When Does Private Money Make Sense?

Question

For investors who’ve used different capital sources—at what point did private money start making sense for you compared to traditional financing? Interested in hearing real-world experiences.

John O'Leary · Answer

Hi Brandon,

From what I’ve seen, once you have deal flow, a team, and repeatable systems, private capital and seller financing become the two real rocket boosters for scaling. Traditional financing works great early on, but it eventually becomes a bottleneck with timelines, seasoning, and leverage.

Private money gives you speed and flexibility, while seller financing lets you control terms and preserve cash especially in today’s market. Once those two are layered on top of solid underwriting and ops, growth stops being linear and starts becoming intentional.

Kenneth Garrett · Answer

Private money is great for BRRRR projects. Quick access to money. Ability to scale quickly. Need enough of a spread to make the numbers work and you have the ability to refinance out of the private money.

I've done 30-40 BRRRR deals. It's all about the numbers. No emotion. It's just a math problem.

I’ve done 30-40 BRRRR deals.  It’s all about the numbers.  No emotion.  It’s just a math problem.

Mitch Messer · Answer

We've been using private money for over 20 years, both as a borrower and a lender.For most investors, private money make the most sense once you've done enough deals to have a working, repeatable and complete system for taking down profitable deals.

Once you've figured out WHAT to do, then you need fast, reliable, transparent funding to do more deals.

You need more flexibility than banks or hard-money lenders can offer, plus you'll appreciate the value of having a true relationship with your lender.

Sadly, most investors approach private lenders way too soon. They don't have the systems in place to support growth, so they crash and burn.

There's nothing more tragic than getting a private loan and then screwing things up so miserably you burn that bridge forever!

When Does Private Money Make Sense?

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