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

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


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 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.