There are two primary ways that private money loans are structured… as an equity or debt investment.
Private Money Loan Structuring – Equity vs. Debt
With an equity investment, you’re giving your private lender a portion of the ownership in the property. What portion? It’s up to you. But, I’ll give you an example from one of our students below.
With a debt investment, your private lender is paid a specific rate of return. This is how I’ve structured most of my private money loans. Why? Because most of the time, it’s more profitable. And by retaining 100% ownership of the property, you remain in full control.
Neither structure is right or wrong… just different.
How PMBP Student Justin Wilmot Structures Loans
Justin Wilmot, one of our students kicking serious butt in the Florida market (he’s done more than a dozen deals in the last year since getting started), structures all of his deals straight 50/50 partnership with his private lender.
So, he chose the equity investment route.
… and he never has to worry about financing again.
He brought in one private lender with deep pockets and started doing deal splits. It worked out great for him and his lender so they decided to go into business together.
With cash to close deals at Justin’s disposal, he simply focuses on finding and closing great deals.
How PMBP Student Rob Russell Structures Loans
He offers anywhere from 5 to 10% interest per annum and consistently gets private money on the low end of that range. Whoohoo!
Rob shared a cool story about a “Loaded Dentist” recently who contacted him through his PMBP website. After chatting a couple times and meeting, he had a commitment for private money at 7% per annum… no fees, no points, no hoops, no B.S.
Also, you may be wondering…
How Does Your Private Money Lender Get Paid?
Do whatever makes sense based on your deals, your business model.
If you’re doing long term private loans (anything over a year), maybe you distribute the interest earned or profits over time… through monthly, quarterly, or annual distributions.
For short term loans, you could let it accrue until you cash it out.
It’s up to you to determine.
Got a comment or question?
Toss it into the comment area… let us know how we can help.
P.S. – In our full Private Money Blueprint system, module 4 is called The Nuts and Bolts: The Essentials and Specific Steps to Every Private Money Transaction. We cover – step by step – exactly how to close a transaction and give you all the paperwork… and that’s just one small component of our overall private money getting system.
P.P.S. – Need some inspiration? Check this out
I caught up with one of our students the other day, Justin Wilmot, who is actively flipping properties in his local market in Flagler Beach, FL.
In this “Insider Interview”… we dig in deep to find out what’s working in Justin’s biz, what techniques and strategies he’s using to fund and close deals, what suggestions he has for other real estate investors in today’s market.
… and just a couple years ago, he was at ground zero.
Justin had been reading books, blogs, studying real estate investing… but hadn’t taken any action. And no action resulted in… nothing.
But, then things changed.
Fast forward to today… Justin has private money at his disposal and is consistently closing deals each month (and he’s a twenty-something surfer dude!).
Justin is going to share how we got his first deal under his belt, how he found and structured his private money (which is different than the way I do it… and works very well for him), and a whole bunch more.
Check out the “Insider Interview” to learn what’s working in Justin’s biz today…
Good stuff, ehhh?
Thanks for sharing with us Justin! We appreciate it buddy
… and we love feedback. So, put your thoughts, comments, and questions in the comment area.
Let us know how we can help.
Okay… now… this is truly my favorite kind of email to get. Justin Wilmot is a young guy who joined our program a little while back and his big “claim to fame” as far as private money goes is that after going through our proram he locked down a private lender who has $1 million available for Justin to use for his investments (check out the previous case study on him on that).
But, a little bit back Justin emailed me… and he just closed his FIRST DEAL… and put $8,678.45 in PROFIT in his pocket on a wholesale deal he just closed with my help and guidance.
Check out the string of emails straight out of my email account below… (read the picture from the bottom up… that’s the correct time-line of how the emails happened… cool stuff).