007: Finding the Money for Your Real Estate Deals – Part 1

SHOW NOTES EPISODE #007 WITH SUSAN LASSITER-LYONS

In the first of a two-part series, Susan Lassiter-Lyons, a successful real estate investor , financing expert and author of Getting the Money: The Simple System for Getting Private Money for Your Real Estate Deals, shares techniques for obtaining properties for little or no money down, what she learned from the crash of 2007 and how to position yourself when asking for money.

You Will Learn:

• 3 Ways to Get Started in Real Estate Investing Without Any Money
• How to Get Rid of Properties That Lose Money
• Why Commercial Properties Are Better Than Residential
• How to Get Properties With No Money Down
• 4 Reasons You Can Give Potential Investors That Justify You Not Investing Money in a Deal

Susan Lassiter-Lyons

Susan Lassiter-Lyons is the #1 Amazon Best-Selling author of Getting the Money: The Simple System for Getting Private Money for Your Real Estate Deals. She began investing in real estate in 1994 by forming a small syndicate, the Lien Lords, to pool $2,500 in capital to purchase tax liens at auctions.  Since that modest start, she has participated in more than 600 transactions as an investor, broker, lender, syndicator and advisor.

She has:

• Over 800 units valued at $75-80 million
• Raised over $30 million in debt and equity partners to fund hundreds of deals.
• Managed real estate hedge funds/syndicates including multifamily equity offerings and a 506(d) private equity mortgage pool to make hard money loans.
• Educated more than 10,000 students who have collectively raised hundreds of millions in private money, closed on thousands of properties and improved their lives and communities.

She loves wearing flip-flops, teaching and sharing what she knows through online training programs, workshops and coaching and lives each day to “have fun and create value!”

How She Got Started

• Car rental business – worked up the corporate ladder
• Dissatisfied with corporate life and starting looking at other ways
• Saw Carlton Sheets “No Money Down” Real Estate ad on late night TV
• Started Mortgage Business
• Started doing no-money down deals
• Crying in Mexico
• Trying to unload a duplex and a triplex

Her strategy: Acquire property using private capital from outside investors (17:54)

Do a re-finance or a “take-out” loan using local portfolio lenders (local community banks that underwrite and service loans in their own portfolio instead of having to follow Fannie Mae or Freddie Mac government loan guidelines that secure their loans and sell them into secondary markets)

She offered owner financing on the duplex with no money down/100% financing.  Did a wrap mortgage and sold it to a fellow investor who held on to it until the market came back and then they refinanced it.

For the triplex she did a deed-in-lieu with the bank to avoid foreclosure and couldn’t finance it because it was losing money.

What she’s doing differently because of that experience

• Decided to do commercial investments only
  • For commercial properties the value of the property and the purchase decision is driven by the debt coverage ratio (DCR) of that property – banks look for 1.25 ratio (which means the income from that property will cover the expenses and mortgage by a margin of 25%) It’s forced cash flow
  • Residential lenders do not operate that way. It’s the debt to income ratio of the individual that is borrowing the money that matters most.  It has nothing to do with the property.
• She forms a syndication comprised of a pool of funds from various investors to buy apartments in Southeast and Midwest US

Other Real Estate Investments She Has

• Has her own private fund
• Has invested in liens one time
• Also, buys, holds and sells mortgage notes in bulk

What She Seeks in Each Deal

• She goes for a minimum 20% cash-on-cash return on each deal
• Tries to automate processes as much as possible
• Leverage –

Advice to People Getting Started With Limited Funds

• Master lease option is a great “No Money Down” technique
  1. Works well with seller who is anxious to sell
  2. Set-up a lease with previous owner (seller) where you pay monthly “lease” payments for temporary time period
  3. As the value of the property goes up, refinance the property and pay-off seller
• Wholesaling
• You can raise capital

How to position yourself when asking for money and not putting your own money into the deal

• I’m syndicating this deal
• I’m leveraging other people’s capital
• I’m providing an opportunity for you to make money on this investment
• My contribution is my “Sweat Equity”
  • The time I’m spending analyzing the deal
  • The value in “finding the deal”
  • Putting the deal together
  • Managing the property once we’ve closed on it

Check out our other podcasts at olddawgsreinetwork.com.

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Episode Sponsor: Meno Studio – menostudio777@gmail.com