| It has been said that "there are two types of people | | | | money. First, if your investor doesn't own the |
| in this world, those who know how money works, | | | | property 100%, then you could be in trouble with the |
| and those who work for them." | | | | SEC and violation of security laws. But your just |
| If you think about this, it will open up your eyes to | | | | giving them the deed doesn't mean your investor is |
| finding private money for your investing. First there | | | | protected. If you were to get hit by a bus tonight, |
| are only two groups in that statement and it is | | | | what would your investor have to do in order to get |
| probably safe to say that those who have money, | | | | his money back out easily and move on, especially if |
| are in the first group, and those that don't have | | | | your investor isn't real estate savvy? |
| money, are in the second group. Second, if you are | | | | Let's consider one of many ways that you might use |
| seeking private investment money the group you | | | | to protect your investor. For sake of example let's |
| need on your side are those who know how money | | | | assume you have a property whose after repair |
| works. This is only logical as they are the people who | | | | value (ARV) is worth $100,000 and that you can |
| have the money. But this should also be a clue that | | | | purchase it for $50,000. It needs $20,000 worth of |
| your private money investor has been around the | | | | work before it can be sold to a retail buyer. You |
| block a few times and may think differently about | | | | want to buy the property, fix it up and resell it, but |
| investing than you do. | | | | you need to borrow the money, and still protect |
| I heard the other day that most millionaires | | | | your investor. What if you let the investor buy it at |
| experience bankruptcy 3 or more times in their | | | | cost, loan you the money to fix it, and then you get |
| career. That's should be enough to make you pause. | | | | an option to purchase the property from the |
| Your prospective investor didn't get to where they | | | | investor in 6 months for the amount of money your |
| are by being lucky or being foolish. Promises of high | | | | lender has in the deal plus a return on their money? |
| returns mean little to them. They may be more like | | | | This way, if you get hit by the proverbial bus, they |
| Will Rogers who said "I'm more concerned about the | | | | have the property at a price they can easily resell it |
| return 'of' my money, than the return 'on' my | | | | for without a loss, they have ownership so they |
| money." | | | | won't have to foreclose if you can't fix it and sell it in |
| One of the first questions you should ask yourself | | | | time, the investor knows you have motivation to |
| when considering bringing in a financial partner is "How | | | | finish the job, and you have the leverage of an |
| will I protect my investor's money?". If you have any | | | | option to make a profit for anything above your |
| problem giving your investor the deed to the | | | | investor's principle and return. |
| property, you shouldn't be asking your investor for | | | | |