Stock Market is Now DOWN for the Year. What’s in YOUR Wallet?

dennisfassett.comIt has been a pretty good ride, hasn’t it?

I mean, since the dark days of the “great recession” when the DOW bottomed out at 6443.27 on March 6, 2009, the market has gone pretty much straight up.

Remember those guys in the office that spent all day with a browser window open to their E-Trade accounts so they could “trade” their mutual funds?

They were all over the place before the DOW tanked. They got killed during the crash. And now that they’ve built their 401ks back up a little, they’re back with a vengeance and they’ve all been partying.

Which is all cool. I don’t ever begrudge anyone their success.

But the funny thing I’m noticing is that people have really short memories. One of those trader-guys even told me that the same thing can’t happen again “because the government won’t let it”.

Wow.

The other thing I’ve noticed recently is that those guys are a bit less euphoric. The reason is pretty easy to determine.

The DOW closed at 16,576 on December 31, 2013. Last Friday it closed at 16,544.

So those clowns day trading their index funds are now negative for the year.

Landlord Friendly Financing? Seriously?

dennisfassett.comThis is pretty amazing.

I was looking around for some new ideas on how to finance additional rental properties, and I happened to find something that was pretty surprising…..

…… that a monster-sized hedge fund – BLACKSTONE no less – has started offering financing specifically focused on rental property owners.

Yeah. To say I was shocked was an understatement.

I mean, Blackstone has been the bad guy as they hoovered up all the good deals in many areas over the last several years.

But that has apparently changed.

I have never been very fond of conventional lenders. They don’t like rental properties, and back before and during the crash they kept making it more and more difficult to get their approval.

In fact, the process to get my 10th conforming mortgage took SIX MONTHS to accomplish. Partially due to the broker’s incompetence, but most of it was due to the lender changing he rules of the game as the game was being played.

So the fact that an organization is now landlord friendly is a great thing.

I’ve included the text from the press release below, and there’s a link to their lending site as well if you’d like to get more information.

Let me know how it goes if you decide to reach out to them.

Here’s the press release from Blackstone….

“Personal Guarantees are STUPID!”

Wow.

I just received another screeching email from a self-proclaimed guru bragging about how he just did another risky deal with private money from a new private lender in a crap-hole neighborhood that he would never buy in with his own money, and that he didn’t even have to offer a personal guarantee because the lender didn’t know enough to ask for it.

Bravo Sparky. Bravo.

You took advantage of someone that didn’t know any better. I’ll bet your mother is SO proud.

And the crime of it is, he’s far from the only one that does this. I personally know several real estate investors that HAVE walked away from risky deals and left private lenders holding the bag. And that wouldn’t hesitate to do it again this afternoon if it suited them.

Some of them even brag about doing it. The amazing thing is that they continue to find new people that will lend to them.

It’s Private Money Ninja Time

Real Estate Private Money 101I’m sure you at least heard about the carnage in the stock market yesterday. The DJIA was down 391, which made this the third worst week for the stock market in history.

And it was only Thursday.

As I write this the market looks like it will open even lower this morning. And gold continued to fall overnight.

There doesn’t seem like there’s anywhere to turn, does it?

And that’s a good thing. A very good thing.

Because the more that people are scared of paper investments, like stocks, that they have absolutely no control over, the more they realize they want something different.

Something closer to home.

Something less risky.

4 Fatal Mistakes Make When Looking for Private Money – Part 2

The last post focused on the top two Fatal Mistakes that investors make when they’re on the prowl for private money. I continue here with Fatal Mistakes #3 and #4.

Private Money Mistake #3: The Complete Lack of Networking

I can hear the shouts right now – “HEY! I network – I attend three REIA meetings per month and I get together with my real estate buddies a couple of more times per month!!”.

Good for you. But to be blunt, when we’re talking about raising large sums of private money, spending time around other real estate investors is not “networking”. In fact, if your goal is private money, then hanging out with other real estate investors is probably the biggest waste of time possible.

Why?

Tell me this  – when was the last time you raised a single dollar of private money from another real estate investor?

Never? That’s what I thought. I haven’t either.

So while REIA meetings have their uses when they’re not pitching the latest fly-in fly-out guru crap, forget about them in your quest to expand your circle to find new potential private investors.

The trick is finding places where potential private investors hang out, then go hang out there yourself and meet and get to know some new people. But how do you discover where these potential private investors hang out? You need to start by creating a profile of your perfect private investor, then figuring out where they spend their time outside of work. That’s actually the easy part!

Have you done either of those things yet? If not, I suggest that you do. If for no other reason that nobody else is doing it, so you’ll start to separate yourself from the crowd of people looking for private money.

Private Money Mistake #4: No Third Party Credibility in Your Niche

What are you doing to get visible on the internet? To create a buzz about your business? To create the aura that you’re the “go-to” guy in your niche in your geographic area?

When I talked with my private investors and asked them how they came to the decision to give me money, every one of them told me that they had researched me on the internet and talked to others in the community, and in doing so they had come across my blog, or found my book on Amazon.com, or had seen the write-ups on me in Smart Money Magazine and CNNMoney.com, or had seen the write up on me in the local paper.

You need to be vitally aware that one of the very first things that someone is going to do after you ask them for money is google you and ask around.

Are you going to appear? I imagine you probably would, unless you happen to have an ultra common name I suppose.

But the more important question though is – are you going to appear with anything relevant to your real estate niche? Using myself as an example, I can confidently say that within 30 seconds of googling me a complete stranger would know that I’m an experienced cash flow real estate investor presently focusing on suburban apartment buildings. In addition, if the same people asked about me around the neighborhood – guess what? They’d hear exactly the same thing about me.

Because that’s what I write about in my blog, that’s what I wrote a book about, that’s what the Smart Money Magazine and CNNMoney.com write-ups are about, that’s what all the pictures and videos that I post are about, and that’s what I talk to my neighbors and friends about.

Are you that identified with your niche?

Not doing this is a huge mistake by real estate investors, because they miss a great opportunity to stand out from the rest of the crowd looking for private money. The good news about this is that while it will take some time, effort, and energy on your part to make this happen, it will take far less than you think.

Because virtually nobody else is doing it.

4 Fatal Mistakes When Looking for Private Money

Private money is the lifeblood of real estate investing right now. Most conventional lenders are out of the market due to the economy, and many former Private Investors are on the sidelines either because they took a hit during the down-turn or because of “Bernie Madoff Syndrome”.

Either way, money is harder to come by than it was just 24 months ago.

So that has gotten many real estate investors very interested in raising private money.

From where I sit though, I see people making a lot of the same mistakes that I did when I was getting started looking for private money. The problem is, these mistakes don’t just prevent you from getting private money. They will also poison a lot of wells, making so you can likely never approach some people ever again. Ask me how I know! I scared away at least 8 people before I figured out how to raise private money. Since then though I’ve raised over $1.6 million.

So I decided to write a series of posts to identify and discuss the these fatal mistakes. I’ll kick off the series with the two biggest mistakes . . . .

Private Money Mistake #1: Looking for the Silver Bullet
The #1 mistake that I see is investors looking for the magic shortcut in the form of a seminar, a home study course, or a coaching program that will have private money raining down upon them within hours of their buying it.

I should know. I tried pretty much all of them. Or at least every short cut that I could think of. I spam-bombed Craigslist. I held “Investor Lunches”, I hired a copywriter and did some very expensive direct mail to a highly targeted list. And I even did a Private Placement Memorandum with a partner.

Guess what I discovered? None of them worked.

There aren’t any shortcuts. There isn’t a magic script, a magic powerpoint, or a magic list that’s going to smooth your way to getting private money. It’s just not going to happen. You can spend hundreds or thousands of dollars on seminars, courses, and lists, but when it comes down to it getting private money is about one thing and one thing only – building relationships.

So if private money is what you’re after, then the key is figuring out how to get to know and build relationships with potential private investors.

Private Money Mistake #2: Cold Contacts

Just about every private investor that I know focuses on casting their net wide and trying to snag people they don’t know. This is a huge mistake, because people that don’t know you are the hardest sell. They don’t know you. They don’t know your family or your reputation. And they don’t know your business.

They literally know nothing about you except that you’re looking for money. So why, exactly, are you expecting them to be receptive to your request? They’re not! So it’s a waste of time to target people you don’t know.

So what’s the solution? Honestly? It’s to target people that you already know.

Sounds simple doesn’t it? So then why don’t we do that? From my experience, real estate investors have trouble approaching people they know for two reasons.

The first is fear. It’s hard to approach people we know, and we’re intimidated by some of them as well. Family and friends often knows us too well. So it’s difficult.

But I’ve found that the fear and difficulty of doing this is based more on their familiarity with our business than anything else. I know from experience that it’s difficult to raise the subject of my business to the people that I know. (Hey – did you know that I’m in real estate?) Because it’s often difficult to broach the subject in a way that’s not awkward.

But what if people already knew you were in real estate? They’d ask you about it – what you’re doing, how you’re doing it – because most people with day jobs are fascinated with people that are doing something different. That’s how it worked for me. I worked so hard at making sure everyone in my circle knew about my real estate that now when I’m around the neighborhood or at one of my son’s hockey practices they ask me about my real estate business first and virtually never ask about my day job.

That opens the door for me to talk about my business. The cool thing about this approach is that eventually almost everyone gets around to asking about how I fund my deals. And when I tell them about my private investors, many of them ask how it works and how they can get involved.

In fact, every private investor that I have now offered me their money. I didn’t have to ask a single person for money.

That’s the power of targeting people you know.

 

Next:  Fatal Mistakes #3 and #4