It's rare but every now and then in nature, three storms come together at the same time and same place. When they do, it's really catastrophic. It's called a perfect storm, like the movie with George Clooney. Right now, you and I are living in a perfect storm in the economic world. There are three things that are happening – right now – that are causing this perfect storm to occasion, creating what I believe to be the very best investment opportunity of 2009 and beyond.
The first one is the law of supply and demand. When there's an oversupply of anything, the price for it falls. When there's a scarcity of anything, the price goes up. Simple. Economics 101. There are so many bad loans available – right now – that the price is falling like a rock; which, for you and me, means a great opportunity. We can buy loans at a lower price than we ever could before and because there are so many of them, the price is coming down even further.
But that's just one of the storms.
The second is that the seller of these loans is not the owner. That means there is no personal or financial attachment to these loans. The seller is the FDIC, the Federal Deposit Insurance Corporation. They do not own the loans, they just took custody of them when banks got in trouble, and they are now selling the loans at a deep discount.
The third storm is the next election just over a year away. We had the Presidential election last year, and elected one-third of our Senators, and all 435 members of out House of Representatives. As you know by now, the Democrats will not be resounding by convincing America that they were going to fix all the problems bought on by the Republicans.
Well, next year, all 435 House members are up for re-election. If the current economic crisis is still going on, it will become the Democrat's problem. So the Democratic administration is going to do everything in its power to make this problem go away before the next election. So these three storms – the oversupply of inventory keeping the price low; the seller not being the owner; and the political pressure to hurry up and push all these bad loans through the system – are creating a perfect storm. This is one of those great and unique opportunities for everyday investors, including you and me.
But it's much bigger this time around.
During the Great Depression, it was a 5-billion-dollar problem. In today's dollars, that would be about 125-billion-dollars. The crisis in the 80s and 90s was about a 250-billion-dollar problem. Today's problem is measured in the trillions. The perfect storm brewing right now is creating such an opportunity that every one of us – if we choose to – can make more money than we ever thought possible.
Not only has the volume of loans increased – which makes it an even better opportunity – but now the financing options just improved. The FDIC has developed a new program that caters to the individual buyer, as opposed to the big Wall Street investors. I put this opportunity in two different categories:
1. Regular Opportunity : The regular opportunity is to just buy non-performing credit card loans from the loan brokers who are offering them for sale, and we show people how they can buy these for as low as a nickel on the dollar and settle with the customers for 10, 15, 20 cents on the dollar. That's the regular opportunity, and that's will last for another year or two, maybe three, if we're really lucky.
2. Super Opportunity : There's a new opportunity – an opportunity that did not exist back in the 80s & 90s when my wife Kathy and I were doing this. In fact, it did not exist even a few months ago. You see, the FDIC – the entity that takes over banks when they fail – has created a brand new program that they are test driving right now. It's called the Legacy Loans Program.
The Legacy Loans Program
The Legacy Loans Program is a program created by the FDIC that allows anyone who chooses to become involved in this business to not only buy the loans, but benefit from a vehicle while the FDIC will provide some, if not most, of the funding. For example, for every $ 1 you invest, you can get matching funds and loans bringing the total to $ 14, and the first $ 1 does not even have to be your own money!
That's right – you do not need YOUR OWN money!
When I first did this back in the mid-80s, I answered an ad in a newspaper that was advertising the opportunity to purchase a portfolio of loans from the FDIC. I bought that first loan package for $ 13,000 and it was not even my own money. I got that package 100% financed by a bank. I collected $ 63,000 on that first $ 13,000 package and made a $ 50,000 profit. People have been taught to think that they need to have money to make money, and that's just not so. The reality is – you do need money – but you do not need YOUR OWN money! I bought over $ 15 billion worth of bad loans and never put any of my own money up, and neither will you. I show my students how to get 100% financing.
People often ask me what sort of qualifications a person should have to do this sort of work. Well, you really do not need any experience, and you do not need a fancy education. You do not need employees or an office, and you do not need to use your own money. What you do need is the ability to step outside your comfort zone just a little bit until you've been through the process once. I encourage my students to take a small bite out of the apple. If you like it, take another bite. You also need the willingness to stick with it when challenges arise, and spend a few hours per week of your time on your new business.
In conclusion, the perfect storm has lined up for you and me, creating what I believe to be the best investment opportunity of our time. And, I will teach you how to get 100% financing so the money you invest does not even have to be your own .