What Bank Failures Teach Us About Borrowing Private Money

What we are going through - right now - is an economic revolution where there is going to be the greatest redistribution of wealth that we've seen in the last 100 years. The greed of banks have really made a mess of things.

However, the mortgage meltdown and the credit crunch have tremendously depressed real estate prices and created a lot of motivated sellers. Private Investors in your real estate projects have the opportunity for extraordinary returns and you can make a huge fortune using our strategies.

Why? Because with credit so tight, buyers with cash (e.g. private money), can literally dictate their own price. Those with cash can demand to buy property at 20% to 40% of the market value, and get it! And, with those kinds of deals, the property can be sold to homeowners at a great discount while the investor and his private money partners walk away with a boatload of cash.

Wouldn't it be tremendous, if you could get in on the secrets of borrowing private money? I'm talking about friends, family, private money funds, and angel investors.

WHAT'S IN IT FOR ME?

The first key ting you have to address is WIIFM (which is not a radio station) it is an acronym that stands for "What's In It For Me". That's right- private individuals just like the banks are motivated by the greed factor.[\hb] So "What's In It For Me" is really the million dollar question.

Since this is the first thing on a potential investor's mind, wouldn't it make sense to start the conversation by telling them?

HOW MUCH really depends on the private lenders you are talking to, and what their expectations are.

For family and friends, their consideration is influence by their investing experience with CD's or the stock market. So, for private investors who are friends or family, consider offering returns of 10% or higher. This is usually offered in the form of a promissory note that is secured or unsecured by the real estate being used as collateral.

On the other hand, for private lenders of high net worth (like angel investors), they regularly look for investments with much higher returns. To be at all interested, they would expect returns of 15% or higher.

Wouldn't it be even better, if you could borrow private money without having to make regular interest payments?

Then consider offering instead of interest, an equity-a percent of the profits. In this scenario the private lender shares in the risk as well as the profit, so he’s apt to demand a much higher return. And if the private lender does want regular payments, you can use mixed funding.

That is, offer low monthly interest payments supplemented with an "equity kicker". So the investor can supplement his yield by receiving a share of the profits.

Real Estate investors who would like to learn more about finding private investors, working with private lenders, presenting to high networth individuals, structuring their entities, and creating a financing plan can take advantage of a new resource I've created called the INVESTOR WEALTH NETWORK (See Resource box).