By N. Xavier Arnold
How to Make Friends e en s
Real Smart Investment LLC
with Investors tor
The distressed-property niche presents
a potential opportunity for willing brokers
Now is a great time for mortgage brokers to provide creative funding solutions for investors
who want to take advantage of today’s
large distressed real estate market. To
do this, brokers must be knowledgeable, build extensive relationships and
understand investors’ desires.
In many cases, investors face down-payment requirements of 20 percent to
30 percent. Those can increase further
for properties requiring renovation.
Moreover, many banks have stopped
doing investor loans altogether, and
many sellers give extreme preference
to cash buyers.
Although all-cash offers provide
several benefits to sellers, including
quick settlement, investors unable to
pay cash still want to buy. With some
creative effort, brokers can provide ef-
fective funding solutions for these in-
vestors and tap a huge market niche.
“Investors unable to
pay cash still
want to buy.”
Seminars offer brokers a way to educate people about the investment
climate and to meet those seeking financing solutions. Often, these investors want to make a purchase soon and
have good credit but lack cash.
Brokers can help these investors tap
other resources, such as cross-collater-alizing the purchase with other properties they own. This works by combining
the equity from the other properties to
back a new loan. It can be most-effec-tive when the equity taken out of the
other properties equals the purchase
price of the desired investment.
Another option for investors could be
a home-equity line of credit (HELOC)
on their primary residence. This can
allow investors to borrow funds from
themselves. Much like cross-collateral-ization, HELOCs can provide relatively
inexpensive access to capital. This
method, however, puts investors’ primary residence at risk, and multiple exit
strategies should be considered before
moving forward with such a plan.
A third option is to seek private financing. These funds often come at a
high cost — in some cases, 15 percent
and 5 points. But investors who see
today’s property prices as the market
bottom may be willing to pay.
One downside of private funding is
that many lenders have small pools of
money that can take six months or lon-
ger to turn over. In addition, many pri-
vate lenders prefer to continue doing
business with successful investors with
whom they’ve worked previously. This
can leave new investors in the cold.
N. Xavier Arnold is founder of Real Smart
Investment LLC and a licensed real estate broker and real estate appraiser with 23 years’
experience. He is a successful businessman,
real estate investor and entrepreneur. Contact Arnold at (301) 292-3636 or by visiting
www.rsibestmethodever.com. He’s also the
author of the real estate book The Best Real
Estate Investing Method … Ever! He resides in
suburban Maryland with his family.
By Rick Grant
Share the Love on Your Blog e the o on You og
Rick Grant & Associates
When you write about your partners, you boost your credibility on two fronts
Although you and your company should be posting to your blog more than once a week, it can
be challenging to do so without seeming as though you’re just reprinting your
One easy way to do this is to write
short blog posts about the other companies and professionals with whom
you partner to get loans originated.
Whether yours is a real estate agent,
title agent or real estate attorney, giving them attention in your blog makes
by Rick Grant
“How to Blog Corporate News,”
“Blogging About Industry Events,”
“Be Borrowers’ Online Answer
Source,” April 2010
View these articles and more at
you look better connected in the community to borrowers at the same time it
does your partners a favor.
The key is to write a post in a way
that will enhance your relationship
with your partner — without confusing your prospects or sending them to
someone else for a loan solution. Talk
about these partners as top professionals with whom you have a relationship,
without going into great detail.
The blog post will run about four
paragraphs. The first paragraph will
introduce the partner or company. The
second will provide information about
how long you’ve worked together and
why you still do. In the third, detail the
benefits your clients get from your re-
lationship with this partner. Your final
paragraph is the call to action, where
you promise to introduce your cus-
tomers to this partner if it’s clear they
have a need for the partner’s services.
Here’s a look at each section:
work of many professionals neces-
sary to get a loan to the closing table.
Then, you could introduce a partner
on whom you depend to help clients
get their perfect financing package.
Rick Grant is the principal at Rick Grant &
Associates, a marketing communications
and public relations consultancy in Jim
Thorpe, Pa. He is the former managing editor
of Broker magazine and Mortgage Technology magazine and is the former editor of
Real Estate Technology Insight. He also produced online content for Office.com. Grant
writes for a number of trade publications
and is an avid blogger. Reach him at rick@
rickgrant.net or at (570) 325-2818.