How We Are Helping Our Private Lenders Get Higher Returns | Freedom Vlog | REI | EP. 33

Hey, everybody. Flip and Danny here, co founders of the Freedom Real Estate Group family of companies.

That's right. And today we are doing one of our vlog series. Yeah. And so our team actually does a lot of them for us. We pretty much host the podcast mainly. But today we got a message that said, hey, you've got two vlogs coming up. We're like, whoa, let's do a vlog today. So our vlogs are really the Freedom Real Estate Group family of companies. A day in the life type of a series of the companies. It's team members, et cetera. So today topic is going to be how we're helping our private lenders get higher returns. Because we're about to do a podcast on that same topic. And as you guys know, we're trying to line up our vlogs with our podcast to give you a little teaser and then we'll dive deep when we get to preview.

This is the coming next Sunday at a theater near you.

Yes. So good. Okay, so should we dive in?

Okay, go right ahead.

All right. So private lenders, higher returns. So we're always trying to figure out how we can help our team, us, our families, our clients, our, our investors, our partners, our vendors, whatever it is, it's always how do we keep on doing, you know, creating win wins. And as we start tackling more investments, we're going, hey, we could do this, we could do that. So this is where the idea came from. We bought the apartments, as you guys know, back in October of 2020. Some of our lenders are, our private lending loan terms are 12 months now. And a lot of our lenders are saying, hey, put me in a 12 month loan. That you actually think the project's going to take that long? Because I want my money constantly working for me. So we did these apartments and on the podcast, we'll kind of dive into the returns our investors are going to see on that particular deal. But that was what sparked the idea of, hey, we need to do more of this because. And we'll dive deep in the podcast. But we are realizing that as our lenders are loaning us money on a project, Tiffany's going to send out a funding packet and she's going to say, hey, do you like the deal? And they're going to say, yes, great. Okay, maybe it's a single family house. It was vacant already. It takes four months. We're in and out four months now they get their money back and then Tiffany's going, what's in my pipeline? So I can give Flip another deal so he can put his money back in. So they're doing there. It's not a whole lot of work, but there's some downtime right in between the deals. So let's just say, and this is probably an exaggerated example, but let's just say it's 12 months. And out of those 12 months, somebody was in a deal for only eight to 10 of those months. That means that two to four of those months, they're not earning any interest.

Right.

They're holding on the money, waiting for another deal to come up. Which, you know is okay, because when you're getting 6, 8, and 10% interest, like, that's. That's a lot compared to putting your money in something else that's getting 1 or 2% interest.

Right. Because it's back in their bank getting.

Exactly, yes. So I think it's still okay, but we're trying to figure out how do we keep that money working? And so we've been talking to an attorney and we're creating a fund. And the idea of the fund is to allow our private lenders to be able to put their money into this fund that is going to earn interest all year long. And we're going to pay out probably quarterly. We've been going back and forth. We were even talking about this last night about how we were going to pay all of that out, because sometimes we don't exit a deal, especially if it's large, for eight or nine months. And so we don't want to be promising payments when we're still waiting for profit to come back in the door. So we're figuring that piece out. We're working with the attorney on it. But this is going to be a way where they can put in their money and they just. They're done. They don't have to. It's still secured by the real estate and the assets that we're buying, but they get to keep on earning interest. So if you're getting 10% over the course of a year, as far as your return goes, then you're actually getting 10%, not 8 out of the 12 months, you're getting 10%, which effectively turns into a totally different number. And I'm gonna let you do the math on that during podcast. Good luck. Bring your calculator.

I'll bring my thinking cap on that one.

But yeah, so that's kind of the idea behind it. Also doing these larger projects, we're going to start doing more multifamily, and we'll talk about that more about the private lenders who are involved in that because they knew it was going to be long term, so they were able to get a higher interest, higher interest rate and keep their money working for them the entire time that we were doing the project. So I thought that was pretty cool. And then I really wanted to dive deep into it. I know in the podcast we're going to go over some other passive income strategies that we want to talk about, but anything that you want to add?

No. This is your wheelhouse. This is your baby with all the private money. A lot of times I sit there, I just sit there with my calculator, make sure all the numbers are correct. This is your wheelhouse.

Yeah. Okay. So if you're watching this vlog and you don't know about our private money lending program yet, or you like the idea of your money working for you in longer periods of time, I'll tell you the quick difference between what we're doing now and what we're creating. So what we're doing now is note and mortgage a bank. Your bank of America. You're Wells Fargo, whatever it is, you're going to get a funding packet. You're going to look at the deal, you know. Yes, I'd like to be the lender on it. You're going to send your money to title, and the title attorney is going to create a note and mortgage. And so you have a lien on the property, you know, and then.

First lien holder.

Yes. First lien holder. Yes, exactly. And at the end of the deal, when we're getting ready to close, Tiffany creates a payoff statement. You say, yes, that's exactly right. That's how much I loaned you. That's the interest rate you promised. Payoff is correct. And then we wire you the funds, and then we do it again. So it's that do it again part where it's sitting back in your hands going, it's not earning any money. It's like, what does Kevin o' Leary say? Send your dollars out so they can have.

He likes to treat his dollars like it's his children. And every morning he likes to send his children out into the world to make more money and to bring back more children.

Yes. So while it's in your hands, it's not doing that.

Yes.

Right. It's not having children or babies and more money's coming back to you.

So, yeah, making your money work for it.

Yes. Yeah, yeah. So that's what we're trying to. So the note and mortgage is what we're Doing right now, what we're getting ready to do, what we're also already doing is doing larger scale stuff so that your money is just. You're in a long term note because it's just a long project. But then we're going to create a fund and we're working with the SEC attorney because there's guidelines on how to do that because then we are pooling money together. But it's a fund that's specifically built to buy real estate assets.

Right.

And so therefore it's secured by the assets in which it's purchasing, and it allows Everybody to contribute $50,000 and have it working 12 months out of the year, where that's very difficult for us to do right now in the scenario in which we're doing it, because usually $50,000 is like the entry point for investors, but that's gonna help us buy a single family house. Right. And then we're gonna top it off with our money to be able to do the rehab, which typically means we're gonna be probably in and out in four to six months. So this is just letting everybody get more children from their money, making it the Kevin o' Leary line. Oh, gosh. Okay, so anything else that you want to add? That's really what the kind of the preview that I wanted to share and what we are trying to do in order to create more win wins.

Yeah, no, I think that that's a great way to wrap it up right there too because like, you know, we always like to make these short and sweet as a preview to what our podcasts are. Because our podcasts will go anywhere from 30 to an hour, depending on how talkative she is that day. But so we hope that you enjoyed this, this little preview, this little what we call our vlogs to preview our podcast. And our podcast is called Real Talk.

Which is Real talk for real estate investors.

That's right. So make sure you check us out. We're on Apple and all those other YouTube. MySpace.

Yeah, we're in lots of places, but we're always on. You know, she releases it on Facebook. I think she puts it in the email too. So subscribe where you can.

That's right.

Awesome. We always like to end the vlogs and podcasts with Invest Smart, Live Happy. Bye, everybody.

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