Build those relationships! - Posted by Pat

Real Estate Investing Real Estate Financing
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Posted by John Corey on June 17, 2006 at 10:02:13:

Pat,

I agree with everything you are saying. I want to extend the massage as you can never tell when a relationship will be important.

  1. Think about how you sign email or posts here. People rarely put a full name or anything like that. Hence it is a bit harder to build relationships when you have 'John" or less as the placeholder.

Definitely something to work on when it comes to email as there are fewer restrictions to what you can add to your signature.

  1. Look into Plaxo and LinkedIn (www.plaxo.com and www.linkedin.com).

Plaxo is a tool to maintain an address book. The beauty is you create a business card (and personal if you like). Then you electronically exchange it with people. If they also register with Plaxo they will never have to wonder if they have your latest contact details or you wonder about there details. Each time you change jobs, get a new email address, sign up for a new mobile number you make the changes to your record and others automatically have access. They do not need to even get promoted or notified if they would rather have the updates arrive silently.

LinkedIn is the largest professional network site. Mostly for people who want to find someone in a particular company, sector, some who is looking to invest or someone who has something to invest in.

Think of networking as something you do a little each day. Like handing out business card or having a mailing looking for motivated sellers. I think it is just as important to be building and refreshing your network of people you can call on when you have a deal.

  1. I also suggest using an email address on your posts that works or at least can be guessed at (NoSPAM in address so someone knows to remove it before mailing). Why take the time to network on the forum if you create road blocks. If you are worried about SPAM consider a gmail account as their filters are very good at keeping out the junk and letting through the mail you would want.

I can send you an invite to gmail if you want an account and do not have an invitation.

All the above services are free, widely used and effective for specific tasks. The key message for building a network is do it now so that you can use it later.

John Corey

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Build those relationships! - Posted by Pat

Posted by Pat on June 16, 2006 at 20:50:10:

Seasoned investors are well aware of the importance of good relations with the various “professionals” we deal with in REI.This is an area new ones do not want to overlook as they develop their businesses.

Several years ago we and our partners obtained financing form a lender we had not used before. The loan officer was not thrilled at the "specualative’ nature of our deal but agreed to finance us with the usual “use and abuse” investors must put up with. At closing we mentioned doing some additional deals and we were told that he would take a “wait and see” position. Shortly thereafter we were contacted to help him get rid of a repo; this time it was on our terms. As the result of our successful track record, we subsequently continued doing deals with him and each one for no $ down!

We recently decided to work another avenue by buying into a subdivision where we’ll develop the lots and put up the buildings. This put us in the position of dealing with the commercial division of the bank.Typical commercial financing requires at least 20 to 25% down. Apparently, our residential loan officer (who is also a vice president) put in a good word with the commercial guy for us. We closed on the first deal today and likewise put no money down! The lesson here is: keep building those relationships through credibility and a successful track record. It’s worth the time and effort.

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Re: Build those relationships! - Posted by Frank Chin

Posted by Frank Chin on June 18, 2006 at 06:40:51:

Pat:

Excellent observations. I can relate to the banker side of the table as the wife did commercial loans years back.

Bankers like to see borrowers with something at risk, and folks who know what they’re doing. Makes sense right?? Without these, makes no sense to even do a loan.

Unfortuately, many people take it the wrong way. They feel the bankers are abusing them by questioning their abilities, and asking them to put up unreasonable sums.

At the time, I was studying real etate, and one course touched on large development deals, and the guy teaching the course, a developer himself, mentioned that he usually get a group together, the cash guys, and those with the experience, and he often find that if they can come up with “one million”, he can get most large deals going.

Many in the class laughed about the 1 million amount, but stopped when he mentioned its for deals of 100 million, its really “one percent” down if you think about it. But the key thing is the banker wants to know there’s something at risk, and the one million is a sizable investment, and the group has someone that wouldn’t mess that up, as well as the other 99 million that the bank is putting up.

The wife happened to be working on a hotel development deal then, and a group is coming with about a million down, with the bank coming up with the rest. I ask how much?? The answer was they’re working on it, since it’s a new hotel development, and the loan has to cover the construction PLUS the negative cash flow for the first several years.

And the key here is that there’s someone with the proven experience getting a hotel off the ground.

Certainly for commercial deals, bankers are looking for people with experience, and can carry the ball, more so than “how much down”. And when things goes wrong, he cane say “don’t know what happened here as these guys came thru before”. Better this than “I took a flyer to see what happens”.

Frank Chin