S.E.C. Real Estate Observer

• Tweet

• Tweet

Author’s note: In researching the materials Colby Sandlian provided me during my rewrite of the “Broker Estate Building” education program he and Cliff Weaver taught many years ago, I came across these little pearls of wisdom in Cliff’s old teaching materials. I think they provide a timeless perspective and a few chuckles in a far too serious world. They’re included in the new “Broker Estate Building” program Mark Johnson and I teach these days.

So, here’s a little “Weaver Wisdom” for your reading pleasure. Enjoy!

Establishing Banking Habits

Cliff Weaver, S.E.C.; San Jose, California

Opportunity does not usually synchronize with the amount of cash we have available, so what do we do? How do we prepare for the sudden opportunity?

It’s called borrowing and financing. Financing is the real acre of diamonds in re-investment. It is an absolute sure way to wealth if you know how.

The people you must learn to work with are called BANKERS.

Bankers for some unknown reason are looked up to as the real financial Wizards of Oz, or so most people think. Many people go to bankers for all kinds of advice; many fear bankers. Now, it’s time you learned to work with them. You must develop a relationship with at least one bank if you are to be successful and I am referring to a regular commercial bank.

Your first encounter with a banker: Dress well and don’t act like you need money. Ask him for the type of loan and amount that you know he can’t refuse, and explain your collateral carefully. For example, if you want $10,000.00, give him $20,000 in good security.

Important Things to Remember:

1. Explain that you need the money for business purposes, and that’s all.

2. Show how you will pay off the loan so if an emergency arises, you will still be able to pay it.

3. Do what you say or will do, make your payments on time.

Good Business Practice:

When you meet with your bankers, especially early in the game, bring him all the information he will need, protect him with plenty of back up information. For example, if you want to take a loan on a first trust deed, have a picture of the property, an appraisal, title report and copies of all related documents.

It it’s on stock, with a difficult to ascertain value, have a letter to purchase from a reliable individual with his financial statement. Have a guarantee for the outstanding amount of the loan.

The Second Encounter:

Remember when you return for money again, that you have made money for the banker and that is why he is in business. Remind him and then pay for lunch!

Borrowing Money

There are some basic things you need to understand when borrowing money:

1. Recognize that banks specialize. Some are noted for auto loans, some for small business loans, some for real estate financing, etc.

2. Recognize that bankers, as all other people, are normally specialists only in one area (like saying no). Don’t talk to the corner store banker about a complicated transaction. Go to the man who is familiar with complicated deals and knows how the bank can profit from getting involved.

3. How much should you pay to borrow a Bank’s money? Only enough to get the loan! Negotiate to your hearts content but play the game by the rules.

4. Here are my ideas of the “Qualifications of a 100% Borrower”:

• If your statement shows a healthy ratio of fixed assets, increasing cash to liabilities.
• If you security or collateral is unimpeachable.
• If your ability to repay is in stated amounts and at stated intervals is unquestioned.

Weaver’s Wisdoms:

BANK STOCK

Nothing warms the heart of a cold banker more than seeing his bank’s stock on your financial statement. You must be intelligent and worthy of making a loan extension if you are smart enough to invest in the bank!

A BUCK’S BUCK

One day an Indian came into a bank in The Dalles, Oregon. “Me want $200,” he said.
“And what security have you?” asked the banker. “Got 200 horses.”

This seemed sufficient security and the loan was made. A month later the Indian was back with $2,200, paid off the loan and headed for the door with the balance of the money.

“Why not let me take care of the money for you?” asked the Banker. The Indian looked him square in the eye and asked, “How many horses you got?”

BANKING

A few hundred years ago, when a man put money in English Bank, his deposit was recorded by notching a stick. The stick was then split, the bank keeping one half and the depositor keeping the other half. Before the money could be withdrawn, the two pieces had to be matched. The depositor’s half was called “Bank Stock,” whereas the part kept by the Bank was called the “Check.”

PRIME BORROWER

You are a Prime Borrower IF you can borrow at lowest rates…the rest of us are just a regular cut of meat to the Banker…