Nov 14

Real Life Story from a real estate investor

So a few months ago, I came across a killer deal on a duplex.

This was an REO located in a great area, right across from a BBQ joint whose beef brisket was so mouth-watering-good that people drove 20-30 miles from around just to have lunch!

And the property was listed dirt cheap so I had to have it.  Problem was, at the time, I already had 4 projects going on and another under contract, so I was short on cash.

AND my best private lenders were totally tapped out of money!

But I had to have this deal – it’s the kind of property I expect to look at 30 years later and say “Thank god I didn’t let that one get away!”.

So after considering robbing a liqueur store (didn’t have a ski mask) and begging on the street for money to make up the short fall (didn’t want to run into old high school classmates), I turned to a local hard money lender.

This guy lent me money on the spot and was happy to do it.

Do you know why?

Because short of making me sign over my first-born, he did the next best thing: charge me 14% interest and close to 8 points flat on the loan.  That means I paid him 8% of the loan amount up front and then had to keep paying a huge interest rate as long as I owed him money.  Talk about expensive!

So what’s the moral of this story?

You can never have enough private lenders ready to close on deals with you.  Private Money is usually much cheaper than Hard Money and has much better terms.

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