Want Private Money For Real Estate? Know The 5 Key Secrets

Private money is the Holy Grail for Real Estate Investors in these challenging economic times.With banks stiffening credit guidelines and limiting their loans to only 70% to 80% of the property's purchase price, private money lenders are needed to fill the gap.

And even for the subject to investors, they may get a "free house", but the funding for rehab, minor fix up, holding costs (while trying to get a buyer or tenant), etc.demands private money, unless they want to rapidly deplete their own bank accounts-and that's not a sustainable business model

As for rehabbers, it used to be that they could tap in hard money private loans for 60-70% LTV from hard money lenders.

Now, even hard money lenders are looking more closely at credit, and the real estate investor had better have private lender funds for back up, in case he goes over budget or needs money for interest payments.

There is clearly enormous wealth-building potential with real estate investors able to pick up properties for $0.20 to $0.50 on the dollar from desperate homeowner and lending institutions needing to unload hundreds or thousands of REO's.All one needs is the money!

So, how can we find these private investors?And more importantly, how does one convince these potential private investors to make a private investment of $10,000's or $100,000's in your real estate project?

Now, if you want to raise a lot of private money, you have to be speaking to High Net Worth individuals with $millions in assets and the desire to invest it in a new venture.Whether these people are friends and family or whether they are accredited investors or Angel investors that you may not know, they share some common attitudes about money and investing.

So, if one understands the private investor's attitudes, and can enter that conversation, the only thing left to do is to ask for the check and start putting that private investment to work.

There are 5 Key Secrets the real estate investor needs to learn and understand, if he or she wants to be successful in borrowing private money for real estate.My colleague Bob, uses these secrets to buy nice homes in bulk (10 at a time), and turn them over for 6 figure profits.Simply put, without utilizing these 5 key secrets, no catchy phrase or elevator speech is going to bring the desired success.

Remember, private lenders are not motivated like homeowner about to lose their house.Nothing bad happens if the private lender doesn't invest his money.

So here are the 5 key secrets:

1) WIIFM
2) The 2 ROI's
3) Risk-Reward
4) Credibility
5) Trust

Here's what they mean:

WIIFM stands for "What's In It For Me?

" A private money lender is going to expect an extraordinary return on his/her investment compared to their other options.And the story, to put it bluntly must excite the private investor's "greed glands".

The 2 ROI's: As Will Rogers once said, "I am much more concerned with the Return OF my Investment, than I am the Return ON my investment.The private lender needs to have confidence in your exit strategy that will get his money back when promised.

Risk-Reward: Private Lenders of money got to be wealthy by being very careful about the amount of risk they would accept for any investment.So, unless you structure your private offering so that the risk is acceptably low relative to the reward, your chances of getting the money will be slim.

Credibility - this is a stumbling block for many real estate investors as they struggle to answer the private money lender's question: "why should I invest in you?" And here is the great secret: It's not about you, it's about your business!Learn how to structure your business so that it brings you credibility even if you have little real estate experience.

Trust - Ultimately, if you want that private money, your private lender must feel that you can be trusted to do what you say.With friends and family, one may have a head start on this.With private money lenders who have a more distant relationship, you must invest the time into building that trust.

About the Author

We help real estate investors find Private Money

Lenders to fund million dollar private mortgage investments in their real estate deals (in business 10 years).

Go To www.InvestorWealth.com

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Choosing Between Fixed Or Adjustable Rate Mortgage

One of the most important decisions a homeowner will have to make when deciding to re-finance their home is whether they want to refinance with a fixed mortgage, an adjustable rate mortgage ARM or a hybrid loan which combines the two options.

The names are pretty much self explanatory but basically a fixed rate mortgage is a mortgage where the interest rate remains constant and an ARM is a mortgage where the interest rate varies.

The amount the interest rate varies is usually tied to an index such as the prime index. Additionally there are usually clauses which prevent the interest rate from rising or dropping dramatically during a specific period of time. This safety clause provides protection for both the homeowner and the lender.

Advantages of a Fixed Option
A fixed re-financing option is ideal for homeowners also accepted credit who are able to lock in a favored comment rate. For these homeowners the thought rate they are able to retain makes it worthwhile for the homeowner to re-finance at the new notification rate.

The major benefit to this make of re-financing alternatives is stability. Homeowners who re-finance also a fixed mortgage rate do not have to be involved near to how their payments may rework throughout the road of the loan episode.

Disadvantages of a Fixed Selection
Although the aptitude to lock in a favored comment rate is an advantage it can still be imagined a disadvantage. This is given that homeowners who re-finance to purchase a fortunate notification rate will not be able to hold advantage of succeeding awareness rate drops until they re-finance once more in the consequent. This will consequence in the homeowner incurring additional polishing off charges when they re-finance over again.

Advantages of an ARM Possibility
An ARM re-finance choice is favorable in situations where the notice rate is supposed to sag in the close succeeding. Homeowners who are skillful at predicting trends in the economy and information tolls may consider re-financing also an ARM if they expect the rates to plunge throughout the course of the loan time. Other than, notice rates are fixed to a quantity of a lot of issues and may arise abruptly at any time despite the extrapolate by industry experts.

A homeowner who can predict the consequent could be able to decide whether or not an ARM is the recommended re-financing choice. Save for, since this is not that you can think of homeowners tolerate to either rely on their instincts and consolation for the befitting or prefer a less dangerous choice such as a intent attention rate.

Disadvantages of an ARM Option
The most plain disadvantage to an ARM re-financing alternative is that the mind rate may arise a great deal and hastily. In these situations the homeowner may rapidly find them paying substantially spare each month to compensate for the higher attention rates.

When this is a disadvantage, there are a couple elements of psychoanalysis for both the homeowner and the lender. This all the time comes in the class of a clause in the language of the deposits which impedes the awareness rate loves personality raised or lowered by a sure fraction above a defined age of age.

Believe a Hybrid Re-Financing Alternative
Homeowners who are uncertain and search out agreed aspects of intent rate mortgages as nonetheless as definite aspects of ARMs to be adorable could agree a hybrid re-financing alternative.

A hybrid loans is one which combines both intent attention taxes and adjustable hint charges. This is often achieved by bestowing a focused briefing rate for an introductory episode and afterward converting the mortgage to an ARM. In this alternative, lenders normally furnish introductory announcement taxes which are remarkably attractive to call homeowners to pick this selection.

A hybrid loan may still book in the opposite way by bestowing an ARM for a agreed sum of episode and afterward converting the mortgage to a concentrating rate mortgage. This version can be rather dangerous as the homeowner may dig up the admonition taxes at the assumption of the introductory phase are not fortunate to the homeowner.


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