Private lenders

[Rikard Lorén]

So, I just want 2 get a thing straight:

If I'm going to buy a real estate, and I lend 20.000 dollars and he/she will get a return on investment ( as usually ?) and intrests, I'm supposed to PAY BACK the 20.000 + Intrest as long as the deal is active ? or does he/she LEND me money for THE INTREST ? Can someone clear it out for me ?

Bcuz when I read Rich dad book, they said that they founded the deposit for the downpayment by investors and then when the building was done, they build made some inprovements and then refinanced it so it increased in value and THEY PAYED OUT ALL THE INVESTORS and THEY GOT Their intrests for the investments AND THEIR DEPOSIT BACK ( correct me if I'm wrong )

So could someone just clearify how the procces goes ? Lender/investor lends out money to me, I later pay back ALL THE MONEY + that they have gotten and will continue get a intrests of their investment every month ?

Cheers!

[Jeff Greenberg]

It sounds like a Ken is referring to an syndicated deal where the investors and not loaning the funds, but becoming equity partners. He is doing a refi with enough money to give back all of the invested funds. The investors still own the same shares and ownership %. They will receive the same % of cashflow and equity.

Equity partners is a more expensive way of using OPM, but unless you have the funds to close on your own it may be your only option. Equity funds are usually used in conjunction with a loan for a majority of the acquisition costs, does not necessarily have to.

An equity position is much more desirable to an investor than providing a straight loan, especially on CRE.