Posted by Brian McDaniel on November 15, 2000 at 11:02:40:
Advertising to borrow money secured by real estate is legal isn’t it as long as you aren’t selling securities
“Borrow Your Way To Millions” - Posted by MN~Chicago
Posted by MN~Chicago on November 21, 1999 at 23:09:39:
Don Ulmer, speaker at the local real estate
group, explained how he used private financing
to fund his properties.
Nothing new, conceptionally, but it may spur
someone on who needs a boost.
He placed an ad in the newspaper offering
a seminar:
YOU CAN EARN 12% - FREE SEMINAR
…TOPIC: Hassle-Free High Yields
(Off to the right in his display ad,
it reads): EARN 12%…5 Years Guaranteed
The rest of the ad gives Time, Location,
Date, Telephone, Etc.
Those who show up are typically earning
CD rates.
This would be a way to finance your notes.
You would offer 12%, secured by your personal
promissary note. Your note purchased could
go into escrow. The LTV tops at 70%.
He also carrys a $6 million insurance policy,
so that in the event of death, the investor
gets paid in full.
The investor is in for 5 years; no formal
agreement. They can opt out any time
with a 30 day notice (replace with another
investor).
He does this with properties. It can be
applied to notes. He also over-finances
each property by $5,000, a loan which goes
tax-free into his Hip Pocket National Bank.
You could pay 12% cost of funds, buy a note
yielding 18% - 25+%, and take out a small
spread if you wanted to get immediate cash.
The idea can be tailored to suit your own
agenda.
Also worth mentioning is the networking
potential in your local groups (Carol,
you have two! Lucky you.), and as William
said, he got 2 note deals from his.
The person sitting behind me has a comapny
which finds houses for people just out of
bankruptcy, for a $2,500 fee. He needs
someone to fund them for 2 - 4 months at
90% LTV.
The loan is immediately refinanced by his
group. Because it is a refinance and not
a new loan, he can get it refinanced in a
short period. The loan is paid off at
100% LTV. The interest cost on the loan
is 4% over cost of funds.
It’s 90% LTV, 20 Year amortization, and
a 1 year balloon. Of the 40 he has done
so far, 31 have already closed. The
average refinance time has been just over 35
days. Short-term exposure for money out.
He has the capacity to do 20 of these per
month. The company owner’s background is
20 years in B,C, lending, so he worked out
this program. There are more details, but
you get the picture.
This has the potential to be a cash cow,
and it came from attending a meeting. One
never knows where one will find a contact,
but these meetings are certainly worth it.
Keep up the good work - Posted by John Behle
Posted by John Behle on November 22, 1999 at 11:38:26:
Michael, your posts show you are pursuing this with an energy I’ve rarely seen. Congratulations.
Be careful with any advertising for capital or investors. Despite the good intentions and possible success of the speaker you mentioned - he is likely running afoul of security laws.
I address that in the videos and we discussed it again in Park City. By definition and confirmed by many security attornies, an ad like he describes constitutes an unregistered “public offering” based on federal securities laws.
Those laws aren’t always enforced strictly and are usually enforced by the state. Your speaker you heard may be lucky - so far - that he has not run into trouble. It essentially means they are lax in enforcing the laws in his state or city. That isn’t the case everywhere.
In some areas, your first call will be from the SEC, containing a threat. Been there done that - dropped the ad immediately. They are not going to pull up with a paddy wagon and throw you in for running the ad.
BUT - what does happen is investors or the SEC use it to hang the person out to dry at a later date. If anything goes wrong in the slightest way with any of your deals or relations with investors - you are in a very precarious position - to say the least. Usually that doesn’t happen unless investors are scammed.
The problem is even if an investor “feels” scammed or mis-treated, their attorney will barbecue you over the securities infractions - and possibly round up the other investors to create a BIG problem.
Is that going to happen?
Why take the risk? There are low key, low profile, legal and careful ways to find and work with investors. It is not worth the potential risk.
Avoid any form of advertising to or unsolicited contact with potential investors that you don’t have a prior relationship with.
And as we’ve discussed - NEVER broker a note to a private investor.
Re: “Borrow Your Way To Millions” - Posted by CarolFL
Posted by CarolFL on November 22, 1999 at 06:07:55:
Thanks for reminding us how smart it is to get out from behind our desk/phone and ‘see the people’. Sounds like it was a great day!
Carol
Re: Keep up the good work - Posted by Brian McDaniel
Posted by Brian McDaniel on November 15, 2000 at 10:58:18:
It’s ok to advertise to borrow money secured by real estate isn’t it?
Re: Low Key? - Posted by Dan Fink
Posted by Dan Fink on November 23, 1999 at 09:44:00:
John,
What are the best low key low risk ways of finding new investors, that you dont currenty know without setting off the sec?
Thanks Dan Fink
My First Thought Was The SEC. - Posted by MN~Chicago
Posted by MN~Chicago on November 22, 1999 at 14:13:25:
Thanks, John.
When this person’s persentation was barely
out of his mouth, on this idea, I thought of
your admonishment about placing an ad for
money.
Because he said he had been doing it for
years, and has several hundred investors,
I figured offering a seminar somehow got
around the “Lend me money for X% return,”
in a classified ad.
Plus, I also knew you would chime in
should it be a “how do you look in
stripes?” situation.
It was also intended as a stimulus to
show people are out there “doing” and
not letting external circumstances stand
in the way.
Where there’s a will…
Re: Low Key? - Posted by John Behle
Posted by John Behle on November 23, 1999 at 18:59:17:
Networking at REI and exchange groups can work well. At REI groups, there are many that have tons of equity but little cash flow. I use the “equity arbitrage” scenario to safely increase their cash flow by investing in notes.
A prior relationship is a big thing as far as securities laws go. Even if it is for a short time. It also makes a difference if they ask you instead of you soliciting them.
If I were starting out I would teach a session or workshop at one of the meetings and/or pass out some information about mortgage investment and cash flow. Those who have money or equity to invest will contact you. Some of the articles I’ve posted here would work or there are some more at my website www.papergame.com that might work too.