Ten years ago, you couldn’t put on late-night television without stumbling across a real estate infomercial…

The market was booming then. It seemed like everyone was “fixing and flipping” their way to instant riches. “You too could get into lucrative property deals for not one cent out of pocket…”

What a difference a decade makes. The market crashed. Lending standards tightened. And the infomercials went away. There were incredible deals available in the wake of the bust… if only you could finance them.

In the piece below, Mark’s brother—master real estate investor Justin Ford—explains how the lean times of the bust taught him to structure fantastic real estate deals using other people’s credit. As you’ll see, you can do it too…


Most people may not know it, but you can use someone else’s credit if they’re your partner. And yes, using their credit is worth something considerable. I’d say 30-40% of gains and distributions.

When I started out, I was the sole borrower on a few projects and got no extra compensation for it. Bad idea. I tied up some of my balance sheet, used up some of my Fannie Mae loan allocations, and put my credit on the line. My partners got leverage without credit risk or providing a personal guarantee. These deals all worked out, but I realized it was unfair and caused me some inconveniences later.

I maintained a perfect payment record on all my mortgage loans, so my credit was always good for any real estate loan I sought. But the best loans are Fannie Mae loans. These are loans that meet Fannie’s guidelines, so the lender can sell them to Fannie.

Because of the enormous volume and virtual guarantees of purchase by Fannie, these loans have the best terms in the market place. But there is a limit. You can have just 10 Fannie loans as an individual. (I think it’s 11 if you count your home.)

Well, I did 10 Fannies… and then more non-Fannie loans. I paid them all on time with the cash flow from the properties. But even though my track record was perfect, after the bubble burst, I couldn’t use Fannie loans anymore.

Never mind the perfect track record… I had used up my allocation. Being the sole signer had cost me new deals, without any compensation for it.

(Ironically, at the same time, I had no problem getting over $5 million in commercial loans on commercial buildings at rates of 4-5%. But that’s a story for another day.)

Long story short… there was one great residential property I wanted to pick up. But despite great credit, I had too many loans. So I approached a partner. I had her put up $800. The total deal cost $80,000. I put in about $25,000 of my own cash. So my partner got the loan and put up 1% of the capital… and in return she got 30% of the deal. That’s 30-to-1 leverage on a dollar-invested basis.

It was a great deal for the partner and for me. She put in $800 and has received over $2,000 in distributions in three years. Her share of capital gains amounts to about $12,000. That’s over a 1,500% return based on the cash she put in… in just over three years.

Have one partner qualify for the loan. He or she gets a greater ownership share thanks to the loan contribution. It’s worth it because, between two people, you could do up to 20 Fannie loans rather than only 10 (if you both cosigned on each loan).

Bottom line: Have a partner. Your partner supplies competitive financing for the deal, and you compensate him or her accordingly. You get an ownership stake in a cash-flowing property, on someone else’s credit. It’s a tremendous “win-win” setup.

Regular Daily readers know Mark’s largest asset allocation beyond his businesses is real estate. He’s partnered with his brother Justin on several of his best deals… and the rent checks keep rolling in.

Thanks to a recent change in federal law, you can now invest alongside Mark and Justin in some once-in-a-lifetime real estate deals. We’re calling these off-Wall Street investments the “DealBook.”