In this article

Too many times real estate investors only care about how they are going to become a millionaire in this business.

But quite honestly, it is so much more important to focus on how you are going to make your private-money partner a millionaire first. If you make your private-money partner a millionaire, it is inevitable that you will also become a millionaire.

So How Do You Make Your Private Money Partner a Millionaire?

Answer: Compound interest (what Albert Einstein called the 8th wonder of the world).

Related: How I Find Private Money Lenders to 100% Fund My Deals (& How You Can, Too)

In simple terms, compound interest is the action of taking the interest you earn on an investment and rolling it back into that investment. This is known as earning interest on your interest. Compounded interest will grow an investment exponentially—and even more so when the investor is not paying taxes each time they take an interest payment.

Einstein discovered a rule around compounding interest, called the Rule of 72. It goes like this: If you take an investment which is compounded annually and divide the interest rate into the number 72, the result you will get is how many years it will take that money to double.

Related: Investors: Don’t Be Intimidated by Private Money! Here’s What You Need to Know.

Compound interest is a very powerful concept that will help you make your private money partners millionaires (and even multi-millionaires!)

Let’s get some discussion going!

How have you been able to help your private money partners increase their wealth by compound interest?

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.