“Inaction breeds doubt and fear. Action breeds confidence and courage. If you want to conquer fear, do not sit home and think about it. Go out and get busy.” – Dale Carnegie
Using private money helped Gary Brevko go from making $250,000 a year to making $30,000 to 40,000 a month doing real estate full-time. He’s not alone. I have countless students whose real estate income took off after they learned how to use private money for their investments.
But surprisingly, not many investors cash in on this unparalleled opportunity for making money.
In my experience, there are only three reasons real estate investors don’t take advantage of the tremendous benefits of using private lenders:
- They don’t know what a private money lender is, or don’t fully understand how much money using one can make them.
- They think they don’t have the time to find investors.
- They are afraid, pure and simple.
The first two obstacles are easy to overcome.
Who Can Tell Me Exactly What a “Private Money Lender” Is?
About five years ago, I learned a lesson I’ll never forget. I came across a foreclosure on a $150,000 property that was going for only $70,000. I’d hit the jackpot! It was almost too good to be true. But – every real estate dealer’s nightmare – I didn’t have the available funds. I went to the bank. I tried to extend lines of credit. But raising money that way takes time, and time is exactly what you don’t have with a sale like this.
As you can guess, I didn’t get the property. By the time I had secured funds, it had been sold to someone who had the cash ready and could close within days. In this one deal, I lost a potential $60,000.
I swore then and there that this would never happen to me again. And it never did … because then I discovered private lending.
A whole new world opened up to me. And my investing has never been the same. Imagine: limitless funds that are constantly and immediately available. Today, I have more available capital than I do property in which to invest it.
Private lenders are everyday people. Some are retired, some work. Some have substantial investment capital, and others have only a little. They may want to make the most of the savings they’ve spent their lives building, or perhaps they suddenly came into money through an inheritance or property sale. Regardless of their backgrounds, all private lenders are looking for a safe, high-yield opportunity for their funds.
I give my lenders a guaranteed 10 to 15 percent return on their investment, and their investment is secured by both a mortgage and hazard insurance on every property.
There’s nothing like it anywhere. The win-win reality of private lending is unparalleled. The incredible thing is that most people don’t know about it.
Why Private Money Is Faster Than Traditional Financing
If you’ve ever gone through the process of buying real estate using a traditional mortgage, you are familiar with the mountains of paperwork and the waiting. (If you close in less than four weeks, it’s a miracle.) With private money, you can close immediately. You never have to pass up a deal because of lack of funds.
The important distinction to understand is that with private money, unlike traditional financing, you get the money lined up before you find the deals.
To many investors, this seems backward. To others, it sounds time-consuming. But the truth of the matter is, I have a file full of letters from my students who have raised $100,000 or more in less than 30 days. Esther Headly raised $240,000 in less than 24 hours. Dr. Dipak Patel raised $4.2 million in just 11 months.
It is not difficult to find private investors – that is the easy part. The difficult part is that third obstacle: fear of the unknown.
If there’s something you’re afraid to do, you can always find a reason not to do it. How do I know that? I’ve been there too. Even when I realized the banks were losing me deals, I procrastinated.
Sometimes, we won’t even admit to ourselves that we are afraid. We tell ourselves we do something because we are too busy, too tired, or focused on other “more important” issues. So the first thing you need to do is admit that fear is actually what’s holding you back.
I remember sitting in a potential investor’s office and being too uncertain of myself to tell him that I was looking for private lenders. I didn’t have the nerve to ask him for the money. That day, we both lost. I missed out on getting money to run my business, and he missed out on earning a tremendous interest rate.
I was afraid. And part of the problem was that I wasn’t entirely sure how private money lending works, so I didn’t have the confidence to try to explain it to him. I needed to educate myself and get some outside help.
I remember my first deal. My knees were knocking. But an experienced real-estate investor walked me through the whole thing, which was a lifesaver. I also got a solid education through two home-study programs I purchased, a few library books on creative real estate investing, and a local REIA seminar.
After I made that first deal, the fear monster was gone and I was ready to do it again.
You’ve already taken the first step toward increasing your income right here – by learning a little about the advantages of private money lending. The next step is to get the education and mentorship you need to overcome any lingering fears.
Start by investing in books and/or programs about the specifics of finding and analyzing real estate deals. Both traditional and “creative” real estate financing are covered in countless books in the real estate section of your local library, so you should have no trouble finding one with useful advice.
If you choose to focus on residential properties, you might try ETR’s Main Street Millionaire program by Justin Ford. If you’re more interested in apartment complexes, check out Dave Lindahl’s Apartment House Riches.
You may find that attending live seminars is an easier way for you to learn. As an ETR subscriber, you’re frequently notified of opportunities to attend Bootcamps and other live events with reputable real estate professionals.
As your knowledge increases, your fears will disappear. And before long, you will be approaching private money lenders with confidence … laying the groundwork to be able to instantly pounce on every great real estate deal you find.[Ed. Note: Alan Cowgill’s Private Lending Made Easy program is the only one on the market that specifically explains how to find and manage private funds. If this topic interests you, a great way to get more information is to attend the free teleseminar that Alan will be giving exclusively to ETR readers next week. It’s a no-cost way to build your knowledge base and find out if private money could help you increase your income this year. Reserve your seat now.]