Closing on a property purchased with private lenders

When you make your offer on repossessed homes for sale, there should be no paperwork involved, just a verbal commitment. Once your offer is accepted, you need to move forward with the mound paperwork that is your passage to closing.

When you are working with the realtor on cash deals, the realtor will take care of the closing preparation for you.

If you’re purchasing a bank repo houses, you’ll be working with an asset manager. Once your offer is accepted, one of the first things they will ask you for is earnest money. You have to put some money down. Normally, I try to get by with $ 100. Sometimes this flies, a lot of times it doesn‘t take off. Often these folks are looking for $ 1,000. I had heard a rule somewhere that you should never give more than two percent. I don’t know if that’s valid, but it’s what I heard.

I probably shouldn’t be so open about what I am about to tell you, but I am going to tell you what I did on one deal. I made an offer and it was declined.

I thought I could buy that particular property at that particular price. This was back when I touched the private lender’s money; I don’t do that any more. I had the private lender’s money in my bank account. They turned me down and the next day. I went back in with my exact same offer, to the penny, that they had turned down on the day before. But, this time, I gave them 100 percent of that offer as the earnest money. They took it. I had a substantial reduction. They wanted this amount, I offered this amount, I low-balled the thing and they turned me down. So I just put up earnest money to the full amount of my offer. And they took it.

I don’t play that risky game now but, I did back then.

Now, the asset manager and your realtor will coordinate paperwork as well as schedules to determine the date of closing. Contact your lender to arrange for a transfer of funds at this time. You also need to set up insurance, both hazard and fire.

It is important to note that if you’re dealing with a bank, they are going to ask for protection of their loan. Private lenders don’t do that because they assume you know what you’re doing and you take care of that.

At this, it would be easy to slide by and forget insurance. That’s why you’ve got a check sheet. I am going to keep drilling the idea of check sheets into your mind. It is easy to forget things during this process.

It would be a nightmare to be at a closing and remember that you haven’t lined up your insurance. Check sheets are the way to avoid this nightmare.

On bank repossessed homes, you get 60 days to close.

Often, I have a lot of houses in process and on rehabs. They’re in the pipeline with offers accepted on them and my contractors can’t keep up. Do I really want another house on top of all of this?

We can start to get overloaded, say I buy 17 houses in two months. This is a lot of work. I can actually use this 60 days as a tool.

If the offer’s accepted, I push things back to the 60 days. If I’ve managed to keep things flowing without working my people to the bone.

If my crew picks up the pace during that 60 days and gets the work done, I can pull that date in. I will call and say, “Hey I’m ready to close.”

That 60 days they give me, is a great tool for me. I can use it to buy time if time is needed.

E. Alan Cowgill is the owner of Colby Properties, LLC. and President of Integrity Home Buyers, Inc. Since 1995, Alan has bought and sold hundreds of single family and/or small multi-family investment properties in Springfield, Ohio. Alan uses Private Lenders, not banks, to fund his real estate purchases. By doing this, he has created his own private bank of ,000,000 in funds. Alan looks for situations where the seller, the lender, and the eventual homeowner can all “Win”. He is not a Realtor, but a Private Investor, author, consultant and national speaker. He has been asked to speak on the topics of ‘Investing for the Beginning Investor.’ and ‘Finding Private Lenders.’ His home study system, ‘Private Lending Made Easy’, shows new and seasoned real estate investors how to find private lenders for their own real estate business.

His website is

BEIJING — Online loan sharks in China have come upon a new way of guaranteeing loans from female coeds in need of some cash: demanding nude photos.

According to the state-run Southern Metropolis Daily, web-based lenders are asking the college students to send nude photos of themselves as a form of collateral, along with copies of their ID cards.

They are threatened that if payments are not made on time, the photos will be made public.

One of the women told the paper that she first borrowed 500 yuan () from a loan shark with a 30 percent weekly interest rate. She was forced to take out new loans to pay off the old ones, and her debt ballooned into 55,000 yuan (,437) when the lender demanded a nude pic of her as a guarantee for new loans.

The woman said several of her female classmates had also been caught up in the scheme but didn’t want to speak out.

The newspaper claims that loan sharks suspended the practice after it published a story on the practice.

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