Podcast episode (Freedom through Passive Income) where hosts Hans and Danny (Freedom Real Estate Group founders) discuss how private money lenders can keep funds deployed continuously instead of receiving payoffs between deals. They describe two solutions used: individualized "master notes" (multi-year loans, e.g., five years, held in segregated accounts) and pooled debt funds that aggregate investor capital and hold mortgage notes on properties (with the debt fund as the security). They reference SEC-regulated 506(b) offerings for certain opportunities, note variations in payout frequency (quarterly/biannual/annual), and stress investor onboarding/relationship requirements and liquidity tradeoffs. Episode ends with CTAs and a legal disclaimer.
Hey, everybody. Flip and Danny here, founders of the Freedom Real Estate Group, family of company. And welcome to another episode of our.
Podcast, which is Freedom through Passive Income.
That's right. And today our episode is Private Money Lending on Steroids. I'm Hans and fr. And we're here to pump you up. Sorry. You like that? Thank you. Good. So she's the private money, and since she's laughing, I'll talk. She's the private money queen and my office is next to her. So I hear her talking to private money lenders all the time. And one of the biggest things that we constantly hear is, would you just keep my money? Yeah, because they'll wire us money and they're all for properties. And sometimes we'll do the property in like four weeks or six weeks or whatever and we're wiring their money back because we already sold the property and it's closed and really just keep our money. We want our money working for us. And so it's the biggest thing that we've heard. They just, what can we do? So that way you can keep our money?
Yes. So in the shortest one that we've done. Two weeks. Yes, two weeks. We literally bought a property and we were going to be able to sell it for more money than if we just even rehabbed it. We're like, good, let's just sell it to this other person that wants it. That's fine. And our private lender was like, just give you my money. So I started talking to numerous attorneys. I wanted to figure out, how do we allow you to invest your money so that we can invest it in properties and. And hold it without giving it to you back. Because if you know the private money lending process, we have to give you the money back so that you can sign a release of mortgage, which is the security that's attached to that piece of real estate. And you can't sign that release of mortgage or you should not unless you actually receive your money back. So we were trying to figure out, how do we do that? So we went through so many ideas and so many of them were they're gonna have to do this or they're gonna have to do this or they're still gonna have to sign this. And people were saying, danny, give me some hands off idea. So here it is. We came up with two things after talking to multiple attorneys that we ended up doing. And now I'm going to be very general because one of them is SEC regulated and it is a 506B, which if you haven't listened to the episode about accredited versus non accredited, you're going to learn that some of our Investment opportunities are 506BS, which stands for buddy, you have to have a relationship with us for you to even know about them. So we're not going to talk about them except for in generalities because this is not a solicitation or an opportunity. We're just talking about, you know, ideas and conversations.
We're just talking.
There you go. So one was a master note. This has nothing to do with SEC because it was individual. We separate, created a separate bank account. The attorney created a five year loan essentially for some of our investors to say, I want to invest in your business. That was one. Some said, I want to invest in your properties. That was one. Some said, I want to invest in both. It doesn't matter how you invest some of my money in the business or within properties, it doesn't matter. So each master note ended up getting structured a little bit differently depending on the preferences of the investor. Most of them were typically five years. And so we would create an extra bank account. I'm sorry, you would create an extra bank account. And so we've got so many bank accounts of people who know like and trust us, wanted to invest with us. And so we were like, we can't keep, we can't keep doing this. This is just unrealistic. It's not scalable. So we talked to the attorneys again and he talked to us about a debt fund. And a debt fund is the way to take all of those funds and then put them into, you know, an instrument that allows the money to be pooled together and to be used the exact same way. So we still have a note mortgage on the properties, but it's in the. So the security is against the debt fund. So if anything happens, the debt funds now doing all the work instead of you having it. So this like solved so many problems for our investors in terms of wanting to get their money, working with them, working for them without having to do approve the investment, wire the funds in, get the funds back, sign the payoff statement, sign the release of mortgage. Now that was like five steps. That really isn't hard.
But some of our investors are international.
Yes.
So we say that's not really hard. Well, they could be in Japan, you know, dealing with way more things than we understand.
Yes. Yeah. So it really wasn't hard. And a lot of people enter into a relationship with us private money lending that way anyway. It's very easy to do. It's an easy barrier of entry Very simple. You don't have to be accredited. So a lot of people just become private money lenders. But then after they've done a few deals, they're like, okay, I know you guys. I like you guys. I trust you guys. Please take my money. And by the way, I've got 500,000 over here and 200,000 over. It happens all the time. It's just crazy. So all of this is to say is, now we've allowed investors that do want to have this option to put their funds somewhere where they're getting a higher effective interest rate because their money is truly working for them 365 days a year at that interest rate, they're getting paid either quarterly payouts or they're getting paid biannual or annual. And it depends on the investment that they're in, the vehicle that they're in as to when they're getting paid. So this made a lot of investors very, very, very happy. It's not always something people do right out of the gate. They typically want to do one or two deals with us first, and then they go, shoot, there you go. And so it's really up to you. But I wanted to talk about it and start educating people on it so that you know what all the options are in terms of what you can do in order to earn money. Because there's things that are long term, there's things that are short term, there's things that keep your money a little bit more liquid versus get it out of my way. I don't need it. I just want to earning interest so it can be inflation and so I can set myself up for retirement. There's things, and some of them, you have to have a relationship with us before we can even tell you about them. So that first phone call that you have with us, it's going to be with one of our team members and they're going to start asking you what your goals are and what is important to you. Is it interest rates? Is it return? Is it that your money is working all the time? Is it that you have. It is liquid and you're in and out. I know I go fast, so I think I covered everything that we're supposed to cover on this and then some.
I think so as well.
These are supposed to be short, so I'm going to stop now.
Well, I hope that you enjoyed this episode Again. Make sure you join our Facebook group right up here. Facebook.com groups.
Freedom through passive Income.
That's right. And if you're not on Facebook, we get it Right down here is our website, Freedom Capital Investments.com, but make sure you like, love comment, give us reviews, questions. I'm sure you're gonna have questions, especially about this one. This one was 90 miles an hour, which she's normally.
That's how I know.
Yeah, exactly. So make sure you put the comments, questions, whatever you have right down there. Right down below here as well. But again, we always like to end all of our episodes with invest smart, live happy. Bye, everybody.
Bye.
Nothing on the show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions and information on the show are not guaranteed. All investment strategies have the potential for profit or loss.
