Duncan Wierman’s Blog

One of the newest forms of  hype information “gurus”  are  pushing is for real estate  investors to use Web 2.0 .  This basically means they want real estate investors to be marketing on social networking websites to connect with prospective clients.   The problem that many of these investors are running into, is that they are not able to effectively generate the leads, or when they do, they are not convert these interested parties into actual clients.

Yes, Web 2.0 can be used as part of a larger marketing strategy,  BUT it is not a “miracle” pill!! Web 2.0 and marketing thereupon still has some inherent factors that you must realize.  Firstly that many people who get involved,  quickly lose interest !!   There are a few things that you should avoid that will give you a much better chance of succeeding using Web 2.0.  Many of these gurus have not even figured out yet!  (It never ceases to amaze me how  small their social networks are as information gurus, yet the  pump you full of their expertise??  Would you not want to follow someone who has “mastered” marketing? )

The first thing that you must do is make sure that you commit to a schedule each and every day. You must publish your listings and pictures at the same time every day so that interested parties will know when to look. The problem with releasing this information at random times is that most people have hundreds, if not thousands, on connections on these sites. Therefore, they are receiving an overload of information every day, so they have to filter through this information and pick out the things that they are truly interested in. All it takes is for someone to miss your listings once for that person to move on to someone else, so it is well worth your time to make these posts. Also, make sure that you monitor your company on a consistent basis, as this will allow you to answer any questions that potential clients might have immediately. By actually communicating with people by using Web 2.0, you can bring your services into these peoples’ worlds, which will make you much more accessible for them.

When you are making your daily updates or posts, make sure that you provide value for your followers. If these people feel as though reading what you have to say is a complete waste of time, you will not have a whole lot of success. Even if you do not have many new listings on that particular day, you can still provide these people with information that they can use. You do not have to write a whole lot, but it will be well worth your while to provide these potential clients with some information that can help them going forward.

One statistic to remember is that if you are unable to convert people to visit your site within the first 30-days, these people probably will never become a customer of yours. People who are joining your social networking sites are likely interested in purchasing a home right now. Therefore, they are following you because they believe that you can be of service to them. Once a certain amount of time has elapsed, these people will no longer be interested or will have found someone else to give them a similar service. They will probably get tired of visiting your site as well, since they obviously do not like what you are offering.

The truth about Web 2.0 strategies is that they can work, but you must be committed to making them a useful part of your selling routine. It is not as simple as signing up for an account and inviting people to join, as you must be prepared to convert these people into sales in the same manner you would over the phone. This is not a way to put your business on auto drive, but is rather a method of connecting with your clients in a new and exciting way. By being able to instantly connect with many different people who are interested in what you have to offer, you can definitely increase your chances of success. Make sure that you are active on a daily basis on many different social networking websites, as this is how solid leads are generated online.

Another thing to keep in mind is that Web 2.0 sites should look as professional as possible. You do not want to look like someone who has never used a computer before, so it might pay to have someone help you out with the design. Also, remember that this technology should be used to build up actual leads. When someone shows interest on one of these sites, make sure you follow up in the same way you would a phone call. This is the way that an increasing number of people are expressing their interest in homes and you are selling yourself short if you do not at least follow up. This is a supporting method of providing your prospects with the information that they are looking for, so try to provide them with as much as possible and then move to the next step.

The key here is to act as professional as possible, as difficult as that might sound while using Web 2.0. Since these are social networking sites that are normally reserved for friends and family, you will have to work extra hard in order to provide these people with the professional real estate investor that they are looking for.

One of the biggest mistakes people make is that they think that if they just put up a few interlinked squeeze pages by a Web 3.0 company is going to bring them hundreds of leads.

Each individual has to take responsibility for their own lead generation using their Web 2.0 sites. I have seen some companies charge 1,000’s of dollars saying they have “created” miracle money pumping squeeze pages for use with Web 2.0 (or Web 3.0) that provide no such results. The fact is that these companies cannot possibly provide the daily work that needs to be done to generate leads. Honestly, ask yourself, how many leads do you convert into sales from companies such as these companies?

By being able to learn and utilize these sites efficiently will definitely put yourself ahead of the other investors in your city, as many of them have not yet figured out how to use Web 2.0. There is a very good chance that social networking will be the next big boom in advertising, so get involved today, and be at the forefront of this new method of selling homes.

OR Subtitle: Is Using Aegis JV Partnership Funds a Good Deal?

Real estate investing can be very easy when you have money lined up to invest with. Individuals with the aptitude to find and analyze deals and use private money stand to gain huge profits as they flip houses strategically.

The Questions you have to ask yourself are,

• What is the deal’s value in comparison to the funds?
• What amount of profit can I make?
• How do you fulfill investing obligations proceeding the deal?
• How much is the funding really worth?

All of these questions deserve relevant answers that include identifying pitfalls of venture capital partnering, advantages of using private money from investors and while increasing profits while reducing risks.

Loss of Profits with Partners

Venture capitalists firms expect high fees or returns or both on your deals.  By offering such high fees, you are placing your investment in a tight spot to squeeze profits. In the end, you begin to lose profits as the loan goes over a very short period of time ie. (90 days).  Venture capital firms expect profits whether you receive a return on your work or not.

The numbers speak volumes in relation to funding using a combination of the following:

Bank Loans            8-12% (depends on credit score) Down payment/monthly payments

Hard Money Lenders    5-10-15% and points of 2 to 3% and monthly payments then repay in 90 days or pay more points.

When borrowing money for renovations, the borrower typically has to start the renovation process with their own money and then the lender will lend the money in increments as the renovation progresses.

Private Money     6-10%, no points/flexible terms

Property – $98,000 + Renovations – $5,000 = $103,000 (Total Estimated Cost)

Bank Loan – $110,300 at 8.7% over 30 years-fixed = $119,896.10 (true value)

The monthly payment for your bank loan equals $806.00. To some, this is an amazing opportunity due to their good credit, but what about the potential advantages of borrowing from private investors? The bank loan’s amount may be cut in half if used correctly by issuing an opportunity to three stockholders a private lender  in a property. In fact, what happens when you have bad credit? Your numbers are slightly different:

Credit Cards           17-18%

Bank Loans             10-12%  Down payment/monthly payments

Venture Capitalist     10-15% and points of 2 to 3% and monthly payments then repay in 90 days or pay more points.  When borrowing money for renovations, the borrower typically has to start the renovation process with their own money and then the lender will lend the money in increments as the renovation progresses.

Private Money     6-10%, no points/flexible terms

Example:

Property – $98,000 + Renovations – $5,000 = $103,000 (TEC)

Bank Loan – $110,300 at 11% over 30 years-fixed = $122,433 (TV)

If this is your first or 50th investment opportunity, it may suit your needs to find private lending partners within your professional network to finance a deal before it is too late.  Stretch your knowledge base by reaching out to individuals whom you are comfortable working with on financing your deals. Nontraditional funding opportunities may be a call away or a meeting from you acquiring your first property.

Nontraditional Funding Opportunities

Private moneylenders are there to help you in the midst of trouble. They are understanding, expect little in return, and are ready to go through the hard times.  Private money opportunities exists everywhere in your reach; the access to investors or everyday people willing to put their money in your hands is the beginning of an evolving partnership with little strings. All you have to do is make a plan in how to attract private lenders, also known as angel investors whom are willing to give you the leading role while providing funds for the real estate venture.

Finding Private Money

Real estate investors lurk are available within real estate investor organizations, doctors, lawyers, IT professionals, and other professionals with slow investment plans providing little return. Your introduction to passive real estate investing is only an option, but if you present it rightcorrectly – it can become their solution to building wealth. Work your circle of influence in a strategic manner – start with family and friends then branch out into investor organizations within your city. You will notice that a number of candidates exists outside of your comfort zone. Some of the other people available are friends of friends, your personal banker, consultants, colleagues and anyone with a retirement plan.  Always ask for referrals!

Creative Borrowing Techniques

Certain private moneylenders will face cancellation or early withdrawal fees from using their IRA and 401K. Consider offering an incentive for this fee by paying their withdrawal fees with their first returns on the property. This presents a sense of gratitude and commitment to their investment.  In addition, offer to pay their annual maintenance fee on an IRA for the money they lend you.  On

$1 million dollars the fee is less than $2,000.  Setup your own self-directed IRA with a company like Equity Trust so you are familiar with the process and you can say with confidence that your IRA is self-directed.  Working with Equity Trust Company will give you huge credibility.

Equal Interest Exchanges

Organize the investing process to help improve success. For instance, if investors request a 5% return on their $20,000 loan offer them 2.5% of ownership in the property. The $20,000 of their loan compensates the purchase and allows potential expansion of their funds in other areas in the deal. Split the interest of the loan in half to give investors a say in the upgrades or improvements of the home overtime. This can develop into a profitable partnership if done correctly.

Develop a SWOT Analysis

What does an investor want to know? How fast will you be able to make money off the property. Add a SWOT analysis in your presentation (or discussion) of a real estate deal. Establishing confidence in investors means describing numbers, level of success, and the steps of how their funding will help increase profits of a property. Contrary to popular belief, numbers speak. Numbers provide confidence and a peace of mind for investors. It is your responsibility to establish a strong network of investors, purchasers, and increase likelihood of success by automating your real estate investing practices.

Work The Numbers

A friend offers to loan $20,000 towards a $110,000 purchase. Their equity in the home is approximately 5.5%. You ask the friend to pay 3% on the loan in exchange for complete control over the project. Now, your total expense to the friend is $20,600 (only $600) for acquiring the loan. You offer to pay a monthly payment of $115 per month over the next 15 years. To your investor, this is a continuous stream of income just for giving the starting money in the deal. To you, this is an amazing opportunity to own your own property to flip.

Now, let’s say you renovate and sell the property for $136,000. The profit is $26,000, which covers the first loan to your friend. Secondly, you decide to pay larger sums in monthly payments in order to give your friend their loan back in 10 years. You now have the power to pay the full loan back with a remaining $5,400 profit towards another property or keep the profits to use as monthly payments for 10 years. At this point of private money, you are in control of everything.

Compare to Venture Capital Firms.

When comparing Private Money to a company such as “Aegis Equity Capital Partner Program”  the differences are vast and in favor of Private Money.  The power of Private Money is most obvious when you’re able to not only acquire the property, but you have the capital available to do the renovation if one is needed.  By utilizing Private Money you will almost always receive a check at closing which is tax-deferred capital available for you to handle marketing expenses, holding costs and money to pay yourself as you run your business.  In addition, you have the opportunity to be very creative with the rates and terms for your private lenders.  You can pay them 6-9% and negotiate payment terms that are monthly, quarterly, semi-annually or annually.  Don’t you love it?  You are in control.

Example:  On a $200,000 ARV (after repaired value)

Private Lender @ 80% LTV = $160,000 loaned

Acquisition Cost    -  $114,000

Renovation Cost     -  $ 28,000

Cash at Closing = $ 18,000 (to handle marketing expenses, holding costs and to pay yourself

2-5 year term with no prepayment penalty with Private Lender

Pay Private Lender 8% APR Fixed on $160,000 = $12,800 divided by 12 months=$1,067….. Keep in rental portfolio and rent for $1,275/month while you earn $200/month cash flow and are in a position to ultimately OWNER FINANCE for $210,000 and turn the renter into a buyer.  Request a $20,000 down payment and owner finance for 36 months and have them refinance with a bank.

Or sell when renovation is completed for $195,000 and earn another $35,000.

First and foremost with Aegis the fees paid to them are outrageous.  The whole idea of investing in real estate is to be in control, have fun and make money. The only people in control, having fun and making money with the Aegis program is Aegis.  They are in the “Driver’s Seat”, not you the borrower.  They set the terms and the rates and you pay the fees and accommodate them.

Special Note:  When borrowing money very seldom should you borrow for the short term 30-90-120 days.  Real estate renovations and marketing take time and before you know it, you’ll burn through the short window of time.  Partnering with Aegis or anyone to ultimately give them 10-20% of the profit or $8,000-$18,000 on the deal, whichever is greater and for 95+ days of access to capital is not a good business strategy.

The ideal time frame to borrow money with private lenders is 12-24 months with no prepayment penalty.  Finish one project and ask the Private Lender permission to keep paying them a great rate of return on their passive investment by moving their money to another property and restart the process.

The two most powerful words in Real Estate are “PRIVATE MONEY”.

Look at what one of the top Realtors has to say in response to The Aegis Equity Joint Venture that Nathan Jurewicz and Chris McGlaughlin promote

Thank you.

Duncan Wierman and Gary Brevko