The Real Estate Investment Blog

A plurality of investors - for the first time ever - say they would rather put new investment money in a bank savings account than in the stock market or in real estate. This marks a dramatic change over the past year in response to worsening conditions on Wall Street and other troubling economic factors.

Properties score a perfect 10 here. You only have to work once to acquire the property. Thereafter the property will continue working for you forever, as long as you keep it.

If you've tried getting a conventional loan recently, you may have ran into this brand new roadblock. Fannie and Freddie have implemented a new guideline for conventional real-estate loans. They limit you to a maximum of 4 total properties. The moment you go to finance that 5th property you smash into their new brick wall.

Piggybacking on my last post, “The Importance of Being Nimble“, I’d like to blog today about something that is absolutely critical to your ongoing investing success: raising capital.

In my opinion, it is a skill you must develop.

Must.

Not should.

Must.

Once you become very very good at raising capital, any amount of capital, you can accomplish anything.

Start any business. Buy any asset/investment. Build a nonprofit. Run a political campaign. Anything.

Get my point?

OK, now to the ‘how’.

This blog may disappoint some of you because raising capital is actually not a science. It’s an art. And you won’t become an expert by reading this blog. But, I hope it will open your eyes to a few things.

First of all, here are some ground rules.

Rule # 1: GET OFF THE COMPUTER! You cannot raise capital in chatrooms and forums. You have to get outside and network and mingle and talk to people. In person. Find common interests. Love golf or tennis? Join a high end country club. Get involved in charities. Like poker? Get the point? This is especially true for those of us among the ‘younger’ set.

Rule # 2: Relationships. Relationships. Relationships. Relationships. Relationships FIRST.

GIVE first. Focus on the RELATIONSHIP first. You will be engaging with very wealthy people who get hit up all the time for donations, investment opportunities, etc. They can invest with anyone. Why you? Why your deals? You don’t want to be one of those people looking for a hand out. You want to be a friend who also happens to have some good deals from time to time. Take your time. I sometimes know people for over a year before I even bring up a specific deal (after I’ve played tennis with them several times a week, gone to poker night after poker night, went to their parties and vice versa, hung out with their families and vice versa, etc …. they know what I do and most of the time actually end up asking ME if I have anything for them … “I don’t know, John, let me see if you’d qualify”).

This will help you: (a) establish trust and (b) learn more about their personality/demeanor, investment criteria, financial profile, and snap shot of current cash position (the last thing you want to do is put the wrong investment in front of the wrong investor).

Rule # 3: See rule #2.

Rule # 4: You still have to have a GREAT deal. You can have a strong relationship, but you ultimately want to establish a reputation for yourself as someone who deals happen to just follow around wherever you go. You’re a deal magnet. And you work hard to attract those deals and vet them before spending any of your investors’ time and money.

Rule # 5: See rule #2.

Rule # 6: You are not a salesperson. There is no SELLING involved here. After you have a great relationship and a great deal, either the investor will be interested in seeing a presentation or they won’t. If not, just leave it alone. They’re missing out, but just leave it alone. After all, you are not SELLING investors, you are SORTING through investors.

Finally, you must communicate with your investors once they’ve invested with you. You must
keep them informed, briefly and concisely, that you’re working hard on their investment to ensure their return materializes.

So, this should be enough to get you started. Work hard at building relationships first. Consistently bring great opportunities and don’t be bashful about asking for interest (and referrals once they’ve invested and have become cheerleaders of your deal).

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Simple Rules for Raising Capital

Exit Realty, a fast growing major real estate franchise, grows their agent base via recruiting by current agents. Since agents sponsor other agents, there is said to be a more supportive environment, as they want to see those they sponsored succeed and prosper. Residual payments for those agents sponsored creates a corporate culture focused on recruiting.

A very popular method for real estate farming is the postcard real estate marketing. With a properly maintained mailing list, regular mailings and follow-up, this method can be highly effective at building business in an area for the real estate agent. Real estate post card farming has always been highly effective if done well.

A step by step instructional with images that will teach a real estate agent how to customize their contact view in MS Outlook 2003. In this tutorial, we'll build a custom Buyer field to store the type of property in which they are interested.

When working with buyers, knowing the market is critical. Market changes are reflected in the "hot sheet", or recent activity report provided to real estate agents by their MLS software. It should be a daily activity for agents to check expired, withdrawn, sold, and new listings, as well as price changes. Real estate buyer agents have a duty to stay informed.

Subagency refers to a relationship between the listing and the selling agents in a real estate transaction.

In the 800 series of items on the HUD-1 Settlement Statement, there is an item for "Loan Discount." This is a fee, usually expressed as a percentage or points on the loan that is paid by the Buyer to "buy down" the interest rate. In other words, the buyer might pay 1 point or 1% of the loan amount to buy down the interest rate an eighth of a percent for lower payments over the life of the loan.