Transcript Subject-To Deals

Raising Private Money Online Series
Class 2: Finding and Prescreening Your
Private Lenders
Konrad Sopielnikow of FortuneBuilders Inc
&
Chris Yates of CM Yates Inc
Chris Yates
Konrad
Sopielnikow
Webinar Agenda
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Finding Private Money Investors
Private Money marketing materials
Prescreening your prospects
Setting up a meeting
Case Studies – Continuation from Webinar 1
Q and A
Changing Your Mindset
Asking for money vs. Offering an opportunity
Changing Your Mindset
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Stock Market
RE Private Lending
Completely Unsecured
Completely Uninsured
Invest at Market Price
Returns Are Unknown
• Secured by a Deed of
Trust or Mortgage Deed
• Collateral is Fully Insured
• Collateralized Below
Market Value
• Returns Are Fixed and
Agreed Upon
• Tangible Asset
Changing Your Mindset
Stock Market
• Value of stock drops
• Risk of Total Loss
• Zero Collateral
RE Private Lending
• Investor Assumes Control
of Asset
• Investor Assumes Equity
Position
• Investor Receives Income
From Asset
Where to Find Private Investors?
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Referrals - Get OTHERS to raise money for you!
REIA and Investor Clubs
Your Real Estate Attorneys
Business and Banking Networking Events
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Your current career and professional circles
Attorneys, Doctors, Accountants, Financial Professionals,
Bankers, Other Entrepreneurs
5. Family & Friends*
6. Online Networks – ex. Facebook, Investor Forums
THEY ARE ALL AROUND YOU!!!
Private Money Networking Strategy
Best Source of Private Money
• Self Directed IRA’s
• Self Directed 401k
• National Custodians
• Equity Trust Company
• www.trustetc.com
• Entrust Northeast
• www.theentrustgroup.com
Setting Up a Self Directed Account
• Simple Process - Explain and help your
investors set up an account
• Fill out Equity Trust Transfer Form
• Invest in Promissory Note with you
• Create, File and Mail security documents
Marketing Materials
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YOU & Enthusiasm for Business!
Your Phone
Introduction/Reconnect Email
Investor Credibility Packet
PowerPoint Presentation
Welcome, Thank You & Statement Letters
Power of Picture & Video (YouTube.com) –
documenting your projects/investments
From: Konrad Sopielnikow
Sent: Monday, December 27, 2006 10:00 AM
Subject: keeping in touch…
Attachments: Investor Packet (12%).doc; Company Resume
Hey Joe,
How is life in NYC treating you? We haven’t talked in a while. I am emailing you for two
reasons. One, to catch up and see if you were planning to come to the football game and two
because we are looking for new investors to help us finance our foreclosure flip projects. As
you probably know, I’ve been working with Than and another friend, Paul up in New Haven and
we’ve been growing our real estate investment company. Since we are always increasing the
number of projects that we are working on, we are looking for new investors.
We already have Joe Smith, few members of our family and friends invested with us for a total
of 2.5 million, which is a nice chunk of change. I figured you may know some other people who
would be interested in making a sure 12% annual return on their money. The market sucks
right now so this is a great alternative. We also pay 1% referral fees to anybody that brings us
an investor. Meaning, if you brought someone who’s willing to put up 100k, you’d get
$1000. The money is invested for anywhere from 6 to 12 months. Finding investors is a great
way to make some extra cash and it’s an easy sell for us considering the security of the
investment and guaranteed high interest rate. We also borrow from investors’ IRA’s, which is a
really good deal, considering the interest is all tax free or deferred. Anyway, I am including a
packet. Take a look at it and let me know if anyone comes to mind. If you find someone who is
interested, pass on my information or better yet give me a call and I’ll explain the program in
detail. Thanks. Kind Regards, Konrad
Credibility Packet
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Company Resume / Description of Business
Case Studies Outline
Pictures (ex. Rehabbing Course “Trash to Cash” )
Investor Program Overview
Answers to FAQ
Business Cards (*Referral Reward Program)
Credibility Packet
Before and After Case Study
PowerPoint Presentation
• Keeps your presentation organized so you
can hit all important points
• Makes you look professional
• Allows for visual effect of pictures
• Allows you to practice and refine your pitch
PowerPoint Presentation
• About Your Business
– Who, What, and How?
• Private Money Program
– How Much, When, and How?
• Closing Process and Documents
• Investor Options
– Buy a Property
– Invest Money
– Refer Investor
Prequalifying Your Investors
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Initial Phone or in Person Conversation
Email Credibility Packet with FAQ
Set Up a Phone Appointment
Explain Basics of the Investor Program
Set Up an In Person Appointment
Keys to Successful Prequalification
• Set agenda for your call/conversation
– Business – Who and What?
– Money Program – intro and terms
– Set a meeting or get commitment
• Know your Private Money program & terms
• Don’t be afraid to ask about $
• Don’t be afraid to say “no”
Where to Meet Your Investor?
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Your Office
Your Attorney’s Office
Your Home Office
Lunch or Coffee Shop
At a Project/Property***
- ONLY AFTER PRE-SCREEN
Case Study Time
Case Study 1 - Rehab
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124 Smith Street, New Haven, CT
Purchase Price $100k
As is value of $150k; ARV of $200k
Rehab $30k
Investor lending $130k at 12%
6 month note
Paid off in 120 days (4 months)
$130,000 x .12 x 4/12 = $ 5,200 in interest
Case Study 2 - Wholesale
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124 Smith Street, New Haven, CT
Purchase Price $100k
Wholesale value of $150k
Investor lending $100k at 12%
7 day flip
$100,000 x .12 x 7/365 = $230.14
***guaranteed 1 point min. = $1,000
Case Study 3
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CM Yates Purchase Price = $71,000
Estimated Renovation Budget = $18,000
Closing Costs = $500
Pro-Rated Taxes and Insurance = $1,000
Total Cost Basis = $90,500
Initial Deal Structure
• Investor Funds: $100,000
– Lender Fees: $1,500
– CM Yates Cost Basis: $90,500
Remaining Funds = $8,000
Joe’s Earnings After One Year
• $100,000 Principal Invested
+ 1.5 Points = $1,500
+ Interest @ 12% = $12,000
= $13,500 Earned in 1 Year
13.5% APY
• Secured by Deed of Trust
• Insured by Hazard Policy
Awesome Webinar Bonus!
www.fortunebuilders.com/investor-packet/
Q&A