Private Capital Explained: The 4-Second Pitch to Unlock Unlimited Funds (Part 1)

Abstract

So how do you come up with the money to buy more rental properties, house flips, or commercial real estate, WITHOUT asking your parents, grandma, or friends for cash? Amy Mahjoory has raised $20M from private money lenders, none of which are related to her. We know what you're thinking, "Private money lending sounds complicated, don't only big investors do that?" Think of a private money lender as anyone who has money, isn't doing much with it, and wants to make more of it. So let me clarify here, because if we're talking about David's method, which I know he does this a lot where he says, "Hey, you invest with me, I'll give you a 10%, I guess interest on the money that you invest with me," I think it's just a straight, simple interest, would that not be hard money simply because of the technicality that there wasn't an intermediary that was facilitating that deal, that works with the fund of hard money, I guess investors? What makes David's style private money versus hard money, I guess since he is more in the 10% camp? Amy: Yeah. What differentiates us between hard money and private money is we are not a private financial institution. In general hard money is a blanket- Rob: Okay, so it's really more the banking system that makes it- David: Also the fact hard money is a blanket term that is used to describe loans that are secured by a hard asset, so if you give someone a loan and their credit card collection secures it, or in a sense, a car note is a form of a hard money loan. They're not going to give us 100%. So with private money, because we set the standards, we can get 100% of our purchase price, our renovation costs and all of our carrying costs in the form of private money. So we are not going to go through any numbers or quote-unquote, "Ask for money" until step three, the credibility piece, where we take them through our deal analyzer, our org chart, our target market, all of our strategy, investment strategies, our contracts, our list of frequently asked questions, our private money presentations.