Real Estate Secrets of the Unknown! - powered by http://www.prospectizer.com

How to Find Private Lenders Globally

An eBook by Trace Trajano, www.MrCashNOW.com

INTRODUCTION

I excitedly typed in the chat program…as my heart was beating fast. I asked her the question. Will she say “Yes?” I hope she does. I waited…It seems like forever. My heart was beating with excitement. I have not done this before. I hope she would say YES. Out popped her message on the chat program…

“Yes, Trace I will invest”

I pumped my arm as I shouted a BIG “Yes!”

Fides is my very first foreign lender. She’s from the UK and the next day, she wired me the money that I need. In fact, she is not only my first foreign private lender, she is my very first private lender ever.

That was 5 years ago…

Today, after millions of dollars, I have investors lining up for my deals and most of them are foreigners or people living and working outside the US. These investors’ funds help me acquire deals…and hold on to these houses specially when I have longer than normal vacancies. Without these investors, I would never be able to buy millions of dollars worth of houses and apartment buildings.

In today’s US economy, it’s crucial to have investors and lenders not just in the US but also in other parts of the world. I will discuss why in the next chapter.

In this eBook, I will discuss why you need foreign money. I will reveal to you the basics of raising money. It is crucial to understand the psychology of investors – what are their goals…and values or the things that are important to them. I will then discuss how you can get exposed globally so you will get investors from outside the US. I will discuss the Patriot Act and how it affects you and how you get money from abroad.

At the end of this eBook is a FREE resource you can tap into to get all the CASH you need for your real estate business. For now, learn how you will find more foreign money than you need to help bring your real estate business to the next level.

Let’s get started.

ABOUT THE AUTHOR

Trace has acquired millions of investment real estate by raising millions of dollars from private investors both here and abroad. He has raised almost $1 Million on just one deal alone – a 133 unit apartment complex he has acquired with none of his own money. Most of Trace’s investors are from Japan, the UK, Germany and Singapore.

Trace is also a best selling author (“Think Rich – Quick!” published in the Philippines, Sept. 2007) and award-winning speaker. Trace has students all over the world who are buying and selling real estate even in today’s slow market. He has written about 200 articles about real estate investing, about money and investing. Check these articles out in his blog – http://tracetrajano.blogspot.com.

Recently, Trace started www.MrCashNOW.com in order to help investors around the world raise all the cash they need to survive in today’s slow market. Through www.MrCashNOW.com , Trace has put under one roof, different gurus who specialize in the following areas:

ü How to raise money from private lenders

ü How to raise money from government grants

ü How to raise money from business lines of credit; and

ü How to raise money by selling your properties LIGHTNING FAST!

Trace is a member of “The Winner’s Circle” which is comprised of real estate experts and gurus such as Ron Legrand, Lou Brown, Roger Salam, Tim Mai and others who have created massive amounts of wealth through real estate investing and information marketing.

Trace has also founded a real estate franchise in the Philippines to help create one million Filipino (Pinoy) millionaires worldwide by the year 2020. Trace regularly contributes to Gawad Kalinga, the Philippine version of Habitat for Humanity. Trace is donating 1 house to a homeless family in the Philippines through his blog – http://tracetrajano.blogspot.com .

He was born and grew up in Manila, Philippines. He now lives in Mason, Ohio United States with his wife Bonna and two sons, Nathan and Johan.

CHAPTER 1

Why Raise Foreign Money

The US economy is in terrible straits right now. While I was writing this eBook, over $2 TRILLION of market value has evaporated from the stock market in the past 2 weeks alone. TWO TRILLION. That’s like having more than 30 Bill Gates going bankrupt all of a sudden. It’s mind boggling and outright scary.

I was just watching on TV a report about General Motors. Some of the GM workers were being interviewed. It was not a pleasant sight. Their faces were dark and gloomy. Why? GM stock has reached a 50-year low. Low stock values means job jeopardy.

This morning a real estate broker who specializes in selling apartment buildings told me last year he made $90,000 a month on commissions. This entire year after 10 months, he only made $18,000 – the entire 10 months! He complained to me that banks in the US are not lending money anymore because… and this is the depressing part…a lot of them don’t have any money to lend! The interest rate has just been reduced but if no one will lend money…what good is it?

To those of you reading this…the bad news is...because financing is hard to get, things are only going to get worse before they become better. Real estate prices are going to drop even further.

So what should you do?

There are two choices in this crisis. One is to complain about it just like 95% of the population…and two – is to do something about it and create your own future. I’d rather do the second one because it’s the only way to survive. This is why I wrote this eBook. I want to help YOU - my fellow real estate investor to not just survive when money is tight, but to actually THRIVE.

Someone moved the cheese. The lie has been exposed. The US does not have the money because it’s now in the hands of foreigners.

The truth is a lot of Europeans are silently gobbling up US real estate. Why?

The price of US real estate has dropped 10-30% in this past year alone. Combine that with the stronger Euro and the Pound, and the result? US real estate has never before looked so CHEAP. To give you an example…

Let’s say you’re a European and you were looking at immigrating here in the US back in 2004. Let’s say you are interested in buying a $200,000 house and back then, the US Dollar has the same value as the Euro. But you held off on buying or something happened with your immigration…regardless of the reason, you’re one lucky guy. Here’s why…

That same house has gone down in price, say by 20% or – it’s now $160,000. Now it gets even better. The dollar is now only 0.75 of a Euro. That means this house which used to be 200,000 euro 4 years ago is now…120,000 euro! To this one lucky European, US real estate is 40% cheaper.

Then it gets better. What if you can tell this one lucky European that since you are an investor, you can get him an even better deal. What if you can get him a newly renovated property that is 10% below market value? He was so happy with you that he told his other European colleagues who in turn decided to buy houses from you. Some of them decided to rent it out with your help…still others decided to just lend you the money provided you give them a fixed rate of return.

You have just been inundated with foreign money. This is a reality that is happening everyday. You can make it your own.

With foreign money…you really don’t care what happens to the real estate market. The longer it remains low, the longer you can use your European investors’ money to buy more deals. You don’t care what happens to US interest rates…or US banks’ lending policies or underwriting guidelines. You have found yourself your own bank.

Now, stop dreaming. Let me show you HOW you can make this your own reality.

CHAPTER 2

Raising Money is Like “Baking PIE”

Raising money successfully comprises of three components – P, I, E which stands respectively for…

Performance;

Image; and

Exposure.

If one of these components is not present, you will NOT be successful in raising money. Performance is knowing what you’re doing. If you’re losing money in your real estate investments right now, chances are you will NOT be able to raise money in a sustainable way. Investors will only invest with winners. Your Performance is very crucial.

Image is about your credibility. If you lose your credibility, you’re dead in the water. Investors invest based on trust. In fact, 98% of all business transactions in America is based on trust. If you can’t establish yourself as a trustworthy individual, you lose any chance of raising capital.

Lastly, Exposure is crucial as well. If your Performance and Image are good but no one knows you, chances are you will NOT raise capital either. Or you might be able to raise money in your own backyard but going global becomes difficult. I will show you HOW you can expose yourself globally without spending thousands of dollars in advertising.

But, I am getting ahead of myself. Let’s go to the basics first…the foundation…the starting point. Your Performance.

CHAPTER 3

Performance – What Investors Are Looking For

It is important to understand how prospective investors or lenders think. The thing that worries them first of all is NOT LOSING MONEY. They are afraid of risks. They are always thinking in the worst case, what will happen? Will they even get their money or investment capital back?

In other words, your prospective investors have a FEAR OF LOSS. This fear becomes even more pronounced if you, the principal in the deal is thousands of miles away – that is, you’re in another country. Hence, it is very crucial that you address this FEAR by structuring your deal in such a way that it is close to impossible for them to lose. If you can structure your deal in such a way that even in the worst case, they will actually make more money…then they will be crazy NOT to invest or lend you money.

To assure investors and lenders that we know what we’re doing, we have to speak their language. We have to know the numbers that matter to them.

To us as real estate investors, it is crucial to have 2C’s - cashflow and capital gains or equity. To private lenders, what matters most is another “C” – CCR or Cash-on-cash return. Cash-on-cash return is the amount of real cash that your lender gets in exchange for the cash that he invests in your deal.

For example, let’s say your investor invested $100,000 in your deal. Let’s say you deal promised him a return of $1,000 a month. What’s the CCR?

CCR = $1,000/month return x 12 months x 100 (%) = 12%

$100,000 (investment)

Generally, a return of 12% is very reasonable and attractive to investors worldwide. This is generally my starting point. You can only go higher from here but, generally not lower.

What’s the difference of CCR vs. ROI or Return On Investment?

CCR is a component of the ROI. To a private lender, CCR is enough because that’s the only return I give them. However, to an equity investor – or someone I give some ownership stake to the property, another return this investor will get is property appreciation or capital gains. The ROI is the total of the CCR and the capital gains return (CGR).

ROI = CCR + CGR

For example, in one of my apartment complexes, I give my investors an 8% return per year or about 2% per quarter. This may seem very little but I also give them an equity stake to the property. I project in 5 years, the initial investment of my investors will grow by 50% over 5 years. Moreover, the CCR will also increase by 100 basis points (or 1%) every year. Per every $10,000 investment, the numbers look like below:

	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5
Investment	($10,000)
CCR		$800	$900	$1,000	$1,100	$1,200
Equity						$15,000
Return per year		$800	$900	$1,000	$1,100	$16,200
Total Return						$20,000

Return on Investment = Total Return – Investment x 100 (%)

Investment

ROI = $20,000 - $10,000 x 100 (%)

$10,000

ROI = 100%

This means over-all, my investor will have doubled their initial investment. On a yearly basis, their ROI is…

ROI/yr = ROI/ 5 years

ROI/ yr = 20%

20% is the typical annual return I give my equity investors.

Property Valuation When the Market is Falling

Your lenders and investors know what’s happening here in the US and it’s crucial that they know that you are in touch with your market. That’s why I included in this chapter how to evaluate property values in this market. You have to be conservative with your numbers so that your investors and lenders will again be at ease and comfortable with you.

Your cost in acquiring, repairs, holding (or carrying) and selling the property must be no more than 65% of the after repair value. In equation form:

Acquisition cost + Holding cost + Marketing cost + Selling cost = 65% x After Repair Value

Let’s say you have three comps for the property you’re looking to buy…

Comp 1: sold for $104,000 9 months ago

Comp 2: sold for $99,000 3 months ago

Comp 3: listed for $99,900 (not an REO, that is, it’s owned by a private seller not a bank)

You know your market has declined by 5% in the past 6 months.

The house needs $10,000 in repairs. How much can you pay for this property?

Given the market, I will say the house is worth $90,000 fixed up (I deducted about 10% off the comparables above) and the repair amount I will use is $12,000 (put in 20% padding). I will assume it will take me 6 months to get the house renovated then sold. I will assume I will need to use a realtor to get the house sold, I will give my buyer a 3% seller concession and 2% will be spent on closing costs. Calculating all these…

Acquisition Cost + Repair Costs + Selling Costs + Holding Costs = 65% x ARV

ARV = $90,000

Repair Costs = $12,000

Selling Costs = (6% for real estate commission + 3% seller concession + 2% closing costs) = 11% x $90,000 or $9,900

Holding Costs = if you give your private lender 12% return per year, that means the cost of the holding onto the house is 1% (of the Acquisition + Repairs) per month. However, since the Acquisition Cost is an unknown, then to be simple and conservative, we can assume it’s 1% of the ARV per month

Holding Costs = 1% x $90,000 x 6 months = $5,400

Putting in these values…

Acquisition Cost + $12,000 + $9,900 + $5,400 = 65% x $90,000 = $58,500

Acquisition Cost = $58,500 – ($12,000 + $9,900 + $5,400)

Acquisition Cost = $31,200

This is your Maximum Allowable Offer for the property. Never, ever go above that amount when making an offer because if you do, you risk having a mediocre deal that is hard to get a private lender to lend money on. Worse, it could be a deal that becomes hard to re-sell (in case you’re lucky enough to find a private lender to lend you money on a mediocre deal).

CHAPTER 4

Image – Perception is Reality

Rightly or wrongly, perception is reality. In the context of raising money, what your prospective lenders and investors perceive about you, is what is real in their minds. Hence, creating the perception that you are a credible real estate investor is crucial in raising money. There are several over-all techniques and shortcuts. The best short cut I have found that immediately establishes you as a credible player is to position yourself as an expert.

Positioning Yourself as an Expert

One night at the Cincinnati REIA, I decided to speak in front of the group during what we call the Buy-Sell-Trade portion of our meeting. During this time, anyone who has houses to sell or anyone who wants to buy houses gets a chance to speak in front of about 200-300 real estate investors. I decided to speak inviting people to buy 11 houses that I happen to have at that time. I was basically wholesaling these deals.

After my 3 minute “speech” and sales talk, a Chinese looking guy approached me. His boyish looking smile was deceptive because from the way he smiled I would never have guessed how loaded this guy was. “Hi! I heard you spoke and I’m impressed you have 11 properties.” He continued, “How long have you been doing this?” This was 2 years ago so I said “About 3 years”. I answered.

“Wow. Only 3 years and you have 11 deals. That’s impressive. I want to sit down with you and have lunch. I want to invest money in your deals.” He enthusiastically replied.

Here’s a guy who has only seen me and heard me speak once and he is willing to invest with me. What’s more is that I did NOT even ask him to invest with me. He volunteered to invest with me.

The rest, as they say is history. This investor became my favorite private lender and he even became my partner in a 133-unit apartment complex that we acquired together! I borrowed probably at least $300,000 from him over the past 2 years. Through his contacts and through his investors, we were able to raise $980,000 on just one deal.

Just imagine what would have happened if I was too shy speaking during the buy-sell-trade? Just imagine if I did not position myself as an expert?

How to become an expert in a hurry…

Positioning yourself as an expert is actually easier done than imagined. If you don’t have the deals, just partner with a more experienced real estate investor or a wholesaler and wholesale his or her houses for him above the price he or she wants to get for them. For example if they are wholesaling a house worth $100,000 for $30,000…try wholesaling it for $35,000 and make an extra $5,000 for yourself in the process. Heck even if you are able to only sell it for $30,000, at least you can say that you get deals done or sold. The mere act of you trying to sell these houses will give you instant credibility. Partner with lots of wholesalers and let others see you at your REIA group as someone who has lots of properties to wholesale. This is what one of my mentors - Preston Ely did. He became the biggest wholesaler in Tampa starting from this strategy.

Starting tomorrow, do the same.

Other things to Help Establish Your Credibility

Aside from positioning yourself as an expert by talking at your REIA group…other things you should do include having a private lender marketing website, testimonials, business cards, a professionally written prospectus about your deal and a team of experts who can help you in your business. I’ll discuss each one in detail.

Private Lender Marketing Website

In this Web 2.0 world, you have to have a website. This is especially true for raising private money both in the US and abroad. Let me give you a screen shot of the website that I use for my own real estate business:

The components of a website like this are the following:

It has to have a way to capture your prospective investor information. In order to do this, you have to incentivize your prospective investor and lender to opt-in in exchange for…
A FREE special report - discussing how they can get a higher return from you versus other investment options
Testimonials from your satisfied investors; and
Introduction or a sales letter to make them want to invest with you

Business Cards

You have to have a business card that tells anyone you meet what you do. You buy and sell houses and apartment buildings…or whatever your niche is. Put this card everywhere you go. It’s better to put something in the back of the card – and say more about what you do. Make it a mini-flyer for you and your business. Then, spread it around. Pass it to everyone you meet and leave it everywhere you go.

A cool business card is the $100 business card. Below is a business card designed by Richard Roop. For more information, go to www.RichardRoop.com

Prospectus

You have to have a prospectus per every deal that you are raising capital for. This prospectus should present who you are or a description about your company, what’s the potential return to the investor, a discussion of the risks (there are always risks) and any data that support your calculation of the return.

I find my investors love a 1-pager Executive Summary. I send that first and if they tell me the deal is interesting enough, I’ll email them the full blown prospectus. In the next page is a copy of the 1-pager prospectus that I use.

Business Team

You have to have a team. If you are just starting out, you have to start identifying people who will help you in your business. Real estate agents, leasing agents, lawyers, mortgage brokers, title company, contractors are just some of the people you need in your business. Once you identify them and “hire” them, put them in an organizational chart. Below is an example of my own organizational chart (I did not put everyone working for me on this chart – which I probably should have done).

Testimonials

You have to have testimonials of investors who have invested with you before. Put their complete name, where they are from and if they are OK with it, even their phone numbers. I have investors invest in my deals after they have read the testimonials. Below are testimonials from some of my investors :

PROSPECTUS

We proudly invite you to consider investing in the following opportunity[1]:

Daytona

Dayton, Ohio

The Opportunity

Take advantage of the possibility of making 20+% return per year in an apartment complex in a pocket of development.

ü 90% occupied with majority of tenants being older people

ü $2.4 Million in renovation already completed (and fully documented) ensuring low repairs and maintenance

ü The company which has managed the property very well will continue managing the property (they have over 15 years experience with over 1,000 units under management)

The Property

ü 229-unit apartment building built in 1947

ü Low-maintenance pitched roofs

ü $2.4 Million in renovation already completed

The Location

The building is located in the northwest side of Dayton and is a pocket of development close to several million dollar home development. The building is located in close to a hospital, several pharmacies and elderly care facilities.

Investment Required

TOTAL CAPITAL REQUIREMENT: $1,320,000; $40,000 Minimum to invest

The Financials

The property has 90% occupancy with a 5.75% non-recourse $5.5 Million financing. The financing that is already in place has a 10-year term (9 years total remaining) with interest only payment over the first three years. The great financing and excellent management (which will continue operating the property) enable this property to give 20+% return per year to its investors (please see Attachment)

Please contact Trace Trajano (513-923-6439, or email: MoneyYoda@GMail.com) if you are interested in this opportunity.

CHAPTER 5

Exposure – How to become a Global Celebrity

Exposure is nothing but letting the whole world know what you do and the value you provide. As a real estate investor you provide tremendous returns to your investors and lenders. They need to know this because they are hungry in putting their money in an investment that is safe and has high return as you are hungry to get their capital to work in your business.

The nice thing about living NOW versus just 10 years ago is that NOW we have the internet. More specifically, now we have Web 2.0 as the way to make our value known on a global scale. And to advertise globally, you don’t have to spend millions and millions of dollars in marketing expense.

What is Web 2.0? It’s the internet where instead of big companies pushing their products to the masses through the internet, the masses push user-generated content to everyone else.

To make it easy to understand this, consider YouTube.

In the days before YouTube, the closest you can get to user-generated content is when you watch amateur videos of weddings and parties of your friends and family. That is user generated content but its reach is very limited. Now because of the internet, user-generated videos are ubiquitous. As a real estate investor, you should push the video you create to the global community through YouTube and more specifically, push it to targeted groups of foreign investors.

These are the steps that I use to create a list of foreign investors who are fighting over each other to invest in my deals:

Develop blogs about…
1. Your properties for sale
2. Your real estate philosophy and experience
Teach people what you do through YouTube videos – you have to give something to the Web 2.0 community first before you can ask something in return. You need to use your videos to direct them to your blogs and your website as well.
Become a member of the different Social Networking sites – like FaceBook and MySpace. You have to participate and become a member of the top 10 real estate groups in these social networking sites.
Post ads in online classified ads like Craigslist.org and Backpage.com promoting your YouTube videos, your blogs and your website.

How to Develop Blogs

Blogs stands for web logs. Originally, a blog is a diary in cyberspace where you put in your thoughts or whatever comes to mind for the day. Blogs are evolving into becoming more and more like websites. You can add videos, pictures and other cool applications. The style of writing you should adopt should be conversational and not formal at all.

You can use blogs in two ways. One is you can blog to position yourself as an expert in the market place. An example of this is my own blog – http://tracetrajano.blogspot.com .

Another way you can use blogs is to market your properties for sale. Because you can put pictures and videos, it becomes a passive way to tell your buyer the details about your properties. One of my students in the Philippines has a wonderful blog about the properties she has for sale. Here it is - http://renttoownproperties.blogspot.com/

How do you make blogs?

First, you have to use a “platform” before you can develop your own blog. Think of a platform as the notebook brand you have to use in order to start a diary. I’ve used Blogger for my blog. You can also use WordPress or TypePad. These platforms are FREE. For more information on which blog platforms to use, go to this link:

http://www.bloggingbasics101.com/101/2007/03/so_you_want_to_.html

After you’ve chosen your platform, you’re now ready to blog. Using the platforms is really very simple. If you know how to use Microsoft Word, chances are you will know how to blog as well.

Lastly, you have to promote your blog. Put it as part of your email signature. Start posting it out there in Craigslist. Send an email blast to everyone you know. You can also mention it in a video which is the topic of the next section.

Videos

Making videos is not that difficult to do. Instead of the normal video that you see on YouTube which usually does not appear professional, I suggest you make a “slide show” video. Click on this video as an example.

http://www.youtube.com/watch?v=cUMW9eKb2TU

This slide show video is combined with music and is actually synchronized with music. This makes the video more memorable. The way to do this video is through Animoto.com. All you need to do is make a Powerpoint slide then upload it to Animoto, pick the music you want and viola! It will create a 30-second professionally done slide show video.

If you don’t want to make a slide show video, you can also create normal videos. I suggest you use a Flip Camera. It so user friendly to use and it’s really designed to be easily uploadable to your computer and into YouTube. At the time this eBook was written, you can buy a Flip Camera for $100.

For more information, go to www.theflip.com .

After making your videos, whether slideshow or the normal format, you can blast the video to all the video listing services (Youtube being the largest of them). The way to do this is via TubeMogul.com.

When listing your video, either in Youtube or in TubeMogul, you have to put the url, say of your blog or your website into the video posting. Of course, put the video in your blog or website as well. By doing this, people seeing your video on Youtube will go to your blogs and websites. If you structure your blogs and websites to get opt-in information, then you can contact back the people who visited your blogs and websites. Some of these people could be potential investors.

The last component of Web 2.0 is social networking sites.

Facebook and MySpace – Joining their eGroups

Facebook and MySpace are the most popular social networking sites out there. You need to join these sites and create a profile as to who you are and what you do. Most importantly, by joining these sites, you can then join their real estate focused groups and investors focused groups. Through these groups you can meet people who can be potential partners, team members and even potential investors.

The way to use MySpace and Facebook is not to immediately post advertisements. That will piss people off and you could be labeled as a spammer. Ask me how I know? I asked my Virtual Marketing Assistant to post ads immediately and the result was we were banned in many of these social networking sites. Some of these sites prohibit advertising.

So how do you do this properly?

Remember, position yourself as an expert first. Join these groups and join in the discussion. Ask some questions, do some research, share some materials and useful websites that you know of. Maybe even use these questions and your answers to them in your blog. Then get people to visit your blog to get the answers to their questions. Your blog can then have a link to your other blog where people can see the properties you have for sale. You can also direct people to see your profile because within your profile page in MySpace and Facebook, you can put your own blog as well as information on the properties you have for sale. You can also put the videos you’ve made for the properties you have for sale.

CHAPTER 6

How to “Cast Web 2.0” to “Catch” More Investors than You Can Handle

Getting investors through Web 2.0 does not happen immediately or overnight. Remember, you have to build trust and credibility and it takes time to build trust and credibility. But once you have built it, getting money is easy. In fact, you will come to a point that you will get more money than you can handle. Imagine turning down money. It happened to me and if you apply what you’re now learning from this eBook, it will happen to you too.

SO how do you do Web 2.0 in the right way? Although, I have mentioned it before, let me make it more explicit here.

The Law in Web 2.0 is the Law of Reciprocity.

Simply stated, you have to give something to the Web 2.0 community first…before you can ask them for something in return.

How do you do this exactly?

Identify a need that people have that is not being met by whatever people are offering out there. This is why I decided to write this eBook because there’s a perception out there that capital for real estate deals is hard to find. I’ve made it so darn cheap so every real estate investor will get it. This is also the reason why I created www.MrCashNOW.com.
If this need is something that you have a talent for, develop some content about that need. Or if you don’t have the talent or knack for developing content, you can borrow content. In www.MrCashNOW.com the content comes from money gurus and experts who are more than happy and willing to share the knowledge.
Promote the content that you’ve now generated or borrowed…in your blogs, YouTube videos and websites. Give the content for FREE. Email it to everyone you think will benefit from it.

By doing the above three things, you will have accomplished two things:

You put yourself in the minds of your prospective investor as someone they can rely on to get FREE and useful information; and
You attract more prospective investors…even people who don’t think they are investors now, but could invest with you in the future.

Admittedly, these things take time to develop and build. However, the rewards are worth it. While my competition complain that they can’t find the money to fund their deals, I just smile to myself knowing that I have all the capital I need to become the most successful real estate entrepreneur in my market place. In fact, I even lend money now to other real estate investors in my town…and the money is not even mine. It’s from my foreign investors!

Online Classified Ads

A discussion of Web 2.0 is not complete without discussing about online classified ads. I don’t put ads in the paper anymore. Online classifieds are for the most part free and reach a wider audience than newspaper ads.

If you’re brand new to online classified ads, you’re missing out on a lot. The most popular of these sites is www.Craigslist.org . You can also check out www.Backpage.com , www.Kijiji.com , www.Oodles.com and other online classified ads. Just google “free online classified ads” and you will see thousands of free online classified ads.

One thing you can do is you can start advertising your videos, blogs and websites in these online classified ads. As in all things, there are proper ways to do things and many wrong ways to do things.

After posting hundreds of ads in these online classifieds, these are the things I’ve learned:

Post on Craigslist everyday. The reason is simple. Thousands of people post ads on Craigslist and the latest posting is the ad that goes on top. If you post an ad once a week, your ad will go to the bottom or even the next page and will not be very visible to your target prospects. So post an ad everyday so your ad will at least remain on the front page of Craiglist. However, since you can only post the same ad every 72 hours or every 3 days, you should have four different ads per every property you’re selling or per every campaign (like raising money):
1. Ad on Mondays and Thursdays
2. Ad on Tuesdays and Fridays
3. Ad on Wednesdays and Saturdays
4. Ad on Sundays
Real estate for sale section is the best section to post an ad in. It is the most visited site and although strictly speaking you cannot post ads that are not related to real estate for sale, I find that people post ads related to finding money and other real estate services related stuff in the real estate for sale section.
Your Headline is everything. Remember, there are thousands of postings and your ad has to stand out from the rest. How do you do this? Below are some things that worked for me:
1. When posting ads for properties for sale, you should sound motivated or desperate to sell. Use words like “my loss is your gain”, “must sell or else I’m ruined” or “I give up!”
2. When posting ads to advertise to get private lenders, put words such as “Secret investment I don’t want you to know”. People love to know secrets.
In the body of your ad, you should incentivize your prospects to act immediately. Now that you’ve gotten their attention, you should give them a reason to do something about it. I use “email me NOW before others make a KILLING” and I get so many emails as a result. You can even promise to give them a FREE gift when they email you or if they act immediately. Be creative. That FREE gift can be a copy of your special report for private lenders.
Capture the information of people who’ve seen your ad. I prefer email so I can pre-screen these prospects first. Email them back with more information with your phone number to call you if they’re still interested.
Follow these people up once a week, specially those who called you. Email them as to what you’re doing and the state of the real estate market or get them a free resource or something useful. The more they see you as providing value, the higher the chances that they will invest with you sometime in the future.

CHAPTER 7

Systematizing and Automating Finding Private Lenders

The way to do everything is to systematize and automate them. Finding private lenders is no different. Why?

Finding private lenders, especially foreign investors can become time consuming. These are the things you need to do:

You have to post ads in Craigslist everyday. In order to raise money from private lenders abroad, you have to obviously post ads in other cities in other countries.
You have to post something useful in you’re the top 10 real estate groups in Facebook and MySpace at least once a week so your name will be top of mind for your prospective investors.
You have to post a video about your properties for sale at least once a month if not once a week.
You have to update your blog that builds your credibility as an expert. Once a week is the minimum.

I delegate most of these tasks to my Virtual Marketing Assistant (based in the Philippines). Before you can delegate these tasks though, you have to…

Find a good virtual assistant. It took me 6 months to hire my very first one and I had to go through a lot of bad ones to get to the good one; and
Take the time to train your virtual assistant

Once again, invest the time and the rewards will come.

If you don’t have the time to do this, I am creating what I will call the Automated Private Lending Marketing System. It is comprised of:

A website that is specifically designed to appeal to private lenders; and
A Virtual Marketing Assistant who is already trained and is ready to help market this website using the Web 2.0 strategies we discussed in this eBook

In addition, with this system, you will also receive online classified ad templates that you can mix and match with the properties you have for sale (you can of course modify them if you want) and you can email it to your Virtual Assistant once a week. In addition to this, your Virtual Marketing Assistant will also do the following:

Find and post informational articles in the top 10 Yahoo, FaceBook and MySpace real estate e-groups
Develop professionally made 30-second “Animoto” videos to market your properties and your blogs
Find answers to people’s questions in the different real estate e-groups and put this content in your blog

At the time this eBook was being written, this system is not yet fully developed and in the process of being tested. For more information, and to get this system for half the price, check our website – www.MrCashNOW.com

CHAPTER 8

Legal Considerations

BELOW DOES NOT CONSTITUTE LEGAL ADVICE AND IS FOR INFORMATIONAL USE ONLY. IT IS ADVISED YOU SEEK PROFESSIONAL LEGAL ADVICE FROM YOUR LEGAL COUNSEL.

There are three legal considerations you have to take into account when borrowing money from abroad.

SEC regulations
The Patriot Act
Ownership of real estate by a foreigner

SEC Regulations

In raising money, the SEC is very strict in general advertising to solicit funds from the public for investment purposes. Basically, you cannot be deemed as selling securities to the public without SEC approval (which is a time consuming and an expensive process). Go to the Appendix for the copy of SEC Regulation 502 (c) for more details. There are two ways around this:

Do NOT pool investor’s money and have only one investor per property. By doing this, it is clear you are not selling “securities”; and
Establish a prior relationship with your investor. You have to show that your investor is not part of the general public.

If you follow these two rules, you’ll get yourself out of trouble. The tactic – then is to go out and advertise you have properties for sale AND position yourself as an expert. When you get inquiries from your foreign investors, eventually you can bring up the possibility of them investing passively (as a private lender) versus an active investor. Once they choose to be a private lender, have them invest in one property and do NOT pool their money.

The Patriot Act

The thing that concerns you here is NOT being perceived by the government as violating the provisions of the Patriot Act with regard to money laundering. Getting the money invested here – from abroad to you is NOT going to be an issue. Paying your investors back, might be perceived as money laundering specially if you send them an amount that is $10,000 and above. You have to file a report with the bank and the bank will have to report it to the government. If the amount you borrowed is not that much, the way around this is simple: send your investor his return in $9,999 increments over several days. It will cost more in wire transfer fees but could be worth while. Of course, if the amount is big, all you need to do is fill up additional paperwork so your bank can report this transaction to the government. For more information about this, check the Appendix or you can also check our website – www.MrCashNOW.com.

Foreign Ownership of Properties

The only way for foreigners to own properties here in the United States is through a legal entity established here in the United States. This can be done through corporations and through foreign limited liability companies (foreign LLCs). Even though, your main objective is to get these investors to become private lenders, if and when they become one, be clear to them that they will not have any ownership interest and all they are just lending money on the property. If they want to buy your property, to avoid violating SEC rules and regulations, again, do not pool investor funds and only have one investor owns the foreign LLC which in turn will have title to the property.

To get the paperwork to put up an LLC, go to your secretary of state website.

Promissory Note and a Mortgage

Since my investors trust me enough, the only paperwork between me and my investor is a promissory note (see Appendix). However, to give further assurance to a private lender, it is advisable to get a mortgage and have this mortgage recorded as a lien on the property. By doing it this way your private lender will end up owning the property in case of default. This is why I mentioned about foreign ownership. You can put in the mortgage document that if and when you default, you will deed the property to a foreign LLC which will be owned 100% by your private lender.

APPENDIX – 1

SEC REGULATION 502 (C)

The following conditions shall be applicable to offers and sales made under Regulation D:

a. Integration. All sales that are part of the same Regulation D offering must meet all of the terms and conditions of Regulation D. Offers and sales that are made more than six months before the start of a Regulation D offering or are made more than six months after completion of a Regulation D offering will not be considered part of that Regulation D offering, so long as during those six month periods there are no offers or sales of securities by or for the issuer that are of the same or a similar class as those offered or sold under Regulation D, other than those offers or sales of securities under an employee benefit plan as defined in rule 405 under the Act.

Note: The term offering is not defined in the Act or in Regulation D. If the issuer offers or sells securities for which the safe harbor rule in paragraph (a) of this Rule 502 is unavailable, the determination as to whether separate sales of securities are part of the same offering (i.e. are considered integrated) depends on the particular facts and circumstances. Generally, transactions otherwise meeting the requirements of an exemption will not be integrated with simultaneous offerings being made outside the United States in compliance with Regulation S. See Release No. 33-6863.

The following factors should be considered in determining whether offers and sales should be integrated for purposes of the exemptions under Regulation D:

a. Whether the sales are part of a single plan of financing;

b. Whether the sales involve issuance of the same class of securities;

c. Whether the sales have been made at or about the same time;

d. Whether the same type of consideration is being received; and

e. Whether the sales are made for the same general purpose.

b. Information requirements-

1. When information must be furnished. If the issuer sells securities under Rule 505 or Rule 506 to any purchaser that is not an accredited investor, the issuer shall furnish the information specified in paragraph (b)(2) of this section to such purchaser a reasonable time prior to sale. The issuer is not required to furnish the specified information to purchasers when it sells securities under Rule 504 , or to any accredited investor.

Note: When an issuer provides information to investors pursuant to paragraph (b)1, it should consider providing such information to accredited investors as well, in view of the anti-fraud provisions of the federal securities laws.

2. Type of information to be furnished.

i. If the issuer is not subject to the reporting requirements of section 13 or 15(d) of the Exchange Act, at a reasonable time prior to the sale of securities the issuer shall furnish to the purchaser, to the extent material to an understanding of the issuer, its business and the securities being offered:

A. Non-financial statement information. If the issuer is eligible to use Regulation A , the same kind of information as would be required in Part II of Form 1-A . If the issuer is not eligible to use Regulation A, the same kind of information as required in Part I of a registration statement filed under the Securities Act on the form that the issuer would be entitled to use.

B. Financial statement information.

1. Offerings up to $2,000,000. The information required in Article 8 of Regulation S-X (Rule 210.8 of this chapter), except that only the issuer's balance sheet, which shall be dated within 120 days of the start of the offering, must be audited.

2. Offerings up to $7,500,000. The financial statement information required in Form S-1 (Rule 239.10 of this chapter) for smaller reporting companies. If an issuer, other than a limited partnership, cannot obtain audited financial statements without unreasonable effort or expense, then only the issuer's balance sheet, which shall be dated within 120 days of the start of the offering, must be audited. If the issuer is a limited partnership and cannot obtain the required financial statements without unreasonable effort or expense, it may furnish financial statements that have been prepared on the basis of Federal income tax requirements and examined and reported on in accordance with generally accepted auditing standards by an independent public or certified accountant.

3. Offerings over $7,500,000. The financial statement as would be required in a registration statement filed under the Act on the form that the issuer would be entitled to use. If an issuer, other than a limited partnership, cannot obtain audited financial statements without unreasonable effort or expense, then only the issuer's balance sheet, which shall be dated within 120 days of the start of the offering, must be audited. If the issuer is a limited partnership and cannot obtain the required financial statements without unreasonable effort or expense, it may furnish financial statements that have been prepared on the basis of Federal income tax requirements and examined and reported on in accordance with generally accepted auditing standards by an independent public or certified accountant.

C. If the issuer is a foreign private issuer eligible to use Form 20-F , the issuer shall disclose the same kind of information required to be included in a registration statement filed under the Act on the form that the issuer would be entitled to use. The financial statements need be certified only to the extent required by paragraph (b)2(i) (B) (1), (2) or (3) of this section, as appropriate.

ii. If the issuer is subject to the reporting requirements of section 13 or 15(d) of the Exchange Act, at a reasonable time prior to the sale of securities the issuer shall furnish to the purchaser the information specified in paragraph (b)2(ii)(A) or (B) of this section, and in either event the information specified in paragraph (b)(2)(ii)(C) of this section:

A. The issuer's annual report to shareholders for the most recent fiscal year, if such annual report meets the requirements of Rules 14a-3 or 14c-3 under the Exchange Act (Rule 240.14a-3 or Rule 240.14c-3 of this chapter), the definitive proxy statement filed in connection with that annual report, and if requested by the purchaser in writing, a copy of the issuer's most recent Form 10-K (Rule 249.310 of this chapter) under the Exchange Act.

B. The information contained in an annual report on Form 10-K (Rule 249.310 of this chapter) under the Exchange Act or in a registration statement on Form S-1 (Rule 239.11 of this chapter) or S-11 (Rule 239.18 of this chapter) under the Act or on Form 10 (Rule 249.210 of this chapter) under the Exchange Act, whichever filing is the most recent required to be filed.

C. The information contained in any reports or documents required to be filed by the issuer under sections 13(a) , 14(a) , 14(c), and 15(d) of the Exchange Act since the distribution or filing of the report or registration statement specified in paragraphs (b)2(ii) (A) or (B), and a brief description of the securities being offered, the use of the proceeds from the offering, and any material changes in the issuer's affairs that are not d