Money is somewhat a complicated matter if it involves close friends or families, especially if you’re the one who is borrowing. Today, foreclosure specialist and real estate broker Darlene Coquerel talks about turning your friends into your private money lenders. She gives tips on what to say, how to present multiple options, and how to think outside the box in such a situation! Lastly, you will learn how to make it and provide a win-win situation between you and your friends. Tune in to learn more!
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How To Turn Your Friends Into Your Private Lenders By Darlene Coquerel
How are you?
I’m excellent. Thank you so much. I’ve been here since the beginning but it was not 7:00 AM. I commend you guys. I tell you. I put these on and Stacy, thank you so much for putting these on. You have no idea what it takes to get all this going and get it all together. What a great resource and I’m sure if anyone here has ideas for Stacy for another type of summit, send them because I learn when I’m speaking with you here. I try to attend as many of them as I can while we’re here that day. I’m so glad I was here early because I got so much already.
Back in the day, a lot of people ask me, “Why did you start the South Atlanta REIA?” The truth is I started it so I could be in front of everybody all the time. I got to hear so many amazing speakers and stuff that it’s the same concept with REI USA. I get to hear all this stuff all the time and it keeps me up to date too.
I’ll tell you a little bit about my story with that too. I don’t have any nice presentations as these guys did, but I have a lot to say always.
Tell us also what you think about the market too.
I normally have a PowerPoint. I didn’t do it. For 30 minutes I thought, “I got a lot to say. Let me use this form here.” There are so many different ways to raise $100,000 in 100 days. You might have started and gone, “That’s not what I was expecting to hear, but short sales and wholesaling, what a great idea.” I’m going to spend time here so be ready to take notes or screenshots. My email is Support@DarBuysHouses.com. I’ll send it out to you. If you want a copy of what this is, there’s going to be some good resources of money people on here so I’m going to go ahead and do that.
To talk about how to fund your deals, Stacy started this morning about talking to your friends and getting them to be private lenders. You have no idea that some of you have money sitting there and doing nothing with it, but you don’t know how to do real estate yet. You have to build your alliances and build your networking. I am not a born extrovert. I had to work hard to get to the place to talk to you guys and to talk to strangers. I know a lot of you here and you go, “No, Darlene. You’re kidding.”
Thirty years in real estate had gotten me to the place where I can speak here very comfortably. I could shoot from the hip, but I don’t have to have everything prepared in advance, although I’m very prepared. I’m that kind of person. I started selling encyclopedias for five years back in Buffalo, New York in the “80s when the steel industry was shutting down. Four generations in the steel mills didn’t think that their kids needed education. It was a great learning experience.
Real estate is marketing, sales, advertising and networking. It’s building your dream team. I thought about it from the perspective of just getting started because it’s tough to listen to Mike and Mike, Darlene, and all these people who now after many years, I’m going to tell you how I funded my deals, but you’re just getting started. Let’s look at it from both perspectives, but specifically for you on what to do. I’m not going to go into talking to your friends right here, but you do need to have a presentation or an elevator speech as they say.
You do need to somehow bring it up in conversation. I say to my students that there are five easy steps to get started. Go get some business cards. Flamboyant green, pink, orange, purple, red or whatever color and big fonts that say, “I buy houses in any condition and any area. I close fast. Here’s my number.” Get 250 cards. Get rid of them as quickly as possible. What’s the address? When can I come to see it? Go look at those properties. Tell the owner how much you love their house no matter how ugly it is and then say, “Let me go call my partners. I love your house. Let me see how I can make the numbers work.”
You run back and you call your dream team. Call your network or get on the Facebook group here and say, “I found one. He said, yes. He wants to sell it and here’s what he wants. I don’t know what to do now.” I teach my students to memorize the fair enough script. When I was selling Encyclopedia Britannica, I was introverted. I was crying. I was doing everything not to knock on the door, not to get on that telephone call and set appointments. I was bad at it but they’re training taught me to memorize.
Friends As Private Lenders: You have to think about what your passion is and what about real estate will click with you. That’s where you got to go.
I have brought that to real estate until you guys memorize some sort of fair enough script. You don’t need to know everything to get started. It took me a year to do my first deal because I had no idea what real estate was. I didn’t own a house. I didn’t know what to do. I’ve had a lot of sales background. I got Napoleon Hill’s Think and Grow Rich. I got Carleton Sheets How to Buy Your First Home or Investment Property with No Down Payment, and it still took me a year to get my first contract closed.
It took me time to get together, start networking, going to seminars, and joining real estate investor groups and that changed my life. It still took time. You’ll see a little bit about my background. To answer the market question, Mike, the short sales specialist loved your presentation and he’s absolutely right. ATTOM Data is the place to go, and Black Knight, to read the market conditions. Look at those guys. They’re some of the biggest analytic data gatherers out there. Watch what they’re telling you and that’s how you know what’s going on.
I have a chart. I’ve done foreclosures consistently for over twenty years and there are three stages. There’s buying them directly from the seller and pre-foreclosure. There’s buying them at the courthouse inside or outside, depending on if you’re in a judicial or non-judicial state. That’s stage two, foreclosure. You need all your cash to buy them there. Post foreclosure is buying directly from the bank REOs. Every one of those requires a different outlay of how you fund that deal. Primarily, I’m going to talk about that but this will apply to all types of deals. We’ll go through that.
From 2000 to 2022, I can show you the graph of foreclosures. In 2000, that was way at the bottom. In 2007 and 2008, the market crashed. In 2009, 2010 and 2011 were the top of the market and then it came crashing back down in 2019 pre-pandemic. 2020 and 2021 were artificially below the line. We’ve had the lowest number of foreclosures ever because of the pandemic, the moratorium, and the forbearance. If you haven’t seen the first presentation of the day, go back and watch Mike’s presentation. He’ll show you some of those graphs there. We’re back on the rise.
I’ll talk about Georgia. I’ve been part of big teams. We bought and sold. I was brokering over 4,000 rental properties that we turned around and sold the Blackstone in 2013. We bought them and fixed them. We put tenants in them. We sold them turnkey to overseas investors. My first deal took me a year by the way so I jumped all the way up to the wow stage. That was 2001. Fifteen years later, I jumped up to the wild stage, but we were buying, fixing and flipping thousands of properties in several different states.
In Georgia, we went from less than 20,000 foreclosures a year in 2000 to over 200,000 foreclosures a year in 2010. That decade went like that and now we came all the way back down. In 2018, 2019 and 2021, we’ve had somewhere between 8,000 for the entire state of Georgia up to 20,000 a year, which is ridiculously low. In the last 60 days, we’ve seen the foreclosures double already, but that’s not saying a whole lot because we had such a low number.
In the state of Georgia, from March 2020 through January, February, March and April 2022, there were less than 600 a month in the entire state. May 3rd, 2022 was the foreclosure auction for May and then April 5th, 2022 was the foreclosure auction. On April 5th, 2022 we had 1,203 foreclosures for the entire state of Georgia. On May 3rd, 2022, we had 1,180 foreclosures in the entire state.
For the decade prior to that, one county had that many or three times that many at the height of the market. I know that foreclosures are going to go up. I read and listen to the media and I don’t agree with what a lot of the media thinks. There’s not going to be a foreclosure tsunami. There’s a long conversation for all that, but from where we sit as individual investors, foreclosures are on the rise without a doubt. You got to be prepared. If you’re brand new in the business, it’s tough to get some momentum.
Going from South Atlanta REIA to REI USA, you have no idea what a goldmine you have in this mastermind group. This is your business and to be the business owner, how do you even know where to start and where to go? You have to commit and it’s difficult. You have to draw a line between the balance of keep spending money on people’s seminars and materials, and getting out there and doing a deal. You got to find the right people as Mike number two said. You have to be careful who you joint venture with. You have to be careful who hook up with.
Stacy is such a giver. She gives back. She gives so much for what you’re getting here, and the people that she surrounds herself with like us, the teachers are big givers also. There’s all that. Again, getting started in the business and how to make it easy in a win-win situation. When you’re trying to get somebody to partner with you, generally speaking, and let alone give you money to be your partner, you need to make it easy. You need to make it a win-win situation.
Many times new investors approach me at some of these events and they say, “Let’s joint venture.” I say, “Tell me about your skillset. Tell me what you’re bringing to the table.” “I don’t know. I’m just getting started.” Why would I want to partner with you? Again, Mike was building his executive summary with his permission. Take that executive summary and create yours. You’re just brand new. It doesn’t matter. Start with something. Create an executive summary.
[bctt tweet=”Real estate is marketing, sales, advertising, and networking. It’s building your dream team.” via=”no”]
Who are you? What’s your superpower? You may have been a nurse. You may have been in the military. You may have been an educator. You have something. Everything leads to real estate. No matter what your superpower is, no matter what your heart’s desire is, it pertains to real estate and you have to figure that piece out. There are some things in real estate that I absolutely don’t ever want to do again and there are things I love. You have to think about what is your passion and what about real estate that it’s going to click with you. That’s where you got to go. When you’re just getting started, you have to get your ducks in a row. Where’s the money coming from? How do you write a contract? How do you do your deal analysis?
You got to know your exit strategy. It’s called reverse engineering. You can’t make your offer without two important elements. Number one, what’s the seller’s situation? Why are they selling and what’s the problem you’re going to solve. Number two, how are you going to make money with this? What’s your exit? Do you have to wholesale it because you have no money? Do you have to do a double closing or do an assignment fee? Do you want to fix and flip it or do you want to buy and hold and make cashflow every month? You have to figure that out. That first little paragraph right there is to get your training to figure out all of the answers to those questions.
I told you that my first deal took a year on my own. It was a horrible experience. I don’t want you to have to take that long. Once I started networking and joining investor groups, and this is what I was saying when Stacy said that the reason she does this is to get in touch and be around all these other amazing people. I volunteered at the local REIA since 1993. By the way, I hate crowds. I hate talking to strangers. I’m not good at shooting from the hip without working in the avenue that I’m trained in. I’m doing all that to make myself be there. I didn’t want to be there, but I needed to be there so I volunteered. By volunteering, I got to go to some seminars for free.
All that was really good and then I got some partners. I learned what my strengths were and I learned what my weaknesses were. I hitched my wagon to somebody whose strengths equaled my weakness. You have to have a personality match too. It’s very difficult. You got to make sure you can work together. I do want to caution you. When you’re buying and holding properties, it’s not a good idea to partner with somebody you don’t know. There are exceptions, but you’ve got to get past that learning curve of who you are and who they are.
Someone said earlier too about you want silent partners or you need to be the silent partner. If you’re a money person and you’ve got a $100,000 or $1 million, be that silent partner, but be smart. Don’t just put up your money and you’ve got a high risk. There’s such a balance to figure it out. The most important thing I’m going to tell you is to build your dream team. You need 2 or 3 good real estate agents on your team. I’m a real estate investor. I also got my license back in 1994. I’m a broker. I’ve brokered in many different states. I share all my revenue with all of my partners and all of my team. We build adult revenue.
We used to pay W-2s by the hour. I paid VA’s and virtual assistants by the hour, but nobody else gets paid by the hour. Nobody gets paid to show up anymore. Everybody gets paid based on profit and results. We’re talking about raising $100,000 in 100 days. One of the most important things you need to do to build your dream team is interview several different money sources. Interview people with money. As we go forward through the end, hopefully, that’ll make sense to you and you’ll figure that out. Interview everyone for potential money partners for private lenders. As it has already been said, you would be surprised at who has money sitting there and they wanted to make money real.
Real estate is a really good investment when you know what you’re doing. It’s a solid tangible investment. There’s always something there versus investing in the stocks and the market crashes when you know what you’re doing. We got to be able to attract people with money as long as you know what you’re doing. You need credibility. In the beginning, one of the hardest things to do is to build your own credibility. Everybody on my team when they’re out there marketing says, “We help with marketing pieces. My team has been helping families facing foreclosure for over twenty years. What’s your situation? Tell me what happened. I’m so sorry to hear that.”
We keep on talking, “Tell me what happened.” When we were dealing with direct to seller pre-foreclosure, “We’ve been helping families in your same situation for over twenty years. Tell me what happened. What do you want to have to happen? Are you trying to walk away from the foreclosure or stop it so it’s not on your record? Do you want to keep your house or are you trying to get the highest dollar you can for it? We can help you in any of those cases.” As Mike said in short sales, we don’t charge anybody upfront. We don’t add salt to a wound. We help a lot of families keep their houses and we don’t make money at that moment. Hopefully, later they come back to us or they send us other people. You need several sources. One thing you’ll learn very quickly is that not every source will fund every project.
They’re not going to agree with you on everything. It’s tolerance. Our tolerance level is very individual. You need to find out what their tolerance level is. There is short-term, medium-term and long-term money. You have to identify if your source is looking for a short-term return or a long-term return. Be realistic. Why would someone want to back your project? As I was saying, “What do you bring to the table? What’s your superpower?” One of my favorite people on here is Angela. I love Angela. Anything that Angela and I could do together, I would love to do.
You just have to find people that you connect with like that. You figure out who’s got what? Who’s handling what? What you want to do is first find those connections that you’re drawn to and you feel you’re like-minded. That’s very important. Funding in all three stages of foreclosure. Here are stages 1, 2 and 3. Let me start there. I should have put that first. Pre-foreclosures is dealing directly with owners. We call this direct-to-seller. Foreclosures, you’re buying directly from the courthouse steps, inside or outside the courthouse. Post-foreclosures, you’re buying directly from the bank.
In funding, we’re going to talk about those and oftentimes, I need proof of funds or POF. One of your next most important steps is to get some proof of funds letters. I have proof of funds letters from at least two different hard money lenders that say that I and/or my LLC have a $1.5 million line of credit. It simply means that these guys are willing to lend me a whole lot of money based on the merit of the deal. That’s because I’ve known them for a very long time. We’ve done deals together where they funded my deals and I pay them off typically in four months or less, sometimes as long as seven months. I don’t think I’ve ever personally had a hard money loan that I didn’t pay off in seven months or less.
Friends As Private Lenders: Real estate is a good investment when you know what you’re doing. It’s a tangible investment. There’s always something there versus investing in the stocks and the market crashes.
My model is I want to turn the money twice a year. I want my project not to take from the purchase and the acquisition to the disposition. These are flips or wholesale. It doesn’t matter. I want my project to be completed, bought, fixed and sold in six months or less. That’s my goal. Sometimes it takes longer. Sometimes it happens faster.
Proof of funds. You need to start interviewing and I’m going to give you some resources. You need to get proof of funds letters, “John, I got your name from Darlene and she said to ask you for a proof of funds letter.” It’s that simple. “Hi, John. Darlene Coquerel, Queen of Foreclosures, said to ask you for a proof of funds letter.” The questions then start and the process starts. Don’t be afraid for somebody to pull your credit guys. If you know your credit, you say, “Before I get you to pull my credit, let me find out what it is you guys do. What you offer and whether or not I want to move forward.”
You need to prepare and have proof of funds letters in order to be considered a strong performer when you put an offer out there. That’s the most important thing. Financing and pre-approval letter is the same thing. If you’re going to buy and hold, then you need to talk to some investor-type loan lenders that typically going to say, you need 25% down. Be prepared and you need to get a pre-approval letter. You need to find out what is it that they require in order to fund the rental property that you’re just now purchasing and you have no seasoning. You need to find out what the seasoning issues are, requirements and those things.
In private funds, I can promise my partners a 15% or more annualized return because I turn the money twice a year. I try not to pop the tops and that means taking a 1954, 750-square-foot house and adding a second floor. I try not to do those deals. If I do them, my partner needs to be the expert in that area geographically and be able to handle that renovation because I’m not going to do it. Figure out what your model is. When I ask people, I say, “I want to go to the steps. I need $3 million to deploy $1 million. I want to go to the steps to buy foreclosures. Here’s the plan. We’re going to wholesale them, flip them or put a tenant and sell the rental property.”
The reason I say that I can give them 15% or more annualized and I’m going to get the same thing is because if I turn that money twice a year, each deal that I flip, I’m only making 10% to 15% net profit. If we do two of those, that’s 20% to 30%. We target 15%. Sometimes we miss it and get a little bit. Oftentimes, we would make a lot more than that. That’s what I promised them. I would give them at least a 15% annualized return. Where else can they get a promise like that? I’ve got a track record.
Again, go back to your dream team. Something you learn early on is sometimes you need to partner 1, 2, 3 or 4 deals before you can do your own. If you haven’t done any yet, I’ve got one student in Pennsylvania and he’s partnering with me down here in Georgia on pre-foreclosures. He’s been in my coaching program for two years now. On his own, he did zero deals. Together, we are on deal number five and he is so super happy. He’s more of a passive partner.
He’s semi-passive and learning everything along the way. I suspect next year, we’re going to have a different relationship where maybe he funds deals and we bring all the boots on the ground to the table, or he goes his own way and he knows enough how to do it on his own. It’s important to find those partners and figure that out. OPM, Other People’s Money and IRAs. They want to invest. They cannot invest in their own business. They need you. They need your deals to invest in.
This is a big subject right here, creative deal structuring. Stacy has a lot on her website in the member’s area to do some studying on this. When you don’t have money, you learn how to do seller financing, subject-to and joint venture with money partners or leverage other people’s properties. You could do lease options and options. Partner with the seller. We had two closings. One is a subject-to deal down in South Georgia and it costs us $13,000 cash and we’re taking over payments. That’s subject-to.
The second one we just did, the guy said, “I want $270,000 all cash at closing.” We ended up doing $235,000. We gave him $40,000 cash at closing and we got him to do a wraparound mortgage and take 25% of the net profit at closing. We both took some risk on that deal. I don’t want to take all the risks. Wholesaling and double closings where you can use transactional funds. In some cases, you don’t even need your own funds. You can use the buyer’s funds. Wholesaling assignments and things like that. Lots of good opportunities there that you have to learn how to get good at.
That’s it in a nutshell. Do you have any questions or comments? All I have left is I do have resources for you. Rick Girgis is here locally in Georgia, but I know he does Georgia and Florida for residential properties. All states, if you have a commercial property. Here are some folks that will give you referrals. I know Jamie. Jamie and I have done several subject-to deals together. Sometimes what you do on the front end is creative financing and you turn around and refinance it with somebody like Rick.
AHP Partners will do a couple of different states. I don’t know how far outside of Georgia they’ll go but touching states such as South Carolina, Alabama, Florida, Tennessee maybe and North Carolina. I do a lot of business with Atlanta Home Partners. You can email me a copy of this if you want.
[bctt tweet=”One of the hardest things to do is to build your own credibility. ” via=”no”]
Visio Lending, you can see they’re out of Texas. They do 30-year no-doc landlord loans. This is a good loan. If you’re buying and holding, you want to get in contact with people like this. This is a moving target. Now, we’re in the process of interest rates going up. You got to constantly contact these folks every 3 to 6 months. A 30-year, no-doc loan, 75% loan-to-value cash out to 30-day seasoning. You have to ask them for all those details. This is some of what they do. Cogo Capital is a private money company here. These guys do Airbnb and no-doc loans. If you’re going to buy an Airbnb or you’re going to create an Airbnb, long-term rentals, no-doc loans.
There was a time when no-doc loans went away so they’re back. These guys do anywhere from $100,000 to over $300 million. Stratton Equities, no-doc rental loans. Hard money, non-qualifying. No upfront fees. Fix and flip, starting at this rate and rental loans starting at this rate. All kinds of options. That’s what I wanted to do. It’s to be able to give out a lot of good stuff and then there’s me, Queen of Foreclosures.
We look at deals in all areas. We’ll joint venture. Typically, my preference as a joint venture is 50/50 together, but it could be 75% to you, 25% to us or 25% to you and 75% to us. We’re really easy to work with. It all depends on what you’re bringing to the table. Bird-dog fee, sometimes we get Uber drivers and we get meter readers. We get those guys that go out there and put out flags that say, “Call before you dig.” Drivers or even Postal Service. These guys know where all the vacant properties are.
If you want to start here and you’re afraid to do your first deal, we’re happy to do that but we prefer to try to at least get you here. I’m going to push you to stay in the deal. We’ll do almost everything and give you 25% of it. If you have a tribe, we can create your campaigns. Some of you speakers, for example. My website is UltimateForeclosureFormula.com. We do have free preforeclosure leads there. If you go to the homepage and click on Services, here’s where you go to Preforeclosure Leads. We’ll give you 100 preforeclosure leads.
In Georgia, you just put your ZIP codes in here. You can put as many ZIP codes on a line as you want. We’ll send you everything. That’s what you do for Georgia. If you’re looking for other areas, you go to our website. You click on Services and on Preforeclosure Leads. If you’re looking for other areas, go in and put your information in. Another thing you’ll notice when you click on Services is Free Consultation. If you guys are really ready to be in the business, I’ll spend 50 minutes on the phone with you. Feel free to just click on Investor Consultation. It will bring up my calendar. Whatever you guys need, that’s the best way to reach me. I got one more exciting thing and I know we ran out of time.
You could grab this QR code. If you’re getting started, we created an opportunity right here for you guys and that is if you go out there and find vacant properties and you’re willing to put your email address in here and all the information, we’ll skip trace it. These are ones you do not have the seller’s information. We’ll skip trace the lead for you. We’ll provide you with phone numbers and email addresses that you find. We’ll even send out the first couple of text messages and emails to see if they want to sell their house.
We spend a lot of money to do this. We’re in beta mode so we’re not charging anybody for this. We would love to have a finder’s fee or be part of the deal with you. We rolled this out with our first door-knocking event. We wanted to make it available. Support@DarBuysHouses.com is my email. Get some pre-foreclosure leads or go out there and start driving for dollars and find some deals. We’ll work them with you. It’s huge. I’m so excited that we finally got this up and running.
In the future, we’ll be charging monthly for that service that we’ll do the skip-tracing. We’ll do your text and email campaign, and all that. Finding the money, sometimes to do your first deal or two, be that person that comes along for the ride but we don’t take deadbeats. There’s nobody out there if you call Mike Watkins or David. You’re going to have to do something to get that partner’s attention to want to be on board with you.
Tell everybody real fast, Darlene, when you teach for REI USA too.
It’s the Ultimate Foreclosure Formula. We go into all the different stages of foreclosure. It’s the fourth Tuesday of every month at 7:00 PM Eastern time. Bring your deals. We’ll do deals. We’ll look at deals together. I have office hours with my team and with my coaching. We have office hours on Friday mornings and Tuesday afternoons. We get on the phone with lenders and sellers. We get on the MLS and we start crunching numbers. We look at offers and contracts. Whatever it is you need, we could do that. I’m going to do auction bidding in the next session. I’m going to do the REO stage three auction bidding.
Thank you so much for hopping on.
Important Links
- Support@DarBuysHouses.com
- Darlene Coquerel
- Think and Grow Rich
- How to Buy Your First Home or Investment Property with No Down Payment
- ATTOM Data
- Black Knight
- AHP Partners
- Visio Lending
- Cogo Capital
- Stratton Equities
- UltimateForeclosureFormula.com
- Preforeclosure Leads
- Free Consultation
About Darlene Coquerel
Darlene Coquerel, Queen of Foreclosures and Founder of Ultimate Foreclosure Formula has been investing in real estate since 1991. She got her real estate license in Georgia in 1991 and is successful in all aspects of residential real estate. It took Darlene a year to get her first property under contract and she’s been working with foreclosures in all 3 stages ever since!
In 2014, Darlene was the recipient of the Platinum Investor Award from Auction.com when her team acquired over $75,000,000 worth of houses that year from the auction.com online platform. Darlene rolls with the punches when the market changes and focuses on the stage of foreclosure to go along with the market conditions. She is currently focusing on buying Preforeclosures, direct from homeowners, Foreclosures when there’s no moratorium and she will buy REO’s direct from the banks when the foreclosure tsunami hits again! Darlene serves real estate investors worldwide who want to Find Motivated Sellers, Close More Deals and Make Money in 60 days or less!
Darlene currently resides in Atlanta but invests in all markets where the numbers make sense. Her superpower is to facilitate a super team and is always looking for new players to add to her team.