Lance Edwards' Apartment Wealth Info

Everyone likes a great deal.  You may have everything in place to put together a deal but do you know how to make it a great deal?  Do you know how to do it in such a way that it won’t cost you too much?  Let’s get some pointers on structuring the deal.

Structuring the deal is creating a deal that allows the private money source to feel comfortable with the amount of control and have minimal risk.  The first thing an investor is interested in is whether they will get their money back, or they are interested in the preservation of their capital.  Both of these concerns address the investor’s comfort level of the deal.  What you need to focus on is publicizing the features of your deals that provide control and low risk for your private investors.

Control means such things as the private lender or investor never releases the money until some promised event has occurred.  For example, they only release the 20% down payment to an escrow at closing rather than to you directly.  Another method is to have the lender only release rehab monies when they have certified that certain parts of the rehab are complete.  This is part of the strategy of preeminence; you are showing your private investors that you thought of their interest when you set up the deal.

Low Risk means that the investor believes that their investment is secure.  That’s one of the great things about real estate because you have a hard asset that serves as collateral.  Part of the security comes from the loan to value ratio because that’s a hard asset and in the worst case scenario, if you don’t perform to their expectations, they can get access to the property and that redeems their investment.  For income producing property, the primary indicator of value is how much income it produces.

The more time you spend on Control and Low Risk, the less time you will have to give in return.  Your goal is to set up a deal in such a way that the person involved is better off even if they don’t buy from you.