So, what’s the problem with that?  Like much legislation that is designed to “protect consumers”, it can include some very negative effects on certain niche people or businesses.  In this case, the SAFE Act can potentially make Owner/Seller Financing ILLEGAL in some states (buyer or selling), and may also make it illegal for your Private Lenders to fund your deals without first obtaining a license to do so! This is a new twist on what we have seen with other recent legislation since YOUR LENDER can even get into trouble here, not just you!  However, if you want to keep operating your business with private capital and maintaining good relationships with those lenders, it would certainly be in your best interests to learn the new requirements in your state and understand how to navigate and/or legally bypass them so that you can safely continue to operate.

Although this Act came to exist back on July 20th, 2008 as a key component of HERA (Housing and Economic Recovery Act), HUD established a deadline for states to create and pass their OWN legislation that complies with the minimum standards of the SAFE Act no later than July 31st, 2009 for some states, and July 31st, 2010 for the rest.  That means that ALL states will have this new legislation in force by now, but because it was left to the individual states to define their own standards, every stay can and will have different rules.

If you intend to use private money or owner/seller financing, either buying or selling, in your business, you NEED to be on this webinar! This is cutting edge information that you won’t find anywhere else.  Most attorneys cannot advise you on this legislation yet as they are just now learning about it themselves!   Chris will not only discuss how the new Act may limit you, but also the tools and tactics that you will need in your real estate arsenal to avoid trouble. As with most things, the fix can be fairly simple, as long as you know the rules.

Space is limited.

Reserve your Webinar seat now by clicking HERE Now!

This webinar invitation is available on a first come, first served basis. Register now to secure your seat!

The days of no down payment or low down payment options are a thing of the past. You’ll be expected to put 20%-30% down and you’ll need to have excellent credit. If your credit is good, but not great, then expect to put even more cash down. Is it still possible to get an investment property loan with no money down? Actually, yes, but these loans are usually obtained from a commercial lender that will accept cross collateral (a lien on an additional property that you already own) in lieu of a down payment.

Your best bet will be to look for a mortgage broker that specializes in investment property loans in your area. They will usually know of all the lenders that offer financing options that will meet your needs, and will be able to structure the best deal for your scenario.

In addition to knowing the best financing options, they may also have other clients that both purchase investment property and fund private investment property loans themselves. Savvy brokers will often have a few private lenders in their pocket to bring in when traditional loan options are not available.

Private lenders often have funds sitting in a self directed IRA account specifically for funding private notes for individual investors that cannot get a traditional investment property loan. Depending on the interest rate they require, this could be a win-win option for everyone involved, so stay open-minded.

Be sure to ask around, search the internet, and find the best options for you. Don’t get frustrated if you don’t find the perfect solution right away. The best option for you could exist in a single relationship that is right under your nose. Do your homework, know your limits, and take it one step at a time.

A new informational website, selfdirectedirastore.com, has been launched to empower investors to succeed. With a large variety of options to choose from, selecting the correct IRA is a critical component in an investor’s overall success. Selfdirectedirastore.com is the premier free information and education destination for those looking to maximize their retirement savings through the use of an IRA.

The site offers step-by-step instructions on how to do an IRA rollover, detailed explanations of the many IRA options – the “flavors” available, from traditional IRA, Roth IRA, SEP IRA, and all variations of the Self-Directed IRA. Visitors to the site will find guidelines for each type on such things as eligibility requirements, contribution limits, distribution regulations, tax advantages of each, and pros/cons by type to help consumers make an educated decision.

Americans change jobs and average of 7-10 times in their working life, so it becomes critical that their retirement plan is portable and continues to accrue wealth through job transitions. Self-employed individuals need an affordable option that can grow as their business expands. Those inheriting an IRA or retirement pension need to be aware of tax liability and distribution penalties. Every IRA owner needs to be familiarized with the penalty (up to 50% of assets) applied if Required Minimum Distribution rules are violated. SelfDirectedIRAStore.com is a one-stop resource for clear and concise information to help consumers through these processes.

SelfDirectedIRAStore.com also provides listings and reviews for Self-Directed IRA custodians, and sorts through the maze of fees and services they provide. There is information about IRS rules governing IRA’s, including non-allowable investments within an IRA, and helpful explanations of non-traditional investment vehicles allowed within an IRA that are excellent options for building wealth safely and with consistent returns.

Anyone with an IRA will find straight answers, detailed research and useful links at this site. The SelfDirectedIRAStore.com is a one-stop address for all things pertaining to IRA and 401k Rollover information.

As I travel around this great country speaking with real estate investors of all levels of experience, I get asked a lot of great questions about how I run my business. So I started keeping track of them to see what were the most popular or important questions I was being asked. After a few months time, I compiled them all from the casual question in a hotel lobby, to the most in depth probe from the hundreds of emails I get on a daily basis.

And do you know what the #1, most important, absolutely have to know the answer, like now, question I get is?

If you guessed “Where is the market heading?” you’d be close. If you said, “Where do you get the money to finance your deals?” you’d only be a little off the mark. How about “Where do you get your buyers?”? That one came in second.

The most important question I get, the one that every investor absolutely has to have the answer to or you can’t run your business is….drum roll please…

How do I get so many motivated seller leads each month?

Seems like a pretty simple question, doesn’t it? Well, it is, sort of. We use a multitude of marketing techniques to bring in all those motivated sellers. I will list them for you in no particular order of importance, and then give you a little bit of the good and the bad for each.

Newspaper Ads
Bandit Signs
Direct Mail
Lead Providers (Both exclusive and non-exclusive)

Let’s start with newspaper ads. They work extremely well in some markets and not so good in others. And the only way to truly find out is commit to running an ad for at least a month or two, which will cost you from $500-$1,000 or more, depending on your ad. Plus, chances are there will be at least a dozen other investors running a “We Buy Houses” ad in that same paper. Having said that, we get enough solid leads every month to make it worth the expense.

What about bandit signs? Again, they work better in some markets than in others. It just depends on the sign police in your market, when and where you put them up (or have them put up for you I should say). The good side is you will typically get leads in the areas where you put the signs, so you can somewhat target an area. As with newspaper, you need to commit to putting out signs every week for a few months to truly test the response rate. This can become a bit costly, because you will lose signs each week.

Moving on to direct mail: This is one of the surest ways to get motivated sellers calling you. Mailing to pre-foreclosures, out of state owners, non-owner occupied properties, people in divorce, in probate, etc will yield wonderful motivated sellers. Direct mail does have its drawbacks though. It can be very time consuming if trying to do it yourself. Plus, it absolutely requires a consistent approach. You have to stay on top of your mailings every week to make sure you have a steady flow of leads coming in.

What has come to be my favorite way to get leads is to simply pay for them. Let someone else do all the marketing and I sit back and check my email for leads. Now, there are two types of lead generation companies out there…exclusive territory providers and non-exclusive territory providers. I prefer the non-exclusive, simply because it’s cheaper!! And when the seller is desperate they are going to contact as many people as they can anyways.

Exclusive lead providers can be well worth it if you can actually get the market you want. Most are already spoken for and if they are available, expect to pay anywhere from $2,000-$5,000 per month for the service. I’m not a big fan of the exclusive services, because you’re paying a premium for the leads. And chances are that desperate seller will contact more than just one company to help them solve their problems.

My favorite is the this motivated lead provider that I personally use: Click here to get started for $1.00. The monthly fee after that is less than you’ll pay for any of your other marketing campaigns. The best part is, you don’t have to do any work whatsoever, and the leads just show up in your inbox. That’s what I love about it so much…NO WORK and a LOW PRICE.

That ought to work for just about everyone, right?

Here’s the deal in a nutshell. If you’re a full time investor and rely on leads to make money, you should be doing all of these things each and every month. If you haven’t already Clicked on the link then you’re going to miss out on yet another great deal… you get to start the service with only $1.00, but only for a few days after I write this (that’s the deal I made for our subscribers with the lead company).

If you’re a newbie, just getting started, or part time investor, you should immediately sign up for this service since it’s the cheapest and fastest way to get leads coming in, period.

Make sure to mention that I sent you and you’ll save 50% off the monthly price. Just enter “CMYates” in the promo code field when you sign up here.

This is the second post in a series where I answer student questions from Costa Rica. In the video that accompanies this post, you can go for a ride with me in the cockpit of a “puddle jumper”. If you’ve never flown on a small plane before, it’s quite an experience. Tag along with me for a quick ride over the rain forest, and then I’ll answer a couple of student questions about real estate investing and private money lending. To see the video for this blog, just click the links in the questions below. You can always view the library of videos I’ve posted on real estate investing and private money on the CM Yates YouTube channel here: http://www.youtube.com/user/cmyatescapital

Question #1: We sell a lot of foreclosed property on ebay. Until recently, this was a fantastic cash business. However, things are going bad quickly. We’ve proven in the past that we can sell these properties with owner financing for substantially more than we can by selling them for cash. We would prefer to go to straight seller financing sales. The problem is, financing won’t cash flow our business. How can we put together the “cash flow financing” for 2 years that will allow us to make the switch in this environment? After 2 years, we’re self sustaining…….until then, we’re in bad need of cash. Thanks, CD
- Chandler D., AR & MO, USA

Sounds to me like you need a more stable (longer term and less expensive) funding model for your deals, Chandler. See my video response to your question here in Part 1 of this week’s video blog, where I can provide more information: http://www.youtube.com/watch?v=IjCad14NK64

Question #2:
I just read an the article about the SEC’s charges against someone for putting on “free lunch” seminars, to allegedly scam senior’s out of their retirement money. The article mentioned a new SEC site (http://investor.gov) that is supposed to educate investors and help them avoid scams, have you seen the site? If you have, what do you think about the material on the site?
- Stephanie P., Atlanta, GA, USA

Stephanie, you can see my initial response to your question in Part 2 of this video blog, found here: http://www.youtube.com/watch?v=nYaVnPB7yXE After just taking a look at the SEC site, I believe that it offers a fair description of what the SEC does and some very valid resources for investors. A lot of people are scared to invest in anything right now. On one hand, most people just lost a lot of money in the stock market and don’t trust it enough to go back in. On the other hand, there are stories left and right about people stealing money from retired folks or ripping someone off this way or that. What’s an investor to do? Well, they should get educated about the investments that they are considering, do some due diligence, and move ahead. Sitting on your investment capital is one of the worst things a person can do right now, and there are a lot of viable places to put it to work for a pretty strong yield with stable collateral. I, of course, favor real estate. But, that’s what I know. I definitely believe that a person should invest in what they know, and nothing else.

While on the topic of investments, a recent e-mail conversation with Amy Sheflin of Entrust New Direction IRA revealed the following tid-bits for the current year:

“2010 offers a unique opportunity for some to avoid that altogether. In 2010, the requirements to convert an IRA to a Roth IRA are waived. That allows investors to pay tax on the value of the IRA account now (at their 2010 income tax rate). Once that tax is paid and the asset is held by a Roth IRA, when the property is distributed at retirement NO tax is due on the asset at all. This is true no matter how much the value increases between now and when the investor retires. In the past, the investor needed to make less than $100,000 to take advantage of this option, but again in 2010 that requirement is waived and anyone can convert to a Roth. It is a good thing for real estate investors to be aware of for 2010.”

“On the report offered at http://RealDistribution.NewDirectionIRA.com/ we go into a lot of detail as to the taxes due when a property is taken as a distribution.”

Look for next week’s post where I take you down the “roads” of Costa Rica through the jungle and to one of my favorite spots on the coast. I’ll be answering even more questions then and have some exciting new locations planned as well, so keep your questions coming in! Pura Vida!

This is the first in a series of videos where I’m answering student questions from Costa Rica. If you happen to miss any on this blog, you can always find the videos on our YouTube channel. You can find today’s video here at any time: http://www.youtube.com/watch?v=TsTSB3NZBIY

Question #1:
“Can you purchase and own a personal residence in your IRA?”
- Mike L. Denver, Colorado

Though I gave my answer in the video, I went ahead and asked Amy Sheflin, Marketing Coordinator at Entrust New Direction IRA, so that I could provide a more thorough response. Amy replied:

Chris,

The answer to the question is, unfortunately, no. The IRS does not permit personal use of real estate owned by your IRA.

This is one of the top 5 pitfalls of IRA-owned real estate on our real estate landing page:
http://newdirectionira.com/purchasing-investment-property-with-ira-401k/

The asker may also be curious about content here, which details how you can purchase a home and then eventually distribute that asset to yourself in retirement. Once you have distributed 100% of the asset (the IRA no longer owns any of the property), you could live in the property. As long as the IRA owns even a small fraction of the property, however, personal use of the property would not be permissible.

http://secondhomes.newdirectionira.com/

Hopefully that helps!

Amy Sheflin
Marketing Coordinator

Entrust New Direction IRA, Inc.
1070 W Century Dr Ste 101
Louisville CO 80027-1657

Question #2:
“I have a chance to buy numerous properties for 30 cents on the dollar. I have tried banks and hard money lenders but to no avail. Where can I find private money lenders to finance the deals in return for 50% partnership?”
- Yuri G., New York

Per my video response, I don’t like equity partnerships unless they are your absolute last resort. It’s a very expensive way to fund a deal, and it is very difficult to keep both parties happy. If you are unable to obtain private money for your deal using the property as collateral along with standard terms (points and/or interest), I would look closer at what the problem is. Is the price of real estate particularly high in your area, making it more difficult to obtain private funding? Are you really getting a great deal? In other words, if a lender thinks a property is worth less than you do, it may not look safe to them. Always be conservative with your values to make sure that you don’t get involved in a deal that really isn’t a deal. Also, how hard have you tried? How many lender prospects have you spoken with and actually presented a deal to? If that number is low, I’d go back to that before considering an equity partner. Have you been to a local REIA group and asked who is lending private money? Have you spoken to some hard money lenders? Even hard money may be cheaper than an equity partnership! Consider all avenues before giving up a huge piece of your profit. Last, always remember that if your deal is good enough, there will always be someone willing to fund it! You just have to keep asking people until you get the answer you want. YES!

I’ve just returned to the US from nearly a month travelling in Central America. After surviving five earthquakes and one volcano eruption, I’m safely back at home getting caught up on all of my real estate updates for you. I have several videos coming soon for you which will show you some of my adventures in Costa Rica, including their idea of roads, and off-grid resort properties. Fun stuff.

This week, I’ve posted a new video which was recorded just before I left. If you have ever raised private funds for your real estate deals or have thought about it, you’ve got to see this! After years of talking to different attorneys about SEC rules versus state rules, when is an investment a security versus when is it not, and receiving different answers, I decided to go right to the source. Rather than getting someone’s opinion this time, I interviewed the Securities Fraud Investigator from the Attorney General’s Office! Yep, he’s the guy with handcuffs that goes to arrest folks that have committed securities fraud. The video is short, but I can guarantee that you won’t see anything like this again. Check it out on this page now: http://cmyatesnews.com

If you are using private funds and are pretty sure that you are doing it properly, you might want to go watch this now anyway. You might be suprised how easy it is to get into trouble, but also relieved to know that they are only a few simple things you need to do in order to raise a lot of private money legally in most states.

I will soon release some great video of me answering your questions, recorded in Costa Rica, as well as the much-anticipated announcement of my advanced private money home study course. Stay tuned!

To Your Success,

Chris Yates

A very rarely talked about strategy for obtaining large amounts of private capital is the little known self-directed 401k group plan. Although individual employees have very little control over their investment options, business owners can move their 401k to a company that offers self-directed 401k options. Those funds can then be invested in real estate notes and similar investments vehicles. Even small companies can provide a powerful source of funding for your real estate transactions, and the asset-backed investments that you can provide them with have the ability to create an astonishing win-win opportunity.

Pros:
If you can get even a small company with a few employees to become a private lender for your deals, you also open up the possibility of building relationships with all the employees of that company and offering them individual opportunities to fund your deals. The employees will often have more invested in their IRA or savings than they do in their 401k account.

Cons:
Business owners that offer 401k benefits to their employees are often looking for the “quick fix” by selecting a 401k plan that is easy to setup and forget about. These plans usually offer a handful of mutual funds to choose from, which makes the employers involvement in the management of the 401k plan very minimal. In order for the business owner to convert their current plan to a self-directed model, they will have to be fairly savvy and willing to do a small amount of hands-on work to move the funds to you and ensure investment security for their employees by fully understanding your investment opportunity.

Strategy:
Read up on how a self-directed 401k works and request some brochures from a company that offers them. The brochure will sell the idea for you. You simply explain what you do and what you can provide the company. The brochure and the company you refer the prospective lender to will handle the rest.

Recommendations to begin with:

Equity Trust Company
http://www.trustetc.com/

Entrust
http://newdirectionira.com/

Denver, CO (PRWEB) December 14, 2009 — Co-hosted by Entrust New Directions IRA and CM Yates Capital, the webinar will focus on alternatives to the rollercoaster ride of financial markets, taking advantage of both the upside and downside of today’s real estate markets. Real estate entrepreneur Chris Yates, President of CM Yates Capital returns as presenter. Yates and Entrust have partnered before for a popular series of webinars (replays available at www.cmyatescapital.com).

Chris Yates has become the first-choice resource for conservative investors alarmed at the diminishing returns on their more traditional investments. Having completed due diligence to meet securities regulations, CM Yates Inc. now operates a private investment fund showing strong returns with capital spread over a portfolio of properties to maximize return. Yates will explain his compliant fund in this new webinar. He will discuss how his fund gives him the ability to respond instantly to market changes and take advantage of significant cash-flow opportunities. The Yates fund provides a fixed rate of return for consistent cash flow, dividend yields for additional gain, and the security of real equity in performing and insured properties, possibly tax-sheltered within an IRA. The CM Yates fund has never been offered as a general solicitation, and Yates teams with Entrust to share this information in an educational format to provide investors with alternative strategies that they will not find elsewhere. Additional information on the fund concept is available at www.cmyatescapital.com where there is a registration link for the webinar, and replays available for those unable to join the webinar live.

Self-directed IRA administrators have praised the exceptional out-of-the-box simplicity of the CM Yates model. Financial instruments involving real estate are becoming much more common, but investors need expert guidance to avoid legal and tax consequences. Yates consistently shares his knowledge at seminars and events, through private coaching, and through his blog at www.cmyatesnews.com.

Chris Yates is no stranger to center stage, having often been featured in national and international media. Chosen as the current “Master Investor” in Personal Real Estate Investor magazine (Nov/Dec’09,) he has been widely praised for the elegant simplicity of his investment models. PREI Publisher Andrew Waite sites the Yates model that reduces investor risk, and discusses the compliant fund that Yates uses and teaches to other investors. Chosen for the cover of Nov/Dec ’09 Personal Real Estate Investor, Yates’ career path is highlighted in the feature article titled “From Bootstraps to Brilliance.” The magazine is on newsstands now.

The live webinar will be held on Thursday, December 17, 2009 at 6pm MST

Registration for the live event can be found at http://cmyatesnews.com

A video replay will be available at http://cmyatescapital.com

Real estate investors seeking solutions to the current funding dilemma headed to Denver, Colorado on October 23rd-25th, 2009 for a special Private Money Event where Personal Real Estate Investor Magazine’s “Master Investor” (Nov/Dec’09) Chris Yates of CM Yates Inc. teamed with Paul Esajian, star of A&E’s “Flip This House” to host a three day event. Yates shared his private money system with nearly 200 registered students.

Praised by PREI publisher Andrew Waite for his creative financial strategies, Yates is “showing every other real estate investor how to get money for the hundreds of great deals available now in every market” Waite sites the Yates model that reduces investor risk and highlights the compliant fund that Yates uses, and now teaches, to other investors. The October event drew seasoned investors and first-timers to learn from Yates , and was widely praised:

“Chris’s openness, his obvious desire to help everyone, his great interaction and integrity was the standout feature of the event”

“Provided great information, and a lot of it!”

“Chris gave us great information. He was brilliant, honest and funny”

Yates offers free coaching for real estate investors on his blog at http://cmyatesnews.com as well as features on private capital, deal structuring, and technology. His management staff now offers blogs on specific areas of expertise, answers questions and can assist with live deals via blog posts, video training and email:

Andy Avery, Director of Operations – REO Acquisitions, Rehab, and Project Management

Sarah Reed, Office Manager – Deal Coordination, Finance and Title, Property Management

Matt Barry, Acquisitions Manager – Short Sales, Creative Acquisitions, Deal Negotiations

For those unable to attend the event, CM Yates Inc. will be offering a home-study course of the event topics in an announcement made to newsletter subscribers. To be added to the list or for further information, join the newsletter list at http://cmyatesnews.com.