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What you’ll learn in just 17 minutes from today’s episode:
  • Learn why not to proceed with a joint venture at the beginning and go for private money instead 
  • Find out about the pros and cons of different refinancing options 
  • Learn what private lenders are primarily used for, especially to real estate entrepreneurs and investors 

Resources/Links:

Summary: 

Susan Flanagan has been investing in real estate for well over 25 years, and has done everything from regular buy and holds to student rentals to rent-to-owns, as well as many flips. She started lending her own money for mortgages over 12 years ago, so it was a natural progression to eventually become a Mortgage Broker so that she could connect lenders with borrowers on a regular basis. She is still an active investor but mainly focused on private lending these days. Susan is known as the “go-to person” when it comes to Private Money Lending. 

In this episode, Susan shares what a ‘private money lender’ is and how useful these lenders are to real estate entrepreneurs especially when investors don’t qualify for a bank mortgage. With a private money lender it’s fast and not much of a hassle. 

Topics Covered: 

01:30 – What is private money lending 

02:09 – Is there any difference between private money lenders and hard money lenders 

05:28 – What are the advantages and disadvantages of using different refinancing options 

08:03 – What do they need private money for  

08:33 – How to qualify for a private money loan 

09:33 – When do people usually use private money for first mortgages 

11:35 – Why do people get on JV partners at the onset when they could go through private money lenders 

12:51 – A logical reason as to why go for private money lenders rather than JV right away 

Key Takeaways: 

“Another good example of why real estate investors use private money is and I just did this on my last project. I took a second mortgage on one of my rental properties. I use that money for my down payment and my rental costs. And then I also took out the first mortgage on the purchase. All were private money again. And this is very expensive when you really work it in there. However, when I looked at all my numbers at the end of the day, I’m still making a decent profit once I flip the property.” – Susan Flanagan 

Sometimes it makes sense that people are using private money. First of all, it’s probably a lot less onerous to qualify. Second of all is probably, it’s a lot faster than jumping through all getting it through a big bank. And third of all, it’s when your debt ratio and all that kind of jazz that the banks are looking at don’t line up.” – Susan Flanagan 

There are many other reasons why you need private money. It could be a bridge loan, it could be you’re in the middle of selling, but then you need it. And it’s fast.” – Susan Flanagan 

“The biggest thing you have to qualify for is to show that you can pay it back. 

We want to know the story, the property, the exit strategy. I don’t care about your debt ratios. We don’t say we don’t care about your credit report. But if it tells me a story about your character that we don’t like, then I do care about it.” – Susan Flanagan 

“What I do suggest to a lot of investors though, don’t try to figure this out on your own. I say give me a call. And let’s brainstorm before you purchase it. And sometimes, getting a couple of people’s input prior is better than making the decision going in, no conditions, the works and then finding out this one isn’t a great property to even do this strategy with.”  – Susan Flanagan 

“It’s just another option for people to explore without assuming the only way to do it is to bring in a JV partner who qualifies for the mortgage.” – Susan Flanagan 

Connect with Susan Flanagan: 

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