The Good Stewards Real Estate Podcast

Raising Private Capital: The Key To Scaling Your Business

Episode Summary

Having a short elevator pitch of what you do and what you offer is paramount to building a private lender network. Think of 30 people you think may have money with no prejudgement. Private Lenders have more security lending with us because their money is tied directly to an asset with a title, rather than unsecured in the stock market. If anything goes wrong, they own a property with equity built-in​.

Episode Notes

Having a short elevator pitch of what you do and what you offer is paramount to building a private lender network.

Think of 30 people you think may have money with no prejudgement. Private Lenders have more security lending with us because their money is tied directly to an asset with a title, rather than unsecured in the stock market. If anything goes wrong, they own a property with equity built-in.

Hard & Medium Money Lending:

2:42: There's different kinds of private lenders. There's a lot of hard money lenders with  higher interest rates and points, points being a percentage of the purchase price. Hard money is what most people think about when they’re starting out, but it’s not the only option.

4:24: We’ve really only seen hard money work for fix and flips. You may approximately have 2-3x the holding costs where you’ll then need to get a deal at something like $0.50 on the $1, minus repairs in order to successfully BRRRR out of it.

7:41: We have built a network of private lenders, what we call “Medium Money” that we secure their money against a property and pay 8-9% interest.

Convincing & Building a Network of Private Lenders:

11:16: Snapchat lost $1B of valuation when Kylie Jenner tweeted that she wasn’t a fan of the 2/2018 update.

12:14: so the point with the stock market that I always lean back to is when people do private lending, they are secured against a property with a deed of trust that's recorded on the county that the property exists in. and what that means is even if we go belly-up and we can't make good on our promise to pay the loan. If we didn’t follow through, we would give the property back to them through a deed-in-lieu of foreclosure.

14:37: Put together a credibility kit that shows, before and after photos. Lots of people watch HGTV, but it’s more fun to watch if you’re financially vested into the industry.

18:30: This is called Trust Deed, Deed of Trust or Mortgage Lending depending on the state you’re in.

21:00: It’s important to constantly be building relationships so that when the time comes you have a list of people you can send the property to. It’s best to be looking for money when you don’t need it.

23:52: The first deal Ryan and Bill did was privately funded through a cold pitch after a meeting over coffee with a local anesthesiologist.

Process from Lending Packet to Liability Insurance:

26:00: In your lending packet, list out the financials, purchase price, rehab budget and the actual retail value (ARV) of the property. Then list out what the rehab includes, provide like-comparable “comps” properties (similar size, age, etc.)

27:00: Once the lender agrees, set the closing with a title company. After that you file a promissory note that includes a personal guarantee as well as a deed of trust, mortgage deed or trust deed (depending on the state) all recorded at the county. Adding liability insurance/being additionally insured is also great too so that both parties are protected.

Our First Lender:

29:42: Ryan’s first lender was a medium-hard money lender, found by happenchance, who offered a 15% interest rate. Rather than having to make him payments, Ryan negotiated giving the lender an equity cut of the deal. 

31:00: Bill’s first lender came about after he bought her house and she didn’t know what to do with the money. So he reborrowed the funds on the same house.

32:00: Amanda’s first lender was from her mom who used her IRA funds. There was a couple hundred thousand just sitting, not earning money. She now doesn’t have to worry about it because the interest is paying directly back into the IRA.

33:00: Andrew’s first lender came about with a mortgage broker as they were discussing financing an apartment complex deal that ultimately didn’t go through. But he was just discussing the business model and the broker thought it was interesting. Having a short elevator pitch on what you do and what you offer is paramount.

Connect with the Good Stewards:

Episode Transcription

Bill: I wrote out a long list of people that I knew from all walks of life. And by the way, I would start with that don't prejudge. Anybody don't say oh that person doesn't have money or that person would never lend me money. No prejudgment.

[00:00:16] Intro: Welcome to the good steward podcast. The only podcast dedicated to seasoned Real Estate Investors who want to maximize the cash flow potential in their business. We are Buy and Hold investors with a thousand plus properties in markets across the u.s. who bring an Insider's view into the nitty-gritty details of real estate investing. If you're looking to develop the mindset, teams and systems that can dramatically build your real estate business and net worth, you're in the right place.

[00:00:49] Ryan: Welcome to this episode of the good stewards podcast. I'm Ryan Dossey.

[00:00:52] Amanda: I'm Amanda Perkins.

[00:00:54] Bill: I'm Bill Syrios,

[00:00:55] Andrew: and I'm Andrew Syrios.

[00:00:56] Amanda: We are going to talk today about private lending and how we use that to build our real-estate Empire. We're going to talk about finding private lenders to finance your purchases and cultivating a network of private lenders of your own.

[00:01:12] Before we dive in we want to connect with you at www.thegoodstewards.com to subscribe to the podcast and receive your free copy of our ebook guide, Don't Make a Profit Create a Fortune. I think we'll start first with just talking about why we would use private lenders. We get asked that question a lot because people say why don't you just go to the bank you can get a loan. Interest rates are four percent right now, go get your loan.

[00:01:40] And that works great for a residential home buyer or maybe a real estate investor just getting started and you can do that. Getting a bank loan from the get-go usually requires a large down payment and often times conventional lender isn't going to want to finance repairs and often times if we're getting a good deal on a property needs repairs.

[00:02:06] So our best bet to limit the amount of cash that we have into our properties is to finance with a private lender from the get-go. And what we're usually doing is trying to finance our purchase price plus our rehab costs in anticipation of what our repair costs are after repair value of our property would be or our arv is what we do at so normally, you know, we're looking for a private lender to fund that initial purchase so that we don't have to go to a bank until after we get down the line get a property fixed up moving on.

[00:02:42] There's different kinds of private lenders. There's you know to start out with there's a lot of hard money lenders and we define that as higher interest rate with points. Points is usually a percentage of the loan value that you pay, if it was a $100,000 loan, you might pay twelve percent interest and four points, which could be as much as $4,000 from the beginning. It's a little expensive. However, if you have a good enough deal, you might be able to make that financing work for you.

[00:03:13] Ryan: I think one thing I'd point out on hard money. So point is equal to 1% of the total loan amount that you're borrowing. But you also kind of want to be careful with this you can get taken advantage of pretty easily when dealing with hard money lenders. I've even met some super successful folks that have paid as high as 20 25 percent APR once it's actually calculated out. So, ten and two is about the most you should be looking at doing so just you know, be careful there and then obviously, you know, don't give them money up front if they hit you up their Facebook offering 5% interest and you know a five million dollar line of credit for anything. Chances are it's probably a scam.

[00:03:55] Andrew: The primary way I've seen people get you know, get kind of taken, taken for a ride with with hard money lenders is borrowing from hard money lenders.

[00:04:04] Ryan: Yeah. I've never actually used one.

[00:04:07] Bill: Other than that problem.

[00:04:09] Andrew: I mean it works for flips. I don't think they really work for holds because I mean, I think the average is 12 to 15 percent interest three to five points, which is three to five percent of the loan and then all the fees. I mean, they got you've got an appraisal they usually. An inspection that

[00:04:24] Ryan: Doc prep

[00:04:24] Andrew: like a thousand different loan processing fees, moving the documents from this side of their desk over to the other side of their desk. That's a $250 fee. So, I mean hard money can work. But I've only seen it work with flips and even then it cuts in their profit margin quite a bit,

[00:04:43] Bill: you know a hard money lender is often wanting to churn their money also, which means they would like to flip it over is often as they can because every time they do they make those points and its really in those points that they make most of their money. So they'll have a hard reset at 6 months or a hard reset at one year or a maybe 18 months. So you want to be very cautious and careful about when they're reset is because that then they can throw some more point.

[00:05:11] I can her own or jack up the interest rate and at that point, you know, it becomes very expensive.

[00:05:18] Ryan: I think the last thing I'd point out with regards to hard money is it it already takes a ridiculously good deal in order to successfully be able to BRRRR out of something even with private money how we're doing it. So, you know, I can't imagine having two or three times as much holding costs. I mean you're you're needing to get something at like 50 cents on the dollar, minus repairs to be able to successfully BRRRR out of it. So I think as Andrew said it's kind of like the only people I know that are using hard money successfully they're doing fix and flips or not so much involved in the Buy and Hold side.

[00:05:51] Andrew: I would also reiterate a point Amanda was making about the about the the reason to use private money. And one of the big reasons we use it is the seasoning process that banks have. So with a bank they will almost exclusively lend on your cost into the property upfront. And then for I mean, I've seen it vary from as soon as you have it fixed and rented to two years before they'll lend on the appraised value. So if they're only letting on the cost to having the property doesn't matter if you got a great deal on it, you could have bought it for half of its value but they'll still only lend on that.

[00:06:28] Amanda: Well and sometimes they'll just loan for 75% of the cost you have into the value. The cost of into the property

[00:06:34] Andrew: I think best usually I mean it's yeah, it's 75% of the cost you have. So if you. If you're into it for 75 percent of its value, which is our goal in the BRRRR process and they're only lending 75 percent of your total cost purchase and Rehab then you're only get what is that 57 or getting a 57 percent or 56 percent loan to value and really that's just you're leaving way too much equity into the property to really take advantage of the power of leverage.

[00:07:04] Ryan: It's also not mutually beneficial. I mean they're taking advantage of you with the points and the rates they're charging. But then you know on top of that they're barely even funding it. So it's a great deal for them. It's a terrible deal for you.

[00:07:14] Andrew: And that goes for both hard money lenders and banks. I was referring predominately to banks there. But it's one of the reasons we like using private money because they will take into account and we're by private money having not hard money. We'll get into that more. Amanda you can pick up from here, but when I say private money I'm talking about, you know regular people with money to lend they will take into account. I mean, they have flexibility. They take into account that this property is worth far more than you're buying it for, a bank will not, not upfront.

[00:07:41] Amanda: Well, and that's I mean, that's really what they're going to be looking at is the deal there definitely will know that you're strong as a company you're strong as a person the loan is backed well, but they're going to be looking at that deal because that's what their money is secured on the property against. So what we use a lot of is our own cultivated network of what we would call medium money 8 to 9% money of people that we've developed relationships with or have been referred to. And we reach out to them and put their money on our properties and the reason why it works so well for us is it's a percentage rate that we can stomach and also it's a great deal for them. These are people that have money sitting in savings accounts doing nothing 8% and 9%. That sounds like a pretty good deal to them. They're happy to make that money.

[00:08:34] Andrew: Doing nothing?! They're getting like 0.2% what are you talking about, "nothing."

[00:08:38] Amanda: I think at one point. It was almost up to 1%.

[00:08:41] Andrew: That is something right there. I mean, they're only lose when you take inflation only losing like one or two percent.

[00:08:46] Bill: A person really needs to find something out there in the world that they can put their money in and what are their options? And that's one of the things that you think about when you're talking to private, potential private lenders and we can go into a little bit more of how you build a private lender a list and the fact that.

[00:09:03] Amanda: Well Bill did you want to jump into that because you kind of founded your business on a private lender Network?

[00:09:10] Bill: Yeah. I kind of you know all the dissing I heard about hard money. I started out with hard money. As many people do I ran into a person his name was Gordon and he and I kind of built our business together. Gordon was used to be an agent and then he was part owner of an agency and he realized that wasn't for him. He had some family money and he ran into people had money. So he started building a large network of lenders and he became a hard money lender himself. I would call him a medium hard, medium hard money lender because he wasn't a predatory at all about his rates and I ended up borrowing lots of money from.

[00:09:50] But over time, I realized I could meet these people as well and I started finding my own folks and stewardship actually got into, particularly during the Great Recession, we started instead of Buy and Hold which was our our desired methodology and strategy in real estate investment. We started flipping a lot because it seemed like every month properties were worth less than the month before and so is hard to justify a Buy and Hold strategy during the 2008 to 2011 season of real estate investment.

[00:10:27] And so during that period of time we started looking for private money lenders because we just needed them to flip these properties and you know necessity is the mother of invention so. I wrote out a long list of people that I knew from all walks of life. And by the way, I would start with that. Don't prejudge anybody don't say oh that person doesn't have money or that person would never lend me money. No prejudgment. Just take that out of your mind and just begin after this podcast and write down 30 people's names who you know in your network who who may or may not have money and again people have limited options out there. Okay, you can put your money. And of stock stocks and bonds, but who wants to put all their money into the stock market?

[00:11:16] Ryan: Think I think a quick stock market way that I've overcome this whenever I've talked to private lenders because that's the the typical thing when we offer eight or nine like, oh I can get you know, 10 or 11 in the stock market and I just use the example of Snapchat. I think it was back in two thousand Seventeen or eighteen one of the Jenners tweeted that Snapchats new interface sucked and overnight Snapchat lost a billion dollars in value off of a like 17 year old girls gut reaction. One tweet sent out cut shaved off a billion dollars in value and I just I'll present that to anybody who I get that objection from and just kind of be like, you know, hey, I don't know about you but I don't like the idea of a 17 year old with a cell phone being able to wipe out a billion dollars of something. I've invested in sure you're on the same page, right? Absolutely.

[00:12:08] Amanda: I mean the other thing just to point out is if you are invested in the stock market, which many people are including myself so I'm not it's a good vehicle. It's historically it's going to work out too it's just this private lending situation feels like you have a little more control over it. But anyway, so the point with the stock market that I always lean back to is when people do private lending, they are secured against a property with a deed of trust that's recorded on the county that the property exists in. and what that means is even if we go belly-up and we can't make good on our promise to pay the loan. They own a property. They can foreclose on a property take it back. I mean, maybe that's not what they want to do, but they still have something of value and probably that's worth more than what their loan is on it because I mean our aim is to not put a private lender in a more than a 75 percent loan to value a situation so that there's a cushion of equity in the event that. You know, we need to refinance we need to sell we can easily satisfy our private lender and have money on top.

[00:13:16] Andrew: I bet it did actually even make a profit on that. Yeah, I mean it if you have that kind of equity margin. I would say we always promise although you can't put this really in writing that we would never if it were to ever come to pass and that we had to return it.

[00:13:29] We just give it back to them. We would do a deed-in-lieu of foreclosure and just

[00:13:32] Amanda: Right, we wouldn't make them pursue us.

[00:13:34] Andrew: You can say that in addition kind of going back to the point you had before. The historic I mean our private loans are usually run eight percent and that the stock market is closer to seven or something like that, which is more than real estate goes up. But I mean real estate is much more of a Rolling Hill. I mean 2008 being the exception. Whereas the stock market, you know, it can Skyrocket and then come back crashing back down and a very very erratic way, which most people are not hugely comfortable with and consistent year over year 8% return is I think something most people would much rather prefer.

[00:14:10] Ryan: I think one of the real perks was stewardship to is the track record. That way you're able to offer for people that are interested in lending to us far exceeds what most people have and what most people offer and I know myself and several of the other partners actually invest with stewardship. So I think that's a good like that's a good sign. When the members of your organization are investing into it as well, and that's a good sign for private

[00:14:37] Bill: lender and maybe we should talk a little bit about okay. How do you approach a private lender? And again, let's let's have a big long laundry list of folks that are potential private lenders in your life in your network ,business network, social network on and on. So, you know, I think the first thing is, do you have a track record and if you don't that's fine, but if you do then how can you put together some kind of credibility kit? In the early years, I use a scrapbook kind of a before and after photos of pictures that that showed what we did when we went into a place and private lenders are kind of excited and understandably.

[00:15:15] So to be part of the process of renewing the communities that were in in terms of the real estate in those communities, they see that we're there to make changes and changes. The better and they're actually part of it. I've had we've had private lenders who they want to see before and after pictures just because they're tickled pink to see the changes we've made and they're thrilled to death to be part of that.

[00:15:37] Amanda: Or maybe they were past or current Real Estate Investors themselves, and maybe they're not wanting to do the day-to-day management, but it takes to have a real estate investment firm. And this is a way for them to feel connected to that real estate industry in a lot more hands-off, easier approach.

[00:15:57] Ryan: I think it's kind of like HGTV of like it's fun to watch right. It's more fun to watch if you're financially vested in it. Right? So, you know, they can kind of get the excitement of the before-and-after but they feel actually included in it it so I think that's another thing that's kind of neat with it. They can almost feel like they're a part of it without you know, the risk really isn't on them because we're the ones that have to perform but they can kind of see the before during after, get it leased. And I mean we have lenders that will fund stuff and they don't really care. We have other lenders that it's like I want to walk projects with you. I want to see how stuff's going. You know, they want to really feel like they're involved.

[00:16:38] Amanda: So one thing that's worked. Well for us in cultivating. Our network is really to just not really be selling a product. Kind of let people come to us, let us let them ask questions. We obviously have a lot of information out there for people to find us. And ask questions about it, but most of our current lenders are coming from referrals. And so it's somebody who's our current private lender and we've done exactly what we've said we do. What that means is we, you know, we're always available to meet with them face to face. We're prompt in our paperwork, their monthly payments arrive into their bank account every month without hassle or into their IRA account. Which could probably be another topic to discuss. But we have you know, we're really good at following through with what we say we do and in doing that it makes our current lenders refer people that they know too that just have money that's doing nothing to come to us. And Bill has been really the person who's kind of driven the bus as far as growing that Network because he's he's made good on every single private loan and bank loan that he's had since 1989. I mean that's very proven track record.

[00:17:55] Bill: That's I think in your mind you have so many stakeholders in your business. You have Partners often, you have residents that you're renting to, you have investors and you have lenders and, boy with every stakeholder, you want to have a commitment. A mission statement almost and for our private lenders our mission is that they make a good return and they are never without that return. So it's a commitment that we hold near and dear to us. It's just not we you know, we hope to make good we will make good with them. And you know, it is something of course there as Amanda mentioned. We have a recorded trust Deed on the property or mortgage depending on the state we're in. People want to be since people have limited options in their investment. They are looking around for opportunities for them. As a matter of fact, this is a statistic I've heard that 22% of Americans have at least a hundred thousand dollars at their disposal. The question is what are they going to do?

[00:19:05] And how can they get the best return on that money many of them? Are totally unaware of what this is called, which is generally called trust deed lending. Sometimes called mortgage lending. And the reason that they're unaware of it is because mortgage lenders, or excuse me financial advisors can't get a commission on it as they can Securities like stocks and bonds.

[00:19:27] So they're not going to tell anybody about trust deed lending understandably. As a matter of fact, we've had some people, in the financial world, give our lenders grief about what they're doing. And that's the kind of unfortunate situation. So I would see yourself as an educator.

[00:19:46] Amanda: And I mean, I just want to jump in and say the reason why the grief is given is because this is not an instrument that a financial advisor can get paid on. They get paid by investing money in security's this is not a security. This is not something that they're going to earn a commission on so that's not something they're going to recommend.

[00:20:04] Bill: We are not lawyers. So you should talk to a lawyer in your state when it comes to this kind of lending because there are some issues with Securities Law, but we have in our experience been all the way through to Oregon's Securities Commission and they've looked this over and the reason we think we got a clean bill of health is because, well one in Oregon law it says that trust deed lending is not a security. Second, if it is collateralized on a real piece of property, then it's hard to make the case that it's a security as well, because if it's just out there and not collateralized and if you're partnering with people and mixing money together, well, you could run into a problem with that.

[00:20:56] Amanda: So one thing that we've found important to do is really to always be developing and building our relationships. It's a lot easier to be looking for money when it's not a crunch and you don't need it. And so you're not backed into a situation that you don't want to be a part of. So we're always out, you know talking about what we do meeting with potential lenders, building our Network so that at the time that we do need the funds, you know, we have options.

[00:21:25] We have a list, you know, we have people who have several hundred thousand dollars. We have people that we’re holding out for a $50,000 loan and we have places, you know, when our property deal comes down, we can send it out into our Network and you know find the appropriate person to that. It makes it a lot easier than if you get that property under contract and you think oh no, how am I going to close it? You know, maybe you are going to get backed into a situation where you have to go with. Harder money lender, maybe, you know, maybe not the loan shark money. But you know, if you're developing that Network before you need it, it's going to help facilitate the process.

[00:22:01] Ryan: A big piece of that too is, in sales we call it like commission breath, right? You don't ever want them to see you sweat. So if you're approaching a private lender is like a you know, hey, man, you know, would you like to earn nine percent on your money? I need it by Friday. They're like, whoa, this is uncomfortable! Actually always presented it and I've heard to present it as you know, operate almost from the position of how would I handle this conversation if I had a hundred million dollars liquid, so it's going to be very like, you know, hey, yeah, we've got this program that we work with people on we pay eight to nine percent interest. Here's kind of the terms. Here's what the collateral looks like, you know, if that's something you'd be interested in we could chat and see if you're a good fit. So it's less like I need you to do something and more I have something that you probably want and we can see if it's a good fit for you.

[00:23:27] Bill: And remember, photos are worth a thousand words, is that what we can say here? Because, if they can see the property or even come out and take a look at it if it's local, all the better. Because again as we mentioned prior, for them to become part of the process, they are part of your team. So why not treat them as a team member and give them as much information as you can. Hopefully you have a 

[00:23:52] credibility kit and if not,

[00:23:52]Ryan: First deal bill and I actually did together. I had a meeting lined up for us coffee with a local anesthesiologist who I knew did some lending for some other people. I just said kind of hey, let's let's go get coffee and talk and I actually had a deal already under contract and I put it in kind of a one-page pitch deck of here's pictures of the property. Here's comps. Here's what I got it under contract for, here's repairs, here's what it's worth. So sat down with this guy and I just said, you know, hey, this is kind of what I'm doing. Is that something that would interest you and kind of slid it over to him and he's like man, there's no way you could get that good of a deal and I already know I had it. So I kind of just you know, well, you know, yeah, we do a lot of things to find off market properties yada yada yada and you know I kind of ended the conversation with you know, if I could get a deal like that. Is that something you'd be interested in and working on. This is in an a class area. So left the meeting and I followed up with the next day and said hey actually end up getting that property under contract.

[00:24:55] Would you like to fund it for us? So he'd already pretty much said this was a incredible deal that he wishes he could have bought himself and then it was kind of well, you've got the opportunity to partner with us on it now, so that was kind of how we met with him. Kind of cold pitch to getting a deal funded was just kind of these are kinds of opportunities that come up with and it just happened to be one that was right there on the chopping block.

[00:25:19] Amanda: So I just kind of wanted to jump in our process which has been working for us. What we start with really actually goes back to a good deal. But what we're doing when we're looking for a private lender for a property is the first thing we're going to do is put together something that we call a private lending packet. What that is is a it's a, you know, a couple page little leaflet that basically identifies our property, spells out what our purchase price is, our rehab budget and then what we think it's worth after, it's after repair value. Like for instance if we have a property under contract for $50,000 and we think we're going to have like a $25,000 budget for repairs we'll outline what those you know, we're going to put a roof in it. We're going to put carpet, new countertops update the HVAC, etc. And you know, we're so we're looking for a seventy five thousand dollar loan to cover that $50,000 purchase price and the $25,000 repairs and what we think at the end of it is that we have a property worth about $100,000 or more.

[00:26:31] And another thing that we include in our private lending packet is comparables. So like properties in the market roughly the same size, close to the same age, close square footage so that they can see that other properties have retailed for amount similar to what we're selling as the after repair value. And so when you know, normally we're going to be trying to cushion ourselves 25% in you know, that's our best case scenario. So from there, you know, we have a lender with $75,000 great. We have our closing set up at the title company. We put the two together in-house and you don't have to do this in-house there's companies that would do this for you. But in house, we will prepare a promissory note. With a personal guarantee on it and then depending on the state a deed of trust a trust deed or a mortgage that is tied to that promissory note. What's important about that is it gets recorded at the county. We can't do anything with the property until that loan is satisfied.

[00:27:35] So that gets recorded at closing the private lender wires their funds we get, you know from the title company we get our repair funds we do the repairs we set up our private lender payments. Another thing that we do is we put liability insurance on our properties and in case something happens in addition what I mean

[00:28:00] Bill: property is called a being additionally insured and that's kind of sure and the buzz word right and go up.

[00:28:07] Amanda: Yeah, right and we would put our private lender as an additional insured on our property in case something happens. And actually this has happened to us a couple of times actually in the recent years. You know in the last few months, we actually had a fire that was a total loss and what that means is when the insurance company identified how much they were going to pay out, in this case, it was the entire value of the policy, it was issued directly to our company and to our private lender. And they had to sign off on that. So we couldn't just take those funds and do something else with it. In this case, we decided that we would pay off the loan and figure out what we're going to do with that burned-out property.

[00:28:45] But you know, that's an important piece there and then, you know, we collect an ACH form from them which means that we have their bank account information. And every month on the date that the loan started their monthly interest payment arrives like clockwork into their account. They don't have to look for it. They don't have to can't take a check to the bank just arrives and then you know, we're taking care of all the paperwork there.

[00:29:08] Ryan: I think one thing I'd point out that Amanda kind of touched on is trust deed or deed of trust versus mortgage. Just Google if your State's a trust deed or a mortgage lending state or you'll do what I did and pitch a lender on something that doesn't exist in your state.

[00:29:22] Amanda: I kind of want to just go around. And let everyone share like where they found their first private lender or how that came to be. Ryan, did you want to go first?

[00:29:32] Ryan: Yeah, I'll start so I think I think mine is going to be interesting for people because a lot of people are going to be in my position. So I done some wholesale deals and that was it.

[00:29:42] I actually hadn't done a flip hadn't done a Buy and Hold deal. I'd literally just you know bought and sold contracts. So I actually found my private lender on Bigger Pockets. I threw out a post in the marketplace and I said hey, I'm a you know, wholesaler. I've had some pretty decent success and I'm realizing that I can make more money by closing on some properties and maybe doing some work to them and I'm interested in partnering with somebody and the guy who reached out to me is kind of like Bills first lender, Gordon. Was kind of a medium hard money lender charging about 15% interest. And I actually negotiated on my first few I said, you know, hey instead of me being obligated to payments for you actually give you an equity cut of the deal. So he actually ended up making more money that way but it also kept me from having to make him payments but literally just a random individual comically. He wasn't even based out of the United States is a guy out of Australia and I worked with him for several years. I think for a while think at one point the most we had out together was about half a million, and you know was just kind of this happenchance guy shot me a p.m. And said, you know, yeah, I think I may be interested. Let's hop on the phone.

[00:30:59] Bill: One of the first ones first private lenders that I ran into is a gal named Barbara and I actually bought her house. She ended up with having a bunch of money as a result of that and she wonder what am I going to do with that money? So I turned around and I re borrowed it actually on the same house. It was kind of comical. In a way, but then she became a good friend and also started loaning us money. And by the way a good source of funds is people who sell houses because they don't really know what to do with their money and that can be a ready place to fund your next purchase. But also Amanda, maybe we'll keep going on but people have lots of money in IRAs or other non-taxable instruments. How can they join the party in terms of being a private lender?

[00:31:56] Amanda: I mean many people think their IRA funds can only be used for money market accounts or investing in the stock market. And actually my first lender was my mom who had only IRA funds that she was doing nothing with she had parked them in cash because it was during the recession and you know, she just kind of was learning about what I was doing in my work. This was around 2011 and she started asking like well, you know, I have a couple hundred thousand dollars in my IRA. It's just sitting cash, it's not earning money. Is that something that could do, you know, you guys could borrow and we moved it over into a self-directed IRA. There's companies that facilitate that for you or you can do it on your own and she's been loaning her IRA funds. So that's worked out great for her. She doesn't have to worry about it being in the stock market. It's doing better than it was in cash and it's grown over the last seven years and she doesn't really worry about it because it's paying right back into her IRA account.

[00:32:58] Andrew: I think our first the first one I came across was actually a mortgage broker of ours who we're working to try to finance an apartment complex the deal actually didn't go through but while working on it, you know, we just decided we're discussing our business model and it's like, huh? That sounds really interesting.

[00:33:14] You know, can you talk more about that? And so we we basically took a bit of a detour from working on this mortgage that we're working on this attempted acquisition of an apartment complex to discuss what we normally do with regards to houses and he's like, yeah, I think I'd like to do that and so like. Well, we didn't get the we didn't get the apartment. We ended up getting outbid on that but we did get a private lender. And I think that's one of the things like, you know, having that short elevator speech just kind of telling everybody what you do and what you offer. I mean you don't need to make it really salesy, just like explain it and make sure like you get the key points what you do how it would benefit somebody and if the you know oftentimes, you know, even expecting it and just seems like you know, that sounds interesting to me and then you just go from there. So I think just being you know being not annoying but but loud about what you do.

[00:34:09] Amanda: just in closing here. Basically, we've built our business on using private money and really it's helped us to grow faster. So, you know, if you don't you can look at getting into real estate all different ways. People do get into it using conventional lending and that's great. We use conventional lending. We just choose to use private lending on an upfront it saves us time. It probably doesn't save us money. But it does work for us. It saves us cash that we don't have to put into our properties because you know, we're borrowing that purchase price plus the rehab from the get-go. Thanks for listening to this episode with us today. If you liked what you heard remember to like And subscribe to the podcast and get your free copy of the ebook.

[00:34:50] You can find us at thegoodstewards.com for more info connect with us and submit your questions to us or topics you'd like us to talk about. Thanks for joining us today.