OPM - The Art of Leveraging

Equity lender, hard money lender, private investor or what ever term one uses can be a great source of funds to do real estate transactions and the question of how to find them comes up often!

There are numerous ways to do this, and no two investors are exactly alike, so it's important to be innovative and customize your proposal to the specific "hot buttons" for each funding source.

One of the greatest advantages of real estate investing is the power of leveraging other people's money.

When a property appreciates, it will appreciate on the value not on the original investment. Therefore, if you 'leverage' the property with "OPM". You can make an investment even more valuable by having the property rented out. The monthly mortgage payment is being paid by the renter and someone else is paying for your equity growth in the property.

"Money is a terrible master but an excellent servant." - P.T. Barnum

The best source of cash for your real estate business is other people's money.

Perhaps one of the greatest "secrets" of the richest people in the world is summed up in those three words: Other People's Money - OPM for short. The majority of most successful people launched their fortunes using OPM.

Your goal is to not use your own cash. The most successful real estate investor tends to use OPM (Other People's Money). Keep this in mind as you start to invest. Hold out for the limited money down or no money down deal rather than tying up a ton of money in one property. Leverage, terms and long loans can be great friends. Keep these principals in mind:

*Leverage is simply controlling a lot of real estate with little or none of your own money. The more the better. *You should attempt to get the maximum loan to funding possible with each property. *The best loans have fixed interest rates and are assumable without qualifying. *Keep your equity as low as possible so you can keep more cash available for investing.

You can find "OPM" by writing to various lenders asking them if they would be interested in your real estate loan. By calling lenders in your area who might be interested in lending on your real estate proposal. By visiting in person lenders whom you think would be willing to help you. By looking on the Internet for real estate lenders who might work with you on the deals you have. By reading the Real Estate Section of your local large-city Sunday newspaper, looking for ads run by lenders in your area.

Find properties that has been sold in the past few months by searching the public records at the county recorder's office. Find property that sold to real estate investors by banks, credit unions, HUD, VA, FNMA, or any other major source and if the buyer is not an individual but say a corporation or partnership you have most likely bagged an investor.

The deeds should give the mailing address of the new buyer. Send them out a letter and tell them about your ability to locate real estate or better yet give them a call if listed.

Any one who has money could be a source of funds for your real estate purchases such as Doctors. Another great source is checking your recorders office again looking for individuals who holds mortgages on property. This has provided me a great source for hard money loans.

Retirement plans are a great source of real estate investment funds. Many people don't even know they can use their retirement plans funds to invest in real estate, mortgages and trust deeds. Many, once they stash it away, forget they even have money in a retirement account.

Many investors think that money (or lack of money) is what stops them from closing a deal. This is not true it is a myth that holds some investors back. Understand that money is NEVER an issue - IF the deal is right, the money will come. Simply think creatively, go to the source of funds and simply ask for money. The worst that can happen is you get a "NO". Each no only places you closer to a "YES".

To your success,
John Michael

Copyright 2005 JMichael Investments

About the Author: John Michael is an active Real Estate Investor - Author - Speaker - REI CoachVisit my Real Estate Investing Site at: http://jmichaelrei.com FREE REI Club Site at: http://stealth.thecreativeinvestor.com

More than 40 states signed onto a proposed $25-billion deal with major mortgage servicers over faulty foreclosure practices. New York, Nevada and Delaware joined California in holding out for better terms.

More than 40 states signed onto a proposed $25-billion settlement with major mortgage servicers over faulty foreclosure procedures, but California, New York and other key states were still not among them.

California has until Monday to share in a multi-state deal with banks to obtain mortgage relief and reforms. Atty. Gen. Kamala Harris, who walked away from talks last year, says the door remains open.

With a Monday deadline at hand, California officials have resumed direct talks with the Obama administration about joining a multibillion-dollar, multi-state mortgage settlement with the nation's largest banks, a source said Sunday.

The talk show host pays $12 million for the 4,088-square-foot house with four bedrooms and four bathrooms. The ocean-view home sits on 1.26 bluff-top acres with beach access.

In one of the more talked-about transactions in town, actors Brad Pitt and Angelina Jolie have sold their Malibu beach house to daytime host and comedian Ellen De Generes for $12 million.

The four-bedroom, five-bathroom house built in 1920 for industrialist James Wigmore lists for $2,875,000.

A decorative cast stone entrance opens to this restored Spanish Colonial Revival-style house in Pasadena's South Orange Grove area. Built in 1920 for industrialist James Wigmore, the house retains such original details as coffered wood ceilings and arched doorways.

They don't believe they can sell their property for what it's worth, so they're spending money on making their homes more comfortable.

Do you fit any of these descriptions?

A biennial research report by the National Assn. of Realtors indicates that a handful of real estate agents and brokers and their clients either don't know the law or don't care to follow it.

When it comes to lawsuits, real estate agents and brokers tangle mostly among themselves.

The president aims to help about 3.5 million people with good credit who are unable to refinance at historically low rates because their homes are worth less than their mortgages.

 

The White House hopes to help millions of homeowners lower their monthly mortgage bill with a $5 billion to $10 billion plan to set up a streamlined refinancing program for people who are current on their payments.

The Standard & Poor's/Case-Shiller index of 20 large U.S. cities fell 1.3% in November from October as foreclosures continue to drag down the housing market.

Three straight months of home-price declines in the biggest U.S. cities showed that foreclosures remain a significant drag on a housing market that is entering its fifth year of deterioration.

L.A. Clipper Chris Paul may be quick down the court, but he moves pretty fast when it comes to buying multimillion-dollar real estate too.