I was recently at an Advanced Focus Group meeting, which is a sub group to our local REIA group, that presents specific topics that are a little more detailed oriented than what is usually presented at the REIA meetings.
The person speaking at this meeting said something that made me say “Wow!” because it was a “Holy crap, she’s right!” moment. This woman was recently at a week long seminar with Greg Pinneo, and he mentioned this to his students. When it comes to getting private money for your deals, we are in the perfect storm.
Let me explain, first of all when I say private money in this post, I am not referring to hard money lenders who charge you several points and high interest. I am referring to the average (or above average) Joe American who has a good sized investment portfolio, at least one big enough to fund your deals. Joe American who is willing to be a private investor and loan you his money to do your deals at 5, 10, 15, 20 & 30 years.
Ok, so here is the perfect storm:
- Interest rates are low
- CD rates are low
- Stock market is a roller coaster with more down hills than up
- It’s a buyer’s market
A lot of investors in the stock market are looking for investments outside of the stock market that are safe. They can put their money in CDs, but CD rates are around 3% right now. You, as an real estate investor, can offer to pay them twice as much interest and secure the loan by real estate. If you are not buying any long term holds and are only doing whole sale and rehab deals, you can offer them 3 or 4 times as much, let the interest accrue (no payments) until your deal is sold and still come out ahead if you had used hard money.
So keep your ears open. If you hear friends, family, colleagues or perfect strangers talking about their need to move their investments elsewhere, it may be your opportunity to get your first blue ribbon investor.
Filed under: investing, private investor, private money lenders, real estate | Tagged: greg pinneo, investments, private investor, private money, stock market
