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Updated almost 7 years ago, 02/21/2018
The bankers code
Has anyone seen this course? Something about obtaining private money and re-lending it at a higher rate. I would love to hear some reviews.
Originally posted by bill schultz:
I review as many gurus and courses as possible, and have plenty of contact with them as I was a co-founder of a local REIA. Sorting through them is a full time job. I especially try to stay on top of the ones relating to lending in real estate investing. When I heard of the Banker's Code, I was all about finding an easier path.
George Antone and Gary Boomershine were promoting the Banker's Code via signing up for a personal phone consultation with them, I was supposed to have a 1 hour session with one of them personally. I paid the small dollars for the offer and signed up, and scheduled the phone appointment. They actually have someone who's full time job it is to make and track these appointments.
Every time it was the appointed time for our phone call, I got a call from a substitute, apologizing that George and Gary were both unexpectedly unavailable, and explaining that he/she were going to speak with me instead. When I politely declined, the person couldn't even reschedule, and had to refer me back to the scheduler.
When this happened 3 times, I called the scheduler and requested a refund. I had enough evidence to satisfy me that I was paying for a sales pitch, not a consultation. I did receive my refund about 6 weeks later.
I have an associate who has been to their course and is trying to follow what they have told him. They apparently make it sound very simple and relatively hands off to start a lending company. Evidently all you have to do is find a mortgage broker who will handle all the borrower compliance issues for you and bring you deals. Then you find a loan servicing company to service these loans. Then you find an attorney/title co who can handle the closings nationally. Then you go and find your funding from people begging you to lend out their money for them. You lend it out higher than you take it in, and voila, you keep the spread. Easy peasy. Why isn't everyone doing it? (Their material is heavily West Coast slanted, and doesn't really address differences we have in the East. For example, in CA I'm told that mortgage brokers can sell fractionalized loans, and the Banker's Code uses that technique, but no lawyer I've spoken to in my location will endorse that. Must be I'm speaking to the wrong lawyers.)
There is more to it, but you get the idea. Gee, I wish I knew it was that easy when I started. Then I wouldn't have gotten so involved with due diligence, SEC compliance, lending licensing requirements, and all those little issues that are so time consuming and don't produce revenue.
I hope everyone reading this knows I have my tongue firmly planted in my cheek.
Bottom line, when someone gives me the run around 3 times for a simple phone call, I'm not going down that road with them any further.
Originally posted by Will Barnard:
Originally posted by bill schultz:
I'm with you, Will, I was just typing my answer and saying the same thing, but in a longer less concise format.
How good are you at underwriting loans?
The 3-6-3 rule of banking may be extinct. "Pay 3% on deposits, make loans at 6% and be on the golf course at 3."
The spread that you envision is only one part of this formula. Loan losses aka defaults or late payments can make a significant dent into your profits. Foreclosing on a property also takes a lot of time and resources.
Are you sure you want to pursue this?
In Colorado, you not only need a mortgage broker license but also an additional license specifically for doing what's described here. I know a few people who are doing this, and I have some money in with one of them. So, this is possible. Starting from scratch know nothing about lending or real estate is not going to be easy, though.
Bill,
never saw the course, but by the description that you just gave me, I would not get involved with that plan.
That is a great plan if you have deep pockets to cover payments and if you REALLY know your business and can maintain control of the property.
Finally, I am not an SEC attorney, but it does seem like their could be some MAJOR legal problems, especially if anyone looses a dime!
There are a lotta easier ways to make coin in this biz without that much risk.
Just my 2 cents! :mrgreen:
I attended the free session that they were doing in May called "The Wealthy Code". This is almost an introduction course to The Banker's Code and it gives you a basic understanding of passive income and other avenues. In my personal opinion, I feel that George Antone is a great teacher and has a wealth of knowledge and this course is amazing and free. They give you workbooks and really open your eyes to analyzing a good deal. I'm going to start the course soon. [REMOVED]
George and Gary are nice guys ,GOOD GUYS,,and I think there stuff is valid,,,I think their information and training is worthwhile,,,
Having said that,,theres Lots of Stuff avaialble on a Google search for Hard Money Lending or Private Mortgage Training,,,
I want to propose a question "
Would you rather pay someone 8K grand to learn something about hard money lending or would u rather spend a little bit less checking stuff out chunk by chunk on the Net,,,,???? If u got 8K and u wanna get in the fast lane then u know what to do,,,,Trust but verify,,,make sure your right and then go ahead,,,(Davy Crockett)
I invite you to draw your own conclusions,,,,,
Heard of the course never took it or read any reviews. I do have mortgage banking experience, as well as lending fund to fund money. I had both private investor money and institutional money including a warehouse line of credit.
All that said, if you know nothing about writing a loan, which frankly you are asking about this to begin with, so you are starting in the wrong place. All the legal issues and license issues can be overcome if your serious, you just go get those. You will need a license to lend in every state you desire to lend in, which is different than being a mortgage broker or a mortgage broker business in many states. Lenders have bond and liquidity requirements and audit requirements which are different from state to state.
The notion is simple, you get money cheaper than you lend it out creating an arbitrage between the two and collect the spread and perhaps a point or two at origination. That is pretty simple to understand. How to measure prepayment risk and default risk along with how to underwrite are skills that you do not get over night. Also, portfolio management is not something you pick up over night. How will you exit the loans? How will you solicit for investors? The list of questions can go on for a bit.
There are plenty of folks here on BP who are affluent in loans, lending and are actually practicing lenders. Spend sometime with them and start the learning process. Perhaps start off in an entry level role as an investor to see if all the work and risk that goes with the venture is truly what you want. BP has the firepower to educate you with the folks here and that will be cheaper than paying for a course that costs thousands and apparently the right teacher never calls you.
I'm glad I found this forum because of course I was in the process of buying into some of the things these "gurus" say not realizing how much behind the scene work is necessary. I did not even know that a license had to be obtained in order to be involved in private lending. with that being said I am still very much interested in this aspect of real estate investing and especially note investing. Hopefully I'll get more insight after searching on here
Where do you find the money to lend? For example I get the concept, but if u are not using your original money how do u access the money?
Originally posted by Ron Steele:
Ron, what you are asking about is called raising capital. If you are raising capital with the intent to loan it out, stand in the middle of the room, look to your left, that is the regulations around raising capital and then look to your right, that is the regulations around lending money.
How to raise capital in compliance with SEC/FINRA is a whole set of discussion on their own. Who you raise money from, how much, how you solicit and how you structure the investment....all things that would fall into that concept.
Provided you gain an understanding of all of that, it becomes a function of raising the capital in either equity or debt or a combination of the two.
Thanks for the info?
I understand raising capital. Could you or anyone provide any resources or examples to learn more about this.
I don't understand why someone would loan me $ at ex 6% no collateral then I loan at 10% hard money which would be ltv of 65% or lower, secured by collateral (real estate),plus points. The other points is lending on what??? my credit,sales pitch, ???
The only way I can see getting these terms are traditional financing which would highly doubtful/impossible I would think.
I thought maybe a line of credit would work(I have a small one) but I don't know if the spread would make sense. I'm not sure what I'm paying on interest, but my loans would have to have a much higher rate. Also it seems you would have to have a pretty big line of credit.
I'm looking for any answers anybody could provide, and thanks in advance for your help.
Any opinions on this would be helpful before I purchase the course.
Thanks
im not sure i understand .. why would u consider buying the course after all the opinions n mention of this course being non-compliant with the law?
I was just at the Real Estate Investors Expo in Anaheim and George Antone was one of the speakers. I also stopped by the booth and spoke extensively with the "rep" about the course and what they are teaching. I have been a FNMA, FHA, VA lender for 25 years and loan my own money, pool money etc... I have not taken their course, and really don;t need to take it. The basics of what they are teaching can be done by anyone, assuming you have access to capital, understand risk and arbitrage. I do this all the time. However, I use my own money to leverage. Example: I loan $200,000 of my own money to an investor at say 12% and 3 points at 50% LTV. (this is very common in my area). I pocket the $9,000 in points, I then borrow $300,000 at say 10% and 1 point (I can easily do this with my connections) and use my $300,000 NOTE as collateral for the new loan. This is what banks do, but they do it a little differently. In theory, as long as I have enough connections (liquidity), I can do this over and over at very low LTV's, pocket the points each time and pocket the "spread" on the loans. However....THIS IS NOT RISK FREE!!! If any of your investors stop making you payments, you have to pay your people with your own money until you can get them paid or foreclose. If you have reserve money, this can work well. I would recommend not leveraging more than a couple of times. You can get people on Loopnet pretty easily to loan against your low LTV notes as collateral.
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Besides pulling up an old thread, things have changed and yes, you need a license.
Ponzi schemes have been around a long time, and when you start borrowing to meet the needs of other loans you then have a Ponzi arrangement, per a past FBI Agent-In-Charge here, I know him well.
About two years ago, a broker here was doing this, he couldn't cover the loans, investors were feeding other investors, notes cam unglued and he is sitting in prison.
And, no, not just anyone can do this, the basics get left in the dust quickly and it will require financing skills, RE skills and social skills that not everyone has, much less the money to back them up.
There are 51 sets of laws to contend with, 50 states and the feds, just because someone has funds they can't just begin lending safely.
If anyone wants to open a mortgage company and you have a million of your own money, I'll assist you, otherwise I suggest you not think it's so easy. I also know an attorney who had similar thoughts, after I talked to him, he decided not to go there, so, no, not just anyone can do it. :)
@Bill Gulley is talking about hypothecation, are you saying that's a ponzi scheme? The one time I say George Antone speak that's what he was talking about.
What I do and have done is not a "ponzi" scheme! I am loaning my own money, and I am legally pledging as collateral assets that I own. I am a licensed real estate broker in CA for 25 years, have closed over 5,000 transactions, own a real estate company, own a mortgage company and have a resume in the private money world that is too lengthy to list here. If you read my post, I am talking about a very simple and basic concept. You loan money at low LTV's, so the "NOTE" has value to other investors. You then borrow against the NOTE you already own, and use it as collateral. This is done in institutional lending every day, It is perfectly legal and banks and private lenders do it thousands of times every month across the USA. If you do it right, you can make points and a spread. As I said earlier, this is easy to do, but is not RISK-FREE! You are still obligating yourself on NOTES and run market risk. If you are in a 50% LTV loan and cannot pay it back, because someone else is not paying you, the lender could foreclose and hurt your credit etc... I am also a former stock broker and hosted a very successful financial show on building wealth and making money, This type of strategy is not for "newbies" or people with no capital. If I do this kind of thing, I have money and can make payments on loans, while I am waiting to foreclose on someone else. The course that is mentioned in this thread by George Antone, is a way to do this with OPM (other people's money). I have not taken his course, and have no idea if he is teaching the exact same strategy I am explaining here :-)
@David Oldenburg , why not just sell the loan outright, wouldn't that achieve the same result without the possibility of having to possibly pay out without money coming in?
@Account Closed Yes, you could just simply sell one investment to do another, but there is a reason why you may not want to do it. Let me give you an example. In June, I had 2 great opportunities to invest. One was a $300,000 low LTV bridge loan to a seasoned investor at a high rate of 20%. I did this loan with no points to me. A few days later I had a Realtor want to do an easy "off-market" flip. I would also need about $300,000... I crunched the numbers and really wanted to do the deal, as it was an easy $30,000 profit. However, at the time, almost all of my money was loaned out to others. What made the most sense is to borrower money at 10% from another investor, and put up for collateral my 1st mortgage NOTE that I had written at 20%. I was receiving $5,000 per month in payments, and agreed to pay the other investor $2,500 for loaning me the money at 10%. This gave me a "spread" of $2,500 per month and I got all of my capital back to use on the flip. This allowed me to continue making $2,500 each month and make an additional $30,000 with the same money. When the flip sells, the money is used to pay back the person who loaned me the money at 10%, and I am left again with a 20% loan. Yes, I am losing $2,500 per month on my initial investment, but the flip took just 3 months ( a loss of $7,500) to make $30,000 profit. In theory, I could do this over and over, with the same original $300,000, but it is not always "easy" and there is definite investment and market risk. You also have to have people who are willing to loan you money and have sufficient collateral (equity) in each transaction to make sense to people loaning you money.
Originally posted by @David Oldenburg:
@Account Closed Yes, you could just simply sell one investment to do another, but there is a reason why you may not want to do it. Let me give you an example. In June, I had 2 great opportunities to invest. One was a $300,000 low LTV bridge loan to a seasoned investor at a high rate of 20%. I did this loan with no points to me. A few days later I had a Realtor want to do an easy "off-market" flip. I would also need about $300,000... I crunched the numbers and really wanted to do the deal, as it was an easy $30,000 profit. However, at the time, almost all of my money was loaned out to others. What made the most sense is to borrower money at 10% from another investor, and put up for collateral my 1st mortgage NOTE that I had written at 20%. I was receiving $5,000 per month in payments, and agreed to pay the other investor $2,500 for loaning me the money at 10%. This gave me a "spread" of $2,500 per month and I got all of my capital back to use on the flip. This allowed me to continue making $2,500 each month and make an additional $30,000 with the same money. When the flip sells, the money is used to pay back the person who loaned me the money at 10%, and I am left again with a 20% loan. Yes, I am losing $2,500 per month on my initial investment, but the flip took just 3 months ( a loss of $7,500) to make $30,000 profit. In theory, I could do this over and over, with the same original $300,000, but it is not always "easy" and there is definite investment and market risk. You also have to have people who are willing to loan you money and have sufficient collateral (equity) in each transaction to make sense to people loaning you money.
Makes sense, thanks!
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Wow, yes, it is hypothecation and that's fine if, the lender taking the note knows what they are doing and not led into fractionalized slices or subordinate positions and I'm not saying that's what is being done. It's common practice in mortgage lending, just don't want to get into "selling more shares than you really have". I have done this for years.
My Ponzi comment is to those who borrow funds to loan out and borrow more ending up having to use borrowed funds to pay loan obligations, which is pretty common by those trying to borrow with out their own pockets, that was not the case with David's post, but the thread.
I think what David is questioning is about was my saying it's not easy. I'd say he's new here and hasn't yet taken in the vast spectrum of investors' experiences we have here. It's very easy for me to do, it's easy for David to do (25 year broker, past stock broker, obviously has financial and social skills to relate to accredited investors) but it's not easy for everyone. What I (we) see as easy will blow right past some initially and it only gets more complicated. It's one thing if your note is collateral to a bank, it's entirely different when that note is given to some little old lady as her collateral (which is where many would try to go with the idea). And, David is using his own money, I guessing he doesn't over extend himself or put little old ladies at risk, as others might or could without having a clue or any ill intentions.
I'm catching a breeze of "marketing" the idea, can't help it, us money guys are usually on the look out for more money in the pipeline. LOL :)
And, we are off topic, I don't think this has to do with subject of this finance guru book
Ok, so getting back on topic, since my original post over 3 years ago, I had since went to a seminar put on by these guys and paid the few hundred bucks to see what it was all about.
In a nut shell, they are taking what is a simple idea, but a complex transaction filled with risk (that you need to know how to manage) and licensing requirements, packaging it up as an easy, anyone can do it, and selling it off for large profits.
The facts are this, it is NOT easy for anyone to do this without violating a number of laws and regulations, it is not easy to manage the risk, and building the relationships they speak of is also not a simple or easy task. This is nothing more than the average guru course pitched as a easy work for big money without having any of your own. Not quite hogwash, but definitely more of a pipe dream for the average person.
The course will work but they teach things that you can do on your own and don't need to buy a course for. The most important aspect is getting the money, which is what you do with your personal relationships and integrity. You don't just hold a webinar or post on Kickstarter then wait for people to just give you money to broker out. I need to see proof that the guys who put out this course (George Antone and Gary Boomershine) are actually doing this and not just scraping info from elsewhere then packaging it up and reselling it to make a buck from newbies who think this course will solve all if their problems.
In South Carolina, you don't need a license to broker out funds from others who have money as long as they're also in South Carolina. Dunno if you need one if your investors are outside of SC, though (even though I have several investors in California and Texas) but I'm not worried about licensing issues for that either. I lend my own money and broker it for my investors without a license all the time. The biggest risk to me is losing my relationships with them if I ever use their money irresponsibly. I recently started a closed Facebook group to teach people in our REIA how to safely lend their own money on deals to others in our REIA to promote investing activity and I'm not worried about the law coming down on me for teaching this to others without a license or brokering it out for them if that's what they prefer.
It's very difficult to get any help from law enforcement or other regulatory agencies even if you do collect money nationwide from people to scam them or to legitimately broker it, whether you have a license or not. I know this from first-hand experience dealing with the FBI to finally get a scammer and fake guru convicted and sentenced to prison, even after supplying them with ample evidence of the fraud.
To lenders/investors: be very careful with whom you entrust your money. The character and competence of the person you're thinking of giving your money to is much more important than the quality of any deal he/she uses your money for. A bad person can ruin the best deal.