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R AISING M ONEY

banks will be willing to loan you money. However, most new in-
vestors try to borrow money only when they need it. That’s a mis-
take. It’s when you don’t need money that banks are most inclined to
give you a loan! When your financial position is strong, their risk is
lower and you are an attractive borrower. When you really need a
loan, the lender will ask you why you need it and then reach their
own assessment of the reason you give. Don’t let banks do this. Don’t
let banks make business decisions for you; their business is lending
money not making real estate deals. They are conservative by nature.
Real estate investors are risk takers by choice.
Here’s a simple method of establishing credit that I have used to
great advantage. Go to a bank and ask to borrow $10,000. When
they ask you the reason for the loan tell them you want to be able to
make an investment when an opportunity presents itself. When the
bank asks for your financial statement (which you should have pre-
pared before your meeting and have with you) give it to them. To the
extent you have some asset that can be reduced to cash such as stocks,
bonds, or surrender value of insurance policies, offer it as security for
the loan even though the value far exceeds the amount of the loan
you asked for. Remember, you’re borrowing simply for the purpose
of establishing credit. One essential ingredient is that you always
have the right to prepay the loan at any time without penalty. Essen-
tially, what you want to do is, borrow $10,000, pay it back, then bor-
row $25,000, pay it back, then borrow $50,000, pay it back, and so on.
You want to establish a perfect payment record. If you put the bor-
rowed money in another account that earns interest, all you really
lose is the difference in the interest rate you pay the bank and the rate
you earn on the investment of the loan proceeds. Along the way, ask
the bank to return or reduce your security based on your excellent
credit record. If they balk, tell them you’re contemplating taking
your account to another bank that’s more flexible. If your loan offi-
cer says no, talk to his superior who will probably be more receptive

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