GATOR method people?

Question

Hi! I am thinking of paying for the Gator Method program through Pace Morby, who I recently saw at the Aspire Conference in Charlotte. Has anyone tried it and had success? If so- what would you rate your work effort (not afraid of work), and the time to close a first deal? I'm making some pretty big moves right now and changing my business plan in a new direction, so I don't want to die of shiny object syndrome, but this method really speaks to me.

Stuart Udis · Answer

It's my understanding the Gator Method consists of providing short term loans to cover other investor's earnest money deposits. I can't think of a worse investment strategy than lending unsecured loans to individuals who don't have funds to cover the deposits associated with real estate transactions. Actually, I take that back....investing in a course to learn how to make make these loans is an even worse investment.  This is probably where the Pace groupies come out of the woodwork to defend him.

John Behling · Answer

I didn't sign up for the Gator course, but I heard the pitch a couple of years ago. If I recall, it was not so much the earnest money that was being lent; it was the down payment and other closing costs. I did not pay for the course or get any deeper because I figured 1) High return = high risk, and I am at a point where I can't afford to lose that kind of money; and 2) I didn’t see a value in a course- why not network with local investors who need down payment, and work it out directly on a deal that I could more easily underwrite? Regarding risk, go to your local real estate investment association, tell everyone you are new at investing and want to borrow down payment money for your first flip. Let me know if you don’t hear crickets, and I’ll come join your REIA. Pace is a brilliant guy- he identified a need and is building a “solution network”. I think there is a place for it; it just was not right for me at the time.

Stuart Udis · Answer

@Jason Dillard Even if the EDM is refundable, point me to the title company/brokerage who serves as escrow agent and returns EDM's without mutual sign off from both parties to the sale contract. It is quite common for their to be a dispute over the validity of the contract termination leading to one parties unwillingness to sign the EDM release. Many contracts have a mediation clause and there are costs and time involved with reaching a resolution. In some instances it becomes costlier to litigate and sellers can squeeze the buyer over at least a portion of the EDM funds because they know the time and costs associated with pursuing the full return. This is the reality so no, just because the contract suggests the money is refundable does not mean its not at risk.

Don Konipol · Answer

@Stuart Udis has hit the nail on the head.  If you don’t comprehend what he’s saying (you Brittany obviously get it) you have no business being an investor.  It pays to know when to just hire an independent financial advisor and do what you do best.

In my 45 years as an active investor across real estate, businesses, commodities, and almost everything else I’ve developed a few “rules” that I believe should never be violated

1. To have a chance for success in any particular investment type, the investor needs to understand the fundamentals related to that type of investment.  In real estate that means real estate principles, finance and law.

2. NOBODY cares as much about your money as you do

3. Many investments that seem to promise higher than market returns do so because of higher than market risk. It’s the risk ADJUSTED return that’s key.  If you don’t fully understand this you’ve got more education necessary before becoming an investor.

4. Direct participation, active investing, extensive time commitment, etc. are NOT the only way to successfully invest.  For example, index funds could be a no brainer for investing in the stock market.  In 2009 I determined the best ROI I could obtain with the least time spent and lowest risk wasn’t direct investing; I merely purchased REIT mutual funds, and tripled my money over the next 5 years.

5. For 99% of the people, for 99% of the time “mentorship’s” are either worthless or actually detrimental to investing success.

Bonus rule:  this applies to any investment or business that even HINTS at being a scam, below board, or ethically questionable - If you don’t know who the “sucker” is, it’s YOU.

Angie Castro · Answer

Hey Brittany! you sound sweet and I appreciate your vulnerability to ask about a method that interests you. My husband and I raise capital from accredited investors on a regular basis. Gator method is a fancy way of saying you are connecting accredited investors and experienced investors looking for financing. It might be hard to imagine but accredited investors usually have a hard time lending enough money. They tend to have 2-6 full time investors that lend from them but not everyone has to lend at all times. It's actually much more secured that people think. Our investors profit greatly from us and we profit greatly by being able to take more than 2 projects at one time because we have the capital to take more.

My honest recommendation to you is that before taking any big steps towards any new endeavors, please just understand it. If you can't explain to us what the GATOR method is and how it works then maybe you are not ready to make the financial investment to get it started. Those are just my two cents. If you are ever near Matthews and would like to stop by our office to ask some questions I'd be happy to help :)

Brittany Olson · Answer

Don, this is great. Thank you.  I have been at those REI meetups and heard the crickets, lol. I have friends who are hard money lenders, and the rates were a no for me as a first time RE investor. I have Mutuals and Indexes- I have always played it safe, however, I've waited way too long to invest in Real Estate. I've purchased homes for my own residence, but never an investment. Appreciate the advice here!

Jason Dillard · Answer

Correct, you as the "lender" have to control the contract as the buyer.  There is risk that the parties won't agree to return the cash held in escrow.  There is a risk that escrow agent will steal the cash.  Every transaction has some risk.  I'm just saying it can be done while mitigating the risk.

Jason Dillard · Answer

If you control the contract, and the money is refundable, your money is not at risk.   BTW I don't know Gator.

Brittany Olson · Answer

Thanks for your insight, I didn't realize that's what it was- I wasn't 100% sure of the method, and knew it was in the "too good to be true" category, but that's a whole different presentation there of what this method really is. I thought it was securing funds FROM private lenders to cover deals for investors- make a deal and get a cut. But this pretty much explains how that works. Thank you! Interested in anyone else's opinion, but you definitely rested my shiny object problem.

GATOR method people?

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