In a recent episode of the Raising Private Money podcast, Jay Conner delves into the inspiring journey of Jonathan Broyles, a real estate investor from Lexington, Kentucky, who, along with his wife Cara, has been making waves in the industry since attending Jay's live private money conference in February 2022. With a remarkable track record of closing 17 deals and raising nearly $2,000,000 in private funding, Jonathan shares valuable tips and insights on how to leverage private money for real estate ventures.

Understanding Private Money in Real Estate

Private money is a powerful tool for real estate investors looking to bypass traditional banking methods. Unlike loans from banks or hard money lenders, private lending involves securing funds from individuals who act in the capacity of a bank, offering investors flexibility, speed, and fewer restrictions on their transactions.

Jonathan, in his discussion with Jay, highlights the simplicity and efficiency of using private money. The traditional bank processes are often slow and laden with bureaucracies, which can be a hindrance for investors needing to move quickly on a property. Private lenders provide a smooth, straightforward financing process, allowing investors like Jonathan to close deals efficiently and with confidence.

The Role of Private Lenders

Private lenders are typically everyday individuals dissatisfied with the returns from traditional investments such as CDs, money markets, or volatile stock markets. By investing in real estate through private lending, they secure a consistent and often higher rate of return, backed by the real estate itself.

Jonathan emphasizes the importance of building relationships with these lenders. For him and Cara, the goal is to offer financial opportunities that benefit the lenders, creating a win-win situation. They source funds from savings accounts, money markets, and retirement accounts, transforming these into lucrative investments for their private lenders.

Real-Life Impact: A Case Study

Jonathan shares a compelling story of one of their private lenders, a widow who was previously earning a meager $750 annually from her money market investments. By shifting her funds to a private lending structure with Jonathan and Cara, her annual earnings skyrocketed to over $12,000. Such impactful changes illustrate the profound difference private money can make not only for investors but also for the lenders themselves.

Benefits for Investors

Jonathan explains how private money offers several advantages over traditional financing for real estate investors. Firstly, it provides unparalleled speed, an essential aspect when competing for properties, especially those requiring quick solutions. Secondly, there are no limitations on the number of ongoing deals, offering investors the flexibility to expand and diversify their portfolios.

Furthermore, using private money allows Jonathan and Cara to adhere strictly to financial safety measures for their investors. They ensure deals are never over-leveraged, maintaining a robust equity cushion and securing investments with mortgages similar to banks.

A $1,250,000 Deal: A Walkthrough

One of Jonathan’s most compelling examples is a current deal with an after-repaired value of $1,250,000. He explains their meticulous process: starting with finding the property through a reputable wholesaler, assessing the extent of necessary repairs, and calculating precise offer limits based on potential returns and costs.

Even when the wholesaler’s asking price was significantly higher, Jonathan and Cara’s disciplined approach, sticking to their formulated offer based on realistic repair estimates and conservative valuations, paid off. The wholesaler eventually agreed to their terms, demonstrating the power of adhering to solid financial principles.

Final Thoughts

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