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Private money is a distinct financial strategy used in real estate investing. According to Susan Flanagan, private money refers to funds borrowed from personal resources, including individuals and small companies, rather than traditional financial institutions. This can be an effective strategy when conventional financing is unavailable.
Private money stands apart in a few key ways:
- Diverse Resources: Unlike traditional banking financing from established banks and credit institutions, private money can come from practically anywhere. This includes friends, family, work colleagues, or even individual investors.
- Flexible Terms: Private money loans are usually far more relaxed. The interest rates, repayment timelines, and other factors can often be negotiated to suit both parties.
- Quick Funding: One of the main reasons investors like Susan turn to private money is speed. Traditional bank loans can take weeks, if not months, to be approved. With private money, funds can be available in a matter of days.
Susan Flanagan has noted time and time again that private money has been a crucial factor in her real estate success. Being able to rely on private funding had allowed her to forge forward with real estate deals even when the banks said ‘no,’ with freedom and flexibility to take in a broader range of opportunities.
During her appearance on Dave Debeau’s show, Susan emphasized that private money isn’t simply about gaining capital—it’s also about building lasting relationships with lenders who trust and support your vision.
But first, if you want financing for your next investment and want to know what type of collateral may be involved, click the link below for a free strategy call with our mortgage team at LendCity to discuss your specific situation.
The Importance of Private Money in Real Estate
In the episode, Dave Debeau talks to Susan Flanagan about the significance of private money in real estate. As Susan explains, private money is an alternative means of funding real estate investments, mainly when traditional financing options are not available or unsuitable.
Private money is critical in facilitating real estate transactions, especially those difficult to achieve through standard financing methods. Susan emphasizes the flexibility and ease of access that private money leads to, a trait often absent in conventional lending systems.
Furthermore, Susan shares how private money can expedite real estate investments by eliminating lengthy loan approval processes. This accelerates purchase timelines, which can be crucial in competitive real estate markets.
Private money also bridges financing gaps, allowing investors to undertake larger-scale projects. Susan discusses how private lenders often focus on the property’s value and potential profit, providing an alternative for borrowers who may struggle to secure conventional loans due to stringent credit requirements.
Lastly, Susan points out that working with private money lenders often leads to mutually beneficial relationships. These personal relationships can result in more flexible investment structures and excellent assistance throughout the project.
The Journey of Susan Flanagan in Real Estate Investing
In her own words, Susan Flanagan describes her journey into real estate investing as a ‘leap of faith.’ She recognized the industry’s potential early on and decided to plunge. She knew her journey wouldn’t be easy, but her hardworking attitude and eager mindset allowed her to press forward continually.
Susan took her first steps into real estate investing without extensive background knowledge. She firmly believed that the best way to learn was by doing. An exploratory first step became the foundation of her prosperous career. Susan insists that anyone with the right attitude, thirst to know, and hard work can make their mark in this field.
For Susan, every deal and every negotiation was a learning opportunity. She grew her knowledge and skills, learning from her triumphs and failures. Instead of retaining, she shared her insight and experiences with other investors, positioning herself as a mentoring figure in her community.
Throughout her journey, she always focused on positively contributing to her community. Her investments were carefully selected to ensure they would not only provide her with financial returns but also serve the needs of her community and leave a positive impact. She claims this is one of the most rewarding aspects of what she does.
Susan often speaks about the hurdles she faced on her journey and how she embraced them as opportunities for growth. She strongly emphasizes the importance of resilience in real estate investing, underlining that challenges can often pave the way for tremendous success.
Let’s learn more about private money from Susan’s perspective and how it significantly shaped her real estate journey.
Understanding the Basics of Private Money
In this podcast episode, Dave Debeau and guest Susan Flanagan delve into the fundamentals of private money. This form of funding, a crucial component of real estate investment, can often be a mystery to many starting in the industry. With her wealth of experience, Susan begins to demystify the concept for listeners.
Susan explains that private money is capital from individuals rather than financial institutions like banks. The allure of private money lies in its flexibility and accessibility, which often make it favoured by real estate investors.
What Are the Types of Private Money?
- Individual Investors: These are private individuals with excess funds seeking ways to earn higher rates of return on their investments.
- Private Equity Funds: These investment management companies pool money from various investors and channel it into real estate ventures.
Susan emphasizes the benefits of using private money for real estate deals, stating that it provides greater freedom in the type and number of deals you can pursue. Unlike bank loans, personal money loans are not as heavily dictated by rules and regulations, allowing for more creative deal structures.
In addition, she notes that private money can often be quicker to access than traditional financing. This speed can be a considerable advantage when closing deals in a competitive real estate market.
However, Susan also cautions listeners that private money is not without its pitfalls. The main concern is usually the higher interest rates compared to bank loans. It’s also worth noting that because private money comes from individuals or investment funds, the availability of funds can vary, and they may not always be available when a great real estate deal comes along.
How Private Money Can Help You Fund Your Real Estate Deals
Using private money is like having your bank. This source of funding can become instrumental for your real estate deals. Let’s delve into how it can aid with your ventures.
Private money allows you to close real estate deals quickly without extensive paperwork. This is unlike traditional bank transactions that take days if not weeks. With private funds, that duration gets significantly reduced, encouraging swifter operations.
The flexibility of terms is another significant advantage provided by private money. Susan Flanagan emphasizes that you can create terms that work for you and your lender with private money. This isn’t always possible with traditional banks that have rigid parameters.
Access to More Opportunities
Utilizing private money can unlock a more significant number of investment opportunities. Monday through Friday, regular bank hours, aren’t the only times when real estate deals materialize. Access to private money can help you grab lucrative deals without delay whenever an opportunity arises.
Enables Greater Bargaining Power
Last but not least, having private money increases your bargaining power. It provides you with the upper hand during negotiations. Dave Debeau says, “With cash in hand, you can often negotiate better terms with sellers who prefer quick transactions.”
As Susan Flanagan and Dave Debeau’s discussion shows, private money is a valuable asset in real estate. It provides the means to conduct business on your terms, at your own pace, enabling you to craft the path to success in your real estate journey.
Common Mistakes to Avoid When Using Private Money
Using private money for real estate investments is not void of potential pitfalls. In this episode of Dave Debeau’s show, the guest, Susan Flanagan, expands on some of the mistakes investors often make while trying to harness the power of private money. It’s essential to understand the fundamentals and the potential tripwires to steer clear of.
Jumping in without adequate research
Susan emphasizes the crucial need to understand the inner workings of private money. She shares that diving headfirst without comprehensive knowledge is a common mistake. From interest rates to legal implications, a good grasp of these fundaments can save you from unforeseen legal or financial consequences.
Not building relationships
According to Susan’s insights, building relationships is the crux of private money lending. The mistake many make is treating private money lenders like impersonal institutions rather than potential partners. The right relationships can create a steady stream of financing for your investment and provide invaluable insights and advice.
Failure to communicate clearly
Communication breakdowns have broken many a deal. Susan emphasizes the importance of transparent communication with your private lenders. Clarifying the terms of the agreement, your investment plan, and return on investment expectations can help prevent misunderstandings and disagreements in the future.
Ignoring the legal requirements and documents
Another blunder that Susan brings to light is overlooking the legal aspect. Some investors take it lightly, causing potential problems down the line. She advises meticulously cross-checking all legal documents and ensuring you have a thorough comprehension of your agreement’s terms and conditions.
By avoiding these common mistakes, you are more likely to effectively use private money to boost your real estate investment endeavours. Learning from others’ errors can save you both time and money, helping you benefit from the enormous potential of private funds.
Overcoming Challenges in Finding and Using Private Money
Successfully navigating through the private money landscape is no easy feat. According to Susan Flanagan, investors often face two main challenges when dealing with private money: finding suitable lenders and using the funds effectively. Here’s her take on how to overcome these hurdles.
Finding the Right Lenders
Not all private money lenders are the same; finding one who aligns with your investment goals is crucial. Flanagan emphasizes the importance of due diligence when researching potential lenders:
“Don’t just settle for the first lender that comes your way. Make sure they have a good track record, reliable, and fits your investment strategy.”
She advises investors to expand their networks, attend real estate investment meetings, and join online investing communities to meet potential lenders.
Effectively Using The Funds
Once you have secured private money, the next challenge is using the money effectively to ensure a good return on investment. Flanagan noted that improper deal structuring is a common mistake:
“Knowing how to structure your deal properly is crucial. A bad deal structure can not only hurt your profits but could potentially sour the relationship with your lender.”
Flanagan suggests getting mentorship or consulting with a seasoned investor to learn about effective deal structuring. She also encourages investors to have a clear business plan that outlines how the private money will be used to ensure transparency with the lenders.
Navigating these challenges may not be easy, but with the correct information and guidance, investors can effectively utilize private money to thrive in the real estate industry. As Dave Debeau always emphasizes, proper knowledge and preparation can make all the difference.
Final Thoughts from Susan Flanagan on Private Money
As the discussion unfolded, with new insights, Susan Flanagan extended her wisdom about private money. Her experience in the realm of real estate investment crafted an in-depth understanding of the nuances of private funds, which she is always keen to share with her listeners.
Weaving her way through the intricate realm of private money, Susan offered enlightening tips for navigating this route. “Patience, persistence, and prudence,” these three ‘P’s’ stood central to her advice. Consider each deal with patience, persistently seek opportunities with potential, and prudently assess the viability and risk of every investment.
One crucial topic that Susan emphasized was risk mitigation. She believes real estate investors must understand that every investment comes with risk. However, knowing how to manage these risks can significantly increase the odds of success. “With calculated risk and thorough diligence, an investment only adds to the financial reservoir,” she rightly accounted.
Susan professed that the key to successfully using private money lies in understanding how to make this type of funding work for you. For her, a well-structured real estate deal with private funds is like creating a win-win situation for everyone involved – the investor, the lender, and the agreement itself.
As she concluded her talk, Susan reiterated the power of private money in driving real estate investments and transforming the financial landscape. With these words, she encouraged every aspiring and seasoned real estate investor to explore the avenues of private money to propel their investment journey.
Remember, as Dave and Susan emphasize, real estate is not only about properties but also about properties and can often be that crucial solution.
If you are ready to start investing today and want more information about how your mortgage may be secured – or are looking to apply for a mortgage today – click the link below for a free strategy call with our mortgage team at LendCity today.