Archived PMG chat (April 22, 2007)

[Debbie]

Many thanx to Tim for introducing PMG for last night's chat.

This archived chat is too big to post. Having trouble posting in one post.

Stand by for multiple attached files in a few minutes!

EDIT: upload keeps failing. Will forward files to Dan.

EDIT: We still have trouble uploading.....I will manually cut/paste....

[Debbie]

Welcome, BrianB_Cereniti
Welcome to room Lobby
The topic in this room is: Everything you want

PMG: Is there anything in particular you want to cover because I usually start with some basics.
mike_mn: Please do
PMG: right, ok, the first thing is you can't advertise for investors.
PMG: That is a no no with the government.
PMG: So, your network is key.
PMG: Who here has an updated list of everyone they know?
PMG: With phone numbers and mail addresses.
[ Private Chat: >>> montessorikelly walks slowly into Private Chat. ]
k6saunde: me
mike_mn: hmmm...a lot but probably not all
PMG: If you do great, if not start building it now!
PMG: How many send out Christmas cards to people on that list?
[ Private Chat: >>> ceres walks slowly into Private Chat. ]
mike_mn: me
PMG: What about change of season cards?
k6saunde: I do
k6saunde: no change of season cards
ceres: hello everyone
[ Private Chat: >>> Dan_Auito walks slowly into Private Chat. ]
PMG: I touch base with my list as often as I can.
montessorikelly: missed the beginning- which list (sorry)
BrianB_Cereniti: My realtor sends a card for every stinking little holiday there is
[ Private Chat: <<< Ricker leaves Private Chat. ]
Dan_Auito: Hello to the crew!
[ Private Chat: >>> Ricker opens the door, looks around and enters into Private Chat. ]
ceres: hows it going Dan
mike_mn: PMG, what do you tell them?
PMG: Brian, your realtor is very smart.
k6saunde: Hey Dan
Maximo: hello....Dan
Ricker: Hey Dan
Maximo: here to learn though
Dan_Auito: All is well brother John
PMG: It doesn't matter mike. Stock cards are fine.
[ Private Chat: >>> <ZONG!> stallingsorg beams into Private Chat. ]
Dan_Auito: Hey Rick
Tim: Hi, Dan.
stroker: hey first time chatter
mike_mn: For business or pleasure?
BrianB_Cereniti: There are services that will do the mailings from you from your list
stroker: dan oops
Tim: PMG is our guest this evening.
mike_mn: What business are you in PMG?
Dan_Auito: Max K6
stallingsorg:
Dan_Auito: Tim
[ Private Chat: >>> <ZONG!> jean beams into Private Chat. ]
Dan_Auito: Hello everyone ok now on with the shoow LOL
[ Private Chat: Collusion has changed their name to EquityBeGone ]
PMG: mike, the best way to describe what I do is I am a playmaker.
mike_mn: So what might a card you send say?
mike_mn: To keep in touch with everyone you know
BrianB_Cereniti: Mike, the card just say hey how you doing. REMEMBER ME
PMG: mike, the last ones i sent were welcoming spring with my name and phone number.
montessorikelly: playmaker- I like it
mike_mn: k
mike_mn: I am with you now
PMG: you want to stay in their field of vision.
BrianB_Cereniti: The message on the card is not the point, it is just so they remember your name. Brand recognition
Dan_Auito: Who is they?
[ Private Chat: >>> Greg opens the door, looks around and enters into Private Chat. ]
stroker: so tell us PMG can you categorize the type of people you approach
mike_mn: Dan, everyone you know
k6saunde: OK, so we keep in touch with people we know, then what?
PMG: stroker, i only work with people i know, have been introduced to and personally met.
Dan_Auito: Thought we were target marketing
Ricker: PMG si that so you do not break any SEC laws?
PMG: yes.
[ Private Chat: >>> Debbie enters Private Chat. ]
PMG: But, I have done some registered deals.
montessorikelly: Because you kno the personally and have met ith them,they fit the mold of "pre-existing relationship", right?
stroker: in my case my base of associates is very limited can you give me some advice on widening my base
PMG: yes, and I can assess their ability to participate.
Ricker: yes, otherwise you are soliciting securities
montessorikelly: likewise
PMG: Are they sophisticated enough to work with.
Debbie: sorry guys! Thunderstorm here and knocked the power out....Glad to see you all!
Dan_Auito: Are you marketing for hard money. I may have missed your opening remarks
ceres: It's Super Deb
BrianB_Cereniti: Marketing for investors, Dan
Dan_Auito: Thanks!
k6saunde: Hey Debbie
PMG: Hard money is for newer investors.
montessorikelly: What kind of a structure do you recommend setting up?
PMG: I am talking about becoming your own private bank.
EquityBeGone: I work with direct lenders
EquityBeGone: one guy does billions every month
BrianB_Cereniti: Guys, lets let PMG talk/type
Maximo: wanna learn
Ricker: agree
PMG: the group structure is always a C corp.
montessorikelly: why c and not s?
PMG: so that if i want to register it and make a full public offering i can.
Dan_Auito: Cha Chinging
PMG: you have a list and this is why.
ceres: what about llc's
PMG: You want to get a small group say 10 to 15 participants who can pool money to form a private lender.
PMG: no llcs for this.
montessorikelly: do these 10-15 have to be qualified, ie net worth and/or sophistication?
PMG: yes.
montessorikelly: gotcha
PMG: You decide your params and then privately, discretely offer it to your network.
PMG: Right, let's take an example.
stroker: and how do you attract said investers
mike_mn: Do they know each other?
PMG: They might.
mike_mn: or only you are the common
montessorikelly: have anyone offered sig a letter of non-disclosure?
Dan_Auito: How do you assure the individuals interests
PMG: as we all know there is a maximum of six degrees of separation between most people on the planet.
BrianB_Cereniti: Kevin Baconish?
mike_mn: right...the point is it doesnt matter if they know each other right?
PMG: it doesn't matter.
PMG: it does matter that I know them.
mike_mn: right
stroker: so what you are saying is pretty much just ask
PMG: yes
Debbie (to PMG): What is your specific requirements that you look for from investors you know?
stroker: only thing you have to risk is a no then
BrianB_Cereniti: How do you find these "investors"
PMG: but you arent' going to get a $20M group on your first try.
mike_mn: Brian, his list
montessorikelly: what kinds of documents do you prepare for them ahed of askig- this is where I get leey of trying out private lnding
PMG: My first group was 10 people, $25K each.
mike_mn: of everyone he knoww
Dan_Auito: How do you assure their interests
EquityBeGone: I had a website set up foor motivated sellers. I had a section for investors who sent me the info via a form
EquityBeGone: I have about 30 investors from it
stroker: cool
PMG: Dan, are you asking how I reduce their risk?
PMG: because I can't "guarantee" or "assure" them of anything.
BrianB_Cereniti: I think he means that they have the money
stroker: thats a given
Dan_Auito: Nope, but rather what protections to the investors do you use to show them the investments are secure
[ Private Chat: >>> mdb jumps into Private Chat. ]
PMG: that's easy, they either fund their part or they don't.
[ Private Chat: >>> Stl_Dave walks slowly into Private Chat. ]
Ricker: real estate secured
Debbie: hi Dave
Debbie: hi MDB
PMG: ah, ok, the next step.
Dan_Auito: Very good
PMG: When the group forms specific params are defined as to the lending of funds.
montessorikelly: is that basically a mortgage?
stroker: ok
PMG: the best way to explain is with an example.
k6saunde: I think its a escrow account??
Ricker: let him type his example
stroker: is there a specific type of deal we are looking for
Dan_Auito: Any particular investments make more sense than others when doing these deals. Larger projects etc...
PMG: assume you are going to buy duplexes. nice solid duplexes in good areas.
stroker: ok
[ Private Chat: <<< Stl_Dave crawls out of Private Chat. ]
PMG: Dan, I have done them from $250k to over $500M.
Dan_Auito: You Da Man!
PMG: back to our duplex example.
[ Private Chat: <<< Greg leaves Private Chat. ]
Ricker: here comes the example.. hold on please folks
stallingsorg: later
[ Private Chat: <<< stallingsorg sneaks quietly out of Private Chat. ]
[ Private Chat: >>> STL_Dave enters Private Chat. ]
Maximo: gus just wait so we can learn
PMG: You decide you need about $150K per duplex to buy, rehab and get ready to rent.
PMG: If I were looking at that, I would look for 10 to 15 people willing to go about $25k to $30 each.
[ Private Chat: >>> susangordon enters Private Chat. ]
[ Private Chat: <<< Ricker crawls out of Private Chat. ]
[ Private Chat: >>> Ricker opens the door, looks around and enters into Private Chat. ]
STL_Dave: .
PMG: Everyone does the same amount.
stroker: but arent you locked into the rental market then
PMG: when forming the group we agree on the type of deal to be pursued.
PMG: no, stroker.
mike_mn: including you PMG, the same amount?
PMG: we find the duplexes, fund the purchase and the rehab, find a great tenant and then
stroker: but arent we talking bits and pieces as opposed to the whole ie
[ Private Chat: <<< STL_Dave crawls out of Private Chat. ]
[ Private Chat: >>> STL_Dave jumps into Private Chat. ]
montessorikelly: or do you get a percentage for organizing t?
PMG: yes, mike. Everyone has the same skin in the game.
mike_mn: k
stroker: pie
ceres: would you recommend the c corp be in Nevada
PMG: I do them where the properties are.
montessorikelly: do you try t keep the investors where the prerties are as well?
PMG: the nevada corp thing is mostly a scam in my opinion.
[ Private Chat: >>> <ZONG!> texaslandlord beams into Private Chat. ]
Debbie: C-corp in Nevada would not be good idea due to negative court cases
montessorikelly: (Sorrry my computer is messing up my tyng)
BrianB_Cereniti: So you find a great tenant and then?
montessorikelly: Utah
texaslandlord: Hello all, this is my first visit to the chat
STL_Dave: .
PMG: i'm less concerned about where the investors are unless i think I am going to register and really go public.
Dan_Auito: Hey Tex
Maximo: just be cool and listen
PMG: i have done that but it is a pain in the bum.
Debbie (to texaslandlord): Welcome Texas!
PMG: So, we get a tenant then
STL_Dave: Is this thing on? (I'm not seeing any conversation...)
PMG: we have options.
stroker: can you give us an example to turn a short term gain
montessorikelly: If you haven't gone public yet, why bother wih going C-corp- couldn't you get many more exemptions by going LLC or S-corp?
Ricker: let him finish his current example pleasae
PMG: we can self fund a refinance at the now higher value and look to sell the note on the open market.
stroker: cool
BrianB_Cereniti (whispers to STL_Dave): Yes it is on.
PMG: I have more restictions and less options with anything other than a c corp for what i do.
montessorikelly: ok
PMG: or we can self fund the refinance and sell the duplex on an assumption to another investor with a second for the down payment
[ Private Chat: <<< STL_Dave jumps out of Private Chat. ]
[ Private Chat: >>> <ZONG!> STL_Dave beams into Private Chat. ]
stroker: excellent
PMG: or we can refinance with a more traditional lender and hold it as a rental.
Ricker: please explain the self fund the refi
PMG: the benefit of the self funding is the speed at which you can execute deals.
stroker: so what time limit do you theoretically put on turnover
PMG: find to close in 24 hours.
Ricker: I see
stroker: cool
montessorikelly: and also, when/if they foreclose, you get the property back again
PMG: yes
PMG: we get in, get out and go home.
Debbie (to PMG): what's the best way to get the property back if they foreclose?
stroker: what time frame
Ricker: this sounds great for me. I have many attorneys I work with now and other investors and we have been forming LLCs for each land dev. deal.
montessorikelly: also, any suggesions for criteria for who you wold sellerfinance-
mike_mn: 1 property per c corp? or keep going with same group
EquityBeGone: if you sell it on a contract for deed you can get it back the week after the first court date
PMG: no, the c corp is for the funding group.
mike_mn: Like the bank
mike_mn: right
Debbie (to EquityBeGone): thanx!
PMG: how the property is held is another matter.
[ Private Chat: <<< STL_Dave walks out of Private Chat. ]
Ricker: I see sio two entiies in your example one for funding and one to put the deed in
PMG: I currently have three groups that are funding mortgage brokers.
Debbie (to PMG): Question---wouldn't you do land trust for each property prior to C-corp as trustee?
mike_mn: Does the c corp generally keep reinvesting, or do they take dividends quarterly?
PMG: the mortgage brokers close with our money and then within about 30 days sell it to a traditional lender.
PMG: mike, it depends on how we set it up.
montessorikelly: like the bank selling their note to another bank
PMG: That is one reason we use a c corp so we can have retained earnings from one year to the next.
Ricker: vb
mike_mn: right
PMG: you can't do that with s.
mike_mn: how long do most groups last?
mike_mn: indefinate?
Ricker: brilliant, the mortage brokers already have the contacts and then it is an arms length deal by them selling the note not you yourself.
PMG: most are a few years, then regrouped to a bigger pool.
mike_mn: gotcha
PMG: Ricker and it allows the lenders to pay and the broker to receive a YSP that does not get disclosed.
montessorikelly: So, if you have a limited pool of posble investors, any suggestions for how to network (legally) to build that network up?
mike_mn: That need to be filled, does everything that does revolve around you>
Ricker: is this ever viewed as gray as far as legally or ethically in any way?
PMG: roles?
Debbie: Question---wouldn't you use Land Trust for each property and use C-corp as trustee?
[ Private Chat: <<< texaslandlord jumps out of Private Chat. ]
PMG: Ricker, i will not give legal advice. I have had no problems with this for the last 22 years.
mike_mn: who does books, finds properties, accounting for funding group, property entities...etc
Ricker: Good answer. I like it so far
Ricker: I suspect this may be how many large deals get doneh
montessorikelly: Deb-seems like the land trus would help with seasoning if we plan to sell it off
PMG: Accountant keeps the books, audited by a different CPA each year.
mike_mn: This is how ski scrapers get bought, just on a bigger scale
[ Private Chat: >>> outwest walks slowly into Private Chat. ]
Debbie (to montessorikelly): ah...thanx for answering!
mike_mn: smaller scale i mean
Ricker: my next question was about seasoning as well, but mortgage broklers sell off their mortgagaes quickly no?
PMG: a land trust is fine. the way you hold title isn't a factor in how you structure funding.
PMG: yes, Ricker.
outwest: hello?
Dan_Auito: Hey Matt
montessorikelly: whne you sell it, do youhave to discount it?
PMG: a mortgage broker using his own funding source will close and sell the note in about 30 days.

[Debbie]

Ricker: is it tough to find smart brokers to work with?
[ Private Chat: <<< EquityBeGone walks out of Private Chat. ]
PMG: yes, you will discount the note.
montessorikelly: Does it need to be seasoned to get a good exchange?
Dan_Auito: 5%?
PMG: Ricker, it is easier to grow smart brokers.
[ Private Chat: <<< <ZONG!> susangordon beams out of Private Chat. ]
mike_mn: and you are the center of this group in dealing with all these things?
[ Private Chat: <<< <ZONG!> stroker beams out of Private Chat. ]
Ricker: "grow your own" gotcha
[ Private Chat: >>> T opens the door, looks around and enters into Private Chat. ]
montessorikelly: Where do you buy the ses nd fertilizer for that?
PMG: if you are a private investor who took a note and are now trying to sell it, then seasoning will be an issue.
montessorikelly: seeds and fertilizer
[ Private Chat: <<< outwest walks out of Private Chat. ]
[ Private Chat: >>> outwest opens the door, looks around and enters into Private Chat. ]
PMG: If you are a broker, the game is different.
montessorikelly: so is your C-corp considered a broker (may be a dumb question, but hey...)
T: Hi room !
PMG: no.
Debbie: Hi T!
PMG: the c corp is a funding group only.
Ricker: reacp about the profit.. I assume the deal has to have some obvious upsieds form a good deal on the land or the duplexes up front so they will appraise out nicley later?
Dan_Auito:
[ Private Chat: >>> texaslandlord enters Private Chat. ]
PMG: the broker is a separate business.
montessorikelly: So as a private lender, webably hold it about 6+ months?
[ Private Chat: <<< <ZONG!> outwest beams out of Private Chat. ]
[ Private Chat: >>> outwest walks slowly into Private Chat. ]
[ Private Chat: <<< outwest leaves Private Chat. ]
PMG: We are not lenders in any way that requires compliance with state or federal lending laws.
[ Private Chat: >>> outwest enters Private Chat. ]
PMG: yes, Ricker is has to be a good deal.
[ Private Chat: <<< outwest sneaks quietly out of Private Chat. ]
[ Private Chat: >>> outwest enters Private Chat. ]
montessorikelly: we're not a lending group, then..w're a group of investors who agree to pool our funds together for a specific unified purpose
Dan_Auito: PMG, What state do you primarily operate out of?
Tim: PMG, what happens if someone in the group wants out?
Ricker: Gothcha I have some of thoise in TN and Florida right now that shoild wotk for this
mike_mn: and you are the center of all the activites surrounding the group, the properties and the disposition of notes?
montessorikelly: the ceo?
PMG: Dan, I live mostly in Colorado but I am in deals in lots of states.
Dan_Auito:
PMG: mike, on some yes, on others i am passive.
[ Private Chat: <<< outwest sneaks quietly out of Private Chat. ]
mike_mn: but there is one point person surrounding all those things.
[ Private Chat: >>> outwest enters Private Chat. ]
mike_mn: ?
PMG: don't get me wrong, we make money in these groups. bloody good money, but it is a means to a better end.
montessorikelly: the better end being?
PMG: yes, mike, there is always one person in control.
PMG: Good solid real estate holdings, montessorikelly.
montessorikelly: which is alo mone.
Ricker: think thjis might work well for some brand new homes a builder freind has in TN at a great price per SQ foot?
montessorikelly: also money... ugh- sticky eyboard darn kids!
PMG: Tim, as you know, since you are in some of these, if someone wants out they can sell their position to anyone in the group.
PMG: At whatever price they can get.
PMG: There is no claim of liquidity.
PMG: There are no guarantees.
mdb: what % rate of return do you try to get?
PMG: There is a history.
PMG: on the money lent?
montessorikelly: is theere an agreement ahead of time to sell only to accredited investors?
mike_mn: In other words the person in control needs to be trustworthy.
PMG: they can only sell to someone currently in the group so that is not an issue.
montessorikelly: perfect!
mike_mn: They control the keys to the castle so to speak
PMG: yes, mike, and with all things business the auditing safeguards have to ensure that trust.
mdb: yes, on the money lent or on the cost of the investment?
[ Private Chat: <<< outwest walks out of Private Chat. ]
[ Private Chat: >>> <ZONG!> outwest beams into Private Chat. ]
outwest: thank you Debbie!
PMG: For self funding of purchases, we do prime -3.
Ricker: I ahve one atty friend with enough cash to do large deals alone. is that a problem? just me and him lets say?
PMG: For self funding refinances it is market rates plus .5.
PMG: The seconds we offer to investors if we sell are at secondary market rates plus 2.

montessorikelly: you're not a lawyer, right? So what kid a lwyer set this up for you? SEC or Real estate?
PMG: Ricker, you can, i guess, it concentrates the risk.
PMG: I use an SEC lawyer.
[ Private Chat: >>> Jim_Johnson jumps into Private Chat. ]
Ricker: Yes, I agree with that part, spread the risk if possibl;e
Dan_Auito: Hey Jimbo!
[ Private Chat: >>> dude1e opens the door, looks around and enters into Private Chat. ]
mdb: If a return of at least 100% on a yearly basis can be guaranteed, would it be hard to put a group together?
mike_mn: How much cost is there in overhead that needs to be covered by the activities of the group?
Debbie (to Jim_Johnson): Hi Jim!!!!!
Jim_Johnson: Hi Dan...
Jim_Johnson: Hi Deb!
PMG: mdb, the instant you start talking guarantees you are playing with fire.
Ricker: cash on cash 100% wow mike
Dan_Auito: I'll take some of that action
montessorikelly: ditto
mdb: I know, but what I am talking about is guaranteable?
montessorikelly: especially if it comes with a guarantee....
PMG: how is it guaranteeable?
Dan_Auito: Like he said, no guarantees
Ricker: I think our guest is smart and says never even talk percentage returns to the investors
montessorikelly: So how do you pitch it to them? By possibilities?
Ricker: it implies one... Dan your freind is very wise. I like what I have heard so far
dude1e: I just came in,anyone have a real short story abou what you are talking about,,I was tied up on some things,hi Dan,we have talked a fw times by email
Dan_Auito: PMG is Tims guest, their both smart!
mdb: In the way the deal is structured, and who you are dealing with. In fact, some of the options thaat can be used are endorsed by the federal government
PMG: montessorikelly, the pitch is the same as any private stock offering.
mike_mn: dude, private money groups
PMG: The numbers tell the story.
Debbie: It's thumbs up chat, thanx to PMG and Tim!
montessorikelly: In other words, you show them the financial oveviews of other groups you've done
PMG: mdb, unless you are licensed or have your language cleared by the US Attorney's be careful about what you claim the feds endorse.
Ricker: two thumbs way up lol
montessorikelly: See, the "pitch" is where I get all flustered.
PMG: Why?
Jim_Johnson: The pitch is easy if you belive in what your selling...
montessorikelly: Becuase I haven't gotten any numbers yet to support it
PMG: You are going to buy great duplexes using our example from before.
PMG: You are looking for a group who can fund the purchase, rehab and sale or conversion to long term holding.
Jim_Johnson: well... the pitch for me is easy....
PMG: get in, get done and get out.
mike_mn: Clarify...They are only great duplexes if you would buy them yourself, without the group IMO
PMG: yes, that is why it works, mike.
Ricker: a deal is a deal no ,atter who buys them at the right price no?
mdb: actual nos.- Apartment Complex sells for $19 Million, Fees generated are approx. $550,000 to $600,000; my share $285,000, my OH cost approx. $2,000, transaction completed in 5 months
PMG: the funding options make the deal sweeter but will not make a bad deal a good deal.
montessorikelly: So I can use exampes of times w've used hard money and show the numbers for those deals, addin in how muc better they would have been without hard money costs
dude1e: Hey,if anyone here is into notes I have some lsts available at 35 cents on the dollar,anyone intersted can email me,also have a 1.5m second at probably 1.1m
dude1e: also know of a commercial complex in houston for 14.5m worth 29m
Ricker: dude can you wait til the guest is done please?
Debbie (to dude1e): Dude, now is not the time....create a post at MB forum....
Dan_Auito: Ditto
dude1e: ok,was not sure what was happening,sorry
mike_mn: PMG, what is the overhead that needs to be absorbed by starting this group?
mike_mn: and maintaining it
Debbie (to dude1e): PMG is a special guest....he's educating us
montessorikelly: SEC papers costs at least 5K, right?
Jim_Johnson: Deb... are you archiving?
dude1e: oh,ok,super
mdb: Hey, dude1e, I am interested.
PMG: It varies but can be as little as $5k to $10k.
BrianB_Cereniti: Yes this is being archived
PMG: You will have on going costs too.
Debbie (to Jim_Johnson): yes. So is Brian...I missed the first part due to power outtage. Hopefully, Brian has it....
Ricker: do you need SECV papers for the example you gave?????
Jim_Johnson: Thanks... I ahve kids duty... bbl
dude1e: email dude1e@yahoo.com and do not mean to interrupt
Debbie (to Jim_Johnson):
PMG: not if i seek the group members privately and do not make my offer look or sound like a security that should be registered.
[ Private Chat: <<< <ZONG!> Jim_Johnson beams out of Private Chat. ]
PMG: which is another reason i use a sec attorney.
Ricker: I thought so was confused with his question about them
montessorikelly: Back to the other question of how you can legally seek out these investors if you haven't gotten a great network yet
PMG: you can't
PMG: you have to build the network.
PMG: As Tim says, "there aren't any shortcuts."
Dan_Auito: How about calling an investors meeting in your town through the paper, but no specifics
Ricker: I am very excited as I have the network in place right now. we were just doing it anotehr harder way....
Tim: Well, there are short cuts but they lead to failure.
[ Private Chat: >>> kare opens the door, looks around and enters into Private Chat. ]
montessorikelly: what would be considered a relationship? If we've met face to face once, is that cool?
Dan_Auito: Ricker get your group together for the GYM we'll talk later
PMG: I will not give you legal advice but if everyone in your group is that casual a relationship, you are probably on thin ice.
Ricker: I know a group whao joined the rotary club and it mushroomed tfrom there once he got introduced to the freinds of the freind etc and then.
Ricker: friends
Ricker: I dont exercise lol
PMG: yes, never miss a chance to network.
PMG: and when you network don't be a bloody wallflower!
Dan_Auito: Fund it don't sweat it
Ricker: I know was kidding ya
montessorikelly: Ok, so probalbby a few casual rel are ok, but you sould know most people more than just their name...
PMG: you better know more than their name.
montessorikelly:
PMG: you better know they are not newbies to being a lender.
Ricker: know their pets names and do lunch with them each week I was told
PMG: or that they are solid and the loss of what they put into the group won't bankrupt them.
Debbie: In other words---get their ss# and run credit check/background check!
jean: When you are networking and someone asks you what you do, what do you say to them to get them interested?
montessorikelly: ou can casually talk about what you do to "feel" them out, without letting them know you're making an offereig, righ?
PMG: sure, what is your elevator pitch?
Ricker: well, deb waht he is saying is that to be legal and not sellking securities you must have prior relationship
PMG: mine is, "I make money and share it with my friends."
Ricker: PMG I like that one
Dan_Auito: B YOU T FUL
jean: Great, I love it
mdb: What PMG is saying about networking is extremely correct; You must investigate before any funding can be directed into a specific project or program.
montessorikelly: Hey, wanna be my friend? (says the son in the elevator)
montessorikelly: person.... ugh!
PMG: lol
Debbie (to Ricker): I acknowledge....I was teasing.
PMG: i have lots of friends and get more every day.
Ricker: well Deb your point is right too
[ Private Chat: <<< <ZONG!> kare beams out of Private Chat. ]
[ Private Chat: >>> kare walks slowly into Private Chat. ]
Ricker: dont want a crook on board
montessorikelly: Have you ever worked with capitalraising groups?
Dan_Auito: Before I forget PMG is officially invited to hold chats in the future and sign on as a member of our forum Pronto. Make sure Tim!
PMG: we are capital raising groups.
[ Private Chat: <<< texaslandlord jumps out of Private Chat. ]
Debbie (to Ricker): Thanx!
Tim: Dan, I have tried.
Tim: God knows I have.
Dan_Auito: Hmmm???? I'll nag him
montessorikelly: when you first did your frst group, did you already have a great network, though?
Ricker: PMG if you want to be my new friend, Dan has my info I have a few bucks to invest with my friends
montessorikelly: I've seen yo can pay professional "capital" raisers for a percentage of wht they raise.
PMG: i had a small network and the first thing i did was get them to introduce me to their friends.
montessorikelly: Did you ask for that introduction casually or professionally?
Debbie: PMG, you'll want to meet Howard Spiva...he's a member of MB.
PMG: montessorikelly, why would you do that? create your own group instead.
Ricker: I am about to go to bed early folks. in a few minutes anyway thanks the invite.. this was my first chat... lets play golf PMG
PMG: He is an attorney in Savannah?
mike_mn: yes
PMG: right, I know Howard, he is a great guy.
Debbie (to Ricker): Good seeing you again, Ricker!
montessorikelly: I did a forum called IBI which was a "supernetworking" experience, but all relationships were relatively casual.
Debbie (to PMG): yes
Ricker: you see me before Deb?
Dan_Auito: I'll play when you have time Rick
PMG: you can't network on the internet.
montessorikelly: Still, I learned all about capital compliance,as well, which helps to not get yourself in BIG trouble
Debbie (to Ricker): I believe you posted at MB forum
Tim: On the internet no one knows you are a dog.
Ricker: MB? I dunno
montessorikelly: No, it was a forum in LA
mdb: For any network, the drive, the motivation, and the need and more must be workable and compatible for all.
Ricker: yes ,magic bullets yes
montessorikelly: Everyone was there for a week-
Ricker: I thought you meant in here
Debbie (to Ricker): lol
Ricker: I am slow lol
Debbie (to Ricker): I remember your post! It made an impact on me!
montessorikelly: We worked on each other's projects
mike_mn: What about the little things?
Ricker: Thnaks I have been blessed...
troyc: wheres this post at?
PMG: I am going to give him a plug because I know he won't if you want a leg up on dealing with people in your network, or tenants or buyers, get Tim's Psychology of the Deal book.
Dan_Auito: You sell insurance in Florida Rick. No sheeet! LOL
Ricker: NOpe retired form minusrnace dan
Ricker: retired after 17 years and own a land dev company now in FL and TN
PMG: Does anyone here take Tim's email newsletter?
Dan_Auito: You must be fat with cash after selling out LOL
Ricker: Nope but would like to
jean: I agree PMG, Tim's book is excellent.
Debbie (to PMG): That is a GREAT BOOK! I read it several times!
mike_mn: I take it that this is not something for the average person to take on. You need to have done your own deals enought to know what works and what doesnt. Can't just start a group and sell notes when you never have before
montessorikelly: PMG- do you structure things any differently if you plan to raise a gret deal of capital, i.e. over 5 million?
Debbie (to PMG): I have Tim's newsletters, free and fee! I love them!
mike_mn: Start a group and get a tenant, that seems reasonable to me.
mike_mn: But have never sold notes
PMG: yes, montessorikelly, but the basics are the same the details differ.
PMG: mike, yes you need a history.
Ricker: Dan, i gonna bow out now, can you email about tims newsletter and I will buy your lunch at the villages this wek?
Ricker: Thanks Guest!!!
Dan_Auito: Sure
Ricker: PMG whatever
montessorikelly: have you done any land development using this? (The profit takes longer to materialize, so I'm curious)
Ricker: was very good
PMG: I am writing a series of articles on this subject for Tim's newsletter.
Debbie: g'night Ricker

[Debbie]

PMG: yes, i have done raw land development this way.
PMG: i am in a group now funding a new sub division very near Tim.
Ricker: what???? land?? I might have to stay LOL
montessorikelly: FL?
PMG: GA
Ricker: what state is tim in? AZ?
Debbie: Georgia
Tim: I'm in Georgia.
Ricker: I am doijung some nice subdivions water front deals in TN
Dan_Auito: Let's all move to Georgia!
Ricker: maybe I can work them this new way
montessorikelly: Ahh, close to me. I'm planning to build my Montessor school here in FL
PMG: I spend some of my time in GA, we are building a house in the Sugarloaf CC and expect to close in late summer.
Ricker: PMG you must play golf then
[ Private Chat: <<< dude1e jumps out of Private Chat. ]
Debbie (to PMG): Is it a concrete house? I'm building one right now...
mike_mn: bro-in-laws folks live there. Very nice
PMG: yes, more deals are done on the golf course than in offices.
montessorikelly: PMG- anyone you would recommend a a good contact for land devlopment capital raisng,please let me know-
Ricker: golf networking: you know that is right in insurance and RE both
montessorikelly: as a montor, of course- not an investor
montessorikelly: mentor
PMG: sorry, i don't mentor.
montessorikelly: not a "mentor" mentor...
Debbie: Too Late! You're mentoring us right now!!!!
Tim: I bet there are some great mentors in FL.
Ricker: Monte, I can talk to you about it one day I have done millions in land in last few years.. learned some good things and bad
montessorikelly: in land devlopment?
montessorikelly: haven't heard of any
mike_mn: keep looking
mike_mn: the best ones dont sell books
PMG: montesorrikelly meet Ricker, Ricker montesorrikelly.
montessorikelly: ricker- I'll take you up o that
montessorikelly: mike- I know, so tey're harder to find
PMG: Looks like we have a network.
Ricker: I will give you a tip right in FL. be very carfeful, very very careful if residnetial if commercial? less risk right now.
Debbie: You give us motivation, PMG!
Dan_Auito: Use the donation button to submit funds
Ricker: PMG, meet Kevn Bacon... LOL
Ricker: 6 degrees
[ Private Chat: >>> <ZONG!> ken1 beams into Private Chat. ]
mike_mn: PMG,
PMG: oh, Tim just corrected me the articles I am writing are for his premium newsletter not the free one. I take both and the free one has some great stuff for investors of all levels and the premium one is worth much more than he asks.
Ricker: Ok I am goping to bed for real nowe I promise by folks
Dan_Auito: This has been great. Thank you Tim and PMG Please make us a regular stop. I'm checking out gang!
mike_mn: Do you have groups that fund for the down payment on a large property?:
jean: PMG I planned on ordering Tim's newsletter before I left for the 2002 Procrastinators Convention!!! Tim, you'll see my order tomorrow.
PMG: you mean and then get conventional financing for the rest? no.
ceres: see ya Dan
mike_mn: k
Tim: PMG agreed to stay until 10:30 are there any more questions?
mike_mn: Just get a larger pool or group.
PMG: I'll stay a little longer.
montessorikelly: PMG, anks so much for all the great info!
Debbie: Lots! But one question for now....
montessorikelly: thanks, I mean
Debbie: Would you be willing to come back here?
PMG: You are all welcome, do great things with it.
PMG: Debbie, i don't know.
jean: PMG Thx for all the great info
[ Private Chat: <<< Dan_Auito sneaks quietly out of Private Chat. ]
[ Private Chat: <<< Ricker walks out of Private Chat. ]
[ Private Chat: <<< montessorikelly walks out of Private Chat. ]
PMG: is this the usual group here?
mike_mn: nope...a lot more
Tim: No, we don't usually have this many.
Debbie: Pretty please with Baskin Robbins' Chocolate Fudge on sugar cone on top? smiling demurely
mike_mn: Batting here eyelashes too I bet
Debbie: Yes, I am
[ Private Chat: >>> Burke walks slowly into Private Chat. ]
Burke: Howdy Room!
Tim: Hi, Burke!
ceres: hello Burke
[ Private Chat: >>> <ZONG!> Jim_Johnson beams into Private Chat. ]
Debbie: Hey Burkie!!! You missed a GREAT chat!
Burke: Checking in from Tuscon here
Tim: Teh migration has begun!
Burke: sorry...couldn't get on sooner...just got settled in to the room
Debbie: Hey Jim! Archive accomplished by Brian!
Debbie: Tuscon? You moved already Burke?
Burke: what was the chat topic I missed?
jean: I used to live in Skyline Belaire--In what area do you live
Burke: we are in transit now
[ Private Chat: <<< <ZONG!> outwest beams out of Private Chat. ]
Debbie: Tim invited PMG as our host tonight.
Jim_Johnson: great... I get pitched on TIC investing on a regular basis... I am looking forward to the archive...
Burke: Jean...if you were talking to me, we are homeless right now
[ Private Chat: <<< kare crawls out of Private Chat. ]
mike_mn: PMG, would you care to share how you started in REI?
jean: At least it's warm out there
ceres: I gotta run folks, Thanks PMG learned a lot tonight, Catch you again Burke
Burke: we flew out of Honolulu on the red eye Friday night and are currently in Tucson on our way to Maryland via Texas and then Arkansas
PMG: probably like everyone else, i was scared to death on my first deal and a little less scared on the next several.
Burke: Later John
Debbie (to ceres): Bye John! See ya later
Burke: John....have a great week!
mike_mn: How many did you do alone before starting to partner?
ceres: see ya Deb
Debbie (to ceres):
[ Private Chat: <<< Jim_Johnson crawls out of Private Chat. ]
[ Private Chat: <<< ceres sneaks quietly out of Private Chat. ]
PMG: i started to partner after my 12th deal. after 10 the lenders got fussy and the rates from other private lenders were unacceptable to me.
mike_mn: What were the deals up to then? buy and hold?
Burke: we will also arriving in MD only to catch a plane for about 4 days in Orlando but I will shut up now and let PMG educate us all
PMG: about half were.
mike_mn: when did you enter the note market?
Maximo: need to read the whole thing again...
Maximo: missed alot
Debbie: it's being archived....it'll be posted either late tonight or tomorrow morning
PMG: it was a few years before we started offering some of the notes to the open market.
mike_mn: Did some alone before partnering again?
PMG: ?
mike_mn: Did note selling alone first, then with partnerships?
BrianB_Cereniti: Okay Deb, sent to both addresses. Its 17 pages
Tim: PMG is one of the heavy hitters we have at the old Real Estate Field Guide.
mike_mn: your own notes
mike_mn: I mean
PMG: no, it was through the groups.
mike_mn: gotcha
PMG: at first the idea was to fund the deal and hold for long term.
PMG: make money on both ends.
mike_mn: Is it not expensive to cash out one of these?
PMG: then we realized we could do more by selling some, selling the first position paper and keeping the second.
mike_mn: tax wise and otherwise?
PMG: the tax man will always take his cut but you know what? I would love to have a $1B a year tax liability.
PMG: The top rate is only 37%.
mike_mn: good point
mike_mn: So, do the partners have expertises that help in putting new things together like note selling?
mike_mn: if you are the CEO.
mike_mn: did instead of do
PMG: some do and some learn from participation and then spearhead their own group.
mike_mn: good
mike_mn: So, the network is key...I am hearing it now
PMG: the thing to remember is you can always find good people who can execute the mechanics.
PMG: yes, the network is the key.
mike_mn: My prob is that I have found very few people who invest in REI that I would trust farther than I could throw them
PMG: just like Verizon.
PMG: you need to expand your network.
PMG: and that is an important point.
mike_mn: I have found a great group of wealthy successful REI guys, but not sure how they can help me or I can help them yet
PMG: i refuse to deal with dishonest people.
mike_mn: That group is honest
PMG: can you engage with them socially?
PMG: golf?
PMG: poker?
mike_mn: I meet with them weekly
PMG: anything?
mike_mn: Then, individually on occation
PMG: when you meet what is the discussion topic.
mike_mn: It usually ends up with me asking questions and them telling of stories of deals
PMG: great!
mike_mn: They enjoy talking, but can only do so much of that
mike_mn: ...
PMG: yes, but there are lessons in those stories.
mike_mn: Totally agree, but dont want to waste time either
PMG: They will tell you how they can help you and you can help them because they are sharing their experience.
PMG: If you waste their time, you will know it.
mike_mn: How many hour long cups of coffee can I have with them
PMG: as many as they will allow.
mike_mn: ha
PMG: how many grains of sand are on the beach?
mike_mn: lol
PMG: Here is how I would segway from random questions to specifics.
PMG: If you have a deal you are looking at, ask them about the specifics.
PMG: If you recently lost a deal ask them what they would do differently.
Debbie: PMG, do you deal with other things aside RE?
[ Private Chat: <<< troyc leaves Private Chat. ]
Debbie: aside=beside
mike_mn: Sounds good.
PMG: like any good investor i am diversified.
Debbie: would you tell us at least a few diversifed items?
mike_mn: It seems to me that I need to focus more on being more in tune with finding the great deals. Money seems to be everywhere if you are looking in the right place
Debbie: auto? mobile home?
PMG: yes, with the right network, the money is the easy part.
PMG: Debbie, I don't do mobile homes by autos do you mean classic cars?
Debbie: not necessarily....it could be used cars
Tim: PMG has one of the best looking classic corvettes I have ever seen in my life!
Debbie: seller finance type
PMG: no, i don't do those.
[ Private Chat: <<< ken1 sneaks quietly out of Private Chat. ]
PMG: by diversified i mean part of my holdings are in stocks, bonds, mutual funds and yes even some low yielding CDs.
Debbie: keep or drive best looking classic corvettes?
mike_mn: Do you do any angel investing? private venture capital money?
PMG: venture capital is a whole other area. I am in some large vc groups but only passively.
PMG: I have never formed a vc group.
mike_mn: One of the guys in my group does it privately self funded.
PMG: I don't personally do angel investing because it requires a more hands-on approach.
mike_mn: His words...I give unbeleiveable amounts of money to businesses I beleive will help this world
PMG: ah, that is philanthropy.
mike_mn: In hopes to make some money and make the world a better placce
PMG: I know this wasn't the subject but that is an important point. Giving back, paying forward, whatever you want to call it is very important.
mike_mn: Yeah.
mike_mn: And it can always be done
mike_mn: You don't ahve to be a gazilionaire to start paying it forward
PMG: but you are more likely to become one if you do.
mike_mn: agreed
PMG: the key to financial independence is fairly simple.
PMG: you consistenly spend less than you make.
mike_mn: HA
mike_mn: I just read those words today
PMG: it doesn't matter where you start.
mike_mn: In Crown financial book
PMG: it isn't new.
mike_mn: some of my life rules:
mike_mn: Keep everything as simple as possible
[ Private Chat: <<< <ZONG!> mdb beams out of Private Chat. ]
mike_mn: live below your means
mike_mn: learn delayed gratification
mike_mn: buy used cars
mike_mn: do something to generate income other than your "day" job
mike_mn: ...
Burke: Mike....crown puts out some good stuff.....I am also doing a Dave Ramsey course with my kids.......on hold right now until we get settled in Maryland
PMG: all good.
Debbie: Great Rules, Mike!
mike_mn: and last one
[ Private Chat: <<< BrianB_Cereniti crawls out of Private Chat. ]
mike_mn: 90% of the population basically stinks
PMG: I have a small issue with Dave Ramsey's views on debt.
Debbie (to mike_mn):
Burke: PMG.....Let's hear it.....is it that he advocates zero debt? even for housing?
PMG: basically. it seems that since he was unable to manage his debt load he doesn't think anyone else can.
PMG: but, he is right about consumer debt.
Burke: yeah....I would like to know more about what really happened with his debt
PMG: his views about budgeting are spot on.
Debbie: I didn't know he wasn't able to....(not big on Ramsey)
Burke: I mostly bought his course for his kids because I couldn't find anything else that was packaged as well for their age
Burke: at least in the research that I did
PMG: he basically fell into the commercial lending trap and was stung by the "quality of collateral" clause in most of the commercial notes.
Burke: I was looking for a complete money management curriculum to go through with them to get them grounded
Burke: his product is certainly meeting that need
PMG: his stuff is great for that.
Debbie: Burke---it's your action regarding finances are what teaches your children best
PMG: and to his credit, if you follow his advice and system you will become a millionaire over time.
PMG: but, to become a multimillionaire, you have to go beyond his teachings.
Burke: I agree........that is why I am starting my kids early and getting them grounded so that we can go beyond the basics with them eventually
Tim: But to retire comfortably takes a lot less than most people think.
mike_mn: Explain tim
PMG: it depends on what you mean by comfort.
Debbie: opening all of my ears!
Tim: In today's dollars, if you had somewhere between $700k and $800k you could retire and live on the earnings indefinitely in most areas of the country.
mike_mn: Based on what assumptions?
Tim: The historical averages of inflation, interest rates, etc.
Debbie (to Tim): by withdrawing the dividends, leaving principal alone?
[ Private Chat: >>> Mtatz opens the door, looks around and enters into Private Chat. ]
Debbie: Hi Michael!
Tim: Yeah, you wouldn't touch the principle and you aren't going to live like Donald Trump.
Burke: Hello Mtatz!
Tim: Hi, Mtatz.
Mtatz: Good Evening everyone!
mike_mn: What type of portfolio does that look like?
mike_mn: mutual funds and REI?
Debbie (to Tim): My only concern is the interest earning....single digit doesn't seem to work well according to my math
Tim: you would have to get 10 to 12 percent and live on 8 or 9.
k6saunde: so where would you get this 10-12 %?
Debbie (to Tim): in other words, re-invest 3% back into the funds?
Tim: Perhaps we should do this another time, I didn't mean to derail the conversation.
mike_mn: I think taxes he means
Tim: No, the taxes would come out of the 8 to 9.
mike_mn: oh
k6saunde: Besides realestate what offer you a 10-12% return?
Tim: If you were retired and your corresponding expenses went down, couldn't you live on $56 to $64K gross?
Tim: Keith, I have mutual funds that have averaged more than 12% for the last 10 years.
k6saunde: I see
Debbie (to Tim): Acorn?
mike_mn: PMG you still here? Any other tidbits of advice for dealing with or working with your partners?
PMG: mutual funds, spyders, tracking stocks these are all good.
k6saunde: do you like the REI Investment stocks out there?
Debbie: I imagine that PMG is enjoying the chat for a change while he relaxes his fingers!
PMG: mike, just be honest and above board, Tim calls it being transparent.
PMG: don't claim experience you don't have.
mike_mn: Well, I am pretty good at that...
mike_mn: You cant fake experiance
PMG: never make any kind of guarantees.
Burke: I have heard someone else mention spyders.....I can Google it but can someone give a quick explanation?
PMG: the most populare spyder is the one tracking the SP500.
PMG: They buy the stocks that make up the SP500 in weighted percentages and adjust daily.
Mtatz: brb
[ Private Chat: <<< Mtatz leaves Private Chat. ]
mike_mn: hmmm...sounds interesting
[ Private Chat: >>> Mtatz walks slowly into Private Chat. ]
Burke: Where do you find them? can you get them from the same place you get your mutuals?
PMG: any brokerage house can sell them.
PMG: they are registered securities.
[ Private Chat: <<< <ZONG!> T beams out of Private Chat. ]
Burke: are they able to keep their trading costs reasonable since they adjust daily?
PMG: burke, my advice is to get a prospectus and check them out.
Burke: ok....I will do some checking....thanks!
Debbie: Milestones are what parents and pediatrician check on babies. For example, roll over/smiles/sit up/crawl/1st tooth, etc
Debbie: Oops! My apology! i was responding to someone in private
Burke: was wondering where that comment came from :P)
Tim:
Debbie: embarrassed
Debbie: lol
Mtatz: all this talk got her distracted
PMG: right, well, i am going to say good evening to everyone here. I enjoyed it, I hope I helped you in some small way. It was nice to chat with you all.
Mtatz: even though I missed all/most, im glad you shared with everyone
Tim: It was archived, Mtatz.
Debbie: Thank you sooooo much PMG!
Mtatz: Awesome.. I was hoping that would be the case
mike_mn: Thanks for being here PMG
Burke: PMG....thanks for joining us tonight! I am sorry that I missed the meat of the chat but I will catch up via the archives. I hope you will join us again! Have a great week!
jean: Thx Tim for bringing PMG to the chat room
Debbie (to Mtatz): Brian took care of the hard work....I'll be editing tonight and post it either tonight or tomorrow
Burke: Tim...yes...if you are responsible for bringing PMG to the chat...Thanks to you as well
Debbie: Great host you brought here, Tim! Thumbs up!
mike_mn: You mean the right click, select all and paste to a file?
mike_mn: That hard work?
Debbie (to mike_mn):
Tim: Yes, I'm glad I could facilitate it.
Tim: I am going to see if I can get other heavy hitters to visit with us this way.
[ Private Chat: <<< k6saunde sneaks quietly out of Private Chat. ]
Mtatz: Definitely, Im sure I'd like it
Debbie: That'd be great Tim.....even if I have a speaker lined up (which I didn't), I'd reschedule my speaker just for you!
PMG: i enjoyed it but is it just me or is this chat client a pain in the bum?
Debbie: pain in the bum!
mike_mn: Not just you
PMG: The one Tim and I did yesterday was much easier to work with.
Debbie: Brian is working on finding better chat along with Magic Bullet's programmer
Burke: not just you....we have encouragement to consider other products....nothing new yet but they are still looking into it I think
PMG: right, well, I really am going this time. Good evening to all.
[ Private Chat: <<< PMG leaves Private Chat. ]
Burke: that was supposed to be "encouraged management"
Debbie: g'night and safe trip!
[ Private Chat: <<< jean walks out of Private Chat. ]
Tim: Thank you everyone!

[tobyjensen]

I pulled out the points I thought were important and put them together for easier reading.

PMG: Is there anything in particular you want to cover because I usually start with some basics.
PMG: right, ok, the first thing is you can't advertise for investors.
PMG: That is a no no with the government.
PMG: So, your network is key.
BrianB_Cereniti: My realtor sends a card for every stinking little holiday there is
PMG: Brian, your realtor is very smart.
PMG: you want to stay in their field of vision.
PMG: I only work with people I know, have been introduced to and personally met.
Ricker: PMG is that so you do not break any SEC laws?
PMG: yes.
PMG: But, I have done some registered deals.
montessorikelly: Because you know the personally and have met with them, they fit the mold of "pre-existing relationship", right?

PMG: yes, and I can assess their ability to participate.
PMG: you better know they are not newbies to being a lender.
Ricker: yes, otherwise you are soliciting securities
montessorikelly: Back to the other question of how you can legally seek out these investors if you haven't gotten a great network yet
PMG: you can't
PMG: you have to build the network.
PMG: what is your elevator pitch?
PMG: mine is, "I make money and share it with my friends."
PMG: you can't network on the internet.

PMG: Hard money is for newer investors.

PMG: the group structure is always a C corp.
PMG: so that if I want to register it and make a full public offering I can.
ceres: would you recommend the c corp be in Nevada
PMG: I do them where the properties are.
PMG: i'm less concerned about where the investors are unless i think I am going to register and really go public.
PMG: I have more restrictions and less options with anything other than a c corp for what i do.
PMG: the c corp is for the funding group.
PMG: how the property is held is another matter.
PMG: one reason we use a c corp so we can have retained earnings from one year to the next.
PMG: you can't do that with s.
PMG: yes, mike, there is always one person in control.



PMG: You want to get a small group say 10 to 15 participants who can pool money to form a private lender.
PMG: no LLC’s for this.
PMG: You decide your parameters and then privately, discretely offer it to your network.
mike_mn: the point is it doesn’t matter if they know each other
PMG: it doesn't matter.
PMG: it does matter that I know them.
PMG: but you aren’t' going to get a $20M group on your first try.
PMG: My first group was 10 people, $25K each.
EquityBeGone: I had a website set up for motivated sellers. I had a section for investors who sent me the info via a form
EquityBeGone: I have about 30 investors from it
PMG: I currently have three groups that are funding mortgage brokers.
PMG: most (groups) are (for) a few years, then regrouped to a bigger pool.


montessorikelly: So how do you pitch it to them? By possibilities?
PMG: the pitch is the same as any private stock offering.
PMG: The numbers tell the story.
PMG: You are looking for a group who can fund the purchase, rehab and sale or conversion to long term holding.

PMG: the instant you start talking guarantees you are playing with fire.
PMG: because I can't "guarantee" or "assure" them of anything.
Dan_Auito: what protections to the investors do you use to show them the investments are secure.
PMG: When the group forms specific parameters are defined as to the lending of funds.

PMG: When the group forms specific parameters are defined as to the lending of funds.
PMG: You decide you need about $150K per duplex to buy, rehab and get ready to rent.
PMG: If I were looking at that, I would look for 10 to 15 people willing to go about $25k to $30 each.
PMG: Everyone does the same amount.
PMG: when forming the group we agree on the type of deal to be pursued.
PMG: we find the duplexes, fund the purchase and the rehab, find a great tenant and then
PMG: we can self fund a refinance at the now higher value and look to sell the note on the open market.
PMG: or we can self fund the refinance and sell the duplex on an assumption to another investor with a second for the down payment
PMG: or we can refinance with a more traditional lender and hold it as a rental.
PMG: the benefit of the self funding is the speed at which you can execute deals.
stroker: so what time limit do you theoretically put on turnover?
PMG: find to close in 24 hours.
montessorikelly: and also, when/if they foreclose, you get the property back again
PMG: yes
PMG: we get in, get out and go home.
PMG: the mortgage brokers close with our money and then within about 30 days sell it to a traditional lender.
Ricker: brilliant, the mortage brokers already have the contacts and then it is an arms length deal by them selling the note not you yourself.
PMG: Ricker and it allows the lenders to pay and the broker to receive a YSP that does not get disclosed.
PMG: Ricker, i will not give legal advice. I have had no problems with this for the last 22 years.
PMG: Accountant keeps the books, audited by a different CPA each year.

Ricker: my next question was about seasoning as well, but mortgage brokers sell off their mortgages quickly no?
PMG: yes, Ricker.
PMG: a land trust is fine. the way you hold title isn't a factor in how you structure funding.
PMG: a mortgage broker using his own funding source will close and sell the note in about 30 days.

montessorikelly: when you sell it, do you have to discount it?
PMG: yes, you will discount the note.
montessorikelly: Does it need to be seasoned to get a good exchange?
PMG: For self funding of purchases, we do prime -3.
PMG: For self funding refinances it is market rates plus .5.
PMG: The seconds we offer to investors if we sell are at secondary market rates plus 2.


PMG: if you are a private investor who took a note and are now trying to sell it, then seasoning will be an issue.
PMG: If you are a broker, the game is different.
PMG: We are not lenders in any way that requires compliance with state or federal lending laws.

PMG: don't get me wrong, we make money in these groups. bloody good money, but it is a means to a better end.
PMG: Good solid real estate holdings.

PMG: Tim, as you know, since you are in some of these, if someone wants out they can sell their position to anyone in the group.
PMG: At whatever price they can get.
PMG: There is no claim of liquidity.
PMG: There are no guarantees.
PMG: they can only sell to someone currently in the group.
PMG: There is a history.
PMG: and with all things business the auditing safeguards have to ensure trust.

PMG: I use an SEC lawyer.


montessorikelly: PMG- do you structure things any differently if you plan to raise a gret deal of capital, i.e. over 5 million?
PMG: yes, montessorikelly, but the basics are the same the details differ.


PMG: i started to partner after my 12th deal. after 10 the lenders got fussy and the rates from other private lenders were unacceptable to me.
PMG: it was a few years before we started offering some of the notes to the open market.
PMG: at first the idea was to fund the deal and hold for long term.
PMG: make money on both ends.
PMG: then we realized we could do more by selling some, selling the first position paper and keeping the second.
PMG: some learn from participation and then spearhead their own group.
PMG: the thing to remember is you can always find good people who can execute the mechanics.
PMG: Here is how I would segway from random questions to specifics (when talking to experienced people).
PMG: If you have a deal you are looking at, ask them about the specifics.
PMG: If you recently lost a deal ask them what they would do differently.

Debbie: seller finance type?
PMG: no, i don't do those.

mike_mn: Do you do any angel investing? private venture capital money?
PMG: venture capital is a whole other area. I am in some large vc groups but only passively.
PMG: I have never formed a vc group.
mike_mn: One of the guys in my group does it privately self funded.
PMG: I don't personally do angel investing because it requires a more hands-on approach.
mike_mn: His words...I give unbelievable amounts of money to businesses I believe will help this world
PMG: ah, that is philanthropy.
mike_mn: In hopes to make some money and make the world a better place

diversify:
PMG: mutual funds, spyders, tracking stocks these are all good.
PMG: the most populare spyder is the one tracking the SP500.
PMG: They buy the stocks that make up the SP500 in weighted percentages and adjust daily.


PMG: Does anyone here take Tim's email newsletter?
PMG: I am writing a series of articles on this subject for Tim's newsletter.
PMG: oh, Tim just corrected me the articles I am writing are for his premium newsletter not the free one. I take both and the free one has some great stuff for investors of all levels and the premium one is worth much more than he asks.

PMG: yes, more deals are done on the golf course than in offices.