Private Money Investors | How to Build Strong Relationships
Don Costa is a married father of 3. He has been in the house flipping game since 2003. He almost lost everything in the crash and he rebuilt his business in 2012. His company currently does around 100 homes a year.
Don started flipping houses when he was unemployed. The unemployment check only covered his living expenses and so he had to find a way to find deals, get funding for them and to fix them so that he could sell them and profit.
He got a notice of default list and began going door to door to try to buy houses from the people about to face foreclosure.
To buy and fix up the houses, he worked out a deal with a money partner to joint venture. The money partner would put up the funds. He would find the deals and manage the fix-up and they would split the profits 50/50.
Not all deals are 50/50, we discuss some of the other terms investors use and how those are determined. Basically, the more value you bring to the table for the joint venture, the more you should make out of the deal. If you are finding incredible deals, managing the rehabs and getting them sold, shouldn’t you be asking for a 60/40 split? Heck yes.
Don didn’t have money to make monthly payments to hard money and private money investors. He didn’t have money to spend on rehabs before getting draws from lenders. He had to joint venture.
He still joint ventures to this day. The reason is that he always wants to do as many deals as he can. Joint venturing allows him to be able to do that.
What you’ll learn about in this episode:
- Don’s background
- Why the less expensive a house is, the higher the ROI
- Focusing on speed rather than perfection when working on entry-level homes
- Finding someone who is teachable, coachable & loyal to be a part of your team
- What the key to the real estate business is really all about
- Why you should just use one person & one lender per house
- The importance of building core relationships with your agents, contractors, private money investors & your team
- Why you need to accomplish what you say that you’re going to accomplish
- Why you shouldn’t get greedy when working with private money investors