2/26/12: Fast, Flexible Financing – The Power of Private Lending

When banks are broken, buyers (and sellers!) are frustrated.  But tight lending requirements open the door for private lenders, who can be more flexible about the people and properties they’ll lend to.

In this scintillating episode of The Real Estate Guys™ Radio Show, we visit with two real world real estate veterans who are putting private lenders together with out-of-the box borrowers in a market with the cash flows to support it.

  • Your powerful yet flexible host, Robert Helms
  • Your somewhat private co-host, Russell Gray
  • Special guests, all the way from Memphis Tennessee, Alex Craig and Jeremy Veldman

We’re always excited when we get to talk with guys (and gals) who are doing creative things in the market.  So when we met Alex Craig in his office in Memphis, we not only invited him to be a part of our market field trip, we asked him to come on the show and share some of the details about how he’s getting deals done in using private money.

What we discovered is that in markets like Memphis, where the prices are low, the rents are relatively high and the cash flows are strong, there’s a lot of interest from people all over the world in acquiring rental properties.  Makes sense to us!

What we also learned is that those very strong cash flows attract private investors who are interested in high yields with the headaches of being a landlord.

So how does THAT work?

Alex and Jeremy explain that even though interest rates are low for qualified borrowers, the key word is “qualified”.  And in today’s super tight lending environment, there are fewer and fewer borrowers who fit in the box.  The folks could be otherwise well-qualified foreigners who simply lack a credit history in the U.S., or have too many conventional loans (“Fannie / Freddie’s out”), but want to keep shopping.

Whatever the reason, there seems to be plenty of demand for unconventional loans.  And people are willing to pay a premium to get it when the cash flow is strong enough to support it  After all, some leverage is better than no leverage.

For the private lender, they get a much higher yield with a monthly payout.  And the loan is secured against an individual property with as much as 50% protective equity and strong cash flow.  Sounds like a win-win to us!

So we ask Alex and Jeremy to explain the whole process to us based on their real world experience.  We learn a lot and so will you!

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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources that help real estate investors succeed.

 

2/19/12: Lessons Real Estate Investors Can Learn from the Stock Market

Dogs and cats.  Labor and Management.  Geeks and Suits.  Democrats and Republicans.

Do you see the similarity?  No?  Exactly.

So when someone (whom you’ll meet shortly) suggested that stock market day trading could teach valuable lessons to real estate investors, we said, “Riiiigghht.”

But being the open minded guys we are (remember: your mind is like a parachute – it only works when it’s open!), we decided to jump on a plane (actually, we rode inside) and fly to Salt Lake City.

Barking into the microphones for this episode of The Real Estate Guys™ radio show:

  • Your Big Dog host, Robert Helms
  • Your hissy co-host, Russell Gray
  • Special Guest, Rich Dad Paper Asset Advisor Andy Tanner

One of the reasons The Real Estate Guys™ radio show and podcast exists is because virtually all of the major media and personal finance gurus look at real estate investing as owning a home.  When it comes to wealth building, conventional “wisdom” is to buy and hold stocks, then hope and pray they go up over time.

We think real estate is the PERFECT investment (if you overlook tenants and toilets) because you can buy it with mostly the lender’s money, make the payment with the tenant’s income, put the extra cash in your pocket each month (when properly structured), get favorable tax breaks (keep more of your money), AND you’re hedged against inflation over the long term.  In fact, you could say that you benefit from inflation over the long term.   And even if the value drops, as long as it cash flows, sooner or later it will be paid off (if you’re into owning free and clear rental property).  What’s not to like?

Compare this to buy, hold, hope and pray stock investing, where most stocks don’t pay you cash each month.  There’s no tax advantages, unless they’re in your tax “advantaged” retirement (you know, the one that trades deferred taxation for converting your low taxed capital gains into highly taxed ordinary income – what a deal!).  And, unless you’re into options (which isn’t really buy and hold, it’s trading), you have to purchase your stocks with your own (often AFTER tax) money.  Ugh.

So you’re entire bet with most buy and hold stock investing is long term appreciation of the stock price, which is something over which you have NO control.  Have you ever tried to put new paint and landscaping on a stock to increase it’s curb appeal?

So, with this admittedly huge bias, we show up with our mobile microphones in Andy’s office.  He’s in trouble.

Then we meet Andy.  All six feet eight inches of him.

What do you say to a 6′ 8″ guy?

“Um, hello, sir” we say sheepishly as we reach out and watch our hands disappear into his huge paws.  “What would YOU like to talk about today?”

Now Andy is one of the nicest guys you’ll ever meet.  So before the microphones are on, we have a little back and forth, and before we even do the interview, we’re fans.

We talk technical analysis, fundamental analysis, diversification, cash flow, retirement accounts, the European debt crisis, and the investor’s mindset.  We have a GREAT time!

So listen in to the conversation and pull out some precious pearls of paper asset wisdom that you can apply to your own real estate investing.  And if you listen all the way through, Andy tells you how you can get exclusive access to his new book, 401kaos.  We haven’t read it yet, but we like the title!

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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources that help real estate investors succeed.

Are your social-networking habits effecting your borrowing power?

Unless you’re Donald Trump, you probably need third-party money to close some deals.

As real estate investors, we want to make the most of our borrowing power.  But is it possible your social media habits will effect your next loan?

Yes, it is possible.

Rumor has it banks and lenders are gathering intelligence through social media and how they intend to use this information is debatable. Let’s take a deeper look at what is being collected, how it may be used and what you should do about it.

Banks and lenders have always assembled data to determine one’s ability to pay. Traditionally the sources have been credit reports, pay stubs, previous years taxes, bank statements, co-signers and so forth. Now, one’s “social-graph” (online relationships and habits) may have an impact on a lender’s willingness to extend credit.

Does your social media presence reflect financial distress? Do you have friends who are in distress? Are you changing jobs? Moving back home? Buying a new car? Planning a wedding? Taking a dream vacation? Getting divorced?

Your financial situation is greatly reflected in how you live your life. Nowadays, people are sharing their life stories through social media, which is creating a more connected world.  But it’s also offering financial institutions (not to mention employers and business associates) a whole new world of insights into things that may not improve your chances of getting that great loan or employment offer.

For legal reasons, the likelihood of an individual’s social sentiment dictating borrowing power is slim. However, word on the street is that banks and lenders will use this information to better direct their marketing efforts. Those with higher social rankings, within their internal system, will get better offerings than those with less favorable profiles.

We have limited this to just banks and lenders; however, this same approach could certainly be applied by potential business partners looking to finance one of your deals. Obviously, as real estate investors, we want the best offerings and here are some tips to preserve your social sentiment.

  • Have secure privacy settings
  • Be conscience of what you post and how it could be interpreted
  • Understand that you are trackable in the digital community
  • If you are not paying for a service, then you (that is, your information) are the product

Social media has created a small-town world and allowed meaningful relationships to develop virtually. This is a powerful thing, which means there is potential for both good and evil – so be conscious of how you use and participate in social media.

Remember, EVERYTHING you put on the internet has the potential to be seen by ANYONE and can live FOREVER.  As an investor and entrepreneur, it’s essential to be diligent in building and protecting your personal and professional public appearance.  Make sure what you’re putting out there consistently presents the public image most advantageous to your investing and business goals.

Staci Davidson is a social media strategist, coach and consultant.  For more information, visit www.stacidavidson.com.

2/12/12: Getting Deals Done – Negotiating Skills Every Investor Needs

Our good friend, Summit at Sea™ faculty member and the mega-bestselling financial author Robert Kiyosaki (Rich Dad Poor Dad series), says the SINGLE MOST IMPORTANT skill that every entrepreneur MUST have is the ability to sell.

But does that mean real estate investors need to be able to sell?  We think so.

So for this episode of The Real Estate Guys™ radio show and podcast, we explore the topic of salesmanship as it applies to real estate investing.

Behind The Real Estate Guys™ shiny silver old-school microphones:

  • Your Host and School Master, Robert Helms
  • Your Co-Host and Teacher’s Aid, Russell Gray

When it comes to real estate deal making, the more creative you want to be, the less you can rely on third parties to put your deals together for you. So even if all you’re doing is stacking up lots of passive income producing properties (as opposed to operating a real estate dealership), there are still many times when solid sales skills are important.

If you’ve watched a skilled professional performing at a high level, more often than not they make it look easy.  They’re “natural”.  But the truth is that top performers have practiced and perfected proven techniques to such a level they just seem to flow effortlessly.  You can see it in athletics, music or man other forms of human achievement.  But is it true in sales?

In this episode, we get into specific techniques used by master salespeople to identify the motivations of the other party, and then place themselves in the most effective position to get the agreement necessary to make a deal.

Whether you’re pitching your project to a banker or an investor, trying to get a buyer or a seller to take YOUR deal instead of the other guy’s, or you’re building alliances with service providers to help you find, finance and manage your properties, having the ability to build agreement to point of action is mission critical!

So grab your G.I. Joe (or Barbie) lunchbox, your pen and notepad, and settle in for this lesson in the negotiating skills you need to get your deals done!

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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources that help real estate investors succeed.

2/5/12: Ask The Guys – Super Bowl Edition

Super Bowl Sunday is the biggest media event of the year – even bigger than The Real Estate Guys™ radio show (hard to believe, we know).  For perspective, consider that the projected 110 million Super Bowl viewing audience is 5 times bigger than American Idol’s nearly 20 million person audience!

And what does that have to do with you and your real estate investing?  Well, pretty much nothing.  Because unless you’re somehow connected to the business of football or lucky enough to place a winning bet (how ’bout those Giants?), the Super Bowl doesn’t really have any positive impact on your financial life.

So, being the ever faithful hosts that we are, for those who are more interested in how to score points on their financial statements, we’re in the studio for another educational edition of Ask The Guys!

Sitting all alone behind the silver microphones in The Real Estate Guys™ studio:

  • The quarterback of the show, your host Robert Helms
  • Running back (and forth to fetch Robert’s coffee), your co-host Russell Gray

As always, our Ask The Guys playbook has more questions than we can get to in one episode.  But keep ’em coming!  We love reading them, and when we see things that come up over and over, we know it’s something we should take time to address.  To submit your question, use our Ask The Guys page.

When we reached into the Ask The Guys e-mail  grab bag for this episode, here’s what we pulled out:

  • How can a young person, saddled with student debt and just starting out, get their dream of real estate financial independence started?
  • What can you do with a credit score of 800 (besides brag about it to your friends)?
  • Are low down payment deals still out there?  Where and how to find them?
  • Help! I’m a brand new landlord and my tenant just went Chapter 13!  What can I expect?
  •  I’m under 30 and have saved up $100,000.  Now what?
  •  I just got out of college and noticed you can get a lot more money each month by renting out 1 room at a time.  What do you think?
  • How do I get cash out of a property in an LLC to pay off a property I bought with my 0% interest credit card?
  • MORE!

Sometimes we know the answers because, after all, we are brilliant (and humble!).  Sometimes we need to use our powerful positioning as big time radio talk show hosts to call up subject matter experts for help.  In any case, we LOVE answering your questions because we always learn something, and it reminds us that there really are people out there in radio-land (and now podcast-lands) listening to us week in and week out.

So THANKS for keeping us company during the Super Bowl and keep your questions coming!

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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to help real estate investors succeed.