One of the frequently asked question is how much to pay private investors. To me that question is directly related to the relationship that I have with that investor. I have presently two kinds of private investors in my group.

The first group is completely passive – they really don’t care what I am buying and selling at any given time. These are people whom I started with four years ago, when I first entered into this private money arena. They are more interested in the rate of return which in my universe is directly proportional to the amount of money they want to invest.

A good model could be :
$0-$25,000 - 9% Annual ROI
$25,001 - $50,000 - 12% ROI
$50,001 - $100,000 - 15% ROI

Anything over $100,000 has to be negotiated on case by case and more importantly how much can you make on in your real estate business. I can pay 20% without blinking.

The second group is more active. They like to evalutate deals and do only the ones that fit their criteria. They are more active in the business and like to get periodic updates. Their returns coming from me are pretty much identical to the first group with one marked difference. Their money is very short term and hence they usually get paid 1% to 2% less than the first group.

I would not advise you to ponder too much about this. Look at your deal – realistically calculate how much you will make out of it and then work from there.

Don’t make the mistake of thinking that a private investor is doing you a favor. This is a marriage of equals. They are looking for a great, secure, above market return. You need their excess cash to make deals happen. Treat them right and you have your own virtual bank. Treat them wrong and pretty soon you will be back to hard money. It is as simple as that.

Posted by Mark Ijlal at 11:26 PM | Permalink | Comments (0)

“You mean to tell me that somebody would literally write me a check so I can buy real estate?”
Yeah, Sure!

That is exactly what went through my mind, when Nora was hounding me three years ago, as usual to go out and get some private money.

As usual, he was right and I was wrong.

Let me tell you, there is an enormous sense of relief when you know you can go and buy a very profitable piece of real estate without calling any lender, going through hoops, being nervous about them slashing the appraisal to tiny little pieces.

But raising private money has nothing to do with real estate at all - and it has everything to do with one of my favorite word - relationship (the other two are leverage and momentum).

Understand this concept and money will flow into your bank accounts - pretty much more than you need. I had to literally shut my web site down because we had it listed in Google and people kept stumbling upon it and calling and asking us how can they invest with us. Some of them were not too happy about being turned down but the reality was that I did not needed the money anymore.

From zero to turning down private money - was done in exactly 16 months.

Here is the secret about raising private money - the “collateral” that the private investors are interested in has nothing to do with real estate but it has everything to do with “you”. Private money seeks individuals who possesses ambition, integrity and a good business sense. All the checks that I have gotten were written out to me and not the house they bought.

The first thing is to understand about private money is - “credibility” - it has nothing to do with which school you went to, where do you work right now and how much did you made last year.

A private investors wants and deserves to know - what the heck makes “you” qualified enough to invest in real estate?
So give them the proof.

One of the things that I think is very important in doing real estate is and I talked about in detail during the October 16th training workshop (hey did you see how I got cornered after the workshop - i was in the hotel lobby till 8:00pm) is “sequence”.

Here it how it works - if you have never done real estate before and you are about do your first deal - it is hard to convince a private investor to invest money with you - if when you possess a personal relationships with them.

Here is a hint : parents and in-laws are the worse people in the planet to ask money from. They look at you and remember the misadventures of your youth (hey we all have them).

So my solution to this is pretty simple -
1. Go and get hard money and do at least 2 deals.
2. Document everything in obsessive details - copy of HUD-1 statement when you bought the property, copy of your cashier check you took to closing to further prove that you actually closed on the property, before, middle and after the renovation pictures, pictures of the finished property (outside and inside).
3. HUD-1 when you sold the house, with a xerox of the checks especially what you made on the house.
4. Spreadsheet of your expenses with timeline showing week by week what go done and how it was fixed.
5. You standing in front of the house - grinning ear to ear with the buyer of your house.

This is your Instant Credibility Kit - punched three holes and put together in a $2 folder.

It can get you as much as money as you want without you saying one word.

You need to start building one - as soon as possible.

PS: some people have emailed me as asked for a copy of my credibility kit - i am not looking for any more private investors. I already have enough investors in my group to fund pretty much everything I come across. But thanks for the vote of confidence.

If you do want a copy to see a sample, it is part of the new video / audio / web program that we are putting together. And i will post details here when it becomes available.

I will however, been given permission by Gold Plus member Mike Lawandaski to post his Powerpoint Presentation on here. I am just waiting for him to put a copy of his profit check as the last slide in there.

Mike did a great job doing that presentation. And i promise you that you will be astonished at the before and after transformation not to mention his “first deal” check.

Posted by Mark Ijlal at 01:01 PM | Permalink | Comments (0)

I got an email from Charles Walker regarding hard money lenders in Michigan. A good one to go to:

Miami Valley Bank - Call Carol at (248) 358-2901

Do keep in mind that hard money lenders do their own checkup of your property - meaning they will do own appraisals. And that usually takes up to 2 weeks. So work that in your deal timetable.

Posted by Mark Ijlal at 07:54 PM | Permalink | Comments (2)

This is an interesting question Robert Stapleton asked me, here is his blog entry and my reply;

Hi Mark,

I purchased the foreclosure list from the Oakland Co. courthouse today, and I was wondering is there a significant difference between working with foreclosures as opposed to pre-foreclosures?
I want to maximize my time and efforts to pursue the most profitable course.

Thanks for your assistance
Robert Stapleton

To me the universe is pretty much divided between pre-foreclosures (from filing of public notice to eviction) and REO’s (houses taken by banks and vacant right now).

On a personal note, I have done pre-foreclosures in my early years - but lately i have been leaning towards the REO’s market. I can give you couple of my reasons on why I like bank owned properties:

1. No title issues - you close, you get clean title policy without exceptions.
2. No back taxes - banks pay everything at closing.
3. No back utilities bills - banks once again pay everything.
4. No headaches of arguing spouses to solve ( you will understand this more once you are sitting in a living room, watching them fight).
5. No emotional dram to get involved in - in my wild years i have heard about every bad thing known to mankind coming up in these conversations.
6. House is vacant - i can go there as much as i want before i close.
7. I don't have to argue about “correct” amount of equity with the homeowner.
8. You can pick an area (i have) - and start buying every good deal in sight.

Most people think that banks are tough to negotiate - but to me the onslaught of foreclosures towards banks is so high that banks have no choice but to negotiate. Either that or sit on those houses for months at end.

My advice to Gold Plus on tonight's coaching call (the last 2 coaching calls were dedicated to REO’s - finding, buying them at huge discounts) was this - if you are new to the game, do three REO’s - put money in the bank and then do your first pre foreclosures. Because these deals are time consuming. And the reality is we are all impatient and want the check now and not later.

So if you want to maximize your profits and efforts, do your first deal out of a REO. I bought a house 67 days, renovated and sold today for a very nice sum. Some of you saw it on Saturdays during the bus tour. That was the one with the Jacuzzi and the kitchen island with track lightening.

Posted by Mark Ijlal at 10:56 PM | Permalink | Comments (1)

They got mailed out to everybody on Friday alongwith the Preforeclosure Voice Script / Homeowner presentation on Audio CD.

Posted by Mark Ijlal at 03:11 PM | Permalink | Comments (2)

Here is Nick Mackris of NEMA in a very serious mood!

Workshop Attendees - thinking up all the questions they are going to hammer me in a minute,

I must be saying something serious,

Posted by Mark Ijlal at 06:06 PM | Permalink | Comments (0)

Charles Walker from Romulus (hey i was just there this morning looking at a gorgeous house in Belleville), Michigan asked two important questions and here is the answer to both:

1. Is it possible to finance properties when your credit is not that strong and you have tons of credit card debt? And not so great income?

Yup! Go hard money for the first three deals! They donot, repeat donot care about credit card debt and your income level. And how about that I just got one of my student with 4 mortgage lates approved for hard money. By the way, the mortgage lates are from 2004. Not to suggest that you should start skipping your mortgage payment. That is never a good idea.

I think I wrote a detailed entry about hard money loans sometime ago. You can look in archives. But I dont, i will this weekend and post it here for everybody. Now obviously, I do REO's - bought, renovated and sold - so this advise does not hold true for if you are thinking about buying and holding for passive rental income.

2. Can somebody with a 645 FICO get a business line of credit from a bank?

Nope! they keep lifting the credit limit - it is around 720 Transunion right now. But here is the shortcut, why worry about what you cannot have and lets look what you might have a decent shot at getting - why are you getting this line of credit in the first place and what this LOC can do for you that a business credit cannot?

Cool thing about small business credit cards are that they dont report on personal credit. A very aggressive company that I have found pretty flexible in the past is Advanta in giving new, small businesses credit cards. Get one, use it once you start doing deals and build your credit limit up. Donot use it for your personal expenses and be very disciplined about it.

Home Depot and Lowes are another good sources that you will use in your real estate businesses. Get them now if you dont have them. They usually start you off with a small $1500 limit but after six months of usage (they will only give you in your personal name) you can transfer them in your corporation name.

Posted by Mark Ijlal at 07:02 PM | Permalink | Comments (1)

Very interesting article in Detroit News today about metro Detroit’s home prices dropping first time since 1993. Job losses and excess inventory in some suburbs is to be blamed for the dip. Sellers are being forced to drop prices and the market is becoming a buyer’s dream.

I have beating this drum for the last 6 months to everybody in my coaching group that this is becoming fast the hottest market to be a real estate investor. You can negotiate more, banks are taking a beating on all price points and for sale by owners nutcases are realizing that they cannot ask whatever they fancy from buyers.

Now what is the deal side of the equation – most sellers are having a hard time selling homes because they are pricing their homes correctly – they are dropping prices but that does not help most buyers in the real world – a better strategy would be to give aggressive seller concessions / down payment assistance to make the house “best on the block” without wasting any money on renovations thinking a new kitchen (that adds another couple of thousand dollars to your cost of the house) will move the house faster.

Posted by Mark Ijlal at 10:09 AM | Permalink | Comments (0)

If you have already subscribed to the newsletter on the right hand side, do nothing. You will automatically get the username and password in your email next week. It is the same opt-in as the newsletter although for the next 3 days it will say Foreclosure Website Access because I have all these people on my other email contacts and I just send them an email informing them of the launch.

Jeevan, I hope this answeres your question.

Posted by Mark Ijlal at 11:22 AM | Permalink | Comments (0)

The best way to get a hold of me is via this journal. Post comments on what you like and better still dont like. I believe in systems of gradual improvement. I am not perfect [well that is not a correct statement. :-) ]

The workshop is over. Next event is a monster 3 day in January, details to be posted soon. So I have three months of breathing room so i will make sure that I will daily entries in this journal. Finish Foreclosure Secrets series that many people have emailed me for.
Please dont think that I dont want to reply to your personal emails sent to my wealthbuidlergroup address. I have a young daughter (six days), very demanding wife and a 2 year old terrifying toddler. Add my real estate business and very ambitious coaching group and my days look very short. Oh, and my book is coming out in December.

So if you want my 100% attention, post a comment here on a topic that irkes your curiousity and think about this way - if you have a question about real estate, foreclosures etc, this will help all the other visitors of the site also. It works out for everyone.

Posted by Mark Ijlal at 10:06 PM | Permalink | Comments (11)

That is me, exhausted after being up all night, holding my newborn daughter, yet to named (Mckenzie, Sage, Lola???), born this morning.
We both wanted another daughter and now we got our wish. The hardest part is explaing this to Hailey who has been insisting for six months that she is getting a brother. Oh well!

Posted by Mark Ijlal at 12:06 PM | Permalink | Comments (2)

I talk fast - that is coming from Nora. So just in case somebody missed couple of sites that I talked about tonights calls:

www.buybankhomes.com is a great resource for identifying realtors who are active in the REO markets. Nationwide site.

www.bargain.com Although i am not a big fan of subscription sites but if for some reason you cannot find anything on www.buybankhomes.com , this is next site I would grudgingly pay the fee to search for top dog realtors. Although on a personal level, i would not keep the subscription beyond the first month. Nationwide site.

www.mcbreo.com is a California based auction company, dealing in Michigan and some other states specializing in HUD (VA and FHA) foreclosures. Althoug not a nationwide company, if your State is not one of them that they operate in - try to use Google to find a compnay similiar to that.

Check the real estate section of your metro newspaper on Sunday - HUD auctions are usually held online nowdays and somebody has to be advertising them. Then you can identify the realtors and hammer them into giving you REO's.

Posted by Mark Ijlal at 10:50 PM | Permalink | Comments (0)

There is a fine line between being persistent and being stubborn. Most of the times I cant see the line. But I know one thing about doing real estate is that Murphy’s Law is in full effect – all day and every day.

I think it was Brain Tracy who said it is not what happened to us but rather how we react to it that makes us who we are.

Truth is that I have no idea where the line is drawn but I know one thing and I think I have known it for a while in my heart but never put to words till I heard Ron Legrand say it in his own unique style – he said that he is never know anybody that has made a whole lot of money and not has lost a lot of money doing it too.

Truth of matter is that you will screw up – hell I screw up all the time – but here is the big thing that separates men from boys, ladies from girls – in my universe – one is note the mistake and most of the time is painful to do that. To look in the mirror and admit that I am wrong is not fun.

Second is to make your mistakes as quickly as possible so the bleeding is quick, relatively painless and the lessons learned are helpful in future successes.

Real estate investment at a level that I am doing right now is a good lesson in living. You can make mucho money – you can loose mucho money. You have to manage your time otherwise you will be working 90 hours per week, hating yourself and your life. You have to let failure (uh, it does happens you know!) bother you that much that it paralyzes you.

And most of all, to understand the faster you do your first deal – the closer you are to your fifth deal and so on.

The hard part is getting in the morning and not to wait for Jan 1st and make your move.

I don’t write my new year resolutions on Jan 1.

Rather in October 31st so I have 60 day head start on my goals. And believe me I am not a goal-lover. But what can you do? The rules are you want to play the game, you gotta have goals.

Next: My mentors and what to do when you have none!

Posted by Mark Ijlal at 10:36 PM | Permalink | Comments (0)

Hold on – what happened to the whole No Money Down thing – I mean every single late night infomercial is talking about doing the real estate investment thing without having any money.

This is the way I look at it – and forget the hype: you don’t need to have your own money necessarily to buy and sell real estate but you definitely need access to some sort of money sources that will fund your deals or your possible deals without hesitation.

Couples of big huge sources that I have used in the past and still use it till this day are:

1. Business lines of credit (unsecured)
2. Private investors
3. Hard money lenders
4. Home equity line of credit on personal residence.
5. Traditional mortgages.
6. Business (not personal) Credit Cards

Lets look at each one of them one by one and how to get some of them to start working for you in the next couple of posts:

Business lines of credit are one of the most overlooked forms of cheap money. This is how they work – they are unsecured meaning you don’t have to pledge any collateral like your house, the new house you are about to buy, your car or any personal belonging. A good analogy would be buying a car on sign and drive.

You walk into a dealership, sign your name and they give you the keys. It is pretty much the same here. The way they qualify you for this is all based on your credit. Bad news is that unless you have devious amount of credit titled in your favor – FICO 680 and above, they will give you a polite smile and that is pretty much it.

On the other hand if you have some monstrous amounts of credit – 700 and above – all you have to do is fill out a simple one-page application and you get an approval and a checkbook in the next 72 hours. I had one business line of credit in exactly 24 hours.

Now here are the insider tricks of making sure that you get approved:

One for God’s sake doesn’t start ranting about your foreclosure deals to your banker. Bankers hate real estate speculation and people who do them. Look I am not asking you to lay but you are signing on the dotted line with 100% personal responsibility to pay it back. The line of credit is unsecured and it is in your business name but you sign, it is given to your personal credit and if you ever end up defaulting on it, they will come after you.

Nice thing about an unsecured line of credit is that it does not report on your personal credit unlike a home equity line of credit. So you can get two or three of them and none of them is going to show on your personal credit – pulling your FICO scored down because of over credit exposure.

So this is my logic behind it – since I am signing for it and my neck is on the block then my banker has no right to tell me what to do with the money. Heck if I want to go and buy a house for couple of thousand dollars on cash by using this line of credit then why not?

And I have done this in the past and present – but bankers are cautious by nature and this is the stuff that was told to me by a Senior Vice President when I was filling out my application.

And that is pretty much there is to it. Don’t go raving about foreclosures and REO’s.

Another thing is to understand is how much to ask for – temptation is to ask for as much as you can. But that is the biggest mistake you can make. First of all anything over $35,000 – you will be asked for 2-year tax returns – showing a profit. Also and this is the biggie – you will be asked provide collateral – house, car, stocks, machinery etc – as collateral for the loan! Yuck!

If you have that in your possession – well for you. Most new real and seasoned real estate investors will not have that. But if you ask for less than $35,000 then the decision to give you the line of credit is solely based on your personal credit.

And here is the good news – most banks make the decision based on ONE credit score usually Transunion – and not three credit scores like they do for mortgages.

Good banks with easy programs are National City, Standard Federal, and American Express.

Coming Up Next: Private Investors

Action Steps For Geting Business Line Of Credit:
So if you want to get some lines of credit in your business name, this is what you need to do:

1. You need to have a corporation - LLC or S Corporation - does not matter. You can form the corporation yourself or use one of the many online servcies providing the service for a charge. In Michigan you can call my office to and for a hideously high fee (just kidding) we can form and LLC plus get you the EIN number etc. Theresa is wonderful in getting this stuff done right away.

2. Go to the banks listed above and ask for the Small Business Under $35,000 Line of credit. Here are the links for the following banks:
National City
American Express Small Business

3. Before you apply for a business line of credit - know your FICO. You can get a paid FICO report at MyFICO.com. Look at your score. Anything less than 680, perferably more than 720 - you have a good chance.

4. Complete the form - all they need from you is copy of a driver license, Articles of Incorporation stamped by your State coprorate divsion when you formed your LLC or S-Corp.

4 Drop the application back at your bank.

5. If you get approved, they will ask you to open a bank account with them so they can auto debit the interest / principal every month from them. Nothing major-i opened my first account with $50 and they were o.k with that.

Very Important: If you pull big sums of money out for your real estate business out of your line of credit - make sure that your checking account have sufficient funds all the time - couple of hundred dollars at least to cover the monthly autodebit.

Posted by Mark Ijlal at 09:53 PM | Permalink | Comments (3)