I have a private lender lined up...

6 Replies

***Newbie alert***

PROS

- Have listened to nearly 50 podcasts over the last 3 months

- Registered with local REIA group and began networking/building team of contractors/agents/RE attorney

- I have a private lender lined up that has PLENTY of capital and solely wants to diversify their investments

- Have analyzed some deals, though probably not as thoroughly as I should have, hence me signing up for BP plus membership before the deadline to access calculators to hopefully show I am taking the right steps

CONS

- I have never done a deal before 

- Recently relocated to this area (only lived here 3 months and moved over 600 miles away from all friends and family)

- Currently in the process of purchasing primary residence with wife (this isn't necessarily a bad thing, but just trying to balance life/new job/closing on home/launching RE business all at the same time is new and somewhat intimidating

- I think I may be having some paralysis by analysis set in. Not 100% exactly which route in RE to take.....

So, I pose the question to you BP community. If you knew you had a private money lender that has said they would be happy to partner with you, what niche would you focus on being a newbie to the industry? Wholesaling? Flipping? Ideally, I love the BRRRR method but wonder, from a private lender standpoint, what's most appealing to them.

My area seems to have a need for affordable starter homes (less than 200k). There is a ton of development going on in our area, however much of it is new single family builds beginning in the $250k range and going up. It seems to be attracting many empty nesters with deeper pockets compared to younger generations with smaller bank accounts. 

There are, however, a ton of homes near the downtown area (I would say a C class area at it's worst) that I have ran numbers on and seem to make sense approaching in regards to flipping. 

I appreciate any and all feedback. I am really looking forward to being more involved on BP, networking, and being able to provide ANY help that I can! 

Originally posted by @Gabriel Stabile :

***Newbie alert***

PROS

- Have listened to nearly 50 podcasts over the last 3 months

- Registered with local REIA group and began networking/building team of contractors/agents/RE attorney

- I have a private lender lined up that has PLENTY of capital and solely wants to diversify their investments

- Have analyzed some deals, though probably not as thoroughly as I should have, hence me signing up for BP plus membership before the deadline to access calculators to hopefully show I am taking the right steps

CONS

- I have never done a deal before 

- Recently relocated to this area (only lived here 3 months and moved over 600 miles away from all friends and family)

- Currently in the process of purchasing primary residence with wife (this isn't necessarily a bad thing, but just trying to balance life/new job/closing on home/launching RE business all at the same time is new and somewhat intimidating

- I think I may be having some paralysis by analysis set in. Not 100% exactly which route in RE to take.....

So, I pose the question to you BP community. If you knew you had a private money lender that has said they would be happy to partner with you, what niche would you focus on being a newbie to the industry? Wholesaling? Flipping? Ideally, I love the BRRRR method but wonder, from a private lender standpoint, what's most appealing to them.

My area seems to have a need for affordable starter homes (less than 200k). There is a ton of development going on in our area, however much of it is new single family builds beginning in the $250k range and going up. It seems to be attracting many empty nesters with deeper pockets compared to younger generations with smaller bank accounts. 

There are, however, a ton of homes near the downtown area (I would say a C class area at it's worst) that I have ran numbers on and seem to make sense approaching in regards to flipping. 

I appreciate any and all feedback. I am really looking forward to being more involved on BP, networking, and being able to provide ANY help that I can! 

 That depends on the time frame for the private lender. If he wants immediate turns you do "quick flips" or "fix & flips" and by fast I mean 30 days to 3-4 months. If he wants his money parked for a long time (5 years) then a syndication or apartment investment might work. If he wants 30 year money then a long term buy & hold. You need to know what the private lender wants to accomplish before you know which direction to go.

@Gabriel Stabile , on the face of it, the "ton of homes near the downtown area" would be more likely to be BRRRR candidates than for Flipping, right? Can you guess why?

Answer: because even when "done up to the nines", they'll still be in a C area.

Whereas, as-is, they likely attract renters, who won't/can't own their own homes!

ie. Renter-areas = BRRRR-areas!

I agree with Account Closed regarding finding out the motivation of your "private" Lender. [They're not asking for money up front from you, are they? That'd be a Big red flag!]

Thanks for sharing here. All the best. Cheers...

Howdy @Gabriel Stabile

I would also add you need to know why you are getting into REI. What are your long term goals and what strategy will help you get there. Do you want to build passive income for retirement? Buy and Hold or BRRRR is the way to go. Do you want to do quick turns and build cash reserves? Then Flips are your preferred strategy. You may want to do a little of both since they are very similar animals. Both can use Private Money lending and both use the same basic analysis. BRRRR just has an additional element (Rent) that has to be considered.

Has far as analysis paralysis - why don’t you post a few of your analysis so we confirm if you are doing it correctly.

I do strictly BRRRR strategy for now. I also use a Private Money Lender. Figure out your goals. Find out your Private Lenders desires. Work out a plan to meet both.

 That depends on the time frame for the private lender. If he wants immediate turns you do "quick flips" or "fix & flips" and by fast I mean 30 days to 3-4 months. If he wants his money parked for a long time (5 years) then a syndication or apartment investment might work. If he wants 30 year money then a long term buy & hold. You need to know what the private lender wants to accomplish before you know which direction to go.

Hey Bill, thanks for reaching out. I should of included my lender's goals. They are interested in diversifying their investment portfolio and isn't necessarily looking for a specific time frame as far as ROI, rather that the returns are worth it. He said a 10-15% return is ideal.

As far as my goals are concerned, I am 28 years old now and would like to have cash flow of $5000 per month by the time I am 35 which I feel is more than doable.

I am going to pick my lender's brain more to clarify his goals and truly get us on the same page.

I greatly appreciate your input, thank you. 

Originally posted by @Brent Coombs :

@Gabriel Stabile, on the face of it, the "ton of homes near the downtown area" would be more likely to be BRRRR candidates than for Flipping, right? Can you guess why?

Answer: because even when "done up to the nines", they'll still be in a C area.

Whereas, as-is, they likely attract renters, who won't/can't own their own homes!

ie. Renter-areas = BRRRR-areas!

I agree with Account Closed regarding finding out the motivation of your "private" Lender. [They're not asking for money up front from you, are they? That'd be a Big red flag!]

Thanks for sharing here. All the best. Cheers...

Hey Brent, thank you for reaching out. So my lender is actually a family member (wife's side) that is relatively entrepreneurial and wants to expand his REI (owns a few condo's in various vacation destinations).

They aren't asking for any money upfront and he was rather candid when I approached him. Not to put his business out there but he basically said "you find the deals and do the work, I'm your capital". He's extremely transparent with me about his businesses and up front about what he will and won't do (Basically just be the lender). 

I want to make sure that I am not taken advantage of (doubt he would do that) but rather want to be sure in how to approach this partnership. I don't see why 50/50 would be out of the question and I believe that there are deals to be had in the area. 

Thanks again for responding to me Brent, I'm sure I will blow you up with more questions. 

Originally posted by @John Leavelle :

Howdy @Gabriel Stabile

I would also add you need to know why you are getting into REI. What are your long term goals and what strategy will help you get there. Do you want to build passive income for retirement? Buy and Hold or BRRRR is the way to go. Do you want to do quick turns and build cash reserves? Then Flips are your preferred strategy. You may want to do a little of both since they are very similar animals. Both can use Private Money lending and both use the same basic analysis. BRRRR just has an additional element (Rent) that has to be considered.

Has far as analysis paralysis - why don’t you post a few of your analysis so we confirm if you are doing it correctly.

I do strictly BRRRR strategy for now. I also use a Private Money Lender. Figure out your goals. Find out your Private Lenders desires. Work out a plan to meet both.

Hey John, thanks for reaching out and noting that I should include my goals as well. 

I believe my main goal is to be able to "retire" from the 9-5 corporate world by my mid 30's. I'm 28 now and would like to be cash flowing in the $5000 range (after expenses). That seems to be the number for me to live my "ideal" life on a month to month monetary basis. 

When I get home, I will be happy to post a few analysis's. I GREATLY appreciate the help and insight. Thank you!

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