One of the key parts of buying an apartment building is raising private money, whether it is for the earnest money if you are wholesaling, or for the down payment and repair cost if you are turning the property around, or buying to hold.
After getting your offer accepted, posting earnest money is the next benchmark to hit. In most situations you have about a week once your seller signs the Purchase Agreement. If you don’t have private money sources on tap, ready to call when the time to post earnest money arrives, you will be unable to post earnest money and your contract will be null and void, right as you are getting started.
Not good. In fact, this minor conundrum is enough of a mental obstacle that it keeps many starting Apartment Entrepreneurs immobilized and not making forward progress on their initial deal.
Because the prospect of raising private money contains a bundle of fears that is right up there with fear of public speaking. Fear of embarrassment, fear of looking stupid, fear of rejection, fear of feeling hopeless, fear of feeling like an idiot, you name it. Every blind fear there is raises it’s dark, insidious head the minute the prospect of you raising private money is entertained.
Wholesaling apartment buildings is an amazing opportunity. You leverage multi million dollar transaction values, slice off five and six figure assignment fees, all without taking any risk or using any of your own money.
In the early stages though, there is a lot to get your head around. In the world of project management, it’s well established that if you have to learn more than one new skill during the course of executing a project, your chances of successful completion start to go down.
This is definitely the case with apartment wholesaling, and it illustrates quite neatly why the first deal is the hardest deal to do. You are learning how to find deals, how to negotiate with sellers, you are learning how to raise private money, you are learning how to qualify buyers, and shepherd them through the closing process, all the while dealing with your own fears and maintaining a “can-do” mindset.
When you look at this way, it’s not a surprise that, most people struggle getting their first apartment deal done. There are a lot of firsts you have to achieve, and an unforgiving time frame in which to achieve them.
One way to lower the bar though, and increase your overall chances of succeeding, is to break the doing of the deal down into separate parts, and assign the accountability for producing a result in each part to another person. This can be a partner, someone in your network, it can be another Apartment Entrepreneur.
A healthy economy makes everybody happy; in society, in business, in government. In a healthy economy there are plenty of jobs, everyone has disposable income, business thrives, and there is plenty of tax revenue for both political parties to implement their pet agendas. One could also hope there would be less need to borrow so much money just to fund the government Budget each year as well.
But what’s wrong? Why after so long are their so many people still out of work, notwithstanding the faux Recovery and the “prosperity” that no-one can seem to identify, at least in their own lives, nor in the lives of most everyone they know.
The answer lies in a common mistake. Tragically for us, this mistake is being made by the Federal Reserve.
The mistake is, confusing correlation with causality.
For forty years now the Federal Reserve has attempted to stimulate the economy by loosening the money supply, which lowers interest rates. The economy has generally responded, though increasingly more slowly in successive downturns since the early 1970′s, to the point of where we are today, five years after the financial crisis crashing the economy. The Federal Reserve is still pumping $65 Billion into the economy every month, though it is failing to move the needle on job creation and unemployment.
We are finally learning now, at the end game of Federal Reserve economic intervention, that loose money supply is only correlated with job creation and economic prosperity, it doesn’t cause it.
The evidence is there for all to see. Three Trillion dollars of U.S. Currency put into circulation since 2009, and real wages have fallen, middle class America is shrinking, and government assistance is needed by most families just to get by.
But if the Federal Reserve trying to fill the ocean with money does not create jobs, what does?