Software Features

BROKERAGE SERVICES

Software Features

Property Data

Research properties and their owners, compile lists, and more.

MLS Comps

A multiple-listing service comparable tool.

Listings

List your properties with Propelio Realty for incredible savings.

Short Sales

If you have an underwater property, our experts can help.

For Education

Blog

Interesting and valuable articles from Propelio and the industry.

Academy

Real Estate education platform led by a team of professionals.

Propelio TV

A channel that gives daily updated archive of our live video.

Discover Propelio

About Us

Get to know Propelio better – explore our story and mission.

Map Coverage and Brokers

Shows MLS coverage and broker transactions in your state.

Referral Program

Share Propelio with friends and family to earn exciting rewards

Template is not defined.
Play Video

Everything You Need to Know About Private Money for Real Estate

Welcome to today’s discussion on private money for real estate transactions. What is private money, when to use it, and how to make the whole process seamless. Our expert today is Alan Cowgill, an authority in the field. His vast experience and insights will guide us on sourcing, defining, and leveraging private money effectively.

Who is Alan Cowgill?

Alan started his journey in corporate America, dedicating 25 years to the sector. Throughout his career, Alan noticed a common pattern: many family members retired at a low-income level after a lifetime of work. Alan decided to change his trajectory to avoid the same fate.

His journey into real estate began with a disastrous first date, where his car burst into flames, underscoring his financial struggles. Late one night, a real estate infomercial captured his attention. Despite his debts and a lost lottery investment, he took a leap of faith, purchasing a home study course on real estate investing.

From his first two properties, Alan expanded rapidly, eventually acquiring hundreds of properties. He successfully navigated a significant downturn in the rental market by leveraging private lenders, highlighting the value of private money in his investment strategy.

What is Private Money and Why Should You Care?

Private money differs from hard money in a fundamental way: you set the terms. Hard money lenders act like banks, setting rules that you must follow. Private lenders, often individuals seeking better returns than traditional investments, allow you to determine the terms.

Key Differences:

  • Control: Hard money lenders set the rules; with private money, you set the rules.
  • Flexibility: Private lenders often allow more flexible and favorable terms.
  • Rates: Typically, private money can offer similar interest rates to hard money but without the extra hoops.

Attracting Private Lenders

Alan’s first private lender was his mother. He offered her a significantly higher return than bank CDs with simple interest payments secured by real estate. Building on that success, Alan secured additional lenders by demonstrating transparency and reliability.

Tips for Attracting Private Lenders:

  1. Start with People You Know: Friends, family, and associates are your initial sources.
  2. Host Group Meetings: Organize lunch meetings to present deals to multiple potential lenders at once.
  3. Up the Ante: Once a lender commits, ask if they would be interested in larger deals to potentially double their investment.

Key Paperwork

Once a lender commits, there are essential documents involved:

  • Mortgage: Secures the loan against the property.
  • Promissory Note: Details the repayment terms.
  • Hazard Insurance: Protects the property against damage.
  • Lender Title Insurance: Ensures clear property title.
  • Disclosure Statement: Outlines the loan details and terms.

Navigating the legal landscape of private money is crucial. Regulations vary by state and at the federal level. Alan’s advice underscores the importance of consulting with an SEC attorney to comply with regional rules.

Major Regulations:

  1. 504 Regulation: Allows raising up to $5 million with proper disclosures.
  2. Private Placement Memorandum (PPM): Unlimited funds for accredited investors.
  3. Family, Friends, and Associates Exemption: Start with personal connections to avoid legal complexities.

Takeaway

Private money offers real estate investors a flexible and powerful tool to finance their ventures. Alan Cowgill’s journey from financial struggles to successful property acquisition through private lenders demonstrates the potential of this financing strategy. By setting your own terms and attracting private lenders from your personal network, you can create mutually beneficial arrangements that propel your real estate endeavors forward. 

Remember, the key to success with private money lies in transparency, reliability, and adherence to legal regulations. With the right approach and guidance, private money can become the cornerstone of your real estate investment strategy.

Get started with Propelio and unlock all the tools you need to succeed in real estate. Sign up now for a 14-day FREE trial: Start Free Trial

show less

Leave a Reply

Your email address will not be published. Required fields are marked *

Recent Episodes

Play Video
3 minutes

Many have asked how I climbed from wholesaling five years ago to flipping...

Play Video
45 minutes

Welcome to the Real Estate Business Mastery Show! In today’s episode, we recap...

Play Video
62 minutes

Welcome to another insightful episode of the Real Estate Power Hour. Today, we...

Play Video
49 minutes

Good morning, everyone! I’m Robert Kelley, and today I’ve got Kristen Gary Saad...

Play Video
47 minutes

Hey everyone, I’m Ryan from Propelio. Today, we talked with Lolita Shira, also...

Play Video
2 minutes

Do you remember the first time you tried to solve a complex problem?...

Play Video
50 minutes

Understanding the real estate market is crucial for investors looking to thrive and...

Play Video
5 minutes

Hey folks, Blade Johnson here from Finishing Touches in Fort Worth, Texas. Today,...

Play Video
28 minutes

In today’s fast-paced world, staying on top of your health can be a...

Play Video
44 minutes

Hey everyone, good morning! I’m Ryan with Propelio, and today in the studio,...

<span data-metadata=""><span data-buffer="">Propelio TV

Do you love learning from your favorite hosts? Subscribe and we will notify you when we release new shows.