When it comes to buying real estate and placing tenant buyers, everything rides on the art of the deal. The key is to come up with a plan that will provide an extra incentive for your lenders to fund the purchase of the property. In some cases, the lenders are looking for money to come in on a regular basis in order to make up for their cash flow problems.
I have a specific way I like to handle lenders that want monthly payments. I will pay ten percent interest if the lender will accept monthly payments, 12 percent if they accrue. And anything at the level of $50,000 and above will earn 15 percent interest. As a result, I can easily beat the competition, which may be offering only six or eight percent.
It's best if you keep track of everything on computer. Computerizing records streamlines the buying and selling process, enabling documents to be handled in a timely and efficient manner. It's good, for instance, to have a closing list, which details all the closings that are coming up, pending, or have been completed recently. You should also distinguish among cash or equity trust money or IRA money. Since there's a high volume of properties and lenders, you need a document to keep everything straight. It's a visual reminder of what's going on.
At first, some individuals may be leery of relying on computers for their business. They may be used to old-fashioned ledgers and file cabinets brimming with paper. But times have changed, and computers are the most efficient, effective means of maintaining records. Without computers, the modern real estate industry would surely be lost.
It's also a good idea to keep in close contact with your private lenders. For instance, you might consider sending Christmas cards to them. You want your relationship to be a win/win proposition for both you and the investor.
Fortunately, my company does not need any more private lenders. I already have more than enough! Obviously, that's a great position to be in. It speaks to the integrity of the company, that it is able to earn the respect of a wide variety of lenders. And those relationships remain strong throughout the years.
The art of the deal can be complicated at times. But, once you've gained some valuable experience, it may simply become second nature. You'll find that securing properties becomes easier and easier-and more lucrative as well.
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