Josh Cantwell Become A Money Magnet In 12 Easy Steps Part I Private Money Funding What you should know private equity Private Equity: In finance, private equity is an asset class consisting of equity securities and debt in operating companies that are not publicly traded on a stock exchange. PPM: Private Placement Memorandum, CYA, "Disclosures. Required IF: raising OVER $1million dollars, criss- crossing state lines, advertising or completing a federal registration INTRASTATE OFFERING within your state Executive summary: Summary of your offer and summary of the PPM. DOES NOT TELL A POTENTIAL INVESTOR THE SPECIFICS. Typically 4 Pages. Debt or Equity Financing: DEBT finance: LOANS to pay for expenses guarnteeing someone repayment of principal PLUS interest. THIS IS WHAT JOSH DOES MOSTLY NOTE AND MORTGAGE / DEED OF TRUST Equity Financing: Give up STOCK / ownership in your LLC to pay for expenses. IS when someone gives you cash and you give them a piece of either your LLC or your deed Example: Facebook IPO - Initial Public Offering / Equity Financing Private Money Funding What you should know private equity Note: I - OWE YOU and PROOF OF THE LOAN Contract that spells out the terms of the loan, who is borrower, who is the lender, how much principal, what is interest rate, how is interest to be paid (monthly, quarterly, annually) Balloon: All interest PLUS all principal is due. Is there a date and time when all the principal plus interest is due in full JOSH's NOTES: 12% interest or 15% of my profits whichever is higher due in 1 year zero monthly payments all due when the house sells OR in one year (whichever comes sooner) Mortgage / Deed of trust: Security Instrument to record "SECURING" the note to the house THE MORTGAGE / DEED OF TRUST ONLY SAYS THE FOLLOWING: who was the lender, who is the borrower, what property was it loaned on, the amount of the loan, MORTGAGE does NOT SAY THE REPAYMENT PLAN Secured Loan: With Mortgage Unsecured Loan: No Mortgage, like a credit card, unsecured loan without any collateral Private Money Funding What you should know private equity Line of Credit: Bank Loan with a revolving amount of money where you can borrow and pay back at will Example: They take a loan out against their own personal residence / has equity in their personal residence / they take out the loan at 4% then loan the money to you at 12% "Financial ARBITRAGE: this is what the bank do get CD money at 1% loan it out at 5% Public Offering: Available for the Public to invest. WE DON'T DO THIS UNLESS WE ARE REGISTERED Private Placement: Available to personal contacts within your state Types of Investors Active Investor Passive Investor Markets for motivated seller leads Negotiates with sellers Buys houses Repositions Properties Launches and Sells Houses Owns a Rental Portfolio Provides financing to the active investor in exchange for a return on investment in form of: Equity in the deal Interest Rate Both Money Magnet Goals Goals 1 Private Investor Fund 1 House Locate and Hire 1 Reliable Contractor Hire 1 Aggressive Real Estate Agent with a Great Marketing Plan / Property Launch Flip 1 Property Cash 1 $40,000 Check FLIP & FUND COACHING So where is all the funding coming from? Private Investors Fund Everything Private Investors Put Money In Banks And Banks Re-loan It Out Private Investors Invest In Hard Money Lenders Who Re-loan The Money Out Private Investors Fund Commercial Buildings Private Investors Fund New Entrepreneurs And New Companies Private Investors are not just investorsthey are just people looking to provide for themselves and their families. ACCORDING TO WIKIPEDIA While the average and median IRA individual balances in the past few years were approximately $69,498 and $20,046 respectively. Rollovers overwhelm contributions the overwhelming majority of IRA contributions, in dollar terms, were from rollovers, rather than new contributions over 10 times as much is added to IRAs from rollovers than new contributions While many rollovers were small (a significant number of rollovers were quite large, with 20.2% being more than $100,000.) Source ACCORDING TO WIKIPEDIA IRAs were divided by type as 33.6% traditional IRAs, 33.4% rollover IRAs (combined with the traditional IRAs, 67 percent), 23.4% Roth IRAs, and 9.6% SEPs and SIMPLEs. While certain types of investments are prohibited in an IRA, real estate is not one of them. As a result, real estate owned by an IRA can generate rental income and gain on a sale which escapes immediate taxation Source ACCORDING TO INVESTMENT COMPANY INSTITUTE Investment Company Institute: Cash invested in Money Market mutual funds recently overtook that invested in stock mutual funds: $3.83 trillion. This is the highest such reading in 25 years. Point: Investors are deathly afraid of the stock market, dont trust it and are leaving their money on the sidelines looking for a better alternative. BUILD WEALTH TODAY With Double Digit Returns, No Commissions & Predictable Results INVESTMENT MARKETPLACE Higher ReturnsSecurity StocksCDs Mutual FundsCorporate Bonds Variable AnnuitiesGovernment Bonds Fixed Annuities WHAT ARE YOUR INVESTMENT OBJECTIVES? 1% Return on Investment as of January 27 th, 2016 CD RATES ANNUITY RATES: 4% RETURN ON INVESTMENT BOND RATES: 3.85% RETURN ON INVESTMENT S&P 500: LAST YEAR: -7.69% Return on Investment for 1 year reporting period -7.34% Return on Investment for 1 month reporting period YTD S&P mo. = -7.34% Our Investors get 12-15% FIXED, No Fees, No Commissions S&P mo. = -7.34% Our Investors get 12-15% FIXED, No Fees, No Commissions S&P mo. = -7.69% Our Investors get 12-15% FIXED, No Fees, No Commissions S&P mo. = -7.69% Our Investors get 12-15% FIXED, No Fees, No Commissions S&P 500: LAST 5 YEARS: S&P year = 9.51% per year Our Investors get 12-15% FIXED, No Fees, No Commissions S&P year = 9.51% per year Our Investors get 12-15% FIXED, No Fees, No Commissions 9.51% Return on Investment for 5 year reporting period S&P 500: LAST 10 YEARS: 5.01% Return on Investment per year for 10 year reporting period S&P year = 5.01% per year Our Investors get 12-15% FIXED, No Fees, No Commissions S&P year = 5.01% per year Our Investors get 12-15% FIXED, No Fees, No Commissions OPTION A = NOT USOption B = US CD = 1%We pay 12% minimum OR 15% of profit Annuities = 4% or less / Bonds = 4% or lessWhichever is greater? Stock Market past 10 yrs. = Approx. 8%Predictable, No Fees Significant Volatility / No Control Over InvestmentsControl over investments that you can see and touch THE WEALTHY DONT DO OPTION ATHE WEALTHY DO OPTION B SUMMARY: IF YOU WERE A PRIVATE INVESTOR, WHERE WOULD YOU RATHER INVEST? WHAT IS A SELF DIRECTED I.R.A? A Self Directed IRA is an IRA where the owner is required to make their own Investment decisions. Non- Traditional Assets: Like real estate, LLCs, oil and gas, etc Self Directed IRA custodians (Like The iPlan Group who I use) set up real estate investments inside of an IRA. Any 401k, IRA, ROTH IRA, SEP IRA or HSA acct owner can make investments like real estate in those accts Sample Investments Note (I.O.U) w/ Mortgage Buy stock in a company SET UPFUND THE ACCTINVESTMENTS 3 STEP PROCESS Set Up A Self Directed IRA Acct = Rollover = from 401k or 203b Transfer = from another IRA Make An Investment: (IE: Note and Mortgage) R.O.I. OFFER 12% interest ~OR~ 15% of the profit Whichever is greater If the investors funds an entire deal 1 st mortgage secured by real estate $500,000 MUTUAL FUND INVESTMENT American Funds = Investment Company of America Exp ratio = %0.65 (paid to the fund manager) 10% = $50,000 Profit / ROI 9.35% = $ 46,750 Profit / ROI $3,250 in fees annually A Share Commission (paid to the financial advisor who sells this mutual fund to their client) $500,000 = 2% (breakpoint) = $10,000 $500,000 - $10,000 = $490,000 - $3,250 (%0.65 exp ratio) = $486,750 left (zero ROI) $10,325 dollars in FEES for American Funds Approx. $1,000 - $1,500 for SD IRA administrator fees (Self Directed IRA) SHARE CLASSES Class A Shares Class B Shares Class C Shares Up Front Commission Back End Commission & Higher Expense Ratio Small Annual Commission & Highest Expense Ratio LOAD / NO LOAD Load = Commission No Load Fund = No Commissions Paying A Money Manager = Charge A Money Management Fee EX: Sell no load funds BUT charge 1% money management fee + 1% expense ratio VARIABLE ANNUITIES Act Very Similar A Mutual Fund BUT Access To 40 Funds Within The Annuity Transfer From Fund To Fund With No Expense 3% Commission Up Front AND 2% Exp Ratio Per Year Every Year OPTION A = NOT USOption B = US CD, Annuities, Bonds, Stock MarketReal Estate Loans 9% Average annual return over the last 100 years12% Average annual return or more 1-2% Annual Fees No Fees* *SDIRA Administrator Fees Net Return Approximately 7-8%Net Return Approximately 12% Significant Volatility and No Control Little or no volatility, fixed returns, investments you can understand 7% Net Annual Returns12% Net Annual Returns Start with $200,000 Double your money every yearsDouble your money every 6 years After 20 years you will have approx. $800,000After 20 years you will have approx. $1.6 million Variable returnsFixed returns Which one would you rather have? The Rule of 72: *Take 72 and divide by your annual interest rate and the resulting number equals the number of years until you double your money. Our Mission Statement To Provide Our Investors Double Digit Investment Returns By Matching Our Knowledge And Acquisition Of Undervalued Real Estate Assets With Investors Looking For Investment Alternatives And Double Digit Returns. TESTIMONIAL Over the last 6 years, while everyone else lost money, especially in 2008, Ive been earning 10% EVERY SINGLE YEAR. Im so glad I got involved with you when I did. Its meant tens of thousands in interest I would have lost in the market or never earned in CDs. - C. Heilman, Brunswick, Ohio ACTUAL LETTER TESTIMONIAL When we looked at our statements we could never tell if we were making money or loosing money. It just went up and down every month with no real progress. Plus our advisor never called us to make adjustments. Now I know we are making real progress towards our financial goals. 10% or more every month! You cant beat it! - M. Tucciarone, Brunswick, Ohio ACTUAL LETTER TESTIMONIAL You were like an answer to our prayers. You always had our personal needs in mind. We felt very comfortable putting our home in your hands. Thank you again for helping us. Your friends, Rev. Willie and Cathi G, Medina, Ohio ACTUAL LETTER SOME OF OUR CURRENT DEALS! AddressPurchase Rehab ARV Profit Walnut 83K 40K 184.9K40K 1512 Roycroft 77K50K 199.9K50K 3665 Brookside 63K55K 189.9K50K 1966 Marwell 65K50K 199K50K 46 Victor Ave 37K38K 129.9K35K Oxford 77K70K 209K40K CASE STUDY # Iota Ave. Cuyahoga Falls, OH Purchase Price$53,000 Rehab, Insurance, Mktg$30,000 Private Money $86,000 Cash Back at Closing$33,000 Acquisition Fee$2,500 List Price$144,900 SOLD Price$139,900 Gross Profit$38, Profit to Private Investor$5, 13% Interest Net Profit After ALL COSTS$32,549.24 CASE STUDY # Homestead Rd. Ravenna, OH Purchase Price$41,500 Private Money $79,000 Self Directed IRA First Mortgage Traditional IRA at 8% Second Mortgage Roth IRA at 20% SOLD Price$121,000 Gross Profit$38,000 CASE STUDY # Steve Dr. Akron, OH Bank Foreclosure Listed$33,000 Purchase Price$50,500 Rehab, Insurance, Mktg$35,000 Private Money $90,000 Self Directed IRA SOLD Price$135,000 Gross Profit$36, Profit to Private Investor$6, 12% Interest Net Profit After ALL COSTS$29,795.40 INVEST IN NORTHEAST OHIO The Cleveland-Akron area is made up of 8 major counties and is the 15 th largest consumer market in the U.S. with approximately 2,950,000 residents Nearly 35% of Ohios population is within Cleveland- Akrons area of dominant influence. Over $1 Billion in residential and commercial development is planned for greater Cleveland over the next 5 years. Flats renovation, Euclid Corridor Project, Steel Yard Commons, Downtown condo development, East 4th Street Project. Locate potential properties.Coordinate and oversee inspections. Perform property analysis and due diligence.Coordinate closings. Process and evaluate foreclosures from Legal News.Research marketplace. Monitor propertys foreclosure proceedings at courthouse and through media. Perform marketplace analysis. Address Realtor questions.Develop marketing plan. Interface with SD IRA Companies.Coordinate title searches. Provide presentations to investors.Arrange and oversee inspections. Negotiate offers.Review settlements for accuracy. Inspect properties on an on-going basis to ensure tenants adhere to lease agreement. Millennium Capital Investments Works Hard So You Can Relax Millennium Capital Investments WORKS HARD SO YOU CAN RELAX Procure tenants for rentals and lease-purchases.Interface with insurance company. Screen tenants for credit worthiness, employment and rental history. Schedule showings. Create ads and signs for advertising available properties.Hold open houses. Put out lock boxes and signs.Coordinate and monitor property renovations. Obtain constant training through Real Estate Investment Assoc. of Cleveland and National Real Estate Investing Association. Negotiate with subcontractors. Manage database.Monitor property renovation budgets. Negotiate with homeowners. Prospect for new clients. Collect monthly rentals.