How would you like to have an UNLIMITED SUPPLY of cash to buy homes??

Private Lending Expert Alan Cowgill Reveals His Secrets To Securing
Unlimited Cash To Buy Real Estate…
With Special Guest Brian Bliss

Alan Cowgill

Lee Parker, CEO U.S. Land Company, Inc.

Produced By:

U.S. Land Company, Inc.
Cutting Edge Resources for the Real Estate Entrepreneur 800-808-6349
 

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Lee: This is Lee Parker with U.S. Land Company and I want to welcome everyone for this very fascinating discussion with Alan Cowgill about getting all the funds you need for investing in real estate. I met Alan three or four years ago at a boot camp that we were both at and then we started bumping into each other as we were going to various training events and at that point Alan, if you recall, you were a full-time employee with Honeywell.
Alan: That's right.
Lee: And, you were doing deals on the side and trying and hoping that one day you could quit that J.O.B., but your volume just wasn't quite high enough that you could justify that. How many years were you with Honeywell?
Alan: Uh 17 ˝.
Lee: So you were almost a lifer there.
Alan: That's right.
Lee: To cut those ties, you just didn't quite have the volume you needed to do that. And if I recall, I think a big turning point came in your life when you discovered that there was a solution to one of your challenges when you were trying to do deals, and that was to get the money you needed to do the deals.
Alan: That's right…
Lee: And you were able to lick that tiger in your life and since that time, I think your business has more than blossomed, and you've long left the J.O.B. behind.
Alan: That's right. It's been phenomenal to be honest with you.
Lee: Well as an observer watching you blossom over those years, it's been an amazing transformation because you're a full-time entrepreneur doing how many deals per month now, Alan?
Alan: We do five to seven deals typically. Back when I met you I was struggling to get one.
Lee: And my guess is that you could probably do a whole lot more deals if you wanted to, but you're plenty happy in doing five to seven a month, which is a pretty darn good volume.
Alan: Yup, that's true. I pretty much buy whatever I want to buy.
Lee: You pretty much don't have to worry about the money any more, do you?
Alan: No, not at all. In fact, actually right now, I have too much money. I've got private lenders, people that loan me money, actually I had four of them come in here this week and want to give me more money. And it's almost like you cringe when they come in because I've already got so much.
Lee: Boy, you've got a really - that's a bad problem to have. I really feel, I feel sorry for you there, Alan. Well, you've got several hundred people on the line here that you piqued their interest, I think. So why don't you begin by telling us a little bit about how you made this discovery of your system, and then maybe tell us a little bit about how it is that you have so much private money in your life that you have a problem now with too much money.
Alan: Okay, yeah, I'd be tickled to do that. I'd like to thank everybody for showing up tonight, and Lee, I'd like to thank you for asking me. What I'm going to share tonight is life-changing stuff. It sure changed my life, and that's why I'm taking the time to teach other folks about what happened to me and maybe make an impact in their life. But, to take you back in time a little bit, I was in the corporate world. I was working in aerospace with Honeywell, and I was making $70,000.00 a year, but I couldn't make ends meet. I know that $70,000.00 sounds like maybe a lot of money to folks, but I'd been through a divorce and like other people, I just found that after going through that, I couldn't make ends meet, and I was restless due to lack of job satisfaction, and I heard that thing where they said that it's like 93 percent of the population, after they work all their life, they retire poor or at poverty level. And I'd actually seen that happen to my mom. And I realized that you know, I needed to do something to change my life, but I was broke. I mean I was, I was just about as broke as you could get. I had this job, but I couldn't hardly make ends meet and I was living in this two-bedroom apartment and I had this old car and I couldn't even afford to get it repaired. It was almost embarrassing to drive it to work. One day, the car, I couldn't get it fixed, and one day it burst into flames. So if that wasn't bad enough, it was on a first date. So that kind of tells you where I was at in life, and I remember it was February 1995, and that's when my car burst into flames, and that night, I was up channel surfing and I was frustrated and I was up at 2:00 in the morning and I had to be at work the next day at 8:00, but I couldn't sleep. And I hit one of those real estate infomercials, and it piqued my interest, and I started to listen to it, and I didn't have the money to buy the course because I had gone out and spent all my money on lottery tickets. So that's the way I thought I could change my life. Those lottery tickets I bought, they didn't get me anything, I lost on every one of them. But I decided that I'd take a chance on that course, and they had a 30-day money-back guarantee, and I had a credit card, so I picked up the phone at 2:00 in the morning and I ordered that course. It happened to be the Carlton Sheets course. I'm sure some of you folks on the line have seen that or own it. And I got the course and it accomplished its mission - it got me into real estate, and that year I bought two houses. Actually I've still go the first house I ever bought. And next year I bought five, and then I bought 18, and since that point in time, I haven't bought a lottery ticket since, and I'm now appearing in two nation-wide infomercials. So actually somebody stopped in the office this week and said they were talking to somebody, I believe it was out in Arizona, and said I was all over the TV out there in the infomercials. So it really changed my life and then a year ago this month, I got married.
Lee: Congratulations. By the way, that's, Alan's got himself a wonderful, wonderful young lady named Julie. She's just a gem.
Alan: Thank you. I appreciate that.
Lee: You know, you were talking about the success you've had and now you're not buying lottery tickets, and you're able to do a lot more deals - I think the sign that you're not buying lottery tickets is a good one.
Alan: Yeah, you've got that right. You've got that right. Well, what had happened to me, just like all, just like most all real estate investors, I went out and I tried to figure out how I was going to finance my properties, and I learned creative real estate techniques and I realized a foundation in this business is education. So I really started to study up on it, and I went to banks and started to borrow money. I believe that's the typical way most of us start out. I did that, along with the creative real estate techniques. But I realized with banks, that when you quit your job, they aren't going to loan you any more money for a while. So that's kind of a problem. That's a downside. And they'll cut you off if you have too many houses. So that kind of stifles your business growth. And they need down payments, and I didn't have that a lot of times, and you need to have decent credit, and I had a loan, I had one house I wanted to finance and it took 4 ˝ months to get the loan approved. So there's, you know, no relationship with the bank, and they can cut you off in an instant if they change their rules, you know, they can shut down your business. So I just realized that there was a lot of different downsides with banks, and so I started to look around and realized that you know, I could get a line of credit, so I went out and I got $100,00.00 line of credit, but the problem with that, is that doesn't buy a lot of houses. And when you max it out, you've shut your business down again.
Lee: And again, when you have no job, that line of credit's going to go away as well.
Alan: That's right. That's exactly right. So then I started looking at hard moneylenders, and that's an avenue, if you don't have private lenders, but you just have to realize that there's some downsides with that. There's only one exit strategy with a hard moneylender, and that means that you've got to pay them off. With, what I do is I use private lenders, and for those of you that don't understand what a private lender is, it's just a regular person that has amassed some money that they can loan, and they want to get a high rate of return on their money. And so that's what I do. I borrow money from private individuals, but I tried out hard money lenders, and what happened with them is I took a look at the HUD statement when I closed on a house, and they've got all these fees in there. They charge you five points and they'll charge you a high rate of interest and there's a lot of padded fees, and what I realized was, when I looked at the HUD statement, that I was losing $5,000.00 on every deal because of all the hidden costs and the points and everything that I was paying. Now when I close on a house for all cash with private funds, my HUD statement will read around $800.00.
Lee: I had a private loan on a property, and I actually didn't go forward with it after I looked at the HUD statement, because I got it in advance, but by the time I got through paying all the fees, there was about a third of the cost of the loan added on to the loan principal, just covering the fees.
Alan: Right. You know, and if you don't have private lenders and you've got a deal, you know, use a hard money lender, but you just have to realize that they're expensive.
Lee: Right. They're going to take a big chunk of your profit, but that's better than no profit at all if you have no other options.
Alan: Exactly. And the other thing that happens is today when I borrow money from a private lender, I get not only a tremendously lower closing cost, but I get my rehab money up front if I want to rehab the house. Whereas with a hard money lender, what will happen to you is they will escrow the money, so you have to put money out of your own pocket into the house and then, once you reach a certain level, they'll go in and inspect the house or send an appraiser in to inspect it, and then they'll start to release your funds.
Lee: Now, why don't you take a moment to explain that a little better for these folks. If you were buying a fixer-upper house where you've got, say a purchase price of the house of $50,000.00, but you have another $5,000.00 or $10,000.00 you're going to have to put into it, what Alan is talking about, is a hard money lender will make you go spend that $5,000.00 or $10,000.00 to fix it up before they will release funds, so you're going to have to actually foot the bill yourself. Whereas a private lender will put the funds in your hands so you can go get the work done.
Alan: That's exactly right. Yeah, you did explain it very well. You explained it very well. Also some hard money lenders are going to want you to have money in the house as far as down payments, and many of them, they're starting to check credit. It used to be a hard moneylender would just care about the house and typically just focus on the house and not care about your credit, but some of them are changing, and they look at both. So what happened, as I was going along and, like you said, I'm working this full-time job, but I wanted to change my life and become a full-time real-estate investor, so I was looking at all these different avenues on how to make this work, and I was going to these boot camps, and I heard the speakers talk about private lenders, and it was one of those things, Lee, when and I were out there attending those, that I knew I would have to do but I put it on the back burner. And I didn't pursue it. But what I did do was I went home and I talked to my mom about it because she had gotten an insurance settlement when my dad had passed away, and I told her that if, and she was putting money on certificates of deposit at a bank, and my mom, who's a very smart lady, really wanted to protect the principal, and she would study the CD interest rates. Bank certificate deposit interest rates in our area. And she'd drive as far as 45 minutes one way to get 1/8 of a point on a CD.
Lee: Isn't that amazing?
Alan: Pretty desperate, isn't it? She's at the poverty level and didn't have any way to have any more money, and she sure wanted to protect that principal, but she had to live off this interest coming in from a CD. So it was pretty important her.
Lee: She was driving way across the country just to try to get an additional 1/8 of 1 percent on her money.
Alan: Yeah. That's exactly right. So I went home and I told her, I said you know, I'll pay you 15 percent interest, and she was just elated.
Lee: She probably fell off her chair, because what was she making on her CD? Probably 3 or 4 percent or something like that?
Alan: Yeah, yeah. Yeah. So she couldn't believe it. She thought she was gypping me to be honest with you. But you know, in this business, it's the availability of cash that's important.
Lee: Yeah, that's an important thing. I'm sure you cover before the evening is out, why that 15 percent doesn't really cost as much as it sounds like?
Alan: Yeah. Because it's short-term money.
Lee: And when you're doing a deal and you're making you know, $20,000.00, $30,000.00, $40,000.00 on the deal, and you've got to pay 15 percent interest, you know, you look at that over a two to three month period of time, or even over a six-month period of time, and it's peanuts.
Alan: That's right. That's exactly right. So mom loaned me some money and that kind of showed me the way on this private lending thing, and then I decided to run a little classified ad in the newspaper. One of the boot camps you and I had been at, the manual had ads in there, so I went ahead and ran one of those. And I had one person call me on the ad, and I sat at his kitchen table and talked to him and he asked me a bunch of questions and, to be honest with you, I couldn't answer all of his questions. But when I walked out of his home that night, he had agreed to loan me $5,000.00. And I was elated. I know that don't seem like a lot of money, but I had accomplished my goal. And so that showed me that you know, I could borrow money from private individuals, but the logical thing to do then, would be to run another ad, wouldn't it?
Lee: Yes, of course.
Alan: Well, you see, I had this full-time job and I had excellent credit and I had been going to these banks to borrow money, and so what I did then was I procrastinated. And for four years, I did not have another private lender. And if there's any message I can leave the folks on the phone with, when they get off the phone tonight, is do not procrastinate on finding private lenders. Because it will stifle your growth if you don't go out and find private lenders. And you can use private lenders, not just on single-family houses, but you can use them on multi-units, apartment houses, commercial, luxury homes. There is techniques in all of those for private money.
Lee: As a matter of fact, anybody who's serious about this business of real estate investing, and those who are invested in commercial, are obviously serious about it, understand the power of having private lenders involved in your business.
Alan: That's right, yeah. So the message tonight for everyone is take immediate proactive steps to achieve your dreams.
Lee: You bet.
Alan: Okay.
Lee: And you're going to show them how to do it a little easier than what you did it the first time around, is that not correct?
Alan: Yes. Yup, I sure will.
Lee: I imagine there's a bunch of people thinking, "I'm not going to go knock on somebody's door and talk to them about private money."
Alan: No that, you know what happened? There just wasn't a road map for this out there.
Lee: Right.
Alan: When you and I was out trying, you know, you would go to these boot camps and they would tell you go get private money, but they wouldn't have a roadmap. And what happened, was I found a roadmap.
Lee: Yup.
Alan: I found a roadmap. Well, moving the clock forward a little bit, I was working this job. I wanted to get out of it. I was to the place where I thought I was ready, and in November of 2001, I quit that job and became a full-time real estate investor. So I had achieved my goals, but I ran into some problems right away. One was I found out that banks wouldn't touch me any more. And I'd been borrowing money from them. See I procrastinated on this private lender thing and I was going down the avenue of borrowing money from the banks and hard moneylenders, and I ran into a $10,000.00 a month negative cash flow.
Lee: Ouch.
Alan: Shortly after I quit my job.
Lee: My goodness.
Alan: So I though back about what I'd done with my mom and what I'd done with this private lender, borrowing money from him, and I realized that I needed to get on with this private lender thing, and I had heard that you could have luncheons or have meetings with them, and so that's what I did. I ran another ad in the paper and I held a luncheon, and I had 18 folks show up. And a month later, I had another luncheon and I had 12 folks show up. And in those two luncheons, I walked away with $1 million to go buy houses with.
Lee: That sounds like a successful luncheon.
Alan: Yeah, yeah. And it was just phenomenal. And I'll tell you more about that here in a little bit, on how that was all put together. So since that point in time, since 1995, I've done 150 deals and still do so today. And obviously, without funding, it creates a big hole in my business. And today, like I said before, I have more money than I can possibly use, and all you have to do is learn a few simple things and you can get started also. So, also as a side note, I talked to you about this job I had.
Lee: Mm-hm.
Alan: It was kind of funny. We were talking on the phone today a little bit about that because today I got my first retirement check.
Lee: How about that?
Alan: I'm 55 years old, and I thought I'd take the money. So I started that.
Lee: All right. Well, congratulations on being an old bird.
Alan: Yeah, thanks.
Lee: I'm sure that huge pension check you get really makes a difference in your life today.
Alan: I don't even look at it. You know. Put it away.
Lee: Let me toss out a few questions to you because I'm trying to think in terms of what our listeners are probably thinking about, because, you know, the, you know, you talked a little bit about having hard money lenders, and I don't know if you've convinced people that they can't just go to a bank and get some money when they need it. Why don't you talk a little bit about some of the kinds of deals you perhaps were able to do because you had a private lender at your bid and call, rather than having to go wait for 4 ˝ months for a bank loan to go through.
Alan: Yeah, no problem. What can happen today is I go out and I can make offers on houses, and if those offers are accepted on a Monday, I can buy the house for all cash on a Friday. And I have done that. I have done that a number of times. One of the deals that comes to mind is a $200,000.00 property here in town. It's on five acres. It's got a pond in the front. It's got a pole barn and a stable in the back, along with a stream running across the back of the property. $200,000.00 house. The folks were in foreclosure. They had a first mortgage where they owed $128,000.00. They had a second mortgage that they owed $44,000.00. And what I wanted to do was do a short sale on the property. I talked to the bank on the first mortgage and they refused to discount the first mortgage, but they said if I would come up with $14,000.00, I could cure the first, which means, you know, bring it current and they would stop the foreclosure.
Lee: Right.
Alan: The second mortgage, which was $44,000.00, I talked to that lending institution and they agreed to discount. And listen to this, Lee - they discounted that $44,000.00 mortgage down to $4,400.00.
Lee: Now people on the phone that aren't familiar with short-sell may not even know what you're talking about, but they essentially are saying to Alan, "Look, we realize we're going to get wiped out on this foreclosure. If you're willing to pay us $4,400.00 for this thing, it's yours baby, you can have it."
Alan: That's right. That's absolutely right.
Lee: And so they knocked away, they essentially took 90 percent of the cash that they had loaned on this deal and they walked away from it just because they would take, you know ten cents is better than nothing they figure, so they'll take ten cents on the dollar.
Alan: Exactly right. Exactly right. So what happened was I needed $18,400.00 to take care of that first and second mortgage. And so what I did was I went to a private lender and I borrowed the money and gave it to each one of the lending institutions, stopped the foreclosure, paid off the second mortgage, turned around then and market the house and sold the house, and I made $43,214.00 on that house. None of my own money.
Lee: Not a bad profit for just being at the right place at the right time and being that dumb and lucky. Right?
Alan: That's right. That's right.
Lee: Let me give an example for those listeners who may not have followed that since it involved a short sale. That's a concept that folks may not understand, but here's one deal that I think is a real nice clean deal that people can understand. This is what we call a real or a bank owned property that my son came across. This property had been on the market for $140,000.00, went into default, the bank took over, and now they're the owners of the property. They wanted out of this property bad. Because they had discovered that the house had been built without permits and, for all practical purposes needed to be condemned, or so they though. My son came across this property, and the bank was asking, I mean I may not have the numbers right, but I think they were asking like $85,000.00 for it. And they had some other investors that were looking at it at the same time that he was looking at it, and I recall that the other investors were putting offers on it of close to what the bank was offering, I think somewhere between $70,000.00 and $85,000.00. My son ended up buying that property for $50,000.00, and the only reason he was able to buy it for $20,000.00 to $25,000.00 less than the other investors was because on his offer, because he was working with a private lender and he knew he had funds available, he put on his offer that this is an all cash purchase - no contingencies. Close in three days. No other investor could do that. They all had their contingency, they all had to go get their money, finance, and they had, you know, they had every contingency they needed to protect themselves. My son was able to buy that property for $50,000.00. He did a little fix-up work to get the permits in place, which didn't cost a lot of money, and he turned around and sold it for $140,000.00, so he made a pretty good profit on that deal.
Alan: Yup. Yup, that's how it works. That's how it works. Would you want a couple more examples here?
Lee: Yes, go ahead.
Alan: A wholesale deal. You know, I made, you talked about a bank-owned house. I've got one where I made $17,000.00 in about a week. There was a bank-owned house, the bank agreed to sell me the house. I went in and paid cash for the house and I like to rehab houses, and I can make more money if I do that, but in this case, what happened was a couple had shown up when I was in the house with my contractor, and they asked me if I would sell them the house. See, they had lived in the area for years, and the house they were living in had burned down. And they had poor credit and they couldn't go to the bank and get another loan, but they did have $15,000.00, and they were willing to put that down on that house if I would sell it to them on a land contract. So the only work I did on that house is I took the lock box off the house when I was leaving. And we closed, we did a, some of you folks in your states, it's contract for deed, so it means that I'm their bank, and I increased the price of the house, they put $15,000.00 down on it, and they still owe me another $2,000.00 and as we pay this thing down on both sides, is when I get the rest of it. So $17,000.00 I'm going to end up making on this house or more as we both pay down the loans. And my loans will pay down quicker than theirs.
Lee: So having private lenders be your source of funds has really created a lot more opportunities for you, that you otherwise may not have been able to take advantage of.
Alan: Oh, no question about it. You know, on that first deal that I talked about on the short sale, you know, what bank is going to come and loan you $18,000.00 on a second and maybe not have the thing come through? The house is in foreclosure.
Lee: Right.
Alan: So.
Lee: I can tell you, everybody, ‘cause we get a chance at U.S. Land Company to talk to a lot of beginner investors who are just getting their wings in this business, and I can tell you in every case, when I see our students catch on to private lenders and how to get private lenders in their lives, their business just rockets.
Alan: That's right. That's what happened to mine and if you stand back and take a look at it, the national speakers that you hear out there and the educators that have different bits and pieces that they're talking about on real estate, they've all got private lenders.
Lee: Exactly.
Alan: Because they understand. They understand how it works.
Lee: And I can tell you from my own personal experience that having private lenders in my life to provide my funds has made this business so much easier and so much more profitable and so much more logical, you know. You don't have to worry about that issue of funds. The funds are there. You've just got to go find the deals.
Alan: That's exactly right.
Lee: I cannot imagine going back and trying to do this business without private lenders. I mean to me, it's unimaginable that anybody would do that.
Alan: Yeah, that's painful.
Lee: It's extremely painful. It's like, you know, why would you do that? But I mean obviously for those folks who are on the line who have not had that experience, you get the joy of learning what it's going to be like when you become, start attracting private lenders in your life. And at some point, just like Alan, you're going to have private lenders coming to you, and you're going to have to be turning them away at your door. Now there's going to be a step in between now and then where you're going to have to learn how to solicit those private lenders, but Alan's going to show you how to do that. You know, it's not only the ability to go out and buy deals that you otherwise can't buy with private lenders, but when you have private lenders in your life, you are in control of your business. The business is not controlled by banks and mortgage companies and anybody else who wants to decide on a whim that they're going to quit loaning money to you, but you're in control. You are the one who can go get the funds because you've got private lenders in your life. And if you've got bad credit, that's not an issue. If you want a loan for more money than what the house is being purchased at, that's not an issue. If you need money for a down payment, that's not an issue. You're in control. You can set the rules and you can get all the funds you need to do any deal you want to do. If you're doing single-family houses you can get money for that. If you're doing commercial, where you've got millions of dollars at stake, you can do that. And this technique of getting private lenders in your life will allow you to do anything you want to do, within some confines of course, because you have to have some basic ground rules you follow which Alan will be showing you, but you have the ability at this point to go anywhere you want to and become a real estate entrepreneur, with money to burn in your pocket.
Alan: That's exactly right. You know, you touched on something there Lee that I was going to talk about a little bit, and let's just talk about it right now, where you said that you can borrow more money than what you need when you buy the house. And let's talk about that because I do that on every deal. What happens with this is when I have a house I want to buy and fix, I need purchase money and rehab money. What I do is I'll call up a private lender and I'll him send money to buy and to fix, and I'll also have them send extra. I'll have them send contingency money. So you can imagine, if I'm doing a rehab, if I run into a problem, I will have an extra $3,000.00 to $5,000.00 to help me through the rehab, it I hit a snag and pay for it, so I don't have to reach in my pocket and take that money. I can use the money that the private lender has sent to the closing to do that. And then, if I don't need that money, what happens to that extra money? It's early profit. And so what happens in my business is I'm borrowing $3,000.00 to $5,000.00 every time I buy a house, and so some of the folks on the phone here I'm sure have done the math real quickly, if I'm buying five to seven houses a month, if I'm borrowing $3,000.00 to $5,000.00 when I purchase the house, you know, they can easily see that I'm taking this early profit and what that does to my cash flow. Also what happens is when you go to a bank and you borrow money, a bank's going to want monthly payments, aren't they?
Lee: That's right.
Alan: With private lenders, since I structure this deal, half of my loans now, I do not have payments on. Can you image that?
Lee: Now let that sink into everyone. Alan is borrowing money to buy houses and these houses now have no payments on them.
Alan: Right.
Lee: There are no monthly payments. What does that do to you, Alan, when it comes time, and perhaps you're going to put say a tenant buyer into a home, so he's going to be making monthly payments. What does that do to your cash flow?
Alan: Oh, it's phenomenal. It's huge.
Lee: So now when you collect $1,000.00 a month from this tenant buyer, what is your net cash flow after you make expenses?
Alan: Yeah, you get to keep everything that's left, don't you.
Lee: It's $1,000.00 a month, that's right.
Alan: Yeah, so -
Lee: Now that's, let people understand why you can do that, because that again is like I don't believe this.
Alan: Yeah. And I do it on half the loans that I get right now.
Alan: What happens is this is your, the way you structure these deals is the way that you want to run your business. And so the percent of interest that you want to pay, you determine that. Just so everybody knows, I pay 10 and 12 percent interest. I pay 10 percent if they want monthly or quarterly payments. I pay 12 percent if they will let the money accrue, and that's exactly what Lee and I are talking about, is if they will wait until I sell the house, then everybody can get paid. That's when I get paid and that's when the private lender can get paid. A lot of my houses, my exit strategy is a rent to own exit strategy. So what that means is I'll buy a house with private lender money, they will loan me enough money to buy, to fix the house, plus that contingency money. And if I don't need the contingency money on that property, it is early profit. And let's say for example I've got a house that I'm going to make a $30,000.00 profit on, well I borrowed $5,000.00 right up front, so when I close on the house to sell, I'll get the other $25,000.00. Now, if this is a house that I buy, fix and sell, and let's say I sell it in 90 days, what will happen is the private lender will get back all the monies that they loaned me. I'll pay them back everything they loaned me, the principal they loaned me, the rehab money and the buy money, the rehab money, and the contingency money. They get that back plus any accrued interest. So if I'm paying them 12 percent on interest, whatever amount is borrowed for that 90-day period, I'll pay them back that simple interest too, and that will come out of my $25,000.00, but along the way, if I have put a tenant buyer in there, any of those rents, and let's say they're paying me $1,000.00 a month, that $1,000.00 bill stays in my pocket because it doesn't go out on mortgage payments.
Lee: So this is like having a free and clear house in terms of his cash flow because he gets to keep all the money that's coming in on that house on a monthly basis.
Alan: Right.
Lee: So your cash flow goes up through the roof, and all you have to do is own ten of these houses, and you could all of a sudden, get a $10,000.00 a month cash flow coming into your life. That's not bad for ten houses. There's probably no other system in the world where you can go buy ten houses and have $10,000.00 a month cash flow, but with Alan's you can.
Alan: Yeah, plus on those ten houses, Lee, I will borrow $5,000.00 extra, so that's another $50,000.00
Lee: That's a little Christmas money there.
Alan: Is that right?
Lee: Yeah. That's a little Christmas money. Um, you know what? I'm looking at the clock here Alan, and we're clipping along quickly. I wanted to get some questions and I also want to get Brian on the phone here because I did a little introduction before you came on, and just let me kind of re-introduce him. Brian is our senior course advisor, and he's also an investor, and he's brought private lenders into his life fairly recently, and I wanted him just to come on board here and just kind of tell us a little bit about how that's affected his business, because he's been pretty excited when he's talked to me about this. So Brian, welcome again.
Brian: Thanks Lee, and hey, Alan, how you doing?
Alan: I'm doing great.
Brian: Great, well I appreciate the opportunity first of all to jump in here and you know, I've been champing at the bit to say some things here and there because I'm so excited about what the private lending has done for my own business, and you know, it's interesting, as I was listening to you guys talk, there was a couple things that really stuck out to me, Alan. You know, we met, I think it was about February or March of last year. I don't even know if you remember or not. We were at Dave's event, and we were sitting there at the back and we were kind of talking about things and at the time, I was trying to look at, you know, quitting my full-time corporate job. I had a great job. It's Sprint, and yet, you know, want to do my own thing , and I started real estate investing about 2 ˝ years ago at that point, and was growing the business but really hadn't quite made that jump, and it's interesting because even knowing that, and I had your, I had just recently gotten your information, I did what you were talking about, and that's why I want to encourage the people that are on the line to, you know, not to procrastinate because I waited till, it was at the end of, coming actually from your event in September, before I did anything. So one of the things that has really hit home to me is motion beats meditation. I heard that quote a while back, and it is so true. If you start to take action, and what you have done so well for everyone, is given us a framework. You know, you gave me a framework and some tools to use to go out and start talking to some people about private money. And I've got to tell you, Alan, it has rocked my world, buddy, so I want to thank you, first of all, I haven't had a chance. I should have given you a call and talked to you, but I got back from your event, let me just give you a quick kind of synopsis of what's happened, and Lee can tell you firsthand, because when I started seeing some of this stuff come together, I called him and said, "Man, this is just incredible." I went to your event, a live event in September. It was the very end of September.
Alan: You remember that?
Brian: Yes, and we had lunch, we talked about things and so forth, and I told you. I said, you know what? I'm tired of just talking about this. I'm going to start doing this. And one of the exercises that you make us do at the event is make out a list of, actually I think you say 20 people, but I did that thing, I put that list of 20 to 30 people, that I wanted to talk to when I got back home, and I did that very thing. I actually came back. I took the tools that you had provided, which gave me an awesome framework to start. I might, you know, like anything, everybody might personalize something here or there, but to not have to start from scratch is just so awesome. Because you gave us the scripts, you gave us, I actually went out, Alan, and made an audio CD, you know, taking your information, the safe alternative to the stock market, modified it some, but I put together a deal, had my own little private lending kit. The difference for me is, instead of doing the live seminar approach like you've done so successful, I found that just even in one-on-one settings, which some people might be more comfortable in that. I'm okay either way because my background is in the sales and marketing, so I like doing presentations. But I found, honestly, just even, just talking to people and making the presentation and helping them understand my business and where I'm coming from, has worked just incredible. I start, just to give you a little bit of a feel for it, I got back probably put that kit together and had my lending stuff together, that I would share with people, about the middle of October. It probably took me a couple of weeks once I got back to kind of get my information put together and start making some contacts and have some lunch with people and -
Alan: Yup, that what I tell them in the class, too. I takes a couple of weeks to get everything put together, and then you're off to the races.
Brian: And then you're off to the races. I tell you what, bud, in the next two months basically, the next 2 ˝ months, I raised about $400,000.00.
Alan: Whoa.
Brian: And I have about another $200,000.00 to $300,000.00 still in the pipe there, people that are just, I know it's probably going to come together in the next couple of months. So you know, that $600,000.00 or $700,000.00 or $800,000.00 ultimately has rocked my world. I bought three properties in December using three different private lenders. I closed on those using the exact same, you know, what you were just going through there on borrowing the rehab money, the purchase money and some of that operating capital, that advance money.
Alan: Yup.
Brian: It changes you world, man. I can't tell you how incredible it has been. The other thing that stuck out to me, and I know that if there are people on the line tonight, they feel this very thing, because I know in the past few months prior to me putting private money into my business, I felt this. I was, it's nice to be able to approach real estate creatively, which is what we're taught, it's what we promote and everything. But gosh, doesn't it just totally change the perspective when you really are truly a cash buyer and you're not having to go down the route of well let me creatively figure out how I can do a subject to and, you know, do all these different things, which I still do those things in my business, but when you're a cash buyer, it changes everything in terms of your ability to move quickly. So I got to tell you man, I'm so pumped up and I'm looking to buy about 40 properties this year is my target. And I wasn't anywhere near that ballpark before. So a big part of that's the private money.
Alan: That's right. That's exactly what happened to me. It just opens up the door for you and cash is king. If you're out there with cash, I mean you're buying at a discount, and you can pretty much rock and just do whatever you want, can't you Brian?
Brian: Absolutely. Absolutely. And you know, people can do this. You know, it's interesting, even today, I talked to two people, Alan, that you know, again, motion beats that meditation every time. If you just start taking those steps and start talking to people about what you're doing in your business, and you know, for me like today, I was talking to a couple of people, I didn't even have any intention of visiting with them about, but the conversation kind of started going down that way. They asked how my business was going, and you know, one thing led to another, and I said, "You know what? I'll tell you what's changed my business really, is my ability to use private funds." And I started explaining my program, and I'm paying, kind of like what you're doing. I pay 12 percent. I'm not interested in paying payments, so I don't even give my investors an option of do you want payments or not? My program is you know, either you're interested in 12 percent and you'll let it accrue, or the program's not for them kind of a deal.
Alan: Yup.
Brian: So that's another nice thing. People have the ability to really set their parameters the way that they want. So it's, you just flap your gums and it starts to happen, bud.
Alan: Yeah, that's right. I'll tell you what, Brian. What you're going to see from that $400,000.00 that you raised and that promise of the other $200,000.00, I mean what is going to happen to you now is those private lenders are going to be your best sales force. They are going to go out and tell other people, and they're going to be out recruiting private lenders for you, and that $600,000.00 that you're looking at, I mean, you'll double that just from that group, within, you know, a few months or a year.
Brian: It's interesting you say that because that is exactly what, you know, a couple of the private lenders have already told me. They're like you know, my broker, on the guys said, "My broker is interested. I told him what I was doing and he said if this works for him, he's interested and he wants to do something." So exactly what you said. I've already had them tell me that, you know, if this works for me, I already know some people that are going to want to invest.
Alan: That's right. What they do is they test you.
Brian: Yup.
Alan: You know, they go out and they loan you some money and they want to see if you're for real, and then once you do what you say you're going to do, I had a lady come in and she loaned me $25,000.00, and the next thing I know, she's up to a quarter million. And she's got her sister in here and she's got her son in here and she's telling other folks about it.
Brian: Yeah.
Alan: It's just unreal. And the other thing that happens is you went out and you said you used the money and you bought three properties, well when you buy those properties and then sell them, your next loan is sitting there ready for your next purchase, isn't it?
Brian: That's exactly right.
Alan: You know, that doesn't happen with banks or hard moneylenders. What happens with them is you got to jump through the same hoops that you jumped through the first time.
Brian: Yeah, yeah. That's right. Well you know, and here's another thing, Alan, that I find interesting. I've already had and can see that once you start to implement the private money, it opens up doors, and banks sometimes can, it can make sense. So sometimes we have a tendency to go overboard and say, you know, never go to a bank or whatever. There might be opportunities, but good night, once you start, you know, putting private money into your business and you start having those success stories, you know what? Now all of a sudden, you are attractive. So if you need that relationship with the bank, you can then go out and establish that. I couldn't have done that before, you know, so it opens up more doors than you even realize, I'm sure than I even realize going forward. There'll be some opportunities to, you know, to really establish some ongoing partnerships because of the fact I was able to put in the private money into my business.
Alan: Yeah, I've seen that too. I understand it. You're on your way, aren't you, guy?
Brian: It works, man, it absolutely works. And that's what, you know, it's one thing to hear it, that's why I was excited to jump on tonight, is because I know a lot of the people that are on the line are, they're not at the stage that you're at or they're not at the stage where Lee is at, and yes, I've had my business going for you know, a couple years, 2 ˝ years, but honestly, it was very, very, very small compared to what I'm doing, because I was working a full-time job, just tried, I knew that I wanted to do something. I wanted to jump out of the corporate gig, even though I had a great job, I felt trapped. You know, wanted to do my own thing.
Alan: Been there, yup.
Brian: And so it's, I think it's important for the people on the line to realize that they can do this. It is something that, I mean it's just literally within the last two or three months, like I said, I've raised that money just by talking and doing the things that you lay out in your program, so it's very exciting and I'm glad to share that success story with you, and I appreciate your help in getting me going down that path.
Alan: Well thank you. I'm tickled that you let me know about it, and everybody else, and you know, Brian, I hear that from folks all over the nation, and at my first event, I had a guy fly in from Australia. You talk about someone wanting to change you life, and you talk about motion beats meditation, I mean he hopped on an airplane and flew in from Australia to go to that, and I had five people from Canada. I mean, this thing is just catching fire and everybody understands now, because we figured out how to have a laser beam approach to finding private money. And we're covering all the bases with it. So.
Brian: Exactly.
Alan: So I, stories like yours, you talked about the fact of you doing one-on-one meetings, I met a couple of guys last April and they went out and used my system, and in 20 days, they had one meeting with one person, and he agreed to give them $1.4 million.
Brian: That's awesome.
Alan: Isn't that something?
Brian: Incredible.
Alan: You think it changed their life?
Brian: Absolutely.
Alan: Yeah.
Brian: Absolutely.
Alan: Yeah, yeah. I just hear from people all over on how it's changed. I got an email last night from a guy, and I sent out some information, this guy emailed me back, and he, just like you, wanted to thank me and he'd made $100,000.00 this past year using the system, so.
Brian: You know what? It's not rocket science either, and that's the other thing that I want to be sure that people are aware of on the line, is the thing that I think so many times some people have in the back of their mind is that they can't do it because maybe they're not sophisticated enough or they don't have what it's going to take to make that presentation. What do I say? You know, all that kind of stuff. And you know what I found real interesting, Alan, is you know, really when you just share with people honestly and genuinely from, you know, from your heart, kind of what's going on in your business, I had the confidence because I had those tools that you gave us, right? You gave us the scripts. You tell us kind of the framework, but what I found is, that gives people, and it gave me, the ability to start talking, and then you find that you know what? Sometimes, it's not like you're following and you need to worry that you're going to say the wrong thing or you know, what's the exact thing? You find that you just talk to people, and people want to get a good return on their money. They want that money to be secure which, gosh, how much more secure can you be when it's tied to a piece of real estate that they get a note and a deed or a mortgage on - I mean it's just awesome. .
Alan: That's right. I'm glad you said too that it's not rocket science, because it's sure not. It's very simple, it's very basic, and if you take a look at it, it's just a person loaning you money to go buy a property. And it's really that simple. They're just your bank.
Brian: That's exactly right.
Alan: And they just fund your deals. And what I hear over and over again is once someone has listened to me and they go out and they're getting ready to go start looking for private money, the next thing that happens is they start sharing information with someone, and all of a sudden, that person agrees to loan them money, and you know, they didn't even do any work for it. You know, they just flap their lips. They just started to talk and money starts to show up.
Lee: I was going to tell Brian the next thing that was going to happen to him is he's going to find out that somebody who's asking him questions about what he does and all you're doing is just describing what you do, the next thing that comes out of this person's mouth is, "Do you need some money?"
Brian: That's exactly what happened today, Lee. Literally, I was, I've got to tell you this, I'm at the G&C store picking up some stuff, right, and I'm talking to a gal that's the owner of the store, and she's been, you know, she used to work at Sprint, you know, as I popped in there when I used to work at Sprint. Just, you know, she had made this step out and was doing her own business, and you know, we always had just kind of had that nice conversation, well she asked how business was going, and I started, you know, telling her it's just going great. Well one thing led to another, and she said, you know, I'd like to get with you because I think I'm interested in seeing what you've got. She, you know, so I mean I went in to pick up some stuff at G&C for Pete's sake, and a three-minute conversation turned into probably a real solid opportunity to get with, you know, these business owners and probably look at getting some private money. So it's amazing.
Alan: You know, I had gone out, had these two luncheons, and I had a million bucks show up back in early 2002. And I was able to go to a boot camp, a seminar, and Ron LeGrand was teaching it, and he went around the room and he asked everybody what they were doing different, and I said, "Well, I had these two luncheons and a bunch of money showed up." And Ron told me, he said, "Oh, that's great," he says, "You're going to be speaking to a group of investors next month in Cashiers, North Carolina, which kind of shocked me because I didn't know I was going to be doing that, but I did. And when the meeting was over, I remember somebody tapping me on the shoulder and it was you.
Lee: Oh.
Alan: And you said, "Alan, could you use a little bit more money?" Ain't that right?
Lee: I'm sure I did.
Alan: Yeah, so, that happens to me all the time. People know, learn that I borrow money and they turn around and you know, they start giving you money, and then once they test you out, they start giving you more and they start telling their family and friends bout it. And it goes on and on and on.
Lee: We might as well just confess right here. I'm one of your private lenders, so everybody knows.
Alan: That's right.
Lee: You know, let me throw out a question that I know, I see popping up here on my screen, so some of the listeners are wondering about where we, you know, where is it that you find people that have money? I mean we haven't talked about some of the sources of these funds, and how you find these folks, and we never even mentioned, for instance, so far, Alan, and we're going to run out of time if we don't mention this, that there's a lot of money available in IRAs. Can you kind of just in a summary way, in a minute or two, answer the question of where you find the investors, where you find the money.
Alan: Yeah, I sure will. What you've go to do is you've got to lead generate, and what I did was I went to a list broker, and I asked the list broker for a list of folks in my county with certificates of deposit. You can also ask for folks that have IRAs. And I mailed postcards to those people, inviting them to my luncheon. And I also ran an ad in the local paper. And that's how I filled the seats in the luncheon, and that was the lead generating technique that targeted the people and I wanted to make sure that I had the right people in the seats when I started my presentation, and that's how the 18 folks showed up on the first one, and the 12 folks showed up on the second one.
Lee: And that one thing that Alan mentioned, that you can borrow money when people have money in IRAs, is pretty significant because there is billions and billions of dollars sitting in IRAs across this country, earning 3, 4 or 5 percent interest, and they are owned by people that are probably your next-door neighbor or maybe even somebody in your family.
Alan: Yup.
Lee: IRA money is everywhere, and those funds can be used for this type of program; however, you have to know how to get those IRA funds, because they're not available in most IRAs, and Alan will show you what you need to do to get those funds available to you.
Alan: That's right. Actually part of my day today was spending, moving IRA money around in the office for us to use. There's actually $4.7 trillion in 401 and IRA money floating around out there.
Lee: That's a fair amount of money for you and I to go buy houses with, don't you think?
Alan: You're not kidding. So also another point on this, Lee, that is unbelievable is I'm sure everything on the phone here knows somebody that is retired or laid off from their job. And if those folks, when they work, if they had a 401(k), once they have quit, retired, got laid off from a job, they can roll that 401(k) over into an IRA. And there is a lot of my money that, we know a lot of folks that have been laid off, that we have them move their 401(k) into an IRA, and then we use that money to buy houses with.
Lee: Right. And frankly, the money that I loaned to you, Alan, is exactly that. It was money that was generated back when I was in corporate America in my 401(k), and when I walked away from that position, I just rolled that into an IRA so that I can loan it to people like you.
Alan: Me, too. I did the same thing, Lee.
Lee: We should let everybody know that one of the secrets to your system is it's just so darn easy to imitate what you do. Because you have made it that way. You have put together this thing using PowerPoint slides and presentation materials that can be easily modified and then duplicated for each individual's use, and you've made it so that all you really got to do is put the PowerPoint slide up on the screen and read the script and what you've done in this presentation, is you have built in the credibility building that needs to be done so that when you're standing in front of a luncheon, if that's what you choose to do, and the luncheon by the way is a very non-threatening way to do this. It's the reason why Alan's been so successful, is you get a group of people together at a nice oh, put them together in a nice golf club or in a nice restaurant somewhere, and I mean that's going to be your biggest expense, is to pay for somebody's lunch.
Alan: Yeah, that's right.
Lee: He's got such a professional presentation that will make you look so good and make you look like you're a big corporation, not necessarily a big corporation, but that you're a big successful entrepreneur in real estate, whether this is your first deal, you'll look like you've been doing this for years, that you build within your folks that are in attendance, a great deal of trust, that you're for real and that you, you know, you're showing pictures of before and after of what you do and the way that you take houses that are you know, crummy looking and you buy for 50 cents on the dollar, and you fix them up and sell them.
Alan: What I have a lot of beginners doing is going ahead and using my slides on the houses and say, this is the typical houses that we'll be buying and this is what we're going to be doing. Because what happens a lot of times is for new folks that have never done a deal, you know, they're worried about the fact that are they going to come across credible. What I tell the beginners to do is, when people say well how many lenders do you have, the answer is the fact that you're getting ready to kick off this new business and you're looking for people that want to be in on the ground floor.
Lee: Be prepared for those kind of questions. You're going to get them.
Alan: Yeah, you're going to get a handful of questions that, and you know, I was real worried about that at my first luncheon, and to be honest with you, it was very easy. The people were very friendly. They were there because, you know, they wanted to earn more money. And they wanted you to show them how you're going to do it. And actually, the first luncheon went a lot easier than I expected. And after you've done your first one, it's a piece of cake. And you said something a second ago, Lee, about the ease of the system.
Lee: Yup.
Alan: That is what I hear from all my students, is how easy this thing is.
Lee: I mean your system includes handouts to give to the folks as they're sitting there waiting for you to get up and do your presentation. So they can be reading about you and getting some idea of who you are and there's credibility building you're doing all along the way. You've actually kind of scientifically laid this thing out, so by the time they get through with that luncheon, and they are done at the end and then you give them that survey where they have to answer those questions of you know, where is your interest level and all that, you have kind of taken them through this emotional kind of buildup to where it's really easy for them to say you know what? I'd like to take the next step.
Alan: That's exactly right. I'm glad you brought that up, Lee, that what I've added there to the end, I didn't have that in the first luncheon, and I realized after the luncheon, I felt like an ambulance chaser.
Lee: Right.
Alan: Because I knew everybody was excited about it, but they, one person loaned money that day, but the rest of the folks had to move money off of one account to another, and it took a little bit of while. I was a little bit concerned about whether the money was going to start showing up. So I started to call people, and it made me feel, you know, like I said, like an ambulance chaser. But what I did in the second one was I have them fill out a brief form at the end of it that I supply to everybody, and what it does, it takes it to a whole different level. I mean you come across as professional, and what happens is while everyone is having lunch, you've got a stack of these. You've got 18 folks in the room, you've got 18 of these brief simple questionnaires that they filled out, and you know right off the bat who's going to loan money and who has more questions and who's going to pass. And so, and the people that pass, you ask for referrals. So it's powerful.
Lee: And the comfortable thing about your system is you do not have to go to somebody and ask them for money. All you're doing is presenting the fact that here's what I do, and here's how you can profit. And they simply say, you know what? I'm raising my hand and here's how much money I have to do this with.
Alan: That's exactly right. It's no pressure for them, it's easy, and all you do is present yourself professionally, share the information and let them decide.
Lee: And you know what? And this is the thing that some of the listeners, maybe most of the listeners don't understand, is that people with money, their biggest problem is what to do with that money. And you are there providing a solution that nobody else will provide them. You are saying, I will give you a high rate of return, I will put you in a first position mortgage on this property in a very low loan to value position, meaning that you are very, very safe. If I don't do what I tell you I'm going to do, and I don't get you that money back again, this low loan to value means that you're going to get the house worth much, much more money than what I'm borrowing from you. So you're providing a very, very safe investment for some, you know, sometimes these folks are older folks who are concerned about that, so that's a very good selling point, and I'm going to give you a return that's, you know, three, four, five times as great as you can get anywhere else. And that's an easy sale to make. Those folks will eagerly take you at your offer, as long as you're credible and you've got the presentation and you understand how to do this, you understand how to get people's IRA funds involved in this, because that opens up the door to a whole bunch of money when you know how to do IRA funds too.
Alan: That's tremendous. That just, that opens up a whole different world when you get into IRAs. See when I started out, I was thinking about where my mom was at on certificates of deposit, and driving that 45 minutes one way to get that 1/8 of a point. And so that was my target in my first two luncheons, and I had $1 million show up just from that group. The next thing that happened was I realized that some of the folks in the audience had IRAs, and that there was a whole different world out there for folks with IRAs, and to be honest with you Lee, hearing this in this last year or so, we have, that has really been our focus.
Lee: Now, we're going to run out of time here, Alan. We sure appreciate your giving us the time tonight. This has been very interesting and Brian, if you're still on here, thank you for joining us.
Brian: No problem.
Alan: Yeah, I was tickled, Lee. Thanks for asking and Brian, your success story just gave me goose bumps. Just thank you, I appreciate that.
Brian: Thank you Alan. I appreciate it, bud.

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