It’s Too Bad… (A Hard Look at Why Some Deals Fail)

- - Borrowing, Getting Started

It’s too bad so many people don’t succeed at getting funding and successfully profiting on a deal.

It’s not that the process is impossible, many people just tend to “go for it” without considering what they could do to improve their success rate.

I tend to talk a lot about what NOT to do in Real Estate Investing. Sometimes, it seems like I speak more on this subject than what you SHOULD do (but logically, I don’t). I’m truly looking out for your best interest when I make these posts, because no matter how much training I offer over at The Lee Arnold System of Real Estate, and no matter how many articles I post about the subject of best investing practices, there’s always a way to help you improve.

Unfortunately, private money mistakes are common. The sad truth is that some people will never get funding because they don’t know what they need to succeed. Others may receive funding on a deal, only for the property plan fall apart along the way

These are the top 3 reasons you either won’t find financing or you won’t make money on your deal.

3. They believe approval is contingent upon their personal financial history, therefore never structuring the deal right or even taking the leap to look for funding.

MONEY FOLLOWS DEALS!

The thing that matters most in private money lending is that you have a good deal. But I understand the confusion. Let’s run a scenario:
(This is what most people believe happens)

You: Hey! Can you lend me $100,000?

Lender: For what?

You: I’d like to find a property to flip.

Lender: Have I lent to you before? Do you have a history with me? How much experience do you have? Do you have the expertise needed to find a good property? How much money do you have to put down?

Yeah. That’s not the way it works. If you’re going to turn to a private money lender for a loan option, this is how you SHOULD expect it to go

You: Hey! Can you lend me $100,000?

Lender: For what?

You: I have this great deal! Here is the address, the lot size, the bed/bath count, comparable surrounding sales and the after repair value (ARV), and here is the profit margin. And (most importantly), here is the contract with my explicit, contractual right to purchase this property with the amount of money I need to borrow.

Lender: Great! We have something to move forward on. Let’s get started on the process.

2. They don’t understand the importance of the 70% rule.

If you aren’t getting funding, math may be the reason. I can’t tell you how many times I’ve heard, “But I got the property for WAY less than the ARV/asking price/appraised price. Why won’t you fund my deal?”

It comes down to a simple equation.

You don’t make money when you sell a flipped property, you make money when you buy it. You need to purchase a property right, or you’re already on the wrong foot. So, how do you determine how much to off on a property in order to make money on it? The formula is easy!

Take the ARV (after repair value of the property, i.e. the retail value), multiply it by 70%, and subtract the cost of repairs. Whatever is left is your MAO (maximum allowable offer).

Let’s say you want to put an offer in on a property that has an ARV of $200,000. Take $200,000 x 70% = $140,000. If the renovations will cost $40,000 (get several estimates by licensed and bonded contractors), that’s $140,000 – $40,000, which = $100,000. The maximum amount of money you should offer on this property is $100,000, and if you can get it for less, you’ll make more!

So, $200,000 (ARV) x 70% = $140,000

$140,000 – $40,000 (rehab cost) = $100,00 (MAO)

It depends on the deal and your history with investing, but you can expect to get funding between 60% and 70% of the ARV.

1. They lack the education on how to structure a deal.

It’s truly a shame when people let a potentially profitable flip turn sour because they miss managed the project. Think about it. You spent a weekend at an event, learn the basics, find a property that is ~60% of the ARV, get it under contract, secure funding through Cogo Capital (or another private money lender), only to pour month-after-month into the mismanagement of the rehab because you jumped in too soon.

Should you have avoided the deal because you didn’t have enough education?

No.

Becoming a Certified Rehab Specialist doesn’t take year’s worth of education or the student loans of an average bachelor’s degree (that’s an average of $5,750-$15,680 per year for four years, and that’s after average scholarships, grants, and student aid). No, a certification through The Lee Arnold System of Real Estate won’t cost you that by a long shot.

In fact, we’re running a limited-time special NOW, giving you $1,000 off. CLICK HERE to learn more.

If you don’t know what you’re doing, the best place to start is by cozying up to someone who does. Not only will a good education, mentor, or coach save you a lot of unnecessary time, cost, and headache, you will learn faster and turn a profit sooner.

Whether you want to expand your investing business by getting your Certification in Private Money Brokering, become your city’s GO-TO investor to snatch up properties for pennies on the dollar by becoming a Certified Lien Abatement Specialist, or you want to make sure you are flipping houses like the pros from day one by becoming a Certified Rehabber, you aren’t going to get a deal like this on such a pivotal moment in your career for long.

 

 

 

 

 

 

 

 

Or, call 800-533-1622 today to speak for your FREE educational consultation and to see what the Lee Arnold team can do for you.

 

 

 

 

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

Follow me on Twitter: @CogoCapital and @LeeArnoldSystem

Have a deal under contract that you would like a quote on? Let us know. You can fill out a quick questionnaire at CogoCapital.com to receive a rate quote via email or you can call us anytime at (800) 747-1104 to talk to a loan officer. With millions deployed and millions to deploy, we want you to get the capital you need for your real estate investing.

Image result for trustpilot 5 stars

Timothy just left a new 5-star review of Lee Arnold System of Real Estate Investing:

I would highly recommend this company to all first time investors that I come across that seek funding. I enjoyed the entire team that was out in Milwaukee to train those of us in attendance.

Gary Meyers and Jarrod done a wonderful job during this weekend. I really enjoyed the bus tour to the properties in South Milwaukee. Secondly, it’s a faith based company and this is very rare in the business and I see that God has blessed and will continue to bless those around Lee Arnold.

This is an education company as far as Real estate, training and funding. I wish I had met these guys a little earlier before I actually invested with the other companies which I won’t name. I am currently in debt to the tune of $100K due to the other companies. If I known what I know now, I could have bought 10 homes and be on my way to financial freedom.

I would like to thank the entire team that was in Milwaukee for the weekend for a wonderful experience and I hope that we meet again.

Starting Simple

Don’t Overcomplicate Investing (Until You’ve Performed the Basics)

Starting Simple Will Better Serve You

 

Working and investing in Real Estate holds the designation of being two things:

1- A pursuit where you can all too easily get in over your head (keeping it simple helps to avoid that) and;
2- A pursuit where creative thinking and unconventional strategies (NOT keeping it simple) can pay off big time!

So exists a dichotomy between keeping your deals simple and creatively complicating your deals for maximum returns.

I recently had a series of conversations with a student where she had become confused and overwhelmed by the amount of information she was studying. She had read and studied information from a bunch of different programs and was trying to pull together a strategy from all of them. Her “a-little-of-this-and-a-little-of-that” approach was taking her in too many different directions. She was not keeping it simple.

Now, I’m not saying you shouldn’t study other material and I’m certainly not saying that you shouldn’t get creative in your deals. You should–eventually. But, if you’re working on putting together one of your first deals, stick with the basics. You’ll get to a point where you’re ready to get creative. For now, a concerted focus on getting some momentum with a few easy deals will serve you well.

What’s the difference between simple deals and complicated deals?

Let’s take a look at an example of lining up a wholesale deal. In this scenario, you;

1) Enter a contract with the seller where you’re the buyer.

2) The price is negotiated. Once you have an approved price, you;

3) assign the deal to someone else–simple.

 

OR…

Contrast that with one where you pursue a short sale using multiple methods.

1) At the same time that you enter a contract, you also get a deed to the property (just in case the seller gets cold feet).

2) Then you get an authorization letter for someone to talk with the bank;

3) plus you get a Power of Attorney (just in case something happens later on that you can’t control).

4) Then, before sending information to the bank, you heard somewhere that if you take all kinds of pictures of the property, it might help.

5) And don’t forget that you can influence the BPO by being at the property at the same time.

6) Plus, you almost forgot that if the bank doesn’t accept the short sale, you might want to take the property “subject to” so you go back to the seller to get another contract.

7) And, you heard on a CD somewhere that getting an option on the property gives you a lot more control with not much risk, so you might as well throw one of those in as well.

Before long you’ve exhausted the whole real estate encyclopedia on this one deal.

There is nothing wrong with those steps. You may be in a position someday when you would do every single thing on that list. But not when you’re putting together one of your first deals. You’ll be challenged enough with just the basics. Over time, you can creatively manipulate deals for maximum returns.

The moral is: Don’t overwhelm yourself by doing too much too soon. Go out and make some money the easy way. It might not be as much as you could make from that deal but, if you overcomplicate it, you’ll lose the deal entirely. Making something is always better than making nothing. The earlier you can see that the better off you’ll be!

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

Follow me on Twitter: @CogoCapital  and @LeeArnoldSystem 

Have a deal under contract that you would like a quote on? Let us know. You can fill out a quick questionnaire at CogoCapital.com to receive a rate quote via email or you can call us anytime at (800) 747-1104 to talk to a loan officer. With millions deployed and millions to deploy, we want you to get the capital you need for your real estate investing.

When you come to Cogo Capital® looking for a private money loan on a property under contract, we’ll assure you have quick turnaround, excellent terms, and millions to lend. Cogo Capital® serves both local and national real estate investors, real estate agents, and private money lenders in quality, multiple loans.

Interested in learning more about Real Estate Investing but don’t know where to start?

Have you gone to FundingTour.com yet? Find an event near you to dive into a crash course of real estate investing AND get the funding you need to start your first project. See what people are saying about our Funding Tours by clicking the link HERE

4 Mistakes to Avoid When Investing in Real Estate

I love making mistakes. (Well, sort of.) Why?

First, mistakes mean I’m trying something new, and good things often come from stretching myself. Second, every mistake I have made, I’ve turned into a learning opportunity so that YOU can avoid the same misled path and can make up the money where I’ve lost it in the past.

We all make misguided choices, often with the best of intentions. And we shouldn’t jump into every opportunity expecting to just make a bunch of mistakes. Not only is that going to keep us from taking advantage of good opportunities because we think we’ll fail, but it’s exhausting financially, physically, and emotionally when our mistakes outweigh our victories.

We should be educated on the work we intend to perform, guided to prevent unnecessary loss, and mentored to make as much profit as possible until we become masters at our craft.

Even though errors are inevitable and not entirely unavoidable, we can minimize our risk by learning from those who have made big blunders already. Because you know what I love more than making a mistake that I can learn from? Doing it right the first time and making more money. Maybe that’s just me…

If you want to avoid losing money by making mistakes that are easily avoidable, then let’s jump into a few mistakes to avoid in your real estate investing business.

#1 – Giving Too Much Money to Your Contractor Upfront

What happens with many contractors is they take the money you paid them for your project, scramble to finish the other project they’re working on with YOUR money with the plan of using their paycheck from that job to pay for yours. Then, if they miscalculate their efforts at the job they’re finishing up (on your dime), they could be there for another month. Or, if they don’t get paid enough or on time for the previous job, then they don’t have the finances to start yours.

Your contractor, as it typically happens, could end up behind schedule and asking you for more money when they haven’t done anything to begin with!

When you receive funding for the rehab costs of your investment property and follow the draw system under which Cogo Capital operates, it can sometimes feel like an unnecessary hassle to prove that work is being done incrementally in order to get the next draw and keep the project moving. I get it. But this due diligence process has been put in place to protect you from being ripped off and losing money.

Don’t get “ahead of the money” by forking over so much that you’re at risk of loss because your finances are now in someone else’s hands.

#2 – Not Making an Offer

You can’t close a house with words. More than anything else, real estate is a business that is done with black ink on white paper.

When you pass someone a written offer (or anything else in writing, for that matter), you are handing them your intentions. They can then take that information home, digest the dates and numbers on the page, live with it and understand what those numbers will mean in their lives and in their situation, and it becomes real to them. Your offer creates a vacuum in their life, especially if the seller has no other offers on the table at the moment, and they often feel like they have no choice but to accept it (or, at least counter).

Call me old-fashioned, but whenever possible, you should hand deliver a physical piece of paper to the seller with your offer. Email has its place and is convenient and often necessary in our fast-paced world. But a piece of paper will take up real estate on that person’s desk (or counter or kitchen table or the dash of their car), making it less unavoidable than an email.

Carve out and make space in that person’s life for you. It’s the same with marketing material. And if you need a refresher on why we still send snail mail and how it can give you a leg-up in today’s world, <<CLICK HERE>>

For more on why you should offer on every house you look at, <<CLICK HERE>>

#3 – Not Getting Non-Refundable Deposits

If you’re assembling a wholesale deal and you’ve found a buyer for the property that is willing to pay more for the property than you have it under contract for, and you don’t require a non-refundable deposit, you run the risk of the buyer not closing and your deal stalling out. This is especially true if you’re still under contract with the seller of that property to you while you “assign” a buyer (the end buyer in your wholesale deal). That original seller has you under contract and therefore under the pressure of a stopwatch, and if you have a buyer who walks away from the deal, you could be out, too.

Control your buyer with a non-refundable deposit to lock them in, because most people don’t want to walk away from $1,000 (or however much you require). Then, if there is a problem and the deal falls apart, you have the deposit to cover the time you’ve spent on that buyer who fell through and can still sell the property to someone else if time allows.

When you have cash buyers, you should focus on your “posture” within the conversation and require specific things to keep them true to their word. When you’re new to investing, it can be so easy to become compliant with what others ask for (or demand) because you feel like they probably know better than you. But if the interested party is truly a cash buyer and not a tire kicker, they should have no problem giving you earnest money for the deal.

#4 – Being Scared to Talk to People

There are ways to work around your natural timidity, but you should make a conscious effort to get out of your self-limiting shyness.

Tell me if this sounds familiar: You break out of your comfort zone to attend a REI meeting in your area to connect with other real estate investors and professionals, only to be so intimidated by the caliber of education in the room and the confident people in suits who seem to have it all together that you barely talk and you don’t make any connections.

First of all, great job for showing up! Keep doing that and you’ll slowly break out of your shell.

Second, get uncomfortable and introduce yourself. I’ve purchased and sold some of the highest-profiting deals by just asking people if they know anyone who is selling a house. Just because you aren’t the smartest person in the room–and that’s a good thing, because if you are, you’re in the wrong room!–you can still make connections that could lead you toward a successful deal (or ten).

And as a bonus, if you keep attending, you will meet people who are beginning just like you. You could build a strong relationship with someone that could turn into a potential partnership, you could meet an accountability partner, or you could help someone else avoid a mistake that could cost them time and money. And that’s all worth it in my book.

Open mouth, open business.

What mistakes would you like to avoid? What mistakes have you made that have kept you on the fence about doing another deal? If you need guidance and support, we’re here to help! Call us today at (800) 473-6051, and we can connect you with the tools, coaching, and education you need to get and stay on the right track (and to keep moving forward because you know what they say… even if you’re on the right track, if you’re not moving, you’ll get run over).

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

Follow me on Twitter: @CogoCapital  and @LeeArnoldSystem 

Have a deal under contract that you would like a quote on? Let us know. You can fill out a quick questionnaire at CogoCapital.com to receive a rate quote via email or you can call us anytime at (800) 747-1104 to talk to a loan officer. With millions deployed and millions to deploy, we want you to get the capital you need for your real estate investing.

Entry Strategy

- - Borrowing

 

What’s in a name?

We’ve discussed exit strategy, process, acquisitions, and many things in between. Let’s talk about entry strategy, specifically the name

There are as many answers to the question of entry strategy as there are options to purchasing real estate. There is flexibility in mixing business and personal, the purpose of the property, interest rates, and taxes. Let’s focus on the name under which you should purchase a house to fix and flip so you can maintain better control over your exit strategy.

Why does your exit strategy determine your entry strategy?

If you are buying a property with the intent purpose to flip it, buy it under an LLC.

If you’re buying with the intention to hold the property–meaning you’re going to borrow hard money as a short-term bridge, fix the property, and refinance in your name to then hold long-term, then finance it in your own name.

If you’re going to bring in a credit partner–someone who has a great credit score and will qualify for a refinance–then you will finance it in their name.

Why is this important, and how does it affect your exit strategy? If you buy it under an LLC and determine that you can’t sell it or flip it, then have to refinance it and hold it long-term, here’s what happens;

– You bought it as an LLC,
– You then need to deed it to yourself to get financing,
– You then deed it out of yourself and back into the LLC for asset protection,
– All of this results in a clouded title.

If you’re going to sell that now to an end-user buyer, they’re going to have a hard time getting financing because you’ve clouded the title and made getting a loan nearly impossible without 8, 10, or even 16 months of seasoning.

Guess who has to cover all those costs.

You.

Let’s get you in and out as soon as you can to turn a good profit, and onto the next property. Don’t get stuck with a financially draining property because you didn’t plan for an exit strategy.

That’s why your entry strategy for a property–under whose name you purchase the property–is important. As always, talk to your lender about your options and requirements. Questions about financing? Call Cogo Capital at (800) 747-1104 to talk about terms.

As a full-service Private Money lender for real estate investors, we do most of the leg-work for you, while you build up your real estate portfolio and cash-flow all your deals. Whether it’s for wholesale, rehab, or buy and hold for long-term cash investment deals, Cogo Capital delivers fast and easy access to Private Money. We’re an equity-based lender which means we care more about the property’s merits, and don’t focus on poor credit, or some of the other factors conventional lenders use to rate the risk.

We offer a full service Private Money platform that will help you through your entire deal from application to closing. You don’t have to make any awkward phone calls to strangers for funds or worry about drafting documents, the HUD 1 statement, or pulling title.

Whether you need fix and flip loans, a rehab ARV loan, or a cash-out refinance, just fill out the quick and easy application above and we’ll be on the way to getting your deal funded. After reviewing your application, and provided your property is under contract, we’ll contact you for the rest of the information.

Cogo Capital offers quick turnaround, excellent terms, and millions to lend. Cogo Capital serves both local and national real estate investors, real estate agents, and private money lenders in quality, multiple loans.

Author: Lee Arnold not only teaches real estate investors how to successfully invest in real estate but he also regularly invests in the local Spokane market using funds from Cogo Capital. He and his team buy distressed properties and turn them into flagship homes, attracting new buyers and money into the local economy.

Not only does he do this in the local community, but he also helps many communities throughout the nation. With a comprehensive educational program and a private capital network, Lee instructs thousands of people every year on how to safely and wisely invest in real estate. He then gives both new and seasoned investors road maps to invest, and the funds necessary to purchase and rehab properties in communities all over the country.

 

Partnering with an Agent


How To Find An Agent For Your Rehab Investments

If you do not have your real estate license (you probably know by now that I recommend you hang your sign with me at Keller Williams if you’re a real estate investor, but that’s a blog for another time), you must find a quality agent who can get you as many listings as possible, fitting your rather unusual criteria, perceiving a minuscule commission rate from your bargain, and… they are thrilled about it.

What a dream team.

You can find and keep an agent like this for a long time, and it can be a mutually beneficial relationship. But you just need to take some burden off your agent and clearly relay your minimal expectations.

What Should Your Agent Do?

Since you will be looking at so many houses and making few deals, you only want your agent to send you listings (daily) and submit your offers.  That’s all. Don’t make them driving you all over town, pull comps on every home you are interested in, or present offers when you aren’t really ready to move forward. You should know how to do all of this, and your participation will take the edge off their (frequent) work with you as well as keep you involved in what you must be involved in.

A rare showing or comp pulling is okay, but only if you can’t gather the information on your own.

What Should You Do?

When looking for an agent, it helps to share the following:

  • Be honest about your experience; how many houses you have flipped?
  • Tell them you are a real estate investor looking for x number of houses to buy per x amount of time (i.e.3-4 houses every 6 months).
  • Tell them you do not expect them to show you the houses, only to make your offers.
  • Tell them how many offers you are probably making per month in order to get X number accepted.
  • Bring up how most banks pay agents a minimum commission (versus percentage) so your agent can still expect decent money- which you want them to have.
  • Finally, iterate, highlight, and say it with conviction, “I highly value your time and won’t waste it.”

Consideration equals loyalty.

You want to find an agent you can stick with so live up to your promises and expectations.  If you find an agent that is ready to jump on board with the above acknowledged, you are in business.

If you need help getting a private money loan in your backyard, visit  us at www.CogoCapital.com or call a loan officer today at (800) 473-6051Cogo Capital® offers quick turnaround, excellent terms, and millions to lend. Cogo Capital® serves both local and national real estate investors, real estate agents, and private money lenders in quality, multiple loans.

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

Follow me on Twitter: @CogoCapital  and @LeeArnoldSystem 

Have a deal under contract that you would like a quote on? Let us know. You can fill out a quick questionnaire at CogoCapital.com to receive a rate quote via email or you can call us anytime at (800) 747-1104 to talk to a loan officer. With millions deployed and millions to deploy, we want you to get the capital you need for your real estate investing.

Finding the Ugliest Houses for Your Next Fix and Flip

When you’re just starting in real estate investing, it can be daunting to consider the entirety of your home town (or nearest urban area). But it doesn’t have to be. You can get started by simply getting to know your neighborhood better!

Real estate investing has an equation.  Like any bit of “mastery” where the general populace thinks “easy” but never gets close enough to try (because really, where to begin?), real estate bargain hunting is an art (sales/negotiation) and a formula (the piece of the equation we will be discussing in this blog post).

How To Farm Your Neighborhood For The Ugliest, Most Perfect Fix and Flip Investment

Part of doing your first deal right (so you maximize your profit, minimize your upfront costs) is educating yourself about your market.  Too many in real estate are proactive and experienced for you to disregard qualifying yourself and extending your local knowledge.  The following information will give you a solid foundation to build upon until you get in your groove and can assess a property’s value without even seeing it.

Drive the Area

Spend a few weeks looking around at homes in the area.  Look at their construction, learn the average prices.  KNOW YOUR MARKET.

Attend Open Houses

When you visit open houses on the weekend, you get a chance to network with the real estate agents (have you partnered with one yet?)  and owners (bring your business cards-word of mouth referrals are the most powerful).  You will become familiar with the typical architecture, pricing and property features in the neighborhood.  You will better understand property values and house styles.

Find Vacant and Ugly Properties

When you are driving around, look for places with no window shades, newspaper piled up, garbage, overgrown grass, etc.  If you are unsure whether a property is vacant, knock on the door.  Ask the owner if he is interested in selling, and if he is not the owner (rental property), ask for the owner’s number.

Get In Touch with AWOL Owners

If you find a vacant property, ask neighbors if they know the owner.  Usually, they will be helpful because ugly houses hurt their home’s property value.  You can also ask the mailman (ask for forwarding address), and if you still have no luck, leave a business card.  When you get home, look up the owner’s address and name.  Call your local tax assessor’s office or by looking up the recorded deed filed with County land records.

Other public databases include infousa.com which will search through the Driver’s License Bureau and the Department of Motor Vehicles.

Look for Tagged Properties

Some areas will “tag” a house that has code violations.  These violations often reflect the vacant or neglected property.  You can ask your city for a list of tagged properties or find out where it is publicly recorded.


When you spend the first few weeks educating yourself, it will pay off in significant savings (and headache).  Save the extra money for rehab (that’s a substantial and surprising enough investment in itself).  And if you play all your cards right (plus you’re lucky), you’ll save that big payoff for your efforts… and inspiration.

If you need help getting a private money loan in your backyard, visit  us at www.CogoCapital.com or call a loan officer today at (800) 473-6051Cogo Capital® offers quick turnaround, excellent terms, and millions to lend. Cogo Capital® serves both local and national real estate investors, real estate agents, and private money lenders in quality, multiple loans.

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

Follow me on Twitter: @CogoCapital  and @LeeArnoldSystem 

Have a deal under contract that you would like a quote on? Let us know. You can fill out a quick questionnaire at CogoCapital.com to receive a rate quote via email or you can call us anytime at (800) 747-1104 to talk to a loan officer. With millions deployed and millions to deploy, we want you to get the capital you need for your real estate investing.

Best Investing Neighborhoods

Do you know the best place to invest in real estate?

No matter where you are in the country, you’re near a prime location. And you don’t need an in depth analysis to give you a radius of quality investing homes and neighborhoods near you.

With all the potential real estate in your city, county, and state (and the whole of the country) you may be tempted to invest in a market with which you’re unfamiliar. Perhaps you’ve recently traveled to a FUNDING TOUR and though the town was out of your normal area, you found some quality looking investment properties on the bus tour and are tempted to put in an offer.

Although experienced investors spread their wings a little further, I rarely recommend it and don’t invest outside of my county, no matter what deals students bring to me.

But, if you want to be successful faster, you really shouldn’t go further than the area in which you live.

If you use the 25-mile radius rule of thumb, you’ll save time, money, and headache.

Here are my top reasons why the real estate in the 25-mile radius around your home or place of work will make you millionaire faster than trecking all over the country will.

Don’t get me wrong, Cogo Capital will fund anywhere you need funding. (For more on locations and states where Cogo Capital funds real estate, visit us at https://cogocapital.com/ or call a loan officer today at  (800) 473-6051.) But you need to make a decision about the radius and locations you will invest in, and remain consistent to your commitment to reap the following benefits.


  1. You won’t waste time, money, and resources on the road. Driving all over is clunky, it doesn’t make sense, and it takes too much effort for too little profit. If you spend your time driving from place-to-place, you have less time to spend managing a flip, listing a wholesale, or selling a rehabbed home. You’ll have a car with a lot of miles and a workload you can’t manage. (I recommend saving those miles on your rig for a family trip this summer!)
  1. You’ll save yourself potential headaches. Take it from someone who had to drive over an hour in the middle of the night to attend to an emergency. Being in proximity to your property means that if you need to be there fast, you can.
  1. You’ll be an expert. It takes a while to get to know all the neighborhoods in a 25-mile radius, but if you can spend your time learning the nuances of the streets, the school districts, the demographics, and (most importantly) the comps in those neighborhoods, you’ll be better at your game.


  1. You have less to cover when driving for dollars. Don’t tell me there aren’t deals around you. Even if you’ve driven every single street in the 25-mile radius, by the time you’re done, there could be an abandoned house on the street you started on!
  1. You’ll build your network faster. If you stay in your area, you’ll get to know contractors, subcontractors, wholesalers, and real estate agents quicker and better. You’ll have those extra subs in your back pocket to call when the one you’ve hired no shows for the job. You’ll build your team faster and with less trial and error.
  1. You’ll know how to buy. This is the most important reason because you make money when you buy, not when you sell! Spend the time in your area meeting wholesalers, responding to bandit signs, putting out your own bandit signs, searching for abandoned houses, researching auction houses, considering listings on the MLS.
  1. Less Taxes to file. Unless that’s your thing; filing taxes in 7 states because that’s where all your properties were. I like to streamline my business better than that.

Confine your area and you’ll maximize your business. Remember the term, there are riches in niches? This goes for your location, too.


If you need help getting a private money loan in your backyard, visit  us at www.CogoCapital.com or call a loan officer today at (800) 473-6051Cogo Capital® offers quick turnaround, excellent terms, and millions to lend. Cogo Capital® serves both local and national real estate investors, real estate agents, and private money lenders in quality, multiple loans.

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

Follow me on Twitter: @CogoCapital  and @LeeArnoldSystem 

Have a deal under contract that you would like a quote on? Let us know. You can fill out a quick questionnaire at CogoCapital.com to receive a rate quote via email or you can call us anytime at (800) 747-1104 to talk to a loan officer. With millions deployed and millions to deploy, we want you to get the capital you need for your real estate investing.

Does Your Offer Have Teeth?

 

Are you able to properly present an offer on a property, without wavering or back peddling?

If you struggle to make offers on real estate, either out of timidity, uncertainty, or naivety, then rest assured. I can train you to have better results.

Broad offers with little to no direction or education lack more than conviction. You must be presenting three-tiered offers that are appropriate to the situation and property in question; offers that will benefit the seller, allow enough room to make a profit, and result in a gain after being sold quickly on the retail market. And I can train you on how to do just that (stay tuned for contact information if you’re interested in learning more).

But, for argument’s sake, let’s say you have your offers right. You’ve stacked and tiered your offer appropriately, but can’t seem to put anything under contract.

How you SOUND when presenting an offer or connecting with a homeowner could have more weight than you think.

When you present an offer to a homeowner, does your delivery establish the image you want (the knowledgeable, confident persona that will ultimately get you a signature) and reinforce your offer, or will your delivery undermine your offer?

When speaking with owners of distressed properties, there are nuances to the conversations that you should take to heart and form into your habits and behavior. Let’s discuss a few.


YOUR TONE

If you have a homeowner who is motivated to sell and interested in your offer, but you say something that doesn’t sit well with them (we all do it eventually), there are two ways you can respond.

Let’s say they’re offended by your offer (as they should be sometimes; if they’re delighted by if then you probably offered too much). They immediately fly off the handle, berating you for offering such a disrespectful amount. How do you respond?

1) “What are you TALKING about?! That’s the BEST offer you’re going to get! You need to calm down and look at the numbers, and then you’ll THANK me for offering so much!”

or

2) “I understand you’re shocked by the numbers I’ve presented. Perhaps we can better discuss what your goals are because if you want more money, the sale of this property could be delayed significantly, in which case, it might not be in our best interest to work together. Tell me again why you want to sell this property so quickly?”

#1 adds fuel to the fire (or at best, they’ll suggest you switch to decaf) where #2 gives you back the control and maintains that the important thing is that you connect on a resolution that will benefit you both.


“Define what your brand stands for,
its core values and tone of voice,
and then communicate consistently in those terms.”

Simon Mainwaring


BE SPECIFIC AND HONEST

If you go into a conversation with an owner of a distressed home and start making outlandish promises that have nothing to do with your true mission statement, it’s going to be obvious. Even if you can sell water to a drowning man, you won’t get far with a false mentality.

Let’s say you begin discussing the sale of a distressed home with an out of state homeowner who wants to dump a duplex fast. If you go into the conversation promising how it’s your passion to reinvent the community when that isn’t true for you but you believe it’ll give your offer “an edge” over the competition, then your dishonest promises could eventually surface and give you a bad name. AND the homeowner might not care because they just want fast money for their property, anyway. Especially if there is a claim of passion without supporting evidence, the result of which could be compromised credibility.

If you’re honest about your intentions (without disclosing things you aren’t comfortable sharing) and specific about your plan, then your words have more gravity.


“My parents taught me honesty,
truth, compassion, kindness
and how to care for people.
Also, they encouraged me to take risks,
to boldly go.
They taught me that the greatest
danger in life is
not taking the adventure.”

Brian Blessed


DON’T JUST TRUST YOUR VERBAL CUES

If you meeting someone in person to present an offer, your nonverbal cues count for just as much as your words. You should express the same gravitas with your eye contact, firm handshake, and hand gestures as you do with the language you speak.

Whether you know it or not, most people [uninfluenced by drugs or alcohol] can correctly identify the sincerity and power of a person by their body language. If you’re dishonest or attempt to skirt around questions simply because you don’t know the answer, then your behavior will eventually be recognized.

Go back to the basics here. Offer a firm handshake; look people in the eye and address them as Sir, Ma’am, or Mr. Jones, not “Hey Jim”; nod occasionally when people speak to assure them that you’re listening.

Maybe you’ll find there are exceptions to these old rules, depending on your area, demographics, and/or existing relationship with the seller. But if you’re at a loss on where to start, I recommend the basic forms of etiquette and practice. Who you are in the “real world” will reflect who you are in business transactions. Strive to be your own personal best every time.


“I have no contracts
with my clients;
just a handshake
is enough.”

Irving Paul Lazar

(We suggest you have contracts.)


YOUR WORDS

If it’s true that 55% of the recipient’s understanding of a conversation happens on the nonverbal level (i.e., you’re judged more on your body language than your words), then it’s enticing to attempt to master your facial expressions more than your investing knowledge.

I would never recommend that a firm handshake and sincere eyes trumps a factual understanding of the necessary processes. Though it’s important to be aware of how you appear to others during business transactions, what you say and present is vital.

Your knowledge of the content of which you speak is what makes you a leader in the conversation. You know why you’re offering what you are, you understand the process that will take place once a house is under contract, you know the end result where the seller doesn’t. You must explain and express as much as you feel necessary and be available to answer questions as they are asked.

Don’t let this be daunting. If done enough (and if you’re following my Rule of 56, you’re making plenty of offers to be well-practiced on your verbiage), then you will eventually know the answers to all the potential questions people ask. I’ve spoken to thousands of sellers and a question has yet to shock me. Well, unless you consider that one time where the inquiry consisted of my tolerance of the property being used as a burial ground…

For more on understanding the necessary steps to the process of property acquisitions, visit www.LeeArnold.com or call NOW to speak with our team at (800) 473-6051. You must understand enough about investing to answer the basic questions homeowners ask. And if you don’t, it behooves you to find the answers first. We can help with that.


“Any fool can know.
The point is to understand.” 

Albert Einstein


Whether you know it or not, life is a series of presentations. Just ask Kim Dower and Tony Jeary who wrote the book “Life Is a Series of Presentations: 8 Ways to Punch Up Your People Skills at Work, at Home, Anytime, Anywhere.”

The way you speak has just as much if not more power than the words you say and put into writing.

Now, does this mean you need to be self-conscious about every interaction you have in your business? Absolutely not; especially since we all have so much room to grow…


“Without continual growth and progress,

such words as improvement,

achievement, and success have no meaning.”

Benjamin Franklin


…But you should be aware of the way you speak to people, how you interact on the phone and in writing, and make adjustments where necessary to drastically improve your interactions.

The question, at this point might be, “Lee, why are you going into all this? If I’m writing good offers, isn’t it just a numbers game? The more interactions I have and the more offers I give, the more properties I’ll gain control over, right?”

You can look at it that way, and it might not hurt you.

But I’m in the business of helping investors make the most out of their investing skills, time, energy, and efforts. If I can help you improve one aspect of one process, it’s not only going to improve your results (purchasing more homes to wholesale or fix-and-flip), it’s going to set you up for future success in your investing business.

I want you to succeed so you can email me and say, “Lee, that really worked! One small shift and I got a house under contract!” Then, I want to fund that deal!

If you need help with your delivery, let us know. You could qualify for a 30 minutes free call with a Business Development Consultant. Simply call (800) 473-6051 to schedule your consultation today.

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

Follow me on Twitter: @CogoCapital  and @LeeArnoldSystem 

Have a deal under contract that you would like a quote on? Let us know. You can fill out a quick questionnaire at CogoCapital.com to receive a rate quote via email or you can call us anytime at (800) 747-1104 to talk to a loan officer. With millions deployed and millions to deploy, we want you to get the capital you need for your real estate investing.

When you come to Cogo Capital® looking for a private money loan on a property under contract, we’ll assure you have quick turnaround, excellent terms, and millions to lend. Cogo Capital® serves both local and national real estate investors, real estate agents, and private money lenders in quality, multiple loans.

Financing Q&A

It’s time for another Q&A, and once again I’m excited.

I receive frequent questions about financing. I’d rather get the same question a thousand times than never have you ask. But though engagement is key, I love when I get the opportunity to disclose a few answers, to the more regularly asked questions.


Q- Do I have to be educated by The Lee Arnold System of Real Estate Investing to get funding from Cogo Capital?

A- No.

You can apply for and receive up to 90% of value on the property even if you’ve never even been to a Funding Tour.

Now, it’s true that you can get better rates and more funding by being a student or having been a student of the system, but it isn’t required. Unlike banks, who review and lend based on the borrower’s credit and the shape of the property, Cogo Capital is a private money lender who look at the appraised value, the borrower’s experience, the equity in the property, and the exit strategy.

However, we do understand that if you know what you’re doing and you’ve received a quality education on what you’re doing, then you are less of a risk, and part of lending is risk analysis.


Q- How does Cogo Capital work, and how do I get started?

A- Great question; it’s easy!

A real estate investor (you) identifies a great real estate deal in a good equity position.

Once you have the deal under contract, start by filling out an easy one page application, which you can view at www.cogocapital.com.

Cogo Capital then reviews the application and contacts the real estate investor for additional information. Cogo Capital then researches, reviews, and assembles all the due diligence items, which includes title insurance and a third party appraisal.

Secured Investment Corp provides the loan package to a select lender’s network. One of the lenders who likes the parameters agrees to lend on the deal. Secured Investment Corp then works with the select lender to wire funds to an outside escrow agent who prepares closing documents which are sent to a closing agent.

The loan is closed, and Secured Investment Corp sets up serving payments. Borrower (you) makes monthly interest payments into the serving company who then pays the lender. You pay off the loan, and we do it all over again!


Q- I’ve heard it said that equity is wasted money. Is this true in real estate investing and why?

A- Equity comes with limits.

If you own properties with significant equity in them, and you know for a fact that you cannot leverage or borrow any more money against them, you should consider selling them because the equity is tied up.

It’s trapped and it does you no good just sitting there.

Equity is one of worst investments. You can’t spend equity. When you come to me at an event and say, “Hey, Lee, I have a powerful real estate portfolio. I’ve got a million dollars in equity,” my advice to you is sell every single one of those properties that make up that million and take all of the cash from those sales and go buy a larger piece of property with higher incomes and higher cash loads and income potential. In doing so, you get the full value and benefit of the entire million dollars from a standpoint of leverage. The 1031 exchange allows you to put all of the proceeds from the sale towards the down payment of the larger asset. It’s a much better strategy than just sitting on all that equity.

As an example: If you have a piece of property that has $50,000 or more in equity and you discover that you can’t get a line of credit against it, there’s nothing you can do with the equity except let it sit there. Consider putting that property up for sale, doing a 1031 exchange, and now using a hundred percent of that equity as down payment into a larger, higher-income producing asset class, like a duplex, triplex, four-plex, commercial building, or car wash, and just keep rolling that money.


Q- Should I “go big or go home” and pursue the biggest properties to flip first? Then, I would have all the income I need for smaller real estate investing!

A- It’s an ambitious goal, one that would likely result in what I call “Ambitious Procrastination.”

This is what happens to people when their aspirations are so high that it becomes a “someday” scenario 99% of the time. And you know what they say about “someday”… that’s right; it never comes.

But, let’s argue that you actually can perform this feat (going from Zero to Giant, fast), here’s why you shouldn’t:

You do yourself a tremendous disservice when you pursue properties that are in the jumbo category because only jumbo lenders can participate in this segment of the market, which represents approximately 4% of investors.

Now if you pursue properties where your retail price does not exceed the FHA cap for your area, you’re more likely to get funding and more likely to easily find an end buyer. You can research the FHA cap for your ZIP code or your county (Google provides excellent answers). For example in my market, the FHA cap is about $285,000. Because of this, I avoid buying any property where the retail exit exceeds $285,000. I know that 80 percent of the buyers that I’m going to be marketing to are going to be getting a FHA or other government-backed loan.

I don’t want to price myself out of the majority audience of buyers so I’m going to buy below the FHA cap and then know, without a shadow of a doubt, how to renovate the property so that it conforms to FHA underwriting. If you don’t know what the FHA underwriting guidelines are, again, Google FHA guidelines for renovations on and repair on a resell.

Certain things have to be done with the property to qualify it for an FHA loan. I use private money to acquire real estate that does not qualify, and then through renovations on and repair, I make sure it qualifies for the end retail buyer. Also, unlike banks’ funding, which must meet agency (Fannie, Freddie, FHA) requirements; private lenders do not need to meet these requirements. It is completely at their discretion on where to deploy their capital.


If you have a question that you don’t see an answer to, you can find out quickly and easily by calling the following numbers:

Have a question about the Lee Arnold System or Real Estate Investing, upcoming events, educational training, or coaching? CALL a Business Development Consultant today at: (800) 473-6051

Have a question about Cogo Capital, applying for a loan, the loan process, or any terms associated? CALL a Loan Officer at: (800) 747-1104

We’re here to answer your questions and get you connected with the information you need to make educated decisions about your investing career. If you don’t ask, we can’t answer; so let us help!

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

Follow me on Twitter: @CogoCapital  and @LeeArnoldSystem 

Have a deal under contract that you would like a quote on? Let us know. You can fill out a quick questionnaire at CogoCapital.com to receive a rate quote via email or you can call us anytime at (800) 747-1104 to talk to a loan officer. With millions deployed and millions to deploy, we want you to get the capital you need for your real estate investing.

When you come to Cogo Capital® looking for a private money loan on a property under contract, we’ll assure you have quick turnaround, excellent terms, and millions to lend. Cogo Capital® serves both local and national real estate investors, real estate agents, and private money lenders in quality, multiple loans.

Ask Yourself This Question

 

If you want to simplify hard money and almost guarantee that every deal you bring in will get funded, ask yourself this one question:

“If I were the lender, would I lend money on this deal?”

If you look at a deal and critically think whether or not you would accrue the risk involved, you can better understand if it’s worth lending on said deal.

Now, that might seem too simple, and if you don’t understand how funding works, the question isn’t going to do you any good. But, if you understand how to make sense of the numbers, and if you know what constitutes a good deal, then you’re more likely to make sense of why a deal isn’t getting approved.

Don’t get disillusioned by lending. Understand the makeup of a deal worth lending on.

That being said, let’s help you identify what constitutes a good deal.

First, you want to have a deal that is HIGH YIELD and LOW RISK.

How do you calculate this?

You need several numbers in front of you; the purchase price, the estimated repair costs, the ARV (after repair value) and the maximum percentage of the ARV a lender will give you for the project. This could be 55%, 65%, or other. So, if you have found a house that has an ARV of $100,000 and the purchase price is $70,000, that’s 70% of the ARV and you aren’t going to get a loan to cover the full amount let alone the repair costs. 70 cents on the dollar looks like a good deal until you factor in repair and holding costs.

Start with the final selling price and work backward to deduct the selling cost, profit margin, renovation cost, and buying costs. Don’t forget to factor in holding costs and margin for error. You figure out your MAO (maximum allowed offer) by first determining the ARV of a house.

Though you don’t need a background in real estate to flip a house, you do need to make sure that the time and money you are investing (whether the money is yours or a lender’s like at Cogo Capital) is well spent and maximized.

Fix and flip education teaches you:

  • How to find funding
  • How to find, negotiate and close a great deal
  • Which materials are trending
  • Which high price items are worth the investment
  • Which materials can be low-cost
  • How to hire contractors for the lowest cost
  • How to manage contractors to meet timelines
  • How to market your property
  • How to yield the highest profit
  • And much more

Essentially, getting an education in the field minimizes your risk and maximizes your profit potential. You’ll go into the industry confident and knowing what to do, when to do it, and why.

If you’re interested in getting started, be sure to check out the Cogo Capital Funded “FUNDING TOUR.” Click Here for more information and to see if we’re coming to a city near you!


To learn more

about determining the 

VALUE of a Property, CLICK HERE


Hard money works like this; say you need $100,000 for 6-12 months for the residential housing market (or 18-36 months, as commonly found in the commercial sector). A lender could charge you 5 points, which is $5,000, and you’ll also pay interest monthly.

$100,000 @ 5 points ($5,000) + 15% interest payment is going to run you $20k (I’m using simple, noncompounded numbers here for this example). That’s $20,000 spent for the $100,000 over the duration of the loan.

So, when is it a good time to borrow hard money? When it’s a good deal. If that $100,000 means you can fix that property up with a net of $50,000 made, then if you have to spend $20,000 to make $30,000, that’s a great deal!


If you want to

learn more about what to

Expect from the Loan Process, CLICK HERE.


Remember, my fiduciary obligation to our lenders is to assure their money is going into good investments, but my fiduciary duty to YOU is to make sure you aren’t getting over your head on a bad deal.

If you’re hearing “NO” from us or any other lender out there, it’s because your deal is too risky. Not getting a deal funded that you’ve worked hard to get under contract sucks; I get it. But you know what’s worse? Losing money on a deal because someone lent you money on a deal that didn’t have the makeup to be a success.

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

Follow me on Twitter: @CogoCapital  and @LeeArnoldSystem 

Have a deal under contract that you would like a quote on? Let us know. You can fill out a quick questionnaire at CogoCapital.com to receive a rate quote via email or you can call us anytime at (800) 747-1104 to talk to a loan officer. With millions deployed and millions to deploy, we want you to get the capital you need for your real estate investing.

When you come to Cogo Capital® looking for a private money loan on a property under contract, we’ll assure you have quick turnaround, excellent terms, and millions to lend. Cogo Capital® serves both local and national real estate investors, real estate agents, and private money lenders in quality, multiple loans.