Minnesota Real Estate Investors Association, Inc.

How To Succeed When the Market Crashes

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Imagine this scenario… 

You find a good piece of real estate that you decide to buy. 

You have little money to buy it, but you decide to use whatever money you have as part of your down payment. 

You get qualified for a 90% LTV loan. 

You call around and you are able to raise the remaining money you need for the down payment from your close friends and family. 

You promise to pay them a generous interest rate of 8% for lending you their hard-earned money. 

The following month, you find another good real estate property that you want to buy.

You have no money to buy it, but you know you can raise the money. 

You have great income and credit and once again you get qualified for a loan with 90% LTV.

You call around and you are able to raise some of the money from your close friends and family. Again, you promise to pay them a generous interest rate of 8% for lending you their hard-earned money. 

This time, you remember about a line of credit you have, and so you decide to use all of it to close the deal.

You’ve now raised all the money to buy this property and you couldn’t be more excited. You start feeling like a successful investor. 

Unfortunately, a few years later, you lose BOTH properties and all of the hard-earned money that you AND your friends and family invested. 

What went wrong?

It wasn’t the properties, they were great. 

It was in the way you structured the deals, specifically the financing (aka capital). 

In this article, my goal is to simply OPEN YOUR EYES to something most investors never realize and don’t know that is hurting them. You could be one of those investors.

MOST investors think the know how to structure the capital of their deals correctly, but very few actually do. 

Would you want to wake up years from now and realize that you are about to lose everything you worked for because you didn’t know this one critical skill – deal structuring? 

This is what happened to many investors around the country in 2008, and unfortunately this is what will happen to many investors again when the next correction (and possible crash) happens in the real estate and other financial markets, which economists are predicting within the next 12 to 24 months.

If you don’t want to be one of them, consider a few basic questions:

  • Most investors know how to measure return (upside of a deal), but very few know how to MEASURE and MITIGATE risk (downside of a deal). Do you?
  • What is the right LTV for your deal? (Please don’t say “the maximum I can get!”)
  • What is the right return for your deal? (Please don’t say “as high as possible!”)

If you KNOW how to answer these 3 basic questions of deal structuring, then you are on the right track. Unfortunately, most investors cannot and it’s causing them to put their money and other people’s money at incredibly high risk. 

And here’s the kicker, this crucially important skill is something that can be learned pretty quickly in a few days and change their investing forever. 

Here are the 3 skills every investor needs to master: 

  • Raising private money
  • Investing in the right assets
  • Structuring capital correctly

The problem is most investors don’t know anything about the last option (which happens to be a VERY important one). It’s time to become aware of it.

The questions to you are simple: 

What is the cost of not knowing this information? 

And will you find out when it’s too late? 

I hope I was able to open your eyes to something you should consider, a skill that most investors are clueless about, that can give you the confidence to raise more money, close more deals and allow you to create CONSISTENT and UNLIMITED SUCCESS.

If you want to learn the skill of structuring capital for passive income like the top 1% of investors in the world, click here to find out more about The Passive Income Course.



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