Pitbull Conference Scottsdale AZ

I recently attended this conference.  It was a great insight to Hard Money Lending.  We have made hard money loans in the past in order to keep returns coming in on idle capital, but these guys do it as a full time business.  Huge returns with about five (5) income streams generated on every loan.  

Expand your thinking about real estate investing.  There is more than one way to skin a cat.  Some are easier than others.  

1. Make loans direct to borrower - requires knowledge, direct management and good instincts.

2. Joint venture with someone that you trust and has a good track record - No direct management and some knowledge.

3. Invest in a fund that has professional management and a good track record - No skills required and no direct involvement at all.

4. Keep your money in a CD and let the bank make money off of you - Same as #3 but pays you less.

5. Keep your money in a mutual fund with a guy that you never met and let him make money on his fees and leave you at the mercy of the market.

Risk vs Issues

Risk is something that may happen and Issues are problems that have happened.

Analyze your risks in order to know what may happen and handle the the issues when they happen.  The biggest issue is the one that you didn't think about and wasn't in your business plan.  I guarantee you that 9/11 wasn't in anyone's business plan.

It is not what happens to you but how you handle the problems as they arise.

The higher the risk, the higher return.  If you can figure out the way to handle the problems and you will have figured out the the higher returns.

 We buy distressed assets that have more hair on them than a good barber can cut in a month.  We start with ideas on how to solve the issues and then grow the plans over time and change the plan almost monthly.  Our results usually are high yields that you would not believe if I told you.  Annualized returns are usually north of 75%.  Compare that to CD's or Money Markets or the stock market and we are the ones in control of our destiny.

Do all come out positive.  There are losers of course.  Have we lost all of our money?  No! Have we taken losses? Yes! Nothing substantial.

I have people telling me that they are afraid of losing all of their money.  Real Estate buying and lending limits your risk immensely.  

Example: We purchased a 211,800 sf building for $6.14/sf and it sat on a 20 acre sight.   The risk was that there is a deep water contamination at around 42 feet below the surface. In evaluating the risk (which scares banks and buyers to death) is the "environmental issue".  Unless you think you would use water from a shallow well, which you can't do in the state and city it is located in, then there is little or no risk.  

This building has been cleaned out and is being divided down into smaller spaces and leased at $4.50/sf.  When we lease out the entire space, we will have over $900,000 per year in income.