How to Leverage Hard Money Lending for Your First Deal

In this episode, Donny Coram leverages his experience as a coach to guide listeners through their first real estate deal using hard money lending. The topic of discussion is the 5 hard money lending factors when making a deal.

He discusses tactics such as getting your LLC and EIN number ready to present to the lenders, adding me as a coach to the operating agreement of the LLC, reducing the down payment percentage to increase leverage, reducing points, and getting the loan approved using education-based lending. Shout out to Junior for his contribution to this topic.

Join the Facebook group and message Donny your LLC documents to ensure that they have set things up properly for buying a house. It's important to note that while he is not a tax professional, he can offer advice on the most effective way to set up an LLC to maximize profits. However, it's important to focus on making money first, as tax savings won't matter if you aren't profitable. Don't miss this episode if you're looking to break into real estate investing and want to learn how to leverage hard money lending to your advantage.

Article: 5 Hard Money Lending Factors We Consider | Private Money Utah

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Transcript

0:02

Welcome to the Foreclosure Deals Coach Podcast. The real estate market is shifting. The time is now. The Foreclosure Deals Coach Podcast is your home for the mindset, tactics and tools needed to break through your limiting beliefs and find freedom by investing in foreclosure deals. Don't buy a house, buy a deal. You need to get into this right now. And now your host, the Foreclosure Deals coach, Donny Coram. Hello, hello. Hello, and welcome back to the Foreclosure Deals Coach Podcast. I am your host and foreclosure deals coach, Donny Coram. Hey, our usual housekeeping today. Don't forget to subscribe. Uh, and my mission every week here is to talk to you and educate you about building income and wealth with foreclosure investing. Don't forget to follow, like, subscribe wherever you consume your content. And on today's show, we got a great one for you. Lots of great topics, but we're gonna talk a lot about leveraging my experience as your coach to get your first deal. Done. Now to get started, we always have our motivational quote today. We've got Richard Chewy joining in with us today, and he said A great coach not only inspires, but supports and encourages others to get results When I think of great coaching, okay, one of the greatest coaches in basketball was Phil Jackson and one of the greatest players to work. Mr. Phil Jackson was none other than the late Kobe Bryant. God rest his soul. But this was an incredible short video that I wanted to share with you guys about the importance of great coaching and how it's going to work to help you get a deal done in the real estate market. Let's hop in here. Take a look at this video. I can't probably be most important. I learned it from Phil, you. How important is understanding human psychology and human behavior? Probably the most important thing, I learned it from Phil. He wouldn't just coach the team, but he'd read everything about every single player. He'd learn about your history, how you grew up, how you were raised. He'll read every interview, he'll learn about you. Gives him a better understanding of what's motivated and then it just helps him communicate with you better there. There was a stretch in oh three where Shaq was out and Phil called me up to his office and said, okay, we need you to start scoring more if you have to win. So I did and I wound up scoring, I think it was nine straight games, 40 plus players. And then Shaq comes back second to last game of that, and then Phil called him to his office. He said, Cole, okay, I need you to dial it back. I'm like, why? Like, we're winning. I don't understand. Our goal is to win a championship and we can get through the Western Conference with you playing this way, but in the east you dominate them inside with Shaq and the Pope. But if you continue to do this, we'll loosen, I need you to pull back so we can pull Shaq forward for June. And I'm, I just looked at him like, smart dude. Wow. One smart dude, man. So I pulled to the back. Yeah. Listen, I, I, I love that. Obviously God rests Kobe, you know, that's a God rests his soul on. That's such an incredible loss. But the takeaway from. Was that he had the right coaching to explain when it was time to advance and when it was time to pull back. Okay. So a great coach as, as Richard alludes to in this quote here, once again, not only inspires and supports as Phil was doing for Kobe here, but encourages. Others to get results. Now, are you looking to get a result in your real estate investing career? Well, I mean like of course you are, right? Nobody sets down the real estate investing thinking I'm gonna learn a bunch of stuff and then do nothing with it. Right? You're getting into this game because you wanna make a profit. You're looking to change your life through real estate investing. Am I right or am I. Okay, so think about that is, and what we're trying, the takeaway that I'm trying to give you here is that real estate, the way the market is right now, is gonna require some great coaching. And I don't just mean this to toot my own horn, okay? I am now working with clients all across the country who are listening to the same content you're listening to right now. And the general consensus has been, I want to do, I know that the market is now conducive to doing this based on what's changed in the recent foreclosure deals market. I just do not know where to get started. Does that describe you? Are you listening to this right now? Going, man, Donnie, I'd love nothing more than to do some real estate investing, but I don't know where my start is going to take place. This is a great opportunity. I had a, I had a call with a guy named Junior, and if you're watching the show, junior, I, I really appreciate your support as a listener, as a follower, as a viewer of the show. Thank you so much. But junior man, he blew me away cuz his. Was fire like for the moment of the call, he's hitting me up going. I've been studying, I'm working on a couple of wholesale deals, but I don't know how to get started in flipping. I don't have the capital to get going right now, but I love listening to the show. Donnie, I love the inspiration that you provide, and I'm promising you I'm gonna be a coaching client. For you at some point in the future. Now, listen, obviously I'm in the business to help people who are, who can start coaching right now, but I love calls like this. I love talking to people who are out there fired up. They're motivated to get started in this industry. This is not all about money. It is not. We're gonna make it. Impact. We're gonna make a difference on people's lives by teaching them a skillset that I developed over the past 17 to 18 years by flipping over 300 properties, doing 47 homes in 2021 alone, being on track to 60 properties in 2022, and now dedicating all of my resource. I need all of my resources to helping my clients find deal. In their local market that they can flip at a minimum profit of$25,000 after all is said and done. Okay? Now, early on in the coaching, I've got some great clientele that's gonna make for some incredible testimonials, but I gotta tell you, by the time this course is at full bore, by the time I've got, you know, 10, 20 people underneath my belt who have achieved this, it's going to get more. Okay. And I don't want this to come across as a sales pitch, but time is money, and the reality is I'm gonna have a limited amount of time to take care of people once this thing takes off at the rate it's starting to take off right now. So I want to be that coach for you. I wanna w look you in the eye via this, this medium we have now via Facebook, via YouTube videos, via the Zoom calls I'm doing my client and tell you if once you hear it right now, you can do. There is no doubt that you can now step into the market, find a deal in your local market, analyze it using Privy to get the best analysis and data on that property. Fund it. This is a big one. A lot of people like, well, where're gonna get the money to fund these deals. Okay. My foreclosure funders are gonna take into detail. And that brings us into our article here for today. Cause I got a great article from Private Money Utah. Now, this is not one of my, my brokerage relationships, but a lot of lenders won't tell you in writing that one of the things that they are looking for, In their clientele, particularly in this market, is experience. So check this out. Check out this article here. I'm gonna, you can't hear me if I go there. So let me, let me shift this out. If you look here, do you have the ability to get loans? And they're talking about the different lending programs that they offer, but as I filter down here, they're talking about the property details. But the, the part that I really looked into here is the real. Investing experience. As always, we're gonna post this link in the, uh, description right here in the video. So go ahead and click this. You can see it in full form here, but you're going, one of the things they're looking for is how much experience you have and your track record with managing real estate. Okay? They're gonna check to see that you know what you're doing, or, and I love this part, have a qualified team in place. To help you and based on having that, okay, they will offer you. A lower interest rate because of your experience, and they're gonna make sure that they're gonna have a low, less hassle deal. If you're out there right now wondering how you're gonna find deals, well, we got privy for that. How are you gonna analyze deals? We're gonna walk you through how to do that with Privy and other sources. But if you're getting stuck on the funding part, which so many people do, this is a hard money lender. Admitting as all of them would. If you ask them how much experience factors in, they're gonna tell you that they're looking for a history of real estate flipping experience, or they wanna know that you have a team behind you to do it. If you have that and you've got me as your coach, you're gonna get a lower interest rate. right? And you're gonna get lower points and you're gonna get a lower leverage point. All of those things are gonna factor in because for most people getting started, they need to have 20% down to get going. Well, if you're in a market like mine where you're buying your flips in the late twos, early$300,000 range, right? With the hopes of selling it for 400 to four 50, give or take, you're looking at, if you're buying it at$300,000, you're looking at 20% down at$60,000. That you gotta bring to the table. That's a lot of money for anybody. Now, maybe you have. Okay. Maybe you're one of the blessed few who can identify that capital and has that available right now. If so, good for you. But would it not be better to use half of that by leveraging the fact that you've got a coach working with you and now get to 10% down or 5% down, or in certain cases, I've got lenders that will do nothing down. If you've got coaching available to. Does that just not make financial sense to leave your money in your bank account to get this done? Guys, deals are happening. The ideal behind this show is to explain to you that week after week, I'm signing clients left and right who are finding deals. I try to show you these deals on privies. You get a feel for the deals that we've got locking down. So you know, this isn't just fabrication. Okay. This isn't just a conversation I'm trying to have with you guys, but rather that lives are being impacted at a very high level as a result of the coaching that I'm doing right now. It's happening, okay? The issue is, I'm gonna pull this article off here. Okay, that you're gonna need a certain amount of things to get this done. One of them is going to be knowledge, the other one's going to be money, right? And, and, and to get both of those things, your best bet is to understand that my job as your real estate coach is to inspire and support you, but also to encourage you to get results. There are so many gurus out there who are tout. I can teach you real estate. I see it on Facebook every single day. Obviously, I'm being targeted as a real estate investment interest because I'm on real estate investment sites all the time. So Facebook sees me at that, so I know what you're seeing out there. Here's the big variable, okay? The results we have to make sure that if you sign up for coaching with anybody, That you're not flushing your money down the toilet, you're getting some kind of result. Well, I can tell you that I'm gonna help you to find a deal. I'm gonna help you to fund that deal, and then I'm gonna walk you through fixing that deal. So we ultimately walk out there with a profit because I want to be the best real estate investment coach available the market. And what I love now is the feedback I'm getting from you, my deal hunter, following who I adore, who's telling me, yes, I'm inspired. I may not be in a financial position to do this right this moment, but I'm inspired. I'm ready to rock. And I appreciate that every week you're tuning into the show and getting that inspiration so I can make sure that at some point when you are ready financially, you can take action and get the result that you. For, I'm excited guys. Right? The, the market is shifting. The problem with coaching foreclosures in the past two years, and I'll shoot straight with you, this was a tough business model, okay? Because there weren't that many deals. I could find a pretty good supply of deals for myself, but when it came down to supplying deals for coaching clients, I now have to think about, okay, am I gonna give this deal to my client? Or am I gonna do the deal myself? And I had to decide what was in the best interest of me. Now there are so many deals and I wanna do a lot less of them because I'm focusing my attention and helping people as opposed to doing deals. But there, there's enough to go around right now. And I'm not just talking here in my local market, but I mean on a national level where I'm seeing deals all the time. That would be viable for coaching clients. I'm going, man, I wish I had a client in this market, or maybe the clients that I have are already locked into deals, so I gotta figure out what to do with the surplus of deals that are coming in through the pipeline right now. This is a great problem to have, being honest with you. So your, your tactic for today is getting started is gonna require that you get an L L C and an e i N number ready to present to your lender when you're ready to go. And we've talked about it on a couple of shows, but you can go to your local Secretary of State website, just Google. You know, if you're in Utah, Utah, secretary of State, you'll get to the business directory and you're looking to file an llc. Do not, I repeat. Do not pay these services out there that will charge you three,$400 to set up an llc. That's ridiculous. And a little tidbit, for those of you based in Colorado right now, there's this thing that happened at the state level and they had to refund a B. They, they. They, they were found to be overcharging for the business document filing. So there's this fund that was set up to kind of give the money back. You can actually file an L L C in the state of Colorado right now for a dollar. It's normally like 50 bucks, but they're kicking back some revenue right now. So the LLC is super easy. The EIN number is free. You go to irs.gov, you put in your LLC information, it spits out a PDF document with your e I N number. And the third thing you're gonna want to do if you want to get a deal done effectively is add a coach to your operating agreement on the l. Okay. And that's where I come in for my clients. I'm leveraging my experience. Some of the lenders just want the coaching agreement signed that says I'm gonna help you through the deal. And they use that to reduce your leverage. Okay. Other lenders want me to be on the L L C itself. In order to make sure that I'm going to operate in the best interest of the company, which is making a profit by getting the flip done. In either case, I consider myself a pure coach, and what I mean by that is there's a lot of gurus out there who want to get a piece of your deal. They want to, you add'em to the operating agreement and because they're taking on that bit of liability, they want to keep half the profit or 25% of the profit or any of that. I don't do that at all. Okay? Even if we have to add me to your LLC to get you the leverage point that you need to reduce your down payment and get you into a deal, you still are only giving the coaching fee the profit that you make on your deal, which by the way, has to be a minimum of$25,000 for me to consider my coaching successful. Okay, minimum of 25 grand. That is all you, you keep every dime of that prophet. This is not about, Hey, I'll set you up with a deal and I'll get my cut of it. I just, I've never liked that feeling. I've never liked if, if I'm truly here to coach and teach and develop people, then I have to watch you get results regardless of what you're making and celebrate that victory with you. Right. I'm sharing in the victory in the sense that I get a testimonial, I get another happy client that I can show to other people who want to get into coaching. But the profit, the bottom line that you take away from that deal is your money, and I want you to take that money, buy something nice with it, and then reinvest it into doing your next deal. That's what the coaching is all about. That's how I help you to get started. First deal and it, I'm passionate about it. You can tell. I love this. This is a big thing for me and I hope that it's gonna be a big thing for you as you're getting started in your real estate investment career. Okay, let's keep this ball moving here. Today, we talked article, we talked a little bit of mindset. We got into some tactics about getting your L L C put together. Okay. And ideally adding me as your coach for the L L C to reduce it. The next thing I wanna chat with you is tools. Cause remember we chat on this show about mindset, then we do some tactics, and then we do some tools. Well, the tools is, you've gotta join the Facebook group. Right. Fd coach group.com will get you there and you can send me your LLC documents. I'll review them for free to ensure that you are ready to get started with lending. I just, I wanna offer that up there. Structure is super important. The last thing you wanna do is have to restructure your LLC while you're in a deal. So I, I wanna be clear, I'm not a tax professional, okay? I'm not a lawyer, but I've seen enough of these L L C document. To know that I can help you to get an LLC set up. Okay. As far as tax structure and things like that, I, I, a lot of people come to me. Well, you know, what about the income taxes and all that stuff on it? I'm not completely negating that. Okay. But if you're already getting by on your jo, just over a broke job, don't worry about the tax implications just yet. Okay. Let's salt the problem about you making too much. And then we'll get into how to reduce the taxation. There are some things we can do upfront to minimize your taxable income. And I'm not just trying to throw that away, but a lot of people don't get started at all because their fear is they're gonna make too much money and have to pay taxes on it. Are, aren't you making more money? And aren't you living in one of the greatest countries in the world where we have the ability to make more money? Listen, I don't like paying my tax bill any more than anybody else. I'm not here to negate that by any means, but the reality is, if you're letting your tax structure stop you from doing a deal, you're missing a very important part of this equation. Okay? The key here is to learn the business and then find ways to reduce your taxable. Okay, you gotta get your mind right here. You guys gotta think about this the right way, and I love the one-on-one calls I'm doing and I'm gonna encourage you to head out to foreclosure deals coach.com. Click on the coaching assessment call. Let's have those calls. Cause I love the one-on-one interactions, but guys, a lot of the people I'm talking to out there are putting in these invisible barriers into their success that just don't actually exist. You know, the deals are out there. We find them each and every single week. As a matter of fact, we're gonna hop in right now and find a deal because that's what we do here on this show is we find deals. And I just got a client out in the Kentucky market, so we're gonna just hop into Kentucky and I'm gonna very quickly show you how Privy can find deals anywhere in the United States of America. We've got, we're just gonna go into Lexington, Kentucky, right? I've never physically been to Lexington, Kentucky. There's a lot of Lexington's. Here we go. Okay. Expensive neighborhood. I can tell that right outta the gate. Okay? But what Privy is doing is they're taking the analysis of properties in the area looking for stuff. Here's how I got it filtered, okay? Right now it just says single family active in the past six months. Well, that doesn't do us any good. We wanna find a deal, so we hop in. We look for a fix and flip deal, it sorts it here, so we can look at 75% of value or less, and then we run our search. Right now, you're not necessarily gonna find a deal on every deal hunting, expedition, deal hunters, right? When you go hunting for a elk, are you guaranteed you're gonna find a deal every time you find? No, but the good thing about this software is I can look for deals each and every single day. Looks like privy. Suffering a little bit with that though. Let me, um, maybe we got a different city. We need to try. Uh, you know what, let's just do the state at large, right? Kentucky's one of those weird, a weird state like I like. I've never done a deal in Kentucky. I'm working on finding one right now, but right here in the entire state, I'm finding I got a list of properties that could be potentials. Privy first filters out by kind of doing the zone, so you can kind of find more geography here. And you don't just wanna buy a place at random Kentucky, don't get me wrong. But here we're sorting based on what we believe could be a deal right here in the Kentucky market. This is in Corman, Kentucky. I don't know where that is. The relevance behind this guys is that there are deals everywhere. Okay? So this house is listed at 1 0 7. You've got comps. Here's one on the same street y'all. Same. That Soul 0.04 miles away went for 186,000. Now, the timeframe doesn't quite line up with using it as a comp, but I think it stands reason we could buy this for 1 0 7 and sell it somewhere in the 170 to 180 bracket. Does that make it a deal? I don't know. At this stage, all I know is I found a potential deal and we can do so each and every single day using the privy application. So don't sleep on this. Click on the link there. Get privy in your world and start looking at deals. It's gonna blow your mind as to how many deals are available out there. If you're just willing to take the time out to look, they're out there guys. You just have to know where to look and have the courage and. Only a good business coach can provide you to take action when you find that deal. I would be honored to be your real estate investment coach. You're looking to get started. Well, first of all, don't forget to subscribe to the channel right now that you're watching the video. Hit that subscribe button so you can say up to date on new videos as they are released. Join my Facebook group@fdcoachgroup.com. Get part of the conversation, ask some questions. Send me your LLC documents. I'll help you to review them so we can make sure you're prepared to get deals started. Download the free ebook, the Hidden Foreclosure Deals Market, and just find out some of the great sources I use all the time, including Privy to find deals in my local marketplace. But most importantly, guys, you have. To take some action. I can only take you as far as you want to go. I would be honored to be your real estate investment coach. Click on the button, get started with that. For right now though, I wanna thank you for tuning into the show each and every single week here on the Foreclosure Deals Coach Podcast and remind you once again, don't buy a house. Bye by a. Thank you for tuning in to the foreclosure deals. Podcast. If you like what you heard here today, remember, new episodes are uploaded weekly. Subscribe wherever you listen to your podcast. Do you want more of the foreclosure deals? Coach, are you ready to learn the mindset, tactics and tools required to be a successful real estate investor? If so, click the link below to schedule a one-on-one coaching. Call today with Donny Korum, the Foreclosure Deals Coach to determine if coaching is right for you. And remember, don't buy a house. Buy a deal.