The 3 Types of Private Money Lenders

You just want safe money with a safe return. So I get $100,000 from that lender. And I tell them every time I go, you’re probably not category, I would imagine your category B or C and you let me know which one you are B is like I’m good. They’re good with a year, maybe upwards of two years. They’re working professionals, they have 50 to maybe $250,000 that they could put into something, they’re not happy with what they’re getting in their stock portfolio or whatever. Category see is actually who I run into the most. And the reason I run into that category the most is because category C is other real estate investors, people that are not finding as many deals as they wanted to people that are like I want to be attached to an active company. I want to see the transactions. I want to see the paperwork, I want to feel like I’m part of the process.

And I want to get a safe return in in the process. So those people doesn’t really matter what the number is, but here’s what happens typically with those people. Those lenders will Lend with me for six months, 12 months, 18 months, whatever. And based on their learning curve and what they see inside of my Slack channels and speaking to my title company, my transaction coordinator, and Cody Barton and Anna Martinez, my project manager and Tony accounts, my my bookkeeper, they’ll get educated enough that sometimes three months later they go, I’m out of here, give me my money back, I’m gonna go deploy back into my own deals. Now, you’ve essentially connected all the missing pieces in my mind. Sometimes it’s a year, sometimes it’s two years, but that’s the price. That’s the primary person that I find is like 80% of my lenders are in Category C, there are other real estate investors that are not doing as well as I am. But they have capital to deploy.

And they know that the only way to actively or actually learn real estate is to be in an active deal. That’s the only way to learn like Caleb, you know that you learn all your stuff by going through it. You learn all your stuff by making mistakes, you learn all your stuff by being involved in a deal where you have, it’s not interesting anymore. It’s important, right? So I literally everything I just told you, I tell my lenders, when I talk to them, Hey, I have category A, B and C at the end of this, you tell me what category you are. And if you’re interested, tell me what you want. If you’re category C, I’ll put you in any variety of deals. Sometimes I’ll put you in a subject to deal that I will never let go of.

I’ll keep it for forever. And sometimes I’ll put you in a fixin flip. Do you really care what kind of transaction you’re in and the lender goes, sometimes I have lenders that and some of them are. I have a lot of students and I don’t know if my student or my lender Yara is in here, but Yara is one of my lenders. She was a lender before she became a student and then she was like, Oh my gosh, I see all the stuff you’re doing and she became a student after she was my lender. Okay. Oh, she and I talked a lot. Yes, she’s a sweetheart, right? Yep. So era lend loan me money. And I told her look, my goal is to teach you how this all works. Behind the scenes you can talk to Cody, you can stop by my office you can communicate with Anna you can call Tony my bookkeeper, you can learn the whole back end of the system and talk to my title company 100 times, right?

Call them because they’re gonna treat you like gold because you’re a lender, not like a regular human being bothering them. Right. So you tell me where you want to be. And Yara comes into. I’m category C I definitely want to invest in my own stuff at some point, but I don’t feel like I have enough experience to get there yet. And I go great. You give me here’s what I want from you. Here’s my agreement with you is if you give me 90 days heads up. Whenever you want your money back, I’ll go find another lender or I’ll refinance you out.