Over the next few days I am going to give you a sneak peak at the REI Concepts Magazine.  The REI Concepts Magazine is a digital magazine geared towards the real estate investor.  We have 7 real estate investment experts who have contributed their knowledge to the very first issue due out April 1st.  Between now and April 1st, we are going to allow our subscribers to get the complete first issue for $1.  But before I give you more information, I want to share an excerpt from one of our contributing experts Gary Brevko.

Ladies and gentlemen, the timing is absolutely perfect at the crossroads we sit at. People that have money are trying to figure out where to invest it, and people that have money are wondering how to protect it.

Let me give you another major insider tip. Not only is there money in the marketplace that is tired, I mean, tired of being where it currently is. There is also money ‑ how about this ‑ over four trillion dollars with a T, four trillion dollars in IRAs.

Those funds can easily be set up into a self‑directed IRA, where investors can self‑direct those funds to your real estate, with the rates and terms you decide to pay. Isn’t this a paradigm shift? The rates that you decide to pay. It’s a shift in thinking, that’s all it is.

That gives you huge flexibility and allows you to run a successful, profitable ‑ and how about this ‑ and a fun business. A business that is efficient and a business where you are controlling your destiny, not the hard money lender or the bank or mortgage company.

If you would like to get your hands on the very first issue of the REI Concepts Magazine, you can do so for only $1 if you sign up before April 1st.

PLEASE NOTE: You will receive the first issue on April 1st.  The $1 issue comes with a 30 day trial to review all the materials.  If you decide that you would like to continue to receive the REI Concepts Magazine, you will be billed $47 every month for your copy.  If you would like to cancel, you can just email me at rtreakle(at)reinvestingsuccess.com.

Get Your $1 Issue Of The REI Concepts Magazine

Cheers,

~ Ross Treakle

I am in Denver this week on a little vacation.  I promise to post some new content tomorrow but I have to go pick up the fiance from Children’s Hospital where she is shadowing some Doctors.  For that reason, I have chose to revisit a previous post on Private Money vs. Hard Money.  I will be releasing a class I made with a hard money expert in a few weeks and the topic of financing is always a relevant choice…Enjoy!

If you would have asked me a few years ago when I first got started in real estate investing what the difference between private money and hard money is…you would have seen a blank stare. 

Broken down into its simplest form the main difference is with private money you decide the terms of use and with hard money the lender decides the terms of use. Now this very basic difference has a lot of impact on your real estate investing business. One type of money is not necessarily better than the other but you should in fact no the difference.

Where does the money come from?

In both scenarios you are going to receive the money from an outside investor. There are several ways to discover these investors from holding luncheons to running ads in the local paper. The investors know that real estate will offer a higher return than the market so they are inclined to give you some dollar amount in exchange for a percentage of return.

So what about the Terms of Use?

Private Money: the terms of use with private money tend to favor that of the real estate investor. Why? Because you as the investor set the terms exactly how you want. You go to the investor and they agree to give you X amount of money and in exchange they will be paid X% return. You can structure this so they receive a monthly return exactly like any lending institution structures a basic mortgage or you may want to give a higher percentage and pay the investor in one lump sum at the close of the deal. However you slice it, you decide where to spend the money, when to spend the money, and how to spend the money. But you do need to have your business set up so that a third party holds the money until you are ready to use the money. The best part about using private money is you determine what is done with the money because you are the real estate investor, you don’t have the private money investor watching over your shoulder. In fact, if using private money I would not even let the private money investor look at the deal. They are not real estate investors rather they are simply your financial backing.

Hard Money: with hard money the deal favors the hard money investor. The hard money investor lays down the terms of the deal. Everything from the percentage of return they will make to the type of deal you can do with the money. If the hard money investor wants you to do a rehab and then flip the house, well that is exactly what you will have to do. There is nothing wrong with this scenario if you can get a better deal as a real estate investor and are confident that you will be able to meet the terms of the hard money investor. Hard money does have its advantages and can be more useful depending on the deal but it is in each specific circumstance which you will have to determine which type of deal is better for you, the real estate investor. When working with a hard money investor it is always important that you have them sign some sort of agreement so you do not get taken advantage of. For example, if you discover a great investment opportunity and approach your hard money investor, it is very easy for them to go around your back and make the deal happen while you are left out in the cold.

Finally, both types of scenarios are very favorable for all parties involved. If a real estate investor can offer the person who is tired of investing in stocks and bonds and the volatility of the stock market a way to make more of a return, they will jump at the opportunity. You will most likely start off slow but once you prove yourself to that money investor, they will be more inclined to give you money a second and third time down the road, and they will often be willing to give you more money so you can do bigger deals. Just always be careful that everything thing is done within the confines of the laws in your area and that you cover your interest in each deal with good paperwork.