Learn how to borrow money for real estate investment, so you know exactly what to do!
Are you wondering how to get investors to back you up on real estate deals? Ted Thomas has got some important tips you can implement that will profit both you and your investors!
Today I’m answering a common question that concerns newcomers as well as experienced investors. In this lesson, I’m answering your question about how to borrow money for real estate investment.
This is not a complicated process. However, most amateurs really mess it up.
Dreamers are the successful people in the world. The problem is they dream, and they don’t necessarily think about the other person’s viewpoint.
They don’t plan or write down in clear, concise ways what they want and how they’re going to get it.
PRESENTING A DEAL
Let’s start thinking like an investor so that they’ll say yes.
Why are they going to say yes? They’re going to say yes because:
- You know what you’re talking about.
- You’ve got a good deal.
If it’s not a good deal, take my word for it, the investor will recognize that it’s no good.
So you need to know what you’re going to get them to invest in, and you must understand it. If you don’t, then don’t present it because you’re just going to get a big no answer.
I have a nice gift for you. It will teach you how to get the best bargains in real estate, and it’s free. So be sure to take advantage of it. Don’t miss out!
SINGLE FAMILY HOMES
Thousands of people purchase new and existing homes every year. Most of those properties are single family homes.
Banks and lenders have made a big business out of using the single family home as collateral. Most loans are 80%, and some are even 90%.
In the United States, we have instances where the FHA, Federal Housing Administration, and the US government will lend up to 97%. The collateral for the loan is the property and the creditworthiness of the borrowers.
As long as the economy is growing, this is a good business. When the economy starts getting soft and things go wrong, they don’t make those kind of loans. However, in some cases, they lend too much money.
THE 2008 RECESSION
In 2006, the banks loaned way too much money, required little or no down payments, and they didn’t qualify the buyers. They were making loans to anybody who could put a signature on a piece of paper.
If they’re making loans, the builders will find out about that, and they’ll keep building property.
Meanwhile, a lot of unqualified people were getting properties with very little down payment. If they couldn’t rent it or sell it, they just didn’t make the payments.
This happened all across the United States, and when that happens, properties start going to foreclosures. So, you have a crisis in the market and the market starts to collapse.
The financial industry created one of our biggest recessions, and it was ugly.
Prices dropped 30%, and in some areas, 60% and 70%. The high speculation markets were a disaster.
GOOD INVESTORS SUFFERED
This crisis severely punished all real estate investors because all properties deflated 30% – 70%. Even the regular investors who had done a good job of investing were in a crisis situation because the markets dropped.
The markets crashed and kept crashing. The people who had done a good job lost money. Everybody lost money.
What did they end up doing? When people can’t pay for things, they go into bankruptcy. That made it even worse, so the situation kept multiplying itself.
Millions of bankruptcies were recorded as people lost their homes.
Take my word for it, investors who lose money don’t forget. If you’re going to get involved with investors, and if you lose their money, they’ll never forget it.
TAX DEED AUCTIONS
On the positive side, I’m going to show you how to successfully borrow money for real estate investment for small deals to get started and big deals as you learn how, and this investment is recession-proof.
Once you “get it” and understand, you can implement these strategies regularly.
First, let me explain something. If you’re new to the Ted Thomas website, I’m telling you about tax deed auction properties that are sold with 60%, 70%, and 80% discounts from the tax assessed value.
How is that possible? Because the treasurer has confiscated the property. This process is mandated and administered by the state legislatures and the local county. It’s an auction process.
Everything about tax defaulted property and tax lien certificates in my program is 200-years old.
So, let’s get you started.
TAX DEFAULTED PROPERTY
In the USA, we have over 3,000 counties and over 100 million properties. All properties are taxed with the exception of churches and schools. Everyone owes property tax.
The properties could be homes, small apartment properties, cattle ranches, small farms or large farms or tall office buildings downtown.
The consequences of nonpayment of property taxes is as follows:
The state legislature authorizes the local county to have the treasurer levy taxes, collect taxes, and finally if no payment for taxes is forthcoming, the treasurer will confiscate the property and sell it at auction.
BARGAIN REAL ESTATE
What they’re going to do is they’re going to put those properties on a list and sell them, and they call that a tax defaulted property auction. They’re going to sell the tax deed to that property, and anybody can buy one.
The property will be sold for a starting bid of delinquent back taxes. As a starting bid.
A $100,000 property could have a starting bid of $5,000 or $10,000.
My point is this is bargain basement real estate for investors, and you want to buy bargain properties if you’re going to make money.
60%, 70%, and 80% discounts are not unusual. If you can buy at an 80% discount, your upside potential is huge!
It gets even better. You’ll be amazed and disbelieving when I tell you the county treasurer will wipe out, extinguish, delete the mortgage loan from the property.
Tax auction properties have no mortgage, and most encumbrances are deleted. That includes trust deeds, security deeds, mortgages, all of these loans are eliminated.
If you’d like to learn how to earn lucrative profits safely from tax defaulted property investing, you can get started today with my FREE Master Class.
Now you’re in the business of buying with a low purchase price, and investors want to work with you. Investors are shocked and delighted.
You want funding. Investors want profits, but before profits comes safety.
If the investor is shown that you can purchase at 60% or 70% or 80% below market, and without a mortgage, then you have their attention. Those are 2 good selling points.
OTHER PEOPLE’S MONEY
The average entrepreneur for some reason, feels that millionaires become that way quickly. That’s not necessarily true. However, if you want to make money, you must figure out how to use other people’s money.
Now, let’s get the money. How do you get it? Bankers will listen to your story, but they won’t lend to you. Credit cards are certainly an option.
Now here’s step one of how to borrow money for real estate investment.
Your first step is to think about people who know you, like you and trust you. This is where you’ll start your funding process.
For example, a tax assessed $100,000 single family home purchased at auction for 20% or 20 cents on the dollar equals $20,000. That’s a deal of a lifetime, but it happens regularly at tax defaulted property auctions.
So how do you profit?
WHAT NOT TO DO
Don’t ask any one investor for $20,000. Though in this case, you need $25,000 to cover expenses. Do not ask one person for that money because if you do, they’re just going to go the other way.
These are people that know you, like you and trust you, and if you ask someone for $25,000 they will get very, very, nervous.
You must start small with a very small group of friends and tell them, “I’m getting a property for 60%, 70%, 80% off the market price, and it has no mortgage. I’m going to buy it 20 cents on the dollar, and I’m raising $25,000.”
If you ask them for $5,000 each, they might listen to you. Most people could put $5,000 on a credit card.
DON’T GET GREEDY
Don’t be stupid like most entrepreneurs that are so anxious they don’t think of the other person.
What interests an investor? First, they’re interested in safety, then they want to make profit.
So, how much profit are you going to make? You must be able to present a good deal. You must generate massive profits.
Banks are paying 1% or less on savings. The average entrepreneur will say to the investor, the banks are paying 1%, so I’m going to give you 8% or 10% and get turned down. That’s not how to borrow money for real estate investment.
You want money. You want to get rich, but if you’re greedy, and you don’t want the investor to get rich, take it from me, you’re going to stay poor.
Those potential investors who know you, like you and trust you will never talk to you again. They won’t answer your phone calls. They’ll move to the next aisle at the grocery store, and I don’t blame them.
HOW THE PROS DO IT
So, here’s how the pros do it. Here’s how to borrow money for real estate investment.
Let’s go back to Step #1 – you are purchasing a $100,000 property at a tax defaulted property auction for $20,000. There is a huge margin in the deal. So, you borrow $25,000.
You ask each investor for only $5,000, and tell them that when you sell, you will give them an outrageous 25% on their money. Yes, offer them 25% interest on their money.
You may be thinking, “Oh, Ted, I’m giving up all the profit,” but are you?
My system is different. I don’t sell for $100,000. My whole business is predicated on buy it low, sell it low, and do it fast. That means I sell for $55,000.
I know every other real estate course says buy it low and sell it high. Well, just try that. It takes a long time to get that done, and you want to turn a quick profit.
So let’s look at the deal:
- Sales price: $55,000
- Investor money: $25,000
- Total profit: $30,000
- Investor return (25%): $6,250
- Profit after paying investors: $23,750
WOW!!! You made a big profit!! And no money out of your pocket!! $23,750.
More importantly, the investors made a 25% profit. You are going to have those investors for life.
If you make money for investors, they love you, and they’ll come back again and again and again.
We hope you enjoyed Ted’s lesson, “How to Borrow Money for Real Estate Investment.”
If you want to borrow money to invest in real estate, you must know what you’re doing, and you must offer a good deal. You want to offer your investors an outrageous profit, like 25%, otherwise they will turn you down.
The first investors to ask for money are people who know and trust you.
If you need to borrow a large amount, like $25,000, don’t ask any one person for it. Instead gather together a small group of people and ask them for $5,000 apiece. That’s how to borrow money for real estate investment.
Tax defaulted property is an excellent real estate investment vehicle because you can get property for pennies on the dollar, and without a mortgage.
This makes it incredibly profitable and much safer due to the high profit margin, and safety is a big concern for investors, often even more so than profits.
The huge profit margin from tax defaulted property investing enables you to pay back your investors and pocket a nice profit for yourself. If you can make your investors happy, they’ll keep coming back to you again and again.
Ted’s system is to buy the property at a low price, and sell it low in order to turn a quick profit, then move on to the next property, and Ted Thomas can show you how.
For over 25 years, Ted’s been teaching students how to do this successfully. Ted Thomas offers full support and a complete training with home study courses, Q&A sessions, live tutorials, workshops & web classes, and personal one-on-one coaching.
If you’d like to know more about tax defaulted property investing, don’t miss Ted’s FREE Master Class. It costs you nothing and only takes about an hour of your time. You can make lucrative profits with real estate. Get started today!