In the classroom today, Blake Yarborough goes over the benefits of private money lending for both the lender and the investor.
Listen in as Blake Yarborough tells us about how private money lending can be more flexible, quicker, and help build your portfolio when getting started.
Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Blake: Hello. This is Blake Yarborough with Capital Concepts. I’m today’s host for the REI Classroom. Today, I wanted to talk about private money, both as a lender and as an investor.
Mike: This show is sponsored by PassiveRental.com.
Blake: As a lender, sometimes people that haven’t ever bought investment property, but they always wanted to learn about it, well being a private money lender is a great way to participate in real estate without actually being hands-on. You don’t have to deal with the tenants. You don’t have to deal with the rehab. You’re just kind of lending the money and kind of watching it all go through, and it’s a way to build confidence.
There have been a lot of investors that started off as private moneylenders. Their rates or return that they receive are negotiated, but many times they’re close to about 1% a month for a 12% rate of return. Their percentages range from, I’ve seen them as low as 6% to 14%, so it’s all up on the negotiation and the amount of confidence you have in the person that actually is doing the work.
Another advantage about being a private moneylender, well of course, if things go back you get the property. That may be an advantage, or you may be fearful of that. But if everything goes well, which it does, then one big advantage typically on bigger projects like apartments or a commercial, is that you have an opportunity to convert your monies into the deal into a percentage ownership, depending on how you write the contract.
So that’s just a couple little quick hits on some of the advantages about being a private moneylender. On the other side of the coin, being a private money borrower is in my opinion, a necessity for success for being in real estate investing. One, it’s the fastest money. I mean, there have been deals when titles open, I saw a house and closed on it the next day. You can’t do that with hard money lending or you can’t do that with bank financing. Without that, I wouldn’t have gotten the deal. So the speed I was able to close.
The other thing is flexibility. With private moneylenders, if the deal makes sense a lot of times, it’ll go through. You don’t have certain rigid guidelines like 70% or 75%. Sometimes, you can get all the repair money up front. You just have to be responsible for it. So the speed and flexibility are very big for me.
If you don’t have access to money, and while you’re building up your portfolio and your credibility, so to speak, if you have gone through the time and built up a network of private moneylenders, then this can really make your real estate portfolio growth much more efficient. The ability to get your hands on the money, even if it costs a little bit more, will help you be a successful real estate investor. Once again, thanks for just being with us at REI Classroom. I’ll see you soon.
Mike: PassiveRental.com is your source for turnkey, done-for-you rental properties. If you’d like to be an investor and not a landlord, please visit PassiveRental.com to learn how to purchase cash-flowing, professionally managed rental properties in the hottest rental markets across the country. We can also help connect you with financing for your next property. Invest the easy way today, and get started by visiting PassiveRental.com.
Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers, or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.
Are you a member yet of FlipNerd.com, the hottest real estate investing social community online? If not, you can join for free in less than 30 seconds and get access to hundreds of off-market deals, vendors in your market to help you and your business, and you can start networking with thousands of other investors just like you. Get your free account now at FlipNerd.com.
Please check out the FlipNerd family of real estate investing shows, where you can access hundreds of expert interviews, quick tips, and lessons from leaders across the real estate investing industry. They’re available at FlipNerd.com/shows or simply search for “FlipNerd” in the iTunes store.