Real Estate Investors: Why Private Money is the #1 Option for Financing Your Investments

There are so many misunderstandings related with private money lending for real estate investors. In fact, most real estate investor do not understand or participate in private money because they do not understand what it is or how to get started. There is a long a history of private money lenders investing their own money in real estate investments. Like many things, private money comes and goes depending largely on interest rates and the demand from real estate investors and other investors.

Traditional lenders always gave loans based on two things: collateral and your personal pledge to repay. Lenders wanted to lend to about 70% to 80% of the assets values (collateral) and wanted you to be trust worthy based that on your credit score and salary.  Private money is different in that the loan is almost entirely based on the collateral and not your personal pledge to repay. This does not mean private lenders do not do some background checking and if you have a history of not repaying things it is unlikely you will be participating in the private lender market.

The definition of a private lender is an individual that you can negotiate directly with on a personal basis to borrow money for real estate investments. The money can be used to purchase rental real estate investments or to supplement funds borrowed from a bank to cover down payments.

Private money became very popular as interest rates on tradition Money Markets and CD's dropped below 5%.  Entrepreneurs and other people with extra cash started looking for higher interest rates (north of 12%). If they could get the high interest rate and enough security (collateral) they were willing to do loans without personal credit or the need to be worried about credit scores. That started the revolution that you see today where private money lenders are as big and popular as hard money lenders were 10 years ago.

This trend toward private money will remain as long as traditional interest remain low and traditional mortgage and hard money remains hard to get.

Finding private money is not nearly as difficult as people think. We utilize a number of low key person to person marketing techniques to attract potential lenders. However, I strongly urge you not to use any large public sources of advertising, such as Craig's List, or you may get a call from the SEC and you do not want that.

Here’s how it works …first, you do some simple marketing to find individuals interested in earning 9% to 15% interest on investments secured by local real estate. You will find these prospects everywhere. They belong to your local real estate investor clubs, church’s, civic clubs, parent organizations, friends, family or even neighbors.

You will be surprised how easy you’ll locate them and soon, they will be searching you out. Just let everyone know that you pay high rates of interest for loans that are secured by local real estate.

As prospects express interest, you explain that the investments are secured by local real estate and do not exceed 75% of the after repair value of each home. Each investment is based on a specific property, and they can decline any property which they are not comfortable with. All you require is that they approve quickly and can fund within 7 to 10 days.

I invite you to learn more about Private Money and become a member of our FREE weekly tele-seminar class where we teach tips and strategy on how to grow your real estate investing business and how to raise Private Money by going to http://www.realestatewealthtoday.com/TuesdayTipsSignUp.html.

Mike Lautensack is a full-time real estate entrepreneur, coach and mentor in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE eBook go to Real Estate Investing Blog.

Residential Property Management - The Important of Money Management and Record Keeping

Many investors are surprised to find out how much money management is actually involved with residential property management.  Once the right property in the perfect location is selected, many investors believe all they have left to do is collect the monthly rent check from their tenants and then wait for their investment to mature.  What the true reality is, there are deposits, bookkeeping, income and expense reports and complete financial records necessary for year-end tax purposes.  These overly time consuming but necessary functions can all be efficiently handled by a professional property manager. 

Residential property managers become involved with the financial management aspect in order to assist their investors with better management of the overall investment.  For example, an investor may be awaiting the monthly rent payment from their tenants, but a property manager would be able to readily assess and bill the tenant for any added fees for items such as late payments or non-sufficient funds.

Keeping the Records 

A professional residential property management firm can help to maintain detailed records that will be helpful for annual tax purposes.  There are also a number of local and state financial regulations that a residential property manager would be able to assist to be sure you are in compliance with, removing this complicated and time consuming process from the investor.

An investor will also appreciate timely reporting on income incurred on the property or expense reports for necessary repair items.  A residential property management company can also provide investors with access to market information to help insure the rental price is current with other similar properties and also to help assess the right time to sell.

A residential property management company can assist an investor with adequately managing the bookkeeping of the rental property. These details initially appear relatively simple but after a few late rental payments, incomplete paperwork required by a tax accountant and multiple repair bills- balancing the cost of the investment becomes critical in determining the overall profit.

Mike Lautensack is the owner of Del Val Property Management LLC, a FULL service residential property management company located in Philadelphia, PA.

Mike advises real estate investors how to build wealth and financial security through hassle-free ownership of investment real estate with their "Total Property Management Program". This proven management system allows owners to enjoy the financial benefits of cash flow, tax savings, and wealth creation while it GUARANTEES you will never receive a late night emergency call, deal with a lengthy eviction proceeding or ever have to interact with an irate tenant. To inquire about our services, or get a FREE estimate, please visit http://www.delvalproperty.com

Discover Why a New Real Estate Investor Should Hire a Professional Property Manager

I have a confession to make… you see; when I first started out in real estate investing I didn’t do everything on my own.  I had a little secret that most people do not understand.  In fact, most people make this mistake over and over again and never even realize how much this same mistake is costing them.

Let me explain, most beginner and intermediate real estate investors do all the work themselves.  This includes finding tenants, credit checks, signing leases, maintenance, tenant relationship, rent collection, evictions, accounting, routine inspections and all of the other 100's of things a property owner must do to keep their real estate investments profitable. Seems like a lot doesn’t it?  That’s because it is!

If you are an experience real estate investor you quickly learn that the tenant stuff is a lot of work and not very profitable.  The real money in this business is finding new profitable deals and arranging good financing not collecting rent and doing maintenance. 

So the secret that most new real estate investors do not know is hiring a professional property manager and letting them handle the 100's of tenant issues will free your time to focus on new deals and financing.

By hiring a professional property manager to oversee your properties you can rest assure that all of the tenant activities will be attended to and your property and tenant will be managed in a way that protects your property and keeps it value as high as possible. 

I was able to learn this early on it saved me from making many costly mistakes.  By hiring a professional property manager I was able to see how they marketed for new tenants, how they collected rent and occasional went to court, how they did the accounting and financial record keeping, and how they managed difficult tenants.  All of these issues I could have learned by making own mistakes several times and then learned how to do it right by “trial and error”.  But this is costly way to learn.  It is far better for the new real estate investor to hire a professional property manager and learn from how they handle these issues.

You may want to eventually manage your own properties but in the early years you should hire a property manager and learn how they do things first. Then after you have seen how it is done you can self manage with a sense experience.

I will also say that tenants are very good at sensing when someone is inexperienced at property management and I assure you they will take advantage of that inexperience to your determent.  Tenant will test you to see if you will give them some breaks or if you do not know the local landlord laws.  This is also why a professional property manager can help you establish some experience and the ability to stand up to tough tenants.

Your goal as a real estate investor is to create long-lasting PASSIVE income for yourself.  Passive income means that you should be earning income from your investments with little to no effort on your behalf.  Managing your own properties is not passive income.

Stop wasting your efforts and let a professional property manager oversee your property investments and focus your time on finding new properties and your real estate investment business.