You may have read in other Jake Leicht reviews how he’s a master of using 100% of OPM (Other People’s Money), and has over 900 deal to his name in the house flipping business. He says, “A lot of times, when I talk about OPM,” he says, “whether I’m onstage or making content online? People immediately get skeptical. They think there’s some sort of catch. They think it’s not entirely possible that you can buy a house, flip it, make a profit on it, all without using anything from your own pocket. And I’m here to tell you, that’s not the case.”
Private Money Lenders love to make more money, so if you can approach them with that in mind and they see the value in working with you, then your golden. Most real estate investors think that if you want to flip houses, you have to schmooz these lenders, send them a birthday card every year, remember them at Thanksgiving and Christmas, build rapport over the next 5 years and sit on the edge of your seat waiting for them to throw your a bone one day. Jake things this is all hogwash. Private Lenders aren’t stupid, and most really don’t like to be pandered to, so just approach them with a good solid deal and they’ll likely work with you or send you on to someone who will.
Jake breaks it down like this… “So step one is to find a really good property with really good numbers. There needs to be a big gap between your purchase price and estimated resale value. And ideally, super low renovation costs. That way, you have a maximized profit. If you bring a deal like that to a lender, that lender will look at the strength of the deal and opt to give you money or not give you money based on how much potential profit you have. So if you find a deal, you don’t need to have a lender first to make an offer on it.”
He specifies that “you want to have a property locked in under contract and bring it to the lender on your first conversation with them. This gives you higher value, this gives the lender some excitement, and gives ’em a little bit of drive to actually have that conversation and go in depth with you; and that’s the best way to start the relationship. So in the big picture, once we bring a property to the lender, it’s also important that we have a good idea of what we are going to need.”
Private lenders are typically easy to work with and can be very flexible on terms. For example, you can find a lender who is will to fund 100% of the deal and all you have to do is find. It it’s a good deal and everything works out, they’ll usually do a 50/50 split with you. In other cases, PLs can be a bit more conservative and only foot the bill for 85% leaving you to cover the remaining 15%. If this is the case, don’t sweat it, because you can typically find another lender that’s willing to come up with the over 15%. So where can you find these lenders? Well, you can find them on Facebook, BiggerPockets.com, or your local BNI. There are real estate investor groups located just about anywhere, so all you’ll need to do is a quick Google search.
Jake wants to make something clear though, “The reason that the strength of the deal is so important is because these lenders put what’s called a lien on the property. A lien is a mortgage or a deed of trust. It’s essentially a piece of paper that is filed with the county that says the lender has the ability to foreclose on the home if you do something shady as the borrower. This gives the lender a cushion, a safety net. They now have a property that they can take over that’s way more profitable than the amount of money they put into the deal.”
That pretty much sums it up about flipping houses with Jake. If you can get out there and hustle, finding awesome deals that Private Lenders will bend over backwards to fund for you, then you’ll have them eating out of your hand. Heck, you might even have them outbidding each other just to get the chance to work with you. Now Jake has a couple programs that you can use if find PLs is a little difficult in your area. If you need his help, you can get his Flip Secrets Success Coaching or check out is Flip Secrets Mentorship Program. I couldn’t find anything on his websites that showed how much those courses cost, but I have a good feeling about the guy, so it’s definitely worth a look.