Easy Real Estate Financing

Unlike all the talk of a troubled economy, we still see great success stories from our readers, telling us how well they're doing with income real estate properties. Here's one testimonial we received by letter from Illinois.

Dear Mr. Hicks,

“I read [your book] ‘How to Make Millions in Real Estate in Three
Years’ two years ago, and I started using your methods immediately. My
first two deals weren’t so hot (I was too eager to close and didn’t do
enough up-front due-diligence), but I’ll make money on them all the same.
These were two small commercial strips in Chicago. Bought them with
basically no money down (for one the seller held paper; the other was
financed through SBA).

It was on my third try that I really hit a home run. This was an industrial
center we acquired through a construction loan. I renovated it, and leased
it up within 8 months (a year ahead of schedule). For this deal I raised most
of the equity from friends and family, after negotiating the bank down to a
10% equity requirement.

So here’s where I am at, barely two years after reading your book: Total cost
of 3 properties = $4,670,000; current value, based on
rent roll = $6,730,000.

That’s about $7-million bought with only $150,000 of my own
money—all borrowed with 2nd and 3rd mortgages on my house. After paying
all monthly mortgages and expenses, I’m clearing about $20,000 a month.
Thank you warmly for your encouragement and advice in your books,
newsletter and phone calls.” By letter, IL.

IF YOU’RE LOOKING FOR A REAL ESTATE OR BUSINESS LOAN, be sure to include local Credit Unions in your search. Why do we suggest this? Because, Credit Unions:

• Have not suffered from bad real estate loans in the current crisis.
• Have loads of cash they want to put into good loans.
• Have understanding boards of directors who want to “put money out.”
• Have a history of lower interest rates on loans than many other lenders.

CREDIT UNIONS MAKE MANY DIFFERENT TYPES OF LOANS. But the types that would
interest you most as a business person are:

• Commercial and residential real estate loans.
• Business loans for startup, expansion, renovation, etc.

TO GET EITHER TYPE OF LOAN, the borrower must meet certain minimum, low- or no-cost needs, namely:

• Be a member of the Credit Union from which you want to borrow. There’s NO charge to you to join a Credit Union.
• Fill out the Loan Application for the type of loan you seek.
• Agree to the repayment schedule the Credit Union sets.
• Sign all needed documents—which usually are fewer than with a bank.
• Receive your loan check and start making P & I (Principal and Interest)
payments one month after you get your money.

THE “WAY TO GO” TODAY IS “WHERE THE MONEY IS” and that’s what you’re doing when you seek your real estate or business loan at a local Credit Union. You’ll get a friendly reception and utmost cooperation when you submit your Loan Application in a businesslike way and treat the CU staff courteously.

APARTMENT OR MULTI-FAMILY LENDERS can be found in most urban and suburban
areas. Even so, many wealth builders looking to acquire an apartment building can use a good loan Finder to steer them in the right direction. And many potential borrowers will pay a good commission to a loan Finder that helps them find the best loan possible.

A MULTI-FAMILY BUILDING IS ONE THAT HAS FIVE OR MORE UNITS. The most common purpose of most apartment building loans is to fund the purchase or refinance of a multifamily building. Loans for rehabbing buildings are just as important, however. A large number of commercial lenders make this type of loan. Look for lenders that offer loan packages for rehabbing apartment buildings. Here are your steps:

1. Gather all the information from your client as to what financing he or she needs. This might include loan applications, summaries of the proposed purchase/rehab, plans to produce an income from the building, and so on.
2. Draw up a “C” list (long list) of all potential lenders from a source such as the list below.
3. Sift through each lender’s information, one at a time.
4. Pay special attention to basic data such as the geographic areas, loan purpose, loan type, and loan requirements and details of each lender.
5. Based on Steps 2 and 3, narrow your “C” list to a “B” list (middle list) of lenders to examine more closely. For example, you can eliminate “C” lenders that don’t make loans in the area where the building is located.
6. Compare the types of funding that each one offers.
7. Make note of each lender that might make the size and types of loans you seek in your area
8. Select your “A” list (short list) of lenders to study further and to contact for more information or a loan application.
   

AS A FINDER, YOU CAN DO EACH OF THESE STEPS for your client, who willprobably be busy on other projects. Your client may offer to work together with you in drafting your “A” or “B” lists. If your client doesn’t suggest this, suggest it to the client. With a little experience and motivation, you and your client can make a winning team.

You Can Become the Loan Expert for Special Loans

If you or a client of yours has a small business in need of funding,
you may have looked at common sources of money—business
partners, family, conventional bank loans, even SBA 7A guaranteed
loans from banks and non-bank lenders. If you’ve tried these
and met with little or no success, don’t give up.

There are many “niche” or special financing programs
for small businesses throughout the United States.
Some niche loan programs are targeted to help specific
industries grow in a particular area. Some are targeted
to improve the economy in a region, state, or local area.
Some are targeted to specific groups of people. Nearly
all niche loan programs have a social, economic development
or community development purpose.

Tips for Financial Brokers

If you are a commercial loan broker or you want to
become one, finding good niche markets that can
give you great broker income may mean focusing on
commercial loan deals. Without limiting yourself
to any specific kind of loan, you can turn your focus
to one or more of the available niche markets in
commercial lending to increase your immediate and
long term income. Take another look at the niche areas
of commercial lending above to see what a wide range
of commercial lending exists.

By concentrating on commercial loans that require
hard money loans, you can find a niche within a niche.
The more focused you get, the smaller your potential
market, so be careful to keep enough commercial loan
niches in your sights to keep the loan requests flowing.

The advantage of taking the time to specialize in a niche
commercial loan market is simple. Once you put
in the legwork to identify, contact and establish a
relationship with direct commercial loan funding sources,
regardless of whether they are hard money lenders or
non-hard money lenders—you can establish yourself
as the expert in those kinds of loans in the area where you work.

You will have a ready source for funding the niche commercial
loans you’ve chosen to specialize in, and you’ll not only get direct
requests from borrowers, but also from other brokers who’ll call
you and ask you to cooperate on this kind of loan.

To be successful, promote yourself on Internet forums, through
email and advertising to your target groups, and by offering your
thoughts on your commercial loan niche market to newspapers,
magazines, and Internet e-zines.

Write articles about such things as your specialty, how to
prepare a commercial loan package for best results, what to look
for to help ensure which lender best suits the loan request and
more. Don’t be afraid to educate your fellow brokers. By doing so,
you’ll show your expertise in more areas than the ones you share
in your commercial loan specialty articles. Other brokers, as well
as borrowers, will still come to you—after all, you are the expert
in your commercial loan niche market.

WHEN MONEY IS HARD TO GET, niche lenders can be your answer to
finding the money you need for business or real estate quickly and easily. Here’s
how to get the money you need for your niche business or real estate:
1. Name your niche. You MUST know your niche if you want to
apply to lenders who serve that niche. Thus, your niche might be
lenders that loan on Gas Stations, Tennis Courts, Used Car Dealers,
Golf Courses, Hotels, Motels, Bowling Alleys, etc
2. Get the names of suitable niche lenders. You can find such
lenders in the IWS “Directory of Niche Lenders,” in reference books
at your local Public Library, or on the Internet
3. Contact your selected niche lenders by phone, postal mail,
fax, or email. Ask for full data on the loans they make. Get the
Amount, Purpose, Interest Rate, Term (length of the loan), Credit
Requirements, etc
4. Carefully go over the info you’re given. Compare the offers from
various lenders to see which gives you the best deal. Look carefully for
deals that do not charge points (1 point = 1% of the loan amount; for
a $100,000 loan, 1 point = $1,000). Some lenders charge as high as 8
points. Avoid them!
5. Get a copy of each lender’s Loan Application. Study each Loan
Application carefully. You’ll see that the Applications are similar. But
some ask for less information than others. Pay close attention to parts
of the selected Application that give you a challenge. If you have any
questions on how to fill out these parts of an Application, call Ty Hicks
at IWS if you have the “Directory of Niche Lenders.” He’ll try to help
you with advice on your questions. REMEMBER AT ALL TIMES:
You MUST be completely accurate in every statement you make on
a Loan Application. The advice you get from Ty Hicks will include
a reminder that every statement on a Loan Application MUST be
completely accurate in every way
6. Be certain your Loan Application is typed. In business and income
real estate niche lending your lender expects a business- like approach
Typewritten (or computer-printed) Loan Applications are standard
Only the signature is hand-written
7. Accept the loan offered you if your business or real estate can repay
the niche loan and ALL other expenses and show a Positive Cash Flow
each month. Niche lenders get you money!

A NICHE LENDER IS A LENDER that specializes in loans to a narrow group of
businesses, or to just one type of business. Thus, a niche lender might focus on loans
to:

• Gas stations, auto repair shops, tire stores, etc
• Sports facilities—tennis courts, bowling alleys, swimming pools
• Health care facilities—nursing homes, rehab centers, hospitals
• Education centers—schools, colleges, universities, etc
• Multi-family real estate, apartment houses, condos, etc


TO FIND A NICHE LENDER you can take a few easy steps. These steps are
quick and direct, namely:


1. Define your niche. You must know your niche clearly so you can focus on
the lenders that make your type of loan. You have a number of typical niches
above. If you can’t figure your niche, call Ty Hicks and he’ll do it for you on
the phone

2. Look for lenders serving your niche. You’ll find them in many different sources,
such as: (a) Magazines and newspapers serving your niche business or real
estate; (b) On the Internet at sites that cover the news of your niche; (c) In IWS
lender books and in the IWS newsletter, or via a special search we do for you at
your request. Such a search will typically find from 3 to 12 lenders

3. Get your niche lender’s paperwork—its Loan Application, Loan Guidelines,
and any other documents they normally supply. This could include forms for
releasing info, checking income, etc. These will be sent to you free of charge

4. Fill out the Loan Application. Don’t be careless about your Loan Application
Make it neat and clean with no cross-outs or messy corrections. The best way to
achieve this is to type your application throughout. If you have to submit your
Loan Application via the Internet, do it yourself. Or have an Internet person do
it for you

5. Call, e-mail, or write the lender if you have any problems filling out the application
Ask “What do you want to see as an answer for Question 7?” for any
question that puzzles you

6. Send your Loan Application to the lender along with a letter explaining how
much you need for your business, for what purpose, and how you’ll repay the
loan. You’ll get your money!

7. Use this method and your Loan Application has almost a 100% chance of being
approved. Being organized will get you to your money sooner!

WHO PAYS THE BIGGEST FINDER FEES? In general, it’s the people, or their companies, who are looking for financing of a business or real estate project. Why are the largest Finder Fees paid by people seeking money for business or real estate? Because:

• “Money is the universal solvent”—every business needs money sooner or later. Find it and you’ll be paid!

• Money answers almost every need a business may have.

• Money allows a business to start, expand, pay debts, or sell itself.

With money in the bank, a business can soar.

SO IF YOU WANT TO EARN THE HIGHEST FINDER FEES, try looking for money for businesses. Why do we suggest looking for money for businesses? Because:

• Businesses usually have fair to good credit, often have assets that are usable as collateral, understand that you’re entitled to a fee for your work. They need you and want your skills.

• Businesses respect you as a professional and seldom argue over your fee; they enjoy paying for results!

• Businesses appreciate you finding money for them and are ready to reward you for your work.

“SO HOW CAN I GET STARTED FINDING MONEY FOR BUSINESSES?” you ask. Here are good steps you can take:

1. Set yourself up as a Financial Broker, or Financial Consultant- Finder in your own profitable business.

2. Decide what types of businesses or real estate you’d like to work with. It helps if you’ve had experience in the field you want to work in. You’ll earn money sooner!

3. Run ads, make phone calls, use the Internet to tell people you’ll look for loans for business or real estate for a fee based on the loan amount. Be their money “bird dog”!

4. Contact local, and distant, lenders who make the types of loans you’ll be looking for. Get details of their loan practices from them so you can use the data for your loan clients.

5. Help your clients fill out their Loan Application so it meets the lender’s needs. Be sure to have the application typed, or fill it out on the Internet, if the lender prefers this method.

6. Get money for business or real estate and you’ll prosper!

One reader's success story. This is an unsolicited comment we received by letter at our office in January.

SUCCESS IN TWO BUSINESSES: “As I said in our phone talk, I’m very active as a commercial real estate investor. I currently own 84 apartment units in the Bronx, NY. My monthly income is about $8,400 net after all expenses and mortgages are paid. My income alone on this building is about $100,800 per year.

“I only buy owner-financed buildings and I get great interest rates and terms. I’m currently negotiating with the same owner for his other building having 97 units. This building will net $9,700 a month, giving me a combined cash flow of $18,100 per month. I learned all my skills through your real estate books.

“I get my due-diligence money for real estate investments by specializing in hard-money loans as a Financial Broker. I closed on a recent deal last month which was for a $2,700,000 loan and my fee was 1%, or $27,000. My family lives on my real estate income so all my Financial Broker fees go straight into my bank account for future real estate deals. I am now working on a $9-million deal and my fee will be 1%, or $90,000. I get great results advertising in the IWS Newsletter.

“Right now I see my Financial Brokering business doing $25,000 to $30,000 a month. This is not bad for an ex corrections officer who resigned after 9 years on the job, even though all my friends thought I was a fool not to stay for the full 20 years to get a tiny pension. These same guys call me to say they have to take a job to support their families, after they retire. I ask myself: ‘Who was the fool?’” By letter from New York

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