What are your Private Lending Frustrations?
I have been talking to many investors over the past 8 to 12 months and they have shared many of their frustrations regarding Private Lenders. I want to hear more. Call me a glutton for punishment but the more I hear the better we can serve you.
Most of the frustrations have been along the lines of; how to find them or how to secure them. I am sure that there are many more out there that you can share. Let’s hear em. I will post my replys in each of the comments so take a look often.
Categories: Investing, Private Lending Questions |
I feel like I need tons of capital or need to work with another investor to receive a lot of private lending deals.
REPLY FROM PAUL:
Exceller, If you are looking to be a private lender you should have liquid assets that you can invest in order to make your money make you money.
There is a rule of thumb for conservative investors that you should not put any more than 10% of you assets into any one investment such as a property or the like. Personally that is a little too conservative for my taste. I have no problem placing 35-40% of my assets with a single real estate investor.
As far as having enough money to lend out where you can get a good position on a piece of property you should have $20,000 or so to work with most investors. I find that I can place this on a property in second position and it be worth the paperwork.
In some areas you can use $20,000 to either pay for or make a good down payment on a property. This will be a good amount in many areas of the country.
You can also work with other people to develop a fund of money that you can then lend out to real estate investors and share the interest. Go deeper into this in my course on how to be a Private Lender called “Intensive Guide to Securing High Returns™” you can visit my site http://www.SecuringHighReturns.com and sign up for more information as we get closer to the offering that product.
What do I need to do to make sure I don’t end up in jail? In other words, what do I need to do be legal and SEC compliant as a real estate investor borrowing private money?
REPLY FROM PAUL:
Great Question. You need to file the proper paper work and follow the rules in each state. Some states will allow you to find and utilize up to 15 investors before filing anything with the state. Others you need to file before you can even talk to the lenders.
You can stay out of trouble by working with accredited investors exclusively. They need the least amount of disclosure and notifications.
My biggest frustration is knowing where to go to find people who are willing to be private lenders, especially in this real estate economy. I feel that a lot of people/private lenders perceive real estate investment as risky right now and are shying away from lending their money to investors.
REPLY FROM PAUL:
I can understand that. I would just explain that you buy properties at a steep discount and that it is best to buy properties when the market is down rather than flying high. I typically use the Warren Buffet saying that you get scared when everyone gets excited and excited when everyone gets scared.
Would a private lender be willing to invest in a person instead of a house? I’m looking for money to run and expand the internal operations of my business right now, not to invest in homes.
REPLY FROM PAUL:
I would talk to people who know you best. People that trust you and what you are doing and then approach them. Show them that you are taking the business seriously and that you are willing to pay a higher rate of return than they would ordinarily get.
You are really looking for an Angel investor and someone that would do this may want a part of your business. I would think long and hard about this. Sometimes they are worth it other times they can suck you dry.
Be careful and set your own terms. I have done this in the past and the person I worked with was great and is still with me to this day. I have heard many horror stories though. I have turned away several investors because they wanted to get too deep into my business and have too much say so.
What kind of criteria do private lenders have for the property they may be investing in and for the borrower they are lending the money to?
REPLY FROM PAUL:
Each Private Lender is different and has different criteria. You are working with individuals who need to earn a high return rather than someone that is funding loans as a business.
Some lenders are looking for Velocity of money others are looking to have their money earning a good interest and accumulating compound interest. You just need to find an investor that is looking for what you have too offer.
I may be good with numbers, but paperwork gives me the heebie jeebies. It just seems like there is a ton of work involved in understanding the process of private lending. The amount of paperwork and documents that are required seems astronomical, and there appears to be room for a lot of potential landmines along the way (with the law). Is there any way to simplify the process?
REPLY FROM PAUL:
Great question MathMan. Paperwork sucks, I agree. You just need to know the rules and follow them. It will take some work on your part though. You can always hire someone to do the paperwork for you. It isn’t that tough. THe amount of paperwork varies depending on your location.
I am close to wrapping up my product and will look at it with fresh eyes to ensure I meet your criteria.
We have systematized everything I could right down to evaluating lender risk tolerance and property risk scenarios. But I was unable to come up with a pill for you to swallow or an injection to pass my knowledge off to you without reading or listening to the course, Sorry.
(I did search the internet and came up short on the SciFi stuff but it seemed too risky.)
I am giving you all the tools in an easy to understand way. It will be delivered in audio, video and book form. What ever will work for you.
As a real estate investor, how do I prevent myself from being taken advantage of by private lenders? I don’t want to be ripped off…
REPLY FROM PAUL:
Do your due diligence. Have a proper contract promissory note and security document in place.
With the current credit crisis, will private lenders provide investors with longer and more favorable financing?
REPLY FROM PAUL:
Each lender is an individual so you need to find someone that will. I would recommend having several exit strategies when you buy a property so that you will be able to find a lender that will meet one of them.
Stay in communication with them and let them know how the project is going. This way you won’t surprise them
I always choose lenders that have a 24 month timeframe minimum that way it helps me be flexible on my exit. I am usually able to work with lenders that are looking to invest for 36 to 60 months.
I really weed out lenders who are in it for 6-12 months out of the funnel by letting them know up front that I will keep their money working for them for a minimum of 24 months.
One of my concerns is being able to agree with private lenders on the terms of the loan. What happens if I am unable to sell the property because of how slow the market is right now?
I think that it is safe to say that the current housing market is less than favorable. As a REI, what can I say to private lenders to get them to partner with me in this housing market?
I have had a hard time finding a private lender who’s willing to lend me money at 70% ltv and still leave me with enough money to do a rehab. Is there a better way to structure a loan so I can get this kind of financing?
REPLY FROM PAUL:
The videos will answer your questions.
As a realtor, how can I help my investors and build my investor clientele? Would finding private lenders that I can refer my investors and clients to be helpful?
Where do I go to even find private lenders? Can I advertise for them? Is there a place on the internet that has compiled lists available for purchase?
As a REI, what types of calculations do I need to do in order to clearly understand that the loan will work for me and my investment goals?
REPLY FROM PAUL:
The videos will answer your questions.
What are the qualifications that a person needs to meet in order to receive private equity?
REPLY FROM PAUL:
The videos will answer your questions.
How do I attract potential lenders when I don’t have any specific projects or deals in the works?
REPLY FROM PAUL:
The videos will answer your questions.
How is a private lending deal qualified? Is it based on the property value only?
REPLY FROM PAUL:
The videos will answer your questions.
Why are the LTV terms so varied among private lenders?
REPLY FROM PAUL:
The videos will answer your questions.
As a private lender, one of my frustrations is knowing how secure the potential investment is going to be.
REPLY FROM PAUL:
Check out video #1 and then sign up for notification of when our product for Private Lenders will be released. http://www.SecuringHighReturns.com
Once I receive money from private lenders, how do I use it to invest?
REPLY FROM PAUL:
The videos will answer your questions.
As a real estate investor, I think one of the most frustrating things I have to deal with is finding affordable money to fund my projects. I want to make sure that if I use private lenders as financiers that I will be getting a good deal.
I would like some clarification regarding when looking for private lenders is a security regulated by the SEC, and the definition of General Solicitation. Are the two mutually exclusive?
REPLY FROM PAUL:
Watch video #3
Is loan seasoning an issue when it comes to refinancing investment loans with private lenders?
REPLY FROM PAUL:
Not usually. Remember a Private Lender is an individual not a company or a bank.
Is there anything specific I can do to better locate accredited investors? How can I be sure they are trustworthy?
What do I need to do with the WA Department of Financial Institutions to work with private lenders? Is there some sort of registration that’s required before I can receive private funds?
REPLY FROM PAUL:
Watch video #3. I even show you the document you need to file.
How do you keep private lenders’ money in use at all times? I don’t want them to feel that they are losing money if I don’t have it invested in RE projects.
Have you noticed if private lenders have a preference as far as what types of properties they lend on?
The financial stability of the lender is very important to me. How can I guarantee that they do not have financial problems?
REPLY FROM PAUL:
When choosing to work with a private lender I always will due my due diligence. I also have them complete a questionnaire before I borrow money from them. It is also your responsibility when working with non-accredited investors to ensure that the lender will not be irreparably harmed financially if they lose their investment.
I have to agree with the comment Jonas made above. What happens if the private lender goes bankrupt? Is there any sort of rule in place that ensures the security of the borrower if this happens?
REPLY FROM PAUL:
Do your due diligence. Have a proper contract promissory note and security document in place.
Do private lenders prefer lump sum payment at the end of the loan, or monthly payments for the life of the loan? Is there any kind of advantage for the REI to using one repayment method over the other?
REPLY FROM PAUL:
It depend on the lender. Different lenders have different requirements. Chose the best type depending on your exit strategy.
Do I need an SEC attorney to file any and all documents that pertain to a private loan?
REPLY FROM PAUL:
Not necessarily. I only use an SEC attorney to compile my syndications. Other than that I use standard documentation including a promissory note and deed of trust frm the local MLS.
Is it better to work with an individual private lender or work with multiple lenders and pool funds?
REPLY FROM PAUL:
Yes. Both. It depends on your use, how much you need and our exit strategy.
Are there certain types of REI who benefit more from private lending? If so, why?
REPLY FROM PAUL:
Sure, people that flip properties as well as rehabbers will benefit more than wholesalers and investors that buy and hold properties.
There is velocity of money that is attainable to these types of investors.
What are the top five ways to quickly and easily find private money sources that will have an immediate impact on my business? I don’t want to have to wait for months and months while I go through a bunch of legal steps.
Is there any kind of process I can put in place that will attract a constant supply of private money?
REPLY FROM PAUL:
Absolutely! Check out Video #2.
Do you know of a place/company that has a compiled list of private lenders? I want to compare the loan rates between lenders before I extend a lot of effort in forming a relationship with any of them.
REPLY FROM PAUL:
There is no list of Private Lenders. These are private individuals not companies. Check out the videos for a more through explanation.
Can a private lender give a REI loans from personal bank account funds, and give other loans from their retirement funds if the funds and deals are completely separate from one another?
How can multiple lenders aggregate their funds to loan on a first deed of trust?
REPLY FROM PAUL:
Check out the video 3.
The lenders I have found expect me to be able to put down so much money up front that if I had that much liquidity I wouldn’t need their help! Is there a trick to finding private lenders that have affordable rates and terms? I don’t have a lot of money to put down on a private loan, so I have used conventional financing on the 3 homes I currently own, but I’m in the position now where I can’t take out any more traditional loans. Any thoughts would be helpful and appreciated.
REPLY FROM PAUL:
Check out the Videos, I explain this pretty well in the first 2. Just don’t confuse Private Lenders with Hard Money Lenders.
I feel like all private lenders want 20% down or more. It seems like conventional financing is cheaper.
I don’t even know where to start with the entire private lending process. I need some steps in an A,B,C fashion – what are the exact steps I need to take to get involved in this?
I am looking for ways to keep the private lending process simple. I have people who are willing to lend me money, but they have a lot of unanswered questions. One such question is whether they have to report the interest I would pay them? Also, what is the best way to handle taxes when they lend me their borrowing power by putting a property in their name?
I have bad credit and all of the private lenders I have spoken with want to run a credit report on me. They have told me that they will be using my credit score to determine if they will give me financing. I thought that private lenders only looked at how good the deal is?
REPLY FROM PAUL:
Again you are probably getting private lenders and hard money lenders mixed up. Private Lenders are individuals that are looking to invest their money and receive a higher rate of returns than they can in a Certificate of Deposit or savings account.
Most Private Lenders wouldn’t know how to obtain a credit report let alone worry about the score. Personally it is my mission to ensure that private lenders do run credit reports but not only that understand why a person has bad credit and why they should lend to them anyway.
In your case I would explain what you are doing and why it is the house and the deal that is more important than your credit score. Work with them by explaining why your credit is low and what you are doing about it.
In this case you are talking to the wrong people. You can not just look in the yellow pages for a private lender. You have to network and talk with people to find the ones that will work with you.
NOTE: Private lenders are the life’s blood of this business. Protect them at all costs and they will protect you.
I have more funds available than good deals to place them on. What should I do? I don’t want to lose my lenders to other investors who have deals they need to finance.
REPLY FROM PAUL:
You need to spend some time and effort on finding good deals. Concentrate on marketing or working with Bird Dogs. Also talk to other investors about buying properties wholesale.
Get those lenders tied up before someone else does.
I have had those problems in the past and then I concentrated on filling my property buying funnel.
I want to make sure that both me and my private lenders are safe when investing in a property. Should I place the insurance in my name only, in my name and my lenders’ name, or just in my LLC?
REPLY FROM PAUL:
I am assuming that you are talking about hazard insurance. You would obtain insurance in your name and place your lender on the policy as a mortgage lender or if necessary as additional insured.
Is there a difference in the process of lending and the paperwork that’s involved when using funds from an IRA vs. using cash?
REPLY FROM PAUL:
Your property would still be secured as normal but when using an IRA there would be the additional paperwork for the IRA custodian. Pretty simple really.
When should I begin my campaign for private lenders? Should I start before I have deals lined up? Or should I wait until I have something to show lenders?
Do private lenders offer short-term funding to meet the needs of investors who flip houses?
REPLY FROM PAUL:
Each lender is different. You should concentrate on finding the lenders that meet your criteria. I have had no problem finding lenders that wanted to get into and out of a property quickly so that is usually not a problem.
I just want to caution you to keep your exit strategy in mind when you are searching for lenders and don’t commit to having only a single exit strategy especially in today’s market.
Do private lenders offer non-recourse loans?
REPLY FROM PAUL:
Why would you want a non-recourse loan? You are dealing with individuals who are local in your community. You should be protecting them before yourself. If you are in a deal where you think it may go south you should not put private money on the property.
It is my contention that if anyone should be at risk it should be the real estate investor. If you are looking for non-recourse loans please do everyone a favor and get a commercial loan so that if you default it will be spread across many people rather than just a single private lender.
Sorry to be short and rough around the edges but my credo has always been to protect everyone in the transaction in this order.
- The Private Lender
- The Seller
- The Buyer
- Myself
If I follow these practices and I concentrate on taking care of everyone then I will automatically be protected.
There are a lot of new regulations that are emerging in the world of lending. As a private lender, I am concerned that I will be forced to reduce the amount of money I choose to loan out to people, causing me to lose principal. Have you heard anything about this?
REPLY FROM PAUL:
As a private lender we are not usually covered by existing governmental regulation on loan limits and the like. If we don’t sell our loans to Fannie Mae or Freddie Mac we are pretty much free to set our own guidelines. Especially if we are lending to investors rather than owner occupants.
I have taken a recent interest in becoming a private lender. I was wondering if there is a specific strategy that works better in obtaining the highest return on my money. Should I charge a flat, say, 12% interest rate, or should I negotiate my return in the form of a percentage of the final sale of the RE project?
REPLY FROM PAUL:
Linda that is great question. You can do what ever you would like. As a lender I would look at the experience level of the investor and charge accordingly. When I buy a house to flip I will not get involved unless I can make a minimum of $65,000 so you can do the same as a lender. You will not get involved for less than 12% interest.
We are coming out with a course on being a private lender soon. You can sign up for notification of it by visiting http://www.SecuringHighReturns.com
Is it possible to broker for private lending funds if I have no available cash and no credit?
REPLY FROM PAUL:
Rose, when you deal with a mortgage broker you are working with hard money lenders not private lenders. Private Lenders are individuals that will lend based on the merit of the deal and your acumen and personality. The deal is the most important part. Good deals will lead to good lenders.
When I started I did not have much cash and I was able to get lenders because of my due diligence and effort on the deal.
Most private lenders don’t pull credit, even though they should. If you have bruised credit you can usually get around that by explaining what happened to your credit and what you have done about it.
Basically you are looking in the wrong place.
I am looking for ways to retain my relationships with private lenders who frequently invest in my projects. Would increasing the amount of interest I am willing to pay on their loan be a good incentive for them to continue working with me?
REPLY FROM PAUL:
A lot could be said for communication. Make them feel a part of your success. Have a dinner to celebrate. Send cards and pictures of your projects. Things like that will go well to helping them feel a connection.
Just don’t over due it because you don’t want them holding you hostage for more interest or a big cut of your profits.
What are the guidelines for syndicating?
REPLY FROM PAUL:
That is a big topic. Too big for a blog post. Short answer would be to look up the SEC guidelines for exemptions.
I address that in depth in my Advanced Strategies manual in the “Cracking the Private Lending Vault” Course.
Is it possible to use funds from numerous private lenders for the purchase of one property?
REPLY FROM PAUL:
Yes, you can such as placing them in order of contribution size as individual deeds of trust or mortgages. This is not combining funds. The issue with this is you would then have a second and a third mortgage. Some lenders may object.
You could also create an LLC or an LP and raise funds this way.
How can I obtain a large amount of money to purchase a single, high-end house without having to pool funds from multiple lenders?
REPLY FROM PAUL:
Find a single lender that would feel comfortable lending on a high end house. The other option is to partner with someone.
I don’t know what the likelihood is of finding that person in your area is though.
I would recommend either doing a blind syndication or creating an entity such as an LLC or a Limited Partnership to raise the funds.
If I were to use private funding, what kind of involvement would a private lender have in my real estate project?
REPLY FROM PAUL:
Yes I would talk to the lenders and only work with the lenders that meet your criteria. The choice is yours with private lenders. You have an opportunity to set the terms.
What are the requirements, and what circumstances warrant the need to pool money for deals?
If I were to pay my private lender completely off before the end of the loan would I incur any prepayment penalties?
Is there a way for REIs to control the property financially and management-wise when there are private lenders involved in the deal?
REPLY FROM PAUL:
Yes I would talk to the lenders and only work with the lenders that meet your criteria. I have personally never utilized a private lender that wanted to control the deal. The choice is yours with private lenders. You have an opportunity to set the terms.
I am having a hard time determining if using private lenders is the right avenue for business goals. How can I determine if using private lenders is right for me? And if they are right for me, how do I know when to use them and not use them in my RE deals? Is there any sort of evaluation I can do that will give me some guidance?
As the syndicator of a deal, what kind of fees and returns can I expect to receive if I don’t put in any of my own money into the deal?
REPLY FROM PAUL:
When you do a syndication as the person that manages the group investment you can obtain a management fee and take a percentage of the profits. It will be a small portion but when you don’t put up the money you can still make money on it. You can set up the deal anyway you want to as long as it is still marketable.
Is there a way for private lenders to receive payment without being regulated by federal laws, such as the Real Estate Settlements Procedures Act and Truth-in-Lending Act?
Is there a “right” way to structure a loan with a private lender? Should it be done on a per deal basis or some other way?
REPLY FROM PAUL:
Yes and Yes. I would do it on a per deal basis and structure it whichever way works for you and your business. Personally I define the structure and then go and find a lender that can live by the terms.
When I work with private lenders I like to pay them off in a lump-sum at the end of a deal, after the house has sold. Though, sometimes I find myself having to make monthly payments to satisfy certain lenders. Are there any tips or suggestions that you have on getting the lender to wait for their payment until I have rehabbed and sold the property?
REPLY FROM PAUL:
Yes I would talk to the lenders and only work with the lenders that meet your criteria. I have personally never utilized a private lender that needed monthly or even quarterly payments. The choice is yours with private lenders. You have an opportunity to set the terms.
Can I receive a loan from private lenders with minimal documentation?
REPLY FROM PAUL:
Sure but I would want to have all of the deal information to present to them. Otherwise why would they want to lend you the money.
Are private lenders able to finance the everyday home owner?
REPLY FROM PAUL:
Some are. It depends on the lender.
Will private lenders be able to help me understand the tax and legal implications of my decision to work with them? How do I know that I am receiving the best rate with them considering all of the closing costs?
Are private lenders willing to invest their money in properties that I want to hold for a minimum of five years?
REPLY FROM PAUL:
Some are. It depends on the lender. If that is what you are after then I would only entice the type of people that are looking for that. Frankly though I would not want to have a first mortgage out there at 12% for 5 years.
I have been known to be a little of a control freak (at least that’s what my wife says). So, I need to know what I can do to explain the benefits of lending to my potential lenders but keep control of my deals at the same time. Any suggestions?
REPLY FROM PAUL:
I work with Private Lenders. I make sure they understand that they are receiving interest on the money not a percentage of the deal. I don’t want partners. They have no stake in the project other than as a lender. I keep them in the loop and if they have more experience than I do I will listen to their ideas. Other than that I don’t even ask or acknowledge their opinions.
I have some funds from a Private Lender but want to obtain a mortgage for the difference. Are there any stipulations on doing this? If so, are there any ways to get around them? thx
I mainly invest in high-end properties. Do you have any thoughts on determining a value acceptable to the lender without giving them a full appraisal? To order a full appraisal on high end properties can be quite costly.
REPLY FROM PAUL:
You can always give them a Comparable Market Analysis from an experienced Real Estate Agent. I typically will pay anywhere from zero to a couple hundred dollars to have them done for me.
Even though I am an agent I always ask someone else to prepare them so that I can remain arms length in the transaction.
I have found lenders but honestly, am a little frustrated because they are all saying they only want to lend for a 6 month to 1 year term. I prefer more of a 2 year or more term. How would I explain to them why they should do a 2 year term versus a 6 month – 1 year term?
REPLY FROM PAUL:
Find more lenders that are truly private lenders rather than hard money lenders. They like short term money because it actually increases their yield. They typically charge points up front and if they can do that 2 or 3 times per year they make more money.
With a private lender that does not charge points you can also show them what they would earn on the life of a loan rather than taking it back having it sit around earning nothing while they find the next deal on which to lend. This keeps their money working and is just what they want.
I have discovered there is a fine line between my potential lenders being “interested” and actually following through. How can I get them to commit?
It seems as though the people i have talked with want about 20% down (from my own pocket). Is there any way to get around this and find people who will lend 100%? Or do most require money down just like the banks do? The problem is I don’t have the money to put down which is why I need a private lender is the first place. I have 2 properties ready, just need a lender.
Since I have no assets to show my prospect lender I am afraid he won’t lend me money for the property I found. What are the minimum assets private lenders usually require?
I can’t find any lenders that want to be in 2nd lien position? Can I explain any advantages to them for being in 2nd? I am not sure what they would be. Ideas would be helpful…
REPLY FROM PAUL:
A higher rate of return and plenty of equity left after them on the property so that you would be able to return their money with interest even if you had to sell the property at a deep discount.
I would like more information on how to pool investors together in an LLC. I am really interested in doing this but not sure where to begin. Advice would be great. thanks.
REPLY FROM PAUL:
Good idea and a great way to raise money for your business. There are some rules to follow when you find people to invest in your LLC or Limited partnership. You can find them by visiting the Securities Division of the state in which you live. You can also visit the SEC website and search for Regulation D Small business exemptions.
Most states will allow you to have a specific number of investors in your limited partnership that can bring money into the company to invest. You would then pay out a percentage of the profits based upon contributions. Sometimes you may want to have a minimum ROI others you may not want to.
I go in this in depth in the Advanced Strategies Manual in the “Cracking the Private Lending Vault™” course.
The first two private lenders I talked to require a business plan for each property I am interested in. Is this a common thing? What does a business plan entail?
REPLY FROM PAUL:
Not as often as people should. My guess is that you were talking to either Hard money lenders or sophisticated lenders. Not a bad thing by the way. It will help you set a higher standard for your deal and help you stay out of trouble.
A business plan should include at a minimum:
- Overall description of the deal
- What you will do to the property
- Whom you will use to do the rehabs and marketing
- Financials w/projected Proforma income and expense sheets and a P&L statement
- Exit strategies
The Forms and Tools Manual has examples of all of these inside.
How can I tell if a private lender really has the funds or is just talking like he does?
REPLY FROM PAUL:
Do some due diligence. Ask for references or require proof of funds before you discuss deals.
I am wondering if Private Lenders want to see proof of income before they lend their money?
REPLY FROM PAUL:
Some may want to see proof of income. But remember these are private individuals not banks or hard money lenders. Typically they are lending on the deal and the persons ability to complete it successfully.
I have experienced hidden and upfront fees by private lenders before they will even take a peek at the actual deal. Is this going to be the same for every private lender? I don’t want to pay upfront fees.
REPLY FROM PAUL:
You are working with the wrong lenders. I have never once paid an upfront fee or had a hidden fee with a private lender. I do take care of all of the expenses of the loan such as closing, appraisal, filing and courier fees and typically any fee that the lender needs to pay when using a self directed IRA. But that is usually it.
You may be working with a hard money lender or someone that is taking advantage of you. Look around for someone else. They are out there.
I’ve heard that in the state of WA a RE investor needs to file one form with the state regarding securities. What is that form, specifically?
REPLY FROM PAUL:
You can find that form in Video #3. I even show it to you and talk about what you need to do. It is the Form U2 exemption.
I am working off of the luncheon model of getting Private Lenders. I am having mixed success. I send out a couple thousand postcards with NO replies.
We are going to do it again this month any suggestions.
REPLY FROM PAUL:
I would hold off on dropping the next batch of postcards until you had an opportunity to test the list. If you received no responses from the original postcard then there is something wrong. It depends on where you got your list, your message and the list demographics.
I would adjust the postcard to something like a free recorded message where you can explain a little bit about how to earn a high return on their money with little work and risk on their part. It could also be for a free CD or report of the same message.
I have a feeling that the message is not resonating with your list. So rather than wasting your money on the postcard you should try something different.
You also need to ensure that you are meeting SEC regulations. Putting people into a seminar is a great thing. BUT Do not ask them for money at the meeting. I don’t know where you are located but many places has prohibitions against that.
The main thing you should be doing is meeting people and getting them interested in what you are doing. Tickle their fancy but don’t go right to asking them for money. I explain this all in my course and unfortunately if you don’t follow this just right one day you will have a State Regulator knocking on your door. I have seen this over and over again.
You mention below that WA investors should file form U2 with the state as an exemption. Why, what is the purpose of form U2? This form is titled “Uniform Consent To Service Or Process”, and it isn’t clear how/why this form would benefit an investor in WA looking for private loans. Please comment.
REPLY FROM PAUL:
Hi Bob,
I apologize. In Washington State, you need to submit Form U2 along with the Notification of Claim of Exemption form. You can find more information by searching on Small Offering Exemptions in Washington.
These are the forms that you need to file with Washington State to claim the Federal Exemption under Rule 147 (Single State transactions; lender, property and borrower in Washington State.)
There are restrictions on selling as well as the type of investors you can borrow from. You will need to research on both the SEC and Washington state websites for a deeper explanation.
These are the documents that I was informed were necessary by my attorney.
To raise larger funds you can do a “syndication” or a “registered offering” with the SEC directly in your company.
This is not legal advice I am passing along guidance. I always recommend consulting with your own attorney specifically and SEC attorney.
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I’ve heard that in the state of WA a RE investor needs to file one form with the state regarding securities. What is that form, specifically?
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REPLY FROM PAUL:
You can find that form in Video #3. I even show it to you and talk about what you need to do. It is the Form U2 exemption.
what happens to a person who raises 1.35 mil from ca investors and he lives in texas and he didnt file with the sec.
that investment also lost the investors the entire 1.35 mil
My biggest frustration has been the sheer amount of time it takes to network and build relationships with private lender prospects. It seems to be one of the only things you can’t delegate.
And that’s okay. I still DO it, and it works. But saving some time would be nice, too.
Alan Brymer
http://www.TheInvestorLibrary.com