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Here’s four responses that came in on my survey in the last week to the question, “what’s your biggest question about investing in real estate?”.

FINDING A GOOD FINANCING SOURCE. THIS IS EVERYONE’S BIG PROBLEM.

How to secure money.

Getting Funding.

Financing.

As I’ve been reflecting on these responses and how I’d answer, I’ve come to the conclusion that on this blog, I’ve beaten the dead horse with the stick so many times on how to get private loans.

It really doesn’t make much sense to continue from that angle since you can look at almost every page or blog post on my website for that information.

But I was a bit perplexed by how frequently these and similar responses have been coming up in the survey, despite all of the information I provide that should solve this problem.

Which got me thinking that maybe I’m taking the wrong angle…

So in this post, I’m going to talk about why you are not getting private loans or hard money loans for your real estate investments.

The first issue is that you don’t know how to evaluate a property properly.  I’ve written extensively regarding this topic on my blog here, so do a quick search and you’ll find numerous articles.

You can also visit our You Tube channel to watch videos on evaluating properties.  There’s at least 10 of them up there:  http://www.youtube.com/user/DoHardMoney

What you need to understand is that if you are not looking at a property the same way a private or hard money lender looks at the property, you are going to have numbers for your ARV that are way different than the lender.

This leads to the second reason why you aren’t getting the financing you want…  unrealistic expectations.

Most newbie investors think they can submit a deal and get the exact amount of financing they are looking for on the project.

That’s never going to happen if you don’t evaluate the property in the same way that the HML looks at it.

Let me give you an example of what happens on most of the applications we receive.  The investor thinks a property is worth “x” on the ARV.  We send out evaluators to the property and discover that the ARV really is worth “y”, with “y” being significantly less than “x”.

That difference is usually five figures and sometimes even six figures.  At DHM, we would still make a loan offer to you in this situation.  However, the difference between what we offer and what you need to close would have to be covered by you.

Which leads to another part of the unrealistic expectations… the majority of these people need 100% financing and think that it’s going to happen in every circumstance.

However, that’s not the case.  First of all, the 100% financing options are only available to our Diamond members.  Second, even if you are a Diamond member, there’s no guarantee that you can still get 100% financing on the deal.

There’s a ton of variables that contribute to that.  You got the area you are investing in – some of the components of the Diamond program are not available in all states, this affects whether gap financing is available.

You also have different components that you can choose to use/not use that can play a role in getting 100% financing.

And finally if you are relying on gap financing, there’s no guarantee that one of our partners will even want to participate in your deal.

So while we champion 100% financing and we make those options available to people, you still have to realize that the ducks have to line up properly in order to get true 100% financing on private loans.

The bottom line is that there’s a boat load of money available through private lenders and hard money lenders.  We just struck a partnership with a group that can do up to $500 million deals!

Finding people that have the money is really NOT the problem that you have either… I mean you’ve already discovered my website.

Your real problem is that you aren’t being patient enough to get the right deal in front of a lender.  And you aren’t getting creative on how you structure deals to get all the funding you need to close the transaction.

Let me give you an example of what I mean by structuring the deal.

I get a ton of people coming to my site that are Armando Montelongo students.  We received an application on a property where the shortfall was $100,000 but the investor still wanted to move forward.

His response to me was – I have $60,000 I can put in and I’ll find someone else to put up $40,000.  We’re closing this deal next week.

The point I’m getting at here is that you don’t have to put up your own money like this guy did, but you have to network and have people in your pipeline that you can bring into deals.

My assumption here is that the people giving these responses are newbies and if you are, you only have to get creative like this for your first few deals.

Get 2-3 under your belt where you have some nice profit and you’ll have the cash reserves that you can put your own money in instead of bringing in a partner.

And just to be clear, all of this only applies if you are in a hurry to do deals!

You can always keep looking until you find that perfect deal and all the numbers align exactly for you to get the 100% financing you want.  It’s just going to take time and patience if you go that route.

To sum everything up, here’s the reason why you are not getting the private loans you want:

1) You don’t know how to evaluate a deal like an HML

2) You have unrealistic expectations of financing

3) You aren’t being patient in finding the right deal to get 100% financing

4) You aren’t getting creative with ways that you can structure deals so you don’t have to wait for all the start to align for 100% financing.

To solve these problems, start educating yourself on evaluating properties and start networking with people that can help you get into deals.

Are you looking for ways of finding good deals? Do you want to get private money loans for your property and make decent profits? This article can answer all your questions by telling you a brilliant way of finding good properties…

When it comes down to being successful as a real estate investor, the number one thing that really matters is finding good deals.

You can’t expect to get a private money loan if you are unable to find a good deal. That’s the most important factor, which true hard money lenders look for.

Finding good deals is like fishing. You can go out there and you can fish with one pole or you can go out there and fish with a long line and bunch of hooks. It depends upon you.

Similarly, when it comes down to finding properties, there is just not one particular way of doing it. You will have to try a bunch of different things.

You’ll have to get a whole bunch of hooks in the water at the same time with a firm believe that one of them is bound to have something to hit on it. Don’t go with the single-fishing pole. Go with a long line and with a whole bunch of hooks.

Some of the ideas I’ll discuss here would not be your only solution for getting private money loans. But they could be one of the several ways of securing financing from private money lenders.

One of the ideas that have the potential of bringing some success is finding out-of-state owners’ properties.

People keep moving to different cities or countries because of their personal and professional requirements. Most of them want to sell their property within a short period of time as they don’t want that property anymore.

Then there are people who buy property as investment properties but they find out that the investment is not what they thought it would be. On the other hand, managing those investment properties from far tends to be more of a problem than it is worth.

Another type of out-of-state owners are those whose grandparents or parents have left a property for them and they are willing to sell it as soon as possible because they are living in some other parts of the country.

All those things can accumulate to a motivated seller. When it comes down to it, you should try finding people who are motivated to make deals happen. That’s where you are going to find some margins and these are the properties, which will help you in getting a private money loan easily.

Basically there are two things, which can help you out:

1. Finding somebody who is motivated

2. Finding a property that is in need of some work

There are places, which are selling the lists of out-of-state owners. You can purchase that list or you can look on the tax roll to see where the mailing address is for the tax notice. If the mailing address for the tax notice is somewhere else than the property address, this means that it is going to be an out-of-state owner or a non-owner occupied property.

You should focus on the ones that are out-of-state, not the ones that are in-state to begin with because typically they are going to be a little more motivated.

You can mail to out-of-state owners and can put a postcard campaign or a mailer campaign together for those people and work for people who own properties and who live outside of the state. It will help you in getting in touch with them. If you can find their contact numbers, it is better to give them a call and discuss your offer.

It can turn out to be really successful for you, lots of times those people are motivated as they want to unload it and this can be a great way to help you find some properties.

The reason why I am calling these properties as good opportunities is because you can buy them at much lower prices and make good profits after flipping them with the help of private money loans.

Just got this email:

Ryan,

“How do I get hard money financing when I spent my last dime on education? Everyone told me I could find money but now that I spent 70k and have no more, they say hard money lenders want 20% skin in the deal??????”

Thanks,

Frank

Dear Frank,

Ouch, $70k? That’s a LOT of coinage…

I know it’s too late to save you now, but for future reference, I use this litmus test to evaluate people giving me advice on real estate investing and hard money financing.

Just simply ask the person this question:

Will you give me the money to back up your advice?

You’ll find that 99.99% of all of them will fail to meet that test.

Having said that, here’s a misnomer that these gurus perpetuate.  The true definition of 100% financing and how hard money finance really works.

Yes, it is possible to get 100% financing on a deal…

But I see that happening in less than half of the deals we fund.

Here’s why:

To get 100% financing for purchase and rehab costs, those numbers together have to be less than 70% ARV. And it’s the ARV determined by the lender – not you.

Only the sweethearts of deals will meet this criteria. Those that don’t fit into it will require money down for you to close.

Another one has to do with points. The points are where we make our profit on the loan and as a result, they cannot be financed by us.

This is typical among hard money lenders.

The gurus don’t talk about this because it dilutes the message they are using to sell their program to you.

And let me tell you Frank, you are NOT alone!  I’ve been swindled by these guys for over $10 grand myself… and I hear from countless others like us that have been hoodwinked too.

Here’s the answer you are looking for…

First, you have to make sure you are getting the best deal to start off with – that’s numero uno.

Do it right and then you’ll have enough profits to get into another deal with some money down if you have to.  Things will start to snowball from there.

If you are going to be in real estate you have to have the proper expectations.  The correct mindset is that if you are looking to become wealthy, it won’t happen from one deal.  You will need to do many deals to get rich.

I’ve been involved in over 398 real estate transactions now and on average, profits are $10,000 – $15,000 per deal.  So you should plan on doing 100 flips to get to the magical million dollar mark.

You might have just spit your Diet Coke out onto the screen over that 100 flip number, but let me tell you – IF you do things right, it won’t take long.  My personal record is 25 flips in one year…

If you are not sure how to figure out what the best deals are before you get in too deep, I highly recommend you check out my Real Estate Millions Diamond program.

It’s a comprehensive training, coaching and partnership program that is only $97 a month.  You can get the details and see if it’s a good fit for you by clicking the link below:

https://www.newsuccesssolution.com/rem3/video

You also have to get creative with how you get your financing for your first deal.

There’s ways you can find money to cover the “gap” in what hard money financing you can get and what you need to close.

You can find financing for the points too.  That way you can cover your whole deal without coming out of pocket at all.

These are a few things that we’ve been working on helping our clients with.  Be on the lookout for an announcement of a new partnership we’ve developed soon.