Operation Wholesale And The ‘Built-In’ Buyer

(Continued on pg. 2)

IN THIS ISSUEPat’s Inbox- If I had to start all over today ......................................................................Pg 2Private Money Monthly- The ONLY 2 Ways Patrick Structures PM Loans .......................Pg 6Swipe and Deploy- Property Cash Flow Analysis Calculator .................................Pg 5Lifestyle Entrepreneur Guide- The Death of Community ................................Pg 3Members Makin’ It Happen ...........Pg 7Operation Wholesale .................Pg 1

March 2013

Hey, I’m about to share something with you that only my closest friends and business associates know. It’s my new set up for doing wholesale deals that practically takes me completely out of the equation.

How would you like to profit from wholesale deals and make $3k, $5k, even $10k or more… without having to do any of the ‘real’ work?

Well, I’m about to show you exactly how I’m doing it…

Just Another Day At The Office

So I’m sitting at my usual table at the Starbucks on Cole-man Blvd in Mount Pleasant (one of my mobile offic-es)... sipping on a delicious iced coffee… getting work done. Day to day, I’m usually either working in a local coffee shop or out of my house on Isle of Palms.

This seemed like just another day at the office… until a good friend, Wil Christenson, walks in. I met Wil years ago when I first got started in real estate at the local REIA and over the years, we’ve partnered on 25 or 30 deals. He moved out of the area for a while… so I haven’t seen Wil much over the past few years. But he’s living back in Charleston now and mentioned that he’s getting back into flipping properties again.

It wasn’t until I left Starbucks and got in the car that it hit me. An idea for integrating Wil into my team, so that I can profit from wholesale deals without spending anytime talking to sellers, looking at properties, doing due diligence, making offers, or going to closings AND have a “built-in” buyer!

To top it off, it’s a HUGE win-win for everyone involved.

Before I get into the details, let’s make sure we’re on the same page…

What The Heck Is Wholesaling?

If you’re unfamiliar with what ‘wholesaling’ is, it’s very simple. It’s when you get a deal under contract and instead of buying it yourself, you sell it to another investor.

Another name for it is ‘real estate matchmaking.’ You’re simply matching up a seller with a buyer and collecting a fee for putting it all together.

On my first wholesale deal, I came across a woman who was in foreclosure, asked if she was just looking to sell for what was owed, and she said “yes.” I got the property under contract and showed it to an investor friend (a guy I met networking)… and he gave me a check for $10,000.

I just matched up a motivated seller with an investor buyer and collected a nice payday… AND didn’t use any cash or credit to make it happen.

Operation Wholesale

For a few months, my partner in my investment business, Dusty, and I have been preparing to launch a new mar-keting campaign specifically for wholesale deals with one stipulation… to minimize our time involved and maximize our strengths.

As I always say, “Real estate investing is a team sport.”

So… we’ve been on the lookout for the right team member to bring on as ‘Director of Operations’ for this campaign… and that’s where Wil comes in.

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(Continued from pg. 1)

If I Had to Start All Over Today…

Here’s a really excellent question I got recently from Broderick Smith in Fort Worth, TX…

“Patrick if you had to start all over today, how would you do it? What would your quickest path to excel in real estate investing be?”

Great, great question, Broderick!

First, Stop the InsanityRight off the bat the very first thing I’d do is figure out exactly how and why I ended up needing to start over again in the first place! I would invest a good chunk of time analyzing my previous results, and I’d very intentionally process through the lessons to be learned and decide specifically what to do differently moving forward.

We’ve probably all heard the definition of insanity before as, “Do-ing the same thing over and over and over again and expecting dif-ferent results.” That’s what I want to avoid. So if put in that position, I’d focus first on learning those key lessons well, so I don’t end up insanely repeating the same blunders.

ConnectMy next focus would be on rebuilding a strong local network as fast as humanly possible. I’d get out and hit the streets hard, networking at the REIA meetings, going to auctions, tax sales, investor meet-ups – really anywhere I could potentially forge more and new rela-tionships with active investors, wholesalers, flippers in the market.

I’m a huge believer that real estate investing is a team sport. I’ve always gotten so much more from viewing this business in a coop-erative manner rather than a competitive manner. So I would really be focusing on building that strong network as fast as possible.

Low-Risk, Low Hanging FruitNext I’d start with a very low risk strategy for building income and cash reserves for the business. And among all the different investing strategies available today, by far one of the lowest risk, highest le-verage strategies is simple wholesaling – and specifically, structur-ing wholesale deals where you’re just assigning contracts and never closing on the property yourself.

So for now, forget multiple streams of income, I’d really put blind-ers on and focus like a laser on a low-risk strategy like assigning contracts to build my business income and reserves up quickly.

Pat’s InboxYou’ve Got Questions...

Pat Has ANSWERS.

Here’s how we have things set up…

I’m in charge of our marketing and am doing direct mail to tar-get properties that fit Wil’s niche. The leads are driven directly to Wil to prequalify, do preliminary due diligence, and set up appointments to send in Dusty (aka “The Wolf) to negotiate.

As soon as we have a signed contract, it falls back on Wil’s plate to complete the detailed due diligence. Then it’s his deci-sion… if he’s interested in buying the deal himself, he pays us a wholesale fee. If he’s not, he’s in charge of wholesaling the deal to another investor… and we split the fee 50/50.

For me, after the marketing is set up, all I’m doing is test-ing and tweaking our campaign (very little time investment, maximizing one of my strengths). For Dusty, he’s ONLY do-ing what he does best… negotiating.

And for Wil, it’s a no-brainer… because it’s a deal source that’s designed to generate properties he’s interested in… and even if he doesn’t want the deal, he can make some extra money wholesaling it for us.

There’s one more team member that I haven’t mentioned yet… and that’s our CFO, Tim. He’s our numbers guy and keeps us on the straight and narrow.

What Next?

Alrighty, now that you know how I’ve set up ‘Operation Wholesale,’ what does this mean to you?

Hopefully it’s opened your mind to a few new ideas on… how to build your all-star team, ways set up your business to mini-mize your time and maximize your strengths, how you can have a ‘built-in’ buyer for your deals, and more.

As Tony Robbins says, “The path to success is to take mas-sive, determined action.” Now get out there and make things happen!

- Patrick

PS – If you’re interested in learning more about wholesaling (aka real estate matchmaking), we have a training program that you may want to check out called Secret Survey. You can learn more about it here… http://www.mysecretsurvey.com.

PPS – Thanks for being one of our SI Insiders! If we can help you with anything, let us know :-)

Continued on pg.4

-Page 3-

The Death Of Community

By Trevor Mauch

Continued on pg. 4

Lifestyle Entrepreneurs Guide To

Legendary Living My monthly thoughts, ideas, and sometimes unconventional ways of building a business to fuel your ideal lifestyle.

You’ve probably read those fancy “reports” online about the “death of...” [insert basically anything here]. The “Death of the Internet”... the “Death of Real Estate,” seems everything is “dying” these days.

If I had to write a “the Death of...” report... it would be The Death Of Community.

Communities As We Know It Are More Scarce Than Ever... Before you write this article off as something you don’t need to read, something that doesn’t affect you, some-thing that you “already know”... don’t. Stay with me and you’ll see why.

You’ll see why community is so closely tied with happi-ness and impact... and how I’ve actively built more com-munity for myself and my companies... and reaped the benefits (financial and happiness) as a result.

Fast Forward To Today... Are You Community-Less???I went through a 2-3 year period right after I started my entrepreneurial journey where I was so wrapped up in the business... had my head buried so deep into the internet (learning, applying, “networking”)... and had myself so de-tached from any real community that I almost forgot what it felt like.

In fact, I almost forgot how great it feels to be a part of a community... a real community of people you can talk to, have a beer (or coffee) with, bounce ideas off of, have fun with, the whole enchilada.

I’m sure many of you reading this are in that same place right now. You feel you’re “meeting” people every day, learning so much, making “connections”... but most if not all of them are solely through the internet... or surface level connections that don’t go past business.

Ok, lets dive in.

So, do you remember ever watch-ing the TV shows from the 40’s, 50’s, and 60’s? I love those shows. One thing I really love about them is how whenever Beaver from Leave it to Beaver... or Opie from The Andy Griffith Show would walk around town... everyone was out to greet them.

You’d see “Hi Opie!” all the time... and the Beavers parents were always hosting the neighbor-

From personal experience, I can tell you... it sucks... it’s not fun... it’s not fulfilling... and it’s a trap.

But I have GOOD NEWS :-)

You can build your way out of it. And it’s not even that tough.

Why Communities Are DisappearingLast night my wife and I had dinner with one of our neighbors for the first time. We’ve lived by them for 4 years (their house is literally 20 steps away). They’re the same age as us, from every

hood kids for dinner... and the families always got togeth-er for fun in person activities.

Those were in fact the good ol’ days.

Those were the days when people were forced to create community because they had to walk places, it wasn’t easy to get a hold of someone on the phone, and the in-ternet was a distant glimmer in their future. People had to talk to each other if they wanted anything out of life.

interaction we’ve ever had with them very likable / fun / and similar to us in many ways, and they just had a kid... just like us. So why did we just now have dinner with them?

Because today, as I type this... they’re moving out of our neighborhood... TODAY... and when we in passing were chatting with them in our driveway and they told us about their impending move... I saw both a missed opportunity (not getting to know them better sooner) and an opportunity still there (that it’s not too late to make a REAL connection). So I invited them over for dinner... even though the only day they could do it was the most inconvenient day of the entire week for us.

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“Pat’s Inbox,” Continued from pg. 2Trevor’s Article Continued from pg. 3

Communities are disappearing for 2 reasons: 1) We’re too busy telling ourselves the connections we’re making online are enough. 2) No one wants to make the first move because we all think if the other person really wanted to connect with us they’d make the move (thats what happened to us and our neighbors... they said the same thing).

So, dinner was GREAT... and we honestly will be really good friends even though they’re moving across town. Just a shame we didn’t do it 4 years earlier.

Missed ConnectionsSo, count right now the number of neighbors in your own neighborhood that you’ve actually connected with on a real level... i.e. - had dinner with them, threw a block party, etc. Probably not too many.

Action plan this week... don’t make my mistake and wait for the other people to make the first move. 99% of the time people want to make new connections (real connections, not online ones) but are afraid or waiting for you to do it.

***

Co-WholesalingWhile focusing on wholesaling my own deals, I’d also leverage those key connections I’m building by trying to connect other wholesalers’ deals with new cash buyers I’m meeting, and sharing in their profits – often called co-wholesaling.

The more deals you have available to potentially show to your cash buyers list, the more it’s going to help you build and sell your own deals.

Deal-Getting on the CheapI would also look to implement low cost deals finding strat-egies, like making offers on the MLS, REOs, HUDs. I’d employ homemade bandit sign, and networking, which are cheap and effective, like we’ve been talking about. And pre-foreclosure leads… researching public records, find-ing people who are in foreclosure, targeting the ones that have the best potential for equity, and then either sending letters or door knocking (yes, literally knocking on their door).

What’s Funny to MeAs I’m thinking through my master rebuilding plan here, what’s funny to me is that the answer hasn’t changed in the years since I first got started in this business. If this ques-tion had been asked a dozen years ago, the answer I just laid out is exactly the same answer that would have been given back then.

It kind of goes back to last month’s newsletter when we discussed the misguided belief newer investors often wres-tle with, that in order for something to be viable today, it’s got to be fresh, new and cutting edge. When in reality, very little of the fundamentals of this business ever change. Market conditions may ebb and flow – they always will. But what it takes to work your way up from nothing to something to a great success today as a real estate investor is pretty much the same as it’s been for a long time. The names and faces may change, but the path remains about the same.

Bottom LineIf I had to start all over today, I’d learn from my mistakes, connect with every investment player in the area, focus on building a quick cash wholesaling machine as quickly as possible, and leverage every low-cost deal-getting mecha-nism as possible.

If you have any questions or comments about this, please reach out – in case you haven’t noticed, we actually enjoy hearing from you! Just email us at:support@strategicinvestorinsider.com.

Now go make it happen.

Something to think about....“It is one of the most beautiful

compensations of life, that no man can sincerely try to help another

without helping himself.”

- Ralph Waldo Emerson

Property Cash Flow Analysis Calculator

Here’s this month’s resource to...

Swipe and DeployYour monthly template, marketing idea, or script to profit from in your own biz today!

Ah, we’ve got a couple of tasty little treats for you this month!

It all started last month actually, when we put fellow Strategic Investors Josh and Audrey Borcherding under our third degree spotlight and grilled them for around 90 minutes about how they creatively structure their deals. If you didn’t catch that yet, it’s your “Insider Gold” CD this month. Definitely check it out!

So as a follow-up to our conversation, Josh and Audrey actually shared with us the actual property cash flow analysis calculator they’ve been using to assess every single deal they do. It’s an Excel spreadsheet their regional banker gave them, and they customized to precisely meet their investment needs. Score!

Just so you know, their primary focus is buying and holding cash flow rentals. They currently own 44 units, which net them around $7,500/month positive cash flow, and they tend to gravitate towards deals they can take down with some or all creative / owner financing.

The insert you see in this month’s newsletter is just a screenshot of their spreadsheet. You’ll definitely want to go download the actual cal-culator for yourself, so you can add it to your own REI toolbox.

Here’s how you can go download it right now:

1) Go to www.StrategicInvestorInsider.com and login2) Then click on “Swipe & Deploy” in the top navigation3) Then click on “03/13 » Property Analysis Cash Flow Calculator”

Another “Coolness Factor” Bonus (Cause We Love Ya!)One the one hand, a calculator like this can be a really powerful tool in your arsenal. On the other hand, it can also be a confounding mess if you don’t really know what the heck it all means or how to use it.

We really want you to get the most out of using this. So rather than just let you download the spreadsheet and fend for yourself, we actually hopped on video with Josh and had him privately walk us through how to use it, step by step. This was not included in our live training call – it’s bonus footage.

As an Insider with us, we’ve posted this video online for you privately – it’s right there on the same “Swipe & De-ploy” web page above. So when you go download your cash flow analysis calculator, be sure to watch Josh walk through it. This is a private, members-only video – please don’t pass it around.

Who loves ya?! :-)

-Patrick and JP

Private Money MonthlyWhere you come to find the latest in “private money getting” strategies and techniques.

By Patrick Riddle

The Only 2 Ways I Structure Private Money Loans

I hear from people fairly often who feel a little “fuzzy” on how to best structure their private money loans. So today I’d like to offer a little helpful insight, using a couple of our students as willful guinea pigs.

The fact is, there are really two PM loan structures that I (and most every investor I know) use regularly: Equity investment or debt investment.

Private Money Structuring – Equity vs. DebtWith an equity investment, you give your private lender a por-tion of the ownership in the property. What portion? It’s up to you. Could be 50/50…70/30… I’ll give you an example from one of our students below. But essentially you’re making your private money lender into a true partner in the deal.

With a debt investment, your private lender is paid a specific rate of return. And rather than having part ownership in the property, they get a lien against the property (note + mortgage or deed of trust) to secure their interest.

This is how I’ve structured most of my private money loans. Why? Because most of the time, it’s more profitable for me. And by retaining 100% ownership of the property, I remain in full control.

Neither structure is right or wrong… just different.

How Justin Wilmot Structures His Private MoneyJustin Wilmot, one of our Private Money Blueprint students, has been kicking serious butt in the Florida market for some time now – he’s a hybrid wholesaler/rehabber taking down three or so deals monthly. He scores around $10k per wholesale deal, and rehabs are $25k profit on average. We actually did a riveting 90-ish minute case study with Justin recently – check it out in your member’s area under January’s training.

Anyway Justin’s secured many millions in private deal fund-ing now, and he always prefers the equity investment route, structuring a straight 50/50 partnership with his private lender. Right from the start, he brought in one private lender with deep pockets and started doing deal splits, sharing 50% of the net profits after all costs associated with the deal are factored in.

The reason he shares “so much” is because that’s just the deal that he worked out with his lender. For Justin, it makes great sense. He never has to worry about needing financing again

for this deals, as he has a tap of private funds ready and willing. He simply focuses on finding and closing great deals, and he doesn’t even have any monthly payments on his loans, which is HUGE. Also as a 50/50 partner, Justin’s only assuming half the risk of the deal.

How Rob Russell Structures His Private MoneyRob Russell, one of our Platinum students in Oregon, chose to go the debt route. Rob offers anywhere from 5 to 10% interest per annum (interest only, no payments) and consistently gets private money on the low end of that range. Yay, Rob!

Rob shared a cool story with me about a “Loaded Dentist” who con-tacted him through his PMBP website. After chatting a couple times and meeting, he got a private money commitment at 7% per annum… no fees, no points, no hoops, no B.S.

This is also my preferred structure most of the time. With the debt investment route, you assume more risk in the deal in a manner of speaking, but you also tend to make more money on the deal.

Question: How Does Your Private Lender Get Paid?Answer: It’s always negotiable, and also depends on the situation.

For an equity investment, it’s often ideal to setup an LLC with both you and your PM equity partner as members, and you as the manag-ing member. Then when the deal is done, you can just make a profit distribution from the LLC to each member. (But please consult your attorney and tax professional – I’m not one :-)

For the debt investment model, you’ll typically have your title compa-ny draft a note with agreed terms, and a mortgage (or deed of trust) to secure it. (Hint: You could set it up with or without monthly payments to your private lender.)

If you’re doing long term private loans (anything over a year), may-be you distribute the interest earned or profits over time… through monthly, quarterly, or annual distributions. For short term loans, you could let it accrue until you cash it out.

I typically structure my flip deals as simple one to one transactions, and always go for low interest and no payments until the deal is sold if I can get it.

Bottom line, there is no right or wrong. It’s up to you to determine, so do whatever makes sense based on your deals and your business model.

***-Page 6-

-Page 7-

Strategic Investors Insider’s CircleMembership Info

Instructions1. Check your email for your username and password.2. Visit the members area of SIIC at: www.strategicinvestorinsider.com3. Enter yout username and password.

For Assistance

If you are having problems logging in, or just have a question about the system or program, just email support@strategicinvestorinsider.com We’re here for you!

What you receive with your Strategic Insider’s Circle Membership

• Downloads and resources for your success• Private Money Articles from our faculty• Access to interviews with successful investors• Live monthly group call

Members Makin’ IT Happen!

Coming Next Month....

Wholesaling “Problem” PropertiesThe sad truth is, there’s a whole pile of“unwholesalable” properties out there that every wholesaler knows you just can’t do anything with. Jake Evans, a wholesaler and member shared this really awesome strategy he’s been using in his wholesaling biz!

You’ll learn:• Learn exactly how Jake easily quick-flips all those “unwholesalable”

houses (HUD, REO, FNMA, etc.)• With NO assignments, NO pricey double-closings needed• Hear Jake’s sneaky trick for entirely avoiding the extra transfer tax• A word of caution: the one type of property this WON’T work on (you

need to know this)

-Page 8-

P.O. Box 1033Alpharetta, Georgia 30009

www.strategicinvestorinsider.com877-224-0445

On this disc....Thinking Outside the Box - Creative Deal Structuring

with members Josh and Audrey

Learn the habit of seeing things a little differently, and applying a few simple rules to your deal analysis and offer

process.

• Invaluable lessons learned from a past partnership gone bad

• Seller financing, land contracts and making multiple offers...oh my!

• Why creative deals vs. “regular” ones?

• How to make it work awesomely as a husband/wife team (without mur-dering each other)

• Exactly why the short-term funding piece is no problem for them

• Frequently uncover “hidden” deals (or deals within deals) that most of us flat out miss

• Plus Much More!

Did you receive a faulty disc? Let us know and we will send you a replace-ment. Send an email with your name and mailing address to Support@StrategicInvestorInsider.com or call 877-224-0445, and we will get a disk out to you right away.

Thinking Outside the Box - Creative Deal Structuring