All Forum Posts by: Jeff Rabinowitz

  Simply put an ad in the paper seeking our local investors who have capital or credit.

I would never consider answering an ad in the paper (the paper, really? Who would even see it?) or anywhere else. I couldn't imagine working with someone who would answer such an ad. Private money is a relationship business. There must be mutual trust and goals or the transaction is doomed to be disappointing, or worse, for both parties. Lawsuits are expensive.

Some hard money lenders will not require monthly payments and will wait until the end of the loan term or sale of the property to recover their funds. Some hard money lenders will not move to foreclosure if there are other reasonable alternatives. Foreclosure is expensive and loans can be restructured. Search for a money partner who fits your needs and your deal. Find a good match, complete a few deals successfully, and future borrowing may be easier than you can imagine.

@Eva Salas, I don't understand why you would put your property manager on your insurance policy as an additional insured. Do they give you a discount for helping to protect them? Don't they carry their own insurance? If they don't you should be looking for another property manager.

@Paul Zanger, I invited you to send me your proposal. My e-mail address is in my signature.

@Paul Zanger, welcome to BP. I am not sure what soft/hard money is--semi-soft? I own property in Oak Park and would be happy to look at your proposal.

@Michael Hicks, welcome to BP. It seems that you are in an enviable position. If I am understanding correctly, you already have a network of friends who have loaned you money before based on your relationship and you have repaid the loans to their satisfaction. Now you would like to approach them again and offer them a greater interest rate. They are quite likely to participate. As far as how much to tell them...just ask. Some may not care to know much of the details and will trust you again. They are likely to continue to trust you if you continue to perform. Others will be very interested in what you are doing and will want to know more of the details. Share everything you are comfortable sharing. If your lenders begin to feel like partners and are happy with their returns they are likely to spread the word to their contacts. You may soon find yourself with a very large private bank that you can return to whenever you have a suitable project.

The answer in these situations is usually: it depends. How much of a down payment will you have in the deal and, if the worst case scenario develops and you cannot find additional financing, are you willing to walk away from it? Will you be giving a personal guarantee to the HML? Will they come after you to make up any deficiencies or will they be satisfied with taking possession of the property if you cannot obtain the needed financing and must abandon the project?

You can't get this information exactly without the owner's permission but you can estimate it fairly closely. Mortgages are recorded on the public record. The record will show the amount of the lien and the date it was recorded. If you estimate what the interest rate was at the time the mortgage was recorded and the term of the mortgage (most are 15, 20 or 30 years) you can estimate the loan balance if the payments have been current from the date of the recording. This should give you a very good idea of whether the owner has a large equity position, a small one, or whether they are likely to be underwater.

Lately, I have been attending meetings less regularly than I had been. @Tom A. , in the post above, hosts a monthly meeting which rotates among various locations. The Renegade Detroit Investors meet on the 1st Tuesday of the month. I am most likely to attend those two. We are fortunate to have a lot of choices here. Michigan RE Investors meets 2nd or 3rd Thursday (can't remember) in Novi. There is an Oakland REIA, Macomb REIA... several others. A web search should lead you to most of them.

To add to @Brandon Turner's comment. If you found a screaming deal that a lender would buy themselves (one that was a good fit for their own portfolio) they would still prefer you bring some of your own funds but they would be more likely to fund the entire deal. The caveat is that you have to be able to convince them that you are not likely to turn a property worth say $100K into a property which is only worth $50K. This will be much easier when you have a strong record of successful deals in your portfolio.