00:00 - 05:00
What's up military millionaires. We have another exciting episode this evening. And we are bringing in Alex Breshears to talk about private lending, private money, limited partnerships and everything that goes into lending money.
So, as a lot of, you know, private money gets touted a lot as Oh, just go find a private lender to fund your deal. And that's all well and good, except they're not always as easy to find. And you don't always know how to structure them. And there's a whole lot of question marks after that statement gets said, and Alex and I were on the phone the other day, and I was like, wow, you know what you're talking about, and you've built a community, the private lending lessons Facebook group, which I actually just invited a friend to today, because I think it's a very useful platform for asking those questions. And she basically, well, I'll let her tell all of it. But we had a good talk. And I was like, wow, yeah, let's get her on the show.
So this is gonna be a good time. And also, because I, I don't know, I didn't say anything about him. Alex Felice is here. He's still the co host, and you should hopefully have heard enough of these episodes. But you know, I should give him an intro. Anyways.
We're gonna we're gonna perfect that part eventually.
Welcome to the military millionaire podcast, where we teach service members, veterans and their families how to build wealth through personal finance, entrepreneurship, and real estate investing.
I'm your host, David Pere. And together with my co host, Alex Felice. We're here to be your no BS guide along the most important mission, you'll ever embark on your finances.
Roger, Vick One Oscar Mike.
Alex without a beard. Welcome to the show. And tell us a little bit about yourself.
Thank you, David.
I have been a military spouse for the last 20 years. My spouse is an active duty service member in the Navy. And in that timeframe, we've moved 19 times. I'm currently sitting in my 19th address and 20 years. So as you can imagine having any sort of, you know, meaningful career doing anything, you know, job wise, becomes very difficult as there aren't a lot of military spouses. It's just a non-existent career. And we used to actually invest as active investors, various places we were stationed around the country, we bought some rentals, we did a couple fix and flips and quickly discovered that was not us. I call it real estate, hazing or newbie real estate hazing, where if someone says you're interested in real estate investing, there's normally only two options that are presented to them. They're either going to be a buy and hold investor and be a landlord, or they're going to be a fixin flip investor, and they're going to put farmhouse sinks into ugly houses. And there's never like any other options ever presented. They're like here, if you're a real estate investor, this is what you do.
And of course, we fell into that early on, and we're like, Okay, let's go, you know, be a landlord and have passive quote unquote, passive income as a landlord. For people that are landlords, you know, it's not necessarily all that passive. You know, we did the fix and flips to you know, get capital to buy the quote, unquote, passive rental. So we feel like we did a lot of the typical textbook, active investor things early on, and just with the military lifestyle, and constantly moving and trying to be a landlord from 2000 miles away, and even with property managers, we were miserable.
The happiest day of our rentals was the day we sold them. To be honest. Last time we had a rental was over 15 years ago, when we vowed we would never do it again. So after that, we kind of stepped away from real estate, because again, the only options we had kind of been fed was, you know, you're going to be a buy and hold investor or a fixin flipper. And we had tried both of those and just didn't enjoy it at all.
And I worked as a hard money loan broker, you know, early on in my kind of real estate endeavor while I was going through undergraduate school. And the guy basically just came up to me and he's like, Oh, I hear you're a stem major, because I was a chemistry major. And I was like, yeah, and he goes, Well, you must be good with numbers. And I'm like, yeah, I'm pretty decent at numbers, I can run a calculator.
And, you know, he said, Well, you know, I'm looking for someone to kind of help run my office and do loans and all this and kind of explained what was involved. And I'm like, Oh, yeah, flexible hours as a college student, I'm there, let's do that. And it just kind of took off and running his back office, I got to see, you know, kind of the cash flow through that through the projects, you know, they would come from his lending business, you know, to the rehabbers, the payments are coming in from the rehabbers and the payoffs and all this. And I was just like, okay, in Florida, hurricane hit mortgages still have to get paid, contractors are run off the job, mortgage still has to get paid.
05:00 - 10:00
You know, tenants didn't pay the rent and the mortgage still has to get paid. And like, I think I need to be on that side of the equation, you know, after being a landlord and fix and flipper and like, the mortgage side makes more sense. So after we bought our home, we live in Hampton Roads now. And after we bought our home, it was finally just kind of time to say Okay, it's time to step foot back into the real estate investing arena. And we decided to do that kind of by accident. You know, I'm, I feel like serendipity kind of steps into your life occasionally. And we just happened to meet another active duty service member, because I mean, it's Norfolk, you can't throw a rock and not hit five people affiliated with the military in some fashion here. And he just turned out to be the exact borrower. He had the exact property. It happened during the very beginning stages of COVID, when the hard money lenders just kind of shut their doors and said, You know, we're not funding anything, have a nice day. And it left a lot of investors in the lurch. You know, they were banking on having this closing, he was banking on having a closing at the end of March. And that's when the hard money lenders literally just shut their doors four days before it's closing.
So we kind of stepped in and said, Well, you know, if we were going to get back into investing, this is how we would do it. And, you know, with the help of attorneys and getting everything set up, we were ready to fund the loan about two weeks later and closed on our first loan. And then we're like, okay, you're just kind of sitting in the bag. Like, at the end of Finding Nemo, they managed to go through this entire adventure to get to the ocean, and then they're just sitting in their little plastic bag, like, Alright, now what do we do you know that the benefit of being a passive investor is you're passive, but I'm stuck inside as an extrovert during COVID.
You know, once your capitals deployed in a couple of loans, you're just kind of getting weekly text message updates, you know, here's the project, you know, here's what's going on tiles installed, you know, cabinets are installed, like, Okay, great. So I actually went looking for community. It's one of my one of my gifts. I love people, I love talking to people. And like you mentioned in the intro, we take the private part very seriously, as private lenders, we are fantastic at hide and seek, because even I couldn't find us. And you know, at that point I was in there I was in the ranks, I couldn't find him.
Every private money group I joined was very much just kind of a place for scammers, hard money lenders to kind of, you know, basically spam out their programs or terms or brokers, nothing was discussion based, nothing was conversational, nothing was informational. And I'm like, Alright, if I can't find a tribe, I'll build one and start helping other people learn how to do this. Because I feel like this is a viable option that should be presented to more investors early on. Instead of just fix and flip and buy and hold, you can be a part of a team that's doing the fixing, and flipping and buying and holding, but maybe this suits your personality, your strengths or time commitments, better than those other two options.
Why this over, over something long term, reliable, lower I mean, fix and flip hard money, essentially what you're doing. I mean, it's private money, but it's hard money. I mean, it's inherently high risk. That's why it's hard.
I would say usually we are into the house no more than about 65% of the after repair value. So our equity position in the property is usually very, very good. If we do any sort of second lien position, we did do a second lien position on one property. He took the first lien subject two but I mean, the the first lien was only at like 40% of the after repair value really didn't need a whole lot of rehab, he just needed about $30,000 to kind of literally throw in some paint, carpet flooring, and update the kitchen a little bit.
So even at that one, the combined loan devalues about 130. And he sold that one for 265, you know, three months after he closed to borrow the money.
Are you taking rates? Are you taking a split?
We are entirely on the debt side of the equation. So we are doing points and interest rates.
The biggest question. I mean, my question stands, why would you do this over? I mean, assume I'm from your personality, it seems like you'd like it.
It's a lot of fun for me.
To me this is, if anything, I feel like this is a little safer for our particular investment goals. If we just wanted to park money somewhere in a mortgage that was you know, say five years, 10 years, whatever it is, even if you could get something that would be quote unquote, competitive for a longer rate, you know, competitive for the lender, not from the borrower's perspective, you know, say seven 8% interest rate, you know, if you're locked into that for, you know, 5 years, 10 years, whatever that is, you slowly have inflation eating away every year at your 5,6,7,8% whatever it is. Whereas if you're constantly recycling that money, that velocity, I don't know if you're familiar with the velocity of money, but you're increasing that velocity of money, being able to loan out the money, you know, every four months, every six months, every eight months.
10:00 - 15:00
You know, you can get a couple origination points every four months or six months or eight months. So I mean, that's, that's really what it kind of boils down to, but it's also you know, if we are at the top of The market, you know, if we do have some sort of impending crash coming, you know, some of the talking heads are saying, you know, if you're in a property 5,7,8,9, you know, 10 years, if you're in there and a little higher LTV, and that crash does happen, there's no incentive for the borrower to perform on the note because they're, they're essentially underwater. Whereas in this case, you're so you have so much equity in the deal, that, you know, they have money tied up in the deal, because it's a refund draw model, you know, they have money that they've put in to close because we do a certain percentage of loan to close, so they have a lot more incentive to perform.
I like it.
So what is, uh, do you have like an ideal, you're, in a perfect world, your go to structure? What would it look like? What are you looking for? Like? I mean, I'd be just curious on like, points, percentage, you know, length of loan, like, what is your ideal, and then I'd kind of like to talk about how you can tweak those numbers to make a deal work.
So I would say the ideal is kind of hard, because every deal is just so completely different. We generally do not do loans over 12 months, because they're designed to be exclusively for fix and flips. That's, that's what we're funding. So if you are really holding on to a fix and flip longer than maybe six, eight months, you know, we have other problems, because holding costs and whatever else is probably eating you alive, and especially if it tends to be a relatively thin deal.
So I would say no longer, you know, holding times of no longer than maybe eight months, nine months, I know some borrowers are having problems during COVID with supply chain issues, you know, borrowers waiting a couple months to have windows put in and, you know, getting appliances seems to be a common problem, at least here for, you know, some of the fix and flip investors that I know of there waiting a couple months to get entire kitchen appliance packages.
So we're trying to keep that in mind, but a little bit longer hold time on our loans, but I would say no longer than 12 months, we traditionally do not charge origination points upfront, because what we do is we do a shorter loan time, but we charge a flat interest rate as opposed to an annualized interest rate.
So if they have the loan for six months, say that a lot of our loans are six months, if they have the loan for six months is a 10% flat interest rate. And that just keeps everything easy, you know, accounting wise, and then if they're experienced enough, or have enough assets on hand, we actually will offer to roll that entire loan, that interest payment into the payoff of the loan when they go to sell it.
So realistically, you know, they don't even really aren't making an interest payment. And it's really about the nice thing about private lending is you don't have to go and check all those boxes that an institutional lender might want, we have the flexibility to go, you know, I understand and the fix and flip model, it's a massive outlay of cash at the very beginning. So it's not in the borrower's best interest to outlay more cash for interest, only payments that we're going to get anyway when they go to sell the property.
So it's one of those things where you can kind of give and take and work with a borrower or work with the deal and see what meets everybody's needs.
I haven't done, I just did private money fix and flips last year, and that was the big reason I probably paid more than I have to my investors. I like my investors, I want them to make money. So they give me a lot more.
So I don't mind that. But that was one caveat. I'm like, and I don't do, my investment, my relationship is a little bit more. I know these people very well. So the one thing I said to him I said Look, I want all the money up front. I don't want I don't want draws, I want all fronts but these people know me.
And the second one is I'm not giving you anything every month you're on your mind, you're gonna give me the money, then I'm gonna give you your money back. That doesn't make any sense.
Now I understand why the hard money is institutional? I'm gonna use the term institutional hard money lenders.
You do so but I do know that there's, I know some other lenders that have meant that that's a point of contention and a kind of a, it's like, why are you paying out a monthly payment for a six on a six month loan? If this thing goes south, those five payments are helping you out anyway. And it's gonna hurt the flipper.
I mean, there's that fine line between what you want, you want to make a return on the money because that's obviously why we're investing but at the same time, you want to set everyone up for success because it's in my best interest that the loan performs. It's in the borrower's best interest that the loan performs, it's that end retail buyer's best interest that the home gets rehabbed, put on the market and sold especially nowadays since inventory is so low. So everybody's kind of got the same goals aligned in that particular model.
I love that I often tell people that that's one of the huge advantages of you know, somebody loaning to you out of a self directed IRA is that they don't even you know, they don't need the money there's nothing to do with the money so they're not going to be able to touch the money even if you gave it to them so a lot of times it's very easy sell to be like hey look, I'll just give you everything at the end one big check don't have to keep track of payments, whatever.
But I find you know like you said Alex with with hard money lenders, that's not usually the case and a lot of private money lenders kind of like to do things traditionally because they're like they're used to mortgage, your monthly payments, whatever but that's gold if you're lending to a fixin flip investor and you can understand like, look if I get $500 a month for six months, or they give me 6000 at the end of that six months doesn't make it. That was terrible math 3000 you guys know what I meant marine over here..
15:00 - 20:00
Bro, he does math on this show in his head every episode and he ruins it.
Whoa, it was spot on last episode. Thank you very much. And I caught it and fixed myself.
I think it would be amazing if we could get a big chunk of our listeners to mail you calculator, calculator for Christmas, Christmas is coming up. We're gonna mail you a bunch of calculators that's gonna be amazing.
Listeners go to David's website find some you have some place we can send you stuff..
I look forward to saying I'm an asshole. When you see what I got you for Christmas.
I’m gonna give you a big prop calculator.
I’m just gonna send you the boxes of what I got you for Christmas now I'm going to keep it. We'll play this game.
So the point being that it really doesn't make any difference because you get the same amount of money, whether you get it up front.
I mean, if they were to really lend that money right away, okay, but nobody's really lending $500 I mean, maybe they you know, bank and Pokemon cards or some Tesla stock, you couldn't even buy a Tesla stock right now for that, because it's overpriced.
But anyway, you know, I mean, so I think that's gold for fix. And flip is it makes A it makes their life way easier, because they're not having to worry about payments and B, yeah, they need the money at the time. So yeah, I think that's awesome.
Yeah, I mean, like I said, it's really, I enjoy it from the collaborative aspect. Because one thing I didn't like about being a landlord, and I feel like the specially been exacerbated with COVID-19 is, you know, that there's that whole eviction moratorium and the rent cancellations, and the rich landlords are kicking out the working poor class that lost their jobs and the whole nine yards, you know, and so the goals tend not to be aligned, you know, the tenant wants to pay as little as possible for a mansion. And the landlord wants to provide something that's reasonable, but obviously collect as much revenue as possible. And those two things end up causing a lot of friction and butting heads. Whereas, you know, when I'm working with an active investor, you know, like I mentioned, we still have the same goals, we're just on opposite sides of the table. So it's in our best interest to work together.
That's mostly, that sounds good. But historically, banks have been hated on almost as much as landlords in history.
Landlords, they're definitely in the south right now. But you'll have your moment too.
I agree what I'm not saying we're not completely culpable as a group, but I mean, it's, it's on the small side, I think having that flexibility of being smaller and not having that institutional tie allows us that collaborative process.
Yeah, I do. Especially like small scales, perfect example, because you guys are like, we both have skin in the game. Like we have, this has to work out because this is, you know, this is all your money and their money.
The bank, they're like, you know, from a bankers perspective, literally at the bank, they're like, Look, if some of these loans don't default, we weren't trying hard enough. So everybody who's going to big banks, like I'm gonna get the other bank to approve me, it's like, bro, they want them to have some of these that have to fail otherwise.
So just so you know, how I think there's a big difference. There's no way, Alex that I can imagine that you're ever gonna have a business model where like, some of these have to default. So we know we're pushing hard enough. That's never ever, ever gonna happen.
Yeah, no. Absolutely, absolutely correct.
All right. So I'm Nick, the new guy. And I posted online that I want to know how to get started in real estate and I have no money and someone told me about private lending.
How do I make myself appeal to anybody who would even think about giving me money if I don't have a track record? Like what are some things you think could make somebody competitive? Or at least worth looking at? Because obviously, the new guy doesn't have a whole lot of experience and saying, hey, you want to give me 100k? So I'm curious if you have any thoughts on that?
I get that question quite a bit. And I would say the number one thing would be to partner with someone or have some sort of mentor that can walk you through your first deal because when I talk to a lot of fix and flippers, especially experienced one they'll tell you like if you break even on your first fix and flip like that you did a good job, you know, because you tend to be very underestimating your construction costs, maybe your holding times, you start opening walls and you're like, wait a minute, I didn't know all this was in there. You start digging up piping. And so your construction goes over budget, you usually go through at least two or three contractors, I feel like that's just a rite of passage. And they're going to run off with your deposit that you gave them all entirely upfront. So that's going to make your construction run over.
20:00 - 25:00
So yeah, I mean, it happens. It's a story, it happens all the time. So that's why I say cuz people will go and say, I don't want to partner with someone, I don't want to give them half the deal. It's like, well, I'm thinking you having half a positive outtake of this entire thing is better than you having a negative outtake of nothing. So I would say..
That’s what If you’d lose.
Yeah! I mean..
I would much rather only lose 15k instead of 30 on my first.
So if you can partner with someone, or at least have some sort of, you know, maybe official mentor or, you know, relationship arrangement agreement, you know, something like a mastermind like that you do that you can go to this quote unquote, board of advisors and say, hey, look, I'm stuck on this. I don't know how to approach this. Because realistically, as a private lender, what we are buying what we are funding is not necessarily a property at the end of the day, that legally might be what we're doing. But we're funding our faith in you to execute a business plan that you have sold us.
And so in order to do that, that's why everybody's stressed is the track record. Because we want to see that you've bumped into the walls, you've you've, you know, overcome these challenges. You didn't just walk away and go, Oh, I guess that was a bad deal. I'm done. You guys, you lender, people take that back, you know that you had the guts to stick in the game, when things go wrong. And it's not a matter of if things go wrong. It's really when things go wrong when you're talking about fixing flips.
So I would say partnering with someone that's more experienced would be my first step. You know, if that's not a possibility, if you're just adamant you want to you want to lone wolf it, then you know, worked with a some sort of mentor mastermind group, you know, just buying a course off the internet, you know, and not talking to anyone is not really going to do very many favors, because real estate is very much a relationship business and that one on one back and forth, been able to ask questions in real time, I feel like it's just absolutely invaluable, especially the first couple times you go through any sort of investing.
But Alex, I watched the whole first season of HGTV.
And the other scary thing is, is a lot of the new people that do not have that sort of support will will be the ones that get into the thin deals, you know the most riskiest deals, you know, they're they're buying this property that needs you know, massive amount of overhaul, you know, bought you know, made in the 1900s you know, all old plumbing, you know, plaster walls the whole nine yards. And they're buying at 18% after repair value, because the wholesaler told them some inflated ARV told them Oh, it only needs paint and carpet, you know, it's $20,000 worth of rehab. And then when you really get looking at it, you're like, Yeah, no, you're buying it at 80% of ARV, and it's going to need more like 80 you know, just just to get it somewhere where it's going to be decent to retail to a homebuyer, you know, and I've run across that a little bit more than I'd like with new investors, especially since COVID has become a thing just because inventory has been just so historically low.
Even properties that need work are going on MLS and selling for over asking, sometimes well over asking, and you're just looking at it, like what numbers are you looking at? Are you smoking something like that's not really and I get a little annoyed people call everything a deal. You know, it's like, oh, you know, I got this contract, it's a great deal. And I might, it might be a deal, but it's not a deal for you.
It's that situation. So I really feel it's crucial to have someone there who knows, hard money lenders, private money lenders, that will work with newer investors and do a little bit more of the hand holding, they usually want to be on the debt and the equity side of the equation. So they will be that person to kind of walk you through the experience. You know, and obviously, you're going to be taking a hit on the percentage of ownership percentage of the cup, whatever you're taking, but that education you're getting in real time is very often well worth it.
Oh, I had a hard time with partners when I was new because maybe not that i wanted to i wasn't so much that I was greedy I want to take the whole deal is that I was too afraid to let anybody see how stupid I was. Right?
Um, but that is a very, very common problem. A lot of people start off and like I won't do myself, we have a friend in our mastermind that he won't do deals with partners at all, he just seems like every time I see the deal, I'm like, I can do it myself and get the whole the whole nut.
And it's very, it's very limiting. It's very incredibly limiting and most beginners go through it. And since I've kind of been working with partners a lot over the last few years and you know, it's so um, there's just so many lessons to learn by having people around that will take some of the work off your back.
And this thing is the greed about like, oh, and take the whole deal. It's like the first one. It's like college. Like you're not gonna don't worry about making money. Just If you can make money, somebody else can do all the work. And you can make 10% of it. And somebody else can help you or whatever. If you do half the work and make 10%. It's like, bro, you got paid to learn how to do this. And once you know how to do it once, you kind of know how to do it.
25:00 - 30:00
And you 100% will get ripped off by contractors, for sure. I still do.
I had a guy on my last clip, I paid him $7,000 for some work, he did a good job. And then he came back and he was thirsty. I could tell he was desperate. I don't know what was going on in his life. But he's like, I need this extra. This additional job I posted on Facebook as I need somebody to do this. He's like, I can do that. I'm like, you can't do that. I could tell he was thirsty. He talked me into it. I gave him seven grand on the work for this, this one house, he came back and he did another $2500 job, I paid him half up front, he took the money and ran.
And I'm like, bro, it will happen to you. If you don't think of a guy who just gave who just did seven grand worth of work and did a good job and then rips you off for 1200 bucks. Three weeks later, if you're new, it will happen you better get ready. So I love that advice. That's very, but look, it's different. Cuz you're a girl, guys too much ego, way too much ego.
Well, I would say I honestly I would say women, if anything have a harder time because we are in the minority when it comes to real estate ownership, there's a huge, a lot of people talk about the income gap between men and women, the wealth gap is probably three times larger than the income gap. Because we just often don't have the assets, we don't have the time, you know, if we're working full time, and then juggling a full household and a lot of the KidCare in the whole nine yards, you know, you don't have time to be an active investor, you don't have time to go out there and scout for deals and run numbers and deal with contractors. You know, and that's just that's what it is. And that's why I really like private lending. Because it tends to be a little work heavy upfront, you know, doing the due diligence on the borrower, doing due diligence on the property. But once you've kind of cleared those hurdles, it's pretty set and forget it, you know, it's just go out, make the money work for you. And then when it comes back home, turn around and roll with it. And if you get the same kind of pool investors, you know, I usually work with three or four the same investors in my market. You know, because we've done a couple deals together, I've seen other deals that they've done, I don't really need to do a whole lot of due diligence on them, you know, I'm comfortable with them. I'm familiar with them, we've closed deals, we've had a successful track record with them. It's really just looking at the property at that point. So it even becomes less time intensive as time goes on.
Yeah, and, uh, you know, seems like you're a heavy extrovert, you said you love people. So this definitely suits you.
And coming from a lending background for anybody who doesn't know, the five C's of credit is staple underwriting the first one and it's not as important, I guess now as it was probably 20 years ago due to FICO and whatnot.
But the first one is character. And, and even in banking, right? Like, yeah, I can go through your financials when it's when and I don't want to get too far in the weeds here. But when it's a Freddie or Fannie Mac deal, and somebody goes to get a mortgage, and it's an underwriting matrix, and they're like, Look, you gotta have this score on this income, you fit the box, the government underwrites it, nobody cares. Nobody cares who you are, like you met to meet the requirements.
That's not how banking really works, right? When a bank actually hands up their money out there, like, Who are you? Who are you David? Are you gonna? Are you going to build a do this do you have what it takes as a human being to take this on, I don't care if your credit score is good, I'm looking at him sniffing you.
And so it seems like this is your, your strong suit his people and so I love that you found this little you you under and that's exactly your underwriting the people.
Yeah, and I tell people, I've held seminars in the group, you know, putting together like your real estate resume and how to approach private lenders. And I tell people all the time, like two very, very simple things that take less than five minutes to accomplish both, is one of them, is making an email address that looks professional, I literally got an A whole entire loan package from someone @oneh[email protected]. Like I didn't even know AOL was still around.
So first off, that means you don't keep up with the time second off, you couldn't be bothered to take 30 seconds to make even a basic gmail address for your company.
You know, and then the other one is to make a professional Facebook profile. And that's the one that will do anything real estate related. Because the first thing I'm going to go do is I'm going to go Facebook stalk you and if you have you know a ton of you know, Italian cars and guys waving cash and you know, talking about you know, jewelry and this and that and shoes and that's not the type of person I want to work with. That's someone that's not spending money wisely, in my opinion. So that's why I would say.
Can you do me a favor?
Like, Oh, no.
You're done. I want you to, I want you to see if you'd lend to me.
30:00 - 35:00
I mean, it's just one of those things, you know, like you go back to, you know, the five C's lending, you know, people, I'm investing in people, and people only invest with people that they know, like and trust.
And factors that I trust are people that have a heart of service, that they have some level of commitment to getting the job done, that they have some level of resilience, you know, those sorts of those sorts of traits are not generally found in people that are running around waving cash on Facebook, and you know, showing off their fancy new cars and things like that, like, if that's all your Facebook profile feed is, you're not my borrower.
I just bought a new car.
You know, I'm an anomaly. But this is really good advice.
So for listeners, you know, Alex is a lender, I was in lending, what she's saying is really, really important, like how you portray yourself. You know, like, people judge books by covers, I want to tell you like, and you know, you should, it should be both, you don't want to fake it and pretend to be, pretend to be responsible, you want to be, you want to be a good steward of the project at hand. And then you want to outwardly convey that to the internet, dude, email addresses. That's ridiculous, like, I can't believe you even say that, that's a really short barrier to overcome. Yeah, and what I really recommend for people is, um, get their own website, get their own website, get your own website, because that's, that's really what tells people, this is what I want the world to see.
It’s really good advice.
Yeah, I mean I liken it to you know, you're going to talk to your boss, or at least you should be, you're going to talk to your boss differently than you're gonna talk to your buddies. And it's not that one is in congruent to the other, it's just, you're in a different environment. And until we're your buddy, buddy, and until I'm going to your house to have barbecues, I just, I would personally like to see a little bit of professionalism from someone at the at least at the very beginning, like, my borrowers now, like, we text daily, and we're sharing pictures, like, they all have children, I do not have children, but they like to harass me, because I don't like children. So they'll send me like, what they say, are cute photos of children.
And, you know, it's just, we're friends now. So at this point, you know, the relationship has been built and when we're good, but I don't want that from the very beginning. And I especially don't want to work with people that have an AOL email address. It's [email protected] that just blew my mind. I was like, No, you if, because I'm a firm believer that how you do anything, is how you do everything.
So if they couldn't take 30 seconds to just make themselves, you know, TH homebuyers or whatever, they were @gmail.com something just super simple. You know, what else are they missing? You know, I guarantee you their scope of work is probably off, you know, their ARV numbers are probably off, because they probably didn't spend enough time or any sort of analysis into it, because they couldn't spend 30 seconds to make themselves look professional.
Yeah, I agree.
I mean, even if it was just your name @gmail.com, right, like that. And I would just piggyback off that and say that, you know, take the two minutes to put some kind of a signature on the bottom of your email too like, once you create that little that, whatever that website is, throw it underneath your name, your email, or your name, your cell phone, your like a little business card, maybe two seconds about what you do, and hyperlink to your website.
And then no, for one, you know, for anyone listening to this for that one that looks somewhat professional, somewhat credible. For two, you will get people to your website, even if you're not talking about lending from that email address, which is nice, win win. Oh, are we gonna share screen what's going on over here? Alex blacked out? Oh, no.
All right. So we lost the other Alex up there, Oh there he is so anyway, um, what, I like the number side like I like the idea of factoring present value of money and discounted notes and stuff. And I think a lot of that kind of thing coincides with seller financing, but it can be done with private lending too, just curious you know, do you see a lot of similarities between so with seller financing you can do some weird stuff like some crazy stuff, right? Like I can get, I had a guy who I was able to be like, Hey, you know, instead of paying you for one one payment a month for 12 months, how about I give you 11 months or 10 months upfront on January 1, and we're done for the year and I've seen people do that so there's some some some fluctuation obviously, that's not what you're looking for I'm more the hard money side for flip.
But do you see people who are willing to do that in the private money space? Or what kind of things are you? I guess what kind of, I don't wanna say tricks of the trade, but like, how do you find the best return for what you're doing?
I would say..
It really depends on the question, but yeah.
35:00 - 40:00
It really does. Because it's gonna vary with loan amount. So for example, if you're loaning out $30,000 like I did in that second lien position, you know, if you're just doing 1% interest, you know, for the six months, that's not even really worth my time, you know, let's, let's, you know, what, maybe 1800 bucks, you know, so at that point, it's like I've put out $30,000, kind of at risk being in second lien for $1800. You know, that's, that's really not a return.
So when you kind of talk to investors, it's about setting a realistic expectation. And just explaining to them, you know, this is the first time we've worked together, the loan is going to be in a second lien position, yes, there's a ton of equity. But, you know, these are the problems I'm seeing, and this is what I would like to do to mitigate the risk, you know, it's about being transparent.
So when you're talking to them, another private lender, friend of mine, he, I really like the way he phrases it, when he does these lower dollar amount loans, is he says, Okay, if I'm, if I'm going to lay out this $30,000, if you were in the position of laying out $30,000 would $1800 make you? Would that make you excited about the deal? Would that make you want to do the deal? And most of the time answers like, No, no, not really. And they're okay, well, what number would make you excited about the deal? And they're like, Oh, well, you know, maybe 3000. And they're like, Okay, well, that sounds more reasonable, you know, and we'll work with that.
So again, it goes back to that collaborative effort. And that particular investor, you know, he has loans that are 17,000 - 27,000, that's kind of his bread, and butter is working in a smaller loan amount just because of the market he operates in. You know, and I found that to be just a really good solution for working with investors, it's, it's not so much just a flat across the board fee, you know, because nobody likes being pegged into that little box, you know, they they like to feel like they have a voice in the conversation. And that allows them to have a voice in the conversation, and kind of meet everybody halfway.
So I would say on that front, it's really about meeting what the problem is and what their pain point is. So for example, when we talked about the fix and flip model, it's very cash intensive, upfront. So what can I do to alleviate that pain point, but still make a return for me or make a return for investors that I'm placing funds for. And if it boils down to timing, okay, we have flexibility to play with the timing, we can do that, you know, and maybe we'll do you know, 12% flat instead of 10% flat, because we're waiting six months or nine months or a year to get all of our money.
I'm okay with that. Because you know, it's a little bit higher rate, because it's a little bit higher risk, you know, we're not getting our money for 12 months instead of six months. So those are just kind of some of the things. As far as mitigating risk. I've seen all kinds of things I've seen, I heard one private lender required the borrower to front load the entire rehab money upfront, to close the deal. And then they basically got draws of their own money back and construction. I still have yet to figure out how that worked.
I've heard of refundable origination points. So one private lender would charge somebody like 10 origination points, but then once the deal was closed, and you know, the loan was paid back, they would get back a certain number of those origination points kind of as like incentive, you know, carrot, if you'll get your money back, and you know, in 90 days, 180 days, whenever you actually close and pay us back. I mean, so it really comes down to like I said, what the pain points are in trying to solve the problem that's at hand.
What's up military millionaires, I wanted to briefly talk about a service I offer that a whole lot of people don't seem to know about. And I guess that's a failure on my part for not having discussed it enough.
So look, finding a realtor that understands investing and or the VA loan or both, is not always the easiest thing in the world and finding a lender, same thing. So what I have started doing is I've built a well, I have a large network, but I've started to compile it all together finally, as a legitimate Excel, document driven, location driven list for you guys, essentially.
So what it is is basically just my way of helping connect you with a realtor or a lender that I know personally and have vetted and talk to and understand that they're not going to screw you. And what I do is, like for example, I had a market where I had two or three agents that I all sent the same person as a connection said, Hey, man, you know, I trust I know all of these, let me know what you think. And they are also the same agent. And same thing. So what I've done is if there's multiple agents in the same market, I choose the best one, and that's who I'm going to hook you up with.
But the whole point of this is just to help ensure that you get connected to the best agent. So if that is something that you would like, just go to the website, go to Frommilitarytomillionaire.com/VA-realtors/ or just reach out to me on Instagram or Facebook, whatever, I'll send you the link or you can find it on the resources page of the website.
But look, all it is is a way to help connect you with an agent who's gonna hook you up. No, I don't charge a fee for you know, I don't charge a fee for the agent. It's just a way to hook you guys up at the end of the day as a buyer, you're not going to pay for a realtor anyway. So it's magic, you might as well use one as far as a VA lender. I've got a really good one that I work with and know very well there's several others that are pretty good. And I'll probably try to steer you away from some companies that I just don't think are very reputable or have been very helpful.
So, you know, if this is a service that sounds good to you for free 99 then reach out. And if not, then enjoy the show right now.
40:00 - 45:00
Thanks for saving my terrible question. You know where I was going. It was just too broad a question.
So, if I could, I'd like to. It's really important, especially when with new listeners that are trying to do this. And they're, you know, what happens, I think they're like, well, I wanted to slip but I have no money. And so they get desperate, because they're like, Well, why would anybody any money, which is the correct question, but they don't really stop to ask what's the lender want, because, you know, I try to explain this to people to my list, that lenders gonna put up 80% of the deal. Like you're the partner, it's their deal, right? They're the buyer, you're along for the ride more than anything. And so people aren't really lending people as partners, they just look at the bank or the lender, it's like, Dude, this guy, they have wants and needs to and not all, not all banks are the same. Not all hard money lenders, the same. And obviously, you gave some really great examples of things I hadn't even heard of actually, really into front loading points is actually really clever, like a pawn your, so. And so I kind of wanna use myself as an example. Like, I will pay a really high equity split for my investors way higher than I have to way higher than I have to. But I want terms and my terms, like you're gonna pay for 100 I don't wanna come out of pocket anything. Right? And I'm not going to give you any draw payments, and I'm not going to give you any, you know, it's like, you're gonna give me all the money. And then when it sells, you'll get your cut, which will be big.
Now, I can't do that. Not everybody's gonna you wouldn't do that with a stranger. But these aren't strangers. And that's, but my point, I guess, is kind of what you're saying is like, do people with private money are infinitely flexible, infinitely flexible. And so what you said was I love which is like finding what the lender really wants.
Now, if you have a lender who's like a hard money institutional, again, I'll use that term in quotes, institutional, hard money lender, they're not going to be that flexible, especially if you've never done that deal. But a lot of people will. And they'll be like, well, this is what I really need. And you can move risk around in a lot of different ways. As well, low LTV. All sorts of things. I thought it was really interesting. You said you, did you end up taking a second position? That's astounding to me.
Yes, I did. I did.
Like I said, this was an investor that I was comfortable with. The deal had tons and tons of equity. It was not a major, like literally, it was under construction, like three weeks, and then it was back on back on MLS, you know, within that time frame.
So in that case, it's one of those things like there were the other factors in the deal. Made it worth the effort and time to do that deal.
Yeah, second position is not certainly I mean, people do it every day. So yeah, it isn't ever for hard or private money, obviously, I assume. Yeah, the deal must have been. I mean, it makes sense plenty in plenty of situations.
But again, it's one of those things where it's, again, a new person, I should probably explain a second position, if you're the first if you're the first person, you own the deed, the bank, they have first position, that means if you default, they get paid, they get paid first, if your second, it literally means after everything is defaulted closed out, and the first person gets paid off, assuming they get fully paid whatever's left goes to second position.
Which is, you know, again, it's one of those things where like, Hey, I don't the risk has to be really low. Because if that has to go to second position, it's called lost.
And I mean, that's, that's one of the things I see more and more the newer investors wanting, they'll they'll say, oh, I've got I've got a hard money loan, and they require me to put 10% down, and they want me to have, you know, $20,000 in liquid assets, you know, in order to get construction going. And so I need a private money lender, and I’m like No, that's not how this works at all.
You know, first off a lot of hard money lenders won't accept a second position, they don't want a subordinate lien on the property, because they intentionally want you to have some money in the game. So it's probably not even allowed, I would say the vast majority of the time.
And it goes back to there's just not a lot of education on private lending. BiggerPockets has great books about how to be a landlord, how to estimate rehab costs, you know, how to do fix and flips, all sorts of things. Even note investing, they got a book for note investing, but there is not a book on bigger pockets about private lending. The only way it's mentioned in private lending is to find a private lender to fund your deals, but nobody talks about what the cash flow through that deal looks like.
I routinely get private messages that ask me what's my interest rate? Like, wait, what? That's not a question. You know, for example, most private lenders only lend in their local market or a specific market.
So I only lend in Hampton Roads, Virginia. So is your property in Hampton Roads, Virginia? No, it's an Idaho Okay, well, then we don't need to have this conversation, you know that the interest rate is completely null and void here.
So you know, it's really I would say, if you're trying to find private lenders to work with, do not start with the question, what are your interest rates? Because there's so many factors and so many other things to the loan, other than interest rate that we are going to take into consideration.
45:00 - 50:00
Well, that's because I imagine that's because as I alluded to earlier, the overwhelming process that people go through with loans is they go to a bank and they say, I want to get a mortgage, it's underwritten by Freddie Mac's.
So they're just selling a product that they don't even own. They're not even it's not even, they're a broker for somebody else's. You know, I get about brokers at a David. So they're like, well, we'll just sell Freddie Fannie Mae loan, and Fannie Mae says, If you fit this box, you're good. And so all they care about is the rate because the terms are fixed. And the terms are well known. For years. It's fixed, done simple. And they’re like so people go, that's what banks do. I'm like, that is not what banks do. That ain't even close. That's one bank product. And the entire banking industry, that's one bank product, and people go, that's what banks do. I'm like, so um, yeah, I just love this. I love lending. I love this conversation. And I think it would behoove people very well to, to learn how things work, they just go well, what's my down payment? And okay, good private loan for that. I'm like, you have no idea what you're asking right now.
Yeah, I mean, that's really why in the Facebook group, you know, we didn't limit it to just people that are doing private lending, we opened it up to active investors, because a lot of times active investors are also doing some private lending as a side hustle. But also, it's education for active investors, that's not really out there for active investors. And, you know, they are able to kind of take a peek behind the curtains and watch conversations that private lenders are having with each other, what concerns us, what do we do? What are some of the options, so those active investors are available to read those conversations that private lenders are having with each other.
And I feel like that's, that's gold, you know, you start learning the lingo, you start learning what we can do to mitigate our risk, you know, what our attitude is, we're, you know, working with and collaborating with active investors, you know, what markets, we're in what we've done before the types of deals we fund.
So I mean, I feel like that level of education is invaluable for active investors, which is why the group is open to active investors in the first place.
Yeah, it's, I mean, it's like all things sales, right. So recruiting duty, they talk about needs, motivators, consultative selling, and so you're not going around and saying, hey, how much do you want for that house? You're figuring out why they need to offload the house, right? What's the story? Why do they, maybe they need 10 grand in cash to move, and they don't care if they pay zero interest on the home. Or maybe they need, you know, whatever, it's the same thing with a lender, right? Like, they're not just somebody, it's you're not gonna find an actual private lender. And when you actually does private lending, you might find like a mom and pop who has money in a self directed IRA or whatever, it doesn't know what they're doing with it might be a little bit less sophisticated, but somebody who actually does lending is not going to give you two and a quarter percent for you know, for risky, like, that's not it, you're not shopping rates, you're figuring out, what do you need, because you're giving me a lot of money, which I didn't have the personal finance or what, like my situation does not allow me to have this much money. I need your money. So what's in it for you, right?
And I think that people get wrapped up when the problem with the advice of go find a private lender is people think of like, well, I've got this awesome thing, and the lender is going to get maybe, right, but it's got to be worth their time. No lender right now is gonna give you 3% interest without any idea what the, you know, markets gonna look like in six months, right? So.
The government does 3% interest, bro.
Government backed but you didn't qualify for that debt, or you wouldn't be having a conversation with a private lender. So yeah, I mean, hopefully, right?
They don't take the time to think about the risk that they're asking. That's that really is what it is.
And then also, I love David said that he was why I had this great deal. It's like, Yeah, but the lenders aren't going to make a rate, they're not going to make the equity that you're going to make in this great deal. So it's not..
Maybe you offer the equity play, right? Like maybe that's part of it, depending on, you know, you gotta make it worth your time. And that's the bottom line. It's everybody wants to know how to get a mentor, will that add value? Well, it's the same thing for anything you do in life, it needs to be about the value for everybody involved.
And it's, you know, real estate is very much a relationship business like you, you can get somewhere to a certain degree, if you're burning bridges, and you know, screwing people over and you might get ahead in that one deal or a couple deals. But I feel like in any market, no matter how big your market is, your name will eventually get around. And then once because one of the things I do as a private lender, I contact three of your professional references that you gave me, and everybody's like, Oh, that's fine. You know, I'll give you my cousin, my coworker and whatnot. I'll say all these great things. But then I'm going to go and ask them for other people that have worked with you. And it's usually that second ring of people where you start getting the real truth of you know, what happens when the nuts and bolts start coming off the buggy? Like how far did you roll when certain things went wrong. And those sorts of stories make their way around any sort of real estate community, like, we might be socially distant right now. But I guarantee you that does not stop people from spreading gossip and letting everybody know who the problem child is in any particular market.
So that's why I say, err on the side of caution. You know, your first couple deals with a partner that somebody that you trust. And on the, you know, on the note of partners do that same due diligence on them as if you were a lender, you know, make sure they are legit, and that they are capable of doing that they have the track record. And then basically, you're buying into that, you know, you're you're piggybacking on their track record.
50:00 - 55:00
Alex, I want to, I want to do a deal with you so badly, just so I can see if I would pass your due diligence.
I went to lunch once, just to prove your point. And there's all kinds of stories like this, but I went to lunch once I was in town very briefly, I had not a whole lot of time, not a whole lot of days. So I was like, let me just grab a couple investors that I know. And I'll just slam them all together into a lunch and, you know, they're all local, so they'll get to network together, it'll be beneficial for everyone.
And lunch was great. Everyone was, you know, whatever. 30 minutes after lunch, the phone rings, and my buddy's just like, Hey, I saw so and so. So you're talking to so and so. You need to know this, this, this, this?
Right. And I was like, Oh, thank God, like, oh, my goodness, you know, dodged a bullet, right? Because in that situation, it was essentially. Well, I can't give, nobody knows what I'm talking about. So not too many details. But essentially, the warning was, someone was a predatory lender, like, you're gonna get screwed. If you go into any if you borrow any kind of money, that dude is not looking for good, mutually beneficial deals. He's looking to get those like, Oh, that's good to know. Thanks. I appreciate that. Like, you know, and maybe there's a, there's always two sides to every coin. But yeah, it'll get around, right. And so you don't want to learn that I guarantee Alex is not going to recommend that contractor rip them off unless you suck, right, unless he really dislikes you, he’s not gonna recommend.
So I mean, that's why I say you know, whatever you're trying to do, just have an abundance mindset, a collaborative mindset, and that's going to get you further in life than anything, then try. I know, a lot of people tout, you know, Hustle, Hustle, Hustle, you know, stay up till 10 o'clock at night after you've been at work all day. And that's what really makes it and then I’m like, that might be a case to a certain degree. But I think what really makes it is when you become part of a team, that everybody has that mindset where they're ready to pitch in, they're ready to jump in, they're ready to be collaborative, they're ready to help. Because you're going to get farther on a team. If you want to do any sort of scaling in real estate, you're going to have to bring team members on board, you know, whether that's to buy you know, more than six, you know, fix and flips in a year you want to do 12 well, you know, where are you going to get that extra manpower, capital and time a partner, you know, whether it's syndication, you know, you're not going to take down a $4 million apartment complex on your own chances are, you know, how are you going to do that you're going to bring, you know, three other four other GP’s on the team, they're going to bring their limited partners to the team and you know, that's just what happens in real estate. It's a very collaborative team sport.
So I think the sooner you can embrace that concept of an abundance mindset, a collaborative mindset, I think that's probably the first thing to do when you're a new investor in general, is just walk into every situation with that mindset.
I'm going through my second apartment deal, first big syndication 3 million and a little bit million dollar deal and for GP’s just like you just said, and it's going to be 20 plus LPs. And I couldn't have done this four years ago when I hadn't had a very much smaller experience with partners. And so kind of to piggyback what you're saying like not only do you get better at working with partners, you get better at it and then like you know, people want to work with you more if you do good business.
So um, I highly recommend it because now this is gonna be one of my best deals, this is probably gonna be my best deal yet and it takes you know, freaking village stick this this thing down and I couldn't do without people and those are long relationships that I built a lot of them and many ways and many cases and um, I just love that yeah, people I this is a good episode, man. We're talking positive about people and banking is right up my alley.
He's like I'm a player.
Lending, not banking.
And you bring up a very good point like the time to start looking and talking to a private lender as well before you have a deal under contract. It's not a situation where if you call up a hard money loan broker and they can have you funded by next Friday, you know, it's do we have the capital available? Do we have a loan coming back in to then disperse funds back out and the timeline you need? So it's very much a relationship model with most of the private lenders that I know you know, they want to know you, they want to see what you're doing for a couple months. You know, they want to be friends with you on Facebook, you know, again, going back to the Facebook feed thing.
You know, they want to get a sense of who you are before they could decide to wire $125,000 to your closing company and pray, you're a good steward of it. So the time to really start talking and networking with private lenders are looking for private lenders, is well before you have a deal. And then to that front, if you find one that you really want to work with, just straight up, ask them what sort of market do you lend in? What type of deals do you want to lend on? What sort of LTV would you be comfortable lending with? And then go find deals like that? And I guarantee you, they will fund them, you know, because they're, they've given you their playbook. And nowhere in there, did you ask what the interest rate was, you just said, Tell me what you need, I will fill that need for you and put your money to work in a safe manner, according to what you just told me you wanted.
55:00 - 1:00:00
Yeah, I love it.
All right. So we got a few questions we asked every guest.
The first one is, if an E one E two or 18 year old was to walk up to you asking for advice, right? And I guess in this scenario would be advice on private lending? What would be the one thing that you would tell them? What do you wish you'd known?
About private lending. Well, I'm telling them about real estate investing in general, my number one takeaway would be, there are more than just fix and flip and buy and hold as far as real estate investing goes.
I feel like that newbie real estate hazing, it's almost like when they put the rolls in the fried rice at the beginning of the buffet line, and you fill up your plate cuz you're super hungry, and it sounds great. But then once you're past that, you see that the shrimp and the crab legs are at the end of the buffet line. But you have to get through all that other kind of cheaper food, you know, to get to the crab and shrimp.
So I feel like that's it's almost like a rite of passage that nobody really presents these options to you. And to that token, no one's having the conversation with a new investor. What strengths do you have? What weaknesses do you have? What sort of, you know, capital as far as time? You know, human capital and actual financial capital do you have the deploy?
Because even when people we talked about masterminds and mentors earlier, a lot of times they end up in these masterminds in these mentor groups after they've decided what type of investing they want to pursue. And it might be because hey, my buddy bought a rental and it's going great, but they never really thought about this renthal fit my real estate goals.
You know, this rental fit, my personality fits my human capital, my time capital, things like that. So by the time they get to a mentor, they might be the greatest mentor ever for the BRRRR strategy. But nobody's having a conversation with that new investor to say, is the BRRRR strategy really where you need to be? Is that really where you want to be? Is it really where you should be?
So I would say early on, have the conversation with yourself with your mentor with somebody and just have an open mind to other strategies of investing, and really do some research on the options before you really nail down what you want to invest with.
Yeah, to push back on that a little bit. Right? Didn't you start with rentals?
I did. And I was miserable.
Right, my point is that you start off kind of you may have somebody I like the advice, I think it is sound, but it's very hard to implement, right? Because somebody's gonna come in and they're gonna be like, like, right like me, like, I'm not gonna buy into this tiny house, I'm gonna do multifamily. I'm gonna do a big syndication. It's like, but I couldn't have started with that. I had to figure it out and single families need to figure out single families too, so there's a scalability of your talents. Yeah, you agree? Yeah. It's like some people, you know, I'm way better. I'm gonna turn out to be way better at raising money that I am actually, I'm not, bro don't let me manage your property. Like I kind of fell in the same boat as you. You're like, I love people, but I don't want tenants.
I was routinely let down because I expected adults to act like adults. And every single time I was just routinely let down between tenants and contractors. And I was like, I can't, I don't have children. I don't like children. I don't want to babysit other human beings. And that's literally what being a tenant and a fixin flipper was was babysitting other human beings and it drove me crazy.
Yes, she got mad there for a second, David.
Oh you have no idea. Like I've got some I've got some tenant doozy stories. Like I said, we had horse property. And we were renting out horse property because the Navy moved us last minute. Because his orders got pulled. And the people when they left, they literally took all the wood from the fencing and the side of the barn with them. And then had the audacity to text us six months later and say that they were going to take us to court to get their security deposit back when they owed us like $20,000 worth of wood because they had taken literally all the wood on the property.
That's just one of the many it was, it was just insane. I was just like, Really?
I just had one of those. It's fun. They're like, yeah, so we're not going to send you the court ordered amount of money we owe you in back paid rent after the eviction until you give us your security deposit. Like I don't get that back since you owe me like three grand.
Yeah, we want it back before we give you the three grand it will just take you back to court, I guess like renting the house cost almost 10 grand to renovate the house and we had to evict you for two months. So not getting the deposit back buddy. Sorry.
Of course it's not my primary residence. So my wife likes living in a barn like I moved in yet. Quite sorry. Love you.
It's been fun. She loves you. She's in a great mood anyway.
1:00:00 - 1:05:00
Uh, all right. Question number two resources are there like what resources would you recommend on a book, course, website, whatever anyone is looking to get into real estate or private lending. I know we've kind of talked on it before the recording, the private lending doesn't have a whole lot of resources out there. If you got anything,
It really doesn't.
So one of my favorite things is there's a group called the American Association of Private Lenders, AAPL, a lot of their material is geared towards a little bit more of what we consider like institutional, maybe hard money lenders. But they do have a pretty strong subsection that are resources for people that are doing private lending similar to what I am just literally individuals lending their own money.
They routinely have a conference every year in Vegas in November, it just happened. They are working on getting some online learning module set up to teach people how to do private lending responsibly doing underwriting things like that.
So I find that's probably my number one go to resource. It's like $400 a year for a member to join as an individual, but you can watch all they get a newsletter that you can sign up for for free, you can watch all their training, live for free, the replays are for the paid members. So I really think they are a valuable resource for people. There are a couple books out there and nothing, I'm really super ecstatic and really, really love. But if you just go on Amazon, do private lending, it'll kind of give you an overview of what the process generally looks like.
But a lot of it is honestly just kind of learning on the fly, you know, talking to others. That's part of the reason I started the group was just talking to other private lenders and seeing what they do, seeing what's available in their market, seeing what their usury laws and their state say you know, what can be done. And a lot of that is really just going to come from, you know, talking to attorneys talking to other private lenders, even if you talk to a hard money lender, you know, you can ask them, you know, why do you only lend to an LLC, why won't you lend to an individual as as an individual like, Oh, well, the usury laws are far easier and higher if I lend to an LLC, if it's an LLC to an LLC, it's a different group of usury laws versus an individual to an individual, you know, much less a non owner occupied property versus an owner occupied property.
So you just it's one of those things, you kind of learn going into the trenches. And that's why I say just finding a community of people that are doing that type of investing is invaluable. There's a couple podcasts out there that have private lending in the title, I don't remember the exact podcast titles, but they do have private lending in the podcast title that you can kind of listen to those get a little bit of a brief overview of the various options that might be out there various aspects of private lending.
And then there's our Facebook group where every day we have a new discussion point, we have a virtual networking event every month, we have educational series, we were having them weekly until the kind of holiday season rolled around. So we scaled back a little bit, but they're traditionally weekly, where, you know, you can come and just learn some new aspect of private lending that we'll just dial into whether it's underwriting or how to do ARV appraisal, you know, those types of things, all basically related to private lending or investing passively in real estate.
I love it. Yeah. And your Facebook group is good.
I was just saying her facebook group is good. So continue.
Usury, for those who don't know, is the practice of unreasonably high interest rates. Usury laws usually mean there's a cap on interest rates, I think in it state by state, but it's usually like 30% or something horrible. It sounds like I didn't know that you can actually be hired, LLC is what it sounds like and get around the usury laws.
Some states like New York, for example, it doesn't matter whether it's your own money, if you are lending money to someone else, they require you to get licensing to do so.
So I mean, there's lending laws that need to be taken in consideration as far as you know, whether you need to be licensed. And then there's the lending laws as far as what's the limitations? What's allowable, you know, is deed in lieu of foreclosure allowed in your state, for example, as opposed to you know, is it a non judicial foreclosure state all those various aspects.
Usury, well, they call it usury now as high interest rates but usury the practice of lending money is banned in all three monotheistic religions. They don't like it at all.
Usury is also very common at car lots right out front of base.
Oh what is the highest interest rate we can get you with? There we go.
All right, cool. So where can people get a hold of you? If they're not so for one, I'll just replug private lending lessons from the Facebook group and if you're interested in private lending, you should definitely go check it out because I like it. And I have poked around and asked a few questions. So I can definitely plug it but is there another way that you would want people to reach out is that the best place to get hold of you?
1:05:00 - 1:08:51
I would say that's the best place, I'm on Facebook quite a bit. And so they can, they can join the group, they can send me a message, you know, privately through there, if they're, if they're in the group, they'll be able to see who I am. And send me a private message. And I'm happy to jump on a call and talk to people.
All the events that all the educational events that we've had previous are all recorded. So like, there's an intro to private lending video that I usually will send people the links to, like you're watching this 40 minute video. And this is how private lending works from the active investor standpoint. So they can always join the group and then go to the Events tab, and then just scroll through all the past events. And if there's anything in there that strikes their fancy, the link is right there. And they can just do some educating themselves on private lending.
And then I've got one final question, which I don't normally ask.
When are you writing the book on private lending?
I've been asked that a few times.
So we're actually working. I've actually loved your teachable videos, because we're actually in the process of me and another private lender in the process of setting up some private lending learning modules.
Just basically a course to get some information out there one course for active investors and how to attract private money lenders, and how to talk to private money lenders, what some common terms, you know, flex points would be, and then another one for private lenders to actually, you know, start private lending because I feel like because people I've been asked, like, why do you want to teach other people to do private lending, that's less business for you? And I'm like, no, that's not an abundance mindset at all. That's, that's more business for everyone else. Because if, if less people have to go through the headache of dealing with contractors and you know, dealing with let you know, tenants, and the whole nine yards, if we can be part of a team, that if that suits someone else's fancy, and that's their strength, let them do that make the tools available to let them do that. That is not my strength, I found that infuriating. So I'm happy doing what I'm doing. You're happy doing what you're doing. And we're both able to make money and not be stressed about it, you know, at least to a certain degree.
So I'm definitely of the mindset that the more people that can do private lending, it's helping more people. It's taking money away from Wall Street and putting it on Main Street as far as I'm concerned.
A lot of the people I work with are active duty service members. So I'm helping another active duty service member family on their trip to financial independence, you know, whatever that looks like for them. You know, we're an active duty family. They're an active duty family. I work with a lot of veterans as well. I mean, it's just I feel like it's just a virtuous cycle. You start getting out there helping other people in your community that eventually comes back to you.
I like it.
Alex, thank you so much for joining us tonight. This has been a really good episode actually, I have both of the episodes we recorded today have been good episodes. So that's exciting. But this has been awesome. I think there's a lot of really valuable information in here people are gonna get a ton out of it on both sides of the fence. And yeah, I think you're gonna get some traction and hopefully your Facebook group from this if nothing else I'm sure Alex will join, because otherwise I’m a Televisa crappy person because..
I’m scared I'll never I can't believe I passed due diligence. I have partners.
He was like, look at them. Look at their Facebook pages.
They got their stuff together.
And that's the whole reason why people should partner and they are good at one thing you might you're not good at. That's exactly a very good point.
Oh, man. I love it. Awesome. Well, thank you so much for joining us tonight. This has been great.
Thank you very much for having me. I really enjoyed it.
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Join your hosts, David Pere and Alex Felice, with their guest, Alex Breshears, to talk about everything you need to know, especially if you’re new, about private lending. Alex introduces the discussion with her primary struggles in establishing a career as a military spouse and her personal experience in active investing.
Alex founded and led a community wherein she teaches people everything essential about private lending and being a passive real estate investor.
In this episode, Alex shares her views on an abundance mindset and how she believes that the more people knew about private lending, the more it takes Wall Street to the main street.
About Alex Breshears:
Alex is a private money lender and an educator for private lending and passive investing in real estate. A community group leader, Limited Partner in syndications, aspiring general partner for multi-family syndications, and EMD funder for syndications.
Alex Breshears’ mission is to help and inspire others to foster a win-win situation that increases her network and the community’s prosperity. She is a military spouse from New Orleans, Louisiana that values strong partnerships with others and a fabulous crawfish boil!
Alex believes that it is essential to smile because life is short and that it is important to make conscious choices each day for success.
Outline of the episode:
- [1:55] ‘Real Estate Hazing’: The two common options presented to newcomers in real estate investing.
- [3:33] How serendipity occasionally steps into our lives.
- [12:09] What is good about Private Lending?
- [16:22] A thing or two about being a landlord and working with an active investor.
- [17:37] The slight pros of working without institutional ties.
- [19:58] Taking home half of the positive outtake is better than taking in full – nothing.
- [20:30] The essence of Private Lending: What else is it?
- [23:27] A problematic mindset that most beginners in real estate suffer and the lesson to learn.
- [28:18] The two necessary steps to start enhancing your real estate resume.
- [31:56] “How you do anything is how you do everything.”
- [35:15] What is it about a deal that should excite?
- [50:09] The mindset to have when entering real estate investing.
- [52:06] When should you start talking to private lenders? Knowing their playbook.
- [53:27] An advice to anyone entering Private Lending.
- [1:04:09] Alex’s words on an abundance mindset.
Advice to an 18-20-year old:
There are more options in real estate than just rentals and house flips!
American Association of Private Lenders (AAPL)
Get connected to a VA Realtor and/or Lender: https://www.frommilitarytomillionaire.com/va-realtor/
Private Lending Lessons on Facebook (Group):
American Association of Private Lenders (AAPL):
Follow our journey:
Real Estate Investing Course: https://www.frommilitarytomillionaire.com/teachable-rei
Recommended books and tools: https://www.frommilitarytomillionaire.com/kit/
Become an investor: https://www.frommilitarytomillionaire.com/investor/
My name is David Pere, I am an active duty Marine, and have realized that service members and the working class use the phrase “I don’t get paid enough” entirely too often. The reality is that most often our financial situation is self-inflicted. After having success with real estate investing, I started From Military to Millionaire to teach personal finance and real estate investing to service members and the working class. As a result, I have helped many of my readers increase their savings gap, and increase their chances of achieving financial freedom! – Click here to SUBSCRIBE: https://bit.ly/2Q3EvfE to the channel for more awesome videos!
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