If you invest in real estate, you need cash to buy houses. Even if you have a full bank account and great credit, you’ll eventually run short on funds - or short on time to obtain a loan - for the next deal. Private lending is the answer. It is a bottomless pool of readily accessible funds: whether you have great credit or poor; whether you have cash reserves or not.

“Private Lending” refers to the process of borrowing real estate investment funds from private individuals at rates higher than these lenders can normally achieve in the marketplace. The attraction of private lending is the speed and ease of funding a deal.

Here’s how it works…first you find or do marketing to find individuals interested in earning 10-12% interest (or whatever you deem affordable for you and attractive to others) on investments secured with real estate. You’ll find these prospects everywhere. They belong to your local investors association, your church, your civic club, they’re your friends and family, your neighbor next door. You’ll be surprised how easily you’ll locate them, and soon, they’ll be searching you out. Just let everyone know that you pay high interest for their loans on your real estate projects.

As prospects express interest explain that the investments are secured by real estate and do not exceed 75% loan-to-value (LTV) of the after repaired value of the home. Each investment is based on a specific property, and they can decline any property with which they are not comfortable. All you require is that they approve quickly (within 48 hours), and can fund within 7-10 days or less.

Once they have approved the investment, the funds are wired to the closing attorney to be held in escrow. After the closing, the lender will receive a Promissory Note from you (either personally, from your business entity, or both), a Deed To Secure Debt (mortgage) on the property, lenders’ title insurance, and listed as a mortgagee on the hazard insurance policy.

If no single investor can fund the entire investment, then piece several loans together by providing the largest investor with a first position mortgage, and each smaller investor a progressively subordinate (2nd, 3rd, etc.) mortgage. Typically, we pay an additional percentage on the interest rate to entice investors who accept subordinate positions.

The advantages of private lending are that there is a minimal approval process, and so availability of funds is quick. You pay interest only, instead of also incurring a loan origination fee commonly known as “points”. You are never constrained by arbitrary rules as to how many mortgages you can have in your name. In fact, none of these mortgages ever show up on your credit report. In turn, the private lendor receives a higher interest rate with a very secure investment. Everyone wins!

Now you may be wondering how many people you know really have $75k -$100k -$150,000 just lying around ready to invest. More than you think - and most of them don’t even realize it! That’s because the money is tied up in their IRA’s which they believe can’t be accessed until retirement. That’s only half true. They can’t personally withdraw the money without suffering penalties; but they can invest their funds (and receive your interest tax-fr ee! if it's a ROTH IRA) if they rollover into a self-directing IRA.

A self-directed IRA is administered by a third party institution (we recommend Equity Trust Company in Ohio www.trustetc.com ) and allows the IRA owner to make decisions relative to the investment of the funds. In other words, the IRA owner can decide to use his IRA funds to make a real estate investment in your property. Most people do not even realize this as a possibility. They believe their money must stay tied up in an IRA until retirement earning nominal interest. Imagine how thrilled they are when you provide this alternative! Imagine how much money is currently sitting in traditional IRA’s that you could tap into. There are more funds available than you can use. Isn’t that a nice problem to have?

Since Equity Trust Company has all of the forms on their website, I ensure that making a loan is as simple as possible for my private lenders. I prepare all of the required documents so all they have to do is sign and fax to Equity Trust. From that point on, the private lender has nothing else to do. Simple. Easy. Their next task is approving the payoff when the loan is re-paid. Because the loan process is so simple, and the interest rate so favorable, investors are always begging to re-invest. This truly is a bottomless pool of investment cash.

Don’t forget that if you have cash in an IRA, you can also increase the interest you’re earning by becoming a private lender. You can not invest in any property or company in which you or your family have a vested interest, but you can invest in the projects of other investors which you know and trust. It’s a great way to leap frog your IRA.

Have a rich week,

Lou

Lou Castillo has been successfully investing in real estate since the early ‘90’s. Castillo was on his way up the corporate ladder until he recognized that real estate offered a greater opportunity for financial freedom, and for the lifestyle he desired. Lou has a knack for developing powerful & proven systems that work in real estate and has authored more than 7 books and courses on the subject.

For more information, visit http://www.Investorriches.com or sign up for his Powerful Investing Tips at http://www.Freerealestatestrategies.com

Even if you’re counting on rising property values to eventually make a profit on an investment property, it’s far more desirable to have a positive cash flow each month. If you’re losing money on a property every month, it may not take long until your future profits will have been lost. Owning investment property is much more enjoyable if you’re making money along the way.

Here are a couple of ideas for keeping your investment property cash flow in the black:

If you don’t already own your own home, your first goal should be to live in your first "investment" property. Interest rates and down payments are considerably lower for a primary residence, and you won’t have to deal with finding and managing tenants or absorbing the cost of an occasional vacancy.

Once you begin looking for your first "official" investment property, you’ll want to concentrate your search for less expensive homes, because they’re generally easier to rent for a profit than higher cost houses. You can also purchase two or three smaller homes for about the same cost as one larger one, thus giving you an even greater cash flow.

One of the easiest ways to achieve a positive cash flow is by obtaining a loan with a very low interest rate for the first several years. One example is known as a “payment option” loan, although these types of loans may not be available in all states.

These loans allow you to set up an optional minimum payment, which can result in low monthly payments, often for the first five years. During that period, your minimum payment will increase by a small amount every year, although it’s usually no more than a factor of 1.075. During the minimum payment period, your interest will still continue to accrue at whatever rate you’ve agreed on (such as 4.5%), but the interest that your payments don’t cover will be deferred. At the end of the first five years, that deferred interest is then added on to the loan, and the loan becomes a standard variable rate loan. Normally, that’s not a problem, however, because the property’s value probably will have increased enough to cover the deferred interest.

Another way to minimize monthly interest payments is through an interest-only loan. The period of most such loans is usually 5-10 years, during which time, you’ll be paying only the interest on the loan. To make this type of loan work most effectively, it’s best to sell or refinance the property by the end of loan period.

There are many other ways to realize a positive cash flow on your investment properties, depending upon the financing options available in your area of the country. But regardless of where you live, it’s always desirable to have your investment properties pay for themselves, and can move you a long way toward your goal of financial success as a real estate investor.

(c) Copyright 2004, Jeanette J. Fisher and Robert S. Kramarz. All rights reserved.

Jeanette Fisher, Design Psychology Professor, is the author of "Doghouse to Dollhouse for Dollars: Using Design Psychology to Increase Real Estate Profits," the only book to reveal interior design secrets on how to make top dollar investing in real estate. For real estate and interior design psychology books, articles, tips, and newsletters: http://www.doghousetodollhousefordollars.com.

Robert S. Kramarz is a loan officer for a major loan brokerage. He has over 20 years experience in finance and business management and comes from a family a long background in real estate investing and banking. He specializes in providing financing for purchase of investment real estate. He can be reached by email at MrFunding@22cv.com. Further information is available at the website http://www.sweetloan.info.

Wholesaling real estate is by far my number one exit strategy in today's market. All you hear about is how terrible this market is and that it's the worst real estate market in decades. I'm here to tell you...Don't believe the hype!

I am an active real estate wholesaler who caters to investors. They pay me a handsome fee for finding them quality properties to BUY! Yes you heard me, BUY! Yes there are people buying houses in this gloomy, end of the world real estate market. The people buying now are setting themselves up for financial security. They are buying right.

See, whether it's real estate or stocks the old adage is you make money when you buy. This basically means that if you buy at a low enough price you will make money when you eventually sell at a higher price.

As a wholesaler, I just find what these investors are looking for and make money doing it. This technique requires me to put up no money. I don't have to have my credit pulled. All that is required from me is a few hours a week and the knowledge to put these deals together.

I don't care if you are unemployed, bankrupt or just plane broke! Wholesaling real estate will put immediate CASH in your bank account! If you don't have the money or the credit to buy now, that's fine. Utilize this strategy to capitalize on this market. Make some money, pay off your debt, and learn the in's and out's of this business.

This is a part time business that once mastered, it will provide you with a full time income.

I learned how to do this while in bankruptcy. My home was beginning to get foreclosed on and we had a new baby on the way. We already had 3 kids so this baby (my son) was on the way.

I needed over $11,000 to save my home. Through the grace of God he guided me to this system and I was able to make the money I need to save my home.

I am not here to give you any fluff. That's not my style. What I learned is the real deal and it can help anyone who is willing to learn and apply it.

Cecil Doggette publishes a free weekly ezine for anyone looking to learn more about making money in real estate using absolutely no money or credit. Sign up now for your Free ezine at http://www.getintoflipmode.com

Buying a home can be one of the most important decisions you make in life. There are many factors to consider when deciding what real estate purchase is right for you. Like all important decisions in your life, it is vital to do research and ask yourself some very complex questions about what your needs and wishes are for both present as well as the future.

First, you must decide for what reason you want the home. Those looking for a quick, short term investment will have different needs and desires than those looking to stay settled and raise a family.

Next, you must consider how much you are willing to spend. It is important not to limit your search to a particular area or price. Instead, pick a wide and practical range of prices that you can afford. When researching this element, you may want to contact a real estate agent, bank official, or home lender to help you weigh the costs and benefits. It is important to remember that real estate purchase not only offer a place to live, but an investment for you and your family.

The next, and possibly most important factor to consider, is location. If you are looking to stay settled in an area, it may be important to look at elements like schools, hospitals, shopping malls etc. located in the vicinity of that area You may also want easy access to airports and work place, cutting your commute time and giving you more free time to spend with your family.

Furthermore, it is essential to gauge how weather and the environmental conditions of the area may affect the real estate's livability. Sun all year round may be fine for some, but many homeowners long for the change of the seasons. Later no renovation is possible that can change a home's location, so weigh this element heavily when making your wish list.

Now, it is time to ask yourself what you are looking for in your home. How many bedrooms will you need immediately? Will you need more or less bedrooms five years from now? If the architectural style appeals to you now, it is important to also estimate how easily you can remodel in the future in case of any change in tastes or styles. It is also important to manipulate any special needs you or your family and friends may have. Stairs may add more floor space to a limited sized lot, but may make your home inaccessible to older guests.

You've done the research and have a substantial wish list for your future home. Now what?

The next step is to find an experienced and knowledgeable real estate agent. Knowing exactly what you are looking for and being able to express your needs will make the buying process all that much easier. However, despite your research and self-examination, it is important to keep an open mind. A good real estate agent will often show you homes just outside of your expressed needs and wishes. Who knows? The right home may be one that you didn't even know existed before your agent pointed it out to you.

When you're investing in residential real estate, financing for your property sometimes become difficult and frustrating. If you are prepared for the process, you can plan for investment property loan without the frustration. Visit KISCL to ensure the success with all of your future property schemes. http://www.kiscl.com