How to Raise Private Capital!!

hey pace i want to raise private money where do i find private money lenders where do i find people that will invest in my real estate business well guys in this video we answer that question pretty in-depth we actually have one of my students michael williams brings one of his private lenders into a private zoom with my other students and ask the question of pace how do i raise money i've got my lender sitting here right here with me what's the documents i need what's the steps do i take and ultimately this lender ends up investing with me we end up getting about sixty thousand dollars that that money is already deployed into some of our fix and flips and it's a great video to see exactly what you need to raise private money with your friends and family i've never seen anybody actually bring on a live investor and walk that investor through and educate them on all the things that are going to need to be signed and detailed out when raising private capital for your real estate deals so the question of how do i raise private capital for my real estate deals is pretty detailed in this question and answer coming up what's going on based here how are you doing all right can you hear me i sure can how can i help you michael i got a friend right here um he came into some money he's interested in being a private uh private lender with me i just wanted you to explain to him the advantages of being a private lender for someone in real estate oh i man don't get me excited i'll be i'll try and take his money from my projects dang um so michael there's so many advantages um it's so interesting so i've got tanisha here with me right now okay and her and i went to lunch today and she was talking about how she's currently private lending some of her money as well because her where her money was before made her 12 last year 12 all her money sitting in bank accounts and 401ks and all kinds of stuff made her 12 last year so first and foremost it's a really great return um usually my lenders are anywhere between 8 to 12 depending on the lender depending on the project etc and they can't believe that they get a check every single month okay so i've got doctors lawyers attorneys janitors nurses you know people that are an insurance salesman their favorite money they make every single month is the money they make from a passive investment in real estate so they give us either money for our rentals they give us money for our fix and flips we give they give us money for a whole wide variety of things and they have very little work to do except for receiving a check so that alone the pat the true passive income of private money lending is one of the biggest reasons why people do it second it's one of the greatest returns ever third it is the only investment i know that is as safe as you ever really want it to be because you're investing in something that you can see smell touch you can go visit the property and you know where your money is located rather than when i'm investing in stocks or i'm investing in somebody's startup business by the way guys i would never invest in somebody's startup like their app or their you know commercial store or their clothing line i would never invest in any of that stuff the only thing i would ever invest my personal money into as a lender is real estate because it's the only thing guaranteed to not lose your money right and that's the most important thing is when you're investing money you want to make sure first and foremost what's my downside right michael like what you got to make sure you put you're protecting your lenders from a potential downside right let's say the market completely crashes does your lender have the ability to get their money out of it and the answer is yes real estate is the safest thing ever now one it's really really secure two it's really really quick you get that money every 30 days you imagine like investing in bitcoin and just waiting and seeing if that would work out and pan out real estate's one of these things that you get to check every single month you know it's working you know it's panning out you know you're getting a return and then three it's freaking fun man investing in real estate is actually really really fun do you guys have any uh questions concerned specifically about raising private capital or investing in real estate that i can't can answer specifically well basically i know you got with uh i think you have some uh contracts that i can hit here and i can sign to protect him we want to make sure we do it legally because he has an attorney that i want to share paperwork too okay so here's the thing you actually don't really sign an agreement or a contract with a private money lender okay can i tell you what you're actually doing so when you are borrowing money from somebody the agreement that they are getting is called a promissory note i want you to write that down it is not a contract it is a promissory note okay also known as a note okay a promissory note is the longer version of that so this is what a promissory note looks like oh okay okay can you see that yes so this is what i give i don't i don't really have anybody sign anything i give them this so let's here's the 90 000 that i receive so it will say promissory note and this is drafted by my attorney sean st claire so i'll send this to the facebook group so you guys can have this and share it with each other i've shared it a thousand times and i'll share it another thousand and one times happily so you say for the value received the undersigned the maker which i'm the maker promises to pay the principal sum of 90 000 and whatever dollars or so much as be outstanding from time to time together with interest on the principal balance from time to time remaining unpaid from the date of this note and can you tell that this was written by an attorney okay at the rate of 10 okay so this is essentially i guess a version of a contract i'm getting 90 000 at 10 interest okay and it will then say interest shall be payable in consecutive monthly installments of blank and you fill that in okay then you want to put in this when you're supposed to get your money back and you'll see for a period of six months so that this is a loan for six months and at the end of six months that lender will have received six payments of interest only and at the end of six months i will write them a check for their original ninety thousand dollars does that make sense yes so what's great about investing in real estate is primarily the way i borrow money from investors it is it's interest only okay so what happens is that ninety thousand dollars never gets paid down it does get paid back but it doesn't get paid down i'm not actually paying any principal i'm only paying interest so that check you get every single month lawrence is interest only okay i like to call it sushi money it's like i can go out and spend it on sushi or whatever else i want if i'm living in atlanta probably peach pie or something like that peach cobbler who knows um so then it says any payment of the principal interest is not received by the holder then a late charge of 100 may be charged by the holder who's the holder well the holder is the lender because the lender is holding this promissory note therefore they are called the holder does that make sense yeah okay i'm receiving this because i'm holding it any notice to be provided under this note should be given electron and then it just goes into a bunch of other boring stuff just basically two pages a very very simple agreement and as you can see um mine oh today is the october 5th i think that this microsoft award auto populated so this document right here is one of the four things that you actually receive as a private lender okay one of four things would you like me to tell you the other three things lawrence and michael yes okay yeah okay so the first thing you're gonna get is that promissory note right so that's number one promissory note oh i don't like red i'm deciding that black is the cooler color so uh tanisha says i should do pink so i get the promissory note okay the second thing that i get is a deed of trust okay a deed of trust michael and lawrence i'm sure you both know what a mortgage is right yes okay a deed of trust and a mortgage are essentially the same thing so lawrence if you are lending money to michael well then mike you essentially are the bank correct yes okay so when you go to a a bank to borrow money for a house the bank gives you what is called a mortgage right yes so depending on the state you're in it's either a mortgage or a deed of trust but this essentially they're the same the same exact thing okay this document right here is also call a so once when i get a lender and i go yeah let's let's just draft the note indeed of trust i very quickly say that phrase that means let's draft the promissory note and the deed of trust and then what we do is we record these documents okay we record these documents at the county recorder's office because i want to make sure that i am secured so when you ask yourself the question of am i secured on this property well of course you are because guess what i just did for you lawrence i drafted a promissory note that was written by an attorney i drafted a deed of trust and i took both of those documents and i went down to the county recorder's office and i recorded those which means i put them on public record that lawrence has a debt that is owed to him on this property and this property whatever that street name is 123 main street cannot be sold it cannot be refinanced it can't be you can't sneeze at that house without telling lawrence about it i mean that's an exaggeration but you know what i'm saying okay so 123 main street when you look up county record you're going to see lawrence's promissory note and his deed of trust recorded against the property and it will show the actual percentage that's owed the payment that's owed it will like i can go pull up other house people's houses right now on public record and i can see who their lender is how much is owed to them all of those things are made public record by those items being recorded all those things being recorded at the county recorder's office okay so that's the third thing you get the third thing you get is a set of recorded documents and a secured position on the property does that make sense lawrence yes the fourth thing you do and you receive this is something i give all my lenders but it doesn't mean you have to give it to your lenders is i give a lender's policy from my title company and what does that mean that means my title company guys you know what a title company is it's actually very different from an escrow company a title and escrow company are actually two completely separate things people think title and escrow is the same thing they are actually not okay a title company is actually a that all they do is they are an insurance company desiree title does not actually handle the transaction title insures the transaction the escrow company handles the transaction okay so an escrow officer is the person who actually does the work right so an escrow officer is the one that takes these documents the note and the deed of trust they're the ones that recorded against the the county recorder's office and then the title company comes along and says i think they did a great job of this and in fact i think they did such a dang good garden job of this that i'm willing to give you insurance that makes it amazing for your lender that if anything ever bad happens on this property your lender gets paid out in the lender's policy and i can tell you that i have actually had this happen to me we had a situation where the escrow officer made a mistake on the paperwork but because i purchased a lender's policy which is usually three or four hundred dollars right the title company had to pay my lender their 85 000 back because the escrow officer made a mistake so those are the four things you get if you lend money to somebody like me or one of my students that's what i teach i teach those four things and i'm going to tell you right now telling you those four things took me 10 years to truly figure that out nobody ever taught me that i had to i had to figure all that stuff out on my own and that is the most secure you could ever be in a position on a property i'm silent because i'm waiting for michael or lawrence to ask me more questions uh i know how many kids right now i'm very new to all of this right and michael's bringing me along baby steps love it absorb it as i go okay this is the only thing i want you to absorb besides those four things right and this is a recording so you can go back and re-watch those recordings the one thing i want to tell you is if you are my brother lawrence you are my cousin you are my father you are my best friend i would tell you to never invest in anything other than real estate right never and what happens is i see a lot of people get a big chunk of money inheritance and they're like oh i'm gonna go invest in this guy's you know he's got a t-shirt company he's launching i'm gonna go be a partner in that have fun um i'm going to go invest in some crypto i'm going to go invest in this i'm going to go the only thing that is reliable in this world that you can invest in is real estate so i'm going to tell you like if you don't have to absorb much more than that okay that's number one number two is you are very secured in those four items and now number three the only thing you really need to know is do you need anything from me other than my money because i don't my lenders don't ever talk to me they cut me a check i tell them where i'm putting the property they sign some documents the title company or i'm sorry the escrow officer records all that stuff against the property so that they're protected and secured and then my lender receives a check every single month same date same time unless it's a holiday we'll pay them a couple of days early then um when i'm done with my project and i sell the house or i refinance it another title company or escrow company will call you lawrence and say hey lawrence michael is about to sell this property and we need to get what is called a payoff okay a payoff means we need to we know that you borrow we know that you loaned about forty thousand dollars but we're just wondering is there any additional interest we're not aware of and we're going to tell you that we're going to close escrow in 10 days and you're going to get your 40 000 back plus any interest between today and when we close so you'll get forty thousand dollars plus you know your daily interest for those ten days okay that phone call will call they'll call you back okay they'll call you back at the end of the transaction when michael sells the house or michael refinances the house and they will make sure you get your money before michael has the ability he physically has no ability to sell or refinance that house without you receiving your money it's impossible there's not much more to absorb than that it sounds good so far that's as that's as good as it gets yeah and face yeah that's like i'm a beginner but if you have something and he wants to invest with you uh is that possible do you wanna be one of your lenders i mean lawrence seems really cool lawrence how much money do you got uh 60. um michael i here's what i would do if i put your if i put lawrence into a project with me i would require you to be involved in it okay so that you learn along the way because i i don't want lawrence as my private lender long term but if lawrence wants to do a project or two with me so he can get his feet wet i would want you guys to work through that together so that so when you get that 60 000 back at the end of the project you and lawrence can start investing in wherever the market is that you're gonna invest in and you already have the feel of the way it's supposed to roll if that makes sense that's what we want to hear sound good [Music]

Channel: Pace Morby

Views: 18,848

Keywords: real estate, real estate investing, pace morby, pace morby creative financing, how to raise private capital, private lenders, private money, private lenders for real estate, private money lenders, private lending, private lenders for real estate investors, private money lenders for real estate, how to find private lenders, how to find private lenders for real estate, how to pitch to private lenders, real estate agent

Id: SQir7ESpCSw

Length: 19min 35sec (1175 seconds)

Published: Fri Nov 05 2021