Latest / Results Driven / Episode 180: How to Raise Private Money Without Feeling Like You’re Asking for a Favor

Transcript

Episode 180: How to Raise Private Money Without Feeling Like You’re Asking for a Favor · Results Driven

• 0:00
  SPEAKER_00: So let's just say something happened or they had to foreclose you.
• 0:02
  SPEAKER_00: You can have them sign a personal guarantee, and then they're protected against other assets.
• 0:07
  SPEAKER_00: And this is what makes private lending so sexy to people who have old retirement funds or old 401k or cash sitting around, maybe equity in their house where they can leverage a line of credit at say 6% and lend to you at 12% and they make the spread while they sleep.
• 0:30
  SPEAKER_00: Are you a driven real estate investor tired of inconsistent deal flow and ready to scale your business?
• 0:35
  SPEAKER_00: I'm Tiffany High.
• 0:37
  SPEAKER_00: And I'm Josh High.
• 0:38
  SPEAKER_00: And this is the Results Driven Podcast, where we share proven strategies to build systems, master sales, grow your team, and create a self-sustaining business with predictable income.
• 0:49
  SPEAKER_00: Whether you're a one-person operation or building a team, our mission is to give you the tools, support, and mindset shifts you need to succeed.
• 0:58
  SPEAKER_00: Let's dive in.
• 1:03
  SPEAKER_00: A lot of investors fear talking about private money and prospecting people in order to raise money for their flips.
• 1:10
  SPEAKER_00: And a lot of times it's because they feel like they're asking for a favor instead of presenting an opportunity.
• 1:17
  SPEAKER_00: And I think that if you were, actually, I'm confident that if you were more educated on the understanding of the stock market versus private lending, you would feel confident that you're presenting an opportunity.
• 1:29
  SPEAKER_00: So a lot of times I target people who have old 401ks or left a recent job that they can self-direct their accounts.
• 1:37
  SPEAKER_00: And maybe they don't understand the difference between where their money's sitting now versus the opportunity of private money.
• 1:43
  SPEAKER_00: So I just want to walk you through the differences in them putting their money in the stock market versus private lending.
• 1:50
  SPEAKER_00: All right.
• 1:50
  SPEAKER_00: So let's just go one by one so that you can see how big of an opportunity this is for prospects that you're thinking of family, friends, friends of friends, et cetera.
• 2:00
  SPEAKER_00: The purchase price, right?
• 2:02
  SPEAKER_00: So when an investor goes to buy a deal, we buy it at a 30 to 50% discount to the market.
• 2:08
  SPEAKER_00: You can't do that in the stock market.
• 2:11
  SPEAKER_00: So when they go um move money around or buy shares of a company, they buy in at that moment's market value.
• 2:18
  SPEAKER_00: Where when they private lend against my house, it's already got an equity cushion of 30 to 50% as is.
• 2:26
  SPEAKER_00: So if they went and signed this mortgage and lended me today and something happened tomorrow, that's okay.
• 2:32
  SPEAKER_00: They're actually probably going to make money off of that.
• 2:35
  SPEAKER_00: Asset backing, right?
• 2:37
  SPEAKER_00: In the stock market, you're just buying shares to own part of a company.
• 2:41
  SPEAKER_00: In private lending, you sign a mortgage against a tangible asset.
• 2:47
  SPEAKER_00: I can physically touch and see this asset in the stock market.
• 2:50
  SPEAKER_00: That's not the case.
• 2:52
  SPEAKER_00: Insurance, this is a big one, right?
• 2:54
  SPEAKER_00: So let's just say I go to fund a company in the stock market and they're headquartered in the state of Florida, and all of a sudden a hurricane came in and just destroyed their entire headquarters.
• 3:04
  SPEAKER_00: So their stock market tanks.
• 3:06
  SPEAKER_00: In the private lending space, when you go to private lend me against a house and it gets hit by a tornado or it catches fire or whatever, it's backed by hazardous insurance so that the lender, the lien holders get paid off, which is a big deal.
• 3:21
  SPEAKER_00: You cannot get that protection in the stock market.
• 3:24
  SPEAKER_00: Security, right?
• 3:25
  SPEAKER_00: In the stock market, you have no security.
• 3:27
  SPEAKER_00: In private lending, you are signing a mortgage.
• 3:30
  SPEAKER_00: You're acting as the bank and it is secured by a lien and promissory note that is recorded against the property.
• 3:37
  SPEAKER_00: So when that property goes to sell, legally, you have to be paid before anyone else on that property.
• 3:44
  SPEAKER_00: Volatility is a big one, right?
• 3:47
  SPEAKER_00: One big headline can wipe out your stock.
• 3:50
  SPEAKER_00: So if a politician comes out and says something stupid or there's a drone strike somewhere, like it'll just automatically impact your retirement funds.
• 4:00
  SPEAKER_00: It's typically not like that when it's backed by a hard asset and not just the market.
• 4:05
  SPEAKER_00: Okay.
• 4:06
  SPEAKER_00: Returns in the stock market, they're unpredictable.
• 4:09
  SPEAKER_00: No matter what you say about it being the S P 500 and the history and all that, it is unpredictable.
• 4:15
  SPEAKER_00: We can't predict the future.
• 4:16
  SPEAKER_00: In private lending, they sign a mortgage and a promissory note with fixed returns.
• 4:21
  SPEAKER_00: So you negotiate it, it's fixed, and you know what you're going to get at the end.
• 4:25
  SPEAKER_00: Again, we already brought up equity cushion, but in the stock market, you're buying at market value.
• 4:29
  SPEAKER_00: In real estate, you're getting, you're backing an asset that's been bought at a discount.
• 4:34
  SPEAKER_00: And then repayment backup, there's none in the stock market.
• 4:38
  SPEAKER_00: And in the lending space, it is optional that you can make that investor sign a personal guarantee.
• 4:45
  SPEAKER_00: So let's just say something happened or they had to foreclose you.
• 4:48
  SPEAKER_00: You can have them sign a personal guarantee.
• 4:50
  SPEAKER_00: And then they're protected against other assets.
• 4:53
  SPEAKER_00: And this is what makes private lending so sexy to people who have old retirement funds or old 401k or cash sitting around, maybe equity in their house where they can leverage a line of credit at say 6% and lend to you at 12% and they make the spread while they sleep.
• 5:10
  SPEAKER_00: Hope this helps.
• 5:11
  SPEAKER_00: I think that the more confident that you get in understanding the value and the opportunity, you'll feel more confident pitching it to other investors.
• 5:21
  SPEAKER_00: And by the way, we have a free coaching community.
• 5:24
  SPEAKER_00: We have free courses, documents, downloads, and we go live every Wednesday at 3 p.m.
• 5:29
  SPEAKER_00: Eastern for free and coach on things just like this.
• 5:33
  SPEAKER_00: So I will put the link to that community in the description.
• 5:35
  SPEAKER_00: And until next time, I'll see you on the next one.
• 5:39
  SPEAKER_00: This episode has come to an end, but your journey continues.
• 5:43
  SPEAKER_00: Subscribe to the podcast so you never miss an episode.
• 5:46
  SPEAKER_00: If you want direct help from us, join our free community by visiting the results driven podcast.com.
• 5:52
  SPEAKER_00: That's the results driven podcast.