NEVER raise money for other people - how to lose $1,000,000

Welcome back, YouTube. It's Christian, and I am back this week for our rules of real estate. This one is another good one. We're on rule number 26, and this rule is don't raise money for other people. Now, this might sound intuitive, but I see this happen all the time. As you start doing more deals, you get a little bit momentum underneath you, you learn, hey, I know how to find deals, I know how to close deals, I know how to raise capital. When you start finding great deals, it becomes very, very easy to line up capital. However, if your goal is not to be a private lender, where you're trying to line up people's money from one place to another, don't get into the private lending business. A lot of people make this mistake and this is where you get burned. The way Cody and I play the game, and the way we recommend you play the game, is you find opportunities. And the order, we say this all the time, deal, then debt, then equity. We never deviate from that. It's always deal, debt, equity. Has to be in that order. So we find an opportunity, that's our opportunity. We raise capital that we control so that paying people back, the responsibility is on us. That is the debt piece. Now the equity are the equity partners. When you're bringing people in, the nice thing is their money's in and they're in the deal with you. But we're talking about the debt piece here. We don't raise capital for other people. Now, if you're talking equity, you can line up one person and another. You can make an introduction. They might partner on a deal together. That's totally fine because they're in the deal together. Today's piece is just talking about how do we line up debt. I'm not going to go raise capital or go get a check for someone. They go, hey, can you bring in $100,000? I'm not going to bring in $100,000 of someone else's money. And put it in a deal that I don't control. Because then what happens if that goes sideways? I don't control that deal. I know my ethics. We include a lot on ethics in these rules. But if you do this wrong, you're gonna lose. This is practical application. I'm going to swap out any names or companies in this because we don't want to throw anyone under the bus, but I have seen this done. Where someone had an opportunity and they needed, they needed $1 million and they raised it in $100,000 chunks. So they went $100,000 from you, $100,000 from you. Hey, can anyone help bring in some capital? Pay you a couple of points. I actually watched people go out, talk to their past clients and go, hey, I have an opportunity. I would love to have you place this capital. What happened is they collected $1 million and they put a little clause in the note that no one caught that said, hey, I can technically lend this for other purposes. True story. What that individual did was raise a whole bunch of money for a project and then lend that money to another one of their companies. And what did they do with that money? They spent it on payroll. Their company failed and they shut the doors and went, oh, you know what, bummer, the opportunity didn't work out. The capital, we tried to deploy it, it didn't make it out, and we ended up blowing it on another project. That is terrible. Now, that actually happened. I have seen that happen with $1 million. I have heard of friends where very similar things have happened. The money doesn't always go exactly where it's supposed to. Maybe that operator isn't as good of an operator as you believe them to be. So how do you avoid this? The practical application is someone else loses your friends' and family's money. Just don't raise money for other people. If you're gonna write them a check, come in as an equity partner. Have it on a deal that you control. But if you don't have control over that deal, don't bring other people's capital to it. Now, this isn't one of our super long videos, but this is so important. I really hope that you hear this and apply it because It's really easy to compromise, especially as you get a little bit further when you're like, oh, I have access to capital, let me go ahead and get that money for you. It is easy to try to make money on other people's money. Don't be the capital raiser if you want to be the real estate investor. You want to be a real estate investor? Hold that capital for deals that you're going to find. Go find new opportunities and place capital with yourself in the driver's seat. That is the only way we advocate for raising money. So hope you found this helpful. If you did, or you have a friend who is, uh, is loose with the raising other people's money, go ahead and send them this video. We appreciate your likes and shares. It helps us grow the channel. And we will be back to you next Monday with our next rule of real estate. This was rule number 26: don't raise money for other people.