Private Money: It’s about the Deal
by Mitch Stephen
Private money is the key!
You may pay more, but there is a certain peace about private money you almost never get with bank money. You can get private money as “non-recourse money.”
That is to say: the loan is a collateral only loan, and the lender has NO RECOURSE against YOU PERSONALLY. Plus, you don’t have to sign a “Personal guarantee.”
Most people worry they don’t have any money; therefore, they can’t do deals.
The successful model takes some nerve and guts at first; contract a great deal and use the deal to attract the money. That’s right…good deals attract money.
You have to hold your deal up high enough for others to see.
It takes some courage, faith, and ability to function under pressure. You will get over it!
Now, with some experience under your belt, start cultivating private money in advance.
Take examples of your deals to attorneys and CPAs. Show them your business model, and ask them for their professional opinion. As good businessmen, if they see any problems with what you’re doing, they will let you know.
Never ask them for the money…they should plug themselves in automatically…as any good entrepreneur with excess money would.
I offer 8%, interest only for 5 yrs, and a first lien on the property I’m going to buy. They are loaning no more than 65% of the value.
These days, I’m averaging 52% Loan To Value (LTV). That is to say; I’m borrowing $52,000 to buy houses I can owner finance for at least $100,000.
The private lenders first lien position is so secure, I deserve the 8% interest rate. The worst thing that will ever happen to my private lender is that I’ll pay him on time, and eventually pay them off.
The private lender would make far more money if I defaulted.
The art of finding private money is in your ability to locate/ recognize “Suspects.” Get an appointment, and then explain your business model clearly and simply; to get their opinion as an admired and respected business person.
If they DO NOT plug themselves in automatically, do the old “Columbo” close on them: as you’re walking out of the meeting, as you get to the exit door, stop-turn around- look at the floor-massage your forehead with your right hand for just a few seconds- look up at your “suspect” and ask,
“Do you know anyone who would be interested in loaning money on this deal?”… but NEVER ask the suspect for money.
You will always and only be there for their opinion.
Come to my webinar, and I discuss this and other tips about Owner Financing.
> Register Now<<<<
> Go to read more and Get My Latest Book– “My Life & 1000 Houses: The Art of Owner Financing”
Now, let’s go find some deals!
On a personal note: Mitch is the creator and author of the “My Life and 1,000 Houses” series. He started from scratch, and with a handful of credit cards, he has purchased or controlled over 1,000 properties since 1996. He has forged a life creating, and then, collecting payments without the hassle of being a landlord.
Today, you will find Mitch living with his wife and daughter in San Antonio, Texas, where he enjoys helping others achieve their financial goals.
To learn more about the money follow this link, Private Money 123