How To Structure Private Money Deals to Get Lenders to Chase YOU!

Apr 26, 2022 | Uncategorized | 205 comments

This is an all-content video about 3 different ways to structure your deals with private money investors for real estate.
In this video, I show you:
– Breakdown of typical financing avenues for real estate deals
– 3 Ways to structure private money deals, with examples
– A slick way to borrow money from people who don’t have money to lend
– A way to structure private money deals that will have lenders chasing you
– And much more 

Please Note: This video on how to find a private money lender was recorded when our property flipping software was still MS-Excel based. Rehab Valuator is now completely cloud-based and does NOT require Excel!

Video Transcript Below

Hey, Daniil Kleyman here, and I wanted to put together this case study and tutorial for you guys on the subject of structuring private money deals for a couple of reasons. If you’re watching this then you’re either one of our 15000 plus subscribers and software clients, or you’ve found us through Facebook, LinkedIn, or another channel, maybe YouTube. But no matter how you found us, if you’re watching it then you’re most likely a real estate investor, and in that case I will bet anything that the subject of finding money for your deals is almost always the most pressing subject on your mind. If only you could find more money, you could do more deals, grow your wealth quicker, whether you’re building your portfolio, or you’re buying and flipping, whatever.

So, I’m going to show you two things in this video. One will be a few typical ways to structure your deals with your lender in a way that fits both your and your lender’s goals. And two, I will show you an easy way to present your deals to your lenders, that will really make you stand out from your local competitors. And it will make you look like you really know what the hell you’re doing in front of your prospective lenders as well, and that’s going to help you raise more money, unquestionably.

So watch this whole video, it’s not long. Don’t skip forward, and take notes. Information is only valuable if it’s applied and executed properly, and to those of you that will go and implement this, it will be very worthwhile content. This is the kind of content that all the real estate gurus out there are charging money for, hand over fist. But as luck would have it for you, I am not a guru, so I don’t charge for information. I buy real estate and make software. Oh, crap, I don’t even charge for software 90% of the time. If you’ve downloaded one of our free programs, then you know what I’m talking about. I’ve really got to reexamine my business model.

But anyway, this is called Private Money Structuring: How to structure your deals to get private money lenders chasing you! And the nature of private money is that it is incredibly flexible. You can literally structure an agreement between you and the private lender a thousand different ways. So this is one of the many reasons why private money is generally more attractive than bank loans, or any other form of financing for that matter. And I can’t possibly cover all of the possible ways you can structure private money deals, so I will just go over two or three of the most common ones. And one of these will be very powerful, and if executed successfully, will make private lenders come back to you time after time, and refer all of their rich friends to you as well. So stay tuned.

But let’s go over a few basics, first. Primary types of financing for residential real estate. Residential investment real estate. There is bank financing, there is hard money lenders, and there’s private money lenders. So when it comes to bank financing, there is obviously the conventional lenders, Fannie and Freddie. There is a limit of 10 mortgaged properties, very strict financing guidelines, requires ton of paperwork, good credit, 20, 30% down, background check, criminal check, drug testing, you have to give them your firstborn. You get the idea. Very hard to qualify these days, especially for investors.

I stopped dealing with conventional lenders ages ago. I can’t go to them anymore, because I have well over 10 mortgaged properties, and even if I could go to them, I probably still would not. You know, 30 year fixed rate financing is great, but just seeing my friends spend months trying to lock up a loan with conventional lenders, and pulling their hair out, is just… That’s enough for me.

So the second category of bank financing is there’s portfolio lenders. These are local community banks and credit unions. I deal a lot with these lenders, because quite frankly they are just way easier to deal with than the conventional lenders. These ae your local, little community banks that are mandated to lend in your area. There is very small hierarchy there, much quicker decision making, you can establish a relationship with a banker that, you know, usually the guys I deal with are the guys I’ll go out to breakfast and lunch with, they’re the same guys that can make decisions with my loans. They’re usually given free reign to make decisions on loans up to a certain limit before they have to take it to a credit committee. Usually it will be 200000, 500000, a million dollars.

So these guys, if they understand your business, they understand what it is you’re doing, they can make decisions on your loans very quickly. There are far less restrictions, because loans are generally kept in-house. That’s why they’re called portfolio lenders. Instead of having their loans have to fit Fannie or Freddie guidelines, because they’re going to sell these loans into the secondary market, they kept these loans in their portfolio and service them. This is how lending used to be 40 years ago. If you went to your local bank, when they lent you the money, they took the time to really underwrite the loan properly, because they knew they were going to keep this loan in-house for 20, 30 years, and they’d better make the correct decision and really get to know you, and make a good loan. Because they weren’t just going to sell this loan off to Wall Street and call it a day.

The downside to dealing with local portfolio lenders is, you still must qualify based on income, based on your credit, they will look at your global cash flow, and global balance sheet. So if you’re buying property, they will look at your entire portfolio, and you have to have solid income, and decent credit. Now, that’s not to say that you can’t team up with a credit partner, I know a lot of people doing that. You find a credit partner, if you don’t have a good job, you find a credit partner that will go in the mortgage with you, that has good income. But you still have to do a good amount of paperwork, and a good amount of qualifying in order to get a loan from a local portfolio lender.

Now, these are also, they’re really classified as commercial lenders, so you’re not going to get the 30 year fixed rate, low interest rate mortgage from these guys. They’re smarter than Fannie Mae or Freddie Mac. That’s why they’re still, a lot of them are still in business and doing well. They don’t want long-term, fixed rate, interest rate exposure. So typical loan you will get from these guys will be, you’ll carry a short-term call. Three, five, 10 years, or it will be an ARM. Now, most of my loans from these local banks are five year ARMs. I’m looking at probably three or four million dollars worth of loans resetting in, starting in three years. And so there is definitely a downside in dealing with commercial lenders.

Then, you’ve got hard money. I always have a running joke that you can go to a hard money lender, but they will rip your face off. They’re very expensive. Loans you can get from then are only going to be short-term, under 12 months, typically you’ll pay four to eight points up front, or on the backend. Points, for those of you that don’t know what that means, that just means if you take out a loan for $100000 from a hard money lender, they will charge you $4000 to $8000 flat on the loan, either paid up front at closing, or in the backend when you repay the loan, and on top of that they’ll charge you 12 to 16% interest rates. So you’re looking at anywhere from 15 to 20% annualized, you know, if you take out that loan for a year, your cost of money will be anywhere from 15 to 20%, typically. That’s expensive. You’d better have an amazing looking deal in order to be able to pay that kind of money for money.

The good thing about hard money lenders is, they don’t care typically about your credit, about your income, about your portfolio, as long as the deal is very strong. Because they know that they can actually make more money on the deal by taking it away from you. So you’d better have a very assured exit strategy in under 12 months, and a very solid deal, before taking out hard money. So if you’re rehabbing and flipping, you’d better be damn well sure you’re going to be able to exit out of this deal in the timeframe that you agree with your hard money lender.

And then there’s private money, borrowing from individuals. That’s really what private money is, you know, it’s not a complicated subject in and of itself. Private money is just borrowing from individuals. There are very few regulations, documentation requirements are up to the lender, and usually there is very little, the terms are incredibly flexible, it’s whatever you and your lender negotiate. There are typically no loan to value limits, again, it depends on what you and your lender negotiate, et cetera, et cetera. So, for example, if you want to buy, rehab, and flip a house, here are your options. And, other than obviously doing it with cash, here are your three most common options.

One, you can go to a local community bank or credit union and you can get a construction loan. You will need, again, to qualify typically based on income, credit, assets, et cetera. You’ll pay one to two points, and these days, I’m seeing interest rates of five to 8%. You’ll have a six to 12 month term on your construction loan. And then typically, most of these community banks will either call them or roll them over into what’s called a mini-perm, which means that your loan just rolls over into a 20 year amortized loan, with a three year call, for example. And all of these community banks… there’s so many of them… all of them are different. I suggest reach out to local ones in your area, get to know them.

Hard money lender. If the deal is strong, you don’t need to have good credit, income, or assets. You can get a loan based purely on the deal, but again, very expensive money and you must be able to rehab and sell the house, or rehab and refinance out of that hard money loan, under the terms specified by your hard money lender. Six to 12 months. Or, they’ll try to take the house back from you, or I’ve seen also clauses where after six or nine months if you haven’t repaid the loan, your interest rate jumps from 12 or 14% to something ridiculous like 25 or 30%. And I don’t know what the usury laws are these days, and if that’s even legal, but that’s what I’ve seen. So it’s incredibly expensive money from the get go, and then if you don’t repay that loan on time it gets even more expensive.

Or, you can get a private money real estate loan. Again, a private money loan is simply a loan made by one individual to another, usually backed by real estate. The terms between you and your private lender are completely up to you. So, in a typical private money transaction, you, the borrower, receive a loan for X amount from private lender in exchange for… and again, this is typically, it’s whatever you negotiate. But in the typical deal, you’ll pay them a monthly interest payment based on X%, you’ll give them a deed of trust or a mortgage on the property, depending on your state it’s going to be called a deed of trust or a mortgage, and you’ll give them a promissory note for the amount of the loan, promising to repay the loan after the agreed term. And I’ve seen private money transactions without the promissory note, again, it’s very flexible.

So in reality, you always want to keep things as simple as possible when structuring deals. So let me show you an example, and I’m going to use our Rehab Valuator software as an example to show you how to structure these deals, whether you use our software or another tool is really up to you, but I definitely suggest you use something, because it will make your life a lot easier. So this will be our example deal, this will be a rehab and flip deal, your purchase price will be $45000, required repairs will be $20000, closing/holding costs around $3300, and your projected resale price is $100000. So, pretty good deal, pretty standard, your cost basis is right below 70% of your after repair value. Now, you just need to find financing for it.

So we’ll switch over to Rehab Valuator, and I’ll show you the easiest way to structure this deal. Okay. So this is, if you haven’t seen this software already, it’s very simple. This is the input interface of the software, your purchase price goes here, $45000. Closing costs, holding costs, and we’ve entered our detailed rehab budget here, and it comes out to right at $20000, and then you switch to all cash option. Again, the easiest way to do this deal would be if you were sitting on a good chunk of cash, then you just do it with cash. You don’t have to pay for financing. I do a lot of my smaller deals with cash, but not everybody’s got the cash to do the deals.

So let’s say you want to go, and you want to get this whole thing financed, because it’s a strong deal. So you switch this to financing, and then you have an option here whether you want to finance it based on the after repair value, or the cost. So you’re going to say, “I want to get my entire cost of this project financed,” so you select cost here, 100%, and now with private lenders… With conventional lenders, with portfolio lenders, you’re often going to have to pay points. So origination discount points for a loan, you could have one, you could have two points, usually with private lenders you’re not going to be paying them points. So we’ll put zero here, and you’re not really going to be paying closing costs to the lender, either, so we’ll leave that at zero as well.

Now, you just have to decide what interest rate do I want to offer to a private lender? I know a lot of people and I finance deals myself at six or seven percentages rate. There is a lot of people out there that are sitting on cash, and that cash is not earning them more than 1%, and they will be very happy to start earning six, seven, 8% on deals, on money backed by real estate, backed by real property. Backed by a hard asset. So let’s just say you find a private lender, or you already have one, and they’re happy to make an 8% interest rate.

Now, the other thing that you have an option to negotiate with your private lender is, “Do I make you monthly interest payments during the rehab project, during the renovation phase, and while my property’s in the market, or can I just pay you on the backend, when I sell the… you know. I’m not going to make you interest payments for the next six months, and when I sell the deal, all that interest will accrue, and will be included in the amount when I repay the loan to you.” So, the simplest way to do this, obviously you’re going to make them an interest payment every month, but you can click this, and I’ll show you what this looks like, and you can say no.

Obviously, the cash required, and you can see here in the software, if you’re making interest payments, your cash required over the life of the project is $5300. So we always assume that your closing costs when you purchased the deal and your holding costs will come out of pocket. You could obviously negotiate to have closing costs and holding costs be paid by the lender as well, but for now, we’ll assume that that money is coming out of your pocket, but 100% of the purchase, and 100% of the rehab budget is coming from your private lender. But you can see, if you’re making interest payments during the rehab phase, and we’re assuming it’s going to take you two months to renovate, and three months to sell, your cash required is $5300. If you say, “I’m not going to pay you until I resell the deal, until I sell this house to a homeowner,” your cash required goes to $3300, which is just your closing and your holding costs.

So now, you can immediately see that you’re going to resell this house. Your cost basis, including your financing costs, will be 70% of the after repair value. Your projected resale price will be $100000. You’re assuming you’re going to pay 7% in closing costs when you sell the property, so 6% commission, and 1% in minor concessions or title work that you have to have the deed prepared when you sell the property. So we’ll assume 7% in closing costs when you sell the project. So here you can see you’re going to make 22.6 thousand dollars on the flip, and because you’ve put in so little cash into the deal, only $3300, your return on your cash investment is freaking astronomical.

So the cool thing about this software, and obviously I’m partial, is now that you’ve got this deal and you want to actually present this to your private lender, here’s what you do. You go view reports, private lender funding request. And you go here, you upload a couple of pictures, it’s very simple, and you can type in the description of the project here, and notes about some of the work required. And then you just create a one page marketing sheet out of this, and this is what it looks like. Right there. And obviously, let me go back and I’m going to change this headline, because your private lender is not making a 10% return, so let’s see. Okay. Opportunity to earn an 8% secured return. So now we’ll go, and I’ll show you what this looks like. Boom. You can print this out, or you can just make a PDF document out of this, and send this to private lenders that you already have a relationship with.

And it’s very important that you don’t blast these out to people you don’t know, because there are particular SEC regulations that prevent you from sending specific deal materials to people that you have never had contact with, offering them a specific rate of return. So you want to send these to people you already have a relationship with, or somebody that you’ve already met, and you’ve already kind of broached the subject of real estate with. But basically, you’re showing them right here very quickly, property information, your contact information, after repair value of the deal, purchase price, rehab costs. This is the total loan amount, and this loan amount will be your purchase price, plus your rehab cost, plus the interest rate that you’re not paying them during the project that you will pay them on the backend.

So look, you’re showing immediately your private lender, “Look, I’m only looking to borrow 67% of the value of the property after I renovate it. It’s a very low loan to value by conventional lending standards. It’s going to take me five months to repay you, and I’m offering you an 8% rate of return.” And here is the actual amount of money that your private lender will make over the course of five months, and their annualized rates of return. And this takes about a second to put together. And the other cool thing you can do with this software is, you can actually go and click full presentation with private lender, and now you’ve got a five page presentation that again, takes a few seconds to put together. You’ve got your cover page, and you could put your logo here. You’ve got your one page marketing summary.

Here, you’ve got the cash flow report, right, so you’re showing your private lender exactly how the deal will look from their perspective. You’re communicating all the numbers very clearly. This makes all the difference, because there’s no more confusion. You go, “Look Mr. Private Lender, you’re funding $45000, which is the purchase price at closing. Then you’re going to fund me two additional rehab draws, totalling $20000. This is how much interest you’re going to earn on this money, and it’s going to be deferred until closing. I settle the deal in month five, and you get repaid $67000, and these are your rates of return.” So you’re spelling out the deal very clearly, and obviously this is just your projection, you’re not guaranteeing them this is what’s going to happen, but this is your best case scenario.

And then you’ve got a comps report. You’re showing, “Look, I’m telling you that I’m going to sell this house for $100000, well guess what? Here are the recent comps for similar properties in my market.” So you’re showing your private lender, “I’m not just making up this $100000 number, similar houses are selling, and they’re selling quickly, and I’ll be able to do the same.” This just goes further to establish your credibility, and essentially back up the numbers that you’re providing to your potential private lender. And then you can include a page with some additional pictures here. And that’s it, and you print this out, or you very easily create a PDF document out of this, if you hit print, select a PDF writer, that’s it, it creates a PDF presentation for you.

It’s going to take a second, a box is going to pop up asking where you want to save the PDF document, you give it a name, and then you just include it as an attachment in your email. So this is the very simplest way, the most common way to structure a private money deal, where you pay your private lender just a set interest rate on their money. So we’ll call this deal structure method number one debt only, or I just like to call it straight interest rate. You’re simply getting into a debt arrangement with your private lender, you’re borrowing money from them, promising to repay it at a certain interest rate, after a certain period of time.

So here’s what this deal looks like for everyone. If we go to project summary, so okay. You’re buying for 45 grand, rehabbing for 20, these are your holding and closing costs, this is what financing costs you, you’re paying about $2100 in interest. Here’s your total cost basis, you’re financing a big chunk of that. This is how much cash you have to commit to the deal. Your projected resell price, cost of sale. So you’re making 22.6 thousand dollars on the flip, and if we go down here, these are your financing costs. $2100, out of that, interest on original money, which is the purchase price, and then interest on your rehab draws is another $560. So there you go, a very clear breakdown of this deal, private lender make a good rate of return, and you make a very nice chunk of cash on the sale.

Now, here’s another cool thing that I like to do. You probably have a lot of… or at least a few friends, family members, acquaintances, that have home equity lines of credit that are not being used. What I’ve often done is, if I find somebody that’s got let’s say a $50000 line of credit on their home, the interest rate that they have to pay, especially these days on that line of credit is very low. 4%, 3%, 4%. So I will tell them, “Hey look, you’ve got this line of credit that’s not being tapped, let me borrow that money.” And typically they can just literally write you a check out of their home equity line of credit. You say, “Look, let me borrow this money for six months, or a year, I will pay you five or six points up front. So you write me a check for $50000, I’ll write you a check for $3000 right back, and I will make monthly interest payments on your line of credit until I repay it in full.”

So this is what that would look like. You say, “I will pay you six points, and I’m going to pay it up front. And I will pay off the interest on this line of credit every single month.” And so what happens is, you’ve got somebody that’s sitting on the line of credit that’s not being used. Now, you’re able to use that line of credit, they make a very nice chunk of cash up front, look at this. Your private lender, on this particular deal, makes… they get a check for $3900 from you right away. As soon as they lend you this money. So they’re making four grand that normally they wouldn’t have made, you in turn are financing the entire cost of your renovation, and acquisition, your cash out of pocket has to be a little bit higher, and your total financing costs go up, but again, this is a great way to let everybody win.

Your private lender, in effect, is using money that’s not theirs to make money. I mean, think about it. They’re taking money from their bank, and arbitraging it to you. They’re making almost four grand up front in cash, and you’re repaying their interest on their equity line of credit while you’re doing the project. So if you were to present this to your lender, again, let’s go back to the marketing sheet. Right, same thing? You’re saying, “Look, write me a check for $65000, I will pay 4% interest on this money, and I will also pay you $3900 in points.” So you still make, after all is said and done, you still make almost 20 grand on this deal, your private lender is happy because they’ve taken somebody else’s money and lent it to you, and made four grand. Everybody wins. This is a very slick way to borrow money from people that don’t necessarily have cash.

If you get anything out of this whole presentation, this is one tip that’s worth tens of thousands of dollars. Hundreds of thousands of dollars. I’ve raised hundreds of thousands of dollars from this method. Find somebody with home equity lines of credit that are not being used, right. These are not your typical private lenders. These are people that may not necessarily have cash, but you can borrow from them. You can utilize their lines of credit. And this is very powerful, and the way you make it worthwhile to them is by offering them these points up front. I mean, to allow these people making four grand, just by writing you a check? It’s huge. It’s powerful. So that’s one tip that is kind of unconventional.

So we’ll call deal structure method number two debt only with points, or borrow from people who don’t have money. Seriously, write this down. It’s pretty slick. All right, so let’s review how these deals look in terms of numbers. So, structuring method number one is where we just pay the simple interest rate to the private lender. All this is the same. Buy for 45, rehab for 20, closing/holding costs, your projected resale price is $100000. You earn 22 and a half thousand dollars on the deal, your private lender makes two grand, annualized cash and cash return to your private lender is about 7.6%, which is pretty nice. A lot of people will be very happy earning that kind of return backed by real estate. Your cash required for the life of the project is $3300 for your closing and holding costs, and even that can be negotiated into the loan.

Again, private money, you can negotiate anything. You want to give your car as security for the loan instead of real estate, I mean you can literally negotiate anything. Structuring method number two, same thing. Numbers are the same here, you earn a little bit less, close to $20000 on the deal, because you have to pay up front points to your lender to use their equity line. But, your private lender makes $3900, annualized cash and cash return is almost double to your private lender. 14.4%, and this isn’t even on their money. Again, remember what I said. Your private lender writes you a check out of their equity line, so they’re making a 14.4 cash and cash return, but it’s not even on their cash, it’s on their bank’s money. This is the beauty of this strategy.

Your cash required for the project is higher, $8200, but what if I showed you a way to go back to only needing three grand for this project, or zero, if you can negotiate it into the loan, but giving your private lender almost a double rate of return than this? In the high 20s? Check this out. Structuring method number three. You make a little bit less, $17000 on the deal. Your private lender makes a whopping 7.3 thousand, which is an annualized cash and cash return of 26.5%. And you only need three grand for the deal, or zero if you can get your lender to finance the closing and the holding costs. Do you think if you can produce this sort of rate of return for your private lenders, do you think they’ll come back to lend to you over and over again? Will they refer you to all of their friends, if you can consistently deliver that kind of returns?

I mean look, again, don’t get me wrong. If you can get away with just paying your private lender six, seven, 8% interest rate, and you’ve got plenty of money, then I’m not advocating doing this, necessarily. But if you’re having trouble raising private money, but you have access to good deals that you can execute, or if you’re dealing with people who want a higher rate of return on their cash in order to lend it to you, then let’s look at the final structuring method that I’m going to show you. We’re going to call debt with equity, or alternatively, it can be just equity only. And I’ll show you how to do it both ways.

Okay, so this is how our previous scenario looked, and before I go any further, if you’re not paying careful attention to this, then you’re wasting your time. The devil is in the details, and the details are the numbers. And unless you’re giving this video your full attention, just turn it off right now, you’re really wasting your time. You’re not going to get anything out of this, it’s really important that you understand the numbers and how the numbers break down. So, turn off Facebook, turn off football or whatever else it is you’re watching, and give this your fullest attention, we’re almost done.

So, in deal structuring scenario two, we looked at paying 6% origination points to the private lender to use their equity line, and a 4% interest rate to repay their line of credit. But, as you can see, you need… and because you’re making these payments every month… you need almost eight grand to do this deal. Check this out. You go back to paying zero points, and you say, “Hey, private lender,” and now you’re dealing with somebody that’s got cash to lend. Before, you were offering them 8%, let’s say, “Hey, what if I only pay you 6% interest rate, and we’ll defer these payments until the end of the project, but when I’m done doing this deal, and I flip it, I’m going to give you 25%… just as an example… 25% of my flip profits. And so you hit this little drop down box here, and you say split backend profits with lender, you say yes.

And by the way, before we go any further, this software lets you apply all of this, not just to deals that you’re going to flip, but my business strategy usually is to purchase, rehab, and then refinance with local community banks into a permanent loan, and then hold the deal. So just as a head’s up, you can do this analysis for deals that you’re going to hold, as well. But let’s not get distracted.

So, basically what you’re saying is, “I’m going to give you equity in the deal. You’re going to lend me money, and I’m going to share the backend profits with you.” And if we go to our private funding request, this is what it looks like. And we’ll… So, cover page, and this is the funding request, look. You’re saying, again, “I’m only borrowing 67% of the value of the property once renovations are finished.” So the thing to always sell your private lenders is, if you want to think of the worst case scenario, “Let’s say I stop making payments to you, and you have to foreclose on me. Well guess what? You’re going to take back a property that’s going to be worth $100000, and you’re only owed $66000. You’re actually going to make more money in the worst case scenario, you’re going to make more money by taking the property back from me.”

So you’re borrowing 67% of the value, again, five month timeline, and you’re saying, “Look, interest rate offered to lender, 6%, with a 25% profit split.” And the way our software works is if you, if profit split is disabled, this never even comes up in the conversation. It’s blanked out. And look at this, you’re showing your lender, “You’re going to make interest income of a grand and a half, but you’re going to get another $6000 almost as a profit split, so your total income will be $7300. And here’s your cash and cash return, and the internal rate of return.” I mean this is huge, and you’re still making great money on this flip. And again, if you can get away with paying your private lender six, seven, 8% flat, great. But sometimes you can’t find the money at those interest rates. Sometimes you can’t get a lender excited about coming to you, or maybe taking a chance on you if you’ve never done a deal with them.

So offering them a profit split is a great way to bump up this return big time, but the beauty of this strategy is, they’re only getting the profit split if you make a profit. You know, if we go back here, they’re sharing in the upside with you. If we go back here and we say, “Oh, man, I’ve got to drop the price to $90000,” well they’re getting less of an upside as well, right? So basically, their profit split is now only $3400. You’re making less, they’re making less. So this is what’s called debt with equity, because you’re borrowing money from them, but you’re also giving them equity in the deal by giving them upside. You could go just a pure equity rout, meaning they put up the money for you to do the deal, and you guys both own the deal, you’re not paying them interest rate on this money, and you’re going to split the profits 50/50.

Right, so here we’re going to say 50%, and we’re going to bump up the sale price back to $100000. So now, with the equity only rout, and splitting profits 50/50 with them, if you don’t make money on the deal, they don’t make a penny. You guys are both invested, so you, assuming you sell at $100000, you make $12000, and guess what? And your private lender makes $12000 as well. But look at the potential upside. With investing, the higher the risk, the higher the return. So your private lender now is taking a bigger risk by becoming your equity partner, but the potential return on their money is much higher, 45%.

So I tend to talk fast, if this didn’t make sense, rewind the video and watch it again. So again, these are just some of the typical ways in which you can structure your private money deals. I mean, again, the beauty of private money is that it’s flexible. It really just depends on your imagination and what you can negotiate with your private lender, and obviously you’ve got to be able to find out what the particular private lender you have in mind, what their goals are, and tailor your deal structure, ideally, to both fit your and their goals. And your ability to raise private money is going to boil down to one, being able to find the private lenders, and then being able to structure your deals with them correctly, and present your deals to them in an intelligent manner.

It’s obviously very important to establish credibility with your lenders, by showing them you understand how the deals work, you understand the numbers, you understand how much money you’re going to make on the deal, how much money they will make on the deal, and you understand your exit strategies, and you plan appropriately. So there is a couple of things that I’d like you to do if you’ve gotten value out of this video. One, right below the video there is a Facebook share button, as well as a Twitter share button, so I’d love for you to share this video with your friends on Facebook, your Twitter followers. Anybody that you think can use this information, we obviously would love to get this video into the hands of as many people as possible.

Number two is leave a comment at the bottom. If you have a question, if you have an opinion, if you have a success story about raising private money, if you want to share your own strategies for structuring deals, for finding private lenders, anything, leave a comment below. When all is said and done, this video is going to get watched by thousands and thousands of people. So we’ve got a pretty big community here, and if you want to tap into this community, this is where you do it. Leave a comment, leave a question, if you’re looking for private money, if you have private money to lend, you can leave your contact information, your website links, leave it all below in the comments section.

Number three is right below the Facebook share button, there is a link for a page with some related resources. One of these will obviously be the Rehab Valuator Premium software. If you don’t have it yet, and you’re raising private money, or you’re doing rehab deals, I obviously suggest, highly suggest, you get the software for what it can do for you and your business. It’s a freaking giveaway, it’s dirt cheap, it’s $97, it’s a one time fee, but obviously as I’ve shown you in this video, if you need a way to evaluate your deals, to structure your deals, and to present these deals to anyone, to banks, to private lenders, to wholesale buyers, this software makes it almost a no brainer. And finally, go out and raise some private money.

So that’s it, I appreciate you watching this, again, if you have questions, comments, leave it all below, and we’ll catch you later.