Monday, June 2, 2014

MONEY FOLLOWS AND FLOWS TO GOOD DEALS

The market for real estate loans has changed. Where the banks use to be the primary provider of capital for purchase and investing in real estate, they have now dropped behind the private money sector on providing capital. We aren’t going to discuss the reasons here, but you may want to pick up THE ECONOMIST, MAY 10TH issue for 14 pages of “The Lure of Shadow Banking.”

Many people have commented either on one of my blogs or in person that they have attended a seminar with one real estate specialist or another because the carrot of “we will connect you with our lenders” has been waved.  The fact is that the money will find you if you have a good deal, all you have to do is get an appropriate deck or package together and get the word out with the details of your deal.

You can do this through Linked-In, Facebook, YouTube, Twitter, BuyersOnFire, REI Blackbook, Connected Investors, Clever Investor’s M5System, COGO CAPITAL (disclosure: I have received loan broker training through COGO CAPITAL, PRIVATE MONEY EXCHANGE, and LEE ARNOLD—SYSTEM OF REAL ESTATEINVESTING) and many other social media websites.

Simply attending the guru meeting is NOT going to get you funding. You still have to have an investable project. What it may get you is a little more direct link to the loan originators and underwriters and may or may not get you a better interest rate.

When SECURED INVESTMENT CORPORATION (the mother company over COGO CAPITAL) was lobbying the money group on Wall Street, they were told that until they (SIC) could broker and move $40 million per month, go away. That was a few years back. SIC has been negotiating with numerous companies to deploy loans for a projected $2.7B (yes that is “B” as in billions) within the next 84 months (7 years). Right now, they have $1M sitting idle and need borrowers to be able to disperse the money. They don’t have enough people asking and applying for money. But the loan has to make sense.

Hedge Funds, Insurance companies, and other Wall Street companies deal in billions with a “B” that they are trying to get brokered, distributed, invested. In many ways, it is actually easier to get a loan for a $5 million project than for a $25,000 project. Secured Investment Corporationhas so much money to deploy through COGO that they have been forced to provide direct training and certification to loan brokers through the educational and affiliate Private Money Exchange. Only in this way can COGO get enough loan requests coming in and being processed in order to keep millions flowing out.

Getting back to whether you should let this carrot sway your decision on whether to attend a seminar, I would ask for information on the loan terms. Are they doing transactional funding, bridge funding, commercial, residential (owner occupied or not owner occupied), long term (and how long), short term, interest only or amortized, asset based or credit based.

COGO CAPITAL does short term (3 to 24 months), asset based lending, and non-owner occupied (except possibly in the commercial/business loans). They do not pull your credit unless you want consideration for a lower interest rate. Does that mean they don’t require paperwork from you? Of course not. They will need to see bank statements, income verification, and a property assessment by a third party appraiser, and borrower guarantees that loan will be repaid. And in the case of a commercial strip mall, for example, you are going to have to show lease records, expenses, renovation bidder estimates, and management experience (either you the borrower or your property management team), as well as additional documents.

A lot of credit scores were damaged by this last recession, but that does not necessarily disqualify the borrower from a loan. But the borrower has to have skin in the game. If they don’t have cash, do they have a piece of property that they can put up for collateral? In some cases, even a motor home, airplane, or yacht can be used. They could even cross-collateralize with two properties to buy a third. Private sector lending has more flexible underwriting guidelines than those of banks.

Where you will find the most money available will be for investment purchasing and many lenders will include rehab money. With the improvement in the housing sector, COGO recently started accepting applications which are based on ARV (AFTER REPAIR VALUE).

For guidelines and information on funding, you can visit my affiliate funding page at:
http://www.mspinvestingllc.com/ Provide your contact information. You will get an email and/or telephone call to clarify the type of loan that you are seeking and details of the transaction. If you have been shopping for funding and already have the loan package assembled, funding can be very quick, another reason people are moving from the regular banking outlets to the private sector. Why wait? For further information text "FUNDING" to 41411.

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