Fallacy No 1: The "skin in the game" bull...

[Lilo Santana]

Recently I posted in various websites, about an apartment building deal, that could be acquired for under 65% of it's ARV.

Those who received the financial analysis should have seen that, the ARV of the property was determined based on rents lower than the average market rate (therefore a very conservative NOI), estimated repairs were overstated to reflect a "worst case scenario" and cover possible overage, CAP rate was 18% at acquisition and, the cash on cash was way over 10% after stabilization.

Operating maintenance estimates, cash reserves and unit turn over expenses for the first year were also inflated to reflect a "worst case scenario" and to provide for unexpected expenses, which usually come up in the first year after the acquisition of an REO or at closing. The notes on the side of the spreadsheet reflected all this information.

My posting also indicated:

"If you as a private lender/Investor or your company, if a hard money lender, can finance 100% of investment of up to 65% of ARV and, have no submission fees, please contact me for financials, executive summary and loan application".

The very first money broker that contacted me indicated that he could do 80% of acquisition. Which part he didn't understand on the previous paragraph?

The next one to contact me was also a broker who was adamant that "No 100% financing exists, I have never seen such a thing in my over 20 years in business". I currently have 5 investors that write me checks for 100% acquisitions and repairs on the right deals therefore, we should assume that she has been doing a disservice to her clients for over 20 years? (If you are going to post, please don't be that one who asks why I'm looking for investors, if I already have five!!)

So on and so forth, the saga continued and my posting turned into a wasted effort. Brokers asking me the same questions I diligently made sure to explain in my financial analysis, others trying to convince me that I was looking for the impossible and best of all; one asked for $10,000 to present the deal to his "private lender". Which part he didn't understand about "no submission fees"?

Why should I be begging for money on a solid deal that can be acquired for way under ARV, with solid financial possibilities and also have to put any money in it, when I found the deal, I'm going to do all the work and, I’m offering a nice return on the funds provided by the investor by the way?

Obviously, because my post was not reaching real investors who analyze the deals themselves (otherwise they wouldn’t be asking the same questions that I made sure to cover in my financial analysis), recognize a good deal when they see one and more important, WRITE THE CHECKS THEMSELVES!!!!

I’m going to get all kind of hate responses to this posting, especially from money brokers. But before you guys do that, realize that I have absolutely nothing against any of you. It’s just that some money brokers out there just don’t understand the rules of the game.

Let’s say I have a carpet cleaning business, want to expand my operation and place an ad in the paper looking for a new cargo van. Are you going to call me to offer me a 1969 Chevy Camaro? Get my point?

Why if I’m asking for 100% financing and YOU can’t do it, are you going to answer the post? Or, why try to convince me that it can’t be done!!! I won’t even comment anything else on the submission fee ($10K?????, get of the pipe brother…)

If you are as tired as I am of dealing with this type of non-sense and/or, you are tired of getting lame deals for review please visit my group in Linked in “Real Private Lenders Network” and submit for membership. Especially if you are the one who sign the checks since, there are too many opportunities out there that are been passed over because they never reach the correct audience (yes, you…)

Since I’m the moderator in that group, I can assure that you won’t be wasting your time…

[Ray Antonelli]

Hi Lilo,

I DO provide 100% financing! All my clients need is good credit.

Call me at 216 337 7520 or email for more details. ray100atgmaildotcom.

[Michele Jefferson]

I really liked your Post. Straight and to the point.