Alternative Financing Sources for Your Real Estate Business

Ready to invest in real estate, but don’t have the capital?

Acquiring capital is an oft-looked part of building your real estate portfolio. But don’t fret … where there’s a will, there’s a way. Over and over, we see creative solutions for investors’ need for capital.

The latest expert guest on our latest show offers new capital ideas WE hadn’t even heard of yet.

We always like sharing interesting new ideas, especially those that give real estate investors a competitive advantage. So listen in, and hear how Joe Nielsen at Clear Capital Group, Inc., can help you turn your real estate investments into a REAL business.

In our latest show you will hear from:

  • Your master debt collector, Robert Helms
  • His number-crunching co-captain, Russell Gray
  • Real estate investor, advocate for small business owners, and founder of Clear Capital Group, Joe Nielsen



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The need for alternative capital solutions

Joe Nielsen, a long-time listener of our show (thanks, Joe!), was growing his own real estate portfolio and needed capital.

After spending many weeks … which turned to months … filling out endless applications and providing volumes of documentation only to be declined and forced to start over again, Joe kept thinking, “There must be a better way.”

In fact, if you’re looking for capital from banks and credit unions, stats are stacked against you. Less than 10% of businesses that seek funding actually get it.

So Joe created a new capital solution. He founded Clear Capital Group, Inc., a specialty commercial finance firm, to help the 90% who are rejected by banks.

Debt: A critical tool for real estate investors

Before we dig into details on how Joe at Clear Capital Group can help you, let’s talk about why debt is a GOOD thing in real estate.

Some people are raised to be debt-adverse, in every situation. Let’s back up and think about this though. There are two kinds of debt, and they are majorly different. Our quick definitions:

  • Bad debt –High-interest rate credit purchases on consumer goods that offer little to no return in value. You PAY to have this kind of debt, sometimes twice as much as the item’s original cost.
  • Good debt –Provides you a long-term return through an investment. This kind of debt PAYS YOU to own it.

See the difference?

In real estate, debt is a critical tool. In fact, the GOAL is to accumulate debt. Our friend and mega-bestselling author, Robert Kiyosaki, says the right debt is a very good thing because of leverage and tax benefits.

We use debt prudently when it’s available. (Remember, debt not always an option! Sometimes we go through whole economic cycles when it can’t be accessed.)

Managing your portfolio of debt

So with that primer, a lot of people don’t pay enough attention to managing their debt. They focus more on the monthly grind of covering utilities, property management, and maintenance.

Banks know this, so traditional lenders often require you have “debt-coverage ratio,” meaning you have enough cash flow coming in, they feel confident you won’t default.

When you get a loan on property, be prudent about it. Do your homework. Make sure you understand your credit, cash, and income sources.

Now you’re dealing with the financing needs of business. Growing your business means investing in more properties, so you save up a down payment and do it again.

Once you have several loans under your belt, it gets harder to get more. That’s where Joe and Clear Capital Group can help.

Seeing capital options more clearly

Clear Capital Group helps real estate investors across the United States get access to capital.

For example, if an investor has 10 properties and wants to invest in another one, the bank will likely tell them, “Sorry, you’re maxed-out on debt.”

Clear Capital Group can take those properties off of an investor’s private portfolio, so their debt-to-income ratio is viewed more favorably.

“You can have as many transactions as you want with healthy debt,” says Joe.

Another option is “wrapping them up” and getting a blanket loan. “This makes it more flexible and clears up the mess of being ‘Fannie and Freddied out’ that happens to a lot of investors,” Joe says.

Underwriting with Clear Capital Group is similar to a multi-family apartment building, and they do have some restrictions. For example, your properties need to be similar product types in near proximity to each other.

They will view your portfolio as a solid mass, and hope to see at least an 80% occupancy rate. Their fees and terms are for a 20-30 year amortization, and although their rates are higher than bank financing, they are fixed for 7-10 years.

“We can turn you into a legitimate business that we can lend to,” Joe says. “For example, this capital could help you with fixing and flipping so you can pay contractors and cover cost of materials.”

The biggest mistake investors make

Joe says it’s a mistake to find a property before you’ve found your financing.

“I educate my clients to prepare for financing first, THEN find the property that fits your strategy,” Joe says. “Seek out a lender and understand your financial profile,” advises Joe. “You want to identify the options available to you.”

This reminds us of our secret to finding a great deal: your Personal Investing Philosophy.

We also say there’s a “Personal Funding Philosophy” – meaning you need to determine the amount of risk you’re willing to take.

At Clear Capital Group, they help you in three ways in their complimentary initial consultation:

  • Identify the options available to you.
  • Determine a strategy.
  • Help you achieve it by connecting you to the right lender.

We’re personally very excited about the tools available, some of which we didn’t know about. You can learn more in Joe’s report, “Tools for Funding Your Real Estate Investing Business,” which you can get by emailing [email protected]

Remember, a consumer thinks about saving, where an investor thinks about profit.

When you’ve got access to capital, you differentiate yourself. You’re not competing with every mom and pop investor out there.

Give yourself a competitive edge in the marketplace with Joe’s report, and ‘til next week … go make some equity happen!

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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.

8/22/10: What is Your Risk Paradigm? A Life or Debt Decision

Protecting your money in today’s highly uncertain economy is surely very challenging. Remember when real estate equity and bank accounts were considered among the SAFEST places to keep your savings?  Today, real estate equity has disappeared – and for many people even getting access to whatever equity they still have is next to impossible.  Boy, do we miss those equity lines of credit with their checkbooks and debit cards!

And even though you can still write checks on your cash deposits at a bank, with record bank failures even that old saying “sure as money in the bank” seems a little outdated.  Add horribly low interest rates and, to compound the injury, taxes on your meager interest earnings, it’s enough to make you wonder what this financial world is coming to.

Well, we have good news. There’s a new way to look at an old product – one that is time tested and has survived its fair share of economic turmoil.  And we got such a positive response to our first foray into this topic, we decided to re-visit it with a new guest.

In the radio lifeboat for another voyage into broadcasting brilliance:

  • Host and head lifeguard, Robert Helms
  • Co-host and lifeboat inflater, Russell Gray
  • Seasoned sailer of stormy economic seas, the Godfather of Real Estate, Bob Helms
  • Special guest, “infinite banking” expert, Patrick Donohoe

Right out of the gate we need to set the table, which is no small task with the lifeboat bobbing on the waves:  what does life insurance have to do with real estate investing?

Think about what a bank account has to do with real estate investing and you’re on the right track.  But unlike a bank account, our guest explains that certain types of life insurance – thought greatly misunderstood – offer far greater flexibility than bank accounts.  And though they aren’t FDIC insured, insurance companies are arguably more stable and conservatively run.  Unlike banks right now, you don’t hear a lot about record number of life insurance companies failing.

We also address why so many CONSUMER financial gurus are down on cash value life insurance, yet corporations like Wells Fargo and Wal-Mart buy tons of it.  Could it be there are BUSINESS purposes that make it very useful for BUSINESS people?  We say all the time that real estate investing is a business, so it makes good sense to see how businesses are using this financial tool.

For example, how’d you like you to take a tax deduction for making a deposit in your bank account?  Hmmm….that’s an interesting concept!  What about getting a loan against your equity without having to qualify?  Try doing that with a property!  And unlike property, the value isn’t determined by market forces, so your equity doesn’t disappear in a market downturn.

The point of this episode is that insurance can do a lot more than manage risk and pay a benefit. Our job is to expose you to some of the possibilities.  Your mission, should you choose to accept it, is to explore those possibilities, learn how to use this powerful tool, and decide when and where to use it to advance your real estate investing program.  It seems the economic storm isn’t over yet, so it might be a good idea to know how to operate the lifeboat.  It’s a matter of life and debt.

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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.