PRIVATE MONEY TIPS IN 2024
PRIVATE MONEY TIPS IN 2024
What strategies can business owners use to attract private lenders?
if you’re sharing your program details—like the interest rate you offer to private lenders, how they can get their money back in an emergency, or the maximum loan-to-value ratio—and in the same conversation, you mention a deal you're seeking funding for, you may appear desperate. Without saying it directly, you’re effectively saying, “Here's my program. Please fund my deal.”
So, what should you do instead? Teach the program to potential private lenders. You don’t even have to ask if they’re interested. It only takes 15 to 20 minutes to explain how the program works and how they can achieve higher returns safely and securely. Then, you remain silent. They will tell you what they have available.
So, how do I get all my deals funded without ever pitching a deal? Here's the answer: I call them with the “good news” phone call.
What mindset shifts are necessary for business owners to utilize private money?
To effectively use private money, you need the right mindset. The first tip is to "own the real estate between your ears," meaning that success with private money starts with a confident mindset. This is 90% a mental game, just like in any business. You need to believe in yourself; if you don’t, no one else will. If you’re not confident in what you’re offering, who will lend you money? If you lack confidence, partner with someone experienced who has been through the process and can guide you. When discussing private money and its potential for high returns, avoid feeling like you’re selling. The moment you feel like you’re pushing too hard or trying to convince someone, stop. This is the wrong approach. Instead, be confident that you are offering something beneficial—a win-win scenario.
Another key mindset shift is understanding that they need you more than you need them. This isn’t arrogance; it’s a fact. There is more money available than there are deals. Before COVID, there was $18 trillion in cash sitting idle in the U.S.; now, it’s $31 trillion, either in cash or investment capital sitting in checkbooks or retirement funds. Many people don’t know what to do with it, especially with the stock market being so volatile.
Finally, adopt an abundance mindset rather than a scarcity mindset. If you believe there isn’t enough to go around, you need to change that perspective. There is more than enough. By understanding there is more money than you can ever use, you lead with a servant's heart.
Why should a business owner focus on private money over traditional bank or hard money financing?
If you don't know why you want private money yet, let me give you a few reasons.
Number one: There's no limit to the amount of private money you can access. You can scale your business as far as you want. When I borrowed from banks, I had a limit—a million-dollar line of credit. Once I used that line, I had to pass on deals unless I bought on terms subject to an existing note. With private money, there’s no limit. I now have $8.5 million, moving from project to project without restrictions.
Number two: There’s no limit to the number of private lenders you can work with. Why? Because private lending is not regulated by the commissioner of banks. It’s business between individuals, not institutions.
Number three: No credit score or credit check is required. Your credit doesn’t affect how much private money you can get because all notes are collateral-based. Private lenders loan you money based on the collateral backing the note, not your credit.
Another benefit is that there are no appraisals. How often have you been held back by an appraiser’s decision or faced delays? With private money, we use comparative market analysis instead.
There’s another reason you want private money: speed. All my offers to buy property come with a seven-day closing. As a result, I get more offers accepted because I can close quickly. You can't close in seven days with commercial money because they need to order an appraisal. Maybe, with a good relationship, you could close in three weeks with a hard money lender.
Remember, private money is not the same as hard money. Hard money lenders are typically brokers of private money who raise funds and loan it out at higher interest rates with points and fees. With private money, there are no origination fees.
What are some mistakes new real estate investors often make?
Let me share a revelation: every deal goes wrong. What do I mean by that? If you've ever rehabbed or renovated a property, have you ever had a project come in on budget? Probably not. I've rehabbed over 500 houses in a small area with a population of only 40,000 people, and I've never had one stay on budget.
One mistake new real estate investors make is paying too much for a property. They get emotionally involved, especially on that first deal, and overpay. HGTV has added to this problem. While I enjoy watching HGTV, the reality is, there’s nothing real about "reality TV." It's just a show.
For example, the profit on a deal isn't just what you sell it for, minus repairs, minus what you paid for it. There are realtor fees, carrying costs, private lender fees, closing costs, insurance, taxes, utilities, lawn maintenance, and more.
Why should business owners join a mastermind?
The mastermind principle has been a key part of Carol Joy and I’s success on many fronts. We joined our first mastermind group in 2011. Before that, I hadn’t heard much about mastermind groups, even though Napoleon Hill talked about them as early as the 1900s.
Being part of a mastermind group with like-minded people offers many benefits. Besides achieving the goals we set, such as growing our business, we’ve formed relationships with people we didn’t know before. These people have become some of our closest friends.
Another major benefit of being in masterminds is the "safe space" it creates. In this environment, we can share confidential information under nondisclosure agreements—things we wouldn’t even tell our closest relatives. It’s rare to find a place where you can take off your filter and genuinely express what's on your mind.
Masterminding is about giving as much as it is about receiving. In fact, I believe it’s more about sowing than reaping. You can't reap anything until you've planted something first. You give value, share your knowledge, and support fellow members. That's how it works.
Additionally, masterminds are excellent for accountability. You can count on your fellow members to tell you the truth, which is rare. And as the saying goes, "The truth will set you free.
