Buying and selling properties is a relationship business. When I’m talking about Private Money Partners and funding for our business, I call it “relationship financing.”
When others genuinely like you, feel like they’re in alignment with you, think that you might be fun to “chew the fat” with, and they might be able to make some money without risks – that’s when the magic happens. Private money is simply that – having Private Money Partners to fund deals.
Everybody else in the business calls them private money lenders or just private lenders. My jargon is a bit different because I like to think of them as much more than that. I like to treat them as silent Partners.
Those Partners invest in our company and our deals in one of two ways. They are debt investors who make us a loan from their Self-Directed IRA and their Self-Directed IRA collects a set amount of interest each quarter, or they are equity investors who get a percentage of the cash flow or a percentage of the equity in a particular deal.
********************************* If you are reading my blog for the first time, let me inform you that… My company buys single-family houses and I write this blog weekly which is primarily directed to educate 1 group of individuals:
Individuals who are losing their shirt as a result of the “roller coaster” volatility of the stock market and low paying rate of other traditional investments, i.e. people that are looking for an opportunity that’ll provide a secured place to put their money to get it working for them to earn better than average returns.
However, oftentimes, homeowners that need to sell their house, stop by to take a peek because they are curious and wondering how and/or where we get the funding to purchase houses. And if they stick around long enough, they begin to understand why individuals partner with us to provide the funding which empowers us to be able to purchase real estate on a continual basis. Simple, it’s because we teach them a secured way to earn better rates of return than they are currently earning.
So everybody wins. It’s a WIN-WIN-WIN !!!
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Disclaimer: This site is intended for educational purposes only. I am not an accountant, attorney, or licensed financial planner. While the information I’m writing here is based on many years of experience buying houses that doesn’t really constitute professional advice (since everyone’s experiences and situations are different).