All Forum Posts by: Amir Khan

@Taylor Dasch if you think big enough, you'll be able to attract all the PMLs you'll need. I do education workshops in collaboration with retirement account custodian companies. This brings in PMLs like clockwork for me. While I don't do fix and flips, many of my PMLs like to do both short and long-term loans. Reach out to me if you have any questions..

@Steve Chaparro the lowest you can start with is $30K (one SFH with 1st lien position). Also I teach courses for new PMLs how to get into private money lending. Please check your DM..

@Brendan Connolly I work with several custodian companies as a real estate investment advisor. If you DM me your information, including what specifically you are planning on doing with your SDIRA, I can do a warm introduction via email to the best custodian that matches your needs (I don't work for any custodian companies)...

Quote from @Christian Cunningham:

Hey BP crew! I’ve been digging into private money lately—trying to wrap my head around how investors and lenders make these deals a win-win. What’s one thing you’ve learned (the hard way or not) about structuring a loan or partnership that really clicked for you? Maybe it’s a term you swear by, a deal that surprised you, or just a tip for keeping things smooth. I’d love to hear your experiences—hoping to soak up some wisdom as I figure out my next steps!

@Christian Cunningham the one thing I've learned is to be upfront working with PMLs about their expectation about a specific deal. We deal with distressed properties, so I put everything "good-bad and the ugly" in front of my PMLs. I also teach PML certification course where I emphasize new PMLs ask operators for "more than one" real example of past deals... 

Quote from @Terry Kearse:

Hey everyone! I’m curious, what’s been the biggest hurdle for you when it comes to securing funding for your real estate projects?

Whether you’re flipping, building, or investing in rentals, I’d love to hear about your experiences and how you’ve worked around any roadblocks. Let’s share insights and tips to help each other out!

@Terry Kearse while the question is broad, the hurdles are drastically different between residential and commercial projects (I have experience with both). So my response is assuming you are referring to residential lending specifically. 

I've found hurdles to be of different nature depending on type of project; flipping, new construction or rentals (I've done all three). If you ask me what is the common thread between these, I would say:

1. Your experience in this particular type of project (flipping, new construction or rentals). I found lowest hurdles in this area when lenders underwrite rentals.

2. Your financial strength and cash reserves. This is more true for flipping and new construction. Different lenders will have different minimum requirements.

Hope that helps... 

Quote from @Paul Novak:

I'm looking for some perspective from others in the BP community. I am 39 years old, and I recently shut off my wife and my 401K contributions. We also stopped investing in Roth IRA's. The only money we have going into the market is in our HSA. We have shifted all our investing to real estate. To take it a step further we have been taking loans from our 401K's to help support down payments on rental properties. Below is my logic and strategy.

Our combined 401K balances are $550K and Roth IRA's are $55K. No one knows what the future holds but assuming a 7% return over the next 20 years those accounts will grow in total to $2.4M. If my retirement goal is to generate $10K per month following the 4% rule I would need $2.5M to retire. With my current balances that would be enough to get there only looking at those two retirement accounts. I also have $50K in a taxable brokerage account and another $20K in an HSA which will continue to grow.

The main part of my portfolio I have been working to grow is my real estate portfolio. Currently the portfolio is 5 properties, 7 doors, valued at $1.2M with $558K equity. This portfolio is currently generating $4,425 per month cashflow. My goal over the next two years is to buy an additional two properties. Once I acquire them, I feel confident that I can generate $11K per month cashflow provided they are paid off in full. This will take me an additional 4-6 years to accomplish. At which point I will have exceeded my retirement income goal without even factoring in my retirement accounts.

My logic is that I want my wife and I to have the ability to retire early. I feel this will be possible somewhere between my mid to late 40's. If I do, I need income to get me to 59 ½ because I can't access my retirement accounts until that age. I understand that I can use the principle from my Roth IRA's but for the most part that money is locked away without paying penalties to access it. By investing in real estate, I can use the cashflow now. By shifting all that money, we were investing in our retirement accounts to real estate it has significantly increased the speed at which we are growing. If I am putting that money to work with investments and not spending it what's the difference if I use it for real estate to fuel my retirement or my 401K. Don't get me wrong I am sure I will put my money to good use in the future, but my thoughts are if my real estate portfolio can fund my lifestyle in retirement why do I even need the additional $2.4M dollars when I turn 59 ½? At that point I am delaying retirement just to grow my accounts to a size larger than I need, that doesn't make sense to me.

I understand that by stopping those tax advantaged accounts I could be missing out on additional growth over the long run. My wife and I are also missing out on free money with our company matches in our 401K’s. For me I feel shifting to real estate is the right play which is why we made the pivot last summer, but I am open to other perspectives. I am sure there are things I am not thinking. If anyone has any other tips and tricks or things they have learned through experience I would be happy to get your thoughts.

@Paul Novak You've received some good advise here. 

One option to reach (or exceed) your goal of passive $10,000/month income is investing in real estate as a private money lender. This is a passive way of earning with real estate-based security, protection and insurance.

If you have $550K in your retirement account to invest, you can achieve $12,011/month in passive monthly income. This means you will need about 18+ loans each at $30K earning you monthly passive income (with double digit returns). 

You will need to roll over your retirement funds into a self-directed IRA account (funds would be lent from there and returned back there). This income projection also assumes all funds are deployed all at once, you can always deploy it in a staggered manner to gradually reach your desired passive income goal. DM me if you need more information about this strategy.

@Robert Ok yes you can. One good way (if you are open to it) is to house hack a duplex. Simply means that you live in one side, and rent the other side to help (or totally) pay off your mortgage. This could make your housing cost $0 if done right. It will also teach you how to be a landlord. Anything larger than that I would not approach without a bit more experience...

Quote from @Ivan Castanon:

Hello all!

I am currently reading books and educating myself about private lending. I am interested in jumping in, but I am not sure if I have enough money. I have $110k ready to invest in Florida. I would like to fund a fix and flip deal with a first lien position in Florida. 

Is this reasonable or do I need more money? I know that I should try to stay at 60% - 70% LTV. But is this possible with my current capital? Is this LTV based on ARV or the purchase price?

If I don't have enough for a first position lean, is it even worth it getting second positon liens?

Thank you!

You've received excellent advise from others here. And I agree, you have enough funds to fund something in the lower price point. Also, research other areas where you can invest as a private money lender (fix and flip is just one option)...

In my opinion, here are the minimum requirements with which anyone with little bit of experience can raise money from strangers:

1. Focus on one real estate strategy only, master it so you can explain the details well. Have at least 1 deal with proof of concept (preferably with your own funds). Document the details of this deal as your sample deal.

2. Based on your real estate investment strategy, figure out who could be the best private money lender (PML) match. In other words, create your PML avatar.

3. Find places where your PML avatar hangs out. Ideally, you are looking for places where everyone is expected to network like local reia meetings.

4. Create your pitch deck keeping focus on your real estate strategy and your PML avatar. 

5. Create your systems that allow you to seamlessly pitch, onboard and service your PMLs.  These include website/investor portal, CRM, in-person meeting space or online (Zoom), online scheduler like calendly.

The secret is to create a "system" so you can keep the flow of PMLs coming through your pipeline. 

Just as some others have chimed in, real estate has 16-17 years cycles. The most recent peak was in 2023, so we are going to see flat then going into a slow steady increase in prices over the next few years. Even though, real estate investments are not uniform in different markets and asset classes, just on the 16-17 year cycle basis and if you primarily rely on appreciation, this may be the perfect time to buy!