks and jump through their hoops. I also

had used hard money lenders, but found them VERY expensive.

It wasn’t until I quit my J.O.B. and found that banks wouldn’t

loan me money that I realized that I needed to bring private

lenders into my life quickly.

When I took that step, everything changed for the better.

What are some of the advantages of using private money for

your real estate investments? Well, if you haven’t decided

whether or not to use private money, I decided to lay it on

the line here for everyone to see.

- Fast & you can buy at a discount

- No credit check

& doesn’t show up on your credit report

- Unlimited funds

- Control, you set the rules

- Help friends, family & meet a great group of people

- Get some of your profit when you buy

- Cash Flow

- Flexible

- Can make offers with confidence

- Can structure quick and more profitable exit strategies

- Saves you money

- Cheaper than a partner

- Fund the purchase of defaulted paper

- It is the foundation for a very profitable brokerage business

- Fast & you can buy at a discount

In this business when a deal comes along you have to move fast.

Many investors have watched a deal slip through their hands

while they waited for the bank to approve their loan. Once you

have private money available, that won’t happen to you! You

can make an offer knowing you can go ahead and set a closing

date. Meanwhile, your competition is wondering how you did it

so quickly!

If you go to a bank, chances are they will want tons of

paperwork, pay stubs, tax returns, etc. It’s a lot of hassle.

When you can move fast with all cash, sellers will sell you

their homes at a discount.

- No credit check & doesn’t show up on your credit report

If you have had credit problems, you can still buy houses for

cash and make a living in this business while you are cleaning

up your credit.

Private lenders don’t ask about your credit nor do they report

loans to the credit agencies.

If they do ask, you are working with the wrong folks.

- Unlimited funds

Banks will tell you how much you can borrow and the terms.

With private money, your only limitation is YOU!

- Control, you set the rules

You decide who you work with and the terms of their investment

with you. I have my own set of rules. For example, I don’t

accept investments for less than $5,000. I decide whether

I’m going to pay my Lenders monthly, quarterly, or when

the property sells. I can make the terms so that they allow

me to make the most of the investment dollars for both of us.

- Help friends, family & meet a great group of people

Many of you have heard me speak and I usually mention that my

first lender was my Mom. The interest that I pay her is much

greater than she could get on a CD! She’s delighted with the

extra money!

- Get some of your profit when you buy

I borrow a little extra when I buy to cover unseen cost and

if I don’t use it, it becomes early profit.

- Cash Flow

Some lenders won’t need monthly payments.

- Flexible

It’s your program and you can change it.

- Can make offers with confidence

I love this one and it is obvious.

- Can structure quick and more profitable exit strategies

I have a lot of exit strategies when I use private lenders.

- Saves you money

No points, prepayment penalties, down payment, hidden fees, etc.

- Cheaper than a partner

Why split your profit?

- Fund the purchase of defaulted paper

A new income stream!!!

- It is the foundation for a very profitable brokerage business

Once you have more money than you can use, you can become a

mortgage broker and loan it out.

===============================================================

Still not convenced? Well, if you insist on continuing to use the following

sources for your funds after today, please understand the downsides:

BANKS

- Quit your J.O.B. and they won’t loan you money

- Need down payment

- Need decent credit

- Lost time (4 ½ months to close a deal)

- No relationship

- They change rules instantly

- Mountains of paperwork

- On credit report

- Provide stack of documents

- Jump through their hoops

- You’re out of control

- Monthly payments

- No pre-qualifying the property

Let’s face it, we buy some really nasty stuff! Beyond the

trash and that horrible smell (which Ron LeGrand calls the

smell of money), some of the houses we buy don’t have roofs,

or windows, or furnaces, or plumbing. We buy garbage and

make it gorgeous. Banks don’t seem to understand that. I’ve

actually had a bank refuse to loan me money on a house for

4-1/2 months because it didn’t have a furnace. Gee I thought

that was the idea as a rehabber. To buy an ugly stinky house

and fix it.

With private money I buy what I want. I know how to rehab

about anything. That’s my decision, not someone else’s.

HARD MONEY LENDERS

- They are very expensive

- Maybe your credit score is important

- Need down payment with some lenders

- Only one (1) exit strategy

- You’re out of control

- No up-front fix up (Rehab $$$)

LINE OF CREDIT

- Monthly payments

- Limited $$$

- Can be called back and you’re cut off

- Out of control

YOUR OWN MONEY & CREDIT CARDS

- Limited $$$

- Could make more by loaning it out (& OPM @ 12%)

Use Private Lenders and avoid all of these problems!

One final note on building relationships…

I appreciate my lenders. I’ve met some great folks. These

strong relationships built on trust make your business grow,

not to mention make your life more enjoyable. Do you actually

know anyone at your bank or are you just a number to them?

There are some exceptions, of course. Actually, I loved my

banker so much I married her:)

The bottom line is that now you know the facts. Don’t

PROCRASTINATE like I did. Go create unlimited wealth and live

the life you want!

THANK YOU Notes

Alan Cowgill — Sun, 27 Jul 2008 05:00:06 +0000

I hesitated about writing this newsletter topic because on one

hand it is so darn simplistic but then I thought back about

how I fumbled this area after my 1st luncheon. Instead of

JUST sending out thank you cards, I decided to hop on the

phone and call everyone that had attended my luncheon.

In the end, I felt like an ambulance chaser after my 1st

luncheon.

In retrospect, I think I became an…

‘Annoying Pest’ instead of a ‘Welcomed Guest’

Soooo, I rethought my position and decided

to give you a ton of information on this one topic.

Hope it helps…

Not only is it good manners to send THANK YOU

notes, it is also a great way to stay in touch and keep the

lines of communication open with your clients and prospects in

a friendly, positive way!

While I’m sure you can put together something yourself on your

handy dandy computer with clip art and a snazzy font, the only

right way to do this is to use professionally made note cards.

And, the note should be handwritten.

The best situation is that you write the note yourself but if

you are thinking, “Alan, my hand writing is not too great,”

have a staff member write the notes and you proofread and sign

them. The next best situation is to use professionally made

note cards and use your computer to print the message but by

all means, sign the cards personally. It makes a difference.

One of the first activities after your lender luncheon is to

send THANK YOU notes. Don’t wait because it will lose the

desired effect. I have grouped them in the following

categories:

- People who attended and want to loan money

- People who attended and want more information

- People who attended and do not want to loan money

- People who couldn’t attend but wanted information

mailed to them

- No shows

- People who refer other prospects to you

The first three categories, of course, go right along with the

“Interest” Form. Below I have more information about each

category and samples of THANK YOU notes. The most important

part of this whole exercise is the fact that you write a

friendly note and sign it yourself so they feel like you have

made a personal contact with them. This is a business built

on relationships and this is a nice, easy way to build

relationships.

- People who attended and want to loan money

Whether you have appointments already set up with these folks

or have been in constant contact since the luncheon, you still

want to send them a THANK YOU note for attending the luncheon.

It goes beyond just saying “Thank you.” It is a courteous

acknowledgment of the new business relationship. It’s true

that not everyone cares whether or not you take this extra

step that shows your attention to detail but frankly, if it

makes a difference to a few, isn’t it worth it?

It takes focus, work, and money on your part to get a lender

to this point. Use this opportunity to show your appreciation

and enthusiasm. A simple note from you to a new lender might

be something like this:

Dear Martha and George,

Thank you for attending our luncheon

last Tuesday. It was great to meet you

and I’m delighted that you have chosen to

take advantage of our awesome program!

Alan

Simple. Just a THANK YOU and acknowledgment. Personalize

your notes however you wish or use my example.

- People who attended and want more information

This THANK YOU note is an opportunity to make another

reassuring impression on these folks who are interested and

need a bit more information before making their move. They

will probably be pleased that you made contact so quickly and

in a professional manner. You might want to make this a chance

to reinforce the fact that you are an established local

company. Your THANK YOU note to these folks might say:

Dear Lovie and Thurston,

Thank you for attending our luncheon

last Tuesday. It was great to meet you and

have a chance to present the program we have

here at Integrity Home Buyers. My staff will

be sending you more information about our

awesome 15% program.

I’m looking forward to talking with

you again soon.

Alan

Make sure you send them more information ASAP along

with a request that they call to make an appointment with you

so you can answer their questions personally. If you already

have an appointment to meet with them, mention that in the

note by saying “I’m looking forward to talking with you

Tuesday, August 31 at 4:00 at your home.” (Include the date,

time, and location of the appointment.)

Adjust the note to fit the situation.

- People who attended and do not want to loan money

At first you might not understand why you should send THANK YOU

notes to this category. It’s true that when some people say

“no,” they mean just that. But think about this. Some of them

really want to loan money but they have to rearrange their

financial situation to make that happen and it might take them

a little time. They don’t want to go out on a limb and make a

commitment without funds readily available. That’s fine.

Your job is to keep the lines of communication open and when

they can loan money, they will let you know.

There can be lots of reasons for their hesitance. Maybe they

know that at some point they will be getting a court settlement

or inheritance but they don’t know exactly when or for how

much. They may need to find out if they can get a home equity

loan. You’ve told them about the possibility of using their

401K money so they may want to see how much they have, if they

don’t check it regularly. They may have some other investment

vehicle out there that they want to see about getting rid of

so they can loan money to you. Perhaps they want to see if

they can start saving more aggressively so they can meet your

minimum loan requirement.

The truth is, you don’t know why they said “no” and it could

easily change to “yes” at a later time. You’ve started them

thinking about a great new possibility and their situation may

just take a little time.

Wherever their windfall is coming from, your THANK YOU note

could be something like this:

Dear Bonnie and Clyde,

Thank you for attending our luncheon

last Tuesday. It was great meeting you.

I understand that you are not ready to

loan money at this time. Please feel free to

share information about our awesome

program with your friends and family who

might like to take advantage of this great

15% return opportunity.

Alan

We’ve left the door of communication open and we’ve just

started them thinking about talking to others about the

program. Word-of-mouth is a powerful advertising tool!

- People who couldn’t attend but wanted information mailed to

them

There will be people who cannot attend or don’t want to attend

the luncheon. Their reason doesn’t matter. They showed

interest by responding to your ad and requested information by

mail (which I’m sure you sent to them immediately). You should

thank them for that request. Here is a THANK YOU note example:

Dear Ozzie and Sharon,

Thank you for requesting information

about our awesome program where you

receive 15% interest on your money. You may

have some additional questions about how secure

your loan is and how you actually hold a mortgage

on a property right here in town while my

team and I do all the work.

I’m looking forward to talking with

you and making sure all your questions

are answered.

Alan

Use this THANK YOU note to emphasize the 15% return. This

is probably the most important part for them so make sure

it’s in your note somewhere. Remember, they didn’t attend

the luncheon or see your presentation so they still might not

understand.

- No shows

You may find that even though some people call you to say they

will attend and the day before the luncheon you call to remind

them, they just don’t show up. It happens. Why? It doesn’t

matter. The only important thing is that they’ve raised their

hand and are interested in your program! Thank them for their

interest and send them the same package that goes to folks who

requested information by mail. Your note to them might be

something like this:

Dear Mr. Hoffa,

Sorry we missed you at our

luncheon last Tuesday. We covered

tons of information and I know you

are excited about learning how you

can make 15% return with your

loan so we are sending you some

information.

You may have additional questions about

how secure your loan is and how

you actually hold a mortgage on a

property right here in town while my

team and I do all the work.

I’d be happy to talk with you at

your convenience to answer all your

questions.

Alan

Again, the package you send them also has the request that

they call your office to set an appointment.

- People who refer other prospects to you

During the course of business, prospects, lenders, friends,

and even people you don’t know very well at all will talk

about your program to someone who gets excited about it and

calls you. Some of your lenders will understand your program

and get so excited they will tell everyone about it! This is

fantastic! You need to acknowledge them for thinking so much

of you that they put their integrity on the line with you.

You need to thank them for that sincere compliment. An

example of a nice THANK YOU note follows:

Dear Arnold,

I want to sincerely thank you

for letting Marie’s family in on our

company’s 15% loan moneyment opportunity.

I am so tickled that you thought

enough of us to tell them to call. I

have a meeting set up to talk with

the Senator in the near future!

Thank you again.

Alan

As always, on the back of each prospect’s or lender’s 3×5

card or file, make an entry with the date and how they were

contacted:

==================================================

| 9/23/04 Attended luncheon at the country club |

| 9/25/04 Sent thank you note |

| |

==================================================

Important Tip

Read Dan S. Kennedy’s book on Time Management.

ISBN 1-932156-85-2

Could change your life.