Alan Cowgill:
Now I could have lost that deal. You know fortunately the guy hung in there, the seller, and I did the deal, but what happens to me today is I can get a property, an offer accepted on a property on a Monday and I can own that property on a Friday with a private lender. So I mean it's just a different world. I'm not sitting out there waiting. You know today I'm the loan committee. I make the decisions on whether I'm buying it or not and the money shows up. Another lesson learned – I was going to share some lessons learned with you – another one is is you don't have all your eggs in one basket. And what I mean by that is a lot of real estate investors go out there and they get a relationship with – or they think they've got a relationship with one bank or they got a relationship – they finally find a hard moneylender and they think they've got a relationship with them – and everything is riding on whether they're going to get approved and every time they want to do a deal they gotta step up and ask again and beg again for money. In my case I've got a number of private lenders and if one person won't loan the money I just go to the next person.

Jeff Adams:
The other thing too I bet Alan is that you can offer to close all cash in seven days or less, right?

Alan Cowgill:
Oh, yeah and that's huge.

Jeff Adams:
Which is – that's a huge incentive.

Alan Cowgill:
Yeah, one of the things that is happened to me is the fact – and I'm glad you brought that up – is that the – I have, you know, the conventional wisdom is the highest bidder gets the deal, gets the house.

Jeff Adams:
That's not true.

Alan Cowgill:
And that's not true. Because when you can close in five days all cash no contingencies, I beat out people and get the offer accepted because the lending institution, let's say it's a bank, and a lot of my deals are REOs, bank-owned houses, they'll give me the deal because they know I'm real. And I can close and they don't believe that the person that outbid me has the wherewithal to put it together and get it done.

Jeff Adams:
Yeah, exactly. Let me ask you this, Alan, when you structure your private loans do you make monthly payments to your private investors?

Alan Cowgill:
Good question. The way I started out was yes. When I did this in early 2002 I did that. I made – everybody could pick. They'd either get a monthly payment or a quarterly payment. And the reason I did quarterly payments was my thought process was that I'd buy a property, I would fix it up, and my exit strategy is either rent to own or land contract, which we can do – in Ohio contracts are deed for other states. So that was my typical exit strategy.

Well, my – the three months that I put in there would be to give me time to get the place rehabbed. And what happened to me as my education increased on this and I realized that I could handle things different, I realized that some private lenders would be happy not getting those monthly or quarterly checks. Some private lenders were okay if they'd let the money accrue and they'd get paid when I get paid, which is when I sell the property. So what I – I made a change here a couple of years ago and I started to offer private lenders an option: they could either get payments and I'd pay them 10 percent interest or they could let the money accrue and I'd pay them 12 percent interest. And what I found out was 50 percent would take payments and 50 percent would want the money – let it accrue.

And I told you here a little bit ago that I bought 48 houses and half of them without payments and that's exactly why. I let the private lenders pick how they wanted the money to be handled.

Jeff Adams:
Well, you know, Alan I don't know if you remember or not, but two years ago you gave me that tip. And I started using that with my private lenders and what I have found to happen is they at first want the 10 percent and after you close is, at least my lenders – you close a couple of deals with them they want the 12 percent.
Alan Cowgill:
Yep. Isn't that something?

Jeff Adams:
It works out great.

Alan Cowgill:
Yeah. Yeah, you – yeah, you know what? That really makes you some money, too. You know, they like it because they don’t have to fool with the checks but then it really helps cash flow, doesn't it?

Jeff Adams:
Yeah, absolutely. So, do you give everybody the same amount of interest?

Alan Cowgill:
No, I do that 10 and 12 percent, and one of the things we started here about a year ago was to incentive people to put more in. You know there might be some folks out there that have oh, let's say, $40,000 that they loan to you; well, what we wanted to do was get people to at least have $50,000 so we put an incentive program in that if you got $50 with us then we'd pay you 15 percent.

Jeff Adams:
Okay.

Alan Cowgill:
So I'm at 10, 12, and 15.

Jeff Adams:
Okay. So are all your private investors all in your local area?

Alan Cowgill:
Yeah. Yep; they're around here. Now I had a guy in California today offer me just under a third of a million dollars and I live in Ohio and I'm going to pass on it because I've got all the money I need, and it's a really good feeling but yeah, they're all local here.

Jeff Adams:
That's a great feeling. So basically what you're telling me is you bought and sold 48 houses last year. You made no monthly payments until the properties sold?

Alan Cowgill:
Right.