Investment Funding Questions...

MrNightly

This may not be the best place to ask this, and I may get some heat from people who only sit and invest in safe things... so all that aside I have a couple questions. I just finished reading Rich Dad, Poor Dad and totally loved it. I have already invested in 1 rental property and have had the desire for a while to pick up a couple more. The economy is perfect for this too at a reduced price no less so I have a goal of getting at least 2 this year!

How does one go about getting loans but not from the bank? I would only need downpayments I assume for some of these types of properties. I have spoken with a couple of lenders and my credit is excellent blah blah blah.. but the DTI is always gonna be high with multiple rental properties. It's not impossible to get another (this would be my 3rd loan.. 1 for primary and 1 for rented rental) but I get a worse and worse rate for the investment properties and they want a minimum of 10% down.

Is there such a thing as safe private lending? Tax Liens in your favor? The inside tricks that very few actually do? Does anybody here have experience with this sort of things?

Obviously, if I had a rich uncle, I would go to him and ask for 10k or whatever... but I don't. How do people pull this money together to invest in multiple properties without going thru a bank/lender? Do I just need to live on beans and rice to save money from my daily job to start building my assets up properly?

Any info on this would be appreciated. If you don't feel like sharing in public, just send me a PM.

Thanks and I will keep searching for answers myself too... just wanted to throw this out here. I bought 3 new books on investing and will get my learn on with those as well... Exciting times I think!

shack

There will not be much out there in the way of "private" lenders.

What you may be able to find are "partners". There is a real downside to this avenue as well since not all partners have the same expectations and goals. It is a definitely a balancing act. I would suggest that you save your money and invest accordingly once you have the necessary capital. A lot of the issues and problems with the economy today can be traced to too much leverage (borrowing to invest).

MrNightly

shack wrote: »

There will not be much out there in the way of "private" lenders.

What you may be able to find are "partners". There is a real downside to this avenue as well since not all partners have the same expectations and goals. It is a definitely a balancing act. I would suggest that you save your money and invest accordingly once you have the necessary capital. A lot of the issues and problems with the economy today can be traced to too much leverage (borrowing to invest).

Solid Advice... which I have been following obviously. There just seems to be so much more that can be attained with money than solely thru banks. (No offense Shack, as you are a tried and true bank guy... ) Maybe I am off, I will keep reading and learning on the topic.

Thanks!

Dennis Gardner

Robert Kiyosaki along with the "Flip This House" fever/mentality put a ton of people in trouble when the bubble busted due to green investors not understanding that markets go up and down. Real estate can be a great investment and now is one of the better times we have had in many years to buy into it. Just remember that in real estate the money is made at the buy, not the sale. Savvy investors will look at dozens, even hundreds of properties before they find one that can't lose.

shack

MrNightly wrote:

There just seems to be so much more that can be attained with money than solely thru banks.

You're right...its called cash. What I am telling you is that there is no magic source of money. You can either borrow it from a bank, relative (dumb thing to do), or a private lender (even dumber) or you can get investors to put up cash as partners, stockholders or equity holders. If you choose the latter, they will want a portion of the profits in relationship to the amount you put up vs what they put up. If you need a $10,000 cash downpayment to purchase a property...the investor puts up $9,000 and you put up $1,000, the investor will want the lions share of any profit. He is taking all the risk. Don't think that just because you "find" the property that makes you equal to share in the profits. Additionally, if I'm a 90% investor, I'm calling most of the shots and really don't need you.

There are lots of books that will tell you how to invest and find investors. Most of it is myth. Also the dynamic of investing has changed drastically. Many who the books tell you to go after as investors...aren't in a position to part with their cash right now.

Bottom line. Get as much cash together as possible, use that cash to invest (but don't totally leverage it as you need reserves). Make your profit and go to the next one. As you build more capital, you can make more investments. Slow and steady may not be sexy or allow you to get rich quick...but it will allow you to build some real assets and wealth...over time...if you do it right.

dudeinaroom

you can

MrNightly

shack wrote: »

You're right...its called cash. What I am telling you is that there is no magic source of money. You can either borrow it from a bank, relative (dumb thing to do), or a private lender (even dumber) or you can get investors to put up cash as partners, stockholders or equity holders. If you choose the latter, they will want a portion of the profits in relationship to the amount you put up vs what they put up. If you need a $10,000 cash downpayment to purchase a property...the investor puts up $9,000 and you put up $1,000, the investor will want the lions share of any profit. He is taking all the risk. Don't think that just because you "find" the property that makes you equal to share in the profits. Additionally, if I'm a 90% investor, I'm calling most of the shots and really don't need you.

There are lots of books that will tell you how to invest and find investors. Most of it is myth. Also the dynamic of investing has changed drastically. Many who the books tell you to go after as investors...aren't in a position to part with their cash right now.

Bottom line. Get as much cash together as possible, use that cash to invest (but don't totally leverage it as you need reserves). Make your profit and go to the next one. As you build more capital, you can make more investments. Slow and steady may not be sexy or allow you to get rich quick...but it will allow you to build some real assets and wealth...over time...if you do it right.

Too notch! I am not looking for get rich quick at all, just wanted to make sure I was exploring all possible methods for this type of investment.

I am currently debt free except my house, so saving up for a few more months isn't a bad idea, I just didn't want to miss the boat if I didn't have to. I am still pretty young and just really learning the ropes. I think I am doing good with one rental already, just feel its time to move up to another.

As also said, the investment starts with the buy not the sell I know that! Not trying to flip anything either but grab some quality places, that I put sweat equity into, and have renters pay for my tax shelters as well as long term assets for me to manage.

Hobbyguy

I understand how the investment starts at the buy not the sell, but as stated by Dennis "the money is made at the buy not the sell"...how is this possible?

shack

Hobbyguy wrote:

I understand how the investment starts at the buy not the sell, but as stated by Dennis "the money is made at the buy not the sell"...how is this possible?

More of a philosophy than a fact. You will make money on an investment if you buy it "right" in the very beginning. Meaning the right investment at the right price at the right time. You don't literally make the money at the buy...but if you buy it right...a return on your investment is determined from the start (how much is a variable...but some return is certain).

Dennis Gardner

Hobbyguy wrote: »

I understand how the investment starts at the buy not the sell, but as stated by Dennis "the money is made at the buy not the sell"...how is this possible?

Basically, too many people emotionalize the purchase of real estate and buy because they fell in love with the property or it just "felt" right. This causes way too many to jump too quick and overpay for it. The potential profit is lost with the purchase price. Investment properties should always remain simply investments, not a labor of love.

SKsolutions

It depends on what you are doing with it. Business is business, and numbers are what they are, . . but if the property does nothing for you, it won't lease well, or it's not worth developing. Being non-emotional isn't about having no feeling, it is about not chasing it, and knowing when it's worth walking away from. If it's just numbers, buy the crappiest house in the middle of the highway. . . see what kind of tenants you eventually get, how often you rotate them and chase them for rent, and how quickly you can't wait to take a loss for it. It's not worth it. If you know your product, know your numbers, know your potential buyers/lessors, then the property won't end up owning you.

-For sales, quite a few sellers with a good equity cushion will take back paper at this point. YMMV.