EP60: How to Find & Use Private Money in Real Estate with Amelia & Grace
Hello everyone, welcome back to another episode. In this week’s podcast episode, we are taking a deep dive into securing private money for real estate deals. We will be detailing exactly what it means to use private money for a deal, examining an equity partnership vs. private money, chatting about the risks and rewards, and sharing a few of our own real-life examples.
In short, private money is a loan, and typically, when people think about partnering there are two ways: private money and equity partnerships.
5 Steps to Securing Private Money
Build your credibility with your lenders
Find potential lenders
Pitch your deal
Secure the documents
Paying back your private money lender
A few of our favorite things about using private money are:
You can make your own rules when it comes to qualifying a lender or buyer
They are quicker with little/less paperwork
It usually comes from someone you are acquainted with (friend, family member, etc.) but not from a company
It is a direct loan to you and your business from another person, not an institution
It is a unique way of helping someone else grow their wealth, while you grow yours
Some of the risks we like to point out when it comes to using private money are:
Some private money lenders charge points (1% of the loan)
As the lender, don’t receive any tax benefits
You need to be mindful of the entire process because you are using someone else’s money, and you should take better care of their money than you would your own
Our inbox is packed full of questions about private money lending, so we hope this will give you some great insight into getting started and using private money in the best way to propel your business forward.
That’s all we have for you this week. Take care, friends!
Resources:
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